Sitting of 1 February 1984

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS
  ORKNEY ISLANDS COUNCIL ORDER CONFIRMATION
  Mr. Secretary Younger presented a Bill to confirm a Provisional Order under section 7 of the Private Legislation Procedure (Scotland) Act 1936, relating to Orkney Islands Council; And the same was read the First time; and ordered to be considered upon Tuesday next and to be printed. [Bill 93.]
Oral Answers to Questions
  TRADE AND INDUSTRY

    Bankruptcies
    Ms. Clare Shortasked the Secretary of State for Trade and Industry what is his latest estimate of the number of bankruptcies which occurred in 1983; and how this compares with the figure for 1982.
    The Under-Secretary of State for Trade and Industry (Mr. Alexander Fletcher): The number of bankruptcies in England and Wales is provisionally put at 7,000 compared with 5,700 in 1982. The figures cover all individuals and partnerships and include deeds of arrangement.
    Ms. Short: Does the Minister agree that, with such a high death rate for firms, there is no point in seeking to give aid to new small businesses, and that without a change of economic strategy we shall not achieve economic growth or an end to unemployment, but will have continuing bankruptcy and failure?
    Mr. Fletcher: I disagree with the hon. Lady. The number of new businesses has increased. The number of new companies registered last year was about 9,000 more than in the previous year. That has occurred as a direct result of Government policy, and outside objective support for that came yesterday from the CBI's quarterly survey, which showed that profits and productivity are rising fast.
    Mr. Kenneth Carlisle: Will my hon. Friend confirm that when considering bankruptcies it is, as he said, important to note how many new businesses are being created, for that is the other side of the equation? Are not the figures which he gave of new businesses greatly encouraging for the future of employment and for business generally?
    Mr. Fletcher: I agree entirely with my hon. Friend.
    Mr. Ashdown: Is the Minister aware of the time that has elapsed since the publication of the Cork report on
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    insolvency? Does he recognise that there is urgent need for action in this area? Will he give the timetable for legislation and make a statement on his proposals following Cork so that we may have an idea of when action will be taken?
    Mr. Fletcher: I hope to deal with that w hen we come to question 21.
    Mr. Nicholls: Is it not a fact that in some ways the figures are even better than my hon. Friend suggested, because over the years 1980, 1981 and 1982 there were 363,000 new businesses, with only about 343,000 going out of business, so that over a three-year period there was an increase of about 20,000?
    Mr. Fletcher: I am grateful to my hon. Friend for making that point. One of the main reasons was that the average rate of inflation in 1983 was 4·6 per cent., the lowest for 16 years.
    Mr. Janner: Is the Minister aware that there can be no excuse for the shattering and disgraceful increase in the number of individuals going bankrupt? In view of the agonising way in which people are suffering as a result — and at which the Minister is apparently laughing—may I ask for a firm date when the House will have the promised White Paper arising out of the Cork report? May we have a date now, please?
    Mr. Fletcher: I hope that the White Paper will be produced in the next few weeks.
    Mr. Bill Walker: Does my hon. Friend agree that firms usually go bankrupt when their expenses exceed their revenue and that that is often the result of bad management and the high rates levels imposed by local authorities?
    Mr. Fletcher: There are many factors which cause it, and when my right hon. Friend publishes the White Paper it will be seen what steps the Government are proposing to try to make directors and managers of businesses more responsible in their financial affairs.
    Mr. Shore: I am sure the Minister is aware that the question refers to companies, and the normal measure of the failure of companies is liquidations rather than bankruptcies. Will he confirm that last year over 13,000 British companies went into liquidation, the highest figure for any year this century? Is he aware that that makes a total of about 44,000 British companies which have gone into liquidation since the Conservatives assumed office in May 1979? Does the hon. Gentleman expect the record number for 1983 to be smaller, or larger, in 1984? If he thinks that it will be smaller, will that be due to the fact that the British economy has had the stimulus of an unexpected increase in public expenditure here at home, or will it be because the United States Government, through their record increase in spending, are stimulating the economies of the West, including our own?
    Mr. Fletcher: The question refers to bankruptcies. About 9,000 more companies were registered in 1983 than in 1982.

    Departmental Reorganisation
    Mr. Eggarasked the Secretary of State for Trade and Industry if he will make a statement on his plans for reorganisation of his Department.
    The Secretary of State for Trade and Industry (Mr. Norman Tebbit): I am pursuing a number of initiatives designed to fuse the work of the two former Departments. In particular, I am bringing much closer together the work on support of industry and commerce and work concerned with trade promotion, competition policy and regulation.
    Mr. Eggar: What aims and objectives has my right hon. Friend set for his Department during the rest of this Parliament, and what further action does he think will be necessary on the organisational side to achieve these aims?
    Mr. Tebbit: As my hon. Friend may know, my Department recently published a small brochure on the Department's aims, and the central aim is:
    "To encourage, assist, and ensure the proper regulation of, British trade, industry and commerce; to increase the growth of world trade and the national production of wealth."
    There are a number of subsidiary aims as well. I have instituted a system of clearer priorities for the Department to achieve and a better system for the allocation of resources and of checking that the priorities are achieved.
    Mr. Hoyle: Following the reorganisation of the right hon. Gentleman's Department, what section will be dealing with the automobile industry and what plans will be laid with it to ask of Nissan that genuine British parts are involved and not merely British content, which can be meaningless and not provide jobs in Britain for the components industry?
    Mr. Tebbit: There is a division of the Department which is responsible for the development of policies towards the motor industry. Since the merger I have consolidated the work which was put in train by my predecessor, the right hon. Member for Hertsmere (Mr. Parkinson), which is designed to bring into the sponsorship divisions an extra awareness of trading aspects, consumer protection and regulatory matters. As for the part of the hon. Gentleman's supplementary question on the Nissan project, it may be that he will be able to catch the eye of the Chair at a later stage this afternoon.
    Mr. Forman: To what extent will my right hon. Friend's plans for the reorganisation of his Department assist or coincide with a change in the balance of expenditure within it which is more in favour of industries with prospects for the future and less in favour of propping up those which really have no future?
    Mr. Tebbit: My Department is anxious not to prop up companies which have no future. However, many industries which are referred to as old fashioned can make a sharp comeback, as a number of firms in the textile industry have shown.
    Mr. Nicholas Winterton: Quite right.
    Mr. Tebbit: That can happen through the adoption of new technologies. It is our task to ensure that that happens, so far as we can. I intend that the Department will have a rather more active role in the sponsorship of some of the service industries, not least the financial services.
    Mr. Wrigglesworth: Will the reorganisation to which the right hon. Gentleman refers strengthen the parts of the Department dealing with competition policy? If so, will he tell us how his Department proposes to deal with what we hear the Government have decided are the natural monopolies in the public sector?
    Mr. Tebbit: I am sure that my policies will reach parts of government and Departments which others cannot reach, as is said sometimes in advertisements. We place great stress on competition policy. The hon. Gentleman might care to have a copy of the speech which I made yesterday at the 10th anniversary celebration of the Office of Fair Trading.
    Mr. Shore: I think the right hon. Gentleman will acknowledge that the great weakness of and danger to the British economy, certainly in the past, has been the balance of payments in both manufactured goods and invisibles. I should like to be assured that, in the merger of the two former Departments, ample resources of intelligence and expertise will be available for the promotion of British trade interests in respect of policy and actual promotion of visible and invisible earnings. Equally, I hope that resources will be devoted to import replacement. Does the right hon. Gentleman accept that there is a great danger, as evinced in the previous period of merger of the two former Departments, when the interests of industry, which are often very much geared to the home market, are allowed to dominate the broader interests of trade?
    Mr. Tebbit: I listened carefully to the right hon. Gentleman. The prime cause of success or failure in these matters is not so much the work of the Department as that of those in industry and commerce. I intend that we shall have a vigorous programme of trade promotion. Everyone in the Department, from Ministers to officers, is aware of that. I hope that there will be a proper balance between all those interests in the Department. I do not believe that Government resources should ever be described as "ample", but they could be described as "sufficient", and they are sufficient.

    Special Steels
    Mr. Whitfieldasked the Secretary of State for Trade and Industry what progress has been made following the measures taken in retaliation against the United States Government's decision to limit imports on special steels.
    Mr. Tebbit: In accordance with the earlier decision of the EC Council of Ministers, the Community has now notified the general agreement on tariffs and trade of its intention to retaliate from 1 March against the restrictions imposed by the United States Government on imports of special steels from the Community. Retaliation will take the form of increased tariffs on some imports from the United States and quotas on others.
    Mr. Whitfield: Does my right hon. Friend consider that the measures he has just announced are likely to have the desired effect, especially having regard to the interests of all Conservative Members at any rate of extending international competition?
    Mr. Tebbit: These measures will have the right effect. I believe that it would be difficult to press upon the United States the importance of maintaining an open trading system while its gross budgetary deficit brings about certain changes in its economy which make it less competitive in the world and thus gives rise to the balance of trade problems to which the right hon. Member for Bethnal Green and Stepney (Mr. Shore) referred a short time ago.
    Mr. Fry: I thank my right hon. Friend for his answer to the question on special steels. Is he aware that there is pressure on the United States Government to take action against exports of footwear from Europe? May I have an assurance that he will take this matter seriously and do what he can to persuade the American Government to take—
    Mr. Speaker: Order. This question is about steel, not footwear.

    Foundries (Output)
    Mr. Leightonasked the Secretary of State for Trade and Industry if he will give figures for output of British foundries for each of the last 10 years.
    The Under-Secretary of State for Trade and Industry (Mr. David Trippier): Output in United Kingdom foundries has fallen by almost 50 per cent. since 1975. With permission, I shall arrange for a detailed table to be published in the Official Report.
    Mr. Leighton: Is the Under-Secretary as worried as I am by the continuing decline of British manufacturing industry which that answer shows? Will he comment on the announced intention of the Ford Motor Company Ltd. to cease foundry production at Dagenham, thus causing thousands of workers to he unemployed, and to import parts from the continent? Has the hon. Gentleman noticed that countries as diverse as Mexico and Spain have laid down terms to the multinationals and said, "If you want our market, you must manufacture here or have a certain percentage of domestic components," and they should also produce a positive balance of payments? Will the hon. Gentleman consider a similar industrial policy in this country to rescue and safeguard British industry?
    Mr. Trippier: I regret the proposed closure of the Dagenham foundry, which is due mainly to the

    Output of United Kingdom Foundries: 1974–83

    Total Production (thousand tonnes)

    Index of Production for Foundries* (1980 = 100

    Iron Castings†

    Steel Castings‡

    Aluninium Castings║

    Copper Castings¶

    1974

    N/A

    3,190

    270

    134

    71

    1975

    148

    3,000

    263

    121

    67

    1976

    148

    2,890

    255

    121

    66

    1977

    145

    2,690

    246

    122

    65

    1978

    139

    2,620

    204

    132

    67

    1979

    139

    2,580

    192

    119

    62

    1980

    100

    1,830

    174

    102

    61

    1981

    87

    1,630

    145

    83

    59

    1982

    83

    1,490

    153

    78

    59

    1982 (Jan. to Oct.)

    84

    1,260

    128

    66

    50

    1983 (Jan. to Oct.)

    76

    1,120

    105

    54

    42

    * Covers foundries of iron, steel, aluminium, copper and other non-ferrous metals and their alloys, classified as Activity Headings 3111 and 3112 in the Standard Industrial Classification (1980).

    † Source: BSO iron castings inquiry. Incorporating revisions to last published figures.

    ‡ Source: Iron and Steel Statistics Bureau.

    ║ Source: Aluminium Federation. The data relate to total despatches.

    ¶ Source: World Bureau of Metal Statistics.

    A320 Airbus
    Mr. Haselhurstasked the Secretary of State for Trade and Industry whether he has yet reached a conclusion about the launch aid for the A320 Airbus; and if he will make a statement.
    considerable over-capacity of the European foundry sector. In our view Ford must be allowed to make these commercial decisions without Government intervention, and that will secure long-term competitiveness.
    Mr. Beaumont-Dark: Does my hon. Friend agree that the foundry industry is as important to the motor industry as it is to the steel industry? Will he outline his plans for talking to the foundry industry and helping with the rationalisation programme, which must go on if the industry is to survive?
    Mr. Trippier: If the foundry industry is to prosper and have a long-term future, it probably needs rationalisation. We in the Department of Trade and Industry are only too pleased to listen to any pleas which the industry brings to the Department. The decline in foundry production to which reference is made in the substantive question asked by the hon. Member for Newham, North-East (Mr. Leighton) and in my initial reply occurred over a period of 10 years, during part of which time the Labour party was in office.
    Mr. Williams: Does the Minister not realise that the situation in the foundry industry shows clearly the absurdity of adding British deflation to world recession? Is he aware that since the Government came to office 18,000 jobs have been lost in this industry in the midlands alone and that a further 15,000 will be lost in the next four years unless there is a change of policy? Indeed, what policy do the Government have? It is not good enough for the Minister simply to say that he is willing to listen to pleas from the industry. What positive strategy do the Government have for the development of the industry?
    Mr. Trippier: The right hon. Gentleman is on very weak ground. At the risk of hammering the nails out of sight, I remind him that the decline in the industry began in 1978 when the Labour Government were in power.
    The Minister of State, Department of Trade and Industry (Mr. Norman Lamont): The Government have not yet reached their decision about launch aid for the A320 Airbus but expect to do so shortly.
    Mr. Haselhurst: Does my hon. Friend agree that there is no comparable alternative project which could sustain British capability in civil airframe manufacture and that it is therefore crucial to our remaining in the industry at all that an early and positive decision be taken on launch aid for the A320?
    Mr. Lamont: My hon. Friend is right. The project is clearly of crucial importance to our civil aerospace industry. That point is well taken. I cannot say very much more. I note what my hon. Friend has said, but we are very close to reaching a decision.
    Mr. Barry Jones: May I warn the Minister that if launch aid is not forthcoming many hundreds of my constituents at the Broughton works may lose their jobs? Is he aware that unemployment in Clwyd is now more than 24,000 or 20 per cent.? Is he also aware that the Broughton factory is one of the finest reservoirs of industrial skills in Wales?
    Mr. Lamont: I am well aware of that, and I am familiar with the hon. Gentleman's comments, as he has made many representations to us. The employment considerations are, of course, extremely important. He will recognise, however, that huge sums of public money are involved. The application for launch aid for the aircraft itself involves more than £400 million, and the related V2500 engine project involves a further £113 million. The decision must therefore be weighed very carefully, but the points that the hon. Gentleman makes are well taken.
    Mr. Hayward: My hon. Friend the Under-Secretary of State said on 19 December that it was hoped to deliver a decision by the end of January and we have now gone beyond that date. Is my hon. Friend the Minister of State aware that further delay is not helpful on a decision which was then described as significant for both British and European airbus industries?
    Mr. Lamont: It is indeed significant, but it involves huge sums of money. It is therefore right that it should be properly researched and evaluated. The Germans have still to make their decision and our timing has been closely related to theirs. I assure my hon. Friend that a decision will not be long delayed.
    Mr. Carter-Jones: Is the Minister aware that Boeing has a virtual monopoly? In the interests of good British-American relationships, will he encourage the A320 Airbus by injecting a little competition into the field? Is he aware that there will be great joy on both sides of the House and among all the workmen if he provides the necessary aid to sustain both engine and airframe capacity in this vital area of technology?
    Mr. Lamont: As Airbus Industrie has said, Boeing faces strong competition from it, especially with the wide-bodied aircraft. If Boeing is not to have a monopoly, a European aerospace industry must be developed. All the points that the hon. Gentleman makes will be taken into consideration.
    Mr. Colvin: Is my hon. Friend aware that one market in which Airbus Industrie already has Boeing knocked for six is in the far east, where the rate of growth in civil aviation is about twice that of the rest of the world? Will he comment on the viability of the project and confirm that it is in no way another Concorde, but is a project of great commercial promise?
    Mr. Lamont: I do not want to comment on the viability issue, as my hon. Friend will understand, because that is precisely what we have to research and make up our minds about. We have to decide whether this is a good commercial proposition which will earn money for this country; whether it will serve in sufficient numbers to make moderately impressive sales and yield returns in dividends. We must not forget that many aerospace projects have failed to do that. We do not need to refer only to Concorde. I have to tell my hon. Friend that no aircraft project in this country since the Viscount has repaid its launch aid to the Government. That is not what we like to see. If we are to have an aerospace industry—and we want one—it must earn money for the country.
    Mr. Stott: The Minister must be aware that the A320 is not Concorde—it is nothing like Concorde. He will no doubt be aware that his hon. Friend the Member for Kingswood (Mr. Haywood) sponsored an Adjournment debate on 19 December last year, during which there was a remarkable degree of unanimity between his hon. Friends and mine. The hon. Gentleman must be aware that there is a clear consensus of support for the A320. It is vital that support from the Government is forthcoming in order to sustain our airframe manufacturing industry. Is the Minister aware that my hon. Friends the Members for Coventry, North-East (Mr. Park) and for Eccles (Mr. Carter-Jones) and I will shortly be departing for Toulouse? Perhaps the Secretary of State would nod sagaciously in my direction if a favourable conclusion to this matter is to be forthcoming immediately.
    Mr. Lamont: Even before the hon. Gentleman told me, I can tell him that I was aware that he was going, I believe at 3.30 pm, hotfoot to Toulouse. I assure the hon. Gentleman that the hospitality of Mr. Beteille and Mr. Lathiére is extremely good. I am sure that he will take a very warm message to them, to judge from what he has said.
    I am aware that the A320 is a different aircraft from Concorde. I believe that it is a different shape. The A320 is a very different aircraft, in the sense that it is designed to be a replacement for existing aircraft in an identified segment of the market. That point is well taken. I repeat that we have to evaluate the economics and the commercial viability of this project. It is not enough to say that this is an important industry. We must make sure that this is a good project. That approach is exactly the same as that of the German Government.

    Companies (Political Contributions)
    Mr. Winnickasked the Secretary of State for Trade and Industry if he is satisfied with the operation of the law regarding companies' contributions to political parties.
    Mr. Lofthouseasked the Secretary of State for Trade and Industry if he is satisfied with the operation of the law covering the way companies make political contributions.
    Mr. Tebbit: Yes, Sir.
    Mr. Winnick: Are we really to believe that it is pure coincidence that 60 per cent. of the knighthoods received since 1979 have gone to industrialists who have been associated with companies donating to the Tory party? Why does the Secretary of State not recognise that the manner in which there is no consultation with

    253
    shareholders, or any involvement by them—they cannot contract out—in making contributions to the Tory party has become quit scandalous?
    Mr. Tebbit: I suspect that about 100 per cent. of the knighthoods given to trade unionists by the last Labour Government were given to people associated with support for the Labour party. I think that knighthoods for people in commercial life are given to those who have shown outstanding success in commerce and industry. That frequently means that they happen to believe in the capitalist free market economy, which often means that they are members, or supporters, of the Conservative party as well.
    As to the hon. Gentleman's other question, he knows perfectly well what the state of the law is, and he knows perfectly well too that, in relation to shareholders' funds, and particularly dividends, the amounts of money concerned are trivial.
    Mr. Lofthouse: Is the Secretary of State aware that, as I do not think there are any hon. Members on the Front Bench whose names are associated with the list of Nazis and Fascists, we expect a fair answer in the House this afternoon? Does he not think that shareholders have the same right to contract out as trade unionists? Why is he so concerned about trade unionists' donations to the Labour party when he does not apply the same criterion to shareholders?
    Mr. Tebbit: It is clear that shareholders have the right to decide whether to contribute to political funds. They have the medium of the annual general meeting to impose a restriction on a company if they so wish. If not, they do not. There is no great demand for reform from shareholders, although there have been very strong demands for reform from trade unionists. Indeed, many trade unionists are conscripted into the unions to which they belong.
    Mr. Viggers: Is my right hon. Friend aware that I have been associated with several companies which have made political donations from time to time? Many shareholders have commended the donations made. The only complaint that I received was when one company, against my advice, donated to the Labour party.
    Mr. Tebbit: I am not really surprised.
    Mr. Wrigglesworth: The Government are apparently not going to change the law on company political contributions. Are they also coming to the conclusion that they should not change the law on trade union political levies, just at they sold out on the question of personal ballots in the Trade Union Bill?
    Mr. Tebbit: I am sure that the hon. Member for Stockton, South (Mr. Wrigglesworth) knows that if he wants to ask questions about that Bill and allied legislation, he can ask my right hon. Friend the Secretary of State for Employment at the appropriate time.
    Mr. Shore: The Secretary of State is rather easily satisfied about the law relating to companies and contributions to political parties. The right hon. Gentleman seems not to have understood or given his mind to the question. When he speaks about individuals in companies being shareholders who have the right to contract out or in, one would imagine that we were still living in the period before the first world war when the
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    great mass of shareholders consisted of individuals. What does the right hon. Gentleman have to say about the fact that about half of all the shares owned in Britain are held by institutions, superannuation and insurance companies, over which individual subscribers have no control whatever? Let us not pretend that the two situations are the same.
    Mr. Tebbit: I have looked into this matter from a personal point of view, as I am a member of the British Airways pension scheme. At present that fund is valued at about £1·5 billion. I have analysed the scheme's holdings, and the total cost of the political contributions made by the British companies in which it has its 10 largest investments amounted to £100·60. That amount will not cause much loss of sleep to the scheme's 53,000 members and beneficiaries.
    Mr. Shore rose—
    Mr. Speaker: Order. I call Front Bench Members frequently, but it reduces the amount of time available to Back Benchers.

    Small Businesses
    Mr. Brightasked the Secretary of State for Trade and Industry if he will take steps to educate professional advisers about the help available to their small business clients.
    Mr. Trippier: Yes, Sir. On behalf of my Department the Institute of Chartered Accountants and the Association of Certified Accountants are organising seminars for professional advisers in April and May. The seminars will deal with financing small businesses and Government grants and advisory services. I plan to announce further details later this month.
    Mr. Bright: That is a welcome statement. Will my hon. Friend bear in mind that some solicitors and bank managers are very much in the front line in advising not only those who contemplate starting businesses, but those who run small businesses and want to extend them? Can they also be included?
    Mr. Trippier: I am grateful to my hon. Friend for his support. The seminars are targeted at intermediaries and professional advisers. To complement the seminars, we shall be sending a booklet, which is sophisticated when compared with "How to Make Your Business Grow", to every chartered and certified accountant, every bank manager and the senior partner in every firm of solicitors.
    Mr. Madden: In view of the current controversy, does the Minister think it would be helpful if companies were required to disclose the names of and the fees paid to professional advisers who secure contracts for them overseas?
    Mr. Trippier: I do not think it would.
    Mr. Bowen Wells: Does my hon. Friend agree that often the best way to provide professional advice to small businesses, which are particularly vulnerable in their early years, is through the establishment of business technology and other centres which provide nursery-type accommodation for small businesses?
    Mr. Trippier: I do indeed. I should like to take this opportunity to congratulate the large companies which

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    help in the small firms sector by providing various units, particularly sheltered workshop accommodation, for small businesses, especially for those in ITEC.
    Mr. Williams: Will the Minister bear in mind that it is not only professional advisers who need educating on the Government's policy on small firms? Will he explain to his right hon. Friend the Chancellor of the Exchequer that, while he is boasting about the measures that he has introduced to help small businesses, his Department, through its policy of reclassification of the self-employed as employed, is sabotaging the same small firms that he claims he is trying to help?
    Mr. Trippier: I have not the slightest doubt that my right hon. Friend the Chancellor of the Exchequer will consider that in his forthcoming Budget. Obviously I am not in a position to divulge anything that may be considered by him.

