Sitting of 16 November 1983

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  TRADE AND INDUSTRY

    Agricultural Machinery
    Mr. Farrasked the Secretary of State for Trade and Industry what was the surplus in 1979 of the value of agricultural machinery exports over imports; and what is the position at the latest available date.
    The Under-Secretary of State for Trade and Industry (Mr. John Butcher): The surplus in 1979 was £524 million and in 1982 was £298 million. Those figures include agricultural tractors as well as agricultural machinery.
    Mr. Farr: As there have been many imports of machinery since 1970, when formerly that machinery was exported from Britain, and as the import trend is increasing, which is disturbing, will ray hon. Friend consider whether the progress of the state-backed research associations can be redirected and whether additional finance is needed?
    Mr. Butcher: Our weapon is support for the innovation head of account. Thus far, about £2·3 million under support for innovation has gone into the agricultural machinery industry. It is a demand-led scheme. We should be pleased to entertain further projects in that context, provided that they are viable and meaningful. I take my hon. Friend's point and look forward to further applications from the companies that are under such pressure at the moment.
    Sir Kenneth Lewis: I support what the hon. Member for Harborough (Mr. Farr) has said. Is my hon. Friend the Minister aware that whenever I go to an agricultural show and look at the machinery section all I can find are machines that are made outside this country? I am beginning to wonder how much ability we have left to manufacture agricultural machinery. It is extraordinary that, though we have the best agriculture industry in the world, we are buying so much machinery from overseas.
    Mr. Butcher: We are still the largest exporter of tractors in the world. However, I think that my hon. Friend is concerned about agricultural machinery in general. He will know that our industry looks enviously at the product certification schemes in Europe, particularly in Denmark, Holland and Germany. We are examining those schemes. I assure my hon. Friend that the industry's case is not going by default and that we are concerned to see that our companies fight back, preferably using the innovation route.
    Mr. Williams: Does the Minister not recognise that the figures he has given represent an appalling decline over the past few years? Are not the already poor prospects for the section of the industry, like those for all industry, worse this week than they were last week? The Confederation of British Industry made that forecast as a result of the Government's announcement unnecessarily to increase gas and electricity prices. Is it not about time that the Government stopped vindictively beating industry about the head with their doctrinal deflationary clubs?
    Mr. Butcher: I cannot accept the central assertion in the right hon. Gentleman's question. The Government are concerned to see that our existing and established manufacturers fight back in international markets. We believe that the best way to do so is by giving them a lower rate of inflation and allowing our recovery to emerge, as it is, gradually. We believe that the industry has a good future. We are still exporting £298 million worth more equipment than we import.

    Girobank
    Mr. Allan Robertsasked the Secretary of State for Trade and Industry what proposals he has for the future of the Girobank.
    The Minister for Information Technology (Mr. Kenneth Baker): The Post Office board is responsible for the development of the Girobank. But it is for the Girobank management and work force to ensure the bank's success by continuing to improve productivity and competitiveness against other financial institutions.
    Mr. Roberts: Will the Minister congratulate both the management and work force of the Girobank on having continued to develop successfully and profitably? Will he give an assurance that he will resist any pressures from banking or commercial interests to curtail the activities of the Girobank or to privatise it?
    Mr. Baker: I echo the hon. Gentleman's remarks. The management and work force of the Girobank have done a good job. There are no immediate plans to privatise the Girobank. However, as the House will know, an important part of the Government's policy is to reduce the size and scope of the public sector, and options for privatising each nationalised industry, as a whole or in part, are kept under review. The Girobank is not excluded from that review.
    Mr. Wrigglesworth: Why should an organisation such as the Girobank be considered for privatisation when it is fully in competition with other sectors of the banking industry? What is the justification for even considering privatisation?
    Mr. Baker: The reverse of that question is why should the Girobank be in the public sector? Its privatisation would be a complicated matter, because we cannot consider it separately from the counter network, a large proportion of which is already in private hands through the sub-post offices.
    Mr. Ewing: Is the Minister aware that his statement that the Girobank is under continuing review for possible privatisation will cause widespread uncertainty among those who bank with it and work for it? Will he seriously reconsider what he has said and accept that under no circumstances should the Government privatise the Girobank?
    Mr. Baker: I have said what I have said. I wholly refute the suggestion that there is any uncertainty. It is fallacious for Opposition Members to believe that through privatisation jobs are at risk. That is not necessarily the case, as we are discussing during the Committee stage of the Telecommunications Bill.

    Regional Policy
    Mr. Fallonasked the Secretary of State for Trade and Industry whether he has completed his review of regional policy.
    Mr. Fisherasked the Secretary of State for Trade and Industry if he has yet completed his review of the arrangements for regional aid.
    Mr. Strawasked the Secretary of State for Trade and Industry when his review of regional industrial aid will be completed.
    The Secretary of State for Trade and Industry (Mr. Norman Tebbit): No, but I intend to publish shortly a White Paper which will invite views from interested parties on some of the issues in a process of consultation that will be part of our review.
    Mr. Fallon: Will my right hon. Friend give an assurance that the White Paper will tackle such structural problems of the north-east as centralised wage bargaining, lopsided public investment and a shortage of entrepreneurs at all levels?
    Mr. Tebbit: I hope my hon. Friend does not think that it is quite that bad in the north-east. Certainly there are a number of problems, and some of them will be dealt with in the White Paper. That is one reason why we shall be seeking views on some aspects, as well as stating our policy on others.
    Mr. Fisher: Will the Secretary of State ensure that, as its major priority, the White Paper deals with the creation of new and lasting jobs in the regions generally, but especially in north Staffordshire and my constituency of Stoke-on-Trent, Central? Is he aware that 50 per cent. of the jobs in the pottery industry have disappeared during the past four years? Does he agree that unless there is new regional aid, as a matter of urgency, the industrial base of north Staffordshire will disappear?
    Mr. Tebbit: It is fortunate that there are good signs of better times in the pottery industry. A number of companies have been making a strong come-back, and some have taken on additional labour. Regional policy is about the creation of jobs, but quite often the expenditure that has been incurred has not necessarily resulted in the creation of many new jobs.
    Mr. Straw: Is the Secretary of State aware that in the north west and other regions there is the gravest suspicion that the review is nothing more than a smokescreen for further cuts in total aid to the hard-pressed regions? If that is not true, will the right hon. Gentleman take this opportunity to assure us that the White Paper and the review will not be used as an excuse for further cuts in regional aid, which has already been cut savagely by the Government?
    Mr. Tebbit: When looking at these issues, the first step must be to decide what instruments should be used, how expensive they may be and how they can be tailored to
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    give the best possible results for the least possible expenditure. I am sure that the hon. Gentleman does not want to incur public expenditure simply for the sake of it —perhaps I am not sure.
    Mr. Hal Miller: In the review of regional policy, will my right hon. Friend pay special attention to the need, not simply to create new jobs, but to preserve existing jobs in industries that need to be modernised and restructured, perhaps with the loss of some employment, to ensure their competitive future?
    Mr. Tebbit: My hon. Friend is right. That is why, of late, we have been giving more help to schemes, especially in the engineering and manufacturing industries, for the introduction of new products, new techniques and new machinery. My hon. Friend the Under-Secretary has been especially active in that respect in the west midlands. We must beware that regional policy does not simply shuffle problems, at great expense, from one part of the country to another.
    Mr. Grylls: Will my right hon. Friend always remember that regional aid takes money through taxation from firms in one area and gives it to those in another? Will he ensure that the basis of the White Paper is value for money for the taxpayer?
    Mr. Tebbit: I can reassure my hon. Friend on the matter that he has raised. The justification for regional policy is primarily on social grounds — trying to do something to assist regions in the most difficulty, especially those with high unemployment.
    Mr. Park: What are the implications of the review for the west midlands? Will the Secretary of State do anything to stop the continuing contraction, especially in the machine tool industry?
    Mr. Tebbit: The hon. Gentleman had better await the White Paper before he makes his judgment. Opinions are divided on whether the west midlands would be better off by being included in an assisted area, or better off without what is often considered to be unfair competition from a nearby assisted area.
    Mr. Kenneth Carlisle: Will my right hon. Friend bear in mind that the strong message from the Conservative Benches is that assisted areas blight their neighbouring areas?
    Mr. Tebbit: I understand my hon. Friend's point. There is a case, especially on social grounds, for those in the more fortunate parts of the country to assist those in the less fortunate parts, but we should not pretend that that necessarily gives a great boost to the economy.
    Mr. Kirkwood: Will the Secretary of State bear in mind the needs of the rural parts when he draws up the White Paper? Will he consider establishing a new regional status—a rural development area?
    Mr. Tebbit: I am sure the hon. Gentleman is aware of the help given to rural areas, not least through such organisations as COSIRA and through assisted area status for certain rural areas. I hope he does not forget the greatest of all aid to rural areas — the common agricultural policy. He may reflect upon its cost-effectiveness, but it amounts to a great deal of money.
    Mr. Shore: I greet the Secretary of State on his first appearance at Question Time in his new and important

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    role. If he is as positive and creative in his new Department as he was negative and destructive in his previous role, British industry and trade may have reason to greet him and look forward to his tenure of office.
    Is not the central problem facing anyone considering regional policy the fact that during the past four years the whole of Britain has become a development area? As this is one of the most controversial of all subjects—which areas should benefit and whether such benefits should be for employment or capital purposes—would it not be more sensible to come to the House with a Green Paper rather than a White Paper, so that we and the Minister can enjoy sufficient flexibility to make our points without the right hon. Gentleman being over-committed before hearing what we have to say?
    Mr. Tebbit: I am very grateful to the right hon. Gentleman for his characteristically generous welcome, which I entirely reciprocate. I am sure that from time to time we shall have our differences, and I am sure also that they will be honestly debated. I look forward to hearing him put his side of the case—whether it is the one in which he believes, or the one that is his party's policy.
    I assure the right hon. Gentleman that I shall remain as destructive of bad practice, and as negative about those who have impaired our industrial economy, as I ever was.
    On the right hon. Gentleman's point about a Green Paper, I have already said that although we intend to publish a White Paper, there will be a great deal of room for discussion. There will be some green edges to the paper. That is the right way in which to proceed.

    Manufactured Goods
    Mr. Gouldasked the Secretary of State for Trade and Industry what is his preferred index of the competitivenes of British manufactured goods.
    Mr. Kenneth Baker: The competitiveness of British manufactured goods has many aspects, including both cost and price competitiveness and the important non-price factors in competitiveness such as design, reliability, delivery performance. No one measure is adequate.
    Mr. Gould: Why does the Minister not give a precise answer to the question? Is it because he knows that any index that he cares to look at would show a substantial loss of competitiveness since 1979 and that the index that has most commonly been relied on shows a decline of no less than 33 per cent? Does not this dreadful figure show that those bits of British industry that have survived the past four years are not leaner and fitter, but smaller and much weaker?
    Mr. Baker: There are many aspects of competitiveness, and the main one, as the hon. Gentleman will be aware, is wage inflation. A large part of the competitiveness of British goods was lost through high inflation. If we have high wage inflation when there is low wage inflation among our competitors, that inevitably leads to British goods being relatively more costly, and thus to fewer sales overseas.
    Mr. Carter-Jones: Will the Minister consider the effect of competitiveness where a monopoly is held by an aircraft supplier? Will he consider giving aid to the British airframe and aero-engine industry, particularly to allow the A320 to become competitively effective?
    Mr. Baker: That is a different question.
    Mr. Budgen: Does my hon. Friend agree that all this discussion shows that it would be unwise for the Government to attempt to manipulate the sterling exchange rate to hold it up?
    Mr. Baker: Yes, Sir.

    Manufacturing Industry (Output)
    Mr. Knoxasked the Secretary of State for Trade and Industry what is the most recent figure for output in manufacturing industry; and how this compares with the figure for the same month in 1979.
    Mr. Tebbit: In the third quarter of 1983 the index of production for the manufacturing industries was 94.9. This compares with 108.1 for the same quarter of 1979.
    Mr. Knox: Does my right hon. Friend not find this reduction in the output of manufacturing industry alarming? What steps do the Government propose to take to raise demand for the output of manufacturing industry to the level of 1979?
    Mr. Tebbit: I am sure that, apart from anything else, my hon. Friend will be pleased to notice that the index figure that I have given is 3 per cent. higher than that given for the last quarter of 1982, when he last raised this question. If my hon. Friend thinks that there is a lack of demand in the economy, he must be failing to do his own shopping.
    Mr. James Hamilton: Does the right hon. Gentleman consider that one of the major reasons for the big difference in the percentages is the number of companies in the hands of receivers? This is happening every day of every week. Is he aware of the letter that I have sent to him about one of the major companies in my constituency, IBH (Holdings) Terex (Scotland), which is in the hands of the receiver, Why is that so, and why are the Government not assisting it?
    Mr. Tebbit: The hon. Gentleman would probably take the view that the Government should not assist every company that falls into the hands of the receiver. A large number of companies do so because they are badly managed, have a bad work force, or are engaged in making a product for which there is no longer a demand. As to the detail of the question and the company to which the hon. Gentleman refers——
    Mr. Hamilton: The right hon. Gentleman ought to know.
    Mr. Tebbit: The hon. Gentleman says that I ought to know. There are a number of things that the hon. Gentleman should know, but he shows few signs of knowing any of them.
    Mr. Beaumont-Dark: Does my right hon. Friend agree that manufacturing industry in the midlands is at long last beginning to improve? Does he accept that as long as any review of regional policy does something to help the west midlands, for a change, and does not dissipate its industry to other regions, recovery will continue?
    Mr. Tebbit: I find myself in complete agreement with my hon. Friend.
    Mr. Shore: Manufacturing output, as the Secretary of State says, is three points up on the trough of recession two

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    and a half years ago, but it is also 17 points below the level that it was when he and colleagues took office, which is the largest fall ever sustained by either British industry or the industry of any other country. The House would like to know to what factors the Secretary of State attributes this massive and unprecedented decline in the performance of British industry. What is the main reason, and how can the Government assist in reversing the trend?
    Mr. Tebbit: There is little doubt that the right hon. Gentleman understands the causes as well as most of us, even if he is not willing to admit it.
    Mr. Straw: High interest rates.
    Mr. Tebbit: The hon. Gentleman will recollect that interest rates are lower now than they have been for five and a half years. He also knows that inflation is lower, and that a lower exchange rate not only puts up prices of exports but reduces the prices of imported raw materials and food required to sustain our economy.
    To return to the question of the right hon. Member for Bethnal Green and Stepney (Mr. Shore)—avoiding the interruptions from behind him—the principal causes are that our industry was uncompetitive in the——
    Mr. Gould: It is more so now.
    Mr. Tebbit: The right hon. Member for Bethnal Green and Stepney has many assistants. I wish that he would keep them in order.
    Faced with the difficulties of a world recession, it was our industry, not that of our competitors, which showed that it was weak and went to the wall in many cases.

    Iraq
    Mr. Wallerasked the Secretary of State for Trade and Industry if he will make a statement about the level of trade with Iraq.
    The Minister for Trade (Mr. Paul Channon): In 1982 United Kingdom exports to Iraq totalled £875 million and imports from Iraq £80 million. In the first nine months of this year trade has been at about half those levels due to the influence of the Gulf war on Iraq's economy, but there are now welcome signs of more opportunities for British firms in Iraq.
    Mr. Waller: Does my right hon. Friend agree that, despite the significance of short-term events, the record in recent years demonstrates that Iraq represents one of the best markets for our exporters? What results has he achieved through the representations that he made on behalf of British manufacturers when he visited Iraq?
    Mr. Channon: I entirely agree with my hon. Friend. When the Iran-Iraq war ends, as we hope it soon will, the prospects for Iraq are extremely good, as are the prospects for British firms there. There were some difficulties over payments, but I am glad to tell the House that these are being worked out and in the future there are good prospects for exports to that country.

    Balance of Trade
    Mr. Leightonasked the Secretary of State for Trade and Industry if he will give the current balance of trade in manufactures for the past 12 months with the rest of the European Community.
    The Minister of State, Department of Trade and Industry (Mr. Norman Lamont): Since the second quarter of 1979 there has been a total deficit on trade in manufactures with the other countries of the European Community of £15·1 billion and a surplus with the rest of the world of £28·7 billion. In the year ending September 1983 there was a deficit on manufacturing trade with the Community of £6·4 billion.
    Mr. Leighton: In view of the first speech of the new director of the National Development Council, in which he said that every £35,000 worth of manufactured imports represented one lost job in this country, can the Minister estimate how much unemployment has been caused in Britain by the appalling deficit that he has just announced?
    Mr. Lamont: It is wrong of the hon. Gentleman to concentrate on one section of the current account. We must take into account exports of services and oil as well, and we have a considerable surplus there. Furthermore, we have had a large current account surplus—one of the largest in the world—in the last two years. The hon. Gentleman must not look at one sector alone.
    Sir Anthony Meyer: Is it not traditional and in no way alarming for the United Kingdom to run a balance of payments deficit with manufacturing countries? Is it not also the case that in our trade with the EC our exports are better covered by imports than they are with other large manufacturing blocs, the United States and Japan?
    Mr. Lamont: It is true that in terms of visible trade in about only six of the last 37 years have we been in surplus. The trend that the hon. Member for Newham, North East (Mr. Leighton) has identified applies not just to EC countries but to our trade with many advanced industrialised countries. Deficits in one area are the counterpart of surpluses elsewhere, and we have been a strong surplus area. Labour Members should remember that they have changed their policy; they used to be against the EC, but now we are told that their policy is different. We should like to know what it is. Is it a fundamental renegotiation or just a fundamental fudge?
    Mr. Janner: Does the Minister appreciate that areas such as Leicestershire, which, alas, have no oil, have depended on the manufacturing sector to provide jobs for their people, and that the collapse of industry and employment in such areas as my city have resulted directly from Government policy? What, if anything, is he prepared to do about it?
    Mr. Lamont: I cannot see, if the hon. and learned Gentleman is implying withdrawal from the EC, how that would be the answer to his problems. The EC has been the fastest growing area for our exports—37 per cent. of our manufacturing exports go to the EC. Unemployment in the hon. and learned Gentleman's constituency is well below the average for the EC as a whole.
    Mr. Batiste: Does my hon. Friend accept that were Britain to withdraw from the Common Market that would result in the most catastrophic loss of jobs in manufacturing industries, particularly in my region of Yorkshire and Humberside?
    Mr. Lamont: I agree with my hon. Friend. An extremely important aspect is inward investment. Much of the inward investment that is made by multinational and

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    American companies in this country is important for jobs, but it would not take place unless those investors had access to a guaranteed market of 270 million people.
    Mr. Shore: Is the Minister aware how seriously our trade balance with the EC in manufactured goods has deteriorated? We are told that the overall total since we joined is minus £15 billion and that last year the minus total was over £6 billion. Is not the deficit this year running at an annual rate of getting on for £8 billion? To what does the Minister attribute this massive decline in Britain's manufacturing exports and balance of trade with the EC countries?
    Mr. Lamont: It is inevitable, as we have growth in our exports both of oil and services, that one of two things will happen: either there will be increased growth in imports of manufactures or there will be an increase in the export of capital. That follows as a simple matter of arithmetic. As for the trend in visible trade—and we should not concentrate on one aspect of the matter—in the second quarter of this year we had a surplus of £650 million and in the third quarter we had a surplus of £400 million.

    Oriental Countries (Trading Malpractices)
    Sir David Priceasked the Secretary of State for Trade and Industry what discussions he has had with his fellow Ministers in the European Community about joint action to curb dumping and other trading malpractices by various Oriental countries.
    Mr. Channon: There are procedures in the Community for protecting its industries from injury by dumped or subsidised imports, whether from the Orient or elsewhere. If my hon. Friend has a specific point, I should be glad to investigate it. The anti-dumping unit in my Department is pleased to help in any case that arises.
    Sir David Price: Is my right hon. Friend aware that South Korea takes part in what I would call dumping practices in respect of steel and shipbuilding when it undercuts even the Japanese below cost? Is he further aware that it would be much better if protective and defensive action against the predatory habits of the Koreans were taken on a European basis rather than on a United Kingdom basis alone?
    Mr. Channon: I understand my hon. Friend's concern. The GAIT provisions have not so far been invoked in relation to shipbuilding, but I should be grateful if my hon. Friend would give me details of exactly what he has in mind in relation to shipbuilding and it jury to United Kingdom shipbuilders, and I shall be ready to look into the matter in relation to the GATT provisions.
    Mr. Merlyn Rees: Surely after all this time there is no need for the Minister to keep asking for individual examples. Is he aware that when I visit firms in my constituency—be they in clothing or woollen textiles—they are all full of the story of dumping from the Orient, as the right hon. Gentleman puts it, and from eastern Europe?
    Mr. Channon: There are, of course, cases of dumping, as the right hon. Gentleman says. They are investigated and the anti-dumping unit in the Department is only too anxious to assist people, and has frequently done so, to prepare their cases for the Community. Where there is a good case, remedies can be taken. If the right hon.
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    Gentleman has a specific case we shall look into it straight away. [Interruption.] There is no point in Opposition Members laughing about it. Every case must be carefully prepared, and we are only too anxious to help.
    Mr. Stanbrook: Are not the numbers of those employed in the anti-dumping unit of the Commission pathetically inadequate to deal with this business? Does not the anti-dumping unit at my right hon. Friend's Department, which has no powers in the matter, employ more people than the Commission, which is supposed to serve 10 countries?
    Mr. Channon: My hon. Friend is right to say that it would be helpful if there were more people in the antidumping unit in the Community, but that is not within my power; it is a decision for the Community. It is important that British industry should get the best help it can from my Department in dealing with cases of dumping, where they arise. That I am determined to achieve, and that is what is happening now.
    Mr. Ashdown: Is the Minister aware that the current tariff on computers and computer components operates in favour of dumping in that completed computers imported into this country are charged at 15 per cent. whereas components for United Kingdom assembly are charged at only 5 per cent.? Is he further aware that an NEDC draft report recently recommended that the position be amended? Will he take the matter up with his colleagues in Brussels so as to reconstruct the tariff system to operate in favour of United Kingdom manufacturers?
    Mr. Channon: I know the point that the hon. Gentleman has in mind. He has a question on that very point later, and perhaps he will await the answer to that.
    Mr. Ewing: Will the Minister stop hiding behind a request for specific cases when there have been countless cases on which the Community took no action? If the Community refuses to protect our steel and shipbuilding industries, as indicated by the hon. Member for Eastleigh (Sir D. Price), will the right hon. Gentleman give an undertaking that the Government will have the courage to act on their behalf and protect them from these practices?
    Mr. Channon: I am not sure whether the hon. Gentleman is suggesting that the steel industry is not protected already. While I do not think that I have received a specific case from him, I assure him that I am continually receiving cases. We pursue them, frequently with satisfactory results. There is no point in having generalised accusations. We need specific action on specific cases, and those we are only too anxious to take up.

    Regional Development Grants
    Mr. Bruceasked the Secretary of State for Trade and Industry if he is yet in a position to say when he will publish the Government White Paper on regional development grants.
    Mr. Hicksasked the Secretary of State for Trade and Industry if he is now in a position to state when he hopes to announce his proposals following his review of regional policy; and if he will make a statement.
    Mr. Tebbit: On 2 November, in answer to a parliamentary question from my hon. Friend the Member for Bromsgrove (Mr. Miller), I announced my intention

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    shortly to publish a White Paper on future regional industrial policy. This will set out the Government's proposals for the framework of a new structure for regional industrial incentives.
    Mr. Bruce: I thank the Minister for that reply, but I am sorry that he is not able to give a more precise date for this keenly awaited White Paper, as there is a great deal of concern about the implications of it. Will he confirm that such a review will be used as an opportunity not to cut regional aid but to redeploy it more effectively to create jobs? Is he aware that under the present system many large capital projects that produce relatively few jobs receive disproportionately large capital grants, while projects that would create many jobs are often denied assistance?
    Mr. Tebbit: The hon. Gentleman refers to the balance between the subsidisation of capital projects and of those that are more job-intensive. He makes the point well, and it is one that we have taken into account. As for the total of aid, we should look at the problems with which we must deal and the instruments that we devise and then decide how much money the economy can afford to devote to those instruments and policies against all the other demands on the public purse.
    Mr. Hicks: Does my right hon. Friend agree that if the level of economic activity in certain peripheral and less well endowed areas of the United Kingdom is to be maintained, with the possibility of a reduction in the level of unemployment, regional policies must continue? In that context, is it not a fact that regional aids serve a function of job maintenance as well as of job creation?
    Mr. Tebbit: If I did not think that regional policy had a role to play in maintaining levels of employment in the country's more disadvantaged parts, I would not even be talking about publishing a White Paper dealing with the way in which regional policy will be conducted. There is a whole raft of policies to help to maintain jobs. Among the most important of those policies are the battle against inflation and the battle to keep down interest rates. That implies that we must be very careful to maintain a tight hold on public expenditure.
    Mr. Martin: Is the Secretary of State aware that the shipyards that specialise in building small fishing craft and ferries have declined to such an extent in Scotland that only two are left? One of them is in Campbelltown and the other is McCrindles in Ardrossan. Does the right hon. Gentleman realise that those shipyards complain that Norwegian companies are receiving excellent subsidies, which mean that the Scottish companies are unable to win contracts despite their competitive tenders? Some local authorities are even giving contracts to Norwegian companies in preference to British-based companies.
    Mr. Tebbit: In this wicked world it is not uncommon for a number of countries to subsidise their shipbuilding industries. We do that as well.
    Mr. Henderson: Will more emphasis be placed in the review on the importance of the role which service industry can play in creating jobs? Will my right hon. Friend ensure that, when assistance is given from public funds, more attention is paid to the quality of the proposed scheme and the number of jobs created, rather than merely to the geographical location of the firm?
    Mr. Tebbit: My hon. Friend has raised two important points. I hope he will find that they are dealt with in an interesting way in the White Paper.
    Mr. Ashley: Does the right hon. Gentleman realise that north Staffordshire badly needs regional assistance, as it has one of the fastest rates of increase in unemployment in the country? It would be wiser to give assistance now, when recovery is possible, than to wait until the area has been completely devastated.
    Mr. Tebbit: The right hon. Gentleman will have gathered that the White Paper is to be published shortly. It will deal both with the measures that we shall use and with their coverage over the United Kingdom. No doubt the right hon. Gentleman will make his observations on both of those points when the White Paper is published.
    Mr. Ward: Is my right hon. Friend aware that many Conservative Members believe that regional aid under all Governments has distorted management decisions, has led to investment where it was not needed, and has thereby slowed down efficiency? If he wants to help British industry, should he not abolish all regional aid and persuade our right hon. Friend the Chancellor of the Exchequer to use the equivalent amount to cut tax on industry?
    Mr. Tebbit: My hon. Friend is correct to point out that regional policy involves an economic cost as well as benefits. We must ask ourselves whether, in the short run at any rate, my hon. Friend's recipe would not impose on those who live in the less advantaged areas additional burdens which could become intolerable.
    Mr. Shore: I am glad that the Secretary of State resisted that siren voice from his Back Benches. Do the scope and terms of reference of the review of assisted area policy extend to the specific Department of the Environment schemes for aiding the inner cities?
    Mr. Tebbit: The right hon. Gentleman will find that the White Paper makes some reference to urban policy and, above all, to the need for it to move in harmony with other regional policies.

    Colombia and Venezuela
    Mr. Shersbyasked the Secretary of State for Trade and Industry if he will make a statement on the Minister of Trade's recent visit to Colombia and Venezuela.
    Mr. Channon: I visited Colombia and Venzuela to further our bilateral trade relations, to support British companies in those markets, and to open a conference of commercial officers from our embassies in Latin America and the Caribbean, with the purpose of increasing United Kingdom trade in the area.
    Mr. Shersby: Does my right hon. Friend agree that trade with the South American continent is of the utmost importance to Britain? Is he aware that trade with that continent is inadequate? What is his policy for improving it?
    Mr. Channon: I agree with all my hon. Friend's points. Our trade with South America has fallen far too much, and is now less than 2 per cent. We need to take energetic action to increase it. We shall now concentrate

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    on selective exports and on trying to make a real effort to increase our share of the Latin-American market. In the past decade or so Britain has neglected it far too much.
    Mr. Dalyell: If the Minister was sincere about that answer, as I am sure he was, will he have a word with our ever so recent ambassador in Washington, Sir Nicholas Henderson, and ask him not to write in The Economist about the Organisation of American States in particular, and Latin Americans in general, in terms that are quite so insulting and offensive?
    Mr. Channon: I have a suspicion that that is another question. However, when I have to pick between the hon. Gentleman and Sir Nicholas Henderson it is, indeed, a difficult task to know which to trust.
    Late——
    Mr. Dalyell: On a point of order, Mr. Speaker. I did not say that Sir Nicholas Henderson was untrustworthy. He may have written an extraordinary article in The Economist referring to intelligence reports which cannot be questioned in the House of Commons, and he may have made ample use of unpublished Foreign Office telegrams. I suppose that Sir Nicholas Henderson is entitled to defend himself and certain sections of the Foreign Office. The Minister for Trade can put his point of view in the article, which, incidentally, is a veiled but devastating attack upon the Prime Minister.
    I said that Sir Nicholas Henderson had insulted the Organisation of American States and what he called in the article "the Latinos". That is different from saying that he is untrustworthy. Can we have an explanation of precisely what the right hon. Gentleman meant when he replied to a relevant question by saying that Sir Nicholas Henderson and I were untrustworthy?
    Mr. Speaker: Order. I am sure that the whole House will accept that the hon. Gentleman is certainly not untrustworthy. I am sure that had the Minister intended to say that he was, he would withdraw that remark.
    Several Hon. Members: Withdraw.
    Mr. Channon: Mr. Speaker, I believe that when the House reads Hansard it will find that I did not say that, but if that was the impression that I gave, it is not the one that I would wish to convey and I naturally withdraw any such implication.

    Electric Traction Units (Exports)
    Mr. Flanneryasked the Secretary of State for Trade and Industry what was the value of United Kingdom exports of electric traction units in each of the past three years.
    Mr. Butcher: Exports of direct current electric traction motors amounted to £4 million in 1980, £5·8 million in 1981 and £8·6 million in 1982. These figures do not include indirect exports or complete propulsion units, which are not separately recorded.
    Mr. Flannery: Is the Minister aware that the most important producer of traction units in Britain, and one of the most internationally famous, is the firm of GEC traction, Sheffield? Is he further aware that that firm is now in great difficulty, having completed its last international order, strangely enough, for the underground railway in Seoul? Will he make a serious attempt to talk
    844
    to the Secretary of State for Transport and the British Railways Board, and encourage them to electrify the railway between St. Pancras and Sheffield, part of which has already been electrified? That would save that very important international firm.
    Mr. Butcher: I can fully appreciate the hon. Gentleman's concern, because he has mentioned one of the two companies that specialise in that type of product. However, as he rightly surmises, the major question is for my right hon. Friend the Secretary of State for Transport. Indeed, I understand that the hon. Gentleman has already raised this issue with him. Of course, the prospects of any company depend on the balance between its efforts in the home and export markets. Therefore, any early effort in the home market will, in turn, help that company to continue to export.
    Mr. Churchill: Is it not a tribute to the skill of the management and the efficiency of the labour force at the Trafford Park division of GEC, in particular, that it has won so many contracts in the far east and South African markets and has been so successful? Will the Government continue to give every possible assistance to ensure that we can land those important foreign contracts?
    Mr. Butcher: I am sure that my right hon. Friend the Minister for Trade will continue to give special help where required for those who wish to export to those markets. I join my hon. Friend the Member for Davyhulme (Mr. Churchill) in congratulating GEC in that regard. In the generality, locomotive and self-propelled rolling-stock exports amounted to £17·1 million in 1981 and £32·2 million in 1982. That is, indeed, a first-class record.

    Film Industry
    Mr. Dormandasked the Secretary of State for Trade and Industry if he will make a statement on the future of the British film industry.
    Mr. Kenneth Baker: I intend to make a statement of the Government's intentions as soon as possible.
    Mr. Dormand: I assume that the Minister is referring to the review of the film industry. Indeed, I see him nodding in agreement. However, will he give an assurance that there will be full consultation on this issue, particularly with the unions involved? Is the hon. Gentleman aware of the great worry that has been expressed about the possible winding-up of the National Film Corporation? There are strong rumours that that is to happen. Will the Minister tell us whether he is considering the institution of the Eady-type levy on films that are being shown on television?
    Mr. Baker: The hon. Gentleman is asking me to anticipate my statement to the House. I assure him that I have consulted hundreds of people about the film industry. I included in those consultations the unions represented by Mr. Alan Sapper. I assure the hon. Gentleman that I shall be dealing specifically with the points that he raised about the levy and the National Film Corporation. The hon. Gentleman will be aware that the British film industry is enjoying a revival. Last year, British films and television programmes added about £163 million to our exports. It has been a success story for us around the world. I want to encourage the revival that is under way.
    Mr. Bermingham: Will the Minister give an assurance that, when making projections about cable television and

    845
    the importation of films on video cassette, some steps will be taken to protect the British film and feature industry from those cheap imports, which could harm a developing and profitable export industry?
    Mr. Baker: We made it clear in the cable White Paper that the cable authority, in issuing the cable licences, and the Home Secretary and the Secretary of State for Trade and Industry, when allocating the first 12 licences—that will be done by the end of this month—will take into account the amount of British content that the various consortia are prepared to make available for cable television.

    Public Companies (Political Donations)
    Mr. John Evansasked the Secretary of State for Trade and Industry if he has any plans to amend the law relating to donations to political parties from public companies.
    Mr. Tebbit: I have no plans to do so.
    Mr. Evans: Is the Secretary of State prepared to acknowledge that if the Tory Cabinet in general—and especially the right hon. Gentleman—is to avoid the charge of hypocrisy, the Government should withdraw part III of the Trade Union Bill and introduce legislation to ensure that donations to the Tory party from big business are subject to a ballot of shareholders.
    Mr. Tebbit: The hon. Gentleman is labouring under a misapprehension. The Bill that was recently introduced by my right hon. Friend the Secretary of State for Employment and the talks that my right hon. Friend is having with the Trades Union Congress deal not so much with how parties are financed or who should finance them, but with how the rights of individuals, which are set out in the 1913 Act, are implemented in honour. I am not aware of any widespread dissatisfaction among shareholders at the manner in which their rights are upheld by the Companies Acts and allied legislation.
    Mr. Leigh: Will my right hon. Friend advise Opposition Members that if they want to set the financial affairs of the Labour party in order they should stop bleating about the democratic right of shareholders to make political donations. They should instead take a leaf out of the Conservative party's book, whereby 90 per cent. of our funds are raised by the hard work and individual efforts of ordinary members.
    Mr. Tebbit: It would be wrong for me to offer such good advice to the Opposition. It might be taken by them, and they would be a much stronger party in opposition to us.
    Mr. Crowther: Is the right hon. Gentleman overlooking the fact that the Secretary of State for Employment is intending to require trade unions to hold a ballot of their members on whether they should have a political fund? Why, therefore, does the Secretary of State not introduce legislation to require companies to hold a ballot of shareholders before they give the funds from which contributions are made to parties?
    Mr. Tebbit: The hon. Gentleman persists in seeing companies as mirror images of trade unions. They are not. I warn him that if the law governing the conduct of trade
    846
    unions were as tightly drawn and had penalties as severe as that governing the conduct of companies, a good many trade union leaders would be in gaol.
    Mr. Nicholls: Does my right hon. Friend agree that if shareholders feel aggrieved about a decision to make a political donation to the Conservative party, that decision can always be overturned at an annual general meeting? If there were a similar procedure in the trade union movement for people who want to opt out of supporting the Labour party, that movement would not be in its present scandalous position.
    Mr. Tebbit: Although I understand the passion and conviction with which my hon. Friend puts that point, he falls into the trap of assuming that trade unions and companies are mirror images of each other. We do not legislate in the same way for them. The trade unions would be the first to protest if we imposed on them the legal sanctions that are imposed on companies.
    Mr. Wrigglesworth: If it is wrong for Ministers to make decisions about companies in which they are shareholders or from which they receive remuneration, in relation to references to the Monopolies and Mergers Commission, or, in the case of the Stock Exchange, a decision whether a case is considered under the Restrictive Trade Practices Act, is it not equally wrong that companies that have made political donations to the Conservative party should be judged by those Ministers?
    Mr. Tebbit: The hon. Gentleman asked a convoluted question. I thought for a moment that he was about to suggest that those who benefit, as the hon. Gentleman did in the past, from trade union funds should not make any judgment on trade unions.
    Mr. Shore: The Secretary of State knows very well that the Conservative party receives well over £2 million a year from company donations. Therefore, there is clearly a relationship between, and a symmetry of arrangements made for, the trade unions when they contribute to the Labour party and for companies when they make contributions to the Conservative party. Is the Secretary of State not aware that it is 16 years since the first disclosure requirement was placed upon companies when making such donations? Does the right hon. Gentleman not believe, since his colleagues are now busily preparing amendments to the trade union legislation, that we ought to reconsider the matter, make it possible for individual shareholders to opt out of any arrangement and for companies to make a formal resolution to establish a political fund under supervision? If the right hon. Gentleman did that he might add to his reputation for evenhandedness and fairness.
    Mr. Tebbit: I was unaware of any need to add to my reputation in that regard. The purpose of the Bill that is being put forward by my right hon. Friend the Secretary of State for Employment is to ensure that those rights that were given to trade unionists under the 1913 Act are fully carried through. In recent years, they have not been. This is a response to the demands not of Conservative Central Office, but of trade unionists. I am unaware of any similar demand for protection by shareholders.

    Tourist Boards
    Mr. Galeasked the Secretary of State for Trade and Industry if he is satisfied with the present structure and operation of the tourist boards; and if he will make a statement.
    Mr. Norman Lamont: The present structure and operation of the tourist boards have been examined in detail in the Department's review of tourism policy. I hope to announce the conclusions of that review shortly.
    Mr. Gale: I am grateful to my hon. Friend for that answer. In his announcement, will he pay attention to the administration of section 14? Will he seek to ensure that money is made available primarily for the purposes for which it was originally intended and that there is not a top-up for what ought to be taken care of by private finance?
    Mr. Lamont: I agree with my hon. Friend. He will understand that I cannot anticipate an announcement that may be made, but I emphasise that I hope it will be made shortly.
    Mr. Wallace: Does the Minister recognise that, while support for tourism locally is welcome, it would be helpful also if there were central Government assistance in easing rating provisions for small hotels and guest:louses and also low interest loans to help many small hotels meet fire regulations and other such statutory provisions?
    Mr. Lamont: I note what the hon. Gentleman said. We discuss issues of that type all the time with the Department of the Environment. It is my function as a Minister within the Department of Trade and Industry to take up those questions with other Departments. I cannot anticipate the outcome of the review.
    Miss Fookes: When may we expect the outcome of this review, because without it there will be difficulties for tourist boards that wish to plan ahead?
    Mr. Lamont: I expect that it will be shortly.
    Mr. Hicks: Is my hon. Friend aware that, amongst those dealing with the tourist industry, there is a widely held view that additional resources should be made available at the two sharp ends — attracting overseas visitors and providing amenities and services when those visitors are here — rather than the unnecessarily cumbersome and duplicating structure of boards that we have?
    Mr. Lamont: I note what my hon. Friend says. He gave evidence during the review and I assure him that his remarks have been carefully considered. Again, I cannot anticipate the announcement.

    Monopolies and Mergers
    Mr. Wrigglesworthasked the Secretary of State for Trade and Industry what is his policy towards monopolies and mergers.
    Mr. Alexander Fletcher: As my right hon. Friend explained yesterday in answer to my hon. Friend the member for Rugby and Kenilworth (Mr. Pawsey), our policy towards monopolies and mergers is governed by a balance between reliance on the market as arbiter of company size and structure, the need for competition to promote the direct interest of the consumer, and any other matters which may affect the public interest.
    Mr. Wrigglesworth: If the Government believe in competition, why are they pursuing a privatisation policy which will simply convert public monopolies into private ones? Will the Minister pursue a policy, particularly in relation to BT and British Airways, of deregulation and further liberalisation which will give true competition?
    Mr. Fletcher: We are pursuing a vigorous competition policy in the private and public sectors by privatisation and by references under section 11 of the Competition Act.

Redundancies (Trafford Park)
3.32 pm
Mr. Tony Lloyd: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"GEC's announcement yesterday of a redundancy programme which will cause the loss of 370 jobs at GEC in Trafford park."
The matter is specific, because yesterday's announcement will directly destroy jobs and training opportunities in the Stretford area, a constituency which already suffers unemployment massively in excess of the national average. The announcement is a tragedy not just for Stretford but for the whole Manchester area.
The matter is important because Trafford park in general and GEC in particular have suffered enormous job losses over the years, particularly since the Government came to power. We have seen the loss of skills of a work force whose skills in the past made Trafford park the nation's engine room. The matter is important also because we see clearly that the United Kingdom turbine manufacturing industry is threatened by the lack of orders on its books, caused partly by domestic policy and partly by a reduction in world demand.
The matter should have urgent consideration so that the Government, the Central Electricity Generating Board and the turbine manufacturing industry can together study the long-term future of turbine supply to safeguard the domestic manufacturing industry. The matter should also receive urgent consideration so that the need to maintain and prevent further erosion of the skill base in the Manchester area is recognised, because the area has invested in the skills of its work force and it is entitled to see those skills utilised.
Mr. Speaker, I submit that this matter is specific, important and urgent. I request that you rule accordingly.
Mr. Speaker: The hon. Member for Stretford (Mr. Lloyd) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"GEC's announcement yesterday of a redundancy programme which will cause the loss of 370 jobs at GEC in Trafford park."
I have listened carefully to what the hon. Gentleman said, and I well understand the concern that he feels for his constituents. He knows that the only decision I have to reach is whether this matter should have precedence over the business set down for today or tomorrow.
I regret that I do not consider the matter that the hon. Gentleman has raised as appropriate for discussion under Standing Order No. 10; therefore, I cannot submit his application to the House.

Prevention of Delays of Trials
3.35 pm
Mr. Gerald Bermingham (St. Helen's, South): I beg to move,
That leave be given to bring in a Bill to establish the maximum period spent in custody pending trial; and for connected purposes.
It is unfortunate that one has to raise this subject, but in any one year a considerable number of people suffer grave hardship because of the current system of remanding people in custody.
During the last 12 months for which we have figures, of about 48,000 people who were remanded in custody, 16,000 later received non-custodial sentences and 2,000 were acquitted. That effectively means that under our system of bail about 30 per cent. of the people involved were not granted bail in cases where they were not going to receive custodial sentences.
It seems to me and many people with whom I have discussed this matter that remands in custody have clogged the prison system. Recent figures available for Manchester and Leeds prisons show that about 25 per cent. of the people currently remanded in custody awaiting trial have been there more than 110 days.
In a recent example in Wales, three men were remanded in custody for approximately nine months before acquittal. They have no right to compensation for the iniquities and the conditions that they suffered during their remand. At a more lowly level of criminal offence, in Leeds the other day a defendant had been in prison for about 142 days on a burglary charge to which he was always going to plead guilty. He received a two-year term of probation. One must ask what is happening to the bail system and remands in custody.
I believe that the Bail Act 1977 has been largely ignored in a series of cases. The Nottingham and the Reading justices' decisions, and the periodic pronouncements of various judges, particularly one or two on the northern and north-eastern circuit who have warned magistrates by saying such things as, "People who are on bail commit offences," have created an atmosphere in which vast numbers of people who need not be locked up before court hearings are being remanded in custody. That places an unnecessary additional strain on the prison system.
My Bill, which is in no way revolutionary, seeks merely to bring English law into line with Scottish law. The Scots have a sensible law. If I have leave to introduce the Bill, England could, and should, benefit from a provision whereby remands in custody are limited to a maximum of 110 days.
I wish to allay one or two fears. In no way is the Bill designed to let the guilty go free. On the contrary, it is designed to enable the guilty to stand trial more quickly and to receive the punishment that they justly deserve more quickly. The Bill is not designed to shift the clog or blockage in the court systems but is a spur—I speak as a solicitor who has practised for many years in the criminal courts—to lawyers to get a move on in dealing with their cases, to listing officers in the Crown courts to list more quickly and to the judiciary to be more efficient in the use of time.
I appreciate that all those who operate in the courts seek to do their best, but we must be realistic. Considering the

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amount of time spent messing about—I speak bluntly—in the preparation of criminal trials, all involved in the legal system have much to ask themselves.
To those who question the intention of the Bill on the ground that Scotland has a procurator fiscal system, the answer is simple—most prosecutions in England and Wales are largely controlled by prosecuting solicitors employed by either the shire or metropolitan counties, and in London by solicitors employed by Scotland Yard. In our system, lawyers control the cases. There is no excuse in 1984 for people to be remanded in custody for more than 110 days before their trial. Old trials are trials with stale evidence. The best way to justice is with fresh evidence, and the best way to justice with fresh evidence is to have speedy trials.
Question put and agreed to.
Bill ordered to be brought in by Mr. Gerald Bermingham, Mr. Gerald Kaufman, Mr. Denis Howell, Mr. Alfred Dubs, Mr. Robin Corbett, Miss Janet Fookes, Mr. Charles Irving, Mr. David Penhaligon, Mr. Dafydd Wigley, Ms. Harriet Harman, Mr. Stuart Bell and Mr. Paddy Ashdown.
Mr. Dennis Canavan: Let them all out.

PREVENTION OF DELAYS OF TRIALS
Mr. Gerald Bermingham accordingly presented a Bill to establish the maximum period spent in custody pending trial; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 16 December and to be printed. [Bill 56.]
Opposition Day
[3RD ALLOTTED DAY] [FIRST PART]

Improvement Grants (Cuts)
Mr. Speaker: Before we move to the important Opposition day debate on the effect on householders of Government improvement grant cuts, I should tell the House that I have a long list of hon. Members who wish to speak in the debate. Would those making opening and winding-up speeches on the Front Benches set a good example to those who are to follow by making short contributions?
3.42 pm
Mr. Eric S. Heifer: I beg to move,
That this House condemns the proposals of Her Majesty's Government to cut improvement grants from 90 per cent to 75 per cent. and severely limit their availability, so disadvantaging individual householders, worsening the effects of previous cuts in housing capital expnditure, housing subsidies and inner city and urban aid, and thereby increasing unemployment in the building and associated industries, retarding home modernisation and impeding recovery in the construction trades and the national economy.
The motion is primarily concerned with the Government's decision to cut home improvements grants from 90 per cent. to 75 per cent., and its effect on revitalising our housing stock and employment within the construction industry and in dashing the hopes of many thousands of home owners whom the Government are supposed to cherish.
The motion goes wider than cuts to improvement grants. The issues involved are interconnected, and add up to a serious blow to householders and to the poorest sections of the community — those who live in old houses which are desperately in need of repair or renovation.
The cuts in improvement and repair grants inevitably penalise the poorest owner-occupiers. Women, who are over-represented among the disadvantaged, must bear the brunt of the cuts. Women spend far more time in and around the home than their male partners. Even if they work, a high proportion of them work part time. Those women bear the main responsibility for the home and must cope with the miserable effects of bad housing. The Government claim that they have the needs of the family most at heart. If that is so, they should try to provide more support for the poorest families in the community and switch more and not fewer resources to improvements and repair than is suggested at present.
The motion deals with the rehabilitation of inner cities, the impending recovery in the construction industry, which has suffered tremendously since the Government came to office, and the effects of the cuts and Government housing policy on the national economy.
I have taken note of what you said, Mr. Speaker; before your remarks, I decided that I would not make a long speech, because the debate is scheduled to last only three hours. I have sat on the Back Benches through many hours of debate, and I have always resented long speeches made by either Opposition or Government Front-Bench spokesmen.

853
I must disappoint those of my hon. Friends who have asked me to include in my speech the statistics of Swansea or other places. If they wish to raise such matters, they must try to catch Mr. Speaker's eye.
The Government's proposal to cut the grant from 90 per cent. to 75 per cent. has caused widespread dismay and much anger. Those who protest include employers' organisations in the building and construction industry, trade unions, local authorities, housing associations and many others. Those householders who may find that their hoped-for grant will not be forthcoming and the workers who looked forward to better days in the building and construction industry will be especially angry.
The Government originally agreed to increase the grant for one reason only—a general election was imminent and this was a general election gimmick. Now that the Conservative party has won the election, it assumes that it can treat local authorities, builders and workers with disdain. There is no doubt that the increased improvements grants have been a great boon to the industry. I accept the Government's figures that spending on such grants increased from £90 million in 1978–79 to £430 million last year. According to what the Minister said on 20 October, the expenditure this year will be about £650 million. That was the only bright spot on the gloomy scene of the Government's policies. When I left the Chamber after the Chancellor of the Exchequer announced the proposals in his Budget speech, the press asked me what I thought of the Budget, and I said that the only benefit was the increase in grant from 75 per cent. to 90 per cent. That bright spot has now disappeared.
Reactions to the Government's decision have been sharp and clear. The Association of Metropolitan Authorities said that the ending of the renovation grant arrangements will have the following effects. Many people on local authority grant waiting lists will be disappointed. It is estimated that about 500,000 people are in the grants system. I should have wished to give the figures for individual areas, such as Liverpool and Swansea, but as I said earlier, I shall not. However, they are available and I assure the House that they add up to several hundred thousand peoole still waiting for grants. In many areas local authorities will not consider new grant applications until the circumstances change and they know what the housing investment programme will be. It has been clearly shown in letters that I have seen, and in statements by the Government, that the HIP allocations for next year are likely to be 20 per cent. lower than they are this year. If that is so, that, together with the cuts in the grants for home improvement, means that there is a bleak future for British housing.
The Association of Metropolitan Authorities stated:
"As the next major announcement on housing capital expenditure will be the 1985–86 HIP then it looks like the freeze on grants introduced by many authorities is set to continue for up to 18 months".
The AMA housing chairman, Mr. John Donnelly, is right to describe the Government's move as "wholly irresponsible". The National Federation of Building Trades Employers described the grants scheme as
"probably one of the most successful initiatives of the last Conservative Government."
It also stated that the cut
"contradicts entirely the Prime Minister's call last year for increased housing investment".
854
Sir Peter Trench, chairman of the House-building Council, was reported in the journal Building on 4 November as having told the City of Westminster Chamber of Commerce:
"The Government's reduction of housing improvement grants in 1984 is a reversal of policy we could live to regret".
Mr. Bruce Chivers, president of the National Federation of Building Trades Employers — which is hardly renowned for its support of Labour policies — was reported in the November edition of National Builder as saying:
"It was monstrous that the Government should be seeking to impose further cuts upon an industry which had already taken far more than its fair share".
The president of the Royal Institute of British Architects commented in the National Builder on reports that the Government are contemplating axing £500 million from local authorities' capital budgets for housing, and cutting inner city aid. Mr. Michael Manser said:
"This would be permanently damaging to a construction industry which remains in a very debilitated condition … It would be bound to stifle general economic recovery … Such a decision would show culpable disregard of the evidence about accelerating deterioration in the condition of the nation's housing stock."
He also made the important point that
"the Government would also be turning its back on some of the severest inner city problems, and withdrawing from its earlier commitments."
Lest some of my hon. Friends believe that I have been biased in quoting only the employers' organisations, the housebuilders and architects' representatives, I shall quote what the trade union leaders in the industry said. Mr. George Henderson, the building groups secretary of the Transport and General Workers Union, said:
"These latest cuts will fall on an industry which has already taken a disproportionate share of the burden … The construction industry is the engine for any recovery. It is high time this Government was investing, not cutting investment."
Mr. Hugh D'Arcy the chairman of my union, the Union of Construction, Allied Trades and Technicians said:
"One of the most effective ways to boost the economy is to invest in the construction industry, which in turn creates demand for the products of manufacturing industry. Looked at in this light the Government's cuts are economic madness".
On radio this morning the Minister of State tried to excuse Government policy by attacking the Labour Government's policies and the Labour party's present housing policies. The hon. Gentleman must know that I have not always supported previous Government's policies, but, although I have criticised some of the Labour Government's policies, I must set the record straight. When the Conservative Government came to office, in 1979–80, 75 per cent. of Government cuts fell on housing. Between 1979–80 and 1981–82 HIP grants were halved, and it has been said that housing grants are to be slashed by at least £500 million.
Cuts in housing expenditure could not have come at a worse time, because 4·3 million dwellings need repairs costing at least £2,500. Of those, 1 million need repairs costing more than £7,000, and 1,116,000 houses are unfit for habitation. Those figures were obtained from the English house condition survey 1981. It shows that 340,000 owner-occupied houses are without one or more basic amenities, such as an inside lavatory or a fitted bath; and 200,000 private rented dwellings and 142,000 vacant dwellings are in a similar position. The AMA estimates that there is a shortage of 433,000 dwellings nationally,

855
and that the figure is increasing. Each year 40,000 dwellings deteriorate into being unfit to live in, and another 100,000 deteriorate into serious disrepair.
At present 400,000 construction workers are on the dole queue, and the National Federation of Building Trades Employers estimates that the cuts will throw another 30,000 workers out of a job.
Mr. John Heddle (Mid-Staffordshire): The hon. Gentleman reminded us briefly of the Labour Government's record on repair and improvement grants. Will he confirm that in 1978–79, the last year of the Labour Government, £90 million was spent on home improvements; that last year, 1982–83, £430 million— four times as much—was spent on home improvements; and that this year £650 million will be committed to home repairs?
Mr. Haffer: The hon. Member must be deaf. I said that a little while ago. I said that that was the one bright spot in the Government's policies of deepening gloom. I accept that that has happened, but why are the Government now cutting improvement grants from 90 per cent. to 75 per cent. while also cutting the HIP allocation? That means that local authorities will not have enough money even to provide the 75 per cent. grants.
The hon. Member for Mid-Staffordshire (Mr. Heddle) must also know that unemployment in the construction industry has reached its highest ever level during the Government's term of office. If the hon. Gentleman does not know that, he should talk to some of my constituents who are construction workers. He should also talk to some of my constituents who live in miserable housing that desperately needs repair. They hoped to modernise their homes but will no longer be able to do so because of the cut in grants. That is what is happening and it is why we protest at what the Government are doing.
I see from the Government amendment that they want to offset criticisms of their policy by referring to their so-called home ownership policy and their so-called tenants' charter. The latter has been discussed in Committee this week. I am sure that some of my right hon. and hon. Friends who have been involved in those discussions will be anxious to deal with the charter today. The Government did not accept the Opposition's sensible proposals. Their tenants' charter is phoney.
The Government's policy of cutting home improvement grants will hit those who own their own homes. They constantly tell us how much they favour people owning their own homes, but many such people are struggling to pay their substantial mortgages. They have bought property that is not as fit and good as it should be. It requires renovation and repair. The grant system which has helped those people in the past two years is now being destroyed. Conservative Members should be aware that the destruction of the system will affect the construction industry as well as people who want to renovate their homes. I appeal to them to support the Opposition's motion.
We shall soon hear of the Government's intentions with regard to the housing investment programme. The Opposition are filled with fear that, once again, housing and construction will be badly affected. Yesterday, I received a letter from a body which calls itself the Confederation of Construction Specialists. I am sure that other hon. Members will have received similar letters. It makes my point excellently:
856
"In 1982 the Government took a welcome (although overdue?) step and increased grant rates for the most important improvement work — installing basic amenities and major repair work.
The result was an immediate surge in much needed improvement work. The number of grant aided major renovations being carried out had almost doubled by the first half of 1983.
This surge in improvement work reflects all too clearly the fact that housing in poor condition tends to be occupied and owned by the poorest people. Without a high rate of grant they simply cannot afford to repair or improve their (often semi derelict) homes.
The Government decision to cut the grant rates back from 90 per cent. to 75 per cent. will mean that many poorer people will not now be able to afford home improvement or repair work.
The short lived house improvement surge will be stopped in its tracks by Government meanness."
Like the National Federation of Building Trades Employers, the Confederation of British Industry is not renowned for supporting Labour party policy. However, Mr. Malcolm Fordy, who is the ex-president of the National Federation of Building Trades Employers, was quoted in the magazine Building, as having told the CBI conference:
"Painful damage will be caused by capital cuts. After the encouraging stimulus of Mrs. Thatcher's campaign to eliminate local authority underspend a year ago, and the construction packages in Sir Geoffrey Howe's last two budgets, the Treasury was now 'back to its old tricks'."
He continued:
"We are perhaps being too polite and too considerate to the Government. Unless this conference acts urgently now to counter the curse of rigid monetary obsessions, this Government will not have a strong construction industry to fall upon in future years."
I never expected to agree with every word of a delegate at the CBI conference. The Government should support the motion, as it is sensible and intelligent. Many Conservative Members whom I have known for many years are present. They have fought for the construction industry and have argued as I have argued. If they are honest today and do not hide behind their party, they will get up as I used to get up and support the industry and those people who should be receiving improvement grants. They should tell the Government to change their policy—and to change it fast.
4.6 pm
The Minister for Housing and Construction (Mr. Ian Gow): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
"welcomes the priority given by the Government to the promotion of home ownership and the repair and improvement of the housing stock through repair and improvement grants and the introduction of the Tenants' Charter and the entitlement of local authority tenants to improvement grants; and believes that these measures are of real benefit both to individual householders and to the construction industry."
I welcome the hon. Member for Liverpool, Walton (Mr. Heffer) in his new capacity as shadow Housing and Construction Minister. The House knows the keen interest that he has always taken in the housing and construction industry. No one who has followed his career as I have can doubt the sincerity of his views or the depth of the conviction with which he holds them. I shall put those views in the context of the construction industry for which he has shadow responsibility and in the context of the tentative attempts which the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) is making to move the Labour party away from some of its more ludicrous policies.

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I begin by referring to an article which the hon. Member for Walton wrote in the March 1983 edition of Marxism Today to commemorate the 100th anniversary of the death of Karl Marx. The hon. Gentleman wrote:
"Through the study of Marx, I became dedicated to fundamentally changing and destroying capitalist society".
The construction industry is an important element of capitalist society and it will have been given no encouragement by those words, especially as they were written by the shadow Housing Minister. That is not all. The hon. Gentleman addressed the Labour party conference in Blackpool on 28 September 1970——
Mr. Neil Kinnock: The Minister really has been following my hon. Friend's career.
Mr. Gow: The Leader of the Opposition will want to hear my next quotation. The hon. Member for Walton said:
"If ever there was an industry that required public ownership in one form or another, it is the building industry."
Mr. Allan Roberts: Will the hon. Gentleman give way?
Mr. Gow: No, I will not.
Any proposal to nationalise the construction industry for which the hon. Member for Walton has shadow responsibility would diminish the prospect of increased jobs now held out to the industry.
Mr. Allan Roberts rose——
Mr. Gow: Mr. Speaker has asked us to be brief. I shall not give way.
I draw the attention of the House to a further piece of advice from the hon. Member for Walton. He wrote a book, "The Class Struggle in Parliament", to which his right hon. Friend the former Leader of the Opposition wrote a foreword. [Interruption.] I hope that the right hon. Member for Bristol, South (Mr. Cocks) will remain quiet while I make my speech. If he wishes to intervene, I shall give way.
Mr. Tam Dalyell rose——
Mr. Gow: No, I shall not give way to the hon. Member for Linlithgow (Mr. Dalyell). I was seeking to give way to the former Patronage Secretary.
Mr. Allan Roberts rose——
Mr. Gow: I shall not give way to the hon. Member for Bootle (Mr. Roberts) either.
"The Class Struggle in Parliament" by the hon. Member for Walton is priced £3·90. I think that it is overpriced, but on page 272 the hon. Gentleman offers the following advice:
"The young active revolutionary-minded Labour MP, unless he is careful, can quickly be ensnared in the aristocratic embrace."
He then added:
"It is not inevitable and many have avoided it."
On page 96, however, we find a photograph of the hon. Member for Walton sitting close beside the second Viscount Stansgate sipping a glass of wine. We are told that the former right hon. Member for Bristol, South-East, who competed for nomination with the Opposition Chief Whip, is now seeking to return to the House following the defection of the right hon. Member for Chesterfield (Mr. Varley). I hope that the hon. Member for Walton will
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follow his own advice and eschew the aristocratic company of the former right hon. Member for Bristol, South-East.
Mr. Michael Cocks: I am sure that on reflection the Minister will wish to withdraw the word "defection" in connection with my right hon. Friend the Member for Chesterfield (Mr. Varley), as it has connotations which are entirely unjustified in this case.
Mr. Gow: I accept that. I withdraw the word. I should have referred to the right hon. Gentleman's prospective departure.
The hon. Member for Walton rightly said that the most important part of the Opposition motion related to improvement grants.
Mr. Allan Roberts rose——
Mr. Gow: No, I shall not give way. The hon. Member for Walton himself acknowledged the marked contrast between the policies of the Labour Government which he briefly adorned and those followed by the present Administration. In view of the Labour Government's appalling record on improvement grants, I am greatly surprised that the Opposition have chosen this topic for today's debate. Indeed, I regard it as impertinence for the hon. Gentleman to raise the matter.
As my hon. Friend the Member for Mid-Staffordshire (Mr. Heddle) said in his intervention, in their last full year of office the Labour Government spent £90 million on improvement grants. That expenditure rose to £200 million in 1981–82 and to £430 million last year and it is likely to exceed £650 million in the current year. I see no reason why next year's spending on improvement grants should not be about three times greater in real terms than the pitiful performance of the Labour Government during their last year in office.
Mr. Donald Stewart: Will the hon. Gentleman give way?
Mr. Gow: No, I shall not give way.
The plain fact is that since 1979 we have made the grant system more flexible, more generous and better attuned to priority needs. [Interruption.] It is clear how much importance the Leader of the Opposition attaches to this subject.
We have provided local authorities with the resources to give grants in numbers unheard of throughout the Labour Government's period of office. Under the Labour Government, repair grants were available only to people in severe financial hardship who lived in housing action and general improvement areas. Between 1974 and the beginning of 1979—that is, during the entire five-year period—only 500 such grants were made in England.
In the first six months of this year more than 44,000 such grants were made — 90 times as many as were made in the entire five years of the Labour Government in which the hon. Member for Walton held office for a brief period. We did not just talk about the problem of disrepair. We have done something about it, through the Housing Act 1980, by extending eligibility for repairs grants to a much wider range of pre-1919 houses in need of major repairs.
It was this Government who provided 90 per cent. rates of grant for people in financial hardship, wherever they lived. Before 1980 such higher rates had beeen available only to those in housing action areas. We also excluded

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grants for disabled occupants from the rateable value limits. This Government, too, enabled occupiers to receive grants as of right to install a single missing basic amenity even if the house still lacked other such amenities. It was this Government, too, who gave local authorities more scope to grant-aid small improvements such as the installation of better heating in one room and encouraged authorities to use those powers, expecially for the elderly.
Mr. Donald Stewart rose——
Mr. Gow: No, I shall not give way.
It was this Government who enabled tenants in both the private and public sectors to receive grants for the first time. Some might say that we have stolen the Labour party's clothes, but the truth is that when in government —an opportunity unlikely to be repeated—the Labour party showed little inclination to wear them.
Mr. Reg Freeson: Will the hon. Gentleman give way?
Mr. Gow: No, I have been asked to be brief. Many hon. Members on both sides wish to take part in the debate.
Mr. Freeson: The Minister is frightened of us.
Mr. Gow: I am certainly not frightened of the right hon. Member for Brent, East (Mr. Freeson) or of the House.
We have now decided that next year, in most circumstances, we should revert to the 75 per cent. grant. The higher rate of 90 per cent. will still be available for those who would suffer financial hardship from any lower rate. The present rate will also be available to anyone who applies for a grant by 31 March 1984 even if the grant approval and the actual works come in the new financial year. I am sure that the rates of grant which will apply from 1 April next year, which are higher and more widely available than those under the Labour Government, will be regarded by many people as generous.
To reinforce the temporary availability of 90 per cent. grants, we have provided special resource allocations this year for some local authorities which needled them. I am glad that so many authorities have responded with so much vigour to our encouragement. This was never intended to be a permanent measure. Next year, local authorities will still have full freedom to allocate a substantial part of the HIP resources for this purpose as well as capital receipts which they hold or acquire in the coming months.
There has been some wild talk within and outside the House to the effect that my announcement last month about home improvement grants in 1984–85 signalled a change of course by the Government. That is nonsense. When the higher rate of grant was announced in March 1982 the then Chancellor of the Exchequer made it clear that it would he a temporary measure only. I quote his exact words:
"This increased rate of grant will apply only to applications received before the end of 1982. The purpose is not to add to longer term demands on the industry but to encourage the early take-up of immediate spare capacity."— [Official Report, 9 March 1982; Vol. 19, c. 750.]
In fact, we have twice extended the scheme—first to the end of March 1983 and then to the end of the current financial year.
The hon. Member for Walton referred to the general condition of our housing stock. I am fully aware of the
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problem of disrepair and we shall continue to adapt our policy in the light of changes in the condition of the housing stock.
Mr. John Fraser: A few minutes ago the Minister carefully said that in the coming months local authorities would be able to reinvest their capital receipts. Does the word "months" in that context confirm today's story in The Guardian that after this financial year the Treasury will start to claw back capital receipts from the sale of council houses?
Mr. Gow: I certainly do not intend to confirm the report in today's edition of The Guardian.
In future, as at present, it will be for authorities to determine their own priorities in the use of 'capital resources, but the Government expect continuing emphasis to be placed on the repair and improvement of the existing housing stock. The resources that we shall make available to local authorities will allow them, if they wish, to tackle those defective dwellings in their own stock that need immediate attention. There is no reason why at the same time they should not also be able to maintain a significant programme of home improvement grants.
I wish to make a broad comment on the general housing scene. For the first 70 years of this century the dominant issue was the scarcity of houses. Very few houses were built during the 10 war years, when nearly 250,000 houses were destroyed. Given the rapidly rising number of households, successive Governments rightly concentrated on producing more dwellings of all kinds. By 197'7 the then Labour Administration were able to record in their Green Paper, Cmnd. 6851, that there were 500,000 more dwellings than households. As I have said, that was not our Green Paper, but the Labour party's Green Paper. By the end of last year the figure had grown to approximately 1·1 million.
Of course I accept that the true housing situation cannot be gauged simply by this crude surplus — substantial though it is. Certainly those statistics are of no comfort to those living in crowded or substandard conditions. We must take full account of the condition of that stock, on which I shall have more to say in a moment, but over the coming years families will be better placed than ever before to express their choice in terms of the kind of housing they want.
A second major fact overlooked by the hon. Member for Walton is the dramatic growth in home ownership. By June 1983 nearly 62 per cent. of dwellings in England were owner-occupied—an increase of more than 5 per cent. since the Conservative Government came to power in May 1979. This year's Building Societies Association survey showed that 77 per cent. of all households and 90 per cent. of households in the age range 25 to 35 saw their ideal housing tenure as owner occupation.
Mr. Allan Roberts: Will the Minister give way"
Mr. Gow: No, I shall not. The Government's policy, including the right to buy, is in accordance with the people's expressed preference. Since my right hon. Friend the Prime Minister arrived in Downing street more than 600,000 local authority, new town and housing association homes have been sold, the vast majority to sitting tenants. I pay tribute in particular to the 66 Labour-controlled councils that have completed the sale of 1,000 houses or more under the right to buy.

