Sitting of 17 December 1984

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

    Coal Industry Dispute
    Mr. Gerald Howarthasked the Secretary of State for Energy if he will make a statement on the strike by some miners.
    Mr. Ron Daviesasked the Secretary of State for Energy if he will make a statement on the latest situation in the coal industry dispute.
    Mr. Willie W. Hamiltonasked the Secretary of State for Energy if he will make a further statement on the dispute in the coal industry.
    Mr. Chapmanasked the Secretary of State for Energy if he will make a statement on recent events relating to the coal industry dispute.
    Mr. Strangasked the Secretary of State for Energy if he will make a statement on the coal industry dispute.
    Mr. Proctorasked the Secretary of State for Energy if he will make a statement on the current situation in the coal mining industry.
    Mr. Hannamasked the Secretary of State for Energy if he will make a statement on the coal dispute.
    Mr. Knoxasked the Secretary of State for Energy whether he will make a statement on the coal strike.
    Mr. Douglasasked the Secretary of State for Energy if he will make a further statement on the mining industry dispute.
    The Secretary of State for Energy (Mr. Peter Walker): Of the 174 pits, there are now 148 with men present and 66 of these are producing coal. Coal production is at its highest level since the dispute started. Since 5 November more than 16,500 miners who were on strike have reported for work. Coal stocks at the power stations remain at a similar level to what they were in August.
    At a meeting with representatives of the Trades Union Congress last Friday, I expressed the Government's regret that the compromise proposal put forward by the Advisory, Conciliation and Arbitration Service, and the detailed agreement reached with NACODS, had not provided proposals acceptable to the leadership of the National Union of Mineworkers. With two of the three mining unions not on strike, and with the one third of the NUM which had a ballot voting overwhelmingly against strike action, the Government regret that the two thirds of the NUM continuing on strike have been deprived of the opportunity to express their views through a national ballot.
    Mr. Howarth: I am grateful to my right hon. Friend for the encouraging news about the number of men who are working and the number of pits that are remaining open. In view of his slightly alarming remarks last weekend about being available for further discussions, will he assure the House and the working miners that further talks between the NUM and the National Coal Board will not take place until there is genuine evidence of a fundamental shift in the attitude of the NUM to uneconomic pits?
    Mr. Walker: I have told the TUC and the mining unions that I am willing to have talks with union leaders or the TUC at any time. That is the correct position for me to take. In my talks with the TUC I made it clear that it would be impossible to end the dispute so long as there was a totally unreasonable demand that every pit, no matter how uneconomic, should be kept open until the last ton of coal was extracted. That is the reality of the scene.
    Mr. Davies: Notwithstanding those figures, does the Secretary of State accept that in parts of the mining industry the strike is solid and there is no prospect of breaking it? In view of that fact and the increasing doubt being cast over the Government's accountancy figures, most recently by the London Business School, does the Secretary of State appreciate that there must be negotiations? Would it not be helpful if he instructed Mr. MacGregor to withdraw his weekend statement about preconditions and took the necessary steps to get the parties involved back round the negotiating table?
    Mr. Walker: I remind the hon. Gentleman that there have been seven rounds of negotiations. In the one at ACAS, ACAS came forward with a compromise proposal. At the end of seven rounds of negotiations Mr. Scargill is constantly on record as saying that he has not moved his position since 6 March. If the hon. Gentleman wants a settlement to the dispute, he should put pressure on Mr. Scargill.
    Mr. Hamilton: Since it is clear day by day that there can be no winners and no losers in the contest—we are all losers, including the miners—will the Secretary of State take an initiative and agree to call together all those involved in the dispute so long as they undertake, before they start discussions, that there will be flexibility on all sides?
    Mr. Walker: My difficulty in replying to that question is that in July one side suggested a range of new proposals which showed considerable flexibility, and, at the behest of another miners' union, went to ACAS and agreed a compromise proposal. On Friday the TUC told me that negotiations must take place between the two parties concerned. Until the one party which has refused to move since 6 March moves, there will not be the negotiated settlement which we all want.
    Mr. Chapman: Regretting the intransigence of Mr. Scargill, but recognising that some striking miners understandably fear that there will be no other employment in the mining communities, may I ask my right hon. Friend to report progress on NCB (Enterprise) Ltd., which was set up to encourage alternative industries in uneconomic mining areas?
    Mr. Walker: As I reported to the House, the company was set up with an initial capital of £5 million. Immediately there were a substantial number of inquiries and applications, and I agreed to double the capital of the company. I have informed the National Coal Board that the Government would be happy to finance an extension of its activities so that that important work can be carried out.
    Mr. Strang: Why does the Secretary of State not facilitate negotiations without preconditions between the NCB and the NUM? Is it not clear that the Government are more concerned to inflict a defeat on the NUM, as part of their assault on the trade union movement, than to secure a negotiated settlement in the interests of the mining industry? How much damage will be done to the economic and social fabric of the country before the Government recognise that the vast majority of miners will return to work only after a negotiated settlement?
    Mr. Walker: The tone of the hon. Gentleman's remarks is very different from the tone of the remarks that I heard in my talks with the TUC on Friday. There have
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    been seven rounds of negotiations without preconditions, one under the auspices of ACAS, which came forward with a compromise proposal. I have heard no criticism of that compromise proposal by the TUC or the Labour party, and it is time that they tried to persuade Mr. Scargill to accept it.
    Mr. Proctor: Does my right hon. Friend agree that the real long-term damage to the coal mining industry has been caused during this dispute by the closure of coal faces in economic pits and the loss of contracts to the industry? Will my right hon. Friend comment on that?
    Mr. Walker: It is true that 23 producing faces have been lost during the dispute, which is a tragic loss to the industry. As my hon. Friend knows, we were conducting an active and successful campaign to persuade industries to convert to coal. I had hoped that 1,000 firms would convert to coal this year, but the entire campaign has been destroyed by the dispute.
    Mr. Hannam: Does my right hon. Friend agree that the dispute is rapidly becoming more concerned with the future of the president of the National Union of Mineworkers than of the coal miners? Will he commiserate with the TUC, which must negotiate on behalf of a union which refuses to budge an inch towards a settlement?
    Mr. Walker: I understand the diverse problems of the TUC. From my talks last week and my communications with the TUC, I am sure that it is anxious that the dispute should end with a negotiated settlement as speedily as possible. I told the trade union leaders who attended the talks on Friday that almost no other British trade union has an offer available to it as generous as the offer available to the miners.
    Mr. Wrigglesworth: Does the Secretary of State agree that the only people who will change the views of the leadership of the NUM are the members of the union and its executive? What plans does he have for discussions with the TUC and others, and what public action will he take to persuade those members of the union and of the executive to try to bring about that change?
    Mr. Walker: I am sure that the 16,500 union members who have returned to work since 5 November are having an impact on thinking.
    Mr. Knox: Apart from our foreign competitors, can my right hon. Friend think of anyone who has benefited from the strike?
    Mr. Walker: No, Sir.
    Mr. Douglas: Does the Secretary of State accept that, for the first time during the dispute, he has gone a little way towards meeting trade unionists, which in a sense is welcome? If we accept that his view concurs with that of the TUC—that the only people who can settle the strike are the NCB and the NUM — what deters him from using his good offices to bring together those two parties in the foreseeable future? It is a mad strike, which must be resolved by sitting round the table, not by attrition.
    Mr. Walker: I repeat that on several occasions the two sides have met, and on one occasion, under the auspices not of a Tory politician but ACAS, a compromise plan put forward by ACAS was rejected by the leadership of the

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    NUM. Likewise, the leadership of the NUM has always refused to put the terms on offer to the miners in a ballot. That is the manner in which it is operating.
    Mr. Aitken: Will my right hon. Friend give special attention to the position in the Kent coalfield where, before the strike began, three pits were losing £25 million a year, which amounts to a subsidy of £10,000 a year from the taxpayer to each of the 2,500 miners? As the position has deteriorated still further, because of geological and other changes, and as every sensible person in the Kent community knows that we cannot go on for ever in the same lunatic uneconomic way as before, will my right hon. Friend give special priority to the idea of an imaginative scheme by NCB (Enterprise) Ltd. after this strike totters to its close?
    Mr. Walker: I assure my hon. Friend that wherever there is a potential closure due to a pit becoming uneconomic and unable to contribute successfully to the future of the industry, the new enterprise company which has been created will deal with the problem. It will have the finance, the managerial advice and, frequently, accommodation and a whole range of services to enable fresh and new enterprises to come into such communities.
    Mr. Benn: Is the right hon. Gentleman aware that for over a year, since the overtime ban began, he has come to the House week after week and said that the strike is crumbling? Has that not been wholly false, and has not the information that he has given misled the House and the country and deceived himself? Is not his policy in a shambles, and is not the only conclusion that can be drawn from his refusal to encourage talks that he and the Cabinet wish the strike to continue, which is the conclusion that most miners have already drawn?
    Mr. Walker: Fortunately, the conclusion that most miners have drawn about the right hon. Gentleman is that his rhetoric during the dispute is different from his record as Secretary of State.
    Secondly, as to disputes crumbling—
    Mr. Benn: Answer the question.
    Mr. Walker: I shall.
    As to disputes crumbling, I recall that the right hon. Gentleman told me that the movement of coal would stop in April, since when 25 million tonnes have been moved.
    Mr. Rost: As the taxpayer has to pay the bills for this senseless strike, has he not the right to demand that the board should do what every other private and public enterprise would have had to do by now to contain its losses, which is to announce a deadline for a return to work, after which the generous guarantee of a job will no longer be valid? When will the board start to manage?
    Mr. Walker: Coal is one of this country's most important resources. Coal has a good, sound and expanding future. I hope that the pressures of all those who are concerned with the future of the industry will ensure that we move back to the potentiality of high investment and good production. I should not want to do anything to damage that prospect.
    Mr. Hardy: The Secretary of State mentioned my association, NACODS. Does he accept that the agreement appears to have considerable fragility about it as a result of actions by the NCB? Does he further accept that that suggests that the chairman of the NCB should no longer
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    be allowed to occupy his office, not least because of the pessimistic statement that he made at the very time when the Secretary of State was meeting the trade unions last week? Is it not time for the right hon. Gentleman to take a further initiative to achieve a negotiated settlement, and should he not suggest to Mr. MacGregor that the time has come when there should be an end to the visits to Hobart house of furtive emissaries from the Conservative party?
    Mr. Walker: The chairman of the NCB has been through seven rounds of negotiations. He has been to ACAS and accepted its compromise proposal, and he has negotiated with NACODS in great detail and reached a settlement. Therefore, nobody can accuse him of inflexibility. As to being pessimistic, on all seven occasions the chairman has been opposed by somebody whose one boast is that he has not moved since 6 March.
    Mr. Gale: Will my right hon. Friend reaffirm that the precondition to the negotiations having been laid down by the president of the National Union of Mineworkers, contrary to the impression that the general secretary of the Trades Union Congress sought to give on Radio 4 this morning, the union has not moved from the start of the strike from its entrenched position? Will my right hon. Friend undertake that there will be no further negotiations until and unless the NUM moves from that entrenched position?
    Mr. Walker: The basic demand that every pit, no matter how uneconomic, must be kept going until all coal is exhausted unless there are safety or geological reasons for doing otherwise has never been made by any NUM leader in the past and, as far as I know, has never been made in any other coal industry. It is not just an absurd demand. It would do permanent damage to the coal industry if it were met.
    Mr. Wallace: I welcome the right hon. Gentleman's meeting with the TUC, but I wonder whether the background of the talks was helped by the Government taking £1 off supplementary benefit. Is it wise, for the atmosphere of future talks, for the Government to proceed with their announced intention to strip miners of housing benefit if they are paying rent?
    Mr. Walker: Certain advice has been given in NUM magazines about how to obtain additional money from social security. If the hon. Gentleman is interested, he should study that advice. It was given positively on the basis not of what were basic needs but of how to organise these matters.
    Mr. Orme: If the tone of the meeting with the TUC was as good as the right hon. Gentleman suggests, why did he not respond to the TUC? The congress put forward positive proposals. The right hon. Gentleman will know that, according to the accountancy report and that of the London Business School, the basis of uneconomic pits has been challenged. Therefore, there is a basis on which to resume talks. Why does the right hon. Gentleman not play a role in seeing that those talks are held, instead of waiting another three or four weeks before anything happens?
    Mr. Walker: The right hon. Gentleman asks why I did not respond. The TUC did not come to the meeting on that basis. It started the talks, quite correctly, by saying that it was not in a position to negotiate. We exchanged views on its suggestions. The TUC's problem, as Mr. Willis said afterwards, was that it did not consider that anyone could

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    back down before the negotiations and therefore that it was wrong to suggest that the NUM should move from its position before negotiations began. I had to point out to the TUC representatives that there had been seven rounds of negotiations and that Mr. Scargill had not backed down on any.

    Gas Prices
    Mr. Maloneasked the Secretary of State for Energy if he will make a statement on the Government's current policy on gas pricing.
    The Minister of State, Department of Energy (Mr. Alick Buchanan-Smith): Gas prices are determined by the British Gas Corporation, taking into account the need to achieve an adequate return on capital, and to obtain an adequate and continuing supply of gas.
    Mr. Malone: I am grateful to my right hon. Friend for that reply. Can he confirm that it is Government policy to ensure that gas is provided to the consumer at the most competitive prices? In addition, will he undertake that in the event of gas prices perhaps falling, as a result of increased efficiency on the part of the British Gas Corporation, prices will reach the consumer unaltered and that there will be no interference to put them up?
    Mr. Buchanan-Smith: Pricing is the responsibility of the British Gas Corporation. We expect the corporation to be competitive. I hope my hon. Friend welcomes the fact that, under its financial targets and performance aims up to 1986–87, it is expected to achieve a reduction in unit net trading costs in real terms of 12 per cent. compared with 1982–83. There is strong pressure on the British Gas Corporation to be efficient, and I am sure that it will be.
    Mr. Rowlands: As future gas prices and supplies may be determined by the decisions to go ahead with the Sleipner contract, will the Minister say what is the Government's position on it? As I understand it, negotiations are virtually complete between the British Gas Corporation and its opposite number. Where do the Government stand on the Sleipner contract?
    Mr. Buchanan-Smith: The Sleipner negotiation is not confined to the British Gas Corporation and the Norwegian company Statoil. There are a number of other big financial considerations which affect the future of gas supplies to the United Kingdom and our balance of payments. Negotiations continue on those issues. Until they are concluded, I regret that it is not possible to answer the hon. Gentleman's question.

    NCB Property (Vandalism)
    Mr. Merchantasked the Secretary of State for Energy if, when he next meets the chairman of the National Coal Board, he will discuss the incidence of vandalism against National Coal Board property and the resulting financial cost to the board.
    The Parliamentary Under-Secretary of State for Energy (Mr. David Hunt): I deplore the malicious acts of vandalism which have been carried out against NCB property during the present strike. They can only damage further the prospects for the industry.
    Mr. Merchant: In view of the serious acts of vandalism which have taken place in many areas,
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    including Easington colliery, near my constituency, where a few weeks ago windows were broken and cars overturned, will my hon. Friend consider encouraging the chairman of the NCB to institute disciplinary proceedings against those miners found guilty of such offences?
    Mr. Hunt: Since the beginning of the dispute about 450 employees have been dimissed by the NCB. These include a significant number for offences associated with vandalism. There can be no possible excuse for causing wilful damage to an industry which, at the start of this pointless strike, had such great potential for the future.
    Mr. Allen McKay: When the Minister meets the chairman of the NCB to discuss vandalism, will he suggest to him that as, after seven meetings, he has found himself incapable of bringing the strike to a successful conclusion it is time that he went?
    Mr. Hunt: As my right hon. Friend has already pointed out, in the course of the dispute there has been just one conciliation proposal from ACAS. After careful consideration, that was accepted by the chairman of the NCB but rejected by the president of the NUM.
    Sir Kenneth Lewis: Is it not a fact that of all the many speeches that Arthur Scargill has made, he has not made one statement urging his members not to vandalise their own plant and tools, because, when they go back to work, any such damage will be to their detriment?
    Mr. Hunt: The strike has been characterised by most unhelpful remarks from the president of the NUM. Perhaps the most unhelpful came today. Hon. Members may have noticed that he now calls for all forms of industrial action on a massive scale in support of the miners. I am certain that he will receive the same sort of raspberry to that ridiculous irresponsible notion as he has throughout the dispute.
    Mr. Dormand: Is it not strange that the hon. Member for Newcastle upon Tyne, Central (Mr. Merchant) should refer to my constituency, Easington, as being near to his, when it is not, and is it not even more strange that he should refer to an incident which took place five months ago? Will he join me in my constituency to see the whole context of what has happened?
    Mr. Hunt: The real damage in the dispute and the real financial cost has been, fòr instance, in the tragic investment situation. It now looks as if the industrial action, if it continues till the end of March, will mean a reduction in investment spending of nearly £500 million.
    Mr. Adley: Just for once, would it not be wonderful to hear one Labour Member stand up and unequivocally deplore vandalism?
    Mr. Hunt: I believe and hope that I am speaking for the House in condemning without reservation the sort of vandalism that we have seen.
    Mr. Eadie: If and when the Secretary of State meets the chairman of the NCB, will he ask him why he seems to come to life only when there is a move to try to resolve the miners' dispute? He must be about the most expensive chairman of any nationalised industry. Is it not vandalism for the chairman of the NCB to make statements on the eve of the Secretary of State's meeting with the TUC suggesting that there is no prospect of the strike ending? It must surely be unparalleled for a Cabinet Minister to

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    have his authority undermined in that way. Is it not time that Mr. MacGregor was asked to go? He has done too much damage already.
    Mr. Hunt: The chairman of the NCB has made what is undoubtedly the most generous offer that the miners have had since nationalisation. It is interesting to note that not one hon. Member so far has said that it is not unreasonable for the president of the NUM to stick to the irresponsible demand that no pit, however uneconomic, should close while there is still an ounce of coal left in it.

    British Nuclear Fuels plc
    Mr. Orme askedthe Secretary of State for Energy what plans he has for the privatisation of British Nuclear Fuels.
    Mr. Peter Walker: We have no plans at present to sell shares in British Nuclear Fuels plc.
    Mr. Orme: I welcome that statement, but will the right hon. Gentleman tell the management of British Nuclear Fuels to stop talking publicly about privatisation, as that will only get the public's back up and do great damage?
    Mr. Walker: I gather that in an interview with one particular journalist the chairman gave his views as to the potentiality of privatisation and implied that, with regard to the staff of British Nuclear Fuels, privatisation would be welcome. But he explained afterwards that he had expressed his own personal view.

    Energy Efficiency Office
    Mr. Tom Coxasked the Secretary of State for Energy what is the budget of the Energy Efficiency Office for the current year; what is its role in relation to the coordination of energy conservation policy; and if he will make a statement.
    Mr. David Hunt: The Energy Efficiency Office's budget for 1984–85 is £18·6 million. My right hon. Friend the Secretary of State set up the office to spearhead the drive for greater energy efficiency in industry, commerce and the home. Considerable progress has already been made.
    Mr. Cox: In view of that reply, will the Minister give an assurance that the Government's financial policies, including those on rate capping and so on, will not harm energy conservation programmes throughout the country? In view of the urgency of the matter, why is there still a division of responsibility as between the Department of Energy and the Department of the Environment? Why cannot everything come under one Department —preferably the Department of Energy?
    Mr. Hunt: I assure the hon. Gentleman that every possible incentive is being given to local authorities—I have recently met a number of them—to spearhead the energy efficiency drive. It is a sign of confidence that the Government have increased the budget of the Energy Efficiency Office within the Department by 34 per cent. over the past year.
    Mr. Boyes: How can the Minister talk about confidence in the Government when Cape Insulation in my constituency gave notice on 4 December to 360 or 370 men that the company would close on 21 December? Is it not a futile use of Government money to spend it on glossy
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    brochures and leaflets when the Government are not allowing local authorities the finance to use those products and thus to keep people in work?
    Mr. Hunt: I sympathise with the hon. Gentleman about the very serious redundancies caused by the closure of Cape Industries in Washington, but for some time there has been over-capacity in that area of the market. With the increased advance in advertising and the "lift a finger" campaign already showing signs of tremendous success, I very much hope that we shall see an upsurge of activity in that sphere.
    Mr. Wallace: How many local authorities have written to the Secretary of State in the past 12 months saying that they are having difficulty in planning and implementing energy conservation measures because of capital restrictions that are imposed on them by the Department of the Environment?
    Mr. Hunt: There has been a tremendous amount of interest in the energy efficiency campaign on the part of local authorities. More than 250 local authorities have sought advice from the Energy Efficiency Office and are participating in the crescendo that we are now reaching in this important campaign.

    Nuclear Power
    Mr. Skeetasked the Secretary of State for Energy if he will make a statement on the prospects for nuclear power in the United Kingdom.
    The Parliamentary Under-Secretary of State for Energy (Mr. Alastair Goodlad): The Government attach considerable importance to the continuing safe and economic development of nuclear power.
    Mr. Skeet: Does my hon. Friend agree that, after Sizewell, there does not appear to be a programme? Will he bear in mind the needs of the nuclear industry? Furthermore, will he take into account the fact that while 17 per cent. of total electricity is produced by nuclear means in the United Kingdom, the French, who are much more competitive, produce more than 50 per cent. of their total electricity from that source?
    Mr. Goodlad: My hon. Friend is correct in what he says about France. The Government consider that a prudent energy policy requires the country to have available a range of supply options, including an appropriate nuclear component. As my hon. Friend says, in 1983 nuclear power contributed 17 per cent. of the United Kingdom's electricity supply. When the three AGRs currently being commissioned are fully operational, nuclear power could be contributing as much as a quarter of our electricity requirements. Our nuclear generating capacity will then have risen from 6·5 to 9·5 GW.
    The Government expect that nuclear power will form an increasing component of our electricity supply in the longer term, provided that nuclear stations can be built to time and cost. The number of new nuclear stations will depend on several factors, including the level of electricity demand.
    Mr. Campbell-Savours: Is not the future of the nuclear power industry very much dependent on its competitive position as against coal? Do the Government take note of the way in which the accounts of companies and organisations involved in the nuclear industry are

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    drawn up? If they do, how do they take note of those accounts? Do they take similar note of the National Coal Board accounts, with which the nuclear industry has to compete? Will the Minister ensure that the accounting procedures of both organisations are published openly so that we can all study them?
    Mr. Goodlad: I note what the hon. Gentleman says. We have every confidence in the accountants concerned.

    Coal Liquefaction
    Mr. Dormandasked the Secretary of State for Energy if he will make a statement on the progress of coal liquefaction.
    Mr. David Hunt: The National Coal Board has completed the basic design work for its liquefaction project at Point of Ayr. I am delighted to be able now to announce that the Commission of the European Community has offered aid of £4·8 million. The board expects to begin work on the construction phase early in the new year.
    Mr. Dormand: Does the Minister agree that liquefaction is most important for the future of the coal industry? Does he agree that the Government first used the excuse of lack of private capital for the slow development of coal liquefaction? Is the Minister now using the miners' strike as an excuse for even slower development? The Minister has said nothing about Government finance. Will he say something about it now?
    Mr. Hunt: This Minister is well aware of the hon. Gentleman's interest in the subject. It is a vital subject. The National Coal Board is discussing terms of participation with a private sector company. Such participation is expected to release the £2·5 million balance of the Department's contribution, which has already been substantial in the design stage.
    Mr. Eadie: Does the Minister realise that his Department has been fiddling around with the liquefaction scheme for five and a half years? At the end of that it seems that all we shall have will be a glorified laboratory scheme on a colliery site. Is it any wonder that our scientists are disillusioned with the Government's approach to science and technology?
    Mr. Hunt: I do not accept what the hon. Gentleman says. The project is important. Completion of the NCB contract with the EEC will trigger the start of the construction phase work. That will go ahead with the Government's full support.

    Electricity Prices
    Mr. Baldryasked the Secretary of State for Energy if he will make a statement on the estimated increases in electricity prices to industry during the coming year.
    Mr. Peter Walker: Electricity tariffs for industrial consumers are determined by the electricity supply industry. I understand that area boards will not be increasing tariffs this winter.
    Mr. Baldry: I am delighted to hear that news, because industry needs to know well in advance, when it is budgeting, what prices might do in the coming year. Is my right hon. Friend aware that some industries have been
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    worried that one of the effects of the damaging miner's strike will be to make them less competitive because electricty prices will go up?
    Mr. Walker: I am aware of the importance to industry of keeping electricity prices as low as possible. That is the electricity industry's objective. I am pleased to say that electricity prices to industrial consumers have fallen on average by 8 per cent. in real terms in the last two years.
    Mr. Nellist: Does the Secretary of State agree that he has wasted £4,400 million in the last 10 months attacking the National Union of Mineworkers and that a large part of that cost will fall on industries such as the electricity industry, resulting in price increases in the coming months or years? Will not old-age pensioners between the ages of 70 and 85, whose heating benefits have been cut, and the families of striking miners whose benefits have also been cut, have to bear the cost of the Government's attack on the miners and their families in the last 10 months? Yet again the people least able to bear the cost will have to bear it.
    Mr. Walker: As I know of the hon. Gentleman's passion for looking after pensioners, I know that he will be doing all that he can to persuade Mr. Scargill to accept the very good terms available.
    Mr. Heathcoat-Amoryasked the Secretary of State for Energy what is the average electricity price charged to industrial customers in the United Kingdom; and what information he has on the comparable figure in France.
    Mr. Goodlad: Electricity prices to industrial consumers vary greatly within all countries, according to the nature of the load being supplied. In general, however, French prices are the lowest in Europe and are, typically, up to 20 per cent. lower than those in the United Kingdom and other EEC states. This is largely due to the greater proportion of electricity generated by nuclear power in France.
    Mr. Heathcoat-Amory: As French electricity prices put British industry at a competitive disadvantage, which is bad for investment and jobs, will my hon. Friend explain some of the reasons for the price differential? Does he agree that the large French nuclear programme enables that country to generate electricity significantly more cheaply than we can manage?
    Mr. Goodlad: Yes, Sir. My hon. Friend is correct.
    Mr. Pike: Does the Minister accept that while European electricity suppliers may advertise certain tariffs through long-term agreements, they supply electricity at a much lower figure to many industrialists working in Europe? Is there not a massive subsidy to industry in Europe? Are there not many companies with bases in this country and Europe which obtain electricity at a cheaper rate by using that method to get around the advertised tariffs?
    Mr. Goodlad: The French tariff is lower because, broadly speaking, it has a larger nuclear element. The electricity supply industry in Britain is currently considering proposals for successors to the present load management schemes, including the contracted consumer load scheme, which formally expires in March 1985. I

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    understand that the Electricity Council intends that the new arrangements should, overall, be no less beneficial than the present schemes.

  HOUSE OF COMMONS

    Palace of Westminster (Bedrooms)
    Mr. Greenwayasked the Lord Privy Seal how many bedrooms there are in the Palace of Westminster today compared with 30 years ago; how they are allocated; and if he will make a statement.
    The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): There are 42 bedrooms in the Palace of Westminster, which compares with 38 bedrooms 30 years ago. These rooms are used by those occupying official residences and by staff of the House whose duties may require the provision of overnight accommodation.
    Mr. Greenway: Will my right hon. Friend bear in mind the problems of some elderly and unfit Members of Parliament—[H0N. MEMBERS: "Name them."]. It would be unfair at Christmas to name them. Such hon. Members have problems getting to the Division Lobbies from their distant offices in the eight minutes allowed. Will my right hon. Friend consider giving priority to finding offices for hon. Members within the precincts of the House? Will he switch the bedrooms from the House to the distant offices vacated by hon. Members?
    Mr. Biffen: My hon. Friend's question became more uncharitable as it proceeded. In the execution of the Bridge street project, it is hoped that it will be possible to shift some staff from the Palace of Westminster and that accommodation can then be made available to hon. Members. Of course, such allocation and the criteria for it are matters for the Accommodation and Administration Sub-Committee.
    Mr. Beith: Is not one of the bedrooms occupied by the Lord Chancellor? Does he not sleep more easily in his bed than he should because he does not have the scrutiny of a Select Committee of this House over his Department, as do all other Ministers? Should not his slumber be made uneasy like that of other Ministers?
    Mr. Biffen: I suspect that the premise of the question is wrong, and therefore it would not be appropriate for me to comment on the conclusion.

    Public Gallery (Access)
    Mr. Wareingasked the Lord Privy Seal if he will make a statement on the provision of access for blind people with guide dogs to the House of Commons Public Gallery.
    Mr. Biffen: I refer the hon. Member to the reply that I gave to my hon. Friend the Member for Exeter (Mr. Hannam) on 2 July.
    Mr. Wareing: I have not seen that reply. Is the right hon. Gentleman satisfied that the facilities for blind people with their guide dogs are equivalent to those in the other place, where I understand Black Rod has a considerable element of discretion? Will he carefully monitor the position in the House of Commons Public Gallery? Will he consider the possibility of giving the Serjeant at Arms like discretion?
    Mr. Biffen: The hon. Gentleman may be interested to know that an identical number of blind persons with dogs may attend the Strangers Gallery in the House of Lords as obtains in the House of Commons. In my answer to my hon. Friend the Member for Exeter I said that two places in the Gallery had been provided for blind persons with guide dogs. Since that arrangement was made six months ago, a place has been taken by a blind person with a guide dog on only one occasion. The visitor pronounced himself well satisfied.
    Mr. Hayes: Given the difficulty that the blind seem to be having in gaining access to the Public Galleries, does my right hon. Friend not feel it outrageous that convicted terrorists are gaining access to Committee Rooms?
    Mr. Speaker: Order. That has nothing to do with the question.
    Mr. Pavitt: The Lord Privy Seal will recall that recently, following a debate on the blindness allowance, there were at least six blind persons present with their guide dogs. Will he consider ensuring that there is flexibility on certain occasions, which will enable him to give instructions to the Serjeant at Arms to increase the number of those permitted in with guide dogs?
    Mr. Biffen: Certainly. I am sure that the appropriate Committee will be happy to consider that. Since the establishment of special places in the Galleries for the blind and their guide dogs, the facility has been used to the extent that admission has always been possible.
    Mr. Hayward: Is it not the position that the Department of the Serjeant at Arms operates the provisions and facilities for the blind and other disabled with a great deal of flexibility when requests are made of it? Last week I brought a disabled person into the House and received all the help that I needed from the Department.
    Mr. Biffen: I am certain that that is so and I am grateful to my hon. Friend for making the point. It enables me to say that the facilities that can be offered and supervised by the Serjeant at Arms are always that much better if lobbyists inform him in advance of their proposals.
    Mr. Boyes: In considering the problems of the handicapped and the disabled, will the Leader of the House inform us whether a sign language interpreter for the deaf is permanently employed in the House? If not, will he be prepared to consider whether one should be so employed?
    Mr. Biffen: I shall have that proposal investigated.

  ENERGY

    Selby Coalfield
    Mr. Eggarasked the Secretary of State for Energy if the current miners' strike has led to delays and cost overruns in the development of the Selby coalfield.
    Mr. David Hunt: The total investment programme of the National Coal Board had been planned at £800 million for this year. The current strike has, however, halted work on many of the NCB's projects, including Selby, to the detriment of the industry's future.
    Mr. Eggar: Was not the Selby development a signal to the entire coal mining industry that the Government

    15
    were committed to the future of coal mining? Was it not a severe blow when the National Union of Mineworkers decided to go ahead with picketing to stop development of this extremely important coalfield? Is there nothing that my hon. Friend can do to try to assist in getting more miners back to work so that development can continue at Selby despite the NUM's actions?
    Mr. Hunt: I agree with my hon. Friend that everything possible must be done. Since 1979 the Government have invested £3·9 billion in the coal industry. That investment is nearly 50 per cent. higher in real terms than investment in the previous five years by the Labour Government.
    Mr. Heffer: As the amount of coal which the Government projected would be mined will not be reached because of the dispute, is it not time that the Government stopped intervening on the side of the Coal Board and took a step in intervening to achieve a settlement of the dispute, as has been asked for by Opposition Members? Given the Secretary of State's statement that there should be no negotiations, is not Mr. Scargill right in saying that the only way forward is industrial action by the rest of the working-class movement?
    Mr. Hunt: It was noticeable that when the hon. Gentleman said that Mr. Scargill was right there was not one note of agreement throughout the Chamber.
    Mr. Nellist: Yes, there was.
    Mr. Hunt: The hon. Gentleman was asleep. It is a fact that before the industrial action started our great coal industry had tremendous potential, but that is being lost every day that the dispute continues.
    Mr. Rowe: Is there not a real danger that the longer the strike continues the more Mr. Scargill's gloomier predictions will become self-fulfulling? What steps is my hon. Friend taking to ensure that when the strike comes to an end the damage that has been inflicted on the coal industry is laid at the door of those responsible?
    Mr. Hunt: I agree with my hon. Friend. All Ministers at the Department of Energy are anxious to start on the rebuilding process. Since the beginning of the dispute, not only have 23 production faces had to be abandoned, but 13 salvage faces as well. In addition, 19 faces are giving cause for serious concern, and a further 65 faces are causing concern. It is a tradegy that the NUM is putting at risk those pits which its leaders claim they are fighting to save.
    Mr. Foster: The Under-Secretary of State continues to plead how tragic it is for the industry that this dispute is continuing, and the hon. Member for Enfield, North (Mr. Eggar) is alarmed about the implications for Selby. If Tory Members are so worried about damage caused to the industry, why do they not lift a finger and get the people involved around the table to solve the dispute? Is the Secretary of State aware that he is profoundly mistaken if he believes that there is any political profit to be had in humiliating the miners and destroying mining communities?
    Mr. Hunt: The solution to this dispute lay with a ballot held at the start of the dispute, in accordance with the long-established, democratic tradition of the NUM. If a ballot had been held, there would have been no need for these mass pickets, intimidation and violence. Not one miner
    16
    would have gone to work. The sad fact is that the only way to end this dispute is for miners to vote with their feet and return to work.

  CIVIL SERVICE

    Northern Region (Job Transfers)
    Mr Dormandasked the Minister for the Civil Service what are the number of Civil Service posts transferred to the northern region since May 1979.
    The Minister of State, Treasury (Mr. Barney Hayhoe): As I last told the hon. Gentleman on 20 November, the dispersal programme announced on 26 July 1979 did not include any transfer of posts to the northern region. Details of posts that may have been transferred by Departments for management reasons are not held centrally.
    Mr. Dormand: Is the Minister aware that people in the north are sick and tired of seeing the Government shed crocodile tears over unemployment in the region? Here is a matter on which the Government can take direct action, and in nearly six years they have done absolutely nothing. The Government have actually transferred Civil Service jobs from the northern region to other parts of the country. In view of what the Minister said today, can we ever expect a change of policy in this matter?
    Mr. Hayhoe: The dispersal programme, which was announced on 26 July, is being followed through. I can hold out no hope to the hon. Gentleman that a new dispersal policy will be brought before the House.

    Administrative Grades (Recruitment)
    Mr. Chapmanasked the Minister for the Civil Service what initiatives he is taking to encourage scientists and engineers to be recruited, at least for limited periods, into the administrative grades of the Civil Service.
    Mr. Hayhoe: Recruitment into administrative posts in the Civil Service is open to people from all disciplines and we seek through publicity and university visits to bring this fact to the attention of all potential recruits, including scientists and technologists. A total of 17 per cent. of successful candidates for administration trainee in 1984 had a scientific or technological background, compared to 11 per cent. in 1983.
    Mr. Chapman: I am grateful to my hon. Friend for giving that information. While recognising the importance of attracting scientists and engineers into the administrative grades of the Civil Service, may I ask my hon. Friend to consider sympathetically the possibility of extending the unified grading approach to new entrants from the professions, as I am sure he will agree that that is the best and most effective initiative that we could take to attract such people into the Civil Service?
    Mr. Hayhoe: I certainly support the concept of extending unified grading, and discussions are occurring to extend it down to principal level. I hope that those discussions will be completed soon. I am sure that that extension will have an encouraging effect on the outlook of engineers, technologists and scientists in the Civil Service.
    Mr. Eastham: Is it not almost criminal that we are to recruit engineers and scientists into administration when

    17
    it costs many thousands of pounds to train those specialists? Is the Minister aware that, recently, a Select Committee on which I served was advised of grave shortages of some of those scientists, such as the shortages to which reference was made this afternoon?
    Mr. Hayhoe: As one of the few chartered engineers in the House, I can say to the hon. Gentleman that I believe that people with such professional skills should be employed in the highest ranks of the Civil Service. Many of the matters with which the Civil Service deals and about which advice must be given to Ministers involves engineering, technological and scientific aspects. It is highly desirable that some of the people giving that advice should have been trained in those disciplines.

    Delegation of Authority
    Mr. Eggarasked the Minister for the Civil Service if he is satisfied with the level of delegation of authority within the Civil Service.
    Mr. Hayhoe: The central Departments have already delegated a wide range of authorities to spending Departments, while maintaining where necessary common standards and rules across the Civil Service, and Departments in turn delegate a good deal to line managers. More delegation is needed and this is one of the aims of the changes in management under way in the Civil Service.
    Mr. Eggar: Has not the record of delegation of authority within Deparments, rather than within the centre, been somewhat disappointing despite the fact that the financial management initiative drew attention to the need for delegation? Has my hon. Friend noted that the new report from the efficiency unit draws attention to that? Will he assure the House that he will lead a drive to ensure that Departments follow the recommendations of the efficiency unit?
    Mr. Hayhoe: My hon. Friend, as so often on such matters, is right in what he says. We want to see more delegation. Delegation and accountability go together. We want to see that being extended. The financial management initiative has that as one of its main objectives. I shall do all that I can to facilitate progress on that initiative.

    Trade Union Discussions
    Mr. Soleyasked the Minister for the Civil Service when he last met representatives of the Civil Service trade unions; and what was discussed.
    Mr. Hayhoe: I met the Civil Service unions on 4 December to discuss the Government's decisions on the 1984 report of the Top Salaries Review Body. The unions also took the opportunity to discuss with me some recent changes in travel and subsistence provisions.
    Mr. Soley: Did the Minister take that opportunity to raise the subject of the review of VAT offices? Has he anything to say about the proposal to close 30 of them, in view of the Government's plan to increase VAT on some commodities—on newspapers, books and so on? What implication does that have for staffing? Will he make a statement on that subject to the trade unions?
    Mr. Hayhoe: VAT was not discussed at my last meeting, which was with the Council of Civil Service
    18
    Unions. Nor was it discussed at an earlier meeting that I held with union representatives from Customs and Excise. At that time they were raising matters about the customs part of the general responsibility of Customs and Excise.
    Dr. McDonald: Is the Minister aware that in the pay negotiations going on at GCHQ, of the five members of the staff side three still retain their trade union membership? Does that not show the absurdity of the Government's ban on trade union membership there?
    Mr. Hayhoe: No. What it does show is that the hon. Lady is relying upon a recent, inaccurate report in the Financial Times.

  ENERGY

    Electricity Prices (Landlords)
    Mr. Greenwayasked the Secretary of State for Energy if he will make a further statement on the practice of some landlords in pricing electricity to tenants above the rate they are required to pay themselves; and if he will make a statement.
    Mr. Goodlad: The Office of Fair Trading is currently considering the comments received on the consultative document which it issued earlier this year and expects to report its findings to Ministers in the new year.
    Mr. Greenway: Does my hon. Friend agree with me, without prejudging what the report says, that it is wrong for some landlords to charge their tenants double, or even more, for the price of energy than they themselves have to pay? When he sees the report, will he introduce legislation to make that impossible?
    Mr. Goodlad: I am aware of the close interest that my hon. Friend has taken in this matter. Existing legislation provides that area boards shall set maximum permitted prices for the resale of electricity. Landlords may resell at that higher price to recoup their additional costs. The Office of Fair Trading reviewed the problems associated with the resale of electricity between 1974 and 1977. It was concluded that there was insufficient evidence to justify recommending changes in legislation. I should not wish to anticipate the findings of the present review or the Government's response to it.

    Coal Industry Dispute
    Mr. Nellistasked the Secretary of State for Energy if he will make a statement on the coal strike.
    Mr. Peter Walker: I refer the hon. Gentleman to the reply that I gave to the hon. Member for Cannock and Burntwood (Mr. Howarth).
    Mr. Nellist: Following the Under-Secretary's remarks about Selby coalfield, does the Secretary of State recognise that that coalfield, producing 10 million tonnes of coal, with 4,000 miners, is designed to replace equivalent production from 21 pits in the north Yorkshire area, which used to employ 16,000 men? Is not one of the central issues that fuels the anger of the miners the development of super pits such as Selby, and in areas of Oxfordshire, Warwickshire and so on, which is a preparation for future privatisation? It shows that the Government are less concerned about the continuation of jobs in communities and more concerned about lining the pockets of their big business mates.
    Mr. Walker: It is remarkable that the hon. Gentleman should argue about the development of pits such as Selby, when a predecessor of mine in a Labour Government boasted of the enormous contributions made by Labour Governments towards Selby's development. The reason for the dispute is nothing to do with the development of Selby, which is in the interests of the coal industry. The leader of the NUM — I gather from the tapes — is reported to have repeated his demand at the meeting with the TUC this morning and informed it that the NUM is not
    20
    prepared to allow the closure of any section of the industry, however small. That is in sharp contrast to what happened under all previous Labour Governments.
    Mr. Lawrence: On a point of order, Mr. Speaker.
    Mr. Speaker: Does the point of order arise directly out of questions?
    Mr. Lawrence: No.
    Mr. Speaker: I shall take the point of order later, then.

Banking Supervision
3.31 pm
The Chancellor of the Exchequer (Mr. Nigel Lawson): With permission, Mr. Speaker, I wish to make a statement about banking supervisory arrangements, in the light of the recent problems at Johnson Matthey Bankers Ltd.
I have now considered with the Governor of the Bank of England the events leading up to the rescue operation conducted by the bank on 1 October. It is clear that the case raises important issues about our present procedures of banking supervision, and the legislative framework within which it is conducted.
The Governor and I have therefore agreed to a full review of the present supervisory arrangements, and to consider whether any early changes in present supervisory procedures are needed. Issues to which particular attention will be given are the relationship between auditors and supervisors, staff experience and training, the handling of concentrations of risk and the assessment of quality of assets, notification and collection of statistics, and the adequacy and deployment of staff resources in the banking supervision department of the Bank of England. The review will also consider whether a more effective framework is required than that provided by the Banking Act 1979. I shall be placing a copy of the full terms of reference of the review in the House Library.
I shall, of course, inform the House as early as possible of the results of the review, including any legislative changes that I consider necessary.
Mr. Roy Hattersley: The most significant fact about the statement is that the Government felt the sudden necessity, after 10 weeks, to go on record about the Johnson Matthey affair. No doubt the Chancellor believes that his message will be blandly reassuring, but the nature of the statement, and the fact that the right hon. Gentleman needed to make it today, will, I suspect, intensify rather than allay fears.
The City of London has been anxious about the matter for the past two months. Can the Chancellor tell us why it took that period of time before he was able to make a statement, in the House or elsewhere, about the changes that he regards as necessary? Has the delay been in part the product of the widely reported disagreements between the Bank of England and the Treasury about how the matter was disposed of? Can the Chancellor tell us whether he personally supports the view that the Bank should have virtually nationalised Johnson Matthey at 9.30 pm one Sunday evening? As well as telling us his view on the general principle underlying that disturbing pattern of events, will the right hon. Gentleman answer four questions, even in advance of the review which he has promised and which we shall no doubt debate?
First, will the review include a thoroughgoing examination of the Banking Act 1979 specifically to deal with the problems of early warning and whether the bank and the Government get sufficient warning in time about incipient collapse; whether the Act provides sufficient supervision in its quasi-voluntary form, or whether some sterner regulation is necessary?
Secondly, may we be told the relationship to the affair of Price Waterhouse and Co., and whether the Chancellor
22
thinks that this firm of accountants is spreading its activities too widely across the entire economy of the United Kingdom?
Thirdly, may we be told about a second firm of accountants — Arthur Young McClelland Moores and Co.—the auditors, which gave the company a clean bill of health as recently as the middle of June last year? We hear that that firm of accountants is likely to be investigated by the standards body of its profession. Is that true?
Fourthly, the Governor of the Bank of England is on record as saying that institutions should stand or fall according to their own performance. Does that rule apply to companies within the City of London, or does it apply only to manufacturing industries, which are allowed to fall by the Government, thereby causing large-scale unemployment?
Mr. Lawson: The right hon. Gentleman asked whether there would be a thoroughgoing examination of the Labour Government's Banking Act 1979. As I have said, in so far as the provisions of that Act are relevant—and many of them are—they will be very much at the heart of the inquiry. I do not want to prejudge the results of the inquiry, but it may well be that it will be necessary to introduce certain amendments to the Banking Act. However, we shall have to await the results of the inquiry.
Price Waterhouse has little, if anything, to do with the case. As the right hon. Gentleman said, the auditors are Arthur Young McClelland Moores and Co. As I said in my statement, the relationship with the auditors and, indeed, the general relationship between auditors of banks and the supervisory authority, are extremely germane and will be at the centre of the inquiry. As to whether firms stand or fall by their results, the shareholders of Johnson Matthey, the parent company, of which Johnson Matthey Bankers is a wholly-owned subsidiary, have lost three quarters of their money — some £¼ billion — and the entire top management, from the chairman downwards, have been obliged to resign. That, I think, answers the right hon. Gentleman's question.
It comes rich from the right hon. Gentleman to ask why it has taken me so long to come to a considered judgment on the best way of investigating banking supervision, because until I announced that I would make a statement today he had not asked one question about this matter.
Mr. Terence Higgins: The House, particularly the Treasury and Civil Service Committee, will need to consider carefully what my right hon. Friend has said, in the light of the document to which he referred. Has he any views on the likely timing of the inquiry? When it is completed, will it be presented to the House as a Green Paper or in some other way?
Mr. Lawson: Given that this is a highly complex matter, it is difficult at this stage to say how long the inquiry will take, but it will be completed as soon as possible. As to how the results are reported to the House, I shall have to determine that in the light of the inquiry, which will go into matters of very great commercial confidentiality, including relationships between banks and their clients. I cannot yet say how I shall report to the House, but, as I said in my statement, I shall report the results of the inquiry, together with whatever action I think it proper to take.
Dr. David Owen: Does the Chancellor accept that his remarks are unsatisfactory? There is now a contingent liability on public funds of £75 million. This matter began with no liability on public funds, it went to £10 million, and many of us are wondering whether the figure will go above £75 million. Will the Chancellor reassure us on that point? Will he confirm that public money is involved, because if the public liability is taken up there will be a loss of dividends from the banking department to the Treasury?
Secondly, will the Chancellor reveal the extent of his own involvement? He told me in a letter that this was entirely the decision of the Governor of the Bank of England. The Governor told me that he had been consulted at all stages. I understand that Sir Peter Middleton was heavily involved in the early stages of the rescue. The Chancellor insisted that no public money should be involved. These are serious matters and very disturbing events in the City of London. To have a public inquiry or the kind of assurance from him for which his right hon. Friend the Member for Worthing (Mr. Higgins) has asked —that there should be revealed to this House the basis of this internal investigation—is the minimum that is needed. Above all, the Chancellor, who is very complacent about this affair, has a duty to say to the House whether any more public money is at risk other than the £75 million.
Mr Lawson: Far from being complacent, I have shown myself to be very concerned about what appeared to me to be possible weaknesses in the system of banking supervision in this country, which goes far beyond the issue which has brought the matter to light; namely, the collapse of Johnson Matthey Bankers Ltd. That is why I thought it right to have in inquiry into the adequacy of banking supervision in this country: both the way in which the existing system is operated, and whether it statutory framework needs to be improved. As to whether there should be an internal inquiry, or a public inquiry, because of the nature of the matter it is right that it should be an internal inquiry, which will involve not only the Bank of England but the Treasury and an independent consultant.
As for when I knew about it, the Governor notified me of the action which he intended to take shortly before the rescue was announced. As for the funds, my approval was neither sought nor required. Perhaps I might refer the right hon. Gentleman to an occasion when he was a Minister in a previous Labour Government. In the case of Slater Walker, my predecessor but one, the right hon. Gentleman's former colleague, the right hon. Member for Leeds, East (Mr. Healey), said when he was asked about it, inevitably by the hon. Member for Bolsover (Mr. Skinner):
"I was aware of the general approach adopted by the Bank of England to the problems of the Slater Walker Group".
The right hon. Gentleman continued:
"My specific approval of the standby loan facility and guarantee was neither sought nor required."—[Official Report, 13 October 1976; Vol. 917, c. 142–43.]
That is the relationship between the Bank of England and the Treasury and between the Governor and the Chancellor of the Exchequer. As for the resources which are at risk, these are not voted funds. They are the own resources of the Bank of England.
Mr. Peter Tapsell: Does my right hon. Friend agree that, with the ever-growing internationalisation of financial markets and the development of 24-hour markets, the supervisory role of all central banks is becoming increasingly more difficult to perform, and that, although it is important to try to achieve the most efficient legislative and codification arrangements possible, in the last resort these matters, which often have to be handled very quickly and in a situation of some crisis, depend for their successful resolution upon having men of great judgment and experience running the central banks and that whatever we do we should be careful not to reduce the role of the Bank of England to that of the Treasury's poodle?
Mr. Lawson: I agree with everything that my hon. Friend has said, but there is no question of the Bank of England being a Treasury poodle. At issue here is the adequacy of our banking supervisory arrangements, for which the Treasury clearly has responsibility. The Banking Act 1979, which is the statutory framework within which it is conducted, is an Act of Parliament for which there is Treasury responsibility. Therefore, it is necessary for the Treasury as well as the Bank of England to be involved in this inquiry.
Mr. Robert Sheldon: I, too, welcome the review which the Chancellor of the Exchequer has announced, but will he be more forthcoming about the liability of the Bank of England? This is an important matter. We are committing public money to the rescue of a bank, although similar amounts of public money are not being given to many worthy individuals or companies whose businesses have collapsed during the past five years. If there is to be sauce for the one, there must be sauce for the other. The right hon. Gentleman must tell us about the amounts of money involved, because those same amounts could have saved many jobs in many worthwhile industries all over the country.
Mr. Lawson: So far, the Bank of England has paid only £1 from the banking department's own resources. It is true that, beyond that, there is an indemnity, jointly between private sector banks and others and the Bank of England of £75 million each. It is far too soon to say how much of that indemnity will be required.
In making the comparisons which the right hon. Gentleman sought to make, he knows as well as I do, because he is a former Financial Secretary to the Treasury, that in every country in the world the central bank has a responsibility, as a lender of last resort, for the banking system. It has to decide in each case whether it is right for it to use that authority as a lender of last resort and, if so, in what way. It was the clear view of the Governor that there was a threat to the London gold market, which is a very important market for this country. That was a factor of which he had to take full cognisance.
Mr. Tim Smith: My right hon. Friend's announcement that the relationship between the auditors and the supervisory authority is to be the subject of a review is welcome, but can he tell us whether he has recommended to the Bank of England or others that the auditors in this case should be sued?
Mr. Lawson: I have made no such recommendation, but, leaving aside the question of litigation, when a

25
company becomes insolvent as rapidly as Johnson Matthey Bankers did, questions arise about the role of the company's auditors. The auditors signed off the company's accounts without qualification on 18 June of this year. Of course, beyond the particular case—the House might do well to concentrate on this—there is the question of the role of banks' auditors and the relationship between the auditors and the supervisory authority.
Mr. Stuart Bell: The House will be grateful to the Chancellor for mentioning, after 17 minutes, the London gold bullion market and for saying that it was involved in the considerations of the Governor of the Bank of England. Was not the lifeboat of the Bank of England launched to help speculators in the gold market rather than those who put their money into real wealth creation in industry in this country?
Mr. Lawson: That is not true. The case was one of a particular bank which got into serious trouble. As far as I am aware, it was a one-off case. The matter was complicated by the fact that the bank was wholly owned by a leading member of the bullion market.
Mr. Jonathan Aitken: Bearing in mind the fact that Johnson Matthey had such a pivotal position in the London bullion market, does my right hon. Friend agree that the Bank of England would have been right to try to rescue Johnson Matthey if it could have achieved, as its initial press release said it had achieved, a rescue in which there was no liability of public funds? Will my right hon. Friend address his mind to what has gone wrong between the original press statement of no liabilities and the present situation where we hear that there could be £75 million of liability of public funds? Where are the guilty men?
Mr. Lawson: I seem to have heard that last phrase somewhere before. My hon. Friend asks what has gone wrong. I think that what has gone wrong is that there is prima facie evidence of a weakness in the way that the banking supervisory system operates. That is precisely why I have set the review in motion.
Mr. Norman Atkinson: Is not the Chancellor's dilemma about whether to have a public inquiry into all aspects of the matter dominated by his desire to protect the reputations of leading personalities in the City and of some ex-hon. Members and current hon. Members?
Mr. Lawson: I have not the faintest idea to whom the hon. Gentleman is referring.
Mr. Anthony Beaumont-Dark: Does my right hon. Friend accept that most of us believe that he has acted entirely properly and with some circumspection before launching the inquiry? Does he agree that if we are to have full confidence in the inquiry, bearing in mind the responsibilities and supervisory role of the Bank of England, noble Lords in the upper House, who have great experience in these matters and who are Privy Councillors, should be included in the inquiry team? If that is done, all hon. Members can have confidence in the inquiry and the report that results from it.
Mr. Lawson: I am grateful to my hon. Friend for his initial remarks. I assure him that he can have complete confidence in the inquiry that I have set in motion.
Mr. Max Madden: Was the Chancellor surprised at the collapse of Johnson Matthey in the buoyant enterprise society in which he keeps telling us we live, and at the disinclination of private interests to rescue the bank, which would have been an alternative to having recourse to the Bank of England and public funds?
Mr. Lawson: It is wrong to say that the private sector was unwilling to come forward. It provided a substantial sum. In addition to the initial sum that was invested, especially by Charter Consolidated, the private sector has invested 50–50 with the Bank of England in the £150 million indemnity.
Mr. Hugh Dykes: Is my right hon. Friend not aware that public anxiety on these occasions is always about the phrase "internal inquiry"? To avoid good old-fashioned City magic circle-ism in this extremely disturbing story, will he assure us that the inquiry will be fully publicised, properly set up and will include eminent people, who may come from the upper House, as my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) suggested?
Mr. Lawson: I am sure that my hon. Friend, who earns his living in the City, as well as in Parliament, will understand that matters of high commercial confidentiality are involved, such as the relationship between the bank and its clients. It would not, therefore, be appropriate for this to be a public inquiry. I have made my concern clear to the House by having a full review of the workings of the existing system and of whether the system should be improved. I shall report my conclusions fully to the House. If legislative changes are required, the House will have the fullest opportunity to debate them.
Mr. Jack Straw: Does the Chancellor accept that his weasel words cannot disguise the extraordinary fact that the Government, who believe in the magic of the market, nationalised for £1 an uneconomic bank late one Sunday evening? Does he agree that that shows that the Government have one law for uneconomic banks and another law for uneconomic pits and factories?
When the right hon. Gentleman speaks about a serious failure of supervision, does that not raise questions, which were hinted at by the hon. Member for East Lindsey (Mr. Tapsell), about the Governor of the Bank of England, whose qualifications were questioned by the Labour party and by many leading figures in the City when he was appointed?
Finally,—
Mr. Tapsell: There is no such implication.
Mr. Speaker: Order. Although the hon. Member for Blackburn (Mr. Straw) is a Front-Bench spokesman, he should ask one question only, as other hon. Members do.
Mr. Lawson: I hope that the hon. Gentleman, who will have heard the comment of my hon. Friend the Member for East Lindsey (Mr. Tapsell) that there is no such imputation about the Governor of the Bank of England, who is a distinguished banker, will withdraw his remark.
Mr. Tim Eggar: I welcome the review. For the benefit of ignorant Opposition Members, will my right hon. Friend make it clear that the Johnson Matthey group employs a large number of people in manufacturing industry and that the prompt action of the Bank of England safeguarded their jobs?
Mr. Lawson: That is absolutely right. The Johnson Matthey group has a gold refining business, various other manufacturing businesses and employs many people, some of whom, if I am not mistaken, are in my hon. Friend's constituency.
Mr. Ian Wrigglesworth: Does the Chancellor agree that, in view of the seriousness of the matter, it is inadequate that there is no independent element in the review that he has announced? Does he further agree that it is incorrect that those who were partly responsible for the collapse should inquire into themselves? Does it not reflect badly upon the Bank of England that it has implemented inadequately the legislation that has been passed during the past four years?
Mr. Lawson: I do not accept what the hon. Gentleman says. The inquiry will be a joint one between the Bank of England, which is the supervising authority, and the Treasury. The Treasury will be fully involved. An independent consultant experienced in banking will also be involved. That consultant has not yet been appointed.
Mr. Harry Cohen: If the Chancellor can give £75 million from public funds to bail out Johnson Matthey, do not his friends in the City think that with this Government it is Christmas all the year round? If he can provide such money out of public funds for them, why can he not waive VAT on the Band Aid record so that that money can be used to relieve the famine in Ethiopia?
Mr. Lawson: I have given no money, and no taxpayers' money is involved in this. The hon. Gentleman mentioned an important factor. Because the Governor of the Bank of England decided to intervene in this case, under his authority and using the resources of the banking department of the Bank of England, it does not follow that he would do so in any other case, were one to arise.
Mr. D. N. Campbell-Savours: Is it not true that an investigation of Johnson Matthey's accounts has shown that half of the loan portfolio was in risky ventures to which it should never have lent money? Is it not also true that that information was relayed to the Bank of England 12 months ago? May we therefore presume that that information was also relayed to the Chancellor about 12 months ago? Does the right hon. Gentleman deny that he knew 12 months in advance of the possibility that the bank would fail in the way that it has and that the Exchequer would be required to pick up the bill in the form of a £70 million indemnity?
Mr. Lawson: First, the Exchequer has not picked up the bill. Secondly, of course I did not have the knowledge to which the hon. Gentleman referred. All these matters, including the loan book of Johnson Matthey bankers, will be germane to the general review into the adequacy of the present banking supervisory arrangements.
Mr. Hattersley: The Chancellor is clearly foolish to pretend that the £75 million, which may technically be a matter for the Bank of England, is not a charge on public
28
funds. It is clearly money which, were it not used for this purpose, might be used for far more desirable purposes. The Chancellor makes a technical, and therefore false, distinction between the two.
Perhaps the Chancellor will clear up some of the added confusion that he has caused. He said that he did not understand my reference to Price Waterhouse and Co. I may be wrong, but I understand that it was the firm of accountants asked by the Government to consider the company's business. When did it become involved? Was it involved when the problem seemed much less serious that it does 10 weeks after the collapse?
Secondly, have any attempts been made to ensure that the risks that may be involved and any money that may be required will properly be debted to the parent company of Johnson Matthey, which I understand is not regarded by the Bank of England as being responsible for the potential debt?
Thirdly, and most importantly, may I ask the Chancellor again a question which he has so far not attempted to answer concerning his attitude to the affair. He said that he was told about the arrangement shortly before the public announcement. He was clearly not consulted, but was informed that it was happening. The House should know whether the Chancellor approves of the rescue in this case. If he approves of this rescue, there will be many more desirable rescues of which the House will expect him to approve.
Mr. Lawson: On the last point, I have made clear, my approval was neither sought nor required. I was informed of the position shortly before the announcement was made in what has become the conventional way, and obviously there was no time for me to consider the full details of the matter then. Price Waterhouse and Co. was asked by the Bank of England to conduct a quick examination of Johnson Matthey's accounts at a late stage, but before the rescue, when the Bank of England had serious doubts about the state of Johnson Matthey's loan book.
I am sorry, but I have forgotten the right hon. Gentleman's third question.
Mr. Hattersley: It was about the involvement of the parent company, which I understand—the Chancellor will correct me if I am wrong—may not be responsible for the debt and for the rescue operation costs which the Bank of England has underwritten.
Mr. Lawson: I have already made it clear that the parent company has lost its entire investment in Johnson Matthey Bankers. The top management, from the chairman downwards, have been obliged to resign and the company now has a market capitalisation of £90 million, which is after some injection of cash from Charter Consolidated, having had a market capitalisation of £320 million before the rescue operation.
Mr. Hattersley rose—
Mr. Speaker: Order. We have an important private Members' day today.

BILL PRESENTED
  TRUSTEE SAVINGS BANKS
  Mr. Chancellor of the Exchequer, supported by Mr. Peter Rees, Mr. Giles Shaw, Mr. John Moore, Mr. Barney Hayhoe, Mr. Ian Stewart, Dr. Rhodes Boyson, Mr. Allan Stew art and Mr. Alex Fletcher, presented a Bill to make provision for the purposes of or in connection with the reorganisation into companies incorporated under the Companies Acts of the institutions regulated by or existing under the Trustee Savings Banks Act 1981 and for the treatment for the purposes of the Banking Act 1979 of any Scottish savings bank established before 28th July 1983 which has not since become a trustee savings bank: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed [Bill 45].

Statutory Instruments
Mr. Speaker: By leave of the House, I shall put together the Questions on the four motions relating to statutory instruments.
Ordered,
That the Sale of Optical Appliances Order of Council 1984 (S.I., No. 1778) be referred to a Standing Committee of Statutory Instruments. &c.
That the Agriculture and Horticulture Grant (Variation) (No. 2) Scheme 1984 (S.I. 1984, No. 1923) be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Dangerous Substances and Preparations (Safety) (Amendments) Regulations 1985 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Novelties (Safety) (Amendment) Regulations 1985 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Archie Hamilton.]

British Shipping Industry
4.1 pm
Mr. Michael Colvin: I beg to move,
That this House recognises that the shipping industry is not only of great importance to the United Kingdom's trade and commerce, but also to the United Kingdom's defence needs and North Atlantic Treaty Organisation commitment; notes with concern the decline of the British merchant fleet in terms of tonnage and share of world markets; and asks Her Majesty's Government to state its policies for helping the industry to improve its international competitive position.
Both the constituencies that I have had the honour to represent have strong maritime connections, and that is one reason for choosing the state of our Merchant Navy as the subject for my private Member's motion. The other is that since the Conservative Government took power in 1979 there has been no opportunity, in either Government or Opposition time, for a general debate on an industry which is crucial to this country's economic prosperity and its strategic defence.
It is true that we have had Adjournment debates about the Merchant Navy, and I pay tribute to the hon. Member for Kingston upon Hull, East (Mr. Prescott), who had an Adjournment debate on this subject in March 1983. I am sure that the House will also applaud my right hon. Friend the Member for Taunton (Mr. du Cann) for initiating his Adjournment debate on the Merchant Navy in October 1982, for the general way in which he has spoken up on behalf of the merchant shipping industry and for the way in which he drew attention to the state of our merchant fleet during the recent debate on the Royal Navy. The House will also salute my right hon. Friend the Member for Taunton for taking over the chairmanship of the all-party merchant shipping group, which has just come into being, and not a moment too soon.
I am afraid that apart from those debates and occasional "quickies" on small matters of shipping legislation, the Finance Bills have offered the best opportunities to say things about shipping. Perhaps that underlines the importance of fiscal policy for this vital industry. It is a pity that all the Treasury Ministers who were here a moment ago, and to whom many of our remarks this afternoon will be directed, are not here to listen to this debate.
The debate is necessary because the British merchant fleet, in spite of being one of the world's most modern and efficient, is declining at the rate of about two ships per week, which could nearly extinguish it by the end of the decade. Cruise ships and ferries may be doing all right, but by the year 2000 we may have a fleet which consists only of cruise ships and ferries, and that would not be good enough for our trading position. As recently as 1966 our fleet was the largest in the world, representing 12.5 per cent. of world tonnage.
When I first went to Bristol as a candidate in 1975, our merchant fleet was still at an all-time, but somewhat exceptional, peak. However, our position in the international league table was then already beginning to slip because our overseas rivals, often with massive state aid, were outgrowing us and adding to the excessive world tonnage. For the last decade the gap between available tonnage and cargoes has been steadily widening. Symbolic of the mounting shipping surplus is the fact that two of the

31
earliest ships which I saw use the new Royal Portbury dock in Bristol, which were recently launched OCL container ships, were laid up because there was no demand.
As I look out from the Waterside part of my constituency across the Solent, I see the horizon blanked off by the huge hulk of the Burma Endeavour standing idle in Southampton, not on account of the industrial dispute in the docks, although there is plenty of that, with dockers determined to scuttle the port of Southampton, their jobs and the jobs of many of my constituents who are working in the dock-related services, but because there is no economic demand for its 500,000 tonnes oil-carrying capacity. It is cheaper for BP to pay £1 million a year in wages, maintenance and mooring fees to keep her idle in dock.
Therefore, I hope that today I can, first, convince the House that Britain needs the Merchant Navy. Secondly, I shall explain why our share in world shipping is down to 3 per cent. and still falling fast. Thirdly, I shall try to suggest what we should be doing to halt and perhaps reverse this dangerous downward trend.
Why do we need a Merchant Navy? In answer to that question I shall quote from a pamphlet entitled "British Shipping—the Right Course", of which I am the joint author with Mr. Jonathan Marks, a shipbroker, a good Tory and one day, I hope, a Member of Parliament. In the introduction to the pamphlet we said:
"Britain's economic prosperity depends on our success in international trade. It generates a third of our national income and employs a corresponding part of our workforce.
As a major exporting and importing nation, it is essential for us to have free access to world markets to sell our goods and services.
It is equally vital to be able to purchase raw materials and finished products abroad.
We need the freedom to invest overseas and to attract foreign capital into Britain.
No other leading industrialised country has so clear a stake in open trading markets.
The prosperity of our country rests upon this foundation."
Our shipping industry is of critical importance in sustaining Britain's competitive performance in these world markets. The comparative advantages which a British-owned and registered fleet once enjoyed have made it one of the largest national flags and made a major contribution to our overseas earnings. Even now, an industry which employs more than 45,000 officers, ratings and cadets on about 800 vessels, which earns about £3.5 billion per annum and which in total contributes a surplus of £1 billion to the balance of payments each year is clearly vital to our economy. Threats to its prosperity constitute a danger to our long-term interests.
Our shipping industry is now in a state of crisis. The advantages which we once enjoyed in supplying shipping services have long since ebbed away and our fleet has shrunk accordingly. The world recession has compounded our problems. It has cut British shipping traffic with disproportionate severity. It has been argued that if our fleet continued to decline at the present rate it would be impossible to mount another Falklands expedition and could cast doubt on our ability to fulfil our NATO commitments.
While this has been happening, we have seen the growth of unfair competition. We have seen Governments in developing countries build up their fleets. We have seen moves by our overseas competitors towards protectionism
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and even more state subsidies. We have seen the massive growth of the Comecon fleet, which, as well as being part of the Soviet Union's naval might, is in a position to wage economic war on this country. Nor should we forget that it is our maritime tradition that helps to make the City of London what it is. Sink our merchant fleet and untold damage will be done to the maritime service industries such as insurance and the Baltic Exchange, ship forwarders and travel agents which today provide worldwide services to shipowners everywhere. They are very important, too.
There are many reasons why we need a merchant fleet, and it is important and appropriate to mention at this stage three independent organisations which think likewise—the Nautical Institute, the Greenwich Forum and the British Maritime League—and pay tribute to the work that they have done and are doing to broaden and to deepen the debate on merchant shipping.
It is not surprising that voices have been raised within and without the shipping industry calling for drastic action to prevent a further decline of our fleet. One purpose of this debate is to ask the Government what they are doing to bring forward maritime policies which will halt and reverse that downward trend.
Before looking for remedies, it is important to examine the reasons for the decline. There has been no shortage of analyses, but diagnosing the ill is very much easier than prescribing a cure.
The British Maritime League has completed the most recent in-depth study in response to a request from my hon. Friend the Parliamentary Under-Secretary of State. The league rightly concludes that the main underlying cause of our fleet's decline is the impractibility of trading fairly in a market which is no longer governed by economics alone. Our competitors will do anything to survive when far too many ships are chasing far too little cargo. I know that it is a clichè, but it is the old case of Britain playing cricket while the rest of the world perform karate.
More specifically, the causes of the decline of our fleet can be either international, over which we have no direct control, or national, over which Britain — the Government or the shipowners or the unions — have some significant influence. The causes also apply either generally to the whole of the British merchant fleet or to particular sections of it.
Internationally, the world recession has reduced the demand for seaborne trade, and the debts of many developing countries and also the Comecon countries have put a high priority on acquiring foreign exchange. Our trade with Europe has grown at the expense of long-haul trade. Shipping requirements have been grossly overestimated by Governments, shipowners and banks. There were, for example, too many tankers in the early 1970s before the oil crisis, and too many bulk carriers in the late 1970s. The growth in protectionism is both national and international and includes national subsidies, direct and indirect, national flag discrimination or preference, national Government interference in conferences, multilateral and bilateral financial aid to developing countries for shipping projects and, of course, the UNCTAD 40–40–20 liner code for freight. More efficient ships have been introduced. There has been a growth in competition from flags of convenience, with lower taxation, minimal regulation, lower crew costs and, in some cases, less costly safety standards.

