Sitting of 28 March 1983

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  ENERGY
  Mr. Speaker: Order. I remind the House that long supplementary questions are unfair to other hon. Members.
  ENERGY

    Fast Breeder Reactor
    Mr. Maclennanasked the Secretary of State for Energy what proposals he has received from the United Kingdom Atomic Energy Authority, the National Nuclear Corporation and the generating boards concerning the development of the fast breeder reactor; and if he will make a statement.
    The Under-Secretary of State for Energy (Mr. John Moore): I have recently received advice from the chairman of the Atomic Energy Authority, on behalf of the various interested parties, and I am considering it. I will make a statement at the appropriate time.
    Mr. Maclennan: In view of the considerable public and parliamentary interest in this issue, will the Minister consider publishing the advice before the Government arrive at a conclusion so that Parliament can pronounce on the issues involved? Secondly, will the Minister state what
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    alterations or reductions in the budget for the development of the fast reactor the Government have already announced?
    Mr. Moore: I can give no undertaking on the first point. The advice that the Government have received is confidential. The precise level of funding is not yet settled. The Government remain committed, as I made quite clear in November, to a substantial development programme.
    Mr. Hannam: Can my hon. Friend throw any light on the apparent conflict of policy between the Social Democratic party and the Liberal party on the future of nuclear power? Will he confirm that all the latest evidence continues to show that if Britain's industrial costs are to be competitive with countries such as France, this country must continue with a nuclear power programme?
    Mr. Moore: I am conscious of my hon. Friend's last point. The way in which the SDP reacts to the more dominant side of the alliance is shown by its antagonism to nuclear power, and it must sort itself out on that issue.

    Severn Barrage
    Mr. Palmerasked the Secretary of State for Energy if he will bring in legislation to establish a public corporation charged with the duty of constructing a Severn barrage for the generation of electricity on the lines set out in the Bondi report, with power to raise capital from public and private sources and a duty to conserve the environment and advance the amenity of the area.
    The Minister of State, Department of Energy (Mr. Hamish Gray): I shall very shortly announce the Government's decision on the recommendations of Sir Hermann Bondi's committee.
    Mr. Palmer: Is it not a fact that the Bondi committee, of which I had the privilege of being a member, reported more than two years ago, that the House has been repeatedly promised a statement, and that the difficulty seems to be finance? Are not my suggestions useful and constructive?
    Mr. Gray: I accept that the hon. Gentleman made his suggestions with the best intentions. He will be aware that considerable consultation has taken place. I assure him that he will not have to wait much longer for a statement.
    Mr. Dover: Will my right hon. Friend ensure that he has examined all possible schemes for a Severn barrage, because there are other, smaller schemes, which are therefore more viable and better able to be financed by the private sector?
    Mr. Gray: I appreciate the amount of local interest in this and other schemes. I assure my hon. Friend that the Government have been considering a wide range committee's report. They include some interesting proposals from private sector financial interests on which several discussions have taken place.
    Mr. Rowlands: Is the Minister aware that the constant delay in a decision on the barrage is causing other decisions to be delayed? The important issue of a second crossing for the Severn is of great concern to both sides of the channel, and that will be affected by the decision made on the barrage. I hope that the Minister will come to the House very soon with an announcement.
    Mr. Gray: I can only reiterate what I said to the hon. Member for Bristol, North-East (Mr. Palmer), that a statement will be made in the near future.
    Mr. Stoddart: Does the Minister agree that there has been inordinate delay over this scheme? Would it not be better to push the scheme ahead, as it would provide 8,000MW of electricity at relatively low cost, instead of proceeding with the highly expensive pressurised water reactor?
    Mr. Gray: The hon. Gentleman must realise that the barrage would make a limited contribution to the base load capacity, equivalent to about one nuclear power station of perhaps 1GW, because tidal flows do not coincide with peak demand. The main benefit would be in the saving of fossil fuel.

    North Sea Oil Prices
    Mr. John Smithasked the Secretary of State for Energy whether he will make a statement on North sea oil prices and their impact upon the British National Oil Corporation finances.
    Mr. Chapmanasked the Secretary of State for Energy if he will make a statement on British oil pricing policy in the light of the recent Organisation of Petroleum Exporting Countries meeting in London.
    The Secretary of State for Energy (Mr. Nigel Lawson): North sea oil prices are determined by the market, as indeed they always have been. BNOC's financial position depends on trading conditions, not on the absolute price of oil.
    Mr. Smith: Is the Secretary of State aware that the price of North sea oil is probably the most important economic factor in this country at present, and that he has either been silent on the subject or his statements have been as opaque as the one that we have just heard? Should not the Government announce their policy on the price at which they want North sea oil to be sold? Does the right hon. Gentleman not appreciate that by breaking BNOC
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    into Britoil and the BNOC trading arm he will land the latter with millions of pounds of losses, which will not be compensated for by profits from the production side?
    Mr. Lawson: The separation of the former BNOC into two parts makes no difference to the activities or finances of the trading side. If the trading side makes losses there are provisions under section 6 of the Oil and Gas (Enterprise) Act—as the right hon. Gentleman should be aware—for grants to be paid to make them good. It would be absurd for the Government to declare the price at which they would like oil to stand, and it would have no effect. BNOC seeks to sell its oil in the market place in a way that is conducive to the greatest stability.
    Mr. Chapman: Does my right hon. Friend agree that a moderate fall in world oil prices would be beneficial to the United Kingdom's economy as we export so much of our industrial output? Is not the real lesson of the past decade that the erratic and dramatic changes in oil prices by the OPEC countries are damaging to world trade, and thus not only to every other country but to the OPEC countries themselves?
    Mr. Lawson: I entirely agree with my hon. Friend. The existence of a cartel led to a more dramatic rise than would otherwise have occurred. We are now in a phase of adjustment because market forces have prevailed, as they always do. I agree that the gradual fall that has occurred has benefited both us and the world and that an exaggerated fall would be undesirable for the reasons that my hon. Friend has stated. My hon. Friend is also right to imply that the right hon. Member for Lanarkshire, North (Mr. Smith) was quite incorrect to suggest that the price of North sea oil is the biggest single factor determining the health of the British economy. That is just not so. The total value of North sea oil is only 5 per cent. of gross domestic product.
    Dr. J. Dickson Mahon: Is BNOC free to determine its own pricing policy? If it is not free to do so, is it not high time that Britain held conversations with the Nigerian Government so that we do not witness a very damaging trade war between Nigeria and Britain on the subject of light oil?
    Mr. Lawson: I have no particular wish to see a trade war with any country, but the sequence of events was that when BNOC proposed a $3 fall in its price for North sea oil, the immediate response was a $5·50 drop by the Nigerians.
    Mr. Smith: If the Secretary of State feels that pricing should be left entirely to the market, why did he call in oil companies to discuss the subject, or were they merely discussing the weather or some other issue? Is the right hon. Gentleman saying that if the price of oil plummeted he would stand back and do nothing about it?
    Mr. Lawson: Unlike the right hon. Gentleman, I do not profess to know all the answers and I find it helpful to discuss these matters with the oil companies and, indeed, with BNOC.
    Mr. Skeet: What is the price of North sea Brent oil? Is it the $30·50, which has not as yet been accepted, $29·or $29·50? We do not know. If the differentials have fallen well out of alignment, should not my right hon. Friend now recommend a correction.
    Mr. Lawson: It is not for me to recommend anything, but it is for BNOC to sell its oil at the best price that it can obtain in the market place. Some time ago it proposed a price of $30·50 a barrel, which some companies have accepted and others have not.
    Mr. Douglas: How would BNOC's finances look if the price of North sea oil fell to $24 or $25 a barrel? What losses would the Secretary of State anticipate for BNOC? How many representatives from different OPEC countries did the Secretary of State meet? Indeed, will he confirm that he met the representatives of five OPEC countries during those discussions? What exactly did he say to them about the international price of oil?
    Mr. Lawson: I pointed out in my original answer, which was by no means opaque, that it is not the absolute price of oil that determines the profits or losses of the trading organisation BNOC, but conditions in the market place, margins and so on. I cannot remember the precise number of OPEC oil Ministers that I met, but I certainly had discussions with them individually, and they were confidential.

    Coal Sales
    Mr. Gwilym Robertsasked the Secretary of State for Energy how much United Kingdom coal was sold in Northern Ireland in the last year for which figures are available.
    Mr. John Moore: As my hon. Friend the Minister of State, Northern Ireland Office told the hon. Member for Cannock (Mr. Roberts) on 4 February 1983, deliveries of National Coal Board coal, including smokeless fuels, into Northern Ireland during 1982 were some 1·5 million tonnes.
    Mr. Roberts: Does the Minister accept that, in view of the Government's rather unhelpful policies, there is considerable alarm in the industry at the prospect of a further contraction in the coal market? Does the hon. Gentleman agree that there may be a case for some sort of subsidy for the coal, because, after all, the Government's theoretical policy is to increase coal burn in the industrial and domestic sectors?
    Mr. Moore: I am sure that the hon. Gentleman would like to get the facts right. Burn has, of course, increased. The hon. Gentleman will obviously be aware that the Government's policy has ensured that the coal industry not only retains existing markets but wins new ones because of its price competitiveness. That is the long-term interest of further coal sales in addition to the 1·5 million tonnes that are now sold to Northern Ireland.
    Mr. J. Enoch Powell: Is the Minister aware that he misread the question and that there is a very large quantity of United Kingdom coal beneath the ground in Northern Ireland, as well as in Cannock? Will he suggest to his hon. Friend the Minister of State, Northern Ireland Office that the time is coming when a statement of the Government's position will be necessary on the exploitation of the large deposits, which have now been proved?
    Mr. Moore: With great respect to the right hon. Gentleman, I did not misread the question. The details are the concern of my right hon. Friend the Secretary of State for Northern Ireland, but the deposits in question are
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    lignite, which under the Coal Industry Act are not defined as coal and are the responsibility of my right hon. Friend the Secretary of State for Northern Ireland.
    Sir Geoffrey Johnson Smith: Is my hon. Friend aware that there is considerable and growing anxiety among the consumers of British coal that the coal industry is not fulfilling its side of the bargain in "Plan for Coal", both in respect of the slow progress being made in phasing out uneconomic coal mines and in its inability to improve productivity?
    Mr. Moore: My hon Friend is, of course, right. Governments of both parties have maintained the pattern of long-term investment in the coal industry. It is sad that the industry's productivity record has not been maintained in accordance with "Plan for Coal". Equally, uneconomic capacity has not decreased, contrary to what was envisaged in "Plan for Coal". Those of us who wish to see the coal industry succeed must deplore that fact and hope that it will be sorted out.

    Advertising Expenditure
    Mr. Eggarasked the Secretary of State for Energy what was the total expenditure on advertising by the British Gas Corporation and the electricity supply industry in the last year for which figures are available.
    Mr. Gray: I am informed by the industries that in 1981–82 advertising expenditure was £22 million by the electricity industry and £23 million by the gas industry.
    Mr. Eggar: Does my right hon. Friend realise that that means that every gas consumer will be paying at last £2 a year for advertising costs and a similar sum in respect of electricity advertising and that those boards will be competing against each other? When will my hon. Friend take action with the boards to ensure that the costs are reduced?
    Mr. Gray: I am concerned at the level of expenditure and I have asked the British Gas Corporation to consider ways of reducing it. My noble Friend the Under-Secretary of State, the Earl of Avon, will be discussing the matter with the new chairman of the Electricity Council at the earliest opportunity.
    Mr. John Evans: Does the Minister agree that if these bodies did not spend quite so much on advertising the electricity supply industry, in particular, would not need to close showrooms in small towns such as Newton-le-Willows in an effort to save money?
    Mr. Gray: The Office of Fair Trading report in April 1982 pointed out that over four years, 1977–78 to 1980–81, the LEB spent more on advertising appliances, as a percentage of turnover, than did other groups of retailers.
    Mr. Forman: Would not that combined figure of £55 million be much better spent on the promotion of energy conservation packages by the industries concerned?
    Mr. Gray: Perhaps I should correct my hon. Friend. The total was £45 million. What my hon. Friend says highlights the matter and shows that there is room for improvement on the part of both industries for economies in advertising.
    Mr. John Smith: Will the Minister reflect on how ironic it is that the hon. Member for Enfield, North (Mr.

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    Eggar) should complain about advertising and competition only when they occur in the public sector, when we hear so frequently about the virtues of both those forces wherever they appear in the private sector?
    Mr. Gray: I do not think that it is at all surprising. My hon. Friend is quite correct, and I do not believe that the two can be compared in scale.

    Electricity Prices
    Mr. Hoyleasked the Secretary of State for Energy if he will seek to bring electricity prices for process industries into line with those charged in Italy, France and Germany.
    Mr. Lawson: The recent study by the CBI on international energy prices shows that our electricity tariffs to the process industries are broadly in line with the European average.
    Mr. Hoyle: While the Secretary of State may claim that, does he agree that representations have been made to him by the process industries, and in particular by the paper industry, all of which feel that they are at a grave disadvantage on energy prices? Will he re-examine the matter to see whether those industries can be placed in a more competitive position?
    Mr. Lawson: The figures in the study to which I referred are not my figures. The study was headed by the CBI. Of course I receive representations from time to time, but I assure the hon. Gentleman that the figures that I quoted are correct.
    Mr. John H. Osborn: As my right hon. Friend will have had contact with Mr. MacGregor, as chairman of British Steel, is he aware that electric steel melting is contracting rapidly because it uses electricity generated from coal-fired power stations, which is far more expensive than that used by competitors elsewhere in Europe and the world?
    Mr. Lawson: I know of my hon. Friend's deep interest in and concern for the steel industry over many years, particularly the electric arc section of the industry. However, perhaps he has not fully taken into account the change in comparative prices that has occurred as a result of the appreciation of the deutschmark and the depreciation of sterling in recent weeks and months?
    Mr. Rowlands: Is the Secretary of State aware of the statement that has been put out by his Department that this problem had gone away? As it clearly has not gone away from the steel industry, the chemical, the textile, and the paper mill industries, will he now call an urgent meeting of all the parties in an effort to resolve the argument?
    Mr. Lawson: I had a meeting with my right hon. Friend the Secretary of State for Industry and with representatives of all those industries some weeks ago. I am well aware of what they said and of the current situation. Of course, many things do not go away, including the hon. Gentleman.
    Mr. Sever: Does the Secretary of the State accept that the promised upturn of manufacturing and process industries is unlikely to come about when so many industrialists, such as those who are desperate to make progress in the west midlands, feel that they are hampered by the Government's continuing neglect of their problems?
    Mr. Lawson: Those problems are not neglected. Through the contracted-consumer load scheme, and in other ways, we have given £100 million a year towards the reduction of electricity prices to those industries. I should add that German prices are now higher than those of the United Kingdom for all industrial consumers, except for a very tiny minority.

    Coal Industry (Investment)
    Sir Anthony Meyerasked the Secretary of State for Energy what recent discussions he has had with the chairman of the National Coal Board regarding public investment in the coal industry.
    Mr. John Moore: My right hon. Friend and I meet Mr. Siddall regularly to discuss all aspects of the board's activities.
    Sir Anthony Meyer: Does my hon. Friend agree that Mr. Siddall and his successor, whoever he may be, can best secure jobs for coal miners and a good standard of living for those who work in the industry by concentrating resources on those pits that have a bright future, such as the Point of Ayr pit in my constituency.
    Mr. Moore: My hon. Friend is of course right. I remember visiting the Point of Ayr colliery, and when I came up from underground I remember the meeting that I held with him, the trade union representatives and the management. It is a perfect example of a pit with a good long-term future. I gather that the output per man shift there is over 3 tonnes. A sizeable investment programme of over £11 million is now in process. It is a perfect illustration of investment from which the industry will benefit.
    Mr. Eadie: In meeting the present chairman of the board, does the Minister agree that it would have been much more helpful if the Government's record had been better during the past four years? For example, they have sunk no new pits since they came to office. Secondly, would it not help, in answering his hon. Friend, if he were to mention that the burden of interest that the National Coal Board is now carrying on capital borrowing is becoming crippling?
    Mr. Moore: The industry has welcomed the Government's massive commitment to enormous investment in the industry, despite the enormous losses. It is hard to reconcile that statement from the Opposition with companies which not only have losses but which cannot borrow from the taxpayer the kind of money that we are talking about. Many companies would be only too happy to have the privilege of paying interest on such money borrowed from the taxpayer at very advantageous rates.
    Mr. Waller: Does my hon. Friend agree that the National Coal Board has a great future, provided that the industry is efficient? Will he ensure that the new chairman of the NCB gets to grips with those parts of the industry that are a drain on public funds, so that the long-term jobs of people working in the industry are secured?
    Mr. Moore: I hope that all of us wish for the coal industry to have a long-term successful future. I am sure that my hon. Friend will not mind if I add that in fact we were answering a question relating to the current chairman of the NCB, who is a very fine leader and has been seeking to put into practice the policies that the Government have been urging for the coal industry.
    Mr. Ioan Evans: In view of the deep anxieties in the coalfields about the anticipated statement that Mr. MacGregor is to become the new chairman, when the statement is made today, will the Minister reassure coal areas that public investment and capacity are to be maintained and that there will be no rundown of the coal industry, as has happened in the steel industry in recent years?
    Mr. Moore: I have much difficulty in reconciling that comment with the miners' ballot recently. The industry itself recognises that its future lies in producing a competitive product, with security of supply, to ensure that it keeps its current markets and wins new ones.

    National Coal Board (Chairman)
    Mr. Canavanasked the Secretary of State for Energy whether he will announce the name of the chairman of the National Coal Board.
    Mr. Lawson: I ask the hon. Member to await the statement that I shall make later this afternoon, if I am fortunate enough to catch your eye, Mr. Speaker.
    Mr. Speaker: If the hon. Member for West Stirlingshire (Mr. Canavan) is content to wait, I shall see that he is called early on the statement.
    Mr. Canavan indicated assent.

    Opencast Mining
    Mr. Les Huckfieldasked the Secretary of State for Energy what estimates he has made of the percentage of future coal supplies to be derived from opencast mining.
    Mr. John Moore: As I told the hon. Member on 28 February this year, the Government have the question of future opencast output under review.
    Mr. Huckfield: Does the Minister think that, with some 52 million tonnes of coal stocks on the ground, the time has come to reject all opencast applications? In particular, will he seriously consider rejecting the application in respect of Sudeley in Warwickshire, to which there is now growing local opposition from neighbouring residents, and which will delay industrial development and seriously affect hospital services, and when even the NCB itself has told me that it does not want the coal?
    Mr. Moore: As I said, opencast output is under review. I hope that the hon. Gentleman will not forget that in the recommendations of the Commission on Energy and the Environment there was an association between the reduction in uneconomic capacity in deep-mined coal and a potential reduction in capacity for opencast. In answer to the hon. Gentleman's point about the Sudeley site, I hope that he will remember that the Conservative Warwickshire county council and the Nuneaton and Bedford Labour-controlled borough council have dropped their objections. If the remaining objections continue there will be a public inquiry, so I do not wish to comment further at this point.
    Mr. Cunliffe: Does the Minister agree that opencast mining was meant not as a substitute for deep coal mining but specifically to complement it? In view of that and the present large amount of unused coal, will the Minister consider revising downwards the opencast mining target of 50 million tonnes per year?
    Mr. Moore: I know that the hon. Gentleman would wish me to remind the House that that target was established by the last Labour Government and that major profits come to the coal industry from that area. In addition, anthracite from South Wales, special coking coals from the north-east and opencast coal from other parts of Britain enable areas with higher chlorine content coal to ensure that the steam market is helped. That is an important part of our coal industry.
    Mr. Eadie: As successive Governments have always tried to limit the production of opencast coal mining, will the Minister give the assurance that the trailer of the expected appointment will not mean that because the individual mentioned had most of his experience in opencast mining in America we are about to see a big expansion of opencast coal mining in Britain? That is unacceptable.
    Mr. Moore: I remind the House that it was the previous Government who said that they sought to increase opencast capacity by 50 per cent. from 10 million to 15 million tonnes. The Government have made it clear that the current level is under review and announcements will be made shortly on that subject.

    Energy Supplies
    Mr. Edwin Wainwrightasked the Secretary of State for Energy if he will make arrangements to meet the chairmen of the National Coal Board, the Central Electricity Generating Board, and the British Gas Corporation to discuss future energy supplies for the United Kingdom.
    Mr. Gray: My right hon. Friend the Secretary of State and I meet the chairmen from time to time to discuss a wide range of issues.
    Mr. Wainwright: Instead of the Government fighting the British trade unions, should they not bring together the three chairmen of the energy industries and the trade unions to try to bring about greater harmony so that the nation can have greater production? Is the Minister aware that if Mr. MacGregor is appointed chairman of the coal mining industry it will be the most discouraging action that can be taken against the top men in the British mining industry? When will the Government show some common sense and ensure that we rely on our own instead of appointing outsiders at a tremendous cost to the country?
    Mr. Gray: The Government have no desire to quarrel with any industry and they go out of their way to cooperate. If the Government received the same co-operation at every level matters would be much healthier. The hon. Gentleman will have to await my right hon. Friend's statement on the new chairman of the National Coal Board.
    Mr. Greenway: As the British Gas Corporation and the electricity supply industry had monopoly control of their industries in 1981–82, does my right hon. Friend agree that it was preposterous that they should have spent £45 million on advertising? Would not that money have been better spent on reducing standing charges, particularly for pensioners?
    Mr. Gray: My right hon. Friend the Secretary of State has dealt effectively with standing charges and has made a substantial contribution towards the welfare of

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    pensioners and the less fortunate in our society. I have already commented on the boards' advertising expenditure, but the raising of the matter again highlights the anxiety that is felt about it in the House.
    Mr. John Evans: Would it not be a good idea to bring those three distinguished gentlemen together to discuss an intelligent energy conservation programme, since most experts at the moment believe ours is in a shambles?
    Mr. Gray: I do not think that all experts would agree with the hon. Gentleman. A substantial amount of energy conservation is being carried out and from time to time discussions take place with the chairmen of those boards that are directly responsible.
    Mr. John H. Osborn: When my right hon. Friend the Secretary of State meets the chairmen, will he also discuss prices? As well as the chairman of the British Steel Corporation being interested in electricity prices, all industries are interested in gas prices. Should they not come down in line with oil prices?
    Mr. Gray: Gas prices are constantly being reviewed by the Government and the chairman of the British Gas Corporation. One should not assume automatically that the price of one fuel would come down because another has.

    Wytch Farm
    Mr. Rowlandsasked the Secretary of State for Energy whether he will make a statement on the disposal of the British Gas Corporation's Wytch Farm interests.
    Mr. Lawson: I shall do so when the current negotiations have been concluded.
    Mr. Rowlands: Is it not an utter scandal that the Secretary of State and the Government are attempting to destroy the fine partnership between the British Gas Corporation the British Petroleum, which has developed the best offshore oilfield that we have? Will the right hon. Gentleman tell us a little more about the current negotiations, and in particular what part he has played in them? We have been told time after time that this is a commercial decision by the British Gas Corporation. Why have the right hon. Gentleman and his Department been having secret meetings with some of the bidders to control them so that they present an acceptable bid?
    Mr. Lawson: The principle of the matter has been debated in the House on several occasions. It has been voted on, Parliament has decided and it is now up to the British Gas Corporation to carry out the will of the House of Commons and Parliament. The British Gas Corporation sought my guidance on the bids that it received, and in formulating that guidance it was necessary for me to seek some elucidation of the bids.
    Mr. Rowlands: This has been a very important revelation, because time after time Ministers have said that this is nothing to do with the Government, and everything to do with the British Gas Corporation. Which bidders has the right hon. Gentleman met? Did he ask the British Gas Corporation to meet the bidders, or did he seek to meet them in order to achieve an acceptable bid?
    Mr. Lawson: The British Gas Corporation is well aware of the part that I have played. It explicitly sought guidance from me about the bids that it received and I have acted in a wholly even-handed manner.
    Mr. Budgen: Does my right hon. Friend agree that it is well understood in the west midlands that the Government wish to dispose of Wytch Farm and to encourage exploration in the North sea, but that those who are dependent upon lower oil prices would not wish the Government to give the impression that they can influence the price of oil so as to keep it up and would much rather that the Government state more clearly that the price of oil is dependent upon market forces?
    Mr. Lawson: I do not know whether my hon. Friend was in the Chamber when I answered question 3. If he had been, he would have heard me say precisely that. BNOC sells the oil that passes through its hands at the best prices that it can get in the market.
    Mr. John Smith: The Secretary of State made an interesting statement a few seconds ago. He said that he had been even-handed towards the bidders for Wytch Farm. Has the right hon. Gentleman met all the bidders?
    Mr. Lawson: I have met all the bidders whom the British Gas Corporation considered to be valid.
    Dr. J. Dickson Mabon: Will the Secretary of State give us an assurance that he has put no pressure on the British Gas Corporation to reduce its valuation of Wytch Farm? Can he assure us that the valuation is a proper one, given by a nationalised industry acting in the nation's interests? Whatever conversations the right hon. Gentleman has had with the bidders, can he say that in the last analysis he cannot refuse British Petroleum if it wishes to buy Wytch Farm?
    Mr. Lawson: The right hon. Gentleman is right to say that BP has a matching right. The only independent valuation of which I am aware is that produced last month by the distinguished oil analyst, Wood Mackenzie and Company, which put a value of between £141 million and £213 million on the BGC's interest.
    Mr. Eggar: Has not the British Gas Corporation been seeking deliberately to try to frustrate the will of Parliament, which was clearly that that share should be sold? It is not quite unreasonable for it to have behaved as it has in artificially inflating the value of its stake in Wytch Farm.
    Mr. Lawson: My hon. Friend has a good point. As I said earlier, Parliament has decided the matter and it is up to the British Gas Corporation to carry forward the decision expeditiously.
    Mr. Rowlands: On a point of order, Mr. Speaker. In view of the outrageous and disgraceful statement by the Secretary of State, I give notice that I wish to raise this matter on the Adjournment.
    Mr. Speaker: I must ask hon. Members to use the usual formula when giving notice.

    North Sea Oilfields
    Mr. Douglasasked the Secretary of State for Energy how many North sea fields in the 50 million to 150 million barrel recoverable reserve range he now expects to be developed in the next five to 10 years.
    Mr. Gray: The oil companies have already responded positively to the fiscal incentives contained in the Budget.

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    The precise rate of development of new oil and gas fields, however, is a matter for their technical and commercial judgment.
    Mr. Douglas: Does the Minister of State accept that that is too much of a "hands off' answer to be acceptable to the House and to the country? Does he concede that substantial fiscal incentives are now given to develop these fields—
    Mr. Eggar: The hon. Gentleman should welcome that.
    Mr. Douglas: I shall welcome it. Will the Minister use his office to ensure that the equipment used in the fields is built and produced in the United Kingdom?
    Mr. Gray: I am surprised that the hon. Gentleman, who criticised the Government not long ago for not giving further incentives to the oil companies, cannot see his way to giving the incentives a warm and wholehearted welcome, unlike the oil companies, which have been most generous in their praise of the Government. The companies have expressed their appreciation and said that a real understanding of the industry's problems has been shown by the Government. They have suggested that it will encourage new exploration and development. I confirm that I shall do all that I can to ensure that Brtish industry is given full and fair opportunity to compete, as I have for the past four years.
    Mr. Rost: Has my right hon. Friend notice that, despite the weakening oil prices, a number of oil companies have already accelerated their exploration and development programmes as a direct consequence of the Budget measures? Should not the Opposition welcome that instead of criticising it?
    Mr. Gray: My hon. Friend is correct. He will not have missed the recent statement by Shell that the Shell-Esso group intends to invest between £700 million and £800 million per year in the North sea for the remainder of the decade.
    Mr. Hooley: What exactly is the Government's depletion policy? Do they intend to go on recklessly using this valuable national asset to cover up the deficiencies caused by their economic failure?
    Mr. Gray: That is apart from the question, but I shall answer the hon. Gentleman and draw his attention to the fact that the all-party Select Committee has greed with the Government's depletion policy.

    OPEC (Ministerial Discussions)
    Dr. J. Dickson Mabonasked the Secretary of State for Energy what discussions he has had with Ministers whose Governments are members of the Organisation of Petroleum Exporting Countries in the past six weeks.
    Mr. Lawson: During the course of recent OPEC meetings in London I had a number of separate meetings with OPEC oil Ministers, at their request.
    Dr. Mabon: Will the Secretary of State confirm that one of the Ministers was the Nigerian Minister? Will he accept that if there is an oil price war between Nigeria and ourselves the British National Oil Corporation will be seriously hurt? Is it not in Britain's and Nigeria's interests that we avoid such a conflict?
    Mr. Lawson: I sometimes think that the right hon. Gentleman is more concerned about the unterests of Nigeria than the interests of Britain, but I am sure that that is due to the infortunate phrasing of his question. As I made clear in answer to art earlier question, Britain has no interest in an exaggerated fall in oil prices and will do what it can, within the confines of market forces, to introduce a degree of stability into the market place.
    Mr. Skeet: As the Secretary of State is prepared to follow market forces, will he give a specific directive to the BNOC under the Petroleum and Submarine Pipe-lines Act to do precisely that and to follow the market price downwards so that the differentials are corrected and so that people buy North sea oil and do not go to Nigeria for oil?
    Mr. Lawson: I see no cause for a directive. BNOC has some highly skilled traders who have been selling North sea output with skill during difficult times. I regret that I forget the second part of ray hon. Friend's question.
    Mr. Hardy: To enhance the stability to which the Secretary of State referred, can he confirm that there will be no increase in the amount of oil exported from British oilfields in the next 12 to 18 months? Would that not be a remarkably sensibile gesture for him to make?
    Mr. Lawson: The amount of oil produced in the North sea depends on the companies. My best guess is that, looking at the profiles of individual fields, North sea production this year will be about the same as last year.

    Coal Industry
    Mr. Allen McKayasked the Secretary of State for Energy if he has seen a copy of the Monopolies and Mergers Commission report on its investigation of the coal mining industry.
    Mr. John Moore: Yes.
    Mr. McKay: As the Minister has now seen the report, will he make it available to the National Coal Board and the mining trade unions? When will it be made available to hon. Members? Will he arrange for a debate on the report?
    Mr. Moore: I shall try to answer all those questions. The report and its publication are matters for my right hon. and noble Friend the Secretary of State for Trade. The extent of the availability of reports to parties mentioned in them is covered by section 17(2) of the Competition Act 1980. It will be made available in advance to those mentioned in it.

    Community Energy Policy
    Mr. Knoxasked the Secretary of State for Energy whether he is satisfied with progress towards the development of a European Community energy policy.
    Mr. John Moore: I should like to see early progress on a Community coal strategy.
    Mr. Knox: Are our European partners expected to shoulder the losses of the British coal industry?
    Mr. Moore: No. I hope that within the European coal policy we can expect a balanced package of aid for economic coal production and use. Clearly our coal

    15
    industry recognises the importance of investment in economic development and restructuring to cover the problems of our older, historic coal industry. There will be advantages not only for us but for the European coal policy's attempt to reduce dependency on coal.
    Mr. Eadie: Would it not be appropriate to tell the House that the coal produced in Britain is cheaper than the coal produced in western Europe?
    Mr. Moore: That is certainly true of deep coal mining. The United Kingdom produces the cheapest deep-mined coal in western Europe.
    Mr. John H. Osborn: Does my hon. Friend agree that a European energy policy should cover all sources of energy? What progress is being made with an electricity grid across the Channel? What further consideration has he given to a European gas grid to join our gas pipeline to that of the remainder of western Europe?
    Mr. Moore: Good progress is being made with the electricity grid across the Channel. I shall return later to my hon. Friend's point about a potential gas interconnection.
    Mr. Edwin Wainwright: Will the Minister admit that the coal produced in Britain is cheaper because the subsidies that overseas countries give to their coal industries are far greater than the subsidies that Britain gives to its coal industry?
    Mr. Moore: The hon. Gentleman must remember that investment in the future coal industry is running at triple the rate of comparable investment by the next substantial coal producer, West Germany, which produces about 90 million tonnes. The other relatively high support levels are for static and declining industries in France and Belgium, which I should not think the hon. Gentleman would want the British coal industry to emulate.

    Combined Heat and Power
    Mr. Rostasked the Secretary of State for Energy when he expects to make a statement on the results of the feasibility studies into the use of combined heat and power for district heating.
    Mr. John Moore: I shall make a statement when the Government have fully considered the consultants' report and the comments of interested parties.
    Mr. Rost: Does my hon. Friend accept that in that statement the Government should give guidance on how district heating should be organised and financed, and especially on the role that the Government believe should be played by the electricity supply industry, local authorities and private industry?
    Mr. Moore: I know of my hon. Friend's long history of support in this area. He will remember our detailed debate in Committee on the Energy Bill, when the nature and role of the electricity supply industry and the local authorities were debated. I am sure that he will wish to consider the matter further when we consider the report to the House.
    Mr. Home Robertson: As Edinburgh is the strongest candidate to be a lead city for a combined heat and power scheme, will the Minister assure the House that he will consult the Secretary of State for Scotland before reaching a final decision?
    Mr. Moore: The hon. Gentleman mentioned in Committee the rule and interest of Edinburgh in the scheme. Nine cities were studied for the report. My right hon. Friend the Secretary of State for Scotland is always involved in matters concerning Scotland.

    Energy Efficiency (Departmental Staff)
    Mr. Proctorasked the Secretary of State for Energy how many officials in his Department are concerned primarily with energy efficiency.
    Mr. Gray: I refer my hon. Friend to my reply of 17 March 1983 to the hon. Member for Kilmarnock (Mr. McKelvey).
    Mr. Proctor: Will the officials in the Department of Energy consider working out an energy conservation scheme for industries such as the paper and board industry and other industries that are heavy users of energy?
    Mr. Gray: Special treatment within the conservation scheme is subject to scrutiny by those who are examining the policy. I can give my hon. Friend the assurance that we will certainly look carefully at the requirements of the various industries concerned with energy conservation.
    Mr. Campbell-Savours: As supply side energy schemes, such as the construction of the national grid in the 1930s, put hundreds of thousands of people back to work in Britain, why do not the Government adopt a demand side energy scheme based on a national programme of energy conservation, thereby putting 100,000 people back to work in the way put forward by the group of eight representing the construction industry in evidence to the Select Committee on Energy?
    Mr. Gray: The hon. Gentleman must bear in mind that the potential for providing employment by the spending of similar amounts of money in other ways must always be considered. The hon. Gentleman's suggestion might not compare favourably with ideas in other areas.

  HOUSE OF COMMONS

    Broadcasting
    Mr. Hooleyasked the Lord President of the Council if he is satisfied with the current arrangements for broadcasting the proceedings of the House and its Committees.
    The Lord President of the Council and the Leader of the House of Commons (Mr. John Biffen): My responsibility is to ensure, as far as possible, that these arrangements reflect the wishes of the House. If any hon. Members are dissatisfied with them they should make their views known to the Select Committee on Sound Broadcasting.
    Mr. Hooley: Is the Lord President of the Council aware of the widespread dissatisfaction among hon. Members about broadcasting Parliament? Is he aware that it is regarded as trivial and frivolous and as providing no proper report of the proceedings of the House? Would it not be more satisfactory for the House itself to take control of the arrangements for broadcasting?
    Mr. Biffen: The answer to the first part of the hon. Gentleman's question must be yes. Any substantial change should probably take place at the beginning of a new Parliament rather than at the fag end of this one.
    Mr. Robert Atkins: Is my right hon. Friend aware that many of my constituents find that coming to the Chamber and hearing from the Gallery what goes on in a three-dimensional manner is different from hearing the noise and row on a mono or stereo set, which does not give a true impression of what goes on in the Chamber? Will my right hon. Friend recognise that and ensure that, as far as possible, the public understand the difference between the radio broadcast and the live show?
    Mr. Biffen: I recognise that.
    Mr. Charles R. Morris: What special broadcasting arrangements will be made for tomorrow when the new Member for Darlington (Mr. O'Brien) takes his seat?
    Mr. Biffen: There will be no ganging up in applause.
    Mr. Stokes: Does my right hon. Friend recall that when Parliament was held in the highest esteem and when Britain was at the height of its greatness there was no recording or reporting of the proceedings of the House?
    Mr. Biffen: I accept the point that my hon. Friend makes.

  LORD PRESIDENT OF THE COUNCIL

    European Community (Information Campaign)
    Mr. Teddy Taylorasked the Lord President of the Council if Her Majesty's Government are notified in advance by the European assembly and the European Community Commission of the information campaigns which they conduct in the United Kingdom; and if he will make a statement.
    Mr. Biffen: The European assembly and the Commission are responsible for their own information programmes and are not required to consult member states about them.
    Mr. Taylor: Is it not outrageous and unreasonable that vast sums of taxpayers' money should be used for propaganda drives in Britain? Is my right hon. Friend aware that we are about to have another £2 million propaganda drive with public funds, sponsored by Saatchi and Saatchi? Would it not be wise to ensure that the information put out at least confirms to the specific information given by Her Majesty's Government in answer to parliamentary questions?
    Mr. Biffen: The sums voted to that purpose are subject to monitoring by Community institutions. My hon. Friend should not be too worried that they are suborning the populace in relation to how they perceive the national interest of Britain relative to the Community.
    Mr. Skinner: Is the Leader of the House aware that even though we do not like the fact that the Community has large sums to spread propaganda, some of us have come to the conclusion that it is not likely to make much impact, no matter how much money it spends, because the assembly seems to spend its time deciding on the length, weight and size of gherkins, regarding that as important and taking away massive amounts of money from Britain and operating a tinpot agricultural policy that benefits the farmers and not the farm workers? Is the right hon. Gentleman aware that the people of Britain know that the Community has been an unmitigating disaster?
    Mr. Biffen: I note what the hon. Gentleman says. Both charity and prudence prevent me from commenting upon the merits of his argument.
    Mr. Dykes: As the turnout in the last European election was low, would it not make sense to provide more information about what the Community and the European Parliament do? Does my right hon. Friend agree that it should not be party-political information, but information based on what the institutions themselves represent?
    Mr. Biffen: I understand that slightly more than £12.5 million has been devoted to that end. Therefore, my hon. Friend should feel a sense of satisfaction.

  HOUSE OF COMMONS

    Accommodation
    Mr. Dormandasked the Lord President of the Council if he will make a statement on the progress being made in providing improved office accommodation for hon. Members.
    Mr. Biffen: The Services Committee has agreed a report on phase 1 of the development of the Bridge street site for parliamentary purposes. It is hoped that the report will be published before Easter.
    Mr. Dormand: Will the right hon. Gentleman give an assurance that the possibility of a general election within the next few months will not in any way affect the work that will be done on the new office accommodation on that site? What progress is being made in making additional office accommodation for hon. Members available in the Palace of Westminster?
    Mr. Biffen: I can promise the publication of the report and, I hope, a debate shortly thereafter. I can promise absolutely nothing whatsoever about the date or outcome of the general election. I shall consider the hon. Gentleman's point about improving the office accommodation within the Palace of Westminster and write to him.
    Mr. Freud: Does the Leader of the House accept that new Members of Parliament such as my hon. Friend the Member for Bermondsey (Mr. Hughes) and the new hon. Member for Darlington (Mr. O'Brien) have the rnost urgent need for office accommodation? Would it be possible to have a temporary office for such Members so that they could spend at least the first few weeks with a desk and a telephone?
    Mr. Biffen: I understand the hon. Gentleman's reference to temporary accommodation. I shall refer it to the appropriate members of the Services Committee.
    Sir Kenneth Lewis: Is my right hon. Friend aware that when I first entered the House all I had was a small locker? Since we have been given desks, my mail has increased, my work has increased, the votes in this place have increased, and I do not believe that the Government are under any more control now than they were then.
    Mr. Biffen: I cannot deny my hon. Friend his boyhood reminiscences. I am by no means sure that even were we to reverse the recent accommodation development we should necessarily reverse the burdens of our correspondence.
    Mr. Hooley: Will the Lord President confirm that the offer of £15 million by the Secretary of State for the Environment for the new accommodation still stands?
    Mr. Biffen: The Government's position on finance will be made clear at the time of the debate.

    Ministerial Accountability
    Mr. Canavanasked the Lord President of the Council whether he will consider ways of improving the working of Parliament to ensure more accountability of Ministers to the House.
    Mr. Biffen: I am always willing to consider proposals for strengthening ministerial accountability to Parliament.
    Mr. Canavan: If the Prime Minister insists upon using her patronage powers to give Cabinet posts to non-elected
    18b
    Members of the House of Lords, will the right hon. Gentleman make such Ministers accountable to the elected representatives of the people by making arrangements for them occasionally to be summoned to the Bar of the House to answer questions? In the recent Anderson Strathclyde scandal, was it not an absolute disgrace that Lord Cockfield was allowed to hide behind inaccurate press releases rather than explain his conduct to us?
    Mr. Biffen: I shall ignore and dismiss the hon. Gentleman's ungenerous references to my right hon. and noble Friend the Secretary of State for Trade. The hon. Gentleman is a little archaic in supposing that relationships between the two Houses of Parliament must be conducted at the Bar of the House. Select Committees of the House can invite those from another place to give evidence whenever they so wish.

National Coal Board (Chairman)
3.31 pm
The Secretary of State for Energy (Mr. Nigel Lawson): With permission, Mr. Speaker, I wish to make a statement about the chairmanship of the National Coal Board.
When I appointed Mr. Norman Siddall as chairman last year he made it clear to me that, regrettably, his health would not permit him more than a one-year term. Strictly speaking, that year comes to an end on 3 July, but Mr. Siddall has kindly agreed to stay on until the end of August. He has already proved to be an outstanding chairman of the Coal Board, as I am sure is widely recognised on both sides of the House.
As his successor I have appointed Mr. Ian MacGregor, currently chairman of the British Steel Corporation. Mr. MacGregor is a Scotsman who was sent to Washington by the Government during the war—
Mr. Dennis Canavan: Send him back.
Mr. Lawson: —to deal with certain aspects of the purchase of arms from the United States. After the war he decided to make his business career there, which he did with conspicuous success, notably with the Amax Corporation.
His first act on becoming chairman of Amax in 1969 was to take it into the coal mining business: by the time he retired from the chairmanship of Amax in 1977 he had built it up into the third largest coal mining company in the United States.
Mr. MacGregor's qualities were recognised by the previous Government when they appointed him a deputy-chairman of British Leyland in 1977, but he did not return to Britain on a full-time basis until 1980, when my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) appointed him chairman of the British Steel Corporation for a three-year term.
Since then he has led BSC with vigour and determination through a period of intense difficulty for the steel industry both at home and abroad. Last year, for the first time ever, BSC's productivity came close to the best levels of its European competitors.
Mr. MacGregor's experience in building up and running a successful coal-mining business and the outstanding leadership he has provided at BSC have demonstrated that he is admirably equipped to become full-time chairman of the Coal Board. He has agreed to accept a three-year appointment starting on 1 September.
Mr. MacGregor has obligations to his partners in the New York-based investment bank of Lazard Freres, from which he was released for three years in order to become chairman of BSC. I have agreed similar arrangements in order to enable him to take on the chairmanship of the National Coal Board for a further three years.
Accordingly, a fee of ·1½ million will be paid to Lazard Freres in compensation for the loss of Mr. MacGregor's services. Two-thirds of that fee will be refundable on a pro rata basis if Mr. MacGregor does not complete his full three-year term.
As with the BSC arrangements, Mr. MacGregor will remain a non-active limited partner in Lazards while serving as chairman of the Coal Board. But this will not
20
entitle him to receive any share of the so-called transfer fee. He will be paid £59,325 a year—the same salary as Mr. Siddall.
Although less than the maximum compensation payable under the BSC arrangements, £1½ million is a substantial sum—indeed, it is what the Coal Board loses every day—but I am confident that securing the services of Mr. MacGregor as chairman of the National Coal Board will prove excellent value for money for the taxpayer, the industry and the nation.
In making these arrangements, my concern has been to find the best possible leadership for the Coal Board at this critical time. The industry and those who work in it deserve nothing less. The coal industry in this country faces fundamental problems of over-production and uncompetitive costs. If it can tackle these problems, it can secure for itself an excellent future and transform itself into the successful modern industry that we need.
Mr. MacGregor's objectives will therefore be to continue the task started by Mr. Siddall and to focus the board's efforts on the earliest practicable return to profitability, on competing successfully in the market place and developing new markets for British coal, and on securing the highest possible efficiency and control of costs.
I am satisfied that Mr. MacGregor is the best man for the job. This is an appointment which everyone with a genuine interest in the success of this great industry should welcome.
Mr. John Smith: Is the Secretary of State aware that this is an extremely foolish appointment that will divide a great industry and will, in the end, impede its progress? I make it clear to the right hon. Gentleman that the appointment is unacceptable to most people concerned with the coal industry and wholly unacceptable to the Opposition.
Mr. T. H. H. Skeet: Mr. MacGregor is a Scot.
Mr. Smith: He may be a Scot by birth, but he is an American by choice.
Is the Secretary of State aware that few appointments have ever been made to an industry in the face of the total and united opposition of the work force and, indeed, of most of the management? Is he also aware that the appointment is divisive, not only in its industrial aspects, but because it is totally opposed by the Labour party and most of the Opposition parties and, indeed, by a large number of Conservative Members, who have made their views known during the past week or two?
Is it not ominous for the miners of Britain that Mr. MacGregor, with his limited experience of United States strip mining in the Amax Corporation, has been appointed to the Coal Board in a manner that amounts to a calculated snub to those well qualified to lead the industry on a long-term basis? Is it right to appoint to an industry that needs long-term leadership someone who is prepared to commit himself for only three years for that purpose?
With regard to Mr. MacGregor's remuneration, will the Secretary of State confirm that the money to be paid is in addition to that paid under the British Steel arrangement? Secondly, will the Government pay it, or will the Coal Board have to foot this extra bill?
Does the Secretary of State appreciate that to make an appointment, in what the Lord President a few moments

21
ago described as the fag end of the Parliament, to take effect on the eve of what is likely to be a general election is a clumsy attempt to tie the hands of an incoming Labour Government, but that it will fail?
Mr. Lawson: The last point of the right hon. Member for Lanarkshire, North (Mr. Smith) is particularly absurd, since there will be no incoming Labour Government. I should point out that Mr. Siddall's term is coming to an end and it is only responsible for a successor to be appointed.
Of course the compensation is additional, because the compensation paid earlier was for the three years of the British Steel Corporation contract, while this is a payment in compensation for a further three years' loss of Mr. MacGregor's services to Lazard Freres. It will fall direct on the taxpayer and not on the National Coal Board.
I am sure that Mr. MacGregor, who has shown himself to be a first-class business man, will do the Coal Board and the industry proud. In talking about the unacceptability of Mr. MacGregor, the right hon. Gentleman has not shown the same common sense as the miners displayed when Mr. Scargill brandished the MacGregor factor before them in the recent ballot. The miners rejected that scaremongering by 61 per cent. to 39 per cent.
Mr. Michael Morris: Is my right hon. Friend aware that the coal industry is one of our vital industries and that within the industry, especially at senior management level, there are first-class men in the financial and marketing sectors and first-class area directors? Is he further aware that these men need leadership and that if Mr. MacGregor provides that the country will have a bargain?
Mr. Lawson: My hon. Friend is right. There are first-class men at all levels in the Coal Board. I was particularly struck by a comment in the New Statesman earlier this month, when reference was made to Mr. MacGregor's charismatic power to motivate those around him.
Mr. Canavan: In view of the public concern that MacGregor will try to follow up his hatchet job on the steel industry with an even greater hatchet job on the coal industry, why are the Government handing out £1·5 million to Lazard Freres in a transfer fee on top of the 1·8 million paid at the time of MacGregor's appointment to the British Steel Corporation? Why pour public money down the drain on such a provocative and disastrous appointment when the coal industry needs a vigorous leader who will fight for more investment in the industry, to prevent the closure of pits with workable reserves and for a better future for those employed in the industry?
Mr. Lawson: A successful leader was precisely the person I sought for the coal industry. I was certainly not seeking a hatchet man. Hatchet men come a great deal cheaper than this.
Mr. A. J. Beith: As the Minister contends that those who have a genuine interest in the industry's future will welcome the appointment, does he believe that the miners who voted not to strike and who are deeply opposed to Mr. MacGregor's appointment are not genuinely interested in the future of the industry, which cannot run without them? Will Mr. MacGregor be able to make underground and coalface visits, or will there be a completely different style of leadership which will mean that management cannot work alongside the men?
Mr. Dennis Skinner: He will use videos.
Mr. Lawson: One of the characteristics of Mr. MacGregor's chairmanship of the British Steel Corporation has been the way in which he has gone out and about to talk to the men. I am sure that he will do precisely the same in the coalfields. I am confident that he will establish considerable rapport. Mr. MacGregor is no stranger to coal mining or to deep mining. The miners will judge him by what he does when he takes over as chairman. I advise the hon. Gentleman to do the same.
Mr. Patrick Cormack: Is my right hon. Friend aware that, while we wish. Mr. MacGregor every possible success in his daunting task, a number of us find it slightly difficult to accept that there is no one in Britain who is slightly younger who could be considered? Was Sir Michael Edwardes approached for the job?
Mr. Lawson: I think that it would be unfair if I were to go through a "Twenty Questions" routine to disclose whom I considered for the appointment. I assure my hon. Friend that Mr. MacGregor was my first choice. I believe him to be the best man for the job.
Mr. John Morris: Are not the terms demanded by Lazard Freres disgraceful and greedy? If Mr. MacGregor had asked to work for the American Government, would the terms demanded by Lazard Freres have been wholly different? Having regard to Mr. MacGregor's age, despite his vigour, what contractual expectation did Lazard Freres have to obtain such substantial and, indeed, enormous compensation? Who is to run the British Steel Corporation in the meantime?
Mr. Lawson: The question of who is to run the BSC when Mr. MacGregor moves over to the National Coal Board is a matter for my right hon. Friend the Secretary of State for Industry. I think that the right hon. and learned Gentleman's comments about age are rather tactless, as the Leader of the Opposition is only 10 months younger than Mr. MacGregor. I understand that the right hon. Gentleman is seeking even more onerous responsibilities than those of the chairmanship of the Coal Board.
Mr. Patrick McNair-Wilson: Were other names considered, and, if so, how many?
Mr. Lawson: I assure my hon. Friend that I gave the appointment a great deal of thought.
Mr. Skinner: How many names?
Mr. Lawson: I came to the conclusion that although there were many excellent candidates, Mr. MacGregor, with his record, was the best man for the job.
Mr. Edwin Wainwright: Is the right hon. Gentleman aware that his statement is a lot of baloney? The arrangement was made months ago for Mr. MacGregor to take over the job, and the right hon. Gentleman knows full well that that is so. The Government are provoking the miners. We want someone in the industry to run the industry. Is the right hon. Gentleman aware that he is belittling all top-level managers in Britain by bringing in someone of 70 years of age to run the NCB when there are many within the country who could do the job?
Mr. Lawson: There is no question of seeking to provoke the miners. The hon. Gentleman knows the coal

23
industry extremely well, and he knows the Government and their record sufficiently well to know that it is not our intention to provoke the miners. He should know better than that. If the hon. Gentleman exercises a little patience, I am sure he will see that Mr. MacGregor will prove to be a first-class chairman of the Coal Board. I cannot think of anyone who is more likely than Mr. MacGregor to find new markets for British coal, and that is of first importance to the industry.
Sir William Clark: Is my right hon. Friend aware that in the country and in some parts of the House there is a certain amount of confusion about why the appointment is being made? I accept that it is difficult to find suitable people to become chairmen of nationalised industries because of the low rates of pay—£59,000-£60,000—compared with rates that are paid in the private sector, but if it was known that the cost of the appointment to be borne on the taxpayers' shoulders was to be as great at £1½ million a year, with those terms we could surely have found someone in top management in Britain.
Mr. Lawson: I had to ask myself two questions. The first was "Who is the best man for the job?" I came to the conclusion that the best man was Mr. MacGregor. Secondly, I had to ask myself whether he was worth the £1·5 million compensation payment. We are talking about a massive business, which is the largest industrial employer in the United Kingdom and which, regrettably, is losing £1·5 million every day. In that context, it seemed clear that Mr. MacGregor was worth that sum.
Dr. J. Dickson Mabon: The right hon. Gentleman's statement refers to the problems of over-production and uncompetitive costs. As he said that he does not want to see any provocation of the mining industry, may we take it that during his chairmanship Mr. MacGregor will be very much concerned with his relationships with the unions as well as with the Government? Is this not a reason why there should be a reconvening of the tripartite conference that led to "Plan for Coal" being adopted in 1974?
Mr. Lawson: I am sure that Mr. MacGregor will seek to bring the industry back to profitability at the earliest practical moment, in consultation with the unions. I am sure, too, that he will develop excellent relationships with the miners at the coalface.
Mr. Skinner: There is some chance of that!
Mr. Lawson: This is a matter not of high-level talks but of a good relationship with the work force.
Mr. Geoffrey Lofthouse: Is the Secretary of State aware that no manager or worker in any section of the mining industry will welcome Mr. MacGregor's appointment? With that in mind, will the right hon. Gentleman kindly inform the House of Mr. MacGregor's terms of reference? Will he tell us also how many pits are expected to be working at the end of Mr. MacGregor's three years and the capacity that we can expect the industry to have? Is he aware also that the nonpolitical association in the mining industry, the British Association of Colliery Management, recently passed a
24
resolution condemning the appointment and stating that there are suitable men in the industry who could do the job as well as Mr. MacGregor, and possibly even better?
Mr. Lawson: The closure of loss-making pits is an essential element, together with the development of new capacity, in bringing the industry back to profitability and in bringing supply and demand for coal into balance. That has been made clear by Mr. Siddall, who has also said that about 12 per cent. of the industry's capacity accounts for well over half its losses. The objectives that were agreed with Mr. Siddall when he became chairman of the National Coal Board can be found in Hansard for 18 March. I pay tribute to the way in which Mr. Siddall is carrying out that job. Mr. MacGregor's objectives will be much the same.
Mr. Tim Eggar: Does not Mr. MacGregor start with two large advantages in that, first, he has a proven track record within the coal industry and, secondly, he has the firm knowledge that 60 per cent. of miners support his appointment? Did not Mr. Scargill himself make it clear that that was the question to which he wanted miners to address themselves in the recent ballot?
Mr. Lawson: It is true that, through no choice of mine, Mr. Scargill made this appointment an issue in the recent ballot. To that extent, my hon. Friend is absolutely right.
Mr. Allen McKay: Does the Secretary of State realise that this appointment is unnecessary and unwarranted and will seem intentionally provocative to the coal industry? What is wrong with British management? What is wrong, in particular, with the British mining management which produced Mr. Siddall, on whom the Secretary of State initially heaped praise? Does the Secretary of State realise that Mr. Siddall has his equals within the industry—men who were quite capable of taking on the job? If the Secretary of State is taking the recent vote as the criterion for making this appointment, does he realise that that is a narrow view and one of the most disastrous mistakes that he will ever make?
Mr. Lawson: I fully appreciate the hon. Gentleman's devotion to and deep knowledge of the coal industry, but I ask him not to jump to such hasty conclusions. I was very glad to be able to appoint Mr. Siddall, but he made it very clear at the time that because of his health he could take on the job for only a year.
Mr. T. H. H. Skeet: I congratulate my right hon. Friend on his sagacity, but is he aware that 30 collieries are accountable for 90 per cent. of the operating losses of the coal industry and that, with a good chairman, the National Coal Board could soon be turned round into profitability? He has a singular advantage in that we have now embarked on work in the Vale of Belvoir, a new mine with great potential.
Mr. Lawson: The green light has indeed been given for the opening up of the north-east Leicestershire coalfield. That is recognised throughout the coal industry and even, I am sure, by Opposition Members as a matter of great importance. The basic fact is that money spent in propping up loss-making pits is not available for investing in new capacity.
Mr. Skinner: With regard to those loss-making pits, is the Minister aware that if this country subsidised each

25
tonne of coal to the same extent as France, Germany and Belgium, every pit that is now in the red would be transferred into the black, irrespective of who was chairman of the NCB? Is the Secretary of State aware that, notwithstanding his use of the ballot result about two other matters, Mr. MacGregor's appointment will be treated with contempt and that when a Labour Government are returned to power—
Mr. Neville Sandelson: The hon. Gentleman will be older than Mr. MacGregor when that happens.
Mr. Skinner: The hon. Gentleman has plenty on his plate with his £30,000 a year in the courts. When we are returned to power we shall, with the backing of the National Union of Mineworkers and other trade unions, terminate Mr. MacGregor's employment.
Mr. Lawson: I notice that the hon. Gentleman is expecting to be personally in government, which I am sure will be of interest to his right hon. Friend the Leader of the Opposition. However, that is academic, as the voters will ensure that that possibility does not arise.
I shall say two things about the amount that is paid in subsidies on the continent. First, what is important is that since the Government came to office we have spent over £3 billion on investment in the coal industry. We have spent more on investment than France, Germany or any other Western European country. Secondly, it is because our coal industry is far ahead of the other coal industries in Europe that the position in coal is totally different from that in steel.
Mr. John H. Osborn: Is it not a fact that the steel, coal, gas, electricity and oil industries are international industries, that Mr. Ian MacGregor has had tremendous contact internationally, and that a common energy policy within the EC would make it possible to sell coal to the Community and elsewhere? Is my right hon. Friend aware that the British independent steel managers have great respect for Mr. MacGregor as chairman of British Steel? Is it not a fact that Mr. MacGregor is an example of gamekeeper turned poacher, or poacher turned gamekeeper, and that his experience in steel will give us cheaper energy?
Mr. Lawson: My hon. Friend is absolutely right in saying that Mr. MacGregor has earned the respect of both the managers and the men in the steel industry. I am sure that he will do the same in the coal industry. My hon. Friend is also right in saying that this is now increasingly an international business. Mr. MacGregor's knowledge of the wider world scene is an added quality that he will bring to the coal industry.
Mr. Joel Barnett: If the Secretary of State is right about Mr. MacGregor's qualities, does he accept that many people outside the House will find it ludicrous that a Secretary of State in this country should enter into an agreement that is little more than a special tax avoidance scheme to give £1½ million, paid abroad, for the benefit of the gentleman concerned? Can he give us any other example of a large private company that would pay such a sum of British taxpayers' money under such an arrangement to get such a man?
Mr. Lawson: I have made it clear, and I have said so in my statement, which I think the right hon. Gentleman
26
will have heard, that no part of the £1½ million will go to Mr. MacGregor. As I said earlier, I am confident that it is good value for money—very much so.
Mr. Michael Grylls: Does my right hon. Friend agree that the Opposition's attitude is hypocritical, in that every time we debate the coal industry they try to persuade the House or the taxpayer to spend more money on it and treat it almost as their own special industry, but when the Government acquire a star chairman for this important industry they seem to object to him? Will my right hon. Friend go on repeating that everyone in the industry will benefit by this appointment, as will everyone outside the industry who is a taxpayer?
Mr. Lawson: My hon. Friend is absolutely right.
Mr. Peter Hardy: The right hon. Gentleman suggested that the appointment would be full time. Will he confirm that? Will Mr. MacGregor have any other remunerated employment during the next three years?
Mr. Lawson: Mr. MacGregor's appointment will be full time. He is, and will continue to be, a non-executive director of Atlantic Assets, which gives him some remuneration. Mr. MacGregor will be full-time chairman of the National Coal Board just as he has been full-time chairman of British Steel. I am sure that he will be successful in that job.
Mr. Richard Page: I congratulate my right hon. Friend on choosing a chairman with a proven track record in the industry. Is it not a fact that when he was chairman of Amax in the United States Mr. MacGregor not only increased the use of coal but did so against the current thinking of the time, which was to switch from coal to other energy sources?
Mr. Lawson: My hon. Friend is absolutely right. He is on the ball today. Mr. MacGregor invested substantial sums of his company's money in expanding the coal business of Amax in the United States. The trouble with Opposition Members is that the only thing they detest more than a capitalist is a successful capitalist.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to call three more hon. Members from each side and then to call the Front Benches to conclude.
Sir Anthony Meyer: Is it not a fact that, despite the public attitude that is being struck for political reasons by Opposition Members and some elements in the National Union of Mineworkers, the great bulk of moderate opinion in the coal industry will wait to see whether Mr. MacGregor can achieve what he achieved at British Steel, which was to concentrate resources where they counted most and to produce a competitive and efficient industry, with secure jobs?
Mr. Lawson: My hon. Friend is right. Mr. MacGregor succeeded in running BSC at a time of acute difficulty for the steel industry worldwide. Fortunately, in an international context, the problems of the coal industry are not as great as those of the steel industry, although Britain has problems, to which I am sure Mr. MacGregor will address himself vigorously.
Mr. Michael Welsh: When the Secretary of State made the appointment of the man from America

27
at such great cost, what consultations took place with the trade unions in the mining industry? Will it be the new chairman's job to increase demand and therefore increase production, or will he be expected to cut production to present-day demand?
Mr. Lawson: As I have made clear, among other things, Mr. MacGregor will seek new markets for British coal. That is important, and I am sure that no one is better placed to do so.
As for consultations with the unions, although I entirely accept my responsibility for making the appointment in my capacity as Secretary of State, when the time came for me to look for a replacement for Sir Derek Ezra, Mr. Arthur Scargill, who had recently taken office, advised me to appoint Mr. Siddall. A short time after I had done so Mr. Scargill called for Mr. Siddall to be sacked. Therefore, I find Mr. Scargill's judgment a little erratic.
Mr. R. A. McCrindle: I do not in any way underrate the qualities of Mr. MacGregor, but may we know what steps are being taken to review and update the list of successful British business men who might be prepared to accept the challenge of taking on the chairmanship of a nationalised industry, thereby following the trail that was blazed by Sir Michael Edwardes, at substantialy less cost to the British taxpayer?
Mr. Lawson: I remind my hon. Friend that Mr. MacGregor is a Scotsman, and proud of it. As for our bringing him back from the United States, he is an excellent acquisition for Britain. I am sure that if one of Britain's top business men had been transferred the other way, my hon. Friend would have complained about the brain drain.
Mr. Ioan Evans: Will the Secretary of State assure the House that this is not a Prime Ministerial appointment, or that he was given a short list of one from which to make an appointment, because the Government want to settle old scores with the miners? Was any British management considered? Is he aware that the Government have attacked the British work force and that British management now feels insulted because top British management posts are constantly being filled from abroad?
Mr. Lawson: I do not know about constant importing. It happens from time to time, such as when the previous Government chose a Canadian to be the first chief executive of British Shipbuilders. My interest lies in having a successful coal industry. I hope that the hon. Gentleman shares that concern. I made the appointment. I proposed it to my right hon. Friend the Prime Minister and, of course, was delighted to receive her approval and endorsement.
Mr. Barry Henderson: I congratulate my right hon. Friend on securing the distinguished services of Mr. MacGregor on significantly lower terms than those arranged by the previous Government with the founder members of Inmos. Does he agree that in the long term
28
there is a need to liberalise this great state monopoly, perhaps along the lines contained in the Telecommunications Bill that we shall consider today?
Mr. Lawson: My hon. Friend has made an excellent point.
Mr. Stan Crowther: Is the Secretary of State aware that in the British Steel Corporation, where Mr. MacGregor has presided over the destruction of nearly 120,000 jobs, the survivors of that massacre view his departure with great fortitude and relief? Indeed, is the right hon. Gentleman aware that they regard the National Coal Board's loss as the steel industry's gain? Does he intend to accept the same type of personal responsibility for closure decisions in the coal industry as his right hon. Friend the Secretary of State for Industry belatedly accepted for those in the steel industry?
Mr. Lawson: The hon. Gentleman is not right to say that Mr. MacGregor's departure will be regarded with great satisfaction in the steel industry. During his three years there he has built up a first-class management team and turned the industry round. The hon. Gentleman fails to show any awareness of the fact that there is massive over-capacity in steel worldwide and that steel industries worldwide are having to make reductions. They are not peculiar to Britain.
Mr. Alex Eadie: The right hon. Gentleman has a great facility for causing a row in an empty House. Moreover, he has entirely failed to defend the appointment that he has announced. It will be seen in the country and the coalfields as provocation, in that he called the outcome of the miners' ballot in aid to defend that appointment by suggesting that that recent ballot was a vote of confidence in the likely appointment of Mr. MacGregor. That will not be acceptable in the coalfields and will be regarded with great resentment. The day will come when the right hon. Gentleman will regret calling the outcome of that ballot in aid of the appointment. The £.1·5 million transfer scheme will probably make Britain and that great coal industry the laughing stock of the industrial world. The right hon. Gentleman should have the courage to resign.
Mr. Lawson: That was a somewhat unoriginal conclusion. The hon. Gentleman says that I have failed to defend my choice of Mr. MacGregor. I have set out clearly the reasons that led me to choose him as successor to Mr. Siddall. I notice that the Opposition have not been able to advance any alternative candidate. It was Mr. Scargill, not I, who introduced Mr. MacGregor as an issue in the ballot. I fail to understand how trying to get the man who has the best chance of leading the industry to success can possibly be construed as provocation.

STATUTORY INSTRUMENTS, &c.
Ordered,
That the draft Housing Corporation Advances (Increase of Limit) Order 1983 be referred to a Standing Committee on Statutory Instruments, &c.
That the Insurance (Lloyd's) Regulations 1983 (S.I., 1983, No. 224) be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Cope.]

Telecommunications Bill (Allocation of Time)
Ordered,
That the report (16 March) from the Business Committee be now considered.—[Mr. Biffen.]
Report considered accordingly.
Question,That this House doth agree with the Committee in their resolution, put forthwith, pursuant to Standing Order No. 43 (Business Committee), and agreed to.
Following is the Report of the Business Committee:
That the allotted days which under the order [16 February] are given to the proceedings on Consideration and Third Reading shall be allotted in the manner shown in the Table set out below and, subject to the provisions of that Order, be brought to a conclusion at the time specified in the third column of that Table.

Allotted

Proceedings

Time for conclusion of proceedings

First day

Government New Clauses

10 pm

Other New Clauses

Midnight

Second day

Remaining Proceedings on Consideration

7 pm

Third Reading

10 pm

Orders of the Day
  Telecommunications Bill

    1ST ALLOTTED DAY
    As amended (in the Standing Committee), considered.
    4.10 pm
    Mr. Stanley Orme: On a point of order, Mr. Speaker. You have selected new clause 1 and a series of amendments from my hon. Friends and myself. Would you clarify the procedure and say when those amendments will be called, if at all?
    Mr. Speaker: When the guillotine falls at 10 pm, it will be necessary to put the Question on the amendment then being discussed—not on the whole series of amendments. In timetable business, the House always tries as far as possible to meet the wishes of the Opposition. If the right hon. Gentleman does not like the arrangement—although the amendments fall together—I shall be glad to consider any proposed change.
    Mr. Orme: I may have misled you, Mr. Speaker. Is it correct that, before we proceed to discuss the amendments, new clause 1 will have to be put to the House and agreed to?
    Mr. Speaker: Yes, that is right.
    Mr. Orme: Thank you very much, Mr. Speaker.

    1ST ALLOTTED DAY
      New Clause 1

        GENERAL DUTIES OF SECRETARY OF STATE AND DIRECTOR
        `(1) The Secretary of State and the Director shall each exercise the functions assigned to him by this Part in the manner which he considers is best calculated—

        (a) to secure that there are provided throughout the United Kingdom, save in so far as the provision thereof is impracticable or not reasonably practicable, such telecommunication services as satisfy all reasonable demands for them including, in particular, public call box services, emergency services and services in rural areas; and

        (b) without prejudice to the generality of paragraph (a) above, to secure that any United Kingdom operator by whom such services fall to be provided is able to finance the provision of those services.

        (2) Subject to subsection (1) above, the Secretary of State and the Director shall each exercise the functions assigned to him by this Part in the manner which he considers is best calculated—

        (a) to promote the interests of United Kingdom consumers (including, in particular, those who are disabled) in respect of the prices charged for, and the quality and variety of, services provided and apparatus supplied;

        (b) to maintain and promote effective competition between United Kingdom operators;

        (c) to promote efficiency and economy on the part of United Kingdom operators;

        (d) to promote research into and the development and use of new techniques by United Kingdom operators;

        (e) to enable United Kingdom operators to establish and maintain a predominant position in the field of telecommunications;

        (f) to encourage foreign users to establish places of business in the United Kingdom;

        (g) to promote the provision of international transit services by United Kingdom operators; and

        (h) to maintain and promote competitive activity on the part of United Kingdom operators in markets outside the United Kingdom.

        (3) This section does not apply in relation to functions of the Secretary of State which are exercisable in the interests of national security or relations with the government of a country or territory outside the United Kingdom.
        (4) In this section—
        "foreign user" means a user of telecommunication services outside the United Kingdom;
        "international transit service" means a telecommunication service consisting in the conveyance of sounds, visual images or signals which have been conveyed from, and are to be conveyed to, places outside the United Kingdom;
        "United Kingdom consumer" means a consumer, purchaser or other user of telecommunication services or telecommunication apparatus in the United Kingdom;
        "United Kingdom operator" means a person carrying on any of the following activities, that is to say, the provision of telecommunication services in the United Kingdom, the production and supply of telecommunication apparatus in the United Kingdom and the export of such apparatus from the United Kingdom.'.—[Mr. Kenneth Baker.]
        Brought up, and read the First time.
        Mr. Speaker: With this it will be convenient to take the following amendments to the new clause: (a), in line 1, after 'shall', insert `have the duty to'.
        (b), in line 3, leave out from 'Kingdom' to 'such' in line 4.
        (c), in line 5, leave out 'reasonable'.
        (i), in line 5, leave out `demands' and insert 'needs'.
        (d), in line 6, after second 'services', insert 'services for residential subscribers'.
        (e), in line 10, at end insert
        'on a stable and long-term basis'
        (f), in line 17, leave out paragraph (b).
        (g), in line 24, leave out paragraph (f).
        (h), in line 27, leave out paragraph (h).
        Government amendments Nos. 5, 10, 12 and 13.
        The Minister for Industry and Information Technology (Mr. Kenneth Baker): I beg to move, That the clause be read a Second time.
        I shall first speak briefly to the four Government amendments, which have been grouped with new clause 1.
        Government amendment No. 5 is entirely consequential, in that it takes the present clause 3 out of the Bill, because new clause 1 will replace clause 3 of the Bill.
        Government amendment No. 10 is consequential.
        32
        Government amendments Nos. 12 and 13 refer to a point raised in Committee. It was put to me that when matters were referred to the Monopolies and Mergers Commission the range of considerations which it would have to take into account was far too wide. I was asked to narrow it, and, in effect, that is what the amendments do. It will mean that the Monopolies and Mergers Commission will also be bound by the new clause that we are about to discuss.
        New clause 1 is a very important clause. It replaces clause 3 of the Bill as originally introduced and sets the framework of general duties regulating how the Secretary of State and the Director General must exercise their functions under part II of the Bill. Its influence is very wide-ranging. I should, therefore, like to explain to the House both the provisions of the new clause and how it will operate when the Bill comes into effect. Although it is tabled as a new clause, most of the ideas it contains will be familiar to the House, or at least to those of us who served on Standing Committee H, which spent a substantial proportion of this parliamentary Session considering the Bill, starting on 9 December last year and finishing on 10 March this year.
        Clause 3 of the Bill, as introduced, was debated for over 60 hours by the Committee, which, if not a record, is an

        33
        extraordinary length of time to debate a single clause. But, as I have said, it is an important clause, and I have been very willing to consider the comments that have been put to me by hon. Members on each side and by outside interests. I told the Committee that the Government appreciated its concern and would consider changing the clause to meet its comments. In the event, I have decided that, rather than simply tabling amendments, it would be more convenient for hon. Members if I recast the whole clause. The new clause now before the House is the recast clause.
        The new clause imposes duties on both the Secretary of State and the Director General when carrying out their functions under part II of the Bill. It might therefore be helpful if, before turning to the detailed provisions of the new clause, I briefly outlined those functions.
        The most important function is licensing, since in future all those wishing to run telecommunication systems will require to be licensed. This will apply equally to British Telecommunications, which will lose its exclusive privilege and will operate under a licence just like any other operator. Licences granted under the Act will give permission both to run telecommunication systems and to provide services over those systems. Licences will also set out the conditions under which the system must be run and the services provided.
        The terms and conditions of the licence to be granted to BT are obviously of central importance and great interest. That is why, on 25 January, we published a document setting out our preliminary views on what BT's licence should contain. Our views had to be preliminary because the eventual licence to be issued to BT will need to take into account the amendments to the Bill made by this House, including the amendments we are discussing at this moment. We also want to take fully into account comments made by interested parties. I am grateful for the comments that we have already received on the document but of all the BT unions I have had so far only the views of the Post Office Engineering Union. I would welcome the views of the other unions. I also want to discuss the BT licence with the National Farmers Union before the legal document is drawn up.
        The primary responsibility for issuing licences and fixing their initial conditions will lie with the Secretary of State. When doing so, he will be duty bound by the provisions of the new clause which we are now debating.
        The new Director General of Telecommunications will also have licensing functions. Those functions include the granting of licences if the Secretary of State authorises him to do so, but I must stress that the major licences—those which will be issued to public telecommunications operators such as BT, Hull, Mercury and the two radiotelephone networks—will be issued by the Secretary of State alone. The Director General will also keep under review the observance of conditions in licences and will have powers to enforce compliance with such conditions if he discovers that they are not being observed. The Director General will also have power to modify licence conditions. In exercising all those licensing functions the Director General must act in accordance with the general duties laid down in the new clause. The same duties will apply to the Monopolies and Mergers Commission when it considers licence modification references.
        The second main function of part II of the Bill concerns the setting of standards for, and the approval of, apparatus which is to be connected to telecommunication systems.
        34
        Standards and approvals are vital in order to protect people working on telecommunication systems, and the systems themselves, from dangerous voltages and to prevent any impairment of the services provided over those systems caused by the connection of unsuitable or unapproved apparatus.
        The third main function under part II is the approval of contractors for the installation and maintenance of such apparatus. Both the Secretary of State and the Director General can exercise these functions, and they will need to operate within the general duties laid down in the new clause. Before leaving those functions I should mention that the Government do not intend to use their powers to approve apparatus or contractors so as to interfere with BT's freedom to install the apparatus of its choice and to maintain that apparatus in the core of its network. BT's licence will reflect this.
        I do not want to dwell on any of those functions at length now but I hope I have said enough to give guidance to the House in its consideration of the new clause.
        I should now like to turn to the detailed provisions of the new clause. Essentially it sets out what I believe are our national United Kingdom telecommunications objectives. It will provide a clear and consistent basis from which the whole United Kingdom telecommunications industry—not just BT but all others who may enter the market—can expand and develop. This will bring benefits not only to customers but to the companies themselves, and not least to the people who work in them.
        I do not deny that the Bill as a whole represents a major change. I make no apology for this and I believe that we are doing what is needed. Transferring BT to the private sector will have benefits for consumers, for manufacturing industry, for all those who depend on telecommunications and, indeed, for those who work in BT.
        I realise that many people are concerned about the effects of our proposals. Many of those expressing concern have been misled by people who have a vested interest in preserving the status quo. That development is wholly regrettable and many people have been caused needless anxiety. Whatever its cause, however, the Government recognise that concern is widespread and that it is genuine. Many people fear for the future of services to the ordinary consumer, to those living in rural areas and to disadvantaged groups such as the deaf and the blind. As I have said, those concerns are genuinely felt, but I wish to make it clear that these are services which we are absolutely committed to preserving. Indeed, we have made that clear ever since we first announced our proposals.
        As my right hon. Friend said when he first announced the proposals in July last year, anyone who has access to a telephone under present arrangements will continue to do so under the new arrangements. Since then, I have given innumerable reassurances on this point and I believe that they have, in the main, been accepted. Certainly, there is now a much better understanding of our proposals.
        One of the causes of concern was that clause 3 originally set out "guidelines" to which the Secretary of State and the Director General merely had to have regard. People felt that mere guidelines could be overlooked and other matters could be taken into account. To answer that concern, we have recast clause 3 so that it imposes positive duties on the Secretary of State and the Director; the new clause lays down that they "shall" exercise their functions

        35
        in the manner that they consider best calculated to secure the objectives set out in the new clause. I believe that that significant change will reassure all hon. Members.
        The new clause also imposes a series of duties similar to those in the original draft but expanded and better defined in some cases. The paramount duty is in subsection (1)(a). That not only continues the obligation in the existing legislation that there should be a telephone service throughout the United Kingdom, but extends it to cover telecommunications of all kinds. Whereas the existing obligation extends only to a single telephone instrument, the new duty extends to all kinds of telecommunication apparatus. That is a significant improvement, especially for rural areas. Whereas the existing obligation cannot be enforced in the courts, any failure by the Secretary of State or the Director to act within their general duties could result in their being taken to court. That is a further significant safeguard.
        Subsection (1)(a) mentions specifically for the first time in telecommunications legislation services to rural areas, telephone call box services and emergency services. Those are areas where there has been special concern, and the House will want me to explain how our proposals will operate in practice.
        Mr. Tom Ellis: Does the Minister mean that if a community council in a rural area felt that the provision of telephone kiosks in its district was not adequate, it could go to court and get a judgment?
        Mr. Baker: Yes. If the council were satisfied that the Secretary of State or the Director General were not observing the duties placed upon them, the action suggested by the hon. Gentleman could be a consequence. I shall deal later with kiosks in rural areas.
        Many fear that services in rural areas will be reduced, that their quality will be diminished or that the cost of rural services will increase. I can say that services will continue to be provided. BT already provides a universal service and the licence to be granted to BT plc will oblige the new company to provide all the telecommunication services which it is practicable to provide and which satisfy all reasonable demands in all parts of the country. If BT fails to provide service or attempts to withdraw service from an area, the Director will have powers to make orders to force BT to continue to provide service. Those are much greater than the powers of Ministers under existing legislation.
        BT's licence will also prevent a diminution of quality; BT will not be permitted to exercise any undue discrimination against any group of persons, and that will apply to customers in rural areas. Moreover, BT will be obliged to provide all forms of telecommunication services in all parts of the country. New technology is expected to improve the quality of rural services.
        Fears about higher prices in rural areas are unfounded; there is no evidence that it costs more to provide service in rural areas than in cities, since overhead wires are far cheaper than underground wires.
        Mr. Tony Marlow: Originally, the Director General had a series of guidelines. He is now to be given a series of duties. They will be the law of the land and will enshrine special protection for those in rural areas. My hon. Friend has said that there is no evidence to show that it costs more to provide services in rural areas than in urban areas such as my constituency.
        36
        My constituents will want to know why the interests of rural areas are picked out in the law of the land in such a way that my constituents' interests are not safeguarded.
        Mr. Baker: My hon. Friend made that point repeatedly in Committee—
        Mr. Stan Thorne: Ad nauseam.
        Mr. Baker: No, fluently and eloquently. It is a fair point. We have changed the Bill because there is genuine anxiety and a prima facie case, though it is not supported by any figures that I have seen, that services in rural areas are more costly to maintain than those in urban areas.
        My hon. Friend refers to discrimination against a group of customers. BT will not be allowed to discriminate unduly against any customers, whether in rural or urban areas. That is the direct answer to my hon. Friend.
        Mr. Orme: The hon. Member for Northampton, North (Mr. Marlow) said that the Director General will have duties to ensure that services are provided, but the Minister has not provided for that in the new clause. The important paragraphs (a) and (b) in subsection (1) are treated in the same manner as other paragraphs in the clause.
        Mr. Baker: The right hon. Member has tabled an amendment on that point. We shall deal with that later, but I am advised that it is unnecessary, because we do not need to use the word "duty". The new clause is specific in saying:
        "shall … exercise the functions assigned to him by this part in the manner which he considers is best calculated".
        The Department's legal advisers tell me that that is the same as using the word "duty", but perhaps we may debate that later.
        Mr. Richard Shepherd: I hope that my hon. Friend will continue to give way when asked to do so, because the new clause has been sprung on us and includes fundamental duties and rights. Are the words
        "which he considers is best calculated"
        challengeable in the courts?
        Mr. Baker: Yes. It is a matter of judgment. The judgment of the Director General or the Secretary of State in providing a universal telephony service or other functions under the Bill would be challengeable.
        Mr. Peter Temple-Morris: Is my hon. Friend saying that the reference to duties in the title of new clause 1
        "General duties of Secretary of State and Director"—
        has the same statutory weight as the word "duty" would have in the clause?
        Mr. Baker: I am advised that the words
        "The Secretary of State and the Director shall each exercise the functions assigned to him by this Part"
        are equivalent to imposing a clear duty on both of them to fulfil the functions under the clause. As I said, there is no evidence that it costs more to provide services in rural areas than in urban areas. Some senior managers in BT have told me that there is some evidence that rural services may subsidise some urban services.
        Nevertheless, there are some remote areas, where pole lines suffer from weather damage, where services are more expensive to provide. I am exploring with BT whether the access charges that I shall discuss shortly will contribute to the cost of services in remote areas or whether the BT licence should require BT to charge customers in all areas the same amount for the maintenance of the line from the