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The hon. Member for Walton understandably placed much emphasis on the condition of the nation's housing stock. The truth is that in recent years we have seen a fundamental improvement in living conditions. Many serious problems of course remain, and I do not seek to minimise them, but I ask the House to consider the facts.
In 1971 nearly 3·2 million dwellings in England were either unfit, lacked at least one basic amenity such as a bathroom, or were in serious disrepair. By 1981 that figure had been reduced to just over 2 million, of which 300,000 were not being lived in. Therefore, it is misleading to argue that we are facing a situation of crisis proportions.
Only in terms of disrepair has recent progress given cause for concern. In the private sector, the primary responsibility — I underline the word "primary" — for keeping homes in good repair rests with individual owners. It is not axiomatic — provided the minimum statutory standards are achieved—that the taxpayer at large should be asked to foot the bill for this kind of work.
In the public sector, I have seen for myself plenty of evidence that the grave disrepair that exists on so many council estates is often the product of quite inadequate management by the councils concerned. It is not self-evident that the only answer is to throw more of the taxpayers' money at the problem. The 1983 HIP return of one major London borough describes more than 22 per cent. of its council stock as difficult to let—more than 14 per cent. of the entire housing in the borough. Yet more than £375 million has been spent on housing capital programmes by that authority since 1974–75, not to mention its expenditure on management and maintenance of council dwellings, which is now running at more than £44 million a year.
Regrettably, that kind of performance is not unique and suggests that the causes are to be found both in original errors of design in relation to real needs and in the quality of housing management. We must certainly think and act radically with regard to management and tenant involvement.
Major lessons should be learnt and applied from the work of our priority estates project, for which I have just agreed a three-year extension until 1986–87. I am sure that dramatic improvements can result from this and other initiatives aimed at restoring a decent quality of life on some of our rundown council estates.
In future, the role of local authorities will be different. The need for massive public sector house building programmes is a thing of the past, and I am glad to say that most local authorities recognise that. Of the total 1983 housing investment programme bids from English authorities, only 26 per cent. related to new build expenditure which they wished to incur, compared with 64 per cent. on various aspects of renovation and repair.
Increasingly, that diminished public sector new build programme will rightly concentrate on meeting the special needs of the elderly and the disabled. From the HIP returns, I am glad to see that more than 250,000 sheltered dwellings are now provided by local authorities—the highest number ever—and I look forward to further increases in housing to serve special needs.
Mr. David Winnick: Will the Minister give way?
Mr. Gow: Perhaps the hon. Gentleman will allow me to continue. We are short of time and many hon. Members wish to speak.
Part of our amendment deals with the Government's main housing priorities. We wish to extend the widest opportunities to those who wish to own their own homes, and most people do. We are now in the business of transforming what for many was a dream into reality. Since May 1979, in addition to the 600,000 people who have bought from public authorities, another 1·4 million households have entered owner occupation—a total of 2 million new owner occupiers in four years.
The house building industry has responded to this demand. Despite the difficult economic circumstances in which it has operated over the past few years, private housing starts in Great Britain are said to be likely to reach 165,000 this year— 17 per cent. up on 1982, and a figure that was last exceeded 10 years ago during the premiership of my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath).
We shall do all in our power to create the right climate to allow private house building to continue to be the main provider of people's housing needs and aspirations. The abatement of inflation and the return of sound money have meant that house prices in relation to average earnings have fallen significantly below the 3·5:1 ratio that has obtained over most of the period since 1945. Currently, building societies have ample funds to meet current mortgage demand and to reduce mortgage queues. Consumer confidence is higher now than for several years.
Last, but emphatically not least, the Government are taking further steps to promote the right to buy. The Government amendment refers to the promotion of home ownership. Our new Housing and Building Control Bill now in Committee will extend the right to buy to 50,000 tenants whose landlords do not own the freehold of their dwelling.
Mr. Winnick: Why will the Government not give private tenants the right to buy in law?
Mr. Gow: I answered the hon. Gentleman in the first Question Time in this Parliament.
The Bill will give to less well-off tenants the right to buy on "shared ownership" terms; it will increase the discount for 400,000 tenants from 50 per cent. after 20 years' tenancy to 60 per cent. after 30 years' tenancy; and it will reduce the right-to-buy qualifying period from three to two years, giving to another 250,000 tenants the immediate right to buy. And we intend, as I have told the Committee, to amend the Bill further to allow periods of occupation spent in other public sector tenancies to count for right to buy qualifying and discount purposes.
The Government also regard the private rented sector as a way of providing a further crucial element of choice and flexibility in the housing market, particularly for the young, the single, and the mobile. Continued decline of this sector is in no one's interest.
The Opposition have adopted — very unwisely — a wholly destructive attitude to the private rented sector. Their threat to repeal the shorthold provisions of the Housing Act 1980 was repeated in the 1983 manifesto. The manifesto went on to list measures to impose still further burdens on private landlords. Although we know what the electorate thought of that manifesto, I suspect that the Opposition have so far learnt little from their experience.

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The Government are determined to build on the measures introduced in the 1980 Act, despite the Opposition's attitude. The response to the assured tenancy scheme is most encouraging. Over 100 bodies have been approved to let on an assured tenancy basis, outside the Rent Acts. Certainly the assured tenancy scheme provides an opportunity both for investors and for tenants looking for modern housing for rent in the private sector.
We are examining the existing legislation affecting the private rented sector as a whole. The truth is that legislation designed to help the tenant has succeeded in drying up the supply of rented accommodation. We have succeeded unwittingly in injuring precisely the kind of people whom we were trying to help. We must aim to establish conditions in which landlords have the confidence, the incentives and the desire to invest in the private rented sector. At the same time, we must and shall provide proper protection for tenants.
In earlier debates concern has been expressed on both sides of the House, notably by my hon. Friend the Member for Westminster, North (Mr. Wheeler), about the problems of management in privately owned blocks of flats, especially in London. In response to this, as the House knows, the Royal Institution of Chartered Surveyors in 1982 set up a working party under a distinguished chairman, Mr. J. N. C. James, whose report, published in January this year, was an important step forward.
Some of the working party's recommendations were essentially matters for the parties involved; for example, the working up of an agreed code of practice for the management of residential blocks. I hope that those directly involved will now press ahead with the implementation of those recommendations.
However, many of its other recommendations would involve legislation. Before we can decide whether it would be right to alter the statutory relationship of landlords and tenants in this area, and in what way, we would need more evidence. I have decided to set up a committee of inquiry to consider the matter and report as soon as possible. I have in mind the following terms of reference:
"To collect and examine evidence of the nature, scale and incidence of problems for landlords and tenants arising from the management of privately owned blocks of flats; to assess the difficulties caused by these management problems and to make recommendations on how they might be resolved."
I hope to be able to announce shortly the names of the chairman and members of the committee, and the date on which it will start work.
The amendment in the name of my right hon. Friends also refers to a tenants' charter. Let no one in the House be under the impression that the Labour party is anything other than a latecomer to the principle of a tenants' charter. There was a memorable occasion in the House which you, Mr. Deputy Speaker, will remember when my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) sought to bring in a private Member's Bill to introduce a tenants' charter. That Bill was voted down by the Labour party. It is all very well for the former Patronage Secretary to keep sniggering about it, but he was one of those who opposed the Bill.
Through the tenants' charter provisions of the Housing Act 1980 we gave for the first time public sector tenants of local councils, new towns and housing associations a number of new statutory rights. First and foremost was the right to buy, but there was also the right to security of
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tenure, the right to improve their homes, rights to information, and the right to be consulted about housing management proposals. These rights were intended to give tenants a greater sense of belonging, a greater sense of responsibility, and a greater willingness to help build a better quality of life for themselves and their fellow tenants.
We are extending the rights under the charter. The Housing and Building Control Bill now in Committee will confer two new rights on secure tenants: first, to carry out repairs for themselves, if they so wish and to be reimbursed for doing so; and secondly, the right to information about charges for communal heating systems.
We have also set up the tenants exchange scheme. This enables public sector tenants who want to move to another council's area to have their needs registered and displayed in the chosen parts of the country. There are now nearly 40,000 registrations under the scheme. Some councils are helpful in their attitude towards people who want to exchange. Many, however, are unnecessarily restrictive. Accordingly, I have decided to help tenants in their exchanges by introducing a right to exchange.
I have issued today a consultation paper outlining the Government's proposals for giving secure tenants a statutory right to exchange. Following consultation, I intend to introduce an amendment to the Housing and Building Control Bill. In essence, our proposals would allow, as of right and subject to certain safeguards, secure tenants to assign their tenancies to other secure tenants of the same or other landlords. Copies of the consultation paper have been placed in the Library.
It is excellent that we should have a debate on housing. I think that the Opposition have made a grave error of judgment in seeking to base the debate exclusively on improvement grants. The record of the Labour party is a record of which, as the hon. Member for Walton said, he had no reason to be proud.
Mr. Heffer rose——
Mr. Gow: No; I am just finishing. The Government have every reason to be proud of their record on housing improvement grants. I hope that the Opposition motion will be roundly defeated.
4.37 pm
Mrs. Renée Short: I am delighted to be able to take part in the debate so soon after being elected chairman of the Transport and General Workers Union Members of Parliament in the House because many of my union comrades work in the construction industries, or did; unfortunately many of them are unemployed because of the Government's actions.
The Minister's speech gave no indication of the problems faced by local authorities. The reduction of the improvement grant from 90 per cent. to 75 per cent. will result in a considerable reduction in the total amount of reconstruction, rehabilitation and refurbishment work that can be done. The replacement of aging housing stock, which would have taken hundreds of years at the existing rate, will be further slowed down. That is a poor prospect for tenants who are waiting to have their houses improved.
In my constituency the position is very serious. The housing committee has just debated it. Its report states:
"In view of the announcement about retrospective allocation arrangements for 1984/85, the projected figures for commitments

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into that year were therefore a matter of concern. On the basis of grant approvals already issued the Council were committed to expenditure of approximately £4·8 million, of which some £3½ million was likely to fall for payment in 1984/85. Grants were currently being approved to a value in excess of £600,000 per month, and if this rate continued to the end of the financial year it was estimated that there would be a carry over of grant commitments into 1984/85 of approximately £6 million. Committed expenditure on the remaining aspects of the Capital Programme for 1984/85 was currently estimated at £14 million.
The housing committee has had to take drastic action and limit its priorities.
There are about 400,000 unemployed construction workers, and there will be many more before the year is out if the Government's programme continues. The construction industry has built up a flourishing export market in the middle east, the far east, Africa and even America. But if it is to be ground down by insufficient work at home, its export earnings will be affected.
Nearly £4 billion of exports were earned in 1982–83, of which the majority came from the export of building materials, plant and machinery. The work of contractors and consultants added significant amounts to that sum. The construction industry involves the building material producers that supply it, and which are affected by cuts in housing construction, new build or refurbishment. On analysis of the figures, and discounting distortions introduced by the Department of the Environment in the statistical data, it must be faced that in 1982–83 export earnings fell below those in 1981–82, so the slide has already begun. Competition from EC countries and America is becoming much tougher. Everyone knows that we cannot expect good export performance without a viable, expanding, home market.
While the Conservative party has been in office, the real value of the output of the construction industry has diminished while the number of unemployed has increased disastrously and the number of bankruptcies amoung smaller firms has risen. But more serious for industrial efficiency and future expansion is the requirement imposed by a shrinking market on the large firms that have had to dismiss established design teams, management teams and construction experts. In other words, they were mortgaging the future. It takes time to build up expertise, and those people will be difficult to replace.
The recent slight improvement in the private housing market is insufficient to halt that process. Compared with our major overseas competitors, the outlook is discouraging, and even dangerous to our economy and the future of our construction industry.
The total yearly product of the German construction industry, in equivalent money terms, is almost three times that of the British construction industry. Its productivity —output per man—is double that in Britain, and its loss due to the recession has been much lower. The number of unemployed building workers is half that in Britain. Why have Germans been able to develop their building industry and control the level of unemployment? Perhaps the Minister can answer that.
French productivity is even lower than that in Britain, but its unemployment rate is less and its total production is increasing. Investment in Germany on modern building plant is encouraged by the German Government, and 70 per cent. of building workers — despite the influx of untrained foreign workers — have a recognised skill.
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That attracts special payments and bonuses. Yet this Government and our building employers are impervious to the need to professionalise the industry. They continue to use unskilled workers and offer no opportunity for training.
Some 50 years ago it was proposed that a special skilled job should be created for those working with concrete, yet that has not happened yet. Rather than cutting the allocation of money to the construction industry, the Government should encourage capital investment in building—as even the CBI is demanding— and abandon their damaging and outdated dogma and prejudice against public investment. Why do not the Government introduce tax benefits to encourage employers to retain their teams of designers, architects and engineers? They should encourage the renewal of our industrial building stock as a matter of urgency. They should reward increased efficiency and productivity. The CBI and the building unions alike are asking for those steps.
Bricks, blocks, steel, timber and many other components are needed to build and improve the housing stock. That would create many jobs to revitalise the stagnation created by the Government. But that work cannot be undertaken without vastly increased investment in the public sector, new build and improvements. That must be done sooner or later because we cannot continue with the present decline in building stock. If it is not done now, ultimately the home market of the British construction industry will be taken over by expanding European entrepreneurs, and nothing will remain of the British building industry.
The Government have a great deal of responsibility on their shoulders and the steps needed for the survival of the construction industry are clear. Unless those steps are taken and resources are injected into new build and improvement of the existing housing stock, the rapidly declining construction industry will decline still further. Foreign building firms will then attempt to take over our industry. I hope that the Minister is well aware of that problem.
4.47 pm
Mr. Robert Hicks: I wish to concentrate my remarks on one aspect of the Government's approach to their housing investment programme and home improvement and repair grants in particular.
I wonder what effect the recent announcement and indications about future Government financial provision for grants will have on householders who have already made their applications, or will do so by 31 March 1984, but who are living in areas where local authorities have already exhausted their funds for the current financial year 1983–84.
There are three local authorities in my constituency, and all have had to suspend approving any further applications — not only because funds for the current financial year have run out, but because of the absence of a guarantee from the Government to provide adequate financial resources for 1984–85 for commitments arising from the approving of home improvement and repair grants between now and the end of the financial year. In south-east Cornwall, some 3,000 householders have found themselves in that position. Their applications have been properly submitted but cannot be approved.

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The three local authorities can expect a total HIP allocation of £6 million to £7 million for the financial year 1984–85, plus any capital receipts that they obtain. Even if they were to use up all their HIP allocation for improvement and repair grant purposes—that would be impossible, because of their continuing new build commitments—there would still be a shortfall for the next financial year of more than £3 million.
I stress that I do not make such remarks lightly, or simply on behalf of my constituents. Local authorities in the constituencies of right hon. and hon. Members on both sides of the House are in identical difficulties. Those problems are especially prevalent in rural areas such as the south-west, and perhaps in other areas where there is the attraction of the 90 per cent. grant incentive, plus the need to update old and declining housing stock. Indeed the embarrassing situation that I have outlined reflects the success of the home improvement scheme, under which grants are available at the enhanced rate of 90 per cent.
It will not be good enough for the Minister to say tonight, as he has already said in letters to me, that those grants are made at the discretion of the local authority. The House has known the facts right from the start of the programme announced by the former Chancellor of the Exchequer in March 1982, and confirmed in subsequent ministerial pronouncements. Today, the hon. Member for Liverpool, Walton (Mr. Heffer) mentioned that and my hon. Friend the Minister for Housing and Construction confirmed on the "Today" radio programme this morning that individuals who apply for grants between now and 31 March 1984 will be eligible for the enhanced rate of 90 per cent., providing that they satisfy the necessary criteria.
My interpretation, and that of other right hon. and hon. Members, is that the Government are still encouraging people to apply for grants under the scheme, designed to improve the quality of existing housing stock, in the knowledge that their application will still be looked upon favourably by the appropriate local authority. I hope that the Minister can put me right when he sums up the debate. It is difficult to reconcile the statements that are still being made with what is happening on the ground. Local authorities have been obliged, against their will, to suspend grant approvals because of the inadequate funds available this year, and because of uncertainty about the adequacy of financial resources that will be made available in 1984–85 for specific housing purposes such as improvement and repair, and for other housing commitments.
I genuinely find the situation very sad. My hon. Friend the Minister and the hon. Member for Walton acknowledged that the scheme has been an outstanding success in improving the quality of national housing stock.
Money spent in this manner is not inflationary. It assists the building and construction industry, thus reducing unemployment on the one hand and stimulating regional and local economies on the other hand. In my own part of the world, it has helped considerably to rejuvenate rural villages socially and economically. One has only to drive through them to see how enormously, as a result of successive Governments' home improvement schemes, their appearance has improved.
There can be no objection by my right hon. and hon. Friends on the Front Bench on ideological grounds. Although it is public investment, it goes straight to the private sector because all the building firms involved come from the private sector. The scheme has enabled the nation
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to enhance the quality of its housing stock. Bearing in mind demographic change and the current national housing situation, I have always felt that the home improvement scheme is just as important as the new building programme.
Above all, I am sad because the Government have, by their actions—they may yet put me right, and I hope they will — deliberately misled a significant and important number of people whom they and I purported to be encouraging. Those people are the householders. As my hon. Friend the Minister of State said, the ambition of most people is to own the property in which they live. It is unacceptable for the Government apparently to mislead those people deliberately, and it is difficult for me to reconcile myself to it, for the reasons I have outlined. As a consequence, unless my hon. Friend the Under-Secretary of State can put me right later, I shall feel obliged to express my feelings in the usual way in the Division Lobby at 7 o'clock.
4.57 pm
Mr. Reg Freeson: The House owes its thanks to the hon. Member for Cornwall, South-East (Mr. Hicks). I say that genuinely, in no partisan spirit, and with no intention of creating mischief. He gave the House a strong dose of realism and straight talking. His speech was realistic and refreshing.
The Minister for Housing and Construction was proud of his Government's policies. I shall not deal with the whole range of housing policies, although I shall go a little wide of improvements when I deal with that sub2ect. However much pride the Minister expressed, especially in the rhetorical conclusion of his speech, false pride will not solve the problems. He will have to do much better for the sake of all hon. Members than he did today. I say that not just because I am a member of the Opposition. The Minister will have to use better arguments about the housing problem. I am sorry to have to say that, irrespective of partisan points of view about housing. Each hon. Member learns to respect others on different subjects, even when we disagree. However, I am afraid that I did not find much merit in the Minister's remarks.
At some points in his speech the Minister played politics. It is not the first time that that has happened. Like my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), as an ex-Minister I am and was far from satisfied about insufficient action during our period of office. I wish that all Ministers were prepared to say that. I frequently did at the Dispatch Box and outside the House. I said it not only when I was in Opposition. I wish that all Ministers were frank enough to say, "I wish that I could do more. I wish that I could do this, and that, but, for certain reasons I cannot. I hope to be able to do it." Ministers should say so, in whichever way they wish to express themselves.
On the facts of the matter, it is misleading to compare the position of the past few years with what happened in the previous period. It is true, as the hon. Member for Cornwall, South-East said earlier, that the figure of £90 million spent on improvement grants then was lower than the figures of recent years, but other improvement work was proceeding on a larger scale, in local authority and housing association housing policies and practices. Other work such as rehabilitation and improvement was under way on a scale way beyond present levels. Hundreds of millions of pounds were being made available during those

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years as part of a deliberate and, I hope, coherent housing policy — not an ideologically based one — to bring declining and decrepit old housing back to a decent state.
I shall quote one figure as an example of what we achieved, and I could quote others. When I left office in 1979, housing associations were annually spending about half their housing resources, perhaps even more, on buying, modernising and converting old properties, particularly in inner city areas. That had reached just below 40,000 dwellings a year, and the figure was rising. However, they are now operating at just below 20,000 dwellings. Hundreds of millions of pounds that were going into the purchase, rehabilitation and conversion into modern flats of old, decrepit houses and mansion blocks, are no longer being spent.
There has been a considerable increase in improvement grants, most of it going to owner occupiers — about which I do not complain. Make no mistake, though, in the worst housing in the inner cities and deprived rural areas there has been a major reduction in activity. I represent an area that suffers particularly from this decline in activity, created not only by the fact that resources are no longer available, but by the rules and regulations being imposed by the Minister and his predecessor through their civil servants. These put constant obstacles, deliberately and on ideological grounds, in the way of local authorities and housing authorities — primarily local authorities —purchasing old properties.
We are talking about people suffering from housing problems. As a result of ideological dogma, local authorities have not been allowed to buy properties, modernise them and convert them into a decent place for families who are now homeless or living in decrepit buildings. I have had answers from the Minister's predecessor that make it clear that this is a matter of policy, not simply a matter of resources for purchase. These rules and regulations have produced a major reduction in activity in many inner city areas, and there will be more.
I shall deal now with some of the other matters raised by the Minister in his reference to history. Five years having elapsed since the period to which he referred, it is now time to concentrate on where we are now and where are going, so I shall deal with that. There is no doubt that the condition of housing, particularly pre-1919 housing, is getting worse. When the house condition survey of 1981 made that clear, it was not a revelation. The problems were underlined. They have existed for a long time, but they are getting worse, while fewer resources are being made available to deal with them.
The Government intend to make not just this cut, which is guessed to be about £200 million. There will be other cuts. The Minister will not deny that. Most of the guesses in the media suggest that about £400 million to £500 million will be cut by the time we reach the next financial year. We shall see. If there is such a cut in expenditure there will be a further — and not the first — major reduction in housing investment. I am not concerned to argue that the particular pattern of expenditure in any particular year or run of years is sacrosanct, or that it must always remain the same. I object to the cuts proposed and to the changes in the grants system, more because the way in 'which they were introduced, which has been well illustrated by the hon. Member for Cornwall, South-East,
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has affected local authorities and customers. I object also because the cuts are in no way the result of a sensible and coherent review of housing policy. If there had been some review that logically led to a change in the pattern or the system, we might argue about the detail, but we could see some sense in the changes.
The third objection is that this is not so much a change in policy that has been thought out as it is a change in the level of resources going into improvement, an urgent aspect of housing need. It is a major reduction that will lead to further reduction.
These are the objections and on them we shall argue strongly. All who are seriously concerned about housing conditions should think seriously about where we are going. This is not just a bandying match across the Floor of the House, or even a genuine difference of view. We need more investment in housing. The house condition survey made this clear when it talked about the need for major works on housing.
We are concerned not only about pre-1919 housing. There has been growing evidence over a number of years, which is clearly shown in the 1981 report, that the problem is increasing in the inter-war housing estates, the owner-occupied houses, and is not confined to the Victorian era housing. The problem is not as big as it is among old properties, but if we do not tackle the inter-war housing with more resources and a reshaped improvement policy, if need be, serious problems will face whichever Minister and Government are in office in five or 10 years' time. The problem will not start then. It has started already.
Many of the people who are suffering who will continue to suffer and who will bequeath it to the next generation, are elderly owner occupiers who have neither the capacity nor the resources to undertake decent repairs of their properties, whether they are pre-1919 houses, or, increasingly, the inter-war housing that is falling into disrepair. These are not the old pattern of old private landlord properties which, for various reasons, are in a poor condition. There is a problem within the owner-occupied sector that has been growing for years and is now serious.
The survey showed that between 5 million and 7 million properties—about 24 per cent. of the nation's housing stock—are in need of major expenditure at all levels, be they pre-1919 houses or inter-war housing estates. It is in that area where some of our most serious problems lie.
There is also the question, frequently overlooked, whether much older property—despite the boom in the policy of rehabilitation, in which I participated, which I encouraged and which I still support—should be saved. I am referring to old properties that need to be replaced. I do not mean that they should be replaced by the high-density massive estates that were built—fashionably or under pressure of events—10 or 20 years ago. The need to replace them will become acute in the future.
We need some fundamental thinking. We must consider how to deal with the entire housing demand—rented, owner occupier, co-operative, housing association and the rest—as well as the need for stock replacement. Some fundamental economic questions have not been tackled by any Government so far on the question of the replacement of old properties, largely owner-occupied. While, as I have explained, some of the worst problems face the elderly, we have the problem of disrepair and increasingly we shall have to tackle the question of replacement.

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I have a few matters to raise which inevitably are illustrated by my experience in Brent, to which I have alluded. However much the Minister may dislike our use of the word "crisis", in parts of the borough of Brent—I am sure that the same can be said of other inner city areas —we have reached a crisis. We now have 500 families in bed and breakfast accommodation. —[Interruption.] If the hon. Members will listen to what is being said and take it seriously, instead of trying to turn this into a flippant barney across the Floor of the House, they will have greater respect for people in need.
As I was saying, we have 500 families in bed and breakfast accommodation and their average expectation for rehousing is three years. That has nothing to do with the state of the local authority and it is idiotic for Conservative Members to think it has. It is because the local authority has not been given the authority or resources— nor have the housing associations that are active in the area—to obtain the properties that they need so as to rehouse those families.
Mr. Gow: As the right hon. Gentleman knows, I came to the borough of Brent and visited some of the very families to whom he is referring.
Mr. Freeson: I was grateful for the Minister's visit. I would have been more glad if, when he returned to his office, he had changed the rules governing the purchase of properties. I sought to negotiate on this in a completely non-partisan fashion with his predecessor, but without success. If we changed the rules governing the procedures for the purchase of properties—which are now more antiquated and inhibiting then they were 20 years ago, when I was leader of the then Willesden borough council — we might get somewhere. We are more restricted today in the procedures that we must adopt for the purchase of properties for modernisation and rehousing than we were at the time of Lord Brooke when, as Minister, he was Henry Brooke.
That must be a nonsense administratively. If we are to bring those families out of bed and breakfast accommodation and house them decently within a reasonable time, more resources must be placed at the disposal of the local authority.
Mr. Vivian Bendall: rose——
Mr. Freeson: I am dealing with a vital matter. I will not give way because I am anxious to get my case across. I am representing my constituents and hundreds of thousands of people who need housing.
If the Minister says, "We must look for more efficiency, especially in administration," I might be prepared to argue that with him; I will visit any local authority department and any part of any housing association and use my endeavours to change procedures and attitudes, if there is a need. But let that not be used as a substitute for action by central Government. Although I speak passionately and strongly—I hope rationally also —on behalf of my constituents, it is a problem that is becoming an increasing curse to inner city areas throughout the country. We cannot in all humanity allow the present state of affairs to continue.
I am endeavouring to concentrate on specific areas, though I must mention other problems such as people who need transferring from high-rise blocks of flats to low-level accommodation — people with heart conditions.
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There are many other needs. The transfer problem in our estates—the same applies in many inner city areas—is a growing one, about half the problem represented by the housing waiting list at the top end. They cannot be rehoused because there is no other accommodation in which to rehouse them.
The only way to handle these problems and prevent the deterioration of stock in the older areas is to change the rules and procedures and increase resources. I implore the Minister to accept—I argue this not in an ideological spirit; I will argue ideology on housing on another occasion—that I am arguing on behalf of individuals who come to see me for advice. My constituents write to me about these problems day in and day out, and I get only the tip of the problem. Those who work in the housing departments and the housing association offices get the worst of it, though in the end, of course, the people who get the very worst of it are those who do not get any answers and cannot get decent housing.
I have given the situation in Brent as an example of what is happening. From the national point of view, I warn the Government — whatever arguments are developed about the patterns of tenure, home ownership, private, local authority and housing association renting and so on —that if they do not become seized of the need for major public investment in a framework of coherent and consistent resource expenditure, our inner cities and certain deprived rural areas will be heading for social and physical disaster.
I am not suggesting that by a change of policy we can resolve all our problems in six months or a year. No Government could do that. But we could start to reverse the trend, and I appeal to the Government to search their heart and mind and act accordingly. Resources are needed, but they have not been forthcoming. On the contrary, they are being cut. Let us have those resources, and increase them, otherwise whoever is the Minister in a few years' time—of a Tory, Labour or any other Government—will be cursing the days of this Government's housing policy. I urge the Government to make the resources available and change their policy.
5.18 pm
Mr. Martin M. Brandon-Bravo:Our ability as politicians to select a piece of information, a single statistic, and then, totally out of context, portray that as reality when it is a distortion of reality seems to be legendary, and today the Opposition are offering us just such a gem. They seek to pluck a small perceived deficiency in an overall well-balanced strategy and present it as illustrating the opposite of what is actually happening.
The right hon. Member for Brent, East (Mr. Freeson) did exactly that—which irritates my hon. Friends and me. There are Conservative Members who care just as much about society and who can at least have a clear conscience about what has been achieved. Left-wing Members always manage to avoid matching their words with actions, and so appear as the good guys.
The House deals mainly in macro statistics —telephone numbers that mean very little to the man in the street. However, in rejecting the motion and supporting the Government's amendment I believe that it is important to deal with reality at the sharp end, and with local authorities and their housing stock. Until recently, the right hon. Member for Manchester, Gorton (Mr.

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Kaufman) led the Opposition in Committee. He accused me of bringing what he called "Nottingham gossip" into the debate. Strangely enough, the right hon. Gentleman thereafter drew on his experience in Manchester. However, at least he was honest enough to record his general opposition to the right to buy and related matters. He has now passed on to other things and the hon. Member for Liverpool, Walton (Mr. Heffer) is seeking to establish his credentials by putting his name to this afternoon's nonsense.
Mr. Heffer: I do not need to establish my credentials.
Mr. Brandon-Bravo: In my city there are about 1,600 empty council homes, some of which have been empty for more than a year. They are monuments to the contrived publicity that lack of Government money is to blame. In fact, the real cause is political dogma mixed with the inefficiencies that are almost inevitable in large housing administrations. For example, the refusal of the repairs section to permit sensible multi-trade craftsmen to complete a job in one, means that fewer repairs—not more—are achieved with the money available. Our city embodies—and it cannot be alone—the reality of that famous Flanders and Swann ditty "The Gas Man Cometh" with its sequence of trade skills.
The right to buy has given our authority all the funds that it could reasonably expect, to do the things that should be done.
Mr. Winnick: Obviously the hon. Gentleman favours the right to buy. Is he in favour of private tenants having the same right in law, so that they can buy the dwellings in which they live?
Mr. Brandon-Bravo: The short answer is no. [HON. MEMBERS: "Why not?"] I am sure that the Minister will give hon. Members a better reply than I could. We have suggested homesteading to the majority Labour party in our city, but we have had no luck. Of course, it would put many of those empty properties quickly into use, but that would mean even more owner occupiers, and that would never do. On 5 July I told the House of our transfer scheme, but that, too, was stopped when Labour took control in 1979. A controlled scheme ensuring that the transferred purchaser left his tenanted home in good and reasonable condition would further reduce the demand on public resources and speed up housing for those in need.
I appreciate that there are dangers. It has been suggested that authorities might put highly unsuitable disruptive tenants into otherwise satisfactory high rise flats, with a view to their conduct leading to a decline in the quality of the property and subsequent claims for demolition assistance. I do not challenge the statement that there are some high rise blocks that must, on objective grounds, come down, and that there are others which, on more subjective grounds, might have to come down. However, we objected strongly to our Labour authority dealing with the matter in such a way as to burden its tenants with an astronomic cost which unnecessarily adds to their rents.
By the statement in the local version of the "Thoughts of Chairman Mao" that Labour would not allow the flats to fall into the hands of private developers, £1·5 million or about £1 per week in rent per home was added just for
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a piece of political dogma. Our authority has doubled its expenditure on repairs; to little obvious effect. As has been said, cash expenditure alone does not create jobs or, necessarily, lead to economic activity. The Opposition, who oppose our right to repair, and the phoney ill-conceived Bill presented to the House by the hon. Member for Bootle (Mr. Roberts), show the real face of the Labour party. I should have thought that, properly exercised, such a right of repair must represent a constructive contribution to the very aims of the Opposition's motion. However, they oppose that very real improvement in tenants' rights.
I can illustrate Labour's attitude to past tenants and its approach to real people in another way. A mortgagor who sought to improve and extend his newly acquired home was refused an increase in his loan. By switching to an alternative funding source, our housing sub-committee deemed the transfer a disposal and reclaimed the £1,200 discount that the tenant had been granted.
I shall deal now with Labour's attitude to a housing improvement programme. Labour says that the Government have not accepted its statement of need. I am not surprised. Labour's attitude is to think of a number that is high enough to ensure that some lesser sum will be agreed, and then to present the result as a cut. Two years ago we asked for £30 million and obtained £20 million. Locally it was splashed that the wicked Government had cut one third of that money, or a whole £10 million, off our needs. Labour should have asked for £40 million—"Housing programme cut in half' would have made a better headline.
The same applies to the reference to urban aid. Knowing full well that £4 million to £5 million was a likely offer, a bid for £7 million was made. Some of that application was deliberately outside our inner city boundary, thus ensuring that the full application would not be granted. In the end, £4·5 million was approved and Labour smugly announced that we had cut £2·5 million from its needs.
The Labour party's conduct where it matters — in local authorities—defies any words that are permitted in this House. However, it means that I and my colleagues can support the Government with a clear conscience.
Several Hon. Members rose——
Mr. Deputy Speaker (Mr. Harold Walker): Order. The shorter the speeches, the more hon. Members I shall be able to call.
5.27 pm
Mr. Ron Davies: Your strictures are noted, Mr. Deputy Speaker, and I shall attempt to comply with them.
We have just heard a mean and nasty little speech from the hon. Member for Nottingham, South (Mr. Brandon-Bravo). It was partisan and reeked of complacency. I suppose that was excusable, given that he did not address his remarks either to the motion or to the amendment. I also suppose that he is representative of the new generation of Conservative Members whose only experience of housing problems lies in deciding which one of their many homes they will live in that weekend—[Interruption.] I should welcome it if any Conservative Member would like to deny the truth of my remarks, or provide evidence that they are untrue.
I represent a part of the United Kingdom that has a housing problem of crisis proportions. I am glad that a

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Minister from the Welsh Office is in the Chamber to listen to the problems of housing in Wales. When he goes away tomorrow, I hope that he will urge the Secretary of State for Wales to spend a little more time dealing with the housing problems of Wales and a little less time helping to speed through planning applications on behalf of the Prime Minister's husband. Of course, I should also welcome it if any Conservative Member wished to challenge that remark.
In 1981 the English house condition survey made a comparison with the situation in Wales via the Welsh house condition survey. In Wales, 8 per cent. of all households lacks one or more basic amenities. Houses without an inside WC amount to 5·4 per cent. and 4·3 per cent. do not have a bath. Since 1979, the Government have done nothing to redress the imbalance between England and Wales. A capable, logical or rational Government would have attempted to redress the imbalance in the distribution of resources. That has not occurred. One report stated:
"The results of the 1981 survey suggest that the overall state of repairs of Welsh housing stock has deteriorated since 1976."
Between 1976 and 1981, the number of defective properties in England fell from 2·22 million to 2·01 million — an improvement. Wales experienced the reverse, and it is not difficult to find the reason. It lies with the ineffectiveness of the incumbents in the Welsh Office. Average housing expenditure in the United Kingdom is about £79 a house: in England, average expenditure is £70 a house and in Wales it is £52 a house. This is not a record of which anyone can be proud or one which the Secretary of State, who is the responsible Minister and who has presided over that decline, can attempt to justify, let alone support.
In 1982, Shelter—a group that many Opposition Members will recognise as being in the forefront of housing battles — reported that since 1970 Wales has been—[Interruption.] If Conservative Members wish to argue, I am prepared to give way. If they wish to challenge, they should stand; if they do not wish to challenge my figures, they should remain seated and await the opportunity to present their arguments.
In 1982, Shelter reported——
Mr. Charles Irving: I did not say a word; I am a member of Shelter.
Mr. Davies: I was addressing the multitude, not the individual.
The Shelter report suggested that we had been underfunded by £370 million over 10 years. My county of mid-Glamorgan is the most deprived in Great Britain, with 20,500 houses classified as unfit and 9·2 per cent. of all dwellings lacking an indoor WC. The county next on the list of deprived counties is Powys with 6·1 per cent. of houses without an indoor WC. The most deprived and the second most deprived counties in the United Kingdom lie in Wales. What a proud record for the responsible Minister. In mid-Glamorgan, 6·1 per cent. of all properties are without a bath, and in Powys 5·3 per cent. are without a bath. Again, the two most deprived counties without these facilities lie in Wales.
Mr. John Butterfill: Are the figures that the hon. Gentleman has been citing caused by inadequate funding or incompetent management by those authorities? Are they receiving significantly less money from central Government than comparable authorities?
Mr. Davies: The conditions are caused by the incompetent management by the Welsh Office and inadequate funding. Our problems are reflected in the statistics and in a series of personal tragedies.
I was a member of a local authority for 14 years. Other hon. Members have spoken of their meetings at Saturday morning surgeries with young couples who are entering marriage or trying to bring up young children in conditions of appalling degradation. I have met middle-aged couples who are suffering the first effects of a life spent working in the steel or coal industries, and they are asking for transfers. It is a hollow promise to provide a statutory right to a transfer when the houses to which these people should be transferred have been sold. Elderly people who are nearing the end of their lives are living in squalour, and they are asking for transfers. The Under-Secretary might say that we cannot afford them. The theoreticians among the Conservative party may say that that is the price that people must pay if we are to live in a free, democratic or capitalist country. They say that we cannot afford to spend money on housing.
I regard this as a matter of choice. We have free will and the essence of democracy is that choices are made. Unfortunately, decisions are made in Cabinet and in the Welsh Office where the choice must be between providing adequate housing for young people and spending money on bombs. The Government show their preference for cruise and Trident missiles, not housing for young people. When deciding between allocating funds for improvement grants for middle-aged couples and their families and spending money on an airport in the Falkland Islands, the Government chose not the people of this country but those in the Falkland Islands. When the choice is between elderly people and tax concessions for the oil companies and the rich, we know the Government's decision. The Government give those tax concessions and turn their back on those people——
The Under-Secretary of State for Wales (Mr. Wyn Roberts): Is the hon. Gentleman not aware that Welsh local authorities spent £50 million less on housing in 1982–83 than they could have done and £35 million less in the previous year? In other words, during those two years they failed to spend the £85 million that could have been spent on housing.
Mr. Davies: This is not the first time that I have heard that tale. Each time the Under-Secretary provides those figures, he becomes less impressive. On the last occasion, he was addressing a conference of Welsh local authority housing associations, and he gave a miserable performance. The hon. Gentleman might have raised his point to put me off my stride; he will not succeed. Whenever the Government have the choice between providing for the needs of the people and making the most brutal, offensive, callous and wasteful decisions, they decide on the latter. If it is a choice between houses and bombs, inevitably the Government choose bombs. The Government tell us that that is an inevitable consequence of capitalism. We reject that point.
I am prepared to take issue with what the Under-Secretary said about housing allocations. In 1980–81 the local authority in the district which is a prime pan of my constituency of Caerphilly and which I have the honour to represent with my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands), made a bid to the

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Welsh Office for £7·48 million. The allocation was £5·15 million. Sixty-nine per cent. of the bid was allocated. It might have escaped the hon. Gentleman's attention that the bid was presented in 1978 prices; the allocation was spent in 1980–81 prices. Because of the increase in inflation between 1978 and 1981, the allocation that was received could purchase only 46 per cent. of the original bid.
The Under-Secretary piously tells us that we are not spending £50 million of resources when they are given in November, December or January. In a last-minute throwaway, local authorities are supposed to gear up and process the applications. They are supposed to take on staff and bring in the builders' estimates. People are expected to obtain estimates and planning consent within three months. It is hypocrisy, and the Minister knows it.
The circumstances affecting my local authority, Rhymney valley, are paralleled elsewhere in mid-Glamorgan. A working party of local authorities in mid-Glamorgan referred to the 1981–82 allocation which was only 72 per cent. of the 1980–81 allocation. The report stated:
"Inflation has cut that 72 per cent. to only 62 per cent. of the 1980–81 investment ability and that was only 46 per cent. of what the county's bid totalled. In real terms therefore the allocation represents only 29 per cent. of the levels that local authorities believe is necessary to resolve the housing problem of mid-Glamorgan."
That is a foretaste of a future Welsh housing crisis.
My local authority has an estimate of expenditure for 1983–84 of £2·5 million to £3 million. It has a carry-over from the current year of £2·5 million to £3 million and £9 million is allocated to committed grants. Further applications between now and the end of the year will amount to £3 million. That gives the local authority an expenditure figure for next year of between £12 million and £15 million. Its choice, unless the Government take action, is to abrogate commitments or make cuts elsewhere in its capital investment programme. The majority of Welsh housing authorities are faced with similar, if not worse, circumstances.
I make a few suggestions which are offered more in hope than in expectation. They are not a shopping list of dogma which will traumatise the Tory theorists. They are sensible, practical proposals designed to help resolve the Welsh housing crisis. The Minister should restore expenditure to the 1983 level. Additional resources should be earmarked for the most disadvantaged areas. The Minister should guarantee a continuation of policy for five years. That is the only way in which local authorities can tool themselves up and householders can make their applications. It is the only way in which the building industry which is dear to the hearts of Conservative Members, will be able to prepare itself if it wishes to meet the challenge.
The Minister should be prepared to guarantee exemption from rate capping for all related revenue expenditure incurred by local authorities in processing applications. He should discount that expenditure when it comes to the assessment of the GRE. The Minister should reduce the complexity of grants. We have three grants — improvement grants, intermediate grants and repair grants. If a property has a problem, the property should be
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looked at as a whole. Local authority expertise should be used so that the system can offer the most appropriate grant to the house owner in the light of his circumstances.
I am sure that my next point will appeal to Conservative Members. The Government should introduce a system of tax relief for mortgages which are taken out to pay for repairs. If there is underspending at the moment, one of the main reasons is that people cannot raise mortgages to meet the cost of repairs. Interest relief is allowed on mortgages, second mortgages and improvement mortgages, so why not on repair mortgages? The Government could do away with VAT on repairs. There is no VAT on house purchase. The person who has a small job to be done or who wants a small bathroom or roof is discriminated against. The Government are prepared to make big concessions to people who wish to build or buy their second or third property.
The Government should develop a scheme of maturity mortgages. In mid-Glamorgan there are 60,500 unfit properties occupied by unemployed people. A maturity mortgage scheme would allow those properties to be rehabilitated and allow those people to obtain the mortgages necessary. The scheme has been agreed in principle. Why do you not take the necessary steps to ensure that those mortgages are made available? It is because of your apathy and complacency. It is because there are Ministers in the Welsh Office who——
Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. The hon. Member must not accuse me of apathy and complacency. It is not my responsibility.
Mr. Davies: I was referring to the Minister, as I am sure he knew.
I come to my last point, which I am sure will be a great relief, but I am sure that hon. Members appreciate that I had to give way to the Minister.
We should pay full regard to housing associations. [Interruption.] I am conscious of all the messages I am receiving. There are 40,000 houses in Wales capable of being repaired. Housing associations are underfunded. Welsh housing associations receive £41 million from the Housing Corporation. They should receive £57·5 million.
If the Minister and the Secretary of State for Wales are serious when they say that they wish to represent Welsh interests, they should go to the Cabinet and start fighting for the interests of the Welsh people instead of tagging along on the coat-tails of the Department of Employment.
5.45 pm
Mr. Vivian Bendall: I must declare an interest, as I am an estate agent, surveyor and auctioneer. As a result, I might be able to give the House the benefit of my experience in these matters. I agree that housing should not be the political football that it has been for a number of years. However, I do not believe that there has been any period during the term of office of a Labour Government when housing grants have been as high as 90 per cent.
Honesty and integrity are missing from this debate, because when the Government announced the 90 per cent. grants they made it absolutely clear that they would be for a limited period only. The housebuilding and other industries, and the nation, were fully aware of that fact. It would be preferable to have such announcements more

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often. so that we would know exactly where we were going. I found the Government's announcement refreshing, because everyone knew where he stood.
On no fewer than two occasions the Government agreed to extend the period involved and gave specific dates for the extension. It is unfair, as some people in the private and public sectors have done, to accuse the Government of cutting resources. This is not a cut. It was a one-off provision. When the economy improves, we may be able to do the same again.
I should like some assurances from the Minister about those who have applications in the pipeline. Their plight worries some of us. Rightly or wrongly, the public and professional people who deal in property management gained the impression that provided applications were in by the cut-off date they would be processed and it would be possible to carry out the improvements.
I am not against private landlords disposing of their property to sitting tenants. However, we must consider whether a sitting tenant will be able to obtain a mortgage in the first instance, because many will have lived in their properties for many years and be beyond the age at which they can get a mortgage. Young tenants are rare, as the landlords invariably dispose of their properties once they become empty. The private tenanted property, properly managed and run, plays a specific part in the nation's housing stock. Not everyone wishes to purchase his own home or to live in a council property.
We have discussed the age of our housing stock and its state of repair. The small private landlord, not the owner occupier, will be most affected by the cut in the improvements grant from 90 to 75 per cent. I refer, not to the landlord who owns a large property company, but to those of my constituents who own one property but who may live in a property that is in a worse condition than that which they rent out. Such a state of affairs is common.
The one-property landlord will regard the reduction in the improvement grants as a serious blow. The reduction will have the effect of preventing him from carrying out the repairs, and local authorities will be obliged to take over the house and carry out the necessary repairs if the property is subject to a public health notice. Could a scheme be devised whereby a lower percentage grant is available to owner occupiers, but where grants slightly above 75 per cent. could be made in extenuating circumstances? We should examine seriously such a scheme.
There is an immense availability, net a shortage, of housing in the inner cities. Many owner occupiers, be they widows or widowers who live on their own, frequently possess much accommodation which they would be willing to let were they not deterred by the rules and regulations of the landlord and tenant legislation and the shorthold rent legislation. If we could eliminate the present form of shorthold tenancies, and the security of tenure attached to it, many of our housing problems in the inner cities would be eradicated and there would be much more mobility of labour, which at times of high unemployment is important. For a trial period we should allow the landlord who deals in shorthold property lettings to charge a reasonable rent without being subjected to the problems inherent in security of tenure.
Mr. Winnick: The hon. Gentleman rightly prefaced his remarks by saying that he was an estate agent. I understand the point of view of somone in that profession.
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Does the hon. Gentleman remember that the Rent Act 1957, which was introduced by a Conservative Government, removed all forms of security of tenure for new tenancies? Far from such legislation leading to an increase in available tenanted properties, there was a substantial reduction, quite apart from the hardship, misery and Rachmanism caused by the Act.
Mr. Bendall: The Rent Act 1957 removed security of tenure for many properties above a prescribed rateable value. I suggest that where the landlord lives on the property, and could let some of the rooms, such property should not be subject to control. If that were the position, many more properties would be available for rent.
I have been concerned, as have many hon. Members, with the structural problems of Airey houses. When I discovered that the grants might be reduced, I asked the Minister for clarification about grants for repair to Airey houses, which until next April will remain at 90 per cent. I have an assurance from the Minister that grants up to 90 per cent. will be available for Airey houses after 1 April 1984. I am sure that that information will allay the fears of many people who would have been affected by such a cut, and I thank the Minister for his assurance.
5.55 pm
Mr. Simon Hughes: Week after week in Committee the Minister reminds us that the Government have a mandate to do many things. The Minister prefaced his remarks today by reading from various books and literature, the relevance of which escaped me, when dealing with the important subject of housing. Will the Minister reflect what the Conservative party said in its manifesto at the general election:
"Housing Improvement grants have been increased substantially in the last two years and will continue to play an important role."?
On how many occasions before the election did Conservative Ministers say that within four months the improvement grants would be reduced? How many speeches were made or questions answered stating that the grants were so temporary that within four months, and before the next financial year, they would be reduced to 75 per cent? The hon. Member for Ilford, North (Mr. Bendall) was clever enough with words to suggest that the reductions were not cuts. Hon. Members have heard that distinction before. The Health Service suffers from the same clinical distinction. People do not perceive what they see round them. Bodies such as the National Home Improvement Council have asked hon. Members to take this subject out of politics because it considers that the revitalisation of our housing stock is not a political issue. Many Opposition Members have been asked to contribute to a debate on a subject that in the past has been a matter of consensus between the political parties. It is difficult to take seriously the Government's arguments when not one of them deals with the consequences of such a reduction in grant, or the savage effects it will have on urban life, the construction industry and the welfare of many of our people, expecially the old. Two Conservative Back-Bench Members have expressed their unhappiness about such an unannounced about-turn in Government policy.
Mr. Gow rose——
Mr. Hughes: I frequently do not have an opportunity to interrupt the Minister's speeches in Committee, and I

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shall persist a little longer. I frequently have to wait for what the Minister calls his "flights of oratory", so I hope that I shall be permitted to proceed a little further.
Those bodies which have been involved for many years in house improvements have expressed anxiety that in the forthcoming financial year more than 100,000 people who have applications in the pipeline will be disappointed. The cost to the local authorities of disengaging themselves from processing the applications will be substantial, and there is no sign that in future the home improvement grants can be given.
The consequences in many local authorities, not just for the old—although often the elderly owner occupier is most in need of a grant to improve his home—are set out both in statistics and in general sociological terms in many of the documents that all hon. Members have received. The strongest indictment of the Government's proposals is that each year, because of the reduction in the grant that was built up and that all hon. Members welcome, tens of thousands of houses that could be saved will be boarded up, entire neighbourhoods will break up and the patterns of life that have been enjoyed for generations will be destroyed. The director of the National Home Improvement Council claims that those will be the effects of reducing a fundamental part of the investment needed to return the basic structures of life to a condition that a healthy economy should require as its first priority.
If 125,000 grant approvals do not proceed next year, if—as is predicted—we lose a possible 30,000 jobs in the construction industry, and if the welcome increase in grants from 5,000 in 1981 to 28,000 in 1982 and to 90,000 in 1983 is reversed, as it inevitably must be, I hope that the Government and especially the Minister will pay attention to the practical worries of all those involved in the past and present administration of those grants. Many authorities are worried about honouring their obligations, which people have been led to believe they can honour, to improve the housing in their areas. It does not matter which authority it is—it may be Medina on the Isle of Wight, whose documents I have here, or it might be my authority at Southwark, which may be the one to which the Minister referred when talking about London HIP bids — all authorities must be certain. What we are now discovering is that this Government will not become the Government of certainty and resolution, as they led us to believe that they wished to be. This is a stop-go Government. They say that the Health Service will be safe in their hands, then cut the money available to the Health Service. They said in June that home improvement grants would be continued, but four months later they reduced those grants.
The Government pride themselves, in the words of the Prime Minister, on being the Government who live by the budget of the householder. If one needs to budget, one must know how much money is coming in. One must be able to plan and, when resources are limited, one must eke out those resources so that next week or the week after there is some money left to spend on the essentials. How can local authorities and those who have invested a little money—the fees that they have paid when applying for a grant which they hope will be forthcoming in the next financial year—be expected to trust a Government who have led them to believe that they will come up with the financial resources, but who let them down so appallingly?
Mr. Gow: I resent the charge that I have not given way to the hon. Gentleman in Committee. I have never refused to give way to hon. Members in Committee. Whenever the hon. Gentleman is there I give way to him, as the hon. Member for Islington, South and Finsbury (Mr. Smith) will confirm. I do not blame the hon. Gentleman for not being familiar with what the previous Chancellor of the Exchequer said in his Budget statement on 9 March 1982, because that was before the hon. Gentleman arrived here. However, I made clear in my speech what the Chancellor said, which was that this is a short-term measure. He said that we would have it only until 31 December 1982. It has been extended twice, but the Government always envisaged that the higher rate of grant would be a temporary measure.
Mr. Hughes: I know what the Chancellor said, although as the Minister rightly said I was not here. However, I have heard no denial of the fact that, as the Conservative party went into the election, it said nothing to suggest that the grant would be reduced during this financial year, and that those who were led to believe that their homes would be improved would be disappointed. Why did people apply in such great numbers, and why are the grant applications lying in piles on the desks of many local authority officials, if they believed, as the Government led them into the election, that the grants would be reduced during this financial year? There was no suggestion that the grants, although temporary, would end this year.
Mr. John Fraser: In the public expenditure document published in February, just before the election, the Government stated:
"The results of the 1981 English House Condition Survey have reinforced the importance the Government attaches to improving the condition of the housing stock. The housing programme reflects a continued emphasis on this aspect of capital expenditure."
Mr. Hughes: The Government suggests in their amendment that the House should welcome
"the priority given by the Government to the promotion of home ownership and the repair and improvement of the housing stock through repair and improvement grants".
If they believed that they could sustain the record that they began to build for themselves, they would not have introduced an amendment relating solely to the past. Clearly, they will make no concessions and they will not allay the fears expressed by hon. Members on both sides of the House on behalf of those who know that they will be disappointed by the Government yet again.
As the hon. Member for Cornwall, South-East (Mr. Hicks) said this afternoon, the Government have misled the electorate. There are but 55 minutes remaining during which Ministers can tell those who are trying to improve housing and fight urban decay that the Government will assist them in that process. I hope that the Government will reconsider this half-baked and half-yearly alteration of a scheme that they began, and will assure local authorities that they will continue a policy that all parties wish to continue to support. The Government alone are backing down from a national responsibility, and I hope that they realise that if they persist, they alone must take the blame.
6.8 pm
Mr. John Butterfill: The hon. Member for Caerphilly (Mr. Davies) questioned the

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competence of some Conservative Members to speak in the debate. The hon. Member whom he accused—my hon. Friend the Member for Nottingham, South (Mr. Brandon-Bravo) has been a member of the council in Nottingham for about 15 years. I am a fellow of the Royal Institution of Chartered Surveyors and have been involved in that profession for more than 25 years. I see the problem of disrepair almost every day, and there is no lack of concern in the Conservative party about that matter.
We have heard some eloquent speeches from Opposition Members, and I have been privileged to listen to the eloquence of the hon. Member for Liverpool, Walton (Mr. Heffer) in the Committee discussing the Housing and Building Control Bill. His speech today, from my limited experience in the House, was probably the most eloquent that I have heard him make. I fear that perhaps the hon. Gentleman doth protest too much. There has been an almost hysterical quality in some Opposition speeches today which reveals that Opposition Members might believe that they are on poor ground when attacking the Government on this subject.
It is right that the public should know the facts. "By their deeds shall ye know them," should be the maxim. We should examine the Government's record and compare it with that of Opposition Members when they were in government. In 1974, when my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) was Prime Minister, there were 192,000 grants. Under Labour, that number fell to 57,500 by 1978–79. That shows the extent of Labour's concern about improvement grants. They are shedding crocodile tears today.
It has taken some time for the number of grants to increase. Last year, the number had risen to 104,000 but in only the first six months of this year the number had increased to 97,000. The Government can be proud of their record. The hon. Member for Walton told us that expenditure on grants had risen from £90 million under Labour to £650 million now. That represents an increase of some 720 per cent. Those figures are impressive. The Government have made an unparalleled contribution to housing improvement. Conservatives should be proud of that record. It shows the extent of our interest in it.
It is not a matter of shame that we have abandoned the temporary arrangement which my right hon. and learned Friend the then Chancellor of the Exchequer announced in 1982. As my hon. Friend the Minister has said, it was a purely temporary measure that has been extended twice. That, too, demonstrates the level of our concern. Reverting to the normal level of grant—75 per cent.—was always expected.
I appreciate that reverting to the 75 per cent. level of grant might cause some difficulties for some local authorities. My hon. Friend the Member for Cornwall, South-East (Mr. Hicks) illustrated the problems that it might create in his area. Local authorities that have promoted grants diligently might face some temporary difficulties after the Government's announcement, but other authorities have underspent and not attempted to promote the scheme. That is a balancing factor.
The important fact is that the Government increased expenditure when a nudge to the economy was required.
Mr. Simon Hughes: Just before the general election.
Mr. Butterfill: It was almost two years before the general election. The Government have always said that
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the larger grants would be temporary. Under the inspired leadership of my right hon. Friend the Prime Minister, we are at last seeing some recovery in the British economy. [HON. MEMBERS: "Oh."] I am quoting OECD figures. The British economy is growing faster than that of any other EC country. We can now afford to take our foot off the pedal. That is what the Government are doing. They deserve to be congratulated on their record. Unlike Opposition Members, I am not shedding crocodile tears today.
6.14 pm
Mr. Michael J. Martin: Many hon. Members have said that improvement grants are to be reduced from 90 per cent. to 75 per cent. I have not had the opportunity to leave the Chamber to check on statements made by Scottish Office Ministers but I understand that Scotland is to be even worse off. The reduction there is to be from 90 per cent. to 50 per cent., except in housing action areas. I hope that the Minister will assure us that Scotland will not be put at a disadvantage to other parts of the United Kingdom.
Glasgow district council took full advantage of the Government's scheme. I do not mind saying that, of all the Government's decisions, increasing improvement grants was the best. It gave local authorities with severe housing problems an opportunity to get on with improving property. Rehabilitation has made a valuable contribution to the environment in Glasgow. We have many tenements and old buildings which community-based housing associations, local authorities and tenants have had sandblasted. They have also replaced windows and brought the interiors up to a high standard.
It is to the Government's advantage to continue modernisation schemes and grants. What the Government might gain by taking away the 90 per cent. grant they will lose in other ways. If properties are not improved, they will be demolished. If, as a result, the population moves out of inner-city areas, schools will no longer be necessary. Therefore, good substantial buildings such as schools, clinics, hospitals, post offices and even fire stations will be demolished because there is simply not enough population to sustain them. As a result, replacements will have to be built in other areas on peripheral schemes.
The level of recent grants has kept communities together. People who were moved to peripheral housing schemes have been able to move back to their old communities. The Government should not spoil that now. The improvement grants are good. Let us keep them. It is foolish to throw away the advantages that we have gained by rehabilitating property.
Many of my right hon. and hon. Friends have said that it is not easy for a local authority to say, "Good, we now have Government approval for grants. Let us get started and tell people in our area that grants are available." Like most other large local authorities, Glasgow district council has had to set up separate departments — which are staffed with officials who have expertise in rehabilitation — just to consider grant approval and to help council tenants and people who want grants.
Some community-based housing associations started to get off the ground four or five years ago. It takes about live years for a good community-based housing association to

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start getting contractors on site. Many of those people will now be disappointed because of the Government's decision.
Many private contractors who put in tenders to local authorities and private organisations operate on a profit margin of about 5 per cent. The tenders are cut very low in that industry. When I ask private contractors how they are doing they, tell me that they are "surviving". Survival is success in the building industry now.
Throughout the country, companies specialising in rehabilitation have sprung up in recent years. Other companies, which are excellent at new building, do not know where to start with rehabilitation. When I was in local government I came across companies which were highly successful in new building but got their fingers burnt when they went into rehabilitation because they could not cope with the work when the tenants continued to live in the houses, there were tradesmen everywhere, and so on. Many companies throughout the country now understand rehabilitation from A to Z.
For example, a contractor in Glasgow who obtained a large local authority contract set up two snagging squads to inspect the houses after rehabilitation to see whether there were any problems. That contractor was so good at rehabilitation that he had to disband the second squad because it was not needed. There is a danger that such companies and their expertise will be lost and that there will be increased unemployment in the industry. Many people in the building industry are guaranteed a job only from week to week, but with 4 million people unemployed that is still quite something.
I ask the Government to reconsider their action in view of the hardship that will be caused to so many people.
6.21 pm
Mr. Patrick Cormack: I am glad to follow the thoughtful and constructive speech of the hon. Member for Glasgow, Springburn (Mr. Martin). I hope that my hon. Friend the Minister will take careful account of what the hon. Gentleman has said.
I make no accusation of bad faith on the part of the Government. As all hon. Members acknowledge, the grant scheme was announced as a short-term measure. I am extremely proud of the Government's housing record. Their policy has been a magnificant success. Throughout the land people have rejoiced at the right-to-buy policy. As the hon. Member for Liverpool, Walton (Mr. Heffer) was magnanimous enough to acknowledge, one of the best things that the Government have done has been to give improvement grants at a high level, thereby stimulating applications in probably every constituency in the land.
I appeal to my hon. Friend the Minister to think again and intercede with the Chancellor of the Exchequer, who is the final arbiter and controls the purse strings, and tell him that the scheme must continue for a further year at the very least. I say that for three reasons. I shall explain them briefly, as I hope that another hon. Member will have the chance to contribute to the debate before the winding-up speeches begin.
First, like every hon. Member, I am concerned about the construction industry and the amount of unemployment in it. The proposed reduction in grant would be a real blow to the industry. I should hate to think of a further 20,000 or 30,000 people being put out of work after 31 March,
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as the employers predict. One of the great things about this scheme is that there are no revenue implications. Arguments may be made against building new hospitals and the like—I do not say that I share them—because there is a revenue commitment. Here there is none, and it seems an extremely sensible way to spend money to prime the pump.
Secondly, there is the state of the housing stock. I do not like that phrase. I agree with Winston Churchill that "accommodation units" mean people's homes. When my hon. Friend the Minister said that 300,000 homes were not being lived in because of their present state, a thrill of horror went down my spine. As hon. Members of all parties know, one of my great concerns is the importance of the green belt. I am extremely worried lest we erode a policy that has stood the country in good stead since the war. If 300,000 homes can be improved, that will save incursions into the green belt. For the reason alone, the Minister should think again.
Thirdly, and most important, whatever we do in the House we should never behave as though people were expendable, and we should never excite expectations and then fail to fulfil them. Although I make no accusation of bad faith and would never do so — it was explicitly stated that the scheme was a temporary measure when it was first announced — expectations have nevertheless been excited and will not be fulfilled. My hon. Friend the Member for Cornwall, South-East (Mr. Hicks) referred in his powerful speech to cases in his constituency. There are many in my constituency, too. Indeed, the problem is probably most acute in rural areas.
A number of people have come to me having entered into commitments to buy properties, many of which are of considerable architectural and historic interest. Having purchased properties on the advice of the local planning authority, they suddenly find that there is moratorium on grants, they are financially embarrassed and they do not know whether they will be able to live in the homes that they have bought.
There is a double penalty. First, the grants are to be reduced. Secondly, the overall sum available is likely to be reduced from 1 April. Therefore, I beg my hon. Friend the Minister to think again about this. I hope that he will also do two other things. He made, as one would expect, an eloquent, entertaining, witty and thoughtful speech. He said that in cases of real financial hardship the 90 per cent. grant would continue to be available, but he did not spell out the details. I hope that when he replies he will tell us exactly what that means and what the financial implications are.
I make one final plea. In the course of a rather long harangue, the hon. Member for Caerphilly (Mr. Davies) made one very good point when he referred to VAT. I have ridden that hobby horse since before VAT was introduced. In the early 1970s I took a deputation to see the then Financial Secretary to the Treasury, now my right hon. Friend the Secretary of State for the Environment, begging him to ensure that VAT would not be imposed on repairs to buildings. I know that my hon. Friend the Minister cannot give such an assurance today, as it is the Treasury that we have to fight, but I hope that we can fight shoulder to shoulder against the Treasury, because it is manifest nonsense to encourage demolition rather than improvement and repair.
As a member of the Historic Buildings Council, I am especially concerned about our heritage. Year after year

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in our annual report we have made the same plea to Labour and Tory Chancellors alike — that VAT should be removed from repairs to buildings. If that were done, the threat of the proposal under discussion today would not be of such consequence. At the very least we want something. Our housing record is something of which the Government can be unreservedly proud. As this temporary measure has worked extremely well, as it helps combat unemployment and as it give real help, hope and satisfaction to people throughout the land, let us think again and keep it going beyond 31 March.
6.30 pm
Mr. Peter Pike: This is an important debate, and I welcome the Opposition's decision to hold it. It is particularly important for constituencies such as my own which contain many old properties that were built before the first world war. All of us who represent constituencies that have older properties in urgent need of improvement are concerned about the Government's decision to reduce the level of improvement grants.
I have no illusions about the fact that the Government stated that the increased grant was temporary. However, we should bear in mind its success. As my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) said, this is one of the best things that the Conservative Government have done.
Since the limit was increased to 90 per cent., applications in Burnley have increased and this year stand at 260 a month. The highest figure before that was in 1975, when there were only 60 applications a month. Given the dramatic increase in applications that has resulted mainly from raising the grant to 90 per cent., there is no question but that the scheme has been successful and ought to be continued.
If we do not continue with grants at this level, in a few years the improvement option will have disappeared and instead we shall face the more expensive option of clearance and rebuild.
It is also important to remember that many people who live in these older properties are in the lower income brackets. Therefore, the difference between 75 per cent. and 90 per cent. grant is a major factor in determining whether they make an application.
Burnley has the dubious honour of being the sixth worst district in England and Wales whose houses do not have an inside toilet or in many cases a bathroom. That is absolutely appalling. A recent publication by the Lancashire county council planning and information department listed three Burnley wards among the 10 worst wards in Lancashire for houses that lack either a toilet or bathroom. The figures show just how deficient those wards are. In Calder ward, 30·13 per cent. of houses lack those amenities. That is the ward in which I live, and the homes that back on to mine have outside toilets. That is deplorable in 1983. In the Daneshouse ward, 22·39 per cent. of homes lack one or more of those amenities, and in Burnley, Wood ward, the figure is 17·38 per cent.
The HIP allocation is also a major factor. At present it is insufficient to meet Burnley's commitment, given the number of grant applications in the pipeline. The council has been forced to stop new applications, although it is processing those that have already been received. It is estimated that these grants will add £500,000 a month to next year's commitment. If, as seems likely, Burnley receives only 80 per cent. of this year's HIP allocation, it
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will receive only £3·8 million. The council will soon have committed all the money available, and it is important that the HIP allocation should meet the needs of the community.
We should look carefully at the difference between the financing of council house improvements and improvements in the private sector. Those in the private sector have few local authority revenue implications, whereas council house improvements have major revenue implications that must be borne either by the council tenants or the ratepayers. The Government should again consider changing their subsidy policy, because few councils now benefit from it.
Therefore, the Government should continue the 90 per cent. improvement grant; ensure that councils receive a sufficient HIP allocation to cover the whole of their programmes and cater for the needs of the communities; and look again at the method of subsidising the improvement of council houses.
6.36 pm
Mr. John Fraser: It should be noted that barely one voice has been raised in favour of the Government's proposal to cut the 90 per cent. level of improvement and repair grant in April 1984.
The two great domestic issues faced by Members of Parliament are housing and unemployement, and this debate is about one aspect of the Government's gross and scandalous neglect of both problems. In fact, "neglect" is too easy a word to use, because they have launched a deliberate and successful attack on employment. The Minister smiles, but in my constituency, as in most others, unemployment since 1979 has increased almost threefold. The Government have also attacked public housing and brought the number of starts down to a derisory level.
On 3 November, a Department of Environment press release stated:
"In the public sector … starts were down 25 per cent. on the previous quarter and 26 per cent. lower than a year ago".
In the last complete year of the Labour Government, there were 107,000 starts in the public sector. That fell to as low as 37,000 in 1981, although it increased to 52,000 in 1982. Nevertheless, that was only half the number of starts in the last complete year of the Labour Government.
It is also interesting to compare employment in the private construction industry. I have with me a list of the top six firms and the comparisons between 1981 and 1982 —[AN HON. MEMBER: "What does that have to do with improvement grants?"] This is not a bad indicator of the relationship between Government policy and employment. Conservative Members will be familiar with some of these names. They are their friends, not their enemies.
In 1981, employment in George Wimpey was 22,000. That went down to 17,000 in 1982. In John Laing, the figure went down from 14,400 to 12,900. In Costain—we have heard that name in the House before — the figure went down from 4,974 to 4,576. Employment in Taylor Woodrow has also dropped, as it has in Bovis, one of whose associates is in the House. The Government even rat on their friends and have robbed their supporters of an important source of work. As I have said, no hon. Member has spoken with any enthusiasm in support of ending the 90 per cent. grant.
The Conservative party is not the party of homes and jobs. It is the demolition contractor of social policy and the architect of despair. I illustrate that by referring to my

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own constituency, which is not so different from those of other hon. Members who have spoken. In Lambeth since 1979, 25 per cent. of the people have been living in poverty, 25 per cent. of the males have been unemployed and 25 per cent. are on the housing waiting list hoping for a decent home. The absence of a decent home and the inability to get a job are the two factors which are most likely to undermine a family and to provide an assault on the dignity of the citizens. Like many hon. Members, I have to live week in, week out, with the consequences of this policy. Bad housing is the cause of family breakup and social tension. [Interruption.] I wish the hon. Gentleman, who has not spent much time here during the debate, would shut up.
I should like to quote from the Scarman report; dealing with social matters, Lord Scarman said:
"the disorders in Brixton cannot be fully understood unless they are seen in the context of the complex political, social and economic factors to which I have briefly referred. In analysing communal disturbances such as those in Brixton and elsewhere, to ignore he existence of these factors is to put the nation in peril."
Over the past four or five years we have seen a desert of achievement in housing policy, with one single exception. The one beacon of light has been the recognition by the Department of the Environment that much of our housing stock was in poor repair and lacking in basic amenities. The figures have been quoted and are probably well known; 4·3 million houses need repairs costing £2,500 or more, and 1·1 million houses lack basic amenities. Almost all the housing which needs a large amount of repair or lacks basic amenities is in the private sector. Many of the 1·1 million houses which lack basic amenities are in the private rented sector.
Here was an area where it was possible to help the private sector and the owner occupier by providing better amenities; at the same time it meant extra employment, which comes about almost instantly when there is an increase in housing repair grants. It was possible to stimulate training and help local authorities through partnership with the private sector to get improvements made. While the Government may have closed hospitals —I noticed that the hon. Member who used to close hospitals is now cutting down on housing because he has been transferred from the Department of Health and Social Security to the Department of the Environment—while they may have presided over riots and cut down on local authority housing, at least they got one thing right. They chose a programme of increasing employment by means of repair and improvement grants.
Now the Treasury has caught hold of the moles. The reduction in grant from 90 per cent. to 75 per cent. in April of next year will not lead to a proportionate decrease in the amount spent on housing repairs and improvements. Once the reduction in grant takes place there will be a disproportionate reduction in the number of people applying for grants. The cut of £200 million in housing expenditure will mean an almost immediate reduction of 30,000 or 40,000 jobs. The Minister for Housing and Construction is just doing a boarding-up job. The demolition contractor will come to the Dispatch Box tomorrow to deliver the rest of the package, which, we understand from the press today, will be a cut of about £500 million in housing expenditure in addition to what we are debating today.
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The Department of the Environment has developed a reputation for at least trying to alleviate some of the worst social conditions. The former Secretary of State took an interest in inner city problems and the Under-Secretary of State, who is a progressive wet, has done what he can for inner city areas. In the battle between the Chancellor of the Exchequer and the Department of the Environment, it is clear that the dry rots have beaten the rising damps. There is to be a cut in housing expenditure, which will deliver an awful blow to people in the private sector and to tenants and owner occupiers, as well as to the construction industry. I do not think any hon. Member has put those figures in pawn in the debate.
When the Government announced a 90 per cent. grant, for once they got it right. They had the support of local authorities. As hon. Members on both sides of the House have pointed out, this was one way of ensuring that there were improvements in the private rented sector. There is very little, if any, incentive for the private landlord to improve tenanted property which is subject to regulated rent. There is little opportunity of public purchase because the Government will not provide the money. The only way to get anything done is to serve a repair notice on a private landlord, but it is no good doing that if it will bankrupt the landlord, because the money will not be there. If the case is to be pressed further, there must be public expenditure involving the local authority. The 90 per cent. grant provided an opportunity to bring about dramatic and speedy improvements in living conditions.
I understand that there are 500,000 grants in the pipeline. There are 4 million houses in need of considerable repair. If there had been no other pressures on the construction industry, it might have been possible within eight to ten years to eradicate poor housing conditions and the lack of basic amenities. The opportunity for doing that is being set aside. The scheme had the support of local authorities, trade unions and the Labour party — branded upon all of us is the overwhelming desire to provide employment and good housing, which are the absolute preconditions for a happy and satisfactory life.
The Government have chosen, not because of any judgment about housing policy but as a consequence of monetary policies, to cut down on the highly successful scheme for which we have been prepared to give them all credit. The reduction in grant will harm particularly inner city areas. In Lambeth there are about 48,000 private homes, of which half are in poor condition. I see very little prospect of those houses, many in the private rented sector, being improved once this policy is pushed through. My hon. Friend the Member for Liverpool, Walton (Mr. Heffer) has told us about Liverpool. There are 7,000 grants in the pipeline there, many of them for properties in housing action areas.
The reduction in grant will be a tragedy for the building industry, for employment generally and for those who live in poor conditions. We have not heard from the Minister a single word of justification for the policy, but simply one or two diversionary tactics. He must answer the question put to him by the hon. Member for Cornwall, South-East (Mr. Hicks) and other hon. Members, about whether applications submitted before March 1984 will be honoured.
In a desert of housing cuts, cuts in employment, cuts in social services and industrial dereliction, there was one beacon of light, the undoubted generosity and compassion

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of the Government's policy on housing improvement and repair grants. The only advice that the Minister can offer to us is that which Macbeth gave:
"Out, out, brief candle!"
We believe in generosity and compassion in housing. In that we have the support of the country and, I believe, the secret as well as overt support of many hon. Members on the Conservative Benches. I hope some Conservative Members will have the guts to vote for the motion.
6.48 pm
The Under-Secretary of State for he Environment (Sir George Young): I shall try to deal with the points that have been raised in the debate, but if I do not have time to deal with all the individual points, I shall write to the Members concerned.
The hon. Member for Norwood (Mr. Fraser) mentioned the construction industry. No one would deny that it has suffered through the recession, but the picture which the hon. Member gave is incomplete, because the output figures for 1982 were up on 1981 and for the first six months of 1983 they are up by 3·5 per cent. on those for the same period of 1982. On new orders, the picture is even better. For the first eight months of 1983 they are 16 per cent. up on 1982. I hope the hon. Member draws the same encouragement that I draw from those figures.
If one thinks through the consequences for the construction industry of improvement grant policy it is worth remembering that for every £1 which local authorities contribute to repair and improvement the individual puts in £30. Of far greater importance to the construction industry is the impact that our overall policies are having on the £30 rather than the £1 put in by the public sector. Our success in bringing down interest and mortgage rates and ensuring that funds are available, and the fact that earnings are still keeping ahead of prices, have meant that more people have the resources to keep their homes in good condition. The construction industry is more interested in securing a long-term future, based on a sound economy, than in pressing for the continuation of short-term initiatives to help them as they move out of the recession.
My Department has implemented the recommendations made by Lord Scarman. The figures for the urban programme show that the Government have put their money where their mouth is. We have increased the urban programme from £165 million in 1979–80, which is the figure that we inherited from the Labour Government, to £348 million in 1983–84.
The hon. Member for Norwood gave the figures for public housing starts, but conveniently omitted the figures for private sector starts. In 1983 those are likely to exceed 165,000. That is the highest level since 1973, and reflects growing consumer confidence in the country's economic recovery. The building societies have had excellent inflows of savings since July, with October's inflow at a record £1,010 million. Those substantial funds are ample to meet current mortgage demands and reduce mortgage queues.
The right hon. Member for Brent, East (Mr. Freeson) sought to excuse the poor performance of the Labour Government by implying that they had spent more on local authority improvements. Sadly, statistics do not support his case. Between 1978–79 and 1982–83 the amount of money local authorities spent on improving their stock rose from £479 million—the figure that we inherited—
892
to £934 million in 1982–83. So the expansion in home improvement grants has not been at the expense of improvements in local authority stock.
It is not for me to pass comment on the performance of Brent council. However, I read in the newspapers that one Brent councillor has decided that her constituents would be better served if she supported Tory councillors. I applaud her decision and her courage.
My hon. Friend the Under-Secretary of State for Scotland heard what the hon. Member for Glasgow, Springburn (Mr. Martin) said about the position in Scotland.
I must tell my hon. Friend the Member for Staffordshire, South (Mr. Cormack) that the 90 per cent. grant for hardship cases will continue. Local authorities have the discretion to define hardship. The 90 per cent. figure will apply for those in hardship in all areas, and will not be restricted — as it was under the Labour Government—to those who live in housing action areas.
My hon. Friend raised a point about rehabilitaion. We are in favour of that where it is economically practicable. There will be some role for demolition, but there is no question of returning to the major clearances of the 1960s and early 1970s. That is not needed, and it is socially costly.
There have been constructive comments from both sides of the House about improving the grant system. The hon. Member for Caerphilly (Mr. Davies) and my hon. Friend the Member for Ilford, South (Mr. Thorne) touched on that matter. The present system is legally and administratively complex, and it is not always targeted towards obtaining the best value for money. We are studying the matter, and will discuss the report of a joint working party of local authority associations and my Department at the housing consultative council next week.
I hope that we all agree that the policy of improvement grants and the publicity surrounding them have had the beneficial long-term effect of bringing home to owners of buildings the importance of keeping their properties in good repair. It has compelled local authorities to reorder their priorities and allocate a higher place to the conservation, maintenance and improvement of existing stock. I make no apology for those consequences.
A number of hon. Members have expressed concern about next year. I cannot anticipate the Chancelllor of the Exchequer's statement tomorrow about the Government's public expenditure plans, but I can see no reason why English authorities should not find it possible next year to match the £430 million that they spent on grants this year — which was a record. The resources that we shall make available to local authorities will allow them to tackle defective dwellings in their stock that need immediate attention. There is no reason why, at the same time, they should not maintain a significant programme of home improvement grants.
The real problem appears to be uncertainty — until local authorities know their allocations for next year they are reluctant to commit themselves. That is why we hope to announce the HIP allocations for individual authorities before the end of the month. We have told them that the minimum provision will be at least 80 per cent. of their allocation for this year. Given that assurance, and the clear terms in which the temporary nature of the 90 per cent. grant was described by the Chancellor, I do not think that any authority can claim to have been misled. Indeed, one

893
could argue that the reduction from 90 per cent. to 75 per cent. helps local authorities, because for any given volume of improvement work, the cost to them is slightly reduced.
The Government vigorously deny allegations of misleading the public. All publicity from my Department has made it clear that, where applicable, the grants are at the discretion of the local authority. The Labour party criticises us for our lack of generosity when we are spending seven times what it spent on improvement grants. The public will realise the shortage of constructive criticism and new ideas within the Labour party. We have all read in the press how the Labour party is abandoning its dogmatic approach to housing, which cost so much support at the general election. But we saw little sign of that new approach today.
If we have not persuaded the Labour party in the House to change its policy on housing, there are welcome signs outside. On September 27 the Scunthorpe Evening Telegraph carried the headline:
"Homes sale critic to buy house."
The article stated:
"A Labour Party chairman on Scunthorpe Borough Council, who has been one of the severest critics of the Government's right to buy Act which allows council tenants up to 50 per cent. discount on the price of their homes, has applied to buy his council house… Councillor Vessey said in a prepared statement last night: 'After much heart searching I have decided that it is right for me to purchase my council house in Scunthorpe.'"
Of course it is right for him to do that. Yet when we seek to extend those rights we meet opposition from the Labour party, which simply does not understand how out of touch it is with public opinion.
The policy on the right to buy has increased the resources available to local authorities. Between April 1979 and June 1983 total receipts from council house sales were £2·1 billion. The average improvement grant is about £3,000. Therefore, in principle, about 700,000 improvement grants could be financed by the implementation of our right-to-buy policy. Each sale of a council house is the equivalent of two and a half improvement grants. Not only does our policy give independence to the home buyer: it helps to finance the improvement of the housing stock as a whole.
It is difficult to find a less promising subject than improvement grants for the Labour party to choose for its attack on the Government. It is like winning the toss and putting the other side in to bat on a plum wicket. Whatever objective measurement we choose, the only conclusion is that the Government are half way around the course while the Labour party is still in the starting trap, facing the wrong way.
The number of home improvement grants in 1978–79 was 60,000, and this year it is likely to be 200,000. In 1978–79 grants totalled £90 million; this year they will total £650 million. In each constituency about £70,000 was spent in 1978–79; this year it will be £1 million. If we asked thousands of people who live in poor conditions which party has benefited them most in their improvement policy, they will quickly reach the conclusion that it is the Conservative party.
For every grant given in 1978–79, three grants are being given this year. We have made the policy more flexible and better attuned to priority needs. The Labour party restricted the 90 per cent. rate to those in hardship in housing action
894
areas. We have removed that restriction. The Labour party denied grants to disabled occupants whose property was above the rateable value limit, and we have removed that restriction. The improvement grant regime for next year, so fiercely criticised by Opposition Members, will still be far more generous than the regime that we inherited from the Labour Government. The Opposition's motion is sheer hypocrisy, and I invite the House to support the amendment.
Question put, That the original words stand part of the Question:—
The House divided: Ayes 196, Noes 342.