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Another international cause for the decline of our cargo liner fleet is the development of the Trans-Siberian railway, which is now taking an increasing share—nearly 30 per cent. —of the trade between Europe and the far east.
Further threats to our liners are, first, the growth of the massive Taiwanese Evergreen and United States lines' fleets, which will be operating round-the-world container services outside the conferences; secondly, the increased practice of cargo reservation by countries such as Latin America, India and Sri Lanka; and, thirdly, reserved cabotage exercised in various forms by France, West Germany, Greece, Spain, Italy, all the Comecon countries, the United States, Canada, Australia, Japan, Finland, India — at least we can beat the Indians at cricket, even if we cannot beat them at shipping —Panama and most countries in south America and southeast Asia. The list is a very impressive one —[Interruption.] I am glad to see the hon. Member for Kingston upon Hull, East here now. I was paying credit to him earlier in my remarks.
To sum up, it is a very inhospitable and unfair market in which British shipowners have to compete, and we cannot afford to have any self-imposed handicaps. I know that it is dangerous to generalise, but it is nevertheless true to say that shipowners, both British and foreign, choose to fly the Red Duster because of the fiscal policies and tax regimes of successive Governments, and they have registered elsewhere—or "flagged out" as it is called—because of excessive operating costs, particularly crew costs. Until recently there were extreme cases where British crews were twice as expensive as Chinese crews, not only because of wage levels, but because of the related welfare payments — the so-called social wage which owners have to meet. British ships also tended to be overmanned, and it is greatly to the credit of the seamen's unions that at least on new ships our manning levels are now comparable internationally.
I cannot be as complimentary about the Government. Until recently our fiscal policies and tax regimes were an incentive to "flag in". Now it is quite the reverse. In his 1984 Budget my right hon. Friend the Chancellor of the Exchequer did his best to torpedo what was left of the British-registered fleet. Apart from adding to crew costs by removing overseas tax relief, he ended the 100 per cent. first-year allowance coupled with free depreciation. Admittedly, thanks to some tough talking during the passage of the Finance Bill, the Government recognised that shipping was a special case and introduced instead free depreciation on a 25 per cent. writing-down allowance, but this is thought by shipowners to be totally inadequate when compared with what other western European Governments are doing to increase their financial support for their shipping. The Red Duster is now being put at a competitive disavantage against nearly every other fleet.
With due respect to my hon. Friend the Parliamentary Under-Secretary of State, I think that there is a very good case to have the debate answered by a Treasury Minister. Indeed, I should like to see my right hon. Friend the Chancellor of the Exchequer at the Dispatch Box. I do not suppose that he would be able to say very much, because we have to accept that between now and Budget day he is in purdah, but I hope that he will read the debate and take action on what is said during it.
Mr. John Prescott: That is true of every Department.
Mr. Colvin: We shall hear what my hon. Friend the Parliamentary Under-Secretary of State says. We are looking for action by the Department of Transport, too.
It is appropriate, therefore, that in suggesting policies to halt and, if possible, to reverse the decline of our merchant fleet I should start with fiscal policies. Even if the General Council of British Shipping has slightly overplayed its hand in years gone by, I believe that its new proposal, which formed part of the industry's submission to the Government for the 1985 Finance Bill, for a 50 per cent. ship allowance on new and secondhand ships in addition to the 25 per cent. writing-down allowance should be considered most seriously. There are other proposals on balancing charges, consortium group relief, the business expansion scheme and overseas earnings tax relief. I know that they sound a lot, but they do no more than bring us into line with some of our main overseas competitors.
On manning, I have paid tribute to the way in which seamen have helped to improve productivity. Of course, most of the reductions that have already been made through the joint efforts of shipowners and unions are in discretionary manning. It needs the Department of Transport to adopt a more innovative and flexible attitude towards statutory manning levels, particularly for officers, if further progress is to be made.
I welcome the recently agreed research into manning and technology which the Department of Transport is sponsoring, and the efficient ship project, at present the subject of a feasibility study being sponsored by the Department of Trade and Industry, could show us how to make further progress in combining high technology and lower manning, and Britain is very good at that
Related to manning are the subjects of regulation and safety. Britain has taken a lead in improving safety at sea. In 1959 we helped to set up what is now the International Maritime Organisation and have consistently applied safety standards which are stricter than those required by the IMO convention. As a result, the casualty rate for British-registered ships is now only one eighth of that of the world fleet for similar ships. That is good, and it is very welcome, but many of the requirements, both for safety and other equipment, may be unnecessarily restrictive and saddle British operators with unreasonable additional costs. Mr. Iain Sproat, when he was Minister, began to get to grips with this problem, but the task of removing petty regulations is far from complete and remains a major deterrent in terms of money and time to owners and operators wishing to "flag in" and sail under the Red Duster. We also want to see the rules tightened and enforced internationally to prevent our overseas competitors sacrificing safety in order to cut costs and therefore to underquote us.
I have mentioned the unfair protectionist policies of many of our overseas competitors. Unfortunately, our partners in Europe are among the worst offenders. Two things have happened which might help to put that right. The first is the appointment of Mr. Stanley Clinton Davis as Transport Commissioner. Those of us who knew him in this place will welcome the arrival in that office of someone with such knowledge of transport matters. The second is the publication by the European Commission of

35
its comprehensive paper outlining a possible common shipping policy. Our shipping industry has already welcomed that and I do too. It is long overdue.
Shipping is excluded from the competition articles of the treaty of Rome. That is why the Commission's proposal to open up existing restrictions within the Community concerning cabotage and cargo reservation is welcome. I understand that it is also to make proposals for defending British and Community shipping from protectionist measures and unfair practices in other countries throughout the world, particularly the Eastern bloc and the developing nations. How about subjecting the Comecon fleet to a quota system for calls at European ports if those countries continue to refuse to allow European ships to call at their ports?
Can my hon. Friend the Minister tell us whether Her Majesty's Government support the view that if we in Europe could get our house in order and adopt a common policy toward the rest of the world we could negotiate from a position of far greater strength for the open trading system upon which the prosperity of our shipping industry depends? For example, the Brussels package, which was a European response to the UNCTAD liner code, will go a long way towards securing access to the crucial cross trades for British shipowners.
The United Kingdom cannot deal with the problems of unfair competition single handed. If we reacted against protectionism by closing our ports to liners of the offending countries, it would do us no good at all unless the ports of Rotterdam, Antwerp and Le Havre were also closed. There is obviously a role for the Community here, but I hope that it will be a constructive one, aimed at keeping trade open, rather than retaliating against the outside world. Can my hon. Friend tell us how the Government will react to the idea of a common shipping policy?
One target for united European action is the United States. I understand that a dialogue on a broad range of shipping policy issues has been going on for two years now between the United States and the Consultative Shipping Group, which includes the European countries and Japan. That dialogue has been mainly concerned with preserving free access to trades in the liner shipping sector in the face of protectionist restrictions in other countries. Is it not about time that we started straight talking with the Americans about the repeal of the Jones Act, which reserves all their cabotage for their ships?
It is not, of course, all gloom and despondency in every sector of our shipping industry. The cruise liner business is reasonably healthy and ferries are doing well, thanks to the growth of trade with Europe, which has hit our deep sea cargoes. Until recently the offshore oil market has been a growth sector, with the British offshore support fleet of some 150 vessels now accounting for nearly 20 per cent. of the United Kingdom-owned and registered fleet. But British supply-shipowners are extremely dissatisfied with their position vis-a-vis foreign flag supply boats operating in the North sea, particularly our Norwegian allies.
At any time one would find that, out of 180 supply ships in the United Kingdom sector, about 40 per cent. would be flying a foreign flag and half would be Norwegian. Contrast that with the position in the Norwegian sector where, out of about 80 ships, rarely more than a couple
36
fly a foreign flag. Today there is only one British flag ship in the Norwegian sector, and that is beneficially owned in Norway.
Two financial inquiries have been carried out in recent months, one by the joint shipowners and the other by the joint Governments. Why are Norwegian ships able to offer lower rates? If it is true that the Norwegian financial assistance gives them the edge over the British, surely our financial system should be changed. At least, British shipowners should be given the chance to requote for business in the Norwegian sector.
Before concluding, I want to mention briefly the conference system, registration and defence. I am sure my hon. Friends will agree that the idea of the liner conference system—in effect, one of cartels—is anathema to our free market economy ideas. But we are dealing with a business which is neither free nor fair. Therefore, any immediate tinkering with the system would quickly lead to disaster, with the break-up of much of our fleet and the consequent loss of influence world-wide.
The conference system is still needed to ensure stability and regularity in the provision of liner services. However, I am critical in my pamphlet of the way in which conferences have repeatedly increased rates without consultation. How does my hon. Friend feel about the conference system? The House would particularly like to hear whether the idea that was being canvassed a little while ago on loyalty arrangements is still being pursued. That was, in effect, that no individual shipper could be required to put more than 70 per cent. of his custom with the conference in order to qualify for the rebate available in many trades in return for loyalty.
I noted that the Department of Transport recently issued a consultative document on registration suggesting changes in the criteria for registration under the United Kingdom flag. That contains valuable proposals for regularising the position in relation to Commonwealth countries where we have no jurisdiction. I hope that the Government will legislate along those lines. Will they go further and establish a register of ships owned by British companies, but registered under foreign flags, so that at least we know the real size of the British beneficially owned fleet? Most importantly, perhaps, will the Government stand firm against demands from the developing countries that open registries should be outlawed?
Lastly, I want to mention the Merchant Navy's defence role, which was touched on during the recent debate on the Royal Navy and about which the Under-Secretary of State had just given evidence to the Select Committee on Defence. Is today's British flag fleet really adequate for our defence needs? We were only just able to assemble 54 merchant ships in 1982 to support the 53 Royal Navy ships in the Falklands task force. Even then, some of those had to be chartered foreign flag carriers. Will my hon. Friend tell us today what he told the Committee last week? Will he also say something about the Government's review of future requirements for merchant ships in support of defence plans? As there is now general agreement that if the decline of our fleet continues our defence capability will be greatly weakened, what kind of arrangements will the Government be prepared to make when gaps in our strategic reserve are identified?
Even if the Government can requisition foreign ships to make up any gaps in our own provision, what will they do to ensure that we have an adequate supply of trained

37
British crews to man such ships when foreign nationals are not prepared to face hostilities? Can the Government cross their hearts and echo the words of G. W. Hunt in 1875, who said:
"We don't want to fight, but, by jingo if we do,
We've got the ships, we've got the men, we've got the money too."
What has my hon. Friend to say about that?
Our Merchant Navy is a big and somewhat technical subject for debate. I have spoken for far too long already. Nevertheless, I have left a multitude of items for hon. Members to cover.
Mr. Bryan Gould: I have been listening with great interest and some sympathy to what the hon. Gentleman has had to say, but does he not find it surprising —I certainly do—that neither of his hon. Friends who represent Southampton is present in the Chamber to hear what he has to say?
Sir David Price: I represent part of Southampton. Eastleigh now includes the Woolston ward of Southampton.
Mr. Colvin: The intervention of the hon. Member for Dagenham (Mr. Gould) does not do him credit. My hon. Friends the Members for Southampton, Itchen (Mr. Chope) and for Southampton, Test (Mr. Hill) have repeatedly taken part in debates, and I am sure that they will be in the Chamber later to participate in this debate.
With the exception of the hon. Member for Dagenham, who has made a facetious intervention, I thank those hon. Members present for their patience and their supportive noises during my speech. The decline of our merchant shipping industry from the pre-eminent position that it occupied so recently is truly a melancholy story. Our fleet faces extinction, and we should be fighting for its survival at least as passionately as we fight for the preservation of the whale. The trouble is that it is not until the species is about to be extinct that anyone takes any notice. My right hon. Friend the Secretary of State for Transport and my hon. Friend the Under-Secretary of State now face a challenge and an opportunity. If they fail, and if our merchant fleet disappears, they, like the Cheshire cat, may disappear too—the only differences being that there will be no smile left behind.
4.31 pm
Sir Paul Bryan (Boothferry): I declare my interest as deputy chairman of Furness Withy and Company Ltd. I start by congratulating my hon. Friend the Member for Romsey and Waterside (Mr. Colvin) on his choice of subject, which is not only important but under-debated.
I shall not recite again the figures that tell the sad story of our merchant fleet since 1975. The reason we Members of Parliament are debating shipping today is that each one of us is deeply concerned that the fleet has fallen in size, is still falling steeply and is expected to fall still further. Britain is now losing merchant ships at a greater speed than at the height of the second world war. They are victims not of torpedoes but of ever-rising costs, far eastern competition, and subsidised shipbuilding which makes ships too cheap to buy and thus leads to a surplus that in turn means uneconomic rates and cut-throat competition.
That general situation was exacerbated by the oil crisis, which led to a recession and to countries drawing their oil supplies from fields nearer home, thus making large
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tankers redundant. No one has escaped the biggest shipping slump for 50 years. Even the spectacularly successful Hong-Kong shipowners, Y.K. Pao, C. Y. Tung and Frank Chao have reduced their ship numbers and diversified into property, container terminals, support vessels for oilfields and so on. The great BP and Shell tanker fleets are a fraction of their former size
In those worldwide conditions the British fleet, with its high costs, was bound to suffer more than most. Many famous shipping names have disappeared. Others such as British and Commonwealth and Furness Withy have been selling off ships during the past five years at an almost hectic speed, and have diversified into other areas. P and O has had to write off £77 million in its balance sheet in respect of gas carriers.
However, there is a brighter side to the picture. For example, 20 per cent. of the merchant fleet—150 ships in all—is servicing North sea oil and other more distant oilfields with some of the most sophisticated ships in the world such as the Orelia, which was fitted out on Humberside and is now in the Persian gulf. We lead the world in luxury cruising. The commissioning of the Royal Princess took one back to the launching of the Queens, except that, regrettably, the Royal Princess was not built on Clydebank. The Atlantic Conveyor, a third generation combined container roll-on roll-off ship is about to join the Cunard fleet. As my hon. Friend the Member for Romsey and Waterside has said, the ferries are also prospering.
Nevertheless, the ugly truth is that new tonnage on order for the United Kingdom fleet is running at an annual rate of about 200,000 tonnes—in other words, at less than the tonnage of just one very large crude carrier. With dropping ship prices and plenty of modern ships on the market, there is no temptation to build anything but specialist ships.
So much for the past and present. What of the future? The bulk carrier and tanker trades are still depressed, but over the past few months, after a vicious struggle in the north Atlantic, the liner trade has been moving into profit in most parts of the world. But just as the horizon begins to brighten storm clouds loom up in the shape of 14 huge new container ships almost twice the size of what is at present considered large, which are owned by United States lines, and of an even bigger fleet of new container ships of slightly smaller size from the Evergreen line of Taiwan.
Both of those lines are starting round-the-world services, increasing world container capacity by about 40 per cent. Whether or not those huge ventures prosper, they must have a devastating effect on rates and hence on the profits of the main world container lines, such as OCL of Britain, which are preparing in various ways to meet this challenge.
We are moving into a world of huge investment in which only the strongest will survive. It is against that background that the Government have to make their Budget decisions and industry must make its business decisions. The main firms in the industry—Cunard, P and 0, British and Commonwealth, Ocean and Furness Withy—are not heading for bankruptcy. They are firms with access to capital and they have to decide how to invest it. In recent years that investment has inevitably been in the direction of diversifying away from shipping.
The Government, in turn, will have to decide whether shipping really is to be a special case, with no guarantee that fiscal measures will stop the rot. My hon. Friend the

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Member for Romsey and Waterside has described the fleet's tremendous commercial value, which goes well outside the industry itself. But another obvious justification for Government action might be defence, and an inquiry is already promised. This is surely unnecessary. The General Council of British Shipping is already deeply involved with Government in contingency planning for defence purposes, both in respect of NATO and nationally. There are also two Standing Committees dealing with this issue, and three statistical studies are now in progress.
We shall duly be told that the Merchant Navy is adequate for a Falklands-type operation. But we know that the whole British defence set-up is ideal for such an operation. We probably have the most efficient forces in the world, but they are small and—owing to lack of conscription, recent wars and, in the case of the Navy, a waning merchant marine — we lack reserves. In the Falklands, casualties were light and reserves were uncalled for. We had to use only our crack troops, and the mix of our Merchant Navy, with its accent on cruise ships, ferries and RO/RO ships was particularly suitable. It is in a more protracted campaign, in concert with our allies, that our reducing merchant fleet with its corresponding reducing core of trained personnel will be found wanting.
None of that was taken into account at the last Budget, when, for the first time, shipping lost its status as an exceptional case. By Committee or Report stage of the Finance Bill, even the Treasury was slightly frightened at what it had done and some small concessions were made. However, by then confidence in the industry was badly shaken.
At that time the Chancellor's no-distortion rule was new and shining bright. Since then student grants, pensions and the like have shown that nothing in this political life can remain rigid and survive. Every other country of any consequence is supporting its shipping in one way or another. When Britain did that foreigners invested in our fleets as a flag of convenience. Now the opposite is true. Our shipping is actually discriminated against since it cannot enjoy regional grants, enterprise zones and the other titbits offered to land-based industries.
The GCBS has made its proposals and my hon. Friend listed some of them. In my eyes the most important of these is a ship allowance. To enable companies to write off their ships more quickly, in addition to the 25 per cent. writing-down allowance, there should be a 50 per cent. ship allowance for new and second-hand ships.
The underlying argument is that the continued existence of a substantial British merchant fleet is of sufficient national importance to warrant special assistance. The Chancellor may find help given discreetly through the tax system repugnant. He knows that if the new tax rules are bent even slightly for shipping, he will be besieged with special cases.
If the Chancellor can be persuaded that assistance is required, it may be better if the arguments are discussed openly and any resulting subsidy is explicit. A shipping allowance would come exactly into that category. It would show that the Government were convinced, without doubt, of the importance of shipping. It would do something to restore confidence in the industry.
4.41 pm
Mr. Donald Stewart: I congratulate the hon. Member for Romsey and Waterside (Mr. Colvin) on his good fortune in the ballot and on fixing on the merchant service as his subject. I had begun to think that the future of the British merchant marine was a minority interest in the House, although a number of hon. Members, such as the right hon. Member for Taunton (Mr. du Cann) and the hon. Members for Jarrow (Mr. Dixon) and for Kingston upon Hull, North (Mr. McNamara), have recently made speeches on the subject.
I am surprised at the Government's attitude because the merchant fleet plays a vital part in defence. Even if the Government were indifferent to the trading and employment aspects of the subject, the connection between the merchant fleet and defence should be in the Government's mind.
The disappearance of the fleet is startling. "Disappearance" is a fair word. People of my generation remember how thin the lifeline was in the early 1940s. My war service was in the Royal Navy, so I am not scratching my own back when I pay tribute to the vital link that the Merchant Navy provided. When one recalls that, one is more than ever surprised at the Government's lack of interest in the erosion of the merchant fleet. We experienced a great humiliation in the Falklands war when we had to charter foreign merchant ships to make up the numbers.
Once we had 50 per cent. of the world's commercial shipping. We are now down to 700 ships or a tonnage of 21 million. The Greeks have more than five times that number in their merchant marine. In 1975, we had 1,614 ships or a 50-million tonnage.
Ships have disappeared to take up flags of convenience for various reasons. I refer to lower taxation, lower manning levels or odd watchkeepers' certificates —where they exist—as opposed to the British mariners' certificate which is demanded under the Red Ensign. Reduced safety regulations elsewhere are also an attraction, but it is a mistake to think that all ships sailing under flags of convenience have lower standards. Some of them are up-to-date.
A restriction applies to our coastal trade. Our so-called partners in the Common Market bar our shipping from their coasts while we have no recourse to the same practice here.
On the invisibles side, the decline of the United Kingdom fleet between 1980 and 1983 reduced the trade balance on sea transport by £1 billion. That is confirmation of what I and some other hon. Members have said for a considerable time—that the Government do not appear to care about the merchant fleet. Their lack of concern has cost the country £1 billion.
In addition, the Chancellor is withdrawing fiscal aid and putting the competitive position of the merchant service at an even greater disadvantage. As the hon. Member for Boothferry (Sir P. Bryan) said, the last Budget did considerable damage to the merchant fleet when it proposed the withdrawal of depreciation allowances.
The position of our seamen was made worse in the same Budget by the withdrawal of the allowance on foreign earnings. That can mean as much as £10 for an able-bodied seaman and up to £40 a week for senior masters. Seamen

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who work outside the country incur extra expenses; they are away from their homes and do not enjoy the amenities available to people living in the United Kingdom.
That ill-judged imposition will inevitably lead to a demand for bigger pay increases. That will make the position even worse. It will reduce the Merchant Navy's competitiveness, although the Prime Minister told me recently that that was essential for the continued existence of the fleet.
I hope that the Minister will convey to the Chancellor what I have said about the availability of fairer allowances for depreciation and restoration and the overseas earnings allowance.
For a maritime nation, the Government's indifference is astounding. In the last war the deep-sea trawling fleets and experienced seamen were the backbone of the navy. That has gone. The only reserve of trained seamen is in the merchant fleet. Any maritime nation neglects that at its peril. The problem has received little attention in the House. It involves trade, employment and defence. If we neglect those matters, the United Kingdom will be placed at a disadvantage.
4.48 pm
Mr. Roger Stott: It might be convenient if I intervene briefly now. I do not have a declaration of interest to make other than happy memories. I am not a vice-chairman of a shipping company, but I am an ex-able seaman. I joined the Merchant Navy 24 years ago when the size of the British fleet, of the shipbuilding industry and of our port industry was very different. It is a sad reflection on Government policy that we have reached such a terrible state in our shipping, shipbuilding and ports industries.
I thank the hon. Member for Romsey and Waterside (Mr. Colvin) for choosing the plight of the British merchant fleet as the subject for debate today. As he has already reminded us, it comes at an important stage in the development of the decline of British shipping. Unless we take some drastic action, this once proud maritime nation may have no maritime fleet left.
Two years ago, the National Union of Seamen—of which my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) is the only sponsored Member of Parliament—produced two documents which outlined the dramatic decline of the British merchant fleet. One was entitled "Flags of Convenience" and the other "British Shipping: Heading for the Rocks." I recommend the Under-Secretary to read them both.
It would appear that singularly little action has been forthcoming from the Government on the state in which Britain currently finds itself. That inaction has provoked a storm of protest from the General Council of British Shipping. I note that in the brief that it sent us today it commented that the 1984 Budget was a disaster for United Kingdom shipping.
Mr. Jim Slater, the general secretary of the NUS, wrote to the Prime Minister on 8 November spelling out in the plainest terms —one might say with a touch of mess deck language — the dramatic decline of Britain's merchant fleet, and suggesting remedies to halt that decline.
In the business section of The Sunday Times on 2 December, Philip Beresford and John Huxley wrote an article entitled "Britain's abandoned ships." No doubt the Minister read that. There was also an article in The
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Guardian by Andrew Cornelius entitled "Facing a fight to the death." That graphically outlined the problems being faced by British shipping. Given the state of British shipping today, it hardly surprising that the hon. Member for Romsey and Waterside, together with his colleague Jonathan Marks — who I understand is a shipbroker and member of the Conservative party —should publish a report entitled "British Shipping—the Right Course." I reiterate that the House should be grateful to the hon. Gentleman for choosing the subject of shipping for today's debate.
I shall do the hon. Gentleman the honour of discussing the report of which he was co-author. I have read it. The report attempts to analyse the reasons for the decline of the fleet and makes recommendations for halting and reversing that decline. Much of the analysis echoes the examination by the NUS of the problems of the United Kingdom shipping industry. Despite some hysterical and factually incorrect sections on manning, collective bargaining and trade unions, the report makes a worthy contribution towards getting the Government to give serious consideration to shipping.
The General Council of British Shipping has reacted to the report in an extremely hostile manner, because it attacks two of the fundamental elements of protection for existing companies involved in shipping — the conference system and the fiscal reliefs peculiar to shipping. It is clear that the authors of the report believe that the GCBS and the shipping companies have, on the one hand, looked for every form of advantage available, including the elimination of competition, but, on the other hand, have publicly espoused free competition.
I believe some of the suggestions in the report to be wrong, but some of its recommendations are certainly worth pursuing. Some of its comments are a direct criticism of the Government's performance thus far. The hon. Gentleman and his colleague outlined graphically the decline of the British fleet and set out certain measures to halt that decline. I shall not bore the House by detailing them, but I subscribe to many of them.
In addition to the points made by the hon. Gentleman in his speech, there has been a process of concentration through the merger of shipping groups, diversification by shipping companies into other areas and a build-up of foreign ownership. Apart from manning restrictions, which I believe to be factually incorrect, the factors mentioned in the report were also identified by the NUS in its pamphlet in 1982. The report demonstrates a belief that the United Kingdom can act alone against these trends. It implies that support for existing shipping companies would not be in the nation's interests.
I wish to quote a number of passages from the report. It states:
"the temptation to go behind the fence to reach bilateral agreements with the developing countries in order to buttress the position of established companies must be resisted … If we succumb to [this temptation] we head towards complete regulation of shipping … the survival of the British merchant marine depends upon the creation of a broader base of entrepreneurial ship-owners, free from unnecessary and burdensome fiscal and regulatory constraints, and thus in a position to face fair competition and the changing trends of the shipping markets of the world. Government should use its powers to create a fairer environment for international competition."
Mr. Colvin roseߞ
Mr. Stott: I shall give way in a moment.

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Acknowledging that the British people play cricket while other countries play karate the report's basic solution is that everyone should persuaded to give up karate and play cricket. That reveals a very slim grasp of the realities of international trade and the commitment of other Governments to protect their interests, rather than the fixation of a single ideology, which I understand from the report is based upon unfettered competition—
Mr. Colvin rose—
Mr. Stott: The hon. Gentleman should be patient.
Mr. Colvin: The longer that the hon. Gentleman continues, the more I shall have to answer. He criticised the idea of a wholly regulated market, which is precisely what the bilateral agreement between Britain and Sri Lanka would lead to and which would be anathema to the whole principle of free trading.
The hon. Gentleman failed to acknowledge that in the NUS paper and brief, which I have read, the NUS recommended a totally controlled environment. It wants to control everything. It would nationalise everything—the shipping lines, the shipments, the forwarding agents, the docks and the shipbuilding companies. The whole lot would be integrated on a national state-owned basis. The NUS thinks that that would solve the problem. But it would not. It would lead to retaliation from our competitors overseas. The hon. Gentleman must appreciate that the cross trades are vital to our shipping industry. If we do anything to weaken our position, we will fire the equivalent of more than one Exocet at our fleet.
Mr. Stott: With respect to the hon. Gentleman, I do not know to which pamphlet he has referred. The NUS document does not mention the nationalisation of shipping companies. It certainly mentions a firmer degree of Government control, and I go along with that. Prior to the election the Labour party produced a document referring to a national shipping line. I do not think that the hon. Gentleman will find what he has suggested in the NUS document.
The hon. Gentleman is not a reluctant critic of the role of the Government. His report states:
"A long-term policy for British shipping is hard to detect. If there is an official view on the structure of the industry, on its tax regime, on its requirements for registration and regulation, it has yet to be made public as a coherent whole."
That is absolutely right.
The report continues:
"A general view has been promulgated neither by Ministers nor officials on the structure of the industry."
Again, the hon. Gentleman is spot on.
The report is critical of a lack of any real regulation over the conferences. It states:
"Despite a political belief"—
that is the belief of the hon. Gentleman and his friend—
"that the conference system is ripe for reform … we have accepted the argument that any immediate dismantling of the system would quickly lead to disaster with the break up of much of the fleet and a consequent loss of influence worldwide."
The pamphlet sets out certain suggestions in respect of the conference decisions. I subscribe to the recommendations, which are absolutely right.
The hon. Gentleman talked about cabotage and state aid and said that the Government should be prepared to go to
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the European court, if necessary, to ensure that other EEC countries do not breach the treaty of Rome on cabotage. The report makes a dramatic leap from having ended cabotage in Europe to pressing the United States Government to abandon cabotage and reversing Government-generated cargoes to United States flag ships. The demonstrates degree of naivety. The chances of getting Greece to abandon cabotage are extremely remote, especially now that it is the dominant shipping industry within the EEC. Italy is trying to obtain EEC approval for a package of credit measures that would encourage Italian shipowners to order new ships in Italian yards. The United States Government have categorically stated that they will not alter the principles of the Jones Act, which provides for United States cabotage.
The blind faith of the hon. Member for Romsey and Waterside in free trade leads him to confuse the ideal world of free trade and entrepreneurial endeavour, which he would like to see, with the real world of shipping. Cabotage exists and will continue to exist in the real world.
Mr. Colvin: When I suggested that it was about time that we talked seriously with the Americans, I went on to explain that we are already taking that approach. As is stated in my pamphlet and as I said earlier, we shall be more capable of acting internationally to try to remove some of the unfair practices of competing nations if we act jointly with our European partners. That is why my question to my hon. Friend the Parliamentary Under-Secretary of State was so important. I referred to the shipping policy document that has been produced by the commissioners and I to Mr. Stanley Clinton Davis, who was an Opposition spokesman and who is now a Transport Commissioner. Mr. Davis should be in a strong position to be able to do something about cabotage and the evolution of a common shipping policy. We can tackle the problem of unfair competition elsewhere in the world only if we act in concert with our European partners. I hope that the hon. Gentleman will endorse the idea of a common shipping policy. If he does not, he will sign the death knell of the British merchant fleet.
Mr. Stott: What a tangled web we weave. I do not subscribe to what the hon. Gentleman has said. I do not think that we are likely to achieve any common cause with our European partners, for the reasons that I have outlined. I cannot envisage the Greeks, the Italians, the West Germans or the French agreeing to what the hon. Gentleman proposes. I redirect the hon. Gentleman's mind to a document produced by the NUS in 1984 in which it proposed that, in the first instance, coastal shipping should be regarded as domestic transport. It suggested that it was valid for every nation to reserve its coastal trade for its own flagged ships. However, if the EEC were to adopt new regulations within the terms of the treaty of Rome, it would be more appropriate to lift restrictions within the Community but to reserve the coastal trade to vessels registered within EEC states than to abandon coastal shipping to all comers. That is a proposal that would probably find acceptance.
I support the attack of the hon. Member for Romsey and Waterside on the Government's taxation measures. That attack has been taken up by others, so I shall not rehearse his arguments on taxation. However, it greatly concerns the shipping industry that it is not treated in a way that would encourage it to keep British ships under the British flag.

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The hon. Member for Romsey and Waterside has repeated the analysis that is set out in the document produced by the NUS on registration by acknowledging that foreign investment represents about half the ownership of the United Kingdom fleet. However, rather than seeing this as a source of insecurity and questioning more deeply why United Kingdom investors have been reluctant to put their money into shipping, the hon. Gentleman suggests that the development of a coherent shipping strategy depends on foreign investment. Surely he is aware that the whims of foreign investors are influenced by factors outside the control or influence of the British Government. The abandonment of United Kingdom shipping to their whims hardly demonstrates a commitment to ensure that United Kingdom shipping recovers from its current appalling decline.
The report of the hon. Member for Romsey and Waterside draws attention to the need to ensure that substandard vessels do not obtain British registration without complying with British safety standards. That is to be applauded. However, the suggestion that more inspection work should be delegated to private sector classification does not make for an adequate system of ensuring that common safety standards are met and maintained.
The hon. Gentleman's pamphlet can be applauded also for its call that eligibility to register vessels should be confined to those over whom jurisdiction can be exercised. However, that contradicts other statements which support flags of convenience operators. Countries which operate the flag of convenience arrangement offer a major attraction, because they do not exercise effective jurisdiction.
The hon. Member for Romsey and Waterside referred to manning. The hon. Gentleman would not expect the Opposition and the NUS to agree to, participate in or countenance levels of manning which would clearly be unsafe. He would not expect us to allow the status of our seamen to be undermined by reducing wages and conditions to levels at which other seamen have to operate. The status of our seamen is a cost to the industry and it is one that the industry has to bear. We cannot, will not and should not be expected to agree to the lowering of the standards that our seafarers have obtained through negotiations with shipowners. We cannot allow that to happen.
The hon. Member for Romsey and Waterside was right when he mentioned the role of the merchant fleet and the defence of the nation. The defensive role of merchant shipping has long been recognised and supported by the Opposition and the NUS. It is to be welcomed that others adhere to the union's position. However, the hon. Gentleman's pamphlet seems not to take into consideration the link between shipping, shipbuilding, ship repairing and Government support in maintaining a defence capability. It is important that we recognise the link.
I apologise to the House for spending some time responding to the issues that the hon. Member for Romsey and Waterside sets out in his pamphlet. I thought it only right to extend to him the courtesy of demonstrating that I have studied his pamphlet and taken some care in trying to understand what he has written and said. A number of sections are flawed, and I cannot agree with the conclusions that he has drawn in those respects; but his
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pamphlet and the suggestions that he has made, together with the debate that he has initiated, are to be greatly welcomed.
The decline in British shipping is serious. There is a general recognition throughout the House of that fact. In the last decade, the British merchant shipping fleet has declined from 50 million tonnes to 20 million tonnes. During the past 10 years, the number of seamen working on British ships has been halved to about 37,000. During the past two years, the balance of payments contribution from merchant shipping has been cut in two. The reason is simply that there are too many ships chasing too little cargo. Unfortunately, that is a fact of life.
We have heard and shall continue to hear the appropriate plaudits for our merchant seamen. With some regret I have to say to the Under-Secretary of State that the tax relief measures for our seamen undertaken last year by the Chancellor of the Exchequer in his Budget were a pretty poor reward for their service in the Falklands war. I hope that, if the Under-Secretary of State has some influence with the Chancellor of the Exchequer he will tell him that that measure went down badly in the shipping world, and certainly with those brave men and women who manned our merchant fleet during that crucial time.
Our merchant fleet is in bad shape. The Government have presided over 4 million of our citizens on the dole and over our industrial decline. Will they preside over the sun setting on the Red Ensign? I very much hope that that will not happen. The House expects the Under-Secretary of State to recognise that there is serious trouble ahead unless the Government do something about it.
5.11 pm
Mr. Edward du Cann: Following the admirable precedents set by the right hon. Member for Western Isles (Mr. Stewart) and the hon. Member for Wigan (Mr. Stott), I should like immediately to congratulate my hon. Friend the Member for Romsey and Waterside (Mr. Colvin) on his choice of subject. This debate was certainly timely, and I should like to congratulate my hon. Friend on the excellent speech to which we had the pleasure of listening. I much appreciate the kindly things he said about the all-party parliamentary maritime affairs group and appreciate his consistent support of that body.
I have a single statement to make and a single question to put. I believe that I shall make common cause with the hon. Member for Wigan, my hon. Friends the Members for Romsey and Waterside and for Boothferry (Sir P. Bryan) and the right hon. Member for Western Isles. Indeed, I should be surprised if the House is not unanimous in these matters.
Britain is faced with an alarming decline in her merchant fleet which is now assuming crisis proportions. That is undoubted. The present condition of Britain's merchant navy is the Achilles heel of our economic and defence policy. The question that was posed immediately by my hon. Friend the Member for Romsey and Waterside was: what do the Government propose to do about it? The need for action now — action this day, as Winston Churchill used to say—is undoubted.
Every right hon. and hon. Member who has participated in the debate so far has given the facts. In 1967, the British fleet was the largest in the world; by June 1983 it had dropped to eighth place in the world league, and it is still declining. What is worse, during the past three months no

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orders for merchant ships have been placed in British yards. Picking up a point made by the right hon. Member for Western Isles, in 1970 Britain had 160 distant water trawlers, last year it had 10, and this year it has none. The loss of trained seafarers is now running at a rate of 5,000 officers and men a year. Educational and training establishments are being closed, and the cadet schemes are virtually extinct. In 1970, the annual number of entrants of engineering cadets was about 1,000; last year it was 70. It does not matter which aspect of the scene one examines —the picture as a whole is horrifying.
It is possible to say that there is a world surplus of ships and shipbuilding capacity and a world recession, as my hon. Friends the Members for Romsey and Waterside and for Boothferry pointed out. Of course that is true, but it is only part of the story. Since 1945, world trade has grown eightfold—with 99 per cent. or more carried in ships. As my hon. Friends have pointed out, other nations have substantially expanded their fleets. They include China, Korea and, not least, as my hon. Friend the Member for Romsey and Waterside pointed out, Comecon and the Russians.
Soviet Russia is now a formidable maritime state while, in comparison, the United States is a naval power only. The Soviet naval fleet is now larger than the British fleet. Russian warships are second in number only to those of the United States. The Soviet submarine fleet, with 400 ships in service—a new submarine completed every 40 days—is larger than the one Dőnitz commanded, which so nearly brought our country to its knees in the 1940s. The Russian fishing fleet—also used from time to time for military purposes—is the largest in the world, as is the Russian fleet of ice-strengthened ships. The Soviet Union's hydrographic capability is by far the greatest in the world while ours—potentially the finest in the world — is disgracefully neglected, as I have often complained. I cannot get out of my mind the words of Admiral Gorshkov:
"Soviet seapower … has become the optimum means by which to defeat the imperialist enemy and the most important element in the Soviet arsenal to prepare the way for a Communist world."
It is not unimportant to ponder those words while we are in the midst of this successful visit, which I greatly welcome, by Mr. Gorbachev.
What about our friends and allies? It is a fact that the United Kingdom's merchant fleet is declining faster than that of any of our allies in NATO or in the European Community. We can, therefore, safely deduce that the dominant cause of the decline of our Merchant Navy is not the recession but the way in which our country has reacted to it.
It has been common ground among every right hon. and hon. Member who has spoken in this debate that a national shipping capability is vital in peace time, for numerous good commercial reasons — for instance, its direct contribution to our balance of payments, which is still running as high as £1 billion a year, although, as the right hon. Member for Western Isles pointed out, it had gone as high as £2·5 billion in 1974. Such capability is vital for the security of availability of cargo space, and for some control over freight rates. After all, 98 per cent. of our trade goes by sea.
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It would surely be extreme folly to be exclusively or nearly dependent on foreign carriers and to put Britain's life support system in the hands of our competitors, or perhaps even our enemies. This process has already gone pretty far. I cite three instances, one of which was given by my hon. Friend the Member for Romsey and Waterside when he pointed out that, of 180 supply ships in the British sector of the North sea, only about 100 fly the Red Ensign. Clearly, that is different from the Norwegian sector, as my hon. Friend rightly said. Secondly, believe it or not, three quarters of our oil and gas from Sullom Voe in the Shetlands is carried in foreign ships. Thirdly, in total, less than one third of our imports are now carried in British registered ships. Some may think, as I do, that the process has gone too far already, but there are many indirect reasons for supporting a substantial British Merchant Navy capability. A thriving and substantial British merchant fleet is the key to and basis for a British shipbuilding industry, a British ship repairing industry, a prosperous marine engineering and equipment industry, and substantial invisible earnings in the City through brokerage, insurance and so on.
London is currently the world maritime centre. I believe it to be of great benefit to the United Kingdom that we should maintain that position. In an emergency our national merchant fleet, as the hon. Member for Wigan said, is, in effect, Britain's fourth arm of defence. Its military task is to transport men and supplies; its economic task is to keep our people fed and supplied. Besides that, as the right hon. Member for Western Isles and my hon. Friend the Member for Boothferry said, it is the Navy's reserve of manpower. Adverting in particular to what the right hon. Member for Western Isles said, a comparison with the years gone by that he and I remember is interesting. In 1934, there were 200,000 British men at sea upon whom the Navy could call for reserves. Today, there are a mere 45,000
All those benefits to the United Kindgom economy and employment are at risk. They should not be. They need not be. My hon. Friend the Under-Secretary is a great friend of mine whom I much admire. He is serving our country well in Government. I must tell him that in the face of the most worrying circumstances I regard the inertia and complacency of successive Governments as intolerable. I remember raising the subject on the Adjournment in November 1982 The Minister then replying, who is not now in the House, said that he shared the concern that was expressed. He further said that he would come forward in the almost immediate future with some measures. Nothing happened. Now, even the OECD is sounding a clear warning in its publication "Maritime Transport" which states:
"OECD Governments · .must take a more active part in shipping and can no longer rely on the resolution of problems between shippers and ship owners while limiting themselves to the role of observers".
Those are wise words. Someone said to me the other day that he thought the attitude of successive Governments to the provision of the Merchant Navy was the equivalent of the man who leant out of a window halfway up a skyscraper to watch a man falling from the top. As the man who was falling went past him he said, "How are you getting on?" The man replied, "So far, so good."
The Government cannot any longer just stand by. What is the right course for Ministers? I do not believe that policy is difficult to decide. I believe that all in the House

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would agree upon it. We should declare loudly and certainly that Britain needs its Merchant Navy. We should accept that the Government have a responsibility to provide the political, diplomatic and fiscal climate in which shipping can survive and prosper.
Now to practical proposals. In the past 25 years—I am sure that we would all agree — shipping has advanced technically, it would seem, about as far as practicable. What with megaships, containerisation, integration with land transport and a substantial reduction in crew numbers, it is right to claim that the industry has done its part. Now, it seems, is the time for Government to back the United Kingdom commercial effort. I say now —I am sure I speak for the whole House—how much the presence of my right hon. Friend the Secretary of State for Transport to listen to part of the debate is welcomed.
What does Government backing of the United Kingdom commercial effort mean? I believe that what it means, above all, is all Government Departments acting together. We have listened to a torrent of complaints—I believe entirely justified—about the changes introduced in the last Budget by my right hon. Friend the Chancellor, with depreciation and tax allowances for seamen being removed. He could not have hit the industry a harder blow than he did with those two measures.
One is entitled to ask what consultation there was with the Department of Transport before those measures were introduced. What is the Department doing, on its own account, to influence other Government Departments to stop the chartering of foreign ships? What are we doing chartering foreign ships when so many of our seamen are out of work? Adverting to a point that has been made several times already, and which is in the minds of us all, I do not recall seeing Swedish, Danish and Norwegian ships in the Falklands when the Exocets were flying around. Out duty is to support our people.
Like my hon. Friend the Under-Secretary and my right hon. Friend the Secretary of State, I believe in the virtues of competition, but what our shipping companies are facing in world markets, as my hon. Friend the Member for Romsey and Waterside said, is anything but fair competition. For instance, five European Community countries ban United Kingdom ships from their coastal waters while we allow free access. That was a point brilliantly brought out by my hon. Friend the Member for Eastleigh (Sir D. Price) in a question to the Prime Minister a little while ago. Whatever the method is for dealing with it—we have been arguing across the House about it—why do we allow it at all? Why do we allow such a state of affairs to continue? A further 25 nations actively discriminate against British shipping using their ports although, again, their ships use our ports without hindrance. Why do we allow such things to happen?
Discrimination, to which my hon. Friend the Member for Romsey and Waterside referred, can take many forms. I have a note of about 68 different examples, many by developing countries. It is particularly odious when developing countries discriminate against British shipping when United Kingdom-financed cargoes are being delivered to their shores. Governments all over the world disregard the virtues of fair competition. It is therefore incumbent upon my right hon. Friend the Secretary of State to ensure that the Government mount a determined political and diplomatic offensive to counter discrimination.
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Retaliation may even be called for. In my view, it is justified in the context of the United Kingdom's present employment position. We should have the courage and realism to do it. Since quotations have been the order of the day, not least from my hon. Friend the Member for Romsey and Waterside, who gave a particularly appropriate one, perhaps I could quote John Stuart. Mill who said:
"In labouring for one's own country in the right principle we labour for all humanity."
What we need, in a sentence, is a national maritime policy designed to defend and advance the British industry and the British interest. We want that campaign carried forward with imagination and pertinacity. That is the message that will come from the debate. We look to the Government to provide it. I have every confidence that my right hon. and hon. Friends will take that initiative. Heaven knows, in the national interest, it is badly needed.
5.27 pm
Mr. Ted Garrett: The hon. Member for Romsey and Waterside (Mr. Colvin) spoke one significant sentence of which I took note. He claimed that British shipping was facing extinction. That is nothing new for the House to hear. Hon. Members have been saying year in, year out that shipping was facing extinction, but successive Governments have done little or nothing about it. That is a sad fact, but one which we must accept.
On Friday morning I shall be at the Swan Hunter yard in Wallsend. I shall be on board the Atlantic Conveyor to have a final look at that ship before it goes on its maiden voyage. Unfortunately, that is the last merchant ship on the river Tyne, as the hon. Member for Tynemouth (Mr. Trotter) will confirm. It means that for the first time since the 1930s no commercial shipbuilding will be taking place on Tyneside, and it does not seem as though there is any possibility of receiving any orders within the near future. Therefore, not only merchant shipping but commercial shipbuilding is facing extinction.
My hon. Friend the Member for Wigan (Mr. Stott) asked the Minister a series of questions, during which he placed his finger on the dilemma that faces us. In the House there are basically two distinct political philosophies: one is the virtue of free competition, and the other is the principle of state intervention. Some would call it Socialism but I prefer to call it state intervention. That is the dilemma. The shipping industry is facing the same dilemma as the cotton, textile, machine tool and steel industries and the fishing fleet—I could go on and on. We have not resolved the dilemmas of those industries. For that reason, this country faces a desperate situation with regard to its productive and manufacturing basis.
The Government have distanced, and continue to distance, themselves from those problems. Because of a lack of state intervention, or at least a move by the Government of the day towards a more careful analysis of the problems, we continue to drift. The chances of any good coming out of today's debate are not great, because of the basic philosophy of the Prime Minister herself, so ably backed by some members of her Cabinet. She has often said that one cannot solve a problem simply by throwing money at it. The root cause of the problem is how we finance the British shipping industry in the context of the role that it performs, as has been said by Conservative Members, including the hon. Member for Romsey and

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Waterside. We are no nearer an answer to the problem than we were when I started my political career in the House some 21 years ago.
I am proud to represent Wallsend in the north-east. There are strong and traditional maritime instincts in that area. People not only built the ships, but sailed in them. The port of South Shields, which my hon. Friend the Member for South Shields (Dr. Clark) has the honour to represent, suffered the largest loss of life among men lost at sea in both world wars. Men have also been lost in peacetime, sailing in ships that have provided the lifeline to our nation.
There are training facilities and technical colleges. There is one at Southampton, and one on the north-east coast, at South Shields, where men have been trained for service in the Merchant Navy—marine engineers, radio operators, deck hands and, of course, officers. When they went to sea, those men performed good jobs. They learnt traditional skills, and when their service ended they came ashore to play a highly valued role in industry because of their skills. The mere fact that there will be fewer vacancies for the positions that I have mentioned means that the skills referred to repeatedly in the House over the past few months will go. Is it any wonder that the recently reconstituted Engineering Council has decided to run a series of advertisements emphasising the role of engineering skills, which are so essential to this country's future?
In our shipping industry, this country has been to the fore in introducing regulations to improve safety, and these are being applied more and more in other nations' merchant ships. However, at the end of the day we must believe in ourselves and ask whether we want a shipping industry. The answer is still unclear.
Admittedly other countries are in a worse state than we are, but some are better off. I should like to refer to China. It is appropriate that I should do so, because this afternoon the Prime Minister left on a very important mission to China. China recognises that there is overcapacity in shipbuilding and has delivered a pledge not to disrupt world shipbuilding markets any further. China has told international shipowners and builders that for the time being it does not intend to become a major shipyard power. If that is so, one of the items on the Prime Minister's agenda, in addition to signing the agreement on the future of Hong Kong, should be to ascertain whether there is a market in China and, if so, what aid we can give British Shipbuilders or the private sector to obtain orders from that country.
Some five or six years ago I attended a lunch in the City of London given by the General Council of British Shipping. The then chairman was Peter Walters, who is now the head of British Petroleum. He forecast that there would be a surge of orders by British shipowners because of the aging of the British Merchant Navy. Regrettably, that has not happened, yet the prospects in other countries for more shipbuilding orders are not too bad. It would be foolish to think that no ships are being built anywhere. Many ships are being built in other countries, and we must look more thoroughly at the market; for example, in India.
It is estimated that one third of the Indian merchant fleet of over 10 million tonnes deadweight will be due for replacement by modern fuel-efficient container ships during the seventh plan for the years 1985–90, according
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to informed sources in New Delhi. I might be straying from the motion, but I am sure that people in British Shipbuilders will read the debate, and I should like them to bear in mind that there is a market there and they can go out and get it. Just as I make no apology for asking for public assistance to get those orders, so I make no apology for asking for direct intervention to save the British shipbuilding industry.
It is often said that if one is a Socialist there is some doubt about whether one is as patriotic as those in the Conservative party, who make great claims to patriotism. But where is the patriotism? It should be applied in view of the simple fact that the British merchant shipping industry is essential to the defence of this country. There is a lack of patriotism by Conservative Members who have to make the decisions about whether we are to have a shipping industry. We cannot carry on just letting industries decline. That has to stop, in the interests not only of the people whose livelihoods are affected but, more importantly, of the whole nation.
Conservative Members who have participated so far in the debate have shown a remarkable awareness of the problem facing the industry, and they have displayed a certain amount of courage when they have had the temerity to criticise the fundamental policy that motivates the Government. If they can change that policy, they will get total support from the Opposition.
5.39 pm
Mr. Neville Trotter: The situation is indeed grave. Britain's historical background to its maritime traditions and links is so great that it is staggering that two thirds of the Merchant Navy has disappeared in just nine years. Given that the history of the United Kingdom has been built up on our maritime endeavour, that is indeed staggering. I can only reflect that as a country we have failed to give more attention to the staggering decline in one of our great historical industries simply because employment in it has not been concentrated in particular parts of the country.
I believe that the man in the street—whether he lives at the seaside or inland—believes that Britain needs a Merchant Navy and that there is increasingly national concern about the decline in, and even the collapse of, this industry.
One newspaper recently published interesting figures about the size of individual companies. My father worked for P and O before the war, when I remember that it had more than 200 ships. That was a long time ago, but today P and O has just 24 ships. Furness Withy has 13 ships, Ellermans six, and British and Commonwealth only four. I appreciate that some of these companies are also members of container consortia, but these figures represent a staggering reduction in the British fleet. It is right that the House should debate this subject today, and I join in the congratulations to my hon. Friend the Member for Romsey and Waterside (Mr. Colvin) on choosing it.
Other hon. Members have referred to the reasons for this decline, one of which is the fall in coastal trade. Coastal traffic has practically ceased as a means of communication. In the days when the hon. Member for Wallsend (Mr. Garrett) and I were at school, the Tyne was crowded with colliers taking coal to the south. Nowadays that coal goes to power stations near the collieries and is conveyed by electric line to the south of the country.

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Britain now trades far more with Europe, and consequently less of our home trade is taken on long-distance journeys by sea. Less oil is now brought into the country from overseas. Every 1 million tonnes of additional output from the North sea means that one tanker fewer is required. Some tankers are still needed to carry oil from some of the wells to the ports, but the oil also comes ashore by pipeline, and we should contrast the demand for tankers to bring the oil ashore from a few miles out in the North sea with the demand required to bring it around Africa from the Gulf. That sector has also witnessed a great fall in demand.
Container ships are now being made more efficient than the ships they replaced. As well as being larger, each spends only a short time in port. In the old days the ships spent a long time in port, but those days have gone because container ships unload in 24 hours and are off again. One such ship now does the job of seven or eight of its predecessors.
The world depression has also had an effect on our trading situation. The first effect was on the tanker industry, when a flood of cheap ships from the low-wage shipyards of the far east were bought up in vast numbers. Having destroyed the tanker market, those shipyards began to construct bulk carriers, with the result that that sector was also destroyed. We have heard earlier in the debate about the way in which the container business is in turn about to be affected by a vast over-expansion in the number of container ships. Huge fleets of new container ships are ready to come into service in the near future, and one of the sectors that is still doing quite well will be badly affected.
World trade by sea has grown by 28 per cent. in 14 years, but in that time the tonnage of ships available to carry the trade has more than doubled. That has had an appalling effect on freight rates, which are now lower than six years ago. While 1984 was a bad year for world shipping, and for western shipping in particular, it looks as though 1985 will follow the same sad pattern.
Several hon. Members have referred to the defence implications of the Merchant Navy, and it is on that that I wish to concentrate. The developments in the Falkland Islands a couple of years ago dramatically focused attention on the requirements for the Merchant Navy. There is, however, a danger that as time passes we shall lose impetus. It is, therefore, with relief that I congratulate my right hon. Friend and his colleagues in the Ministry of Defence on setting up an inquiry into the adequacy of the Merchant Navy in a war or crisis. I hope that that inquiry will investigate "out of NATO area" operations as well as operations in the north Atlantic. Should some terrible circumstances again require Britain to act alone—God forbid that it will ever happen—we shall have to look to our own resources. We shall be unable to count on our NATO allies in that situation.
During the Falklands crisis, 20 product tankers were sent south to support the Royal Navy. At that time, BP had 25 or 30 such ships in its fleet. I understand that now it has only eight, far fewer than would be needed to support another Falkland Islands operation. There has been a particularly critical fall in the number of specialist ships.
Some figures about shipping requirements in the event of a crisis in Europe are freely available in America—though not perhaps in this country. I understand that 1·5 million men would be flown across the Atlantic, but their equipment would have to come by sea. Further, 8·5
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million tonnes of stores plus 10 million tonnes of fuel would have to be brought across the Atlantic. That would require 2,000 shiploads a month. On top of that, a similiar requirement would be needed to maintain the civilian and industrial life of Europe. These are enormous figures, and it is right that the Government should now be inquiring into the continuing capability of the Merchant Navy to play its part in dealing with such a crisis.
Manning would be a particular problem in a crisis. The number of our people at sea has nearly halved in the last 10 years, and is falling at the rate of about 5,000 a year from its present level of 41,000. As we have heard, the number of cadets recruited is also causing great concern. At one time, 1,000 cadets a year were recruited, but it is now a fraction of that number. Therefore, we shall be unable to produce the officers of the future.
It is no good having ships available under flags of convenience which could be requisitioned at a time of crisis if there is no one to man them. It could well be that the existing foreign crews would refuse to sail into particularly hazardous waters, and we might have to rely on our own sailors.
Given the present state of oversupply, with 1,400 surplus ships laid up in the world's ports, it is easy to acquire a second-hand ship cheaply. It is therefore important to do everything we can to maintain the safety of international shipping operations. I very much welcome the recent increase in the number of port inspections. There are now about 10,000 inspections a year, and the need for them is highlighted by the fact that well over 13,000 defects were discovered. No fewer than 430 ships inspected were detained or delayed because they had serious deficiencies. That was 6 per cent. of all the ships inspected. Clearly, that effort needs to be maintained.
The main cause of the problems in the British Merchant Navy is the protectionism of the developing world, which uses its own fleets to gain hard currency and to develop an industry. Those countries gain great advantage from their cheap labour. There is no doubt that this will be a permanent problem for Britain and the other western ship-owning countries. The same applies to much of manufacturing industry, but the problem is highlighted at sea.
Recently I spoke to the manager of a foreign-owned company which still operates from London. On ships registered under the Red Ensign, crew costs account for two thirds of the income, while on ships registered in Liberia or one of the other flags of convenience countries the crew costs account for only one third of the income. That kind of difference highlights the great problems when operating under the Red Ensign, as we all wish.
Turning to specialist ships, the difference in crew costs is not so much a factor. Crewing costs can be the least of the requirements when providing a complex service, whether it be container ships, gas carriers or other specialist vessels. Countries such as Britain are still able to compete in providing ships of that kind.
What can we do for the future? We can try to be more efficient. We can cut crews. I do not believe that this will in itself solve the problem, but we have to do all we can to be as efficient as possible. In recent years there have been quite dramatic falls in the size of crews. A ship which a few years ago had a crew of about 60 has been replaced by a ship with a crew of 31. That in turn will be replaced by ships which are now being built for crews of about 21. Japan is talking seriously about operating large ships with

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crews as low as 12. Technology will bring further changes in the manning of ships. However, that will not deal with the magnitude of the problems that have been outlined in the debate.
If I may deal with subsidies, I do not believe that British shipowners seek to be subsidised. However, they say with great justification that they are at a disadvantage compared with other western operators and even more with the countries of the eastern bloc which pay no regard to normal commercial factors. I trust that my hon. Friend the Under-Secretary of State for Transport will refer in his winding-up speech to the discussions that have taken place with the Soviet Union on the passenger cruise liner sector of the industry, which has been so harmed by competition from the non-profitmaking, subsidised Soviet merchant navy, the size of which has been so well portrayed by my right hon. Friend the Member for Taunton (Mr. du Cann) who, again, made a strong case for the Merchant Navy.
What can we do to provide our shipowners with at last the same financial assistance as is given by their western competitors? I support fully what has been said about the negative nature of the Budget changes that have been made this year and the suggestion made by the GCBS that the fleet should be allowed, in addition to the 25 per cent. writing-down allowance, a 50 per cent. ship allowance for new and second-hand ships. Nothing less than that will encourage the investment that is so desperately needed.
The hon. Member for Wallsend referred to the fact that he and I have been invited to go on board Atlantic Conveyor later this week. It is sad indeed that we should these days be talking about individual new ships, not fleets of ships. One ship today is a great achievement for both the shipbuilders and the shipowners of Britain. It is indeed tragic that when Atlantic Conveyor sails there will not, for the first time in centuries, be a merchant ship being built on the Tyne. We must do everything we can to encourage shipowners to continue to invest. The financial state of their industry is so bad that they cannot invest without tax relief. If they are not asking for operating subsidies they should at least be given tax relief. The lack of incentive and of help to our shipowners makes Britain unique. It needs to be put right.
I come to the problems of navigation, and the ports around our coasts. They have the greatest effect upon the British Merchant Navy since it is the British Merchant Navy that uses our ports most. Pilotage is a matter that deserves a separate debate. I welcome the recent publication of a Green Paper on that difficult subject. Ships coming to this country can be charged £12,000 for light dues, whereas if they go to continental ports they pay nothing at all. This leads to ships avoiding Great Britain and to traffic being diverted from our ports to western European ports, with goods being brought on to Britain on cross-Channel ferries. This results in a further adverse effect upon our deep-sea shipping fleet.
I was at Southampton recently. It was a sad sight. That great port has eight container channels. Not one container was to be seen there. The whole trade of the port has gone. While that is harmful to Britain and surely disastrous for Southampton, it must certainly also be bad for the British Merchant Navy if ports of that magnitude are closed down by the lunatic action of the labour force. I say to my hon. Friend the Under-Secretary of State for Transport that the
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dock work labour scheme must be given further attention by the Government in the interests of those who work in the industry as much as of those in the Merchant Navy.
One of the problems is the lack of co-ordiation between Ministries. That is not through any lack of goodwill or intent. It is just the result of the history of Government in this country. I do not believe it to be sensible that the vital question of labour relations in the ports should not be handled by the same Ministry as deals with the Merchant Navy.
The efficiency of ships can be helped by improvements in fuel efficiency and design. I welcome the efficient ship project, which the Government are supporting, but I repeat that there will be no investment in new ships unless there are Budget changes. The inadequacies of the present system must be put right in the next Budget.
I believe that this will not be the end of the matter for this House. A maritime league has been formed in this country, consisting of eminent people who deal with every aspect of maritime life. It will continue the battle for the Merchant Navy. There is a maritime affairs committee in the House. It is on an all-party basis and is chaired admirably by my right hon. Friend the Member for Taunton. It will not go away, either.
I am sure that we shall return to this subject. The message that has to go out from our debate today is that as a first step the Treasury must accept the need to give assistance in the next Budget to our shipowners. It is absolutely vital that this message should be taken on board.
5.57 pm
Mr. Stephen Ross: I am pleased to follow the hon. Members for Tynemouth (Mr. Trotter) and for Wallsend (Mr. Garrett), because I know a little about the technical college which trains Merchant Navy officers and personnel at South Shields. Until recently my daughter taught there. She conveyed to me the depressing nature of the rundown in numbers and the virtual closure of that college, which has played such a great role over many years.
I, too, congratulate the hon. Member for Romsey and Waterside (Mr. Colvin) on choosing this subject for debate. It is important that we should discuss these matters—in particular the dramatic decline in the strength of our Merchant Navy and the continual rundown of our shipyards.
As has been mentioned, since 1975 the number of ships in our merchant fleet has more than halved. The number has gone down from 1,600 to only 700. Between 1977 and 1980 about 24,000 jobs were shed in British shipyards, and many more have disappeared since then. More shipyards have been closed and there have been continual lay-offs. A great number of lay-offs are taking place at the moment, not only in the north-east, but in Southampton, at Vosper Thornycroft, a very modern shipyard which I believe should never have been nationalised. No new orders at all were received by British shipyards between July and September.
However, I welcome, as I am sure the hon. Member for Fermanagh and South Tyrone (Mr. Maginnis) also welcomes, the recent order which has been placed by British Steel for a bulk carrier at Harland and Wolff. My inspection of Harland and Wolff leads me to believe that

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it is as superbly equipped a shipyard as any in the Western world. That at least is one piece of good news. Every effort must be made to keep Harland and Wolff in operation.
Fiscal measures relating to taxation would help the shipowners of this country. I shall not repeat what has already been said. I support the GCBS proposal for a 50 per cent. ship allowance, not only for new but for secondhand vessels.
The "British Shipping Review 1984" says that Norway, Denmark and Japan provide extended periods of finance for up to 10 or 12 years, with initial grace periods of two to three years. While those schemes may have been devised to help domestic shipbuilders, obviously British shipowners have had some benefit from that. There is a host of examples of the sort of help given in West Germany, the Netherlands and many other parts of the world.
Does this country really want to opt out of owning a merchant fleet or building any more ships? Some operators in the City believe that we cannot compete and that, therefore, we should order all our ships from Taiwan—I have seen the very impressive shipyard there—Japan or Korea and perhaps merely fit out ships in this country.
That view was put to me by a City shipowner— I shall not name him—when I suggested where he might order his new ferry. The Under-Secretary may guess where it will be operating to and from. The Robb Caledon yard had just closed, and it seemed to me that such an order would be a great opportunity to reopen the yard. He said that I must be mad if I thought that he could get a ship built on competitive terms in a British yard. He said that the order would go perhaps to Scandinavia, but probably to the far east and that all that a British yard could do would be to fit out the ship.
That view is far too defeatist and must be resisted. The Government must help. I welcome the establishment of the all-party maritime affairs committee under the distinguished chairmanship of the right hon. Member for Taunton (Mr. du Cann), who spoke so knowledgably earlier. However, we are late on the scene. As a member of the committee, I pledge that we shall maintain the pressure until we see an upturn in our merchant fleet.
I congratulate the Government on facing reality in their Green Paper on maritime pilotage. That remark will probably not go down too well in my constituency, because a number of pilots live there, but the Government cannot opt out of the compensatory redundancy payments that will inevitably arise. The Green Paper says:
"The Government propose that as a matter of mechanics the cost of the scheme should be met from a levy on harbour authorities, which would be recoverable from a special charge on shipowners."
We made a previous attempt to get some sense into pilotage, and it was accepted that 600 or more pilots might be made redundant. At that time, it was thought that redundancy payments would average about £80,000 per pilot. The shipowners said that they could not meet such sums, and it is hardly likely that they will be able to do so today when the situation is so much worse. There is a case for what the Government have set out in the Green Paper. However, the terms will have to be generous if we are to get a sensible settlement. A three-way split between the state, port authorities and shipowners is surely the right way forward.
Like other hon. Members, I am depressed by what I have seen across the water from my constituency, in
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Southampton. The actions of some dockyard workers and their colleagues in that port are, as was said earlier, sheer lunacy. They have put in jeopardy the jobs of too many innocent bystanders, whose livelihoods depend on a vigorous, modern, well-run port complex. Many Southampton operators have moved to Felixstowe, and one has even gone back to Liverpool. Perhaps we should give a cheer for Liverpool, but if Southampton has put itself in the same league as Liverpool, I deeply regret it.
Southampton has all the advantages: excellent facilities, four tides a day, and so on. Regrettably, the workers have committed suicide, and they have taken many pilots, tug owners and launch supply operators with them. That has had an effect in my constituency. Even taxi drivers in Southampton complain bitterly. The whole economy of Southampton has been affected.
A new attitude is required if we are to put matters right. We need a competitive port with a sustained record of industrial peace. Otherwise, shipowners from abroad will not come to our ports. We need to make proper use of modern technology and end overmanning, though with adequate redundancy terms.
As has been said repeatedly in the debate, we need the Government to provide a more sympathetic tax regime and financial help over the next few years similar to that which is so readily available to our competitors. We want fewer crippling charges imposed on shipowners and a determined effort to encourage people to buy British and to repair ships in British yards.
I tried today to get a copy of the evidence given to the Select Committee on Defence by the Under-Secretary of State for Transport, but I gather that it has not yet been published, so we cannot read what was said. The hon. Gentleman was dealing with the role of the merchant fleet in support of the Royal Navy in times of crisis, and what I have heard secondhand is not reassuring. Therefore, I hope that the Under-Secretary will say more about the issue when he replies to the debate.
I welcome the inquiry that is to be set up, but it is far too late. We know what the inquiry will show, and if we wish to save our merchant fleet we must take action now.
6.6 pm
Sir David Price: I shall not follow what the hon. Member for Isle of Wight (Mr. Ross) said about the problems of the dock industry in Southampton, though we could have a fruitful debate on that subject alone.
I join other hon. Members in congratulating my hon. Friend the Member for Romsey and Waterside (Mr. Colvin) on his success in the ballot and on his choice of subject. It must be clear to my hon. Friend the Under-Secretary of State for Transport that the House is disturbed by the decline in the size and scope of the British merchant marine.
Various figures have been bandied about, but I prefer the simpler and more homely statistic that our fleet has been declining by two ships a week—we have seen the fleet stealing away into the mist—and it is continuing to decline.
Every hon. Member has asked the simple question: is it in the national interest that there should have been such a decline and that the decline should continue? The answer from every hon. Member has been a firm no.
The message from the debate is that, although we all have our own solutions, we agree that in the national interest the present situation must not continue. In saying

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that I must declare an interest, because my constituency, which surrounds Southampton and includes a corner of the city, is deeply involved in the shipping industry and I have professional contacts with the industry.
No hon. Member has yet discussed the Government's policy as they have stated it. It has been suggested that the Government do not have a policy but I know that they have one, because it was spelt out to me by my right hon. Friend the Secretary of State for Transport in reply to a question from me earlier this year. My right hon. Friend told me:
"The Government will continue to fight strenuously for the widest and fairest possible opportunities for British merchant shipping to compete in the shipping markets of the world. The industry's future will depend mainly on the use it makes of those opportunities, and thus on the enterprise of our shipowners and seafarers. These have always been the main factors in the industry's fortunes."—[Official Report, 9 July 1984; Vol. 63, c. 375.]
How far have the Government succeeded in achieving the laudable objective set out in the first sentence of that answer?
The annual report of the GCBS states:
"Non-commercially operated shipping from Soviet bloc countries continues to cause major problems in many important liner trades and in the UK cruise market by grossly undercutting British and other Western operators."
There should be an agreement with the NUS about that. I am sure that Jim Slater would agree that the Soviet bloc has been undercutting.
The report continues:
"Moreover, in the liner trades, a deluge of new tonnage is about to fall on the market. Highly subsidised either by the shipowning or shipbuilding country, in some cases operated by companies based in countries which restrict access to their own trades, these ships will operate almost exclusively as cross-traders. Many will be manned and operated from relatively prosperous newly industrialised countries, where trade unions show modest aspirations for their members.
Hence they will have substantial cost advantages over operators from European countries of comparative affluence."
I speak as a former Minister at the Board of Trade, and it is clear to me that that in ordinary language means dumping. We must therefore use some form of antidumping legislation against them. I am without doubt in favour of action. Obviously, the action is better done if we can do it on a European basis. I am glad to tell the House that from my information the Commission of the European Community is well seized of that matter and is well on the way to producing a shipping policy to put before the Council of Ministers. I commend what I have seen of it in draft form.
The Secretary of State for Transport (Mr. Nicholas Ridley): I only wish to say I received it on Wednesday and that I agree.
Sir David Price: When my hon. Friend replies to the debate, I hope that he will support what is being proposed in Brussels. Broadly, the message is that the time has come when we must collectively take action against unfair competition, and that it is better done collectively than individually. Therefore, I hope that the Government will give the new policy their full support.
In the meantime, European countries would be in a better position to take such action if they lived by anti-discrimination within Europe. Many hon. Members, especially my right hon. Friend the Member for Taunton (Mr. du Cann), referred to my efforts this summer to demand action against our so-called partners in Europe for
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not allowing free access to their coastal waters. My hon. Friend the Member for Tynemouth (Mr. Trotter) suggested that there had been a great decline in coastal shipping. I remind him that coastal shipping round our own coasts carries in terms of tonne-mileage 2·8 times more freight than is carried by rail. It is second only to transport by road as the main United Kingdom carrier of freight. I commend to the House the figures that I received in reply to a question that I put to my hon. Friend the Parliamentary Under-Secretary of State on 25 June. Coastal shipping is increasing, not declining, largely because of the moving of oil products.
Mr. Trotter: I referred to the 1930s, when there were between 50 and 70 colliers on the Tyne, and at a small port like Blyth between 30 and 40. Now the figures would be two or three for that particular trade.
Sir David Price: There has been an increase in fuel technology, and in those days there were no large coastal refineries. What we have lost in coal we have gained in oil. I repeat that coastal shipping is the second most important method of moving freight around our kingdom.
With regard to the extension of the Community to include Spain and Portugal, if we have free cabotage for British shipping within the EC, the Atlantic ports and the whole of the northern Mediterranean coast will be open to our coastal traders. That would be a great bonus to British coastal shipping. When my hon. Friend replies, I look forward to repeated assurances in addition to those which he has already given me that in the Council of Ministers we shall fight for British rights of coastal access.
I deal next with other forms of appropriate Government aid within the context of free trading and an open seas policy, which the industry and I support. I agree with many of my right hon. and hon. Friends that the Chancellor's measures in the last Budget were not helpful. I hope that some effort will be made to reverse them. It is perfectly legitimate to ask for appropriate tax treatment of capital in the next Budget. The Minister knows that the industry has been making representations about that. I know that this is not the occasion to advance detailed arguments, but I hope that he will give the general idea a fair wind. Similarly, current shipping costs are largely crew and fuel costs. The impact of crew costs can be assisted through favourable taxation treatment. I shall not develop the point further.
My hon. Friend the Member for Tynemouth referred to the problem of lights, and the hon. Member for Isle of Wight commended, as I do, the new proposals on pilotage. However, there is a problem of charges. In a perfect world it is right that the charges should be borne by the industry, but in an imperfect world the industry finds them hard to bear, especially as none of its competitors must bear them. That point is not fully appreciated. The main users of lights are not the merchant fleet, but private yachtsmen. Merchant ships are so well equipped with navigational aids that they need lights less than they did in the past. Therefore, I hope that my hon. Friend will consider further the lights problem.
My hon. Friend the Member for Tynemouth wisely said that the Merchant Navy is the fourth arm of defence. However, both its size and mix are matters for its effective support of the Royal Navy. Even more critical is the time scale of the decline both in absolute terms and in the mix of the fleet. I suspect that the admirals who do their sums