        37
        customers' premises to the exchange. I can, however, assure the House that we are determined that customers in rural and remote areas will not suffer price discrimination once they are connected to BT's system.
        Mr. A. J. Beith: I hope that the Minister will realise that, despite the important general point that he has just made, differential pricing under the present system operates against the rural consumers and their access to the system. I can tell him of a recent case in my constituency where someone was quoted £4,500 to have an ordinary domestic telephone connected. That figure was reduced to £3,200 after prolonged discussions in which I took part, but that was still the bottom line under the present system. Therefore, even under the present arrangement there is a serious problem, which everyone feels will become a great deal worse.
        4.30 pm
        Mr. Baker: I shall deal with the installation charge later. Hon. Members who served on the Committee will know that we dealt with that matter at some considerable length. The position on installation charges under the Bill is greatly improved for the potential subscriber. If a subscriber, as in the case mentioned by the hon. Gentleman, is quoted £4,500, at the moment he can go to his Member of Parliament, who can try to negotiate a reduction. However, I have no powers as a Minister to deal with BT or to examine whether the charge is justified. Under the new arrangement, the subscriber can approach the Office of Telecommunications, which will be able to investigate the basis of the charge to see whether it is reasonable and can go to the extent of getting a second quote for the laying of that line. If the new charge came out at a much lower figure, the Director General of Oftel could then instruct BT to install the phone at the lower figure. This is a considerable improvement on the existing position. I shall deal with the level of installation charges later because I appreciate that it is a matter of concern, particularly for those living in rural areas.
        Subsection (1)(a) means that the Secretary of State must, when issuing licences to telecoms operators, include in one licence, or in as many licences as he sees fit, conditions whose effect is to secure provision of the services covered by this subsection. If he did not, the Secretary of State would be open to challenge in the courts. The Director General is similarly bound by this duty. Thus, if he received a complaint that a licensee was refusing to supply a telephone in a particular rural area despite being obliged to do so by a condition in its licence such as I have just mentioned and then failed to take action to ensure compliance, the Director General could be compelled, in the courts if necessary, to ensure that the licensee took such action necessary to comply with the condition. I do not believe that this action in the courts will be necessary, but the possibility, which is not permitted in present legislation against BT, gives powerful confirmation that this is a major advance for consumers.
        However, it might be argued that, although the initial licence will contain conditions safeguarding the rural areas and the social services, these could be removed at a later date. The answer is a categorical no. I have explained that it is the Director General who is responsible for changing conditions either by agreement with the licensee or following a reference to the Monopolies and Mergers Commission. There is no question of the Director General
        38
        and BT getting together, for example, to remove the condition relating to the provision of telephone kiosks because the Director is duty bound by this clause so to exercise his power to ensure that the service is provided. If he did not, he could be challenged in the courts. Indeed, I could so challenge him.
        I should like also to mention briefly the qualifications of reasonableness and practicability mentioned in subsection (1)(a). Concern has been expressed that these severely diminish the safeguards that this paragraph otherwise provides. That is not the case. The words
        "save in so far as the provision thereof is impracticable or not reasonably practicable"
        —phraseology for which we are indebted to my hon. Friend the Member for Leominster (Mr. Temple-Morris)—simply repeat, word for word, the qualifications in the British Telecommunications Act 1981. The purpose of such qualifications is simply to prevent the obligations imposed on licensees front being unworkable because of the impossible or completely unreasonable demands that they impose. I point out that the wording of these qualifications in the Bill as it was introduced was slightly different, but I have followed the advice of the Committee and of the unofficial legal adviser to the Committee, my hon. Friend the Member for Leominster.
        I should like to expand briefly on two other points of particular concern—the 999 service and the provision of telephone kiosks. I do not think anyone would dispute the fact that the 999 emergency service must continue, That is why it is specifically mentioned in the legislation. Indeed, some might think it surprising that it has not been included before in previous legislation. However, the Bill will put this right. We have already made it clear that BT''s licence will oblige it to continue to provide this service free of charge—thus preserving an especial feature of our emergency services which is not always found in other countries. We also propose that other major telecom operators such as Mercury, Hull and possibly the two national radio telephone companies will also be obliged to provide access to such services.
        Mr. Orme: I am interested in the hon. Gentleman's point, which, as he knows., was of considerable concern in the Committee. Will the 999 calls still be used through operators and, therefore, will BT maintain its staff, or will there be a different system?
        Mr. Baker: That is not for me to answer but for the management of BT, which will determine how the service will be run. I am aware of the concern and anxiety, particularly of the Union of Communication Workers, which will no doubt be expressed. I am sure that BT management will take note of what is expressed in the House, but this is essentially a matter for it.
        I doubt whether anyone here could doubt the value of telephone call boxes, almost all of which are open 24 hours a day. Apart from my hon. Friend the Member for Northampton, North (Mr. Marlow)—who is unfortunately not with us at the moment, although I am sure that that is by accident—who has told us that he always loses his money when he tries to make a call, what hon. Member has not at some time given thanks for the assistance offered by a call box? Not only are call boxes of great value to those who do not have a phone of their own; they are even more important in an emergency, as the majority of 999 calls are made from call boxes. The new clause ensures

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        that call boxes will continue to provided, but the House might like to know a little more about how we intend to ensure that.
        As many hon. Members will know, there are at present guidelines agreed between BT and the Post Office Users National Council governing when the least-used call boxes can be removed. When a call box takes less than the agreement says, that call box becomes a candidate for removal. The figure is below £200 in revenue. I think that it is a sensible arrangement as it enables there to be flexibility in the positioning of kiosks while protecting the interests of those wishing to use the network. We intend that the director should continue to operate broadly similar arrangements. We propose to include in BT's licence a condition obliging BT to continue to provide the call boxes installed at present and not to withdraw any call boxes except in accordance with procedures agreed with the Director. This arrangement means that the obligation to provide call boxes can be enforced whereas at present BT is under no obligation to provide any call boxes. BT has, of course, provided the existing network of call boxes without an obligation and has followed the POUNC guidelines.
        Mr. Beith: I wish that the Minister would not sound so satisfied with the arrangements for the call boxes that take less than £200, of which there are many in remote places. Will he bear in mind that many people travelling, including country people going about their work, will put a small coin in one of the boxes and then be called back from their office to the box from where they are calling? This depresses the revenue of the box, and when the figures are applied they can lead to the removal of boxes that are essential, and have done so in a number of cases. I hope that the Minister will not continue to express such satisfaction with these arrangements. It is because of them that my hon. Friends and I are worried about the word "demand". We have sought to substitute "needs" for "demand" because we have related "demand" to this provision, which suggests that a box taking less than £200 is not in demand, whereas it may be in great demand.
        Mr. Baker: The cost of maintaining each box is more than £2,000 a year, so there must be some measure of revenue against which the box will be considered for closing. However, I do not want the House to have any impression that there have been massive numbers of closures of telephone kiosks—there have not. The numbers for each year are very modest. In 1979–80, 32 were closed, in 1980–81 it was 30 and in 1981–82 it was 63. These are modest closures and may reflect the change in the pattern of living in the community. I assure the House that for the first time in legislation, a duty and obligation to provide telephone kiosks on a national basis is now enshrined in statute.
        Mr. Charles R. Morris: The Minister said that all licensees would have an obligation to provide access to emergency services such as the 999 services. Are we to assume from that that all licensees will share in the financial obligation of providing such services?
        Mr. Baker: I shall come to that in a moment when I deal with access fees. But first let me complete my
        40
        remarks about telephone kiosks. One has to measure the number of closures against the extensive network of telephone kiosks. There are more than 77,000 in the country. They provide an invaluable service not only to remote areas but in urban areas, at railway stations and in areas where the provision of telephones in the home is not very great. We want that service to be continued.
        Mr. Marlow: My hon. Friend said that it cost £2,000 to maintain a telephone kiosk. Does that mean that for each telephone kiosk that is removed there is a saving of £2,000, or is my hon. Friend talking about the average cost over the whole system being £2,000?
        Will there be any change since, at the moment, if a kiosk is threatened with closure the public have access to my hon. Friend whereas in future their only access will be to the Director General? My hon. Friend is talking about what he is telling the Director General at this stage. When the Director General is more free-standing than my hon. Friend is describing at the moment, will not the public's access to the political situation be rather less than it is at the moment?
        Mr. Baker: It is so remote to Ministers now that I cannot recall over the past two and a half years ever having had a letter from an hon. Member about the closure of a telephone kiosk. Even if I had, I remind the House that I do not have any powers to stop BT. In the future, the complainant—it could be a person or a local authority—could complain to the Director General of Oftel, who would be obliged to examine the matter. He would have to be satisfied that the guidelines were followed before action was taken. It means a considerable improvement for consumer interests.
        I turn to subsection (1)(b), which concerns the need for those persons providing the services mentioned in subsection (1)(a) to be able to finance those services. This duty is of equal importance to paragraph (a), and I may anticipate some questions if I explain why.
        The effect of subsection (1)(b) is to ensure that neither the Secretary of State nor the Director General exercises his functions in such a way that the operators are unable to finance, both in the immediate future and thereafter on a continuing basis, the services that their licences oblige them to provide. For example, as I told the House on 7 February following the publication of the Littlechild report, we intend that any increases in BT's prices in some of its monopoly areas such as local calls and residential rentals shall be limited to less than the rate of inflation. This limitation, which will be contained in the RPI minus X formula, will take the form of a condition in BT's licence, but paragraph (b) means that the Secretary of State could not set the value of X, nor the Director General and the MMC change it, to such a low level that BT could not finance the service that it was obliged to provide. That is a considerable protection which I am sure that the House recognises.
        I have dealt with subsection (1) at some length because it is of fundamental importance. In short, subsection (1)(a) imposes on the Secretary of State and the Director General a duty to use their powers in the way best calculated to ensure that a universal service is provided, so that services are provided in rural areas and so that emergency services and call box services are provided. Subsection (1)(b) provides that they will act in the way best calculated to ensure that operators can finance these services. These

        41
        fundamental duties are recognised in the new clause as being more important than the duties set out in subsection (2), and the duties in subsection (2) are specified as being subject to subsection (1). Thus the duty, for example, to promote consumer interest in low prices is made subject to the overriding duty to ensure that action to encourage low prices does not damage the ability to finance the universal service. As hon. Members will recognise, this set of overriding duties in subsection (1) corresponds to the needs of old clause 3, while the secondary duties in subsection (2) correspond to the desirabilities in that clause.
        4.45 pm
        Mr. Donald Stewart: Although I acknowledge the apparent practical safeguards in subsection (1)(a), will the hon. Gentleman clear my mind about paragraph (b)? Does that mean that if an operator could prove that these services were uneconomic, he would no longer be under any obligation to maintain them?
        Mr. Baker: I shall come to that in a moment. I know that it is a matter of great concern. It is all very well to oblige BT to provide a universal service, but, the right hon. Gentleman wishes to know whether, if it becomes uneconomic for it to do so, there will be a let-out. I shall deal with that specifically, because we have an arrangement to ensure that it can be properly financed.
        Mr. Richard Shepherd: Subsection (1)(b) raises the spectre of cross-subsidisation. In Committee, we had very little discussion of what that leads to in terms of the misallocation of resources and investment decisions. Therefore, given the Littlechild proposal and given a respectable body of intellectual and academic opinion, I wonder why the Government have rejected the direct Treasury subsidisation of subsection (1)(a) which would identify clearly the costs attributable to and support the necessary services that we say are to be provided.
        Mr. Baker: Perhaps I may be allowed to answer that at the same time as I deal with the question put to me by the right hon. Member for Western Isles (Mr. Stewart).
        I want to deal now with the detailed provisions of subsection (2).
        Mr. Marlow: Before my hon. Friend moves to subsection (2), perhaps he will deal with one other matter. BT is to become a public limited company with shareholders. As I understand subsection (1)(b), it appears that the better that BT does, the more pressure the Director General will be able to put on BT to ensure that the services, priorities and duties set out in subsection (1)(a) are better effected. The more efficient and the more effective BT becomes, the more it will have to spend in satisfying the Director General about the rural areas, and so on. Is that not a rather invidious position in which to put a public company with shareholders? Does not it make nonsense of the arrangement?
        Mr. Baker: It is implicit in the legislation that, when converting a public monopoly into what for a time will be a private monopoly until further competition and new market entrants are allowed, the obligations must be carried by that company. We have to be satisfied, first, that the obligations for the services are imposed and, secondly, that conditions so operate that the services can be provided at an economic cost and nationally as well.
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        I move to the provisions of subsection (2), because I want now to deal with the questions put to me about subsidy and price restraint. It has been claimed that prices will increase after privatisation since BT will be under pressure to run each part of its business at a profit. Others have suggested that we should institute a scheme of price control with prices approved or set by the Director General to ensure that BT or other operators do not abuse their monopoly position.
        We have listened carefully to all these arguments, and I believe that we can say with confidence not only that fears about prices will be set at rest but also that elaborate schemes of price control are unnecessary. Past experience of much more limited price control involving only a restriction of price increases as opposed to absolute price fixing shows conclusively that this is likely to be counterproductive.
        We propose a number of steps which I believe are a much better approach and ensure protection of consumers' interests. On prices, I am convinced that competition, the subject of subsection (2)(b), is both the fairest and the most powerful weapon of price restraint. Nevertheless, we must be realistic and recognise that for the foreseeable future BT will be the dominant force iii the telecommunications market and for the majority of ordinary residential households the only supplier of a telephone line.
        That is why I told the House on 7 February that we proposed that prices for certain of BT's monopoly services, especially residential and local calls, should be limited initially for five years to less than the rate of inflation. Our minds are stall open on the range of services to be covered by the RPI minus X formula, and I was pressed in Committee to examine whether certain other items should be included in it. For example, several installation charges and international calls have been suggested for inclusion within the formula, and I am considering these at the moment.
        As with much of the regulatory framework, we must strike the right balance between preventing abuse of monopoly power and allowing BT the commercial freedom to achieve the expansion, growth and responsiveness that the Government and BT seek. Overall, the effect of our proposals is that privatisation and an end to direct Government controls should lead to a fall in prices in real terms during the next five years.
        Mr. J. Grimond: Is it correct that a freeze on prices would apply only to local calls? In the rural areas, especially in the islands, the most important calls are those to the county towns and outside the islands.
        Mr. Baker: The Littlechild report recommended that the control on prices should apply only to those areas of British Telecom's activities where there is, in effect, a de facto monopoly and it identified particularly the residential subscriber network. Price controls will not be needed as more and more areas are opened up to competition. Competition is opening up substantially on the trunk lines. Mercury will be offering services very shortly to the business world. That has led to the price of trunk calls being reduced by BT significantly. I am examining the question whether other matters should be included in the area covered by price control but they are, essentially, the residential, the rental and unit charges.
        Mr. John Golding: Is the Minister of State suggesting to the right hon. Member for Orkney and Shetland (Mr. Grimond) that Mercury will operate in the Scottish Highlands and Islands?
        Mr. Baker: Mercury, initially, will be operating a business service over the main city networks. Mercury, which will take some years to become established, cannot possibly compete with BT in the remote areas. BT will have a monopoly in those areas and the Government must ensure that that monopoly is not exploited and that the service continues.
        I wish to deal with the question of prices in rural areas, and specifically that raised by the hon. Member for Berwick-upon-Tweed (Mr. Beith). Again, his is a claim without foundation. When the House first debated the Bill last November, there was a fairly lengthy discussion about the costs of installation of a telephone to a constituent of the hon. Member for Whitehaven (Dr. Cunningham). As I explained, BT at present levies a standard charge when an installation takes no more than 100 hours. It is only when an installation is so difficult that it takes more than two-and-a-half weeks of one man's time that an extra charge is made. I do not find that unreasonable and I expect that BT would continue such arrrangements.
        In any event, customers will be in a stronger position in the future. At present, as I have already said, a customer has no formal means of complaint other than through POUNC but in the future, when BT's licence will prevent it from discriminating unduly against any class of customer, which includes those living in rural areas, any potential customer who thinks that the installation charge quoted amounts to undue discrimination will be able to complain to the Director General. Moreover, if the Director General considers the complaint justified, he will have powers—unlike POUNC—to oblige BT to reduce the charge to a level that is not unreasonable in the circumstances.
        Dr. John Cunningham: We have had this out many times in Committee. The House is going over the same ground. Will not the Minister admit that, because the Director General has to ensure that BT operates commercially, the reality is that in most cases he will have to accept BT's sums, even if a contractor is brought in to check the arithmetic and the calculations of cost? The net result will be a very high connection charge for many people in remote and rural areas.
        Mr. Baker: That certainly will not be the result.
        Mr. Marlow rose—
        Mr. Baker: Before my hon. Friend the Member for Northampton, North intervenes, let me say that connection charges can be high for those living in urban areas. Digging up a road can be complicated and expensive. The cases that are usually quoted are those in very remote areas where, often, a land line is insisted upon for environmental reasons in areas of unique natural beauty and matters of that sort. That is an obligation imposed by the state upon a particular operation. The dilemma that the hon. Member for Whitehaven and my hon. Friends referred to is the clash that exists between the duty to provide services in remote areas or 999 services and the duty to make a profit.
        I turn to the question of finance for such loss-making services, specifically the 999 service, call boxes and possibly—I emphasise the word "possibly"—services in
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        the remote areas. BT's system of accounting is undergoing a total reorganisation because it was accounted for on Treasury systems. There was only one cost centre in BT when it ceased to be part of a department. BT is now revising its accounts so that it can determine whether telecommunications in Scotland or Wales make money. The first indication from these revisions is that the rural areas make a positive contribution to the centre in terms of profit. When I say the "loss-making services", I do not necessarily include the rural areas, but if they were to be loss-making they would be included in that revision. As I have explained, it will be a duty of the Secretary of State and the Director General to use their powers in the way best calculated to ensure that the provision of these services is financed.
        Where is the finance to come from? Some have suggested that it should be from the Government or the taxpayer, since it is they who are imposing the obligations. One of the recommendations of Professor Littlechild was that there was a clear case for subsidy and it should be paid for by the taxpayer or the Treasury. The Government's experience of this in dealing with nationalised undertakings has not been happy. Having started down this route, the whole concept of a direct subsidy being met from the Exchequer has led to very high levels of subsidy in the provision of certain services in the United Kingdom. I have considered this but decided against it. Such a subsidy would only prolong day-to-day interference by the Government in BT's business and encourage complacency in both the quality and efficiency of the service. The chairman of BT agrees with this view and opposes subsidies from the taxpayer.
        I believe that the best way to secure the provision of these services and to avoid placing those who are obliged to provide them at an unfair competitive disadvantage is by the system of access fees, which I explained at some length in Committee and wish now to explain to the House.
        An access fee is a fee that will be payable by providers of services, including BT, when they connect into BT's local networks. It is these networks that provide the loss-making services that BT will be obliged by the terms of its licence to provide. On the basis of present information we know that there are two loss-making services, the call box network and the 999 service. It is possible, as I mentioned, that services in remote areas are also run at a loss, but there is no firm evidence of that. If this service were shown to be unprofitable, then it too would be covered by the access fee arrangements. The purpose of charging access fees is to provide local areas of BT with a source of finance to make a fair contribution towards the net cost of services that BT is obliged to provide and that make a loss. That is the basic outline of the scheme. The details are still to be worked out. It may be helpful if I briefly elaborate on one point.
        Mr. Golding: In Committee the Minister was pressed for details on the access fees. He said that he would ask the chairman of BT to produce a paper. He said:
        "I have written today to the chairman of BT and asked him for a paper to help the Committee to see exactly how it would operate."—[Official Report, Standing Committee H, 10 February 1983; c. 983.]
        We did not get a reply in time to help the Committee. Has the chairman sent the paper in time to help us at this stage?
        Mr. Baker: I regret to say that the chairman has not submitted a paper. The Government have started discussions at official level to determine the details of the access fee and the interconnect fee.
        Some people have expressed concern that while access fees are fine in principle they could be used to frustrate competition, which I believe was the point raised and the anxiety of my hon. Friend. For example, the fee might be set at such a level that competitors would find it hard to pay and to maintain a profitable business. However, BT will have to pay the same fees when a trunk call is connected to a local area, so that the fee should be fixed at a reasonable level.
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        Fears have also been expressed that the fees could be used to subsidise and disguise inefficiencies in other activities apart from the specific loss-making obligations. Indeed, my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) raised that point. I can assure the House that we are aware of those concerns and I intend that the Director General shall ensure that the access fee arrangements are not abused in that way.
        Dr. John Cunningham: It is most unsatisfactory that when we discussed this issue in Committee almost two months ago we were promised some detailed arguments about access fees and that the chairman of British Telecom, who has had every opportunity since then to provide the Government and the House with the paper, has failed to do so. Since we are told that there will be an entirely new way of financing important services, the House is entitled to be given the information.
        Mr. Baker: Obviously, I would have preferred to be able to provide the House with a paper from the chairman of BT. However, the principle of the access fee is established and determined. The chairman of BT and his management believe that there are matters of detail that have to be pursued. However, we have established the principle and the details can be discussed between my officials and those of the chairman. I repeat the assurance that I gave in Committee that the fees will operate and will be set at a level that will ensure the provision of the necessary, subsidised social services.
        Mr. Richard Shepherd: Professor Littlechild's comments showed the anxiety that most people have that cross-subsidisation may lead to the misallocation of resources and is thus against the interests of the community as a whole. By identifying the costs that need to be subsidised and paying for them by Exchequer grant, the possibility of cross-subsidising other areas and of misallocating resources is more likely to be eliminated. My hon. Friend should address his remarks to that argument.
        Mr. Baker: I shall try to do so. My hon. Friend's point is important, but if an Exchequer subsidy was applicable to the social services, the Government would have to be satisfied that the costs were truly borne and that the services of telephone kiosks in remote areas and 999 calls were properly incurred, and a whole team of people would have to be engaged in doing that. At present, we do not have a team doing that. One of Oftel's purposes would be to respond to complaints about prices not only from the public but from other public telecommunications
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        operators. Oftel would be able to satisfy itself that the access fees were set at a level that would cover only the specific services mentioned in the clause.
        Mr. Richard Shepherd: Does not my hon. Friend therefore have to satisfy himself that those charges are reasonable and fair to ensure that subsection (2)(a) is satisfied?
        Mr. Baker: I do not have to satisfy myself of that. We have debated this issue at some length. The whole history of the regulation of private and public monopolies in America shows that one cannot follow the route of cost allocation in determining whether the charges are reasonable and fair. Indeed, the whole system has broken down in America and it has proved that that is not the path to follow. The purpose of the regime of control that we are operating is to have the blanket overall cover of Professor Littlechild of the retail price index minus X. That provides the telecommunications consumer in this country with the greatest protection that he has ever had. There will be a right of complaint by public telecommunications operators to the Director General of Oftel in respect of access fees.
        Mr. Marlow: What safeguards will there be against the escalation of access fees? It has been said that an element of subsidisation may well be needed in the remote areas. What will prevent Mercury, which will make massive investments for the future and will look for a return on those investments over many years, from being in the position of ratepayers and commuters on whom excess charges can be levied each and every year while there is nothing that they can do about it?
        Mr. Baker: My hon. Friend has made an important point. The answer is that the onus will be on BT to prove to the Director General of Oftel that those services lose money. The Director General of Oftel must be satisfied of that. He can examine the details and, indeed, the whole case, and will do so on a continuing basis. The operators—Mercury, Hull and the two radio telecommunications networks—will have the right to complain to the Director General of Oftel if they think that the charges are too high. The rest of FT's network must also account internally for the access fees as otherwise it might lead to the real possibility of cross-subsidisation. It must also make its accounts transparently available to the Director General to satisfy him that it is not subsidising other activities by means of the access fee arrangements, at the expense of other competitors in the market.
        I hope that I have gone some way towards satisfying my hon. Friends. I have tried to deal with the access fee. I do not want the access fee arrangements to be abused and I intend that the Director General shall ensure that they are not. The licence condition that I have already mentioned, preventing undue discrimination, will apply to the access fee element of interconnection charges, as to other charges. We intend that before the fee is set, BT and the Director General must agree the accounting policies on which the loss for the service in question is calculated and also on the particular services eligible for inclusion in the access fee. Finally, we intend that the revenue that BT's local network receives from the access fee shall not exceed the losses on the eligible services.
        I turn now to the other duties placed on the Secretary of State and the Director General, which are listed in

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        subsection (2). I think that these aims are largely self-explanatory, but the House might find it helpful if I briefly nm through them. I do not think that anyone would dispute the importance of subsection (2)(a) on the interests of consumers. Some have said that that should take precedence and therefore should be upgraded to subsection (1). However, we have taken the view that the consumers' interest in the provision of a universal service takes precedence over their interest in low prices and that, if necessary, prices should be increased—for example, by the access fees—to finance the universal service.
        The duty in subsection (2)(a) is not dissimilar to the guideline that exists in the original clause 3, but there is one important difference. I have included a special reference to the disabled, which is something that I promised the Committee. But its inclusion is more than simply fulfilling a promise. It is an important step forward in safeguarding the interests of disadvantaged groups.
        As some hon. Members will be aware, there are a number of pieces of apparatus supplied at present only by BT which are specially adapted for the use of disabled people. Two examples are: first, inductive couplers in ordinary telephones which enable the partially deaf to use them in the normal way; and secondly, the adaptations made to private automatic branch exchanges which enable them to be operated by blind persons who can benefit from the job opportunities thereby opened to them. At present the Manpower Services Commission can help finance these adaptations, and we are considering whether these arrangements are sufficient. We want these benefits to continue and subsection (2)(a) requires the Secretary of State and the Director General to carry out their functions to ensure that they do. The ways in which they will do this include the inclusion of appropriate conditions in licences and the inclusion of appropriate requirements in the standards and approvals for apparatus. The exact requirements for both are not yet finally decided, but are being carefully considered in consultation with all interested parties. I am sure that the House welcomes that provision.
        The duty in subsection (2)(b) encapsulates one of the main features of the telecommunications policy we have been pursuing ever since we came to power. We believe that competition is the key to achieving the expanding and dynamic telecommunications industry that is our main objective, and one that I would have thought Opposition Members would share. Competition in price, quality and variety of services will provide the consumer with maximum choice and the opportunity to obtain the services which best suit his needs. It will make the providers of such services responsive to the wishes of consumers and will stimulate them to develop new services to meet demand.
        Since we came to office we have taken a number of measures to promote competition and encourage market entry. We have already liberalised the supply of many kinds of telecommunication apparatus, and when the end of the phasing-in period is reached in July we shall have gone a long way towards freeing the supply of such apparatus. We are now seeing encouraging signs that more and more companies are entering the market. We have licensed Mercury to run an alternative national telecommunications network and have announced our intention to license two national cellular radio companies.
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        We have also issued a general licence for value added network services, of which so far 33 companies have taken advantage.
        In addition, on 7 February I announced further measures to increase the scope of competition. In particular, I announced our intention to end the prime instrument monopoly and BT's monopoly over the maintenance of call-routing apparatus. I announced also that we accepted the principle of reducing restrictions on resale of capacity on private circuits leased from BT, and finally other public telecoms operators, and that the restrictions on Mercury's supply of international services should be eased.
        The whole Bill, and clause 3 in particular, are designed to further this process of promoting competition and encouraging market entry. We have achieved a lot so far in a short space of time, but I believe that it will be impossible to fulfil our aims unless all competitors are on equal footing. Parts II and III are designed to achieve this. The process will, however, not be complete while BT remains a nationalised industry. Part IV, of course, remedies that by providing for the conversion of BT into a public limited company.
        Mr. Richard Shepherd: Some anxiety has been expressed that the Bill is not an engine in itself to promote competition. In what way does the Director General promote competition in the issuing of licences? Is it incumbent upon him to issue a licence when it is applied for in the absence of certain criteria—against the interest, and so on? Otherwise, could we not come to a complete halt after the limited introduction of competition that has already taken place? Is that not, therefore, dependent on the good will of the Secretary of State or his successor?
        Mr. Baker: Both the Secretary of State and the Director General "shall each exercise" his function in the manner which he considers is "best calculated" to promote competition. There is no doubt that with the present Government in power, and with my right hon. Friend and myself in charge of policy, we are clearly in favour of market entry. We have made rapid progress in that direction in a quite unprecedented way. As I have said, I think that our example will be followed by other countries in the next few years because I do not believe that this great and expanding industry can be dominated by monopoly. The Director General, quite apart from the Secretary of State, will also have to exercise his functions to maintain and promote effective competition. Even if the Secretary of State were hostile, in many ways we are setting up a regulatory regime that is separated from political control. I should have thought that Opposition Members, including those who occupy the Liberal and SPD Benches, would welcome that. We are removing much of the control and influence that were operated by successive Ministers on our public telecommunications system. That is surely right.
        The issuing of licences can be delegated to the Director General of Oftel, and we envisage that certain general licences would be delegated. However, as I said earlier, we do not envisage delegating to the Director General of Oftel the issuing of licences to further public telecommunications operators. They are highly important licences, because public telecommunication operators are given various privileges under this legislation and under law, and in our view that responsibility should remain with the Secretary of State.
        Mr. Golding: I understand that the Director General will not be authorised to issue further licences to public telecommunications authorities. Does the Minister of State intend that the number of public telecommunications licences be confined to the three we have at present—that is, BT, Mercury, and Hull?
        Mr. Baker: At present the public telecommunications operators that we envisage licensing under the legislation will be BT, Mercury and Hull and two radio-telephone networks. There is to be a debate later about cable systems and the extent to which they are telecommunications systems. It is not our intention in the foreseeable future to go beyond that.
        5.15 pm
        Mr. Richard Shepherd: First, does not my hon. Friend's statement contradict his declaration that we are trying to advance the frontiers of competition, and is it not, therefore, against the public interest? Secondly, if, as I understand and as reported in yesterday's papers, a major union concerned in British Telecom decides effectively to inhibit competition and thus limit consumer choice, and so on, in what way can the Secretary of State or the Director General of Oftel insist upon competition coming into being?
        Mr. Baker: Perhaps I might deal first with my hon. Friend's last point about the story that appeared in The Observer yesterday, saying that the Post Office Engineering Union was threatening not to connect Mercury, and thus deprive it of the possibility of interconnecting with the BT network. It is a matter of crucial importance, because I know that Mercury causes genuine worry and anxiety within BT. Recent press reports about the indefensible policy of the Post Office Engineering Union towards co-operation with Mercury stem from that anxiety. Many of those who work in BT's middle management and in the telephone areas are worried about Mercury and the whole idea of competition. They have been insulated from competition for 70 years or more and have devoted their working lives to building up a monopoly national network. They now see that significant changes are taking place, and they fear that competition will damage BT and the network.
        I ask the House to accept that this anxiety and fear are real. None of us likes change, or too sudden a change. I would like to assure the House that Mercury itself is not a threat to BT. Competition in telecommunications is not like a boxing or wrestling match where both combatants attempt to knock the other to the ground. Telecommunications, instead, is a huge and rapidly growing market, the most rapidly developing industry in the world, and the revolution in communications and information technology means that there is room for both BT and Mercury to prosper, but by collaboration, not by confrontation. Experience in America shows that competition between telecommunication companies increases employment and revenues while improving quality.
        The way forward for those in BT who are concerned is to increase their efforts to ensure that BT itself provides the best service. This means collaborating with the BT board to reduce the cost of telephone services.
        The wrong way forward would be to black Mercury or to try to block its development, as advocated by some
        50
        members of the POEU. If the POEU did that, it would be seen as an attempt to frustrate the development of Mercury. That would be seen as a naked attempt to defend a vested interest. The House will remember that the POEU also pursued it own narrow interests in 1977–78, when it did serious damage to business and industry by its refusal to collaborate in the connection of new equipment.
        The problem of Mercury interconnect, which lies behind the recent articles, is covered by a commercial agreement between BT and Mercury. The Government did not instruct BT or Mercury to make the agreement and the arrangements for putting it into effect are a matter for the two companies. I do not want to enter into discussion about the detailed arrangements but I can assure the House that the board of BT knows that the Government expect it to honour its agreement with Mercury. The Government are confident that that will be honoured.
        Mr. Richard Shepherd: As I understood it, my hon. Friend has just listed the way in which he is inhibiting competition. He said that there would be only three licensees, and I said that that seemed to be a contradiction.
        Mr. Baker: My hon. Friend should first recognise the enormous amount of market entry that we have allowed over the past three years. That has been on an unparalleled scale in the history of telecommunications. My hon. Friend seems to give scant regard to that. I know that he is ambitious for the future but he should first recognise what we have done. We have allowed competition to come in and apparatus to be sold, and that is by no means marginal. The fact that the Post Office Engineering Union is considering the action that it is means that it is worried about it.
        It is significant that we have allowed two mobile telephone networks. We are moving rapidly into cable television, and those local networks will be capable of taking data transmission. All that involves considerable competition. We have already said that there are 33 companies that are already operating value added network services. There were none doing that legally before. I have already said that I am looking at resale and that I intend to ease restrictions on Mercury's international business.
        Mr. Richard Shepherd rose—
        Mr. Baker: I must continue if my hon. Friend will allow me.
        When competition is introduced into an area that has been subject to monopoly for 70 years it must, by its very nature, take some time. For example, we found in 1980 that virtually all the expertise in telecommunications equipment—standard-writing and testing—was in BT's hands. BT had the engineers and the expertise. It has taken us nearly three years to set up a separate testing and standard-writing arrangement. It takes a long time to write standards for telecommunication equipment. It takes between a year and 18 months, and that is after we have given more resources to that process. My hon. Friend should recognise that we are moving rapidly and want to see as much competition as possible. At the same time, it must be done in a mature and sensible way to ensure that what one has liberalised flourishes and survives.
        I doubt whether any hon. Member would dispute that the promotion of efficiency and economy is a desirable aim. Subsection (2)(c) particularly incorporates the point raised by my hon. Friend the Member for Northampton,

        51
        North, but we must realise that competition is still in its infancy and will be slower to develop. Similarly, the duty in subsection (2)(d) will not cause any controversy. Indeed, it should be positively welcomed by Labour Members as it follows closely a suggestion that they made in Committee. Research and development are of great importance, particularly in such a fast-moving business as telecoms. The United Kingdom has already benefited from the expertise of and the work done at Martlesham and we want that to continue in future. We also want to encourage research and development by other companies—for example, Mercury, the radio telephone companies and the manufacturers of telecommunications apparatus.
        Mr. Marlow: How will the Director General carry out the duty in subsection (2)(d)? What will he do to encourage research and development and what effect will that have on, for example, Martlesham?
        Mr. Baker: In the exercise of his duties in the consideration of the matters that BT submits to him, he will have to satisfy himself that his decisions do not inhibit the work being done at Martlesham. He would seek out ways in which that could be promoted. It is not only Martlesham but the other telecommunications operators as well—Mercury and the radio telephone networks. It may be helpful if I were not to give way again so that other hon. Members can have an opportunity to express their views about new clause 1. I do not want to talk out the new clause.
        Subsections (2)(e), (f), (g) and (h) are listed separately because they all contain separate points. However, the ideas that they encapsulate are connected. The Bill is directed towards the pursuit of excellence in telecommunications. It removes the present barriers to achieving that and sets up the framework that will allow that to happen. So far I have concentrated on the benefits that that will bring to the domestic market but we want excellence to manifest itself in other ways, particularly in markets outside the United Kingdom. We want the United Kingdom to establish itself as a centre of excellence for the services, skills, apparatus and systems that are available here so that major international users of telecommunications will want to base their operations here and so that the United Kingdom economy will benefit. There is a great opportunity for London and Britain to become a major telecommunications switching centre. We also want that excellence to be manifested so that we can sell our products and services abroad.
        I have spent a lot of time on new clause 1 and have tried to answer the questions that have been put to me, but, as I said at the start, it is of crucial importance and I wanted to give the House as much explanation as possible in the time available of what it contains and what it means in practice. I commend it to the House.
        Mr. Marlow rose—
        Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. I heard the Minister say that he would not give way further.
        Mr. Marlow rose—
        Mr. Deputy Speaker: Order. Before I propose the Question, it might be for the convenience of the House if I clarify the position regarding the amendments that are
        52
        grouped with new clause 1. These are amendments (a), (b), (c), (i), (d), (e), (f), (g) and (h) and Government amendments Nos. 5. 10, 12 and 13. It will not be possible to move individual amendments until new clause 1 has been read a Second time. If the House agrees, perhaps the best solution is to have a general debate on new clause 1 with the grouped amendments and, at an appropriate moment before 10 o'clock, when the guillotine falls—perhaps at about 9 o'clock—I shall put the Question, That the clause be read a Second time. I shall then ask whether any right hon. or hon. Member wishes to move an individual amendment formally for Division. The House should bear in mind that no amendments other than Government amendments may be taken after 10 o'clock.
        Mr. Orme: Your suggestion, Mr. Deputy Speaker, appears to be sensible. The only problem will arise if the debate on new clause 1 runs until 10 o'clock, with some of my hon. Friends still endeavouring to speak.
        Mr. Kenneth Baker: I shall seek to accommodate the right hon. Gentleman's wishes. Under the guillotine motion, the pattern of debate must depend on the right hon. Gentleman and his right hon. and hon. Friends.
        Mr. Orme: We have had a long speech from the Minister of State, with several interruptions. May I have the Minister's attention? Perhaps his hon. Friend the Member for Northampton, North (Mr. Marlow) will raise his point with him at a later date. It is important that Labour Members address themselves to the Government. I am sure that the hon. Member for Northampton, North will have an opportunity to speak to his hon. Friend later.
        We have had a long speech from the Minister on new clause 1 and we do not complain about that. We find ourselves in a unique position, because clause 3—probably one of the main clauses in the Bill—has now been withdrawn. The Minister said that he did not think he should amend it and that it would be better to put before the House a completely new clause. Some hon. Members feel a little aggrieved. We spent 64 hours on clause 3 in Committee and had begun to feel some affection for it. After 64 hours of debate it is plucked out and replaced by new clause 1, which, in effect, is clause 3. From what the Minister has said, and because of the difficulties involved in the new clause, it is evident that the Government have not yet got the Bill right, irrespective of the deep philosophical and political divide.
        5.30 pm
        Mr. John McWilliam: I agree with my right hon. Friend. Will he reflect on the fact that we are discussing not just a new clause, but a new Bill? If the Minister wanted to deal with the Bill properly he would withdraw the new clause and take it upstairs, so that we could sort it out properly. As things stand, the House cannot properly debate the issue.
        Mr. Orme: I take my hon. Friend's point, but I do not know whether we want to go back into Committee, because we may have a similar experience and another new clause might be presented.
        The Government are ill-prepared and confused about their major proposals. Crucially important policy statements and papers were provided by the Government far too late for adequate consideration. I refer to the Department of Industry's views on the BT licence, the

        53
        Littlechild report and the Government's response to it, and the articles of association for BT plc. The confusion has been increased by the Government having to withdraw their original clause 3.
        I shall not refer to the new clause in detail, because hon. Members on both sides of the House have important comments to address to the Minister. Irrespective of the changes that the Minister has made, some as a result of pressure from the Opposition in Committee, the new clause still falls far short of what we consider necessary and I shall ask my right hon. and hon. Friends to vote against it.
        Detailed discussion has taken place on subsidies, access fees and rural services. The detail spelt out by the Minister today shows how worried the Government are about maintaining essential provisions. BT is a publicly owned company which operates a monopoly under which such services are not threatened. The change proposed by the Government—to give the company competitiveness, as the Minister would put it—and the private capital will create a double headed company, part privately and part publicly owned.
        Mercury will have access to the system. The changes will put in jeopardy BT's loss-making services. Since 1906, when the organisation was originally conceived by the then Liberal Government, and which has since been supported by Liberal, Labour and Conservatives, it has been seen as a public service. The service had to be paid for, but one could take advantage of the service whether one lived in the Western Isles, Cornwall, Orkney, the Greater Manchester conurbation or anywhere else in the United Kingdom. That universality is being broken up by the Government.
        The Government now have to identify the loss-making areas so that they can he paid for. BT plc will have to answer to the shareholders, who will ask, "Why are we subsidising rural telephones, the 999 emergency service or any other loss-making services?"
        Mr. Richard Shepherd: That is not what will happen, because all users of the telephone system will support the loss-making services through the access fee system.
        Mr. Orme: I accept that. The hon. Member for Aldridge-Brownhills (Mr. Shepherd) in Committee asked the Minister what criteria would be used. The Minister acknowledged that there could be argument among the different companies about their accounting, whether the access fees were correct and whether they were subsidising other sections of BT plc. Such questions do not arise in the public monopoly. The Minister has not satisfactorily answered our probing about the rural services, the maintenance of the emergency services and other general provisions.
        Our amendments try to clarify certain provisions in the new clause. The amendments seek to define what is meant by "general duties" now that the original title of the guidelines has been dropped. We seek to identify the priorities given by the Government to the many and sometimes conflicting objectives in the new clause. We seek to remove qualifications such as "not reasonably practicable" and "reasonable" which reduce the requirement to provide telecommunications services. We seek to identify the needs of residential subscribers, whose bills are certain to rise more than necessary.
        We seek to ensure that the finance from unprofitable services such as public telephone kiosks and emergency
        54
        and rural services is based on a stable long-term objective. We seek to question the prices to be charged and how the service will be provided in non-profitable areas. How is the access charge supposed to work? We have not been told that. We seek to remove the requirement to maintain competition in the United Kingdom, which will simply increase imports and reduce British jobs. We seek also to remove the requirement to promote competitive activity overseas. The Government's arguments are wholly without teeth.
        The Minister has made a concession to the disabled, who are now included in new clause 1(2)(a). We welcome that, but the issue goes much wider. Those using the network are not only the disabled, but the elderly, those who cannot read, the confused, the housebound, those simply unable to help themselves or unable to use the system. The hon. Member for Northampton, North is laughing. There is nothing funny about groups of people for whom the phone is a lifeline. The Opposition see the phone not as a luxury but as a necessity in modern society. A person can be lonely, not only in Orkney and Shetland, but in a housing estate in my constituency.
        Mr. Marlow: The only reason for my amusement was that I thought the right hon. Gentleman was talking about himself when he referred to the confused. With the way that his speech has gone so far, I thought that that was a pretty good description.
        Mr. Orme: I think that the House can ignore that remark. The hon. Gentleman is not taking seriously the problems of groups of people who need help. He might not think that they do, but the Opposition think so. He and I can take the brickbats, but those people need help.
        Mr. Stan Thorne: My right hon. Friend may remember that the hon. Member for Northampton, North (Mr. Marlow) was himself so confused that he stayed away from the Committee for much of its proceedings.
        Mr. Orme: We can leave that to the judgment of the electorate and the people to whom he is responsible.
        The Minister dwelt at some length on new clause 1(1) (a) and (b) The Opposition tabled amendment (a) to insert the words "have the duty to". The Minister said that he had been advised that the Bill covered that point. I have sat on the Government Benches and spoken at the Dispatch Box. I know that when a Minister is given legal advice and tells the House, "I am advised," it means that he is in a weak position. It certainly does not mean that the point has been met. If the Minister believes that the point is fully met he can have no objection to accepting our amendment, but that would, of course, cause a fluttering in the dovecotes. He would be told in strong terms by the legal advisers, "Look, Minister, that alters the whole complexion of the Bill."
        We are attempting to strengthen paragraphs (a) and (b) We want the point to be emphasised. Hon Members will know that paragraphs (a) and (b) deal with crucial areas covering emergency services, services in rural areas, and so on.
        New clause 1(4) defines the United Kingdom consumer and the United Kingdom operator. It states that a
        "'United Kingdom operator' means a person carrying on any of the following activities, that is to say, the provision of telecommunications services in the United Kingdom, the production and supply of telecommunication apparatus in the United Kingdom and the export of such apparatus from the United Kingdom."

        55
        We have been told that buying British will not be the order of the day. BT currently buys British, and many thousands of jobs in the private sector will be in jeopardy if orders go overseas.
        Mr. Richard Shepherd: Is the right hon. Gentleman saying that those jobs should be protected at a greater cost to the general consumer and therefore lead to the misallocation of resources within our community? Is that a desirable objective?
        5.45 pm
        Mr. Orme: BT has a right to insist—as it has insisted—that the services and equipment are first class. BT has a research and development organisation that is second to none. Some of the foreign equipment does not meet the required standards. Some of it will be subsidised, probably through hidden subsidies. I want the best equipment for BT, and I want it to be British equipment. I want British manufacturers to meet the requirements. BT has a right to insist on its requirements being met and not to accept shoddy goods. Orders should not willy-nilly be placed overseas because the equipment is cheaper.
        Mr. John Farr: The right hon. Gentleman must get his facts right. For a long time BT has been supplying foreign-made telephones and equipment, some of which has been very good. We all want British jobs to be preserved and British equipment to be supplied, but the facts are not as stated by the right hon. Gentleman. BT has been supplying a great deal of Scandinavian goods as well as goods from other countries.
        Mr. Orme: But BT uses predominantly British-made equipment.
        Mr. McWilliam: BT currently buys 95 per cent. British equipment.
        Mr. Orme: The equipment is not exclusively British, and I accept that there are some imports, but the figure is well over 90 per cent. for British goods. I want to maintain that figure.
        The Financial Times of 18 March states:
        "Mr. Charles May, who heads BT' s large research establishment at Martlesham, said: 'I have spent my whole life developing equipment with British industry. My opinion of British industry is extremely low and I, given the choice, would spend a great deal more of my money in Japan and Sweden and Germany. I don't necessarily think that is a good thing but something that a plc would be bound to do.'
        Mr. May's remarks were made earlier this month at a public meeting in Ipswich. He emphasised yesterday that the comments were made purely in a private capacity—a point he also made at the time."
        I find it extraordinary that an employee of BT should make such a statement and denigrate British industry when he is employed in research and development that is passed on to the manufacturers. The Government have a duty to say whether Mr. May has been approached and, if so, to tell us British Telecom's reaction. According to the press, the need for that to be done has been re-emphasised by Sir George Jefferson.
        The Under-Secretary of State for Industry (Mr. John Butcher): Surely the right hon. Gentleman is aware that, unfortunately, over the past few days there has been mutual recrimination between those who are the predominant suppliers of BT and those who supply the
        56
        research and development and industrial property rights. Does this not encourage the House to come to the conclusion that the cosy relationship between the two sides of that debate does not serve the country well, and is this not an argument for proceeding with all haste with the further momentum in the liberalisation programme? Could we not do better for the United Kingdom?
        Mr. Orme: Of course we want to do better for the United Kingdom. We want to see the best products, but if the orders were removed from BT we could see the loss of 60,000 or 70,000 jobs. The Government are supposed to be encouraging everyone to buy British and to think British. The Government and the consumer have a right to say to British manufacturers that they may not be doing as well as in the past and we want improved standards, better pricing and British goods. The Government should insist on that. That is where the argument lies. They should not be going off to Japan, Sweden or West Germany to purchase this equipment.
        There has been a tremendous development in modern technology. One could say that BT has been slow in catching up, but it is now at the forefront. One could say that British manufacturers did not put in enough effort in the past, but they now realise the importance of this matter. The answer is not to denigrate British manufacturers—Plessey, GEC and Standard Telephones and Cables Ltd.—at this stage, when the explosion is about to take place, but to call for improvements and say that we will support British industry and buy British. British manufacturing industry, which is in a terrible state, would be absolutely devastated if a large number of orders were to leave BT and go overseas.
        Mr. Golding: Is it not shocking that the Under-Secretary of State for Industry, who represents Coventry, South-West, should advocate the export of jobs from Coventry to Tokyo?
        Mr. Orme: The Under-Secretary of State for Industry must answer that himself. He made that public statement and he will have to answer for it.
        Mr. Butcher: I am grateful to the right hon. Member for Salford, West (Mr. Orme) for allowing me to answer the point made by the hon. Member for Newcastle-under-Lyme (Mr. Golding), particularly as I recently had the happy opportunity to open a factory in Coventry that makes telecommunication products. It is because I have numerous contacts with those who supply BT that I know that there is more than one side to this story. BT is not entirely without blame—because of the way in which it specifies its products, fiddles and messes around with its development programmes, changes specifications and imposes gold-plated standards on its suppliers — in driving some of the supplier companies into a position where they cannot be internationally competitive. In that context, I am anxious to defend jobs in Coventry.
        Mr. Orme: That does not alter my argument. No one is saying that BT has been perfect in the past or that it cannot improve in the future. No one has said that there is no room for British manufacturers to improve, but some of this equipment can be dangerous or lethal if it is not correctly made. British safety standards are second to none. If we are not careful we shall import equipment that does not match those safety standards and, as a

        57
        consequence, undercut British manufactured products. That would be dangerous to the consumer and to the whole network.
        Mr. Marlow: Is not the right hon. Gentleman indulging in a certain amount of impractical rhetoric? He is asking the Government to ensure that BT buys British. Is he not aware that we have treaty obligations towards both the EC and GATT which prevent the Government from taking such a direct role?
        Mr. Orme: When the hon. Member for Northampton, North (Mr. Marlow) and I have taken Britain out of the Common Market, we will have removed one major obstacle. The countries to which I have referred—Sweden, West Germany, Japan and the United States—and from which much of the equipment could come are, apart from West Germany, non-EC countries. The main problem, as with motor cars and high technology, will come from the Japanese, not the EC. I make that point because new clause I will open the door to the very thing to which we are opposed.
        I have said enough and my right hon. and hon. Friends have many other points to make.
        Mr. Richard Shepherd: I am surprised that the right hon. Gentleman should say that the main problem is that someone else provides us with something cheaper. Is that really what the Opposition spokesman intended to say? It is clearly in the interests of the country that we pay as little as possible for the goods that we buy, so long as they meet the criteria that we want in the market place. Therefore, that should not be the problem. The problem is to get our suppliers to provide the same standard and price as our competitors.
        Mr. Orme: The hon. Gentleman appears to be missing my main point, which is the preservation of jobs in British manufacturing. I accept that criticisms can be made. I accept that improvements can be made in competitiveness and in meeting order deadlines, but that should be based on the overwhelming desire to purchase British goods. To date, the policy of BT has been to buy British, and that should remain the policy of the company. This issue involves thousands of jobs in the manufacturing sector, which has been decimated over the past three or four years. That is what I am trying to protect. A major company, whether it be British Telecom or the British Oxygen Company, should maintain a policy of buying British.
        Mr. Richard Shepherd: We are therefore forcing our consumers and our national companies to pay more than they need do. If one pushes them down that road, one will put other jobs at risk. One must contrast the jobs that the right hon. Gentleman now identifies as being at risk—presumably through inefficiency or failure to meet the market criteria—with those that would be viable but for the charges that would be pushed on to BT as a consequence of his policy.
        Mr. Orme: The hon. Gentleman should bear in mind that his Government have seen the necessity of maintaining jobs in British Leyland and in British Steel on the basis that we need a motor car industry and a steel industry. We may have disagreed about the approach, but, nevertheless, large subsidies have been given and demands for efficiency and improved output have been made. Considerable improvements have resulted. That would happen with the provision of telecommunications
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        equipment. What will be the cost to the nation of 30,000 or 40,000 people on the dole? That is the argument. While we are interested in creating jobs, I am now talking about maintaining jobs.
        I have covered some of the important effects of the Bill. The Minister made virtually a Third Reading speech which covered the ambit of the Bill. That was inevitable when discussing a wide-ranging clause that covers the powers of the Director General and the Secretary of State.
        6 pm
        Mr. Temple-Morris: I am grateful to you, Mr. Deputy Speaker, for calling me at this early stage of the debate, not least because I had the pleasure and privilege of moving the "rural" amendment. The concessions that amount to new clause 1 resulted from our Committee debates and arose from the so-called "rural" amendment, which enjoyed the support of both sides of the Committee. I moved also the "international" amendment, which has resulted in new clause 1(2)(d) to (h) Again, the amendment enjoyed the support of both sides of the Committee. The Government's concession is set out in the part of the new clause to which I have referred. I wish to put that in the most charitable way because I feel that the Government are anxious to tidy up that part of our beloved old clause 3.
        I do not intend to follow the speech of the tight hon. Member for Salford, West (Mr. Orme) word for word. I shall not do so as I have a sneaking suspicion that this is not the end of the matter. Their Lordships in another place may develop a tremendous affection for the clause when it reaches their House. The right hon. Gentleman referred to the speech of my hon. Friend the Minister for Industry and Information Technology as a Third Reading contribution. I suspect that it is not the final Third Reading speech that we shall hear from him. No doubt we shall hear much from him about old clause 3, which is now replaced by new clause 1.
        As I have said, I agree entirely with the Bill, but when we take a public monopoly into the private sector it is necessary to establish statutory controls, and that is when we find ourselves in a dilemma. With the establishment of those controls we get into the arguments that were advanced in Committee about the extent of the controls. I appreciate the pressure that must be being placed on my ministerial colleagues by British Telecom. Once we unshackle BT and encourage it to be part of the brave new world of private enterprise, it should be allowed to be fully competitive. On the other side of the coin, we are creating a private monopoly with what could be an unfair advantage at the beginning over other organisations with which it is meant to compete. That is the dilemma. It is one that creeps into the new clause and it will probably do so when we discuss subsequent clauses.
        I wish briefly to examine how the new clause lives up to the spirit of the concessions that were made in Committee. I said earlier that I did not want to be uncharitable. Indeed, I am grateful to my right hon. and hon. Friends in the Department of Industry for introducing the new clause, which is a marked improvement on what went before. It achieves a better balance overall. If I appear to be detailed or semantic, I shall be adopting that approach for the benefit, I hope, of what eventually becomes the Telecommunications Act.
        I am sad that my hon. Friend the Member for Northampton, North (Mr. Marlow) is no longer in his

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        place. When rural areas are mentioned in Committee or in the Chamber he breathes fire and brimstone on behalf of his constituents. However, when he made an eloquent intervention on behalf of his constituents, my hon. Friend the Minister for Industry and Information Technology replied to the effect that he recognised that there was considerable concern in the rural areas but one could not escape the fact that many of the services within them have been loss-makers. The accounting practice of BT did not allow it to assess whether rural areas were loss-makers. It is obvious that the services in rural areas will be put in jeopardy unless they are looked after, and that is what all the fuss is about. That is why they are specially included in the new clause and have always been included in the Bill.
        This has to be a more expensive approach and I recognise that the services are already in jeopardy. It is a matter of considerable concern to those in rural areas that telephone boxes are already being removed. There is a great reliance on the telephone in remote areas. Petrol is becoming more and more expensive and it is increasingly difficult for those in remote areas to go to the nearest town. Village shops are closing and so are schools and churches. Rural deprivation is clearly a matter of concern.
        In the rural and remote areas there is the absence, of course, of the urban money spinner—big business. It is in that sector that money can be made out of the brave new technology. I have seen the admirable exhibition of telephonic and communications equipment in an area adjacent to the Committee Corridor, which I understand my hon. Friend visited last Thursday. It is clear that many of the services there exhibited will benefit the rural areas, but the big business money spinners are not to be found in those areas. Probably the constituency of my hon. Friend the Member for Northampton, North has a more lucrative base than that which exists in the constituencies of Leominster or that of my hon. Friend the Member for Hereford (Mr. Shepherd), or of those of other of my hon. Friends who are in their places.
        As I have said, I am concerned about whether the new clause measures up to the pledges that were given in Committee. I look forward to the reply of my hon. Friend the Under-Secretary of State, who gave the various undertakings in Committee. My hon. Friend was extremely lucid and brave when he addressed the Committee—perhaps he was slightly fatigued—at 7.25 am, having been up all night. He had to answer many questions and queries. He may agree that the sentences that I am about to quote form the most important part of that speech. My hon. Friend said:
        "I accept that it may be appropriate to place the Secretary of State under a duty"
        —I wish to emphasise that "duty" appears quite frequently in the various pledges that have been made—
        "to ensure that certain services will be provided through his power to impose obligations when issuing licences. Therefore, I shall consider amending clause 3 to provide that the Secretary of State and the Director General should have a duty when issuing and amending licences to ensure that telephone services will be provided throughout the United Kingdom, subject to the test of the reasonableness of the demand and practicability of supplying the services."
        I am grateful that the somewhat semantic argument that we had in Committee about what would be practicable or unpracticable has been concluded in the form of the new
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        clause. I am grateful to my hon. Friend the Minister for Industry and Information Technology for introducing the clause.
        In Committee my hon. Friend the Under-Secretary of State went into the structure of what has now become the new clause. He then reached the most important part of his reply. He said:
        "I am anxious to help the Committee and it may be helpful to put before Committee Members the sort of amendment, in terms that we can now define, that I would be prepared to introduce on Report. It would read roughly as follows:".
        There then appears the long passage within quotation marks in column 687, which appears in the fourth part of the Hansard report for the so-called afternoon sitting. About halfway through the outline of what the Government expected to introduce as a new clause is the word "duty". It is to be found in the seventh line of the passage within quotation marks. The passage reads:
        "subject to this duty, take into account all matters which appear to them in the particular circumstances to be relevant and, among other things, shall have regard to—(a)".—[Official Report, Standing Committee H, 1 February 1983; c. 686–87.]
        That "duty", to which I shall not refer, is a reference to call boxes, emergency services and services in rural areas. We then have the words "subject to this duty", and the draft continues as I have quoted.
        When the Minister of State referred to the matter in his very helpful speech today, he made a mass of references to "duty". He said that new clause 1 imposes duties on the Secretary of State and the Director General. He said that it imposes positive duties, that it imposes a series of duties, and that subsection (1)(a) is the paramount duty. I was glad to hear all that, and it helps me to favour the clause. However, although we heard much about duty in Committee and in the Minister of State's speech today, what counts is what is actually in the clause. I should be grateful if the Under-Secretary would take up this point in his reply.
        I have not had time to check thoroughly, and my knowledge of the law is sometimes a little rusty, but, as far as I remember, I was taught that the heading or marginal description of the clause was not part of the statute but only a guideline to the contents of the clause. I may be wrong on that point. I am trailing my coat to elicit a reply, just as, to give further notice to those sitting in the Civil Service Box, I interrupted the Minister of State.
        Mr. Golding: The hon. Gentleman should take into account Government amendment No. 10, which inserts the word "duties" into clause 8.
        Mr. Temple-Morris: Yes, indeed. I believe that the hon. Gentleman is referring to an Opposition amendment.
        Mr. Golding: I understand that the Government have tabled an amendment—
        Mr. Kenneth Baker indicated assent.
        Mr. Golding: The amendment would delete the words:
        "matters mentioned in paragraphs (a) to (e) of section 3(1) above",
        and replace them by a reference to "the duties" outlined in new clause 1.
        Mr. Temple-Morris: I am grateful to the hon. Gentleman for that helpful intervention. It strengthens what I have to say. The word "duty" ought to occur in the body of the clause. If there are further amendments that refer to "duties", and the description of the clause refers to "duties", it seems strange that the word "duty" does not

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        appear in the body of the clause. I shall be interested to hear the Government's reply on amendment (a) to new clause 1, which would insert the word "duty" into the clause.
        It appears from the intervention of the hon. Member for Newcastle-under-Lyme (Mr. Golding), from what I have said about the Committee stage and from my hon. Friend's speech that everyone is presuming the existence of the duty. I invite the Minister to tell us where the presumed duty appears in the body of the clause. Subsection (1) of new clause 1 states that
        "The Secretary of State and the Director shall each exercise the functions assigned to him by this Part in the manner which he considers is best calculated".
        There is no reference to duty there. The clause does not even refer to "the duties and other functions" or "the duties and desirabilities", but merely to functions. Those trying to form some idea of what the clause is about will not give precedence to the marginal note:
        "General duties of Secretary of State and Director".
        They will look at the body of the clause and see the words:
        "shall … exercise the functions assigned to him"—
        no reference to duties—
        "in the manner which he considers is best calculated".
        If I remember rightly, that is what is known as the subjective test. The Secretary of State or the Director General is to act in the manner that he considers is best calculated to preserve the rural areas, the telephone boxes, or whatever it may be.
        This point is very important to the understanding of the clause. That is the reasoning behind my comments about a fundamental dilemma. I am tempted to say that new clause 1 is a skilful regurgitation of our beloved old clause 3. It has been further strengthened and is a better clause, but it does not take us as far as I believed we were to go.
        6.15 pm
        My hon. Friend the Minister of State said that there was no need to put the word "duty" into the body of the clause and that the words
        "The Secretary of State and the Director shall each exercise"
        were sufficient and amounted to a duty. Our beloved clause 3 is full of the word "shall". I know that that clause concerns the guidelines. Clause 3(1) reads:
        "In exercising the functions assigned to them by this Part the Secretary of State and the Director shall take into account all matters which appear to them in the particular circumstances to be relevant and, among other things, shall have regard to"—
        and so on. I feel that we have not got what we are entitled to. I hope that the Minister of State or the Under-Secretary will have an answer to put my mind at rest. I am concerned about the rural areas, bearing in mind that we are dealing with a great new technology for the future and a completely new concept, which in many ways means that we are crossing all manner of frontiers.
        I do not want to appear too semantic. I apologise if I have been. I believe that my points are valid, bearing in mind that they result from amendments that I originally moved in Committee and undertakings that were given to me in Committee by my hon. Friend the Under-Secretary of State.
        New clause 1(1)(b) seems to be a bit of a nightmare. The old conflict between clause 3(1)(a) and 3(1)(b) is creeping in. It was discussed in Committee again and again. I think that the word "regurgitation" is appropriate. New clause 1(1)(b) reads, as an American might say, "fancy", but it comes to the same thing. Phrases such as
        "without prejudice to the generality of paragraph (a) above"
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        seem nightmarish to construe. Those words mean that if someone cannot afford to provide the services, something different applies. I have doubts about that. There should be more justification than there has been hitherto for the difference from the beloved clause 3, with its various difficulties.
        I shall raise some specific queries which are relevant. I could come back to them on Third Reading, but that might be too late. They were mentioned in Committee, and caused considerable concern. The reason is that we do not have the licence and, I dare say, will not have the licence until the Bill becomes law. This has been of concern to many hon. Members on both sides of the Committee. Therefore, these queries must be made. My hon. Friend the Under-Secretary of State tried valiantly to deal with almost everything that was put to him. I believe that this query went past him in the early hours of the morning. It is concerned with paragraph 19(c) of the important document called "Ringing the Changes". It is crucial. I shall return to this point on Third Reading or later if we do not get an answer. We must have a further explanation.
        In paragraph 19(b) various duties are put on BT to provide ordinary voice telephony
        "everywhere and advanced services in all areas except those where there is insufficient commercial demand for them."
        BT has the duty to provide those services. There are various other references to the duties of BT. According to paragraph 19(c), BT will not have to supply if someone will not pay BT the cost of supplying a person with a service. That means that there is a possibility of pricing out or raising one's charges so that they become impossible to pay. I know that the hon. Member for Newcastle-under-Lyme is also concerned about the balance between paragraphs 19(b) and 19 (c)
        Mr. Golding: Will the hon. Gentleman advise me on this point? If the Minister and Secretary of State were taken to court, as the hon. Gentleman described in Committee, to enforce subsection 1(a), would the court be bound by the restrictive definition of "all reasonable demands" in the licence or could the court take a more reasonable and just view of what "reasonable demands" means?
        Mr. Temple-Morris: It depends who the action was against and who the parties were. If the Secretary of State or the Director General were taken to court, what is in the clause is vital. It is on that that they will be judged. The licensee comes into the picture when the Secretary of State or the Director General wants to enforce matters against BT. If they tell BT that they have not supplied Mrs. Bloggs, BT can refer to clause 19 as the reason. Some people may argue that that is a semantic point. I do not believe that it is as it concerns rural organisations, including the National Farmers Union, Rural Voice and everyone else. They want and deserve an answer.
        Public call boxes have been mentioned. There may be considerable delay before vesting date. Because that process has already begun in rural areas, there is anxiety about security for those areas against BT. It is feared that, perhaps before the appointed day, it will get as lean and fit as possible by getting rid of as many public call boxes as it can, before the licence conditions outlined in "Ringing the Changes" comes into force. An assurance

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        from the Government on that point is desirable. I hope that I have not repeated myself. I am grateful to have had the opportunity to speak.
        Mr. Stan Thorne: I must deal with some of what the hon. Member for Leominster (Mr. Temple-Morris) said. In reply to my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding), he appeared to suggest what I have long believed—that the law is interpreted according to who takes action against whom in a court of law. If a Minister or Secretary of State is taken to court because of the failure of a licensed provider to provide the required type of service, the court will interpret "reasonable", however the Secretary of State defines it. Those who have difficulty because of a lack of money or for various other reasons will have another problem if that is how the law will operate.
        It is unfortunate that the Report stage involves some repetition of the arguments that are made in Committee. As my hon. Friend the Member for Blaydon (Mr. McWilliam) said, the amendments to new clause 1 would be better dealt with in Committee. They are significant, although they appear to be simple, as they clarify the nub of the clause.
        In essence, we are debating the competition which the Government are trying to introduce against an existing service. The Government have a responsibility to prove beyond doubt that increasing competition in British Telecom will not result in a diminution of service. So far, both in Committee and today, they have failed miserably to produce such overwhelming proof.
        I was sorry to learn today that the Minister has been adopted for a new constituency. In Committee I revealed that the Government had taken my seat away. People in the Preston area have now selected me to contest the new Preston seat. Therefore, I issue a challenge to the Minister. He should seek adoption as the Conservative candidate for the new Preston constituency. That would give us an ideal opportunity to debate the implications of the Bill. The probable outcome would be that the Minister would lose his seat. I could not regret that, because it would mean that it would be possible to argue what the Government have denied about a variety of recent legislation. It could be said that the people have completely rejected the privatisation of BT. Will the Minister agree at this late stage to withdraw from his Surrey constituency and come to Preston? We could have an excellent campaign debating this issue.
        Mr. Kenneth Baker: I must resist that temptation, as I am sure that the hon. Gentleman would resist the temptation to come down to Surrey to advance his case that the interests of the consumer and the telecommunications industry are best promoted and supported by the continuity of monopoly. I am sure that that will not be the case.
        The hon. Gentleman and I will stand for different seats in different parts of the country in the forthcoming general election, but the Conservatives will set out clearly in our manifesto that if we are elected we intend to privatise BT. We intend to sell 51 per cent. of BT. We shall put that argument to the country. It will be one of the many issues at the election and people will be invited to decide accordingly. If, as I expect, we are returned to power, we shall have a clear mandate, reinforced by the country, for our policy.
        Mr. Thorne: The Minister has made an interesting set of observations, but, as usual, they are far from reality. I reject completely the suggestion that the Conservative party is capable of winning the next general election, but let us assume—
        Mr. Deputy Speaker: Order. Perhaps I should have intervened immediately after the Minister spoke to say that this has nothing to do with the new clause. I hope that the hon. Member for Preston, South (Mr. Thorne) will not follow that track too far.
        Mr. Thorne: I shall respect your ruling, Mr. Deputy Speaker. I had intended to talk about percentages, but perhaps I had better not pursue that line.
        The Government have a responsibility to promote a competitive telecommunication industry. They also have a responsibility to promote the service that people not only expect but receive from BT. It is inevitable that I shall have to refer to specific parts of new clause 1.
        I do not want to repeat the valuable point that the hon. Member for Leominster made. In spite of his political affiliations, he clearly has a grasp of the loss of service that his constituents will suffer should the clause go through as it stands. Subsection 1(a) uses the words:
        "The provision thereof is impracticable or not reasonably practicable".
        The hon. Member for Leominster suggested that that was a major improvement on the original wording of clause 3. A good solicitor, barrister or judge could drive a bus through that sort of wording, given certain circumstances.
        6.30 pm
        With regard to emergency services, I understand that there is a recognition within BT that doctors have a special role in the community. Doctors can be called upon at weekends and during the night, when most of us are asleep. There are urgent cases when people, in order to help people who are dear to them, call out doctors. Hospitals also have emergency calls on their services.
        If private operators are merely concerned with what is profitable rather than with the service that they should be providing to doctors and hospitals, they may seek to argue that it is "not reasonably practicable" to attend to the particular repair or deficiency within the telecommunications system. Such an attitude will be totally unacceptable.
        At present it is possible for BT to provide proper maintenance and repair facilities, on the basis of recognising the need for a public service. My experience tells me that private companies in search of private profit are less concerned than public services about the facilities that they provide to their consumers. The hon. Member for Aldridge-Brownhills (Mr. Shepherd) shakes his head. That was his practice in Committee when Labour Members suggested that people in search of profits might not necessarily provide good services. I am sorry that he feels that way about it, but that is our total experience of life within a society in which profit is the motive for production.
        Mr. Richard Shepherd: We have been over this ground many times, but I remind the hon. Gentleman that most enterprises find that the way to profit is by providing a good service. The consumer makes a judgment in terms of price and service. Generally speaking, it is only where a monopoly is involved that the quality of service to the consumer tends to be ignored. That is the complaint that the general public have frequently levied against

        65
        monopolies. That is why Conservative Members have been so concerned to ensure that the regulatory function protects the consumer against a monopoly. The hon. Gentleman, who passionately espouses Socialist policies, should recognise that, generally speaking, the public do not think that they have had the fairest deal possible from state monopolies.
        Mr. Thorne: It could be argued that the National Health Service is a form of state monopoly, but very few people who have had occasion to be a patient in a British hospital would complain about the service they received from that sort of monoply. Service to the public has always been at the forefront of BT's endeavours. We are perturbed that that service is likely to be eroded following the introduction of the profit motive. Shareholders seek to make profits by the shortest and best route and not on the basis of providing services. Therefore, public call box services, emergency services and rural area services are likely to suffer when the motive is private profit.
        The hon. Member for Leominster made a valuable point when he referred to subsection (1)(b) of the new clause, which contains what I regard as a banal provision. How is the provision to be determined? I do not know whether the Minister of State is interested in the remotest degree in what I am saying, but I hope that the Under-Secretary of State will be able to say what is meant by
        "without prejudice to the generality of paragraph (a) above, to secure that any United Kingdom operator by whom such services fall to be provided is able to finance the provision of those services."
        How is that provision to be determined? Who is to determine it? Is it to be determined before a licence is issued to an operator, or is it to emerge from experience or knowledge of the way in which an operator is or is not able to meet the necessary financial commitments?
        Subsection (2)(a) refers to the promotion of the interests of United Kingdom consumers. I do not want to revert to the point made by the hon. Member for Aldridge-Brownhills, but over the weekend I had a particularly unfortunate experience as a consumer. It was not a telecommunications problem, but one that arose in connection with my motor car. The service that I was offered was ridiculous. I was told, "We cannot do it—come back on Monday." Is that to be the sort of service that we provide to consumers under the new clause? Will consumers be told that, even in special circumstances, services will not be available because they are not profitable? Will that be the criteria when services are required outside normal hours? Is that how BT is to operate in private hands? Private operators may well find that paying people to provide services during weekends will be a little more expensive than paying them for services provided during the week.
        Mr. Richard Shepherd: Is not the hon. Gentleman's experience that it is very difficult for many people to get their telephones repaired at the weekend? The hon. Gentleman and I, as Members of Parliament, may have special provision made for us, but the ordinary consumer does not necessarily have that degree of attention.
        Mr. Thorne: I am always conscious that it may well be the case that Members of Parliament, simply because they are Members of Parliament, from time to time receive privileges that they should not receive. We should seek to ensure that people receive services on the basis of equality. I am sure that the hon. Member for Aldridge-Brownhills
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        would not, simply because he is a Member of Parliament, seek to lean on some supplier to get a special dispensation. We do not have an ideal world, and we are not likely to get it as long as the motivation for production is profit. We shall get the best possible service only when the motivation is production for use and not for profit.
        Subsection (2)(c),
        "to promote efficiency and economy on the part of United Kingdom operators",
        is particularly relevant to some of the interventions of the hon. Member for Aldridge-Brownhills. If a person has to keep his eye on costs while attempting to promote efficiency, it will mean that efficiency will sometimes be sacrificed in the interests of avoiding increased costs.
        No private entrepreneur will deliberately cut corners to achieve a profit, but, because he is in competition with others providing a similar service, he has to take into account what those others are doing on the provision of services and products and cutting costs. Inevitably, he will cut costs to avoid losing money.
        One of the speediest ways of cutting costs is to cut the labour force. That is what has happened in most of our industries. Labour represents the highest cost to most manufacturers and if they are in financial difficulties they seek to cut the size of their labour force, which results in increased unemployment.
        Mr. Richard Shepherd: I imagine that when the hon. Gentleman's wife shops for food for his family she is pleased that she has a choice between suppliers who compete against each other to offer her the best service at the lowest price. The choice of food-retailers — Sainsburys, Safeway, International Stores and others —allows shoppers to check that they do not make excess profits or rip them off. If a store attempts to do that, a shopper can go somewhere else.
        The hon. Gentleman referred to the difficulty that he had in getting his car repaired, but he has a choice of garages. There is no choice in the supply of telephones, and the introduction of competition and the ability to reduce costs through that discipline are tremendously important. The hon. Gentleman must try to understand the advantages that his family gain from competition in most areas, and he should extend that principle, on behalf of us all, to the provision of telecommunications.
        Mr. Thorne: I am not sure whether the hon. Gentleman thinks that I or my wife ought to understand things. I regret that she is not here, but I am sure that she could give a good reply to what the hon. Gentleman said about competition and choosing between supermarkets.
        My wife has read a little about economics and she recognises that those oligopolies fix prices so that they can all make fulsome profits. If they were eliminated, the prices of many goods would be reduced. If those oligopolies were in public ownership, we could do something about the price mechanisms and restrictive practices that they operate.
        I am sorry to have taken so long, but the hon. Member for Aldridge-Brownhills has obviously not prepared his own speech and thinks that he can intervene frequently and make a speech every two or three minutes. He may wish to do so again after my next remarks.
        6.45 pm
        Subsection (2)(d) refers to the promotion of
        "research into and the development and use of new techniques".

