Sitting of 23 November 1983

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

    London Docklands Development Corporation
    Mr. Spearingasked the Secretary of State for the Environment if he is satisfied with the support given to voluntary organisations by the London Docklands Development Corporation.
    The Under-Secretary of State for the Environment (Sir George Young): Yes, Sir. The LDDC has given considerable support to the work of voluntary organisations and to other projects benefiting the community. Resources available under the former docklands urban programme are tailing off as existing commitments are completed. I am, therefore, enabling the LDDC to make available additional resources for voluntary projects.
    Mr. Spearing: I am grateful to the Minister for his reply. Can he be more explicit about the additional resources? Will the grants which the LDDC may be able to make be in addition to the notional 1 per cent. limit and enable the projects started at the time of the docklands joint committee to continue?
    Sir George Young: These are additional resources and grants will be available to a new limit of £750,000 each year for voluntary sector funding. In addition, the LDDC can top that up from a pool of receipts.
    We would normally expect the local authorities to take the time-expired projects on board. The LDDC will consider fresh applications where time-expired projects which contribute to regeneration cannot be funded by the usual means.
    Mr. Chapman: Will my hon. Friend confirm that the LDDC does consult, and is willing to consult and meet, any tenants' organisation that represents part of the urban development corporation, as well as many local businesses and individuals? If there is obstruction to consultation and liaison, it comes from the heavy-handed and non-supportive role of the GLC in this vital area which we all wish to see regenerated in the interests of the metropolis as a whole.
    Sir George Young: My hon. Friend is right. The LDDC makes every effort to consult local opinion. I commend to hon. Members the newsletter which it publishes regularly reporting on progress. Communication is not helped by the dogmatic refusal of Southwark borough council and the GLC to have any contact whatever with the LDDC. Such a ridiculous state of affairs should be brought to an end.
    Mr. Simon Hughes: I accept and endorse the Minister's criticism of Southwark borough council, but does he agree that one way of improving the LDDC's communications would be to open the meetings of its board to the public, especially when they involve matters such as the grants with which we have been dealing today?
    Sir George Young: No.
    Mr. Leighton: Will the Minister pay tribute to the numerous volunteers who work for the 30 or so organisations that strive to make life more tolerable in the deprived inner city areas of east London? Does he recognise the impossibility of asking local authorities, in their straitened financial circumstances, to take on that burden? Will he agree not to wash his hands of these voluntary organisations and recognise his Department's responsibility for them? Will he at least agree today to meet a deputation to discuss the problems?
    Sir George Young: I should be prepared to meet representatives of the voluntary organisations, but, as the LDDC has agreed a grant of £20,000 to the forum, I hope that such a meeting will be unnecessary. I endorse what the hon. Gentleman said about the valuable work performed by the voluntary organisations, and that is why the LDDC funds 183 community and voluntary sector projects through a host of separate organisations.

    Metropolitan County Councils
    Mr. Fatchettasked the Secretary of State for the Environment if he will set up a public inquiry into the financial implications of the abolition of the metropolitan county councils.
    The Secretary of State for the Environment (Mr. Patrick Jenkin): No, Sir.
    Mr. Fatchett: As the Secretary of State has refused to subject his proposals to objective and public scrutiny, and as his White Paper gave no cost implications of abolishing the metropolitan country councils, does he agree that the ratepayers in those areas have a right to be suspicious that their rate bills will increase as a result of his proposals? Does he also agree that for a Government to abolish a tier of local government, or to change local government in the way that he proposes, without conducting any impartial analysis of the costs involved, is unprecedented?
    Mr. Jenkin: We are sure that savings can be made by eliminating a tier of government. I am beginning to recognise my wisdom in not seeking to pluck figures out of the air, because had I done so I might have underestimated the savings that could be achieved. When I was in the west midlands last week I heard that the Dudley council had expressed confidence that it could save 33 per cent. of staff currently engaged in the West Midlands county council on services which would be transferred to Dudley. I hope that the councils in the West Yorkshire area will do their best to emulate that example.
    Mr. Maples: Does my right hon. Friend agree that one of the financial implications of the proposed local government reform is that the ratepayers of London will no longer have to pay for the political excesses of the GLC?
    Mr. Jenkin: My hon. Friend is absolutely right. The GLC's expenditure is so high that, quite apart from targets

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    and holdback—to which it is not subjected—it has taken itself out of the rate support grant altogether under the block grant system.
    Mr. Parry: Will the Secretary of State consider the social implications of abolition? Is he aware that all those on Merseyside county council, including Conservative members, are utterly opposed to its abolition? Is the right hon. Gentleman further aware that the decision will be opposed tooth and nail by the Labour movement on Merseyside because further jobs will be lost there as a result of the county council's abolition?
    Mr. Jenkin: The hon. Gentleman must make up his mind whether the result should be savings for the ratepayers or the loss of council employees' jobs. They cannot both be right.
    Mr. Favell: Is my right hon. Friend aware that hon. Members are being inundated with literature from the metropolitan county councils saying why they should be saved? The latest literature from the GLC announces that it is setting up a briefing point at County Hall. Should not that expense be borne by the political parties that are seeking to save the skin of those white elephants, rather than by the hard-pressed ratepayers?
    Mr. Jenkin: My hon. Friend is absolutely right. To add insult to injury, those ratepayers are having to pay for propaganda—particularly in London—against a proposal for which they voted in unprecedented numbers.
    Mr. Meadowcroft: Given the Secretary of State's comments about the west midlands, will he have the confidence to publish more comprehensive information about the financial savings that he believes can be made so that they can be considered by hon. Members on both sides of the House?
    Mr. Jenkin: It would not make sense to try to put a figure on the savings until the district councils have considered in detail how they will finance and staff the services for which they will become responsible, either individually or jointly. They are now considering that, and I am encouraged by the information coming forward.
    Dr. Cunningham: Does the Secretary of State agree that his proposals to abolish the metropolitan counties and the GLC run contrary to almost all local government practice among the western industrial nations that face the problems of conurbations? Does he realise that his proposals have hardly any supporters in the local government associations? The proposals will cause unnecessary dislocation of essential services. Does the right hon. Gentleman agree that, in addition, the proposals will result in control over those services being removed from the democratic process? They will be overseen by rate-raising quangos—[Interruption]—which may result in half a dozen rate bills dropping on each doormat. Given the right hon. Gentleman's comments about the GLC, does he recall writing to the Herbert commission, expressing his support for the GLC and saying that there should be a progressive return to the concept of the GLC being a strategic authority?
    Mr. Jenkin: In the course of his somewhat lengthy question the hon. Gentleman has been guilty of more inaccurate statements than I would have believed possible. He knows perfectly well that there will not be a large number of rate demands. Our policy on that is clear in the
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    White paper on rates. As a result of the letter to which the hon. Gentleman referred, the Herbert commission pointed out to me fairly sharply that when it had reported on local government in Greater London it had at no stage used the word "strategic".
    Dr. Cunningham: But the right hon. Gentleman did.
    Mr. Jenkin: Yes, but the answer is that I was proved wrong.

    Rates
    Mr. Easthamasked the Secretary of State for the Environment when he expects to introduce legislation to implement his proposals on rate capping.
    Mr. Patrick Jenkin: I hope to do so before Christmas.
    Mr. Eastham: Is it not a fact that the Association of Metropolitan Authorities, the Association of County Councils and the Association of District Councils are all condemning the Government because of their attitude to rate capping? I am talking about Conservative-controlled as well as Labour-controlled authorities. Are not the Government creating the conditions for overspending by reducing the rate support grant from the 66·5 per cent. of only a few years ago to the proposed figure of 52 per cent.? That will affect the very inner city areas and partnership schemes which the Government say they support. In those areas there is the highest level of poverty and unemployment and the worst housing. They are the very areas that need Government support.
    Mr. Jenkin: We made it clear at the election and in our manifesto that we would take action to control the high rates of those local authorities that spend irresponsibly and excessively. There is no doubt that their ratepayers are very anxious to see an end to that. I am coming under pressure to take action sooner rather than later.
    Mr. Charles Morrison: Nevertheless, will my right hon. Friend take full account of the strong opposition expressed by most Conservatives in local government to his proposals as they have been presented to us? Will he note that elected local representatives in Conservative-controlled councils are just as concerned with the interests of ratepayers as he is?
    Mr. Jenkin: My hon. Friend will have read the White Paper carefully and will know that the vast majority of councils that have done their best to keep their spending within the Government's guidelines have nothing whatever to fear from the selective rate capping proposals that I have put forward. Indeed, they have much to gain. I am being criticised because the autumn statement had to cut back the capital spending of local authorities on housing, and so on, because the current spending of local authorities had so far exceeded the guidelines which the House approved in the public expenditure White Paper. If we can cap the rates of the overspenders, the majority of councils can perhaps move into less turbulent waters.
    Mr. Park: Would the right hon. Gentleman care to comment on the opposition that he found the other day in the Tory-controlled Warwickshire county council, when he had a private meeting?
    Mr. Jenkin: I think that at the end of the meeting there was a much better understanding of how a council such as Warwickshire, which has budgeted responsibly over the

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    years, would gain if we could bring under control the overspending of the few authorities which spend far in excess of targets. A council such as Warwickshire would stand to gain from that.
    Mr. Hickmet: Can my right hon. Friend offer any hope to ratepayers in local authorities such as Humberside county council, who face the prospect of a very significant rate rise in the next financial year because of the loss of rate support grant for next year? Can my right hon. Friend offer them any hope prior to the introduction of his legislatiion?
    Mr. Jenkin: If the councillors of Humberside county council tailor their spending to the targets that the Government have set, there is hope. The responsibility lies with them. However, the county council would be unwise to proceed with projects that could only increase the burden on its unfortunate rateapayers.
    Dr. Cunningham: Is it not a unique achievement that the Secretary of State has united all three local government associations against his proposals? Do not his proposals mean that rate levels and local authority budgets will be dictated essentially from Whitehall? Are we not seeing the dictatorship of central Government over local government? Will that not result in more damage to services in many communities where people are already under severe strain as a result of the Government's policies?
    Mr. Jenkin: I have much respect for the hon. Gentleman, but he is indulging in absurd hyperbole. There is no dicatatorship in the Government taking steps to ensure that the public spending guidelines, which are approved each year by the House, are observed by local government. Commercial and domestic ratepayers in areas of high rating local authorities are worried and have been calling for the Government to take such action for their protection.

    Amusement Centres
    Mr. Ottawayasked the Secretary of State for the Environment what plans he has to revise the development control policy note on amusement centres.
    The Under-Secretary of State for the Environment (Mr. Neil Macfarlane): This development control policy note is currently under review and I hope to issue a revised version before long, which will be the subject of the customary consultation.
    Mr. Ottaway: I am grateful to my hon. Friend for that answer. As every decision by the city of Nottingham planning dept not to authorise the opening of an amusement arcade has been overturned by the Department's planning inspectors, in spite of local petitions, the wishes of local councillors and a forecast by local traders of the impact on shops, does he agree that the wishes of the local community should be borne in mind in the revised note?
    Mr. Macfarlane: I note what my hon. Friend has said. I understand the background to the problem that has affected his constituents. That is why we are promoting the issue urgently. I hope that the consultations can be concluded early in the new year and that that will satisfy my hon. Friend's constituents.

    Tameside
    Mr. Andrew F. Bennettasked the Secretary of State for the Environment whether, in view of the conclusions in the publication by the metropolitan borough of Tameside "Tameside: the Case for Aid" a copy of which has been sent to him, he will make available new assistance for Tameside.
    Sir George Young: Tameside's case will be studied in the context of other relevant evidence and the claims of other authorities. However, I would not wish to raise hopes of further changes so soon after the last review of designations under the Inner Urban Areas Act 1978. Tameside has been encouraged to submit bids for support under the traditional urban programme and the derelict land reclamation programme. Its recent applications are now being considered.
    Mr. Bennett: How recently did a Minister from the Department of the Environment go to Tameside? Will the hon. Gentleman arrange to make a visit there soon to examine the area's many problems and explain why the people there appear to get no Government assistance, whereas neighbouring areas in Manchester and Oldham do?
    Sir George Young: That is a generous invitation, which I unhesitatingly accept.

    Local Authorities (Privatisation)
    Mr. Dubsasked the Secretary of State for the Environment if he is satisfied with the success of privatisation measures by local authorities.
    The Under-Secretary of State for the Environment (Mr. William Waldegrave): I am satisfied that contracting out has brought benefits to authorities which have tried it. I am not satisfied that enough authorities have done so.
    Mr. Dubs: Is the Minister aware that, in my local authority area of Wandsworth, there is a positive avalanche of complaints about dirty streets and unemptied dustbins? Is he aware that the service is beset by industrial disputes and that even the Tory-controlled Wandsworth council has recently had to sack one of the private contractors? Is he further aware that Opposition Members will not be stilled by the practice of some contractors appointing ex-leaders of local authorities and present Tory Members of Parliament to their companies on retainers?
    Mr. Waldegrave: I am aware that the contracting out of services in that borough will save the ratepayers about £10 million over the next few years. I am also aware that one of the strengths of contracting out is that if there is unsatisfactory performance, local authorities can find a new contractor.
    Mr. Eggar: What is the rate per pound in Lambeth, and what is the rate per pound in Wandsworth?
    Mr. Waldegrave: I am afraid that I do not have those figures to hand, but the implication of my hon. Friend's question is clear and correct.
    Mr. Straw: Does the Minister realise that, in Conservative-controlled areas all over the country, there is increasing discontent with the services that have been privatised? Despite the fact that many of those companies

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    are major paymasters of the Tory party, will he have the courage to admit that, in many areas, privatisation has been a bad deal for the councils and an even worse one for ratepayers?
    Mr. Waldegrave: That is a foolish line of argument because it makes people wonder whether the hon. Gentleman is speaking for some of the trade unions which are paymasters of his party. There is no widespread dissatisfaction such as he mentioned. On the contrary, ratepayers have warmly welcomed the savings that have been achieved.
    Later—
    Mr. Hickmet: On a point of order, Mr. Speaker. The hon. Member for Battersea (Mr. Dubs) implied in his question to my hon. Friend that those involved with the privatisation of local authority services and who are now Members of the House were in receipt of pay-offs from the companies that obtained the contracts. Will the hon. Gentleman tell the House what evidence he has to confirm that statement. If he has none, will he withdraw the statement?
    Mr. Speaker: Order. The hon. Member draws attention to a legitimate point. If the hon. Member for Battersea (Mr. Dubs) had intended to impute any dishonour to any Member of the House on either side, I am sure that he will wish to withdraw the allegation.
    Mr. Dubs: I thank the hon. Member for Blandford and Scunthorpe (Mr. Hickmet) for warning me that he would raise this point of order. I have to rely on my memory of what I said until we have the record before us. If the House will allow me, I shall clarify the position. I said that the Opposition would not be satisfied even if the contractors put on retainers the leaders of local authorities which had privatised local authority services. In saying that I was in no way intending to imply anything dishonourable. I was anticipating what the annual Members' Declaration of Interests would show when it was published. If that document had been available, I should have quoted from it. I was seeking to do no more or less than that.
    Mr. Skinner: Further to that point of order, Mr. Speaker. Does the House not accept that if, as a result of privatisation, some of the bodies, such as Exclusive Cleaning and others, which are run by Tories for Tories, obtain additional contracts and are able to set other Tory Members on retainers, that would mean that they were lining their pockets? Is it not justifiable to say that in the House?
    Mr. Speaker: Order. All Members of the House are honourable in their dealings. Let us leave it at that.

    Green Belt
    Mr. Hal Millerasked the Secretary of State for the Environment whether he has issued any clarification of his draft circular to local authorities on green belt policy; and if he will make a statement.
    Mr. Patrick Jenkin: I refer my hon. Friend to the speech made by my hon. Friend the Under-Secretary of State for the Environment, the Member for Sutton and Cheam (Mr. Macfarlane) in the Adjournment debate on Friday 18 November 1983. I am considering the many useful comments made on the draft circular. I can assure my hon. Friend that I am as committed as any of my predecessors to preserving a strong green belt policy.
    Mr. Miller: I thank my right hon. Friend for that assurance. Is he aware of the deep anxiety in my district and county about an especially vulnerable area of green belt in north Worcestershire, which is subject to attack from neighbouring authorities which are making proposals in their structure plans for development in our area? Is he further aware that there is anxiety about my hon. Friend the Minister calling in an application for development on the ground that more houses, rather than fewer, should be built in the green belt?
    Mr. Jenkin: I have already made it abundantly clear that the draft circular is intended to strengthen, not weaken, green belt policy. I have taken careful note of the many comments made by my hon. Friend and others. I recognise their anxieties and am considering whether it would be right to issue a second draft circular so that there can be no doubt about the Government being committed to a strong green belt policy.
    Mr. Cartwright: Does the Secretary of State agree that one of the most effective ways in which to reduce pressure on green belts is to encourage greater public and private investment in cities? Does he agree also that improving the quality of life there would reduce the pressure on people to find a better environment beyond the city limits?
    Mr. Jenkin: I entirely agree with the hon. Gentleman.
    Mr. Flannery: Do it then.
    Mr. Jenkin: We are doing it. I hope that the hon. Gentleman will visit the enormously successful London docklands development. Between 1975 and 1982, two houses were built for sale. Now, thousands of houses which are being built are being sold before they get to the footings. It is one of the most successful examples of inner-city regeneration. I hope that the hon. Gentleman will take the trouble to visit it. Perhaps he will advise his local authority to do the same sort of thing.
    Mr. David Howell: Does my right hon. Friend appreciate that the problem is not so much his underlying intentions, but the ambiguity of the original draft circular about the concept of the green belt? Will he take that into account in any redrafting? Will he accept that, when examining the pressure on housing in the south-east, his first priority should be—I think that he just said this—to look to the eastern side of Greater London, where there is room for a whole new city? Does he agree that he should look there rather than put additional pressures to develop on green belt land?
    Mr. Jenkin: I accept my right hon. Friend's criticism. The original draft was widely misunderstood. That is why I think it might be sensible to issue a second one to make the matter abundantly clear.
    On my right hon. Friend's second point, I draw his attention to the extremely important letter that I wrote to my noble Friend Lord Sandford as chairman of the Standing Conference on London and South-East Regional Planning about the effect of the M25. We intend that that road will shift some of the heavy pressure on the west of London to the east of London, where there is indeed ample room for development. I commend that letter to my right hon. Friend.
    Mr. Penhaligon: How many of the Secretary of State's right hon. and hon. Friends opposed the original draft as they understood it?
    Mr. Jenkin: The hon. Gentleman will know that, rightly, a number of my hon. Friends expressed the anxieties of their constituents because there had been some wild misrepresentations in some quarters about what we announced, and now that our intentions are clear I am sure that my hon. Friends will be enormously reassured.
    Sir Dudley Smith: Is my right hon. Friend aware that there are good reasons why there should be a relaxation on building in some areas? At the same time, as has been said, there are real and grave doubts about the erosion of the green belt. In the circumstances, is my right hon. Friend aware that his announcement today will be welcome, and will he make it clear and explicit that there is no intention of eroding the green belt as we know it?
    Mr. Jenkin: I am happy to give my hon. Friend that specific expression of our intentions.

    Consultative Council on Local Government Finance
    Mr. Dixonasked the Secretary of State for the Environment whether he proposes convening the statutory meeting of the Consultative Council on Local Government Finance in December.
    Mr. Waldegrave: My right hon. Friend hopes to arrange a meeting of the council on 14 December to announce details of the rate support grant settlement for 1984–85.
    Mr. Dixon: Is it not a fact that the arbitrary spending ceilings and penalties imposed by the Government on local authorities, including my local authority of South Tyneside, which has had £2 million stolen from it in rate support grant over the past three years, have driven up rates and savaged local authority services? In view of the Secretary of State for the Environment's continuous assault on local democracy, will the hon. Gentleman undertake to make a statement to the House before he meets the council on 14 December so that right hon. and hon. Members will have the opportunity to question him on the cutting down of home helps, the closing of nursery schools and old people's homes and the stopping of meals on wheels?
    Mr. Waldegrave: My right hon. Friend will be putting the rate support grant settlement before the House in due course in the normal way. I reject the implications of what the hon. Gentleman said. If money has been unfairly taken by anybody, it has been taken by high-spending authorities from those that are more responsible.

    Environmental Policy
    Mr. Marlowasked the Secretary of State for the Environment what powers have been acquired by the Commission of the European Communities either through the Treaty of Rome or other means over United Kingdom environmental policies.
    Mr. Patrick Jenkin: None, Sir, by the Commission.
    Mr. Marlow: Is it not the case that as well as running our agricultural policy and our trade policy from Brussels, directives are now being issued on our planning policy? Given the disastrous CAP and the less than successful trade policy, will my right hon. Friend make it his business to stop any empire-building by the Brussels megalomaniacs with regard to our environmental policy?
    Mr. Jenkin: It is now over 11 years since the Heads of Government of the EC, in the European Council agreed on the importance of a Community environmental policy, and since then the Community has adopted successive environmental action programmes, the most recent one being last February, covering the period from 1982 to 1986. It is my belief that this European policy on the environment is widely supported by many people within the Community.

    Local Government Act 1972
    Mr. Gerald Howarthasked the Secretary of State for the Environment when he intends to bring forward proposals for the reform of section 137 of the Local Government Act 1972.
    Mr. Waldegrave: My right hon. Friend is considering whether action is needed and practicable, in the light of the study published recently by the Chartered Institute of Public Finance and Accountancy.
    Mr. Howarth: Does my hon. Friend agree that there is great public concern in the country about the abuse of section 137, the 2p rate, particularly in the metropolis, where funds are being given by the GLC to bodies more worthy of private than public support? Can my hon. Friend confirm that action will be taken as soon as possible by the Government to ensure that, at a time when ratepayers are so hard pressed, their funds will not be whittled away in this squandering fashion?
    Mr. Waldegrave: I agree that there are places in the country where the power has been used not in the way in which Parliament originally intended it to be used.
    Mr. Flannery: Name them.
    Mr. Waldegrave: I can name the Greater London council and Islington council. The difficulty is that there are many worthy schemes supported by the same powers, and the matter is difficult to sort out.
    Mr. Wareing: Does the Minister recognise that section 137 has been the means by which Merseyside, through the Labour-controlled Merseyside county council, has generated 6,000 jobs in small industry and co-operative enterprises? Is not one of the great concerns of people on Merseyside that the Government's proposals for the metropolitan counties, and the possible proposals for section 137, would destroy any prospects of jobs being so generated?
    Mr. Waldegrave: It is true that in various parts of the country the section 137 power has been used to support the Government's urban development grant initiative and other worthy projects. It is misuse in other places that threatens section 137.
    Mr. Robert B. Jones: I have noticed that many Labour-controlled authorities have advertised in Labour Weekly for recruiting officers. Will my hon. Friend consider amending section 137 as a major means of preventing Labour-controlled authorities from using it to subsidise their own party from public funds and thus make it absolutely certain that they recruit Socialists?
    Mr. Waldegrave: It is clear that if section 137 were used for party political purposes that would be open to legal challenge.
    Mr. Loyden: Does the Minister agree that the local authorities to which he referred were democratically elected on the basis of a manifesto which they placed before the people, and will he come clean on whether it is the Government's intention, and that of his right hon. Friend, to interfere with democratically elected members of local authorities and impose the Government's will on those authorities?
    Mr. Waldegrave: I fear that a large number of the sillier section 137 projects were not put before the electorate.

    Home Repair Grants
    Mr. Penhaligonasked the Secretary of State for the Environment whether all applications for home repair grants that are made to the relevant local authority by 31 March 1984 and subsequently approved will receive a 90 per cent. grant.
    Sir George Young: All repair grant applications made by 31 March 1984 will continue to be eligible for the 90 per cent. maximum rate of grant now in force. The actual rate of any grant approved is at the discretion of the local authority.
    Mr. Penhaligon: I assure the Minister that my constituents will be delighted with that reply. However, is he aware that one council in my constituency stopped taking applications in the second week of January this year, that another council has a waiting list of over 600, and that both councils say that they have no money? Is not the Minister's answer misleading my constituents into the belief that help exists when it does not?
    Sir George Young: The reason why the councils have stopped giving the grants is not because they have no money, but because they do not know what the allocations will be next year. My right hon. Friend hopes to make a statement about the HIP allocations shortly. When the local authorities have that information they will be able to consider how much to spend on home improvement grants next year and, I hope, to start reprocessing applications.
    Mr. Cowans: On a point of order, Mr. Speaker. May I seek your assistance? How can the Minister's first reply be correct if his second reply is correct? Is he not guilty of misleading the House?
    Mr. Speaker: Order. Such points of order merely take up the time of the House.
    Mr. Hicks: Can my hon. Friend give an assurance that the HIP allocation for 1984–85 for those local authorities that have had to suspend approving applications during the current financial year will be sufficient to cover those on the waiting lists, 2,000 in my constituency, plus those many applications that will come in between now and 31 March 1984?
    Sir George Young: We always take into account the commitments which local authorities have already entered into when deciding what the allocations will be next year. My hon. Friend has made forceful representations on behalf of his local authority and I shall try to ensure that the allocation next year not only covers the commitment but gives some leeway for the other things that local authorities want to do.
    There was no inconsistency between my first and second replies. I said that applications were eligible for the
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    90 per cent. grant, but the local authority had discretion whether to give it. That was not inconsistent with what I subsquently said.
    Mr. Concannon: The Minister must take this matter much more seriously. A local authority such as Mansfield allocates the money in the first month of the year, and the people of Mansfield know that it is a waste of time to apply for this year's grant. Will the Minister offer some advice to local authorities?
    Sir George Young: It is because we take the matter seriously that last year £430 million was spent on improvement grants, compared with £90 million in the last year of the Labour Government.
    Mr. Nicholas Winterton: Does my hon. Friend accept that repair and improvement grants are immense value for money and that they preserve our housing stock, which is cheaper and better than building new houses? Will he assure the House that the Government truly appreciate the value of improvement and repair grants, especially to towns and cities that were a part of the industrial revolution, not only because of the improvement to the housing stock, but because of the employment that it provides in the building and construction industry?
    Sir George Young: My hon. Friend is absolutely right. There is no reason why the amount spent on improvement grants next year should not be the same as the amount spent last year—£430 million—which was a record.
    Mr. John Fraser: If the Department is to cut housing expenditure next year by 20 per cent., unless the Minister can confirm that all local authorities will have enough money for 90 per cent. repair and improvement grants, without cutting their new building and other programmes, he is practising a cruel hoax on tens of thousands of owner-occupiers and tens of thousands of tenants who live in premises with the minimum amenities and in the worst state of repair. Does he agree that some of the statements made by his right hon. Friend are worthy of the probity of a confidence trickster?
    Sir George Young: I strongly reject the hon. Gentleman's latter assertion. I also reject the statement that he made at the beginning of his remarks. In cash terms, the provision that we have made for housing next year is comparable to that of this year.

    Sports Council
    Mr. Moynihanasked the Secretary of State for the Environment what matters he intends to raise at his next meeting with the Sports Council.
    Mr. Macfarlane: My hon. Friend, as a member of the Sports Council, will be aware of the number and variety of issues with which the Sports Council is involved and which I discuss at my regular meetings with the council's chairman. The agenda for my next meeting has yet to be fixed, but it may include such issues as sports sponsorship, regional boundaries, sports medicine, grant-aid for 1984–85, inner-city facilities, regional arenas, the Olympic games, appointments, and recreation management training.
    Mr. Moynihan: Will my hon. Friend also bring to the attention of the Sports Council the excellent European initiative that he recently pioneered to handle the appalling

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    problem of football hooliganism? Will he draw a distinction between football supporters and hooligans, who have no interest in the sport and who should be subjected to tougher sentencing by the courts?
    Mr. Macfarlane: I am grateful for my hon. Friend's approval of what took place at the Rotterdam conference last week. I normally discuss such matters not with the chairman of the Sports Council, but with the Football Association and the Football League.
    Mr. Ioan Evans: Will the Minister ensure that an additional item on the agenda is the preservation of the Gleneagles agreement on sporting contacts with South Africa, and will he dissuade sporting organisations from making contact with that apartheid regime?
    Mr. Macfarlane: I discuss such matters from time to time with the chairman of the Sports Council. The Government's commitment to the Commonwealth declaration was reaffirmed by my right hon. Friend the Prime Minister and by myself in recent weeks.
    Mr. Stokes: Is my hon. Friend aware that some Conservative Members doubt whether there is a need for a Sports Council at all, or even the need for a Minister responsible for sport? Having said that, if I were to occupy that position, I should insist that the Sports Council ensured that it protected the British spirit of fair play when we send spectators abroad.
    Mr. Macfarlane: I am aware of the contribution that the regional council on sport and recreation makes to the many people of the west midlands, not least to the good people in my hon. Friend's constituency, who had the sense to return him here in June. I must tell him that I have duties other than being Minister with responsibility for sport.
    Mr. McGuire: In view of the problem with football hooligans, will the Minister encourage the Sports Council to do everything in its power to persuade people to play rugby union football instead of soccer, if only because the players of that noble game are known to get their retaliation in first, and they go for each other instead of the spectators going for each other? If we can have more people playing rugby union, perhaps eventually they will move to the even more noble game of rugby league.
    Mr. Macfarlane: There may be merit in what the hon. Gentleman says, but that route is fraught with risks and is a matter for the governing bodies.
    Mr. Hayward: While my hon. Friend remains as Minister with responsibility for sport, and before the Sports Council is abolished, will he discuss with the council the medical support provided for the preparation of the Olympics team, so that we do not send a team to the Olympics next year that is ill-prepared or severely injured prior to the games?
    Mr. Macfarlane: The House must understand that there is no intention to abolish that most important and august body, the Sports Council, which does much important work. I have discussed those matters in close detail with the chairman of the Sports Council and with the chairman of the British Olympics Association, but the role of the governing bodies in this is critical.
    Dr. Cunningham: Will the Minister assure the Sports Council that the money raised by the British Olympics
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    appeal will not be taxed? Will he also reconsider his response to the question of my hon. Friend the Member for Cynon Valley (Mr. Evans) about the importance of the Gleneagles agreement, which is being breached in spirit and in reality by teams coming to Britain and by proposals that British teams should visit South Africa?
    Mr. Nicholas Winterton: The more that come and go the better.
    Mr. Macfarlane: The hon. Gentleman's first question is important. The chairman of the Sports Council and I discuss South Africa and a range of other important issues, which will be on the agenda of the next meeting.
    Mr. Hickmet: On a point of order, Mr. Speaker. I give notice that I intend to raise a point of order at 3.30 pm arising from implications in the question of the hon. Member for Battersea (Mr. Dubs).
    Mr. Speaker: Order. It is a bad habit to raise points of order in the middle of Question Time.

    Private Sector Rented Houses
    Mr. Squireasked the Secretary of State for the Environment whether he has any plans to seek to expand the private rented sector; and if he will make a statement.
    The Minister for Housing and Construction (Mr. Ian Gow): The Government wish the private rented sector to fulfil its important role in meeting housing needs, particularly those of the young, the single and the mobile. I am considering how we might improve the Rent Acts, with a view to enabling the private sector to meet more effectively the demand for homes to rent.
    Mr. Squire: I thank my hon. Friend for that reply. Does he agree that in many inner cities the only place where the young and mobile have a genuine choice is in the private sector? Will he consider some of the informed criticism of the present assured tenancy scheme made by people such as Clive Thornton? Does he agree that if changes were implemented there would be a dramatic increase in property coming on to the private rented market?
    Mr. Gow: There has been an encouraging response to our new assured tenancies scheme and we wish to build on its initial success. It is precisely because I realise that for many people there is a great opportunity in the private rented sector that I am reviewing existing legislation. Too much of the legislation that was designed to help tenants in the private sector has succeeded only in drying up the supply of the accommodation that we need.
    Mr. Winnick: Is the Minister aware that any change that would weaken security of tenure would be a great and damaging blow to private tenants? Is he further aware that there is considerable anxiety about the way in which the Berger group of companies treats its tenants? Will he take every possible step to investigate the serious allegations made about the Berger group, and will he report to the House as quickly as possible?
    Mr. Gow: If the hon. Gentleman will put in writing the allegations that he has made on the Floor of the House, I shall investigate them fully. If he really cared about those who require accommodation, he would welcome the review that I have just announced.
    Mr. Dykes: Does my hon. Friend agree that there is another aspect of legislation that needs to be looked at, and that is giving more confidence to this sector by making sure that tenants have a legal right to know who the landlord really is—the real owner, not just the agent?
    Mr. Gow: I accept the force of what my hon. Friend says.

    Precast Concrete Houses
    Mr. Ashdownasked the Secretary of State for the Environment what, according to his best estimate, is the total number of all types of precast reinforced concrete council houses, other than those of Airey construction, in the United Kingdom.
    Sir George Young: It is estimated that in the United Kingdom there are about 146,900 precast reinforced concrete houses similar in design to the 24,250 houses of the Airey type. In addition, it is estimated that there are another 230,000 precast reinforced concrete dwellings, mainly flats, which have been built since 1960, almost all to designs different from those which were the subject of my hon. Friend's statement on 10 November.
    Mr. Ashdown: I thank the Minister for giving those figures. Does he realise that a substantial number of people are living in PRC houses of a type not yet commented on by the Building Research Establishment? There are about 300 in my constituency alone. Does he realise that many of those people are suffering, in that they cannot either buy or sell their houses. Will he say when the next BRE report will be published, bearing in mind that the last one was promised in three months and took 10? If the BRE report were to identify problems similar to previous ones, will the people not so far commented on receive the same assistance as has been announced today?
    Sir George Young: When we have the BRE report we shall be able to make a judgment on the matter. If the statutory criteria of the existing scheme are met, it will be possible for the local authority to exercise its discretion to help owners of houses which were not specified by my hon. Friend in his statement but which, none the less, meet the criteria. It may help to put the matter in context if I say that there is no widespread evidence of serious defects in the non-traditional houses built after 1960.
    Mr. John Fraser: Are people who live in seriously defective system-built slums regarded by the hon. Gentleman's Department as being in special housing need or just general housing need?
    Sir George Young: It would be a matter for the local authority, as the owner of the buildings, to decide what priority to give in transfers to people living in difficult conditions. It would also be up to the local authority to make sensible use of its housing investment programmes to put the problem right.
    Mr. Nicholas Winterton: My hon. Friend clearly understands the great problems of people living in these houses. Will he assure us, in the case of people who live in Airey houses that are still owned by the local authority, as compared with those that have been purchased from the local authority, that proper account will be taken by the Government in allocating housing resources so that the houses can be repaired with the same element of grant as is the case with houses purchased by people who were previously council house tenants.
    Sir George Young: As my hon. Friend will know, the method of financing repairs would be different if the repairs were carried out by a local authority, as opposed to a private owner. I assure my hon. Friend that we took into account the obligations of local authorities when we calculated their housing investment programme allocations for next year.

    Land Disposal
    Mr. Heddleasked the Secretary of State for the Environment if he is satisfied with the rate of disposal by public authorities of land on the land registers.
    Mr. Patrick Jenkin: No, Sir, I am not satisfied. While many public bodies are doing well, some are not. I intend to step up the pressure and will, where necessary, use my powers to direct a disposal.
    Mr. Heddle: I welcome my right hon. Friend's answer. Does he agree that many Labour-controlled authorities are, regrettably, sitting on urban land, inner-city land, which builders would like to be released to enable them to build homes for first-time buyers? Will he take urgent steps to implement the powers given to him under section 98 of the Local Government, Planning and Land Act to enable those local authorities to release the land forthwith?
    Mr. Jenkin: I entirely accept the premise of my hon. Friend's question. When attention is drawn to a piece of land that is in the possession of the local authority it has always proved possible so far to persuade the local authority to sell, rather than to use my powers. I have made it clear, and I make it clear again today, that if there is unreasonable delay I shall not hesitate to use those powers.
    Mr. Freeson: Is it not true that the building industry's organisations have made it clear, both privately and publicly, that most of the land that is publicly owned and on the register is not suitable for most development, including large-scale housing development, and that one of the main reasons is that large areas of the land do not have infrastructure services? Does the Secretary of State accept that the only way to get most of the land into use is for the Government to provide more capital to local authorities, and thus get the sites serviced and possibly made available for housing and other purposes?
    Mr. Jenkin: I am sure the right hon. Gentleman knows that large parts of the land are not suitable for housing in large quantities. About 10,000 acres that have been identified as suitable for housing are in the possession of public authorities, and another 10,000 acres may be suitable if planning permission were available. We are concerned to ensure that that land, most of which is in inner-city areas, is made available and we are prepared to help the housing industry to acquire the land wherever possible.
    Mr. Michael Forsyth: Will my right hon. Friend instruct the London boroughs and the metropolitan districts to enter on the registers publicly owned land that is less than an acre in area?
    Mr. Jenkin: At the moment the registers do not include land of less than an acre. It is a question whether the additional administration that would be involved in

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    registering smaller areas would be commensurate with the advantage that would be given. However, I assure my hon. Friend that I have the matter in mind.

    Local Authorities (Financial Penalties)
    Mr. Robert Atkinsasked the Secretary of State for the Environment how many local authorities within the county of Lancashire will fall into penalty as a result of policies in 1982–83.
    Mr. Waldegrave: Nine out of the 14 district authorities within the county of Lancashire overspent their effective targets in 1982–83 and therefore incurred grant holdback. Eight are budgeting to spend above their expenditure targets for 1983–84 and are, therefore, subject to grant holdback this year.
    Mr. Atkins: Does my hon. Friend not think it extraordinary that the borough of South Ribble, which is the lowest-rated authority in the county of Lancashire, and which has done everything required of it by his Department, should now be penalised? It feels extremely aggrieved at that prospect. Would my hon. Friend be prepared to accept, or to advise his right hon. Friend to accept, a delegation from that council so that it can put its point of view to him?
    Mr. Waldegrave: South Ribble's provisional target for 1984–85 is almost 15 per cent. higher than its 1982–83 budget. However one measures inflation, that is a real increase. I repeat that the need for savings from low-spending authorities derives, in part, from the inability so far to control the high spenders. That is why we need the powers that my right hon. Friend mentioned earlier. I think I have explained to my hon. Friend that we are now too near the rate support grant settlement to be expected to receive further delegations.
    Mr. Haynes: Surely the Minister realises that authorities are overspending because of Government policy? When will the Government learn the lesson? It is all very well for the Secretary of State to laugh, but it is not a joke. It is a serious matter. When will the Government and the Department realise that local
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    authorities are required to provide services that were promised at the election, but that the Government's policies are preventing them from doing so?
    Mr. Waldegrave: The Government were re-elected with a greatly increased majority on a ticket which said that they would control public expenditure. A number of local authorities have followed a policy that has flown in the face of that re-endorsed mandate.
    Mrs. Kellett-Bowman: Will my hon. Friend ensure that in the efforts—which all Conservative Members support—to control grossly spendthrift councils he does not accidentally penalise those councils that have been prudent over the years?
    Mr. Waldegrave: As I have said before, part of the reason why it is still necessary to ask so much from the lower spenders is that we still face the problem of the high spenders breaking through. That is why my right hon. Friend needs the powers that he will seek in the House.
    Mr. Straw: Do not the examples of the South Ribble council and all the other Lancashire councils show just how capricious and arbitrary is the Government's system of rate limitation? Does it not show that the real reason why rates have risen in Lancashire and elsewhere is not alleged overspending but the £2,000 million that the Government have imposed on the ratepayers of the country—expenditure which was paid for by central taxation? Will the Minister admit that, despite that additional burden, rates have risen far less than taxes, local government expenditure has risen less rapidly than central Government expenditure, and that even alleged high-spending authorities have seen their expenditure rise more slowly—for example the GLC's has risen by only 88 per cent.—than that of central Government, which has risen by 101 per cent.? Will the Minister admit that central Government are the overspenders?
    Mr. Waldegrave: The hon. Gentleman has failed to understand the point. Central Government cut the percentage of aggregate grant because they wanted local authorities to cut spending. Rates have increased because local authorities have not responded and cut expenditure, which is why my right hon. Friend has to seek further powers.

Messenger Group Newspapers
3.32 pm
Mr. Speaker: Before calling the hon. Member for Altrincham and Sale (Mr. Montgomery) to ask a private notice question, I must tell the House that I understand that the trade union in dispute with the Messenger Group Newspapers has been ordered by the High Court to appear before it on Friday regarding non-payment of a fine. The Messenger Group has issued a writ for sequestration, which will be heard at the same time. I must, therefore, disallow any reference in questions to these matters before the court as being sub judice.
Mr. Fergus Montgomery (by private notice) asked the Secretary of State for Employment whether he would make a statement about the industrial dispute with Messenger Group Newspapers.
The Secretary of State for Employment (Mr. Tom King): As the House will know, there has been a dispute over the past year between the Stockport Messenger Group Newspapers and the National Graphical Association in connection with the establishment of closed shop agreements at the firm's subsidiaries at Warrington and Bury. As a result of action taken by the union during the dispute, the Messenger Group sought an injunction against the union in the High Court. The injunction was granted requiring the union to desist from organising unlawful industrial action. The court subsequently found that the injunction was not being observed and imposed a fine of £50,000 on the National Graphical Association for breach of that injunction. The fine has not been paid, and I understand that the High Court has now directed that it wishes to deal with the non-payment of the fine on Friday of this week.
As the House will also know, there have been intermittent incidents of intimidatory picketing at different plants culminating in the mass picket at Warrington last night. One policeman was seriously injured. I understand that a number of arrests have been made. Criminal charges have already been brought against those involved in earlier incidents and further charges may be made against those arrested last night.
In connection with the substance of the dispute, the Advisory, Conciliation and Arbitration Service has already been involved in seeking to assist the parties to a resolution of this dispute. I understand that the conciliation service is seeking to arrange a further meeting of the parties very shortly.
Whatever the arguments in relation to the dispute, I hope that both sides of the House will join with me in deploring the disgraceful behaviour that occurred at Warrington last night and to reaffirm that such conduct has no place in industrial relations in this country, and that the law must be observed.
Mr. Montgomery: Is my right hon. Friend aware that the workers were offered the choice of joining the National Graphical Association, that the union had a chance to put its case, and that after a secret ballot the workers decided that they did not want to join the union? Is my right hon. Friend further aware that the union has accepted that point?

On Sunday there was a 13-hour meeting between the two parties and ACAS. The point of difficulty seems to be
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the re-employment of the six people who withdrew their labour. That difficulty has arisen because the other employees in the organisation are not happy to have those people back—[Interruption.]—because for 20 weeks people have suffered harassment and intimidation from those people and the other union bullyboys. Why did we enact the Employment Act 1982 if it is to be ignored by such people? I hope that the Government will make their position clear, because a small firm is being intimidated by a union.
Mr. King: Had it not been for the 1980 and 1982 Acts, the Messenger Group would have had no recourse against the secondary picketing that took place, and the attempts to breach other contracts, which were part of the substance of the complaint to the court in respect of which the injunction was granted.
I know that my hon. Friend will also accept that, whatever be the system of law, it has been accepted by every party in the House and by successive parties when in government that picketing is lawful only when it is peaceful. Intimidation and obstruction are criminal offences, and the law must be observed.
Mr. John Smith: Does the Secretary of State agree that a politically inspired private notice question does not help the solution of a sensitive industrial dispute? [Interruption.] Hon. Gentlemen who proclaim the rule of law should listen to criticism in reasonable silence. Is the Secretary of State aware that the Opposition deplore violence and extend their sympathy to anyone affected by it? Will he equally recognise that the National Graphical Association issued a leaflet to those involved in the dispute? I quote from it:
"On behalf of the Organising Committee it is requested that the demonstration remains peaceful and you are asked not to attack the building or be provoked into using violence."
Does the Secretary of State accept, if he can hear me above the interruptions from behind him, that the trade union involved acted responsibly in giving that advice to its members? [Interruption.] May I say in the presence of the Secretary of State that the conduct of Conservative Members is not consistent with the type of order that they proclaim to those involved in industrial disputes?
The substance of the dispute is the serious matter with which all those involved in settling it are concerned. Does the Secretary of State accept that it is an extremely serious dispute with the potential for spreading rapidly throughout this sector of British industry? Is not the dispute within the area of settlement as what is now at stake is no more than the jobs of the six NGA members who were dismissed by Mr. Shah?
Is not the most important part of the Secretary of State's statement his reference to the ACAS meeting? Should he not now revive the old Ministry of Labour tradition of putting the Government's weight behind conciliation and the resolution of the dispute as early as possible?
Mr. King: I am sure that the whole House will hope that the further meeting that ACAS is seeking to arrange will be helpful in resolving the core of the dispute. While the original substance of the dispute is important and its resolution will help to remove this problem, I cannot walk away as readily as the right hon. and learned Gentleman from the events of last night and the type of behaviour that took place.
The right hon. and learned Gentleman accused my hon. Friend the Member for Altrincham and Sale (Mr.

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Montgomery) of asking a politically motivated question, as though he is supposed to ignore the incidents that took place last night and on earlier occasions affecting his constituency and constituents. The right hon. and learned Gentleman knows that I referred to the intermittent disputes at the various plants and to the seriousness of this matter. I hope that the right hon. and learned Gentleman was not equivocating in any way on what I took to be his categoric denial of violence in picketing. I am pleased to say that I understand that the TUC has also issued a statement condemning the use of violence. I hope that the right hon. and learned Gentleman and his right hon. Friends will lend their good offices to ensure that every effort is made to prevent any recurrence of this type of action.
Several Hon. Members rose—
Mr. Speaker: Order. Before I call another hon. Member to speak, I should say that a private notice question is an extension of Question Time. I propose to allow questions on this statement to continue until 3.55 pm. We have a further statement and an Opposition day debate thereafter.
Mr. Tim Rathbone: Does my right hon. Friend accept that the forces of law must be sufficient to meet the needs of the law? Is he reassured that the law as it stands is sufficient in its scope to meet episodes such as this and that the forces of law, particularly the police force complement, are large enough and well enough trained to meet incidents such as that which occurred the other evening?
Mr. King: That is not a matter for me. It is first the responsibility of the chief constable concerned. My hon. Friend will wish to pay tribute to the fact that, after the first problems the police encountered, they took the necessary steps to ensure that the mass picketing and the obstruction and intimidation did not prevent the progress of the business.
Mr. Doug Hoyle: First, does the Secretary of State accept that the constituency involved is not that of the hon. Member for Altrincham and Sale (Mr. Montgomery) but is my constituency and that his hon. Friend is interfering in my constituency without even having the decency to tell me that he proposed to table this question? Is not the bully boy in this case the employer, because he brought in paramilitary thugs with dogs, which inflamed passions? Is not that the reason why violence occurred?
Secondly, does the right hon. Gentleman accept that there could be an agreement? The right hon. Gentleman has admitted that the union has been flexible and that the TUC is backing the union in this dispute. Is he aware that if only the employer would stop victimising the six members and reinstate them the dispute could be over tomorrow?
Mr. King: I recognise, and I sought to make it clear—I think the hon. Gentleman heard me say it—that the company is affected at three plants in three constituencies. A number of hon. Members are affected, and, indeed, my hon. Friend the Member for Altrincham and Sale (Mr. Montgomery) has already taken the trouble to raise the matter on the Adjournment. I do not know whether the hon. Member for Warrington, North (Mr. Hoyle) took part in that debate. I shall not enter today into the merits of the
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dispute, which I hope can be discussed at ACAS and resolved. However, it distresses me that the hon. Member for Warrington, North can speak but utter not a single word of criticism or deprecation about the scenes of violence, which have no part in proper industrial relations in this country.
Sir Kenneth Lewis: Does my right hon. Friend agree that many of the pickets at the factory gates came from other parts of the country and, in fairness to the NGA, were probably members of other unions? Is it not against the principles of picketing and an abuse of the law that they should do that?
Mr. King: As the company involved employs only 120 people, it is clear that a picket of 1,000 or more must be a breach of the law. It is well known and has been accepted by Governments of both parties that intimidation and obstruction are criminal offences that have no place in peaceful picketing.
Mr. Ron Leighton: As a member of a separate print trade union, Sogat '82, I should like to ask the Secretary of State whether he recognises that we are dealing with an employer who reneges on agreements. Secondly, does he appreciate that the NGA has bent over backwards to reach agreement in this case to the extent that it has reached a provisional agreement, a copy of which I have with me, that all employees at Bury and Warrington will stay in their jobs and only new employees will be members of the union? Thirdly, is he aware that the seven members of the NUJ who took industrial action have been taken back by the employer but that he is refusing to take back six members of the NGA? That is the sole issue in dispute. I urge the right hon. Gentleman to use his offices of conciliation to get an agreement to take those six men back. Would it not be a pity to have industrial Armageddon over six men?
If those principally concerned go down the road of stealing the property of the union and seeking to destroy it, not only will that be bad for industrial relations—do not expect any more copies of Hansard or newspapers—but the state will be biting off more than it can chew.
Mr. King: I know enough about the background of the dispute to know that every one of the statements that the hon. Gentleman has made to the House is itself the subject of bitter argument in this controversy. That reinforces my judgment that I do not propose at the Dispatch Box to comment on any of his remarks.
Mr. Tony Speller: May I remind my right hon. Friend that there are victims well beyond this internecine war? The public will be deprived of the newspapers and titles that they are used to, retail distributors and newsagents will suffer financial loss, and, as usual, the public will suffer. On seeking to resolve the dispute, will my right hon. Friend remember the public interest, which is paramount in all things?
Mr. King: There are procedures and ways in which disputes of this type can be resolved and should be resolved without industrial action but, if it takes place, it should at least be conducted within the law. What is unacceptable to the people of this country is that people should refuse to observe the law.
Mr. Andrew F. Bennett: Is the Minister aware that there is mounting anger in Stockport over the fact that this dispute could have been settled by

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agreement at the beginning of the week had Mr. Shah not refused to take back the six workers in Stockport, in my constituency, who throughout this period have observed the law and picketed in the most respectable way? Will the Government now use their good offices to persuade Mr. Shah to reinstate the six people and thereby have the whole dispute settled? Will the right hon. Gentleman remember that the reason why these people are not being allowed to go back are the blacklegs who have been recruited since and who object to them returning to work?
Mr. King: The House will have heard my hon. Friend the Member for Altrincham and Sale (Mr. Montgomery) refer to allegations about the conduct of some of the members of the firm who were affected in that way, and the question of their reinsatement obviously arouses considerable controversy. I shall not enter into that because that matter is, I understand, now at the heart of the resolution of the problem. ACAS is giving the matter its close attention and is seeking to arrange a meeting, and I shall not enter into the pros and cons of it at this stage. I say unequivocally that, whatever be the pros and cons in terms of the original dispute, illegal and intimidatory action of the kind we have seen and criminal behaviour are intolerable.
Sir Dudley Smith: However big or small the case, will my right hon. Friend confirm that in a true democracy the law, and the will of Parliament which passes the law of the country, must in the end prevail?
Mr. King: That is what I have been seeking to reinforce to the House today. The trade unions enjoy certain rights and privileges—whatever title one gives them—of immunity under the law and are protected by the law, and it is as much in their interest in the long run that the law should be observed by others; they should insist that their members also observe the law. I trust that the TUC, having condemned violent behaviour, will take every possible step to ensure that no such events occur again.
Mr. Norman Atkinson: On a point of order, Mr. Speaker.
Mr. Speaker: I would rather not take a point of order at this moment.
Mr. Atkinson: On a point of order, Mr. Speaker, I wish to refer to your ruling—
Mr. Speaker: Order.
Mr. Atkinson:—when you ruled—
Hon. Members: Sit down.
Mr. Speaker: Order. I said that this was an extension of Question Time. It will take time out of that if I take points of order at this stage. If the hon. Gentleman wishes to raise a point of order, I will take it afterwards.
Mr. Atkinson: On a point of order,—
Mr. Speaker: Very well, but I must tell the hon. Member that taking his point of order now is taking time out of the private notice question.
Mr. Atkinson: I hope that you will allow the time, Mr. Speaker, because my point of order relates to an important
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matter on which you have ruled. You said that it was sub judice to refer to charges which are to come before the court. However, that did not prevent the Minister from out of hand condemning workers in relation to charges on which they have not yet appeared before any court. The Minister said that those workers were already guilty[Interruption.]—and he asked Opposition Members to condemn their behaviour as though they had already been found guilty of those offences. Should you not prevent the Minister from referring to that issue, Mr. Speaker?
Mr. Speaker: The Minister has not talked about the guilt of individuals in this case. When I granted this private notice question, information about the matter going before the courts was not known, and that is why I made the statement that I did.
Mr. Robert Parry: Is the Secretary of State aware that I had a long meeting last Saturday with the full-time secretary and officials of the NGA at which strong allegations were made of police brutality against pickets? [HON. MEMBERS: "Shame."] Is he further aware that a number of pickets suffered head and leg injuries and concussion and that one of my constituents, Mr. Peter Stanton, whose height is less than 5 ft and who weighs less than eight stone, has a fractured shoulder bone? Will the right hon. Gentleman urge the Home Secretary to have words with the Cheshire police for a cooling down of tempers? The NGA members regret the injuries to a police officer in the early hours of this morning. Is he aware that if action is not taken to cool down the situation this will turn out to be the Grunwick of the north?
Mr. King: There is a proper procedure for charges or complaints of that kind and that certainly should be observed because nobody condones that sort of behaviour. The hon. Gentleman calls for a cooling down of the situation. I suggest that anything he can do to discourage such an assembly of pickets he should do; the assembly of, I understand, nearly 1,000 people outside the Warrington plant could hardly be a contribution to a cooling down of the situation.
Mr. Alistair Burt: Is my right hon. Friend aware that my constituents working on the Messenger newspaper voted on the closed shop issue some weeks ago, voted unanimously against and, as a consequence of that, now have pickets at their door? Does he agree that the National Graphical Association should call off its threat to my constituents' livelihood, look after the business of those who have chosen to represent them and leave my constituents alone?
Mr. King: I am aware of reports of the ballots that were taken and I understand that, according to those reports in both plants concerned there was a majority against membership of the NGA, the decision having been unanimous in one plant. That is part of the background to the dispute. My interest in the matter is to see that the dispute about recognition or the closed shop is resolved in a proper way, and neither I nor the Government are prepared to condone the sort of illegal and intimidatory picketing that has been taking place.
Several Hon. Members rose—
Mr. Speaker: Order. In view of the point of order that was raised, I propose to take one more question.
Mr. Martin J. O'Neill: Is the right hon. Gentleman aware that my union, the National Graphical Association, regrets that anyone should have been injured in the dispute but recognises that this morning the TUC came out in support of the NGA on the core of the issue—the victimisation of six former members of Mr. Shah's staff whom he has refused to reinstate? Is he further aware that it would be greatly appreciated by the trade union movement if he ensured that his officials acted as constructively as possible to secure conciliation because the only issue now at stake is that of the six members, and the union is looking to the right hon. Gentleman for support on that issue?
Mr. King: As I said in my statement, ACAS, which is independent, is seeking to achieve a settlement of the dispute. I hope that the hon. Gentleman will lend his good offices to ensuring that the NGA, in wishing to prosecute an industrial dispute—which it is entitled under the law of the land to do—will ensure that it conducts it within the law.
Mr. Dennis Skinner: On a point of order, Mr. Speaker. A few days ago you were asked, as the result of a newspaper article, about the SDP and Liberals in particular not getting a fair crack of the whip in relation to speaking opportunities in the House. It may be remarkable to people outside Parliament—though it is not to most hon. Members—that when we get into the sharp end of politics, as we have just been doing—with the Tories supporting the bosses and the Labour party supporting the workers—SDP and Liberal hon. Members are not to be found.
Mr. Speaker: That is not a point of order for me.

Intermediate Nuclear Force Talks
3.58 pm
The Minister of State, Foreign and Commonwealth Office (Mr. Richard Luce): With permission, Mr. Speaker, I should like to make a statement about the INF negotiations.
As hon. Members may be aware, the Soviet delegate to the Geneva INF talks has made it clear this morning that the Soviet Union does not intend to continue the present round and has given no date for the resumption of the talks.
The Government regret this Soviet decision and can see no justification for it. As recently as 15 November the United States tabled a further constructive proposal in the negotiations, which was rejected out of hand by the Soviet Union. The Russians may seek to justify their interruption of the talks by the final preparations for initial Western INF deployment. But the House will recall that the West has remained at the conference table while the Soviet Union has increased its own deployments of SS20s by over 40 per cent.
The NATO Alliance has made its first priority the achievement of a balanced and verifiable agreement to reduce and if possible to eliminate these weapons worldwide. At the same time, we have made it clear that until such an agreement can be attained the Alliance will proceed in accordance with its decision in 1979 to work towards a balance which would safeguard Western security. We will not be deflected from achieving the first stage of this objective by the end of this year.
I wish to emphasise that the Alliance remains ready to halt or reverse at any time the deployment of the missiles if only we can secure an agreement with the Soviet Union that would allow us to do so. The achievement of such an agreement remains our unshakeable objective. The Alliance will spare no effort to secure it. We remain convinced that an agreement is possible and that it remains in the interests of East and West that the negotiations should resume at the earliest possible date. We therefore urge the Soviet Union to demonstrate an equally sincere commitment to arms control by returning to the negotiating table.
Mr. Denis Healey: Is the Minister aware that he has made a serious and disturbing statement, although the news was not unexpected? Does he recall that Her Majesty's Government have been arguing for four years that the moment the West began to deploy cruise and Pershing missiles agreement would be reached at the disarmament talks? Is it not clear that that could not have been more wrong? As the Soviet Union has frequently warned, it has produced a breakdown in the talks.
The Minister suggested that the responsibility for the breakdown lay exclusively with the Soviet Government. Is he aware that Her Majesty's Government's refusal to allow their Polaris force to be included in the balance has been a major obstacle to the talks until last week?
Mr. Churchill: Whose side is the right hon. Gentleman on?
Mr. Healey: I am on the side of peace and disarmament. Is the Minister aware that, only last week, the Soviet Government, at the last moment, offered not to include British and French nuclear forces in the balance and to reduce the number of their SS20s to half those

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deployed in 1979 and their warheads to well under half those deployed in 1979? How can the hon. Gentleman justify the action of Western Governments in rejecting that offer out of hand and leaking the proposal? This is a repetition of their action over a similar proposal after the so-called "walk in the woods" a few months ago. Does the hon. Gentleman believe that this treatment of the serious proposals by the Soviet Government is consistent with the sincere negotiations on disarmament to which Western Governments committed themselves in December 1979?
Is the Minister aware that the decision to deploy cruise and Pershing missiles is opposed by a substantial majority of people in Britain and Germany—the two countries which are so far involved—and has done more damage to public support for the NATO Alliance than any other action during the past 34 years? Will the Government now insist that the United States Government should offer not to deploy any more missiles if the Soviet Union will agree to resume the talks? Will they also insist that the West should seek to take the latest Soviet offer as a starting point in renewed negotiations which, even at this late moment, might save us from an acceleration and escalation of a nuclear arms race which can only decrease the security of the British people and present a greater threat to the prospects for peace in the world?
Mr. Luce: The House will agree with the last remarks of the right hon. Member for Leeds, East (Mr. Healey) that it is our desire to see an end to an escalation of the arms race. I am surprised that the right hon. Gentleman lays the responsibility for this latest development on the Western world and ignores essential facts. Since 1979 there has been a trebling of the number of SS20s. Since 1981 the numbers have increased by 40 per cent., and they are increasing at an average of one a week. The right hon. Gentleman seeks to ignore those salient facts that threaten our national security.
With his wealth of experience as Secretary of State for Defence, the right hon. Gentleman surely would agree that the prime duty of the Secretary of State for Defence and Her Majesty's Government is the security of the nation. That should be our first and ultimate objective.
I am surprised also at the right hon. Gentleman's comments about the United Kingdom and French strategic nuclear force. He knows that we are not talking about mixing like with like. The main point to come out of the discussions in public and at the INF level is that, whatever the Soviet Union's proposals, it wishes to retain a monopoly of intermediate range nuclear weapons. We believe that that poses a threat to our security, and we must consider that. Our genuine aim is to reach an agreement in Geneva, and we do not believe that we can do that by moving away from the negotiating table.
Mr. Healey: Is the Minister aware that the Soviet Government have had a monopoly of intermediate range missiles in Europe for over 20 years and that this was accepted by all previous British Governments—of both parties—since it was offset by the allocation of 400 Poseidon warheads to SACEUR? Is he aware also that the Soviet Government have offered to reduce the number of warheads deployed to half those that were deployed in 1979? Why did he not persuade the Americans to accept that offer as a basis for agreement? Is the hon. Gentleman aware that the Labour party regard the deployment of what
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has been described by the American negotiator, Mr. Perl, as a weapon of no obvious military utility—the cruise missile—is a means to increase Britain's insecurity rather than contribute to its support?
Mr. Luce: Against the background of the twin-track decision, the principle of which was supported by the Labour Government, I am surprised that the right hon. Gentleman is suggesting that the Soviet Union should continue—whatever proposals it has put forward so far—with an overwhelming superiority and monopoly of those weapons? Does he believe that that is in the interests of Western security? I must ask the right hon. Gentleman that question, because it is a serious consideration in our national interests. The United States, with the full support of the NATO Alliance, has put forward proposals which, in broad terms, suggest a balance. We stand ready at any time to halt or reverse the deployment if the Soviet Union responds to our proposals.
Mr. Healey rose—
Mr. Speaker: Order. It might be fairer to the House if the right hon. Gentleman were to speak again at the end of questions.
Mr. Julian Amery: Does my hon. Friend agree that, far from being scared by the Soviet walkout during the talks, most Europeans, especially in Britain and in Germany, will sleep more safely and securely in their beds now they know that the Soviet monopoly of these weapons is ending and some equilibrium is slowly on the way to being achieved?
Mr. Luce: It is essential that the Soviet Union—let alone our public—should understand that the resolution of the British and other Western Governments is to ensure the safety of our people. That is a prime objective. Allied to that, we have a genuine and earnest desire to seek an agreement that leads to a broad balance in weapons. We believe that that would be in the interests of all concerned. If the Soviet Union were ready to respond to those flexible proposals, we might make some progress.
Mr. David Steel: Does the Minister agree that the Soviet decision prematurely to end the talks should be universally deplored? Does he accept, however, that after four years the talks cannot be regarded as a great success, since they were billed as arms reduction talks but we have ended up with the deployment of cruise and Pershing in the West and a new generation of missiles in East Germany and Czechoslovakia? In the light of that, what is the Government's response to Prime Minister Trudeau's suggestion of a summit meeting of the five nuclear powers?
Mr. Luce: On the first point, I entirely agree with the right hon. Gentleman that the Soviet decision this morning is to be deplored. The Secretary-General of NATO, Dr. Luns, made exactly the same comments this morning in response to that decision. The Government remain ready to work as closely as possible with our allies, as we have done for a long time, to try to persuade the Soviet Union that it is in its own interests as well as ours that we should reach an agreement on balanced and verifiable arms reductions. That is our aim and any proposals, including those from Mr. Trudeau, must be seriously considered.
Sir John Biggs-Davison: Have the Government received an assurance that the United States

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is ready to resume negotiations at the earliest possible moment and has not been discouraged by the somewhat childish tactics of Moscow?
Mr. Luce: President Reagan has already made it plain, not only that he joins us in regretting the Soviet decision this morning, but that the United States, with the full support of the rest of us, stands ready at any moment to resume discussions, and the sooner the better.
Dr. David Owen: Is the Minister aware that the central aim of all of us must be to restore the negotiations? In the meantime, is he aware that for very similar reasons, and with some of the same hesitations as Helmut Schmidt, I believe that NATO has no alternative but to continue with the first stage of the deployment? Will NATO Foreign Ministers now meet and consider seriously the possibility of declaring a freeze on first stage deployment of the 41 missiles when they become operational to allow time for the Soviet Union to reconsider its position and return to the negotiations, and will NATO maintain that freeze so long as there is any chance that the Soviet Union will negotiate a substantial reduction in the number of SS20s?
Mr. Luce: I am grateful for the right hon. Gentleman's first remarks. We now have no alternative but to proceed with deployment, but he is absolutely right to suggest that we should be ready at any moment to respond to any possibility of halting or reversing that if there is genuine progress in discussions. The sooner the discussions are resumed, the better.
As for consultation with other Foreign Ministers, the right hon. Gentleman will be aware that there is shortly to be a discussion at NATO level. All these matters can be assessed at that stage in the light of this morning's events. I am sure that there will be a renewed strong commitment to do whatever we can to try to get discussions going again.
Mr. Patrick Thompson: While we must all agree that the breakdown of the talks is most unfortunate and distressing, does my hon. Friend agree that responsibility for the Russian walk-out must be shared by all those people, including many Opposition Members, who have encouraged the so-called peace movements, which have increased the likelihood of a tactical walk-out of that kind?
Mr. Luce: My hon. Friend is right in the sense that, however sincere the people who have joined in the protest movements and however much we all share the desire for a lowering of tension, the Soviet Union has tried to use the protest movements to undermine the elected Governments of the Western world and the unity of the Western Alliance. Although the people concerned are extremely sincere in their intentions, the Soviet Union has tried to use them as a tactical ploy to its own advantage.
Mr. Donald Stewart: Is the Minister aware that many people in the West who have no illusions about the Soviet system cannot understand why the British and French nuclear capability is not included on the side of the West? Does he agree that in a two-sided confrontation no one would imagine that capability being used in support of the Warsaw pact and that that cannot be overlooked in negotiations?
As the CIA has announced that the Americans overestimated Russian missile deployment by 100 per
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cent., what is the basis for suggesting that the Soviet Union has an overwhelming lead over the nuclear forces of the West?
Mr. Luce: I should first correct a point that I made to the right hon. Member for Plymouth, Devonport (Dr. Owen). My reference to discussions at NATO level related to a meeting of Defence Ministers, not Foreign Ministers.
In answer to the right hon. Member for Western Isles (Mr. Stewart), we have discussed many times, including the recent debate on the twin-track policy, the position of the United Kingdom and French strategic deterrents. We have made it absolutely clear that we are talking about strategic weapons and not intermediate weapons, so we are not comparing like with like. My right hon. and learned Friend the Foreign Secretary has made it plain both at home and at the United Nations that if START makes progress and there is no strengthening of Soviet defences we could review our position and consider whether the United Kingdom and French strategic deterrents should be included in the discussions. At present, however, we are dealing with intermediate and not strategic weapons.
Mr. Stuart Bell: Does the Minister agree that the timing of the introduction of cruise and Pershing in Europe was a negotiating ploy to get the Russians to take the SS20s away from Eastern Europe? That ploy having failed, does he agree that there will now be more SS20s and other Russian nuclear missiles? Having failed to call the bluff of the Russian bear, will the Government now call President Reagan's bluff and return the cruise missiles already here to the United States?
Mr. Luce: We shall do no such thing in the absence of any agreement with the Soviet Union. I am surprised at some of the Opposition comments, which seem to ignore the facts of the case. They describe what the Western world, led by the United States, has been doing in the negotiations as a ploy, but it is clear from President Reagan's published proposals that there has been any amount of flexibility—zero option proposals or, in the absence of that ideal solution, an interim agreement at a lower level, and the latest proposal for a global figure of 420 warheads. So far, however, the Soviet Union has made it plain that it wishes to maintain a monopoly. That is the key point. It is the overall balance that we must aim for because that is how we believe that we can best achieve security.
Mr. Churchill: Is it not disturbing that, thus far, the Soviet Union has shown itself unwilling to enter into any agreement between East and West based on equality in numbers of warheads of this kind? Is it not appalling that the right hon. Member for Leeds, East (Mr. Healey) on behalf of the Labour party should put forward the case for a Soviet monopoly in these weapons? Bearing in mind that in the past four years the Soviet Union has added 200 SS20s with 600 warheads while we have remained at the negotiating table, what earthly justification is there for the Soviet Union to leave the talks when the first score of cruise and Pershing missiles arrive in Europe?
Mr. Luce: I agree entirely with my hon. Friend. Indeed, I go further. I hope that the situation is never reached, but even if we deploy the 572 cruise and Pershing 2 missiles over a five-year period there would still be a