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assume that what is on the books now will be on the books in four years' time. However, given the trends that many hon. Members have described to the House, that cannot be a certain assumption.
There is also the question of flagged-out ships which may be under beneficial ownership from this country. There is no certainty whether the crews of those ships will be available in an emergency. That deserves more study than it has so far been given.
Thought should be given to providing some sort of financial arrangements to companies which commit their ships to the Ministry of Defence, similar to that which exists for people — a ship version of the Royal Naval Reserve. There should also be a form of bounty for reserved ships. That would be a legitimate way of giving a little modest help to British shipping companies at this difficult time.
The decline of the British Merchant Navy has reached disturbing proportions. It must be halted and reversed. I invite the Government so to do. Although this is Christmas time, I do not ask the Government to emulate Santa Claus, only to be wise men.
6.18 pm
Mr. Don Dixon: I congratulate and thank the hon. Member for Romsey and Waterside (Mr. Colvin) for initiating this important debate. The hon. Member for Tynemouth (Mr. Trotter) talked about the colliers on the river Tyne. I can remember colliers, Blue Star boats, city boats and tankers lying three or four abreast, but now there are virtually no ships to be seen.
My area designs, builds, sails and maintains ships. The Royal Navy cannot be divorced from the merchant fleet, nor the capacity to build and maintain the fleet. I agree with the right hon. Member for Taunton (Mr. du Cann) that we require a maritime policy. We have asked for a maritime policy on many occasions in the House, and the Select Committee on Trade and Industry recommended it in 1981. Britain must be the only maritime nation that has no maritime policy.
I was born in Jarrow, which was a shipbuilding town, and from the day I was born I was meant to work in the shipyards, just as someone born with a silver spoon in his mouth is meant to go to Eton. My grandparents and father were shipyard workers, and I was always being told how important seagoing was. I was told a tale about a Mr. Jenks who used to deliver manure by horse and cart. He did so, despite the arrival of gas turbine motor cars, jet aircraft and spaceships, because he discovered that with his horse and cart he could deliver manure with an economy and a certainty that pleased his customers and repaid him. Manure for the fields of England and food and goods for the rapidly increasing number of under-fed people in the world need neither missiles, spaceships nor jets; just a safe and certain means of transport so that the cost can be kept as low as possible.
If Mr. Jenks' horse became a Pegasus and grew wings, it might be able to lift about 15 lb of books from the Table and carry them through the air. However, if we taught the horse to swim, it could probably tow 50 or 60 hon. Members through the sea. Horse power is extremely important. It is important to realise that it could take 15 lb by air, but 9,000 lb by sea.
The need for a navy stems principally from the possession of a merchant fleet and the need to ensure that merchant ships have unhampered passage through the
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world's sea routes. General Galtieri taught Britain a lesson about the importance of surface ships and a merchant fleet; 54 merchant ships were in the task force that went to the Falklands. Everyone, from the Prime Minister upwards, or downwards—it depends how one looks at it—realised the importance of our merchant fleet. Yet, since the Falklands crisis, there has been a reduction of 200 ships in the merchant fleet. During the NATO exercise Operation Lionheart we had to charter foreign vessels.
There has been much publicity recently about the Royal Princess, which was built in Finland. It was a tragedy and a disgrace that British Shipbuilders did not tender for that ship, which is one of the finest passenger ships sailing the oceans.
Many hon. Members have mentioned the fact that the 1984 Budget was a disaster for United Kingdom shipping. The first thing that the Treasury should do is to put that right by introducing 100 per cent. fair share allowances and free depreciation, not by removing the 25 per cent. tax relief for seafarers, as is promised in next year's Budget.
In 1975, the United Kingdom fleet had 1,600 ships and a dead weight tonnage of 50 million. Now it has 700 ships and a dead weight tonnage of 18.5 million. To maintain it at that level would require new orders for 1 million tonnes every year. If new orders for 1 million tonnes were placed in British shipyards, we would not have problems such as we have in the shipbuilding industry. As the hon. Member for Romsey and Waterside said, for the past nine years we have been losing two ships a week. That has happened not simply because of a decline in freight orders, but because of containerisation and the fact that British trading patterns have become increasingly dominated by Europe. For many years I worked on refrigerated vessels that took fruit and meat from Australia, New Zealand and South America, but those ships no longer come to our shores.
When the merchant ships returned from the Falkland Islands bands were playing,
"Rule Britannia, Britannia rule the waves."
If the Government do nothing about the decline in the shipping industry we will not even break the waves, let alone rule them.
The hon. Member for Romsey and Waterside, referring to protectionism, said that, while Britain was playing cricket, the rest of the world is engaged in karate. As an ex-boxer, I would say that, while Britain is fighting according to the Marquess of Queensberry's rules, the rest of the world is engaged in all-in wrestling. We do not have an open market. The Government must do something about the decline in shipping, shipbuilding and engine-building industries, which are important to an island nation. In a world two thirds of which is covered by water and 98 per cent. of whose trade is carried by sea, it is important that something be done immediately.
6.25 pm
The Parliamentary Under-Secretary of State for Transport (Mr. David Mitchell): I am glad to have the opportunity of responding to the motion that was so ably moved by my hon. Friend the Member for Romsey and Waterside (Mr. Colvin). In the terms of his motion, he recognises the importance of shipping to our trade and our defence, and the importance of our fleet in its own right. I agree with him. It is overlong since the House gave time to this important industry. It is perhaps surprising that the Opposition have not chosen the indusry as the subject of

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an Opposition debate, so I am doubly grateful to my hon. Friend for choosing this subject. The motion follows his recent valuable contribution to the debate about the future of the United Kingdom merchant marine in the document produced by the Centre for Policy Studies entitled, "British Shipping — the Right Course." The hon. Member for Wigan (Mr. Stott) paid tribute to that document, although he did not agree with everything that it said.
The Government naturally share the concern expressed in the debate by hon. Members on both sides of the House about the decline of the United Kingdom merchant fleet. It has been a cause of understandable concern to me and my colleagues, as I know it has been to seafarers and their unions, the shipowners, the General Council of British Shipping, and to others concerned with our island's interests and our maritime history.
The decline in the merchant fleet looks especially dramatic if it is measured against the exceptionally high figure to which the fleet had grown in 1975. It may be useful to the House if I restate some basic facts about our fleet. Its high reputation, the skills that are brought to bear by the officers and men who man our ships, and the high calibre of the ships are all known and give us a world-wide reputation. But it is perhaps sometimes overlooked that, despite the decline, the United Kingdom fleet is the seventh largest in the world. That puts us well above our natural position in relation to our total trade. Among European fleets we rank as third, and within the EC as second. Therefore, although I recognise fully the deep concern which the Government share about the decline in the fleet, it is right to put it in perspective.
My hon. Friend the Member for Romsey and Waterside was right to draw attention to the various roles in which the merchant fleet is involved. It is clear from the debate that the House shares his anxiety in three areas: first, in terms of enabling us to carry on our import and export trades where we are so dependent on the sea and ships for bringing in and taking out so much of our trade; secondly, the vital area of defence, which several hon. Members mentioned; and, thirdly, the realisation that the United Kingdom fleet is a major national asset, a major investment, a source of jobs and an industry in its own right.
Perhaps I may mention the projections about the rate of decline of the United Kingdom fleet. My hon. Friend the Member for Romsey and Waterside referred to projections that would lead to the fleet's being extinguished. The General Council of British Shipping has suggested that the 700 vessels which now form the United Kingdom-owned and registered fleet will have fallen to 400 by 1986. Others, further projecting the current rate of decline, declare that by the year 2000 there will be no United Kingdom fleet. Even the hon. Member for Wigan who spoke on behalf of the Opposition, referred to the time when there would be no fleet left. It is far too simplistic just to extrapolate the recent level of the decline and suggest that there is an inevitable progression to the sort of figures that have been spoken about. I do not demur from the concern expressed by my right hon. Friend the Member for Taunton (Mr. du Cann) about this matter. He is chairman of the all-party maritime group, and I hope that we can have discussions about this matter.
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My hon. Friend the Member for the Isle of Wight (Mr. Ross) will know that I am not responsible for shipbuilding. However, does he not recognise some inconsistency when he complains about uneconomic freight rates, because of the glut of shipping, in the same breath as he calls for subsidies for shipyards to build more ships, even in his constituency? The truth is that the fleet is not a single fleet; it is many separate fleets. For the House to judge the seriousness of the decline, where it comes, where the shoe is to pinch and what the causes are, we need to look more closely at the different mini-fleets that make up the total of the United Kingdom merchant marine against the background of the changes in our pattern of trade, which themselves lead to a different demand pattern for our fleets. For example, the change to membership of the Common Market has meant that a much larger proportion of our trade is no longer long distance, to the Commonwealth, but is on short haul from the east coast to European ports.
I commend to the House the analysis of the reasons for the decline given by my hon. Friend the Member for the Isle of Wight. He analysed brilliantly, as one might have expected from his experience of the industry, what is going on. He said that seven or eight ships of the old fleet are now replaced by one container vessel. That is one of the many signs of the extent to which there are forces at work that are not within the control of any Government and that are leading to a decline in the number of vessels.
The development of containerisation has meant fewer and larger ships with smaller crews, and the oil crisis of a decade ago has had a dramatic effect on the pattern of the oil trade. For example, 55 per cent. of all the tonnage lost over the last decade—the largest proportion of all reductions in the United Kingdom merchant marine—has been in tanker tonnage. That has not been through any failure on the part of the Labour party when it was in government or of this Government. Principally, the tonnage has fallen because the world trade in oil shrank with high prices and we became self-sufficient from North sea oil being brought ashore by pipeline.
The huge surplus of tankers looks as if it may be coming to an end. One can contrast that with what has happened with regard to containers. We have one of the largest container fleets in the world, but Evergreen and United States Lines are proposing giant, round-the-world, minimum stop operations, which will present a huge challenge to our fleet. The prospect of a freight war developing, with massive surplus tonnage, is horrifying. My hon. Friend the Member for Boothferry (Sir P. Bryan) referred to its devastating potential.
I hope that my right hon. Friend the Member for Taunton will accept that there are many complex factors at work in the decline of our fleet. Happily, roll-on/roll-off and ferries are operating in a more buoyant and steady market, which shows that, while the total size of our fleet has declined and some further decline is on the cards, it would be wrong to extrapolate the figures of the past decline and assume that we shall end up with nothing.
The Government's strategy falls into three parts, all of which were referred to by my hon. Friend the Member for Romsey and Waterside. First, there is the need of our island for ships to import and export goods; secondly, there is our defence strategy; and, thirdly, there is the help and encouragement that we can give to our ship operators. The House may expect me to start by saying that we must have a fleet of a given size to be able to carry goods to and

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from the United Kingdom, but that is not the case. Our fleet is important because of the jobs and the overseas earnings that it provides in itself. However, in terms of our imports and exports, the important factor, which relates directly to our competitive position and therefore to our national need, is that we should have efficient shipping services, able to get in and out of our ports with the minimum of burdens, to enable our exporters to compete. That is true in the changed pattern of trade, as so much of it lies with Europe. Our principal competitors are in Europe where they have land frontiers, while everything that we have has to be dragged across the sea and through our ports.
In this connection, it is important that we should minimise the burdens that are imposed on our shipping industry and those who use our ports. We have a continuing dialogue with the General Council of British Shipping about the burdens imposed by the Government, and we are seeking to do what we can to minimise them. For example, the cost of lighthouses and buoys around our shores is an expensive burden, amounting to £43 million a year, which is paid by ships using our ports. For some time, shipowners and the Public Accounts Committee have expressed concern as to whether the money was being most effectively spent. I am pleased to be able to tell the House that Trinity House has now invited the Government to nominate four business men to serve on the reformed Lighthouse Board, which has responsibility for this function under Trinity House.
Mr. Jonathan Sayeed: Does my hon. Friend accept that there is a case, in equity, for those charges falling not just on shipowners? My hon. Friend the Member for Eastleigh (Sir D. Price) mentioned that these facilities are used most by yachtsmen, and the whole country benefits from having a safe maritime regime. Is it not possible for this cost to fall on the Exchequer rather than directly on shipowners?
Mr. Mitchell: On the total burden of lighthouse costs, Trinity House will welcome the addition of four distinguished business men on to the Lighthouse Board, which is involved with the administration of the service. That should lead to an assurance to the shipping community that there will be good value for money in the handling of the money that goes into the fund.
My hon. Friend raises a different point, which concerns not the totality of the expenditure, and therefore the totality that would be raised, but the distribution of it as between the commercial shipping, shipping and yachtsmen. We have identified this as a significant problem. There is an apparent unfairness about it. I understand the misgivings that the GCBS has expressed on this matter. We have commissioned a firm of management consultants to look into matter, and I expect to have its report early in the new year. I shall report to the House on what its recommendations are. I hope that my hon. Friend will recognise that that will cover the points that he raised about yachtsmen.
Mr. Donald Stewart: In view of the comparatively small sum involved, and as the whole rescue service is borne by the Royal National Lifeboat Institution, it would be a welcome contribution if the Government would bear the cost of lighthouses and buoys.
Mr. Mitchell: It would be nice for all of us if the Government had a bottomless pit out of which they could
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finance endless numbers of goodies. We would not then need to argue late into the night the relevant merits of spending money on kidney machines or lighthouses. However, in many sectors it has long been established that it is right and proper — and in this regard it has happened under all Governments—for the users of the service to pay for it rather than the general taxpayer. If that is a view that the right hon. Gentleman feels should be debated when the report is received from the consultants, I have no doubt that he will initiate an opportunity to do SO.
Another burden is that of pilotage. I welcome the support of the hon. Member for Isle of Wight (Mr. Ross) for our proposals for the reform of pilotage in the United Kingdom. I am also grateful to my hon. Friend the Member for Eastleigh (Sir D. Price) for his support.
Pilotage is another very substantial cost which has to be paid by ships coming to and going from our shores. It is quite right that we should give the highest possible priority to ensuring the safety of vessels coming in and going out of our ports. In a Green Paper that we published at the end of last week, we announced significant changes which will make for a more cost-effective service while in no way endangering the safety of vessels. It will give to the ports responsibility for pilotage as one of the services provided within ports. These proposals are being cautiously welcomed by the General Council of British Shipping and by Trinity House, which sees it as a new challenge as it will be able to tender for the work around our coasts. Concern has been expressed by the pilots themselves, and I look forward to hearing the response of the British Ports Association.
Another burden to which attention has been drawn is the cost of moving ships into the United Kingdom flag. A good deal of work has been done to reduce that cost and to make it possible for vessels to flag-in more easily. But my hon. Friend the Member for Romsey and Waterside referred to further barriers, and I shall be grateful if he will write to me about them so that I can look at them more closely.
A number of the hon. Members drew attention to the tax position of British fleets. I shall ensure that what they said is drawn to the attention of my right hon. Friend the Chancellor of the Exchequer.
My hon. Friend the Member for Romsey and Waterside also asked me about conference loyalty arrangements. We have given much thought to the proposal that the postponed EEC competition regulation should prohibit conferences from enforcing loyalty arrangements in respect of more than 70 per cent. of shippers' custom. In our consideration we have taken account of the many views expressed to us, but I can now announce that we no longer intend to pursue this proposal.
Widespread anxiety has been expressed about our defence needs. I have been asked whether we would ever again be able to mount that which was done at the time of the Falklands in terms of merchant marine support for the Royal Navy. I have been asked about our NATO reinforcement ability and the needs of the Ministry of Defence. The hon. Member for Wigan referred to the cross-party recognition of the importance of these matters. We should seek where we can to ensure that these matters are not unnecessarily involved in the party political dogfight.
There is a continuing dialogue between the Department of Transport and the Ministry of Defence, in which the

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latter identifies its needs, and my Department has the task of ensuring that those needs are supplied. At the moment there is no reason to suppose that we are unable to supply those needs in one way or another. But that begs the question about what will happen in the years ahead if the decline in our fleet continues. For this reason, we have obtained from the Ministry of Defence its forecasts of its needs at varying times over the next few years and in 1992. Having its detailed analysis, we are now going out to consultants. A contract has been placed to see whether the vessels required at those forward dates will be available.
Should we find that some years ahead we are unlikely to meet particular needs, various possibilities are open to the Government. We have long-standing plans for collaboration with our NATO partners, and it is possible that they could help. However, it is not simply a question of the United Kingdom-registered fleet being available. In addition to the United Kingdom fleet of about 800 vessels, we have requisitioning powers in respect of 400 vessels registered in our overseas dependencies and 250 further vessels which are flagged out but beneficially owned by the United Kingdom. That makes a total of 1,450 vessels.
Sir David Price: Although they could be requisitioned, will my hon. Friend bear in mind that their crews are not British subjects in the ordinary sense of the word? With the changing policies of some of those countries, it is doubtful whether they would be available.
Mr. Mitchell: I am grateful to my hon. Friend for reminding me of that. I had made a careful note that he and other hon. Members had referred to it as a matter that I must take back and look at more closely with my officials in the Department. I undertake to do that.
Mr. Sayeed: Beneficial ownership has been discussed a number of times. The suggestion is that those 250 ships flagged out but under our beneficial ownership could be used by us. I and many others who understand flagging out believe that that is by no means certain. We doubt whether our Government could get their hands on those ships, because it is not certain that the minority partners would necessarily let our Government get their hands on them or that their crews would want to go to war under the British flag. That being so, it is extremely optimistic to assume that 250 ships that have been flagged out will be available in time of conflict.
Mr. Mitchell: There may be some which are not available. There may be others which are in far off parts of the world and will not be immediately available. But my understanding is that in law we have the power to requisition. However, that does not detract from the perfectly valid point of my hon. Friend the Member for Eastleigh about crewing these ships. I was about to say to him that it is one of the benefits of this overlong delayed debate that hon. Members have been able to draw attention to important matters that we must take in hand.
Mr. Garrett: In Exercise Lionheart last autumn there were huge successes, but one of the failures related to the mobility of our shipping. It was difficult to get the right types of ships for the right vehicles and with the right storage and necessary speed to get them over to mainland Europe. Can the hon. Gentleman assure the House that this matter is receiving serious consideration? In an emergency it would be of vital importance.
Mr. Mitchell: The hon. Gentleman is right, but perhaps I can reassure him about it. In order not to interfere grossly with the holiday traffic and the ferries on their daily commercial routes across the channel, they were not requisitioned. The exercise was conducted using other vessels. But obviously people would not be going abroad on holiday at times of tension.
Mr. Richard Ottaway: My hon. Friend said that the Government did not wish to disrupt holiday traffic. Will he make inquiries to discover how many British shipowners were even approached to see whether their vessels were available. I know of one vessel which was laid up and which would have been perfect for Exercise Lionheart. It could have been used, but the owners were not approached.
Mr. Mitchell: I am grateful to my hon. Friend for raising that matter. I shall make inquiries and write to him. However, against the fact that we required 49 vessels to support the initial Falklands operation, the fear that out of the 1,450 vessels that we have power to lay our hands on we would not be able to find that number does not seem to me to be borne out.
Should shortages emerge in the future, we could purchase ships for addition to the Royal Fleet Auxiliary. There are a number of other options, some of which it would be inappropriate to dwell on here. The aim of the surveys that we have set in hand is to discover whether there will be shortages of specific types of vessel, and I have no wish to prejudge the findings. It would be for us to consider how best to meet any such shortages in specific areas, rather than to do something about the generality of our fleet on defence grounds.
A vital part of the debate related to the huge United Kingdom investment in our fleet, the importance of its overseas earnings and the jobs which it provides. A fundamental choice has to be made between whether we are for protectionism or free trade. Countries will choose whichever of those two policies suits their national needs. There may be some, with a small national fleet which they are ambitious to see grow, which feel that it makes sense to go for cargo reservation and suffer the disadvantage of higher freight rates on their exports. But if, like us, a country has a large fleet—far too large for its national trade—an open market across the world is needed in which to deploy that fleet. We are certainly in that camp, as my hon. Friend the Member for Romsey and Waterside stressed.
Some 58 per cent. of our fleet's earnings come from the cross trades. We must have fair and open markets to provide that opportunity. Indeed, I pray in aid the words of the greatly respected president of the General Council of British Shipping who, on taking up his post, said:
"So what should be done? Do we want Government subsidies or protectionism? No, gentlemen, we do not. I believe that is a route which we should only seek to follow if all else fails." I concur with that view.
Dr. David Clark: I have been very patient. I accept the thrust of the Minister's argument, but Norway is an even better example than the United Kingdom in cross trades. How can the hon. Gentleman justify one British vessel in the Norwegian section of the North sea and 48 Norwegian vessels in our section?
Mr. Mitchell: I shall come to that point. I am glad that the hon. Gentleman has raised it.

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The hon. Member for Wigan asked about the inspection of substandard vessels. I agree that that is important. We exercise port state control strictly and I have initiated a considerable tightening up of that. It is effective in deterring people from bringing substandard vessels to Britain.
The Department of Transport is engaged, with the help of other Government Departments, in seeking to ensure that the number of markets closed to us is kept to a minimum so that our fleet has the maximum trading opportunities. In terms of value, we reckon that only between 10 and 15 per cent. of total international seaborne trade is now subject to reservation. That is to say, between 85 and 90 per cent. is free, open and available for our ships to operate in. Certainly we keep up constant pressure in one way or another against those who seek to close the markets to us. That is most often successfully achieved by acting in co-operation with other countries. For example, talks have been going on between the United States and the Consultative Shipping Group. Those are designed to hold back the tide of protectionism where it stands today, and to ensure that there is no further creeping protectionism. That can be achieved only by acting together.
The hon. Member for South Shields (Dr. Clark) referred to Norway and the fact that there is only one British vessel operating there. One of the biggest single reasons for that is that Norwegian vessels are not required to take a pilot, but British vessels are. That has two disadvantages. The first is financial. To have to pay £200 on entering and leaving port in a competitive market is not peanuts. Far more important is that an oil rig requiring a supply vessel needs to have it immediately when the weather is right. If a vessel has to wait for a pilot, it will not be much cop as a potential bidder for a contract. Recognising that, at the suggestion of the GCBS I went to Norway and had long and frank discussions with its Minister. He came back here and we completed our discussions. The Norwegians have now waived that requirement in respect of United Kingdom supply vessels operating out of Norwegian ports.
Another important area is the EEC. The time has long passed when it should have developed a shipping policy. There have been enormous benefits to European countries from larger trade in goods as a result of membership. Such a policy should have applied to services in aviation and shipping, and it has not. We have been putting on as much pressure as we possibly can in recent months to try to get it to do just that. My hon. Friend the Member for Eastleigh is right to refer to the importance of that area and of cabotage and all the unfairnesses thrown up from open access to our coastal ports for other European countries while some at least close theirs to our fleet. We cannot with equanimity allow that to continue.
The Commission, under considerable pressure from us, has at last produced its memorandum. We are waiting to see its terms, which I understand were agreed by the Commission last Wednesday. We look forward to pressing the Council of Ministers to bring that policy to a successful conclusion because it will provide fairer trading and competition within Europe.
It is not for the Government to run ships; it is for our shipowners and merchant mariners. They have had a tough task, and I praise them for the way in which they have tackled it. It is the Government's job to seek to ensure fair trading opportunities. On that I am never
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satisfied, but we are working on it and more progress has been made than hon. Members may recognise, particularly in relation to a joint response to protectionism by the United States and the OECD countries. I hope that in January we shall sign an agreement committing the signatories to act together against any new protectionist devices which may emerge. We attach importance to early progress on the Commission's memorandum on a shipping policy in Europe and on a competition policy as part of it.
We shall ensure that there are sufficient vessels to enable us to fulfil our defence requirements. There certainly are at present, and forecasts have been made for the years ahead. We have taken steps, such as I have spelt out to the House, to limit the burdens imposed by the Government on vessels using our ports.
I do not claim that the Government have all the answers. There is a considerable pool of wisdom in the House on this subject. It is important that Ministers should listen, and I have done so carefully. I shall consider equally carefully the points that have been made. I again express my gratitude to my hon. Friend the Member for Romsey and Waterside for having introduced the motion.
6.57 pm
Mr. Colvin: In the remaining few minutes I want to thank my hon. Friend the Under-Secretary of State for his reply and also to thank those hon. Members who have participated in the debate, a feature of which has been the measure of all-party support for demands to improve the lamentable state of our Merchant Navy, and the awareness of the fact that if the present trend continues and the number of our ships continues to drop Britain will be in dire straits not only from an economic point of view, but from the point of view of our strategic defence.
I was pleased to note that my right hon. Friend the Secretary of State was present during most of the debate. I trust that he has taken copious notes of some of the points that have been made. In particular, I was impressed by what my hon. Friend the Member for Boothferry (Sir P. Bryan) had to say about the way in which some of the bigger companies have pulled out of shipping. That highlights the essence of the problem mentioned by my hon. Friend the Under-Secretary of State in his reply to the debate.
It is not the Government's job to run the shipping industry. It is their job to create the economic climate in which shipowners can prosper. That that climate has not been present of late is the reason for so many companies going out of shipping. I wish that it were possible to see the size of our merchant fleet maintained, but until we change the economic climate and encourage people to come back in, we are on a loser.
With that in mind, I am pleased that the GCBS, in its presentation to the Chancellor, has drawn attention to the need for allowances to be made available on secondhand ships. While we lament the state of the shipbuilding industry, there are nevertheless as many ships now laid up around the world as would constitute the whole output of our shipbuilding industry in one year.
I have no time in which to refer to the other remarks of hon. Members. The motion called on the Government to state their policies on merchant shipping, and my hon.

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Friend the Under-Secretary of State has done just that. We may not be satisfied with all his replies, but he has, nevertheless, stated the Government's policies, and I therefore beg to ask leave to withdraw the motion.
Motion, by leave, withdrawn.

Merchant Shipping
7 pm
The Parliamentary Under-Secretary of State for Transport (Mr. David Mitchell): I beg to move,
That the draft Merchant Shipping (Liner Conferences) (Mandatory Provisions) Regulations 1984, which were laid before this House on 13th November, be approved.
Mr. Deputy Speaker (Mr. Paul Dean): With this, it will be convenient to discuss the following motion:
That the draft Merchant Shipping (Liner Conferences) (Conditions for Recognition) Regulations 1984, which were laid before this House on 13th November, be approved.
Mr. Mitchell: Hon. Members will remember that in 1982 the Merchant Shipping (Liner Conferences) Act became law. That Act enabled the Secretary of State to make certain regulations whose effect would be essentially to translate the provisions of the UN convention on a code of conduct for the liner conferences into United Kingdom law. The matter is complex, but I think that it is important that I put the situation clearly on the record. Accordingly, I hope that the House will forgive me if I go into some detail.
The purpose of the present regulations therefore is to enable the United Kingdom to accede to that convention. The convention, which came into force in October 1983, embodies a complex and wide-ranging set of rules governing the relations between shipping lines that are members of shipping conferences and between those lines and their customers, the shippers. The application of this code of conduct in the United Kingdom will be significantly modified by EC Regulation No. 954/79, commonly referred to as the Brussels package. I shall have more to say about that later. The United Kingdom intends to accede early in the new year—we hope to do so at the same time as a number of other European countries. That event will constitute a very significant development in international liner shipping and we have not taken this decision without conducting extensive consultations with interested parties. I am glad to be able to tell the House that the United Kingdom's accession to this convention is fully supported by the General Council of British Shipping and the British Shippers Council.
Although the regulations themselves are quite technical in nature — I am sure that the concern that is often expressed in the House about the state of the British shipping industry will be reflected in today's debate—hon. Members would wish me to explain the relevance of the regulations and of the code itself to the wider shipping scene.
I turn to the Government's objectives in liner shipping. The policy of successive British Governments on liner shipping has been governed by our interests both as an exporting nation and as a major shipping nation. Those two national interests continue to point in the same direction. A third of our national income is derived from international trade, and roughly that proportion of our jobs depends on its success. Most of this trade is carried by sea. Any failure to maintain competitive conditions on our shipping routes would clearly result in more expensive and less efficient sea transport, with inevitable consequences for our trade.
Equally, our shipping industry relies on its own ability to compete in maritime trades worldwide. Opinions may well differ as to the most effective method of arresting the

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decline of the British flag fleet and what role the Government should play, but one issue on which there is agreement is that it is the Government's task to try to keep the world's shipping markets open to British vessels. Nearly three fifths of the freight earnings of the British shipping industry comes from trading between other countries' ports, and cross-trading earnings represent two fifths of the industry's liner earnings. Free and fair access to cargoes in other countries' ports is therefore vital to the future of the British shipping industry.
I turn to the conference system. The House will know that, in line with the practice of Governments throughout the world, we exempt liner shipping conferences from the provisions of our restrictive practices legislation. We find that liner conferences are generally beneficial in providing reliable scheduled services required by many shippers of different types of cargo. They also help to preserve stable freight rates, although this stability can be threatened when there is an abundance of competition from non-conference lines. The exemption can, of course, only be tenable provided that this competition is present to some degree, or is not prevented from developing; and provided that shippers are effectively organised so as to make their views known to the conferences. In a nutshell, closed conferences are acceptable only as part of an open system.
Thus British industry wants to have access to the regular scheduled liner shipping services provided by the conferences; and a free choice of competing non-conference carriers. British shipping wants to have the widest possible freedom to compete in the world's liner shipping routes, both within and without conferences. The Government's key shipping policy objectives are to ensure that these very reasonable desires of British industry and British shipping can be fulfilled.
But the House will not be surprised to know that a number of developing countries do not share the Government's desire to maintain an open market in liner shipping. They want instead to share cargoes as exclusively as possible between trading partners. It was these pressures for cargo reservation which were a moving force in establishing the UN liner code.
The core of the code is concerned with: first, the relations among conference shipping lines: and, secondly, the relations between conferences and shippers. In dealing with the relations between conferences and shippers, the code states that its objective is to
"balance the interests of the suppliers and users of liner shipping services".
The provisions of the code in large measure reflect the practices that have developed internationally in recent years and are, I believe, broadly acceptable to shippers and shipowners alike.
But in dealing with the relationship between conference lines the UN code sought to impose the very kind of rigid cargo-sharing that the Government have so often fought to resist. Article 2 provided that cargo should be divided equally between conference lines of the two countries that were served, leaving other conference lines to carry some 20 per cent. between them. This so-called 40:40:20 division of conference cargoes was unacceptable to the Government and was the main reason why the United Kingdom voted against the code convention at the diplomatic conference which adopted it in 1974.
Hon. Members who specialise in this subject will know that some OECD countries including France, West Germany and Belgium had voted in favour of the code and
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other OECD countries had merely abstained. We therefore faced the unhappy prospect that the United Kingdom might be compelled to stand aloof while this new regime was applied without restraint on many of the world's major shipping routes. In that event British shipping lines' cross-trading opportunities would have been severely restricted. I know that hon. Members would be deeply concerned at such a prospect.
Clearly there were, therefore, compelling reasons for OECD countries to adopt a more uniform approach to the code for EC states and, in particular, to agree a common position. That common policy was developed under the last Labour Administration; and the present Government were glad to continue it on behalf of the United Kingdom very soon after we came into office in 1979. The policy is embodied in the Brussels package, which creates directly applicable law in the United Kingdom.
The overall effect of the Community's policy on the code will be that its cargo-sharing provisions will protect the shipping of only those countries, mainly developing countries, that wish them to do so. This is assured by three key provisions. First, when the code applies to a route between a Community member state and a third country, conference lines from all member states will compete on that route on the same footing. Secondly, lines from countries within the OECD which intend to accede to the code will also be able to compete on the same footing provided that they offer reciprocal treatment on routes serving their own countries. Finland, Norway and Sweden have already announced their intention of joining the code and operating it in the same amended way as the United Kingdom and the rest of the EC. Thirdly, the conference shipping lines of other OECD countries such as Australia and the United States of America, which at present do not intend to accede to the code, will also be treated in the Community on the same footing as Community conference lines, so long as those countries do not themselves discriminate against Community shipping. Japan is the only country in the OECD which has indicated an intention of acceding to the UN code without having made clear what kind of reciprocal arrangements will be available, and discussions between the Community and Japan are continuing.
As a result of these fundamental modifications the Department has calculated that the code's cargo-sharing provisions will in practice reserve only cargoes representing between 10 per cent. and 15 per cent. of the world's liner conference trade; the remainder will be free of cargo reservation. I know that the House will welcome that in the light of earlier discussions on dealing with protectionism and access for our ship operators.
As I have mentioned, the code's basic regime concerning the relations between conferences and shippers was altogether more acceptable. The Brussels package contains some modifications to certain of the code's provisions but in the main the provisions which give rights to shippers to be consulted on the basis of full information are welcome.
There are two draft statutory instruments. The first, the mandatory provisions regulations, identifies the code's provisions which are to give rise to rights and duties. The second defines a United Kingdom national shipping line for the purposes of the code and defines those shippers' organisations which will have rights to be consulted.
The Merchant Shipping (Liner Conferences) (Mandatory Provisions) Regulations 1984 implement the

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code convention. The code's provisions are a mixture of mandatory and recommendatory provisions, and some of the mandatory provisions are ambiguous. It would not therefore have been possible or desirable to import the code as a whole into our law.
Regulation 2 lays down that these regulations apply to conferences which have their seat in the United Kingdom or serve the trade of the United Kingdom.
Regulation 3 lies at the heart of the statutory instrument and sets out in the form of a table those provisions of the code which are to be mandatory. The table identifies those people by whom and against whom these provisions may be enforced.
I do not believe that this table contains any unexpected or unusual decisions. We have sought to reproduce the code's mandatory provisions as faithfully as possible. Some minor clarifications have been made to ensure that the provisions work effectively and, above all, do not inhibit competition. I shall draw the attention of the House to just two.
First, regulation 2.4 (b) is clarified by stating that the share of cargo available to cross-trading lines is a right to acquire a share by commercial means. We wish to avoid any possibility of a cross-trading line seeking to increase its share simply through legal action.
Secondly, regulation 13.1 (2) is clarified to make it plain that conference lines are entitled to charge rates less than the published tariff. Our objective is again to ensure that this provision does not dampen competition.
Regulation 4 ensures that where any conference is incorporated its individual member lines remain responsible in respect of the duties set out in regulation 3, so far as this lies within their power. Regulation 5 contains minor clarifications to chapter VI of the code which deals with
"Provisions and Machinery for the Settlement of Disputes".
The Merchant Shipping (Liner Conferences) (Conditions for Recognition) Regulations 1984 set the conditions for a national shipping line and shippers' organisation.
The code defines a national shipping line, but allows Governments to add further criteria. The code conferred certain privileges on national shipping lines and although these have largely been removed by the Brussels package it is widely acknowledged that national line status will be of some importance. During our consultations with shipowners, shippers and the seafaring unions some suggestions were made which in the Government's view would have imposed unduly restrictive conditions on national shipping lines. Some groups felt that United Kingdom national shipping lines should be British-owned, other groups felt that United Kingdom national shipping lines should be compelled to fly the British flag.
The Government have decided to set criteria to maintain as open a market system as possible for shipping lines operating out of the United Kingdom. Regulation 2 therefore limits national shipping line status only in the following way. Lines will be regarded as national shipping lines only in respect of those conferences of which they are members. And they will have to be of British nationality —which is defined as having their principal place of business in the United Kingdom. The only other limitation
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is that lines from countries which would refuse similar treatment for British lines will themselves be excluded. I believe that that is agreeable to the House.
The code also allows Governments to decide who should have the right to take part in consultations with the conferences. Here, our objective has been to ensure that those organisations which already have a key role in representing shippers' interests will have the right to be consulted under the code. We have also been concerned to avoid a position where conferences are obliged to consult so many organisations that the process becomes unmanageable.
There are two avenues available to the Government to determine who should have those consultation rights. The first — and the fundamental one — is to set down the conditions for recognition as a shippers' organisation. The code contains a basic definition of a shippers' organisation and allows Governments to add further conditions. These conditions, set out in regulation 3, are necessarily expressed in broad terms. All those whom we have consulted have argued against a very rigid set of conditions. I hope that the House will agree that we are right to respond to consultation in that way.
Regulation 3 allows one national organisation, which is expected usually to be the British Shippers Council, to claim consultation rights in respect of most if not all conferences subject to the code. In addition, other shippers' organisations may claim consultation rights where they can show that they represent shippers of such quantities of goods with that conference that it is reasonable for them to be consulted. If the conference sought to deny that claim it would be for the conference to show either that the shippers concerned were already adequately represented by recognised shippers' organisations or that there were so many other organisations representing more cargo that recognition would be inappropriate.
We look to both shipowners and shippers to operate the consultation procedure in a constructive fashion. With goodwill on both sides I am sure that the shippers' interests can be effectively and efficiently represented.
The second avenue by which consultation rights may be established is designed to benefit large individual shippers and representatives of shippers. Regulation 5 gives the Secretary of State the power to designate these groups.
As the conditions that we have imposed on shippers' organisations represent something of a compromise between competing claims, I think that it would be right at this stage to state that the Secretary of State would use his powers of designation only in exceptional circumstances. He would adopt criteria in line with those laid down for shippers' organisations. The result would be that when large shippers, or a large number of small shippers, using the same agent, such as a freight forwarder, feel that their interests have not been adequately represented to a particular conference they will be able to seek consultation rights. I think that that is a comprehensive set of guidelines. I am sure that the House will agree.
I would now like to say something about non-conference lines and the code. The diplomatic conference that adopted the code convention also adopted a resolution on non-conference shipping lines which stated that such lines should not be prevented from operating provided that

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they competed fairly. But that resolution is not legally binding and the code itself confers no rights on non-conference shipping.
The problem that we face is that there is an increasing disposition among some developing countries to seek to close their shipping trades to non-conference lines and thus establish a monopoly for the conferences. That position would be unacceptable to the British Government on routes serving the United Kingdom.
We have therefore concluded that the United Kingdom's accession will be subject to the condition that the United Kingdom will be bound by the convention only while our trading partners permit non-conference lines to compete in our mutual trades. We shall make a formal reservation along these lines when we come to accede. In the event that non-conference lines were to be excluded by another contracting party the Government would be able to suspend the operation of the code using section 4 of the enabling Act and would thus be free to use the wide-ranging retaliatory powers contained in section 14 of the Merchant Shipping Act 1974. We have discussed our intention with our Community partners and we understand that other OECD Governments are likely to make similar reservations when they accede.
Finally, let me just touch on other current initiatives in liner shipping with which the Government are closely involved. I have explained that the Brussels package ensures that the OECD's ground rules concerning competition in the provision of liner shipping services are fully respected. But there is clearly a need for the OECD countries to continue to develop unambiguous and positive policies to promote their interests in liner shipping, particularly as more countries come to accede to the code.
I have referred already to the EEC regulations and the United States—Consultative Shipping Group dialogue, so I shall not refer to that again. I have sought to set out the Government's objectives in pursuing the interests of British shipping and its customers. The code, together with the Brussels package, is an attempt—some would say a very ambitious attempt — to reconcile quite different and potentially conflicting aims. But the alternative would have been a series of unilateral or, perhaps, regional initiatives taken by each sovereign state attempting to impose its preferred solutions on the shipping lines of its trading partners. Interference of that sort would have led to inefficiency, increased costs for shipping lines and, not least, the threat of very real disruption to shipping and trading operations where disputes could not be resolved.
The British Government recognise that the code represents something of a challenge and we have equipped ourselves with appropriate defensive powers if things go wrong. We shall do our best to make the code work effectively because we believe it holds out the best prospects for the stable development of liner shipping and that, of the options available, it represents the best course for British shipping and for British industry at large.
I have spoken at some length. It is a complex matter and it is right to put on record exactly what is involved in this important step for our shipping interests. I commend the regulations to the House.
7.22 pm
Mr. Roger Stott: During the excellent preceding debate hon. Members from both sides of the House made it absolutely clear to the Government that
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action to arrest the critical decline of our merchant fleet is required immediately. We must judge these regulations, tortuous though they may be, in the light of that criterion.
On the matter of the Brussels package, we have reached the stage when we must question whether it is in the best interests of the United Kingdom to continue to support it. Continued support makes sense only when the United Kingdom's earnings through cross trade exceeds the earnings that could be made from carrying 40 per cent. of our liner imports and exports. Clearly, that position has not yet been reached. However, the changes between 1979 and 1982 show the way in which matters are moving. Great change is taking place. The position is not quite what the Minister alleged. Serious changes are occuring and we must consider whether the package is acceptable to us.
The second set of regulations deal with the national shipping lines. They do not provide adequate defence for the United Kingdom shipping interests, and that applies especially to the definition of a national shipping line. Neither ownership nor the registration of vessels is taken into account to the extent that national line status can be accorded even if ownership and registration are outside the United Kingdom.
While regulation 2(3)—the conditions for recognition —has been included because of EEC regulation 954/79, the Government have not reconsidered that regulation in the light of the changed circumstances of United Kingdom shipping. The decline in the United Kingdom's liner trade calls for the regulation to be amended so that national line status is accorded only to companies with ownership and registration within the United Kingdom. However, recognising the existence of the EEC regulation, national line status could be accorded only to companies using vessels registered in the United Kingdom or in other member states.
Regulations 2(1), (2) and (3) give national line status to existing members of liner conferences. Even if they use non-United Kingdom flag ships with non-United Kingdom crews, such status can be retained by the conference members. For example, a Swiss-owned Liberian flag of convenience ship with a Singaporean or Filipino crew could still be used by a company with national line status. That really makes nonsense of the definition of a national shipping line.
The requirement that reciprocal arrangements exist for a foreign-owned company to receive national line status in the United Kingdom provides some attempt to protect our interests, but it is the very narrow interest of owners, because United Kingdom companies establishing subsidiaries abroad would be using foreign ships and labour, with no benefit to United Kingdom seafarers or to the nation as a whole.
The regulations are clearly aimed at the Comecon countries, because they are regarded as operating unfairly, and I subscribe to that view, but there is no attempt to act against flag-of-convenience operations, which are just as unfair and are a greater threat to British shipping. Overall, the regulations will not help to protect United Kingdom shipping. They will not secure existing operations or promote further opportunities.
I shall not ask my hon. Friends—if they are still around—to divide the House. I merely wish to point out to the Minister that some of us are greatly upset by the regulations. We do not believe that they will in any way deal with the very grave position facing British shipping.

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The Government are in the process of undertaking a review of shipping. The Minister of State for the Armed Forces is studying the whole question, but it is limited to the defence requirements for merchant shipping and the capability of the fleet to meet those requirements. The Under-Secretary of State, in answer to a question on 10 December, at column 304 of the Official Report, said that the review would take into account only vessels and not manpower, nor the economic necessities of maintaining a merchant fleet. I hope that the Minister will take that point on board.
I wish to crave your indulgence for a moment, Mr. Deputy Speaker, as I may stray slightly outside the motion. However, I believe that an important matter should be put on the record. The Minister must ensure that the consultants whom he has engaged to consider the matter also consider manpower. He will know from the questions asked by his hon. Friend the Member for Eastleigh (Sir. D. Price) that manpower is important, especially if there is another Falklands-type conflict, where ships that are flagged out may be brought back into Britain, but their crews may not.
In the light of the disastrous state of British shipping and the dire prospects for United Kingdom companies, the Government should undertake a major review of the industry. It is 14 years since Lord Rochdale made his major report on shipping, and a great deal has changed since then. In fact, the Government's lack of concern and their inactivity have condoned the worst decline in our merchant fleet in our history. It is time that we did something about that.
I shall not rehearse the arguments that I used in the previous debate. I am sure that the Minister is well aware of the feeling of hon. Members on both sides of the House about this great industry. I am sure that he is also well aware that something must be done quickly to arrest that decline. I do not believe that the regulations will go any way towards that. Much more positive action is required.
7.30 pm
Mr. Michael Shersby: First, I must declare an interest as I am associated with an organisation which is a member of the British Federation of Commodity Associations.
Regulation 2 is headed:
"National Shipping Lines of the United Kingdom".
I recognise the necessity for the regulation where there is a definition of a national shipping line. The United Nations liner code enables developing countries to participate in liner conference trade by virtue of having the right to carry in vessels of their national lines about 40 per cent. of the goods generated by trade between them. The countries at the other end would also have about 40 per cent. The remaining 20 per cent. of trade can be acquired by vessels of third countries. That is the so-called 40:40:20 rule.
If my hon. Friend the Under-Secretary of State has read the Second Reading debate on the 1982 Bill, as it then was, he will understand that I have always been opposed to the United Nations liner code, which led to the Merchant Shipping (Liner Conferences) Act 1982. I have opposed it because of its impression and the opportunity which it has afforded to less scrupulous countries to abuse
80
normal commercial practices and to take refuge for their action behind the code. I spoke at length on these matters when the 1982 Bill was being considered in Committee.
I was interested to hear my hon. Friend the Under-Secretary of State talk about the appropriate defensive powers that the Government have taken if things go wrong. I cannot help feeling that I have been reinforced in the view that I took in 1982, that the whole of this bureaucratic and cumbersome apparatus is very much the best of a bad job. My hon. Friend spoke about the problems that would have ensued if we had not decided to adhere to the code. He reminded the House of the difficulties that might have arisen if countries had pursued their separate interests. None the less, I am filled with gloom as I hear once again a description of the way in which the proposed apparatus will work.
I remind the hon. Member for Wigan (Mr. Stott) of what was said in the House on 9 June 1978 by the then hon. Member for Hackney, Central, Mr. Stanley Clinton Davis:
"But much of the current support for the United Nations code derives from the desire of certain developed countries to increase their share of liner trades by cargo reservation, since it appears that they cannot win a greater share by commercial means. I see no reason why we should encourage any move at all in this direction."—[Official Report, 9 June 1978; Vol. 951, c. 610.]
I am glad that after a considerable period my hon. Friend has tabled the regulations, which seek to define important matters. In regulation 2(2) we have a clear definition of a shipping line of British nationality. In regulation 2(3) recognition of a shipping line as being of British nationality is accorded to shipping lines of member states of the EEC. I understand that that provision will operate reciprocally within the Community. However, in regulations 2(4) and 2(5) recognition as a national shipping line of the United Kingdom is accorded to lines of states outside the EEC under certain conditions. In regulation 2(4) there is a requirement for an effective opportunity to ply for trade, and in regulation 2(5) there are requirements relating to the percentage of share capital and directors. Those conditions may be subject to change—possibly to sudden change. For example, the opportunity to ply for trade could be restricted. The percentage of shareholders could change, and so could the number of directors. I should like to know what steps my hon. Friend proposes to take to ensure that when a decision has been made on such conditions there will be a system of monitoring to ensure that the conditions on which the decision was taken are retained.
I have always been worried that the code is vague and imprecise. I understand the problem of drafting regulations that result from a code that has been internationally criticised for being vague and imprecise. However, Britain decided to adopt the code, and it has taken seriously the subsequent legislation. It has attempted to make as good a job of it as possible. I ask my hon. Friend to set before the House the evidence he has that the issue is being taken equally seriously by other code states and that they are taking the necessary steps to draft legislation, especially the developing countries which have adopted the code. Unless all signatories to the code apply equally strict conditions, there is a danger that the code will not work.
Regulation 3 is headed "Shippers' Organisations". In regulation 3(2)(b) there is the right for shippers' organisations to be consulted by the conference under certain conditions. The conference is given the opportunity of saying under regulation 3(2)(b)(ii)
"that it would not be appropriate to consult".

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In the debates that took place prior to the 1982 Act, I strongly represented the views of shippers of raw materials which were members of the British Federation of Commodity Associations. The commodities that are traded through London rarely reach the shores of the United Kingdom. The majority of them pass between third countries. However, the commission earned by London trading houses on such transactions is an important part of our invisible earnings. The commodity trades, according to the latest statistics that are available, earned £350 million in invisibles in 1983. The trade associations of London, which cover commodities such as sugar, cocoa, non-ferrous metals and rubber, may have problems from time to time with the carriage of their commodities by liner conference which they will need to discuss with the conferences. It is astonishing that the regulations should contain a proviso that might enable any conference to refuse such consultation on the ground that the quantities carried were not large enough or that the trade concerned belonged to a larger shippers' organisation, such as the British Shippers Council.
When there are real problems it is essential that the trade should be able to consult directly with the conference. It should not have to consult any other organisation, unless it wishes to do so. Representations have been made to my hon. Friend the Minister on this issue and I hope that he will be able to give some assurance when he replies that it is not his intention to deprive any trade of the opportunity of full consultation when a genuine problem arises.
This is the first piece of Government legislation that I have opposed at all stages with both voice and vote. When historians come to plot the decline of the British merchant marine, I hope that one of them will read the proceedings in Standing Committee during April 1982 and possibly the report of this debate. I hope that it will be noted that at least one Member of this place expressed serious reservations and surprise that the British Government found it necessary to accede to the proposal.
7.38 pm
Dr. David Clark: I take up the rather sombre tone of the hon. Member for Uxbridge (Mr. Shersby), who has argued in the same vein for a number of years. Like many who spoke in the previous debate on merchant shipping, I have no direct financial interest. However, I represent a constituency that contains one of the four designated nautical colleges. As we heard from the hon. Member for Isle of Wight (Mr. Ross) in the previous debate, the colleges are under threat of closure. As the hon. Member for Wallsend (Mr. Garrett) said in the previous debate, my constituency is a town which lost more merchant seamen in the past two wars than any other. My constituency contains the largest branch of the National Union of Seamen in the north of England and the general secretary of the NUS comes from my constituency. My constituency is based on Tyne Dock. As I have said, I have no financial interest but I have a great interest in the maritime industry.
It is with great sadness that I take part in this debate, especially in view of the earlier speech on the motion and the introduction to these regulations by the Under-Secretary of State. There is great resentment in my constituency about the way in which the Government have let down the Merchant Navy. These regulations are not a step forward. The Under-Secretary of State took 35
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minutes to wind up in a three-hour debate, thereby preventing me from making a speech, and that can only add to the resentment.
Mr. David Mitchell: Will the hon. Gentleman give way?
Dr. Clark: I shall not give way. The hon. Gentleman spoke for 35 minutes in the previous debate and gave a long introduction to this debate. He will have a chance to make his point when winding up.
The Under-Secretary of State talked about the Brussels package. I hope that all hon. Members wish the new commissioner in charge of transport, Stanley Clinton Davis, well in his task. I deplore the scurrilous attacks made on him and his colleague, Lord Cockfield, by the leader of the Liberal party when in Brussels. It was disgraceful to make such attacks on two first-class men. We wish Stanley Clinton Davis well in his efforts to grapple with the problem connected with the Brussels package.
The Under-Secretary of State said that our maritime ability will depend upon our industry's ability. As we argued for three hours in the previous debate, this has nothing to do with the industry's ability—it has to do with the fiscal measures that the Government are prepared to take to help the maritime industry to survive. I am sad that the Under-Secretary of State was not able to pick up that point, which was made ferociously by both sides of the House. I hope that the hon. Gentleman will take that message back to the Chancellor of the Exchequer and say how unfair the Government's decisions in the last Budget were in reducing the overseas earnings allowance of seamen. That measure will increase the cost of the wages of the British shipping industry. It will give the lie to the point made by the Under-Secretary of State that our maritime ability depends upon the industry's ability. The Government have shown no incentive in trying to help the merchant shipping industry.
About 22 minutes ago, the Under-Secretary of State assured us that the purpose of the regulations and his policy was to protect British shipping. That is not how the shipping industry sees it. The hon. Gentleman responded by referring to the supply ships in the Norwegian section of the North sea. Some months ago, the hon. Gentleman met the responsible Minister, but we are still awaiting developments. The Norwegians operate a bureaucratic system that makes it virtually impossible for British offshore and supply vessels to become involved. It is as simple as that. The Norwegians know that, and they are pulling the wool over the Minister's eyes.
In introducing the regulations, the Under-Secretary of State rightly mentioned many other OECD countries, specifically Norway, Sweden and Denmark. I understand that the British Government are conducting negotiations with the Soviet Government. The British Government propose to preclude any Russian vessels from entering the port of Tyne and the river Tyne. I urge the Under-Secretary of State — he probably does not have the necessary information with him — to look into this matter. We can understand why the Government do not want to let the Russians into Barrow-in-Furness and Rosyth. I seriously warn the Government that, if they prevent Russian vessels from entering the river Tyne, they will add to unemployment. As a representative of the travel-to-work area with the highest unemployment rate in

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England — more than 30 per cent. of the men in the travel-to-work area of my constituency and that of my hon. Friend the Member for Jarrow (Mr. Dixon) are out of work —I know that already this year we have had more than £1 million worth of work from the Russians. I have heard much criticism of the Russians in this debate, but at least they pay their bill and are good customers. We want Russian vessels on the river Tyne. I hope that, if the Under-Secretary of State cannot give an answer today, he will write to me.
7.45 pm
Mr. David Mitchell: I do not want to detain the House for any longer than need be. I apologise to the hon. Member for South Shields (Dr. Clark) if my summing up in the earlier debate deprived him of the opportunity to participate. That was unintentional. We did not have sufficient time to discuss such an important subject. I wanted to put several points on the record, because hon. Members on both sides of the House raised a large number of issues. I shall ensure that the points made by the hon. Member for South Shields about fiscal matters are conveyed to my right hon. Friend the Chancellor of the Exchequer, and I shall write to him about the entry into the Tyne of Russian vessels.
My hon. Friend the Member for Uxbridge (Mr. Shersby) raised a number of points and expressed his continuing anxieties. I well know the points that he made at the earlier stage of the legislation. I shall write to my hon. Friend about the legislation in other countries. The Government's objective in the definition of a shipper's organisation has been to ensure that those organisations able to play a worthwhile role in consulting conferences will be recognised, but to avoid setting conditions requiring conferences to consult so many organisations that the process becomes unmanageable.
My hon. Friend the Member for Uxbridge asked about a national line and about how the Government will monitor conditions set out in regulations 2(4) and 2(5). The Government will not intervene. These are matters for the liner conference and disputes will be referred to the civil courts. It will be in the interests of other lines to monitor progress.
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The hon. Member for Wigan (Mr. Stott) and other hon. Members questioned the wisdom of our being involved. They suggested that extrapolating the historic trend of protectionism raised the question whether we would be better to join those countries which voted in favour of the code and get our 40 per cent. out of our trade. That assumes that no further effective steps are taken to resist protectionism. I hope that I managed to convey to the House our clear intention to be active on that front, especially in co-ordinating resistance protectionism within Europe and through the United States — Consultative Shipping Group talks, with the expectation that there will be progress in January or February.
Hon. Members referred to charges imposed on our exporters if they lose the freedom to choose which they now enjoy. Some goods for Brazil from the east coast of the United States travel via western Europe because that is cheaper than using the carved up trade between the other two countries. That shows the damaging effect on a country's exports when there is a stranglehold on the shipment of goods.
The industry's calculations show, and the General Council of British Shipping has made this point also, that it would be better for our ship operators if we joined the liner code on the terms now proposed. Although I understand the misgivings that have been expressed, I believe that there must be a coincidence of interest between the ship owners and the unions. There is room for the unions to talk more closely and to understand each other's thinking. That would be a helpful step forward. I hope that hon. Members will join me in saying that that should be commended to the parties. I hope, too, that the House will feel it right to approve these regulations.
Question put and agreed to.
Resolved,
That the draft Merchant Shipping (Liner Conferences) (Mandatory Provisions) Regulations 1984, which were laid before this House on 13th November, be approved.

MERCHANT SHIPPING
Resolved,
That the draft Merchant Shipping (Liner Conferences) (Conditions for Recognition) Regulations 1984, which were laid before this House on 13th November, be approved. — [Mr. David Mitchell.]

Northern Ireland (Appropriation)
Mr. Deputy Speaker (Mr. Harold Walker): Before I call the Minister to move the Appropriation (No. 3) (Northern Ireland) Order 1984, I should remind the House that this order deals with specific Supplementary Estimates and the debate should, therefore, be confined to agricultural assistance and social security benefits, or to other specified matters arising directly from the order.
7.50 pm
The Minister of State, Northern Ireland Office (Dr. Rhodes Boyson): I beg to move,
That the draft Appropriation (No. 3) (Northern Ireland) Order 1984, which was laid before this House on 20th November, be approved.
This order is being made under paragraph 1 of schedule 1 to the Northern Ireland Act 1974. The purpose of the draft order is to authorise the issue of £41 million out of the Consolidated Fund of Northern Ireland in respect of the autumn Supplementary Estimates of Northern Ireland departments and to appropriate this sum for the purposes shown in the schedule. The House has already approved a total Estimate provision of £2,832 million for this financial year; the present draft order will bring the figure to £2,873 million. Detailed information about the provision sought can be found in the autumn Supplementary Estimates volume, copies of which have been placed in the Vote Office. The draft order covers only four out of the 39 Votes of Northern Ireland Departments. Provision is sought to meet the cost of the continuation of special measures to assist agriculture, and to fund the milk outgoers scheme. On the social security side, more money is required to pay increased numbers of recipients of a range of non-contributory benefits and to cover the cost of the new severe disablement allowance.
Before I deal with the details of the provisions I shall, as is customary on these occasions, and with your permission Mr. Deputy Speaker, say a few words about the economic position in Northern Ireland. Mr. Deputy Speaker has not yet intervened. I have read the previous Appropriation debates as part of my training for this post, which is why I asked for the permission of Mr. Deputy Speaker.
Mr. Deputy Speaker: Order. The Minister should set a good example by following the advice that I tendered at the outset, when I reminded the House that the debate should be confined to agricultural assistance, social security benefits or other specified matters arising directly from the order. I am sure that the Minister does not want to debate the economy of Northern Ireland.
Dr. Boyson: I shall accept your guidance on that point, Mr. Deputy Speaker. I shall have to use my rather splendid paragraph on some other occasion, when I know that it will be enjoyed by hon. Members.
Now to the details of the four Votes covered by these Supplementary Estimates. The main purpose of the two Votes in Class I, which covers agriculture, is to increase funds for the various special aid measures to assist agriculture which were announced in February 1984. Provision is also sought to cover the initial payments under the milk outgoers scheme and the fees and expenses of tribunal and panel members adjudicating milk quota cases.
In Vote 1 there are three main items. An estimated £450,000 is sought for continued measures to develop the
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quality of beef cattle production, mainly through reduced charges under the Department's artificial insemination service. That provision is part of the special aid measures, most of which fall in Vote 2, and to which I shall be referring a little later in this speech.
New provision of £800,000 is required to meet the cost of compensation payments to those milk producers who have undertaken to give up milk production and thereby release quota for reallocation. A further £370,000 is sought to cover the costs of the Northern Ireland dairy produce quota tribunal and local panels established to adjudicate on special case claims and quota allocations, together with payments to the Northern Ireland Milk Marketing Board for the administration of certain functions under the dairy produce quota regulations.
Right hon. and hon. Members would, I am sure, wish me to make some comment on the present milk quotas position. All wholesale producers have by now received definitive primary quota allocations based on 1983 sales. The total primary wholesale quota so issued amounts to some 1,286 million litres, out of the total Northern Ireland allocation of 1,316·7 million litres, which means that 30·7 million litres have not been allocated. About 3,900 producers applied for special case treatment, either because of an exceptional event which adversely affected production in 1983 or because they were committed to expansion. Almost all these special case claims have been considered and provisional awards of secondary wholesale quota have been made by local panels in about 1,700 cases. The remaining claims have been rejected. Producers have, of course, the right of appeal to the Northern Ireland Dairy Produce Quota Tribunal, and at present 750 have exercised that right. The tribunal is also required to adjudicate on cases made under the exceptional hardship rules and here 3,430 producers applied for consideration. As at 28 November, decisions had been taken on 1,788 of these and provisional awards made in 540 cases. The remainder will be dealt with over the course of the next few weeks.
I have great sympathy for those farmers who are attempting to make unwelcome and difficult adjustments in circumstances where unavoidable delays have resulted in uncertainty about final quota allocations and levy liability. It would be remiss of me to continue without reference to the immense efforts being made by members of the tribunal and panels on behalf of those farmers who have sought a change in their position under the special case rules or have made appeals. In particular I should mention the leadership, which has been provided by Mr. W. E. Boyd, the chairman of the tribunal. The industry and the Government have cause to be grateful to Mr. Boyd and the many other people involved in establishing a base from which individual producers can better take sensible decisions about their milk businesses.
Under the milk outgoers scheme 595 producers have submitted applications, thereby offering to release a total of 53·3 million litres for reallocation. The Department has written to all producers with a valid application inviting them to proceed, and those who decide to take up this invitation will have four weeks to make a claim for payment. Since producers with special case or hardship applications do not have to commit themselves until their claims are determined, it will therefore be some time before the position on overall quota surrender is known. However, as a number of applicants have decided to

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withdraw from the scheme it is already clear that additional quota released will be well below the initial offer levels.
With only 30·7 million litres of primary wholesale quota unallocated out of the Northern Ireland total, and a potential maximum of about a further 20 million litres becoming available from the outgoers scheme, the way ahead for distribution to people with special claims will obviously be difficult.
The second of the two agriculture votes, Class I, Vote 2, is mainly for special local support schemes. There is £5·5 million required for continuation of the milk consumer subsidy, which enables a higher wholesale price to be fixed for milk going to the liquid consumption market. Without that, consumers in Northern Ireland would have to pay more than consumers in Great Britain, or dairy farmers in Northern Ireland would suffer an even bigger gap between their average milk price and that in Great Britain. There is £2·3 million required for continuation of aid to pig and poultrymeat processing plants and egg packing stations, with the objective of easing the pressures on the intensive livestock sector and maintaining employment in the processing industry. Finally, £1,948,000 is sought under the grassland scheme, which was first introduced two years ago to encourage the improvement of grassland productivity outside the less-favoured areas. Following extension of the less-favoured areas the scheme will, of course, now apply to a much reduced area and expenditure will consequently be less.
I close my remarks in relation to agriculture by reminding the House of the background to special aids and the objectives we are seeking to achieve by continuing to support them. The absolute and relative importance of agriculture to the Northern Ireland economy is obvious. This is one of the first points that struck me when looking at the structure of the economy of the Province. Agriculture remains the largest industry — farm employment represents 9·8 per cent. of total civil employment and ancillary industries constitute a further 3 per cent. Agriculture produces 5·6 per cent. of the Northern Ireland gross domestic product. At the same time, farmers in Northern Ireland face particular disadvantages, such as remoteness from the main markets, high dependence on imported feedstuffs and lack of suitable alternatives to livestock enterprises, the latter being less well supported under the common agricultural policy than other products such as cereals.
Against the background of a general economic weakness, and unemployment rates higher than those in any other United Kingdom region, the justification for those special aids is that they will be of some assistance in maintaining production and employment on and off farms. Having visited farms in Northern Ireland, I know why farmers have concentrated on livestock as opposed to cereal growing, and I now realise how high up they are and the amount of rain that falls in those areas.
With regard to the social security programme, additional provision is being sought in Votes 1 and 2 of Class X. Vote 1, which covers national insurance, makes provision for the supplement from the Consolidated Fund of Northern Ireland to the Northern Ireland national insurance fund. The supplement is an annually defined percentage of contribution income, which for the current year is set at 11 per cent. The Estimates may therefore
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need revision during or after each financial year in the light of the Government Actuary's revised forecasts of contribution income. The supplementary provision now sought thus comprises an upward revision of £3·9 million for the current year, and a final upward adjustment of £250,000 in respect of 1979–80.
Class X, Vote 2, covers non-contributory benefits. The Supplementary Estimate of £26·12 million represents an increase of 6·3 per cent. on the original provision. The largest increase sought is for supplementary benefits. The additional provision of £770,000 in respect of supplementary pensions is necessary because of the reduction from 70 to 65 years of age in the upper qualifying age for age-related heating additions and the introduction of a new, higher age-related rate. The additional provision of £14·22 million sought for supplementary allowances is attributable to a rise in the number of beneficiaries and an increasing number of single payments.
An additional £·8 million is sought in respect of housing benefits. There have been increases both in the numbers of eligible claimants and in the average weekly rebates and allowances.
A new benefit — severe disablement allowance —replaced non-contributory invalidity pensions from 29 November 1984. The new allowance is similar in purpose to the benefit that it has replaced, but more people will receive it. All those who qualified for receipt of non-contributory invalidity pensions on 29 November automatically qualified for the new allowance. Apart from that, people who have been continuosly incapable of work for at least 28 weeks because of a disability on or before their 20th birthday can qualify for the new benefit simply on that basis. Those who become incapable of work later in life must also be severely disabled to qualify. Married women can claim the severe disablement allowance even if they are able to carry out normal household duties. The benefit is being introduced in two phases—people aged 50 or over and those aged 16 to 34 can get the new allowance from November 1984, while those aged 35 to 49 will be eligible from November 1985.
There are several other factors contributing to the net increase sought in that Vote. In particular, there is an additional provision of £800,000 in respect of attendance allowances due primarily to a rise in the number of beneficiaries.
In my opening remarks I have tried to outline briefly the main features of the draft order and to give right hon. and hon. Members an appreciation of the reasons for the changes in these four Northern Ireland Votes. I shall listen with interest to the points raised by hon. Members, and my hon. Friend the Under-Secretary of State will reply.
8.4 pm
Mr. Harold McCusker: I intervene briefly to give my agricultural friends the opportunity to shake the straw out of their hair because no doubt they will be splashing about in the milk quota once again when they have had time to digest what the Minister has just told us. I should like to comment on three of the allowances that he mentioned when he introduced the Supplementary Estimates for the Department of Health and Social Services in Class X, Vote 2.
I should like to comment, first, on the attendance allowance increase of £800,000. That must be the best £800,000 that we shall spend this year. I am glad that there are 500 new beneficiaries. There are not all that many of

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them in Upper Bann, but I am glad that some people are having success in getting that allowance. It is one of the most frustrating allowances to deal with and upon which to advise one's constituents.
I should like to refer to the method that is used to determine whether someone qualifies for the allowance. A doctor visits the applicant, who might be an old person, with his memory failing. Not all applicants, but many, might suffer from varying degrees of dementia. The doctor asks the applicant a series of questions, as well as giving him a medical examination. Such people are not in the section of the community that tries to suck the system dry. The applicant tries honestly to answer the questions asked by the doctor. He might be more than honest, and understate his case, thus depriving himself of the allowance. In doing so, such people are only doing themselves and the community in general a disservice. The assessor might take at face value what the person says, so he is doing us all a disservice.
Surely, if anything, the allowance was designed to ensure that we do not put a greater burden on geriatric hospitals and other homes which are the alternative for elderly people if their families cannot maintain them at home. Some 500 people will put an added burden of almost £1 million on our social security budget, yet the one thing of which we can be sure is that there will be no gross abuse of the increase. The only abuse, if there is one, is that the elderly person might marginally receive some assistance to which he is not entitled if one applies a strict interpretation to the rules. But, in reality, £1 million is being spread among several concerned families in the community in an attempt to help them to look after the elderly people in the bosom of the family and prevent them from becoming an added burden on our society.
I hope that an effort will be made to involve the applicant's local doctor, because the applicant's general practitioner is frequently at variance with the assessing doctor. If local doctors are professionals and we are to believe that they will make an honest judgment—which we must believe — some cognisance must be taken of their assessment of whether that person, and his family, should benefit from the allowance. Therefore, I welcome the increase and look forward to its increasing even more. I believe that it will be offset by savings in other places.
Mr. Peter Robinson: Does the hon. Gentleman agree that the most frustrating thing in connection with attendance allowance is that, if someone has an independent mind and does not want to feel embarrassed by letting the person visiting him know how incapable he is, there is no appeal system, except on a point of law?
Mr. McCusker: I have suffered the same frustration as the hon. Gentleman and others. We are dealing with a category of people who do not want to take advantage of the system. Perhaps one can say that that is unfortunate. That applies to other aspects of the social security system. Those are the people who are least willing to take what they are entitled to — for example, in supplementary benefit—whereas others are prepared to take what they are not entitled to.
Heating addition is another part of the supplementary benefits system. A few days ago I had a visit from an elderly constituent who had moved home. In her former home she had used a room heater from which she ran
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several radiators. She had been assessed as qualifying for the higher rate of heating allowance. In her new home she used a similar room heater but without radiators. She still had to fire that room heater, but she also bought a couple of oil-filled radiators to heat the other rooms. That combination was more expensive to run, yet she was told, "I am sorry, but you no longer qualify for the higher heating addition. You will now qualify for the lower heating addition." That is incredible.
I choose that allowance as an example, and I should like to make it clear, first, that we are dealing with the same category of person to which I referred earlier, and, secondly, if there is any abuse, it is marginal. We are talking about someone aged 60 or 70 who is taking advantage of the social security system to get perhaps £1 or £2 more than he ought simply to heat his home. That is an extremely fine judgment to make.
Most of the money is spent on supplementary benefit. Is the Minister satisfied that every effort has been made to prevent massive abuse of that system? Is he convinced that the number of investigators at his disposal is adequate to do the job? Equally, is he convinced that in his Department and social security offices generally there is an even-handed application when judging these cases?
The Minister of State talked about an increase in the number of claims for single payments. I have been supplied with some statistics, which show that 33,000 single payments were made in 1979. By 1983, the figure was in excess of 100,000. In 1979, single payments amounted to about £1·5 million, but by 1983 they were in excess of £12 million. Is the Minister satisfied that we are getting value for money?
In essence we are not talking about people aged 65 or 70 who have given a lifetime's service to the community and have applied for assistance to help buy a new appliance. In fact, the lady who came to me with her heating problem bought a new cooker for £90. She is in receipt of minimal supplementary benefit, and I suggested that she should apply for supplementary benefit assistance to help buy that appliance. She told me, "I'll do no such thing. I wouldn't have the town of Lurgan talking about me." She was indicating that she was sufficiently independent and had saved enough money to buy the cooker. She was also indicating that she did not believe the system to be watertight, and that if she did apply there was no guarantee that it would be in confidence. That lady did not believe that her application would be in confidence because of the rumours and talk that one hears throughout Northern Ireland about the abuses of the system.
For example, my hon. Friend the Member for Newry and Armagh (Mr. Nicholson) will no doubt be aware of the strong rumour that a firm in Newry will remove one's furniture, store it and return it when required, thereby enabling the householder to make a large claim for furniture under the single payments system. No doubt that firm will be happy to furnish the individual with a receipt to prove that he was entitled to the £1,000 that he received.
There is also a rumour in my constituency that if someone gets a single payment of £350 he can approach a "dealer" who will buy the cheque for £250 and furnish a receipt. The single payment was not designed to enable people to line their pockets with £250 or to allow a so-called "dealer" to take a £100 cut.
I asked another of my hon. Friends what he considered to be the worst abuse of the single payment system, and he told me that it was voluntary separation. A man and