Division No. 69]

[7.00 pm

AYES

Abse, Leo

Fatchett, Derek

Alton, David

Faulds, Andrew

Anderson, Donald

Field, Frank (Birkenhead)

Archer, Rt Hon Peter

Fields, T. (L'pool Broad Gn)

Ashdown, Paddy

Fisher, Mark

Ashley, Rt Hon Jack

Flannery, Martin

Ashton, Joe

Foot, Rt Hon Michael

Atkinson, N. (Tottenham)

Forrester, John

Bagier, Gordon A. T.

Foster, Derek

Banks, Tony (Newham NW)

Foulkes, George

Barron, Kevin

Fraser, J. (Norwood)

Beckett, Mrs Margaret

Freeson, Rt Hon Reginald

Beith, A. J.

Gilbert, Rt Hon Dr John

Bell, Stuart

Golding, John

Bennett, A. (Dent'n & Red'sh)

Gould, Bryan

Bermingham, Gerald

Gourlay, Harry

Bidwell, Sydney

Hamilton, W. W. (Central Fife)

Blair, Anthony

Hardy, Peter

Boothroyd, Miss Betty

Harman, Ms Harriet

Bray, Dr Jeremy

Harrison, Rt Hon Walter

Brown, Gordon (D'f'mline E)

Hart, Rt Hon Dame Judith

Brown, Hugh D. (Provan)

Hattersley, Rt Hon Roy

Brown, N. (N'c'tle-u-Tyne E)

Healey, Rt Hon Denis

Brown, R. (N'c'tle-u-Tyne N)

Heffer, Eric S.

Brown, Ron (E'burgh, Leith)

Hogg, N. (C'nauld & Kilsyth)

Bruce, Malcolm

Home Robertson, John

Caborn, Richard

Howell, Rt Hon D. (S'heath)

Callaghan, Rt Hon J.

Howells, Geraint

Campbell, Ian

Hoyle, Douglas

Canavan, Dennis

Hughes, Mark (Durham)

Carter-Jones, Lewis

Hughes, Robert (Aberdeen N)

Cartwright, John

Hughes, Roy (Newport East)

Cocks, Rt Hon M. (Bristol S.)

Hughes, Sean (Knowsley S)

Cohen, Harry

Hughes, Simon (Southwark)

Coleman, Donald

Janner, Hon Greville

Concannon, Rt Hon J. D.

Jenkins, Rt Hon Roy (Hillh'd)

Conlan, Bernard

John, Brynmor

Cook, Robin F. (Livingston)

Jones, Barry (Alyn & Deeside)

Corbett, Robin

Kaufman, Rt Hon Gerald

Corbyn, Jeremy

Kennedy, Charles

Cowans, Harry

Kilroy-Silk, Robert

Cox, Thomas (Tooting)

Kinnock, Rt Hon Neil

Craigen, J. M.

Kirkwood, Archibald

Crowther, Stan

Leadbitter, Ted

Cunningham, Dr John

Leighton, Ronald

Dalyell, Tam

Lewis, Ron (Carlisle)

Davies, Rt Hon Denzil (L'lli)

Lewis, Terence (Worsley)

Davies, Ronald (Caerphilly)

Litherland, Robert

Davis, Terry (B'ham, H'ge H'l)

Lloyd, Tony (Stretford)

Deakins, Eric

Lofthouse, Geoffrey

Dewar, Donald

Loyden, Edward

Dixon, Donald

McCartney, Hugh

Dobson, Frank

McDonald, Dr Oonagh

Dormand, Jack

McGuire, Michael

Douglas, Dick

McKay, Allen (Penistone)

Dubs, Alfred

Mackenzie, Rt Hon Gregor

Dunwoody, Hon Mrs G.

McTaggart, Robert

Eadie, Alex

McWilliam, John

Eastham, Ken

Madden, Max

Edwards, R. (W'hampt'n SE)

Marek, Dr John

Evans, Ioan (Cynon Valley)

Marshall, David (Shettleston)

Evans, John (St. Helens N)

Martin, Michael

Ewing, Harry

Mason, Rt Hon Roy

895

Maxton, John

Ryman, John

Maynard, Miss Joan

Sedgemore, Brian

Meacher, Michael

Sheldon, Rt Hon R.

Meadowcroft, Michael

Shore, Rt Hon Peter

Michie, William

Short, Ms Clare (Ladywood)

Mikardo, Ian

Short, Mrs R.(W'hampt'n NE)

Millan, Rt Hon Bruce

Silkin, Rt Hon J.

Miller, Dr M. S. (E Kilbride)

Skinner, Dennis

Mitchell, Austin (G't Grimsby)

Smith, C.(Isl'ton S & F'bury)

Morris, Rt Hon A. (W'shawe)

Smith, Rt Hon J. (M'kl'ds E)

Nellist, David

Snape, Peter

Oakes, Rt Hon Gordon

Spearing, Nigel

O'Brien, William

Steel, Rt Hon David

O'Neill, Martin

Stewart, Rt Hon D. (W Isles)

Orme, Rt Hon Stanley

Stokes, John

Paisley, Rev Ian

Strang, Gavin

Park, George

Straw, Jack

Parry, Robert

Thomas, Dr R. (Carmarthen)

Patchett, Terry

Thorne, Stan (Preston)

Pavitt, Laurie

Tinn, James

Pendry, Tom

Torney, Tom

Penhaligon, David

Varley, Rt Hon Eric G.

Pike, Peter

Wainwright, R.

Powell, Raymond (Ogmore)

Wallace, James

Prescott, John

Ward, John

Radice, Giles

Wardell, Gareth (Gower)

Randall, Stuart

Wareing, Robert

Redmond, M.

Welsh, Michael

Rees, Rt Hon M. (Leeds S)

White, James

Richardson, Ms Jo

Williams, Rt Hon A.

Roberts, Allan (Bootle)

Winnick, David

Roberts, Ernest (Hackney N)

Woodall, Alec

Robertson, George

Young, David (Bolton SE)

Rooker, J. W.

Ross, Ernest (Dundee W)

Tellers for the Ayes:

Ross, Stephen (Isle of Wight)

Mr. James Hamilton and

Rowlands, Ted

Mr. Frank Haynes.

NOES

Adley, Robert

Buchanan-Smith, Rt Hon A.

Aitken, Jonathan

Buck, Sir Antony

Alexander, Richard

Budgen, Nick

Alison, Rt Hon Michael

Bulmer, Esmond

Amery, Rt Hon Julian

Burt, Alistair

Amess, David

Butcher, John

Ancram, Michael

Butler, Hon Adam

Arnold, Tom

Butterfill, John

Ashby, David

Carlisle, John (N Luton)

Aspinwall, Jack

Carlisle, Kenneth (Lincoln)

Atkins, Rt Hon Sir H.

Channon, Rt Hon Paul

Atkins, Robert (South Ribble)

Chapman, Sydney

Atkinson, David (B'm'th E)

Chope, Christopher

Baker, Kenneth (Mole Valley)

Churchill, W. S.

Baker, Nicholas (N Dorset)

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

Baldry, Anthony

Clark, Dr Michael (Rochford)

Banks, Robert (Harrogate)

Clark, Sir W. (Croydon S)

Batiste, Spencer

Clarke Kenneth (Rushcliffe)

Beaumont-Dark, Anthony

Clegg, Sir Walter

Bellingham, Henry

Cockeram, Eric

Bendall, Vivian

Colvin, Michael

Bennett, Sir Frederic (T'bay)

Conway, Derek

Benyon, William

Coombs, Simon

Berry, Sir Anthony

Cope, John

Biffen, Rt Hon John

Cormack, Patrick

Biggs-Davison, Sir John

Corrie, John

Blaker, Rt Hon Sir Peter

Couchman, James

Body, Richard

Critchley, Julian

Bonsor, Sir Nicholas

Crouch, David

Bottomley, Peter

Currie, Mrs Edwina

Bowden, A. (Brighton K'to'n)

Dickens, Geoffrey

Bowden, Gerald (Dulwich)

Dicks, T.

Boyson, Dr Rhodes

Dorrell, Stephen

Braine, Sir Bernard

Douglas-Hamilton, Lord J.

Brandon-Bravo, Martin

du Cann, Rt Hon Edward

Brittan, Rt Hon Leon

Dunn, Robert

Brooke, Hon Peter

Durant, Tony

Brown, M. (Brigg & Cl'thpes)

Dykes, Hugh

Browne, John

Edwards, Rt Hon N. (P'broke)

Bruinvels, Peter

Eggar, Tim

Bryan, Sir Paul

Emery, Sir Peter

896

Evennett, David

Kershaw, Sir Anthony

Eyre, Reginald

Key, Robert

Fairbairn, Nicholas

King, Roger (B'ham N'field)

Fallon, Michael

King, Rt Hon Tom

Farr, John

Knight, Gregory (Derby N)

Favell, Anthony

Knowles, Michael

Fenner, Mrs Peggy

Knox, David

Finsberg, Geoffrey

Lamont, Norman

Fletcher, Alexander

Lang, Ian

Fookes, Miss Janet

Latham, Michael

Forman, Nigel

Lawler, Geoffrey

Forsyth, Michael (Stirling)

Lawson, Rt Hon Nigel

Fowler, Rt Hon Norman

Lee, John (Pendle)

Fox, Marcus

Leigh, Edward (Gainsbor'gh)

Franks, Cecil

Lennox-Boyd, Hon Mark

Fraser, Rt Hon Sir Hugh

Lewis, Sir Kenneth (Stamf'd)

Fraser, Peter (Angus East)

Lightbown, David

Freeman, Roger

Lilley, Peter

Fry, Peter

Lloyd, Ian (Havant)

Galley, Roy

Lloyd, Peter, (Fareham)

Gardiner, George (Reigate)

Lord, Michael

Gardner, Sir Edward (Fylde)

Lyell, Nicholas

Garel-Jones, Tristan

McCrindle, Robert

Gilmour, Rt Hon Sir Ian

McCurley, Mrs Anna

Glyn, Dr Alan

MacGregor, John

Goodhart, Sir Philip

MacKay, Andrew (Berkshire)

Goodlad, Alastair

MacKay, John (Argyll & Bute)

Gorst, John

Maclean, David John.

Gow, Ian

Macmillan, Rt Hon M.

Gower, Sir Raymond

McNair-Wilson, M. (N'bury)

Grant, Sir Anthony

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

Gregory, Conal

McQuarrie, Albert

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

Madel, David

Griffiths, Peter (Portsm'th N)

Major, John

Grist, Ian

Malins, Humfrey

Grylls, Michael

Malone, Gerald

Gummer, John Selwyn

Maples, John

Hamilton, Hon A. (Epsom)

Marland, Paul

Hamilton, Neil (Tatton)

Marlow, Antony

Hampson, Dr Keith

Marshall, Michael (Arundel)

Hannam, John

Mates, Michael

Hargreaves, Kenneth

Mayhew, Sir Patrick

Haselhurst, Alan

Mellor, David

Hawkins, C. (High Peak)

Merchant, Piers

Hawkins, Sir Paul (SW N'folk)

Meyer, Sir Anthony

Hawksley, Warren

Miller, Hal (B'grove)

Hayes, J.

Mills, Iain (Meriden)

Hayhoe, Barney

Mills, Sir Peter (West Devon)

Hayward, Robert

Miscampbell, Norman

Heathcoat-Amory, David

Mitchell, David (NW Hants)

Heddle, John

Moate, Roger

Henderson, Barry

Monro, Sir Hector

Heseltine, Rt Hon Michael

Montgomery, Fergus

Hickmet, Richard

Moore, John

Higgins, Rt Hon Terence L.

Morris, M. (N'hampton, S)

Hind, Kenneth

Morrison, Hon C. (Devizes)

Hirst, Michael

Morrison, Hon P. (Chester)

Hogg, Hon Douglas (Gr'th'm)

Moynihan, Hon C.

Holland, Sir Philip (Gedling)

Mudd, David

Holt, Richard

Murphy, Christopher

Hooson, Tom

Neale, Gerrard

Hordern, Peter

Needham, Richard

Howard, Michael

Nelson, Anthony

Howarth, Alan (Stratf'd-on-A)

Neubert, Michael

Howarth, Gerald (Cannock)

Newton, Tony

Howe, Rt Hon Sir Geoffrey

Nicholls, Patrick

Howell, Rt Hon D. (G'ldford)

Norris, Steven

Hubbard-Miles, Peter

Onslow, Cranley

Hunt, David (Wirral)

Oppenheim, Rt Hon Mrs S.

Hunt, John (Ravensbourne)

Ottaway, Richard

Hunter, Andrew

Page, Richard (Herts SW)

Hurd, Rt Hon Douglas

Parkinson, Rt Hon Cecil

Irving, Charles

Patten, John (Oxford)

Jenkin, Rt Hon Patrick

Pattie, Geoffrey

Jessel, Toby

Pawsey, James

Johnson-Smith, Sir Geoffrey

Peacock, Mrs Elizabeth

Jones, Gwilym (Cardiff N)

Percival, Rt Hon Sir Ian

Jones, Robert (W Herts)

Pink, R. Bonner

Jopling, Rt Hon Michael

Pollock, Alexander

Joseph, Rt Hon Sir Keith

Porter, Barry

897

Powell, William (Corby)

Stewart, Andrew (Sherwood)

Powley, John

Stewart, Ian (N Hertf'dshire)

Prentice, Rt Hon Reg

Stokes, John

Price, Sir David

Stradling Thomas, J.

Prior, Rt Hon James

Sumberg, David

Proctor, K. Harvey

Tapsell, Peter

Pym, Rt Hon Francis

Taylor, John (Solihull)

Raffan, Keith

Taylor, Teddy (S'end E)

Rathbone, Tim

Tebbit, Rt Hon Norman

Rees, Rt Hon Peter (Dover)

Temple-Morris, Peter

Renton, Tim

Terlezki, Stefan

Rhodes James, Robert

Thatcher, Rt Hon Mrs M.

Ridley, Rt Hon Nicholas

Thomas, Rt Hon Peter

Ridsdale, Sir Julian

Thompson, Donald (Calder V)

Rifkind, Malcolm

Thompson, Patrick (N'ich N)

Roberts, Wyn (Conwy)

Thorne, Neil (Ilford S)

Robinson, Mark (N'port W)

Thornton, Malcolm

Roe, Mrs Marion

Thurnham, Peter

Rossi, Sir Hugh

Townend, John (Bridlington)

Rost, Peter

Townsend, Cyril D. (B'heath)

Rowe, Andrew

Tracey, Richard

Rumbold, Mrs Angela

Trippier, David

Ryder, Richard

Twinn, Dr Ian

Sackville, Hon Thomas

Vaughan, Dr Gerard

Sainsbury, Hon Timothy

Viggers, Peter

St. John-Stevas, Rt Hon N.

Waddington, David

Sayeed, Jonathan

Wakeham, Rt Hon John

Scott, Nicholas

Waldegrave, Hon William

Shaw, Giles (Pudsey)

Walden, George

Shaw, Sir Michael (Scarb')

Walker, Rt Hon P. (W'cester)

Shelton, William (Streatham)

Wall, Sir Patrick

Shepherd, Colin (Hereford)

Waller, Gary

Shersby, Michael

Walters, Dennis

Silvester, Fred

Wardle, C. (Bexhill)

Sims, Roger

Warren, Kenneth

Skeet, T. H. H.

Watts, John

Smith, Sir Dudley (Warwick)

Wells, Bowen (Hertford)

Smith, Tim (Beaconsfield)

Whitney, Raymond

Soames, Hon Nicholas

Wiggin, Jerry

Speed, Keith

Wilkinson, John

Speller, Tony

Winterton, Mrs Ann

Spence, John

Winterton, Nicholas

Spencer, D.

Wolfson, Mark

Spicer, Michael (S Worcs)

Wood, Timothy

Squire, Robin

Woodcock, Michael

Stanbrook, Ivor

Yeo, Tim

Stanley, John

Young, Sir George (Acton)

Steen, Anthony

Younger, Rt Hon George

Stern, Michael

Stevens, Lewis (Nuneaton)

Tellers for the Noes:

Stevens, Martin (Fulham)

Mr. Carol Mather and

Stewart, Allan (Eastwood)

Mr. Robert Boscawen.

Question accordingly negatived.
Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 32 (Questions on amendments), and agreed to.
MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.
Resolved,
That this House welcomes the priority given by the Government to the promotion of home ownership and the repair and improvement of the housing stock through repair and improvement grants and the introduction of the Tenants' Charter and the entitlement of local authority tenants to improvement grants; and believes that these measures are of real benefit both to individual householders and to the construction industry.

Milk
7.14 pm
Mr. Robert Hughes: I beg to move,
That an humble Address be presented to Her Majesty, praying that the Milk-based Drinks (Hygiene and Heat Treatment) Regulations 1983 (S.I., 1983, No. 1508), the Milk and Dairies (Heat Treatment of Cream) Regulations 1983 (S.1., 1983, No. 1509), the Milk (Special Designation) (Amendment) Regulations 1983 (S.I., 1983, No. 1510), and the Milk and Dairies (Semi-skimmed and Skimmed Milk) (Heat Treatment and Labelling) (Amendment) Regulations 1983 (S.1., 1983, No. 1511), dated 18th October 1983, the Importation of Milk Regulations 1983 (S.I., 1983, No. 1563), dated 24th October 1983, the Milk-based Drinks (Scotland) Regulations 1983 (S.I., 1983, No. 1514), the Cream (Heat Treatment) (Scotland) Regulations 1983 (S.I., 1983, No. 1515), the Milk and Dairies (Semi-skimmed and Skimmed Milk) (Heat Treatment and Labelling) (Scotland) (Amendment) (No. 2) Regulations 1983 (S.I., 1983, No. 1526) and the Milk (Special Designations) (Scotland) Amendment (No. 2) Order 1983 (S.I., 1983, No. 1527), dated 17th October 1983, and the Importation of Milk (Scotland) Regulations 1983 (S.I., 1983, No. 1545), dated 21st October 1983, copies of which were laid before this House on 26th October, be annulled.
Mr. Speaker: With this it will be convenient to discuss also the second motion:
That, in the opinion of this House, the Importation of Milk Regulations (Northern Ireland) 1983 (S.R.(N.I.), 1983 No. 338) ought to be revoked.
Mr. Hughes: It might be for the convenience of the House if I describe the background to the regulations relating to the conditions under which UHT milk, sterilised milk and frozen pasteurised cream may be imported. There can be no doubt that these regulations have caused widespread concern. I have received letters and representations from organisations in England, Wales, Scotland and Northern Ireland. The representations have come from the Dairy Trade Federation, the Union of Shop, Distributive and Allied Workers, the Transport and General Workers Union, the milk marketing boards, and the National Farmers Union. In addition, I have had representations from individual consumers. They have all expressed worry, even consternation, at the impact that these imports may have on every section of the dairy economy.
It is well understood that our system of doorstep delivery of milk is unique. I concede that uniqueness is not by itself a sufficient criterion for maintaining a system, but it is not disputed by anyone that the doorstep delivery provides a welcome and satisfactory service to the consumer. Isolation is feared by many, especially women alone at home and elderly people, and there is no doubt that the milkman is a valuable contact for them and for others.
If the doorstep delivery system were to be disrupted, that could put many jobs at risk. About 50,000 people work full-time in milk distribution. About 15,000 people are employed in liquid milk processing and packaging and about 15,000 are involved in the road haulage industry, glass manufacturing and electrical vehicle construction. I accept that the destruction of the system will not happen at once, but the House should be under no illusion that the damage to doorstep deliveries will have serious consequences and will affect milk consumption. We can tell that from the experience in the Netherlands. Since the late 1960s, deliveries have fallen from 90 per cent. to

899
under 25 per cent., and consumption has fallen by 25 per cent. It is clear that no section of the community will remain unaffected.
It is also clear from the regulations that the effects on the consumer must be taken into account and that we must have regard to the quality, hygiene and health standards. It is acknowledged by everyone with any knowledge of our dairy industry that we have the highest and the best standards of milk production, processing, packaging and delivery. Inspections take place at all stages by the most competent officers. It is essential that this thorough inspection is continued as far as possible for imported milk.
The regulations refer to the imports through authorised places of entry. It is fortunate that I have been given a copy of the London Gazette, published today, which answers some of the questions that I was asking, in particular the one on how many places of entry there will be, though it only partially answers it. According to the London Gazette, there will be 17 places of entry. I do not know how many places of entry there will be in Scotland, because that information will be published separately in Edinburgh. Perhaps when he replies to the debate the Minister will say how many places of entry he has designated there.
The Minister of Agriculture, Fisheries and Food (Mr. Michael Jopling): It may help the hon. Gentleman to know now that the number in Scotland will be two.
Mr. Hughes: I am grateful to the right hon. Gentleman for that information. I wish that the answer was two for England and Wales as well. An imperative in the Minister's decision should have been to keep the number of places of entry to the absolute minimum. I say, not in any obstructive way, that we must lessen the administrative problems of inspection. We must ensure a high frequency of sampling and strict testing, and in my opinion 17 is far too many.
It is vital that adequate resources are made available at Ministry and port health authority level to make sure that we have a rigorous, though fair, form of monitoring for milk imports, and it will remain essential for many years to come that the procedures continue to be sustained.
What analysis has the Minister made of the number of personnel who will he required? What will the cost be? May we have a guarantee that the cost will be fully provided for? What criteria will be laid down for the primary inspection? Paragraph 2 of schedule 2 to Statutory Instrument No. 1563 is curious, because it says:
"(1) Within a reasonable time after the arrival of a consignment of imported milk at a designated place an authorised officer shall carry out a primary examination (that is to say such examination of the consignment of imported milk as may be carried out without opening any closed container in which it is to be supplied to the ultimate consumer or to a catering establishment, and an examination of any document accompanying that consignment).
(2) if upon that primary examination the authorised officer decides that any of the consignments of imported milk has been imported in breach of these regulations or that human health would be protected if that consignment were not unconditionally authorised to be removed, he shall give notice to the importer in writing that the consignment must not be removed from the designated place for any purpose other than its exportation."
How will that work? How will the authorised officer form a judgment on the health standards and hygiene of the milk without opening any container? Will he have an X-ray machine? That will not tell him much. How can he possibly do it without taking a sample?
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We now know, again courtesy of the London Gazette, what the form of certification will be; I shall not read that document into the record and delay the House unnecessarily, but it worries me to the extent that. given that the primary examination must be done without opening containers, it seems that the form of certification will be taken on its face value. If it is signed, that will be that. How on earth, with such a full certificate being provided, will the authorised officer be able to make any checks? Will there be any examination on the other side of the Channel or of the Irish Sea?
The more one looks at the regulations, the more it becomes clear that the Government should have had a debate when they were in draft, so that they could have had the benefit of the advice of the House on these and other matters before proceeding. It has been, to put it mildly, rather naughty of the Government on an issue as important as this to make us discuss it at such a late stage in the proceedings.
I come to the curious inclusion of sterilised milk and frozen pasteurised cream in the importation regulations. The Government are going beyond what is strictly necessary under the European Court decision of February of this year. I do not think that that can be denied. When the then Minister of Agriculture, Fisheries and Food—now the Secretary of State for Energy — made his statement on 9 February, he repeated a number of times that the decision referred only to UHT milk. For example, he said:
"During the course of the Council, as the House knows, the European Court of Justice issued its judgment in the case related to United Kingdom imports of ultra-heat treated milk As I informed my hon. Friend the Member for Devon, West (Sir P. Mills) yesterday, the judgment states that the United Kingdom would be entitled to lay down the objective conditions which it considers ought to be observed as regards the quality of milk before treatment and as regards the method of treating and packing UHT milk of whatever origin offered for sale in its territory. The Government will study the judgment in detail and will as soon as possible take the steps necessary to comply with it. Our aim will be to provide for the import of UHT milk from other member states subject to its satisfying the same health and hygiene requirements on which, in the interests of public health, we insist for the production and processing of our own milk". —[Official Report, 9 February 1983, Vol. 36, c. 1003.]
Clearly, the Minister was saying that the judgment referred only to UHT milk.
That assurance was repeated and underlined when the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, spoke in reply to the Second Reading debate on the Importation of Milk Bill on 10 May of this year. She said when referring to the regulations which would finally be produced under the Bill:
"However, their main effect will be to provide for the importation of UHT milk and cream and flavoured milk from member states subject to these products satisfying the same health and hygiene requirements".
The emphasis was again on UHT milk. When replying to that debate the hon. Lady said:
"I should like to repeat that the judgment applies only to UHT milk, which tastes different from the fresh milk to which we are accustomed in this country, of which, I believe, we are the largest consumer in the Community."
The hon. Lady went on to point out that UHT milk accounted for
"such a small share—1 per cent.—of the United Kingdom market". — [Official Report, 10 May 1983, Vol. 42, c. 743–59.]
Once again the emphasis was on UHT milk only.

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It is true that the minds of many hon. Members on that day were engaged on other matters, particularly the forthcoming general election, though my mind was otherwise engaged. I was on my way to Gothenburg to see Aberdeen play Real Madrid in the European Cup Winners Cup—and win—but that is by the way.
Hon. Members who were present on that day—for example, my hon. Friends the Members for the City of Durham (Mr. Hughes) and for Bradford, South (Mr. Torney) and others—pressed the hon. Lady to say how far the Bill was intended to go. The hon. Member who then represented Thirsk and Malton, now called Ryedale (Mr. Spence)—who is not in his place, though I see that the hon. Member for Harborough (Mr. Farr) is with us, and was present that day—also pressed strongly to make sure that doorstep deliveries would be protected.
There is no doubt that the Minister's response on that occasion was designed to assuage the fears of hon. Members. Indeed, had the House had any idea that the measure would be used for other than the importation of UHT milk it would never have been allowed through at that late stage of the Parliament. My hon. Friend the Member for the City of Durham complained that the Bill was being put through virtually on the nod.
I accept without reservation that the Minister did not seek on that occasion to mislead the House. It is clear, therefore, that there has been a significant change of policy to include sterilised milk and frozen cream. It is serious that this change of policy has never been reported to the House of Commons. I should have thought that there would have been a proper oral statement setting the record straight. Surely the Minister owed it to his Parliamentary Secretary to make one and so exonerate her of any duplicity and assert her innocence in the matter.
One must ask time and again why the Government have gone so far. We have had no logical explanation, and today we are governed by the rules of order in that I open the debate and the Minister replies. In view of all that has been said, we are left with the impression that the right hon. Gentleman has capitulated even before being tested in the defence of British interests.
It has always been thought that it was Government policy to defend to the limit the doorstep delivery of milk, at the same time remaining consistent with our obligations under the treaty of Rome and the European Court decision. That was clearly in the mind of the Parliamentary Secretary when she promised the widest possible consultation, while not accepting—I regret that she did not accept—the statutory right of consultation that was pressed on her.
During the consultation process that has taken place since 10 June, the Minister has been pressed to write into the regulations a period of transition of, say, three to five years, to allow some adjustment and to give the industry time to meet any new competitive challenge that might arise. I accept that the industry is competitive at present. There is strong evidence to suggest that a transition period would have been acceptable to the Commission, but the initiative for the transition period had to come from the Government. They had to lodge a formal request with the Commission for a transition period. I regret that that was not done, and I hope that it is possible, even now, to do that.
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I should like to ask the Minister some questions about frozen pasteurised cream. Can he give an absolute assurance that there will be no risk to public health from imports? If he believes that there is a public health risk from imported pasteurised milk, how can pasteurised cream not represent the same health hazard? I do not see the distinction, or how the right hon. Gentleman makes it. Is it not the case that freezing has no bactericidal effect; in other words, that it does not kill the bacteria?
I fully accept and understand that the European Court's judgment made it quite clear that we could not use health regulations in a spurious way that would amount to, as article 36 of the treaty states,
"a disguised restriction on trade between member states"?
It is difficult to do so, but, nevertheless, we probably have to accept that decision. However, I have before me the Minister's press statement dated 26 October 1983. There is no number on it, but I am sure that the right hon. Gentleman knows which one it is. It is headed, "Michael Jopling Speaks About The Challenges Facing The Dairy Industry" and concerns a speech made at the golden jubilee lunch of the Dairy Trade Federation.
Mr. Nicholas Winterton: It was a very good lunch.
Mr. Hughes: I was not lucky enough to attend the lunch. Some people might say that I was lucky to miss the Minister's speech. The right hon. Gentleman said:
"Although we must comply with the law we can also avail ourselves of certain helpful aspects of the judgment. In particular, the judgment recognises that we are entitled to lay down objective conditions as regards the quality of milk before treatment and as regards the methods of treating and packing UHT milk offered for sale in the United Kingdom. We have, of course, invoked these references in the course of the intensive discussions which have taken place with the Commission and Member States since February."
The Minister went on to say that the regime would provide for comprehensive certification for imports, and so on. He made great play of how he understood the importance of doorstep deliveries. He was, of course, defending very high standards.
I do not want to indulge in scaremonger tactics, but we need some assurances about a point that has been raised with me by, for example, the Milk Marketing Board. In a letter dated 14 February it said:
"The industry has recently been involved in a review of the regulations relating to UHT cream and milk based drinks and in the course of this review the Ministry of Agriculture have insisted that henceforth it will be necessary to apply a treatment of 140C for 2 seconds to render these UHT products safe against the dangerous organism chlostridium botulinum."
Some hon. Members may think it easier to say "CB", but I always think of a radio when I hear those initials.
The letter continues:
"This requirement is based on evidence from the Department of Health and Social Security and because of its concern for the health of its customers the industry has accepted this tighter UHT specification for cream and milk based drinks. Having been made aware of the danger by the DHSS the industry has strongly argued that UHT milk both domestically treated and treated elsewhere in Europe prior to import must be treated to the same level of 140C for two seconds. It is clearly absurd that one level is adequate for white milk when a tighter level is required for, for example, flavoured milk."
The regulations certainly say that UHT milk-based drinks and cream are to be treated at 140 deg C for two seconds, yet the temperature for UHT milk is 132·2 deg C for a minimum of one second. That is clearly

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inconsistent. As the Milk Marketing Board points out, it is below the guidelines recommended to eliminate that highly dangerous organism "CB".
In practice, however, our dairies use the higher temperature. It is extraordinary that the Minister should accept the lower levels in the import regulations. He should have been consistent, in the interest of health. There is also growing concern about the detection of antibiotics in milk in Ireland. I shall not cite the instances, as I am sure the Minister is aware of the articles that appeared in The Irish Times on 3 February and in the Connacht Tribune on 10 June 1983.
I think that UHT could best be described as unpalatable, hideous and tasteless. It could be argued that it will not take much of the market. At present it has only 1 per cent. of the market, so there is not much to worry about. However, sterilised milk—which can be imported under the regulations—already takes more than 6 per cent. of the market, and in some parts of the country the figure is as high as 20 and 25 per cent. Therefore, there is clearly a threat.
Mr. Robin Corbett: Is my hon. Friend aware that in the greater midlands area sterilised supplies account for 36 per cent. of daily doorstep deliveries? The national figure is quite bogus, because the balance between pasteurised and sterilised products will vary from region to region. The biggest threat to daily doorstep deliveries will come from those areas with high sales of sterilised products.
Mr. Hughes: I entirely accept that. One of the difficulties of using averages is that they can be misleading. However, if I had cited the west midlands and the figure of 36 per cent., I might have been accused of over-dramatising things.
Once we go that far, things will not end there. The judgment of the European Court and the other pressures will mean that very soon there will be pressure for the importation of pasteurised milk. What will the Government do then? What excuse will they give?
At present, the economics of doorstep deliveries are finely balanced. It will not necessarily require a flood of imports to distort, change and disturb the industry's pattern. What will the Government do to monitor the effect of imports? Before things go any further, will the Minister — if he is successful in defeating our prayer — immediately offer to hold discussions with all those concerned in the dairy trade, the trade unions and the distributors and so on, so that he is in a position to act swiftly if there is any evidence of a challenge to doorstep deliveries?
Mr. Peter Hardy: Will my hon. Friend invite the Minister to tell us whether, as he suggested, the Government have gone rather further than they needed to? Would the Minister care to tell the House whether the Government could have taken steps to ensure that we would not receive cream from countries where foot and mouth disease was endemic? It would have been reasonable to make that stipulation, given this country's record of keeping itself generally free from disease.
Mr. Hughes: I accept that point, and I am glad that may hon. Friend asked that question. There are many questions that I should like to ask, but time does not permit me to do so. However, I hope that my hon. Friend receives
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an answer, because at this stage we should not still be asking why the Minister did that. Given the importance of the issue, he should have told us without being asked.
The decision to take us to the European Court shows us something about the Commission's bureaucracy that must be the despair of those remaining few who believe wholeheartedly in the EEC. The Commission cannot leave well alone. We have a unique system of doorstep delivery, which is not doing anyone any harm. However, it is clear that the consequences of change for us were disregarded. It was impossible for the Commission to do other than apply the grey uniformity which goes under the euphemism of harmonisation.
Conservative Members have an important responsibility to defend the rights of the House and consumers. The Government's response, by going further in these regulations than compelled to by the court decision, displays an accelerating trend in their behaviour to the EC that is too prevalent. The Government have indulged in strong rhetoric in the defence of British interests, but they are woefully inadequate when action is required to defend those interests. The interests of the people, producers and distributors would be served best by the rejection of these regulations, and I urge all right hon. and hon. Members to join us in the Division Lobby.
7.40 pm
The Minister of Agriculture, Fisheries and Food (Mr. Michael Jopling): On behalf of the House I express my warm good wishes to the hon. Member for Aberdeen, North (Mr. Hughes) on becoming the Opposition spokesman on agriculture, fisheries and food. — [Ho N. MEMBERS: "Why is he not in the Shadow Cabinet?"] That is a matter for the right hon. Member for Islwyn (Mr. Kinnock) who sits grinning. No doubt, as a good party manager. he will prevail upon his Back Benchers to ensure that the hon. Gentleman obtains more votes next year.
We are sad that the hon. Member for Paisley, South (Mr. Buchan) is not well. He previously filled the role now being played by the hon. Member for Aberdeen, North. I hope that the hon. Gentleman will be kind enough to pass on to the hon. Member for Paisley, South the good wishes of the House.
These new regulations, which were laid before the House a few weeks ago, are essential to enable the United Kingdom to comply with Community law and to provide effective public health safeguards on imports for the British consumer. The European Court of Justice decided in a judgment in February this year that the United Kingdom's present regulations, which have the effect of preventing imports of UHT milk, are inconsistent with our obligations under articles 30 and 36 of the treaty of Rome and are therefore contrary to Community law.
In the light of this ruling, the Government have no option but to comply with the law, and my predecessor announced this intention immediately after the judgment. I was glad to hear the hon. Member for Aberdeen, North say—I think it was a responsible remark—that he agrees that the Government of the day must obey the law of the land.
Ms. Harriet Harman: The Government were sufficiently keen to make a mockery of the European Court's rulings on our equality legislation when they introduced an order on equal pay for work of equal value, which did nothing to implement the European Court's

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judgment. May we look to the Government on this important issue similarly to undermine the European Court's judgment—this time in the national interest?
Mr. Jopling: I have sufficient responsibilities under my agriculture, fisheries and food portfolio without becoming involved in that matter. The hon. Lady must discuss it on one of the many occasions that I am sure the House will provide to debate women's lib. Many matters will be raised tonight, and I hope that we can keep away from that.
In the light of the European Court's ruling, the Government have no option but to comply with the law. If we fail to do so, we shall inevitably expose ourselves to the possibility of further proceedings in the European Court. The House should note that we should be vulnerable also to proceedings in our domestic courts. I acknowledge the concern of hon. Members about the economic consequences of complying with the judgment and the detail of our regulations. I hope in due course to deal with all of those points.
I trust that no hon. Member will dispute the general principle that Ministers and their officials should comply with the law of the land. The hon. Member for Aberdeen, North has set the tone. There have been suggestions by hon. Members, including the hon. Gentleman, that we should comply with the law, but only slowly or partially. That would not be a tenable position, and to adopt it would prompt an immediate further challenge in the courts. There is nothing in the judgment or in articles 30 and 36 of the treaty of Rome to suggest that a gradual or partial compliance with these obligations is sufficient. There is no such principle in our law or that of the Community, nor is there any evidence that the European Court, the Commission as a whole, any other member state or individual trader would have acquiesced in such an arrangement.
I have good reason to doubt whether the Commission would have accepted a further delay beyond the nine or so months since the Court judgment and our compliance with that judgment.
Mr. Robert Hughes: I hope that the hon. Gentleman is coming to the point, which is not that we should not comply in full with the law on UHT milk, but why he went further than necessary and why he has consistently exercised his judgment only on UHT milk.
Mr. Jopling: That is a major part of the debate, and I shall come to it a little later.
Mr. Andrew Bowden: Is my right hon. Friend aware that there is widespread feeling among organisations dealing with the welfare of the elderly that these regulations, if implemented, could be the beginning of the end for milk deliveries to their homes? The implications would be serious for our retired people.
Mr. Jopling: We are all aware of my hon. Friend's great interest in matters affecting the elderly. I shall deal with that point at the end of my speech when I discuss the importance of the doorstep delivery.
We must comply with the judgment, but that does not mean that there has to be a free-for-all. On the contrary, although the judgment requires us to admit imports, it acknowledges that in the interest of public health the
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United Kingdom can lay down objective conditions on the quality of milk before heat treatment and on the methods of treating and packing imported milk. The judgment acknowedges also that we can operate a system of certification and that we can sample and test imports to ensure that our requirements for the protection of public health are met. These observations by the court are significant, and they are fully reflected in the rigorous import regime that will be established by these regulations to protect public health.
The general effect of the regulations is to ensure that imports will be subjected to requirements equivalent to the stringent health and hygiene safeguards that we apply to our milk production. I hope that that answers the question of the hon. Member for Aberdeen, North. The regulations provide that imports must be accompanied by a prescribed certificate properly completed. The form of the certificate is being published today, as the hon. Gentleman said, in the London Gazette.
For public health purposes, the importer will be required to provide a range of factual information about each consignment and to give guarantees relating, first, to the condition of the milk before processing; secondly, to the heat treatment process; and thirdly, to the end product. The regulations lay down detailed rules for the examination of imports at the ports.
The hon. Member for Aberdeen, North asked whether the port health authorities could examine the milk. I refer him to statutory instrument No. 1563, page 6, schedule 2 where paragraph 3 gives a great many powers. It provides:
"For the purposes of further examination under this paragraph an authorised officer may, to such extent as is reasonable and within such time as is reasonable"
do many things, including taking, testing and analysing samples of imported milk and so on. That demonstrates that the inspecting officer at the port has the right not just to inspect products externally but also to sample and open them.
Mr. Mark Hughes: Will the Minister give the House an unequivocal undertaking that no lower standards of hygiene are required in the farm dairy on the continent than are required from our dairymen?
Mr. Jopling: We do not have jurisdiction over farms within the Community ——
Mr. Geraint Howells: They never wash their hands.
Mr. Jopling: —any more than we would allow an overseas Government to lay down regulations for our farms.
Mr. Nigel Spearing: The Government do allow that because the EC is making regulations.
Mr. John Home Robertson rose——
Mr. Jopling: No, I must proceed. In England and Wales it will be the responsibility——
Mr. Home Robertson rose——
Mr. Jopling: No, I have given way a great deal already and I must proceed.
Mr. Deputy Speaker (Mr. Paul Dean): Order. It is clear that the Minister is not giving way.
Mr. Jopling: In England and Wales it will be the responsibility of the port health authorities, who are already responsible for monitoring the safety of other imported foodstuffs, to carry out the examination. They have the experienced staff and the necessary infrastructure to ensure that the job is done thoroughly and that public health is fully protected. The port authorities will work closely with my Department and will take samples——
Mr. Home Robertson rose——
Mr. Jopling: —for testing in laboratories belonging to the Ministry of Agriculture, Fisheries and Food, and that will provide a safeguard.
Mr. Home Robertson rose——
Mr. Jopling: I have given way a great deal. I must proceed. To achieve uniformity of standards and the necessary co-ordination, it is necessary to restrict trade to ports which have the facilities and expertise necessary to provide adequate safeguards in this important health function.
England and Wales has 144 ports, and we have designated 17 of them, as the hon. Member for Aberdeen, North said. They are the ports which are already designated to handle meat. All those ports have great experience in the public health aspects of the meat trade. It is logical that milk should be added.
My right hon. Friends are designating two ports in Scotland and three entry points in Northern Ireland, details of which will be published in the appropriate Gazettes.
Rev. Ian Paisley rose——
Mr. Jopling: I must proceed. The regulations are concerned solely with public health safeguards. They do not deal with animal health, which is covered by existing legislation. I heard someone mention foot and mouth disease which is what I shall deal with now.
Mr. Home Robertson rose——
Mr. Jopling: There has been some public controversy about safeguards against foot and mouth disease. We are changing from a system of specific animal health licensing for UHT and sterilised milk, cream and milk-based drinks, to one of general licences as a result of the European Court judgment. I assure the House that our conditions will continue to provide adequate safeguards against the introduction of foot and mouth disease.
The time-temperature combination of heat treatment required for UHT products under the animal health regulations is a minimum of 135°C for at least one second and for sterilised products 108°C for 45 minutes. My veterinary advisers are satisfied that these combinations are sufficient to provide an adequate safeguard against the risk of introducing animal diseases such as foot and mouth. I have had this advice confirmed by the experts from the Animal Virus Research Institute at Pirbright, which I think will be recognised as the world reference laboratory for foot and mouth disease.
If any case of foot and mouth disease were to occur in a country which sends milk to us, we would immediately investigate the circumstances to see whether there was any risk of post-processing contamination. In such an event we would consider what additional precautions were necessary—for example, area restrictions.
Mr. Mark Hughes: That is one of the most disturbing statements that I have heard during my 13 years in the
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House. If ever a stable door was being closed after the horse had bolted, it is that one. It is a disgrace for any Minister of Agriculture, Fisheries and Food to come to the House with such regulations when we have no additional controls to prevent the import of foot and mouth disease. I am appalled by the Minister's statement.
Mr. Jopling: I am sorry that the hon. Gentleman should say that. It is a dreaded disease which cannot be——
Mr. Spearing: Think of something to say.
Mr. Jopling: —which we have not had in this country for many years.
Mr. Home Robertson: Yes, we have.
Mr. Jopling: I believe that these regulations will be sufficient to deal with it.
Mr. Hardy rose——
Mr. Jopling: Foot and mouth disease can be carried in food products other than milk. There is always an outside risk of that disease coming into the country. No Minister of either party could give an assurance that the disease would not come into the country.
Mr. Patrick Cormack rose——
Mr. Jopling: If foot and mouth disease broke out in a country within the Community, and there have been a number of outbreaks of the disease in the Community over the years, although not many, we would deal with it in relation to milk in almost exactly the same way as we would for any other food product.
Mr. Cormack rose——
Mr. Jopling: The position with regard to milk is exactly the same as it has always been for other foodstuffs.
Mr. Cormack: Dairy farmers in my constituency have put two points to me. The first is the fact that foot and mouth disease is endemic in Community countries. Secondly, what guarantee is there that the tests, which my right hon. Friend assures me are adequate, will be done? Is there any inspection by which we will know that the tests will conform to the standards?
Mr. Jopling: There were two outbreaks of foot and mouth disease in Denmark in 1982. It is well known that we import a great deal of bacon and pig products from Denmark. It has been a regular practice for Britain to import animal products from countries in which foot and mouth disease has appeared from time to time. The hon. Gentleman is being unreasonable in making a fuss about this matter.
Mr. Hardy: Will the Minister give way?
Mr. Jopling: No.
Mr. Robert Maclennan rose——
Mr. Jopling: I shall deal with the scope of the regulations. The first point that I wish to make, which has not been sufficiently acknowledged, is that we do not start with a clean slate. Far from it——
Mr. Maclennan rose——
Mr. Jopling: I shall give way later. Before the judgment, imports of all types of milk were effectively prevented. As a result of the decision taken by the Labour Government in 1977, from that date imports of cream have

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been freely admitted. When the hon. Member for City of Durham (Mr. Hughes) refers to milk imports I hope that he recalls that in 1977 imports of cream were freely admitted. Some of the criticism from Opposition Members is strange.
Mr. Hardy rose——
Mr. Jopling: I will not give way.
This matter was seized upon by the European Commission and the European Court of Justice and was criticised as being inconsistent treatment of products with similar health risks. In framing our regime, we have had to consider several constraints. First, the measures that we propose for imports must, in accordance with the treaty, be entirely justifiable on public health grounds. We cannot introduce restrictions for economic reasons.
Secondly, such measures must not be more stringent than those which apply to home production, although our intention is that they shall be no less so. Thirdly, they must be consistent. We cannot treat different products differently when the health risks are the same. Fourthly, we should not, without good reason, interrupt an existing trade. Several serious legal challenges under our interim regime since February have underlined the importance of that matter.
The application of the four criteria lead to two important conclusions, which must be spelt out. First, there is no question that our measures can be confined to ultra-heat treated milk. The judgment was confined to UHT milk because that was the subject of the complaint before the court which, in its judgment, interpreted how the provisions of articles 30 and 36 of the treaty should be applied. Those articles are of general scope and apply to all types of milk. We have had to consider how the principles laid down by the court should apply to other types of milk.
Our second conclusion was that we must devise a regime which takes account not only of the wider implications of the judgment, but which draws a dividing line, as do these regulations, on the strongest possible legal basis. This means that we must take full account of the four criteria to which I have referred. I can see much disadvantage in making a minimal provision in our regulations which could be attached immediately, on a legal basis, as being inadequate and call for a relaxation of our initial regime.
I shall illustrate these principles by explaining why we decided to make provision for the import of sterilised milk and of frozen pasteurised cream. Sterilised milk in the United Kingdom is subject to a spectrum of heat treatments and not to just one standard form of treatment. It consists of using temperatures ranging between 104 and 113 deg C and with times of treatment ranging between 15 and 40 minutes.
We are imposing a requirement on imports of 108 deg C for 45 minutes, which is equivalent to treatments in the upper part of the spectrum, and is more rigorous than those which we propose to require as the minimum for UHT milk, which is treated at 132·2 deg C for one second. There could be no public health justification for not making provision for the import of such sterilised milk. We already admit freely imports of sterilised cream as a result of the Labour Government's decision, to which I referred. I understand fully the economic importance of
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sterilised milk in United Kingdom milk consumption, but at present there are no imports of that product. I can see no purpose in legislating to exclude imports of that product if such a decision cannot be defended legally on public health grounds.
Ms. Harman: Will the Minister give way?
Mr. Jopling: No.
Sterilised milk at the lower end of the spectrum is a product similar to pasteurised milk, where the safeguards provided by a rigorous heat treatment process are not available. We have, therefore, not provided for this product in the regulations.
The present position under the regulations is that pasteurised milk, which comprises about 90 per cent. of our liquid milk consumption, and sterilised milk, which has been treated less vigorously than UHT milk, will continue to be banned from entering the United Kingdom.
Mr. Robert Hughes: Not for long.
Mr. Jopling: When the hon. Gentleman says "not for long", he is saying that should there be a further attack by the courts, we should lose the case. That is not my view. That is a defeatist and dangerous attitude to take on public health grounds. I hope the hon. Gentleman will reflect upon his comment, which is damaging to public health in Britain.
Mr. Robert Hughes: It is a bit rough for the Minister to complain that what happened in 1977 is all the fault of my right hon. Friend the Member for Lewisham, Deptford (Mr. Silkin). The Minister has, by these regulations, opened the door so far that he will face difficulties, although I believe that he can succeed. The Minister, by going so far, has given the Opposition no confidence that the Government will stand by the industry.
Mr. Jopling: When the hon. Gentleman reads what I have said, he will regret the remark that he made from a sedentary position a few moments ago.
There is a small existing trade in frozen pasteurised cream, which follows the Labour Government's decision in 1977. Although frozen pasteurised cream is not subject to rigorous heat treatment, as compared with UHT milk or cream, we consider that the public health status of the product is acceptable under suitable conditions because the freezing prevents the growth of contaminating pathogenic bacteria which would otherwise multiply steadily at room temperature or even at refrigerator temperature.
I wish to deal with the time and temperature combinations of heat treatment. We propose to require, in the new domestic regulations for UHT cream and milk-based drinks and in the parallel provisions for imports, a minimum treatment of 140 deg C for two seconds. That is higher than the public health requirement of 132·2 deg C for one second, which we have had for the past 20 years in our domestic legislation for UHT milk. On technical grounds, it is reasonable to specify a slightly higher standard for cream, which is of course thicker, and for flavoured milk to which other substances have been added. Recently there have been suggestions that to provide the fullest safeguards against some public health hazards, such as botulism, we should specify in our import regulations a standard for milk similar to that proposed for cream.
In considering that suggestion I had to examine two matters: first, the fact that in practice other member states already apply more stringent standards to their UHT

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milk—140 deg C for two seconds — although in most cases this goes beyond what is provided for in their legislation; and secondly, I have been conscious of the fact that to specify this higher standard in our import regulations would require us to have the same standards in our domestic regulations, which might be unwelcome in some sections of our industry.
Against that background I have taken the view that it would be right to maintain the present provision for milk in our domestic regulations of 132·2 deg C for one second, and to have the same provision in our import regulations. However, I am ready to have further discussions on the views that have been expressed, and to consider, in the outcome of those discussions and of the information that we shall be gathering about the standard of treatment of the imported product, whether a later amendment to the regulations will be needed with regard to the heat and time treatment of UHT milk. That assurance meets one of the requests of the National Farmers Union, and also meets the point made by the hon. Member for Aberdeen, North.
Mr. Mark Hughes: Will the Minister give way?
Mr. Jopling: I have given way a great deal to the hon. Gentleman, who has made almost as long a speech as I have.
Mr. Mark Hughes: Will the Secretary of State give us a time scale for this matter, because he is clearly closing another stable door after another horse? When will those consultations be completed and when will the amended regulations be brought before the House?
Mr. Jopling: It was a Labour Minister who opened the stable door, and I hope that the hon. Gentleman will not pursue this matter. I will not give a time scale for it.
I know that the possible economic implications of the proposed imports cause great concern to the dairy industry, which has been extremely vociferous — I do not blame it for that—in propagating its views of how we should tackle the problem that has been created by the European Court's judgment. My Department has had full consultations with the industry, and I am bound to say that I am disappointed that in many recent public statements the industry has concentrated negatively on the possible economic dangers and has largely ignored the legal and other considerations that must be taken into account.
I am well aware of the fear that cheap milk in the shops could undermine the doorstep delivery service, although I should add that the threat comes not only from imported milk. Hon. Members will remember the recent Tesco milk offer, when pasteurised milk was sold for a short time with a minuscule mark-up at a price substantially undercutting the doorstep-delivered price. The milk was about 4p a pint cheaper than the milk delivered on the doorstep. I am not against sensible developments to widen consumer choice on an economic base, but I am well aware of the adverse consequences for consumers, for milk producers and for those who work in the dairy industry, that could flow from a sudden decline in or a loss of doorstep deliveries. My hon. Friend the Member for Brighton, Kemptown (Mr. Bowden) referred to old-age pensioners, whom I have very much in mind.
However, we must be careful not to exaggerate the risk of that happening or to increase it by unwise reactions to the threat of imports. I remind the House that the taste of UHT and sterilised milk must limit its appeal to British
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consumers, accustomed as they are to fresh pasteurised milk. I do not know how many hon. Members have tried it, but I think that it tastes horrid. I cannot believe that many people would wish to try it twice——
Ms. Harman:
What about those who are hard up?
Mr. Jopling: —and having tasted it once I would not wish to do so again.
During the months since I have been responsible for such matters, I have been impressed by the wide support enjoyed by the doorstep delivery service. That has emerged clearly from my correspondence and from the many representations that have been made to me by hon. Members and by their constituents.
I know of and welcome the efforts being made by the National Dairy Council and the Glass Manufacturers Federation to remind consumers of the great advantages of the doorstep delivery service and its dependence on consumer support. That is the right approach, because in the last resort the service, and the many jobs that go with it, depend on the support of the consumer. The British consumer values both the product and the service provided. If the dairy industry continues to bend its efforts towards maintaining and improving the service and the product, and gives publicity to its advantages rather than those of the imported substitute, this unique service will retain the loyalty of the British consumer. I have full confidence in the industry's commercial skill and capacity to compete. Supermarkets may wish to expand their sales, but they have no interest in giving priority to imports. The Government have no wish to damage doorstep deliveries —quite the reverse—but they cannot seek to protect it by improper means. It is up to the industry to fight for its market, and I believe that it can do so.
I urge hon. Members on both sides of the House to vote against the motion and to join me in encouraging our consumers to continue to support the regular doorstep delivery of fresh, pasteurised, British milk.
8.17 pm
Mr. William Ross: I listened with great interest to the Secretary of State, who referred throughout his speech to imported milk and to UHT milk. However, in Northern Ireland the door has been open to other products for some time. In Northern Ireland, as in other parts of the United Kingdom, there are high standards for the treatment of milk. However, if we must import milk from the continent and from the rest of the island of Ireland, we fear that those countries will not impose equal standards on their dairy products and that we cannot have equal treatment or equal competition with our products.
There are high transport costs involved in bringing milk from the Continent, but in Northern Ireland those high transport costs do not exist, because the milk is simply loaded into a tanker, which is driven across the border. I am curious—no doubt the Minister will give us full information about this when he replies—about the three entry points that he mentioned. Are they land frontier entry points, sea ports, or a combination of both? As I understand it, milk from Great Britain will still not be imported into Northern Ireland or, perhaps, the rest of the island of Ireland when the regulations are passed. I hope they are not passed, but there is a question there which demands an answer.