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Soviet monopoly, for which we would allow, in terms of the SS20s. There are more than 700 SS20 warheads now targeted on Western Europe.
In addition, the NATO Alliance has shown a genuine desire to make progress and to reduce tensions by the recent announcement that we shall reduce our arms by a further 2,000 shorter-range nuclear weapons in Western Europe. That is further evidence of the Western world's genuine desire to make progress in the negotiations. If the Soviet Union would only respond, there would at least be some hope.
Mr. Dick Douglas: Is not one of the most disturbing aspects of the Soviet withdrawal from the talks the view expressed by leading United States commentators that the Soviet Union will continue to be removed from the negotiating table until after the American elections? The Minister says that he will spare no effort. Will he apply his mind to linking the strategic arms negotiations with the INF talks because the nature, range and delivery capability of the weapons blur the two issues? Does he agree that we should therefore link the two and come to the negotiating table on all these issues before we blow one another up?
Mr. Luce: I remind the House, in answer to the hon. Gentleman, that the Soviet Union said this morning that it did not wish to continue the present round. Compared to previous rounds, this one has already gone on longer than any previous round. All that the Soviet Union has done is to say that it has not given a date for the resumption of talks on INF. I am not talking about START. The Soviet Union has given no indications on that matter. Obviously, we all hope that the talks will continue until they are due to adjourn, very shortly. All that I can say to the hon. Gentleman is that we can keep an open mind about the relationship between INF and START. At present they are divided between the two sets of talks, and we think that that is the best way to proceed.
Mr. George Walden: I accept the implication in the Minister's statement that there is no reason for alarm or despondency, or for a change in Western policy over deployment. However, will the Minister accept that the West should not merely return to the nuclear counting-house, but seek actively to create the political atmosphere for the eventual success of the negotiations, and that Britain should be more prominent in the search to promote that atmosphere?
Mr. Luce: I agree entirely with my hon. Friend that there should be no undue alarm. Indeed, the Soviet Union should understand the very genuine and strong desire of the Western world, including our Government, to achieve agreement as soon as possible, and to make progress in the Geneva discussions. Against that background, my right hon. Friend the Prime Minister and my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs have said that we wish to have a dialogue with the Soviet Union. At least, we have to acknowledge that we live on the same planet, however much we may disagree with each other. We must find a way of living together. We shall certainly pursue that policy.
Mr. Bill Michie: Will the Minister state more clearly his answer to remarks by Conservative
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Members about the peace movement helping to make the situation worse between East and West? Is the Minister saying that the peace movement, which includes ordinary people who want peace, the Roman Catholic Church, the Church of England, the Free Churches and the Quakers, has somehow connived to undermine the security of the Western world? Is the Minister saying that those people are naive, and do not understand all the problems that we are arguing about?
Mr. Luce: I do not believe that anybody is questioning the sincere desire of people in the protest movements for progress, and a reduction in arms. The point that I was making, in reply to an earlier question, is that the Soviet Union is and has been taking advantage of the protest movements to try to challenge the authority of elected Governments in the Western world, and to undermine the cohesion of the Western Alliance. That is not in our interests.
Mr. Michael McNair-Wilson: Does my hon. Friend agree that the walk-out proves that the Soviet Union's attachment to the INF talks lay in its hope, or belief, that it could reach an agreement with the West that left it with some supremacy in theatre nuclear weapons? If that is the case and, as the deployment of cruise and Pershing is going ahead in Western Europe, is there any real purpose in holding the talks again in their present form, or is it not time for both sides to take a breather and consider the situation anew?
Mr. Luce: We have been talking for just over two years, since the first Geneva talks started. It is fairly evident that the objective of the Soviet Government was to try to achieve an agreement that enabled them to have a strong monopoly of nuclear weapons. However, now that they see our resolution in starting to fulfil the principles of the twin-track policy, we must all earnestly hope that they understand that we are determined to defend ourselves and have a credible deterrent. At the same time, we are most anxious to reach an agreement with them. Against that background it is in all our interests—the Soviet Union's as well as Great Britain's—that they resume their position at the negotiating table.
Mr. Martin Flannery: Is it not a fact that, by deploying cruise missiles on our territory, the Government in no way represent the wishes of the majority of the British people and that the same is true of the Government in Western Germany? Has not the belligerent posture of the President of the United States over many areas of the world made mankind more fearful than ever before of those dreadful weapons and brought into the struggle against those weapons many people who were not in that struggle before? Has not the Prime Minister met real criticism in the meetings that she has had with the Heads of Government in India today? Does not all that mean that we should use our immense prestige and influence to bring back the Russians to the conference table so that the future can be discussed rationally, whether it be peace for all or Armageddon?
Mr. Luce: The British electorate had a chance in June this year to express their views on the Government's defence policy. They overwhelmingly endorsed it. Moreover, the German Bundestag, by a substantial majority, gave the go-ahead to the policy of deployment unless there were a negotiated settlement, and in Italy

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there was a majority of 132 in favour of that policy. It is evident that the United States is demonstrating its commitment to the defence of the free and democratic way of life in Western Europe. The Soviet Union should be under no misunderstanding that the United States is committed to the defence of Western Europe and the Western world. If the Soviet Union has no misunderstanding about that, there is a better chance in the longer term of getting stronger security and peace.
Mr. Andrew MacKay: Is it not both extraordinary and sad that no Labour Member, not even the former Secretary of State for Defence the right hon. Member for Leeds, East (Mr. Healey), has condemned Soviet withdrawal from the peace talks?
Mr. Luce: I agree with my hon. Friend. It is totally incomprehensible.
Mr. Ioan Evans: As we now have enough nuclear weapons on this planet to destroy it 10 times over, is it not a human tragedy that more resources will be devoted to building up a larger stock of nuclear weapons in the nuclear arms race? What positive initiatives will the Government take in view of the recent CIA report that the Russian build-up of arms had been greatly exaggerated? What positive response will the Government make if the Commonwealth should support the call by Premier Trudeau for a summit conference now not only of the United States and the Soviet Union, but of China, France and Britain, to get us out of this nuclear madness?
Mr. Luce: It is for the reason that the hon. Gentleman gave at the beginning of his question that we want a reduction in armaments. That makes it all the more regrettable that the Soviet Union took the decision that it did this morning. It is only by talking and negotiating in the conference chamber, not by declaratory measures or rhetoric, that we shall make any progress. That is why we regret and deplore the decision all the more. The NATO Alliance has undertaken a net reduction of 2,400 short range nuclear warheads. That, if anything, is a demonstration of our desire to make progress. That will lead to the lowest level of such warheads for 20 years.
Mr. Peter Bottomley: Does my hon. Friend agree that the Russians are probably watching reactions in democratic countries to their tactical and, I hope, temporary withdrawal from the talks? Would it not be right for the Russians to realise that every major political party in this country disapproves of their withdrawal from the talks? Would it not help if every major party made it clear that it did not want the Russians to have a monopoly of those types of weapons? Would it not be a helpful gesture to make sure that the Metropolitan police were deployed in large numbers round the Russian embassy today just in case the CND so disapproves of what the Russians are doing that it holds a demonstration there?
Mr. Luce: I think that the best contribution that the Leader of the Opposition and the Labour party could make to our security and the prospects for peace would be to stand up now and say that they believe we should stick together, that we believe in a balance of armaments, and that the best hope for the peace of the world is to fulfil the principle that successive Governments have accepted—a twin-track policy decision.
Mr. James Callaghan: Is it not to be remarked that the hon. Gentleman speaks of it being necessary for us to be at the negotiating table when he is reporting upon a series of talks in which we have played no part and have no power to influence what is taking place at the negotiating table? Is it not time therefore for us to consider very seriously the propositions that have half been put forward that this serious decision by the Soviet Union to withdraw provides an opportunity for a pause, for reflection, and perhaps for a new forum in which these matters can be discussed?
Should not the British and French weapons be included in one set of negotiations or the other so that if they are brought together they can be put on the table and be counted? I do not say that we should destroy our own weapons. That is not my position; I have never said that. Is there not a rational ground for the Soviet Union to say that these weapons, whether they crawl, swim or fly, are directed against them and therefore should be counted in the total?
Is not this a moment when we should not seek to condemn Moscow? I told them when I was there Clem Attlee's old dictum when it was suggested that the Labour party should walk out of the Chamber—"Don't walk out, you have only got to walk back some time". Is not that the position in which the Soviet Union will find itself?
Is it not the case that we cannot accept a Soviet veto in principle on the deployment of American nuclear weapons in Europe? Once that fact is accepted by the Soviet Union, is it not possible, as I believe firmly that it is, to reach an agreement since the issues that divide us are getting narrower the whole time? Therefore, although this breakdown is serious, does it not provide us with a fresh opportunity for beginning negotiations not in public, not making public offers, but in private in order to reach an agreement?
Mr. Luce: I entirely agree with the right hon. Gentleman that discussions in private in order to get agreement is the only sensible way to proceed and, with all his experience, he is in the best position to reflect on that. I wish that other Opposition Members would reflect his view that it is unacceptable to have a Soviet veto over the United States and Western policies in this field.
Earlier the right hon. Gentleman suggested that we do not have influence over the discussions in Geneva. We do. The NATO Alliance is consulting very closely and we fully support the flexible proposals that President Reagan has put forward.
In answer to the right hon. Gentleman's point about the need for time to reflect, as I said earlier, very shortly the Defence Ministers in NATO will be meeting and no doubt that will be a sensible occasion on which to reflect on the present position. But no one must be in any doubt about our sense of resolution in the Western world with regard to the twin-track policy.
Mr. Nigel Forman: Is it not abundantly clear from everything my hon. Friend has said this afternoon that Her Majesty's Government remain strongly committed to the cause of multilateral and genuine and balanced disarmament? However, is it not also important for the House to bear in mind that there is a danger of over-reacting to this Soviet walk-out that may have more to do with internal political difficulties in the

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Kremlin than with a long-term strategic decision to boycott the negotiations? Will the Government therefore keep up the pressure in the way my hon. Friend suggested?
Mr. Luce: On the question of multilateral and balanced disarmament, I reaffirm that we are utterly committed to seeking ways in which we can achieve viable multilateral and balanced disarmament and we feel that this is the only safe way to proceed in arms control policies. Indeed, the House will have noted that some time ago Mr. Andropov himself intimated that he believed that this was the best way to proceed when he said that one-sided or unilateral disarmament was in itself naive.
I agree with my hon. Friend entirely that it would be wrong to over-react. We continue to invite the Soviet Union to return to the negotiating table, pointing out all the time that we believe that it is as much in their interest as it is in ours that the discussions should resume as soon as possible.
Mr. Roland Boyes: If the peace movement is helping the Soviet Union, how is it that the only party that is losing members faster than the British Communist party is the SDP?
Why has the Minister concentrated on only half the formula? He said that the talks had to lead to balanced and verifiable reductions. The big problem in the talks is that cruise missiles cannot be verified for a number of reasons. First, they are very small. Secondly, they are mobile. How can the Soviet Union count them their satellites—[Interruption.] An hon. Member refers to SS20s. They are launched from concrete pads—
Mr. Speaker: Order. The hon. Member should not allow himself to be distracted. He must ask his question.
Mr. Boyes: I agree and I apologise, Mr. Speaker. I should not be distracted by buffoons.
Is it not a fact that these weapons are mobile, and if there is a dozen here today and a dozen there tomorrow the Russians will not know whether it is the same dozen? Is it a fact that cruise missiles can be hidden away? Is not the fact being overlooked that not 400 or 500 but 5,000, 6,000, 7,000 or perhaps 10,000 cruise missiles are being produced—
Mr. Speaker: Order. The hon. Gentleman must bring his question to a close. He has had a very fair run. He may say his last words.
Mr. Boyes: My last word is that it is not just a question of 400 or 500 cruise missiles being produced but up to 10,000 can be hidden in submarines? How can they be verified? Will the Minister concentrate on the verification of cruise missiles apart from trying to achieve balanced reductions?
Mr. Luce: It is difficult to discover precisely the point of the hon. Gentleman's remarks. If he suggests that balanced reductions is the wrong way to proceed and that a Soviet monopoly is acceptable, I find that quite astonishing. Does he not realise that that in itself poses a threat to the security of our interests? As with every other kind of disarmament or arms control discussion, verification must be a salient part. It is essential that we should at least have the ability to ensure that agreements on both sides are being fulfilled. Surely he can see the point of that.
Several Hon. Members rose —
Mr. Speaker: Order. This is a very important matter, but I must protect the business of the House. I shall allow these questions to continue until a quarter to five.
Mr. Ian Lloyd: Should not the House remind itself, especially in this difficult and dangerous context, of two fundamental differences between the Soviet Union and the West? The first is that no Soviet Minister, official or general—and we do not know who it should be—will today or tomorrow be answering at any dispatch box in public for his country's policy. The second is that the Soviet people would not have had the opportunity that the American people had last week to see the film "The Day After" which showed in the most dramatic and lurid form the consequences of a nuclear war. If the Russians are to return to the negotiating table in Geneva, would it not be a very good idea to challenge them to show that film in the Soviet Union?
Mr. Luce: The difference between ourselves and Moscow in terms of our way of life is stark. There would be no opportunity to discuss, as we are doing in this Chamber in a democratic fashion and with a variety of views, how we can best achieve peace and security. It is that democratic way of life that we are trying to preserve by our policies.
With regard to the film to which my hon. Friend referred and which I believe is to be shown in this country shortly, our policies are designed to avoid just that kind of catastrophe. It is with that in mind that we are pursuing our present policy on defence and disarmament.
Dr. John Marek: Will the Minister stop misrepresenting the position and trying to mislead the country by equating the cruise missile with the SS20? The cruise missile is a cheap, accurate, new generation weapon with a first strike capability—[HON. MEMBERS: "Rubbish".] I regret that the Soviet Union has walked out of the negotiations, but some Labour Members in the recent defence debate warned that that was likely, if only because of President Reagan's ludicrous proposals—which were meant for home public consumption rather than serious negotiations—and the problem of verification. The Minister should not be ingenuous about this. Otherwise we might believe him if he continues to adopt the attitude that this is not a serious problem for the Soviet Union. If he accepts these points, how long will it be before he realises that his policies will merely result in nuclear war in our lifetime?
Mr. Luce: I cannot understand why some Labour Members constantly ignore what has happened over the last few years. The SS20s pose a threat to Western Europe. We have a primary duty to defend ourselves. We merely wish to ensure that we have a credible deterrent policy. We are not talking about first strike. The NATO Alliance is concerned with the defence of the Western world. I and many others are disturbed and alarmed at the fact that people, such as the hon. Gentleman, seem to want to ignore the facts and evidence that confront us.
Mr. Nicholas Soames: The Russian walkout at Geneva should be deeply regretted. Nevertheless, should not Great Britain, with all its experience and expertise in world affairs, be involved in regular talks with

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Russia on other matters so that a useful and valuable line of communication can remain open to deal with these local difficulties?
Mr. Luce: I agree with my hon. Friend. That is what the Prime Minister recently said. My hon. Friend the Minister of State, the hon. Member for Edinburgh, Pentlands (Mr. Rifkind), was in Moscow earlier this year. My right hon. and learned Friend has visited Hungary, and the Prime Minister will be doing so shortly. Our objective is to have a dialogue with the Soviet Union, and we invite it to respond.
Mr. Robert Litherland: Is the Minister aware that the NATO Commander-in-Chief is reported to have said that if he were losing a traditional battle on European soil he would use nuclear weapons, and that he had the political backing to do so? Will the Government give him that backing? Does not deployment of these weapons reflect the United States fallacy of a limited nuclear theatre war?
Mr. Luce: We are precisely in line with the policies pursued by previous Governments, including Labour Governments. Our first priority is the defence of our way of life. At all costs, if we possibly can, we wish to avoid conflict. That is what our policies are designed to achieve.
Mr. John Maples: One hopes that the breakdown in the talks will be temporary. However, has not every position adopted by the Soviet Union and every offer made by it, when unwrapped, effectively mean that it will continue to deploy several hundred SS20 warheads but that there will be no American deployment of cruise or Pershing 2s?
Mr. Luce: That is exactly the point, and it is essential that people should understand it. The Russians wish to maintain a monopoly. They wish to prevent the United States from deploying these weapons and showing their commitment to the defence of Western Europe.
Mr. Paddy Ashdown: As the Minister—and the Secretary of State in his statement on the arrival of cruise in Britain—placed great emphasis on the withdrawal of a significant number of nuclear weapons from Europe, may I draw to his attention the comments of Mr. Richard Wagner to the Military Constructions Appropriations Sub-Committee of the House of Representatives on 20 April, when he said:
"Withdrawing weapons which are needed goes counter to everything we are trying to do to strengthen our posture in Europe. We do, however, frequently review our nuclear weapons posture and as we modernise the stockpile we do withdraw older unneeded warheads. For example, we have in the last year or so withdrawn 1,000 older weapons which we no longer need"?
Does the Minster agree that those weapons have been withdrawn not because they are a threat to the Russians, but because they are so old and out of date that they are probably a threat to our own troops? To represent that as a concession is damaging to our sincerity and negotiating posture. Does the Minister also recognise that far from imbalance—as agreed by a House of Representatives Congressional hearing recently—since START began 20 months ago, the United States has added—
Mr. Speaker: Order. The hon. Gentleman should watch the clock.
Mr. Ashdown: This is my last point, Mr. Speaker.
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Since those talks began, the United States has added 900 warheads to its stockpile whereas the Soviet Union has added 600.
Mr. Luce: I continue to find it extraordinary that the hon. Gentleman does not find it possible to welcome the fact that the NATO Alliance has decided to reduce the number of warheads. The latest decision is to reduce this by another 2,000 short range nuclear weapons. That in itself must contribute to peace, and is a demonstration of our sincerity and desire to make progress. While we are reducing weapons, there is an increase in weapons on the other side. One additional SS20 a week has been deployed. We are now asking for a genuine response from the Soviet Union. We want that, await it and are ready to respond to it.
Mr. Healey: Do not these exchanges show that we all deplore the Soviet withdrawal from the talks? That is why I described it as serious and disturbing news, and suggested the steps that the West might take to secure a resumption of the talks. I regret that the Minister did not respond to that suggestion. If the talks can be resumed, the West is bound to take the view that President Reagan now takes—that equivalence in nuclear weapons does not require equality in every particular nuclear weapon. The Russians have a substantial superiority in intercontinental land-based missiles, but the Americans have a superiority of 5,000 to the Russians' 2,000 in submarine-launched warheads. Those are the figures in the Scowcroft report. A similar equivalence exists in Europe. All previous American and British Governments have accepted that the Soviet monopoly of land-based missiles was offset by the Western allocation of submarine-based missiles to SACEUR.
Is the Minister aware that the systematic leaking of the critical Soviet proposal—the one that arose from the so-called "walk in the woods" a few months ago—by the United States and the leaking by the German Government of the so-called "walk in the park" proposal damaged the credibility of Western Governments in the disarmament talks? It is essential that we should now resume the talks in private, accept that equivalence, not equality, is the objective, and take the first step to secure resumption by freezing further deployment of nuclear weapons on our side on condition that the Soviets resume talks. We should then seriously explore the Soviet offer to reduce their SS20s by half compared with the number they have deployed now, and the number of warheads by more than half compared with those deployed in 1979.
Mr. Luce: I welcome the fact that the right hon. Gentleman deplores the withdrawal. As he rightly said, we cannot make progress with the Soviet Union unless we have proper discussions round the negotiating table and in private. I agree that our first priority must be to persuade the Soviet Union to have these discussions in private.
Mr. Healey: On all sides.
Mr. Luce: I agree. That is the first priority. At the same time, I am surprised that the right hon. Gentleman, with all his knowledge and experience, does not acknowledge that the Soviet Union is still insisting on an overwhelming monopoly of these weapons.
The right hon. Gentleman is right to suggest that we should seek a broad balance. It is essential that we have adequate deterrence. However, the right hon. Gentleman

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has not acknowledged the essential fact that the Soviet Union insist on having an overwhelming monopoly. Until the Russians agree to talk about a balanced reduction of forces, it is difficult to envisage how we can make progress.

Emphysema (Compensation of Coal Miners)
4.50 pm
Mr. Geoffrey Lofthouse: I beg to move,
That leave be given to bring in a Bill to provide compensation for mineworkers under the Industrial Injuries Acts for emphysema.
Having discussed at some length the problem of the arms race and the millions of pounds that it will probably cost to blow us off the face of the earth, it is ironic that I, in my meak and mild way, should request the Government to provide a few measly pounds to protect and comfort the living.
Hon. Members will be aware that this is the third time that I have brought this matter to the attention of the House. I presented a Bill in October 1982 and a further Bill in March 1983. I make no apology for my persistence. I consider that those who suffer from emphysema and have become incapacitated, because they are or were coal miners, should be recognised as suffering from an industrial injury.
Miners suffer from many industrial diseases—for example, pneumoconiosis and silicosis—which are recognised as being industrial illnesses. However, some are not. Unfortunately, emphysema falls into the latter category. The reason is that there is insufficient evidence to show that it is an occupational rather than a generalised disease. Recent research has shown that emphysema should no longer be classified in this way. It must be put alongside industrial diseases in the primary class, and thereby enable sufferers to receive compensation. As a result of the overwhelming research carried out in this sphere, it is unlikely that subsequent research will reveal anything new. In October 1982 I presented a detailed list of research. I do not intend to cite that detail again. I assure the House that it was scholarly and decisive.
Yesterday morning I received a letter from a constituent who is a consultant in respiratory diseases. He referred to the case of a non-smoking miner who was refused compensation by a pneumoconiosis panel. The same panel deals with cases of emphysema. He considered that the panel's reasoning for refusing compensation was poor. The letter states:
"Whilst I would accept the assessment of the pneumoconiosis panel that this man only qualifies for 10 per cent. compensation with regard to pneumoconiosis, I think that his respiratory disability is almost entirely related to his work in the colliery, and as such that it severely limits his exercisability.
I would strongly support his claim to receive further compensation on the basis of an obstructive airways disease related to the pneumoconiosis."
I challenge the authority of the pneumoconiosis panels. Rumour has it that many such panels consist of retired medical practitioners who need ready cash. I wonder how many members of the panels in Sheffield or in other parts of the country have specific qualifications in respiratory research or have attended courses on this subject in the past five years?
An editorial in The Lancet in March, which relied on a body of recent research, stated that emphysema in coal workers was an occupational illness and that sufferers should receive compensation. All hon. Members are aware that The Lancet has great authority. Eight months have

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passed since the article was published, yet no champion has come forward in its columns to challenge that opinion. We should heed what the article says.
Armed with that information, I approached the then Minister for Social Security. I asked if he would list the research used by the industrial injuries advisory council as I wished to compare it with my research. He said that to review all the evidence used by the council would be impracticable.
Miners are practical men and mining is a practical occupation. Emphysema is a physical condition of practical miners. It behoves me, as an ex-miner, to ask whether any practical clerk can produce such a list. The reason why such a list cannot be produced is that it is undesirable, rather than impracticable, to show that the civil servants have not seriously reviewed the new research.
At the beginning of 1982, I presented two Bills which rested on research conducted in the 1980s. The House requires an answer to the question: why are coal miners 10 times more at risk from emphysema than the rest of the general public? The total compensation award for sick miners would in the first year cost about £2·25 million. Such a sum is coppers compared with the amounts involved in producing nuclear warheads.
On 22 March I told the House that academic research had established that coal miners are 10 times more at risk from emphysema than other members of the general public. That fact has still to be challenged. I challenge any member of the medical profession to refute my statement, but only after in-depth research. I challenge the Government to institute in-depth medical research and to provide evidence to the industrial injuries advisory council. If the Government are not prepared to acknowldge my evidence, they should set up an investigation to show that The Lancet editorial is fallacious.
Question put and agreed to.
Bill ordered to be brought in by Mr. Geoffrey Lofthouse, Mr. Roy Mason, Mr. Alec Woodall, Mr. Peter Hardy, Mr. J. D. Concannon, Mr. Allen McKay, Mr. William O'Brien, Mr. Martin Redmond, Mr. Terry Patchett, Mr. Walter Harrison, Mr. Kevin Barron and Mr. Alexander Eadie.

Emphysema (Compensation of Coal Miners)
  EMPHYSEMA (COMPENSATION OF COAL MINERS)
  Mr. Geoffrey Lofthouse accordingly presented a Bill to provide compensation for mineworkers under the Industrial Injuries Acts for emphysema: And the same was read the First time; and ordered to be read a Second time upon Friday 9 December and to be printed. [Bill 60.]
Opposition Day

Pensioners
4.58 pm
Mr. Michael Meacher: I beg to move,
That this House regrets that this week's pension uprating is below the current rate of inflation, leading to a significant loss in purchasing power for over nine million pensioners; and calls upon Her Majesty's Government to reverse its damaging and increasingly discredited economic policies which are depriving pensioners of the higher living standards they deserve.
It is often said that it is by its treatment of its elderly people that a society should be judged. I agree with that, and we approach this debate in that constructive spirit. The Opposition chose this issue partly because we want to draw the nation's attention to the re-emergence of mass poverty in our society. Today, more than 7 million people are wholly dependent on means-tested supplementary benefit for their survival. That is 60 per cent. more than four years ago, and a great many of those people are pensioners. Altogether roughly two out of every three pensioners are living in poverty, or on its margins.
One of the prime signs of the poverty that millions of pensioners face is that they are increasingly forced to choose between food and heating. I shall cite just one example that I found in the newspaper. It is not in any way exceptional. Indeed, I fear that it is wholly typical. The article states:
"Mr. Frederick Moody, an 82-year-old pensioner, survives in his bed sitter by keeping an electric heater half switched on for just eight hours a day. He gets up at 10 am and is in bed by 6 pm. Even with extreme economy he has watched his autumn bills jump from £17 to £23 in the last two years since the Government let fuel bills rise."
Mr. Moody is being forced to try to solve the problem by staying in bed for 16 hours a day. Life is being increasingly reduced to that standard for millions of pensioners under this Government's regime.
What are the Government doing to help the millions like Mr. Moody? Two days ago the pension was increased by 3·7 per cent., an amount significantly below the inflation rate, which is now running at 5 per cent. or more. That means that the living standards of married pensioners will be cut now, and over the whole of the rest of the year by about £1 per week. In effect, married pensioners are being robbed of the equivalent of one week's pension in a full year. To most pensioners that is a significant sum.
I am sure that the Secretary of State will say that the shortfall will be made good at the time of the next uprating. He always says that, and no doubt he w ill say it again today. However that does not solve the main problem. Unlike the right hon. Gentleman and his colleagues, most pensioners do not have a pool of reserve capital on which to fall back in hard time. For pensioners, a cut is a cut. The increase, which is well below the rate of inflation, means a significant and big cut in the living standards of millions of pensioners. The Secretary of State may say that pensioners are protected because last year they received an increase above the going rate of inflation. He may say that they can use that excess to tide them over this year. However, if that is the argument, it confirms what the Opposition have always suspected—that the

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Chancellor of the Exchequer's change in March in the method of uprating was simply a backdoor manoeuvre to claw back the excess that he dared not take openly. The Government, then, have simply devised a system of getting their clawback without having to admit it openly.
Thus, whether we think of the meanness of the clawback or the enforcement of lower living standards, the fact remains that pensioners will be getting a bum deal this winter.
Mr. Andrew Bowden: I apologise for intervening so early in the hon. Gentleman's speech, and congratulate him on his new appointment. He will know of my interest in pensioners. I understood the hon. Gentleman to say that Mr. Moody would be faced with a quarterly autumn bill of something in excess of £23 or £24. Mr. Moody is 82 and is, therefore, almost certainly entitled to the highest level of heating supplementary benefit. How much would he get in one quarter at the new high rate of heating supplementary benefit?
Mr. Meacher: That is an interesting question. I do not know the answer, because I do not know the circumstances of the case. However, it is quite likely that Mr. Moody is one of the 2 million pensioners who do not get supplementary benefit and who are simply on rate and rent rebates. There are another 900,000 pensioners who are entitled to supplementary benefit; but who do not receive it. That means that there are nearly 3 million pensioners who will not receive the heating additions, because the additions are limited purely to those on supplementary benefit. I do not know whether Mr. Moody is one of them. However, more than half of all pensioners do not receive such aid, and it is quite likely that he is one of them. It would be more helpful if the hon. Member for Brighton, Kemptown (Mr. Bowden) told the Government that they should provide those 2 million pensioners with heating additions.
Mr. Ralph Howell: Does the hon. Gentleman agree that if Mr. Moody is not receiving that supplement he must have other means that exclude him from supplementary benefit?
Mr. Meacher: The hon. Gentleman comes from a class that certainly does have other means. He should not assume that other people are necessarily like him. However, the newspaper article further states that Mr. Moody
"fits into the national picture of pensioners—he pays his bills on time, tries to keep down his total bill below £2 a week and is not sure whether he should be entitled to charity.
Mr. Moody is certainly one of those who does not want to have to claim. He wants benefits as of right, and so do we. That is how pensioners should be assisted.
I have described the situation facing 9 million elderly people. However, something much more fundamental is at stake. It is not a question of whether the Government have maintained the pension in line with inflation. That is what the Secretary of State keeps coming back to. The question is whether pensioners have shared in rising living standards. That is the essential issue and it is a central part of our case, because under this Government they patently have not done so. In case the Secretary of State thinks that I have chosen the criterion for my own purposes, I should
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point out that the Opposition did not choose it themselves. It was originally accepted by the Government. In 1979, the former Secretary of State said:
"My right hon. Friends and I have repeatedly committed ourselves to ensure that pensioners share in rising prosperity."—[Official Report, 20 December 1979; Vol. 976, c. 903.]
That is what was said four years ago, but it clearly has not happened. Since that statement was made, the record on every count belies it. Ever since then, the Government have consistently used clawback in one form or another precisely to prevent that from happening. In November 1980, the uprating was delayed for two weeks, which cost the pensioner couple £12.30. That loss was never made up. In November 1981, the Government clawed back 1 per cent. so that pensioners would not be permitted even to keep a meagre 25p a week. In November 1982 the pension uprating again turned out to overrun estimated inflation, and again the Government threatened to use clawback to obtain the extra sum. A more deliberate, calculated and persistent policy of nailing pensioners down to the floor of inflation could scarcely be devised.
The Government's promises to pensioners are not worth the paper that they are written on. Rather than honouring their word and trying to meet the targets which they rightly announced when they first came to power, the Government cynically changed those targets on the principle that if it is not possible to score a goal shift the goalposts. That is what the Government did. They dropped higher living standards as an objective for pensioners. They then proclaimed that price-matching was the height of their ambition and, having achieved that, claimed to have scored a major victory. Big deal. As the British Pensioners Action Association said recently, on being told that pensioners had been awarded an extra 5p under the so-called Rossi price index, "Do not spend it all at once".
I accept that, like the Labour party, the Tories are sincere when they say that they would like pensioners to enjoy higher living standards. The difference between us is that the Labour party did something. In five years of Labour Government the pension increased by 20 per cent. in real terms. In nearly five years of the Conservative Government the pension has increased by only 3 per cent. in real terms and that includes this week's uprating. Even that tiny margin of improvement will almost certainly be eroded by inflation in the next 12 months. That is the measure of the difference in performance between the two parties.
The truth is that pensions are no more safe in the Prime Minister's hands than is the National Health Service. Pensions are not safe in the Prime Minister's hands because she cannot resist tampering with them. Her most serious act of interference was committed in 1980 when she broke the link that Labour made between pensions and the rise in prices or earnings, whichever was the greater. At a stroke, pensions were decimated and have remained so ever since.
If Labour's method of uprating had been preserved, the single person's pension would now be £2.95 higher and the pension for a married couple would be £4.65 higher. Those are large sums of money for most pensioners. As a result of the Government's shabby manoeuvre, since 1980 pensioners have been robbed of about £2 billion. That is the extent of the Tory Government's meanness towards elderly people.
Mr. Peter Lloyd: With regard to the Labour Government's method of uprating—by prices or

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earnings, whichever was the higher—will the hon. Gentleman confirm that that is what the Labour Government did each year that they were in office? I have a strong impression that they broke their promise.
Mr. Meacher: The hon. Gentleman is not on to a good point.
Mr. Lloyd: I am.
Mr. Meacher: What matters to pensioners is the result, not the procedure or the method. They are worried about cash in the pocket and how much it increases their prosperity. The fact remains that, at the end of five years under Labour, pensioners were 20 per cent. better off in real terms as compared to 1974. Under the Tory Government, they are a mere 3 per cent. better off. At the end of next year they will be 0 per cent. better off.
Mr. Robert McCrindle: Since the intervention made by my hon. Friend the Member for Fareham (Mr. Lloyd), the hon. Gentleman has made considerable play of how much better pensioners did under the Labour Government. Has he calculated how much better still they would have done if the Labour Government had not failed to reach their policy target in four of the nine years in which it was in operation?
Mr. Meacher: I am glad to harness the hon. Gentleman to the Labour Government's objectives. As he is so anxious that pensioners should be rewarded as richly as he would appear to believe, I am sure that he will support the Opposition, as that is the best way in which to achieve the objectives that he mentioned.
The Opposition are aware that big increases in the real value of pensions, such as Labour achieved, must be paid for.
Mrs. Elaine Kellett-Bowman: Will the hon. Gentleman give way?
Mr. Meacher: In a moment.
The Government sometimes argue—no doubt the Secretary of State will do so again today—that however much the Government might like to make substantial increases in pensions, the necessary resources are simply not available. I must tell the Secretary of State that such preening of the conscience would be far more credible if such resources as the Government command were used to reduce poverty and not to enhance wealth. Nye Bevan said that Socialism is the language of priorities. It is. However, the language of priorities also gives meaning to capitalism. The Government's priorities are all too plain. In 1980 they chopped £500 million by uprating pensions and other long-term benefits in line with prices only. They chopped £100 million by deferring the 1980 uprating for two weeks. They chopped another £500 million by abolishing the earnings-related supplement and by other changes in the Social Security Act 1980.
Mrs. Kellett-Bowman rose—
Mr. Meacher: They chopped another £200 million through the 1 per cent. clawback in November 1981. In every case—
Mrs. Kellett-Bowman: Will the hon. Gentleman give way before he leaves chopping?
Mr. Meacher: I shall chop the hon. Lady out of any right to speak if she continues to break in.
Mr. Kellett-Bowman: The hon. Gentleman is afraid.
Mr. Meacher: In each case, the Government reduced aid to pensioners and other people who are among the poorest people in Britain. The total cut amounted to £1 ·3 billion. How was the money that was clawed back from pensioners and the poor used? It is perhaps no coincidence that that sum was almost exactly the same as the value of the tax handouts that were given away to the rich in the 1979 and 1983 Budgets. In other words, £1·4 billion was given away in reductions in the higher tax rates and rises in the higher tax thresholds.
Mrs. Kellett-Bowman: Will the hon. Gentleman give way now?
Mr. Meacher: No.
Bearing in mind Government accounting conventions, I am the first to admit that there was not a straight swap from one to the other, but that was unquestionably the effect. Under the Government the poor have got poorer and the rich have got richer. There can be no doubt about that and it has happened on a big scale.
Mrs. Kellett-Bowman: Is the hon. Gentleman aware that many of my constituents have managed to put away a certain amount of their income for a rainy day or for their retirement? They have done that throughout their working life although they were not well paid as it is not a well-paid area. Will the hon. Gentleman express the regret that he should feel that the Government whom he supported chopped their savings in half?
Mr. Meacher: I am glad that the hon. Lady is getting so worked up about private pensioners with modest private pensions.
Mrs. Kellett-Bowman: I am talking not about them but about elderly people who have put money away out of an honest income.
Mr. Meacher: I am also talking about elderly people who saved up modest pensions.
Mrs. Kellett-Bowman: Not pensions but small lump sums.
Mr. Meacher: Perhaps the hon. Lady is as worried as the Opposition that the Government decided in Cabinet—apparently they did not understand what they were doing but perhaps that is the normal way in which they make decisions—to make major cuts in the private pensions of occupational pensioners.
Mrs. Kellett-Bowman: So the hon. Gentleman does not like that?
Mr. Meacher: I am desperately opposed to that cut. If the hon. Lady were a little more genuine and a little less partisan she would join us in condemning the Government for what they have just done.
Mr. Dennis Skinner: My hon. Friend should be aware that, when he is dealing with the hon. Lady, she is likely to be envious of the fact that he is advancing an argument for increasing pensions because she has just suffered the bad result, so I am told, of having her European seat taken away from her. She is therefore losing more than half of the expenses that she has been picking up.
Mr. Meacher: My hon. Friend has the knack of putting his finger on a matter.
Mrs. Kellett-Bowman: On a point of order, I14r. Deputy Speaker. May I refer you to the remarks made by

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the hon. Member for Bolsover (Mr. Skinner). I have clearly stated my intentions throughout my term, but the hon. Gentleman has complained that I should not be in Europe—
Mr. Deputy Speaker (Mr. Harold Walker): Order.
Mrs. Kellett-Bowman rose—
Mr. Deputy Speaker: Order. The hon. Lady knows that that is not a point of order.
Mr. Meacher: The hon. Lady has managed to combine a misunderstood intervention with a bogus point of order. I suggest that she stays in Brussels.
It does not wash when Ministers, such as the Secretary of State, loudly proclaim their integrity, as the right hon. Gentleman has done many times over the past few months. They say that although this has been the worst slump—we agree with that—since the 1930s, nevertheless they have done the decent thing and stuck by the pensioner, but there is not any more money available. The fact is that the record gives the lie to every word of the Government.
I hope the Secretary of State will pay attention to me as I examine what has happened under this Government, on the one hand to the pensioner and on the other to a director paid at the Secretary of State's level. In 1979, the pensioner got an extra £3·80 a week in the uprating. A director got an extra £74 a week from the Budget. These are not my figures but the Government's figures from Hansard of 21 November 1979, column 227. That £74 a week would be a fortune for pensioners, but that is the priority of the Government in our society-0 for the pensioners and £74 for the directors. This was not a one-off exercise in the first year—the exuberance of the new Government. In 1980, the pensioner got £3·85 and the director an extra £9·33 a week from the Budget. Again, these are the Government's figures from Hansard 23 April 1980, column 146. In 1982, the pensioner got an extra £3·25, and the director and extra £10·67 a week from the Budget. These are again the Government figures in Hansard of 20 April 1982, column 60 It was not that the money was not available, but that under capitalism—and Thatcherism is a reversion to unreconstructed capitalism—pensioners do not count high in the priorities. That is what this is about.
It is not only the present pension provision, but the future pension entitlement that is under threat from the Government. The best deal that pensioners ever had was provided by Labour's 1975 earnings-related pension scheme, and I pay a warm tribute to my former colleague, Brian O'Malley, for that. When the scheme is fully mature in 1998, a married man on average earnings will receive a pension of over half his gross earnings, and a single person on similar earnings will receive a pension of around 40 per cent. That is a huge step forward. However, such is the Government's lust for cuts that this excellent scheme is subject of an unspecified threat.
In his New Society article a month ago the Secretary of State said:
"We will be announcing a major inquiry into pensions soon."
We all know what Government inquiries into health and social security matters are about, and I understand that his officials were none too pleased about the right hon.
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Gentleman's disclosure, so no doubt there is trouble brewing. The interviewer asked the Secretary of State a straight question, which was:
"Can you give an assurance that the earnings-related scheme will be preserved in its present form?"
The Secretary of State gave a characteristically evasive answer and said:
"The aim is to try to come to an objective view of what the cost of it is going to be and to look at the other side—what standard of living people in retirement should be entitled to."
I have news for the Secretary of State. People are entitled to receive what they have contracted and paid for, and nothing less. The truth is that this scheme is a solemn contract between the generations. Will the right hon. Gentleman give an unequivocal and public commitment that he will not interfere with it? In particular, because this rumour is rife, as the Secretary of State must know, will he explicitly deny the rumours that the Government are contemplating cuts such as discontinuing the right of a widow to go on receiving the pension on the basis of her husband's contributions? Surely, there are some things that are sacred even for this Government. I hope that the Secretary of State will give that answer.
The reality is, as my hon. Friends seem to believe, that wherever the Government's eye turns on matters affecting pensioners, nothing is safe from them, whether the threat is cuts in services, removal of concessions, higher charges on essentials, or simply inactivity where reform is needed or was promised.
Let us take the pension earnings rule. In 1979, the Tory manifesto pledged the Tory party to phasing out the earnings rule in the lifetime of Parliament, but nothing was done. The pledge was repeated in the 1983 Tory manifesto and so far nothing has been done again. Even this latest increase this week has still not returned the value of the pensioners' earning rule to the real level at which it was held in May 1979 when the Labour Government left office.
Mr. Sydney Bidwell: What has not emerged is that there are many pensioners, particularly the older and more dignified ones, who simply will not go for supplementary benefit even though the value of their state pension has been eroded. This is the reality. They will live in the same conditions as in the case cited by my hon. Friend at the beginning of his speech. Those are the facts, and the pensioners are not fools. Those who live close to them, and Labour Members in particular have these cases coming to them all the time, are not fooled either. The Government will reap the whirlwind in consequence of the pensioners' movement against the Government.
Mr. Meacher: That is an important point. There are about 1 million pensioners who, for their own good reasons that we all understand, and for the sake of their self-respect, are unwilling to accept what they see as help. They will accept benefits only as a right. It is for that reason that we are so concerned that the pension has simply been kept up in line with prices and not with earnings. Had it been kept in line with earnings, even those 1 million would have had a steadily increasing income. My hon. Friend is making a point about which we should all be concerned.
Let us also take the example of the death grant, which is deeply symbolic of the yearning for dignity of millions of elderly people. In March 1982, the Government issued a consultative document on the subject, which represented

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a typically mean response to the problem. No new resources would be committed to the grant. Instead, they proposed the restructuring of the existing expenditure on a means-tested basis. I warn the Secretary of State that this is totally unacceptable. The right hon. Gentleman might as well withdraw that consultative document. The Labour party will increase the grant and keep it as a benefit as of right, and it will take action to control funeral prices, which have soared during the past few years. I am convinced that that is the right solution.
Hon. Members on both sides of the House will recognise that mobility is a crucial part of the health and well-being of pensioners. In London, 1 million pensioners have claimed bus passes, yet Age Concern was so troubled by the Government's White Paper on public transport that it was moved to say, with good reason, that the future of free public transport for the elderly in London is now at serious risk.
Mr. Charles Kennedy: The hon. Gentleman will recognise that the alliance has given considerable support to the points that he makes against the Government, but I should be interested to hear how the Labour party, were it returned to office, would finance those proposals. During the election campaign in the summer the shadow Chancellor, who would presumably have been Chancellor in a Labour Government, disowned most of the economic policies on which the Labour party fought the general election.
Mr. Meacher: One could ask a similar question of the SDP, but since that party will never be elected to office it does not matter. It is little use to make promises. What really matters is the record, which shows that the Labour Government made available to pensioners, in the state pension and in other ways, much more money than has been given to them before or since then.
The Secretary of State for Social Services (Mr. Norman Fowler): The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) has made a fair point. Is the Labour party pledged to the precise promises that it made about pensions and related spending during the election campaign?
Mr. Meacher: The right hon. Gentleman must await our statement of policy, which I hope will be produced soon. However, I assure him that the Labour party will devote considerably greater resources to pensioners than he has managed to do.
It is widely accepted on both sides of the House that heating costs for the elderly have become a scandal. There is good reason to believe that the number of pensioners who die from hypothermia is much greater than we see in the official records. However, leaving aside the headlines about hypothermia deaths, surveys have shown that more than one quarter of the elderly—or 2·5 million people—will have living room temperatures this winter below the level at which employers would be liable to prosecution under the Offices, Shops and Railway Premises Act 1963. Fuel prices are critical for old people, since the proportion of their budget that is devoted to heating is almost double that of other households. Pensioners have been nothing less than devastated by rocketing fuel prices during the past three or four years. During that period pensions increased by 68 per cent., but electricity prices increased by 84 per cent. and gas prices by no less than 116 per cent.
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The Government are condemning millions of pensioners to a life in the cold. That is why, under this Government, more and more pensioners are forced to make the fundamental choice between eating and heating. It is a national disgrace.
Mr. McCrindle: The hon. Gentleman has expressed indignation about heating costs. Can he explain why, in constant 1982–83 prices, the total amount of expenditure on heating costs under the Labour Government in 1978–79 was £201 million, whereas under the Conservative Government in 1982–83 it had increased to £325 million?
Mr. Meacher: The hon. Gentleman forgets to take into account the fact that there are many more pensioners today than there were in 1979. If he works out the sum on a per capita basis, I suspect that there will be little difference in the figures.
The housing benefits scheme—which is a polite euphemism for an administrative mess—has been a disaster. More than 1 million pensioners have lost benefit, and one sixth of them have lost more than 75p a week, which is no mean sum for a pensioner. Far from simplifying matters, this scheme has spawned a system that is difficult and expensive to administer, and incomprehensible to most of those whom it is supposed to help. The hon. Member for Lancaster (Mrs. Kellett-Bowman) failed to recognise that the Chancellor has made matters worse because of the cuts in housing benefit that he announced in his autumn statement last Thursday. They will especially hit elderly people with a modest occupational pension, who may suffer cuts of up to £5 a week. There must be something radically wrong with a scheme that leads to old-age pensioners who have not owed a penny in rent in their lives suddenly being in rent arrears of £400.
I quote only one example of the chaos and anxiety that the scheme has produced:
"Until last November the Shaws paid their £18 a week rent from their pensions, which was topped-up with a payment from the DHSS. Then they got a letter telling them to stop paying rent. They did as they were told and their pension was cut by £13 a week as the rent was now paid direct to the council. At the beginning of February the Shaws got a letter from Birmingham Council, threatening them with eviction because they were behind with their rent. Horace, an 80-year-old retired railway guard who has never been in debt in his life could not understand it, so he telephoned the council. Nothing happened until May, when the Shaws saw their local councilor. The housing department said everything had been sorted out, but the next month the Shaws got another letter telling them that they were £365 in arrears. And later in the month the council told them to pay these off at £2 a week."
That is pretty rich for those who simply did what they were told.
Mrs. Jill Knight: Will the hon. Gentleman accept that the Members of Parliament for Birmingham have taken up some of the cases to which he quite fairly referred? There has been much worry, but it was caused by difficulties at the beginning of the scheme, which have now been sorted out. Does he agree that it is infinitely better that the rent should be paid direct either to the local council or to the private landlord, because before this scheme rents were often not paid?
Mr. Meacher: The hon. Lady is wrong to say that the matter is almost settled. Tens of thousands, if not hundreds of thousands, of pensioners are still suffering from chronic

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anxiety. Rent arrears in the Anchor Association have soared to unprecedented levels and are only gradually decreasing.
I am glad that the Minister for Health is in the Chamber, because I wish to deal with the cuts in health and personal social services. Elderly people, more than anyone else, will bear the brunt of the health cuts, and for them the consequences will not only be those set out in our motion—lower living standards. There will also be the loss of the care on which they depend and which they desperately need, and unquestionably for some it will mean premature death. Last Friday I visited Thornton Heath hospital in Bradford, of which the Minister will be aware, where 70 frail elderly patients are looked after lovingly by staff whose devotion to them led them to occupy the hospital. Now it is threatened with closure by the so-called Lawson cuts. It is the only home that those elderly and helpless patients know. If the Government cuts force its closure, and that of many similar hospitals, it will almost certainly mean that half of the patients will die within about three months. That is what happened when the Government forced the closure of St. Benedict's hospital, and the story is being repeated all over Britain. The elderly are suffering, and the consequences are tragic.
Is that what we have come to in Britain? Do not the pensioners, who have served Britain with their labour for all their lives, deserve better from us? Are not the indignities and deprivations that I mentioned, and the multiple hardships that are being heaped on millions of pensioners, an indictment of the nation and of this Government, who have made it all too clear that their priority is to stuff the pockets of the rich with gold, even if it means that the elderly and the poor go without food and suffer the cold?
We believe in a better society, a society where pensioners share in rising living standards, where expanding health and personal social services provide a base for security and dignity in old age, and where the needs of the elderly are not sacrificed to the interests of those who have wealth and power. It is because we not only believe in that but have shown in the past how on each count rhetoric can be matched by action that I call on all my right hon. and hon. Friends and all other hon. Members who share our ideals to vote for our motion tonight.
Mr. Deputy Speaker: I inform the House that Mr. Speaker has selected the amendment standing in the name of the Prime Minister.
5.40 pm
The Secretary of State for Social Services (Mr. Norman Fowler): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
"congratulates Her Majesty's Government for successive increases in retirement pensions which have increased the purchasing power of nine million pensioners since 1978–79; recognises the success of this Government's economic policies in reducing and controlling inflation; and notes that the greatest single threat to the security, savings, and living standards of pensioners would be the reversal of these policies."
I again welcome the hon. Member for Oldham, West (Mr. Meacher) to his new job and to his first debate in that capacity. He comes to these debates with a record of his
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own, because he was a junior Minister at the Department of Health and Social Security in the Labour Government between June 1975 and April 1976. That period was significant for pensioners in a number of ways which it appears have temporarily escaped the hon. Gentleman's memory.
First, my hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight) was right in what she said. The hon. Gentleman did not say much about the rate of inflation during his time at the Department of Health and Social Security. During that period, inflation was destroying pensioners' savings at a record rate. It was the highest inflation rate for generations. During his period at the DHSS it reached 26·9 per cent. So the hon. Gentleman is uniquely qualified to talk about the effects of inflation on the pensioner.
Secondly, there was the matter of the Christmas bonus. The hon. Gentleman did not mention that, although he mentioned virtually everything else. Opposition Members now say a great deal about increasing that bonus, but it should be remembered that in 1975 and 1976 the Labour Government did not pay a Christmas bonus at all.

Thirdly, and most significant—this is particularly important, bearing in mind the hon. Gentleman's remarks about cynically changing the system—he did not say that during his time as a Minister at the DHSS Ministers decided to change the uprating basis. They decided to switch from the historic to the forecast method. That meant one thing, and one thing alone: they did not pay pensioners for the period when inflation was at its highest. As a result, the Labour Government, who should have paid 21 per cent. on the historic method, paid 15 per cent., thereby saving themselves £500 million. At today's prices that is more than £1 billion. Therefore, we shall not take lectures from the hon. Gentleman.
Mr. Meacher: No doubt the Secretary of State has had Conservative Central Office, as well as his Department, working flat out to find criticisms, so I hope he will accept that what he has said is remarkably feeble. Bearing in mind the three criticisms that he has made, will he confirm that pensions rose by 20 per cent. over and above inflation during the Labour Government's five years in office and that under his Administration and that of his predecessors pensions rose by 3 per cent.?
Mr. Fowler: If the hon. Gentleman regards the three criticisms that I made of his record as feeble, I should tell him that there are many other criticisms that we shall make of it. It would be a mistake for the House to believe that in his period at the DHSS he was seen as the unquestioned hero of the pensioners. I quote from The Times of 11 March 1976, which, for the hon. Gentleman, had the rather unpromising headline:
"Minister shouted down at pensions rally."
The report says:
"old age pensioners shouted down Mr. Meacher, Under Secretary of State at the Department of Health and Social Security, yesterday as he tried to explain the Government's record on pensions."
Before the hon. Gentleman claims that it was a meeting of retired Conservative agents, I should point out that it was a rally of 2,000 pensioners from all over the country, and it was organised by a trade union action committee. The hon. Gentleman has a great deal to be modest about on his own record, and we on the Conservative Benches do not feel inclined to take lectures from him.
Mr. George Foulkes: Before the Secretary of State leaves the three points of criticism, one of which was the Christmas bonus, will he be announcing an increase in the Christmas bonus? Is he aware that to maintain it at the level at which it was introduced it should now be £38? Will he accept the early-day motion that was signed by many of his colleagues, including the hon. Member for Watford (Mr. Garel-Jones), who has conveniently disappeared? Ah, there he is! Will the Secretary of State announce an increase in the Christmas bonus today, because this is the perfect opportunity?
Mr. Fowler: The hon. Gentleman's eyesight is about as bad as his points. My answer is that we have no intention of abolishing it this Christmas, which is what the hon. Member for Oldham, West did.
Mr. Simon Hughes: Before the Secretary of State leaves the subject of meeting pensioners, is he prepared to say that he will leave the doors of his office and come and meet the hundreds of pensioners in Southwark who today said that the Labour Government's record was inadequate, but that this Government's record was considerably worse? Does he accept that pensioners in Britain are worse off than pensioners in any other state in the European Community?
Mr. Fowler: I shall do a deal with the hon. Gentleman. Rather than leaving the doors of my office, I will open the doors of my office and he can bring a delegation of pensioners to see me.
Mr. Hughes: The only problem is that the Minister's colleagues might be a little perturbed to see 700 pensioners coming up the escalators at Alexander Fleming house. However, if the offer is on, I shall certainly accept it.
Mr. Fowler: The offer is on, and I should be delighted to see a representative delegation.
I say that Conservative Members are not prepared to accept lectures from the hon. Member for Oldham, West for three major reasons. First, the motion that stands in the name of the hon. Gentleman and his colleagues is headed:
"Pensioners' Loss of Purchasing Power."
The hon. Gentleman in his speech ranged from the new method of uprating to the changes in housing benefit. I shall come to those points, because they are clearly important.
If this debate is about living standards, I should have thought that the hon. Gentleman's starting point would have been the rate of inflation. The fact that inflation is down to levels not experienced since the 1960s is surely one of the Government's main dramatic achievements and contributions to the living standards of retired people who, all too often in the past, saw their savings slashed in real value. The single greatest threat to the financial security of old people is the prospect of a return to the levels of inflation which so ravaged the country in the mid-1970s.
There was a period when that fact was recognised by the Labour Front Bench. The White Paper "The Attack on Inflation" published in July 1975 noted that prices had risen by 25 per cent.
In unequivocal terms it declared:
"This must not go on. Failure to control inflation would mean massive and indiscriminate cuts in public expenditure with crippling damage to the social services. Success in controlling inflation is the best guarantee against this."
That statement is as true today as it was then.
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The tragedy of the Labour party is that the bitter truths that were learnt then have been forgotten, but the people of this country have not forgotten that the previous Labour Government presided over a rise in prices of 110 per cent. That is particularly true of retired people who, as my hon. Friend the Member for Edgbaston said, saw the real value of their savings eroded and the security of their fixed incomes shattered.
It is fair to say that retired people expect the Government to protect their savings, and I believe that the Government have a duty to do that. It is not enough for any Government to say that they have kept national insurance pensions in line with the cost of living index and to ignore the rate of price increases. If inflation rises at 20 per cent. a year, that not only erodes savings and eats into occupational pensions—many occupational pensions are not index linked—but it destroys the base of industry from which the resources for social provision can come.
Any Government who are serious about maintaining pensioners' living standards must also be serious about reducing inflation in this country. The public can judge for themselves in which party they have the most confidence.
I cannot accept the charges made by the Opposition, even on their own terms. I accept that the Government have responsibility to provide not just for national insurance pensions but for extra help for those who need it. The facts are that, in spite of the worst recession since the end of the second world war, we are currently spending £35 billion a year on the social security budget. As a result of the Chancellor of the Exchequer's statement last week net spending next year will increase to almost £37 billion. By any standard, that is an enormous budget, amounting to nearly 30 per cent. of all public spending. Over half of that is devoted to pensioners and the elderly.
Mr. David Winnick: Does the Minister accept that the increases in fuel prices will be a nightmare for many pensioners during the winter? Do the Government intend to help any of the 2 million pensioners who are not on supplementary benefit but are in receipt of rent and rate rebates and do not receive a penny towards their fuel bills? Does he recognise the hardship, nightmares and agony suffered by those who cannot afford an increase in fuel prices? The price of gas has increased by 116 per cent. during the past four years, which is double the increase in the retail price index.
Mr. Fowler: I recognise those problems. I hope that the hon. Gentleman recognises that expenditure on heating additions will be about £100 million more this year in real terms than during the last year of the Labour Government.
It is important to say that the improvement in benefits payable from this week means that the Government have more than fulfilled their pledge to protect the real value of pensions. This week's uprating takes the pension 75 per cent. above the rate in November 1978. Over the same period the retail price index increased by about 70 per cent.
We have raised the capital limit for supplementary pensions by 20 per cent. to £3,000. We have also increased the single payments limit and introduced a £1,500 disregard of the surrender value of life assurance policies. In the last Budget, tax thresholds were increased, benefiting people on lower incomes and taking about 1·25 million people out of tax altogether—and many of those were pensioners. The hon. Member for Oldham, West will have heard the Chancellor of the Exchequer's statement

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last week. He will know, therefore, that we have made provision for not only pensions but other benefits—supplementary benefit, unemployment benefit and child benefit—which will be increased in line with prices next year.
Mr. Jeff Rooker: Will the Secretary of State assure the House that in operating the commitment that he has just given about the increase in benefit next year there will be no fudging of figures as in the cuts in this week's increase to pensioners with children and widowed mothers?
Mr. Fowler: There will be no fudging of figures. I can also give an assurance on one of the points raised by the hon. Member for Oldham, West about widows. We do not intend to change the position of widows.
Mr. Rooker: I said "widowed mothers."
Mr. Fowler: We had to make some economies in this year's budget. We made no secret of it. It would have been remarkable in a budget of £37 billion had we not. The hon. Member for Oldham, West must remember that expenditure on housing benefit currently amounts to something approaching £4 billion. It goes to almost 7 million households and affects 21 million people. The changes to come into effect next April will amount to less than 5 per cent. of total spending and will leave 6·3 million households receiving help. Moreover, we have specifically designed the changes to protect poorer households, and that includes the pensioners.
The hon. Gentleman made the further point that we have changed the system of uprating, from the forecast to the historic or actual method, to the disadvantage of pensioners. I have already touched on the reasons why we moved to the forecast system in the first place. If anyone wants confirmation of the motivation of the then Labour Government for that change, he has only to read the memoirs of the former Chief Secretary to the Treasury, Lord Barnett, who said:
"The reason was simple: with inflation forecast to show a substantial fall, if we had not made such a change, we would be increasing pensions and other benefits by nearly 30 per cent."
There is no doubt why the Labour Government moved that way. They moved for no reason other than to make a once and for all saving at the expense of pensioners. What also became clear later was that the forecast method with which they then lumbered the country was more often wrong than right. During the past seven years, forecasts have been wrong five times. Sometimes there has been an overestimate and sometimes an underestimate of inflation. The measure used to determine pensions and benefits for millions of people was shown to be three times more likely to be wrong than right.
So in the Social Security and Housing Benefits Act which we introduced in April this year, the system was changed and we returned to the actual method of measurement. In other words, we have the benefit of an exact measurement of inflation between May in one year and May in another, and that figure becomes available in June and forms the basis of the November uprating.
If I may say so, there is one significant difference between our proposal and what the Labour Government did in 1976. In 1976, the Labour Government made a once and for all saving. There was no way in which pensioners
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could ever catch up with the £500 million that they had lost. By definition, as the hon. Gentleman said, under our system if there should be an increase in inflation between May and the November uprating, it is automatically taken account of in the following uprating. These arguments were fully and extensively debated earlier this year, as the hon. Member for Birmingham, Perry Bar (Mr. Rooker) would be the first to confirm, not only in the House, but throughout the general election campaign. There was nothing hidden about the change.
There is one further important point that I should like to make. There are wider issues involving pensions policy. The decisions that we take now affect the entitlement of people in 20, 30 or 40 years' time. The hon. Member for Oldham, West is clearly right to be concerned about this year's uprating of national insurance pensions, but it is surely also right for him to be concerned about future generations of pensioners. There was little mention in his speech of occupational pensions.
At present 11·5 million people in this country are covered by occupational pensions. It is right that their interests should be protected as well, and that was at least part of the intention of the Social Security Pensions Act 1975. Like the hon. Member for Oldham, West, I pay tribute to Brian O'Malley for his work on that Act. The Conservative party, then in opposition, gave an unopposed Second Reading to that measure. We did so because on pensions policy it is necessary to have a degree of agreement between parties on the way ahead. Prior to that legislation various schemes had been put forward but had perished. There was the Crossman scheme and the scheme of my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph). We on this side of the House—and I was chief Opposition spokesman at that time—took the view that this uncertainty could not go on. We sought the views of the pensions industry, which overwhelmingly advised that we should proceed on the basis of the proposals contained in the 1975 Bill and that there should be a firm long-term basis for pensions development.
Mr. Bidwell rose—
Mr. Fowler: The result has been a partnership between the Government and the occupational schemes in the provision of pensions. That partnership has been to the overwhelming benefit of the public.
Although occupational pensions matters are generally negotiated and financed by employers and employees, the Government have a role to play in this area. Most employees in occupational schemes have no option but to join the schemes as part of their contracts of service. The Government, therefore, cannot turn a blind eye when members join schemes with apparently favourable terms only to find the unfairness of those terms should they later leave that particular job. Basically that is the position of early leavers at the moment. The problem is that someone who leaves a scheme and goes to another job often leaves behind him a pension entitlement, but that entitlement is frozen until the age of retirement. Alternatively, if he transfers his pension, the transfer value also reflects the frozen rights. I do not believe that that position can be justified. In its 1981 report the Occupational Pensions Board declared that it remained a fact that many early leavers lose and often lose substantially and that it cannot be just that early leavers from pension schemes should suffer in relation to those who stay.

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Because of this concern, in September I convened a conference on early leavers. I do not pretend that there is complete agreement, but there is now a wide consensus and acceptance that reform is needed.
Mr. Bidwell rose—
Mr. Fowler: Consequently the Government have now decided that it would be right to legislate at the next suitable opportunity.
The legislative changes we propose will be broadly on the lines of the Occupational Pensions Board's majority recommendation. They will require schemes to revalue pension rights of future early leavers up to the time when they take their pension by 5 per cent. a year or, if prices rise by less than 5 per cent., by that amount. Next week I shall be issuing a consultative document setting out the Government's proposals in greater detail, and I should like to have reactions and comments by the end of February so that we can keep open the option, which has many attractions, of legislating in the next Session.
Mr. Bidwell: We accept, because of the forward-looking projects with which the right hon. Gentleman has been dealing, that under any future Government pensioners, in relation to the rest of the country, will be better off because improvements in occupational pension schemes are proceeding apace. But the immediate problem involves those who had no chance of contributing in a substantial way to occupational pension schemes. Does the Minister accept that the more the value of the state retirement pension is eroded, flattened out or sustained, the greater will be the administrative costs of seeing whether people are entitled to supplementary benefit? The myriad extra benefits available to people struggling for dignity will mean more administrative costs. Has the Department taken that on board? I do not think that the previous Labour Government went into it exhaustively.
Mr. Fowler: The adequacy of pension provision now and in the future is a fundamental matter with which any Government must be concerned. I shall return to that point.
Mr. Meacher: The Secretary of State is apparently using the opportunity of the debate to make an important statement about the early leaver problem. Will he undertake to make a formal statement to the House, because there are many other issues, such as disclosure of information and the policing and regulation of schemes, on which the House has a right to question him? Will he make a statement on another occasion?
Mr. Fowler: I cannot give that undertaking, but it is fair in a debate on pensions for me to announce the Government's pensions policy. If I do not have many more interruptions, the hon. Gentleman and other hon. Members who wish to take part in the debate will have a full three and a half hours to go over this point. I will do what I can to provide further information to the hon. Gentleman. I stand by what I said. It is important in this area to have as much agreement as possible. I appreciate and understand that there will be differences between us on pensions policy, but it is important to try to seek as much agreement as we can.
A linked area in which we look for improvement in the operation of occupational pension schemes is the disclosure of information to members, to which the hon. Member for Oldham, West has just referred. It is
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important that members of pension schemes should not only be provided with full information about their individual rights, particularly when they change jobs, but have access to information about the general situation of the scheme, as revealed by the audited accounts, actuarial valuations, annual trustee reports, investment reports and so on. There should be as much information as possible. That was the subject of a further report by the Occupational Pensions Board in 1982. At the time of publication I said that the Government accepted in principle the need to legislate on the disclosure of information to members of occupational pension schemes.
I also announced the setting up of a working party of officials to consider the pensions law. I am considering its conclusions, which also cover the possibility of a register of occupational pension schemes, the need for trustees' and employers' responsibilities to be clarified, and the issue of supervision. I shall also pay careful attention to the outcome of Professor Gower's study on the protection of investors in, and beneficiaries from, pension funds. When I have seen those proposals—which I understand will be ready very shortly—I intend again to publish a consultative paper with the aim of starting the consultative process early in 1984 so that those disclosure measures might be included in the legislation proposed for early leavers.
That much has been decided for legislation on early leavers and disclosure. But one of the proposals that is now attracting a great deal of attention is the proposal that individuals, if they wish, may be given the chance to have their own personalised pensions. This includes the proposal for personal and portable pensions, which has been put forward by, among others, Mr. Nigel Vinson. The aim is to encourage schemes in which the individual member knows what his personal stake in the pension fund is and can identify the units of pension wealth that he has built up. At the minimum, this would promote greater interest in the development and investment of funds, but the ultimate aim would be that people leaving a job would be able to take with them the pension wealth that they had built up in that scheme.
The debate that has been opened up by this proposal for a portable pension scheme has demonstrated not only that the concept has considerable attractions to many people, but that there are considerable practical problems to be overcome. For example, there is the old problem and question of contracting-out conditions, and the whole issue of the employer's contribution. Nevertheless, I believe that this proposal deserves careful study, and it comes together with a number of other very important questions that will require decisions in the coming years in relation to state and occupational pensions. There are the questions of pension age, of the balance between the working population and the retired population and of demographic growth. Those issues will crucially affect the expectations of millions of people for 20, 30, 40 years ahead.
Accordingly, the Government believe that it is the right time to set up a special inquiry into provision for retirement, which I shall be chairing, which will study the future development, adequacy and costs of state, occupational and private provisions for retirement in the United Kingdom, including the portability of pension rights, and consider possible changes in those arrangements, taking account of the recommendations of the Select Committee on Social Services in its report on retirement age.

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The House has the benefit of the report of the Select Committee on Social Services on pension age, but the decisions to be faced could obviously involve substantial costs to be borne by future generations of contributors, and that cannot be considered in isolation from other pensions issues. The House will be debating the matter on Friday, when my hon. Friend the Member for Eastleigh (Sir D. Price) moves the Second Reading of his Bill on pension age. I shall tomorrow publish the Government's response to that Select Committee report, and that will make it clear that the report will form an integral part of the inquiry.
Another important issue concerns changes that might occur in the age structure of the population in the next 40 years, and, if I may say so, it is important to look carefully at the position. The present projections show a patchwork that falls as well as rises in the numbers of old people relative to the rest of the population. The number of people over 65, having risen by more than one third in the past 20 years, will now remain more or less stable as a proportion of the population until about 2010. Thereafter, indications are that the proportion of elderly people will increase quite rapidly.
Estimates of future pension costs must also depend on assumptions about matters such as the future age structure of the population. But they also depend on other assumptions—for instance, about price and earnings increases. I will illustrate this from the recent report by the Government Actuary on long-term pension costs—a subject about which the hon. Member for Perry Barr often talks. On the least favourable assumption about the real increase in earnings, the Government Actuary's report shows that class 1 contribution rates would increase from 15·4 per cent. now to 21·9 per cent. in 2025. On another assumption—that the real increase in earnings is in line with the historic growth of 2 per cent. and that the pension remains price-protected—the contribution rate would fall in the same period to 13·5 per cent. That underlines the importance of reviewing the whole position carefully before reaching conclusions, and that basically is what the inquiry will be about.
The membership of the inquiry will include Ministers from the other Departments most concerned, the Government Actuary and figures outside the Government. I am not giving a comprehensive list, but they will include people such as Mr. Stewart Lyon, president of the Institute of Actuaries; Mr. Marshall Field, chairman of the joint working group of the main occupational pensions organisations; and the eminent economist, Professor Alan Peacock.
There is I think one other important point to make. No one can doubt the public importance of pensions policy. These are important issues for public debate, and accordingly I shall conduct the inquiry as openly as possible. The public, employers, unions and pension interests will all be invited to express their views, and they will be free to make their evidence public. Certainly we will also expect to have some public sessions, but I do not envisage this inquiry going on for years. My aim is to produce conclusions—for example, on portable pensions—by the spring. I hope that the inquiry will be completed by next summer or autumn, and following that the Government will publish their conclusions as soon as possible.
Mrs. Jill Knight: Will my right hon,. Friend make sure that when the inquiry is at work it looks with a very jaundiced eye indeed at some of the figures that were put forward today by the hon. Member for Oldham, West (Mr. Meacher), who said that in Birmingham hundreds of thousands of pensioners were in difficulty over their rents—[HON. MEMBERS: "No."] I have checked the figures. Considering the size of the population of Birmingham and the fact that 40 per cent. of households may be receiving housing benefit, it would be impossible for the figure to be anywhere near that mentioned by the hon. Gentleman, even if no cases had been settled, but I know from experience that many have been settled.
Mr. Fowler: I am grateful to my hon. Friend. I am sure that the point she raised will be mentioned in the debate.
Provision for retirement is an issue in which hon. Members in all parts of the House have an interest. We have a duty to satisfy ourselves that the pension promises of today can become the pension payments of tomorrow. My aim in setting up an inquiry is not to call into question the fundamental pensions structure that was established in the 1970s with all-party agreement, and to which I was a party. Rather, it is to ensure that our pensions structure is soundly based, that it is fair as between contributors and beneficiaries as well as between all scheme members and that it continues to command the support of the community as a whole.
A responsible Government must look ahead. Only in that way can we be sure that successive generations of pensioners get the pensions that they need and deserve. We stand by what this Government have done for pensioners since 1979, and I want to see that record maintained for future generations of pensioners.
6.18 pm
Mr. Donald Stewart: The Secretary of State based much of his defence of the Government on the need to keep inflation down, and pensioners, like the rest of us, are happy to see inflation coming down. However, that is not sufficient to answer the charge that is being levelled against the Government in this debate.
Special housing, day care, residential and other facilities for pensioners are already inadequate. The social benefits system is already under strain and attack, and it also is inadequate. If there are problems now, there will be much greater problems in a few years. By 1986, there will a large bulge in the aged population, and in Scotland 864,000 people will fall into that category. In the following years, an increasing proportion of the population will be becoming elderly with a smaller proportion of the economically active population supporting them. If unemployment figures are not drastically reduced, the system will be even more insupportable.
The most suitable accommodation for the growing number of frail and elderly people in Scotland will be sheltered houses and, in some cases, residential care. Officially, it is necessary to have 50 sheltered houses per 1,000 people aged 65 and over. In my view, this is a gross under-estimation of needs, given the appalling housing conditions that many old people must endure.
According to "Scottish Housing Statistics" and the "Scottish Abstract of Statistics", the 1983 edition, 9,458 sheltered houses provided 15,500 places in 1981. I doubt that conditions have improved dramatically during the past couple of years. Perhaps the Minister will enlighten us on

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that point. According to projected 1986 figures for the elderly in Scotland, we shall need 56,200 sheltered housing places. That is judged by the official standard of 65 places per 1,000 people aged 65 and over.
The current level of pensions is scandalous. Old people have always been under-provided with pensions by Tory and Labour Governments. The Government's latest trick is extremely nasty. They decided that the increase in pensions which occurs in the autumn should be based on the inflation rate until May 1983. The rate of inflation until May 1983 was 3·7 per cent. Expecting that the rate of inflation would be higher in November 1983—it is now about 5 per cent.—the Government followed that decision and did the pensioners out of their money. Pension payments have fallen behind inflation and pensioners are now worse off for the third consecutive year.
The Government have sunk fairly low at times, but this must be one of the lowest and meanest tricks to date. This example of hypocrisy is outlined by the fact that the Government in their 1983 manifesto state:
"In the next Parliament we shall continue to protect retirement pensions and other linked long-term benefits against rising prices."
After this highway robbery, the unforunate pensioners are expected to be duly thankful to the Government for their Christmas bonus. With a Santa Claus like the Chancellor of the Exchequer, few pensioners can look forward to a happy new year in 1984.
Last year in Norway the state pension was equivalent to £49 for a single person and £80 for a married couple. This year, the figures were £52 and £82 respectively. Meanwhile, in Scotland, which is also an oil country—it is an oil-exploited country—pensions have been £33 and £53 respectively. The Scottish National party has long supported a substantial increase in pensions, at least to Norwegian levels, for our old people in Scotland. We have the wealth to do it. Only Westminster holds us back from implementing progressive social policies in Scotland.
It is bad enough for pensioners in England to cope with the present situation and the Government, but it is generally harder for pensioners in Scotland. There are two reasons. First, the price of everyday foodstuffs and other commodities is higher in Scotland. According to official answers given in the House, it is consistently 3 per cent. higher than the United Kingdom average. In some parts of Scotland, the price is considerably higher. In my constituency, in Benbecula, the cost of everyday shopping and services is 16 per cent. above the United Kingdom average. This level of price hardship is found elsewhere in rural Scotland. How can Scottish pensioners, never mind working people, cope with such a situation? Many pensioners are on supplementary benefits. In Glasgow, 27 per cent. of pensioners are on supplementary benefit. That shows how bad the situation is.
Secondly, heating bills are higher in Scotland. To heat a comparable house in Scotland to the same temperature in winter as in the south of England takes much more energy, and that must be paid for. In Glasgow, heating a comparable house takes at least 20 per cent. more energy, and in Aberdeen at least 30 per cent. more energy, than in the south of England.
The Scottish National party has often called for a cold climate allowance to be paid to pensioners and other households on supplementary benefit. The automatic payment of such an allowance would equalise living
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conditions for those in colder areas and would go a long way towards preventing the series of tragic hypothermia deaths about which we read in our constituencies every winter.
Other measures could be undertaken to enhance and improve the lives of our pensioners—the abolition of standing charges for pensioner households on gas and the introduction of concessionary television licences for pensioners. Surely that is not beyond the Government's resources, even in the present climate. When a Bill was introduced in October 1982 by the hon. Member for Barnsley, West and Penistone (Mr. McKay) and supported by my hon. Friend the Member for Dundee, East (Mr. Wilson) and me, no Scottish Tories, Liberals or SDP Members bothered to support it. No doubt, some of them were against it. In a country as potentially prosperous as this—although not at present because of our difficulties—the Government could surely go some way towards alleviating the hard struggle that nearly all pensioners are facing. I therefore support the motion.
6.27 pm
Mr. Robert McCrindle: As one who has for many years been at the forefront of those who see the need to improve the lot of members of occupational pension schemes who change their jobs, I warmly welcome the Secretary of State's announcement that he is contemplating legislation along the lines of the Occupational Pensions Board report that was made some time ago. There can be no doubt that, when mobility of labour is becoming increasingly important, the prospect of losing out pension rights is a serious disincentive. Having sometimes felt that I was fighting a one-man campaign, I am delighted that I have been able to persuade my right hon. Friend that the time is ripe to move forward. I could not have been more pleased to hear his announcement.
I am also pleased that the Secretary of State is to mount this wide-ranging inquiry into the future and status of pension provision and its financing. It is wise to encourage the public to engage in the widest possible discussion of the problems that lie ahead, although I in no way concede the point made by the hon. Member for Oldham, West (Mr. Meacher) that this is another way of saying that the Government are intent on cutting pension entitlements. We do not have to accept that to welcome the wide-ranging inquiry announced by my right hon. Friend.
The House will appreciate that I did not have any knowledge that the subject of portable pensions would be announced by the Secretary of State this afternoon. My right hon. Friend is right in wanting further inquiries into the advantages and—I must be fair—the disadvantages of this imaginative idea. He and I are united in the desire to increase what we choose to call the property-owning democracy by encouraging the development of one's own pot of gold. That can best be achieved by a measure along the lines of the portable pensions idea which has gained currency in 1983.
Pensioners' living standards are at the heart of the debate and a wide range of the main arguments will no doubt be rehearsed today. Front Bench spokesmen on both sides have certainly done that. I shall concentrate on three key issues, which I concede are among the most emotive of the topics to be discussed today—heating costs, concessionary bus fare schemes and supplementary benefits for the elderly.