    Export Credits Guarantee Department
    Mr. Sedgemoreasked the Secretary of State for Trade and Industry whether he is satisfied with the current operations of the Export Credits Guarantee Department.
    The Minister for Trade (Mr. Paul Channon): Yes, Sir. I believe that the Export Credits Guarantee Department provides a good service to British exporters. To ensure that the Department will continue to do so, a committee under the chairmanship of Sir Peter Matthews is presently considering its most suitable structure for the future.
    Mr. Sedgemore: Will the Minister confirm that there is an export credit guarantee in respect of the Cementation contract to build a university in Oman? What amount is the guarantee for? Was there any lobbying by the Prime Minister or her office in respect of the guarantee? Was the commission to be paid to Mark Thatcher and his associates also covered by the guarantee?
    Mr. Channon: The hon. Member's question is typical of his conduct in the House.
    Mr. Sedgemore: Just answer it.
    Mr. Channon: I certainly shall answer it.
    Mr. Sedgemore: Just get on and answer the question.
    Mr. Speaker: Order. It is no good the hon. Member shouting from a sedentary position. He has asked his question.
    Mr. Channon: If the hon. Member had taken the trouble to note, a press notice on this deal was issued on 12 August 1982, so all the facts have been known for a very long time.
    Mr. Campbell-Savours: Will the Minister ensure that in any future contracts which the ECGD guarantees, commissions paid are shown as separate items in the contract?
    Mr. Channon: No, Sir. Under successive Administrations the ECGD has assessed applications for cover on a commercial basis. It does not give details beyond those which are occasionally released in press notices of the kind to which I have referred. It would be wrong, and not in the national interest, to make any change in that procedure.

    Small Firms Technical Engineering Scheme
    Mrs. Ann Wintertonasked the Secretary of State for Trade and Industry if he is satisfied with the response to the small firms technical engineering scheme.
    Mr. Trippier: Small manufacturing firms with up to 200 employees can receive free help and advice from the small firms technical inquiry service, which is funded by my Department. I am very satisfied with the growing demand for this service, which has assisted over 4,000 firms since it started in July 1982.
    Mrs. Winterton: Will my hon. Friend take this opportunity to remind the House of the benefits of the technical inquiry service? Has he any further plans to assist smaller businesses which would in due course enhance future employment prospects?
    Mr. Trippier: The service provides up to five days' free consultancy advice in areas covered by materials, manufacturing methods, the use of computers, factory layout and production control. In the debate on small firms on 4 November I announced the measures that the Government intend to carry out.

    Exports
    Mr. Powleyasked the Secretary of State for Trade and Industry what is his forecast for British exports in 1984.
    Mr. Channon: My right hon. Friend the Chancellor of the Exchequer in his Autumn Statement projected a 4 per cent. increase in the volume of exports of goods and services between 1983 and 1984.
    Mr. Powley: I thank my right hon. Friend for that encouraging reply. Is he aware of the threat to the British footwear manufacturing industry's export drive of the reported decision of the American Government to restrict shoe imports into that country? Does he agree that that would have a damaging effect on our footwear industry?
    Mr. Channon: I understand that the American Government have taken no decision on that matter. However, I entirely share my hon. Friend's view that that would be an extremely regrettable step. My right hon. Friend the Secretary of State will be in the United States next week, and I am sure that that could be one of the topics that he would want to raise.
    Mr. Kennedy: Does the Minister agree that Britain's export position would be much healthier if industry were able to take advantage of what happened late last summer when aluminium prices escalated on the American market? Would not a strong domestic base in that industry be able to take advantage of such an escalation? Does not the fact that the Government stood by and allowed the Invergordon smelter, which is in my constituency, to close mean that we have lost the advantage of such a base? Does not that closure highlight the Government's shortsightedness with regard to export policy?
    Mr. Channon: The Invergordon smelter is not one of my responsibilities, but I am sure that the hon. Gentleman will be pleased to learn that the evidence is that businesses are much more confident that exports will improve. There is much more domestic confidence on all fronts and evidence that exports will do extremely well.
    Mr. Nicholas Winterton: Does my right hon. Friend agree that the textile and clothing industry, to which my

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    right hon. Friend the Secretary of State for Trade and Industry rightly paid tribute a moment ago, could make a greater contribution to Britain's exports if the Department responded promptly to the report "Plan for Action"—which was sent to the Department by the British Textile Confederation in March last year—which includes a request that a scheme similar to the small engineering firms investment scheme be applied to the textile industry?
    Mr. Channon: Yes. An answer to that report will be given shortly. I share my hon. Friend's views of the textile industry's achievements. He will be aware of the great help that the Government have given to the textile industry under the multi-fibre arrangement.
    Mr. Shore: As the Minister ought to know, last year, for the first time in our history, we had a major deficit in trade in manufactured goods. The Minister said that his right hon. Friend the Secretary of State forecasts an increase in British exports next year. Does that forecast specify an increase in British manufactured goods? If the right hon. Gentleman can give us that answer, can he also tell us what the forecast is for next year's imports?
    Mr. Channon: The pattern of the British economy has been changing for several years. It is changing and it will continue to change. There is nothing wrong with that. We have large surpluses on oil and on services. We cannot conceivably hope to have a surplus on every item. I am sure the House will be glad to learn that, in the last quarter, manufactured exports increased by 7 per cent. over the previous quarter. That is an extremely encouraging sign.

    Regional Industrial Development
    Mr. Phillip Oppenheimasked the Secretary of State for Trade and Industry what views he has received on the White Paper on regional industrial development.
    Mr. Norman Lamont: I have received a number of submissions on issues on which views were invited, including the assisted area map and activities which should qualify for regional development grant.
    Mr. Oppenheim: Is my hon. Friend aware that millions of workers in areas which do not receive any assistance or regional aid deeply resent the assistance that is given to some areas because it creates unfair competition for jobs? Is he further aware that such workers look forward to the legislation that is proposed for the autumn?
    Mr. Lamont: We are aware of that feeling. That is why the Government have reduced the area of the country that is covered by regional policy. It is also one of the reasons for reviewing regional policy. We want to reduce discrimination and distortion against non-assisted areas. My hon. Friend will recall, from my right hon. Friend the Secretary of State's statement, that the new system will produce some public expenditure savings. We believe that it will do less damage to non-assisted areas.
    Mr. Bagier: Does the Minister agree that the White Paper on regional policy seems to be a White Paper of despair? Is he prepared to take notice of the fact that, since 1 January, 1,500 redundancies have been notified in the Tyne and Wear area and that since 1980 41,500 redundancies have occurred in that area? Where is the action from the Government, never mind the words?
    Mr. Lamont: I do not accept that it is a White Paper of despair. It was designed to produce a more cost-effective regional policy that would give better value for money and do less damage to the non-assisted areas. The fact that the hon. Gentleman's constituency has suffered from persistently high unemployment, despite tens of millions of pounds of regional aid being poured into it, begs the question whether that regional aid is being effective. That is why we chose to re-examine it. We want better value for money.
    Sir Raymond Gower: Will my hon. Friend take account of the fact that, in addition to any moneys that might be withdrawn from areas of greatest need, such as parts of Wales and Scotland, the White Paper will have repercussions on the amount of aid that may be available from the EEC? The reduction in aid from that source would have a harsh effect on areas such as Wales and Scotland.
    Mr. Lamont: We are well aware of the point made by my hon. Friend. One of the important considerations in framing regional policy is that we should be able to maximise receipts from the European regional development fund. I assure my hon. Friend that, during the period of consultation, we shall take into account what he said.
    Mr. Skinner: Will the Minister stop engaging in this bout of hypocrisy? Is not the truth of the matter, in respect of Amber Valley and other parts of Derbyshire that, as a result of lobbying by Labour authorities in the area, we managed to convince a Labour Government to give assisted area status to Erewash Valley? The Conservative Government, as one of their first acts in 1979, took away assisted area status from Amber Valley. That resulted in no grants being received after 1982. The Minister is now engaging in hypocrisy. He is trying to kid the nation into believing that the Government will be giving regional benefits to all those areas from which they removed them in 1979.
    Mr. Lamont: The hon. Gentleman lives in his own small world of delusion, into which I do not wish to go. The decisions about regional policy were taken by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), then Secretary of State for Industry, based on objective criteria. I reject the suggestion that political considerations came into the decision taken about the hon. Gentleman's constituency.
    Mr. Budgen: Will my hon. Friend take evidence from all those who have been affected by the great experiment in regional development at Linwood and make it available to all those who support the Nissan project?
    Mr. Lamont: Attempts to steer large projects in the motor industry to particular areas have had an unfortunate history. We do not propose to repeat that.
    Mr. Geoffrey Robinson: Does the Minister agree that the Government's unique achievement has been to turn the whole of the United Kingdom into a depressed region? Does he further agree that manufacturing industry in particular will not benefit from the provisions outlined in the White Paper? Will the Minister take note of the point made by my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) and direct his attention to whole sectors of manufacturing industry, especially machine tools in Coventry, which are falling into a state of teminal decline?
    Mr. Lamont: I do not accept what the hon. Gentleman says. The only point with which I agree is that it is an illusion to think that regional policy can bring about a revival of the economy. That revival will be brought about only through our becoming more competitive. The hon. Gentleman knows as well as I do that the signs of that revival are good, with inflation and interest rates down. Yesterday the CBI published its best survey for years, showing a strong expectation of growth in industry and the economy. That is what the regions need, not a bigger regional policy.
    Mr. Grylls: Taking into account the all-too-modest changes proposed in the White Paper, can my hon. Friend be certain that taxpayers will get real value for money as a result of those changes?
    Mr. Lamont: Yes, I am certain that taxpayers will get better value for money. There will be a smaller regional policy, which we believe will create as many jobs as the previous policies. Above all, this regional policy will be more job-related and will not throw away money on large, capital-intensive projects. That approach has damaged the economy of many of our regions.
    Mr. Maclennan: I recognise the need for a more discriminating regional policy, but does the Minister accept that the circumstances in Scotland, particularly west central Scotland, have changed since the Government's proposals were published, and that the prospect of collapse at Scott Lithgow must lead to a reconsideration of the underlying premise of the White Paper? Does he further accept that the £400 million that it is now widely stated will be lopped off Scotland's regional aid must be replaced?
    Mr. Lamont: It would be difficult to lop £400 million off Scotland's regional aid, because it does not receive that amount. I do not accept what the hon. Gentleman said about the premise being altered. What may have altered are the areas that should qualify for assistance. However, we are not yet taking decisions on the map. We cannot do so until we have the return from the Department of Employment on the travel-to-work areas, and that will be in several months' time. Obviously, I cannot anticipate decisions on particular areas.

    British Oxygen Company
    Mr. Flanneryasked the Secretary of State for Trade and Industry if he will refer the supply of gases by the British Oxygen Company to the Monopolies and Mergers Commission.
    Mr. Alexander Fletcher: The Director General of Fair Trading has received representations about the supply of medical gases by the British Oxygen Company. He has asked for evidence to enable him to consider, in accordance with his statutory responsibilities, whether to take action. My officials are in close touch with the Office of Fair Trading.
    Mr. Flannery: Is it not a fact that the Government are very slow to attack private monopolies and very quick to accuse the nationalised industries of being monopolies? Does not the arrogance of power that is vested in the wages of the chief executive and other executives in the organisation show that it is so dominant in the market that it is clearly a monopoly, and that the Government are aiding that monopoly instead of doing something about it?
    Mr. Fletcher: No. If the hon. Gentleman has any evidence that he wishes to submit to the Director General, who is considering the case, I should be pleased if he would do so.
    Mr. Gould: Is not this case the acid test of the Government's competition policy? Does the Minister not recognise that to imply, as his right hon. Friend the Secretary of State did yesterday in a speech at the Office of Fair Trading conference, that competition alone is all that is required to promote efficiency and protect the consumer is far too simple-minded? Does not that case show that unregulated competition means that a dominant firm can exploit and abuse its market position to the detriment of efficiency, the consumer and, in this case, the taxpayer? In this case, will he be as robust as his Conservative predecessors in 1954?
    Mr. Fletcher: The matter is already being considered by the Director General. If he decides to make recommendations to my right hon. Friend the Secretary of State, we shall take speedy action.

    Textile Industry
    Mr. Burtasked the Secretary of State for Trade and Industry if he will make a statement on the prospects for the textile industry.
    Mr. Norman Lamont: I welcome recent reports of improved company results and higher figures for both output and employment, which suggest that the textile industry is pulling out of the recession. If firms are able to meet the demands of their customers in terms of quality, design, price and delivery, I think that the prospects for the industry are brighter than they have been for some considerable time.
    Mr. Burt: I welcome the positive aspects of my hon. Friend's statement, but note that the industry has been badly hit by the recession. Much needs to be done. Will my hon. Friend give special consideration to those in the knitwear industry and those in exports, who have radically improved their position in the past 12 months? I echo the call of my hon. Friend the Member for Macclesfield (Mr. Winterton) for an early response from the Government to the British Textile Confederation's "Plan for Action". Does my hon. Friend believe that the statement that he issued echoes the fact that the industry is doing its best to pull out of the recession? I ask the Government to support that effort.
    Mr. Lamont: I note what my hon. Friend said. One of the reasons why we were delayed in responding to the British Textile Confederation's "Plan for Action" was that we wanted to consider it with the representations from the knitwear, footwear and clothing industries, which are related to each other. A number of companies in the knitwear industry have had good results. There are some first-class companies in that industry. They can do well, and they need encouragement.
    Mr. James Lamond: Is the Minister aware that the industry does not believe that it gets much protection from the multi-fibre arrangement and that it is very concerned because it appears that China intends to expand its exports of textiles by an amount equal to the present total production of the Common Market?
    Mr. Lamont: I know that people complain about the MFA, but it is one of the most complex and elaborate

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    arrangements of protection that we have. No fewer than 600 quotas are imposed on different products. We do not hesitate to impose quotas on other products that show any surge above agreed levels.
    I am aware that there is concern about China. The hon. Gentleman will know that we are negotiating new arrangements with China. The negotiations are not yet concluded. In the meantime, quotas were imposed on particular products for 1984. However, I note what the hon. Gentleman says.
    Mr. Waller: Does my hon. Friend agree that the export performance of the British wool textile industry has been remarkable in recent times, especially in prevailing world conditions? However, does he accept that the continuation of that performance depends on a satisfactory home market? Will he bear that fact in mind during the forthcoming negotiations with countries which may erect substantial barriers against our exports?
    Mr. Lamont: I agree with my hon. Friend that the industry has been a successful exporter, especially to the United States, despite some rather unwelcome measures taken by the United States. We do not welcome what the United States has done. I note what my hon. Friend said.
    Mr. Williams: The Minister may express optimism about the future of the industry, but is he aware that profitability is still so low that most firms cannot afford to install the latest machinery, incorporating microtechnology, which is essential to their long-term survival?
    What does the Minister have to say to the man-made sector of the industry, which points out that, despite employment in its sector falling to a mere one third of the level when the Government took office, all the productivity gains have been eliminated by the Government's policy of high interest and sterling rates and high energy costs?
    Mr. Lamont: The right hon. Gentleman must not underestimate what is happening in the textile industry. It is true that profitability does not compare well with industry in general, but there have been some striking company results — for example, Vantona-Viyella and Illingworth Morris. Courtaulds profits have risen by no less than 100 per cent. Textile output in the third quarter of 1983 was 3·6 per cent. up on the previous quarter, and 3·2 per cent. up on the previous year. — [HON. MEMBERS: "What about jobs?"] In September 1983, textile employment was 2,000 up on June 1983, so we are beginning to see a recovery.

    Trade Statistics
    Mr. Parkasked the Secretary of State for Trade and Industry whether, in answering questions on trade, he will make it clear whether he is using overseas trade statistics or balance of payments figures.
    Mr. Channon: Yes, Sir. It is our practice to use balance of payments figures where possible. When figures on the overseas trade statistics basis are used, they are labelled accordingly.
    Mr. Park: I am rather surprised at that reply. Does the Minister recall that the last time his Department appeared at Question Time a similar question was tabled? Was not the reply given on that occasion based on an internal departmental estimate covering three months, which was
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    not checkable and was therefore likely to mislead? I am sure that the Minister does not wish to mislead the House, but I hope that in future he will abide by the rules that he has laid down.
    Mr. Channon: The basis on which figures have been given has been precisely the same under successive Governments. It has not changed in any way. Wherever possible, figures relating to exports, imports and the balance of trade are given on a balance of payments basis. When that is not available, they are given on an overseas trade statistics basis.
    I hope that in future there will be improvements to that system and that we can give reliable monthly figures on a balance of payments basis. That will be more satisfactory for all concerned. I hope that that will be possible from March onwards.
    Mr. J. Enoch Powell: Will the Minister confirm that total payments always necessarily and inevitably balance?
    Mr. Channon: I think that must be self-evident.
    Mr. Gould: Will the Minister confirm that, whatever statistical basis is used, the figures show the unmistakable trend of a decline in the balance of trade in manufactures, which has fallen by no less than £10 billion since the end of 1978? Does the right hon. Gentleman accept that that reflects not only the definitive judgment of the market on the Government's economic policies, but a substantial loss of price and non-price competitiveness as shown by the survey published by the European management forum last month? Will Ministers now stop claiming that competitiveness has improved?
    Mr. Channon: I have already dealt with manufacturing and services. It is a curious point for the hon. Gentleman to make at this time. During the last quarter, manufacturing exports, in value terms, were probably higher than they have ever been in this country. They were 7·5 per cent. up on the preceding quarter. Rather than endlessly complaining about everything under the sun, the Opposition would do better to recognise that things are improving. We do not hear hon. Members from the midlands say that exports of cars in the last quarter had increased by 39 per cent. over the quarter before.
    Mr. Ashdown: On a point of order, Mr. Speaker. You may recall that at the beginning of Question Time the Minister refused to answer a question that I put to him, on the ground that it was in some way similar to a later question on the Order Paper. However, the substance of my question was totally different from that of No. 21. Is it in order for the Minister to use such a device to avoid answering an important question, particularly when he knows perfectly well that the question to which he referred will not be reached?
    Mr. Speaker: Order. I noted what happened. I must say again—I hope that the House will consider that this is fair — that in dealing with Question Time I look carefully through the later questions of those who have taken part in the ballot, and I do my best, although I cannot always achieve this, to ensure that hon. Members whose questions appear later on the Order Paper have an opportunity to ask their supplementary questions. I am not, of course, responsible for the replies.
    Mr. Campbell-Savours: On a point of order, Mr. Speaker. On Monday, I raised with you a point of order on the difference between the status of a question—
    Mr. Speaker: Order. Does this arise out of Question Time?
    Mr. Campbell-Savours: No, Sir.
    Mr. Speaker: Then I think that we will take the two statements first.
    Mr. Andrew F. Bennett: On a point of order, Mr. Speaker.
    Mr. Speaker: Order. Does the hon. Member's point of order arise out of Question Time?
    Mr. Bennett: Yes, Mr. Speaker. I wonder whether you would consider the rights of Back Benchers. I feel somewhat disappointed today because my question, No. 20, was not reached. It seems odd to me that in the past, when Trade and Industry questions were separate, it was
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    fairly common in both cases for between 20 and 30 questions to be answered. Now that the Government have chosen to put the two Departments together, it seems unfortunate that only about 15 questions are answered. Back Benchers should have more opportunity to ask questions on Trade and Industry that are of concern to their constituents.
    Mr. Speaker: I am very sympathetic to what the hon. Member has said, and I think that we should have done rather better today. However, I am bound to say—this is no criticism of the Front Bench—that I called the Opposition Front Bench 10 times at Question Time today. If that happens, further questions are effectively cut off. In a full hour, we should get through more than the 15 questions that were answered today. I shall endeavour to do better Back-Bench in future.

Nissan Project
3.34 pm
The Secretary of State for Trade and Industry (Mr. Norman Tebbit): With permission, Mr. Speaker, I should like to make a further statement on the Nissan project. I am pleased to inform the House that the Government and Nissan have reached an understanding on the basis for a Nissan car plant in the United Kingdom. The president of Nissan, Mr. Takashi Ishihara, and I have signed heads of agreement today. These are being published and copies will be available in the Library of the House later today.
Subject to a satisfactory outcome of negotiations with United Kingdom trade unions and local authorities, Nissan will proceed with the construction of a car plant on a green field site of substantial acreage—probably around 800 acres — within a development or special development area.
The first phase will be a pilot plant, to begin production in 1986 providing an assembly capacity of 24,000 cars a year based on imported kits. These will be treated as though they were built-up imports in the context of the discussions between the Society of Motor Manufacturers and Traders and the Japan Automobile Manufacturers Association, both of whom have given their agreement to this arrangement. During this phase Nissan intends to gain experience of general operating conditions in the United Kingdom, to develop effective relationships with local component manufacturers and establish the prospects for further development.
In the light of that Nissan will decide, not later than 1987, whether to proceed to phase 2 which will provide capacity for 100,000 units on a full manufacturing basis. If Nissan decides to proceed to phase 2, production would start by 1990 at 60 per cent. local content on an ex-works price basis. Full production would be reached in 1991, with 80 per cent. local content being achieved and maintained from the middle of 1991.
In addition to regional development grants, the Government will also be ready to provide selective assistance of up to £35 million, if Nissan proceeds to phase 2; that is equivalent to 10 per cent. of the total capital costs of both phases. In phase 1, the plant will employ directly between 400 and 500 people, and in phase 2 about 2,700 people, but particularly in phase 2 the potential total direct and indirect employment will be considerably greater.
This project represents an important opportunity to create fresh investment and jobs in the motor industry. It will introduce a major, efficient new domestic customer for the United Kingdom components sector; and it represents a constructive step forward in the dialogue between Europe and Japan on trade and investment. For those reasons I am sure that the House will join me in welcoming the Nissan project to the United Kingdom.
Mr. Peter Shore: The House will certainly want to judge this proposal for major inward investment as it would any other such proposal — that is, against some measurable criteria of the national interest. In particular, it will want to judge it against the criteria of whether it will lead to a net increase of jobs in the United Kingdom and a net improvement in our balance of trade in vehicle trading.
On the first of those criteria, the Secretary of State will concede that phase 1 certainly would not meet the criteria
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of any increase in jobs or in the balance of trade, helpful to the United Kingdom. I think that that is specifically conceded in the remarks contained in the statement, that the 24,000 imported kits will, I understand, be set against the Japanese agreement under which they do not take more than 11 percent, of the British market. I should be grateful if the Secretary of State would make that point, which I think is implicit.
The judgment must therefore turn upon phase 2 of the proposed inward investment project. There, a great deal turns, as I am sure the Secretary of State recognises, upon the precise meaning of certain key figures and phrases. When he speaks of local content of 60 per cent. being achieved in 1990 and 80 per cent. in 1991, to what precisely do those percentages refer? Do they refer to the value of the components manufactured in this country or to that much looser and larger total value represented by the rent of factories, advertising, marketing and non-manufacturing activities? Those questions must be answered.
How far will this agreement and the component content — which may not be the same percentage at all, and may be considerably lower—fit in with the certificates of origin that affect access to the European market? The Minister should bear in mind, because it is a strong bargaining point for the United Kingdom Government, that the countries of western Europe, particularly France and Italy, maintain separate and highly restrictive direct constraints on the import of Japanese cars. It is a great pity that other countries have been unable to do the same.
How much does the right hon. Gentleman reckon will be the total cost of phases 1 and 2 together—on the assumption that phase 2 takes place—and of that sum, how much is to be contributed by the British Treasury?
Mr. Dennis Skinner: They have got their agent in the Gallery, look—the Nissan agent.
Mr. Tebbit: I hope that we shall be able to conduct these proceedings with decorum and that we shall not be interrupted by such contemptible, oafish remarks as that.
Although the right hon. Member for Bethnal Green and Stepney (Mr. Shore) was almost completely wrong in everything he said, none the less, and as ever, he was immensely courteous. I am sorry that his attitude was as negative as that of his right hon. Friend the Member for Salford, East (Mr. Orme), although I understand that the right hon. Member for Salford, East later changed his mind.
As the right hon. Gentleman knows, there have been discussions between the trade associations JAMA and SMMT. As he said, prudent marketing has led to a stabilisation of Japanese imports at under 11 per cent. I understand that under phase 1, the two trade associations will treat the 24,000 assembly operation as a feature of their continued prudent marketing. In other words, 24,000 fewer completed cars will be imported, and 24,000 will be produced here from kits. Clearly, all of the 400 to 500 jobs that will be created in phase 1 will be a gain to the British economy.
Mr. Shore: How?
Mr. Tebbit: Quite clearly, because those 400 or 500 people are not employed at present.
The 60 per cent. and 80 per cent. figures are calculated on the ex-works value basis, and that is identical to the present EC rules of origin. That problem is clearly solved.