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The Library has provided me with an interesting research note which I assume the Minister has seen. On page 8 of that document, the Minister will find a list of the retail prices of liquid pasteurised milk at January 1983 in various Common Market countries. He will discover that the retail price in the United Kingdom was 37p per litre, whereas in Eire it was 26·5p. That difference arises because the method and organisation of milk production and processing in the Irish Republic is very different from that in Northern Ireland or the rest of the United Kingdom. A considerable price differential has appeared—10·5p a litre.
When non-United Kingdom produced milk starts to flow across the border into Northern Ireland, the effect upon the dairy industry there will be horrific. It is inevitable that the milk will not so much flow as rush in a raging torrent across the frontier. Because of the system in the United Kingdom, that rush will have a disturbing effect throughout the nation. There is no way in which to avoid that. The Minister should tell us far more. What he has revealed today will simply create terror among producers in Northern Ireland.
The Government have also skated lightly over the importation of cream. The Minister talked of fresh cream imports under the previous Labour Government. Is it not a fact that those imports came principally from the Irish Republic? I noticed that the right hon. Gentleman was careful to qualify what he said when discussing them. He said that there was no way in which imports could be prevented when they came from countries that have health standards that are similar to ours. The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food gave my right hon. Friend the Member for Down, South (Mr. Powell) an assurance on 10 May that health standards in the Irish Republic were the same as those in Northern Ireland. That is one matter on which there has been general agreement between Dublin and Belfast for many years. Standards might not always be as well administered in the southern part of the country as they are in Northern Ireland, but there is an intention that standards should be similar.
The Minister used the similarity of standards between the Republic of Ireland and Northern Ireland in an attempt to justify the importation of fresh cream from continental countries. Hon. Members will realise that he was not comparing like with like. If he was attempting to do that he should explain which countries in the EC have similar health standards to those appertaining in the United Kingdom and Northern Ireland.
The Minister was not convincing today, and it will take a great deal more to convince the milk producing community in Northern Ireland that their future is assured, in spite of what has been announced today. The imports that we are being asked to allow were supposed to be confined to UHT and sterilised milk. The Minister went further than that and without justification. As a result, he has created grave circumstances for the dairying part of the agricultural community. What does the Minister mean by sterilised? He gave us a string of figures and described various treatments. I shall read what he said with interest tomorrow. On 10 May in reply to the hon. Member for Ryedale (Mr. Spence) — he represented Thirsk and Malton before the general election—who asked whether
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UHT milk carries foot and mouth disease and whether research had been carried out, the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food said:
"The answer is no, as the temperatures used in the process would kill the disease."—[Official Report, 10 May 1983; Vol. 42, c. 759.]
Information that I have received casts some doubt on that answer. There is also the clostridium botulinum bacterium. On foot and mouth disease, a document which I have received states:
"there is uncertainty about the lethal effect on the foot and mouth virus of heating milk to 132·2°C for one second and since imports will be permitted from Member States with endemic foot and mouth disease … it is imperative that the heat treatment should be increased to 140°C for 2 seconds."
The Minister told us that Pirbright informed him that the treatment that he will insist on will be sufficient. I wonder about that. Foot and mouth is endemic in many countries. The most recent outbreak in Britain cost the farming community and the state an enormous amount of money. If the most recent outbreak is considered to have been many years ago, I should like to have the right hon. Gentleman's definition of "many years" as there was a major outbreak in the 1970s. By farming standards, that is not many years ago—it is the very recent past. The raw scars of that outbreak remain in farmers' minds. We do not want to take the risk of repeating those dreadful months.
Mr. Martin J. O'Neill: The recent past to which the hon. Gentleman refers was 1982, when there were 23 outbreaks. That is rather more recent than one might have thought.
Mr. Ross: I am grateful to the hon. Gentleman for that information. The outbreak was even more recent than I thought. However, there was a much more serious outbreak a few years earlier, and it proved much more costly.
According to my information, the problem is that cows can secrete the foot and mouth virus into milk for several days before they show clinical signs of having the disease. Therefore, imports of pasteurised cream involve a risk of introducing the virus to Britain. Moreover, there is a grave risk that the virus will be spread throughout the country before its presence is detected. Freezing has no effect on the survival of the virus. People do not eat frozen cream. My experience is that people take the stuff out of the freezer, thaw it and whip it or use it in some other form. A small quantity could be left over for several days. That is the normal procedure in every household, as every hon. Member and housewife knows.
The danger is real and great and the Minister's attempt to justify importing fresh or frozen cream is unacceptable. It is certainly unacceptable to me. I hope that it is unacceptable to the House, although no doubt the Whips will ensure that in the eyes of the world it will appear to be acceptable to the House.
The Minister of State, Northern Ireland Office (Mr. Adam Butler): As the hon. Gentleman refers specifically to Northern Ireland, I confirm that the health status of the Republic of Ireland is the same as that of Northern Ireland. Imports from the south therefore involve no risk of foot and mouth disease.
With regard to imports from other EC states, I assure the hon. Gentleman that there will need to be specific animal health licenses certified by the veterinary

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authorities in the north, who will require to satisfy themselves as to the animal health status of the country of origin and the heat treatment to which the product has been subjected. I hope that that satisfies the hon. Gentleman.
Mr. Ross: I am grateful to the hon. Gentleman, but that statement does not take us very far. He referred to heat treatment, but there is no heat treatment, in the sense used hitherto, in the formation of frozen cream. The process goes in the other direction. The temperature is lowered, not raised. I therefore find his comments surprising, but perhaps we may have a fuller explanation of the process later.
I am not just concerned about Northern Ireland. Like all hon. Members, I am concerned about the United Kingdom as a whole. The Minister said in opening that there was no way in which the United Kingdom could interfere in another country's affairs. There were, of course, interruptions from various parts of the House whenever he made that comment. At present, as for many years past, at the various potato-exporting ports of Northern Ireland there are Egyptian inspectors to ensure that potatoes from Northern Ireland farms meet the standard required by Egypt. If that can be done with potatoes, why should not similar and indeed more comprehensive arrangements be made for milk?
Mr. J. Enoch Powell: It is inside the Community.
Mr. Ross: I see no reason why that should not take place within the Community. If the United Kingdom accepts such inspections so that we can sell seed potatoes to Egypt, other countries which are clearly anxious to make money out of selling milk here— they intend to make a profit, not a loss—should be willing to accept the stringent demands that we ought to make but apparently have not so far made in this respect.
Grave concern is always expressed about the future of doorstep deliveries. There is no doubt that doorstep deliveries are threatened by the import of milk. I understand that the economics of the doorstep delivery system is very finely balanced. The economics of the whole United Kingdom milk sector is equally finely balanced. If our milk sector is disrupted to such an extent that the doorstep delivery falls, the whole house of cards will fall and all the jobs involved in transport and delivery of milk will disappear. That is extremely serious. Moreover, the whole structure — the sharing arrangements and co-operation in the present monopoly—will be at risk and the whole system of milk production in which there has been such vast public and private investment will be destroyed, causing great hardship for many farmers.
The entire milk industry of this country — the production, sale, treatment and delivery of milk—is under threat as a result of the regulations. That is why the House is so worried. That anxiety is to be found not only
The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food told her hon. Friend the Member for Harborough (Mr. Farr):
"the same health and hygiene requirements." —— [Official Report, 10 May 1983; Vol. 42, c. 759.]
will apply to imports from other countries as apply to imports from the Irish Republic. From what I have heard this evening it seems that the Government are failing to live up to that undertaking. There is no way in which any
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British Government can say that the status of animal health on the continent is anything like as good as it is in the island of Ireland. Therefore, the Government have retreated from the promise made on 10 May. Everyone concerned with the milk industry must condemn that failure, and I hope that hon. Members will do so in the Lobby tonight.
Those farmers who listened to their leadership — which has not yet changed its mind — when we discussed the Common Market 10 years ago should now realise how foolish they were to do so. The pigeons are coming home to roost, and the farmers do not like the pigeons very much.
Several Hon. Members rose——
Mr. Deputy Speaker: Order. Many hon. Members wish to speak and the debate must end at 11.30 pm. I therefore appeal for brief contributions.
Mr. Joseph Ashton: On a point of order, Mr. Deputy Speaker. Would it be in order if you invoked the 10-minute rule in view of the number of hon. Members who want to speak?
Mr. Deputy Speaker: I would dearly like to, but I have no power to do so. I can only appeal to hon. Members.
8.37 pm
Sir Peter Mills: I must declare an interest, in that three huge milk plants are located in my constituency—Express Dairies, the Milk Marketing Board and Ambrosia.
To say the least, one is concerned about these regulations. The Government have been placed in a difficult situation following the European Court case of 8 February. However, no hon. Member has acknowledged that the Government have kept out this milk for a long time. It is a miracle that that has been done, particularly as we are members of a community which believes in free trade.
One can understand the reasons why the Government have brought forward these regulations. They have been obliged to accept and introduce them. One can also understand the real fears and strong feelings of the various milk organisations in the United Kingdom. Indeed, much is at stake if doorstep deliveries are threatened.
The Opposition's case is not convincing. Sadly. they never mention the producer, and he is concerned about these matters as well.
Mr. Robert Hughes: We did mention the producer.
Sir Peter Mills: Well, not very strongly. It must also be remembered that the president of the NFU has said that we must accept these regulations and that it would be unwise if we were to change course now.
Although the Opposition Front Bench made it quite clear that we should accept the ruling of the European Court, other hon. Members, including some of my hon. Friends, have said that they do not. I remind Opposition Members in particular that in 1977 the then Minister of Agriculture, Fisheries and Food introduced the pigmeat subsidy. A European Court ruling was given on 21 May and on 11 June the subsidy was stopped. The Socialist Minister acted quickly on that occasion, and my right hon. Friend is doing exactly the same now.
How the doorstep delivery system will be affected by UHT imports is unpredictable. The future depends on our

917
action to counter those imports. We should go on the attack. We have the best milk in the world. Instead of accepting this situation, we should be counter-attacking all the time. The future of doorstep deliveries depends on the quality of milk, the service and the price. That must be remembered as well.
My big criticism of the Opposition and of some sections of the dairy trade is the tremendous publicity they have given to this milk. Many people had not heard of sterilised or UHT milk, but they have now. The Socialists and others who oppose the regulations have given the product the best publicity it could have received. There has been free advertising all along the line. Many housewives and consumers will say, "This milk is cheaper by 5p a pint; let us try it." The Opposition have done a grave disservice to doorstep deliveries by their free advertising.
UHT and sterilised milk are not of the same standard as fresh milk. Certainly I do not like the taste. I have heard that even cats do not like sterilised milk. We must publicise good, fresh milk which has been pasteurised. The Milk Marketing Board and the industry are determined to go forward on the attack rather than being on the defensive.
There are strong rumours that parts of the trade want to import fresh milk, perhaps to undermine the power of the Milk Marketing Board. If what I have heard is true, it destroys completely the case of the Opposition. I hope that my right hon. Friend will be able to give some information about that.
The Opposition and the trade unions have forgotten something else, and I hope that the shadow Minister will listen carefully. If we do not adopt the regulations, there may be legal problems not only in the Community but in this country if people wish to purchase imported milk. I wish my right hon. Friend had put more stress on that aspect of the matter.
What I fear most is retaliation against food exports. If we refuse to import milk from some parts of the Community, what will they say about our exports of food? I must declare an interest, because in my constituency are North Devon Meat and other food processing companies. If there were retaliation, trade union members in such plants would be affected. I do not think the Opposition have thought about that. It could undermine our whole food export trade. I accept that there is a delicate balance. I would much rather things continued as they are, but we must accept the regulations. Much is at stake.
I hope that the Minister will refer to foot and mouth disease. I have had an excellent brief from the Milk Marketing Board which shows clearly that some countries are concerned about our exports of milk powder. If there were the slightest suspicion that there was foot and mouth in this country they would not accept our milk powder.
Mr. Colin Shepherd: Does my hon. Friend not recall that the Milk Marketing Board had a severe setback with exports to Mexico because of what happened on the Isle of Wight?
Sir Peter Mills: I was coming to that. We have evidence that there has been a problem when there has been a suspicion of foot and mouth in this country. We also need to study carefully the problem of chlostridium botulinum.
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I have received an excellent brief from the Milk Marketing Board in Northern Ireland. That country produces excellent milk. Indeed, I have a soft spot for Northern Ireland, as I was once a Minister there. I hope that my right hon. Friend will reconsider the whole question of frozen pasteurised cream. I am not at all happy about that. If Northern Ireland feels strongly about it, we should consider the matter again.
The Opposition do not have a leg to stand on. It was a previous Labour Government who opened the door to the difficulties that we are now facing. They cannot wriggle out of that. On balance, I shall support the Minister, but I hope that he will take note of the various points that have been raised during the debate.
My message to the Opposition and to the dairy trade is, "For goodness sake go on to the attack. We have the best milk in the world, so let us sell it."
8.46 pm
Mr. Alfred Morris: I have the honour to speak in the debate as chairman of the co-operative parliamentary group. The debate is of the first importance to the co-operative movement which is, of course, much the largest consumer organisation in Britain. It is with pride that I declare an interest as a co-operatively sponsored Member of Parliament. As well as being the largest consumer organisation, the co-operative movement is both the largest farmer and the largest supplier of liquid milk. Those are its credentials for insisting that its voice should be heard in this important debate.
Britain has more liquid milk sales than any other country in Europe. Furthermore, the volume of milk sales is related to the extent of doorstep delivery, which exceeds that in any other country. All the evidence suggests that, when doorstep deliveries decline, the consumption of milk falls with it. The co-op—or rather the co-ops, because we are not in any way a monolithic entity, but rather a collection of community-based, community-owned and community-oriented voluntary associations — together supply more than one quarter of the nation's milk. We do so through a doorstep delivery service, which we want to continue in the interests of our many millions of members. We also sell milk in shops, where the price is lower than for doorstep deliveries but it is our view that milk imports, at perhaps 5p or 6p a pint cheaper than milk sold on the doorstep, could seriously undermine the doorstep delivery system.
Milk is a price-sensitive commodity for many families. There are 7 million people living in or near poverty. A price differential of 5p or 6p is a considerable incentive to them to opt for foreign milk. I hope that no one will try to minimise the importance of the price factor.
The doorstep delivery of milk would, in many cases, become uneconomic if there was even a marginal switch to cheap imported milk. The profit on doorstep deliveries is small. If only 3 per cent. of consumers switched to imported milk in shops, or bought 3 per cent. less each week from their milkman, his round could become uneconomic. In consequence, the remaining 97 per cent. of consumers on the round would lose their choice of doorstep delivery. For many, that would inevitably mean that they could not even choose between fresh and long-life milk. The elderly and the disabled, large family units and those living in remote areas without private transport, would be especially hard hit. The effect of fewer rounds would be a drop in the consumption of milk. That would

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be bad nutritionally, especially as replacement food, if any, would almost certainly be more expensive, and therefore the poorest would suffer most.
There is also the issue of public health. The Government's approach to the issue seems to the cooperative movement to be an abandonment of the previous policy. The change is, in our view, highly dangerous and unacceptable. It is one from "no risk" to "minimum risk" and I am by no means reassured by the parliamentary replies that I have had from Ministers on this issue.
The consumer interest in the doorstep delivery of milk is reinforced by the producer and distribution interests. The number of jobs that are at risk, the industries that face decline, perhaps even extinction, must also be considered. There are tens of thousands of workers directly involved in the doorstep delivery service and many more on farms and in industries such as glass, bottling and electric vehicle manufacturing.
My hon. Friends the Members for Ogmore (Mr. Powell) and for Bradford, South (Mr. Torney) have made a very distinguished contribution in arranging for the workers whose jobs are at risk to have their case heard by the House. I know that my hon. Friends will speak on the employment consequences of what is proposed. At the same time, I am sure that my hon. Friends will have been pleased to learn that Brian Hellowell, speaking for the cooperative movement, recently made it clear that we are concerned not only with interests of consumers, but also
…to preserve jobs and the vital service aspect of doorstep contact."
The Minister, who has left the Chamber, told me in a reply on Monday:
…in the last resort the future of this unique service can be assured only by the continued support of consumers." —[Official Report, 14 November 1983; Vol. 48, c. 354.]
He should have said, and must now recognise, that the future of this unique service can be determined by the merest minority of consumers. As I have shown, as few as 3 per cent. of consumers could leave very many milk rounds no longer viable. What the Minister is doing is to allow freedom of choice for the vast majority to be put at risk by a tiny minority of defectors to foreign milk. It is a central fallacy in the Minister's speech tonight, as in his reply to me on Monday, to imply that the majority of consumers can save the doorstep delivery service. It can be ended by a small minority of consumers.
Quite apart from my role in the Co-operative movement, there are two other reasons why I have a special interest in the debate. First, as the Minister knows, I had very close links with the Department for a number of years, going back to the mid-1960s—that is, long before the second coming of Lord Peart.
The other reason is that, as the then Minister responsible for the disabled, I was very much involved in the making and launching of the Dairy Trade Federation's "Care Code" for milk roundsmen in 1977. The code asks milkmen to observe, inquire and take action whenever milk they have delivered has not been taken in, or if they see any other signs that a customer may be in serious difficulty. The success of the code over the past six years has shown how our doorstep delivery service provides an essential link with the outside world for the elderly and the disabled. There are countless instances of milk roundsmen coming to the aid of their customers who are in trouble.
Rev. Ian Paisley>: On a point of order, Mr. Deputy Speaker. The debate affects Northern Ireland, yet no Minister representing Northern Ireland is on the Front Bench. Surely a Minister should be present.
Mr. Deputy Speaker (Mr. Paul Dean): Order. I am sure that Ministers have heard the hon. Gentleman's comment, but it is not a matter for me.
Mr. Morris: Most of the instances of help given by milk roundsmen have gone unreported, but the Ely milkman who, in July of this year, received a bravery award for rescuing two children from their burning home, and the Knaresborough dairyman who discovered an elderly lady who had suffered a stroke, are two striking examples of the code's success. Therefore, the Minister must not be allowed to ignore the social cost of undermining the uniquely valuable service of doorstep delivery.
Many will have read a recent article about milk imports by John Young in The Times. After pointing out that tomorrow the floodgates are to be opened and, for the first time in our history, foreign milk will be imported, he said:
"All that stands in the way is the House of Commons, which will be urged on Wednesday evening to throw out the new regulations and tell the European Court to mind its own business."
Far from telling the court to mind its own business, the Minister has gone further than the strict requirements of this provision by allowing in sterilised milk and pasteurised cream.
I quote from a letter from the National Joint Council for the Dairy Industry in England and Wales, which says:
"What is causing most anxiety is that the Minister of Agriculture intends to let in sterilised milk and frozen pasteurised cream as well as UHT milk. This is beyond the requirements of the European Court and goes against previous Government assurances."
Does the Minister think that the French would go further than a decision of the European Court and, by so doing, damage the French national interest? He surely cannot believe that, but he has gone much further than he was required to do by the strict terms of the court's decision.
My hon. Friend the Member for Peckham (Ms. Harman) pointed out that there was an inconsistency between the Government's attitude on this issue and their attitude on equal treatment for women. It was not good enough for the Minister to say that he had no responsibility in that field. He is a member of the same Government as the Minister who is standing in the way of a court decision that does not suit this Government. The Minister's speech was inadequate, glib and grossly incompetent.
Fundamentally, what we are dealing with tonight is another of the absurd consequences of the common agricultural policy of the EC. I hope that many Conservative Members will join us tonight in resisting these orders. It will be much to their honour if they do.
8.58 pm
Mrs. Ann Winterton: I intend to make a brief contribution to the debate tonight in order to describe to the House some of the reasons why I am unable to support my Government in extending the regulations to include the importation of sterilised milk and frozen pasteurised cream from the EC, in addition to the UHT long-life milk which we are now obliged to admit, whether or not we want it.
In this debate I wear three hats in championing the cause of the British dairy industry, the milk retailer and the

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consumer, of whom I am one. In my constituency there are many efficient and well-run dairy farms in a county, Cheshire is renowned throughout the world for the excellence of its dairy products, which include the famous Cheshire cheeses—I stress that we have more than one—which we export all over the world.
We in Britain are not producing the milk surpluses that exist in the EC today. In the forthcoming reform of the common agricultural policy we shall be looking to the Minister to press for national quotas on milk so that those countries that are at present producing the surpluses will have to pay for those surpluses and be penalised for producing over and above their agreed national quotas. I do not want to see efficient British farmers subsidising the over-production of milk by countries such as the Netherlands, Denmark, France and Germany.
The dairy industry has fought long and hard to stop the importation of UHT milk, but reluctantly has had to accept last February's ruling of the European Court, with certain reservations. However, since then, and much to our disappointment, the Minister has seen fit to include in the new regulations the importation of sterilised milk and frozen pasteurised cream, and that will have a considerable effect on the industry as a whole.
It will particularly affect one of our national institutions, the doorstep delivery of milk. This service must continue if we are to keep up the sales of British fresh liquid milk, which is produced efficiently on the farms and is then transported to the dairies where it is processed and bottled under the strictest and most hygienic conditions before being delivered daily to the consumers.
During the recess I was fortunate to visit many dairy farms in my constituency to see one end of the operation. I also visited Healds, a big dairy in Manchester, where I saw the bottling and other processes. I am grateful to have had that experience, because it has helped me considerably.
The doorstep delivery of milk is of tremendous benefit to several sections of society. They have already been mentioned in the debate. The elderly, disabled, young mothers with small children and those who live in remote rural areas without their own transportation rely on doorstep deliveries. We have been told that a change of only 3 per cent. from the consumption of our own fresh pasteurised milk to foreign imported milk could affect the whole structure of doorstep deliveries. In that event, sales of liquid milk in Britain would drop considerably and that would badly affect many sections of the dairy industry, including the farmers. People will often go to the shops to buy cheap imported milk, but the others in the community whom I have described will find it difficult to carry enough bottled milk home. The result will be a drop in consumption, and that will be neither good nor practical.
If the doorstep delivery ceased, a social service would be lost. I hasten to add that it is a valuable social service which costs the state not a penny, which is more than can be said of many social services. Every day a friendly milk roundsman calls in the neighbourhood. He can spot at first hand the tell-tale signs of trouble or illness in the household of, say, an elderly resident. As we know, once a service to the community ceases it is rarely restored, and society is the poorer for that.
The effects on public health might prove even more damaging, because imported sterilised milk, which is
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produced, processed and bottled under far less stringent conditions than apply in Britain, would still contain certain contaminants which could affect both humans and animals. That aspect has been discussed at length in the debate.
That also applies to frozen pasteurised cream, the importation of which would, I believe, be the thin end of the wedge for future imports of fresh pasteurised milk, and that, as a consequence, would undermine even further our efficient dairy industry.
In my area sales of sterilised milk account for about 6 per cent. of the liquid milk sold, and I believe that that is about the national average. However, in certain inner city areas the figure can go as high as 23 per cent. One can imagine what the import of cheaper foreign milk supplied through the shops would do to the small independent roundsman and to the bigger dairies, and the damage that would be done to employment prospects as a result.
Employment in many associated industries would also be affected. I refer to glass manufacture, electric vehicle construction and the manufacture of heavy goods vehicles. That would, in turn, affect my constituency badly, as heavy goods vehicles are manufactured in Sandbach and are certainly used in the dairy industry. I have not even touched on all the other jobs that might be put in jeopardy, including those involving the processing and bottling of milk, distribution to the various depots and delivering the product to the doorstep.
Ultimately, it is the consumer who will suffer once again. However, I for one have great faith in the good common sense of the British housewife who, in her search for good value for money and not just the cheapest product on the market, will come down on the side of the fresh pure British pinta that is delivered to her door. I am one of thousands who feel that we must do all that we can to protect our best national interest in this matter, and I urge the Minister to do exactly the same.
9.6 pm
Mr. Joseph Ashton: I shall try to be brief, because many other hon. Members wish to speak. I want to concentrate on something that the Minister disgracefully skated over in his speech. I refer to the effect of these measures on British jobs in the milk and supportive industries.
My constituency has the biggest milk bottle manufacturing plant in the country, and probably in Europe. It employs 460 people. It turns out 100 million milk bottles every year. That is one third of this country's output, which is in all, 300 million milk bottles. Hon. Members should imagine the jobs that are involved and the number that will vanish as a result of the regulations. Each milk bottle makes 20 trips, so the job is regular as the bottles do not have any returnable value. In that town the unemployment rate already stands at 14 per cent. with 3,731 people unemployed. The town is surrounded by dairy farms. The Minister's attitude seems to be that the Common Market is the be-all and end-all, and that British jobs must come last. That is not good enough.
That attitude is wholly contrary to the Government's patriotic attitude towards the Falkland Islands. It is time that the Minister started defending jobs in Britain, instead of taking so much notice of the European Court. The production of milk bottles requires a lot of sand, silica, quarrying and so on. When we met the glass manufacturers in the House last Thursday, they were deeply concerned

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about the effect of these measures on their products. A bottling plant has to run at a high volume. That means that it also turns out, for example, sauce and pop bottles, pickle jars and jam jars. A huge quantity of glass has to be melted. Therefore, if the milk bottle trade goes, the other side of glass manufacturing will go with it. The size of furnace and weight of glass involved car, not be used just to turn out a smaller quantity of, for example, sauce and medicine bottles.
Each milk bottle costs 6p to produce. Supermarkets selling plastic containers of milk will be able to undercut heavily the price of milk that is delivered to the doorstep. To gain a foothold in the market, Common Market imports will be sold as loss leaders and will be widely advertised. It has been said that the taste is not so good, but such milk can be used in Yorkshire puddings, scrambled eggs, milk puddings and in the sort of cheap dietary meals that pensioners and housewives who are on low incomes have to make.
As has been said, in rural areas doorstep deliveries enable the milkman to keep an eye on old people. The milkman will know if someone has not been seen for a few days. However, what will happen now? The milkman knows that if the delivery of milk has not been taken away, he ought to tell the local authorities that something is seriously wrong. If no milkman calls, a pensioner might have to be three of four weeks behind in rent payments before any one knows that he or she is in difficulty.
The Tory Government's attitude to rural areas is unbelievable. With the privatisation of British Telecom — despite the Government's promises—the telephone boxes in the villages will go. During the four years of the Conservative Government, the price of petrol has increased from 84p a gallon to £1·84 a gallon, and this has hammered the rural areas. Village shops have gone to the wall because they cannot afford to trade. In rural areas, old people who do not have a car to take them to the supermarket to buy their milk in bulk will finish up with no milk. It is not economical to deliver a bottle of milk to one house, miss the next 9 or 10 houses and then deliver the milk somewhere else. The milk supply business, which includes delivery, the manufacture of glass, bottling, loading and distribution, is based on volume. The whole industry is attacked if this volume is hit. In the Netherlands, when daily doorstep milk deliveries declined, milk consumed from that source fell from 80 per cent. to 25 per cent. of total consumption.
The Tory Government's philosophy on the market economy affects their attitudes to the Common Market. They say that the market must find its own level and we must have the widest possible market. Why does this not apply to gas? The Government believe in rigging and controlling the gas price and skimming off the profits to regulate consumption and to make it profitable for the Exchequer to pull in an extra £1 billion a year. However, the Government do not apply the same argument to milk. About 55,000 jobs at least — perhaps 75,000 if we include those who work in the quarries to make the raw materials of the milk bottle — are at stake if these regulations are accepted.
The Government are in a supine position and are allowing the Common Market to tread all over them. Last year, the Common Market said that it would revise the way in which it drew up the figures for the proposed British rebate. There were howls of outrage from the Chancellor of the Exchequer, the Foreign Secretary and the Prime
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Minister. Tonight, they have the opportunity to say to the Common Market: "We are not standing for your juggling of the figures. We shall not acept that you are taking away our rebate. In protest, we shall withdraw these regulations until the matter is sorted out. Until we meet around the table to argue about this rebate, the House will not approve these regulations." The Government would do that if they were as patriotic as they profess and if they were as jingoistic and fond of flag waving as they were during the Falkland Islands incident. The Government accepted the Common Market measures when they agreed to reduce steel production by 14 million tonnes while Italy reduced production by I million tonnes.
The Government accept the milk proposals. They show no patriotism, pride or determination to fight for British jobs in this fallacy that they are proposing. Why do they not act as the French would if wine were entering France from Italy? Why do they not have one point of import, in a similar way to the French when one man at Poitiers handles the incoming Japanese video recorders? It takes six months to do the necessary paper-work and every restriction is placed on this video importation. Britain will have 17 points of import.
The party of jingoism, the Union Jack and rural areas consists of nothing but suckers. They are a push-over when someone else's interests are considered. It is time that the Government stood up to fight for their people in the rural areas and especially for British jobs. A butter mountain can be subsidised; but if there is a coal mountain the pits are shut, the miners are sacked and everything is sold out to the mass commercialism of the Common Market.
The Labour party is the party of Britain. We shall protect British jobs and interests and look after the British consumers. The Conservative party is the party that is selling out.
9.14 pm
Mr. John Farr: I am sorry that the right hon. Member for Manchester, Wythenshawe (Mr. Morris) has left the Chamber, because I should have liked him to hear my comments about his reference to the Manchester co-operative society which has its headquarters in his constituency. It is the biggest landowner in my constituency, owning about 5,000 to 6,000 acres. It has taken the retrograde step which has incensed the local inhabitants, of banning all forms of foxhunting on its land in Leicestershire. I hope that the right hon. Gentleman will read that message in Hansard tomorrow.
I listened with care to what my right hon. Friend said, because I am anxious to support the Government tonight if I can. I have always tried to support my party, but. I confess that I shall not be in the Lobby with it tonight. I have not taken that decision lightly, and I should like to explain briefly why I cannot take that step.
I agree that we must comply with the European Court ruling and allow UHT milk into this country. What worries me, as has been mentioned earlier, is the fact that the DHSS says that to eliminate the possibility of infection, the ultra-heat treatment should be at 140 deg C for two seconds, but I find that the regulations detail 132·2 deg C for one second. That makes me unhappy about accepting the regulations.
I am even more unhappy about sterilised milk. It is all very well for people to say that sterilised milk accounts for only about 6 per cent. of our milk sales, but that varies from one part of the country to another. In parts of the

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midlands it accounts for one third of sales. I am not altogether happy about approving regulations allowing the importation of sterilised milk from the Community.
If the regulations come into effect after tonight's vote, the heating of sterilised milk will be increased to 108 deg C for 45 minutes. I have received expert advice that contaminants are not destroyed by that level of treatment and are often not destroyed by the level of treatment for UHT milk.
I could have gone along with my party on those points, but I part company with it in relation to the import of frozen pasteurised cream. I have done my best to fall in line with my right hon. Friend, but I have the nagging thought at the back of my mind that if we allow in frozen pasteurised cream — even my right hon. Friend recognises that the health standards of some continental producers are inadequate — we will find it almost impossible not to accept pasteurised milk. If we accept unsatisfactory standards for pasteurised cream, we shall find it difficult to prevent any subsequent attempt to bring in frozen pasteurised milk.
Mr. Jopling: I am pleased that my hon. Friend said that he could agree with the first two points, despite his reservations about the third. Will he remember that frozen pasteurised cream has been imported into Britain for the past seven years as a consequence of the decision of the Labour Government? My hon. Friend may ask whether a ban could have commenced now. Our experience has shown since the court case in February, that we would certainly have been taken straight to the European Court had we sought to change what has become an established chain. We faced an impossible option, but the Government were put into that position because of the decision by the Labour Government.
Mr. Farr: I am obliged to the Minister for his remarks. I must stress that some hon. Members have striven hard to understand the Minister's point of view. If we narrow down the conundrum, which appears in the complicated group of papers that hon. Members are studying, my right hon. Friend is asking the House to take two additional steps beyond those which the European Court has required. That is where I part company with my right hon. Friend. In any event, we must allow in imports of UHT milk but not sterilised milk. I also do not believe that we should allow frozen pasteurised cream to come into the country. Those battles can be fought later if a case is pressed. For goodness sake, we must not allow all our defences to fall today and allow Britain to become awash with imported milk and cream.
Hon. Members on both sides of the House are worried because many jobs in Britain depend upon the daily doorstep delivery. The milk roundsman is an important person, as the hon. Member for Bassetlaw (Mr. Ashton) said. My hon. Friend the Member for Brighton, Kemptown (Mr. Bowden) mentioned the importance, from a social point of view, of the daily doorstep delivery. We must also bear in mind the ancillary services which complement the daily doorstep deliveries. Our system, which is fragile and truly remarkable, is also a form of social service and is unique in Europe, if not in the entire western world.
I promised to be brief, and I have made my intentions fairly clear. I cannot understand why UHT milk is being
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imported through 17 ports. If I had had my way, Skegness would have been the only point of access. The UHT milk imports would have taken a long time to get through Skegness. Why on earth must the process of importation be speeded up by providing 17 points of access? When the Minister replies, will he say what the extra cost will be, presumably to the United Kingdom consumer, in running the additional complicated machinery? Will every imported consignment be tested? I hope so. I believe that any import should be subjected to scrutiny and lengthy examination. I trust that the Minister will remember that some hon. Members on both sides of the House believe that he is wrong in this case.
With great regret, I will be unable to go into the Lobby tonight with my hon. Friends.
9.23 pm
Mr. Geraint Howells: Once again, I declare an interest, in that there are many dairy producers in my constituency. We are fortunate in that the Milk Marketing Board erected a comprehensive factory many years ago employing hundreds of my constituents. I congratulate the hon. Member for Aberdeen, North (Mr. Hughes) on a constructive maiden speech in his new responsibility of shadow spokesman for agriculture. I wish the hon. Gentleman well.
I believe the Minister to be a sorry man. I am sure that the hon. Gentleman will regret trying to persuade the House to accept the regulations. When history is written, perhaps he will be regarded as the man who began to dismantle the daily milk delivery service in this country. I hope that I am wrong, for the sake of the consumers, the elderly and the young in our society.
Had the Minister not decided to extend the regulations quite arbitrarily beyond what had been previously agreed as applying to UHT milk only, there would probably have been no need for such a lengthy debate. It was a cynical gesture to arrange a debate on the day that the regulations come into force. It gives the impression that hon. Members are merely rubber-stamping decisions taken long ago, and gives easy ammunition to those who are enemies of the Community.
When the European Court gave its ruling in February of this year, it was clearly understood that it applied only to UHT milk. That was underlined in a House of Commons debate in May, and other hon. Members have emphasised what the Under-Secretary of State said then. The dairy industry, with some reservations, would have accepted that, since sales of UHT milk amount to just under 1 per cent. of total liquid milk sales, and they were more than able to compete with the competition. It is not likely that the British public will succumb easily to the product, as we have become used to the delicious pinta that is such a feature of our daily life. We are proud that 33 million pints of milk are delivered each morning to 16 million homes. That is a wonderful achievement, and we must do everything to maintain the existing system.
However, quite out of the blue, the Minister included sterilised milk and frozen pasteurised milk in the new regulations, which immediately changed the entire matter. Sterilised milk accounts for about 6 per cent. of the milk bought in Britain, and in some areas as much as 10 per cent. The British have always maintained the highest standards of hygiene in milk production, and each pint of milk produced here is carefully checked at each stage of

927
the process until it arrives on the doorstep. It cannot be claimed that every country in the EC has equally high standards and, as many of those countries are not entirely free of diseases such as foot and mouth and tuberculosis, there is always the possibility of a danger to public health.
The sterilisation requirement for imported milk is now 108 deg C for 45 minutes, but I am reliably informed that even that improved standard is insufficient to destroy contaminants that might be present in the milk. The DHSS recommends that UHT milk should be treated at 140 deg C for two seconds, but that standard is not being applied in the present regulations.
Concern has also been expressed that imports of frozen pasteurised cream will open the way for the import of pasteurised milk.
Another issue that has caught the public imagination is the threat to the doorstep delivery. That service is so much a part of our lives that many people take it for granted, but the figures show that the economics of the system are such that a fairly small drop in the number of people requiring the service would make it impractical to continue it at all even though a large majority of people might prefer it. Imported milk will of necessity be sold in shops and if just a few consumers are tempted away from the undoubtedly superior product supplied by the milk roundsman the doorstep delivery service will be in trouble. Those who will suffer most will be the old, the infirm and others unable to get to the shops with ease. Moreover, the many thousands of people involved in the distribution and bottling of milk would be out of work. The implications are therefore extremely serious.
The regulations should be withdrawn and amended to apply far higher standards of hygiene.
Mr. Maclennan: Does my hon. Friend agree that one of the most disturbing aspects of the Minister's comments on the health aspect is that he gave no assurances about the personnel to be employed in conducting the tests? He made no attempt to answer the authoritative claim of the Milk Marketing Board that the ports were wholly unequipped to carry out the necessary tests. He said not a word about that and repeatedly refused to give way when I sought to intervene to make the point.
Mr. Howells: My hon. Friend makes a valid point. I am sure that the Minister will answer the question when he replies.
If the regulations were amended as we suggest they would ensure much fairer competition from our European partners and the continued health of consumers.
Sterilised milk and frozen pasteurised cream should be excluded from the present regulations. Many farming organisations and other bodies have suggested that there should be strict control by port authorities through comprehensive sampling and testing of all imported milk so as to enforce high standards. That is vital in view of the health risks of contaminated and impure milk. Milk is an important part of the British diet. It is nourishing, cheap and, at present, easily available. It is vital for producers, retailers and especially consumers that that should remain the case.
Finally, I wish to put a few questions to the Minister. Is it right to assume that frozen pasteurised cream does not meet the standard of UHT treatment and that imports should therefore not be allowed to continue? On 11 November the Farming News stated:
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"On the eve of the lifting of legal barriers to imported UHT milk from the Continent, it has been discovered that Harrods is already selling a French-made fresh pasteurised dairy cream."
Mr. Maclennan: I have some here. This is the stuff.
Mr. Howells: No doubt the Minister will confirm that later.
The article continued:
"A DTF spokesman confirmed that his organisation had bought three packs of Claudel, at £1·15 each, for examination, 'At first glance this product, with a two-month shelf life, would appear to be improperly labelled,' he said."
I hope that the Minister will clarify the position when he replies.
How much UHT milk does the Minister estimate will be imported in the next six months? What will be the effect on the daily delivery of fresh milk? What plans has he to deal with the situation if foot and mouth disease is imported during the next few months? What will be the effect on the producer retailers who sell green top milk in various parts of the country? What will be the effect on the future role of the Milk Marketing Board? What will be the effect on milk producers? Finally, what will be the effect on the Dairy Trade Federation which has done excellent work in the past decade?
9.34 pm
Rev. Ian Paisley: I am glad that the Northern Ireland Office is now represented on the Front Bench. I should like to tell the hon. Member for Dumfries (Sir H. Monro) that I was present when the Minister of State, Northern Ireland Office made an intervention during the speech of the hon. Member for Londonderry, East (Mr. Ross).
The hon. Member for Torridge and Devon, West (Sir P. Mills) supported the regulations. He said that the Milk Marketing Board for Northern Ireland has produced an excellent paper on the subject. He did not however, tell the House that it utterly opposes the regulations. I can do no better than summarize some of the arguments that it makes. Frozen pasteurised cream could never previously have been imported into Northern Ireland. Whatever arguments there are about it being permitted in the rest of Great Britian, it was never before allowed in Northern Ireland. I know that there was a small importation of frozen pasteurised cream from the Republic of Ireland into Great Britain and I understand that some cream is imported from Normandy, but it never came into Northern Ireland.
I was a Member of Parliament when the vote on whether the United Kingdom should enter the Common Market was taken. On the night of that great debate, some hon. Members prophesied the very thing that is happening today — that the long arm of Europe would dictate policy to this sovereign Parliament. Their prophecy has come true. I am glad that I voted against membership. I remain utterly opposed to membership of the EC.
The European Court of Justice might have ruled that the Government of the United Kingdom must permit the import of UHT milk, but we were informed by the Secretary of State for Northern Ireland that the European Court's ruling permitted the United Kingdom to lay down quality standards for imported products. He said that there would have to be subordinate legislation to specify standards enabling sampling and other protective measures to ensure that imported UHT milk was of the same quality as domestic produce.

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The Milk Marketing Board for Northern Ireland argues in its paper about the serious contaminant chlostridium botulinum which produces the most lethal toxin known to man. It is not normally found in British milk but it is found in the soil and if hygiene during production and processing is not of a high standard, milk can be contaminated by the heat resistant spores of that extremely dangerous organism. The board recommends that the required heat treatment be raised to 140 deg C for two seconds. That is the same as is required for UHT cream and UHT milk-based drinks in Britain. I do not understand why one standard should apply to domestic milk and another to the imported product.
The board points out the seriousness of the position on frozen pasteurised cream and says that such cream represents an even greater risk. It also says:
"Cows can secrete the foot and mouth virus in milk for several days before showing clinical signs of the disease and therefore imports of pasteurised cream means that not only is there a risk of bringing a virus into this country but also a risk of it being spread widely across the country before its presence is detected. Freezing has no effect on the survival of bacteria and viruses."
The board also says that foot and mouth disease is endemic in many of the countries from which the imported products will come. That is a vital point for Northern Ireland. The Minister of State, Northern Ireland Office, who had responsibility for agriculture in Northern Ireland, is well aware of the situation in Ulster.
The importation of raw milk from the Republic of Ireland into Northern Ireland also exposes cattle in Northern Ireland to considerable health risks. I am well aware that the small imports from Donegal to Leckpatrick have been carefully controlled. However, the new regulations open the door wide.
The Minister intervened in the speech of the hon. Member for Londonderry, East and suggested that health standards in the Republic were equal to those in Northern Ireland. The paper from the Milk Marketing Board for Northern Ireland states:
"Some progress on control has been made and at present the incidence of Brucellosis in Northern Ireland is almost zero, and while TB is still a problem the Northern Ireland position in relation to the eradication of both of these diseases is very much better than that which obtains in the Republic of Ireland … The extension of the existing importation from Donegal to one centre near to the border with the Republic to other centres throughout Northern Ireland from all parts of the Republic must seriously undermine the attempts which have been made to eradicate both Brucellosis and Tuberculosis from Northern Ireland."
Mr. Clement Freud: Quite apart from contamination and health risks, do not the people of the Six Counties share the views of the rest of the people of the United Kingdom that the taste of UHT is quite foul?
Rev. Ian Paisley: I certainly agree with the hon. Gentleman. It is Utterly Horribly Tasting.
In its wisdom, and after much debate, this House set up the Northern Ireland Assembly, which was given the responsibility of scrutinising proposed legislation. Yet this legislation did not come before the Agriculture Committee of the Assembly, of which I am chairman. Another hon. Member who hopes to speak later is also a member of that committee. In a letter that was hastily delivered to the Northern Ireland Assembly, Lord Mansfield, the Minister in charge, said:
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"The Ulster Farmers' Union, the Milk Marketing Board for Northern Ireland, the Northern Ireland Dairy Trade Federation and the Ulster Farm Bottlers' Association have been made aware of the intent of the regulations and are content."
All those organisations have been in touch with us, and not one is content. They are all protesting the regulations and are making it clear that they are completely opposed to them.
How will the Minister police these regulations along a border which the security forces cannot protect from the bringing in of arms, bombs and other terrorist equipment? He should name the three ports of entry.
Mr. Butler: I think it would be helpful if I were to tell the hon. Gentleman that the three ports of entry will be the port of Belfast and the frontier posts of Newry and Armagh. They will be useful in ensuring that there is limited access. Of course, there is little that can be done, as he knows better than I, to prevent the sort of traffic, both of animals and goods, that occurs across the border from time to time.
Rev. Ian Paisley: When the hon. Gentleman talks about Armagh he should define where that entry post is. There is no entry post actually in the city of Armagh because it is not on the border. Where in county Armagh will the milk come in? Is it to be Crossmaglen or some other place? The Minister will have to come clean with the House and tell us exactly where it is. He did admit that there is a problem. If there is not proper policing and raw milk comes in, it will have a detrimental effect on the high standards that he knows prevail in the milk industry in Northern Ireland.
The dairy industry is very important to the economy of Northern Ireland. It does not need the Minister slamming it. Instead, it needs his defence and support at this critical time when jobs are at stake.
9.46 pm
Mr. Thomas Torney: I must declare an interest in that I am sponsored to the House by the Union of Shop, Distributive and Allied Workers, which is very much involved because the import of this milk will cause much unemployment among our members and among members of the Transport and General Workers Union, with which we share the mass of trade unionists who work in the dairy industry.
I listened carefully to the Minister's statement and I could not help feeling amazement at the naivety of what he was telling us or his lack of understanding or knowledge of the working of the milk distribution industry. In his decision to include sterilised milk and frozen pasteurised cream with ultra heat treated milk, the Minister has taken upon himself a grave responsibility. I wonder if he has briefed himself properly on the industry with which he is meddling. What he has done so far will cause the disintegration of the industry. Does he realise that the liquid milk market represents 9 per cent. of the retail food index and that the annual retail value of the industry is £2,500 million? I hope the Minister is listening to this, because he may learn something.
Each person in the United Kingdom uses 4·5 pints of milk per week; that is 12 pints of milk per household. There is a daily delivery of 33 million pints of milk to 16 million homes. According to a survey done not by the Socialists but by the Dairy Trade Federation, 98 per cent. of customers are satisfied with the delivery service. If the

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Minister does not wipe the industry out at a stroke he will seriously weaken it and certainly cause considerable unemployment among its workers.
The hon. Member for Torridge and Devon, West (Sir P. Mills) chided the Opposition for being unpatriotic. No one could suggest that the Dairy Trade Federation is Socialist, and it is very much opposed to the regulations that the Minister is introducing. It represents 4,500 dairy companies and co-ops throughout England and Wales. Likewise, the Milk Marketing Board is hardly Socialist. It is as opposed as I am to the orders. The Minister does not appear to care about the 75,000 full-time workers in the milk industry—those in distribution, the roundsmen, the supervisors and those in the dairies. [Interruption.] There are obviously other Conservative Members who do not understand the implications of the orders on our dairy industry. They think that I am speaking rubbish.
A large proportion of the 75,000 employed in the industry will be thrown out of work by the loss of the doorstep delivery system. I know that Conservative Members find that fact hard to swallow, especially the Minister. He is a shrine-worshipping admirer of the Common Market. He does not care that it is interfering with our industry and that British jobs will be lost.
The Minister has not thought the matter through. I wonder whether he has been under pressure from Cabinet, or whether we are trading off milk to secure concessions in another area of the EC. Perhaps the Minister will tell us that, or perhaps he will not.
The Parliamentary Secretary stated clearly on 10 May that the orders, to which we agreed almost on the nod, would apply only to UHT milk. Why has there been such a drastic change in Government policy? Why are sterilised milk and pasteurised cream now included? Why has the Minister sold out? Why has there been a change of policy with a change of Minister?
Sterilised milk will seriously damage the daily doorstep delivery system. My hon. Friend the Member for Birmingham, Erdington (Mr. Corbett) said earlier that 36 per cent. of people in his area use sterilised milk. I know that in Bradford about 20 per cent. of doorstep delivery is sterilised milk. A breakdown in the daily delivery system will cause unemployment. Jobs will be lost not only in distribution but right back to the farming industry.
It is interesting to note that where sterilised milk is used more, in areas such as Birmingham and Bradford and most of the north of England, there is considerable unemployment. In my constituency, unemployment is higher than the national average. People would prefer to buy their milk from the milkman and have it delivered on the doorstep, but if in the shops or at the supermarket imported milk is cheaper by 2p, 3p, 4p or 5p a pint, they will buy that milk because they cannot afford the higher price. People want to pay less in times of mass unemployment.
I do not know how the Minister can bury his head in the sand and say that the milk tastes nasty. Of course sterilised milk does not taste nice. I do not like it. The dog belonging to the former Minister of Agriculture, Fisheries and Food did not like it either. The right hon. Gentleman told us that. [HON. MEMBERS: "That was UHT."] I know that it was UHT. Sterilised milk does not taste nice either.
If one's husband is out of work, and probably one's teenage children as well, one will try to save some coppers by walking down to the supermarket to buy the milk. That
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is where the rub will come. It will mean the breakdown of our daily delivery system. In most of the country it will mean considerable unemployment.
The Minister does not seem to have considered that the economics of the milk distribution system is such that it needs only a small loss of a pint here and a pint there to make it unviable. The cost of delivering milk to the doorstep is so high that, as soon as a few pints here and a few pints there are lost, the system becomes unviable and the delivery system stops.
I am certain that the Minister will live to regret his action that he has taken. I only hope that when the regulations go to another place they are thrown out lock, stock and barrel. I hope that Conservative Members will not just pay lip service to their opposition to the Government's proposals, but will come into the Lobby with us against the regulations.
9.57 pm
Sir Hector Monro: This is not the first time that the hon. Member for Bradford, South (Mr. Torney) has ruined his case by exaggerating. It is sad that he bandied about figures that he could not substantiate.
I am concerned as much as anyone about the production and sale of British milk, whether it is fresh milk, cream or manufactured milk. I am interested in the producers, the dairy farmers and the manufacturing plants and, of course, doorstep deliveries. Moreover, we are all concerned about jobs in the milk industry. Therefore, one does not welcome the regulations, but one must accept—the Opposition do not seem to be prepared to do so— that there is no alternative to introducing the regulations if we are to abide by the European Court——
Mr. Torney: I do not agree. Why not go to the European Court again?
Sir Hector Monro: The hon. Gentleman has already spent too much time nattering. I wish that he would shut up.
Our objective should be, not to listen to the gloom and doom of the Opposition, but to follow the example of my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills), who highlighted the super qualities of British fresh milk and British dairy products, which are real value for money. The housewife should always put them first and not contemplate foreign imports of UHT.
We must not be afraid of an inferior imported product. We must go out and sell our product, which is the finest that can be produced. We can sell it on its own merits and also maintain our excellent door-to-door delivery service. I believe that it is possible for it to continue, with all the advantages that hon. Members mentioned. It provides a social service. My morning paper is delivered each day by the milkman.
There is no alternative to accepting the regulations. The pass was sold by the Labour Government in 1977, but Labour Members have kept remarkably quiet about their deep and distant past and their failure to stand up then for our British dairy product. The judgment of the European Court has made it essential for the Minister to bring in these regulations. Consequentially, the sterilised milk and frozen pasteurised cream that has, in any event, been coming in during the past seven years will be allowed in, in full.
We must concentrate, not on the decision that we have had to take, but on making certain that the regulations are

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carried out as stringently as possible and that we can be certain that the rules laid down for heat treatment and hygiene are strictly enforced on the milk that comes in.
I am interested in the number of ports that have been mentioned for entry points for the products, and I was thinking earlier that I wish that they were all north of Lerwick.
I should like the Minister to comment a little further on the uncertainties that we all have about the heat treatment, the temperature and the time for which it must stay at that temperature. I hope that he will re-emphasise that he is completely satisfied that the treatment recommended and enforced by the regulations will clear this country from any danger of foot and mouth. If he could say that again firmly, that would be most helpful.
I appreciate as much as anybody the enormous trouble that the Milk Marketing Board, the National Farmers Unions in the home countries and the dairy trade have taken to give advice to the Minister about the regulations, and I am glad that he has listened to our representations and, where possible, fulfilled them. The message tonight should be, "Get out and sell our home products to defeat the imports that could come into the country because of these regulations."
I do not think that we shall be flooded with UHT milk from the continent. The British housewife has more sense than to be conned by this evil-tasting liquid from the Continent. The Milk Marketing Board has already accepted this tremendous challenge and has many new products under consideration, which it is developing and which will be welcomed by the housewife when they come on the market. In this way, we shall help to reduce the supply of surplus milk in Europe. [HON. MEMBERS: "How?"] These new products will help to deal with increased production. It is a challenge to the British dairy industry, and one that can be won.
10.4 pm
Miss Joan Maynard: The Minister is asking the House once again to capitulate to the Common Market, and that is a disgrace. He talked about the law of the land, but this is not the law of this land but the law of the EC. So much has been lost of our sovereignty that we do not make our laws; they are made in the EC.
The Minister talked about widening choice, but this action will not do that. The loss of the doorstep delivery will narrow, not widen, choice. This debate highlights yet again what a disaster it was for the British people that we ever joined the EC. We think of what it has cost the British taxpayer in contributions to the common agricultural policy and in higher food prices, when we could have bought more cheaply on world markets. We think of what it has done to the steel industry in the city part of which I represent.
The tragedy is that tonight it is the turn of the dairy industry, and the House is being treated poorly because now the imports start coming in; we should have had this debate earlier. Obviously this action will be good for the rest of the Common Market. After all, they, not us, have a surplus of milk and they want to unload it on to our market. The step we are taking could affect the jobs of
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farmers and farm workers. Some dairy farmers have already been paid to leave the industry, but there is no compensation, I regret to say, for farm workers.
Mr. Corbett: They have been paid to leave for only five years.
Miss Maynard: My hon. Friend is right; having taken a golden handshake, the farmers can come back after five years and start up again in the dairy industry. The jobs of tanker drivers, those employed in the bottle industry, those who work on the electric vehicles and the milkmen are all at risk. Many things are at stake, not least the interest of the consumer, who depends greatly on the doorstep delivery. As others have said, the old, the disabled and the sick are particularly dependent on this service, especially the old in rural areas who do not have motor cars but only an expensive bus service, if they have a bus at all. How they will manage if the doorstep delivery goes I shudder to think. Thus, the rural communities, the consumer generally and the people directly involved with the industry will be the sufferers.
Reference has been made to USDAW and the campaign that it has been running. USDAW and the Transport and General Workers Union have tried to alert people to the threat to the doorstep delivery. I regret that the hon. Member for Torridge and Devon, West (Sir P. Mills) is not in his place, because he did not seem to think that we should be alerting people to the dangers that we say exist. He does not appear to be proud of what we are doing tonight; he wants this measure introduced by stealth. That would be the wrong way to pass legislation. I have always been opposed to our membership of the Common Market and feel therefore that I have every right to speak against the regulations.
I was glad to see a big and effective lobby of Parliament on 1 November against the importation of UHT milk. In other words, some of us have done our best to alert people to the dangers. At present, UHT milk accounts for only 1 per cent. of retail milk sales in Britain. Sterilised milk is a different proposition and the figures for that vary from 10 per cent. to 30 per cent. for different parts of the country.
We must not forget the health question; foot and mouth and TB are endemic in the rest of the EC, and I believe that milk imports could spread infection here, particularly as frozen pasteurised cream has been included, because freezing does not kill bacteria.
UHT milk has been cleared safe and healthy, but is it? A recent DHSS booklet recommends that the temperature of UHT should be raised from the current 132 deg. to 140 deg. C and that the time of treatment should be extended from one to two seconds. The DHSS believes that failure to extend the treatment in that way could risk botulism being brought into this country. Those are serious matters and I hope that when he replies the Minister will deal with them. I hope that we shall be told why the Minister agreed that sterilised milk and frozen pasteurised cream should also come in.
The number of ports involved should preferably be restricted to one, because I should like the products to be blocked there. That would give us a breathing space in which to attempt to change the regulations. We could then use our stick, which is that we shall not continue to pay our huge contributions to the common agricultural policy

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if such action is taken against our industry and consumers. Thus, it would be easier to deal with the problem if the number of ports was restricted to one.
However, in the final analysis, the problem will be solved only by Britain coming out of the Common Market; and the sooner the better.
10.10 pm
Mr. Edward Leigh: I should like to take the middle way in this debate. The fact that a foreign court is attacking one of our greatest institutions says much for the crassness of aspects of the EC.
I agreed with everything that my hon. Friend the Member for Congleton (Mrs. Winterton) said about preserving our doorstep deliveries, but for the past two hours much of the debate has been fought in an atmosphere of unreality. To listen to the Oppositon one would think that in this case Britannia was throwing herself at a French lover, whereas in fact she is tied to a post and being raped against her will. We have no choice in this matter, given the generalised principles set out at the court hearing. We must abide by the regulations and that is why, unwilling and with a heavy heart, I shall vote for them tonight.
We should not be complacent. I take issue with my hon. Friend the Member for Dumfries (Sir H. Monro). It is not simply a question of the housewife making a market choice. She will be looking at a different product. Our fresh milk is characterised by being delivered on the doorstep, fresh in a bottle. However, there are now to be metric cartons. The product will be very different.
The hon. Member for Cambridgeshire, North-East (Mr. Freud) came in to the Chamber about two hours later than the rest of us and informed us that UHT milk was horrible, and I have to admit that he is right. However, the sort of UHT that will be available in six months' time will not be that horrible, because it will be low-fat milk.
In about six months' time, I envisage advertisements on television showing a housewife saying that she cannot tell the difference between UHT and fresh milk, just as she cannot tell the difference between Stork margarine and butter. Therefore, we face a grave danger. It is not good enough to say that we can rely on the great British dairy industry. We must rely on more sustained marketing from the Daily Trade Federation.
There is also a role for the Government, and if the Government cannot speak out, at least a Back Bencher like me can. Why cannot we do what the French do? Why cannot we do what the French did at Poitiers? I must take up a point made by the National Farmers Union in its excellent statement. Despite the strict controls and regulations that we have heard about tonight, so-called fresh pasteurised cream is on sale in Harrods. Yesterday I discovered that Kerrygold UHT milk is or sale in London hotels. That stuff is already getting into the country. Therefore, I hope that the Minister will put more resources into our ports in an endeavour to slow down the flood of UHT milk.
Let us be as ruthless and tough as the French. Let us take advantage of section 29, which gives us power to consider the health aspects of the product. We have already heard about botulism. I have been told that if UHT milk is heated to 140 deg C it is undrinkable, not only by humans but by dogs. The Minister said that he would look at the issue, but he must do so straight away. We must be like the prudent business man building up a business. We
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must be prepared to avoid, if not evade, tax. In working to rule on these regulations we must obey the law to the letter and preserve one of our greatest national institutions.
10.15 pm
Mr. Robin Corbett: We might as well meet head-on the conclusion of the Agriculture Committee in its first report for the 1979–80 Session in which it went into the likely impact of the importation of foreign milk. The last sentence in paragraph 129 states:
"In principle, however, we favour giving consumers the greatest practicable choice of what to buy and how to buy it."
That has some semblance of appeal. This milk-sop Minister is now over-zealously proposing to threaten the operation of that choice. The certain effect of these measures—there is no point in dodging it; this is not an exaggeration — will be to damage and to reduce the frequency of our daily doorstep deliveries.
We are told that, on the orders of the Common Market, we must admit UHT milk; but why, on earth, should we admit sterilised milk? It is as though someone stopped the Minister to ask him whether he had a penny and he said, "Take a pound." The Minister wrote me a letter on 16 November dealing with this point. The right hon. Gentleman told the House that, if we must deal with UHT milk, we might as well throw in the rest, and end the matter in one sitting.
Several hon. Members have said that the argument is not solely about UHT milk. This is where the Minister has gone overboard. He has volunteered to include sterilised milk in this regulation. Page 2 of a brief that has been ably prepared for us by the House of Commons Library states:
"It should be emphasised that the case was confined to UHT milk".
The brief refers to the judgment handed down by the European Court. I ask the Minister to think, even at this late stage, about sterilised milk. It is no good saying that sterilised milk accounts for 1 per cent. of the national market and 6 per cent. of the market in England and Wales. I was told in a letter from the Greater Midlands Cooperative Society Ltd. that in its area sterilised milk sales are more than 36 per cent. of all milk sales.
The Minister knows that an alteration of 1, 2 or 3 per cent. in the quantity of milk carried on the milk rounds, which have been carefully built up and sustained over the years, will make a difference. During debates on the egg market, the responsible Minister unfortunately told a meeting of egg producers that they should not be upset about French egg imports because they amounted to only 2 per cent. of the egg market. However, that small percentage upset the egg producers.
The Chief Executive of the Great Midlands Cooperative Society Ltd. Mr. Henn, underlined this point by stating:
"the Minister has extended the regulations unnecessarily to permit the import of sterilised milk".
It is no good the Minister saying that he is anticipating what might happen the day after next; he is too fond of doing that.
If the Government believe that we must have this measure, why do they not try for some transitional arrangement? The Minister of State replied to my letter to him:
"I must make it clear that the suggestion that the Commission would have been prepared to agree to a transitional period is unfounded."

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Never mind the Commission. Will the Minister be kind enough to tell us whether we asked other member states for a transitional period and if so when and with what result? Sections of the industry believe that it may have been available. I put it no higher than that. The facts seem to prove that such an arrangement was not sought by the Department.
Mr. Jopling: I do not know whether the hon. Gentleman recalls it, but I mentioned exactly that point. I said that I had good reason to doubt whether the Commission would have accepted any further delay in the nine months between the court's decision and the laying of the regulations. The Commission pressed us extremely hard during that nine months. I do not believe that we could have gone any further without laying the regulations.
Mr. Corbett: I understand what the right hon. Gentleman is saying. We seem to be the only country within the Community to jump through hoops of fire the minute the decision arrives from the European Court. We do not simply do what it tells us; we give it more than it rules that we should.
Mr. Jopling: If the hon. Gentleman is going to press that point he should remember that the court ruled in February and we did not lay the regulations for nine months. He will recall that when his Government were in power they had a pig support scheme which was challenged in the same court. The right hon. Gentleman, the then Minister, complied with the court within three weeks.
Mr. Corbett: No one is arguing that we should not ultimately respect the rulings of the European Court. Suppose that the boot were on the other foot and this was a ruling against the French. Would they have moved so quickly and widely to open doors to imports from this country? Of course they would not.
Paragraph 127 of the Select Committee report stated:
"we start from our strongly held belief that door-to-door delivery renders a valuable service to the community which it is highly desirable to preserve. It is a great convenience to many, particularly in scattered rural communities".
That point is extremely important, but the Committee might have added that it is also true of the village communities that exist in the heart of our inner cities such as Birmingham. It is important there for the elderly, the disabled and the lonely to have daily doorstep deliveries, because apart from the postman who delivers the giro cheque—received by the many thousands of people who have been forced out of work—the only regular caller is the milkman. Milkmen and women perform an extremely valuable service.
In its evidence to the Select Committee the Dairy Trade Federation at paragraph 119 said that
"consumption of liquid milk would decline by as much as 40 per cent; and that the effect of even a relatively small quantity would increase the unit cost of the delivery system to the detriment of its maintenance."
How can the right hon. Gentleman and his hon. Friends ignore such advice? At other times they cannot agree quickly enough with what the Dairy Trade Federation, the National Farmers Union and other such bodies say. In this case, after considered evidence to a Select Committee a Government Department says, "Never mind. We know best. Forget it all. Trust us."
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In plain English, the Dairy Trade Federation and the trade unions involved are saying — it cannot be disproved, and I do not want to exaggerate the position —that if UHT and sterilised milk from abroad get a toehold in this market they will start to chip away at the regularity and frequency of daily doorstep deliveries. I am not saying that they will disappear overnight. It may be that instead of deliveries on six days, they will be cut to five, from five to four, and then down to three. Once we start on that slope, despite the pious hopes of the hon. Member for Torridge and Devon, West (Sir P. Mills), the rot will set in on these rounds.
Mr. Hardy: Does my hon. Friend realise that it is inevitable that within a relatively short time we shall have a milk surplus similar to that in France. Is it imagined that the French will be as prepared to take our surplus milk as we seem prepared to take theirs?
Mr. Corbett: I am grateful to my hon. Friend. I listened to the contribution by the Minister, but it seems that he has not considered the matter.
France and other EC countries which are wallowing in a milk surplus — I emphasise that we are not — can almost afford, providing that they cover their transport costs, to dump the stuff in Britain. They have had their greedy eyes on our differently organised liquid milk market for years and have been working out ways of how to enter it. My complaint is that we have given them the keys to the gate. Britain has the finest liquid milk market in the world. It is the envy of Europe, and the Minister is prepared to gamble with its future.
The Minister was asked to be more specific about the way in which the regulations will be tested and policed. We have experience of other areas in which the Minister is concerned, such as the export of live food animals. He has been unable to satisfy the House that the regulations, however comprehensively drawn, are being adequately policed. How many extra staff will be employed in the ports of entry? Will there be any extra staff? What type of training will they receive? Answers are required to these questions.
We must be concerned, although we do not have a responsibility in the matter, about the conditions on the farms from which the milk originates. That point was raised by my hon. Friend the Member for City of Durham (Mr. Hughes), about which the Minister made light.
Is the Minister asking consumers to put their trust in a completed form which will be presented at the port of entry, amidst all the other duties for which the new staff will be responsible, a staff which will not have received adequate and proper training? How many consignments will be involved, what will be their frequency and by whom will they be inspected? We deserve answers to those questions.
Strong doubts and criticism have been expressed by Conservative Members about the regulations. I appreciate that the matter is well-understood, but I shall repeat it. There are no second chances when dealing with the regulations. If the regulations are passed, they will come into operation. If Conservative Members have doubts about the wisdom of the regulations and to where they may lead, the doubt belongs on the side of the consumer and daily doorstep deliveries. Those Conservative Members should take their courage in their hands and go into the same Lobby as Opposition Members.
10.30 pm
Mrs. Elizabeth Peacock (Batty and Spen): I contribute to the debate as a Member of this place and as a housewife. As a housewife, who is the person in mast households with responsibility for balancing the family budget, I look to buy quality food at the best possible price. I look also for certain standards of service for the community. The delivery of milk to our doorstep is a necessity. The British milkman provides a social service for the sick and the elderly by ensuring the supply of a basic food item and at the same time keeping a watchful eye on their health and mobility.
I suspect, from European and American experience, that should doorstep deliveries disappear, milk consumption will fall. The delivery of milk to the doorstep—to about 16 million doorsteps every day —encourages the young housewife with young children to use milk as a means of providing a balanced and basic diet. If milk did not arrive daily on their doorsteps, I am convinced that the diets of many young children would suffer. That is something that we cannot allow to happen.
I am seriously concerned about the way that milk imports have been handled. I clearly understand the ruling given by the European Court of Justice that British health and hygiene regulations can no longer prevent the import of UHT milk. As we are in Europe and committed to it, we must comply with the court's ruling, but that is as far as we need to go. At the best of times UHT is a poorly flavoured product, and I understand that it has about 2 per cent. of the British liquid milk market. It is a milk that is not really to the British taste. I know from my own experience that British UHT milk is no better and will have no greater attraction to the British housewife.
The Minister need have gone no further than the original regulations because we could have complied with the European court ruling. The British housewife would have rejected the product and British farmers would have been moderately happy with a challenge to a small part of their market. By introducing regulations allowing the import of sterilised milk and frozen pasteurised cream, the Minister is taking steps that he need not take—steps not required by the European court. Sterilised milk, with a 7 per cent. share of the national market, has much greater significance in the west midlands, Tyneside and parts of Yorkshire and Lancashire, where it has a much larger share of the market, than elsewhere. In these parts of Britain milk producers and dairymen will come under pressure unnecessarily. It is in these areas that sterilised milk has traditionally been sold from the retail milk float or from the corner shop. With the regulations we are to get an invasion of French and other European sterilised milk, which will head inevitably towards the large supermarkets, to the serious disadvantage of the milk round and the corner shop.
I suspect that French sterilised milk will be cheaper, at least to begin with. French farmers' co-operatives will embark on a marginal costing exercise for an export market that will not affect profit margins in France. They will take the view that cheap sterilised milk is a better bet than making butter or milk powder, which is the usual use for this milk. Inevitably, our supermarkets will take the opportunity to use French sterilised milk as a loss leader by selling at or near the price they pay for it, so grabbing a larger slice of the British milk market from the dairies. That is something that they have wanted to do for years.
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On the face of things, the British housewife should be happy. She should be able to buy cheap sterilised milk, but I do not suppose that she will be able to do so for long. The French farmers will get greedy. The British supermarkets will become tired of handling large volumes of milk that take up valuable shelf space for a poor margin, and up will go the prices. In the meantime, milk rounds will have gone and the corner shop will no longer sell milk. For these reasons, the Minister should reconsider the regulations.
I cannot understand the logic of allowing the import of frozen pasteurised cream from other parts of Europe when it has been arriving for some years from the Republic of Ireland. The housewife finds frozen cream a useful item to have in the freezer, and when it is produced from British milk it is obviously a first-class product. However, when produced from European milk there must be some doubt. The regulations, by implication, continue to ban the import of pasteurised milk, and as the process of pasteurisation has a similar effect on the bacteriological safety of milk and cream, with or without freezing, there must be a potential health hazard from imported pasteurised cream.
The regulations need more consideration. I wish to have the best value for the British housewife, continued delivery to our doorsteps, and the safety of imported milk products. That is impossible under the regulations as they are framed.
10.35 pm
Mr. James Nicholson: The Government's decision to allow the importation of UHT milk into the United Kingdom will have serious and far-reaching effects on the milk industry for many years. It is hard enough to accept the importation of UHT milk, but, as the regulations also propose the importation of frozen pasteurised cream, they are unacceptable to me and to my colleagues.
The British and Northern Ireland housewife has come to expect the doorstep delivery of milk as part of her way of life, which is quite right, since it is fresh and of high quality. It is helpful to both the urban and the rural dweller, and perhaps the rural dweller gains most benefit because he does not have equal access to shops and supermarkets. The service is also of great benefit to the elderly and the disabled. Any move to destroy the service must be opposed vigorously and never allowed to reappear. Unfortunately, only a small reduction in doorstep deliveries will make them uneconomical.
The effect of the regulations in Northern Ireland will be great, because not only will we be open to imported UHT milk from all members of the Community but our markets will be easy prey because of our long frontier with the Irish Republic. The Government's decision to allow the importation of UHT milk, although damaging to Northern Ireland industry, could have been understood in the light of the European Court's judgment, but I cannot understand what possessed the Minister to allow the importation of pasteurised cream into Northern Ireland. It will have a disastrous effect on our disease-free status, especially as cream will be admitted from countries that have endemic foot and mouth disease. Northern Ireland is extremely proud of its achievements in disease control, and I pay tribute to the Department of Agriculture for the role that

941
it has played in that. However, it was not achieved without great expense and sacrifice, and these proposals have thrown away all that has been achieved.
An illustration of our success is the brucellosis eradication scheme. To the best of my knowledge, only four out of the many herds in Northern Ireland are restricted because of brucellosis. That status is worth preserving and protecting. The Republic of Ireland has no such achievements, and the other European countries are even worse, especially with the dreaded foot and mouth disease. At present the only raw milk imported into Northern Ireland, as the hon. Member for Antrim, North (Rev. Ian Paisley) said, comes from one creamery in the Republic and is for manufacturing purpose only.
Will the Minister clarify further his statement on the three points of entry into Northern Ireland? He mentioned the port of Belfast and also Newry and Armagh. The last named is the name of my constituency, and I can understand Newry being one of the points of entry, but I do not know how Armagh can be one.
Mr. Butler: The hon. Gentleman knows that the frontier post at Middletown is known as the Armagh post.
Mr. Nicholson: With all due respect to the Minister, that is the first time that I have ever heard Middletown called the Armagh border crossing post.
Mr. William Ross: The creamery that was importing the milk is close to Londonerry on the Donegal-Tyrone border. That means that if the milk is imported through the points of entry that have been named it must be carted right across the Province before it reaches the creamery.
Mr. Nicholson: I welcome my hon. Friend's valuable comment. What he says is true. The milk will have to be driven right through the country to reach the entry point at Middletown.
If the regulation is implemented, lorries will be travelling all over Northern Ireland. How will controls be exercised if a tanker of imported milk is mixed with milk produced in Northern Ireland in a milk silo? The regulation is a recipe for disaster.
The regulation states that raw milk can be imported from the Republic of Ireland when the Department is satisfied that such milk, or any skimmed milk derived from it, will not be used for sale for direct consumption as liquid milk or cream. It would therefore appear that pasteurised cream derived from this imported raw milk can be used for sale for human consumption as cream. If that is not so a processor in the Republic of Ireland can produce frozen pasteurised cream and sell it in Northern Ireland, but a processor in Northern Ireland cannot produce frozen pasteurised cream from the same milk and sell it in his own country. That will have serious consequences for the Northern Ireland milk industry.
Inquiries that I made recently into the effectiveness of freezing from a bacteriological point of view all point to the same answer—freezing has no bactericidal effect. Nor does it have any effect on viruses. If imported frozen pasteurised cream contains pathogens, its being frozen will not afford any protection. Indeed, when the cream is thawed the organisms will be reactivated and multiply rapidly. Does the Minister intend to allow the importation of pasteurised cream? If so, how will he stop the
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importation of pasteurised milk? If he allows the importation of the one he will have lost the argument if he does not want to allow the importation of the other.
Mr. Butler: The hon. Gentleman's point about frozen heat treated cream is important. I should like to add to what I told the hon. Member for Londonderry, East (Mr. Ross). Frozen pasteurised cream will not be allowed in from countries where the health status or the heat treatment is in doubt. As to foot and mouth disease, I can confirm that, for Northern Ireland, that product will not be allowed in from countries where foot and mouth is endemic.
Mr. Nicholson: What control or monitoring will there be of imported milk, in whatever form? I understand from my hon. Friend the Member for Londonderry, East (Mr. Ross) that other European countries have excellent standards of hygiene. I do not wish to cast aspersions on any other European country, but it is widely accepted in Northern Ireland that standards of hygiene in the United Kingdom as a whole, including Northern Ireland, are the highest of all and that the milk produced in the Republic of Ireland comes nowhere near that standard.
We are told that there will be designated crossing points, but will they be constantly manned, or will there be a spot check system which will not be fully effective? Will the Minister assure the House that any certificates issued by the Department will be effective and not just window-dressing, so that they will improve the high standard of disease control in Northern Ireland rather than dismantle all that has been achieved?
I am told that at no point in the consultations between interested parties were the implications of imported frozen cream seriously discussed. I implore the Minister to think again about the implications of the regulations, especially in regard to frozen cream, because that is the nub of the problem. Will he consider the serious consequences for the dairy industry of the United Kingdom as a whole and Northern Ireland in particular?
10.46 pm
Mr. Colin Shepherd: I am delighted to be able to get into the debate at this late stage. I shall try to finish by 10.50 pm when I understand that the winding-up speeches are to begin.
The debate has been fascinating, especially for the magnificent rhetoric from Opposition Members. I wish that they had been such strong and avid critics when their right hon. Friend the Member for Lewisham, Deptford (Mr. Silkin) was sliding through the moves which allowed the pass to be sold and completedly undermined the Government's position. It is difficult to launch an attack when standing on quicksand, and the Opposition's attack had the power that one expects from people in that position. My right hon. Friend the Minister was dealt a Yarborough and he deserves the sympathy of the House for having to try to make tricks when there are very few to be made. We must now give as much constructive thought as we can to finding ways to resolve these issues.
Leaving aside the schizophrenia and selective recollection of the Opposition, I assure my right hon. Friend that I shall support him in the Lobby on this, but that does not mean that I am not critical. I am worried about the UHT specification. I understand that the dairy industry would accept the higher specification. I hope that