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        Where will the new investment come from? I understand that savings in Britain total about £20,000 million a year and that about £1,000 million per month is exported and invested in overseas companies that sell their goods here and undercut our manufacturing industry.
        One of the fears of BT employees is that the importing of equipment for BT will take off after privatisation. A substantial proportion of BT's equipment is bought in the United Kingdom. I do not have the precise figures with me, but I am sure that my hon. Friends could provide them.
        Mr. Orme: The figure was given earlier. About 95 per cent. of BT's equipment is British.
        Mr. Thorne: That must be applauded, because it means that BT recognises that importing goods means exporting labour and, thus, increased unemployment. Privatisation is likely to have precisely that effect.
        I know that some of my comrades wish to take part in the debate—[HON. MEMBERS: "Comrades?"] I see a number of hon. Members on the Opposition side who are my comrades. There are some exceptions, most of whom are SDP Members.
        Subsection (2)(h) refers to maintaining and promoting competitive activity. That is where I began. The Government regard the promotion of competitive activity as the raison d'etre of virtually all their legislation. It may be five or 10 years before the damage that the new clause will cause to our telecommunications industry becomes apparent. Of course, that depends on the Government's winning a majority at the next election. Last week I spent four days in Darlington, and, although the Labour party had a very good candidate in Mr. Ossie O'Brien, it was the general presentation of Labour party policy that won us that seat.
        Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. The hon. Gentleman must get back to the new clause.
        Mr. Thorne: I was seeking to do so. My argument is that the clause will do irreparable damage only if the Government are returned to power at the general election. I believe that that will not happen.
        Mr. Donald Stewart: Needless to say, I shall not follow the hon. Member for Preston, South (Mr. Thorne) down the Darlington road, as, understandably, in that instance I am an innocent bystander between the Opposition and Government sides of the House.
        The only thing that can be said for the new clause is that it is a decided improvement on the original clause. The hon. Member for Leominster (Mr. Temple-Morris) is due the thanks of both sides of the House for having suggested the new amendments, although they still leave a good deal to be decided, particularly by hon. Members such as myself, who represent rural areas that will suffer if the Bill goes on to the statute book.
        Perhaps with the exception of the right hon. Member for Orkney and Shetland (Mr. Grimond) I have the most scattered constituency in the country. One of the most important facilities is the telephone. Communities that are extremely remote depend, as the Minister said, on the telephone as a lifeline. Any threat that that lifeline might be removed or diminished is a great threat to my
        68
        constituents. I think of one community in a place called Rhenigidate on the island of Harris which is six miles from the nearest road. Recently, two incidents there put life at risk. Had it not been for the availability of the telephone, these matters might have been a great deal more serious than they turned out to be.
        The Minister referred to rural lines and said that some may be cheaper because they are overhead. However, a number of the lines in my constituency have been buried, I believe on the ground that that would save maintenance. There still remains the question, in spite of the safeguards that the Minister sought to assure us were in the new clause, of who will pay for the cost of repairs. In many of the areas and no doubt in other parts of the country, overhead lines are brought down by inclement weather, ice and so on. Who will pay for the cost of maintaining the lines and repairs?
        Mr. Kenneth Baker: I understand the anxieties of the right hon. Gentleman about the telephone in his remote constituency. I know only part of his constituency—I know Wester Ross, which looks out on his constituency, rather better. I am aware that in the western Highlands the provision of a telephone is an important service. I assure him, as regards the provision of the telephone, that under the existing legislation it is up to BT alone to decide whether to provide service. Under the Bill, that obligation is extended widely to involve the Secretary of State and the Director General both of whom, in the decisions that they make, have to be satisfied that a universal telephone service and beyond that a telecommunications service is provided. That represents a substantial increase in safeguards over existing legislation. The right hon. Member asked who would pay for cost of repairs. At the moment BT does that and in future BT, the provider of telecommunications, will continue to do so.
        Mr. Stewart: I thank the Minister for that reply. He says that BT makes the choice. There is no doubt that that is so, and nobody has suffered any great loss because that was so. To the best of its ability, BT has provided a good service. There were faults here and there, even so. I have written to the general manager of BT over the years, and the faults have been rectified as much as it was in BT's power to do so. Therefore, there is no great demand for changing the present system. BT has to make judgments, but it was widely accepted that in most cases a fair judgment was made.
        Mr. Orme: Since the British Telecommunications Act 1981 and the liberalisation that has taken place as a result, a limited number of phone boxes has been closed by BT on the basis that they were no longer profitable. We are going down that road slowly but surely, and the right hon. Gentleman is right to emphasise that the telephone booth, or the public call box, and the service to the subscriber are of major importance.
        Mr. Stewart: I have noticed that in my area. Recently, I also noticed that two of the kiosks were not of the ordinary metal type seen about in the rest of the country and the rest of my constituency but were composed of concrete blocks with the instrument provided by BT. One wonders whether the standard of kiosk will be maintained in the future.
        Mr. Roger Stott: With regard to the right hon. Gentleman's point about maintenance, is he

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        satisfied with the Minister's answer? At the moment, BT is obliged to maintain the equipment that it provides and the subscriber pays no charge for the maintenance of equipment, apart from the rent of the instrument from BT. If, under the new provisions in the Bill, BT is obliged to sell the instrument, it may be that his constituents and mine in the future will have to pay excessive amounts of money in maintenance costs, particularly his constituents who live in remote rural areas that are subject to storm damage.
        Mr. Stewart: I assure the hon. Gentleman that I am against the purpose of the Bill. I am seeking to try to get as many assurances as I can from the Minister before the Bill is put on the statute book, if it is.
        As to amendment (b), the clause, as amended, should be suitable, and even acceptable to the Government, as long as there is provided throughout the United Kingdom such telecommunications services as satisfy all reasonable demands. In other words, the expression
        "save in so far as the provision thereof is impracticable or not reasonably practicable"
        seems a little alarming. I hope that the amendment will be accepted. Amendment (a), which provides that after "shall" there will be inserted "have the duty to", would, however redundant it may be regarded in legal terms, save much disquiet.
        I have great doubts about maintenance if the Bill goes through as it is. We have had a good service and we recognise that ours is a difficult area. Within the financial restraints of BT headquarters in Aberdeen, BT gave consideration to any requests for extending the service. I doubt whether that will continue. We should have more assurances that the same standards as elsewhere will be maintained in the services and that there will be adequate pressure to ensure that this will be the case. Unfortunately, it appears that the uniform national prices will come to an end, and undoubtedly the service in rural areas and special services will suffer as a result.
        It has been said that there has been no choice, but there has also been no complaint because this was a national service that was serving the public well. The Bill is a great mistake, but I hope that these amendments will be accepted by the Government.
        Mr. Farr: I welcome the Bill. I begin by referring to the remarks of my hon. Friend the Member for Leominster (Mr. Temple-Morris) about his concern about remote rural areas. His constituency of Leominster, which I am privileged to know quite well, is second in its natural beauty only to my own. It has one thing in common with my constituency. They both contain large remote rural areas. Therefore, both of us have a real concern about some of these isolated villages. In my constituency, some of them are merely hamlets—groups of houses round a crossroads. At the moment, they have a service by telephone kiosk, which is essential and must be continued.
        7 pm
        In a very interesting speech, my hon. Friend the Member for Leominster expressed concern about the wording of new clause 1 and said that he hoped that amendment (a) would be accepted, adding the words "have the duty to". I go some way with my hon. Friend. If we highlight only the important words in subsection (1), we see that, as amended, it would read:
        "The Secretary of State and the Director shall have the duty to each exercise the functions … to secure that there are provided throughout the United Kingdom … including, in particular, … services in rural areas."
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        Earlier, we had an assurance from the Minister that there would be no price discrimination against rural area call boxes. He also said that rural services would continue to be available to meet all reasonable demands. Finally, he said that British Telecom could be directed by the Director General to take certain steps to protect rural areas and matters of that nature. That being so, I am not prepared to go the whole way with my hon. Friend the Member for Leominster and treat the new clause with the probably quite justifiable suspicion or concern that he expressed.
        I ally myself firmly with my hon. Friend the Member for Leominster when he stresses the importance of the rural call box. It is not fair to have as a yardstick that if it does not take £200 per annum it is not viable. As the hon. Member for Berwick-upon-Tweed (Mr. Beith) pointed out, rural telephone kiosks often exist at crossroads where little hamlets are located. Most of their traffic is not generated by people picking up the receiver and putting in money for lengthy calls. Essentially, they are key points in remote and scattered areas. Often calls are made by people who stop and use a system that they have devised whereby they dial the number that they require and, as soon as they hear the telephone at the other end ringing, they replace the receiver and wait for the person at the other end to ring back.
        The rural telephone box is an essential part of village and hamlet life in the United Kingdom.
        Mr. Beith: Does the hon. Gentleman realise that what happens in many cases is that a 5p or 10p coin is used by a stranded driver to establish contact and provide the call box number but that revenue accrues to British Telecom from the return call which goes on to the account of a subscriber somewhere else? Large amounts of revenue must accrue which never feature in calculations about whether rural telephone kiosks should remain in place.
        Mr. Farr: The hon. Gentleman has made another valid point. This is all hidden revenue. The money is coming in, although it is not credited to the telephone kiosks in question. But there is no doubt that they generate income for British Telecom.
        Mr. Kenneth Baker: I do not want my hon. Friend to have the impression that all telephone kiosks which generate revenue of less than £200 are closed automatically. That is by no means the position. When the revenue is very low—and sometimes it may be only £10 or £20—the future of the kiosk is looked at together by BT and POUNC. I am the first to accept all my hon. Friend's arguments. To rural communities, the telephone kiosk service is very important. I know of some in the Western Highlands which are literally in the middle of nowhere, but they are very important for travellers and, in that part of the country, for shepherds as well.
        Mrs. Elaine Kellett-Bowman: And in the Pennines.
        Mr. Baker: I am quite sure that they are.
        The arrangements for closure are not changed by the Bill. We are giving additional guarantees on the face of the Bill. Never before in our legislation has the responsibility to provide a telephone kiosk service been recognised. I assure my hon. Friend and other hon. Members who share his concern that the position is being strengthened by the Bill.
        Mr. Farr: I am grateful to my hon. Friend for that lengthy and valuable intervention, which will provide reassurance to many hon. Members who represent remote areas.
        I touch upon another matter affecting rural areas and villages which has not been mentioned so far. My hon. Friend the Member for Leominster talked about the closure of schools, which we have all suffered. The loss of a school is a tragedy for a village that has a heart. But in many of our villages the local sub-post office is also under threat. I wonder to what extent the Bill will affect the future prospects of sub-post offices in many of our villages. At the moment, the authorities in British Telecom are most sympathetic and very helpful. They do their best to keep sub-post offices open, especially if they see a real social need for them—for example, so that people may collect their pensions, buy their stamps and make telephone calls. What will be the position of sub-post offices, and will their future in our villages be prejudiced if the Bill is passed and British Telecom call boxes are dealt with in the way proposed?
        I listened carefully to the Minister's remarks about the Director General. It seems to me that with all his duties he could be described as a sort of British Telecom ombudsman. In a way, many of his duties will be similar to those of the Health Service Commissioner and the Parliamentary Commissioner. As my hon. Friend said, he will be separate from political control and will be the umpire and arbiter in many disputes.
        I should like to see the duties of the Director General in respect of rural telephone kiosks and other matters specified in a series of guidelines which Parliament could debate and approve. It may be that my hon. Friend will consider introducing some such provision at a later stage. But after the Bill is enacted, the Director General will be a man of considerable influence and importance, and I cannot help feeling that it would not have been inappropriate to introduce an order specifying the numerous duties with which he should concern himself so that Parliament might debate it at some later stage.
        I welcome the provisions for deaf and blind persons and the Minister's assurance that disabled people in general will be no less protected and helped than they are, quite properly, now.
        I have been in touch with the Minister about the Bill because I have received a lot of criticism from my constituents and through the post that centres round four main points. My criticisms do not relate to rural telephone services, but there are other criticisms that are unnecessary and untrue which have been brought about because the Government's public relations about the purposes of the Bill have been bad.
        I have often had arguments put to me by constituents who are against the Bill who have made fanciful and outrageous suggestions about its effects. I have had great difficulty in countering those arguments because I have been short of valid information. I received so many criticisms that I wrote to my hon. Friend the Minister some months ago. He confessed that British Telecom and the Government thought it improper at this time to approach employees of British Telecom to point out the Bill's favourable aspects. No doubt the reasons were ethnical but, unfortunately, the result was that many people throughout the country who work for British Telecom have formed a jaundiced view of some of the Government's proposals. With the exception of questions about the rural
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        telephone services and the Bill's effect on the services for the disabled, I have had great difficulty in answering questions that have been put to me about the Bill's effect on the security of messages of national importance. A fanciful figure has been flying about the city of Leicester and the county that 45,000 jobs will be lost in British Telecom when the Bill is enacted.
        Several remarks have been made to me by my constituents about the impropriety of the sale of British Telecom to the public. I have told my constituents and others who have raised such questions that I will take the matter up with the Government. My view is that in the long run the Bill will prove best for British industry, British Telecom and my constituents in general.
        Although I am convinced of the necessity for the Bill, which will bring our telephone service right up to date and even ahead of time, I trust that my hon. Friend the Minister will examine the possibility of countering some of the fabrications that are circulated by enemies of the Bill, the scaremongering stories and the absolute nonsense that are causing great anxiety in many remote and rural areas, and are putting some of the Bill's supporters in a difficult position.
        7.15 pm
        Mr. Charles R. Morris: I listened carefully and closely to the Minister of State's speech when he moved new clause 1, and in his preamble I felt that he made an outrageous charge.
        He suggested that needless anxiety had been generated about the Bill's implications by those whom he described as having a vested interest in the status quo. That argument would have carried greater conviction had it not been made by a Minister who moved a new clause that completely rewrote clause 3 because of the validity of anxieties expressed about the Bill.
        My anxieties focus on the four main points referred to by the hon. Member for Harborough (Mr. Farr). He referred to the impact of the Bill on the 235,000 staff of British Telecom. A proposal in a document entitled "Ringing the Changes", which the Minister made available to the Committee, stated that the licence to operators granted by the Director General and the Minister would oblige British Telecom to provide 999 services by means of operators who are employed by British Telecom if the Director General and British Telecommunications agreed that the service could be provided by other means. If that proposal were implemented, there would be an immediate impact on the staffing of switchboards by telephone operators. The Minister said that the anxieties regarding the impact of the Bill on BT staff were needless.
        The Minister has rightly reacted to the understandable anxiety that was expressed on both sides of the House about the impact of the Bill and of clause 3 unamended on the disabled. It is not only the disabled who will be affected but the continuance of the telephone operator services. I believe that British Telecom should continue to have what I would describe as a human interface with the public at large. The disabled will continue to need an operator on the end of the telephone line if the service is to meet their needs.
        The Minister rightly referred to the services that BT provides for the blind and the hard-of-hearing. There should be some reference in the new clause to the continuance of the provision of the telephone operator service, not only for the disabled but for the elderly, those

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        who cannot read, the confused, the housebound, and those who are merely unable to help themselves or are unable to use the system. There are many instances where having an operator at the end of a telephone is an essential community need. In those circumstances, that is not a luxury but a necessity.
        I have a host of instances where operators have assisted people in need in extremely esoteric circumstances. I quoted in Committee the instance of an old, sick woman who needed an ambulance in an emergency. Somehow she got through to the operator in Greenock, Scotland, although she was living in London and wanted the ambulance in London. Had the service been provided on the basis suggested in "Ringing the Changes", that operator would have been unable to help the subscriber. The anxiety about the impact on staffing standards is justified. Equally, the anxiety which the Bill causes to manufacturers who supply BT is justified. At present 70,000 workers are employed in the companies that make telephone equipment for BT. The Bill will expose the domestic telephone equipment manufacturing industry to unrestricted imports without reciprocal arrangements.
        Imports will flood in from Japan, the United States of America and Sweden. The Telecommunications Equipment Manufacturers Association sent a deputation to Japan to assess its prospects of establishing reciprocal arrangements, but it came back and said that it was just not on. It is impossible to establish any reciprocal arrangements with Japan. We are blithely opening up the domestic market to imports of telecommunications equipment without making any reciprocal arrangements.
        The anxieties that I have raised are real, just as the anxiety about the continuance of the public telephone call service is real. We have heard of the concern about telephone kiosks in remote and rural areas, but there is also concern about the kiosks in inner city areas. In my constituency—an inner city area—the proportion of private telephone subscribers is as low as between 25 per cent. and 30 per cent. In London and the south-east telephone penetration amounts to about 70 per cent. In certain circumstances a public telephone kiosk can act as a lifeline in inner city areas. Today, the Minister said that anxiety about telephone kiosks should be allayed because they will be financed on the basis of an access interconnect charge, which will be a rather sophisticated means of cross-subsidisation. At the time, it sounded very convincing, but the more one probed the less convincing it became. Nevertheless, we are invited to accept this legislation on the basis that details will be worked out. At this stage, that is just not good enough.
        Mr. Richard Shepherd: Does the right hon. Gentleman recognise that a grave threat may arise when cable transmission through television sets is allowed so that two neighbours can be interconnected by their television sets either through cable or satellite transmissions? Presumably those operating outside the limitations of the Bill will not be subject to access charges and thus may be able to undercut the existing providers of services. In that case, those who are subject to the access fee will be disadvantaged and there will be a bias in favour of the new technologies.
        Mr. Morris: That is a perceptive and valid point. Earlier, the Minister said that he had established a committee to consider what he described as the details that
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        would be worked out later. I hope that the Minister will consider the hon. Gentleman's point. Our anxieties are real and understandable and are not the sort that the Minister lightly dismissed when he suggested that they had been generated solely by chose with a vested interest in the status quo. That was an outrageous charge, which was unworthy of the Minister.
        The new clause refers to emergency services. I hope that the Under-Secretary will define that. Do emergency services mean solely 999 calls, or do they also cover the ship-to-shore services that are currently financed on the basis of a direct subsidy of £1·1 million from the Department of Trade? What will happen to that service? There is justifiable anxiety that the Government are seeking to phase out the ship-to-shore radio services.
        I believe that my anxieties are justified, and that anxiety about the Bill as a whole is equally justified.
        Mr. Tom Ellis: In common with the great majority of Opposition Members, I am fundamentally opposed to the Bill and will vote against it on. Third Reading. Even when hon. Members on either side of the House profoundly disapprove of a Bill, however, they have a duty, if possible, to improve the Bill, both in Committee and on Report.
        I listened carefully to the Minister's speech. I am grateful to him for making such a lengthy speech. I did not have the opportunity to spend 60 hours debating the original clause 3 and I was grateful to the Minister for spelling out some of the more complex issues. I was anxious to find out whether the new clause was a substantial improvement on clause 3.
        I cannot see that the new clause is a significant improvement. The Minister claimed that it made some improvements, and in terms of parliamentary drafting it may be an improvement, but the nub of the issue has not changed in any way and the same broad issues that were contained in clause 3 still apply. Therefore, I shall vote against the provision, although if it had improved the Bill a little I might have been able to bring myself to vote in favour of it. To register ray profound disapproval of the Bill, I shall vote against that provision as it will be the only opportunity to do so before the guillotine falls.
        The Minister claimed that the new clause would remove the rather vague guidelines for the Secretary of State and the Director General that appeared in clause 3 and that the guidelines were now much more specific. I accept that there is now a more direct relationship between the Secretary of State and the Director General and their general duties. The Minister pointed out that individuals, organisations or local authorities would, in certain instances, have recourse to the courts if they felt., for example, that the Director General had not acted in accordance with his duties, as laid down in paragraphs I (a) and (b).
        The Minister said that he did not think that recourse to the courts was likely to be very frequent. However, we need to know how the courts will determine such difficult phrases as "reasonably practicable" and "reasonable demand". I am not a lawyer, and I hesitate to enter into this debate, but I seem to recall that some years ago, in a dispute about the Tameside district and whether there should be a grammar school or a comprehensive school, the House of Lords ruled that "reasonable" meant precisely what it said and that it was the opposite of bonkers. Therefore, if "reasonable demands" are interpreted as

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        demands that are not stark raving crazy, it will clearly be the Director General's duty to impress on whatever official is involved the duty of implementing that demand.
        Amendment (i), which stands in the names of my hon. Friend the Member for Berwick upon Tweed (Mr. Beith) and other hon. Friends, seeks to remove the word "demand". After all, the word "demand" has a financial connotation. People talk about demands when they mean bills. Indeed, BT sends out "demands". If it was felt that there was no financial justification, the demand would be doubly unreasonable, because it would not be meeting a need. Therefore, I hope that the Minister will agree to that technically straightforward amendment.
        We are left with the problem of how the courts will decide. The Minister used recourse to the courts to illustrate the improvements that he had introduced in new clause 1 as compared with the original clause 3. If the courts decided that the Director General had not done his duty, it would be interesting to know what would then happen and what the Director General would be obliged to do. It seems no more precise, in practical terms, than the original so-called vague directions in the original clause.
        7.30 pm
        There is a reference in subsection (2)(a) to disabled persons. It says that the Director General shall exercise the functions
        "to promote the interests … (including, in particular, those who are disabled) in respect of the prices charged for, and the quality and variety of, services provided and apparatus supplied".
        The Minister gave an example of a particular type of telephone for people who are hard-of-hearing. That makes sense. Where the word "disabled" appears in the subsection, it seems to qualify not only the apparatus but the price and the quality, and one assumes that there might even be a form of differential pricing for those who are disabled. If the intention is for the provision to apply only to the apparatus supplied for the hard-of-hearing, the words in brackets should be nearer to the words "apparatus supplied", to make it quite clear that those are the words being qualified.
        I want to say a brief word about rural areas, because under the new dispensation I shall have the privilege of standing for Parliament at the next general election for a very rural constituency, where the largest town has a population of only 6,000 and there are scores of small villages and hamlets. The provision of telephone services in rural areas will be a matter of direct concern to me.
        I was interested—perhaps I should say doubtful or sceptical—when the Minister said that under the new accountancy arrangements in British Telecom we find that rural areas are now making a positive contribution to BT's finances. I am surprised to hear that. As the right hon. Member for Manchester, Openshaw (Mr. Morris) said, telephone penetration in many such areas is very low. In many parts of rural Wales, in north and mid-Wales, telephone penetration is nowhere near as high as it is in many of the densely populated areas in, for instance, the south-east of England. There is a real threat to rural kiosks. During the time that I have been a Member, not for a truly rural area but for one that is part-way between a metropolis and a rural area, I have had correspondence on a number
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        of occasions with British Telecom about retaining kiosks. However, my attempts were unsuccessful and the kiosks disappeared.
        The hon. Member for Aldridge-Brownhills (Mr. Shepherd) came down firmly on the side of having an Exchequer grant to subsidise loss-making services, such as emergency services and others. Here, I am on the side of the Minister. Access fees are a much better proposal, because it would at least confine the matter to telecommunications and not become one of general taxation. The further one gets away from the specific item that one seeks to subsidise the worse it is. I agree with what the hon. Gentleman said about satellites, and so on. However, that is very much a matter for the future, and I should hesitate to cross bridges before reaching them. It is hard enough to cater for the realities of today, let alone for future possibilities.
        Finally, I was pleased to hear what the Minister said about pricing policy. I do not know how he can be so certain about it. I assume that the RPI minus X policy—keeping price increases below the rate of inflation—is a measure of his confidence in the possibility of improving the efficiency and competitiveness of the telecommunications industry—not just BT, but Mercury, radio telephones, and so on. I said at the beginning that the improvements in the new clause were not sufficient to satisfy me, and although I accept that there are slight improvements compared with the original clause 3—
        Mr. Richard Shepherd: I wanted to make certain that the hon. Gentleman understood me. I hope that he will forgive me if I seem impertinent. The purpose of cross—subsidisation is to ensure that one set of consumers pay more for a service than they otherwise would to enable another set of consumers to pay less than they otherwise would. To avoid confusion in charging, and to ensure fairness, one should identify the extent by which one charges those consumers less than they would otherwise pay, making that up through Exchequer grants.
        Mr. Ellis: I had understood that. My reason for not agreeing with the hon. Gentleman is my experience in a whole range of publicly owned industries, not just telecommunications, where subsidies and so on have to be paid through general taxation, and there is an inability to pinpoint the costs of the profit-making or loss-making sectors—the cost centres. The Minister said that until fairly recently the Post Office, as it used to be, had just one cost centre for the whole telephone service. That illustrates the practical problems of catering in practical accounting for specific cost centres. This applies to the people in the telecommunications industry—the person seeking access and the person letting the access at a fee. At least it is contained in a comparatively small sector of our general industrial life, rather than being a matter of general taxation, which brings in matters such as macroeconomics. For those reasons, the Minister would be well advised to continue the access fee.
        Mr. Stott: In accordance with Standing Orders I declare my interest, in that I am a Member sponsored by the Post Office Engineering Union. Before I came here 10 years ago I was employed by the Post Office as a telecommunications engineer. To my knowledge, there are only two Members of the House in that position, my hon. Friend the Member for Blaydon (Mr. McWilliam) and myself.

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        Because of my current position I was unable to be a member of the Standing Committee considering the Bill but I was one of the few people outside the Committee's membership who attended every sitting in an effort to show solidarity with my comrades and to listen to the devastating analysis of my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding).
        It goes without saying that I am utterly opposed to the principles of the legislation. As I sat listening to the debates upstairs, I was extremely frustrated because I could not participate in the arguments that were being advanced against my hon. Friends. Tonight gives me an opportunity so to do.
        New clause 1 is tabled in response to the arguments on clause 3 in Committee. It is wholly unacceptable for the Minister utterly to change the face of the Bill on Report. I suspect that I know why he has done that. On Second Reading he and the Secretary of State tried to tell hon. Members that we need not worry about the rural areas and that the Government had no intention of introducing a Bill that would materially affect the provision of telecommunication services to the rural areas. It is only because the Bill has been examined in microscopic detail and because of the worries that hon. Members have expressed about it that the Minister has had to come to the House today after a monumentally long time in Committee and fundamentally alter the Bill. The right hon. Member for Western Isles (Mr. Stewart), the hon. Member for Wrexham (Mr. Ellis) and many others have said that new clause 1 is still unsatisfactory for rural communities throughout Britain.
        As somebody who for many years worked in the rural areas, climbing telegraph poles and putting up telegraph lines, rather than just philosophising about it, I know the value of the service to people in the rural areas. At the moment BT might not have the ultimate statutory responsibility to provide everybody with a telephone but custom and practice mean that it does. If anybody wishes to have a telephone he is connected to the system. In the old days of the Post Office everybody believed in what is commonly called the Rowland Hill principle. That was a tax on letters whereby everybody paid the same price for the delivery of mail, whether one lived in inner London or on the Isle of Skye. There was a comprehensive service and everybody paid the same. Apart from the one or two examples that have been quoted tonight, almost everybody pays the same installation fee. That has happened in the past and still happens today.
        Mr. Orme: That is changing.
        Mr. Stott: I appreciate that. Until now more or less everybody paid that fee. For the Minister to say that they are good guys and have enshrined in legislation the rights of people to have full access to a telecommunications system is nonsense because in custom and practice everybody had that before. Moreover, everyone had a right to have that service maintained free of charge. No maintenance charge was paid by subscribers.
        Mr. Richard Shepherd rose—
        Mr. Stott: The hon. Gentleman need not get excited. If he will listen, I was about to qualify that. Maintenance charges might have been included in the rental charge for the instrument but there was no direct maintenance charge. There is no need for this legislation other than the fact that the Government are hell-bent on pursuing their political
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        ideology. People are entitled to have access to the telecommunications network. They are provided with telephones and those telephones are maintained.
        7.45 pm
        The new clause seeks to mollify the opposition of all hon. Members who represent rural areas. The Minister is trying to tell us that new clause 1 will protect rural areas because it says:
        "the Director shall exercise the functions assigned to him … in the manner which he considers is best calculated—(a) to secure that there are provided throughout the United Kingdom, save in so far as the provision thereof is impracticable or not reasonably practicable".
        Despite the Minister's speech, which lasted about an hour and 10 minutes—I do not criticise him because there were many interventions—the new clause does not satisfy my right hon. and hon. Friends who have the interests of the rural subscriber at heart.
        The Minister talks about access fees and how the access fee arrangement will be constructed. Many people in Britain are worried that their kiosk services might be at risk. The Minister said that few kiosks have been removed and that the criteria for their removal is that they take in less than £200 a year. I think that that figure is £185 but I stand to be corrected. The hon. Member for Berwick-upon-Tweed (Mr. Beith) said that that is not the point. Many people use kiosks to ring a number, put the telephone down and wait for the subscriber to ring them back. Therefore, it is false to assume that simply because a kiosk does not turn over more than £185 or £200 a year it is not being used by the community.
        If that is the criterion, who is to say that it will not come under attack? As my hon. Friend the hon. Member for Preston, South (Mr. Thorne) said in an interesting contribution earlier, if the Bill becomes an Act we shall not be dealing with the old Post Office as I knew it or British Telecom as we know it today; we shall be dealing with a commercial company that acts in the market place and has shareholders, which is responsive not necessarily to community aspirations or the rural areas, but rather to the demands of its shareholders.
        Those shareholders might say that they are spending a lot on rural kiosks and suggest reducing the figure from £200 or £185 to £100. The Minister has not satisfied me or my right hon. and hon. Friends that that could not happen. Under BT's new rules I am not satisfied that different criteria will be applied for rural kiosks. Despite his words from the Dispatch Box today, I am not convinced.
        It never took me over 100 hours to install a telephone but I can well imagine some of my union colleagues in the remoter areas of the United Kingdom such as the Outer Hebrides taking over 100 hours as a result of geographical and other problems. What is to say that that figure cannot come down? Under the new commercial arrangements that figure could well be under attack. The shareholders of BT might say that if it takes 100 hours or more to install a telephone and there is a common set of charges they should reduce that 100 hours to 50 hours and that anything more than 50 hours will be charged at the commercial rate. That is conceivable and there is nothing in new clause 1 to suggest that that might not happen.
        The Minister accused me of being provocative when I intervened in the speech by the right hon. Member for Western Isles. I accept that charge. I was saying that under

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        the present regime maintenance is not charged directly to the subscriber. The subscriber rents the instrument and part of the rental is assumed to cover maintenance costs.
        There is nothing in the Bill to say that BT cannot sell the instrument to a subscriber. That subscriber would then have to take out a maintenance agreement. I should not like to be a subscriber in the Western Isles taking out a maintenance agreement with BT because that region is subject to inclement weather—to gales and storms. I know that because I talk to my colleagues who work there. The same applies to the southern part of the United Kingdom and the Yorkshire dales. I should hate to be a farmer on the Yorkshire dales having to pay for a maintenance contract.
        I can remember spending three days in the snow connecting a Pennines farmer at lambing time. He was charged not a penny. I cannot see that happening under this legislation because BT today has an obligation to provide almost total maintenance cover. In future, if BT decides to sell rather than rent the prime instrument, the subscriber could be faced with heavy maintenance charges.
        Mr. Richard ShepherdI understand that we now rent a line and rent a phone. We may have the option, now that the Government have agreed to the removal of the prime instrument monopoly, of buying the phone rather than renting it. If a line breaks down, surely that is covered by the rental agreement on the line, whereas if the instrument breaks down the subscriber is regarded as an independent customer.
        Mr. Stott: The prime instrument is rented according to an arrangement that takes in the line. Additional rental is paid for an extension to the prime instrument. The subscriber pays a rental for the line and the prime instrument and maintenance costs are included in that rental.
        Mr. McWilliam: Is my hon. Friend aware that since the Minister refused point blank to make the terms of the BT licence available to the Committee it is not possible for any hon. Member to answer the question asked by the hon. Member for Aldridge-Brownhills (Mr. Shepherd)? BT may not be allowed to charge for maintenance, but perhaps it will be. We have not had the privilege of seeing the terms of the licence because the Minister says that commmercial confidentiallity is involved, whatever that means.
        Mr. Stott: My hon. Friend the Member for Blaydon was a member of the Committee and he has a more detailed knowledge than I have. I accept his judgment. Until the Minister allows the House and nation to see the terms of the licence we are whistling in the dark. So much for freedom of information.
        I am a little confused about what will happen now that the prime instrument is under attack. That is what Littlechild suggested. The prime instrument can now be privatised. What will happen if a prime instrument is fixed to a shared service? There are not many shared services in the United Kingdom today, but they have not been totally phased out.
        The hon. Member for Aldridge-Brownhills (Mr. Shepherd) looks confused, but the matter will become clear. I shall demonstrate a technical, engineering point.
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        If I fix a prime instrument, and an extension to it, on a shared service circuit, how will I be sure that the instrument is fitted correctly without ringing the exchange to test the instrument? In a shared service the current that rings the bell goes to earth rather than down the other leg of the telephone line. If the legs of the telephone lines are not fitted correctly and there is an extension on a shared service and I get the legs the wrong way round, every call made from the extension could register on the other subscriber's meter. Has the Minister thought about that?
        The only way that BT can ensure that that does not happen is to ring the exchange and ask the engineer to conduct a proper, balanced test. If a private telecommunications operator has to do that, will BT receive an agency fee for the test? That question has nagged me for some time. I hope that the Minister will ask his officials for an answer.
        My right hon. Friend the Member for Salford, West (Mr. Orme) mentioned telephone equipment. I have much to say about that but other hon. Members wish to take part in the debate. My right hon. Friend was right to say that BT and the Post Office bought British. About 95 per cent. of equipment in the exchanges—the telephones, cables and ancillary equipment—was made in Britain. I fitted the stuff and was not always satisfied with the quality, but that equipment has improved over the years. I have never been an apologist for the old Post Office board or for the private manufacturers, but equipment is improving. If the Bill is passed, the competition in equipment will be enormous.
        Let us consider what has happened since CB radio became legal. The Under-Secretary is a great fan of CB radio, but since his Government legalised it—and I applaud that decision—almost every CB set bought in Britain has been made in Japan. If we adopt the principles enshrined in the Bill, British telecommunications manufacture will be under severe pressure. There will be an enormous inflow of imports, at the expense of jobs in our home-based telecommunications market.
        This is an appalling piece of legislation. The Minister said earlier that the benefits of the Bill will be seen when the Government are returned to office. The Government will not be returned to office and, thank God, the benefits of the Bill will never be seen.
        8 pm
        Mr. Beith: The new clause improves the Bill. The Government have been much criticised on certain aspects of the Bill, and there are still strong reasons to doubt whether it will be effective. I hope that the Minister can reassure us.
        There is a general doubt about the long-term position of British Telecom, which may be undermined by obligations for which it has no external finance. That issue has been dealt with extensively during this debate, especially by hon. Members who served in Committee. They have discussed the relative merits of cross-subsidisation and direct financing. However, laymen worry that it will turn out to be rather like the bus services that replace withdrawn rail services—at some point it may be said that it represents an unfair and unreasonable obligation—from which the operator should be freed.
        In dealing with the problems of rural areas, the Government say that an attempt should be made to "satisfy all reasonable demands" for services. My hon. Friends and I have tabled an amendment to substitute the word "needs" for the word "demands". We were worried about the

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        history and association of the word "demands". As my hon. Friend the Member for Wrexham (Mr. Ellis) said, the word is used extensively in a financial context. Therefore, it is hard to envisage it in the clause as meaning anything other than an association with the ability to pay. That same word is used in connection with the use of telephone boxes and the number of people prepared to subscribe to a service. It is the usual economist's word for those prepared to put up the money.
        I do not think that the word "demands" was intended to mean that in the new clause. Some of the demands referred to are such items as emergency services, for which charges are not made. I hope that I am right in assuming that the Government had intended a more general meaning of that word. We need some assurance on that.
        The word "needs" sums up what we are discussing—not the demands of rural areas in either the economist's sense or the requests of those in rural areas, but what would be judged by any reasonable person to be a genuine need in rural areas. For example, there is a need for call boxes to be connected to the telephone network, for maintenance and for access to various facilities. That is better expressed by the word "needs" than "demands". Perhaps the Government mean the same by "demands" as we mean by "needs". I hope that they will confirm that they do not mean the ability to pay for a service in straight commercial terms.
        The Minister rightly pointed out that it is no more expensive to provide many services in rural areas than it is in urban areas—but some are undoubtedly more expensive, but are very much needed. People in the countryside have become more dependent on the telephone. As other services have retracted, they have had to rely more and more on the telephone for access to certain services. As shops and local delivery services have been withdrawn, they have relied on the telephone to order goods. As doctors' surgeries have been withdrawn, they have telephoned the doctor for advice and to avoid a journey for which no public transport is available.
        Many suppliers and organisations use the freefone service, which shows no benefit in the call boxes. Many suppliers give a freefone number, which is especially helpful to those living in rural areas. Many public and social services use the freefone system. The citizens advice bureau in my constituency does so, which enables those in remote areas to telephone for advice because they do not have access to a local CAB office.
        When I visit the remoter parts of my constituency, and the remoter parts of the country such as the outer islands, I notice that children appear to be dressed from mail order catalogues—they all wear the same clothes. Because there is no access to shops, people pick up the telephone and order their goods. The telephone has become an important aspect of the rural scene. That explains the deluge of expressions of concern that Ministers have received from rural areas. It is one of the few services that they have left, and all other services are now dependent on it.
        The costs in rural areas can be prohibitive. In an intervention earlier I gave an example of a constituent who was quoted £4,500 for the installation of a telephone. Whatever the hon. Member for Westhoughton (Mr. Stott) may believe about the provision of services on a uniform basis, the rot has already set in. Changes are already being made. We negotiated a reduction in the installation charge to £3,200, which was still well beyond the resources of my constituent.
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        The pressures to charge an economic rate already exist. The only assurance that the Minister gave me was that in future my constituent would have a better means at his disposal for challenging the cost figure. He can secure an alternative quote. But at the end of the day it is probable that the quotation will still be for several thousand pounds. We are, therefore, talking about the problem of cross-subsidisation and the extent to which, in future, people using the telephone system can expect to have it made available to them, even though that might cost a great deal more than making it available to other subscribers. That must be viewed against the background that such a subscriber has far fewer other public services at his immediate disposal than a subscriber in an urban area who often has less need of a telephone.
        It is worth reminding the Minister of our experiences in rural areas. We spent many years trying to get a telephone installed in one valley. Quite frequently, walkers on the Pennine way would become lost in snowstorms and go to the nearest farmhouse. They would sit there, wrapped in blankets and served with hot cocoa by the helpful farmer's wife, while watching on the television the rescue teams setting out to look for them. They were quite unable to tell them they were safely tucked away and well looked after because there was no access to a telephone. We managed to obtain a telephone for that valley, but there are still many rural areas where the telephone could save public services a great deal of money. I am sure that that applies to other rural areas, such as the Lake District.
        The same high cost problem applies to telephone boxes, as many of those in rural areas are unlikely to show a reasonable return. They may fall below the £200 figure often used as a yardstick, but in reality some contribute far more to the system than the takings emptied from the coinbox show. Time and time again boxes are used by people who put 10p in the box and ask their office to ring them. I know that I do that. Feeding money into a coinbox is a both expensive and inconvenient way to conduct a long telephone call. Most significant telephone calls from those areas have to be long-distance. The centre to which anyone will telephone to contact his headquarters will be more than a local-call distance away in a scattered rural area.
        In my constituency a telephone call box by the A1 has recently been removed. I am glad to say that, after a tremendous row, British Telecom has agreed to reinstate it. One of the immediate consequences of the removal was that people living in nearby farms were constantly troubled by long-distance lorry drivers coming to their homes and saying "I have broken down, please may I use your telephone?", or "I have used up my 10 hours under the 10 hours' rule; I must phone in, so may I use your telephone?" The need and demand for the telephone became obvious even though it had not been so apparent from the coin box in which these matters are recorded. Because of such reservations we are most anxious that the assurances should be clearer and that the emphasis should be on "needs" rather than "demands" in a narrow sense.
        I regret that we cannot proceed to a vote on amendment (i) to new clause 1 and on some of the other amendments. It would have been better had we used the time available to us within the guillotine to ensure that we disposed of the new clause earlier and took votes on some of the crucial amendments. It would have been sensible to organise the proceedings better. However, that is beyond my control, but in his reply will the Minister try to carry us further with

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        the assurances that he has given because our worries are still deep, and even the points that he made earlier in the debate leave us with the fear that the high cost of some rural facilities will mean that services which are already being threatened will be doomed under the new regime?
        Mr. John Spellar: Previous speakers have addressed themselves substantially to the effect of the legislation on the system. In the time available to me I wish briefly to address myself to the implications of the Bill for manufacturing industry. I do so both as an official of the Electrical, Electronic, Telecommunication and Plumbing Union—which has several thousand members in the telecommunications manufacturing industry in companies across the country—and as a member of the sector working party for electronic components.
        I am sorry that the Minister for Industry and Information Technology has just left the Chamber. He has made a considerable reputation for himself through his interest and work in information technology. He must realise more than most of his colleagues the key position of telecommunications in information technology. With that knowledge and experience, and given his responsibility under the new clause, he must be extremely worried about the recent pronouncements from BT about the implications of the Bill as it will be applied to the ordering of equipment. I join my right hon. Friend the Member for Salford, West (Mr. Orme) in drawing to the attention of the House the comments of Mr. Charles May and of Sir George Jefferson. With regard to Sir George Jefferson and his threat to resign if the Parliamentary Control of Expenditure (Reform) Bill was carried, I am almost led to reconsidering my position on that Bill. Sir George Jefferson made some disgraceful comments about a vital part of British industry. He was referring not to moving from existing suppliers—the three main companies, Standard Telephones and Cables, GEC and Plessey—but to importing substantial quantities of equipment from abroad.
        8.15 pm
        It could be charitably said that Sir George was trying to shake up the so-called "cosy relationship" between BT and the big three. Many hon. Members on both sides of the House would have criticisms of the impact that that relationship has had on the industry, not only on the supply of equipment to British Telecom but on the dramatic decline of the export share of British companies in the world market, which has fallen from 25 per cent. to about 6 per cent. I believe that that blame falls on both sides of that cosy relationship. It falls on manufacturers, for having looked on BT as a soft market and on BT for having over-specified for equipment, often making it unable to compete in the export market, for occasionally taking the wrong route in specification, and also, as in so many other respects of British purchase and investment, for having a stop-go policy which has led at some stages to substantial investments. Only recently we have seen another "stop" in the expansion of BT. Therefore, there have been problems on both sides. This is neither the time nor the place to investigate the implications of that relationship, athough, quite frankly, an investigation at some stage is necessary to see how we can improve the position in the future.
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        We need to consider the consequences for British industry and employment of a precipitate movement away from that relationship. With regard to some of the comments that have been made, I am worried that this is almost a rerun of the British Leyland argument. We know from the recent memoirs of Sir Michael Edwardes that siren voices inside the Government in 1979 said that not many people were employed in British Leyland and that closure might be a healthy shock to the economy and a lesson to other people in how they should conduct themselves in the future. It would be extremely worrying if, rather than just an attempt to shake the complacency of the big three, the comments of British Telecom were really an attempt to move out of ordering from British manufacturers in any sizeable way.
        With regard to employment implications, the British telecommunications industry is a substantial employer, particularly in areas of high unemployment such as the north-east, Merseyside and Scotland. In addition, the industry has a good record in manpower policies. Industrial relations in telecommunications are good and productivity increases have been dramatic and substantial. This has been based on an acceptance of change by the work force. It would be ironic and grossly unfair if the reward for that co-operation and that acceptance of change were not only to be buffeted by the rapid speed of change, which is dramatic in the electonics industry, but to be devastated by a savage cut in orders.
        Equally important for telecommunications are the implications for the future. Can we imagine Britain moving into the 21st century without a substantial telecommunications industry? The tying in of office technology with regard to computers and communications is vital for the development of information technology. Is a reduction in the advanced areas of that technology, taking them away from British companies and giving them to IBM, the company quoted in The Sunday Times and ATT and other North American companies, let alone companies in Europe, really the way to encourage the necessary development of volume, not only in telecommunications but in components? After computers, telecommunications are the largest single user of components, and the components industry will be vitally dependent on their development. Not only this industry but others would be severely disadvantaged in being able to compete with the rest of the world. That would also apply in software and development work. If the Government are to take work away from British manufacturers and give it to high technology manufacturers abroad, that will cripple the vital development work in British electronics and telecommunications.
        We have had grounds for concern about the Government's will to follow this through. When liberalisation was introduced, for example, the Government gave many assurances that they would have approval testing and that, as well as having a board to consider new equipment, they would be seeking reciprocity with other countries. However, over recent months the Government have been moving away from reciprocity. They say that in the face of pressure from the GATT and the EC they are not able to sustain reciprocity. That applies in a number of other industries.
        It was argued that liberalisation would provide a useful stimulus at the fringes of the telecommunications industry. But the British telecommunications industry has not been stimulated to provide peripheral instruments although

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        there has been a dramatic improvement since liberalisation. However, protection for the British industry lies in mainframe orders. The bulk of orders will come from British Telecom and will be directed towards the domestic industry. It is that which will keep the main industry going, but the Government say that at the same time we shall have the stimulus of liberalisation which, they hope, will get other industries going. It is said that even if that brings in imports the effect will be only on the fringes. The Government seem to have retreated in that area of liberalisation. Their spokesmen in British Telecom seem to be retreating in the telecommunications industry.
        Can we really envisage any other PTT or Government allowing main purchases of telecommunications equipment from foreign manufacturers?
        Mr. Richard Shepherd: The United States Government.
        Mr. Spellar: Can we honestly see the French PTT taking in foreign equipment in competition with its own? Can we see any of the other main European PTTs bringing in foreign equipment? We shall be one of the few open markets. The hon. Member for Aldridge—Brownhills (Mr. Shepherd) has mentioned the United States, but he knows full well that until recently there was an extremely close link between the major telecommunication manufacturer in the United States and the main telephone system in Bell telephones. There were major links, which sustained a particular development. That is not analogous with the position that we are discussing. The main bulk of equipment sold in the United States to United States telecommunications systems is produced in the United States. If there were a major threat posed to United States telecommunications systems, there would soon be pressures for trade restrictions.
        Britain is yet again in danger of being one of the few open markets, with little benefit for our technology and little benefit for our industry. Telecommunications and the industries surrounding it, which are gradually converging, are the base for the next industrial revolution. It will be absurd if, through the Bill, we are to throw away the opportunity in pursuit of dogma.
        Mr. McWilliam: Like my hon. Friend the Member for Westhoughton (Mr. Stott), I must declare an interest as a Member sponsored by the Post Office Engineering Union and as a telecommunications engineer for 22 years before entering this place. I do not speak entirely in ignorance of the effects of the Bill.
        I congratulate my hon. Friend the Member for Birmingham, Northfield (Mr. Spellar) on his speech. He made an excellent contribution and addressed himself to some serious problems which the old Post Office, British Telecom and the Government have failed to face. One of the problems is the effect that the Bill will have on British industry.
        My hon. Friend the Member for Northfield alluded to the endemic problems, and these can be summarised quite briefly. There has been the gutlessness of the Post Office and British Telecom in not insisting on getting new equipment. There has been opposition from British industry to investing in new technology. I am sure my hon. Friend will agree that it is the combination of those two misguided approaches that has caused some problems that
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        have been thrust down our throats as excuses for introducing the Bill. These have been only excuses, and not reasons.
        The real reason is that British industry has a rotten record of investment in technology. The reasons are nothing to do with the fact that British Telecom has never used its market position to force British manufacturing industry into the second half of the 20th century. The reasons are connected purely with the ability of a few individuals to make the maximum profit, and the devil take the hindmost.
        I was fortunate to catch your eye earlier in the debate, Mr. Deputy Speaker, and to be permitted to intervene on new clause 1. I said that the new clause is in effect a new BT Bill. We do not like it any more than we liked the last Bill, but it is very different in kind from what we discussed in Committee, when we spent 63 hours trying to convince the Government that what they had started to do was wrong. Evidently the Government have accepted that they made some fundamental mistakes, because new clause 1 is a great change from the old clause 3, but it is not by any stretch of the imagination a charter for most of the telecommunications customers. It is still a charter for big business in the centre of London, Birmingham, Glasgow, Liverpool and Manchester. It does nothing much to defend the need for a pervasive telecommunications system to which all have access.
        The hon. Member for Aldridge-Brownhills (Mr. Shepherd) took some flak from my hon. Friend the Member for Westhoughton, because in Committee the hon. Gentleman was consistent in his argument about cross-subsidisation. I do not agree with his argument, but I accept his consistency and the logic and clarity of the argument. However, we are not talking about mink coats or Rolls-Royces. Especially in the rural areas, we are talking about the staff of life. Only the telecommunications system enables those living in remote areas to have any life at all.
        It is not fair to try to equate the financial decisions that would need to be taken if one were buying a mink coat or a Rolls-Royce with the financial considerations that face those living in remote areas. This is one of the aspects of new clause 1 to which I take most exception. There are cop-outs. There is the phrase
        "save in so far as the provision thereof is impracticable or not reasonably practicable'".
        What does "reasonable" mean in that context? The hon. Member for Aldridge-Brownhills made great play of the ability to take a licensee to the courts, but anyone taking a licensee to court will be faced with the word "reasonable", the meaning of which will depend on the circumstances. The court's decision will depend on a judge's view of the particular circumstances of the case. That does not seem to be the guarantee described by the Minister of State when he moved the new clause at great length.
        8.30 pm
        There is another problem, to which my hon. Friend the Member for Northfield (Mr. Spellar) alluded, but did not expand his argument as much as he should have done. I refer to new clause 1(2)(h), which contains the words,
        "to maintain and promote competitive activity on the part of United Kingdom operators in markets outside the United Kingdom".
        It appears that the clause states that the purpose of the Bill is to enable the British Telecommunications

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        manufacturing industry to sell the very best and latest equipment all over the world, but that has to be taken in the context of the rest of the clause. When that manufacturing industry is to be undermined by cheap, shoddy, foreign competition and imports from other countries of equipment of questionable technical reliability and standards—I use those words advisedly—how on earth can we base an outgoing, technically advanced competent manufacturing industry on that? The rest of the clause says, "Thou shalt buy equipment wherever thou shalt find it as cheaply as thou shalt be able to get it, and ram it down people's throats." How on earth can that pie in the sky idea be realised?
        I agree with my hon. Friend the Member for Northfield. BT has something to offer, and not merely in terms of maintaining employment in Coventry, Birmingham, South Shields, Liverpool, Glasgow, East Kilbride, Glenrothes and all the areas where telecommunications equipment is manufactured. In Martlesham we have a unique and superbly successful research establishment. The output from that establishment could have a great effect in improving communications, not just in the rich Western world that can afford to buy equipment, but in the developing countries.
        Some of the equipment that is being designed and manufactured at Martlesham could have a dramatic effect on people's ability to communicate. The ability to communicate is one of the most important things that we can give to our fellow men. We should do so not just at any price. We should produce the equipment which they and their rich Western competitors want. That would revitalise the export of British technology and expertise, which, unfortunately, has been neglected of late.
        Mr. Richard Shepherd: I am slightly confused by the arguments that have been advanced by the hon. Gentleman and his hon. Friends, who identified the relationship between BT and its suppliers as intimate. Why has that not served to enable the suppliers to be world efficient and world competitive when that intimacy of relationship has enabled them to reject the advances of foreign competition into our markets? Why are we confident that the situation will improve?
        Mr. McWilliam: The hon. Gentleman has raised an interesting point. I thought that I had dealt with it earlier when I argued that there were two basic and conflicting interests in that relationship. The first is the interest of BT in getting the type of equipment that it wants, that it can get along with and that people will swallow. The second interest is that of manufacturers in making the most profit out of existing capital equipment. BT has not had the incentive to use its market position to force manufacturers to advance.
        If I am criticising anyone, I am not criticising the manufacturers. If BT had told the manufacturers, "We are not buying your old rubbish. If you make this, this and this, we will buy it, but if you continue to make the old rubbish that you now make we will not buy it" things might have been different. BT has never done that. My union has made that argument for at least the 20 years that I have been a member of it. The point has never been taken up properly. It had nothing to do with the fact that BT was
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        nationalised, a Department of State or anything else, but everything to do with the style of management and the type of attitude that is native to manufacturing industry.
        Mr. Richard Shepherd: Surely it was to do with the fact that BT is a monopoly and the customer, the consumer, did not have a choice.
        Mr. McWilliam: The hon. Gentleman has raised another interesting point. All telecommunications systems are a monopoly at some level, whether it be at a national level, as in the United States, a state level or a city level. Telecommunications suppliers do not run parallel networks in the same city at the same time. We are on our way to fulfilling the words in subparagraph 2(b),
        "to maintain and promote effective competition between United Kingdom operators".
        That can be true only in the trunk sense. As the hon. Member for Aldridge-Brownhills well knows, it cannot be true in the overall sense. Moreover, it is only true in the trunk sense in that companies such as Mercury have set up to do a cream-skimming job, whereas BT has to provide a comprehensive service. It is nonsense to suggest that there will not always be a monopoly in this type of system at some level. No one is suggesting an alternative and privatised M1 motorway to the hon. Gentleman's constituency, and if anyone did he would fail miserably. On the other hand, some people suggest that Mercury can make money. It can do so only by taking money from someone else—and that someone else is BT.
        Mr. Richard Shepherd: No doubt the hon. Gentleman will help me, but one of the arguments is that the new technologies that are advancing extremely rapidly are bypassing some of the old technologies and that in the easily foreseeable future there will be transmission by alternative services, whether by cable through our television sets or by satellite, which I hope the Minister will liberalise and offer alternative licences in. They will undermine the monopoly of the old-style provider of the service. The hon. Gentleman's anxiety may be that the union which he represents with distinction will be undercut by the new technologies.
        Mr. Mc William: Technology cannot overcut or undercut anything. Only the application, ownership and use of technology can do that. I reject any technological argument out of hand. I know that BT, with its new systems, is as technologically advanced as any system in the world. System X is a far more advanced system than anyone else is using. It is a shade more expensive, but it is rather better. At Martlesham, BT developed fibre optics. Plessey has a system of transmission and reception of light pulses which uses a window that is unavailable to anyone else in the world.
        At the level of technology and our ability to use it we have nothing to apologise about, but we have to apologise for our past inability to realise that things could not go on as they were. My criticism of the Government is that, instead of being concerned with the system, with the ability of people to have a telephone and to use it effectively, they are concerned with the ability of people to make money out of the profitable bits of the system and to leave the rest of it to fester as it will. That is the basic difference that the Opposition have with the Government.
        The Government do not and will not accept that telecommunications, the telephone system, is far too important to be made the object of mere cream-skimming,

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        ripping off the greatest amount of profit. It is far too important to a modern society for that to be permitted. The Minister talks about telecommunications instead of telephones and such things. I think that he honestly recognises the role that telecommunications has to play in the development of our country. Unfortunately, he happens to be a member of a party and of a Government ruled not by the technologists and not by the people who want to ensure that their old auntie in Caithness can speak to a relative in the west of England. The Government are utterly besotted with the idea that there is private profit here for somebody, that he ought to be able to make a profit, and that the benefits of it should not go into the development of the system.
        The hon. Member for Caernarvon (Mr. Wigley) has just come into the Chamber. I shall not attempt to follow him in going round all the villages in his constituency, as he did in Committee, because I cannot pronounce the names of some of them.
        It is appalling that, having gone through all the long hours in Committee, and having heard the Minister say that he accepts that something has to be done about public call boxes, about ensuring that the emergency services are run, and about the services in rural areas, he should table a new clause such as this. Even the Minister admits that it is not exactly in the kind of wording that his informal legal adviser, his hon. Friend the Member for Leominster (Mr. Temple-Morris), would have liked. It has been severely watered down in the Department. If the Minister had said, "It is the best that I can get away with because the Cabinet wants to rip off the greatest amount of profit," and had gone on to show a bit of heart and tried to make sure that some sort of service was available, most of us would have said, "Good for you, we shall still vote against you but you did try." Instead of that, the hon. Gentleman says that his new clause is the millenium and that it will protect public call box services, emergency services and services in rural areas.
        8.45 pm
        During our discussion about "a duty to provide", as opposed to "shall provide", the Minister admitted that the wording ought to be "duty to provide". If he agrees to make that change, I shall apologise for being too harsh on him, but I suspect that he will say that he has been advised that "shall provide" means the same as "duty to provide". The hon. Gentleman nods in confirmation. I cannot accept his assurance. I ask the House to accept that the Minister has had the ground cut from under him yet again, and I urge hon. Members to vote against the new clause.
        Mr. Ken Weetch: I shall concentrate on research and development, which will play an important part in the future of not only the telecommunications network, but British industry generally. New technology will be a precondition of industrial and economic advances.
        I declare a constituency interest. A number of my constituents work at the Post Office research centre at Martlesham and I have been in touch with the management and unions there over a long period. I wish to deal with the issues that loom large in their future.
        I welcome subsection (2)(c):
        "to promote efficiency and economy on the part of United Kingdom operators"
        and paragraph (d):
        "to promote research into and the development and use of new techniques by United Kingdom operators."
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        I hope that the Minister who is to reply will tell us what future the Martlesham research centre will have under the new conditions that will prevail in the telecommunications industry. What changes will affect that centre and what effect will they have on its skilled labour force?
        I wish to ask some general questions. What will be the future of general high-level research and development under the new system, which will involve more competition? Will there be more investment in research and development? What will be the quality of the research that is carried out? The latter question is enormously important, not only as a broad principle, but for the future of those working at Martlesham.
        Martlesham has built up a research team of high quality over a long period. I am sure that every hon. Member would want to pay tribute to the high quality of the research there. It is important to realise that the quality of the research has stemmed from the fact that people work together as a unit. What will happen to it? Will it be left intact or will it be split up now that the industry is to be opened to the winds of competition? Is the quality of research likely to be maintained, despite the new order of things? These are important questions for the Minister to answer.
        The people who 'work at Martlesham need an assurance about their future because they have made a high quality contribution to our telecommunications industry. Most of them have serious misgivings about the future. There will be inevitable disruption—inevitable because of the changes which to me look to be brought about by political dogma rather than by any practical consideration. There is a definite danger that success will be interfered with because of the changes that have not been fully thought out. These are legitimate fears. What will happen to the research done, in terms of volume and quality? Secondly, what will happen in particular to Martlesham and the people who work in it?
        We are told that in the future research will be determined more by commercial considerations 'than it ever has been before. Will that lead to higher quality research? I do not know. I have heard it argued from the Government Benches that when there is a more competitive system it is more highly tuned to the market and there is more research, more investment in research and development and more activity. Is that so? I doubt it. However, if there is a higher volume of research, what will happen to the structure of research at Martlesham, and what changes will occur there? Telecommunications will now be governed by commercial considerations, but the research done by BT in Martlesham has been conducted on certain principles. There, the research has been done not for commercial considerations but for the national interest. How will things alter?
        I quote from some correspondence that I have had with the trade unions and the professional associations involved in Martlesham. They say:
        "The principal and very understandable concern is the possibility of cuts in research and development and consequential job losses".
        This is especially so in an area where there are few other employment prospects. I hope that all hon. Members will recognise the legitimate fears that must arise from people who have invested a substantial part of their lives in Martlesham. Over a continuous period, many people have

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        moved from London and resettled in another part of the country. They have invested a great deal in doing so. Now a question mark hangs over their future.
        How far is the promotion of competition and the securing of efficiency and low cost in the telecommunications industry to be based on foreign equipment? Here, we have a contradiction in principle. If we wish to go for lower costs and competition and we exclude any other principle, do we pursue that objective by importing foreign equipment, possibly with the loss of jobs in British suppliers?
        In a moment I intend to try to bring out one of the general contradictions in the clause but, before I leave this section of my remarks, I want to underline the importance of very high quality research and development and technical progress in the industry. We should hesitate and think very carefully before damaging what is so valuable and has been built up over such a long period.
        I seek the assurance of the Under-Secretary on a number of matters arising generally in new clause 1. The clause contains a long list of aims and objectives which relate to the Secretary of State and the Director General and the functions that those two persons are to exercise.
        I am not an expert in these matters, but it appears from the clause that the Government sat down with a fresh sheet of paper and made a list of all that could possibly be considered virtuous. The Government are trying with the clause to get into the Kingdom of Heaven with the clause. It contains about everything. But we must ask not whether everything is in it but how everything in it fits together. There are items in the clause which contradict others. But there is a let-out:
        "The Secretary of State and the Director shall each exercise the functions assigned to him by this Part in the manner which he considers is best calculated",
        and so on. That means that they can both make up the rules as they go along. If at one time it appears to them that they should emphasise competition, they will underline it. If it is some other objective, they will underline that. The clause means all things to all men.
        The Government have argued consistently that the clause is based on the principle of free competition. However, it contains provisions which are nothing of the kind. Some of the competition about which the Government talk in parts of the clause is a complete masquerade. I am tempted to think that when the Government drafted the clause, they not only made it up as they went along but they did not know what they were doing in certain parts of it.
        There is one central contradiction in the clause. While the Government have been arguing about free competition, at the same time in another part they have been arguing about social obligations. It is impossible to argue both of those points at the same time because they simply do not go together.
        I was interested in the speech made by the hon. Member for Aldridge-Brownhills (Mr. Shepherd), because he said that it was necessary to try to reconcile the position and to identify quite clearly when Government assistance was forthcoming and when it was not. The hon. Gentleman seemed to disagree with a blanket cross-subsidisation principle because then you did not know where you were.
        Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. I thought that the hon. Gentleman referred to me.
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        Mr. Weetch: I beg your pardon, Mr. Deputy Speaker. As I understood the hon. Member for Aldridge-Brownhills, he was saying that if Government assistance was forthcoming, it should be identified and clearly visible. I do not know whether he would say that about agricultural support, where it is possible to identify a deficiency payment as opposed to a common agricultural policy blanket price subsidy across the board. I am glad to hear the hon. Member say so and I appreciate his consistency.
        In the long run, there are bound to be commercial pressures on the social obligations that the Government are trying to write into the new clause. When commercial pressures and free competition on a cost-related principle are brought to bear on the social obligations, they will, unless we are careful, go by the board. The House needs much more reassurance from the Government than it has had so far. I trust that hon. Members will get that reassurance when the Under-Secretary of State replies.
        Mr. Richard Shepherd: I had not intended to make a speech on this clause because so much of the ground was trawled in Committee. I wanted to make one or two points merely by intervening in the speeches of hon. Members. The speeches have covered very marginally the tremendous issues of cross-subsidisation and the problems that it can give rise to. Although that has been alluded to briefly in the House and was covered, not very effectively, in Committee, I was prepared to let it go, reassured in the belief that the other place would look into these questions rigorously and form some conclusion about them. I appreciate that that may be an unfashionable view, but the Government have been left little option because of the attitude adopted by the Opposition in being unconstructive in our many debates in Committee.
        I was stung into trying to catch your eye this evening, Mr. Deputy Speaker, by the remarks of my hon. Friend the Minister about the extent of competition and the way in which that issue is being approached. One of the great deficiencies of the Bill and of this clause is that it does not act as an engine for competition. There is nothing making it incumbent upon either the Secretary of State or the Director General of Telecommunications to issue a licence. From the date that the Bill is passed, I understand that no more licences need be granted. The Government are placed in the invidious position of privatising a mammoth monopoly with what one can only recognise as monopoly profits, and consigning that to private individuals without requiring Oftel to issue new licences as a statutory responsibility.
        The only way that the Government can best protect the interests of the consumer—I fully endorse and support this view—including commercial and industrial users, is by introducing competition. That would give us all a choice in respect of the use of the systems available. The Bill does not insist that that happens. The Government are dependent upon the good will and the intention of the Secretary of State or the Director General of Telecommunications. I would have liked to have seen inserted in the Bill a requirement that licences be issued in the absence of certain damaging criteria to the rest of the system and, where refused, the reasons published. I fear that we could get the worst of all worlds—a private monopoly that is not responsible and not subject to

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        competition. I say that with some hesitation because I listened as carefully as possible to many of the speeches made in Committee, and my hon. Friend the Under-Secretary of State, who spoke eloquently and forcefully on the Bill, mentioned a duopoly. I listened to what the Minister said about Mercury, and I think that we are getting into the worst of all possible positions. We are trying to coax Mercury into life but also to protect it from competition other than with BT, and at the same time argue that that is in the interest of the consumer. I should like anyone to be able to enter that market. Why do we have to give a semi monopoly, or, as my hon. Friend the Under-Secretary called it, a duopoly to such big interests as those behind Mercury? Is that what the Conservative Government were elected to do? How does it genuinely assist the consumer, our constituents? That is what niggles me.
        The Minister said that I had failed to realise how far we had gone. Perhaps I am impatient and saw the Government as a valiant reforming Administration who, after four years in office, could turn round and say that the principle of competition and open access to it would be vigorously pursued. However, that it is not so at present.
        I have also raised the question of access charges, but only because they raise the spectre of cross-subsidisation in the way that the Americans fear, and try to identify. There are advancing technologies. I listened carefully to the hon. Member for Blaydon (Mr. McWilliam), who spoke as if those developing technologies were not going on apace. I am not a seer and cannot envisage the state of technology in 20 years' time, but there are developments now that mean that in the not too distant future we may be able to bypass present arrangements. That will have a tremendous impact on BT and on those providing the more conventional services. I am mindful of our debates on cable television and of our ultimate ability to link one television to another and to provide effectively alternative telephone systems. Indeed, I believe that Plymouth can already do that. That will give citizens the choice of using a cable television system for transferring messages. I understand that there will be no access charges for that and, therefore, those involved will be at a competitive advantage, although in limited areas at present.
        What about the use of satellites? Can I or can I not beam in lines through my own exchanges? Can I link up through the cable television? Will I be encumbered by access charges? I raise those general points in the hope that they are taken up elsewhere and because I want to reiterate to the Government my concern that when this Bill, with the new clause, is enacted no new licences will need to be granted. There is a rather vague intention—although I do not wish to deprecate it too much—to promote the interest of United Kingdom consumers in the manner which the Secretary of State considers is best calculated to do that, but we all have a different idea of what is in our best interests. If the right hon. Member for Bristol, South-East (Mr. Benn) was Secretary of State again, he might deem it to be in the best interests of consumers not to have any competition. Therefore, what safeguard is there for the charges that we pay for our systems?
        Mr. Stan Thorne: The hon. Gentleman has made his opposition to monopoly clear and has taken up the point made by the Under-Secretary of State, who invented the term "duopoly". But does the hon. Gentleman accept oligopolistic competition as valid? If so, why?
        Mr. Shepherd: All through the 161 hours on this Bill I have tried to argue resolutely, albeit not very successfully, for competition and consumers' interests. By and large, those are not provided in oligopolies, duopolies or monopolies. Where the latter exist, because of the nature of the business, they should be curbed and restrained until full competition can be introduced, if that is possible. In some industries—perhaps the water industry, I do not know—it is not always possible to introduce that freedom. However, in telecommunications, over a period it is possible to introduce competition. That is recognised in the United States and it is recognised by my hon. Friends the Ministers who are associated with this Bill. That I welcome. What worries me, however, is that it can come to a halt. I want to impress on Ministers that this clause could have encompassed at this stage something that made it incumbent on the Director General or the Secretary of State for Industry to issue a licence in the absence of compelling criteria that would damage the overall structure of the industry and, where a licence is refused, to publish the reasons for refusal.
        I do not intend to take any more time, other than to say, with hesitation, that on balance I think I shall abstain when a vote is called.
        Mr. Golding: This is a unique occasion for me. On every previous occasion when I have risen to speak, you, Mr. Speaker, have gone out. This is the first time when, after you have arrived, I have been called to speak. Therefore, it is unique.
        I have to be brief, because the Minister of State spoke at such length earlier. He did so because he failed to answer so many debates in Committee, and because he failed to defend his clause 3 and had to revise it completely.
        The other reason why I speak briefly is that we all want to hear my hon. Friend the Member for Whitehaven (Dr. Cunningham), who was so successful in pursuing Labour party policy last week and in shooting the fox. My hon. Friend did an excellent job last week, and tomorrow we shall welcome Ossie O'Brien. I only hope that my hon. Friend has briefed him to take part in the debate on this Bill later in the afternoon.
        I do not regard new clause 1 as the most important part of the Bill. In my opinion, the two most important parts of the Bill are those that further take away the telecommunications monopoly from British Telecom and those that address themselves to privatisation. It is a red herring to regard this new clause as the heart of the Bill. It is window dressing; it is cosmetic.
        The new clause is the Government's response to the rural lobby. It is the realisation by the Government that people in the countryside have caught them out. The Government have said: "Let's find a form of words that we can put in a new clause and then put it into a circular that we can send to Back Bench Members to keep them out of the Chamber when we debate this matter on Report. Let them think that the Government have met their point of view, so that they will vote with the Government, instead of courageously abstaining."
        Tonight the House is in no better a position than we were in Committee to debate this matter with intelligence. As the hon. Member for Leominster (Mr. Temple-Morris) said, we are still waiting for the licence. I hope that we shall raise this matter again tomorrow. The Minister and Conservative Members made it clear at the beginning of

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        the Committee stage that we could not intelligently discuss the Bill without seeing the draft British Telecommunications licence. There was agreement on that. The Minister supported us. He told us that we could not have a considered discussion until we had seen the licence. We still have not seen it. The reason is that the chairman of BT would not give the Minister permission to produce the draft licence.
        9.15 pm
        Our debates have been frustrated, not only by Ministers' incompetence and lack of comprehension but by the chairman's refusal to let the Government give to Parliament the information that it requires for purposeful debate. We came across that earlier today. I quoted the Minister's statement that he was writing to the chairman of BT to ask for details of the access charges that are to be used to fund the rural and emergency services, kiosks and some residential services. The Minister wrote to the chairman for that detailed explanation in order to inform the Committee. As he was so often embarrassed in Committee, so he was shamefaced this afternoon to admit that the chairman of BT had not had even the decency to reply to his letter. We still do not have details of the access charges. Is it any wonder that the only Conservative Member—the hon. Member for Aldridge-Brownhills (Mr. Shepherd)—to have listened to the whole of tonight's debate has decided to abstain? Nobody who has listened to the speeches from the Government Benches today could vote for the new clause, particularly in the knowledge that vital information has been withheld not by Ministers or civil servants but by the chairman of BT.
        One wonders why the Government have proceeded with the Bill when they are unable to give us, and do not have, such vital information. The Minister said that he was not competent to give the information and could not answer our questions but that he would ask the chairman of BT to do so. What a situation! It is not only the licence and the access fees; we are no wiser about the pricing policy. When I listened to Conservative Members trying to get information from the Government, I felt a slight tremor of sympathy for them. They have desperately tried to find out what the formula RPI minus X means. What does it mean? What is X? The hon. Member for Aldridge-Brownhills shakes his head in despair, like a sad cocker spaniel, at what the Government are doing to telecommunications. He described the Bill as creating the worst of both worlds and all Labour Members must agree with that. I fear that I shall have to deal on Third Reading with the principle of some of my amendments.
        The hon. Member for Leominster acted as our unofficial legal adviser in Committee. On more than one occasion he drove a coach and horses through the sloppy drafting of the Bill. Tonight he asked how important were the words "he considers". The new clause states:
        "The Secretary of State and the Director shall each exercise the functions assigned to him by this part in the manner which he considers is best calculated—"
        Of what value is the clause? The Secretary' of State or Director General can say in court "My judgment may be at fault, I may not have done my job properly, but I can put my hand on my heart and say that I considered that this was the best calculation that I could make."
        The clause is not worth the paper that it is written on. The clause is not worth anything at all. The words "he
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        considers" make the clause a sop to the rural lobby. The clause is there only because the POEU and the other trade unions drew the attention of the people in the countryside to the devastation that the legislation will cause to their telecommunications system. In Committee I examined the words "not reasonably practicable". In the licence, but not in the Bill, "not reasonably practicable" is illustrated. If a service cannot be provided because of the laws of nature or the topology of the earth, it is deemed to be "not reasonably practicable".
        I asked the Under-Secretary for an example. He asked me to consider what would happen if a mountain shadow made telecommunications impracticable. When challenged about the constituency that the Government Chief Whip represents in the Lake District the Under-Secretary ducked. He did not know whether to tell the truth—that there would be no service for the Chief Whip's constituents. It was a pathetic sight to see the Under-Secretary in Committee trying to justify the small print in the proposals. I draw the attention of the House to the gibbering by the Minister when humiliation was poured upon him and the Under-Secretary in Committee.
        The term "reasonably practicable" was not the only term which failed to stand analysis in Committee. The expression "all reasonable demands" suffered the same fate. If someone in the countryside will not pay BT the costs attributable to supplying that service there are no "reasonable demands". The hon. Member for Leominster underlined that if the people in the countryside are told that they have to pay the full cost of their telecommunications service they will not think that the Bill contains a fair definition of "reasonable demands". He feels that very strongly. He is not taking a cosmetic view of rural interests—indeed, he is speaking for them. It is the Government who are taking a purely cosmetic view.
        Public call box services, emergency services and services in rural areas are mentioned in the new clause, but the residential subscriber is not. In Committee we established beyond doubt that one of the casualties of liberalisation and privatisation will be the residential subscriber. Since liberalisation the prices paid by the residential subscriber have risen so that the costs to the large businesses can be reduced. The consequences of privatisation for the residential subscriber will be even worse than they are from liberalisation. I intend to speak about that matter on Third Reading.
        One of the Opposition's constant complaints in Committee was the slack draftsmanship and wording of the legislation that we are being asked to approve. Earlier today, during a lengthy speech, the Minster refused to give way when Opposition Members wished to question him on paragraphs (e), (f) (g) and (h). I do not blame him, because those paragraphs are written in such a way that they are absurd.
        Paragraph (f) states that the Secretary of State and the director shall have the function
        "to encourage foreign users to establish places of business in the United Kingdom".
        The definition states:
        "'foreign user' means a user of telecommunication services outside the United Kingdom".
        Does that wording mean that if an Eskimo uses a telephone in an igloo in the Antarctic—a user of telecommunications overseas—there is a duty on the Secretary of State and the

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        Director General to try to persuade that Eskimo to establish a place of business in the United Kingdom? That is what the wording suggests.
        We are owed an explanation of what those paragraphs mean. What are their qualifications? What parameters will be placed around them? The hon. Member for Croydon, South (Sir W. Clark) mutters from a sedentary position, with his feet spoiling the furniture. He has obviously come out of the cold into the warmth. He has no interest in telecommunications. As is typical of Conservative Members, he makes nonsensical remarks. I can tell the hon. Gentleman that that monopoly has been reserved for the hon. Member for Northampton, North (Mr. Marlow), and I ask him to desist.
        9.30 pm
        Will the Under-Secretary of State rectify the omission of the Minister for Industry and Information Technology? Will he address himself to new clause 1(2)(e), (f), (g) and (h), and tell us precisely what they mean for British manufacturers and British operators? Finally, with regard to new clause 1(2)(h), what sense does it make to maintain and promote competitive activity on the part of United Kingdom operators in markets outside the United Kingdom? Does the Under-Secretary of State think that the Japanese are telling their companies to go and compete against each other in Britain? Does he think that the Germans are telling their telecommunications companies to go and compete against each other in Britain? Does he think that the American companies are doing that? That is nonsense. What the Government should be saying to telecommunications companies is "Go together into the world markets and try to obtain orders for Britain." The Government should not be exporting them to compete against each other and to cut each other's throats. I hope very much that we reject new clause 1.
        Dr. John Cunningham: It is always difficult to follow my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding), whether he is speaking about telecommunications or any other subject. Perhaps I should correct him in that foxhunting is outwith Labour party policy. Far from trying to shoot the hon. Member for Shipley (Mr. Fox), I may have done my best to snooker him during the Darlington by-election, but the real purpose of my efforts was to burst the bubble of a party which, in the name of the right hon. Member for Crosby (Mrs. Williams), has no roots, no principles, no philosophy and no policies.
        It is not surprising that we have had a long debate on new clause 1. We had a long debate about the clause that it seeks to replace. In defence of the Minister for Industry and Information Technology, we made progress in Committee and we see in the redrafted clause that "guidelines" has been changed to "general duties", but much of the wording about which my hon. Friend the Member for Newcastle-under-Lyme and others have complained remains, as does the complete lack of definition of priorities for action either by the Secretary of State or by the Director General of Telecommunications.
        Some of the best passages in the new clause are due to amendments moved by the Opposition in Committee. The use of the word "duty" is one example. The provisions for the disabled and the promotion of research and development are other examples. We have also, as my hon. Friend mentioned, removed the word "practicable" and the word "needs" and other desiderata, so painfully
        98
        explained to the Committee by the Under-Secretary of State late one evening, which resulted in a row. Nevertheless, what remains is unacceptable.
        The vagueness has been replaced by phrases such as "to promote" and "to encourage" which themselves leave wide open some of the important issues with which the clause seeks to deal. Lurking behind the clause are the all-important licence conditions and the guidelines for the Director General and the Office of Telecommunications. So this is a far from satisfactory state of affairs.
        The general duties in the clause are no substitute for specifc duties being laid upon either the Secretary of State or the Director General. We would have much preferred clear and specific duties in respect of a number of matters which we sought to have clarified.
        The Minister for Industry and Information Technology mentioned the importance of licensing, safety standards, standards for the provision of services and the need for approval to be given to appliances and contractors. The Opposition go along with much of what he said on those issues. In spite of the hon. Gentleman's remarks, the clause does not set out clear objectives for the United Kingdom telecommunications industry. The Bill fails to set out clear objectives and a strategy. Instead, it will provide a free-for-all in the telecommunications market and industry. We do not accept that that will be in the best interests of British manufacturers, of our telecommunications indudustry or of a universal telecommunications service and network, which we reckon to be all important for Britain and very much in the national interest.
        The Minister glossed over the problems that will remain for consumers in not only rural areas but inner city areas and deprived urban areas, where low income wilt not attract investment either from British Telecom in future or from operators such as Mercury. Nor are the problems to be faced by the employees of British Telecom to be taken lightly. The Minister said nothing about them. Almost 250,000 futures are bound up with British Telecom, and perhaps pension rights will be put at risk.
        There is no doubt that the creaming off that will result from the licensing of Mercury will threaten jobs in BT. It is not good enough to say that fears about the provisions of the new clause have been removed or assuaged. It is not true to say, as was implied, that the consumer organisations will be happy with the redrafting of the clause. The Consumers Association, the watch dog body—the Post Office Users National Council—Rural Voice and the National Farmers Union have all expressed deep anxiety about the Government's proposals.
        It was clear from the time that the Minister gave to these matters that he is still sensitive about them. The reality is that Conservative Back Benchers, many of whom purport to represent rural communities and rural areas—an honourable exception is the hon. Member for Leominster (Mr. Temple-Morris), and perhaps the hon. Member for Aldridge-Brownhills (Mr. Shepherd)—have missed a marvellous opportunity to toughen the Bill and to ensure that a service is provided for those communities. They have missed it because they have not taken enough interest in the Bill, and nor have they sought to bring sufficient pressure to bear on their Government to bring about the changes—
        Mr. Richard Shepherd rose—
        Dr. Cunningham: No. I should like to give way but I am very short of time.

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        There is no doubt that, as with rural bus services and the threat to rural schools and sub-post offices, a real threat to rural telephone services will remain in spite of the redrafting of the clause.
        It is fair to ask who is really in charge of what is being proposed. On his own admission, the Minister of State asked the chairman of British Telecom almost two months ago to give the Committee and the House the details of how access fees will be applied. He has had no answer. That is an appalling state of affairs. The Minister says that he regrets it. I would have expected him to summon the Director General before Report and demand to know what proposals there are for the very important financial mechanism for the support of services in rural areas. It is not acceptable that the Bill should be passed before those proposals have been made clear.
        Another anxiety remains. One of my hon. Friends raised the question of research and development. The Minister agreed that it was an important issue, and the clause was amended appropriately, but nothing has been said about the future financing of research and development. Nothing has been said about who will pay or whether any access fee or similar charge will be levied to ensure that our world lead in such places as Martlesham will be sustained once the privatisation and liberalisation aspects of the Bill have become law—as we regretfully assume that they will.
        Much has been made of competition and choice for consumers, but in reality most domestic consumers, whether in urban or rural areas, will have no choice. They will be left with the services provided by British Telecom. They will not want to expend large amounts of money on equipment. They will want a simple, reliable telephone service, and British Telecom will be the only organisation offering them such a service. The only difference will be that it will have become a private rather than a public monopoly. The Opposition are in no doubt that such a monopoly should be under public control. That would give the consumers the best safeguard.
        The Government tabled the new clause almost at the last possible moment. We have had very little time in which to consider its implications or to amend it. That is typical of the way in which a number of important aspects of the Bill, such as the licence arrangements, were handled throughout the Committee stage. The new clause encompasses many important facets of what the Government propose to do, but it leaves us with many concerns about the impact of the proposal on the community at large, and that is why we tabled a number of amendments which we are discussing together with the clause. The amendments seek to define "general duties" now that the original description of the clause as "guidelines" has been dropped, and to identify what order of priorities will be given by the Government to the many and sometimes conflicting objectives set out in the new clause. The prime example is the objective on the one hand to look after the consumer and on the other hand to promote efficiency and competition. The Minister and his hon. Friends have never been able satisfactorily to tell us how the Director General and the Office of Telecommunications can pursue those two directly conflicting objectives within the same umbrella organisation.
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        9.45 pm
        We tabled an amendment to remove qualifications such as "not reasonably practicable" and "reasonable", which reduced the requirement to provide telecommunications services. As my hon. Friend the Member for Newcastle-under-Lyme said, we have tried to identify the needs of residential subscribers whose bills are certain to rise as a result of the proposals. We have sought to ensure that finance for unprofitable services, for example public telephone kiosks, the emergency services and services in rural areas, is on a stable and long-term base. We have sought to raise questions about the prices to be charged, the service to be provided in non-profitable services and how the access charge is supposed to work. We have sought to remove the requirements to maintain competition in the United Kingdom, which will simply increase imports and reduce British jobs, as many of my hon. Friends have said.
        Finally, we have sought to remove the nonsensical requirement in the Bill which lays a duty on the Director General and the Secretary of State to promote competitive activity overseas in other people's markets, whatever that might mean. We reckon that to be a piece of nonsense. The Government have failed again to come forward with evidence that any other major industrial nation intends to provide any reciprocal arrangements for British manufacturers of telecommunications equipment. Therefore, we do not think that there will be anything other than a further disadvantage.
        I said that some improvements to the clause had been made as a result of Opposition pressure, but we cannot accept it as presently drafted. I shall invite my right hon. and hon. Friends to reject it in the Lobby.
        Mr. Butcher: We have had a long, six-hour debate on new clause 1, but when one bears in mind that we had a 60-hour debate in Commitee on the old clause 3, that puts things in perspective.
        In the early part of the debate the Government were challenged by my hon. Friend the Member for Leominster (Mr. Temple-Morris) and a number of Opposition Members to state clearly the definition of the duty that is to be placed on the Director General and the Secretary of State to ensure that the operators provide a universal service. I agree wholeheartedly with the purpose of amendment (a) to new clause 1, which is to ensure that the Secretary of State and the Director General are each placed under a duty to exercise their functions described in the new clause. However, the drafting of the new clause achieves precisely the effect that the amendment seeks. The use of the imperative through the word "shall" in its opening words imposes the duty. There is no doubt about that. The amendment adds nothing.
        I draw hon. Members' attention to a number of other duties in the Bill that are placed on the Director General and the Secretary of State. For example, in clause 11 the Bill enunciates a duty to publish a reference to the Monopolies and Mergers Commission. It says:
        "The Director shall publish a reference".
        In clause 13 there is a duty to amend licences following MMC reports. The words used there are:
        "The Director shall … make such modifications".
        Clause 52 states:
        "The Director shall … make to the Secretary of State a report on his activities".

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        Under clause 20 the Secretary of State has a duty to consult the persons running the telecommunication systems before delegating the functions under clause 19. It states that
        "the Secretary of State shall consult with the persons running the telecommunication systems concerned".
        In clause 50 there is an unequivocal duty on the Secretary of State to lay copies of directions before Parliament. It states:
        "The Secretary of State shall lay before each House of Parliament a copy of every direction given under this section".
        I remember the debate that we had in Committee. I remember my hon. Friend the Member for Leominster pursuing his argument with tenacity on behalf of his rural constituents. I remember proffering my version of the proposed amendment to him, which sought to satisfy his legitimate demands. I remember saying that night that we would elevate to a duty the need to secure the prime requirement—I even used the word "paramount"—which is a universal service. I can give my hon. Friend the Member for Leominster the strongest and most unequivocal assurance that the use of the word "shall", by every legal precedent that we can muster, not merely in this Bill but in others, imposes that duty with a capital "D".
        My hon. Friend the Member for Leominster pressed me that evening to include not merely the first telephone and the 999 emergency service, but other telecommunications services. I recall that after an intervention, which I might even call a provocation, from the hon. Member for Newcastle-under-Lyme (Mr. Golding), who is our resident expert on these matters—I use those words in the kindest sense—I was provoked into saying something that was tantamount to a confession that the duty pertained only to the first telephone. I should have thought that he and my hon. Friend the Member for Leominster would rejoice that we have expanded that duty to telecommunications services. The broader spread of services can now be made available universally, subject to the constraint that hon. Members on both sides of the House have recognised as reasonable. Not only is that enshrined in the Bill, but something similar is enshrined in the previous Bill.
        We have here a definition of the need to provide a universal service. It is a duty. We have broadened it, enshrined it and made it subject to supervision and checking by an impartial Director General. Moreover, we have made him accountable to the Monopolies and Mergers Commission for amendments to licences as he must secure the commission's permission to amend them. If we need it as a final sanction, we are even able to go through the courts, to take mandamus or certiorari action to impose duties or to check that the duties have been reasonably fulfilled by the Secretary of State or the Director General.
        Many questions have been asked, but there is one in particular which hon. Members on both sides of the House have asked. It relates to the paragraph which endorses the need to make proper provision for the disabled. The Government have given considerable thought to the effect of liberalisation on the disabled, as anyone who has followed the debates on clause 3 will know.
        We are deeply grateful, not only to my hon. Friends, but to the right hon. Member for Manchester, Openshaw (Mr. Morris), who has been persistent in his lobbying on the subject. The right hon. Member for Salford, West (Mr. Orme) also referred to it. Two points that arise from the
        102
        increased competition in the supply of subscribers' apparatus have been discussed between the Department of Industry and representatives of the disabled. They are the ability of the hard-of-hearing to use telephones in conjunction with hearing aids and the safeguarding of the employment of blind telephonists. Various ideas to deal with those problems have been suggested and the Government are looking urgently for technical answers that meet the needs of the disabled at minimum cost to users or British industry.
        The Bill contains ample powers to require special technical features to be incorporated into telephones or private switchboards. I am ready to use those powers for that purpose if that is regarded as effective and the best way forward. I undertake that those points will not be forgotten, but the technical issues are quite complicated and I do not want to prejudge what will emerge as the best answer.
        The hon. Member for Berwick-upon-Tweed (Mr. Beith) entertained us and wanted to get rid of "demands" and insert "needs". The amendment that he proposed would alter the duty imposed on the Secretary of State and the Director General under subsection 1 of the new clause in a subtle but important way. The demand for telecommunications services can be measured, for example, by seeing how many people are prepared to pay extra for a more sophisticated and versatile domestic phone or by assessing the revenue from a telephone kiosk.
        Those examples illustrate an important point—demand in an objective term. We intend that licensees of telecommunication systems will be able to respond to the demands of the market. The need for telecommunications services cannot be measured. It is a subjective matter that can be assessed, but the assessment of need will depend on the person who carries cut the assessment. It would be reasonable to predict that the Secretary of State, the Director General and the licensee of a public telecommunication system would have different views of the need for telecommunications services, although they could be expected to come to agreement on the demand for services.
        If the amendment were to be accepted, someone would have to judge the need for telecommunications services. Would those who propose the amendment wish the judgment of need to be made by the Secretary of State? If so, how could the views of the Secretary of State be imposed on licensees without unreasonable day-to-day interference with their activities? The amendment does not help us in that regard. We believe that the juxtaposition of needs, demands, the universal service, duties, and, indeed, the needs of the market are synthesised in the clause.
        Much was made of the need to innovate. We believe that in the clause we have put together in plain English the requirement for BT operators to apply for, and for equipment managers to supply, the goods and services required to keep the United Kingdom in a good position to make use of the international markets—for international they are.
        I was asked a specific question by the right hon. Member for Openshaw about which services would be covered by the access payments. I can confirm that coastguard services are covered, as are the mountain rescue services and, by the usual understanding, police, fire and ambulance services via the 999 caller service. I understand that BT, the Department of Trade and the

        103
        General Council of British Shipping are now talking about ship-to-shore radio. I regret that I cannot give the right hon. Gentleman the result of the negotiations but they are going on, and his point might be met as a result of the negotiations.
        The hon. Member for Westhoughton (Mr. Stott) let the cat out of the bag. He said that maintenance, unbundled within the price as it was, was never a charge on the farmer whose telephone he fixed, and that it was always within the rental arrangement. He said that custom and practice sufficed. What we are saying in the Bill and in the clause is that, when BT is a private company, custom and practice will not suffice. Certain duties will be placed upon BT. Of paramount importance will be the maintenance of the universal service. But, unlike the arrangement in the early days, the 1960s and 1970s, BT will be liable. It will have lost its exclusive privilege. The Director General will be able to supply to potential customers an alternative quotation for the very service with which the hon. Gentleman provided the farmer. If the farmer thought that he was being overcharged for the service, whether the initial installation or otherwise, he would be able to take action about it.
        The hon. Member talked about jobs and imports. I hope that he will bear in mind that since liberalisation was set in train in 1981, in one market alone—the PABX market—the volume of sales has increased by 50 per cent. I suggest to the hon. Member for Ipswich (Mr. Weetch) that Martlesham will be able to get its teeth into that. There is a new demand and a new dynamic, and a base against which British equipment suppliers can get their costs down, their volumes and their margins up, and attract the international markets, as we have so ordained and encouraged them to do in the subsections of the new clause.
        The hon. Member for Blaydon (Mr. McWilliam) used the old argument about cheap and foreign competition making inroads into our market. He even used the word "substandard". I have been criticised for being too zealous in bringing forward standards, too zealous in seeing that they are objective, and too zealous in seeing that we are not flooded with cheap imports. I give the hon. Member the firmest assurance that we are more than alive to that danger, but we are concerned that, when the liberalisation programme is in place—as it will be in July of this year—British industry will be in a position to compete.
        The hon. Members for Newcastle-under-Lyme and for Whitehaven (Dr. Cunningham) have thoroughly misunderstood the second half of the clause. They know better than I do that telecommunications is now an international market. Satellites have been invented; they exist.
        We have to compete with other suppliers of telecommunications services. We wish the United Kingdom to become a centre of excellence that will attract international traffic and we want overseas companies to set up here and to base their value added network services in the United Kingdom. We believe that the new clause is important and that it reflects much of what was said in Committee. It is relevant—
        It being Ten o' clock, MR. SPEAKER proceeded, pursuant to the Order [16 FEBRUARY] and the Resolution this day, to put forthwith the Question already proposed from the Chair.
        Question put, That the clause be read a Second time:—
        The House divided: Ayes 279, Noes, 225.