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wife can agree to separate temporarily, and for some reason they seem to be assisted by the Housing Executive. The two partners then set up home independently and claim £1,000 or £1,200 to furnish those households. Consequently, they are reconciled, but £1,000 has been lost by that time. We have all heard of someone applying for a cot when there is one in the attic, merely because he wishes to cash the cheque.
I must accept a strict interpretation of the rules for elderly people applying for attendance allowance to help their relations support them within the bosom of the family. I also accept that great care must be exercised to ensure that there is no abuse of that system. But if a pensioner is to be taken off the higher rate of heating allowance and placed on the lower rate because of the number of radiators she uses, I want an assurance that the same effort is being made to prevent abuses of supplementary benefit, which now amounts to £250 million, £12 million of which goes on single payments.
The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Chris Patten): Perhaps I can help the hon. Gentleman. I estimate that this year we shall be spending more than £20 million on single payments.
Mr. McCusker: That makes my point. If he has not already done so, I ask the Minister to investigate this matter. I appreciate that there are dangers in what I shall say, but is it possible to identify where most of that money is spent? I should not be surprised if it was spent in those areas of the Province where the Queen's writ does not run as it should. There are all sorts of pressures on all sorts of people in those areas to be extremely careful when dealing with these matters. If we are now talking about an increase from £1.5 million to £20 million in five years, action clearly needs to be taken. Now that the Minister has confirmed that figure, I look forward to an assurance that he is getting value for money in respect of every penny of that £20 million.
8.18 pm
Rev. Ian Paisley: Like the hon. Member for Upper Bann (Mr. McCusker), I am sure that any hon. Member from Northern Ireland would express concern about attendance allowances. Such concern must be highlighted. The other matters to which the hon. Gentleman referred are also of the utmost importance, especially as the Minister has said that single payments this year will amount to £20 million. That must be looked at carefully. No doubt my hon. Friends will develop these matters further.
I wish to speak about Class I, items 1 and 2. Anybody who heard the Minister introducing the order and who did not know anything about Northern Ireland would think that Northern Ireland was to receive special aid which would put agriculture in the Province in a far better position than agriculture in any other part of the United Kingdom. I should like to underline what has been taken out of Northern Ireland agriculture and the cross which Northern Ireland farmers have to carry so that our view of special aid to Northern Ireland is put into its proper perspective.
On 12 November the Minister of Agriculture, Fisheries and Food told us of his intention to save £40 million in 1985–86. Those who know something about Northern Ireland agriculture will be aware that the Department of
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Agriculture in Northern Ireland has a special relationship with the Ministry of Agriculture, Fisheries and Food and that MAFF is a very important part of the administration of Northern Ireland agriculture. On 11 December the Minister of Agriculture, Fisheries and Food announced, in reply to a written question, that changes in the farm capital grants were estimated to save about £40 million. In other words, United Kingdom farmers will be £40 million worse off in 1985–86.
The new standard rate of grant in the lowlands under the agriculture and horticulture grant scheme will be 15 per cent. It was 20 per cent. In the less-favoured areas the new standard grant will be 30 per cent. Grant will no longer be available for land clearance and land reclamation. Those activities will be assisted in Northern Ireland only where the Minister says that they are essential to maintain farm incomes. The ceiling on the amount of investment that may be grant-aided will be halved, except for heated glasshouses and orchard replanting. Heated glasshouses in Northern Ireland are few and far between. Grants for orchard replanting will not be of very much help to Northern Ireland farmers. The limit per labour unit will be about £25,000, and the overall business limit over six years will be about £50,000—again halved.
The changes made under the agriculture and horticulture development scheme and the agriculture and horticulture grant scheme relate to the exclusion of certain land reclamation items and reductions in the rate of grant for field drainage, from 70 to 50 per cent. in the less-favoured areas, and from 50 to 32.5 per cent. in the lowlands. According to the Minister, the policy is to have a closer integration of conservation and agriculture policies through high rates of grant for certain agricultural works which are of benefit to the environment, and to exclude land clearance except for Northern Ireland reclamation works. That may be helpful in East Anglia, but it is not helpful in Northern Ireland.
The sugar on this pill is an increase in the rate of grant from 20 to 30 per cent. for hedges, walls and dykes built of traditional local materials and for associated gates. The farming community in Northern Ireland is told that more cereals should be grown. If it were to grow cereals, instead of erecting dykes ail hedges and putting up traditional gates, the farming community in Northern Ireland would have to remove them. So that will not be of any real benefit to Northern Ireland.
I am trying to put these special aids for agriculture into their proper perspective, because the brakes have been firmly applied to the agriculture industry of the United Kingdom. What was described by the Government as savings in 1985–86 have turned out to be a major change in policy. For Northern Ireland, this is a serious matter. The changes made to the national schemes will apply to Northern Ireland. There are, however, two valuable supplementary schemes which have been recognised, and I give credit for that. I am pleased that Northern Ireland is to retain the grassland scheme and that it will continue to be paid for land reclamation. I am also pleased that the agriculture development programme in Northern Ireland is to continue. That programme is 40 per cent. funded by the European Economic Community, but I suppose that we should be grateful for small mercies.
The rates of grant and special supplement for the grassland scheme which applies to lowland areas remains unchanged, but the changes and reductions in the national capital grant scheme mean that the overall benefits to

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farmers will be reduced. In the case of drainage, for AHGS relevant items the reducion will be from 45 to 30 per cent., and for AHDS relevant items the reduction will be from 55 to 37.5 per cent. The Ulster Farmers Union says that under this announcement Northern Ireland stands to lose £14 million. This means that farmers in England, Scotland and Wales will lose £26 million. That adds up to £40 million. Does this seem to be a fair proportion for Northern Ireland—a loss of £14 million compared to a loss of £26 million in Great Britain? I believe that it is a disproportionate loss to Northern Ireland agriculture. I hope that the Minister who is to reply to the debate will be able to help us about that problem.
The effect of the EEC farm price agreement for 1984 is having a depressing effect upon farm incomes. Farmers must spend money in order to earn grant. They have been caught in a pincer movement. The future looks bleak indeed for our most important industry. I am pleased that the Minister who introduced the order pointed out that 13 per cent. of all those employed in Northern Ireland are employed in agriculture. Nearly £250 million worth of our exports came from the farming industry. This industry is very important to Northern Ireland.
That leads me to the other very important inroad that has been made into Northern Ireland agriculture. The milk quotas will take about £20 million out of the agriculture industry. This will result in a total reduction of £34 million, while we are given aid amounting to £10 million.
I am sure that both Ministers on the Front Bench know the views of Northern Ireland dairy farmers. I am sure, also, that the figures that we have been given today about the quota that will be available will come as no surprise to those of us who know what is happening to the dairy industry in Northern Ireland. We are in a very serious position. That situation should never have arisen, and that is why the dairy farmers in Northern Ireland strongly condemn the Government for their handling of the matter.
The Milk Marketing Board in Northern Ireland, the Ulster Farmers Union and the Northern Ireland Agricultural Producers Organisation, together with the three Members of the European Parliament from Northern Ireland, the right hon Member for Strangford (Mr. Taylor), the hon. Member for Foyle (Mr. Hume) and I, met Mr. Dalsager, the Commissioner for Agriculture, in Strasbourg. He told us that the purpose of the 65,000 tonnes allocation was to give more to Northern Ireland, because of the position of our agriculture industry within the United Kingdom. It was proposed that when the United Kingdom quota was settled Northern Ireland should get an extra 65,000 tonnes. To our cost, we know that that 65,000 tonnes was not given to Northern Ireland. It was spread throughout the United Kingdom, so that we got little more than 5.5 per cent. of it. That is why there is so much bitterness in Northern Ireland. We were told in Europe that we should get more, but we did not get any more. The jewel of Northern Ireland agriculture—the dairy sector—has been kicked into the gutter and will face serious problems.
Panels and tribunals have been set up, but when they give judgments the Government are not able to give allocations to those for whom they were intended. We spend money on a system to investigate hardship cases and to allow people to put their case to tribunals. Those people win their cases, but they still face serious problems. Some cases have already been adjudicated upon and the appeals machinery has been used. People who have brought those
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cases have been told that they will get a bigger quota. But how much will they actually receive? That question needs to be answered.
The Prime Minister said that until every member state of the EC pays the levy the British Government will not collect the money. We should remember that Northern Ireland is the only part of the United Kingdom that will have to pay the levy. Therefore, our farmers want to know what the future holds.
Dr. Boyson: I referred at a recent Question Time to the statement made by my right hon. Friend the Prime Minister about the milk levy. The Minister of State, Ministry of Agriculture, Fisheries and Food announced in a written answer today:
" We are fully committed to the milk supplementary levy arrangements agreed by the Agriculture Council in March. It is clear from last week's Council discussion and from the position adopted by other member states that there are differences in the interpretation of the rules and uncertainty about the amount of levy due. We are, therefore, suspending action for the time being. We are keeping the situation under review and are ready to collect and pay over any levies that may be due from us once the legal position becomes clearer and other member states are conforming to the requirements." — [Official Report, 17 December 1984; Vol. 70, c. 37.]
I have not discussed the matter with the Minister of State, Ministry of Agriculture, Fisheries and Food, but it seems that we are not paying any levy at the present time.
Rev. Ian Paisley: I welcome that reply, even though it only puts off the evil day. Knowing something about Europe and about the Governments who have not taken even the first steps to legislate so that they can collect levies, I know that it would be the height of madness for us to demand payment from our people.
Dr. Boyson: The hon. Gentleman has referred to the different attitudes of various countries. It may he helpful if I point out that Belgium, the Netherlands and the Republic of Ireland are taking the same approach as we are. So are the Germans, except that they have already collected some levy, which they are holding on to. The position in other countries varies.
Rev. Ian Paisley: That statement will help the farming community, the Milk Marketing Board and everyone else in Northern Ireland. I trust that the Government will remain firm on the issue. I know that if the British Government had said, "We will not pay the levy," other countries would have used that as an excuse not to pay the levy either. Now the matter is in the court of those who have not legislated to enable themselves to pay the levy. I am glad that that information is out in the open.
Ministers in Northern Ireland will be confronted by people who feel bitter because they have been badly treated. The Prime Minister said that we would get an increased production allocation. Subsequently, that undertaking had to be withdrawn. We were also told that we would be as well off as the rest of the United Kingdom. Now we find that Northern Ireland farmers do not get the same as British farmers for their finished products.
Northern Ireland agriculture faces a serious problem. The Minister of Agriculture said that that was a thing of the past, but it will never be a thing of the past. I trust that, even now, we can find a way to alleviate the hardship of Northern Ireland's dairy farmers.
Agriculture in Northern Ireland faces other problems, but the difficulty experienced by dairy farmers

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overshadows the others. The beef sector faces problems, but I am glad that the intervention regime has been made to work in Northern Ireland. At one time we did not think that we would have the necessary storage space or get the rights that we ought to have as a member of the European Community to get our meat into intervention. I am glad that the pressures put on the Minister of Agriculture have been effective and that there is provision for intervention.
I understand that an application is before one of the other Ministers for blast-freezing accommodation and factory space in Northern Ireland. I hope that that space will soon be available, so that we shall not have to take produce from Northern Ireland. That would be a great help to our farming community.
We shall no doubt hear more about how the Minister hopes to allocate special aid. However, even with special aid, agriculture has been badly hit and will suffer severely in the coming year. As agriculture provides permanent jobs and maintains the heart of employment, a larger measure of aid should be made available for it. That is what the Minister's message should be to farmers tonight.
8.41 pm
Rev. Martin Smyth: I shall not follow the hon. Member for Antrim, North (Rev. Ian Paisley) on that latter point because it may raise difficulties in that shopkeepers and industrialists may also look for more aid. We are debating a specific Appropriation order. I would be happier if we were doing so in a United Kingdom context because some of the issues that I shall raise may be applicable to other parts of the United Kingdom. I may appear to ask for something specifically for the people of Northern Ireland, but I shall deal with the division of the cheque of the nation to the needy, especially regarding Class X, Vote 2.
I welcome the Minister's statement that there has been an increase in the numbers who have taken up the severe disability allowance. Under the old scheme many deserving cases did not get it. I suspect that even yet all those entitled to it are not claiming it and that some who should receive it may not be entitled to it because of the way in which the rules are drawn. The rules were widened but they were drawn to exclude many people because the nation could not foot the bill.
How are the new policies on housing benefit working out under the new point system? I understand that anomalies are developing and injustices occurring. The housing authority introduced a fine point system. The normal bureaucratic process is to think of a number, double it, subtract 10 and come up with an answer. In some of our houses people were given points for having a kitchen dinette. However, we discovered that there was no specific measurement for a kitchen dinette. After several test cases it was acknowledged that a kitchen dinette was not specified. We thought we had won that, but then we discovered that there was no reduction in the rent and no housing benefit. When we inquired we found that, although there was no kitchen dinette, there was a living-room dinette. Therefore, the Housing Executive transferred the points across and charged people accordingly. Yet a house that is supposed to have a living-room dinette is no bigger. In many such rooms there is not
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space to put a table. At best one can have a drop-leaf table or a card table. Have there been savings in housing benefit for the Department?
There has been an increase in the basic pension, together with a re-examination of the allowances of those who hitherto had them. There is a case in my constituency that is typical of the sort of older people to whom my hon. Friend the Member for Upper Bann (Mr. McCusker) alluded. The husband is more than 80 and the wife is more than 70 years of age. Previously, they were entitled to a heating allowance, which brought them in about £1 a week. They now have the increased pension. However, through regrading, the allowance has been reduced. That family has an overall increase of 3p a week. Top salary review boards, Members of Parliament and trade unions would not be satisfied if, at the end of a pay review when there was supposed to have been an increase in line with inflation, they were losing. As we are considering the Appropriation order, will the Minister say how many people are being adversely affected by the new arrangements?
Mr. J. Enoch Powell: Will my hon. Friend bear in mind that that also bites upon payments for special diets as well as payments for heating?
Rev. Martin Smyth: I thank my right hon. Friend for widening my point. The arrangement has an adverse effect on those with special diets. Can the Minister assure us that food prices have been reduced, and tell us how those who three weeks ago were entitled to a special rate to meet the needs of their special diet can get resources to meet their medical needs?
As I said earlier, I would be happier if we debated the matter in the context of the United Kingdom as a whole, because it bites throughout the kingdom. My constituents are not happy with it or the glib response from the Department and the Prime Minister that the policy is to give people more in their basic pension so that they can choose how they use their money. That sounds nice, but those who receive an increased pension and have other pensions or savings to augment it find that the Treasury claws it back in income tax. It is not simply that pensioners are automatically given more money to spend as they wish. Many pensioners will lose because the increased pension takes them over the margin for benefits.
I am even more worried about pensioners who are net losers. A caring Government and Parliament should never legislate willingly for that and then dismiss complaints by saying that it is rough and ready justice. Can the Minister tell us how many people have been affected in that way?
Tonight we are dealing with an appropriation in aid. What worries me about social services in Northern Ireland is that whenever there has been a shortfall in the Northern Ireland programme the Department that deals with social services has made no bids for money to meet people's needs. Perhaps in its wisdom or otherwise the Department decided not to trawl for that money. I am referring especially to the problems of the elderly who have done their best to maintain their dignity in the community. According to the rules, they are entitled to the provision of a telephone service, but because there is a shortage of cash in the Department such telephones are being rationed and social workers must tell those elderly people that they cannot have telephones. It is rationing by lists. Time

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magazine has said that it is becoming a modern problem in medicine, with doctors hoping that people will die before they have to spend money to meet their needs.
Mr. Chris Patten: I may have misunderstood what the hon. Gentleman said, but I think I am right in saying that my Department suggested several ways in which some of the underspend might be used in the social services area. The Assembly disagreed with those proposals and our views were changed. I make no elaborate constitutional point on the issue, but the hon. Gentleman will discover that the Assembly and many others believed that the money should be spent on educational schemes rather than on DHSS schemes.
Rev. Martin Smyth: The Minister is saying that the spending of the nation's money goes outside the remit of this Chamber. I am asking him why the Department did not put in bids for the specific services to which I referred. I assure the Minister that either here or in the Assembly I would have fought my corner on that matter. I have made inquiries and I understand that the Department did not put in a bid. Does the Department believe in the emphasis on community care and that we do not therefore need more money? If so, it is going in the right direction, although in the end it will cost the Department more than if it supported such people in the community.
I support the plea of my hon. Friend the Member for Upper Bann about the attendance allowance and ask for a little more understanding from those who conduct the final vetting. We live in an age of interdependence, but it would be utterly false to remove the pride of independence from the sick or the elderly. I have known doctors ask elderly people how well they can walk unaided. In many cases, those elderly people get up and do what we call in Ulster the rounds of the kitchen, holding on to the furniture and without using the Zimmer frame. They are then classified as being able to move unaided, and as a result they lose the mobility allowance or the attendance allowance.
I know a lady aged more than 80 who is remarkably fresh mentally and clear-eyed. She lives with her brother, who is aged more than 70. Her brother has managed to keep his car on the basic pension, but now he must give it up because they are not entitled to mobility allowance. Although he is looking after her, because of the way the axe comes down, he is not entitled to attendance allowance.
I draw the Minister's attention to the misuse of supplementary provision, which is creating an attitude that could not be described as helpful. I am thinking of a rehabilitation home for young people where those who have managed to obtain work are penalised whereas those who cannot find work are not. If a youngster is unemployed, his rent at the home is paid—it costs about £48 a week—and he is given £19 a week pocket money. His time is his own. However, if a youngster manages to find a part-time job, he is penalised by not being granted supplementary benefit. If a youngster must pay travelling expenses to go to work, he is worse off than the person whose rent is paid and who has £19 a week pocket money.
I hope that the review of the supplementary benefits system will do something more to help those who genuinely want work but who are not encouraged to find it. The Government speak about incentives and urge people to get up and do things, but in this case youngsters are encouraged to do nothing, to sit back and to relax.
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There is misuse of the supplementary provisions, especially of those for younger people. I am glad to see that within England, at any rate, there has been a growing awareness of this problem and I hope that the forthcoming reviews will come up with something positive.
I take this opportunity to welcome the increase in the Appropriation order, but I wish to highlight the needs and misuses. I agree with my hon. Friends about some of the abuses that have occurred. This is straying outside the order somewhat, but as the matter has been raised and as the Minister has thrown it back to us I take the opportunity of asking whether the Minister has had any reply from any sources in Northern Ireland about the possibility of the aid for transport for pensioners being put on the rates.
8.59 pm
Rev. William McCrea: I come to this House from a constituency with the highest unemployment in the United Kingdom and with a large farming community, in which the majority of the farmers have smallholdings. I appreciate and welcome any money being allocated to Ulster, and I appreciate the Minister of State's efforts on our behalf. He has shown clearly his interest in these matters since coming to Northern Ireland a short time ago, and I appreciate his grasp of the many problems, which he displayed clearly a few days ago when he addressed the Northern Ireland Assembly.
However, I wonder whether the Government fully appreciate the effect that the milk quota system is having, especially on the small farmers in my constituency. I was led to believe, whenever the matter was discussed, that the Government had it in their mind to safeguard dairy herds of about 40 cows. However, as the milk quota system is being applied, I find that there is a genuine suspicion that there is somewhere a desire to force the small farmer into liquidation and, rather than saving the small herd, a desire that the farmer with a small number of cows should be pushed below the poverty line and forced to rely on supplementary benefit. I assure the House that these are the genuine worries and concerns of the people whom I represent.
What assurances can the Minister give to those farmers who have already been adjudicated on? Will they receive the quota that they have been promised? The tribunals have sat and listened to the cases, especially hardship cases; and an extra quota has been given. What assurances can the Minister give to the farmers of my constituency and throughout the provinces on the likelihood of getting any of this quota? The Minister drew to our attention the fact that the outgoers scheme will fall far short of the Government's intentions for the initial estimation of the amount of quota that can be spread. I should like the Minister to direct his attention to that matter.
Farmers in Northern Ireland have been encouraged to invest in agriculture and new farm units. Up until the time that the quota came into existence, farmers were encouraged by the Department of Agriculture to go into milk production. After that encouragement, it is disgraceful that farmers are now being left high and dry and with a great financial burden on their shoulders.
Dr. Boyson: I do not think that what I can say will be helpful, but the hon. Gentleman has asked me a straight question on a matter that concerns everybody, and which has concerned me since I have looked at the figures. Originally, there was a cut of 6 per cent. plus a cut of 3

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per cent. The 3 per cent. cut was to provide extra resources for those who, on appeal, won the right to keep the extra number of cows producing milk on their farms. At the moment, all but 30·7 million litres of the clawback have been allocated, and that 30·7 million litres are still available for distribution. It was hoped to add to that what was expected to come back on the outgoers scheme. Originally, that was estimated to be 53·3 million litres. Since a lot of people are not going ahead with the scheme, having been given the right to do so and to get their money from it, I estimate that less than half that amount will come back. Let us assume that it is 20 million litres. That means that the total available for distribution in Northern Ireland amongst those who have won their appeals will be only about 50·7 million litres.
I have come into this in the middle of it, and the Northern Ireland farmers know about this better than I do. But it was obvious from the start to anyone who could add up that, with the tribunals being left to decide appeals, there was no means of getting the equation into balance. It depends how many appeals are allowed and the demand. We know that we can provide about 50·7 million litres, but we only know that now because fewer producers are outgoing than the number who intended to at the beginning.
Mr. Deputy Speaker: Order. I am not sure whether the Minister is seeking to make a second speech or whether this really is an intervention, but even ministerial interventions should be brief.
Dr. Boyson: Your intervention has saved me, Mr. Deputy Speaker. Bearing in mind hon. Members' knowledge of these matters, I shall conclude my intervention immediately by saying that there was no means at the beginning of getting a balance, and there will be the Dickens of a job at the end to decide what is to be given to those whose appeals are successful.
Rev. William McCrea: I thank the Minister for his interesting intervention, though I am not sure that it was all that helpful. However, I hope that his hon. Friend, when he replies to the debate, will address himself to another question on the same subject. What has already been allocated of the 50·7 million litres by the tribunals so far? The Department should know the answer, and we shall be able to judge from it whether there is any reason for farmers to go to Dundonald house to have their appeals heard.
I suspect that, although some farmers will come back satisfied, having had their cases heard by the tribunals, they may be in for a disappointment when we come to consider the 50·7 million litres available. This is very serious, because the farmers have had a long wait. They have experienced months of deep concern and financial and other worries about this. Unfortunately, at the end of the day, they may come to a serious bump in the road when they discover that it is not possible to keep the promises that they felt were made to them at the tribunal.
Other hon. Members have raised a number of matters which are of the utmost importance to the people of the Province. Among them is the problem of housing benefit. I hope that the Minister will be able to say how the new points system for housing benefit is working in the Province. Only today I visited an estate in Watson Park,
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Omagh. The tenants told me that under the new rents system their aluminium bungalows, which they could be blown out of on a windy night, will be on a par with a normal Housing Executive house. That causes me great concern. Within the next few days I shall be asking the Minister about matters relating to this estate. There are many worries about it.
I draw the Minister's attention to housing benefit. I notice from the paper that Northern Ireland Housing Executive rents are going up again. I was a member of the board and felt strongly about those rents. We were always being told that rents in Northern Ireland compared favourably with those in England and Wales. Will the Minister tell the House tonight how they compare with those in Scotland? What is the average rent for a Northern Ireland Housing Executive property compared with that of Scotland? When I was a member of the board there was a considerable differential. The problems of Scotland are no different from those of Northern Ireland. I hope the Minister will answer that clearly when he replies.
Mr. Chris Patten: Would the hon. Gentleman also like Northern Ireland to have the same expenditure, pro rata, on housing as Scotland?
Rev. William McCrea: I am sure that the Minister is fully aware that spending on housing in Scotland is through the local authorities. It was taken from the local authorities in Northern Ireland. If the Minister wants to tell the House tonight that he is handing housing back to the local authorities in Northern Ireland, it will be a most interesting statement. I shall be glad to welcome that as a former member of the Northern Ireland Housing Executive board because that is an unwieldy body and unfortunately it is far removed from many of the day-to-day problems of my constituents in Mid-Ulster or those of other hon. Members. I hope that the Minister will not run away from my question. Will he, for the record, tell the House the difference between the average rent in Northern Ireland and that in Scotland?
As the hon. Member for Upper Bann (Mr. McCusker) said, I do not know where all the people who are getting an attendance allowance come from. They definitely do not come from my constituency. I am delighted that there will be 500 new beneficiaries. I strongly believe that it is desirable to keep the elderly in the community. The Ulster people have an independent character that is in many ways commendable. The Government do not desire to put an extra burden on geriatric units or hospitals because there are already insufficient for the number of elderly people who desire to enter them.
I wholeheartedly agree with the hon. Member for Upper Bann that the majority of those being denied attendance allowance in the Province are honourable citizens who do not like to complain. That is the last thing they want to do. Indeed, the elderly in Ulster have always come from a proud stock and they do not like to say that they do not have the means to look after themselves. Indeed, when a doctor visits them they get into a nervous state and deprive themselves of many of the benefits which are their right because they are unwilling to plead poverty. That is the simple substance of the situation.
Some families are anxious to look after their elderly relatives, but there are many who are not. The House should — I believe that the Minister will — commend those families who genuinely care for the elderly in the

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community. Everyone should salute them. Indeed, it is desirable to encourage more of that. I would wholeheartedly encourage families to show greater concern for their loved ones.
I turn to a point that has already been touched on. People rely on their local doctor. People are always told that their doctor is their professional adviser on health and that they must believe him. But he is believed only until it comes to benefits, and then it is said that the local doctor is not the man to rely on. I doubt whether the Government will disagree when I say that they probably have a better record than the Labour Administration on pensions and other benefits. Indeed, I think that I have heard the Prime Minister state that at the Dispatch Box.
But I assure hon. Members that ordinary pensioners do not find that they have a lot of money to spend at a time of cuts in the number of home helps and in the provision of telephones. Indeed, the hon. Member for Belfast, South (Rev. Martin Smyth) mentioned that. It is like David in the scriptures, who said "no man cared for my soul". Many pensioners think that no one cares for their bodies either. Quite a few pensioners have come to speak to me about the 50p being taken off. Everyone got the addition to their pensions, but 50p was taken away from heating allowance. I know that 50p may not mean much to hon. Members, but I can assure them that it means a considerable amount to pensioners, to those on long-term supplementary benefit and to widows.
I should like to hear the Minister's comments, because I am told that the allowance amounts to practically nothing. I think that the hon. Member for Belfast, South said that his constituent got a 3p addition. Where is the allowance for inflation in that? People feel that they are worse off as a result of the change.
Like other hon. Members, I must express alarm about supplementary benefit. Every effort must be made to stop abuse. I do not believe that the number of investigators is sufficient. I speak as a former employee of the DHSS, and I feel sure that there is an inadequate number of personnel to investigate the abuse and skullduggery going on.
A few weeks ago I went to the DHSS about a very serious instance of abuse. One of the senior officials there told me that he knew that it was going on. Indeed, the mechanism of abuse was so great that there was an early warning system among the fishermen. Consequently, whenever someone from the Department was in the vicinity, the alarm was raised over the air waves, the boats were cleared and the men are able to live on supplementary benefit as well. It is alarming that a chief official at the Department should know that that is going on, yet say that there is nothing that he can do about it.
I know that many who genuinely need single payments are denied them. But many of us are worried that, although genuine cases are sometimes denied, those skilful in abuse are apparently able to get away with it. I shall give a typical example and invite the Minister to ask the business man concerned whether what I say is true. I raised the matter in another place and my case was not believed. A person desired a colour television. He was on supplementary benefit and put in for a special needs allowance. That person went to an electrician, a business man, and asked him to order a colour television and to make out an account for furniture. A television enclosed in a cabinet is regarded as furniture. To ensure that he got the best furniture and television, the person asked the electrician to ensure that the cabinet had Queen Anne legs.
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The business man was worried. He asked, "Are you sure you are entitled to this?" The person promised him that he would be back immediately with a cheque. The business man thought that he would like such a television set himself and wondered whether to order it. He decided to but thought that he would never see the person again. Inside three days the person was back with a state cheque for his colour television in a cabinet with Queen Anne legs. That should be condemned, but it is not unusual. The hon. Member for Upper Bann talked about buying cheques. My friend the business man told me that he was offered £230 if he would buy a cheque. In that one-off payment he would be allowed to keep the £230. He was not willing to buy the cheque.
I find such incidents alarming. The Minister is also worried. He has said so in the Province. What action is being taken on the ground to ensure that that practice is stopped?
Mr. Roy Beggs: Does the hon. Gentleman agree that it would help the Minister if a close examination were made of those business premises which cash such cheques? Does he accept that honest and upright business men refuse to accept the cheques or to participate in fraud?
Rev. William McCrea: I agree wholeheartedly. That is a matter which should exercise the Minister.
As the hon. Member for Belfast, South said, there are parts of our country in which the Queen's writ does not run. Government officials cannot go to parts of the Province. In another place I described a typical example involving a television licence. The official was investigating. He was taken out of his van, stripped, sent back and told, "Appear again and you'll get a bullet through your head." In that area, licences do not have to be paid and yet people in the rest of the community have to pay their licence fees. I do not suggest that they should not pay; I suggest that everyone should pay.
A special calibre of officer is needed to go into some of the areas because he might be putting his neck on the block.
Mr. Chris Patten: Extremely committed and brave officers do such work and go into every area in the Province. I have discussed the problem with them. The hon. Gentleman makes serious and important allegations about individual firms and abuses. I hope that he will bring those cases to my attention and we shall pursue them in the normal way. General allegations are not worth much unless one has specifics on which to act.
Rev. William McCrea: I accept that the allegations are serious. As with other serious allegations, they have been brought before the House. It is appropriate and proper to exercise my right to draw the attention of hon. Members to these matters. I shall seek to do so as quickly as possible.
Whether or not the Minister accepts it, there are vast areas of the Province where few charges are brought against those fiddling the social services. I should be delighted if the Minister would reveal the figures. What charges of fraud are being brought, and how many stick?
I know that other hon. Members wish to speak. I have been glad of the opportunity to do so. Indeed, it would be wrong if I did not welcome funds for Northern Ireland.
9.26 pm
Mr. James Nicholson: I wish to address myself to Class I, Vote 1. I welcome anything that improves the facilities of our agricultural colleges. However, I must make it clear that I only welcome improvement to the existing system—the funds should not be used to purchase additional land for the colleges.
An agricultural college in the Province recently bid for land against local farmers and the price rose to more than £3,000 an acre. It is bad enough when farmers make fools out of themselves by bidding land to exorbitant prices, but when they bid against the Department it is quite ridiculous. The Department does not have to worry about milk quotas, about the troubles in the intensive sector or whether the pigs will pay. Quite frankly, the farmer does not stand much of a chance. I hope that that will never be repeated.
There is sufficient land within the control of the Department in Northern Ireland, and the colleges should not need to bid against the farmers for additional land. There is no point in educating our young if, when they return to their farms, they cannot expand. Our young farmers must be given their heads and must be allowed to expand. When I left school I would have been severely disadvantaged if I had had to face the problems that many young people face today.
Our farmers are not allowed to expand their milk production—the one profitable area of agriculture where they can see a return month by month. More importantly, their bank managers can see that return. They can count on repayments being made against borrowing. The Government's present policy does not allow that.
Restrictions were announced last week on farm capital grants, and that will cause difficulties to the agriculture industry. I agree with the remarks of the hon. Member for Antrim, North (Rev. Ian Paisley) about the severe difficulties that will arise in Northern Ireland from the reduced grants. The hon. Gentleman talked about a £14 million reduction out of an overall reduction of £40 million. I received a written answer from the Minister of State, Ministry of Agriculture, Fisheries and Food in which he said that Northern Ireland will suffer a reduction of £13 million. I am sure that the hon. Member for Antrim, North will not disagree with me over £1 million. However, it is most unfair that the small six counties of Northern Ireland should be asked to bear one third of the reduction in the agriculture budget for the entire United Kingdom. I do not think that that proposal will bear scrutiny. I hope that the Minister will consider it further and tell us at a later stage why he thinks that it is fair. I shall be most concerned if the proposed reduction is implemented.
Rev. Ian Paisley: I am sure that the hon. Gentleman will agree that the estimate of the Ulster Farmers Union is not so very far out. We often find with the Ministry that £1 million is neither here nor there, but is of much greater concern to the farmers from whose pockets it will have to come.
Mr. Nicholson: I agree with the hon. Gentleman that £1 million would be considered extremely important by Northern Ireland farmers. It is only right that we should stress that Northern Ireland is expected to accept one third of the cut for the entire United Kingdom.
I direct myself to milk quotas, the buy-out scheme, the administration of the scheme and the consequent costs. Milk quotas have been with us for a short time but they
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have caused many problems for farmers, politicians, the Government, those involved in the manufacturing industry, those engaged in the ancillary industries and those who depend on agriculture for their employment. We all know that there has been a reduction in employment because of the implementation of the quotas. I do not wish to repeat everything that has already been said about the quotas but there are many grey areas that must be clarified. I have spoken about those issues on a number of occasions in the House and unfortunately we have not found answers to many of the questions.
The production allocation of 65,000 tonnes remains the burning issue. In the first six months, Northern Ireland producers started paying in excess of £5 million in levy. I hope that there will be a ministerial statement this evening even if its effect is only to put off the evil day of reckoning. At least that will give us a breathing space to enable us to ascertain how things will work out as the months progress. No other part of the United Kingdom has any levy to pay, or has had to do so. The United Kingdom is still falling far short of the overall national quota that was determined as part of the Brussels agreement.
Many of us contend that the 65,000 tonne production allocation that was set in the Brussels negotiations never reached Northern Ireland. The Minister of State, Ministry of Agriculture, Fisheries and Food maintains that it did. The whole problem has been cloaked in mystery. I still cannot accept that we have been informed correctly, especially in view of the statement made by the right hon. Member for Bosworth (Mr. Butler) when he was the Minister of State responsible for agriculture. He made that statement during a dinner on 29 April at the Ulster Farmers Union and in numerous press releases issued by the Ministry of Agriculture, Fisheries and Food. The press release of the speech made at the annual dinner of the Ulster Farmers Union stated:
"those who contributed most to the surpluses through increasing production since 1981 should stand the biggest cutbacks. Such a principle applied to Northern Ireland would have been little short of disastrous: a 15 per cent. cut in overall output against 1983. Under pressure from the United Kingdom the EC Agriculture Ministers agreed that Northern Ireland had to be specially treated. The result, as you know, was a special allocation of 65,000 tonnes to Northern Ireland. Then the Agriculture Ministries of the United Kingdom agreed a further special allocation; and the possible 15 per cent. cut was reduced to 6 per cent."
On 26 April 1984, the Minister replied to a question I raised by stating:
"The 65,000 tonnes allocation has certainly gone to Northern Ireland. The allocation between the regions of the United Kingdom was initially based on 1981 levels of production, to which was added a special quota of 65,000 tonnes agreed between the EEC Agriculture Ministries. A further addition of almost the same amount was then agreed between the Ministers responsible for agriculture in the various regions of the United Kingdom." — [Official Report, 26 April 1984; Vol. 58, c. 875.]
Those two statements complement each other. They were not off-the-cuff speeches about a one-off possibility.
Where has the 1981 allocation plus 1 per cent. quota gone? Where has the amount from England, Scotland and Wales disappeared to? The Minister, who then had responsibility for agriculture, told us what would be the solution. That was the position of the Northern Ireland Department of Agriculture until the end of June this year. What changed all that? The position was changed in the House on 3 July. The Minister of State told us when presenting the regulations that it was not the 1981

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allocation plus 1 per cent. quota. That milk would not flow from England, Wales and Scotland to Northern Ireland. I do not know whether the Government were forced to change the provision because of earlier discrepancies in the regulations. The Minister of State, Ministry of Agriculture, Fisheries and Food—the hon. Member for Norfolk, South (Mr. MacGregor) — replied to my question by stating:
"The allocation of quota between the regions of the United Kingdom was based on deliveries in 1983, but in the calculations we have taken account of the trend of deliveries since 1981, and that includes the rapid growth in deliveries in Northern Ireland as compared to the other territories."—[Official Report, 3 July 1984; Vol. 63, c. 235.]
Therein lies the difficulty that faces Northern Ireland agriculture. The important phrase is
"taken account of the trend of deliveries since 1981".
That proved to be important for Northern Ireland. It meant that England and Wales received a cut of 6·25 per cent. on 1983 production; Scotland received a reduction of 6·39 per cent.; but Northern Ireland received a reduction of 10·35 per cent. That reduction of 10·35 per cent—this is the argument that is put forward—includes the 65,000 tonnes, which brings us back to the reduction, on the 1981 figure of 5·83 per cent. Northern Ireland should not have been treated differently from any other part of the United Kingdom. The Government have used that excuse to justify their action. The spirit of the Brussels agreement was not honoured.
We have spoken of the trend in deliveries. That is what the figures are based on and the argument that is used. I gave the Minister of State some figures about the trend in deliveries in other areas. If other areas had received the same treatment as Northern Ireland, we should have had more difficulty in arguing our case. The islands of Arran, Bute, Coll, Tigh and Great Cumbrae increased their production by 14·4 per cent. The Orkneys increased production by 19·4 per cent. and the Shetland Isles by 26·8 per cent. between 1981 and 1983. I do not argue that the Orkneys and the Shetland Isles should not have received the consideration that they have. I have no doubt that they were entitled to that consideration because of their remoteness. The increase in production within the Aberdeen district milk marketing area was 11·7 per cent.
Will the Minister tell the House tonight whether the areas I have mentioned received a more severe cut based on trend in deliveries than other parts of the United Kingdom? He and I know that that is not what happened. That is how the Northern Ireland argument for fair treatment under the trend deliveries has arisen. Northern Ireland's isolated position within Europe and its difficulty in reaching markets means that we should have received the 65,000 tonnes that was awarded to us in Brussels. We did not receive it, and that is our main problem.
That places Northern Ireland dairy farmers at a serious disadvantage compared with their counterparts in the rest of the United Kingdom. The figures that I have given illustrate that. Northern Ireland's case for the 65,000 tonnes is accepted by everyone but the Minister. He appears to be the only man living who does not accept it.
I shall refer the Minister to a good booklet produced by the Select Committee, which deals effectively and efficiently with the problem of the Northern Ireland milk quota. The Select Committee called upon the Minister to clear up the matter, not tomorrow but immediately. I reiterate that call tonight.
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I should like to refer to the buy-out scheme and its effects. In reply to part of a speech that I made on 3 July, the Minister of State, Ministry of Agriculture, Fisheries and Food said:
"In addition, I hope that the hon. Gentleman has noted that we have selected Northern Ireland for special treatment under the outgoers scheme. As a result of buying out 5 per cent. of Northern Ireland in the outgoers scheme, as opposed to 2¼ per cent. in Great Britain, we shall be spendng £4·73 million more in Northern Ireland than if we had applied the same percentage as in the rest of the United Kingdom. We have adopted this approach because we recognise the special problems of Northern Ireland, which include an especially high number of small producers. That is why we have given it favourable terms under the outgoers scheme."—[Official Report, 3 July 1984; Vol. 63, c. 235.]
After what the Minister of State, Northern Ireland Office, told us about the amount that is available in the outgoers scheme, the amount of milk that is to he bought appears to have diminished. We were told that the outgoers scheme would be a panacea for the dairy problem in Northern Ireland. However, we find that it has not worked. It was never going to work, and we cart now say that it has not worked. Why? Because the farmers of Northern Ireland, who depend on the milk industry, could not afford to take up the scheme. They had to cut back to the required level because there was no other option for them. They could not expand into grain or any other part of agriculture as farmers could in other parts of the United Kingdom.
I ask the Minister what proposals he has to make up the shortfall to which the Minister of State referred on 3 July. We were told that the scheme would be the panacea to solve the problem. What proposals does the Department have to make up the shortfall? If I understand the Minister correctly, there are roughly 50·7 million litres of milk left to Northern Ireland. We have been given the figure of 5,000 litres per cow. I hope that my hon. Friend the Member for Antrim, East (Mr. Beggs) is right in his calculation, when he tells me that that means that there are 10,000 cows to be shared out among all the farmers who are competing daily at Dundonald house for quota. That means that there are about 15,000 or 16,000 litres per applicant, in special cases. However, those are only rough figures. If that is so, I think that the Minister will not disagree that it will not solve the problems—and they are great; they are vast. I sometimes shudder when I wonder how they will be solved.
Daily, I receive telephone calls from farmers, not only in my constituency but outside, asking me how they can improve their position. They tell me the position that they are put in by the Department of Agriculture schemes in which they have participated in all sincerity. They tell me that they have purchased land on the strength of increasing their dairy herd and making the repayments. I cannot reply adequately to the farmers. I sincerely hope that the Minister will tell us that there is a chink of light at the end of the tunnel, because 50 million litres is nowhere near what is required to deal with the problem in Northern Ireland.
I should like to refer to farmers in the rest of the United Kingdom in a similar position, who have applied to participate in the scheme. From what the Minister told us, I do not know what percentage a farmer who has achieved a secondary quota will receive in the final analysis. I doubt whether even the Minister knows. We shall be shocked and dismayed, and there will be even more anger and

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resentment if farmers in the United Kingdom get 100 per cent. of secondary quota while farmers in Northern Ireland receive only 40, 50, 60 or 70 per cent.
Mr. Ken Maginnis: Or 25 per cent.
Mr. Nicholson: That may well be, but I did not want to go that low. That would be unacceptable to the farmers of Northern Ireland, just as I hope it will be unacceptable to the Minister.
Mr. Maginnis: I do not want to distract my hon. Friend, but is he aware that a particular problem affects a limited number of dairy farmers which under the present system seems to be insoluble? That is the problem of dairy farmers who over the past eight, 10 or 11 years have, through terrorism, been forced to leave farms that are close to the frontier with the Irish Republic. They have held on to their land in the hope that the violence would decrease and they would be able to return to continue dairying, which they have done for generations. But when they go to the Dairy Produce Quota Tribunal to argue for a quota, they are told that as they have stopped milk production, perhaps 10 years ago, there is no basis on which their application can be judged. Consequently, they are penalised yet again. They have received no compensation for being forced to move from their farms because of terrorism, nor have they any hope of returning to continue their farming if things improve.
Mr. Nicholson: I thank my hon. Friend for his valuable and learned contribution. He makes a valid point. The Minister has no doubt listened to it and will perhaps in due course comment on it. It is a matter that will cause concern to the farmers placed in that invidious position.
It is fair to say that no other bureaucratic body, in an attempt to solve one problem, could have created a greater one. The EEC, with which we are all saddled, has forced a monster on us. Day after day, farmers throughout Northern Ireland travel to Dundonald house to face tribunals in an attempt to secure secondary quotas, but the number of such quotas is insufficient. They must all fight for the small amount available. I must express my distaste and anger at the cost of administering and processing these, appeals. It is a total waste of public money and is unjustifiable, even though those attempting to administer the regulations have a difficult and thankless task which I do not envy. The total cost is £370,000—£220,000 to run the panels and tribunals and £150,000 to the Milk Marketing Board to administer any awards that may result. When that is placed against the £800,000 which was set aside for the buy-out scheme, it means that almost half of the amount which was to be paid to farmers is being spent on administrative and bureaucratic nonsense. This has been brought down on our heads by what I consider to be the worthless organisation known as the European Economic Community.
It has been brought to my attention that there are apparent discrepancies in the awards which are made to Northern Ireland farmers. If the tribunals were able to demonstrate a 100 per cent. success rate, I have no doubt that everybody would be assured that a fair allocation had been achieved, but that is not possible. Farmers come to me and say that they have been treated unfairly. There
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must be another way in which to look at the small number of cases where farmers believe that they have been treated unfairly. Having fought a large number of cases at tribunals, I believe that there are some cases that do not appear to have received a fair and just reward.
I welcome the continuing aid that is to be given to the pig and poultry industry. Given help, these two industries will have a chance to survive. However, I am most unhappy about the Department's attitude towards the intensive sectors of agriculture in Northern Ireland. If they put their mind to it, ways could be found by which intervention grain could be brought from Europe to Northern Ireland. Farmers could also be encouraged to grow more grain. Although we may never be self-sufficient in grain, Northern Ireland could be encouraged to become more self-sufficient than it is now. This must be one of the top priorities for the Minister. This policy would not only help the agricultural industry but would also have spin-off effects. Intensive sectors of agriculture in Northern Ireland would result in an increase in employment throughout the length and breadth of Northern Ireland.
Marketing must be improved. However, to say that marketing must be improved could be used as a very lame excuse to justify areas where marketing is bad. Although marketing must be improved, it must be improved in conjunction with proper and planned expansion. Agriculture in Northern Ireland is showing more foresight than was shown in the past. However, it must show more determination to improve. That has been lacking for a long time.
I am not very happy about the way in which the SPP has been established. It is yet another quango. The House knows my views on nominated boards and quangos in Northern Ireland. There are far too many of them. This is yet another quango. Because of my prejudices, it may be that I am being totally unfair to it. However, I should like producers to have a greater say. They must not be abused. Similarly, the SPP must not be abused by those who have been appointed as members. I ask the Minister to keep under scrutiny at all times the funds being spent by the SPP. I hope that the special land improvement scheme will ease some of the burdens, especially by means of a reduction of the farm capital grants in Northern Ireland.
The main problem of the past nine months is that we have been so involved with milk quotas that we have not paid enough attention to other equally important problems facing agriculture in Northern Ireland. For example, we have not paid enough attention to the intensive sectors or to the beef sector. Agriculture is Northern Ireland's largest and strongest industry. I hope that Ministers will work hard to ensure that it survives and flourishes.
10 pm
Mr. William Ross: The guide to Supplementary Estimates for services in Northern Ireland gives a number of reasons why such Estimates may be produced.
The reasons include securing
"the authority of Parliament to use money already voted for particular purposes to meet expenditure on other services within the same vote. This is commonly done when the allocation is substantial, likely to be controversial or involves a new service. In other cases, the authority to approve reallocations of this sort … has been delegated to the Department of Finance and Personnel."

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I can understand the need for Supplementary Estimates when there is a new service or when a matter is controversial, though what is controversial may be a matter of opinion. However, I should like an explanation of what "substantial" means. Is it substantial in relation to the sum involved, or substantial as a percentage of the sum originally allocated for a service? Given the differing sizes of the sums allocated, I cannot see that they can all be regarded as substantial.
A number of hon. Members have spoken about the problems created by the milk quota system and about the changes in farming grants. In a press notice on 12 December, the Secretary of Stale for Northern Ireland said:
"The planning figure for Agriculture for the coming year was increased in last year's Survey to allow for local support to be maintained at a substantial level."
When one realises that the support for certain schemes has been cut by at least £13 million, one wonders what the Secretary of State meant by "a substantial level". There appears to be a considerable decrease, both in total sums and in the percentage of the public input into Northern Ireland farming.
A Ministry of Agriculture, Fisheries and Food press release said that there would be an increase in the money available for work on hedges and for other schemes. I find it difficult to believe that there will be so little extra money for that work that the overall decrease in the rest of the United Kingdom will be as small as it appears to be. I also find it difficult to understand how as much as two thirds of the decrease will be in Great Britain. I find it impossible to visualise the farming community in Great Britain being so sparse in its grant aid schemes that only £26 million or £27 million will be chopped, while in Northern Ireland we are so anxious to spend money that we lose £13 million. We need a full explanation of how that has happened.
We must look beyond farming when we consider the sums of public money that are being invested in it. The cut will mean that schemes which were reasonable to carry out at the higher rate of grant are no longer viable. We are not considering a cut in spending of £13 million but a much larger cut in public and private spending. That is bound to have a wider effect than is generally realised. When farmers undertake a drainage scheme, they buy pipes, which provides employment right back to the smelt works, and considerable amounts of gravel. All in all, schemes provide an enormous amount of labour. That trend is echoed throughout agricultural grant schemes. When the Minister considers the loss to the commercial life of Northern Ireland, he will find that it would have been better never to have made the saving. The volume of work in Northern Ireland is such that one third of the United Kingdom's savings is made there.
Land reclamation schemes have been retained in Northern Ireland when they have been wiped out in the rest of the United Kingdom. I cannot believe that the differences in agricultural practices in Northern Ireland compared with Scotland or hill areas in England and Wales are such that there is no need for the work to continue.
I cannot envisage how much worse off Northern ireland would have been if land reclamation grants had disappeared there as well. We are to lose £30 million. How much more would we have lost if the land reclamation scheme had also been wiped out? We were told that it was kept in Northern Ireland because it was essential to maintain incomes. What is the Government's thinking
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regarding farm incomes in Northern Ireland over the next few years? I think that the Government expect a decrease in farming incomes and that they are saying to the farming industry that it must learn to sustain itself in a much harsher economic climate. The Government talk about maintaining incomes, not increasing them. If it is necessary to maintain hill land incomes — that is basically where land reclamation work takes place—the Government are expecting a decrease in farm incomes generally.
Finally, I shall quote a passage from the MAFF press release for supplies to Northern Ireland. It states:
"The changes will come into effect immediately in respect of expenditure under the AFIGS incurred after December 11, and new applications or variations under the AHDS, and variations under the FHDS, received after that date."
Is it normal that such expenditure changes should come into effect immediately under the AHG scheme, but only in respect of new applications under the other two schemes? If this is a departure from normal practice, we should be told how it will affect the schemes that farmers already have in hand. If it represents a change, why has it been introduced now?
10.10 pm
Mr. A. Cecil Walker: I join my hon. Friend the Member for Mid-Ulster (Rev. William McCrea) in welcoming the new Minister State, the hon. Member for Brent, North (Dr. Boyson), to his first debate on Appropriation in aid for our beleaguered Province. In the short time that he has been with us, our new Minister has pursued his brief with flair, sympathy and understanding, and he has shown great readiness to come to grips with the many complex problems of his Department. My remarks in this debate will be directed to the Under-Secretary of State, the hon. Member for Bath (Mr. Patten), who has made many fact-finding visits throughout the Province. His dedication and his wide knowledge of the matters dealt with by his Department are well known.
I refer first to Class X, Vote 1. I note the Government's anxiety about unemployment in Northern Ireland, which is shared by all those who represent the Province. I support most of the measures announced in the public spending plans, and note that there has been a slight increase over expected inflation. Although that will not improve job prospects, it will at least maintain those that we have. It is regrettable that law and order expenditure has reached such proportions, but the provision of another 500 jobs in the police force is at least a consolation.
I welcome the Government's approach to the measures outlined in Class X, Vote 2, and their recognition of the fact that additional expenditure is necessary to combat the social deprivation caused by our geographical location, the civil unrest in the Province and the poverty with which we must contend. It is generally accepted that Northern Ireland is the most deprived area of the United Kingdom. As a result, families derive substantially more of their incomes from benefits, while at the same time they must pay more for food, clothing and fuel.
I am pleased about the introduction of the severe disablement allowance, which will replace noncontributory invalidity pensions, but I am disturbed by several aspects of the implementation of the criteria. I realise that there must be a test for incapacity, and I am glad that the Government have given a lead by publishing

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the document entitled, "Guidance in Adjudicating for Medical Practitioners", which will be available at all DHSS offices.
Nevertheless, some cases will be more complex than others, and I am worried that people who could qualify for benefit now will not qualify because they do not meet the 80 per cent. disablement test, although they may be incapable of working. I agree with my hon. Friend the Member for Belfast, South (Rev. Martin Smyth) that people who are severely incapacitated should not have to prove such incapacity from time to time to retain their right to benefit. I should have thought that where medical records showed a permanent incapacity, such persons should not be required to present themselves at tribunals, which subjects them to a painful and exhausting experience with which they are completely unable to cope.
I am glad that in section F1, of the Autumn Supplementary Estimate for 1984–85 the Government have responded to the needs of the aged for help with heating costs. I draw attention to the plight of those elderly who have homes which are difficult to heat. Many of these are large family homes which are ideal for bringing up families but which have deteriorated and fallen into disrepair after the families have grown up and moved to homes on their own. In most cases there is no alternative accommodation available to those who are left behind. These people are left to live in unsuitable houses and such grants as are available for extra heating are soon exhausted, particularly as the price of coal is £10 per tonne more than on the mainland.
In section F2, I note that there are an increasing number of claims for single payments. There are many and varied circumstances when a single payment is necessary, but, as has been said, the system can be abused. My hon. Friend the Member for Upper Bann (Mr. McCusker) said that in many parts of Belfast there is evidence that crooked so-called business men are ripping off customers who come to them with welfare cheques issued under the single payments system. In my constituency, I have had reports of people being given substandard and secondhand articles not worth a fraction of the grant, and when people discover that the articles are not of an acceptable quality, they are told by these unscrupulous traders that their guarantee ended when they walked out of the store.
Another abuse of the system occurs where young people have applied for accommodation as a single person. On being allocated a flat, which is usually in a hard-to-let area, they immediately apply for a single payment for furniture. However, in most cases the allocation is not taken up and the recipient uses the grant for purposes other than that for which it was intended.
A matter that is worthy of consideration is the plight of prisoners' wives and families who wish to visit their relatives in prison. Most of us know that prisoners are allowed one visit per week, but close relatives can claim the cost of their journey to prison only once every four weeks. Therefore, it is distressing that the family entitlement to visit cannot be maintained where there is financial hardship, particularly among wives of ordinary, decent criminals who do not have access to, or wish to avail themselves of, paramilitary transport.
Section G deals with housing benefits. Attempts are being made to implement the system fairly for everyone who is eligible for help. The amended scheme now brings
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Northern Ireland generally into line with Great Britain. I note that there is now a high level of local liaison between the Northern Ireland Housing Executive and its social security counterpart. Such a liaison highlights cases where supplementary benefit could be claimed, and the fact that the persons concerned in these cases are now advised about their entitlement is a step forward in the take-up campaign.
It has been recognised that the housing benefits scheme has had a smoother introduction into Northern Ireland, with fewer problems, than in many other parts of the United Kingdom, and the Government must be commended for their efforts in this direction. However, some Housing Executive tenants, although they appear to be gaining the benefits to which they are entitled, are nevertheless forced to live in houses which either need replacing or need expensive repairs. These are the tenants of the Orlit and similar types of houses. I ask that the executive announces its timetable for dealing with such houses.
Section A covers old pensions. Even with linked increases, inflation and increased costs are substantially reducing the real value of pensions. Any Government decision to impose VAT on printed products would undoubtedly affect them, as would an increased television licence fee.
The proposal that doctors should be obliged to prescribe medicines from a restricted list worries me. Unsuitable drugs might be prescribed which could put the lives of elderly persons at risk. The proposal must give cause for alarm. I hope that the implications of the proposal for this most deserving section of our population will be examined fully.
10.20 pm
Mr. J. Enoch Powell: I shall refer to two specific matters falling within the ambit of the order and then I shall come to two constitutional issues.
I had not meant to refer to Class X, Vote 2, until I listened to my hon. Friend the Member for Upper Bann (Mr. McCusker). Now that I have heard him, I want to underline what he said on the subject of the attendance allowance.
The hon. Member for Bath (Mr. Patten) must be beginning to detect a certain uniformity running through much of the correspondence that he receives in his capacity as being in charge of health and the social services. I find myself writing to him rather more monotonously repetitive letters on this subject than I would wish, and I am sure that someone as sensitive as the Minister is to administrative implications will long ago have arrived at the conclusion that something must be wrong somewhere.
Something is wrong when one finds so often the irresolvable conflict between the advice given by the family doctor of an applicant and the conclusions arrived at by the doctor who examines that applicant in the course of an appeal.
There is somewhere in the application or the administration of the rules for attendance allowance a deficiency which is subjecting applicants to a great deal of harassment in the cases where they are ultimately successful—there are some of those—and is denying to other applicants the assistance to which they and their families were always intended to be entitled. I hope the

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Minister will say that he intends to clear the board and address himself afresh to the administration of the scheme to find where the gremlin in it is.
Included in the matters falling under Class I, Vote 2, is the "improvement of livestock" and the "control of diseases". It is in that connection that I draw attention once again to the control of veterinary medical products because—and I quote the submission made to me by the Ulster Farmers' Union—
"it is a matter of concern to our own producers that certain materials in this field are under strict control in Northern Ireland, but not of in the Republic … the bona fide trade … is … disquited about the traffic in medicinal products which is apparently going on from the Republic to the Province."
It is not seriously disputed that the application of existing EEC rules in this respect leaves much to be desired on the other side of the frontier but is accurately observed in the United Kingdom. I tabled a question in October in which I asked the Minister of Agriculture, Fisheries and Food what he was doing about that. I have abbreviated the terms of the question, but the Minister's reply was even briefer. He said:
"This is a matter for the European Commission, and we have written to the commission about it." —[0fficial Report, 31 October 1984; Vol. 65, c. 1114.]
That is not the sort of reply which most of our constituents would long tolerate about 'a grievance which they had put before us. It is not good enough for the Minister to have written to the Commission about it, if he has left it there. Therefore, I hope that when the Minister replies he will be able to confirm that that matter is being directly and actively pursued with the Commission with a view to bringing into line the country which lies across the border from Northern Ireland.
One of the main topics in this debate has been the working out of the milk quota scheme. Whatever else can be said about it—there is not much that is favourable—it is certain that it has caused an enormous amount of irritation, misunderstanding, disquiet and sense of injustice. How the scheme was going to work, how it was going to be applied, what the meaning was of the various assurances that had been given from stage to stage, remained obscure and in some cases remains obscure to this moment.
It occurred to me to investigate why it was that a scheme which affected the whole farming industry in the United Kingdom, and which affected differentially the farming industry in Northern Ireland, should still remain in such confusion and obscurity for nine months after its introduction. The reason is not far to seek, and it should not be far to seek, above all, here in the House.
The seeker after enlightenment on the working of the milk quota scheme requires to deal with three fundamental documents. They are all EEC regulations. The first is regulation 804 of 1968. The second is regulation 856 of 1984. The third is regulation 857 of 1984. By a careful reading of those three documents one can, at first dimly and then with increasing clarity perceive the outlines and the underlying principles—which are even, arguably, in some respects rational—of the milk quota scheme.
They are a remarkable collection of documents. Regulation 804 of 1968 set out, as I have said, the principles. In our language it would be called the principal Act—it is the CAP for milk—I am sure that that is an unofficial description—and it is constantly referred to in the documents which immediately impinge upon the farming industry in Northern Ireland and which repeatedly
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refer to paragraph 5 of the principal regulations—to the bewilderment at first of the student who finds no resemblance between article 5 of that regulation and what is being talked about. What has escaped his notice is that regulation 856 of 1984 virtually rewrote, or wrote a whole new regulation into, article 5 of the principal regulations of 1968. On that article as amended was built the trigger regulation 857.
One fact which is common to all those regulations is that they are Community legislation directly applicable in the member states. Each of them is directly applicable — the CAP regulation, the amendment of the CAP regulation, and then the inauguration of the milk quota scheme—it is all legislation made in Brussels which automatically takes effect in this country.
It seems self-evident that such legislation when it reaches into the very lives and farms of individuals in the Province will not be understood—that is almost to say, it simply will not be accepted — until it has been properly and publicly debated in this country. There is one sovereign way — that is not intended as a pun — of getting such matters properly understood and debated. That is to bring them before the House. But because of the EEC's legislative procedures, all that was involved in the milk quota scheme—how it would work, how it would impinge on individual farms — how the quotas were assesed and how the levy was to be drawn—was never thrashed out on this side of the English channel. The matter was never thrashed out, and, therefore, never properly understood, let alone accepted, because it did not have to come before the House. It did not even have to go before a Scrutiny Committee.
It is for another debate to declaim against the directly applicable legislation of the EEC. Suffice it to say tonight that we and the dairy farmers of the whole United Kingdom, and especially of Northern Ireland, have learnt by an object lesson just what it means to be legislated for by a foreign body which imposes its decisions, in effect, by decree.
I turn to another constitutional matter—one that it is within the Government's power to deal with. We are given to understand that the Government are in some difficulty over their programme for the current Session. That has been brought to our attention by the unprecedentedly early date at which we are to terminate our Christmas holidays and return from all the oceans and continents of the world to resume our deliberations on Wednesday 9 January. The Government are short of time—the very predicament most feared and dreaded by all Governments, particularly by all Government business managers. Yet in every Session three whole days in effect are devoted by the House to the business of appropriation orders such as that which has claimed our attention since about 7·.30 pm tonight—there is still another hour to go, if we can find the means to apply Parkinson's law. One might think that some useful or necessary purpose was served by such orders. Those hon. Members who are anxiously wondering how soon the Division will be must naturally assume from the fact that they are about to be marched through the Lobbies that those parliamentary days are being used for some practical—I do not say "good", as I put the matter more modestly—purpose. Not at all.
It is not in order to provide these sums for expenditure in Northern Ireland that such orders are brought before the House. The sums eventually come out of the Consolidated Fund of the United Kingdom anyhow and would continue

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to do so, subject to the decisions of the House, even if these orders were heard of no more. Nor are these orders brought before the House to give Northern Ireland Members an opportunity to air their constituents' grievances on major matters of public concern. If they were, that would be a signal and peculiar instance of generosity towards Northern Ireland and its people on the part of those who sit in the seats of power. Not so: if this order was not taken tonight and if this procedure was disused, my hon. Friends and I would still be raising exactly the same subjects, perhaps with a little more concision and thereby a little more force, in the debate which is to be held on Wednesday.
No, Sir; the only effect and purpose of this expenditure of parliamentary time and effort on appropriation orders for Northern Ireland is to preserve an ancient absurdity —the Consolidated Fund of Northern Ireland. This is a "Consolidated Fund of Northern Ireland Preservation Order." That is what it is about.
Since the Consolidated Fund of Northern Ireland performs no ascertainable financial function, being only a receptacle into which money is poured in order that it may be poured out again, hon. Members may still be inquisitive to know why the Government attach so much importance to preserving this ancient and fatuous institution that they will spend three good days of parliamentary time per Session in preserving it. And, indeed, hope is growing that the Government are approaching the time when they will no longer wish to preserve the Consolidated Fund of Northern Ireland.
The original purpose of conserving the fund, with which this pantomime started some 12 years ago, was that Northern Ireland might, as far as possible, be a separable entity which could be floated off in the direction of an all-Ireland state. It was to render it essentially self-contained and separable that it was given the same sort of distinct Consolidated Fund and financial organisation as a self-governing dominion, in the hope that one day it would take itself off and go somewhere else.
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That motive was disposed of with striking and beneficent clarity by the Prime Minister during and following the recent conference at Chequers. We know now, in a way that we did not previously know, that that is not the Government's intention.
Perhaps it might be said that Her Majesty's Government are still anxious to provide Northern Ireland with another Stormont — Stormont back again with Stormont's Consolidated Fund.
Mr. Chris Patten indicated assent.
Mr. Powell: The Under-Secretary of State, clutching at a straw, thought just now that he heard something in my discourse with which he could safely be seen to be agreeing. I suppose that the Minister "indicates assent" will duly appear tomorrow in the appropriate column of Hansard.
That is also out of date, however, because the new Secretary of State for Northern Ireland has been brutally candid. With brutal candour he has explained the terms upon which—and upon which alone—administration or legislation will be devolved to the Province. They are conditions upon which there is no prospect of a devolved constitution being accepted or worked; and I do not think that the Secretary of State or Her Majesty's Government generally—if for such a purpose one can take them as a generality—are so stupid as to suppose otherwise.
So at last we have worked through to a time when the House can, without any loss whatsoever, be deprived of this tri-annual entertainment, a time when the business managers of the House can gain three days, a time when it is no longer thought necessary for any purpose —attainable or unattainable—to preserve the Consolidated Fund of Northern Ireland.
My hon. Friends and I, in expectation of that day and by way of giving, to this Government so far as is in our power, a gentle nudge from time to time in that direction, have made a habit in the last two years of marking our disapprobation of the motives behind this legislation, by voting against it. After all that, it should not come as any surprise either to the Whips or to the Ministers, to hear that we intend to do likewise tonight.
10.40 pm
Mr. Stuart Bell: The right hon. Member for South Down (Mr. Powell) referred to our proceedings as a triennial entertainment and as a pantomime. As the festive season is approaching, I prefer the description of a pantomime. Like the Minister of State, I have spent some time reading in the Hansard the record of the debates on Appropriation orders. Having read them, I was surprised that such dehydrated topics as milk quotas, levies, outgoers schemes, and the quality of beef cattle production could be so interesting and scintillating. I shall seek to make equally cogent arguments on the same manifold subjects, although I doubt that I can match the level of articulation of other hon. Members.
Class I, Vote 1, of the supplementary Estimates spell out clearly the nature of the supplement as it relates to agriculture. Class I covers the administrative cost of the new milk quota arrangements and the compensation scheme for farmers who want to give up milk production, thus releasing quotas for reallocation.
The hon. Member for Antrim, North (Rev. Ian Paisley) drew the attention of the House to the considerable bitterness about the quota arrangements in Northern Ireland. He declared that the jewel of our Northern Ireland industry had been kicked into the gutter. I originally thought that that was a mixed metaphor, but the industry would not be the worse for that — in fact, it was an accurate description of how some of the farmers feel about the quota arrangement, reallocations and penalties.
The reason for the bitterness was that the Government had announced that the first instalment of the levy on farmers who had exceeded their quota must be paid, notwithstanding that the European Commission had said that four member states had not implemented the regulations. The Minister was kind enough to tell the House that while the Government were fully committed to the mutual supplementary levy agreed by the Agriculture Council in March, Belgium, the Netherlands, the Republic of Ireland and the Federal Republic of Germany had decided not to pay any levy because there appeared to be a confusion over the interpretation the rules. Only West Germany has collected some portion of the levy. It was a timely intervention that may assist in alleviating some of the bitterness felt by the farmers in Northern Ireland.
The Minister also took the opportunity to tell the House that he had sympathy with farmers who were attempting to make unwelcome and difficult adjustments. One additional source of bitterness is that no levy will be payable in Britain because of the summer drought that resulted in a drop in milk production. Production also fell in Northern Ireland—down 6 per cent. since April—but total production will still exceed the quota and up to 5,000 farmers will face the levy payments. The Ulster Farmers Union has claimed that individual payments could be as much as £20,000. The average will probably be more like £1,000 per farmer. The Government have estimated that about 2,000 farmers will exceed their quota.
The Northern Ireland farmers are bitter about the Government's decision to collect the payments—they may now be held in abeyance—because they feel that they never received the 65,000 tonne special allocation granted by the EEC specifically for Northern Ireland. That was referred to by several hon. Members. They believe that the special quota was subsumed into the special quota
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allocated to the United Kingdom overall. This issue was touched upon by the hon. Member for Antrim, North. I shall not attempt to untangle the entangled questions of milk quotas and levies as expressed and interpreted by the European Community and its Agriculture Council. Grievances may be perceived as well as being real; and I am sure that the Under-Secretary of State will wish to take an early opportunity to elucidate the true facts.
The Minister of State has said that 3,430 producers have applied for special treatment as hardship cases and that the claims are still being evaluated. In the meantime, producers who regard themselves as eligible for special treatment do not know whether they will find themselves in excess of the quota. The Minister has said that decisions have been taken in 1,788 cases and that provisional awards have been made in 540. He explained that the remainder would be dealt with over the next few weeks.
There is considerable confusion over the nature of the quota and whether it will be a salable asset. I understand that 595 farmers in Northern Ireland have applied to stop milk production and that the Government have said that all valid applications will be accepted. The 595 applications will yield 53·3 million litres.
In Class X of schedule 1 the sums to be paid out by way of expenditure by the Department of Health and Social Services on important items such as old-age pensions, attendance allowances and non-contributory pensions amount to £26·118 million. That figure must be seen against the overall background of social security in Northern Ireland. According to information provided by the Confederation of Health Service Employees in Belfast, social security statistics on the payments of sickness benefit, invalidity benefit and non-contributory invalidity pension show a level of demand in Northern Ireland that is 66 per cent. above that in Great Britain.
According to the same source, the incidence of severe disablement or incapacity based on attendance allowance statistics for Northern Ireland is 35 per cent. above the figure for Great Britain. There are higher birth rates and levels of infant mortality and handicap in Northern Ireland than elsewhere in Great Britain. There is a higher incidence of mental handicap. The level of new outpatients seen in Northern Ireland in 1982 was 51 per cent. higher than the comparable Great Britain figure. There is also a higher incidence of congenital abnormality and in 1981 deaths from this cause were 16 per cent. higher than those in England.
We welcome the fact that under the Health and Social Security (Northern Ireland) Order 1984, severe disablement allowance will replace the non-contributory invalidity pension. We welcome equally the fact that the severe disablement allowance—the SDA— is for those who cannot work because of long-term sickness or disability and who have not paid enough national insurance contributions to qualify for contributory sickness benefit. It is to be welcomed that it is not means tested and is tax-free.
The Minister of State rightly said that the Supplementary Estimate of £26·12 million represents an increase of 6·3 per cent. on the original provision and declared that the largest increase sought is for supplementary benefit. We welcome, too, the reasons for the increase, which is a reduction from 70 to 65 years of age as the upper qualifying age for related heating additions and the introduction of a new, higher age-related rate. The Minister referred to an addition of £7·8 million