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that is so and that the Minister will press the case and secure the higher specification because I believe that it is right.
Much has been said about frozen pasteurised cream. I especially welcomed the statement of my hon. Friend the Minister of State, Northern Ireland Office, that there would be no imports if the health status of the exporting country was in doubt. I hope that that is correct because I never want to witness again the devastation caused by foot and mouth disease in 1967, when such a vast proportion of the country's beef herd was destroyed with all the ghastly funeral pyres and burials involved. We must ensure that that never happens again.
Chemical content has not been mentioned so far. Are the batches imported capable of being identified so that if a sample is found to be below specification every part of that batch can be returned? One worries about residual pesticides and antibiotics in products from countries in which the regulations may not be so strict.
No speech would be complete without mentioning the doorstep delivery. In my view, it is under attack even now from our own dairy industry. People in that industry are queueing up and falling over themselves to tender supermarkets for the supply of fresh, pasteurised milk which undercuts the doorstep delivery.
That is the dilemma facing the dairy trade and the country—[AN HON. MEMBER: "Why compound it?"] If the damage is being done now, what happens is immaterial. We must take steps now. Marketing is the answer. The challenge lies with the National Dairy Council, the Milk Marketing Board, the Dairy Trade Federation and the Glass Manufacturers' Federation. They must come together to devise a PR campaign that makes it clear that if we do not use the doorstep delivery system, we shall lose it.
It is no good people experimenting and saying, "I shall not use it this week. It is cheaper in the supermarket", because if they do, the service will disappear. That is the message to get across. Anything else is a red herring.
10.51 pm
Mr. Martin J. O'Neill: This has been a lengthy debate which has been significant for many things, not least for the fact that the Government have been supported by only one hon. Member who did not have a pecuniary interest in doing so or had not benefited by obtaining some ennoblement for a previous display of loyalty.
Virtually every hon. Member has been dismayed at the Minister's feeble attempt to make the best of a bad job. Our misgivings about membership of the Community have been underlined by the fact that we have considered these regulations under the negative procedure. As a result, we have been afforded no opportunity to amend them.
The regulations are the result of rushed legislation, which we now know to have been passed on a misunderstanding, because some of the areas that we had assumed would not be considered are now included.
In the dying days of the last Parliament, the Government felt that unless they acted speedily in response to the judgment of 8 February, something even worse would befall us. We can only surmise what our French friends would have done had they been faced with a similar challenge from the European Court. I doubt whether they would have acted with the same celerity.
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We must decide whether United Kingdom systems of controls will be adequate, as paragraph 29 of the judgment said, to protect the health of our consumers. Our contention is that they are inadequate to meet the responsibilities placed on the United Kingdom Government. We shall endanger the economic viability of the British dairy industry, which at the end of the day is the only sure and safe defence of the health of the British consumer.
The manner in which the judgment has been phrased inhibits the right of the British Government to take reasonable precautions to protect the consumer by ensuring that the powers to insist on the reprocessing and repackaging of milk are not open to us. Had they been, many of the misgivings of the British glass manufacturers might well have been met. That would certainly have allayed the fears of my hon. Friend the Member for Bassetlaw (Mr. Ashton), who was concerned about the production of glass bottles in his constituency.
We are not satisfied with the Minister's complacency or that of his office. In a letter of 24 June to the chief executive officer and general secretary of the Co-operative Union Limited, his office said:
"I am sure the response you have received"—
this was a response to a petition which attracted more than 850,000 signatures in defence of the doorstep delivery service—
"is a true reflection of the very strong measure of support among consumers for the continuation of doorstep deliveries of milk, and this should prove to be the system's greatest safeguard."
We have heard from the Minister this evening various statements like this. In the two speeches of support we have heard the reiteration of the humbug that somehow the traditional loyalty of the British consumer to the service will withstand any challenge. Yet we know that the dairy industry is on a knife edge and it will take only a small movement from one source to another, from British milk to imported milk, to make a tremendous difference to the fragile economic structure of the industry.
This is an efficient sector of agriculture. We drink more milk than any other part of the Community, apart from Ireland. We are all conscious of the fact that there will be more dumping of surpluses by continental producers. The skimmed milk we have heard about will be what is left after the cream has been removed for the production of butter for intervention buying. Continental producers will get rid of the milk which they cannot sell in their own countries by dumping it in the United Kingdom at the expense of British producers and at the end of the day of the British consumer as well. Once they have broken the back of the British dairy industry they will seek to raise prices.
We recognise that legal constraints are imposed upon the Government. Requests have been made for a transitional arrangement. We have heard from the Minister a feeble excuse that if we were to ask for a transitional arrangement nothing would happen, and we would probably end up in a worse position. Yet when the Transport and General Workers' Union met two of the commissioners, Mr. Tugendhat and Mr. Richard, in Brussels, Mr. Richard said that he was prepared to seek the agreement of other commissioners to lessen the impact of the new milk regime. We are told:
"In that regard the discussion concentrated on a transitional period of, say, five years. His support"—
that is, Mr. Richard's support—

945
"was conditional on obtaining the agreement of the UK Government to a transitional period. Unless the UK Government was prepared to support such a transitional period Mr. Richard felt that he had no chance of gaining support for the proposal in Europe."
We would be grateful if the Minister would tell us what he told Mr. Richard and whether he offered to back him in his attempt to defend the Britsh dairy industry by seeking the transitional period we need. If the Minister would care to intervene I would be happy; it might assist the smooth running of the debate. If instead he wishes to use his 20 minutes, then I look forward to hearing what he has to say.
The demand for these products is limited in many parts of the country. There is a limited demand for UHT milk. We are told that the British consumers are resistant to change, but, given the prevailing economic circumstances, when they are faced with a cheaper alternative people will initially buy UHT milk as an additive for tea and coffee. Then they will use it as a substitute for British milk with cereals and the like. One can only guess at the impact that UHT milk will have on institutional cooking and on the catering and baking industries. The denial of such opportunities to the small dairies, and even to the larger producer-processors, can only endanger a great number of our dairies and, ultimately, the retail dairies that are so dependent on their connections with producer-processors.
Many of my hon. Friends have spoken of the problems that will be created for the doorstep delivery system. We heard a courageous speech from the hon. Member for Congleton (Mrs. Winterton), who showed such a lack of enthusiasm for the Government's proposals that she may join us in the Lobby. She said that the doorstep delivery was a unique social service. In many parts of the country it certainly provides an informal social service, on which many elderly people and single parents depend.
In Scotland doorstep deliveries are only about 50 per cent. of sales, and much is made of that fact. But the areas of low penetration mainly consist of tenements and multi-storey blocks that make delivery difficult. Throughout the country there is a tremendous dependence on the work of the milkmen. If the doorstep delivery system is removed, we could go down the same road as the Netherlands where, since 1967, milk consumption has fallen by 27 per cent. and the number of milkmen almost halved from 9,000 to 4,900. During the same period in the United Kingdom, the consumption of milk fell by less than 12 per cent.
We know that, because of demographic changes, consumption will fall in the near future. There are likely to be fewer children. We hope that they will drink more milk, but it will not be enough to sustain the present level of demand. We have a responsibility to consumers and to the protection of their health. That protection will be afforded through milk consumption.
If the doorstep delivery system is removed or considerably reduced, there will be a massive change in the fortunes of many of the co-operatives. I am a member of the Co-operative party, although not sponsored by it. I am conscious of the tremendous emphasis it places on its dairy activities. It is the largest farmer in the country. It is responsible for 25 per cent. of dairy produce. In some areas small, franchise dairy companies deliver co-op milk. The co-op plays a substantial role. It is right that my hon. Friends should seek to defend that organisation and come
946
to its assistance when it is under threat. It is right to point to the levels of unemployment that could be created by a change in the fortunes of the dairy industry.
But we also recognise that there are legal constraints. That is why we ask the Minister to reconsider a transitional period. Under article 30, the Government are running scared in case further proceedings take place. We want specific assurances that inspections will be robustly applied.
I have been given a copy of the Press Association tape, which states:
"Milk rules may deter imports."
I do not know whether the individual who reported that was in the House when the Minister was speaking. He failed to convince many of his colleagues about the robust way in which the inspections would be applied.
We have heard that 17 ports in England and Wales and two ports in Scotland are to be used for access. Many of us are shocked that there should be so many access points. There has been a dramatic rundown in the support for many of the environmental health services provided by local authorities and so on because of local government cuts. Many of the ports may have great difficulties in meeting their responsibilities. It was suggested that people should go abroad to look at the point of production, and that we should go to the farms abroad and see what happens. That was pooh-poohed by the Minister. At the moment proper inspection facilities are made available in abattoirs on the continent. At one time inspectors even went to Argentina to inquire about the quality of the meat that was being imported into this country. One could suggest that if we can send inspectors to Argentina to look at the meat that we used to import, milk could be imported through Port Stanley if we wanted to do the job properly. The French have been meeting their obligations. The hon. Member for Harborough (Mr. Farr) said that if we wanted to "do a Poitiers", it would be difficult for the national sponsors of the Union Laitière Normande to complain about the way in which their opponents were behaving.
The hygiene provisions have failed to convince the House that adequate protection of the British consumer will be provided through the regulations.
Mr. Butterfill: Does the hon. Gentleman know whether the co-operative movement has been prepared to give an undertaking that it will not sell UHT milk through any of its retail outlets?
Mr. O'Neill: If the hon. Gentleman had been here earlier, he would have had the opportunity to speak to the spokesman for the co-operative movement, my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris). I understand that it has plenty of milk that it could convert into UHT and sell if it wished, but from its own processing and production plants. That question does not arise. If the hon. Gentleman had done the House the courtesy of being here for most of the debate, he would have been in a better position to ask the question.
The Government's defence of frozen pasteurised cream is that we need a permanent and defensible regime, and we cannot afford to have any more alterations. However, we feel that the contrary is the case. In the past we allowed UHT cream and flavoured milk into the country without second treatment. It is argued that there is now no reason why we should not allow in UHT milk. A Ministry of

947
Agriculture. Fisheries and Food circular of 3 March 1976 said of the importation of UHT and cream and flavoured milk:
"This proposed amendment would have no effect on existing arrangements relating to milk for liquid consumption."
The point is simple. The reason why the Dairy Trade Federation was prepared to go along with the deal of my right hon. Friend the Member for Lewisham, Deptford (Mr. Silkin) was that it was clear that there would be no question of endangering the provision of milk for liquid consumption. No problems would arise. No such assurance has been, or can be, given by the Minister.
The fundamental weakness of the Government's case is in the regulations providing for fresh pasteurised cream. If one accepts the logic that if one has UHT cream, one must agree to have UHT milk — that is what the Government are arguing—it follows that if we agree to pasteurised cream, we agree to pasteurised milk. There are two possible scenarios. One is that the allowance and acceptance of UHT milk will result in a decline in pasteurised cream and milk, and the other is that the importation of pasteurised frozen cream will lead to pasteurised milk. Either way, we shall see the collapse of the United Kingdom pasteurised milk industry.
We said earlier that the regulations go further than what was agreed before the general election. The grudging consent that we granted did not extend to the range of options included in the regulations. There is now a danger to the financial framework of the dairy industry that did not exist before, and inadequate protection for the health of the consumer. The unhappiness of the House is shown by the almost total rejection of the regulations by almost every speaker tonight. We recognise that the regulations have been pushed through with indecent haste. If we believe in the protection of our industry, of the dairy workers, the processors and the farmers, we must prevent the dumping of continental milk in this country. To do that we must throw out the regulations.
Mr. Nicholas Winterton: On a point of order, Mr. Deputy Speaker. You are, I understand, the protector of the interests of Back Benchers. May I point out to you, and ask you to take this point back to Mr. Speaker, that 39 per cent. of the time of this debate will have been taken up by speeches from the Front Benches? Is that fair to the Back Benchers—particularly on the Government side of the House. because we are in a majority—who wish to express strong views on a subject in which they have taken a considerable interest for many years, and who wish to vote against the Government tonight?
Mr. Deputy Speaker: I understand that the hon. Gentleman was one of those on both sides of the House whose hope to speak was disappointed, and I shall convey his remarks to Mr. Speaker.
11.11 pm
The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. John MacGregor): I understand the frustration of my hon. Friend the Member for Macclesfield (Mr. Winterton), because I found myself in that position on many occasions in the past. However, many issues have been raised in the debate, which make it necessary for me to reply to them, in fairness to those who have raised them. The speech of my right hon. Friend the Minister was prolonged by the fact that he gave way many times to the legitimate questions put to him.
948
I welcome the hon. Member for Aberdeen, North (Mr. Hughes) to the Front Bench, and congratulate him on his speech. I look forward to many exchanges with him in the future. The hon. Gentleman and I are agreed on five issues. The first, and I was glad that the hon. Gentleman said this at the outset of his speech, is that the Government and the House must abide by legal requirements and court decisions. The second is that we cannot use import restrictions for health reasons, made under the legal process, to achieve economic or other objectives. That is an important point, to which I shall refer in answer to some of the things urged upon us. The third is that we must accept UHT milk, although many of us agree that it has an awful taste, and it is not likely to appeal to the United Kingdom consumer.
The fourth point is the importance of the doorstep delivery, and I stress its importance. I understand the point, and agree with all those who emphasised the employment reasons for it, and the other industrial reasons, as did the hon. Member for Bassetlaw (Mr. Ashton). I recognise, too, its importance to many consumers, and especially to those in need and to our senior citizens, a point to which several of my hon. Friends drew attention. My hon. Friend the Member for Congleton (Mrs. Winterton) singled out the importance of the doorstep delivery as a social service. I could continue to wax lyrical about the doorstep delivery, but I shall have to move on. However, all these important aspects of this service were emphasised in the debate.
I hope that we are agreed, certainly on the Government Benches, on the fifth point—the importance of selling the tremendous benefits of British fresh milk and my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) in a cogent and powerful speech, brought this point out. We must not sell our product short, because that helps none of us. Those are five points on which we can agree.
Mr. Alfred Morris rose——
Mr. MacGregor: No, I will not give way because I have an enormous number of points to cover.
Mr. Alfred Morris: Will the Minister give way?
Mr. MacGregor: No. The right hon. Member for Manchester, Wythenshawe (Mr. Morris) made his speech and in fairness to other hon. Members—because I have much to say—I will not give way. [HON. MEMBERS: "Answer."] I am endeavouring to answer the debate. I have singled out the five points on which we are agreed — [Interruption.] —and if I am not interrupted I will answer the rest of the debate. I would like to go into detail on all the points that hon. Members have raised, but I shall not be able to do that through lack of time. I will therefore deal with three specific points now and go on to what I regard as the three key themes of the debate, and that will enable me to answer many other points.
The first of the specific points was raised by the Liberal spokesman, the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) who asked about allegations in a Farming News article. I am aware of that article and my Department is investigating the product, which I understand may be home-produced despite its name and label. The position on fresh pasteurised cream, if that is what it turns out to be, from abroad is clear. For animal health reasons, imports would be permitted only under the terms of a specific licence and no such licence has been issued.

949
Secondly, my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) made allegations about certain aspects of the dairy trade. We have been hard pressed by a part of the dairy trade—as it was in confidence, it would be wrong to give details — to include in our regulations a general provision for new imports of raw milk for processing. It was illogical for certain sections of the dairy trade to do that at the same time as they were pressing for stricter controls elsewhere. My right hon. Friend had no hesitation in turning that request down.
The third point concerns the aspect raised by the hon. Member for Clackmannan (Mr. O'Neill) about a transitional period. Although the commissioner to whom he referred may have favoured a transitional period, there is no evidence that he could have delivered a majority of the Commission in favour of it. But in any case, even if the Commission had been persuaded to agree to a transitional period, the court's judgment would not have been affected and we should have remained exposed to legal action by other member states and individual traders. Thus we had to move straight away.
Mr. O'Neill rose——
Mr. MacGregor: I hope that the hon. Gentleman will forgive me for not giving way. I have much to say. For the reasons I have given, that was not the appropriate way to tackle the problem. We heard how the Labour Government responded within a short period to a court decision——
Mr. O'Neill: Did the present Government ask for a transitional period?
Mr. MacGregor: —and they did not ask. For all those reasons, it is right to go ahead with the regulations.
I come to the three key issues in the debate, and I shall answer them all. The first key theme has been the question why the Government have gone beyond just UHT. References have been made to the debate on 10 May 1983 when the Second Reading and further stages of the Importation of Milk Act, as it now is, were carried through the House. My hon. Friend the Parliamentary Secretary said in that debate:
"For those reasons"—
which were reasons of need to consult not only the Commission and member states but the domestic industry—
"we are unable to give a detailed statement as to the contents of the regulations. However, their main effect"—
and that was the phrase—
"will be to provide for the importation of UHT milk and cream and flavoured milk from member states subject to…requirements".—[Official Report, 10 May 1983; Vol. 42, c. 743.]
We had then to consider carefully the detailed regulations, and for the reaons that my right hon. Friend spelt out clearly, we concluded that the additional aspects had to be put in, and I shall deal with those because the first is sterilised milk. This has been criticised as going beyond the strict letter of the judgment, but as my right hon. Friend pointed out, our new regime needs to comply with the general principles of Community law and there are no legal or scientific arguments for excluding products that have been treated at 108 deg C for 55 minutes, which is at least as rigorous as the UHT process. The important point is that to seek to exclude them would have taken us
950
straight back, if the case had not been watertight, to the courts. Therefore, it was important for us to ensure that our case was as watertight as possible.
The hon. Member for Aberdeen, North made the point clearly that it would not be too long before the importation of pasteurised cream would lead to pasteurised milk coming into the country. I do not believe that that will be the case. Had we not drawn up these regulations in a watertight manner, so that they would stand up in the courts, it would not have been long before we were again challenged and we would have been on a difficult, slippery slope. It is important to our industry, the doorstep delivery services and others affected that we introduce regulations that stick. My hon. Friend the Member for Torridge and Devon, West referred to the possibility of a retaliation on our food products in other Community states if we were seen not to be playing the proper game according to the law.
The hon. Member for Aberdeen, North talked a great deal about frozen pasteurised cream—it may have been a slip of the tongue at the end of his speech to talk about fresh pasteurised cream—which has been criticised as a dangerous precedent for pasteurised milk. I do not believe that this is the case. The first problem that faced us is that imports of pasteurised cream had been permitted by the previous Government. In these regulations, we are tightening up the regime that we inherited. Fresh pasteurised cream—admittedly, this is a small amount—will not be included in these regulations. Secondly, I understand that it is not possible to produce frozen pasteurised milk. We are drawing the line on frozen goods on health grounds. Even if it were conceded that milk does not have to be frozen, this line will not slip because there are no adequate health safeguards for pasteurised fresh milk. That is why the regulations will not lead to a change in this area. I believe that we were correct in drawing the line there.
A number of hon. Members have asked about the heating of milk to 140 deg C and have said the Milk Marketing Board has pressed this regulation on us. In our discussions with the Board, we discussed UHT cream and milk-based products, not UHT milk, and I believe that that is an important point.
Understandably, many of my hon. Friends have raised the subject of botulism. The conditions for the manufacture of sterilised milk, UHT cream and milk-based products are safe from botulism. I understand that UHT milk is not a substance that supports botulism, but two other aspects are important in this context. Heating milk to a temperature of 132 deg C has been applied in this country for many years, and there have been no outbreaks of botulism for 20 years. The Minister has said that we shall have a review of the 140 deg C stipulation, and this aspect will be covered in the review.
Certain parts of the industry are unhappy about the imposition of a temperature of 140 deg C because of the burdens that would be imposed upon them. We have often talked about not imposing additional burdens unless we are sure that they are correct. We must have full discussions with the dairy industry before we move to imposition of 140 deg C. There are still disagreements in our domestic dairy industry.
Foot and mouth disease has been referred to by my hon. Friends the Members for Torridge and Devon, West and for Dumfries (Sir H. Monro).

951
We are assured by the Animal Virus Research Institute at Pirbright, from which we receive expert advice, that heat treatment of 80 deg C for 15 seconds makes pasteurised cream safe from foot and mouth disease. That makes imported pasteurised cream safe because it will have to undergo that heat treatment before it is frozen. There is the safeguard.
With UHT cream and milk-based products, on animal health grounds the advice of my veterinary staff and Pirbright is that the regulations provide an adequate safeguard against foot and mouth disease. We are assured of adequate safeguards there.
There have been only two outbreaks of foot and mouth disease during the past two years in two parts of the Community. If there were an outbreak of the disease we should take the same action as for any other food product. That is partly an answer to the Liberal spokesman.
We have a double system of checking at the ports. We have certificates which will cover the processing and bottling conditions and also the sampling and testing arrangements. Our staff will visit other member states to study those arrangements to provide a double check. If we discover through the sampling and testing arrangements that there has been reckless certification, we will apply more rigorous and regular testing of the products from that area. We will send back the product and make representations to the Government of the member state.
Those are significant safeguards.
It is important to stress that in the note it sent to all Members of Parliament the National Farmers Union made a particular point of saying that
"we would seek specific assurances that the procedures themselves will be robustly and fully applied, and that the necessary resources in personnel and equipment will be supplied and maintained, to ensure this."
That point was important to the National Farmers Union, and I can give those assurances tonight.
One or two hon. Members urged that we should have fewer ports for entry of these products. I cannot resist saying that the Poitiers argument does not stand up, because although that arrangement applied to a non- member state, it was able to last for only a few months. We are seeking to provide lasting arrangements to reassure our industry. If we had reduced entry to one or two ports it would have been open to immediate challenge on the ground that we were not doing that not for health but for economic reasons. That is precisely what the Opposition accepted we should not do.
My final theme is doorstep deliveries and the effects on producers and dairies. I am bound to say that the predictions of the hon. Members for Bassetlaw (Mr.Ashton) and for Bradford, South (Mr. Torney) were hysterical and extremely unhelpful to their industries and members.
An analogy has been drawn with the Netherlands. I shall make a number of points on that. It is more interesting to have an analogy from Scotland, which is closer to home. Doorstep deliveries have decreased there in the past 12 years from 74 to 50 per cent. but the consumption of milk per head compared to 1970 has risen slightly. That is a sign that the consumer approves of fresh, pasteurised milk. Provided we maintain our support we shall continue to have that level of consumption.
It is important to recognise that we have a number of plants producing our own UHT and sterilised products. My right hon. Friend pointed out that sterilising takes place
952
under a wide range of conditions. Our domestic milk production has a less strict heat treatment requirement because deliveries can be more immediate than products from abroad. The important point is that a significant proportion of our sterilised milk production have the less strict heat treatment applied. If an equivalent restriction were applied to our exports by other member states the likelihood is that only a small proportion of our products would be exported. If the position were reversed, the indication is that the threat would be nowhere near as great as the Opposition have suggested.
I wish to pay a tribute to everyone involved in doorstep deliveries. Hon. Members have suggested, correctly, that other market forces are a far greater threat to doorstep deliveries than UHT. I recognise the concern that has been expressed about doorstep deliveries. My right hon. Friend the Minister of Agriculture faced a difficult decision. I believe that doorstep deliveries, when supported by the consumer, will remain a valuable part of the British social system.
The Government are drawing a line which is defensible, which must stick and which must give proper protection to legitimate British production interests and to the British consumer.
Question put:—
The House divided: Ayes 212, Noes 323.

Division No. 70]

[11.30 pm

AYES

Abse, Leo

Davies, Ronald (Caerphilly)

Alton, David

Davis, Terry (B'ham, H'ge H'l)

Anderson, Donald

Deakins, Eric

Archer, Rt Hon Peter

Dewar, Donald

Ashdown, Paddy

Dixon, Donald

Ashley, Rt Hon Jack

Dobson, Frank

Ashton, Joe

Dormand, Jack

Atkinson, N. (Tottenham)

Douglas, Dick

Bagier, Gordon A. T.

Dubs, Alfred

Banks, Tony (Newham NW)

Dunwoody, Hon Mrs G.

Barron, Kevin

Eadie, Alex

Beckett, Mrs Margaret

Eastham, Ken

Beggs, Roy

Edwards, R. (W'hampt'n SE)

Beith, A. J.

Ellis, Raymond

Bell, Stuart

Evans, Ioan (Cynon Valley)

Bennett, A. (Dent'n & Red'sh)

Evans, John (St. Helens N)

Bermingham, Gerald

Ewing, Harry

Bidwell, Sydney

Fatchett, Derek

Blair, Anthony

Faulds, Andrew

Boothroyd, Miss Betty

Field, Frank (Birkenhead)

Bray, Dr Jeremy

Fields, T. (L'pool Broad Gn)

Brown, Gordon (D'f'mline E)

Fisher, Mark

Brown, Hugh D. (Provan)

Flannery, Martin

Brown, N. (N'c'tle-u-Tyne E)

Foot, Rt Hon Michael

Brown, R. (N'c'tle-u-Tyne N)

Forrester, John

Brown, Ron (E'burgh, Leith)

Forsythe, Clifford (S Antrim)

Bruce, Malcolm

Foster, Derek

Caborn, Richard

Foulkes, George

Campbell, Ian

Fraser, J. (Norwood)

Canavan, Dennis

Freeson, Rt Hon Reginald

Carter-Jones, Lewis

Freud, Clement

Cartwright, John

Garrett, W. E.

Clay, Robert

Gilbert, Rt Hon Dr John

Cocks, Rt Hon M. (Bristol S.)

Golding, John

Cohen, Harry

Gould, Bryan

Coleman, Donald

Gourlay, Harry

Concannon, Rt Hon J. D.

Hamilton, James (M'well N)

Conlan, Bernard

Hamilton, W. W. (Central Fife)

Cook, Robin F. (Livingston)

Hardy, Peter

Corbett, Robin

Harman, Ms Harriet

Corbyn, Jeremy

Harrison, Rt Hon Walter

Craigen, J. M.

Hart, Rt Hon Dame Judith

Crowther, Stan

Hawksley, Warren

Cunningham, Dr John

Healey, Rt Hon Denis

Dalyell, Tam

Heffer, Eric S.

953

Hogg, N. (C'nauld & Kilsyth)

Pendry, Tom

Home Robertson, John

Penhaligon, David

Howell, Rt Hon D. (S'heath)

Pike, Peter

Howells, Geraint

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

Hoyle, Douglas

Powell, Raymond (Ogmore)

Hughes, Mark (Durham)

Prescott, John

Hughes, Robert (Aberdeen N)

Radice, Giles

Hughes, Roy (Newport East)

Randall, Stuart

Hughes, Sean (Knowsley S)

Redmond, M.

Janner, Hon Greville

Rees, Rt Hon M. (Leeds S)

John, Brynmor

Richardson, Ms Jo

Jones, Barry (Alyn & Deeside)

Roberts, Allan (Bootle)

Kaufman, Rt Hon Gerald

Roberts, Ernest (Hackney N)

Kennedy, Charles

Robertson, George

Kilroy-Silk, Robert

Robinson, G. (Coventry NW)

Kinnock, Rt Hon Neil

Robinson, P. (Belfast E)

Kirkwood, Archibald

Rooker, J. W.

Leadbitter, Ted

Ross, Ernest (Dundee W)

Leighton, Ronald

Ross, Stephen (Isle of Wight)

Lewis, Ron (Carlisle)

Ross, Wm. (Londonderry)

Lewis, Terence (Worsley)

Rowlands, Ted

Litherland, Robert

Ryman, John

Lloyd, Tony (Stretford)

Sedgemore, Brian

Lofthouse, Geoffrey

Sheerman, Barry

Loyden, Edward

Sheldon, Rt Hon R.

McCartney, Hugh

Shore, Rt Hon Peter

McCusker, Harold

Short, Ms Clare (Ladywood)

McDonald, Dr Oonagh

Short, Mrs B.(W'hampt'n NE)

McGuire, Michael

Silkin, Rt Hon J.

McKay, Allen (Penistone)

Skinner, Dennis

Mackenzie, Rt Hon Gregor

Smith, C.(Isl'ton S & F'bury)

Maclennan, Robert

Smith, Rt Hon J. (M'kl'ds E)

McNamara, Kevin

Smyth, Rev W. M. (Belfast S)

McTaggart, Robert

Snape, Peter

McWilliam, John

Spearing, Nigel

Madden, Max

Steel, Rt Hon David

Maginnis, Ken

Stott, Roger

Marek, Dr John

Strang, Gavin

Marshall, David (Shettleston)

Straw, Jack

Martin, Michael

Taylor, Rt Hon John David

Mason, Rt Hon Roy

Thomas, Dr R. (Carmarthen)

Maxton, John

Thompson, J. (Wansbeck)

Maynard, Miss Joan

Thorne, Stan (Preston)

Meacher, Michael

Tinn, James

Meadowcroft, Michael

Torney, Tom

Michie, William

Varley, Rt Hon Eric G.

Mikardo, Ian

Walker, Cecil (Belfast N)

Millan, Rt Hon Bruce

Wallace, James

Miller, Dr M. S. (E Kilbride)

Wardell, Gareth (Gower)

Mitchell, Austin (G't Grimsby)

Wareing, Robert

Molyneaux, Rt Hon James

Welsh, Michael

Morris, Rt Hon A. (W'shawe)

White, James

Nellist, David

Wigley, Dafydd

Nicholson, J.

Williams, Rt Hon A.

Oakes, Rt Hon Gordon

Winnick, David

O'Brien, William

Winterton, Mrs Ann

O'Neill, Martin

Winterton, Nicholas

Orme, Rt Hon Stanley

Woodall, Alec

Paisley, Rev Ian

Young, David (Bolton SE)

Park, George

Parry, Robert

Tellers for the Ayes:

Patchett, Terry

Mr. Frank Haynes and

Pavitt, Laurie

Mr. Harry Cohen

NOES

Adley, Robert

Batiste, Spencer

Alexander, Richard

Beaumont-Dark, Anthony

Amery, Rt Hon Julian

Bellingham, Henry

Amess, David

Bendall, Vivian

Ancram, Michael

Bennett, Sir Frederic (T'bay)

Arnold, Tom

Benyon, William

Ashby, David

Berry, Sir Anthony

Aspinwall, Jack

Biffen, Rt Hon John

Atkins, Rt Hon Sir H.

Biggs-Davison, Sir John

Atkins, Robert (South Ribble)

Blaker, Rt Hon Sir Peter

Atkinson, David (B'm'th E)

Body, Richard

Baker, Kenneth (Mole Valley)

Bonsor, Sir Nicholas

Baker, Nicholas (N Dorset)

Bottomley, Peter

Baldry, Anthony

Bowden, A. (Brighton K'to'n)

Banks, Robert (Harrogate)

Bowden, Gerald (Dulwich)

954

Boyson, Dr Rhodes

Gummer, John Selwyn

Braine, Sir Bernard

Hamilton, Hon A. (Epsom)

Brandon-Bravo, Martin

Hamilton, Neil (Tatton)

Brittan, Rt Hon Leon

Hampson, Dr Keith

Brooke, Hon Peter

Hannam, John

Brown, M. (Brigg & Cl'thpes)

Hargreaves, Kenneth

Browne, John

Haselhurst, Alan

Bruinvels, Peter

Hawkins, Sir Paul (SW N'folk)

Bryan, Sir Paul

Hayes, J.

Buchanan-Smith, Rt Hon A.

Hayhoe, Barney

Buck, Sir Antony

Hayward, Robert

Budgen, Nick

Heathcoat-Amory, David

Bulmer, Esmond

Heddle, John

Burt, Alistair

Henderson, Barry

Butcher, John

Heseltine, Rt Hon Michael

Butler, Hon Adam

Hickmet, Richard

Butterfill, John

Hicks, Robert

Carlisle, John (N Luton)

Higgins, Rt Hon Terence L.

Carlisle, Kenneth (Lincoln)

Hind, Kenneth

Carttiss, Michael

Hirst, Michael

Channon, Rt Hon Paul

Hogg, Hon Douglas (Gr'th'm)

Chapman, Sydney

Holland, Sir Philip (Gedling)

Chope, Christopher

Holt, Richard

Churchill, W. S.

Hooson, Tom

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

Hordern, Peter

Clark, Dr Michael (Rochford)

Howard, Michael

Clark, Sir W. (Croydon S)

Howarth, Alan (Stratf'd-on-A)

Clarke Kenneth (Rushcliffe)

Howarth, Gerald (Cannock)

Clegg, Sir Walter

Howe, Rt Hon Sir Geoffrey

Cockeram, Eric

Hubbard-Miles, Peter

Colvin, Michael

Hunt, David (Wirral)

Conway, Derek

Hunt, John (Ravensbourne)

Coombs, Simon

Hunter, Andrew

Cope, John

Hurd, Rt Hon Douglas

Cormack, Patrick

Irving, Charles

Corrie, John

Jenkin, Rt Hon Patrick

Couchman, James

Jessel, Toby

Crouch, David

Johnson-Smith, Sir Geoffrey

Currie, Mrs Edwina

Jones, Gwilym (Cardiff N)

Dickens, Geoffrey

Jones, Robert (W Herts)

Dicks, T.

Jopling, Rt Hon Michael

Dorrell, Stephen

Joseph, Rt Hon Sir Keith

Douglas-Hamilton, Lord J.

Key, Robert

Dover, Denshore

King, Roger (B'ham N'field)

du Cann, Rt Hon Edward

King, Rt Hon Tom

Dunn, Robert

Knight, Gregory (Derby N)

Durant, Tony

Knowles, Michael

Dykes, Hugh

Knox, David

Edwards, Rt Hon N. (P'broke)

Lamont, Norman

Eggar, Tim

Lang, Ian

Evennett, David

Latham, Michael

Fairbairn, Nicholas

Lawler, Geoffrey

Favell, Anthony

Lawson, Rt Hon Nigel

Fenner, Mrs Peggy

Lee, John (Pendle)

Finsberg, Geoffrey

Leigh, Edward (Gainsbor'gh)

Fletcher, Alexander

Lennox-Boyd, Hon Mark

Fookes, Miss Janet

Lewis, Sir Kenneth (Stamf'd)

Forman, Nigel

Lightbown, David

Forsyth, Michael (Stirling)

Lilley, Peter

Fowler, Rt Hon Norman

Lloyd, Ian (Havant)

Fox, Marcus

Lloyd, Peter, (Fareham)

Franks, Cecil

Lord, Michael

Fraser, Peter (Angus East)

Luce, Richard

Freeman, Roger

Lyell, Nicholas

Fry, Peter

McCrindle, Robert

Gardiner, George (Reigate)

McCurley, Mrs Anna

Gardner, Sir Edward (Fylde)

MacGregor, John

Garel-Jones, Tristan

MacKay, Andrew (Berkshire)

Gilmour, Rt Hon Sir Ian

MacKay, John (Argyll & Bute)

Goodhart, Sir Philip

Maclean, David John.

Goodlad, Alastair

Macmillan, Rt Hon M.

Gorst, John

McNair-Wilson, M. (N'bury)

Gow, Ian

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

Grant, Sir Anthony

Madel, David

Gregory, Conal

Major, John

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

Malins, Humfrey

Griffiths, Peter (Portsm'th N)

Malone, Gerald

Grist, Ian

Maples, John

Ground, Patrick

Marland, Paul

Grylls, Michael

Marshall, Michael (Arundel)

955

Mayhew, Sir Patrick

Shepherd, Colin (Hereford)

Mellor, David

Shersby, Michael

Merchant, Piers

Silvester, Fred

Meyer, Sir Anthony

Sims, Roger

Miller, Hal (B'grove)

Skeet, T. H. H.

Mills, Iain (Meriden)

Smith, Sir Dudley (Warwick)

Mills, Sir Peter (West Devon)

Smith, Tim (Beaconsfield)

Miscampbell, Norman

Soames, Hon Nicholas

Mitchell, David (NW Hants)

Speed, Keith

Moate, Roger

Speller, Tony

Monro, Sir Hector

Spence, John

Montgomery, Fergus

Spencer, D.

Moore, John

Spicer, Michael (S Worcs)

Morris, M. (N'hampton, S)

Squire, Robin

Morrison, Hon C. (Devizes)

Stanbrook, Ivor

Morrison, Hon P. (Chester)

Stanley, Jonn

Moynihan, Hon C.

Steen, Anthony

Mudd, David

Stern, Michael

Murphy, Christopher

Stevens, Lewis (Nuneaton)

Neale, Gerrard

Stevens, Martin (Fulham)

Needham, Richard

Stewart, Allan (Eastwood)

Nelson, Anthony

Stewart, Andrew (Sherwood)

Neubert, Michael

Stewart, Ian (N Hertf'dshire)

Newton, Tony

Stokes, John

Nicholls, Patrick

Stradling Thomas, J.

Norris, Steven

Sumberg, David

Onslow, Cranley

Tapsell, Peter

Oppenheim, Philip

Taylor, John (Solihull)

Oppenheim, Rt Hon Mrs S.

Tebbit, Rt Hon Norman

Ottaway, Richard

Temple-Morris, Peter

Page, Richard (Herts SW)

Terlezki, Stefan

Parris, Matthew

Thomas, Rt Hon Peter

Patten, John (Oxford)

Thompson, Donald (Calder V)

Pattie, Geoffrey

Thompson, Patrick (N'ich N)

Pawsey, James

Thornton, Malcolm

Peacock, Mrs Elizabeth

Thurnham, Peter

Percival, Rt Hon Sir Ian

Townend, John (Bridlington)

Pink, R. Bonner

Townsend, Cyril D. (B'heath)

Pollock, Alexander

Tracey, Richard

Porter, Barry

Trippier, David

Powell, William (Corby)

Twinn, Dr Ian

Powley, John

Vaughan, Dr Gerard

Prentice, Rt Hon Reg

Viggers, Peter

Price, Sir David

Waddington, David

Prior, Rt Hon James

Wakeham, Rt Hon John

Pym, Rt Hon Francis

Waldegrave, Hon William

Raffan, Keith

Walden, George

Rathbone, Tim

Walker, Rt Hon P. (W'cester)

Rees, Rt Hon Peter (Dover)

Waller, Gary

Renton, Tim

Walters, Dennis

Rhodes James, Robert

Ward, John

Ridley, Rt Hon Nicholas

Wardle, C. (Bexhill)

Ridsdale, Sir Julian

Warren, Kenneth

Roberts, Wyn (Conwy)

Watts, John

Robinson, Mark (N'port W)

Wells, Bowen (Hertford)

Roe, Mrs Marion

Whitfield, John

Rossi, Sir Hugh

Whitney, Raymond

Rost, Peter

Wilkinson, John

Rowe, Andrew

Wolfson, Mark

Rumbold, Mrs Angela

Wood, Timothy

Ryder, Richard

Woodcock, Michael

Sackville, Hon Thomas

Yeo, Tim

Sainsbury, Hon Timothy

Young, Sir George (Acton)

St. John-Stevas, Rt Hon N.

Younger, Rt Hon George

Sayeed, Jonathan

Scott, Nicholas

Tellers for the Noes:

Shaw, Giles (Pudsey)

Mr. Carol Mather and

Shaw, Sir Michael (Scarb')

Mr. Robert Boscawen.

Shelton, William (Streatham)

Question accordingly negatived.

MILK (NORTHERN IRELAND)
Motion made, and Question put pursuant to the Order [11 November],
That, in the opinion of this House, the Importation of Milk Regulations (Northern Ireland) 1983 (S.R.(N.I.), 1983, No. 338) ought to be revoked.—[Mr. William Ross.]
The House divided: Ayes 208, Noes 321.

Division No. 71]

[11.39 pm

AYES

Abse, Leo

Gilbert, Rt Hon Dr John

Alton, David

Golding, John

Anderson, Donald

Gould, Bryan

Ashdown, Paddy

Hamilton, James (M'well N)

Ashley, Rt Hon Jack

Hamilton, W. W. (Central Fife)

Ashton, Joe

Hardy, Peter

Atkinson, N. (Tottenham)

Harman, Ms Harriet

Bagier, Gordon A. T.

Harrison, Rt Hon Walter

Banks, Tony (Newham NW)

Hart, Rt Hon Dame Judith

Barron, Kevin

Hawksley, Warren

Beckett, Mrs Margaret

Heffer, Eric S.

Beggs, Roy

Hogg, N. (C'nauld & Kilsyth)

Beith, A. J.

Home Robertson, John

Bell, Stuart

Howell, Rt Hon D. (S'heath)

Bennett, A. (Dent'n & Red'sh)

Howells, Geraint

Bermingham, Gerald

Hoyle, Douglas

Bidwell, Sydney

Hughes, Mark (Durham)

Blair, Anthony

Hughes, Robert (Aberdeen N)

Boothroyd, Miss Betty

Hughes, Roy (Newport East)

Bray, Dr Jeremy

Hughes, Sean (Knowsley S)

Brown, Gordon (D'f'mline E)

Janner, Hon Greville

Brown, Hugh D. (Provan)

John, Brynmor

Brown, N. (N'c'tle-u-Tyne E)

Jones, Barry (Alyn & Deeside)

Brown, R. (N'c'tle-u-Tyne N)

Kaufman, Rt Hon Gerald

Brown, Ron (E'burgh, Leith)

Kennedy, Charles

Bruce, Malcolm

Kilroy-Silk, Robert

Caborn, Richard

Kinnock, Rt Hon Neil

Campbell, Ian

Kirkwood, Archibald

Canavan, Dennis

Leadbitter, Ted

Carter-Jones, Lewis

Leighton, Ronald

Cartwright, John

Lewis, Ron (Carlisle)

Clay, Robert

Lewis, Terence (Worsley)

Cocks, Rt Hon M. (Bristol S.)

Litherland, Robert

Cohen, Harry

Lloyd, Tony (Stretford)

Coleman, Donald

Lofthouse, Geoffrey

Concannon, Rt Hon J. D.

Loyden, Edward

Conlan, Bernard

McCartney, Hugh

Cook, Robin F. (Livingston)

McCusker, Harold

Corbett, Robin

McDonald, Dr Oonagh

Corbyn, Jeremy

McGuire, Michael

Cowans, Harry

McKay, Allen (Penistone)

Craigen, J. M,

Mackenzie, Rt Hon Gregor

Crowther, Stan

Maclennan, Robert

Cunningham, Dr John

McNamara, Kevin

Dalyell, Tam

McTaggart, Robert

Davies, Ronald (Caerphilly)

McWilliam, John

Davis, Terry (B'ham, H'ge H'l)

Madden, Max

Deakins, Eric

Maginnis, Ken

Dewar, Donald

Marek, Dr John

Dixon, Donald

Marshall, David (Shettleston)

Dobson, Frank

Martin, Michael

Dormand, Jack

Mason, Rt Hon Roy

Douglas, Dick

Maxton, John

Dubs, Alfred

Maynard, Miss Joan

Dunwoody, Hon Mrs G.

Meacher, Michael

Eadie, Alex

Meadowcroft, Michael

Eastham, Ken

Michie, William

Ellis, Raymond

Mikardo, Ian

Evans, Ioan (Cynon Valley)

Millan, Rt Hon Bruce

Evans, John (St. Helens N)

Miller, Dr M. S. (E Kilbride)

Ewing, Harry

Mitchell, Austin (G't Grimsby)

Fatchett, Derek

Molyneaux, Rt Hon James

Faulds, Andrew

Morris, Rt Hon A. (W'shawe)

Field, Frank (Birkenhead)

Nellist, David

Fields, T. (L'pool Broad Gn)

Nicholson, J.

Fisher, Mark

Oakes, Rt Hon Gordon

Flannery, Martin

O'Brien, William

Foot, Rt Hon Michael

O'Neill, Martin

Forrester, John

Orme, Rt Hon Stanley

Forsythe, Clifford (S Antrim)

Paisley, Rev Ian

Foster, Derek

Park, George

Foulkes, George

Parry, Robert

Fraser, J. (Norwood)

Patchett, Terry

Freeson, Rt Hon Reginald

Pavitt, Laurie

Freud, Clement

Pendry, Tom

Garrett, W. E.

Penhaligon, David

957

Pike, Peter

Snape, Peter

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

Spearing, Nigel

Powell, Raymond (Ogmore)

Steel, Rt Hon David

Prescott, John

Stott, Roger

Radice, Giles

Strang, Gavin

Randall, Stuart

Straw, Jack

Redmond, M.

Taylor, Rt Hon John David

Rees, Rt Hon M. (Leeds S)

Thomas, Dr R. (Carmarthen)

Richardson, Ms Jo

Thompson, J. (Wansbeck)

Roberts, Allan (Bootle)

Tinn, James

Roberts, Ernest (Hackney N)

Torney, Tom

Robertson, George

Varley, Rt Hon Eric G.

Robinson, G. (Coventry NW)

Walker, Cecil (Belfast N)

Robinson, P. (Belfast E)

Wallace, James

Rooker, J. W.

Wardell, Gareth (Gower)

Ross, Ernest (Dundee W)

Wareing, Robert

Ross, Stephen (Isle of Wight)

Welsh, Michael

Rowlands, Ted

White, James

Ryman, John

Wigley, Dafydd

Sedgemore, Brian

Williams, Rt Hon A.

Sheerman, Barry

Winnick, David

Sheldon, Rt Hon R.

Winterton, Mrs Ann

Shore, Rt Hon Peter

Winterton, Nicholas

Short, Ms Clare (Ladywood)

Woodall, Alec

Short, Mrs R.(W'hampfn NE)

Young, David (Bolton SE)

Silkin, Rt Hon J.

Skinner, Dennis

Tellers for the Ayes:

Smith, C.(Isl'ton S & F'bury)

Mr. Frank Haynes and

Smith, Rt Hon J. (M'kl'ds E)

Mr. William Ross.

Smyth, Rev W. M. (Belfast S)

NOES

Adley, Robert

Carlisle, Kenneth (Lincoln)

Alexander, Richard

Carttiss, Michael

Amery, Rt Hon Julian

Channon, Rt Hon Paul

Amess, David

Chapman, Sydney

Ancram, Michael

Chope, Christopher

Arnold, Tom

Churchill, W. S.

Ashby, David

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

Aspinwall, Jack

Clark, Dr Michael (Rochford)

Atkins, Rt Hon Sir H.

Clark, Sir W. (Croydon S)

Atkins, Robert (South Ribble)

Clarke Kenneth (Rushcliffe)

Atkinson, David (B'm'th E)

Clegg, Sir Walter

Baker, Kenneth (Mole Valley)

Cockeram, Eric

Baker, Nicholas (N Dorset)

Colvin, Michael

Baldry, Anthony

Conway, Derek

Banks, Robert (Harrogate)

Coombs, Simon

Batiste, Spencer

Cope, John

Beaumont-Dark, Anthony

Cormack, Patrick

Bellingham, Henry

Corrie, John

Bendall, Vivian

Couchman, James

Bennett, Sir Frederic (T'bay)

Crouch, David

Benyon, William

Currie, Mrs Edwina

Berry, Sir Anthony

Dickens, Geoffrey

Biffen, Rt Hon John

Dicks, T.

Biggs-Davison, Sir John

Dorrell, Stephen

Blaker, Rt Hon Sir Peter

Douglas-Hamilton, Lord J.

Body, Richard

Dover, Denshore

Bonsor, Sir Nicholas

du Cann, Rt Hon Edward

Bottomley, Peter

Dunn, Robert

Bowden, A. (Brighton K'to'n)

Durant, Tony

Bowden, Gerald (Dulwich)

Dykes, Hugh

Boyson, Dr Rhodes

Edwards, Rt Hon N. (P'broke)

Braine, Sir Bernard

Eggar, Tim

Brandon-Bravo, Martin

Evennett, David

Brittan, Rt Hon Leon

Fairbairn, Nicholas

Brooke, Hon Peter

Favell, Anthony

Brown, M. (Brigg & Cl'thpes)

Fenner, Mrs Peggy

Browne, John

Finsberg, Geoffrey

Bruinvels, Peter

Fletcher, Alexander

Bryan, Sir Paul

Fookes, Miss Janet

Buchanan-Smith, Rt Hon A.

Forman, Nigel

Buck, Sir Antony

Forsyth, Michael (Stirling)

Budgen, Nick

Fowler, Rt Hon Norman

Bulmer, Esmond

Fox, Marcus

Burt, Alistair

Franks, Cecil

Butcher, John

Fraser, Peter (Angus East)

Butler, Hon Adam

Freeman, Roger

Butterfill, John

Fry, Peter

Carlisle, John (N Luton)

Gardiner, George (Reigate)

958

Gardner, Sir Edward (Fylde)

MacKay, Andrew (Berkshire)

Garel-Jones, Tristan

MacKay, John (Argyll & Bute)

Gilmour, Rt Hon Sir Ian

Maclean, David John.

Goodhart, Sir Philip

Macmillan, Rt Hon M.

Goodlad, Alastair

McNair-Wilson, M. (N'bury)

Gorst, John

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

Gow, Ian

Madel, David

Grant, Sir Anthony

Major, John

Gregory, Conal

Malins, Humfrey

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

Malone, Gerald

Griffiths, Peter (Portsm'th N)

Maples, John

Ground, Patrick

Marland, Paul

Grylls, Michael

Marshall, Michael (Arundel)

Gummer, John Selwyn

Mates, Michael

Hamilton, Hon A. (Epsom)

Mayhew, Sir Patrick

Hamilton, Neil (Tatton)

Mellor, David

Hampson, Dr Keith

Merchant, Piers

Hannam, John

Meyer, Sir Anthony

Hargreaves, Kenneth

Miller, Hal (B'grove)

Haselhurst, Alan

Mills, Iain (Meriden)

Hawkins, Sir Paul (SW N'folk)

Mills, Sir Peter (West Devon)

Hayes, J.

Miscampbell, Norman

Hayhoe, Barney

Mitchell, David (NW Hants)

Hayward, Robert

Moate, Roger

Heathcoat-Amory, David

Monro, Sir Hector

Heddle, John

Moore, John

Henderson, Barry

Morris, M. (N'hampton, S)

Heseltine, Rt Hon Michael

Morrison, Hon C. (Devizes)

Hickmet, Richard

Morrison, Hon P. (Chester)

Hicks, Robert

Moynihan, Hon C.

Higgins, Rt Hon Terence L.

Mudd, David

Hind, Kenneth

Murphy, Christopher

Hirst, Michael

Neale, Gerrard

Hogg, Hon Douglas (Gr'th'm)

Needham, Richard

Holland, Sir Philip (Gedling)

Nelson, Anthony

Holt, Richard

Neubert, Michael

Hooson, Tom

Newton, Tony

Hordern, Peter

Nicholls, Patrick

Howard, Michael

Norris, Steven

Howarth, Alan (Stratf'd-on-A)

Onslow, Cranley

Howarth, Gerald (Cannock)

Oppenheim, Philip

Howe, Rt Hon Sir Geoffrey

Oppenheim, Rt Hon Mrs S.

Hubbard-Miles, Peter

Ottaway, Richard

Hunt, David (Wirral)

Page, Richard (Herts SW)

Hunt, John (Ravensbourne)

Parris, Matthew

Hunter, Andrew

Patten, John (Oxford)

Hurd, Rt Hon Douglas

Pattie, Geoffrey

Irving, Charles

Pawsey, James

Jenkin, Rt Hon Patrick

Peacock, Mrs Elizabeth

Jessel, Toby

Percival, Rt Hon Sir Ian

Johnson-Smith, Sir Geoffrey

Pink, R. Bonner

Jones, Gwilym (Cardiff N)

Pollock, Alexander

Jones, Robert (W Herts)

Porter, Barry

Jopling, Rt Hon Michael

Powell, William (Corby)

Joseph, Rt Hon Sir Keith

Powley, John

Key, Robert

Prentice, Rt Hon Reg

King, Roger (B'ham N'field)

Price, Sir David

King, Rt Hon Tom

Prior, Rt Hon James

Knight, Gregory (Derby N)

Raffan, Keith

Knowles, Michael

Rathbone, Tim

Knox, David

Rees, Rt Hon Peter (Dover)

Lamont, Norman

Renton, Tim

Lang, Ian

Rhodes James, Robert

Latham, Michael

Ridley, Rt Hon Nicholas

Lawler, Geoffrey

Ridsdale, Sir Julian

Lawson, Rt Hon Nigel

Roberts, Wyn (Conwy)

Lee, John (Pendle)

Robinson, Mark (N'port W)

Leigh, Edward (Gainsbor'gh)

Roe, Mrs Marion

Lennox-Boyd, Hon Mark

Rossi, Sir Hugh

Lewis, Sir Kenneth (Stamf'd)

Rost, Peter

Lightbown, David

Rowe, Andrew

Lilley, Peter

Rumbold, Mrs Angela

Lloyd, Ian (Havant)

Ryder, Richard

Lloyd, Peter, (Fareham)

Sackville, Hon Thomas

Lord, Michael

Sainsbury, Hon Timothy

Luce, Richard

St. John-Stevas, Rt Hon N.

Lyell, Nicholas

Sayeed, Jonathan

McCrindle, Robert

Scott, Nicholas

McCurley, Mrs Anna

Shaw, Giles (Pudsey)

MacGregor, John

Shaw, Sir Michael (Scarb')

959

Shelton, William (Streatham)

Thornton, Malcolm

Shepherd, Colin (Hereford)

Thurnham, Peter

Shersby, Michael

Townend, John (Bridlington)

Silvester, Fred

Townsend, Cyril D. (B'heath)

Sims, Roger

Tracey, Richard

Skeet, T. H. H.

Trippier, David

Smith, Sir Dudley (Warwick)

Twinn, Dr Ian

Smith, Tim (Beaconsfield)

Vaughan, Dr Gerard

Soames, Hon Nicholas

Viggers, Peter

Speed, Keith

Waddington, David

Speller, Tony

Wakeham, Rt Hon John

Spence, John

Waldegrave, Hon William

Spencer, D.

Walden, George

Spicer, Michael (S Worcs)

Walker, Rt Hon P. (W'cester)

Squire, Robin

Waller, Gary

Stanbrook, Ivor

Walters, Dennis

Stanley, John

Ward, John

Steen, Anthony

Wardle, C. (Bexhill)

Stern, Michael

Warren, Kenneth

Stevens, Lewis (Nuneaton)

Watts, John

Stevens, Martin (Fulham)

Wells, Bowen (Hertford)

Stewart, Allan (Eastwood)

Whitfield, John

Stewart, Andrew (Sherwood)

Whitney, Raymond

Stewart, Ian (N Hertf'dshire)

Wilkinson, John

Stokes, John

Wolfson, Mark

Stradling Thomas, J.

Wood, Timothy

Sumberg, David

Woodcock, Michael

Tapsell, Peter

Yeo, Tim

Taylor, John (Solihull)

Young, Sir George (Acton)

Tebbit, Rt Hon Norman

Younger, Rt Hon George

Temple-Morris, Peter

Terlezki, Stefan

Tellers for the Noes:

Thomas, Rt Hon Peter

Mr. Carol Mather and

Thompson, Donald (Calder V)

Mr. Robert Boscawen.

Thompson, Patrick (N'ich N)

Question accordingly negatived.

Pharmacists (Discount Arrangements)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Sainsbury.]
11.57 pm
Lord James Douglas-Hamilton: I am advised that this subject is entirely competent to be raised as court proceedings were dropped yesterday morning.
The background is that retail pharmacists are provided with their medicines from pharmaceutical wholesalers. These medicines are issued on prescription, and later the prescription forms are sent to the Government pricing bureau where the value of the substances and the fees of the chemists are worked out. The sums are then paid to the chemists through the local health boards.
I understand that retail pharmacists in Scotland are under contract to local health boards and must be paid a sum that covers not only the purchase price of the medicines but the overhead costs and an agreed profit for each prescription.
After the abolition of resale price maintenance, discount competition began in a big way among the wholesalers, who tried to attract a greater share of the market. At the time, payments were made to the chemist at the manufacturer's list prices, and the Government noted that they were losing considerable sums previously paid to the Exchequer. They devised a scale of discount recoveries which were brought into operation so that sums paid to pharmacists to reimburse the ingredients were discounted by a percentage that bore some relationship to the value of the ingredients. The amount of discount for each chemist was roughly equivalent to the discount which he or she could obtain from the wholesalers.
Recently, I paid a courtesy call to the shops in my constituency, and the chemists forcibly impressed on me their indignation at the method used to recover the discount. After I made inquiries with the Pharmaceutical General Council, it emerged that the period of most concern is from 1 October 1980 to 31 July 1983.
This year, the Home and Health Department is asking for £2·5 million to be recovered by a surcharge. The remainder—about £4·7 million—is to be recovered by a reduced rate of surcharge over a longer period of 19 months from 1 January next year. Apparently the Scottish Home and Health Department is making no exception for pharmacies which opened after 1 August 1983, nor for new businesses which started during the period concerned, nor for businesses which changed hands during that period.
It has been suggested that it would be difficult and complex to ascertain which shops have been established, which were closed, which changed hands and which were taken over, and how much, if anything, would be payable in each case. Much of the work has already been done by the Pharmaceutical General Council, which has ascertained which shops were taken over, which changed names, which were established from scratch, which formed new partnerships, and so on.
The ground which has been given by the Minister's office for rejecting the pharmacists' case is given in a letter of 7 October:
"This kind of situation has arisen in the past and is usually considered to be part of a swings and roundabouts situation where

961
new pharmacists have sometimes benefited, and sometimes lost, from adjustments to remuneration resulting from past outcomes and future predictions."
The case of the Pharmaceutical General Council should be taken more seriously. It is that a scheme should be devised to recover funds from those in business at the time and those who could have been expected to earn discounts. It hopes that this will be considered more carefully.
It may be correct that in the past some pharmacists have benefited or lost from adjustments in remuneration, but the case I put to the Minister and before the House is that there has never been such a massive adjustment as that suggested now. What makes the pharmacists feel particularly strongly about it is that the Department is trying to recover more than half the £4·7 million over five months during this year. On a previous occasion some three to four years ago when overpayments were made, measures were taken to reduce the level of the dispensing fee and on-cost payments so that the debt could be written off over two years. At that time it was soon realised that this was leading to an underpayment, so a supplementary adjustment was made after nine months.
In this case it would be fair for the Department to endeavour to recover funds only from pharmacists who were in business at the time. If the Government were to waive the debt for new pharmacists it would be unacceptable to the general council if such a debt were to be transferred to the general body of pharmacists.
As I mentioned earlier, there has been much discussion about the complexity of working out what the debt would be in each case. The Pharmaceutical General Council deserves to be congratulated on the work it has already done in completing an analysis of the changes which have occurred in ownership since 1 October 1980. The council has modern equipment with new computers and it would be possible to assess the individual debt for each chemist's shop in Scotland and itemise it on a month-to-month basis. This would be warmly welcomed by the chemists.
I should like to give two examples in which the Department has already found the resources and the will to deal with chemists individually when it suited its purpose. First, there was a case involving the chemists who supply oxygen gas and equipment. Some 250 of the 1,100 chemists' shops in Scotland supply oxygen gas. Retrospective payments involved a repricing of all oxygen prescriptions for 250 shops.
Of more importance was the second case; a massive amount of work was undertaken when there were allegations that Roche was making excess profits. So the company reduced its prices and the Department had to examine more than 8 million Scottish prescriptions for the period covering June, July and August 1973 to reprice Roche products. Individual accounts showing overpayment were made for each contractor. There can be no doubt that the Scottish Office coped with the examination of millions of prescriptions. It was a herculean task. Surely such an examination in the case before the House tonight would be far less herculean.
The crux of the matter is that the Pharmaceutical General Council estimates that the proportion of the £4·7 million debt that the Minister has been invited to write off in Scotland is about £450,000. If the Minister accedes to that request, new pharmacists opening after 31 July 1983 would be exempt from the surcharge, and those opening
962
or having changed hands between 1 October 1980 and 31 July 1983 would be responsible only for a debt in proportion to the length of time that they had been in business.
I appeal to the Minister to reconsider the matter, on the basis of common sense and equity, while bearing in mind that the Government believe strongly in supporting small new businesses. Surely if and when such measures must be put into effect they should be carried out with scrupulous fairness.
Several Hon. Members rose——
Mr. Deputy Speaker (Mr. Paul Dean): Order. I must protect the Adjournment debate of the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton). Do the hon. Members rising have the permission of the hon. Member for Edinburgh, West and the Minister to intervene?
Lord James Douglas-Hamilton: They do, Sir.
12.7 am
Mr. Michael Forsyth: I am grateful to my hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) for allowing me to take part in the debate.
The measures proposed by the Minister raise serious questions of morality and fairness. They also pose a threat to chemists in rural areas. There is considerable concern that the clawback scheme has been introduced in Scotland without any inquiry into the levels of discounts being secured by chemists. Almost by the very nature of their business in Scotland, discounts are bound to be lower than in England. The businesses are, on the whole, small and deal with more sparsely distributed populations. The Pharmaceutical General Council in Scotland has estimated that the discounts are 0·6 per cent. less than in England. That alone would reduce the amount of claw back from the proposed £4·7 million to nearer £3 million.
Another worrying aspect of the scheme is the haste with which £2·5 million has been taken out of chemists' income in five nonths. That can have only a serious, if not disastrous, effect on the cash flow of many small businesses. The problem is compounded because their income is calculated on the value of the prescriptions with which they deal, which will consequently be reduced.
However, the most serious aspect is the unacceptable imposition of clawback on people who did not benefit from overpayment in the first place. In the past, where the reverse position has applied, every effort has been made by the Department to ensure that the repayments went to those who had been underpaid. Nothing was paid to newcomers then.
The impact on rural areas can only be severe. Villages are heavily dependent on local shops, and the chemist is a critical linchpin in local communities, especially with rural transport in decline. The very businesses that will be most vulnerable will be those with low turnovers and the least choice of wholesalers. Despite the sliding scale that has rightly been implemented, they will have to repay discounts that they have never received. I regret that the whole sorry scheme has the hallmark of something which, while it is perhaps just in its aspirations, pays little regard to the difficulties that it places on small businesses.
I am grateful for the opportunity to ask the Minister to think again, to establish a clawback after a proper attempt

963
to ascertain the real levels of discount that area being achieved in Scotland, and to reconsider the speed of implementation of the scheme and the speed with which the money is withdrawn. I ask him to throw out the proposals to penalise those who have started new businesses or have bought existing ones, and have never benefited. I understand that we are talking about 208 businesses in Scotland. It is not enough to argue that identifying those firms is complicated, so it cannot be done. After all, presumably, if the Pharmaceutical General Council can do it, so can the Scottish Office.
12.11 am
Mr. Michael Hirst: I have been prompted to make a short contribution to the debate by representations that I have received from eight constituents who feel aggrieved by the arrangements that the Scottish Home and Health Department has made to claw back discounts.
I support the Government entirely in their determination to make sure that the money spent on the Health Service is spent in the wisest way and to maximum advantage. I agree that the overpayment to the pharmacists should be recovered, but if they were underpaid I should make vigorous representations on their behalf.
I have three points to make. First, the level of the clawback will be based on the volume of prescriptions now being done. My constituents have represented to me that that adversely affects pharmacists whose businesses are expanding. I recognise that, to operate a slightly more fair system, one would need an elaborate bureaucracy. Therefore, that point must pass, although I am happy to make it.
Secondly, the level of clawback, at 7 per cent., is, in the view of at least three of my constituents, more than was received. I should be grateful if my hon. Friend the Minister could give me an assurance on that point. The matter that I find more difficult to overlook is the disadvantaged position of the pharmacists who have started up in business since October 1980 and have not traded either in or throughout the period from October 1980 to July 1983. I understand that the discount clawback is for a 34-month period.
If the Minister accepts the merit of fairness in this case, in order to avoid an elaborate bureaucratic system of making detailed calculations he should merely provide an abatement in direct proportion to the number of months that that pharmacist has not traded during the relevant period. The corollary of that is a small loss to the Scottish Home and Health Department in respect of pharmacists who have gone out of business or sold up during the period, but overall I think that we are talking about a fairly modest sum.
12.13 am
The Under-Secretary of State for Scotland (Mr. John MacKay): I am grateful to my hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) for giving me the opportunity to deal with the subject of discounts on drugs.
The detailed arrangements for chemists' remuneration are complex, some would say too complex, but the basic concept is simple. Chemists have contracts with health boards to provide pharmaceutical services, and the aim of the contract is to reimburse to chemists their costs in providing the service and to provide an agreed level of
964
profit. The matters raised by my hon. Friend relate mainly to reimbursement of costs. That is the procedure to assess that the overall amount paid to chemists as a whole for drug costs is the same as the amount that they spent on buying the drugs.
Payment to chemists for reimbursement for drug costs is broadly based on manufacturers' list prices. However, chemists receive discounts, and it is those discounts that have caused the problems to which my hon. Friend directed our attention. This is not the first time that hon. Members have discussed this matter. The Public Accounts Committee looked at it in a report in May this year when it underlined the need to ensure that the system does not pay out more public money than it should.
Formal negotiations on chemists' remuneration are conducted on a Whitley basis under committee B of the Pharmaceutical Whitley Council. In recent years, most negotiations have been conducted on a more informal basis between the Pharmaceutical General Council (Scotland), representing the staff side, and officials of my Department.
In Scotland, the contractual arrangements for chemists provide for the payment of dispensing fees per prescription dispensed, presently 46p, and on-cost payments, paid as a percentage of the value of the drugs supplied, which together reflect both the costs incurred by chemists in providing the service, including labour costs for staff and overheads for costs for premises, and a negotiated allowance for profit margin. In addition to the above elements of remuneration, chemists are reimbursed the costs of drugs dispensed and the prescription pricing division of the Common Services Agency prices individual prescriptions accordingly. As part of these procedures, adjustments have had to be made, mainly to take account of discounts which have enabled chemists in general to purchase drugs at costs lower than the manufacturers' list prices.
It has always been regarded as impracticable to identify individually contractors' entitlement to remuneration. Details are obtained from periodic surveys of a representative sample of chemists shops of the average costs incurred by chemists in providing the NHS dispensing service and for the years between surveys the costs are updated in accordance with agreed conventions.
Chemists are also entitled to a negotiated level of profit, and since 1981 this has consisted of two elements: an interest cost element representing the amounts of interest the chemist is deemed to have incurred in funding his business; and a pure profit element. For each financial year a balance sheet is prepared that brings out on one side chemists' overall entitlement to remuneration, comprising labour costs, overhead costs and profit margins. The other side of the annual balance sheet brings out the actual payments made globally to all chemists, mainly dispensing fees and on-cost payments.
Because of the need to estimate likely volumes of prescriptions and costs of drugs to be dispensed, it is not practicable to keep the entitlement and payments sides of the remuneration balance sheet in line because of the complexity of the calculations. Inevitably underpayments or overpayments are identified, and appropriate adjustments are taken into account in the balance sheet assessments for later years.
As regards reimbursement of drug costs, the items dispensed on each prescription form are priced by the prescription pricing division generally in relation to drug

965
manufacturers' price lists or drug tariffs specified for certain commonly prescribed standard drugs. If the gross ingredient cost figure for the month exceeds £2,000, the chemist becomes liable to adjustment on account of discounts by applying the graduated discount scale which is referred to in paragraph 5 of the drug tariff 1981 and the net result is that a modified sum, the net ingredient cost, is arrived at for reimbursement to the chemist.
Discounts from wholesalers on the price of drugs in some form have existed for many years, with some minor recognition of the fact in the reimbursement arrangements, but the abolition of resale price maintenance as my hon. Friend the Member for Edinburgh, West said, led to an upward surge in 1978–79. When the independent Franks panel made its recommendations in England and Wales it recognised that there were uncovenanted profits elsewhere in the overall remuneration arrangements and that the position on escalation of discounts required to be considered.
As a result, during negotiations with the Scottish chemists' representatives on a revised approach to profit margins from 1 July 1980, it was agreed that revised discount arrangements also required to be applied from that date, and chemists knew about that. As regards the period from 1 October 1980, interim arrangements were agreed by the parties, with the details being subject to review in due course in the light of statistical survey work which it was recognised would be required in England and Wales and in Scotland. Subsequently, a revised interim discount scale averaging some 4·8 per cent. was applied as part of the prescription pricing procedures from 1 July 1981. Both parties to the negotiations recognised that there had been insufficient allowance for discounts in earlier periods from 1 October 1980 and made what was then considered appropriate provision as part of the overall remuneration arrangements. The actual rates to different contractors depend on the band size into which contractors fall, on the basis that the larger the chemist the bigger the discounts.
Following the Franks panel negotiations in 1980 and 1981, it was hoped that the discounts inquiry to take place in England and Wales could provide a sufficiently realistic interim assessment of the likely level of discounts in Scotland, thereby limiting the scope of the additional survey work necessary in Scotland, and so it was agreed that the figures of discount arrived at in England and Wales should be used in Scotland until the Scottish position could be considered. The English inquiry has taken a long time.
As I mentioned, the Public Accounts Committee looked at the whole question earlier this year. In its 10th report to the House, ordered to be printed on 27 April 1983, the PAC made certain observations in paragraphs 34 and 35 and while I will not quote the whole text, I draw the attention of hon. Members to some of the comments. The PAC said in paragraph 34:
"We must express great concern that chemists in England and Wales should have been so slow to co-operate in an enquiry which has the straightforward objective of ensuring that—to be fair both to them and the taxpayer—they are reimbursed no more than the actual cost of the drugs they dispense …We look for the early recovery of any over-reimbursement since 1 October 1980."
In paragraph 35 the committee said:
"We note the long-held right of Scottish chemists to negotiate their remuneration separately with the Scottish Home and Health
966
Department …Should the present rates be shown to have been too low, it may mean that over-reimbursements have been accumulating for perhaps three years. While we expect the Scottish Home and Health Department to act on such of those points we make above as are relevant to Scotland, we look to them in particular to secure the prompt recovery of any sums shown to be due from chemists."
Mr. Churchill rose——
Mr. MacKay: I must get on.
The English discount inquiry eventually came up with some conclusions, though these are not yet final. It was therefore possible in August of this year for us to arrive at an average discount figure of 6·5 per cent., to be applied in the usual way to monthly ingredient cost figures. This yet again is an interim figure depending on what still emerges from the English inquiry and on what more we need to do in Scotland.
At the same time as the 6·5 per cent. was agreed, we had to face up to the question of the earlier interim discounts as requested by the Public Accounts Committee. We arrived at a provisional figure of £4·7 million in respect of the estimated value of discounts which had not been taken fully into account in the drug pricing and remuneration procedures in earlier years.
Negotiations on means to correct those earlier over-reimbursements of drug purchase costs took place. As a result, there was proposed an additional surcharge averaging 3·4 per cent. in respect of prescriptions for the months of August, September, October, November and December of this year. The remainder would be found by a modified surcharge, to be agreed in due course, for the following 19 months.
Mr. James Wallace: Will the Minister give way?
Mr. MacKay: I come to the problem of new chemists. They feel, as has been clearly represented, that it is unfair to expect them to pay back 3·4 per cent. for five months when they may not have been in business for the whole, or indeed any, of the period for which the discount has been calculated.
It might be argued that any person buying an existing chemist's business since 1980 would have taken into account the discount situation, which was well known. That argument could even apply to anyone setting up a new business. I appreciate that the chemists do not accept that argument and I have accepted their offer to provide information from their computer about the scale and nature of the problem of new chemists who have set up in business since 1980.
As hon. Members will know, the Pharmaceutical General Council (Scotland) applied to the Court of Session for an interim interdict in effect to stop the 3·4 per cent. surcharge, and in the light of that application I felt that the best course was to undertake not to apply the surcharge of 3·4 per cent. to the forthcoming payments in respect of the September and October prescriptions. The Council has dropped its application for an interim interdict and agrees that negotiations should again commence. The House will appreciate that I do not want to say anything now that will make the negotiations more difficult. I assure my hon. Friends that my officials will be approaching the negotiations constructively, and I am sure that the Pharmaceutical General Council will do likewise, to see if we can arrive at some agreed solution on how to pay the money back, as the Public Accounts Committee clearly

967
outlined we have a duty to do, to the House and the public, on whose behalf we spend the money. Equally, we must take into account that we are prepared to deal with this, and especially the problems of new premises during the negotiations. It would not serve much purpose to examine the forthcoming negotiations during this debate.
There are some possibilities of a new contract being considered by my colleagues in England and Wales. We would be interested in any developments. I am sure that the Scottish chemists will be looking to what is provided so that the present difficulties are solved to our general satisfaction. At present, we have complex arrangements which have worked quite well for many years. With good will, I believe that they can be made to work in the present difficulties. Anyone who has visited the prescription pricing division of the Common Services Agency and seen the mammoth task that goes on, month after month, to reimburse the chemists promptly will appreciate this difficult and complex operation.
If there are discount prices which differ from the manufacturers' list prices, we must try to be fair to the
968
chemists—that is reasonable—and to the taxpayer. I assure the House that willingness exists on my part and that of my officials to reach an agreed solution with the Pharmaceutical General Council. I am sure that the same willingness exists on the part of the Pharmaceutical General Council because it knows what the Public Accounts Committee has said and it does not want to be taking more from the taxpayer any more than I wish to be giving more to the chemists.
That is the difficult position in which we find ourselves. I am happy to give my hon. Friends the assurance that we shall enter these negotiations in the hope that we can find a reasonable solution which will clear up this matter and remove some of the ill-feelings that, I admit, I have detected in the correspondence that I have had with some of my hon. Friends, from their constituents and front some of my constituents.
Question put and agreed to.
Adjourned accordingly at twenty-six minutes past Twelve o'clock.