        Division No. 103]

        [10 pm

        AYES

        Aitken, Jonathan

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

        Alexander, Richard

        Fletcher-Cooke, Sir Charles

        Alison, Rt Hon Michael

        Forman, Nigel

        Ancram, Michael

        Fowler, Rt Hon Norman

        Arnold, Tom

        Fox, Marcus

        Aspinwall, Jack

        Fraser, Rt Hon Sir Hugh

        Atkins, Rt Hon H.(S'thorne)

        Fraser, Peter (South Angus)

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

        Fry, Peter

        Baker, KennethfSf.M'bone;

        Gardiner, George (Reigate)

        Baker, Nicholas (N Dorset)

        Gardner, Sir Edward

        Banks, Robert

        Garel-Jones, Tristan

        Beaumont-Dark, Anthony

        Gilmour, Rt Hon Sir Ian

        Benyon, Thomas (A'don)

        Goodhart, Sir Philip

        Benyon, W. (Buckingham)

        Goodhew, Sir Victor

        Berry, Hon Anthony

        Goodlad, Alastair

        Best, Keith

        Gorst, John

        Bevan, David Gilroy

        Gow, Ian

        Biffen, Rt Hon John

        Gower, Sir Raymond

        Biggs-Davison, Sir John

        Grant, Sir Anthony

        Blackburn, John

        Gray, Rt Hon Hamish

        Blaker, Peter

        Greenway, Harry

        Body, Richard

        Grieve, Percy

        Bottomley, Peter (W'wich W)

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

        Bowden, Andrew

        Griffiths, Peter (Portsm'th N)

        Boyson, Dr Rhodes

        Grist, Ian

        Braine, Sir Bernard

        Grylls, Michael

        Bright, Graham

        Gummer, John Selwyn

        Brinton, Tim

        Hamilton, Hon A.

        Brooke, Hon Peter

        Hamilton, Michael (Salisbury)

        Brotherton, Michael

        Hampson, Dr Keith

        Brown, Michael(Brigg & Sc'n)

        Hannam, John

        Browne, John (Winchester)

        Haselhurst, Alan

        Bruce-Gardyne, John

        Havers, Rt Hon Sir Michael

        Bryan, Sir Paul

        Hawkins, Sir Paul

        Buck, Antony

        Hawksley, Warren

        Budgen, Nick

        Hayhoe, Barney

        Burden, Sir Frederick

        Heddle, John

        Butcher, John

        Henderson, Barry

        Butler, Hon Adam

        Heseltine, Rt Hon Michael

        Carlisle, John (Luton West)

        Hicks, Robert

        Carlisle, Kenneth (Lincoln)

        Hill, James

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

        Hogg, Hon Douglas (Gr'th'm)

        Chalker, Mrs. Lynda

        Holland, Philip (Carlton)

        Channon, Rt. Hon. Paul

        Hooson, Tom

        Chapman, Sydney

        Hordern, Peter

        Churchill, W. S.

        Howe, Rt Hon Sir Geoffrey

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

        Howell, Ralph (N Norfolk)

        Clark, Sir W. (Croydon S)

        Hunt, David (Wirral)

        Clarke, Kenneth (Rushcliffe)

        Hunt, John (Ravensbourne)

        Clegg, Sir Walter

        Irvine, Rt Hon Bryant Godman

        Cockeram, Eric

        Irving, Charles (Cheltenham)

        Colvin, Michael

        Jenkin, Rt Hon Patrick

        Cope, John

        Jessel, Toby

        Cormack, Patrick

        Johnson Smith, Sir Geoffrey

        Costain, Sir Albert

        Jopling, Rt Hon Michael

        Critchley, Julian

        Joseph, Rt Hon Sir Keith

        Crouch, David

        Kaberry, Sir Donald

        Dickens, Geoffrey

        Kellett-Bowman, Mrs Elaine

        Dorrell, Stephen

        Kershaw, Sir Anthony

        Dover, Denshore

        Kimball, Sir Marcus

        du Cann, Rt Hon Edward

        King, Rt Hon Tom

        Dunn, Robert (Dartford)

        Kitson, Sir Timothy

        Durant, Tony

        Knight, Mrs Jill

        Dykes, Hugh

        Knox, David

        Eden, Rt Hon Sir John

        Lang, Ian

        Edwards, Rt Hon N. (P'broke)

        Langford-Holt, Sir John

        Eggar, Tim

        Latham, Michael

        Elliott, Sir William

        Lawrence, Ivan

        Emery, Sir Peter

        Lawson, Rt Hon Nigel

        Eyre, Reginald

        Lee, John

        Fairgrieve, Sir Russell

        Le Marchant, Spencer

        Faith, Mrs Sheila

        Lennox-Boyd, Hon Mark

        Farr, John

        Lester, Jim (Beeston)

        Fell, Sir Anthony

        Lewis, Sir Kenneth (Rutland)

        Fenner, Mrs Peggy

        Lloyd, Ian (Havant amp; W'loo)

        Fisher, Sir Nigel

        Lloyd, Peter (Fareham)

        105

        Loveridge, John

        Rhys Williams, Sir Brandon

        Luce, Richard

        Ridsdale, Sir Julian

        Lyell, Nicholas

        Rippon, Rt Hon Geoffrey

        McCrindle, Robert

        Roberts, Wyn (Conway)

        Macfarlane, Neil

        Rossi, Hugh

        MacGregor, John

        Rost, Peter

        MacKay, John (Argyll)

        Royle, Sir Anthony

        Macmillan, Rt Hon M.

        Sainsbury, Hon Timothy

        McNair-Wilson, M. (N'bury)

        St. John-Stevas, Rt Hon N.

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

        Scott, Nicholas

        Madel, David

        Shaw, Giles (Pudsey)

        Major, John

        Shaw, Sir Michael (Scarb')

        Marland, Paul

        Shelton, William (Streatham)

        Marlow, Antony

        Shepherd, Colin (Hereford)

        Marshall, Michael (Arundel)

        Silvester, Fred

        Marten, Rt Hon Neil

        Sims, Roger

        Mates, Michael

        Skeet, T. H. H.

        Maude, Rt Hon Sir Angus

        Smith, Tim (Beaconsfield)

        Mawby, Ray

        Speller, Tony

        Mawhinney, Dr Brian

        Spence, John

        Maxwell-Hyslop, Robin

        Spicer, Jim (West Dorset)

        Mayhew, Patrick

        Spicer, Michael (S Worcs)

        Mellor, David

        Sproat, Iain

        Meyer, Sir Anthony

        Squire, Robin

        Miller, Hal (B'grove)

        Stainton, Keith

        Mills, Iain (Meriden)

        Stanbrook, Ivor

        Mills, Sir Peter (West Devon)

        Stanley, John

        Mitchell, David (Basingstoke)

        Stevens, Martin

        Moate, Roger

        Stewart, A.(E Renfrewshire)

        Monro, Sir Hector

        Stewart, Ian (Hitchin)

        Montgomery, Fergus

        Stokes, John

        Moore, John

        Stradling Thomas, J.

        Morgan, Geraint

        Tapsell, Peter

        Morris, M. (N'hampton S)

        Taylor, Teddy (S'end E)

        Morrison, Hon C. (Devizes)

        Temple-Morris, Peter

        Morrison, Hon P. (Chester)

        Thomas, Rt Hon Peter

        Mudd, David

        Thompson, Donald

        Murphy, Christopher

        Thorne, Neil (Word South)

        Myles, David

        Thornton, Malcolm

        Neale, Gerrard

        Townend, John (Bridlington)

        Needham, Richard

        Townsend, Cyril D, (B'heath)

        Nelson, Anthony

        van Straubenzee, Sir W.

        Neubert, Michael

        Vaughan, Dr Gerard

        Newton, Tony

        Viggers, Peter

        Normanton, Tom

        Waddington, David

        Onslow, Cranley

        Wakeham, John

        Oppenheim, Rt Hon Mrs S.

        Walker-Smith, Rt Hon Sir D.

        Osborn, John

        Waller, Gary

        Page, John (Harrow, West)

        Walters, Dennis

        Page, Richard (SW Herts)

        Ward, John

        Patten, Christopher (Bath)

        Warren, Kenneth

        Patten, John (Oxford)

        Watson, John

        Pattie, Geoffrey

        Wells, Bowen

        Pawsey, James

        Wells, John (Maidstone)

        Percival, Sir Ian

        Wheeler, John

        Peyton, Rt Hon John

        Whitney, Raymond

        Pink, R. Bonner

        Wiggin, Jerry

        Pollock, Alexander

        Williams, D.(Montgomery)

        Porter, Barry

        Wolfson, Mark

        Prentice, Rt Hon Reg

        Young, Sir George (Acton)

        Price, Sir David (Eastleigh)

        Younger, Rt Hon George

        Proctor, K. Harvey

        Raison, Rt Hon Timothy

        Tellers for the Ayes:

        Rathbone, Tim

        Mr. Carol Mather and

        Renton, Tim

        Mr. Robert Boscawen.

        Rhodes James, Robert

        NOES

        Abse, Leo

        Bennett, Andrew(St'kp't N)

        Adams, Allen

        Bidwell, Sydney

        Allaun, Frank

        Booth, Rt Hon Albert

        Alton, David

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

        Anderson, Donald

        Bradley, Tom

        Archer, Rt Hon Peter

        Bray, Dr Jeremy

        Ashley, Rt Hon Jack

        Brocklebank-Fowler, C.

        Ashton, Joe

        Brown, Hugh D. (Provan)

        Atkinson, N.(H'gey.)

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

        Bagier, Gordon A.T.

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

        Barnett, Guy (Greenwich)

        Brown, Ron (E'burgh, Leith)

        Beith, A. J.

        Callaghan, Rt Hon J.

        106

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

        Hughes, Mark (Durham)

        Campbell, Ian

        Hughes, Roy (Newport)

        Campbell-Savours, Dale

        Jay, Rt Hon Douglas

        Canavan, Dennis

        Johnson, James (Hull West)

        Cant, R. B.

        Johnson, Walter (Derby S)

        Carmichael, Neil

        Jones, Barry (East Flint)

        Carter-Jones, Lewis

        Jones, Dan (Burnley)

        Cartwright, John

        Kerr, Russell

        Clark, Dr David (S Shields)

        Kilfedder, James A.

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

        Kilroy-Silk, Robert

        Coleman, Donald

        Lamond, James

        Concannon, Rt Hon J. D.

        Leadbitter, Ted

        Cowans, Harry

        Leighton, Ronald

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

        Litherland, Robert

        Crawshaw, Richard

        Lofthouse, Geoffrey

        Crowther, Stan

        Lyon, Alexander (York)

        Cryer, Bob

        Lyons, Edward (Bradfd W)

        Cunliffe, Lawrence

        Mabon, Rt Hon Dr J. Dickson

        Cunningham, G. (Islington S)

        McCartney, Hugh

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

        McDonald, Dr Oonagh

        Dalyell, Tam

        McElhone, Mrs Helen

        Davidson, Arthur

        McGuire, Michael (Ince)

        Davies, Rt Hon Denzil (L'lli)

        McKay, Allen (Penistone)

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

        MacKenzie, Rt Hon Gregor

        Deakins, Eric

        McNamara, Kevin

        Dean, Joseph (Leeds West)

        McWilliam, John

        Dewar, Donald

        Magee, Bryan

        Dixon, Donald

        Marshall, Dr Edmund (Goole)

        Dobson, Frank

        Marshall, Jim (Leicester S)

        Dormand, Jack

        Martin, M(G'gow S'burn)

        Douglas, Dick

        Mason, Rt Hon Roy

        Dubs, Alfred

        Maxton, John

        Duffy, A. E. P.

        Maynard, Miss Joan

        Dunlop, John

        Meacher, Michael

        Dunnett, Jack

        Mikardo, Ian

        Dunwoody, Hon Mrs G.

        Millan, Rt Hon Bruce

        Eadie, Alex

        Mitchell, Austin (Grimsby)

        Eastham, Ken

        Mitchell, R. C. (Soton Itchen)

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

        Morris, Rt Hon A. (W'shawe)

        Ellis, Tom (Wrexham)

        Morris, Rt Hon C. (O'shaw)

        English, Michael

        Morris, Rt Hon J. (Aberavon)

        Evans, loan (Aberdare)

        Mulley, Rt Hon Frederick

        Evans, John (Newton)

        Newens, Stanley

        Faulds, Andrew

        Oakes, Rt Hon Gordon

        Field, Frank

        O'Halloran, Michael

        Fitt, Gerard

        O'Neill, Martin

        Flannery, Martin

        Orme, Rt Hon Stanley

        Ford, Ben

        Owen, Rt Hon Dr David

        Forrester, John

        Paisley, Rev Ian

        Foster, Derek

        Park, George

        Foulkes, George

        Parker, John

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

        Parry, Robert

        Garrett, John (Norwich S)

        Pavitt, Laurie

        Garrett, W. E. (Wallsend)

        Pendry, Tom

        George, Bruce

        Penhaligon, David

        Gilbert, Rt Hon Dr John

        Powell, Raymond (Ogmore)

        Ginsburg, David

        Prescott, John

        Golding, John

        Price, C. (Lewisham W)

        Gourlay, Harry

        Race, Reg

        Grant, John (Islington C)

        Radice, Giles

        Grimond, Rt Hon J.

        Rees, Rt Hon M (Leeds S)

        Hamilton, James (Bothwell)

        Richardson, Jo

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

        Roberts, Albert (Normanton)

        Hardy, Peter

        Roberts, Allan (Bootle)

        Harrison, Rt Hon Walter

        Roberts, Ernest (Hackney N)

        Hart, Rt Hon Dame Judith

        Roberts, Gwilym (Cannock)

        Hattersley, Rt Hon Roy

        Robertson, George

        Haynes, Frank

        Robinson, G. (Coventry NW)

        Heffer, Eric S.

        Roper, John

        Henderson, Barry

        Ross, Ernest (Dundee West)

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

        Rowlands, Ted

        Home Robertson, John

        Sandelson, Neville

        Homewood, William

        Sever, John

        Hooley, Frank

        Sheerman, Barry

        Horam, John

        Shore, Rt Hon Peter

        Howell, Rt Hon D.

        Silkin, Rt Hon S. C. (Dulwich)

        Howells, Geraint

        Silverman, Julius

        Hoyle, Douglas

        Skinner, Dennis

        Huckfield, Les

        Smith, Rt Hon J. (N Lanark)

        Hudson Davies, Gwilym E.

        Soley, Clive

        107

        Spearing, Nigel

        Weetch, Ken

        Spellar, John Francis (B'ham)

        Wellbeloved, James

        Spriggs, Leslie

        Welsh, Michael

        Stallard, A. W.

        White, Frank R.

        Steel, Rt Hon David

        White, J. (G'gow Pollok)

        Stewart, Rt Hon D. (W Isles)

        Whitehead, Phillip

        Stoddart, David

        Whitlock, William

        Stott, Roger

        Wigley, Dafydd

        Strang, Gavin

        Willey, Rt Hon Frederick

        Straw, Jack

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

        Summerskill, Hon Dr Shirley

        Williams, Rt Hon Mrs(Crosby)

        Taylor, Mrs Ann (Bolton W)

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

        Thomas, Jeffrey (Abertillery)

        Wilson, William (C'try SE)

        Thomas, Dr R.(Carmarthen)

        Winnick, David

        Thorne, Stan (Preston South)

        Woodall, Alec.

        Tilley, John

        Woolmer, Kenneth,

        Tinn, James

        Wrigglesworth, Ian

        Torney, Tom

        Young, David (Bolton E)

        Varley, Rt Hon Eric G.

        Wainwright, E.(Dearne V)

        Tellers for the Noes:

        Wainwright, B.(Colne V)

        Mr. George Morton and

        Walker, Rt Hon H.(D'caster)

        Mr. Norman Hogg.

        Warded, Gareth

        Question accordingly agreed to.
        Clause read a Second time, and added to the Bill.
        Mr. Speaker then proceeded to put forthwith the Questions necessary for the disposal of the business to be concluded at Ten o'clock.

      New Clause 3

        APPROVAL ETC. OF METERS
        .—(1) Where licences granted under section 7 above include provisions which are framed by reference to meters for the time being approved under this section for use in connection with telecommunication systems to which the licences relate, then, for the purposes of those provisions, meters may be approved for use in connections with those systems—

        (a) by the Secretary of State; or

        (b) with the consent of, or in accordance with a general authorisation given by, the Secretary of State, by the Director.

        (2) A person applying for an approval under this section may be required by the person to whom the application is made to comply with such requirements as the person to whom the application is made may think appropriate; and those requirements may include a requirement to satisfy some other person with respect to any matter.
        (3) An approval under this section may apply either to a particular meter or to any meter of a description specified in the approval, and may so apply either for the purposes of a particular telecommunication system or for the purposes of any telecommunication system of a description so specified.
        (4) An approval under this section may specify conditions which must be complied with if the approval is to apply, for any purpose specified in the approval, to any meter which is so specified or is of a description so specified; and any such condition may impose on the person to whom the approval is given a requirement from time to time to satisfy any person with respect to any matter.
        (5) Nothing in this section shall preclude a person (not being the Secretary of State or the Director) who is charged with determining any matter for the purposes of any requirement imposed in pursuance of subsection (2) or (4) above from requiring any payment to be made in respect of the carrying out of any test or other assessment made by him.
        (6) Standards to which any meter of a description specified in the designation should conform if it is to be approved for use in connection with a telecommunication system so specified or of a description so specified may be designated—

        (a) by the Secretary of State; or

        (b) with the consent of, or in accordance with a general authorisation given by, the Secretary of State, by the Director.

        (7) A designation under this section may specify conditions which must be complied with if any meter of a description
        108
        specified in the designation is to be regarded, for any purposes so specified, as conforming to the standard to which the designation relates.
        (8) A meter shall not be approved under this section for use in connection with any telecommunication system unless either—

        (a) the meter conforms to a standard designated under this section which applies to it for the purposes of that system; or

        (b) the Secretary of State or the Director is satisfied that, if used in connection with that system in accordance with the approval, the meter would be sufficiently accurate and reliable.

        (9) Before giving an approval under this section by virtue of subsection (8)(b) above or designating a standard under this section, the Secretary of State or the Director shall give notice

        (a) stating that he proposes to give the approval or make the designation and setting out its effect;

        (b) stating any conditions which he proposes to specify in the approval or designation; and

        (c) specifying the time (not being less than 28 days from the date of publication of the notice) within which representations or objections with respect to the proposed approval or designation may be made,

        and shall consider any representations or objections which are duly made and not withdrawn.
        (10) A notice under subsection (9) above shall be given by sending a copy of the notice to the person applying for the approval or designation and to such other persons (if any) as the Secretary of State or the Director considers appropriate.
        (11) Any power conferred by this section to give an approval or designate a standard includes a power to vary or withdraw an approval given or designation made in the exercise of that power.
        (12) The Secretary of State may by order provide for the payment of fees in respect of approvals or designations under this section.
        (13) An order under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
        (14) For the purposes of this section any description may be framed by reference to any circumstances whatever.
        (15) Any sums received by the Secretary of State or the Director under this section shall be paid into the Consolidated Fund.
        (16) In this section "meter" means any system or apparatus constructed or adapted for use in ascertaining the value of telecommunications services provided by means of a telecommunication system.'.—[Mr. Kenneth Baker.]
        Brought up, read the First and Second time, and added to the Bill.

      New Clause 4

        DELEGATION OF FUNCTIONS UNDER SECTIONS 19 AND (APPROVAL ETC. OF METERS)
        `.—(1) A person appointed by the Secretary of State may exercise any function conferred on the Secretary of State by section 19 or (Approval etc. of meters) above (other than the power to make orders) to such extent and subject to such conditions as may be specified in the appointment; and an appointment under this section may authorise the person appointed to retain any fees received by him.
        (2) Before appointing any person under this section, the Secretary of State shall consult with the persons running the telecommunications systems concerned, or with such organisations as appear to the Secretary of State to be representative of those persons.
        (3) The Secretary of State may at any time vary or revoke an appointment made by him under this section.
        (4) The Secretary of State may, with the approval of the Treasury, make grants or loans to persons appointed under this section.
        (5) Any loans under this section shall be repaid to the Secretary of State at such times and by such methods and interest thereon shall be paid to him at such rates and at such times as he may, with the approval of the Treasury, from time to time direct.

        109
        (6) There shall be paid out of money provided by Parliament any sums required by the Secretary of State for making grants under this section; and the Treasury may issue out of the National Loans Fund such sums as are necessary to enable him to make loans under this section.
        (7) Any sums received by the Secretary of State under subsection (5) above shall be paid into the National Loans Fund.'—[Mr. Kenneth Baker.]
        Brought up, read the First and Second time, and added to the Bill.

      New Clause 8

        RECOGNITION OF BODIES REPRESENTING CONSUMERS ETC
        `(1) Where licences granted under section 7 above include provisions which are framed by reference to bodies for the time being recognised under this section to be assisting persons running telecommunication systems to which the licences relate to ascertain the opinion of consumers and other users of telecommunication services provided by means of those systems, then, for the purposes of those provisions bodies may be so recognised by the Secretary of State.
        (2) A recognition under this section may apply either to a particular body or to bodies of a description specified in the recognition, and may so apply either for the purposes of a particular telecommunication system or for the purposes of any telecommunication system of a description so specified.
        (3) The Secretary of State may pay such allowances as he may determine to members of a body recognised by him under this section, and may pay such expenses of a body so recognised as he may determine.
        (4) Any power conferred by this section to give a recognition includes power to withdraw a recognition given in the exercise of that power.
        (5) There shall be paid out of money provided by Parliament any sums required by the Secretary of State for making payments under this section.'.—[Mr. Kenneth Baker.]
        Brought up, read the First and Second time, and added to the Bill.

      New Clause 2

        POWER OF SEWER AUTHORITIES TO INSTALL TELECOMMUNICATION APPARATUS IN PUBLIC SEWERS ETC.
        .—(1) Notwithstanding the provisions of the enactments conferring functions on sewer authorities or any limitation imposed by any enactment or instrument on the use to which a particular public sewer may be put, the sewer authority in relation to any public sewer may—

        (a) carry out, or authorise any other person to carry out, telecommunication works in that sewer;

        (b) keep telecommunication apparatus installed in that sewer or authorise any other person to keep telecommunication apparatus so installed;

        (c) authorise any person to enter that sewer to inspect telecommunication apparatus kept installed there; and

        (d) enter into an agreement on such terms (including terms as to the payments to be made to the authority) as it thinks fit in connection with the doing of anything authorised by or under this section.

        (2) In this section—
        "public sewer"—

        (a) in England and Wales, has the same meaning as in the Public Health Act 1936;

        (b) in Scotland, means any sewer which is vested in a regional or islands council; and

        (c) in Northern Ireland, means any sewer which is vested in the Department of the Environment, for Northern Ireland;

        "sewer authority" in relation to a public sewer means the authority in which the sewer is vested or any other authority which discharges functions of that authority in relation to that sewer and is authorised by the authority in which the sewer is vested to act on its behalf for the purposes of this section;
        110
        "telecommunications apparatus" has the same meaning as in Schedule 2 to this Act; and
        "telecommunication works" means works for or in connection with the installation, maintenance, adjustment, repair or alteration (within the meaning of that Schedule) of telecommunication apparatus. '.—[Mr. Kenneth Baker.]
        Brought up, read the First and Second time, and added to the Bill.

      New Clause 9

        CO-ORDINATION OF LICENSING OF TELECOMMUNICATION SYSTEMS AND WIRELESS TELEGRAPHY LICENSING
        `(1) With a view to co-ordinating the exercise of licensing powers under Part II of this Act and under section 1 of the Wireless Telegraphy Act 1949 (licensing of wireless telegraphy), it shall be the duty of the Director, where either he considers it expedient or he is requested by the Secretary of State to do so, to give the Secretary of State—

        (a) advice with respect to the exercise of the licensing powers of the Secretary of State under that section in cases where the running of a telecommunication system is involved: and

        (b) information with respect to any matters appearing to him to be relevant to the exercise of those powers in such cases.

        (2) For the purposes of this section—

        (a) references to the licensing powers of the Secretary' of State under section 1 of the said Act of 1949 are references to the powers of the Secretary of State with respect to the grant, variation or revocation of licences authorising the establishment, installation or use of stations for wireless telegraphy or wireless telegraphy apparatus; and

        (b) the running of a telecommunication system is involved in cases where those powers are exercisable in relation to any station or apparatus which is in use or intended for use in running a telecommunication system.

        (3) In this section—
        "telecommunication system" has the same meaning as in Part II of this Act; and "station for wireless telegraphy" and "wireless telegraphy apparatus" have the same meanings as in the said Act of 1949.'.—[Mr. Kenneth Baker.]
        Brought up, read the First and Second time, and added to the Bill.

ROYAL ASSENT
Mr. Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967. that the Queen has signified Her Royal Assent to the following Acts:

1. Consolidated Fund (No. 2) Act 1983.

2. British Nationality (Falkland Islands) Act 1983.

3. Conwy Tunnel (Supplementary Powers) Act 1983

4. British Fishing Boats Act 1983.

5. Currency Act 1983.

6. Transport Act 1983.

7. Greater London Council (General Powers) Act 1983.

Telecommunications Bill
  New Clause 5

    RIGHTS OF PERSONS AFFECTED BY CONTRAVENTION/
    `The obligation of a person to comply with such conditions as are referred to in section 8(2) (a) to (d) of this Act is a duty owed to any person who may be affected by a contravention of

    111
    it and any breach of that duty is actionable accordingly subject to the defences and other incidents applying to actions for breach of statutory duty.'.—[Mr. Henderson.]
    Brought up, and read the First time.
    10.15 pm
    Mr. Barry Henderson: I beg to move, That the clause be read a Second time.
    The new clause deals with the rights of persons affected by a contravention of licensing conditions. Under the Bill as drafted licences may be granted to various public telecommunications operators. Provision is made in clause 8(2)(a) to (d) for conditions that may be applied to those licences. The purpose of the new clause is to ensure that a breach of those conditions could be actionable by an aggrieved party.
    A slightly similar amendment was moved in Committee by my hon. Friend the Member for Hertfordshire, South-West (Mr. Page), who sought to impose a duty on the Director General to ensure compliance with these conditions, whereas under the Bill the Director General may take action against such an infringement of the licence conditions. In response to my hon. Friend's amendment the Minister argued that it would be liable to constrain the activities of the Director General and that that was perhaps bad. My new clause overcomes that objection without affecting the Director General's duty as described in the Bill, and it adds to anything that the Director General may or may not do a right for a person who feels that he may be adversely affected by a breach of the licensing conditions to go to the courts to seek redress.
    In any concept of natural justice—and I do not speak as a lawyer—it must be right that if someone feels aggrieved as a result of the actions of other persons that affect him he should have the right of protection from the courts. Because of the way in which the new clause would be implemented—it is fairly narrowly defined—a person could not go to court and say that he did not like the licence, or anything of that kind. He could go to court only if he felt that particular contraventions of the conditions of the licence as laid down in clause 8(2)(a) to (d) had been breached.
    The new clause states that we accept the terms of clause 8(2)(a) to (d) and those of clause 15, which place general duties upon the Secretary of State and the Director General, and that if, and only if, the Director General feels, for one reason or another, for whatever pressures may be upon him, that he need not take action against someone who has contravened his licence conditions, that person may take action.
    The licence that would be granted under clause 7 and the conditions laid down in the licence must fall within the criteria stated in clause 8. Where those criteria have been breached, it is possible to envisage circumstances in which the Director General might, on balance, decide not to take action against the licence holder. One could hypothesise about the circumstances in which that might occur. It could be pressure from the Secretary of State or from a vested interest in industry. It might simply stem from a desire for a quiet life.
    Obviously, the Director General has many duties to consider. New clause 1, which will replace clause 3, contains a long list of things that the Secretary of State and the Director General have to take into account in
    112
    exercising their functions. Some of them may produce a contradiction in themselves. In such circumstances, the Director General may feel that on the balance of his range of duties as specified in the Bill it would not be appropriate in a particular circumstance of breach of conditions of licence to pursue the licence holder under his powers in clause 15. In that narrow sphere of difficulty, it would be appropriate to give someone who is adversely affected by a breach of licence conditions the possibility of recourse to the courts. In that spirit, I commend the new clause to the House.
    Mr. Golding: The new clause should be rejected. When the new clause was tabled, clause 8(1) presumably referred to clause 3(1)(a), (b), (c), (d) and (e). Therefore, how can the new clause tabled by the hon. Member for Fife, East (Mr. Henderson) take into account the provision in clause 3(2), which states:
    "Subsection (1) above shall not apply in relation to functions of the Secretary of State which are exercisable in the interests of national security or relations with the government of a country or territory outside the United Kingdom."
    Have those who proposed the new clause taken that into account? I doubt it.
    Clause 8 is not the same as it was 22 minutes ago. It is now different. When we debated the issue, Conservative Members probably did not realise that subsection (1)(a) was being debated for amendment. The Minister will correct me if I am wrong, but I understand that we have just decided to amend it, so that
    "A licence granted under section 7 above may also include—
    (a) such conditions as appear to the grantor to be requisite or expedient having regard to the"—
    "duties" laid down in the new clause. It is not clear whether clause 8(1)(a) is modified by new clause 3. The amendment just accepted refers to the clause on the general duties of the Secretary of State and the Director General, but it does not say which parts of the new clause are covered by it. We are in some difficulty. The Minister looks puzzled, but if he looks at the amendment that we have just accepted to clause 8(1), he will see that, instead of referring to particular parts of the new clause, it refers to the new clause in its entirety.
    Had I had more time to address the House before we voted, I should have drawn attention to the vagueness of the amendment. I take this opportunity to ask the Minister of State what the amendment covers. If it includes subsection (3) of new clause 1, perhaps my remarks are not quite so pertinent. If not, those who propose this new clause should consider the position that would arise if a licence were not implemented because of national interest.
    Mr. Henderson: I thank the hon. Gentleman for giving way. He has raised an important point. As my new clause is concerned with breach of licence conditions, it seems improbable that any licence conditions would include things that the public telecommunications operator would have to do to comply with subsection (3) of new clause 1, which we have just passed. Those terms are likely to be in the licence, and therefore there would be no breach of licence conditions if something were done that another operator did not like, provided it was under subsection (3) of new clause 1.
    Mr. Golding: The hon. Gentleman is talking about probabilities and possibilities. Such things should be clearer in legislation.

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    Conservative Members have been caught, because we have altered both clause 8 and clause 3. The difficulty arises because of the amendment that we have just passed. New clause 5 says:
    "The obligation of a person to comply with such conditions as are referred to in section 8(2)(a) to (d) of this Act".
    we are not clear now what we are debating. Subsection (2) says:
    "Without prejudice to the generality of subsection 1(a) above".
    Unless we know what 1(a)means, we do not know what
    "Without prejudice to the generality of subsection 1(a) above"
    means. The Minister of State must admit that.
    Mr. Kenneth Baker: Quick thinking.
    Mr. Golding: Because Conservative Members have been caught out by deficient drafting, they try to score these puny points, which are always misdirected.
    This is almost like the Committee stage. The Minister of State moves away from the ministerial seat to that of the Whips so as to disclaim responsibility, and the Under-Secretary is bound up in constant discussion with the parliamentary advisors, trying to find out what the amendment that we have just passed actually means. It is like old times. The hon. Member who proposed the new clause is now trying to puzzle out what is happening. The scene is made complete by the hon. Member for Northampton, North (Mr. Marlow) saying "Get on with it". We are back where we began in Committee.
    What is wrong is that we would suffer from one of the worst features of the American system—the constant resort to litigation.
    10.30 pm
    Mr. Richard Shepherd: Clearly, an injury could be done or a person aggrieved. For instance, if BT discriminates against a customer there could be injurious effects, such as financial damage. If I understand new clause 5 correctly it enables the injured party to seek compensation in the courts for any loss suffered and I support that. Is not that a principle that the Opposition would support? Should not an injured party be compensated for any injury that has been suffered?
    Mr. Golding: We do not accept any part of the Bill. The hon. Gentleman knows that. But if we are to have this legislation, let us not have the worst of all worlds. The hon. Gentleman says that this legislation will be that. Were we to end up in constant litigation we would be in the same position as the United States. We would be spending a considerable amount on lawyers rather than on technologists and technicians.
    Mr. Shepherd: The hon. Gentleman has not answered my point. As I understand new clause 5 it gives a defence against being injured by the failure of BT or somebody else to act in accordance with the terms and conditions laid down. Where the Director General refers a matter in the ordinary way it still may mean that a person applying for a service or whatever suffers a loss or is otherwise injured. The new clause enables that loss to be claimed in the courts. Is not that a general principle that the hon. Gentleman and the Opposition accept?
    Mr. Golding: I speak not for the Opposition but for myself and I do not accept it. If I did I would not be speaking against the new clause.
    Mr. Shepherd: Does the hon. Gentleman understand it?
    Mr. Golding: I understand what lies behind it and that is the temptation to go constantly to litigation, and that we do not want.
    We are used to having a provision that action should be taken only by the Director of Public Prosecutions. We are used to officials being charged with the duty of deciding whether there are breaches of law—in this case civil law—of sufficient gravity to take them into the courts. In this case the Government have decided that they will apply the principle that there should not be an easy road to litigation. I do not blame them. I shall not go over the last debate, but 8(1)(a) relating to new clause 1 is so vague, so indeterminate, and, if one considers the draft proposals for the license, so absurd that it does not make any sense to be saying to all and sundry—"Look, we hereby give you authority to take the public telecommunications authorities to the courts."
    I hope that Ministers will resist the new clause.
    Mr. Marlow: Is the hon. Gentleman's problem the fact that if the Post Office Engineering Union, by its present prediction of action, were to cause major losses to Mercury, Mercury would be able to go back to BT and claim compensation through the courts from BT? Is that what is worrying the hon. Gentleman?
    Mr. Golding: That does not concern me in this context. I am addressing myself to the general principle. I doubt whether it will concern the Minister any more than it concerns me. I think that the Under-Secretary will stick to his guns for once and respect the decision taken in Committee. It would not make sense to accept the amendment.
    Mr. Richard Page: I support the amendment proposed by my hon. Friend the Member for Fife, East (Mr. Henderson). The debate has been a re-run of what happened in Committee and we have heard the hon. Member for Newcastle-under-Lyme (Mr. Golding) make the shortest of his speeches on this Bill. I wish that he had set for the entire proceedings the pattern that he followed today. We could have discussed more aspects of the Bill if we had not been subjected to the 11-hour, five-hour and four-hour speeches on the continuous works of the hon. Member for Newcastle-under-Lyme.
    New clause 5 is similar to the amendment that I moved to clause 15 in Committee. I am still worried about what course an aggrieved third party can take if the Director General of Oftel decides to be slow or not to take action against a breach of a licence.
    I support new clause 5, but I am worried about some aspects of it. It clears a path for a third party to take action against any licensee who is in breach of his licence. My main concern is for the tune that could be lost before a decision on action is taken. One has only to remember how quickly technology moves to appreciate that if a breach takes place a third party could be seriously disadvantaged before any move is taken.
    Clause 10 provides the mechanism by which the conditions of a licence can be altered or added tce and clause 15 provides the mechanism by which the particular conditions can be enforced.
    I hope that the Minister, who will shortly represent a seat more reminiscent of Kenneth Grahame's "The Wind in the Willows" than Marylebone, will recall that in my original amendment to clause 15 I wanted the Director

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    General's discretion to be strengthened. I thought that the discretion that enabled him to do something only if he wished was a weakness. Many third parties want the position to be more clear cut. That is why I support the new clause. It will clarify the position.
    Mr. Richard Shepherd: Will my hon. Friend vote for it in the Lobby?
    Mr. Page: My hon. Friend was a constant support to the Government throughout Committee. I should like to weigh up the position, see how the debate continues and how my hon. Friend the Minister replies before I make a decision. I come to the debate with an open mind. I do not announce before I make my argument that I shall vote against the Government, like some people who shall be nameless.
    My hon. Friend the Minister made great play of the strength that is in the Director General's hands because of his discretion to deal with minor breaches of licence. He said that
    "The discretion does not mean that the Director General can deliberately ignore a flagrant breach of licence conditions—this is the important point."
    He continued:
    "If the Director General did not act so as to enforce conditions in licences … he would be in clear breach of that duty and could be challenged in the courts".—[Official Report, Standing Committee H, 24 February 1983; c. 1222.]
    I was grateful to him for drawing that to my attention.
    Clause 15 provides for at least 28 days to elapse before any order may be produced and seven days before it can be submitted. While that is a sensible and adequate protection when allowing people in breach to make a submission to the Director General, it is open-ended. There is no cap on the end of the timescale. A third party suffering by the breach is prevented from taking any form of action.
    The Director General could take weeks, months or even years to decide to take action. I am not a legal expert, unlike my hon. Friend the Member for Leominster (Mr. Temple-Morris) who was our unpaid legal adviser in Committee. I do not know the position under the Bill for taking action against a licensing breach while the Director General is considering the matter. But it appears that the third party would find it difficult to take action. I should welcome clarification from my hon. Friend the Minister on that point.
    New clause 5 clarifies the position. It allows the third party to take action, through the courts if necessary. It will begin the process and give a clear date from which some redress for the losses can begin. If it takes two or three years for the Director General to make up his mind about a breach, the third party will have lost two or three years of revenue before being recompensed, simply through the slowness of action of the Director General. I support the purpose of new clause 5, which enables the Director General to make up his mind more quickly, or the third party to take action.
    It is only fair to remind the House that the speed at which information technology is developing is frightening. Japan has designated that area as its maximum growth area for not only wealth but employment during the next decade. We cannot afford to waste time while the Director
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    General considers whether a breach has occurred. Although I would prefer the Director General to control the licensee, I want him to act a great deal more quickly.
    My hon. Friend the Member for Fife, East (Mr. Henderson) has produced an alternative. I look forward to hearing what my hon. Friend the Minister has to say. We must strengthen clause 15 if we are to avoid a great deal of confusion and problems in future.
    10.45 pm
    Mr. McWilliam: I have read new clause 5 with a great deal of interest, and I listened to the speech of the hon. Member for Hertfordshire, South-West (Mr. Page) with the same amount of interest, but I have problems. I cannot relate what the hon. Gentleman said to the wording of new clause 5. It refers to section 8(2)(a) to (d), which appears to be an extremely doubtful vehicle on which to float any type of legislation.
    Clause 8(2) says:
    "Without prejudice to the generality of subsection (1)(a) above, a licence granted by the Secretary of State under section 7 above to a particular person may include conditions requiring that person".
    as the clause is permissive, how on earth can anyone go to the courts and say, "I want redress about a permissive power of the Secretary of State"?
    The other aspects of new clause 5 refer back to clause 3, which no longer exists. It appears to me that Conservative Back Benchers are trying to give the impression that they are concerned to protect the individual, when the subsection of the clause on which they are hanging that peg is permissive. Therefore, no such protection can possibly be available in law.
    Mr. Richard Page: Surely the hon. Gentleman appreciates that many conditions may have been involved in the creation of the licence, but, it having been created, that is the licence on which the company will base its financial forecasts, its cash flow and its future investment programme. If that licence were then to be breached, surely all those calculations and, indeed, employment, would be put at risk.
    Mr. McWilliam: I am grateful to the hon. Gentleman, because he has made my point for me.
    There is another problem with new clause 5. Nowhere in the Bill is it specified that the licence has to be published. The Minister has said that he will publish the licence. Indeed, he said in Committee that he would publish the licence, but when it came to the crunch what he published was the Department of Industry's views about the generality of the licence. In fact, the Minister had the opportunity to publish the Mercury licence, which already exists, but he decided, for reasons of commercial confidence, not to publish it. I deplore the fact that he did not do so. It would have been useful to the Committee when we discussed the Bill to have available the terms of the Mercury licence, but the Minister decided not to publish it. How much redress can be obtained at the end of the day on the basis of a licence that has not yet been published? The contents thereof are not known and they cannot be known under the Bill if the Minister chooses not to publish the licence.
    It seems that yet again Conservative Back Benchers are perpetrating a piece of pious nonsense. I should dearly love to see the Mercury licence. I should dearly love also to see the BT licence. The Opposition have argued that

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    these documents are necessary so that we can sensibly consider the Bill. The Mercury licence was not made available, because of "commercial confidence". Surely that phrase means nothing in the House except a blank refusal by the Minister to give information to the House. There is no such thing as "commercial confidence" under the Standing Orders. I agree that the Minister could not show us the BT licence, but that was because it did not exist when we were discussing it. He and his officials were still discussing it when we were trying to ascertain what it meant. The document that was given to us was not worth any more than the paper on which it was written. It merely set out the Minister's officials' views of the generality.
    New clause 5 gives no additional rights, and the present rights amount to nothing. I fully endorse the principle which the hon. Member for Fife, East (Mr. Henderson) was adducing. It is a good principle, but I am arguing on the practicalities of the Bill. I think that the hon. Gentleman, in his heart of hearts, will agree that although the clause is well intentioned it means nothing when set against the Bill. If an amendment had been tabled that stated that the Minister must publish all the licences in full and that had been followed by the new clause, the hon. Gentleman's clause could have been regarded as offering a protection, but in the absence of such an amendment it means nothing and I think that the House should so regard it.
    Mr. Richard Shepherd: Let us assume that a small company makes an application for a telecommunications service as specified in a licence and that discrimination is exercised against it. The discrimination may be such as to cause financial loss; it may put the company out of business. Normally we would, not unreasonably, suppose that in the event of discrimination, which is proscribed by the terms of the licence, there would be some form of compensation or the right to sue for redress.
    I am not one who denigrates the courts' role. I believe that our freedoms and liberties are defended and preserved by our access to the courts. I recognise, perhaps not in sympathy with most hon. Members, that as our society evolves, our confidence in institutions is eroded and our confidence in the decisions of bureaucracy and in ministerial fiats diminishes, we shall increasingly seek reference to the courts for the defence of our liberties and of our property. Therefore, I consider new clause 5 to present an extremely important concept.
    I have noticed during our consideration of the Bill in Committee and on the Floor of the House that anything I endorse is almost invariably rejected by my ministerial colleagues. That does not mean, however, that the principles enunciated in the clause are not important.
    "My heart leaps up when I behold
    A rainbow in the sky"—
    to quote the poet—but also when I behold clause 8(2)(d), because the concept of discrimination had been omitted from the Bill, and that was a very grave omission. That concept has now been included, albeit not in quite the form that I should have liked, because it is a variable that may or may not be included in a licence.
    Where it is included in a licence, as under clause 8, it is important that there should be recourse to the courts if someone is discriminated against and suffers a consequential loss. I am therefore slightly dismayed by the way in which my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) traditionally
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    advances an argument, retreats from it, suggests that he will listen to the counter-arguments, and invariably never presses it. That depresses me, because although I understand that the amendment was nurtured in the bosom of Mercury, the principles behind it are tremendously important to every other user of the systems.
    I therefore urge the ministerial team, although the exact wording meets the legal requirements, to take on board the arguments behind the amendment. If they reject the amendment I shall certainly wish to press for a Division, if only to see and count those hon. Members who stand for the principle that we should be compensated when we are discriminated against by an overwhelming—in this instance our real fear is that it will be overwhelming—monopoly.
    I therefore urge my hon. Friends to consider carefully the important principle of the defence in the courts of our personal wealth and fortunes and of our industries and businesses. If, for instance a licensee exercises undue discrimination that damages someone commercially, that person should have the right to reference to the courts and to compensation.
    Mr. Michael Marshall: My hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) was right to touch on the important principle behind the new clause. I wish to declare my interest as parliamentary adviser to Cable and Wireless. It is pleasant to he back in these salubrious surroundings. For many months I have had the pleasure of listening to a number of hon. Members who are present tonight, and I have followed the Bill through Committee stage by making occasional visits and even dipping into some of the speeches of the hon. Member for Newcastle-under-Lyme (Mr. Golding).
    I rise to support my hon. Friends the Members for Fife, East (Mr. Henderson) and Hertfordshire, South-West (Mr. Page) in their arguments. The essential difference between the new clause and the points made by the hon. Member for Newcastle-under-Lyme is perhaps twofold. First: as my hon. Friend the Member for Hertfordshire, South-West made plain—the approach is quite different from that which was advanced when the so-called Mercury amendment was discussed in Committee. That amendment was designed to strengthen the powers of the Director-General. This amendment is designed to give the aggrieved party an opportunity to go to court. I support my hon. Friend's arguments. I believe that that is a sound principle. We traditionally look to the courts for clarification when our laws are not crystal clear, and in an area as complex as this, I anticipate that recourse to the courts may from time to time be necessary.
    It is also important to stress that the Bill as it is now—and certainly as it will be after the new clause has been added—refers to the operation of the public telecommunication operators. I always enjoy the sophisticated arguments of the hon. Member for Blaydon (Mr. McWilliam) when he tries to oppose the arguments of the Government, but he may wish to consider that this provision is open to all public telecommunications operators. Therefore, it is not a one-sided argument that Cable and Wireless will be free to use, because BT could be equally free to use it. It may be that in some circumstances Hull or cellular radio—or those whom we know would fall within that category at present—would use it. There is a significant two-way principle here.

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    11 pm
    I should like to put the argument in the context of some of the practical problems which have been experienced so far. It is no secret that in regard to the operation of value-added network services there have of recent months been differences of view between BT and Cable and Wireless, and they turn on the interpretation of the existing agreements and licences. This has shown in practice the need to have some clear-cut procedure by which differences can be reconciled. The Minister will no doubt wish to give us his views on the matter, but I should think that one of the first advantages of the new clause is that it would make the task of the Director General somewhat easier.
    If the Government are looking to the discretionary powers, as reconfirmed in Committee, rather than the strengthened powers to be carried into force wherever there is a dispute, surely we are looking for something which may be used perhaps regularly, and which could be avoided. If the Director General were able to say, "I understand that you have a power to seek recourse through litigation, and if it is your intention to move in that direction there is no need for me to take action", that would be an additional "light rein" aspect of the proposal that should commend itself to the Government.
    With regard to the question of speed, I think that my hon. Friend the Member for Hertfordshire, South-West was right to raise the question of what would happen if the Director General, for perhaps perfectly good reasons, was unable to bring remedial action to help an aggrieved party promptly, because that could mean that perhaps in certain circumstances the commercial loss and damage might run on for many months and might be substantial. The Bill as drafted seems to provide no recourse by which that could be made up.
    It is true that the Director General has discretion. The amendment does not restrict the powers and duties of the Director General under part II of the Bill. It would remain open to him in appropriate circumstances—for example, where a number of people were affected—to make and enforce an order. If, for example, only one person were affected by the alleged non-compliance with the conditions of a public telecommunication operator's licence, the Director General might in practice rely on a provision such as I am suggesting, but could encourage that person to seek his own remedy. For the reasons I have given, I think that would be perhaps part of the additional discretion and the "light rein" touch.
    For all those reasons, I think there is a very serious point to be examined, and I am wondering what might encourage the Government to oppose the proposal. I say that advisedly because I have to reflect that over the years the incidence of Government accepting Back Bench amendments on Report is extremely limited. Indeed, I would struggle to recall a single occasion under successive Governments.
    At this stage I wonder whether we are getting into the "Yes, Minister" territory, where the advisers in practice come forward with good reasons why a proposal should be resisted. If the Minister is looking at a brief which says "Resist", I should be fascinated to know whether the appropriate drill has been followed. Aficionados of "Yes, Minister" such as I will recall that the drill consists of four parts. The classic one is to say "Resist on technical grounds". That means, "We can perhaps look at the drafting." The hon. Member for Newcastle-under-Lyme,
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    during this unholy alliance, has already tried to make some play with that tonight. I can see that his long years in Government service have made him very receptive to that kind of argument. He will know, as will the whole House, that it is possible to overcome drafting problems. We can also examine them when we deal with the legal aspects.
    The House will recall that the second part of the drill is to say that there will be administrative problems. That is usually construed to mean that there will have to be a great deal more staff to police something adequately. As I have explained, if we have the light touch on the rein, we will probably have the opportunity to save staff. I am sure that that will commend itself to my hon. Friends.
    The third part of the drill is to ask, "Is this the right moment?". My hon. Friend the Minister will concur that the Bill is now moving with proper speed. With good opportunities for debate under the guillotine, we cannot say that timing is a critical element.
    That brings me to the last and, perhaps, most worrying part—whether there are legal problems. When we consider litigation, legal problems look like a natural. I have not had the privilege to hear what my hon. Friend has to say, but I have a feeling that he will take that course with all the alacrity of the homing pigeon looking for safe refuge. If he does, there is a serious and genuine point that he should bear in mind and which I should like to make with some care.
    The real worry of those who have advised me is that the status of an order that is made under clause 15 does not seem to be wholly free from doubt. It is clear that breach of such an order is not an offence, but it can be enforced by an injunction by the Crown—for example by section 93 of the Fair Trading Act 1973, which is incorporated by clause 15(6). Despite the opening wording of section 93(2) of the 1973 Act, no express power is given under clause 15 to enable a person who suffers loss as a result of a breach of an order to take any direct action to enforce that order. He may not even know of the existence of the order as there appears to be no obligation on the Director General to publish it other than to the operator whom it is to bind.
    I am sure that the House will realise that, as I have used copious notes, I have merely advanced the basis of the legal advice that I have received. It is of great significance. My hon. Friend the Minister may wish to consider the matter with some care when he replies, especially if we are considering different legal interpretations.
    Mr. Henderson: In the legal context that my hon. Friend has highlighted, is there any way in which someone who has suffered damage can obtain restitution, even if the Director General had made an order, showing that the licence conditions had been breached and caused damage to another party?
    Mr. Marshall: I agree that that does not seem to be clear in the Bill as we now have it, not only with regard to the final decision and all that flows from it, but with regard to delay. It is hard to find proper grounds on which what I have suggested can be resisted.
    Drafting problems can be overcome, but the legal problem is a genuine and serious point which should be examined carefully. Therefore, it is not in any idle sense that I say that I shall listen to my hon. Friend's reply with the greatest care. It is on legal interpretation that the whole of his argument may turn.
    Mr. Gerry Neale: I shall raise points that are similar to those which my hon. Friends have raised. Like my hon. Friend the Member for Arundel (Mr. Marshall), I shall be interested to hear what my hon. Friend the Minister says in reply. He may say that his defence arises from the Government's general philosophy of trying to create an environment of proper competition and that sufficient powers have already been given to the Director General to monitor that competition to secure the competitive environment that he has proclaimed.
    Many of the Ministers' great claims about the future under the Bill are shared by the telecommunications industry, in which I declare an interest, but there is a fear abou the lack of redress for a third party who suffers loss or damage as a result of a breach of a licence.
    There will be an inherent time lag in decisions being made by the Director General, not only because in a complicated, technical age all sorts of arguments can be put to the Department of Industry about why it is not easy to make an early decision, but because until Oftel takes on people with the appropriate skills and becomes used, as an organisation, to dealing with all the matters that will arise, there will be delays in arriving at decisions.
    I join my hon. Friends in urging Ministers at the Department of Industry to pay heed to the apprehensions felt by those who consider that they could be third parties who would suffer as a result of licence breaches.
    The hon. Member for Blaydon (Mr. McWilliam) and the hon. Member for Ashton-under-Lyne—
    Mr. Golding: Is it not time that Conservative Members stopped offending my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) in this way?
    Mr. Neale: That was a slip that I have come to fear making, because I knew that it would cause the hon. Gentleman to intervene. Nursing that fear causes me to make the slip. I apologise to the hon. Member for Newcastle-under-Lyme (Mr. Golding).
    The hon. Gentleman and the hon. Member for Blaydon implied that the new clause was an attack on BT or would adversely affect only BT. My hon. Friends have made it clear that the new clause would affect all licences granted under the Bill.
    The hon. Member for Newcastle-under-Lyme suggested that it would be ridiculous for us to follow the American practice on litigation. In Committee, a number of us used examples from America to support various arguments, but the situation in the United States is different in this case, because the legislation on which much of the American procedure is based is very old—it was passed in the late 1930s—and it is because the Senate has found it impossible to pass any new law that successive actions have been taken in the courts, which have amounted to legislation.
    I agree with my hon. Friends that we should not exclude recourse to the courts when licence breaches adversely affect third parties. While I suspect that my hon. Friend will seek to defend the Government's position, and I have to accept that it is unfortunately unlikely that this point will be taken, I ask him to reassure the House that he will carefully monitor the way in which the matters are considered by Oftel. In particular, will he consider the time that it takes for a decision to be made on some of these matters, and take careful note, particularly of the
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    companies and individuals that are adversely affected and suffer loss, to see whether it is necessary in the future to stiffen the proceedings by allowing recourse to the courts?
    11.15 pm
    Mr. Marlow: I ask the Minister a simple question. As I understand it, new clause 5 visits an obligation on a licensee to comply with section 8(2) (a) to (d) of the Act. If the duty is not complied with, the matter is actionable in the courts. Among 8(2) (a) to (d), one of the duties that will be required to be performed will be to permit the connection of any telecommunications service to which the licence relates.
    Supposing that BT were to be required through its licence to connect Mercury into its system, and that the Post Office Engineering Union, in its wisdom, were to decline to effect that connection. Would it be possible for Mercury to take action in the courts against BT, or would force majeure be said to act? If it were possible to take BT to court, would it be possible within the existing state, either of contract of employment or of employment legislation, to join the POEU with BT in that court action?
    Mr. Golding: The hon. Gentleman will probably get advice from the Minister, but I should have thought not, because specifically, in the draft proposals for a licence, one of the conditions that excludes BT from having to give service is that of industrial dispute.
    Mr. Marlow: That is an interesting point. We all know what the hon. Gentleman's interests are in these matters, but I should be interested, before passing judgment on the new clause, to hear what ray hon. Friend the Minister has to say.
    Mr. Temple-Morris: There is a frenzied discussion behind me that may result in a Division, and as my name is on the new clause, I feel that I should make my reasoning clear. I liked, when I first read the new clause, the fact that an independent individual should have a right to sue, as well as the Director General, in conjunction with the Secretary of State. It is right that all those affected should have their rights, and I look forward to hearing the Under-Secretary's answer.
    I have listened carefully to the debate. I add as a reason for putting my name to the new clause not only the championship of the individual, but the fact that if the Director General is in any way dilatory—here I agree with the frenzied conversationalists on my right—I feel that there would be a getting together, and the Director General would take action if he felt that somebody else would do it first.
    I take the point made by the hon. Member for Blaydon (Mr. McWilliam) about the practicalities of this, which add up to the fact that there will have to he further amendments if we pass the new clause, not least over the question of the application of licences. How on earth one can enforce a licence if one does not know what it is is a bit of a mystery. I respect my hon. Friend the Member for Arundel (Mr. Marshall) for tabling this new clause. I had words with him about this, and applaud the spirit of what he said.
    With due respect to my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd), we are not dealing with small individuals, but with firms such as Cable Wireless, which have adequate resources to have their own contractual arrangements with BT. Therefore, there is a

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    case for saying that the Director General, as the public watchdog, will be dealing with people who, are at liberty to reach their own contractual arrangements with BT and enforce them. I should like to hear what my hon. Friend the Under-Secretary says about it but, first, I give way to my hon. Friend the Member for Aldridge-Brownhills. This is a matter which concerns me and, if my hon. Friend can help me, I shall be grateful.
    Mr. Richard Shepherd: As my hon. Friend will appreciate, it concerns me also. The concept that it will be only substantial companies that become licensees or have dealings with licensees is a wrong one. I hope that my hon. Friend the Under-Secretary will confirm that, as competition expands, it is his wish that small firms take part as well. As I understand the clause, if I am discriminated against in an application for the provision of a service as set out in the licence—say that I am a small company, I apply for the provision of a telephone, I am discriminated against in favour of a competitor and, as a result, I lose some of my market or am put out of business—am I not entitled to argue for compensation? It does not have to be substantial companies. Insubstantial companies can be at risk.
    Mr. Temple-Morris: We have put in abundant duties, as my hon. Friend the Under-Secretary reminded us when he replied to the debate on new clause 1, which can be legally enforceable against the Secretary of State and the Director General. There are clear ways through to remedy my hon. Friend's concerns.
    Dealing primarily with the bigger fraternity, do we want a free-for-all or are we to create a public creature, the Director General, in whom we must have some trust and on whom the smaller person will have to rely because he will not be able to afford the cost of a full-scale legal action, anyway? Be it small or large, there is abundant scope for private contractual relations which are now, and always will be, enforceable in the courts. That is what concerns me, and no one has yet given me the answer.
    Mr. Marlow: Will my hon. Friend say what legal redress a butcher in Northampton would have if he felt that he had been discriminated against in the provision of a telephone?
    Mr. Temple-Morris: With respect to my hon. Friend, we have heard an awful lot about Northampton, its butchers, its citizens and its voters. I wish them all well. I shall even volunteer to return to my practice at the Bar and represent my hon. Friend's constituent without a fee if that will put his mind at rest.
    Although I am in favour of the spirit of this proposal, there may be other ways of dealing with it without necessarily getting to the litigious stage—a dangerous free-for-all and a public official in whom we must have some confidence.
    Mr. Butcher: My hon. Friend the Member for Arundel (Mr. Marshall) voiced his feeling that it was rare for amendments to be accepted by Governments during the Committee stages of Bills. Had he spent the past four months in Committee on this Bill he would have discovered that the Government had not been inflexible in accepting a number of changes to the Bill. Some would say
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    that the passage of the Bill through its Committee stage had been the very justification of the principle of open government.
    Mr. Michael Marshall: May I remind my hon. Friend that I said "on Report". If my hon. Friend is about to break all parliamentary records by accepting an amendment on Report, we shall welcome it.
    Mr. Butcher: It goes without saying that this amendment takes us into the realms of legal procedure. My hon. Friends have tempted me sorely into using information which I have resisted using for the past three-and-a-half months, especially during the gruelling passage in Committee, about the use of words such as desiderata. Unfortunately, to meet my hon. Friends' comments this evening, I shall have to use words such as "mandamus" or even "certiorari" and look at declarations or, in plain English, injunctions.
    Mr. Henderson: I hope that if my hon. Friend uses words such as "mandamus" he will be able, in the course of the evening, to clarify what Scottish law comparison there is with that practice.
    Mr. Butcher: It is MacMandamus, as my hon. Friend has reminded me.
    During the Committee stage, Cable and Wireless and Mercury both expressed concern that licensees, and in particular BT, will not comply with the conditions in their licences and that this failure could cause substantial harm to other people, particularly those who are the licensees' competitors. For example, if the licensee did not comply with a licence condition which prevented an anticompetitive practice its competitors might find that their legitimate business interests were seriously affected. If the breach of the licence condition was not put right quickly, the competitors might even be forced out of business. Consequently, Cable and Wireless and Mercury have sought an arrangement under which they would receive compensation for any damage they may suffer as a result of the breach of the licence condition.
    I do not want this problem to arise any more than my hon. Friend does. The Government are firmly committed to the promotion of competition. As I explained earlier in the debate, all the measures, including this Bill, which we have taken since we came to office, have been directed towards this aim. We are, therefore, fundamentally sympathetic to the concern that underlies this proposal and we do not want to overlook a possible change to the Bill that could further our objectives. I do not believe that my hon. Friend's amendment will do so. Indeed, it may be counter productive.
    I believe that the Bill as it now stands, following amendment by the Committee, contains sufficient powers to meet, both effectively and speedily, those situations that cause my hon. Friends concern.
    Perhaps the House would find it useful if I briefly explained what these powers are and why I believe this new clause would not help. The new clause is framed by reference to the licence conditions listed in clause 8(2) of the Bill which, as the House will note, is now drafted differently from when the Bill was first introduced. This is an extremely important subsection and was one on which the Committee spent a considerable time. For the foreseeable future, BT will be the most dominant force in the telecom market. Inevitably, there will be scope for this

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    monopoly power to be used deliberately or accidentally to the detriment of the competition we wish to encourage. We have always made it clear that BT's licence will contain certain conditions directed towards the promotion of competition and the prevention of unfair competition. Clause 8(2) as amended and expanded in Committee, contains the power needed to include these conditions in BT's licence. I think my hon. Friends are now content with clause 8(2).
    I come to the point that causes concern to Cable and Wireless, and to my hon. Friends. What happens when a condition included in a licence by virtue of clause 8(2) is, or appears to be, breached? We have given careful thought to this problem and clause 15 gives the Director General sweeping powers of enforcement. What will happen is that, if the Director General becomes aware of the possible breach of any licence condition, including, of course, those mentioned in 8(2), the Director General will investigate the matter and if he considers that a licence condition has been breached he can issue an order under clause 15 requiring the licensees to stop the offending practice. For example, if a breach concerned a tariff that was set so as to constitute undue discrimination, the Director General could order the licensees to reduce the price to a level that was not in breach of this condition. The important point is that the Director General can act at once on his own initiative and order the licensees to take any corrective action that is necessary. The powers do not end there. If the licensee chooses not to obey the order, the Director General can apply for an injunction, breach of which could result in the licensee being fined or in its directors being put into gaol.
    I must emphasise the wide range of the Director General's powers to issue orders, his ability to act quickly, and the strength of the sanctions if the order is disobeyed. I shall not disguise from the House my concern, when the Bill was being drafted, that the powers were too great. The clause has therefore been drafted to strike a balance between speedy action and fairness to the licensee in question.
    11.30 pm
    Mr. Richard Page: I thank my hon. Friend for what he has said, but he has used the phrase "speedy action". Under the Bill, as drafted, what is there to guarantee "speedy action"?
    Mr. Butcher: It may well be that delay could be a de facto violation of the duties in new clause 1, as laid down in subsection (2)(a) to (g). Not only may they be breached and the Director General be in dereliction of his duty, but there may be an infringement of the competition code as a result of that delay. On that point I have the greatest sympathy with my hon. Friend.
    On occasion, BT could use delay to thwart the ends of liberalisation. Although that is not relevant to this clause, I appreciate the genuine fears that are held because of the propensity of major licensees to fudge and delay. However, once the liberalisation programme is in place in July, it will be a quite different animal from that which pertains under the interim arrangements.
    Mr. Richard Shepherd: I am not sure that my hon. Friend the Under-Secretary has understood the anxiety felt about the provisions in the clause. He argues that the Director General may enforce compliance with the
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    licence, but we are worried about the delay. In supporting this amendment, I argued that if someone who applied for a service found after some time that he had been discriminated against, the Director General, once alerted, would swing into action under clause 14. We may be talking about a delay of four to nine weeks, by which time the original applicant for the service who had been discriminated against may have gone bankrupt. Why cannot he have a right of redress and make an application for compensation?
    Mr. Butcher: That is not the type of delay that we have in mind in these measures, important as they are. There are fundamental areas of delay, one of which has been mentioned. However, that incident would not become an inordinate delay, because that would be a legitimate area in which to invoke these measures. But I shall consider those concerns and the sanctions in more detail later.
    Concern has been expressed that the Director General has a discretion whether to exercise his powers under clause 15, and that he might decide not to take action against a particular licence breach. That fear is unfounded. The Director General will be under a duty to act in accordance with clause 3 and it is a principle of public law that if a person such as the Director General has a discretion to act, he is under an obligation to consider whether to exercise that discretion and he may refuse to exercise it only if he has good grounds of which he may legitimately take account. So far, the procedures that I have described involve only the Director General and the licensee in the enforcement of compliance with licence conditions. But what of other parties? I can assure the House that their interests are fully taken into account.
    Mr. Marlow: If the Director General, in line with everything in the Bill, makes a decision, is there any appeal against it? Real commercial considerations could be at stake, as well as a lot of money, companies' futures, and profits. Does my hon. Friend the Under-Secretary have more faith in the Director General—without any recourse to appeal against him—than in our courts of law? If so, why?
    Mr. Butcher: If the Director is negligent and unreasonable in his pursuit of redress, allowing for the guidelines, and allowing for the measures in clause 8(2), remedies are available against him or against the Secretary of State. I mentioned earlier that in one proceeding the court can award one or more of several remedies of which the following may be relevant under those circumstances: mandamus—an order of the court commanding the Secretary of State or the Director to perform his functions in the manner that the court says is proper; an injunction—something that prevents rather than obliges, but this is available only in limited circumstances under order 53; damages—although it is notoriously difficult to obtain an award of damages for breach of statutory duty; and a declaration that either the Secretary of State or the Director General has failed to carry out his statutory duty.
    I hope that my hon. Friend will understand, as I go through my response, that the remedies should be fast. I agree with him that justice delayed is injustice, but in these cases we believe that the Bill provides a route which gives a fast and relevant response to the issues that we are debating.
    Mr. Richard Shepherd: I thank my hon. Friend for giving way. Let us suppose that the Director General is

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    prepared to enforce all the conditions of licences that he issues, but that, nevertheless, the licensee is in breach of one of the terms. Clause 15(1), to which the Minister has referred us, says that he can make an order
    "not being less than 7 days",
    but before he makes that order, he has to give notice of a draft of that order, he has to give the option to the licensee in breach of the licence, and specify the time
    "not being less than 28 days from the date of the service of the notice".
    So already we have 28 days plus seven days, which makes five weeks. The Minister talks about speedy redress, but in that time the small applicant company may have gone bust and suffered considerable consequential losses. That is not because the Director General is not prepared to enforce the licence, but merely because of the delays involved, first, in identifying, say, any discrimination in the example that I gave, and second, once it has been identified, for the Director General to set in motion the means by which he ends that discrimination. Meanwhile, the person who has been discriminated against has suffered loss. Why can he not, under the amendment, sue for compensation for the amount of the loss? That is the normal defence that one would expect in a reasonable society.
    Mr. Butcher: My hon. Friend makes my case for me. The process that he describes would take 35 days. In the United States, for example, a similar process, even if it were not contentious, might take three, four, five or even six months.
    We believe that we have here a fast route. The justice that is required here is one where reactions have to be fast. We said in earlier debates—my hon. Friend and I crossed swords over this matter early in the Committee stage—that we wanted the Director General to be authoritative and informed. We wanted him to be the sort of a person who could react quickly to such demands. One can go to a court of law. That is another route, but the route that we have prescribed meets the fears of a number of other operators. It should also meet some of the longer-term fears of hon. Members on both sides. In my opinion, it is a useful balance between the conflicting pressures that are placed on my hon. Friend and me.
    Mr. Golding: Is the Minister aware that the Committee was told that under an order of mandamus the writs are the subject not of jury trials but of a straight High Court hearing? If an individual is not doing something that he should do it is comparatively easy under our legal system to make him do it. The hon. Member for Leominster (Mr. Temple-Morris) may remember that he advised the Committee strongly that this procedure was sufficient to ensure that the Director General and the Secretary of State looked after the licensee's interest.
    Mr. Neale: Not many authorities outside the House dispute what is said about procedure once the Director General has found a proven breach. It is the delay in reaching that point, possibly on sound and understandable grounds, bearing in mind the technological complexity of a case, that is the problem. Over that period a loss can develop and be sustained by people who have no privacy of contract with the licence holder. While I accept my hon. Friend the Minister's case I urge him to watch carefully how Oftel succeeds in the early stages to fulfil his
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    expectations of its ability to contain this investigative period, so that when added to the processing time of an order it is only a short period in all.
    Mr. Butcher: My hon. Friend has a strong point. I take to heart that the Secretary of State and the Director General should be mindful of the delay in getting these matters into the in tray. As I said earlier, justice delayed is an injustice.
    My hon. Friend the Member for Fife, East (Mr. Henderson) may not have considered the impact of his proposals on the enforcement procedures under clause 15. If there were a legal action in progress against an operator in respect of a breach of a licence condition it would be difficult for the Director General to issue an order under clause 15 in respect of the same breach. To do so would be to interfere with the operation of the court and the Director General would not want to be seen to prejudge the issues before the court. Therefore, the effect of the new clause would be to delay enforcement action against the licensee committing the breach which would harm those with whom the amendment is concerned.
    There is also a pernicious effect. If licensees are to be continually subject to the threat of legal action they will have to be always looking over their shoulder and not getting on with their business. One of the main aims of licenses is to provide a clear, consistent framework within which operators can develop and expand. There need to be effective weapons to ensure this framework is adhered to but not day-to-day contentious interference. We have provided the former and avoided the latter. However, my hon. Friend's new clause contains a danger that we might not avoid it and therefore I must ask him to withdraw it.
    Mr. Henderson: Will my hon. Friend clarify something that he said about damages for breach of statutory duties being hard to get? Was he speaking in the context of an action under the proposed new clause, or would it be open to a person to seek restitution for financial loss as a result of the Bill without new clause 5?
    Mr. Butcher: I was trying to say that if all else fails in this set of provisions, mandamus or other legal actions against the Secretary of State have been difficult to pursue in the past. That is the best advice that I can give on that and I hope that it helps my hon. Friend.
    Mr. Michael Marshall: My hon. Friend has just made an important legal point about the difficulty he foresaw for the Director General in running, as it were, simultaneous actions. Does he accept that that raises questions that should be explored more fully because there appears to be a direct legal contradiction here with the advice that I gave earlier, to which I appreciate he has not been able to address his mind during the debate. Will he undertake to keep an open mind if perhaps in another place these legal arguments are given further detailed consideration?
    Mr. Henderson: I understand that my hon. Friend was referring to damages against the Secretary of State as opposed to against those who breach their licence obligations. That should be pursued further.
    My hon. Friend the Member for Hertfordshire, South-West (Mr. Page) said that this debate was a re-run of a debate that he initiated in Committee. It is different from that because the amendments that he proposed in Committee would have forced the Director General into action in every case, regardless of whether there had been

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    a breach of licence conditions. The new clause is different in character. The third party must be affected by the contravention.
    The hon. Member for Blaydon (Mr. McWilliam) said that we had not yet seen the licence. The new clause can apply to any licence, not just to BT's licence or any immediately foreseeable licence. That is important for BT or any other licence holder.
    The debate has prompted many thoughts for me. We have explored a number of important aspects, I should like to think further about some of them. I cannot vote tonight even if I want to, because, technically, I am in Aberdeen. The debate has revealed a number of points which strengthen the argument for such a new clause, but it has raised a number of issues which, in the words of Para Handy, give us pause to consider. Having paused to consider, there are other opportunities to improve the Bill in another place.
    I beg to ask leave to withdraw the motion—
    Hon. Members "No."
    Mr. Marlow rose—
    Mr. Deputy Speaker (Mr. Ernest Armstrong): the hon. Member for Northampton, North (Mr. Marlow) has already contributed so he cannot make another speech. I shall put the Question.
    Question put and negatived.

  New Clause 6

    TIMING OF TRANSFER OF UNDERTAKINGS OF BRITISH TELECOMMUNICATIONS
    'No property, rights and liabilities of British Telecom shall be transferred until 12 months following the publication of the memorandum and articles of association of the company nominated by the Secretary of State to receive the property rights and liabilities of British Telecommunications.'.—[Mr. Golding.]
    Brought up, and read the First time.
    Mr. Golding: I beg to move, That the clause be read a Second time.
    Mr. Deputy Speaker: With this we may take amendment No. 112, in clause 54, page 44, line 35 after `Part', insert, subject to section (Timing of transfer of undertakings of British Telecommunications) of this Act,'
    Mr. Golding: I wish to protest about the way in which the Government have found themselves in chaos yet again tonight. The Minister and the Under-Secretary have been at sixes and sevens with Back Benchers. There is utter confusion on the Government Benches everytime we debate the Bill. It is being processed in such chaos that not one hon. Member can comprehend it.
    The Opposition have seen through the legislation, and we will—
    Mr. Kenneth Baker: My hon. Friends have been summoned from their beds, rooms or Committee rooms at this late hour, not as the result of Government action, but because of the view of my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd). He was not convinced by the persuasive eloquence of my hon. Friend the Under-Secretary, who dealt clearly with the issue. Many of my hon. Friend's are now present because of my hon. Friend's action. Credit must be given where credit is due.
    Mr. Golding: The Minister is again trying to filibuster to prevent me from making my contribution. Conservative Members should not have been in their beds. They should have been here—
    Mr. Deputy Speaker: Order. Perhaps the hon. Gentleman will now address himself to the new clause.
    Mr. Golding: You were distracted by the Clerk, Mr. Deputy Speaker when the Minister made a statement, to which I replied.
    Once again the House is acting on inadequate information. It is vital to a business valued at £3 billion to £4 billion that when we pass legislation we have some idea of the articles of association and the memorandum for the successor company. We are almost as much in the dark about the articles of association and the memorandum as we are on RPI minus X the licence and the detail of the access fee.
    I do not know what will be in the articles of association or in the memorandum, but what is more serious is that that Minister does not know either. It is not surprising, therefore, that when we are given draft articles which are no more than extended notes, almost no more than a student would learn in a Workers' Educational Association class on the subject of articles of association, we discover that it is intended that special provision will be made in the articles for two matters, and possibly for a third—the exercise of the provisions in clause 60 relating to the borrowing of British Telecommunications plc during the transitional period.
    Before we reach the Third Reading tomorrow night the Minister should be able to tell us what will happen with regard to the exercise of the provisions in clause 60 relating to borrowing by British Telecommunications plc during the transitional period. We should know what the detail is to be. That borrowing will be vital to BT during the transitional period if it is to meet the competition that will be imposed by the Bill. We wish the Minister to give other answers, but he will not be able to reply tonight because of the savage guillotine that he has imposed on the Bill.
    The notes given to Standing Committee H on the draft articles of association said:
    "The company will have power to create different classes of shares."
    Who will determine that power? Will the Government insist on drawing up the commercial articles, or will the Minister leave this matter, as he has left the detail of access fees, as he is obviously leaving the draft licence and as he is obviously leaving RPI minus X, to the chairman of BT? Who will draw up the power to create different classes of shares? If the Government say that they will determine the different classes of shares, will the Minister tell us what is intended? The argument between the Opposition and the Government is that the Government should know at this stage what they will be doing in the transitional period. They should know what are the articles of association and what is to be the memorandum for the new BT plc.
    We must also ask about the safeguards on ownership and control. The draft articles say that the arrangements for the safeguarding of ownership and control will follow broadly those adopted for Amersham International. They say:
    It is envisaged that the specified proportion of votes of X per cent. would be around, although not necessarily the same as, the 15 per cent. figure adopted in the Amersham International case."

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    What considerations will the Government take into account when deciding what X will equal?
    I have never known proposed legislation to be so dependent upon so many unknown factors. The Minister should be able to tell the House what will be the safeguards on ownership and control for BT plc. What will lead him to vary the 15 per cent. that was adopted for Amersham International? What considerations will he bear in mind? Why is it that the Minister has not been able to tell us so far precisely what formula will be followed?
    The time is now after 11.59 pm, and because of the savage guillotine I shall have to debate some of these matters on Third—
    It being 12 o'clock, further consideration of the Bill stood adjourned pursuant to the Order [16 February].
    Bill (as amended in the Standing Committee), to be further considered this day.

Urban Development
12 midnight
The Under-Secretary of State for the Environment (Mr. Giles Shaw): I beg to move,
That the London Docklands Development Corporation (Vesting of Land) (Greater London Council and Southwark London Borough Council) Order 1982, a copy of which was laid before this House on 17th January, be approved.
This order is made under section 141 of the Local Government, Planning and Land Act 1980, and effects the transfer of approximately 132 acres of land, known as the Southwark site, from its present owners—the Greater London council and Southwark London borough council—to the London Docklands Development Corporation.
The Southwark site was to have been released by the authorities for a major development proposal by Lysander Estates Ltd. Because the local authorities have withdrawn from negotiations with Lysander, that scheme cannot now proceed. My right hon. Friend the then Secretary of State therefore, on 23 December 1982, made this order vesting ownership of the site in the LDDC.
The order was laid before the House on 17 January and it was declared hybrid and was open to be petitioned against for a period of 14 days. Four petitions were received against the order: one from each of the joint owners, the Southwark council and the GLC; one from the Southwark trades council; one from the Southwark docklands campaign and a number of local tenants associations.
The GLC opposed the order, arguing that the site had been the subject of a major private sector development proposal, the details of which had been negotiated between Lysander and the owners. The owners had now withdrawn from those negotiations, and wished to pursue the contingency plan which had been prepared against this eventuality by the borough council. The GLC argued that it was accordingly better placed to secure early development of the site than was the LDDC.
In its petition the GLC also argued that if the order were approved it would leave in the council's ownership small areas of land which would be severed from the Southwark site, and that the order incorporated other areas of land which the council required for the construction of the A200 Lower road improvement scheme.
The borough council in its petition similarly argued that following the withdrawal from negotiations with Lysander it was best placed to secure early development by implementing its contingency plan which provided for public housing, open space and industrial development.
The Southwark trades council argued that the Lysander scheme had always been unsuitable for this site, and that what was needed was industry and public housing related to local needs, which the trades council believed could be provided by the local authorities.
The trades council supported the contingency plan prepared by the borough council and further argued that to vest the site in the LDDC would pre-empt the borough's local plan for the north Southwark area. The council also contended that the corporation's performance in the Southwark area could not justify the Secretary of State's belief that the LDDC would secure early development of the site.
The collective petition of the Southwark docklands campaign and local tenants' associations argued that the

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Southwark site should be developed for the benefit of local people and not on the lines of the Lysander proposal. Concern was also expressed that, if vested, the opportunity would be lost for the provision of further public housing, community facilities and industrial development which was related to the needs of people in the borough.
The order and petitions were referred to the Hybrid Instruments Committee in another place. It considered whether any substantial ground of complaint was made which merited an inquiry by Select Committee.
My right hon. Friend, in his representations to the Hybrid Instruments Committee, pointed out that the development of this site has been one of the matters aired before the previous Select Committee which had considered the designation and constitution order establishing the corporation and defining the urban development area. He explained that at that time of those proceedings there was no proposal to vest the site, as negotiations were continuing between the local authorities and Lysander and it appeared that a satisfactory scheme would be agreed and would proceed without delay. However, counsel of the Secretary of State, in suming up the Government's case, stressed that if the development did not proceed, Southwark's chances of finding another developer must be doubtful. In that case the LDDC would be better placed to secure an alternative development for the site.
In their report the members of the Select Committee agreed that that view was the right one. They also stressed that a change of approach was required in the dockland area, and that the need was to attract private investment. They concluded that the LDDC was more likely to attract that investment than were the local authorities.
My right hon. Friend explained to the Hybrid Instruments Committee that, since the petitions were deposited, assurances have been given to the GLC that in those cases where severance of land may be caused by the vesting order, the LDDC will purchase that land. The GLC has also been assured that land required for the construction of the A200 Lower road improvement scheme will be dedicated for highway purposes.
My right hon. Friend also explained to the Committee that the contingency plan prepared by the local authorities would rely heavily on direct public investment in the provision of services and public housing. The authorities recognised this. My right hon. Friend explained that there could be no reasonable expectation that such resources would be available and that in those circumstances it must be doubted that the plan could be implemented. He also referred to the concerns expressed by several of the petitioners regarding the provision of public sector housing in the north Southwark area. He told the Committee about the agreement that the corporation had made with Southwark for the provision of improved accommodation, including 550 new dwellings, for many of the borough's tenants in the north Southwark area. My right hon. Friend concluded that the matters referred to in the petitions had been so fully canvassed in the proceedings on the designation order that, having regard to the circumstances in which the vesting was now proposed, the petitions disclosed no substantial ground of complaint on any new matter. The petitions, together with my right hon. Friend's representations, were considered by the Hybrid Instruments Committee in the other place. The Committee took the view that none of the points raised was of such substance as to require investigation by Select Committee.
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The corporation is finny committed to the regeneration of this part of dockland. For this to take place, the site must first be cleared of contaminated silt, levelled, consolidated and generally prepared for development. The LDDC is already funding the completion of a distributor road in the Surrey docks area at a cost of approximately £1·25 million, and these reclamation works will cost a further £1 million.
The corporation would have commenced a full survey of the site to identify the extent of site clearance necessary, but an application to the local authorities for permission to enter the site was refused. The LDDC has commissioned two leading firms of planning consultants and chartered surveyors, which are advising on development options for the site. There will be many options for the corporation to consider. This will ensure that the site's development potential is realised as quickly as possible, utilising the private investment which was so clearly identified by the Select Committee as being necessary for the regeneration of the area.
I referred earlier to the concern expressed that vesting this land will reduce the availability of public sector housing. This area demonstrates one of the most serious imbalances in housing tenure in London. The latest census figures show that the north Southwark area within the LDDC boundary has over 90 per cent. public sector housing. We are determined, through the provision of more private sector housing, to redress that imbalance. The LDDC has already made a start in the area, with construction already under way on 290 houses, and a further 320-plus in the immediate pipeline. An additional 2,000 houses are programmed. The LDDC is also making available a site in its ownership in this area for the provision of 27 houses for old people, which are being constructed by the Royal British Legion housing association.
I referred earlier to the agreement that the LDDC: had made with Southwark for the provision of 550 new dwellings. This arrangement, known as the Downtown agreement, would have secured the early relocation into new homes of those families presently occupying substandard blocks of flats. The LDDC would acquire those blocks and demolish, or in one or two instances refurbish. An immense improvement to the quality of life would have been made, but I must tell the House that Southwark has reneged on the deal. Alternative means of assisting the tenants are now being considered by the corporation, but I am sure the House will want to join me in condemning the parochial attitude which places an extreme political viewpoint before the improvement of so many people's quality of life. The Southwark site represents a superb opportunity to introduce essential variety in housing, employment and industrial prospects. Vesting the site in the LDDC is clearly the only way of securing early development and the prospect of long-awaited improvement of the area and many local jobs.
I commend the order to the House.
12.10 am
Mr. Ted Graham: This is a debate which, alas, will be all too short, and it is necessary for hon. Members without direct dockland constituencies to make a contribution. Nevertheless, I think that the House will have its debate enriched tonight by the presence of so many Opposition Members who can speak with local experience from their dockland constituencies.