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I have explained that the extent of the Government's financial assistance will depend, first, on whether the plants are in a special development area or a development area and, secondly, that a maximum of £35 million, or about 10 per cent. of the total cost of phases 1 and 2, will be paid in selective financial assistance.
Mr. Steve Norris: I welcome my right hon. Friend's statement, especially the inclusion of the 24,000 phase 1 units in the JAMA quota. However, may I draw attention to the considerable reservations—held particularly by hon. Members who represent constituencies with British motor interests—about the unfettered release of 100,000 manufactured units on to United Kingdom market under the second phase proposals? There is still considerable fear that substitutional jobs will disguise the real increase in jobs that this scheme will create.
Mr. Tebbit: I note what my hon. Friend said. He should be clear that there is no basis for his assumption that all the 100,000 output would be released on to the British market; they would be capable of being exported to the remainder of the Community or elsewhere. The Department's estimate, based on some central assumptions, is that about 6,000 net jobs could be created as a result of the project. The ultimate number is crucially dependent, naturally, on the success of British component manufacturers in getting their components, as opposed to those of other Community manufacturers, into the project. That comes down to the same question that we face at all times: are they competitive? If they are not sufficiently competitive to supply into a factory on their own doorstep, I doubt very much whether they will be sufficiently competitive to supply into the flood of imports currently coming to us from the European Community.
Mr. Paddy Ashdown: Did the Minister see the piece in last week's Observer, which said that one of the advantages which could spring out of the deal would be a reduction of trading tensions between ourselves and Japan? Is the right hon. Gentleman prepared to list to the House any advantages that he can see might accrue to British exporters to Japan as a result of this deal?
Mr. Tebbit: I am sure that the more that it is seen that British manufacturers can meet the extremely tight requirements of Japanese companies, the more credible we will be in our exporting policies towards Japan. This is quite clear.
Sir Raymond Gower: Is my right hon. Friend aware that in recent years a number of Japanese companies have settled in Wales and that their experience on the whole has been happy, successful and mutually beneficial? Will he bear in mind the fact that if the Nissan company should decide on a site in Wales, it will receive a welcome from all the community, as it could make a valid contribution to replace the numerous jobs that have been lost in the Principality in the past decade?
Mr. Tebbit: My hon. Friend is correct. A large number of Japanese companies have found very good homes in Wales and found that they have been extremely successful and prosperous there. It is not, of course, for me to say
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where Nissan will eventually locate its plant, but I am sure that what my hon. Friend has said about the welcome will be noted.
Mr. Geoffrey Robinson: Will the Minister accept that this is a pathetic shadow of the project that he presented to the House over two years ago, when he talked in terms of 5,000 jobs, 200,000 cars, half for export, and reaching a level of 80 per cent. within two years? Is this not a project which, in its present form, the right hon. Gentleman should not accept? Would it not be better to see if he can get to phases 2 and 3 at once and say politely that we must be critical in the national interest because, in terms of jobs and exports, the project as presented to the House is unacceptable? Under phase 3, provided that we had a commitment on gearboxes and engines to be manufactured in this country, we could look to an increase in jobs and exports, but without that we should back our indigenous manufacturers,
Mr. Tebbit: I am afraid that the hon. Gentleman has got it completely wrong again. He always did, he always does, and I fear that he has reached the stage in life when we must say that he always will. First, as I explained, the 24,000 cars which will be assembled from kits in the first phase will be wholly a gain to this country in terms of the jobs that will be created. Secondly, while he may be contemptuous of 100,000 extra motor cars being produced in this country, frankly I am not. Approaching 1 million cars were imported into Britain last year. The 100,000 stage could substitute for many of those, and I hope that the success of the Nissan firm will be such as to encourage it to move on from phase 2 to phase 3 and beyond. I am amazed that the hon. Gentleman should seem complacent about the fact that half the Ford motor cars sold in this country are imported, yet be so churlish about this.
Mr. Beaumont-Dark: I think that many of us will breathe a sigh of relief that the Meccano outfits that are to come in will be treated against the imports of Japanese vehicles. As the Japanese are considered to be so efficient already, and as they will virtually be given a green field site when they come here, why do we need to buy competitors? How much will we give the Japanese of other people's money to compete with our own industry?
If the Japanese are so marvellous already, why should we think that there is any chance of us beating them at the game that they intend to play? Most of us think that when we come to 1990 they will find a way to wriggle out of the agreement, and that by 1991 there will be so much taxpayers' money in the project that we shall not be able to let it fail, and other home industries will fail instead.
Mr. Skinner: And Sir Michael will have pocketed his consultancy fees.
Mr Tebbit: If my hon. Friend will forgive me for saying so, he is wrong on these matters. There is no question of a site being given to anyone. A site will be sought of about 800 acres on which the factory will be built. That site will be purchased. My hon. Friend asks about the aid that will be given. I shall not repeat the figures because I am sure that my hon. Friend will be able to read them in Hansard tomorrow. The aid that will be given to Nissan will not be nearly as much as that which has been given to British Leyland—[HON. MEMBERS:

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"That is British."] — and we shall treat Nissan as a British operation in the same way as we treat the British operation of Ford or General Motors.
Mr. Roy Hughes: May I express regret that the investment is a good deal smaller than originally envisaged? Nevertheless, if Newport is chosen as the site, we shall say clearly and unequivocally, "Croeso oeth deg pedwar". Bearing in mind all the advantages that Newport has to offer, the company will make a wise choice if it decides to locate its factory within it.
Mr. Tebbit: I must confess that since my childhood in Wales I have forgotten what Welsh I learnt, so I am not sure whether the hon. Gentleman was speaking Welsh or Japanese. I construe that he was offering a warm welcome to Nissan should south Wales be favoured with the investment. I am sure that he is speaking for all the people of Wales when he makes that remark.
Mr. Mark Robinson: Despite some of the carping comments in response to my right hon. Friend's statement, I welcome it, just as I welcome the visit of the chairman of Nissan to London today. Can my right hon. Friend say when a decision will be made on the siting of the plant? If the decision is made to locate in south Wales, I echo the comments of the hon. Member for Newport, East (Mr. Hughes) and say that Nissan will be made most welcome within the region.
Mr. Tebbit: I note, Mr. Speaker, that the Welsh lobby today is one that would have made your predecessor extremely proud. I hope that the decision on the location of a site will be made shortly. The Nissan company is anxious now to proceed as quickly as it can.
Mr. Gordon A. T. Bagier: Does the right hon. Gentleman agree that by and large Japanese investment in Britain has been good investment? Does he agree further that by and large the Japanese have proved to be first-class employers? As Sunderland is one of the areas that has been short-listed for the location of the site, will he take it on board that in the light of the prediction of this announcement today, the chairman of the northern TUC telexed Nissan and assured it of a warm welcome in the north-east should the project go there?
Mr. Tebbit: I am grateful to the hon. Gentleman for his remarks and the fact that so many hon. Members can clearly see the advantage for their own region of this investment going there. That shows firmly that there will be a national advantage wherever it goes. The chairman of the northern TUC was echoing sentiments about the Nissan project that I have heard expressed by other senior trade union leaders.
Mr. Richard Hickmet: Will the Secretary of State consider the great hopes that have been raised by Nissan's decision? Will he bear in mind also that the Scottish and Welsh lobbies have a nauseating amount of time in the House? [HON. MEMBERS: "Withdraw!"] Accordingly, will he bear in mind that in my constituency in south Humberside a great welcome would be given to the project? Will my right hon. Friend consider that Humberside has development area status, whereas south Wales has special development area status and that it is open to the Secretary of State to top
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up any difference with discretionary grants should Nissan come to Humberside? I invite the Secretary of State to bear that in mind in any negotiations he may have with Nissan.
Mr. Tebbit: My hon. Friend was for a moment encouraging what one might call the division lobby with his remarks about some other lobbies. Hon. Members are all good lobbyists for their constituents, and there is nothing wrong with that. I note what my hon. Friend has said. I believe that I made it clear that the RDGs would be fixed according to whether a region was a special development of a development area and that I would consider special financial aid. I cannot add to that.
It is useful to reflect that Nissan appears to be in the van of a number of people in taking that view of investment in Britain. I was especially interested to read the view of some hard-headed Swiss bankers, the Union Bank of Switzerland, that recently observed:
"Great Britain, one of the world's leading industrial nations, has thus become attractive again as an investment country and will receive increased attention especially from investors residing abroad."
Mr. Kevin McNamara: It must be clear to all men of objective thinking that, all things being equal, south Humberside is the best site for this project. That being the case, will the Secretary of State inform the House more precisely about the Government's position on grants? Humberside county council has always been of the opinion that if the erea were chosen, our position as a development area would not be used against us and the Ministry would be prepared to top up any grants. Has the right hon. Gentleman revealed to Nissan what rate of grant will be available in the different areas following his review of development area status throughout the country?
Mr. Tebbit: The hon. Gentleman will be aware that when I introduced the White Paper I made it plain that there would be transitional arrangements. Under those arrangements, the existing rates of grant will be applicable to this plant and others whose timing is similar. RDGs will be paid at the appropriate rate, according to where the factory is sited. I have said that I could provide selective financial assistance up to about 10 per cent. of the total capital costs of the project to a maximum of £35 million.
Mr. Roger King: Not wishing to be left out of the auction for where the cars should be built, I point out that history has told us that the only sensible place to build them is in the west midlands. What, if any, sign has Nissan given about the model mix that it is about to start assembling? What classification of car will Nissan make? Will it be a range or one particular vehicle?
Are the terms that have been set down open for renegotiation pending the Nissan project developing more quickly than anticipated? Is it possible that the 1991 date will come forward to the late 1980s so that the British components industry can become involved more quickly with the manufacture of the car?
Mr. Tebbit: I note what my hon. Friend said about the great strengths and abilities of the midlands. He will understand that in the initial stages with a small production it is most unlikely that there would be more than one model, and that would be in the medium price range. I expect the principal model to be in the medium price range in the second phase, although it will be a commercial

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matter for Nissan to decide whether it can produce more than one model within a production of 100,000 vehicles. It is for the company to see whether it is appropriate to accelerate the pace of the development, but I hope that it will go on to phase 2 and phase 3.
Several Hon. Members rose—
Mr. Speaker: Order. I have a duty to protect the business of the House. There is another important statement after this, as well as a ten-minute Bill, and I have had notice of some points of order. I propose to allow questions on this important matter to continue for a further 10 minutes, when I shall call the Front Bench to wind up, but I ask hon. Members to be brief in their in their questions.
Mr. Sydney Bidwell: Is the right hon. Gentleman aware that part of the reason for the success of Japanese penetration in the market here has been the advance of cheap money, sometimes with long-term, no-interest loans to purchase Japanese cars? Does he agree that it would be ridiculous if the money advanced by the British taxpayer to establish the Nissan plant were used for such purposes?
Mr. Tebbit: I take it that the hon. Gentleman opposes the existence of Ford, Vauxhall and Talbot plants in this country.
Mr. Robin Maxwell-Hyslop: So that we may be reassured about the benefit from the 80 per cent. and 60 per cent. local components provision, will my right hon. Friend tell the House whether the agreement provides for an explicit policy on transfer pricing between Nissan, Japan and its subsidiary in the United Kingdom?
Mr. Tebbit: There are arrangements in the agreement concerning those matters.
Mr. Ernie Ross: Is the Minister aware that the statement about the first phase means that this country will provide the low-tech components because the company will not want to ship wheels, fuel tanks and the like from Japan? Will he admit that the statement has more to do with the fact that within the next two days it will be announced that the Japanese trading surplus with the Common Market is $13 billion and that the real purpose of the project is to give Japan a back door into the Common Market?
Mr. Tebbit: If the hon. Gentleman believes that the project will be a back door to the Common Market for Nissan, he must believe that the products will be exported to the remainder of the Community. In that case, it is certainly a very good deal for the workers of Britain to have the factory here rather than elsewhere in the Community exporting to Britain.
As regards the first phase—
Mr. Ross: What about the Leyland car industry?
Mr. Tebbit: The hon. Gentleman must try to keep his mouth closed for a moment so that he can listen.
As regards the first phase—
Mr. Ross: What about the Leyland car industry?
Mr. Tebbit: He is at it again.
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As regards the first phase, the cars assembled here will be in substitution for cars which would have arrived in any case, but fully assembled. The hon. Gentleman is being extraordinarily stupid, even by his own standards.
Mr. Hal Miller: Although there should be a broad and warm welcome for inward investment from Japan to offset the trade imbalance and for anything that will help our motor industry to be more competitive and to create additional jobs in this country, is my right hon. Friend aware that there will be disappointment that the project has been so long delayed and so much reduced? Is it to be financed in accordance with his new regional policy or is the west midlands yet again to suffer discrimination on the basis of old and discredited policies?
Mr. Tebbit: I am grateful in general terms for what my hon. Friend has said, as he recognises that the project offers a considerable opportunity, not least for British component manufacturers. As I have already explained, this project — like all others of identical timing — is covered by the transitional arrangements that I announced in December. In respect of regional grants, therefore, it will be treated on the present basis and not on any future basis which has not yet been decided.
Mr. Stuart Bell: Is the Secretary of State aware that we have now been waiting for about two years for a decision on the creation of some 5,000 jobs in this country but that that figure has now been reduced to 500? Although Cleveland is at the top of the unemployment league, I doubt whether anyone there would expect me to go down on my bended knee asking for this investment to come to Cleveland on that basis alone. There will be great disappointment at the mouse that has been presented to us today. Many of us find it demeaning that after five years of Tory government and with 2 million more men and women unemployed Members of Parliament have to scratch around making a case for 500 jobs for their constituents. Many of us are greatly saddened by today's experience.
Mr. Tebbit: I can assure the hon. Gentleman that whether he goes down on his bended knee will make no difference to a commercial decision about where a project will be placed, whether it be from Japan, Birmingham or Frankfurt. What counts is the quality of the work force and the environment. The environment for business in this country is improving every day. I am sure that the hon. Gentleman's constituents will not thank him for his sneering references.
Mr. Michael Marshall: Does my right hon. Friend agree that if some Opposition Members find it difficult to accept the import substitution argument plenty of people in the European Community accept it? Does he agree that there is sufficient interest within the Community and that if we had not come up with a decent package the project would have gone elsewhere?
Mr. Tebbit: My hon. Friend is quite right. Moreover, if the investment had gone elsewhere in the Community, I am sure that there would have been cries of outrage and "Why didn't you get it for Britain?" from Labour Members. Of course we should all be happier if the project had been earner and larger, but that is a commercial judgment on the part of the company. Opposition

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Members should rehearse in their minds what they would have said if the project had gone to Belgium, France or Germany.
Mr. Eddie Loyden: Does the right hon. Gentleman agree that the manufacturing base of the British car industry has been eroded over many years and that although we should welcome an extension of that base we are concerned that the present project may undermine the position of the British industry? Does he agree that such extension is essential but that it should be in the control of British companies?
Mr. Tebbit: The hon. Gentleman says that it is essential to extend the manufacturing base of the car industry in this country. That is what the project is about. If he does not like the project he had better get down to Dagenham and tell the people there how lucky they are that the Ford company is taking some of its investment away from there.
Mr. Stephen Dorrell: Does my right hon. Friend agree that this is a further example of an investment project coming to Britain because Britain is a member of the European Community and offers an attractive production base for supplying a larger European market? With that in mind, will my right hon. Friend confirm that the 24,000 cars made from knockdown kits and the 100,000 manufactured fully in this country will be treated as having free circulation within the Community and able to compete for Europe-wide markets?
Mr. Tebbit: I think that the 24,000 are unlikely to qualify in that way, but the remainder on the 60 per cent. and 80 per cent. basis certainly can. My hon. Friend is right. The fact that we are in the Community was one of the important factors which caused Nissan to look towards the United Kingdom as well as other member countries. But, of course, the other important fact is contained in the view I quoted earlier by those hard-headed Swiss bankers who commented that, from the fact that the Conservatives have another four years in office, it can be expected that they will adhere to the policy to restore the health of the nation's economy and that will have a related positive impact. That is the reason why the Japanese are coming here.
Mr. Terry Davis: The Secretary of State has referred to the net effect on jobs, but what are the gross figures for job creation and job loss? How many existing jobs will be lost at existing motor manufacturers and component manufacturers such as GKN, Lucas, Smith Industries and hundreds of smaller firms that supply the British motor industry? As for the option to move to phase 2, will this be an option for the British Government, or will the decision be taken by Nissan alone? Have the Government simply given a postdated cheque to Nissan for £35 million?
Mr. Tebbit: I am afraid that the hon. Gentleman again was not listening. The question of the £35 million arises only in the event that we go on to phase 2, so there is no question of a post-dated cheque. The decision quite clearly will be taken by the company concerned, in the same way that it is taken by Ford. [Interruption.] Of course the Government cannot decide when a commercial operation increases its scale. When the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) tried playing that game, his Government stumbled into one of the
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biggest financial crises that had ever been seen and got kicked out of office and kept out of office at the subsequent general election.
Several Hon. Members rose—
Mr. Speaker: Order. In the interests of balance, I shall take one more question.
Mr. Michael Gryils: Would my right hon. Friend note that, while I welcome this decision on balance, unlike other hon. Members, I am not seeking to have the company in north-west Surrey. Does he agree, as has been said earlier, that this is a vote of confidence in a low inflation rate economy, and that it is therefore a plus to the country that it is coming here? Could he give us an assurance that it will not result in the British Government having to give more money to British Leyland as a result of the Nissan development?
Mr. Tebbit: No, the arrangements for funding British Leyland are not related to this, and British Leyland is expected to look after its own financing before too long. The fact that my hon. Friend is not asking for the company to go to north-west Surrey, must be a relief to all of us, not least his constituents.
Finally, I did not fully answer the hon. Member for Birmingham, Hodge Hill (Mr. Davis) on the subject of the number of jobs, but, of course, it is impossible to estimate that, beyond the fact that we know—[Interruption.] If the hon. Gentleman would let me reply, it is not possible to estimate that, beyond the fact that we know that there will be 400 or 500 jobs directly in the first phase and about 2,700 in the second phase. The number of jobs additional to that will depend crucially on the success of British manufacturers in supplying components against the competition with others within the Community.
Mr. Peter Shore: The Secretary of State has shown an unusual degree of ill-temper, even by his own standards, in addressing the House. We understand that he would have welcomed the Japanese equivalent of a Roman triumph this afternoon, but what he has found is that the House was in a serious and probing mood on both sides because it genuinely wishes to establish where the national interest lies. Because of that, I want to come back to two factual questions that I think are of great importance.
The first relates to the amount of manufacturing that will take place in the United Kingdom when phase 2 is reached—I put phase 1 on one side for the time being— and that is not until 1990. Can we have a further explanation of what is meant by percentages based on EEC ex-works prices? Is that based upon the cost of the various components that go into the assembly of the car? Are engines, gearboxes and other major components to be manufactured here in Britain? That is what we want to know. We want to know also whether British machine tools are to be used, and not Japanese machine tools in the general assembly and laying out of the new plant. If they are to be Japanese tools, is regional development grant to be paid to install them? Finally, on the major costs of the project, will the right hon. Gentleman confirm that what we are talking about here is a sum of not less than £100 million of British money in a total project in phase 2 which on current costs is of the order of £350 million?
Mr. Tebbit: The right hon. Gentleman puts his points clearly and fairly and, as always, courteously.

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If I have been sharp with some hon. Members, it is because of the offensive and distasteful behaviour of one or two hon. Members in particular. I wish I could direct my remarks to the hon. Member for Bolsover (Mr. Skinner) with the skill with which the right hon. Member for Bethnal Green and Stepney (Mr. Shore) did one day in putting him in his place.
Turning to the right hon. Gentleman's questions, the ratios are related to the ex-works price of the vehicle. With regard to what the right hon. Gentleman said about the engine in phase 2, for example, the engine components may well be assembled, and certainly sub-assembled, in Great Britain. Production of 100,000 is very unlikely to be a sufficiently large base for engine manufacture. As to the question on machine tools in the building of the lines, the first thing is that they will, of course, be the best. I very much hope that British manufacturers will be able to compete in that way. It would not be sensible to require the company not to use the best machine tools, from wherever they come, and it would clearly be very foolish to say, for example, to Ford, to Talbot, to GKN or, indeed, to British Leyland that it could not import machine tools that were competitive with the best in the world.

Fisheries Council
4.19 pm
The Minister of Agriculture, Fisheries and Food (Mr. Michael Jopling): With permission, Mr. Speaker, I shall make a statement on the Council of Fisheries Ministers meeting in Brussels on 31 January. Together wih my noble Friend the Minister of State, Scottish Office, I represented the United Kingdom.
The Council reached agreement, on the basis of compromise proposals put forward by the presidency and the Commission, on the total allowable catches and quotas for 1984 for all fish species other than North sea herring. The scientific advice on the management of the herring stocks will not be available for a few more months. We obtained significant improvements over the original proposals on a number of stocks of interest to United Kingdom fishermen, in particular cod and haddock in the west of Scotland, western mackerel and a variety of sole and plaice stocks in western and southern waters. We have a clear commitment from the Commission that every effort will be made in further discussions with Norway to secure an increased availability of North sea cod. We secured greater flexibility for our fishermen in respect of the closure of the mackerel fishery north west of Scotland. The Council has, therefore, for the first time set total allowable catches and quotas early in the year to which they relate. This is an important achievement since it gives fishermen throughout the Community a secure basis on which to plan their catching and their marketing operations.
Pending receipt of the full scientific evidence on herring in the North sea, the Council approved interim arrangements, which the Commission had agreed with Norway. Under this agreement, up to 31 July Norway will be free to fish for 15,000 tonnes while the member states of the Community will have quotas totalling 54,300 tonnes for the same period. The allocation of these quotas has been carried out on the basis of the key agreed at the Council on 14 December. The question of the distribution of member states' quotas between the three areas of the North sea will be studied and a report made to the next Council in March. While I expressed concern at the relative size of the interim allocation to Norway, I accepted the proposal on the basis of a clear Council declaration confirming the declaration agreed on 3-4 October concerning the distribution of North sea herring as between Norway and the Community and emphasising that the interim arrangements agreed for the early months of 1984 do not prejudice the definitive allocation for 1984 and subsequent years.
The Council also agreed on the conclusion of a reciprocal fisheries agreement for 1984 with Sweden, an agreement with Senegal on access to fishing opportunities there on an improved basis, and a new agreement with Seychelles on access to tuna fishing operations.
Finally, I raised the question of progress on the arrangements for improved enforcement of the common fisheries policy. I was told that as of today, nine of the 13 Community inspectors would be in post and that, while it has not been easy getting hold of people of the right quality and experience, the remaining four inspectors had been nominated and would be in post wthin the next few months. As to the Community logbooks and landing declarations, consultation on their text and format has now been completed and tenders for printing will be issued in