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Preamble
The House met at a quarter past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Gloucester.

Lord Grimond
The Right Honourable Joseph Grimond, having been created Baron Grimond, of Firth in the County of Orkney, for life—Was, in his robes, introduced between the Lord Byers and the Lord Chitnis.

Lord Eden of Winton
The Right Honourable Sir John Benedict Eden, Baronet, having been created Baron Eden of Winton, of Rushyford in the County of Durham, for life—Was, in his robes, introduced between the Lord Lyell and the Lord Boyd-Carpenter.
The following Lords took and subscribed the Oath or made the solemn Affirmation:
John Francis Hervey, Earl of Mar and Kellie;
John Edward Terence, Lord Sandhurst.

Public Assets: Investment of Sale Proceeds
2.43 p.m.
Lord Beswick: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what percentage of the money raised by the sale of public assets will be invested in new capital projects.
The Chancellor of the Duchy of Lancaster (Lord Cockfield): My Lords, in accordance with Section 1 of the Consolidated Fund Act 1816, receipts are not hypothecated to a particular purpose. Receipts from sales are used in accordance with the Government's overall economic policy.
Lord Beswick: My Lords, I am much obliged to the noble Lord the Minister for his historical review. He puts a persuasive case to cover a most unsatisfactory state of affairs. I wonder whether the noble Lord has been able to read of that most interesting conference held yesterday, organised by The Times and a leading firm of accountants, the report of which in this morning's issue of The Times starts:
"The drive to cut public spending has fallen most heavily on capital projects, which are easiest to cut. Everyone agrees this is the wrong way round".
Did the noble Lord see the headline to that report, which was:
"It's time to rebuild Britain"?
Is it not a fact that the noble Lord and his Government are not rebuilding Britain, but are selling it off?
Lord Cockfield: My Lords, so far as the first supplementary question asked by the noble Lord, Lord Beswick, is concerned, the position is that the Consolidated Fund Act 1816 has now lasted 167 years. So far as his second supplementary question is concerned, public sector expenditure in the current year is estimated at £11¼ billion. The noble Lord will find the figures in Volume 1 of the Public Expenditure Survey Paper, at paragraph 31. Compared with this, disposals this year are estimated at £1¼ billion only. Public sector investment is therefore many times the amount of disposals. So far as the noble Lord's point about The Times newspaper is concerned, I read not only the report which appeared in this morning's paper, but also the long, informative and interesting article which appeared in yesterday's newspaper as well.
Lord Morris: My Lords, does my noble friend not agree that as the original acquisition of these assets was either directly or indirectly by way of taxation of earned income or the spending of taxed income, to suggest, as the Question does, that the proceeds of realisation be tied to capital projects is nothing if not spurious?
Lord Cockfield: My Lords, I am grateful to my noble friend for his observations. The money to acquire those assets came, of course, from the general flow of Government receipts, whether revenue receipts or capital receipts. The position is as I explained it to the noble Lord, Lord Beswick: one cannot attribute any particular item to any specific item on the other side of the account.
Lord Beswick: My Lords, can the noble Lord tell me of one year in those 167 years that he reviewed in which the Government of the day sold off assets at the rate at which they are now being sold off?
Lord Cockfield: Not without notice, my Lords. But it is not at all clear from the noble Lord's Question whether he thinks we ought to be selling public sector assets at a greater or lesser amount.
Lord Diamond: My Lords, although one accepts what the noble Lord the Minister has said about non-hypothecation of one item on one side of the national accounts to one item on the other, is it not the case that the Government are now embarking on a totally new policy which requires completely new thinking in terms of housekeeping? Is it not the case that the Government ought to regulate their housekeeping in the same way as everyone else does—by having regard to money coming in from the sale of assets in relation to current spending? Is it not the case that the Minister has once more given us only a partial answer? He has not indicated at all what the other side of the capital account is—theloss of capital from depreciation, and so on, which is not shown. Nor has he said that the amount which the Government are currently bringing in of £ 1¼ billion bears any relation whatever to the £40 billion which the Government propose to sell if they can.
Lord Cockfield: My Lords, the noble Lord holds a number of extremely interesting and somewhat controversial views on this matter, as indeed he does on a number of other subjects. I realise that the noble Lord is very dissatisfied with the state of public accounts—a matter to which perhaps he ought to have directed his attention during the years when he was Chief Secretary to the Treasury. But I think the most important point is that there is a fundamental difference of philosophy between the noble Lord and his noble friends on that side of the House and noble Lords on this side of the House. Noble Lords opposite believe that there is something particularly meritorious in public ownership. We take the view that, while in certain circumstances public ownership may be unavoidable, assets ought so far as possible to be held by private citizens.
Lord Shinwell: My Lords, may I ask the noble Lord for further clarification so that we can understand the position? When an industry is privatised the Government divest themselves of economic responsibility; that is what the noble Lord the Minister has said. In those circumstances, when an industry leaves the national sphere and is invested in private hands should not the general public—we and the people generally—have a right to ask the Government how the money is being distributed, and not to be told that the money is used in a general way by the Government without knowing exactly to what use it is being put?
Lord Cockfield: My Lords, the point the noble Lord raises is, of course, basically the same point raised by the noble Lords, Lord Beswick and Lord Diamond. The simple truth of the matter is that there are large flows into the public accounts and large flows out of the public accounts, and it simply is not possible to attribute an income flow and match it with a specific expenditure flow.
Lord Underhill: My Lords, as the Minister has stated that in his view assets should be in the hands of the private sector, could he explain to the House why the Government propose to nationalise London Transport?
Lord Cockfield: My Lords, the Government do not propose to nationalise London Transport.
Baroness Gardner of Parkes: My Lords, is the Minister aware of the situation in the National Health Service whereby assets cannot be realised to their full value due to planning restrictions, and yet these funds are badly needed? Could he inform me whether he knows of any action that is being taken to remedy that situation?
Lord Cockfield: My Lords, I think the point my noble friend raises strays somewhat far from the Question on the Order Paper.
Lord Taylor of Gryfe: My Lords, could the noble Lord the Minister tell us whether the figure quoted of £11 billion of capital expenditure in the public sector represents an increase on previous years in view of the requirements in the public sector for substantial capital expenditure to keep industry going?
Lord Cockfield: My Lord, it is an increase in cash terms, yes. But the figure is in fact the public sector capital expenditure; it does not include the expenditure by the nationalised industries, which for the current year is estimated to account for a further £6.9 billion.

Scottish Farm Tenants: Land Purchase
2.54 p.m.
Viscount Massereene and Ferrard: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they think it satisfactory to allow farm tenants of the Department of Agriculture and Fisheries for Scotland to buy their farms at one third of the official valuation.
The Minister of State, Scottish Office (Lord Gray of Contin): My Lords, public ownership of these estates now serves no useful purpose and, as my right honourable friend announced in 1980, it is the Government's policy to dispose of them. In order to encourage the tenants concerned to acquire their homes and land, the selling price in appropriate cases has been fixed at 30 per cent. of the open market, vacant possession agricultural value as assessed by the district valuer.
Viscount Massereene and Ferrard: My Lords, I thank my noble friend the Minister for that reply. I appreciate the need for the necessity to divest the state of being landlord to agricultural tenancies. However, does he not agree that this is an expensive way of doing it? Is it not a burden on the taxpayer because, as I am sure my noble friend must be aware, some of these tenants have received grants from the Highlands and Islands Development Board to stock their farms? Does not my noble friend agree that this arrangement will eventually dry up the availability of more vacant farms for tenancies because the existing tenants will surely take advantage of the huge profit to be made by selling their farms? Does not my noble friend also agree that the proprietors who buy these farms will not readily re-let them?
Lord Gray of Contin: My Lords, perhaps I should explain to my noble friend that the cost of administration has now reached a figure in the region of £1 million per year. Tenants of the land settlement estates are being offered a very substantial discount in order to encourage them to buy their holdings. I think my noble friend was suggesting that because of the circumstances there might be a clawback; but I should point out to him that any clawback or any pre-emption stipulation would have quite the opposite effect. It would discourage sales when the Government's objective is to dispose of all its leasehold and landlord units.
Lord Blyton: My Lords, is the noble Lord aware that Conservative policy over the past four years has been to sell council houses at a discount that is calculated according to the length of the tenancy? What is wrong, if that is the philosophy, for a tenant farmer who has

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worked his land for years having the same privilege as council tenants?
Lord Gray of Contin: My Lords, perhaps the noble Lord has not quite understood the situation, which is that so far as those holdings are concerned approximately three-quarters have been bought. This represents some 700, which is very satisfactory and means that the tenants have been taking advantage of the very attractive terms which the Government have offered.
Lord Leatherland: My Lords, may I ask the Minister whether he thinks that it might be unfair to the Scots to ask them to put their hands too deeply into their own pockets?
Lord Gray of Contin: My Lords, I think that the figure I have given will assure the noble Lord that many Scots know a good bargain when they see one.
Baroness Nicol: My Lords, in view of the Answer we have been given, may I ask the Minister to say whether it is the Government's intention to extend this principle to England and Wales?
Lord Gray of Contin: My Lords, I am afraid that I must tell the noble Baroness that I find my remit in dealing with the Scottish Office as much as I can master at the moment; but I shall make inquiries on her behalf and write to her in due course.
Lord Mackie of Benshie: My Lords, will the Minister tell the House whether tenants can sell the farms straight away?
Lord Gray of Contin: Yes, my Lords, the tenants have the right to sell the farms immediately. There is no question of pre-emption. However, it must be remembered that the tenant sells a very substantial part of his own right to the holding when he sells, and that is reflected in the price.

British Nationality Act and Travel Restrictions
2.58 p.m.
Lord Geddes: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what action they have taken in relation to the British Nationality Act 1981 with respect to (a) the refusal by the Canadian Government to grant entry, even as a visitor, to a British overseas citizen and (b) the insertion by the Hong Kong Government, at the request of Her Majesty's Government, of the words "Holder is subject to control under the Immigration Act of 1971" under "observations" on page 5 of a British Dependent Territories' Citizen's Hong Kong Government Passport.
The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): My Lords, may I apologise in advance for the length of this Answer.
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A Canadian Order in Council of 15th April precludes the issue of a visitors' visa to any person whose passport or other travel document does not give the holder the right to enter the country on whose authority the document was issued, although the passport is accepted for settlement. We expressed our concern to the Canadian Government and I am happy to say that they have now agreed to admit British overseas citizens as visitors where the visa officer is satisfied that the purpose of the visit is legitimate and that the visitor will be re-admitted to his country of normal residence at its conclusion. We have been assured that amended instructions will be given to Canadian visa officers.
On the second part of the Question, we have agreed that the endorsement "Holder is subject to control under the Immigration Act 1971" need no longer be inserted on page 5 of passports issued to British dependent territories' citizens. This of course includes those issued by the Governor of Hong Kong.
Lord Geddes: My Lords, given that my Question was effectively double-barrelled, may I thank my noble friend the Minister most sincerely for those replies. With regard to the second part, and conscious of the next Question on the Order Paper, may I ask whether my noble friend is aware that my Question was perforce tabled three and a half months ago—that is, before the situation was satisfactorily resolved as regards Hong Kong? Will my noble friend confirm that the endorsement that "the holder has the right of abode in" the relevant British dependent territory is now inserted in all British Dependent Territories' citizens' passports? Will he further confirm that no situation even remotely similar to that referred to in part (b) of my original Question still exists or will recur for any British Dependent Territories' citizen?
With regard to the first part, and assuming that the prime use of a passport is to facilitate travel, would my noble friend comment on the validity and usefulness of passports that do not have returnability on them?
Lord Trefgarne: My Lords, let me answer the last of my noble friend's supplementaries first. The answer is, no: a British overseas citizen's passport provides (as do other British passports) clear evidence of the holder's identity and national status. It is a valid travel document and no problems such as those referred to in the Question have to our knowledge arisen anywhere else. On the other point that my noble friend raised, I can confirm that all new British dependent territory passports, as issued, will include the revised wording, and existing passports will of course be amended as they come due for renewal; but anyone who holds one of these passports and wants it changed right away can have that done.
Lord Mishcon: My Lords, does the noble Lord the Minister remember the warnings, given by my noble friends and myself at the time of the passing of the British Nationality Act, that we were indeed creating divisions and misunderstandings in our Commonwealth? Does he remember the remark of the noble Lord, Lord Boyd-Carpenter, that we were slapping Gibraltar in the face, and that the slap remained until this House carried an amendment? Is he prepared to reconsider at some time the disadvantages of that Act?
Lord Trefgarne: My Lords, I remember only too well the proceedings on the British Nationality Act to which the noble Lord refers and indeed the interventions of my noble friend Lord Boyd-Carpenter on the question of Gibraltar. As the noble Lord rightly says, an amendment was carried in your Lordships' House in that connection. But the matters referred to in the Question, as it happens, do not, strictly speaking, arise out of that Act.
Lord Jenkins of Putney: My Lords, has the noble Lord seen the notes issued by the Action Group on Immigration and Nationality dated November 1983 on the workings of the Act in relation to passports? If he has not done so, will he read them and consider the possibility of amending the Act to remove some of the difficulties and injustices which are currently arising?
Lord Trefgarne: My Lords, I cannot claim to have seen the document to which the noble Lord refers, but if he will send me a copy, I shall be happy to look at it.
Lord Paget of Northampton: My Lords, is not the truth of the matter that we are all racists now and that every Government is equally determined to control racial immigration?
Lord Trefgarne: My Lords, that is a view for which I fancy the noble Lord will not find much support in your Lordships' House.

Starred Questions
3.2 p.m.
Lord Reigate: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask the Leader of the House whether he is aware that on Wednesday, 27th July, the first available date for tabling a Starred Question was 14th November.
Lord President of the Council (Viscount Whitelaw): Yes, my Lords, and I quite understand my noble friend's concern. But it is, I fear, inevitable that the Summer Recess should disrupt the normal pattern of Starred Questions.
Lord Reigate: My Lords, I thank my noble friend for that helpful Answer, but would he not agree that the important thing about a Question is that it should have some topicality, which it cannot do under these circumstances? Would he consider that the period for tabling a Question should be limited to a calendar month without making allowance for the Recess?
Viscount Whitelaw: My Lords, that of course is a matter for the House to decide. I understand that the rules are set out in Standing Order No. 40. No Question may be put onto the Order Paper for a date more than one month ahead; but in reckoning that period no account is taken of any time during which the House is in recess. If, however, the House was to change that and decide that the Recess should not be
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left out, that would be perfectly possible but it would require an amendment to Standing Order No. 40.
Lord Ponsonby of Shulbrede: My Lords, since the new system for tabling Questions has been introduced, can the noble Viscount confirm that there has been a greater opportunity for Peers to table Questions at an earlier date than was previously so?
Viscount Whitelaw: My Lords, that is certainly true. I think that there has been a considerable improvement since the new arrangements were made, which was of course before I came to my present position. The Order Paper indicates that the first available date for putting down a Question is now 8th December, which, after all, is only three weeks ahead. If we disregard the question of the Recess, I think that shows that the situation is reasonably satisfactory. If the House wished to pursue the question of the Recess in this connection, it would be perfectly proper for the Procedure Committee to consider it.
Lord Renton: My Lords, would it not ease the situation, however slightly, if we each limited ourselves to one Question, or double-barrelled Question, per day?
Viscount Whitelaw: My Lords, I am entirely in the hands of the House in these matters. I accept at once that the arrangements that have been made for the number of Questions that may be tabled and the times at which they may he tabled have made a considerable improvement. I am told by some noble Lords that I am too reasonable about the time for which I am allowing Question Time to continue. I am totally in the hands of the House. I seek to judge the mood of the House on every particular question. If it is said that I am too reasonable, I know that I am perhaps considered not sufficiently reasonable by those to whom I am being reasonable, and very unreasonable by those to whom I am less reasonable. I understand all that, but I shall continue to do my best.
Lord Alport: My Lords, would my noble friend consider asking the Procedure Committee whether it would be possible to add a fifth Question, which should be tabled not more than seven sitting days and not less than three sitting days before it is answered?
Viscount Whitelaw: My Lords, that can of course be considered, but I understand from my noble friend the Chief Whip—who is always willing quickly to advise me on such matters—that that was considered by the Procedure Committee and was rejected. That does not mean that the committee might not change its mind on a future occasion. The matter could certainly be looked at.
Lady Saltoun: My Lords, would the Procedure Committee consider having the fourth Starred Question tabled at a week's notice? Would it not perhaps reconsider the matter?
Viscount Whitelaw: My Lords, the noble Lady raises another point which would inevitably extend the period for Questions, but as I say, it is in the hands of the House. I am advised that the House feels that 20

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minutes or thereabouts for Question Time is about right. If the House wants it to be further extended, that would be possible, but it would impinge on the debates thereafter. I am advised that that is not what noble Lords want.
Lord Derwent: My Lords, may I suggest to my noble friend the Leader of the House that if we lengthen the period of Question Time it would be very bad for the temper of the House?
Viscount Whitelaw: My Lords, that is a matter for noble Lords as to how they judge their Questions. It is entirely a matter for the House whether we have more time for Questions. I am in your Lordships' hands. I am prepared to discuss with any noble Lord personally or through the usual channels whether this is something that is wanted. I am so far advised that it is not, so I hope that we shall be able to continue some arrangement on the same lines. I shall certainly consider all the points that have been put during this exchange.
Lord Molloy: My Lords, may I agree with everything that the noble Viscount has said? I think that we are moving towards a reasonable solution to some of the problems that confronted the House. In my judgment the noble Viscount's behaviour has been par excellence. Just one little thing seems to irritate Back-Benchers on both sides of the House, and that is the issue of the Private Notice Question. Such Questions always seem to be acceptable if they come from a particular Bench, commonly known as the Front Bench. But there is no reason to say that the Front Bench is more informed or knowledgeable than any other Bench. If a Private Notice Question is submitted other than from the Front Bench, does the noble Viscount consider that nevertheless it deserves whatever attention it ought to command?
Viscount Whitelaw: My Lords, I think I should make the position—which perhaps the noble Lord does not quite appreciate—clear. In my duty as Leader of the House I have to consider a Private Notice Question put down by any noble Lord, irrespective of the Bench that it may come from. Of course, I do that. I have to be guided by the convention of the House that the matter must be urgent and topical. I have to consider it on that basis. Indeed, I do just that. In case there should be any doubt, I add that if a Private Notice Question is accepted in another place that raises different issues. The noble Lord may now be referring to that.
Lord Jacques: My Lords, is the noble Viscount aware that the House generally is very pleased at his tolerance, which is in accordance with the traditions of the House?
Viscount Whitelaw: My Lords, I am grateful to your Lordships. I am acutely conscious that when one marches up one day, one goes down the next. I shall do my best to continue on an even keel.
Lord Reigate: My Lords, will my noble friend note that practically all the supplementary questions have
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been totally irrelevant to the Question that I asked first of all? Will he consider submitting all the issues raised to the Procedure Committee?
Viscount Whitelaw: Of course I will, my Lords. I am sorry if I have done what I constantly tell all my fellow Ministers they must not do: that is, to stray outside the original Question. I realise, therefore, that my previous answer was all too correct.

Business
Lord Denham: My Lords, with the leave of the House, I should like in the normal way to say a brief word about the timing of the two short debates this afternoon standing in the names of my noble kinsman Lord Spens and the noble Lord, Lord Jacques. Following the principle that the mover should be entitled to approximately 15 minutes and that the Minister should rise to reply no later than 20 minutes before the scheduled end of the debate, may I suggest that other speakers in today's debate should limit their speeches to a maximum of 11 minutes as regards the debate of the noble Lord, Lord Spens, and 14 minutes as regards the debate of the noble Lord, Lord Jacques, respectively? Perhaps I should point out that, if any noble Lord should speak at greater length, he will do so at the expense of later speakers in that particular debate.
Standard Chartered Merchant Bank Bill
Read a third time, and passed, and returned to the Commons with amendments.

Cyprus
3.11 p.m.
Lord Spens Lord Spens rose to call attention to the situation in Cyprus; and to move for Papers.
The noble Lord said: My Lords, we are to be honoured today to listen to the maiden speech of a very remarkable man, my noble colleague sitting on these Cross-Benches, Lord Tonypandy. I hope he will indulge himself in the freedom of speech which we all enjoy here, free from the shackles of an office in another place which were inclined to restrict his utterances to little more than, "Order, Order!" I wish him great success in his maiden venture in this Chamber.
I feel I owe the House an apology for being so lucky in the draw for short debates. I believe this is the fourth one I have achieved. It is certainly the second one on Cyprus, because I introduced a debate on Cyprus three years ago. The Motion which I put down for today's debate I put down right at the beginning of this Parliament, in June. I had just returned from a 10–day visit to North Cyprus and I realised that things were impending there which, in fact, happened yesterday. I hoped we would have had the opportunity of discussing that situation before the events of yesterday, but I am afraid I was beaten by a short head.
I think that what I should try to do now is to explain why yesterday's events happened. I am afraid your Lordships will think I am a little bit biased in so doing, but I have had many talks with President Denktash and his colleagues, and I believe that they are all genuine. I am sorry, however, that this event has happened so quickly because, when I was over there in June, I urged President Denktash—and he agreed with me—that there should be a referendum of everyone on the Turkish side before this unilateral declaration was made. I was waiting for that to happen. Unfortunately, political events made that, I will not say impossible, but they made it I think tactically easier for the Turkish Cypriots to take the action they did very quickly yesterday.
There are two myths circulating about the cause of the present stalemate in the island, and I want to try to dispel them. The first is that the problems of Cyprus only started with the Turkish intervention in 1974. The second myth is that, prior to 1974, Greeks and Turks lived happily together and could go back to that situation today.
Taking the second myth first, I should like to suggest to noble Lords that, as regards the Turkish Cypriots, a book which I placed yesterday in the Library explains very well the of events even earlier than 1960 up to the present day. It is called, The Road to Bellapais, The Turkish Cypriot Exodus to Northern Cyprus, by Pierre Oberling, who is a professor of history at the City of New York University.
One has only to glance at this book to see how serious and how long the troubles have been. At page 58 of the book, the author talks about civil war between Greek and Turkish Cypriots as early as 1956.You only have to look at the chapter headings of the book to see what has happened since then. Independence was given to Cyprus in 1960, with a treaty of guarantee signed by Greece, Turkey and Her Majesty's Government, in the form of the noble Lord, LordCaradon—who I am very sorry to see is not here today.
Looking at the chapter headings, "The Rise and Fall of the Cypriot Republic" is one of them, and that only relates to the period 1960 to 1963. The next heading is, "The 1963/1964 Crisis", and that crisis occurred because there was a co-ordinated attack on Turkish Cypriots by Greek Cypriots in December 1963. I think it started on 21st December and went on until about April of 1964. During that time, Turkish Cypriots were kicked out of their homes in more than a hundred villages all over the country. That might not have been so bad if they had been allowed to build other homes elsewhere, but the Cyprus Government, led by the late Archbishop Makarios, declared building materials to be of strategic importance, and would not allow them to get building materials to build new homes. So there were about 30,000 Turkish Cypriot refugees looking for homes from 1963 until after the events of 1974. That is a fact that I think people forget.
The next chapter in this book is called, "The Crisis of 1967". There again, there were attacks on Turkish Cypriots by the Greeks and, this time, Turkey very nearly had to intervene. However, when they sent over one or two planes, that stopped the Greek Cypriots continuing their attacks and the crisis
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finished. In the book there is a map which shows how the Turks were pushed into enclaves all over the country in the late 1960s. Crowded together in those enclaves they almost starved, though not quite. But if your Lordships read the United Nations reports, you will see that there was trouble over feeding them, and economic sanctions were brought against them by the Greeks. They survived, but they did not live happily ever after with their Greek neighbours. I am certain that they would never do so again. I hope therefore that the myth that this might happen has been dispelled.
The first myth—that the crisis started with the Turkish intervention in 1974—has been more or less explained away by what I have just said. What happened was that on 15th July 1974 there was a coup d'état organised by the Greek colonels in which, as your Lordships might remember, Archbishop Makarios was dethroned and more or less had to escape from the country. For five days there was an enormous slaughter of Greek after Greek. The Turkish Government, worried about the safety of the Turkish Cypriots, begged the British Foreign Secretary to come under the Treaty of Guarantee and help stop what was happening. The British Foreign Secretary, I am afraid, did not do so. So, on 20th July, Turkey came in alone, using its rights under the Treaty of Guarantee, to protect the 150,000 Turkish Cypriots on the island. If one compares that with the action of the United States a few days ago in going into Grenada to protect only 1,000 United States citizens, one really cannot blame the Turks for doing what they did.
Lord Trefgarne: My Lords, if the noble Lord will allow me to intervene briefly, may I ask whether he will say to which right under the Treaty of Guarantee he is referring?
Lord Spens: My Lords, I believe I have the Treaty of Guarantee here. I shall have to look it up. The right is, I think, in Article III, or perhaps it is in Article IV. Article IV states:
"In the event of a breach of the provisions of the present Treaty, Greece, Turkey and the United Kingdom undertake to consult together with respect to the representations or measures necessary to ensure observance of those provisions.
"In so far as common or concerted action may not prove possible, each of the three guaranteeing Powers reserves the right to take action with the sole aim of re-establishing the state of affairs created by the present Treaty".
That is Article IV of the Treaty of Guarantee.
It was under that article that Turkey sent in its troops. Of course, when an army goes in, it does so in force. That is what happened. There was a lot of bloodshed on both sides. But, after the fighting, peace came, and there have been nine years of complete peace, certainly in North Cyprus. It is the safest place, at the moment, anywhere in the world. There is no crime, or hardly any crime, and I recommend your Lordships to visit the island. There is still a small British population. We know them as "the ancient Brits." I understand that they are about to issue a statement supporting what happened yesterday.
The reason for what happened yesterday was that for nine years no one recognised the Turkish Cypriots. Everyone allowed the Greek Cypriots to pretend to be the Government of all Cyprus. But that was never the

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case. Even if it was the case, it was quite contrary to the basic law of the constitution of 1960, which Her Majesty's Government again had guaranteed to keep. I am afraid that they never took action to keep that basic law, as it was written, giving the Turkish minority their rights to places in the Parliament and places in government. So they have been frustrated.
Their frustrations amount, I think, to three. The first is that no one has taken them seriously, and they have become fed up with that situation. The second frustration—and, I think, a more serious one—lies in the fact that they have been suffering from an economic blockade imposed by the Greeks. Economic sanctions have prevented their airport from being recognised as an international airport. Their seaports have been blacked. That has frustrated them and frustrated their economy. They do not want the situation to continue for much longer. I hope that my noble friend Lord Energlyn will elaborate on that point.
The third frustration is that throughout the inter-communal talks the Greeks have never considered the Turks to be in any way partners to those talks. They have always considered them to be a second-rate minority, whereas the Turks feel that they must be partners. Their action yesterday, they hope, will put them into that position.
My time is up. I see the Chief Whip glaring at me. I shall therefore conclude by saying that I hope that the British Government and the British people will not act too soon and too quickly to try to reverse what happened yesterday. They will not be able to do so; it is a fact. It is only putting into a more constitutional form a situation that has existed for nine years. I wish the Turks well.
The Earl of Perth: My Lords, before the noble Lord sits down I should like to ask him whether, under Article IV, the declaration of UDI is in his view lawful.
Lord Spens: My Lords, I am quite certain that it is not lawful under that article. My Lords, I beg to move for Papers.
3.30 p.m.
Lord Cledwyn of Penrhos: My Lords, we are more than usually grateful to the noble Lord, Lord Spens, for selecting this subject for debate because it could not be more timely in view of yesterday's critical developments. I appreciated the noble Lord's speech, but I must tell him that I cannot accept his interpretation of events. We are now able to examine the full implications of the action and to hear the Government's reaction to them. I know that the House is looking forward very much to the speech of my noble friend—my very old friend—Lord Tonypandy, who for many years has taken a close interest in the affairs of Cyprus. We shall be most interested to hear his comments and advice.
One matter became clear immediately after the news of the declaration of secession came through—namely, that all parties in both Houses deplored and condemned the action, as did most countries in the world. It was an act which broke the
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treaties of 1960 and which contravened resolutions of the United Nations. Whatever the arguments that the Turkish Cypriot leadership may advance, or the Turkish Government for that matter—and the two have always worked closely together and there was sympathy for some aspects of their cause—the fact is that this unilateral step, and the finality which the Turkish Cypriot regime attach to it, bring a new and dangerous dimension to the problem of Cyprus.
Before I come to the new situation created by secession, it is as well to consider the events of the past few weeks so as to get the matter in perspective. The House will recall that we debated Cyprus on 20th April and we then reviewed the prospects for a long term settlement which would bring stability to the island. We recalled the invasion of 1974, to which the noble Lord, Lord Spens, has just referred, and the establishment of the Attila Line. That in itself is an unrealistic boundary from every point of view, specially the demographic one. The United Nations condemned the invasion without qualification because it was an act of aggression by Turkey and because also it broke the treaty which guaranteed the independence and security of the Republic of Cyprus. This should be made clear now—namely, that the partition of the island, which yesterday's declaration seeks to make permanent, was forbidden by the treaty which laid down that unilateral action by any one of the three powers—Greece, Turkey and the United Kingdom—was only permissible for the purpose of maintaining the terms of the treaty itself.
The noble Lord, Lord Spens, takes a different view of that; but he must remember that the view was taken clearly by a great majority of the members of the United Nations that Turkey was in breach of the treaty, and that was the view taken by Her Majesty's Government at the time. Turkey broke the treaty which she herself had signed. Turkey has now, as we understand, supported the declaration although the Government had said that they opposed a unilateral declaration. It is said that the Turkish Government were unaware of the intentions of Mr. Denktash and his colleagues and were taken by surprise. Their immediate favourable response to the actions of Mr. Denktash is not conducive to a constructive meeting between the guaranteeing powers.
We must accept that the progress made since our last debate in April has been disappointing, although the Secretary General of the United Nations, Senor Perez de Cuellar, has made strenuous efforts over the last few months to get the parties together in a reasonable frame of mind. Both sides have, it is true, been intransigent, but the possibilities of a settlement underwritten by the United Nations were clearly there. Senor de Cuellar certainly deserves the utmost praise.
Perhaps we should also recall that in May the United Nations General Assembly called for the withdrawal of all the occupation forces from Cyprus. The voting was 103 for, 5 against, and there were 20 abstentions. It was at that point that Mr. Denktash started talking about the declaration of an independent state, against overwhelming world opinion. Again, in June, the Security Council extended the mandate for a peacekeeping force by six months, and in August the Greek and Cypriot leaders met to discuss Mr. de Cuellar's proposals for a bizonal federation. No

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action followed this meeting although the Secretary General met Mr. Denktash and President Kyprianou several times. I mention this to show that no one can argue that there was no movement or that no effort was being made to find a solution. Strenuous attempts have been made throughout the last few months by Senor de Cuellar to find a settlement. The Secretary General has shown a courage and a willingness to take initiatives which in my view are wholly admirable. One can understand that he must feel dismayed and frustrated at this time. We must also concede that neither the Turkish nor the Greek Governments made things easier for the Secretary General. It was a poor example of international co-operation.
However, prospects took a better turn a fortnight ago with the United Nations initiative to convene a summit meeting. This had the strong support of President Papandreou and Mrs. Thatcher, and Turkey had indicated support as well. Mr. Denktash himself had suggested this initiative to the Secretary General and Mr. Hugo Gobbi (the United Nations envoy) was due in Cyprus to discuss the details with both Mr. Denktash and President Kyprianou. Many spoke of this effort as a last chance to obtain a settlement, and it is one of the tragedies of the situation that it was never given the opportunity to develop.
As we look to the consequences of the Turkish Cypriot action, may I repeat what I said yesterday—namely, that we support the initiatives taken by the Government thus far. They appear to us to have been right and to have been swift. We do of course have special responsibilities as one of the guaranteeing powers and there are historical associations with Cyprus, our NATO commitments and our bases there, and we also make the largest contribution to the peacekeeping force. I do, however, believe that the next step and the main initiative must once again come from the United Nations.
I have read the declaration from the Turkish Cypriot régime and while much of it is, inevitably, propaganda, there are points which deserve attention. For example, the declaration says:
"The proclamation of the new State will not hinder, but facilitate the establishment of a genuine federation",
and later:
"The good offices of the United Nations Secretary General and negotiations must continue";
and it promises:
"to remain faithful to the principles of the United Nations Charter".
Those are extracts from yesterday's declaration.
We should—and I am sure that this will be the Government's intention—support the Secretary General in an effort to get the parties together in the hope that they will make a genuine effort to find a solution. The proposal for a bizonal federation should still provide a basis for serious discussion; but it could only succeed if both Greece and Turkey give it support. They are both members of NATO, but one begins to think that this has been more of a hindrance than a help to a solution.
I hope that the new Turkish Government will take a more constructive attitude. The Turkish Government have a crucial role to play in this matter. We sympathise with them and with the people of Turkey
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upon the terrible tragedy which recently befell them and we wish the new Government and the new Prime Minister well in what must be a very difficult task. We also hope that they will move towards democratic and co-operative policies. It would make NATO a more comfortable partnership if they would do so. And NATO itself would benefit from a solution in Cyprus. Entrenched partition in Cyprus will not help. Partition would be a running sore; it never solves problems; it is an admission of defeat wherever it exists, and even if its boundaries are declared to be permanent, it never creates a permanent political solution. We are perhaps more aware than most of the potential dangers of partition.
It will be said that the treaty is now a dead letter; it will be said that the United Nations is ineffective. Many—perhaps most—will assume quietly that the declaration and the new arrangement will drift into permanance. I hope not. That would indeed be a triumph for wrongdoing and for international disorder. The danger and likelihood is of communal strife between Greeks and Turks in Cyprus. It is in the interests of both that they should reach an understanding. The economy of Cyprus also demands this and the Turkish area would greatly benefit from a closer relationship. It is a mistake to think that the Turks of north Cyprus have prospered since partition. It is the Greeks in the south who have prospered most, and economic co-operation between the two areas is needed very quickly mostly in the interests of the Turkish Cypriots of the north. There are good reasons why an early and realistic exchange of views is, therefore, essential.
We are also conscious of the refugee problem, which may now become more acute. And, as I said yesterday, there are British citizens about whom we shall be glad to have news; their safety is always our close concern. Therefore, we urge the Government to use all their efforts in support of a strong and urgent United Nations initiative to convene a meeting of the parties in an effort to resolve this unhappy and complex affair.
3.40 p.m.
Viscount Tonypandy: My Lords, I ask the indulgence of the House as I seek to address it for the first time. Every noble Lord who has made his maiden speech in this House will know exactly how I feel at this moment. I made my original maiden speech to another place in this very Chamber 38 years ago, and, naturally, I see on Benches here people who were in that 1945 Parliament; so memories crowd in on me.
I hope your Lordships will forgive me if, in passing, I say that I love another place. I was there a long time; and, with all its foibles and its frailties, it is a good place. I shall always have it written on my heart that I had the privilege of being Speaker and of leading the Members of that House to the Bar of this House, when your Lordships looked so formidable and, of course, impressive.
Already I have learned to love this Chamber. Noble Lords, with their courtesies and their kindnesses, have made it quite clear to me that the sharp clash of party political opinion can take place in a civilised atmosphere; since I have been a Member of this House no attempt has been made to drown an argument by

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noise alone. I believe that this Chamber bears witness that democratic debate in a peaceful atmosphere diminishes the strength of no one's argument. To the contrary, it adds to the significance of the debate.
In sitting on the Cross-Benches in your Lordships' House, as does my noble friend Lord Maybray-King, I follow a long-established custom designed to support the current Speaker of the other place. As a former Minister in the Commonwealth Office and as a regular visitor to Paphos, Cyprus, for many years, I wish to thank the noble Lord, Lord Spens, for initiating this timely debate. I should also like to thank both the noble Lord and my old friend Lord Cledwyn for their kind words this afternoon.
The unhappy diplomatic blunders in the policy on Cyprus of long ago belong to the history book. We now have a new situation. My heart aches for the people of Cyprus. I think of those who lost everything when they had to leave their homes. The noble Lord, Lord Spens, referred to Turks who had to leave their homes. I have met the refugees from Famagusta and Kyrenia, and I admire beyond measure the way in which they have rebuilt their lives, and in which they have restored the economy of Greek Cyprus.
I do not believe that the declaration of independence by Mr. Denktash could have come as a surprise to the Foreign Office, to Nicosia or to Ankara. There have been plenty of warnings. However, as the noble Lord, Lord Cledwyn, has reminded the House, talks were under way and the United Nations had made it quite clear that it desired, not partition but an understanding between both sides.
It may well be that in making his declaration Mr. Denktash has exploited the political situation in Turkey during the interregnum between power passing from the military dictators to civilian rule under the Prime Minister, Mr. Ozal, in early December. Of course, it is a moment of opportunity for activities of this sort, but it is my belief that, without the assurance of Turkish support, the declaration would not have been forthcoming; and I think that they owe it to the allies in NATO to realise that, in any case, the Middle East is an explosive area, and that further troubles of a military character could lead to imponderables that are too frightening to consider openly and at length.
However, the part of Cyprus that was taken by the Turkish tanks and soldiers is 37 per cent. of the whole of Cyprus. When we bear in mind the major British sovereign bases in Cyprus we must realise how unfair this declaration by Mr. Denktash is to the Greek Cypriot population there. I rejoiced to read that the Prime Minister had led the world in condemning the action taken. We have major treaty obligations (to which reference has been made) to the territorial integrity of Cyprus. We failed to fulfil our obligations in the previous crisis, and, therefore, I join with the noble Lord, Lord Cledwyn, in hoping that Her Majesty's Government will feel that this time they can use the United Nations and NATO to ensure that conversations among the Greeks, the Turks, ourselves and the Secretary General of the United Nations should take place.
I realise that the necessity for NATO bases in Turkey is a factor in people's minds, and it makes the
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Government's task in negotiations more difficult. But our national honour is involved in this matter and, in my opinion, the national honour of Turkey as an ally in NATO is also at stake. She ought to realise that she endangers the whole of the Alliance by the attitude which she is taking.
I conclude by making a plea to Mr. Denktash and to his Excellency President Kyprianou. They both hold power in their respective areas and with regard to their respective peoples. But it is in the greater interests of Cyprus that both of them should realise that this is not a time for pride, that it is not a time for bigotry, and that the future—which does not belong to them but to the young—cannot afford the partition of that small island. I pray that the endeavours of Her Majesty's Government will be successful in ensuring that the federal state, to which President Kyprianou had already agreed and which, as the statement by Mr. Denktash indicated, is possible, will come about, and that we shall be able to work on that. We dare not let the situation slide so that Cyprus can suffer the agonies that we suffer in a part of the United Kingdom.
3.50 p.m.
Lord Kennet: My Lords, chance gives me the honour of following on the noble Viscount, Lord Tonypandy. His voice is known and loved by millions. His career, his integrity, and his political gifts are known and admired by tens of thousands, and his personality has brought warmth and pleasure to all those who know him. He was a fine Speaker of the House of Commons, and he has made a fine maiden speech here. He is very welcome.
From 1960 to 1974 we saw in Cyprus the failure of a federation of communities—that is to say, of communities joined all the way up from top to bottom. Both communities were to blame. Majorities are usually more to blame when community relations break up, and though there was great blame on both sides yet the Greeks were the majority, and we should not forget that.
In 1974 Greece, a guarantor power under the foundation treaties, with a stupid military régime in charge in Athens which was already tottering, staged a coup d'état and placed Nikos Sampson in power in Cyprus. This was not the work of Greek Cypriots; it was the work of kalamares, as they call Greeks from Greece 500 miles away. It was done in pursuit of the dishonoured dream of Enosis, which had already long since been abandoned by all sane people.
The Greek colonels fell over their own feet immediately, but this did not stop Turkey from invading, and what a change there has been since then. Perhaps they had a right under the treaty to go in while Sampson was still there, but they certainly had no right to build up an invading army of 40,000 men; they had no right to take 39 per cent. of the land of the island given that they are only 18 per cent. of the population; they had no right to ignore a stream of desperate appeals from the United Nations to stop, stop, and stop, and not to advance inexorably right down into the south until they hit the British sovereign base, where they are still today.
Perhaps for a few weeks or months after that unjustifiable and extreme action there could have been a hope of a new kind of federation of communal

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territories; that is, the two territories joined only at the top. Now, unfortunately, even that hope has gone. There is now an iron curtain across the island, engagingly called the Attila Line by its builders. It is a heartrending thing. It looks exactly like the Russian one, only scruffier.
Like the noble Lord, Lord Spens, I have had the advantage of a recent visit, only last month, in which I was able to visit both sides of the island as well as the British sovereign bases. There is only one gate in the island. That is in Nicosia. You have to cross there if you are going to cross at all. Immediately on the Turkish side of this gate the first thing you see is a signpost saying, "To the museum of barbarism" where relics of a Greek massacre of a Turkish family many years ago are lovingly preserved. No such thing appears anywhere in Greek Cyprus. Indeed, I think all visitors are struck by the strong spirit of optimism, of economic achievement, and of a refusal to be resentful or to whine or groan about what has happened to them, which is to be found among the Greek Cypriots.
Two hundred thousand Greek Cypriots were driven from their land and their homes in the north, and Anatolian peasants were brought in by the northern Turkish régime to take their places. It is true that a perhaps proportionate number of Turks found life in the south in the legitimate Republic of Cyprus impossible and went north. That was a population exchange.
We want to be as even handed as we can of course in all such matters as this, but even handedness must not blind us to obvious illegality. The Turkish Cypriots rely on the support of an invading army from Turkey which still, even today, numbers over 20,000 men. The Greek Cypriots, on the other hand, are well advanced in the process of removing Greek officers from Greece out of their own National Guard, and replacing them by Greek Cypriot officers. Cyprus is a Commonwealth country. It is one-third under illegal rule backed by an invading army, and that third has now illegally declared its independence as a sovereign state, which is impossible. It is bad weather, my Lords, for Commonwealth islands.
The United States and to a lesser degree we ourselves have often stood back from the flood of United Nations resolutions, culminating in the one of May this year which has called upon the Turks to take their army away, and has called upon Turkish Cypriots to undo their illegal instruments and to remove their illegal iron curtain. The American and British standing back reflects reality. There is a wider consideration than communal conflict in Cyprus, and that is not only the Commonwealth: it is also NATO. NATO has so far been able to contain—just—the two peoples, Greeks and Turks, who have not been able to make lasting peace for more than 1,200 years.
Turkey needs NATO, for Turkey's main fear is Russia. And so is ours, and we need Turkey in NATO. But Greece's main fear is not Russia; it is Turkey. It is not Russia which lays claim to Greek islands and to the Greek seabed round them, and it is not Russia which nine years ago invaded an independent country where 82 per cent. of the people are of Greek extraction. That was Turkey. These are the facts, and we must all live with them.
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The new entity created, or announced, by yesterday's deplorable declaration, of which more than half is a sustained, high-pitched litany of abuse against the Greek Cypriots, will in any case be friendless in the world—except for Turkey, which has regrettably already recognised it, and a few more or less remote Islamic countries who know little of Europe and the Levant.
There is a further danger than that, something even wider and probably graver. The danger is that Turkey itself, by its continuing illegal actions, might become a pariah state able to converse only with other pariah states. The position of one of those within NATO will be difficult indeed. That would be grave. How grave we cannot see. We must just hope that it does not happen. The Government, I think, are taking the right courses, but perhaps most of all the new Turkish Government in Ankara must be helped to see the danger I was outlining for itself. It is a danger for the whole of the West, to which Turkey so ardently aspires to belong.
The new Turkish Government—elected with what degree of democracy the world will be in due course judging, but elected unlike the one before—should be an element of hope. It was because of this hope that I, for one, read with a mixture of laughter and despair the reported remarks of Mr. Turgut Ozal in The Times of Saturday, before the declaration, when he was interviewed by a Times journalist. I quote The Times journalist:
"I asked if there was any significance in the fact that the map of Turkey used as a symbol by his Motherland Party includes northern Cyprus. He said there was not. 'You see, if we had not shown Cyprus, some people would have said "Why did you not show Cyprus?" ' ".
Well, so they would. The people who would have said that are the people who wish to maintain the option of an outright Turkish annexation of Cyprus into the state of Turkey, or at any rate of northern Cyprus into the state of Turkey. The fact that that remark could be made, even in the innocence of having won an election three or four days before, even before assuming the responsibility of power, by the man who will be the Prime Minister, bodes ill. I repeat that we believe the Government are on the right track. We cannot know, nor do we expect to be informed, what they are saying to the new Turkish Government, but we can only hope that they are speaking very seriously and straight from the heart.
4 p.m.
Lord Drumalbyn: My Lords, in the brief time I have at my disposal I should like to start by congratulating the noble Lord, Lord Spens, for introducing this debate. I should also like to thank the noble Viscount, Lord Tonypandy, for the wonderful speech that he has given to us today. We all feel it was a great privilege to have heard it.
The quarrel within Cyprus is a matter not only of sadness but of deep anxiety for this country. It is not only that we are involved in Cyprus through our bases at Dhekelia and Akrotiri, which play a valuable part in the NATO system of defence: it is that Greece and Turkey are both valuable partners in NATO, and the value of that partnership is not enhanced by their

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failure to agree about Cyprus. Furthermore, both countries are friends of ours—and, I believe, good and loyal friends.
As for Cyprus itself, that republic is a member of the Commonwealth, though I fear that it is unlikely to remain so if, for the first time in history, Cyprus becomes, in defiance of the treaties, part of the Greek state. That is what the Turkish Cypriots believe the present régime in Cyprus wants, and there is plenty of evidence to support that belief. The question is not, "Will the Greek Cypriots carry Enosis to its logical conclusion?", but, "When will they do so?" This is the Turkish view. The Turkish Cypriots, led by Mr. Denktash, can be forgiven for wanting to get out from under Greek domination, which they consider not only unjust but illegal under the constitution. We should bear in mind that the Zurich agreement establishing the Cyprus constitution in 1959, negotiated and agreed between the Greek and Turkish Governments, was backed by a tripartite treaty—or, rather, two treaties—which rules out, first, Enosis;secondly, partition; and, thirdly, division. When I say "division", I mean the division of Cyprus into two parts.
According to Miss Nancy Crawshaw's book, Cyprus Revolt, which is in the Library and which is worthy of attention, no change could be made in the 27 basic articles of the constitution, agreed by Greece and Turkey at Zurich and confirmed by the document signed and initialled at Lancaster House on 19th February 1959, prior to legislative approval in each signatory country. No change is possible in those articles; yet changes have been made, and I am bound to say that they appear to render the present Greek Cypriot régime illegal and unconstitutional. The constitution itself is basically bipartisan. Surely the fact that the Kyprianou régime has ignored the entrenched rights of the Turkish Cypriots is a direct and deliberate breach of the treaties. This, I acknowledge, has its legal aspects, but it is not only legal aspects that count in this matter.
Not unnaturally, the Turkish Cypriot community were not content to be treated as second-class citizens, deprived of any say in the destiny of their country and, indeed, of any share in the benefits of citizenship. Quite recently they set up an administration which this country, as well as the official Cyprus Republic, has pitilessly ignored.
The northern part of Cyprus, which has been referred to and which comprises between 37 and 40 per cent. of the island, has been subjected to much worse than discrimination by the south. For a régime which claims responsibility for all the inhabitants to set out deliberately to make life so difficult as to be impossible for a large section of the population for which it is responsible is, to my mind, quite shocking. The result is that the north, in comparison with the south, as has already been mentioned, is very poor. Admittedly part of the reason for its poverty is that the north has had to keep a large military presence to defend itself against the south, but it was the conduct of the régime which brought upon itself the advent of the Turkish troops.
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Whatever the legal niceties of the situation in Cyprus, the reality is that constitutionally Cyprus is divided into two parts—one predominantly Greek, and the other predominantly Turkish. Cyprus is one island containing two peoples, speaking two different languages, having two different religions, two different cultures, two different social systems, I believe, and separate education systems. They are two separate entities.
The constitution recognised that. What the constitution did not do was to implement the reality on the ground. But to a large extent the Cypriots themselves have since implemented it by population movements out of the southern half of the island and also from the north to the south. I think that on both sides there was great cost in loss of property. The tragedy is that the two partners could have existed together peacefully but for the outside interference, first by the Greeks and then by the Turks, not to mention the guerrilla activities of one Grivas. I merely observe that whenever the Greeks try the Turks too sorely, they get the worst of it in the end.
The question is: what should be done now? The obvious course is to renegotiate the treaties, as the noble Lord, Lord Cledwyn of Penrhos, has indicated, and to have talks. Possibly the constitution should be changed to that of a federation. This, I believe, is what Mr. Denktash has been advocating and working towards. I found it astonishing that this morning the Cyprus High Commissioner claimed on the BBC news that the Cypriot Government had been in favour of this; but it is good to know that they are now.
The second course could be to approve, or at least reluctantly to accept, the secession, perhaps in the hope that the two sides will come together again in the not too distant future, when their positions are much more equal. The snag about this is that it might mean that one side would be lost from the Commonwealth. The Commonwealth is not an alignment. It contains millions of Christians and Moslems. So perhaps the island is itself in some way typical of the members of the Commonwealth. I hope that they will both remain.
The third possibility is to reaffirm the existing treaties and to go back to the Zurich constitution. That is not so preposterous as it sounds, though it would be very difficult. The fact that the Greeks and Turkish Cypriots are no longer living cheek by jowl should in the main make it easier than it used to be when they were. This could be a fresh start, given the will.
The fourth possibility is to renegotiate the constitution so as to provide for a cantonal system rather than a federation of two states. The one thing not to do, I submit, is to try to force the Turkish Cypriots to adopt any particular system, or to say to them, here and now, "You and you alone are in breach of the constitution and the treaties; and we shall have nothing to do with you until you submit to the régime"—what I believe to be the illegal régime—which at present exists in Cyprus". I do not think that that would be at all tenable.
During the debates in the Commons on the Zurich settlement, the late Lord Boyd of Merton called for a policy of partnership and communal autonomy. I believe that unless that can be achieved, the future for Cyprus is dim. May I just say to all concerned that

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there are plenty of olive branches available in Cyprus, in Greece, and in Turkey.
Lord Kennet: My Lords, before the noble Lord sits down, will he courteously answer for me one point? He said that the poverty of the Northern Turkish zone in Cyprus was due to the need felt by the Turkish Cypriots to keep a large army. Does he not know that the expenses of the Turkish army in North Cyprus are paid, as to 100 per cent., by Turkey, and, indeed, that the civil administration of North Cyprus is paid, as to 85 per cent., by Turkey?
Lord Drumalbyn: My Lords, I am not certain whether I was aware that the expenses of the civil administration were paid by Turkey. I am not at all certain whether Turkey will go on carrying that liability. I did know that the Turkish troops there are paid for by Turkey.
4.13 p.m.
Lord Brockway: My Lords, my opening sentence must be a welcome to the first speech in your Lordships' House of my noble friend Lord Tonypandy. I have been honoured by friendship with him over many years, from Tonypandy itself to the Houses of Parliament. We were all charmed by his speech and most of us, I think, agreed with his conclusions. His membership adds distinction to this House.
It is eight years since Turkishtroops occupied the north of Cyprus. Then, the Turkish Cypriots were only 18 per cent. of the population. They occupied 40 per cent. of the area of the land. Yesterday, representatives in that area declared it a separate state. They did so in Famagusta. Ten years ago, when I visited Cyprus, Famagusta was almost entirely occupied by Greek Cypriots. With the exception of Turkey and, perhaps, one or two Moslem states, the whole world has denounced the action of those in Northern Cyprus who have declared their area an independent state. It is surely now a test of whether world opinion can change what has happened. In another place yesterday the Foreign Secretary stated the Government's proposals: a resolution at the Security Council urging all nations not to recognise the new, declared state; and renewed talks with Greece and Turkey who, with us, were guarantors of the territorial integrity and independence of Cyprus.
I want to suggest that in view of the enormity of the action which has been taken, those proposals by the Government are inadequate. The key to the situation is Turkey. It gave what The Times this morning describes as grudging recognition to the new state. It has a new civilian Government. I want to suggest to this House this afternoon that pressure upon it could change the whole situation—pressure, first, by the declaration of the United Nations almost isolating it in the world; pressure, secondly, by the fact that the West, and in particular America, gives it so much military and economic aid; and pressure, thirdly, through its membership of the EEC and NATO. From all those three sources, enormous pressure could be brought to bear upon the Turkish Government to change its attitude of recognition of the new independent state.
If this radical denial of international law is not altered, there could be in the background the
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possibility of economic sanctions both against Turkey itself and against the new independent state. The Government have suggested in view of this situation that they should renew, very belatedly, their talks with Greece and Turkey. I believe that after the kind of pressure which I have suggested—pressure from not only the United Nations, but also the West and, in particular, America, the EEC and NATO—such talks might he of value. We could then urge the Turkish Government, who are so much dependent upon assistance from the world, to withdraw their recognition and to withdraw their troops (totalling more than 10,000) which are now in Northern Turkey. If that situation were reached, then the inter-community talks could be resumed under the guidance of the Secretary-General of the United Nations; and one might move to a solution of this problem.
4.20 p.m.
Lord Maybray-King: My Lords, as one old friend, I find a particularly peculiar and rich pleasure in expressing my congratulations to the noble Viscount, Lord Tonypandy, for his excellent maiden speech today. He has served democracy in another place wonderfully and he now begins, I hope, to serve democracy again in the House of Lords.
I am glad that the noble Lord, Lord Spens, has again raised the grave problems of Cyprus in the debate which he has initiated today, although his speech has made me very sad. I found it impossible to recognise in his speech the situation as described by the noble Lord, Lord Brockway. In February 1980 many noble Lords, of whom I was one, spoke on Cyprus. It would be wrong for me to make the same speech today as I did then or the speech that I made on Cyprus in 1978 or even in 1975. But very little has changed during those years. The same problems remain and the last two days have sharpened almost every issue in those problems.
For years after the noble Lord, Lord Caradon, had admirably governed Cyprus on our behalf, some Greek Cypriots, among them Archbishop Makarios, pursued a will-o'-the-wisp which they called Enosis, unity. I believe in unity and I believe in the unity of Cyprus but the Greeks at that time by Enosis meant the unity of Cyprus with Greece; and as a considerable minority of Cypriots are Turkish Cypriots, Enosis could never have happened with the consent of Turkey. But most Greeks, including Makarios himself, learnt the folly of that conception. A good constitution was created, with Makarios as president and with a Turkish Cypriot as vice-president. In those days, when I frequently visited Cyprus, the situation was working—not well: it creaked, and neither side was playing as it should—but left alone I think Cyprus could have become a happy island of Turkish and Greek Cypriots.
Then came tragedy. The fascist colonels in Greece set up a dictatorship and tried to create a diversion by supporting a madman, Sampson, urging him to seize Cyprus as a Greek Cyprus. With a fanatical gang, helped by the Greek colonels, he tried to seize power in Cyprus. The coup was to include the assassination of Makarios: a very grim tribute to the merit of Makarios. Turkey rightly feared—and here for once I

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say a word in favour of Turkey—that a group of Enosis supporters taking command of Cyprus was dangerous to the Turkish Cypriots; and so they occupied a portion of Cyprus. But they are still there all these years later, the army of occupation of Turks.
However, the coup fizzled out; Makarios escaped assassination; and Greece is now a democratic country. The colonels are in gaol; and Turkey, too, is a democratic parliamentary country, these last few days. Both are members of NATO, and it is to be hoped that Turks and Greeks, apart from those in Cyprus, could reach accommodation. But what the Turks and Turkish Cypriots will not accept is that Enosis is dead; that almost all—if not all—the Greek Cypriots want is a unified Cyprus in the peace that Denktash speaks about in his declaration, independent and free—unity without Greece and unity without Turkey.
If Denktash really wants the two peoples to live side by side, as he says he does, the first thing that must happen is that the Turkish army (far more than the 10,000 mentioned by the noble Lord, Lord Brockway) should withdraw its occupation forces. I believe that the new democratic Turkey ought to agree to this. The UDI document of Denktash—and what an ominous term is UDI to those of us who remember Rhodesia!—speaks of 20,000 Turkish Cypriots who were driven from the south into the north. However, it makes no mention of the 100,000 Greek Cypriots who were driven from northern occupied Cyprus into the south—many of them evacuees now cared for by the Cyprus Government, but first living in squalor. I have met many of them. In my own city of Southampton live many Cypriots who have lost everything in the part of Cyprus that was occupied by the Turks.
I mentioned in an earlier debate the victims of the civil war who are reported missing. A month ago I received another delegation of Greek Cypriots. Two of them have brothers who were missing in the violence and they know nothing about them. We have tried for some time to get information from both sides so that those who may have lost somebody at least know whether they are alive or dead.
Greek Cyprus now is flourishing. Turkish Cyprus, with the help of Turkey, is still not flourishing. I believe the two communities could come together and build a very prosperous Cyprus indeed. I hope that nothing will be said in these critical days which will exacerbate the tensions. In the words of Denktash,
"The two peoples of the island are destined to co-exist side by side. We can, and must, find peaceful solutions to all our differences through negotiations on the basis of equality."
I believe that the co-chairmen—Greece, Turkey, Britain and the United Nations (the Security Council)—can really step in now and bring together these dissident bodies. But I believe that, as a first step towards peace, Turkey must withdraw its troops from Cyprus. The world we live in is a world of crisis after crisis, any one of which could start the great explosion we are all afraid of. I believe that here is an opportunity to deal with such an explosive point and to end it honorably and peaceably to both sides. Denktash, the leader of the Turkish Cypriots, and President Kyprianou, can yet become friends.
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Therefore I wish the Government, supported as they are by almost everybody in both Houses, every success in all attempts that they make to contribute to a peaceful solution of the problem that suddenly has become so dramatic.
4.30 p.m.
Lord Newell: My Lords, I should like to add my minuscule congratulations to the noble Viscount. Lord Tonypandy, on his excellent, uncontroversial and beautifully delivered speech. We all hope, I know, to hear him many times again.
I have not visited Cyprus since 1979, when I was very glad to be able to spend a whole week on either side of the island. As many speakers have said, not very much has changed since that time, but yesterday's announcement of the declaration of independence by the Turkish Cypriots is but another page in the turbulent history of the island of Cyprus. As a guarantor power—the only really neutral one, for the Greeks favour the Greek Cypriots and the Turks help the Turkish Cypriots—it is sad to think how seldom we have taken any initiative.
I have to say that I blame the British Government of 1974 for doing nothing at a crucial time in the history of Cyprus. The then Foreign Secretary, Mr. Callaghan, failed to take any positive action whatsoever and it is because of this fact, more than any other, that the present situation has arisen. Although I do not condone the action of the Turkish Cypriot Parliament, I cannot help feeling some sympathy for a group of people who had been so continuously and vindictively ostracized by some Greek Cypriots because of political and racial ideology. I believe that if, as I have suggested on many other occasions, the British Government had shown just a spark of interest in helping both sides, they would almost certainly have reached an agreement long ago.
Lord Cledwyn of Penrhos: My Lords, I am grateful to the noble Lord for giving way, and I apologise for interrupting his speech, but perhaps he would accept, as would the whole House, that the circumstances in Cyprus in 1974 were very different from the circumstances as they are today, and that hindsight is a very easy matter.
Lord Newell: My Lords, hindsight is indeed very easy, but I am afraid it does not alter my opinion. It has been obvious for a long time that Greek and Turk would not agree without a strong chairman in whom both had faith. This was the role that we should and could have played. So there is yet another large question mark now hanging over Cyprus: which nations will support the newly declared state of Northern Cyprus? How will the Islamic nations react? I hope to be in Turkey next week and I shall look forward to hearing the latest news. The new situation will undoubtedly anger the Greek Cypriots but it was, in my opinion, inevitable, and in many ways it changes nothing. I repeat, in many ways it changes nothing. Perhaps there will be a little bit of change, because if the Turkish Cypriots can receive some support from outside, they may be able to rebuild their slender economy. Meanwhile, the Turkish Cypriots owe it to their friends to continue a positive attitude towards

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peace between the two sides in Cyprus. When they are stronger, they will, I am sure, want to continue negotiations for a joint overall administration of their island.
However, I am not here to adjudicate over the rights and wrongs of one side or the other but to raise one important issue which is so very vital to the future of individuals in Cyprus—individuals who will one day either benefit or suffer from the actions of their predecessors. I wish to refer to the need for the teaching of English in schools in Cyprus, which the present situation will in no way change. Since the division of the country, no Cypriot has learned the language of the other half, so the only language of communication between Cypriots on either side of the Green Line is English. Everyone wants stronger links between the two sides and with ourselves. Eventually federation may come about, but English is essential as a common language.
The standard of English teaching in Northern Cyprus has fallen and is falling to a disastrous level, and this fact is acknowledged by all concerned. The United Kingdom spent only £381,000 on educational development in Cyprus, with £136,000 going, as a proportion of the population, to the Turkish side. But because of a lack of good teachers of English the money is not being used in the best way. There is, indeed, a fee support scheme which is available to all eligible students from Cyprus, but without good English many Cypriots cannot possibly apply unless they have managed to live over here and pick up the English language.
Surely there is an organization which could help the teacher training college in Northern Cyprus, which is pathetically inadequate for its purpose. Are the Government able to point a way to finding a group who might be able to help in teaching teachers to teach English? We still have some obligations to all Cypriots and we owe it to them to ensure that they at least have a proper ability to speak English. The fee support scheme is likely to benefit many more Greek Cypriots than Turkish Cypriots, although I know that all Cypriots start with an equal chance in the eyes of the Foreign Office. But inevitably it is not enough to cover the costs, and the poorer Turkish Cypriots have greater difficulties.
The real need is for support for the teacher training college in Northern Cyprus—a totally unpolitical establishment where so much needs to be done. We must consider people as people and not just as the end product of their political masters. The Government have many reasons for disliking yesterday's events, but I hope they will find ways of increasing the teaching of English in Cyprus, especially in the North.
4.37 p.m.
Baroness Jeger: My Lords, I am very glad to follow the noble Lord, Lord Newall, because I share his dismay about the falling-off in the teaching of English in Cyprus, which means that the two communities cannot talk to each other. If people cannot talk to each other, what hope is there for the future? We are all indebted to the noble Lord, Lord Spens, for bringing this subject forward for debate today. I have always known that he is very close to Denktash, but I never knew that he was so close that Denktash would fix his
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announcement for the day before the noble Lord's debate was due to he held in this House.
The noble Lord said that we must go back to the time before 1974.Some people believe that the troubles began only then. I know more history than does the noble Lord. I believe that we should go back to 1581, when, with the explosion of the Ottoman Empire, the Turks invaded Cyprus and have stayed there ever since. We might even go back to 1191 when King Richard Coeur de Lion gave Cyprus to Berengaria as a wedding present. We have been involved with this beautiful, tormented island for a very long time. I was sorry that the noble Lord, Lord Spens, spoke in such disparate tones about the Turkish and Greek Cypriots. I have been to Cyprus very many times. I would say, as Othello said when he was asked about his experience in Cyprus:
"I have found much love among them".
I have friends in all parts of Cyprus, both Turkish and Greek. I have friends in both communities, not only in Cyprus but in Camden Town as well. I remember the time when Denktash, Kyprianou and Clerides were young law students in London. We could eat, drink and talk together. The artificiality of the present divide seems to me to be an unnecessary wickedness. I had the honour to be present in 1960 at the Ledra Palace Hotel for the departure speech of the then Sir Hugh Foot, now Lord Caradon. The independence of Cyprus was being celebrated. On one side of Sir Hugh Foot sat Dr. Kucuk for the Turkish community and on the other side Archbishop Makarios for the Greek community. Our hopes were high that the constitution for which we had taken the main responsibility would be imposed. I do not know why those hopes have been dashed in that disastrous way. If there was time, I could explore some of the experiences and some of the things which have happened, but this is a short debate.
I will only say that I am most anxious that today no noble Lord will take for granted that there has to he divisiveness between the Turks and the Greeks. I am a member of a body called the Friends of Cyprus. We have arranged conferences in London for Turkish Cypriots and Greek Cypriots, who come here for discussions. We have held such conferences for architects, engineers and journalists. Is it not a shame that they have to come all the way to London to talk to each other because they cannot do so at home?
When one gets down to human relationships, one does feel that there is hope. We are talking about a tiny island. If the noble Viscount, Lord Tonypandy, whose interest I very much appreciate, will forgive me, it is an island only half the size of Wales. It is nonsense to talk about partition, and the announcement made yesterday does mean partition. That partition—the separateness of northern Cyprus can only work if that area becomes a colony of Turkey, as it exists only because of the thousands of Turkish soldiers who are there still.
The noble Lord, Lord Spens, referred to the American intervention in Grenada. I hope that the American soldiers there will soon be able to go home. But we are 10 years on in Cyprus, yet the Turkish army is there still. When we hear that the Turkish so-called parliament in the north of Cyprus is in favour of yesterday's declaration, I must remind your Lordships that every Turkish soldier in northern

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Cyprus had a vote for that poll. And every imported mainland Turk from Anatolia or wherever also had a vote. There is a deliberate attempt to destabilise the demography of Cyprus. If we could persuade the Turkish Government—and I have high hopes of the new Turkish Government—to get the army out and allow Turkish Cypriots (among whom I have many friends) to say what they want, then we might get a very different answer.
I hope very much that in the discussions about Turkey's closer association with the EEC, this situation will be a factor. If the word "Community" means anything, it cannot mean that one member of the Community invades and keeps troopson the soil of another. And if "Commonwealth" means anything, it cannot mean that we allow that situation to continue. I am very worried about the atmosphere in which many young Cypriots are growing up. When I go there, I try to talk to them about what has been said by United Nations and about the resolutions which have been passed. But their answer is, "So what?". I deplore that mood of cynicism, but I understand it. If we allow a situation to develop in which there is no follow up to all the resolutions and statements, then it does undermine the authority of United Nations.
Then there is the question of NATO. I can think of nothing better for NATO than for Greece and Turkey to work in harmony together. I have heard it said since yesterday that we might as well write off the 1960 treaties to which we were guarantors. I may remind your Lordships that it was under the 1960 agreements that British sovereign bases were established in Cyprus. If we are to tear up the 1960 agreements then we have to ask ourselves the question: what about the agreements regarding the bases, which were an integral part of those agreements?
I have said that partition is not viable in that little country. For instance, most of Nicosia—the Greek part—gets its water from Morphou, which is in Turkish hands. Famagusta, which is in Turkish hands, depends on Larnaca for its sewerage. There are areas of Cyprus, such as the central plain, where the wheat grows. In the north, there is fruit. In the south there are the factories which make clothes. This needs to be one united country, and there is no reason why it should not be. The Government made their views known speedily, and I am very glad about that.
I will raise just one further point which I should like the noble Lord the Minister to answer. I should like to know what consultations are being held in the United States of America about that which has happened. We know of United States' anxiety in the Middle East, and this seems to me to be a tinder box in the unstable situation in the Middle East. Will the United States continue exporting arms to Turkey? What assistance are Her Majesty's Government giving in economic aid to Turkey? Is there any way in which the Government, in discussing the position of Turkey in the EEC, can bring these points to bear?
I must finish by reminding this House of Resolution 3395 of United Nations, which urged upon all the powers concerned:
"To undertake urgent measures to facilitate the voluntary return of all refugees to their homes in safety".
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That must still be our objective, and I hope that it is still the objective of Her Majesty's Government.
4.47 p.m.
Lord Energlyn: My Lords, this will unquestionably be an historic debate recorded in Hansard for two reasons. First, because of the maiden speech of the noble Viscount, Lord Tonypandy. Secondly, because of the declaration of independence of Mr. Denktash. For me personally, this history will be warm because of the noble Viscount's maiden speech, if I may be so bold as to say that.
Any geologist who is interested in the earth's interior is fully acquainted with Cyprus because it is the most important island geologically for those who study the earth's interior. In a previous debate on Cyprus I advocated the idea of putting down a bore hole to tap the hot rocks of Cyprus to create a geothermal power station whose power could be used for the mutual benefit of Greeks and Turks alike. The small island needs for its buoyant economy more water and more cheap electricity.
That idea was received with considerable favour by the Turkish Cypriots but I received no response whatever from the Greek Cypriots. That was my first experience of the lack of interest of the Greek Cypriots in the welfare of the Turkish Cypriots. Therefore, I am a little sad to find that the Government and many of your Lordships have tended to over-react to this precipitate act of Mr. Denktash. I tend to follow the noble Lord, Lord Drumalbyn, who said that this could be a fresh start. If it does no more than clarify the situation, it will make both sides face reality.
The reality is that for the past nine years there have been two separate communities. What is important and touching to me is that they are two communities who have lived side by side, divided by an artificial line, and there has been no bloodshed. I am not prepared to adjudicate as to who is responsible for that, but the fact is that they have lived side by side without bloodshed.
I therefore turn to the reasons why there have to be two separate communities, and. for brevity, these reasons are very clearly set out in the declaration announced yesterday. I quote:
"The bi-national character of the legislative assembly of the partnership state has been abrogated by force and armed violence. The right to elect and to be elected to this Assembly has been under the de facto monopoly of the Greek Cypriots for the last 20 years. The executive organ of the so-called Republic of Cyprus has also come under the monopoly of the Greek Cypriots. The joint exercise of executive, the power by the elected leaders of both communities has been abolished by brute force in 1963. For 20 years ministerial seats belonging to Turkish Cypriots have been unlawfully occupied by Greek Cypriots".
It goes on in that vein, until ultimately one must reach the conclusion that undue pressure has been brought to bear on the Turkish Cypriots and this has resulted in their having no real say in the Government of Cyprus. That seems clearly to indicate why they gradually parted, and now we have concentrations of Greeks and Turks in the two parts of Cyprus. That dramatic situation with the so-called invasion by the Turkish army has resulted in two communities, who have managed to live without bloodshed side by side.