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I refer in particular to my hon. Friends the Members for Newham, South (Mr. Spearing), for Newham, North-East (Mr. Leighton), for Bethnal Green and Bow (Mr. Mikardo), for Vauxhall (Mr. Holland), and for Lambeth, Central (Mr. Tilley), and to my right hon. Friend the Member for Stepney and Poplar (Mr. Shore). I am pleased to see the hon. Member for Bermondsey (Mr. Hughes) in his place, and I am sure that the House will listen with great attention to what he has to say about the site, which is in his constituency.
This is a new Peninsula war—the Surrey docks peninsula war. It can be summarised in clear and simple terms. What is the task? There is a job of work to be done for the communities and the people of this part of south London, of docklands, and that job is to develop the industrial sites, public housing and community facilities.
What mechanism is best fitted to carry out the task—an anti-democratic, non-elected committee of placemen, the LDDC, or a joint committee of locally, democratically elected people, working with local community groups, aided and supported where necessary by the Government, especially with Government money?
The crucial question to be asked and answered brings us to the reason for the debate. Is it right for a Secretary of State, when he finds democratically elected people refusing to give away their land at knockdown prices, to use his parliamentary bulldozer to smash them into the ground and hand valuable public assets to a Government quango which has yet to tell the local people what is in store for them?
Southwark and the GLC very willingly began what started out as a beautiful friendship with Lysander Estates Ltd. in April 1981, and the main elements were not wild or far out. They were certainly not over-communityoriented—offices, shops, industry, hotels, conference centre, exhibition centre, 250 dwellings, museum, community facilities and roads. Even so, the desire to get the 130 acres used overcame the very strong desire of local people to build more houses, more workshops and more community facilities.
The case for the vesting order has not been made out. When the former Secretary of State said on 23 December last year that
"Vesting this site in the LDDC is clearly the only way of securing early development",
he was utterly and dogmatically wrong.
If the present joint owners, the GLC and Southwark, were the recipients of the same sympathy, the same resources and the same ministerial muscle as Lysander Estates Ltd, and the LDDC, action to develop the site to the satisfaction of local people and the Government could be just as swift. What we have is ministerial prejudice on a scandalous scale.
What has caused a relationship which could have worked, and which both the GLC and Southwark were prepared to make work, to founder and eventually to perish? The details of the terms agreed can be restated and the programme, timetable, conditions and aspirations can be reviewed and reassessed, but in this short debate the guts of the issue can be stated as follows. Lysander, faced with the normal commercial problems that beset any project of this size and complexity, sought their
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redemption by reneging on its agreements. Nothing emerged relative to detail during 1981 and 1982 that was not known or could not have been seen.
When, in July 1982, Lysander returned documents that were based on its original promises, it tried to alter them in fundamental and unacceptable ways. First, there was a radical reduction in the premium and licence fee to be paid by Lysander to the joint owners. Secondly, leases were to be given at the same time instead of in phases as was agreed. Thirdly, the approval of all plans by the joint owners was to be watered down. Fourthly, restrictions on the disposal of housing land to Lysander were to be scrapped. Fifthly, rent reviews at 10-year intervals were to be scrapped, community housing provisions were to be jeopardised, arbitration provisions were to be scrapped and there was an insistence on the power to rescind all agreements at the will of Lysander. No self-respecting public body would tolerate such arrogant behaviour.
When the GLC and Southwark sensed the net effect of uncertainty that this bombshell from Lysander created, they recognised that the salvation of the project would lie in their own hands. In July last year they produced their own joint plan. First, it would reduce unemployment by creating industrial space to provide 2,000 jobs in 41 units comprising 130,000 sq ft of space. Secondly, they would build 733 dwellings with gardens for rent, which are still sorely needed in the area. Thirdly, they would create open space and community provisions in consultation with local groups. It was a financial package—a mix of help from the Greater London Enterprise Board, Southwark and rents from the projects. Nobody should tell the House that there is no way to forward the project other than by vesting the land in the LDDC.
Is the track record of Southwark council in these matters so bad as to compel Parliament to deny it its right to build and develop for its own people? Before the advent of the LDDC in 1981 Southwark had created more than 50 developments, at a cost of more than £35 million, in docks clearance, housing, roads, playing fields, parks and environmental improvements.
Since the secret society of the LDDC came into being, there has been a history of deliberate frustration of Southwark and GLC initiatives by the LDDC and the Department of the Environment. We are already aware that the officials of the Department of the Environment are busy on behalf of their masters, the Ministers. We are indebted to my hon. Friend the Member for Newham, South for drawing the attention of Standing Committee E on 24 March to some such activity.
Mr. John Tilley: Will my hon. Friend confirm that this is more disturbing evidence that either officials or successive Conservative Secretaries of State for the Environment seem to regard the south bank of the Thames as their personal fief? First we had Vauxhall Cross in Lambeth, then we had Coin Street on the border of Lambeth and Southwark and now we have this Southwark site. In each case the Conservative Government have changed the rules because they do not like what the local council has decided. Does my hon. Friend agree that in each case we are getting architectural disasters that ignore the needs of the local community? We can almost say there is a constitutional outrage, as the Government are riding roughshod over the rights and duties of local authorities.
Mr. Graham: I am grateful to my hon. Friend. I intend to show that this shoddy and shabby episode is part of a series of decisions that were taken by the former Secretary of State for the Environment—relating to the south bank especially, but to London generally.
I refer the House to last Thursday's debate on the Ports (Reduction of Debt) Bill. My hon. Friend the Member for Newham, South drew attention to the cosy relationship that exists when he quoted the minute of the LDDC for 10 November. It said:
"The Chief Executive informed the board that he was meeting Terry Jones on 11 November 1982 to seek an assurance that the PLA has resisted offers made to them by the GLC."
My hon. Friend said:
"On reading that, I assume that Mr. Terry Jones was a minor functionary of the PLA. I have since inquired and discovered that Mr. Terry Jones is a senior official of the Department of the Environment, whose responsibilities are for London in general and the London Docklands Development Corporation in particular—for the LDDC especially. That shows the matter in a very serious light. It would be bad enough if the LDDC said to the PLA, privately and secretly, 'Do not accept that money'."—[0fficial Report, Standing Committee C, 24 March 1983, c. 45.]
That clearly shows that when it suits the Department of the Environment it is not above seeking to manage or manipulate or to make things happen or not happen. Why does it not work as diligently to help local people to attain their objectives? Will the Minister take the opportunity to comment on a very serious episode?
We are denied any detailed knowledge of LDDC proposals for the site. Is it to be the old Lysander scheme? As the proposition will need to be at least as commercially viable—that is, profitable—may we expect increases in the number of offices and shops? Plans have already been approved for an additional 32 million sq ft of office space in London, much of it along the south bank. It is estimated that more than £1,000 million will be spent on building offices, many of which will be left empty. What are the Government doing to bring some sanity into the use of resources and to give places such as Southwark a feeling that the Government care about the people who live and work there and want to go on living and working there?
I make a last appeal to the Minister and the Government: drop the vesting order, send immediately for the GLC and Southwark council to produce their plans and costings for getting the site brought into productive community use. The Under-Secretary laughs at the prospect of the Secretary of State taking an initiative that might salvage something from a disgraceful episode. I have enough faith in the right hon. Gentleman to believe that he will at least look at my suggestion. Let him examine the snags holding up progress and give the GLC and Southwark the same ministerial and financial resources and muscle as he intends to give others. He should seize the opportunity to give local people, who want to create their own sensible, viable scheme, the chance to do so.
Failure to do that will earn the Secretary of State the reputation of caring more for private profits than for principle, more for dogma than for democracy and more for financial institutions than for local people. That is why we shall vote against the vesting order.
12.23 am
Mr. Peter Bottomley: I suspect that the House would welcome a short intervention from me. I can see from the number of Labour Members who wish
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to speak that the fight for nominations for the Vauxhall and Lambeth, Central constituencies will take place over the entrails of Southwark and GLC land.
It is clear that there is great ignorance on the Labour Benches about what has happened, or not happened, to land along the Thames over the past 15 or 20 years. When I stood for the GLC in Vauxhall in 1973, the Vauxhall Cross site was empty, and there is still no building there; the Coin street episode had started, and has still not been resolved; the Southwark dockland site was becoming empty and only now do we hear that the GLC and Southwark council will, if asked, bring forward detailed proposals.
For years and years, jobs have not been created, building has not been stated, homes have not been built and land has remained sterile. Even in the past six months there have been two by-elections in Southwark and we have had no detailed proposals, but only political rhetoric.
It is always a delight to hear the hon. Member for Edmonton (Mr. Graham) defending London Labour councils. He does that better than many, because he believes that they have been disgracefully slow in reacting to all the opportunities. Of course, it is difficult to know how seriously to take the views of any Labour Members on this issue. If we had asked four years ago whom we should listen to, we would have been given the names of Robert Mellish and John O'Grady. We are now told that because they are involved in the LDDC we should pay no attention to them because they are old hat, and we have to listen to the hon. Member for Edmonton and perhaps one or two others.
In two or three years' time, unless a grip is taken on the land, we shall find that the same arguments are going on and successions of Labour speakers will stand up and then be disowned. The people of London want to see action. The Government are right to expect the LDDC to get that action, and it is right that the House should pass the order.
12.26 am
Mr. Nigel Spearing: The hon. Member for Woolwich, West (Mr. Bottomley) has not done his homework. My constituency is the area of the former dockland joint committee, which was a democratic body. I can tell him that considerable expenditure on roads and drainage took place in my constituency and houses were about to be built. No fewer than 8,000 were programmed, and many are now started. Unfortunately, however, through the Government's intervention, instead of many of those houses being for council accommodation by rent with gardens, they are now largely privately built and occupied. I wish the occupants of them good luck, but it was the interference of the LDDC and the Government that changed those ambitious and constructive plans.
The LDDC has its powers from the Local Government, Planning and Land Act 1980, section 136, which charges it to secure the regeneration of its area
"by bringing land and buildings into effective use, encouraging the development of existing and new industry and commerce, creating an attractive environment and ensuring that housing and social facilities are available to encourage people to live and work in the area."
Those are precisely the plans that have been suggested by the GLC and the London borough of Southwark. Consequently, no fewer than two schemes have failed, because prior to the Lysander scheme there was the well-advertised Trammel-Grow scheme, which did not get off

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the ground, again because it was not sufficiently viable. It was right that my right hon. Friend the Member for Stepney and Poplar (Mr. Shore), who was then the Secretary of State for the Environment, reserved the Government's position on that scheme. It has not been a surprise to many of us that the Lysander scheme did not get off the ground, because the Estates Times, in a report of 11 February 1983 had a headline about doubt over the viability of docklands shop plan, and a story telling in detail why the Lysander scheme will not get off the ground.
Now we hear from the Minister that we are to approve more consultants, to find out what sort of plan might get off the ground. All the time, the GLC and Southwark have a plan ready. We in dockland are fed up with the LDDC spending huge sums of money on ridiculous scarecrow posters all over London and going on television, but not being able to produce sound schemes.
The local preferences are clear, and I expect that we shall hear some of them in a minute from the hon. Member for Bermondsey (Mr. Hughes). The LDDC does not appear to want to carry them out. It is disgraceful that the vesting order did not go before a Select Committee—I do not wish to criticise the other place, but that should have happened. As it did not, there can be only a one and half hour debate on the subject, and that is not enough time for a proper discussion of the issues involved.
Is the LDDC a proper body to be charged with the job of regenerating docklands, not just the site about which we are talking? I shall refer to the points made by my hon. Friend the Member for Edmonton (Mr. Graham) concerning the conduct of the LDDC. It is true that persons from the three London boroughs involved—this does not now include Woolwich—are members of the board. But they are not there as leaders or former leaders of the boroughs. They are on the board merely as persons having been nominated by the Secretary of State in accordance with the Act.
Anyone appointed to a body in a personal capacity, even though he has experience which qualifies him, has to go along with the majority view of the board. What is worse, when the board does not publish its minutes and is not open to public scrutiny in the sense that a local authority is—it must not be forgotten that the LDDC has powers of planning and powers of vesting, which is extraordinary—it is not open to "municipal" persons to talk about the confidential matters that come before the board. Hence, there is suspicion, crossed wires, misunderstandings and distrust.
I do not believe that the LDDC is a fit and proper body, and we had this out during the Committee stage of the 1980 Act and in the debates on all the vesting orders that have come before the House. I have a special reason for drawing attention to it in this debate, because of what is happening in my constituency and the stewardship or lack of it of the LDDC.
I shall not describe in detail the Royal docks area. It is 2 miles long by about half a mile wide, and 600 people work there at the moment in short-term lets but having nothing to do with the docks. The docks will never again be what they once were, but it would be possible to make them available for mixed use—a certain amount of shipping, bulk cargo, recreation for local young people and national sporting bodies, redevelopment of some of
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the area for works and workshops and, above all, the use of the three dry docks for ship repair. A ship repair firm came into those workshops recently but had to withdraw because the PLA said last year that it would lose £500,000 on maintaining water access. The LDDC will encourage any activity in this area, even if it floats on the water, but it must not float into the river. It says that it is not particularly concerned about water access.
When the GLC heard that water access to the river was allegedly costing £500,000, it wrote to the PLA saying that it would guarantee those costs for 1983. The PLA—surprise, surprise—suddenly found that it could break even in 1983 and that it did not want assistance from the GLC. I explained the correspondence in detail in the Committee which considered the Ports (Reduction of Debt) Bill only last week. Magically, in 1982 the PLA claimed that it lost £500,000, but in 1983, on less activity, it claims that it can break even.
The LDDC remained silent when this controversy was going on. It appeared to have no view on whether water access to the docks should remain open. It observed some of the meetings, and it received correspondence. It said nothing. I suggest that that in itself was reneging on its responsibility for the regeneration of the area, because it was cutting out the options.
We are to have a local inquiry into the possibility of a short takeoff and landing airport. There was one proposed for the Surrey docks back in the early 1970s. But it is not beyond the bounds of possibility for all these other uses to be there as well.
I now come to the quotation made by my hon. Friend the Member for Edmonton, which I shall read:
"The Chief Executive informed the Board that he was meeting Terry Jones on 11 November 1982 to seek an assurance that the PLA had resisted offers made to them by the GLC."
I received this in an envelope, from where I do not know, and I challenged the Minister in charge of the Ports (Reduction of Debt) Bill on Thursday to confirm that this was a correct statement. He said that he could say nothing because it was outside his departmental responsibility.
We have here tonight the Ministers who have that departmental responsibility. Mr. Terry Jones is a senior official at the Department of the Environment, and it is clear that, if this document is what it purports to be, the LDDC believed that Mr. Jones had some influence with the Port of London Authority, a body which was the responsibility of another Secretary of State. Quite clearly mechanisms had been produced whereby the London Docklands Development Corporation could interfere or put pressure on an autonomous or a supposedly autonomous body, the Port of London Authority, to change policy decisions which had direct and fundamental bearings on the regeneration of a large area of dockland.
I do not believe that the LDDC was acting responsibly in that manner. I am not saying there should not be confidential talks and arrangements between the LDDC and the Department of the Environment. There must be up to a point. I submit to the House that that action was not only improper but contrary to all the tenets of the proper regeneration of dockland. The hon. Member for Bermondsey will confirm that the Greenland dock is in the centre of his constituency, is used for several purposes and has access to the Thames. Why should not that happen to my docks as well? Why can this unaccountable and unelected body approach a departmental official from the wrong Department and get an undertaking, and why can

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the PLA, in producing figures that nobody believes, fudge them with the apparent connivance of the Government? This is very serious. The Secretary of State should, in some respects, be above all this and be acting in a proper and judicial capacity.
I asked the Minister, and he has had notice since last week that I would raise the matter, why the LDDC expected that Mr. Jones could give the assurance concerning the policy matters of the PLA, which is itself responsible to another department?
Given the attitude of the LDDC concerning the continuation of ship repairs in the royal docks, and that closing the water access has meant that that work has gone to Chatham, why does the Minister think that that body is fit and proper to continue to be responsible for this development? Does he understand that in the light of the material now available, the public must conclude that the LDDC and the Government have connived in the closure of water access to the royal docks and must be suspected, as must the PLA, of conniving at, and presenting false figures for the public.
I suggest that unless these matters are disproved, they show conclusively that the LDDC is not a fit and proper body to have the land, now being discussed in the House, vested in its charge.
12.33 am
Mr. Simon Hughes: A year ago a newspaper reported that the area that is now in the charge of the London Docklands Development Corporation was not only the largest development area in Britain but possibly the largest in Europe. The LDDC was charged, in the borough that I represent, with the task of restoring a community to that part of London where community spirit is one of its proudest traditions.
It is sad that in the years since the docks closed in 1970 and up to the creation of the LDDC in 1981, despite considerable efforts by the local authorities, there was not much visible sign of the development that that part of London needed. Since then, as a result of the order passed in the House in July 1981, a corporation has been seeking to remedy that situation. There is however, an unsatisfactory element in the corporation's role. It is undemocratic. It is possible for representations to be made to it only by elected Members of Parliament or by local council or GLC representatives. From a distance, we must seek to influence decisions that should be taken by people elected to take them. For that reason, before becoming a Member of Parliament, together with most of the groups and political parties in my borough and constituency, I opposed the setting up of the LDDC.
Since then, it is a futher sad comment on the way in which matters have gone that such an important issue as we are debating could not be examined by a Committee in the other place and is being debated at a time most of the real world would regard as ludicrous for a subject that is so important, both to London and to those individuals whose futures are our particular concern. It is essential, however, to consider what we should do in the ridiculous position we find ourselves.
One attitude is exemplified by the local authority in my area. For reasons of its own, Southwark council has decided not to speak to the docklands corporation. That is an irresponsible attitude, which is not in the interests of the people whom the council represents. Indeed, local people have often told me this, particularly in recent weeks when
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I have had even more occasion than usual to listen to their views and repeat them. Sadly, that attitude has other manifestations. Some tenants of Surrey docks live in council property that is in an appalling condition. Indeed, 70 per cent. or 80 per cent. of some properties are boarded up and empty. Some blocks have only one or two families in them. They find that they are the subject of debate between certain authorities but that there is no progress while the corporation and the local authority will not speak about their future. The downtown tenants of Surrey docks are the sufferers while the intransigence of Southwark borough council compounds the lack of democracy of the docklands coporation, by not acting together with it and not acting in the interests of those who live in the area.
There are further problems, some of which have been referred to by the hon. Member for Newham, South (Mr. Spearing). About 700 people are employed in the area of Greenland dock, but firms there have received notices from the development corporation threatening them with closure and removal. I have been active, together with the GLC member for my constituency—who is a member of a different political party—in seeking to ensure that those firms and the jobs that they represent can remain in that area and provide a future for those who work there.
Such problems would be obviated or lessened if there were a democratic body. We are considering a site of 120 acres, which is jointly owned by the borough council and the GLC. It represents 80 per cent. of the new build land and of the available space for Southwark. It is a sufficiently large site for me to say that no one developer should be charged with its development. Its value is between £8 million and £10 million. It should be used to meet the desperate needs of that part of London. It should be used for both public and private housing. Only tonight, at a tenants' meeting, I was told once again that some young families can afford low-cost housing and want to buy. They want to settle with their families in the area in which they were born and brought up. I am talking about a maximum of £26,000 or £27,000. At £28,000 it begins to be too difficult for families to buy, even when both parents are working, in a community such as Southwark. Many people, however, cannot and do not wish to afford private housing. Therefore, the development should be mixed. I would be reassured if I knew that some of the site would definitely be given for that purpose, even by the LDDC. From a meeting of several hundred tenants that I attended before returning to the House this evening, I know that another 900 tenants are likely to have to move out of an estate that will have to be demolished and that they will soon be looking for accommodation elsewhere in the borough that has the responsibility of providing them with homes.
The need is therefore for housing, and for jobs for the 20 per cent. who are unemployed in my borough We particularly need jobs for the young people in my borough who cannot find work on leaving school. They want a future in the place that they know and love. There is also no better place in this city than the docklands when it comes to developing water-based recreational facilities. There is no better place to use for open spaces and no better place in whch to let our young people grow up in. It can provide the healthy environment that we would want for all those whom we represent.
A contingency plan has been prepared by the London borough of Southwark and the GLC. It estimates that 2,000 jobs will be available. It provides for 733 homes.

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It has the advantages of local control, low-cost housing, and homes with gardens. However, it has disadvantages. It has a timescale that guarantees money for only two years. It has the problems of the formulation of the local statutory district plan which are not yet resolved and are not likely to be resolved for a further nine months. It has no build for sale, and therefore does not respond to the clear needs of some of the community that I represent. It has potentially a smaller industrial appeal than other developments could have. So the scheme is by no means perfect, although it has many redeeming and commending features.
However, it is more perfect than the Lysander scheme, which clearly is no longer acceptable, first, because it has at all times included elements that are inappropriate for the surrey docks and second, because it is clear that the developers have changed their conditions in several substantial ways that make the prospect of decent development by them no longer realistic. We should not condone that scheme or allow it to go ahead without severe criticism and strong resistance.
What, then, is the alternative? It is that we pass a vesting order, handing over the land to the LDDC. Tonight we have a vesting order to give a blank cheque to the old LDDC. If we knew the plans, if we knew what the proposals were, if documents were available to the public, we could judge whether those plans were acceptable, and balance them against the alternatives. However, there are no plans, and the scheme has not been presented to the public.
Whatever the outcome tonight, I hope that I can continue to do what I told those who elected me as their representative only a month ago that I intended to do. I said that I would remain independent of the LDDC, but at the same time that I would speak to it. I would seek to influence it to do what was needed for the area. I would seek to do so in a way that would produce for public discussion the plans for the area. Until we have those, I say on behalf of my party that we shall vote against the vesting order. We shall do so because I cannot sign a blank cheque for my constituents.
From today onwards, however, I shall seek to encourage all those who are responsible, whether in my local authority or the GLC or the LDDC, to produce for the Southwark site the proper balance of housing mix, industry and recreation that is clearly needed, without dogma and prejudice, and to persuade those affected that their interests are being represented and that that land will be used to the best advantage.
I end with a letter that I received this morning from one of my constituents, and it happens to be about this debate. He wrote:
"I'm sure that you've been struck by the wealth and skills to be found in the area; it seems to me that instead of trying to adapt the people to the development, one should try and adapt the development to the people. So for God's sake keep Colonel Siefert away from the area".
Let us plan with those in authority the area that we want. I hope that we shall soon know the plans, that they will be worked out, and that they will be honestly presented. When the people have seen them, I hope that I shall be able to do my part with other Members representing dockland constituencies to make sure that local people are represented and that influence is brought
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to bear to produce the sort of community that will healthily survive. Our job is to bring back to our part of London the development that it so desperately needs.
12.50 am
Mr. John Hunt: We have all listened with great interest to the hon. Member for Bermondsey (Mr. Hughes), who speaks with a close personal interest in and knowledge of the area under discussion. I was struck by his comment about the dilapidated and disgraceful state of many of the council dwellings administered by the London borough of Southwark. That seems to cast considerable doubt upon the validity of the scheme being presented by that borough and the Greater London council. One is bound to say that from what the hon. Gentleman said the borough's track record is not particularly good.
The hon. Gentleman was right to remind us that the London Docklands Development Corporation came into existence precisely because of the long history of procrastination in dockland redevelopment. My hon. Friend the Member for Woolwich, West (Mr. Bottomley) was right when he spoke of the delay and endless wrangling and rivalry that has gone on over the years between the various boroughs in the area.
Mr. Spearing: Does the hon. Gentleman agree that there was no major disagreement between the boroughs but that there may have been between the Conservative Cutler-led GLC and the boroughs? If there was any delay at all, responsibility for it should be laid at the door of that gentleman and his council.
Mr. Hunt: I have been in the House for 18 years and I can recall endless debates and reports about all the difficulties and differences between the boroughs that make up this area. That is a fact that cannot be gainsaid.
Basically, the argument is between private and public housing. My hon. Friend the Minister is right to say that the vesting of the site in the LDDC is now the only way to secure its early development and the long-promised improvement and regeneration of the area.
The briefing material that we have received from the GLC talks about meeting the needs of local people. In a letter to London Members, Mr. Michael Ward, the chairman of the industry and employment committee of the GLC, said:
"Private developers have already shown that they are less able to invest in this site, particularly in view of present market conditions."
I wonder what the evidence is for that statement. Present market conditions for the construction industry are now looking considerably brighter. Therefore, the prospects for private development in the area are better than they have been for some considerable time.
Labour Members must face the fact that a new market for home ownership is being created in the docklands. That is basically what they dislike about the proposals now before the House. The recent history of the LDDC has shown that there is a demand for low-cost housing in the inner city. I remind hon. Members that the corporation started from scratch, and yet by October 1982, 400 of the 601 houses and flats that had been built had been sold at prices ranging from £20,000 to £31,500.
Significantly and interestingly, a large proportion of those houses went to those who were on the waiting lists of the boroughs in the areas.—[Horn. MEMBERS: "That is

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not true. Mr. Mellish himself informed me of that.—[Interruption.] I am astonished. Mr. Mellish devoted himself to the docklands and is concerned with its regeneration. He believes that his work at the corporation will provide the homes that the people of the area want. I prefer to judge Mr. Mellish on his record than to listen to squeals from Opposition Members whenever his name is mentioned. Nearly all the houses have been sold and some have gone to housing associations.
The hon. Member for Bermondsey made a plea for mixed development—
Mr. A. W. Stallard: The hon. Gentleman referred to years of neglected housing in the area. That happened during the time that the man he now lauds to the skies was the representative in the House of that area. The hon. Gentleman said that Mr. Mellish had been a good Member and that he would rather listen to him, but he was the bloke responsible for the neglect.
Mr. Hunt: The former right hon. Member for Bermondsey was never a member of the Southwark borough council and therefore never had direct control of the decisions of that council. I think that Mr. Mellish is capable of answering for himself.
The present hon. Member for Bermondsey mentioned the need for mixed development. Only 5·3 per cent. of households in dockland own or are buying a house or flat. That compares with the average of 27·3 per cent. in inner London. Even if all the new homes in the area are private, there will still be a substantial mix and it will probably be below the average for inner London. There is plenty of scope for private housing, and we should welcome it.
12.58 am
Mr. Stuart Holland: We have just heard the principle of private ownership and profit raised to a metaphysical level. We heard the Minister say that there is a need to attract private investment. We are told that the GLC's proposals cannot be taken seriously. In fact, there is no way that the Government's proposals can be taken seriously. They are all part and parcel of the free enterprise philosophy with which they are still imbued, despite the fact that they have made a gigantic mess of the economy, with record levels of unemployment.
If Government Members interpret a hiccup in a downward cycle for an upswing in the economy they deserve the ride that they are being taken for. The free enterprise and free enterprise zone approach in the proposals for vesting powers in the London Docklands Development Corporation is fundamentally wrong. It is something that the Chancellor of the Exchequer has put to the House on many occasions, even arguing that it would be a good idea to have in Scotland some of the entrepreneurship that we see in Singapore.
It appears that in this case it is hoped that the entrepreneurship of Singapore will be brought into Southwark. There is virtually no chance that it will happen with the present state of the economy. The author of the enterprise zone proposals and enclaves of this kind, Peter Hall, has said that he is amazed by the Government's policy and that it is not at all what he had in mind when recommending such enterprise zones, although he should perhaps have his mind re-examined since it appears that he thought that he could literally get entrepreneurs from Singapore to come to Scotland or to Southwark and invest their creative talents there.
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The reality is that there are major structural problems with employment in inner London. They affect the crisis of small and medium firms in the area, where entrepreneurship and resolution alone are not enough to survive in the economic climate that the Government have created. It is precisely to this that the Greater London Enterprise Board, of which Mike Ward is the chairman, is addressing itself. It is taking on firms that do not have the internal resources to modernise, cannot adapt to new technologies or lack the diversification to undertake risk. Provision can be made for this by the Greater London Enterprise Board, and the Board's intervention is part of the GLC's counter proposals for the site.
I cannot understand why Conservative Members take the view that any municipal intervention is Socialist red in tooth and claw. Such assistance is given by every Government—Left, Right or Centre—in continental Europe. Municipal intervention, whether it is designing a road system, ensuring that there is a decent living environment or providing for urban planning, is the mark of a civilised society. But in the 20th century it should be with the involvement and consent of the elected representatives of the area. Otherwise, there will be a suspension of the rules of the game in the normal planning process only too similar to the suspension of certain of the rules of the game in free enterprise zones in other parts of the world—for example in south-east Asian enterprise zones, where boss figures are put in to run their show their way against the wishes of the local people.
We are told that the market will resolve all the problems and that there is market superiority. A couple of my hon. Friends have already referred to the report in the Estates Times. As the message has not got through to Conservative Members it may be worth spelling out what it says. It was reported last month that Hillier Parker for the London Docklands Development Corporation said that prelets to major tenants were unlikely and that the population's spending power in the area would not support such a large development.
That echos precisely what is happening in the property market along the river and further up river on the south bank. The unwillingness of the private sector to invest its risk capital in small and medium or high technology enterprises in inner city areas is very marked. Lemming-like they all rush to invest in property. The hon. Member for Woolwich, West (Mr. Bottomley) told me that he has been appalled to see for so long the sites by Vauxhall bridge unlet. Perhaps he would care to tell me with what confidence he has now that they will be let in future. There is no commitment whatsoever that the plans will be fulfilled.
Mr. Peter Bottomley: If, 10 years ago, the site had been put up for auction, and if reasonable proposals had been approved, there would be more jobs in the hon. Gentleman's constituency and I might have been happier to be one of his constituents. All I know of him is his opposition to virtually every plan put forward, and no jobs on the site.
Mr. Holland: It was quite a good idea to give way to the hon. Gentleman. If he does not have a stronger case than that he is wasting his time. Anyone who looks at the position knows that office developments do not bring significant local employment. They do not even bring much through contract cleaning because contract cleaners

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are brought in from a wide area. The white collar workers in offices do not necessarily come from the local area. Also, the demand for white collar office staff is shrinking because of the impact of new technology. This has not in any sense been taken on by the LDDC. The demand for lettable space is shrinking, and will continue to fall. It is striking that the House cannot catch up with the analysis made at the recent Financial Times conference when no one from the property lobby was prepared to say that there was an upswing in the market. Yet Conservative Members imagine this will take place, that all is well with commercial judgment and that the properties can be let.
My answer would be that, instead of putting up these sites for public auction, it is a public responsibility for there to be housing on them. There is a questionable need for office development and a patent and crying need for housing. With the abolition of the strategic housing role of the GLC, the inter-borough nomination scheme is seen by my constituents as an insulting farce. They know when they are put on the inter-borough nomination list that they have virtually no hope of getting a transfer.
Why cannot we meet London's housing needs by building houses, for those in need rather than those who may be able to pay if, God help them, the rent review terms of the Lysander-type approach are used where there are no rent provisions at all but only additional annual rent? If that is to be the case for private housing, only a minority of people on the edge of the river will be able to afford penthouse flats. Constituents of mine and of other Opposition Members who desperately need housing will not get it because speculative developments, instead of investment for housing for local need, are going ahead.
In the Vauxhall bridge site the Department of the Environment Ministers overrode the local authority with grandiose design plans, again with no conditions for fulfilment. In this case we see the local democratic process and the local interest overridden. Local democracy in London needs the London Docklands Development Corporation like a hole in the heart. It will knock the heart out of the process of accountability in inner London. The vesting order should be opposed, and I shall certainly oppose it.
Several Hon. Members rose—
Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. Before I call the hon. Member for Wood Green (Mr. Race), I remind the House that the Minister wishes to reply to the debate, and I am sure that the House would wish to hear him, at about 1.20 am
1.6 am
Mr. Reg Race: I do not represent a docklands constituency, but a large number of my constituents are in acute housing need. I am moved to speak on the order by the outrageous comments of the hon. Member for Ravensbourne (Mr. Hunt). It is the view of the Conservative party that people in London should increasingly depend upon the whims of the private market for the provision of private housing. According to Conservative philosophy, someone on a council waiting list shoud take second or third place.
I should like to remind the hon. Gentleman and the House of the record of Bromley borough council, which, with broad green acres within its area, has built extremely
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few council houses, has sold a large number of them to sitting tenants and has a substantial council house waiting list. The hon. Gentleman does not appear to be in favour of a decent mix of private and public housing in Bromley. It appears that only in docklands is his party and the people whom it represents willing to countenance a decent mix of private and public housing, for the sake, no doubt, of the profits of private developers.
That is a scandal, because in my local borough 10,500 families are on the housing waiting list, and that is the situation in virtually every London borough. We not only have large numbers of people on council house waiting lists, but extremely large numbers of homeless people in bed and breakfast accommodation. The London borough of Camden has 500 families in bed and breakfast accommodation. The London borough of Brent, with acute housing problems, has 500 families in bed and breakfast accommodation.
It is a scandal for Members to pretend that those people should have second or third priority. They should have the first priority, not the fourth or fifth. I do not believe that those who have substantial amounts of money should be able to buy land that has been ripped off the public and acquire flats or other housing on it when there are homeless people and many others living in bed and breakfast accommodation. But that is exactly what will happen.
For all those reasons, I believe that the Government's advocacy—they have been saying that an unelected and unaccountable body should have the right to determine what goes on in Southwark and the GLC area—is a scandle of unprecedented proportions. They are proposing to hand over a considerable profit to individual private companies.
The advice that is being received from members of the LDDC, such as Mr. Robert Mellish and Mr. John O'Grady, is hardly neutral. They are paid members of the corporation. I am reliably informed that Mr. Mellish receives a salary of over £16,000 a year.
Mr. John Hunt: He deserves more.
Mr. Race: I am told that Mr. John O'Grady receives a salary of over £3,000 a year.
Mr. John Hunt: So what?
Mr. Race: That is his salary as a member of the board.
Mr. John Hunt: So what?
Mr. Race: It is important to note where their interests lie. They have not been elected to serve on a body to look after the interests of the local people. They are paid to do a hatchet job for the Conservative party. That is why they were put there by the former Secretary of State for the Environment. In my opinion—I expect that it is shared by many of my hon. Friends—it was an extremely foolish thing for them to do. However, they did it and I believe that their advice is not to be trusted. Their advice should not be heeded by the people of Southwark and the rest of London.
The elected bodies in London—the GLC and the Southwark council, for example—should determine what happens in this crucial area. It is crucial to south London and to London as a whole. The homeless families in my constituency need homes desperately. If the land is sold, and if the majority of it goes to private development and private home ownership, their chances of being rehoused

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will be reduced. For that simple reason, I believe that all hon. Members who have a conscience should vote against the order.
1.13 am
Mr. Eldon Griffiths: The hon. Member for Wood Green (Mr. Race) told us that he intervened because he was provoked—two can be provoked. I shall make three points and make them simply.
The hon. Gentleman spoke of a former colleague of us all, Mr. Mellish. Our former colleague was a housing Minister, and on behalf of very many in London he was extremely helpful in moving people from Southwark, from the area that we are discussing, into the overspill estates in my constituency. It ill becomes the hon. Gentleman to make such absurd comments about a man who served the House well and who served many of the people well. I say that although I was not a member of his party and I opposed many of his policies. The hon. Gentleman does himself and House no credit by throwing around insults when talking about a former Member of this place, who served it well.
Secondly, the hon. Member for Wood Green and several of his hon. Friends have said that it must be left to the elected local authorities to provide housing for London's needy. I do not disagree with that, but I look at the record. I have had some experience of these matters, because I was a Minister at the Department of the Environment for four and a half years. If there is a lack of housing for the people of many of the Socialist areas which the hon. Gentleman and his hon. Friends represent, the responsibility lies mainly with those who have run the local authorities in those areas for the past 25 years. Those Socialist authorities have sat there and brought about the housing shortages of which the hon. Gentleman has spoken. He should recognise that his own party bears the principal responsibility.
Mr. Ian Mikardo: Will the hon. Gentleman give way?
Mr. Griffiths: Of course I will give way to the hon. Member for Bethnal Green and Bow (Mr. Mikardo). I like him too much to refuse.
Mr. Mikardo: If public money had been shoved at those local authorities as it has been shoved at the LDDC—public money that has been robbed from the local authorities to be given to the the LDDC—the position would have been very different.
Mr. Griffiths: I have almost as much affection for the hon. Gentleman as I had for Bob Mellish, but he knows perfectly well that Labour local authorities and Labour Governments between them grossly failed the people of London by not providing the houses that they now have the effrontery to blame my hon. Friend for not providing.
In 1970—almost in the middle ages, as it seems now—I went to the Department of the Environment as a Minister. One of the first things I did was to look at the London docklands. I knew very little about dockland, except what I had learnt from dockland people who had come to live in Suffolk—and fine people they were. I flew over the docklands in a helicopter, and travelled through them along the river. I received the advice of the same officials at the Department as had advised Labour Ministers.
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It is clear to me that successive Governments have tried to move the development forward, but it has not moved. There have been plans, proposals, schemes, and consultation, but there has been no progress. Opposition Members may have strong feelings—they have made them very clear tonight—but nothing has been done. There is an urgent need for something to happen. The order will make things happen, and that is why it should be supported.
1.18 am
Mr. Ian Mikardo: I shall bear in mind, Mr. Deputy Speaker, your earlier reminder of the need to leave time for the Minister. I shall therefore make one or two points very briefly indeed.
It was very kind and condescending of the hon. Member for Bury St. Edmunds (Mr. Griffiths) to fly over docklands in a helicopter when he was a Minister. I wonder how many of the people there he was able to speak to. Tory Ministers do not care about people; they care about land and property. A few years earlier the hon. Gentleman might have accompanied some of the Junker 88s that flew over docklands. He had no more contact with the people on the ground than their pilots had. Tory Ministers care about the physical things that they can see. They think that they have studied an area if they have studied the buildings and the land—the money-making propensities. They do not care about the people.
The hon. Member for Ravensbourne (Mr. Hunt) said how terribly neglected Southwark has been by the borough council. The man who has for a long time been the leader of that council has now been appointed a director of the LDDC. Apparently Mr. Broackes does not share the hon. Gentleman's view of Mr. John O'Grady, as he wants him to be on the board. Is it a very good recommendation of the LDDC that it should have invited such a person to join the board?
My last point is also connected with what I said to the hon. Member for Bury St. Edmunds. I have seen these matters from our side of the river.
We had our vesting order on our side of the river some months ago and we can see what has come out of it. The one element in our experience that is missing from the equation is the people. The LDDC does not take two pennyworth of notice of the views of the people in its area. It cares about those who can come into the area to make profit out of the area, to get hold of the resources that ought to be available to the people in the area. The people who live in the area are neglected and treated with contempt by the LDDC. That is why, sooner or later, it will go out on its neck.
1.20 am
Mr. Giles Shaw: The debate has followed the traditional lines of anything concerned with the London docks. There are those who do not want any progress whatever to be made, and there are those who are seeking it seems against overwhelming odds—to allow a new regime to make progress.
The hon. Member for Edmonton (Mr. Graham) began by suggesting that it was the Lysander group, and not the GLC or the London borough of Southwark, that reneged on the agreements that were in negotiation. I do not ask him to take my word for it but merely quote the words of the GLC in its evidence before the Select Committee, when it stated:

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"In December 1982 both your Petitioners and the Borough Council decided not to continue with these negotiations and not to conclude the legal arrangements".
It was, in fact, the responsibility of the GLC and the London boroughs—
Several Hon. Members rose—
Mr. Shaw: I shall give way to the hon. Member for Edmonton.
Mr. Graham: Does the Minister agree that in view of the wholesale changes in the original agreements, which were made by Lysander and reported to the joint owners in July, any self-respecting council would take the action that the GLC and Southwark took?
Mr. Shaw: The hon. Gentleman must recall the size and scale of the scheme. It was to provide a wide-ranging development in that part of the docks. It was to produce 45,000 sq m of industrial development, 45,000 sq m of retail development, 27,000 sq m of offices, and 350 units of housing. It would have provided over 7,000 jobs. If the hon. Gentleman really thinks that the contingency plan produced by the London borough, with its prospect of 2,000 jobs, 540 units of housing and a science park, is an adequate contribution to the development of the site, I have to say to him that it would be nowhere near as effective as the original proposition.
I remind the House that the proposition was entered into by the London borough and the GLC, and was well advanced at the time that the corporation came into existence. That is why this particular land was not included in the original vesting order. Had it not been for the fact that the local authorities had decided to withdraw from it, we would not be having this debate tonight. To argue that the local authority should resume control of this area of docklands is once again to go backwards into trying to find ways in which the local authorities can develop portions of docklands which for generations, as my hon. Friends have said, have not been developed.
Opposition Members have argued strongly about housing and housing land. The hon. Members for Vauxhall (Mr. Holland), for Wood Green (Mr. Race) and for Newham, South (Mr. Spearing) were among them. I remind the House that in the London borough of Southwark the district auditor has reported that there are 120 acres of vacant land, excluding this site, available for development. Moreover, Southwark is top of the league of London boroughs with empty properties. It has 4,500 empty properties in its area. It is also top of the league in the hard-to-let properties, with about 14,000 such properties in its area. If the borough wants to concentrate on the improvement of the existing stock or the development of the existing land that it owns, that is what it should be doing. It should leave the development proposals in the hands of those who are committed to a wide-ranging use of development and not merely to the extension of public sector housing from 90 per cent. upwards.
I very much welcome the support of my hon. Friend the Member for Woolwich, West (Mr. Bottomley) for the proposition. I also welcome the support of my hon. Friends the Members for Bury St. Edmunds (Mr. Griffiths) and for Ravensbourne (Mr. Hunt).
The hon. Member for Bermondsey (Mr. Hughes) raised a particular problem in connection with the Greenland
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dock, and I fully understand why he should be expressing concern for possible redevelopment. If the plans proceed, the corporation will ensure that it relocates those firms that have to be displaced as far as possible in the immediate area and without loss of jobs. I remind the hon. Gentleman that when the Greenland dock area is developed, it will offer many more new jobs.
The hon. Member for Newham, South raised a problem in a manner that is typical of him. He takes a completely different view from the LDDC in everything that it does, and, he suggested that there was impropriety. There is no question of the LDDC exerting undue influence on the PLA with regard to the royal docks and there is certainly no question of its approaching Department of the Environment officials for that purpose. As the hon. Gentleman knows, the PLA is not responsible to the Department of the Environment, but the Department has a perfectly proper interest in advancing to the PLA its views about the future prospects of the royal docks, and in keeping itself informed about the authority's negotiations with other bodies. I hope that the hon. Gentleman will take it from me that that is how the LDDC will and should conduct its affairs.
Mr. Spearing rose—
Mr. Shaw: No, I shall not give way. The hon. Gentleman has made a significant attack on people who cannot answer for themselves and I am providing him with the answer.
With regard to the LDDC and home ownership in the London borough of Newham, of the first 120 households in the Cyprus development there, more than 34 per cent. of those dwellings have been bought by people who were previously council tenants, and 19 per cent. were bought by people who were previously council tenants in the borough of Newham. That shows the importance of development in the area.
The hon. Member for Newham, South suggested that the LDDC does not care a fig about the people who live in its area. It is proposing to rehouse them in a manner in which they infinitely prefer to the long decades that they have spent as council house tenants in his borough. If he really wants to know, I shall tell him that the LDDC has spent not £1 million or £2 million, but £7·1 million on 24 projects in Southwark, 28 projects in Newham and 51 projects in Tower Hamlets. I suggest that that is a positive sign that the LDDC takes its responsibilities seriously.
Today's debate is about allowing the LDDC to resume the development of what used to be the Lysander site.
Mr. Stallard rose—
Mr. Shaw: No. All hon. Members would be right to criticise the fact that there are no proposals before the House on precisely how the development should take place. The reason for that is that the LDDC is a development authority and is not the authority that eventually produces buildings and plans. Therefore, it must produce the land before development can take place.
I believe that the mix of developments, which has been such a feature of the Lysander site, is probably the right type of mix for that land. The suggestion that the Lysander proposal will not be continued cannot be confirmed at the moment, as Lysander may come forward for further development on that site. It would be wrong for the site not to be developed as a wide-ranging project to provide

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jobs, industrial and commercial opportunity and housing. That is the way in which the corporation has been able to provide many jobs in docklands already. It already employs about 3,000 people in docklands or projects related to its activities. I trust that the corporation will develop in that way. I therefore ask the House to pass the order.
Question put:—
The House divided: Ayes 90, Noes 35.

Division No. 104]

[1.30 am

AYES

Lyell, Nicholas

Alexander, Richard

Macfarlane, Neil

Alison, Rt Hon Michael

MacGregor, John

Ancram, Michael

Major, John

Benyon, Thomas (A'don)

Marlow, Antony

Berry, Hon Anthony

Mates, Michael

Biggs-Davison, Sir John

Mather, Carol

Blackburn, John

Maxwell-Hyslop, Robin

Boscawen, Hon Robert

Mellor, David

Bottomley, Peter (W'wich W)

Meyer, Sir Anthony

Boyson, Dr Rhodes

Miller, Hal (B'grove)

Bright, Graham

Mills, Iain (Meriden)

Brinton, Tim

Moate, Roger

Brown, Michael(Brigg & Sc'n)

Murphy, Christopher

Browne, John (Winchester)

Myles, David

Bruce-Gardyne, John

Newton, Tony

Carlisle, John (Luton West)

Onslow, Cranley

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

Osborn, John

Clarke, Kenneth (Rushcliffe)

Page, Richard (SW Herts)

Colvin, Michael

Proctor, K. Harvey

Cope, John

Rhodes James, Robert

Costain, Sir Albert

Rhys Williams, Sir Brandon

Dorrell, Stephen

Rossi, Hugh

Dover, Denshore

Sainsbury, Hon Timothy

du Cann, Rt Hon Edward

Shaw, Giles (Pudsey)

Dunn, Robert (Dartford)

Shepherd, Colin (Hereford)

Durant, Tony

Speller, Tony

Dykes, Hugh

Spicer, Jim (West Dorset)

Eggar, Tim

Sproat, Iain

Fenner, Mrs Peggy

Squire, Robin

Fletcher-Cooke, Sir Charles

Stanbrook, Ivor

Garel-Jones, Tristan

Stevens, Martin

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

Stradling Thomas, J.

Griffiths, Peter (Portsm'th N)

Thompson, Donald

Gummer, John Selwyn

Thome, Neil (liford South)

Hamilton, Hon A.

van Straubenzee, Sir W.

Hampson, Dr Keith

Waddington, David

Hawkins, Sir Paul

Waller, Gary

Hawksley, Warren

Warren, Kenneth

Heddle, John

Wells, Bowen

Hogg, Hon Douglas (Gr'th'm)

Wheeler, John

Hunt, David (Wirral)

Whitney, Raymond

Hunt, John (Ravensbourne)

Young, Sir George (Acton)

Jopling, Rt Hon Michael

Kitson, Sir Timothy

Tellers for the Ayes:

Lang, Ian

Mr. Peter Brooke and

Lester, Jim (Beeston)

Mr. Alastair Goodlad.

Lloyd, Peter (Fareham)

NOES

Beith, A. J.

Campbell-Savours, Dale

Bennett, Andrew(St'kp't N)

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

Booth, Rt Hon Albert

Cryer, Bob

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

Cunliffe, Lawrence

154

Deakins, Eric

Prescott, John

Dean, Joseph (Leeds West)

Race, Reg

Dobson, Frank

Richardson, Jo

Dubs, Alfred

Robinson, G. (Coventry NW)

Graham, Ted

Shore, Rt Hon Peter

Hardy, Peter

Silkin, Rt Hon S. C. (Dulwich)

Harrison, Rt Hon Walter

Skinner, Dennis

Haynes, Frank

Spearing, Nigel

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

Stallard, A. W.

Hughes, Simon (Bermondsey)

Strang, Gavin

Jay, Rt Hon Douglas

Tilley, John

Kaufman, Rt Hon Gerald

Lyons, Edward (Bradf'd W)

Tellers for the Noes:

McWilliam, John

Mr. George Morton and

Mikardo, Ian

Mr. Ron Leighton

Penhaligon, David

Question accordingly agreed to.
Resolved,
That the London Docklands Development Corporation (Vesting of Land) (Greater London Council and Southwark London Borough Council) Order 1982, a copy of which was laid before this House on 17th January, be approved.

STATUTORY INSTRUMENTS, &c.

  AGRICULTURE
  Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &c.)
  That the draft Pig Industry Levy Scheme 1983 (Confirmation) Order 1983, which was laid before this House on 2nd March, be approved.
  That the draft Farm and Horticulture Development (Amendment) Regulations 1983, which were laid before this House on 2nd March, be approved.
  That the draft Agriculture and Horticulture Development (Amendment) Regulations 1983, which were laid before this House on 2nd March, be approved.
  That the Agriculture and Horticulture Grant (Variation) Scheme 1983 (S.I., 1983, No. 273), a copy of which was laid before this House on 2nd March, be approved.—[Mr. Lang.]
  Question agreed to.

  RATING AND VALUATION
  Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &c)
  That the Valuation (Communal Accommodation) (Scotland) Order 1983, a copy of which was laid before this House on 7 March, be approved—[Mr. Lang.]
  Question agreed to.

  SOCIAL SECURITY
  Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &c.)
  That the draft Pneumoconiosis, Byssinosis and Miscellaneous Diseases Benefit (Amendment) Scheme 1983, which was laid before this House on 18th February, be approved.—[Mr. Lang.]
  Question agreed to.

Merseyside (Social Security Offices)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. David Hunt.]
1.40 am
Mr. Frank Field: I wish to draw to the attention of the House a report entitled "For whose benefit?", which is a report on the policies of the Department of Health and Social Security in the Merseyside region compiled by the Society of Civil and Public Servants and the Civil and Public Services Association, and I have to declare an interest in that I am the parliamentary consultant for the CPSA.
This is a debate on how the poorest members of the community are treated by the Government, especially by the DHSS, and it is important that the House should realise that poverty does not fall arbitrarily on the population but singles out those who are most vulnerable. The Government have increased the number of poor by conscripting into the army of the unemployed large numbers of people in order to wage their fight against inflation.
I want to look at how the service in the Merseyside region to the poorest of our citizens has declined, why it will continue to decline and what this means to those at the bottom of the pile in our society. Then I shall make two requests of the Minister.
First, I ask hon. Members to consider the decline in the service. Since 1979 there has been a massive increase in the numbers of people dependent of drawing supplementary benefits. In the Merseyside region, there has been an increase of about 35 per cent. Yet, because much of that increase has been concentrated amongest those who are unemployed, the civil servants calculate that the increase in their work load is about 70 per cent. and that with an increase of 70 per cent. in the work load one has to record about a 4 per cent. fall in the number of staff dealing with those claims.
If there are more people coming through the doors and fewer people on the other side of the counter to deal with them, it is not surprising that there has been a deterioration in the ratio of staff to the number of claimants. The report calculates that that ratio has declined by about 35 per cent. But, taking the two offices which serve my constituency and that of the hon. Member for Wirral (Mr. Hunt), one sees declines of 32 per cent. in the Birkenhead, north office and of about 41 per cent. in the Birkenhead, south office. So we have an increase in the work load and a deterioration in the ratio of staff to claimants.
The third way in which the service has declined is that there has been a considerable increase in the numbers of claimants awaiting visits. The report reveals that in the region as a whole there are well over 10,000 claimants awaiting visits and, taking the two offices which serve the Birkenhead area, there are well over 1,000 claimants awaiting visits. That is important, because often it cannot be judged whether people are eligible for single payments until visits have taken place. In addition, it is important because of the control mechanisms that the Department has over those who may be wrongly claiming. Any deterioration in the waiting time for visits is bad news for claimants and taxpayers. The deterioration in the number of claimants who are awaiting action on their benefit claims is just as important as the number of those who are awaiting visits. The report records that when the records
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were compiled more than 92,000 claimants were waiting for the Department to come to a decision on their claims. In Birkenhead, the figure is well over 9,000. I shall repeat those figures because I was somewhat amazed when I read them in the report. There are more than 92,000 claimants awaiting decisions from the Department in the Merseyside region, and in Birkenhead alone there are more than 9,000.
There are several reasons why the position will get worse. First, the Government are intent on a policy of cutting the size of the staff, partly because that is their policy commitment—a reduction in the size of the Civil Service was in the Conservative party's manifesto—and partly because of the supposed simplification of benefits. The report records that in November there will be a further decline of 144 posts in the region and by April 1984 a further decline of more than 500 posts in the region. That decline in staff leads me to suspect that the service will deteriorate still further unless the Minister can argue that there will be other changes in the offices to counter that movement.
Even on the most optimistic predictions, unemployment in the next 12 months will continue to rise. As I hinted earlier, unemployed claimants' claims take longer to process than those of other claimants. As unemployment increases and as the number pushed into the dole queues increases, so will the work load in the DHSS offices. There will be a cut in staff but an increase in unemployment.
To add to that, the Merseyside county council is beginning a take-up campaign. The civil servants calculate that about £20 million is unclaimed in the region. In the Birkenhead area, the figure is more than £2 million. A campaign of this nature, even if it is well targeted, will increase the number of people who think that they may be entitled to benefit, even though some of them will not be entitled. Each claim will require processing. Throughout the next few months there will be further cuts in staff and a further increase in the numbers of people pushed into social security offices because of unemployment. In the take-up campaign, efforts will be made by the county council to draw the attention of the people of Merseyside to the extent of unclaimed benefits.
What does that mean? Had I not been slightly put off my stroke by the row going on earlier, I would probably have said that the debate involves the kind of service that is available to the poorer people in the community. The test of a public service, or any service, is whether it is good enough for me and my family and the Minister and his family. The public service offered by DHSS offices in Merseyside fails that test.
First, there is a lengthening of the queues, and that means not only difficulties for those who are trying to find out whether they are entitled to benefits, an increase in the time that people spend in offices and an increase in the length of time taken by people trying to make contact by telephone, but some form of rationing. I am talking about rationing to people who usually have little or no resources to fall back on and who need their pay cheques at a specific point in time, and not tomorrow, next week, or, as the report says, in the two weeks that is often taken to process a claim. Therefore the service will deteriorate still further.
In addition, the service is deteriorating in that the officials say that they are overworked. Perhaps one of the better aspects of the report is that officials comment on the amount of unpaid overtime that they are working in an

157
attempt to improve the public service to those on the bottom of the pile. However, with lengthening queues and overworked officials, who have no doubt shortening tempers, one must expect an increase in the number of errors being made in processing claims. In addition, the lengthening queues, the effect of attitudes on the other side of the counter, and the increase in the number of errors made, will reinforce the second class status that many people feel that they inherit on walking into social security offices.
Would the Minister be happy if he was on the receiving end of DHSS services in the Merseyside region in general, and in the Birkenhead offices in particular? Would he be happy to go into those offices? Would he be happy for his family to go into those offices? If they are not good enough for him or for his family, are they good enough for any of those who live in that region? I ask for two things from the Minister. If the figures that I presented earlier about the numbers of claims, length of waiting time and so on are broken down for the Birkenhead area, they show that the Birkenhead offices come off worse than the region in general. Thus, cannot a case be made for special help to be given in terms of an increase in staff to the two social security offices that serve constituents in my area and that of the hon. Member for Wirral?
Given the decline in services, what proposals does the Minister have for the Merseyside region as a whole? I make no apology for emphasising once again that we are debating the sort of public service that we offer to those who are the most vulnerable in our society. They are at the bottom of the pile, are poor and often they find it difficult enough to cope with officials without the decline in service that I have described. I am making a plea for an immediate improvement in the service that can be offered in the Birkenhead offices and for a longer-term review of services that can be offered through DHSS offices throughout the Merseyside region.
1.52 am
The Under-Secretary of State for Health and Social Security (Mr. Tony Newton): It is customary to say that one is grateful to an hon. Member for raising an Adjournment debate, although it often occurs to me that only either a madman or a Member of Parliament could say that he was grateful to anybody for giving him an opportunity to make a speech at nearly 2 am.
Nevertheless, I am grateful to the hon. Member for Birkenhead (Mr. Field), because he has enabled me to make several important points about the DHSS staffing system nationally, in Merseyside and in the hon. Gentleman's constituency. It is a testimony to the interest of others that my admirable hon. Friend the Member for Wirral (Mr. Hunt) should also be present. I well remember that only a day or two ago he brought me a most impressive and high-powered delegation that was concerned about an aspect of DHSS services in part of his constituency. Indeed, my predecessor—now the Under-Secretary of State for Transport—my hon. Friend the Member for Wallasey (Mrs. Chalker), has also spoken to me tonight of her keen interest in the matter. I should like to pay tribute to her efforts when she held my job, not least—I understand—in launching an experiment to help to improve take-up by assigning a member of DHSS staff to a social services department in Wirral. That is just the sort
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of thing on which we are now seeking to build in improving our advice and information services in other parts of the country.
I should like to place the comments of the hon. Member for Birkenhead in a national context and to emphasise that the staffing of DHSS offices is not—as some people occasionally suggest—a random process. It is set squarely within a carefully worked-out system which is known in the trade as the DHSS complementing system. That system was devised in the time of the Labour Government after lengthy discussion with the trade union side. I say discussion rather than negotiation, because I understand that it was very much a co-operative effort. I shall briefly outline the main elements of that system.
There is constant measurement of all the activities in local offices, so that up-to-date information is always available about the volume of work being handled in each office, and its nature. There is a detailed examination of the work of the local office system at three to five-yearly intervals to check that the basic complement is correct. Work and staff activity are measured by staff inspectors in a large sample of offices. Each year forecasts of the work load in the following year are made, using the latest available information about changes in policies and procedures and current trends in work, and forecasts about demographic and economic changes. The forecasts are detailed ones, benefit by benefit.
The total complement is adjusted in the light of these forecasts so that each year the DHSS starts with an authorised complement of the size needed to cope with the work load forecast for that year. At quarterly intervals during the year, the actual work load is checked against the forecasts and the forecasts themselves are revised as necessary. If this check proves work loads to be running at a significantly higher or lower level than was forecast at the start of the year—that is, if it is more than 500 staff out either way—or about one per office, throughout the country—the total complement is adjusted accordingly. The hon. Member will be aware of all this, but l wanted to put it on the record.
The hon. Member will know, too, that we placed a yellow booklet—describing this system in a fair degree of detail—in the House Library in the late summer or autumn of last year. We did that—this is the second important point—because the existence and operation of the complementing system makes it rather meaningless to quote figures of the increase in claimants and of the number of local office staff, to compare the two in a rather crude way, and to think that it shows something to the discredit of the Government and the management of the Department. What counts is the work load, and the work load depends not only on the number of claims but on the way that they are dealt with. Work loads have been reduced, for example, by the introduction of the postal claim form for supplementary benefit by the unemployed, and the new housing benefit scheme. Other work loads have decreased because of reduced demand—for example, in sickness benefit claims.
Against that, of course, supplementary claims and claimants have risen quite substantially. All those changes, in their different ways, affecting the need for staff, are taken into account through the complementing system. The broad pattern is that the proportion of staff on supplementary benefit—on which the hon. Gentleman

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focused most of his remarks—has been rising, and the proportion engaged on other work, in particular on contributory benefits, has been falling.
There is a third matter of considerable importance, which illustrates in a specific way what I have just said. It is worth noting that between October of last year and next month, three major changes which have already come into effect, or will shortly come into full effect, have reduced or will reduce the estimated number of staff required for the DHSS system as a whole by over 6,000. The first is the partial start and the full start of housing benefit, which together are equivalent to a saving of about 2,000 staff. The second is the introduction of the postal claim form, with a net saving of about 1,000 staff. The third is the impending introduction of statutory sick pay, which is estimated to lead in due course to a saving of over 3,000 staff. That illustrates the extent to which one has to take account of changes in the system, not simply the rise in the number of supplementary benefit claimants—which is what the report that the hon. Gentleman quoted stressed in particular.
Having said all that I want to acknowledge clearly that neither I nor anyone else is suggesting that the DHSS complementing system, or indeed any system that could be devised to deal with this complex problem, is or could be perfect. As I think the hon. Gentleman knows, we have embarked on a review of that complementing system in conjunction with the trades unions. The aim is urgently to produce a report by the beginning of June. Alongside that general review, and indeed feeding into it, is a study of the special problems that may exist in inner city offices. That study includes in its sample of local offices no fewer than 13 in the Merseyside region.
It is to the Merseyside region that I want to turn from the broader description of the national picture. The complementing system allocates staff to Merseyside, as to other regions, a share of the total staff required to handle the forecast work loads. That share is determined by the region's proportionate share of the past work load. Resources are allocated in the form of permanent staff and what are known as manpower substitutes—that is, casuals or overtime, the regions then issue those resources to local offices according to their shares of the region's work load, retaining some posts for central services and for issue on a judgment basis where local circumstances warrant additional staff. At any particular time a local office's staffing position can be affected by staff turnover, but if that happens the manpower substitutes can be used to tide them over until permanent replacements can be posted.
Merseyside has undoubtedly borne its share of the difficulties of the past year and of the staff reductions that have taken place. But it has to be said that its overall performance, which we regularly measure, has generally been good and on a par with other regions. Much of the critical information in the report "For Whose Benefit", from which the hon. Gentleman has quoted, is somewhat selective and now to some extent out of date. The major pieces of work—the uprating and the introduction of housing benefit—have been and are being accomplished with a minimum of delay and there are no major pockets of arrears. Only six offices on Merseyside were late with the uprating and they had completed it by 4 December, not
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much more than a week or 10 days late. Only two offices will be slightly late in implementing the impending full housing benefit change, and that is a pretty good position.
Although overtime is being worked and was properly used to deal with the peak of work involved in the uprating, there is no evidence that its use on Merseyside is either excessive or masks serious staffing deficiencies. Over the past 12 months overtime in Merseyside represented only 2·23 per cent. of total time worked by permanent staff, compared with a national figure of 1·16 per cent. over the same 12 months. So the Merseyside figure was undoubtedly above the national average, but it cannot by any standards be regarded as excessive or unreasonable.
The hon. Gentleman made some points about the figures at the back of the report on the number of visits outstanding and the total number of cases awaiting action. I have to tell him that neither the regional office nor our headquarters staff have been able to identify what the figures for total cases awaiting action mean. If the hon. Gentleman can enlighten me I shall be happy to see whether I can provide him with further comment, but I regret that I cannot do so this evening. On the figures for cases awaiting visits I should make the point that although they sound quite large, when simply quoted as absolute numbers they in fact represent less than two weeks' work. When judged against the normal head of work in any administrative system that cannot be regarded as unreasonable.
Mr. Field: When the hon. Gentleman says that it amounts to two weeks' work, is he saying that on average a person would have to wait two weeks for a visit, or is he saying that if all the resources of an office were put to clearing the issue—that is, of visits—it would take two weeks to meet the backlog?
Mr. Newton: I am saying that if the normal effort devoted to visiting were applied it would represent two weeks' work. Since the report was written, as a result of savings arising from the postal claim form—the net saving was 1,000 staff, but the gross saving was higher—we have allocated back to the system a number of additional staff to improve the arrangements for visiting, in particular for families with children, from an automatic visit after one year on supplementary benefit to visiting families with children after three months. That may not go as far as the hon. Gentleman would like, but it is an improvement.
Mr. Field: The Minister said that he did not understand some of the figures at the back of the report. He said that we should not pay too much attention to them. On any one day I am aware of how many letters I have not answered. I assume that the DHSS is aware of the number of claims that have been lodged but not processed. Can we have that figure because I think that the report referred to it?
Mr. Newton: It is not clear exactly what figure the report referred to. I can only speculate because I am not in a position to give a definite and authoritative answer. The figures seem to relate mainly to April and May 1982. Considerable numbers of re-assessments of rent and rate increase cases could have taken place that spring and could have been included in the figures. They need not be simply new claims awaiting action. We are not clear what the figures are. I shall comment further if I have further information.
Mr. Field: I asked one question to which I should like a simple answer. The Minister said that things are not as bad as I painted them. Would he be happy to use the service? Would he be happy for his wife and children to use the service offered by DHSS offices in the Merseyside region?
Mr. Newton: Yes, I would be happy for my family to use the service. I hope to have an opportunity to visit the area soon. That does not mean that I am completely satisfied with the service. That would reveal a degree of complacency which the hon. Member and the House would not think justified. There is always room for improvement. We are seeking to bring improvement about, not just in processing claims but in improving take-up and our general service to the public. I hope that with the reforms that we are introducing we shall see further improvements in the coming year.
I have little time to deal with the take-up campaign. Although we regret the blanket way in which it is being
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conducted, because we think that it will cause unnecessary loading on officers in Merseyside, fortunately it comes at a time when, because of staffing factors, it will be easier for our officers to cope than it would be if it happened at another time. We shall do our best to ensure that it works as effectively as possible with the fewest possible unfair consequences for our staff and the claimants.
In some ways the most important thing that I 'want to do tonight is something that we do not do often enough. I want to thank our staff, not only on Merseyside, but throughout the country, for the work that they do. There have been many difficuties and pressures in the last year or two when the system has had to cope with the problems of high demand and considerable change. What our staff have achieved in that time is a genuine credit to them. We are grateful, as is Parliament and the public.
Question put and agreed to.
Adjourned accordingly at nine minutes past Two o' clock.

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

Brain Tumours: Detection and Treatment
Lord Auckland: My Lords, I beg to 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 facilities are available in National Health Service hospitals for scanning to detect brain tumours and in how many hospitals in England, Wales and Scotland can surgical operations be carried out when tumours are detected.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Trefgarne): My Lords, scanning facilities are available in about 100 centres in the National Health Service in England, Wales and Scotland. There are some 40 neurosurgical centres where operations to remove brain tumours are normally performed.
Lord Auckland: My Lords, I thank my noble friend the Minister for that generally satisfactory Answer. Perhaps I may put to him three very brief supplementary questions. First, in the case of the child in Sussex who went to America for treatment at large cost, can my noble friend say what liaison took place between the local area health authority, the child's doctor and other relevant bodies as to the availability of treatment in this country? Secondly, what is the general liaison between area health authorities and general practitioners, particularly in the case of those on hospital waiting lists for treatment of this kind? Thirdly, is there any chance of more hospitals being able to treat this condition, which, if it is treated in its early stages, can often, I understand, be completely cured?
Lord Trefgarne: My Lords, with regard to the particular case to which my noble friend referred, I understand that the consultant was fully aware that the kind of treatment which the parents appeared to prefer was available in the United Kingdom, but it was the parents themselves who chose to have their child treated in the United States—as, of course, they were absolutely entitled to do. As for the second point which my noble friend raised about liaison between doctors and these facilities, it is of course open to consultants to refer a patient to a particular hospital where he knows a particular kind of treatment is available, even if that hospital is outside the region within which the consultant happens to work. As for the general availability of these facilities to which my noble friend referred, as I said in my original Answer, there are already quite a number. More are certainly planned, but this is principally a matter for the regions and the districts.
Lord Wells-Pestell: My Lords, may I ask the noble Lord the Minister if he is in a position to say whether the scanners are strategically placed so that it is possible for a person with a suspected tumour on the brain (I have an emotional involment in this, going back some years) to be scanned within a reasonable period of time?
Lord Trefgarne: My Lords, I cannot claim that these facilities are available in each and every region. There are two regions at present which do not have these facilities but in both cases they are planning to acquire them within the reasonably near future. As for the even spread of these facilities, I have to give an unsatisfactory answer to the noble Lord: It is not perfect at present. That is why it is possible for consultants to refer patients to other facilities outside their region.
Baroness Bacon: My Lords, is not one of the difficulties the difficulty to which my noble friend Lady Masham of Ilton referred some time ago; namely, that if a hospital which is giving specialised treatment is open to an area much wider than the area which the health authority covers the cost has to come out of the total amount of money allocated to that area?
Lord Trefgarne: My Lords, that is a rather different problem. When the noble Baroness, Lady Masham of Ilton, referred to that matter she was thinking of hospitals which might perhaps be unique in the National Health Service, being the only places in the country which can provide a particular service, or perhaps one of just two or three. As I said in my original Answer, there are at least 100 of these facilities in the National Health Service. Therefore, the kind of problems which the noble Baroness described do not apply.
Lord Auckland: My Lords, may I ask my noble friend one further question? He mentioned that further hospital facilities are being provided. It was very good to hear that, but can my noble friend say whether any improvement is foreseen in the outlying areas of the country? I am thinking of the North of Scotland and North Wales, for example.
Lord Trefgarne: My Lords, in the National Health Service it is of course necessary to use the funds that we can make available in the best possible way. I am not sure that providing one of these facilities in every location where it could possibly be needed would be the best use of scarce funds. The scanning facilities cost upwards of £½ million to install and something like £90,000 a year to run. If there are just a few patients to be examined in this way, there may be better uses for sums of that kind.
Baroness Masham of Ilton: My Lords, may I ask the Minister whether he is aware that a great deal of money for scanners has been raised voluntarily by the public? This shows how important early detection is. Would the Minister agree that, for patients from the Outer Hebrides, North Wales and the rural areas, a good cross flow across district and regional boundaries is very important?
Lord Trefgarne: My Lords, I agree with the last part of the noble Baroness's supplementary question: that where facilities cannot be made available in every location, then patients should be facilitated to be moved to other locations for the purposes of these particular diagnostic procedures or, in due course, operations, if that is proved necessary. I also agree with the noble Baroness that voluntary funds have played a very important part in financing some of these facilities, and I think that is a most admirable thing.
The Earl of Halsbury: My Lords, can the noble Lord the Minister give the House any information on the annual incidence of these operable tumours as a background to one's judgment of the adequacy of the facilities about which we have been speaking?
Lord Trefgarne: Not without notice, my Lords. Perhaps I might find what figures I can and then write to the noble Earl.
Lord Cledwyn of Penrhos: My Lords, the noble Lord, Lord Trefgarne, has been extremely helpful in the replies he has given. Can he confirm to the House that there is no difficulty about patients crossing boundaries between one health authority and another? As I understand it, patients who suffer in this way in North Wales are able to cross the boundary into Merseyside, where these facilities are available.
Lord Trefgarne: My Lords, I can confirm what has been said by the noble Lord, Lord Cledwyn of Penrhos. It is open to the consultant to refer the patient to whichever hospital he considers necessary for the examination or treatment of the patient concerned.
Lord Wallace of Coslany: My Lords, in order to assist the many noble Lords who have put supplementary questions of some importance, can the noble Lord the Minister prepare a list of the hospitals where these facilities are available—not only scanners but operations as well? If it is impossile to publish this information in Hansard, perhaps a list can be made available in the Library in due course.
Lord Trefgarne: My Lords, one of the difficulties of proceeding along that course is that the list could be changing constantly, because these facilities are being added to all the time, as I said. Also, some facilities are not the same as others; that is to say, some of the scanners have high resolution attachments which are not available in every case. I am not certain, therefore, that such a list would be as helpful as the noble Lord imagines; but perhaps I might look into the matter and write to him.
Lord Elwyn-Jones: My Lords, I believe that what concerns my noble friend Lady Bacon is: who will foot the bill when a case is transferred to another regional authority? Will it be the regional authority who receives the patient, or will it be the referring authority? I believe that was the point which worried my noble friend Lady Bacon.
Lord Trefgarne: My Lords, the RAWP formula, as it is called—the Resource Allocations Working Party formula—provides for what are called cross-boundary
1340
flows. Any significant action of this kind would therefore be covered by that formula. I understand that in individual cases it is open to the relevant local health authorities to agree between themselves the funds to be transferred.

Immigration Ordinances of Dependent Territories
2.46 p.m.
Lord Avebury: 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 any of the dependencies have changed their immigration ordinances since the British Nationality Act 1982 received the Royal Assent; whether they will place copies of any such alterations in the Library; whether they will make an estimate of the number of British dependent territories' citizens who have no right of entry to any territory for which the United Kingdom is internationally responsible; and whether they will produce an analysis of such persons, showing their respective origins and numbers.
The Parliamentary Under-Secretary of State, Home Office (Lord Elton): My Lords, Hong Kong, Gibraltar and Montserrat have so far changed their immigration ordinances. Copies will be placed in the Library as soon as they become available. The other dependent territories are in the process of introducing similar changes. However, since such legislation is the responsibility of the individual territories, it is not possible at this stage to provide the assessments and analyses for which the noble Lord has asked. We expect that persons who held belonger status on 31st December 1982 will continue to hold that status.
Lord Avebury: My Lords, is it not the case that after this change, in the Gibraltar ordinance persons born in the territory of Gibraltar will no longer necessarily have the right of entry into that territory; that this applies also to Bermuda; but that, whereas the Gibraltarians have a right of registration as British citizens, the people born in Bermuda who do not have access to that territory may not be able to get British citizenship or, indeed, any other? Does the noble Lord, the Minister not agree that it is necessary to have comprehensive advice available for the agencies who will have to tell people about these matters? What information leaflets have the Government made available to CABs and others who will have to deal with questions of BDTC status?
Lord Elton: My Lords, until the ordinances are passed in the respective places it is difficult to be specific. I cannot therefore make a categorical statement at this stage, but we do not expect many people, if any, who were formerly citizens of the United Kingdom and colonies, to have their status vis-á-vis the dependent territories changed as a result of the change in the description of their citizenship following enactment of the British Nationality Act
**
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1982. Having said that, I accept that where it is appropriate for advice to be made available it should be made available.
Lord Avebury: My Lords, I wonder whether the noble Lord the Minister is aware of the particular case of St. Kitts, Nevis, where there have been anxieties that on independence, which will be conferred on the territories later this year, there might be a change in the status of persons living in this country? Will the noble Lord the Minister give an assurance that those persons will not have their status changed and that they will be eligible for British citizenship in the same way as were those from Belize?
Lord Elton: My Lords, I cannot give undertakings of the nature which the noble Lord, Lord Avebury, has asked me to give, but I can take his concern to my right honourable friend. If it is appropriate for him to do so, he will write to the noble Lord.
Lord Avebury: My Lords, is the noble Lord the Minister aware that such an undertaking has already been given by his right honourable friend the Minister, Mr. Waddington? I am only asking for this to be confirmed on the Floor of this House so that others may read of it.
Lord Elton: My Lords, if the noble Lord, Lord Avebury, has had an undertaking, it is not necessary to give another. If he has not, it would not be appropriate for me to give one.

British Council: Sponsored visits from South Africa
2.49 p.m.
Lord Brockway: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how many persons from South Africa were sponsored by the British Council on visits to the United Kingdom in 1982, and of these, how many were European, African, Indian, and other ethnic origin, respectively.
Lord Skelmersdale: My Lords, a total of 36 people from South Africa made short-term visits to the United Kingdom in 1982 under the British Council's sponsorship. The British Council do not select their visitors on the basis of their ethnic origin. Statistics on this point are therefore not available.
Lord Brockway: My Lords, while greatly admiring the work of the British Council in many respects, would not these figures, if made available, show great discrimination? Should it not be the policy of the British Council, in view of the opposition to apartheid by all parties in Parliament, to encourage those who are deprived of opportunities in South Africa due to their ethnic origin? If so, should not more of those invited, in this diversified population, represent those who are deprived?
Lord Skelmersdale: My Lords, while the council does not record this information in its records, I would certainly imagine that most of the visitors were nonwhite. The British Council representative in South Africa selects visitors on the basis of their specialised interests and the potential benefits they may derive from observing at first hand the work of institutions and organisations in Britain corresponding to their own fields of interest and activities. I rely on the second part of my original Answer: that ethnic considerations do not enter into this particular field.
Lord Hatch of Lusby: My Lords, is the noble Lord not aware that his first Answer is very unsatisfactory. Is it not the case that in South Africa every individual is classified, and is so classified in his or her passport, according to racial origins? Should it not, therefore, be perfectly simple for the British Council to supply the Minister with the information that my noble friend has asked for?
Lord Skelmersdale: Surely, my Lords, if they kept records, but I understand they do not.
Lord Brockway: My Lords, does not the evidence of teachers in South Africa, as well as such scholastic records as are available, show considerable potentialities in writing, music and the arts among Africans, Indians and those of the coloured population? Should not they be given the opportunity, being deprived of it in South Africa, of the developed facilities that there are in this country?
Lord Skelmersdale: My Lords, they are given the opportunity and they are certainly not deprived of it in this country. As I have said, I think now twice in my answers this afternoon, ethnic considerations one way or the other do not enter into it.
Lord Bruce of Donington: My Lords, will the noble Lord confirm to the House that his department made specific inquiries on this matter of the British Council?
Lord Skelmersdale: Yes, my Lords, most certainly they did, and the discoveries are as I have reported them this afternoon to the House.
Lord Molloy: My Lords, in so far as there is grave concern throughout the country, and I think there is also deep concern in this Chamber, regarding the central issue of my noble friend's Question, will the Minister please write to the senior authorities of the British Council in South Africa drawing their attention to this question and answer period this afternoon and asking them if they will be kind enough to provide their comments, which possibly he could then make as a statement in Hansard?
Lord Skelmersdale: My Lords, I am not quite sure of the propriety of the latter suggestion of the noble Lord, Lord Molloy. Nonetheless, I have no doubt that the British Council take great note of everything referring to them which is said in this House or in another place. If they do not see the particular Hansard of today, I shall make sure it is drawn to their attention.

GLC Financial Grants
2.55 p.m.
Baroness Trumpington: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will seek from the GLC a complete list of all the projects and community activities that lie outside its statutory obligations upon which it is spending ratepayers' money.
Lord Skelmersdale: No, my Lords. Local authorities commonly incur expenditure on activities which go beyond their strict statutory obligations. If my noble friend has in mind activities which lie outside statutory powers, any expenditure on such activities would be a matter for the authority's auditors, and ultimately for the courts.
Baroness Trumpington: My Lords, I thank my noble friend for that reply. Would he agree that the GLC has a strange sense of priorities when it withholds the annual grant of £62,000 to the Boy Scouts and splashes out £500,000 on a community centre for homosexuals?
Lord Skelmersdale: My Lords, I can neither confirm nor deny that. All I know is what I have read in the press, and what I suspect my noble friend has read. For good or ill the Greater London Council exists, and it is within its rights to spend money in accordance with statutory powers on any local project which seems to it fit. Any dissatisfied voter has a remedy in his or her own hands at the ballot box.
Baroness Gaitskell: My Lords, may I ask the Minister this question. Surely he would agree that this is an extraordinarily insensitive and unsympathetic Question to be put at this time about young people, because they bear the main brunt of unemployment. Surely we should not be fiddling around with this kind of Question.
Lord Skelmersdale: My Lords, as has been pointed out many times from the Government Dispatch Box, the Government are not responsible for the Questions on the Order Paper.
Baroness Trumpington: My Lords, would my noble friend be able to tell me how one obtains the information which has caused the GLC to give a grant of £5,000 to Bedside Manners Company Limited and £35,000 to the Karl Marx Centenary?
Lord Skelmersdale: My Lords, I am not quite sure that I can advise my noble friend as to which specific person to go to, but I have no doubt there is within the Greater London Council a publicity officer of some sort who would doubtless be absolutely delighted to give my noble friend the information that she requires.
Lord Jenkins of Putney: My Lords, would the noble Lord explain to his noble friend that the GLC, as distinct from this House, is an elected body and that
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the electorate of London has the determining matter in its hands rather than the electors of Trumpington?
Lord Skelmersdale: My Lords, the noble Lord, Lord Jenkins, is perfectly correct. This is why in my first supplementary answer I referred to the ballot box.
Lord Monson: My Lords, would the noble Lord not agree that for many families on average incomes the reduction in direct taxation announced by the Chancellor in his Budget and the increased child allowances are almost totally wiped out by the increased rates bill that they face as a result of these extravagances?
Lord Skelmersdale: My Lords, statisticians will tell the noble Lord that comparisons are always dangerous.

National Coal Board: Chairmanship
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Avon will, with the leave of the House, repeat a Statement to be made in another place on the National Coal Board chairmanship.