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for housing benefits. The reason for this additional supply is the increase in the number of eligible claimants and the increase in average weekly rebates and allowances.
The House has heard several criticisms of the housing benefit scheme. The hon. Member for Mid-Ulster (Rev. William McCrea) pertinently asked how the housing benefits points system is working. He declared that rents were being increased again. We note that under Class X the increase to cover rent rebates, rent allowances and rates rebates is the net result of a rise in the number of eligible claimants, and that this has been partly offset by changes in the housing benefit scheme, which has reduced the extent of the assistance.
The Parliamentary Under-Secretary of State will be well aware of the fact that the impact of the housing benefits scheme in Northern Ireland has given rise to some anxiety and criticism from hon. Members with Northern Ireland constituencies. Allegations are made that, because the scheme's administration is shared between the Department of the Environment, the DHSS and the Northern Ireland Housing Executive, there are serious cases of administrative failure. People feel that the housing benefits scheme has been based on a novel principle—robbing one set of claimants to pay another. It is therefore not surprising that the housing benefits scheme was rejected by all political parties when it was proposed for Northern Ireland. The Parliamentary Under-Secretary of State took that aspect into account when he gave a clear undertaking to the Northern Ireland Assembly that no supplementary benefits claimant would be worse off because of this reform. We trust that that will be the case.
We have had an interesting and long debate. It has been well attended, in the way such debates are, by those hon. Members who have listened to most of the speeches. The Labour Opposition support the order. We accept and understand the principle put forward by the right hon. Member for South Down, who wishes to make a constitutional point about the Appropriation order. The Labour Opposition believe in public expenditure as a principle. We believe that it helps to alleviate distress and that the appropriation order will assist those recipients of non-contributory benefits. We welcome the fact that more people will receive the severe disablement allowance than received the non-contributory invalidity pension. We welcome the £800,000 for attendance allowance, although we take on board the criticisms that have been made. We welcome the fact that married women can claim the disablement disallowance, even if they are about to carry out normal household duties.
We accept that there is confusion about the milk quotas and take on board the point made by the right hon. Member for South Down about Common Market legislation. The right hon. Gentleman said that these matters are decided elsewhere and give rise to different interpretations throughout the Common Market because we deal with many different nationalities, languages and technical matters that are difficult to grasp. We accept the new input into agriculture and understand the importance of agriculture to the economy of Northern Ireland. Every help should be given, and the Supplementary Estimates go some way towards giving that help.
10.52 pm
The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Chris Patten): I believe I am right in saying that I have enjoyed the privilege of responding to every debate on Northern Ireland Appropriation orders since the last general election. I suppose that if I am particularly fortunate I shall be able to notch up the dubious record of replying to every Appropriation order debate during the entire Parliament. I realise that, for constitutional reasons at least, the right hon. Member for South Down (Mr. Powell) would not be too pleased with that idea, but that question is, of course, not entirely in my hands.
I welcome, as I am sure do all hon. Members, the hon. Member for Middlesborough (Mr. Bell) to our debates. I am sure that he will learn to enjoy them as much as the rest of us do. As on all these occasions, we have had a good and lively debate, which has ranged to the furthest limits of the order. The order is more limited in scope than some that we have considered in the past, but, nevertheless, the debate has covered a wide variety of subjects. I shall try, once again, to respond as adequately as I can to the main points raised. As usual, when I cannot cover a point today, or if I inadvertently pass one by in the night, I shall try to ensure that the hon. Member concerned receives a suitable reply as soon as possible from me or from one of my right hon. and hon. Friends.
A number of hon. Members have referred to social security. I shall make one or two general remarks about the Government's record on social security benefits in Northern Ireland, in view of what the hon. Member for Belfast, North (Mr. Walker) said in his customarily well-informed speech.
We shall spend about £1·2 billion on social security benefits in the current year. As the House is aware, it is our policy to maintain parity with Great Britain in the rates and procedures applying for those wide-ranging benefits, and I believe that that policy has served Northern Ireland well.
At the same time, when we introduced housing benefits, which the hon. Member for Middlesbrough mentioned, in November 1983, which was a benefit system which allowed some measure of local discretion within the national framework, I was able to provide some local enhancement of the scheme; for example, a more generous transitional protection against losses, the inclusion of water charges within rate rebates and allowances and, for the time being, more generous needs allowance for children. We were also able to tailor the administration of benefits to local circumstances. Northern Ireland has a more localised network of offices than elsewhere in the United Kingdom, and uniquely unemployment and supplementary benefits are delivered from the same local office.
The take-up of benefit in the Province already compares favourably with that in Great Britain, and is demonstrably higher in some cases. We have run some successful media campaigns in relation to particular benefits. More can and should be done. I have recently announced an extension throughout the Province of the information and advice service, which was successfully piloted in some of my Department's local social security offices.
Over the next year each local office will provide a separate advice point at which members of the public can

121
obtain information about the range of benefits available. We are also introducing a freephone service for those who cannot easily visit their local offices.
These developments have been welcomed by many local representatives and have been commented upon favourably by the Social Security Advisory Committee, whose close interest in Northern Ireland I greatly appreciate.
In these ways, and assisted by a flourishing welfare rights movement in the Province—a point to which I shall return in the context of the remarks of the hon. Member for Upper Bann (Mr. McCusker) — we are doing everything that we can to ensure that benefits reach everyone entitled to them. These efforts depend heavily upon the splendid and dedicated staff administering benefits in our local and central offices. I am pleased that hon. Members from Northern Ireland have often paid deserved tribute to their work.
The hon. Member for Upper Bann mentioned three matters on the social security Vote. I agree with him and the right hon. Member for South Down that attendance allowance is an extremely valuable benefit in that it can make the difference between an elderly or disabled person staying at home and having to be admitted to hospital. The view of the claimant's general practitioner is taken into account by the examining doctor, who must be satisfied that the conditions attaching to the allowance are met.
I accept the point made by the right hon. Gentleman about the administration of attendance allowance, on which, as he said, we have had a good deal of corresponsdence. I have had a good deal of correspondence on the subject with every hon. Member representing the Province. I am therefore prepared to consider further how the allowance is administered. I shall do so against the background of the Oglesby report, which reviewed the procedures for that and other benefits in Great Britain. I shall also consult the Attendance Allowance Board, which plays an important part in administering the scheme. If there are any gremlins still left in the system, as the right hon. Gentleman suggested there may be, I want to remove or perhaps exorcise them as rapidly as possible.
The hon. Member for Upper Bann will appreciate that I cannot readily deal on the Floor of the House with the case of his constituent who was denied higher rate heating addition. He will be aware that his constituent could take the matter to an appeal tribunal, or the hon. Member may wish to raise the case with me first for further examination.
The hon. Gentleman and the hon. Member for Belfast, North referred to single payments under the supplementary benefits scheme. This is a subject about which I have learned an increasing amount as I have visited social security offices throughout the Province. As was said, the number of single payment awards has grown significantly in recent years—from 77,000 in 1982, to 126,000 in 1983, and, I estimate, to upwards of 200,000 in 1984. Expenditure in 1984 will be more than £20 million.
Although from time to time allegations are voiced about abuse of single payments, we have no evidence that this is a major problem. Clearly there is scope for abuse, but the Department of Health and Social Services does all that it can to prevent it. Home visits are made in most cases, and Girocheques are made payable to suppliers rather than to claimants where large sums are involved.
It is fair to say that one of the main reasons for the surge in single payments is the development of a thriving welfare rights movement, which I welcome. I intend to give
122
support to that movement through a grant to a regional welfare rights resource centre. It is also fair to say that the single payments aspect of the supplementary benefits scheme is being given particular attention by my hon. Friend, who is leading the review of the scheme. I should not be surprised — I do not put the point any more strongly, and I have no inside information at this stage — if we saw changes proposed in this aspect of supplementary benefit.
Meanwhile, I assure the House, and the hon. Member for Upper Bann in particular, that we shall do everything possible both to encourage full take-up of all the benefits to which claimants are entitled and to check against abuse.
Mr. McCusker: Will the Minister say more about this group to which he intends to offer financial assistance? Who has selected it, and what justification is there for giving it public funds?
Mr. Patten: The justification is the belief, which I hold strongly—I should be surprised if I did not share it with hon. Members—that we should do everything that we can to encourage the take-up of benefits to which people are statutorily entitled. That should involve work by my Department, particularly by local social security offices, and by the voluntary sector. That has already helped considerably; for example, through the action for community employment scheme.
I want to make sure that, wherever possible, the voluntary sector works with the statutory sector to encourage take-up. That is why we have been discussing with the Belfast law centre how we can best help provide a resource centre and training for local welfare rights groups which are legitimately involved. There are a large number of local groups which at present are helped by district councils and through the ACE scheme and in other ways. I assure hon. Members that the provision of more training and advice centrally should enable us to have a more sensible take-up scheme throughout the Province.
When I hear hon. Members properly talk about constituents who are not getting the benefits to which they are entitled, I think that there is an obligation on us, through our local social security offices and through the voluntary sector, to do all that we can to make people aware of the things they are entitled to receive.
Mr. Maginnis: Is the Minister not undermining the democratic process by encouraging voluntary groups of this sort and giving them almost statutory recognition? Can he assure us that a group such as this will be monitored in a way that will ensure that it is not exploited by organisations such as Sinn Fein—[Interruption.] I fear that it may be. Will the hon. Gentleman assure us that the members of this voluntary welfare group will be made known to those who have an electoral responsibility within the community?
Mr. Patten: The answer to the first substantive question of the hon. Gentleman is no. The answer to his second substantive question is yes. We are not talking about my Department giving grants to local groups but about giving funds to an organisation that is already heavily involved in helping local welfare rights activities. I have noted the point that the hon. Gentleman has made; it would be idiotic if we had not already done so. A great deal of this work has been carried on for some time with the Belfast Law Centre. We are discussing how it can help further.
Mr. Bell: Can I point out to the Parliamentary Under-Secretary of State that, while one understands the views which have been put forward tonight, we welcome the statement he has made that all those who ought to have benefit and who are entitled to benefit should be encouraged to have it and assure him that any steps that he may take in that direction will be warmly welcomed by us?
Mr. Patten: I am grateful to the hon. Member for his message of support. When hon. Members in other parts of the House note what is already happening and note also our intention to work closely with the voluntary sector to improve the quality of the advice that is provided, I hope that support in the House will be rather more widespread than it is now. The hon. Member for Belfast, South (Rev. Martin Smyth) asked a number of questions about social security and the expenditure covered by the Appropriation order. He referred initially to the Department of Health and Social Services and asked why we had not put in a shortfall bid for telephones for the housebound. Because shortfall money is available only for spending in the year in which it arises and because the expenditure on telephones which the hon. Member has in mind would be a recurring commitment for the health boards, it could not be covered in the way he suggested. The boards have been doing a great deal of work but they have to live within their budgets.
Hon. Members, including the hon. Member for Middlesbrough, asked questions about the housing benefit scheme. It is fair to say that the reformed scheme, to some of whose enhancements I referred earlier, has been operating reasonably satisfactorily in Northern Ireland. We have managed to avoid some of the problems that existed on this side of the water. However, reviews of the schemes are being undertaken in Northern Ireland as well as in Great Britain, mainly because of difficulties in Great Britain and concern about the rising cost of housing benefit. In the light of the reviews we expect to be able to publish proposals for change in the new year.
Hon. Members referred to the available scale margin. This is the amount deducted from certain additional requirements of claimants on the long-term rate of supplementary benefit. It was first introduced in 1966. It was intended to reflect the fact that the long term scale rate should cover nearly all additional needs, amounting at that time to 45p, the difference between the long term and the short term rates. Although the difference is now £7·65, the available scale margin remained at 50p, having been increased to that amount in 1968. To allow the previous relationship between the available scale margin and heating additions to remain unchanged would have resulted in the continuation of an increasingly anomalous situation. The Government therefore decided that it was reasonable to increase the margin to £1 and to apply it again to heating additions, which were originally within its scope.
In response to the hon. Member for Belfast, North in particular, I stress that no pensioner has suffered an overall reduction in income as a result of the change and that, for the first time, supplementary heating additions of £2·10 per week are automatically payable to householders aged 65 to 70. Householders over 70 already qualify. Furthermore, the higher rate addition of £5·20 per week is now given to pensioners aged 85 or over.
Rev. Martin Smyth: The hon. Gentleman said that pensioners over 70 qualify automatically and that no pensioner has suffered a loss as a result of the change. I have written to the hon. Gentleman giving him details of a case were that has happened.
Mr. Patten: I shall look into that case and reply to the hon. Gentleman as soon as I can.
The hon. Member for Mid-Ulster (Rev. William McCrea) mentioned rents. I am not sure whether it would be in order for me to dwell on that subject, but I think that the proposed increase of 4 per cent. for the coming year is not unreasonable. The hon. Gentleman referred to comparisons with the position in England, Wales and Scotland. I shall be delighted to give him the figures and, if necessary, to discuss the comparisons with him.
I assure the hon. Member for Mid-Ulster that there is no part of Northern Ireland in which the writ of the DHSS does not run. About 60 fraud investigation staff are doing sterling work throughout the Province, checking overtly and covertly on abuse and fraud. I shall be glad to supply the hon. Gentleman and other hon. Members with figures of prosecutions, which are quite impressive. I have met members of the fraud investigations staff to pay my personal tribute to their work, which is often done in particularly difficult circumstances.
As hon. Members know, my remit in Northern Ireland Departments runs fairly wide, but I am sure that it is a relief to all concerned that it does not cover agriculture, though I have been called on to say a word or two on the subject from time to time. As the hon. Member for Newry and Armagh (Mr. Nicholson) will confirm, I am all too conscious of my limitations in dealing with the subject.
I appreciate that hon. Members have serious worries about agriculture. Many have been expressed by the hon. Members for Antrim, North (Rev. Ian Paisley), who is chairman of the Assembly Committee, for Mid-Ulster, for Londonderry, East (Mr. Ross) and for Newry and Armagh and by the right hon. Member for South Down, though he touched principally on some of the constitutional aspects.
I shall not deal with all the detailed points raised, because I prefer to mention three major issues. Naturally, I shall draw the attention of my noble Friend the Under-Secretary to the vigorous speeches made in the debate, and I know that he will respond to them as quickly as he can.
With reference to the payment of the milk levy, my hon. Friend the Minister of State quoted a written answer given today by the Minister of State, Ministry of Agriculture, Fisheries and Food. I do not think that I can shed any further light on that. I gather from hon. Members that they thought that that had clarified the matter a little.
There is the question of the regional allocation of the milk quota, which I enjoyed debating with the hon. Member for Newry and Armagh on a memorable evening earlier this year. When my hon. Friend the Minister of State introduced the debate, he made it abundantly clear that he has great sympathy, as we all do, with Ulster milk producers. I should like to associate myself with those remarks. Nevertheless, Northern Ireland has received the full benefit of the 65,000 tonnes from the Community reserve, and an additional amount from the United Kingdom total. As a result, the percentage amount by which the Northern Ireland quota was less than 1983 deliveries will be no more than in other regions of the United Kingdom, although deliveries of milk in Northern Ireland have increased proportionately more between 1981

125
and 1983 than deliveries in England and Wales. My noble Friend is aware of the need to ensure that we again receive the 65,000 tonnes for 1985–86 in the price fixing round which is about to begin in Brussels.
The hon. Member for Mid-Ulster asked whether the reserve was sufficient to meet the needs of those producers. More than 3,800 farmers—almost half of all milk producers in Northern Ireland—submitted special case claims. The local panels have many cases remaining to be considered, including some from producers complaining against the Department's decision to reject cases which, in the Department's opinion, did not fulfil the criteria.
In addition, the tribunal received about 750 appeals from producers against provisional awards made by the local panels. Further appeals are expected. There is, therefore, some way to go before all cases are finalised. I cannot give a categoric response about the reserve question, as hon. Gentlemen understand. However, indications are that it will probably be necessary to scale down substantially the awards to these producers who have claimed secondary quotas and who meet development plans.
The subject of agriculture capital grants was also raised, especially by the hon. Members for Antrim, North and for Newry and Armagh. I appreciate that at first glance it must look strange and unfair that a province which provides only 6 per cent. of the United Kingdom's agriculture production should produce 33 per cent. of the cuts. However, that is not so surprising as a large proportion of any general reduction in grant rates was bound to fall on Northern Ireland, as more than one third of the United Kingdom's capital grant expenditure of this type is incurred in the Province. If a large share of the money goes to Northern Ireland, it is inevitable that a large share of the cuts will fall on the Province.
However, there is some good news for farmers. Because of the rather different needs in Northern Ireland —this touches on a point raised by the hon. Member for Londonderry, East—for a balance between conservation and agriculture, the Government have agreed that while grant rates for land reclamation will be reduced in the rest of the United Kingdom, they will not be reduced in Northern Ireland.
The right hon. Member for South Down asked about the control of veterinary products in the Republic. The proper handling and control of veterinary medicines in the European Community is essential for human and animal health. I therefore accept that we should continue to ensure that all concerned are alive to the need for agreed Community-wide measures. I undertake to draw the attention of my noble Friend to the right hon. Gentleman's remarks.
Finally, the right hon. Member for South Down made a point, in a particularly engaging style, which he has made on previous occasions, and to which I have replied. I doubt whether he will find my reply on this occasion any more convincing than he has found it previously. The arrangements that were criticised by the right hon. Gentleman are not new. As he conceded, Northern Ireland has had separate legislation and a separate Consolidated Fund for more than 60 years. There is no secret or hidden reason why the Government persist with the arrangements. We believe that a devolved Government would best meet the special needs of Northern Ireland's divided community, and my right hon. Friend the Secretary of
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State is encouraging the political parties to work out mutually acceptable arrangements to that end. The right hon. Gentleman has reservations about that policy, but the Government, with the support of Parliament, are seeking to do that. In that light, the financial and legislative arrangements for Northern Ireland are appropriate and sensible.
I hope that I have dealt with most of the main points raised during the debate. If not, I repeat that I shall respond by letter as soon as possible. I have only one task remaining, which is to commend the order to the House. I am only sorry that, once again, we shall not enjoy the company in the Division Lobby of the right hon. Member for South Down and his disapproving colleagues.
Question put:—
The House divided: Ayes 126, Noes 8.

Division No. 56]

[11.22 pm

AYES

Alexander, Richard

Hunt, David (Wirral)

Ancram, Michael

Jackson, Robert

Baker, Nicholas (N Dorset)

Jessel, Toby

Baldry, Tony

Jones, Gwilym (Cardiff N)

Beaumont-Dark, Anthony

Jones, Robert (W Herts)

Bell, Stuart

Key, Robert

Benyon, William

King, Roger (B'ham N'field)

Blackburn, John

Knight, Gregory (Derby N)

Boscawen, Hon Robert

Knowles, Michael

Bowden, Gerald (Dulwich)

Knox, David

Boyson, Dr Rhodes

Lang, Ian

Brandon-Bravo, Martin

Lawler, Geoffrey

Brinton, Tim

Lennox-Boyd, Hon Mark

Browne, John

Lester, Jim

Bruinvels, Peter

Lightbown, David

Budgen, Nick

Lloyd, Peter, (Fareham)

Burt, Alistair

Lord, Michael

Butterfill, John

McCrea, Rev William

Carlisle, John (N Luton)

McCrindle, Robert

Carttiss, Michael

McCurley, Mrs Anna

Cash, William

Macfarlane, Neil

Chope, Christopher

McKay, Allen (Penistone)

Clark, Dr Michael (Rochford)

Maclean, David John

Clarke, Rt Hon K. (Rushcliffe)

McQuarrie, Albert

Conway, Derek

Major, John

Coombs, Simon

Malins, Humfrey

Cope, John

Mather, Carol

Couchman, James

Maude, Hon Francis

Cranborne, Viscount

Maxwell-Hyslop, Robin

Currie, Mrs Edwina

Mayhew, Sir Patrick

Dorrell, Stephen

Meyer, Sir Anthony

Douglas-Hamilton, Lord J.

Miller, Hal (B'grove)

Dover, Den

Mills, Iain (Meriden)

Dunn, Robert

Morris, Rt Hon A. (W'shawe)

Durant, Tony

Morris, M. (N'hampton, S)

Fallon, Michael

Moynihan, Hon C.

Fenner, Mrs Peggy

Needham, Richard

Finsberg, Sir Geoffrey

Newton, Tony

Forth, Eric

Nicholls, Patrick

Freeman, Roger

Norris, Steven

Gale, Roger

Oppenheim, Phillip

Galley, Roy

Osborn, Sir John

Garel-Jones, Tristan

Ottaway, Richard

Gregory, Conal

Page, Richard (Herts SW)

Griffiths, Peter (Portsm'th N)

Paisley, Rev Ian

Ground, Patrick

Patten, Christopher (Bath)

Hamilton, Neil (Tatton)

Pawsey, James

Hargreaves, Kenneth

Peacock, Mrs Elizabeth

Harris, David

Penhaligon, David

Harvey, Robert

Percival, Rt Hon Sir Ian

Hayward, Robert

Powell, William (Corby)

Henderson, Barry

Powley, John

Hickmet, Richard

Proctor, K. Harvey

Hind, Kenneth

Raffan, Keith

Hooson, Tom

Rathbone, Tim

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

Rhodes James, Robert

Howarth, Gerald (Cannock)

Robinson, P. (Belfast E)

127

Rowe, Andrew

Thompson, Patrick (N'ich N)

Sainsbury, Hon Timothy

Wardle, C. (Bexhill)

Sayeed, Jonathan

Wheeler, John

Skeet, T. H. H.

Wiggin, Jerry

Stanbrook, Ivor

Steen, Anthony

Tellers for the Ayes:

Stewart, Allan (Eastwood)

Mr. Archie Hamilton and

Thompson, Donald (Calder V)

Mr. Michael Neubert.

NOES

Beggs, Roy

Smyth, Rev W. M. (Belfast S)

Forsythe, Clifford (S Antrim)

Walker, Cecil (Belfast N)

McCusker, Harold

Molyneaux, Rt Hon James

Tellers for the Noes:

Nicholson, J.

Mr. William Ross and

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

Mr. Ken Maginnis.

Question accordingly agreed to.
Resolved,
That the draft Appropriation (No. 3) (Northern Ireland) Order 1984, which was laid before this House on 20th November, be approved.

STATUTORY INSTRUMENTS, &c.

  INTERNATIONAL IMMUNITIES AND PRIVILEGES
  Motion made, and Question put forthwith pursuant to Standing Order No. 79(5) (Standing Committees on Statutory Instruments &c.)
  That the draft Inter-American Development Bank (Immunities and Privileges) (Amendment) Order 1984, which was laid before this House on 28th November, be approved.
  That the draft International Lead and Zinc Study Group (Immunities and Privileges) (Amendment) Order 1984, which was laid before this House on 28th November, be approved.
  That the draft EUTELSAT (Immunities and Privileges) Order 1984, which was laid before this House on 28th November, be approved.—[Mr. Sainsbury.]
  Question agreed to.

  SOCIAL SECURITY
  Motion made, and Question put forthwith pursuant to Standing Order No. 79(5) (Standing Committees on Statutory Instruments &c.)
  That the draft Supplementary Benefit (Requirements) Amendment and Temporary Provisions Regulations 1984, which were laid before this House on 22nd November, be approved. —[Mr. Sainsbury.]
  Question agreed to.

  COMPANIES
  Motion made, and Question put forthwith pursuant to Standing Order No. 79(5) (Standing Committees on Statutory Instruments &c.)
  That the draft Companies (Share Premium Account) Regulations 1984, which were laid before this House on 22nd November, be approved.——[Mr. Sainsbury.]
  Question agreed to.

House of Commons Members' Fund
11.32 pm
Mr. Alfred Morris: I beg to move,
That the whole or any part of the sums deducted or set aside in the current year from the salaries of Members of Parliament under section 1 of the House of Commons Members' Fund Act 1939, and the whole or any part of the contribution determined by the Treasury for the current year under section 1 of the House of Commons Members' Fund Act 1957, as amended by the House of Commons Members' Fund and Parliamentary Pensions Act 1981, be appropriated for the purposes of section 4 of the House of Commons Members' Fund Act 1948, as amended by section 12 of the Parliamentary Pensions etc Act 1984.
It will probably be convenient to discuss with it the second motion,
That in pursuance of the provisions of section 3 of the House of Commons Members' Fund Act 1948 and of section 2 of the House of Commons Members' Fund and Parliamentary Pensions Act 1981 the maximum annual amounts of the periodical payments which may be made out of the House of Commons Members' Fund under the House of Commons Members' Fund Act 1939, as amended and the annual rate of any payments made under section 1 of the said Act of 1981 shall be varied as from 1st December 1984 as follows:
(a) for paragraph 1 of Schedule 1 to the said Act of 1939, as amended, there shall be substituted the following paragraph:
1. The annual amount of any periodical payment made to any person by virtue of his past membership of the House of Commons shall not exceed £2,199 or such sum as, in the opinion of the trustees, will bring his income up to £4,067 per annum whichever is the less:
Provided that if, having regard to length of service and need, the trustees think fit, they may make a larger payment not exceeding £4,245 or such sum as, in their opinion, will bring his income up to £6,113 per annum whichever is the less:
(b) for paragraph 2 of that Schedule there shall be substituted the following paragraph:
2. The annual amount of any periodical payment to any person by virtue of her being a widow of a past Member of the House of Commons shall not exceed £1,101 or such sum as, in the opinion of the trustees, will bring her income up to £2,969 per annum, whichever is the less:
Provided that if, having regard to her husband's length of service or to her need, the trustees think fit, they may make a larger payment not exceeding £2,118 or such sum as, in the opinion of the trustees,, will bring her income up to £3,986 per annum, whichever is the less:
(c) in paragraph 2A of that Schedule for the words 'the annual amount of any periodical payment' to the end of the paragraph, there shall be substituted the words:
'the annual amount of any periodical payment made to any such widower shall not exceed £1,101 or such sum as, in the opinion of the trustees, will bring his income up to £2,969 per annum, whichever is the less:
Provided that if, having regard to his wife's length of service or to his needs the trustees think fit, they may make a larger payment not exceeding £2,118 or such sum as, in the opinion of the trustees, will bring his income up to £3,986 per annum, whichever is the less:
(d) in section 2(1) of the said Act of 1981, for the words from the beginning to the end of paragraph (b) there shall be substituted the words:
'the annual rate of any payments made under section 1 shall be—

(a) £1,282 if the payments are made to a past Member; and

(b) £641 if the payments are made to the widow or widower of a past Member'.

129
The motions stand in my name and those of hon. Members on both sides of the House who share with me, as trustees, the responsibility of administering the House of Commons Members' Fund.
Right hon. and hon. Members enjoy today pension rights under the Parliamentary Contributory Pension Fund, but, as the House knows, this has not always been so. Our colleagues who left the House before 1964 have no pensions in respect of their service in the House, and many now live in considerably reduced and often straitened circumstances. This applies especially to former Members who are now of advanced years and, even more so, to many widows and widowers. The Members' Fund has existed since 1939 to provide assistance to former Members an their dependants, but the help which my fellow trustees and I are able to provide from the Members' Fund is modest in the extreme. We are deeply conscious of the need to improve their position and are giving urgent consideration to what steps might be taken to make this possible.
A further problem is that the needs of our former colleagues, and of widows or widowers, is not always known to us. I shall be most grateful, therefore, if hon. Members will let me know, as chairman of the trustees, of any case of which they become aware of a former Member or his or her dependants who are in need of help. I strongly urge any hon. Member who knows of a case of hardship to let us see if we can help.
In the meantime, we are now increasing the present levels of grants and payments which may be made under the Members' Fund legislation in line with recent increases approved for public service and national insurance retirement pensions. This is the purpose of the motions. I hope that they will receive the unanimous support of the House, for I can assure right hon. and hon. Members that the experience of the trustees has made us realise how much further provision is needed and also how very much it will be welcomed by those who will benefit.
I need not detain the House at length in moving the motions, since the provisions for which we seek approval are set out in detail in the motions on the Order Paper. Paragraph 1(a) sets out the new provisions for grants to ex-Members. At present, the Trustees are authorised to make grants to ex-Members of up to £2,091, provided that the total income of the applicant, including the grant, does not exceed £3,868. The grant is now raised to £2,199, and the income limit goes up to £4,067. To that is added the provision by which the trustees will be authorised to make larger payments, having due regard to length of service and need, of a grant of up to £4,245 provided that the income of the applicant, together with the grant, does not exceed £6,113.
Grants to widows are set out under paragraph (b). At present the grant to a widow of an ex-Member is £1,047 provided that her income, including the grant, does not exceed £2,824. That grant is raised to £1,101 and the income limit goes to £2,969. There follows the provision by which, having regard to her husband's length of service, or to need, the trustees will be enabled to make grants of up to £2,118 provided that the widow's income with the grant does not exceed £3,986.
Grants to widowers are set out under paragraph (c). The provisions here are similar to those for widows under paragraph (b). In subparagraph (d) we refer to the "as of right" payments from the Members' Fund to former Members who had 10 years' service before October 1964,
130
and to widows and widowers of such Members, provided for by the House of Commons Members' fund and Parliamentary Pensions Act 1981, which came into force on 19 March 1981. That provision seeks to increase the payments, at present at the rate of £1,218 per annum to former Members, to £1,282 per annum, and the payments to widows or widowers from £609 per annum to £641 per annum.
Those new provisions will all be retrospectively effective from 1 December 1984. They provide for increases of approximately 5·1 per cent. across the board, in line with the provisions contained in the Pensions Increase (Review) Order 1984. The additional expenditure arising is £7,200.
It is impossible on this occasion for us not to be reminded of the tragic loss of the late Member for Enfield, Southgate, who so cruelly lost his life two months ago. Sir Anthony Berry was appointed by this House as a trustee of the Members' fund in July last year and at once played a full and active part in all our work. He was most anxious to ensure that everything possible was done to help his former colleagues. He had a most genuine and humane concern for everyone who needed the help we could give. We honour his memory and shall sorely miss him.
11.37 pm
Mr. Albert McQuarrie: I congratulate the right hon. Member for Manchester, Wythenshawe (Mr. Morris) on moving the motion. I am sure that the House will welcome the fact that the Committee in its wisdom has decided to look after the interests of former Members and their widows and widowers who find themselves in pecuniary circumstances not of their own making. I sincerely hope that the House will join with the right hon. Gentleman and pass the resolution unanimously.
Question put and agreed to.
Resolved,
That the whole or any part of the sums deducted or set aside in the current year from the salaries of Members of Parliament under section 1 of the House of Commons Members' Fund Act 1939, and the whole or any part of the contribution determined by the Treasury for the current year under section 1 of the House of Commons Members' Fund Act 1957, as amended by the House of Commons Members' Fund and Parliamentary Pensions Act 1981, be appropriated for the purposes of section 4 of the House of Commons Members' Fund Act 1948, as amended by section 12 of the Parliamentary Pensions etc. Act 1984.

House of Commons Members' Fund

  HOUSE OF COMMONS MEMBERS' FUND
  Resolved,
  That in pursuance of the provisions of section 3 of the House of Commons Members' Fund Act 1948 and of section 2 of the House of Commons Members' Fund and Parliamentary Pensions Act 1981 the maximum annual amounts of the periodical payments which may be made out of the House of Commons Members' Fund under the House of Commons Members' Fund Act 1939, as amended and the annual rate of any payments made under section 1 of the said Act of 1981 shall be varied as from 1st December 1984 as follows:
  (a) for paragraph 1 of Schedule 1 to the said Act of 1939, as amended, there shall be substituted the following paragraph:
  1. The annual amount of any periodical payment made to any person by virtue his past membership of the House of Commons shall not exceed £2,199 or such sum as, in the opinion of the trustees, will bring his income up to £4,067 per annum whichever is the less:
  Provided that if, having regard to length of service and need, the trustees think fit, they may make

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  a larger payment not exceeding £4,245 or such sum as, in their opinion, will bring his income up to £6,113 per annum whichever is the less:
  (b) for paragraph 2 of that Schedule there shall be substituted the following paragraph:
  2. The annual amount of any periodical payment to any person by virtue of her being a widow of a past Member of the House of Commons shall not exceed £1,101 or such sum as, in the opinion of the trustees, will bring her income up to £2,969 per annum, whichever is the less:
  Provided that if, having regard to her husband's length of service or to her need, the trustees think fit, they may make a larger payment not exceeding £2,118 or such sum as, in the opinion of the trustees, will bring her income up to £3,986 per annum, whichever is the less:
  (c) in paragraph 2A of that Schedule for the words 'the annual amount of any periodical payment' to the end of the paragraph, there shall be substituted the words:
  'the annual amount of any periodical payment made to any such widower shall not exceed £1,101 or such sum as, in the opinion of the trustees, will bring his income up to £2,969 per annum, whichever is the less:
  Provided that if, having regard to his wife's length of service or to his needs the trustees think fit, they may make a larger payment not exceeding £2,118 or such sum as, in the opinion of the trustees, will bring his income up to £3,986 per annum, whichever is the less:
  (d) in section 2(1) of the said Act of 1981, for the words from the beginning to the end of paragraph (b) there shall be substituted the words:
  'the annual rate of any payments made under section 1 shall be—

  (a) £1,282 if the payments are made to a past Member; and

  (b) £641 if the payments are made to the widow or widower of a past Member'. —[Mr. Alfred Morris.]

PETITIONS

  Human Embryos
  11.39 pm
  Mr. David Maclean: I beg to ask leave to present to the House a petition in the names of Ann Twomey of Wetheral and Mary Delap of Great Corby and on behalf of a further 157 of my constituents of Penrith and The Border. The petition is entitled,
  "Petition for the Protection of the Human Embryo",
  and my constituents are responding to the Government's invitation to comment on the report of the Warnock committee.
  My petitioners
  Welcome the Statement in the Report of the Committee of Inquiry into Human Fertilisation and Embryology (the Warnock Report) that "the status of the embryo is a matter of fundamental principle which should be enshrined in legislation" and its recommendation that the embryo of the human species should be afforded protection in law.
  I entirely agree with that statement.
  My petitioners go on to affirm that the newly fertilized human embryos are real individual human beings, and they therefore oppose all such practices as are recommended in the report which discriminate against the embryo or violate his or her human dignity and right to life. They conclude:
  Wherefore your petitioners pray that the House of Commons will take immediate steps to enact legislation which forbids any procedure that involves purchase or sale of human embryos, the discarding of human embryos, their use as sources of transplant tissue or as subjects for research or experiment (unless this is done solely for the benefit of the embryo concerned). And your Petitioners, as in duty bound, will every pray, etc.
  To lie upon the Table.
  11.41 pm
  Mr. James Wallace: I beg to ask leave to present a petition which has been signed by some 720 of my constituents, mostly in the Shetland part of my constituency. I think that that number amounts to about 5 per cent. of the electorate of that part of my constituency. The terms of the petition for the protection of the human embryo are substantially those that have already been referred to by the hon. Member for Penrith and The Border (Mr. Maclean). The petition asks
  that the House of Commons will take immediate steps to enact legislation which forbids any procedure that involves purchase or sale of human embryos, the discarding of human embryos, their use as sources of transplant tissue or as subjects for research or experiment (unless this is done solely for the benefit of the embryo concerned).
  The petition concludes:
  And your Petitioners, as in duty bound, will every pray, etc.
  Those who have signed the petition affirm, as I do, that the status of the embryo is a matter of fundamental principle and that the embryo of the human species should be afforded protection in law. I present the petition in that spirit of support.
  To lie upon the Table.
  11.42 pm
  Mr. Albert McQuarrie: I beg to ask leave to present three petitions from residents within the Banff and Buchan constituency. The first petition was initiated by Mrs. Marie Stephens of 39 Prince road, Peterhead, and contains 392 signatures. The second was initiated by the Reverend I. D. Zass-Ogilvie, rector of St.

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  Marnon's Scottish episcopal church in the village of Aberchirder. The third was initiated by Edith M. Smith of 22 Schoolhendry street, Portsoy, and contains 47 signatures.
  All three petitions are couched in identical terms and affirm the petitioners' belief that the newly-fertilised human embryo is a real living individual human being. All three petitions also oppose all practices which discriminate against the embryo or violate his or her human dignity and right to life.
  The petitioners continue as follows:
  Wherefore your Petitioners pray that the House of Commons will take immediate steps to enact legislation which forbids any procedure which involves purchase or sale of human embryos, the discarding of human embryos, their use as sources of transplant tissue or as subjects for research or experiment (unless this is done solely for the benefit of the embryo concerned).
  The three petitions conclude:
  And your Petitioners, as in duty bound, will ever pray, etc.
  To lie upon the Table.
  11.43 pm
  Mr. Patrick Thompson: I beg to ask leave to present a public petition for the protection of the human embryo, which stands in the name of Joan Johnson and is signed by more than 500 of my constituents from all parts of Norwich, North. I present it in a spirit of support.
  To lie upon the Table.
  11.44 pm
  Mr. Gerald Bermingham: I have a petition to present in respect of 3,662 people in my constituency and surrounding areas that prays in the terms already mentioned tonight. I associate myself with the sentiments expressed in the petition collected by J. Fox. My constituents pray that
  the House of Commons will take immediate steps to enact legislation which forbids any procedure which involves purchase or sale of human embryos, the discarding of human embryos, their use as sources of transplant tissue or as subjects for research or experiment (unless this is done soley for the benefit of the embryo concerned).
  And your Petitioners, as in duty bound, will ever pray etc.
  To lie upon the Table.
  11.45 pm
  Mr. Peter Bruinvels: I also beg to ask leave to present a petition in similar terms from the constituents of Leicester, East, which I have the honour to represent, and from all parts of the city of Leicester and the county of Leicestershire.
  The petition contains the signatures of 976 people, including many from Leicestershire Life. It rightly draws attention to certain recommendations in the Warnock report, particularly in relation to the status of the embryo. The petition reads:
  the House of Commons will take immediate steps to enact legislation which forbids any procedure which involves purchase or sale of human embryos, the discarding of human embryos, their use as sources of transplant tissue or as subjects for research or experiment (unless this is done solely for the benefit of the embryo concerned).
  I heartily endorse all the sentiments expressed in that petition, which has been supported throughout the county. The petition ends
  And your petitioners, as in duty bound, will ever pray, etc.
  To lie upon the Table.

Mental Health Commission Secretariat
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Sainsbury.]
11.46 pm
Mr. Stan Thorne: I am indebted to Mr. Speaker for being given the opportunity to raise an issue which, although not earth-shattering, is of considerable importance following the passage of the Mental Health Act 1983 which set up the Mental Health Commission.
The Minister and I sat on the Committee that considered that measure. Various discussions, which are not connected with the work of the secretariat, took place, although much of what we determined in that Committee gave life to the secretariat.
The secretariat's main function is to protect the rights of formally detained psychiatric patients by investigating complaints by such patients and by visiting hospitals where they are detained.
The commissioners are either professionals associated with psychiatry or interested and involved lay people. Its organisation is split into three regions—the north-west, the north-east and the south. Each region is serviced by its own secretariat, with support staff, totalling only about 15.
My debate is about the proposed centralisation of that secretariat. Before dealing with that, I shall deal with a misleading answer given to me by the Minister. He said that commissioners do not receive fees. Different classes of commissioners exist. The retired, the self-employed and those employed by private organisations, in addition to their expenses, receive fees at a rate of a little more than £70 per day. The employers of those employed by public bodies other than the Health Service are remunerated for loss of their employees' time.
I regret that, unfairly, where commissioners are Health Service employees, neither their employers—the district health authorities—nor the commissioners receive any financial consideration for their loss of working time on commission business that may involve several days per week, evenings and even weekend work. NHS-employed commissioners must be struggling to maintain an adequate input to keep their jobs going. Their hard-pressed district health authorities, with their manpower targets and cash limits to meet, must regret releasing their staff without compensation.
Many of the staff are highly experienced and valuable. After all, presumably that is why they were appointed by the Secretary of State. Many of their jobs involve direct patient services. I suggest that the discrimination against the Health Service appointees is likely to present a powerful disincentive to health authorities supporting their employees' appointment to the commission and to such employees to accept appointments in future. I urge the Secretary of State to regularise the position of Health Service-employed commissioners at an early date.
The commission consists of part-time commissioners — some of whom are in an anomolous position in respect of fees-serviced by a full-time but small secretariat organised on a regional basis. It has been in existence for just over one year. As the Minister has acknowledged, its achievements are impressive, yet already it is proposed radically to alter its organisational structure. That was admitted by a DHSS Minister in answer to my recent parliamentary question.

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The proposal is no longer to have separate secretariats in the three regions, but to centralise them in the south-east, in London. I maintain that one reason why the commission has been able to establish credibility so quickly is that it is decentralised and regionalised. Thus, in the north-west, the commission covers two special hospitals—Moss Side and Park Lane. Much of the work of the commission is very much concerned with those institutions.
The patients in the hospitals have been able to relate to a commission which, for them, is almost just down the road. More importantly, it stands a chance of being seen as independent of "them" — the DHSS and the Home Office in London.
The commissioners have been able to establish good working relationships with the present secretariat, so that, as has been acknowledged, a commission that is part-time and largely unpaid has become an efficient, practical and working body. Yet, already, it is proposed to destroy the working relationships and replace them with what will inevitably mean more faceless relationships with more anonymous civil servants in London.
From both points of view—that of the patients served by the commission, and the efficiency and good working relationship within the commission — the proposed change cannot make good sense, especially coming, as it does, so soon after the inception of the commission. More general considerations concern me as well. The proposal represents yet another, albeit small, example of the drift of jobs away from the north-west and north-east, for example, into the south-east and London. It seems to represent yet another imposition of a doctrinaire policy of centralisation against the wishes of those concerned.
I understand that of the two commission regions concerned, the commissioners in the north-west were unanimous in their objection to the proposed centralisation, as were many of the commissioners in the north-east.
Worse than this, a centralised secretariat of civil servants in central London, dealing sometimes with highly sensitive complaints involving the DHSS, starts to sound like the beginning of the end of the independence of the commission. I consider that independence —I thought that the Minister did too—to be essential. It will no doubt be seized upon by patients' rights groups, which will perceive this, rightly or wrongly, as the first nail in the coffin for a body for which they had high hopes.
I understand that the secretariat shares the same in-line management structures as the managers of special hospitals. Centralisation into London is bound to lead to concern, justified or otherwise, that the vital and necessary independence of the commission and its secretariat will be eroded within these management structures.
The Minister may wish to claim that the proposed centralisation is necessary on cost and efficiency grounds. I dispute that. The commission has a modest budget which should not be made so modest that it cannot carry out its functions. It has a small support staff. In the three regional secretariats there is a total staff of about 15, including typists, and they have the job of organising the part-time commissioners, who are scattered throughout the country, to visit every establishment where there are detained patients at least once a year, and once a month to special hospitals. They deal with many complaints and organise second opinions for compulsory treatments within days of
136
the request coming from hospitals, including all the paperwork and documentation that must be involved. Against that background, a staff of 15 can be considered only as minimal.
As I understand it, the proposed reorganisation will do nothing to reduce the number of secretariat staff. The proposed centralisation will lead almost certainly to more expenditure on incidentals such as travelling, telephone and office rental costs. Given the nature of the work that I have outlined, it is difficult to see how greater efficiency can ensue.
Another claim that the Minister may wish to make in justification of the proposal is that the central policy committee within the commission has agreed to the proposal. Far from being a justification, I would submit that that agreement raises other concerns. I know that some of the commissioners are concerned about the work and role of the committee, which is appointed by the Secretary of State. They consider it to be out of touch with the regions, in that it has agreed with the proposal against the wishes of the regional commissions.
The proposal to centralise the secretariat has met with considerable opposition from commissioners. It will decrease markedly the credibility of the commissioners as an independent body seeking to protect the rights of formally detained patients. The proposal represents yet another centralising drift of jobs and influence from the regions to London.
The new commission has a difficult job, and our efforts must be directed towards supporting, not undermining, it. This country's recent record on human rights has been somewhat tarnished in the eyes of the rest of the developed world. We have set up a body to safeguard civil rights and guarantee minimum standards of care and treatment to a vulnerable section of our community which, sadly, until recently as a society we preferred to lock up as far away from us as possible and forget. We must not demean our advances by petty-minded and premature bureaucratic blinkering or efforts at minuscule financial savings.
I should like the Minister of Health to give the House certain assurances. Will the right hon. and learned Gentleman reconsider his decision to centralise the commission's secretariat and instead follow the opinion of the majority of the commissioners affected and ensure adequately staffed regional secretariats? If the right hon. and learned Gentleman has not yet made a decision to centralise — I must admit that an earlier reply to a parliamentary question seemed to suggest that the final decision had not been taken—will he reject the advice of his civil servants, accept the unanimous view of the north-west commissioners and at least ensure an adequately staffed regional secretariat within the north-west? If the right hon. and learned Gentleman feels unable to depart from the concept of a centralised secretariat, will he consider carefully whether it must be centralised into London? I understand that there is more than adequate office space next to the offices of the north-west secretariat and within the same building to house the whole centralised secretariat. There seems little good reason—other than dogma — why London should always be chosen as the site for the centralised secretariat, when adequate and arguably more suitable accommodation exists elsewhere.
Could the Minister leave the north-west on its own if he is determined to centralise and take in the north-east with London? The right hon. and learned Gentleman will

137
be aware that the National Health Advisory Service consists of people who are seconded from their employing authority. Why cannot the same be done with the mental health commissioners? Whatever the decision the Minister eventually reaches, I hope that he can say that there will be no enforced redundancies among the staff of the existing secretariat.
12.3 am
The Minister for Health (Mr. Kenneth Clarke): I thank the hon. Member for Preston (Mr. Thorne) for raising this matter on the Adjournment. As he said, the subject matter is hardly earth-shattering, but I agree with him about its importance. We served on the Standing Committee on the Bill which eventually became an Act and paved the way for the creation of the Mental Health Act Commission. During the Committee's proceedings we agreed on rather more occasions than we are accustomed to do when considering more general political issues in the House. We both share and support the broad objectives of the legislation and support the work of the new commission. We wish to defend its independence, which was a matter which the hon. Member mentioned. I am sure that we both congratulate it on its work so far.
Both of us are fairly defiantly provincial, which is an interest we share, and, as the hon. Gentleman said, the present secretariat is divided, with five people in London, four in Liverpool and four in Nottingham. I have no doubt that the hon. Gentleman speaks with an interest in Liverpool, but I represent part of the county of Nottingham and assure him that I have no innate desire to see the secretariat of this or any other body situated in central London if there are compelling reasons to the contrary.
I agree with the hon. Gentleman in supporting the work of the commission. It was established in 1983 under an order and regulations following the powers contained in the Mental Health Act 1983. Its work began on 30 September 1983. I am pleased to join in the tribute which, by implication, the hon. Member paid to the work of the chairman, my noble Friend Lord Colville, and his fellow commissioners, who have made impressive progress.
The principal purpose of the Act and the commission's work is to look after the interests of patients who are suffering from mental illness. The commission must protect the interests of those patients whose mental disorder takes such a serious form that they must, in their interests and for the protection of others, be compulsorily detained.
People in such a position suffer a double disadvantage. They suffer a serious mental disorder and they lose the freedom of movement, which is such a valued possession of all in a society such as ours. The law therefore has to make special provision to protect the interests of detained patients. The Act was intended to make radical changes to the law to bring it up to date and to add to the protection of patients.
The commission was set up to look after the legal and more general rights of those patients. It has four main functions. First, members of the commission pay regular visits to hospitals where patients are detained to monitor the standards of care and treatment provided and to ensure that the various requirements of the Act are being satisfied.
Secondly, the commission's members operate the statutory provisions relating to consent to treatment. In some limited circumstances, those provisions affect informal patients also. At the moment, the commission is
138
interested mainly in the consent to treatment of detained patients. Some of the medical members of the commission undertake second-opinion visits in connection with consent to treatment. The commission also provides the doctors to carry out that work.
Thirdly, the commissioners receive and act on complaints or other representations made by or on behalf of detained patients. Fourthly, the members of the commission are preparing a draft code of practice which will contain guidance on compulsory admissions to hospitals or nursing homes and guidance on the treatment of patients suffering from mental disorder.
The purpose of the code of practice is to promote good practice generally throughout the service. After we have undertaken the required consultations, we shall table the code for Parliament to consider. That is a wide range of work, which the commission is undertaking with vigour and enthusiasm. The commissioners, in the first year of operation, as part of the regular visiting programme already have paid one or more visits to hospitals where there are detained patients throughout England and Wales. They are also dealing with a considerable number of complaints from patients and their friends and relatives.
The commission is a large body. It must he, to undertake all this work across the country. There are 90 members. By discipline, the largest group is doctors. The other main disciplines represented are nurses, social workers, psychologists and lawyers. There are also lay members, and one or two members with a special knowledge of mental health services. The members are drawn from all parts of England and Wales.
While individual members bring their experience and specialist knowledge to the commission's work, one of the impressive features of the first year's work is the way in which members have seen themselves as commissioners first and not as representatives of specialist interests. A strong corporate team spirit has been forged.
The hon. Gentleman mentioned the fees paid to the commission's members and suggested that we were in some way making divisions between them according to classes and not dealing with them fairly. It is true that we pay some compensation for loss of earnings to those in private employment, and we also make arrangements to pay the travelling expenses of all commissioners. There are some special arrangements to pay for additional work done by doctors who give up parts of their practice to serve on the commission but do extra sessions to provide a service to patients in their localities. Otherwise, in drawing up the statement of compensation for members of the commission, we try to act fairly between them all.
I shall write to the hon. Gentleman setting out fully and clearly the precise arrangements, in order to try to answer his fears that we are being unfair as between one category and another. He was, however, particularly concerned about those who worked for health authorities and thought that we might be deterring the authorities as employers, or the employees themselves, by not providing either with compensation for loss of earnings.
We believed that, for those working for health authorities, work for the Mental Health Act Commission would be regarded as part of their ordinary service to the NHS. I have no evidence that anyone has been deterred, and I have no evidence that any health authority has discouraged any of its employees from serving on the commission. I hope that that has not happened, but I shall

139
look into the matter and give the hon. Gentleman a full letter. He can then respond if he feels that our arrangements are in some way unfair and discriminatory.
The hon. Gentleman's main concern is with the organisation of the commission. In drawing up the organisation we followed, but did not exactly match, the organisation of the parallel mental health review tribunals. They are slightly different bodies created under the Mental Health Act 1959. Their members are appointed by my right hon. and learned Friend the Lord Chancellor. They hear appeals against detention by detained patients, and have been working for many years.
The tribunals have found that a large proportion of their hearings arise from patients who are detained in the four special hospitals located in Berkshire, Nottinghamshire and near Liverpool. Because a significant proportion of all tribunal hearings take place at those hospitals, the secretariat offices of the mental health review tribunals are located in London, Nottingham and Liverpool, and from there the tribunals derive the secretarial support that they need.
I mention those because when the Mental Health Act Commission came into existence that pattern was to some extent followed. The commission divided the NHS regions in the country into three groups, one covering the southern half of the country, one the regions on the western side, from the west midlands northwards, and the third the eastern side, from Trent northwards. Each of these three territorial teams has its own chairman and vice-chairman, and organises its own programme of regular work under the various headings which I have described.
Essentially, my noble Friend Lord Colville of Culross is supported by a small central policy committee. When the organisation was first being set up, we rejected the suggestion that it should share the secretariat with the mental health review tribunals, because the two bodies have quite different functions and ought to have separate identities. However, we followed the pattern which I have described, which the tribunals had previously followed, and we now describe our areas within the Mental Health Act Commission as the southern, north-eastern and north-western regions of the commission.
There is a total of 15 staff in the commission's secretariat, all but one being seconded officers from my Department, and almost all of them serving with one of the three regional teams. All those staff have thrown themselves with great enthusiasm into the work of the commission, and their work has been much appreciated by the commissioners.
A little while ago it was decided that as it was now 12 months since the new Act was introduced, and it was time
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for the Department's staff inspectors to examine the work of the secretariat staff of both the mental health review tribunals and the Mental Health Act Commission. We use staff inspectors regularly inside our Department, just as we do inside every Department of central Government. It is a well-established procedure for looking at the distribution of the work load and making sure that organisational questions are addressed in a way which ensures that work is undertaken in the most efficient and economical manner.
The inspectors in this case interviewed individual staff members and looked at the replies to standard questionaires. After discussion of a draft report with local management, they drew up a final report with their recommendations. It was those staff inspectors who recommended the centralisation of the services.
In due course I can provide the hon. Gentleman with a list of the eight reasons which led the inspectors to recommend the centralisation of the secretariat. They were first drawn in by a request from the regions for more staff, because various problems had arisen in organising the work properly with such comparatively small numbers in each of the centres. It was very difficult to cover for staff absence, holidays or sudden surges of work. It was found that that difficulty had been overcome by a rather heavy use of casual labour. No fewer than 42 man weeks of casual labour had been used in the period 1 October 1983 to 30 June 1984. Therefore, the recommendation was that greater efficiency of operation could be achieved if all staff were located at the London headquarters office of the commission.
I listened to what the hon. Gentleman said. No final decision has been taken, although the central committee, despite some misgivings on the part of some members, has supported the recommendation. I shall put the points made by the hon. Gentleman to my noble Friend Lord Colville of Culross and will look into the matter again to see whether the commission is really satisfied that it needs to centralise its staff. We do not want more staff, but we do want efficient organisation. We do not want unnecessarily to increase costs. We are both agreed that we want to support the work of the commission. There is no point in centralising it if that is not useful to the commission. Therefore, I promise the hon. Member that I shall take his points on board and come back to him in due course with a considered response. I shall hope to amplify the reasons for centralisation if that goes ahead or to come back to the hon. Gentleman with the reasons for its reconsideration if my noble Friend considers that, on balance, this matter is worth reopening.
Question put and agreed to.
Adjourned accordingly at sixteen minutes past Twelve o' clock.

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  Rapeseed
  Rapeseed
  Nuclear Winter
  Nuclear Winter
  Dairy Farming
  Dairy Farming
  Potato Marketing Board
  Potato Marketing Board
  Mineral Waters
  Mineral Waters
  Farm Capital Grants
  Farm Capital Grants
  Sea Fish Industry Authority (Development Programme)
  Sea Fish Industry Authority (Development Programme)
  Milk
  Milk
EMPLOYMENT
  Information Technology Centres
  Information Technology Centres
  Long-term Unemployed
  Long-term Unemployed
  Young Persons
  Young Persons
  Methyl Isocyanate
  Methyl Isocyanate
  Job Creation
  Job Creation
  Community Programme
  Community Programme
  British Association for Commercial and Industrial Education
  British Association for Commercial and Industrial Education
  Labour Statistics
  Labour Statistics
  Computer Operators (Newcastle)
  Computer Operators (Newcastle)
  Industrial Training Boards and Skillcentres
  Industrial Training Boards and Skillcentres
HOUSE OF COMMONS
  Executive (Accountability)
  Executive (Accountability)
CIVIL SERVICE
  Civil Servants (Confidential Material)
  Civil Servants (Confidential Material)
  Trade Union Discussions
  Trade Union Discussions
  Disabled Persons
  Disabled Persons
SOCIAL SERVICES
  Prescriptions
  Prescriptions
  Oglesby Report
  Oglesby Report
  Roche Products Ltd.
  Roche Products Ltd.
  Supplementary Benefit
  Supplementary Benefit
  Pensioners
  Pensioners
  Still Births
  Still Births
  Funerals (Payments)
  Funerals (Payments)
  NHS (Treatment Statistics)
  NHS (Treatment Statistics)
  Heart Operations (Manchester)
  Heart Operations (Manchester)
  Disabled Persons (Hospital Treatment)
  Disabled Persons (Hospital Treatment)
  Hip Replacement Operation
  Hip Replacement Operation
  Hospitals (Hygiene and Nutrition)
  Hospitals (Hygiene and Nutrition)
  Housing Benefit
  Housing Benefit
  School Children (Dietary Survey)
  School Children (Dietary Survey)
  Marginal Tax Rates
  Marginal Tax Rates
  Departmental Staff (Medical Qualifications)
  Departmental Staff (Medical Qualifications)
  Single Payments Regulations (Washing Machines)
  Single Payments Regulations (Washing Machines)
  Occupational Pensions
  Occupational Pensions
  Pensions
  Pensions
  Retirement Pensioners
  Retirement Pensioners
  Midwifery Services
  Midwifery Services
  Perinatal Inquiry Committees
  Perinatal Inquiry Committees
  Advisory Committee on Medical Manpower Planning
  Advisory Committee on Medical Manpower Planning
  Kidneys and Smoking-related Diseases (Member's Questions)
  Kidneys and Smoking-related Diseases (Member's Questions)
  Aspartame
  Aspartame
  Portable Cordless Telephones
  Portable Cordless Telephones
  Mrs. Anne Wood
  Mrs. Anne Wood
  Invalid Three-wheeler Cars
  Invalid Three-wheeler Cars
  Child Benefit
  Child Benefit
  Supplementary Benefit (Leaflet S.10)
  Supplementary Benefit (Leaflet S.10)
  Sale of Optical Appliances Order 1984
  Sale of Optical Appliances Order 1984
  Parliamentary Under-Secretary of State (Visit)
  Parliamentary Under-Secretary of State (Visit)
SCOTLAND
  Health Expenditure
  Health Expenditure
  Broad-leaved Trees
  Broad-leaved Trees
  Disabled Persons (Hospital Treatment)
  Disabled Persons (Hospital Treatment)
  Selective Financial Assistance
  Selective Financial Assistance
  Age Concern
  Age Concern
  Association for the Care and Resettlement of Offenders
  Association for the Care and Resettlement of Offenders
  Police Houses
  Police Houses
  Coal Industry Dispute
  Coal Industry Dispute
NORTHERN IRELAND
  Free School Meals
  Free School Meals
  Primary Schools
  Primary Schools
  Housing
  Housing
  Mentally Handicapped Persons
  Mentally Handicapped Persons
  Gas Supplies (Republic of Ireland)
  Gas Supplies (Republic of Ireland)
  Incident (Linden Street)
  Incident (Linden Street)
  Plastic Bullets
  Plastic Bullets
  Public Authority Housing (Demolition)
  Public Authority Housing (Demolition)
  Newry-Dundalk (Port Improvement)
  Newry-Dundalk (Port Improvement)
  Young Help Scheme
  Young Help Scheme
NATONAL FINANCE
  Cigarettes
  Cigarettes
  Sterling Balances
  Sterling Balances
  2p and 5p Coins
  2p and 5p Coins
  Penny Coin
  Penny Coin
  Tax Allowances and Child Benefit
  Tax Allowances and Child Benefit
  European Economic Community (Budget)
  European Economic Community (Budget)
  Lump Sum Retirement Payments (Taxation)
  Lump Sum Retirement Payments (Taxation)
  Single Parent Families
  Single Parent Families
  Nationalised Industries (Shares)
  Nationalised Industries (Shares)
  Mr. Jack Lacey
  Mr. Jack Lacey
  Caravan Sites (Taxation)
  Caravan Sites (Taxation)
  National Insurance Pensions (Taxation)
  National Insurance Pensions (Taxation)
  Occupational Pension Schemes
  Occupational Pension Schemes
  Alcoholic Beverages (Taxation)
  Alcoholic Beverages (Taxation)
  Oil Taxation
  Oil Taxation
TRANSPORT
  M1 Motorway
  M1 Motorway
  Air and Water Pollution (Felixstowe Docks)
  Air and Water Pollution (Felixstowe Docks)
  Stoke-Derby Link and Etwall Bypass
  Stoke-Derby Link and Etwall Bypass
  Car Radios (Traffic Information Systems)
  Car Radios (Traffic Information Systems)
  London Regional Transport (Grants)
  London Regional Transport (Grants)
  A420 (Reclassification)
  A420 (Reclassification)
  Travel Concessions (Manchester)
  Travel Concessions (Manchester)
  Oxford Circus Station (Fire)
  Oxford Circus Station (Fire)
  British Transport Police
  British Transport Police
  Space Saver Spare Wheels
  Space Saver Spare Wheels
  Railway Safety
  Railway Safety
  Motorway Lighting
  Motorway Lighting
  Singapore International Airlines
  Singapore International Airlines
  Motorway Speed Limits
  Motorway Speed Limits
  Heathrow Airport (Traffic Movements)
  Heathrow Airport (Traffic Movements)
  Buses (Deregulation)
  Buses (Deregulation)
  Taxis (Deregulation)
  Taxis (Deregulation)
  Southampton
  Southampton

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

Trident: Cost
Lord Bruce-Gardyne: My Lords I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is their latest estimate of the current sterling cost of acquiring the Trident missile system.
Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): My Lords, the Trident estimate is currently being reviewed as part of the annual recosting of the defence programme. My right honourable friend the Secretary of State for Defence hopes to be able to announce a revised estimate early in the New Year.
Lord Bruce-Gardyne: My Lords, I am most grateful to my noble friend for that reply. Would he not agree that it is already apparent that that estimate is likely to be at least double the original cost? Is it not by now apparent that the original assurance that it would have no impact in squeezing the other programmes in the defence budget which we were given when this expensive purchase was embarked on, is no longer sustainable? Is it not therefore desirable that we should review this purchase at the earliest possible date?
Lord Trefgarne: My Lords, no. I am afraid that I disagree with my noble friend on all three counts.
Lord Grimond: My Lords, may I ask the Minister whether he would not agree that the constantly escalating costs of this weapon will distort the whole defence budget? Would he agree—I am sure he would—that there is no doubt that the cost estimates are going to be about double what they were originally, and that this is bound to mean cuts in conventional arms and other much more essential parts of our defence programme?
Lord Trefgarne: My Lords, no, I am afraid that the noble Lord is not correct. The total cost of this project is still estimated to be around 3 per cent. of the defence budget as a whole over the period of its acquisition. This amounts to about 6 per cent. of the procurement budget during the same time. Of course this is a comparatively small proportion of our total defence expenditure.
Lord Boyd-Carpenter: My Lords, does not the comparatively small proportion of the cost out of the total defence budget contribute, on the other hand, a major factor for maintaining the peace of the world?
Lord Trefgarne: Indeed it does, my Lords. If we were not to embark upon this programme we would, some time early in the 1990s, be out of the independent nuclear deterrent business altogether.
Lord Stoddart of Swindon: My Lords, is the noble Minister not being rather shy about this matter? We have heard and seen estimates of the costs at a figure of about £10,000 million. The running costs of the system have to be added to that figure. Surely that must detract from the conventional defence budget. Would it not be much more sensible for this country to concentrate its defence effort on the Navy and the Royal Air Force? Perhaps the noble Minister would comment on newspaper reports this morning that, due to lack of funds, the Air Force is going to cut down on pilot training.
Lord Trefgarne: My Lords, the equivalent in conventional terms of the cost of the Trident programme is four or five mechanised divisions. Having regard to the fact that the Soviets already have a preponderance of I think 60 or 70 mechanised divisions on the central front, that is not likely to make much difference.
Lord Kennet: My Lords, would the noble Lord not agree that all defence procurement programmes have cost overruns, and that those which are at the frontiers of technology at any given time always have very large cost overruns, often amounting to double and sometimes more? Would he not agree that it is about time this Government, like their predecessors, devised a system of costings which would eliminate those unexpected overruns? Above all, would he now begin to pay attention to the continuous warnings which have been uttered from these Benches over the past three years that the original costings given for Trident were totally unrealistic?
Lord Trefgarne: My Lords, may I invite noble Lords to await the publication of the new estimate of costs early next year? I do not think it will be anything like some of the absurd figures that I have seen in the press recently. In any event, as I was saying in answer to my noble friend, it does represent very good value for money for deterrent purposes.
Viscount Trenchard: My Lords, would my noble friend agree that previous Ministers at the Ministry of Defence made a major mistake in quoting as one figure an amount for a 15 or 18 year programme to keep our independent nuclear deterrent up to date? Even then it is substantially less than the cost of the Tornado. Would my noble friend further agree that our record in building submarines—half the cost of the project—has been good: they have come through at estimate on all recent occasions. Would he further agree that the U.S. cost of building missiles of this nature has also in the past come through at estimate? Would he further confirm—
Noble Lords: No!
Viscount Trenchard: Would he further confirm that the agreement has fixed, as a fixed sum in dollars, the R and D expenditure? Would he finally confirm—
Noble Lords: No!
Viscount Trenchard: Would he finally confirm that the French spend some four times what we do on maintaining an independent nuclear deterrent?
Lord Trefgarne: My Lords, I am afraid that I lost track of some of those supplementaries. But my noble friend does underline some of the important advantages of this programme, speaking as he does from an important position of experience in these matters.
Lord Beswick: My Lords, does not the noble Lord agree that a country that spends this amount of money on an independent nuclear deterrent that can never be used independently but that has nevertheless to cut down proper flying practice for its service pilots does not cut a very good figure in international affairs?
Lord Trefgarne: My Lords, the noble Lord starts from a mistaken premise. This is an independent nuclear deterrent and can indeed, if circumstances so demand, be used independently.
Lord Molloy: My Lords, while the noble Lord has always been generous about providing detailed information on the astronomical costs of the mighty weight of nuclear weapons that we are endeavouring to harbour unto ourselves, does he not agree that it is disturbing that, at the conclusion of his remarks, after giving all this information about what is being spent, he says the the reason for it is that the Russians have a 60 to 1 preponderance over us? Will he therefore inform the House what the Government think will encourage the Russians to start a war so that we shall not catch up with them before the position is 30 to 1 or 40 to 1 in the USSR's favour?
Lord Trefgarne: My Lords, the answer to the noble Lord is that the purpose of our independent deterrent and, indeed, of the deterrent posture of the alliance as a whole is to enable us to ensure that if, and only if, the Soviets or any other potential adversary should seek to attack us, we are in a position to respond in a way that they would find unacceptable.
Lord Carver: My Lords, would the noble Lord not agree that there is a general consensus within NATO now that the first priority for NATO is to improve its conventional capability? Would he not therefore agree that, rather than spend 3 per cent. on this superfluous weapons system, he should maintain the 3 per cent. increase in real terms which the Government, I understand, propose to cease to spend from 1986?
Lord Trefgarne: My Lords, I certainly agree that we should do what we can to improve our conventional forces' posture but not at the expense of our nuclear forces.
Lord Bruce-Gardyne: My Lords, having listened carefully to my noble friend's replies, would he not agree that in two respects at least the equations have changed since the sums were originally announced? First, as the noble Lord, Lord Carver, has pointed out, is it not a fact that we have abandoned, in my view
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quite rightly, the open-ended commitment to a 3 per cent. real increase in defence expenditure since these commitments were entered into? Secondly, is it not apparent that the offset in terms of manufacturing to be done and orders to be won in this country has been substantially reduced as a proportion of the total Trident expenditure?
Lord Trefgarne: My Lords, in answer to the last part of my noble friend's question, no, I am afraid that the correct position is not as my noble friend describes it. The "offset", as my noble friend refers to it, will be, and was always intended to be, the result of a competitive process. It is up to British firms to compete effectively with their American competitors. But it is, of course, necessary that they should be given the chance to do that. And that is what we have arranged.

Capital Transfer Tax
2.46 p.m.
Lord Beswick: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are satisfied that current legislation prevents undue avoidance of capital transfer tax.
The Chancellor of the Duchy of Lancaster and Minister for the Arts (The Earl of Gowrie): My Lords, the capital transfer tax legislation already contains numerous anti-avoidance provisions. The Government keep the effectiveness of these provisions—and the need for any further legislative safeguards—under regular review.
Lord Beswick: My Lords, I am obliged to the noble Earl for that Answer. Has he, or the Government, a view about the expensive salesmanship of the City gentlemen who say that they can reduce or even eliminate the necessity for paying tax? Is he aware that one City company, for example, says:
"The capital transfer tax is a voluntary tax".
In these circumstances, should not the law be strengthened or some of these people charged with misleading advertising?
The Earl of Gowrie: My Lords, I am not wholly clear what kind of schemes the noble Lord has in mind. It is, of course, impossible to block all forms of avoidance. A balance must be struck between stopping undue avoidance on the one hand and making our tax system oppressively complex and full of traps for the unwary on the other.
Lord Simon of Glaisdale: My Lords, rather than proceeding with immense complication, often belatedly and frequently ineffectively, against particular schemes for avoidance of tax, can consideration again be given to the American and Australian system of providing simply that any transaction whose paramount object is the avoidance of tax shall be void for that purpose though valid for all others? Would that not greatly simplify our fiscal code?
The Earl of Gowrie: My Lords, I shall of course give consideration to what the noble and learned Lord has said, but I would claim that the tax is still cost effective. The estimated yield from CTT for 1984–85 is £680 million, and the cost/yield ratio of 3.2 per cent. compares rather favourably with that for other capital taxes.
Lord Kennet: My Lords, the noble Earl has spoken of preventing undue avoidance and has thereby introduced into debate the interesting concept of due avoidance. Would he be so kind as to describe that, or define it?
The Earl of Gowrie: My Lords, yes, I think there has to be a balance between what is regarded as avoidance and what is regarded as prudent tax planning, which has always been wholly legitimate.
Lord Morris: My Lords, is it not true that a learned judge, many years ago, rightly distinguished between the duty to avoid tax, that is, the duty to one's family and one's interests, and the fact that tax evasion is a crime?
The Earl of Gowrie: My Lords, one should, I believe, pay one's taxes but one should not pay more in taxes than one can reasonably avoid.
Lord Bruce of Donington: My Lords, the noble Earl has passed some observations about the cost effectiveness of this particular tax. Will the noble Earl inform the House as to whether he considers the total yield from this tax to be one that is satisfactory, bearing in mind that the yield is but a fraction of that formerly yielded by estate duty?
The Earl of Gowrie: My Lords, I confess to a certain personal bias against capital taxation generally—and I speak disinterestedly as I am not personally the possessor of capital. Nevertheless it seems to me a sensible thing for the economy to try to build up capital, rather than the reverse. As taxes go, £680 million seems to me to be a fair amount of revenue.
Lord Beswick: My Lords, would the noble Earl agree that there is another aspect to this? This wad of material I have here is only some of that which came to me within a space of two or three weeks. Most of it is on high-quality paper and there are prepaid envelopes. If this kind of costly extravagance had been shown by those who dig our coal or produce our gas would not the noble Earl be saying that it is evidence of waste in the public sector?
The Earl of Gowrie: My Lords, the trouble is that the noble Lord, Lord Beswick, is in the fortunate position, unlike myself, of being beseiged by people instructing him about the disposition of his taxes; so I do not quite know what he is referring to.
Lord Somers: My Lords, would not the noble Earl agree that all these various taxes on capital—capital gains, capital transfer, death duties, et cetera—are enough to dissuade anybody from making any money at all, even if it is possible?
The Earl of Gowrie: My Lords, that is precisely why we have tried to raise tax thresholds and narrow tax bands. I am encouraged to say that there is some evidence that people are trying to make a bit more money, and I hope that they will be able to keep it.
Lord Beswick: My Lords, may I congratulate the noble Earl on his cleverness in the last answer he gave me? But may I also ask him: is he not aware of this material that is going around?
The Earl of Gowrie: My Lords, I am aware that there is quite an industry which encourages individuals to invest in various forms of investment schemes the object of which is to lower the liability to taxation. I am not aware that this is doing any appreciable harm to the Inland Revenue. My advice from the revenue is that they are satisfied with the tax base of this particular form of taxation.
Lord Bruce-Gardyne: My Lords, is it not the case that the main single reason why the yield from capital transfer tax has hitherto been lower than the yield from death duties, which the party opposite replaced with CTT, is that the former Chancellor, Mr. Denis Healey, produced the surviving spouse concession? Is it not therefore somewhat illogical to complain at the result that that has produced?
The Earl of Gowrie: My Lords, I think it is not only illogical but it is rather a slap in the face of spouses. I should have thought that noble Lords opposite, of all persuasions and, indeed, all sexes, would be reluctant to engage in that.