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But when we come to examine the economy of both of these areas I think it is as well to look at some of the facts. The noble Lord, Lord Kennet, mentioned the fact that the Turkish Army is paid for by Turkey. Yes, it is. He should also have gone on to say that the Turkish Government introduced subsidies into the economy of the northern area of Cyprus, which is true. But when you come to look at what happens in the southern half of Cyprus—which is buoyant, and, as the noble Lord, Lord Maybray-King, pointed out, very buoyant as compared with the north—there is a very simple explanation; that because the southern half of Cyprus is the recognised Government of Cyprus it receives all foreign aid and none of it goes to northern Cyprus. A fifth of' the cash flow of southern Cyprus is foreign aid. This is all denied to the Turkish Cypriots. So that their entitlement is something to which one should give serious consideration.
Be that as it may, we then look at the activities of the Greek Cypriots. Because they are the state they can impose laws which cover the whole island. So consequently no airline is permitted by the Greek Cypriot Government to fly into any aerodrome north of the line. So the tourist industry is completely denied air transport. The Turkish Cypriots on five occasions contracted with an airline to fly produce in and out of northern Cyprus. They were only allowed to come in once, and they were threatened by the Cyprus Government that their licences would be withdrawn if they continued this operation. Again, on the question of imports and exports, the Cyprus Government maintained that it was illegal for any ship to import produce into any port that was described as a Turkish Cypriot port. These laws were so vicious that sea captains have been imprisoned. That is true.
A Noble Lord: Of course.
Lord Energlyn: They can do that by law, but the Turkish Cypriots have no reciprocal muscle to respond.
Baroness Jeger: They have got Famagusta, the biggest port in Cyprus.
Lord Energlyn: But, my Lords, they do not imprison ships' captains who happen to come to Famagusta. So it seems to me, trying to be as impartial as I can, that the Greeks have irritated, if that is not too harsh a word, the whole livelihood of the Turks in this manner, because they happen to have the status of government.
So, as the noble Lord, Lord Drumalbyn, says, we come to a point where there is no longer any grey; we now have two straightforward issues; should there be two separate governments or is there a possibility of there being a sensible government established in that island?
Lord Kennet: My Lords, I am obliged to the noble Lord for allowing me to intervene. He has given a very accurate and vivid description of a rather successful blockade by a legal régime against the usurping authority which brought a foreign invading army on to a part of its territory.
Lord Energlyn: My Lords, I take Lord Kennet's point, but we are not talking about two different countries, we are talking about two communities. It is the imposition of the legal muscle of one community upon the other that I am talking about, not two countries. Does the noble Lord concede the point?
So in conclusion, my Lords, I would urge the Government to take a cool look at this, and to look upon this as a refreshing and challenging start of something that can be really constructive in that fabulous island.
4.58 p.m.
The Duke of Portland: My Lords, I have been advised that it is desirable that I should mention the following for the record. In July 1923, I was Secretary to the British Delegation at the Lausanne Conference. We were about to sign the Treaty which we had finished—it dragged on for several months—when Ismet Pasha, and later Inönü, put forward a demand for a clause to be included that if we ever gave up Cyprus, or left Cyprus, we would hand it back to Turkey. We had held it before the First War as a sort of protectorate, but the Ottoman Empire never abandoned sovereignty.
Sir Horace Rumbold, who was the chief delegate, almost had an apoplectic fit with rage at the prospect of having to remain on in Lausanne and sent back a message that we would never give up Cyprus, which was vital to our interests, and he hoped that the matter would not be pressed. He refused to put anything in writing. I thought I would mention this, my Lords, just for the record.
5 p.m.
Lord Banks: My Lords, perhaps I can begin by saying to the noble Lord, Lord Energlyn, that he ought to consider the conduct of the Greek Cypriot Government in Cyprus by looking at it from their point of view: namely, that they see within their territory what they regard as a rebel Government maintained by the armed forces of a foreign power. I think any Government in that situation is bound to act in the way he mentioned against what they consider to be a rebel Government.
I join in thanking the noble Lord, Lord Spens, for raising this important matter once again and for doing so at such an appropriate time. The debate has been overshadowed by the action of the Turkish Cypriot estate yesterday in declaring independence. As my noble friend Lord Kennet made clear earlier, we on these Benches, like so many others in other parts of the House, deplore that action. We feel that it must make a solution more difficult even though the Turkish Cypriots say that they still want a federal state and still want to talk with the other community.
The basis of the 1960 settlement was that there should be no union with Greece, that there should be no partition of Cyprus, and that Cyprus should be united and independent. Of course, as we have been reminded by many noble Lords, our own Government is a guarantor of that settlement with Greece and Turkey. The invasion of Cyprus by Turkish troops in 1974 and the division into two virtually separate states—one legally recognised throughout most of the world and the other not—was clearly a breach of that

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settlement, whatever the Turkish Cypriot grievances may have been, and I readily concede to the noble Lord, Lord Spens, that the Turkish Cypriots had genuine grievances. But there was always the hope—
Lord Drumalbyn: My Lords, I was about to intervene but realised that the noble Lord had said Turkish Cypriots. I beg his pardon.
Lord Banks: Yes, my Lords, I think there have been grievances on both sides and I would not for one moment seek to deny that. There was always the hope that agreement between the two communities would end that breach and in February 1977 President Makarios, as he then was, and Mr. Denktash agreed certain guidelines: Cyprus should be independent, non-aligned, bi-communal and a federal republic.
There were, of course, serious problems over the question of the area which each zone was to occupy. At present we know that 36 to 37 per cent. is occupied by the Turkish state although the Turkish population is about 18 per cent. There were problems over representation in the institutions of the proposed federation. But I think that more fundamental than those was the difficulty over interpreting the phrase "bi-communal". Was there to be a single Government with two regions, each with a certain amount of autonomy, as the Greek Cypriots wanted, or were there to be virtually two separate states linked by a kind of co-ordinating machinery, as the Turkish Cypriots wanted? In plans put forward by the Turkish Cypriots there would have been two armed forces and no single commander. There would be no commander of both forces but merely a system of liaison. That fundamental difference was argued about year after year and, as the noble Lord, Lord Maybray-King, reminded us, in our debates in 1976, 1978, 1979 and 1980 in this House we had to admit that there had been no progress.
Recently a new initiative was taken by the Secretary-General who went further than his predecessors in assessing the possibilities for discussion by fixing maximum and minimum parameters within which the discussion might take place. For example, there was to he either a Greek Cypriot President and Turkish Cypriot Vice-President, with a division of 60–40 in favour of the Greeks in the federal executive, or the Greeks and the Turks were to alternate the presidency, with the membership of the executive being 70–30 in favour of the Greeks. The lower House was to be elected by proportional representation or there was to be a 70–30 representation of the communities in favour of the Greeks in that body. As regards area, the Turks were to have either a minimum of 23 per cent. or a maximum of 30 per cent.—somewhere between those limits—instead of the present 36 per cent.
What I suppose we must ask ourselves today is whether this new initiative, put forward as recently as August, has been brought to an end by the action which took place yesterday. It is true, of course, as the noble Lord, Lord Spens, said, that the Turkish Cypriots are merely seeking to legitimise the status quo. Nevertheless, that very act, if it could be brought about, would produce legal and political consequences
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of considerable difficulty. I suppose that, as a number of speakers have said, the differences on the ground will be small.
The Turkish Cypriots say that they still want a federal state, but one wonders whether any federal state that could possibly be acceptable to the Greek Cypriots can be achieved starting from the base we now have of two entirely and virtually separate states within the island. Are we not back to the old question of whether there are to be two states or one? Of course, events on the island are inevitably influenced by Greek/Turkish relations and Mr. Papandreou, the Prime Minister of Greece, has recently underlined the difficulty of reaching an agreement while the Turkish forces remain on the island.
I ask the noble Lord, Lord Trefgarne, how, in the situation I have described, do the Government see their role as guarantor? Do they feel that, apart from denying recognition to the state which has declared itself independent, no action should be taken against that state? For example, the noble Lord, Lord Brockway, mentioned economic sanctions. I am not advocating that, but I am asking whether the Government have a view on that. Do they feel that the United Nations or the guarantor countries should take action, or should the Government seek to get them to take action, in any way against the Turkish state? Do the Government feel that having deplored the action and having denied recognition their main function must be to get both communities talking again, in spite of almost insuperable difficulties, on the Churchillian ground that. "Jaw, jaw is better than war, war"?
There is no doubt that a happier state of relations between Greece and Turkey, while it would not solve the problem, would greatly assist. Is there a case for a wider conference, including the guarantor countries as well as the two communities, perhaps under the auspices of the United Nations? That was suggested by the noble Lord, Lord Cledwyn of Penrhos, and by the noble Viscount, Lord Tonypandy, in a maiden speech which we much appreciated. One thing is clear. While Turkish troops remain in Cyprus we cannot expect the matter to be solved by the communities alone.
5.9 p.m.
Lord Trefgarne: My Lords, when the noble Lord, Lord Spens, was successful in the ballot and elected to debate the question of Cyprus I am sure that neither he nor any of your Lordships realised how timely such a debate would be. Obviously your Lordships will expect me to devote much of my speech to yesterday's news of a purported declaration of independence by the Turkish Cypriot community. Nevertheless, I think it right to begin by setting yesterday's events in a broader perspective.
Before doing so, may I add my words of appreciation to the noble Viscount, Lord Tonypandy, for his maiden speech, which has so much enhanced and decorated our debate today. I hope that we shall hear the noble Viscount again very soon and often thereafter.
Cyprus was last debated by your Lordships on 20th April, when my noble friend Lord Belstead explained the Government's view of the Cyprus problem at that time. The debate came at a crucial point, just before

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the debate on Cyprus in the United Nations General Assembly in May. My noble friend, in looking forward to that debate, appealed to the parties involved to ask themselves whether their actions would bring a Cyprus settlement any nearer or would push it further away. Subsequent events have shown how justified were my noble friend's fears. The United Nations debate came and went. It did not bring a settlement any closer. I still hope, despite yesterday's events, that we shall not in future see that debate as having pushed the settlement further away. But the plain fact is that since that debate there has been no further meeting of the two communities. There have also been many other serious developments.
But there was one element in the United Nations resolution which we regarded at the time as extremely positive. Although we abstained on the resolution as a whole, because we believed it would not help the search for a solution to the Cyprus problem, we voted in favour of one particular paragraph, the sixteenth. This paragraph endorsed the publicly declared intention of the United Nations Secretary General, Sr. Perez de Cuellar, to strengthen his personal involvement in the search for a solution to the Cyprus problem. The United Kingdom Permanent Representative, in his explanation of vote at the United Nations, said that, in keeping with our firm support for the Secretary General, we very much welcomed this intention. The Secretary General's personal involvement in the problem represented a ray of hope for a number of reasons. In the first place, Sr. Perez de Cuellar is an international statesman of wide renown. Secondly, he has himself served in Cyprus as Dr. Waldheim's Special Representative, and knows the problems of Cyprus well. Thirdly, it became increasingly clear over the summer that some new impetus was necessary to get inter-communal discussions going again.
In early August, Sr. Perez de Cuellar presented some new ideas to the two communities. The details were confidential. But we understand that he suggested to the two parties a basis on which to concentrate initial discussion in resuming inter-communal negotiations. We understand that this concerned the three important subjects of territory, the legislature and the executive. We believed that this move by the Secretary General presented the two sides with an opportunity to make progress and we urged them to seize it. I am afraid that I am not able to discuss in detail how the two sides reacted to the Secretary General's ideas: their comments were made confidentially to the Secretary General.
I would simply wish to make two points. The first is that, for real progress to be achieved, it was clear that both sides would have to make difficult—perhaps painful—concessions. Whatever the structure and details of a future solution to the Cyprus problem, it has always seemed most unlikely that either side could obtain everything it wants. Secondly, I said that the Secretary General's ideas presented the two sides with an opportunity. It would be over-dramatic to suggest that this was the last opportunity that the two sides will ever have. But, as yesterday's developments underline, the passing years do not make things any easier; rather the reverse. This opportunity was one which should not have been missed.
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As your Lordships will now know, after the United Nations debate Mr. Denktash began to threaten to declare an independent Turkish Cypriot state in Northern Cyprus. The British Government took these threats very seriously both in the summer and when they were renewed in the last few weeks. We made it very clear to Mr. Denktash, and to the Turkish Government, that we were opposed to any such move. We believed that it would make a solution to the Cyprus problem more difficult to find. We told Mr. Denktash that a declaration of independence was in the interests neither of Cyprus as a whole nor of his own community. We told him, and the Turkish Government, quite unequivocally that we would not recognise a purported new state and that a declaration of independence would amount to secession, which would be incompatible with the 1960 treaty arrangements. Most of our major allies agreed with our views and made similar representations.
In our case, diplomatic representations by our Ambassador at Ankara and our High Commissioner at Nicosia were reinforced at a high level. For example, the Turkish Foreign Minister, Mr. Turkmen, was in London in July. My right honourable friend the Secretary of State for Defence visited Ankara last month. My noble friend Lady Young visited Cyprus also last month and spoke personally to Mr. Denktash. Indeed, were she not abroad at present she would, I am certain, have welcomed the opportunity to tell your Lordships about her visit. On all these occasions we made very clear to the Turkish Cypriot leadership and to the Turkish Government the strength of our views. It is a matter of great regret to us that these representations seem to have had no effect.
During this period we also kept in close touch with the Governments of Greece and Cyprus. President Kyprianou visited London in July and Prime Minister Papandreou of Greece was here last week. Both discussed the Cyprus problem with my right honourable friend the Prime Minister. Indeed, as your Lordships may have seen, President Kyprianou is to come to London again tomorrow and I think will again be discussing matters with my right honourable friend the Prime Minister.
This short survey of the background to yesterday's declaration leads me to the British Government's view of what has occurred. My right honourable friend the Secretary of State for Foreign and Commonwealth Affairs made a statement in answer to a question yesterday in another place. My noble friend Lord Lyell repeated the Statement in your Lordships' House. The Government have made it clear that we deplore this action by the Turkish Cypriot community, particularly as it came at a time when the Secretary General, at Mr. Denktash's suggestion, was preparing the ground for a summit meeting between the two communities. We will not recognise the new state which they claim to have established.
My right honourable friend also explained some of the actions we are already undertaking to deal with what has now happened. My right honourable friend the Prime Minister yesterday sent a message to the President of Turkey urging him to help to secure a reversal of the declaration made by the Turkish Cypriots. My right honourable friend the Foreign and

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Commonwealth Secretary has also sent messages to the Foreign Ministers of Greece and Turkey calling for consultation with ourselves as fellow signatories of the 1960 Treaty of Guarantee. That is the answer to the point raised by the noble Lord, Lord Banks. In addition, as I think noble Lords already know, we are seeking an early meeting of the Security Council and have circulateda draft resolution deploring the move.
I turn now to some of the other points that have been made during the course of the debate. The noble Viscount. Lord Tonypandy, and indeed the noble Lord, Lord Kennet, focused on the role of Turkey and the position of that country in NATO in the light of her activities in Cyprus. I can see that the Turkish Government were under strong pressure to recognise a Turkish Cypriot state but their decision to do so is one that we deeply regret. We hope that it will not be followed by other states. My right honourable friend the Foreign Secretary has today summoned His Excellency the Turkish Ambassador to convey to him our views in this matter.
There are many channels by which our views may be communicated to the Turkish Government, but in NATO (to which several noble Lords have alluded) our primary concern is to counter the Soviet threat. We hope and believe that this concern will be of paramount importance to both Greece and Turkey also. We must not permit the Cyprus dispute to disrupt the co-operation among NATO allies.
As I have said, we much regret Turkey's decision to recognise the so-called state. The next step must be the consultations proposed with the guarantor powers to which I have referred. We shall consider further action in the light of those consultations. We must of course ask whether whatever we do will help to find a solution to the problem or push it further away. Incidentally, I understand that Turkey has indeed agreed to these consultations under certain circumstances and we hope for a formal response from the Greek Government later today.
The noble Baroness, Lady Jeger, asked me about consultations with the United States. We are indeed in close touch with the United States Government. They have shared our dismay at the purported declaration of independence and share our desire to see a solution to this problem.
The noble Lord, Lord Cledwyn of Penrhos, in his earlier remarks expressed understandable concern—which I share—over the safety of British residents in Cyprus, but I am happy to say that we have no reason to believe that these developments present any direct threat to British citizens in the island. We are, of course, watching the situation very carefully. Indeed, as my noble friend Lord Lyell said yesterday, there are about 200 British subjects in Northern Cyprus. We also share, of course, with the noble Viscount, Lord Tonypandy, sympathy for the Cypriot populations, Greek and Turkish. Undoubtedly, as the noble Lord, Lord Kennet, said, there have been many cases of suffering and ill-treatment in the past but clearly the solution to these problems lies in the long-term solution to the Cypriot problem generally.
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My noble friend Lord Newall also made an interesting suggestion about the provision of teacher training, particularly to the Turkish Cypriots. I will ensure that this matter is studied very carefully and followed up as best as may be.
What then of the future? A most important objective must be to attempt to secure the reversal of the action of the Turkish Cypriots. We must also continue to give our firm support to the Secretary-General of the United Nations, who has all along played a key role in the search for a solution to the Cyprus problem. We are in close touch with him and we stand ready to do anything which he considers might help. At the same time, however, we wish to discourage any action which will lead to a deterioration of the situation on the ground in Cyprus. The last few days have been sad ones for the island, but we remain convinced that a solution can and must be found. It will be found only when the two communities are prepared to show the will and the flexibility to make the necessary progress.
Our efforts will continue to be devoted towards ensuring that, despite the regrettable events of the last two days, a solution will still be found to the problems which have bedevilled the lives of the two communities in Cyprus for far too long.
5.21 p.m.
Lord Spens: My Lords, I think I have 20 minutes of your Lordships' time and I could spend that time in answering in detail the various speeches which have been made. I do not propose to do that. All I want to do is to thank all the speakers for their contributions. I think what we have heard today has been, and will be, very useful.
There is only one little thing I am sorry about. That is Lord Trefgarne's last statement that the British Government are going to try to seek to reverse the situation that happened yesterday. I do not believe that they will be able to do it and I think they will be wasting their time. What is much more important is using that situation to bring the two sides together, and I am quite certain that the Turkish Cypriots are willing to negotiate on the basis of the partnership which they have now established, by creating this separate state.
May I quote just two or three extracts from the part of the declaration which I was given yesterday:
"The Proclamation of the new State will not hinder but facilitate the establishment of a genuine federation. The new Republic will not unite with any other State. The new State will continue to adhere to the treaties of establishment guaranteeing alliance. The good offices of the United Nations Secretary-General and negotiations must continue.".
I am quite certain that that is what the Turkish Cypriots want to happen. They do not want to become part of Turkey. They want to remain in Cyprus, but they want to remain as their own separate community in Cyprus dealing with their neighbours, the Greeks, with as much friendliness as is possible between the two. I wish them all the goodwill in the world in their endeavours for something like that to be brought about. My Lords, I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Employment Measures and Inflation
5.24 p.m.
Lord Jacques Lord Jacques rose to call attention to the necessity of reducing unemployment without increasing inflation; and to move for Papers.
The noble Lord said: My Lords, I look forward to the debate with some pleasure and especially to the maiden speech of my noble friend Lord Dean of Beswick. The Family Expenditure Survey shows that whereas in 1971 there were 11½ million people living on the margins of poverty, by 1981 that number had increased to 15 million. The greatest increase was in those families where the head of the household was unemployed. There is also little evidence that the benefits that are paid to the unemployed act as a disincentive in their seeking work. Fifty-nine per cent. of the men who have been out of work for more than a year are receiving benefits which are less than one half of the wages that they received when they were last in work. Those who are receiving a greater proportion of benefits are doing so because they were receiving exceptionally low wages.
The poverty caused by unemployment is only one aspect. The demoralisation is probably more important, especially for the young—for the school-leaver who is ready to join the adult world and finds there is no place for him. He has little incentive to obey the rules of the society which cannot find a place for him and he has plenty of time in which to break those rules. That is a danger. Unemployment is demoralising even among the adult population. The great bulk of our men and women want to go to work. They regard the benefits they are receiving as handouts and do not like living on handouts; and many of them feel rejected by our society.
Even on the fringe where you have the idle, they are also demoralised because they are encouraged to be idle. I claim that all unemployment, regardless of the circumstances, is demoralising.
We cannot solve this problem by the application of Victorian prescriptions. Our economy is quite different from that of the nineteenth century. First of all, there is a much greater willingness on the part of the public to take responsibility. Consequently, there is far greater public investment and public expenditure. What is equally important is that both sides of industry are now organised in a way in which they were not organised in the nineteenth century, and without formal agreement they can quite easily synchronise their actions. Consequently, our markets are quite different. We have no laissez-faire markets. In all our markets there are institutions which have got enormous market power. Those are the new circumstances and it is no use applying pre-Keynesian economics to those circumstances. If we are going to solve this problem we shall need post-Keynesian economics and not pre-Keynesian economics.
I believe that in the long run, if we are ever going to get full employment and maintain it, we must have quite different industrial relations from those which we have now. We need industrial relations in which the worker is not regarded as a worker but as a partner in the business. I believe that the Japanese in our midst are demonstrating what our Government should be
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sponsoring. In the words of the general secretary of the TUC in Wales, the Japanese inform the workforce, they consult with them and they regard them as partners in the business, not just as servants. They do not take the attitude that they themselves are the bosses. They seek not to offend. They avoid threats and laying blame. They try to carry people along with them. Because of that they are able to achieve things which many employers cannot. For example, there are very tough terms for lateness and for absenteeism.
The Japanese get complete flexibility in the workforce by agreement with the workers, and because they treat workers as responsible people, they get a responsible response. In one agreement between the electricians' union and the Toshiba company, there is a provision that, should there be a difference between the union and the company, it will be referred to an independent arbitrator, that both sides will represent their case and that the arbitrator will make an award either to the company or to the union. There is no compromise and both parties agree to accept the result. That is the kind of industrial relations that is needed if we are going to have full employment and to maintain it. With that kind of arbitration, you get a responsibility that you do not get in the ordinary course of events. Neither side can afford to make extravagant claims or counter-claims because the arbitrator will make his award to the other party. It brings a new discipline into industrial relations. That is what is needed if we are ever to have full employment.
I should also emphasise that we need to have full employment. It should always be remembered that Beveridge made his calculations about the welfare state on the basis of 2½ to 3 per cent. unemployment, not on the present figure of 12 to 13 per cent. We are being carried along at the moment by North Sea oil taxation. When that oil dries up, we shall have great difficulty in maintaining our welfare state unless there is full employment with people paying taxes instead of drawing benefits. We have gradually to prepare for that situation. In the meantime, there are things that the Government ought to do. Both sides of industry—not just one side—are pleading with the Government for actions that are needed to prevent a continued increase in unemployment. First, the most elementary step is that the insurance surcharge should go. That is a tax on employment. It was all right when we had full employment, but it is no longer tenable.
Secondly, we are a nation endowed with rich deposits of energy—our coal and now North Sea oil. We know how to use the raw materials of energy because of long experience. We are in a very advantageous position. We also have industries that use a great deal of energy, for example, paper, chemicals and glass. In the case of glass, energy costs are 23 per cent. of the total. They are very important costs. If we are endowed with this great resource of energy, we could use it to make our industries more competitive. Instead, we find that our industries, which are heavy users of energy, are failing to compete, especially with European countries. This is because, in some cases, competitors are getting energy cheaper, even though those countries have not been endowed, as we are, with plentiful supplies.
The Government are giving too much attention to the immediate effects of the public sector borrowing

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requirement. It would be better, in the interests not merely of the unemployed but of the whole country, to take a longer view and to make those industries more competitive. Because of the multiplying effect, there would eventually be more people paying taxes and fewer people drawing benefit. The PSBR would be enhanced to a far greater extent than if we take a narrow and immediate view.
Thirdly, there is the issue of interest rates. If we are to solve our unemployment problem, the sooner we realise that we have to invest in this country on a far greater scale than for many years, the better. We know, like the Government, what has to be done to get interest rates down. We have to control the exchange rate. It is important to control the exchange rate and not to facilitate investment in Japan and the United States. We have to encourage employment in this country. These are things that can be done without greatly increasing inflation. There are public works that ought to be done. We are behind with them: they need doing. It is known that we shall have to do them sooner or later. To do those public works now would mean, at the very least, that we have a huge discount through saving on unemployment benefit. Every businessman knows that, when you have a substantial discount, that is the time to buy.
The multiplying effect of a moderate investment of the kind I have described would increase considerably the number of people paying taxes and reduce greatly the number receiving benefit. I remind the Government that they are in a better position than any postwar Government to deal with Britain's problems. The Governments of the 1970s had to bear the consequences of importing the hardware to enable the oil to be produced. Paying for the hardware led to balance-of-payments problems. Let there be no mistake. Many of the balance-of-payments problems of the Governments of the 1970s were incurred to enable oil to be produced in the 1980s.
The Government now are in a much more favourable position. The oil is now flowing. The balance of payments is protected rather than jeopardised, as it was in the 1970s by the import of hardware to produce oil. Furthermore, the Government have a huge income in taxation from oil. No Government in the post-war period have had those facilities to help in dealing with the problems of our country.
What are we doing with this bonanza? We are using the money to keep people unemployed instead of using it to employ them. If we continue in this manner, when the oil dries up, we shall have only one thing to show for that bonanza—an airport in the Falklands that is under-used. My Lords, I beg to move for papers.
5.40 p.m.
Lord Rochester: My Lords, I am sure that the whole House will be grateful to the noble Lord, Lord Jacques, for having introduced this Motion. It will not be possible for anyone on these Benches to speak after the noble Lord, Lord Dean of Beswick, has made his maiden speech, and so I should like to say how much we are looking forward to hearing him.
I want to compliment the Government on their achievement in reducing the rate of inflation, even
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though it has been done at a cost in terms of increased unemployment, in particular among young people, which in my view is no longer tolerable. Indeed, I wonder whether the House is fully aware of how the composition of unemployment continues to worsen. In the first place, more than one in three of those on the register have been unemployed for more than a year, and that proportion is rising all the time. As the Economist pointed out two weeks ago, in the last three years it has in fact doubled. That is bad enough, but even worse is the fact that about one in four of the long-term unemployed are aged under 25.
Of the few Government schemes available to the 1,200,000 people who have been out of work for more than 12 months, I suppose that the most significant is the community programmed, which is providing temporary employment for only about one in 10 of them. It is reasonable to suppose that the great majority of all these people are unskilled, and as recent research by the Policy Studies Institute has shown, the longer particular individuals are out of work the less likely they are to find jobs and the more rusty become such skills as they possess. The social cost of this sustained unemployment in terms of crime, physical and mental sickness, and the general demoralisation—to which the noble Lord, Lord Jacques, has already referred—may not be quantifiable. However, I fear that its long-term consequences could nevertheless prove catastrophic.
I am a strong supporter of the youth training scheme, which is struggling to provide school-leavers with certain basic skills. But increasingly the heart of the problem is shifting to those aged between 18 and 25. At this stage I should like to ask the noble Lord, Lord Cockfield, a specific question: What plans do the Government have to follow up the youth training scheme in 1984, and to cope with the increasing proportion of unemployed people who are aged under 25 and who have been out of work for more than a year? In this connection I suggest that it might be preferable—and I look for no answer on this point this afternoon—to alter the conditions of the young workers' scheme so that it no longer competes with the youth training scheme, but applies only to those who have left the YTS and are looking for a permanent job.
Although today he made little or no reference to the point, the noble Lord, Lord Jacques, has consistently advocated in this House an incomes policy as a means by which unemployment can be reduced without increasing inflation. The noble Lord knows that for my part I have often joined with him in arguing that there is need for consultation between Government, employers and unions, aimed at securing the widest possible understanding and acceptance of the overall increase in incomes which at periodic intervals the country can afford. The noble Lord, Lord Cockfield, does not see it that way, and I am realistic enough to recognise that for the next four years at least no progress is likely to be made on those lines, although I am fearful about what will happen to the Government's pay policy—or the lack of it—if and when recovery is fully under way.
The noble Lord, Lord Jacques, talked about the need for partnership in industry. What I would urge is that, in support of their own desire to ensure that increases in pay are limited to those justified by

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improved productivity, the Government will do all that they can to further the cause of employee participation. This can be done in keeping with the spirit of Section 1 of the Employment Act 1982 (which I was able to play some part in introducing) by encouraging the development of arrangements aimed at increasing the involvement of employees through share schemes and, even more important in my view, achieving a common awareness among managers and other employees of the financial and economic factors affecting the performance of their company. What is more, I should like to see much more being done to promote a clearer understanding among those employed in the public sector—where the Government can give a direct lead—of the relationship between pay, prices, productivity, investment and employment.
Last week the CBI held its annual conference, and I was much impressed by remarks reported to have been made there—and highly relevant to the Motion before us—by the president and the director general of that organisation. Sir Campbell Fraser, a well known supporter of the present Government, observed that the calm acceptance of 3 million people out of work was just not good enough. Sir Terence Beckett expressed the hope that the next Budget would help to increase public investment and said that the structure of the economy was not being maintained intact, but was increasingly shabby and expensive to operate. He added that business was slowly getting better, but that recovery was patchy and there was a possibility that the economy would run out of steam in the second half of next year. He urged the Chancellor of the Exchequer—asthe noble Lord, Lord Jacques, has already done this afternoon—to announce the early removal of the remaining 1 per cent. national insurance surcharge. The earliest opportunity to do that looks like coming tomorrow, and I very much hope that it will be grasped.
Along with the noble Lord, Lord Jacques, I am alarmed by the prospect of general increases in the price of gas and electricity and their effect on inflation and unemployment, and in particular on poor people who have to spend a higher proportion of their income on fuel than do other people. As one who was earlier employed in a part of the chemical industry of which the main business is the production of chlorine, I have good reason to fear the effects of an increase in the price of electricity in that energy-intensive industry where the price which is having to be paid for electricity is still well above that payable by most of this country's European competitors. At this point I should like to ask the noble Lord, Lord Cockfield, another direct question. Are the Government willing to seek some means of sparing industries, such as chemicals, steel and paper, from increases in the price of energy which are bound to damage further their international competitiveness?
In a letter to The Times published on 10th November Sir Terence Beckett wrote:
"What British business needs now is a reduction in those overhead costs which it is not itself responsible for. That is all we are asking the Government to do; the rest we will look after ourselves".
Later in the same letter Sir Terence added:
"total manufacturing employment is still declining, for the record, by nearly 14,000 a month on average. And company liquidations in
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the third quarter of this year, 17 per cent. up on a year earlier, were at the highest ever recorded level".
I hope that the Government will heed those words.
Short of agreed pay determination arrangements, neither we on these Benches nor, indeed, your Lordships' Select Committee on Unemployment, have ever claimed that proposals aimed at reducing unemployment can be introduced without any cost at all. What we do say, and what the unemployment committee recommended, is that carefully selected schemes for increasing employment opportunities should he introduced at a cost that would be well within the margin of error of the public sector borrowing requirement. There cannot be a substantial increase in investment within the private sector until there is a rise in orders and in profits. It can be done only in the public sector, and in my view timing is crucial.
Investment in such industrial necessities as road building and maintenance cannot be delayed indefinitely. If we wait until recovery is in full swing and there is a surge in the demand for labour, the effect will be bound to be inflationary. Why, therefore, do we not start now, while labour, plant capacity and savings are all available? Such essential investment in this country's infrastructure would have over consumer expenditure the great advantage that it would not involve the risk of purchasing power going into imports. It would provide jobs, both skilled and unskilled, in our hard pressed building and construction industries and I suggest that in the private sector generally it would increase the volume of orders, unit costs would fall, and profits and investments would rise.
For my part, I cannot believe that there are not identifiable projects of this kind in the public sector which would provide an adequate return on capital in just the same way as in the private sector. If such a policy continues to be unacceptable to the Government, then, as Mr. Ian MacGregor was advocating only yesterday, surely it should not be beyond the ingenuity of the City of London to select for investment a number of infrastructure projects, harnessing people and resources for the purpose in a way which might eliminate altogether the need for public borrowing.
In all fairness, I have already congratulated the Government on their achievement in reducing the rate of inflation. I beg them now to exploit that success by heeding not only my words, but the advice of many of their own supporters in the front line of industry who, in this matter of investment in the public sector, are imploring them in some way or other to give the country an imaginative lead.
5.52 p.m.
Lord Mancroft: My Lords, we have a wide field to cover and time is at a premium, so I propose to confine myself to one aspect only, and that is the number of illusions about this problem which are hindering our attempt to solve it. The noble Lord, Lord Jacques—and I found very little to disagree with in what he had to say to us drew attention to the fact that it is not only a national problem but also an individual tragedy. I add to that that it is a worldwide

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problem. All manufacturing countries are suffering the same difficulty.
I think we are agreed that it is no good shouting political dogmas at each other and that it is no good trying to solve the problem by soap box catcalls. I think that the last general election proved that we must all try to solve the problem together. I should like to add my words of tribute to those of the noble Lord, Lord Rochester, to the very vigorous attempts of the Government to solve the problem and in no way to minimise the dangers that we face.
However, when we look, on the one hand, at the size of the problem, we look, on the other hand, at the calls for greater modernisation, for greater streamlining of managerial and work force activities, and for the need for greater technology, computerisation and dataprocessing. What does a worker in one of the Rover company factories that are situated around the Midlands, who is about to be thrown out of work, think about that? He says, "You are asking me to support this programme of modernisation; you are asking me to work myself out of a job; you can hardly blame me for not giving it much enthusiastic support". But this is an illusion, and it is a very old one. He is not working himself out of a job by supporting modernisation.
I am happy to see the noble Lord, Lord Sainsbury, in his place. He gives his name to that distinguished firm which last week published a report in which we are informed that after 20 years' hard work at modernisation Sainsbury's have produced 30,000 more jobs. Surely that is a satisfactory answer from a firm of that calibre. The firm goes on to add—and I hasten to add that I do not own any shares in it; this is purely gratuitous—that it is seeking profitability, but a profitability with a social purpose, which is a cliché—perhaps like all clichés—very soundly based.
This illusion is not new. Exactly 500 years ago this year in the great city of Florence in 1483 the wool workers burnt Somerset wool because they thought that its greater workability would put them out of work. It did not; it gave them much more work. The Luddites—the followers of Ned Ludd in the Midlands—in 1815 broke their looms because they thought that this modernisation, this mediaeval computerisation, would put them out of work. It did no such thing. I can only hope that the employees of Rover will realise that if they follow this policy of modernisation, it may help them to put more Rover cars on the roads and fewer Japanese and German ones.
Between the wars, when I was first taking an interest in politics, there was a hideous slander that used to go around that you could not give certain people bathrooms in their houses because they would only keep coals in the bath. I never knew anybody who kept coals in the bath, and I never knew anybody who knew anybody who kept coals in the bath. Perhaps I moved in the wrong social circle!
But today we hear another slander (to which the noble Lord, Lord Jacques, referred), suggesting that people will not look for a job because it is simpler to go on the dole; that you can get nearly as much money with much less work by going on the dole. I have never
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met anybody who actually wanted to stay unemployed and on the dole. I have never met anybody who has met anybody who wanted to do that; but that is something which, if it is true, ought to be put right, and put right soon.
For the past 25 or 30 years I have worked in service industries, and one notes—and other people note it too—the other illusion: why is it that, with 3½ million people unemployed, we find shortages all round in the catering industry? One seldom—if ever—sees an English waiter. When I went to get my train home the other evening from the Parliament Square tube station there was a notice saying that they regretted delay on the Circle line. I asked why and was told that it was due to a shortage of guards and drivers. A puzzle! Have noble Lords ever tried dialling for the Directory Inquiries' service at the weekend when you could not find a telephone number? Have you ever wondered why you cannot get an answer? It is due to shortage of staff. That is an illusion that needs to be put right.
The word "moonlighting" is well known to all of us. I have never actually met a moonlighter, although I read about them all the time. They are called "cowboys"—a sad reflection on the very honourable and hardworking cowboys. However, the other day in a case of tax evasion and avoidance and generally fiddling of VAT which was being heard in Bristol Crown Court, I noticed that the defendent said: "Why shouldn't I? Look what is going on in the City of London. Look at Lloyd's and at the Stock Exchange". That was a little harsh, but it is an illusion that needs putting right. That is not the social welfare to which the annual report of Sainsbury's refers. There is no sense of social purpose there.
I should like to refer to another illusion. Did noble Lords see two or three days ago in the newspapers that London Weekend Television is paying between £60,000and £80,000 a year to some of its employees whose job is to edit football video film? I wonder what the future unemployed workers of Rover think about that. I do not even know what editing football video film involves. I suppose it means cutting out the respectable parts of the play, concentrating on the rioting in the streets of Luxembourg and those terrible pictures when a goal is scored of players jumping about, hugging and kissing each other. If I had done that when I played outside right for my school's second XI, I should have been expelled at once. That is another illusion that needs contradicting.
However, the one that worries me most of all is the size of the golden handshakes which are handed out now and again to those whom the law prevents you from sacking. What do the unemployed workers at Rover think about the size of the golden handshakes? What do they think about the enormous salaries that are paid to some managing directors and chairmen of companies? I am sure that the labourer is worthy of his hire. I know all about taxation; I know that he takes home very little but pays an enormous amount of tax. Many companies include in their reports figures of take-home pay and taxation paid. But how many unemployed workers at Rover actually read company reports?
I hope that this debate will help to dispel some of these illusions which are I think making it difficult for

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us to tackle the problem as sincerely as we should all wish. They may be small points, but they are damaging and I hope that we can put them right.
6 p.m.
Lord Dean of Beswick: My Lords, rising to make a maiden speech in this illustrious Chamber is something of an ordeal, even though one has made numerous speeches in another place along the corridor. First, may I thank noble Lords from all sides of the Chamber for the kindness and consideration they have shown me since I took my seat a fortnight ago. Perhaps I may digress for a few moments from the subject under debate to compliment the noble Viscount, Lord Tonypandy (although unfortunately he has had to leave the Chamber) on his maiden speech. Mine, as your Lordships are aware, is the second one today. I should also like, in complimenting him on his speech, to place on record my appreciation of his services in another place, and for the kind and considerate way he dealt with Back-Benchers like myself. He had no favourites, and both the most powerful in that Chamber and the humblest BackBencher received the same consideration. He left a record there as Speaker that any of his successors will have a job to live up to.
May I also thank the noble Lord, Lord Rochester, for his kind wishes when speaking in this debate earlier; and also the noble Lord, Lord Jacques, for the subject he has introduced for debate. Unemployment is the subject which, if judged in a social context, is the most vital and urgent problem facing us as a nation today. I had the good fortune, when a Member of another place, to obtain an adjournment debate on unemployment in the city of Leeds travel-to-work area. This was on Thursday, 28th April this year. I cite the city of Leeds because it is an area in which my former constituency was included, and also because what happened in that great city, both industrially and commercially, can be applied to the nation as a whole.
It is an area of diverse industry mainly relying on the clothing, engineering and chemical industries for its industrial base. It has an excellent record of industrial relations. It is by no means a high wage area, with normally a below national average number of unemployed in percentage terms. I was able to show, however, despite its record, that between 1979 and 1983 unemployment in Leeds doubled and was equal to the national average at the end of that period. Two of the most alarming features were the increased unemployment among young people and the steady and ominous increase in the long-term unemployed.
Little did I realise, when speaking in that debate in April, that in less than two months I would myself be joining the dole queue. I can tell your Lordships that it is a shattering experience for one who, since leaving school at the age of 14, has never been unemployed. We can debate unemployment in this Chamber today, and we can debate it again; they will debate it in another place, and debate it again. But the trauma of standing among young people at the Job Centres and watching the despair registered on their faces, and the trauma of having middle-aged, highly-skilled people come to you who know they will never work again, is an experience I do not want to repeat. It certainly taught me something about the problem.
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Before becoming involved full time in politics I spent the whole of my working life in Manchester, another great city of the North. The area in which I grew up and learned my trade was the largest engineering centre in Europe just prior to and after the Second World War. Manchester now stands almost deserted in industrial terms. Factory after factory and company after company have gone out of existence despite a first-class record for industrial behaviour, quality of goods and moderate wage settlements. It is a fallacy to blame high wages for this process taking place. It is accepted that in engineering some of the most skilled workers, such as people who manufacture machine tools, were in fact suffering the lowest wage rates.
I see my old friend and colleague, the noble Lord, Lord Lee of Newton, here. During the period I mentioned, which is when Manchester was perhaps industrially at its busiest, he was heavily engaged in organising the largest engineering factory in the Greater Manchester area. I believe that there were about 24,000 people employed at that time. It must sadden him to know that that number is now down to less than 5,000, and that they will suffer another blow following the announcement today that 650 more jobs are going in the turbine generating division of the General Electric Company. Those jobs will be lost between Rugby, Manchester, and Larne. I say that to kill some of the optimism that there has been that things are on the upturn, because if things are bad in the turbine manufacturing industry then it is the base that is bad; and therefore those predictions cannot be too great when looked at from that angle.
I welcome the Government's initiatives for the young unemployed, but I believe that they are, at best, a cosmetic exercise, with no firm hope at the end of the tunnel. Only an expanding economy providing real jobs can alter that. As for the adult group of unemployed, to which I have already referred, unless urgent action is taken some of them may never work again.
It is within the power of the Government to expand the public sector in a way which will make a significant impact on the present disastrous situation. The noble Lord, Lord Jacques, in opening the debate, referred to the public sector and the jobs that it could provide. It seems ludicrous that with 400,000 building trade workers drawing unemployment benefit there are growing queues and waiting lists. It seems nonsense that we under fund our railway system to a greater extent than any of our sophisticated competitors. I know that perhaps this is a simple equation, but it would be far better to transfer the £17 billion which is being spent on unemployment and related benefits to the creation of jobs by house building, road building, repair and extension of our railway system, roads, hospitals—you name it. The jobs are there if we will only put the money into them.
There is no point in the Government wringing their hands and saying, "It is not our fault". I would not for one moment ascribe to them the total fault of the unemployment situation today in a world recession. But I have seen figures from responsible people showing fairly and squarely that 50 per cent. of the increase in unemployment is directly attributable to present Government policies. The sooner they start to

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move away from those policies, the better. It is on record—and I think that the noble Lord, Lord Jacques, referred to this—that both the CBI and the TUC have recently, in varying degrees, called for such a policy. The reports from some quarters that the economy is improving are viewed with skepticism, and certainly are not believed by most people concerned.
There was another important debate in this Chamber yesterday, and it was on the increase in crime. There is a correlation between that debate and what is causing that increase and what we are talking about today. Police chief after police chief in the country has come out firmly with the opinion, with figures, that where there is an increase in unemployment then, correspondingly, there is an increase in crime in the area. The Law Lords, the courts and the legislative bodies can pass and administer all the laws they want, but one of the best ways to start to get those figures moving downwards immediately would be to get the young people to work with some fulfilment in life.
I do not wish to take the full 14 minutes, and I do not want to make too controversial a speech on a day like this. I am most grateful for the hearing that I have been given, and I close on a warning note. Unless we take action now, it may well be that those people who are bearing the adversity of unemployment with patience may cease to do so—and I do not think that they will wait forever—and may resort to action both through the ballot box and by other means alien to us as a democratic nation. Time is not on our side. The time to act is now, to stop the present situation before it gets any worse. I thank noble Lords for the kind and considerate hearing they have given to me.
6.10 p.m.
Lord Harris of High Cross: My Lords, it is my pleasant duty on behalf of the whole House to congratulate the noble Lord, Lord Dean of Beswick, on his quite admirable maiden speech. I am sure we are all glad to hear and to see that he already feels so much at home among us after his escape from the other place. His speech was succinct, was well argued, was well informed, was plainly heartfelt and was gracefully delivered. He comes here with wide knowledge of local government and trade unions and I am sure we all look forward to hearing his contributions to our future debates.
I should also like warmly to congratulate the noble Lord, Lord Jacques, on the delightful way that he opened this short debate. I commend him especially on the progress I detect in his emphasis on the need to tackle unemployment without increasing inflation. I wonder whether we may hope this initiative from the Labour Benches marks a move towards a new and much needed consensus. If so, I should like to put forward with my usual humility four propositions to open the way for the expansion of employment.
My first proposition which the noble Lord, Lord Jacques, agrees with is simply that unemployment can be reduced. I assert this against the Jeremiahs like Mr. Francis Pym, who recently argued that the new technology must permanently reduce the demand for labour. As Mr. Samuel Brittan never tires of pointing out, this unhistorical view rests on what he calls "the
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age-old lump of labour fallacy" which, in plain terms, fails to allow for the almost limitless possibilities of increasing standards of living. No doubt we shall continue in future to benefit from shorter hours, longer holidays and perhaps from earlier voluntary retirement. But such developments will create an enormous additional demand for more leisure goods and services, including more education, entertainment, travel, tourism, transport, more yachts, to say nothing of such minority indulgences as swimming pools and holiday homes, and what about more hunting, shooting and fishing?
My second proposition which is also implicit in the noble Lord's Motion is that inflation is not the friend of employment, but its enemy. Even Left-wing economists, I see, are now less inclined than recently to favour the easy panacea of boosting monetary demand. This is for the simple reason that experience around the world has taught that its lasting effect is to raise costs and prices rather than to increase output and employment.
Today, under the Government's medium-term financial strategy, there is no shortage of monetary demand. Whichever measure is taken, the money supply is increasing sufficiently to finance demand for more production. Indeed, there is plenty of British demand for foreign cars, kitchen equipment, ships; we may have noticed in shipbuilding recently a demand that British industry could supply if it were more competitive. If British prices were lower existing purchasing power would buy more of the products of British labour. Despite the remarkable progress in productivity over the last two or three years, we still have a long way to go in reducing costs. We cannot dodge the fact that approaching 90 per cent. of all costs, 90 per cent. of the value added in British industry, is accounted for by wages and other expenses of employment.
The need is not crudely to reduce wages, but rather to reduce the labour costs per unit of output so that, as the noble Lord has said, we can rebuild profit margins without pushing up prices. The moment employing more people is more profitable, more people will be employed.
My third proposition is that a large part of the official statistics of those without jobs is explained by what economists have described as voluntary unemployment. I fear this will come as a shock to noble Lords, but I turn to The General Theory of Lord Keynes, which I know many of your Lordships still hold in high regard. In the second chapter of Keynes' great work he described voluntary unemployment as arising from,
"The refusal or inability of a unit of labour … to accept a reward corresponding to the value of the product attributable to its marginal productivity".
In plain English what that means is that workers are voluntarily unemployed if they hold out for a wage above the market value of their labour. Keynes went on to explain that such excessive wages might be due to trade unions, to the level of social benefits, to legislation on minimum wages or even to what he called "mere human obstinacy". Alas, there is still a good deal of that about, and not only on the Labour Benches.

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This leads me to my fourth proposition which is that a consensus favourable to the reduction of unemployment must ceaselessly proclaim the logical link between jobs, productivity and pay. A recent vivid example is provided by the continued tragic decline in British shipbuilding. At Swan Hunter's the workers voted against a survival plan because it would require the ending of demarcation rules. I thought the most revealing episode on that occasion was the candid admission of a trade union leader who said:
"It would mean the destruction of the trade union structure".
I can only say, in that case, the sooner the better. I would certainly welcome an increase in partnership and a selective advance in co-operative ownership along the lines that the noble Lord, Lord Jacques, favours. But I should not wish to blame shortsighted and obstinate trade unions as the only reason labour is priced into voluntary unemployment.
It seems to me absolutely incontestible that wages councils have forced up pay, especially for school-leavers and part-time workers, so as to destroy jobs and the associated opportunities for training and promotion. From such clear-cut examples, it follows that anything which adds to the cost of employment without increasing production reduces the prospects of getting people hack to work.
From this vantage point, I would still say that the burden of government is the greatest destroyer of jobs. If we just take income tax, and include the employers' national insurance contribution, the marginal cost is more than 50 per cent. starting on earnings little above supplementary benefit levels. Such a levy simultaneously raises the charges against production that must be covered from prices and reduces the take-home pay of workers so as to make employment relatively less attractive for many low paid workers than social benefits. I insist, against all the protestations that we have heard and will hear in this debate, that high income tax operates perversely both to depress the demand and the supply of labour. The noble Lord singled out the national insurance surcharge as a tax on jobs. In this respect, it is no different from other taxes paid by employers which have to be incorporated into their costs.
In conclusion, I would say that if the Government cannot help by cutting taxes, especially on low earnings, we have no alternative but to slog it out by reducing total costs per unit of output and restoring profit margins as the best inducement for firms to take on more labour. Meanwhile, let the Government and their critics ponder that we see in many countries, if we look around the world, that unprecedented unemployment has been associated with an unparalleled volume of legislation and regulation to protect employment, to enforce minimum wages, to improve working conditions, to raise social benefits and to obstruct the flexibility of the labour market.
I have no doubt that if we could sweep away most of this well-intended interference and even abolish the Manpower Services Commission, and radically reduce income tax on wage earners and their employers, it would have at least two beneficial results. In the first place, it might temporarily deprive noble Lords on the Labour Benches of the power of speech—but I am not too confident that would work with the noble Lord,
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Lord Molloy. But that would be a temporary phase and they would undoubtedly recover their powers of speech in time to welcome the second effect which would be a powerful reinforcement of economic recovery and higher employment.
6.20 p.m.
Viscount Hanworth: My Lords, on two previous occasions I wanted to give the speech that I am going to give on much the same lines as it is today. Today, I almost wondered whether I was going to be able to give it because I have either a very bad cold or 'flu. I start with the proposition which I believe cannot be challenged by any economist. It is that the more people can work usefully for the longest possible time, the richer a nation should be. Theword "usefully" of course needs to be underlined. It is therefore clear that there is something unsatisfactory in the working or the side effects of our western capitalist system. Economists should focus their attention on this problem and also on the still wider problems of the world economy in relation to the developing and poorer nations. If we cannot at least alleviate the latter situation on a permanent basis, then our western monetary system—and much else in my view—is doomed.
Secondly, returning to the immediate, unacceptable level of unemployment, we should put in the forefront of our minds the proposition that keeping people unemployed, taking into account unemployment benefit, loss of tax revenue and other less obvious factors, costs the nation around 75 per cent. as much as it does to employ them. My third proposition is that unemployment could be reduced to under a million quite quickly if we were prepared to accept the side effects and disadvantages of possible methods of doing so. An obvious and hardly useful truism, one may say. Nevertheless, I believe that every possible solution must be kept under review because the side effects, disadvantages and opposition to a possible course of action may become less than it is in the present case.
There are several courses which come in this category. The obvious one is a degree of re-inflation which, if carefully controlled, my party and many others believe could be done without appreciably increasing inflation. One of the ways of doing this would be to increase public spending on essential work such as the renovation of our sewers; but there are many other areas which do not require increased imports or infrastructure. Other possibilities are abandoning chronic overtime and early retirement. These two were considered in the report by our Select Committee and there is likely to be a financial penalty unless those concerned accept some financial loss.
I believe, however, that there is an immediate possibility, with job sharing and part-time working, if the Government make it easier both for the employer and the employed. Many people these days, particularly married couples with children, would be prepared to accept less than full-time jobs for both husband and wife. Job sharing with an otherwise unemployed person needs thinking about. Two men working on a three-quarter time basis should produce one and a half times the work of one man. If the firm was paying the one man full wages and the Government chipped in at 75 per cent. of the cost of keeping

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the other man unemployed, both men could receive full wages.
Yes, I know that the flaw in this idea is that you cannot have some people working full time and others three-quarter time for the same wages. But there may be ways round the problem. If something on these lines could be worked out, we could almost solve our unemployment problem overnight.
This leads me on to the education field. I know that the number of pupils and students has decreased; but for years we have wanted to decrease the size of classes. Why not an agreed proportion of teachers on a three-quarter time and pay basis? In the manufacturing and export industry, we must remain competitive with foreign nations who have lower wages. It follows that all methods of increasing productivity must be accepted, both for export and also for home consumption, unless tariff barriers are erected against imports. There is then regrettably a direct equation between increased productivity and increased sales.
If the two do not match, then redundancy is inevitable. The same does not apply to purely domestic projects and services; and it is here where I believe there is the possibility for real, worthwhile reductions in unemployment—which, as I have said, might be on a no-cost basis to the Government. In all this, it should be said that we still face the 19th century attitude of some people, and of course of the unions. I hope that the unions will increasingly look to the long-term benefits of their members because at present many think only of the immediate and short-term future.
Finally, I should like to sound a note of warning for the future. It is to be hoped that our present problem of unemployment may be soluble; but what I believe will be a far more intractable problem in the future is that of finding work or occupation for those of low or lower IQs. Laborers, in the simple sense, are being replaced by mechanical diggers; petrol pumps are being automated—and who wants a dumb waiter except in an auction?
6.30 p.m.
Lord Molloy: My Lords, I should like during my few remarks to express my appreciation to my noble friend Lord Jacques for opening this debate. I should like also to express appreciation, gratitude and congratulations to my noble friend Lord Dean of Beswick. I could well have made that kind of speech a couple of years ago. The fundamentals are precisely the same, and, like him, I speak from some experience.
I do not mean this in a particularly nasty way, but it seems to be an awful coincidence that, along with a few millions of my fellow Britons, I have to remark that the only time we experience unemployment of this size is when there is a Tory Government. People scratch their heads and ask, "Why is it that this sort of thing happens to us with a Government of businessmen?" Even now Conservatives are asking that. I think that this might perhaps be a subject suitable for examination by the noble Lord, Lord Harris of High Cross. I go out of my way to listen to the noble Lord every time he speaks in this House, not because I agree with everything that he says but because he compels me to think; and he is very challenging when he takes
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one tiny aspect of, say, industrial relations. Although the point may be small, by the time he has finished with it, it is fairly massive.
The noble Lord reminds me of the rugby commentator who, when the Welsh captain, J. P. R. Williams, scored a brilliant solo try against the English rugby team, criticised him for the fact that for half the distance he ran he had his socks down. When the noble Lord, Lord Harris, talks about the wicked, awful people in the shipbuilding industry of our nation, I think of them as the men who built the Royal Navy and who, in the Falklands crisis, rapidly converted large ships so that they could join that magnificent force. Of course, lines of demarcation have been sources of irritation and have been the causes, I think, of unnecessary strikes. But we have to say to ourselves that this situation arises not because a particular trade in this complicated industry is afraid of being wiped out, but simply because it is afraid of how many of its workers will no longer be able to contribute, to build ships for the British Navy—I do not think that it is a had thing to get worried about—or the British Mercantile Marine, due to some change in method. Also, those workers are not prepared too lightly to accept that the alternative to that great craft and skill is the dole queue.
While we are on the subject of shipbuilding, I would point out that the noble Lord, Lord Harris of High Cross, forgot to mention the massive irritation that was caused in the shipbuilding industry regarding a ship that was converted into a very necessary form of cargo vessel. It went to the Falklands, and later returned home. Instead of the same British shipwrights and shipbuilders converting it back again, it was sent by the Government to the Malta shipyards. There is patriotism for you! So do not let us think it is all on one side.
The Government have a very difficult task; in particular, so do those Ministers, such as the noble Lord, Lord Cockfield, who every day, I am quite certain, are trying to find some answer to this problem. It would be absurd stupidity to say that the Government do not care, or that people such as the noble Lord, LordCockfield, and other Ministers with similar responsibilities, do not care. But some of us on this side of the House feel that we need a new tack. When the Government have departed from monetarism to some degree, as they have, it has been to the benefit of the CBI, small businessmen, the nation, and the unemployed; so why be afraid? Why not move further away from this awful system? The Motion calls for what is almost an impossibility: the necessity of increasing employment without increasing inflation. Quite frankly, I do not know whether that can be done, but I believe that it would help the nation if it were seriously attempted.
I have said in your Lordships' House on many occasions that we still ought to look to see whether the situation that now confronts our island race has occurred before. The answer is, yes. I was one of the young, skilled artisans who were on the dole at the time; and this is what frustrates some students in our universities when they read about the 'thirties. How did we overcome it? One answer is immediately on everybody's lips. It was not a perfect answer, and it did not immediately create full employment without any

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form of inflation. Of course not. However, it got us back on the road to solid government and lifted up the morale of a great people—that is, the great people of the United States under Franklin Delano Roosevelt.
If we were to look more closely at what was achieved—and, if I may say so, speaking parenthetically, I have searched; and I am sure that the noble Lord, Lord Harris, and many other notable economists in this House could help us here—since the years of the New Deal, we should see that there has been only one evaluation by an historic scholar and economist of repute that has in any way been condemnatory of the New Deal. Democrats and Republicans have built their new America on the foundations of the New Deal.
The crisis in 1928, when Roosevelt was Governor of New York, was absolutely appalling. One discovers that poverty-striken Arabs in the streets of Cairo were collecting money to send to starving children in New York. Yet they overcame it; and they did so because they were prepared to do something about the economic "polio" which the nation had, and which unfortunately their great President had. I find it absolutely remarkable that the United States could throw up a leader from the upper classes such as Roosevelt—struck down in the middle of his second presidency with polio—and that he was able to carry on building up a nation, when millions of unemployed, and even more millions on short-time work, were it seemed, slowly suffocating that nation. In the United States corn was burnt to keep people warm; 7,000 farmers lost their farms in six months; local authorities just had no money at all. No equivalent of rates came in: they had nothing.
We do not suffer that situation in this country—at least, not yet—and I hope to God that we never shall. The noble Lord, Lord Mancroft, made a point about morale which I think is very important. It may not be an important economic argument, but I have heard in working men's clubs and on the terraces of rugby-football grounds the argument which has been submitted by the noble Lord, Lord Mancroft, put forward by those who are on the dole. Why do we not deal with it? Did your Lordships read in the paper the other day about a golden handshake that a bloke had got? What do they call the thing? Is it a review body? When I was working I would have had to work 10 years to get his increase in pay in that situation. When people see what is happening, of course they get upset and angry. It is understandable. One would think that people on a couple of hundred thousand a year would say, "Hold—we will not have one halfpenny more." I would deplore any evil person being given a chance to get among our unemployed and whip up frenzy and hate against our Government. I am not a supporter of the present Government, but I would deplore that kind of activity, and I hope that they will heed very carefully the submission of the noble Lord, Lord Mancroft, this evening.
I think that my country is entitled to a New Deal, and I believe that even the present Administration, if they had the courage, could present a new deal for Britain. I should support them the moment they embarked upon it, if they were simply to design a broad programme to stimulate recovery by giving
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relief to small businessmen, to parts of industry, and to working people. America got out of the mess. If I may say so, I was doing some reading only the other day in preparing for this debate. Lord Mancroft's speech reminded me that in the United States of America it was compulsory for the upper echelons not to have massive increases in their top salaries. I hope it will not be necessary for us to introduce legislation. I hope we shall be able to appeal to those in the top salary echelons to do this; but they must remember that, if necessary, we shall legislate to prevent any form of greed.
Public spending increased in the USA, especially for the needy. There was the development of public works and the creation of the Tennessee Valley Authority. At the very beginning, there was a national recovery administration plan which protected wages in the United States. During the early 1930s Roosevelt decided that child labour should he abolished. We shall not have to abolish child labour; that is not the size of our problem. But it was the size of the Americans' problem, and they overcame it. Guarantees were given that workers would be allowed to join unions, and all forms of collective bargaining were encouraged. Once everything got under way the result was amazing. The building industry completed the Great Boulder Dam and hospitals, town halls and schools were built. Picks, shovels and machinery had to he manufactured. On and on went this run-away return to full employment. An examination was carried out into what this meant for industries associated with the building industry in the United States. When full employment returned it meant that machinery, chisels and hammers had to be manufactured. The wheels of industry started to turn again. Families were then able to buy clothes for themselves; they had been unable to buy any for 10 years. So the clothing industry started up again. There was inflation at the beginning, but in the end it evened out. We know today that that despairing nation in 1933 is now the richest and most powerful nation in the world. I want my country to be the richest and the most powerful country in the world in terms of sane, sensible thinking. I believe we can quite easily achieve that objective.
I end with one appeal. The Government are beginning to realise that they can no longer entirely worship monetarism. A great deal has been said about "spend and prosper". An examination of the new deal in the United States shows that in the end "spend and prosper" works. I do not believe that any Government can generate recovery and abolish unemployment in a couple of years. However, I believe that a Government who are determined to do it will have the courage to look at every alternative to see whether they can pick from the best what will achieve the one thing which unites us all in this Chamber: the abolition of mass unemployment and the economic recovery of our nation.
6.44 p.m.
Baroness Vickers: My Lords, first I should like to thank the noble Lord, Lord Dean of Beswick, for his maiden speech. Regrettably, I was not in the other place at the same time as he was, but I shall have the pleasure of catching up on him here. I should also like

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to say a word about the noble Viscount, Lord Tonypandy. I served under him for so many years. Not only was he very gracious to one in the House; he even came down to Plymouth to preach a sermon in the Central Methodist Church in order to save my soul. So I am very grateful to him. It is very nice to see the noble Lord, Lord Barnett, on the Opposition Front Bench, because, even though we have always been in opposition, everything he has said has always been extremely pleasant.
We are grateful to the noble Lord, Lord Jacques, for the way he has drafted his Motion. It has given us so many opportunities to express different points of view. I want to draw attention to unemployment in rural areas, especially unemployment among the young. In previous years, particularly before the war, it was normal for many young people to follow their parents and go into farming, in the same way as miners' sons followed their fathers down the mines. However, as a result of mechanisation in all forms and different attitudes towards work on farms, employment has been greatly reduced. A job which used to employ several men—I am thinking in particular of harvest time—can now be done by one or two machines in only a few days. And jobs outside farms—hedgecutting, for example, on the side of roads—are now done mechanically; but hedge cutting used to give a great many people excellent employment. We now have very few blacksmiths, gamekeepers, river keepers, full-time gardeners or village shops.
I have here a few figures from Devizes in Wiltshire which relate to permanent jobs obtained by young people. In 1980–81, 43 per cent. obtained permanent jobs. In 1981–82, the percentage went down to 41. Regrettably. in 1982–83—from April to October—the figure went down to 35 per cent., but I am glad to say that at the moment the current figure is 46 per cent. This is not at all satisfactory. It means that a great many young people are leaving the countryside and going to the towns, as they did in the days of the industrial revolution—though, I am glad to say, in not quite such large numbers.
I like to be practical, so I lent my vegetable garden to the job centre. I have had many young men working in it for several years now. I have never taken a penny in rent nor any of the seeds, because I believe that they should be ploughed back and the produce sold. Unfortunately, however, not one of them wanted to take a permanent job as my gardener. This was nothing to do with me personally. It was not that they had taken a dislike to me. I am glad to say; but they did not want to take a permanent job with anybody as a gardener. This makes me wonder how well we choose people for these jobs. I have had to employ a part-time gardener. He has another job during the week and comes to me at the weekend. A young fireman comes to cut the grass on his days off. My object was not to employ people who already had jobs. I wanted to employ somebody who had been trained and who therefore was a new recruit to work experience.
I should like to discuss how these work projects are arranged. In Wiltshire, there are 10 project teams, based in selected towns, each consisting of an adult and four trainees. They carry out various tasks, enumerated as tasks of benefit to the community, skill
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training, painting, decorating, bricklaying, minor construction and horticultural work; and also work of an environmental nature. Furthermore, there is catering, which was mentioned by the noble Lord, Lord Mancroft, and caring skills, office practice and needlework. There is also a theatre workshop in which the young generation do scenery painting.
On the other hand, we have very industrious young people. I should like to mention one family consisting of eight children. The mother has had to bring them up alone; the father deserted them. There are five girls and three boys. Every one of them has a job. One of the boys was a chef but unfortunately he lost his job. What did he do? He went off to Greenham and laid bricks there for £100 a week. When that job finished he went to another situation, where he also earned good money. I am glad to say that now he is a chef again. He is in a very good restaurant in Wiltshire, has a flat of his own and earns £120 a week.
So there are methods, if you have the will, by which to obtain jobs. This boy had many disappointments over the jobs for which he applied. Very often the problem is that young people are not taught at school how to set about looking for a job. I have here a leaflet, again from Wiltshire, which says, "How will I start on the scheme?" The answer is,
"After an initial interview you will join a one week introduction course during which time you will be told all about the scheme and what work experience and training courses are available. We will then decide how you will spend your 12 months on the scheme".
I must say that I would be very scared if it was my first interview and I was told that I had to make up my own mind in that way. The difficulty is that we do not have enough career officers. I am not blaming the career officers themselves because they often have another job to do and undertake career training and advice only in their spare time. But I also believe we do not obtain enough outside help in regard to finding jobs for young people at an early time.
More employers—more industrialists—should visit schools and should explain in detail what their type of work is. Farmers should go along and do the same. There are plenty of other people—from the nursing service and so on—who could talk to young people and give them some insight into what their future lives might be. This would give them a chance to consider a career and make a suitable choice. In other words, they would gain confidence in choosing. First, the young people should meet at an early time a careers officer in schools, and I hope that we shall get more fully trained career officers. They should also have adequate, accessible information, and an appropriate range of opportunities in their local environment.
The Further Education Unit, through the work of the National Institute of Careers Education and Counselling, sponsored an exploration of the concept of a personal guidance base. I hope that this may be carried out because employment will be increasingly difficult for a young generation, and they do need considerable counselling by people with real knowledge of the subject. The Further Education Unit went on to mention the various terms they were considering, the progress that might be made by young people, and how such schemes might be assessed. One suggestion was in terms of motivating young people to learn to contribute to society. Providing them with a