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the next few days. This Council therefore marked an important step in transforming the common fisheries policy into a living and working reality.
Mr. Robert Hughes: I acknowledge that yesterday's early and unexpected agreement is welcome and represents a movement towards stability of which the fishing fleet in general approves. However, will the right hon. Gentleman in turn acknowledge that issues still remain to be resolved before the flaws in the common fisheries policy can be removed? Is it not the case that the industry wants greater cod quotas? I am sure that the Minister is aware of the industry's view that there are restrictions on fishing for herring which limit its chances of achieving its quotas. I support the conservation measures which avoid overfishing and protect stocks, but will the Minister hold discussions individually with the industry and with the scientists involved about the advice that he has received on fishing particular areas?
I agree that enforcement, policing and inspection are the key to the whole deal. Is April now the firm, latest possible date for the introduction of the logbooks, which are already long overdue? What steps are being taken to monitor the reporting procedures at an early stage, so that any failures are quickly identified and put right at the earliest opportunity? If inspection proves inadequate—as we think it will—will the right hon. Gentleman move towards the more rigorous inspection standards and systems which we have suggested, so that neither quotas nor TACs are exceeded?
Finally, I refer to the interim agreement with Norway. Will the right hon. Gentleman give a clear and categorical assurance that, when the final discussions are under way, he will resist any attempt to give Norway more herring than is already suggested and that he will not be bought off by some sort of swap for an increased cod and haddock quota, which the industry understandably wants.
Mr. Jopling: I am grateful to the hon. Gentleman for the welcome that he has given to the settlement of the 1984 TACs and quotas. I also welcome his endorsement of the industry's general approval.
I understand the hon. Gentleman's point about the need for greater cod quotas, and I am conscious of the problems that will be caused to our white fish industry. Because of a reduction in the stock, it has been necessary to reduce the TAC of cod, particularly in the North sea. However, I am extremely pleased that we have been able to increase the cod quota in the west of Scotland by about 800 tonnes. That is welcome. I should like to put cod fishing in perspective. In area IV, which is the North sea, and area IIA, which is adjacent, we shall this year have 47 per cent. of the catch, with a quota of just under 93,000 tonnes. That compares, in 1982–83, with the same percentage and 114,700 tonnes. Between 1973 and 1978—when we had only 43·1 per cent. of the North sea cod—the average was only 83,677 tonnes. Therefore, we are not doing badly.
I am glad to have the hon. Gentleman's support on conservation, and I am also glad he agrees that inspection is vital. However, I cannot give an undertaking that the inspectors will all be in place by April. I fear that they will not be, although I have been pressing the Commission on that. One difficulty is that some of the right people who have been found to do the job are finding it difficult to become disentangled from their existing jobs. We shall watch carefully the quality of monitoring and inspection.
Mr. Hughes: Can the Minister say something about the logbooks?
Mr. Jopling: The Commission was unable to give me a date yesterday for the introduction of the logbooks. I asked that question and specifically put it on the agenda. In the course of next week the logbooks are going out to tender for printing and we shall press the Commission to get them into use as soon as possible. I agree with the hon. Gentleman that that is vital.
As I implied in my earlier statement, I have been unhappy about the amount of herring in the North sea that has been allocated to Norway, and I have expressed my views about that. I am happy to say that we have been able to make it clear to the Commission that the 15,000 tonnes that Norway has been allocated, and the arrangements made with Norway, are interim arrangements only and do not prejudice the definitive allocation for 1984 and subsequent years. That was agreed by the Council. We must be extremely tight on the Commission's activities in negotiating with Norway on that joint stock.
Several Hon. Members rose—
Mr. Speaker: Order. Again I remind the House that a ten-minute Bill and an Opposition Day follow the statement. Accordingly, I shall allow questions on the statement to go on for half an hour.
Mr. Robert Hicks rose—
Mr. Speaker: Order. I meant not a further half hour, but half an hour in all.
Mr. Hicks: I assure you, Mr. Speaker, that I shall not be on my feet for half an hour. In the context of conservation enforcement, did my right hon. Friend manage to raise the very sensitive issue that has arisen in the mackerel box off the coast of south-west England? Very serious abuses are occurring because of the activities of a minority of fishermen. Did my right hon. Friend raise the specific question of adjusting the terms of the existing directive on the subject? Is he aware of the urgency of the situation? If agreement cannot be reached through Community channels, will my right hon. Friend consider the alternative of closing the mackerel fishery this year?
Mr. Jopling: I am conscious of the disquiet felt in the south-west about the many mackerel that have been taken out of the box adjacent to that part of England. That box was introduced for the sole purpose of protecting the mackerel stock. The number of mackerel taken out of the box since 1 November is comparable to the figure for last year. The figure is slightly less, but not very much less. That has been done because there is a derogation with regard to bottom trawling. My hon. Friend asked what I had done about the situation. The answer is that I made a point of talking to the Commissioner about it in the margins of the Council and asking him to see whether the situation was satisfactory. No doubt we shall be able to raise the subject with him again if necessary.
Mr. David Penhaligon: With regard to the point that has just been made, will the Minister confirm that it is impossible to catch mackerel by bottom trawling? Can he find out why, suddenly, it is so difficult to get a bottom trawl to stay on the bottom of the ocean as opposed to going along in mid-water? All that is required is a simple step by the Minister to stop the derogation of the

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regulation which is supported by the House and by anyone with a long-term interest in conservation. When will he do something to stop this practice!
Mr. Jopling: It is interesting that the hon. Gentleman should raise that question, because it is one that I asked the fishermen yesterday: how is it possible to catch a pelagic species by demersal techniques? I am told that the reason is that at certain times of the day the pelagic species go to the bottom of the sea. That is the moment when the fishermen seem to scoop them up. My inspectors have been watching with the greatest care the techniques used by those who are fishing in the box off the south-west of England and they have not been able to find a scrap of evidence of techniques other than bottom trawling, which, I must stress, is perfectly legal.
Mr. Albert McQuarrie: I am graterful to my right hon. Friend for the success that he has had on TACs for cod and haddock. I stress what was said by the hon. Member for Aberdeen, North (Mr. Hughes) about the herring quota for Norway in comparison to that for our fishermen.
In regard to the southern pout box, my right hon. Friend will be aware that it comprises 27,000 square miles. I hope that in any discussion he will not permit pressure to be brought to bear by hon. Members from that area against Scottish fishermen who are engaged in fishing for mackerel in the southern box.
Mr. Jopling: I hear what my hon. Friend says about the problems caused by the reduction in the cod quota in the North sea. The depletion of the stock has made a smaller quota necessary.
Mr. D. N. Campbell-Savours: Address the House.
Mr. Jopling: If the hon. Member does not mind, I would rather address the Chair.
When I answered the hon. Member for Aberdeen, North (Mr. Hughes) I referred to the herring quota which had been agreed with Norway. In regard to the south-west mackerel box, I am afraid that I am not in a position, nor would I dream of trying because it would be a hopeless quest, to prevent hon. Members from that part of the world from putting pressure on the Commission or anyone else to deal with what they see as a serious issue.
Mr. Donald Stewart: Can the Minister tell us whether there was any discussion about setting up local management committees to cover the points made by the hon. Member for Truro (Mr. Penhaligon)? These have been asked for by fishermen throughout the United Kingdom. If not, can he say whether the Common Market as a whole has any objection in principle to the setting up of these committees, which would not conflict with the agreement already made?
Mr. Jopling: If the right hon. Gentleman does not mind my saying so, one might get into serious difficulties if one were to go all the way down the road on local management committees. When the Commission and the Council are formulating policy, I always listen carefully to the views of local people and fishermen in particular. Indeed, I had two meetings yesterday with representatives of the fishing industry, who were able to give me helpful advice.
Sir Peter Mills: I congratulate my right hon. Friend on his success. May this be a good omen for success on the agricultural problems? I remind my right hon. Friend that fishermen throughout the country and particularly in the south-west are concerned about who will check the inspectors to see that the tonnages are kept to. Will he redouble his efforts to ensure that there is no cheating, as there is in regard to other products within the Community? Finally, may I reinforce what has been said by my neighbour and hon. Friend the Member for Cornwall, South-East (Mr. Hicks) about the mackerel box? We will not have other people coming in and raiding our mackerel in the south-west.
Mr. Jopling: I am very grateful to my hon. Friend for his kind remarks at the beginning and for his congratulations. I shall press as hard as I can to get the inspectorate in place as soon as possible. During the last seven or eight months I have raised the matter in the Council of Ministers more often than all the other Fisheries Ministers put together, and I shall continue to do so. I hear what my hon. Friend says about the mackerel box. I cannot add to what I have already said about this, having drawn it to the attention of the Commissioner himself.
Mr. Gavin Strang: Is the Minister aware that the interim arrangements on North sea herring are inadequate and deeply disturbing? Is he aware also that it would be a scandal if the Scottish fishing industry, having made enormous sacrifices because of the North sea herring ban, were prevented from benefiting from the stocks that are coming back?
Mr. Jopling: It is difficult to understand how the hon. Gentleman can make those remarks, because, as he well knows, we have not reached the time of year when the scientists make their recommendations on total allowable catches for 1984. Because of the nature of the species, we do not usually get the advice of the scientists until April or May. I am told that it would not be sensible for it to be given earlier. Therefore, it is not yet possible to decide what the total allowable catches should be for herring out of the North sea. Bearing in mind the need to make a decision as soon as possible after the scientists have reported, we have had discussions.
It is clear from the agreement that the fishery is open from now. Perhaps I should have made that clearer. The herring fishery in the North sea will be open straight away on an interim basis up to 31 July. The quotas for each country will be on the basis of the agreed key on which the Council decided after months of argument and desperately difficult negotiations which were completed in December. Nothing will be done to divert from that key. The fishermen gave me their support for the deal that I made on their behalf, which was excellent on North sea herring. It is on the basis of that key that we shall be allocating Britain's quota when we know how high it should be.
Mr. David Harris: Reverting to the box, my right hon. Friend referred to disquiet, as he put it, among south west fishermen. Is he aware that that is a massive understatement of the feelings of the fishermen, 12 of whom came up last week from the coves and small ports of Cornwall? They do not have a powerful financial lobby. As no decision was taken yesterday, although we are grateful that the Minister raised it, does it not mean that

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no action will be taken until the next meeting of Fisheries Ministers at Community level on 5 March? If my right hon. Friend confirms that, will he consider seriously the necessity of closing the box to commercial fishing now to protect the stocks?
Mr. Jopling: I am sorry that I gave the impression that I was understating the gravity of the situation in the eyes of my hon. Friend and his friends from the south-west of England. I detected the need to tread wearily with my hon. Friend the Member for Banff and Buchan (Mr. McQuarrie), who has left the Chamber, who takes strongly opposite views on this matter. There will not be another Council until 5 March, but I assure my hon. Friend the Member for St. Ives (Mr. Harris) that we shall keep the matter very much in mind during the next few weeks.
Mr. Robert Maclennan: Is the Minister aware that it gives us genuine pleasure to be able to congratulate him and his colleagues in the Council on reaching an important agreement so early in the year, especially as advantage must now be taken of the restructuring arrangements? The certainty which the settlement has given is warmly welcomed. Does he accept, however, that there is disappointment, especially with regard to North sea cod and haddock quotas as there has not been an increase in the TACs for them, and that the agreement with Norway about herring might make it more difficult to ensure that Scotland gets its fair share when the Government receive their scientific advice?
Does the Minister accept that many people are extremely sceptical about the adequacy of the proposed arrangements for conservation? Even though those arrangements are not in place and it is therefore not possible to determine their effectiveness, we shall want an opportunity to debate their adequacy within months of their being in force. Will he listen carefully to the views of local fishermen about management and carefully consider the possibility of structurally establishing area management?
Mr. Jopling: I am extremely grateful to the hon. Gentleman for his generous remarks. With regard to the restructuring arrangements, it gives me great pleasure that we have been able to give fishermen 11 months' notice so that they know where they stand, what will happen and what they will be able to catch. That means that they can plan ahead much more satisfactorily than has inevitably been the case in the past.
I hear what the hon. Gentleman says about his disappointment with regard to North sea cod and haddock stocks. This is necessary solely because of the smaller level of the stocks. The hon. Gentleman would be the first to be critical if the TACs had been set too high and caused the stock to decline even more. What he said about adequate conservation effectively answered that point.
I hope that a fair share of herring for Scotland will be dealt with. Following our initiative in the Council yesterday, the Commission has agreed to an urgent review of the way in which the total herring catch in the North sea should be carved up between the areas IVA, IVB and IVC so that people fishing in the Scottish Area, IVA, are dealt with adequately when we set the quotas.
Mr. Gerald Malone: I add my congratulations to my right hon. Friend, especially as this is an issue on which right hon. and hon. Members do not
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usually heap congratulations on his head. Although the agreement will be most welcome to the fish processing industry in Aberdeen, as it will ensure a sufficient quantity of white fish for it to continue its business, will my right hon. Friend please bear in mind that there should be no compromise on TACs in this area, as any reduction would result in great difficulties for that industry?
Mr. Jopling: I am conscious of what my hon. Friend says. He is right to say that the agreement will ensure adequate quantities of fish for fish processors. Moreover, the agreement will mean that the fish will appear in even quantities over a long time provided that the fishery is properly managed. I am grateful to my hon. Friend for what he said.
Mr. Archy Kirkwood: Is the Minister aware that his scientific advice not being available for a few more months will throw those who fish the central North sea area west of 3 deg east into some confusion, as I understand that they operate principally between 15 August and 30 September? It is essential, therefore, that fishermen in that area get an earlier decision on the management of herring stocks, so that the nets and the processing industry can be geared up to cope. With regard to the difficulties which the east coast fisheries are suffering because of reductions in cod and haddock TACs, will the Minister seriously consider central quotas, under regional management schemes, so that the constraints on the catch can be spread over a more sensible fishing period?
Mr. Jopling: Perhaps I might correct the hon. Gentleman. These are complicated matters, but I think that, with regard to herring in the central North sea, he referred to the fisheries being active between 15 August and 30 September. As I understand it, that is the time when the area is closed for conservation reasons.
Mr. Robert Hughes indicated assent—
Mr. Jopling: I am glad to see that the hon. Member for Aberdeen, North (Mr. Hughes) agrees.
Mr. Hughes: They want it open.
Mr. Jopling: Yes, the fishermen want us to open the area. We have an agreement from the Council to review that closure period before August. We shall consider whether it is wise to keep it closed. I have already said that there will be an opportunity to review the amount of cod that we get from Norway. We shall see whether it is possible to get more from Norway later in the season.
Dr. Norman A. Godman: Can the Minister give any news of changes in the Community funding of training for fishermen, bearing in mind the Government's decision to withhold funding from the Sea Fisheries Training Council? In view of the council's excellent record on training in survival and fire fighting and of novices, will the Minister assure us that there will be no diminution in the provision of such essential training for our fishermen?
Mr. Jopling: That matter was not discussed in the Council yesterday. The new Commissioner—it was his first meeting in the chair—gave notice that he was anxious for the Council to discuss these matters in the near future. No doubt I shall be able to report to the House some time in the future about those discussions.

Members (Declarations of Interest)
4.49 pm
Mr. D. N. Campbell-Savours: On a point of order, Mr. Speaker. On Monday I raised with you the difference in status between a question and an answer. You ruled:
"That is a matter of interpretation. I shall look carefully at the hon. Member's points. On Thursday, the hon. Member asked me a different question. He is now distinguishing between what is an answer to a question and what is a parliamentary statement … I shall examine what the hon. Gentleman has said".— [Official Report, 30 January 1984; Vol. 53, c.29.]
In the light of that ruling, I and my right hon. and hon. Friends are looking forward to a statement which you obviously intend to make, Mr. Speaker, based on fuller consideration of my point. I raise the matter today because I should like to draw your attention to a sentence in "Erskine May" which I believe has a direct bearing on my point of order. On page 436 of the 20th edition under the heading "Declaration in Other Proceedings of the House or its Committees" is the sentence:
"The asking of a supplementary question is the one oral proceeding in the House which does not require a declaration of interest."
I wish to draw attention to the words, "the one" which are crucial to my point of order. I hope that they will be crucial to your ruling, Mr. Speaker, when you make it.
Mr. Speaker: I thank the hon. Gentleman. I have not yet sent him a message about my ruling on this matter. I shall certainly take that point into consideration.

Members (Declarations of Interest)

  BALLOT FOR NOTICES OF MOTIONS FOR FRIDAY 17 FEBRUARY
  Members successful in the ballot were:

  Mr. Don Dixon

  Mr. Simon Hughes

  Mr. James Lamont

Straw and Stubble Burning (Control)
4.51 pm
Mr. Roger Gale: I beg to move,
That leave be given to bring in a Bill to extend controls over the burning of straw and stubble after harvest.
The problem that I seek to solve is well known to hon. Members. In late summer last year much of the country suffered from black clouds and flying ash, as 6 million tonnes of waste straw went up in smoke after the harvest. In my constituency, two leading seaside resorts were almost brought to a standstill for three days. Hotels had to close. The beaches were uninhabitable and the roads were sometimes impassable. Inland, several businesses had to shut. A long, dry summer and high winds exacerbated the situation.
The burning of straw and stubble is the disposal of industrial waste and, as more farmers move from keeping livestock to cereal growing, with yields from 3 to 4 tonnes of corn per acre, the problem will get worse unless steps are taken to prevent a recurrence. The Minister of Agriculture, Fisheries and Food, the National Farmers Union, and farmers have done much towards finding a solution. Research continues into uses for surplus straw, to turn the millions of tonnes of waste into a commodity, along with research into other methods of disposal. There is good reason to hope that in about five years' time the burning of straw, if not stubble, will no longer be necessary. But it is not desirable now.
Last summer the NFU introduced a code to be followed by farmers burning straw and stubble. It made provisions to minimise the inconvenience caused to the public, and to ensure the safety and protection of the environment. Some farmers—not necessarily members of the NFU— chose to ignore it. Fire brigades throughout the country were faced with hundreds of call-outs at the expense of the public purse. It is not surprising that that caused public outcry.
The NFU was first to respond. As a result of the deliberations of its straw and stubble burning subcommittee, a new and much tougher code of practice is expected to be approved later this month. The Ministry proposes to introduce a byelaw that might be adopted by local councils. It would specify conditions for fire breaks, supervision of burning, provision of emergency water supplies, and the acreage that may be burned at any time. It would also provide for the burial, or incorporation, of ash within 36 hours of the burning.
Neither the NFU code nor the Ministry's proposed byelaw has real teeth. The maximum penalty under the byelaw for a breach of the code would be £1,000. In the radio programme "Fanning Today", broadcast this morning, cereal prices of £120 per tonne were announced. With an average yield of 3 tonnes per acre, it is clear that fines will be no deterrent to irresponsible farmers. I stress that we are trying to deal only the irresponsible farmers.
In its proposals to the Ministry, the NFU called for a ban on burning as one of the sanctions to be available upon conviction under the byelaw. In other words, the NFU sought to make the punishment fit the crime, but that sanction is not possible under a byelaw. It requires primary legislation; hence this measure.
The Bill will give the full force of law to the new NFU straw and stubble burning code, which takes into account not only the Ministry's precautions, but prevailing wind

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and weather conditions. It will enable the NFU, acting as agent for the Ministry, to issue, at a fee sufficient to cover the administration costs, a permit to every farmer—whether or not he is a member of the NFU — who wishes to burn straw and stubble.
The precedent for such a system already exists. Licences are required for those burning grass and heather, for example, under the Ministry's regulations. Therefore, a permit will be required by law, and will state the conditions of the burn and the penalties for a breach of the code. It will enable the fire brigade to carry out spot checks at any time. Failure to obey the code will mean loss of permit and of the right to burn. That penalty will be imposed not by the NFU, the first duty of which is to its members, but by the fire officer. Of course, it will be subject to the right of appeal.
My proposals are not "anti-farmer" in any sense—quite the reverse. They are designed to protect the responsible majority and to make irresponsible husbandry not worth while. They recognise, as does the NFU, the need to exercise acceptable controls that are fair to the farmer and the rest of the community alike. I have already discussed my proposals with the NFU. More discussions will take place. I should be pleased to receive any suggestion that will improve or simplify the proposed legislation, and ask of the House leave to bring in the Bill.
4.56 pm
Mr. Phillip Oppenheim rose —
Mr. Speaker: Does the hon. Member for Amber Valley (Mr. Oppenheim) wish to oppose the Bill?
Mr. Oppenheim: Yes, Mr. Speaker. My hon. Friend the Member for Thanet, North (Mr. Gale) has chosen a fashionable topic for his Bill. Hon. Members only have to mention straw burning these days, and they are guaranteed plenty of media prime time, such is the legitimate concern about the problem of straw burning. I realise that the Bill does not represent an attack on the farming community, but it would not be unfair to say that politicians only have to make hostile noises about farmers to gain the almost undivided attention of the press. It is therefore with some trepidation that I speak against the Bill.
My hon. Friend rightly expressed deep concern about the problems sometimes caused by straw burning, but it should be emphasised that the problems last summer were caused by a minority of farmers, and those who abided by the existing code caused few problems. Those responsible farmers are equally concerned by the actions of the irresponsible few.
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The issue has already been fully covered by my hon. Friend the Member for Suffolk, Central (Mr. Lord) in an Adjournment debate, and action is now being taken on the problem. Therefore, while I share my hon. Friend's concern about the problem, I do not feel that the Bill constitutes a real advance on the current situation.
Fines under the byelaws are already increasing from £1,000 to £2,000 per offence. Each fanner can be fined in multiple units of £2,000. Therefore, any farmer who offends against the code more than once could be subject to fines of several thousand pounds. Even with the price of corn at £120 an acre, that is a severe blow for someone with a small or medium-sized farm.
There is already provision for banning severe offenders under the Clean Air Act, so there is no need for further legislation to ban offenders. It is also true that the NFU is not advocating registration for straw burning, as has been stated. It rightly believes that that is a possibility, but it also sees the disadvantages in extra bureaucracy and sees no useful purpose in an NFU registration policy.
There is also a danger in making the regulations on straw burning too harsh and stringent. If they are made too harsh, that could result in an unfortunate spate of dropped matches by certain irresponsible farmers. It would be difficult to pin blame on the offender in such a situation.
Although it grieves me deeply to see the waste of potential energy when a field of straw goes up in flames, there is no real alternative yet to straw burning — although the £6 million Government research project into alternative uses of straw is most welcome. Above all, it is welcomed by the farming community.
I appreciate the concern about straw burning, but some quite severe action is already being taken. I propose that we should wait until the summer, to see if the problem remains as bad as it was last summer, before proposing further action.
Question put and agreed to.
Bill ordered to be brought in by Mr. Roger Gale, Mr. Jonathan Aitken, Mr. Peter Bruinvels, Mr. David Crouch, Mr. Eldon Griffiths, Mr. Robert Rhodes James, Mr. Robert Key and Mr. William Powell.