Criminal Justice: Public Confidence
2.53 p.m.
Lord Gainford: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps they are taking to strengthen public confidence in the criminal justice system.
The Minister of State, Home Office (Lord Elton): My Lords, a number. We have increased the resources available to the police, to the courts and to the probation and prison services, and we are now taking steps to ensure that they are applied as effectively as possible. We have modernised the law relating to police powers, made it uniform throughout the country, provided safeguards against its abuse, issued guidelines on its implementation and required police authorities to establish police/community consultative arrangements in their areas. We have increased the emphasis on crime prevention and established a Crime Prevention Unit.
Moreover, my right honourable friend the Home Secretary has responded to public anxiety about the worst crimes of drugs trafficking and violence by agreeing to only minimal periods of release on parole for those sentenced to more than five years for any of them, unless there are exceptional circumstances. On the release of life sentence prisoners, my right

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honourable friend also exercises his discretion so that the most heinous murderers can normally expect to serve at least 20 years in custody.
Lord Gainford: My Lords, I thank my noble friend the Minister for that very full Answer. Can he give any information, additional to the obvious mass he has available, on the scheme to provide new courts in order to speed up the hearing of cases? Also, has he any information on the neighbourhood watch system?
Lord Elton: My Lords, as to magistrates' courts, we have just offered starts in 1987 for nine major schemes. For other courts, the present programme contains some 60 schemes in the planning, construction and adaptation stages. We actively encourage the use of neighbourhood watch schemes in order to support the police in the maintenance of law and order in all districts.
Lord Mishcon: My Lords, the House will no doubt appreciate the very long list of reforms that the Government have carried out. Would the noble Lord the Minister, with his usual modesty, admit that, in spite of them, the crime rate is proceeding apace, to a very worrying extent? Our prisons are still crowded. The situation in regard to remand periods for prisoners is still in a most uncivilised state. Is he prepared to come forward at some stage with proposals as to how our over-filled prisons can be dealt with except by the building of new prisons? Are there alternatives that are being considered to the question of imprisonment?
Lord Elton: My Lords, while I acknowledge that crime levels in the current year are higher than those in the year before, it is worth noting that the year before saw the first decrease in recorded crime for very many years, and it would therefore be unwise to exaggerate the importance of those statistics. As to prison overcrowding, I think the noble Lord knows of our building programme, which is designed to bring overcrowding to an end by the end of this decade, which is not very far off. If you cannot empty prisons either with the increased programme of non-custodial offences which we have provided or by accelerating the availability of justice in the courts, the only other way is to stop people committing crimes, and that is what neighbourhood watch and other methods of crime prevention are aimed at.
Lord Mishcon: My Lords, perhaps the noble Lord will forgive me if I merely remind him of my question about the uncivilised length of remand periods in custody.
Lord Elton: My Lords, the noble Lord, I am sure, will be the first to assist the Government in the Prosecution of Offences Bill in introducing a statutory limit on the time that may be taken to bring a case to court.
Lord Denning: My Lords, in view of the letter in The Times newspaper this morning, which showed that some defence counsel habitually challenge any potential juror who happens to be wearing a pin-stripe suit, or to look intelligent, or to wear a collar and a tie,
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is it not time that we considered the abolition of the right of peremptory challenge?
Lord Elton: My Lords, I should be very foolish to answer that question in any definitive manner.
Lord Hunt: My Lords, while acknowledging the importance of the statement made by the Minister in answer to the original Question, and of course acknowledging the place, the importance and the necessity of prison sentences as a measure of deterrence and as a measure for protecting the public, I should like to ask him whether he would not agree that public confidence in our criminal justice system is likely to increase to the extent that the public themselves are encouraged, and have the means, to involve themselves in certain respects in the operation of non-custodial alternatives to imprisonment, based in local communities.
Lord Elton: My Lords, we are always anxious to increase the use of non-custodial sentences where they are appropriate, and have indeed legislated to make this necessary to the courts for young offenders. The noble Lord has a distinguished and long interest in this field of voluntary work, which I am happy to endorse.
Lord Avebury: My Lords, is there any evidence to show that the general public regarded the custodial penalties which were being imposed for particular classes of offences as inadequate, or that the custodial sentences that were being imposed did not have a proper effect on the rates of crime for those classes of offences as compared with other countries such as Holland, where there is about a third the number in prison, per head of the population, that we have in this country? May I also ask the noble Lord why, in that long list that he read out, he had nothing to say about racial attacks, which are a particular class of offence which I know is causing as much anxiety in the Home Office as it is to the public at large? Is the noble Lord able to say anything about the racial incidents panels, of which one has been appointed, I think, in Enfield and of which others are planned by the Home Office and the Metropolitan Police?
Lord Elton: My Lords, it is generally agreed that there was public anxiety about the increase in violent crimes and in drug trafficking and that my right honourable friend's response to that, in terms of the operation of his discretion to release offenders on parole licence or life licence, was properly used, and that was subsequently tested in the courts. As to the incidence of racial attacks, I am afraid that I do not have the statistics to hand but I shall write to the noble Lord and a copy will be placed in the Library.
Lord Molloy: My Lords, during his reply the noble Minister said that the role of the police is also part of our judicial system—indeed, we value their role very much in terms of their general behaviour. Is the noble Lord able either to tell me now or to write to me about whether, when a plain clothes officer goes to somebody's home to arrest him and is asked to show his warrant card, it is necessary for that officer to have his warrant card on him? Secondly, when someone is taken to a police station should he be warned that

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anything that is said will be taken down? First, should a plain clothes officer produce his warrant card when making an arrest, and secondly, should people be warned when they are asked to make statements to the police?
Lord Elton: My Lords, the requirement for identification in the form of a warrant card or other identification is on the face of the Police and Criminal Evidence Act—which I think the noble Lord helped to put on the Statute Book—and so is a requirement for codes of conduct which specifically require the proper handling of all aspects of the questioning and detention of suspects in police stations.

Argentine Literature: Import Ban
3.2 p.m.
Lord Kennet: 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 they believe the ban on the import of books and papers from Argentina is in the national interest.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, the Government's embargo on the import of goods exported from Argentina applies to books and other publications only if they are imported for resale or redistribution. This reflects the Government's wish to discourage any trade which might benefit Argentina until their sanctions against United Kingdom firms have been dismantled. We have repeatedly urged the Argentine Government to agree to the reciprocal lifting of all remaining commercial and economic restrictions between us. So far the Argentines have not shown any willingness to respond.
Lord Kennet: My Lords, the House will be grateful to the noble Lord for explaining how the ban works. But is not the case thus: that the operation of the ban impoverishes British booksellers and enriches Argentine booksellers? Is it not a bit absurd that, two and a half years after the end of a war which lasted for only a month, we should still be frightened of the free exchange of the printed word between us? Finally, in a country which prides itself on the flexibility of its administrative arrangements—and I refer to our own—would it not be possible to find some way round this stupid ban?
Lord Lucas of Chilworth: My Lords, the Government acknowledge that the results of the embargo are perhaps less than perfect, but we must avoid setting precedents which would inevitably lead to the embargo being undermined. Such action would not assist in any way the Government's primary objective of securing a fully reciprocal lifting of all remaining commercial and economic sanctions.
Lord Shinwell: My Lords, is the noble Lord aware that this is similar to the policy that we, alongside France, adopted at Versailles after the First World
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War and which proved to our disadvantage and laid the foundations of another war? What is the reason for it? Do we want to continue this quarrel with the Argentine? Will that be to our advantage? Have we not had enough of it?
Lord Lucas of Chilworth: My Lords, I certainly was not aware of the matter raised in the first part of Lord Shinwell's question. The reality of the matter is that the Falkland Islands were invaded. We wish to move to more normal relations with the Argentine but we and the people of the Falklands are entitled first to have it made clear that there is no further intention of hostilities. We have made a number of efforts at reconciliation with regard to trade, but the Argentine have consistently and explicitly refused to give the confirmation for which we ask over that first matter.
Lord Strabolgi: My Lords, has the Minister seen the letter in The Times from the director of a foreign language university booksellers which is a very reputable firm? If so, is he also aware that that firm has had a consignment of Argentine books and literature held up now for well over a year, that they have been obliged to pay the exporter for the consignment, and that at least 25 universities and many students are without this material which they need for their studies? Can the Government not make some distinction as regards cultural matters of this kind, and grow up?
Lord Lucas of Chilworth: My Lords, I have not seen the letter to which the noble Lord, Lord Strabolgi, refers. But there is no question of growing up or not growing up. Students, university and higher educational libraries have established direct import links with booksellers in the Argentine and they are not affected by any embargo.
Viscount Montgomery of Alamein: My Lords, does my noble friend appreciate that before the recent tragic conflict, Anglo-Argentine two-way trade exceeded some £300 million in total? Does he further appreciate that the Argentine economy is in some difficulty, that we are currently in the process of debt renegotiations, and that everything should be done to stimulate their foreign trade? Moreover, does he also appreciate that we, as one of their previous strong partners, would be well advised to make some type of magnanimous gesture (particularly as we were the victors in the unfortunate conflict) to stimulate this trade and thereby encourage the Argentine economy to recover to the benefit of all concerned?
Lord Lucas of Chilworth: My Lords, I am very well aware of the figures pertaining to our trade with the Argentine before the outbreak of hostilities to which my noble friend Lord Montgomery refers. So far as financial matters are concerned, we have made some relaxation in order that the Argentine's debt rescheduling programme—required by the IMF—may be encouraged and that thereby their own economy will also be encouraged.
Lord Kilmarnock: My Lords, will the noble Lord accept that the present rules have precisely the opposite effect to that intended by the Government? Is it not the case that they affect British booksellers

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adversely because they are unable to import these books directly from the Argentine, but Argentine booksellers are allowed to export directly into the United Kingdom? Is it not absurd that books addressed to British booksellers should be lying under seizure in Her Majesty's Customs when they can be ordered direct from Buenos Aires?
Lord Lucas of Chilworth: My Lords, I do not agree with the noble Lord that the present arrangements have exactly the opposite effect to that which is intended. Unless I have misunderstood the noble Lord, the Argentines may export individual books, magazines and other publications to this country provided that they are not imported into this country for resale, or trade, or redistribution. So there is no disadvantage to students and other institutions.
Lord Kilmarnock: My Lords, is there not a disadvantage to British booksellers?
Lord Lucas of Chilworth: My Lords, there is certainly a disadvantage to British booksellers, but we also have to look at the wider aspects of our trade, and while the Argentine prohibits the import from the United Kingdom of products other than those which they specifically need for their own national interest, it would not be right that we should put our own people at a serious disadvantage.
Lord Kennet: My Lords, will the noble Lord be so good as to draw this exchange to the attention of the noble Baroness, the Minister of State, who is responsible, under the Foreign Secretary, for relations with Argentina and who is sitting two places down the Bench from him?
Lord Lucas of Chilworth: My Lords, I am quite sure that my noble friend will take note of the exchanges that have occurred in the House this afternoon.

Business
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Brabazon of Tara will, with the leave of the House, repeat a Statement that is to be made in another place on the Johnson Matthey Bank.
Friendly Societies Bill
Read a third time and passed.

Enduring Powers of Attorney Bill [H.L.]
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(The Lord Chancellor.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD WELLS-PESTELL in the Chair.]
Clause 1 agreed to.
Clause 2 [Characteristics of an enduring power.]:
Lord Mishcon Lord Mishcon moved Amendment No. 1:
Page 3, line 17, leave out ("he") and insert ("the donor").
The noble Lord said: On the Second Reading of this Bill a general welcome was given to the Bill by all sections of the House, because it was realised that in the present circumstances someone who becomes mentally unstable and unable to look after his or her affairs must have a remedy open to him or her in regard to his or her affairs at the Court of Protection. It is an informal procedure and the officers of that court behave with great kindliness, and have done so for a long period of time. But the formalities that have to be observed and the expense involved obviously make it an unnecessary procedure if an alternative procedure can be envisaged. Of course, the Bill aims to do just that. In those circumstances, but with due protection, the Bill seeks to offer as a remedy the giving of an enduring power of attorney, subject, as I have said, to various protective measures which are laid down in the Bill.
I have used those opening words only because they have a relevance to this first amendment. In regard to the amendments to which I shall speak, I have the privilege of saying that they have the full support of the Law Society. Indeed, in large measure, they are the initiative of the Law Society which, as usual, has received every consideration from the Lord Chancellor's Department in discussions on this Bill.
One of the provisions contained in Clause 2 deals with the question of the validity of the enduring power and says that it will not be an effective power if the attorney who is appointed has not attained the age of 18. Noble Lords may think that that is a very acceptable and sensible provision, but the Bill does not say when the proposed attorney has to attain the age of 18. It would seem from the reading of the Bill that the relevant date is the date when it is executed by the attorney. Does that mean that the donor of the power can execute the power and then the young attorney, if he happens to be 17 and a bit, can wait until he is 18 before he executes it, and then, and only then, the power of attorney becomes an enforceable, valid power of attorney? Surely the relevant date is not the date that the young attorney chooses; it must be the date when the donor of the power executes the power of attorney. If then the attorney is 18 years old, it is a valid power; and if he is not 18 years old, it is not a valid power.
Therefore, the amendment purely seeks to say that the relevant date for dealing with the validity of an enduring power of attorney ought to be the date of the execution of the power by the donor, and as to whether at that date the proposed attorney had attained the age of 18 years. I beg to move.
The Lord Chancellor: I am grateful to the Law Society for raising this question and to the noble Lord, Lord Mishcon, for ventilating it in the Committee. As the noble Lord has told the Committee, as drafted, the Bill allows the donor the power to appoint an attorney

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who is a minor, provided, but only provided, the attorney does not execute the instrument before he reaches the age of 18. That is not an oversight on the part of the draftsman. As I say, I am grateful to the Law Society for drawing attention to the fact, but what they have not done is to show why the present draft is objectionable. I have, of course, referred this question back to the Law Commission and to my own department, and neither can see why it should be objectionable, provided the minor executes the instrument after he has attained the age of 18.
It may very well be in the donor's interest to appoint an attorney as young as possible, particularly if the power is not to come into force until many years later, and the donor may wish to appoint one or more of his children as his attorney, particularly if they are nearing the age of 18. So far as we can see, there are no good legal or policy reasons why he should be denied this right and there is no danger to the donor in making such an appointment. If the donor's mental capacity supervenes at any time before the attorney executes the instrument, it would of course have the effect of revoking any ordinary power already in existence and preventing the creation of an enduring power. It is not possible for the power to be a valid enduring power unless and until both the donor and the proposed attorney have executed it. Clause 2(7)(a) makes it clear that when he executes the instrument the proposed attorney must have attained the age of 18.
There is probably an unintentional danger in the amendment, as drafted, because it allows the possibility of a bankrupt attorney to represent the donor. The proposed attorney could be solvent when the donor executes the instrument but bankrupt when executing it himself. This matter has been referred back to the Law Commission, with the result that I have sought to explain. I would respectfully suggest that, grateful as we are for the opportunity to discuss the matter, the draft as it exists is the better alternative of the two.
Lord Mishcon: I am sure that the Committee is most grateful to the noble and learned Lord for elucidating this matter. I have brought it before the Committee at the wish of the Law Society and I believe that the Committee will probably be more satisfied with the noble and learned Lord's answer than they were with my amendment. I therefore crave leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Mishcon Lord Mishcon moved Amendment No. 2:
Page 3, line 25, leave out from ("successor") to end of line 25 and insert ("shall only be valid as an enduring power so long as the attorney originally appointed by the donor himself acts as such attorney.")
The noble Lord said: Again I wish to raise a short point, if I may try to put it clearly. In the Bill there is a provision which this amendment seeks to deal with, which says that if you have an enduring power and that enduring power contains a provision that the attorney may have a substitute or an alternative, then the enduring power is void and nothing about it can be done because it is a void instrument ab initio. What this amendment seeks to do is to say this: there is surely no reason why the enduring power should cease
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to have any validity at all merely because this provision has slipped into it, as it were. It is quite effective as an ordinary power of attorney, and those of us who have to deal with these matters know that it is quite a normal provision in some powers of attorney to have the right to appoint a substitute and to delegate it that way.
We therefore say that we accept completely that an enduring power of attorney should not contain within it the ability for the power to go on as an effective instrument if indeed the original donor of the power is not carrying out his duties because he is no longer there able to do it. Therefore we say that it is not void ab initio, but, if I may turn to the wording of the amendment, it,
"shall only be valid as an enduring power so long as"—
and if I may interpolate these words: only so long as—
"the attorney originally appointed by the donor himself acts as such attorney".
That would prevent some provision which is put in, possibly accidentally, stopping the enduring power of attorney from being effective at all even while the original donor was acting perfectly properly under it. I beg to move.
The Lord Chancellor: This is again a matter in regard to which I am grateful to the noble Lord, Lord Mishcon, for ventilating. It involves a slightly more technical and possibly a slightly longer reply on my part. It is not easy to explain this in words of one syllable, but I shall try to be as simple as I can.
Under the Bill as drafted Clause 2(9) provides that a power of attorney which gives the attorney a right to appoint a substitute or successor cannot be an enduring power of attorney. The effect of the amendment, if passed, would be that such a power of attorney could be an enduring power but only so long as the attorney originally appointed acted in person. Once he attempted to appoint a substitute or successor the enduring power would cease to be valid.
I have now to make a short discursion on the existing law apart from the Bill. Under the existing law on powers of attorney an instrument in which the donor appoints an attorney but himself nominates substitutes or successors in his place is valid. Such an instrument, however, will not create a valid enduring power under the Bill, since Clause 11(1) provides that an instrument which appoints more than one person to be an attorney cannot create an enduring power unless the attorneys are appointed to act jointly, or jointly and severally.
Under the existing law it is not clear whether an instrument which gives an attorney the right to appoint a substitute or a successor—that is to delegate as it were, or to substitute somebody else for himself—can be valid. That is not clear under the existing law. But the Law Commission were quite clear that, whatever the position might turn out to be in relation to ordinary powers, such an instrument should not create a valid enduring power. It would strike at the special relationship of trust which must subsist between the donor and the attorney.
Moreover, since the substitute or successor attorney might be appointed after the donor had become mentally incapable, the donor would not be in a

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position to object to the person chosen by the attorney as his substitute or successor, though he might well have objected had he been in full possession of his mental faculties.
The amendment does not strike at this fundamental objection, but only seeks to validate an instrument which allows the attorney to appoint a substitute or successor so long as that right has not been exercised. However, the Law Commission on this, as on the previous amendment, were consulted and when consulted they were concerned that if the policy behind the amendment were adopted, the attorney could register the instrument, so creating the enduring power, and then appoint a substitute or successor, or purport to do so. The donor would be in no position to do anything about this, and the Court of Protection could not do so either because they probably would not get to know about its having been done.
There is also another danger, and that danger would be that third parties might deal with the substitute or successor in the belief that the power was still a valid enduring power. The Commission therefore thought it preferable to retain Clause 2(9) in its present form so as to prevent an instrument from ever being registered and so creating an enduring power. For those reasons, expressing again my gratitude for this rather esoteric point having been ventilated in Parliament, I stand by the Bill in its present drafted form.
Lord Denning: I hope your Lordships will not accept this amendment. It is contrary to principle that an attorney should himself appoint a successor. It is the donor of the power who appoints him. The right way to deal with any instrument such as this which purports to give him power to appoint, etc., is to say that it is completely invalid. It cannot be an excluding power.
Lord Mishcon: It was an esoteric point. It was, I hope, dealt with in ordinary English and with due simplicity and clarity, certainly by the noble and learned Lord. I turn, with the deference with which I always do, to the noble and learned Lord, Lord Denning, and would point out to him that it was not a question of the attorney having this right alone; it was a matter for the donor as well having this right which would vitiate the question of the enduring power of attorney under this Bill. However, the matter has been ventilated. Obviously I respect the reaction of the Law Commission to this matter, and I think it would be wrong for me to try to press the point. I have brought it before the Committee. I now ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 agreed to.
Clause 3 agreed to.
Clause 4 [Duties of attorney in event of actual or impending incapacity of donor]:
3.30 p.m.
Lord Mishcon Lord Mishcon moved Amendment No. 3:
Page 5, line 8, leave out subsection (7).
The noble Lord said: Again a simple principle is involved with which I hope I can deal in proper
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simplicity. It is objectionable as a general principle that one duplicates criminal offences. In other words, if a criminal offence exists under statute, and it is already clearly there, it is objectionable to repeat that offence in another Act because this only leads to confusion.
My respectful submission is one which no doubt will be opposed by the noble and learned Lord, and if it is opposed, and opposed with reason, I shall immediately pursue the same course that I have pursued so far in regard to withdrawing the amendment. I am dealing at this moment with Clause 4, subsection (7), on page 5. That reads, as your Lordships will see:
"Any person who, in an application for registration, makes a statement which he knows to be false in a material particular shall be liable—on conviction on indictment"—
and there the punishments are set forth, and
"on summary conviction"—
and there, again, the punishment is set forth.
It is the opinion of the Law Society that the existing criminal law covers all these reprehensible actions; and indeed more reprehensible actions than are dealt with in this particular subsection which a naughty attorney might get up to. In particular Section 15 of the Theft Act would undoubtedly apply to such acts of dishonesty and it is in these circumstances, and only with this principle in mind, that I move the amendment to delete this subsection as being unnecessary, since it is already covered, in my respectful submission, by existing law. I beg to move.
Lord Denning: May I say that I have a good deal of sympathy with this amendment. Not only is it covered by the Theft Act but Section 5 of the Perjury Act 1911 deals expressly with false statements which are made in a document of a statutory nature which are required to be executed by statute. But there the offence is "knowingly and wilfully" making a mistake in a material particular. In other words, the wilfulness is an essential ingredient apart from the knowing. In Archbold's Pleading, Evidence and Practice, in referring to this Section 5 of the Perjury Act 1911, the form in which this section is cast has led to a subsequent proliferation of statutory offences related to making false statements.
The difficulty with the clause as it is is that it refers to something done "knowingly", whereas the report of the Law Commission deals with offences of dishonesty committed by the attorney. I suggest that the dishonest aspect of it could come in with the word "wilfully", as in the Perjury Act, or with the simpler words "with intent to defraud or deceive". In other words, this makes a criminal offence of just knowingly making a false statement in a material particular. I am not sure that to cover dishonesty, which the Law Commission wants, you ought not to have "with intent to defraud or deceive" or the "wilfully" of the Perjury Act. In other words, I do not like this criminal offence going so far as it does.
The Lord Chancellor: I would accept the premise of the argument presented by the noble Lord, Lord Mishcon, at once. There was a medieval philosopher

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called Occam who invented a saying called "the razor" which said,
"Entia non sunt multiplicanda praeter necessitatem".
That means in relation to criminal offences, "Don't make more than you have to". Therefore, I start with the presumption that the premise of Lord Mishcon's argument is correct. It is also correct that there are cases which would be affected by the criminal offence which would be created by the Bill as drafted under subsection (7) of Clause 4 which would be covered by Section 15 of the Theft Act 1968. I have not myself considered Section 5 of the Perjury Act 1911, and I will therefore consider it between now and Report without expressing a concluded opinion upon whether that would or would not apply to the present case. At present I have some doubts in the matter but I would not venture to put my opinion in front of that or my noble and learned friend on the Cross Benches. I will therefore consider that further.
But Section 15 of the Theft Act 1968, which was the section referred to by the noble Lord, Lord Mishcon, does not cover the situation where the attorney makes a false statement while having no intention of depriving the donor of property. It is of course accepted, as I have indicated, that Section 15 will deal with attorneys who dishonestly appropriate the donor's property after registration but it does not deal with attorneys who make dishonest statements which might affect the attitude of the court of protection towards registration. The main purpose of the registration is to protect the donor, and it is for this purpose essential that the statements which are made to the court of protection are correct. It is not at all unusual for there to be a criminal sanction with regard to dishonest statements when people make official applications, as this is, in other areas of the criminal law, as for instance applications for a passport, or driving licence applications.
Moreover, the criminal offence as drafted in Clause 4(7) is not particularly wide. To attract the criminal sanction the statement must be false in a material particular and the maker of it must know that it is false when he makes it. Because the requirements of the offence are so strict there is therefore no danger that a person who innocently makes a statement which is false, particularly a statement on an unimportant matter, will be caught by the offence. It is considered better to have the chance to deal with the dishonest attorney at the point of registration rather than wait and see until he actually dishonestly appropriates the donor's property after the instrument has been registered.
Therefore, on the whole, recognising that there are things to be said in favour certainly of the premise of the argument founded by the noble Lord, Lord Mishcon, I would have stuck to the text as drafted because it is essential to support the court of protection and therefore to put a sanction behind the honesty of the statement, at the moment of registration, rather than at the moment of deprivation. For that reason I would have stuck to the text as drafted. As I say, I will consider the point of the noble and learned Lord, Lord Denning, and write to him if necessary; or we can have a further discussion on Report.
Lord Mishcon: I am grateful to both noble and learned Lords. The point raised by the noble and learned Lord, Lord Denning, is certainly worthy of examination. I tried to cover it in my own way by saying that in this regard there were existing provisions in the criminal law, but the noble and learned Lord, Lord Denning, went into it in greater detail, referring to the Perjury Act.
The noble and learned Lord the Lord Chancellor has agreed to look into the matter. Therefore, I ask him, if I may, for the courtesy of sending to me a copy of any letter he sends to the noble and learned Lord, Lord Denning. I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Lord Chancellor: I beg to move that the House be now resumed for the purpose of repeating the Statement.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Banking Supervision
3.41 p.m.
Lord Brabazon of Tara: My Lords, with the leave of the House I shall now repeat a statement on banking supervision which is being made in another place by my right honourable friend the Chancellor of the Exchequer.
"I have now considered with the Governor of the Bank of England the events leading up to the rescue operation conducted by the Bank on 1st October. It is clear that the case raises important issues about our present procedures of banking supervision, and the legislative framework within which it is conducted.
"The Governor and I have therefore agreed to a full review of the present supervisory arrangements, and to consider whether any early changes in present supervisory procedures are needed. Issues to which particular attention will be given are the relationship between auditors and supervisors; staff experience and training; the handling of concentrations of risk and the assessment of quality of assets; notification and collection of statistics; and the adequacy and deployment of staff resources in the Banking Supervision Department.
"The review will also consider whether a more effective framework is required than that provided by the 1979 Banking Act.
"I shall be placing a copy of the terms of reference of the review in the House Library.
"I shall of course inform the House as early as possible of the results of the review, including any legislative changes I think necessary."
My Lords, that concludes the Statement.
Lord Stoddart of Swindon: My Lords, may I first thank the noble Lord for repeating to your Lordships the Statement which was made by the Chancellor of the Exchequer. It seems to me that the most significant

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point about the Statement is that it is being made at all after 10 weeks have elapsed since the rescue operation. Is he aware that, although his Statement is meant to be reassuring, it may instead lead to an intensification of fears rather than allaying them?
Does he also accept that the City has been anxious about the whole affair for the past 10 weeks and does the delay in making the Statement reflect disagreement between the Treasury and the Bank of England over the actions of the Bank in mounting the rescue operation? We should like to know that.
With regard to the Banking Act 1979, why did we have to wait for a collapse of this sort before a review of the Act was put in hand? There have surely been many instances and many fears expressed before this particular collapse which should have ensured that a review of the Banking Act was put in hand well before this serious event.
May I also ask the noble Lord about the position of the auditors, Arthur Young McLelland and Moores, who gave Johnson Matthey a clean bill of health? Are they to be the subject of an examination by their own profession, for many fears and many doubts have been expressed about their rôle in this particular affair? I should like the noble Lord's comments about whether this particular firm of auditors is to be the subject of examination, at least by the profession.
Finally, may I ask the noble Lord whether the Robin Leigh-Pemberton doctrine of firms standing on their own two feet applies only to manufacturing industry? Does it not extend to financial and City institutions, as seems to be the case? There seems to be one rule for manufacturing industry and one rule for financial institutions.
Lord Ezra: My Lords, I also should like to thank the noble Lord for repeating the Statement. I should like to say, first, that we on these Benches fully support the intention of the Government to review the banking supervisory arrangements. We possess in Britain one of the most efficient and reliable banking establishments in the world and, as necessary, we need to ensure that that continues whenever weaknesses arise. Having said that, however, in the case of the particular rescue operation that has given rise to this review I think it is permissible to ask a few questions.
The first question must surely be why was it necessary, even under the present supervisory arrangements, for such precipitate and apparently costly action to be taken to solve this problem? Had the difficulties emerged earlier, the costs of the rescue would presumably have been less.
Secondly, in dealing with this issue, what were the relations between the Bank of England and the Treasury? Was the Treasury made fully aware of the situation from the start and did it concur in what was done, or was this purely a Bank of England operation?
Thirdly, and relating to that issue, have public monies been used in this rescue operation? If they have been used, surely the consent of the Treasury should have been obtained. It would be helpful if the noble Lord would answer those questions.
Lord Brabazon of Tara: My Lords, I thank both noble Lords for receiving the Statement. Regarding the questions of the noble Lord, Lord Stoddart, as to why we should need to have the review now, the Chancellor has considered the issues and thinks that it is sensible to make a Statement. There are no sinister reasons whatsoever for this. There is no disagreement whatsoever between the Bank and the Treasury. The Banking Act 1979 has only been in force since 1980 so there have been no grounds for an earlier review.
The noble Lord also asked about Johnson Matthey's auditors and whether they would be examined by their own authorities. That is a matter for them, not for us. This could be something which the review might look at in general terms, but not specifically.
The noble Lord, Lord Ezra, asked why we do not use the same sort of funds to save manufacturing industry—
Lord Stoddart of Swindon: I asked that, my Lords.
Lord Brabazon of Tara: My Lords, I beg your Lordships' pardon. This was a decision made by the Governor of the Bank, not by the Government. It is, however, the Government's view that the main part of Johnson Matthey's business was viable and that the consequences of the failure would have spread well beyond Johnson Matthey itself. I should say that it is the Bank's money being used, not Government money in this case.
The noble Lord, Lord Ezra, asked whether the Treasury had been told. Yes, the Chancellor was told a short time before the operation took place, but, as I say, the Bank of England looks after these things and it was its decision to carry out this operation.
I hope that I have answered all the questions put to me.
Lord Kilmarnock: My Lords, does this not raise serious questions as to liaison between the Treasury and the Bank of England? Is the noble Lord aware that on 12th November, Mr. Nigel Lawson, the Chancellor, wrote to my right honourable friend Dr. David Owen saying that the decision was entirely the Bank's, and that three days prior to that, on the 9th, the Governor of the Bank of England had also written to my right honourable friend saying that the Chancellor was informed before the decision was implemented? What is the true position?
Is it not the case that the Treasury ought to be involved if it is a question of public funds? I think that the noble Lord said that the funds were not considered to be public money as they came from the Bank's reserves. Is it not the case that the Bank's reserves are public money? If the reserves are depleted, will they not have to be replenished? And is it not the case that the Bank might have to cut its dividends to the Treasury so that there might be an indirect loss to the Treasury? How is it possible to say that public money was not involved in this case?
Lord Brabazon of Tara: My Lords, it is possible that the Bank might have to cut its dividends to the Treasury, but this is the Bank of England's money. As I have said, the Governor informed the Chancellor. That is all that he is obliged to do. It is the Governor

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of the Bank of England who is responsible for making these decisions; and he uses the Governor's funds if they are necessary to make up the losses.
Lord Kilmarnock: My Lords, will the noble Lord undertake that the review, when it is put into operation, will look seriously into this matter of liaison between the Bank and the Treasury?
Lord Brabazon of Tara: My Lords, that undertaking I think I can definitely give.

Enduring Powers of Attorney Bill [H.L.]
House again in Committee.
Clause 4 agreed to.
Clause 5 [Functions of court prior to registration]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 4:
Page 5, line 20, leave out from ("necessary") to end of line 8 on page 6 and insert (", before the instrument creating the power is registered, to exercise any power with respect to the power of attorney or the attorney appointed to act under it which would become exercisable under section 8(2) on its registration, the court may exercise that power under this section and may do so whether the attorney has or has not made an application to the court for the registration of the instrument.").
The noble and learned Lord said: If I may, I shall move Amendment No. 4 and speak also to Amendment No. 8, which is purely consequential upon it.
Amendment No. 8: Schedule 3, page 18, line 26, leave out ("(2)").
My name appears to this amendment, and it is therefore a Government amendment, but we really owe it to the noble Lord, Lord Mishcon, and the noble and learned Lord, Lord Elwyn-Jones, who drew our attention to the weakness which this amendment is designed to cure. Therefore, I have to express gratitude to them, and I hope that the Committee will record its gratitude to them rather than to me because all that I did was to put the thing to the Government's draftsman, who has done it (I think in a slightly more elegant form, but with the same effect) as the noble Lord, Lord Mishcon, had originally proposed to do it.
The fact is that Clause 5(2) and Clause 8(2) give the Court of Protection identical powers, in the first case to be exercised prior to registration of the instrument and in the second case to be exercised in the case of a registered power. This involves an unnecessary duplication of drafting, and this is the way it is now proposed to remove the unnecessary duplication. Therefore, with due expressions of gratitude to the real source of the improvement, I beg to move.
Lord Elwyn-Jones: I am grateful to the noble and learned Lord for taking up the suggestions of the Law Society so clearly explained by my noble friend Lord Mishcon. This has at least enabled me to say something in the course of these proceedings. It may also be convenient to indicate that further amendments which purport also to be in my name will be moved by my noble friend.
On Question, amendment agreed to.
[Amendment No. 5 not moved.]
Clause 5, as amended, agreed to.
Clause 6 agreed to.
Clause 7 [Effect and proof of registration, etc.]:
Lord Mishcon Lord Mishcon moved Amendment No. 6:
Page 7, line 42, leave out paragraph (b).
The noble Lord said: I move this amendment by asking one question. Has not disclaimer already been dealt with by Clause 2(12)? If that be so, should not this amendment be accepted? I beg to move.
The Lord Chancellor: I am grateful, again, to the noble Lord, Lord Mishcon. This amendment was proposed, I think, not because it was believed that the provision was objectionable in substance but precisely—and the noble Lord, Lord Mishcon, has confirmed it—because there was a similar provision in Clause 2(12) and it was believed, therefore, that Clause 7(1)(b) was repetitious and unnecessary. I think that this argument, for which I am grateful, overlooks, however, the differences between the provisions; and it also overlooks a third similar provision contained in Clause 4(6).
All three provisions are necessary. Each is slightly different from the other two. Each is logically correct where it appears. There are two distinct situations: where the donor is mentally capable, notice of the disclaimer has to be given to him; where he is mentally incapable, notice has to be given to the Court of Protection. Since Clause 2 deals with all the characteristics of an enduring power, subsection (12) deals with both these situations. It is, however, the only provision in the Bill requiring that notice has to be given to the donor when the latter is mentally capable. When the donor is, or is becoming, mentally incapable (so that notice has to be given to the Court of Protection) the situation is dealt with in two separate provisions; namely, Clause 4(6), which deals with disclaimers before registration, and Clause 7(1)(b) (which is the one currently under discussion), which deals with disclaimers after registration.
The proposed amendment is also technically defective in that a consequential amendment would be needed to Clause 8(4)(a). For these reasons, I am grateful to the noble Lord, Lord Mishcon, but I hope that I have given an adequate explanation.
Lord Mishcon: I am most grateful to the noble and learned Lord for the explanation that he has given. It was only because one was anxious to raise the principle as to whether there was not a repetition which was needless that the amendment was put down; and that is why—and I am sure that the noble and learned Lord realises this—it was not followed through, as it will be, of course, at a later stage in the Bill, if another fate had been accorded this amendment. In view of what the noble and learned Lord has said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 7 agreed to.
Clause 8 agreed to.
Lord Mishcon Lord Mishcon moved Amendment No. 7:
After Clause 8, insert the following new clause—
Tax returns
(". Notwithstanding the Tax returns provisions of section 72 of the Taxes Management Act 1972 when an instrument has been registered under section 6 of this Act the Inland Revenue shall recognise the attorney acting pursuant to such instrument as the

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duly authorised representative of the donor for the purpose of signing any tax returns.")
The noble Lord said: This is an amendment of some substance, and certainly of practical importance. As the Committee probably knows, there is a practice of the Revenue which prohibits an attorney from signing, for example, a tax return on behalf of the person appointing him as his attorney. One can well appreciate the reason for that. It is that there would be most likely every excuse for an attorney to say that he did not know of the person who had appointed him attorney, he did not know of that person's actual means, and that when he made the return he honestly believed it was true; whereas if the taxpayer himself makes the return he is deemed to know what he possesses and therefore if he says something which is inaccurate, or if he omits something, the Revenue want to have their rights and remedies against him. Therefore, that is the normal answer, the normal practice, normal procedure—and very understandable it is.
But now we are dealing with a very different type of case. Perhaps before saying that I ought to pay tribute to the Revenue and say that where a genuine case comes before them, where the taxpayer is very old or suffers from some physical disability, and they are satisfied in the circumstances that that procedure ought to be adopted, they will accept an attorney's signature. But now we are dealing with a very different situation under this Bill, because the Bill is meant to cover only those who, by reason of their mental state as from the date of the enforceability of the power of attorney, are to have no legal rights whatsoever. Indeed, they could not sign the return and make it a valid and proper return. It has to be done by the attorney.
4 p.m.
In the discussions which have taken place—and the noble and learned Lord the Lord Chancellor will correct me if my information is in any way inaccurate—the Lord Chancellor's Department was good enough to consult the Inland Revenue, and apparently what the Inland Revenue are saying is that they do not anticipate any difficulty because they would normally allow such a procedure to take place; namely, the tax return I have given as an example would be signed by the attorney and they would normally accept it.
But is that good enough since the attorney cannot require that acceptance? If the Revenue do not accept the attorney's signature to that tax return, what would happen would be this. The whole purpose of the Bill would be defeated and the family of the taxpayer would then not be able to rely at all upon its provisions and would have to go to the Court of Protection and go through the whole of the procedure in order to see that a proper tax return is rendered by a person who has the right and power to do so. That would, of course, be a defeat, as I said, of the whole purpose of the Bill. For the life of me I cannot see why there should not be in the Bill a clear provision that says that in a matter of this kind the Revenue shall accept the attorney who has not only been appointed by the donor but the attorney who, if I may put it this way, has been investigated by
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the Court of Protection and it is found that all the matters that are supposed to be there in protection of the donor have been carried through and everybody is satisfied that he is a proper and rightful attorney.
That may have some sort of reflection upon the provisions of Section 72 of the Taxes Management Act 1972. That is why, in what I hope is wording that is not too clumsy—and, frankly, it is my own wording—I have tried to say that:
"Notwithstanding the provisions of section 72 of the Taxes Management Act 1972 when an instrument has been registered under … this Act the Inland Revenue shall recognise the attorney acting pursuant to such instrument as the duly authorised representative of the donor for the purpose of signing any tax returns."
There was a method, if I may say so, behind my saying to the Committee that the wording of this amendment was entirely my own because I have mentioned in the past that these amendments have been initiated by the Law Society, and if there is any defect in the wording (and lam sure that the noble and learned Lord realises that it is really the principle which is involved here at Committee stage) I should not like the learned Law Society to be blamed for it. I beg to move.
Lord Davies of Leek: I just want to ask a simple question. Does the word "shall" mean, and is it semantically exactly the same as, "shall be obliged"?
Lord Mishcon: I cannot at the moment detect any difference between the two.
Lord Campbell of Alloway: May I very briefly support the substance and principle of this amendment and in doing so be allowed to pay a tribute not only to the Court of Protection, but also to the way in which the Revenue work in such circumstances, as I know from my own personal experiences, which were somewhat unfortunate in regard to my own family? But why should a normal concessionary practice stand? Really, it is not, it seems to me, apposite in the circumstances of this case; and although maybe the Court of Protection and no doubt the Revenue would operate the concessionary practice reasonably and fairly, this is not really a matter for concessionary practice within the recast framework of this Bill. For those reasons I support the principle, although the drafting may be a little beyond me.
The Lord Chancellor: Again, I am grateful to the noble Lord, Lord Mishcon. In this case, if I may, I should like more time to consider the matter, and if he will be good enough to withdraw this particular amendment, I would hope to see whether further discussions can find a satisfactory solution before the Bill leaves this House; indeed, I hope at the next stage. There is one error, but only one, that I have been told about, and I think it is either a misprint or a lapsus calarni. The Taxes Management Act referred to should be 1972, not 1970. Has it been changed? If so, then it has been changed since I last looked at the text, and I am very grateful. Apart from that, the situation is a genuine one and it has been explained by the noble Lord, Lord Mishcon. I hope it will ultimately result in an improvement to the Bill.
There is no doubt that, as the noble Lord, Lord Mishcon, urged, once the donor of the power is

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mentally incapacitated, it would be to the benefit of all concerned—that is to say, to the donor himself (by this time mentally incapacitated), his attorney, and the Inland Revenue—if correspondence relating to the donor's tax matters could be addressed to the attorney and if the attorney could sign tax returns on behalf of the donor. But there is one difficulty. In other circumstances, where one person has the direction, control or management of the property of an incapacitated person, Section 72 of the Taxes Management Act 1970—I got it the wrong way round in my first attempt, but now I have got it the right way round; it is 1970, not 1972—provides that the person having such,
"direction, control or management … shall be assessable and chargeable to income tax in like manner and to the like amount"
as the incapacitated person would be if he were not incapacitated.
In other words, if effect were given to this amendment, the unfortunate attorney would find himself liable personally for the return, and that might deter proposed attorneys from accepting the responsibilities of their office. The Inland Revenue, possibly understandably, are somewhat reluctant to make an exception in favour of attorneys under an enduring power which they would not make in other cases. But I hope that all this can be resolved by friendly discussion.
There may be, I am told, other difficulties, of which I should like the noble Lord, Lord Mishcon, and others to have notice, such as where the attorney is empowered to deal with only part of the donor's estate; that is a highly technical matter. If the noble Lord, Lord Mishcon, will withdraw his amendment now, I hope that discussions can go on and a favourable solution be arrived at.
Lord Mishcon: I am most grateful to the noble and learned Lord and I readily accept his suggestion. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clauses 9 to 14 shall stand part of the Bill?
The Lord Chancellor: I give notice that at the Report stage I may have to return to Clause 9. But subject to that, I naturally support the Question.
Clauses 9 to 14 agreed to.
Schedules 1 and 2 agreed to.
Schedule 3 [Joint and joint and several attorneys]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 8:
[Printed earlier: col. 447.]
The noble and learned Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Schedule 3, as amended, agreed to.
House resumed: Bill reported with amendments.

Supplementary Benefit (Requirements) Amendment and Temporary Provisions Regulations 1984
4.15 p.m.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Glenarthur)The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Glenarthur) rose to move, That the draft regulations laid before the House on 22nd November be approved. [3rd Report from the Joint Committee.]
The noble Lord said: My Lords, the main purpose of the regulations before the House today is to empower the Government to impose a temporary freeze on the maximum amounts of supplementary benefit payable to people in all forms of board and lodging accommodation, otherwise commonly known as the "local limits". The freeze is the first step in the overall action we are proposing as a result of the very disturbing facts that have become available during the past few months, on the rapid rise in board and lodging expenditure. There is, of course, nothing new about the basic arrangements for payments to people in board and lodging accommodation—those were firmly established in the days of the Supplementary Benefits Commission—but the sudden sharp increases in spending since 1982 indicate a new trend, present particular problems and demand firm action. The figures have been repeated often recently, but I think they are worth quoting again to set both the scale of the problem and these draft regulations in context.
Expenditure on supplementary benefit claimants in private and voluntary residential care and nursing homes rose from £39 million in December 1982 to £102 million in December 1983. The corresponding figures for the ordinary board and lodging sector—guest houses, hostels and the like—were £166 million at December 1982 and a massive £277 million at December 1983. Our latest estimates are that total expenditure on this is now running at a level of some £570 million. Unless action is taken, this figure is likely to rise by a further 50 per cent. by December 1985. It would be quite irresponsible to allow this sort of trend to continue, and to do so might very well jeopardise expenditure on other parts of the the social security programme. It is against that background that the Government announced on 5th September their determination to act swiftly to bring expenditure in this field under control. Additional evidence that has become available since September only strengthens the need for urgent action.
The current system of local limits was introduced in November 1983 in a move to prevent exploitation. A previous open-ended commitment to meet charges, however high, in certain circumstances, was withdrawn and the system of determining basic entitlement was refined. Offices were advised to set local limits for the three new tiers of accommodation—ordinary board and lodging, residential care homes, and nursing homes. We undertook to monitor the new arrangements, and in doing so we grew concerned about both the scale of the increases that occurred in November 1983—the average ordinary board and lodging limit, for example, rose some 39 per cent. from £47·50 to £66—and about the very wide range of the new limits. Again, I make no apology for repeating the figures.
For ordinary board and lodging, the range was from £40 in Manchester (Wythenshaw) to £110 in Kingston; for residential care homes from £51 in Shoreditch to £215 in Leytonstone; and for nursing homes from £80 in Liverpool Belle Vale to £295 in Leytonstone again. There is mounting evidence that landlords of hotels and guest houses in particular see the higher current board and lodging limits as very attractive; some landlords have been advertising for supplementary benefit claimants, and increasing numbers of young people have been setting themselves up in seaside resorts. The supplementary benefit scheme is intended to meet genuine need, not to enable young people to choose a comfortable life-style by the seaside at the taxpayers' expense.
We have placed a list of the current local limits in the Library. This makes very interesting reading, expecially from the point of view of discrepancies between limits for neighbouring and apparently similar areas. Why, one may ask, should the ordinary board and lodging limit for Salford be some £40 to £50 higher than the limits in nearby Manchester? In compiling the list, we were struck also by the scale of the further increases in limits that had already occurred since the main annual review at November 1983. The fact remains that any increase in a limit, whatever its cause, enables all proprietors in that area to raise charges for any residents on suplementary benefit by up to the same amount. We have seen this happening over the past year.
We have indeed also heard from a number of Members of both Houses about elderly people paying for residential care from their own hard-earned resources, who have been put in very real difficulty when proprietors increase charges in step with supplementary benefit limits, often far in excess of the rate of inflation. Many such people, providing for themselves and expecting their savings to cover their needs adequately for the rest of their lives, are now suddenly finding that their money is running out because of these rapidly increasing fees. Further evidence of this sort continues to become available. It is clear that despite the good intentions behind the November 1983 changes, the current limit system is prone to unreasonable and inflationary increases.
A new system cannot of course be introduced overnight. We identified the scale of the problem and announced our intention to act in September. We then issued proposals for consultation on major changes in the current system in November, and we expect the Social Security Advisory Committee's report on this in January. We shall pay very close attention to this; but we nevertheless hope, subject to this consultation process and Parliamentary approval, to implement new arrangements in April 1985. This will he rapid progress by any standards, but expenditure is growing rapidly.
The provisions will work as follows. The regulations relieve adjudication officers of their obligation to decide on local limits by reference to local charges, and they transfer responsibility for setting the limits directly to my right honourable friend the Secretary of State for Social Services. He intends to use these powers to adopt the local limits in use when the proposed changes were first announced in September,
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and to freeze them at that level until the Spring. We have already undertaken to ensure that those claimants who had an appeal or a request for a review outstanding on 5th September will not be penalised by the freeze, and the draft regulations have been widely drawn to allow for this.
Regulation 3(3) enables my right honourable friend to determine limits either generally or in respect of a particular case or class of cases, and to revise the limits as he considers necessary. Where such a decision on an appeal or a review is specific to the circumstances of the individual claimant, that higher limit would be applied only to the individual concerned. Where there has been an appeal or review concerning a resident at a specialist, high-care residential home, for example, we would only want to apply the new higher limit to any claimant at the same establishment to ensure that the needs of vulnerable elderly or disabled people are safeguarded under the temporary freeze.
If however there were a case where an appeal tribunal had criticised a particular local limit on general grounds—in other words, saying that accommodation was not to be found within the area at that price—we would have to consider allowing a higher limit for the area as a whole. The wide powers we have taken enable us to adopt whichever approach is most appropriate because we believe that such flexibility is necessary to ensure that no one suffers as the result of the freeze.
In addition to these "no detriment" provisions, the regulations also allow us to consider any exceptional cases where there is danger of serious hardship. There will be no risk of this for the significant majority of boarders. They are paying charges below the appropriate local limit and will therefore be quite unaffected by the changes. Others who are presently relying on the provisions allowing an increase in the local limit in certain circumstances or on attendance allowance to help them meet a high charge, will have had these amounts uprated in the normal way at the end of November. But if, exceptionally, an individual claimant or establishment gets into real difficulty, we shall want to look at that case sympathetically. As I have indicated, we are particularly concerned that no elderly or disabled person should have to move from a residential or nursing home as a result of the temporary freeze, and we should take special care over any case where this seemed to be a possibility.
I should stress that we expect such cases to be very few; but, for example, we have already begun following up the small number of elderly and disabled claimants who received 12 months' transitional protection at the time of the November 1983 changes to check on their present position, and we shall want to consider further help in any case where expiry of protection looks likely to pose real problems. I should perhaps say that the power to vary limits is not confined to variations upwards. If anyone submits evidence to us that the current limit is encouraging exploitation, we shall want to look carefully at that evidence.
Finally, I should like to mention briefly the other largely technical and entirely beneficial items included in these draft regulations. Regulations 2(2) and 2(4) make minor amendments consequent upon the introduction of severe disablement allowance, to

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ensure that it, like non-contributory invalidity pension, is treated as a qualifying benefit for the supplementary benefit long-term scale—and that SDA is added to the list of benefits which, if they are received by a non-dependant in a household, means that no contribution for housing costs from that person is assumed in assessing the householder's supplementary benefit entitlement. Regulation 2(3) corrects an oversight in the up-rating regulations by up-rating the maximum amount by which a local limit can be increased in respect of a couple in special circumstances.
These regulations constitute a wholly responsible holding measure to contain expenditure until more far-reaching changes can be considered and implemented. They strike a balance between safeguarding public funds and making provision for exceptional cases. I beg to move.
Moved, That the draft regulations laid before the House on 22nd November be approved. [3rd Report from the Joint Committee.]—(Lord Glenarthur.)
4.25 p.m.
Baroness Jeger: My Lords, I can agree with at least one point in the Minister's speech: we welcome the changes affecting the disability allowance. However, these changes seem to indicate some inefficiency, in that this particular allowance has only very recently been introduced. It must he confusing for claimants to find that already the Government are having to bring forward amendments and tidy up these matters. This indicates the terrible muddle which is to be found in the whole area of social services at the present time.
I should like to ask the Minister one or two questions, if he will be so courteous—as he usually is—to answer them. I understand the theory behind freezing local limits but I am worried about the practicalities. I know that there is a wide range of costs between one area and another but also within each area there are varying standards. There may be a warm and comfortable residential home which charges more than a cold, miserable slum down the road or around the corner. That is certainly true in the Borough of Camden, which I know best. There, one might he comparing—if the comparison is made purely on geographical grounds—a pleasant place in Hampstead with a slum at the back of St. Pancras station. I hope that in fixing these local limits, officers will be instructed to have regard to the standards of each establishment and not only to the neighbourhood.
The noble Lord the Minister referred to an increase in costs. Anyone who is serious about social security must look at these figures very carefully. However, the Minister did not tell the House why expenditure has increased so steeply and so rapidly. Why are there more people in bed and breakfast accommodation? Why are more people living in hostels? I do not want to be out of order by going beyond the proper range of this debate; but I hope that some time the Minister will ask himself whether there is any parallel between this situation and the decrease in local government provision for the elderly and the sick; and whether there is some parallel with housing cuts which are making it more and more impossible for councils to deal with the families on their waiting lists and who are
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the very people who so often finish up in such expensive and unsatisfactory accommodation.
This represents the biggest waste of money in the whole of government expenditure because there is nothing to show for it at the end—whereas if councils were allowed to get on with some building at least there would be homes for the future as well as for the present. Perhaps the Minister does not accept that there is some connection between the present situation and unemployment; but many of us are convinced that unemployment is at the heart of the matter—especially so far as young people are concerned.
How many people are involved? We do not want to know only about money. We want to know also how many people are affected. Is it the case that more money is being spent on proportionately more people, or is it being spent on proportionately fewer people? If the Minister is able to provide us with these figures and if he includes in them homeless families, then does a homeless family count as one unit, or are the members of the family counted individually so that we can have a fuller picture?
Certainly in London it is the homeless families, and not young people sunbathing on the beaches of King's Cross, which form the major part of the problem. They are homeless for all sorts of reasons. Sometimes they are homeless because they are genuinely looking for work. Sometimes there are older people who have been sent out of mental hospitals, and other vulnerable members of our society, who are supposed to be returned to what is called community care. Too often community care is the care of a landlady and bed-and-breakfast accommodation. Some of these landladies do very good work and provide a very real social service, but many of us would rather see that provision fall directly within the responsibility of local authorities.
What arrangements will the Minister be making, in consultation with the Department of the Environment, for inspection? There is no doubt that it is the landlords who are getting the money, not the claimants, and it is the landlords who should be penalised. How do we know that the Minister's department is getting value for money? I understand that his officers are supposed to contact local authorities if they have reason to suspect that there are fire hazards or health hazards in this sort of accommodation. I can tell the Minister what happens, although I am sure that he will have a more informed answer than I have. When the local authorities are contacted they have to say that owing to Government policy they have fewer environment officers, that they have a long list of old houses waiting to be inspected and that they are short of clerks to process the information and to put details through the machinery. We had a dreadful case recently in Camden, although the home was in Westminster, where a woman and two children were burned to death in a really disreputable place which, even had it been inspected, the landlord was not inclined to put right.
Unless there is some inspection on that side it is no use chasing young people around because they are on a sort of holiday on the south coast. The people I want to get at are those who are exploiting the claimants and, therefore, are exploiting the Minister and the

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whole department. Until there is inspection we cannot do that, because we do not know what standards we are paying for. I have had complaints from people in one of these bed-and-breakfast homes—I shall send a note to the Minister about this—where the department pays for bed and breakfast but the landlord does not give any breakfast. He lets the tenants borrow a kettle to make a cup of tea, but the taxpayer is paying for what is supposed to be their breakfast. That is what I call exploitation, and I wish that the Government would pay more attention to that aspect.
I have one final point. Is there to be any change in the Government's attitude to furniture grants? Why do we not encourage more of these people to try to find unfurnished accommodation? I know that it is very difficult, and certainly it is not easy anywhere in the country. However, I do not see why we must have the present rule that applies if someone does find an unfurnished flat. A case recently came to my attention of a man who was told that the rules said he could only have the flat he had found if no suitable alternative furnished accommodation was available. How could he prove that there was not a furnished flat somewhere else and only then ask for help from the department for what would be a much higher rent than the rent of the little place he had found, which was empty and unfurnished? It is false economy and I believe that the advisory committee is looking into this. It would be in everyone's interest if such help could be given in suitable cases.
I should have liked to have gone further into what we regard as the root causes of the problem. I recognise that the Minister is trying to deal with the symptoms and not the causes, but often one does have to treat symptoms. We have no time for cheating: we totally condemn that. I am anxious—we are all anxious—that those on social security, the majority of whom are there through no fault of their own and whose numbers are increasing because of the Government's policies, should not be penalised. I hope that the Minister and his colleagues will spend more time in dealing with the underlying causes which lead to what is a disgraceful and very sad situation for many of our poorest people.
4.35 p.m.
Lord Banks: My Lords, I should like to join in thanking the noble Lord, Lord Glenarthur, for his clear exposition of the purpose and content of these regulations. As he explained, they are only an interim measure. We are to receive further proposals, and we have had an indication in the consultative document of what they will be. If I have understood the timetable aright, we shall be discussing those proposals in February.
I should like to make it clear at the outset that if there is abuse then we on these Benches want to eradicate it. If hoteliers and proprietors have been rooking the Department of Health and Social Security, we want to put a stop to it. If anyone is being feather-bedded by the social security system we want to end that. But we are not clear on how much the increasing cost to which the noble Lord has referred is due to abuse and how much is due to the economic policies
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pursued by the Government, as the noble Baroness, Lady Jeger, suggested.
These regulations and the consultative document have all the appearance of panic measures. After all, it is only a year since alteration was made to the arrangements, as the noble Lord explained. The single local limit for board and lodging, plus the local discretion to go higher in certain cases, was withdrawn and replaced with the three categories, each linked to the highest reasonable charge in the locality. It is true, as the noble Lord said, that there has been an increase in the total cost, but certain questions have to be asked in that connection. For example, in 1983 did not the Social Security Advisory Committee report criticism that in some cases previous local limits had been set at unrealistically low levels? Is the increase in cost not due more to an increase in the number of claimants, principally unemployed, than to an increase in charges? Is it not reasonable to suppose that young unemployed people are more likely to leave home to look for work the longer they have been unemployed? Therefore, there is a build-up in the numbers involved in this particular benefit. Is it not true that youth unemployment has increased from 814,000 in October 1980 to 1,286,000 in October 1984?
I should like to ask the Minister this further question. Is it not correct that the increase in charges in 1983–84 was 8.4 per cent., the lowest figure for five years? That figure is certainly in excess of the rate of inflation, but it is not a figure that suggests that charges are out of control. One is bound to ask whether there is any need for panic measures and whether it would not have been perfectly satisfactory to leave this matter to be dealt with by the general reviews now being conducted by the department, which reviews deal with the question of benefits for young people and with supplementary benefit.
Under this order, a freeze is instituted from 5th September 1984. In the Department of Health and Social Security press notice of 5th September it is stated that any increase needed—and it does not say, "any increase given", it says, "any increase needed"—under the terms of the 1983 regulations after 5th September will be taken away when the order goes through. I should like to ask the Minister whether he thinks that that is just and reasonable. I should like to ask him also whether he thinks that all existing local rates are excessive and, if that is not so and all local rates are not excessive, will not a freeze inevitably penalise some?
Then there is the question of the elderly to which the noble Lord, Lord Glenarthur, referred and the fear that some elderly people may be moved out of their homes during the freeze or when the new proposals come into effect. As I understand it, long-term protection at existing levels of payment is guaranteed only if charges are considered reasonable. I want to press the Minister again on what he has said about the Government being most concerned to look at all cases where people may be moved from their homes. What will be the position if, because of increases in charges which are not permitted as a result either of the freeze now imposed or of the new regulations, a person cannot afford to remain in his or her present accommodation? Many elderly people have been advised to go into their accommodation by

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community or hospital social workers. It would not seem to be right that they should now be moved.
Then there are cases where the limit for residential care has been fixed to accommodate homes for the elderly and does not meet the more substantial care required by the young physically handicapped. A total freeze on current limits would not allow temporary problems raised by that situation to be solved before next April or May. I should like to ask whether the Secretary of State will use his reserve powers to consider such cases favourably.
Under the order, and indeed under the new regulations if they follow the lines of those suggested in the consultative document, the fixing of limits will be transferred from the local adjudication officer to the Minister. This is another piece of the centralisation which is so beloved of the present Government. I think they have taken as their motto the slogan, "The gentleman in Whitehall knows best".
Then I have a question about residential care. Are not the Government dealing with the problem of residential care—which, of course, is involved in this order—in a piecemeal fashion? For example, there has been a consultative document on payments for residential care. What is the outcome of the responses to that? There has been a marked shift from local authority sponsorship to supplementary benefit. Is there not ground for concern about continuity of care if there is no local authority involvement? Is not a wider and more comprehensive review necessary in this field?
While we want to eradicate abuse, we are not happy about the effect of this order. We shall want to examine very critically and carefully the proposals for further change when they are finalised and brought before us.
4.44 p.m.
Lord Beaumont of Whitley: My Lords, today's regulations are part of a process which I think appears to a number of your Lordships to be deeply disturbing. In fact, the whole matter appears to be another example of the Government's tendency to take a sledgehammer in order to crack a rather small nut. That is a process which involves a great deal of danger to anyone or anything which happens to get in the way. I say "a tendency" since noble Lords will recall only too well that the whole of the nonsense which the Government, Parliament and the greater part of the urban administration of this country is plunged into as a result of the Government's determination to avoid the cheap, simple and obvious answers to the problems of local government overspending. This appears to be another exercise in the same area.
What we are discussing today may be only an order and only an interim measure but it is building up to a way of coping with what it is undoubtedly an abuse but coping with it by involving really the whole of the machinery of government, bringing the whole of the solution into the centre and increasing—not decreasing in any way—the amount of bureaucracy involved.
The problem really boils down to the scandal of the youths living on social security at the seaside. That is
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a scandal which makes good headlines but which, as has been pointed out, is more a question of dishonest lodging-house keepers than anything else. It certainly must be dealt with. What seems quite intolerable is that it should be dealt with in such unnecessary haste, by-passing Parliament to a certain extent—to the extent, for instance, that we have already had: the freeze on these charges and now the regulations to allow the freeze actually to happen. It also puts a brake on mobility and it sets and is in danger of setting, according to the consultation document, unrealistic limits for the accommodation of families.
This is not the time for a debate on the consultation paper and I will not embark on it. However, I must take the opportunity to say that Church Action on Poverty, of which I have the honour to be an officer, will be among the very many bodies which will be deeply concerned if the limits on charges for accommodation have the effect that Shelter now predicts they will—that of a massive squeeze on families, coming from the proposed limits. Life is far too near the knuckle for such families as it is.
The Government would also do well to look at the effect of their proposals on mobility. What has happened to the philosophy of "Get on your bike"? Perhaps the truth is that the Government have finally come to terms with the fact that there are not any jobs anywhere. But certainly, in so far as there are and in so far as any will occur, job mobility is one of the things that we definitely want to encourage. The whole of this process through which we are going this afternoon does not help with that.
To return to this order in particular, we of course must welcome it in some sense since it may be said to some extent to "make an honest woman" of the Government, in that the Government have most improperly anticipated the passing of this order by imposing the freeze on these accommodation limits anyway.
But when we come back to the order itself, the fact is that with this, as with so much of what this Government do, their main recourse, as my noble friend said, is to centralise. A party which campaigned, and has campaigned for years, on freeing the people from government has produced more centralisation than any government for 35 years. This is another example. Their motto appears to be, "If there is a nut to crack, choose the biggest hammer you can find and give it to us. We are the only people". The Government ask, drunk with their own righteousness, "Who can wield the hammer of reform? Get out of my way, all you others, unless you want to get hurt".
It is our business to see that people do not get hurt, particularly that the weak and the defenceless do not get hurt. This order today is a fairly minor matter but the whole process of which it is a part is, as I said at the beginning of my speech, deeply disturbing. I hope your Lordships will not allow this matter to progress further in the direction that the Government want without challenging it extremely severely.
4.50 p.m.
Lord Glenarthur: My Lords, I should perhaps say first to those noble Lords who have spoken that the regulations with which we are concerned today are part of a holding measure only. This is, I think, worth

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stressing. Some, if not many, of the points raised by the noble Baroness, Lady Jeger, will be covered in the second stage of the action we are now looking at. As the noble Baroness will be aware, details of these proposals have already been submitted to the Social Security Advisory Committee for consultation. I can assure the noble Baroness and other noble Lords who have spoken that we shall certainly take note of the comments that it receives as part of our consultation procedure.
I should state immediately that, unlike the suggestion made by the noble Lord, Lord Beaumont of Whitley, there is no question at all of the freeze having been imposed illegally or in any other improper way in advance of the necessary regulations. When the scale of the recent increases in expenditure on board and lodging payments became apparent, as they did in the summer, we decided that we must give an early signal of our plans to bring about a firm control of the arrangements in force. That is what led to the Statement on 5th September. However, we could not introduce the temporary freeze immediately since the necessary regulations would of course require the approval of both Houses before they could be implemented.
We therefore made clear that the regulations would be introduced at an early opportunity after Parliament reassembled. We were anxious to avoid any last minute pressure by landlords and proprietors to push up local limits by increasing their charges in the intervening period. This would have quite defeated the object of the exercise. We made plain therefore that when we did take powers for Ministers to set the local limits, we would adopt those limits in force at the time of the 5th September announcement. I hope that that clarifies any impression to the contrary that the noble Lord, Lord Beaumont, may have gained.
I think that I should go on to say that, in the light of this intention, the chief adjudication officer concluded that there would be no purpose in proceeding with the normal full-scale annual review of local limits, usually timed to coincide with the general benefit up-rating, which took place on 26th November. However, pending the introduction of the regulations before us, it has remained open to individual adjudication officers to review local limits if particular local circumstances require it. This was made clear in the guidance issued to local officers in circular S39, a copy of which is available in the Library. The arrangements were also explained to the Social Security Advisory Committee, which decided to waive consultation on the interim measures and await the proposals for longer-term change. I hope that that explains that particular point.
I revert now to some of the other points that have been made. The noble Baroness, Lady Jeger, spoke about the variation of standards which explain the existing variations in limit. Yes, there is a variation of standards. I am sure that some of the examples that she gave do indeed take place. I should explain, however, that the draft regulations will freeze the existing limits at their current levels and we shall not expect local offices to revise their limits. As to the general standards of variation throughout the country, yes, certainly, those that "rip off" people, so to speak,
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by putting them in appalling accommodation—for example, not supplying them with breakfast when they should be supplied with breakfast, as the noble Baroness explained—are to be deplored. One would like to find ways of sorting that out.
The noble Baroness asked particularly about inspection. She asked whether we were not concerned about taxpayers' money and the health and safety of claimants. We are concerned, obviously, about large sums of money spent on expensive, overcrowded and dangerous establishments with poor amenities. The steps that we propose on board and lodging payments will help curb this abuse and this exploitation by landlords and proprietors. However, the enforcement of accommodation standards is a matter for local authorities. Local authorities already have a duty to inspect periodically houses in multiple occupation. There is a wide range of powers available to them to tackle the problems that have been mentioned. For example, they can ensure proper standards and amenities; they can limit the number of occupants; they can take out a control order; and they can run buildings themselves to protect the health, safety and welfare of occupants. Hotels are also subject to control by local authorities in important aspects of safety and health and also fire precautions under various enactments.
As to any challenge to the DHSS to take particular action in cases of substandard accommodation and the question, "Why don't we?", I can say that, where there is cause for concern about standards at an establishment, supplementary benefit staff should report this to the responsible local authority department. This I have no doubt they will continue to do. As part of next year's board and lodging measures, we intend to take the opportunity to strengthen the existing instructions on reporting substandard conditions to those authorities. Our new instructions will require local office staff to monitor and to record referrals to local authorities and the eventual outcome. We hope that this will also prove effective in combating substandard facilities.
The noble Baroness asked about furniture grants. Single payments for furniture can be very large, as I have seen myself in some of the visits that I have made to local offices. I am sure that the noble Baroness realises that. The present rule on there being no suitable furnished accommodation before furniture grants are paid is intended to prevent abuse—and I am afraid that there is abuse. There have been similar rules for many years. The Government are awaiting a report on single payments for furniture by the Social Security Policy Inspectorate and advice from the Social Security Advisory Committee. And the whole area of single payments is being considered in the current review of supplementary benefit. It would be wrong to rush into premature changes until those reports are completed.
The noble Lord, Lord Banks, charged the Government with panic measures. The November 1983 changes, like our current proposals, were intended to introduce more effective controls on expenditure on board and lodging. It is now clear that expenditure was rising more rapidly before 1983 than we realised. But it is a mistake, I think, to blame the November 1983 changes for the increases in costs that

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have occurred between December 1982 and 1983. It is because we recognise that the November 1983 changes failed to stem the increase in supplementary benefit expenditure that we have come forward with further proposals.
The noble Lord asked about figures for the November 1983 changes. There were two conflicting criticisms of the local limits system prior to November 1983. A local limit for all types of accommodation was too low to cope with the wide variety of accommodation paid for on a board and lodging basis. Secondly, and contradictorily, expenditure was getting out of control because of a discretionary power to meet charges in excess of local limits in special circumstances. To meet these criticisms, Ministers abolished the discretionary power and introduced the three categories of local limits to which I referred in moving the regulations. Local offices reviewed all limits at the end of 1983 on the basis of advice issued by the chief adjudication officer. This advice stressed that limits should be set by reference to the highest reasonable charge in the area concerned and only accommodation that was unusually expensive would be omitted. The November 1983 changes have not curbed rising expenditure or been the cost-neutral package which had been expected by my ministerial colleagues and the Social Security Advisory Committee. Considerable increases in limits—sometimes well over 50 per cent., as I described, in local limits—have resulted. There are wider ranges of limits across the country that are really most extraordinary and very difficult to explain, both in housing and in labour costs.
The changes in 1983 produced increases in average limits across the country. I could give the noble Lord all the figures, but I suspect that it might be best if I let him have the figures in writing in due course, if he would be happy with that. He asked why we should take action now and why we do not wait until the reviews are complete. But local limits did rise significantly in 1983, and that is why we had to make the changes that we have made. For example, 80 residential care limits have been further increased in 1984 by an average of £25 a week—not an insignificant sum. It would have been irresponsible to allow the trend to go on; and a trend it has certainly become. I think that trend is self-evident from the figures I was able to give the noble Lord when I spoke earlier.
As to the concern which he expressed and which I think others, too, might feel—that some individuals might be forced to move, particularly the elderly and those less able to look after themselves—I really have to revert to what I said in moving the regulations; that was, that in exceptional cases where an individual claimant or establishment gets into real difficulty we will have to look at that case sympathetically. There is no expectation that there should be many cases of this sort; but there will be some, perhaps, and if that is so we shall have to look very carefully at them. I can assure the noble Lord and others that these people are not forgotten. That is why we have set out the regulations in the way that we have.
The need for continuity in residential homes, to which the noble Lord referred, is a point which we
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have considered, and a joint working party of DHSS officials and the local authority associations has been established to improve co-ordination in the area of residential care. Our aim is to encourage local authorities' help with determining suitability of accommodation for those supported by supplementary benefit.
On the more general political question of the young and mobility of labour throughout the country, which the noble Lord raised, I should like to say that I am aware of the recent comment in the press about this, but I can tell your Lordships that the children and young persons' review, which is examining the benefit position of young people, is due to report at the end of the year. It would be premature to react before we have that report with us, and so no final decisions have been taken at this stage.
The noble Lord, Lord Beaumont, suggested that to some extent the problem was one of dishonest landlords, but there is evidence of abuse by young people. Numbers of young claimants have increased the most rapidly of all, as I am sure he is aware. The number of boarders aged 25 and under rose by some 60 per cent.—from 23,000 to 37,000—between 1982 and 1983, and all the evidence is that the growth in numbers in this age group is continuing rapidly and disproportionately to all other claimants. There have been many reports of youngsters paying board and lodging charges of £60, £70, £80 a week, or more, and that is well in excess of what they could in fact earn in employment.
There have been some blatant attempts to gain extra benefit through claiming as a boarder—for example, families even swapping their teenage sons to maximise their benefit income—and there are many people who are disturbed that large amounts of supplementary benefit should be payable to young, immature people so as to entice them away from their families. I am quite sure that all your Lordships would agree that the family is the basis for so much, and that to allow the supplementary benefit regulations to achieve an undesirable end in that direction is most unsatisfactory.
The fact is that, as I started by explaining, we have now reached an interim point. We are consulting. The views that will be expressed will, no doubt, be many. The Social Security Advisory Committee are advising on it. But to have continued in this way, without control, would have been irresponsible.
Baroness Jeger: My Lords, before the noble Lord sits down, I would remind him that we asked him a lot of questions. Can he let us have the figures for homeless families, who are really such a large proportion of those in the bed and breakfast accommodation?
Lord Glenarthur: My Lords, yes, of course. I shall do my best to find out, and let the noble Baroness know.
On Question, Motion agreed to.