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Hypothermia is not just an emotive word which conjures up feelings of revulsion and distaste in all parts of the House. It can be ended only if we continue to move in the direction in which, as I shall try to prove, the Government are already travelling. The essential element in the prevention of hypothermia is the provision of adequate heating. That may seem so obvious as not to need repeating. Nevertheless, it is important to stress that, and to emphasise that the Government's policy in the whole sphere of social service provision is to give priority to those in greatest need. There can be no doubt that people suffering from or threatened by hypothermia fall into that category.
Overall, the Conservative Government are providing more help with heating costs than did the Labour Government. I do not enjoy putting the argument in a partisan way, but as the hon. Member for Oldham, West, for perfectly understandable reasons, chose to argue in that way it is so some extent incumbent on Government supporters to reply in the same vein.
Mr. Archy Kirkwood: What about gas prices?
Mr. McCrindle: If hon. Members will be patient, I shall come to that. I make that comment not as a parliamentary device but because I intend to deal with gas prices shortly.
Basic heating additions are now paid automatically to householders on supplementary benefit who are aged 70 or over. That was introduced by the Conservative Administration in 1980. A heating addition is now paid to 90 per cent. of supplementary benefit pensioners. The Conservatives thus provide more help with heating costs in both real and cash terms than the Labour Government did, as I sought to prove with the statistics that I quoted in my intervention in the speech of the hon. Member for Oldham, West. There has been a substantial increase in the heating addition since 1978, with two higher rates being consolidated into one.
I promise not to bore the House with too many statistics, but one or two are helpful at this stage. The increase in the heating addition at November 1983 is 8·6 per cent. That is higher than the rate of inflation and takes into account the disproportionate rise in some elements of fuel costs. The basic rate in 1979 was 95p per week. It is now £2·05 per week. The higher rate was £1·95 or £2·85 in November 1979. It is now £5·05 per week. The increase of 8·6 per cent. will protect the poorest pensioners—those on supplementary benefit—against the rises in electricity prices.
I promised to deal with the gas and electricity price rises now in the offing. I make no secret of the fact that I should have preferred the prospective increases to be avoided, if that had been at all possible. Nevertheless, the increases are likely to be less than the rate of inflation. That may not justify the price rises, but it brings them more into perspective than is likely to be the case in speeches from the Opposition.
The news today that the electricity industry is considering efficiency improvements and economies which could prevent increases in costs is greatly to be welcomed. The Daily Telegraph reports that the electricity industry's review is evidence that not only will the Government have the right to insist on increased efficiency
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from nationalised industries but that efficiency can increase savings and thereby benefit pensioners as well as other consumers.
The right hon. Member for Western Isles (Mr. Stewart) raised the question of standing charges. This applies not only to pensioners on supplementary benefit but to all pensioners and other consumers. I shall concentrate on its effect on pensioners across the board. I ask the gas and electricity undertakings to recognise that if, as a result of Government decisions, it is necessary to increase gas and electricity charges the whole relationship of standing charges to the cost of these basic fuels to the consumer should be examined. I suspect that there can be no greater resentment than that felt by people on low incomes, be they pensioners or otherwise, who have economised in the use of gas and electricity but find that their bills are still dwarfed by the standing charges. If the cost per therm or per unit has to be increased, this is surely an opportunity for the gas and electricity undertakings to consider carefully whether a better balance can be achieved. If I am challenged to say whether that means a slightly higher charge per therm or per unit, I cannot have it both ways. I must concede that that is indeed my proposition to the House and to the gas and electricity undertakings.
Hypothermia is a particular problem at this time of year and the Government have taken steps to prevent pensioners from suffering its effects, but there are other areas of policy in which the Government believe that local authorities are more able than central Government to help. Transport is one such area.
As I have said before, I oppose a national concessionary fares scheme which would extend to all pensioners irrespective of their financial or physical circumstances. It is sometimes overlooked that such a national scheme, which would have to be paid for and might mean a reduction in benefits in other areas, would bring no benefit to the bedridden, to those who are disabled and unable to use public transport or to those who for one reason or another do not wish to use it. None of those people would obtain the benefit that is often adduced for the introduction of such a scheme.
In my ideal world we should press for disproportionately larger increases in the pension itself and leave behind the tendency in recent years to decide how pensioners ought to spend their money. That is not the function of Government. Ideally, the whole principle of such concesssionary schemes should be abandoned. I have to be a realist. I recognise, from experience of my constituency, the popularity of such concessionary schemes. I suppose that I shall have to accept that there is no way of terminating them, because they have become so much a part of the social fabric of pensioners' lives in many parts of the country.
The provisions of concessionary schemes can be arranged much better by local authorities. There will be envy if a pensioner resident in one local authority area gets poor concessionary rates, or, sometimes, none at all, when those living just along the road have a good scheme. I accept that there will be unevenness. Equally, I accept that what is necessary and possible in terms of the cost to the ratepayer will be much more easily ascertainable if the matter is kept in the hands of local authorities rather than introduced as a national scheme.
Mr. Donald Stewart: Does the hon. Gentleman accept that the provision of many schemes costs the local

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authorities nothing? The buses, trains, boats and, sometimes, aeroplanes, have vacant seats, and should be available for old-age pensioners.
Mr. McCrindle: I have heard that argument many times. I am fair-minded enough to recognise that there is something in it. With the greatest respect to the right hon. Gentleman, it does not go the whole way to answer the objections that I have tried to raise this evening. I have to say that, although there are superficial attractions in the introduction of a national scheme, it would be costly and unfair in some respects to a sizeable section of the population who could not take advantage of it.
For those reasons, and because local authorities are better able to assess the needs of their areas, I should much prefer to leave the matter in their hands. I hope that we shall not continue to add to the number of concessionary schemes introduced through the Government. It is an affront to old people to assume that Parliament necessarily knows better than they do how they want to spend their money. I hope that I have conveyed my preference. I support the Government's broad objective of encouraging local authorities to introduce concessionary fare schemes.
The division across the Chamber is very real when we talk about health and social security benefits. Opposition Members seem to believe that we should for ever put up every social benefit to each person within a particular category. Therefore, they object to what they regard as selectivity. They prefer the universality of putting up benefits and then paying them to everyone, irrespective of need. That is a perfectly defensible position. However, the great divide that is always obvious whenever we debate these matters is between that approach and that of the Government, taken at a time when there are limited resources. Whatever anyone says, resources would still be limited if a Labour Government were in office today. In those circumstances, there is no alternative but to do the very best that we can, sometimes on a selective basis.
Let me give an example. Mention was made of the death grant. The hon. Member for Oldham, West expressed great distaste for the consultative document issued by the Government some time ago. At the heart of the document was the suggestion that it is ludicrous to pay a death grant of £30 in 1983, but that one way of paying a sum almost 10 times that amount to those in real need would be to introduce an element of selectivity. One idea was to pay 10 times that amount in respect of those whose next of kin are left with the responsibility for burial, and are receiving supplementary benefit. That is not the only way, but it was one suggestion. It was rejected by the Opposition. In the meantime, because they are not prepared to countenance the need for selectivity in benefits, the payment of £30 continues to all. That is totally inadequate for those who need it, and it comes willy-nilly to those, including hon. Members, who do not need it under any circumstances.
That is the great division. Although the Opposition hold their views strongly, I hope that they will understand that some Conservative Members who are known to speak on these matters have an equally sincere dedication to doing the best that we can within what we see to be the limited circumstances. If that is the yardstick, Her Majesty's Government have done pretty well so far.
6.45 pm
Mr. Robert Litherland: I represent the inner city area of Manchester, which is no
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different from any other city. There has been a mass exodus of young people, strong in wind and limb, talented and able. Such people have tended to leave the cities and go to pastures new, to the suburbs and new towns.
There has been a massive decline in manufacturing industry, and people have had to go in search of jobs. What is left in their wake, in inner cities such as Manchester, is a large percentage of people in desperate need. Many categories of people require the welfare services and rely on the services provided by the local authority. One such category is the elderly. There are many of them in the inner city of Manchester who, together with the unemployed, the low skilled, the young unemployed and the ethnic minorities, are victims of a double-edged attack on their livelihoods. One side of that attack is cuts in public expenditure, which have been discussed today. That is a backdoor and underhand tactic to cut facilities for the elderly. The other side of the attack is in the Government's policy for the elderly.
Manchester social services is proud of what it does. I used to say that one had to go outside the city to appreciate the facilities provided in Manchester. The chairman of the social services tells me that he is in the unenviable position of having to make a decision not on who benefits but on who suffers under the Government's enforced local authority cuts.
In the inner cities there is a high demand for home helps, meals on wheels and domiciliary services, but because of the Government's policy to cut finance, and now that we have the new terminology "natural wastage", there is a limited number of staff, and they have to spread their time thinly over the elderly people. Many of them now go wanting. That is not because Manchester social services or the city council is less caring than it was before, but because there is a lack of resources and facilities
Many of the elderly people whom I represent are now marooned in tower blocks. We had a policy to alter and restructure the tower blocks to provide sheltered accommodation, with community rooms, a warden service and all the facilities that the elderly need, but because of the cuts in the housing investment programme that is now a pipedream. The people who suffer are the elderly.
The elderly are the victims of bad housing. The package deals in which people must live have been discussed in the House over and over again. 'Chat is system-built rubbish with inefficient and costly heating systems. The elderly tenant is confronted with an astronomic fuel bill. How have the Government assisted? They have "assisted" the pensioner by increasing the price of gas and electricity. The result is a choice between spending on food and spending on fuel. The pensioner tries to economise, and the result is hardship. It can even mean death. It is estimated that about 600 pensioners die annually from hypothermia. The number who die from other cold-induced illnesses may well run into thousands.
The case of one elderly person comes to my mind. I went to her flat to see what the problem was. She was living in a damp-ridden, condensation-filled room. She could not pay the fuel bill because she was living in the type of development I have described. She was using a paraffin heater. She asked whether I could get the room decorated before her husband came back from hospital where he was dying of cancer. It was necessary to bring in the direct labour department to refurnish the room simply to enable an elderly person to die in dignity. That

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is what some of the elderly are experiencing in my constituency. What a way to treat the most vulnerable sections of our society.
Pensioners living alone tell me they have less money to spend. They certainly have less money to spend than married couples, but their heating requirements may be even greater. They may need more bodily warmth. Old single people need even more bodily warmth. They may need to heat more than one room. Winter is a frightening time of year for elderly people who do not know whether they will come through it. It is no fault of their own; it is sheer neglect.
In Manchester sheltered accommodation for the elderly was thought to be a great success. Yet these people find they have to pay not only for their own heating costs but, because of a switch in financing, for the heating of corridors, common rooms and the overall cost of the building. That cost comes out of their meagre pensions.
Those people are luckier than pensioners living alone in my constituency who suffer from the cold and die alone. Mr. Jack Jones is absolutely correct when he says that old people are dying simply through neglect.
In "Caring for Old People" the Government said:
"The Government's overall priority is to reduce and contain inflation. As the economy improves elderly people will share in that improvement. In the meantime we have to hold back public spending and concentrate on the revival of the economy."
That was the Government's message to pensioners in 1981.
Public spending has been cut and the economy is in ruins. Its status is stagnation. What faces the elderly at the bottom end of the scale? To them it means a decline into abject poverty. This is what the campaign for the elderly is trying to avoid.
What do elderly people receive after looking forward to retirement and doing their share for the country? They receive a pension that lags behind those in other European countries, whose links have been broken with earnings and prices, whose value should be about £16 higher for a single person and £20 higher for a married couple, and which means a further deterioration in their living standards. They are made to feel inferior, unwanted and a burden to society.
The idea of continuing to throw pensioners a few crumbs of comfort and acting in a charitable way may solve the problem, but that is not what they want. Pensioners want dignity and a feeling of belonging to society.
As more and more elderly people become aware of the injustice, they will make their voice heard. They do not want charity, simply their rights. They have earned them and they are our responsibility. The elderly have provided for us in the past and we should be providing for them for the future.
In recent months I dealt with elderly people who have accepted responsibility for burying their elderly relatives. In one case an elderly person's sister was in a private nursing home and they had not seen each other for years. On the death of the sister my constituent was found to be next-of-kin and this poor lady in her ignorance accepted the responsibility. In doing so she had to accept financing the funeral. Friends contacted the undertaker and the
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funeral eventually took place. My constituent, a pensioner, was faced with a massive bill to cover that expense. She did not have the resources to pay.
What does £30 cover? The death grant would not bury even a pet budgie at today's funeral costs. It is inadequate to meet any funeral expenses. More and more elderly people are being conned into accepting responsibility only to find the undertaker knocking on the door and demanding his recompense. The Government have failed the elderly not only in the pension but in the death grant, community care, public transport and television licences. However, this neglect is being recognised by 11,500 pensioners and their voice will be heard.
Not only elderly pensioners are suffering. One of my constituents is a war pensioner. This lady, a Mrs. Hibbert of 48 Assheton Road, Newton Heath, Manchester, has just obtained a small warm flat. She has written to me saying:
"Today I am 71 and 40 years of that I have been a war widow bringing up three daughters on the meagre pension that was awarded at that time. Now I am on my own trying to keep head above water which I do, still on the meagre pension, with a rise this year of about £1.30. To say I am disgusted is putting it very mildly indeed when you realise that if you have a retirement pension with your war pension you are barred from getting any help with heating and other things it makes life very hard trying to save for the heating bill. That is one reason I applied for this flat, so that I would have a warmer winter to look forward to".
That flat was provided not by the local authority but by the British Legion. Her husband was a Regular soldier who lost his life fighting for his country in 1944.
That is just one of the voices that are now being raised. When public opinion is on the side of the pensioners the roar will be deafening and I am afraid that the Government will have to listen.
I wish to commend the former Member for St. Pancras, North, Mr. Jock Stallard, who is now in another place, for his fight for the elderly and some advice that he gave us. He told us to recognise the need to look no further than our neighbour, the Republic of Ireland, which makes exemptions similar to those he sought in his Bill.
The Irish provide a free electricity allowance of 300 units for every two weeks of the six winter months as well as exemptions from standing charges and free television licences. The Irish economy cannot claim to be far richer than ours. Therefore, it may be in our interests and those of pensioners to examine the Irish schemes. The former Member for St. Pancras, North said that if they can do it in Ireland we can do it in this country. I know that there will be a fight outside the House, there will certainly be a fight in the Chamber, and people like the former Member for St. Pancras, North will be fighting in the other place.
I ask that we stop quoting statistics and using the pensioner merely as a political football. Pensioners must be treated with the dignity they deserve, and that means paying them a proper pension.
7 pm
Mr. Conal Gregory: I feel strongly that this is an appropriate subject on which to address the House in my first debate. I come before the House in all humility to represent the people of the magnificent city of York—a city of great antiquity with Roman and Viking influences and with schools dating from the seventh century that are almost as striking as its medieval centre. Yet the city has very much moved with the times by adapting itself during the Georgian and Victorian eras and by showing its practical care, usually based on strong, Christian, traditional values towards the old.

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York's contribution to the community has embraced the foundation of the British Association for the Advancement of Science in 1831 and, this century, the formation of a distinguished university 20 years ago.
The care of the individual was very much the concern of the retiring Member for York, who represented the constituency since 1966, a fact that I generously acknowledge on behalf of the House. He took up many causes and won a special place of mention on an international stage, particularly in the new Commonwealth.
The city's thriving industries—confectionery, the railway, tourism, construction and insurance—will be an absorbing interest of mine. The diversity of industrial investment must be a priority for the next quarter of a century, and I shall do my best to encourage such growth against the background of a living city that continues to conserve the best of the past with the commercial viability of the present and future in mind.
The media, particularly the Yorkshire Evening Press and this year's new birth, BBC Radio York, rightly find much to comment upon for a city that is both ancient and modern. It is a mixture of narrow medieval streets, dominated by the largest and finest gothic cathedral north of the Alps—the scene of last Friday's glorious enthronement of the new archbishop, attended by my right hon. Friend the Prime Minister among others. It is a city of elegant Georgian facades and characterful Victorian brick, the whole bisected by two rivers.
It is said that York is Britain's largest village. In that respect, I am pleased to know a great number of its inhabitants who are now of retirement age, and to have seen their lovingly cared for homes, both private and state, in which many are housed.
Turning more specifically to the debate, the Government can take the lead in rethinking society's attitudes to senior citizens. I urge them to seize the opportunity to give our elderly a higher priority in terms of their welfare and dignity. Both sides of the House realise that the legislation affecting pensioners contains unjust anomalies, and I hope that the Government will act to rectify that.
We shall witness a rapid growth in the number of very old and frail persons in Britain. By giving the estimated number for north Yorkshire, of which York is the principal conurbation, hon. Members will be made aware of the alarming increases that are predicted. There will be a 20 per cent. rise in the number of people aged 75 and over, from 46,100 in 1981 to 55,300 in 1991. Within that figure is a 42 per cent. increase in those aged 75 and over who live alone, from 8,300 two years ago to 11,800 in 18 years' time. There will be an even more drastic increase. A rise of 43 per cent. is estimated for those aged 85 and over, from 19,200 in 1981 to 27,400 by 1991. This demographic move requires the Government's urgent attention and they must think well beyond the traditional five-year period.
I urge the Government to ensure full transferability of pension rights for all members of occupational schemes who discontinue service. The pensions movement appears to have taken no effective action to deal with the problems confronted by a member of an occupational scheme who changes jobs during his working life. Such people need protection if we are to ensure proper job mobility and avoid penalising someone who reaches normal retirement age.
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There are about 90,000 pension funds. The most effective way of giving statutory effect to my suggestion is for the Government to instruct the superannuation fund office of the Inland Revenue to approve only those deeds of trustees that increase either the transfer value or the value of deferred pensions by 5 per cent. per annum, as recommended by the Occupational Pensions Board. That my be adequate today when we have a low rate of inflation, but any scheme must ensure that the final pension provided protects the individual against the ravages of inflation.
The Government must look again at the earnings level in respect of retirement pensions. That is particularly iniquitous on so-called "unearned" income, which is effectively "savings" income. We must raise the thresholds. The limit has been increased by £7 to £65 this month, but it must be kept under constant review and, I hope, finally abolished.
In 1979, the Conservative manifesto pledged that we would phase out the earnings rule. It stated:
"It is wrong to discourage people who wish to work after retirement age, and we will phase out the 'earnings rule' during the next Parliament".
That pledge was repeated in the 1983 manifesto, which contained the phrase:
"as soon as we can".
However, the figure has not been increased in line with inflation.
Pensioners over 80 years of age have received a relatively mean 25p extra a week since 1971. That would now be more than £1 a week if it were to be increased in line with inflation. Constituents have told me that they find that small element degrading.
The Christmas bonus has not been missed, as it was under another party in 1975, 1976 and almost in 1978. We honour our commitments. If updated in line with inflation, the bonus would now be worth £38.
We Conservatives recognise the energy needs of the elderly, especially during prolonged winters. The hon. Member for Manchester, Central (Mr. Litherland) said that many old people live in properties that are insufficiently heated or which were constructed at a time when oil and electricity were low-cost fuels. I ask the Minister to re-examine the statutory fuel allowance to see whether it goes far enough. Many consider that it is wholly inadequate in the light of today's high fuel costs. Heating allowances should be extended to those receiving housing benefit. The Government should also take account of the sense of injustice felt by those who pay standing charges on relatively small amounts of fuel.
Often, the elderly live in older draughty property and are unable to find the extra money to pay for insulation. Insulation schemes could be better publicised. The Government could do more to help, and the conditions under which insulation grants are given could be extended. At present, such grants are rigidly available only for lofts without insulation. They should be extended to all homes, even to those with a little insulation. It should be remembered that even in the 1970s insulation standards were less stringent than we demand today. As the all-party Energy Select Committee recommended last year, the Government could pay the costs of insulation for poor households.
No pensioner should be disconnected by a fuel board. Fear of disconnection is widespread throughout the country. If the disconnection of pensioners were

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abolished, debts could still be reclaimed through the courts, and at least some pensioners might not be as fearful as they now are of using fuel.
We should not forget those pensioners who, additionally, are blind and disabled. They face extra costs, such as equipment, because of their disabilities, especially if they are not eligible for extra benefits through supplementary pensions.
They cannot obtain a suitable form of work to supplement their pension. Prior to retirement, such people often secure low-paid jobs and therefore cannot afford superannuation arrangements. Furthermore, the blind and the disabled often retire early and their state pension is reduced.
Several hon. Members have referred to the death grant. In view of my interest in this subject, it is appropriate for me to refer to it. The death grant was foreshadowed 41 years ago in the Beveridge report. Reform of the national insurance death grant is long overdue. However tenuous, it is a contributory benefit. The subject is usually raised at the most distressing time—when a close loved one has died. The full rate of £30 has remained unchanged since 1967, and is one of the lowest in the EC. West Germany's death grant is £26·01p.
The British death grant has increased only twice since the inception of the national insurance scheme. It covers barely 10 per cent. of the cost of a funeral. Families often need assistance with funeral costs. I have been told that widows fear that they may be unable to leave sufficient money to pay for their own funerals. As a consequence, they deprive themselves of food and fuel in an endeavour to save for that purpose. While I recognise that we cannot restore the purchasing power of the grant to its 1949 value, which would cost the exchequer £100 million on a universal basis, priority must be given to those who most require assistance, rather than to maintaining the present scheme, which applies to 90 per cent. of recorded deaths, and costs £10 million to administer.
The Government should re-examine the possibility of making income tax concessions to those who wish to prepay their notional interest accrued on the sum pre-paid each year until the funeral takes place. I commend that novel and enterprising scheme to my right hon. Friend the Chancellor of the Exchequer. It would assist in the development of specific insurance policies to fund funerals and cause less distress to the elderly. The consultation period ended in July 1982. However, no Government action has taken place despite the presentation of a petition containing 1 million signatures urging improvements in the death grant made in January 1981.
About 22,900 people are in receipt of mobility allowance. That allowance suffers from an arbitrary rule that application must be made before one reaches the age of 65. I have witnessed the distress that the rule has caused to some of my constituents. It is fully appreciated that, initially, the Government cannot provide an allowance to those who suffer from degenerative conditions owing to old age. We should give a mobility allowance to those who are diagnosed after the age of 65 as having specific neurological conditions or other grossly incapacitating diseases. The elderly person, armed with the mobility allowance, could make donations to friends towards petrol costs, or could afford a hire car when necessary.
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I commend the work of the Government and local authorities in many aspects of community care, especially home helps—by September 1981 the number of home helps had risen to more than 48,000—the meals on wheels service, the so-called bath ladies, the district nurses—which cost £2·2 million in 1981–82—the laundry service for the incontinent, and community physiotherapy to improve and maintain mobility and advise relatives on how best to care for the elderly. If the Government are to provide more community care, the elderly could be looked after at home. We must foster voluntary bodies that help to transport the elderly to doctors and others, and we must assist with the provision of telephones.
The next stage is to foster the construction of privately run homes, be they old people's homes or sheltered housing with a warden and a built-in alarm system, that are easy to run and self-contained. The Abbeyfield Society, founded in 1959, is probably the best known of its type in Britain, and caters for 6,000 people.
Day centres enable pensioners to be looked after while remaining in their home environment. They provide an opportunity to give the elderly attention on a cost-effective basis. Many such centres receive visits from chiropodists and physiotherapists. Their early work can save disproportionate costs incurred at a later stage in a person's medical life. Above all, the day centres, which cater for more than 38,500 elderly people, provide fellowship. I am a frequent visitor to St. Sampson's social centre in York and I know what a lively base it is. More than 1,000 elderly people visit the centre daily, which is housed in a redundant church. There is a national demand for more places. I applaud the voluntary bodies that are working towards expanding day centres.
The joint financing between health and social services has assisted the development of such projects as increasing the number of home helps. This means an increased longterm commitment as local authorities take over the responsibilities and costs. Over a five year period, the local authorities will pick up the tab. Bearing in mind the substantial number of people who will reach pensionable age and live long into old age, I urge the Government to make the necessary resources available and to co-ordinate the caring agencies that deal with the problem.
By supporting the amendment I believe that we shall continue to give our support to a just cause and be seen to do so by those most in need.
7.18 pm
Mr. Archy Kirkwood: It is a great honour and privilege to follow the hon. Member for York (Mr. Gregory). He has the good fortune to represent one of England's most beautiful cities. He comes to the House with a distinguished record of activities on councils in Norwich and Norfolk. I am sure that that experience will stand him in good stead. The hon. Gentleman is also described as being a master of wine. I am sure he will agree that the vintage year of 1983 will grow and mature with keeping. I have a vested interest as I had the privilege to join the House of Commons at the same time as the hon. Gentleman. His speech dished up a strong brew. I wonder whether it was too strong for the palate of the Minister. He posed some questions to which I look forward to hearing the Minister's answers.
I welcome the debate as we are dealing with an important subject, much canvassed at the election. The House should maintain close scrutiny and control over the

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impact of the economy on the living standards of households whose only income comes from the national insurance retirement pension.
I think that we obscure some of the problems confronting us by using strident party political dogma. We must be more objective in our approach to these matters. I accept that on some issues there is a case for the normal cut and thrust of parliamentary politics, but on this important subject we would be wise to try to secure some constraint.
When I first saw the motion before the House, I was afraid that the hon. Member for Oldham, West (Mr. Meacher) would restrict the terms of the debate to a narrow economic, statistical and financial analysis. I am pleased that he broadened the debate to include some of the wider issues facing pensioners.
Although income is the crucial problem facing pensioners, they have urgent needs for accommodation. They should have privacy and the facility to look after their material possessions and the freedom to express and indulge themselves in their last years of life. It is also important to provide them with sensible access to transport, so that they can provide for their own needs and indulge their own inclinations. They need security. We must ensure that they are not subjected to threats, or to the danger of physical violence. We must also see that they are not threatened by having essential domestic supplies cut off, just when they are in a most vulnerable position. They also need a great deal of domiciliary help to give them as much independence as possible as they become increasingly infirm and disabled.
I shall divide my remarks into two sections. First, I should like to consider some of the long-term aspects of the problem. The Secretary of State rightly said that, although there had been an increase of about one third in the number of those falling into the pension bracket in the past 20 years, the figure would stabilise to some extent in the medium term. However, after that there will be a real problem. According to some statistics I have turned up, by the year 2001 the number of people over the age of 75 will have increased by about 500,000, and the number of those over 85 by some 300,000.
We should make urgent long-term plans so that we can meet the consequences of that demographic change. Such an aged population needs special help, because the elderly are often unable to bathe themselves, are bedridden or are unable to leave their own homes. Indeed, some live on their own. Such problems demand urgent long-term planning. However, no one seems to be doing any sensible long-term planning. The only exception to that might be the Chancellor of the Exchequer, but the long-term plans that he has in mind do not augur well for the needs of the retired population.
I should like a reassurance from the Government about their intentions towards the development of the earnings-related pension scheme. I listened carefully to what the Secretary of State said about the proposed review, and look forward to seeing the Green Paper. However, in the course of that review I should like him to consider recommendations 10 and 11 of the Social Security Advisory Committee, which were published recently in its second report. The report said:
"Retirement pensions should be maintained in real terms and there should be a periodical adjustment of basic pension levels in relation to earnings if the full objectives of the new pension scheme are to be achieved."
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The Government Actuary's quinquennial review of the national insurance fund also made it plain that some uprating of benefits above the minimum price relation provided for was essential if the Government's intention to allow pensioners to share in the increased standards of living of the country as a whole were to be fulfilled. The problem is whether the Government are prepared in the long term to relate the increase in pensions not to the increase in prices, but to the increase in average earrings.
I should also like the Government's reaction to recommendation 11, which states:
"Pension measures should be considered to give help to older and poorer pensioners who have not been able on grounds of age to take due advantage of the earnings-related element of the pension scheme."
The Social Services Committee took the view that there were special problems for those who had not had the opportunity, on the ground of age, to take advantage of the earnings-related element of the scheme. It said:
"future Governments of whatever political complexion will have no choice but to regard this as one of the first calls on any additional resources."
Those points are important to long-term planning, and the Government should take them into account in their review.
There is a flaw in the basis that is used for calculating the retail price index for pensions. The RPI does not reflect the lifestyles, incomes or needs of pensioners. Indeed, they are excluded from the expenditure weighting calculation in the general index of retail prices. The general index shows a clear bias in favour of those at the top end of the distribution curve. There is evidence front Age Concern that since 1974 the cost of living for pensioner households has been 12 percentage points higher than the RPI. That is an important point that the Government should bear in mind when considering the relationship of pensions to prices.
In the short term, too, there are some problems to be confronted. Inadvertently, or otherwise, the Cabinet has recently inflicted a series of financial blows on pensioners. The new financial limits for the electricity and gas industries must have a cruel effect on pensioners. Indeed, I understand the concern expressed earlier by other hon. Members, because there is no doubt that hypothermia will be stalking the countryside again this year. In addition, the recently announced cuts in housing benefit will seriously affect pensioners. The scheme is now so complicated that it is difficult to assess its full impact.
Mr. Simon Hughes: Earlier, we heard suggestions that the problems of housing benefit had gone away. However, I hope that the Government will accept, and that my hon. Friend will confirm, that pensioners who are receiving only £30 per week are still receiving bills from their local authorities that show that there is a muddle in housing benefit. They used to have at least a bit of spare cash that they could use to budget properly. However, that has now gone under the housing benefit scheme. It confuses and worries hundreds of pensioners even now. Britain has a lower basic rate of pension than any other state in western Europe. Therefore, I hope that the Government will treat that problem as a matter of urgency.
Mr. Kirkwood: I am grateful to my hon. Friend for that clarification. We all have examples in our constituencies of how the changes have caused concern in pensioner households throughout the country. The historic uprating cuts this week have not in any way compensated

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pensioners fairly for the recent rise in prices. The sooner the Government consider twice-yearly upratings, the better for those who receive those benefits.
The cuts in the housing allocations will inevitably mean that local authorities will be unable to build many sheltered units and that the housing associations will no longer be able to continue the sterling work that they have been doing in providing suitable accommodation for retired people. The expenditure of local authorities is under severe constraint. My own local council is now having to choose between home helps and shoring up bridges that are in danger of falling down. That is a ridiculous position to be in, and the Government cannot deny that the situation has worsened as a direct result of their economic policies.
Furthermore, there is no prospect of any improvement in the Christmas bonus, the abolition of the earnings rule, the death grant, the flexible age of retirement or the standing charges, to which the hon. Member for York rightly referred.
Mr. William McKelvey: The hon. Gentleman's apprehension about benefit increases is correct. Is he aware that from January next year all pensions of less than £1 will be paid annually, one year in arrears? Many of my constituents will be affected by that. One old lady told me that she draws her pension of 89p every 10 weeks and regards it as a substantial part of her electricity bill. She is now to be denied that and will have to wait a year—I hope that she survives the year—to be paid in arrears. When I asked the South of Scotland Electricity Board whether it would wait one year for its bill to be paid, it understandably said that that was not possible.
Mr. Kirkwood: I am grateful for the hon. Gentleman's intervention. I entirely agree that the Government do not understand the full horror of the system that they have introduced. It is only when examples such as the hon. Gentleman gave come to hand that the system's complexity is exposed.
In the long term, the Government must consider returning to a system that links pensions to prices or earnings, whichever is the greater. That is important as it is the only way in which we can protect the living standards of the poor and the elderly.
The Liberal party expounded at great length during the general election campaign on the rationalisation that it considers necessary to bring together the taxation and benefit schemes. That reform would eradicate many existing anomalies and provide the machinery for a real redistribution of resources to meet the needs of retired people. We shall follow the hon. Member for Oldham, West into the Division Lobby tonight.
7.31 pm
Mr. Charles Morrison: I should like to be the first Conservative Member to congratulate my hon. Friend the Member for York (Mr. Gregory) on his interesting and very well informed maiden speech. The whole House will have been pleased to hear the credit that he gave to his predecessor. Some of us have been here long enough to remember his predecessor's predecessor. It is extremely pleasant to recall the work of Charles Longbottom and to see another Conservative Member representing the York constituency.
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My hon. Friend's speech was not entirely uncontroversial. His message to the Government was that they are doing quite well but could do better. I hope that it is not presumptuous of me to say that that is an entirely proper attitude for a new Government Back Bencher. It was a balanced stance which was neither sycophantic nor rebellious, and it was constructive. Many of us will echo many of the sentiments that my hon. Friend expressed. We all hope that he has as long and successful a reign as the Member for York as will York's new archbishop who was recently enthroned.
If emotion and rhetoric had any effect on the level of pensions, the speech made by the hon. Member for Oldham, West (Mr. Meacher) would have contributed to them considerably. His speech contrasted unfortunately with the calm, informative, factual and forthright speech of my right hon. Friend the Secretary of State, who reflected wisely on many aspects of the matter to which we shall have to give our attention.
Governments do not often look as far into the future as has my right hon. Friend. It is entirely right that he should do that. By the time that he finished his speech, I could not help feeling that it was hard of the Leader of the Opposition to have appointed the hon. Member for Oldham, West as the Opposition's spokesman on pensions as he cannot avoid responsibility for some of the less successful administration of pensions during the period of office of the previous Labour Government. What the hon. Member for Oldham, West said was repeated by several Opposition Members. They said that the Government are not doing enough for pensioners. No Government will be judged by the House to be doing enough for pensioners. I was glad that the hon. Member for Oldham, West acknowledged that all of us are trying to do much more.
It is regrettable that the arguments which are advanced in support of improvement are based almost entirely on hard cases. All hon. Members have regrettable and sad cases of people who draw attention to their plight at our surgeries. Nevertheless, it is not possible to improve, administer or legislate for pension schemes or systems purely on the basis of hard cases.
It is important to keep a perspective on pensions. There is not a pensioner in my constituency whom I would not like to have a larger pension. The same could be said of Opposition Members and my right hon. Friend the Secretary of State and his team. As I said, however, we must maintain a perspective. The Government increased the single person's pension from £ 19·50 to £34·05 between November 1978 and November 1983 and they increased the married couples' pension from £31·20 to £54·50 in the same period. That is an excellent record.
When one considers that prices have increased faster than that during the same period, the Government's record is seen to be even more remarkable, especially during a recession. Moreover, it should be pointed out that pensions have risen faster than the pensioners' price indices. I understand that, from the last quarter of 1978 to the third quarter of 1983—the latest date for which figures are available—the pensioners' price indices did not rise as fast as the retail price index. The single person pensioner price index rose by 62·7 per cent. from 1978 to the third quarter of 1983 and the married couple pensioner price index rose by 62·4 per cent. during the same period. The RPI rose by 67·7 per cent. during the same period. That shows that pensioners have done just a little better

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than price increases alone demand. That is something to be welcomed, and on which the Government should be congratulated.
My hon. Friend the Member for York referred to inflation. It is undoubtedly true that the control of inflation is not only a feather in the cap of the Government, but above all has had a beneficial effect for those on low incomes, particularly pensioners. I am glad that so much emphasis has been laid on the control of inflation. One point has not been made this afternoon about the Christmas bonus. Reference has been made to it, but it should not be forgotten that it was originally instigated by the Conservative Government. The Conservative party can claim not only that it has been able to pay the Christmas bonus on every occasion that it has been in power, but that it instigated this particular form of help to pensioners, which is so welcome at Christmas time.
Mr. Simon Hughes: Having explained the Government's success, can the hon. Gentleman explain why so many pensioners, like so many other people in our constituencies, certainly in my constituency in the inner city, must have supplementary income from the state to top up the basic pension to give them enough to survive? Where is the success if over 2 million pensioners are still on the poverty line?
Mr. Morrison: I do not think that the hon. Gentleman was listening to my earlier remarks. I suggested that it was wise to maintain a sense of perspective. Undoubtedly we all want to see more and better provisions, but we have to take account of wider considerations. I am not claiming that the Government's record is perfect. My right hon. Friend knows that I am not, and he would be amazed if I were to say so. I shall not do so, but the record has been pretty good, given the circumstances and the times in which we have been living.
A briefing recently arrived on my desk from the Child Poverty Action Group was not entirely complimentary to the Government in every respect; it was quite critical. However, at least in regard to pensions, it made the point—this is related to what the hon. Member for Bermondsey and Southwark (Mr. Hughes) has just said—that the number of people over pension age who are living below the supplementary benefit level fell by 15 per cent. between 1979 and 1981. That is a considerable improvement. I do not know the latest figures, but that demonstrates yet again the successes of Government policy for pensioners.
The second part of the Opposition motion
"calls upon Her Majesty's Government to reverse its damaging and increasingly discredited economic policies".
I should not agree for one moment with that request, or with the rest of the motion, although I am one of those who consistently suggest that the Government should evolve their policies to take account of changing circumstances and to do as I should like and provide a little more stimulus to the economy without recreating inflation. That is possible.
It is wholly unwise to forget either now or in the long term the implications for public spending attached to pensions. In that regard, I was pleased to open my newspaper this morning and to read the speech by my right hon. Friend the Secretary of State to the Brent Conservatives last night. A good deal of what he said then he repeated today. In that speech, he referred to the long term. Quite rightly, he called for an appraisal of the
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circumstances. He asked for a rational approach, and with that I entirely agree. If there is not a rational appraisal, no hon. Member can sensibly or reasonably draw conclusions and exercise choice, which is what we have to do, or, what the level of pension or any other form of public spending should rightly be.
My right hon. Friend was right to call for this rational appraisal. It seems clear that the necessity for such an appraisal for the long term is all the more necessary if I am right in concluding that there is some difference of opinion between the Department of Health and Social Security and the Treasury. One cannot believe everything written in the newspaper, but the journalists who came to that conclusion would not be far from my view on the subject.
Therefore, it is regrettable that there is no independent body or adjunct to the Government such as the Think Tank—call it what one will—to look objectively at such subjects and to put the facts before the Government. It may be that discussion of a think tank is not proper for this debate, but I express the hope—perhaps this will even be support for my right hon. Friend—that he will press for the re-establishment not of the think tank of the variety that was recently guillotined but a proper one that does what it was set up to do—to make long-term appraisals for the benefit of the Government and other political parties. The more open the resolutions of these appraisals, the better, so that all political parties may know the facts and develop and evolve their policies accordingly. All too often there is too much emotion in policy making and too little reference to the facts.
I congratulate the Government on what theyare doing, and I encourage my right hon. Friend to do even better.
7.49 pm
Mr. George Foulkes: When I listen to speeches made by hon. Members such as the hon. Member for Devizes (Mr. Morrison), I wonder whether they understand what is meant by poverty in Britain today. I wonder whether they ever see the poverty that exists and that affects many pensioners. Perhaps the hon. Member for Devizes believes that a housing problem is deciding at which of his houses he will spend the weekend. Those are not the housing problems that our old-age pensioners face. They have problems with inadequate houses, with heating those inadequite houses and in some cases with getting decent houses.
On a less aggressive note, I concur with the remarks of the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood)—I was surprised that he seems to have abandoned the Liberal Whip, because his speech sounded like that of a non-party Member—and of the hon. Member for Devizes that the hon. Member for York (Mr. Gregory) made an excellent speech. I hope that he will not soon be disillusioned by the actions of the Government, whom, I am afraid, he will troop into the Lobby to support this evening.
I am pleased to speak today as the joint chairman of the all-party pensioners' group. I pay tribute to my predecessor Jock Stallard, now Lord Stallard of St. Pancras. As you know, Mr. Deputy Speaker, I do not favour the House of Lords, which I sometimes believe is one of the best day centres for the elderly that exists. However, if we must have a second Chamber, we can do no better than to fill it with people such as Lord Stallard.

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My hon. Friends will find it difficult to believe, but as the joint chairman of the all-party pensioners' group I sometimes become disillusioned. The group produces early-day motions signed by many Conservative Members, including the hon. Member for Eltham (Mr. Bottomley), now parliamentary private secretary to the Minister, but I suspect that they sign the motions only to send them to their elderly constituents as evidence of their support of the cause mentioned in the motion. It does not take much to sign an early-day motion, but when they are asked to vote on the subject of the motion—when they are asked for deeds, not words, to support the elderly—they troop into the Government Lobby.
My hon. Friends, who meet pensioners more often than do Conservative Members, and who understand their problems, know that the most important matter is the level of pensions. Pensioners have often said to me, "If only we had a decent pension we would not need concessions. We would not need cheap television licences or travel concessions if we had a decent pension." That is why the pensioners valued the system in which pensions were linked to prices or to earnings increases, whichever was the larger, because for the first time that ratchet effect gave them a real increase in pensions.
What worries me is that the Government say that keeping up with inflation is enough. We are in danger of accepting that. As the hon. Member for Southwark and Bermondsey (Mr. Hughes) said, 2 million pensioners need supplementary benefits to make up their basic pensions. We have lowered the expectations of the House, of pensioners, and of pensioners' organisations. Keeping up with inflation is not enough if one starts from a low base, which is why the ratchet effect was one of the greatest advantages that pensioners enjoyed. I see the hon. Member for Macclesfield (Mr. Winterton)—[HON. MEMBERS: "Where?"] It is the hon. Member for Northampton, North (Mr. Marlow). I always make that mistake.
Mr. Tony Marlow: I am extremely flattered by the hon. Gentleman's mistake. My right hon. Friend the Member for Macclesfield (Mr. Winterton) is far better looking than I am.
Mr. Foulkes: I am grateful for that intervention. What a pity that the hon. Member for Macclesfield is not here, because in March he rightly criticised the Government for their willingness to introduce the clawback. He said that the change in the method of calculation from the predictive to the historic was a device to obtain the clawback by another means. He was right.
I heard the Secretary of State speaking on the "Today" programme this morning from a radio car. It is appropriate that the right hon. Gentleman always gives interviews from his getaway car, because he is frightened that the pensioners will come round to find him. He said that my hon. Friend the Member for Oldham, West (Mr. Meacher) was booed by pensioners about 10 years ago, but the right hon. Gentleman is frightened to meet pensioners nowadays. He would be lynched, and not simply have a can of red paint thrown at him. The pensioners know—the Chancellor effectively admitted it when I asked him the other day—that the change in the basis for calculation caused a real clawback of pensions.
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Hon. Members mentioned the twice-yearly uprating of pensions, which in the past was supported by many Conservative Members. They include the hon. Member for Oxford, West and Abingdon (Mr. Patten), who is now a Minister, the hon. Member for Watford (Mr. Garel-Jones), who is now a Whip, and the hon. Member for Calder Valley (Mr. Thompson), who is also a Whip. When the Secretary of State was the Opposition spokesman on social security matters, he attacked the Labour Minister and said:
"Why does the right hon. Lady still resist six-monthly reviews of pensions, for which we have pressed? Is it really only because the proposal comes from the Opposition side?"—[Official Report, 22 May 1975; Vol. 892, c. 1626.]
Now he is Secretary of State and can do something about it, so why does he resist the proposal? Is it only because it comes from the Opposition?
Mr. Fowler: If the hon. Gentleman had read the remainder of the quotation, he would have seen that I qualified that remark by saying that it was a time of high inflation. The difference is that inflation was then running at 25 per cent. Now it is 5 per cent.
Mr. Foulkes: The pensioner, the pensioners' organisations and some Back-Bench Members still want such a change. Most of our partners in the European Community manage to have a twice-yearly increase, so why cannot Britain? Neither the Secretary of State nor other Ministers has answered that question.
The Minister for Social Security knows of my interest in the death grant, in which he too is interested. I share the concern, annoyance, disgust and despair expressed by many hon. Members on both sides of the House that have lingered on over this matter. There has been promise after promise. The previous Minister promised unequivocally, without reservation, an announcement by Christmas 1981. Then the Government produced a consultative document, to which they received more than 700 replies, most of which rejected the Government's option and put forward a more positive option for an all-round increase. At present the death grant of £30 does not even cover the cost of the two doctors' certificates required if a body is cremated. The VAT levied on services provided at funerals amounts to more than £30 in each case, so the Government are making a profit out of death. They claw back in VAT more than they give in the death grant.
As the hon. Member for York said, there was a petition with 1 million signatures, but the Prime Minister refused to accept it. I wrote to the Prime Minister asking her how she reconciled the vacillation of her Ministers, who are unable to make a decision about the death grant, and are transfixed like the rat in front of the snake—I hope that I am using the right metaphor—with the resolute approach of which we hear so much? The Prime Minister wrote me a pathetic letter, saying that the resources were not available. There are unlimited resources for an airport in the Falklands, and for Fortress Falklands, but there are not enough resources for an increase in the death grant.
Let me give another example of how Conservative Members, including the parliamentary private secretary of the Minister for Social Security, the hon. Member for Rugby and Kenilworth (Mr. Pawsey), behave. It concerns the Christmas bonus. The Secretary of State made announcements about occupational pensions. Conservative Members always seem to be interested in them. They talk very little about the ordinary pensioners.

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They avoid that subject. I gave the Secretary of State the opportunity to make an announcement about the Christmas bonus. He berated my hon. Friend the Member for Oldham, West about the Christmas bonus. It is still only £10, when it should be £38, to keep up with inflation. We waited, but we got nothing. The right hon. Gentleman made no announcement.
I shall finish with two points. The first concerns Europe. I find it strange that this Government are keen to carry out some of the decisions of the European Court, some of the directives of the European Commission, and some of the suggestions that come from the European Community. The UHT milk is now flooding in, threatening our doorstep deliveries of milk. We implement directives about the size of eggs. We have directives about the specific gravity of beer. However, when it comes to harmonising the amount of pension for retired people we get no action. In Belgium, a single person gets 60 per cent. of gross average earnings, in France the figure is 50 per cent., in the Netherlands it is 42 per cent., but in Britain it is only 24 per cent. Surely, it is time that we brought it up to the level of our European partners.
My final point, which I am sure hon. Members will be pleased to hear, is that in my capacity as joint chairman of the all-party pensioners' group I was asked to speak a few weeks ago to a meeting in Finchley, the Prime Minister's constituency. It was a little like going into the lion's den. I did not know what kind of a reception I would receive from the 300 pensioners who turned up. However, I did not receive a hostile reception, and I was astonished by the strength of criticism that they voiced about the Government. They criticised the amount of the pension. They criticised the NHS cuts. I am not one to advocate the closure of any hospital, but I was told by those pensioners about the threatened closure of the Finchley memorial hospital. I was told that the Prime Minister had said that it would be closed over her dead body. It is a tempting proposition to say that if any hospital is to close it should be the Finchley memorial hospital, as long as the Prime Minister keeps her promise.
The pensioners at that meeting in Finchley were overwhelmingly in favour of the retention of the Greater London council. They supported Ken Livingstone rather than the Prime Minister because they valued the concessionary ticket, the free travel. I realise that Conservative Members will say, "Ah, but we have clear assurances from the London Boroughs Association that after the GLC goes it will continue that scheme." I am a Scotsman, and I do not throw away money lightly, but I bet the Prime Minister a pound to a penny that that guarantee will not last long. As soon as the London boroughs take over, particularly the London borough of Barnet, which includes the Prime Minister's constituency, we shall see the end of the concessionary fares, the free travel for pensioners. The pensioners know that.
When I visited Finchley I got the feeling that if there were a general election tomorrow the pensioners there would sweep the Prime Minister out. I am not in favour of early retirement for all, but that is the one early retirement that I would look forward to, as would British pensioners, with the greatest glee.
8.6 pm
Mr. Patrick Nicholls: I start by saying how much I appreciated the speech of my hon. Friend the
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Member for York (Mr. Gregory). It was an elegant and eloquent speech, and I certainly look forward to hearing from him again in future.
There was one aspect that I thought I should like about this debate—and I have not yet been disappointed. Although we debate many contentious subjects on which not all hon. Members could agree, this debate is about a subject on which there should be considerable agreement. Surely one of the few matters that would unite hon. Members on both sides of the House is the care of those who cannot look after themselves. Who is more worthy of our care and compassion than the elderly and retired? That sentiment has no party political element. As a Conservative, I feel that way, and I am sure that many Opposition Members feel the same. No political party can have a monopoly on compassion. It is not good enough to say, "We care." We have to do something about it.
We should pause to consider how many elderly people there are. I shall give the figures for today, not for the future. There are about 9 million people in this country of pensionable age. That represents about 18 per cent. of the population of the country as a whole. Certainly in Teignbridge the percentage is far higher—about 26·6 per cent. I claim no special experience when I say that from what I learnt during the election campaign and what I know from my constituency and my postbag pensioners feel bitterly about the deals that they have had from past Governments.
The Opposition motion seemed almost to say that there have been cuts in the pension. We have had many statistics today, so I shall not give many more, but we should remember that this Government have not cut pensions. During the lifetime of the previous Conservative Government, pensions kept pace with prices. Pensions went up about 74·6 per cent., and in the same period prices went up by 69·9 per cent. I do not say that a single person on an old-age pension of £34·05 can have a ball. That is certainly not true. No hon. Member would say that was a marvellous sum and that the pensioner should be grateful. In fact, it is the bare minimum. Few hon. Members would care to live on that amount. However, it has at least kept pace with inflation. That is an important and significant fact, because hon. Members continue to say that the pension is not high enough, that there is no point in. talking about inflation, and that not everyone has a pool of capital, but neither does the country.
Inflation is important because many pensioners do have a small amount of money tucked away. It may be a few coppers put away week by week to contribute to the death grant. People who do that have a small amount of capital. If they have to suffer inflation at 25 per cent., it is no consolation to know that at the end of the year their pensions will be increased in line with inflation. During the period 1974 to 1979, pensioners would have seen their nest-eggs halved. That fact is relevant when talking about inflation. If inflation is increasing at 25 per cent., by the week before the next yearly increase there will be a great deal less left in one's pocket to do the basic food shopping. The pensioner is not consoled, when going to the corner shop and being faced with those prices, by the fact that the Government will give him or her a 25 per cent. increase at the end of the day.
Inflation is also important when talking about pension increases keeping in line with inflation.
Mr. McKelvey: Is the hon. Gentleman bearing in mind that the pension increase on Monday was 3·7 per cent., while inflation was 5 per cent.? Irrespective of the nest-eggs that pensioners might have, they are concerned that the pension increase buys less than it should. They are being deprived, irrespective of their nest-eggs.
Mr. Nicholls: I understand the hon. Gentleman's anxiety, and I shall address myself to that problem in a few moments.
The Government try to look after pensioners and ensure that they receive a proper pension increase, but money has to come from somewhere. There is not a limitless amount of money available.
It is all very well for the hon. Member for Oldham, West (Mr. Meacher) to indulge in great flights of rhetoric and talk about the record of the previous Labour Government. I hope I can speak in a non-partisan way. For once I am not trying to score points in anything I say about the previous Labour Government. When they were in office—and their compassion cannot be questioned—they were charged with responsibilities that the hon. Member for Oldham, West does not have today. When considering the reponsibilities of office in the context of his caring and compassionate speech, he might care to bear in mind the appalling pickle that that Labour Government got themselves into when they found themselves hooked on the earnings as opposed to the prices link. Hon. Members on both sides of the House will remember the Labour Government's contortions when trying to honour that commitment. When talking about that I can do no better than mention a remark by the then Labour Secretary of State for Social Services. When tackled about the 1978 pensions deficiency, he replied:
"There is a statutory obligation to take these figures (i.e. earnings) into account, which was done, but no statutory obligation to get it right."
One could make a cheap remark about that and say that it showed the right hon. Gentleman's cynicism. It did not. It showed his desperation, because he did not have the money to honour the commitment.
The Christmas bonus excites a certain amount of merriment and mirth on the Oppostion Benches. I cannot see why it should. When I said that for two years the Labour Government did not pay the Christmas bonus, I was not saying it in a partisan way. They must have been appalled when in Cabinet they had to consider taking bonuses away from pensioners, for two reasons. In political terms it must have been a difficult decision, but in compassionate terms it must have been appalling to be so strapped for cash that a caring Government had to cut Christmas bonuses for two years in succession. That is the significance. It was not, for once, the wicked old Labour Government doing these beastly things. It was a measure of their dilemma. They had the care and compassion and wanted to do what was morally and decently right, but at the end of the day, when using their calculators, matches or the back of an envelope, the cash was not there. My point is that we do no service to pensioners by forgetting that their pension increase has to be found from somewhere.
The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) said that if there is money to spend on Fortress Falklands and the Falklands airfield, more should be spent on the old-age pension.
Mr. Foulkes: Hear, hear.
Mr. Nicholls: I hear the hon. Gentleman say, "Hear, hear." If roles were reversed and the Labour party were in government, I wonder whether he would take that attitude. The Government must honour a wide range of responsibilities. On this issue they will be judged on whether they have done the right thing. One cannot say that money should be taken from one thing and given to another.
I was questioned about the fact that pensioners lose because of the change from the forecast to the historic method of calculation. One must remember how that came about in the first place. It was calculated on the historic basis until 1976. I sympathise with the Labour Government's dilemma, but they could not find the money. One could say that that was the inevitable consequence of their economic policies, but that is a point for another day. They could not find the cash, so they switched to the forecasting method. Nothing could be more unsatisfactory for a Government than to have to make predictions in that way in an inflationary age. We know what happened. On about seven out of nine occasions the calculation was wrong and the wrong increase—even allowing for the assumptions on which it was based—was given.
We now have a logical and certain method. It works on a historic basis—on what has happened rather than on what might happen. The point made by the hon. Member for Kilmarnock and Loudoun (Mr. McKelvey) was fair, but ironic. The Government have brought inflation down. If inflation were constantly coming down, the historic method would not have brought about the apparent injustice that the hon. Gentleman had in mind. The change happened to coincide with a slight increase in inflation. Inflation is now coming down and the position should be remedied. There can be no doubt, even on a straightforward arithmetical basis, that what pensioners lose one year, they will gain in the next. I know it is said, "That is not good enough. Some of them will not be here. If you are approaching subsistence level, you need the money now, not later." That is a marvellous argument for those who are not charged with the responsibility of getting it right. There are only two ways to calculate the pension increase—by forecasting or on an historic basis. At least, on an historic basis, it comes right within 24 months, and that must be important. That does not mean that the garden is entirely rosy and that no improvement could be made.
There is one improvement that might be worth considering. It relates to those who decide to opt for a higher rate of supplementary benefit with a view to coming off the unemployment register—effectively those who retire at 60. They suffer an injustice because, if they want to earn to supplement their "new retirement money", they are tied to the levels of earnings appertaining to supplementary benefit. I know from a written answer that I have recently received that the Minister makes the point that supplementary benefit is one thing and old-age pensions another. Many people who are approaching retirement age feel badly about that, and that matter could perhaps be looked at again.
People will be looking to the House today not for rhetoric and arm-waving, but for the knowledge that hon. Members on both sides of the House take seriously the plight of pensioners. They can be told that the Government have a good solid record. The Government are protecting them as much as they possibly can while at the same time

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not spending money out of compassion, which, at the end of the day, pushes inflation through the roof. The most cruel thing of all for pensioners, after they have listened to our deliberations today and the bombast and rhetoric of the hon. Member for Oldham, West, is to think that the money is there waiting for them, if only rhetoric could produce the money. If they go away thinking that, if they go away not realising what a good record the Government have, their expectations will have been cruelly raised. Regardless of party politics, no hon. Member should raise expectations which will be dashed. The Government have a good record on pensions, and pensioners should know that as well.
8.21 pm
Mr. Ernie Roberts: Unlike the hon. Member for Teignbridge (Mr. Nicholls), who has been engaged in and has referred to rhetoric and theories about pensioners and their problems, I shall speak from experience.
Two years before coming to the House I was already retired on a pension and in receipt of a small addition from my previous employer. It was no life of luxury. Pensioners are much worse off than I was during that period. I have a much higher standard of living now than I had then or even when I worked for my living as an engineer.
I want to speak about reality, not about statistics. We have had a good deal of wishful thinking from Conservative Members. I wish to talk about the reality of life for pensioners in Hackney, North and Stoke Newington. The living standard of old-age pensioners in my area is outrageous and scandalous. They live in poverty and many die neglected and alone when they need not. They live in constant fear. I have before me a cartoon sent to me for this debate by an old-age pensioner. The cartoon was drawn by a Mr. Fowler. It must be a different Mr. Fowler. The cartoon shows the Prime Minister acting as a conductor on a bus of old-age pensioners. The Prime Minister is shown tearing up the pensioners' GLC free travel permit. On her money bag is written "Feed the rich". That is the opinion of an old-age pensioner who took the trouble to write to me and send that cartoon.
Old-age pensioners come to my advice surgery every Sunday to complain about their gas or electricity supply being disconnected by the board. They live in damp squalid homes that need repair and modernisation. Many are imprisoned in tower blocks such as those on the Nightingale estate or those that were described in the House a few days ago by my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore). The Government must make money available to Hackney borough council to deal with these problems.
There are not enough home helps or social services workers in the area to help the high proportion of old-age pensioners. There is a great need for free telephones for old-age pensioners—for some it is the only lifeline. In a local paper that is produced and distributed to residents the point is made that
"around 1,300 specially-installed telephones could be among the aids for elderly and housebound people which will have to be cut off if the council is starved of more cash by the Government"—
in other words, if the Government operate penalties against councils such as Hackney.
Health care in the area has deteriorated disastrously since the Tory party came to power in 1979. Hospitals
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have closed. Many of the doctors in the area are old. They work alone in dingy surgeries, in old shop units and in first floor rooms of houses that have been left empty. The old-age pensioners who come to see the doctor queue in the streets in the cold and rain. Those are the conditions from which old-age pensioners suffer in places such as Hackney. Rhetoric and fine words from Conservative Members will not solve the problem. The only way to solve the problem is to put money into places such as Hackney.
Arising from this poverty and neglect Hackney borough has the second highest discharge rate from hospitals for schizophrenia—20 in every 10,000, which is almost twice the national average. Old people are being driven into insanity. It is no exaggeration to say that when they come to see me week after week at the surgery I see a mental deterioration.—[Laughter.] Conservative Members should not laugh because they do not see it
Mr. Skinner: It lines their pockets.
Mr. Roberts: That is right—it lines their pockets. These old people are being driven into the lunatic asylum as a result of the living conditions being imposed on them by the Tory Government.
As with many pensioners, I have worked for 50 years. Pensioners have produced more wealth in their lifetimes than they could ever consume, yet they eke out their existence in poverty. Is that right? Where is the morality in that? That is the morality of the system of society which the Tory Government represent and defend. The Government say "Let these poor people who have worked for 50 years save out of their miserable salaries." The Low Pay Unit has just produced a booklet for Hackney entitled "Low Pay and Unemployment in a London Borough." How can these people save? They live in poverty even when they are working because of the exploitation of those who employ them. This is no laughing matter. Poverty is a serious problem and it can be solved only if more money is poured into efforts to solve it.
I have before me the Queen's Speech which outlined the Tory Government's policy. Old-age pensioners did not even merit a mention in it. That shows what the Tory party thinks about the old-age pensioners. The Government owe old-age pensioners a decent, secure and happy life. For the benefit of the hon. Member for Teignbridge who asked from where was the money to come and who said that money was needed for many different things, may I say that the Prime Minister has £130 billion in her purse. The right hon. Lady is always talking about the family budget. Her family budget for this country is £130 billion I can give the House examples of where money is being misspent. For instance, £16 billion is spent on unemployment. There is £16 billion spent on arms expenditure—to defend what type of life? The type of life from which old-age pensioners are suffering" That money should be injected into Hackney to solve these serious problems. The Government have the money and responsibility to ensure that the problems of old-age pensioners throughout Britain are solved.
8.30 pm
Mr. Tony Marlow: I find the motion depressing. As I have strong views about the things that I stand for, so I am sure that there are members of the Labour party who have equally strong beliefs in what they

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stand for. But the motion is destructive of the credibility of the Labour party and can only do it damage. If the Labour party is damaged, the alliance benefits, and I wish Labour more success than the alliance.
The motion is naked propaganda. It is designed to be plastered all over the front cover of Labour Weekly. It represents bleeding hearts poured out all over the Order Paper. It requires more money, but nowhere does the motion say from where it should come.
Mr. Skinner: I will tell the hon. Gentleman.
Mr. Marlow: We look forward to hearing from the hon. Member for Bolsover (Mr. Skinner). We are always delighted to see him and we are particularly delighted tonight to see that he has his son with him.
Mr. Skinner: My son?
Mr. Marlow: I will explain to the hon. Gentleman later.
I say that this depressing motion is destructive of Labour Members' credibility because everybody knows that many of those we see on the Opposition Benches were present in 1975 and 1976 when the pensioners were prevented from having their Christmas bonus. They were led by Lady Castle who, in 1976, at a stroke, reduced the value of the pension by 6 per cent. That financial sleight of hand has since cost pensioners millions of pounds a year. Yet the Opposition have the cheek to criticise this Government, whose record on pensions is second to none.
Most of us have elderly relatives and we all have elderly constituents. We appreciate the problems of the aged, and I assure Opposition Members that my hon. Friends care every bit as much as they do. Not only do we care, but, as was eloquently said by my hon. Friend the Member for York (Mr. Gregory), we have done something about it. My hon. Friend gave a catalogue of the many services that we have improved or provided for the elderly. I pay tribute to my hon. Friend's predecessor, the then Labour Member for York, who was a valued Member of the House. I had much time for him, and I hope that he is doing well in his present occupation.
Some things in life are certain. We all grow old and finally die. Most of us will become pensioners, so we have a vested interest in seeing that the pension is as realistic as we can afford to make it.
There are other facts. For example, since the Conservatives came to office, the real value of pensions has increased by 5·5 per cent. Not only against the retail price index but against the pensions price index, pensions have gone up faster than ever. The heating addition has gone up in real terms by 60 per cent. That is real caring, real money and real value.
Mr. Simon Hughes: The hon. Gentleman says that he has compassion. How can he reconcile that compassion with saying that pensioners are entitled to only £34 a week on which to live? Does that standard justify the compassion that he is leading the House to believe he has? I do not believe that it is compatible; nor do I believe does he.
Mr. Marlow: Few people would say that the pension is generous or that they would not wish it to be higher. I
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simply say that the Conservatives have provided a more generous and realistic pension than any previous Government.
Mr. Hughes: If pensioners do not have enough to live on, it is no use.
Mr. Marlow: The pensions paid to this generation of pensioners must be borne by those in work—the younger generation. They feel no resentment. The younger generation would wish to have a generous and compassionate pension scheme. We must take account of the fact that since the Conservative Government have been in power there are about 600,000 more pensioners than there were before and that means that more resources are needed than were needed when the Labour Government were in power.
The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes)—the Paul Daniels of economic policy—is good at discovering what needs to be done and, no doubt, producing money from thin air. The Government are a little more responsible and do not gull people in that way. The support of those of pension age takes in excess of £9,000 million a year from the resources of the Exchequer, taxpayers' money or contributions—whichever way it is put. Said quickly, that is a figure taken from thin air. However, £9,000 million a year is actually £16 a week from each person in work. [HoN. MEMBERS: "Half the arms programme".] We heard interventions like that before. We had a general election a few months ago. The Labour Party, on the basis of its defence policy, suffered a humiliating reverse. People as a whole are 100 per cent. behind the Government's arms programme.
I know that my plea will not be met. There is such a lack of understanding of the facts of life and arithmetic incompetence in the House that it would be almost sensible to insist that anyone who stood for Parliament should have not A-level but perhaps O-level maths. I know that that would be too much for the right hon. Member for Islwyn (Mr. Kinnock), because I do not believe that he could manage even that level. It is a fact of life that if we are to spend money, we must get it from somewhere. It is no good having ideas about what the money will be spent on or how the resources will be committed unless and until we find out from where those resources will come.
Another way of looking at the contribution that society makes, quite rightly and properly, to the elderly is that for every family of four it costs £1,500 a year. That is a lot of money. We must think about that before we decide from where any more money will come. I am not saying that that is wrong or that we should reduce the amount. At the moment, we are having discussions about the family. We should keep the level of resources for our elderly at least at the same level, but many societies—even some that have recently come within our midst, the immigrant societies—are much better at looking after elderly people. They have a greater commitment to their family members as they grow older. If the Government, through the fiscal system, encouraged people to look after families better, that would be great social progress.
What else have the Government done since they have been in power? During the past 10 years, 200,000 more people than before have been working in the hospital service. That is a valuable service to the elderly. We have reorganised the Health Service. We have taken out a whole layer of administration so that resources can be spent on

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the needs of our people, especially the elderly. Recently we produced the Griffiths report, which gives us a chance to have the Health Service properly managed at last.
The Government have increased the size of the police force. The hon. Member for Hackney, North and Stoke Newington (Mr. Roberts) talked about elderly people living in fear. If there were a change of Government and the Labour party were in power, police numbers would be reduced to their previous levels, road blocks would be put in the way of their activities and they would become so ineffective that elderly people would live in fear, trepidation and trembling all their lives.
Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. I remind the House that the Front Bench spokesmen hope to catch my eye by 9.10 pm. The debate is about the purchasing power of the old-age pension. I hope that the hon. Member for Northampton, North (Mr. Marlow) will return to that.
Mr. Marlow: Inflation is one of the most important factors for pensioners. They need stability in the cost of living. Most people want to save for their old age, to help themselves and to look after themselves. In five years of Labour Government, the savings that people had put aside to look after themselves were cruelly halved in value. That is theft, robbery and deception. Conservatives are committed to ensuring that inflation remains extremely low so that people can save for their old age, look after themselves and retain their pride and dignity.
Pensions this year are very important and we must be as generous as we can, but pensions next year and in succeeding years are also important. The only way to be honest and to do the best for our people is to ensure that the economy of this country is properly run and that business does not at this stage have to pay taxes that will destroy its future. We must ensure that business can invest so that we can increase the wealth of the country and the community and thus have more resources to devote, rightly, to our elderly people.
Labour Members have been howling and complaining, putting forward plans for more expenditure and telling the Government how to cut their expenditure, but they have not said a word about the cost to the public sector or how the public sector can become more efficient and thus release resources. The Government must come to grips with the problem of the public sector and provide resources not only for industry to create more wealth, but to produce more money, more value, more resources and better pensions for our people.
8.41 pm
Mr. Kevin Barron: I am grateful to you, Mr. Deputy Speaker, for calling the hon. Member for Northampton, North (Mr. Marlow) to order and saying that he should stick to matters affecting the plight of pensioners.
The 3·7 per cent. increase in pensions this week is a tragedy for the House. I was told about that in June. A short time later, we had a long debate about Members' salaries in which we decided to give ourselves a rise in July, followed by further increases every January for the next three years, every one of them well over 3·7 per cent. and taking no account of inflation. The decision to give pensioners 3·7 per cent. is a disgrace. No Tory Member
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today has tried to justify the pitifully low pensions of £34 for a single person and just over £54 for a married couple. That is certainly not a healthy pension.
Whatever else was increased by the Labour Government, one increase was achieved, although it was difficult and we had to find the money to pay for it We linked pensions with earnings, which is the fairest way to try to eradicate poverty. The Conservatives took away that link, costing the pensioners money that should now be in their pockets. My hon. Friend the Member for Oldham, West (Mr. Meacher) gave the exact figures. I hope that the Minister will comment on them and on what has happened to old-age pensions since the Conservatives came to office.
We must also consider the effects of other Government policies on pensioners. Rotherham metropolitan borough council had an excellent housing record in the 1970s. Now we cannot afford to build houses for old people in the area. We used to concentrate our energies on building accommodation with wardens and flats or bungalows in which old people could live, but now we cannot make any starts that would help the aged population in Rother Valley. We must accept that there are more old people than ever before. The Government, by not giving local authorities the money to build houses, are attacking pensioners. Many people whom I have seen say that they would like to live in a bungalow because of illness, sickness or disability, but they have little chance of getting into such a house. The Government should consider that matter.
In south Yorkshire, we run an excellent and popular passenger transport service. If anyone does not believe that that service is for the community, especially old people, they could do no better than get on a bus in the Rotherham area at 9.30 am and see the old people travelling on the bus, going to visit relatives or going into town to shop, trying to spin out their pensions a little more. That service is under direct threat from the Government. We are attacking pensioners not just by giving them a rise that is lower than the rate of inflation but by threatening the services that they get.
Meals on wheels, luncheon clubs and home helps have gone to the wall in the past few years. Those services are directly connected with the care of old people. It is an utter disgrace that the local authorities have been forced to cut back on home helps, meals on wheels and luncheon clubs when the number of old-age pensioners is growing. We should expand those services, yet we must cut back because of Government dictates.
It may be true that old people often die from hypothermia. However, in view of the energy surplus, thousands of old people should not die each year. 'We cannot care for them all as individuals, but we could put the energy surplus to use to make sure that old people are kept warm in the winter. I am sorry that we are not thinking of doing that. The allowances are not sufficient.
Mr. McKelvey: It is not a free market.
Mr. Barron: Indeed, it is not a free market.
There are long queues of patients in the National Health Service. It means that there have to be priorities in health care. Who is at the back of the queue for kidney transplants, hip replacements and knee replacements? It is not those of 40 or 50 years of age but those of 60, 70 or