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valuable range of skills was another. Preparing them for employment and for periods of unemployment, and for continuing their learning, was yet another. The importance of recognising the risk of future unemployment and understanding its cause was a point raised by the noble Lord, Lord Molloy.
I should also like to mention the subject of apprenticeships because I believe they should be discussed, especially in the case of rural workers. Most apprenticeships nowadays, I consider, are too long because education in schools has greatly improved. I know, for instance, that in the Royal Dockyards they cut the length of their apprenticeships when they found out how much better educated young people were. For those working on farms, it is absolutely essential to have an apprenticeship in engineering because the vast number of accidents on farms is very frightening. This is because farm workers do not have a thorough knowledge of the machinery they have to use or of how to repair it. I would like to see a good apprenticeship for all farm workers who will have to manipulate machinery.
One might also consider whether young people should be given some kind of award. Many suggestions have been made about certificates saying what a person has done and has not done. I should like to see a scheme on the scale of the Duke of Edinburgh Award so that young people have something to show for all the hard work they have done—something to show their parents and their friends; everyone likes to receive a little reward.
In rural areas, the youth training schemes should aim to encourage young people to gain employment in their own rural environment, in order to help build up the country communities again. It is very depressing to find, in village after village, weekend cottages belonging to people who just come to stay in them from Friday to Monday. That sort of thing spoils the community because it does not create extra work for the local people. If we can achieve more employment for young people in rural areas we may be able to keep such areas alive.
I hope that the suggestions I have made will not offend those who are at present working in the various training schemes. I admire what they are doing despite many difficulties, but I should like to see action taken which would strengthen organisations for the training of the young in rural areas, in order to reduce unemployment.
6.55 p.m.
Lord Barnett: My Lords, I hope that your Lordships will forgive me for making another "maiden speech" so early after my first from the Back-Benches. I do not know whether it has anything to do with the fact that my first maiden speech did not entirely agree with everything that is in my own party's policy!
I am delighted to have this opportunity to speak because, apart from anything else, it enables me to congratulate, first, my noble friend Lord Jacques for having introduced in so excellent and constructive a way this debate on such an important topic. Secondly, I am particularly delighted to have a chance to pay a personal tribute to my noble friend Lord Dean of Beswick for his maiden speech. Almost anyone
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hearing it would have been as moved as I was—and I am sure all noble Lords on this side of the House and, I imagine, many Lords opposite were moved—to hear about his personal experiences upon finding himself unemployed so recently. We have debates about unemployment both in another place and in your Lordships' House but most of us have no real experience, fortunately, of that particular situation. We are very grateful for that.
For my part, I have found the debates in this House to be much easier, one might say. I was grateful to the noble Baroness, Lady Vickers, for her kind remarks about my manner in another place when we were together there. I must say that it will be even easier to be pleasant in this place, it seems to me.
I agree with much of what has been said in this debate although not with everything; that will not surprise your Lordships. I did not quite agree with everything said by the noble Lord, Lord Harris of High Cross, although not necessarily in the way he would imagine, when he spoke about the disincentive effect of high national insurance contributions and high taxation at low levels of income. There is some truth in that, and to some extent I disagree with the recent findings of the Policies Study Institute in a study they did for the Department of Employment. They said—and I quote:
"The level of benefits was not found to have any relationship with labour market activity".
There may be some little effect, but on the other hand I feel that the noble Lord, Lord Harris of High Cross, tended to exaggerate the effect of the levels of tax and national insurance contribution as an important factor in the level of unemployment.
I certainly agreed with many of the illusions about which the noble Lord, Lord Mancroft, spoke—particularly the illusion about the effect of modernisation. I hope that many of my old friends and colleagues in the trade union movement will recognise that modernisation and cash limits—which I had a little to do with—were not intended to work and are not working against their interests but rather in their interests; in improving the industrial scene, making us as a nation more productive, and ultimately finding more jobs for our people.
On the other hand, as the noble Lord pointed out, it is also understandable that while we in this place may be able to consider this matter in broad terms, for the one man who is made unemployed in the interests of modernisation it is 100 per cent. unemployment for him and it is not easy for him—or for her—to take a broader view. He or she can only be concerned—understandably—with his or her situation and wants to see us in this House and those in another place do something about it.
I take it that everyone who has spoken in this debate—and indeed those noble Lords who have not done so—would agree with the vital need stated in the Motion moved by my noble friend Lord Jacques to reduce the appallingly high number of the unemployed; and to do so in a sustained and steady way while avoiding inflation taking off again. One has to concede that no Government-certainly not one of which I had the honour to be a member—have been able to find an answer to the three economic problems

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that have faced all Governments. They have not been able (as a juggler might say) to keep the three balls of employment, inflation and economic growth all in the air, and dealt with, at the same time. Nobody has managed to achieve it yet, and it would be as well for all of us who are critical of what any Government do to bear that in mind.
On the other hand, I am bound to say from what has happened in the last four years that I fear that the Government appear to have taken the view that bringing down the rate of inflation will of itself, as it were, cure unemployment and create the right conditions for higher growth. I am bound to say to your Lordships and to the Government that there is absolutely no evidence from experience here or elsewhere to justify such a conclusion. In any event, if there were need for further evidence we have the proof, and we have it in abundance, from what has happened in the last four years. We have seen that during the process of bringing down the rate of inflation there has not only been no economic growth but at times there have been negative rates of economic growth, and unemployment has risen to its present appalling level. So we can see for ourselves what that kind of policy has achieved.
In the short term there may well be some increase in economic growth(indeed, I hope there is) and there may be (indeed, I hope there is) some fall in unemployment during the course of, for example, the next 12 months. In this Short Debate I do not want to get bogged down in what I would consider to be a futile argument about whether growth in the next 12 months will be 1 per cent., 2 per cent., 2½ per cent. or 3 per cent. I just hope that the Government are right and that we shall have 2 to 3 per cent. growth, and that unemployment will to some extent come down.
But I want to deal with two questions arising from that assumption, and not, as I say, with what rate of growth we shall have next year. First, if the Government are right, what are the reasons for that growth; and secondly, what are the long-term prospects if the Government are right and we get that level of growth in the coming year? As to the first question, I start with where growth is not likely to be coming from. Sadly, if the Government are right, the source of growth will certainly not be from exports. We cannot foresee—I certainly do not think the Government can foresee—an export-led growth in the next 12 months. The figures are quite clear. This is a Short Debate, so I will not bore the House with the figures, but the volumes of exports in recent months have mostly been down on the 1982 figures, while imports have been well up. So it does not look likely that the growth we are going to see is going to be led by exports.
Then, again, the source does not seem likely to be from a substantial increase in the growth of private capital investment. I wish it were otherwise; I wish there were going to be a growth in private capital investment. There might be some: indeed, I hope so, because unless we see a substantial growth in manufacturing investment then the growth in the next 12 months is hardly likely to be sustained. Again, the figures are not helpful. Total fixed capital formation was lower in 1982 than it was even in 1979. The same applied to the first half of 1983, which was down on
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the same period in 1979. I hope—and it seems possible—that there will be some small increase in manufacturing investment; but it will be so small (and I doubt whether the noble Lord, Lord Cockfield, will be able to tell us anything different), certainly as a proportion of total demand, as to have little or no impact in making us believe that growth is going to be led by a huge increase in private capital investment.
Certainly the growth is not going to come from the public sector capital investment. We do not yet know the results of the public expenditure exercise, but I do not know that anyone in your Lordships' House will be expecting to see that the Government have managed to bring down the level of public expenditure as previously envisaged while allowing capital expenditure to increase. To put it mildly, it is unlikely, I fear, for the same reasons as those for which I was criticised by the present Chancellor when I was Chief Secretary to the Treasury and when I made substantial cuts in public expenditure, and for the same reasons as those for which I was criticised when cutting capital expenditure rather than current. But even without any new cuts the figures we have for public sector capital expenditure again show that in 1982 the figures were down even on 1979, and that the same applies again in respect of the first half of 1983.
So if it is achieved, if the Government are right and we do achieve some growth in the coming 12 months, there is only one source, and we all know what that is. It is going to be a consumer-led increase in economic growth. Indeed, we see the evidence all around us in the booming consumer durables; but if we do not trust our own eyes the figures are available to tell us the story. Volume expenditure in the first half of 1983 is well up on that for the similar period in 1982, and the money comes from some modest growth in earnings over and above the rate of inflation and from something which should concern the Government and certainly noble Lords in this House. A large amount of it comes from a substantial fall in personal savings as a percentage of GDP. We have seen it fall from 10.46 per cent. in 1980 to 6.25 per cent. in the first quarter of 1983. So the cause of any growth now achieved cannot by its very nature be sustained.
My second question about what happens in the longer term answers itself. The growth must inevitably decline, and I fear unemployment would rise again if those policies are persisted with. As I have said, I do not pretend it is easy to achieve the three economic objectives to which I referred at the outset. But I am bound to say that if we are going to continue with the kind of policies we have had in the last four years we not only cannot see an answer to the three conundrums, as you might say, but we can see the situation getting worse and worse—and this at a time when we have a Government that came into office with absolute certainty as to the solution they were offering the nation.
It is sad for the nation—and it is certainly sad for me—that they have failed. But it is much worse for the nation because of what they have done in the process of failing. I refer to the fact that, despite all the virtues to which this Government and the Prime Minister pay lip service, particularly that of ensuring that the nation lives within its means, in the last four years this Government have allowed the nation to live beyond its

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means with a vengeance. The Government have indeed led the nation in a great eating of the seed corn, with catastrophic consequences for the future. The disastrous increase in unemployment; the low, at times negative, rates of economic growth; and the cuts in public services, might have been understood, even accepted, if there were any evidence that the hair shirt the Government unevenly imposed had resulted in a dramatic improvement in economic performance, and if we could now look forward to sustained growth and a steady reduction in unemployment.
Whatever they may claim in the short term, the Government can make no such claim for the long-term consequences of their policies. Indeed, the miserable record of the past four years was itself only sustained, as I think my noble friend Lord Jacques said, by the use of the North Sea oil bonanza. One shudders to think what would have happened to our balance of payments without it. Yet North Sea oil production, we were told by the Minister for Energy in a recent Answer to a Question in another place, will peak in the next two years. Instead of using this great national benefit to boost capital expenditure in the public and private sectors and prepare for the day not so far off when the oil starts to run out, the Government have ensured that we have eaten that seed corn by allowing personal consumption to grow, for some, far beyond the rates of the economic growth they have achieved.
It is a policy that is the very opposite of everything that the Government are supposed to stand for. It is living beyond our means in the worst of all kinds of ways. The Chancellor said it himself. He has indicated that there are not likely to be any tax cuts next year. That is understandable, because personal tax cuts next year would give a further twist to the spiral of growth in personal consumption and the consumer-led boom we are now seeing. The Government have dug a hole, which they cannot now get out of, by their excessive views on public expenditure.
I make it clear to this House that I do not go back in any way on what I have done in the past as Chief Secretary to the Treasury or on what I have said at any other time. We must control levels of public expenditure. But there is an enormous difference in resource terms; in finding resources, at the present time and with the present state of our economy, for increases in capital expenditure without allowing public expenditure to get out of control. There is enormous difference. I accept responsibility for what I have said, notwithstanding what the noble Lord said recently in answer to another Chief Secretary when he spoke—wrongly, as I am sure he now recognises—on the question of how revenue is used. To some extent I accept the responsibility of introducing cash limits in the way that I did which did not distinguish between capital and current expenditure. But that is no excuse for the current situation, because if the Government cannot get us out of the hole they have dug by increasing personal consumption and by getting us into an export-led boom there is no other way than through increasing capital expenditure, as a number of noble Lords have said in this debate. Yet because of their obsession with a particular level of public expenditure they are unable, without eating their words, to do it. I very much regret to see that that is the
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situation into which they have led themselves by their, to say the least, somewhat dogmatic approach.
In a longer debate I should certainly hope to indicate other ways in which we might at least do better as a nation. For the moment it can only be said without fear of contradiction that, if the policies of the past four years are persisted with, there can he no long-term prospect for a sustained reduction in unemployment without increasing inflation. Indeed, the very reverse will be the case. This, despite the enormous misery that has been inflicted on millions of our fellow citizens.
I know this is a pleasant place where one does not make serious criticism, but I hope that I may conclude by saying, in as non-controversial a way as I can, that Ministers with any responsibility would need to be pretty insensitive not to feel some sense of shame for what their policies have achieved in the past four years.
7.14 p.m.
Lord Cockfield: My Lords, this has been an interesting and instructive debate and it has been marked by a number of distinguished and thoughtful contributions. The discipline exercised by the time limit has, I think, noticeably improved the quality of the debate even if it has somewhat reduced the quantity.
May I in particular congratulate the noble Lord, Lord Dean of Besvvick, on a distinguished maiden speech. We all listened to him with very great interest and his description of the problems facing the cities of Leeds and Manchester, of which he has very close personal knowledge, was particularly interesting. We look forward to the opportunity of hearing from him again on many occasions in the future.
I was glad to see from the Motion on the Order Paper that the noble Lord, Lord Jacques, now recognises that the Government are entirely right in their policy of ensuring that inflation should not be increased. Of course, we go somewhat further than the noble Lord and believe that inflation should be reduced. But we welcome his conversion so far as it goes. We share, of course, the noble Lord's concern at the position of the unemployed. I would not accept some of the noble Lord's descriptive material. In particular, perhaps I might say that unemployment benefit will be increased by 8½ per cent. in November and it will then stand, in real terms, at a higher level than it did at the time we took office.
If by saying, as he does in his Motion, that unemployment needs to be reduced he means that we would all most sincerely wish to see unemployment reduced, then so far as this objective is concerned there is nothing between us. Where we part company is in our analysis of the part that Government can and ought to play. In this connection I was particularly struck by the speech of my noble friend Lord Mancroft with his reference to the illusions which hinder our attempts to deal with these problems. I entirely agreed with him when he said that modernisation and new technologies create jobs and do not destroy them. Very much the same point was made by the noble Viscount, Lord Hanworth, in what he described as his four-times delayed speech.

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I start by defining the role of Government and the role of industry as we see them. The function of Government is to provide the right framework within which the economy has to operate. It is the function and responsibility of commerce and industry, of management and of workers, of businessmen and entrepreneurs, to seize the opportunities, to improve productivity and competitiveness, to expand output and thus to create more employment and new employment. That is the way that unemployment is reduced.
At this point may I dispose of what I describe as the old fallacious solutions, many of which have been paraded once again this evening. First, reflation; that is, a substantial increase in Government expenditure. The only conceivable result of such a policy would be to increase inflation, push up interest rates and thus, after a brief period, reduce output and increase unemployment. I entirely agree with the comments of the noble Lord, Lord Harris of High Cross, on this point. We cannot dismiss the consequences of an increase in Government expenditure of this character. We cannot simply dismiss them as side effects which ought to be tolerated, as the noble Lord, Lord Han worth. suggested.
Viscount Hanworth: My Lords, I did not say that. I said that there were side effects and we ought to go on considering whether these side effects were acceptable. I did not say that they were acceptable.
Lord Cocktield: My Lords, if the noble Lord agrees that they are not acceptable, there is nothing between us. It is very important in this connection to look at what has happened.
If one looks at the decade of the 1970s, money incomes increased by something like 345 per cent. During that period output increased by 17 per cent. only. This was a period in which repeated attempts were made to increase demand. There was no shortage of demand whatever: but virtually all the additional money which was pumped into the economy in this way simply came out in the form of inflation. The one thing that it did not do was to increase the level of output. There is no reason to suppose that precisely the same would not happen again. Indeed, as the noble Lord, Lord Hams of High Cross, said, there is no shortage of demand at present.
The second point is incomes policy. This is the spavined, broken winded nag of economic policy. It has been tried seven times, and seven- times it has failed. With that sort of form, if anybody wishes to put his shirt on it he is likely to lose it. The noble Lord, Lord Rochester, at least admitted—and I am glad that he did—that in the next four years we are not likely to see any reappearance of an incomes policy. Of course if his point is that it is highly desirable that people should understand the facts of economic life, I am entirely at one with him. The more that people understand the way that the economy works, the better it will be for all of us. The thing that one cannot do is to impose either by statute or under the guise of voluntary action a form of incomes policy of the kind which has been tried and which has repeatedly failed in the past.
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May I take also the question of import controls? We export 30 per cent. of our total output of goods and services. This is one of the highest figures for any industrialised country in the world. If we went in for import controls we should be wide open to retaliation and we should be the losers from such a policy. There is no question about that at all. In certain instances where our industries are seriously damaged by imports from low cost countries, often employing unfair trading practices, we take action wherever it is legitimate for us to do so. But any form of generalised import control will make the position of this country more difficult and not easier. It will increase, and not reduce, unemployment. So much for the answers that we do not want.
I turn briefly to the answers that we do want. It is the proper function of the Government to provide these. It is the function of the Government to maintain sound money, to reduce inflation and to keep it on a downward path. This is essential if there is to be confidence, if people are to trust the future, if they are to be able to plan ahead and if they are to invest for the future. Reducing inflation requires sound financial and monetary policies. These we have followed. The success is there to be seen. Inflation has come down from a peak of 22 per cent. to 5 per cent. now. Next year inflation will resume its downward path. We must be resolute to keep it that way. I was grateful to the noble Lord, Lord Rochester, for his recognition of the importance of this point.
I turn next to interest rates. The level of interest rates is determined by both international and domestic factors. We cannot control what happens in the international field but we are responsible for what happens at home. Excessive borrowing by the Government means high interest rates. Less borrowing means lower interest rates. We have reduced drastically the size of the Government's borrowing requirement as a proportion of total national product. Interest rates have come down by seven percentage points since the peak of 1981. Base rates now stand at their lowest level for five and half years.
The noble Lord, Lord Jacques, raised the question of fixing, stabilising or pegging exchange rates. We had a most interesting debate on this issue in your Lordships' House as recently as Monday. One of the major problems is that if you try to stabilise exchange rates by a device such as the exchange rate mechanism of the EMS or by some other device you shift the pressures from exchange to interest rates. If your domestic policies are right, you are likely to end up with the right mix of interest and exchange rates; but if you set out to control exchange rates when your domestic policies are wrong, or where there is a lack of convergence between your economy and the economies of other countries, you end up with instability of interest rates in place of instability of exchange rates. The CBI has argued with some justification that that instability is just as damaging as instability in exchange rates.
Next I come to Government expenditure. Over the years Government expenditure has absorbed too big a proportion of the national product. It grew after 1979 but never quite reached the peak of 46 per cent. scored under the LabourGovernment. But now at last Government expenditure is on a downward path.

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Much Government expenditure is unavoidable and provides services that people want. But you can have too much even of a good thing. Expenditure in the public sector has to be supported out of the wealth generated by the private sector. You simply cannot have a healthy economy where more and more has to be supported by less and less. So we have Government expenditure as a proportion of output on a downward path. It must continue that way.
I deal next with the labour market. If an economy is to operate efficiently it is essential to improve the operation of the labour market and to remove rigidities and artificial constraints. Our trade union legislation is directed to reducing the excessive power of trade unions to cause industrial disruption or to take action which prices their members out of jobs. There is an important—and indeed essential—part for both employers and workers to play here. Constructive trade unionism directed to looking after the true interests of its members rather than playing politics could make a substantial contribution to improving our competitiveness and creating new job opportunities.
Let us consider enterprise, initiative and innovation. We have abolished a whole string of controls on pay, prices, dividends, exchange control and hire purchase controls. We have introduced 100 measures to help trade and industry, particularly new small businesses. We have introduced enterprise zones, 24 of which have now been authorized. We give massive support to science and to research and development. Total Government expenditure on research and development this year will exceed £4 billion.
Training is a subject that was raised by a number of noble Lords. We need a skilled workforce to take advantage of the opportunities particularly in new industries and new technologies. The new youth training scheme will cost £1 billion a year and will bring nearly half a million employed and unemployed young people into a single integrated programme of high quality giving training for work. I can assure the noble Lord, Lord Rochester, who raised this point, that the youth training scheme will continue. The Manpower Services Commission will watch the position carefully to see whether any changes are necessary in the light of experience.
As for the long-term unemployed under 25, the community programme was started in October 1982 to provide employment opportunities for the long-term unemployed. By the end of October 1983, 106,000 places had been filled. This represents a considerable achievement on the part of the Manpower Services Commission. Places have been filled rather faster than expected, and my right honourable friend the Secretary of State for Employment will be proposing an additional £10 million for this service by means of adjustments made elsewhere. My right honourable friend has also announced that the programme will run for a further two years from October 1984 on the basis of 130,000 filled places for the long-term unemployed.
The noble Lord, Lord Jacques, suggested that the national insurance surcharge should be abolished. We have made clear our dislike for this particular tax. Perhaps it would be unkind to remind him that it was
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introduced and increased by the Labour Government. It stood at a rate of 3½ per cent. when we came into office. We have now reduced it to 1 per cent. and my right honourable friend the Prime Minister has said that we will abolish it during the lifetime of the present Government, but I cannot at this stage be more specific than that.
The noble Lord, Lord Rochester, raised the question of energy prices. The Government has already done a great deal to assist industry with energy costs. Industrial electricity prices have been frozen for 1983–84 and new load management schemes have been introduced which offer reduced tariffs. Gas contract renewal prices have risen only 3½ per cent. in the last three years. Heavy fuel oil duty has been frozen for the last three years.
It is essential that—I have been talking about the part played by Government—we improve our competitiveness. Here the level of pay settlements is crucial. In the last 20 years our share of world trade has been halved and import penetration of our home market increased dramatically. This has been one of the main reasons why unemployment in this country has been higher than in most other countries. But it is not sufficient for pay settlements to be modest. Other countries are improving their position, too. Pay settlements have come down substantially but they need to come down much further. Pay, of course, is not the only factor. We must improve productivity. We need better design; better quality; higher standards; more aggressive salesmanship at home and abroad. We need to produce the right goods; of the right design; of the right quality; and at the right price. All these are matters within the responsibility and competence of industry itself. Success here means success in export markets and in home markets alike and it is this success that we can build increased output and increased employment.
We are too much inclined as a nation to complain about our lot; too much inclined to dwell upon our difficulties and our failures. Complaints, once justified, continue to be trundled out long after they have ceased to have justification. Let us instead concentrate on the things that are right. Let us take credit for our achievement. Let us build upon our successes. The British economy is not plunging downhill into recession. On the contrary, our feet are now firmly on the path leading up and out of the recession. This is really the answer to the noble Lord, Lord Barnett, in his claim that Government policies were not producing the results. Just look at the record today compared with early 1981: output up by 5 per cent.; industrial output up by 6½ per cent.; output of chemicals and man-made fibers up by 10 per cent.
Lord Barnett: My Lords, would the noble Lord care to tell us why he is comparing the position with 1981 rather than with, say, an earlier year?
Lord Cockfield: My Lords, I am comparing it with 1981 for the very simple reason that that is when we reached the bottom of the recession. If you are looking at the path of the economy, you look at whether one is going up or down. The noble Lord's gaze is firmly fixed on the past when we were going down. The position for two years now is that the economy has

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been recovering and I hope this will give the noble Lord some encouragement because I am going on like this.
Output of chemicals and man-made fibers is up by 10 per cent.; output of engineering and allied industries up by 6 per cent.: total investment up by 7 per cent.; productivity in manufacture, up by 17 per cent.; inflation down to 5 per cent., the lowest rate since the 1960s; interest rates are down by 7 percentage points since the peak. All this adds up to recovery; not recession.
Unemployment, tragically., still remains much too high, but not as high, for example, as in Belgium, the Netherlands, Ireland or Spain. and only moderately above the EEC average. Even here there are encouraging signs. In many industries employment is now increasing—nearly 150.000 new jobs in the service industries, for example, in the first half of this year. Vacancies are at their highest level since early 1980. Short time working is less than a quarter of what it was two years ago. Overtime is on the increase. Total employment, including self-employment, is increasing and the underlying trend in unemployment may be leveling out.
No one would dissent from the aspirations expressed in the Motion itself. We are all against sin and in favour of virtue, but good intentions need to he backed by sound policy. We in this Government have those policies. The policies we are following are the right policies to maintain sound money, reduce inflation, and increase output and employment on a sound, enduring, long-term basis, and these policies are working.
The noble Lord, Lord Barnett, is a distinguished ornament in the City of Manchester. May I, therefore, quote to him the words used by Emerson nearly 140 years ago of the City of Manchester:
"This aged England: I see her not dispirited, not weak, but well remembering that she has seen dark days before: indeed, with a kind of instinct that she sees a little better on a cloudy day, that she has a secret vigor and a pulse like a cannon."
Viscount Hanworth: My Lords, before the noble Lord sits down, would he agree that this is a short debate and that he has not really dealt with the contributions of individual speakers in any great detail? All that he has usefully said could really have been said in 15 minutes.
Lord Cockfield: My Lords, I must take issue with the noble Viscount. I have endeavoured—admittedly in a comprehensive form—to answer most of the points that have been raised in the debate, including the points raised by the noble Viscount. There is a problem in a debate of this sort because there is some limitation on time. Although I have spoken longer than I would normally have done due to the courtesy of noble Lords in keeping their own speeches so brief, I felt that it was not really appropriate for me to go on at any much greater length.
Lord Molloy: My Lords, before the noble Lord sits down, does he not think that he might have mentioned the massive anguish among small businessmen? In the period that he talked so glowingly about, there has
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been a massive increase in suicides and the largest rise in bankruptcies since the First WorldWar. Was it not worth mentioning that that matter, too, is to be tackled?
Lord Cockfield: My Lords, so far as businesses are concerned, there are always casualties. One greatly regrets seeing this happen. The number of new businesses starting up is greater than the number of businesses that fail. We have gone to very great lengths to give help and encouragement to provide incentives for small businesses. As I mentioned in my speech, we have introduced 100 measures of this kind.
Lord Jacques: My Lords, as there is another debate to follow, I shall rest content with congratulating my noble friend Lord Dean of Beswick on a distinguished maiden speech, and also my noble friend Lord Barnett on his first speech from the Dispatch Box, which was indeed distinguished. I also wish to thank all those who have taken part in the debate. Although I am not wholly happy that there has been the amount of agreement which I had expected, I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

Contemporary Art and Tax Legislation
7.42 p.m.
Earl Haig Earl Haig rose to ask Her Majesty's Government whether they will consider tax legislation as an incentive to relieve the financial hardship suffered by many living artists at a time of recession and to promote the sales of contemporary art.
The noble Earl said: My Lords, I believe that no Member of your Lordships' House would deny the importance of the artist in our society. In an age of mass production, he has understood his cultural heritage and used his techniques to interpret life in terms of symbols and in terms of feeling and personality. The Russian painter Kandinsky once described content in painting as:
"The communication of what is secret by what is secret".
Kandinsky left Russia because artists were being denied the right to express themselves and because only those artists who were willing to interpret politically acceptable themes were provided for. Here, in this country today, although the artist is secure from the point of view of freedom of expression, he is less secure from the material point of view. Artists have a fine record of being ready to sacrifice the material things of life in order to practise their art. Many of them have had the courage and the toughness to continue working in spite of adversity. In this country today, at a time of recession, many of them need every penny for material things, and the chances of survival are slim.
I must declare an interest as a practising painter. From the knowledge of my profession, I can help to pinpoint some of the problems that many artists are facing—problems which force them to look for other means of earning a part-time living, as teachers, as art critics, by working in a gallery or museum, or simply by applying for national assistance. Many artists who are allowed to register and to receive supplementary

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benefit suffer from a dilemma whenever they receive income from sales, commissions, grants or awards. Are they to declare their receipts and risk prosecution at a later stage or do they simply hide their receipts?
Opportunities for part-time employment do not come easily. But when chances do arise to supplement income by other work, things can be difficult under the present taxation system. Many artists cannot claim expenses since they are liable to be written off as hobby painters by the Inspector of Taxes. These expenses are growing fast while the returns on exhibitions are diminishing. The commission in most galleries on sales has now reached the level of at least 40 per cent. This increased gallery commission is due to rising overheads which, in the past 10 years, have risen tenfold. Opportunities to exhibit in galleries are becoming scarcer, and the cost of materials has risen steeply during the past 10 years. For instance, a canvas prepared by Winsor and Newton of modest size, say 24 inches by 36 inches, today costs over £23 excluding VAT, compared to just over £4 in 1972,
Framing costs have increased likewise and the price of paints and brushes has risen. So the cost of painting big pictures is prohibitive. The galleries are having to confine their exhibitions to business-making ones so that artists who are relatively unknown, but who should be given opportunities to exhibit, are being cut out. It is only when an artist's work is considered to be an investment that there is a chance of selling and the chance of an exhibition. The owner of the gallery where I exhibit in Edinburgh tells me that, with the exception of one or two exhibitions a year, the gallery makes a substantial loss in putting on exhibitions of contemporary art. This is only offset by the dealing aspect of the business where expensive and lucrative pictures are bought and sold. My dealer tells me that he knows of no other dealer of any repute in the world who makes a serious commitment to the showing of contemporary art who does not also deal from a back room.
My purpose is to sound the Government about what proposals they have in mind to regenerate the market for contemporary work and which would foster a demand. At present, the whole machinery is slowing down because the finance needed to drive the machinery has disappeared. Both the public sector side of patronage, through the Arts Council and local authorities, and the private sector need a boost. It is with the sphere of private patronage that this Question is concerned.
The public sector funding through the Arts Council, enjoyed by only too few practising artists, should not be reduced. Having served myself for some years on the Arts Council, I know how important and useful its work is. In that sphere, the artist comes under the discretion of committees, whereas in the private sphere, about which I am talking, his work is considered by individual people. Having said this, let us not forget the part which the public sector played at the time of the great American depression when the careers of many budding young painters of the New York school were saved by an enlightened scheme in which murals were painted for public places. Last year, during a less severe recession in America, the private sector market for contemporary work fell
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drastically, which shows how vulnerable the artist is to the ebb and flow of money.
While on the subject of commissions for public buildings, perhaps I might add that the President of the Royal Academy, Sir Hugh Casson, has particularly urged me to press the merits of a scheme whereby a percentage of the cost of each building should he spent on embellishment, as happens in several other countries. The main responsiblility for carrying out such a scheme would be upon the architects, and it is interesting that it has the support of such a distinguished architect as Sir Hugh.
I should like to refer briefly to the need to preserve so far as is humanly possible state support for our schools of art and design, many of which are suffering cutbacks. At a time when there are many new techniques, new materials and new ideas afloat, money is needed to provide adequate teaching staff and adequate resources for students while in the art schools. Business training also is needed to prepare them to face the colder climate prevailing in the outside world.
Last May, our Conservative Party Manifesto contained the following sentence:
"We shall examine ways of using the tax system to encourage further growth in private support for the arts and heritage".
My Question tonight urges the Government to encourage a little faster the growth of private patronage for the visual artists. It urges the Government to give some kind of financial boost which will encourage bankers, businessmen, private collectors and industrialists to buy or commission new works of art which, in turn, will encourage galleries to offer more opportunities for one-man shows.
We are extremely fortunate to have my noble friend Lord Gowrie answering for the Government as he has particular experience and knowledge of the matters under discussion. If my noble friend accepts that there is a need for the introduction of new tax legislation to stimulate private patronage, perhaps he will consider some of the options available to him. I should like to suggest six possibilities.
The first possibility is that original works of art be no longer subject to VAT. Indeed, VAT adds greatly to the complications of the art dealers and customs officials, since some artists are registered and others are not registered. I understand that in many cases dealers are made to charge VAT on all sales, whether or not the artist is VAT registered, in order to facilitate the keeping of records. All this confuses the non-registered artists and reduces their chances of sales, since their prices have to be raised to the same level as the prices charged for the registered artists, which include VAT.
The second possibility is that artists with consistent records, who are not registered and who are working part-time, should be able to reclaim VAT on the cost of materials. The third possibility is that the Government accept the suggestion made to the Pile Committee, which is in line with a Canadian concession, whereby any person is able to spend up to 2 per cent. of his or her gross income on works to be allowed against taxation. Fourthly, there should be clearer and fairer rules whereby part-time artists can claim losses against business income so that they would be less dependent upon individual tax inspectors. Any artist

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making a profit in two out of five years should be considered to be a genuine professional artist, able to claim expenses against income.
The fifth possibility is that companies be allowed to make capital donations to galleries registered as charitable organisations and claim relief, as happens in America. This would enable galleries registered as charities to be given new works which would be available for public viewing, instead of piling up in artists' studios. The sixth possibility is that businesses be allowed to purchase works of art to decorate and embellish their offices on terms which would enable the depreciation value of the works to be set against tax. Offices would be allowed to buy works to a given sum.
I realise that works may appreciate rather than depreciate in value, but there could be some stipulation whereby a buyer under this scheme would derive no financial benefit by a sale. This would remove the element whereby works are bought with an eye on investment rather than on quality or enjoyment. Any criticisms on the grounds that this proposal would encourage the supply of work for the benefit of a relatively small number of privileged people might be blocked by a stipulation whereby, if the work was later sold, the amount received from the sale would be given back to the Government.
On behalf of the artists I would urge my noble friend to find a way to help artists. My noble friend is in a position to know what is possible when dealing with a not altogether sympathetic Treasury and Department of Inland Revenue. We know that he is sympathetic to our problems and that our concern is his concern. My reason for putting down this Question is to urge my noble friend to press on with finding some solution to our difficulties.
7.54 p.m.
Lord Strabolgi: My Lords, we must be grateful to the noble Earl, Lord Haig, for raising this important Question this evening. The noble Earl is a practising artist, and a very distinguished artist at that. He has spoken with great sincerity and deep knowledge of the tax problems as they affect the professional artist today. The noble Earl touched on one or two of those problems, and I should like to develop what he said.
Many tax inspectors try to prove that the artist, even the professional artist, is actually exercising a hobby and is not entitled to offset losses and certain overhead expenses against income. There seems to be no uniformity of approach throughout the country. I understand that some inspectors try to argue that the artist is not engaged in a profession and that this is some casual source of income. The burden is on the artist to convince the inspector in every case.
I should also like to support what the noble Earl, Lord Haig, has said about VAT, which drives up the price of an artist's work. and to ask the Minister—whose presence we welcome here this evening, and who is also a Treasury spokesman—if consideration could be given to exempting original works of art from VAT in the same way as books are exempted. In France and Sweden the first sale of an artist's work is exempted from VAT, and so I do not
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think it would be very difficult to try to give that concession in this country. Why do we always have to lag behind other countries in this and other respects?
Can something also be done to arrest the decline in the number of part-time artist teachers in art schools? At a time of recession and cuts, when there are reductions in the teaching staff of an art school it is usually the part-timer who has to go. The Department of Education and the local authorities seem unwilling or unable to grasp what that great inspector of the old LCC art schools, Mr. Tomlinson, knew so well: that it is more interesting and stimulating to be taught by a practising, working artist, and that he is usually a much better and more inspiring teacher. Students nearly always prefer to be taught by a working artist, and I can vouch for that personally as someone who at one time had the privilege of being taught by both Henry Moore and Graham Sutherland, when both, at the beginning of their careers, were part-time teachers at Chelsea in the early 1930s—and excellent teachers they were.
Training in the fine arts is surely important even from the most materialistic point of view—and I think that this should appeal to the Government—since industrial design often stems from the fine arts and depends on them. We neglect the fine arts at our peril as an industrial nation, and, as the noble Lord, Lord Cockfield, said just now in the last debate, we need better design. It is important, too, that a proper balance should be struck between what we spend on preserving our past heritage, and keeping it within these shores, and what we spend as a nation on our present creative activity. France is currently spending the equivalent of £4 million on acquiring contemporary French art. Too often we tend to look almost exclusively back to the past and to forget that our present will he their past for future generations who will judge us to some extent according to the artistic legacy we leave them.
The stimulation of patronage is all important if both the artists and the galleries are to survive. As we all know, the Contemporary Arts Society has done much to encourage corporate patrons to purchase contemporary art, but more needs to be done to open up sources of support on a significant scale—as is done in the United States, where very generous tax concessions are given to donors of works of art and to galleries. Tax concessions are also given to industrial companies. The value of works of art owned by industrial companies in America amounts to many millions of pounds.
In order to encourage the collector of modest means, who is just as important, the possibility of organising something like art lotteries, such as have existed for a hundred years in Sweden, should be examined, as should the provision, too, of interest-free loans, such as operate at the Arts Council's Hayward and Serpentine Galleries and under the Welsh Arts Council's scheme to enable private buyers to spread payment over a number of months.
But much more remains to be done to raise the general public consciousness of the attractiveness and possibly even the financial advantage of acquiring original works of art, although they should always be bought because you like them and not as an

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investment. One significant way in which the patronage of artists can be extended and their work brought before the public is by commissioning works of art for public spaces, and over the past five years I understand that the Arts Council's scheme for grant-in-aid for this purpose has encouraged considerable activity in this area.
However, unlike some European countries and several states in the United States, this country has no legislation providing for a percentage of the building costs of public buildings to be spent on art works; that is, art works which are both inside and outside the building. If legislation could be introduced, it would open up a considerable area of patronage not yet available. Therefore, I hope that the noble Earl, Lord Gowrie, will give our artists some encouragement this evening. I trust that the noble Earl the Minister will never forget that he is just as responsible for encouraging the arts of the present as for helping to preserve those of the past.
8.2 p.m.
Lord Beaumont of Whitley: My Lords, I too, should like to thank the noble Earl for initiating this debate. I am rather overcome by the expertise in the art world which has been shown by the speakers so far and which no doubt will be shown by the speakers who are still on the list. I cannot boast any such expertise myself, except possibly my wife's expertise, because at the moment she is representing the Contemporary Art Society in Scotland and buying pictures from contemporary painters with the funds of that extremely-to-be-praised body, and thereby possibly doing more for contemporary painters than we are in your Lordships' Chamber. But I suspect that we may have a longer lasting effect, because I think that a great many things can be done and a number of them should be close to the heart of a Conservative Government.
The fact that we have a Minister for the Arts, whose heart and soul we know is in this matter and who is on the side of those who are speaking today makes it the more important it is that we underline those areas where it is quite clear that this Government should be making progress because they have motivation to do so.
First, the Government claim to be, and to a certain extent have shown that they are, on the side of small business. The artist today is the small businessman par excellence. He may not always be pleased to be called that, but nevertheless that is what he is and in so far as he can be helped to be a successful small businessman, that should be part—and I am sure it is—of the Government's intentions.
There is also the necessity or the desire, which I am sure the Government have, to make the artistic community more reliant on themselves and less so on that queen of quangos, the Arts Council. That is not to denigrate in any way the Arts Council, but given that the Conservative Party has this particular interest in encouraging private enterprise and the field outside quangos, I think it is very good that we should try to find as many sources as possible. I know that in fact the Minister is spending a great deal of his time doing this.
Thirdly, it is good for this Government to he concentrating on this because, like every Government before them, they are keen on trying to expand our
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industry and our exports. The existence of a number of practising artists provides a pool of talent for design and for commerce which is a beneficial background. The beneficial background of arts and crafts helps to increase the ability of our industry to produce the goods which are needed and which are aesthetically desirable.
Fourthly, I think there is a need—and I believe the Government realise there is a need—to do something about contemporary art, because I do not think that we shall have a thriving art market in this country unless we have thriving contemporary art. There are signs of a very real danger that the position held by this country until recently of being the hub of the art market of the Western world may alter as, for instance, insurance shows signs of doing and the City shows signs of doing. Art, too, may be under threat and the possibility of the art market moving to other countries should not be lightly passed by. However, the noble Lord the Minister will probably know more about that than I do.
I also have a list of suggestions which I think the Government might take up. Some of them overlap those mentioned by the noble Earl, Lord Haig; some overlap what the noble Lord, Lord Strabolgi, said. Like them, I shall be brief in explaining them. However, even if the Minister cannot immediately give us a great deal of encouragement—I hope he can give us some—there are signs that at the end of the debate there will be a great deal of material which he can take away. None of these ideas which we are putting forward from the various Benches round your Lordships' House is, of course, new, or hardly any of them are new. But they are ideas which, to a certain extent, are receiving a wide range of backing. As this consensus is rising in the parts of the community which are interested in the arts, so it encourages a Minister who is on the side of the arts to try to push forward some needed reforms.
The first matter I would mention, which has already been mentioned, is the droit de suite, or the possibility of having a taxation on subsequent sales of an artist's work. That can either be in the form of copyright, which goes back to him, or it can actually be a tax which goes to the help of the arts as a whole. I should have thought that the first was the more preferable of the two, but in Europe both methods are used in a number of different countries, and it is something which certainly ought to be introduced in this country in one way or another. We have paved the road with public lending rights for books; I think we ought to go on to the droit de suite.
Secondly, there is the question of VAT, which has been raised by all speakers so far. I should particularly like to take up the point made by the noble Earl, Lord Haig, about agents being required by the Customs authorities to charge VAT on smaller artists, even where those smaller artists—and I do not think that the noble Earl mentioned this particular point but it is absolutely vital—themselves cannot claim back the VAT for the materials because their income is too small to he under the VAT scheme. This is a real injustice and something which ought to be put right as soon as possible, and I should have thought that there was no reason why it should not be done.

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Thirdly, there is the easing of the ability of companies who wish to do so to make commissions to the arts against tax. The present rulings by the income tax authorities as to what is admissible and what is not admissible, although logical in their way, militate against enlightened patronage. There is not all that much enlightened patronage that we can afford to turn down or discourage that which there is.
Fourthly—something I do not think has been mentioned—there is possibly the need for a copyright collection agency. This is a subject which has not come up very much, but Art law (the service which has helped a lot of artists over the last few years and which I shall come to in a moment) has had 2,000 cases over five years dealing with the infringement of copyright in industry and in publishing, and in all sorts of ways. On the whole, artists have no particular help with this, and it is difficult for them to seek redress. But they have been able to use Art law. Unfortunately, Art law has now ceased to operate because it no longer had any money; but there is a need for this kind of protection, and there is a precedent for a copyright collection agency which could possibly be supported partly by the Government or. Perhaps, by the Arts Council. It is an idea which certainly should be taken up and urged on behalf of artists.
The abolition of part-time teachers, or the fact that the employment of part-time teachers in art schools is dying out, has already been mentioned. It is a British phenomenon. It does not. I gather, happen in many other parts of the world, except the other side of the Atlantic, and it has been tremendously important. The influence of live artists, as has already been mentioned, is good in itself. The mere fact that it keeps artists working, and working in a productive way, and keeps them off the dole and keeps them from the unemployment queues, is surely worth while.
I have talked already about the income tax authorities. There is need for criteria to be given to the income tax authorities, possibly after informal talks with the Arts Council, to exclude the hobby artist and, therefore, to be able to support more wholeheartedly the full time artist who exists and needs support. We can no longer follow Duchamp's remark that if you say you are an artist, your are. One can have some sympathy with the revenue authorities if they do not entirely accept that: but the answer to it is not just to have a hotchpotch, as we have at the moment; the answer is to lay down guidelines.
Also in this field, there is the question of bursaries and grants. From time to time there is doubt whether or not these are taxable. If they are ex gratia, they are free of tax; if they are regarded as income, they are subject to tax. This is unclear even with Arts Council bursaries and grants.
Finally, I have been helped in compiling this list by the people who have been running Art law for the last few years. It was an admirable body. It fell between the stools of subsidy and self-sufficiency. On a subsidy of £10,000 a year, which it had for a little time, it managed to release something like £200,000, or maybe even a quarter of a million pounds, of useful advice to artists. It was a great mistake to let this body disappear. It is not really the fault of the Government
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as such, but I have no doubt that the Government themselves could do something to renew the work of Art law.
Altogether, there is a vast range of areas in which the Government can act and in which, if they have the will, they can achieve something. There are probably objections to every single one of the suggestions I have made; but objections are meant to be overcome, and when the aim is worthwhile a good Government overcome them. The aim in this case is undoubtedly worthwhile. Over the last 20, 30 or 40 years this country has become a haven of the arts. It has lived down the reputation of being a Philistine country, which it had for so long. It leads the world in a great number of areas, and visual art is not one in which it is far behind. It would be a good thing for art as a whole, and for this country, if the Government were to give it and its artists the encouragement they need.
8.16 p.m.
Lord Hutchinson of Lullington: My Lords, I, too, am most grateful to the noble Earl for initiating this debate. It is most gratifying that it should be initiated by someone who is a practising artist. It must be, I would have thought, almost unique in this Chamber. It has also been a great privilege to have heard in this Chamber the speeches that we have heard so far this evening on this subject.
I must at once declare a direct interest in the subject matter of this debate, because not only have I had a lifelong love of the visual arts but I have, at the moment, the privilege of being the chairman of the trustees of the Tate Gallery. That gallery is the one most intimately involved in the country, I suppose, in the purchase of contemporary art. We do not deal in works; we are not allowed to sell; and the money that we spend on the purchase of works of art, for the most part, comes from the taxpayer. For those reasons, perhaps I am able to look at the present tax arrangements in relation to contemporary art with a modicum of personal detachment.
Before so looking, I should like to make one or two general observations. Whereas I am, and always have been, acutely aware of the difficulties which have already been referred to in the financial situation of the great majority of practising artists, and indeed craftsmen, nevertheless there has been a substantial improvement in their lot over the last two or three decades. There are many more artists practising in this country now than there have ever been. There are many more outlets for their work by way of commercially and publicly supported gallery spaces up and down the country. There is a slowly increasing number of patrons: not only such bodies as the Arts Council, the Government art collection, the Tate Gallery itself and other provincial museums. but a large number of unlikely commercial firms who are buying contemart work, as the noble Lord, Lord Strabolgi, has said, through the Contemporary Art Society.
What is still missing, unlike in many European countries and across the Atlantic, is a broadly-based section of the art-loving population with a real and sustained enthusiasm for privately purchasing works of art—and that was referred to by the noble Earl, Lord Haig, in introducing this debate. I think that that

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is largely due to the small amount of space in reviews in newspapers and periodicals which is given to the work of contemporary artists, and, I am bound to say, to a certain lack of enthusiasm, passion and love in the writings of art critics which might well communicate itself to potential purchasers.
But the buying of contemporary art still largely depends on relatively small groups of people and institutions buying a unique object. It is that which distinguishes this form of purchase from other commercial purchases. In the market for prints it is of course much less so, and here again there has been a very great expansion in the past 20 years.
Having said all that, nevertheless I know very well the problem of artists, which has been referred to in relation to supplementary benefits, and their present inability to register as artists. I know the dilemma to which the noble Earl, Lord Haig, has referred. It comes as a great shock to me to hear that the organisation Art law has packed up. I did not understand that it had already done so. I should like to pay a great tribute to the work it has done. It is a complete disaster to great numbers of artists in this country and for institutions if that is really so. The work that that organisation has done for individual artists and for art institutions is absolutely out of proportion to the skeleton staff with which it has run; a staff which has largely consisted of lawyers—solicitors and barristers—working in their free time and giving free advice to artists over innumerable numbers of legal problems which have come their way. The Arts Council suddenly ceased to support it on the basis that it was only a service organisation. It is no doubt as a result of that that it has met its demise. If the Government can do anything to support that organisation they would repay a thousand fold the tiny amount of money it needs to carry on.
Returning to the centre of this debate, the first and most strangely unacceptable matter which occurs to us at the Tate Gallery, and which has already been referred to before, is that whereas books, magazines, composers' compositions (good, bad or indifferent) are zero-rated for VAT, the works of visual artists—who use canvas, paper, metal, wood or stone, and so on, to convey their unique works of imagination—paytax at the full rate. The noble Earl the Minister will know that I have had some correspondence with his predecessor on the question of VAT. I have recently continued that correspondence with him. I know he will forgive me if I take this opportunity to say in public some of the things which I have said to him in private.
It is the first purchase of an author or composer which is zero-rated, but the effect of that is to free from the tax everything that has gone into the work. The simple fact is that books are zero-rated and are free, but paintings and sculptures are not. Is the Minister really prepared still to justify that discrimination?
Once an artist's turnover reaches a certain point and he has to register for VAT, particularly in the case of a sculptor buying the complex materials of his trade, it may be many, many months before he can sell his completed work and recoup his VAT payments. He will then have to pay possibly 40 per cent. or 50 per cent. commission to a gallery and on top of that pay 15 per cent. VAT. As far as my gallery is concerned, and public museums, such a museum is treated as provid
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ing a free service and not conducting a business. Thus related inputs are not deductible. Therefore we carry the full rate of VAT. When I say "we", that is the taxpayer pays the tax on the purchase of works from living artists.
If artists and dealers sell abroad they are not troubled by VAT and nearly every successful dealer in this country has built up a significant foreign clientele. The result is that many British artists' work simply goes straight to the dealer and out of this country. Thus so many of our greatest artists and most successful contemporary artists have a reputation abroad far higher and far greater than the reputation they bear in this country. I wonder whether that is not one reason why nearly all the substantial collectors of modern art are presently to be found outside this country.
The next fact which irks us at the Tate Gallery is that when we buy the works of dead artists for the British historic collection we pay no VAT, but when we buy for the modern collection from contemporary artists we pay the full rate of 15 per cent. I ask the Minister again can he really support this discrimination? A third matter which irks us is that we observe secondhand works of art passing through dealers' hands where VAT is levied only on the dealer's margin. Yet, if we bought direct from the artist, we would have to pay the full rate of VAT. I hope the noble Earl will not tell us when he replies that the Government cannot now extend the zero rating provisions and, because VAT is charged on all commercial transactions on the sale of goods and the provision of services, that no exceptions can be made, for if exceptions are made, the floodgates will be open and he, the Minister for the Arts, can claim no priority.
We all know that VAT is broadly based. We all know, first, that in 1972 books were exempted by a political decision. We all know that, secondly, since then there have been innumerable ad hoc exceptions, especially in regard to the export of goods. Thirdly we all know that recently, when it looked as though the nation might lose a great heritage building, in a period of days the VAT (Works of Art) Order 1983 was tabled exempting from VAT disposals from historic houses. It can be done and it was done. I should like to urge upon the Minister, knowing where his heart lies in this matter, that it should be done in relation to those matters which I and other speakers have raised this evening.
When we import works of art—and our national duty at the Tate Gallery is to build up our collection of modern foreign art—we enter a tax jungle. One example—and there is no time now to go into many others—is that a work which already has been disposed of by its creator, or his estate, attracts no VAT if the disposal was before 1st April 1973. But if that work has been kept by the artist or forms part of his estate at death—we all know that artists very often keep back their most original and interesting work—if we acquire such a work by purchase, gift or bequest we must pay 15 per cent. VAT. This is no small burden, because, for instance, an outstanding work by a contemporary American artist may well be worth 300,000 dollars. If left as a gift to us—that is in reality a gift to the nation—it would attract VAT of no less than 45,000 dollars.

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I would say to the noble Lord that not only does that thwart the wishes of the testator but it is hardly an encouragement for us to set up an organisation for the encouragement of gifts from our American friends to museums over here. I would ask the Minister, first: Why not exempt first sales by living artists—and this has already been mentioned—as is done in France and various other countries? I understand that there is a UNESCO recommendation to this effect. I would ask the Minister, in passing, what the Government have done in regard to that recommendation. Secondly, why not exempt all gifts and bequests to national collections?
Thirdly, why not permit the purchase of works from abroad free of VAT when they are already free of import duties and so create a reciprocity and thus help British artists in selling their work in the same way? Indeed, the Minister may know that there is an EEC regulation which I hesitate to spell out—it is the Sixth Council Directive of 17th May 1977—which places this obligation on all members of the Common Market. I would ask the Minister again whether there has been any agreement on such a directive up to date.
Before sitting down, I would also like to support the idea (which was mentioned by the noble Earl in initiating the debate) of the embellishment of public buildings, an idea which has been particularly supported by the President of the Royal Academy, Sir Hugh Casson. I should also very much like to hear from the Minister what are his views on droit de suite mentioned by the noble Lord, Lord Beaumont, whereby the artist will obtain some small percentage on the resale of his work when, as so often happens, the work was originally sold for a contemptibly small sum and then, a few years later, when the dealers and the buyers realise suddenly that this is a work which in every way is highly desirable, it is resold at a very substantially increased price. At the moment, the artist sees absolutely nothing of that increase in value.
Other matters have been raised. I should like to support all those matters which have been put forward by the noble Lord, Lord Beaumont, and the suggestions that he has made. I would submit that all these matters are exactly within the remit of the Minister for the Arts. I know that the noble Earl has a very particular love for the visual arts. I know that he has a very particular experience and knowledge of the market in the visual arts, and I know, too, that he has a very particular fascination for economic and fiscal problems. I know that he is a man of imagination and determination.
I can only say that there are at this moment very many persons involved in the world of art and, above all, and always, the artists themselves, and they, as of today, have a real belief that the new Minister for the Arts may really be able in the months to come to make a great contribution in sorting out the complications and injustices of the whole tax system, and particularly the VAT tax system, which weighs down on the artists of this country. It has already been said that, whatever we have achieved in this country in the last 10, 15 or 20 years, and whatever we have not achieved in this country, economically there can be no argument whatever that, as far as the arts are concerned, this country stands pre-eminent.
8.34 p.m.
The Minister of State, Privy Council Office, and Minister for the Arts (The Earl of Gowrie): My Lords, although it has been a brief debate, this has been an extraordinarily fascinating one. It is probably as well for the Inland Revenue and the Chancellor of the Exchequer that Money Bills do not have to go through your Lordships' House. Many years ago when I first became interested in painting—a love which has remained with me all my life, although even at the age at which children can do virtually no wrong on paper my own paintings were various shades of khaki on mud—I ran into a large and vibrant landscape in the wilds of Donegal which I took to be by a local painter. It turned out that it was, in fact, a painting by my noble friend Lord Haig. I looked at it and have stayed in the house where it resides on many occasions. It has long been my ambition that when eventually released from the cares of office, and from the salaries of office, I might be able to afford to purchase a picture from my noble friend. I urge all of you to do so; because not merely is he a painter in your Lordships' House but he is an inordinately good one.
I welcome the chance to pay that personal tribute to him but also to pay tribute to him for raising the debate in the way that he did, for making many suggestions to the Government in an informed and moderate way but also in a way that stimulated other noble Lords. I shall try to comment on as many of these issues as I can, given the lateness of the hour.
I would ask your Lordships to remember that all tax changes, however desirable—and I am the first to recognise how many anomalies there are in all taxation systems—represent forgone revenue; and it is difficult for any Government to make concessions in one sector which can so easily be held unfair to another sector. I will return to that important point in a moment. In general, as a Government, we believe that the rules of taxation need to be simplified rather than made additionally complex. There is always the problem that concessions and the boundary disputes that thereby arise—andsome will always arise—have the overall effect of complicating the taxation system. They also give rise to a loss of income. This has to be considered in an economy such as ours where a very great deal of art support is publicly funded. But I do not believe that in any way at all we have an ideal tax system. I would, as I have said, like it simpler and more equitable, and therefore the suggestions which have been made are in general most valuable and interesting, and we will as an Administration look at them very hard.
May I start by saying to my noble friend that he was quite right to take the Government's manifesto commitments as a test. We mean what we say in our manifesto and we shall be judged accordingly. Our record to date I believe is good in this area. Since 1979 there have been significant changes. There has been a substantial reduction in the minimum covenanting period for gifts to charities, including arts charities. I hope that the wife of the noble Lord, Lord Beaumont, for whose efforts I have the greatest regard and I have some knowledge of them, will benefit from those efforts accordingly by this significant change.
The Government have also simplified the requirements for public access to conditionally exempt works

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of art, particularly in the case of houses not regularly open to the public, and have provided much clearer information about such relief. They have also provided substantial tax reliefs for endownments for heritage property, including works of art, and, in addition (as the noble Lord, Lord Hutchinson, reminded us) last summer a VAT concession was introduced in respect of the disposal of works of art from historic houses in the case of private treaty sales and acceptances in lieu. That has indeed been widely welcomed, so I do not think this is a record to be ashamed of, and of course I hope very much to build upon it.
Theoretically there are two options open to the Government. Either we seek very fundamental changes in the present tax structure or we operate within the overall present framework and seek to make modest improvements. The tax changes which have been suggested in the report of the Select Committee of another place, and which have to some degree been argued here tonight, would fall into the former category of being fairly fundamental. They would enable individuals and companies to spend a percentage of pre-tax income on their own selected causes. Of course that could not—and should not—be restricted to the Arts. That expenditure—unrestricted, as I say—would be allowed against general taxation.
As everyone knows and as many have mentioned tonight, this is very broadly the American system and it has engendered a great deal of private and corporate support of activities throughout American society. But it is not the British system. We start from the proposition that the state collects and disposes of the money required to run essential and other services, supplemented—and the supplementation is of increasing importance—by earned income, private covenanting and business sponsorship. The transition from one system to another would be a massive operation, and the upheavals of the transitional period would undoubtedly damage many worthy causes, institutions and operations which at present are reasonably well run under the existing arrangements.
However, I can say that as a firm enthusiast of open societies and capitalist economies, I should like us to move steadily and without disruption towards something a good deal nearer to the United States system, as it has for a long time seemed to me that public spending through fiscal arrangements is overall a freer system than public spending by means of direct subvention. But I must say that such a move would take more than a generation to achieve, and I remind the noble Lord, Lord Strabolgi, in particular that it would in no way be welcomed unconditionally by most present Arts organisations, as it would inevitably mean a loss of funding in terms of direct subvention at one stage or another.
So I think the more realistic option, in present terms, is to look closely and continuously at the taxation system that we have and see what modifications might improve it. It is in this sense that I welcome some of the suggestions that have been made tonight, and I can assure the House that the Government will continue to look at the various possibilities.
Let me comment very quickly on a few of the suggestions that your Lordships have made. Much
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mention has been made of course of the proposition that original works of art should no longer be subject to VAT. My noble friend talked of this, as did the noble Lord, Lord Strabolgi. The noble Lord, Lord Hutchinson, devoted a great part of his extremely persuasive speech, if I may say so, to the problems of museums and other bodies engendered by the VAT system. As the noble Lord, Lord Hutchinson, anticipated, VAT is a highly efficient tax. It is designed, and operates, as a broad-based revenue tax and it would be very difficult to keep that consistency and efficiency of operation the moment one started introducing special reliefs. Existing reliefs are limited for the most part to items of significant and continuing expenditure by ordinary families: food, house prices, rents, public transport, fuel and children's clothing.
In this context, much though I should like to see works by living artists regarded as the essential fare of living, it seems to me it is very difficult to justify singling them out for special relief. This is where the problem of any exemptions from broad principles does in fact occur because the very difficulty about the book exemption—which, as an avid reader and purchaser of books, of course I in no way regret—is that it does provide an exemption. Here I agree with the noble Lord, Lord Hutchinson, that it is indeed difficult to justify the difference of that exemption with other works of art.
But what I think he is suggesting would lead to other claims for exemptions which again would be hard to defend; and so, if you like, the domino theory would come into effect and the overall efficacy of VAT would be very greatly reduced. However, I can say from my experience in the Arts market that what the noble Lord, Lord Hutchinson, has told us about the incentives to sell abroad are of course absolutely right. This does seem to me to be extremely difficult to defend. For that reason, while I doubt whether there is very much I can do about it, I certainly do not propose tonight to defend it.
I come now to the recommendation of the Pile Committee, which was mentioned by my noble friend: the question of donations by individuals being allowed against taxation. This is in essence the American approach, which I have referred to; and any percentage—whether 2 per cent. as Pile suggested, or a higher amount suggested by the Select Committee —would represent a major change. It is essentially a proposal for tax deductibility for single donations by individuals to support the Arts; and successive Governments have taken the view that tax relief should go to payments made to charities, including of course Arts charities, under deeds of covenant. Again, perhaps this is where we should see some significant growth in activity in terms of the creation and maintenance of Arts charities.
The present Government have followed the Goodman Committee's recommendations in reducing the period of charitable deeds of covenant from seven to four years and in providing for higher rate of tax relief generally. The case for going further at the present time—which of course would have implications for other charitable payments—has not really been established. I believe the argument of many corporate finance directors that there is no real change

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from seven to four years is not well founded and that charitable bodies should continue to prod them vigorously.
May I say in passing at this point to the noble Lord, Lord Strabolgi, that of course I am aware that many distinguished artists—many of whom are friends of mine—supplement their incomes by passing on their skills in teaching. I am sure that will continue.
Lord Strabolgi: My Lords, I am sorry to interrupt the noble Earl, but the point I was trying to make was that with the cuts in education, including the art schools, if a member of the staff has to leave it seems to be the part-time artist who is asked to do so. This is something that the Department of Education and the Government do not seem to understand. They do not appreciate the importance of the part-time artist as a teacher. The noble Earl does, I know, and I hope that he will try to get this over to his colleagues and to the local authorities.
The Earl of Gowrie: My Lords, in spite of spending constraints and such market factors—if I may put it that way—as falling pupil rolls, the overall spending of local and central Government on education is still very large, and I do know that there is the temptation to dispense with the part-time artist. But, given the relatively low cost of part-time artists, it should be possible for most authorities to resist these temptations. I hope they will pay heed to what the noble Lord says. He will appreciate, however, that I cannot require them to order their budgets in this way. I can simply point out that, in relation to total spending on education, spending on the arts is small and that the maintenance of a corps of part-time teachers should be possible.
Lord Beaumont of Whitley: My Lords, the noble Earl is deploying an extremely good and detailed reply to the debate as a whole, but a very important point has been raised. In his reply the noble Earl seems to be skating over the fact that these part-time teaching posts have been disappearing at a rate of knots over the last few years, and are still disappearing. He and I both know artists who have still got such jobs, but I know for a fact that a survey in the art teaching profession which covered the whole country showed that these jobs have disappeared. I would be the last person from these Benches to say that the Government ought to be forcing on local authorities exactly what they should do in this particular way, though I am surprised that the noble Earl, speaking from those Benches, is prepared to defend that point of view at this particular point in time. Nevertheless, is there nothing that the Government and the Minister for the Arts can do to tackle what has already been seen to be a very grave problem indeed? It is not a minor matter; it is a very important matter.
The Earl of Gowrie: My Lords, what the Government can do and what the Minister for the Arts can do and, indeed, has done is to point out, as I have already said, that against the overall funds which are available the process of axing part-time artists, which I fully acknowledge has taken place to some degree, need not be necessary. But I cannot enforce this method of
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spending, as the noble Lord, Lord Beaumont of Whitley, has acknowledged, on local authorities. What we can do is to draw the situation to their attention and to generate, as no doubt this debate will help to generate, public pressure that they should not make economies in that particular direction, or should do so with the greatest care and vigilance.
Tax relief is not given for purely personal expenditure which any individual chooses to incur. Surely it would be wrong that the tax system should subsidise the expenses of pursuing a particular hobby, whether the hobby be a high art form like painting or the manufacture, say, of corn dollies. But the losses of a professional artist, whether he is part time or full time, from his profession are in fact allowable for tax. Whether what is done amounts to the carrying on of a profession is a question of fact. Evidence of commercial exploitation would be looked for. An individual must show a real and substantial attempt to market works for profit. I do not believe there is a basis for changing this rule at present, though I shall look carefully at what has been said.
I turn to single donations by companies. This option is arguing for a tax deduction for single donations by companies rather than individuals to apply to the arts. The same objection applies, I believe, as applies to donations by individuals. It is true that tax deductions for single donations by both individuals and companies are given in the United States, but America does not have the deed of covenant system and, as I said earlier, does not of course make the overall levels of public subvention that we do. Companies can make donations to the arts by means of deeds of covenant and I urge them to do so.
The issue of company tax allowances for the purchase of works of art was raised. I was very interested in what my noble friend had to say on the subject. A business can already deduct for tax expenditure incurred for the purpose of earning its profits. Expenditure of a capital nature may qualify for capital allowances. I am not wholly clear what has been recommended: whether the concession would be a deduction or a form of capital allowance. I have to acknowledge that, either way, it would involve extending tax relief to items of expenditure which I believe it would be slightly difficult to argue were strictly necessary for the purpose of generating profit. Again, any concession sought in respect of paintings could set a difficult precedent for allowing all manner of non-business expenditure, and there would be questions of fairness and equity in respect of other art forms. However, I view with some interest what my noble friend said and I shall continue to give it more thought.
May I now say something about tax credits. The concept here does, on the face of it, appear to be attractive but in fact the proposal would involve considerable complexity, particularly in terms of who would be entitled to redeem a credit and over what period; to whom would credits be transferable; and how would their loss of value through inflation, over a long time span, be treated? The noble Lord, Lord Beaumont of Whitley, and also the noble Lord, Lord Hutchinson of Lullington, asked me about the droit de suite. I am afraid that the noble Lord, Lord Beaumont of Whitley, somewhat anticipated my reply when he said that objections were raised to every suggestion he

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made. The noble Lord is a pessimist, and pessimists usually find that the world works out in the way they want it to work out. However, we do see great practical problems in any proposals for artists to share in the profits from transactions after the initial sale.
Wearing my other hat as a Civil Service Minister, I see one of them. This would certainly require many enforcement staff. That is an additional cost which would be borne by the estate of the arts as well as by the rest of us. In respect, too, of the copyright collection agency, I believe the Government would be reluctant to embark on yet another quango. However, the noble Lord might await perhaps a little less pessimistically the Government's overall proposals on copyright following the consultations which we are undertaking on the Whitworth Report.
I do not believe we should confine our attention to the ways in which the tax system supports the arts, because the arts are broad based and rely on many other incentives. Under present arrangements, the lion's share of subsidies is provided by central Government either directly or through the rate support grant to local authorities. But there has also been a very substantial growth in business sponsorship, and this is a trend that I expect to see continue. At present, the level of business sponsorship is variously estimated at £14 or 15 million a year, as against some £½ million only seven years ago. I fully believe that there is scope for much more growth. One of my main objectives is to encourage that growth and to emphasise to businesses, large and small, the mutual advantages that can he obtained from association with arts bodies.
To this end I have strengthened my own Ministry in its business sponsorship role and am campaigning actively up and down the country on the need for closer business involvement. But it is a marriage of two parties. The arts have to sell themselves and to be ready to market their product in a way which is attractive to business. At the same time, business should recognise that the arts offer a great deal of community value to the area in which they operate and can play a significant role in the marketing effort of the company which sponsors them.
I think, therefore, that we must increasingly look at a mixed economy in the arts—that is to say, greater box office, more private patronage and support by friends, additional business help and a continuation of central and local government support. This diversity of finance is one of the great strengths of the arts and is something to be encouraged. New developments will increasingly come not from more public funding in an area when it is a struggle to maintain it—and we will win that struggle—but from increased private support, perhaps triggered by elements of matching public resources in some cases.
Looking around the arts scene, the most striking feature to my mind—and the noble Lord, Lord Beaumont of Whitley, recognised this—is that it is currently so varied and active in spite of that which has been said about all the difficulties created by limited funding. There has been a resurgence of art activity since the war in this country, and I must pay tribute to the part which the Arts Council has played in engendering that. While London remains the hub of that activity, inevitably in a smallish country, it is
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spread increasingly throughout Great Britain. Moreover, it cannot be said that the arts are in any way parasitic. They have great earning potential, and the "high art" which on the whole receives the majority of public support is itself a seed bed for developments which percolate through the field of arts and entertainment.
I do not doubt that there are very real links between the interest in dance and the development of a musical such as "Cats" and the subsidized sector such as the Royal Ballet; and nor do I have any doubt about the connections between success in serious and so-called pop music. And, of course, the contribution of the arts to television in terms of writing, acting and producing talent is enormous. These are all reasons why the arts are a vitally important part of our society at the present time and why the Government attach such value to their health.
In conclusion, I wish to say that it is difficult to devise any system which is totally fair to all individuals or sectors. The essence of the taxation system is that it should create a broad measure of parity among all manner of sectional interests. If we begin to tamper with that system too radically and seek exemptions in too many particular cases, we risk not so much the merits of diversity but the confusions and expense of special pleading. I believe that we should seek salvation overall, not so much in terms of tax changes, which may in the short term help one group or another, but in terms of shifting the balance in the economy as a whole towards more wealth-producing and productive activities. In the longer run this is the safest way of engendering the lower taxes and the higher disposable income that can be used to benefit the community at large.
Our best efforts should be directed towards generating wealth which will enable individuals and groups within the community to give that degree of additional personal stimulus without which no artist and no subsidised venture can satisfactorily survive for long. I recognise with all the speakers in this debate that the tax system has a contribution to make to this end; and I shall try to see that its contribution is maintained.

Severn-Trent Water Authority Bill
Returned from the Commons with the amendments agreed to:
House adjourned at two minutes past nine o'clock.

  THE HOLLIES CHILDREN'S HOME
  THE HOLLIES CHILDREN'S HOME
  PARKHURST PRISON: USE OF SPECIAL CELLS
  PARKHURST PRISON: USE OF SPECIAL CELLS
  EMPLOYEES AND JOB APPLICANTS: ETHNIC RECORDS
  EMPLOYEES AND JOB APPLICANTS: ETHNIC RECORDS
  INDUSTRIAL NOISE
  INDUSTRIAL NOISE
  ELECTRIC LIFTS: EC DIRECTIVE
  ELECTRIC LIFTS: EC DIRECTIVE
  ENGINEERING RESEARCH AND DEVELOPMENT: SELECT COMMITTEE SECOND REPORT
  ENGINEERING RESEARCH AND DEVELOPMENT: SELECT COMMITTEE SECOND REPORT