Charities Bill [H.L.]
5.5 p.m.
Viscount Colville of Culross: My Lords, I beg to move that this Bill be now read a second time.

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It is the result of the deliberations of a Select Committee of your Lordships' House which worked through most of last Session, but I think I shall offend none of my colleagues if I say that the credit is to be attributed to a very large measure to the noble and learned Lord, Lord Brightman, our chairman, whose hard work and hard thought are really responsible for what we have before us. To his name I would add that of our most assiduous committee clerk. If I may say so, the noble and learned Lord, Lord Brightman, could not have found a more appropriate or happier occasion on which to choose to make his maiden speech, and we much look forward to hearing him in a moment.
What had happened was that—I am sure your Lordships will remember this—over recent years there had been two Private Member's Bills involving my noble friends Lady Faithful, Lord Renton and Lord Maude of Stratford-upon-Avon, in a previous incarnation. After these Bills were submitted to the Select Committee, a great deal of written and oral evidence was received about them. It is printed in the big blue book for your Lordships to read. In the end, the Select Committee felt that it could not recommend that either Bill, as such, should proceed because there were great arguments which had arisen on certain aspects of each of them, but they addressed very substantial mischiefs which should be put right; and that is what this Bill tries to do. I hope, therefore, that it has now been reduced to a form which is uncontroversial in principle but in fact is practical to achieve the results that we want.
But it is a modest Bill, as befits a Private Member's Bill. It is not intended to be anything like a wholesale reform of charity law; that would be a job for Government, not for me. Upon reflection, I think that there may be something to be said for changing the Long Title of the Bill so as to make it certain that that is not the overall intention. There are various technical reasons for that. Nor is it any attempt to change the workings of the Charity Commission. We heard from them on two occasions at least, and they have been extremely helpful in relation to this Bill, because, commendably quick off the mark, they have published a pamphlet about it, which is already in circulation—I hope not too prematurely—for charity trustees to use.
I shall leave others to go into the details of what happened in the Select Committee—the process and reasoning—but of course there is a very full account of it in the report of the Select Committee, which is Paper 293-I, The three mischiefs that the Bill sets out to remedy are to be found in paragraph 79 of the smaller document. For me at least, the starting point is the fact that in many charities money is available for public purposes to fill needs which had been selected from one time to another as being requisite to be put right. The money came from private beneficence, but now it is wrong, I think, if some obstruction or fetter prevents it being put to a proper charitable public purpose. It is also wrong if there is no public accountability. It emerged, incidentally, from some of the evidence that, in relation to many of these funds, there has been information available about the funds or their value ever since the charity was first registered under the 1960 Act—probably about 20 years ago. No up-to-date information is available at all.
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This is public money in another sense too because if there is income there is of course no tax payable, or if tax has been paid it is refunded. The Inland Revenue require accounts if that is going to happen; but of course no accounts would be publicly available through the channels of the Inland Revenue. All in all it seems that there is just no supervision at all of how efficiently or how properly the trustees are administering this public money. So with that very short introduction and in the hope that other Members of the Committee will fill in more of the details of our discussions, I should like to turn to the Bill because it is my job to take the House through the content of the clauses.
It must first be realised that the Bill is to be read as one with the main Act—the Charities Act 1960. So if any interpretation is required of the phrases used one looks to the text of the 1960 Act and the whole will be part of a single statutory code. Clause 1 deals with local charities for the relief of poverty. The first matter that appears in the text is that the Home Secretary is given power to require by regulations more detail in the accounts that the trustees have to lodge. Next, instead of sending accounts to the parish council—or I may say, as a result of having had a letter from the National Association of Local Councils it perhaps ought to say "as well as" sending it to them—and to the Commission, the accounts are to go to the appropriate local authority. Which local authority that will be has still to be decided and will take the form of a statutory instrument, because it is probable that the proper one would be the one responsible for social services and that, according to what part of the country you are in—and I do not want to get on to delicate ground in this respect—may be the county or the district council. Therefore, it may be better to look at this matter in rather more detail through regulations which of course could be changed unlike the Bill itself. At any rate the accounts are to go to the proper local authority where they will be available for public inspection. The trustees have to give notice where the accounts can be inspected; and also unless and until they have lodged the accounts with the local authority they must make a copy (on repayment) for anyone who wants to see them.
The final sanction on the publication of accounts would lie in the fact that power is now being given to anyone to complain to the commissioners if accounts are not published. Section 18 of the 1960 Act gives the commissioners very wide powers; but at present the procedure is complicated and there is a limit on who can apply—an ordinary member of the public cannot apply. So Clause 1(6) gives the commissioners a free hand, with less formality and on application by anyone, to exercise their powers under that section. For instance, they can establish a scheme for the administration of the charity; they can remove the trustees; and they can deal with any problems relating to property or to money payments. Even if the commissioners do not often use that power—and I do not envisage that they would do so—it is hoped that its existence will underpin the other requirements in the Bill that figures should be published which really mean something, and that they should appear on a regular basis.

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The next problem arises out of the objects that were originally laid down for a charity and which may have become very out of date. Here the Bill deals again in Clause 2 with local charities for the relief of poverty. Some of them are very ancient. But even if they are not so old the objects as originally set out may have become obsolete. However, the important point is that the evidence showed us that, despite the existence of the welfare state, the opportunity to put money to good use is still very present—perhaps even more so at a time of economic constraint.
I was very struck with the evidence of the Family Welfare Association when they came to the Select Committee. In 1982–1983 they gave £80,000 to the poor, having taken over the administration of a large number of charities. They said that they could, with the greatest of ease, have given away from between £800,000 and £1 million annually, to meet what they called "desperate needs". Those needs are exemplified in the stouter of the two blue books on page 229. There was also evidence that the same applies in Wales and in Northamptonshire, to give two other examples that can be found in the evidence. The Charity Commissioners themselves confirmed this view earlier on in the evidence that they gave at Question 49.
Yet the trust may be so drawn that such contemporary needs cannot be met or usefully met. I have only picked out a few examples. There is a Humberside charity formed as recently as 1910 which provides an income of £3 a year to provide oranges for school-children. There is another one for the provision for 16 loaves in the market-place at Michaelmas for the poor. There is another to provide financial assistance to the first sons of miners in the parish entering the Anglican ministry. The right reverend Prelate no doubt would applaud that with his Kentish coalfield constituency; but it may not be perhaps the most relevant way in which to help all the poor at the present time.
So looking at those type of charities and bearing in mind the doctrine of cy près, which means as near as practicable, it is really not possible to allow free and ready change in the objects which will meet an up-to-date need. For the reasons given in the report, the Select Committee thought it better not to attempt to tinker with the doctrine of cy près, and so there is another approach in Clause 2 which is to allow a discretion in the trustees themselves to change the objects. Fifty years or more after the charity's foundation the trustees can say that the objects are obsolete or useless or unachievable for reasons such as social or economic changes over the period concerned, and that an alternative would allow better use consistent with the the spirit of the original gift.
Clause 2(3) sets out the extent to which change in the objects can be made, and there are other safeguards. One has to consult the founder of the charity if he is still alive (and that will perhaps not be very often in view of the period, but if he is still alive then so be it). There has to be a unanimous resolution, and they have to give their opinion on the modified objects; there has to be publicity, if that would be useful; and there has to be a copy of the change sent to the commissioners and to the local authority. The
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Charity Commissioners have three months in which to consider this, including any representations that may be made. They can ask for an extra six months in addition to that, but they cannot take more than nine months in all.
However, in order to put the minimum of burden on to the Charity Commissioners, this clause provides that the trustees' opinion that the new objects are apposite is, prima facie, to be considered as well-grounded, and by that means we hope that the number of times that the Charity Commission will have to expend a great deal of trouble on one of these cases will be greatly reduced. If and when they concur, the objects will stand as so modified. But they need not of course concur—they have a complete choice. I may say that there have been many cases in the past where even under the more cumbersome method of making schemes they have concurred in the changing of objects, so it is nothing new.
The next problem relates to the ineffectiveness and size of the charity. Under Clause 3 an exactly similar procedure to that which I have just been describing about the change of objects is introduced for another purpose—the amalgamation this time of any registered charity, provided that its income in the last accounting period was £200 or less. It must be amalgamated with another charity. That other charity must be willing to take over the property and must have objects which are similar enough to adhere reasonably to the donor's intentions or the spirit of the gift. The modification of the procedure, as against that to be found in Clause 2, is only very small. The local authority only has to be notified if the charity transferring its property is a local one for the relief of poverty. If it is not that sort, there is no need to inform the local authority.
This is in fact a simplified form of scheme-making (which I have just mentioned) for small charities. It keeps the money available for charitable use, and this is a principle that has underlain a great deal of the evidence which the Select Committee received; and, again, it should not cause any more trouble to the commissioners than the scheme under Clause 2.
I should like to raise one small point on it. The question was raised whether the Bill itself should take power to vest any property that was being transferred under these provisions; but for conveyancing reasons, it was thought better to leave this to an order under the Charity Commissioners so that there would be a proper record in time to come, and not leave it simply to the Bill. As for the monetary limit, I have received a number of representations about these monetary limits and of course under Clause 3 it is possible for the Home Secretary to increase by regulation the income level of charities which can avail themselves of this machinery over and above the rate of inflation. I suspect that that is something which will only be done when the system has been tested to see whether or not it is a success. But to those who say that the limit should he increased, I would point out that under Clause 3 the power is there to he used at a suitable time.
The other provision to deal with small charities which may be ineffective occurs in Clause 4, and this again applies to any charity with a permanent

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endowment valued at £25 or less, not being land, and with an income of £5 or less. There is an enormous number of such charities; noble Lords would be surprised if they had heard or read the evidence about that. In this case the trustees may resolve to free themselves of the restriction on spending the capital as income. Again, they must be unanimous; they must notify the commission, but in this case the commission has no power to prevent it; it is simply a matter of record—they must put the file right and note that that is what has happened: the possibility is that the charity will cease to exist.
Under Clause 5(2) the financial limit can only be increased to take account of inflation. This is intentional because, again, there was a great deal of evidence and discussion about whether it is proper for money which has been set aside for charitable purposes to disappear altogether in the course of spending on some project. Therefore, the Select Committee was quite deliberate in keeping the size of charities which could do this to a very small figure indeed.
Clause 6 is the interpretation clause. In the schedules, which are quite important, there are some draft forms for trustees to use. The schedules apply respectively to Clauses 2, 3 and 4. They need not be followed exactly, but they are meant to be simple forms to fill in which will encourage the trustees to use these do-it-yourself provisions without resort to high-powered advisers in the legal or accountancy professions, because we hope that the schedules are clear and easy enough to fill in without any such assistance.
In summary, the Bill tries to pick up the best of both the two previous Bills. It entirely avoids compulsion on amalgamations of charities, which previously was a very controversial issue. It avoids any substantial costs falling upon local authorities, which was another controversial point; it minimises any loss of endowment funds from charitable use: it has very small implications for the workload of the Charity Commissioners; and indeed it ought to help to fulfil some of their duties, such as the question of insisting upon accountability, on which, sadly, they fail very greatly at the moment. In addition—and this is a very important point for any Private Member's Bill—the Bill has no resource implications. Yet the amount of' money—public money—which could be put to better use seems substantial. For instance, there was £60,000 in unused accumulations of parochial charity funds for the relief of poverty on Humberside alone. It is anyone's guess what the total over England and Wales might be. I do not propose to make such a guess about the figure. But even so, without it I would hope that your Lordships will agree that this Bill represents a useful, if comparatively modest, reform but one which is full of common sense. I beg to move.
Moved, That the Bill be now read a second time.—(Viscount Colville of Culross.)
5.27 p.m.
Lord Mishcon: My Lords, in the course of the very lucid introduction of this Bill—a lucidity which we have come to expect from the noble Viscount—the noble Viscount said that it was a Private Member's Bill
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and that in the circumstances it was not appropriate to talk about the larger implications of the law of charity. The noble Viscount was quite correct in making that observation, but, as I cannot resist the temptation, perhaps I may be excused for saying that I hope this will not be made the excuse for not looking again (as it is so necessary that one should and that the Government should) at the shortcomings of the present law of charity and the implications which charities have in our modern social life.
It is a fact that our law of charity goes back to the days of good Queen Elizabeth I, the Act being dated 1601. Lawyers still have to invoke that statute, helped, as they are, by the very memorable categories that the greatly esteemed Lord MacNaghtan put upon them: the advancement of religion, the advancement of' education, the relief of poverty and, the fourth category, a general benefit to the community not falling within the other three categories. That has lead to a very narrow interpretation of what is a charity. Political implications have been ruled out in spite of the fact that political propaganda of some kind or other is very often necessary to advance the very cause of the charity that one is having to examine.
Therefore, as my very first point, when welcoming this small Bill now before us (as in general terms I do from these Benches, bearing in mind that I speak as an individual, as one always does on a Private Member's Bill) I enter a plea for a general look—be it by Royal Commission or otherwise—at our general law of charity and the need to have it brought up to date. If one needed a reminder, one had it in yesterday's Sunday Times where, in the course of an article headed "Getting the giving habit", the writer of the article, Mr. Michael Brophy, said:
"I suggest that a look at charities and their financial position is long overdue.
"Charities are big business. Charity Statistics show that in 1980 their annual income was £7 billion. That is equivalent to 14 per cent. of all public expenditure on health, personal social services, housing, social security, education and the arts. There are also many of them: the Charity Commission, which officially registers all charities, has nearly 150,000 on its records, with about 40 new organisations approved every week".
May I turn to the Bill before us? It finds its birth in the parenthood which was given to two Bills which were considered in the course of discussions in your Lordships' House. I do not suppose that the parent of either of them, if I may say so, is necessarily happy with the present child that has emerged, but that does not mean that one should not pay tribute at all events to the act of conception, even if the issue is not quite what the conceiving parents had in mind.
Your Lordships will remember so well that we had in our debates the provisions of the Small Charities Bill brought before us. We considered them in our general discussion of another Bill in which the noble Baroness, Lady Faithfull, brought before us the most powerful arguments for the Bill for which she was responsible, the Parochial Charities (Neighbourhood Trusts) Bill
We were in a dilemma because the Government, as we understood, it—the Home Office—were giving their support to the Small Charities Bill sponsored in another place by an honourable Member who has in fact had public esteem for many years and who is now most welcome in your Lordships' House: Sir Angus

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Maude as he was then, and now Lord Maude, who has taken on the cloak of Shakespeare himself by having as his title Lord Maude of Stratford-upon-Avon.
One saw that there was a problem about that Bill. That Bill had as its object the turning of what were supposed to be perpetual endowments for small charities into non-perpetual endowments giving the trustees the power to spend capital even though that power had not been given, or intended, by the original settlor. That meant the extinction of these small charities. Some of us were worried, not least by the fact that this was not the intention of settlors, and settlors might be discouraged from creating charitable settlements if it was found that their wishes were by statute ignored.
Then came the Bill of the noble Baroness, Lady Faithfull. She is so well liked in this House that almost automatically we found ourselves liking her Bill, but that did not mean that we did not have some concern about it. There was concern because under that Bill local authorities could—and, indeed, they were requested so to do—compulsorily see that certain small charities were amalgamated into neighbourhood trusts. In this day and age, when local authorities are complaining that they have not enough money and personnel to carry out their existing important objects, one wondered whether this was likely to be a power that they either wanted or could in fact carry through.
The other aspect that made us a little doubtful was the compulsory element in it, which hardly encourages charitable trustees to perform the duties which they do as a great public service and usually in a voluntary capacity. Therefore, we did a sensible thing. We said, "We are in a dilemma: let a Select Committee of this House try to sort it out". The Select Committee, or somebody, did a further sensible thing by appointing the noble and learned Lord, Lord Brightman, as its chairman.
The noble Viscount paid him a tribute, and may I from these Benches say that I, too, pay him and all the members of the committee a tribute for putting before us a fine report accompanied by a draft Bill, and accompanied by forms which are going to be of great use to the people involved. Belonging to the profession that I do, possibly I do not necessarily welcome Bills which seem to draw for the layman everything that the lawyer thinks is possibly his entitlement to draw or advise upon: but, seriously it is most valuable, especially for small charities.
I am nervous about one thing, and that is that we should believe that the provisions of this Bill necessarily cover one of the greatest lapses that we have allowed of necessity in regard to these small charities. The lapse which is brought out in evidence is that so many of them have not registered; so many of them have gone to sleep; so many of them return no accounts to anybody at all. I am really saying to the House, "Please do not let us think that the provisions of this Bill have covered these inadequacies because these provisions apply to those small charities which will be known by local authorities, so that indeed if they do not render the accounts the local authority, or the Charity Commissioners, can chase them and say, "Please may we have the accounts?", or indeed get even stronger in their attitude than that.
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The real problem here is that we have not reached the many charities—one suspects there are thousands of them throughout the land—that really nobody knows anything about. Since it is difficult in a statute to provide for them, I would hope that there will be a substantial propaganda campaign by the Government, or by a properly financed body of charity commissioners, to see that all local charities, where they may exist are at least told in our national newspapers, or by such advertisements as can appear by posters, to please see to it that they have communication with, and that certainly they have an obligation to send accounts to, the authorities set forth in this Bill.
There are so many who are taking part in this debate—and noble Lords will all have a particular contribution to make—that for me from these Benches to try to cover all aspects and all arguments would be a selfish act in regard both to the time that I should take and to the contributions that those Members of your Lordships' House have to make, and I am sure that they will be very worthy contributions. I therefore want to close merely by saying that I think that this is a sensible compromise between the two Bills, which were conflicting. It is a sensible Bill in many ways. There are duties which are going to be cast upon the Charity Commissioners which they do not have at the moment, and upon local authorities, which have to be recognised as additional duties upon overburdened bodies. The practical aspects of that have to be faced. They should be faced, and they must be faced, but generally this is a good Bill.
5.40 p.m.
Lord Brightman: My Lords, I wonder whether the House might find it useful if I seek to sketch the reasoning which lies behind the recommendations of the committee which I had the honour to chair. Ample evidence emerged to convince it that there were many charities within the order of reference of the committee which were not effective, and the committee identified the causes of this ineffectiveness as threefold. First, a woeful lack of accountability on the part of charity trustees. Secondly, the difficulties and complications in the way of updating obsolete charitable trusts. Thirdly, an ineffectiveness flowing from the sheer smallness of the funds at the disposition of the trustees. It was the task of the committee to search for an acceptable solution for those problems.
It became central to the committee's thinking that any solution to be acceptable had to comply with three requirements. First, the solution must be a simple one, easy for the trustees to understand. Secondly, it must be a solution which made no appreciable demands on central government or local government in terms of money or manpower. Thirdly, except only in the sphere of accountability, it must be a solution which was voluntary, in line with the voluntary nature of charitable giving.
May I turn first to the question of accountability which is sought to be tackled by Clause 1 of the Bill, and may I invite your Lordships to read paragraph 87 of the report of the committee which is the essential background to what we seek to do in Clause 1 of the Bill? If I may quote, paragraph 87 points out that:
"there is no immediate incentive for trustees of parochial and local charities to try to perform well. In the case of a private trust there

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will almost always be specific beneficiaries to whom, or to whose parents or guardians, the trustees are accountable and who are likely to take action if the trustees fall down on the job. In the case of a charitable trust, by contrast, the trustees are operating largely on their own, without any effective accountability save in exceptional cases. The result is that inactivity or incompetence is likely to go undetected and unchecked".
The principle behind Clause 1 of the Bill increasing the accountability of local charities for the poor is that a charitable foundation exists in the public domain. It is not a private matter, not a private concern, either of the trustees of the charity or indeed of the parish. Therefore, accounts have to he made informative and they must be open for all to see. Not only local authorities but also local residents and local charitable organisations must be able—and indeed must be encouraged—to concern themselves with charities for the poor which exist in their locality.
Clauses 2 and 3, as your Lordships have been told, deal with the updating of obsolete trusts and with amalgamations among small charities. The principle of Clauses 2 and 3 is that trustees of local charities and trustees of small charities should be placed in a position where they can put their own houses in order. Under Clause 2, the trustees of local charities for the poor are to be able, by means of a simple resolution, to bring their trusts, if obsolete, up to date, and they turn to Schedule 1 for the form of the resolution. Under Clause 3, trustees of a small charity may amalgamate with a more viable charity, again by means of a simple resolution. The trustees turn to Schedule 2 to see the form of the resolution.
These are very wide discretions given to trustees, and the committee considered that it was imperative that there should be adequate safeguards to prevent those discretions being misused. Six safeguards are built into the Bill. First, there is a waiting period, which is likely to be about three months, before the trustees can put the resolutions into effect. Secondly, the trustees have to be unanimous. The majority cannot dictate to the minority. Thirdly, the new purposes have to be such that they are compatible with the original purposes and do not violate the spirit of the original gift; and the trustees are required to express their opinion that that is so in the form of the resolutions. Fourthly, there must he public notice given of the change. Fifthly, the resolution must he sent to the Charity Commissioners with a statement of the reasons and also to the local authority in the case of a charity for the relief of poor in a parish or other locality. Lastly, the trustees are not able to act on the resolution until the Charity Commissioners have signified their concurrence.
Whether we have the right safeguards in the Bill is an important question. In a way it is a balancing act between simplicity for the trustees on the one hand and not overburdening the Charity Commissioners with too many duties on the other. I hope that the Committee has that balance about right.
The only other point that I ought to mention is the question of resource implications for local authorities. Those resource implications are negligible as the Bill stands. Under Clause 1 the duty of a local authority is confined to receiving the accounts, to allowing inspection to any person who wishes to see them and to supplying copies on request and upon payment. All
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the local authority has to do is to compile an index and possess a copying machine.
Under Clauses 2 and 3 the local authority has no mandatory duties. It has powers which it may exercise or not as it thinks fit. The Bill, as I think your Lordships have been told, is supported by the Charity Commission. Indeed, I think I am right in saying that it is welcomed by the Charity Commission. I hope your Lordships may feel that the Bill makes a modest but worthwhile contribution to society in an important and sensitive area.
5.52 p.m.
Lord Airedale: My Lords, when I became a member of your Lordships' House just over 25 years ago it never occurred to me in my wildest dreams that the day would ever come when it would fall to me to congratulate a Law Lord upon his maiden speech. But having served under the chairmanship of the noble and learned Lord, not only upon this committee but on the Joint Committee on Consolidation Bills, I offer my congratulations to him not only with humility but with the greatest enthusiasm. I think it has taken him just over two years to come to his maiden speech. We very much hope that it will not be another two years before we hear from him again.
Much has been said already about this Bill. I have only one point to make, and I shall not detain your Lordships for more than a very few minutes. The transfer of one charity to another will mean a loss of identity, and it may mean a loss of a piece of local history. Many charities were founded in honour of some well-known local person who was held in very high regard. The committee were told by one of the witnesses that what inspired the founders of charities sometimes was the desire to perpetuate the memory of a particular person whom they admired: the desire to perpetuate his memory for ever, they hoped, being almost more than the desire to accomplish the good works that the charity was to perform.
It will sometimes be possible to preserve the name of the transferor charity by incorporating it into the name of the transferee, but sometimes this will be difficult because it will lead to a cumbersome new title. However, I hope that the Charity Commissioners, whose task will be to oversee these transfers, will themselves be instinctively anxious to do what they can to see that a piece of local history does not disappear. If Ministers and others were to echo these hopes in the course of this Bill through Parliament, I am sure that the Charity Commissioners would feel strengthened in their desire to do what they can to see that local history is kept alive.
5.55 p.m.
Lord Maude of Stratford-upon-Avon: My Lords, as has already been said, the Select Committee dealt with two Bills relating to charities, one of which was the Bill that came ultimately to your Lordships' House as the Small Charities Bill and was taken over by my noble friend Lord Renton.
It took me 28 years of solid balloting to draw a place in the list for Private Member's Bills in another place. I confess that when I managed to carry it through all its stages in another place in the last Session of my last

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Parliament, such is the vanity of politicians that I was puffed up with the hope that I might go out in a blaze of glory leaving a Maude Act on the statute book as a permanent memento to my parliamentary career there. But your Lordships, in your wisdom, decided differently. Swallowing my natural disappointment, I hope that I am able to approach the present measure dispassionately and with generosity.
Not only my Bill but that of my noble friend Lady Faithfull were fed together into a kind of legislative mixer which, like the mills of God, ground very slowly but came up in the end with what I think we can all agree is a valuable and worthwhile measure. I fully appreciate what the noble Lord, Lord Mishcon, said about the very important matters with which this Bill does not deal. What my noble friend who moved the Second Reading said is essentially true and very important for us to realise; it is that there is no hope in the world that any Private Member's Bill which attempted to deal with the whole field of charities law and of reorganisation of the Charity Commission could possibly get through the other place during the Private Member's Bill time in one Session of Parliament. Nor do I believe that it would be a proper subject for a Private Member's Bill. This is something which the Government must do. It would be the greatest pity if what is valuable and important in this present measure were to be prejudiced by any attempts to widen the scope of this Bill. I hope very much that my noble friend will follow his suggestion of tightening up the Long Title to ensure that we can keep within the bounds of what the committee set out to achieve and what they have put into this Bill.
There is no doubt whatever, as the committee find, that there are a great many small charities in this country which have become ineffective, not always because the resources are not there but often because they have been ill-managed or because the trustees have lost interest or simply do not understand what they could do to improve the effectiveness of their charity. There is, as has been said, a great deal of money lying about which might be much better used. I entirely agree with the noble Lord, Lord Mishcon, that a great deal of publicity ought to be given to try to stir up public interest and the interest of the trustees to see how much more could be done to make effective use of the endowments and income.
I wish to refer to only two specific points in the Bill to which I might wish to return in Committee. The one which is the most important and which has been mentioned already refers to the financial limits. I do not find anything to disagree with in the financial limits in Clause 3—a gross income of £200 or less. This seems to me to be reasonable for that purpose. It is with the financial limits in Clause 4 that I am concerned, because Clause 4, to all intents and purposes, is the one that replaces my own Small Charities Bill. I recognise, of course, that the use which is likely to be made of Clause 4 will be considerably diminished by the provisions of Clause 3, because very many small charities which without the provision of Clause 3, might have wished to spend their capital and terminate their charity, may well be stimulated to take advantage of the opportunities under Clause 3; but there will still be some which will not.
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I feel that the financial limits in Clause 4 are too low. My noble friend Lord Colville of Culross—and I know that the noble and learned Lord, Lord Brightman, and other members of the committee felt the same—took the view that there was a great deal of opposition to the idea that any charity, having once been established by a donor, should fail and be wound up completely. I was advised that there was no law or anything else which said that this was something immutable and could not happen. Obviously, there is a moral obligation to try to keep a charity in being as long as it can be effective. But even if there were some total bar in law or morality to the winding up of charities by disposal of their endowments, Clause 4 breaches that anyway because Clause 4 gives charities the power to spend their endowments if the endowment and the income is below a certain point. So the principle is breached in Clause 4, anyway: and since the principle is breached, I think that one is entitled to ask whether the figures are reasonable. As to the gross income of £5 or less, that, I think, is arguable; but what I am sure is that the value of the endowment at £25 or less is a figure that is too low.
One must assume—and I think that it is probably right that it will be assumed—that when the Bill mentions the value of the endowment we are talking not of nominal or par value in the case of securities but about estimated current market value, whether of securities or of whatever else. I would point out that it is possible for a charity's gross income to be less than £5 while the value of the endowment is considerably more than £25, because not all trustees have invested their money as cleverly or with due notice of changing opportunities for investment. I believe that while there may not be a case for increasing the £5 limit under Clause 4(1)(b), there is certainly a case for increasing the value of the endowment in Clause 4(1)(a) above the figure of £25 because—and this is important—before a charity can dispose of its assets it has to meet both these requirements, both in terms. If it had been "either/or", there might perhaps have been more to be said for it: but it is very restrictive indeed to make it meet both the endowment value of £25 and the income limit at £5 or less: and I think it would be worth pursuing that in Committee.
The only other point that I should like to raise—this is a comparatively minor one but it has caused me a little concern—is about the requirement for trustees to give public notice of what they are about to do. This is provided in Clause 1(4)(a), and the phrase appears throughout the Bill:
"give such public notice as they think reasonable and justified".
It appears again in Clause 2(6)(a):
"give such public notice that they have done so as they think reasonable and justified".
But in this case, in Clause 2, that is substantially cancelled by the last paragraph of subsection (6), which says:
"The trustees need not comply with paragraph (a) of this subsection if they consider that, in all the circumstances, no useful purpose would be served by giving public notice of the resolution".
Exactly the same appears in Clause 3(5), where they are told to
"give such public notice … as they think reasonable and justified";
and then are immediately told that they need not comply with that if they do not want to or consider that it would not be useful.

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I think there is a contradiction here; but I am not sure that they ought to be allowed to take these steps without giving some public notice of what they intend to do or have done, even if it be only, in the case of a small local charity, a notice on the parish notice board. I think the reasoning behind this was that, since they are under an obligation to notify both the Charity Commissioners and the appropriate local authority, notifying the appropriate local authority would bring it to the notice of all local people who might be concerned or interested. I do not think that this is necessarily so. Where you have, for example, a large county council or a large district council and this is a very small charity in one tiny village, it does not in the least follow that some councillor will in fact pick up what is going on by local word of mouth and inform his constituents. I see a certain amount of trouble, resentment and opposition being caused if local people discover that their own small, local charity is going to undergo some transformation about which they have never been informed. I think it would be sensible if, at least, we remove the waiver of the obligation to give public notice where it occurs in this Bill.
I am sorry to have taken up so much of your Lordships' time but, having been thwarted in my ambition to go further with my own Bill, I felt I was justified perhaps in spending a little time on the present one. I should like to conclude by thanking the noble and learned Lord, Lord Brightman, my noble friend Lord Colville of Culross and all the other members of the Select Committee for having done such a good job and for having brought this matter to a conclusion with which I hope we can all be satisfied.
6.10 p.m.
Lord Allen of Abbeydale: My Lords, it was a very great pleasure to listen this evening to the speech of the noble and learned Lord, Lord Brightman, as indeed it was to serve on the committee under his chairmanship. He kept us under very firm control and was very strict in seeing to it that we came up with positive proposals, as indeed we did. Altogether it was a fascinating experience and I think some of us ended by knowing rather more about such mysteries as ecclesiastical parishes and Welsh local government than we did at the beginning. I shall not keep the House for very long, as the provisions of the Bill and the reasons for them have already been explained with a clarity which could not be excelled, but there are one or two points I should like to make.
For one reason or another, I have been concerned off and on over the years with problems of charity law and administration, and what struck me with renewed force as our inquiry proceeded was that we knew so little about some of the basic facts. The Central Register of Charities, of which such high hopes were held when it was created by the 1960 Act, manages at the same time to be cumbersome, incomplete and out of date, for reasons which one can readily understand; and although we have the results of some of the county reviews and some very valuable pieces of research, the fact is that we just do not know with any exactitude what we are talking about in terms of sums when we discuss these local charities.
I think, though, that everyone does now agree that as a starting point it can be accepted that there are
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quite a lot of charitable assets in existence which are not being put to the best advantage. Conscious though I was of the advantages of passing into law the Bill mentioned by the noble Lord who has just spoken, it always seemed to me a fatal objection to that Bill, which we know the Government at one stage favoured, that it would result in the loss for all time of sums which could still be made capable of effective use for charitable purposes. Incidentally, that Bill would also have had the effect of creating further havoc with the central register, as charities could simply have faded away without anyone at the centre knowing.
It seems to me that Clauses 3 and 4 of the Bill tackle this problem of the small charity in a much more effective way.
The question which has been raised by the noble Lord, Lord Maude of Stratford-upon-Avon, about the financial limits in Clause 4 no doubt can be pursued at Committee stage but since he has raised the point, I think it only right to say that in my view it would be wrong to go above the limits we have set out in the clause. He fairly takes the point that the clause itself breaches a principle, and it is no secret that there was some discussion on whether that clause should be included at all; but if one is to breach a principle, in my view, the breach should be kept as small as possible.
If we turn for a moment to Clauses 1 and 2, I am conscious of the fact that earlier on, I think on two occasions, I spoke in favour of the Parochial Charities Bill, a central feature of which was to import an element of compulsion. I felt then that so little had been achieved in this regard by voluntary effort under the 1960 Act that it was pretty doubtful whether much more would be achieved in the next 20 years or so unless we had on the statute book something with some teeth in it. But the evidence we received during our inquiry persuaded me that to go in for compulsion would arouse much controversy and much resentment, especially among the trustees who are conscientiously discharging their responsibilities, so much so that we might end up with a measure which created just as many problems as it solved, in the somewhat unlikely event that the measure would get through Parliament at all.
I came to the conclusion that the other possibilities which emerged in the course of our inquiry and which are now embodied in these clauses in the Bill offered a greater prospect of real progress, even though, as has been said more than once, that progress could be quite modest. I am therefore very much in favour of the Bill; but there are four points I should like to touch on very briefly. They are points where I feel a little concern; I was going to say "anxiety", but that would be putting it too high.
The first sounds a bit technical. It arises on Clause 2(2) and is rather more than a drafting point to be left to the Committee stage. Clause 2 itself very neatly bypasses the problem of cy-près, but I cannot help wondering just a little whether some lay trustees might he a shade puzzled, when they come to set out objects which are not too dissimilar to those of the original gift which of themselves become obsolete, to learn that these new objects must still be objects which are charitable in law—a test, the answer to which is not always entirely straightforward.

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Secondly, I think one is bound to ask: is it right to limit the first two clauses to charities for the relief of poverty? There is the particular problem of the charity with a number of purposes, only one of which is the relief of poverty, which will find that different rules apply to the different parts. We were assured that difficulty could be surmounted.
However, going beyond that rather narrow point, there must be something of an argument that if we think that what we are suggesting in these clauses is good sense for charities for the relief of poverty, then it ought in logic to apply to other types of local charities as well. It is true that the Parochial Charities Bill, which comprised half our terms of reference, was similarly limited; and in paragraph 82 of our report we make a valiant attempt to justify such a limit on the merits, arguing that it is among those often old and largely obsolescent charities that the chief mischiefs lie. I suppose, too, that I should remind myself of the Churchillian adjuration to abstain from needless innovation, particularly when dictated by logic. Even so, I shall be interested to know whether the Government (if, as I hope, they are going to welcome the Bill) have it in mind to suggest any widening of the application of these two clauses.
My third point is whether the Charity Commissioners will be able to take on the extra duties that the Bill puts on them and which to my mind are perhaps a little greater than the noble Viscount suggested when he was introducing the Bill. They find it difficult enough in all conscience to discharge their present duties with the resources allocated to them. The Chief Charity Commissioner was examined closely on this point, but I think it would be right to ask the noble Baroness when she speaks whether she feels able to give us any reassurances on this point, and whether the Government are confident that these new duties can safely be taken on and properly discharged.
Finally, I should like to say a few words about investment. Some charities have done well; a great many have not. Some of them have not raised their rents. Some have simply left their capital in undated, fixed-interest gilts. Some think that, because their assets are now vested in the Official Custodian for Charities, they are relieved of the responsibilities of financial management. Altogether it is not a very happy story.
The other day I read an interesting article in the Investors Chronicle which argued that it was rather a pity that this opportunity was not being taken to revise the Trustee Investments Act. Notwithstanding the width of the Long Title (I go along with the noble Viscount in thinking that some alteration is called for there). I fear that such a proposal would fall well outside the scope of this legislation. But I believe that charities with sizeable funds—I think that the operation of this Bill should add to their number—would find it sensible to follow the advice of that article and appoint an investment adviser. The trouble is, I suppose, that not all trustees read the Investors Chronicle; come to think about it, they do not read Hansard either.
I noticed that in The Times today there was an article about charities in which the writer referred to the report of the Select Committee but seemed to be
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completely unaware that we were just about to debate this Bill.
One of the problems on which the noble Lord, Lord Mishcon, touched, and which the noble Lord, Lord Maude, took up as well, was the question, if the Bill is passed, of getting it widely known and understood. No doubt the National Council for Voluntary Organisations will play its part in giving publicity; no doubt the Charity Commission, which has already started, will also organise some publicity; but as has been pointed out, it is not in touch with all charities. I think there is a real problem here and I wonder whether the Government have any thoughts to offer in this particular context.
I am bound to confess that if I had been given a free choice of a place in the legislative programme for a Bill on charities (even a Private Member's Bill, with all its modest scope) I am not entirely sure that this particular topic would have come right at the top of my list. But certainly we have here a perfectly good opportunity to make worthwhile, if modest, progress, as the noble and learned Lord put it, in an area where progress is much needed.
There are a great many trustees who discharge their duties perfectly satisfactorily, and all credit is due to them. But the mischiefs we identified exist on too great a scale for comfort. There is still a very important role for voluntary charitable effort in our welfare state and the Bill will help a little to improve the discharge of that role. I hope that the House will give the Bill a Second Reading and, if I may go on, I hope that we shall be told that, if necessary, the Government may be able to find some time for it in another place.
6.25 p.m.
Lord Mancroft: My Lords, I, too, should like to join in congratulating my noble friend Lord Colville on the very clear and helpful way in which he has introduced this Bill to your Lordships' House. I should also like very warmly to congratulate the chairman of our committee on his maiden speech, and indeed on his chairmanship. I have only one complaint to make: he has spoilt the market. None of us will ever be able to take on the chairmanship of a committee again without looking anxiously over his shoulder to see whether the noble and learned Lord, Lord Brightman, would have approved or disapproved of the course he is suggesting should be taken by his colleagues. I hope it will not take all the time of another Private Member's Bill and another Select Committee before the noble and learned Lord gives us the benefit of another speech in this House in its legislative capacity. If that proves to be the case, I will utter an ugly threat. In the course of the 42 years in which I have had the honour to be a Member of your Lordships' House, I have sponsored no fewer than seven Private Member's Bills with varying degrees of luck and ill-luck. I still have two or three left in my filing cabinet. If the noble and learned Lord promises that he will speak again, I will keep them there; if not, he knows perfectly well where the threat lies.
The noble Lord, Lord Mishcon, touched on, and almost flirted with, the subject of the Charities Act 1960 and the possibility of amending it. My memory goes back to 1950 when the Nathan Committee was

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appointed; to the discussions afterwards in which I took a part myself; and to the Bill which I think was piloted through another place by my noble friend Lord Renton, who followed me at the Home Office in the role of Under-Secretary (and both of us were kept in order by the noble Lord, Lord Allen of Abbeydale, who has just spoken). I must confess that I thought the same as the noble Lord, Lord Mishcon. The more I listened to the evidence that was put before us, the more worried I became about the obvious gaps in the 1960 Act.
I was also reinforced in that worry by the ten years in which I have served as a trustee of my regimental charity, because day after day—the committee met daily and worked daily—I came to realise how the development of the welfare state and the changes in our social conditions had brought about a complete change of what would have gone through the minds of Lord Nathan and his colleagues when they were working upon the draft of the 1960 Act. But of course we could not do that; first, it would have been completely outside our terms of reference as a Select Committee—we must never do that of course when the Whips are listening; and secondly, it would have been a Herculean task which we could not possibly have undertaken.
The noble Lord read to us from one of yesterday's papers and it happened by coincidence that there were two major articles in the press yesterday concerning the public reaction to this little Bill. The writers were concerned principally with major charities and not with the charities which we are discussing this afternoon. But they made that same point and I think it is worth considering.
The other point I should like to make, which was brought up in two speeches in the House this afternoon, concerns the attitude of the Charity Commissioners towards this small Bill. One of the letters in The Times directly after our Bill was published commented, I think a little unfairly, on the attitude of the Charity Commissioners and asked why they had not taken a more active part in supervising this problem. With the best will in the world, they could not. They could have done so of course if they had three times the number of staff and four times the number of computers. Impressed as I was with the evidence they gave us, I came to the conclusion they had done their level best with the facilities at their command and the time at their disposal. The Charity Commissioners take a certain amount of time and trouble over their work; the expression "helter-skelter" is not one that can be readily applied to the work of the Charity Commissioners. Therefore, we cannot blame them. They quite clearly showed that they are proposing to take a much more active part, if they possibly can, with the resources at their disposal. I was grateful to hear that.
What about the fate of this Bill? We shall listen eagerly to what the noble Baroness has to tell us. I hope very much that it will pass easily on to the statute book. There are various types of Private Member's Bills, as I am only too well aware. There is the Private Member's Bill that is really a Government Bill, given to a Back-Bencher or private Member for the sake of the timetable. There is the old warhorse of a Bill; a Bill
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of the kind which noble Lords opposite on the Liberal Benches used to produce year after year—a Bill of Rights. They never expected to get it on to the statute book but took it out for a little airing once a year. Dear old Lord Merthyr, whom we all liked so well, used to produce a Bill at regular intervals to try to have the date of Easter fixed. He knew that he would never get it on to the statute book but he took it round time and time again.
There is then the Bill that is directed towards a specific ill, a specific injury, a specific mischief. The noble Viscount, Lord Massereene and Ferrard, who I am sorry to see is no longer in his place, produced such a Bill only two or three days ago for the improbable though proper cause of enabling one to marry one's mother-in-law. I am not making fun of that because I tried some years ago to introduce a Bill to make it possible for one to marry one's divorced wife's sister—not one's deceased wife's sister but divorced wife's sister. It is an Act. It took the noble Lord, Lord Maude—I think it was—25 years to get his Bill into action, and it took me 11 years to get my Bill on to the statute book. I therefore beg the noble Viscount, Lord Massereene and Ferrard, to be of good cheer.
My Bill had some awkward consequences which I hope this Bill of ours will not run into. Many people did not realise that one could not do what my Bill sought to achieve; to allow one to marry one's divorced wife's sister. Indeed, I had some pained correspondence with a lady living in Manchester, who told me she had been living for some 20 years with a husband whom she discovered she had never legally married. When she told him this, he (realising the marriage had not been happy) folded his copy of the Manchester Evening News, heaved a sigh of relief, and went to live with a barmaid in Bridlington.
The last type of Private Member's Bill is the kind we have before us today. I hope that the noble Baroness will be able to reassure us about this Bill. I was worried about the 25 years mentioned by the noble Lord, Lord Maude. I could picture him standing—as so many of us do—by the luggage carousel in an airport. One makes a grab (or a small porter does) at one's luggage. One misses it or it falls to pieces in one's hand, and away it goes for 25 years, into the maw of the airport, never to be seen again.
I hope therefore that the noble Baroness will be able to give some reassurance that this Bill be more kindly treated than some of our Bills have been in another place. We treat their Bills very kindly always. I am sure that the noble Baroness, with all her power and charm (and, if she will allow me to, I ask her to forget about Bridlington), will be doing all she can to get this Bill on to the statute book, where it deserves to be.
6.33 p.m.
Lord Denning: My Lords I enjoin with all your Lordships in thanking my noble and learned friend Lord Brightman and the other members of the committee for the good work that they have done, and in congratulating my noble and learned friend on his maiden speech today. I may tell your Lordships that no one in this country knows more about charities than my noble and learned friend Lord Brightman; we could not have had a better person to chair the committee.

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If I may say so, the proposals are excellent. I warmly support the Bill, but I would almost join with my noble friend Lord Allen in asking whether it has enough teeth to ensure that matters are put in order. The mischief is plain and it is spelt out in the report of the Select Committee. It is that 140,000 charities are registered with the Charity Commission but only 14,000 of them submit any accounts. Also, charity trustees are supposed to manage funds and invest them properly in order to ensure that they earn a proper income. Do they do that? No, my Lords, funds are left in the bank and no one reviews them or sees to it that any changes are made to the investments.
Lastly, what is to happen about trustees? Many of them fall dormant. Trustees die and nobody is appointed in their place. It happens that there is £60,000 left in a bank for a trust for which no trustees exist. In my own little town of Whitchurch there was a trust in favour of the freeholders of the Borough of Whitchurch. They disappeared and the corporation no longer existed. Who owned the property? We had to appoint our own trustees. Many trusts do not have proper or suitable trustees, or sufficient of them.
Looking through the report, one sees that this and that obligation is placed upon the trustees; that this or that power is given to them to apply, for instance, to extend the objects of the charity—the cy-près—if that matter is not properly dealt with; they must apply for permission for capital to be used; and they must apply also to transfer funds to another charity. All those powers are vested in the charity's trustees. Who are they? Are they all good and responsible trustees? The report assumes so and the Bill assumes so. Must not something be done to ensure that all charities have good and responsible trustees?
I should like the matter to be placed in the hands of the parish councils. I was president of the National Association of Parish Councils for some years. They did not have enough work to do. Could they not supervise parochial and other charities? They could do so without any fee or expense. I am sure that they would do this work voluntarily. There could be a solicitor, a banker, and some other representative. Why should not the charity trustees be properly constituted so as to perform the very important functions which this Bill will give them?
I am afraid that I do not find one word in the report as to the appointment of new trustees or the constitution of them. I should like to see some provision to ensure that trustees are fully representative of good and responsible people. I believe that they would all do this job voluntarily. Many people in our localities would do so; bankers and solicitors would voluntarily give their services if only we requested them to do so. The only request I would make—although it would of course have to be done in Committee—is for some consideration to be given to the appointment of trustees and to seeing that proper trustees are available for all the charities in the land, and that they will do their duty.
The only other point I would make concerns accounts. Clause 1 of the Bill lays down that the accounts are to be properly prepared in the prescribed form and delivered to the local authority, whichever it may be. But who is to enforce those provisions?
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Subsection (5) states that any person may apply to the Charity Commissioners. All well and good—but will one be able to find a person who will do that, if the accounts are not proper? One must find a public-spirited person who will take an interest in the charity and will himself apply for the accounts to be properly regulated. Could not the responsibility be not only with the person but with the parish council, or whatever it may be, in order to see that accounts are properly prepared? These are only Committee points; but I should like to see this excellent report supplemented in some way, and given some teeth in the way that I have suggested.
6.40 p.m.
Lord Renton: My Lords, my noble friend Lord Mancroft has made a revelation to your Lordships which saves me from making a confession; namely, that I had the responsibility of piloting the Charities Act 1960 through its Committee and Report stages in another place. It was one of the most harassing experiences that I have ever had in a long and varied life. Strangely enough, that Act was regarded at the time as being controversial, not because people thought that it did not go far enough, but because, its critics said, it went too far by giving too much power to the Charity Commission over trustees, even though, as has been pointed out in several speeches this evening, it contains practically no powers of compulsion over them. Indeed, the Charity Commission has lacked the resources which would have enabled it to take the fullest opportunity of such power as is given to it by that Act. At the time that Act was considered progressive, almost adventurous. Now, however, its shortcomings are well known and have been referred to by most of those who have spoken in this debate. It was very far-reaching, so much so that the mere list of statutes that it repealed starting with, I think, the 1601 Act to which the noble Lord, Lord Mishcon, referred, came to 12 or more pages.
Before I go any further, I should like to join in the congratulations to the noble and learned Lord, Lord Brightman. His speech was well worth waiting for, if I may say so. Like others, I hope that we shall not have to wait so long to hear him again. His committee, by its terms of reference, was necessarily confined to the scope of the two Bills introduced in July 1983—one by my noble friend Lady Faithfull and the other by myself, although I always regarded it as the Bill of Sir Angus Maude, which it truly was for reasons which your Lordships know. I should like to join in the rejoicing that he is now with us.
In my opinion the noble and learned Lord, Lord Brightman, and his committee in their difficult task managed to combine the virtues of both of those Bills with the vices of neither. In particular, I am glad that the Select Committee avoided recommending compulsion. Even now, after 24 years, I think that it is best to see how far we can get with voluntary action. If we had something more stringent, there would be no hope of this Bill getting through both Houses. In any event, I think that if we are to have all charitable trusts registered with the Charity Commission, put on a computer and with compulsion to provide information so that it can be properly analysed and so that we can detect the moribund trusts to see that their

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endowments are better used, that would be a major task for the Government to undertake. I join with those in hoping that one day the Government will undertake it. Frankly, I do not think it will be the major task that the Nathan Committee, the Home Office and the Government undertook before the 1960 Act came on to the statute book. All that would be needed is some tightening of administration, coupled with some amendments to the 1960 Act; and funds will have to be provided.
My noble friend Lord Colville of Culross is ideally suited to pilot this Bill through the House because he is a Queen's Counsel, a former Home Office Minister and a member of the Select Committee. I hope that when he does so he will be so kind as to bear in mind, first, the point made by my noble friend Lord Maude of Stratford-upon-Avon in referring to the very small limit in Clause 4. It is quite absurd. I hope that we can get that amended in Committee. I do not think that that would jeopardise the Bill.
I refer also to Clause 3 because, unlike Clauses 1 and 2, it is not confined to local charities for the relief of poverty. Indeed, it is abundantly plain that it can refer to any registered charity as long as the conditions laid down in subsection (2) are followed; that is to say, £200 gross income is the limit.
In order to make the fullest use of the opportunity given by Clause 3, I suggest to your Lordships that what is needed is an effective method of identifying those small charities that the clause would cover so that the trustees of those charities can be approached by larger charities—I mention for example the Royal Society for the Mentally Handicapped, of which the noble Lord, Lord Allen of Abbeydale, is chairman and I am president. When the objectives of these small charities are not dissimilar from the larger charities which might approach them with a view to arranging a transfer of property within the power given in Clause 3, it would be a great pity if the opportunity were missed. I do not suggest that any amendment to the Bill would be needed to achieve the passing of information about these small charities. It merely needs a Ministerial statement that the Charity Commission will publish information about those small charities so that the clause could be used to devote all the resources of moribund charities for the benefit of living charities which are doing a good job. Some of those charities are of course very big but need more money. In wishing the Bill a safe passage through both Houses I should like to remind the business managers in another place that
"In faith and hope the world may disagree, But all mankind's concern is charity.".
6.49 p.m.
Lord Prys-Davies: My Lords, I shall always value the experience of serving on your Lordships' Select Committee, and I hasten to add my tremendous appreciation of the leadership that the noble and learned Lord, Lord Brightman, gave to the committee. At every stage the noble and learned Lord was decisive. Indeed, he was an inspiring chairman. We are also grateful to the noble Viscount, Lord Colville of Culross, for having introduced the Bill to the House and explained its provisions.
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There is one point that I should like to make, and it is this, The problem is not new. The three principal problems identified by the committee are not different in nature, although possibly different in degree from those which have beset charities for over a century. One could quote from the reports of the Charity Commissioners in the 19th century complaining of difficulties which were being constantly experienced because of outdated objects or outdated purposes. Similarly, since the middle of the last century there have been complaints of inadequate accountability of charity trustees.
We know from the evidence of history, from the evidence brought before the committee, that the Charity Commissioners are there in the background, but the trustees do not stand in awe of them. Indeed, we have heard how some trustees have allowed their charities to become dormant and to be wiped off the map. Bearing in mind the recommendation made by the committee in order to improve accountability, we might do well to recall that the Charitable Trust Amendment Act 1855 imposed an obligation upon trustees of charities to submit accounts annually. But this obligation was ignored by two-thirds of the charities. That was partly due to the absence of a sanction or a penalty for failure to submit accounts.
The obligation to submit accounts was also cemented into the 1960 Act in order, hopefully, to provide a firm foundation on which to build accountability. But we have heard that nothing came of this, the obligation having been ignored by the majority of the parochial charities to which it applied. So one cannot be blind, deaf and dumb to this unsatisfactory state of affairs.
Unlike the noble Lord, Lord Mancroft, I am a little uneasy about the role of the Charity Commissioners. This is the second point which I wish to make. In their report for the year 1982, published a matter of a few months before the Select Committee was established, the Charity Commissioners appeared to be agreeing with a government statement of about 1980 that there was no need for changes in the law on charitable status or in the administrative practices relating to charities. Then they went on to reassure the reader that that did not preclude a reconsideration of the subject in the light of fresh evidence suggesting that changes are desirable. That is to be found in paragraph 15 of the report for 1982.
Within 18 months the fresh evidence became available in Volume 2 of the report of the Select Committee. I should have thought that it must be a matter of some anxiety that the evidence contained in Volume 2, or the nature of it, was apparently not known to the Commissioners in 1982. It is also worrying that this evidence in Volume 2 would not have been collected together and have seen the light of day had it not been for the perseverance of the individuals who sponsored the Parochial Charities (Neighbourhood Trusts) Bill and who sponsored the Small Charities Bill. We in this House are particularly indebted to the noble Baroness, Lady Faithfull, the noble Lord. Lord Renton, and the noble Lord, Lord Maude, for their lasting contribution. But anyone who reads Volume 2 of the committee's report will appreciate that there is considerable unease about the

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commission as at present constituted, and with its current resources, making any sort of showing commensurate with the efforts which are required of it.
The proposals and the safeguards have been explained; I will not go over that ground again. But we should note that a quarter of a century ago the reformers looked to the Charity Commissioners and the local authorities to take the lead in bringing about the changes which were seen to be necessary. In this report we have not gone down that prescribed road. The proposals contained in the committee's report start with the trustees and the need to make it possible within limits for them to make the most effective use of the endowments available to them. One might well ask: is there a better place from which to start?
Having asked the question, one must, however, mention the caveat that has been spelled out by my noble friend Lord Mishcon, the noble and learned Lord, Lord Denning, and other Members of your Lordships' House. It is that this Bill, if it is passed, will be what the trustees make of it. Therefore, we must ask: are we asking too much of the ordinary trustees of a charity? Will they co-operate or will they be indifferent? In other words, are we asking trustees, in the words of the old-fashioned sermon, to change themselves? We just do not know enough about the attitude of mind of the average trustee to enable us to answer this question—although I think it is absolutely right that we should ask the question. Certainly this Bill, with its limited but still real powers, will open up possibilities which should be seized by trustees of afflicted charities. If they fail to do so, if they fail to grasp the opportunities, we shall be back to square one.
6.57 p.m.
Baroness Lane-Fox: My Lords, none of us who served on the Select Committee can be surprised by the admirable maiden speech by the noble and learned Lord. Lord Brightman. The Select Committee on Charities is the first Select Committee on which I have had the honour to serve, so I have no yardstick by which to measure. Certainly to observe the masterly skill, good humour and patience of the chairman was inspiring and unforgettable. Here I so agree with the last speaker. The report owes much to the brilliance of the noble and learned Lord and also to the sustained effort and expertise of the clerk, who had a mass of documents to unravel, collate and condense.
My noble friend Lord Colville of Culross, the noble and learned Lord, Lord Brightman, and other speakers have dealt with the main substance of the Bill. I want just to refer again to Clause 3(1) and Clause 4(1). Both give a kind of do-it-yourself power to trustees to pass a resolution regarding (a) the transfer of property worth £200 or less to another charity and (b) to free from any restrictions imposed by law expenditure of an endowment of £25 or less, or gross income of £5 per annum or less. My noble friend Lord Maude and my noble friend Lord Renton think these limits a little low. I should certainly say they were no passport to profligate expenditure. But they are sums which would be warmly welcomed by other charities struggling for funds.
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Any of your Lordships who have my experience of trustee meetings in a rural locality will know only too well how time-consuming is the current requirement to consult a higher authority. At best, and by their own word, it takes six weeks to get a reply from the Charity Commissioners. There is then further correspondence, followed probably by the need for a journey to London from far away rural areas to give verbal clarification of a point at issue.
The Bill's proposed method streamlines this course to reduce these delays—delays that can exasperate the trustees. And we have heard what valuable people they are to keep on our side. Many rightly consider that they, at grass roots level, have a far clearer view of local requirements than the Charity Commissioners. In any case, a copy of such a resolution, which must have been unanimously carried, is to be forwarded to the commissioners and, in the case of transfer of property, forwarded also to the local authority. The Charity Commissioners will be asked to signify their approval or otherwise of the resolution within three months unless they state that they require further time to consider the case and then the time limit will be not more than six months. Such a period may not seem long to the Charity Commissioners, but to those with constructive plans awaiting a decision it is quite long enough.
Throughout the taking of evidence it was apparent that the Charity Commissioners have the reputation of being aware immediately of events and conditions in far flung hamlets and villages. Yet the extent of their existing establishment and their shortage of information technology renders this most unlikely. The Bill aims to recognise these deficiencies and, in the case of the small sums I have mentioned, to provide more realistic timetables to meet the present day scenario.
May I make a passing reference to a fact that repeatedly showed up throughout the hearings? That is the determination of trustees, voluntary bodies and organisations to protect the small charitable sums in their charge from compulsory schemes even where these would save both time and effort. Conscious of this bastion of defence of these tiny local nest-eggs, the chairman and my distinguished colleagues on the Select Committee have sought to respect this very responsible stance yet to give a gentle reminder that the needs of the 1980s call for a slightly more flexible attitude to bring to life these useful and oft-forgotten funds. For many more reasons than I have described, it is my hope that the Bill will be welcomed in this House and in another place.
7.2 p.m.
Baroness Faithfull: My Lords, if the noble Lord, Lord Airedale, was astonished to find himself after 25 years being the one first to congratulate a noble Law Lord, it never occurred to me in a thousand years that I would be a member of a triumvirate who would supply a subject on which a notable Law Lord could make his maiden speech. I am proud, with my noble friends, to have achieved that. With much diffidence, I congratulate the noble and learned Lord. Lord Brightman. May I also thank the noble Viscount, Lord

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Colville, for introducing this Bill—this modest Bill, as the noble Lord, Lord Mishcon, called it. I believe that it is modest, but valuable.
I am sure that the noble Lords, Lord Renton and Lord Maude, hear the Select Committee no ill will for the fact that it has not produced exactly the Bill which they brought before the House. I also bear no ill will, but I would not be human or indeed honest if I did not express a tinge of regret that some of the recommendations made in the Parochial Charities (Neighbourhood Trusts) Bill have not been incorporated in the Bill before your Lordships today.
The Parochial Charities Bill—I shall confine my remarks to that Bill—made it mandatory for parochial charities for the relief of the poor to amalgamate, not transfer, across parish boundaries to meet the needs of new parishes, many consisting of new estates. This amalgamation was to take place with old parishes having parochial charities bringing in an annual income but no poor or needy in the parish. As the right reverend Prelate the Bishop of London said of parochial charities in the debate on 6th May 1983:
"It is often forgotten … that they belong not to the parishes but to the poor and needy"—[Official Report, 6/5/83; col. 287.]
The reason why the promoters of the Parochial Charities Bill recommended mandatory amalgamations was due to the historical fact that the Nathan Committee of 1952 which, as the noble Lord, Lord Renton said, led to the Charities Act 1960, gave permissive powers to trustees to form neighbourhood trusts. The recommendation was subsequently endorsed by both a Select Committee of the House of Commons and the Goodman Report. Suffice it to say, that from 1960 to 1983 only a few trusts availed themselves of the permissive power.
Having read the evidence given to the committee of the noble and learned Lord, Lord Brightman, I appreciate that feelings ran high over the mandatory clause. As I believe that the views, opinions and feelings of people should be heard and as in this country at present, in some sectors of public life, we have dissension, disagreement and frustration, I fully appreciate the line taken by the noble and learned Lord, Lord Brightman, and his committee in deleting the mandatory clause.
I am still not clear why the committee recommended transfer of funds from one parochial charity to another, rather than amalgamation. A Mr. Hellin wrote to me suggesting that the trustees of small parish charities might be more reluctant to be taken over by other charities, by comparison with the formation of a totally new body. I wonder whether the noble and learned Lord, Lord Brightman, will forgive me if I quote his reply to me concerning that letter. The noble and learned Lord says:
"Such an arrangement could readily he carried into effect under the Bill as it stands. To take a simple case, suppose that there are in a parish three charities for the poor; suppose that there is general consensus in favour of the formation of a totally new body to take over and administer the funds of these three charities, as a single charitable fund".
Then the noble and learned Lord, Lord Brightman, goes on to state what the procedure would be. I say this because I think that it will allay quite a lot of worries in a number of people's minds.
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The second point about which I am deeply concerned occurs in Clause 2, which is headed,
Resolution by trustees of old charity to alter objects.
As I think I said earlier, the right reverend Prelate the Bishop of London made clear that the charities were for the poor and for the needy. I should like to ask the noble Viscount to say when he replies whether he is satisfied that the original charities for the poor and the needy will in fact be used for the poor and needy. I am bound to refer to the pamphlet that the Charity Commission has, I think very efficiently and quickly, drawn up. Nevertheless, a clause in it which worries me says that the trustees,
"should he able to resolve unanimously to change the objects of the charity if they are of the opinion that the existing objects are obsolete or lacking in usefulness or impossible of achievement".
In regard to the parochial charities, I feel very strongly that they should be used for the poor.
But that brings me on to the point about which I am still confused. Suppose one has a village—a large village, perhaps—which has a good charity, well run by the trustees, with a good income. When I say "a good income", I do not mean thousands and thousands, or millions; I simply mean £500 a year, which would he quite adequate to deal with the stop-gaps of the welfare state. Suppose you have such a village—and I know such a village—where there are no needy and no poor. I know that that village would like to use that money in order to put up seats on the village green and build a bus shelter. But that would not be devoting the money to the poor. I should be grateful if the noble Viscount could explain to me exactly how that would be fulfilled.
The strength of this Bill is the clause which lays down that annual accounts must he submitted to the local authority, which, in turn, can make them available to those requesting to see them. Therefore, if this Bill is to be effective and money is to be available for the relief of the poor, it behoves members of the public, voluntary organisations such as the rural community councils, councils of social services, the Charities Information Bureau, and the National Council of Voluntary Organisations, as referred to by the noble Lord, Lord Allen of Abbeydale, to call for and to see those accounts, to take an interest in them and to be aware of them. Thus the public would have some control and could ask the trustees to administer well the trusts for which they are responsible. May I say that there is a growing awareness of the responsibility of trustees. Indeed, Brunel University has inaugurated a course for trustees. I did not believe that it would get anyone on that course, and I was astonished to find that the course is full.
Finally, I should like to say that from 1962 to 1983 the Charity Commission have not seen it as their role to safeguard the poor or the donors to parochial charities; hence the position today is as it is, and to a great extent this was appreciated in 1952. However, I believe that under the leadership of Mr. Denis Peach, the Charity Commissioner appointed, I think, less than two years ago, the commission will be aware of the mischiefs and poor administration of some parochial charities and will give support to trustees who have conscientiously and with integrity carried out their duties and will give help to those who are having difficulties. Despite my apprehensions, I support the Second Reading of this Bill.
7.14 p.m.
Baroness Trumpington: My Lords, I welcome the opportunity to speak on the Government's behalf in this interesting and important debate. My noble friend Lord Colville, who was of course a member of the Select Committee, has introduced with his usual eloquence the Bill which is before us. His speech permits me to confine my remarks to the Government's attitude to the provisions of the Bill and to endeavour to answer those questions aimed at the Government.
First, however, I should like to congratulate the noble and learned Lord, Lord Brightman, whose untiring efforts while chairing the Select Committee have produced this Bill. The noble and learned Lord must be aware, from the warmth with which his speech was received, how much we have enjoyed listening to his splendid and informative remarks this afternoon. I do not feel timorous when I congratulate my betters—just very, very jealous.
In producing its report the Select Committee has been admirably thorough in its consideration of the two Bills before it and of the issues underlying the problems of local charities; those of the responsibilities and powers of trustees, and the nature of the cy près principle. As my noble friend Lord Colville and many other noble Lords have said, for this we must be grateful not only to the noble and learned Lord, Lord Brightman, but to all the noble Lords who served as members of the Select Committee.
I must also pay tribute to my noble friend Lady Faithfull who has done so much to bring to your attention the very real problems which exist and to attempt to resolve them. Although we did not feel able to support my noble friend's own Bill, I am confident of your Lordships' agreement when I say that if this Bill is successful it will be in large measure due to her energetic and unselfish work.
There is widespread concern that something needs to be done about parochial charities. I am sure that we all share a desire to see the resources of charities, both large and small, used to their greatest effect. It is right that, in the case of local charities, we should be concerned with the proper and relevant use of funds which were donated sometimes hundreds of years ago. It is true that modern needs in a welfare state are different from those of previous times, but it is sadly also true that a need still exists. We have for some time recognised the problem of putting to effective use the under-used resources of parochial charities, so we were happy to support the setting up of the Select Committee to examine both Lady Faithfull's Bill and that introduced into another place by my noble friend Lord Maude and into this House by my noble friend Lord Renton. My noble friends Lord Maude and Lord Renton have shown not only stamina in the past, but also typical generosity in the present situation.
As we have heard, although the Select Committee did not consider that either Bill should proceed, it found that the evidence put to it confirmed the nature of the difficulties facing local charities—an inefficiency and ineffectiveness on the part of some trustees, which the committee believed stemmed from insufficient accountability, the restrictions imposed on them by the rigidity of cy près and the special difficulties of
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charities with very limited funds in relation to their objects.
Let me now comment briefly on the Government's attitude to the four provisions of the Bill. In regard to Clause 1, there is no doubt that many charities fail to meet their obligations under the 1960 Act to file accounts, and that trustees should be publicly accountable for their activities to a greater extent than at present. We see this provision as increasing public knowledge of the activities and assets of local charities. For the first time, trustees could be obliged to keep up to date their valuation of the property they hold on trust, which in itself might be a spur to action. The thought that anyone might make representations to the Charity Commission for serious default would also, I think, be a spur to action.
If I may pick up the remarks of the noble Lord, Lord Mishcon, about the failures of charities to register, I would suggest to him that reviews of local charities sponsored by local authorities throughout England and Wales brought to light many charities which had not complied with their duty to register. It is difficult to know how many have so far escaped the net. I think it is safe to assume that the number cannot be large, particularly in view of the tax benefits that accompany registration. I would anticipate that the publicity given to this Bill will bring to light some of these charities. I have little doubt that the commissioners will take every step to make the necessary provisions widely known.
To return to the Bill, its second clause empowers parochial charities for the relief of poverty to be able to change their objects. The architects of the Bill intended that trustees should be able to circumvent what the committee considers to be the over-restrictive principle of cy près, and the cumbersome process of changes through a scheme of the commissioners—a process determined by the legal requirements of the Charities Act. We find this proposal attractive for two reasons. Its simplicity may make it more likely that trustees will take advantage of the opportunities afforded by the Bill. It may also effect much needed reform while not imposing too great a demand on the resources of the Charity Commission.
We believe that the commissioners have a crucial role to play in ensuring that sufficient regard is paid to the original objects. They will if necessary act as a brake upon the trustees' intentions, should they appear to be straying too far from the terms of the original bequest. They will also take into account any representations made by the appropriate local authority or other people. Here other local organisations or people who have a view could make this known to the Charity Commission which would take it into consideration before deciding whether to concur with the trustees' resolution.
I come now to the third clause. We believe that this power for trustees of small registered charities to transfer their property to another will appeal to trustees and others who want to see sensible use made of small, perhaps dwindling, amounts of capital and who believe that the money cannot be put to a good use in isolation. By this method they will not be put to the strict test of cy près but could go to any registered charity large or small, local or national with similar