Medical Bill [H.L.]
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I beg to introduce a Bill to consolidate the Medical Acts 1956 to 1978 and certain related provisions, with amendments to give effect to the recommendations of the Law Commission and the Scottish Law Commission. I beg to move that this 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.

Business of the House
Lord Denham: My Lords, on behalf of my noble friend the Lord Privy Seal, I beg to move the Motion standing in her name on the Order Paper.
Moved, That Standing Order 43 (No two stages of a bill to be taken on one day) be dispensed with for the purpose of enabling the Consolidated Fund (No. 2) Bill to be taken through all its stages this day.—(Lord Denham.)
On Question, Motion agreed to.

Consolidated Fund (No. 2) Bill
The Bill was brought from the Commons, endorsed with the certificate of the Speaker that the Bill is a Money Bill, and read a first time.
Then Standing Order No. 43 having been dispensed with (pursuant to Resolution), the Bill was read a second time; the Committee was negatived; the Bill was read a third time, and passed.

Currency Bill
Read a third time, and passed.

Transport Bill
3 p.m.
Read a third time.
Clause 2 [Financial duty of Executives]:
Lord Underhill Lord Underhill moved Amendment No. 1:
Page 2, line 35, at end insert—
("( ) Where the plan prepared by the Executive under section 3 below and approved by the Authority under section 4 below so provided, subsection (1) above shall apply to the relevant period described in subsection (1) of section 3 below instead of to any accounting period").
The noble Lord said: My Lords, this is the third endeavour to introduce some business common sense in relation to the period in which to balance revenue against charges. Perhaps I may recount to your Lordships a brief history of the amendments. In Committee an amendment was introduced to provide that instead of any deficit being met in the next accounting period—that is, in the following year—it should be made up within the period of three years by reference to "the relevant period" of the three years for the plan, provided for in Clause 3(1). On that occasion the noble Lord, Lord Bellwin, said that although subsection (2) of this clause provides that any deficit shall be made good in the following year, this duty "does not provide a financial straitjacket". He stressed that the requirement on the executive to break even so far as is practicable did not mean that if an executive was faced with an unavoidable deficit it would he forced, come what may, to make good that deficit in the following year if it was impracticable to do so. The noble Lord, Lord Bellwin, went on to say that if the deficit arose from circumstances beyond the control of the executive and the authority,
"the authority might decide that some increased revenue support was necessary to make good the deficit in the following Year, and the Secretary of State will take that into account when considering his guidance on the level of protected expenditure."—[Official Report, 28/2/83; col. 968].
As the Minister suggested that there was some flexibility, the amendment was withdrawn so that the position could be considered.
On Report a different amendment was brought forward to the effect that, instead of making good any deficit in the following accounting period, this should be changed to "three … accounting periods." On that occasion it was stressed that any assurance that the Secretary of State will take any unavoidable deficit into account when considering the guidance on the level of protected expenditure for the following year (which was the statement made by the Minister) is not statute law. That provision is not in the Bill; it is an assurance given by the Secretary of State. On that occasion the noble Lord, Lord Lucas of Chilworth, again stated 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 made good in the following year's plan
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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."—[Official Report, 17/3/83; col. 852].
At that stage other noble Lords emphasised that it would be good common sense to allow a deficit to be cleared within the three-year period of the plan. My noble friend Lord Sefton of Garston suggested that to meet the Government's view of the need for financial discipline an amendment was needed which would give an executive the freedom to clear a deficit in the three-year period of the plan but at the same time would give the Government the power to restrict any abuse. The noble Lord, Lord Lucas of Chilworth, as the Minister, said he would consider what had been said. I said that, likewise, on this side we would consider the position, and as there was one further stage of the Bill we would see what could be done. Since then a letter has been sent by the Minister to my noble friend Lord Sefton (I should say that the Minister kindly sent me a copy, for which I am grateful) explaining the situation but again emphasising that there was no need to defer for three years when
"the courses available include the power to vary fares, costs, grant and use of reserves.".
The proposed amendment now before your Lordships refers to the procedure under Clause 3 for the preparation of the plan to cover the next three years and the approval of that plan under Clause 4. The amendment then states that references to the relevant period in those clauses—that is, Clauses 3 and 4—shall be to the next three years, stated in Clause 3(1) as being "the relevant period", and not to any accounting period, which is for one financial year.
I believe that the amendment will meet what the executives want and will also meet the concern of the Government. The amendment in no way interferes with the provision for the preparation of the plan by the executive and that for its approval by the authority. It does not interfere with the power, which the Secretary of State wants, to give advice and guidance under the various stages of the process; nor with his power to give advice on the protected expenditure level. Therefore, any suggestion that it will encourage financial indiscipline does not arise. In our view the amendment will make for business common sense. It will enable the executive and the authority to plan so that any unexpected deficit could be cleared over three years, instead of the following year, without removing any of the other powers contained in Clauses 3 and 4. I beg to move.
Lord Lucas of Chilworth: My Lords, as the noble Lord, Lord Underhill, has reminded us, we have had some interesting and really quite long discussions on this point during previous stages, particularly on the financial duty imposed on an executive under Clause 2. Amendments have been put down to enable an executive to make good deficits over a three-year period rather than in the next year, and we have explained on a number of occasions why such loose financial management is unacceptable. This amendment is only slightly different from the others we have considered in that it enables an executive to break even over a three-year period ("the relevant period" to which the noble Lord referred) rather than

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on an annual basis, provided that this is proposed in the annual three-year plan.
There might appear to be some logic in applying a break-even duty to the same period as that for the plan provided that the executive adopt that course at the time. Nonetheless, the amendment is quite unacceptable because in practice it would enable an executive to circumvent completely its financial duty. It would enable that executive to accumulate larger and larger deficits. As I said, an executive might propose in, say, its first three-year plan that it needs to break even only by the end of the three-year period. Then the following year when they renew the plan they could propose again to break even only at the end of the next three years. Deficits therefore under this kind of arrangement—the arrangement which is suggested certainly to me by the amendment—could be rolled forward quite indefinitely. Indeed, one might go so far as to suggest that a deficit could deliberately be created and rolled forward indefinitely. At the same time they could incur further deficits in each succeeding year.
That is briefly why we could not accept the amendment. I hope that I have shown that the amendment would enable an executive to accumulate ever-increasing deficits without, in practical terms, any obligation on them to make good. The amendment would be a recipe, as I have said, for loose and, indeed, profligate financial management. It cannot be in the interests of the executives, the authorities, and equally—if not more importantly—the ratepayers and the taxpayers, who might find their money wasted on excessive subsidies and increasingly inefficient services. It is not unreasonable, I suggest to your Lordships, to expect executives to exercise that taut financial control which is such a part and a requirement of this Bill.
Lord Underhill: My Lords, the Minister has repeated many of the arguments which we had at the Committee and Report stages, but the House will notice that the Minister agreed that there is a change in this amendment—that the three-year period would apply by providing for it in the three-year plan. The Minister has said that this will circumvent the whole idea of financial control; but how could this be, as the Minister has agreed that it is a provision to be put in the three-year plan? Therefore, at the end of that three-year period the position has to be corrected and the deficit has to be cleared by then. His argument on that point falls completely to the ground. It surely is business common sense, as I am certain many noble Lords would agree, that where there is an unavoidable deficit, it is better to spread it over a period where you can plan ahead than having to adjust things quickly for the following year, which is what the Bill at present provides.
There is always this suspicion in statements from Ministers opposite on this matter about profligate activity and profligate expenditure. But we should bear in mind that this is what the executives and the authorities want and the authority is responsible to its ratepayers. Nevertheless, the Government seem determined not to move on this matter, and therefore I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 [Preparation and submission of financial plans]:
3.13 p.m.
Lord Underhill Lord Underhill moved Amendment No. 2:
Page 3, line 24, after ("determine") insert ("after consultation with the Authority").
The noble Lord said: My Lords, this amendment relates to Clause 3 and in particular to subsection (3) of that clause. This particular subsection provides that the executive may prepare its plan:
"on the assumption that the Authority will … make revenue grants of such amounts as the Executive may determine".
It will be recalled that at the Report stage an amendment was brought forward to leave out the words:
"of such amounts as the Executive may determine".
That amendment was proposed on the grounds that the executive is the operating body—the unelected body—and is responsible to the elected body, which is the public transport authority or, in other words, the county council. It was argued that the authority has the responsibility for making the grant to the executive and therefore it was wrong to place on the executive the obligation to work on an assumption that the authority would pay an amount which the executive may determine on the grounds that it had no authority so to do. The argument referred also to aspects of the procedure. I shall not go into those.
Generally I do not disagree with the points made by the Minister about the procedure, but he did make one statement:
"Nothing would be achieved by preparing a plan based on only one proposal from the authority, which is what would result from the amendment".—[Official Report, 17/3/83; col. 859.].
In my view that was an absolutely misleading account of that particular amendment and what it meant. That amendment would not have interfered with the provision that:
"the plan may be formulated on the assumption that the Authority will in the relevant period make revenue grants".
That assumption would be all right; but what we suggested was wrong was that there should be an assumption that the authority would make revenue grants of such amounts as the executive would determine. As we said at the Report stage, the executive has no real authority to make such a determination.
As the Government for some completely unfathomable reason did not like that particular common sense amendment at the Report stage, this present amendment provides that, if that determination is to be made by the executive, then it must be made on some firm basis. Therefore, the amendment provides that this assumption of the amount the authority shall pay shall be determined by the executive after consultation with the authority. That seems a very common sense basis. If the Government wish to leave in the Bill that the assumption of the amount that the authority will pay can be determined by the executive, surely the executive should do that after consultation with the authority, which is the body which has to pay. I therefore have pleasure in moving the amendment.
Lord Lucas of Chilworth: My Lords, again I remind your Lordships' House that we have had some amendments put down at previous stages of this Bill in similar vein which we have resisted as being unnecessary and because, frankly, they would have added nothing to the Bill. I have to resist this amendment as well, both because it is unnecessary and also because it actually repeats a provision that is already in the Bill.
Under Clause 6(1) an executive is already required to consult the authority before it prepares the draft plan. At that stage, the authority will be able to give the executive advice on the level of grant that it proposes to make, and the executive will obviously have that in mind, and it will also have the advice from the Secretary of State under Clause 3(5) when determining the assumption about the level of grant for the purpose of the plan. If the authority decline to give such advice, then that is their choice. But under Clause 4(2), the authority can ask at that later stage for alternative proposals. So the Bill already provides the consultation procedure that this amendment seeks to achieve. It really is not good sense, I suggest to your Lordships, to accept amendments which are simply duplicating existing provisions.
I recognise, however, the concern that the noble Lord has raised that an executive might determine an assumed level of grant before they consult the authority on the plan preparation. I can hardly conceive that this would be likely; even in that unlikely happening, it would be a most unwise practice to adopt. Nonetheless, if this does occur, the authority will still be free, when considering the executive's draft plan, to tell the executive to produce alternative proposals, to which I have referred, based on perhaps different levels of fares, services and facilities and on different levels of grant, as they may then specify. So the problem that this amendment seems to try to rectify, again, is already covered in that clause.
Lord Underhill: My Lords, I am certain that if one made reference to all the subsections to which the noble Lord has referred one would find that it is not as simple as it seems. We can trace this on various previous amendments. The danger in leaving the Bill as it is, is that it leaves in quite clearly the words:
"as the Executive may determine".
That means that the executive will proceed to work its plan on that basis. Any attempt later on by the authority to modify that surely is delaying the whole thing. I will not go now into the chronological process which the Minister kindly supplied, but that is so tight that any hold-up could defer a plan being properly made. The present provision will enable the executive to determine what amount it is going to assume the authority will pay. It is plain common sense to qualify that. That is what the amendment sought to do. That was such a common sense amendment that the Government prefer not to accept it. That will be borne in mind when we come to a later important amendment on this Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Undernhill Lord Undernhill moved Amendment No. 3:
Page 3, line 33, after ("to") insert ("existing and").
The noble Lord said: My Lords, this is an important amendment because Clause 3 deals with the preparation and submission of a plan, which must be prepared annually by the executive to cover the next three years. The amendment relates to subsection (4) of the clause. The subsection provides that the plan must be accompanied by various estimates, which are set out in paragraphs (a), (b) and (c). Paragraph (a) relates to the cost of providing the services and facilities described in the plan. Paragraph (b) relates to the level of demand for the services and facilities. Paragraph (c), which is the important paragraph and the one to which the amendment is directed, refers to,
"the benefits to potential users of those services and facilities".
The amendment proposes that paragraph (c) should read:
"the benefits to existing and potential users of those services and facilities".
In preparing the plan the executive must take into consideration what benefits will be given to existing users. If it is considered that it will be of importance to give estimates of benefits to potential users, surely it must also be appropriate to give details of the benefits to the existing users. In Committee the noble Lord, Lord Bellwin, said that it would be wrong to widen the benefits of which estimates will have to be supplied under the subsection. At different times in our debates the Minister referred to the fact that in various places in the Bill the word "benefits" can be used to refer to any benefit. In fact, on one occasion he went so far as to say that he would readily consider any benefit not covered and decide whether an amendment should be made to the Bill.
The amendment now before the House does not seek to define what is meant by "benefits" in formulating the plan or resulting from the plan. The subsection relates only to the submission by the executive of estimates relating to various matters, and the benefits to other than potential users are not included. As reported at column 865 of the Official Report for 17th March, Lord Bellwin, in referring to Clause 3(4), said that it is concerned with the duty of the executive to
"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".
I suggest that those estimates will not be complete unless they include benefits to existing users, as well as benefits likely to accrue to potential users.
At a previous stage the Minister could not accept deletion of the term "potential users". I think that such a proposal was moved at the Committee stage by the noble Lord, Lord Teviot. The Minister said that that would widen the benefits and it would not be appropriate for the submission of estimates. The present amendment does not widen the meaning of the word "benefits" in that way. All it suggests is that if the estimates of the plan are to have a common sense meaning, they must refer to the benefits to existing users as well as to potential users. That is what the amendment seeks to do. I beg to move.
Lord Lucas of Chilworth: My Lords, I of course accept that the amendment has nothing to do with the benefits. However, I wonder whether the amendment results from perhaps a slight misunderstanding of the

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reference to "potential users" in Clause 3(4)(c). What we are saying here is that the executive must consider the benefits that potential users will receive from the proposed services and facilities. In this context everybody would be a "potential user"—even if they currently use local transport—because we are talking about future services in the years ahead. Existing users who then continue to use the services will form part of the potential user force. So a separate phrase adding existing users is really quite inappropriate. Perhaps I should emphasise that, by that, I do not mean that an executive cannot have regard to the benefits that existing users receive from existing services. Of course it can: and I am sure that it would be helpful if the executive were to take that factor into account.
However, surely in this instance the term "potential users" covers everybody who is expected to use—who might use—the service, whether or not an existing user, because we are concerned about future transport plans for future years. How can one have an existing user of a proposed service—a service which has not yet come into being? I suggest that that is quite impossible. The addition of existing users is therefore quite inappropriate. I hope that the noble Lord can accept that and will not press his amendment.
Lord Underhill: My Lords, I am happy to accept the statement made by the Minister. However, I should have thought that since he has said that there has been a misunderstanding, the opportunity could have been taken here to remove the misunderstanding by making quite clear what is meant. The very fact that there is a misunderstanding seems to suggest that the text of the clause could be improved. However, I am delighted to have the assurance of the Minister. I only hope that the courts, too, will accept the assurance of the Minister. What is important is what the courts will decide on the wording of the Bill, not (I say with all due respect) on what any Minister may say. Having had the Minister's assurance, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
3.26 p.m.
Clause 4 [Approval of financial plans and determination of revenue grants]:
Lord Underhill Lord Underhill moved Amendment No. 4:
Page 4, line 6, at end insert—
("(1) If the Authority have modified the plan submitted to them under section 3 above, in circumstances where they are satisfied that a particular passenger transport service which the Executive have power to provide is required to meet the needs of their designated area, but the Executive are not willing to provide it or to arrange for its provision because they consider that the cost of providing it would be too high in relation to the contribution which it would make to the needs of the area, the Authority may give the Executive a direction requiring the Executive to provide or secure the provision of that service, and the Executive shall comply with that direction.").
The noble Lord said: My Lords, your Lordships will recall that on the first day of the Committee stage an amendment, Amendment No. 4, sought to exclude from revenue grants those grants made by an authority to enable an executive to carry out an instruction from the authority under the provisions of Section 15(3) of the 1968 Act. That subsection provides that where an authority considers a particular service to be essential,
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but the executive cannot meet the cost of providing it, the authority may give the executive instructions to provide the service and undertake to meet the cost that may arise. The earlier amendment was rejected by the Government at the Committee stage, and the noble Lord, Lord Lucas of Chilworth, explained that the Bill leaves the power of Section 15(3) in place only until April 1984, after which it will be repealed.
So at the Report stage there was brought forward a different amendment, which proposed that an authority may exercise its powers under Section 15(3) only where no increase in the amount of revenue grants will result. I stated that if that amendment were carried I would bring forward a consequential amendment to adjust a later clause. The Minister, the noble Lord, Lord Bellwin, again pointed out that after the first year Section 15(3) of the 1968 Act would be repealed, and he explained that the power in that provision would be replaced by means of part of the annual planning process. Under the Bill the authority has responsibility to approve the plan prepared by the executive, and, if considered necessary, to approve it with modifications.
However, there is no provision which specifically replaces the power contained in Section 15(3) of the 1968 Act. At Committee stage I referred to the judgment given by Mr. Justice Woolf when he dismissed the appeal of Great Universal Stores against the Merseyside County Council and emphasised the importance of the provisions of Section 15(3) of the 1968 Act. That point was again stressed at the Report stage by my noble friend Lord McIntosh of Haringey. Ministers have argued that the power of Section 15(3) is covered by Clause 4(2) of the present Bill, and they have also claimed that the provision in the Bill does a bigger job in that respect—I use words used by the Minister. However, what Clause 4(2) provides is that,
"the Authority may require the Executive to supply them with …".
alternative proposals, estimates of particular benefits, and
"such other information as the Authority may specify".
That in no way relates to the provisions of Section 15(3) of the 1968 Act.
The amendment before you provides that, if the authority has modified the plan submitted by the executive by including a service that the executive is not willing to provide because it may consider the cost to be too high, the authority may give a direction to the executive to provide that service and the executive must comply with the direction. It is important that this power remains with the authority. The amendment makes no reference to Section 15(3) of the 1968 Act, so the argument about repeal under the Bill does not arise. The words in the amendment are precisely those taken from Section 15(3) of the 1968 Act.
There is, however, one point that I must emphasise. The plan in Clause (3)(1)(a) of the present Bill refers to the general level of transport services, whereas the amendment relates to a particular service. The difference will therefore be apparent. At the Committee stage, I quoted from letters received from the solicitor-secretary of the Merseyside Passenger Transport Executive and from the solicitor-secretary

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of the West Yorkshire Transport Executive each of which emphasised the importance of this provision being in the Bill.
I repeat that Section 15(3) of the 1968 Act is not mentioned in the amendment. There will therefore be no argument this time from the Minister about the provisions of the Bill relating to its repeal. As pointed out, the provisions of Clause 4(2) of the Bill cannot be used as an argument against the objectives of the amendment. This is an instruction to an executive that should be retained. I have pleasure in moving the amendment.
Lord Lucas of Chilworth: My Lords, this amendment would, in effect, put back into the Bill a provision similar to Section 15(3) of the Transport Act 1968. With the amendment, we return to the subject of that section that was discussed in some detail in your Lordships' House and in another place—that of the authority's power to direct an executive to provide a loss-making service. As the noble Lord, Lord Underhill, explained, the authority has power under Section 15(3) of the 1968 Act to direct its executive to provide this loss-making service on the condition that it provides the necessary grant. It is the case that Section 15(3) is to be repealed in April next year because its provisions, as we have previously made clear, will be effectively replaced by Clause 4, especially subsection (2) and, to an extent, subsection (1).
I believe that noble Lords have not attached sufficient importance to the real powers available to authorities under these subsections. The provisions enable an authority to require its executive to supply alternative proposals based on different levels of services and facilities. Of course, the authority has in clause 4(1) the final word on the content of the plan. So these subsections provide the authorities with an effective alternative power. They are similar to those currently available under Section 15(3) of the 1968 Act. In our view, Section 15(3) of that Act is made redundant by the provisions of this Bill. That is why we propose to repeal it. Clause 4 provides a perfectly good alternative.
The noble Lord, Lord Mishcon, made the point during our Committee stage on 3rd March. I readily accept that. The difficulty, in his view, arises because the Secretary of State, when setting his guidance, could decide that the kind of loss-making service envisaged is not essential and that he would therefore not include the cost of its provision when setting the guidance. If the authority still wished to provide the service, it would have to do so only by exceeding the guidance and would therefore run the risk of challenge in the courts.
There are two points that I should like to make. First, the authority, as all of us know, has freedom to exceed the guidance if it feels that it is justified in doing so, and if it feels able, should the need arise, to justify that decision before the courts. So, it is for the authority itself to decide if it wishes to provide a loss-making service and exceed the guidance. This, it seems to me, is no different from the situation that authorities are already in. At present, they risk challenge in the courts for any level of service and grant.
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Perhaps more important, it is for the authorities to decide on their priorities. The authority would not necessarily have to exceed the PEL if it was to provide a loss-making service that the Secretary of State, in setting his guidance, had felt was unnecessary and which he would not, of course, have taken into account when setting that power. The authority might, for example, reassess its priorities in the light of the PEL if it wished to keep within it. If it feels that a particular loss-making service is absolutely essential and must be provided without exceeding the PEL, it can do so, but at the expense of other less important services. To me, that seems a fairly proper discipline to impose upon the authority.
Clause 4(2) allows the authority to ask for alternative proposals; for example, for a loss-making service, and then Clause 4(1) allows the authority to decide the final form of the plan. It is the authority that decides the final form of the plan. That may well include a decision that the executive must run a particular loss-making service. My Lords, I can see no need for the amendment. The Bill provides a new and fully adequate financial planning procedure that should not provide undue difficulties—indeed, any difficulties—between the executive and the authority.
3.37 p.m.
Lord McIntosh of Haringey: My Lords, in resisting the amendment, the noble Lord, Lord Lucas, is really trying to spring a trap not just for the Opposition but also for the authorities and executives. I invite the House to examine the issue from the point of view of the authority. The authority has responsibility under Clause 4 to produce the best transport plan it can, at the best possible price, taking into account the needs of the mainstream transport users in its area. It has all sorts of hoops to jump through to reach that stage, going backwards and forwards between the authority and the executive and having to take heed of the guidance of the Secretary of State. In doing so, the interests of what I call the mainstream users of the basic services must be paramount. The best possible service at an acceptable price must be provided for those users.
It is, however, recognised and has been recognised since the 1968 Act and before, that there are certain kinds of service that do not readily fit into that pattern. There are, for example, services to hospitals on visiting days, services to rural areas that are included within metropolitan authorities, and various social bus services that are no different from any other kind of local authority social service expenditure. There is no difference between providing a bus to a hospital on visiting day and providing a wheelchair for the patients. It is the same kind of public expenditure and should not be treated in a different way at the expense, as is now to be the case, of the mainstream public transport users.
Therefore, if the authority does what the noble Lord is suggesting, it will be doing so not at the public expense generally but at the expense of the general public transport users. In other words, it will be producing a less than optimum general public transport service in order to provide those particular social bus services which are considered to be necessary. That cannot make sense, particulary when

1355
we have the situation that the threat which hangs over the authority is that of a challenge in the courts by a ratepayer. It is a particularly severe threat on this occasion because by their nature those special social bus services will be required for a minority of people and will be useless to the vast majority of ratepayers in the area.
Therefore, those ratepayers who are not influenced by the need to visit a hospital and by not having their own car, will be particularly prone to take this opportunity to challenge the authority in the courts, sometimes for selfish reasons and sometimes for straightforward political reasons. Therefore, the sanctions to be applied against the authority are that much greater in this case and the distortion which is proposed by the noble Lord the Minister is that much more dangerous. I hope that those arguments will not prevail against the amendment proposed by my noble friend.
Lord Lucas of Chilworth: My Lords, with the leave of the House, it is not I who am springing a trap: it is the noble Lord, Lord McIntosh, who is making quite unwarranted and quite uninvited assumptions. He has said that the responsibility of the authority is to provide the best transport plan possible. He said that that may well include a number of headings which he mentioned among them social needs. Of course that is so; that is absolutely right. But he then assumed that those social needs—which may only meet the needs of a small number of people—would be provided at the expense of the mainstream service. That is as an assumption with which I cannot agree because it need not necessarily be so.
The noble Lord has perhaps forgotten that when the executive and the authority deal with their plan, they have an overriding consideration—that of taking into account the interests of both user and ratepayer. Indeed, that is really what the Bill is all about. A fair balance has to be struck. In order to assist the authorities the PEL three-year plan system has been evolved.
The noble Lord implied that the financial planning procedure, which is really what the Bill is all about, provides that the authority ought to be able, the day after it has approved a plan, to change that plan by adding a service or by removing another or, in fact, by increasing the grant. While I do not accept for a moment his argument as to where the interests are going to lie as regards social need at the expense of mainstream or otherwise, certainly there is nothing in what the noble Lord has said that makes me think that we ought to accept this amendment.
Lord Sefton of Garston: My Lords, before the noble Lord sits down, I should like to ask him a question arising from a matter which I raised on Second Reading and to which the noble Lord, Lord Bellwin, said that he would refer when replying but in fact he did not do so. I raised the question of whether or not this Government wanted the courts to decide about the balance between fares and grants. That question has not been answered. I raised it twice in Committee. I should like to ask the noble Lord whether or not it is the Government's intention that the courts should decide whether the balance of money is to come from grants or from fare-paying passengers?
Lord Lucas of Chilworth: My Lords, with the leave of the House, I am sorry that the noble Lord, Lord Sefton, has not received a particular response to that question. What I can tell him is that it is the Government's intention to defend, to protect, the authority up to the protected expenditure level outside of which, if an authority wished to proceed, it would then be for the courts to decide.
Lord Sefton of Garston: My Lords, that does not answer the question. May I repeat—
Lord Derwent: My Lords, I am sorry to interrupt, but this is not a Committee stage and the noble Lord is clearly out of order. We cannot expect the Minister to get up several times.
Lord Underhill: My Lords, if your Lordships look carefully at Amendment No. 4 you will find that there is nothing in there which refers to a change in the guidance level. There is nothing in there which refers to a change in the protected level of expenditure. The Minister said that this would be putting back Section 15(3) into the Bill. I have already admitted that that is what it intends to do. But we have not referred to Section 15(3) of the Act; we have referred to what we want to do. I have already said that the wording of this amendment is precisely the wording taken from Section 15(3) of the 1968 Act.
Why do we want this? I have referred already, as I did during the last stage of the Bill, to a letter from each of two solicitor-secretaries of two passenger transport executives. There are only six passenger transport executives and two of them took the trouble to write to say that they wanted this provision in the Bill. Yet they are the ones who will have the direction given to them by the authority. They believed that this was very important. Surely the authority is the elected body, the body which the ratepayers have put in to control local affairs and if they want a particular service to be run but the executive says, "Sorry, we cannot do it because it is too costly", the direction must remain with the authority to instruct the executive to do this. That is what the amendment wants—the elected representatives shall have the authority to say what should be done in their area. The question of PEL and guidance levels on revenue support comes afterwards.
This direction is vital. The PTEs want it and the Government for some strange reason will not put it in. Yet they say that it is in Clause 4(2). If any noble Lord looks at Clause 4(2)—I shall not trouble to read it out—and suggests that that is the same as this amendment, then he is not reading the same language as I am reading. We regard it as an important principle that the elected body must retain the authority to decide that a certain service shall be run. Let us leave alone the question of the PEL because that will come after the decision has been taken. In view of the importance of this subsection we ask the House to make a decision upon it.
3.48 p.m.
On Question, Whether the said amendment (No. 4) shall be agreed to?
Their Lordships divided: Contents, 70; Not-Contents, 97.

DIVISION NO. 1

CONTENTS

Aberdeen and Temair, M.

Jenkins of Putney, L.

Airedale., L.

John-Mackie, L.

Amherst, E.

Kearton, L.

Amulree, L.

Kennet, L.

Ardwick, L.

Kirkhill, L.

Avebury, L.

Leatherland, L.

Aylestone, L.

Listowel, E.

Bacon, B.

Lloyd of Hampstead, L.

Banks, L.

McIntosh of Haringey, L.

Beaumont of Whitley, L.

Mayhew, L.

Beswick, L.

Oram, L.

Bishopston, L.

Peart, L.

Blease, L.

Phillips, B.

Blyton, L.

Ponsonby of Shulbrede, L. [Teller.]

Briginshaw, L.

Brockway, L.

Rathcreedan, L.

Bruce of Donington, L.

Rugby, L.

Burton of Coventry, B.

Sainsbury, L.

Byers, L.

Sefton of Garston, L.

Caradon, L.

Shackleton, L.

Chitnis, L.

Sidmouth, V.

Colliston, L.

Stedman, B.

Cooper of Stockton Heath, L.

Stewart of Alvechurch, B.

Crook, L.

Stewart of Fulham, L.

David, B. [Teller.]

Stone, L.

Denington, B.

Strabolgi, L.

Donaldson of Kingsbridge, L.

Tanlaw, L.

Elwyn-Jones, L.

Taylor of Gryfe, L.

Ezra, L.

Taylor of Mansfield, L.

Gaitskell, B.

Tordoff, L.

Grey, E.

Underhill, L.

Hale, L.

Wallace of Coslany, L.

Hampton, L.

Wells-Pestell, L.

Hatch of Lusby, L.

White, B.

Houghton of Sowerby, L.

Wooton of Abinger, B.

Hunt, L.

NOT-CONTENTS

Adeane, L.

Gray, L.

Airey of Abingdon, B.

Hailsham of Saint Marylebone, L.

Ampthill, L.

Avon, E.

Henley, L.

Balfour of Inchrye, L.

Hylton-Foster, B.

Belhaven and Stenton, L.

Ilchester, E.

Blake, L.

Jessel, L.

Boyd-Carpenter, L.

Killearn, L.

Campbell of Croy, L.

Kilmany, L.

Carnegy of Lour, B.

Kinloss, Ly.

Cathcart, E.

Lane-Fox, B.

Chorley, L.

Lauderdale, E.

Cockfield, L.

Lawrence, L.

Constantine of Stanmore, L.

Long, V.

Cork and Orrery, E.

Loudoun, C.

Cottesloe, L.

Lucas of Chilworth, L.

Cox, B.

Lyell, L.

Cullen of Ashbourne, L.

McFadzean, L.

Daventry, V.

Macleod of Borve, B.

Davidson, V.

Mancroft, L.

De Freyne, L.

Margadale, L.

De La Warr, E.

Marley, L.

Denham, L. [Teller.]

Merrivale, L.

Derwent, L.

Mersey, V.

Drumalbyn, L.

Milverton, L.

Dudley, B.

Molson, L.

Eccles, V.

Montgomery of Alamein, V.

Effingham, E.

Mottistone, L.

Ellenborough, L.

Newall, L.

Elliot of Harwood, B.

Northchurch, B.

Elton, L.

Nugent of Guildford, L.

Fortescue, E.

Orkney, E.

Gibson-Watt, L.

Orr-Ewing, L.

Gisborough, L.

Penrhyn, L.

Glenarthur, L.

Plummer of St. Marylebone, L.

Glenkinglas, L.

Gormanston, V.

Porritt, L.

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Portland, D.

Strathspey, L.

Rankeillour, L.

Sudeley, L.

Ridley, V.

Swinfen, L.

Romney, V.

Swinton, E. [Teller.]

St. Davids, V.

Taylor of Hadfield, L.

Saltoun, Ly.

Teviot, L.

Sandys, L.

Trefgarne, L.

Shaughnessy, L.

Trenchard, V.

Shuttleworth, L.

Trumpington, B.

Skelmersdale, L.

Vaux of Harrowden, L.

Somers, L.

Vivian, L.

Spens, L.

Westbury, L.

Stamp, L.

Resolved in the negative, and amendment disagreed to accordingly.

National Coal Board: Chairmanship
3.56 p.m.
The Parliamentary Under-Secretary of State, Department of Energy (The Earl of Avon): My Lords, with the leave of the House, I shall repeat a Statement being made by my right honourable friend the Secretary of State for Energy in another place. The Statement reads as follows:
"With permission, Mr. Speaker, I wish to make a Statement about the Chairmanship of the National Coal Board.
"When I appointed Mr. Norman Siddall as chairman last year, he made it clear to me that, regrettably, his health would not permit him more than a one-year term. Strictly speaking, that year comes to an end on 3rd July, but Mr. Siddall has kindly agreed to stay on until the end of August. He has already proved to be an outstanding chairman of the Coal Board, as I am sure is widely recognised on all sides of the House.
"As his successor, I have appointed Mr. Ian MacGregor, currently chairman of the British Steel Corporation.
"Mr. MacGregor is a Scotsman who was sent to Washington by the Government during the war to deal with certain aspects of the purchase of arms from the United States. After the war he decided to make his business career there, which he did with conspicuous success, notably with the Amax Corporation.
"His first act on becoming Chairman of Amax in 1969 was to take it into the coal-mining business: by the time he retired from the chairmanship of Amax in 1977 he had built it up into the third largest coal-mining company in the United States.
Mr. MacGregor's qualities were recognised by the previous Government when they appointed him a Deputy Chairman of British Leyland in 1977, but he did not return to Britain on a full-time basis until 1980, when my right honourable friend the Member for Leeds North-East appointed him chairman of the British Steel Corporation for a three-year term.
"Since then he has led BSC with vigour and determination through a period of intense difficulty for the steel industry both at home and abroad. Last year, for the first time ever, BSC's productivity came close to the best levels of its European competitors.

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"Mr. MacGregor's experience in building up and running a successful coal-mining business and the outstanding leadership he has provided at BSC have demonstrated that he is admirably equipped to become full-time chairman of the Coal Board. He has agreed to accept a three-year appointment starting on 1st September.
"Mr. MacGregor has obligations to his partners in the New York based investment bank of Lazard Frères, from which he was released for three years in order to become Chairman of BSC. I have agreed similar arrangements in order to enable him to take on the Chairmanship of the National Coal Board for a further three years. Accordingly, a fee of £1½ million will be paid to Lazard Frères in compensation for the loss of Mr. MacGregor's services. Two-thirds of that fee will be refundable on a pro rata basis if Mr. MacGregor does not complete his full three-year term.
"As with the BSC arrangements, Mr. MacGregor will remain a non-active limited partner in Lazards while serving as chairman of the Coal Board. But this will not entitle him to receive any share in the so-called transfer fee. He will be paid £59,325 a year—the same salary as Mr. Siddall.
"£1½ million, although less than the maximum compensation payable under the BSC arrangements, is a substantial sum. Indeed, it is what the Coal Board loses every day. But I am confident that, in securing the services of Mr. MacGregor as chairman of the National Coal Board, it will prove excellent value for money for the taxpayer, the industry and the nation.
"In making these arrangements, Mr. Speaker, my concern has been to find the best possible leadership for the Coal Board at this critical time. The industry and those who work in it deserve nothing less. The coal industry in this country faces fundamental problems of over-production and uncompetitive costs. If it can tackle these problems, it can secure for itself an excellent future and transform itself into the successful modern industry we need.
"Mr. MacGregor's objectives will therefore be to continue the task started by Mr. Siddall and to focus the Board's efforts on the earliest practicable return to profitability, on competing successfully in the marketplace and developing new markets for British coal, and on securing the highest possible efficiency and control of costs.
"I am satisfied that Mr. MacGregor is the best man for the job. This is an appointment which everyone with a genuine interest in the success of this great industry will welcome."
My Lords, that concludes the Statement.
4.1 p.m.
Lord Strabolgi: My Lords, on this side of the House we should like to thank the noble Earl, Lord Avon, the Minister, for repeating this Statement. We also sympathise with Mr. Norman Siddall that his health does not permit him to serve longer than the end of August, and we should like to pay a tribute to him for his first-class services, particularly as he followed the
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outstanding chairmanship of the noble Lord, Lord Ezra. We wish Mr. Ian MacGregor well—I think that that is probably the least that we can do—in his new appointment to head this important industry on which so much of the nation's future prosperity depends. But, my Lords, we are bound to ask some questions.
Is the appointment acceptable to all sides of the industry? Had the National Union of Mineworkers and senior management been consulted before it was made, or has it been imposed from outside? Do not the Government think that it would have been better to have chosen a younger man, who could have served longer? Do they envisage Mr. MacGregor continuing another term after he has reached the age of 73? If not, do they not think that a three-year term of office is rather a short period, especially at this important period in the coal industry? Do the Government think that this appointment shows much confidence in the able younger men of Britain's top management? After all, they will have to find another chairman fairly soon to replace the septuagenarian Mr. MacGregor. Will Mr. MacGregor continue as chairman of BSC as well, or is he going to relinquish his present post?
The Government say in the Statement that the £1½ million transfer fee, as they described it, is to be paid to Lazard Frères in New York as compensation for the loss of Mr. MacGregor's services. Is this very large sum in addition to the even larger sum already paid to Lazard Frères when Mr. MacGregor was appointed to the BSC? If so, what is the total cost to the Treasury for these two engagements? If Mr. MacGregor continues in office for a further three years will yet another £1½ million, a third tranche, have to be paid to Lazard Frères in New York, making about £4½ million to £5 million in all? Do not the Government think that this is rather a large sum for the hard-pressed British taxpayer to have to find, especially in these days of austerity and the curtailment—and the ruthless curtailment—of our social services?
Lord Tanlaw: My Lords, we from these Benches also wish to thank the noble Earl the Minister for repeating the Statement made in another place. I should also like to add our tribute to Mr. Norman Siddall for the work he has done, as well as to my noble friend Lord Ezra. We also must congratulate Mr. MacGregor for taking on what is clearly going to be a difficult and onerous task bearing in mind his age, which is that of an old-age pensioner. I must say that we from these Benches also believe in flexible retirement; that people have different abilities at different ages. I do not think that old-age pensioners on £57 a week will grudge Mr. MacGregor his £59,325, or his £1½ million compensation given to a merchant bank. What they and we would like to know is, will the earnings rule apply to Mr. MacGregor as it does to other old-age pensioners?
What is his tax status? Is he resident but not ordinarily resident in this country, or is he non-resident for tax purposes? In which case, what is the net income he will receive from his £59,325 after tax in this country? I think that every old-age pensioner wants to know this, while admiring his ability in being able to hold down this job compared to their difficulty often in hanging on to take that little bit of extra to keep them going.

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Finally, I should like to ask the noble Earl, after the three-year term what method of selection do Her Majesty's Government envisage for future chairmen of nationalised industries and the coal board? We, from these Benches, favour a panel independent of Government, and so do the Bow Group. The question is whether the Conservative Government wish to follow the Bow Group and the Liberal SDP alliance in recommending an independent selection panel for these onerous and responsible jobs.
The Earl of Avon: My Lords, I shall try to cope with some of the questions which have been asked. The noble Lord, Lord Strabolgi, asked whether Mr. MacGregor would be appointed again after three years. I think that this is something we would have to wait for, to see what sort of job he has done, and where we are. I am delighted that both the noble Lord, Lord Tanlaw, and the noble Lord, Lord Strabolgi, realised that it would be this side of the House which would be deciding this. The noble Lord, Lord Strabolgi, asked me about the £1½ million. The payment for the British Steel Corporation is £1,825,000, two-thirds of which is being retained until 1984, when it will be adjudged whether he has earned the full fee or not. So far as the fee for the Coal Board is concerned, it is an additional £1½ million; £1 million of which will be retained in trust until the end of his term.
The noble Lord, Lord Tanlaw, asked about tax. My understanding is that Mr. MacGregor is taxed in the normal way, and there is no special concession. As to whether he is a non-resident or not, of course he is not because he is working here as a full-time chairman. Some idea was suggested that he might be too old. Those who know the energy, drive and determination he has applied to BSC could not possibly agree with that. His vigorous performance there has underlined how fit he is at the young age, certainly in this House, of 71.
I was asked specifically about United Kingdom managers. There are, of course, many excellent British managers but they are usually fully committed to other important jobs and organisations. We are indeed very impressed by the standard of the National Coal Board. But I have yet to be convinced that anybody from there would succeed in the place of Mr. MacGregor. I am sure that the good sense of those who work in the industry, as indicated during the recent NUM ballot, will persuade them that it is the qualities of the man leading the industry which matter, and I am confident that the industry itself will respond to the leadership of the new chairman.
Lord Blyton: My Lords, is the Minister aware—
Lord Taylor of Gryfe: My Lords,—
Lord Blyton:—that the miners will regard this appointment as an act of provocation, and that to pay a salary like this—with the brilliant mining engineers and the men we have in this country—is a disgrace? All the conciliations of the recent ballots will go by the board, because, even if this man has murdered steel, the miners will never allow him to murder the mining industry.
The Earl of Avon: My Lords, I should like to make two points to the noble Lord. First, it is not an act of provocation. What we are looking for is the best man for the job. Secondly, what we are looking for is a man for the job at the moment. One of the points about the coal industry is that there is plenty of coal, and one of the aspects that we appreciate about Mr. MacGregor is that he is a marketing man, as well as a metallurgist. We believe that the combination of these two factors is very important at the present time.
Lord Taylor of Gryfe: My Lords—
The Earl of Lauderdale: My Lords, as an old age pensioner—
Lord Denham: My Lords, I think that the noble Lord, Lord Taylor, was trying to get up. Perhaps we could hear him first and then my noble friend afterwards.
Lord Taylor of Gryfe: My Lords, we on these Benches should like to thank the Minister for the Statement he has made and to join in the congratulations to Mr. Norman Siddall for a year of very distinguished service, despite the fact that he was not very well during that period and took these responsibilities with some reluctance. We should also like to pay tribute to Mr. MacGregor's outstanding ability and to wish him well in his new post. At the same time, we should like to ask the Government whether this is a departure from the normal practice of the Government, in so far as Government appointments, including quangos, as a rule, are limited to a period when the person concerned reaches 70 years of age.
I should like to ask the Government, too, whether the difficulty in filling this position arises from the facts outlined in the recent book of the retired chairman of British Leyland, to the effect that he found it extremely difficult to work with Governments who interfered with management; and whether Mr. MacGregor will be given an assurance that he will have little interference in the management of the coal industry in the short period of his appointment. Would the Government confirm that in view of the vote of confidence which has just been given by this appointment, the £1.8 million will automatically be paid to Lazards, making a total transfer fee of £3 million covering both of these appointments? Also, would the Minister confirm that it might be sensible to test the market on occasion, when major appointments of this character are about to be made? That might enable British management to feel satisfied that they are not being overlooked by friends of the Government.
The Earl of Avon: My Lords, the noble Lord has asked a number of questions. I was expecting that Mr. MacGregor would he acceptable to the SDP, as I saw that he went to Hillhead Grammar School. So far as the figure of £1,825,000 is concerned for the BSC job, my understanding is that that will not be paid until 1984. The noble Lord asked about testing the market and talked about friends of the Government. The point here is that there has been quite a lot of rumour that Mr. MacGregor might be appointed to this job,

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but throughout all that period of rumour I have heard nobody else canvassed for the job, except—and I am sorry that he is not here today—the noble Lord, Lord Gormley, but I think that he was caught in Spain at the time. So that nobody else has come forward for this job. I am not trying, in any way, to denigrate Mr. MacGregor about this, but it is very difficult to find the right person for these jobs, and, when you have such an outstanding character as this, it would be a great shame not to take the opportunity.
The noble Lord asked about interference. Of course, the Government do not interfere with the nationalised industries, except in giving them their objectives and their limits. Mr. MacGregor has already had experience with Goverment over the last three years and I am sure, when he says that he is willing to continue, that he is perfectly aware we shall not be interfering with him.
The Earl of Lauderdale: My Lords, would my noble friend agree that, as this House has many old age pensioners in it, including myself, some of whom are very vigorous indeed, it is hardly a place where we should criticise the appointment of an OAP? But can my noble friend just tell us this, while the subject is current? Does he have a figure for the annual cost to the taxpayer of the Coal Board's running at a considerable deficit? Would he not agree that, when the world is awash with coal and oil, marketing is the critical requirement at this stage?
The Earl of Avon: My Lords, I think I said earlier on in my remarks that marketing is one of the factors which made up our minds in regard to this decision. So far as the loss of the Coal Board is concerned, that is running at about £500 million at the moment which, as was said in the Statement, means that the payment of £1½ million is one day's loss.
Lord Taylor of Mansfield: My Lords, can the noble Earl say whether any consultation took place with the leaders in the industry, the Coal Board itself and the three important unions representing the workers, because their co-operation is absolutely necessary, so far as the appointment is concerned?
The Earl of Avon: My Lords, I do not know the level of consultations. We have, of course, had the recent ballot which the noble Lord, Lord Blyton, mentioned. So far as the board is concerned, I gather that it approved.
Lord Sefton of Garston: My Lords, would the noble Earl agree that there is a point of view in existence in this country in very responsible circles that perhaps this appointment will be viewed as a very severe reflection upon the quality and type of management contained in the CBI and the Institute of Directors in this country?
The Earl of Avon: My Lords, I hope that it will not be construed in that way. As I said in an earlier reply, both United Kingdom management and the National Coal Board have a lot of extremely good people. It is a question of having people available who have
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covered both fields—metallurgy and coal mining as well as the field of marketing. They are the people we are looking for.
Lord Nugent of Guildford: My Lords, as there seems to be a difference of opinion between the two sides of the House, is my noble friend aware that on this side the wish to see the coal industry built up into a highly productive and efficient industry, as a major part of the economy of this country, is at least as strong as in noble Lords opposite, and that the new leader, whoever he may be, is a man of critical importance, especially in the field of marketing, if this is to be achieved? Is my noble friend aware that the transfer fee, heavy though it is—and, of course, to many of us undesirable, though apparently unavoidable—is small money compared with the huge subsidy which our taxpayers are, at present, bearing of £500 million a year to keep the coal industry going? So if this man has the qualifications of leadership, which we recognise, and which noble Lords opposite recognised in 1977 when they appointed him deputy chairman of British Leyland, he may very well be able to give the lead in the reconstruction which is needed in this industry, to bring about the very great contribution which it can make towards our whole economy.
The Earl of Avon: My Lords, I am grateful for the support of my noble friend and agree with him throughout. I believe that one of the reasons why we have to pay this sum to Lazard Frères is the very qualities of the man, which puts him at such a high price.
Lord Beswick: My Lords, are we to understand that the £1,500,000 is to be paid to Lazard Frères, irrespective of performance? If there are to be criteria, would the noble Earl the Minister be good enough to say what those criteria are, and whether they will be applied to the chairmen of other public sector corporations? Finally, may I ask the noble Earl whether he happens to know if there is any retiring age for the directors of Lazard Frères?
The Earl of Avon: My Lords, if I may answer the last question first, I am afraid that I do not know. So far as refundability is concerned, as in the case of the BSC, two-thirds of the compensation is refundable on a pro rata basis. If Mr. MacGregor does not complete his term—that is to say, if he resigns or, unfortunately, should be ill or anything like that during the term—that two-thirds will be kept in trust until the end of the term. The noble Lord asked another question which, I am afraid, I have not answered.
Lord Beswick: My Lords, I asked whether there are any criteria which will be applied, as to whether the £1,500,000 is to be paid irrespective of what happens to the industry in the next three years.
The Earl of Avon: My Lords, two-thirds are kept in trust until the end of the term and if Mr. MacGregor happens to resign, becomes ill or fails to keep the appointment then, on a pro rata basis, the compensation is payable.
Lord Beswick: My Lords, remembering what my noble friend Lord Taylor of Mansfield has said, supposing that there is a confrontation in the coal field, and supposing that there is a complete upset as a result of this appointment, is that £1·5 million payable, irrespective of what happens?
The Earl of Avon: My Lords, the noble Lord paints a scenario which I find hard to follow, in my brief, as it were. So far as I know, if Mr. MacGregor continues to be chairman he will continue to get paid. If he is no longer chairman, then he will not be paid. I am not sure from the scenario which the noble Lord paints, where he would be.
Lord Bruce of Donington: My Lords, can the noble Earl clarify one point? Is it to be the case that Mr. MacGregor will continue to be the chairman of British Steel Corporation, until the day he takes up his duties with the coal industry? Is there going to be any period of overlap at all? Perhaps the Minister will care to clarify that point.
Is the noble Earl aware that, so far as one can judge, there was no advertisement put forward for taking on this particular task? Is he not aware that the Prime Minister herself made it quite clear from the beginning that this "super guy", as she called him, was to have the post? Would he not agree that very few Members of the party opposite, including some in the Cabinet, have the courage to tell the Prime Minister that she was wrong? Is it not quite clear that this is a purely personal appointment?
The Earl of Avon: My Lords, so far as the first part of the noble Lord's supplementary question is concerned, the chairmanship of BSC will be decided by my right honourable friend the Minister responsible for the industry, and he will be making an announcement in due course. So far as the noble Lord's latter point is concerned. I do not know from where the noble Lord gets his knowledge but, according to my knowledge, this is an appointment made by the Cabinet with the full approval of all members.
The Earl of Lauderdale: My Lords, can my noble friend say whether there is any requirement in any of the nationalisation Acts that the Government should consult with, and get the approval of, the unions before making such appointments and whether, in its particular case, Sir Peter Parker was vetted and approved by the NUR before his appointment?
The Earl of Avon: My Lords, I believe there is no such thing in the Act. However, I hesitate to use the word "vetted".
Baroness Wootton of Abinger: My Lords, I do not think that the noble Earl answered the question put by the noble Lord, Lord Bruce of Donington, as to whether there would be any overlap during which Mr. MacGregor would be holding both posts.
The Earl of Avon: My Lords, the noble Baroness is quite correct. I do not know at the moment. It is up to my right honourable friend to make the appointment of the new chairman of BSC.
Lord Ezra: My Lords, the noble Earl referred to the amount of public funds payable to the National Coal Board. Would be agree that, on a per tonne basis, the National Coal Board is in receipt of substantially less from Government funds than is the case in any other West European coal-producing country? Secondly, would he also agree that a large amount of these borrowings and these funds is due to the fact that the Coal Board under the 1974 Plan for Coal is building up a new industry to replace the old mines which inevitably had to go out of existence and that the amount of public money being paid into the Coal Board at the present time will represent a future investment far the country?
The Earl of Avon: My Lords, as this is the first time that I have had the pleasure to talk to the noble Lord, Lord Ezra, across the Floor of the House, may I say how much I welcome him here and how much we appreciate his term as chairman of the National Coal Board. Regarding his figures, of course I would not argue with him. As I understand it, there were quite a lot of things agreed in the 1974 Plan for Coal, most of which have been carried out. One of the things that has been carried out is the investment by Government. That investment at the moment, so far as the present Government are concerned, is in the neighbourhood of £800 million. What we should like to see—in the market which I know is not what the Plan for Coal anticipated, in that there is not the market that they thought there would be—is that, equally, the productivity side of the agreement is carried out so that we may have a prosperous and healthy coal industry.

Transport Bill
4.25 p.m.
Third Reading resumed.
Clause 5 [Payment of revenue grants]:
Lord Underhill Lord Underhill moved Amendment No. 5:
Page 5, line 21, at end insert—
("( ) An Authority may with the approval of 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 for reasons of extreme urgency brought by events unforseeable by the Executive and the Authority.").
The noble Lord said: We are now dealing with Clause 5 of the Bill, which provides that an authority shall make a revenue grant only in accordance with a determination that they shall make in the light of the annual plan and with a regard to the guidance given by the Secretary of State. As there may be only one determination by the authority in any one year, previous amendments have sought to make provision for circumstances where the amount of the revenue grant has been exceeded by expenditure due to unforeseen circumstances. At the Committee stage, there was an amendment to allow the authority to increase the grant in such circumstances. On that occasion the noble Lord, Lord Bellwin, pointed out that "unforeseen circumstances" could enable an executive to act irresponsibly. He argued that it could

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negotiate a huge wage settlement or increase its level of services. He explained also that any additional grant would have to be within the single annual grant determination and not be an extra grant.
Therefore, at the Report stage, a different amendment was brought forward that an authority may increase the amount of revenue grant where it becomes inadequate due to circumstances beyond the ability of the executive and the authority to control. It was proposed also that this increase be made by the authority after consultation with the Secretary of State. On that occasion the Minister said that he had more difficulty as the amendment would still provide opportunity to circumvent the planning procedures and was even an excuse for slack management. He said, showing great confidence in local authorities and transport executives, that he was sure that, with their ingenuity, some authorities could if they wished find examples of circumstances beyond their control. He added,
"Would there not then be never ending approaches to and discussions with the Secretary of State?".—[Official Report, 17/3/83; col. 906].
This amendment now before your Lordships should meet the apprehensions of the Minister, first because the words, "due to circumstances which are beyond the ability of the executive and the authority to control" are replaced by the words of the amendment:
"… for reasons of extreme urgency brought by events unforeseeable by the Executive and the Authority".
That, I would suggest, satisfactorily qualifies the circumstances in which the need for an increase in the grant could arise. The amendment is further changed in a way which should completely remove the apprehensions of the Minister because, instead of using the words, "after consulting with the Secretary of State" (which was in the amendment at the Report stage) the present amendment uses the words, "with the approval of the Secretary of State". Therefore, the amount of revenue grant may not be increased without the approval of the Secretary of State. All the arguments used by the Ministers at both Committee and Report stages cannot now possibly apply to this amendment because the final decision will rest upon the approval of the Secretary of State. I beg to move.
Lord Lucas of Chilworth: My Lords, during the Report stage of this Bill on 17th March we had a long and interesting discussion in relation, then, to Amendments Nos. 21 and 22 which were moved by the noble Lord, Lord McIntosh. These were basically on whether an authority should be able to increase its amount of revenue grant to an executive during the year in order to cover any emergencies. The noble Lord suggested then that this might be made subject to the approval of the Secretary of State and my noble friend Lord Bellwin promised at that time to consider all that had been said on that occasion. My noble friend has indeed done so, and your Lordships will know that when he promises to do something he always does it.
In the light of his consideration and, may I say with all due temerity, in the light of my own reconsideration of what was discussed on Report, we have come to the conclusion that an amendment of this nature is
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not really necessary. The fact of the matter is that there are already a number of courses available to executives to cover unforeseen circumstances during the year without any need for the amount of revenue grant to be increased. The emergency could immediately be covered—and I apologise to your Lordships if I am repeating myself but it seems to be necessary—by borrowing or by the unplanned use of reserves. This in turn would be covered in the following year by an increase in fares, a reduction in costs, the planned use of reserves or an appropriate increase in the amount of revenue grant from the authority.
Moreover, as has been emphasised on a number of occasions, the executive's financial duty to break even is qualified by the words, "so far as practicable". This is an important point and one which I do not think has been given due regard in our discussions. It really means that if because of an emergency or for whatever compelling reason it was impracticable for an executive to break even, then they are not obliged, come what may, to do so. I would have hoped that what I have said would reassure noble Lords opposite that the Bill already provides executives with adequate scope in covering any emergency or contingency which might arise outside their control, without any need for an increase in the grant.
I turn now to the suggestion that any increase could be made subject to the approval of the Secretary of State, and I would suggest that this would result in considerable exchanges between the executive, the authority and the Secretary of State. Frankly, it would seem to me this would only result in considerably greater interference by the Secretary of State in the affairs of the authority and the executive; and I know we are at one in agreeing that this would be highly undesirable. Moreover, there could be no guarantee that the Secretary of State would agree that the emergency was such as to justify an increase in the grant. The executive would then have to fall back on one of the alternative solutions already available to them which I have outlined on more than one occasion.
I should also make the point that if the authority were allowed to increase its revenue grant halfway through the year it would itself have to cover the increase either by borrowing or by the use of reserves, or possibly by depleting funds allocated to other services within the authority. The noble Lord, Lord Underhill, reminded us that a second precept, a second increase, is not permissible. Therefore, it seems to me quite unnecessary, not to say undesirable, that any additional revenue grant should be provided and financed by means of this kind when the executive itself has access to at least three sources of funding.
I hope that noble Lords opposite will see that this amendment is so very similar to those which we have had before and therefore the answer has to be very similar because of that degree of similarity. I hope, in the light of what I have said this afternoon, they will see that the amendment is not sound.
Lord McIntosh of Haringey: My Lords, on each of the occasions when the Government's reply is given to amendments put forward from this side of the House I have a little bet with myself as to which of the two speeches the Minister is going to make. Will it be the

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one in which he says that the amendment is unnecessary because this or that other clause has already provided for it? Or will it be the other speech in which he says that this is an intolerable attack on the core of the Bill, on the seamless cloth out of which the Bill is woven, which would never survive the strain of the extra two or three words moved by my noble friends or myself? On this occasion we have had the first of those two speeches and, frankly, it is no more convincing than it was when the noble Lord, Lord Lucas, made it on Report.
He seems to have learned very little since that time about the kinds of circumstances we were referring to when we moved those amendments on Report and the futility, really, of the approach he was making to the business management of public transport undertakings. We did try (and I am sorry that I have to repeat myself as well to some extent) to say that there are some occasions—I wish I could think of some new examples rather than the heavy snowfall which I keep on using, or other acts of God or the weather—when a public transport undertaking, which actually works in the open air, is involved in often quite heavy additional expenditure. It could be "one-off"; there may be no implication whatever of bad management and no implication—unless there are more statistical forces at work in regard to the weather than I am aware of—that the expenditure will be repeated in a future year. Certainly there would be no indication that this was a deliberate attempt by the authority or the executive to break any financial boundaries imposed by the Secretary of State, but it is unavoidable and, as my noble friend says in the amendment, involving grave urgency—I am trying to read without my glasses.
Surely, in those circumstances, it is sheer bad management for the authority and the executive to be forced to borrow in order to meet that expenditure. It is equally bad management for the executive to get into debt and to have to make it up out of reserves for the next year. It is equally bad management if it comes out of existing reserves available, because that means that the reserves have been kept at too high a level for the normal operations of the executive's undertaking. So from a sheer business point of view—nothing to do with party politics—what the noble Lord is suggesting is bad guidance to an executive and ought not to be pursued. I am very sorrry indeed that the overwhelming case for that piece of business management has not been understood and accepted by the Government.
Lord Boyd-Carpenter: My Lords, I think it is a little ungenerous of the noble Lord, Lord McIntosh, to complain of the similarity or, as I would prefer to put it, the consistency of my noble friend's speeches. If noble Lords opposite exercise their right, even on Third Reading, to go on putting down substantially the same amendment they really must not be surprised if they get substantially the same answer. The answer which my noble friend gave on at least one and, I believe, on two previous occasions on this subject seems to me wholly convincing and indeed he has no option but to give it again if the same amendment is put down again and again. Frankly, it does not lie in the mouth of the noble Lord, Lord McIntosh, with respect, to criticise my noble friend on this point.
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The only other observation I should like to suggest to your Lordships is that emphasis has been put in this amendment on the question of the unforeseen. I would remind your Lordships of an observation of Disraeli:
"A policy is the toll levied on a fool by the unforeseen. I am not the former and I do not believe in the latter".
Lord McIntosh of Haringey: My Lords, before the noble Lord sits down, I wonder whether he would accept that I was not criticising the noble Lord, Lord Lucas of Chilworth, for repeating his arguments. I was merely criticising the content of those arguments and apologising for the fact that I myself was repeating the arguments.
Lord Sefton of Garston: My Lords, the emphasis of the noble Lord, Lord Boyd-Carpenter, is on the unforeseen. In this amendment, the emphasis is entirely different: it confers upon the Minister the right to say what is an emergency. Perhaps I could outline its importance by describing what could happen in the place which I know best, Merseyside. On either side of the river we have developed a quite extensive network of rail services. They cover both the north and the south bank of the Mersey. Because of the obvious cost, we have to rely upon the old Mersey railway tunnel. This means that both those services are dependent upon one double track under the Mersey.
It is within the bounds of possibility that with two trains under the River Mersey, one train could be derailed and hit the other. Then one would be faced with a catastrophe. Lives would be lost and transport on Merseyside would have to be reorganised. All communication between the south and the north banks of the Mersey by rail would immediately be at an end. It would call for a massive injection of investment: either for the movement of buses from the LBC into the area to use the two road tunnels or for the hiring and chartering of one or more additional ferryboats to provide for the tremendous movement of traffic. One has to remember that the commercial life of Liverpool practically depends upon the large number of commuters from the Wirral.
I have outlined a scenario which could occur. Nobody could describe it as not being an emergency. Therefore I pick up the argument of my noble friend Lord McIntosh of Haringey about whether or not it is good management to borrow for a situation of that kind. I do not think that it is, nor do I think that the Government believe it to be good policy to borrow money for that kind of purpose. Even if they do at the moment, there would be no option under the Bill but for them to say to a local authority, "Borrow the money in order to get you out of this difficulty". That is a stupid situation to be faced with. It means that in framing the Bill the Government have envisaged every possible circumstance and have left themselves with no flexibility to move away from the Bill. What kind of a Bill is that? It places upon the Government so firm a restriction that they cannot possibly move.
This amendment seeks to allow the Minister to decide what is an emergency. Secondly, it allows him, if he thinks fit, then to allow the transport authority to exceed the grant rather than to borrow. That is all the amendment seeks to do. If ever there were a constructive rather than destructive amendment which is designed to make it a better Bill, this amendment is it.
Lord Lucas of Chilworth: My Lords, with the leave of the House, I am rather forced to my feet by the noble Lord, Lord McIntosh of Haringey. I would suggest that he has lost his bet, because I added a totally different argument from that which was previously advanced—one which I should have thought would appeal to him. I said—and I cannot recall having said it before—that it seemed to me that this would result only in considerably greater interference by the Secretary of State in the affairs of an authority and an executive. I know that we are at one in not wishing that to happen, but that is what the amendment suggests.
The noble Lord, Lord Sefton of Garston, spoke about a snowfall and added another scenario, but I do not believe that we can be expected to legislate for acts of God. I suggest that it would be extremely bad management not to hold reserves against contingencies. Noble Lords opposite seem to suggest that this is not one of the ways out of a problem which might arise. They want to shift that responsibility to the Secretary of State. I suggest that this is not right. I could not possibly agree with the arguments which noble Lords opposite have put forward. To accept the amendment would be to throw away the orderly processes provided for in the Bill and to substitute possibly a continuous process of approaches to the Secretary of State, with the substitution of his decision about the amount of the grant rather than leaving that to be determined by the authority, which is what noble Lords opposite have been calling for throughout. Their arguments have not persuaded me.
Lord Underhill: My Lords, as discussion of the Bill continues I grow more and more amazed. We are now told that this amendment would interfere with the determination of the grant by the authority. The authority can determine nothing. It can say what it thinks the grant should be, but when the Minister can say, "No, I shall give you different guidance, and if you dare to vary it somebody can go to the courts" that is not determination by the authority. With all respect to the Minister, it is nonsensical to put forward that argument.
Of course a similar pattern is to be found in the three amendments moved at Committee stage, Report stage and Third Reading. With respect to the noble Lord, Lord Boyd-Carpenter, that is the purpose of this House. What we have tried to do at each stage is to listen to the ministerial arguments and to adapt the amendment accordingly, hoping that it would then be acceptable to the Government. We adapted the amendment moved at the Committee stage. At the Report stage we hoped that it would meet the arguments advanced by the Government. But that amendment was not successful. This time, therefore, we have gone to the ultimate. Therefore the amendment says, "with the approval of the Secretary of State". How much further can one go in adapting amendment after amendment? I am certain that the noble Lord, Lord Boyd-Carpenter, did not mean what he said, otherwise the revising function of this House is useless and we may as well dispense with the revision stages—and with this House.
Lord Boyd-Carpenter: My Lords, if the noble Lord, Lord Underhill, is challenging me on that point, may I say that I was replying to his noble friend Lord McIntosh of Haringey who criticised my noble friend the Minister for using the same arguments on this occasion as those used on previous occasions. I pointed out that as the amendment is substantially the same as those moved on previous occasions, consistent and sensible answers must also be more or less the same. Surely the noble Lord can absorb that proposition.
Lord Underhill: Except, my Lords, that I am saying that it is a substantial change to give the authority to the Secretary of State. This was not proposed in any previous amendment. Noble Lords will see the point that I am trying to make. Emphasis is placed on the number of courses which are available. My noble friends Lord Sefton and Lord McIntosh of Haringey have dealt at length with the business arguments against the courses which have been set out. To say that if there is an unforeseen emergency one should increase fares in an area where there is 25 to 30 per cent. unemployment, might result in employers in the area saying, "What the devil do you think you are doing by increasing fares? Think of the effect it might have on employers and their employees". Recourse to borrowing and recourse to increased fares might be unsuitable. We are therefore saying that an authority should not be allowed to take this decision; they should put their case to the Minister. If the Secretary of State says that he does not regard it as an emergency in which the Government can act in this way and asks whether there are other ways of dealing with it, then he can say, "I will not agree". But if he considers that a case has been put up, the Secretary of State will decide. That is what this amendment says.
When I am told that this will increase the number of exchanges between the authority and the Secretary of State, I hope that the Minister will go to the department and take a look at some of the exchanges which are taking place already, before this Bill is even passed, on points concerning the chronology of the planning process. I have seen some of the correspondence, so I do not want to be told that this will increase the number of exchanges between the authority and the Secretary of State. If this will deal with a situation where the final decision rests with the Secretary of State, then surely that is something which the whole House ought to applaud.
When I am then told, as a final argument, that we should not wish to press this amendment because it will increase interference by the Secretary of State in the affairs of the authority, we would have preferred to have seen matters the other way around. We tried this at Report stage. The Minister, for various reasons which we have heard explained, said "No." So now we have come to the ultimate point. We have said: "Right, this emergency has come. It is unforeseen and beyond control. Who will take the decision? We will put up the case, but the Secretary of State's approval must be given to it." That seems to be so reasonable.
This issue is not one on which I was proposing to divide the House, but some of the same arguments put against this amendment were put forward last time,

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and have been adapted each time to knock out a different stage. Unfortunately, there are only three stages to a Bill. If there were another, we would adapt the amendment yet again and see what other argument was put forward against it. But that is not a possibility, and so we can only show our disagreement and our objections to the arguments of the Minister and of the Government. All we want to do is say, "All this is subject to the approval of the Secretary of State." If that is not acceptable to the Government, then your Lordships' House ought to say, "Yes, it is."
4.52 p.m.
On Question, Whether the said amendment (No. 5) shall be agreed to?
Their Lordships divided: Contents, 58; Not-Contents, 106.

DIVISION NO. 2

CONTENTS

Ardwick, L.

Kirkhill, L.

Avebury, L.

Leatherland, L.

Aylestone, L.

Listowel, E.

Bacon, B.

Lloyd of Hampstead, L.

Banks, L.

Lloyd of Kilgerran, L.

Beaumont of Whitley, L.

Longford, E.

Beswick, L.

McIntosh of Haringey, L.

Bishopston, L. [Teller.]

Mayhew, L.

Blease, L.

Melchett, L.

Blyton, L.

Mishcon, L.

Briginshaw, L.

Oram, L.

Brockway, L.

Phillips, B.

Bruce of Donington, L.

Pitt of Hampstead, L.

Chitnis, L.

Rathcreedan, L.

Cledwyn of Penrhos, L.

Sainsbury, L.

Cooper of Stockton Heath, L.

Sefton of Garston, L.

David, B. [Teller.]

Stedman, B.

Denington, B.

Stewart of Alvechurch, B.

Elwyn-Jones, L.

Stewart of Fulham, L.

Ezra, L.

Stone, L.

Hale, L.

Strabolgi, L.

Hampton, L.

Tanlaw, L.

Hatch of Lusby, L.

Taylor of Gryfe, L.

Houghton of Sowerby, L.

Taylor of Mansfield, L.

Hunt, L.

Tordoff, L.

Jacques, L.

Underhill, L.

Jenkins of Putney, L.

Wallace of Coslany, L.

John-Mackie, L.

Walston, L.

Kennet, L.

Wootton of Abinger, B.

NOT-CONTENTS

Ailesbury, M.

Daventry, V.

Airey of Abingdon, B.

Davidson, V.

Auckland, L.

De La Warr, E.

Avon, E.

Denham, L. [Teller.]

Balfour of Inchrye, L.

Drumalbyn, L.

Bellhaven and Stenton, L.

Eccles, V.

Blake, L.

Ellenborough, L.

Boyd-Carpenter, L.

Elles, B.

Caithness, E.

Elliot of Harwood, B.

Campbell of Croy, L.

Elton, L.

Carnegy of Lour, B.

Fortescue, E.

Cathcart, E.

Fraser of Kilmorack, L.

Cockfield, L.

Gainford, L.

Coleraine, L.

Gibson-Watt, L.

Constantine of Stanmore, L.

Gisborough, L.

Cork and Orrery, E.

Glenarthur, L.

Cottesloe, L.

Glenkinglas, L.

Cox, B.

Gormanston, V.

Craigavon, V.

Gray, L.

Cullen of Ashbourne, L.

Greenway, L.

1374

Hailsham of Saint Marylebone, L.

O'Neill of the Maine, L.

Orr-Ewing, L.

Hampden, V.

Penrhyn, L.

Henley, L.

Plummer of St. Marylebone, L.

Hylton-Foster, B.

Ilchester, E.

Porrit, L.

Ironside, L.

Rawlinson of Ewell, L.

Killearn, L.

Ridley, V.

Kilmany, L.

Romney, E.

Kinloss, Ly.

St. Davids, V.

Lane-Fox, B.

Saint Oswald, L.

Lauderdale, E.

Sandys, L.

Lawrence, L.

Seebohn, L.

Long, V.

Shuttleworth, L.

Loudoun, C.

Skelmersdale, L.

Lucas of Chilworth, L.

Somers, L.

Lyell, L.

Spens, L.

McAlpine of Moffat, L.

Stamp, L.

McFadzean, L.

Strathspey, L.

Macloed of Borve, B.

Sudeley, L.

Mancroft, L.

Swinfen, L.

Margadale, L.

Swinton, E. [Teller.]

Marley, L.

Taylor of Hadfield, L.

Merrivale, L.

Terrington, L.

Mersey, V.

Teviot, L.

Mills, V.

Trefgarne, L.

Milverton, L.

Trenchard, V.

Molson, L.

Trumpington, B.

Montgomery of Alamein, V.

Vaux of Harrowden, L.

Mottistone, L.

Vickers, B.

Murton of Lindisfarne, L.

Vivian, L.

Newall, L.

Westbury, L.

Northchurch, B.

Wise, L.