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80 years of age. They do not have priority for treatment because of their age. Indeed, they are discriminated against because of their age.
The list of problems is endless. We shall not be able to means-test our pensioners for ever. We should move away from means-tested benefits for pensioners. At present 2 million pensioners receive supplementary benefit. That is an indictment of this country. We are supposed to be civilised. We should make sure that there are good basic state pensions for old-age pensioners. If one is wondering where to look for finance, one need look no further than Trident. Some £10 billion will be spent on weapons of death and destruction. It is immoral that any Government should consider that when our pensioners are in such a plight.
8.49 pm
Mr. Dennis Skinner: The hon. Member for Northampton, North (Mr. Marlow) talked about the Labour party tabling a motion for propaganda purposes. Let us face it, that cannot be the purpose. I was hoping that it would be the motion that was passed at the Labour party conference in the first week of October, but it missed out one or two things to which I shall refer later. It is nonsense to say it is blatant propaganda. I think that the machine has been at work. I know there was a lot of good will and unity at the Labour party conference but we must now fill in some of the blanks.
The hon. Gentleman talked, as many Conservative Members have done, about not being able to find the money to pay reasonable pensions. Who do they think they are kidding? Yesterday a debate was devoted to the stock exchange. It was about all this money coming through the stock exchange, what is called "liquid stuff'. It was all about ensuring that jobbers and brokers, who it was alleged were not doing as much work as one old-age pensioner, would get fantastic professional salaries or increments—
Mr. Dennis Canavan: Emoluments.
Mr. Skinner: That is the word I was looking for—so they could make money on the side, by inside share dealing and goodness knows what else. The 50 Members of Parliament who represent Lloyds here as underwriters joined in, too. There was plenty of money for that. The place was flooded in it—all spread across the carpet of the House that cost £24 a square yard. Yet the hon. Member for Northampton, North says that there is no money in the country. He spends most of his time talking about where the real wealth is, and all the time throughout the last four and a half years this Tory Government have been aided and abetted by the hon. Member for Northampton, North and all those who should be sitting on the Conservative Benches but have not turned up for the debate. It is significant that there are nearly twice as many Tory Members of Parliament as there are Labour Members of Parliament, yet not one could be found to speak in the later stages of the debate. That shows the paucity of the Government's efforts for the pensioners.
Therefore, I do not take much cognisance of the argument about there being no money. There is always plenty of money for the purposes that some of my hon. Friends referred to earlier.
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My hon. Friend the Member for Kilmarnock and Loudoun (Mr. McKelvey) talked about Trident, which will now cost £10 billion or £12 billion. [Interruption.] I am told it is £20 billion, yet the Government say there is no money in the country. My hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes)—he is a pro-Marketeer and not bad on pensions, as a matter of fact—talked about the Falklands—
Mr. Deputy Speaker: Order. I remind the hon. Gentleman that we are discussing pensioners.
Mr. Skinner: I am trying to give an answer, because we have had a debate of a kind. The only question that has been asked from the Conservative Benches, from the Secretary of State to the last Conservative Member who spoke, is from where a Labour Government would get the money, and it has to be answered.
My hon. Friend the Member for Carrick, Cumnock and Doon Valley said that the Falklands dispute cost £3 billion, but the Government were sending money to the Argentines when there was still a junta. The Prime Minister was telling bankers to send money to Argentina to bail out their economy so that the Argentines could use some of it that ought to be going to the pensioners. The money was going to the Argentines so that they could buy more French Exocets and other armaments with which to bomb the airstrip that the British taxpayers are currently paying for. What lunacy! The Government then have the cheek to tell us that there is no money in the country. We do not believe it, and we will not have it.
We can justifiably be proud of the record of the last Labour Government. I know that they could have done better, I know that they should not have cancelled the Christmas bonus, but they will not fall into that trap again. We want no more instructions to the next Labour Government from the International Monetary Fund and whispers in the ear from the leader of the Liberal party. I remember those sad days. We shall not go down that path again.
Mr. Simon Hughes: You would not have survived without us.
Mr. Skinner: We should have tabled a motion stating that we would pay people decent pensions, build more houses, prop up the welfare state and reduce NHS waiting lists. We should have gone to the country on that basis, and we would not have needed the Liberals.
Last Thursday the Chancellor of the Exchequer made a statement that flies in the face of all that the Tories have said in this debate. He stood at the Dispatch Box and said, I have found a winning combination". I thought that he had come up on the pools. The Minister for Social Security should say how much of that winning combination will go to the old-age pensioners.
The Chancellor meant that he had found a winning combination for the stockbrokers and jobbers and the rest of his friends in the City. Year by year the Conservatives have shoved the balance of power away from working class people and pensioners towards the bosses. An article in the Daily Telegraph on 1 October reveals just how much the pensioners have been hammered. It said that Mr. Smith, a jobber, had got a 250 per cent. pay rise and that his turnaround profit was £100,000.
The Government say that they have no money, yet the big four banks have made profits of £6,000 million in the

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Government's first four years of office. They are hound to make more because interest rates remain at 9, 10 or 11 per cent., despite the fact that inflation is less than 5 per cent. The banks are bound to make money. They cannot fail when interest rates remain at that level. The wealthy have had the money. Tax decreases have not been given to those near the pensioners' bracket. They have gone to the wealthy.
We are not just arguing for a married couple's pension of half average earnings and a single person's pension of one third average earnings. We are also calling for the abolition of standing charges. I have a letter in my pocket from a constituent whose gas bill was £22, 60 per cent. of which went towards the standing charge. That is why pensioners should get free television licences, for example.
The Republic of Ireland, supposedly one of the poorest countries in the world, gives its pensioners free television licences and free passes on road, rail and ferry services, yet it is said that that cannot be done in Britain where North sea oil gushes out of every pore. What nonsense! That typifies the Tory Government. They even attacked the pensioners last Friday by blocking the Bill to help the disabled, many of whom are elderly and suffer from NHS cuts and so on.
Without a doubt, the Labour party is on the side of the pensioners. Much more could be said, but I need only repeat that money is found for Trident and the Falklands and that the banks have made huge profits. Currently £17,000 million is paid to the unemployed. If those 3 to 4 million people were in full-time work and paying taxes and insurance contributions, that real wealth could be distributed.
The Labour party's main argument is that the Government have deliberately run down the economy. They have prevented 4 million people from paying taxes and insurance contributions so that they could shift the balance of power away from the workers and towards the bosses. As a result the pensioners and others like them have suffered. That is the reason why they have lost purchasing power.
Until we turf out the Government, the chances of improving the pensioners' lot are very slim. That is why I welcome the motion. It could have been toughened up to be exactly parallel to the motion that was before the Labour party conference. But make no mistake, when the next Labour Government take office they must carry the motion into practice.
9 pm
Mr. John Powley: If rhetoric and loud noises paid pensioners, they would undoubtedly be well off should the Opposition come to office. Neither rhetoric nor loud talk pays the pensions that we want the elderly to have. The realisation of hard cash pays for benefits for any section of the community. It does not matter whether we are talking about pensioners, the disabled or the chronically sick. If we have no cash, we cannot give benefits. The Opposition can say what they like, but rhetoric does not produce cash for any section of the community.
Mr. Canavan rose—
Mr. Deputy Speaker: Order. The hon. Member does not appear to be giving way.
Mr. Powley: Opposition Members—
Mr. Canavan rose—
Mr. Powley: Opposition Members have derided the word "profit" and those who make profits. I am in business in a small way and my company makes a profit
Mr. McKelvey: On a point of order, Mr. Deputy Speaker. In a debate about the living standard of pensioners, is it in order for the hon. Member to give his living standards?
Mrs. Kellett-Bowman: How ludicrous!
Mr. Powley: Whatever benefits or pensions the Government give, most of the money comes from the profits of companies or from individuals. If they do not make profits, they cannot pay their taxes. They are a means of revenue for the Government and that is how they provide pensions and benefits. Without that revenue, pensions would not be paid.
I do not like the traditional way in which Opposition Members deliberately try to manipulate the emotions of sections of the community. Today they are manipulating the pensioners and trying to inflame emotions. Last Friday they tried to manipulate the chronically sick and disabled in an effort to further their cause. I regard their behaviour as disgraceful.
My opponent at the last general election told his audience on untold occasions, be it pensioners, schools or nurses, "We will give you everything if we are elected. We will give more to the Health Service, to the pensioner and to the education service". Not once during the debate has any Opposition Member told us where the money will come from. If we add up what the Opposition have said, they would find it impossible to produce the goods. They would be unable to give anybody anything as they would not have the resources.
Mr. Canavan rose—
Mr. Deputy Speaker: Order. The hon. Member for Norwich, South (Mr. Powley) is obviously not giving way.
Mr. Powley: The hon. Member for Bolsover (Mr. Skinner) can deride the IMF as much as he likes, but he knows that when the Labour Government got into trouble in 1975 and 1976, and could not give pensioners their Christmas bonus, they had to be bailed out by it in order to save this country from becoming bankrupt.
This Government's record is absolutely first class. It represents realism rather than the rhetoric that we have heard tonight from the Opposition.
9.5 pm
Mr. William McKelvey: I know that I must be brief, but hon. Members will accept that my speech will not be any incantation of rhetoric. The maiden speech made by the hon. Member for York (Mr. Gregory) certainly showed that he has a humane streak. The first part of his speech contained many progressive elements that we would all support, but unfortunately the second part showed that he has already been contaminated by the company that he is keeping on the Conservative Benches.
In response to many of the points raised by Conservative Members I should like to quote something factual. Fortuitously, a letter from a pensioner landed on my desk today. I shall read it out as quickly as possible.

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It is from Margaret Cameron, 15 Main Road, Low Fenwick, Ayrshire. She certainly cannot be accused of rhetoric when she states:
"Dear Mr. McKelvey, I am sure you will not be surprised to receive my protest against further increases in the electricity charges suggested for April 1984. I am now 91 and it is a great strain to meet the heating costs of heating in the winter. So much so that I only heat one room. It would appear we have many power stations in Scotland and yet electricity is not be be cheaper. My old age pension has only been increased by £1·04p and this month is already fully absorbed by my increase in the cost of living. Why does industry need such huge profits? We elderly people will never live to experience or enjoy the advantages of the technological age much less be able to afford them, so why do you make us pay for them? I write for your comments and interest in this matter."
Now that that letter has been recorded in Hansard, the Minister may be able to answer the very questions that that 91-year-old lady asked. We must all have felt the drop in temperature this morning. We shiver on a cold morning. But let us think of what that means to the elderly. The point is that hypothermia will be with us very shortly. Unfortunately, no figures are available to show exactly how many elderly and infirm people will die this winter because they cannot afford to heat even a single room. It is not a question of asking where the money will come from. We do not need any money. Scotland has a surplus of electricity and there is now more coal above the ground than we have had for the past decade. We could give them coal for their coal fires and free electricity. We do not even need to cancel Trident to prevent them from suffering from hypothermia.
Mr. Canavan rose—
Mr. McKelvey: I would be happy to give way to my hon. Friend, but have been told that I have only one minute in which to speak. I shall probably use the remaining time to explain some of the points that my hon. Friend would have raised. Like me, he takes an active part in the fight against fuel poverty. Pensioners suffer abjectly from fuel poverty. The old lady who wrote to me expressed the fears of the elderly on that subject.
Unfortunately, the hon. Member for Northampton, North (Mr. Marlow) is not in the Chamber. He spoke of the pensioners' fear of muggers and of the violence perpetrated on the streets. None of us would tolerate that. Indeed, we all abhor it. There are other ways in which old people are violated. One of them is insidious—if they are not given the proper facilities to keep their homes or at least one of their rooms adequately heated, thousands of old people will die of hypothermia this year. That type of violent crime need not happen, because we have surplus coal stocks and electricity.
9.10 pm
Mr. Jeff Rooker: I congratulate the hon. Member for York (Mr. Gregory) on his maiden speech. I should like to pay tribute to my hon. Friend the Member for Leyton (Mr. Cohen) who has sat through the whole debate, yet has not been able to make a speech—I am not criticising the Chair—because the hon. Member for Norwich, South (Mr. Powley) bowled into the Chamber when the Tories had run out of Members to make speeches. The hon. Gentleman made a speech based on ignorance and prejudice and deprived my hon. Friend of the opportunity to speak.
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I do not believe that anyone could disagree with the first part of the motion:
"That this House regrets that this week's pension uprating is below the current rate of inflation".
It is therefore natural to call on the Government to change their discredited economic policies. We shall continue to do that as long as they remain in office and impose cuts.
My hon. Friend the Member for Oldham, West (Mr. Meacher) concentrated on the mechanics of the financial side of pensioners' standard of living. I shall widen the debate slightly and deal with matters that other hon. Members have mentioned to encompass the quality of life of old people.
The Government have produced voluminous documents about the problems of the elderly. Recently, I re-read sections from their booklet, "Care in Action", of 1981. In that document the Government admitted that elderly people have often been provided with an unacceptably low standard of care. They then set the priorities and objectives for health authorities and local government. The Government said that those bodies should
"strengthen the primary and community care services, together with neighbourhood and voluntary support, to enable elderly people to live at home."
Later in the same year we had the White Paper, "Growing Older". The conclusion reads:
"To enable people to enjoy secure, dignified and fulfilled lives in their later years is a large and ambitious objective. It will never be possible to achieve it for everyone, but there is no doubt that society can do more for its elderly members."
Many of the services that translate that rhetoric into action are the responsibility of local government. Social services departments provide services in so far as the Treasury allows them to do so. Early this year, the Department of the Environment published its audit on social services departments. That document reveals massive variations in expenditure on the elderly. It can vary as much as plus or minus 37 per cent. In a typical area with a population of 500,000, containing 75,000 elderly people, spending varied by plus or minus £2 million per annum. Spending on the over-75s varied as much as plus or minus 42 per cent. between different local authorities. We should be aware that 50 per cent. of spending on social services is accounted for by residential accommodation, that nearly 33 per cent. is accounted for by the home help service and that no other provision accounts for more than 4 per cent. of spending. That shows that a relatively small shift in the expenditure that social services departments are allowed can have a catastrophic effect on elderly people.
The most recent report by the Association of Directors of Social Services of November 1982 pointed out that the frail elderly are three times more likely to get home help or meals on wheels if they live in a northern urban area than if they live in a southern county area. That is why some of my hon. Friends representing northern constituencies find that local authorities in urban areas, which are not famed for being under Tory control are having cuts imposed through the rate capping procedure of the Department of the Environment. Those authorities are spending on services for frail elderly people three times more than is spent by authorities in the south controlled by the Conservatives.
Let me highlight the differences between investment per head of the population in caring for the elderly. Five social services departments were found to invest over per head of the population, and 15 spent less than £30 per

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head of the population. We can imagine the political control of those social services departments. My point is that in no other aspect of local government services would such a wide range of standards be tolerated. It is simply because there is too much discretion, and standards are not good enough under the law. Tory-controlled shire counties take advantage of this and do not provide a good and adequate service.
The Association of Directors of Social Services—this makes the point that my hon. Friend the Member for Bolsover (Mr. Skinner) has made—concluded:
"This leads to standards of care well below what a rich civilised society should tolerate "
We are a rich society. There is money galore for improving services for elderly people. In virtually every debate every day there are examples of where expenditure could be cut and the money transferred to the care of the elderly. The Exchequer is now getting revenue from the North sea amounting to £8 billion. It was not getting a penny piece four years ago. That £8 billion, which is coming in as a windfall to the Government, is being frittered away because none is directed towards the services for the elderly.
What happened in the House last Friday has not gone unnoticed. Many elderly people are disabled. One can draw the connection between what happened on Friday and the audit report. I am not sure about the motives for the report, but it provides useful information and evidence and gives a breakdown of the number of disabled among the elderly. Some 50 per cent., one way or the other, can live satisfactorily without being supported by others; but 2 per cent. cannot handle the most basic task without assistance and 35 per cent. cannot do heavy household cleaning. Altogether, 50 per cent. of our elderly, to a greater or lesser extent, depend upon the services provided by the general community.
We saw the Government's aims in a document published in 1981, but what action has been taken? The Government's White Paper on public expenditure imposed a cut of 4 per cent. in social services departments in the year 1980–81. That was supposed to be followed by a 2 per cent. growth, which the Select Committee in its second report in 1982 said was not enough. That 2 per cent. would not be enough even to keep standards at the present level.
The 1980 expenditure cuts were substantial, and, as reports from social services departments have made abundantly clear, they have not been recovered. It is easier for social services directors to cut services, such as aids and adaptations, than to close an old people's home. Such cuts are made quickly, but their after-effects create massive problems for the elderly. The Government have not realised that.
In the Birmingham social services department the position has become so bad that the chairman was forced to report to the committee on 9 March this year:
"I am advised by the City Solicitor that it is not proper to recommend to the Committee that the Council ignores its statutory obligations."
That Tory chairman had reached the point where, because of the cuts imposed by the Government, he had to contemplate throwing out of the window some of the statutory obligations of the social services department. The Association of Directors of Social Services reported in 1980–81 that 74 out of the 78 reporting authorities had
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made cuts that affected mainly the handicapped and the elderly. My hon. Friend the Member for Oldham, West quoted the directors as saying that those cuts would
"foreshorten the lives of the elderly."
As late as 1982 the association complained that it was receiving two different messages from the Government. The report stated:
"We are also confused by the fact that we get two totally different messages from Central Government; firstly the DHSS say we must expand slightly our expenditure on social services, whilst the Department of the Environment, and Mr Heseltine in particular"—
I suspect that the present Secretary of State is no different—
"say we must reduce Local Government expenditure."
The association also stated that a
"4 per cent., or even 6 per cent., growth would only begin to reflect the type of service development required to prevent standards from dropping."
However, the Government told authorities to cut 4 percent. in 1980 and to plan for 2 per cent. growth later. The association also said that the country had entered such a massive recession since 1980 that the promise of a 2 per cent. growth went out of the window, and that a 4 per cent. to 6 per cent. growth was needed to stop services deteriorating.
The headline in The Guardian on Monday of this week, even with that track record of damage to the elderly, stated:
"Lawson firm on welfare cutbacks."
That contrasts with the headline in the Financial Times of 12 October:
"Biffen warns against social service cuts."
Who in the Cabinet will win that battle? Who will stand up for the elderly, who are being crushed by the Government's cuts? We know that the Leader of the House knows the score, because he has made it abundantly clear. Some of us rely on him, in his quieter moments, to restrain some of the Chancellor's plans.
It is clear that the present Secretary of State, who has made all the cuts demanded of him, in so far as he has never admitted that he has not, has seen the light of day. I welcome his announcement today of an inquiry. In next year's Budget the Prime Minister and the Chancellor cannot muck about with the Pensions Act 1975, because the right hon. Gentleman's inquiry will still be continuing. We shall win a breathing space of another year. It is clear from the speeches of Treasury Ministers, past and present, that the Government wish to tinker with or completely to change the 1975 earnings-related pensions scheme.
Although it is clear from the Government Actuary's report, which the Government have taken on board, that changes must be made, the population has a contract with Parliament—not with the Tory Government or with a Labour Government, because, of the 20 million people who work, about 50 per cent. are contracted in and the rest are contracted out—for that pension scheme before it comes into full working order in 1988. Neither the population nor the Opposition will tolerate the Government slashing that scheme simply because they wish to privatise or to make cuts, or because the Prime Minister says that there will be too many pensioners by the time that she becomes one. The right hon. Lady need not worry about an old-age pension. She will have the cushion of a Prime Minister's pension, and she will never know what it is like to be a pensioner such as the one mentioned by my hon. Friend the Member for Kilmarnock and Loudon (Mr. McKelvey).

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The Government speak with a forked tongue. The Department of the Environment audit of social services departments was carried out partly to ensure that district auditors could see that local social services departments were providing value for money. However, the document "Care in Action", when talking about community-based packages of care, stated:
"The 'cost-effectiveness' of these packages often depends on not putting a financial value on the contribution of informal carers."
They include the voluntary sector and the families out of whom the Government are squeezing yet more time and financial resources. On the one hand there is the question of value for money, and on the other hand there is cost-effectiveness. When the Government talk about the cost-effectiveness and efficiency in the service, they rely on not including the full contribution to the care of the elderly.
Many hon. Members have mentioned home helps. Home helps create wealth. They create just as much wealth as the factory owners, because they enable people to lead fuller lives and allow other members of families to keep on working and contribute to the community. It is true that between 1978 and 1982 there was an increase in home helps, from 44,000 to 47,000, but in fact the number has fallen as a percentaage of the elderly population. That is what counts. The percentage has fallen in respect of the over-75s from 1·8 per cent. in 1978 to 1·7 per cent. in 1982. That looks small, but it is many hundreds of home helps for the over-75s in the country. The percentage has fallen from 9·7 per cent. in 1978 to 8·9 per cent. in 1982—that is home helps as a percentage of the population over 85. That should be the key part of the home help service. Nevertheless, in the area where the demand is greatest the number of home helps has been cut—in real terms, not in absolute numbers.
The Centre for Policy on Aging said in a recent report that it estimates that only half of the people who are in moderate need received the service. Time does not permit me to go into the details that it gave, but the document that it produced was considerable, dealing with the research evidence. It used official figures for people in only moderate need, and it said that only half of those people actually received home help service. Under this Government, for the first time, the social services departments have charged people on supplementary pensions for home helps.
Reference has been made to meals on wheels. There are now 27,000 fewer meals on wheels a week than under the Labour Government. That is an absolute disgrace, when one realises that the need has risen. In 1979–80, the number was 41·7 million. The system was already in force then, and the Government could not change it quickly. In 1981–82, it was 40·3 million—1·4 million fewer meals on wheels a year. That is a scandal. After all, more people die during the winter months than during the summer months. One reason is the lack of heating. Another reason is an inadequate supply of nutritious hot food, and that is a direct result of the fact that 27,000 fewer people a week are getting meals on wheels.
Many of my hon. Friends have mentioned the subject of fuel. The Government intend to tax fuel. Whether or not they call it a tax, that is clearly the Government's intention. The Minister for Social Security wrote a long letter recently to Age Concern. I do not want to quote the
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hon. Gentleman out of context, but he said in that letter that the Government used the introduction of the housing benefit scheme to provide a "convenient opportunity" to take anomalies out of the existing rules on heating additions. What that really meant was that a lot of old people have lost £4·65 a week. Irrespective of what the anomalies were, a lot of old people lost more than £4 a week on the heating addition, as a result of the introduction of housing benefit.
Many tower blocks have their underfloor heating switched off. Calor gas canisters proliferate in many blocks, in contravention of the safety rules that we all know about and constantly tell our constituents about. However, when electricity bills reach £75 to £80 a month a pensioner under a Tory Government is in real trouble. I know of one tower block where the heating is still on. The March 1983 bill for one flat, which was occupied by a lady of over 80, was £294·81. The lady was housebound, and she was not even getting all the heating additions to which she was entitled from the DHSS. She was terrified. As my hon. Friend the Member for Oldham, West said, the elderly today get up at 10 am and go to bed by 6 pm. That is a thundering disgrace, given the wealth that is around.
The Government have taken the opportunity to cut £3 million from pensioners with dependent children. They never referred to that. It slipped through in one of the orders in July. They also took money from widowed mothers by changing the rules of the uprating. None of the Ministers or press releases referred to that fact. About 200 pages of orders slipped through the House just after the general election. The Opposition plead guilty to not spotting the provisions.
No one could argue that the pension has not been cut this week. I will not quote the statistics. I will settle for the headline of The Times of 19 November:
"Rising pensions fail to keep pace with prices."
That is good enough for The Times, me and my constituents.
One or two hon. Members referred to the chiropody service, which faces a complete crisis. The Government have been slipshod. The Secretary of State may smirk?—
Mr. Fowler: I am not.
Mr. Rooker: The right hon. Gentleman was not smirking. I withdraw that remark. He knows as well as I do that the Birmingham foot clinic is under threat of closure because of the squeeze on district health authorities.
Housing benefit cannot be ignored, because of the disastrous effect of its introduction. I have Government figures which show that 1·1 million pensioners lost out when the scheme started. I and my hon. Friends have received an estimate, resulting from the Chancellor's announcement last Thursday, of the consequences of next April's changes in housing benefit. There will be 2·26 million losers of whom 1·15 million are pensioners. I do not care what their income levels are but 1·11 million more losers among pensioners is unacceptable, given the wealth in this country. The cut has been made because the Cabinet is blindly ignorant of how the housing benefit scheme works, as any hon. Member who sat in Committee and watched the orders go through the House could testify.
The hon. Member for Birmingham, Edgbaston (Mrs. Knight) was right when she said that it is not true that there are no problems in Birmingham. There still are. It was

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guaranteed that everyone would be on full housing benefit by 31 December this year. The scheme was supposed to start in April, for the last group of people who were to be transferred. Yesterday I came across a constituent of 80-plus who had not received housing benefit. My constituent had not received a penny piece since April. The private landlord is going bananas. However, he is not threatening eviction, like the city council. The city council threatens people with eviction for not paying their own housing benefit.
Today's generation of elderly people have passed through more dramatic changes in society than any other generation. Go back to the first or second world wars, the first depression, the massive recession that we are suffering now, the change in technology, values and attitudes, and this group of elderly people is utterly bewildered by what it has had to put up with for the first time.
The Government come along with their penny-pinching measures, whatever they may say about the retail price index. They are the first Government to bring a Bill before the House to cut pensions by 1p in the pound. Whatever the arguments and statistics about the previous Labour Government, at the end of the day pensioners were 20p in the pound better off, after inflation, compared to the 3 per cent. of the first four years of this Government.
Mr. Paul Marland: What about the Christmas bonus?
Mr. Rooker: Even if we count the Christmas bonus in the pensioners' annual income, we are quids in compared with the Tory party, and the hon. Gentleman knows it. If the Tories were so confident, they would have increased the Christmas bonus. We have reached the point when, if we do not defend the elderly, this Government will defeat them. That is why I ask my hon. Friends to join me in the Lobby tonight.
9.35 pm
The Minister for Social Security (Dr. Rhodes Boyson): This has been at times an emotional as well as a rational debate, and we have been privileged to hear a speech from the hon. Member for Bolsover (Mr. Skinner). I cannot say that I agreed with him, but I enjoyed what he said. This House is made up of people with all kinds of characteristics and ideas and is, I hope, representative of all people in this country.
From the Government Benches—for example, from my hon. Friend the Member for Devizes (Mr. Morrison)—came not only support for the amendment, to which I shall come, but some prodding from time to time about various actions that we should take. There cannot be any hon. Member who is not concerned for the standard of living of the pensioner. I do not bow to anybody in any other party when it comes to compassion. The question is how to do it so that in the long run not only the pensioner but the country is better off, because, if the country is not better off, the pensioner will not be better off. In the realisation of that lies the diffence between the two sides of the House.
My hon. Friends the Members for Teignbridge (Mr. Nicholls) and for Northampton, North (Mr. Marlow) made it clear that they, like all Conservative Members, feel as much as anybody for the mentally and physically
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handicapped, the old and the young. As they pointed out, it is a question of so ordering our society that, in the long run, we can raise their standard of living.
I come to our record with the pensioners. In the five years from November 1978 to November 1983 there was 70 per cent. inflation while the uprating of the pensions was 75 per cent. The living standard of pensioners is marginally better now than when the pensioners rejoiced at the failure of Labour and its defeat in the May 1979 election. It is only marginally better and we should have liked to have done better, but that has been achieved.
Reference was made from the Liberal Benches to the pensioners' price index. Compared with that index -which has increased by only 64·3 per cent.—the 75 per cent. uprating is even higher. Reference was also made—I will not dwell on it too much because I do not want unduly to hurt the feelings of Opposition Members—to the tragic history of the Labour party in 1975–76, to Christmas bonuses not being paid, and to £500 million being taken away by a 15 per cent. uprating instead of a 21 per cent. uprating. Compared with that record, we have no apologies to make.
Heating additions have gone up by 8·6 per cent. in this month's uprating. In 1980 the Conservatives gave to supplementary pensioners over the age of 70 an automatic heating addition. The cost of that addition is now £200 million, going to 1½ million supplementary pensioners. When that is linked with the automatic giving, as happened in 1980, of heating additions to families on supplementary benefit with children below the age of five, it means £100 million more in real terms in heating allowances than in 1978–79. Therefore, the old and the young are getting more than they were when we came to power.
As for heating addition rates, since 1978 heating allowance rates have gone up by 140 per cent. compared with fuel costs rising by 100 per cent. Thus, not only are we giving the allowance to more people, but what we are giving is more valuable.
Consider what we have done for the 60-year-olds, those who unfortunately—as we get the economy of the nation right—are still unemployed. In November 1981 we decided that the unemployed at the age of 60 should after one year go on to the higher rate of supplementary benefit. That was done by the Conservative Government.
In 1983 we gave automatic credits to all unemployed men between 60 and 65 to help them fill gaps in their contribution record. That, too, was done by this Government. In June of this year we decided that a 60-year-old unemployed person should immediately go on the higher rate of supplementary benefit. That makes a difference of £11 for a couple and £7·50 for a single person. That also was done by this Government.
Mr. Foulkes: What about the death grant?
Mr. Boyson: The facts that I am mentioning are worrying the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes), but he will have to listen to what I am saying; he may even enjoy it. I respect him highly and I listened to him. His turn has now come to listen.
We inherited in 1979 a mobility allowance of £10—it is now £19, an increase of 90 per cent., which is 5·3 per cent. more than the increase in transport costs during that time. Again we have done more than could be expected.

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I hate to mention the Christmas bonus again but we have made it statutory. Now it must be paid. It is not a decision made in any year.
Mr. Foulkes: What about the death grant?
Dr. Boyson: I have not yet reached the death grant. I am dealing with old-age pensioners—I have not reached the undertakers yet.
The debt of honour of our manifesto pledge in 1979 to war widows for pensions and allowances to be tax exempt was carried out immediately after the 1979 election. A great many people were involved. For those who want to continue working we have increased the earnings limit form £57 to £65 for men between 65 and 70 and for women aged between 60 and 65. That is a 14 per cent. increase. That is not chickenfeed. It is 9 per cent. more than inflation. They can earn their additional money without losing.
On supplementary benefits, we have increased by 50 per cent. in two years, from £2,000 to £3,000, the minimum amount a person may have before he can claim supplementary benefit. Many more people can have assistance, as my right hon. Friend said. We have allowed at the same time £1,500 of life assurance to be disregarded so that people can still have supplementary benefit.
Mr. Foulkes rose—
Dr. Boyson: I am glad that the hon. Gentleman is listening. Other hon. Members were not here and I could not rely on the hon. Gentleman to tell them.
A person can have capital of £500, against £300 last year, before his entitlement to supplementary benefit single payments is affected.
Mr. Foulkes: What about the death grant?
Dr. Boyson: I have not yet reached the death grant. I am dealing with low income families. I have not mentioned death grant. But I would not want the hon. Gentleman to worry because I have not mentioned it. I did not intend to mention it but because of his persistence he will get his reward.
According to the DHSS report that came out recently 100,000 fewer pensioners in 1981 compared with 1979 were below supplementary benefit level. I have quoted 1981 because it will be another year or two before we have the 1983 figures. I shall come back to the hon. Member for Carrick, Cumnock and Doon Valley when I have those figures and bring him up to date.
As for job release, where people retire early so that someone else can take their job, the Labour Government spent £22 million in 1978–79. In the past year we have spent £212 million to enable older people to leave their jobs so that others can take them.
The hon. Member for Oldham, West (Mr. Meacher) dodged the issue of inflation. Inflation is the most terrible thing for someone who has saved up—however small those savings are—to supplement the pension and to live on the interest of what has been saved. Few people in this country today do not have savings of some type. There are quite a number of people, including Labour voters—not just those who want to buy their council houses—with savings. As my right hon. Friend said, there was 110 per cent. inflation in 5½ years of Labour Government. Every £100 that was put away was eroded in value by more
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than half after that 5½ years. It is no wonder that some grandmothers are still frightened to talk to members of the Labour party when they come around after dark. By bringing back the value of money we have helped pensioners. The value of money is essential to a good and healthy society. Pensioners gain from that.
Mr. Rooker: I want the Minister to explain housing benefits. Why does he believe that the index-linked bonds that were introduced under the last Labour Government were called granny bonds?
Dr. Boyson: We wanted a property-owning democracy and every granny with a bond. I am prepared to appear on television with the hon. Gentleman advertising that throughout the length and breadth of the country.
In discussing housing benefits, I come to the most difficult part of my script. When I have lived through this debate, I can take even death in its stride. About £4 billion is going to about one third of houses. Housing benefits have been given to those on increasingly high levels of income and greater amounts have been spent. The adjustments to housing benefit, to which the hon. Member for Birmingham, Perry Barr (Mr. Rooker) referred, will mean a cut of about 5 per cent. in total expenditure. However, the needs allowances are being uprated this November by about 4 per cent. At the end of next April 2½ million out of 4 million pensioners on housing benefits will still be better off than they were in April of this year, even after taking account of the changes last April, the November uprating and next April's changes. Of the pensioners affected, nearly one third will lose less than 25p a week and over half will lose less than 50p a week.
I give three cases of senior citizens on housing benefits. The recent changes have no effect on the housing benefit of a non-dependent son or daughter living with his or her pensioner parents and who is at school, on the youth training scheme or on supplementary benefit. If a pensioner is living as a non-dependent with his son or daughter there is no change of housing benefit. If a pensioner's income is no more than £9·75 above a state pension, there is no change in housing benefit. It is wrong to say that the Government have said, "Who are the poorest in the land? Let us line them up and do the worst that we can for them." We have protected those on supplementary benefit and the lowest incomes. I believe that at one time the philosophy of the Labour party was to look after those who were the worst off in our society.
About 500,000 families will be helped from next April with £1 a week extra when we increase the dependent children's addition to the needs allowance. There were problems in Birmingham when a computer broke down. Local authorities quickly complained that the system was not working. I have received no further request for extensions to the transitional arrangements for implementing housing benefit, although extensions have twice been given.
I shall now deal with the pensions inquiry. I will then give a short summing up. I am sure that hon. Members would be disappointed if I did not do that. [Interruption.] There is clearly approval for that.
Mr. Foulkes: What about the death grant?
Dr. Boyson: Yes, then there is the death grant. The hon. Gentleman should come to all my meetings, not just some of them.

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I inherited—if that is the right expression—a report on the death grant. There were replies from some 700 people, some with large petitions, referring to three ways in which the death grant could be dealt with. Of that total, 55 per cent. said that they did not like any of the proposals, 30 per cent. just wanted the grant increased and the other 15 per cent. we could not understand. We are still studying the 15 per cent., but there was an overwhelming decision.
To uprate the death grant in line with the present cost of funerals would cost hundreds of millions of pounds.
Mr. Rooker: Two hundred.
Dr. Boyson: I accept the hon. Gentleman's figure. At least £200 million would be added. That money is not available. The choice is, therefore, between allocating the available funds through means-testing, to which the Opposition object, and giving it to those most in need or doing it in some other way. With regard to those who have no income at all, last year some 11,000 such people were paid an average of £200 for funerals, so it is not true that people with nothing cannot get grants.
Mr. Foulkes: I am sure that the Minister will agree that this is no laughing matter. The people who replied may have been confused, but it is not their business to make a decision. It is the Government's business. Will the Minister give a clear assurance that an announcement will be made, preferably before Christmas, about the future of the death grant, since it is something for which people have been waiting for four years?
Dr. Boyson: I assure the hon. Gentleman that we shall move at least as fast as the Labour Government on this.
Mr. Skinner: Will the Minister give way?
Dr. Boyson: No, I listened to the hon. Gentleman without interrupting him.
Social security expenditure by the Government in real terms is 20 per cent. higher than it was in 1978 under the Labour Government, so we shall take no objections from Labour Members about what we are doing. Increased expenditure of £748 million was provided for in the spring Budget this year and the autumn statement provided a further increase in social security expenditure of £163 million. We have no apologies to make in relation to our spending on the social security system.
My right hon. Friend the Secretary of State referred today to other important long-term factors. My hon. Friend the Member for York (Mr. Gregory) in his maiden speech, the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) for the Liberals, my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) and the hon. Member for Oldham, West in opening for the Opposition all referred to the need for an inquiry to get the long-term question of pensions right. I trust that we can deal with this in an entirely non-partisan manner. As my right hon. Friend the Secretary of State said, similar changes were made in 1975 when he was Opposition spokesman. We trust that the same will apply now.
There are four further points. First, on occupational pensions, there is the problem of the early leaver. Employees in occupational schemes often have no option but to join and accept the terms given. The terms are often unfavourable if the employee leaves for another job because the entitlement is likely to be frozen. We all receive letters about that. The Government have accepted the majority report of the Occupational Pensions Board in
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1981 requiring uprating of pension rights by 5 per cent. per annum or up to 5 per cent. if inflation is lower, as we trust that it will be in years to come if the Conservatives remain in power.
Mr. Foulkes: We have heard all that.
Dr. Boyson: Not all hon. Members were present earlier, or does the hon. Gentleman propose to tell the others outside?
A consultative document will be issued next Tuesday asking for comments by the end of February 1984 on the option of legislation in the 1984–85 parliamentary Session.
Secondly, on disclosure of information, the 1982 report of the Occupational Pensions Board recommended improvements in the information available not only on individual pension rights but on the overall schemes, on audited accounts, actuarial valuations, annual trustee reports and investment reports. As for the publication of that report, my right hon. Friend the Secretary of State accepted the need in principle to legislate on disclosure and established a working group, which has reported on issues such as a register of occupational pension schemes and clarification of trustee and employee responsibilities. We shall issue a consultative document early next year with the aim of including disclosure measures in proposed legislation for early leavers.
We must also consider the report of Professor Gower, which is expected shortly, on the adequacy of provisions for protecting investors in and beneficiaries of investment funds.
In addition, as my right hon. Friend has said, we are setting up a pensions inquiry to report shortly on the whole question of the adequacy and cost of state, occupational and private provision for retirement and portability of pension rights. The Select Committee report on the retirement age will also be taken fully into consideration. Tomorrow the Government's response to the report by the Select Committee on Social Services will be published. My hon. Friend the Member for Eastleigh (Sir D. Price) will introduce a debate on retirement age in the House on Friday this week.
A good life for the pensioner depends not just on the amount of money that he receives but on living a useful life in society. We should see that that is so, as people live longer. Flexible retirement means that one can choose when one retires. People are changing their jobs much more often up to the age of 60 or 65, and they do all sorts of things later. It is most satisfying for any senior citizen to feel that he is part of the family, has a job to do and is part of the community.
I recently read a book by Eric Midwinter. It was a biography of W. G. Grace, a person of considerable versatility. It is well worth reading because of what he said about the university of the third age. Some time in the future we shall have to start thinking about education from the age of 60 onwards. I trust that we shall also be able to do that in a bipartisan fashion.
Pensioners are part of society. They are concerned not just about money coming in. I read a Gallup poll this month, which may interest hon. Members. Twice as many pensioners are concerned about defence as about pensions. There is no doubt which party they support on that—the Conservative party. More pensioners are concerned about inflation than about pensions. Again, more will support the Conservative party. Of the number of pensioners most

407
concerned about pensions 60 per cent. are most concerned about law and order. We are charged with depriving pensioners of the high living standards that they deserve. However, they are not so concerned about that. According to the first report of the British crime survey, they are more concerned than young people about law and order on the streets. Again, the Conservative party is concerned about law and order.
The Opposition's motion states that we are
"depriving pensioners of the higher living standards they deserve."
No one in the House believes that pensioners do not deserve high living standards. However, we must get the economy going so that we can pay them what they deserve. Also, throughout one's life, one must consider carefully one's income and expenditure, so that one has a satisfactory retirement. Pensioners deserve a good standard of living, but we can give it to them only when we get the economy right. As well as doing that we need to decrease the rate of inflation and increase production, and then we shall have the capacity to look after the young and the old, and the mentally and physically handicapped. Until then, it is no good saying what people deserve. The hon. Member for Bolsover may deserve more. But until we get the economy right, we cannot offer more, even to the hon. Gentleman.
A Gallup poll in June showed the way in which pensioners voted at the election. Today Opposition Members claimed to speak with concern and integrity on their behalf. According to the Gallup poll, 48 per cent. of 65-year-olds, and people over 65 voted Conservative compared to 33 per cent. who voted Labour, and 19 per cent. who voted for the alliance. They believe that we are the Government to get the country right and to give them what they deserve.
Mr. James Hamiltonrose in his place and claimed to move, That the Question be now put.
Question, That the Question be now put, put and agreed to.
Question put accordingly, That the original words stand part of the Question:—
The House divided: Ayes 197, Noes 343.

Division No. 76]

[10.00 pm

AYES

Abse, Leo

Brown, Hugh D. (Provan)

Adams, Allen (Paisley N)

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

Alton, David

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

Anderson, Donald

Brown, Ron (E'burgh, Leith)

Archer, Rt Hon Peter

Caborn, Richard

Ashdown, Paddy

Callaghan, Jim (Heyw'd & M)

Ashley, Rt Hon Jack

Campbell, Ian

Ashton, Joe

Canavan, Dennis

Atkinson, N. (Tottenham)

Carlile, Alexander (Montg'y)

Bagier, Gordon A. T.

Carter-Jones, Lewis

Banks, Tony (Newham NW)

Cartwright, John

Barnett, Guy

Clark, Dr David (S Shields)

Barron, Kevin

Clay, Robert

Beckett, Mrs Margaret

Cocks, Rt Hon M. (Bristol S.)

Beith, A. J.

Cohen, Harry

Bell, Stuart

Coleman, Donald

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

Concannon, Rt Hon J. D.

Bermingham, Gerald

Conlan, Bernard

Bidwell, Sydney

Cook, Robin F. (Livingston)

Blair, Anthony

Corbett, Robin

Boothroyd, Miss Betty

Corbyn, Jeremy

Boyes, Roland

Cowans, Harry

Brown, Gordon (D'f'mline E)

Craigen, J. M.

408

Crowther, Stan

Marek, Dr John

Cunningham, Dr John

Marshall, David (Shettleston)

Davies, Rt Hon Denzil (L'lli)

Martin, Michael

Davies, Ronald (Caerphilly)

Mason, Rt Hon Roy

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

Maxton, John

Deakins, Eric

Maynard, Miss Joan

Dixon, Donald

Meacher, Michael

Dobson, Frank

Meadowcroft, Michael

Dormand, Jack

Michie, William

Douglas, Dick

Millan, Rt Hon Bruce

Dubs, Alfred

Miller, Dr M. S. (E Kilbride)

Duffy, A. E. P.

Mitchell, Austin (G't Grimsby)

Eadie, Alex

Morris, Rt Hon A. (W'shawe)

Eastham, Ken

Morris, Rt Hon J. (Aberavon)

Ellis, Raymond

Nellist, David

Evans, Ioan (Cynon Valley)

Oakes, Rt Hon Gordon

Evans, John (St. Helens N)

O'Brien, William

Ewing, Harry

O'Neill, Martin

Fatchett, Derek

Park, George

Faulds, Andrew

Parry, Robert

Field, Frank (Birkenhead)

Patchett, Terry

Fields, T. (L'pool Broad Gn)

Pendry, Tom

Fisher, Mark

Penhaligon, David

Flannery, Martin

Pike, Peter

Forrester, John

Powell, Raymond (Ogmore)

Foster, Derek

Prescott, John

Foulkes, George

Radice, Giles

Fraser, J. (Norwood)

Randall, Stuart

Freeson, Rt Hon Reginald

Redmond, M.

Freud, Clement

Richardson, Ms Jo

Garrett, W. E.

Roberts, Ernest (Hackney N)

Gilbert, Rt Hon Dr John

Robertson, George

Godman, Dr Norman

Robinson, G. (Coventry NW)

Golding, John

Rogers, Allan

Gould, Bryan

Rooker, J. W.

Hamilton, James (M'well N)

Ross, Ernest (Dundee W)

Hamilton, W. W. (Central Fife)

Ross, Stephen (Isle of Wight)

Harman, Ms Harriet

Rowlands, Ted

Harrison, Rt Hon Walter

Ryman, John

Hart, Rt Hon Dame Judith

Sedgemore, Brian

Hattersley, Rt Hon Roy

Sheerman, Barry

Healey, Rt Hon Denis

Sheldon, Rt Hon R.

Heffer, Eric S.

Shore, Rt Hon Peter

Hogg, N. (C'nauld & Kilsyth)

Short, Ms Clare (Ladywood)

Holland, Stuart (Vauxhall)

Short, Mrs (W'hampt'n NE)

Home Robertson, John

Silkin, Rt Hon J.

Howells, Geraint

Skinner, Dennis

Hoyle, Douglas

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

Hughes, Robert (Aberdeen N)

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

Hughes, Roy (Newport East)

Soley, Clive

Hughes, Sean (Knowsley S)

Spearing, Nigel

Hughes, Simon (Southwark)

Steel, Rt Hon David

Janner, Hon Greville

Stewart, Rt Hon D. (W Isles)

Jenkins, Rt Hon Roy (Hillh'd)

Stott, Roger

John, Brynmor

Straw, Jack

Jones, Barry (Alyn & Deeside)

Thomas, Dafydd (Merioneth)

Kaufman, Rt Hon Gerald

Thomas, Dr R. (Carmarthen)

Kennedy, Charles

Thompson, J. (Wansbeck)

Kilroy-Silk, Robert

Thorne, Stan (Preston)

Kirkwood, Archibald

Tinn, James

Lamond, James

Torney, Tom

Leadbitter, Ted

Varley, Rt Hon Eric G.

Leighton, Ronald

Wainwright, R.

Lewis, Ron (Carlisle)

Wallace, James

Lewis, Terence (Worsley)

Wardell, Gareth (Gower)

Litherland, Robert

Wareing, Robert

Lloyd, Tony (Stretford)

Weetch, Ken

Lofthouse, Geoffrey

Welsh, Michael

Loyden, Edward

White, James

McCartney, Hugh

Wigley, Dafydd

McDonald, Dr Oonagh

Williams, Rt Hon A.

McGuire, Michael

Winnick, David

McKay, Allen (Penistone)

Woodall, Alec

McKelvey, William

Young, David (Bolton SE)

Mackenzie, Rt Hon Gregor

McNamara, Kevin

Tellers for the Ayes:

McTaggart, Robert

Mr. Frank Haynes and Mr. John McWilliam.

Madden, Max

409

NOES

Aitken, Jonathan

Eggar, Tim

Alexander, Richard

Emery, Sir Peter

Amery, Rt Hon Julian

Evennett, David

Amess, David

Eyre, Reginald

Ancram, Michael

Fairbairn, Nicholas

Arnold, Tom

Fallon, Michael

Ashby, David

Favell, Anthony

Aspinwall, Jack

Fenner, Mrs Peggy

Atkins, Rt Hon Sir H.

Finsberg, Geoffrey

Atkins, Robert (South Ribble)

Fletcher, Alexander

Atkinson, David (B'm'th E)

Fookes, Miss Janet

Baker, Kenneth (Mole Valley)

Forman, Nigel

Baker, Nicholas (N Dorset)

Forsyth, Michael (Stirling)

Baldry, Anthony

Forth, Eric

Banks, Robert (Harrogate)

Fowler, Rt Hon Norman

Batiste, Spencer

Fox, Marcus

Beaumont-Dark, Anthony

Franks, Cecil

Bellingham, Henry

Fraser, Peter (Angus East)

Bendall, Vivian

Freeman, Roger

Benyon, William

Fry, Peter

Berry, Sir Anthony

Gale, Roger

Best, Keith

Galley, Roy

Bevan, David Gilroy

Gardiner, George (Reigate)

Biffen, Rt Hon John

Gardner, Sir Edward (Fylde)

Biggs-Davison, Sir John

Garel-Jones, Tristan

Blaker, Rt Hon Sir Peter

Gilmour, Rt Hon Sir Ian

Body, Richard

Glyn, Dr Alan

Bonsor, Sir Nicholas

Goodhart, Sir Philip

Bottomley, Peter

Goodlad, Alastair

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

Gorst, John

Boyson, Dr Rhodes

Gow, Ian

Braine, Sir Bernard

Gower, Sir Raymond

Brandon-Bravo, Martin

Green way, Harry

Bright, Graham

Gregory, Conal

Brinton, Tim

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

Brittan, Rt Hon Leon

Griffiths, Peter (Portsm'th N)

Brooke, Hon Peter

Grist, Ian

Brown, M. (Brigg & Cl'thpes)

Ground, Patrick

Browne, John

Grylls, Michael

Bruinvels, Peter

Hamilton, Hon A. (Epsom)

Bryan, Sir Paul

Hamilton, Neil (Tatton)

Buchanan-Smith, Rt Hon A.

Hampson, Dr Keith

Buck, Sir Antony

Hanley, Jeremy

Budgen, Nick

Hannam, John

Bulmer, Esmond

Hargreaves, Kenneth

Burt, Alistair

Harris, David

Butcher, John

Harvey, Robert

Butler, Hon Adam

Haselhurst, Alan

Butterfill, John

Havers, Rt Hon Sir Michael

Carlisle, John (N Luton)

Hawksley, Warren

Carlisle, Kenneth (Lincoln)

Hayes, J.

Carttiss, Michael

Hayhoe, Barney

Chapman, Sydney

Hayward, Robert

Chope, Christopher

Heathcoat-Amory, David

Churchill, W. S.

Heddle, John

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

Henderson, Barry

Clark, Dr Michael (Rochford)

Heseltine, Rt Hon Michael

Clark, Sir W. (Croydon S)

Hickmet, Richard

Clarke Kenneth (Rushcliffe)

Higgins, Rt Hon Terence L.

Clegg, Sir Walter

Hind, Kenneth

Cockeram, Eric

Hirst, Michael

Colvin, Michael

Hogg, Hon Douglas (Gr'th'm)

Conway, Derek

Holland, Sir Philip (Gedling)

Coombs, Simon

Holt, Richard

Cope, John

Hooson, Tom

Cormack, Patrick

Hordern, Peter

Couchman, James

Howard, Michael

Critchley, Julian

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

Crouch, David

Howarth, Gerald (Cannock)

Dickens, Geoffrey

Howell, Rt Hon D. (G'ldford)

Dicks, T.

Howell, Ralph (N Norfolk)

Dorrell, Stephen

Hubbard-Miles, Peter

Douglas-Hamilton, Lord J.

Hunt, David (Wirral)

Dover, Denshore

Hunt, John (Ravensbourne)

du Cann, Rt Hon Edward

Hunter, Andrew

Dunn, Robert

Hurd, Rt Hon Douglas

Durant, Tony

Irving, Charles

Dykes, Hugh

Jackson, Robert

Edwards, Rt Hon N. (P'broke)

Jenkin, Rt Hon Patrick

410

Jessel, Toby

Page, Richard (Herts SW)

Johnson-Smith, Sir Geoffrey

Parkinson, Rt Hon Cecil

Jones, Gwilym (Cardiff N)

Parris, Matthew

Jones, Robert (W Herts)

Patten, Christopher (Bath)

Jopling, Rt Hon Michael

Patten, John (Oxford)

Joseph, Rt Hon Sir Keith

Pawsey, James

Kellett-Bowman, Mrs Elaine

Peacock, Mrs Elizabeth

Kershaw, Sir Anthony

Percival, Rt Hon Sir Ian

Key, Robert

Pink, R. Bonner

King, Roger (B'ham N'field)

Pollock, Alexander

King, Rt Hon Tom

Porter, Barry

Knight, Gregory (Derby N)

Powell, William (Corby)

Knight, Mrs Jill (Edgbaston)

Powley, John

Knowles, Michael

Prentice, Rt Hon Reg

Knox, David

Price, Sir David

Lamont, Norman

Prior, Rt Hon James

Lang, Ian

Proctor, K. Harvey

Latham, Michael

Pym, Rt Hon Francis

Lawler, Geoffrey

Raffan, Keith

Lawrence, Ivan

Rathbone, Tim

Lawson, Rt Hon Nigel

Rees, Rt Hon Peter (Dover)

Leigh, Edward (Gainsbor'gh)

Renton, Tim

Lennox-Boyd, Hon Mark

Rhodes James, Robert

Lester, Jim

Rhys Williams, Sir Brandon

Lewis, Sir Kenneth (Stamf'd)

Ridley, Rt Hon Nicholas

Lightbown, David

Ridsdale, Sir Julian

Lilley, Peter

Rifkind, Malcolm

Lloyd, Ian (Havant)

Rippon, Rt Hon Geoffrey

Lloyd, Peter, (Fareham)

Roberts, Wyn (Conwy)

Lord, Michael

Robinson, Mark (N'port W)

Luce, Richard

Roe, Mrs Marion

McCrindle, Robert

Rossi, Sir Hugh

McCurley, Mrs Anna

Rost, Peter

MacGregor, John

Rowe, Andrew

MacKay, Andrew (Berkshire)

Rumbold, Mrs Angela

MacKay, John (Argyll & Bute)

Ryder, Richard

Maclean, David John.

Sackville, Hon Thomas

Macmillan, Rt Hon M.

Sainsbury, Hon Timothy

McNair-Wilson, M. (N'bury)

Sayeed, Jonathan

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

Shaw, Giles (Pudsey)

McQuarrie, Albert

Shaw, Sir Michael (Scarb')

Madel, David

Shelton, William (Streatham)

Major, John

Shepherd, Colin (Hereford)

Malins, Humfrey

Shepherd, Richard (Aldridge)

Malone, Gerald

Silvester, Fred

Maples, John

Sims, Roger

Marland, Paul

Smith, Tim (Beaconsfield)

Marlow, Antony

Soames, Hon Nicholas

Marshall, Michael (Arundel)

Speed, Keith

Mates, Michael

Speller, Tony

Maude, Francis

Spence, John

Maxwell-Hyslop, Robin

Spencer, D.

Mayhew, Sir Patrick

Spicer, Michael (S Worcs)

Merchant, Piers

Squire, Robin

Miller, Hal (B'grove)

Stanbrook, Ivor

Mills, Iain (Meriden)

Steen, Anthony

Mills, Sir Peter (West Devon)

Stern, Michael

Miscampbell, Norman

Stevens, Martin (Fulham)

Mitchell, David (NW Hants)

Stewart, Allan (Eastwood)

Moate, Roger

Stewart, Andrew (Sherwood)

Monro, Sir Hector

Stewart, Ian (N Hertf'dshire)

Montgomery, Fergus

Stokes, John

Moore, John

Stradling Thomas, J.

Morris, M. (N'hampton, S)

Sumberg, David

Morrison, Hon C. (Devizes)

Tapsell, Peter

Moynihan, Hon C.

Taylor, John (Solihull)

Mudd, David

Tebbit, Rt Hon Norman

Murphy, Christopher

Temple-Morris, Peter

Neale, Gerrard

Terlezki, Stefan

Needham, Richard

Thomas, Rt Hon Peter

Nelson, Anthony

Thompson, Donald (Calder V)

Neubert, Michael

Thompson, Patrick (N'ich N)

Nicholls, Patrick

Thorne, Neil (llford S)

Norris, Steven

Thornton, Malcolm

Onslow, Cranley

Thurnham, Peter

Oppenheim, Philip

Townend, John (Bridlington)

Oppenheim, Rt Hon Mrs S,

Townsend, Cyril D. (B'heath)

Osborn, Sir John

Tracey, Richard

Ottaway, Richard

Trippier, David

Page, John (Harrow W)

Twinn, Dr Ian

411

Vaughan, Dr Gerard

Wells, John (Maidstone)

Viggers, Peter

Whitfield, John

Waddington, David

Whitney, Raymond

Wakeham, Rt Hon John

Wiggin, Jerry

Waldegrave, Hon William

Winterton, Mrs Ann

Walden, George

Winterton, Nicholas

Walker, Rt Hon P. (W'cester)

Wolfson, Mark

Wall, Sir Patrick

Wood, Timothy

Waller, Gary

Woodcock, Michael

Walters, Dennis

Young, Sir George (Acton)

Ward, John

Younger, Rt Hon George

Wardle, C. (Bexhill)

Watson, John

Tellers for the Noes:

Watts, John

Mr. Carol Mather, and Mr. Robert Boscawen.

Wells, Bowen (Hertford)

Question accordingly negatived.
Question put, That the proposed words be there added:
The House divided: Ayes 343, Noes 198

Division No. 77]

[10.15 pm

AYES

Aitken, Jonathan

Clark, Sir W. (Croydon S)

Alexander, Richard

Clarke Kenneth (Rushcliffe)

Amery, Rt Hon Julian

Clegg, Sir Walter

Amess, David

Cockeram, Eric

Ancram, Michael

Colvin, Michael

Arnold, Tom

Conway, Derek

Ashby, David

Coombs, Simon

Aspinwall, Jack

Cope, John

Atkins, Rt Hon Sir H.

Cormack, Patrick

Atkins, Robert (South Ribble)

Couchman, James

Atkinson. David (B'm'th E)

Critchley, Julian

Baker, Kenneth (Mole Valley)

Crouch, David

Baker, Nicholas (N Dorset)

Dickens, Geoffrey

Baldry, Anthony

Dicks, T.

Banks, Robert (Harrogate)

Dorrell, Stephen

Batiste, Spencer

Douglas-Hamilton, Lord J.

Beaumont-Dark, Anthony

Dover, Denshore

Bellingham, Henry

du Cann, Rt Hon Edward

Bendall, Vivian

Dunn, Robert

Benyon, William

Durant, Tony

Berry, Sir Anthony

Dykes, Hugh

Best, Keith

Edwards, Rt Hon N. (P'broke)

Bevan, David Gilroy

Eggar, Tim

Biffen, Rt Hon John

Emery, Sir Peter

Biggs-Davison, Sir John

Evennett, David

Blaker, Rt Hon Sir Peter

Eyre, Reginald

Body, Richard

Fairbairn, Nicholas

Bonsor, Sir Nicholas

Fallon, Michael

Bottomley, Peter

Favell, Anthony

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

Fenner, Mrs Peggy

Boyson, Dr Rhodes

Finsberg, Geoffrey

Braine, Sir Bernard

Fletcher, Alexander

Brandon-Bravo, Martin

Fookes, Miss Janet

Bright, Graham

Forman, Nigel

Brinton, Tim

Forsyth, Michael (Stirling)

Brittan, Rt Hon Leon

Forth, Eric

Brooke, Hon Peter

Fowler, Rt Hon Norman

Brown, M. (Brigg & Cl'thpes)

Fox, Marcus

Browne, John

Franks, Cecil

Bruinvels, Peter

Fraser, Peter (Angus East)

Bryan, Sir Paul

Freeman, Roger

Buchanan-Smith, Rt Hon A.

Fry, Peter

Buck, Sir Antony

Gale, Roger

Budgen, Nick

Galley, Roy

Bulmer, Esmond

Gardiner, George (Reigate)

Burt, Alistair

Gardner, Sir Edward (Fylde)

Butcher, John

Garel-Jones, Tristan

Butler, Hon Adam

Gilmour, Rt Hon Sir Ian

Butterfill, John

Glyn, Dr Alan

Carlisle, John (N Luton)

Goodhart, Sir Philip

Carlisle, Kenneth (Lincoln)

Goodlad, Alastair

Carttiss, Michael

Gorst, John

Chapman, Sydney

Gow, Ian

Chope, Christopher

Gower, Sir Raymond

Churchill, W. S.

Greenway, Harry

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

Gregory, Conal

Clark, Dr Michael (Rochford)

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

412

Griffiths, Peter (Portsm'th N)

Maclean, David John.

Grist, Ian

Macmillan, Rt Hon M.

Ground, Patrick

McNair-Wilson, M. (N'bury)

Grylls, Michael

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

Hamilton, Hon A. (Epsom)

McQuarrie, Albert

Hamilton, Neil (Tatton)

Madel, David

Hampson, Dr Keith

Major, John

Hanley, Jeremy

Malins, Humfrey

Hannam, John

Malone, Gerald

Hargreaves, Kenneth

Maples, John

Harris, David

Marland, Paul

Harvey, Robert

Marlow, Antony

Haselhurst, Alan

Marshall, Michael (Arundel)

Havers, Rt Hon Sir Michael

Mates, Michael

Hawksley, Warren

Maude, Francis

Hayes, J.

Maxwell-Hyslop, Robin

Hayhoe, Barney

Mayhew, Sir Patrick

Hayward, Robert

Merchant, Piers

Heathcoat-Amory, David

Miller, Hal (B'grove)

Heddle, John

Mills, Iain (Meriden)

Henderson, Barry

Mills, Sir Peter (West Devon)

Heseltine, Rt Hon Michael

Miscampbell, Norman

Hickmet, Richard

Mitchell, David (NW Hants)

Higgins, Rt Hon Terence L.

Moate, Roger

Hind, Kenneth

Monro, Sir Hector

Hirst, Michael

Montgomery, Fergus

Hogg, Hon Douglas (Gr'th'm)

Moore, John

Holland, Sir Philip (Gedling)

Morris, M. (N'hampton, S)

Holt, Richard

Morrison, Hon C. (Devizes)

Hooson, Tom

Moynihan, Hon C.

Hordern, Peter

Mudd, David

Howard, Michael

Murphy, Christopher

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

Neale, Gerrard

Howarth, Gerald (Cannock)

Needham, Richard

Howell, Rt Hon D. (G'ldford)

Nelson, Anthony

Howell, Ralph (N Norfolk)

Neubert, Michael

Hubbard-Miles, Peter

Nicholls, Patrick

Hunt, David (Wirral)

Norris, Steven

Hunt, John (Ravensbourne)

Onslow, Cranley

Hunter, Andrew

Oppenheim, Rt Hon Mrs S.

Hurd, Rt Hon Douglas

Osborn, Sir John

Irving, Charles

Ottaway, Richard

Jackson, Robert

Page, John (Harrow W)

Jenkin, Rt Hon Patrick

Page, Richard (Herts SW)

Jessel, Toby

Parkinson, Rt Hon Cecil

Johnson-Smith, Sir Geoffrey

Parris, Matthew

Jones, Gwilym (Cardiff N)

Patten, Christopher (Bath)

Jones, Robert (W Herts)

Patten, John (Oxford)

Jopling, Rt Hon Michael

Pawsey, James

Joseph, Rt Hon Sir Keith

Peacock, Mrs Elizabeth

Kellett-Bowman, Mrs Elaine

Percival, Rt Hon Sir Ian

Kershaw, Sir Anthony

Pink, R. Bonner

Key, Robert

Pollock, Alexander

King, Roger (B'ham N'field)

Porter, Barry

King, Rt Hon Tom

Powell, William (Corby)

Knight, Gregory (Derby N)

Powley, John

Knight, Mrs Jill (Edgbaston)

Prentice, Rt Hon Reg

Knowles, Michael

Price, Sir David

Knox, David

Prior, Rt Hon James

Lamont, Norman

Proctor, K. Harvey

Lang, Ian

Pym, Rt Hon Francis

Latham, Michael

Raffan, Keith

Lawler, Geoffrey

Rathbone, Tim

Lawrence, Ivan

Rees, Rt Hon Peter (Dover)

Lawson, Rt Hon Nigel

Renton, Tim

Leigh, Edward (Gainsbor'gh)

Rhodes James, Robert

Lennox-Boyd, Hon Mark

Rhys Williams, Sir Brandon

Lester, Jim

Ridley, Rt Hon Nicholas

Lewis, Sir Kenneth (Stamf'd)

Ridsdale, Sir Julian

Lightbown, David

Rifkind, Malcolm

Lilley, Peter

Rippon, Rt Hon Geoffrey

Lloyd, Ian (Havant)

Roberts, Wyn (Conwy)

Lloyd, Peter, (Fareham)

Robinson, Mark (N'port W)

Lord, Michael

Roe, Mrs Marion

Luce, Richard

Rossi, Sir Hugh

McCrindle, Robert

Rost, Peter

McCurley, Mrs Anna

Rowe, Andrew

MacGregor, John

Rumbold, Mrs Angela

MacKay, Andrew (Berkshire)

Ryder, Richard

MacKay, John (Argyll & Bute)

Sackville, Hon Thomas

413

Sainsbury, Hon Timothy

Thurnham, Peter

Sayeed, Jonathan

Townend, John (Bridlington)

Shaw, Giles (Pudsey)

Townsend, Cyril D. (B'heath)

Shaw, Sir Michael (Scarb')

Tracey, Richard

Shelton, William (Streatham)

Trippier, David

Shepherd, Colin (Hereford)

Twinn, Dr Ian

Shepherd, Richard (Aldridge)

Vaughan, Dr Gerard

Silvester, Fred

Viggers, Peter

Sims, Roger

Waddington, David

Smith, Tim (Beaconsfield)

Wakeham, Rt Hon John

Soames, Hon Nicholas

Waldegrave, Hon William

Speed, Keith

Walden, George

Speller, Tony

Walker, Rt Hon P. (W'cester)

Spence, John

Wall, Sir Patrick

Spencer, D.

Waller, Gary

Spicer, Michael (S Worcs)

Walters, Dennis

Squire, Robin

Ward, John

Stanbrook, Ivor

Wardle, C. (Bexhill)

Steen, Anthony

Warren, Kenneth

Stern, Michael

Watson, John

Stevens, Martin (Fulham)

Watts, John

Stewart, Allan (Eastwood)

Wells, Bowen (Hertford)

Stewart, Andrew (Sherwood)

Wells, John (Maidstone)

Stewart, Ian (N Hertf'dshire)

Whitfield, John

Stokes, John

Whitney, Raymond

Stradling Thomas, J.

Winterton, Mrs Ann

Sumberg, David

Winterton, Nicholas

Tapsell, Peter

Wolfson, Mark

Taylor, John (Solihull)

Wood, Timothy

Tebbit, Rt Hon Norman

Woodcock, Michael

Temple-Morris, Peter

Young, Sir George (Acton)

Terlezki, Stefan

Younger, Rt Hon George

Thomas, Rt Hon Peter

Thompson, Donald (Calder V)

Tellers for the Ayes:

Thompson, Patrick (N'ich N)

Mr. Carol Mather and Mr. Robert Boscawen.

Thorne, Neil (Ilford S)

Thornton, Malcolm

NOES

Abse, Leo

Cook, Frank (Stockton North)

Adams, Allen (Paisley N)

Cook, Robin F. (Livingston)

Alton, David

Corbett, Robin

Anderson, Donald

Corbyn, Jeremy

Archer, Rt Hon Peter

Cowans, Harry

Ashdown, Paddy

Craigen, J. M.

Ashley, Rt Hon Jack

Crowther, Stan

Ashton, Joe

Cunningham, Dr John

Atkinson, N. (Tottenham)

Davies, Rt Hon Denzil (L'lli)

Bagier, Gordon A. T.

Davies, Ronald (Caerphilly)

Banks, Tony (Newham NW)

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

Barnett, Guy

Deakins, Eric

Barron, Kevin

Dobson, Frank

Beckett, Mrs Margaret

Dormand, Jack

Beith, A. J.

Douglas, Dick

Bell, Stuart

Dubs, Alfred

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

Duffy, A. E. P.

Bermingham, Gerald

Eadie, Alex

Bidwell, Sydney

Eastham, Ken

Blair, Anthony

Ellis, Raymond

Boothroyd, Miss Betty

Evans, Ioan (Cynon Valley)

Boyes, Roland

Evans, John (St. Helens N)

Brown, Gordon (D'f'mline E)

Ewing, Harry

Brown, Hugh D. (Provan)

Fatchett, Derek

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

Faulds, Andrew

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

Field, Frank (Birkenhead)

Brown, Ron (E'burgh, Leith)

Fields, T. (L'pool Broad Gn)

Caborn, Richard

Fisher, Mark

Callaghan, Jim (Heyw'd & M)

Flannery, Martin

Campbell, Ian

Forrester, John

Canavan, Dennis

Foster, Derek

Carlile, Alexander (Montg'y)

Foulkes, George

Carter-Jones, Lewis

Fraser, J. (Norwood)

Cartwright, John

Freeson, Rt Hon Reginald

Clark, Dr David (S Shields)

Freud, Clement

Clay, Robert

Garrett, W. E.

Cocks, Rt Hon M. (Bristol S.)

Gilbert, Rt Hon Dr John

Cohen, Harry

Godman, Dr Norman

Coleman, Donald

Golding, John

Concannon, Rt Hon J. D.

Gould, Bryan

Conlan, Bernard

Hamilton, James (M'well N)

414

Hamilton, W. W. (Central Fife)

Park, George

Harman, Ms Harriet

Parry, Robert

Harrison, Rt Hon Walter

Patchett, Terry

Hart, Rt Hon Dame Judith

Pendry, Tom

Healey, Rt Hon Denis

Penhaligon, David

Heffer, Eric S.