Straw and Stubble Burning (Control)
  STRAW AND STUBBLE BURNING (CONTROL)
  Mr. Roger Gale accordingly presented a Bill to extend controls over the burning of straw and stubble after harvest: And the same was read the First time; and ordered to be read a Second time upon Friday 17 February and to be printed. [Bill 92.]
Opposition Day
[7TH ALLOTTED DAY]
Opposition Day

  Shipbuilding
  Mr. Speaker: Before we begin the important debate on the industrial and social consequences of the Government's policy on the shipbuilding industry, I must tell the House that I have selected the amendment in the name of the Prime Minister.
  Seventeen hon. Members have written to me indicating that they wish to speak in the debate. In view of the late start, I hope that hon. Members will keep their speeches as short as possible.
  5.2 pm
  Mr. Peter Shore: I beg to move,
  That this House, recognising the importance to the United Kingdom economy of the maintenance of a strong merchant, naval and offshore shipbuilding industry, and keenly conscious of the devasting social consequences of further major yard closures, calls upon Her Majesty's Government to use the new opportunity presented by the successful trade union efforts to avoid a national stoppage to abandon its ideological commitment to privatise the industry, and instead to reach agreement on a corporate plan for the future of the industry with a realistic strategy for its further development, modernisation and re-equipment, and thus help to restore the necessary confidence to the workforce, its suppliers and customers.
  Our choice of subject—the future of the shipbuilding industry—for one of our all too few Opposition days shows the great importance that the Labour party attaches to the survival and revival of Britain's shipbuilding industry and its connected offshore construction activities. It also reflects the serious position that confronts the whole of the industry, and our total dissatisfaction with the policy—perhaps I should say the lack of policy—of the Government.
  Although less than a fortnight ago we gave a half-day to debating the special problems of Scott Lithgow and its imminent closure, in view of yesterday's announcement about its proposed take-over by Trafalgar House it is right that I should begin my speech with some reference to that. We were told yesterday, in somewhat sibylline terms—following the Prime Minister's meeting with representatives of Scottish trade unions—that the slate was to be wiped clean on Scott Lithgow's finances and, in return, Trafalgar House would, it was hoped, take over the yard. I hope that today we shall have some explanation of what is being proposed. I am not inviting the Minister to intervene now because I am sure that he will want to set forth his remarks in a serious manner later.
  Three questions immediately arise. First, is Trafalgar House intending to take over the Britoil contract? If so, and if the additional costs entailed by the delay in completing the rig are to be met by the Government, why is it necessary to hand over the yard to Trafalgar House?
  Secondly, what evidence is there that there is more management skill in the sophisticated and specialist area of oil rig construction in Trafalgar House or any of its subsidiaries than exists already in Scott Lithgow? Thirdly, is there any guarantee that, once the Britoil contract is completed, there is any obligation on Trafalgar House to continue the Scott Lithgow oil rig operation?
  * See c. 624–7 of Official Report for 6 February 1984.
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  Previous experience of Trafalgar House — I refer specifically to its major subsidiary, the Cunard shipping line — shows that the firm has no commitment to the British shipbuilding industry. We well remember that during the Falklands campaign one major Cunard vessel was sunk and the Queen Elizabeth 2 and the Cunard Countess needed major refits. Almost unbelievably, Cunard intended that all three major contracts should be placed abroad. The refurbishment of the QE2 took place in a German shipyard and the Cunard Countess was refitted in Malta. As to the Atlantic Conveyor, it was only after the Government had been pressed by the Opposition to intervene and pay an additional subsidy that Cunard was persuaded to place its order with a British shipyard. So there is no commitment by Trafalgar House to British shipbuilding.
  We are, therefore, extremely apprehensive about the fate of Scott Lithgow if it is to be transferred into the hands of Trafalgar House. The question is whether Trafalgar House will take over the Britoil contract, and there is still major doubt about that. As the matter is so recent, I can only base my remarks on what the better informed newspapers have to say. We get an entirely different impression from the Financial Times than we do from The Daily Telegraph. However, both newspapers have serious doubts whether Trafalgar House is interested in, or has the capability for, taking over that major contract. Both newspapers refer to the various douceurs that the Government appear to be offering Trafalgar House to take over Scott Lithgow — whether or not it is obliged to complete the contract.
  The Daily Telegraph refers to the possibilty of placing naval orders for conventional submarines with Scott Lithgow. Both newspapers refer to the financing of large-scale redundancies for at least half the work force. I hope that the Minister will give the House a great deal more information about that when he speaks.
  Mr. Michael Grylls: Will the right hon. Gentleman accept that Trafalgar House and Cunard are consistently profitable, while British Shipbuilders has consistently made losses? Surely Scott Lithgow—if it is taken over—is far more likely to be successful under the wing of that company than under British Shipbuilders?
  Mr. Shore: I shall say something about the policies of British shipping companies later on. They have an important part to play.
  Cunard's own record has been very uneven. The company was taken over by Trafalgar House in a somewhat odd and unusual extension of a property company's activities into shipping. Since then, mixing property deals with more conventional liner operations, it has managed to be profitable. However, in the light of recent experience, and on the basis of the orders which the company has placed over a number of years, we cannot assume that it has any commitment to the British shipbuilding industry.
  Our debate today will not be restricted to Scott Lithgow. We shall consider the condition and prospects of the whole shipbuilding industry of Britain, but discussion of Scott Lithgow is relevant to the wider debate bacause it exemplifies and symbolises the Government's approach to the industry. I shall explain in a moment the main features of that approach.
  Mr. Neville Trotter: The right hon. Gentleman referred to doubts about the ability of Trafalgar House in this specialised field. The company is already operating in this field. It has an operation in the north-east which is engaged in the oil industry in the North sea.
  Mr. Shore: I am aware that there is a subsidiary—a construction firm—which was taken over from one of the steel companies some years ago. As we all know, Trafalgar House is constantly engaged in the purchase of companies. However, I have no reason to believe that the company has any experience in the construction of sophisticated rigs. Its expertise in building submersible rigs is totally undemonstrated.
  There are lessons to be learnt from the Government's treatment of Scott Lithgow. Their approach to Scott Lithgow has been the same as that applied to the whole of the British industry. First, there has been a deliberate and protracted ministerial and managerial effort to pin the responsibility for the undoubted difficulties of the shipyard on the work force alone. I do not contest that, as in other British industries, the performance of the work force has on occasions fallen short of what the industry and the country have needed to achieve the rate of growth and the rise in living standards which our people wish to see, but the responsibility of management has been no less than that of the work force, and in most instances far greater.
  From the days of the Geddes report in 1966, no one could have had any doubts about the defects in the management and organisation of the British shipbuilding industry. Given that history, the approach of sensible men would have been an undeviating search for improved performance by all those concerned—management and labour—in British shipyards.
  The approach of the Government has been one-sided abuse of the work force and the attribution of all the industry's difficulties to the restricted practices or incorrigible greed of the employees in the shipyards. There has been no mention of management failure, the lack of realism in the contracts entered into between major customers and British Shipbuilders, or—in the case of the Britoil contract—of the almost endless changes in technical and design requirements which have poured into the yard ever since the contract was signed. Those changes in design requirements appear to have originated in the experience of the American company Odeco, operation from New Orleans, and in response to a disaster to an earlier rig built to a similar design, but there has been no mention of that in the House of Commons.
  Laying the blame on the unions is the first feature of the Government's approach. The second is the systematic propagation of the view that the industry must be substantially contracted to reflect not just the protracted world recession in shipbuilding but the alleged cumulative and irreversible inefficiencies of Britain's shipyards. Closure or redundancy—or closure and redundancy—are the orders of the day. Three additional yards are soon to close. I refer to Robb at Leith, Clelands on the Tyne and Goole Shipbuilders on Humberside. Those closures will make some 1,500 men redundant, while the further contraction of the labour force in other yards which are still open will account for no fewer than 4,900 jobs in the first half of 1984. In addition, 5,800 jobs were lost in the second half of last year.
  The test applied throughout appears to be the short-term profitability of the yard concerned. The fact that in both
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  Robb and Clelands negotiations for new orders are well advanced does not count in the Government's, or British Shipbuilders', decisions. Yet I can think of few industries where the medium to long-term view of demand is more necessary. Like steel, and one or two other major capital industries, shipbuilding is peculiarly sensitive to the business cycle — the fluctuations of demand between trough and peak of business activity. That cycle has been enormously deepened since 1974 by the destructive effect of the massive changes in the movement, supply and price of oil, and by the worst recession that the world economy and the world trading system have suffered since the 1930s.
  In such circumstances it is, for the shortsighted, tempting to wipe out loss-making activities. Those were the arguments used to contract the British shipbuilding industry and the British steel industry in the 1930s, and such policies were the basic reason why we were in such desperate supply difficulties not only in the war years but in the years of the sustained recovery after 1945.
  The third feature of the Government's policy, illustrated by their approach to Scott Lithgow, is the blind faith in the virtues of privatisation, which is the Government's sovereign remedy for all industrial problems. So compelling is the myth of private ownership, or so attractive the prospect of private profit, that it appears likely that the Government will pay massive sums of money—including the placing of warship contracts—with those yards which are sold off to private enterprise, while denying the same sums of money and the same assistance to the publicly owned British Shipbuilders.
  The irony and the folly of that whole approach can be demonstrated by the appalling decline of the industry. In 1950 the British shipbuilding industry was the largest shipbuilding industry in the world, accounting for 43 per cent. of world output. Under private ownership, the industry shrank. By 1975, when we took it into public ownership — my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) was very much in the lead—its share of world output had shrunk to 3 per cent., and the volume of output in the 1970s was no greater than it had been in 1950. In 1975 the yards were, with few exceptions, on the point of bankruptcy. That is the record of private ownership in the post-war period. Those who believe that a sovereign remedy can be found simply by handing the industry—or bits of it—back to private ownership must be out of their minds.
  Those central features of the Government's approach —blaming the men and the unions, the commitment to contraction and redundancy, and the commitment to the earliest possible privatisation of the remaining yards—are now generally known, but they are nowhere more clearly recognised than in the yards themselves and in the communities where those yards play so important a part. In many areas, direct and indirect employment centred on the shipbuilding industry provides the economic and social lifeblood of whole communities.
  The bulk of our shipyards are in the older industrial areas in the north in England and Scotland — areas which have been special victims of the present British and world recession. Anyone who knows the industrial community around Scott Lithgow and Govan can have no doubt of the catastrophic consequences of closures to those communities, or the effects of the closure of Austin and Pickersgill or Sunderland Shipbuilders on Sunderland, Swan Hunter Shipbuilders on Newcastle, Smith's Dock on

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  Middlesbrough, Cammell Laird on Birkenhead, or Vosper Thornycroft on Southampton. Those, of course, are only the major yards. On the smaller communities of Leith, Aberdeen, Grangemouth, Troon and Goole, the effect of yard closures, given the dearth of alternative employment, is an appalling prospect.
  Not surprisingly, the men are deeply worried. Their jobs, skills and communities are at risk. They have seen their industry pared away year after year. From April 1982 until the beginning of this year there was a pay freeze.
  When we last debated shipbuilding on the British Shipbuilders (Borrowing Powers) Bill on 1 November, the prospects for a national stoppage were serious. The mood in the industry reflected not just grievances about pay and the pressure for still further changes in the work practices, but the underlying feeling that there was no Government commitment to the industry's future and no way forward.
  No one who has followed the negotiations during the past three months, culminating in the settlement of 25 January, can fail to recognise the skill and determination with which the union side pressed for an acceptable agreement which would give the industry a further chance to survive. No one can say, with the chairman of British Shipbuilders on holiday in Canada, that management evinced an equal and overriding interest in a settlement.
  No one who listened to or took part in the debate on the affairs of the industry on 1 November, and the more recent debate on Scott Lithgow, could fail to be struck by Ministers' barely concealed hostility to the industry and their readiness to wash their hands of the responsibility for its future.
  The negotiations, against the odds, succeeded. I hope that, in spite of reservations, the yards will endorse the agreements reached by their union representatives by the deadline of 10 February. No one who has read the agreement can doubt that the unions have made a further and major contribution to the success of shipbuilding. The end of demarcation and the complete interchange within the three main groups which has now been established is a major step; so is the establishment of composite groups embracing all the shipyard skills to tackle the entire range of tasks which may be required to complete a shipyard job. The result of these changes will be to bring industry's productivity fully into line with the standards established by our competitors in northern and western Europe. That is bound to help, but we should be foolish if we were to delude ourselves into believing that that is sufficient or the end of the matter. It is not. We must also consider the much more deadly competition which comes not from our European competitors but from the far east and, most notably, Japan and, ever-increasingly, Korea. We must also be clear that labour productivity is only one factor in the competitiveness and success of shipbuilding. Equally important is the cost of the other inputs which account for so large a part of the total cost of what is, increasingly, an assembly industry. It is of enormous importance that Governments should pursue policies designed to assist the industry's recovery no less favourable than those available from Government to our overseas competitors.
  If we are to use the new breathing space that has been won by the agreements negotiated this month, we must work out a new and intelligent policy for the industry's future. The first essential step is to abandon the foolish and ideological commitment to privatisation. The Minister of
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  State is recorded as favouring the privatisation of the naval shipyards. We are bound to take him seriously, because he has the authority of the Conservative party manifesto behind him. However, it needs only a cursory glance at British Shipbuilders' accounts to discover that by far its most profitable part is the activity of the naval shipyards. If those are removed and privatised, it is difficult to see how the remaining merchant shipyards and the offshore construction yards can survive. Many believe that they are not intended to survive.
  The Government must make a serious commitment to the future of shipbuilding in Britain. A corporate plan—there was a draft in 1982, but it was more a discussion document than a serious plan—agreed and understood by the industry, is urgently needed. It is essential that a strategy, relevant to the changed patterns of demand which have taken place and which will grow throughout this and the next decade, is worked out. Once a strategy has been agreed, it will be up to the Government, in partnership with the industry, to see it through.
  I referred earlier to shipbuilding as an industry peculiarly susceptible to the peaks and troughs of demand. If we allow the industry to go down during a trough, we are condemning ourselves to a further massive deterioration in our trade balance when, as new peaks of demand are reached, we are forced to buy abroad. The Minister will have noted the announcement by the French Government only a week ago of their intention, in this year of continued recession, to back their shipyards with an additional £330 million.
  The Government must find ways to bring together the shipping and shipbuilding industries. When one reflects on the fact that during the four and half years that have elapsed since the Government came to power the British merchant fleet has shrunk from 37 million tonnes to 23 million tonnes, or from 1,200 merchant ships to some 800, it may be argued that the need for a shipping policy is as great as that for a shipbuilding policy.
  The Minister of State, Department of Trade and Industry (Mr. Norman Lamont): The right hon. Gentleman is saying that there are two reasons for the problems of our shipbuilding industry. One, as he puts it, is the Government's ideological preoccupation with privatisation, and the other is the too short-term view of what he believes is a cyclical industry. If those factors are the cause of the problems, why do the problems seem to extend to almost all western Europe's shipbuilding industries? Why is there a contraction throughout western Europe? Does that not show that the right hon. Gentleman is not getting to the bottom of the problem?
  Mr. Shore: All that the Minister is saying, and I believe that he is right, is that the recession, which is particularly fierce in Britain is, nevertheless, strongly felt throughout the Western world.
  This year we are beginning to see some revival in world trade, which inevitably affects world shipping. Last year, and the year before, if my memory is correct, we saw a decrease in the volume of world trade. When there is a decrease in world trade, as the Minister of State knows, the problems of industries such as shipping and shipbuilding are bound to intensify.
  The extraordinary feature of British shipping and shipbuilding, when compared with the relationships between the shipping and shipbuilding industries of our

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  European, not to mention our far eastern, competitors is, in recent years, the amazingly low proportion of orders placed by British shipping companies with British shipbuilding yards.
  Let me illustrate that. I am taking the average for 1978–81, the four most recent years for which I have complete records. The orders placed in their country's yards by French shipbuilders averaged something over 87 per cent.; those placed by Belgian shipowners averaged some 97 per cent.; by Italian shipowners some 95 per cent.; and those placed by the allegedly more liberal traders—the West Germans, the Danes and the Dutch—averaged respectively 85 per cent., 76 per cent. and 71 per cent. The proportion of orders placed with British yards by British shipowners in the same four years was just under 26 per cent., and Britain has by far the largest shipping fleet of any country in Europe.
  In addition, although all shipbuilding industries receive financial aid in one way or another, the evidence that I have seen strongly suggests that the aid provided by the British Government, quite apart from what is done through our shipping fleet, is significantly less generous than that provided by other Governments for our main competitors.
  There must be a new relationship between British shipowners and shipbuilders, but that can be achieved only through a strong Government link. I regard the settlement reached this month as a welcome reprieve for the British shipbuilding industry. I greatly feared that a catastrophe was about to occur — one which, I judged, the Government were not prepared to try to avert.
  If our industry is to survive in the years ahead, a real and serious planning strategy must be worked out. It is essential that that be done and that the new corporate plan be underwritten by the Government themselves. That is the only way to restore the confidence of the men who work in the industry and, perhaps even more important in these times, the confidence of their customers both at home and abroad. Customers will not be won while there is uncertainty about the future of so many British shipyards.
  It would be a crowning shame and folly if, through Government neglect and ideological folly, the one island nation of Europe whose commerce is overwhelmingly seaborne, and the one industrial nation of this continent which has major oil and gas resources under its seas, found itself within the next decade without the capacity to build the ships which it needs or the oil rigs required for the North sea and deeper waters.
  I urge the House to accept our motion and the Government to recognise that the time has come for a major change in policy.
  5.32 pm
  The Secretary of State for Trade and Industry (Mr. Norman Tebbit): I beg to move, in line 1, to leave out from 'House' to the end of the Question, and to add instead thereof:
  'recognising the seriousness of the problems facing the merchant and offshore shipbuilding industries, supports the efforts of the Government and British Shipbuilders to create a more efficient and competitive industry; endorses the Government's policy of returning as much as possible of the industry to the private sector; and welcomes the new mood of realism shown by the Shipbuilding Negotiating Committee in agreeing the British Shipbuilders proposals for changes in working practices.'.
  I begin by apologising to the House. I feel a little better about this apology in view of the slight touch of the late
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  delivery problem with the right hon. Member for Bethnal Green and Stepney (Mr. Shore) today. Unfortunately, I shall have to leave the debate almost as soon as I finish speaking. As the House will appreciate. the Opposition could not possibly have known when they chose this subject for debate that today would be the day on which the Nissan agreement was to be made. I have to leave to complete some arrangements about that. I hope that the House will forgive me. I felt that I could not simply not take part in a debate of this nature and I shall read the record most carefully tomorrow morning.
  Listening to the right hon. Member for Bethnal Green and Stepney, I could not help wondering at times why the Opposition had chosen this subject and why they chose to deal with it as the right hon. Gentleman did. I wondered what they sought to gain from it. The motion is a self-indulgent display of self-righteousness. They may perhaps gain a little cheap instant popularity among some of the workers at British Shipbuilders and among certain trade unions.
  Mr. Shore: We are concerned about the industry.
  Mr. Tebbit: There is no need to put down such a silly motion to demonstrate that. The right hon. Gentleman and his colleagues are simply trading unrealistic daydreams about the shipbuilding business. The general idea seems to be that if they sling enough mud at the Government some of it may stick, but what will stick in the minds of many who heard the right hon. Gentleman's speech is that it was an epic of encouragement for future irresponsibility from start to finish. Indeed, one did not have to wait to hear the right hon. Gentleman's speech. It was sufficient to read the motion.
  The motion
  "calls upon Her Majesty's Government to use the new opportunity presented by the successful trade union efforts to avoid a national stoppage".
  If it was trade union efforts that averted the stoppage, who the devil does the right hon. Gentleman think was trying to cause a stoppage?
  Mr. Gerald Kaufman: You.
  Mr. Tebbit: The right hon. Gentleman knows that that is nonsense. I also know him and I have some quotations from him that he will not welcome hearing later. He knows full well that the dispute arose because Mr. Graham Day insisted on delivery of productivity promises made time and again in the past but not delivered. That was the cause of the dispute.
  Mr. Gordon A. T. Bagier: It is project management that is adrift.
  Mr. Tebbit: The Government cannot possibly be blamed for the fact that the work force at British Shipbuilders refused to adopt practices that have been commonplace in every other yard in western Europe for the past decade.
  It is also hard to stomach talk by the Labour party about ideological commitment to privatisation of the industry. Whose ideological commitment was it to nationalise the industry? I remember the right hon. Member for Manchester, Gorton (Mr. Kaufman) describing that as being in the cause of the advance of Socialism. If that is not ideological commitment, I do not know what is. Since that rush of blood to the head and the advance of Socialism, which the right hon. Gentleman is trying to leave behind now that he is described as a Right-winger,

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  the once-proud yard of Scott Lithgow has been brought to the verge of collapse. Yet the Opposition motion reads as though ideology were immorality.
  Mr. Shore: The history of the shipbuilding industry shows that from the early 1960s onwards one private yard after another collapsed. Successive Governments, including the Conservative Government under the right hon. Member for Old Bexley and Sidcup (Mr. Heath), had to take over major yards on the Clyde, as they had earlier had to rescue the John Brown contract for the Queen Mary and secure completion of the Queen Elizabeth. That was done by successive Governments not for ideological reasons but for the entirely practical reason that that was the only way to retain a shipbuilding industry in Britain. That was why we took over the industry in 1975.
  Mr. Tebbit: The right hon. Gentleman talks as though taking it over ended the problems and the threat of closures when the reverse is true. The policies pursued in the days to which he harks back were profoundly wrong policies which have landed us in our present problems.
  Mr. Michael Brown: I cite an example in support of my right hon. Friend's argument. The Humber Graving Dock, a privately-owned shipbuilding and ship repair company in my constituency, yesterday announced 500 redundancies. It is no coincidence that that company's losses were sustained from 1977 onwards. [Interruption.] The company itself states:
  "It will be seen that Humber Graving Dock made satisfactory profits for many years, but following nationalisation of shipbuilding and ship repairing … made huge losses"—
  Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. I understand that the hon. Gentleman wishes to catch my eye, but he must not make his speech now.
  Mr. Brown: May I complete the point?
  Mr. Tebbit: I assure my hon. Friend that I have got the message. He does not need to read the whole of this year's statement and accounts to convince the Government that when there is competition between the nationalised sector and the private sector it is the private sector that gets ground down, whether it is more efficient or not.
  The right hon. Member for Bethnal Green and Stepney takes the high-minded line that to suggest privatisation is ideologically immoral, whereas to suggest nationalisation is utterly natural. He will have some fun if his former right hon. Friend Mr. Benn gets back to the House and starts leaning over his shoulder with his ideological commitment to nationalisation.
  In any event, is it so immoral or ideological to have given the workers at Readheads, at Grangemouth Shiprepairers or perhaps at Tyne Shiprepairers a chance to escape from the straitjacket of nationalisation, which has been costing them their jobs, into the private sector to seek to save their jobs? Those workers do not think so, even if the right hon. Gentleman wants to stop them saving their jobs.
  Dr. David Clark: As the Minister mentioned my constituency, may I ask him to remind the House that those two shipyards, Readheads and Middle Docks, went bankrupt under private ownership in the 1970s, before nationalisation, under Court Line, and that those same workers were glad that the state intervened at that time to save their jobs?
  Mr. Tebbit: The point underlying what was said by the right hon. Member for Bethnal Green and Stepney is that the state has not saved their jobs but has merely prolonged the agony and prevented the coming of changes that could conceivably have done so.
  I found it sad that a right hon. Gentleman for whom I have considerable respect should indulge in such humbug. To listen to him, one would have thought that it was simply a question of an obstinate Government refusing to allow British Shipbuilders to take orders from queues of shipowners who were striving to get their orders into British Shipbuilders' yards and that that had brought about the crisis in the industry.
  Frankly, I have some contempt for the way in which, not least through this debate—if it goes the way that the motion suggests it is likely to go—the matter is being approached by Labour Members, and I should be particularly depressed to see a willingness to play politics with men's livelihoods—[Interruption.]—and in doing so to do further damage to the already slim chance of saving British Shipbuilders' merchant shipping and rig building yards from complete disaster.
  Let us look at the industry and at what was expected of it. Let us consider, for example, what the right hon. Member for Gorton expected of it when he was Minister of State and was taking through—in a rather inadequate manner, judging by the time that it took him to do it—the Aircraft and Shipbuilding Industries Bill. Speaking about the financial objectives, he said:
  "In a good year, when there is a surplus after covering interest and tax liabilities, the Corporations will be expected to pay a dividend to the Government on their PDC. In a bad year a dividend may be waived entirely."
  He went on:
  "We should, as I say, normally expect PDC dividend to be paid, and we should make sure that PDC payments balanced out in such a way as to provide what we ask for earlier in the Bill as an adequate return".—[Official Report, Standing Committee D, 19 February 1976; Vol. IV, c. 1025.]
  That was what the right hon. Gentleman expected when he was going to nationalise the shipbuilding industry. The then Under-Secretary of State for Industry, now Lord Carmichael, put it even more strongly—I am not sure whether the right hon. Member for Gorton would wish to water it down, judging from the remarks of his right hon. Friend the Member for Bethnal Green and Stepney—when he said some much tighter things, for example:
  "The Corporations will be subject to stringent financial regimes … They will be required to pay full interest on their borrowings … Section 5 of the National Loans Act 1968 required that loans from the Fund should be at rates not less than the Treasury would have to pay for loans of similar periods and terms … They will have to pay dividends on their public dividend capital. They will have to earn the public sector test discount rate on their investments". — [Official Report, Standing Committee D, 22 January, 1976; Vol. IV, c. 395.]
  Goodness me, great things were expected of those organisations in those happy days when they were being put into the safe hands of the state. If one really wants to rub the point in, one can recall the right hon. Member for Gorton saying:
  "They will be expected to pay a dividend on their PDC … the Secretary of State wants the Corporations to earn a proper rate of return … It"—
  referring to the Government—
  "could not set, as a financial duty, the earning of a loss."
  Oh no? He went on