Nugent of Guldford, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
5 p.m.
Lord Underhill Lord Underhill moved Amendment No. 6:
Page 5, line 33, at end insert—
("( ) The National Bus Company and their subsidiaries and the British Railway Board shall supply an Executive with such information as they reasonably require for the purpose of preparing a plan under section 3 above.").
The noble Lord said: My Lords, once again I have to make it clear that an amendment dealing with the general content of this present amendment was brought forward at Report stage. Reference to the need to obtain information from the National Bus Company so as to supply information to the Secretary of State has been left out. It has been left out because of the attention which the Minister drew to the provisions of the 1962 Act, which provide the Secretary of State with a comprehensive power to obtain all information from the National Bus Company directly. But we have now included in the amendment the need to obtain information from British Rail as well as the National Bus Company and its subsidiaries. To meet the point which the noble Lord, Lord Boyd-Carpenter, made at Report stage, the word "reasonably" has been included. I shall be too optimistic if I assume that he will therefore support my amendment, but I still hope so.
The noble Lord, Lord Lucas, said that Section 24(2) of the 1968 Act places the National Bus Company and the executives under a duty to co-operate with one another and to enter into agreements as to services to be provided within a metropolitan county. That is correct, but that subsection is nothing to do with the provision in this amendment—neither subsection (2) nor subsection (3) of that section. I will not take the time of your Lordships in explaining the point, except

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to say that I am sure the noble Lord the Minister will agree when he looks at those two subsections that they have no relationship to what we are trying to do in this amendment. There is need for the executives to have such information as they may reasonably require—that is in the amendment—for the purpose of preparing the annual plan, which is to be spread over three years, which is part of the purpose of this Bill.
There is another reason why this amendment should be supported. Apart from the purpose of meeting the criticism of the Minister, which we have tried to do in this new amendment, it was made absolutely clear when I attended a meeting last Friday of representatives of transport executives and of transport authorities that hitherto considerable difficulty has been experienced in obtaining required information from the National Bus Company and also from British Rail. In fact, some officers of transport executives said that the information required in connection with the submission of their TPP was sometimes two years old. Therefore, if the executives are to be in a position to really carry through the requirements of the Bill, to submit a proper annual plan covering three years, it is absolutely essential that there be statutory powers for them to obtain reasonable information from both the NBC and its subsidiaries and, as now included, also from British Rail. Past experience of transport executive officials makes it quite clear that this amendment is really necessary. I beg to move.
Lord Lucas of Chilworth: My Lords, without being frivolous, perhaps I could remind your Lordships of some of the words the noble Lord, Lord Underhill, used when we were discussing the last amendment. He referred to having had to adapt his amendments to meet what we had said. Frankly, this amendment is an absolute adaptation; it is fundamentally the same, but it brings in the British Rail element and adds one word. Recognising these small differences, I would not have thought they were very significant; but if the noble Lord wishes again to debate the basic issue then that is, of course, his prerogative. The present amendment introduces the word "reasonably", which my noble friend Lord Boyd-Carpenter pointed out in a teasing way when we last discussed this would be necessary in the interests of consistency. Of course, the House did not accept that amendment, as the noble Lord reminded us.
This new amendment extends to the British Railways Board. If I may take that point first, I do not think it can be argued that it adds anything of substance to the amendment we considered last time. There is already the existing power in Section 20(3) of the 1968 Transport Act that the Railways Board,
"shall furnish the Executive with any information which the Executive may reasonably require for the purposes of discharging their responsibilities".
Lord Sefton of Garston: My Lords, will the noble Lord give way?
Lord Lucas of Chilworth: My Lords, I think it would be very difficult for me to follow my own line of argument—and, indeed, for the noble Lord, Lord Underhill, to follow it—if I gave way before I had
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finished saying what I have to say in response to the amendment. If noble Lords opposite feel that I am perhaps taking an attitude to which they really object, I am happy to give way, but I think it would be more helpful if I went on.
I was talking about there being an existing power under Section 20(3) of the Transport Act 1968. That provides that the Railways Board,
"shall furnish the Executive with any information which the Executive may reasonably require for the purposes of discharging their responsibilities under section 20(2) for keeping the rail services in their area under review and entering into agreements with the Board for the provision of services".
So I do not think an executive could claim that they lack any adequate power so far as the railways are concerned.
The question of what information is needed from the National Bus Company is perhaps a little different. We discussed this before, and I suggested then—and certainly my inquiries do not suggest that I was wrong at that time—that while there are sometimes disagreements and there may be times when the two bodies, the NBC and the PTE, are not seeing eye to eye, I have certainly not had any evidence brought before me that PTEs have not been able to get the information that they require. The department consulted with both the National Bus Company and, incidentally, with the British Railways Board, at the same time as we were trying to have consultation with the AMA, about the information requirements that would result from the Bill. We were concerned then, and we are still concerned, to ensure that there is so far as possible general agreement about what needs to be provided, and that the requirements are in a form which will not create unreasonable difficulties either for the Railways Board or for the NBC, any more than for authorities and transport executives.
The Railways Board and the NBC have been helpful and constructive in their approach to our consultations. Frankly, I have to say that I wish the AMA attitude had been as forthcoming at that early stage as were the NBC and the railways. Having said that, I should add that in recent days—in fact only from about 18th March until this morning—the AMA have responded in a very much more fulsome manner to the consultation documents which we have put out. That is, of course, to be commended and is helpful to everyone concerned.
Nevertheless, I remain convinced that the sensible way of getting the information requirements and the planning system right is in discussion and agreement and not by relying on additional statutory powers. If one had them it would add nothing material within the context of this amendment. We took that view on Report and I have to tell your Lordships that we see no reason at this stage to change it.
Lord Underhill: My Lords, I am almost tempted to take up the point that the noble Lord made about the AMA because I am aware of the reply to which he referred. The reason why the AMA hitherto has not sent various pieces of information is that co-operation was required from the AMA on how to carry out a Bill to which they were opposed. They were not brought into consultation about the provisions of the Bill. As I shall explain later, the White Paper and the Bill both

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came to Parliament on the same day. This amendment is not intended to be critical of the NBC or of British Rail.
The Minister said that we ought to secure this information by discussions and agreement, and not by statutory powers. I wish that statement had been made before we started consideration of this Bill, because the whole of it is statutory powers on what the authority must do and the information it must give, what the executive must do and the information it must give. It is riddled on almost every page, in every section and subsection, with powers. If that is what the Government wanted to avoid we could have had numerous amendments to the Bill.
Reference was made to the Act of 1968, but that is 15 years ago. We are talking about information required for a different purpose—to prepare a plan each year for the next three years. That is a totally different thing altogether. The Minister can take my assurance that the people I was with on Friday afternoon all expressed concern that it was essential that if they are to do the job of preparing a three-year plan they must have this information. However, one can see the attitude of the Government. We will not press this further, but the statement that I have made and that the Minister has made are on the record. I beg leave to withdraw the amendment.
Amendment, by leave withdrawn.
Clause 7 [Review of managerial organisation]:
5.12 p.m.
Lord Underhill Lord Underhill moved Amendment No. 7:
Page 6, line 27, leave out from ("shall") to ("cause") in line 28 and insert ("if the Secretary of State so requires, not more than once in any period of three years").
The noble Lord said: My Lords, a similar amendment was put forward on Report and I will briefly explain why. On that occasion the noble Lord, Lord Lucas of Chilworth, said:
"I can say categoricaly that the Secretary of State has no intention of requiring transport authorities to cause frequent reviews to be made of the management and organisation of their executives.".
That is a statement which I think was generally welcomed. Shortly afterwards the noble Lord, Lord Lucas, said that he reiterated the assurance given by the noble Lord, Lord Bellwin, in Committee that the Secretary of State would call for a review,
"only at the time of giving the guidance".
The noble Lord, Lord Lucas, added:
"It would be undesirable to modify the Bill to prevent the Secretary of State asking for more frequent reviews. However, I assure the House that it is not his intention to ask for such reviews more frequently than once every three years."—[Official Report, 21/3/83; cols. 956–957.]
Therefore, we have a situation where categorical assurances are given that it is not the intention to ask for reviews more frequently than once every three years but at the same time we are told that it is undesirable to modify the Bill to stop the Secretary of State from asking for more frequent reviews. One hand seems to disagree with the other hand, or the same voice disagrees with itself at different stages of the discussions.
It must be pointed out that these reviews under the Bill are for a particular purpose. They are not general
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organisation reviews. They are to determine whether any particular activities should be managed as separate units with separate accounts. If it is the intention of the Secretary of State to act as has been stated by the Minister—and I freely accept those assurances—then that should be in the Bill. But we cannot have legislation drawn up on the basis of assurances from the Secretary of State for the future. As we have said time and again, the Secretary of State may not be there. There may be a different Secretary of State and different circumstances. I think we are right in the point that we have put forward by moving this amendment but having noted what the Minister said, with which I totally disagree, I beg leave to withdraw the amendment.
The Deputy Speaker (The Earl of Listowel): The amendment is not moved.
Lord Underhill: My Lords, I should explain that I am withdrawing the amendment, having already moved it.
Lord Skelmersdale: My Lords, if the noble Lord, Lord Underhill, will give way for a moment, he has in fact neither moved the amendment nor withdrawn it in the current state of play because my noble friend has not answered. If the noble Lord wants an answer he will have to move the amendment.
Lord Howie of Troon: My Lords, the amendment should not be withdrawn just yet because the whole thing hinges on the Secretary of State. Whoever he may be in the future, and it may well be the distant future, he might or might not have opinions and those opinions might or might not be agreeable to the House. Certainly they might not be agreeable to this side of the House. As my noble friend on the Front Bench said, it is not sufficient for us that this part of the Bill should go through merely on the future say-so of the Secretary of State. We should have something from the Government Front Bench which reassures us on how the Secretary of State, whoever he might be, is likely to react in the future to the comments of my noble friend on the Front Bench, which were, I thought, very restrained.
Lord Underhill: My Lords, I apologise to the House. I seem to have spoken so much that I was forgetting. I was dealing with arguments put forward on Report and not with arguments put forward at this stage. May I formally move the amendment so that the Minister can get his reply on record. I beg to move.
Lord Lucas of Chilworth: My Lords, since the noble Lord, Lord Underhill, and the noble Lord, Lord Howie of Troon, are particularly anxious that I should respond I can do no worse. Neither can I do any better than say that I can and do repeat the assurances I previously gave on Report. First, the Secretary of State will not ask for a Clause 7 review any later in a year than the date on which he gives his guidance under Clause 4(5). Secondly, he will not require reviews under Clause 7 more frequently than once in three years. The Secretary of State is in fact likely to use his powers under Clause 7 very rarely because authorities are far more likely to carry out such reviews of their

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own accord under the existing powers in Section 15A(3) of the 1968 Act.
I will again remind your Lordships of the examination which London Transport have been making of their bus operations, for they are considering reducing the number of bus districts from eight to six, devolving a great deal of managerial responsibility away from the centre to the divisions. This is precisely the sort of review we have in mind. Most of the authorities, we believe, will undertake such a review of their own accord and the power of the Secretary of State to require a review is really provided to cope with an exceptional situation where an authority does not institute such a review. In view of that repeated assurance, I hope that the noble Lord, Lord Underhill, will do as he suggested when he spoke just a few moments ago, and withdraw his amendment.
Lord Underhill: My Lords, I am glad that I was able to adjust what I had said previously so as to get the Minister's reply on record. It was not exactly in the words which the noble Lord, Lord Lucas of Chilworth, has now put forward. Clause 7(1) is not a general review of the organisation and operation of the activities of an executive. It says it shall determine,
"whether, in the interests of managing the activities of the Executive in the most efficient manner, any particular activities of the Executive should be managed as separate units with separate accounts".
That is the purpose of the review.
I and other noble Lords pointed out way back in the distant Committee stage of this Bill that passenger transport executives do carry out their own reviews of their own organisation. In fact, we were able to instance examples of this, where they had done it themselves. The London Transport Executive has been mentioned by the Minister. That was not a review that they carried out to see whether or not they should run things as separate units. It is a regular review that any sensible executive will carry out from time to time. Having put that statement on the record, let me say that the authorities are not insensitive bodies and the executives are not incompetent bodies, despite the comments that we occasionally get from Ministers. They are bodies which want efficiency. What we were trying to do in this particular amendment was to ensure that we should not have these particular reviews, which are for a particular purpose only, more than once in three years.
The Minister has given assurances that that will not happen. I agree with my noble friend Lord Howie of Troon that that should be in the Bill and we should not just have assurances. But, having had those assurances once again, I beg leave to withdraw this amendment.
Amendment, by leave, withdrawn.
Clause 8 [Tenders for carrying on activities of Executives]:
5.22 p.m.
Lord Underhill Lord Underhill moved Amendment No. 8:
Page 7, line 3, after ("persons") insert ("selected from a list of tenderers approved by them").
The noble Lord said: This may seem an unnecessary amendment to some noble Lords—I hope not—but it has a very important purpose. Clause 8(1) provides that:
"An Executive shall … invite other persons to submit tenders to carry on".
such of their activities as the executive may determine, or, under subsection (2), as the authority may direct the executive so to do. The amendment is a commonsense, businesslike proposal that the persons to be appointed to tender shall be:
"from a list of tenderers approved by",
the executive. It may be asked: why do this? It is mainly because of the condition laid down in this clause that—I am just paraphrasing—an executive shall accept a tender which gives satisfactory service and at no greater cost.
In these days, many of us believe that we ought to purchase the maximum amount that we can from British sources. Buses, for instance, may be cheaper from overseas and may reasonably satisfy the operations, but we should not necessarily find the executive compelled to purchase from that source. That is only one example. That is why we want a list. There ought to be a list of tenderers approved by the executive and only persons from that list should be drawn to tender for these respective activities. I beg to move.
Lord Mottistone: My Lords, the noble Lord, Lord Underhill, opened by saying that some of us might not see the point of his amendment. I listened with as much care as I could, and I still do not see the point of his amendment. I do not quite understand why, if,
"An Executive shall … invite other persons to submit tenders",
they need to make a list of them. It seems a very nitpicking sort of thing, hardly relevant to an Act of Parliament, let alone this particular subsection and this sentence. I really think that the amendment does not have much point to it and is not perhaps wholly suitable for a Third Reading amendment.
Lord Lucas of Chilworth: My Lords, notwithstanding what my noble friend Lord Mottistone said, nevertheless we do have an amendment and I think that it would be right and proper to respond to it and your Lordships would expect me to do so.
In the Bill there is no restriction or control over the way that the executives seek tenders. Once executives have decided to invite tenders for an activity, it is up to them to decide how to go about it. They may indeed use a list of tenderers which perhaps the local authority have or they may go out to open tender. In our view it would be completely inappropriate to put in the Bill the requirement for an executive to have an approved list of tenderers. It would interfere, I suggest, with matters which are for the executive. It would certainly restrict their freedom of action and in all other regards be far too much of a constraint upon them. They may consider at some particular stage that they would like to go out to tender on an activity, a tenderer for which may not be on a tender list. It may be a totally new development or a new piece of expertise which has arrived for which they might like an outsider to tender. While on the one hand they can use selective tendering

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for certain areas of activities, we would not wish them to be restricted or constrained in any way. Because of that we could not agree to this amendment.
Lord Howie of Troon: My Lords, is it not common for public bodies to go out to tender on a list, whether they are a local authority or any other kind of public body, for any purpose? They know, as a rule, what they want when they go to tender and they also know the kind of people who are likely to be able to meet their requirements, so they go out on a list. That is by no means unusual, unique or new. I take the point of the noble Lord the Minister that from time to time occasions occur when the requirements are themselves new. For such occasions the list would include such others as were able to meet the requirements of the authority. Therefore there is no difficulty in my noble friend's amendment at all. I think that the Government should accept it. There is no difficulty of any kind whatsoever.
Lord Sefton of Garston: My Lords, there is a point. If we look at Clause 8, that deals with the executive alone. If it was left as it is, there is no provision whereby the authority could decide who the tenders should be accepted from. May I remind your Lordships that it is not the first time that committees with delegated authority have done things which the democratically elected body thought other than reasonable? I am not quite certain on a point of order whether I should refer to the other place, but it certainly happened in the other place, when somebody discovered that they were dining off crockery manufactured in West Germany. That was done because of the freedom of the Catering Committee—I suppose one could call the Catering Committee the executive in that regard—to pick where it wanted to pick in regard to a tender.
The point behind the present amendment is that the executive's power to choose a tenderer would be circumscribed by the list approved by the authority. So there would not be a gap. If the list were approved, it would be approved early enough. If it needed reviewing, it would be reviewed early enough. So at all times the authority would be aware of from where the tenders were coming.
I should not like to be in the position in which the present Government might find themselves if, by mischance or deliberate intent, an executive decided that, instead of obtaining buses in the normal way, it would import them from Japan, at a cost which was slightly lower, but which would not compensate for the number of people who would become unemployed because the buses were being manufactured in Japan rather than in this country. That is a real possibility, and all that is needed to avoid it is for the Government to accept the amendment. However, I am quite certain that they will not accept it, because they have resolutely set their face against any constructive amendment at all.
Lord Underhill: My Lords, the noble Lord, Lord Mottistone, said that there was no point in the amendment, and that it is not an amendment suitable for Third Reading. I should like to follow up what my noble friend Lord Sefton of Garston said and draw
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attention to the actual provisions of the clause. Subsection (3) states that:
"An Executive shall"—
I emphasise the word "shall"—
"accept a tender invited pursuant to this section if it appears to them that to do so would result in the relevant activities being carried on in a satisfactory manner and at less cost to them than if they were to continue to carry on those activities themselves".
The word "shall" is involved in that provision. Subsection (5) provides that in the report that it must submit the executive must give a statement showing the steps that it has taken during the last accounting period to comply with the requirements of subsections (1) and (2) of the clause.
So, in other words, the Government could say to an executive, "Well, you have had a tender at less cost to yourselves. You can't deny that it would give you satisfactory service. Why haven't you accepted it?" Admittedly, the Minister has said that the authority to accept a tender rests with the executive, but the word "shall" appears in subsection (3), and there is also the report that the executive has to make to the Secretary of State on what it has done to carry out the requirements of the clause.
Therefore there must be kept in mind the point that I made at the outset, and which has been referred to by my noble friends in support of the amendment. We should not wish there to arise a situation where an executive could have satisfactory service at a cost and from a source which would in turn result in unemployment in this country being increased. That would be absolutely undesirable. The purpose of the amendment is to avoid such a situation, as well as other circumstances that we might consider. However, the Minister has explained that, for reasons which, frankly, I could not properly understand, the Government will not accept the amendment, and so I beg leave to withdraw it.
Amendment, by leave, withdrawn.
5.34 p.m.
Lord Underhill Lord Underhill moved Amendment No. 9:
Page 7, line 12, after ("on") insert ("over whatever period they consider appropriate").
The noble Lord said: My Lords, this amendment, too, relates to Clause 8, which concerns tenders. As I have already pointed out, subsection (1) of the clause provides that tenders shall be invited to carry on the specified activities for such period as the executive may specify. However, subsection (3), to which I have already referred, contains a mandatory "shall". The amendment seeks to insert words so that, if the amendment were accepted, the relevant part of subsection (3) would state that the executive shall accept a tender if it appears to it that to do so
"would result in the relevant activities being carried on over whatever period they consider appropriate in a satisfactory manner and at less cost".
So that would remove any dubiety that the executive could not accept a tender for activities to be undertaken over a period which it considered appropriate and satisfactory. I beg to move.
Lord Lucas of Chilworth: My Lords, I am most grateful to the noble Lord, Lord Underhill, for explaining the purpose of the amendment. However, I

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think that the point is adequately covered by subsection (1) of the clause, since the subsection specifically states that the executive may invite tenders
"for such period"—
and so on—
"as the Executive may specify".
So if the executive thinks that the particular activity for which it is inviting tenders must be looked at over the long term, it is perfectly entitled to insert such a qualification in the tender invitation. If, likewise, the executive is convinced that a tenderer has looked at an issue and submitted a low tender solely on the basis of a short-term calculation, it is entitled to say that it is unacceptable because it is not convinced that the activity would be satisfactorily carried out; that is of course in relation to the details and the time period specified in the invitation to tender. I think that the Bill allows the executive full flexibility with regard to anything that it may wish to insert in an invitation to tender document, and I can see no point in this additional amendment to the Bill.
Lord Underhill: My Lords, the Minister has given the reasons why the amendment cannot be accepted. The reference in subsection (1) to "such period" refers to the invitation to tender. It may well be that when the tenders are received, although they may seem satisfactory and the cost would be economically advantageous, for some reason or other the executive may wish, by agreement with the tenderer, to extend the period, or it may wish to have a more limited period. The Minister said that that is what the provision really means. This is one of those cases where the addition of a few simple words might avoid a devil of a lot of correspondence, interviews and meetings in order to try to settle the issue, and at the end of the day might avoid even possible court arguments. Yet the Government are adamant that they will not accept this simple, commonsense proposal, which would provide a very valuable safeguard. The Government have resisted the amendment, and so I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Clause 10 [Commencement of Part 1 and transitional provisions]:
Lord Underhill Lord Underhill moved Amendment No. 10:
Page 8, line 33, after ("not") insert ("without the approval of the Secretary of State").
The noble Lord said: My Lords, perhaps it will be convenient for your Lordships to take, with this amendment, Amendment No. 11. We come to the final amendments at the last stage of the Bill at which it is possible to move amendments. We are placing a power completely in the lap of the Secretary of State, and we hope that at this last opportunity we might secure acceptance by the Government of an amendment.
At the Report stage in the other place Clause 10(2) was amended without any consultation, without any debate whatever, without even an explanation by the Minister who moved the amendment, because the guillotine was in operation. As amended, the
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subsection imposes a complete block on payments of revenue grants in 1983–84—which I would remind your Lordship commences on 1st April this year; only a few days ahead—until the Secretary of State has issued guidance and the authorities have made the determination of the amounts required under the subsection.
I am assured that passenger transport executives generally are paid the revenue grant on a monthly basis, and there is considerable concern about the hold-up which may occur with the April and May payments this year if the Bill as it now stands receives Royal Assent. Based on the provisional protected expenditure level figures set out in the White Paper, the amounts which could be held up for the two months could reach £70 million. If, to maintain cash flow, the public transport executives have to borrow, that will further increase their expenditure. That would be commercially undesirable, and should be avoided.
The insertion of the words set out in the two amendments would enable the Secretary of State to allow the normal monthly payments to be made where he thinks that is appropriate; in other words, where it has not been possible for him to go through the process that is set out in the Bill, but there is likely to be a hold-up in the payments for April and May of this year, which could reach £70 million. If one looks at the figures relating to the provisional guidance in the appendix to the White Paper, one sees a figure of £436 million for the year. Divided by six for two months, that gives a figure of £70 million. It is a big problem. I hope the Minister will not say that the executives can borrow the money. This is an important business proposal; there are no politics involved. At the end of the day, we are saying that we want the Secretary of State to give authority, if he considers this necessary, for the payments to be made without going through the process outlined in the Bill for any one of the earlier months of the first year. I beg to move.
Lord Pitt of Hampstead: My Lords, I hope the Government will accept this amendment. We are passing the Bill this week, probably today. Clause 10 will then come into effect. The Government and the authorities will not have gone through the planning process in time for a proper estimate to be made of the payments that will start on Friday. The amendment provides a safeguard that would be useful to the Government, to the authorities and to the executives. It allows for the Government to continue their planning process while allowing the executives in the meantime to receive payments from the authorities without the proper determination incumbent upon them under Clause 10. The amendment is merely a safeguard—in fact, a sort of long stop—which I consider (given the circumstances in which we are passing the Bill) should be acceptable to the Government. I hope they will accept the amendment.
Lord Teviot: My Lords, I hesitate to intervene. I have listened with interest to all the debates. I heard Lord Underhill move the amendment. I can follow his argument when he talks about the situation in regard to the next two months' payments. However, I cannot see what effect the wording of the two amendments will achieve. I am not sure of the purpose behind the

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words. I hope that my noble friend may know what is intended.
Lord Lucas of Chilworth: My Lords, I am grateful to the noble Lords, Lord Underhill and Lord Pitt, for raising this point. I can appreciate their worries about the likely consequences if there were to be a delay after Royal Assent in issuing guidance and the authorities making their determination. I do not, however, believe that the amendment is necessary. I hope that I can categorically set your Lordships' minds at rest.
The Secretary of State will issue guidance very quickly following Royal Assent—in fact, as soon as possible after he has considered any new information that the authorities and the executives wish to supply. This should take only a few days. There will therefore be no delay at the Government's end. It is, of course, for the authorities to decide how to make their determination. I know that the authorities have been closely following the progress of the Bill, and I am sure that, as responsible bodies, they have made adequate contingency plans to make a speedy determination.
Lord Underhill: My Lords, the Minister says that this may take only a few days after Royal Assent. For the benefit of the noble Lord, Lord Teviot, I should like to explain why we consider the amendments necessary. Under the Bill,
"An Authority shall not make any revenue grant in the year beginning on 1st April 1983".
We wish to amend the Bill to insert, after the word "not", the words,
"without the approval of the Secretary of State".
We also wish to amend the words,
"no such determination shall be made by an Authority unless they have been given guidance by the Secretary of State",
to read,
"except with the approval of the Secretary of State no such determination shall be made by an Authority unless they have been given guidance by the Secretary of State".
On what facts will the Secretary of State make a decision of this great importance within a few days of Royal Assent? What will be the basis? What will be the criteria? The Secretary of State has had no plan from the executive. After he has given his guidance figure, the authority has then to give its determination. There could be delay. Discussion, argument and controversy may occur. One is talking of the possibility of £35 million in April this year, not next year, and of £35 million in May this year. One would have thought that it was plain business common sense for the amendment to be inserted. It is not asking that any particular authority be given to the executives; it is not asking for any special authority to be given to the transport authority. It is giving the Secretary of State power to say that he will approve, if necessary.
One would have thought that the Government would jump at the opportunity to accept the amendments. We are placing something in the lap of the Secretary of State to enable him to avoid a complication. If a complication now occurs under Clause 10(2), it will be the Government's responsibility for putting the Bill forward in this manner. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 11 not moved.]
5.48 p.m.
Lord Lucas of Chilworth: My Lords, I beg to move that this Bill do now pass. I regret very much that my noble friend Lord Bellwin is unable to be present today. I wish to begin, if I may, by reminding your Lordships that at Second Reading he described the urgent need for greater certainty and stability for our public transport services both in the GLC and the metropolitan areas, and the need for improved efficiency and better value for money. Finally, he emphasised the need to achieve a proper balance between the interests of ratepayers and of transport users. That is what this important Bill seeks to do.
My Lords, the Government fully recognise that it is necessary to subsidise public transport in our major cities. Indeed, the Government accepted £283 million for revenue support through the transport supplementary grant for 1983–84. In setting the provisional PELs, we were prepared to protect no less than £436 million. Nor, my Lords, should we forget the substantial Government contribution to capital spending on public transport. The Government have, for example, contributed over two-thirds of the total estimated cost of £425 million, at December 1982 prices, of the Tyne and Wear Metro scheme. Although the Metro is not repaying its capital costs, there have been real benefits in that it has encouraged forward-looking Management and manning policies and practices.
These huge sums reflect significant Government commitment to public transport in our cities, but the Government, it must be firmly stated, have viewed with alarm growing and accelerating demands for subsidy for local transport. In 1979–80 the sum was £139 million; in 1982–83 it was nearly £400 million; and the level predicted last summer for 1983–84 was no less than £700 million. Since last summer there has been time for reflection—a process encouraged by the publication of this Bill and the White Paper. And on reflection it is significant that many authorities have been able to curb their appetite for revenue support. It now looks as though about £500 million will be spent on subsidy next year, but authorities have not yet determined their grant under the Bill.
To judge from their rate precepts, some authorities do not propose to alter course, so that if the final PELs are similar to the provisional ones, they could not therefore have the whole of their subsidy protected from legal challenge. But others appear to be making quite significant downward adjustments. This must be due, at least in part, to this Bill, which in my view very clearly offers protection to reasonable levels of subsidy while not preventing authorities from deciding for higher levels of subsidy should they so wish. But unless the higher level is clearly justifiable, there will then be a real risk of challenge. In this way the Bill certainly improves the clarity of the legal basis for subsidy but without, admittedly, providing protection for excessive levels.
One result of the reassessments by authorities will be the more selective use of subsidy. In the Government's view there is all the difference in the world between holding fares down to 1976 levels using massive tranches of ratepayers' money, as South Yorkshire have been doing, and the judicious use of subsidy to maintain a reasonable network. The bill for cheap

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fares in South Yorkshire in 1982–83 is estimated at £53 million. However, whatever South Yorkshire decide to do, a number of the other authorities appear likely to adopt a more reasonable and protected level of subsidy, and to try to provide—and no doubt they will—the best services they can within that level.
I am of course aware that individual authorities, and the Association of Metropolitan Authorities on their behalf, are opposed to the Bill and were initially unwilling to discuss it. I believe that we have dispelled some of their genuine fears—for example, by showing that the Bill really does leave almost untouched the existing powers of the authorities and the executives. Most of the authorities have now discussed the Bill and the provisional PELs with the department. The department regrets that discussion between the department and the authorities, executives and the association was restricted during the early period, but now that the Bill has reached its final stages we very much hope that all concerned will get gack to the more usual and proper discussions. Indeed, I was very glad to hear that the AMA are now providing comments on the most recent of the department's consultation documents. Although these comments are a mixture of support and criticism—I do not suppose that we would have expected otherwise—they do form a basis for discussion and improvement. I very much hope that this is a sign of a return to improved relationships between the department and the association and, of course, the individual authorities and executives.
The noble Lord, Lord Underhill, has worked strenuously indeed, I think I might describe it as indefatigably, in persuading us all to look most carefully at this Bill. That is quite proper. I can readily understand his disappointment that the Government have not accepted any amendments and we shall no doubt discuss that in relation to the Motion which we shall come to shortly. With the leave of your Lordships' House I would wish to say a few further words at the end of that debate. But at this time I think that your Lordships would like me to place on record our thanks to the noble Lord, Lord Underhill, for the work which he has done on the Bill. He has, of course, been ably supported by the noble Lord, Lord Mishcon, who as always managed to develop complex and very devastating arguments from a few well chosen words. His ability is to make those words into something of a heavy artillery barrage. Nevertheless, I am very glad to place on record that answering fire came from this side of the House and I should particularly like to mention my noble friends Lord Boyd-Carpenter and Lord Campbell of Alloway.
I was particularly impressed with the contribution made by the noble Lord, Lord McIntosh. I am sorry that he is not in his seat because I would have liked to say to him that he and I perhaps had something in common in that this was his first major Bill speaking from that side of the House, as indeed your Lordships will recall this is my first major Bill speaking from this side of the House. There were of course other noble Lords who contributed—the noble Lord, Lord Sefton, the noble Lord, Lord Pitt, the noble Lord, Lord Tordoff, my noble friend Lord Teviot, my noble friend Lady Gardner of Parkes and, indeed, the noble Baroness, Lady Bacon, and the noble Baroness, Lady
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Nicol. If I have left anyone out, it is not to suggest that the contributions they made were any more or any less significant than any other.
I thank all of your Lordships who have contributed or listened to our debates. There has been great value in those debates because we have examined the way in which the Bill is to work to see whether there are faults or room for improvement. I believe that our discussions have cleared away many misconceptions and demonstrated how the Bill is to work. Those of us who were present will recall my noble friend Lord Bellwin giving very forceful assurances at Second Reading that, despite allegations to the contrary in the campaign against the Bill, the powers to pay concessionary fares to the elderly, the blind and the disabled were in no way affected by this Bill.
We have also shown that the Bill provides adequately for consultation; it allows any benefits to be taken into account; it provides a taut financial duty which is nevertheless not a straitjacket; and it provides for other measures. We have also given assurances with regard to the organisational reviews under Clause 7. Only a few minutes ago I repeated the assurance that organisational reviews will be requested no later in the year than when the Secretary of State gives his guidance. I repeat that the reviews will not be asked for more frequently than once in three years. We have shown that it is the intention of the Secretary of State to meet the targets requested by the noble Lord, Lord McIntosh, in relation to the timing of the Secretary of State's initial advice and the question of later guidance.
I believe that this Bill should lead to substantial improvements in the areas of the GLC and the metropolitan authorities, in the efficiency and value for money being provided by their massive transport executives, and also in the benefits which they provide from the subsidies. The Bill will also provide protection from legal challenge for reasonable levels of subsidy. And the authorities and the executives, and the taxpayers and the ratepayers, will, in the end, have cause to be grateful for this Bill.
Although the Bill deals principally with public transport I must not overlook the other provision in Clause 11, which provides for the reduction in the National Dock Labour Board's debt to the Government of £23.8 million. This follows an undertaking given by the Government last April to write off the debt arising from the severances in London and Liverpool in 1981 as part of a wider package to help ease the financial problems associated with the continuing reduction in registered dock workers. This measure will benefit all ports involved with the National Voluntary Severance Scheme.
I should like to conclude by using words which come more familiarly to me. The Bill represents a correction in the alignment of the steering gear and an overhaul of the direction indicators as regards public transport within the metropolitan areas.
Finally, may I take this opportunity to thank officials who have helped on the Bill, particularly officials who have had to deal with me personally and who helped me in an area which at one time was extremely unfamiliar to me. Again, I should like to

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reiterate my thanks to those of your Lordships who have participated in the discussions on this Bill. My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Lucas of Chilworth.)
Lord Underhill Lord Underhill rose to move, as an amendment to the Motion that the Bill do now pass, at end to insert ("but this House deplores the insistence of Her Majesty's Government that this Bill should pass unamended through all stages irrespective of the merits of amendments proposed.").
The noble Lord said: My Lords, at this stage I should like to move the amendment which stands in my name. Having formally moved the amendment, I should like to thank the noble Lord, Lord Lucas, for his kindly references to me, and to say how much we on this side of the House always appreciate the way in which his noble friend Lord Bellwin introduces Bills. We congratulate the noble Lord, Lord Lucas, on the way in which he has handled his first Bill in his new position. Having had that experience four years ago—this is now the fourth Transport Bill for which I have had responsibility—I can appreciate how he feels. But having said that, I am sorry that he is in the position of having to defend this particular Bill.
I should also like to thank my noble friends. At the Committee stage of this Bill there were more speakers from this side of the House than there have been on any Transport Bill with which I have been concerned—there was so much feeling about the issue. It is always invidious to mention names, but in particular I should like to express my thanks to my noble friends Lord Mishcon, Lord McIntosh and Lord Sefton. In addition, I have seven or eight names in front of me of noble friends who assisted. Little support came from the Government side. There were notable exceptions but, generally speaking, either Members were satisfied with the answers or, for some reason, preferred not to defend the Government in any of the criticisms being made against them.
As this amendment says, no amendment has been accepted. Seventy were brought forward at the Committee stage, 36 at the Report stage and 11 at the Third Reading this afternoon. A considerable number of these amendments had cross-party support from the Liberal Benches and from the SDP Benches; therefore, they were not just Labour amendments. I am not being presumptuous in saying that our amendments should have been accepted, but not a single Government amendment was based on any arguments that were brought forward whereby the Government thought it was worthwhile trying to introduce an amendment to clarify points. I contrast that with previous Transport Bills. In one Transport Bill there must have been 60 or 70 Government amendments brought forward at subsequent stages because of points which needed clarification. Even in the noble Lord's speech on the Bill do now pass, he referred to assurances. Assurances are not legislation, and those assurances should have been written into the Bill. So even those simple amendments could have been accepted by the Government. But for some reason best known to themselves they preferred not to do so.
A great number of the amendments proposed no interference whatever with the basic intention behind the Bill. I would remind noble Lords that beyond Clause 2 no clause of this Bill was properly debated in the other place. It rested with this House to try to deal with it, and that is what we attempted to do.
I want to raise one other important point. We have heard a great deal about the failure to consult. The White Paper proposing the legislation and the actual Bill were both published on the same day—5th November last. So the only consultation there could have been after that was on how to implement the Bill and not about the principles in the White Paper. That is another reason why we regret that the Government have not seen fit to bring forward amendments to clarify some of the important points, for there are many points in this Bill which needed clarification, and there are still many points in the Bill which could be the basis for legal arguments.
It is not my intention to go through the Bill and give, in effect, what would be another Second Reading speech. The Bill deals with the public transport arrangements for more than a third of the population of England. All the PTAs concerned oppose the Bill, and the executives are concerned about the provisions in the Bill. It is not without some significance that the areas concerned—the GLC and the six metropolitan authorities—have the highest proportion of households without cars, and those figures can be checked from the 1981 Census returns. Except for mid-Glamorgan, the areas covered by this Bill have the largest proportion of households without cars. That is why public transport is so important to these particular authorities and to their executives.
This is a further example of interference with local government. We have been told time and time again by Ministers that there is flexibility and that the authority will have the final decision. The final decision?—yes, so long as you do what the Secretary of State says and accept his guidance figure. It is wrapped in advice and guidance but always from behind, and that is an encouragement which was given without any doubt at all in the White Paper—that if you want to deviate from his advice and guidance, then the courts will determine, and any body of ratepayers or a local authority concerned can take the matter to court.
That is not my idea of flexibility; that is not my idea of a decision which rests with the local authority concerned. Every effort to amend the Bill, so that the plan covering three years must have regard to such important matters as planning and social benefits, has been rejected on the basis that the word "benefits" in the Bill covers everything, despite the fact that we were able to quote from departmental statements issued with the authority of the Government that benefits of a certain kind shall not be taken into consideration in the preparation of the plan.
The Bill is an attack on local democracy. It ignores issues which have been made focal points at local elections. We even had a statement at an earlier stage of the Bill which suggested that manifestos at local elections should not be taken into account—and I am paraphrasing. Local people know what their transport needs are; they should determine the basis for meeting those transport needs. We cannot have a situation,

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which is so prevalent in this Bill, that the Secretary of State knows best and can ignore local mandates.
In moving that the Bill do now pass this afternoon, the noble Lord, Lord Lucas, said that he believes that many fears have been disposed of. I can assure the noble Lord that many fears still exist, and some of the comments which have been made by Ministers have shown no confidence in the local authorities concerned. Those fears must be dispelled if this Bill is not to upset good relations between local and central Government. The department and the Secretary of State will be involved in considerable detail of local transport planning and operation—again, we have quoted from departmental documents. I have referred to letters which I have seen—detailed information about the operation of local services. The planning process, which is to extend over a period of 12 months, is, with all respect to the department, a piece of real Whitehall bureaucracy.
Even parts of the chronological table will be impossible. The Secretary of State will have to give his guidance on the revenue grants before any decisions are made on rate support grant and transport supplementary grant. How that is to be done is not established in the Bill. The Bill establishes a wrong relationship with the transport executives, and they are the unelected operators of the local public transport. They are responsible to the elected public transport authorities, which are the county councils concerned.
We are also told that the Bill will clarify the law. Noble Lords will recall that little that they have heard in our various debates has clarified the law. There is the invitation to hostile individuals and reactionary councils to go to law. The basic criticism of the Bill is that it shows a lack of understanding, or readiness to accept, that public transport is a service which must be based on local needs, local desires and local wishes. Without effective public transport large numbers of people—and I have already referred to the fact that these are the areas with the largest numbers of households without cars—will be unable to move about, and without it, too, our roads in these conurbations will become even more congested. After the Secretary of State has decided the protected expenditure level it will then be left to the local authorities—in some cases an almost impossible task—to meet local needs and what the local people really want.
In the event, this is not really a Transport Bill; it is another local government Bill. It is not designed to improve public transport; it is designed to allocate a predetermined sum of money between the public transport executives. And it is not to decide the best level of public transport provision to meet local needs. There was opportunity to amend the Bill, there was opportunity to clarify some of these points and not to interfere with the basic desire of the Bill, but that opportunity has not been taken. I therefore move my amendment.
Moved, as an amendment to the Motion that the Bill do now pass, at end to insert ("but this House deplores the insistence of Her Majesty's Government that this Bill should pass unamended through all stages irrespective of the merits of amendments proposed.")—(Lord Underhill.)
6.12 p.m.
Lord Boyd-Carpenter: My Lords, I am sure that the whole House appreciated the generous and proper tribute that the noble Lord, Lord Underhill, paid to my noble friend Lord Lucas on his maiden trip in charge of a substantial Bill. I am sure from this side of the House that we should like to join in that tribute, and at the same time express the admiration which I certainly feel for the untiring energy, resourcefulness, and good temper which the noble Lord, Lord Underhill, himself has shown. Those of us who have been on Front Benches both in Government and Opposition know the handicap that the noble Lord, Lord Underhill, is under in not having those wise counsellors who send in little bits of paper when the position might otherwise become a little difficult.
One noted a curious thing about the speech to which we have just listened. The noble Lord, Lord Underhill, repeated with great force his criticisms of the Bill but said very little about the quite remarkable Motion which he has put on the Order Paper and which he has indeed just moved. I shall, with your Lordships' permission, reverse that procedure and say only a word about the Bill, for which my noble friend is responsible and for which he can and, I am sure, will say all that needs to be said, and say a certain amount about the quite serious Motion—for it is a kind of vote of censure—which the noble Lord, Lord Underhill, and his noble friends have placed on the Order Paper.
On the Bill, I want to say that I share the regrets which have been expressed that it has been necessary to introduce a Bill which in fact reduces the independence of local authorities. But what I regret particularly is the necessity for so doing. It is the sad experience of all of us who have seen something of public life that when power is abused then that power, sooner or later, will be restricted. There is really no doubt at all that certain local authorities in this country, and in particular the Greater London Council, have abused their power in respect of subsidisation of transport, and have placed—and are still threatening to place—quite intolerable burdens on their ratepayers in pursuit of their policy.
I only need remind your Lordships that the Greater London Council carried this policy to a point at which they were found to have transgressed the law. They spent a great deal of money—ratepayers' money—both in the subsidisation and indeed in the legal proceedings which they had brought upon them. When local authorities, or anybody else in this country, conduct themselves in that irresponsible way, and indeed in that oppressive way, no Government of any spirit, no Government with any sense of responsibility, can do other than introduce remedial legislation.
The Motion on the Order Paper is a curious one. As I have ventured to suggest to your Lordships, it is in the form of something of a vote of censure. The word "deplores" is there. It is not only a vote of censure on the Government; it is a vote of censure also on your Lordships' House for not having accepted any of the amendments which the noble Lord, Lord Underhill, and his noble friends put down and argued.
I do not suppose for one moment that the noble Lord, Lord Underhill, would claim that anyone

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proposing an amendment is wholly impartial in his assessment of it. Indeed, if he were, he would do it infinitely less well than the noble Lord, Lord Underhill, did. But the fact remains that though the Government advised your Lordships' House to reject the amendments which were taken to a Division, it is a fact that your Lordships' House on every such case, normally by substantial majorities, rejected those amendments. Therefore, I say to your Lordships that this is also to some extent a vote of censure on your Lordships.
It is quite wrong to put the sole responsibility on the Government. The Government, as my noble friend knows very well, cannot always rely on the support of your Lordships' House. In the present Parliament the Government have been defeated on, I understand, some 40 occasions, and some of them matters of great importance. In all those cases the Minister concerned had asked your Lordships, as my noble friend did in this Bill, to reject amendments, or other propositions, and your Lordships declined by a majority to accept that advice.
I need hardly remind your Lordships of the school transport matter on which the noble Duke, the Duke of Norfolk, and the late Lord Butler of Saffron Walden, inflicted a heavy defeat on the Government. I would hesitate also to remind your Lordships of the amendment to give the citizens of Gibraltar, under the nationality Bill, the full British citizenship which they sought, in which I was myself a little involved, and in which I certainly voted against my noble friends. Therefore, it is an assessment which this amendment seeks to raise of the conduct of your Lordships' House.
In one way I was deeply impressed by the anxiety which the noble Lord, Lord Underhill, showed that your Lordships should fully carry out your revising function. I wonder whether in that way he speaks for his right honourable friends in another place? In particular, whether he speaks for Mr. Foot, who has only recently reiterated the doctrine that your Lordships' House should be abolished. The noble Lord, Lord Underhill, cannot ride both horses. He cannot say that your Lordships should, when he wants to do so, amend the Bill radically because your revising function is so important, and at the same time say that your Lordships' House should be abolished. Therefore, I shall be interested to hear whether the views of Mr. Foot, or whoever it may be who will, presumably, sooner or later, succeed him—sooner, I understand, rather than later—will prevail, or the view that this House should discharge a revising function. I—I make no concealment of it—am one whose whole bias is in favour of your Lordships' House exercising its revising function particularly when, as the noble Lord, Lord Underhill, was perfectly justified in pointing out, the Bill in question has been subject to the guillotine procedure in another place and part of it came here undiscussed. Therefore, if one is to deal with this amendment fairly your Lordships must look at what actually happened.
I do not claim to have the 100 per cent. attendance record during our debates—it must almost feel like 105 per cent.—that the noble Lord, Lord Underhill, has had, but I can claim to have heard most of the debates and I think that I have been involved in all but one of the Divisions. I have a very clear recollection
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that the amendments fell into two broad categories. The first category was amendments which, in greater or lesser degree, would frustrate the purpose of the Bill and make it less effective for the perfectly clear purpose for which it has been produced, which I shall not repeat because my noble friend Lord Lucas has set it out so clearly. The other category was small amendments to the phraseology—the addition of adverbs, slight adjustments to the terms—for which there was of course some argument. But in every case there was also a considerable counter-argument which your Lordships were fully given, and—if I may be allowed to repeat this—when the noble Lord, Lord Underhill, called a vote, resulted in the amendments being rejected.
Nor, my Lords, when one is considering, a Bill of this sort, is it sensible to ignore the fact that this is a Bill which basically embodies a conflict between the Conservative and Labour Parties. It is a measure on which there is a genuine difference of party philosophy and party doctrine. It is significant, but understandable in that context, that the speeches against it were made almost exclusively—I, of course, except the noble Lord, Lord Tordoff—from the Labour Benches. We had the indefatigable Lord Underhill, the equally indefatigable Lord Mishcon and, occasionally, the sound of Thames water from the noble Lord, Lord McIntosh of Haringey, and what I might call a Mersey sound from the noble Lord, Lord Sefton of Garston. But it was a straight party issue. I think I am right in saying that there was not a single speech from the Cross-Benches; and, in view of the immensely important part in most of our legislative process which the Cross-Benches fulfil, that was, perhaps, some confirmation of the proposition which I am venturing to put to your Lordships.
Therefore, I come back to the point that is posed by this amendment. Given that this is a Bill on a narrow but important issue which in the view of my noble friends is urgently needed to protect ratepayers from very serious further burdens being imposed upon them by improvident or, indeed, extravagant local authorities acting in support of their own party docrine, is it the kind of Bill, contested almost exclusively by the official Opposition, on which it is to be expected that amendments are likely to be accepted?
It would be a little naive for this purpose to put this Bill in the category of the great major measures, raising great constitutional and philosophical issues, on which your Lordships have so frequently divided in recent years—for example, measures such as the British Nationality Act—on which opinions of all sorts were expressed from all sides of the House and on which amendments were put forward, some of which were carried against the wishes of the Government, while on others the Government themselves succeeded in meeting the objections raised. This Bill is not in that category. Noble Lords opposite know that as well as I do.
Therefore, I hope that now that we have had this Motion, and when such of your Lordships as so wish have eased your feelings by indicating support for it, we shall be able to get back to the normal position in this House, in which every issue that is raised and debated is debated in a friendly and understanding—even if, sometimes, contesting—

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manner; and that your Lordships, after due debate, will deal with the Motion of the noble Lord, Lord Underhill. I express the profound hope, which I have no doubt is shared by my noble friend the Chief Whip, that in due course it will be resoundingly defeated.
6.26 p.m.
Lord Mishcon: My Lords, the House has been privileged to hear a weighty speech from a weighty speaker, in the form of the noble Lord, Lord Boyd-Carpenter. Let me at once emphasise, in view of the joviality of the noble Lord, that I was referring to his mental capacity and not to his physical capacity. He took the trouble to deliver such a weighty speech upon a Bill which he thought was not weighty in content, and I have the idea that he thought that some of the things that he had to say to the House—always matters which are worthy of consideration—were of weighty importance. Indeed, they were.
One of the things one has noticed about the debates which have taken place on this Bill, especially when those on the Front Bench have spoken, and those who carry all the authority that the noble Lord, Lord Boyd-Carpenter, carries, is that the reason for this Bill has been clearly stated. It is the behaviour of profligate, irresponsible local authorities. I am not going to argue from this Dispatch Box whether some authorities deserve those terms. I am going to take it for granted for one moment, in order to shorten my speech and to make the point I want to make, that what they say is true. What I am going to say is that you are bad legislators if what you do is to make national legislation which is supposed to last, and you do it because you regard a few in number, a minority in the whole conglomeration of local authorities, as irresponsible and profligate.
The noble Lord, Lord Boyd-Carpenter, knows a phrase very well from his own legal training and from the profession which is glad to have him as an adornment, and it is "Hard cases make bad law". The legislator and the lawyer use that phrase only to show that you cannot legislate for hard cases. Hard cases are bound to occur. What you must do is to look at the general and see the benefits that you manage to achieve, or possibly the harm, before you legislate. This is mistaken legislation, for the very reason that those who have spoken from the Front Bench, and the noble Lord, Lord Boyd-Carpenter, have advanced today. It is legislation for hard or bad cases, and the good have been caught with the bad.
Why do I say that? Tributes have deservedly been paid to my noble friend Lord Underhill, as indeed they were deservedly paid to the noble Lord, Lord Lucas. I thought that if only our batsmen who played for the first time in a test had scored as many runs as did the noble Lord, Lord Lucas, we should have had a better record in Australia. It was made abundantly clear that this legislation was a local government Bill, said the noble Lord, Lord Underhill, and not a transport Bill. I differ from him, if I may, in only one respect. I literally call it the "Local Government Democracy Burial Bill, No. 2". We have had a No. 1 Bill. We had it before. Now we have a No. 2 Bill. The No. 2 Bill lays down without any doubt at all that the master is the Secretary of State and the office boy is the authority.
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Why that is bad law is very simple indeed to somebody who has tried to serve in a humble capacity in local government for a very considerable fraction of his life. The question is—and I have asked it before: What sort of people are you going to get in the future in local government? Are you going to get people experienced in transport (where transport experience is so necessary in local authorities) to act as office boys under a Bill of this kind? You are not.
I shall turn very briefly to deal with the actual Motion moved by my noble friend by way of an amendment. It is all very well for the noble Lord, Lord Boyd-Carpenter, to make a few quips. They are received, I assure him, with great goodwill and with great good humour. He knows, as well as I do, that there are many people of no party and many people of my party, who are fighting for the continuance of this House, continuance, possibly, in a very much reformed way. The noble Lord, Lord Boyd-Carpenter, has also fought for some reforms to this House in order that its life may be secured.
I have to answer the noble Lord by saying that this Bill, and the way in which it has been treated in this House, has not helped one bit those who are trying to fight that battle; because one of the main arguments that is advanced—and speaking here for myself alone as a relative newcomer to your Lordships' House, I have so much admired it—is the way in which we fill the gaps that are left by another place through the use there of the guillotine or whatever it may be.
Where have we filled the gaps here? Somebody issued an edict, and let us not pretend that it did not happen. "For Heaven's sake," was the edict, "not one amendment to go into this Bill. It must not go back to the Commons. It will spoil the whole of the timetable and all this has to be got in. April 1st is a sacred day. We have got to rush the whole thing—White Paper same day as Bill, Bill same day as White Paper; and when it comes to the Lords it does not matter how many amendments are put down, even an amendment saying that you cannot accept the lowest tender". I think it was the noble Lord, Lord Campbell of Alloway—and I hope I am not taking his name in vain—who thought that that was a perfectly sensible amendment. The answer from the Minister at the Report stage (and I pay him every respect; I have just done so and I meant it sincerely, and now I am trying to use fairly neutral terms) was unsatisfactory. It did not even catch the purpose of the amendment. Although I am used to making speeches which are not well received, at least, I hope that the arguments that I advance are going to be answered; but they were not. That applied to many amendments. The whip, in more senses than one, has been inflicted upon the Front Bench. And I am sorry to say that they have cowered under it.
I am sorry, too, to say—and it is all very well to talk in the terms used by the noble Lord—that people wandered in, strange people from strange places in your Lordships' House, who had not heard a word of the arguments. And then the noble Lord, Lord Boyd-Carpenter, says, when the Division results come out, "Good gracious me! It must be that the amendments were not worthwhile because they were not passed by your Lordships' House."

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I am sorry, my Lords, but this amendment on this occasion is correctly moved. It is correctly moved, with those behind it who have a loyalty to this House. Those who say they are loyal to this House and who vote against the amendment ought to think again.
6.35 p.m.
Lord Tordoff: My Lords, I expressed my views on this Bill at Second Reading and I think that I was one of the first to say that this was not a transport Bill at all, but it was in fact a local government finance Bill. That has been echoed several times since. How often at this stage of the Bill one hears Members on both sides of the House saying that we send it away a better Bill than it reached us. In this case, we send it on its way in exactly the same form in which it arrived at Second Reading. I will come back to that later.
Like the noble Lord, Lord McIntosh, and the noble Lord the Minister, this is the first time that I have been involved from the Liberal Benches in all the stages of a Bill. It has been at times a frustrating and somewhat wearing experience. Nevertheless, it has been interesting and I am grateful to have been able to sit and listen to noble Lords much more experienced than I am, through all the stages of the Bill. I think, in particular, that one has had the usual respect that one has for the noble Lord, Lord Bellwin, who indeed has a great feeling for local government. In a sense one feels a degree of sadness that he has had to be part of the pilotage of this Bill—because I am sure that he has had difficulty with some parts of it—although one understands that he feels very strongly some of the views that were expressed by the noble Lord, Lord Boyd-Carpenter, a few minutes ago.
To the noble Lord, Lord Lucas, one expresses admiration for speaking from the Back Bench. One would hesitate to say that he is poacher turned gamekeeper; nevertheless I think that he has had to suppress his exuberance from time time on matters such as this. I think that, as has already been said, your Lordships would wish to congratulate him on the way in which he has conducted himself in steering the Bill through this House.
It is a bad Bill. One accepts the point that Lord Boyd-Carpenter made in saying that there were perhaps two sorts of amendments to this Bill which were brought before the House. One did not expect that those amendments which directly attacked the strategy of the Bill would receive acceptance. They were not matters of principle and I will not go into the Second Reading arguments about them again. But they were there, they were confronted, and one did not expect that the Government would give way on those or that, with whatever support there was on this side of the House, the Government would be defeated on those. But there were the other sort of amendments which I think the noble Lord, Lord Boyd-Carpenter, tended to trivialise in what he said.
They were the sort of amendments which, in the case of many other Bills, the Government would say, "Yes, we understand the reasoning behind this". Indeed, they said that. And then they would say, "We will take it away" or, "There are certain deficiencies in this amendment but if it were brought back at Report stage and somewhat amended we would be prepared
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to accept it". It did not happen on this occasion. The Government agreed on a number of occasions to have second thoughts on one or two matters, but, unfortunately, when they came back the second thoughts had turned sour.
One is driven to the conclusion, inexorably through every stage of this Bill, that the Government had not the slightest intention of accepting any amendments to this Bill. It is for that reason that my colleagues and I will be supporting the amendment in the name of the noble Lord, Lord Underhill. In passing, may I also offer our congratulations on the way in which on many occasions he so devotedly has put forward amendments against which our names have appeared; he has leapt into the fray with his knowledge and expertise and support from his colleagues.
But I believe that if this procedure were to happen too frequently in this House your Lordships' House would be gravely damaged, for the very reasons that have been expressed by the noble Lord, Lord Mishcon. I did not come here just to be part of another rubber-stamping process and I am sure that goes for many of those Peers who are known these days—dare I say it?—as working Peers. We are here to try to play our part in a rational way and a way which I believe has got through to the British public, who believe that somehow in this Chamber rational argument does on the whole prevail.
The problem has been that we have had to divide too often because the Government have not been prepared to bend, to understand and to accept some of the arguments and to come back at later stages with their own amendments. There has been a confrontation throughout this Bill on both major and minor matters. I believe it is a great sadness and I would counsel my noble colleagues to support the amendment in the name of the noble Lord, Lord Underhill, in the interests of your Lordships' House.
6.42 p.m.
Lord Mottistone: My Lords, I should like to make two quick points to underline what my noble friend Lord Boyd-Carpenter has said and, in a sense, to answer the noble Lord, Lord Mishcon. I do not think that noble Lords, and certainly the noble Lord, Lord Tordoff, have paid sufficient attention to the many occasions when this House has believed that the Government were wrong and have defeated the Government. This is not entirely due to the number of noble Lords sitting on these Benches. In fact, we know very well that if all noble Lords on these Benches were to vote one way and everybody else votes against them, we would be outvoted. There are many examples of that; and I think that perhaps a significant vote, which is very relevant to this particular aspect, was on the very last Division which we had on Third Reading, when the figures were, I believe, 106 to 58. That, I would suggest to noble Lords opposite, was not so much because there was strength on this side but because there was an absence on their side—and that absence could be Cross-Benchers, Liberals, Social Democrats or Labour supporters.
The example of this particular Bill is not as catastrophic to our standing, our good name and all that as noble Lords opposite are attempting to say. The example of this Bill is that it was a straightforward,

1399
quite simple and very political Bill which really did not require anything in the way of amendment. That is what, collectively, your Lordships have said about it, and have said about it pretty firmly. That is the balance of the position, and I hope that the amendment will be defeated as resoundingly as the last amendment was.
Lord Mishcon: My Lords, before the noble Lord sits down, I wonder whether he would agree with me that, of the 106 votes cast, which he sought to give as an example, less than 25 per cent. were present in the Chamber to hear the argument. Therefore, what can he possibly deduce from that, except that somebody has "whipped" the Government supporters to vote in favour of the amendment?
Lord Mottistone: My Lords, if I may answer that question before I sit down, I would say: how about looking at the 53? There were not all that number on the Benches opposite. Furthermore, noble Lords on the Benches opposite normally produce on these occasions, if they are important—for themselves alone, let alone the other, minor parties and the Cross-Benchers—votes of 70 and 80. That is what is significant, my Lords.
Baroness Bacon: My Lords, I will not detain your Lordships' House for more than two minutes to make just one short but, I believe, very important point, It is one which has already been touched on in general terms by my noble friend Lord Mishcon. During the Second Reading debate I said tht people south of Watford, those who live in the Greater London area, neither knew nor understood the problems and difficulties of the metropolitan counties in the north of England. I come from West Yorkshire, which is a totally different area from the Greater London area, and there we have problems of great rural areas which they do not have here in London. Yet during the Second Reading and the Committee and Report stages we heard speech after speech from the opposite side of the Chamber about how spendthrift are the Greater London Council.
To me, this is beside the point. I do not even care whether they are or are not; but what I do care about is that the people in my county, in West Yorkshire, should be penalised by this Bill because of that. I think it would have been much more honest if the Government, instead of calling this the Transport Bill, had produced a Bill called "The Greater London Transport Bill", and had discussed it in that context. My people in West Yorkshire, the West Yorkshire County Council, and all the local authorities in Yorkshire, are sickened by the idea that they are to be penalised because of this Bill, though they are in a totally different area from the area of the Greater London Council.
Lord McIntosh of Haringey: My Lords, I would follow the noble Lord, Lord Boyd-Carpenter, in one respect, in that I want to speak mainly about the amendment rather than about the Bill. All I will say about the Bill can, I think, come from the White Paper, Public Transport Subsidy in Cities. A study of that White Paper makes it quite clear that, as has been
1400
said, this is not a Transport Bill. This is a Bill the real objectives of which are not shown in the White Paper and are not made clear in the Bill itself. Indeed, the noble Lord, Lord Boyd-Carpenter, has made it clear why the Bill has been put forward: it is to spite those local authorities who have been behaving in a way which the Government do not approve.
The White Paper said the object of the exercise was to provide a clear and consistent legal framework. I think that anybody who sat through the debates in your Lordships' House will have to recognise that there is at least a case for saying that we will have a less clear and consistent legal framework at the end of the exercise than we had at the beginning, and that what has been resolved by the courts in recent months now becomes a matter for virtually indiscriminate challenge by ratepayers against the elected authorities in their area.
The White Paper says that the object is to have a reasonable, stable and lawful subsidy régime. The Bill provides nothing of the sort. It produces a subsidy régime which is entirely at the whim of the Secretary of State. In the case of the present Secretary of State, of course, the intention is really to reduce public subsidies to public transport. It might be different in the hands of another Secretary of State, and the Bill would then have a totally different effect from that which is intended by the present Government. Without any changes in the wording of the Bill there is no stable régime but simply central Government political control.
The White Paper says it is the intention to build three-year planning into the legislation. We have moved innumerable amendments to try to get that written into the Bill so that there could be three-year planning. All those amendments have been summarily rejected. The financial horizon for public transport is now to be for a single year only, with only indicative plans for future years, and nothing like even the provision for longer-term plannning that there is in the transport policies and programmes procedure.
Finally, the Bill is described in the White Paper as a framework for the future. I venture to suggest to your Lordships that this Bill will not be in its present form on the statute book in five years' time, or possibly not even in three years' time. It is a panic measure, intended to be against some particular actions of local government rather than a serious attempt at planning public transport expenditure for the future.
As to the amendment, I should like to take as my text a quotation from The Times before the Bill came to this House:
"Seldom, if ever, have the surviving functions of the Upper House been more important. A casual glance at the Transport Bill as it leaves the Commons suggests that if a revising Chamber did not exist it would have been necessary to invent it. The Bill will no doubt pass into law. There is no question of the Lords frustrating the will of the Commons but it is vitally important that before it is passed these sections and clauses which have been so far discussed inadequately or not at all should be subjected to the impartial, practical and expert examination of which the Upper House is capable".
Some of your Lordships will not recognise that quotation. I said it was before the Bill came to this House. I did not say how long before. That was on 6th June 1947. It referred to a Transport Bill of the Labour Government which at that time was amended

1401
substantially by your Lordships' House. What is the difference between that time and this time? Despite what the noble Lord, Lord Boyd-Carpenter, says, it is not the conduct of the House which is being criticised in the amendment. It is the composition of the House which is being criticised. The fact of the matter is that a permanent majority is available to a Conservative Government.
Several noble Lords: No!
Lord McIntosh of Haringey: My Lords, in my short experience I have seen that majority working very effectively. There is a majority available to a Conservative Government which want to push through legislation with a deadline. The deadline is more important than the wording or the effect of the Bill. That majority is available, and during the last few weeks ruthless use has been made of it in this House.
Lord Boyd-Carpenter: My Lords, I do not know whether the noble Lord was good enough to listen when I was speaking, but I invited the attention of your Lordships to the fact that in the present Parliament alone Her Majesty's Government have suffered 40 defeats, a number of them on major issues.
Lord McIntosh of Haringey: My Lords, I did hear what the noble Lord said and I do not disagree with it in any way. I am not saying that the Government exercise on every Bill their power to achieve their intentions. I am saying that when it is thought to be necessary by the Government, that when it is a relatively straightforward political issue (let us not deny that this is an issue of political difference between the Conservative and the Labour parties; I would not attempt to deny it at all) and that when there is a deadline, a majority is available, and no attempt on this side of the House to make any reasonable changes has any effect whatsoever.
6.54 p.m.
Lord Sefton of Garston: My Lords, may I commence by welcoming Part II of the Bill, Clause 11. I am sure that my welcome of that clause will not be shared by the noble Lord, Lord Boyd-Carpenter, whose only comment about it was that he did not believe that the two bodies were worth the amount of money which was being given to them. To those who are not so blind that they do not want to see, it illustrates that because of Clause 11 it would be difficult for this side of the House to vote against the Bill. The amendment does not ask the House to reject the Bill. The House is asked to criticise the Government. It is not asked to criticise the membership of this House. I, for one, would not quarrel about the way the Whip works in this House, nor would I quarrel about the fact that Members opposite have used their vote on several occasions to defeat the Government. The important point, however, is: what were those occasions? They were occasions when the Government were vitally involved in getting a Bill through by a certain date.
I have no fundamental objection to any Government saying that it is important to get a Bill through by a certain date. That is part of government. But you
1402
cannot make statements in isolation and not look at the reasons. Why do the Government want to get the Bill through by a certain date? Why is there so much opposition to the Bill? Why did the Association of Metropolitan Authorities and all the local authorities concerned refuse to discuss the Bill? Why has a large body of experienced people in local government—who believe, with the Government, that in some ways there has been abuse by local government of the power to levy rates—been alienated by the Government? Why have transport executives which have no political axe to grind and experienced men in local government reached the conclusion either that it is no use or that it would not be a perfectly good function, from the point of view of democracy, to discuss the Bill with the Government? Is that the fault of local authorities? Is that the fault of this House? Of course it is not. The fault was outlined by my noble friend Lord Mishcon. The fault lies with the Government.
If it is right that the majority here say that expenditure on items such as transport should come within a global figure of expenditure as it affects the national economy, why have we reached the stage where we are not discussing it? Why have we reached the stage where we are not discussing how the Government should control that figure? Why is it that instead we are discussing how the Government should set about achieving that aim? It is because of the fault of the Government. Can one really expect responsible members of local authorities to sit down and accept a Government diktat? We have a White Paper and a Bill produced on one day. There was no previous consultation. If one lambasts local authorities as being guilty of abuse, can one then expect local authorities to sit down without protest and discuss the matter with the Government?
What should the Government have done? First, the Government should have realised that local authorities are an important part of our democracy and that they are treading dangerous ground by imposing penalties on local authorities because of the way that they manage their budgets. The grounds are that local authorities have abused their power. Merseyside were taken to court because they had been accused of abusing their power. But the courts decided that they were not guilty. Despite that, the Bill goes ahead and tries to impose these penalties on West Yorkshire, the Midlands and Merseyside. If the Government had not already alienated local government, the sensible course would have been for central Government to hold discussions with local government to find out how they could achieve their aim.
As I said at Second Reading, it was not the fault of local government that they were pushed into the wilderness and that all their expertise and experience was taken away from them. It was not the fault of local government that the boundaries were redrawn. At that time local government told central Government about the tragic mistakes they were making in reorganising local government. Nobody listened when the Government were told that if the aldermanic bench was abolished the experience which local government had built up over many years would automatically be taken away. All these problems have now arrived on the Floor of this House.

1403
This amendment criticises the Government. It does not criticise the Government for the Bill. It does not seek to say to the Government, "You are not going to have your way". It merely points out to the House that what the Government did was ill-advised, wrong and damaging to local democracy. It says:
"but this House deplores the insistence of Her Majesty's Government that this Bill should pass unamended through all stages irrespective of the merits of amendments proposed".
I am not going to deal with the amendment but I shall deal with its fundamental aim. Most of the amendments to the Bill sought to do one thing: to restore to local authorities some of the status and dignity that this Bill takes away. It was all being taken away on the grounds that the Government decided that they had to have this Bill through by 1st April.
We know the money involved. I made the point at Second Reading that the money involved was not sufficient to damage the economy of this nation. I quote no better person than the Chancellor of the Exchequer, who said that the country could handle the whole of the expenditure on the Falklands Islands adventure without it damaging the economy of this nation; that the reserves of the nation were sufficient to handle that. So who would deny that the amount of money we are discussing here could have been held back for another 12 months? Of course it could have been. The truth is that this is the next step in the Government's proposed attitude to local authorities. If it is popular and if it is demanded by some newspapers that local authorities should suffer more, then they will suffer more. It will start with London and then perhaps the Government will want to abolish the county councils.
Let me say this as a final word. There are some people in local authorities, in district councils, who think that a threat to county councils is just a threat to county councils and is not a threat to local government. This Bill and the last Local Government Bill are indicative of the way in which this Government is going. I said on Second Reading that this Bill is moving us still further to a bureaucratic central state that the Government supported. I believe that this amendment should be supported because the Government have acted in haste. They have acted ill-advisedly and they have alienated local government, and it is time that someone stood up for the interests of local government.
Lord Underhill: My Lords, I am advised that I have an opportunity to reply on this amendment.
Lord Lucas of Chilworth: But, my Lords—
Lord Underhill: I am sorry, my Lords—I thought that the noble Lord, Lord Lucas of Chilworth, had the last word.
7.2 p.m.
Lord Lucas of Chilworth: My Lords, I believe it would perhaps be helpful were I to respond now to various points which have been made. To change the tone of this debate just a little, may I at the outset say how grateful I am to my noble friend Lord Boyd-Carpenter, to other noble friends and to the noble
1404
Lords, Lord Underhill and Lord Tordoff, for making such kind remarks about me personally.
I should like to start by saying to the noble Lord, Lord McIntosh of Haringey, that as I stand here I take a very firm view over to the other corner of the House, where I often feel that the balance is held. It is quite ridiculous for the noble Lord to say that we can defeat amendments. Noble Lords on this side of the House have explained how, for more than 40 times this Session, we have been beaten. We are quite consistently beaten with help from independent Members of your Lordships' House. So there is no question here of it being on a party basis. The noble Lord may shake his head but that is a fact. When the noble Lord has been here a little longer or has studied some of the Division Lists a little more completely, perhaps he will come to agree with me.
As I said earlier in moving the Motion that this Bill do now pass, I understand the disappointment which noble Lords opposite expressed, because the Government have not accepted any amendments. I must insist that the Government did not have a closed mind. On the contrary, I hope that it is clear from the responses we have given, and in a number of letters, that we have thought hard about the proposals made and considered them on their merits. The Government would have been prepared to accept any amendment which we believed genuinely to be necessary or which would have created a genuine improvement. Indeed, time has been set aside in the other place for them to consider any amendments to this Bill which might have been accepted today. I will explain why it is that the Government have not wished to accept the amendments proposed.
A number of the amendments that we have considered I might term "wrecking amendments". One noble Lord said that a kinder phrase might be "frustrating amendments", although in many cases I do not believe that the amendments were necessarily intended to wreck. The point is that the Bill is a structure and to have altered one part would often have damaged or wrecked the whole. The noble Lord, Lord Sefton of Garston, will remember that I was in some trouble with him when I said something similar shortly after the start of the Committee stage in your Lordships' house. What I meant then, and what I mean now, is that the making of what appears to be a minor alteration to one part of this Bill could very often have damaged or wrecked the whole. I did not mean then, nor do I mean now, that the Government would not accept amendments. But I do believe that until the Government responded to some of these amendments, noble Lords had not recognised the damage which the amendments may have caused.
I will give just a few examples. First, there were amendments which sought to ease the financial duty and which would have led to incredible complexity and a slackening of that duty. We showed that there were already adequate means for executives to meet their duty even in the face of some of the most fearsome emergencies, which were conjured up before us even as late as this afternoon. Similarly, we showed that there was no need to transfer child fares from within the PEL to Section 138 of the 1968 Act; that is, outside the PEL. We showed that under the Bill, the

1405
setting of these fares remained firmly with the authority and with the executive.
We explained why the Government could not accept the early amendment designed to alter Clause 5, to give protection to any level of subsidy, however large, nor indeed subsequent variations designed to lead to more than one determination of grant in the year. We have shown this to be unnecessary. Other amendments sought to prevent or alter the frequency with which the Secretary of State may require an authority to carry out a review. Most authorites will institute such reviews themselves, but the Government have insisted on retaining the right to call for one if the authority does not. We have given assurances not to call frequent reviews, and shown that there is no need to alter the Bill; no more than any need has been shown to alter the similar power of the authorities under the 1968 Act.
Some other amendments have sought to extend policy, such as one to alter Section 138 of the 1968 Act yo allow authorities to give concesssionary fares to the unemployed. Although your Lordships did not agree to make this amendment, you showed in your speeches characteristic sympathy for this and other groups of disadvantaged people. I gave an undertaking then to draw the attention of my right honourable friends with responsibilities in this area to that which has been said; and I say to your Lordships this evening that that is what I have done.
Other amendments again sought to insert words which, while not paricularly damaging, would have added little or nothing to the Bill. The fact that an amendment is not harmful or damaging is not, I suggest, a good enough reason to make it. Otherwise, your Lordships' House would find itself forever making amendments of little merit; padding out a Bill.
The point I seek to reiterate here is that the amendments proposed would either have damaged substantially the integral structure of the Bill, accidentally or perhaps even deliberately, or sought to extend policy in a way the Government could not accept, or would have added little or nothing of substance. We have shown in the Bill and during the debate, that preservation of local democracy has not been damaged. On the contrary, the protection from challenge enhances the ability of an authority to exercise more effectively their role in local democracy within a protected limit. They did not have that before.
The noble Lord, Lord Sefton of Garston, said that the real truth was that this Bill was an attack on local authorities. The real truth is in the three figures I gave earlier this afternoon; the figures which my noble friend Lord Bellwin gave at Second Reading, when we began our consideration of this Bill. The truth is that expenditure in 1979–80 was in terms of a sum off £39 million; in 1982–83, nearly £400 million; and predicted for 1983–84—last summer—was a figure of £700 million. The real reason is that the interests of both the user and the taxpayer had to be protected, and this Bill goes a long way towards doing that. Indeed, as I mentioned earlier, since last summer, while there has been time for reflection, that predicted figure of £700 million has now been reduced to £500 million because the authorities are curbing their appetite for money.
1406
The noble Lord, Lord Mishcon, and indeed the noble Lord, Lord Underhill, have both argued very strongly, as did other noble Lords, that the Bill was an attack on local democracy. This is not so. The Bill keeps to a minimum the intervention by central Government. Direct intervention really is concerned simply with the Secretary of State obtaining information in order to allow him to set the guidance figure. That means that the seven authorities must supply plans of which at least an element is in a common form. My understanding is that most of the authorities already provide for their own internal use most of this information. It is the common form, the common methodology that is required.
When the noble Baroness, Lady Bacon, says that it is no good us suggesting that we can deal with West Yorkshire in the same way that we deal with others, how can we bring a common purpose, how can we take account of the overall need, the overall ability of the nation to provide these monies, without having a common basis upon which to work? These are necessary so that the Secretary of State can evaluate plans on that basis. But all the present relationships in the authorities and the executives continue, and after indicating the protected level of expenditure it is left entirely to the authority to choose its plan and decide its subsidy. So the Government cannot see this as an interference with local democracy, at least no greater interference than is necessary to produce this legal clarity and a stable framework for local transport to operate within the level of resources the nation can afford.
Although the Bill has not been amended, as I said earlier, there has been value in the debates. Our discussions have cleared away misconceptions. Although the Government are now content with the Bill as it stands, the debates have recorded even more sharply than were recorded at Second Reading that there are fundamental philosophical differences dividing us, and the differences are those which cannot be and will not be and would not have been removed by amending this Bill. My noble friend Lord Boyd-Carpenter referred to this aspect.
The noble Lord, Lord Tordoff, talked about rational argument. He then went on to say that underlying it were these philosophical divisions. Of course he is quite right. That is what has prompted this Motion we are debating tonight. I was sad, I might add, that the noble Baroness, Lady Bacon said in her opening remarks that she did not care whether the GLC are spendthrift. Well, my Lords, we do care.
Baroness Bacon: My Lords, may I just say this? I am not a ratepayer of the Greater London Council. It is the concern of the ratepayers of the Greater London Council what the Greater London Council does. But I am a ratepayer of West Yorkshire County Council, and our powers to determine what happens in West Yorkshire have been taken away from us because the Government think they have to bring the Greater London Council to heel. That is the point I was making.
Lord Lucas of Chilworth: My Lords, that may well have been the point the noble Baroness was attempting to make. The point she made, certainly with me, was

1407
that she did not care whether the GLC were spendthrift. I argue that the Government have not taken away the rights of her local authority to determine either the rate or how they spend it. All the Government have done is to set a limit above which the Government are not prepared to protect the authority.
The Government recognised these philosophical differences. Some opponents of the Bill might well have preferred the authorities and executives not to have to prepare the proposed financial plans, nor to have to explore more systematically the uses of subsidy Some might have preferred the Government not to protect from legal challenge this subsidy up to a reasonable level. Some opponents have gone so far as to say that they would prefer a cash limit system to be imposed by the Government in preference to the system under the Bill which leaves the authorities free to have the final word on their plan and proposed subsidy. We listened to all these views and recognised the gulf between them and the Government's own view. But I must repeat the Government's belief is that this Bill is necessary.
The Bill will provide an improved financial planning procedure; it will protect a reasonable level of subsidy from challenge; it will certainly strike a better balance between the interests of ratepayers and public transport users; it will also encourage the efficiency in the transport executives that we are looking for. That is what the Bill does. I have to say, in all seriousness, having heard every single amendment at every stage of this Bill, that I cannot see that had we accepted any of the amendments there would have been improvement in meeting those objectives. I invite the House to reject this Motion and to pass the Bill.
Lord Underhill: My Lords, after this debate I will be extremely brief in reply. I do not intend to follow the noble Lord, Lord Lucas in going through all the amendments to show where they could have been beneficial to the Bill and to the House. In moving this amendment I did refer to a number of points of disagreement, philosophic, if you like, but also points where this Bill could have been improved without interfering one jot with the principle that the Government wants.
I am glad that a number of noble Lords have referred to this House as being a beneficial revising Chamber. As the noble Lord, Lord Tordoff, said, it is not a rubber stamp. Reference has been made by the Minister to the 40 occasions on which the Government have been defeated. That has been this House at its very best, not as has happened on the occasion of this Transport Bill. I have had experience from this Dispatch Box of numerous occasions where the Government have intelligently taken back arguments and examined them and brought forward their own amendments. That is what we are concerned with as well as having our amendments carried.
The noble Lord, Lord Boyd-Carpenter, referred to understanding my disappointment. That is not the issue; my disappointment does not matter. It is that there has been an opportunity to improve this Bill, there has been an opportunity to clarify issues, there
1408
has been opportunity to bring into the Bill assurances which the Minister has tried to give orally but was not prepared to put into the Bill. My criticism is not of this House. My criticism is that the Government did not give a lead. The amendment says:
"deplores the insistence of her Majesty's Government".
We do not on principle vote against the Third Reading of any Bill, but this is an occasion where the Government have failed abysmally. They have been too rigid, too inflexible. They have failed to see opportunities where they could have brought forward their own amendments, not to destroy the purpose of the Bill but to clarify it and improve it. I hope the House will support the amendment.
The Lord Chancellor: My Lords, the original Question was that this Bill do now pass, since when an amendment has been moved at the end to insert the words set out on the Order Paper. The Question, therefore, is that this amendment be agreed to.
7.20 p.m.
On Question, Whether the said amendment shall be agreed to?
Their Lordships divided: Contents, 51; Not-Contents, 89.

DIVISION NO. 3

CONTENTS

Ardwick, L.

McIntosh of Haringey, L.

Aylestone, L.

Mayhew, L.

Bacon, B.

Milner of Leeds, L.

Beswick, L.

Mishcon, L.

Bishopston, L. [Teller.]

Ogmore, L.

Blease, L.

Oram, L.

Boston of Faversham, L.

Peart, L.

Brooks of Tremorfa, L.

Phillips, B.

Chitnis, L.

Pitt of Hampstead, L.

Cledwyn of Penrhos, L.

Ponsonby of Shulbrede, L. [Teller.]

Collison, L.

David, B.

Rhodes, L.

Denington, B.

Sefton of Garston, L.

Ezra, L.

Simon, V.

George-Brown, L.

Stedman, B.

Hatch of Lusby, L.

Stewart of Alvechurch, B.

Hayter, L.

Stewart of Fulham, L.

Houghton of Sowerby, L.

Strabolgi, L.

Ingleby, V.

Tanlaw, L.

Irving of Dartford, L.

Taylor of Mansfield, L.

Jeger, B.

Tordoff, L.

Jenkins of Putney, L.

Underhill, L.

John-Mackie, L.

Walston, L.

Kennet, L.

Whaddon, L.

Kilmarnock, L.

White, B.

Kirkhill, L.

Winstanley, L.

NOT-CONTENTS

Avon, E.

Cork and Orrery, E.

Belhaven and Stenton, L.

Cottesloe, L.

Blake, L.

Cox, B.

Boston, L.

Craigavon, V.

Boyd-Carpenter, L.

Daventry, V.

Brabazon of Tara, L.

Davidson, V.

Brougham and Vaux, L.

De La Warr, E.

Caithness, E.

Denham, L. [Teller.]

Campbell of Croy, L.

Drumalbyn, L.

Carnegy of Lour, B.

Eccles, V.

Cathcart, E.

Elliot of Harwood, B.

Chelwood, L.

Elton, L.

Coleraine, L.

Ferrers, E.

Colwyn, L.

Ferrier, L.

Constantine of Stanmore, L.

Fortescue, E.

1409

Fraser of Kilmorack, L.

Murton of Lindisfarne, L.

Gainford, L.

Newall, L.

Gibson-Watt, L.

Nugent of Guildford, L.

Gisborough, L.

O'Neill of the Maine, L.

Glenarthur, L.

Orkney, E.

Greenway, L.

Orr-Ewing, L.

Hailsham of Saint Marylebone, L.

Penrhyn, L.

Plummer of St. Marylebone, L.

Harmar-Nicholls, L.

Henley, L.

Rankeillour, L.

Hylton-Foster, B.

Ridley, V.

Killearn, L.

Romney, E.

Kilmany, L.

Saltoun, Ly.

Kinloss, Ly.

Sharples, B.

Lauderdale, E.

Shuttleworth, L.

Lawrence, L.

Skelmersdale, L.

Lindsey and Abingdon, E.

Stamp, L.

Long, V.

Swinton, L. [Teller.]

Loudoun, C.

Taylor of Hadfield, L.

Lucas of Chilworth, L.

Terrington, L.

Lyell, L.

Teviot, L.

Macleod of Borve, B.

Teynham, L.

Mancroft, L.

Thomas of Swynnerton, L.

Margadale, L.

Trefgarne, L.

Marley, L.

Trenchard, V.

Merrivale, L.

Vaux of Harrowden, L.

Mersey, L.

Vickers, B.

Milverton, L.

Vivian, L.

Molson, L.

Westbury, L.

Montgomery of Alamein, V.

Wise, L.

Mottistone, L.

Resolved in the negative, and amendment disagreed to accordingly: Bill passed.

Energy Bill
7.28 p.m.
The Earl of Avon: My Lords, I beg to move that this Bill be now read a second time.
Electricity has long been generated and supplied outside the public electricity supply system. This Bill is designed to accord this private generation its proper place in the country's overall electricity supply and to enable the private sector to take advantage of the economic opportunities it may have to expand this resource.
The first legislative obstacle which has stood in the way of such opportunities has been the ban, dating from 1909, on anyone who wished to supply electricity as a main business activity other than an electricity board. Clause 1 of the Bill accordingly removes this prohibition. It also removes the requirement for anyone to obtain the Secretary of State's consent before building or extending a generating station whose output is mainly for sale to others. This requirement has meant that a large private station could be built for its owner's use without such consent, while even a small station whose output was sold would need consent. This is not a logical position; nor is it one which meets the planning needs of the electricity boards, since either type of station reduces actual or potential demand upon the boards.
Therefore, in order that the boards can take proper account of private generation in planning their own systems for the future, Clause 2 provides for them to be informed of any proposal to build or extend a generating station above 10 megawatts in output. This output has been suggested by the Electricity Council as the level at which a private power station might begin
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to have a significant impact upon the planning or operation of an electricity board's system. In context, if this provision were already in force it would have meant that boards would have been notified of 90 per cent. of all private generating capacity.
So far I have dealt with matters which will liberalise the régime under which private generators may operate. I come now to two areas where for different reasons we have provided or maintained Government controls. First, the Government thought it appropriate to remove the existing anomaly that a large company would be able to build a nuclear powered generating station to produce electricity for its own use without having to seek ministerial consent. Clause 3 of this Bill therefore requires anyone to seek such consent before building, extending or becoming the operator of a nuclear station. The need for consent to operate is designed to deal with the case of someone acquiring a nuclear station from, say, the CEGB. Let me say that this clause makes it neither more nor less likely that anyone will wish to build a nuclear power station. This is a new control which is additional to the sophisticated system we have in this country for ensuring the safe design, construction and operation of nuclear power stations.
The second control, which we have retained in Clause 4, is that over private hydro-electric plants in Scotland. Not only does hydro-electricity occupy an important position in terms of energy policy in Scotland, but by its nature one project can have a direct impact on another by influencing the water flow. It therefore seemed right for consent to continue to be needed. However, the output above which consent is needed is raised from 50 kilowatts to 1 megawatt, so that very small schemes will no longer need consent.
Clauses 5 to 11 contain the real heart of this Bill. They establish both the arrangements which may be made between private generators and the electricity boards and the terms on which the commercial relationship between the two is to be conducted. Clause 5 sets up a system of requests and offers by which private generators are given certain rights to seek services from the electricity boards, and the electricity boards are given corresponding duties to supply those services. First, a private generator will be able to seek a supply of electricity not only for his own premises, as at present, but also in respect of other premises which he supplies. Second, a private generator will be able to ask an electricity board to purchase any electricity which he wishes to sell to the board; and, third, and perhaps most important, the private generator will be allowed to ask an electricity board to permit him to use the board's transmission and distribution system to convey electricity. In responding to these requests the electricity boards may include in their offer such reasonable terms and conditions as are necessary to ensure that the board may recover any expenditure it incurs, and to ensure that compliance with the request does not affect the control by electricity boards over the electricity supply system.
As to the supply which an electricity board may be asked to give to a private generator, the electricity board is to charge under Clause 6 precisely the same price as that which would obtain if the private generator were any other customer. Where a tariff for

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these supplies is not appropriate, the board must specify a price in its offer to the private generator.
The terms upon which electricity boards are to carry out their duty to purchase privately generated electricity are contained in Clause 7. Boards are to fix tariffs of prices that they will pay for such electricity, or in the absence of an applicable or appropriate tariff they must specify the price they propose. These tariffs and prices may be based upon any principle which the board wishes to invoke, provided that one of these principles is that the board's prices to other customers for electricity supplies must not be increased as a result of the purchase, and, secondly, that the tariff or price must reflect the costs that the board would have incurred had it not purchased the electricity from this particular source.
The clause goes on to recognise that in making a purchase from a private generator the board may itself incur costs arising from the administration of the purchase or from the fact that it has had to employ its own assets in taking the electricity. In the latter circumstance, the payments which the board may seek from the private generator may be sufficient to ensure that the board earns the same kind of return on any assets it employs in taking privately generated electricity as that which it would expect to receive on a similar asset which it used for its own purpose.
Clause 8 of the Bill provides for electricity boards to fix tariffs and charges for the use by private generators of their transmission and distribution systems. Where a board establishes a tariff or makes an offer in connection with the use of its system, one of the principles that it must invoke is that charges should be no more than sufficient to give the board a return on the assets it employs in meeting the request of the same order as that which the board would expect to receive on such an asset used for its own purposes. This principle is set by analogy with Clause 7.
Having established this basis for fair dealings between the private generators and the electricity boards, the Bill goes on in Clause 9 to enable any dispute between a private generator and an electricity board to be referred to the Secretary of State, or to an arbitrator appointed by him, for determination. Clause 10 requires the electricity boards to consult the Secretary of State on the principles underlying the tariffs that apply to dealings with private generators. I have dwelt on these provisions in order to explain to the House the guiding principles behind this central part of the Bill. I now come briefly to the remaining provisions of Part I.
Clause 11 enables one board to propose to another that the latter might more appropriately meet a private generator's request; and Clause 12 provides for pattern-approved meters to be used for measuring electricity supplied by private generators to their customers. Clause 13 relieves an electricity board of its duty to supply consumers who are supplied by private generators through the board's system. This measure is designed to clarify the board's statutory and commercial obligations to private generators. Clause 14 is concerned with the application of certain powers and duties of boards, electric inspectors and electricity suppliers. Its aim is to ensure that private suppliers and
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their customers have parity of treatment with the electricity boards and their consumers.
Clause 15 gives effect to the further provisions relating to meters which are contained in Schedule 1. The presentation of the schedule is complex because of the bulk and antiquity of the electricity legislation, but it does three relatively simple things. First, it provides for certified meters (which are used by boards to measure supply to their consumers) to be used also to measure electricity supplied by a private supplier through a board's system, and for these meters to be subject to the statutory procedure for determining disputes about accuracy; second, for meter manufacturers and repairers to be authorised to certify meters; and, third, for regulations to be made in respect of the recovery of costs incurred by my department's meter examiners in determining disputes about meter accuracy.
Clause 16 replaces the existing powers to make safety regulations with a new and up-to-date power under which the present regulations will be gradually replaced with more comprehensive ones which will apply to both public and private supplies of electricity. Clause 17 allows boards to include a standby charge in their tariffs, and Clause 18 enables local authorities to benefit from the provisions relating to fair prices for the purchase by boards of electricity, and also for arbitration in disputes over this matter.
Clause 19 gives electricity boards a new duty to promote economic schemes for combined heat and power and the use of heat from power stations generally. This clarifies their rights and obligations in this field, and puts beyond doubt that such schemes are to be considered part of the board's normal operations. Clause 20 abolishes two unnecessary and unused powers of entry available to boards.
Finally, Clauses 21 and 22 of Part I of this Bill establish the Electricity Consumers' Council on a statutory basis and give other bodies duties in relation to that council. The council has the duty of considering any matter affecting the interests of electricity consumers generally, who are supplied by electricity boards in England and Wales. These may of course include general matters, such as those related to contracting, or sales of appliances, as well as those more directly related to electricity supply.
I turn now for a few moments to Part II of the Bill. This amends the liability and compensation provisions of the Nuclear Installations Act 1965, by restoring the value of the compensation sums provided for in that Act in order to take account of inflation. Although I should be pleased to set out the effects of Part II more fully if the House wishes me to do so, let me just say at this stage that in broad terms the changes make good the effects of inflation upon the United Kingdom's original provisions for compensation in respect of nuclear incidents. They also, inter alia, allow for new compensation figures to be changed by order.
The safety record of our nuclear power industry is second to none. Nevertheless, it is prudent to have a proper system of liability and compensation to ensure that nuclear injury or damage is properly compensated, and to keep that system up to date. I hope that noble Lords will agree that this is a sensible objective.