Pike, Peter

Hogg, N. (C'nauld & Kilsyth)

Powell, Raymond (Ogmore)

Holland, Stuart (Vauxhall)

Prescott, John

Home Robertson, John

Radice, Giles

Howells, Geraint

Randall, Stuart

Hoyle, Douglas

Redmond, M.

Hughes, Robert (Aberdeen N)

Richardson, Ms Jo

Hughes, Roy (Newport East)

Roberts, Ernest (Hackney N)

Hughes, Sean (Knowsley S)

Robertson, George

Hughes, Simon (Southwark)

Robinson, G. (Coventry NW)

Janner, Hon Greville

Rogers, Allan

Jenkins, Rt Hon Roy (Hillh'd)

Rooker, J. W.

John, Brynmor

Ross, Ernest (Dundee W)

Jones, Barry (Alyn & Deeside)

Ross, Stephen (Isle of Wight)

Kaufman, Rt Hon Gerald

Rowlands, Ted

Kennedy, Charles

Ryman, John

Kilroy-Silk, Robert

Sedgemore, Brian

Kirkwood, Archibald

Sheerman, Barry

Lamond, James

Sheldon, Rt Hon R.

Lead bitter, Ted

Shore, Rt Hon Peter

Leighton, Ronald

Short, Ms Clare (Ladywood)

Lewis, Ron (Carlisle)

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

Lewis, Terence (Worsley)

Silkin, Rt Hon J.

Litherland, Robert

Skinner, Dennis

Lloyd, Tony (Stretford)

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

Lofthouse, Geoffrey

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

Loyden, Edward

Soley, Clive

McCartney, Hugh

Spearing, Nigel

McDonald, Dr Oonagh

Steel, Rt Hon David

McGuire, Michael

Stewart, Rt Hon D. (W Isles)

McKay, Allen (Penistone)

Stott, Roger

McKelvey, William

Straw, Jack

Mackenzie, Rt Hon Gregor

Thomas, Dafydd (Merioneth)

McNamara, Kevin

Thomas, Dr R. (Carmarthen)

McTaggart, Robert

Thompson, J. (Wansbeck)

McWilliam, John

Thorne, Stan (Preston)

Madden, Max

Tinn, James

Marek, Dr John

Torney, Tom

Marshall, David (Shettleston)

Varley, Rt Hon Eric G.

Martin, Michael

Wainwright, R.

Mason, Rt Hon Roy

Wallace, James

Maxton, John

Wardell, Gareth (Gower)

Maynard, Miss Joan

Wareing, Robert

Meacher, Michael

Weetch, Ken

Meadowcroft, Michael

Welsh, Michael

Michie, William

White, James

Millan, Rt Hon Bruce

Wigley, Dafydd

Miller, DrM. S. (E Kilbride)

Williams, Rt Hon A.

Mitchell, Austin (G't Grimsby)

Winnick, David

Morris, Rt Hon A. (W'shawe)

Woodall, Alec

Morris, Rt Hon J. (Aberavon)

Young, David (Bolton SE)

Nellist, David

Oakes, Rt Hon Gordon

Tellers for the Noes:

O'Brien, William

Mr. Frank Haynes and Mr. Don Dixon.

O'Neill, Martin

Question accordingly agreed to.
MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.
Resolved,
That this House congratulates Her Majesty's Government for successive increases in retirement pensions which have increased the purchasing power of nine million pensioners since 1978–79; recognises the success of this Government's economic policies in reducing and controlling inflation; and notes that the greatest single threat to the security, savings, and hiving standards of pensioners would be the reversal of these policies.

European Community (Hazardous Wastes)
10.27 pm
The Under-Secretary of State for the Environment (Mr. William Waldegrave): I beg to move,
That this House takes note of European Community Documents Nos. 4342/83, Proposal for a Council Directive on the Supervision and Control of Transfrontier Shipment of Hazardous Wastes Within the European Community, and 8124/83, Proposal for a Council Regulation on the Supervision and Control of Transfrontier Shipment of Hazardous Wastes Within the European Community; and supports the European Community's efforts to improve control over the transfrontier shipment of hazardous wastes.
This proposal for a European Community instrument for the supervision and control of transfrontier shipment of hazardous waste both complements and enhances the controls that the United Kingdom already operates over shipments of hazardous waste across our frontiers as well as introducing additional safeguards on the movement of hazardous recyclable materials. It should significantly improve controls over shipments across frontiers throughout the European community. It is not concerned with radioactive waste.
In January this year the European Commission submitted a proposal to the Council in the form of a directive. That was document No. COM(82)892 or 4342/83, which required the producer or consignor of hazardous wastes to notify "competent authorities" of member states that a shipment was intended, any objections to be stated by the "competent authority" and to be resolved, and the shipment to be accompanied by a consignment note during transit, which would identify the origin and destination of the waste, its essential characteristics and indicate the action to be taken in case of emergency. Finally, the disposer of the hazardous waste would be required to certify that he had received the waste described on the consignment note. The system therefore provides a positive form of control over transfrontier shipments of hazardous waste from the "cradle to the grave". The Government have welcomed the basis of the Commission's proposal.
Mr. Tony Marlow: What is the volume and value of this waste that is passing across United Kingdom frontiers into other Community countries? What would be the likely cost to those people of moving such wastes, and what would be the increase in bureaucracy, the Civil Service and Government costs involved in it? Perhaps my hon. Friend will be coming to that later.
Mr. Waldegrave: Almost no hazardous waste is exported from Britain. About 5,000 tonnes a year—mostly from Sweden—is imported into specialised facilities in Britain. Those wastes, by definition, have a negative value. It costs money to get rid of them. The value of the recyclable waste—which is mostly nonferrous metals but includes some chemicals, which have a positive value and which are re-used after being recycled in specialised facilities—is about £250 million a year. However, I shall write to my hon. Friend if that figure is wrong.
I recognise that this is a matter of considerable concern to hon. Members, and I am grateful to the Select Committee on European Legislation for the interest that it
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has shown and in particular for the two helpful reports it has produced on the Commission's proposals. I should also mention the valuable work done on the same subject in another place, amd the report resulting from it which was published last week.
In June, the Commission amended its original proposal in the light of the opinions of the European Parliament and the Economic and Social Committee, which called for a regulation. This was the form of the revised proposal—document No. COM(83)386 or 8124/83—which has superseded the original draft directive. With the House's agreement, I would therefore suggest that we confine our debate this evening to the contents of the latest proposal, the draft regulation.
The reports that I mentioned criticised several of the provisions contained in the Commission's revised proposal. It is widely recognised that there is a need for a Community-wide common system of control over transfrontier shipment of hazardous wastes. This was dramatically illustrated earlier this year when a consignment of highly toxic waste, dioxin, from northern Italy went missing, only to be discovered later in a disused abattior in France. That incident called into question the degree to which some member states had honoured their obligations under existing community waste legislation, especially the 1978 directive on toxic and dangerous waste. Recognising the need for urgent action, Ministers at the Environment Council in Luxembourg in June which I attended, called for rapid agreement on a legally binding Community instrument covering transhipment, at the latest by the end of the year.
I cannot, of course, pre-judge the outcome of the meeting of the Council of Environment Ministers, which I shall be attending next Monday, but I am pleased to say that, on the whole, discussions have in general proceeded towards a more simplified proposal than the Commission's draft regulation. Perhaps it would therefore be helpful to the House at this stage if I briefly outlined the scope of the draft regulation. The documentary control system envisaged in the original directive is retained, albeit with some modifications, and is supplemented by some additional requirements, such as the use of special routes for shipments, the designation of border crossing points, and producer liability.
There have been extensive discussions in Brussels at official level on all the new provisions, and the Government have not been alone in expressing their concern that the supplementary provisions were not essential to the basic system of pre-notification and documentary control, and could jeopardise early agreement on the instrument as a whole.
I shall concentrate on the fundamental provisions which are at the core of the proposal, although I shall be happy to respond to points that hon. Members may make about the supplementary provisions during the debate. For this reason also, I shall not spend much of the limited time we have available this evening discussing the legal form of the proposed instrument—whether it would be a directive or a regulation. A regulation would set something of a precedent in the environmental area, although a directive is just as legally binding on member states. What matters more is the scope and content of the proposal itself, although I shall take careful note of the preference expressed by the report from another place for a directive, and of the views expressed this evening.

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My Department's latest supplementary memorandum provides the details of the amended test. The core consists of article 1, which deals with objectives, and article 2 with definitions of hazardous waste.
Article 3 deals with the pre-notification arrangements which enable competent authorities to check that proper contractual arrangements exist for the disposal of the waste and that the wastes are to be disposed of at a properly licensed site, as well as providing the necessary details about the nature of the wastes and where they originate from. A standard form is provided for.
Article 4 requires the competent authority to acknowledge the notification within four weeks. This is perhaps one of the most important articles in the whole proposal. The Government favour a control system which, while preventing a transfrontier shipment being initiated before the competent authority of the country of destination has satisfied itself that adequate disposal facilities exist in the member state, places a requirement on the competent authorities to process the notification form in a reasonable period of time—four weeks—and, as provided for in article 5, to state the legal justification for objections to the proposed shipment.
Once this process has been completed the shipment can proceed, accompanied by a copy of the acknowledgement from the competent authority and the consignment note, copies of which must also be sent to the competent authority as required in article 7. The waste disposer must certify that he has received the wastes and notify the competent authorities accordingly. Thus, all the competent authorities will have received advanced notice that a shipment is intended, will be aware that it is in progress and will be notified that it has arrived at its intended destination.
Article 3 provides for season ticket arrangements for regular shipments of waste—a new article covers materials for recycling, which I should like to deal with separately—and article 9 deals with exports to outside the Community. There are also provisions for the introduction of appropriate penalties for infringement of the requirements of the instrument, and for providing information to the Commission. The rest of the articles of the revised proposal concern issues which the Government considers supplementary to the essential objectives of the instrument.
The United Kingdom's existing system of controls over disposal of hazardous wastes is both compatible with and strengthened by this proposal. Particularly difficult wastes, known as special wastes, are already subject to a pre-notification and consignment note system under the Special Wastes Regulations 1980, and such wastes have to be disposed of at a site licensed to take them under part I of the Control of Pollution Act 1974. The regulations already apply to imports and exports of special waste, but the Commission's proposals would give the United Kingdom competent authorities—that is, our waste disposal authorities—greater advance warning that a shipment was planned. It would also enable them to satisfy themselves that any waste exported out of the United Kingdom had been properly disposed of, although I should say that, to my Department's knowledge, such exports of waste, as I said to my hon. Friend, are at present minimal.
Perhaps it is as well to recognise at this point that the proposal has far greater relevance to our other EC colleagues in mainland Europe, whose land borders mean that much more crosses their frontiers. The proposal,
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therefore, has to recognise those countries' own particular circumstances as much as ours. That is reflected in the degree of involvement of transit countries in the documentary control system, something that the United Kingdom would prefer to minimise, as it has little transit traffic, but which a number of other countries in Europe are rightly concerned about because of the volume of traffic crossing their frontiers.
Mr. Marlow: My hon. Friend has just said that this directive would strengthen the system that we have in this country. Is the system that we have at the moment not adequate, or are we being forced into yet further bureaucratic measures that we would not of our own volition introduce?
Mr. Waldegrave: I believe that this is an improvement on our existing controls. What is more, quite apart from the European Community, we have various international agreements and regulations dealing with the transporters—the tankers, and so forth—in which chemical waste is transported. That shows that, apart from the European Community, we have always recognised that in such circumstances we have to deal with friends and neighbours to get a sensible regime. Measures of this nature are appropriate for the Community. It is an example of how the European Community can produce sensible results for our citizens.
In addition, other member states do not at present have the type of pre-notification system for difficult wastes which already operates in the United Kingdom. It is a case where perhaps the higher standards and the more sensible system that exist in the United Kingdom have been adopted in the European Community. That is beneficial to us in maintaining our practices, and sensible for the rest of the Community. I think it would be fair to say that the Commission proposal is, in fact, based on existing United Kingdom practice.
I would now like to return to the subject of those hazardous materials which cross frontiers and which are intended for recycling. Hon. Members will know from the memoranda submitted by my Department that the Government remain unconvinced that recyclable materials should be subject to the type of control system envisaged for hazardous wastes.
Recyclable materials are the object of normal commercial trading practices in the same sense as other comparable raw materials with which they compete. They are valuable to their owners and so are much less likely to "disappear" than hazardous wastes going for disposal. The recycling industry is highly vulnerable to changing market pressures, so a delay of four weeks could be very costly and might in some cases mean that disposal rather than recycling takes place.
It is firm Community policy to encourage recycling on environmental grounds. We do not want to damage what is a sensible trade in environmental terms. To force each individual country to invest in what is sometimes expensive capital plant for recycling would be the absolute negation of sensible Community policy. However, I understand the view that exclusion of recyclables might provide a significant loophole in the controls. There have been one or two incidents in the past which could lead one to believe that that might happen.
We have therefore proposed a simplified control system for hazardous recyclable material, and this proposal

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appears to be attracting substantial interest among our Community partners. no pre-notification would be required, but the person sending the waste across a frontier would still have to use the same consignment note form that is used for wastes intended for disposal. He would be required to sign a declaration on this form that the waste was intended for recycling, and send it, in advance of the shipment, to the competent authority in the country of destination. A copy of the consignment note would, of course, travel with the shipment. The person receiving the material for recycling would also have to sign a declaration to the effect that he had received it for recycling, and forward his copy of the consignment note to the same competent authority.
There would still be a "closed loop" of information in the country of destination, allowing the authorities to check up on the shipment if they wished. Such a system also avoides the delay inherent in the full control system envisaged for wastes for disposal. This is a compromise arrangement which seeks to meet the views of some other member states while recognising that it would be impracticable to treat recyclable hazardous materials in the same way as hazardous wastes intended for disposal.
Mr. Nicholas Winterton: During his excellent exposition, my hon. Friend has repeatedly referred to "states". Will he refer to the chemical industry, which is inevitably intimately involved in this matter, and tell the House what representations he has received from the Chemical Industries Association and individual companies, because they are rather more interested than the states? Their views, rather than those of the member states of the Community, are more important to me in deciding whether these are good regulations.
Mr. Waldegrave: I am happy to give that information. Governments and industry have a legitimate interest because it is the duty of Governments to ensure that hazardous products do not cause avoidable dangers to their citizens. Industry has a legitimate interest in seeing that the control systems that the Government introduce are not unnecessarily complicated and bureaucratic. Although the Chemical Industries Association, with which I have discussed the matter, and the CBI are anxious, as are the Government, that we should stick to the "core" proposals without decorating them unnecessarily with additions, they believe that the system is workable and have not objected to it. I think that I can set my hon. Friend's mind at rest on that point.
The rest of the provisions of the Commission's draft regulation cover a wide range of issues which are related, but in our view not essential, to the basic control system. These include objections by transit countries—article 5 the use of designated routes and border crossings—articles 8 and 14—licensing and training of transporters article 13—insurance cover—article 11—and strict liability of producers until the waste is disposed of—article 15.
The last of these, in particular, is unacceptable to the Government. We recognise that there may be a problem in that different member states have different laws on the liability of the producer and that the contrasts between these will be highlighted where transfrontier shipments are involved.
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Our legal system recognises that the producer of a waste has a moral responsibility for it throughout its shipment and disposal, but that the transporter, disposer, and any others involved share this as well. The Commission's proposal would therefore be at odds with United Kingdom law in this area.
Mr. Hugh Dykes: Articles 11 and 13 of the draft regulation refer to this matter obliquely. Does my hon. Friend agree that, while this may not be a problem with the domestic internal transport of waste, for cross-frontier transportation there should be more guidance in the articles and in the regulation about the quality, strength and dimensions of the containers? Labelling is not enough. That would have the twofold purpose of helping the authorities, including the Community authorities, if they wished to pursue those who were infringing the regulations, and giving guidance to those connected with the transportation exercise?
Mr. Waldegrave: The Hazchem warning labels on transporters and, indeed, the requirement that tanker drivers, although not all other hazardous goods vehicle drivers, must carry certificates showing that they have been properly trained, are at present maintained under one of the other treaties to which I referred previously, not under an EC regulation. It is an important area in which negotiations continue between the British Government and the industry. I do not rule out the EC having a role in that in future. At present, however, I would not want to delay the chance of getting this directive agreed relatively quickly by seeking to widen its scope in that direction. Therefore, it is the Government's view that on this occasion we should try to concentrate on the basic core of consignment note and notification systems and get that agreed.
At the same time, as this legal issue goes much wider than transfrontier shipments of hazardous waste, the Government think that it should be tackled by the Community in a broader context. It is in fact already under detailed discussion by our consumer affairs colleagues.
The Government welcome the basis of the Commission's proposals. I hope that we shall be able to reach agreement on the early introduction of the basic documentary control system when I attend the Council of Environment Ministers in Brussels next week.
10.48 pm
Dr. David Clark: We welcome the opportunity to participate in this debate and to be able to express our views to the Government. I know that the Minister will take on board our views and represent some of them to his colleagues in Europe next week.
I welcome the debate in a personal sense because I represent a town that is also a port which has had considerable problems with the storage of hazardous material. It is good that we should be debating this issue. Ever since I became a Member of the House in 1970, I seem to have been fighting alongside the hon. Member for Bury St. Edmunds (Mr. Griffiths), arguing for stronger and tighter legislation for the storage and disposal of waste. I am pleased to say that I think we have tightened things up considerably over the past 13 years and the documents before us tonight is a step in the process of making our society and people safer from chemical and other hazardous processes.

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The hazardous waste that we discussed 10 or 12 years ago was domestic, but with the growth of modern technology the hazardous waste industry now recognises no international barriers. For example, nuclear waste comes all the way from Japan to this country to be reprocessed. The EC has a valuable role to play in this respect and it is right that we should be working together to achieve common standards and practices.
There are a few points that I am sure the Minister was expecting me to raise because certain matters need clarifying and we have some doubts about the Government's reaction to the proposals before the House. I pay tribute to my MEP for South Tyne and Wear, Joyce Quin, who worked closely with me in prodding the Commission into trying to persuade the European Parliament to produce the directive that is now before us. Indeed, It was the answer to one of her questions, on 4 May 1983, that elicited the information that only three EC states—West Germany, Luxembourg and the United Kingdom—had complied with the obligation regarding the report on the disposal of toxic and dangerous waste pursuant to article 16 of directive 78/319. I hope that the Minister will follow that up because the Community sets these standards and it should not be just three states that support them.
Mr. Waldegrave: I strongly agree with the hon. Gentleman, in respect of not only this directive but a number of others. One sometimes has the feeling that we legislate in Europe and that some countries are more serious than others about the enforcement that should follow.
Dr. Clark: I am grateful for the Minister's reassurance on that point. Different countries have different standards of definition and I gather that our definition will be the key one covering imported material.
Mr. Waldegrave indicated assent.
Dr. Clark: I am glad that the Minister acknowledges that. It is right that our standards should be those to which we adhere and not the standards of the country sending the material.
Some waste disposal authorities take my view—although I recognise that the CBI and other interested bodies take another line, as the Minister outlined—on the question of waste for recycling. I was partly reassured by the Minister's explanation; he explained the position more clearly than a reading of the documents provides. I am still worried because, as he remarked, this is a volatile industry in every respect and time is of the essence. I am worried lest we have some hazardous waste imported into Britain with the intention of recyling it but for some reason—because of a change in the market or because exchange values alter—it is considered not worthwhile to conduct the reprocessing.
There might be a loophole in that connection and I will explain my fear as a result of experience in my constituency, for not only the interest of industry is involved. We are all interested in industry, jobs and modern technology, but we must be equally interested in public safety, and in that respect there are problems for some local authorities in planning matters.
With my constituency being at the very mouth of the Tyne, facing Europe, we have at least one large firm connected with the storage of hazardous and other waste,
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Velva Liquids, which has a large number of storage tanks in my constituency and some across the river. In the past—I emphasise that—there have been great difficulties simply because local authorities were never sure what was in those storage tanks. Most tanks were within several hundred yards of residential development, and that caused the authorities much anxiety. The system has improved considerably of late since the Health and Safety Executive has started operating the system more effectively. In one case, the Health and Safety Executive advised the local authority not to build a junior school in the vicinity because of the proximity of the tanks. My local authority was concerned because it had been advised not to build a school, yet children were still playing around the houses and in the gardens in the area. I am worried that full notification may not be given to the local authorities.
I concede that materials imported under the regulations are covered. However, I am worried that material imported under the recycling regulations could be stored for some time, not be recycled as proposed and the local authority may not know what is in the storage tanks. I know that the Minister will examine that point.
The Minister dealt briefly with land-fill—I know that he was trying to expedite business. Many waste disposal authorities face difficulties in finding a place in which to put domestic waste. If the draft regulations are accepted could a waste disposal authority refuse waste if it were intended for land-fill? It may be that some authorities would not want the material to be used as land-fill when they already have problems in disposing of domestic waste. It would be helpful if the Minister were to answer that important point.
Mr. Eldon Griffiths: I share the hon. Gentleman's anxiety. If an authority had licensed a pit to receive toxic materials or recyclable materials, there would surely be no way of discriminating between materials coming from different places. The pit should receive the waste if it is fit to do so, no matter from where it comes.
Dr. Clark: We went through this matter in great detail when discussing the 1971 Act. There is a shortage of licensed pits in some parts of the country. Local authorities know their capabilities, and more waste could add to their problems.
The Minister said that the Government were a little worried about the transit arrangements. I take his point that perhaps we are not too worried about that in this country. I should be interested to know how much material comes into this country en route from or to the Irish Republic. Many shipments come into the Tyne, Humber and other east coast ports in huge container lorries. There may be more material in transit than we imagine. Perhaps the Government could look into that matter before Monday.
The Government are reluctant to specify entry ports. I concede that this adds to the difficulties. However, there is a great advantage in channelling hazardous wastes through ports, as Britain does, where there is expertise available and one does not need literally to have a master and a dog to deal with the sophisticated and complicated waste and documentation. I hope that the Government will not be too rigid on the specific entry points to which reference is made in the draft directive.
I wish to be slightly critical about two points. I hope that the Minister will take my criticism in the spirit in

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which it is intended. Nowadays we are told of the cost and the manpower implications of every Bill. Is he satisfied that the ports have sufficient personnel to handle the increased documentation? We all welcome the tightening of the regulations, but unless they are properly checked and monitored the whole system will fail. I hope that there will be sufficient personnel to deal with them and that the Health and Safety Executive will also not suffer manpower problems. Finally, will there be any extra demands on the local authorities involved? The Minister's comments on those aspects would be most helpful?
In answer to an intervention, the Minister rightly said that, although we were dealing with this in a European context, the majority of our imports of hazardous waste were from non-EC countries. Will he undertake to press for bilateral agreements with other countries at least to comply with these regulations, if not to tighten them up?
To be parochial for a moment, my constituency faces more towards Norway than France. Scotland and the north-east have a long seaboard with the Scandinavian countries. We are conscious that the regulations cover waste oil, but not oil slicks. Material from Norway and Sweden comes into the United Kingdom, some for reprocessing and some for other reasons. I recently read an excellent paper by the Norwegians' "keep the coast tidy" organisation. I sometimes feel, however, that they are keeping their coast tidy at our expense, although they would probably reply that we are killing their lakes with acid rain. Nevertheless, I hope that the Minister will press for bilateral agreements with other countries as I understand that we import material from at least 19 countries, including some behind the iron curtain.
There is great public anxiety about these matters. We believe that the regulations are a step in the right direction. We hope that the Government will ensure that they are tightened up—not to make them unworkable, but as a first step towards even more ideal arrangements.
11.2 pm
Mr. John Watson: I wish to ask two rather lengthy questions rather than to make a speech, but I thought that it was better to do so in this way rather than by intervening in the speech of my hon. Friend the Minister.
The potential dangers to human beings in Britain from the transport of non-nuclear waste and various hazardous chemicals seem to me to be considerably greater than those likely to arise from the transport of nuclear waste. It is therefore appropriate that we should give rather more attention to the transport of non-nuclear waste than we customarily give to the transport of nuclear waste. If we were discussing the latter, attendance in the Chamber would be far greater. In my constituency, when a consignment of waste comes along the local railway line for processing at Sellafield people wait about to take photographs of the flasks and send nasty letters to the local press, but consignments of cyanide or propane gas go through more or less unnoticed. I should have thought that the chances of an accident happening to one of those conventional consignments was rather greater. More importantly, if anything went wrong the risk to human life from such a consignment would also be considerably greater. I am therefore glad that the House is spending time in dealing with the transport of non-nuclear waste.
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My first question is this. Does my hon. Friend the Minister feel generally content with the standard of regulations now operating in the United Kingdom for the broad transport of non-nuclear waste?
My second question concerns land-fill, to which the hon. Member for South Shields (Dr. Clark) referred. I understand that the regulations as drafted will not enable us to object to the import of hazardous waste simply and solely on the ground that it is to be used for land filling. It may be possible to object to the shipment on other grounds, but not simply on the grounds of land filling. I can see no logical reason why my hon. Friend the Minister should not give himself power to do so at this stage.
I know that the problem is not significant. People say that little is imported from Europe for land-fill tipping and that the cost of shipping it is so small that it will never be a problem. However, I should have thought that, as there would be no harm in giving ourselves the power to ban such shipments outright, we should give ourselves that power. Perhaps other European countries will decide to give themselves that power. The Germans may become increasingly irritated with their absorption of hazardous waste from Holland, for example. In those circumstances, if we do not watch it, we may find that we are the general dumping ground for Europe for hazardous waste of various sorts, although we have less land and fewer pits available to absorb the wast than most of our European competitors.
Therefore, will my hon. Friend carefully consider equipping himself with that power? If not, will he at least give the House an undertaking that he will keep the situation under close review to make sure that the nation's resources are not abused?
11.6 pm
Mr. Stephen Ross: I welcome the directive, which is an important step forward. I reiterate what was said in an intervention in the Minister's speech. Labelling and packaging is important. It must be permanent and clearly identifiable. That is not necessarily so at the moment.
Local authorities, particularly county councils, are faced with increasing expenditure. I hope that the Minister will draw this matter to the attention of the Secretary of State. I am a former leader of a county council, and still am a member. Increased costs are always imposed on such authorities, and are not always made up in the rate support grant. As we are facing all sorts of penalties, I hope that any increased costs will be allowed for.
The Minister said that he was likely to visit Brussels shortly in connection with the directive and its implementation. Will it be possible to extend the provisions under article 9 to cover the carriage of dangerous chemicals and poisons that are leaving the EC for countries outside it? My constituency has suffered appallingly in recent years from the washing up on our shores of dangerous chemicals and poisons. I went to Brussels in March this year to meet a gentleman in Mr. Dalsager's office. I am afraid that I cannot remember his name. I pleaded that the EC should start to consider the matter. I am told that some preliminaries have been made in an office in Dublin, but I am not sure how far they have got.
I remind the Minister that in the past two or three years there have been two major disasters in the channel of ships going down or shedding loads—the Tozeur and the Aeolian Sky. Vast quantities of poisons such as arsenic

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trichloride washed up on our shores. The problem hit not only my constituents but the whole of the south coast. It was difficult to identify those poisons. We had to get experts from Harwell and elsewhere to help us. The identification on the packages was inadequate.
Consideration of the regulations, which deal with the transportation of hazardous waste within the EC, offers us an opportunity to widen the scope and include dangerous chemicals and poisons. It is not a big step to take, and it is partly covered by article 9. I hope that that will be taken on board, together with the claims that local authorities then make for the damage and expense they incur in clearing up their beaches and getting these chemicals restored and properly dealt with. Our figure is about £35,000, but I realise that other authorities within the United Kingdom are faced with far higher sums. I know that the House is not talking about oil, but I believe Norfolk has a claim of about £5 million outstanding.
The owners of ships that discharge cargoes or go down always seem to be registered in some obscure country and cannot be brought to book. That is a difficulty. One hopes for help from the Department of Trade. No doubt the Department helps, but local authorities generally finish up shouldering the entire cost.
Therefore, my plea is for the extension of the role of these directives and regulations so that a common approach can be looked for within the EEC to a growing problem. This is particularly so in the English channel where there is a far more lackadaisical approach. Systems of transporting chemicals and fertilisers can cause great trouble to areas which look too much to the tourist industry for their income. Although many of these cargoes are lashed on board ships, I gather that some have to be put on deck. When a ship gets into trouble, these cargoes are the first to be offloaded and come up on to our beaches. If any help can be given on that matter, I shall be grateful.
I very much welcome the proposed directives.
11.12 pm
Mr. Eldon Griffiths: I welcome the general drift of the proposed regulations and the explanation that my hon. Friend the Minister so lucidly gave to the House. It is a particular pleasure to follow the hon. Member for South Shields (Dr. Clark), for, as he said, we have from time to time debated these matters in the past.
I have some interest in this matter. I suppose I was the author, in this House at least, of the arrangements whereby we require people to notify the disposal authorities when they get toxic and hazardous waste off their premises. Similarly, we require that the loop be closed by the receiving authority indicating that it has received it and disposed of it. I am delighted that this system which was probably initiated in the United Kingdom has now, in a sense, been Europeanised.
I welcome the document also because it is a further step down the road towards creating a genuinely Common Market. There must be within the European Community a certain division of labour and specialisation of function. If some countries have the facilities for disposing of particularly complex wastes in an intelligent fashion, it makes sense that those facilities should not be duplicated in every part of the Community but should be used wherever they are best available. That is why the transfrontier movement of waste is an inherent part of the concept of a common market that I welcome.
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From some modest experience, I can say that nothing alarms people so much as merely talking about toxic or hazardous wastes. It is rather like the word "nuclear", which alarms people. Therefore, I welcome the regulations because we are providing a sensible system that can meet the alarm that people genuinely feel from time to time.
The hon. Member for the Isle of Wight (Mr. Ross) spoke of the risks of ships offloading hazardous cargo in difficult circumstances. I remember going down to Cornwall when we were told that barrels of death were floating up on to the Cornish beaches. I was told by the then Prime Minister to deal with them. I found that the whole episode had been manufactured largely by the press as a scare. The toxic waste could not have floated ashore as its specific gravity was greater than that of water and it would have been bound to go the bottom of the Bay of Biscay. None the less, we used a frigate and three helicopters and I virtually stood the home guard, or whatever they were called, in Cornwall and Devon on the alert because there was a scare about "barrels of death."
It is important that Parliament should deal with these matters in a rational and sensible way to avoid the circulation of such scare stories.
Mr. Stephen Ross: I hope that the hon. Gentleman is not suggesting that the information I gave was incorrect, because it is all documented. I assure him that what I said was correct.
Mr. Griffiths: I was in no sense referring to the hon. Gentleman's contribution, but rather to events in the not so distant past.
Against the background of some of the real environmental dangers that we have seen in recent years, it is proper that the Community should now be taking this step.
I have only three points that I hope will assist my hon. Friend when, with the support of the House behind him, he negotiates the further details with some of his ministerial colleagues in Brussels.
I am in almost complete agreement with the Government's reservations. I am not persuaded that it is necessary to license all the handlers. That sounds sensible. If we license the site, should we not also license the person moving the material into the site and specify the strength and type of container that may carry it? I hope that my hon. Friend will carry with him the support of the House in resisting the proposal to license handlers, as that would impose additional cost and complexity on the process. If the system is to work, it must be relatively simple and not too expensive.
I also agree with my hon. Friend that we should resist the legal consequences in the United Kingdom of placing the responsibility at all stages on the producer of the waste. With my right hon. Friend the Secretary of State for Energy, we invented the notion that the polluter must pay. There is a lot in that, but if a company that produces waste has abided in every sense by the requirement to specify the nature of the waste when it leaves the plant and has ensured that the destination is capable of receiving and disposing of it, it would be wrong to carry through a legal liability on the original producer as it would cause all kinds of problems under British law. In spite of my hon. Friend's anxiety to see this regulation made, I hope that he will not be pushed around but will stand fairly strongly on the problems that would be faced in English law.

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We are a smallish country with increasing amounts of complex wastes. In a sense, we should welcome that because it means that our more advanced industries are doing better. However, we have the problem of a limited number of holes in the ground. Sensibly-handled land-fill is an excellent way of dealing with waste, and there have been some splendid examples of land reclamation and the covering of land by trees and grass proving that, properly handled, land fill can add to rather than subtract from environmental attractions.
The hon. Member for South Shields said, "Don't put your waste in our dustbin because it is full", but we should not attempt to discriminate within the European Community about whose waste can go into holes in the ground, provided that they have been properly licensed. There may be occasions when we will want to put some of our waste into holes in the ground in France. I merely say that, within a community, it is absurd to try to patriotise specific holes in the ground. It will not work.
11.19 pm
Mr. David Crouch: I hope that I have a little time before my hon. Friend the Minister replies.
I declare an interest in that I have spent my life in the chemical industry and have been for many years the chairman of the all-party committee on the chemical industry, which is associated, in its briefing, with the Chemical Industries Association.
We must not minimise the importance of handling hazardous waste. We know of Seveso, and the dangers surrounding dioxin and contaminated earth. Like nuclear waste, such substances are deadly dangerous. We must ensure that there are provisions to cover the handling of deadly dangerous and hazardous waste.
Consideration of who produces the waste in the first place—the primary producer—is not the paramount issue. There are secondary and tertiary producers of chemical products. Initially, the product is manufactured and known to be dangerous by a responsible producer. Subsequently, the product is sold and handled by someone else who uses it in a chemical or metal process. That person becomes a secondary user of the dangerous product. The product becomes waste in the hands not of the primary producer but of the secondary producer. The product may move further down the line and fall into the hands of a tertiary producer or user.
Problems arise when the third user does not realise that he is handling a dangerous product, which Government regulations in every member state have ensured that the primary producer is aware of. Whatever we do as a member state of the Community, we must remind the Council of Ministers and the Community as a whole of that fact of life.
Each country has its own record in dealing with this problem. The British chemical industry has a remarkably good record in its concern for the protection of the environment, for workers in factories who handle dangerous products, and for emission control and pollution. I am not saying that we have the best record in the world, but it is certainly very good. However, we can always improve.
In our small country local authorities are responsible for waste disposal, although they are supervised by the Department of the Environment. They are extremely
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competent compared with other countries, such as the United States, which do not have such a strict system of central Government supervision over those local authorities.
I hope that a directive is all that will be required when dealing with this problem. I am sure that the good record of our industry and that of the local authorities does not require a regulation. Regulations contain an imperative. A directive is a much better way to deal with the problem. I hope that I have made my point clear.
11.24 pm
Mr. Waldegrave: I am most grateful for the helpful comments made by hon. Members on both sides of the House, which will be of use in the Brussels negotiations. They will only begin to become serious at about this hour of the night and will continue, as I am sure that my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) remembers, well into the early hours. It is helpful to have such clarification at the back of my mind.
I shall try to answer some of the matters raised by the hon. Member for South Shields (Dr. Clark). However, in response first to my hon. Friend the Member for Canterbury (Mr. Crouch), I think that a directive is the more sensible form of legislation, although the Government do not feel passionately about that. The majority of our European colleagues consider that to be so, and it is more likely to be a directive. If the outcome of the discussions is a directive, the national definition of "hazard" would be used. I take my hon. Friend's comment about the competent waste disposal authorities—the local authorities—knowing where dangerous substances exist. That is important particularly in relation to the recyclables. Perhaps things have not always been clear in the past. I think that the consignment note system that we have tabled would help. The authorities would have the information sent to them, with full details about the substances and details relating to whom they were going.
My hon. Friend the Member for Skipton and Ripon (Mr. Watson) referred to our power to refuse land-fill. If the directive were passed, I do not think that we would be able to refuse the reception of waste at a site licensed for it, wherever it came from. There would be problems with trade barriers in the Community if wastes were refused. However, in the other place, the Select Committee drew attention to that point. There is a real issue here, and I assure hon. Members that we shall keep an eye on the situation. Clearly, land-fill sites are a finite resource, and if the now trivial trade developed rapidly, we might have to return to that subject.
I shall look into the point raised by the hon. Member for South Shields about transit through the United Kingdom to Ireland. I think that the amounts involved will be pretty small, but I shall try to find some figures on that. I note what he said about specific entry points. We are not enthusiastic about them. I take the hon. Gentleman's point. The danger is that we could become involved in a long wrangle over that, and that might mean a delay to the whole thing. I do not think that that is important enough to put at risk the basic system, and I suspect that we should get into some difficulty in that territory.
I come to a point mentioned by the hon. Member for Isle of Wight (Mr. Ross). I do not think that large increases will be needed in county council staffs. Indeed, if the system worked more smoothly and automatically, staff might spend less time chasing round interviewing people,

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and looking for information. Under this system, that will be made available to them. Increased manpower needs would become a serious problem only if the trade burgeoned in the next few years. However, we are talking about a fairly small tonnage of trans-frontier wastes. I think that about 2·5 million tonnes went across Community frontiers as a whole last year. However, only about 5,000 tonnes came into Britain, and much of that came from outside the Community. Therefore, from our point of view the tonnage is relatively small.
I think that I have covered the second point made by my hon. Friend the Member for Skipton and Ripon. However, he also wondered whether we felt that sometimes the balance of emphasis between nuclear and other dangerous substances was wrong. I rather sympathise with that point. We sometimes talk as if the dangers involved in radioactive substances are unique and particularly long lived. However, the Seveso incident has reminded is all that that is not so. There are chemicals that are just as long-lived, non-degradable and dangerous, as the nastiest of the radioactive chemicals. That is why it behoves us all to take care and to have sensible legislation on such matters.
The hon. Member for South Shields also asked about bilateral arrangements with his Scandinavian neighbours. A proposal similar to the European Community's document is under discussion in the OECD. We are closely involved with that. In OECD language it is a recommendation, and is likely to be agreed in the next few months. That will be helpful. However, the Scandinavian countries tend to have fairly high standards in these matters.
The hon. Member for Isle of Wight referred to labelling, which is at present dealt with under the ADR agreement. That is the non-European Community agreement. I do not say that there is no improvement to be found there. Indeed, there may be further work to be done. However, I do not want to widen the scope of the directive or enmesh us in a tangle of things that may put at risk the passage of the core directive.
I sympathise with the hon. Gentleman's points about article 9. He said that we should take care that things do not leave the Community and disappear out of all ken. We are still having discussions about whether there can be some arrangements about wastes that are shipped out of the Community for disposal. There should be some check that they have been disposed of.
The hon. Gentleman also mentioned shipborne wastes. This directive, as it is likely to become, will not cover some of the unpleasant substances such as oil that are accidentally sluiced out of ships. They are to be dealt with by an International Maritime Organisation convention, MARPOL 73–78, which came into force this October. A section of it, Annexe 2, which deals with liquid chemical waste will come into force in three years. We might be able to offer the hon. Gentleman some comfort on that point under the IMO rubric rather than under this directive. This legislation will not extend to considerations of compensation. There are discussions on that matter in the
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EC but they are in the consumer affairs council because the matter is being discussed in the context of consumer liability.
I pay tribute to my hon. Friend the Member for Bury St. Edmunds as the only begetter of this directive He was right to say that the legislation with which he was originally associated formed the model for European legislation in this area. It is not unduly boastful to say that. It is fair for him to take credit for it. He was also right to say that, in terms of maintaining recyclables, this is a good, sensible communautaire trade to protect. I like the picture of him at the head of the home guard, rather like the late and much lamented John le Mesurier, dealing with the barrels of death. I take the point that these matters are sometimes the cause of good but, not always accurate stories in the press.
My hon. Friend the Member for Canterbury talked of the danger of over-licensing. In terms of our domestic wastes investigation—the Gregson committee—somewhat tortuous negotiations are still going on between local authorities and the chemical industry. There is a danger of too much legislation being aimed at a reasonable target which then escapes. It is not possible to catch the cowboys by putting more regulations on the people who behave sensibly.
I do not want to end on a negative note, but there is one item which we cannot accept. My hon. Friends the Members for Canterbury and for Bury St. Edmunds referred to it—the introduction of a simplistic concept of producer liability. Our courts would want to examine whose fault it really was and would not follow a rule of thumb saying that the primary producer had responsibility in every case. That is good law and common sense. We should not import such an idea. I made it clear to colleagues in Europe at the informal meeting at Athens, that we could not accept it.
I am grateful for the contribution that hon. Members have made to the debate. Their speeches confirm that the Government are on the right lines as to the type of package that we are trying to negotiate. I have some hopes that we shall be successful in Brussels on Monday—or Tuesday morning, as it is more likely to be—although, as my hon. Friend the Member for Bury St. Edmunds will recall, there are sometimes Gallic slips, or hazards of a non-chemical type, on the way to agreement on these matters. I do not want to sound over-optimistic, but there is no reason in common sense why we should not agree a sensible package of which we and all of our Community partners can be proud.
Question put and agreed to.
Resolved,
That this House takes note of European Community Documents Nos. 4342/83, Proposal for a Council Directive on the Supervision and Control of Transfrontier Shipment of Hazardous Wastes Within the European Community, and 8124/83, Proposal for a Council Regulation on the Supervision and Control of Transfrontier Shipment of Hazardous Wastes Within the European Community; and supports the European Community's efforts to improve control over the transfrontier shipment of hazardous wastes.

Baljit Kaur
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Douglas Hogg.]
11.35 pm
Ms. Clare Short: I welcome this opportunity to raise the case of my constituent, Baljit Kaur, and the refusal of the Minister of State, Home Office to allow her husband, Hardev Dosanj to join her and their newly born daughter in Birmingham. I ask the Minister to use his discretion to allow Baljit's husband to join her for two reasons. The first is to bring to an end the unhappiness of this young couple by allowing them to be together during the early growth of their first child, for humanity's sake, and for the sake of the family. Secondly, and very importantly, the Minister should not insist that they wait for the delay of an appeal.
It is important that, through this case, the Minister should send a message to the entry certificate officers in India, Pakistan and Bangladesh about the way in which they should interpret the relevant section of the immigration rules in relation to applications by husbands and fiancés from the Indian Sub-continent. If the Minister fails to intervene in this case, he will, in effect, be saying that he applauds and accepts their rigid interpretation of the rules, which is being used crudely to make it impossible for any Asian husband or fiancé to come here to join his wife and fiancée in Britain.
Since this case came to my attention, many others have been pointed out, such as Mrs. Salinder Kaur, who has a seven-month-old baby, whose husband has been refused entry on the same grounds. A Miss Dhillon—a vibrant and attractive young lady who had been brought up in Birmingham—went to India to meet the man that she intended to marry, and fell deeply in love. However, her fiancé has been excluded under the rules, and she is now a tearful and unhappy girl.
I shall tell the House the story about this case, and then return to the general rules. Baljit Kaur is 20. She was born and brought up in Birmingham, and is a British citizen. She is as much a British citizen as I am. I am a child of Irish immigrant parents. I was born in Birmingham and I grew up there. Baljit should have the same rights as a citizen as I have.
In 1982 Baljit went to India with her mother and younger brother. She went to see her granny and her aunt. No marriage had been arranged. She told me—I spoke to her this evening again—that she felt that she was ready for marriage as she was 20. She was willing to consider any suitable offer, but she was not sure whether she would like to marry a man from India, or would prefer to marry someone from England. Before she left, her father told her that this was entirely a matter for her but that if she met and liked someone she should marry him. There was no pressure on her to do so. If she did not a marriage would be found in the United Kingdom.
While Baljit was in India, an uncle of hers, who knew well the family of Hardev Dosanj, who is now her husband, suggested to the young man and his family that he might like to consider a marriage to Baljit. He and his family came to see Baljit. She met and liked him quite a lot, but did not decide that she would like to marry him. The decision was hers, and no pressure was exerted on her
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by the family. After three or four months, she decided that she would like to marry Hardev Dosanj, and in August, they married.
Baljit tells me that she married in India because her granny and aunt were there, and if her husband had applied to come back to Britain, and done so, her granny and aunt would not have been at the wedding. It was therefore decided that they would marry in India, have a family celebration, and her granny would be able to see her first grandchild in that family get married. They hoped as a family to stay while his application was processed and he waited in the queue, and, when he got permission to come to the United Kingdom, her mother, brother, she and her husband could come back together to be reunited with the rest of the family in Britain.
In October 1982 her brother became ill—he had been ill for some time—and her mother decided that the only sensible thing to do was to bring him back to the United Kingdom where he could get better medical treatment. Baljit tells me that she was happy in her marriage but that she missed her family in the United Kingdom and missed her mother. She visited her aunt and grandmother a great deal to get through the time. In January she knew that she was pregnant, and she wanted even more to be with her mother and to have her mother's advice. When I asked her whether her aunt could have had advised her, she said, "Yes, of course; my aunt has had many children. But I am an English girl and I grew up in England, and the advice of my aunt would not be suitable for me." Baljit is a Birmingham girl who thinks of herself as being English, which is why she wishes to make her life with her family here.
Baljit returned here in April, partly because her ticket was running out and partly because she was pregnant and wished to have proper medical care. When she came back, she was confident that, shortly thereafter, her husband would be interviewed—the date of interview was already set—and he would be given permission to come to the United Kingdom, because there was no question but that they were married and that they were about to have a child.
Baljit came to see me just after the election. She was pregnant, and very anxious that her husband should join her before the baby was born. For that reason, I wrote to the Minister asking that the case be dealt with—again, we had no doubt that his entry would be permitted—sufficiently speedily so that her husband could be with her before their first child was born. On 1 September I received a letter from the Minister of State saying that Baljit's husband had been refused entry. The letter stated:
"Mr. Dosanjh was specifically asked by the entry clearance officer if his marriage had been arranged solely for immigration purposes and he openly agreed that this was so."
I thought that improbable, but I sent the letter to Baljit and asked for her views. She was enormously shocked and upset. Until then she had had no doubt that he would come, but was worried only about the time of his arrival. She was convinced that he would have said nothing that could have led to that conclusion, because their marriage was not like that. There was no long arrangement, and he was not seeking a marriage that would bring him to the United Kingdom.
Therefore, I requested a meeting with the Minister, which we had recently. The Minister agreed that the couple were married, that the child was their child, that Baljit loved her husband and wanted him with her, but he

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said that he would not intervene in the decision. He said that there was no point in interviewing her because he accepted the truth of what she said about the marriage and her feelings towards her husband. He said that the rule was that the husband or fiancé was not allowed in if the marriage was contracted primarily because he intended to come to the United Kingdom. He was convinced, because of the answers allegedly given by Baljit's husband, that this was so in his case.
I made some notes from memory after the meeting about what the Minister claimed Baljit's husband had answered. The notes read as follows. He was asked why he had obtained a passport in 1980, considerably before the marriage was contracted, and he is supposed to have said that he wanted to go to the United Kingdom, like his cousins who were already there. He was asked why we wished to go to the United Kingdom, and he is supposed to have said, "In order to earn money." He was then asked whether his desire to go to the United Kingdom was the sole reason for his marriage, and he was supposed to have said, "Yes." That is enormously improbable, and the series of questions was bound to lead to trouble, but he is alleged to have said those things.
Those of us who have visited the Indian sub-continent and experienced such interviews will know that they are conducted through interpreters, with a great possibility of differences of nuance in questions and answers. However, knowing that, I put to Baljit what the Minister said. She simply did not believe it was possible, because it was so far from the truth, for her husband to have given such answers. It was not the way in which their marriage was arranged or took place.
I asked her to write to her husband and to obtain from him an account of the questions he was asked at the interview and his answers. She did that, and received in return a long series of questions—about 30—and the answers which he gave. One question was why he had obtained a passport before the marriage, and he said that his answer was that he intended to work in an Arab country. Apparently it was not until Baljit's uncle suggested the marriage to Baljit that he thought there was any real possibility that he might go to the United Kingdom.
In answer to the question—one that the Minister did not tell me had been asked; one sees the attempted trickery of it, in my view—"When you are prepared to leave your parents, why can't she come to live in India so that you can be with your parents?", he said that he answered, "It is her will. As she was born and grew up in the United Kingdom and wants to stay there, I will go to be with her." He also says that he was asked, "Why do you intend to go to the United Kingdom? Do you want to earn more money?" He answered, "Marriages are intended that husband and wife should be together, not alone. Because I am married to a British-born girl, I want to go and stay and be with her."
It is overwhelmingly clear that this is a genuine marriage, and that refusal to permit this young couple to be together is cruel and unnecessary. From the experience that I have in my constituency, it seems to be a precedent for other similar cases. Since the Government changed the rules on marriages, they have moved the burden of proof on to the applicant—the husband or the fiancé—to prove that it is not his primary purpose to come to the United Kingdom. Whether it becomes an absolute bar to entry for genuine marriages, or whether it is simply a way
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of filtering out marriages of convenience, seems to depend on how the rule is interpreted. I suggest that the way in which the Minister's staff in the Indian Sub-continent are now interpreting the rule is making it a bar to entry when they so wish. They say to a young man who has married a young girl, knowing that she lives in the United Kingdom, and that it is part of the arrangement that they will live in the United Kingdom together, "Why did you many? Why do you want to come to the United Kingdom? Is that part of the purpose of your marriage?" It is part of the arrangement. One might as well ask, "Why did Lady Di marry Prince Charles? Was part of her purpose to live in Buckingham Palace?" We could all ask ourselves why we got married, and was the aim to better our lives? It is easy to move on from that question to ask "Is the primary purpose to come to the United Kingdom", and thus exclude all marriages of people who come from the Indian Sub-continent. We seem to have reached that stage.
The way in which the rule is not being interpreted makes it an impossible test. In my view, it is in breach of article 8 of the European Convention on Human Rights, which gives the right to many and found a family. In interpreting the rules as they are, the Minister and his officials are refusing my constituent the right that she has under article 8 of that convention. Under article 12, people have the right to enjoy the rights and freedoms set out in the convention without discrimination on any grounds, such as sex, race colour, national origin, and so on.
I appeal to the Minister to be generous in this case, for the sake not only of this young couple and their little daughter, but of others, by telling his officials that he expects them to interpret the rules in a humane, decent and legal way.
11.49 pm
The Minister of State, Home Office (Mr. David Waddington): I am grateful to the hon. Member for Birmingham, Ladywood (Ms. Short) for the moderate way in which she put her case and because it gives me an opportunity to answer a number of allegations that she made recently, notably in early-day motion 259.
Mrs. Baljit Kaur travelled to India in June 1982 and in August married Mr. Dosanjh, a citizen of that country. He now seeks settlement in the United Kingdom in right of that marriage. His application has, however, been refused because he failed to satisfy the entry clearance officer in accordance with rule 54(a) that the marriage was not entered into primarily to obtain admission to the country.
It is plain from early-day motion 259 that the hon. Lady does not like the rule to which I have referred. That is a matter for her. She is entitled to her opinion, but the rules of which rule 54 is one were approved by Parliament after a lengthy debate as recently as February this year. The hon. Lady is not entitled to suggest that I should ignore the rules or put a completely artificial interpretation on plain words to avoid making uncomfortable decisions.
When a person fails to qualify under the rules, the Home Secretary may, in exceptional compassionate circumstances, exercise his undoubted discretion and admit a person outside the rules. He has no right to say that the rules mean one thing when they clearly mean another, and refuse to apply a safeguard against abuse which Parliament wished to see in the rules.
I return to Mr. Dosanjh and consider what he said when he applied for entry clearance in New Delhi. It is easy for someone who is caught by the rule to say after the

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interview that he did not say what he is recorded as having said. I have recently returned from the Indian subcontinent. I have seen our entry clearance officers at work. They carry out a most difficult job with great expertise, tolerance and fairness. I have no reason to believe that the entry clearance officer in this case was prepared to lie and record what was not said by this young man. He said that it had been his anbition to go to the United Kingdom since his two cousins had gone there a few years previously. He said that he wanted to earn more money like everyone else who went there—that is, to the United Kingdom. He said that he thought that he could achieve his ambition—admission to the United Kingdom—through marriage. When the entry clearance officer put to him in terms that the sole purpose of the marriage was to gain entry to the United Kingdom, Mr. Dosanjh admitted that that was the case.
Whenever there is a law or a rule, there will be difficult borderline cases about which it is difficult to judge whether they fall one side of the line or the other. This does not seem to be a borderline case. Someone else may come to a different conclusion, but the matter is clear to me as it was to the entry clearance officer and the other officials who considered the matter and decided that Mr. Dosanjh's application should be refused.
I want to make it plain to the hon. Lady that the entry clearance officer and the other officials who considered the case were not passing judgment on Baljit Kaur. They were interested in Mr. Dosanjh's motives, not those of Mrs. Kaur. It is worth reminding ourselves of a bit of the history of husband applications under the rules.
The first safe guards to prevent abuse of the marriage provisions in the rules were introduced by the Labour Government in 1977. The then Minister who held my responsibilities, Dr. Shirley Summerskill, said that evidence left no doubt that there was substantial abuse. In other words, the right on the part of a woman settled here to bring in her husband was being substantially abused. As a result, the Labour Government changed what was then the rule to provide for refusal of entry clearance if the entry clearance officer had reason to believe that the marriage was one of convenience entered into primarily to obtain admission into the United Kingdom with no intention that the marriage should subsist thereafter. That was the position after 1977.
In 1979, the Conservative Government decided to strengthen what by then had come to be known as the safeguards against abuse. I shall quote what my predecessor, my right hon. Friend the Member for Aylesbury (Mr. Raison), said in the debate on immigration on 4 December 1979:
"We are not talking about the marriage of convenience that takes place purely to secure entry and then collapses. That is dealh with under the present rules, if somewhat imperfectly. We are talking about marriages that may last but are merely for the purpose of immigration."
Later in the same debate, referring to the new primary purpose test, he said:
"Our proposals will help to seal off an avenue of primary immigration."—[Official Report, 4 December 1979; Vol. 975, c. 368–72.]
My noble Friend Lord Whitelaw said on the same occasion:
"What we are discussing is the question of men being able to use a provision in our immigration control which enables them to settle on marriage when they could qualify to come in no other
436
way. We must stop this loophole. The Government have a clear mandate to do so."—[Official Report, 4 December 1979; Vol. 975, c. 254.]
Therefore, one cannot possibly come to the conclusion that in 1979 the Conservative Government were out only to catch the simple obvious marriage of convenience where the man did not really intend to live with the woman at all or at any rate for any longer than was strictly necessary. The intention was to go wider than that, and the rules do go wider than that.
Ms. Clare Short: Will the Minister clarify what he is saying? It appears to me from the quotations that he has just given that it would be impossible for any young Asian man seeking to marry and live with a woman in the United Kingdom not to breach that rule. Is he saying that the rule was intended to prevent young Asian women who are British from marrying any Asian men from the Indian subcontinent?
Mr. Waddington: I am saying nothing of the sort, and I shall reinforce that in a moment. The facts belie what the hon. Lady suggests.
In 1979 we knew what we wanted to do and we did precisely what we said that we would do. We made it clear in the debate what we were doing. We were not attacking the traditional Asian custom of arranged marriages. We were out to try to stop that system being abused—to prevent marriages being used by people to get into this country.
The early-day motion is nonsense for a number of reasons. It is also thoroughly mischievous and misleading. First, contrary to what the motion says, I am not putting a cruel interpretation on the rules controlling the entry of husbands and fiancés. Entry clearance officers are applying the plain language of the rules, so the early-day motion is wrong when it suggests that I am putting a cruel interpretation on the rules.
Secondly, it is not a policy decided by me that is being applied; what is being applied is a set of rules approved by Parliament. Again, therefore, it is nonsense to state, as the hon. Lady states in the early-day motion, that what is in issue here is a policy propounded and decided by me.
Thirdly, the rules—and this rule in particular—are not designed to split families; and it is not the rules, as the hon. Lady knows perfectly well, that are separating this young couple. They are separate at present because the woman decided to come back here, having lived in India with her husband for the first eight months of her marriage. Incidentally, by doing so—and now inviting her husband to join her here—she is not acting in accordance with the traditional custom, as I understand it, in arranged marriages. So, again, that statement in the motion is nonsense.
Fourthly, the rule is not designed to prevent British women from marrying men from the sub-continent. Had it been so designed, it would have been badly designed because a very small percentage of husbands are refused on the grounds of primary purpose.
Mr. Dosanjh can exercise the generous rights of appeal that we in Britain afford to people in his position. It is sometimes forgotten how generous are our rights of appeal, and I have already told the hon. Lady that the case will be reviewed again in the light of any recommendations that the adjudicator may make. Nothing could be fairer than that.

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For the moment, I can see no case for acting exceptionally outside the rules, particularly when the rules have bitten because Mr. Dosanjh has failed to fulfil a requirement put there for the specific purpose of preventing abuse.
Question put and agreed to.
Adjourned accordingly at three minutes past Twelve o' clock.

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

The Hebrides: Oil Pollution
Lord Campbell of Croy: 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 have yet identified, from samples of the oil, the vessel which caused the pollution in the Hebrides in mid-October and the resulting damage to wildlife.
Lord Lucas of Chilworth: My Lords, I regret that it has not been possible to trace the vessel which caused this unfortunate pollution off the Isles of Coll and Tiree last month and which resulted in such a regrettable loss of bird life in the area. Samples of oil were taken from the shores of Coll and Tiree and from the plumage of oiled birds during the incident and these were compared with samples taken from two vessels known to have been in the area at the time, but tests indicate that none of the samples taken from the vessels matched the oil spilled in the incident.
Lord Campbell of Croy: My Lords, I thank my noble friend for his reply. I share his regret that the culprit has not been traced on this occasion when many sea birds suffered a miserable death. Can my noble friend say whether the system of matching oils is yet precise enough to obtain conclusive evidence against a particular vessel?
Lord Lucas of Chilworth: Yes, my Lords. Government scientists are quite satisfied that the techniques now employed could achieve that result.
Lord Underhill: My Lords, can the Minister indicate briefly what monitoring arrangements are made to check on oil spillage? Are the Government satisfied that everything possible is being done in that monitoring?
Lord Lucas of Chilworth: My Lords, the Marine Pollution Control Unit comprises a small number of people but it also has eight aircraft which are maintained and operated around the clock. They are stationed in various parts of the country. In addition, that unit has recently acquired airborne remote-sensing equipment for identifying oil at sea.
Lord Shinwell: My Lords, is it not the case that Lloyd' s Register can locate any vessel at any time if it is engaged in legitimate shipping business?
Lord Lucas of Chilworth: My Lords, I very much regret to have to tell the noble Lord, Lord Shinwell, that that is not so. There is a voluntary code of identification mostly used in the Dover Straits, particularly by vessels carrying dangerous or hazardous
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cargo. Otherwise, Lloyd's can only identify a ship sailing on a particular day but not exactly where it might be.
The Earl of Cromartie: My Lords, is my noble friend aware that some time ago I asked a Question about oil spillage in the Minch? The Answer was not very satisfactory. I was told that it was something to do with the laws of the sea. Is he aware of the danger not only to birds but to people living both on the islands and on the mainland? Is he also aware that the oil spill could have been very much worse had it been further north where it would have been completely closed in in what is very nearly an inland sea? Will he ask his noble friend to look more carefully into the question of oil vessels, usually sailing under flags of convenience—which makes the situation even more dangerous—using the Minch?
Lord Lucas of Chilworth: My Lords, I can certainly assure my noble friend that I shall draw his remarks to the attention of my right honourable friend. We have no evidence that ships flying flags of convenience are worse culprits than others. We think that the incident to which my noble friend Lord Campbell of Croy refers in his Question is probably the result of illegal tank or bilge washing.
Lord Somers: My Lords, does the noble Lord agree that the large number of catastrophes that we have had with oil vessels implies that on the whole tankers tend to be rather too large and therefore not easily manageable at sea?
Lord Lucas of Chilworth: My Lords, there is no evidence to suggest that the size of tankers has very much to do with the occurrence of spillages.
Lord Campbell of Croy: My Lords, is my noble friend aware that in this case it was fuel oil and not crude, so that it could have come from almost any kind of craft? Will the Government promote the development of the system of detection, as well as the system of matching oils? This could be a powerful deterrent against practices which foul our inshore water and our coastline.
Lord Lucas of Chilworth: My Lords, my noble friend is quite right. It will undoubtedly be of interest to noble Lords to know that the 1973 International Convention for Prevention of Pollution from Ships and the Protocol of 1978, which sets out the regulations, came into force on 2nd October. The transfer of information between the Northern European port operators and ourselves is now very much closer than it was before.
Lord Bruce of Donington: My Lords, is the noble Lord aware that at an inquiry in Paris in 1979 into accidents at sea, including oil pollution, which was held under the auspices of the European Parliament, evidence was produced that ships flying flags of convenience in the main were more culpable than the rest? Will he have a further look into this matter?
Lord Lucas of Chilworth: Yes, my Lords.

Neighbourhood Watch Schemes
2.43 p.m.
Baroness Sharples: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty' s Government how many home watch neighbourhood schemes are contemplated in major cities in the United Kingdom.
The Parliamentary Under-Secretary of State, Home Office (Lord Elton): My Lords, the Metropolitan Police and 10 other police forces in England and Wales are operating neighbourhood watch schemes, under various names, and a further six will be doing so within a year. I understand that no schemes are in operation in Scotland and Northern Ireland at present. The matter is, however, being kept under active review by the police forces concerned.
Baroness Sharples: My Lords, I thank my noble friend for that reply. I understand that the scheme only started at the beginning of September. Would my noble friend agree that it has been an extremely encouraging start, in that I understand that in one area in London the reduction in crime has been 50 per cent. compared to an equivalent period for last year? Would he also agree that the community spirit shown by people is excellent and numbers of people are coming forward to be special constables?
Lord Elton: My Lords, I am grateful for my noble friend's supplementary question. Indeed, we are encouraged by our experience in this field. Policing is a matter of work within the community and not upon the community. and this is a very good way of generating a community spirit and co-operation with the police force.
Lord Mishcon: My Lords, does the noble Lord the Minister remember, as I am sure he will, a very interesting debate on crimes of violence which took place on the initiation of the right reverend Prelate, Primate—I mean the most reverend Primate? If the noble Lord the Minister does not remember my question. he will at least remember the corrections that have been made to it. Was it not the very essence of that debate that there should be more community involvement with the police? Is this not an excellent way of showing it. and are the Government going to encourage it as much as possible?
Lord Elton: My Lords, I do indeed remember the debate initiated by the most reverend Primate and its central theme, and I welcome the noble Lord's support for our view that the co-operation of the police and the community is the foundation of good law keeping; and we shall of course support it.

Children in Custody
2.45 p.m.
Baroness Masham of Ilton: 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 why the number of 15-year-old school children residing in prisons and remand centres waiting to be sent to youth custody centres is increasing, and why detention centres and community homes with education are not being fully used.
Lord Elton: My Lords, on 30th September there were 26 sentenced 15-year-old offenders held in prisons and remand centres. This figure does show an increase over earlier years. It may reflect recent changes in sentencing patterns, but it is too early to draw any firm conclusions following the implementation of the Criminal Justice Act 1982, and noble Lords will be aware that it is for the courts to decide how each individual case should be dealt with. Initial indications. however, are that fewer detention centre orders are being imposed on boys under 17 than formerly. As to community homes, community homes with education are not reserved for offenders and the courts have no powers to require a child to be sent to one. In recent years the demand for residential care has decreased and the Government are concerned to extend and strengthen the range of community based disposals for young offenders.
Baroness Masham of Ilton: My Lords, while thanking the noble Lord for that full reply, may I ask him whether he is aware that, when we get boys sent to us in youth custody centres, they have very often completed maybe half of their sentence in an adult prison? Would he not agree with me that for a 15 or 16 year-old boy to be locked up 23 hours a day while in the middle of his puberty could be very damaging?
Lord Elton: My Lords, of course it is our aim to have as little recourse to imprisonment for this class of offender as possible. but I think that in the cases to which the noble Baroness refers the period in custody will have been short. The allocation procedure is normally completed in between four and 10 days and transfer allocation to another establishment is normally then done with despatch, and at any rate within a week. It is on occasion the case that so little of a short sentence remains that it is not in the interests of the prisoner to be put to the upset of removal to yet another strange place for the remaining period.
Lord Glenamara: My Lords, does not the noble Lord agree that to hold 15-year-old children in a prison with hardened criminals is an appalling state of affairs, and as the numbers are so small—the noble Lord quoted the figure of 26—could not some alternative arrangements be made throughout the country?
Lord Elton: My Lords, it is a question of administration—and that is not meant to be a pettifogging reply, but we do have to provide the means of allocation which is a specialised job. The young people concerned are not kept in contact with adult offenders; they are in separate parts of the establishment. The allocation process is carried out as swiftly as possible and we find that it does not militate against the interests of the prisoners to the extent that I think the noble Lord fears.
Baroness David: My Lords, may I ask the Minister how many community homes with education have been closed and whether it is likely that more will be closed?—because the one with which I am involved as a governor has now 19 people at it, when it has places for 54, and the facilities and teaching are excellent. Even though the courts cannot send the young people directly there, the courts can put the young people into the care of the local authority which can then send them to the community homes with education.
Lord Elton: My Lords, we are aware of this problem. But I have to remind the noble Baroness that the closure or maintenance in operation of a community home with education is the responsibility of a local authority, and even before the implementation of the 1982 Act a surplus of accommodation in such homes had already developed. Where this has led to establishments becoming uneconomic, local authorities have had no alternative but to close them.
Lord Hunt: My Lords, following the previous question, is the Minister satisfied that the staffing of community homes, while necessarily high in relation to the number of resident children, is not excessive in present circumstances of under-use, as pointed out by the noble Baroness in her original question? Is it not a fact that in some of these homes, with one of which I happen to be personally involved, the number of staff considerably exceeds the number of resident children?
Lord Elton: My Lords, the noble Lord has put his finger on what I was trying to point out. Sometimes these homes are uneconomic. We are trying to see how these facilities can be made more cost effective. New provisions in the Health and Social Services and Social Security Adjudications Act 1983, which comes into force shortly, will widen the use that community homes with education may be put to, and should stimulate this development.
Lord Glenamara: My Lords, may I refer to the noble Lord's reply to my supplementary question? I appreciate the point about administration, but surely it is not beyond our wit and ingenuity to ensure that 26 children are not held in jail. We can organise all kinds of things. We organised a war 8,000 miles away at the drop of a hat. Surely we can organise matters so that 26 children are not held in jail. Why cannot that be done?
Lord Elton: My Lords, the Falklands episode is used as a yardstick for a great many things. I am not sure that this is the most appropriate. Leaving that aside, we are talking about 26 individuals at any one time spread across the country in a number of institutions. The offences occur all over the country, not in specific places. If we are to reduce the number of places in which they are to be held for allocation and very rarely for anything else, we automatically make it a much greater distance for the family to travel in order to visit and support, as well as a more expensive process for the system. We have to balance the interests of all prisoners one against the other. In the light of what the noble Lord has said, I shall of course look at the matter again, but I am broadly satisfied that what we are doing meets the criteria both of cost effectiveness and of humanitarianism, as it should.
Lord Mishcon: My Lords, did the noble Lord the Minister catch the anxiety in the House following upon what the noble Lord has just said in his supplementary question? Would he regard cost effectiveness as being the least priority in this matter instead of one of the main priorities? Will the noble Lord kindly answer this question? In regard to youth custody orders, is it not correct that in the passage of the Criminal Justice Bill the hope was expressed by the Government that youth custody orders would be on the decrease? Has that hope so far been fulfilled?
Lord Elton: My Lords, I did catch the anxiety. I thought that I responded to it in the terms in which I replied to the noble Lord. As to cost effectiveness, I cannot agree with the noble Lord, but perhaps he does not quite take the point that I am making. We have a finite budget and a finite amount of money to spend on the service. Within that service, the more cost effective we are in dealing with one prisoner, the better we can treat another. I am therefore seeking the best way to use the money so that all prisoners benefit to the maximum amount. I do not think that I can give disproportionate amounts of money to individual classes of prisoner beyond what may be required by their tender age and the fact that they may be first offenders.
As to the noble Lord' s last supplementary question, I well remember the heat of the debate on Section 1, as it now is, of the Criminal Justice Act in which the noble Lord and I partook. and which makes it an obligation on the courts to consider every other form of disposal of a prisoner before custody is considered. That is still what we intend. As I said in my original and equally long substantive Answer, it is yet too early to see how the pattern of sentencing will settle down.
Lord Campbell of Alloway: My Lords, does my noble friend, the Minister, agree that one of the problems is the inability to suspend a youth custody order under existing law? If he agrees, will Her Majesty's Government give favourable consideration to introducing an amendment to cure that defect?
Lord Elton: My Lords, I think that my noble friend is wishing to remind me of the remarks made by the noble and learned Lord Chief Justice on the question of the suspension of such sentences. As my honourable friend made clear recently in another place, we do not at the moment foresee an opportunity for early legislation.
Baroness Masham of Ilton: My Lords, is there not a problem in that some magistrates are not aware that detention centres are not being fully used? They are under the impression that the centres are very full. Is he aware that I have discussed this with some magistrates?
Lord Elton: My Lords, I am aware that the noble Baroness has discussed it with some magistrates. She was kind enought to tell me yesterday that she had done so. I trust that in future discussions she will enlighten her friends in that quarter and that our exchanges in the House will serve to enlighten the rest.
Baroness David: My Lords, is the Minister aware that not only are more young people receiving youth custody sentences but also many more are in secure accommodation since the implementation of the Criminal Justice Act? I made local enquiries. I found that, in five months before implementation of the Act, no boys were in secure accommodation in my county. In the five months since the implementation of the Act, 209 boy-days have been spent in secure accommodation. This is very unfortunate in every way, and also from the point of view of cost. It costs £500 a week to keep a boy in such accommodation.
Lord Elton: My Lords, I repeat that I think it is a little early to form a judgment on the working of the Act. I shall look at the working of the Act in the light of what the noble Baroness has said.
Lord Cledwyn of Penrhos: My Lords, on a practical point, is the noble Lord saying that exchanges in the House are sufficient to inform magistrates of the point that the noble Baroness was making? Will the noble Lord give an assurance to the House that he will discuss the matter with his noble and learned friend the Lord Chancellor to see whether the magistrates can be specifically informed of the point at issue?
Lord Elton: My Lords, I am most grateful to the noble Lord for drawing attention to what was intended to be a verbal felicity but not to limit the scope of my action.