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  "They will have to pay dividends on their PDC because if they do not do so, we have power to require them to do so." —[Official Report, Standing Committee D, 12 February 1976; Vol. IV, c. 895–6.]
  Let the right hon. Gentleman try requiring them to pay a dividend on their PDC. Therefore, when the right hon. Member for Bethnal Green and Stepney asks for even more money to be put into financing the losses, he sings a different tune from his now very moderate and Right-wing right hon. Friend.
  We must ask the House to look more carefully at the performance of the industry, not as Labour Members wished it to be—as they daydreamed about it being—but as it actually has been.
  Mr. Kaufman: Against what?
  Mr. Tebbit: The expectations have always been clear. The right hon. Member for Gorton used to say, "We expect the shipbuilding industry to be profitable," so let us look at the record of the merchant shipbuilding division. In 1982–83 the total loss before interest and tax, but after crediting intervention fund payments of £20·4 million, was £55·7 million, a total cost to the taxpayer of £76 million. In that year, of the 11 companies in the division, eight made a loss. It might be suggested that the figures have been selectively culled, so let us take 1981–82. In that year there was a loss—again before interest and tax after crediting intervention fund payments of some £47 million —of £36·2 million, giving a total of £83·2 million. In that year, nine of the 11 companies made losses.
  Mr. Shore: So what?
  Mr. Tebbit: I will tell the right hon. Gentleman so what. So what? That was money that could not be put into any other enterprise. So what? It was money that could not go into hospitals. So whit? It was money that could not go into the National Health Service. So what? It was money that could not go into BL or any of the other organisations of which the right hon. Gentleman is fond. So what? Let him get to his feet and explain what he meant.
  Mr. Shore: So what else does the right hon. Gentleman expect in the middle of the worst slump that his policies helped to engender? What happened to the profits of private industry in 1981 and 1982? They were lower than they had ever been, not just in the right hon. Gentleman's adult lifetime and not just in the public sector but in the private sector as well, for there were more company liquidations in those two years than we had memory or record of.
  Mr. Tebbit: The failings of the industry have nothing to do with the Government's ideology? Is it all now to do with the slump? We seem to have a change of tune half way through. I will tell the right hon. Gentleman what happened to the profits of the private sector; they were milked to pay the losses of British shipbuilders. In 1980–81 the loss was £36 million, with intervention fund credits of £44 million, and again, nine of the 11 companies made losses—£80 million in total.
  But the most ridiculous aspect of the Opposition motion is its attempt to make the responsibility for the misfortunes of the shipbuilding industry predominantly, if not entirely, a matter for the Government—that is, until the right hon. Member for Bethnal Green and Stepney changed his mind when he was caught on the hop and made a foolish
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  intervention. In the Labour party's book, all would be well but for the Government—[Interruption]— but Labour Members know that that is rubbish.
  There has been a world depression in which even the most efficient yards have had to struggle to find orders. I regret having to say this from the Dispatch Box because it will not help British Shipbuilders to get more orders, but bluntly, the British shipbuilding yards have not had reputations in some cases such as to attract customers. Nor have their prices, nor their ability to deliver on time, made them attractive to customers.
  No one except our competitors can take any comfort from that. I find it especially frustrating because I know, as we all know, that, given proper leadership and management, and when they put their minds, hearts and backs into the job, our shipyard workers can match their competitors. Yet in recent years, with honourable exceptions, they have not done so.
  It does no good to whine on, as the right hon. Member for Bethnal Green and Stepney did, that the saviour must be the Government. The motion refers to a
  "corporate plan … with a realistic strategy for its further development, modernisation and re-equipment … to restore …confidence to the workforce, its suppliers and customers."
  It is interesting to note which comes last on the Opposition's list. I refer to the appendage that is hung on the end as though he did not matter—the customer. He is always last in the Labour party's thinking. All it can do is complain that customers are not patriotic if they do not put their orders into our yards. It never thinks of what has happened to some of those who have shown their patriotism by doing so.
  Why did the right hon. Gentleman not suggest that there could have been a touch of patriotism in ensuring that every ship in the yards was delivered on time as far as it was humanly possible for the management and work force to do so? Would there not have been a touch of patriotism in meeting the requirements of the British shipowner as well as calling for patriotism on the part of the British shipowner to order a ship that might be six months late and lose the business to which he was committed on the original delivery date?
  Dr. Norman A. Godman rose—
  Mr. Tebbit: Is it lack of investment or lack of equipment that has deterred customers from placing their orders here? Is that why customers have hesitated to put work into our yards? If so, that lack of equipment does not arise from a lack of taxpayers' money.
  Mr. Kaufman rose—
  Mr. Tebbit: About £1 billion of public money has been consumed since nationalisation by way of losses and intervention fund subsidy. I give way to the right hon. Member for Gorton, who wants to defend his optimism.
  Mr. Kaufman: Is it not a fact that, due to the world slump, every shipbuilding industry is making losses and that the chance of getting orders depends upon the amount and rate of aid that a Government can provide? Is it not a fact that the Government have reduced the intervention fund from £85 million, as it was under the Labour Government, to an extension of only £10 million for the current period after a figure of £40 million for last year? Is it not a fact also that, as a result, the work force under

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  this Government has declined by 33 per cent. at the rate of 6,500 a year? Is the right hon. Gentleman aware that Sir Robert Atkinson, whom the Government appointed, said that if it had not been for the Polish order, which was gained through nationalisation, our shipbuilding capability in significant part might have had to be disturbed, and that it was through that act that nationalisation saved the British shipbuilding industry, which the Government are now destroying?
  Mr. Tebbit: I am delighted with the right hon. Gentleman's intervention. I shall deal with only a few of his arguments because it is too tempting to take them all. First, I shall deal with intervention-fund degressivity. When the right hon. Gentleman signed the fourth directive in a flush of pro-European feeling and said that he wanted a European shipbuilding policy, he committed himself to degressivity. He has a pretty poor memory because when the Government took office in 1979 he had let the shipbuilding fund run out of money. There was not an intervention fund. The right hon. Gentleman had better start remembering. Irrespective of what he says now, it is illuminating to read what he said in a debate on the shipbuilding industry in February 1977. He said:
  "It would be foolish to bail out yards that are not able to meet pricing and delivery criteria."
  Does the right hon. Gentleman still think that it would be foolish to bail out yards that are not able to meet "pricing and delivery criteria"?
  Mr. Kaufman: To begin with, the right hon. Gentleman has entirely misinformed the House, no doubt deliberately, about the state of the intervention fund when the Labour Government left office. On 4 April 1979 we announced that £85 million would be made available from the intervention fund for the following year, which was the same sum made available for the previous year and £20 million more than the sum for the year behind that. As soon as the Conservative Government took office, they cut our £85 million to £65 million. The intervention fund was not empty. We had obtained a commitment to increase it from Brussels. The right hon. Gentleman is misrepresenting what was said about the nationalised shipyards. When I made the statement from which he has taken a few words, I was announcing for the first time ever an intervention fund that was designed to gain orders. In the course of so doing I said:
  "Our aim is not to see how many yards we can close; it is to find the maximum numbers of yards that we can keep open."
  We obtained more orders than the Government have obtained to date, and under the Labour Government the rate of job losses was a fraction of that which has taken place under the Conservative Administration. The shipyard workers who are listening to the debate want the return of a Labour Government, not a Conservative one.
  Mr. Tebbit: So it is extraordinary that a Conservative Government were returned after the general election. I do not want to do the right hon. Gentleman a disservice. I know what he said in column 1653 during the debate that took place in February 1977. He said:
  "We continue to be firm advocates of a Community policy for shipbuilding."
  That was the statement of a devoted European, and enthusiast for the Community. However, he had not got his intervention fund properly sewn up when the
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  Conservative Government took office, despite the announcement that was made so shortly before the general election. I recollect well what he said in another passage of the report of the 1977 debate. He said:
  "Shipbuilding industries all over the world from Japan to Sweden are accepting the inevitability of contraction, and Britain cannot be insulated from this world trend."—[Official Report, 24 February 1977; Vol. 926, c. 1653–65.]
  But now, when times are much more difficult, we are told that we can insulate ourselves. The right hon. Gentleman has no credit with anyone. How can he argue that there has been a shortage of investment, as his right hon. Friend the Member for Bethnal Green and Stepney suggested, if £1 billion has been consumed over the years?
  Dr. Godman: I find the Front Bench exchanges interesting but given that the matter is of deep and considerable concern to my constituents and that time is passing, is the Minister going to make any statement on the future of Scott Lithgow? My constituents are desperately worried and they are not interested in Front Bench exchanges. Let us hear something about the future of Scott Lithgow, which is in my constituency.
  Mr. Tebbit: I appreciate that, but I must explain that the Front Bench exchanges take place because I try always to be as generous as I can in giving way to those who wish to intervene.
  Dr. Godman: Be generous to Scott Lithgow.
  Mr. Tebbit: I shall come to Scott Lithgow in a moment. First, let us discuss what can be done by the Government and the Opposition to help British Shipbuilders, including Scott Lithgow.
  Dr. Godman: Get on with it.
  Mr. Tebbit: Where was the, right hon. Member for Gorton and his colleagues, including the hon. Member for Greenock and Port Glasgow (Dr. Godman), on the issue of new working practices? Did they support the efforts of the management and of some union leaders to get those practices established, practices which have been accepted for the past decade in Europe and in Japan? There was not a word of support for Mr. Day from the right hon. Gentleman and, indeed, he has made matters worse this afternoon.
  Dr. Godman rose—
  Mr. Tebbit: If the hon. Gentleman wishes to tell us that he was on the side of management in getting the new working practices accepted, I shall welcome his intervention.
  Dr. Godman: I constantly urged the management and work force at Scott Lithgow to reach an agreement on working practices. The survival plan was the management's document. Anyone who has any knowledge of industrial relations knows that one starts with the management's position and the union's position, arrives at a compromise and enters into an agreement that meets with the qualified support of both sides. That is what I urged on the management and work force at Scott Lithgow.
  Mr. Tebbit: The hon. Gentleman should have gone beyond that and urged the unions to tell the management how it could achieve greater productivity. What was the advice that the right hon. Member for Gorton and his hon. Friends gave the men of British Shipbuilders when they

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  were on the verge of a strike? Did they tell the workers at Scott Lithgow that a solid "no" vote, and absolute determination to avoid a strike call—
  Dr. Godman: Let us hear about the future of Scott Lithgow.
  Mr. Tebbit: —and the wholehearted adoption of new practices might just save the Britoil rig, and that a strike might finally destroy it and any confidence in a will to catch up on lost time and deliver by the new deadline?
  Dr. Godman: Let us hear about the future.
  Mr. Tebbit: Did the right hon. Gentleman and his colleagues who have been attacking me stay silent or even support a strike call that they knew could be nothing more than an overture to a funeral march? I found not one word from any Opposition official spokesmen speaking up for sanity on that issue. What is all this talk about what this Government should do? There is just an unhappy appendage, a last thought, to the Labour party's motion —the customer, who has been absent from our yards. No one can create queues of customers for shipyards while lines of ships are laid up because of lack of freight to carry. But even in these difficult days, there are orders for the yards to take, and it is up to industry to set out to attract those orders.
  Negotiations are in progress between British Shipbuilders and various interests including Trafalgar House. Those negotiations do not directly involve the Government, although I can say something about them. Their aim is to see what can be saved from an unhappy position that reflects credit on none of the parties. I refer to a yard whose past performance has reflected badly on British Shipbuilders and on Scott Lithgow's management and work force. Our aim is to see what can be salvaged and to ascertain whether under new ownership with new management and new work practices the rig can be completed and a business established. The Government would be delighted if such a rescue could be made successfully. We will help, as my right hon. Friend the Prime Minister recently told those concerned. By wiping the slate clean. There will be no responsibility on whomever takes over the yard for the redundancy costs of those who must lose their jobs or for the losses already incurred on the rig.
  This part of our debate about Scott Lithgow is immensely sad against the backdrop of an industry that has already cost the taxpayer £1 billion. How much better it would have been if we could have put that money to more productive uses.
  But there are some encouraging signs: slightly fewer ships are laid up; freight rates are hardening; and there are forecasts of 5 to 6 per cent. growth this year in world trade, which suggests a modest improvement in shipping. Times in shipbuilding are still grim, and I, like Opposition Members, believe that the agreement reached between British Shipbuilders and the Confederation of Shipbuilding and Engineering Unions has begun to open a way forward. As the right hon. Member for Gorton used to say, British Shipbuilders will be able to survive if, and only if, it drives down its costs at least to the level of other European yards. To do that, there must be a willingness to overcome the problems of low productivity that have beset the industry in the past. It is clear that that can produce results. We saw, for example, what could be done
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  when the work force and management cast aside old practices and worked with determination in producing the ships that were required for the Falklands conflict. Opposition Members know that, and they need not take my word for the results that can be achieved by those new working practices. They can take the word of a spokesman for the Amalgamated Union of Engineering Workers, as recently reported in The Scotsman. An AEUW spokesman from Hall Russell made it clear:
  "About 95 per cent. of the changes"—
  those changes being discussed between British Shipbuilders and the CSEU—
  "they are looking for have been here since about 1970".
  If that is so, there is little wonder that Hall Russell is surviving.
  Compare that with Henry Robb, now in the process of closure, to which reference is also made in The Scotsman. When steelworkers agreed to help complete the paintwork on a ship to get it out on time and on cost, the regular painters objected, so extra painters had to be brought across from the other side of Scotland, from the Clyde. Bluntly, such antics—not the Government—have sunk Henry Robb and others.
  Mr. Ron Brown: Is the Secretary of State aware that there are faults on both sides? As management apparently manage, will the right hon. Gentleman accept that the old style of the heavy hand does not always help in reaching an understanding with the work force? Workers at Henry Robb have offered to change. Recently, they put on paper certain guarantees that were forwarded to Mr. Graham Day. He acknowledged that changes were taking place in the yard. Despite that, he deliberately held back on three main orders for RASCO, the Suez Canal Authority and Caledonian-MacBrayne, which is coming up shortly for consideration. The yard did not close. It was starved to death. That was a political action by an appointee of the Government. It is a political, not a simply commercial issue. Politics comes into the matter.
  Mr. Tebbit: Politics does not come into it.
  Mr. Ron Brown: It does.
  Mr. Tebbit: Ministers do not decide to which yards the orders go.
  Mr. Ron Brown: Who appointed management?
  Mr. Tebbit: That is a decision made by the management in the belief that it is in the best commercial interests of British Shipbuilders in general. No doubt, the type of antics to which I have referred had something to do with the way that British Shipbuilders' management thought about the matter. There are faults on the management side, and no one denies that. We must concentrate on those places where the management and the men can reach a sensible agreement—not after closure is announced but well before—to keep customers.
  Mr. Gavin Strang: Will the right hon. Gentleman give way on that point?
  Mr. Tebbit: I must press on, although I shall give way.
  Mr. Strang: I shall be brief. Will the Secretary of State give us at least the assurance that, although he has said that the Government wanted to avert the complete closure of Scott Lithgow, they are equally prepared to look sympathetically at any proposals to retain shipbuilding?
  Mr. Tebbit: If a private sector operator wants to take over the yard, I have no doubt that Mr. Day would welcome discussions with that operator. I cannot predict what the outcome would be. That would be a matter of commercial negotiation for the parent company.
  While those attitudes which were shown by the regular painters at Henry Robb exist, it is unrealistic and improper to expect the Government to save those intent on self-destruction. It is irresponsible of the Opposition to claim that we should.
  The House is anxious about the future of British Shipbuilders and the private sector, and I shall therefore sum up our intentions. I shall make it clear what is meant by the expression "wiping the slate clean" at Scott Lithgow. The proposition under negotiation is that the new operator should make a fresh start at the yard with the Britoil rig. The terms of any deal depend on the negotiations, and I cannot and will not predict their outcome. For our part, we will be prepared to foot the full bill for the losses incurred by the yard so far. I hope that that will represent a clean slate on which a sound commercial deal can be struck between BS and the interested parties. We hope to see a sound and commercial business making profits and safeguarding jobs, but whether that is possible depends upon many factors.
  Mr. Dick Douglas: I believe that the House would like more information. The main press comment relates to Trafalgar House. In the public domain that company, which is ostensibly a holding company, is not one that commands great credibility. Will Trafalgar House or one of the subsidiaries command the expertise?
  Mr. Tebbit: I am sure that the management of Trafalgar House is having close talks with British Shipbuilders. The potential customer for the rig will judge whether the management is adequate. We would not help by digging too far into the proposed arrangements.
  We are currently discussing the corporate plan with Mr. Day and his colleagues. In that context, we will discuss our support for the industry with the European Commission.
  The plan will lead to the disposal of the warship building yards, the peripheral businesses and the remainder of the ship repair yards in the relatively near future, leaving Mr. Day and his colleagues free to concentrate on the difficult problems of the merchant yards and engine building.
  I must say that the prospect for the industry is a difficult one. There is some prospect of an upturn in world orders, but there is little doubt that special circumstances in 1983 brought forward some orders from later years. Therefore, we should not assume that the increase in orders last year will be carried through. What is certain is that only by ensuring the maximum of efficiency, the maximum productivity, the best management and, above all else, total devotion to customer satisfaction, will British Shipbuilders have any hope of survival.
  During my time at the Department of Industry in 1981, I was struck with both the good and the bad aspects of British Shipbuilders, and I sought to ensure that our treatment of yards would take their performance into account. I hope that our plan for survival will do so—indeed, it would be madness if it did not. We must approve the corporate plan, within which are the plans for investment. Those are business decisions.
  Mr. Kaufman: By you.
  Mr. Tebbit: In the past, the right hon. Gentleman has expressed very clear views about the division of responsibility. He knows full well that a corporate plan must be approved. That involves the overall strategy of the corporation. It does not involve our deciding which yards take which orders on a day-to-day basis.
  None of us—men or management—can save yards from self-destruction. We have a duty to ensure that those intent on self-destruction do not drag others down with them. It is in that spirit that my right hon. Friends and I have tabled an amendment to the Opposition motion which offers support to British Shipbuilders and the Government
  "to create a more efficient and competitive industry … and welcomes the new mood of realism shown by the Shipbuilding Negotiating Committee in agreeing"
  the new working practices.
  We Conservatives, like the Opposition, recognise the social consequences of yard closures. We have not pursued some wild destructive policy of yard closures over the past four years, nor do we now want to see yards close if they can survive. But yards can close themselves, and yards without customers are dead.
  We have not shrunk, nor will we shrink, from support where it can lead to viability, nor shall we shrink from facing the facts squarely when a yard has no customers willing to place work in it. It is with that in mind that I ask the House to reject a discredited and incredible Opposition motion in favour of the more serious, realistic amendment that encapsulates our programme to help British Shipbuilders through to viability.
  6.13 pm
  Mr. Roy Jenkins: I begin on a non-controversial note by saying that I doubt whether anyone would object to the Secretary of State putting the seal on his agreement with Nissan. He would do more good by doing that than by coming to the House and speaking in the way that he has done in the last half an hour.
  The right hon. Gentleman made a remarkably unconstructive speech in a tone of voice that varied disagreeably between the venomous and the sanctimonious. It appeared to reply to a speech that had not been delivered.
  I hold no brief for the Opposition Front Bench, with which I disagree just as often as I do with the Secretary of State, but I thought that the right hon. Member for Bethnal Green and Stepney (Mr. Shore) made a calm, constructive speech in which he looked to the future and tried to face some of the real problems and difficulties.
  However, the Secretary of State — apart from his interventions which embellished it—came along with a carefully prepared speech which replied in great detail to one that was never delivered. It was, I thought, a mistaken use of ministerial time.
  Mr. Tebbit: The right hon. Gentleman is making a mistake, because he has clearly not read the amendment to the motion on which I was speaking, as is customary in the House.
  Mr. Jenkins: I have read the amendment to the motion, and I shall have something to say about it. But the Secretary of State referred much more to the speech of the right hon. Member for Bethnal Green and Stepney and

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  replied to that—[Interruption.] I note that the Secretary of State is now leaving, no doubt to deal with his Japanese colleagues.
  The safeguarding and preservation of Britain's future in this industry, and as many jobs as possible, is far more important than who owns parts or the whole of the industry. In retrospect, I would not have nationalised the industry—and not too much in retrospect: no one can accuse me of having shown any great enthusiasm for further nationalisation for several decades past.
  Mr. Douglas: The right hon. Gentleman will recall, in his previous incarnation as a member of the Labour party, standing in the rain in Shawfield football stadium when we wanted to bring Upper Clyde Shipbuilders into the public sector to save thousands of jobs.
  Mr. Jenkins: Primarily I wanted to save jobs. I have adopted a non-dogmatic attitude on that issue. I have no doubt that other hon. Members can quote examples where I have voted for nationalisation, but one of the problems of our two-party system is that it is inevitable that one votes, as every hon. Member has, for some things that do not command one's full enthusiasm, until one decides that one has voted for too many and makes a break.
  I fail to see how the setting up of British Shipbuilders has contributed to the industry or the nation, but, that having happened, it does not follow that the major policy and principle of privatisation is the right answer. That is the reverse of the old Irish story, that if one wants to get to Ballylicky, one would not start from here. Whether one wants to get to Ballylicky or anywhere else, one must start from one's present position. That is so in this case.
  The onus of proof lies very much on those who want to make a change, be it a change to nationalisation or to privatisation. In a sense, I would take that view even more strongly if I thought that the Labour party might recover enough to form another Government. It would presumably renationalise and have the industry absolutely set on the course that for several decades has done such immense damage to the steel industry. That is a dreary course of alternation about which people should be extremely careful.
  I do not believe that the frontier between the private and public sectors must be absolutely rigid, but it is desirable that it should be as stable as possible. It is extremely harmful to the industry, and to those who work in it, if it is moved backwards and forwards for purely ideological reasons.
  Having abandoned their attempt to roll back the frontiers of the state on public expenditure and the reduction of taxation, and being engaged daily in increasing the power of the state over local Government in a highly centralised way, the Government are trying to compensate for that through privatisation for its own sake. I am against that. I shall, therefore, as I think will my hon. Friends, vote for the amendment of the right hon. Member for Bethnal Green and Stepney. However, I should not do so if there were added to it a rider that the right hon. Gentleman and his hon. Friends would reverse it in due course if they had the opportunity to do so, because I am in favour of stability, not dogmatic rules.
  If we are convinced that privatisation in the case of Scott Lithgow is the best way to preserve jobs, I accept it as an acceptable exception to the general rule of stability that I have tried to lay down. However, as this appears,
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  rightly or wrongly — probably wrongly — to be the Government's determination, I am not prepared to have an ideological battle when so very much is at stake for the lower Clyde and for the communities of Greenock, Port Glasgow and the surrounding area. The most important thing is to preserve the jobs and to preserve the yard at the highest level of activity, and with the most secure future that it is possible to achieve.
  There are certain questions on which I should like to ask for assurances that I believe the House ought to have. First, is the Trafalgar House deal really going to come off? The Secretary of State for Scotland must be careful about not getting a reputation for trailing solutions that look very attractive when the heat is on him and then hoping that, the heat having gone off, he can explain that the deal somehow disappeared.
  Mr. Douglas: The right hon. Gentleman was praising the Secretary of State for Scotland the other day.
  Mr. Jenkins: Incidentally, I think the right hon. Gentleman ought to be present for the debate. The Under-Secretary is in the Chamber and will take notes of what is being said.
  Taking up the point of my old hon. Friend the Member for Dunfermline, West (Mr. Douglas)—I mean old in the sense of going back a number of years—about my having praised the Secretary of State, I certainly thought it right to say a few words of fairness about the Secretary of State's general performance, but if he pursues this policy of trailing great solutions merely as an alibi to get through a difficult period, and then they do not come off, I take back the relatively nice things that I said about him two weeks ago.
  Mr. Douglas: That is stability!
  Mr. Jenkins: In one of his very constructive factual remarks the Secretary of State probably pretty well answered the next crucial point, but I should like to have an assurance on it. Is it the intention of the Government that the rig should be completed in the yard under whatever the ownership might be, the existing ownership or the new one?
  Mr. Albert McQuarrie: The Secretary of State said that.
  Mr. Jenkins: If that is so, that is a new, clear statement, and it was not made, as I think the hon. Gentleman will agree, in very ringing tones. It was very different from the tones in which he made his controversial remarks. I take it he said that it is the intention of the Government that the rig should be completed. That is crucial.
  Mr. McQuarrie: It is in the Glasgow Herald.
  Mr. Jenkins: It is sometimes desirable to have statements from Ministers, and not merely a report in even the Glasgow Herald. That really is crucial. If not, the lesson would be lost on Scott Lithgow, and Scotland and Britain would be effectively out of this important and advanced field of technolgy. Submarines and submarine contracts, while they may be a very helpful addition—and submarines should be built on the lower Clyde—would not be a substitute for the rig being cancelled and for the yard being effectively out of that field.
  I find it just a little peculiar that the Government should apparently have trailed in the Daily Telegraph today the