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The Bill was carefully scrutinised in the other place. A number of amendments were made. I believe that it reaches us in a workmanlike state. I shall look forward to debating further issues on it in Committee. On that note I commend the Bill to the House. I beg to move.
Moved, That the Bill be now read a second time.—(The Earl of Avon.)
7.41 p.m.
Lord Strabolgi: My Lords, we are grateful to the noble Earl, Lord Avon, for explaining the provision of the Bill so clearly, and we on these Benches should like to thank him for that. Since I shall not be speaking again in the debate, I should like to say how much we are looking forward to the maiden speech of the noble Lord, Lord Taylor of Hadfield.
Having said that, and turning to the Bill, I feel bound to ask why the first 18 clauses of it have been included at all. Who really wants this privatisation? No one, so far as I can see, except the Government; and then of course the Government want privatisation only on ideological grounds, and because they have an obsession about it.
The Bill follows other measures of the same nature, such as those dealing with the Britoil sale, which was so disappointing from the Government's point of view, the totally unnecessary Amersham sale, and the breaking up of the gas industry. These are all the actions of a Government who see everything in crude, simple terms, and in black and white. Everything publicly owned and operated is no good, in the eyes of the Government. Everything privately owned automatically finds favour in their eyes.
Fortunately, this Bill has been much improved during its passage in another place (as the noble Earl has said), where several important safeguards were introduced. The public sector is now at less of a disadvantage, compared with the private sector, as was the case in the original draft. I understand that consultations are taking place between the Government and the industry over the matters to be covered by the regulations relating to supply and safety which are to be issued under Clause 16. This is much more reassuring.
Clause 10(6), which was introduced in another place, now ensures that no undue preference will be shown to consumers in the private sector at the expense of public consumers. I am glad also that Clause 19, too, was introduced in another place, dealing with the important matter of combined heat and power. What is extraordinary—I am really surprised that I have to say this—is that such a clause was not in the Bill originally. Indeed, a short Bill dealing with combined heat and power was probably all that was needed for much of Part I. Much of the rest of this part of the Bill seems to be irrelevant, if not potentially harmful to our public sector electricity industry. Let us hope that no lasting harm will be done before wiser counsels prevail.
We are particularly concerned over Clauses 2 and 3. As the noble Earl said, Clause 2 requires a person to notify the relevant board of his intention to construct a generating station. But such a person—the private generator—will not have to obtain the permission of the Secretary of State for Energy for the construction
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of a new generating station unless he proposes to construct a nuclear-powered station. All that the private generator will need will be planning consent under the Town and Country Planning Act 1971.
There is no provision for an inquiry procedure to consider any private sector proposals, as there is for vetting applications by the electricity boards to build publicly-owned power stations. An electricity board, in future, could be required to undergo a lengthy and expensive public inquiry into an application to build, say, a 100 megawatt power station, while a private generator could construct a power station of similar capacity without such an inquiry. The balance seems to be loaded against the public sector with a vengeance!
Clause 3 will allow private persons to build and operate nuclear power stations, with, of course, the consent of the Secretary of State. There is so much public concern about nuclear safety and other factors in this difficult and controversial field that to allow private operators to dabble in it does not seem to me to be desirable. Here again the Government's obsession seems to have got the better of their common sense.
I much regret that the Government did not take the opportunity afforded by the Bill to put forward some constructive proposals for the whole reorganisation of the electricity supply industry, following the review in the last Parliament by the Plowden Committee. As your Lordships are aware, the present structure comprises 12 area boards, the Central Electricity Generating Board, and the Electricity Council. All these are autonomous bodies, yet all seem to have the same overall aims and objectives. Many decisions, I understand, are taken within the CEGB, and often without adequate debate within the supply industry as a whole.
There is, I submit, an urgent need to review the whole organisation and to have about six all-purpose authorities, under a single unified authority at the centre. There is the need for a central authority to deal with fundamental questions, such as the procurement of primary fuels, the siting of power stations, the choice, type, and design of generating stations, future research, central finance, and long-term strategic planning. In our view it would have been better if the Government had tackled these fundamental questions, which will surely have to be tackled one day, instead of making the future control of the industry and its unification more difficult by the disruptive proposals contained in much of this Bill.
7.48 p.m.
Lord Tanlaw: My Lords, from these Benches we wish first to take the opportunity to congratulate the noble Earl the Minister on piloting his first Energy Bill through your Lordships' House. We are looking forward to the maiden speech of the noble Lord, Lord Taylor of Hadfield. In this connection I would suggest to the noble Earl that it is rather late in the day to have a Second Reading debate which includes a maiden speaker, bearing in mind that another maiden speaker, the noble Baroness, Lady Cox, is to take part in the debate on the Unstarred Question which is to follow later this evening. It is rather unfair for maiden

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speakers to have to wait until so far into the evening to make their speeches.
We want to give a general welcome to the Bill. Of the first 18 clauses, we on these Benches should like to dispose of only Clause 3, which deals with nuclear energy generating stations in the private sector. I should like to ask the noble Earl the Minister whether, before the Bill was drawn up, any discussions were held in order to look at the various roles of the Department of Energy and the other statutory bodies involved in the whole energy industry. In this country there are 17 statutory bodies involved with energy. They comprise the Central Electricity Generating Board, the Electricity Council and the regional generating boards. There has here been a golden opportunity to take up the Plowden Committee's recommendations, and possibly even to extend them. My main disappointment over the Bill is that this has been an opportunity missed.
I am not sure whether the moment has not now come for another look to be taken at the role of the Department of Energy. It was formed, as the noble Earl will recall, in rather a rush after the first energy crisis as an offshoot of the Department of Trade and Industry. I wonder whether its role should not now be examined carefully to see whether the taxpayer is getting the best value for money from the department as presently constituted. I recall a debate on the rational use of energy in your Lordships' House—an excellent debate of an amazingly high standard—which showed up the activities of the Department of Energy and other departments towards conservation. I feel that more could be done by the Government through the Bill about conservation. It is a great disappointment to find that there seems to be a lack of enthusiasm, emanating from the Secretary of State downwards in the Department of Energy, on the whole nature of conservation. One would like to see more public enthusiasm. I believe that the noble Earl, with his responsibilites, will no doubt be able to inject some of that much needed enthusiasm in the months to come.
I wish to touch briefly on the role of the Electricity Council. This is a body which no one seems to do much about. Some of its work is grossly underestimated, as is its value to consumers, to industry and to all in Parliament who take part in energy debates. I should like to know from the Minister whether consideration has been given to granting more powers to the Electricity Council and possibly fewer powers to the Central Electricity Generating Board. When one looks at the role of the CEGB over past years, one can easily appreciate, with admiration, its ability to generate paper. It has also generated a certain heavy-handedness in its dealings with its regional boards, which is becoming uproductive.
This Bill could have provided a start for an open, non-political discussion on how the energy industry is run from the Department of Energy through the Electricity Council and the CEGB, to see whether the taxpayer and the consumer are getting their money's worth from these excellent bodies containing excellent men. I believe, however, that their direction may be slightly awry. On the Second Reading of the Bill now
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being discussed, I feel I can say this; it is one of the few opportunities that arise. I hope it will be taken up in some other areas at a later date.
The Electricity Council should be given more powers and more assistance to help in the new technologies available in the electricity industry. More help could also be given to alternative energy systems, and how best they can be installed within the regional boards. The Minister may be able to express a view on whether the bill of £22 million for advertising electricity is to continue. Consumers have a right to know whether this amount will be spent annually, often to tell consumers to use electricity when they have little option to use anything else A similar amount—it is about £23 million—is spent on advertising gas. There is a need for the nationalised industries to examine this expenditure. This Bill may be a means of bringing reasonable common sense into the industry.
I wish to deal now with the parts of the Bill that I welcome. I refer to alternative energy generation. As chairman of PARLIGAES, a group involved in alternative energy strategies, we are pleased to see that those who operate generators of wind or water will be able to benefit to a certain degree under the Bill. There is another aspect on which I should like to hear the Minister's comment. It was depressing to see that the CEGB ordered a foreign made windmill when it got round to examining wind generation of electricity. I hope that under the Bill greater enthusiasm will be given to small businessmen and small companies that are manufacturing, under great difficulty, some alternative energy systems of electricity generation. It is not only this country that I have in mind. In fact, there is little application for them in this country. A far greater application for them exists overseas. I should like to see the Ministry of Overseas Development make more effort than to date in exporting alternative energy systems working on the passive system of energy generation.
There is another point on which I should be grateful for guidance from the Minister. Will these private generating companies, particularly hydro power companies, be able to go back into the market and raise funds through debentures and the issuing of shares, as used to be the case? I believe that the first hydro electric scheme in this country operated in Galloway. I stand to be corrected but I think that there was a debenture that was popular with the public. Nothing is stated precisely in the Bill about the ability to raise funds from the public. I hope that the Minister will be able to help when he replies.
Clause 12 covers metering. Out of 19 million domestic consumers, I understand that 1·5 million have pre-payment meters. This leaves 17·5 million consumers, 2 million of whom I am told by the Electricity Council have outside meters. I am also told that 90 per cent. of new customers will have outside meters. Is the Minister satisfied that the Bill gives adequate guidance to local authorities and architects to site electricity meters so that they may be read either remotely electronically or electrically and sited on the outside of the house so that the householder will not have to be bothered about arranging an appointment with the meter reader? This action should be taken in conjunction with the gas authorities and water boards.

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One does not want to see this kind of rule going into the statute book. It has, however, created an untold amount of unnecessary aggravation for householders. This is obviously the right Bill for a metering amendment to be included. I wish to know whether it is necessary. Any guidance from the Minister would be helpful.
I wish, finally, to touch upon combined heat and power. Why was it necessary for people outside the Government, Back-Benchers in the Conservative Party, through great persistence, to produce a new clause to cover combined heat and power? This was recommended in the Plowden Report in 1976. Who stopped it? It was the CEGB, which was never enthusiastic about it. Nor were the gas authorities, which did their best to stop it. What is the purpose of these boards? They are meant to help consumers to be warm and comfortable by providing them with cheap electricity. Why not cheap heat? They can produce what arguments they like against it. The fact is that it took the persistence of Back-Benchers, with support from other bodies outside Parliament, to get Clause 16 through. The Government were not interested. The Government had to be forced to accept it. This is disappointing, nor is it a hopeful sign for the future.
The local boards can still stop combined heat and power coming about in their areas. They can prove that it is uneconomic in one way or another. I should like the Minister tonight to state categorically that, in places like Merseyside, Clydeside and anywhere else where CHP would be of real benefit to the community the social side will be considered as well. Why is it all right to dig up the streets for the installation of cable television when there is already plenty of television, but not all right to dig up the streets to put down pipes for combined heat and power? The argument which has been put forward by the CEGB is that it would disrupt the communities too much. We can dig up the streets to put down cables for cable television, but apparently we cannot dig them up to improve low cost housing and to keep people in the low income groups at least warm during the winter at very reasonable cost. I shall pursue this matter from these Benches if the Government are not going to press the CEGB in turn to press the regional boards to make combined heat and power a reality.
At this late hour I have spoken for long enough on the main points that we shall wish to emphasise during the Committee stage. On the whole, we welcome the Bill. There are some signs of hope that the Government are prepared to listen in regard to energy generation to people other than the CEGB. They obviously have done so to get the Bill this far. I hope that they will continue to keep on listening and activate some of the points that have been raised from these Benches.
8.1 p.m.
Lord Taylor of Hadfield: My Lords, in my maiden speech I wish to support the Energy Bill, but first I should like to thank all the noble Lords in this House who have been so friendly and so helpful and have given me wise advice. It is a great honour for me to be a Member of the House of Lords, and an honour which I never dreamed would come to me. I hope that your Lordships will forgive me, but after 62 years as a
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builder I really am more fitted for the scaffold than to be speaking in this noble House. However, my company, which I serve, does spend thought, time and energy in promoting and achieving good human relations. We believe that that is very important.
On Sunday I had the pleasure of reading an article by the Leader of our House, the noble Baroness, Lady Young, who was writing of the things that she wished she had known when she was 18 years of age. It was a most interesting, stimulating and instructive article. In my life I have made many mistakes. In 1921 when I was 16 years of age the bank very kindly loaned £400 to build my first two houses, which was the start of the Taylor Woodrow Company. Like the noble Baroness, Lady Young, had I known then that this evening I would be trying to make my maiden speech in your Lordships' noble House, I would have asked the bank to lend me not just the £400 to build the two houses, but another £7 because in that day and age for £7 I could have had a complete course in public speaking!
In my short experience of membership of your Lordships' House many kind noble Lords have given me good advice. One noble friend in particular who is in the House but who shall be nameless said. "You do not need to hurry with your maiden speech. I inherited my title when I was 22 years of age but I did not make my maiden speech until I was 54". On that basis I would he 110 by the time I made my maiden speech and while the noble Lord, Lord Shinwell, I am sure will be able to make his speech at 110, I doubt whether I could do so. However, the Energy Bill was scheduled for tonight and it deals with matters of which I have had comprehensive experience in my business life and so I am sure that my noble friend will not mind me taking this opportunity.
The Energy Bill is a very interesting one which, may I repeat, I wish fully to support. Of course, in some ways it may be controversial and I have been advised that I must keep my speech short and non-controversial. However, I must confess that my company had the honour of building the first commercial atomic power station in the world at Calder Hall. That was completed in 1956 and opened by the Queen in October of that year. It was designed to produce 184 megawatts; today, 26 years later, it is still giving wonderful service and producing 200 megawatts.
My company has built 26 electric power stations of which 14 are coal burning; three are gas turbine; one is oil burning; and eight are nuclear, of which three are in the later stages of construction. May I quote from a reliable source the cost to produce electricity, which I hope will be of interest to your Lordships. For coal fired, the cost is 2·05 pence per kilowatt hour; for oil-fired, it is 3·22 pence per kilowatt hour; and for gas turbine there is no figure. As regards nuclear, for the first Magnox type the cost is 2·57 pence per kilowatt hour, and for the later type, the AGR (the advanced gas reactor), the cost is 1·57 pence per cubic hour.
In Part I of the Energy Bill, Clause 19 imposes duties on electricity boards to adopt and support schemes for the combined production of heat and electricity and for the use of heat from electricity generation. This is a splendid idea. For far too long the heat generated from the cooling systems in our electric power stations has been barely used. With the excellent technical

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advances achieved by the Central Electricity Generating Board and industry, in the future may we hope that it can be utilised for the heating of homes, factories, glasshouses for the production of food, and in other useful ways.
Your Lordships will be pleased to know that very exciting schemes for the use of waste heat have already started. There is one in North Yorkshire where the Central Electricity Generating Board and the Express Dairy Company have joined and formed the Exel Produce Company. This company has built a 20-acre horticultural project at Camblesforth near Selby in North Yorkshire. This represents the successful marriage of modern technology and advanced horticulture. The glasshouses are heated from the Central Electricity Generating Board's Drax power station in North Yorkshire using the reject heat from the power station's cooling water. On this project in 1982 the average production of tomatoes was 110 tonnes per acre, which I am sure your Lordships will agree is very good indeed. The CEGB is also working on an exciting scheme for fish farming which I believe will have very good effect.
Part II of the Energy Bill deals chiefly with the nuclear installations and wisely reviews the provisions for compensation in respect of a nuclear incident by the operator and public funds together, including contributions from other countries party to the Brussels Convention. I feel sure that noble Lords will agree that this is a wise and prudent measure and deserves the support of noble Lords of this House, although one sincerely hopes that it will never be required. So far the record in the United Kingdom has been remarkable.
Since 1956 in this country we have had the benefit of more than 300 reactor-years of operating experience without one emergency at a nuclear power station. My noble friend Lord Avon said that that is a record second to none. It is the result of good design engineering and construction teams, maintenance of standards by the Nuclear Installations Inspectorate and, in particular, the policies and practices of the CEGB in designing, building and running these power stations.
That brings me to the last point that I wish to make. The various schedules to the Bill indicate the antiquity of much of the legislation governing this industry. For example, meters are important instruments in electricity supply and concern most people in our country. Is it appropriate in the 1980s that our new laws in Schedule I should have to rely on amending the Electric Lighting (Clauses) Act 1899? Although no doubt it is a worthy piece of legislation, it surely demonstrates the need for a modern consolidating Act for this important industry.
In closing, may I say that I have great affection and great concern for our country. I believe that this noble House is vital to the good will and the good government of our country, and I shall give it my full support at all times. Thank you.
8.14 p.m.
The Earl of Lauderdale: My Lords, one of the happy chances which the law of averages brings one's way from time to time is the opportunity to follow a
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maiden speaker and to say a few words. To follow the noble Lord, Lord Taylor of Hadfield, who is an adornment of the House and of the nation in his own right, is a particular pleasure and privilege. We have listened to a maiden speech that was witty and crisp; it was modest, brief and factual, and yet in the compass of a few minutes he showed a width of scope from Calder Hall and nuclear power to horticulture and fish farming—a magnificent compression of information and insight. The becoming modesty of the noble Lord's demeanour, both personally in the House and in his speech tonight, will have commended itself to everybody. He referred to good human relations in his industry—a self-built, self-help undertaking—but when he referred to the possible need for courses in public speaking, I am sure the House will agree that he has no need of such. We shall all listen to his interventions with great interest in future and hope that they will be frequent.
One thing that is quite clear to me is that there is nothing in the nature of things to show that a monolithic monopoly supplier is necessarily better—and I say "necessarily" better—than a variety of private suppliers. There is much valuable reading to be had in the evidence of the Select Committee on CHP in the other place. I noticed the words of the chairman of the Midlands Electricity Board, Mr. Shepherd, who said in his evidence:
"If you get huge monolithic corporations, and basically the electricity supply industry is such an organization, it does not exactly lead to innovation unless it has competition at least in comparison of performance if not in fact of actual supplies".
That was said on 24th November 1981. Frankly, I was rather disappointed with the noble Lord, Lord Strabolgi, who outside the House I count as a personal friend but inside the House we do tangle occasionally. He was pretty ideological in his approach to this Bill. The fact is that many industries generate their own power and could sell more cheaply to the grid if they were encouraged to do so. Despite the antiquated provisions of the Electric Lighting Act 1909, private enterprise generation already accounts for 6 per cent. of the country's total supply and some 15 per cent. of industry's use. This in itself is important because energy costs to industry are a long-term concern of general energy policy, and it is because of that that I particularly welcome this Bill.
When private enterprise can produce electricity more cheaply, this is to the general advantage, whether it is for that enterprise's own use or mainly so, or whether it is meant as a contribution to the grid supply. When private enterprise investment can increase the supply, this can only lessen the need for public sector investment at the taxpayer's expense. There have been cases where it has been evident that private enterprise could have supplied energy to CHP schemes had the area boards been co-operative. At this hour of the night I shall not take up your Lordships' time with examples of this, but they are to be found in the Select Committee's report, which I am sure the noble Lord, Lord Strabolgi, has already read but chosen to leave mentally on one side. However, since CHP is itself a Labour aim in Labour's 1982 programme, one would have thought that the noble Lord would have given this Bill a warmer welcome than he did. Of course, they see electricity more as a

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vehicle for social engineering in the countryside than as a critical input to industry.
There might well be some heat, if not power, generated by the attitude of this Bill to nuclear generation. But, of course, as my noble friend Lord Avon said in moving the Second Reading, it is legally possible even now for private enterprise to set up a nuclear power station. However, the Bill adds the special extra provision of great importance, that it can only be done with the consent of the Secretary of State. Moreover, the operator would still require a nuclear site licence from the Health and Safety Executive under Section 1 of the Nuclear Installations Act 1965.
What it is important to get into the record, because no doubt somebody will challenge this later on, is the fact that private enterprise generation of nuclear power is already established without disaster in Germany. It is established in Japan. It is established in Spain. So those who are frightened of what the noble Lord, Lord Strabolgi, called private enterprise dabbling in nuclear power need not really hunt for bogeys under the bed. Anything done in this field would still be under the watchful eye of the National Nuclear Inspectorate, and the onus lies always on the operator to satisfy the NNI. The NNI will not give a guarantee that nothing will go wrong. It is up to the operator to satisfy the NNI that it is going to be safe.
This Bill has had a signal blessing from the Electricity Council acting for the supply industry. To quote a letter which I received a day or two ago, they say:
"Arguments put forward have been carefully considered by the Government".
No fewer than seven safeguards that they sought were all given in the proceedings in another place. The Electricity Council are not seeking further safeguards or protection. That speaks for itself. This is not the hour for political controversy, but like others who have spoken I wish my noble friend good fortune in the further stages of the Bill.
8.21 p.m.
Lord Ezra: My Lords, I should like to join in the tribute paid by the noble Earl, Lord Lauderdale, to the noble Lord, Lord Taylor of Hadfield. I have had the privilege of knowing him for a good many years, and in my previous activities dealt a great deal with his company which he founded, as he explained to us and led with such distinction and still leads to the great benefit of all who have dealt with it. It is a particular personal delight to me to feel that we shall be colleagues in the House, even though we are looking at each other across the Chamber.
I should like to raise two points associated with this Bill. The first concerns the organisation of the electricity supply industry, and the second concerns the question of combined heat and power and other ways of more efficiently generating electricity. As to the first question, the organisation of the electricity supply industry, this has been a matter which has been of great concern for many years. I regret that this Bill, which deals with a number of aspects of the electricity generation in this country, does not deal more deeply with this whole question of the organisation of the industry itself. This was a point that the noble Lord,
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Lord Strabolgi, made as also did the noble Lord, Lord Tanlaw.
Unfortunately, it is a bit of a muddle. The very important report prepared by Lord Plowden's committee went into this whole question with great thoroughness, and many organisations testified as to what might be done. It is a pity that that report, produced some five or more years ago, has not so far found any place in legislation. I should like to ask the noble Earl, Lord Avon, what the Government's attitude is to that report and to any further steps that might be taken to reorganise the electricity supply industry, quite apart from the measures introduced in this Bill.
On the question of combined heat and power, it is satisfactory to know that a short clause has now been introduced into the Bill. I do not believe it goes nearly far enough. The fact is that Britain falls behind many other countries in the development of combined heat and power, district heating schemes, and other ways of making much better and more efficient use of electricity generation combined with the production of other forms of energy. It is not enough, after two important reports have been prepared over the years on this subject—Sir Walter Marshall's report and then Sir William Atkins' report—simply to say that a duty is now put on the area electricity boards to promote the development of this form of energy.
Much more is required if we are going to get anywhere near the efficiency with which other countries—for example, Denmark, Germany, or France—have developed in this field. The technology, I regret to say, is all being developed abroad. There are few instances of large-scale combined heat and power plants in this country, and very few instances of large-scale district heating schemes, which go together. I hope, therefore, that we might get some guidance from the noble Earl, Lord Avon, when he replies later to the debate on what further steps and measures the Government may be contemplating to promote this much more efficient use of energy.
8.25 p.m.
Viscount Ridley: My Lords, I should like to add my congratulations to the noble Lord, Lord Taylor, on his magnificent speech, and also say how delighted I was to listen to the noble Lord, Lord Ezra. In view of the Statement that we had earlier this afternoon, I hope your Lordships will all agree that in securing the services here of a former chairman of the Coal Board we are very lucky not to have had to pay £1½ million to Lazard Frères or anybody else, although the noble Lord is worth all of that, even if he is, for the moment, sitting on the wrong side of the House. It has been most interesting to hear him.
My own purpose in speaking tonight is simple, and I hope to be as brief as this debate has been so far. Indeed, we are setting an example after proceedings on the Transport Bill. I welcome Part I, which allows the private producers to add electricity to the grid and to use the board's transmission systems, But on Clause 18, it was added in another place at Report stage that local authorities would be allowed to sell electricity produced from waste disposal plants to the electricity boards. This concession is indeed a good one, but it was added only at a late stage. Unfortunately the Bill

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does not, as we see it, allow that such local authority generated electricity has the right to use the transmission systems, even where this electricity is to be used in premises owned and occupied by the local authority itself. I do not know why this should be so, and why there should be a distinction between private generation and local authority generation. I hope we can come to that later.
I believe that the generation of electricity from waste disposal systems is still very much in its infancy, although the GLC have, I understand, started to do this. It may well come in due course to be an economical and standard practice. Surely this is something which must be greatly encouraged as a conservation and energy-saving measure. I hope that the Government will do all that they can on grounds of equity to ensure that there is no distinction between private and local authority sources of energy in this respect, and also add a spur to the development of such practices and encouragement to use waste economically, We should take the opportunity in this Bill to put that right. I readily admit that this is purely a Committee stage point, but it is of such importance that it should briefly be raised tonight as a curtain raiser to what may come in the Committee stage. I do not, of course, expect an answer from the Government at this stage.
8.28 p.m.
Lord Kennet: My Lords, most speakers in this debate, and indeed in the House of Commons, have not, it seems to me, made enough of the fact that we are seeking to permit the privatisation of an industry which has been nationalised since 1909. That is longer than most of our nationalised industries by a long way. There was a pretty confused situation before 1909. The simplicity which was imposed then under the banner of public enterprise has not served the country badly. This is not to say that the Bill is wrong, or that I urge that it should be thrown out, but simply that we should look at all the things it does and ask whether it is really necessary to have a change, since unnecessary change merely unsettles an industry. Clearly I expect that in certain respects it is necessary, but there are one or two others where one may raise doubts.
It seems to me—and this is only a layman's impression from reading the Bill; it could look different on the ground in the industry, and the Government will, no doubt, tell us if that is so—that the burden of rights and duties to be imposed respectively upon the new private generators and upon the existing electricity boards is quite uneven. If we look through the Bill we find that it specifically lays two duties on the private generators, and it specifically lays eight new duties on the electricity boards. Most of those duties are concerned with helping out the private generators when they get into difficulties—or so it can appear.
Under the Bill, the private generator is under no obligation to his customers—and we shall want to see in Committee whether that provision is on all-fours with the provision which still governs the electricity boards—and the private generator has a right to a stand-by supply from the electricity board, with a corresponding duty on the electricity board to provide that supply—presumably, for when the private
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generator's gear breaks down. I must say that it seems that the whole picture is one of public industry being forced to carry the risk of a lot of amateurs riding on its back, which is no doubt very nice; but it will impose a lot of worry on the electricity boards, and we want to see that they are not shouldering burdens which they will have to pass on to their customers—because that would be the most inequitable thing imaginable.
There are one or two other minor points before coming to my main worry. The Secretary of State is assigned the role of arbitrator between the public and the private sectors in the new mixed electricity economy—a role which he will, no doubt, be called upon to play fairly often; the Bill in itself is so complicated. I doubt whether he is the right arbitrator for the following reason. Will he not, according to whether he is a Minister of the Left or the Right, give judgments of differing impact and differing value, so that the industry will be rocked from side to side, as other industries have for so long been, and, in default of the absolute certainty that there will be an Alliance Government for ever more, might it not be wise to revert to the ordinary commercial practice of commercial arbitration? These are points which we can probe further at Committee stage.
To turn for a moment to Part II, which deals with the new nuclear accident liability—"upping" the total which is a good thing in itself, so far as it goes—I see that throughout Part II there is a class of persons known as prescribed licensees. It appears that the new provisions will apply to everybody, except those people to whom the Secretary of State says that they need not apply. I do not particularly ask the noble Earl to answer this point now on Second Reading, but in debate we must probe it. Who are the prescribed licensees who will not have to be subjected to the same discipline as other private licensees, how will the Secretary of State decide who they are and why should there be an exempt class of persons at all?
I turn now to the main objection to this Bill. I would just remind the House that the Alliance parties in the House of Commons voted against the Bill on Third Reading, for the simple reason that it permitted private nuclear generation at all. I think the question of whether or not private nuclear generation should be licensed by the Secretary of State is a minor one. Obviously, the Bill is slightly improved by the Government's amendment agreeing that the Secretary of State should license this class of operations. I do not want to make too much of it. To people like us in our parties, and to the Labour Party, too, it goes without saying that you just do not risk it.
What is the point of risking it? There are plenty of other fuels for the private sector to generate with. Why breach the great principle that the transport and management of the nuclear fuel cycle has been under strict public control, and almost entirely in public hands, since the beginning? I am against it. To be persuaded to be for it. I should like an early answer to a lot of questions—once again, at Committee stage. Amendments will be forthcoming which will produce those answers.
First, what about the foreign ownership of private nuclear plants in this country? There is nothing against it in the Bill. Are we happy with that? What about United States' experience of profit-orientated nuclear

1425
power generation? To the naked eye, it looks deplorable. It seems that these private nuclear generating plants are closed down repeatedly and for long periods by the federal agency because they are simply not performing well. I should like the Committee of the House to see, when it comes to that stage, proper comparative figures of the performance, in number of hours on-stream and so on, of privately owned nuclear power stations in the countries where they exist, compared with publicly owned nuclear power stations. I think that the House should be reluctant to see this private nuclear industry grow up, without having those figures before it.
I should also like to know in which countries there is a privately owned nuclear generating industry. I know that there is one in the United States. Let us have some figures about other countries as well. I should like to know, too, what arrangements can be made to ensure that the International Atomic Agency in Vienna, and its safeguard system, applies with equal rigour to the private nuclear generating stations as to the public ones. Lastly, what will be the duties of the internal constabulary, which at present safeguards our nuclear power stations from terrorist attack? What will be their rights and duties in respect of private nuclear generating stations? Unless and until all those facts can be presented to the House in a specific manner, I, for one, shall be against permitting this experiment—because experiment it will be in British terms—at all.
8.37 p.m.
The Earl of Avon: My Lords, we have had a wide-ranging debate and I should like to thank all noble Lords for their contributions. In particular, I should like to thank my noble friend Lord Taylor of Hadfield for his excellent maiden speech. It is an incredible achievement to have put his name to such a well-known national and international firm in such a short period as 62 years. I also appreciate very much his wise remarks about the electricity supply industry and, judging by other noble Lords' contributions today, they will all welcome his points about CHP, in particular. We look forward to hearing his contributions a lot in the future.
I should first like to respond to the point made by a number of noble Lords, and started by the noble Lord, Lord Strabolgi, on the reorganisation. This Bill makes no attempt to deal with reorganisation or privatisation of the public issues. I have, of course, been made well aware of reports such as the Plowden Report, and I shall also read what the noble Lord, Lord Strabolgi, had to say to see exactly what he himself put forward. I was not quite sure whether or not these were going to be power boards, but I shall read Hansard tomorrow to find out.
This Bill aims to stimulate competition. Of course, we keep the structure of the public industry always under review, and in this context I should just pay tribute to the present chairman, Sir Austin Bunch, who will be leaving his job in three days' time. The noble Lord, Lord Strabolgi, asked: who wants the Bill? We undertook a consultation exercise to find out the demand, and we are satisfied that there is such demand. The Bill will be beneficial to all companies which generate electricity, because of the fair terms
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provisions. There have been many criticisms in the past about the terms offered by the boards for privately generated electricity. These new provisions will give greater confidence to private generators and, as my noble friend Lord Lauderdale said, will encourage the development of alternative sources of energy.
The noble Lord, Lord Strabolgi, asked: why not ministerial consent for private generation? The prohibition on generating electricity as a main business is, we believe, out of date. Private electricity already makes a valuable contribution to supply—about 6 per cent. overall and about 15 per cent. of industry's needs—and we want to remove the barriers so that we can realise further potential in this field. The prohibition, in itself, has probably not been a major check on the scale of private generations, but it is an obstacle to competition with electricity boards, and private generators will now be able to set up a new business, or to expand existing operation into a main business. Under Clause 2, electricity boards will be able to take full account of the private sector's plans for replacing existing load, or meeting new load with private plant. This will avoid duplication of investment. Plant of 10 megawatts and above can have significant effects upon public supply. There is nothing bureaucratic about this measure. Notification will help to ensure the co-operation of the electricity boards, assist the development of private generation and prevent later problems. This Bill is not loaded against the public sector but there is a delicate balance. A number of noble Lords raised the point of nuclear power stations. May I say once again that ownership here does not govern the safety of a plant. This Bill does not remove any existing restrictions on nuclear stations. The most important requirement remains; and that is to obtain a nuclear site licence.
May I once again stress that the Bill imposes additional controls. Whether the output of a power station is for the operator's own use or for sale to others, he would now have to obtain ministerial consent. If anybody wished to purchase and use a nuclear power station, he would need consent to his becoming the operator. The noble Lord, Lord Strabolgi, mentioned the planning inquiry procedure. Most inquiries relating to public generating stations are held under Section 34 of the Electricity Act 1957, which requires the Secretary of State to hold an inquiry of a local planning authority if it objects to a generating station proposal. If a local planning authority objected to a private station, a similar inquiry would be held under the Town and Country Planning Act.
The noble Lord, Lord Tanlaw, asked whether power companies will be able to raise capital. Yes! The whole aim of the Bill is to open up electricity supply to the market forces. Most noble Lords, if not every noble Lord, mentioned CHP. The Government have made a positive commitment to investigate thoroughly the economic potential of CHP and district heating and that is why they were very happy to help in the drafting of Clause 19. The purpose of this clause is to make this clear to everyone. We are undertaking a programme of work to test the economic and practical feasibility of CHP schemes in nine individual locations. The noble Lord, Lord Ezra, referred to this. The main report, known as the Atkins Report, on this matter has been

1427
issued to those interested. We are now awaiting comments on this report and it will be considered fully before a further statement is made. If I may elucidate a little, we hope that that may be towards the end of May. It is a very voluminous report and a very complicated one, as well.
The noble Lord, Lord Tanlaw, asked about legislation necessary for outside meters. No changes are needed to the legislation to enable outside meters to be installed. He followed through a theme which I am beginning to know from him about meters generally and I believe he knows equally that I support him in his view. We will continue to press on with this. He also brought out the question of a foreign windmill. I am led to understand that Taylor Woodrow are being supported by my department and the Department of Trade in developing the wind generator for the Orkneys. We are keen to see British technology used wherever possible. Nearly all the demonstration projects in the energy conservation field are using British technology.
My noble friend Lord Ridley spoke also of waste. There are experiments now going on with the biofuels both by London Brick and also by Ford of Dagenham. This is an art which my department are keeping a careful look at. Why not do more for conservation? This was a plea made by the noble Lord, Lord Tanlaw. The Government do a lot for this but, since we had a debate on this only some three or four days ago, I think I could leave that now.
My noble friend Lord Ridley asked why we should not allow local authorities to use the boards' transmission and distribution systems. I believe that this is a wider issue concerned with the powers of local authorities. The main purpose of the Bill is to encourage the production of electricity in the private sector. We have agreed that it is right for local authorities to be treated on the same basis as private generators as regards the purchase of their electricity; but we do not see a strong case for extending the powers of local authorities to generate and use electricity. This, we think, will be a decision for the Secretary of State for the Environment and for Scotland.
The noble Lord, Lord Kennet said that I need not take up any of his points as they are mainly Committee points. He mentioned prescribed sites and, if I could reply to him on that, there have been complaints over the years from the operators of small installations such as university research reactors about the burden of the existing £5 million operator limit. They have said that their installations could not cause damage on such a scale and that it is unfair to impose on them the burden of insuring for so large a sum. The Nuclear Installations Inspectorate have advised that there are small installations which, under the worst conditions, would not be capable of causing as much as £5 million damage at current money values. We think therefore that it would be unfair to require such operators to insure for £20 million. Clause 27 of the Bill therefore exercises a new option given by the protocols and retains the present limit of £5 million per installation in respect of the licencees of such sites as may be prescribed. The noble Lord, Lord Tanlaw, also mentioned advertising. There was reference at
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Question Time in another place today to energy matters and I believe my colleague there, the right honourable the Minister of State, spoke on this subject. I should like to check in Hansard what he said before repeating it to the noble Lord.
Turning finally to the principles of the Bill, our aim has been to remove the legislative and institutional barriers to economic private investment in power generation. We expect this to be of particular benefit to those with schemes for the combined production of heat and power and for renewable forms of power generation. We have sought to achieve this aim consistent with the principles of fairness and safety—fairness in the arrangements between boards and private generators, so that there is no financial subsidy either way; and safety through the sensible safeguards which we have provided, where necessary. The electricity supply industry has been closely consulted at every stage of the Bill and their legitimate concerns have already been met by amendments in another place. If I have not covered any particular points, I will read Hansard and come back to the noble Lords as appropriate. The Government consider that this is a workable Bill and I commend it to the House.

Royal Assent
The Lord Chancellor: My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:

Consolidated Fund (No. 2) Act,

British Nationality (Falkland Islands) Act,

Conwy Tunnel (Supplementary Powers) Act,

British Fishing Boats Act,

Currency Act,

Transport Act,

Greater London Council (General Powers) Act.

Adult and Continuing Education
8.48 p.m.
Lord Kilmarnock Lord Kilmarnock rose to ask Her Majesty's Government, in view of their decision not to renew the remit of the Advisory Council for Adult and Continuing Education, what steps they intend to take to promote and extend this area of education with particular reference to the Advisory Council's Report Continuing Education: From Policies to Practice and their proposals in The Case for a National Development Body for Continuing Education in England and Wales.
The noble Lord said: My Lords, in asking this Unstarred Question I want to make it clear from the outset that the assumption of the demise of the Advisory Council for Adult and Continuing Education is predicated on the parallel assumption that the Government will take some significant action in response to their major report, Continuing Education: From Policies to Practice, and their accompanying proposal for a National Development Body for Continuing Education in England and Wales.

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In view of the great importance of the matters raised in these two documents, it is clear that no responsible Government could do nothing, and I am sure that the present Government will not open itself to the accusation of irresponsibility in this field.
Awareness of future potential has been very much stimulated by the work of the advisory council. For instance, the model "E" option in the DES Higher Education in the Nineties made a clear case for increased participation of adults in higher education; and the PICKUP campaign for professional, industrial and commercial updating is an example of another form of continuing education for adults. Both the UGC and the NAB have recently set up working parties on the subject.
These various initiatives at present lack the cement of a national policy promoted by a national development body, which is what the advisory council is arguing for. In his letter of 23rd December last to the Secretary of State, Dr. Hoggart wrote:
"The present council is unanimous in its view that the time is now ripe for a new national body, one which will begin to translate into practice the advice we have been giving over the past five years."
Much of that advice is contained in the council's report on continuing education mentioned in my question. This is the most important report in the adult and continuing education field since the Russell Report, now nearly 10 years old. In some ways it is more important than Russell, which was restricted to adult non-vocational education. The confinement to that part of the education spectrum which we have always treated as being a poor relation was sufficient to ensure that it had little effect. The council's report, by contrast, is unrestricted in scale; it covers industrial training, the TOPS scheme, further education, the universities, and other responsible bodies as well as private correspondence courses and voluntary bodies. It gives us statistics and expenditure so far as this can be deduced from available evidence.
I am not going to comment on this part of the report because I assume that all of us who are interested, and most particularly the Government, have read it. The picture that emerges is one of "a rich and divese range of provision"—I quote from Chapter 4—which, though "widespread" is also extremely "haphazard" and has seen very little growth in real resources in the past decade, although its actual potential clients are increasing in number both for demographic reasons and on the grounds of deep structural unemployment.
However thorough the homework or illuminating the statistics, there is something else we look for in a good report which I can only call its message. What is the message here? I think we can approach it best through the concluding Chapter 13, in which the council advances some basic propositions, three of which I want to single out. The first is:
"Any highly industrialised country which cannot refute the charge that it is an under-educated society is condemning its own future".
We are certainly open to that charge in comparison with our main competitors.
The second proposition is that:
"Every country should ensure the highest possible levels of self-reliance and self-fulfilment among all its citizens, for both their individual and collective wellbeing".
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So long as we have large numbers of unemployed people to whom many part-time and most full-time educational routes are barred we are failing in this criterion also.
Thirdly:
"A democratic society can only be sustained by its individual citizens' ability to take part in and contribute to economic and social and cultural growth".
I should have thought that that was self-evident but, as Professor Dahrendorf recently pointed out in his lectures "On Britain", we are in grave danger of forcing many of our citizens into a new lumpen-proletariat or underclass.
From these propositions stems the central idea of the report, which is that initial education no longer equips people adequately for life. It is no longer sufficient to regard education as an early and finite process in preparation for adult life. The idea of holding the same job for life is becoming increasingly untenable. Accordingly, education must be regarded as a planned and continuing process. The report does not draw artificial boundaries between education and training or between vocational and general education.
After stressing the paramount importance of the ability to adapt and acquire new knowledge and skills, it says that much vocational education and training must depend on the learners having an adequate prior standard of general education. In Chapter 2.8, it points to the number of unemployed people failing the standard entrance tests for many courses in the TOPS scheme and comments:
"This exposes the simplistic distinction too often drawn between training and education".
This statement has my strongest sympathy. I have on a number of occasions in your Lordships' House drawn attention to the damage that can arise from the development of rival education and training camps where what we require is their mutual support and joint development. That there is a great need can hardly be in doubt when one learns from Chapter 2, paragraph 11 that:
"Approximately half of the adult population in Britain has had no further education or training since completing their initial education".
In many cases, that means since leaving school at 14, which is a frightening thought in the complex and rapidly-changing technological environment in which we live.
I am not going to attempt even to summarise all the remedies and measures canvassed by the advisory council. They cover priority groups, barriers to learning for adults, local guidance centres, the need for basic and post-basic courses, types of access (including open access), finance for institutions and learners, entitlement to paid educational leave, staff and retraining of staff, and legal and other matters. I rather think the noble Baroness, Lady David, will say something about the inadequate legal basis of continuing education and I also look forward to the contributions of the noble Lord, Lord McIntosh of Haringey, and the noble Baroness, Lady Carnegy of Lour. I am also particularly gratified that the noble Baroness, Lady Cox, has chosen to make this debate the occasion of her maiden speech. Their contributions will, I am sure, do much to fill the many lacunae in my remarks.
In the remaining time at my disposal I want to look at some of the council's priorities for action, which are graded into immediate, short-term, mid-term and long-term categories, although of course some of them overlap. Among the most pressing needs for immediate action is the establishment of an educational guidance service to help adults in identifying their educational needs and finding the best ways of satisfying them. Guidance centres could operate through the public library network and also through the workplace, and here not only the CBI but government departments and nationalised industries could help to make this a reality at very little cost. I also want to mention a scheme which my noble friend Lord Perry would have referred to had he not unfortunately been prevented from being here this evening: that is using the existing network of the Open University Study Centres in the additional role of adult education guidance centres, which would be another relatively cheap method because the premises are there and only the guidance centre staffs would have to be separately funded.
Then research is needed on open entry and appropriate admission procedures for adults. Another crying need is for a national information service on credit transfers so that adults can carry with them from place to place and course to course the result of their participation in pan-time and modular courses. I understand the Department of Education and Science is already working on a scheme and perhaps the noble Earl would say something about this aspect when he comes to reply.
Next, distance learning requires further research and development. It can clearly be a boon to adults but requres an appropriate tutorial framework. The council also stresses the need for local centres of continuing education which might perhaps be accomodated in surplus buildings from the initial education centre.
Here I want to pause in this list to shine my torch for a moment on to another important idea which is expressed in Chapter 7, paragraph 4, as follows:
"The decline in the size of the child population offers an unrepeatable opportunity to make continuing educational use of surplus school accommodation for the benefit of the growing proportion of adults in the population."
This, be extension, applies to higher education as well and of course to the retraining and redeployment of staff to match the shift in the age structure of the population. Only the other day I attended at Goldsmiths' College a meeting of 150 university teachers on the subject of developing part-time degrees for mature students. The noble Baroness, Lady David, was there too and I do not know whether she would agree with me but I took away the impression that there was a real readiness in the universities to adapt and cater for a far broader age range of students than at present. But here was also hesitation about going out on a limb and having it chopped off. The example of Salford, which thought it was doing the right thing and then lost 40 per cent. of its grant was quoted. I have a letter from Salford which says:
"It would be most unfortunate if at some subsequent date it was found that this activity was not helpful when the UGC assessed an institution".
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This is where a Government lead is vital. If the Government would say: "Right, that is the end of falling rolls and from now on we are going to redeploy resources, make them work better, make them work for adults and for the country", the effect could be electrifying.
I turn to the advisory council's proposals for its successor body. Its report recognises quite realistically in Chapter 13.8 that,
"the setting of priorities in the allocations of public funds for education must remain a political decision".
That is of course so. Any Government must make their own assessment of priorities for public expenditure, but not without listening carefully to expert and informed opinion. I would argue that the council has made a good case for its preferred option, which is a national development body with a fairly wide remit. But if the Government do not want to go all the way at once, they might prefer to go for a national co-ordinating agency to develop education for unemployed adults along the lines suggested in the council's report, Education for Unemployed Adults. This would have positive results in terms of enhanced employability, which should be valuable in the present national situation. The terms of reference could later be expanded in other directions.
Another possibility would be to fund a specific research and development project—for example, into unemployed adults—for a limited time. All these options would be positive, though in descending order. Perhaps I can tempt the noble Earl to put a tick in the box corresponding to one or more of them. If finance is the sticking point, may I ask him whether the Government have considered joint funding between the Department of Education and Science and the Manpower Services Commission? The council has made out a very good case for the need for a general education input for disadvantaged adults if they are to be able to gain and use new skills. A new body could act very effectively to pool resources from the two departments most concerned. If this has not been considered, will the noble Earl undertake to bring this suggestion to the attention of his colleagues and of Mr. David Young of the MSC?
I am sure we shall be told what the Government are doing already, but I hope it will be clear from the debate tonight that there is no room for complacency. The numbers of university students of mature age—that is, over 21—are down from 24 per cent. in 1979–80 to 21·7 per cent. in 1982–83. TOPS courses are currently catering for a bare half of their peak figure, which approached 100,000 adults in 1977, yet they are almost the only full-time, publicly-funded retraining provision available for adults. I gather that there is a one-year wait to get on to most courses for new technology jobs. Then, again, the social security rules governing participation by the unemployed in part-time courses, which I have here, are full of traps and pitfalls which seem positively designed to discourage self-improvement.
On all these grounds, I think we are entitled to expect from the Government a constructive answer to my Question and at least an advance response to the council's report and proposals. I know there has been mention of a statement in the spring, but the spring is

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now upon us. They have had the main report since last spring and the proposals, which are very concise, since Christmas. I hope we shall not be told the Government are still brooding on the report Education for Unemployed Adults which they have also had for some time—since, I think, September 1982—because this is confined to a specific area and should not inhibit a response on a broader front. I also hope the Government will not merely fall back on some form of interdepartmental liaison committee, which, though no doubt desirable as an adjunct to more positive action, would lack the independence, drive and separate funding of an arm's length body. If the need for more consultation is prayed in aid, I hope it will be genuine and objective consultation.
There is one course which I am clear is not seriously open to the Government, and that is to offer no successor arrangement at all to the Advisory Council for Adult and Continuing Education, because this would be to turn their backs on the whole field of continuing education, the importance of which they have already acknowledged on a number of occasions. It would be a terrible waste to build nothing on the work of the advisory council, which has accomplished so much at so little cost to the public purse. I therefore look forward with some expectation to the noble Earl's reply.
9.3 p.m.
Baroness David: My Lords, we are very grateful to the noble Lord, Lord Kilmarnock, for asking this Question tonight on an extremely important subject—a subject which I think will become increasingly important over the next few years. It also gives us an opportunity to hear the maiden speech of the noble Baroness, Lady Cox. We look forward to it. It gives us, too, an opportunity to congratulate ACACE on its remarkable achievements in the 5½ years since it was set up in 1977. It has published 30 well-researched reports as well as a number of considered responses to educational documents which have appeared during that time. Of those reports, Continuing Education: From Policies to Practice, Education for Unemployed Adults and Part-time Degree Level Study in the United Kingdom are of particular relevance tonight when we are considering The Case for a National Development Body, in which the council's own proposals for the future are outlined.
It is not certain as yet, as the noble Lord said, that the council will be brought to an end in October, but the odds are that it will. It seems very wise for the council at this stage to be making proposals for what should come after it as a follow-up. The fact that they have said that they think their job is done and that something else should happen now does not mean that they want nothing to happen. In fact, very much the opposite is the case. We hope that this document, The Case for a National Development Body, will make the Government concentrate on the possibilities in good time. Indeed, the Parliamentary Under-Secretary, Mr. Shelton, said in reply to a Question in another place that a statement would be made in the spring. Well, spring started officially a week ago. It would be very gratifying if tonight the Minister did not prevaricate and procrastinate but instead had something positive to offer.
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What I believe ACACE has achieved with relatively limited resources is to bring about a complete change of attitude. The climate of opinion has been changed. There is now, I would say, general acceptance that continuing education (a phrase I prefer to "adult education") must be a central part of the philosophy and policy of all political parties. The Labour Party produced last November a discussion document, Education after Eighteen, Expansion with Change, which advocated much easier access to post-school education at any age, a widening of financial support so that mandatory awards would be given for part-time and short advanced courses (and also for designated non-advanced courses), the establishment of an advisory and counselling system and, at a second and later stage, the introduction of adult educational entitlement for one year for all. The proposals are very similar to many of the proposals in the ACACE reports.
There can be no doubt that there is great enthusiasm for widening access for adults and for part-time degrees. As the noble Lord said, 150 university people attended the conference on part-time degrees, chaired by Dr. Hoggart, which was held at Goldsmith's College earlier this month. It was a very stimulating and lively conference. It made one feel that change was afoot and that the universities were ready and willing to play a quite new part. A lot is even now happening and this seems to be the moment to capitalise on the interest that has been engendered. The interest is not only because of the great increase in unemployment and the need for retraining, and training for leisure and early retirement, although these inevitably and obviously play a part.
Research has proved the vast unmet need among the population as a whole. The situation has been that it is the more educated adults who have demanded additional education for themselves. We now want to create a situation where the less educated and the less fortunate have far greater opportunity and encouragement to participate at any period of their lives so that the potential which is most certainly there can be realised for both the individual's and the nation's good.
What Continuing Education: From Policies to Practice points out is the inequality between expenditure on initial and continuing education. Eight to 9 per cent. of the GNP is spent on all forms of education and training. Well over half that goes to initial education. Of expenditure on education by public authorities, 85 per cent. goes to initial education, and this does seem to be a grave imbalance. The hitherto uncritically accepted belief that a single lengthy period of education in the early years of life can meet the changing needs of people throughout their lives is challenged in that report. The DES itself, when in 1980 it published Higher Education in the 1990s, can claim some credit for the shift in attitude. Model E of the options presented in that document makes a case for wider participation by adults in higher education, and the DES PICKUP campaign for professional, industrial and commercial up-dating—which the noble Lord, Lord Kilmarnock, also mentioned—is a practical example of one form of continuing education. There seems at last to be a consensus. But at this moment, some commitment to

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the future is wanted; some comprehensive system of continuing education.
Profound social and economic changes are happening and a sensible Government will surely plan for adaptability in its population. A national development body is what the council proposes. This is not a new idea. Ten years ago the Russell Report advocated it; eight years ago the Venables Report did. The national body would co-ordinate and plan, and would have three main purposes. I shall now quote from the document:

"(i) To review regularly the facilities available in England and Wales for the continuing education and training of adults.

(ii) To initiate, and respond to requests for, advice and help in the development of all aspects of continuing education and training.

(iii) To identify areas of provision in need of specific development and to undertake or sponsor innovative and experimental work so as to encourage and enable the most effective country-wide provision appropriate to particular local circumstances".

The developmental purpose outlined in (iii), which we regard as critically important for the new body, is exemplified in our recently published report on education for unemployed adults. This recommends a central co-ordinating agency for developing educational provision for unemployed adults and argues that these central functions should be discharged inter alia to a national development council for continuing education.
This national body would not conflict but rather work with existing bodies. Care would be taken to ensure that there was no unnecessary duplication. Local centres would be essential. A key element in a system of continuing education would be a network of local centres to provide ease of access for those not able to travel far; attractive settings to encourage into the education system those previously reluctant or too timid to enter education; and local bases within the community from which staff would provide education elsewhere and work at home, in local clubs, or at centres. These bases could be housed in redundant buildings becoming available through falling rolls.
The local dimension is very important to recruitment and to the advisory and couselling sevices. There are a number of ways in which the DES might respond to the ACACE proposals, and the noble Lord, Lord Kilmarnock, mentioned some of them. I should like to add another; that it could give the responsibility to an existing body, such as the National Institute of Adult Education or the Further Education Unit. It could also set up some inter-departmental machinery to facilitate liaison over different aspects of continuing education between the DES, MSC, DoI, DE, DoE, DHSS, and Home Office. But this is not a good proposal and I hope that the Government will not follow it because it seems to me that to set up something involving all departments might well be a recipe for doing nothing and shelving or putting off decisions.
I believe that it will be impossible for the Government to do nothing when the advisory council comes to the end of its remit in October; I do not think that the department could have the nerve to do nothing. Enough initiatives have been taken from it by other departments, the DoE, the DoI, and I think the field of continuing education really does give the DES a new
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chance to prove its metal and to innovate. I hope it will.
If it did nothing it would be ignoring all the facts that recent research has established and not only the ACACE research. The admirable working paper produced by the University of Nottingham Department of Adult Education Changes in Student Participation in Adult Education, which proved a large and unmet need, contained some very interesting evidence of where the numbers had fallen over the last five years, from which groups. The economic reasons they give for the falling off among manual workers, the retired, housewives, the poor, are very convincing—indeed, proved. I would just like to read the last paragraph and the conclusions of this paper:
"The long term damage to adult education is to its values and ideals. Historically adult education has been wrought out of a desire to be socially relevant to all kinds of people and, at the same time, to address itself positively to the less provileged. Thus adult education aspires to be comprehensive and lifelong, and is equally committed to egalitarian ideals as much as to individualism. Striking a balance between the latter two goals is the stuff and lifeblood of adult education and makes for its diversity, richness and interest. But the pursuit of a truly comprehensive service reaching all sections of the community is now in conflict with a narrow, economising view of adult education. The issue of fee levels is symptomatic of a deep rooted problem of priorities and values. The evidence presented in this study suggests that these are being sacrificed to a short-sighted view of adult education".
I think the DES now has its chance to redeem itself. I do hope that Ministers have taken note of this very important paper.
To return to the case for a national body outlined in the green document, funding it is suggested should be the responsibility of the DES and the Welsh Office, and there should also be a subvention from the MSC. An annual expenditure of at least 150,000 would be needed for staff and accommodation and office costs; advisory and development work with temporary staff appointments would need £1½ million, and the dissemination of findings, publications, conferences et cetera would need about £100,000, a total budget of £1·75 million which could be built up to over a period of three years. Comparisons can be made with the Adult Literary Basic Skills Unit which costs £1·35 million, and the Further Education Curriculum Review and Development Unit which costs about £2 million. Comparisons could of course be made with the Assisted Places Scheme which costs £30 million, and in Cmd. 8789: Government Expenditure Plans for 1983–84 to 1985–86, £649 million is proposed to be spent on all adult education services, and this includes the youth service. So asking for £1·75 million to be built up to over three years seems a modest demand, and only a little bit more than the transfer fee for Mr. MacGregor which we were told of today.
It will not come as a surprise to the Minister, who has had to answer my Starred Questions on two occasions in January and in February, that I should refer to the Legal Basis of Further Education which was published in June 1981, nearly two years ago. Comments were asked for by October 1981. The last answer the Minister gave me—and it was the fourth I had had, because the noble Lord, Lord Elton, replied in October and again in the debate on the Queen's Speech in November—was to the effect that the department—that is, Ministers—had not yet come to a decision. This, I may say, was after the noble Lord. Lord Elton, said in October that there would be an

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early Statement. It is imperative that the Government come to a decision on this matter. There are very many devoted workers in the field of continuing adult education who feel slighted and ignored; that the Ministers just do not care. There are the members of the advisory council itself, who have for six years done this excellent work. All workers and enthusiasts are asking for some indication of the Government's intentions and are sick of the stalling, as indeed am I.
Some legislation there will have to be. The Legal Basis of Further Education asks for it. Chapter 12 of Continuing Education: From Policies to Practice asks for it, and it contains actual proposals for revising Sections 41 and 42 of the 1944 Act, as does the Labour post-18 discussion document. I want to tell the Minister that some view, some commitment, is essential now. The Government cannot get away with it any longer. Do they want to stick to the old-fashioned, narrow view of helping chiefly the more academic in a narrow age range, or are they willing to break the mould, follow the good practice that is already going on in some places, and produce a more modern, more up to date, educated, trained, flexible and adaptable population, readier to meet the undoubted challenges and needs of the 1990s?
I hope tonight we can have some good news from the Minister and that the leading article entitled "Remember Model E" in The Times Higher Educational Supplement of 18th March, which says that Sir Keith is pondering whether to create a successor to ACACE and is being advised to do nothing—who by, I wonder?—is wrong. With the THES, I say he should reject that advice.
9.20 p.m.
Baroness Cox: My Lords, I am particularly grateful to the noble Lord, Lord Kilmarnock, for raising this Question on continuing education because it is a subject on which I feel so strongly that is has given me the courage to make my maiden speech; and I beg the indulgence of your Lordships' House on this occasion. Continuing education, as has already been emphasised, is a matter of great importance—indeed, of necessity. It is necessary for at least three reasons: first, to enable people to adapt to a society characterised by continuous technological, economic and social change; secondly, for people to realise their potential to attain personal fulfilment both in work and in recreation; and thirdly, it may also be necessary at a basic level to teach skills such as literacy or numeracy to those who, for one reason or another, are lacking them.
The question requires us to think of the future but it may be helpful first, very briefly, to touch on some of the achievements of the recent past. The Advisory Council for Adult and Continuing Education has done immensely valuable work in its publications on policies, on curriculum and programme development and on basic fact finding. There have been so many other important developments that I can only refer very briefly to two of them, ranging from the large-scale nationally available opportunities afforded by the Open University to innumerable smaller-scale, local initiatives geared to local needs such as the English as a second language courses provided in areas where there are sizeable numbers of people whose first
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language is not English. Such developments must be seen as encouraging.
If we now turn to consider ways in which future policies can build on what has already been achieved, it may be relevant to identify at least two distinct but related purposes of continuing education: first, it can make educational opportunities more widely available; and, secondly, it can serve the purpose of up-dating occupational skills and knowledge. Both are crucial. For example, with regard to the first purpose—that of increasing educational opportunity—one of the most valuable contributions of continuing education is to offer a second chance to those who missed out the first time round. The adult literacy schemes have played a valuable role in this context and the survey by the Institute of Mathematics, which showed that a disturbingly high proportion of school-leavers were incapable of tackling even very simple everyday mathematical problems, suggests that there may be scope for similar work here.
Another very valuable role for continuing education lies in offering new opportunities to older students. This is perhaps particularly important for women who have devoted many years to caring for their children. When the younger generation leave home many of these women have at least a quarter of a century of active life and service ahead of them and many welcome the chance to embark on vocational training which enables them to take on new and rewarding roles.
However, for many of these older students it is essential that facilities for continuing education are available on a part-time basis because their other commitments preclude full-time study. For this reason I particularly welcome and support the recommendation of ACACE that:
"Priorities for action should include: development of more part-time provision and complementary child-minding facilities";
and for those institutions providing part-time courses:
"Adjustment of full-time equivalency ratios to take account of the additional workloads required for part-time education".
Perhaps I should declare a personal interest at this point, as I owe both my first and my higher degrees to opportunities for part-time study. I am therefore understandably committed to policies which make part-time study more widely available. This commitment has been enhanced by many years of rewarding work for the Open University, teaching large numbers of highly motivated and splendidly enthusiastic students who deeply appreciate the opportunity to study later in life.
I now turn very briefly to that second purpose of continuing education—the updating of occupational skills and knowledge. There have been important developments here, too. If I may, I should like to draw to your Lordships' attention some recent initiatives which have occurred in my own profession of nursing. I do so (I hope with suitable maidenly modesty) because I think that these developments may have something to offer to the wider debate on the principles which underlie some of the policies of continuing education.
Nursing has been taking the question of continuing education very seriously. A recent paper from the United Kingdom Central Council for Nursing,

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Midwifery and Health Visiting states unequivocally:
"Continuing education is a sine qua non of any professional person today. Every opportunity must be offered to all professional nurses for the updating of clinical knowledge".
Recent publications from the Royal College of Nursing link a commitment to continuing education with the fundamental commitment to the provision of the highest possible standards of patient care. Indeed, so strong is this commitment that it underpins current proposals for changes in the professional career structure for nurses.
For example, it is proposed that the formal qualification, obtained at the end of initial training, is seen as just the beginning of professional education rather than a ne plus ultra. In order to be eligible for promotion to senior posts and higher salary scales, nurses will need to demonstrate that they have fulfilled specified criteria of accreditation, including the successful completion of appropriate post-basic training. In other words, there should be no automatic promotion based just on length of service, and no automatic progression through salary bars, as tends to occur in some other professions. Midwifery is even further along the road of commitment to continuing education, for midwives are required to attend regular refresher courses every five years in order to remain on the professional register and to continue in professional practice.
I have mentioned these examples of the application of the principle of continuing education in this professional context because I hope that they may be seen as exemplars of a dedicated commitment to its importance. Although they may appear tangential to the main thrust of the debate as it has been initiated, with its particular emphasis on the work of ACACE, I think they do come within its broad terms of reference. I should like to ask whether some note of this aspect of continuing education might usefully and constructively be taken into account in any considerations of future overall policy.
9.29 p.m.
Lord McIntosh of Haringey: My Lords, I have two duties at the outset. One gives me unalloyed pleasure, and it is to express on behalf of the House our appreciation of the excellent maiden speech of the noble Baroness, Lady Cox. If I may say so, I thought that she not only showed her professional knowledge but also the warmth which she feels about adult education students. That was particularly valuable to us in this debate today.
My second duty is to declare an interest. I do so because, since I am the husband of the convenor of Committee B of the Advisory Council for Adult and Continuing Education, there might be thought to be some family interest in the future of that advisory council and what might take its place. I want to say straight away that, having had the work of the advisory council flowing through our study and living room for at least five and a half years, there is at 4 Talbot Road a consensus that the advice is no longer enough and that the remit of the advisory council in anything like its present form ought not be renewed when it expires in October of this year.
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I should like to refer in particular to the aspects of continuing education which have involved me personally in work for the Manpower Services Commission and work in manpower and industrial research generally. As a starting point I take the ACACE report on the education of unemployed adults because it seems to me that that reveals in all its starkness the contrast between the kind of funding which is available to the Manpower Services Commission and the kind of funding which is being considered for the new development body for adult and continuing aducation. If I give the figures, that will be almost enough to make the point. The MSC strategies for what is in effect adult education in the wider sense in which ACACE used the term involve expenditure of roughly £280 million. The expenditure proposed by ACACE in its report on education for unemployed adults would build up to a figure of, I think, just over £15 million. The MSC has already made it clear that it does not consider that education of unemployed adults is an appropriate area for a slice of the £280 million. As my noble friend Lady David has said, the cost of the proposals for a development body for continuing education amounts to less than £2 million a year, even at the end of three years. So the quantum of money involved in the proposals is very small indeed.
Yet the importance of the need for such a body can hardly be exaggerated. I should almost go so far as to say that it will be unavoidable. My noble friend reminded us that five years ago the discussion document on Higher Education in the 1990s, put model E—the model which most closely approximates to the work of ACACE—almost as the last of the options available, as the most revoluntionary of the options available. I do not think that anybody would now say that. I believe that the fact of the decline in school populations, which in due course will be transferred to tertiary education, is well known. However, in parenthesis I must say that my youngest son, who was born in 1964, is now entering tertiary education, being a member of the largest cohort since the war, and is already feeling the effects of considerable cuts in higher education provision.
The effect of the decline in school populations will certainly result in traditional higher educators scrambling for the work (to put it at its lowest) of continuing education. The Goldsmiths conference, to which noble Lords have referred, makes it clear that that point is well appreciated in the higher education sphere, and that the flexibility which might not have been available 10 or 15 years ago towards continuing education is now very much more accepted by those working in the higher education sector.
I chose as an example the education of unemployed adults, but really the question is very much wider than that, and the other general realisation which has taken place since the publication of the discussion document on Higher Education in the 1990s is the realisation of the effect of technological change. I do not think that anyone will live through a lifetime of work without having the nature of their job changed at least once, probably twice, and maybe three times. I am reminded of a saying of my friend Michael Pentz, Dean of Science at the Open University, who said some years ago that the body of scientific knowledge from the time

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of the ancient Greeks had more than doubled since he had gained his PhD a little more than 25 years previously. That is the rate at which scientific and technological change is taking place. All of us, at one stage or another in our lives, will have to make major changes in the work we do, some of it, perhaps without adequate training, by coming to your Lordships' House. Other people have different kinds of responsibilities. It will be necessary to increase the provision, much more than has ever been accepted by Governments or by the educational world in the past, for those retraining in skills at all levels.
I carried out a survey some years ago on management education in the London area. I was able to calculate, following 500 interviews, that the amount of time spent on their own education and training by managers working in the London region was approximately two days a year—in other words, less time than they spend making up their expense claims. That position cannot persist either for management or for people working at other levels in industry and commerce and in the public sector. Something will have to be done. The need for a new initiative is virtually unstoppable.
I feel some reluctance, I must confess, to support any proposition that there should be a new body. When anyone suggests that some new institution should be established, my natural instinct is that we should be able to abolish half a dozen others in order to have a rational view of the work that is to be done. There is a real danger in all these areas—education suffers no less than any other sector—of the development of advisory bodies and co-ordinating bodies that trip over each other's heels. That must be avoided. I hope that the Government will not simply set up some other co-ordinating body—the idea of an interdepartmental committee has been criticised—to do the work that is so obviously necessary.
I think, on reflection, that this may be an exception. The number of people who will need to be involved in the provision of the wider range of continuing education that is now necessary is great. They include Government departments, local education authorities, the educational establishments at all levels, the communication industry, broadcasting and the press, those responsible for new technology in the form of data processing and video production of educational material, the trade unions, employers' organisations and community groups. One of the essences of the provision required is that it should be local and accessible to people who do not think of themselves as being in the educational market and who would be more confident if the provision was local among their neighbours in a context and an atmosphere that they could recognise. All of these must be brought together in a constructive way.
The kind of new development body proposed in the ACACE report and by Dr. Hoggart in his message to the Secretary of State last December will have a most difficult job to do. A very large number of people must work together in order to start out on the 20-year programme which ACACE envisaged in the document published last year. The problems are immense. The opportunities are very great. If we do not do anything about it now we shall certainly have to
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do something which will be much less effective in the future.
9.41 p.m.
Baroness Carnegy of Lour: My Lords, may I first join in the congratulations to my noble friend Lady Cox on an exceedingly interesting and able maiden speech. It is excellent that we are going to have her voice in our midst in the future. I rise to speak with diffidence on a matter which concerns only the area south of the Border, but I do so because I am the chairman of the Scottish Community Education Council which has precisely the type of powers which are suggested in the ACACE report. Whether this is the right solution for a much greater area nine times as large in England and Wales, I am not sure, but I do in fact deal a great deal of the time with these matters as well.
I endorse what other noble Lords have said about the quality of the council's report. It seems to me to set out with admirable clarity the reasons why wider and better access to continuing education of one sort or another will be of such importance in the coming years both to individuals and to the economy. Important decisions have to be taken about the central education, and for the whole of Great Britain for training. Whatever the solution, these two areas—education and training—can no longer be separated even though at the present time they are the responsibility of separate Government departments.
I disagree with the report about the imbalance in the funding of youth training. The whole objective of the first part of the Government's strategy is to get a proper foundation of education and training for young people on which they can build in the changing future. I also disagree with what one or two noble Lords have said in relation to the concept of talking about more provisions and better provision, in this context. "Provision" is a suitable word in some areas of what we are talking about, but not, I think, in all.
The report itself acknowledges that it is crucial, especially on the less formal side of continuing education, that people are involved in getting the continuing education going themselves, in arranging it and even in the teaching as in the learning. It seems to me that there are broadly three areas for attention and decision by the Government and those three areas are, in fact, susceptible to three different approaches.
First, there is the continuing education—to which my noble friend was referring when she was talking about the nursing profession—which is closely linked with employment, with the way in which one earns a living. The changing nature of work is not simply a matter of learning new skills. One has, at whatever level one operates, to learn to think in new ways as well. Imagination, the ability to analyse, to innovate, to see how one's work fits into the whole, demands more than simple craft training has hitherto offered. Likewise, the graduate who has learnt the theory of a certain subject, finds that his or her job involves understanding more about people, more about management, more about other subjects apart from that originally studied, if he is to be competent.
This kind of continuing education is very closely linked with training. I believe that it is entirely wrong

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to say that the Government have no strategy on this subject or will not have a strategy. The MSC is in the course of developing a consultative process at this moment on what the national strategy for adult training should be. It seems that the strategy for continuing education must be linked with this across department boundaries. I sometimes wonder whether this is not an area which is susceptible to a voucher system, a means by which people could buy their share of continuing education from time to time throughout their lives—continuing education linked with their ability to earn a living. Whatever way it is done, funding for this has partly to be found by Government, for this kind of continuing education is about the economy and about the welfare of the entire country. To leave it to employers would not be enough.
The second area is the informal learning of new things which people enjoy, which they very much want and which they desperately need in the modern world. What used to be called evening classes, ranging from keep fit and old fashioned dancing to woodwork, dressmaking and cookery, right through to the effect of the Roman occupation on modern motorways (which was the subject of such a class), used to flourish until they were knocked on the head by the doubling of teaching costs and by the inability of people to pay. As the noble Baroness, Lady David, has said, it has tended to be the educated who have sought more education in this kind of area. Here it seems that the vision in the report that there could be an enormous network of activity at not too great cost is something that really could be tackled. In many parts of the country now, including inner cities and rural villages, people are finding ways to help one another learn and enjoy one another's society as they do it. It happens during the day; it happens in the evening on every sort of subject. People of all ages are involved, including very many pensioners.
The way forward here is surely to have a few professionals acting as what one might call "multipliers"—people who could help local leadership develop in organising classes, forming classes, finding teachers and arranging accommodation and finance. In the area where I live this is happening now most successfully and most cost-effectively. People are then involved in what they are doing; they learn better, and are far more likely to come along than if provision is laid on for them. That is what attracts the already educated. The subject matter may be microcomputer programming, how to get the best out on one's electric oven, aspects of do-it-yourself, or motor car maintenance. The cost will be fixed by the people involved and in that way they will arrange it in a way that is suitable for them. So this great network across the country seems to me to be a possible way forward which really could involve the vast majority of people who want to participate.
The third aspect, which has already been mentioned, is basic education. In Great Britain we already know a lot about that. Government pump-priming which there is at present, and local education authority input have enabled many hundreds of amateur adult tutors to learn how to help a person to read, to write and to calculate. It seems to me that this should continue and develop on the lines it is at the
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moment. Therefore, there are three aspects. There is basic education, the informal leaning of new things for their own sake, which people want and need so very much, and the education linked with earning a living.
In Scotland we focus it on the Scottish Community Education Council, but the initiative on the ground mostly has to come through education authorities and through voluntary organisations. It is simply the coordinating that is done by our council. Whether this is a way for England and Wales I do not know, but I am convinced that there are enormous possibilities at not enormous cost.
9.50 p.m.
The Earl of Swinton: My Lords, I am grateful to the noble Lord, Lord Kilmarnock, for affording us this opportunity for a brief exchange of views on a subject—continuing education—which is rightly of concern not only to this House but to many well-informed interests outside it. Social and economic changes, largely related to the accelerating pace of technological development, have brought about a much wider recognition of the need for education to be seen as a process which should continue, in one way or another, throughout adult life, and not as a once-for-all process to be cut off abruptly when the individual reaches some point in his mid to late teens or, if he is relatively lucky, his early twenties.
Turning now to the terms of the noble Lord's Question, I should like to make two preliminary points. First, I hope he will not be too disappointed that I am unable this evening to give him a very specific answer. As I suspect the noble Lord himself knew, and certainly as the noble Baroness, Lady David, knew because she quoted it, in reply to a recent question in another place my honourable friend the Parliamentary Under-Secretary of State for Education explained that the Government hoped to be able to make a statement "in the spring" on ACACE's proposal for a national development body for adult and continuing education. Notwithstanding any meteorological appearances to the contrary, I thoroughly agree with the noble Baroness, Lady David, that spring begins on 21st March. I say this with absolute confidence because it happens to be my birthday, and I always say that I was born on the first day of spring. I do not think it can be said, as today I think is the 28th, that we are seriously behind schedule in our consideration of this matter.
I am sure that the noble Baroness, Lady David, would not agree that this might be the case when it comes to the Government statement on the report, the Legal Basis of Further Education. Tonight I am not going to get involved in another debate on whether sooner is sooner than shortly, or shortly is shorter than soon. Incidentally, I know that that got on to the back page of the Times Educational Supplement, and a month later it got into Private Eye. I think there might be a message there. I can only repeat that the report and the many representations on it are being considered carefully, and a statement will be made as soon as possible.
Secondly, and purely to set the record straight, I ought just to note that the terms of the noble Lord's Question embody a slight misconception, and this has

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been recognised by several noble Lords and noble Baronesses who have spoken this evening. No final decision has yet been taken about the future of ACACE when its present term expires in October. But in saying this I must not myself mislead the House. ACACE was original appointed for three years only; and when its term was extended for a further three years, the then Secretary of State explained to the council's chairman, Dr. Hoggart, that he thought this extension should be sufficient to enable the council to complete the task assigned to it. A similar view was expressed by Sir Leo Pliatzky in his Report on Non-Departmental Bodies; and I think it is fair to say that ACACE itself does not expect, nor indeed particularly wish, to be invited to continue in its present form. I am grateful to the noble Lord, Lord McIntosh of Haringey, for endorsing that.
That this should be so is in itself a tribute to what the council has been able to achieve in the six years of its existence. The council's programme of work has placed heavy demands on the time and the talents of its busy, unpaid, members, and some individuals in particular; their dedicated response to those demands is attested by an impressive list of publications. Over 20 reports have been published to date, with a further 10 or so in the pipeline, covering a wide range of topics. Some of these have been mentioned this evening. A few of the titles will give some indication of the varied ground which the council has managed to cover; Education for Unemployed Adults—which has been referred to by more than one speaker; Part-Time Degree Study in the UK; Adults' Mathematical Ability and Performance; The Arts and Adult Education; and so on. Through the council's efforts, our knowledge and understanding of the problems of a complex field have been significantly enhanced.
Proceeding through the terms of the noble Lord's Question, I come to the major report, Continuing Education: From Policies to Practice, which ACACE submitted last year to the Secretaries of State for Education and Science and for Wales. Your Lordships will not expect us to provide a comprehensive response as yet. Again, as the noble Lord, Lord McIntosh of Haringey, pointed out, many of the recommendations of this wide-ranging document are, in any case, directed to other bodies—local education authorities, individual institutions, examining bodies and so forth—and ACACE themselves recognise the long-term nature of many of the elements in their strategy, and the need for further research and discussion before any definite action is taken.
But there is a third point, which I should be less than frank if I did not make. The overall strategy proposed by ACACE is an ambitious one. Except in the most general terms, proposals in the report are not costed, and I sympathise with the council's desire to avoid a specious appearance of accuracy and objectivity in an area of considerable uncertainty. Nevertheless, the full implementation of ACACE's strategy would, undoubtedly, entail a substantial increase in public expenditure which, within current ceilings, could be met only by redistribution from other areas. This is not, I think, the time or the place for a wide-ranging debate about the allocation of resources between the main public expenditure programmes, nor even between different elements of educational
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expenditure. We all have different priorities and are rarely prepared to see our favourites cut, as we have learned during past weeks in your Lordships' House.
It follows from what I have been saying that expansion in the provision of adult and continuing education will, to a great extent, depend upon the willingness of those individual students or sponsors who can afford it to contribute as much as possible towards the real cost of provision, thus releasing resources to subsidise provision for those who cannot afford to contribute much. I quite accept that some people cannot afford much, if anything, and that it is only right and proper that special provision should be made in such cases. I am happy to say that the great majority of LEAs charge reduced fees—and, in some cases, nothing at all—to such categories of students as the handicapped, the unemployed, the elderly and persons attending courses in basic literacy and numeracy.
If I may, I will answer two specific questions which were asked of me. One was by the noble Lord, Lord Kilmarnock, and the noble Baroness. Lady David, about the use of surplus school accommodation for adult education. It is the Government's policy to reduce public expenditure, and one of the ways in which this can be done is when accommodation becomes available through the falling rolls of children. But it is for local authorities to determine, in the light of the resources available, what is to happen to that accommodation which is no longer needed as a result of falling rolls. The noble Lord, Lord Kilmarnock, also asked about joint funding for the MSC and the DES. I am delighted that he asked me that question, because there is sometimes a feeling in educational circles that the MSC is the "enemy", and I am pleased that there is some co-operation. I am glad to say that the MSC is considering the development of a strategy for adult training. The DES is in close contact with the MSC over this, and will seek to ensure that any action taken is closely complementary.
Any strategy for the future development of continuing education must seek to ensure that necessarily scarce public resources are deployed in the most effective way possible; which, in turn, involves the careful selection of priority fields for such public investment as we can afford. Let me therefore give the House a few brief examples of what is being done in certain fields which we judge, for various reasons, to be of especial importance.
I shall begin with the Government's PICKUP initiative, which was mentioned by the noble Lord, Lord Kilmarnock, and the noble Baroness, Lady David, because it illustrates a point I have been making. The initials stand for "professional, industrial, and commercial updating". The ever-increasing pace of technological change, the development of new management techniques and changes in legislation all contribute to the need for those engaged in industry and commerce to keep abreast of developments. By and large, our educational institutions have not played as extensive a part in this as they might. There are already, of course, a sufficient number of honourable exceptions to establish both the potential contribution which the education service can make and the readiness of

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employers to pay an economic price for the right product.
Many of the factors inhibiting developments, in other words, are not fundamentally financial. Rather, there exists a communications gap and, in some cases, a lack of confidence based on lack of experience. Firms do not always appreciate the contribution which our colleges of further and higher education can make to meeting their updating requirements; colleges do not always realise that these requirements exist and that the employers will pay an economic price to anyone who is able to meet them. A college which genuinely wants to help may, nevertheless, be unsure how to go about it. In terms both of course content and teaching method, in-service education for mature employees requires a measure of adaptation which colleges accustomed to providing initial vocational education for the young may find daunting.
What is needed, against this background, is a catalyst which will promote dialogue between colleges and employers, encourage the provision of better and clearer information to bring about a better match between supply and demand, and publicise examples of successful practice so that colleges not yet active in the field of post-experience vocational educational can benefit from the experience of the pioneers. The PICKUP initiative seeks to act as such a catalyst. Colleges also need help in the process of adaptation to which I have just referred, and accordingly curriculum development projects in key areas are being funded as part of the initiative.
PICKUP is an example of a form of continuing education in which it is reasonable to look for an expansion of provision on a self-financing basis, given a suitable steer and a modicum of pump-priming from the centre; but, as I have already indicated, there are other priority areas to which different considerations apply, and one such instance is the provision of education in literacy and basic skills. Here, we have carried forward the campaign begun in the 1970s, which originally focused on literacy. I was delighted that my noble friend Lady Cox, in what I thought was an excellent maiden speech, remarked upon this point. Apart from encouraging the local education authorities to make provision, and to subsidise it, we set up in 1980 the Adult Literacy and Basic Skills Unit to act as a central focus, and in particular to sponsor innovatory development projects in collaboration with LEAs and other providers; and last year we announced that grant-aid for the unit would be continued for at least a further two years, until 1985, and also extended the unit's remit to enable it to sponsor a somewhat wider range of projects. We hope to make an announcement early next year about the unit's future after 1985.
To these contrasting examples on initiatives to meet defined priorities I would add two more, In the first of the reports mentioned in the noble Lord's Question, much is rightly made of the problem customarily described by the phrase "educational barriers to entry". Alternatively, as I think my noble friend Lady Cox put it, there is need for "a second chance"—that is to say, there is the problem faced by the mature student who wishes to embark on a course of higher education but finds that he does not possess the
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necessary qualifications for entry. In fact, there is more flexibility in the system than is commonly appreciated, and what the student needs is to be able to find out, more readily than he often can at present, what opportunities are already open to him on the basis of his existing qualifications and experience. With this in mind, the Open University—and I think that here I come to the point in which the noble Lord, Lord Kilmarnock, was saying that the noble Lord, Lord Perry, was very interested—has recently been commissioned by the Department of Education and Science to set up a pilot Educational Counselling and Credit Transfer Information Service; the intention is that this pilot service, operating initially in the South-West but covering courses at all universities and polytechnics, will commence in 1984.
The last example I would mention briefly is that of pre-retirement education. I think that my noble friend Lady Carnegy of Lour is interested in this. The proportion of retired people in our society is growing and we are convinced that people are much more likely to enjoy a satisfying, active and independent retirement, and to be better able to cope with the transition from work, if they have prepared for it in advance. On the whole, I think it fair to say that this point has come to be increasingly widely appreciated in principle, but that the provision of effective pre-retirement education is not as widespread as might be wished. To support development work and disseminate good practice, the Pre-Retirement Association, who deserve much credit for their efforts in raising public awareness of the need for a well thought-out approach to the implications of retirement, have been given a three-year grant by the Department of Education.
I have left myself little time to speak of the second report to which the noble Lord's Unstarred Question alludes; but as I noted earlier in this speech, a decision has not yet been taken on ACACE's proposals for a national development body, and there is therefore little which I could properly say on this aspect of the Question. Recalling what I have said earlier in this speech, therefore, let me simply say that the need, as we see it, is to secure the optimum deployment of scarce resources to support development in those areas of continuing education which merit the highest priority—and I do not suggest, of course, that those areas are confined to the three or four which I have chosen to mention tonight. The ACACE proposal must be judged against this criterion, and on this basis it has its pros and its cons. A wide-ranging representative body can be well-placed to select key areas for development on the basis of an informed and comprehensive overview of the field; on the other hand, it may be tempted to give each potential claimant too small a slice of what must be a finite cake.
Experience suggests that some of the most successful development agencies have been those with more clearly and specifically directed remits, often over a fairly narrow range of priority areas. Against the advantages of a continuing focus are the disadvantages of quangos with indeterminite lifespans which rely on Government finance. The decision which the Government have to take on the ACACE proposal is not therefore a simple one, and in reaching that decision the Government will of course take account of the

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views expressed by noble Lords this evening, for which I am grateful.
Lord Kilmarnock: My Lords, before the noble Earl sits down may I ask him, since he prayed in aid that the first day of spring was only a week behind us, whether we can expect a more definite statement before the first day of summer?
The Earl of Swinton: My Lords, I am always very baffled about this because summertime started yesterday and it rather intrigues me, therefore, as to whether we only get six days of spring, but I do not think that the beginning of summertime necessarily heralds the beginning of summer. I cannot give a more definite answer than that to the noble Lord, I am afraid.
House adjourned at five minutes past ten o'clock.

  THE BALTIC STATES: DIPLOMATIC PRIVILEGES
  THE BALTIC STATES: DIPLOMATIC PRIVILEGES
  UN WORLD DISARMAMENT CAMPAIGN: PARTICIPATION
  UN WORLD DISARMAMENT CAMPAIGN: PARTICIPATION
  CIVIL SERVANTS: DECREASE IN NUMBER
  CIVIL SERVANTS: DECREASE IN NUMBER
  EDUCATIONAL MANDATORY AWARDS: BRITISH CITIZENS WORKING IN THE EC
  EDUCATIONAL MANDATORY AWARDS: BRITISH CITIZENS WORKING IN THE EC
  THE BRANDT COMMISSION: MEMORANDUM
  THE BRANDT COMMISSION: MEMORANDUM
  BRITISH CITIZENS ABROAD: MISBEHAVIOUR
  BRITISH CITIZENS ABROAD: MISBEHAVIOUR
  BLIND CHILDREN: NATIONAL PLAN FOR EDUCATIONAL PROVISION
  BLIND CHILDREN: NATIONAL PLAN FOR EDUCATIONAL PROVISION
  TRAFFIC AREA BOUNDARIES
  TRAFFIC AREA BOUNDARIES