The Theatre Museum
2.56 p.m.
Lord Crathorne: 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 when they expect the Theatre Museum to open.
The Minister of State, Privy Council Office, and Minister for the Arts (The Earl of Gowrie): My Lords, assuming that the building work proceeds on the timetable envisaged, the Theatre Museum's Covent Garden premises should be ready to be opened to the public during 1986 or early 1987. I hope it will be possible to let the building contracts for building starts very shortly indeed.
Lord Crathorne: My Lords, I should like to thank my noble friend for that Answer. I am sure that he will be aware how much we are looking forward to the opening after this long delay, and the sooner the better.
Lord Jenkins of Putney: My Lords, is the noble Earl aware that the decision to locate the Theatre Museum in Covent Garden was announced in another place by a Labour predecessor of his in 1975? Since then, there have been three Conservative Arts Ministers who do not seem to have been hurrying themselves enormously in the last eight years. Nevertheless, is the noble Earl further aware that we warmly welcome the fact that at last he is able, apparently, to put a date on matters? Would he not agree that it is sad that the date
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is as far away as 1986 or 1987? Nevertheless, will he accept that we are very glad to know that at least he has put a date on it? Will he do whatever he can to see that it goes ahead as quickly as possible?
The Earl of Gowrie: My Lords, I am grateful to the noble Lord for his welcome of my announcement. I would point out to him that a Labour predecessor may have announced the project in 1975 but I notice that no Labour predecessor of mine actually brought it to fruition.

Business
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Gowrie will, with the leave of the House, repeat in the form of a Statement the answer to a Private Notice Question in another place on the dispute at the Messenger Newspaper Group. This will be followed by my noble friend, Lord Trefgarne, who will repeat a Statement on the intermediate-range nuclear forces negotiations.

Wealth Creation and Taxation
2.59 p.m.
Lord Boyd-Carpenter Lord Boyd-Carpenter rose to call attention to the urgent need to liberate from the control of Government and other public bodies more of the resources required for the creation of wealth; and to diminish the disincentive effects on work and investment of high levels of taxation; and, to move for Papers.
The noble Lord said: My Lords, before I venture to offer to your Lordships a few observations in support of the proposition contained in my Motion, may I first say what a pleasure it is for me, and I have no doubt for many of your Lordships, that this debate is to bathe occasion of the maiden speech of my noble friend Lord Maude of Stratford-upon-Avon. Those of your Lordships (who I am happy to think include the noble and learned Lord the Lord Chancellor) who have listened to my noble friend through the Oxford Union and through the House of Commons to this House, know what a pleasure this will be and what a powerful addition to the speaking power of this House my noble friend will undoubtedly make.
It was said of a certain provincial mayor that on taking office he solemnly assured the citizens that he would, in the course of his duties, steer between partiality, on the one hand, and impartiality, on the other, without actually falling into either. That particular line of conduct seems to me to be very much the line which successive Governments of all parties in this country have followed in the management of our economic and financial affairs. In the modern world there are basically two methods of organising the operation of large economic communities. There is the socialist/communist method, with virtually all power vested in the Government machine and in the political party which controls it, which allocates investment, decides on earnings and wholly controls the operation of the economy; and there is also the free enterprise capitalist system. Part of the theme of what I desire to say to your Lordships is that we have followed the

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tottering footsteps of the provincial mayor to whom I referred.
The communist/socialist system undoubtedly works. It does not work very well in agriculture, but it does manage somehow to organise an economic community although it produces, by relative standards, very low standards of life. The free enterprise capitalist system, of which the United States is the obvious example, has produced the highest material standards of life that humanity has seen in the history of mankind, but it has to be bolstered and assisted by substantial social security provision for the less fortunate and the less capable, which it has the advantage of producing the means to sustain.
It seems to me that for the last, I was going to say 19 years, but as that pinpoints almost too exactly my own date of departure from the Treasury I had better say 20 years—and I hope that my noble friend Lord Home will forgive me for that observation—we have steered between the two methods, neither attaining the discipline on our economy which the communist system undoubtedly provides nor at the same time obtaining the stimulus to the creation of wealth on which the free enterprise system depends.
Before that 20-year period and during the prime ministership of Mr. Macmillan and of my noble friend Lord Home, we had in this country a period during which the free enterprise system, though still somewhat restricted, was allowed to deliver the goods. Year after year we had a reduction in the level of taxation, but year after year those taxes at reduced rates produced increased revenues which financed the provision of improved social benefits as well as adequate defences and the other needs of Government. We had a situation in which the Prime Minister of the day, Mr. Macmillan, was rebuked for an observation to the effect that we had never had it so good by a number of intellectual prigs who thought that his observation was too materialistic. The very fact that that observation could be made and was not challenged for its accuracy is an indication of the success which, if given a chance, the capitalist free enterprise system can have in, first, the creation of wealth, and, secondly, as a consequence of that creation of wealth, the availability of resources both to stimulate the enterprising and take care of the unfortunate and to meet the financial needs of the state. It is our departure from that which I fear is the cause of a great many of the ills which on both sides of this House and of another place, with, I think, equal sincerity, we deplore.
After the war—and I hope that your Lordships will forgive this expression—we lurched into nationalisation. The older of your Lordships may recall the bright enthusiasm with which the taking over by the state of the commanding heights of the economy was received in certain quarters. One accepts that all this was done for the highest of motives, in the genuine and sincerely held belief of those who constituted a majority in this country at that time that the national benefit and the national wealth would be improved by the transfer of large activities to public ownership. Very few people, in the light of subsequent experience, would put it quite that way today.
But let me recall the heady enthusiasm of those days in the words of the late Lord Morrison of Lambeth—Herbert Morrison—who, as your Lordships will remember, was not a particularly starry-eyed or emotional character. In his publication The Socialisation of Transport he said:
"The quality of service will tend to advance, and the price charged to fall".
He went on to say:
"The industry itself will be more efficiently and economically conducted".
I do not think that there would be many people today who would share the enthusiasm of Lord Morrison of Lambeth.
I must remind your Lordships, so far as it is necessary, of some of the facts. For years past now the prices of the products of the publicly-owned industries have risen considerably faster than either the index of retail prices or the level of prices in the private sector. If we take the latest figures available we find that in February this year the retail price index was rising at a rate of 5 per cent. per annum and that the price rise in the private sector was somewhere near that figure. Prices in the public sector were rising at a rate of 13 per cent. At the same time, if one quotes Economic Trends again, it is the fact that the cost per employee in the nationalised industries, the cost of labour, has risen far faster than in the private sector, with, of course, the inevitable consequence on prices to which I have already invited your Lordships' attention.
The nationalised industries as a whole have not assisted in the solution of the problem of unemployment. Indeed, several of them are now employing a good many fewer people than they were even five years ago [Interruption.] and are doing so very properly, within their limitations, because of their inability to sell their goods. I wonder whether the noble Lord, Lord Beswick, laughs at that? Worse, in several cases these industries have been kept in operation only by substantial payments of subsidy, at the cost of the taxpayers. In recent years the coal and steel industries and the railways have all absorbed subsidies of very great substance taken from the taxpayer, and, therefore, many of them, taken from the taxed profits of the private sector of industry.
It is by no means self-evident—it would not be self-evident to a visitor from another planet—that profitable industry (industry which in the difficult conditions of today can still make a profit) should be taxed, and heavily taxed, to sustain the scale of operation of industries which are plainly unprofitable and which for years to come will show no prospect of providing anything other than a deficit.
Lord Molloy: My Lords—
Lord Boyd-Carpenter: My Lords, I hope the noble Lord will forgive me, but I have a good deal to say and I do not want to detain the House any longer than I must. The noble Lord may have a chance to speak later.
I ask your Lordships to consider the point of the diversion of investment by the Government into the public sector—the use of the guaranteed borrowing power of the state to secure that a large proportion of

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the resources available for industrial investment goes into the public sector. I would invite those of your Lordships who have not followed this argument very closely to look at a recent leading article in The Times headed:
"It depends on the rate of return".
This article points out that, particularly in the middle-1970s, huge investments were undertaken in the steel and coal industries to increase their capacities—in the case of steel to increase its capacity by the construction of Ravenscraig and by the expansion of Redcar, and in the case of the coal industry to extend its capacity after 1985 up to a possible total of 42 million tonnes a year. The Times, in its brutal but I fear—and many of your Lordships will think—its justified way, says:
"The money 'invested' in the two industries was, in fact, clear and massive social waste".
Since the war, apart altogether from investment but by way of subsidy and writing off of debts, some £40,000 million have been provided from central Government for the nationalised industries. It is easy to reflect what immense return might have been earned on such an investment had it been directed into the newer areas of electronics and communications—the newer industries which are still clamouring for capital and for investment.
Therefore, one must reflect on the damage done to the British economy by the diversion of these resources, not on the basis of proved economic need (and still less on the basis of proved prospects of profitability) but simply because the industries concerned happened to be publicly-owned and in the public sector. If your Lordships want one further example—and I promise that I shall not give more at the moment—there is the case of British Shipbuilders which even in the past few months in the case of the "Canberra" replacement, in the case of the "Queen Elizabeth II" refit, in the case of the "Cunard Countess" refit and in the case of the "Atlantic Conveyor" refit, have demonstrated themselves to be completely uncompetitive with their foreign rivals.
Why has this happened? It is certainly not due to any lack of quality in the leadership of these industries. Very far from it. On the whole, they have been led by men of great distinction and ability, two of whom—the noble Lords, Lord Ezra and Lord Beswick—I understand are taking part in this debate. I hope they will allow me to say that they are people who have undoubtedly proved their capacity to run industries and organisations in very difficult circumstances with very great ability.
Therefore, it is all the more significant that, despite having had the advantage of the leadership of such men. these industries have produced so dismal a result—a dismal result in that even the electricity industry is only returning 2 per cent. On capital employed at a time when the cost of money is 9 per cent. or 10 per cent. Indeed, in the nationalised sector as a whole the overall return on capital employed at the moment is about nil.
Why has this happened? I think this is almost literally the 64 billion dollar question—or, indeed, your Lordships might name a higher figure. My submission to your Lordships is that this derives from the nature of the system. The managers are not free to manage; they are subject to continuous interference,
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not so much by Ministers but by civil servants. Here I speak from experience as a former chairman of the Civil Aviation Authority where the Ministers under whom I worked, both Conservative and Labour, were helpful in the extreme, but where a great many of their civil servants were the reverse and took up a great deal of my time and that of my senior staff asking silly and pointless questions which had nothing whatever to do with the conduct of the business.
Secondly, in the nationalised industry sector it is the fact that no one's living depends on its profitability. This creates particular difficulties when difficult decisions have to be taken over closures of plant or equipment. In the private sector if parts of your activities are unprofitable, you have to brace yourself to close them down and to say to those concerned, "This has to be done to keep the company viable and going". No leader of a nationalised industry can say that because it would not be true, and all those concerned would know that the resources of the state were behind it.
Equally, the managers of these industries have to deal not only with Whitehall but with monopoly trade unions, and they are denied the advantage which we have in the private sector of the development of employee shareholding. In a company of which I have the honour to be chairman, over 90 per cent. of those who work for us are shareholders in the company, and for that reason have a feeling of common interest with those who run the company. This is impossible in the nationalised structure.
Again, a good many, but not all, nationalised industries are subject to the enervating effect of monopoly, of absence of competition, of the fact that they have captive customers. This is bad for all of us and only too easily leads to a contempt for your customers—the very opposite of that American placard which I saw in an American factory, which on a previous occasion I quoted to your Lordships:
"Customers make pay day possible".
I suggest to your Lordships that it is this system which is the cause and the explanation of the problem.
The words which were used by the present Financial Secretary to the Treasury I think sum up this part of my argument:
"At the end of the day the heart of the matter is that a nationalised industry does not have to succeed in order to survive".
Evidence about the system is coming to our hands daily now as a result of my noble friends' and my right honourable friends' policy of denationalisation. I prefer to say, "denationalisation" because in common with most of your Lordships I hate the expression "privatisation". Quickly let me give your Lordships one or two examples. Since Cable and Wireless was denationalised, it has produced pre-tax profits more than double those in the last year under nationalisation. The profits of Associated British Ports for the first six months have gone up from £1.5 million under nationalisation to £6.8 million under company structure. Amersham's profits, despite the competition. have risen by a third. There is every reason to believe that the National Freight Company—itself a good example of co-operation—is going to bring in profits of something like £5 million this year after breaking even last year.

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Here is solid evidence that the system is working against the efficiency of the industries, and therefore against the creation of wealth in this country. To take one final example, even the prospect of denationalisation—plus of course the dynamic leadership of my noble friend Lord King of Wartnaby—has pushed British Airways back into profit after some years of deficit. The result is that all these denationalised industries or about to be denationalised industries are now creating wealth for the nation instead of consuming it.
A criticism has been made which I ought to answer. It was made in another place by a member of the party opposite, who said that to sell these nationalised industries and use the proceeds for current expenditure was like "selling the family silver to pay the food bills". There is a slightly feudal ring about that observation. But with respect, I think it is right. It is extremely important that we should not use the proceeds of these sales simply to finance current expenditure. The resources should be made available for investment in the private sector, either indirectly by using them for necessary Government capital expenditure, so diminishing the demands of the Government on the market for funds, or perhaps even more firmly and effectively by reducing taxation, but certainly not by financing current expenditure.
On the mention of taxation I must add this: I am concerned, as I think are many of your Lordships, by the observations of the Chancellor of the Exchequer that he might be contemplating increases in taxation in the coming Budget. From the point of view of the creation of wealth, as indeed from the point of view of the whole policy of the Government as I understand it, that would be a most unfortunate step to take.
We have become so accustomed to it that not all of us realise how high is the burden of taxation in this country: a burden of taxation, local and national, which takes up in the current year 42.5 per cent. of gross national product—and I shall give noble Lords opposite the point, otherwise they will certainly take it—which is a higher figure than in the last year of the Labour Government. In those circumstances, to increase taxation further would, I suggest to your Lordships, be a particularly unfortunate step to take.
Taxation is very high. You do not need to say that because your Lordships pay it. But when you consider that a man of substantial earnings—I am going to the top of the scale deliberately now—who has certain savings is paying tax at the rate of 75 per cent. on some part of his income, one cannot forbear the comment that taxation at that rate is confiscation. I am rather surprised that those bodies who interest themselves in human rights have not made that point. Gross domestic product is being taxed to the extent of 42.5 per cent. There are taxes on capital; there is 15per cent. VAT; and there is the national insurance employers' surcharge. All these constitute a heavy burden on the taxpayer.
They do two things: first of all, they directly divert wealth from the private hands to the public sector; secondly, they diminish incentive either to save or to undertake additional work. The 15 per cent. surcharge on investment income hits particularly viciously a
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person such as perhaps the small shopkeeper who has not had an opportunity to contribute to a pension, which is treated as earned income, but has built up a little business and sold it to pay for his retirement, and finds himself taxed with this 15 per cent. surcharge on whatever else is his rate of tax.
I say to my noble friend the Lord President of the Council, who is to speak in a moment, I beg of him to convey to his right honourable friends the need for reductions rather than increases in taxation. I believe that I am going to the right court. According to the public prints my noble friend is President of the Court of Star Chamber on Public Expenditure. In that role, as one who was once involved in control of public expenditure, I wish him extremely well, because it is of course only through the success of his efforts in restraining the growth of public expenditure that the reductions of taxation, which are a necessary part of a policy aimed at the creation of wealth, can be effective.
Having said that, I hope that none of your Lordships will suggest that those of us who take this view are wanting in compassion for those who need the support of our social services. I assure them that they have no monopoly of compassion. Where I think we differ from this is as to the means, not the ends. We all want to see a prosperous, wealthy country. We all want to see a country where resources and incomes rise year by year, where inflation is checked, and where, so far as human happiness depends on material things, that human happiness is increased. We all want to see that. The object of those of us who have put down this Motion is to suggest that that purpose is best served by the creation of wealth, and by concentrating on measures which stimulate the creation of wealth.
It is one of the advantages of this House that, as we are not subject to direct electoral pressure, we can express our views with complete freedom without fear of saying things that are unpopular. But that does, I suggest to your Lordships, impose on us a particular duty—as freedoms always do impose duties—and that is to seek to the best of our ability, whether measures are popular or unpopular, to secure that those measures are the right ones for our country, because it is only if the economic and financial policies which we follow are right—and I suggest that these should be policies concentrating on the creation of wealth—that we shall be able, in the words of the poet, to "scatter plenty o'er a smiling land". My Lords, I beg to move for Papers.
3.28 p.m.
The Lord President of the Council (Viscount Whitelaw): My Lords, I should like to begin by congratulating my noble friend on his choice of Motion today. May I humbly say to one whom I have both long admired and wished that I could emulate in his oratory, how much I admired the speech that he made this afternoon. His theme is central to the Government's policies for economic recovery. It is fortunate that we should be considering these questions only a week after my right honourable friend the Chancellor of the Exchequer published his Autumn Statement; and it is apt that the Motion should stand in the name of my noble friend.

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In an earlier incarnation he was a distinguished member of a Treasury team. He was, indeed, the second of a long line of Chief Secretaries—now powerfully reinforced in this House—whose thankless task is always to remind us that the public purse is never quite so full as we should like it to be. It is a task which requires all the persuasive skills which my noble friend has long shown, and which he has certainly shown again today.
The economic background to this debate is one of modest optimism. The economic recovery has now been under way since early 1981. Growth this year is likely to be up by 3 per cent. We are now growing faster than any other country in the European Community. As the economy recovers, the job market is also beginning to recover. The total number in employment (including the self-employed) is estimated to have risen in the second quarter of this year. Vacancies are continuing to rise. Unemployment is worryingly high, but it is now levelling out.
The recovery has begun with a rise in consumer spending and an acceleration of housebuilding. These resulted from increased confidence, lower interest rates, and, above all, low inflation. The emphasis of the recovery can now be expected to switch from the personal sector to the company sector, as investment increases and exports benefit from the world recovery.
The Government's economic objective is clear. It is to achieve sustainable non-inflationary growth. The first essential is to continue our sound money policies and make further progress against inflation. This means keeping to our medium-term financial strategy and maintaining downward pressure on Government borrowing. But equally important is to encourage enterprise where it really matters—in the market place. This means increasing incentives, exposing more of the economy to the forces of competition, and removing obstacles to the operation of free markets. Those are the main themes of the Motion put before us by my noble friend.
It is right that this Motion should link the questions of wealth-creation and investment with that of the level of taxation and its disincentive effects. No member of the Government could claim to be satisfied with the progress that we have made so far. I shall certainly convey to my right honourable friend the Chancellor of the Exchequer what my noble friend said about the future; with considerable acceptance on this side of the House, I noted. But we judged that high inflation and high interest rates are even more damaging to investment and wealth-creation. That is why our aim of reducing taxation has had to take second place. Yet we have made substantial and beneficial improvements in taxation.
The basic rate of income tax has been reduced by three percentage points. The penal higher rates of income tax have been reduced to levels equivalent to those of our European competitors. The income tax thresholds, including the threshold for the investment income surcharge. have been increased in real terms. The capital tax regime has been recast to reduce disincentives to productive investment. In the field of company taxation, the national insurance surcharge (the tax on jobs) has been cut from 3½ per cent. to 1 per cent.—a reduction worth some £2,000 million a year to the private sector.
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But, as my noble friend made clear basic success in reducing the burden of taxation can be achieved only through firm control of public spending. So often in the past we have seen the relentless tendency of public expenditure to creep upwards. White Paper has succeeded White Paper, and each year's plans have been higher than the plans they replaced. Last year we halted that process. For the first time in years the Government's spending plans were within the level already set. When last week my right honourable friend announced his plans for spending in 1984–85, he was able to show that once again we have kept to the level of spending we had planned. When next year's White Paper gives the figures for the two following years, it will be clear that we are keeping to our plans in those years. too. It is this discipline which strengthens the Government's determination to get good value for the taxpayers' money.
As noble Lords know, and as my noble friend mentioned, I have recently had some small part in the difficult decisions required to achieve these results. This experience has demonstrated to me the relentless pressure for more public spending. The truth is that many of those who press for reduction in public spending in general still have their own particular favourite projects which they wish to protect or, indeed, enhance. Nor can this dilemma be solved by vague talk of priorities, nor by illusory hopes of basing substantial economies solely on administrative saving. Of course, every Government must constantly seek to improve their efficiency and to cut staffing costs. as this Government certainly have done and shall continue to do. But the undeniable fact is that beyond a certain point any further major reduction in public spending can come only from fundamental changes in policy. That is why I agree so strongly with my right honourable friend the Chancellor of the Exchequer that, at a time when trends in our society are pointing to increasing Government expenditure. we should have a frank and informed public debate about the alternatives before any decisions are taken. I would suggest that there is no better place in which such a debate can take place in those terms than your Lordships' House.
But it is not simply a matter of adjusting the programmes from year to year to meet short-term pressures. We need to take a broader view of the shape of the public sector—how we can best strike the balance between public and private activity, how we can best deploy the nation' s resources overall. To that aspect my noble friend addressed a considerable part of his speech.
As he has suggested, denationalisation is, and must be, a key part of our drive to roll back the frontiers of the public sector. It is one of the most important means of liberating wealth-creating resources. This is so, first, because of the size of the problem. Nationalised industries account for about a tenth of the gross domestic product. Secondly, I have to say—as my noble friend made so dramatically clear—that in many cases the performance of these industries has been poor. Their rates of return have been consistently lower than in the private sector, and since 1970 have been around zero. That, too, is a reason for a new approach.
Thirdly, liberation is important because of the numbers of people directly affected. In the end

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recovery depends on the initiative and enterprise of the British people, one-and-a-half million of whom work in the nationalised industries. Their talents need to be deployed to the best possible effect. Denationalisation will make it possible to link pay to success; and it decisively breaks the political link, which can so easily intrude on commercial decisions—evenunder the best-intentioned of Governments. Denationalisation will enable those who work in the nationalised industries to take a greater pride in them, and their job satisfaction will be increased. As my noble friend made clear, it offers employees the chance of owning a stake in the business in which they spend their working lives.
In this field, we already have a record of major achievement. British Aerospace, Cable and Wireless, the National Freight Corporation, Amersham International, Britoil, Associated British Ports, International Aeradio, and others have already been transferred to the private sector. Our manifesto set out our intentions for further denationalisation. They include British Telecom, British Airways, Enterprise Oil, and as many as possible of Britain's airports. We shall also continue to identify and bring forward other candidates.
But it is not enough just to transfer control. We must also tackle the problems of monopoly and lack of competition. Competition is an extraordinarily efficient mechanism. It ensures that goods and services preferred by the consumer are delivered at the lowest economic cost. It responds constantly to changes in consumer preferences. It does not require politicians or civil servants to make it work.
The denationalisation programme furthers our objective of reducing the size of the public sector and holds substantial advantages for the management of the industries, their employees, and the taxpayer. But our main objective is to promote competition and increase efficiency, and the prime beneficiaries will be the economy and the consumer.
It has been strongly represented to me that these Wednesday debates belong to Back-Benchers and that Government speakers must not monopolise debating time. I intend this afternoon to set a good example and so I will leave other questions such as reductions in Civil Service numbers to my noble friend the Minister of State. I will conclude, therefore, simply by reminding the House that we start with a much brighter economic picture than for some time. Already we have done much to reshape the tax system, to encourage incentives and the creation of wealth. We hope to, and must, do more. We are operating a firm control over public expenditure and we have a major programme for transferring industrial activity from the public to the private sector. It is a programme for a Parliament and the people have given it their support. My Lords, we shall carry it through.

Messenger Newspaper Group: Dispute
3.42 p.m.
The Earl of Gowrie: My Lords, it maybe for the convenience of the House if I now repeat an Answer given to a Private Notice Question in another place about the dispute at the Stockport Messenger
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Newspaper Group. My right honourable friend the Secretary of State for Employment delivered a Statement which reads as follows:
"As the House will know, there has been a dispute over the past year between the Stockport Messenger Group of Newspapers and the National Graphical Association in connection with the establishment of closed-shop agreements at the firm's subsidiaries at Warrington and Bury. As a result of action taken by the union during the dispute, the Messenger Group sought an injunction against the union in the High Court. The injunction was granted requiring the union to desist from organising unlawful industrial action. The court subsequently found that the injunction was not being observed and imposed a fine of £50,000 on the National Graphical Association for breach of that injunction. The fine has not been paid and I understand that the High Court has now directed that it wishes to deal with the non payment of the fine on Friday of this week.
"As the House will also know, there have been intermittent incidents of intermittent incidents of intimidatory picketing at different plants culminating in the mass picket at Warrington last night. One policeman was seriously injured. I understand a number of arrests have been made. Criminal charges have already been brought against those involved in earlier incidents and further charges may be made against those arrested last night.
"In connection with the substance of the dispute, the Advisory Conciliation and Arbitration Service has already been involved in seeking to assist the parties to a resolution of this dispute. I understand that the conciliation service are seeking to arrange a further meeting of the parties very shortly.
"Whatever the arguments in relation to the dispute, I hope that all sides of the House will join with me in deploring the disgraceful behaviour that occurred at Warrington last night, to reaffirm that such conduct has no place in industrial relations in this country and that the law must be observed".
My Lords, that concludes the Answer.
Lord Dean of Beswick: My Lords, may I first thank the Minister for repeating the Statement on this particular dispute. May I also extend our sympathy to the people who were injured last night, especially the policemen and the pickets concerned. I must emphasise here that violence has no part in our philosophy in the resolution of industrial disputes. It serves no purpose whatsoever and very often has the effect only of delaying a settlement.
Part of this Statement refers to court proceedings that are to take place, I understand, on Friday. I think that it would be incorrect of me to attempt to pass any comments on that particular facet of this Statement. But is it not a fact that the best way of resolving this situation for all concerned would be a quick settlement acceptable to all? May I ask the Minister whether he will urge the Secretary of State to give the fullest and most urgent support to ACAS in their attempt to convene another conference by all parties concerned in order to get a settlement of the sad state of affairs that exists at present?
Lord Rochester: My Lords from these Benches I should like to join in thanking the noble Earl, Lord Gowrie, for having repeated this statement. In this House we have our differences over employment legislation. Indeed, during the passage of the 1982 Employment Bill (as it then was) my noble friends and I actually voted against the selective dismissal of strikers following industrial action—one of the issues in this dispute. But a law to which we on these Benches in general subscribe has been enacted concerning secondary picketing and it covers among other things this very point of selective dismissal.
That legislation was endorsed at the general election last June and we, for our part, are clear that the action that has been taken by the National Graphical Association and other unions is unlawful and should be condemned. Therefore, such question as I have will be of a rather rhetorical kind. Is not the National Graphical Association, with which before now I have had to negotiate, notorious for its restrictive practices; and does not the refusal of this union to abandon unlawful secondary picketing or to pay the fine imposed upon it by the Higher Court represent an attempt to impose on society the most restrictive of all practices? Is there not now an obligation resting on us all to back the police, whose duty it is to enforce the law, and to support any further legal sanction which may prove necessary to ensure that the law is upheld?
The Earl of Gowrie: My Lords, I am grateful to both noble Lords for the responsible way in which they received the Statement. Also, I should like to extend on behalf of these Benches our great sympathy and anxiety to the policeman who was hurt in the incident last night. We hope that his recovery will be rapid. In respect of the remarks of the noble Lord, Lord Dean of Beswick, the point here is that of course ACAS has a role, and, indeed, has had a role, but nothing that ACAS can do can prevail against those who not only deliberately break the law but continue to encourage their members to do so. This is simply unforgiveable and has no place in any kind of credible industrial relations system. This was the point made substantively by the noble Lord, Lord Rochester, and I have to say that I wholeheartedly agree with him.
Lord Orr-Ewing: My Lords, can my noble friend say whether it is true, as reported in some newspapers, that, with the employment by this firm of only 120 people, no less than 500 of the pickets were bussed in from areas around? Is he able to say whether the union, before imposing the closed shop, has made any attempt to hold a ballot; and, if so, what was the result of the ballot?
The Earl of Gowrie: My Lords, with regard to my noble friend's preliminary supplementary question, I have to say that the NGA has a particularly bad record in seeking to coerce employees into joining trade unions against their will. All the information that I have suggests that the employees of the Messenger were content not to proceed with the closed-shop arrangement and that the people creating the incidents which we all regret so much came in from outside.

Wealth Creation and Taxation
3.50 p.m.
Debate resumed.
Lord Barnett: My Lords, I am delighted to have the opportunity of opening from our side in this debate and I should like to begin by congratulating the noble Lord, Lord Boyd-Carpenter, on choosing this important subject. Also, I feel perhaps a little inhibited in criticising anything he had to say because I have always had enormous regard for him. I served under him when he was chairman of the Public Accounts Committee, a position which I later filled, and there is the fact that, like myself, he is also a former Chief Secretary to the Treasury. So it would be very nice to agree with him this afternoon. However, I am bound to tell your Lordships that there is very little I found in his speech that I could agree with, as I hope to indicate.
If I might say a word to the noble Viscount, Lord Whitelaw, simple assertions, or even complicated ones, do not really make a case: nor is a tax cut equal to a tax reform. In saying that I am not alone, as I am sure your Lordships will appreciate, for I doubt whether there are many on any side of this House or of another place, or in the country, who would accept that either under the present Government or under any previous one we have made any real start to a fundamental reform of our tax system. I hope to return to that in a moment.
Could I say a word to the noble Lord. Lord Boyd-Carpenter? I hope he will not mind my saying that he seemed almost to be saying that prior to 1964 we had, as it were, an almost Utopian situation in this country, with every-thing going swimmingly. Again, being a reasonable man, I am sure he would be the first to recognise that there are very few in any political party who would accept that what happened prior to 1964, in economic or industrial terms, was at all Utopian. Indeed, many on both sides of this House and elsewhere would argue that much of what happened prior to 1964 was responsible for what happened after it.
However. I want to deal briefly, if I may, with the first part of the noble Lord' s Motion, which says (and I quote):
"To call attention to the urgent need to liberate" —
a lovely word!—
"from the control of Government and other public bodies more of the resources required for the creation of wealth".
I think it is fair to say that the noble Lord somewhat exaggerated just what would happen or has happened in the so-called "liberation" of resources where there has been denationalisation in order to create an enormous improvement in "the creation of wealth". The noble Lord, as one would expect. tried his best; but I am afraid he did not succeed, I would have thought. in the eyes of anyone looking at it dispassionately.
For what resources was he referring to? He was referring, presumably, to manpower and to tangible and intangible assets in Government departments and in public bodies generally. The evidence is, at best, inconclusive. Of course there is inefficiency in public bodies, but I would hope that all of us would also

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accept that there is considerable inefficiency in large private bodies, too. Of course it is possible for the noble Lord to point to companies that have taken over from nationalised industries and to show that in certain circumstances they did better than they had done previously. I must say, however, that his choice of British Shipbuilders was not necessarily a good one, because in private hands they did not exactly do wonderfully well, either.
I am bound to say, too, that anybody looking fairly at what has happened in the case of denationalised industries would have to admit that we would need a much longer experience of how they did in private hands before we jumped to conclusions and made false assertions that everything is now going to go swimmingly and everything is now going to be all for the best, in the best of all possible worlds, simply because a large industry is in private rather than in public hands. Even then it is possible to produce evidence that companies did better in public hands than they did in private hands, as your Lordships will be only too well aware. British Leyland and Rolls-Royce Aero Engines did not exactly do wonderfully well in private hands. Of course, I am not suggesting that they have done brilliantly in public hands, but they have done very much better than was happening when they were in private hands.
The noble Lord referred to British Airways. It has done much better in recent years—very much better under the chairmanship of the noble Lord, Lord King of Wartnaby—but he overlooked the fact that it has done better in public hands and the noble Lord, Lord King, who wants to privatise it, as we know, would be the first to admit that his priority was to get greater efficiency in that industry, and he has achieved it in public hands—
Lord Boyd-Carpenter: My Lords, would the noble Lord allow me to intervene since he has challenged me on this matter?
Lord Barnett: Certainly.
Lord Boyd-Carpenter: Would the noble Lord also allow for the fact that the most welcome recovery under my noble friend' s guidance in British Airways has flowed directly—both in time and in cause—from the decision that it should be liberated?
Lord Barnett: My Lords, really I am surprised at that statement from the noble Lord. I doubt whether the noble Lord, Lord King of Wartnaby, would argue that it is only because of something which may happen this year, next year or some time in the near future that he has achieved whatever success he has. I doubt whether he would assert that.
However, let me come to the real way that the noble Lord's case was undermined. It was undermined for him—indeed sunk—by one of his right honourable friends in another place yesterday. In answer to a Question in another place yesterday, we were told that the proportion of our GNP taken by public expenditure in the United Kingdom is the lowest in the EEC—not the highest but the lowest—and that was despite the fact that almost every country within the
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EEC can show a better economic performance than ours in this country under successive Governments, I am bound to concede. It certainly does not prove in any way that what is needed is a so-called "liberation", as the noble Lord put it. Indeed, one could argue the reverse. I do not propose to try to do so. Certainly one cannot prove in any way the assertions made by the noble Lord, for there is no evidence to do so. Even if one takes the return on capital employed which the noble Lord took—that every part of British private manufacturing industry has done magnificently in terms of return on capital employed—has the noble Lord forgotten that it is our manufacturing industry largely in private hands, that has done so badly for so long? Is he suggesting to us on the basis of that evidence that what we need to do is to transform all manufacturing industry which is now in public hands into private hands and it will then do as well as it has done in the past? There is absolutely no evidence for that. He produced none, and for the obvious reason: he could not produce any.
Above all, what I think the noble Lord did—and what anyone does who seeks to argue that what is needed above all to solve our major and serious economic problems is to denationalise everything—is to seek to do huge damage. This is to play political football with major industries in this country by moving them in and out of the public sector—especially when, as I say, it cannot be shown that liberating them has any clear advantage. So, I hope noble Lords, wherever they may sit in this House, will not accept the arguments we have heard from the noble Lord today.
Unlike the noble Lord, I want to spend the greater part of my speech this afternoon on the second part of the Motion, which says:
"and to diminish the disincentive effects on work and investment of high levels of taxation;".
It seemed to me from the speech of the noble Lord and from that of the noble Viscount that what they were saying is that high tax is bad and therefore we should reduce it. In the view of the noble Viscount, that constitutes tax reform. I agree that high levels of taxation can be a disincentive to both work and investment; but it is far too generalised a statement to say that in the way that it was said because there is ample evidence that it does nothing of the kind.
Before turning to the disincentive effect on work, I should like to say a word on investment, which is in the Motion. Successive Governments have tried a variety of investment incentives, many of them quite substantial: cash grants, investment tax allowances of very high levels, regional grants and particular industry grants. Some were effective for a short period—but usually only for a short period. They were usually more effective when there was an economic upturn; usually at a time therefore when one did not really need any specific grants to encourage new investment. The major disincentive for companies as regards investment is not, as the noble Lord sought to have us believe, the levels of taxation. The major disincentive for new investment is when a company cannot see where the additional sales from the extra production provided by that new investment will come from.
Certainly, in recent years nobody could possibly

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argue that the level of corporation tax was a disincentive for, as the noble Lord must know, most expanding companies hardly paid any mainstream corporation tax. Indeed, some of it, I willingly concede, is due to something that I introduced—a major form of stock relief which largely ensured that for years most companies, particularly the expanding ones, did not pay any corporation tax at all. So it is certainly not possible to argue that the levels of taxation have formed a major disincentive for companies to invest. It has been the level of demand that has largely caused the problem; and I am not suggesting for a moment that it is easy to ensure that the level of demand can be at the kind of sustained levels that most companies should like to see and that I should like to see.
I should now like to turn to what I assume to be the main part of the Motion, although the noble Lord did not dwell on it too much; that is, the high levels of taxation. That is normally taken to mean—indeed, the noble Lord referred to it—the highest level of earned income of 60p and the highest level of investment income tax of 75p. I want to turn in a moment to much higher levels of taxation, in any real sense of the word. I mean the truly high rates at the other end of the income scale, which neither the noble Lord nor the noble Viscount saw fit to dwell upon, for perhaps understandable reasons.
But, first, I think we can all agree that nobody likes paying tax, at whatever level, and tax avoidance—here I declare an interest: I have from time to time indulged in it, both on my own behalf and on that of clients—isnot necessarily at its high point where the tax rates are at the highest points. As the House may know, capital gains tax at 30 per cent. is the major area for tax avoidance schemes—and for very good reasons. People do not like paying tax at whatever level and the greatest area for tax evasion—that is, the illegal form of evasion—is where the rate of VAT is just 15 per cent. So it is just not true to say that it is the very highest levels of taxation that cause either avoidance or evasion.
As to the idea that the highest rates of income tax are a major disincentive, I want to assert and show that that kind of assertion is much exaggerated and is certainly not proven. When there were major cuts in direct taxation at the very highest level in 1979, in the very first Budget of the then Government, what happened? In the years immediately thereafter, we had not only low levels of economic growth; we had negative levels of economic growth; that is, with huge cuts in the highest levels of taxation. Indeed, President Ronald Reagan in the United States made equally very large cuts in taxation on the highest paid, and what did he get in the first few years after he had been installed as President?—again, negative rates of economic growth.
So far as the United Kingdom is concerned, our taxation, as the noble Lord and the House will be aware, as a percentage of GNP is lower than in many countries, certainly in the EEC, with far better economic performance than anything we have yet achieved under any Government. Of course, that is not to say that if the incentive is big enough and personally directed it will not have effect; but it has to
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be specific and it has to be directly identifiable so that a man or woman might be motivated to do more.
For example, if somebody is earning £50,000 a year, then clearly he might just work a little more and a little longer and be prepared to earn a little more than that modest sum if, for every pound, he paid no tax whatsoever. It is perfectly true that that kind of incentive would work, although my experience tells me that even though individuals on high rates of tax say that it is the tax that is the reason why they do not want to do any more work, the real reason, which the man or woman concerned would prefer not to mention, is that it does not sound so good to say that they would like to play more golf, their ambition had been reduced or they simply had a diminished appetite for work. That is all perfectly understandable, but it is certainly not taxation that is the major reason why they tend to work less. It is usually easier to blame the tax system and the Government of the day than to concede the true reason.
On the other hand, it is certainly true for some that tax levels are a disincentive. It is a very personal reaction. It applies more, I suspect, in the professions where men and women have literally to work very hard and long hours for each extra pound; and, as they are already earning substantial sums, the extra, less tax, makes it less worthwhile working. But in many cases of course even then, the same attitude would apply as for many others on a high rate of tax, and the real reason is that they have earned enough and they would not mind taking it a little easier now.
But as to the real area of growth potential, both personally and for the country, I submit that tax is by no means a disincentive, and I refer to the self-employed and the small companies. The opportunities for legitimate tax avoidance in small expanding firms abound. and the tax system certainly does not in any way prevent a really successful small firm from making very large sums of money, as we have seen in recent years with the growth of the unlisted securities market. But that does not prevent the unsuccessful, small businessmen from blaming the tax system, the Government and anyone else they can find readily to hand.
But the tax that is a really big disincentive, as I have indicated, is at the very lowest level of income, which is called the poverty trap and the unemployment trap level. Taking tax in its broadest sense to include national insurance contributions, which are certainly a tax, and family income supplement and other means tested benefits, there is no doubt whatsoever that tax at those levels is far higher than at the other end of the income scale. Let me give just one example. It is not my own; it comes from the all-party Treasury and Civil Service Select Committee.
In certain instances—and it is not a small number of families—an extra pound of cash is taxed at 30p in the pound, then there is 8¾p national insurance contribution and there is a 50p reduction in family income supplement, making a total tax bill for that man, who is on a very low level of income, of just short of 89 per cent. In fact, it will invariably be higher and be above 100 per cent., because there will be at least 20p to 30p in the pound lost from rent and rate rebates. So it would be a tax disincentive for that

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person of well over 100 per cent., and we heard nothing of that from either the noble Lord or the noble Viscount.
I say that we are not talking of small numbers because, again, the Treasury and Civil Service Select Committee told us something of the number of people who would be affected. I am quoting from paragraph vii of their report in May this year. They said:
"Using a relative definition of poverty, the poor are not only always with us but more numerous than ever—just over six million on a narrow definition of those with net incomes at or below supplementary benefit level".
They went on to say:
"perhaps a quarter of the population, on a wider one, if we include those with up to one and a half times supplementary benefit".
So we are talking about large numbers of people. Not all of those, but quite a substantial number of people are paying tax at that kind of level. The Minister for Social Security told us in another place on 11th July of this year that the latest study he had done in his department indicated that an estimated 9 per cent. of people did better out of work than in work.
There can be little doubt that all that is a major cause of what has been described as the black economy and moonlighting, something which the chairman of the Board of Inland Revenue has estimated to be costing this country, in terms of income not taxed, somewhere between 5 and 7½ per cent. of GDP—between £15 billion and £20 billion. Of course, tax evasion does not apply only at the lower end of the income scale but when a man or woman can do better out of work than in work, especially if a modest amount of moonlighting will help, we should not be too surprised if, human nature being what it is, that person takes advantage of the situation. We should not like it; indeed, I certainly do not like it. But the plain fact is that the black economy and moonlighting has been growing. While it is understandable, I am bound to tell your Lordships that in my view, and I hope in everybody else's, it goes a long way towards undermining the very fabric of a civilised society. This is the area which should be concerning your Lordships' House and the other place rather more than some of the points which were made by the noble Lord.
I am bound to say immediately that it is easier to show the extent of the problem than it is to offer a simple solution. Certainly there is no solution by simply arguing for a cut in taxation, as some people do from time to time, whether it be a cut in the rate, which would be of no help whatsoever in the poverty trap or the unemployment trap to which I have referred, or even a reduced rate of tax, or higher thresholds, which personally I would prefer. Although it is better to do that rather than to have a higher starting point, it certainly would not solve the problem of this terrible poverty trap and unemployment trap. But it is no solution, as is sometimes suggested, to make major cuts in public expenditure in order to make major cuts in taxation. Anybody who looks at our public services in this country must recognise that what is vitally needed is not a cut-back but the maintenance and improvement of the level of our public services.
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The all-party Select Committee report showed a number of ways in which we might be able to relieve the poverty trap and the unemployment trap. One way, I must tell your Lordships, was not by cutting public expenditure but by increasing it, and increasing it substantially in the one area of public expenditure which would really help—child benefits. That would be the way to begin to get to grips with the problem, but of course it would be very costly and that cost is undoubtedly at the heart of the problem. In 1982, the Inland Revenue estimated that it would cost some £8 billion to raise the tax threshold just to supplementary benefit levels—I repeat, just to supplementary benefit levels. The sub-committee of the Select Committee estimated that income tax changes to deal with the problem might cost as much as £15 billion.
In the Financial Times on 28th April 1983 the very well-known journalist, Sam Brittan, came up, as always, with a very imaginative way of dealing with the problem—imaginative, but in a way which would just about hurt everybody he could lay his hands on. He would, for example, pay for all this by abolishing the marriage allowance, the age allowance, mortgage relief, life assurance relief, the upper earnings limit for national insurance contributions and pensions fund relief and by the payment of a national insurance contribution on investment income. I imagine your Lordships would find most of that unpalatable but that was the way he suggested we might pay for removing the poverty trap and the unemployment trap.
I want to make it quite clear that I am not suggesting anything so drastic, but what I believe it does do, when one looks at the real problem which faces us as a nation, is to put into perspective what the Motion we are debating should be about: the difficulty of finding a solution to the problem. I am grateful to the noble Lord for having introduced this debate in order to give us a chance to discuss a serious problem. On any analysis, even if the Government were able to maintain in perpetuity the present levels of economic growth, which I doubt whether even the Chancellor of the Exchequer would argue, although he might, we should not have sufficient resources more than to tinker with the problem. Many of the solutions simply create an even worse social injustice. That would certainly apply if we cut public expenditure.
As I say, I do not have a simple solution but I do have five suggestions to make. First, we must treat national insurance contributions as the income tax that it really is. Second, we should merge it with income tax and start at a much higher level than that at which it now starts for very low-paid people. Third, we must increase child benefits. If there were to be a substantial increase, speaking for myself I believe that it should be subjected to tax so that those with the highest levels of income do not obtain child benefit. We should also have a much more graduated scale of income tax so that people do not start paying tax at 30 per cent. on ridiculously low levels of income. Finally, I would abolish the family income supplement and the child needs allowance, in that way removing earnings related benefits which do so much damage. Some of this could be paid for by reducing other reliefs. Certainly the marriage allowance, which is unfair, anyway, could go. But if we want to do something about the real disincentives which are in the Motion,

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if not in the speech of the noble Lord, that is, I believe, the direction in which we have to move. Any new resources obtained from increased economic growth need to be utilised in this way to deal with the real problem which is facing our nation.

INF Negotiations
4.18 p.m.
The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): My Lords, with your Lordships' permission, I will now repeat the Statement which is being made by my honourable friend Mr. Luce in the other place. The Statement is as follows:
"As honourable Members may he aware, the Soviet delegate to the Geneva INF talks has made it clear this morning that the Soviet Union does not intend to continue the present round and has given no date for the resumption of the talks.
"Her Majesty's Government regret this Soviet decision and can see no justification for it. As recently as 15th November the United States tabled a further constructive proposal in the negotiation which was rejected out of hand by the Soviet Union. The Russians may seek to justify their interruption of the talks by the final preparations for initial Western INF deployment. But the House will recall that the West has remained at the conference table while the Soviet Union has increased its own deployments of SS.20s by over 40 per cent.
"The NATO Alliance has made its first priority the achievement of a balanced and verifiable agreement to reduce and if possible to eliminate these weapons worldwide. At the same time, we have made it clear that until such an agreement can be attained the Alliance will proceed in accordance with its decision in 1979 to work towards a balance which would safeguard Western security.
"We will not be deflected from achieving the first stage of this objective by the end of this year.
"But I wish to emphasise that the Alliance remains ready to halt or reverse at any time the deployment of the missiles if only we can secure an agreement with the Soviet Union which would allow us to do so. The achievement of such an agreement remains our unshakeable objective. The Alliance will spare no effort to secure it. We remain convinced that an agreement is possible and that it remains in the interests of East and West that the negotiations should resume at the earliest possible date. We therefore urge the Soviet Union to demonstrate an equally sincere commitment to arms control by returning to the negotiating table."
My Lords, that concludes the Statement.
Lord Bishopston: My Lords, I thank the noble Lord the Minister for repeating the Statement here. The country will be greatly alarmed, although not surprised, that the INF talks have broken down, for the Government were warned that insistence on going ahead with the deployment of missiles here could lead to the Soviets acting in the way they have.
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Do the Government not see even now that going ahead and ignoring the genuine concern of people from all walks of life here and in Europe has increased the number of those opposed to nuclear policy, to the evident satisfaction of the Soviet Union? The Government have surely done much more than CND and the women of Greenham Common to ensure that even more people are opposed to nuclear policy. That is revealed by the public opinion poll which has just been announced.
One may ask the question: why in those talks have the allies ignored the Soviet offer to radically reduce warheads; and why did we refuse to allow our intermediate nuclear weapons to be counted in the deal when such a policy would lead to the situation we now face? Does the Minister not agree that the deployment of missiles has not led to any enhancement of the prospects of peace but has led to the first shooting down of the prospects of peace hopes that we had?
In the Statement, the Minister says:
"I wish to emphasise that the Alliance remains ready to halt or reverse at any time the deployment of the missiles if only we can secure an agreement with the Soviet Union which would allow us to do so".
Accepting—with regret, of course—the failure of the peace initiatives up to now, due to deployment and inflexibility, will the Government now promise, as the building up of weapons has not produced the results that we wanted, to cease further deployment until the talks are resumed? Further, with the lessons of Grenada, will the Government themselves take a major initiative of their own and recognise also the increasing importance of dual control of the weapons we have? This is a very grave Statement, and the Government must take a large share of the responsibility; and at the same time, they must have new initiatives to bring us out of the prospects we face at the present time.
Lord Kennet: My Lords, this is a bleak little Statement for what is, after all, a very grave moment in the history of Europe. Was not the East unwise to continue to deploy its SS.20s throughout the four-year period of negotiations: and was not the West unwise to insist that the needlessly alarming Pershing 2s should be included in Western deployment? Is it not instructive that it is the decision of the German Parliament to go ahead which has been the immediate trigger for the Soviet Union to break off negotiations, and not the decision of our own House of Commons?
We do not reject, as I believe the Labour Opposition does, the Government' s conclusion that there is no alternative but to allow our own deployment to carry on. Nevertheless, will the Government now recognise that, as so often before, a disarmament negotiation has failed not because it tried to bite off too much but because it tried to bite off too little? Will the Government, not just stand back and hope that the Soviet Union will one day come back to this particular negotiating table, hut, starting this evening, work towards a disarmament negotiation which will include enough countries and will talk about enough weapon systems, and in which our country in particular will be entitled to speak for itself?
Lord Trefgarne: My Lords, I am grateful to both noble Lords. The noble Lord, Lord Bishopston, asked a number of questions. Why was it, he asked, for example, that the United Kingdom and French forces were not to be included in the negotiations? That point has been answered on a number of occasions from this Dispatch Box. The United Kingdom and the French forces are not intermediate range forces but are strategic forces, and they constitute but a tiny fraction of the total forces held by the Soviet Union in that category of weapon.
The noble Lord also asked why Soviet offers—so-called offers—at the INF talks have had to be rejected. The fact of the matter is that the Soviet Union seem to have had but one objective in the INF talks, and that has been to maintain their total monopoly of this category of weapon all the time, while they have been deploying more and more of their SS.20s. In the past two years or so since the talks started in Geneva, they have continued to deploy this category of weapon. At the same time, the United States have remained at the negotiating table there.
The noble Lord, Lord Bishopston, referred also to the shooting down of the Korean airliner. I would have thought that nothing would have shown more effectively the need for us to keep up our guard in this area, as in others. The noble Lord went on to ask whether it was not now ripe to halt deployment of the Western intermediate range weapons in Europe. I believe not because, as I have said, at this time the Soviet Union have a total monopoly of this category of weapon in Central Europe.
Moving now to the remarks of the noble Lord, Lord Kennet, he asked whether the East was not unwise to continue to deploy SS.20s during negotiations. Indeed it was; I wholly agree with the noble Lord. There was an alternative option available to the East, but it was rejected. As to the West's position, I believe we had no alternative but to proceed as we have done. As the noble Lord and other noble Lords will know, we shall be effectively deploying these weapons by the end of the year.
The noble Lord, Lord Kennet, went on to ask whether we should not widen the talks in Geneva. I must say that I disagree with him in that particular argument because we have shown effectively at the various disarmament for a which have taken place in the past 10 or even 20 years that the right approach is a step by step approach. The fact of the matter is that the comprehensive disarmament discussions which have taken place from time to time have all in the end been bogged down in various details. The idea that strategic nuclear arms reductions, for example, could be agreed in a wide forum of 30 or 40 people when only two or three nations actually hold that particular category of weapon is, I believe, a myth, and one not worthy of examination.
Lord Bishopston: My Lords, before the Minister sits down may I say without any hint of rebuke that I did not refer to the shooting down of the Korean airliner. What I did say was that in the light of the Grenada experience I wondered whether this was not a reason why the United Kingdom should take some major initiative.
Lord Trefgarne: My Lords, I apologise if I misheard the noble Lord, but I thought that he did refer to the shooting down. The Grenada matter is, of course, something entirely different, and therefore something quite outside the ken of this particular matter.
Lord Renton: My Lords, can my noble friend the Minister say whether the Soviet Government have, publicly or behind the scenes, given any reason for their withdrawal from these talks? Does he agree (as many noble Lords on these Benches, together with many other people in the Conservative Party and throughout the country, agree) that the Russians' withdrawal from the talks makes it imperative that we should calmly and deliberately proceed with our deployment programme of these missiles? Thirdly, will my noble friend comment on the danger of the proposal made by the noble Lord, Lord Bishopston, that we should deploy no more missiles until the Russians are prepared to come to the negotiating table again? Does he not consider that if we were to take that step it would mean that in future negotiations we would be negotiating from weakness?
Lord Trefgarne: My Lords, my noble friend is quite right. If we were to follow the course proposed by the noble Lord, Lord Bishopston, we would be giving the Soviets exactly what they want without getting so much as an iota in return. That would not be fair or successful negotiation. As to what is the present Soviet position, I must say that it is rather difficult to ascertain. For example, they make proposals in Geneva which they then publicly withdraw, attributing them to the United States. From what we understand of the latest so-called offer which they made the other day, they are still proposing to keep more than 120 SS.20 missiles within the range of Western Europe while demanding that there should be no such deployment in Europe of United States missiles. Such a monopoly remains, as I have said, unacceptable to the Western alliance.
Lord Jenkins of Putney: My Lords, is the noble Lord aware that, if they can see no justification in the Soviet action in withdrawing from these talks, the Government must be blind? Is he further aware that many analysts of this subject, not only analysts on this side of the fence, had told the Government that this would happen and had explained to the Government in detail why it would happen? Are not the Government, therefore, in the position of refusing to know rather than being unable to know what the Soviet position is? Do not the Government know full well that from the beginning the Soviet Government have said that the British and French weapons must be counted, and is he aware that it is technically impossible for the Soviet Union to know from their radar systems where a weapon is coming from? Is not the only hope at the present time to initiate a fresh series of talks on the START basis, taking into consideration all nuclear weapons on either side? Must not the initiative be asserted by European nations? Is the noble Lord not aware, finally, that the people of this country and the people of Europe have no faith whatever that the American Government are negotiating in good faith?
Lord Trefgarne: My Lords, I can assure the noble Lord that the United States Government are negotiating in good faith. They have made what has come to be known as the zero option proposal, which apparently was not acceptable to the Soviet Union. The United States then made some adjustments and amendments to that proposal, and those, too, apparently were not acceptable to the Soviet Union. All that seems to be acceptable to the Soviet Union in these talks is a total monopoly on their side of this category of weapons. I do not understand how that could be thought to be fair or reasonable.
As to the knowledge that the noble Lord imparted to us, it is true that Mr. Andropov is reported to have said some weeks ago that there was a risk that the Soviet Union would withdraw from these talks, but the fact that we knew that it was possible does not mean that it was justified.
Lord Mayhew: My Lords, does the noble Lord recall the repeated statements of the Government over the last two years that it was only when the missiles were being deployed that the Soviet Union would start negotiating seriously? Does he recall the very opposite predictions made by my noble friends and myself repeatedly in this House and elsewhere?
Secondly, is the noble Lord aware that many of those who oppose the unilateral approach are dismayed at the handling of these negotiations by the United States Government? The noble Lord referred to changes in the zero option proposal, but is he aware that examination shows that there has been no significant move away from the zero option by the United States Government? The zero option is where they stood two years ago before the negotiations began, and in two years there has been no serious change in the negotiating position of the United States. Will the noble Lord, therefore, now inform the United States Government that we shall not agree either to the deployment of the missiles now in this country or to the arrival of further missiles until there has been a decisive change in the negotiating position of the United States?
Lord Trefgarne: My Lords, I suspect that the noble Lord has not been following these matters too closely in recent weeks if he says that there has been no change in the United States position in recent days. It was as recently as 14th November that the United States offered the Russians a precise figure in terms of the number of warheads in terms of a global ceiling—420 was the figure. The Russians have refused this as they have refused all previous offers.
Lord Cledwyn of Penrhos: My Lords, would the noble Lord not agree, whatever detailed arguments may be advanced on one side or the other, that this is a deeply disappointing development and will be so regarded by the people of this country and indeed by people throughout the world?
Secondly, can the noble Lord say what initiatives, if any, Her Majesty's Government have in mind to bring about a resumption of these talks as soon as possible? That again will be the desire of the people of this country and people everywhere else.
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Thirdly, can the noble Lord say what effect he thinks this development will have on other talks—for example, the START talks—which are equally important?
Lord Trefgarne: My Lords, of course, I agree that it is deeply regrettable that these talks have for the time being at least come to an end. I hope the Soviet Union will urgently reconsider its position and return to the negotiating table as soon as may be. In the meantime, I am certain that we must be steadfast in our plans to continue with the deployment of intermediate range missiles so that the monopoly that the Soviet Union possesses can be brought into balance.
As to the implication of the Soviet Union's decision today for the other talks currently proceeding—for example, the START talks—we have no reason to believe that there will be any parallel effect on those discussions.
Lord Shinwell: My Lords, as I have frequently in this House criticised the content of the negotiations which are now the subject of this question based on the announcement the noble Lord has made, may I ask the noble Lord this question? Has not our approach been based on a comparison of weapons and not on the political issues involved? Is there any advantage in returning to a conference where they discuss the number of weapons on either side, because we will never reach a satisfactory conclusion that way? Would it not be far better to say to the Russians quite directly, "What are your intentions?". We have some knowledge of what their intentions are, but all the cards should be laid on the table. They have a perfect right to respond by asking the United States of America, ourselves and the other allies what our intentions are. The other side want Communism throughout the world; we do not want Communism throughout the world. Let us discuss those issues, and not assume that, if we reach some conclusion about the number of weapons that either side possesses, it will not lead to peace but will mean war.
Lord Trefgarne: My Lords, the difficulty is matching the Russians' words with their deeds. They have professed all sorts of peaceful intentions, like the Helsinki Final Act and the United Nations Charter, and what do we have? Breaches of human rights left, right and centre in the United Kingdom, not to mention the invasion of Afghanistan.
Lord Taylor of Gryfe: My Lords, is the noble Lord the Minister aware that the Secretary General of the United Nations this morning foresaw this situation which is expressed this afternoon in this House and tried to take an initiative from his end to bring the parties together? With the discontinuance of the disarmament talks at Geneva we must surely maintain some form of communication. May I say that the Statement made today, with its rejection of all Soviet intentions and approaches, introduces into this question a degree of finality which would be disastrous for all of us if it were to continue?
Lord Trefgarne: My Lords, I warmly welcome the Statement of the Secretary General of the United

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Nations this morning. We shall certainly want to study what he has said very carefully and hope that a way forward may emerge from what he has said.
Lord Ardwick: My Lords, although the last supple mentary question has largely taken my point, may I say that what alarms the people of Europe is not merely the build-up of nuclear arms but the build-up of nuclear arms in a deteriorating political situation, and it is only the pursuit of some form of detente which will give them any hope during the consequent build-up of arms?
Lord Trefgarne: My Lords, the difficulties to which the noble Lord refers are, of course, in the forefront of everyone's mind. That is why it is important to move forward to achieve an agreement in these matters. That is why we hope sincerely that the Russians will return to the INF talks in Geneva. That is why we also hope that progress can he made in the other international for a to which I have referred.
My Lords, I am told that in my reply to the noble Lord, Lord Shinwell, I referred inadvertently to breaches of human rights in the United Kingdom. I did of course mean the Soviet Union.
Lord Bowden: My Lords, may I ask the Minister one very important question? Has it ever occurred to the Government that it is very probable that the cruise missile will not work when it is tried, and for a fundamental reason? It depends for its navigation on precisely observing the ground beneath it. Small hillocks, and so on, are used to check the inertia navigation on which it basically depends. If you stand on the Malvern Hills and look east, the first hillock would be the Ural Mountains. In principle, even, the missile cannot work because there is nothing to guide it. In any event, the maps have not been prepared and it will take at least two or three years to prepare them. They have not yet been started. It will cost several hundred million pounds to do that, and no funds seem to have been allocated for the purpose. I wonder whether there is any purpose at all in talking about cruise as a viable and useful weapon for the time being.
Lord Trefgarne: My Lords, I am sorry to say that the noble Lord is not quite right in all that. The cruise missiles have been very fully tested. I also assure him that they need less than a range of mountains by which to navigate.
Lord Hankey: My Lords, are the Government aware that one feature of the present situation which worries people most is that the two parties have ceased to talk? It is terribly important to go on talking to people when you disagree with them. I suppose that there will be quiet ambassadorial discussions about this; but will the Government agree that it is terribly necessary to promote and encourage those discussions? It is easier for the Americans to do that than for us. An awful lot hangs on these results. Will the Government also agree that one feature of the recent negotiations that has worried people has been
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the tendency for the negotiations to be conducted at the top of the voice rather than in the quietness of a negotiating forum; and that proposals have been made and rejected within about an hour of their being heard on the other side? Will the Government be able to encourage a quieter approach to this extremely delicate, important and vital question?
Lord Trefgarne: My Lords, I entirely agree that we need to go on talking just as often and long as we can. That is why we hope that the Soviet Union will return to these talks. It is the Soviet Union that has left the table at Geneva and not the United States. But the noble Lord may be reassured that the talks in the other disarmament for a are continuing, as I have said, and we know of no reason to think that they should not do just that. The noble Lord is right: we need to go on talking. I also agree with him that it is sometimes better if these talks are conducted rather more confidentially than has always been the case in the past.
Lord Sefton of Garston: My Lords, would the noble Lord the Minister agree with me that if the level of political and economic hostility increases at the rate that it has increased over the past five years (and particularly over the past three), there will probably be military hostilities between the East and the West; and even if those military hostilities start with no nuclear weapons at all being used, it will not be long before that stage is reached? Therefore, does he agree that it would perhaps be a good idea if the Government of the United Kingdom approached the Government of the Soviet Union to talk about détente and to try to establish some common sense in the relationship that now exists between East and West, so that we do not have a situation where the powerful forces in America are determined to stop any economic co-operation between the Soviet Union and the United Kingdom and the rest of Europe by opposing such ventures as the oil pipeline?
Lord Trefgarne: My Lords, there has been no war in Europe for nigh on 40 years. I believe that that has been because we have succeeded in deterring the Soviet Union, or anyone else, from perpetrating aggression upon us. It is our policy to continue to deter, and I believe that we shall be successful in that.
Lord McIntosh of Haringey: My Lords, will the noble Lord accept that what some of us find most depressing is the negative aspect of his Statement, and what not just noble Lords in this House but people in the country will be looking for is evidence that the day on which the present talks break down is the day on which positive plans must be made for the resumption of new talks?
Lord Trefgarne: My Lords, the negative aspect of the Statement today is of course the departure of the Soviet Union from the negotiating table in Geneva. A positive aspect would be the return of the Soviet Union to that negotiating table, and that is what I hope will happen.

Wealth Creation and Taxation
4.45 p.m.
Debate resumed.
Lord Ezra: My Lords, I join the noble Viscount, Lord Whitelaw, and the noble Lord, Lord Barnett, in congratulating the noble Lord, Lord Boyd-Carpenter, on choosing such an important subject for debate today. He has worded the Motion in such a way that we need not be too repetitive. It covers such a wide range of important topics that I believe most of us will try to choose one particular angle on which to concentrate.
We have heard with commendable brevity from the noble Viscount. Lord Whitelaw, what is the Government's policy. We had what I believe many of us felt was a brilliant contribution on tax reform from the noble Lord, Lord Barnett. It is a subject on which, in view of its importance, I hope that we shall be able to hear him many times in the future.
As I listened to the noble Lord, Lord Boyd-Carpenter, as someone who for many years worked in a nationalised industry, I felt tempted to respond to some of his remarks. He was kind enough to disarm me by referring not only to my role; he also reminded us that at one time he, too. was the chairman of a nationalised industry—and a very distinguished chairman he was. I should like to see the day when noble Lords opposite can perhaps speak about nationalisation with rather less fervour than they do at present. It seems to me that every time the word "nationalisation" is mentioned, they see a colour which is not normally associated with them. I feel that we should be getting to the point at which we can look at this whole question rather more objectively.
It is a pity that when the weaknesses of nationalisation are referred to, certain industries only are mentioned—those which are in difficulty, such as steel, coal, shipbuilding, and the railways. But these industries are in difficulty in varying degrees throughout the world. Little mention is made of the sectors under nationalisation, such as telecommunications, electricity, gas, and the Post Office, which, measured in profit and loss terms at any rate, are very successful. Neither is mention made of the contribution coming from many of these industries. Sometimes size is an advantage. It enables a considerable degree of concentration of technical research and development to take place.
I refer to the industry with which I was associated. The mining industry has made remarkable progress over the years since the war in massively reducing the incidence of accidents to a point at which we are the least accident-prone mining industry in the world. We have made enormous progress in dealing with pneumoconiosis to the point at which the incidence of new cases is very low indeed. We have in our mining industry won the Queen's Award for technical innovation in dealing with this matter. Then there is the technical development in methods of mining itself. I hope that the day might come when a rather more balanced view will be taken of the contribution that these industries—all of which are great in their own right—make to our affairs.
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But I would rather not dwell on that aspect too long. I feel that there are other temptations held out to us in the Motion put before us by the noble Lord, Lord Boyd-Carpenter. The aspect which tempts me to speak on for a little while is wealth creation, which, after all, is the nub of the whole issue raised in the Motion. Here is a problem which we would do well to ponder in order to consider how we can start to create real wealth in this country at a rate which will enable us not only to see living standards continually improved, but to make adequate provision for those people who, through age or infirmity, need to be helped.
We only need to consider the great pressure on social expenditure these days to realise that the creation of wealth is not proceeding at a rate which enables us to do all that we should like to do. At the root of this question of wealth creation, I feel, lies the question of capital formation. The record of Britain in recent years in capital formation is dismal indeed. There are many figures that I could quote, but I shall quote just a few. I shall take the period from 1979, when the recession set in, to 1982. If one takes the rate of capital growth—fixed capital formation in manufacturing industry—one sees that in that period it actually declined by 34 per cent. If one takes the construction industry, one sees that in that period it declined by 49 per cent. If one takes the transport industry, one sees that in that period it declined by 36 per cent. If one takes housing, one sees that it was 26 per cent. Admittedly, in some of the sectors there is now some improvement, but I have taken the last figures available for a full year.
The question is, how can we deal with this situation? If we do not deal with this problem of capital formation fairly soon, I think that we shall get into very great difficulty.
Last week we had a debate on our overseas trade, and in analysing the figures of this trade it was possible to discern what seems to be the consequence of the lack of capital investment in our manufacturing industry. For the first time for very many years—we were told from the Government Benches we had to go back to 1931—we have actually seen the emergence of a substantial deficit in our manufacturing balance of trade. That upsets the whole of our balance of trade because we know that the great benefit we are getting from oil at the moment is going to start slowly declining before long and unless we can make sure that the contribution to our overseas payment from manufacturing industry, as well as the very important contribution made by invisibles, is built up to take over from the contribution now being made temporarily by oil, then we shall indeed be in great difficulty.
We come to the question of how we might deal with this problem. There is nothing new that one can say here because it has been amply and vigorously debated in recent years. Indeed, the CBI at their Glasgow conference went through this subject in great depth and detail and the conclusion that was reached there, if you read summaries of the speeches as they appeared in the press and listened to those who talked on radio and television, was that they were getting increasingly worried about the lack of resource which was finding its way into capital formation.