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  fact that submarine orders were to be forthcoming. I hope that they may be, but it is rather a curious approach to competition that, before one knows who owns the yard, before one knows what the management is, before one has thought about asking for tenders or receiving tenders, one announces that, if the yard is privatised, one will give it submarine orders, whereas presumably there was no question of doing so when it was publicly owned.
  Third, why is Trafalgar House thought to be so good at running a shipyard? What great ships has it built, as opposed to sailing ships that it owns being refitted in other yards? Exactly what change will the change of ownership make in the running of the yard? The work force, which I believe has taken account of the time of great uncertainty that it has been through recently, wants, I hope, with the management, to make a new beginning, but it will be basically the same work force. As the hon. Member for Renfrew, West and Inverclyde (Mrs. McCurley) said in the debate last week, in what I thought was a penetrating remark, the work force, if not the same people, are the brothers or sons of the people who work at IBM, with outstanding success and outstanding productivity, so much so that IBM pays constant tribute to the productivity of that plant as the highest level of any of its plants in the world, and it has many. That is a very good point. There were obviously grave management weaknesses in the early stages of the contract, but I believe that they have been substantially corrected. I think it would be a great mistake if there were to be a complete upheaval again in the management team. I do not believe it will be possible to have a completed rig by 1986 unless one sticks broadly — as one obviously would with the present work force—with the reconstituted management team.
  Mr. Christopher Hawkins: The hon. Gentleman asked what great ships Trafalgar House had built. Would the hon. Gentleman not accept that the principles of good management are frequently transferable? This is a non-party political point. Taking Michael Edwardes as an example, what great car firm did he run before he went to British Leyland? Yet he did a fine job of reviving that company.
  Mr. Jenkins: I recognise, of course, that good management has its value, but Trafalgar House is a very remote holding company, and Trafalgar House will not, in fact, build many parts of the rig in Scott Lithgow.
  Mr. McQuarrie rose—
  Mr. Jenkins: It is a great mistake to believe that one must interrupt every other sentence and therefore hold up speeches and prevent other hon. Members from speaking. I am right at the end of my speech.
  Mr. McQuarrie rose—
  Mr. Jenkins: No, I am not giving way. I intend to conclude my speech. I believe that that will be in the interests of the House generally, so that the House does not suffer excessively long speeches.
  I have no dogmatic view about the ownership of the industry. I deplore dogmatism on both sides. I deplore making a shuttlecock out of this industry, as has been done with other industries. By far the most important thing is to get the rig completed in the yard, and to provide a future for the yard. If the Government will give adequate
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  guarantees there, even though I may not be entirely persuaded by their case that privatisation is the route—I do not want to indulge in a sterile ideological dispute—the important thing is the future of the yard. The ownership of the yard is of relatively minor importance.
  6.29 pm
  Sir Paul Bryan (Boothferry): First, I declare my interest as a director of Furness Withy, a major shipping company, and, more relevant perhaps to the debate, my interest as the Member of Parliament representing Goole where the dockyard is about to close down. The closure comes as a shattering blow to the town. I may not be talking about thousands of redundancies, as many hon. Members have had to do coming from the major shipbuilding areas — the number is 370 — but, nevertheless, in a small town such as Goole the impact is shocking.
  Given the history of the yard, the shock is all the greater. It is not a tale of years of losses, bad industrial relations, late deliveries, absenteeism, poor quality and so on. Not a bit of it. The town regards the shipyard as something of an institution. For many years the yard has been the biggest employer of males in the town. Until nationalisation it was reasonably prosperous and provided steady employment for generations of men in the Goole area. However, in recent years, since nationalisation, the yard, like many other shipyards, has been making losses, although productivity has still been above the average for the shipyards of British Shipbuilders.
  Deliveries have been good. There have been no complaints about quality, and on the whole industrial relations have been pretty good. It is against that background that the closure comes as a great blow. I cannot say that it comes as a complete surprise. For the best part of the year there was work, but when it was completed there was no other order on the way, and clearly closure threatened.
  When I went to see Graham Day to obtain some idea of the prospects, he was quite frank. He expressed sympathy for the situation, but had no prospect to offer. Therefore, although the closure has not come as a surprise, the yard has been an integral part of the town and it is hard to believe that it is to go for ever.
  Having said all that, what is to happen now? The yard is not likely to be sold as a going concern. Voluntary redundancies are already on the way for many of the work force and before long the yard's life as a shipbuilding yard will be over. Could it be turned into a shiprepair yard? I hear that the Humber graving dock is about to close, and that will leave the Humber without any major repair setup. However, the yard at Goole was built for shipbuilding and I should be surprised if it could take on the work of the Humber graving dock, with its large facilities.
  Therefore, one is driven to the conclusion that the yard's life must be over and that jobs can be found only in an expanding local economy. The local economy will expand only in accordance with the efforts of local people, employers, entrepreneurs, local authorities, organisations and so on. The Government have a part to play, although not a major one. They could help.
  At present Goole has intermediate area status. Its neighbours, Hull and Scunthorpe, both have development area status. In the Scunthorpe area there are also three enterprise zones. The various statuses were all based on unemployment figures which are now well out of date. In

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  December the male unemployment figure for Hull was 19·2 per cent., for Scunthorpe 16·6 per cent. and for Goole 17·4 per cent. Although Goole had higher unemployment than Scunthorpe, it did not enjoy the same development area status. However, after the closure of the dockyard, male unemployment in Goole will stand at 22 per cent. and will be above the levels of Hull and Scunthorpe. In Old Goole, the area immediately around the dock, the figure will stand at about 27 per cent. Therefore, judging by the figures, Goole certainly qualifies for development area status or as an enterprise zone.
  According to the White Paper, which was published in December, a new map of revised areas will be published. The new categories will be formed in accordance with new criteria. The White Paper states that the criteria will include not only unemployment, but cost-effectiveness, and that greater importance will be attached to service industries. Under the new criteria, Goole will be able to make a stronger case.
  With regard to cost-effectiveness, Goole is the biggest inland port in the country. It is connected to the entire motorway network via the M62, and it has recently acquired a bypass. A truck from Goole can reach any part of the country in the course of a working day. Most of the new businesses which have sprung up in Goole during the past few years are connected in one way or another with the port or our admirable communications.
  Goole also has good industrial estates with an ample number of factories as well as room for development. Therefore, on the counts of unemployment, cost-effectiveness and the development of service industries, Goole is well placed. I see from the White Paper that we are asked to make our submissions by 24 May. With the help of the local council and other organisations, I propose to make a submission, and I think that Goole is in a strong position to be awarded development area status.
  That is all that one can say so soon after the tragedy has hit Goole. However, I hope that we shall have time to discuss this subject again, because it cannot be dealt with in one afternoon. It needs to be thoroughly thrashed out when all of us have had more time to think about the situation in which these beleaguered towns find themselves.
  6.36 pm
  Mr. Ernie Ross: This seems to be a night for making apologies, so I apologise for the fact that I shall leave the Chamber after I have spoken, because this is my wedding anniversary—[HON. MEMBERS: "Hear, hear".] Twenty years ago I was married, and 20 years ago I left the shipping industry, having served my time as a marine engineer and apprentice in a shipyard called Robb Caledon in Dundee.
  I am sorry that the Secretary of State for Trade and Industry has left the Chamber, because some of his comments about the work force's failure to respond to the needs of the yard in the 1970s, 1980s and 1990s were ill-founded. Although there was an agreement on the dropping of demarcation and restrictive practices in the Robb Caledon yard many years before its closure, it still closed. Therefore, tomorrow, when the Secretary of State has read this debate, I hope that he will reply to me and give some advice to those shipyard workers, many of whom are still on the labour exchange in Dundee. They did exactly as the Secretary of State demanded. They dropped their opposition to demarcation and restrictive
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  practices, but that did not save the yard, despite the fact that it was building ships with machinery that was 20 or 30 years out of date. Restrictive practices just did not exist when that yard closed.
  The present situation represents a mess for British Shipbuilders and for all those in the shipping industry. Our priority must be to maintain shipbuilding capacity in the United Kingdom, to defend an integrated shipbuilding and shipping industry, and to restore the British merchant fleet. That priority was missing from the Secretary of State's speech. Therefore, I hope that the Minister will tell us more about what the Government intend to do to help the industry.
  The Secretary of State laid great stress on his disappointment in the motion. However, the Opposition are not the only people to think like that. Recently, all the church leaders in Scotland said exactly the same thing. I would not want to say that church leaders know very much about building ships of oil rigs, but they are aware of what is going on in their communities.
  The matter was also the subject of early-day motion 255 which the Secretary of State might like to read as well; there he will see words similar to those in the motion before the House.
  A big question mark hangs over the shipping industry. The warship yards are allegedly ready to be privatised. Smaller yards are closing. Following the announcements yesterday and today it seems likely that Britain will be left with only one yard within British Shipbuilders, Cammell Laird, capable of building offshore rigs. The decimation of the industry is wreaking havoc not only on communities but on the economy. The United Kingdom shipping industry has contributed over £1 billion annually to the balance of payments in recent years. During 1982 exports by British Shipbuilders increased significantly by 31 per cent., to £288 million. However, against this substantial income the Government's policy of non-intervention in shipping and shipbuilding is nonsense; they are actually supporting the United Kingdom's competitors. The lack of a coherent maritime policy is ensuring that the Government are presiding over the demise of the British merchant fleet and the decimation of the British shipping industry.
  In the 1983 annual shipping review released by the General Council of British Shipping, the president, Richard Tookey, stated that if free trade was the maxim, such a policy should accommodate the protectionist measures of other nations. There seems to be a determination by the Government to ensure that British manufacturing industry, whether in cars or ships, does not survive into the 1990s. Those of us who are concerned about the future of aerospace await with trepidation the Minister coming to the Dispatch Box to tell us about the Government's commitment to aerospace.
  We have heard tonight the prime example of the failure of the Government to respond to the problem of Scott Lithgow. Only now is the truth becoming apparent. We have been through the myths of lazy, inefficient workers. We now know that Britoil accepts that most of the responsibility for delay rests with management. The Government knew that, yet they took no action. Many former chairmen and directors of British Shipbuilders have been quoted. I should like to put on record the comments of a former managing director of Lithgows, Mr. Balch, who wrote in strong terms to the Financial Times on 26 January, praising the dedication and skill of the work

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  force. Other hon. Members have been making that point for months but have not got a response from the Government.
  The Secretary of State attacked my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) for his failure to say anything about recent negotiations. Within the industry there have been many hours of negotiations during the past few months between management and trade unions, with the encouragement of my right hon. and hon. Friends, to find a solution that would help to save British shipbuilding. The trade unions, under the auspices of the shipbuilding negotiating committee, have endeavoured to find a plan to save the industry, not an easy task when confronted at the negotiating table by someone who does not have the same commitment to the industry. That has come out of the negotiations and the Minister must accept responsibility for it.
  The whole approach to the shipping industry is piecemeal and sporadic. If a company wishes to borrow under EC provisions, it must go cap in hand to the Government. At the same time there is still no confirmation of the rumours circulating within the industry that 17 ships are being held up deliberately by the Ministry of Defence until the three small yards, Robb Caledon, Cleland and Goole are closed.
  There is no point in people crying out that the work force is not committed to the industry when the facts demonstrate the opposite. The work force is committed not only to the survival of the industry but to making it profitable. It cannot be stressed often enough in the debate that there is a lack of commitment by the Government and by the management of British Shipbuilders.
  There are people in the industry who are trying to bring forward a coherent strategy. My trade union, the Technical Administrative and Supervisory Section of the Amalgamated Union of Engineering Workers, has for many years argued for an integrated maritime policy. In conjunction with the National Union of Seamen, TASS intends to produce a booklet at the end of February, if there is still an industry then, which will show where a start might be made on restructuring the industry. Great stress will be laid on the home coastal trade and the need for a policy of cabotage.
  Mr. Bill Walker: Does the hon. Gentleman recall the situation at Robb Caledon and how, from the failure to keep the yard open, something else emerged—North sea activity? He played no small part in bringing that to Dundee and I pay him credit for that. Would it not be right to remind the House of the difficulties we faced then and the fact that we managed to achieve results which brought jobs to the old Robb Caledon yard?
  Mr. Ross: When the Robb Caledon yard closed, we could have lost a valuable site. The efforts of Kestrel are to be commended, but the yard should never have closed. There could have been a working relationship between Kestrel and the Robb Caledon division at Dundee which would greatly have enhanced the potential for Kestrel and British Shipbuilders in the North sea oil industry.
  TASS and the National Union of Seamen will produce a document at the end of the month which will offer a way forward for the shipping industry. That document will make it clear that over 30,000 seafaring jobs have
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  disappeared since 1979. It will detail the structural changes that have occurred in shipping which demand Government intervention. It will show that approximately one third of the United Kingdom coastal trade has been captured by foreign flag vessels. It will show that three of the top five countries in that one third restrict their coastal trade to their own flag vessels. In 1962 the Department of Trade survey showed that 46 out of 76 countries practised cabotage in some form. In 1983–84 the Government are still not prepared to help British Shipbuilders, the balance of trade and the shipping industry.
  There must be fewer side swipes by the Minister at those who may or may not have been responsible for the state of the industry. There must be a much more positive commitment from the Government about what they intend to do to help the industry, which is on its knees, and to help a work force that has demonstrated through its representatives that it is prepared to dedicate itself to making the industry efficient and productive. It needs the support of Government if that is to happen.
  6.47 pm
  Mr. Michael Brown: Like my hon. Friend the Member for Boothferry (Sir P. Bryan) I have bad news concerning my constituency. When I intervened during the speech by my right hon. Friend the Secretary of State, I was surprised that the hon. Member for Dundee, West (Mr. Ross) asked from a sedentary position what ship repairing and shipbuilding there was in my constituency. Since 1913 we have had the Humber Graving Dock, which has been a successful ship repairing and shipbuilding company in private hands. Until 1977 it made profits every year. Until this week it has employed some 500 workers.
  Obviously it is not just the hon. Gentleman who does not appreciate the role of this company in the industry. The right hon. Member for Bethnal Green and Stepney (Mr. Shore), when listing the redundancies that had taken place in the shipbuilding and ship repairing industries, did not mention the latest and largest number of redundancies announced this week at the port of Immingham. I was utterly appalled at the speech of the right hon. Member for Bethnal Green and Stepney, because the policies which he advocated seemed to condemn docks such as Humber Graving to closure and redundancy. That private ship repairing company has been driven out of business principally because of unfair subsidies and competition arising from the nationalisation of British Shipbuilders.
  The company has said that it has made losses since 1977. It says categorically that it is no coincidence that those losses coincided with the nationalisation of British Shipbuilders. It has appealed to me as the local Member of Parliament and to Ministers in the Department of Trade and Industry for British Shipbuilders to be given no more subsidies. It has made representations to my hon. Friend the Under-Secretary of State. I am grateful to him for seeing me some four weeks ago and for receiving representatives of the company on 23 January.
  I regret that it has not been possible for the Government to make money available to the company, but I understand the reasons for that. Humber Graving Dock's problems have been caused by the Government giving taxpayers' money to selected portions of the shipbuilding industry—the nationalised industry.
  If we accept the proposition of the right hon. Member for Bethnal Green and Stepney that the problems of ship

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  repairers have nothing to do with nationalisation, we should examine other possible causes. No one can deny that Humber Graving has suffered from its share of bad management. Moreover, no one who knows anything about the company doubts that industrial relations have also contributed to the problem. It is not for me as a Member of Parliament to apportion blame to management or the work force, but it is impossible to deny that industrial relations have been appalling for several years. That cannot have assisted the company to rectify the £6 million losses which have occurred since 1977. It is only because the company was taken over by the holding company, Richardsons, Westgarth that redundancies did not occur earlier.
  My experience of local unions does not inspire me with much confidence. When the announcement was made yesterday, I made it clear that I recognised the problems created by unfair competition. I also said that I recognised the problems created by poor management and poor industrial relations. I am not at all impressed by the way in which the union convener is trying to deal with the problems at Humber Graving. He asked me to telephone him. I did so this morning. As the local Member of Parliament I was only too pleased to discuss the matter with him at the earliest opportunity. Serious negotiations are going on with Seaforth Welding. We all hope that it will take over part of Humber Graving Dock.
  I have been involved in those discussions with the Department of Trade and Industry and was able to see the Under-Secretary of State a few weeks ago about them. However, when I rang the union convener this morning he slammed the telephone down on me when I mentioned the delicacy of the negotiations and said that in the next two or three days the union would have to give a clear sign to Seaforth Welding that it was prepared to acknowledge past mistakes and give a commitment to change working practices. If it does not do that, we run the risk of no employees being retained at Humber Graving Dock. We should be under no illusions. Even if the negotiations with Seaforth Welding are successful, few employees will be taken on.
  Mr. Austin Mitchell: Does the hon. Gentleman agree that it is hardly surprising that the convener put the 'phone down on him if he blamed what has happened at Humber Graving Dock on the workers and bad industrial relations? Does he further agree that there is no inducement for another firm to continue work at Humber Graving Dock if, on an occasion such as this, he denigrates management and workers and blames them for the problems?
  The dock is doing a superb job on the Aurelia and has been widely praised. The yard is working on £17 million worth of orders and a contract for P and O worth £2 million will come in on Monday. The real problem is the depressed state of demand for repairs, which has been caused by the crisis in British shipping and the intense competition which has inevitably resulted from yards which do not have enough work. The industrial relations record at the dock has been extremely good for the past four years. It is unreasonable in the circumstances that I have outlined to attack management and men and to use them as an excuse for the Government's failure to manage the economy.
  Mr. Brown: The hon. Member for Great Grimsby (Mr. Mitchell) should know the circumstances of that company
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  well. Seaforth Welding knows the company's history and is under no illusions about what it might take on. I assure the hon. Gentleman that if he reads the reports in the Grimsby Evening Telegraph and the Scunthorpe Evening Telegraph he will find that I did not mince my words. However, if we are to save any remnants of Humber Graving Dock it is about time that employees ad especially trade union officials recognised their obligations as well as my obligations and the Government's.
  I shall now deal with the Government's obligation to see whether there is any way in which they can assist successful completion of the negotiations with Seaforth Welding. As I have said, I was able to meet my hon. Friend the Under-Secretary of State and arrange for meetings with him and Richardsons, Westgarth. Those meetings took place. I should like to ask my hon. Friend the Minister a question, the answer to which could have a direct and beneficial bearing on the negotiations with Seaforth Welding. Can he give the House an unequivocal assurance that the Government will provide no more subsidies and guarantee no more orders to Tyne Shiprepairers after the next 12 months? Contrary to what the hon. Member for Great Grimsby said, there is no doubt that the competition from Tyne Shiprepairers is unfair.
  Dr. David Clark: Will the hon. Gentleman give way?
  Mr. Brown: I have already given way to the hon. Member for Great Grimsby who has a constituency interest in this matter, but I give way to the hon. Gentleman.
  Dr. Clark: The hon. Gentleman mentioned one of my constituents. I am intrigued by what the hon. Gentleman has said. Are the Government giving any guarantees to the privately owned Tyne Shiprepairers group? We should all like to know if they are.
  Mr. Brown: It is not for me to answer that question. My hon. Friend the Minister is far better placed to answer it. I am merely trying to point out that whereas the constituency of the hon. Member for South Shields (Dr. Clark) has had the benefit of substantial public funds, mine has had not one penny piece. I am simply asking my hon. Friend the Minister to bear in mind the extreme unfairness which has led directly in my view—and in that of the company—to the redundancies. There can be no doubt that the nationalisation of British Shipbuilders and the constant flow of public money to state-run enterprises in the shipbuilding industry have had a direct impact on Humber Graving Dock.
  Mr. Don Dixon: Will the hon. Gentleman give way?
  Mr. Brown: No, I shall not give way. I was in the middle of asking the Minister a question about Tyne Shiprepairers. My constituents who are employed at Humber Graving Dock, will want to feel that they have the same opportunities as those afforded to employees of ship repairing firms in the state sector, including those about to be privatised. Earlier this afternoon, my right hon. Friend the Secretary of State for Trade and Industry spoke about Scott Lithgow, saying that the Government were prepared to wipe the slate clean and stand the cost of redundancies. It might be possible for Humber Graving Dock to be given the same facility. If there is public

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  funding to assist with redundancy payments to shipyard workers elsewhere, why cannot that assistance be given in my constituency, to Humber Graving Dock?
  There should be equal treatment. No subsidies should be paid to any ship repairing firm, or the slate should not be wiped clean anywhere in the country. Alternatively, subsidies should be given to companies such as Scott Lithgow and Tyne Shiprepairers, as well as to Humber Graving Dock.
  I am sorry to have aroused passions in Opposition Members, but it must be said that there is blame on the union side at Humber Graving Dock. The sooner the unions give a public commitment that they acknowledge that a massive change in working practices must take place, the sooner there will be an incentive to Seaforth Welding seriously to consider taking over part of Humber Graving Dock. If negotiations are successful, there will be only a certain number of jobs. We should be under no illusion that Seaforth Welding will be able to accommodate all the 500 employees in the company. Let us not suggest that Seaforth Welding, if it can take over the present company, will take over responsibility for all the work force.
  The Government can assist. The Minister of State and the Under-Secretary know the details and what is at stake. I hope that they will be able to give specific answers to my two questions about this company in my constituency.
  Mr. Nicholas Brown: On a point of order, Mr. Deputy Speaker. I urge those who take the record of our proceedings to make absolutely sure that there is no more confusion between Mr. N. Brown and Mr. M. Brown. I should not like any of the remarks made by the hon. Member for Brigg and Cleethorpes (Mr. Brown) to be attributed to me.
  Mr. Deputy Speaker (Mr. Harold Walker): I feel sure that the Official Report will be as accurate as it always is.
  7.4 pm
  Mr. Gordon A. T. Bagier: I congratulate the hon. Member for Brigg and Cleethorpes (Mr. Brown) on restoring the debate to the level it reached when the Secretary of State sat down. The hon. Gentleman is clearly a candidate for entry into the league of those who are described in various parts of the House, and elsewhere, by names that I, as a gentlemen, would not use. I hope the work force in the hon. Gentleman's constituency, which the hon. Gentleman has been knocking about strongly, will take due note of what the hon. Gentleman said about it at the next general election.
  I am more concerned to turn the debate to a consideration of the industry's future, and the effect on the shipbuilding areas if there is no future in the industry.
  I sympathised much more with the hon. Member for Boothferry (Sir P. Bryan) when he referred to the high unemployment in his constituency. Although it is a relatively small figure, his constituency is badly hit. It was significant that there was not one word of sympathy from the Secretary of State when he talked about the industry. He talked about the social consequences, but there was no question of him sympathising with those affected.
  In Sunderland, which is heavily dependent on merchant shipbuilding, unemployment varies from 41 per cent. To
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  33 per cent. If the shipyards in Sunderland close, we shall be in serious difficulty. That is why I should like to ask where the Government are going. They owe the House a much tighter explanation than they have given up to now.
  The Secretary of State made great play of the motion and amendment on the Order Paper. He was selective when he quoted from our motion and the Government amendment. I recommend him to read at least the first few lines of our motion:
  "That this House, recognising the importance to the United Kingdom economy of the maintenance of a strong merchant, naval and offshore shipbuilding industry".
  That is important, and it is what we are interested in.
  During the general election all the candidates received a questionnaire. In the introduction we were told:
  "Our merchant fleet has halved during the last seven years from 1,614 ships to under 900. Three ships a week are now being laid up or sold. If this continues there will be no British Merchant Fleet by 1999."
  That was from the British Maritime League. Those people describe themselves as non-party-political. However, they are concerned about our maritime fleet.
  In today's Lloyd's List, there is a strong letter headed:
  "Govt turns deaf ear to pleas for fleet support".
  The letter states:
  "by allowing British operators to flag out their vessels the Govt has been aiding and abetting the decline of the merchant navy; by allowing this, the overall position in respect of bad crewing and safety standards will be exacerbated."
  The fleet has declined by that tremendous amount.
  The British Maritime League stated:
  "Our fishing fleet has been decimated."
  I do not have to tell our colleagues from Grimsby and elsewhere, even the hon. Member for Brigg and Cleethorpes (Mr. Brown), that the fishing fleet has been decimated. The circular goes on:
  "Our shipbuilding and marine equipment industry is going through the worst slump in its history. British Shipbuilders alone has reduced its manpower by 55 per cent.—24,000 people—and plans to reduce it by a further 6,000 in the near future."
  The circular also states:
  "The Royal Navy and its support services have been steadily weakened to the point where their ability to carry out their role effectively is in doubt."
  I wonder whether the hon. Member for Brigg and Cleethorpes or the Secretary of State replied to the circular from the British Maritime League and how it fits in with what they are doing now.
  The Secretary of State let the cat out of the bag towards the end of his speech. He did not refer much to the excellent speech by my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore). He said that he would support the part of British Shipbuilders' corporate plan to transfer the warship building yards to the private sector. He said that that would leave us with the difficult job of looking after the merchant yards. I am interested in the merchant yards in Sunderland and elsewhere. I believe that the Government are interested only in handing them over to private enterprise.
  Will the Minister tell us what he thinks will be the future structure of the merchant shipbuilding capacity? Does he believe that it will be modernised, then privatised and left to get on with the job? The Government amendment states that the House
  "endorses the Government's policy of returning as much as possible of the industry to the private sector".
  The Government believe that that is a panacea. We in Sunderland have good reason to remember what has happened in the private sector, as my hon. Friend the Member for South Shields (Dr. Clark) said.