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purposes and ask, "Would you like to absorb our funds?" We think that its simplicity should commend the procedure to trustees.
The final substantive provision affects charities with a permanent endowment worth not more than £25 and income in the preceding accounting period of not more than £5. For charities of this size the committee accept that amalgamation might not be a practicable proposition and they therefore propose that they should be empowered to spend capital. The procedure proposed is again simple and straightforward for trustees. We welcome this provision as a useful measure for very small charities, although we believe—and I take note of the remarks of my noble friend Lord Maude—that there is something to be said for considering whether the limits have been set at the correct level initially.
When your Lordships' House last debated this matter, my noble friend Lord Elton said that charity is voluntary giving and charity law is based on the importance of preserving that principle. We believe that the chief merit of this Bill is its adherence to this principle. It gives to trustees of parochial charities for the relief of poverty a greater freedom to interpret their trust deed in line with modern life and needs. At the same time it tightens up their responsibility for proper management. This will focus on the production of accounts which should be a public statement of a charity's true financial affairs.
We cannot know to what extent the voluntary provisions of the Bill would be used; but if the opportunity is used a way would be opened for trustees to modernise and rationalise old charities. I like the idea of "do-it-yourself" amalgamations—a phrase coined by the committee in its report—although I am not sure how many trustees will want to tackle even the simplest of schemes. This view of the Bill as a potentially useful tool for trustees is shared, I know, by the local authority with which I was associated, and would expect by many others. I cannot speak for local authorities in general, but I understand that they are considering this matter urgently. I hope that they too will be able to welcome this Bill.
We see the Bill as a self-contained measure which should place only limited additional demands on the Charity Commission and local authorities. Your Lordships—in particular the noble Lord, Lord Allen of Abbeydale, and my noble friend Lord Mancroft—will have noted that the Charity Commissioners have already indicated their support for the Bill, which they welcome as a potentially helpful measure and a modest but useful reform. With regard to publicity for the Bill, about which the noble Lord, Lord Allen of Abbeydale, asked me, my reply is that the Government will consider how the Bill should he publicised and will consult the Charity Commissioners about the most effective way in which to make it widely known.
The noble Lord, Lord Mishcon, will be pleased to hear that the Charity Commissioners believe that they could implement the provisions of the Bill without additional resources—a point which we believe should commend the Bill to your Lordships' House. The
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noble Lord, Lord Mishcon, the noble Lord, Lord Maude, and the noble Lord, Lord Allen of Abbeydale, said that they did not think that the Bill was wide enough and that the Government should act. It is probably true to say that it is virtually impossible to devise a comprehensive law governing charities that would meet universal approval. A balance has to be struck therefore between periodic revisions of the law to meet changing circumstances and caution not to upset the delicate balances that have emerged over the years. One of these balances is between the voluntary sector—whether it be the donors or those that administer the charities—and the Government.
To answer the noble Lord, Lord Mishcon, and his remarks about the Government's attitude to charity law, let me say that the Government keep a close watch on the criticisms made of charity law and enter into discussion with those who wish to see changes—for instance, the National Council for Voluntary Organisations. They are not averse to change if change is clearly necessary to enable charities to function properly and effectively, but they are hesitant to support frequent changes in the law if it is not the law that is at fault. For example, the Charity Commissioners have recently interpreted the existing law in a way which allows the promotion of racial harmony to be charitable and they have given guidance to charities to help charities avoid exploitation by unscrupulous professional fundraisers.
The Bill is a modest reform measure but it is by no means generally agreed that radical reform is needed. The Bill does not impose the heavy hand of the Government through severe restrictions on trustees. It does, however, command widespread support for its provisions and if that support is not to be lost it is important that amendments be kept to a minimum and that the substance of the provisions remains essentially as recommended by the committee after their careful and detailed consideration.
I must say to my noble friend Lord Maude, my noble friend Lord Renton, and my noble friend Lord Mancroft—who tugged at my heart strings when asking whether the Government would give time—that the Government are already committed to a heavy legislative programme. I cannot hold out any promise of Government time. However, the Government will not oppose the provisions of the Bill as it now stands, and in view of the care taken by the Select Committee in its consultations it is hoped that others may not oppose it.
I have briefly set out our view of this Bill. The subject of parochial charities is one which, although it may not attract much attention at national level, is important in local communities, and I know that many Members of your Lordships' House have, like myself, direct experience of local and parochial charities. I believe that the careful and thorough study of this matter by the Select Committee reflects the depth and variety of the experience in this House of the problems of parochial charities. I understand that some minor technical amendment may be necessary. But having said that, I should like to assure your Lordships that the Government welcome the Bill.
7.29 p.m.
Viscount Colville of Culross: My Lords, the noble and learned Lord, Lord Brightman, made a speech which most earnestly and fully supported the case, which I had to deal with in rather technical detail, for the Bill. In joining with others in congratulating him on his maiden speech, I feel that he must be a happy man this afternoon because of the way in which his work has been received by this House. First, he succeeded with members of the Select Committee in obtaining the support of my noble friend Lady Trumpington on the Front Bench, without whose support we would not get any further at all. Then he managed to secure the generous support of my three noble friends whose Bills have not been pursued. They have set aside their disappointment; and I congratulate them and thank them for their generous remarks this afternoon about this new Bill, which has tried to pick out the best of what was contained in the two previous measures. So it has not been a failure.
At the bottom of the difficulty is the point made by the noble and learned Lord, Lord Denning, about teeth. The difficulty about teeth is that they do not come cheap in this field. Therefore, we have had to rely upon secondary measures (I would not say that they did not involve teeth) such as the points made so widely around the House, including the use of publicity and propaganda, the use of other national or slightly smaller bodies to bring to the attention of trustees the possibilities under this Bill, and other methods, all of which have been so constructively discussed this afternoon. If the noble and learned Lord, Lord Denning, has any further points which would not involve resources, of course we should be only too happy to consider them at the next stage of the Bill, and his wisdom in this would be very much appreciated.
I think I should try to answer a few points that have been made. First, my noble friends Lord Maude and Lord Renton raised the point about Clause 4. I should not for one moment wish to say that these figures at the upper limits are immutable, and by all means let us have a discussion in Committee about it. But I know that there are feelings—and the noble Lord, Lord Allen, is one who expressed them—that we must not go very much higher than this because otherwise the principle will be breached in a much more severe way, and one which may not be tolerated. This is a danger area, but by all means let us discuss it.
My noble friend Lord Maude raised the point about public notice being given under Clauses 2(6) and 3(5). One can exemplify the point by a case that was raised before the Select Committee. There was a charity—it has now been amalgamated under the Charities Aid Foundation—which was originally set up in order to give money to natives of Cumberland now resident within 30 miles of St. Paul's Cathedral. Where does one give public notice for that if one proposes to amalgamate with the Charities Aid Foundation? There must be some relief for cases of this sort; otherwise, it will not be possible for them to amalgamate at all because of the technical difficulty. Therefore, on reflection, I think that my noble friend may withdraw his objection to that.
The noble Lord, Lord Allen, pointed out that the new objects of a charity which the trustees wished to
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change must still be charitable. It will, or course, be for the Charity Commission to say whether or not they are, just as it does with all new charities now. But I say to my noble friend Lady Faithfull that if there are no poor in the parish and they wish to spend the money on seats for the park or for bus shelters, she may find that they get into great difficulty because I am not so sure that they are charitable. It may be that they should look a little further afield to see whether a wider amalgamation is not the solution to this because, for the purposes of amalgamations, you do not have to stay within the parish. It may be that one of the larger organisations mentioned by other speakers this afternoon would be more suitable, or at any rate perhaps they ought to consider it more broadly.
What is important is that the Bill provides only that the spirit of the gift should be preserved. I believe that that is an important concept when one is looking at something which has become obsolete but which could be used for up-to-date purposes.
The noble Lord, Lord Allen, commented upon the fact that Clauses 1 and 2 are confined to charities for the relief of poverty. I believe he will recollect that the reason for that is that the Select Committee did not have any evidence about anything else. The scope of the Select Committee was confined to this matter; but it does not seem to me to be beyond the bounds of possibility that if in this field the provisions of Clauses 1 and 2 appear to be helpful and satisfactory, some other person many come along later and wish to broaden the scope of charities to which they can apply. This is another area where the Bill may act as a pilot. Of course, the noble Lord will have been greatly relieved to hear from so authoritative a source as my noble friend on the Front Bench that the Charity Commissioners think that they can take on such extra work as there is within their existing resources. That is a relief to all of us, as well as to the noble Lord.
I believe that those are the points that needed to be answered. I am extremely grateful to noble Lords who have taken part in this debate for the support that they have given and for the anticipation that we shall continue with a very constructive approach to this small piece of legislation. I particularly thank the Government for their support and for some of the intimations about how it might be possible to deal with the matter in another place, which is a very useful tip for myself and in due course for some friend from another place. I hope that I have dealt adequately with these matters this afternoon on Second Reading. I look forward to a Committee stage when we can go into some more of these details. For the moment, I hope that the Bill may now be given a Second Reading.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Sale of Optical Appliances Order of Council 1984
7.36 p.m.
Lord Ennals Lord Ennals rose to move, That an Humble Address be presented to Her Majesty praying that the Order of Council [1984 S.I. 1778], laid before the House on 19th November, be annulled.
The noble Lord said: My Lords, I should not be moving this Humble Address if I did not think that this was a thoroughly undesirable order. But none of your Lordships will be surprised that I seek the annulment of this order in view of the position that I took on behalf of my colleagues on these Benches when the Bill itself was brought before your Lordships' House a few months ago.
The main effect of the order is to allow anyone—butcher, baker, candlestick-maker—without any training or qualification whatever to dispense ophthalmic prescriptions and sell spectacles to anyone over the age of 16 who is not registered blind or partially sighted. The order will permit the sale of spectacles by anyone—barrow boys, market traders, door-to-door salesmen, or mail order. In fact, it will open the door to many of the abuses which the Opticians Act 1958 was originally designed to prevent. In future no minimum standard of training, knowledge or competence in ophthalimic dispensing will be required in this country. Any suggestion that a period of one week's training or any other period of training might be sufficient is nonsense. The question is whether a fall in the standard of ophthalmic dispensing will be in the public interest. My submission is that it will not. The educational and examining bodies for optics are totally opposed to the order, which seems to be based on the philosophy that proper training in ophthalmic dispensing is a luxury which the public can do without. I think that their opposition is totally justified.
I and the professions are firmly convinced that accurate and correct dispensing is essential for safe and comfortable vision, whether on the roads, at work, or for leisure activities. The so-called "safeguards" in the order are no substitute for the safeguard of professional training and qualification. As I shall seek to prove a little later, they are likely to be very difficult, if not impossible, to enforce.
On 23rd August 1984, the Association of Optical Practitioners wrote to the Department of Health and Social Security commenting on the initial draft proposal for an order on which they were being consulted. That letter was acknowledged on 19th November. The submission was made on 23rd August; it was acknowledged on 19th November by the department, who enclosed with it the final order that was laid before Parliament on the same date.
The profession was not afforded the opportunity to comment on the Government's precise proposals while they were in final draft form and before they were laid. This simply is not good enough. If there is going to be change, whether one likes the change or not, the professions are entitled to be consulted. They are entitled to have their views considered, whether the Government agree with those views or not. We are having too many cases brought before this House in which consultation has been a myth and not a reality.
I welcome the inclusion of the partially sighted in the categories of patient to be protected against unregistered dispensing. It is one step forward. But I particularly regret that the order does not take into account the following points. First, the prescriber should be given the right legally to vary the normal validity period of a prescription, if there are genuine
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clinical reasons for doing so. This is the only effective way of ensuring that patients whose sight needs to be monitored carefully and at intervals shorter than two years have the care and attention that they require.
Secondly, unregistered sellers of spectacles should be required to keep a simple register of their sales for a period of, let us say, three years in order to introduce for the protection of the public the minimum detail and record keeping required to enable a complaint raised by a member of the public to be dealt with satisfactorily. Thirdly, unregistered sellers of spectacles should be limited to—and I am quoting—"bricks and mortar" premises, and no sales should be allowed from stalls, pitches, caravans or the like, or by door-to-door selling, or by post or mail order.
It is extraordinary that these issues were not included in the order which your Lordships are expected to swallow, unless you accept my wish that the order be annulled. This requirement is essential to ensure that the patient can return to a known address for "after-sales service" on spectacles supplied, or otherwise trace a vendor should he or she wish to do so in connection with the service provided.
Fourthly, it is a matter of concern that unregistered sellers will be permitted to supply industrial safety spectacles. The efficiency of these appliances depends not only upon their accurate prescription and dispensing but also on the fact that they need to be fitted properly or they become unsuitable as protective devices. The supply of safety spectacles is a clear example of a field where the services of a registered optician protect both employer and employee in a situation where professional knowledge and judgment are required.
Fifthly, the order contains no provision for monitoring and control of these sellers of spectacles apart from reliance on the trading standards departments of local authorities. The inevitable inaccuracies that will arise from the activities of these traders will place an intolerable burden upon trading standards officers and will mean that there will be little effective redress for people using their services. I say this at a time when the Government are, by other means, imposing financial burdens on local authorities and yet expecting them to be able to carry out statutory responsibilities which in my view they will be unable to fulfil.
The Minister of Health, Mr. Kenneth Clarke, claimed in another place that,
"these overdue reforms carry no risk to the wearer of glasses but will lead to greater competition, provide greater choice, and, above all, have the effect of bringing down the price of spectacles to the benefit of the public."
This implies that the present price of spectacles is unduly high, which in my view is untrue. The 1984 edition of Optics at a Glance shows that the average price for all types of spectacles is £35.
The Government have accepted that registered opticians should not sell to either registered partially-sighted or blind people. That has been welcomed by the Royal National Institute for the Blind. But it does not mean that they are by any means satisfied with the order now before your Lordships' House. In a letter to me dated 10th December, they say:

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"Our concern remains about the Order as a precursor to ending general NHS subsidies for glasses from April 1. We fear that people who need complicated glasses will face big price increases.
"The Health Minister, Kenneth Clarke, has said (letter to Director-General RNIB, 29th June 1984) that the maximum present subsidy is £40. People now getting subsidies of £15 or more will still be able to get general ophthalmic service glasses, but at the full economic cost. Thus, they will lose the NHS subsidy. Opticians readily give examples of items for which they say the cost of materials plus VAT is at least £20 or £30 higher than the present subsidised price.
"Mr. Clarke has said the Government will see that 'Hospital Eye Service patients with a similar optical need to former GOS patients are treated financially in a similar manner'. This must mean that subsidies are to be lost for HES patients, to the same extent as in the GOS, so that patients do not get an advantage by going to the HES".
There is a continuing concern about the power of the Secretary of State, by denying the requirement that exists up to now, to treat unqualified persons as dispensing opticians for the purpose of allowing them to dispense NHS spectacles under the National Health Service. It is an extraordinary provision which, in effect, allows the Government to pretend that people are qualified dispensing opticians when they are not.
When we took the Bill at Committee and Report stages we had considerable discussion about the situation in other countries. My view is that the order is an unnecessary and retrograde step, and this view has been supported by the International Guild of Dispensing Opticians, which at their biennial convention in Toronto on 28th June 1984 passed a resolution deploring the British Government's proposal to permit untrained and unqualified persons to dispense.
The other area of concern is how the order is to be enforced. I hope that the Minister will give some answers to some questions that I want in a moment or two to put to him. In the past, the police have always shown extreme reluctance to prosecute offences under Section 21 of the Opticians Act 1958. The General Optical Council has brought some prosecutions in the past, but it has no statutory duty to do so and its primary duty is to regulate the registered profession. It is difficult to see why the registration fees paid by opticians should be used to pay the prosecution costs of enforcing an order to which the entire optical profession is opposed.
I want to ask some questions about enforcement. Is the responsibility for enforcement to rest with county trading standards officers or with the police? Or will there be any other method of monitoring what is contained in the order? How in practice will they ensure that unqualified persons do not sell cheap spectacle frames made of cellulose nitrate? How will unqualified persons be prevented from selling ready-made spectacles without a prescription from an ophthalmic medical practitioner or ophthalmic optician if they are doing so without a prescription at all? How will they be able to check that this is not being done? How will the requirement that lenses comply with the British Standard tolerances be enforced? How will the Government ensure that unqualified sellers have "verified that the appliance is in accordance with the prescription by means of a focimeter"?
I want the Minister to say how the Government intend this order to be properly and effectively monitored in the interests not only of the
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profession—which is very proud of its record—but also of the patients whom it serves.
I want to raise two other points before sitting down. I believe that the timing of this order is quite wrong. It permits unqualified persons to start selling spectacles on 10th December 1984. If I may say so, they started to do so long before 10th December 1984. Many of your Lordships will have seen advertisements several weeks before the date on which the order came into effect. I should like to ask whether the Government took any legal action against those who were at that time quite clearly breaking the law. These people are free to advertise themselves subject only to the limited controls applied by the Advertising Standards Authority. I was a little surprised to see a picture of one of our most handsome Ministers—I have to say that he is not a Member of your Lordships' House—Mr. John Patten, who is a health Minister, who is pictured in the Guardian looking very handsome and trying out spectacles which he was buying from Woolworth's. Qualified and registered opticians are, however, still now strictly bound by the General Optical Council Rules on Publicity 1981, which at present restrict opticians from advertising except to the very limited extent permitted by the rules.
I ask your Lordships and the Minister himself—and I think he must give an answer to this—why it is that a special privilege is given to those unqualified people who will be taking on responsibilities now undertaken by qualified people whereas qualified people will not be allowed to advertise their wares. They will be put, for a period of months, at a very severe disadvantage. What is the justification for this? I am sure the Minister must have some reason for this and that he will explain it to us.
Last June the General Optical Council submitted revised publicity rules substantially relaxing the restrictions on advertising. The GOC received no response from the Privy Council until 9th November, when the Privy Council declined to approve the amended rules without some further modifications. As a result, we shall have a position in which qualified ophthalmic and dispensing opticians are still not allowed to advertise and will be faced with unfair competition from unqualified retailers who will be free to advertise without restraint. I submit to your Lordships and to the Minister that this really is a very unfair and a very unsatisfactory situation.
My view is that the order should be completely withdrawn. But, if that is not possible—if the Minister is not prepared to go along with me and if I have not convinced him—then at least the commencement of the order should be postponed until such time as the GOC rules on publicity have been amended, if necessary by a further Order in Council under Section 1(2) of the Health and Social Security Act 1984. Since the Government's aim is to achieve greater competition, the relaxation of the GOC rules on publicity should be the first priority and not the introduction of unqualified sellers, for which there has never been any real public demand.
I hope therefore that, with this series of arguments which I know are sustained by the profession—we know perfectly well also that there has been no demand whatsoever from the public—the actions which will be authorised by this order will not be

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carried through, and it is for this reason that I seek to secure the annulment of the order.
Moved, That an Humble Address be presented to Her Majesty praying that the Order of Council [1984 S.I. No. 1778], laid before the House on 19th November, be annulled.—(Lord Ennals.)
7.55 p.m.
Lord Cullen of Ashbourne: My Lords, that speech really leaves me with very little to say. I think at last we seem to have some unity in the optical profession and I can only think that the noble Lord, Lord Ennals, has had very similar briefs to the one I had. He practically made my speech. I have just one or two things to say.
For instance, I have tried for the last two years—and I am now very glad to have one or two supporters such as my noble friend Lord Mottistone and the noble Lord. Lord Ennals—to persuade your Lordships that there are dangers in allowing unqualified people to dispense spectacles. It was for that very reason that we had the Opticians Act 1958. It must be a great joy to the noble Lord, Lord Northfield, to see the end of this period, but I have a feeling that the time may come when we see occurring the same abuses that were responsible for the Opticians Act 1958 occurring; that the Government may once again change their mind; and that we may find that it is necessary to have the sort of control and discipline that we have had for the last 25 or 26 years.
As the noble Lord, Lord Ennals, said, what happened was certainly a great disappointment to the international optical profession. It might amuse your Lordships to know that I have made inquiries and I do not believe that there is any other country in the world which has actually introduced a system of training, education, and licensing or regulation, and has afterwards gone backwards and allowed unqualified persons to dispense spectacles. I believe that in the past we have led the world in optics. We now appear to be leading them backwards. I hope that they will not follow our example.
I was very interested in the various points that the noble Lord, Lord Ennals, made about ensuring that the so-called safeguards actually stick. Like him, I really do not see what a person can do if, after somebody carrying a suitcase of spectacles, comes along and raps on his door, and "flogs" him a pair, he finds a day or two afterwards that he gets headaches, that he cannot see properly, and that the spectacles are not properly centred. What does he do? Does he go to the police, or perhaps to the county trading standards officers? Who is going to trace this fellow? What redress is there for the person who has bought the spectacles? This is a new problem which we have not had for 26 years and I just hope that my noble friend Lord Glenarthur will be able to answer these detailed questions that we ask. I shall certainly listen with very great care.
I completely agree that the situation under which unqualified dispensers can advertise while registered opticians still have to be controlled by the General Optical Council seems extraordinary.
What also seems to me to be quite unfair is the fact that the unregistered opticians can now compete in the private sector. They cannot compete in the NHS; that would be quite a different matter. The private sector is
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quite lucrative. The NHS is a loss-maker. It is a very high volume loss-making business. It would be more reasonable if the unregistered were able to take part in all the business concerned. I see why they are not able to do so. Admittedly under Section 28 there are transitional arrangements so that these unregistered people should be able to do this, but that might not be implemented. I believe it was inserted because there might be a long gap between April 1985 and the time when the new system is introduced where one has a voucher scheme or a grant-in-aid scheme.
It seems that perhaps the reason this is not envisaged by the Government is that they realise that if they allowed the unregistered people into the NHS there would be a great number of complaints. They would not get the same service that they have had in the past, nor would unregistered people have the slightest idea how to fill up forms for getting their reimbursement. There would be all sorts of problems, all of which would come back on the Government; so this will probably never take place.
I do not have much to add, but I should like to finish by saying that if this order goes through people will be tempted to take their prescriptions and have them dispensed by an unqualified person, in pursuit of cheap spectacles. But I fear that many will end up sadder and, I hope, wiser. The effect the order will have on spectacle prices remains to be seen. It is possible that differences of view about that may be expressed in the future.
I should like to have it placed on the record once again that the report of the Director General of Fair Trading found as a fact that opticians' profits had not been excessive in the period 1978 to 1981. Why were they not excessive? Everybody says that the prices of spectacles are unnecessarily high. What happens to the money? Why were not the profits excessive? It seems very surprising. I can tell your Lordships exactly: it is because the NHS work had to be subsidised by private work. That has been going on year after year. The good news is that in April 1985 three-quarters of that work will stop. Opticians will not be subsidising three-quarters of NHS work, and in due course, when the grant in-aid scheme begins, the whole distortion will go. That is when the price of spectacles will fall—not as a result of what we are doing today. When we get rid of the distortion which has wrecked the market for opticians for years and years, then we shall get into a normal trading pattern.
I am pleased to support the noble Lord, Lord Ennals, in his wish to annul this order. I do not suppose for a moment that the Government will agree. But it would be excellent if it were at least held up until the advertising rules for both sections could come together.
The last thing I want to say is that at the end of the day it is the public who will judge the matter. I doubt whether new entrants to the opticial scene who provide an inferior service will survive very long in the highly competitive optical market in the future. It will not be a case only of caveat emptor (which is how I think the Government regard the matter) for the purchasers of spectacles, but a case of caveat vendor for the suppliers of optical services.
8.5 p.m.
Lord Rugby: My Lords, I must confess that the wording of the order is somewhat obscure to me because I am not very good at being able to interpret these documents. I feel that if it had been in clearer English I might have been better able to do so. I understand that, as the noble Lord, Lord Ennals, has said, no particular training is needed to sell complicated lenses provided that a prescription is available. I presume that the prescription has been made out by a qualified optician and that it will be made up by one of the optical manufacturers' houses or association. Consequently, the only check that is needed to ensure that a prescription is correct is a focimeter. In that respect the person selling the glasses needs merely to check that they conform with the prescription. On the other hand, I am not sure about reading glasses. I hope that the noble Lord will advise me about what is happening there, and how differently they are being treated, because I am not entirely clear about that in my own mind.
As everybody knows, my campaign has always been for a freedom of choice in reading glasses. The battle was joined in 1958 when the noble Lord, Lord Northfield, and Mr. Norman Pannell nearly succeeded in having that Bill overturned in another place because they were prepared to accept and to understand that this was a trade war. It was a war about who should market these simple magnifying spectacles, and whether the job should stay in the hands of Woolworth's, which had done a quite superb job, as everybody who remembers the Woolworth counter will acknowledge. But at the end of the day the opticians managed to have that overturned because they brought into both Houses the idea that if people were allowed to buy their glasses there they were in danger of going blind. These statements, which were extremely exaggerated, were accepted. The Bill was pushed through rather quickly, and I believe we have been suffering ever since.
The victims of this war have been the elderly, because the correlation between magnification and age can be drawn with precision on a chart. Virtually all normal, healthy eyes will conform with that chart. It is two parallel lines going together, magnification going up with age. Indeed. I have frequently been asked my age so that reading glasses could be sent to me, and according to my age these reading glasses have arrived and have suited me to perfection. In other words, in presbyopia age is one's prescription; and, vice versa, the prescription gives a good idea of age.
I remind noble Lords that our gracious Sovereign the Queen used magnifying glasses to read her speech from the Throne. I am sure that she was offered a choice of which magnification would be the most comfortable for her in relation to the distance from her eyes at which she wished to hold her speech. If such a choice of glasses is made available to the Queen, then what is right for her is correct for her subjects.
But we do not use magnification only for reading: we use it for a whole variety of purposes. I do not see how we must always have a prescription for the various purposes for which we use magnification. Reading is just one, but I need magnification for various purposes. I asked my noble friend Lord Halsbury how he used it, and apparently he does some very intricate
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petit point work. For that he needs a higher magnification. I cannot see why that should have to be obtained on a prescription. Indeed, magnification is an abstract concept. How is it possible to make a law which will put magnification on ration and allow it to be obtained only by means of a chit signed by an optician?
Through the years that we have had this Act, it has been necessary for opticians to state that presbyopia is an illness and to refer to presbyopes as patients. I am a presbyope and one thing that I definitely am not is a patient. I decide what magnification I need and for what purpose. That is my right and I stick with it. Furthermore, presbyopia is part of the total body undergoing its natural changes through age throughout our life. That is now accepted by the courts. In a recent judgment, the prosecuting witness, who was an ophthalmologist, refused to be drawn into saying that it was a defect of eyesight. It is also necessary for the General Optical Council to state that presbyopic lenses are not magnifying glasses.
In this way, they can win court cases by getting expert witnesses to make statements to the court upholding this edict. Nevertheless, they registered with the Office of Fair Trading under the Registered Trade Practices Act. I quote from a letter of 9th January, 1981, from the Association of Optical Practitioners, referring to the Restrictive Trade Practices Act. It states:
"A registered optician should not accept for re-glazing with prescription lenses any appliance which was not originally supplied as an optical appliance within the meaning of Section 30 of the Opticians Act. Thus, in the case of 'magnifying spectacles' in the form of twin lenses of identical power, these should only be accepted for re-glazing to a new prescription if the original lenses [i.e. magnifying lenses] were supplied to a prescription.".
I believe that if the present restriction on magnifiers is to succeed, it must be something which must be registered with the Office of Fair Trading and therefore he open to challenge under that Act.
In looking at these various restrictions at present registered at the Offices of Fair Trading, I feel that some are really quite disturbing. I should like to mention just one. It refers to coal miners. Apparently nobody had set about providing coal miners with proper protective glasses when working at the coal face, and such protective glasses as they had were "bashed into their eyes" frequently by falling coal or when hit by jagged rock and so forth. Apparently opticians had these experiences described to them. The upshot was that it was decided that no miner would be allowed to have an optical appliance which was suitable for working in the coal mines unless he had first bought ordinary glasses from the optician and had a prescription from him for those glasses. He had first to get normal glasses in order to prove that he was entitled to wear protective ones underground. Then, on top of that, if the protective pair was one year old, he would then have to go through the whole rigmarole a second time and pay again.
Industrial safety wear in spectacles and its usage is totally overlooked today in the pursuit of these fat profits which can be claimed in the High Street with this monopoly. I should like to ask why it is that in an industrial nation where there is such enormous wear and tear and where so much depends on having proper safety wear, the General Opticial Council, who is

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responsible and has been charged with these things, has never offered anything in the way of a prize for good designs. We have plently of good designers in this country. They do not have to be opticians. In my opinion, it is absolutely imperative that if we are now to have a proper optical service in this country our best designers should be put to the task of seeing that people who work in industry get the very best protective wear to enable them to perform most efficiently.
Tomorrow I am joining a party to meet the members who have just arrived from the Soviet Republic. When I see them, I shall be asking them what they are now doing in Russia for eyesight. What I am particularly interested in is that they now have an absolutely superb 100 per cent. reliable operation by which astigmats (people with a slight aberration of the eye) can undergo a quick, cheap operation, which, as I say, is 100 per cent. certain, after which they can throw their spectacles away. While we have this Opticians Act which restricts everything, I do not believe that we are going to be in the happy position of the members of the Soviet Republic who can have the operation and can throw these wretched things away and be much more efficient as a result. I sincerely hope that if this law is to he put into effect the Privy Council will see to it that it is no longer used in any kind of partisan way in a trade war, and that people who are over 50, or elderly people, will not have to suffer inconvenience and distress as the result of the restrictions which arc placed upon presbyopic glasses.
8.17 p.m.
Lord Mottistone: My Lords, it is a privilege to follow the noble Lord, Lord Rugby, who has been a pioneer in this campaign. I was not quite sure whether he was pleased with the order that we are debating or whether he thought that it was not good enough. But I do not think that he gave himself enough credit for having been the consistent pusher-forward of this viewpoint. As your Lordships know, I do not agree with it at all, but I still admire greatly somebody who over the years through your Lordships' splendid Chamber can get things changed—whether they will be changed for the better is another matter altogether. I am grateful, as I think we should all he grateful, to the noble Lord, Lord Ennals, for praying against this order. It certainly needed an airing.
I do not think that the order is right in any sense at all, in that the sort of safeguards which I think the public require and would like to have have not been adequately dealt with. The noble Lord, Lord Ennals, in a powerful speech made all the points regarding where the order is inadequate in regard to safeguarding the public; and I shall not repeat what he had to say. I think the most important thing he said was that there was no real public demand for this change. There was a demand from the noble Lord, Lord Rugby, a demand from the noble Lord, Lord Northfield, a demand from my noble friend Lord Orr-Ewing, a demand from one or two highly intellectual people who I know personally in the country; but there was no great demand from everybody in general.
I think that in their various ways everybody, though they might have had to pay a little more for their specs than they might if they bought them when they went
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on holiday abroad, accepted this as being a reasonable sort of thing in the modern world. I am always slightly suspicious of changes which are brought about by earnest do-gooders such as the noble Lords I have just mentioned, rather than changes which come from the grass roots of the public. I think that this is an example of where we have been rather pressed into it by the earnest do-gooders, rather than encouraged by the broad mass of the people.
The noble Lord, Lord Rugby, talked about the elderly people suffering. I have not noticed that the elderly people suffer. I am only a year away from being an old age pensioner myself, but I have not really suffered from the present arrangements. I have been able to get my specs at different times and at the right sorts of intervals. I shall not bore your Lordships with my comparisons with the cost of whisky, but the sorts of prices I have been paying for my specs seem to me to he reasonable in the modern world; and so I think perhaps the Government were pressured into making changes that were not necessary.
I think that the order has the kind of defects that the noble Lord, Lord Ennals, told us about, and it is very important for the whole position to be reviewed as early as practicable. I suppose that that is of the order of two years' time—and it will probably be longer than that, which is a great pity because there are gaps in it.
The real problem is that it is all very well for what you may call the average person. The noble Lord, Lord Rugby, told us—and I agree with him—that with an awful lot of people the prescription relates to their age. I am sure that that is true. My technical advisers have never said they agree with that, but in my own experience I think it is right. However, I am one of the lucky possibly 80 per cent. of the population who are like that. Unfortunately, I am not at all sure whether the other 20 per cent. are going to be as well safeguarded under this new order as they were before. The great question is: is it fair on them to make these changes if they are not going to have the kind of safeguards that they have not only become accustomed to, but which in the modern world they ought, naturally, to expect? As was said by, I think, the noble Lord, Lord Ennals—or was it my noble friend Lord Cullen?—other countries have moved towards the sort of system that we have had, and have not gone backwards. We seem to have gone backwards, and I am not sure that this is a sound move at all.
In principle, let us see how it works out. What the Government must do—and I hope that my noble friend Lord Glenarthur will reassure us on this point—is keep a very sharp eye open to see whether people who are not strictly following the normal pattern which the noble Lord, Lord Rugby, talks about are in fact going to be disadvantaged in the sort of ways that the noble Lord, Lord Ennals, put before us. I think the Government might be in very grave dereliction of their duties if they do not make quite certain that they have not overdone it with this order that we have before us.
Finally, I am terribly sad that I am speaking before the noble Lord, Lord Northfield, because while listening to other noble Lords during the debate I was fascinated to see him changing his specs as he looked at things. One pair has a price tag on them and the others have not, and I am longing to hear what this

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signifies. I am sure he will tell us. But I am sad that I am not able to speak after him, so that I can pull his leg about the absurdity of his spectacle changes, which are clearly designed to impress your Lordships with his particular viewpoint, which is unique to him and to the other do-gooders of whom I am highly suspicious.
8.25 p.m.
Lord Northfield: My Lords, I shall resist the temptation to fight old battles and go over old ground. We are not here debating the principle of this matter, which was decided in the Act of Parliament. We are talking about the machinery for implementing it, and I do not really want to go over the whole of that old debate again. I would, however, just comment on three points which have been made by my noble friend Lord Ennals and echoed by other speakers.
First, with respect, I think he is quite wrong to say that there has been no public pressure for this change. Goodness me! I have seen press letters, and people have come up to me all over the place, saying, "I am extremely suspicious of the high price of spectacles". Indeed, in your Lordships' House people come up to you in the corridor and say such things as, "I was delighted to see your speech. How much do you think I paid for these wretched things?" My noble friend must be going about blind and deaf if he has not had any of this public pressure put on him. I am also surprised, on that same point, that he thinks an average of £35 is reasonable. My goodness me!,Spectacles ought to be a good deal cheaper than £35 average, and I shall give some prices a little later on—
Lord Ennals: My Lords, I am grateful to my noble friend for giving way. Does he not realise that Members of your Lordships' House are so kind and so generous that of course they say nice things to him about his speeches? They actually say nice things to me about my speeches, and no doubt that applies to others as well.
Lord Northfield: My Lords, perhaps it is the case slightly less often on this issue, but the fact is that everybody is complaining about the high prices of spectacles and is saying that it is about time there was some competition in order to bring down the prices.
Secondly, I want to comment on what my noble friend said about people being plagued by door-to-door sellers. This is the sort of exaggeration that does not do his case any good. Even under the Act and under this order it will be necessary for prescriptions to be produced and for spectacles to be made up to conform with quite minute differences between the lenses. That is not something that somebody will be able to do on the doorstep. It does not really do any good to the case to exaggerate it in that respect.
My third comment is that I would agree with him, however, about lack of consultation. This is becoming rather a habit with the Government and we are just seeing it again on pharmaceutical prices, about which I shall be saying something on a future date. I really do deplore it. It is not right that large parts of industry and the professions should be treated in a cavalier fashion, particularly when there are details to be settled. If it is true, for example, that a letter which was sent on 23 rd August was not acknowledged until 9th November,
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with the order in the same post, that really is quite monstrous. I do not think it is the right way to convince us all that this is being done in the most diplomatic fashion possible.
One last point, before I move on to what I want to say about reading spectacles, is that I think we really must accept the division between the two sides on this matter. A lot of us have believed for a long time that the selling of spectacles is a matter that is stranded somewhere between a professional activity and a commercial selling activity. Of course we do not believe that everything in the garden is going to be wonderful now that we have got a change, because there are advantages and disadvantages both ways; but we feel that the advantages competition will bring will outweigh the disadvantages that can be laid at the door of the Act and of this order. It will need more consumer vigilance. People will be in some difficulties, I have no doubt, from time to time and perhaps they will not have the state behind them, as they have had so far, in protecting standards. But I do not regard it as a terribly bad thing. Consumer vigilance has risen to the occasion before and, in doing this, it forces the pace of competition, which should, on balance, result in benefit for the consumer in a situation where, as I say, I have never believed that right is all on one side. But I believe that the balance of right is on the side of more competition in this case.
I now move on to the point about reading spectacles, and I shall be brief. I wanted to make sure that this order will give some chance for cheap spectacles to be put on sale and freely bought. Therefore, in answer to Lord Mottistone's leg-pull, I must say that today I bought a pair of reading spectacles, which I have got on now and which cost me £9·75. They are perfectly good spectacles, with a 3-dioptre correction, which happens to be quite right for me. The point I want to make about the spectacles concerns how I got them, and then I shall move on to the issue that arises under this order.
I got them from a shop in Victoria which is newly opened and which is called The Glass House, where a very enterprising young doctor has set himself up in business with assistants. Under the Act he is able to say that as he is a qualified medical practitioner, he can sell anything to people who call. That is quite clear in the legislation. He is selling, among other things, at £9·75, these reading spectacles which I am wearing. The way I bought them was quite simple. I went into the shop and said, "I have broken my other glasses"—and I had. I had had to wait for a week for them to be repaired, and I had suffered for a week with an old pair; and so, to provide for the future, I said I wanted a spare pair.
The man said, "My assistant will attend to you"—though he supervised him. "We can either make up a pair for you here, which we will do in 24 hours and the price of which will be from £19·75"—not £35, I would say to my noble friend—"or, if your eyes are very similar, in need of correction, you could probably do well with these cheap spectacles at £9·75". He then checked my spectacles, my reading glasses, and said that my correction was about three dioptres and my eyes were very similar, and he asked me to try this pair to see how I got on. I tried them, they were perfectly

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adequate, and I walked out of the shop 10 minutes later perfectly satisfied with the spectacles at £9·75.
This young man is very enterprising, and he is "getting away with it" (I use those words in inverted commas) because he can under the law. He is a registered medical practitioner. What will happen under this order about the sale of spectacles of this type? I wish to say a few words about that. First, let me say how enterprising I found this shop and let me answer some of the points which my noble friend raised. Look at what competition is already doing in relation to what this shop is providing. It is offering in all its work—not just with these glasses but with the ones for prescription as well—a full guarantee for 12 months; it is offering free tests for glaucoma—it is not going to pretend that that risk does not exist—it is offering free minor repairs and adjustments; it is offering a 15 per cent. discount on extra pairs bought to the same prescription and bought within 12 months. That is only a beginning. Competition will get going. There will be other benefits from competition as it progresses. These are just the first in the field.
In addition, the shop provided me with two very good papers which in simple layman's terms take all the mysticism and pseudo-professionalism—and I mean "pseudo-professionalism", my Lords—away from part of what opticians tell us. The papers tell me in simple language what eyes are, what goes wrong with them, what corrections are normally needed, and how to set about it. That is a sensible way to behave towards adult citizens. This gives me the chance to understand the subject without all the mysticism.
The papers then explain the treatment. In addition, having provided all these commercial benefits, they set out a clear price list. They say, "This is the price for a frame and here are the extras". So much is charged for tinting, so much for extra large lenses, and so on, all in the £5 and £10 range. There is a £21 range for something really fancy at extra cost. But when you go in the shop, when you stand there, you can choose your price, add it all up and you know where you are. I should have thought that that is an immense step forward for the consumer in spectacle buying.
Lord Winstanley: My Lords, I am most interested to hear about this person's admirable commercial enterprise. The noble Lord tells us that this person is a registered medical practitioner. I wonder whether he would care to hazard a guess at how long he will remain a registered medical practitioner if he continues to engage in commercial activities of that kind and in that particular way. I ask that question without making any comment on the advisability of his doing it or otherwise.
Lord Northfield: My Lords, I have no idea, and it is not my business. If he wants to take the risk of doing this in providing a commercial service, blooming good luck to him is all I can say. A very good precedent is being set by this first step into a competitive situation by the young people who are doing this job very well in Victoria. I congratulate them wholeheartedly.
What happens under the order in regard to spectacles of" this type at £9·70, which I want to see more widely sold to people who do not need to pay
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such high prices for spare pairs and who need them for small corrections, requiring only 1, 2 or 3 dioptre corrections in their reading spectacles? What the order seems to say is that for those who just require corrections for short sight—I believe it is called "near sight"—all that is necessary is that the appliance as sold should be in accordance with a written prescription, with the lenses and frames following the British Standard specification. First, is that correct? Can these type of spectacles be sold so that if somebody goes in for an eye test the person selling can say, "Look, we have done an eye test. You have got your prescription. Your eyes are nearly identical. You should try, if you want to save money, these cheap ones first and if they are not suitable, we will make some up for you at a much higher price"? All that has to be proved, I understand, in those circumstances is that the spectacles conform to British standards in the lens and in the frame.
One more point arises. Paragraph (4) at the foot of page 3 of the order says that the appliance shall have certain tolerances. In other words, the spectacles sold by the seller need not be absolutely accurate to what is in the prescription. There are certain tolerances. This is very important for the spectacles. My eyes are not totally identical. There is some fraction of a dioptre difference in need of correction. But the man assured me when he sold the spectacles to me that I was within the tolerance that is provided by law. I wish to be clear that those tolerances are set, and will be set in the future, in a way that enables people who sell spectacles to say, "you need not be frightened of this standard article because it does not quite fit your prescription. This is a matter for you to decide and there are tolerances in the British standard which will allow you quite freely to buy this and know that it is accepted under the British standards system". What we do not want—I made this point in an earlier debate on the Bill—is to find that the spectacles are suddenly made available but are then frozen off the market because everybody has to have a pair of spectacles delivered to them exactly to their prescription. There must be certain tolerances which will then enable this market to grow and to influence the remainder of the market.
I do not wish to go on any longer. I hope we will accept that this is the beginning of a system. I look forward to seeing the unregistered practitioner setting up. The way the trail is being blazed by these young people at Victoria—I know of another place as well—will lead to the sort of price that I paid for these spectacles today being a standard to which others will be brought down. This same shop is providing spectacles from £19·75 upwards, fully glazed, complete and guaranteed for 12 months. That is the kind of price at which we should be aiming—not £35, with due respect to my noble friend, nor the £70 or £80 which many noble Lords say they have paid for the spectacles that they wave at me in the corridors of your Lordships' House. That is what the Act is about. That is what this order is about. I want to be assured that it helps these cheap spectacles to be as readily saleable as possible.
Lord Mottistone: My Lords, before the noble Lord sits down, will he tell us the price of the other spectacles which he was trying on before, including the

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ones with something on them which looked like a price tag? Could he explain those too?
Lord Northfield: My Lords, I would be wasting your Lordships' time. These are ones I had on prescription. I do not know the price because they came in a package but I remember the cheque I wrote was for £69.
Lord Mottistone: My Lords, what about the other spectacles?
8.38 p.m.
Lord Orr-Ewing: My Lords, the noble Lord has already told us in his speech. He said that they were £9·75.
I regret that Statutory Instrument No. 1778 does not go rather further. I think that it might have been a little bolder. After 28 years of a restrictive monopoly which, so far as I know, has kept spectacle prices in this country higher than in any other country in the world, I think a little more freedom would have been desirable. A freer market such as that existing in the United States, in Canada and in the Far East should have been permitted. The opticians' interests—they have been quoted to us, particularly the retail interests—have been fighting like tigers. They are entitled to. They have had 25 years of this monopoly. They have done a good job by and large but they have, as a result of the lack of competition, kept prices high and their profits have not been too bad either.
I am encouraged by the Government publication which I came across today. It is entitled Sale of Optical Appliances. For those outside this House, it costs 60p and was issued in November 1984. It states in paragraph 4:
"Retailers can now sell the normal range of complete spectacles, frames and lenses. They can also glaze an empty frame or reglaze a customer's existing frame, or fit the customer's existing lenses into a new frame, or sell empty frames".
That is a measure of extra freedom—but, of course, the customer needs a prescription. I hope the public understand that when they do have their eyes tested, they are entitled to take away—free—a copy of their prescription. There are black sheep in every industry and there are now those people who are demanding, so I am informed, £5 before providing a copy of a prescription. This is a mischarge and I hope the public will not be deceived.
I am a little worried that the amount of freedom depends on balanced eyes. There must, therefore, be an incentive to the less scrupulous to find a minor difference between the two eyes of, say, one quarter of a dioptre or even a little more. I hope the public understand that the eyes are extremely flexible and that that sort of correction can be taken up. If there is a minor difference of that order between the two eyes, it is not essential to ask for special spectacles, which will take a long time to prepare and cost vastly more. But that incentive does exist and some opticians may take advantage of it and try to sell spectacles that cost between £50 and £100 by exaggerating the difference between the patient's eyes.
I am alarmed by press reports that NHS glasses will go off the market. They are of course going to be free for children and for those in the low income groups,
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and there is no reason why registered opticians should not continue to sell NHS glasses and lenses—although the subsidy which, according to the type of lens, averages £5—will go.
An article in The Times on 10th December set out the facts about current prices. This is probably where the noble Lord, Lord Ennals, got his figures. The article stated that in 1983 the average price of NHS spectacles—the subsidised price—was £16·38, and the average price of private spectacles was £56·39. The noble Lord's average of £35 is between those two figures. I am sure that if we could achieve even that measure of freedom—which does not actually match my needs or desires—it will mean that that cost of £56 will fall nearer to the average price of NHS glasses. There may therefore be no demand for NHS glasses, because the private sector will provide better designs and more choice at a comparable price.
I hope that we shall not see any inhibitions about the importing of spectacles or lenses—particularly from the EEC. If such a measure of restriction was imposed, we should find ourselves in direct disobedience to EEC standards, and the Commissioners would look into any such restriction. I hope that the Federation of Optical Corporate Bodies will not discourage EEC imports, because they will add to the choice that their customers and clients can have. I myself have confidence that, when this competition is allowed, the United Kingdom industry will be able to match both the designs and the quality of spectacles from overseas. I am sure this will be for the betterment of all those who have to wear spectacles.
I am sad in a way that more freedom was not given. I believe that this measure should have gone further. I recognise that there will need to be some supervision—and perhaps my noble friend Lord Glenarthur will deal with this point when he comes to wind up—and a decision as to whether such supervision will be undertaken by trading standards officers or by the Office of Fair Trading. I believe also that there is a readiness to revise. We shall learn as we go along. I do not believe that all the bogeys set up by my noble friends and by the noble Lord, Lord Ennals, will actually come to exist. There is a measure of freedom, and, if the bogeys are shown to exist, then we can think again and undertake some revision. But I am sure that the benefits will be very considerable, and it is only right that we in this country should have the advantages which so many overseas purchasers already enjoy in their own countries.
8.45 p.m.
Lord Kilmarnock: My Lords, we on these Benches are not opposed to the general principles behind this order, although I must say that I agree with the points made by the noble Lords, Lord Ennals and Lord Northfield, about the lack of consultation being all too typical of the Government's way of proceeding—not only in this field but in many others. This said, we do not object to the breaking of the opticians' monopoly. Our objection to monopolies is fundamental to our political philosophy. The noble Lord, Lord Northfield, has put our minds at rest on the question of the so-called unqualified dispensing which worried a number of people (myself included) when we had the Health and Social Security Bill in this House. The noble Lord

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then made a very interesting speech when he described how most prescriptions are actually made up by large commercial houses. I personally was grateful to him for that explanation.
As regards advertising, we are not opposed to it, but I would put to the noble Lord, Lord Glenarthur, the same question asked by the noble Lords, Lord Northfield and Lord Cullen: is it fair to permit advertising from 10th December while the members of the General Optical Council are still bound by their existing rules on publicity? Would it not have been fairer to suspend commencement until such time as the GOC rules have been amended to bring them in line with everyone else? If we are to have competition then, in the interests of consumers, should it not be full and free competition?
I was glad to learn that under the terms of the order non-registered opticians will not be allowed to sell an appliance either to registered partially sighted or blind people. However, I am slightly puzzled by the wording of paragraph 2(b)(i) where it states that this requirement does not apply where,
"the seller of the appliance does not know, and has no reason to suspect, that it is for a person so registered".
I find that statement rather puzzling and wonder whether the noble Lord can explain what weight can be attached to those words.
I turn to my two serious reservations. They are the same as those that I advanced during the passage of the Bill. They do not affect the liberalisation of the supply of spectacles but they do affect the cover provided by the NHS. This is to be severely curtailed and is to be limited to children and those receiving supplementary benefit. We believe there are many elderly people (perhaps only just above the supplementary benefit level) who will be adversely affected—particularly if they require costly prescriptions. That is to say, we are not so concerned about the method of dispensing as about the financial effect on the poor. We hope that the Government are correct in forecasting a general lowering of prices; but we believe it would have been preferable to keep the GOS cover in position for the elderly—at least until we know how liberalisation is working. I wonder whether the noble Lord would care to comment on that point?
I know that these provisions are not to be put into effect until 1st April and are not the subject of this order—but this is perhaps the last opportunity we shall have to raise this matter in advance of the next regulations. So I want to ask the noble Lord: will the Government think again about this aspect? I repeat, we are not attacking the principle of this order but asking that the umbrella covering a certain section of the population should not suddenly be rolled up.
There is the related point concerning complex prescriptions. We understand that the position of the General Ophthalmic Service will be that people now subsidised by £15 or more—that is to say, those who do need complex glasses—will still be able to obtain them through the General Ophthalmic Service but at full economic cost. This means that some people who are not at all well off will lose subsidies which, on the Government's own figures, range up to £40. We feel that this type of prescription should have been
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protected from the bracing winds of the market. After all, some people of very limited means may need two or three changes of spectacles within a year or 18 months—for example, after a cataract operation. Will the Government think again about that aspect? Finally, there is the question of the hospital eye service, which is very important to those with the poorest sight. Mr. Kenneth Clarke, the Minister of Health, has said that the same financial arrangements will apply in the hospital eye service as in the General Ophthalmic Service. He wrote to the Director-General of the Royal National Institute for the Blind on 29th June 1984:
"in the interests of consistency and equity we shall be ensuring that HES patients with a similar optical need to former GOS patients are treated financially in a similar manner.".
I think the noble Lord, Lord Ennals, referred to this aspect. Therefore, it would appear that the Government's intention is to stop hospital eye service patients getting subsidies which are not available to general ophthalmic service customers.
I wonder whether the noble Lord can clear up the position here. Will the NHS-based provision be as limited as in the GOS, or will there be different provisions? Is there to be a maximum charge for the most specialised items not supplied by the GOS? Will he clarify the Government's plans and say how far they have progressed in working them out? I make no apology for raising these matters because I do not see how we can raise them again before the subsequent set of orders comes before your Lordships' House.
To sum up, we are not supporting the annulment of the order but we are seriously concerned about the effect of the regulations that will follow. I want to put this on record now because if we wait until those regulations are laid it will be too late to have any effect on them.
8.51 p.m.
Lord Glenarthur: My Lords, we have had another stimulating debate on this issue, albeit, perhaps, rather shorter than the standard we set ourselves during the long hot summer. Those days, when we last debated the issue of whether or not to allow unregistered retailers into the optical market to sell spectacles, seem only yesterday, but your Lordships will recall the lengthy debates on the Health and Social Security Bill. At that time I informed the House that under the enacted legislation we would prepare an order after having consulted with consumer, optical, medical, commercial and other interests. The Sale of Optical Appliances Order of Council 1984, which is before your Lordships today, is the result of the balance we struck following all the views we received during that consultation process.
A number of your Lordships have raised this question of consultation. As promised in those debates on the Bill, we consulted widely on the content of the order. A large number of views were expressed. We considered those views carefully and reached our judgment on the necessary balance to be struck between the various arguments that were put to us. Because of the very clear expression of views already received in both the consultation exercise and the normal course of business since announcing our

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proposals last year, it was not felt necessary to consult further with the various groups which had expressed an interest.
I can perhaps develop this a little further this evening without pursuing in detail the discussions over the GOG's publicity rules. I suggest that the criticism levelled at the Government over the time taken to convey their views to the GOC on its latest revised rules serves to deflect attention away from what is the real issue. The OFT report was published in December 1982. The Director-General made perfectly clear his views that the publicity restrictions imposed by the GOC on opticians resulted in prices being significantly higher and efficiency significantly lower than they would otherwise be. I suggest that that report was warning number one to the profession. Warning number two came with our announcement almost a year later of our policy initiative on this issue. Warning number three was the presentation to Parliament of the Health and Social Security Bill last November. Despite these warnings the COG has not felt able to meet the Government's desire to allow the use of an acceptable degree of advertising by the profession.
All along the way the Government have been seeking to persuade rather than to compel. For that reason there was need to study the GOC's revised publicity rules, carefully seeking also the opinions of other Government departments, and to take legal advice before replying to the GOC. This all took time, I know, but we had to get it right in the end. May I assure your Lordships that there was no Machiavellian or other plot conspired in by Ministers or anyone else to synchronise the arrival of the Privy Council's letter at the GOC with the laying of the order which we are debating tonight—absolutely not.
On the question of delays in acknowledgement, which was raised by a number of noble Lords, I think the noble Lord, Lord Ennals, will be aware that the volume of correspondence in the department is huge. If there was delay in acknowledging a letter, I can only apologise and explain that during and after the passage of the Bill we were assailed by a vast amount of additional correspondence which put some strain on our resources. I am sure that the noble Lord will accept that in a department where Ministers alone are signing about 30,000 letters a year, with a further 80,000 signed by officials, there is a considerable burden. It was certainly the intention to acknowledge each reply to the consultation letter, but I accept that at least one acknowledgement was overlooked. If the criticism is that the particular organisation did not receive a detailed commentary on its response, I must say that there has to be an end to the consultation process, finally. Our response in this case was to prepare the necessary order that we are now debating.
Perhaps I should now give an outline of what the order aims to achieve, although much of the ground has been covered earlier. It is based on the firm and expert opinion of both the British Medical Association and the Faculty of Ophthalmologists—and it cannot be stressed often enough—that incorrectly dispensed glasses cannot damage adult eyes. It is also a fact that most people will know when their glasses are not right in some way, and they can take them back. Furthermore, the Faculty of Ophthalmologists has advised us
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that it has been unable to find any evidence of inaccurate dispensing of spectacles causing actual damage to health or sight of the adult. This assurance allows us to open up the present monopoly with total confidence.
Notwithstanding this, our objective, as we have always made clear, is to provide for the sale of safe and serviceable glasses. The order achieves this by regulating what may be sold rather than by controlling who may sell spectacles. We have not permitted the unregistered to sell contact lenses, low vision aids or spectacles to children under 16 years old. We have also excluded the registered visually handicapped. The order does not permit dangerous materials to be used in the manufacture of frames or lenses. All spectacles must conform to a written prescription completed by a registered ophthalmic optician or doctor, and it must not be more than two years old when it is presented by a customer. British standards will govern conformity to the prescription and also the glazing of lenses. For spectacles other than prescribed simple reading glasses, we have chosen to add conditions governing lens centration, their checking by focimeter and, where prescribed, the checking and adjusting of the back vertex distances. All these conditions will form part of the contract between the buyer and the seller.
I come now to some of the points raised in the debate. The noble Lord, Lord Ennals, spoke about the lack of training that would exist under the terms of what is now proposed. We said from the outset that our objective is to control what is sold rather than who may sell it, as I said a moment ago. We have not de-registered opticians. They may still pursue professional excellence and, indeed, professional registration. We have given individuals the freedom to choose between the registered and the unregistered supplier. We do not believe that this will lower overall standards, as the noble Lord fears. Indeed, open competition is much more likely to stimulate and enhance quality and standards—a view expressed by the noble Lord, Lord Northfield. I doubt whether, as the noble Lord, Lord Ennals, suggested, many butchers, bakers, candlestick makers or what have you will enter the market. If they do, it will be with the objective of attracting and obtaining business. To do that, they will have to offer the services that satisfy the customer. It is that which is the final test of whether or not a patient is happy with the end product.
Other points raised by the noble Lord, Lord Ennals, were the keeping of records and operating from permanent places of business. Both those points are concerned with consumer protection rather than with any special optical considerations. Indeed, those specific issues were not put to us by the national consumer representatives, with whom we also consulted. We do not feel that consumers need such undue protection, as they are quite capable of reaching their own decisions on where they believe they will get value for money, as they do for all sorts of other things.
On the question of mail order spectacles, again all spectacles must accord with a written prescription. All spectacles will have to meet the British standards laid down in the order in respect of glazing and conformity with prescription. It is quite feasible for mail order agencies to develop customer services to provide for the simple reading glasses defined in the order.

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However, for the more complicated prescriptions, the order lays down the requirements for the taking of measurements in respect of optical centration and back vertex distances, and I should have thought that mail order agents would have difficulty in meeting these particular obligations.
On the question of industrial safety spectacles, which the noble Lord raised, and which I think was raised also by another of your Lordships, the supply of industrial safety spectacles is already governed by the Protection of Eyes Regulations 1974; and under the Health and Safety at Work Act 1974 employers have a general responsibility towards their employees, and rightly so. We consulted the Health and Safety Executive on this point. Their view was that they saw no need to make industrial safety spectacles a special case. The responsibility is with the employer and this is where it should be.
The noble Lord, Lord Rugby, raised a question of design. I am sure that that is a valid point. Perhaps it is something that those who make these things will note. I certainly take the point he made.
On the more general point about the provision of ready made glasses, I perhaps should emphasise one or two things. The order does not seek to prevent the sale of ready made spectacles. They can be supplied provided—and it is an important point—they are in accordance with a written prescription produced by the customer which—and here I quote from Article 3(2)(a) of the order—

"(i) has been given by a registered medical practitioner or registered ophthalmic optician following a testing of sight by him, and

(ii) bears a date not more than two years before the day on which it is presented to the seller for the purposes of the sale".

This will allow a retailer to keep stocks of ready made spectacles but he can only supply them to a customer if they meet the requirements of a recent prescription given to him by that particular customer. If the retailer does not happen to have ready made frames containing lenses of the required strength, he will obviously not be able to supply them immediately. The customer can then either order them or go elsewhere. If a customer does not have a prescription he cannot be supplied. That is a fact.
The order does not permit unrestricted self-selection. A customer cannot walk in off the street, as some might think he will be able to, without a prescription, and rummage through a box of glasses and buy any that happen to take his particular fancy.
Lord Winstanley: My Lords, may I interrupt the noble Lord for a moment? The noble Lord explained to the House that these glasses can be supplied provided they are in accordance with the prescription. Could the noble Lord define a bit more clearly "in accordance with" there? To what extent is there a tolerance? Do they have to be precisely in accordance with or is there an element of tolerance? Can the noble Lord come to that point?
Lord Glenarthur: My Lords, I shall certainly come to it. If the noble Lord will bear with me for a moment, I am in fact going to deal with tolerances and how that affects what he is concerned about in due course. To sum up the point that I was really making to do with
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this particular matter of ready made spectacles, ready made spectacles are not illegal if they are supplied to meet a recent prescription. I shall develop the theme of tolerances in a moment.
The noble Lord, Lord Northfield, powerfully made the point about relaxation of requirements for reading glasses. As he and others will be aware, we consulted widely on the order. Consumer interests persuaded us that our requirements for a focimeter and that kind of thing might well discourage retailers from entering the market when all they were proposing to stock were simple reading glasses. The requirements regarding centration and back vertex distance are far from critical for such simple appliances, as the noble Lord so elegently put it. Indeed professional opinion is agreed that the latter is hardly relevant for glasses up to 5 dioptres in strength. Checking the glasses with a focimeter is not very relevant, either, to glasses of this nature, where the lenses have mostly been cut to shape and even glazed to the frame in the factory. In any case, patient satisfaction with them is the main criterion. It goes back to the point that I made earlier. Having said that, it will still be a legal requirement for them to accord with a prescription.
The noble Lord, Lord Kilmarnock, raised the question of the blind and the partially sighted. It is a difficult area in which to legislate. It needs a consultant ophthalmologist to make decisions on whether or not someone is blind or partially sighted enough to be registered. I think it would have been a nonsense to put on to shopkeepers the responsibility of deciding whether or not someone was in this particular category. We have therefore made the test one which is reasonable for a shopkeeper to apply. However, if, for whatever reason, a registered person gives a misleading reply, it cannot be reasonable for the shopkeeper to be prosecuted for supplying glasses in such circumstances. I am sure that the noble Lord, Lord Kilmarnock, will accept that. Hence, the order provides that sales in these circumstances are not illegal.
Of course I appreciate that many visually handicapped people decide not to apply for registration, even though this brings them advantages. But they are responsible people and it is their right to choose as they will. If, despite advice to the contrary, visually handicapped people decide to patronise unregistered traders, they must be free to make that choice.
On the issue of the opticians' publicity rules, to which both the noble Lord, Lord Ennals, and my noble friend Lord Cullen referred, I think I covered this in sufficient detail earlier. However, if the noble Lord, Lord Cullen, particularly feels that I have not done so, then I shall be very happy to take the matter a little further. But I should like to say that we see no need to prevent unregistered retailers advertising their services. They will of course have to observe existing codes of practice governing advertising, but competition from these suppliers should have a significant impact on the price which the public pay for their glasses. I think it would be absurd to deny the public information about the availability of glasses from new suppliers. However, I shall read carefully what the noble Lord said and I shall if necessary follow it up in writing.

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My noble friend also asked about the powers that exist to permit unregistered suppliers to enter into contract with family practitioner committees to deal with the supply of NHS spectacles. This was of course provided for in the 1984 Health and Social Security Act. The Government do not intend to operate the powers at the moment but of course circumstances may change in the future. All I can say is that we shall not forget that the power exists.
The noble Lord, Lord Ennals, was concerned about enforcement—lack of enforcement in his eyes—because this order does not have specific enforcement provisions in it. There are two aspects to the order. First, there are the provisions concerning the quality of an individual's finished glasses, that is, whether they accord with the prescription, etc. These are self-policing. They form part of the contract with the customer. If they are broken, the customer can demand replacement or his money back. Secondly, there are the public interest provisions concerned with the exclusion of glasses for children and those who are registered as blind and the exclusion of contact lenses. Since 1958, the Opticians Act has regulated who can test sight and who can supply optical appliances. No specific enforcement agency was provided by that Act. Yet no one has ever suggested that there is any general problem arising from unqualified people attempting the testing of sight or the fitting of contact lenses. Similarly, we see no need for such an enforcement agency in the future.
So far as sales of glasses for children are concerned, this would require the active collusion of parent and retailer. Are parents likely to take that sort of risk with their children's sight? I think certainly not. There is no financial incentive to do so because free glasses will still be available under the GOS arrangements. Furthermore, children's glasses which are supplied privately are a tiny segment of the market. I cannot believe that a retailer will risk a £1,000 fine for an insignificant improvement in turnover.
Most of the problems that have occurred with the Opticians Act concern illicit sales of glasses. These breaches of law, which I certainly do not condone, are the direct result of a law that is too restrictive and that has lost all credibility with the public at large. The noble Lord asked me a number of questions on this area, and I shall do my best to deal with them. We talk about prosecution of those who go outside the permitted exemptions. Contravention of Section 21 of the Opticians Act will still remain an offence. If a supplier steps outside the terms of orders made under the new provision he will remain liable to prosecution. On enforcement, again, anyone breaking conditions contained in orders made under Section 21 of the Opticians Act will be in breach of that section and subject to a fine of £1,000. It is up to anyone to lay information before magistrates where they believe that an offence has been committed.
My noble friend Lord Mottistone was concerned about consumer safeguards. Much has been made of the loss of consumer protection as a result of permitting unregistered traders to sell glasses. The unregistered trader will operate under conditions specified in orders made by the Privy Council and our
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objective has been to ensure that safe and serviceable glasses are sold. Breach of conditions by an unregistered trader will be a criminal offence. It is open to magistrates' courts to compensate those who have suffered loss as a result of such offences. The normal protection of the Sale of Goods and Supply of Goods and Services Acts will also apply. The cost of most glasses will be within the limit for informal arbitration hearing by county courts.
I turn now to the question of tolerances raised by the noble Lord, Lord Northfield, and by the noble Lord, Lord Winstanley. The tolerances applied in ophthalmic lenses vary depending upon the power of the lens. It is important to remember that the tolerances apply to a pair of glazed spectacles and thus the tolerances that appear in British Standards are for each separate lens. So a tolerance of 0·06 of a dioptre for each lens provides for a possible tolerance of 0·12 for the completed pair of spectacles. These tolerances were decided by a British Standards committee which included representatives of the optical and medical professions and industry. The industry has been operating these tolerances without undue problems, I am told, since 1962. This is perhaps the base from which we should start. Maybe, one of the advantages of subordinate legislation is that it provides for speedy changes should these prove necessary. That, I hope, will satisfy my noble friend Lord Orr-Ewing, who I do not see in his place behind me. Clearly, any discussion of British Standards tolerances can become rather technical. But we can pursue that point more fully if necessary by correspondence if both noble Lords would like me to do so.
Lord Northfield: My Lords, would it not be a good idea to have consultations on the figure of a maximum tolerance of 0.12? My guess is that it should be something like 0.25, in other words, that it should probably be double what it is. Could there not be some discussions on whether that would be acceptable?
Lord Glenarthur: My Lords, as I have said, these figures were reached by consultation that took place in the past. If the noble Lord wants us to go wider still, I am sure that those involved will note his views. Beyond that, I do not think that I can give him any undertaking this evening.
Before concluding, I should like to refer to a couple of points raised. First, the suggestion by the noble Lord, Lord Kilmarnock, that the old and poor would be forced to use unqualified suppliers and so risk harming their sight. It is wrong, I think, to assume that qualified opticians will not become much more competitive and reduce their prices. It is also wrong, I think, to assume that new unregistered suppliers will be unskilful in the way that the noble Lord thinks that they might be. Of course, as I said earlier, they will need to try harder to attract and retain custom, mistakes will not cause permanent damage, as I said right at the beginning, and the customer will usually become aware of them straight away.
In regard to expensive lenses, I accept that there are many fears about the future cost of complex lenses in the post-GOS private market. But I think we have already given an assurance of allowing access to GOS to those needing certain complex lenses, and the

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arrangements which will be made for them in due course will of course come forward.
Lastly, on the question of the Hospital Eye Service, I can tell the noble Lord, Lord Kilmarnock, that there will be no change in the present arrangements for the supply of contact lenses or low-vision aids. However, many hospital eye prescriptions are for quite routine lenses and it would be quite wrong to prevent such patients seeking the best bargain for their glasses. There are some special cases where the patient might be unable to reach a judgment on what his vision should be. In these cases the clinician can be expected to advise the patient of the need for the prescription to be made up by a qualified optician.
We believe that the order strikes a sensible balance between protecting and enhancing the position of the consumer and the opening up of the optical market to competition. This will achieve our objective of reducing the price of private spectacles to the public at large. During the passage of the Bill through your Lordships' House, the noble Lord, Lord Ennals, as he said, opposed our wish to see competition injected into this segment of the market. He described how the purpose of his Prayer today was to repeat that opposition. He and other opponents—my noble friend Lord Mottistone and my noble friend Lord Cullen—claimed that what we are doing is helping to erode the quality of the existing service. Others criticise us for not having gone far enough. I can only deduce from this that what we have really discovered is the right path down which to proceed in complete confidence. Our order involves no health risk; indeed, it protects all necessary health aspects. It strengthens the hand of the consumer but, above all, it allows the consumer the right to make a choice between registered and unregistered dispensing. I believe that consumers richly deserve this freedom of choice and that Parliament has denied it to them for quite long enough. That is why I commend the order to your Lordships.
9.17 p.m.
Lord Ennals: My Lords, I am most grateful to the noble Lord, Lord Glenarthur, for answering so completely the questions that were put. When I say "completely" I do not mean satisfactorily; I mean completely. He would not expect me to be satisfied with a number of the answers that he gave. I am going to take only a couple of minutes in dealing with a few of the points.
First, I was not at all satisfied with what he had to say about consultation. I think it was generous of him to accept that because of pressures within the department—so many protests must have been coming into the department about so many other things—it must have been very difficult for him to get through his work. That would have led me to believe that it would have been better to delay the date of the order in order that it could then have come into line with the date in April when the qualified opticians are able to begin their own advertising. So I see no reason at all why the pressure of work upon the department—which I well understand, having myself been Secretary of State—should have led them to go into a rushed consultation which quite clearly did not
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take into consideration some of the representations that were made by those within the profession. The attitude, "We warned the profession once, we warned the profession twice, and we warned the profession three times", is not an attitude that I believe the DHSS should take toward any of the professions that work within the National Health Service.
I am not satisfied with what the noble Lord had to say about enforcement and supervision, which really was that it is self-enforceable. Some people like my noble friend Lord Northfield are certainly able to seek enforcement, and so, too, are others in your Lordships' House. But there are some people who have not got the qualification, the guts, or the stamina, in a sense. They are not do-gooders in the way that my noble friend has been accused of; whether he recognises himself by that title I really do not quite know. Certainly when we bring in Lord Orr-Ewing, I do not think he would accept himself as being a do-gooder.
I think the Minister ought to have postponed the date so that advertising could have come in at the same time. If he argues that it is absurd to deny to the public the opportunities of knowing what facilities are open to them, then it must equally be absurd that registered opticians should be denied the right by law to make available to the public the facilities that they can offer. He has put the new private sector into a position which I think is advantageous to them and disadvantageous—if the Minster wishes me to give way, I will do so.
Lord Glenarthur: My Lords, I do not want to prolong this matter but the fact is that the position in which the General Optical Council finds itself is perhaps due to the way in which it has chosen to handle this particular situation. I gather that it is to meet on 20th December to discuss the Privy Council's response, and I hope that it finds itself able to reach a speedy decision. But I do not think that I can go back on what I said.
Lord Ennals: But it is still the case, my Lords, that it will not be until April, as I understand it, that it will be free to advertise in a way which up to now has been denied it under the 1958 Act.
The final point I want to make (except for one concluding sentence) concerns records. I did not think that the Minister dealt adequately with the reason why there should not be proper records kept by those who are taking on a new responsibility. Admittedly, they are taking it on for profit. But the fact that they are doing it for profit is no reason why they should not keep proper records in order that patients should be able to refer back to them one year, two years or even six months afterwards in order to check on the work that was done. It is all part of the supervision and enforcement to which I referred.
I agree with the noble Lord, Lord Mottistone, that the subject needed an airing. It was helpful that we were able, across the Chamber, to air the problem once again. But I conclude by saying that I am sure the noble Lord realises that my worry is not just about this particular order. My worry—and I know that it is shared by many opticians working within the National Health Service—is that we are not very far off the time when the optical service (and, I would add, the dental

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service, too, but we are not debating that now) will be phased out of the National Health Service. I see this as yet one further attempt—snip, snip, snip—to take services which have been provided by the National Health Service and hand them over to the private sector. That is the basic and fundamental reason why I feel so disturbed by the Government's attitude towards this matter. My Lords, I beg leave to withdraw my Motion.
Motion, by leave, withdrawn.
House adjourned at twenty-two minutes past nine o'clock.

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