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What emerges from this debate in my opinion, among those who are involved with industry, whether public or private, is that they feel that we have not yet got the conditions under which this lack of capital formation can be put right. In the private sector there is still the feeling that there are impediments in the way of the burden of real interest rates, national insurance surcharge, and the many things we have talked about so many times in this House. In the public sector there is this question of the infrastructure which has also been fully debated.
What I worry about when I hear about all these cuts in public expenditure is that it does seem to be having such a very substantial impact upon capital formation, which seems to be the wrong objective. The trouble about this whole issue is that the dividing line between desirable investments in the public and private sectors is a very thin one. The interdependence of the two sectors is very considerable indeed.
In the days when I was responsible for the coal industry and we invested substantial amounts in new mines, we knew that that investment would immediately have to be undertaken by the private sector, and I do not believe that this interdependence of the two sectors in relation to capital formation has been sufficiently realised.
We know of the Government's great reluctance to enable public expenditure to rise in any aspect. Nonetheless, I think here is a matter which must be looked at very seriously. As there is interdependence, can we not perhaps deploy some creative thinking as to how these necessary investments can be financed which could involve both sectors?
We were told some years ago in the coal industry that if we could find suitable ways for injecting private capital into some of our projects which came out with the Government's limit on our capital expenditure, we could proceed with them, and the Treasury gave us some ground rules: so we worked very hard at finding ways round this problem because we now knew that we could attract external capital. It ended up by being some sort of parlour game. The more we thought we found solutions on the basis of the Treasury's ground rules, the more they seemed to change the rules. After a time I am afraid we had to give up.
We heard only the other day of a rather imaginative proposal which certain private contractors had made to undertake an extension of the road building programme. Reports in the press have already indicated that the Treasury are likely to turn that down. I wonder whether we cannot try to persuade our friends in the Treasury that perhaps they have a responsibility for a bit of creative thinking from time to time and not just to tell other people to be creative and then sit back and turn down their ideas. We have a real problem here. There must be a solution to it. We need to get more capital formation in the infrastructure in such a way that provides us with much needed resources and facilities and at the same time stimulate a whole great tranche of the private sector. There is money ready to be put into these projects and surely it cannot be beyond our wit and capability in this highly computerised, technological age to find a way round that.
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The noble Lord, Lord Boyd-Carpenter, in his speech referred to the criticism that had been made about selling off national assets to meet current expenditure, and I think I am right in saying that he also believed that anything realised from the sale of these national assets should go into asset formation. I hope I understood him correctly.
Lord Boyd-Carpenter: Entirely.
Lord Ezra: If so, I should like to say that I heartily concur with that sentiment and I should like to make a small suggestion here. If we take our minds to the Province of Alberta in Canada, a Province which has been blessed with very substantial mineral resources, they realised that those resources would not last for ever: a large part of the proceeds which the Government gained from the exploitation of those resources they put into what they called a Heritage Fund and that fund has been used to develop longer lasting industrial activities.
It is worth consideration whether the amounts realised from the sale of national assets should not be put into a capital formation fund for the stimulus of much-needed investment either in the public or the private sector by whatever desirable means might come to hand. At least we should then know that we are not losing out in this, that we are not transferring capital assets from the public to private sector in such a way that they would simply mop up a large amount of the resources at that time available in the private sector for capital formation.
This is, I am afraid, what is likely to happen if we have such a large issue of new shares as the Telecom's privatisation will involve. It means that a large part of the resources allocated by the institutions for equity investment will be mopped up. It is not an answer to that, as I have heard said, that if the Government did not get the money this way they would have to do it by gilts issues, because the two markets are totally separate. Anybody in the banking world will know the way the institutions work is that they allocate certain resources to one market and certain resources to the other, and I do think that we shall find that the substantial sales to the private sector of public sector assets that are coming up could do harm to this objective to stimulate investment and capital formation. This is another issue to which we might address ourselves in the wholly laudable objective of creating real wealth in this country.
I do not want to take up more time. I wish to concentrate on making two proposals arising from the very important Motion put to us by the noble Lord, Lord Boyd-Carpenter. These are, if I may remind you, that we should find some way of making sure that the funds released from the sale of assets are used for the creation of other assets, perhaps by allocating them in a specific way. I should also like to suggest that we give some creative thinking to ways in which public and private investment can be brought together to finance desirable infrastructure projects.
5.1 p.m.
Lord Maude of Stratford-upon-Avon: My Lords, it was represented to me some time ago that the habit of elderly graduates from another place exclaiming the

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happy coincidence that they had made their maiden speeches there here, so to speak, had become a rather boring commonplace, so I thought that I would not mention that today but just say that it is nice to be back after all these years among so many old friends in all parts of the House. It is a particular pleasure to have the opportunity to make my maiden speech on the Motion of my noble friend Lord Boyd-Carpenter. I do not think that it will embarrass him, since he wears his years so lightly, if I say that I have known him for more than half a century and have learnt much from him over the years. It was good to hear him still in such excellent form today.
Important as capital formation, investment and the ownership of industries are, I want to deal with another form of resource today. I believe that the greatest and most important resource that any nation has is its people and that any restrictions or controls which prevent their proper employment in productive and satisfying work are to be deplored. There are today far too many of these restrictions, particularly those which deter small businesses from taking on one or two more workers. This is particularly true of the self-employed, the one-man business. I know at least half a dozen in the country area where I live, independent craftsmen who are grossly overworked, who are booked up with jobs months ahead and who would be delighted to be able to take on one or even two assistants. But the restrictions of the extra paperwork that becoming an employer involves are too complicated and costly to make this attractive.
One has to consider first the position of the wife of such an individual. She is probably sitting by the telephone most of the day doing the book-keeping, planning out the orders and certainly coping with the VAT during her evenings and at week-ends. Just the sight of the PAYE tax tables and the accompanying forms on top of them is enough to make the idea of employing someone singularly unattractive to her at least. A survey by the Economist Intelligence Unit recently showed that the United Kingdom came almost bottom of the European league in measures taken to help profitability of small businesses. It was only in tax incentives that it came near the top. I would give credit to the last Government for the tax incentives they gave to help firms start up and expand; the loan guarantee scheme, the business start-up and expansion schemes, and so on. But the PAYE and national insurance system is a very severe burden on very small firms.
The fact is that the Inland Revenue does not like the self-employed. For obvious reasons, it takes longer to get in their tax money than it does tax from those who are subject to PAYE. So it came about, at the time when the last Government were trying to encourage the self-employed, that the Inland Revenue was busy forcibly reclassifying self-employed people as employees. It is estimated that no fewer than 107,000 self-employed people were so forcibly reclassified during the lifetime of the last Government. This is very hard on the one-man business which starts, as so many of them do, with only one customer or client. If he is forcibly made to become an employee of that customer or client, he finds it much more difficult to get others. It stifles the growth of that business at the start.
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But it is when the one-man business takes on an employee that the cost burden rises most sharply. The costs of acting as unpaid tax and insurance collector for the Government are very regressive. The cost of collection per employee is many times higher for the smallest firm than for the largest. Whereas the very large firm gets a substantial offsetting cash flow from the PAYE system which may far outweigh the collection cost, the very small firm benefits very little indeed. It should surely be possible to devise some method of offsetting the burden of collection costs for very small businesses with one or two employees. But PAYE and national insurance are far from being the only deterrents to employment.
I do not propose to discuss today the vexed question of wages councils, which generates a certain amount of heat and which might be thought a shade too controversial for a maiden speech, important though the problem is. But becoming an employer brings much trouble in its wake. There are the provisions on unfair dismissal and redundancy. There are the complicated laws and regulations on race and sex discrimination and equal pay. The employer is likely to come to the notice of inspectors under the Health and Safety at Work Act 1974, the Factories Act 1961, the Fire Precautions Act 1971, the Offices, Shops and Railway Premises Act 1963, and Heaven knows how many more. At a certain size, the firm may become liable to pay a training board levy, though one will not get very much benefit from it. All these were well intentioned measures, but together they constitute a nightmare for the very small business or the one-man business contemplating taking on an assistant.
It might have been hoped that the youth training scheme would have helped in the respect, but I am sorry to say that the Manpower Services Commission has been pretty bureaucratic and restrictive about this. Even under the previous schemes it often refused to include one-man businesses in the scheme at all on the grounds that the young person could not be adequately supervised. Indeed, the problems that the youth training scheme was designed to cure are for the most part problems that have been created by Governments themselves. I submit that it really is time that this Government made a genuine effort to remove the bureaucratic burdens and restrictions on very small businesses and to simplify the tax system to remove injustices.
It may seem an unnatural reaction, but I do have some sympathy with the Inland Revenue. They have a job to do and they have to administer the system with equality for all. But I believe that a system that tries to treat everyone alike may end by doing justice to no one. I believe that more flexibility and understanding would be welcomed, for it is true, I am afraid, that some income tax and VAT collectors do unduly harass small businessmen.
In conclusion. I am convinced that the scope for increased employment is great if some of these deterrents can be eased. There are about 2 million self-employed people in this country and about 1½ million very small businesses. Many of these could use one or more extra workers. Indeed, some could be the great firms of the future once they get off the ground. It is salutary to consider from what small beginnings some of the great enterprises of today sprang—for

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example, Mr. Morris in his bicycle shed. I seriously doubt whether many of them would have got off the ground at all if they had had to contend with the complications, the regulations, the restrictions and the Government-imposed costs which confront the small businessman today. The need for action is obvious and I hope that the Government will rise to this challenge, and soon.
5.12 p.m.
Lord Beswick: My Lords, I have the privilege of being the first to offer congratulations to the noble Lord, Lord Maude of Stratford-upon-Avon, and I do so with sincerity and alacrity. Having graduated with him to this Chamber and having followed his career, although occasionally at a distance, in public service, I have the utmost admiration for both his intellect and his integrity. However, I find it a somewhat frightening thought when he tells us that together he and the noble Lord, Lord Boyd-Carpenter, have a century of mutual experience. The fact that for 50 years they have been sharpening up each other's wits and intellects must make us all the more careful. I am sure that I speak for every one when I say that I do hope that it will be possible for the noble Lord, Lord Maude, to come and speak to us as frequently as he wishes.
The noble Viscount the Leader of the House paid a most pleasant compliment to the noble Lord, Lord Boyd-Carpenter. I would echo that compliment about the most formidable powers of oratory which the noble Lord possesses. I am sure we all have to discipline ourselves to ensure that the force of the argument does not cloud the substance of what he endeavours to put over to us. I was a little surprised to hear him say that he agreed with us about the lack of wisdom of selling off national assets and using the proceeds as current revenue.
In the last week or so there have been a number of Questions put to the noble Lord, Lord Cockfield, speaking for the Government, and I do not recall that we had any great support from the noble Lord, Lord Boyd-Carpenter. Certainly the noble Lord, Lord Cockfield, had absolutely no doubt about the wisdom of this action. It will be remembered that ultimately he fell back on the argument—and I quote from the answer that he gave to the noble Lord, Lord Diamond—that there was, "a fundamental difference of philosophy".—[Official Report, 16/11/83; col. 1281.] I fear that there is a fundamental difference of philosophy, and I find it difficult to follow the noble Lord, Lord Boyd-Carpenter, when he says that the present Government have strayed a little too far towards the path of impartiality. There is a difference between us—and I think that I speak about this matter within the context of what the noble Lord, Lord Maude of Stratford-upon-Avon, said about the absolute need to consider the investment in people. The fact is that since this Government came to power the division between one body of British people and another is wide, is widening, and ought to be narrowed, and is one of the most unfortunate features of the present political scene.
I have to say, sadly, to the noble Lord, Lord Boyd Carpenter—for whom I have reason to have the
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greatest respect—that his speech and the policies that he propounds will widen still further the gaps which are developing between us. There is, tragically, a widening gap today between those who have a job and those who do not have a job. For all the restraints on pay settlements, current earnings continue to go beyond the RPI, while at the same time, by one device or another, payments to the unemployed fall below the rise of living costs. Of course there has been a consumer boom. Some of those in work are doing very well indeed.
But there is another widening gap between the low and the high wage and salary earner. Every percentage settlement applied across the board has the effect of widening that gap. A week ago the noble Lord himself complained about a 6 per cent. wages board award. However, it is not the percentage figure that matters, but the base to which it is applied. Indeed, 6 per cent. on the wage of a shop assistant or a health service worker will mean about another £5 a week, but the same percentage on the wage of a man earning £20,000 a year means another £1,200 a year—over 400 per cent. more if we want to fool ourselves with percentages. Yet for the low and the higher paid worker the cost of a pint of beer, or a packet of sugar, or a pound of potatoes, or the price of gas and electricity, is almost exactly the same.
If we are considering wage rates and the need to increase motivation and productivity—which is one of the themes in the noble Lord's Motion—we might consider another phenomenon of the current scene. Payments to those who dig our coal, deliver our letters, nurse our sick, or bury our dead, are examined in detail by the press and in this House. But only half of wage and salary earners in this country are covered by agreements which are publicised or by trade union negotiations. Among the other half, in which the people are not members of trade unions, there has been in the last year or so a quite remarkable wage explosion.
I suppose that £50,000, £60,000, or £100,000 a year for a footballer might be justified on the basis that he plays only for a few years, though I am not sure that this applies to a man who only comments on football, yet who is said to earn £80,000 a year. In my view that type of thing is bad for football: but it is part of this new, commercial entrepreneurial spirit which the latter-day Tories suggest will now save Britain. Probably more serious than the payments to a few footballers are the claims which are now being made on society by those who presently operate in the brash, new financial organisations. A year or two ago, before this Government came to power—and the noble Lord, Lord Ezra, might confirm what I say—a salary for the head of a great manufacturing organisation was held to be reasonable at £25,000 or £30,000 a year. But that is now chicken feed, especially for those who are in finance or in public relations and who are not conspicuously creating real wealth. I read recently that Merrill Lynch were prepared to pay up to £200,000 a year for an analyst. Maybe that is exceptional for that kind of desk work, or maybe the report was exaggerated. But I have a list of salaries now being paid of between £250,000 and £500,000 a year.
The noble Lord, Lord Boyd-Carpenter, spoke understandably—and I so much agree with

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him—about the need for both incentives and motivation. But I have said before, and I say again, that a society which relies on that order of motivation is not a society which will endure.
There is another gap which is relevant to this Motion—the gap between those who depend upon, or are compelled to resort to, the social services, and those who pay for them. The noble Lord wishes to reduce the burden of taxation, but what is a burden to one man is a source of relief to another; and both live in the same society. Let me say at once that there are some enormous items of expenditure which I think we must all regret. Apparently, Fortress Falklands is costing us £600 million a year, though the runway is extra. The bill for Northern Ireland must be even higher. There are hundreds of millions of pounds going to waste on the scandal known as the common agricultural policy. And the item which is really causing financial trouble is the economic policy which brings about unemployment and makes a potential taxpayer into a drawer of the dole. We could usefully discuss lightening those burdens, but I want to put tax-paying into a different context.
The other day we must all have read of a worker in a field who had his arm cut off. He picked up the arm and went for help, and at the national health hospital he had the limb sewn back on. We must all marvel at that man's courage. But ought we not also to rejoice in the fact that we have built a society which can provide a service of that kind? The cost of that new surgical equipment is one cause of the rise of health costs, but we ought not to talk of a burden. Is it really a disincentive to us if we work to create a society of that kind?
I think it can be shown that some cuts in social services can be bad economics. Next week I shall ask an Unstarred Question about the care of those among us who are mentally ill, and I think that it will be possible to show that an increase of expenditure on local government care services would enable recovering patients to be released earlier from hospital, with a consequent eventual net saving to the public purse, as well as an increase in human happiness. There are a number of ways in which an increase now in social services, instead of a cut, can mean a saving in the years ahead.
I again turn to the subject on which I started; namely, the sale of assets which were previously held in common to limited sections of the community. More and more people are coming to realise, with the noble Lord, Lord Boyd-Carpenter, that it is unsound business to balance the housekeeping accounts by selling off bits of the house; or maybe I am not putting that as strongly as I should for it seems from last week's Statement that £2 billion has been raised by selling off entire houses—and at up to a 50 per cent. discount on market values.
I do not believe—and in this I agree with the noble Lord, Lord Ezra—that a crude argument of public versus private enterprise is helpful. I believe that there is a need for both. I have myself worked in both. I am in favour of a mixed economy. Not the least damaging consequence of the Government's policy is that it has diverted thought and action from getting the best out of both the public and the private sector.
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There are three areas of relationships within the public sector to which we should be giving attention, and where improvements are possible. One area is that of trade union relationships. It is possible to say that in the public sector union organisation is easier and the influence is stronger. This strength can be, and sometimes is, used to procure settlements more favourable to the producer than to the consumer. But the approach here should not be to try and get back to some Victorian concept of master and man, or to glorify market forces with the sanction of the sack. We should be seeking more than ever to secure a steady development of worker participation in management.
Alongside that approach we have to face the problem of wage bargaining. I have some experience of the practical difficulties of imposing from Whitehall a so-called incomes policy. With all those difficulties in mind, I still say that some attempt must be made to ensure that strength in negotiation is not confused with fairness. Overall fairness must mean that we do not try to restrict settlements in the organised half of the national workforce, while within the other half the doctrine of "grab what you can" still prevails. Moreover, in any consensus in the future I hope that there will be not only a minimum wage, but a maximum figure, too—a ratio between the highest and the lowest paid in the country.
Another area in which constructive improvement is possible is that of consumer representation and influence. For all the valiant efforts of the noble Baroness, Lady Burton of Coventry, there is still much to done there—and not simply in the narrow field of prices and service to the consumer, but also in the whole question of identity with the community as a whole.
There are private companies which would love to have the potential feedback from customers which is open to some national industries through consumer councils.
In appropriate corporations I am sure that we could have consumer representation making a positive contribution, not only towards an even more efficient service, and not only in curbing an undue tendency towards syndicalism, but also possibly in countering the bigoted anti-public ownership stance of the gutter press and, indeed, the more elegant criticisms and prejudices of Conservative propaganda. We need to ensure, and then to show, that the interests of the British people are identical with the industries which they own: and the consequence could be a very real incentive and motivation in those who work within those industries.
The third area of relationships in which, in my view, change is overdue is that between public corporations and the Treasury. If public sector management is less than totally resistant to a 51 per cent. sale of shares, it is because this means for them protection from Treasury frustration. The doctrine that productive investment in the public sector has a malign influence on the demand-supply situation in the economy, but that this does not apply if the national holding is only 49 per cent., surely is stretching dogma too far.
Along with others, including the noble Lord. Lord Ezra, I have already said that I am not disposed to pick faults in individual private companies. I do not need

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anyone to preach to me the merits of personal initiative. But what I shall argue is that if we are to have a properly balanced economy and a truly civilised society, then we need more, and not less, public investment.
Mr. Peter Rees, the Chief Secretary to the Treasury, said at The Times conference last week that:
"Privatisation was also the solution which produced the most efficient allocation of resources for investment".
I wonder whether post-war experience really proves that. The noble Lord, Lord Boyd-Carpenter, made great play of the point that increased profits from some of those organisations have now gone from the public into the private sector. But he knows as well as I do that a company does not make increased profits in one year as a result of the decisions taken in that year. In all those cases the investment when under public control and public ownership had been ample, and those investments are now paying off, as they should have done in either case under public or private control.
Apart from that, does the noble Lord really tell us that we should have the present basic energy industries, as efficient as any in the world, if they had been left after the war to private capital? Should we have had the same massive conversion to North Sea gas? Would the rural areas in the United Kingdom have had the same electric power, post, or telephone services if the market forces dogma had prevailed? Of course not.
Long-term investment in basic manufacturing industry just does not appeal to private capital. We have seen this past few days something of the money markets' idea of social priorities. They poured £500 million into the flotation of a casino. The issue was over-subscribed 55 times. The week before BAT announced that they had surveyed the economic scene and decided that the £700 million that they had to invest would go into the financial sector. I have no doubt that that was wise from the point of view of the shareholders of British American Tobacco, but from the point of view of Britain it was not so good.
In the years I have spent in this House I have learned to hold in great regard the readiness of colleagues with vast experience to identify the issues which will really shape our national character in the years ahead. In the debate of 9th November on the Health Service I was especially impressed by the words of the noble Lord, Lord Richardson, a former president of the General Medical Council, and who is never concerned with short-term political arguments. He spoke of, "the very great threat" which confronts our teaching hospitals: and of St. Thomas' s in particular he said that if present projections are applied,
"it will amount to the extinction of St. Thomas's…as a national centre".—[Official Report, col. 868.]
The impression made upon me by that was heightened because in the same week, as it happened, I had sat at lunch next to the head of one of Oxford' s colleges. He told me that Oxford could not complain of their allocation from the UGC, but he went on to say that the overall economies meant that they were no longer attracting talented young people to an academic career. "If this process continues", he said, "we shall
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not have a university of international standing at Oxford by the middle of the 1990s".
If we get tax cuts now—the tax cuts which the noble Lord is demanding—we might well step up the current boom in video sales. But Britain would be better off if we had not cut the home improvement grants. The allocation of resources by the private market might well mean that we get a super casino in the West End, but should we not all feel much prouder if the standing of Oxford was maintained and our teaching hospitals were preserved?
It gives me great encouragement to think that more people are beginning to see the implications of the present Government's economic policy. Maybe this is what Peter Walker was getting round to saying as reported this morning. Recently I have derived even greater hope from the feeling that the new leadership in the Labour Party would soon be putting this new philosophy into practice.
5.35 p.m.
Lord Orr-Ewing: My Lords, I should like to start by adding my warm congratulations to the noble Lord, Lord Boyd-Carpenter, who opened this debate. For us all, wherever we sit in the House, that was a speech that was such a tour de force that we shall long remember it as a high point in 1983. I should also like to add my congratulations to the noble Lord, Lord Maude of Stratford-upon-Avon, and old friend from a long period together in another place. How right he was to concentrate in such an effective maiden speech on the problems of the small businesses. I should like to endorse everything he said. I hope that this Government are not running out of steam on that front. We started with great energy, great enthusiasm, and we need to keep it up, because if pressure is not kept up the Treasury will have their way and tax them out of existence.
It is right to have a debate of this nature on this subject at this moment, because the public accounts for the coming year have just been published in a grey paper, and it is desperately important that we should consider where the wealth creation is going to come from and how we can help it in the future. I shall not repeat it, but there is much to be said for what the noble Lord, Lord Boyd-Carpenter, said in his opening speech about the heady days of the 1930s. I was re-reading recently—I have it here, but in the interests of brevity I shall not quote it—Let Us Face the Future, the programme on which the Labour Party won the 1945 election. All the quotations are a little hollow today in that almost every forecast about the service being better and the price being lower to the public was wrong.
They are not the only people who got it wrong, by the way. A programme like that goes ahead with enthusiasm, but one looks to see what Lord Beveridge said when the National Health Service was set up, of which so many people have spoken, and which can go on expanding and improving provided that we have a healthy wealth-creating sector. It is strange to think today that he forecast that the cost of the Health Service in its first years of operation would be about £70 million, but that it would be a reducing cost because the health of our nation would steadily

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improve and there would be fewer people seeking to go to our hospitals. That is a forecast which is so amazingly wrong that it is now costing £14,500 million, not £70 million, and employing, by the way, 828,000 people.
Looking at the results of the nationalised industries—and there are some 20 of them and they are all different in many respects such as size, position, centralisation, subject and everything else—it is broadly true to say, as has been said in this debate. that prices have regularly increased rather more rapidly—considerably more rapidly in some cases—in the nationalised industries than the RPI has increased. It is also sad that the productivity of labour in the nationalised industries—and perhaps restrictive practices that go with that—has not matched up. The employment costs of gas—I was studying them recently—are up by 38 per cent. more than the employment costs in the private sector. Coal is 21 per cent. more than in the private sector, as an average. Even in telecommunications and electricity they are up 18 per cent. more. Therefore, although big investments have been made in many of these fields, it has not unfortunately yet been matched by big improvements in productivity.
It is important that we should discuss the public sector from time to time, the public industries particularly, because they represent exactly a tenth of the total United Kingdom gross domestic product. They also employ 1,500,000 people. So on any score they are of considerable importance. Of course, they also dominate some sectors of our economy—sectors which are vitally important infrastructure to British industry. The whole of transport, energy, communications, road, rail, air, telecom, steel—all these industries are in the public sector, as well as shipbuilding and part of aerospace, and therefore it is a worthy subject to discuss.
I am sad in a way that noble Lords opposite, who have not made desperately partisan speeches, have not come forward with any constructive ways in which they believe the performance of the nationalised industries might be better. I think that that is sad. I do not blame the managers or the work force in any way. I, like the previous speaker, worked for a national monopoly, the BBC television service, for many years. It was rather more fun in its early days; it has probably become more bureaucratic since then. I also worked in the private sector for many years. I do not criticise in any way. I find that people work in nationalised industries with exactly the same dedication and loyalty. The very size of the organisation sometimes has a repressive effect on their energies and ambitions.
We have to go on trying to prod the nationalised industries because they will long remain monopolies, even if all the ambitious proposals for privatisation come about. It will leave many of the twenty untouched. We must go on prodding, probing and encouraging the use of productivity measures, of comparative figures between one and another and among the regions of a single organisation. One should carefully monitor the amount of research and development money which is going back for the future of those industries. The reaction time and the innovative process should also be examined, because if a decision has to go through a number of layers or
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strata before it is endorsed it will take a long time and may lose its thrust in the process. Capital expenditure has long been monitored by successive Governments.
One of the astonishing things when we discussed British Telecom recently was that it turned out that the organisation has only one profit centre. Here is an enormous organisation by any standards, with no knowledge of certain facets. It could not tell whether public kiosks were making a loss or a profit. It did not believe that there were losses as some people had suggested, but there were no figures to say so. Now two large accountancy firms have been put in to British Telecom to see whether they can start some cost centres and begin to get some facts on the business which is managed. It is a sad fact that it is said the processes will take a further two years before there will be any figures by which efficiency can be measured.
It is wrong to say, as one speaker did, that British Airways has not been livened up by the threat of privatisation. It is true to say that British Telecom has changed out of all colour, not just from red to yellow. It has really woken up. One of the problems for the small private companies is how they will compete with British Telecom, which is a very lively outfit and prepared to spend almost any amount of money advertising. A Member in another place said during the Committee stage of the Bill, which I read recently, that £17 million had been spent in launching Merlin, one of the new projects. I know that £1,000 has been spent in Scotland for every paging gadget that is sold—£1,000 for every gadget sold, though they cost only £100 each. British Telecom is not short of money or energy; just the mere whiff of competitive grapeshot has had a salutary effect.
All Governments since the honeymoon of Socialist days of 1945–51 have attempted to grapple with the problems. They have put forward a number of solutions. I remember new formula after new formula. The original one was breaking even taking one year with another. That did not work out very well because we never came across "the other"; we always came across the uneven one. Then there was the capital investment which should only be undertaken if there was rigorous "discounted cash flow"—the buzz word at that time—so every capital investment project had to be examined under this score and unfortunately we never got around to examining it.
Then there was Government control and interference. Every time one tried to insert a whole layer in the Ministry responsible, the people concerned had first to learn about the business then had to try to control, as someone recently said, and waste an awful lot of time of the management in answering questions to educate the people who were their official bosses. Governments of all persuasions have tried.
The introduction of external finance limits has had some salutary effects because it has meant that if one can generate the profits within one can undertake more ambitious capital programmes and research and development for the future. That is a healthy discipline and probably the best we have had for some time.
We all have a duty in the House, wherever we sit, conscientiously to seek routes for improvement. In 1984 there are two areas which we understand are to

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be privatised. I like others do not like the word, but it describes the efforts. It is sad that in the case of British Telecom the DTI, the Ministry responsible, estimates that, despite all the objections from the POEU, 97 per cent. of telephones will remain under the aegis of British Telecom and only 3 per cent. will be won by Mercury, the rival network which is to be set up. That does not seem to be anything like true competition when one remembers that if one has technically 30 per cent. of a market one is subject to a Monopoly investigation. What happens when one has 97 per cent. of the market set up under a statute?
What is sad, particularly in view of what my noble friend said about small companies, is that 97 per cent. goes to British Telecom and 3 per cent. to Mercury, and all the other fringe services—the 47 little companies who provide paging, mobile telephones and message answering services for doctors and other people who need them—are apparently unthought of. No one has encouraged them. In fact their growth is being inhibited by forbidding them to have the frequencies which they need with which to expand and to create the jobs.
Lord Strabolgi: My Lords, why do it?
Lord Orr-Ewing: My Lords, I am delighted that people are doing it because I believe a pace-setter is required and Mercury will act as a pace-setter for British Telecom. I even think that the Hull telephone exchange acts as a pace-setter because that is one yardstick by which one can measure the efficiency of telephones in this country without having to go to France, Sweden or anywhere else. A pace-setter, whether or not one is the best 1,500-metre man in the world (I was not) is a very valuable person to have because one can measure oneself against his efficiency.
I was sorry to read that British Caledonian will not he given the chance to grow. I still think that 80 per cent. of the market in British Airways hands, however good it is. and however good its administration, is too much and 10 per cent. is too small a portion for British Caledonian. I should have preferred to see it more equally divided.
That brings me. finally, to what we intend to do not only with the industries which may be privatised in 1984 but with all the others. Let us suppose we privatise two in 1984; that still leaves 18 others. Should we perhaps be strengthening the Monopolies and Mergers Commission? When we set it up there was a feeling that it should deal with both monopolies and restrictive practices. I think it should, and I think it should be enlarged and modernised in the light of experience to do that.
We also have the Office of Fair Trading. I know it is struggling, and sometimes it is successful, but it is a slow moving outfit. Can it really investigate whether trading is fair between the national and the private sector? In the case of British Telecom there is to be Oftel, the Office of Telecommunications; a new outfit to control. I wonder whether we are giving all these organisations sufficient strength and sufficient teeth to do a job and create a competitive economy within the national industries and mixed industries where we have both. It seems to me that we want to examine
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these methods most carefully, otherwise all our efforts to privatise will not be successful.
5.50 p.m.
Lord Harris of High Cross: My Lords, I strongly welcome the Motion in the name of the noble Lord. Lord Boyd-Carpenter. It exactly reflects my own impatience with the failure of the Government to push on more rapidly in reducing the burden of taxation which has grown remorselessly throughout the whole of this century. If we look back to 1900 we find that Governments took 15 per cent. of the national income. By 1938they took 30 per cent. of the national income, by 1960 they took 40 per cent. and, through the 1970s, they took around 50 per cent. of the national income. I checked back with the Blue Book for 1982 which showed that for that year total state spending was£128,000 million of a net national income of £240,000 million. Those two figures tell us that central and local government and their various offshoots laid claim to 53 per cent. of all the income earned by the exertions and enterprise of this nation.
In a prudent world all this mounting public spending has to be financed from rates and taxes of a whole variety of kinds or it has to be borrowed from current savers and eventually to be repaid by future taxpayers. It must be obvious, even to such overflowingly generous and well-intentioned people as the noble Lord, Lord Beswick, that there is some limit to the amount of tax that Governments can take without doing more harm than good. This is a matter of judgment. Unlike the noble Lord, Lord Barnett, I judge that we have already gone beyond the bounds of prudence.
I would assert that, above a modest level, all taxes damage our economic performance in a variety of ways. Most people, despite what the noble Lord, Lord Beswick, has said, do not positively rejoice in paying higher taxes. There is no such thing as a free tax. We all know that local authority rates have rocketed, firms have been forced out of socialist city centres and sometimes, too often, have been forced out of business.
Lord Beswick: My Lords, I did not talk about rejoicing in paying higher taxes. I rejoiced that we had a system which could give the surgical treatment which a poor man needed. Does not the noble Lord also rejoice in that; and, if he does rejoice, does he not accept that it follows that we must pay taxes?
Lord Harris of High Cross: My Lords, we must go back and look at the record of Hansard. The noble Lord implied that people should take pleasure in paying taxes because it led to some good things of which you approved. I approve of some things that the Government do but I thoroughly disapprove of many other things where I can see that my money is wasted. So I cannot take pleasure in the total burden of tax that falls upon me. My argument is that income tax and national insurance contributions raise costs, depress efficiency, distort effort, make British products less competitive than foreign competition and so destroy jobs.
I was not impressed by the complacent comparison of the noble Lord, Lord Barnett, with European tax

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levels—and for a number of reasons. In the first place, the structure of our own income tax is, in my view, more onerous, especially on lower and higher incomes. Secondly, European earnings over the post-war years have risen a good deal faster than those in Britain; so that, despite rising taxes, take-home pay has risen faster in those other countries. Furthermore, Britain suffers from larger handicaps than France, Germany or even Sweden, especially in our troublesome trade unions and in the more extensive nationalisation. Therefore, we need all the additional help that we can get from lower taxes.
It is a fallacy to suppose that taxes do not matter because only some people are affected by their disincentive impact. The noble Lord, Lord Barnett, conceded that some people are so discouraged; and that concedes my point. The only dispute is how widely that particularly damaging effect runs. I wholly agree with the noble Lord, Lord Barnett, in his attack on taxes on lower income. I would say that before the war working class families like my own parents never paid taxes unless incomes rose to something like two or three times average earnings. Today income tax starts for many at levels nearer one-third of average earnings, and even below the entitlement level to supplementary benefit. It is no wonder that we hear of the unemployment trap and the poverty trap and so forth where people are discouraged from taking a job which would leave them worse off after loss of tax and benefits than if they had stayed on social security. As the noble Lord, Lord Barnett, acknowledged quite explicitly, we are literally taxing people into poverty and unemployment as well as taxing other people into the black market or the underground economy.
Another count against this great tax snatch is that by knocking-off almost 40 per cent. from take-home pay workers are encouraged to try to pass the buck to the employers by demanding wage and salary increases which firms cannot afford. The buck eventually has to stop somewhere, and it tends to stop on the backs of the creators of wealth. It is indisputable that all taxes are a negative transfer of goods and services away from individuals and towards the Government. The trouble is that higher taxes must, however marginally the noble Lord may think, reduce the flow of wealth which alone enables us to pay increasing taxes in the future.
A further disadvantage of high public spending which has not been touched upon is that no Government can give as good value for our money as we get when we spend it for ourselves and our families. The men in Whitehall cannot know and cannot really even care about individual preferences which differ very widely. They are inevitably inclined to spend other people's money just as though it was other people's money. I have a great deal of admiration for an unnamed noble Earl—and I went back to the Hansard of 7th November 1979 to check my recollection. On that occasion (in column 977) I found from a noble Earl who was then, and is now, a Minister, the following words:
"I rather like spending other people's money; it is one of the most enjoyable functions of a Minister's life".
At that time I was deeply shocked. That was four years ago. Now I am a hundred years older and wiser and sadder; and I have come to accept that there is not much prospect of getting politicians to treat the
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taxpayer's money with the most especial respect which it should deserve.
Even if Ministers were recruited exclusively from the legendary one-armed Macedonian with sewn-up pockets, I would argue that it is impossible for public services to be as cost-conscious as private suppliers who have to compete to win customers. Even in the recession, we have seen that managements in local government, in education, and in health services have faced none of the market disciplines that have compelled private enterprise to improve efficiency by cutting out waste, ending slack working habits, reducing manpower often by 10 per cent., 20 per cent., or 30 per cent. without, in many cases, reducing output or capacity. The additional difficulty that has been touched upon is that state services and nationalised industries have over-powerful trade unions that have fought, often without scruple, to retain over every over-manned post and preserve every demarcation and restrictive practice.
I may say with respect to the noble Lord, Lord Ezra, that I think I heard him say that the National Coal Board had won Queen's Awards for some of its technical triumphs; but it would win no taxpayers' or customers' awards for its efficiency or its return on capital over a period of years.
The trouble fundamentally, which has been touched upon earlier, is that wherever any activity is plugged into Government all the pressures are for more spending. The noble Lord, Lord Barnett, would agree, I know, with this proposition in the light of his own excellent post-mortem on the years 1974 to 1979 when he was the Labour Chief Secretary at the Treasury. His remarkably readable requiem entitled, Inside the Treasury, is full of instructive revelations which I never cease to advertise in this House and before wider audiences. If his sales are doing well it is partly due to my advocacy. Early in his book he lamented—and I quote:
"The days had long since passed when I naively thought it would be easy to persuade my colleagues that two plus two really did make four".
A little later he said:
"So many of my colleagues wanted to have their cake and eat it; even the most intelligent of them wanted both tax cuts and public expenditure increases".
I think the noble Lord's colleagues are not so different from many Ministers on the other side of the House, but I think I can say with some confidence that at least the present Government have not been guilty of that degree of folly. I have no doubt that the present Chancellor would like to get spending and taxes down, even if Mr. Peter Walker and other Tory rustics and romantics are not entirely in agreement. Therefore, I would urge Mr. Nigel Lawson to persevere, and I offer this concluding thought: no single boon would do more for growth and employment prospects than a large and continuing reduction in the burden of taxation on workers, savers and investors. It is they—millions of ordinary and extraordinary people, not Governments of any party—who are the true source of Britain' s wealth and future prosperity.
6.1 p.m.
Lord Boardman: My Lords, like other noble Lords, I should like to congratulate my noble friend Lord

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Boyd-Carpenter on the introduction of this debate in his inimitable style. I also congratulate my noble friend Lord Maude of Stratford-upon-Avon. It is a joy to hear him once again, having listened to him with pleasure for many years in another place.
One matter which has not been mentioned so far in the debate is the dramatic change which has taken place since 1979. Prior to 1979 there was a sort of ratchet effect operating which made it appear quite impossible ever to shift back from increasing state intervention and state ownership to greater reliance upon the private sector. But since 1979 that has been released: not an easy task. It says much I think for the courage and perseverance of the Government, and in particular of my right honourable friend the Prime Minister, that the reversal has been achieved. It has now become possible, for the first time for many decades, for there to be a shift hack to get a better balance between the public and the private sectors.
No-one should minimise the extent of that achievement. Lip service has been paid to the aim by previous governments over some 30 years. Previous Conservative Governments had pledged themselves to try to get back to a greater private sector and to prevent the increase in the public sector's erosion of so much of our activity; but the sum total up to 1979 was minuscule. There was I think a de-nationalisation of road haulage; there was a return of some of the pubs—the Carlisle Brewery, I think it was—to the private sector. The noble Lord, Lord Ezra, will remember that there was a transfer of the National Coal Board brickworks to the private sector; and there was a travel agency. But that was about the lot. Indeed, the balance tended to go somewhat the other way and, as the noble Lord, Lord Barnett, reminded us, we had the nationalisation of Rolls-Royce. I will not go into the circumstances of that but I am sure the noble Lord will well remember the responsibility that his then colleagues had for that sad state of events—
Lord Orr-Ewing: Hear, hear!—the RB.211.
Lord Boardman: My Lords, the reasons why there was so little shift back, the release of that ratchet, were manifold. There was massive resistance by the Labour Party and massive resistance by the trade unions in the public sector. Then of course there was the recognition that, these vast public monopolies having been created, to return them to the private sector would probably lead to a private monopoly which to many was and is unacceptable.
The consequences of the massive shift to the public sector, unintentionally, were economically disastrous. I believe that if we plotted the industrial decline of the United Kingdom since the war and matched it against the trend of increasing state intervention, we should find a remarkable correlation between the two graphs. The vast state-owned monopolies had an impact on the economy which has done grave damage. No Government have felt able to stand back and say: "Let us allow them to get on with their business". The levers of power which Government Ministers have in those industries are irresistible; and management, as my noble friend Lord Boyd-Carpenter said, had to act in a strange environment. The management of those
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industries, as my noble friend said, was often of a very high quality. Management at all levels in those nationalised industries are not blamed for the circumstances. They worked within an environment which made it impossible to apply the same judgments as applied elsewhere. They were directed by political considerations rather than industrial ones; pricing policy was not fixed upon ordinary commercial terms but upon its impact upon the RPI. Employment policies were fixed upon the effect, particularly concerning unemployment, in constituencies that might arise if what would otherwise be a sensible commercial decision was taken.
Management, as has also been said in this debate, had a blank cheque and they were free from the disciplines of the market place. I had ministerial responsibility for some of those industries for some two years and I know the frustrations suffered by management on the one hand and by Government on the other. In the middle there were the powerful public sector trade unions, determined to preserve their jobs, their place in the wage "pecking" league, and their restrictive practices. It was really a recipe for economic chaos and I suggest that the pudding has been proved in the eating.
I do not want to bore your Lordships with statistics, but I noted with interest and my usual pleasure the figures quoted by the noble Lord, Lord Harris. I will avoid putting figures to you, but since 1979, as I have said, the direction has been reversed. Some may say—indeed I believe I should myself— "too little and too slow". But to reverse the momentum of some 30 years takes some doing.
One may ask: what are the benefits of reverting to a greater part of our industrial and commercial activity being in the private sector? May I give one small illustration from my personal experience? The noble Lord, Lord Ezra, will recall, as indeed would the noble Lord, Lord Gormley, who is no longer in the Chamber, that the National Coal Board possessed a whole lot of brickworks—old, not main line activities, loss-makers, starved of capital. To prise those out of the National Coal Board was a major effort. Every opposition was put forward, I am sure with the very best of motives, from the noble Lord, Lord Ezra, and the noble Lord, Lord Gormley. The resistance was great, but it was achieved and they were prised out and sold to the private sector. Perhaps I may just finish this sentence and then I will gladly give way to the noble Lord, Lord Ezra. They went to the private sector, to a company of which some years later I became chairman. I may say I am no longer chairman. Those brickworks are now the most modern in Europe; they are highly profitable, using highly competent, efficient and well-paid staff; and they are making a very significant contribution to the nation's economy and welfare.
Lord Ezra: My Lords, I thank the noble Lord, Lord Boardman, for letting me speak on this question of the brickworks. If I may, I should like to correct the record slightly. I should also like to say that our relations with the noble Lord were always amicable while he was a Minister. The point is not that we did not want to sell off the brickworks; we wanted to get a good price for them. It was my task to nurse those brickworks, and I

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spent some years on it, to the point at which we thought we could profitably dispose of them, which I am glad to say we did. We disposed of them because it did not seem to us to make good commercial sense to go on operating a brickworks which we had inherited from the old mine owners.
Lord Boardman: My Lords, of course I accept the noble Lord's interpretation. But what he has said endorses my point, which is the desirability of getting that type of peripheral activity away from the main line activity and back into the private sector, where it can be managed more effectively. The Government are moving in this direction and I congratulate them on what they are doing with British Telecom, British Airways and the like. But these large denationalisations will take time. and I ask my noble friend to consider urging the nationalised industries and the public sector to look through all the bits and pieces that they have on their books, which are not part of their mainline activity.
Every part of the public sector should be required to reveal all the resources that it employs, all the jobs that it does, which are not essential to that mainline activity. For example, as the noble Lord, Lord Ezra, is in his place, I ask: why should the Coal Board have investments in builders' merchants, and why should the electricity and gas boards have their showrooms? Are they essentially a mainline activity? Is a direct labour force the most cost-effective way of maintaining our roads, and so on? These are questions which should be asked. I believe that the answers will reveal massive barnacles on the hulls of these vehicles, slowing down progress and wasting resources.
It is not something which applies only in the public sector. It applied throughout much of the private sector. In more prosperous days, large companies accumulated masses of bits and pieces. Due to the recession and the need to clean out and release what resources they can, many of them—I hope all of them—have looked at their "bottom drawer" and have seen what they could turn out. The recession has forced them to divest and many of these divestments from the private sector have been to very successful management buyers.
Now is the time to get this divestment through. It is difficult to achieve in recession; but I believe, as my noble friend Lord Whitelaw said earlier, that the indicators are all hopeful. They are all going the right way. Inflation is down and will come down further; interest rates are low and I hope that they will come down lower; the growth forecast is 3 per cent.; public attitudes have come to accept the sort of change which is so essential; there is reasonable stability in exchange rates and cash resources are available from the private sector. That is where the financial services of the private sector make such a massive contribution to our economy and to our overseas earnings.
In this context, I declare an interest as I am chairman of a major clearing bank, and may I remind my noble friend that it is this part of the economy, the financial services sector, that has done so much to support and sustain the weaker parts of our economy; that has made, and is making, a greater contribution to the preservation of the international financial system, which is the greatest source of net earnings from
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overseas, as well as providing the means for British industry to compete in world markets.
If, as the press suggests, the Chancellor of the Exchequer is minded to impose further special penalties on this sector, he will be putting his whole philosophy in reverse. If the reserves of British banks are to be eroded by further taxation, then "the normal banking prudence", to which the Prime Minister referred in her Mansion House speech last week, will limit the support available to British industry as it comes out of recession, and the contribution to achieving the financial stability that is needed in those parts of the world which provide major markets and jobs. That task, if it is worthwhile—and is for the Government to decide—and if those circumstances arose, would fall on the public purse. For that reason, I say that it would be a reversal of the policies which the Chancellor and the Government are pursuing.
I conclude by congratulating the Government on the direction which they are taking. They are moving in the right direction. They have overcome the ratchet effect, of which I spoke earlier, and I hope that they will speed it up wherever possible. I also hope that they will look at all the peripheral activities which should and could be returned to the private sector. Finally, I put in a plea that they do not weaken the private financial structure, which carries the weight of British industry and commerce.
6.16 p.m.
Baroness Seear: My Lords, 1 should first like to join those who have congratulated the noble Lord, Lord Maude, on his maiden speech tonight, and on his emphasis on the development of and help for the small business, which has always been a subject of great concern to Members on these Benches. Your Lordships will be pleased to hear that I shall be very brief, partly because of the late hour and the number of speakers still to come but even more because, much to my alarm, the noble Lord, Lord Barnett, in the second half of his speech and with a great deal more eloquence than I could command. said nearly all the things that I wanted to say. This is a fate which, sooner or later, befalls all speakers coming later in the list, but it is slightly disconcerting when you believe that you have points to make which other people are less likely to bring forward.
The first part of the debate has concentrated on the question of wealth creation. It seems to me rather a pity that so much time has been spent on arguing as to whether wealth creation is better carried on in the private or the public sector. Underlying the discussion there has been emphasis, about which I think there is agreement on all sides, on the need for greater investment. But, surely, what is important is getting that greater investment and seeing that it is used to the greatest possible effect in both the public and the private sectors.
Indeed, as the debate has gone on this evening, and having listened to speakers from the other side of the House, I am tempted to put to the noble Earl, Lord Gowrie, a question which we used to put from these Benches in the days of the Labour Government. Do the Government still really believe in a mixed economy, or do they not? We always had protestations

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from the Labour Government, which we did not always believe, that they did, in fact, support the mixed economy. Is this still true of the Conservatives, and will they confirm that this is the position? From the tenor of many speeches tonight, one really begins to think that they believe there is no use at all for a public sector. However, of the importance of capital formation for wealth creation there can be no doubt, and I think there is very little disagreement inside your Lordships' House.
This leads me to say once again, as we have said so often in the Alliance, how extraordinary and regrettable it is that the Government are so unwilling to make funds available for essential capital investment in the public sector. I was very glad to hear that they are to spend money on building new prisons, which are long overdue. But, surely, money should be found for such things as home improvements, which we were told at the end of last week are to be cut, and for the repair of the sewers—a subject which we have pressed for a very long time. That is job-creating, essential work which must be done sooner or later. Surely, if there is one job which cannot be indefinitely delayed it is the repair of our 100-year old sewers, and, if it were done on the scale required, it would be very job-creating. The Government say that they cannot spend that kind of money without returning to inflation. We can only point out to them that the amount of money that it has been estimated to cost is less than the margin of error which is made regularly every year in the estimate of the PSBR. That is all I wish to say on the first part of today's debate.
I want to pick up and underline one or two of the points made by the noble Lord, Lord Barnett, about the incidence of tax at the lower level. I do not believe that anybody has so far made the point that we are not in fact a very highly taxed country. In the league table of taxation I believe that we are about half-way down the league table compared with other industrial countries. If we look at the level of tax in relation to productivity and unemployment, there is no correlation whatsoever.
There is no indication from the figures, when you examine them comparatively, that the existing level of tax contributes one way or the other to the major problems that we in this country face. But the noble Lord, Lord Barnett, was surely absolutely right to stress the appalling incidence of tax at the lowest level of all and to point our that, because of the muddle we are in and because of the way in which tax and social security payments have been added incrementally, ad hoc, to meet particular problems as those problems have arisen and have never been reviewed as a whole since we began schemes of this kind, we are now in the most frightful muddle so far as tax and benefit at the lower level of the scale are concerned.
"The poverty trap" has become one of the phrases that is very commonly used. So is "the black economy". They are the other areas about which I wish to speak. We regard them as marginal problems that are always with us and probably always will be with us, and there is not very much that we can do about them. What I want to say tonight—I am very sorry that the noble Earl, Lord Gowrie, is not here because I wanted particularly to address these remarks
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to him—is that surely the time has come, at the beginning of a new Government with three or four years ahead of them, to examine seriously, perhaps on an all-party basis, these two subjects which are of major importance in order to find out whether or not we can work out a very radical reform which will get rid of the poverty trap and deal with the issues which are associated with the black economy.
To take first the poverty trap, may I just repeat that the issue of the poverty trap and the issue of the black economy have been talked about for a very long time. But no Government have attempted to tackle them on a radical basis. There has been no real examination on an all-party basis of what can be done to get rid of the poverty trap and to explore the issues connected with the black economy. This is not a marginal matter. It is a matter of very considerable importance, and it is going to get more important unless we do something about it. It has been with us for a long time. We do not have to do it tomorrow; we can take our time, study it and try to get it right. The noble Lord, Lord Barnett, illustrated the absolute nonsense of what is, with tax and insurance alone, practically a 40 per cent. marginal rate at the lowest level of all. Then there are the additional losses because of the means-tested benefits and the very strong inducement indeed to people not to get jobs when they are at that level, because it simply is not worth their while.
The noble Lord, Lord Barnett, said—and I agree with him—that the Government do not know the answer in the short term. There are certain things one could do. I have always found it difficult to believe that there would not be some value in having a lower band of tax. It would not take us very far, but it would be something. We did have a lower band at one time; if my memory serves me right, it was introduced by Roy Jenkins when he was Chancellor of the Exchequer in the Labour Administration. For some reason which I have never understood, unless it was as a result of pressure from the Inland Revenue on the ground that it is easier to cope with a smaller number of bands (but that is only fancy on my part; there may be no truth in it), we removed that lower band and restored it to, at that time, 33 per cent., plus national insurance. This is absolutely absurd.
All parties have attempted to look at this question in terms of a tax credit scheme. The more one examines it the more obvious it becomes that only some form of tax credit scheme—the amalgamation of the tax and benefit system into one system—will make sense in the long run. I know, because my party and the Social Democratic Party have done a good deal of work on it, that it is not at all easy, but we are equally convinced that it is essential to find a way. I would suggest to the noble Earl that now is the time to get together the most high-powered group that we can find to work the maggots out of tax credit schemes, for tinkering about with tax and benefit is going to get us absolutely nowhere and will leave us indefinitely with a poverty gap, with all the undesirable economic and social consequences which flow from it.
My second point is the effect of tax on the creation of the black economy. I have shocked some members of your Lordships' House in the past by saying that I do not take a very appalled view of the existence of the black economy. It is real work; it is real income for the

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people who earn the money from it; it gives them something to do; certainly it is a great deal better than having nothing to do. But it has also very considerable and serious disadvantages. That it is large there can be no doubt. I do not believe it to be profitable to spend a lot of time trying to calculate how large, because we shall never know. But if we look at the figures which measure GNP by expenditure and compare them with the figures which measure GNP by either income or production, it is quite clear that a very great deal is going on in the black economy.
Although there are advantages and benefits which flow from the black economy, there are also very great disadvantages. No doubt a small black economy has always existed and is something we can all live with. But I do not believe there can be much doubt that it is growing. Nor do I believe that any of us would like a country which had, as other European countries already have, a black economy which was a very sizable proportion of the economic activity of the country as a whole. Some of both the economic and social consequences which would flow from an economy which had a very heavy black edge to it are not what I believe any of us would want. Perhaps the least of the disadvantages of the black economy is that it mucks up the national statistics quite impossibly. We do not know what the GNP really is; we do not know what money is available for taxation; we do not know what the true figure of unemployment is. All these things we ought to know. If the figures are only small it does not matter, but as they get bigger it becomes very serious indeed.
One of the advantages of the black economy—here I know that I shall shock some people—and probably one of the reasons for its success is that it introduces a flexibility in labour costs which our excessively rigid system of labour pricing does not enable us to have in any other way. A great many people in the black economy are underpaying themselves, in trade union terms, quite considerably. That is why they are able to get jobs. But that is by the way. That is one reason which would make the system appeal to some Members of your Lordships' House, while it would be deplored by other Members of your Lordships' House. But the black economy probably also involves a considerable waste and distortion of genuine entrepreneurial effort. There are undoubtedly people in the black economy who would be capable of making a very considerable contribution if their efforts were better supported and better directed than they are at present, because plainly there are many limits to what they are able to do when they are operating in that way.
We surely want to find ways of getting people to come out of the black economy and into the normal operation of the economy. I do not know how one achieves that, but we must find a way; we must find a way of making it really worthwhile. It is not worthwhile at the present time for a man who is running a successful plumbing business on the side to run his own small business as a proper small business—openly recognised, paying tax, and doing all the things that small businesses should do.
I urge the noble Earl that the second project that should be undertaken in this field is another investigation into the ways in which one can reduce
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the size of the black economy—not spending a long time trying to measure it, but accepting that it exists. It is our old friend the elephant again: we cannot define it but we know it when we see it. We must try to see what policy steps can be taken to reduce the inducement to stay in the black economy and to give positive encouragement. It will probably mean some rather drastic steps; making changes which many people may not wish to make. But if we do not do something now, we shall before very long be in the situation in which the black economy is so deeply established as a major part of the economy that there will be no way of altering matters.
The Earl of Lauderdale: My Lords, before the noble Baroness sits down, does she have in mind a Select Committee of this House to investigate the matters she has described as being so urgent? Does she have any suggestions to make on that point?
Baroness Seear: I had that in my mind, my Lords, as one possible way of dealing with the question, but I did not want to say so in precisely those words.
6.32 p.m.
Baroness Carnegy of Lour: My Lords, your Lordships' experience and expertise in the matters under debate are, of course, copious. I have been listening with enormous interest, especially to my noble friend Lord Maude of Stratford-upon-Avon, whose maiden speech was on an aspect very near to my heart. But personally I have a great fear about this debate and, perhaps even more importantly, about the national debate now going on across the country.
My fear is that the Government underestimate the extent to which the vast majority of the people of this country now understand the essentials of this situation in which we find ourselves: and that as a result of that underestimation, Parliament will be too slow, and not nearly radical enough, nor nearly creative enough, in determining the way forward from this time on.
Since 1979 the British people have in many ways been taken into the Government's confidence. We have come through several years of learning hard lessons, and we have disciplined ourselves to hard policies. There is now, even in the area in which I live—which does not typically vote Conservative, or anything like it—a widespread view that the old ways will not do any more; that to carry on with the old structures, even if we had a lot more money to spend on them, would not work; and that to keep those structures and spend less and less on them would be even worse.
Likewise, increasing numbers of people in all walks of life appreciate very well that economic reality is crucial. They know also that the economy is not an abstruse creature with a life of its own and uncontrollable by ordinary human beings, but that it is largely made up of people in this and other countries who can influence the economy, and that the economy exists for us, and not us for it.
People are aware, too, of the history of the welfare state. Those who are old enough to remember—and others know from them, and from television—the high hopes of the 1940s and 1950s, shared across a large

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part of the political spectrum, know that we had found the best way for an educated modern society to maximise freedom and fulfilment for us all. They therefore understand why today we still ask every citizen to forgo part of his or her income, in the form of tax, rates, or national insurance for those in work; and in the form of lower benefits and pensions than would otherwise be available for those not in work or retired, in order to pay for education, health and social services; public housing, employment and training services; roads and railways, and to subsidise coal mining, postal services, and the rest.
People also know from their own experience the way in which the system of paying for essential and very personal services by way of the state actually works in practice. Responsibility for these matters may be in the hands of democratically-elected and replaceable councillors and Members of Parliament, but it is not clear that those people are able to ensure that precious potential spending power forgone by individuals is turned into provision where the individual customer's needs or wishes are always paramount.
It does not pass unnoticed, for example, in the great housing schemes of the Scottish cities that schools are still not seeking the greatly increased answerability to parents which those parents strongly desire. Across the country, despite the marvellous operations which the hospitals are capable of performing, hospital patients and visitors do not by any means always feel that the hospital exists for, and belongs to, them—which, of course, it does.
People notice the roads coned off and traffic jams prolonged for far longer than is actually needed for the job. They also observe expensive chromium-plated barriers which have recently been purchased on their behalf by the Post Office, so that they—the waiting customers—may be coralled like sheep waiting to be dipped. They notice, too, that housing officials—and even councillors themselves—are often markedly reluctant to help people with advice about expediting the buying of their own homes or to accommodate their wishes as tenants in other ways.
On the employment front, there is growing understanding that if the state makes it too difficult for employers to employ people, or if self-employment involves too many problems, there will simply be less employment. Likewise, if the creation of part-time or fixed-time employment opportunities is discouraged, there may be no opportunities in that particular area at all.
There is also—dare I say it?—considerable disillusionment about the role of politiciansin all this. Local government councils and Parliament itself are widely suspected of being concerned more with political gamesmanship and manipulation than with dedicating themselves to the creation of a setting in which, given the constraints and the new possibilities of changing times, the people of this country can find ways of leading happy and fulfilling lives.
For most people, the power to live their lives in the way that they want, and the freedom to exercise responsibility as they see it, comes from time to time through the ballot box; though in practice, largely through having the power to spend. They have
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recently voted, and the vote was massively anti-Socialist. It is now for the Government to recognise what it is that the people are wanting and are saying; to continue to take the people into their confidence; to take courage, to be innovative and radical; and with all speed to set about finding ways of meeting at least some of those clearly expressed desires.
6.40 p.m.
Lord Mottistone: My Lords, it is indeed a privilege to follow my noble friend Lady Carnegy of Lour in making such a heartfelt speech from the country as opposed to the great theories that we all advance, and I thoroughly endorse from my part of the country a great deal of what she has said. I too should like to congratulate my noble friend Lord Maude and endorse so much of what he said about the difficulties very small businesses have in expanding themselves in a small way because the very stiff rules of the Treasury make it so difficult for them. My thanks are particularly to my noble friend Lord Boyd-Carpenter for introducing this most important debate.
My own experience is in having been a manager in the public sector, in the private sector and in a non-profit making quango. From all that I think I have gleaned a profound truth: that is, that it is most important for us all to realise that the key to prosperity is competition in an open market, and the key to the ability of a country to look after its old, its sick and its children is for the country to be prosperous.
The great lesson, as I see it, of the past 50 years has been that the theories of Marx and his many socialist successors have been shown to be totally false. My noble friend Lord Boyd-Carpenter quoted from a book by the late Lord Morrison of Lambeth, Socialisation of Transport. If I might briefly remind your Lordships by paraphrasing what my noble friend quoted, it was that service will improve, prices will fall. industry will be more efficiently conducted. I would add also that the board of a nationalised industry and its officers must regard themselves as the high custodians of the public interest.
Sadly, in practice the very reverse of each of these high hopes has in the event occurred. It is indeed tragic that real humans have let the theorists down, not only in free countries like ours where we can all take important choices but also in dictatorships riddled with secret police. But we should not be surprised. The Bible gives ample evidence of similar human failings. What is indeed more tragic is the slowness of many people to grasp the lessons of the past 50 years. It is understandable that the sincere theorists should cling to their theories even when totally discredited. It is also understandable that trade union leaders in nationalised industries who have gained tremendous power in artificially buttressed unproductive industries should wish to cling to that power even if it is gradually destroying their industry by making it uncompetitive in the world market.
But the rest of us who desperately want a prosperous country which can take a proper share in helping to put developing countries on their feet, as well as looking after our own disadvantaged people properly, really must throw off all false ideas about any practical benefits from state or corporate ownership. The

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message is being well understood by other countries, like Germany, Japan, Singapore, et cetera. We have not much time to waste in turning over all the industries we can to private ownership. In doing so, however—and here my noble friend Lord Orr-Ewing made the point, as indeed did my noble friend the Leader of the House—we must not forget, as I said at the outset of my speech, that the key to prosperity is competition. A denationalised industry that has more than 40 per cent. of any of its markets and is able to control its own market place is more of a danger than a sleepy nationalised giant.
The noble Lord, Lord Barnett, told us that there were of course inefficiencies in public bodies and also inefficiencies in large private industries. I am not so sure about that second point in relation to the first. Perhaps I could illustrate what I think and illustrate the message that I am trying to convey to your Lordships albeit humbly, by concluding by recounting to your Lordships two really live stories which demonstrate those points. Last week a television set which I had been borrowing was recovered by its owner. We realised on Monday that we would require another television set on Wednesday because a young nephew was coming home for his half-term holiday. On Tuesday morning I rang up the private enterprise firm Radio Rentals, which, as your Lordships will know, is in competition with several other rental companies. By five o' clock that evening we had the set installed and working. I should mention that my son-in-law when told about this said "It must be unfair special treatment for Peers"; for he had had to wait a week for his set.
Let us compare this with the treatment that my same son-in-law and my daughter received from the nationalised gas board. They came back from the united States—where incidentally, prompt service is the normal practice—last April. They took possession of their house on 28th June. The men from the gas board discovered on 1st July that the gas central heating was faulty and they reported that major repairs were necessary. My daughter assumed that they would return to do this reasonably soon, and she did not take any immediate action. However, by 18th August she was a little concerned and rang the gas board. She now blames herself for not chasing sooner. The interesting feature of this story is that the gas men made her feel guilty for not keeping them up to the mark. There was no question of them giving a service. That is a subtlety but an important one, and it bears out what my noble friend Lady Carnegy was saying. The men said that they would repair the system after 18th August. They finally arrived on 21st October, saying there had been a strike. They did not ring up to say they could not come because there was a strike; they just eventually turned up. The central heating was still not working last week, five months after it was orginally discovered that a major repair was necessary, so my daughter and son-in-law had to come to dinner with us to escape the cold.
Superficially your Lordships might think that a television set is simpler than a gas heating system somehow, but do not forget that the central heating problem was a repair and not an installation job. I worked for Radio Rentals 15 years ago as the director of personnel and training. In that company we had a
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problem in getting sufficient trained engineers to instal the sets, to maintain them and to respond to calls. In those days they frequently had to instal the aerial as well as the set. That is not so much the case now. Our problem was that by long-established practice the engineers were required to do a five-year apprenticeship. This was not good enough for a company which had to balance the books to survive. That is a key point. So the technical director asked the training staff to work out a minimum training scheme for competent engineers. We adopted a basic 16-week technical course plus nine months' practical training in the field under supervision to produce people most of whom were as good as the five-year apprentices. Indeed, our prize student came to us straight off his milk float.
Your Lordships may feel that if one can do that to produce shorter training courses there may be some other factor. How about safety? We all know that gas explodes, but let us not forget that the high voltages in television sets may he just as much a killer as gas. They are safe for the public because of good set design by free enterprise designers and competent installation by engineers such as I have described.
Quite honestly, to have a difference of one week in installation and five months for repairs. whatever the background reasoning, is absolutely disgraceful. Even the employees of a pre-war municipal gasworks would have done far better—but they would not ever have seen themselves as Lord Morrison's high custodians of public interest. For heaven's sake!, let us stop fooling ourselves that Government of any sort can run any industry. We must have competition to prosper; and without prosperity our welfare state will founder.
6.51 p.m.
Viscount Chandos: My Lords, I should like to join the other noble Lords who have spoken this afternoon in thanking the noble Lord, Lord Boyd-Carpenter, for introducing this debate on a stimulating, but contentious subject. After one of my first speeches to your Lordships' House, the noble Lord suggested that my contribution exhibited a radical naivety, or perhaps a naive radicalism, which reminded him of some of the speeches made by members of the Labour Party in another place when, immediately after the Second World War, they were lodging temporarily in your Lordships' Chamber. I hope that the noble Lord will not think me impertinent if I say that the subject of the debate which he has proposed, and his speech, suggest to me naivety certainly, but perhaps radicalism also, now that the advocates of a return to laissez-faire economics have been able to claim the description "radical" for their views. It seems to me simply naive, however, and not at all radical, to say that public ownership is bad and private ownership is good.
My noble friends and allies in the Social Democratic Party and Liberal Party respectively are declared supporters of the mixed economy, and can justifiably claim to be the only political grouping to be supporters and defenders of the mixed economy, though many noble Lords who sit on the Labour Benches here are individual supporters of the mixed economy, as the noble Lord, Lord Barnett. has shown. Many others, such as the noble Lord, Lord Beswick, have made distinguished contributions to the mixed economy.

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The official policies of the Labour Party can now only be described as ambiguous, while the views of many of the most active members of constituency and local Labour parties are openly opposed to the continuation, let alone the expansion, of the mixed economy.
There are also many distinguished members of the business world on the Conservative Benches in your Lordships' House. I believe that many share a view similar to that of noble Lords on this side of the House that the mixed economy represents the best approach to increasing the wealth of this country and of all those members of our community in a complicated, competitive, and challenging world. Once more, however, the official policy of the Conservative Party, and the attitude and spirit behind it, have grown increasingly different from this view and increasingly distant from the real interests of all members of our society, whether in industry, commerce, public service, or private life.
The noble Viscount, Lord Whitelaw, described the theme of today's debate as being central to this Government's objectives—an admission that the Government have finally taken up residence in their own ideological tax haven: cloud cuckoo-land. I regret therefore that the noble Lord, Lord Boyd-Carpenter, whose career has encompassed parliamentary politics, as well as service as chairman of a major public body and as chairman and director of notable private companies, should nonetheless feel that his experience points to such a serious imbalance between the strengths of the public and private sectors. With what the noble Lord will undoubtedly think is the blind idealism and optimism of youth, I think that he is wrong.
One of the problems of speaking at this stage of the afternoon's debate and trying to summarise the position of my noble friends and allies, is the excellence of many of the speeches that have come before. Not only did I find much common ground with the views of the noble Lord, Lord Maude of Stratford-upon-Avon, but I can also say that his contribution was an outstanding part of today's debate, as would be expected from a noble Lord who was not only such a distinguished Member of another place, but who has included the town of Stratford-upon-Avon in his title.
I have to contend, furthermore, with following not only the excellent speeches of my noble allies Lord Ezra and Lady Seear, but also the first speech that I have been privileged to hear by the noble Lord, Lord Barnett. In my short time in your Lordships' House a number of the noble Lord's colleagues on the Labour Benches have suspended party rivalries and said some kind and encouraging things about my speeches. I should therefore like to call a similar, but temporary, truce and express my admiration for the speech of the noble Lord, Lord Barnett, very little of which differed from the views held by any of my noble friends and allies—which is perhaps why he is now in your Lordships' House, rather than having been selected by a Labour constituency party to return to another place.
One phrase used by the noble Lord, Lord Barnett, seemed decidedly familiar to anybody who has
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listened to the policies proposed by the SDP in the past two-and-a-half years; namely, the dangers of treating the nationalised industries as a political football. Rather than complain that the noble Lord has stolen our football, if not our clothes, I should like in my speech to concentrate on suggesting a sensible approach to determining the frontiers between the public and private sectors—not rolling them back indiscriminately like a squadron of tanks at full tilt, crushing friend and foe alike, or pushing them forward recklessly, without rhyme or reason, but creating an environment in which both public and private sectors can grow for the benefit of employees, consumers and the owners (as shareholders or taxpayers) of those businesses.
Some noble Lords have mentioned companies that are now in public ownership, or have been in public ownership and are now private sector companies, or vice versa, in every case to prove the point of view which they hold. It is inevitable that such examples are selective, just as the instances that I shall ask your Lordships to consider will also be selective. In mentioning various names I should perhaps declare that in my professional life some of my banking colleagues are, or have been, involved in a number of the transactions to which I shall refer. Needless to say, anything that I say reflects my own views and I hope those of my noble friends and allies, but not necessarily those of my professional colleagues. Equally, nothing which I say is based on anything other than publicly available information.
First, perhaps I may ask those noble Lords on the Government Benches which instance of the sale of Government shareholdings they would consider the most successful. It does of course depend on the objectives of such operations—whether they be simple fund-raising for the Government, the attempted improvement in the efficiency of the companies concerned, the satisfaction of manifesto promises, or whatever. On one set of criteria I would suggest that perhaps the sale of the holding of the National Enterprise Board in ICL, the computer company, should take first prize. Every investment manager in the City must admire the Government's timing in selling at the top of the market and no doubt reinvesting the proceeds in some constructive and profitable way. Sadly, however, the liberation from Government control of that company did not have any noticeable effect on its profitability—or not a positive one, since it was effectively bankrupt not long after. It has of course now staged an encouraging recovery in private ownership, with collaboration agreements throughout the world, but only after the Government had guaranteed a considerable portion of its debts for a time to ensure its continued survival.
The Government cannot, of course, allow major companies in the private sector to go bankrupt any more easily than those in the public sector, here or in any other industrialised country, as demonstrated by the US Government's support of Chrysler a few years ago. So it is wilful misrepresentation of reality for the noble Lord, Lord Boyd-Carpenter, to claim that employees of nationalised industries are really less dependent on profitability for their continued long term employment than those in a major private sector company. The more, moreover, that the Chief

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Financial Secretary to the Treasury says that nationalised industries do not have to succeed to survive, the more he is exacerbating whatever problems there are.
Taking some further examples of companies where the Government have sold some of their shareholding, I believe that both British Aerospace and Cable and Wireless have benefited from the change in their corporate status and the other consequential changes. As I have said to your Lordships on previous occasions, the success of British Aerospace now is undoubtedly the result of the merger of its constituent parts at the time of its nationalisation under the distinguished chairmanship of the noble Lord, Lord Beswick.
Equally, even if the efficiency of Cable and Wireless might have improved in the last two years, who can deny that the foundations of its outstanding business were laid in its 30 years of public ownership, as, of course, can be said for other high technology companies such as International Aeradio and Amersham International. During the time such companies prospered in public ownership it would be invidious to single out private sector companies which declined. whether or not terminally.
I suggest to your Lordships that while these examples are selective, they do demonstrate, unlike those used by other noble Lords, that there are two sides of the argument. Businesses are dynamic, and at different times they need varying degrees of support, intervention, finance and autonomy. Furthermore, even in those countries such as Japan and Germany, where their economies have grown most significantly in the last three decades, the level of Government intervention, if not necessarily of Government ownership, has been very substantial.
I believe, therefore, that a rational policy towards the frontiers between the public and private sectors should be based not on simple ideology but on the intelligent balancing of a number of different factors. First, there should be stability, unless there are good reasons for changing the ownership of a company. The noble Viscount, Lord Whitelaw, emphasised the importance of competition and the prevention of monopoly. The conversion of a public monopoly into effectively a private one, as in the case of British Telecom, is unacceptable, and the potential increase in efficiency from such a transaction does not seem to be great. Second, however, within the general principle of stability there must be a readiness to make changes where benefits can be identified, and those changes can cover the acquisition of a shareholding in a company, whether whole or partial, as well as the disposal. But in every case not only the management but all the employees of the company must be carried along and convinced of the benefit by the Government.
I would ask the Government to consider the case of Sealink, where I believe the best solution to the company would be one involving the participation of the employees in the same way as in the case of the National Freight Corporation, and unlike the case of British Transport Hotels, where the Government rejected an offer by the employees for a majority of the hotels in favour of one where the group was split up.
My noble ally Lady Seear has represented our views on the second part of the debate, on tax, very
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effectively, and I will not add much to that. I should merely like to pick up a comment of the noble Lord, Lord Boyd-Carpenter, who felt that those people who were taxed at a rate of 75 per cent. were a minority cause who deserved support. I am sure the council of Amnesty International will drop further business to consider such a proposal! In conclusion, my Lords, I would suggest to the Government that there are many things that have much greater urgency to our economy, and to which they should give prior consideration, rather than the subjects proposed by the noble Lord, Lord Boyd-Carpenter.
7.5 p.m.
Lord Bruce of Donington: My Lords, the House has already expressed its gratitude to the noble Lord, Lord Boyd-Carpenter, for having introduced this subject this afternoon. The House has also had the opportunity of hearing a maiden speech from the noble Lord, Lord Maude, to whom I should like to offer my congratulations as one of the former inhabitants of another place when it was in this place but who, owing to the harsh arbitrament of arithmetic, vacated his seat at precisely the same time as the noble Lord arrived. I very much enjoyed his speech, and I sincerely hope that he will take a further opportunity of enlarging further on some of those matters to which he referred this afternoon relative to small businesses, particularly one-man businesses. I rather thought that the application of all the items in his long list of restrictions as applicable to one-man businesses only was possibly slightly exaggerated, but, nevertheless, the noble Lord raised a matter of very great importance and we on this side of the House sincerely hope that he will return to it.
When I read the Motion on the Order Paper in the name of the noble Lord. Lord Boyd-Carpenter, I thought he was going to discuss with us the need to liberate "resources" required for the creation of wealth. There was an inference behind that; but he meticulously kept his resources to cash, to ordinary wealth resources, rather than human. I myself confess to some wonderment, because, of course, capital has been liberated for a very long time. I remember well that in 1979, when the exchange control regulations were lifted, capital in this country voted with its feet on its confidence in the Conservative Government by departing from this country in very large quantities indeed. As noble Lords, particularly those in the banking community, know quite well—and I am looking at the noble Lord, Lord Boardman, and the noble Viscount, Lord Chandos—capital can be transferred from one side of the world to another in a matter of minutes by telex and by other means, and indeed has been.
The idea that capital needs liberating, I must say, is rather a novel one. Capital exists in very considerable quantities, some of it in bank deposit form and in various other forms—and, indeed, is held by institutions on a very wide scale—and I was interested in the way the noble Lord was going to deploy his argument as to how it could be liberated. The inference was, I thought, that by pursuing a programme of privatisation, wealth was somehow going to be liberated and production was going to fructify. Of course. the reverse is true. Any liquid resources that

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are spent merely in acquiring shares in an existing company or acquiring control of it are a purely passive investment. In fact, the more that funds are put into passive investment, merely into acquiring ownership of nationalised, or indeed other, industries, the less money there is available to devote to constructive and valuable investment projects. I should in that connection like to express my complete agreement, or perhaps I had better say almost complete agreement, with the arguments so ably advanced by the noble Lord, Lord Ezra.
It is the whole question of investment in productive industry, investment in infrastructure, that lies at the core of the country's future prosperity. When considering important matters of this kind it is really no good to embark upon the familiar diatribe that we have heard many times before in which all the alleged evils of nationalised industries are paraded before the House. This serves no useful purpose when we are addressing ourselves to the key problem which was proposed by the noble Lord, Lord Ezra. however amusing it may have been to contemplate the noble Lord, Lord Harris of High Cross, putting out his own fires, having rockets on his roof to defend himself, paving his own roads round his house and doing all the other things that are provided by local authorities or by the Government of the day. This is the question.
I am glad that the noble Viscount, Lord Chandos, raised one or two questions about the way in which the denationalised companies had behaved since they had become privatised. This illustrates the complete hypocrisy of the suggestion that somehow, by investing money in acquiring nationalised industries, you liberate funds. 1 have made it a point to study the accounts of British Aerospace which, as your Lordships recall, was privatised in 1980 under the British Aerospace Bill. I observed from its latest report, dated March 1983, that at the present time it has unused medium-term hank facilities of £300 million in addition to unused short-term facilities of over £200 million and further liquid assets of another £250 million. In short, British Aerospace Limited has done very well indeed largely, as I think is widely acknowledged, due to the efforts that were made by the old company in investment when it was under the control of my noble friend Lord Beswick. This is not, I think, in dispute.
I was therefore surprised to find in the course of Sir Austin Pearce's speech that the company was looking for Government aid for the new air bus. In fact, in The Times last week I observed that some £420 million was being applied for. This is surely a little remarkable. At the time of the privatisation, the noble Lord, Lord Trefgarne, speaking in this place and moving the Second Reading of the Bill, said:
"I wish to emphasise that our intention is to create a free-standing company, independent of Government and, by the same token, divorced from automatic Government subsidy. This is an essential departure from the usual practice adopted for a nationalised industry".
The noble Lord also said:
"The successor company will be free to raise its finance on the commercial markets of the world: it will have no special claim on the public purse".—[Official Report, 3/3/80; col. 17.]
This must be a triumph for privatisation. Here we have a company that was privatised and which is now
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apparently looking, in spite of it being an independent private concern, to the Government to assist it. I have no objection in principle to that for entirely other reasons. I do not take the narrow view that it is not right for the state in certain circumstances to aid private companies. Indeed, as the noble Lord, Lord Boardman, will probably recall, considerable efforts were made by a Conservative Government to aid Rolls-Royce, and Rolls-Royce was ultimately nationalised by them, as again the noble Lord will recall.
It seems to me remarkable that, having been privatised, British Aerospace is behaving in exactly the same way as before. Is it to be thought that this private company could not obtain its funds from the normal market in the City of London or elsewhere? Did it try to do so? If so, why was it unable to obtain funds from the City which, according to the noble Lord, Lord Boardman, is the fount from which all benefits flow and sustain? Its accounts show a good record. Its prospects are good. Why, therefore, should it happen to do that?
My guess is that it tried. My guess is that, in accordance with the original intention of the Government, it did try to raise the £420 million but the City, financed with the lush prospect of being able to invest its money, £4,000 million of it, in British Telecom for doing nothing, with an established profitable concern in which its investment was gilt-edged, or would be near gilt-edged, preferred to hold its money for the further lush pickings that will arise on the privatisation of other industries. That is my guess—
Lord Beswick: My Lords, I think that I should put one point straight. Most of the liquidity to which the noble Lord refers consists of customers' deposits which can never be put into anew project. And the new project for which Government support is being asked will probably take seven to 10 years before it is profitable. I hope that the wrong impression is not taken from what the noble Lord says.
Lord Bruce of Donington: My Lords, no. I take that immediately from the noble Lord. I have no objection to that at all. I am certainly not suggesting that the funds that I detailed coming out of the chairman's speech should have been devoted to investment purposes. Certainly not. There are several ways of raising money. You can have a rights issue. You can have a new issue altogether. There are several ways of raising money in the City for a project of this kind.
It seemed a little odd to me that the suggestion should be made that, somehow, privatisation was the answer to all our problems. Clearly, it is not. If, in the event, Her Majesty's Government decide to advance, on whatever terms they think fit, the £420 million to British Aerospace, it will, on their own definition of the public sector borrowing requirement, come out of that, and therefore it will have a very bad effect on the other aspects of Government expenditure.
I come to the tax disincentives. I thought that the case for a radical tax change was very adequately dealt with by my noble friend Lord Barnett and, indeed, by other speakers. It is a very complex matter and, as an accountant, I know the complexities of it. I do hope that at some time an effort will be made to have a more rational tax structure. However, it is one thing to say

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it, but quite another thing to embark on the very complex way of carrying it into effect if we are to be—as we always wish to be in the United Kingdom—as fair to the individual taxpayer as we can. It is the desire to attain equity within our tax system that gives rise—as I am sure my noble friend Lord Barnett will agree—to many of its legal abstrusities and complexities. But it would be a mistake to assume that British industry suffers unduly from its tax burden. Nobody likes to pay taxes and certainly nobody would wish to impose on British industry tax burdens that are unfair or uncompetitive in relation to our colleagues.
Some study may have been made of the recent paper put out by the Institute of Fiscal Studies which dealt with this question and endeavoured to arrive at a comparison of various countries as regards the percentage of their total tax revenues devoted to the taxation of companies either on capital or on the payroll. The fact of the matter is that we were well below any other country in the Western world in this respect. In France such taxes amount to 50.5 per cent.; in Italy 44.5 per cent.; in Japan 41 per cent.; in the United States 36 per cent.; in West Germany 32 per cent.; and in the United Kingdom 26 per cent. So I do not think it can be said that, in comparison with other countries competitively, we are over-taxed in that particular sense.
The worst aspect of the whole question of resources is that we tend to evaluate them in cash, bank balance or capital terms. One of the resources that we waste the most is human resources. I would point out to those who keep on parroting the cry of reducing Government expenditure, that at the moment our extra unemployed are costing us £8,500 million a year. One of the finest ways to reduce Government expenditure would be to reduce the number of unemployed and to pursue policies that resulted in that. If that were done very much on the lines that have been suggested by my noble friend Lord Barnett, and certainly by the noble Lord, Lord Ezra, if some constructive effort were made to evaluate and to give priority to the vital capital investment of this country regardless of whether it should be made by the private sector or by the public sector—but preferably it would be done by a combination of them both—it would ensure, first, that our expenditure on unemployment would be far less and, secondly, it would make for a far better social climate in our country, a far better relationship within industry and ultimately a far greater degree of creativity and production in all the companies in this country.
7.25 p.m.
The Earl of Gowrie: My Lords, I should like to begin conventionally, but sincerely in this case, with two congratulations. I should like to congratulate my noble friend Lord Boyd-Carpenter on introducing the debate and on the way in which he did so, and perhaps most of all, on keeping the Government's eye on the ball which the electorate gave them. When faced with the day-to-day problems of any large, mixed economy, it is very easy to get your eye off the ball which your electorate has handed to you. My noble friend reminded us of that, and his reminder was echoed
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most eloquently later in the debate by my noble friend Lady Carnegy of Lour.
I also want to congratulate most warmly my noble friend Lord Maude of Stratford-upon-Avon. As the House may be aware, in the first term of the Conservative Government my noble friend was Paymaster General and during that time he used to send round small forms—short pieces of paper—with reminders of policy and reminders about how policy should be translated into action. They were models of their kind. I have them filed away in my office, and occasionally I pit them against the briefs that I am given. I always find as a result of doing so that I remain a healthier, if somewhat drier, Minister than I might otherwise be.
I also thought that in his own, single and, very largely, unpaid person my noble friend answered the request of the noble Baroness, Lady Seear, for a committee to look into the effects of the black economy. He did so with great concision and eloquence, and I hope that the noble Baroness will find that what he said repays study, as I certainly shall.
The central theme of the debate has been the creation of wealth for the country by removing disincentives and liberating the energies and enthusiasms both of individuals and companies. It is the business of wealth creation upon which we have to keep our eye—whether we do it within the public sector, or within the private sector, or whether we shift the balance a little between the two.
Wealth is created by the efforts, skills and inventiveness of individuals. Governments do not create enterprise; they can, however, get in the way of its creation. In our philosophy the responsibility of Government is to provide the overall conditions under which individuals can give of their best. We have a range of policies to strengthen these conditions and encourage competition and enterprise. They range fairly widely, and they involve trying to wind down controls. They also include, for instance, an improved legislative framework for trade unions (and today we are sharply aware of the justified need for that legislation); the direct encouragement of small businesses; the privatisation, or "freeing", of industries, which is the more attractive term which we have discussed today; trying to achieve lower tax burdens on businesses and on individuals; and a lesser, rather than a greater, share in the mix of public spending.
Lower inflation of course provides the necessary conditions for wealth creation by giving greater certainty about the future for individuals and businesses, by enabling them to plan ahead, and by recognising that inflation is in itself a very large form of taxation. It is only under such conditions that sustainable growth can emerge. In the first term of the Government we got control over inflation and, almost as important, we succeeded in reducing inflationary expectations.
In the next term of the Government we must establish control over public expenditure, and we must reduce taxation, if we can do so, without additional borrowing and, therefore, without future inflation. I believe that we can and will be able to succeed in this; and the substance for this belief can I think be found in a phrase used by my noble friend the Leader of the

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House when he opened the debate from our side. He said:
"We are now growing faster than any other country in the European Community."
My noble friend also referred to the three main themes to which the debate has constantly returned: to taxation, to control of public spending and to privatisation. I should like quickly to treat with these in turn, dealing if I can on the way with some of the points raised.
The overall burden of taxation has increased, which is a great disappointment to the Government but not, I would suggest, wholly surprising in a great recession and in a time when the priority has been given to reducing inflation and therefore to reducing borrowing. But against that background it is worth mentioning in a little more detail some of the steps which the Government have succeeded in taking to encourage enterprise and initiative through the tax system as an earnest of our determination to go on with fiscal improvements of this kind and to get the overall burden down in the life of this Parliament.
For instance, in the field of capital taxes the annual exempt amount for capital gains tax has been increased three-fold in real terms, and we have taken the substantial step of indexing future gains. The threshold for capital transfer tax has been more than doubled with, in addition, indexation of the threshold and rate bands and considerable improvements in the reliefs for business transfers. On company taxes, a much more generous system of stock relief was introduced in 1981, and the small companies; rate of corporation tax has been reduced from 42 per cent. to 38 per cent., with substantial increases in the profits limits for this reduced rate to enable more companies to benefit. Again, I hope that my noble friend Lord Maude will take account of that as he was concerned with this issue.
There have also been improvements in the reliefs on interest for borrowng to invest in close companies, partnerships, co-operatives and, recently, employee buy-outs. These will help to create that vital sense of identity between an employee and the success of his firm; the sense of "we" as against the sense of "they" on which all good enterprise depends. There have also been a number of innovatory tax reliefs to encourage the provision of finance for unquoted companies, and these were mentioned in the debate: the venture capital scheme introduced in 1980 and extended the next year; the business start-up scheme introduced in 1981 and extended last year and this year its transformation into the business expansion scheme. Measures such as these have done much to eliminate the "equity gap" which was so much the concern of the late 1970s.
I believe that these changes are consistent with the aims of my noble friend's Motion. He may say, and others may echo him, that the Government have not done enough. I certainly would not dissent from that. We have not done enough and we intend to do more. We were re-elected on a manifesto which had as its objectives further improvements in allowances, lower rates of income tax and the encouragement of wider ownership by lowering taxes on capital and savings. It
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also remains our objective further to reduce these disincentives. Mention of the word "disincentives" came in the very interesting and clear speech, as we would expect of the noble Lord, Lord Barnett. I was going to play the old trick of selectively quoting at him some of his remarks from his book, Inside the Treasury. I shall desist from doing so for two reasons. One is the lateness of the hour and the fact that I must get on with my speech, and the other is that I found a perfectly marvellous passage in it which I intend to use in Manchester tomorrow!
The poverty and unemployment traps mentioned by the noble Lord, indeed, present this country and the Government with very real problems, even though they affect a relatively small proportion of the working population. As the noble Lord emphasised, there are no quick, easy or cheap solutions and many of the solutions proposed—including, I fear, some proposed by the noble Baroness—not only involve radical changes in the tax and benefit system, but would be liable to end in an increase in taxation, and therefore in a worsening of the very problem that was intended to be cured.
The traps have of course arisen because of the development of an overlap between tax and social security benefits, as tax has been levied at lower and lower levels of income in order to finance higher and higher levels of public spending, including those same benefits. The realistic response surely is to try and reverse this trend: to increase tax thresholds by releasing resources through controlling public spending, and by allocating the resources so released—provided also on top of that release hopefully by some economic growth—to tax cuts rather than spending increases. That is certainly the Government's aim in this regard.
On this issue of public spending, I wish to emphasise the key point that growth requires low borrowing to keep down inflation and interest rates and low taxation to provide the necessary incentives. May I say to the noble Lord, Lord Bruce, that, of course, we do not think that incentives by themselves or low taxes by themselves, are all-in-all for improving the output of an economy, but it was his noble friend Lord Barnett—then Mr. Joel Barnett as Chief Secretary—who saw the point of the disincentives in corporation tax and who, indeed, made it easier for companies not to pay it.
The earnest of the Government's achievement here in terms of control of public spending lies in the outcome of the annual review this year, which has been to hold the planning total for 1984–85 at the level announced in previous plans. That repeats the Government's achievement last year. This is the first time that this has been done in two consecutive years. We mean to keep up this record. I think that this more than anything should be an indicator to some of those like the noble Lord, Lord Harris of High Cross, who believe that in some way the Government may be losing their drift, losing their way, or departing from the concepts on which they were elected. I must confess to the noble Lord, Lord Harris of High Cross, and to the House that I was the guilty man who confessed in an earlier debate that Ministers in fact rather like spending other people's money. But my

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confession was a wry, perhaps even an ironic, recognition of the difficulties of controlling public expenditure, not of any lack of determination to do so.
There has been much mention made of the nationalised industries; and in his opening remarks my noble friend dealt with the privatisation issue. I shall not make too much of it now. I noticed that the noble Lord, Lord Ezra, said that we must look at the nationalised industries rather more objectively. When arts bodies call on me as Arts Minister to look at them rather more objectively, it is inevitably a prelude for requests for more public money—and they are often richly deserved requests. So the noble Lord's sentence made my heart sink. Then—lo! and behold!—only a few moments later the noble Lord, Lord Beswick pointed out that there was too much under-investment in nationalised industries and that more money would have to be provided. I simply want to say that we are not at all hostile, as the debate has suggested in some quarters, to the concept of capital formation in the public sector. During the latest public expenditure review, in spite of the overall successful outcome of retaining last year's base levels, we have been very much aware of the need to find room for worthwhile capital spending projects.
I ask the noble Lord, Lord Bruce of Donington, who criticised us in this respect, to look objectively at this part of my speech at any rate. There will be some increases in capital programmes. There is the issue of the overdue prison buildings; and the conspicuous reduction in the housing programme is not a capital reduction but mainly an increase in council house sales—£300 million out of £500 million.
The revised total provision for housing capital next year is still no lower in cash terms than for this year. Details of public sector capital spending have of course still to be worked out for the three years ahead, and certainly capital projects must he carefully evaluated within the overall public expenditure policy; but they are only a small part of total fixed investment in the economy which has been rising steadily since the trough of the recession in 1981, and is forecast to be 13 per cent. higher than that level in real terms next year.
The noble Lord also mentioned injections of private capital for public capital projects. Again, he and I have trodden this ground before, and trodden the ground of the problems of mixing guaranteed capital with capital that is subject to real risk. I can say to the noble Lord that in 1982–83 total public sector capital spending was nearly £17 billion, excluding special sales of assets and public sector housing sales, and even more important is that Government expenditure or borrowing—and already, as I have shown, it is at a high rate rather than a low rate—should not squeeze out profitable private sector investment. It is encouraging to see that this has grown, and it is expected by the CBI to grow by 5 per cent. in the coming year. One way by which profitable private sector investment can grow is through more privatisation, and again my noble friend dealt with some of our ambitions in that direction.
There has been mention of efficiency. Privatising can lead to much more efficiency. Large savings have already been achieved by contracting out, as the House will be aware, and we want to continue the
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impetus there. But I want to make it clear that contracting out will not be undertaken regardless of cost. My right honourable friend the Prime Minister laid great emphasis on this point when she said that it will be done—I am quoting her—
"only when commensurate with sound management and good value for money for the taxpayer".
I cannot see that Members of your Lordships' House, wherever they sit, could really object to those sentiments.
I have a special interest as Civil Service Minister in efficiency within our own purlieus, and with putting our own house in order. We are aiming to reduce the scale of government, and thus the burden of financing it. In 1980 we announced our aim of reducing the size of the Civil Service by 14 per cent., from 732,000 to around 630.000, by 1st April 1984. This target should be reached, and that is a considerable achievement in itself. Our aim over the next four years will be to maintain a steady pressure on manpower numbers in order to take maximum advantage of all opportunities for the further improvement of efficiency. Your Lordships will notice that this is taking place outside the context of the wider debate as to what services government should, or should not, provide.
In conclusion, there is one point which, with my particular responsibilities. I would not wish to overlook in the wording of this Motion. I notice that it speaks of liberating
"from the control of Government…more of the resources required for the creation of wealth".
I believe that the word "more" is important here. The Motion in the name of my noble friend does not say "all", nor does it say even "most". None of us would deny the essential role of our public services: the defence of the nation; the education and health services; an efficient transport system: and (dare I say it?) the high arts activities, which have always been subsidised. whether by states or by. monarchs. All these in their different ways contribute to the quality of our national life, and in many cases to our efficiency and our economic well-being.
There are many functions which can well be provided by a well-run public service, and some which can be provided only in that way. I hope that that answers the questions put to me by the noble Baroness, and by the noble Viscount, Lord Chandos, as to whether we believe in the mixed economy. Of course, as should have been quite clear, if not from my remarks then from the remarks of my noble friends Lord Orr-Ewing and Lord Mottistone, we believe in the mixed economy, but we also believe in attending to the proportion of the mix.
Our concern is to strike the right balance: to keep to the public sector those things which can best or uniquely be provided there—and in these cases to ensure value for money—and for the rest to rely to the greatest extent possible on the skills and freedom of the private sector. For many years that balance has been weighted too heavily towards public provision and against individual endeavour. We aim to redress that imbalance, not only in taxation but in public spending, industrial enterprise and individual incentive. I believe that the Government's objectives accord fully with the spirit of my noble friend's Motion, and I therefore congratulate him on the way in which he moved it.
7.46 p.m.
Lord Boyd-Carpenter: My Lords, although the hour is not by the recent standards of this House a late one, I understand that the custom and practice of the House suggests that what I say at this stage should be largely formal, although I may well yield to the temptation to reply to one or two arguments which were specifically directed at me during the course of the debate. My first and pleasant duty is to thank all of your Lordships who have taken part in this debate, and also, if I may do so without impertinence, to remark on the excellent precedent which has been established, inasmuch as I understand that all of your Lordships who took part in the debate are here present at its termination. Without making heavy weather of this, the good practice of the House that this should be so has, in recent months, not always been completely observed by all of your Lordships. I hope that the good example which your Lordships present tonight have set will have its repercussions in future.
I should like also to thank particularly the noble Lord, Lord Harris of High Cross, for a reason of which I think your Lordships are not aware. He had set down for early debate a Motion not in precisely the same terms as the one before your Lordships at the moment, but broadly similar in effect. In accordance with the proper rules of this House one cannot gazump, or near gazump, a fellow Peer's Motion, and I had therefore to approach the noble Lord, Lord Harris, to ask his permission. I am glad to say that he not only most generously gave it but contributed greatly to the debate by the speech he made on it. I should like to express my gratitude, and that of a good many of my colleagues, to the noble Lord for that.
So much has been so rightly said about my noble friend Lord Maude of Stratford-upon-Avon that I shall only say that I ventured in advance to forecast that his speech would be one which would appeal greatly to your Lordships. I am glad, as one whose forecasts do not always come off completely, that on this occasion I am not subject to any criticism whatever on that point. We all, I know, share the hope that my noble friend with his great experience and considerable powers of speech, will adorn our debates in the future.
I should also like, if it is not an impertinence, to congratulate the Leader of the House on what I believe is for him a somewhat novel occasion. In his long and immensely distinguished career he has not, on the whole, specialised in speeches on financial and economic matters. Indeed, the only link that I could really find between his participation today and his previous distinguished employment was the old remark, "The only way to prevent crime paying is to nationalise it". My noble friend the Leader of the House—it is an impertinence to say it, but nonetheless I say it—gave us a most effective speech. We are greatly indebted to him, as to my noble friend Lord Gowrie, who has just wound up.
This has been, not an unusual debate but what to people outside would be an unexpected debate in the normal run, because it has been noble Lords on this side of the House who have been advocating change, and conservatism has been manifested very strongly in the speeches from the other side of the House. This is
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reflecting what is becoming evident in the country as a whole, that the Government, under their present Prime Minister, are—if I may adopt the phrase of the noble Viscount, Lord Chandos—the radical ones faced with the massive, almost reactionary conservatism of the Labour party. This only shows that your Lordships' House is, as always, fully up to the moment in the movements of public opinion.
With your Lordships' permission, I should like briefly to refer to two or three specific points that were put. I hate, as he said he hated quarrelling with me, to quarrel with the noble Lord, Lord Barnett, because we belong to the same union, or indeed to two of the same unions. We have both been through similar and, in both cases, similarly trying experiences both as Chief Secretary and in the Public Accounts Committee. When he was good enough to allow me to interrupt him, he missed the whole point about British Airways. It is beyond dispute that there is a very close coincidence in date between the great recovery in British Airways and the announcement that it was to be privatised.
I know there are other factors—one formidable factor being my noble friend Lord King of Wartnaby—but I believe the noble Lord, Lord Barnett, overlooked the fact that the knowledge that British Airways was going into the private sector greatly helped my noble friend in the changes he was making because it became apparent to all in British Airways that they would be subjected to the disciplines of the private sector. Therefore, steps in respect of overmanning, for example, which would have encountered appalling resistance at an earlier date, went through with considerable ease. It is difficult in an interruption to put over a point with complete clarity and fullness, but I hope that the noble Lord, Lord Barnett, will reflect on this and not, as he seemed to he doing in his speech, brush that argument aside.
I have only one other point in respect of the noble Lord, Lord Barnett, whose speech I know he knows I very much enjoyed, which is that he seemed to ignore the stimulus which competition, the disciplines of the market and all the atmosphere of private industry have upon denationalised industry. He could not quite brush aside the fact that those industries which have been denationalised in the recent past have shown so much better results.
I should also comment for one reason on one observation of the noble Viscount, Lord Chandos. I do so only because he used, no doubt inadvertently, rather strong language in describing an argument of mine. He was good enough to observe that it was wilful misrepresentation to suggest that there was any difference between nationalised and privately-owned industries in the need to be prosperous if they were to survive. I do not wish to seem over-sensitive; indeed, none of your Lordships would believe I was after a number of years in English public life, because no one who was would have survived that. "Wilful misrepresentation" is a strong term not often used in this House; indeed it carries a connotation of a criminal offence. But I should like to deal with the substance, as he put it this way, of the noble Viscount's observation.
I maintain and reaffirm the view that not only is there a great difference between a nationalised

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industry and a privately-owned one in this respect, but it is a difference of major importance. It is perfectly true, as the noble Viscount properly said, that particularly large industries may have to be or think they have to be rescued by the Government of the day if they get into bad trouble. But in practical terms there is all the difference in the world between an industry which knows that it is owned by the Government, which the Government cannot allow to go bankrupt, which the Government have to sustain, however heavy its losses, and a privately-owned industry which, if it gets into serious trouble, can ask the Government for help and may even hope the Government will help, but which, even at that late stage in the day, has no certainty that that help will be forthcoming.
One may be thinking, for example, of the effect of trade union action. The knowledge in the unions in the public sector is that, however rapacious their wage demands may be, however much damage they may do by industrial action to their industry, they are not destroying their industry or their jobs. In no company in the private sector is there any such certainty. This is a significant factor—I beg the noble Viscount to consider this—by way of difference between the two.
I do not intend to take the discussion of points further, though I made some notes in the course of the debate. It therefore remains for me, once again, to thank your Lordships for the personal courtesy which so many of your Lordships showed to me and which I deeply appreciate.
The substance of the Motion is for Papers. I would remind your Lordships of one of the horror stories of this House. The late Lord Woolton was replying to a debate in this House and, among his many qualities, that great man did not have much concern for the niceties of procedure. Therefore, to the horror of his officials, he accepted a Motion for Papers. This created a practical problem which was resolved by our ever adroit and humorous officials arranging for delivery at the private house of the noble Lord who had moved the Motion for Papers, a vanload of out-of-date papers from the Printed Public Paper Office. I am anxious to avoid that fate. I hope your Lordships will protect me from it by accepting my application to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Oil Drilling: Ditchling Beacon
7.58 p.m.
Lord Teviot rose Lord Teviot rose to ask Her Majesty's Government what is their policy on drilling for oil in areas of outstanding natural beauty, in particular Ditchling Beacon.
The noble Lord said: My Lords, I beg leave to ask the question standing in my name on the Order Paper. I am grateful to your Lordships, first to those who have been kind enough to stay for the debate, and, in particular, to those who will take part. Also I should like to say how delighted I am that the noble Baroness, Lady Nicol, will be making her first contribution from the Front Bench and I am privileged to congratulate her on doing so.
As one has no right of reply on an Unstarred Question. I will say here and now that I am grateful to
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all concerned and to those bodies which have sent me papers to do with this Question, and, in particular, to the honourable Member for Lewes, Mr. Rathbone, who has also sent me various papers and has given this debate his blessing.
I start by reminding your Lordships that Parliament has, in its wisdom. determined that certain major tracts of land are so—this sounds rather whimsical—intrinsically beautiful and representative of all that is best in the British landscape that they should be afforded national recognition and preserved for the benefit of all the people of this country, both present and future generations. These are the so-called areas of outstanding natural beauty. They represent part of the natural resources and heritage of this country, just as much. for example, as does oil—useful though that is.
There are two vital differences, however. First, the areas of outstanding natural beauty are, by definition, visible. If it is our intention that as a nation we should continue to exploit them, as have past generations. for their ecological, aesthetic. recreational, and inspirational values, we can do so only by ensuring that they are left as they are and by preserving their visual impact. I do not need to remind your Lordships that they also have an economic value in the tourism that they promote.
Secondly, whatever human ingenuity might achieve in overcoming present or future limitations in other natural resources, such as oil, there is nothing whatever that human endeavour can achieve in the way of replacng lost areas of outstanding natural beauty. There is a fixed and finite amount of oil. We cannot drill for more elsewhere. nor develop a substitute. It is out of our hands. If an area of outstanding natural beauty is despoiled. then it is lost forever, and the national resource is diminished. To put this in perspective, my Lords, I would point out that less than 10 per cent. of the English and Welsh landscape is considered worthy of being so designated.
I have dwelt at some length upon the significance and importance of the decision taken by both Houses of Parliament, or through Acts of Parliament, to establish areas of outstanding natural beauty because it is fundamental to the Unstarred Question that I am putting to my noble friend tonight that, having done so, Parliament has not provided the means whereby these areas can be adequately protected for the benefit of the nation as a whole, in particular when it comes to oil exploration and production.
I gather that in the papers that I sought from the mineral and planning committee there are no guidelines for these areas. What then are the means by which these areas are currently protected? The national policy statement states that:
"…new major industrial and commercial developments (including extractive industries) should continue to be excluded from AONBs, except where it can be proven that it is in the national interest and no alternative sites are available".
It is my contention that that policy statement and the manner in which it is implemented are fundamentally flawed. First, there is the implication that the ability to claim the national interest lies, per se, with the potential developer, and that if that claim can be substantiated, however tenuously, then the industrial development has priority. But surely that is wrong.
Areas of outstanding natural beauty are themselves the manifest expression of the national interest in selected parts of the British landscape. They were established first and must surely have the primary claim to the national interest. The developer's claim is secondary. In reality, therefore, such situations represent a direct conflict between two rival national interests, in which natural justice suggests that the status quo should prevail, unless the developer can prove an overwhelming priority.
The second flaw is that Parliament decided that determination of what development would be permitted should rest in the normal local government planning procedures. Is it right that local government should decide national issues? Excellent as they are, their role is to deal with local matters. They have great responsibility, and I do not wish to denigrate them at all. But to me it sounds a little strange. Your Lordships will forgive me if I give a somewhat extreme analogy. It is as though Parliament declared Greenham Common—a place that I was wheeled around in my pram—an area of outstanding defence interest and then left it to Newbury District Council to decide whether to permit nuclear missiles to be stationed there.
I believe that local councils are being placed in an impossible situation. When I say "local councils", I would point out that it is the county councils who have the final authority. I must get it absolutely right because I know that there are present many noble Lords with great experience in that field. The local councils are being asked to do something for which their role and constitution make them manifestly unsuited. Nowhere is this more glaringly evident than when they are confronted with applications for on shore oil development.
At this stage, I should like to make a number of disclaimers. Nothing that I have said, or am yet to say, is intended to impugn the integrity or ability of local government councillors or officers. They do their best in very difficult circumstances. Equally so, on the whole the oil companies deservedly have a good reputation for sensitivity to their surroundings. In particular, Carless Exploration Limited, the Ditchling Beacon applicant, has been frank, very open and understanding in its dealings with local environmental organisations.
The issue is as much one of principle as it is one that relates to the application on the South Downs. Neither is this a party policical issue; for Governments of all colours have neglected their responsibility towards AONBs. It is abundantly clear that where applications for on-shore oil development are concerned, local councils are running to catch up with the flood. The Department of Energy has already issued exploration licences, but it is only now, following receipt of the first planning applications, that many county councils (including East Sussex) are producing oil and gas development policies.
Since these will then need to be incorporated into the county structure plan following public consultation, it is evident that much of this process will be conducted under considerable time duress. The Ditchling Beacon application is a good example. The parish council in whose boundaries this site falls had to
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give its view without the benefit of even a draft county policy to guide it. May I say that this was voted for, but only by the casting vote of the chairman. The local district council had to postpone its original meeting to enable it to give its view within the context of only a draft policy. Also, I gather that the district council gave its blessing largely because the parish council had given its blessing.
I must explain this site at Ditchling Beacon. It is in the southernmost extremity of the parish, and about one-and-a-half miles from the centre of population. It would not need Mr. Faldo to hit such a golf ball; but one could hit a golf ball into about four local parishes; namely, Westmeston in the south-east, Stanmer in the south-west, Patcham in the west, and Keymer. So the views of the parish council, if that is the ultimate authority, rather explains what I am talking about.
Now the county council, which has the power to decide—the overall power lying in the planning authority—is having to ask Carless Exploration to agree to an extension of the time limit for its right of reply in order to enable it to complete the public consultation process and to finalise its policy document. I ask your Lordships, frankly, whether this is the right context in which policies so vital to the future of our AONBs should be formulated. And what about the content of these policies? In the absence of any clear Government guidelines or direction, it is clear that councils are having to learn as they go along, drawing as best they might. upon the experiences and decisions of other councils before them. But who is to say that they were right, and that originally bad decisions are not being repeated 10 times over?
There is evidence that some county councils are already having second thoughts, but in many instances it is too late. For example, I would draw your Lordships' attention to the case of West Sussex County Council, which granted Conoco permission to explore for oil at Graffham. I am most grateful to the body at Graffham, on the South Downs, who wrote to me about this. This decision subsequently received severe criticism. Your Lordships may have read the correspondence in The Times.
The council is even now reviewing its policy towards oil exploration in AONBs. But what good is that for Graffham? A priceless part of the South Downs heritage has been bulldozed out of recognition. Is this haphazard, piecemeal development of county oil policies really the best method of ensuring protection of the nation's beauty spots? Is it really what Parliament intended when it established AONBs? Is there not a case for some central control and consistency of approach! Before leaving Graffham, I am very sorry to say that my noble friend Lord Cork and Orrery is unable to speak tonight because of another engagement. He lives in the next-door parish of Heyshot and would have been able to give local views and make other important points.
An examination of county structure plans quickly reveals the major difficulties councils encounter when shaping their oil policies. There are five. First, all the councils are united in their desire to protect the small, easily-definable and highly specific items of our national heritage within their county boundaries. Hence, in all the structure plans there is a

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"presumption against" oil exploration in, for example, sites of special scientific interest, nature reserves and so on. But no such special protection is afforded to areas of outstanding natural beauty. Why not? I suspect that quite simply it is because an AONB is too large a concept for a local council to comprehend because it cuts across county boundaries. But surely the pleasure the Downs give—and presumably the very reason why they are designated as an AONB—is that they are one of the few remaining significantly large tracts of uninterrupted land on which it is still possible to walk for miles without the intrusion of industrial development. Every time industrial development is permitted, however seemingly innocuous and inconsequential it may appear to the immediate locality, it diminishes the greater concept on which the AONBs were established and ultimately give the nation less and less reason for giving them special status.
Secondly, councils usually base their decisions on industrial development applications on the potential benefits for the local community. That is what they are there to serve. But in the case of oil exploration and production there are no benefits for the local community. To illustrate my point, let me take two extracts from the East Sussex County Council's explanatory notes:
"The financial and economic benefits to the local authorities and to the local economy from drilling exploratory boreholes are very small. Even the full development of an oilfield will produce only a modest boost to local employment."
Also:
"An exploratory borehole is not assessed for rates and the rateable value of a productive oil well is not very great."
So, faced with none of their usual assessment criteria and with no specific directions as to the circumstances in which AONBs are to be protected. what are councils supposed to do? The probability is that they will divide along national party political lines and try to decide from their different ideological standpoints whether the applicant has a legitimate claim to the national interest. This is manifestly not something that they are equipped to do and it is something, I would respectfully suggest, which is more correctly the prerogative of these Houses of Parliament. Is it surprising that, placed in this insidious position, councils are more likely to vote for today's fashionable obsession—oil—rather than for the preservation of the status quo for tomorrow's world?
I do not seek thereby to understate the nation's continuing need for oil. But in order to put the need for on-shore oil development into perspective, your Lordships may be interested in the following facts taken from the BP Statistical Review of World Energy, 1982. United Kingdom production was 2,120,000 barrels daily and United Kingdom consumption was 1,580,000 barrels daily. The country is therefore a net exporter of oil. In addition, Western European oil reserves, which comprise in major part the United Kingdom reserves, currently stand at 23 billion barrels.
By contrast, Carless's current predictions for a Ditchling Beacon oilfield, if indeed there is recoverable oil present at all, are for a total of about 5 million barrels to be produced over a period of 20 years. In other words, the total amount of oil, if it were to be
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produced all at one moment in time, would keep this country going for no more than 3½ days at today's consumption rates, which is equivalent to 0.04 per cent. annually of the nation's requirement. I accept that oil production forecasting is notoriously difficult but Carless Exploration would agree that, given the fairest of minds. that estimate will not rise beyond a total of 10 days. That is the extent of what constitutes, in my view, a very tenuous claim to the national interest and which threatens to destroy if repeated four of five times along the length of the Downs—as now appears distinctly possible—hundreds of years of our visible heritage for present and future generations.
My final point is that local councils, without putting too fine a point on it, are ignorant of the world of oil exploration and production. This is not intended to be taken pejoratively, but simply reognises the fact that onshore oil production is a novel development. Nothing that they have encountered before has quite prepared them for it. For a planner, even with a massive experience, it is a difficult and complex discipline because there are so many variables and uncertainties. It is quite impossible for an applicant to specify precisely at the outset of the development just how many well sites, boreholes and rigs will be required to complete the exploratory stage. Similarly, it is impossible for the applicant to specify precisely the time-scale of this stage of the operation. Similar uncertainties surround the nature and extent of the production facilities eventually required to extract it, until the oil has been tested and its properties and dispersal are known. The initial application to the council has been likened to a blank cheque and although theoretically the council can reject any subsequent applications it is difficult to imagine its happening once the commercial momentum has been started.—
Lord Oram: Hear, hear!
Lord Teviot: My Lords, I would say, Oh good! It is nice to hear a voice. Sometimes one feels one is just talking to cushions! Is this not another reason for lifting the decision-making process out of local government into the national forum so that oil exploration plans in AONBs, if they are to continue to be placed there. can be examined at the outset by technical experts and the chances of them growing, like Topsy, can be reduced?
I am grateful to your Lordships for listening to the points that I have made. I am asking my noble friend on the Government Bench what policies the Government have towards oil exploration in AONBs because in so far as I have seen them in operation they do not seem to be either sufficient or strong enough to protect them. Although I do not wish to pre-empt what he will say, I shall be interested in his views on two possible remedies. The first and ideal one is that the Department of the Environment agrees with the Department of Energy areas where exploration permits will not be issued. These latter will, I hope, include all AONBs. Secondly, failing that. an agreement could be made with local councils on specific no-go areas which extend beyond individual county boundaries and which in particular include high land. Thirdly, councils could be directed to

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institute a "presumption against" oil exploration in all AONBs. I urge the Government to act quickly and to review those applications which have already been submitted.
Finally, may I say that the whole subject of this debate has been brought to me not from any local authority but from preservation societies and I am sure that the country is very grateful for their efforts regarding the conservation of our countryside over the past twenty years. These societies bring these matters to our attention and they urge us to get up on to our feet and speak for them. My Lords, I look forward to the rest of this short debate.
8.20 p.m.
Lord Oram: My Lords, I very much welcome this opportunity of supporting the noble Lord, Lord Teviot, in his protest about this threat which overhangs the South Downs, which he and I know so well. Like him, I should like to offer my congratulations to my noble friend Lady Nicol on her assumption of duties at the Dispatch Box, and I wish her well not only this evening but in the future.
I join in this debate in my capacity as president of the Society of Sussex Downsmen. That is a role which I am very glad to fulfil, because since my early boyhood, in many different ways and on many different walks, I have appreciated the beauty of the Sussex Downs, sometimes guided by the book which the noble Lord, Lord Teviot, has written in this respect. There is no doubt about the great beauty of the Sussex Downs—what Kipling called our "blunt, bowheaded, whale-backed downs".
That beauty of the Sussex Downs has inspired many of the best of our nation' s poets—Hilaire Belloc, William Blake, Robert Bridges, John Goldsworthy, Rudyard Kipling, Alfred Noyes and Lord Tennyson. All these famous people have extolled the beauty of our downland and now, as the noble Lord has explained so carefully, there is no doubt that that beauty is under threat from unwelcome commercialisation. As he said in his closing remarks, that threat has aroused great protests from many organisations which are concerned to preserve the Sussex countryside.
The noble Lord pointed out that, although his Question this evening refers to Ditchling Beacon, this is the second drilling application in recent times. He explained that in the village of Graffham, in West Sussex, earlier this year there was a similar application and similar controversy. On that occasion, on behalf of the society which I have mentioned, I was in correspondence with the Minister responsible—at that time, it was Mr. Giles Shaw—about the application for drilling in the Graffham area. I urged him, as the Society of Sussex Downsmen urges, that in this matter there should be a public inquiry, and it is that point that I particularly hope to impress upon the Minister who is to reply this evening.
I would just quote one paragraph from the letter which Mr. Giles Shaw sent to me on that occasion. He said:
"Under the Town and Country Planning Act 1971, Parliament has given the day to day responsibility for the control of
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development to local planning authorities (the County Council in this case), and it is therefore only in exceptional circumstances—for example, when matters of national or regional importance areinvolved—that the Secretary of State would feel justified in intervening".
I believe that that paragraph is based on a complete misconception of the problem with which we are concerned, because this is not a local question. This is a regional question and for that reason it justifies a public inquiry.
Of course, any particular drilling is local. Graffham was a local case. Ditchling Beacon is a local case. But we said at the time, in the spring of this year, that the Graffham application would be the first of many. We now have the Ditchling Beacon one and in a report the planning officer of East Sussex County Council says:
"Several planning applications are expected for a variety of sites over the County within the next 12 months".
What, I wonder, is to come next. Will it be Kingston Ridge near Lewes—that would be a local case. Will it be Wolstanbury?—that would be a local spot. Will it be Mount Caburn, Lancing Clump or Firle Beacon? Each one of these taken seriatim could be considered local and, therefore, not justifying a public inquiry. But when we take them all together, we clearly have a regional problem. The South Downs are a region, and a particularly important region as the noble Lord has pointed out. They are important, because they have been designated as an area of outstanding natural beauty.
The noble Lord quoted a paragraph from the policy statement of the Countryside Commission, which I shall not now need to quote which I was proposing to quote. But I would follow his quotation with one from a press release of the Department of the Environment. That reads:
"The Government agree with the Commission's"—
that is, the Countryside Commission's—
"view that, in general, it would be inconsistent with the aims of designation to permit the siting of major industrial and commercial development in AONBs. Only proven national interest and lack of alternative sites can justify any exception".
That. I suggest, is the Government's policy and I hope that the Minister, in answering the Question this evening, will reiterate that that is the Government's policy and it will be applied in this case.
How can it be said that there is a "proven national interest" to justify these drillings? The noble Lord, Lord Teviot, dealt with the oil question, and whether it is in the national interest that we should seek out this tiny fraction, as it would be, of oil supplies for this country. I do not believe that there is the beginning of a case on the national interest theme. But if it is claimed that there is a national interest, then why should it not be deployed before a properly constituted public inquiry? That is where the oil companies should openly state their case. Not only that, it would give the preservation societies, of which there are many in the county, the chance to state their case in opposition to that of the oil companies.
In recent years your Lordships' House has dealt in great detail with two important Acts which are very relevant to tonight's discussion. There was—and we remember the long proceedings on it—the Wildlife and Countryside Act and, more recently, there was the National Heritage Bill. I claim that the South Downs

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are one of the most beautiful areas of the British countryside and that they are, indeed, one of the treasures, both historically and aesthetically, of the British heritage. Therefore, it would be criminal to allow their beauty to be despoiled, unless there is an overwhelming national case on the other side; and, as I have indicated. I do not believe that there begins to be such a national case.
The poet Alfred Noyes, one of the poets on the list which I gave just now, wrote a poem of protest against the destruction of the South Downs flora. I believe that his protest might equally be directed against the current threat to the Sussex Downs. I shall quote and then sit down:
"Not into words can I distil
The pity or the pain
Which hallowing all that lonely hill
Cried out 'Refrain. refrain' ".
8.30 p.m.
Lord Beaumont of Whitley: My Lords, more than the average amount of conventional thanks are due to the noble Lord, Lord Teviot, for having raised this matter this evening. He has given two opportunities to the House: first, to ask about Ditchling; secondly (and this is no less important) to ask about the presently established procedures for coming to a decision on a matter like this. I know that the department has this matter under consideration at the moment, but this is a very suitable moment to reinforce the argument that there should be a rearrangement of the procedures in aid of preserving the countryside, both in areas of outstanding natural beauty and in national parks.
As tonight's debate shows, there is considerable disquiet about the procedures for licensing, prospecting and drilling in those areas. There is no dispute that mineral sources should be explored and, in many cases, exploited; and, of course, that there are times and occasions when exploitation comes very high on the list of priorities—for instance, in wartime, or at a time of fuel crisis. No national park or area of outstanding natural beauty can claim to be completely sacrosanct, and nobody has made that claim tonight. But every proposition to despoil in any way these areas must be explored carefully, publicly and in time so that it can be stopped, if that is what the community decides.
As I understand it, the present procedure envisages three stages: first, an exploration licence, which gives rise to seismic surveys and shallow drills; secondly, what is called a production licence, after which deep exploratory wells can be sunk; and, thirdly, planning permission, after which actual production can go ahead. The stages as they are, and the nomenclatures appended to them, are muddling and can lead to real problems. It is often suggested that there is a real safeguard at the planning permission stage, after which production can go ahead. But I understand that there are no examples of the Government refusing permission to exploit, once oil has been found. And it usually comes to Government. As has been pointed out, this particular stage is not very suitable for local authorities, because so much pressure is put upon them.
I would follow the excellent suggestion which has been put forward, I understand, to the Ministry by the Council for the Protection of Rural England: that at a
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very early stage, the exploration licence stage, the Secretary of State for the Environment should be brought on to the scene, particularly in sensitive areas—the kind of areas we are discussing tonight. It seems to be absolutely wrong that the Department of Energy should go ahead with issuing licences at this stage without at least alerting and preferably consulting the brother or sister department, which must have a real interest in the situation.
Secondly, in the case of particularly sensitive areas the Secretary of State for Energy should be able to inform potential licensees that if finds are made during exploration no subsequent exploitation is likely to be allowed to be made because they are areas of considerable sensitivity—which, of course, they will know if they have done their homework. But it has to be said that some of the companies which are now exploring for oil do not necessarily have the expertise and ability to discharge to the full their responsibilities. This is the moment when it can be said that production rights will not necessarily be given. Possibly a compromise can be achieved by saying to the company, "You can explore; exploration is in the interests of everybody, since we should know what is there, and, by exploring, you achieve the right to sink wells for oil eventually. But you must not take it for granted that permission and a licence actually to extract oil will come in the near future, or at all. All we can say to you is that if you undertake to go ahead with exploration you will have reserved rights when permission is finally given, if it ever is".
Thirdly, provision should be made for public inquiry where there is a substantive volume of unresolved objections, as happens with road schemes. I can well believe that some of the ministries and civil servants may not be too encouraged by the thought of having to go through the same procedures as apply to road schemes, but on the whole our roads inquiries have been seen, and are seen by other countries, as models of their kind. I see no reason why this kind of public inquiry should not take place.
The present system is confusing. It is too easy for licensees to creep up on their objective, with no real chance for the public interest to intervene. As the noble Lord, Lord Teviot, said, once permission for one well to be sunk has been given the chance of finding the courage, the backing and the independence to say, "No, no further", grows more and more remote. The time to stop, if you are going to stop, is at an earlier stage. That earlier stage must be signposted so that everybody who is interested—both those who want to extract the oil and those who have doubts as to whether it should be extracted—can see exactly what happens at each stage and where the decisions are made.
The object of what I have set out. which I hope the department is already exploring and will continue to explore, is not to stop the exploitation of minerals and oil—still less to stop exploration which, as I have said, is extremely important—but to allow the community as a whole, whether at local or national level (and there is a case for saying that both levels should be brought in) to make up its mind whether in this particular instance, in this particular place, exploration and exploitation should be allowed.
8.40 p.m.
Viscount Torrington: My Lords, I came along tonight to listen to this debate, but as somebody who works in the oil exploration industry—especially, one exploring on-shore in the United Kingdom—I am afraid that I was unable to resist the temptation to rise to my feet. Your Lordships might think mine was a dubious qualification for speaking in this debate, but perhaps I can add a couple of better ones. The first is that I myself live in a fairly attractive area of Hampshire which is under licence to a company which has been mentioned already—Carless Exploration —and the second is that I went to school within what the noble Lord, Lord Teviot, called the good golf shot of Ditchling Beacon. So perhaps I have a little knowledge of this problem.
One of the greatest problems the oil industry faces in exploring on-shore in the United Kingdom is that this country has come to know something about the oil industry from essentially the wrong end. In the United States oil drilling started off as something that was done with a little cable tool rig and two men and a dog—a small engine, a small derrick maybe 20 feet in height which hauled the tool up and down and dropped it. It is essentially the same equipment that has been used in drilling water wells all over the world.
We first saw the oil industry through the development of major off-shore fields in the North Sea. The British public has seen on television huge concrete structures, and they have heard the sort of figures involved in that type of exploration. But the on-shore oil industry is not really comparable. In areas of outstanding natural beauty, I do not believe that anybody ever particularly disliked the sight of an old water well; that simple, latticed mast with a little fan on top. In fact, one hardly ever sees such wells now because they have almost disappeared throughout the entire country. But essentially those old water wells are just the same as oil wells; they are merely completed in a zone below ground from which water is extracted as opposed to oil.
Essentially it is a cottage industry on a slightly larger scale, perhaps, than the old-fashioned cottage industry. I always hate to introduce an American analogy because I believe to do so often puts a number of people's hacks up—hut it is very much a cottage industry still in the United States. The average oil well in the United States produces less than five barrels of oil a day—that is, about 150 gallons of oil a day. The majority of wells are drilled by individuals rather than by companies; by the old-fashioned oil speculator, so called. When wells are drilled, it is a matter between one individual and another—between the man who wants to drill the well and the landowner. People do not feel threatened to anything like the degree they seem to feel here by the very corporate nature of the oil industry.
The noble Lord, Lord Teviot, suggested that areas of outstanding natural beauty can be lost for ever as a result of oil drilling. We appreciate that when a well is drilled, a very large piece of equipment is brought along and an area of land has to be flattened. The process is very visual for a while, but the majority of exploration wells in Southern England have to date
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been dry, and although techniques for deciding where oil may be are improving, no doubt the majority will continue to be dry in the future. The oil industry puts a great deal of effort into the restoration of these sites. I have some experience of trying to find sites where oil wells have been drilled within the past 20 years, and it is often extremely difficult to identify the precise spot.
Site restoration is something of which the oil industry is only to well aware in the event of a dry hole. In the event that oil is successfully found, a single well will probably consists of a pump jack, and maybe a stock tank and an electricity line laid to drive the pump. But those items can be considerably less disfiguring than, for example, a site I see every day from my house—which results from a neighbouring and very good natured farmer, who nevertheless abandons equipment when it ends its useful life. His land is strewn with old combined harvesters, which are considerably more obtrusive than pump jacks would be.
The oil industry is very aware of the environmental problems. I do not believe, as the noble Lord, Lord Beaumont of Whitley, suggested, that it expects to creep up on planning permissions. The degree of public interest that is shown in these matters really pre-empts that.
Lord Beaumont of Whitley: If the noble Viscount will give way, my Lords, I should like to make it plain that I was not in any way suggesting that the oil companies were doing that on purpose. I was merely suggesting that it was the effect that happened from the public point of view. It may be just as bad for the oil companies because they may get to a stage where they find that public opinion tries to stop them, a stage where they find that they have been put into a false position. I was certainly not suggesting that it was the oil companies' fault.
Viscount Torrington: My Lords, I am grateful to the noble Lord for that clarification. Touching on another point made by the noble Lord, perhaps it would be desirable that the oil industry should explore, given a situation where it had almost no right to exploit—only a right in the sense of a lease from the Government relating to the oil rights but with no reasonable expectation of planning permission unless it can show a very good case.
One of the problems is that drilling for oil is not a cheap business. It is considerably more expensive off-shore than on-shore. I might add that the cost per foot of drilling wells in this country is about ten times the cost in the United States where they have a developed industry of this nature, whereas we have a relatively under-developed industry. To drill a well costs approximately £100 a foot in this country, so if one drills a 5,000 foot well one has £500,000 invested in that well. It would be very difficult to have any wells drilled at all if there was less than a 50–50 chance that companies would have the opportunity to exploit anything they find.
The drilling of a well is an exploratory process. Everything one says or tries to say to local people, to councils or in planning inquiries is based on supposition. One does not know whether oil is down

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there until one has actually drilled a well to find it. The oil industry has to find a way to live within the constraints of the planning process and in a way that will allow it to do its work and allow people to be reasonably protected—indeed, well protected—from bad and ill-thought-out developments.
In Southern England the oil industry is very aware of the outstanding natural beauty of the country: not just of designated areas but of areas as a whole. I know that a great deal of thought is put into minimising the impact of developments. I hope that we do not create a situation in the planning arena which makes it impossible for this work to go ahead. There are benefits. We have enormous off-shore fields. But if by any chance there was some form of disturbance which affected Europe we would be very grateful for the amounts of oil—albeit small amounts, although perhaps Wytch Farm is not so small—at our fingertips. To that extent, these developments are considerably more secure strategically than our off-shore oil and gas developments.
8.49 p.m.
Baroness Nicol: My Lords, I am very grateful to the noble Lord, Lord Teviot, not only for raising this question so that we may discuss it tonight but also for his kind wishes to me, as I am also grateful for the good wishes of my noble friend Lord Oram. I am conscious of the honour that it is to stand and address your Lordships from this place—second only to the honour of being in your Lordships' House to begin with.
With the exception of the noble Viscount who has just spoken, we are all saying roughly the same thing although perhaps we have some variations on the theme. The subject raises issues far beyond that of Ditchling and even beyond areas of natural beauty. The Government's present policy, as I understand it, is to encourage the fullest possible development of oil resources, a policy based on economic and strategic considerations and not on environmental ones. The economic assessments appear to be based on assumptions about a possible future alternative source of energy. Perhaps these assumptions should be questioned at another time.
Tonight we are concerned with the environmental impact of drilling for oil or indeed gas. The noble Lord, Lord Teviot, drew attention to the need for central Government, policy on areas of natural beauty. It seems incredible, as other speakers have said, that licences to explore can be issued by the Department of Energy without reference to the Department of the Environment at all. Yet this appears to be the case. These licences enable the applicant to carry out seismic works and to drill shallow boreholes and he does not require planning permission at this stage. If his exploration is promising he then applies for a production In licence and will he required to obtain planning, permission for each borehole from then on. Lord Teviot was I think a little doubtful of the abilities of planning authorities to control the operation at this stage. Indeed the protection offered by the need for planning permission is of doubtful value.
Local authorities find arguments about the national interest very hard to resist. In any case, planning refusal can be overturned by the Minister from whom companies who have already made large investments
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in exploration are likely to receive sympathetic consideration, given the existing policy. During the past few years there has been a dramatic increase in the number of licences issued, and large areas of the country, much of it of outstanding natural beauty, will be explored on existing licences. There is an urgent need for a firm policy to rationalise the issue of exploration licences and to establish firm protection for particular areas.
We must define these areas with great care. No one denies the need for a healthy economy, especially in the fight against unemployment: but we also have a duty to protect our environment for the sake of this and future generations. I agree with Lord Teviot, who says that we must ask the Minister to consider that all applications for exploration licences should be cleared with the Department of the Environment. We further suggest that certain areas should be given absolute protection by a classification which would indicate that exploration licences would not even be considered. These areas would be limited in number. They would include certain areas of outstanding natural beauty of a particularly vulnerable nature where restoration is likely to be unsatisfactory. Also included would be sites of special scientific interest, and in a moment I shall enlarge on the present difficulties of these sites.
There could be a second classification of other areas of natural beauty or local amenity where exploration could be allowed against the possibility of future national need, but where production permissions would not normally follow. The public inquiry procedure suggested by the noble Lord, Lord Oram, could probably operate at this stage and in this classification, but it would be no substitute for a firm Government policy in the first place.
Now I should like to say a special word about SSSIs. These fragile survivors from better times are already under threat. They contain flora and fauna of recognised value and in many cases are irreplaceable. Even the noble Viscount's modest wells would wreak havoc on these sites. It is widely believed that the Wildlife and Countryside Act 1981 offers adequate protection for them. In fact the renotification necessary for their protection is proceeding too slowly because of the reduced budget of the Nature Conservancy Council, and many are being destroyed as each year passes. These sites are often not in areas of outstanding natural beauty and will therefore require to be specially defined in any new approach to exploration controls. The formula of "lost profits" compensation applied to agricultural protection would be far beyond the resources of the NCC if applied to oil or gas, and this would need to be recognised by the Government.
And now at last to Ditchling Beacon. Other noble Lords who know more of the area than I do have spoken with feeling on this subject. and I share their concern. The proposed alteration to the East Sussex County Council's structure plan indicates that they may take a less positive stand in defence of sensitive areas. I have the draft proposal, and as one who has been closely involved with the production of a structure plan I can see all the dangers in this one. Although Policy 1, as drafted, would appear to give fairly comprehensive protection to areas of natural

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beauty and indeed for the whole business of exploration, Policy 2 starts:
"Oil and gas development will normally he permitted only if the following criteria are met to the satisfaction of the planning authority…"
I am aware of the number of times that word "normally" has been included in structure plans for the sole purpose of allowing exceptions, which it is expected will be numerous and which are then the subject of inquiry after inquiry. I should think a lot more of the attempts of the County Council to protect if they had omitted that particular word.
They go on to list the criteria which will protect the sites and which must be followed. One of them is,
"It does not significantly injure an ancient monument or a listed building or its setting."
What does the word "significantly" mean in this case? There are some of us who would argue that any injury to an ancient monument or a listed building or its setting is unacceptable. Again, this word "significantly" shows, to my mind, a lack of intention on the part of the authority. They continue in the next item:
"A landscape plan and programme is provided to ensure that the impact of the development is reduced as far as possible."
There are other get-out phrases of this kind with which I will not weary your Lordships. But as a protective document that structure plan proposal is useless. In view of the attitude displayed in it, an attitude not unique to East Sussex, it becomes a matter of urgency that a national policy should be evolved for the protection of a national resource which, as the noble Lord, Lord Teviot, has said, is in its way as important to our well-being as the resources of oil and gas. All of them are finite.
8.59 p.m.
Lord Skelmersdale: My Lords—perhaps, just to prove that I have been listening to my noble friend Lord Teviot, I should say "my cushions"—I am most grateful to my noble friend for raising this Question this evening. It touches on a subject which I know to be of great concern to this House and to many outside. Energy and environment issues invariably arouse strong interest—even passion—not least among your Lordships. I must in this connection restrain my natural impulse to blow a kiss across the Dispatch Box in welcoming the noble Baroness, Lady Nicol, to the Opposition Front Bench. I am delighted to see her in her new position and to welcome her as Environment co-spokesman on the Front Bench opposite. I have no doubt that she will bring a lightness of touch which is on occasion so needed in countryside matters. I do not know whether the noble Baroness was here when we had the wide-ranging and informative debate earlier this year on the future of the Commission on Energy and Environment, but I can tell her that tonight's debate has definitely been in that tradition. I am grateful to noble Lords who have spoken in the debate.
My noble friend Lord Teviot naturally (if I may use the word) started with the concept of areas of outstanding natural beauty. He then continued to discuss the oil implications which are implicit in his Question. With the permission of the House, I intend to reverse that order.
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It has been the policy of successive Govenments over the years to give every possible encouragement to the exploration for and proving of our indigenous mineral reserves. Oil and natural gas are an integral part of those resources. The cynic would probably say that this is because the Petroleum Production Act 1934 vested oil and gas in the Crown, but I am only a part-time cynic and certainly not one tonight. Whether or not this vesting had happened, in my view it is quite irresponsible for any Government not to discover the extent of what are clearly our national assets. It is only by determining the location and the full extent of these hydrocarbon resources that we can make sensible provision for the future and ensure that energy needs are balanced against environmental considerations.
I must agree with every noble Lord who has spoken that that is exactly the right policy to seek. We must at all times seek to achieve a balance in our planning law. Nobody would argue with that. It must be in the country's long-term interest to know at the very least what resources are potentially available.
Oil and gas exploration and extraction are by their very nature less intrusive than other forms of mineral working, and the potentially most objectionable phase—the drilling—is completed relatively quickly. However, when drilling is taking place, there can be considerable noise from the operations, together with visual intrusion from a derrick 120 ft. or so high—my noble friend Lord Teviot will correct me if I am wrong—and the flaring of gas if found and if allowed. Although each site may be occupied for only four to eight weeks, drilling in a particular district may continue for several years. The remaining surface development, if oil is found, can be effectively screened and operated without causing a nuisance or environmental problems. The outstanding example is Wytch Farm on the Purbeck peninsula in Dorset, the success of which won British Gas and the Dorset County Council jointly the Jubilee Cup of the Royal Institution of Chartered Surveyors.
My noble friend Lord Teviot compared such exploration with that of water. Like the Lord High Executioner, I have a list of exactly what has gone on since 1966 in the area of outstanding natural beauty that we are discussing. Let us take first public utilities: water bore holes and associated pumping stations; some covered reservoirs; overhead power lines; high pressure gas mains; and radio masts. Then there are playing fields. I think probably every noble Lord would admit that these are perfectly allowable under the Access to the Countryside Act 1949. The tipping of inert material at Waterhall at the back of Brighton was carried out for some years by the Brighton council. There is the case involving the University of Sussex and the polytechnic at Falmouth. There is then residential development in three villages which I need not mention. There are road schemes: for example, the improvement of the A..27 at Newmarket. An old chalk quarry is used as a county council tip. Another chalk quarry at Tarring Neville has recently been given planning permission for an extension. To say that areas of outstanding natural beauty should be sacrosanct and prevented from having change occurring in them is quite evidently nonsense.
Lord Teviot: My Lords. I am hoping that my noble friend has a point in bringing all these lovelies along about overhead power cables, chalk pits and all the other things referred to, but I cannot say that one accepts those any more than one accepts these. The power cables going up have made certain areas quite hideous. One certainly does not want any more. I cannot let my noble friend get away with it. I do not know what is on the rest of his list, or whether there will be any more items, but I shall listen.
Lord Skelmersdale: My Lords, I had hoped that I had proved my point. I certainly was not going to read any more from my list. In all those applications, I have not noticed the enormous public or local outcry which has been occasioned by the particular application—perhaps I might better call it a series of applications, as we are now on our second—to drill for oil on the Sussex Downs.
Where a mineral such as oil is found in any quantity within an environmentally attractive area some conflict of interest is inevitable. Resolving such conflicts depends upon assigning a value both to the mineral and to the damage that the working will cause both during the life of the site and permanently thereafter. This can only sensibly be done where details of the exact location, size and quality of mineral deposit have been proved and the various possible ways of exploiting it have been fully explained. In the case of oil, I understand moreover that on average only one in 35 exploratory bore holes drilled reveal oil in commercial quantities.
Noble Lords question whether the need for oil is so great in the present circumstances. The Government seek to ensure that United Kingdom oil and gas resources are developed economically and expeditiously, while taking full account of environmental and other considerations, and that a fair return to the Exchequer is obtained while ensuring that developments which are economic pre-tax remain so post-tax.
Oil and gas production on the United Kingdom Continental Shelf is expected to peak within the next few years. In particular, the Government seek through their fiscal and regulatory functions to ensure that a high level of United Kingdom oil and gas production will be maintained at least until the end of the century. This means exploration both on the Continental Shelf out at sea and at land-based sites.
Having said that, we recognise that even the prospect of exploration, much less a firm intention to exploit, arouses strong feelings in areas of attractive and beautiful countryside such as is typified by the Sussex Downs. This is entirely understandable, but it is an uncomfortable fact that many mineral deposits occur in some of the most beautiful parts of the countryside. We cannot pretend that these do not exist, nor that the economy can prosper without our exploiting some of these essential sources of supply. It is a truism to say that the extractive industries can operate only where the raw products are to be found, be they coal, limestone, oil or any other of the natural substances upon which our modern world relies. The Government have a duty to ensure that adequate provision is made for the development of these resources in the years ahead. Equally however we have
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a responsibility to weigh carefully short term economic gains against the longer term implications for the beauty of our countryside and for nature conservation.
It might be helpful to the House if I, like the noble Baroness, Lady Nicol, and indeed the noble Lord, Lord Beaumont, were to say a few words about the respective roles of the licensing and planning systems. Licensing gives certain rights and responsibilities to a single company for any given area. What it does not do—and I think this is important—is to confer any planning or access rights: a company licensed by my right honourable friend the Secretary of State for Energy needs to obtain any necessary planning permissions before any development can take place at any particular site.
Planning permission will normally be required on at least two occasions. First, when an application is made to drill an exploratory well; and, secondly, if oil is found, to put in production and transportation facilities. Under planning law, it is the responsibility of county councils—in this case, East Sussex—to determine applications relating to mineral exploration and extraction. This they do in their county plan, and the noble Baroness referred to the green document and she has a very good point. The noble Baroness and the House will of course know that it is part of the perogative of my right honourable friend the Secretary of State for the Environment to approve proposed changes in structure plans and I will see that he takes her remarks into account when he comes to look at that particular proposal.
Having made sure that the proposed application is within the structure plan, the planning authority will decide such applications, taking into consideration the views of local people, the district and parish councils, and so on. In only very rare circumstances, where issues of regional and national significance are involved, are such cases called in for determination by my right honourable friend the Secretary of State for the Environment after a public local inquiry. I am sure that noble Lords will agree that it must be right for the vast majority of planning applications to be decided by local authorities. After all, it is local people elected to such councils who know the site where the development is proposed and who can take into account all relevant considerations.
The Ditchling Site is, as we now know, in the Sussex Downs area of outstanding natural beauty. The Government regard the AONB system as having a most important role in conserving our natural heritage. The landscape of designated areas is recognised as being of national importance in terms of their natural beauty. This means in general we should not expect to see the siting in those areas of, for example, large scale industrial or commercial development unless there was a proven national interest and no reasonable alternative site was available. In other words, the national significance of the amenity value in these circumstances becomes a factor to be weighed in the balance against the need for the development concerned. As I have already said, in the case of minerals this "need" argument has to include the unhappy fact that they can only be worked where they occur.

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I apologise if that sounds an unnecessarily abstract way of talking about some of our finest areas of countryside. I like, I am sure, every noble Lord in the House this evening was very moved by the speech of the noble Lord, Lord Oram. I wish that I had his facility with quotations so that I could quote one back at him. But I can assure the House that I have not lost sight of the basic issues that we are discussing here today. Few visitors walking along the South Downs Way on a fine summer's day would be very much concerned with terms such as "national scenic importance", or "outstanding natural beauty". They would be too busy enjoying a day out in one of the most beautiful parts of Southern England. The scenery and the magnificent views would be sufficient in themselves.
The Government's job is to provide guidelines by which others, principally the local authorities, may formulate more detailed proposals for the shape of future land use within each area. Local authorities should take these guidelines into account in preparing their structure and local plans. A number of local authorities now have approved structure plans containing policies for oil and gas development as well as those for the protection of the environment. As I said just now to the noble Baroness, East Sussex County Council are in the midst of this process.
My Lords, you will understand if I do not venture into discussion on the merits of the County Council's policies in this respect, nor on any application to the proposals for exploration near Ditchling Beacon which the Council is at present considering. As long as the possibility remains that those proposals might at some future stage come before my right honourable friend, the Secretary of State for the Environment, for decision, I think it would be preferable if I were to confine myself to matters of general principle rather than individual cases. But the approach adopted by many local authorities towards oil and gas development is certainly one which we would commend to your Lordships. It offers in our view a sound basis for the proper consideration of mineral applications and reflects the Government's firm policy that all such applications for substantial new working in AONBs, or extensions to existing workings, should he subject to the most rigorous examination because of their potential impact on the natural beauty of those areas.
I hope it is clear from what I have said this evening that we are acutely conscious of the need to strike the right balance between meeting the nation's energy requirements from indigenous sources and protecting the environment in some of our more beautiful areas. But there is no escape from the dilemma that I put to the House at the beginning—that many valuable mineral resources are to be found in outstanding, naturally attractive areas. I can assure the House that we shall continue to encourage local authorities to take a responsible attitude towards these matters and to insist that all applications in AONBs and in other environmentally sensitive areas are subjected to a full and rigorous assessment.
The noble Baroness, Lady Nicol, suggested, if I have understood her correctly, that it is wrong for large areas of environmentally attractive country to be
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covered by oil production licences, and that such licences, anyway, should not be issued without the consent of the Department of the Environment. As I understood it, she proposed the creation of super sensitive sites. It is my view that this would undervalue areas of outstanding natural beauty that have been with us since the National Parks and Access to the Countryside Act 1949. I would hate to have a new body, or even a sub-body, to determine what, or perhaps where, such sites should be. We would immediately have second-class sites. In this connection, I would remind the noble Baroness of her own answer to the question, rather like her noble friend Lord Graham the other day, that in this connection, anyway, SSSIs have nothing to do with AONBs. One might be superimposed on the other, but they are there for totally different reasons.
Lord Graham of Edmonton: My Lords, they are both badly treated by way of being looked after and cared for by the resources that the Government give to the Nature Conservancy Council.
Lord Skelmersdale: My Lords, they are considerably better treated than if they had not been identified in the first place.
My noble friend Lord Teviot had, I think, a rather better idea. That was to have all areas of outstanding natural beauty excluded from oil and gas extraction applications. But we all know what is contained in Section 39, I think it is, of the 1949 Act. But only the Government can decide upon just what is the national interest. Once that is established, I can see no possible reason why a planning authority should not decide on local issues of environmental sensitivity and all the other local issues.
Having said that, the noble Lord, Lord Beaumont, is correct. My right honourable friend the Secretary of State for Energy is undertaking a review of current licensing procedures, and the views expressed by noble Lords tonight will be carefully considered in this context. I must say, however, that I can see grave dangers in a system whereby the Department of the Environment is asked to give its blessing to licensing large areas of countryside, for, really, the environmental implications of a proposal can be fully considered only when the exact site is known. I can see a good deal of merit in the current clear distinction between licensing and planning procedures.
House adjourned at seventeen minutes past nine o'clock.

  HEROIN USE AND ADDICTION
  HEROIN USE AND ADDICTION
  GUIDE DOGS: ACCESS TO PRISONS AND COURTS
  GUIDE DOGS: ACCESS TO PRISONS AND COURTS
  ARBITRATORS: LORD CHANCELLOR'S PANEL—NOMINATIONS
  ARBITRATORS: LORD CHANCELLOR'S PANEL—NOMINATIONS
  ARBITRATORS: LORD CHANCELLOR'S PANEL—CURRENT NUMBER
  ARBITRATORS: LORD CHANCELLOR'S PANEL—CURRENT NUMBER
  NATIONALISED INDUSTRIES: CONSUMER REPRESENTATION
  NATIONALISED INDUSTRIES: CONSUMER REPRESENTATION
  WELFARE MILK AND VITAMIN TOKENS: ISSUE PROCEDURES
  WELFARE MILK AND VITAMIN TOKENS: ISSUE PROCEDURES
  BRUCELLOSIS
  BRUCELLOSIS
  CIVIL SERVICE UNIFIED GRADING STRUCTURE
  CIVIL SERVICE UNIFIED GRADING STRUCTURE
  HANDICAPPED CHILDREN: EDUCATION EXPENDITURE
  HANDICAPPED CHILDREN: EDUCATION EXPENDITURE
  UNITED KINGDOM OVERSEAS REPRESENTATION: HONOURS
  UNITED KINGDOM OVERSEAS REPRESENTATION: HONOURS
  FARM SIZES
  FARM SIZES