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  Sunderland Shipbuilders, one of the most effective yards in Britain, nearly went to the ground because it was part of the Court Line empire. That profitable shipyard almost went under the receiver's hammer. The Secretary of State made a snide remark about Mr. Tony Benn. I would be the last to be accused of being a great supporter of Mr. Benn, but I must say that when the Sunderland yard appeared to be about to close, Mr. Benn, as the responsible Minister, agreed to take it under public ownership as a going concern. If he had not done that orders would have been lost. He showed a concern for the work force that is lacking in this Government.
  A delegation of Tyneside shipyard workers visited the House today and expressed deep concern about their future. One shop steward told me that at a quarter to four yesterday the nationalised firm of Sunderland Forge was told that it would be sold—just like that, without any consultation. The work force was neither considered nor consulted. A draught of fear ran through that factory because the workers did not know what would happen to them. They should have been consulted; that is open government. Or are the Government frightened to admit what the future might be? One of the shop stewards hit the nail on the head when he said, "I cannot understand why it is being privatised when it is profitable." That is the tragedy — it is being privatised because it made the mistake of being profitable. If it had been losing money, it would have been a different story. The Government want to get their sticky hands on a profitable section of the shipbuilding industry and its ancillary services. That is why they want the warship section.
  Even at this late stage, I appeal to the Government to show some conscience about what is happening to the societies that depend on the shipbuilding industry. They should not only ask themselves whether Trafalgar House or some other private concern will invest their brass in the industry, because those whom we represent have invested their lives in the industry. The country owes them something for that.
  It is little short of disgraceful for an island nation even to think of reducing its shipbuilding capacity and its merchant fleet to the extent that they are being reduced under this Government. I hope that when the Minister replies he will explain how the Government reached the conclusion that reducing shipbuilding capacity by knocking the blazes out of it has some patriotic effect on an island nation.
  As my hon. Friend the Member from Sunderland, North (Mr. Clay) has said, I am an optimist in expecting some finer feelings from the Government. I agree that I did not expect that from the Secretary of State, but I have not yet given up hope for the Minister of State. I see that I have raised a smile on his face.
  The Opposition are concerned about the shipbuilding industry. We believe that Britain needs it in this great competitive world. The Government lecture us on how the lads should be competitive. The Financial Times article on the demarcation dispute shortly before Christmas stated:
  "Any suggestion that the primary cause of losses in the industry is rigid demarcation and unproductive labour should be treated with considerable scepticism."
  The article was right. We might discuss the difficulties of management and so on, but let us at least give credit to the industry and its unions. There have been massive changes in working practices and the workers have done their utmost to help put the industry back on course.
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  What do the Government really want? They know who our main competitors are, and South Korea is one. At a recent Select Committee hearing Mr. Atkinson said about the position in Korea:
  "Of course, their operations are totally uncommercial and are being funded by the Government."
  Korea is demanding a large share of the shipbuilding industry. It has new technology and low wages. A recent report in the Sunday Times about Korean shipbuilding stated:
  "Part of the success comes from cheap labour. Most shipyard workers put in 10 hours a day, six days a week and are not averse to additional early morning, late night or Sunday overtime. Wages are still only about one third of their Japanese counterparts, strikes are illegal and unions are mostly formed by management."
  Is that what the Government want? If they examine their consciences they will admit that they do not want strong trade unions; they do not want people to have a decent standard of living. The Opposition will not stand for that approach to our great industry.
  The Opposition will press the motion. We know that we will be defeated in the vote, but we will win the debate. We always win the debate, and there is no shadow of doubt about that. When Conservative Members go through the Lobby tonight, I hope that they will have a social conscience about the work force and communities that will be affected by the Government's proposals.
  7.16 pm
  Mr. Albert McQuarrie: As usual, the Opposition seek to lay the blame for the shipbuilding crisis on this Government—
  Mr. Roland Boyes: Exactly. The hon. Gentleman has made his point and should now sit down.
  Mr. McQuarrie: The hon. Gentleman, in his usual manner, addresses the House from a sedentary position. If he wants to make a speech, he should attempt to catch your eye, Mr. Deputy Speaker. I hope that we will have no more of these interventions in such a serious debate. The hon. Gentleman is becoming famous for them.
  Since the Government were elected, their intention has always been to maintain the shipbuilding industry. They have stood by that commitment, but it has been a one-sided affair. That has been obvious since the prolonged parliamentary struggle in 1977 over the Aircraft and Shipbuilding Industries Act. The Opposition must accept that the greatest problem has been the rapid decline of shipbuilding throughout Europe during the 1950s and 1960s. Our share of the world market has fallen to only 3 per cent. The collapse forced British Shipbuilders to come to the Government to ask for approval of further loan facilities. When the 1977 Act was passed, the loan was fixed by the then Government at £200 million. That was increased in stages to £800 million, and by July 1983 the Government were forced to increase the loan to £1,000 million. By the end of 1983 it had to be further increased to £1,200 million.
  Against that background, British Shipbuilders was suffering from mounting losses each year. In 1982–83, it lost £117 million. That was an increase of 600 per cent and far in excess of its agreed loss limit. That is the financial side of the story. The Government can be justly proud of their financial commitment to the industry. However, the

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  story of the losses is a sorry tale, and both management and work force in British Shipbuilders should take heed of it.
  British Shipbuilders, being acutely aware of the crisis in many of the yards in the group, produced a survival plan. The three main targets in the survival plan were to cut costs, boost production and deliver on time. It has been said today—no doubt it will be said again—that the records of many of the yards in meeting these targets was abysmal. Much unnecessary overtime was being worked, there was no increase in production, the need for flexibility was being ignored by the workforce and management seemed to have no grasp of the critical importance of the fact that overheads and losses often accounted for as much as 50 per cent. of the total cost of an order. More than half the working days were being lost—that is suicidal for any business—and absenteeism had reached alarming proportions. It does not take much intelligence to appreciate that together, those factors were responsible for enormous losses, and, more important—as the Secretary of State for Trade and Industry has said today—for a loss of confidence by the customer who had placed the order. That loss of confidence had reached a stage at which customers were excluding some of the yards from their tender lists.
  Companies must take action which will give customers the confidence to place further orders. In the case of the survival plan, it was vital for British Shipbuilders to demonstrate to the customers that it had the ability and the desire to meet programme dates on existing contracts. That was necessary in order to restore confidence. The company was aware that if it did not obtain general recognition that many improvements had been implemented in performance, it could not survive. It was made clear to both management and work force that such improvements were fundamental to success and that everyone in the industry must understand that survival was possible only if the matter was treated with the urgency that it deserved.
  Top and middle management—and, to be fair, some of the work force—accepted the survival plan. Some people at Scott Lithgow accepted it. However, that acceptance was thwarted by the national officers of the trade unions, who insisted that any deal on work practices would only be accepted if British Shipbuilders would guarantee the future of all the yards and work forces. How any trade union could ask any business to give such a guarantee is beyond comprehension. In addition, the offer by British Shipbuilders of an increase of £7 a week in basic pay in return for acceptance of the survival plan was not accepted. The work force also declined to accept major reforms of restrictive practices and demarcation lines within the yards, or the aim of British Shipbuilders to improve productivity to the level of the company's competitors in northern Europe and in the far eastern yards.
  The survival plan was rejected, with the result—as is well known—that the trade unions threatened a national strike if British Shipbuilders insisted on implementing it. Good reason prevailed when it became clear to the unions that British Shipbuilders had no intention of giving in to their demands and that some of the commercial yards might be closed permanently if the strike went ahead. I am glad to hear from hon. Members on both sides of the House
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  that further talks have produced agreement, after minor amendments by both parties, and that the survival plan is now being actively considered by unions and management in the various yards.
  Without doubt, there is still a serious problem. Orders are not coming forward in many of the yards, and the outlook is bleak. There is a total glut in shipping capacity, which means that new orders are not being placed. There is a glut of 40 per cent. in shipping capacity. In March 1983 some 91 million tonnes of shipping were lying idle. Competition from foreign yards is fierce, and at the end of November 1983 British Shipbuilders' order book was worth only an estimated £2,500 million, which included £1,800 million of defence work and only £500 million of merchant shipping.
  I sympathise with the hon. Member for Sunderland, South (Mr. Bagier), who said that as a merchant nation we should endeavour to maintain a higher proportion of merchant shipping. I was born in Greenock, and in my youth—
  Mr. George Foulkes: Lord Nelson.
  Mr. McQuarrie: As usual, there is a clown in the Chamber.
  I was born in Greenock, and I do not forget the many years in which the British shipbuilding industry was a shipbuilding industry.
  The picture is not all black. Provided that the management and work force of British Shipbuilders get the plan working, any further loss of job in real terms may be delayed.
  The Navy has recently announced the ordering of 12 new type 23 frigates over the next decade at £100 million each. The first orders are expected to be announced this year. We in Scotland hope that some of the orders will go to Scotland. Yarrow on the Clyde has designs on the orders, and perhaps some will go to Scott Lithgow.
  As my right hon. Friend mentioned, Hall Russell in Aberdeen has received an order from the Ministry of Defence to build three moorings and salvage vessels at £28 million. There are also high hopes that the Scott Lithgow yard will be saved from closure, although there are bound to be redundancies there in the first instance.
  A number of firms have expressed interest in Scott Lithgow. I intervened in the speech of the hon. Member for Glasgow, Hillhead (Mr. Jenkin) because he was referring specifically to Trafalgar House. The House should not lose sight of the fact that Trafalgar House is not the only firm interested. We who wish to see the restoration of that yard are delighted that more than one company is interested. Some of the other interested companies may have more expertise in shipbuilding than in rig construction. In the past few years, Scott Lithgow has developed into a rig construction yard rather than a shipbuilding yard. That is sad, because for over 50 years there was always a submarine in the dry dock.
  I am glad to know that the Prime Minister, the Secretary of State for Scotland and the Secretary of State for Trade and Industry are in active discussion with the interested firms. I am, however, surprised and disappointed by the comments of some trade union leaders who met my right hon. Friend yesterday and by the adverse comments by Labour and Liberal party spokesmen in the west of

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  Scotland, particularly those attributed in today's Glasgow Herald to Mrs. Helen Liddell and to Mr. Ross Finnie of the Liberal party.
  Scott Lithgow has no future under the management of British Shipbuilders. That yard has cost the taxpayer £160 million in losses since 1977. It accounted for £66 million of the £117 million which British Shipbuilders lost in 1982–83. Trade unions should be more than delighted to learn that anyone is interested in taking over the yard.
  Last week there was turmoil in the lower Clyde area when the yard was threatened with closure. Now that there is a possibility of a private firm taking over the management responsibility, the trade unions are reluctant to accept the plan and a deal which could save their members' jobs. Do they not realise that it could be the life saver which all at the yard desire? The Government have said, as my right hon. Friend the Secretary of State repeated today, that existing losses will be wiped out and that the cost of redundancy will be met by the Government. Whichever operator takes over the yard, it will take it over with a clean slate.
  In the discussions that I had with the joint shop stewards committee at Scott Lithgow last week, they told me that they would be happy to accept a private operator after full negotiations. I accept, as the hon. Member for Sunderland, South said, that there must be negotiations between management and work force if there is to be a happy relationship between them in any shipyard. The same applies to any commercial business. The shop stewards agreed that they would go into the private sector yet after Mr. Duncan McNeill met my right hon. Friend the Prime Minister yesterday he is reported as saying:
  "unless and until the Government laid its cards on the table by revealing the effects of privatisation, then privatisation 'was not an option'."
  Do they or do they not want the yard to stay open? I believe that the yard has a future. I have known it all my life and I know what it can do. British Shipbuilders has made a genuine effort to improve the yard's productivity—
  Dr. Godman: The hon. Gentleman mentioned a constituent of mine, Mr. Duncan McNeill. His commitment to Scott Lithgow's future is as strong as that shown tonight by the hon. Member for Banff and Buchan (Mr. McQuarrie). The remainder of the shop stewards committee, the work force and management feel the same. As a Greenockian, the hon. Gentleman should know that is true of the Greenock and Port Glasgow community.
  Mr. McQuarrie: I am proud to be a branch of the green oak tree. I accept what the hon. Member for Greenock and Port Glasgow (Dr. Godman) said about Mr. McNeill but, unfortunately, the statement attributed to him in the Glasgow Herald belies what he told me last week. I hope what the hon. Gentleman said is correct, because that is what I should like to hear.
  Mr. Bill Walker: My hon. Friend will remember that when we met the shop stewards there was no doubt that they were making no qualifications about who should own the yard or what the future was. They were interested in keeping the yard open.
  Mr. McQuarrie: I am grateful to my hon. Friend for making that point. In an effort to improve the yard's productivity, British Shipbuilders engaged a Dutchman, Mr. Kooymans, who is an expert at rig construction. I
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  should like to pay a special tribute to him for the considerable improvement he has made in the yard's productivity. The steps he took have had a considerable effect. I can give two examples of that. The first is in the steel section, where productivity has been increased by 30 per cent. and, the second in the welding section where, with the use of semi-automatic equipment, production has increased by 100 per cent.
  Mr. Kooymans has gained the respect of management and the work force. He has stated that if the work force and management accept flexibility, Scott Lithgow can be put into profit very shortly.
  I take issue with the right hon. Member for, Hillhead who was plainly unaware that some of the present management had only been temporarily seconded to the yard. They cannot hope to be retained. There must be new management the right hon. Gentleman admitted, when he was challenged by one of my hon. Friends, that new management, such as Sir Michael Edwardes, could make a success of the firm. There is no reason why any firm that takes it over should not make a success of it.
  The present management has also played a part in reducing costs. Overtime, which cost £7·5 million last year with no great increase in productivity, has been cut by 75 per cent. Subcontracting has been cut by 65,000 per cent.—[[HON. MEMBERS: "What?"]—£65,000 and the work has been put back in the yard. Absenteeism, which was alarming, has been cut to single figures. It is estimated that those steps will save between £6 million and £7 million this year. That has been achieved by the full cooperation of management and work force.
  Would it not be better for national trade union leaders to leave the Scott Lithgow survival plan negotiations to the joint shop stewards committee which is actively engaged in the yard's day-to-day running? The local committee knows far more about what is going on at Scott Lithgow than the national leaders. I ask trade union leaders to act responsibly and let us get the yard going again. Let us have no more talk in the press from ill-informed people of a "sell-out." We are talking about people's jobs and the economy of the Inverclyde region. I hope that no one—trade unions, management or anyone else — will do anything to damage the present negotiations, or the blame for the devastation of the lower Clyde will be laid at their feet.
  We want a strong, viable shipbuilding industry. It failed miserably under nationalisation; it is now time to put it right by allowing the private sector to run it with the good will of the work force and management. The Government's commitment to shipbuilding will continue to be implemented only so long as the trade unions and the Labour and Liberal parties do nothing to damage what is now a must if Scott Lithgow is to be saved instead of being closed, with the resulting devastation of the Inverclyde region.
  7.37 pm
  Mr. Frank Field: I wish to return to the urgency that my hon. Friend the Member for Sunderland, South (Mr. Bagier) introduced to our proceedings. The sad and simple fact about today's debate is that we are trying to tell the Government that the spectre of closure is haunting many of our shipyard towns. Closure is a possibility in towns which have already been buffeted not just by the present recession but, long before this

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  Government were elected, by the economy. I do not wish to lay the blame solely on this Government, although things have speeded up since the 1979 election.
  I wish to remind the House of the sufferings endured by Birkenhead. In the first two years of the Government's life we lost 1,800 jobs. That was bad enough for a town which already had high unemployment, but since then job losses have speeded up until they are now out of control. The latest figures which the Government can give are for the mid-point of 1983. If we take the period from 1979 to 1983, we find that there have been more than 20,000 job losses in the Birkenhead area.
  Tonight we are discussing the hope which the Government, along with other parties, hold for the survival of shipbuilding in Britain and shipbuilding in Birkenhead. The closure of the yard in Birkenhead takes place against the decimation of much of our industrial base. In many streets in Birkenhead, unemployment is now well over 40 per cent. We are not discussing just a closure or the fact that 4,000 jobs might be lost. That is bad enough, given the number of jobs that have been lost over the last few years, but, as hon. Members who have defended the interests of Scott Lithgow have pointed out, we are equally concerned about the multiplication of job losses if subcontractors are forced to close their doors.
  Indeed, this issue is even more important than that. Cammell Laird is now the only major training centre remaining in the Merseyside area. If the Government hold out the prospect of an industrial renaissance—which will affect the north-west and Merseyside in particular—we shall need a skilled labour force if we are to benefit from it. This therefore is another reason why Cammell Laird must be saved.
  Apart from the immediate horror and cost of losing this shipyard in my constituency, and the subcontractors who will be dragged down by that decision, people generally will lose hope of participating in any industrial future at all.
  If anything major happens to Cammell Laird, the morale of the whole area will be affected—not just the morale of those who work in the yard or the industries and small firms that service it. The catechism, when speaking of the sacraments, teaches us the importance of outward visible signs. If the Government allow that yard to close, that will be an outward, visible sign of how much they care about our area.
  I hope that my short contribution has reintroduced the urgency surrounding this debate—the spectre of closure that haunts many shipyard workers and their families as well as workers in the supply industries.
  I do not apologise for speaking about Cammell Laird. Indeed, general principles can be drawn from my remarks which are relevant to the national debate. An important lesson can be drawn from Cammell Laird's record. It completed on time the Bayleaf order for the Royal Fleet Auxilliary. It built a type 42 frigate—the Liverpool—a year ahead of the target date set, and the sea trials revealed the excellent quality of workmanship. However, that yard is now facing problems, and it would be foolish if I tried to hide them from the House.
  At present the yard is building a jack-up rig for British Gas, and that is behind schedule. If the yard is to survive,
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  it must build it and deliver it on time by 26 April. However, it is no longer totally within the power of the workers or management to deliver on time.
  Mr. McQuarrie: Cammell Laird and Scott Lithgow are the two rig construction yards within British Shipbuilders. Does the hon. Gentleman accept that British Shipbuilders made a fundamental error by trying to transfer shipbuilders to rig construction in too short a time and without adequate training?
  Mr. Field: There is a danger that some hon. Members assume more expertise than they possess. It is easy to sound off. That sounds good, but it does not help to build ships or oil rigs on time. I am mindful of my limitations when I speak to people in the yard who possess far more skills than I do.
  As I was saying, it is no longer totally within our power to decide whether or not we build on time. There is the crucial question of outside suppliers. In building that jack-up rig, Cammell Laird is dependent on outside suppliers for vital parts, and if they do not deliver on time the yard will not be able to meet the deadline of 26 April.
  The Government also have a responsibility. I hope that the Minister of State, when replying. will not adopt the attitude of the Secretary of State;, otherwise, morale in that shipyard and others will hit rock bottom. So far, little encouragement or hope can be drawn from what the Government have said.
  Cammell Laird now has to jump three hurdles, the first of which is the new working procedures. From what they have said, it appears that some hon. Members think that those new procedures have been agreed. They have been agreed only at national level, and must still be agreed at local level.
  The Secretary of State taunted us by asking how many Labour Members had supported this new era for the shipbuilding industry. It comes strangely from a Government who do not think that politicians should participate in industrial relations to suggest that somehow the Opposition have a crucial role to play. However, we do have a role to play. We must stress publicly what I hope many of my hon. Friends have said privately to those who work in the shipyards—the importance of the successful outcome of those negotiations.
  Given the condition that the shipbuilding industry is now in, and given that they have had to deal with this Government, the trade union leaders have done extraordinarily well in the negotiations. They do not dispute the direction of change. There has been no dispute about that. Their concern has been about the pace of change. At the same time, they have tried to win wage increases for their members.
  It should be remembered that during the past 18 months those who work in the shipyards have had wage cuts, something which did not even occur in the 1930s. Wage rates were cut in the 1930s, but prices fell faster, and as a result real wages rose. Shipyard workers have suffered a period of wage cuts which no other group in British industry has had to bear. Against that background, the trade union leaders have been extraordinarily successful in boxing with the Government.
  I now come to the second hurdle. Cammell Laird must try to win the Sun Oil contract, and here the Government have responsibility. If they maintain the stance which they adopted last week on Scott Lithgow and are prepared to

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  see yards fail, I doubt whether any foreign company will be prepared to place an order with any British yard. Therefore, the Government must play their part in steadying the nerves of those who are able to place orders.
  Thirdly, I plead with the Government to stop playing politics with orders. Last July we were told that they were asking for tenders for two type 22 frigates. The bids had to be in by September. Classification meetings were held in November. By 18 November we were told that there would be a second round of re-submissions. On 18 January we were told that there would be a third round. Many shipyard workers feel that the Government are holding back on placing orders until they decide what they will do on the privatisation issue; in other words, that they will not look at those bids on their face value and make awards to the most competitive yards, but are trying to fit them into a longer-term privatisation strategy.
  I conclude by making three, I hope constructive, suggestions. First, I have never disputed that the Government have a mandate to privatise. I disagree with it, but I have never disputed it. If the Government hold to that policy now, it will be impossible for merchant shipbuilding to survive the next couple of years. I therefore appeal to the Government, not to drop their deeply held views, but not to play politics with the future of merchant shipbuilding during the next couple of years.
  Secondly, I make a plea in respect of a corporate plan. When I speak to my shop stewards, which I often do, I never attack the Government for not putting money into the industry. However, during the time that I have been in the House we have not once debated a corporate plan for the industry. My criticism is that, while the Government have come up with money, they have never come up with money linked to a long-term view of the industry, and it is that for which we are looking to the Government tonight.
  Thirdly, while I understand all the difficulties of trying to persuade the shippers in this country to place orders with British yards, cannot the Government at least begin discussions with them on the sort of terms which they might be able to offer to achieve that? If the Minister could weave those three points into his reply, at least we could go back to our shipyard workers and the towns we represent with some message of hope, for that message has been sadly lacking in what the Government have said so far.
  7.52 pm
  Mr. Neville Trotter: It is safe to say that the industry under discussion tonight, merchant shipbuilding in Britain, is in its worst condition ever and is trading against the worst market conditions of any industry in this country.
  We should remind ourselves that the plight is not unique to the industry in Britain. The same problems are arising in every western European country. One reads in the technical press of closures and rundowns in Sweden, Holland and Germany. In all western European countries there is the same crisis with the same difficult conditions and decisions having to be faced.
  Reference has been made to the tonnage of ships laid up. To put what has been said another way, about three years' production for all the world's shipyards is surplus and is laid up around the world. That perhaps enables us to understand the situation more clearly because one can get carried away when quoting millions of tonnes. It is
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  against those market conditions that we are discussing the future of British Shipbuilders. About one tenth of all world tonnage is surplus, and it is naturally extremely difficult to obtain any orders for new ships in those circumstances.
  I understand that in the current financial year, British Shipbuilders hopes to obtain orders for only eight merchant ships for the whole of the industry in this country. Austin and Pickersgill, alone, if it had the opportunity, probably could produce 14 ships in a year on the production line that it has established. Against that, I repeat, we are hoping to obtain orders for eight ships for the whole industry. That is the measure of the crisis and it justifies my earlier comment that, with the world market conditions as bad as they are for ships, no industry in the country faces such a serious situation.
  The speech of the right hon. Member for Bethnal Green and Stepney (Mr. Shore) seemed to be far away from the reality of the situation and contained no analysis of the market conditions, of the reasons for our present plight and of what is wrong with the industry. Four factors affect shipbuilding as they affect every other industry. They are the demand for the product, and I have commented on that; the competition; the efficiency of the industry; and the amount of Government support. I shall deal first with the last factor.
  In the last five years, Government have provided £1 billion for shipbuilding in Britain. That figure includes Harland and Wolff in Belfast, which does not come within the remit of British Shipbuilders or of the Department of Industry, being in Ulster. However, it is engaged in exactly the same industry — trying to build merchant ships—so it is fair to include in the equation the sum provided to that yard, just as it is to include the amounts provided to the yards on the Clyde, the Mersey and the Tyne. As I say, the total has been £1 billion in five years, which means a great measure of commitment by the Government to the industry.
  I understand that last year, Swan Hunter alone received £30 million of public money—in one yard on the Tyne in one year—which is equivalent to over £3,000 for each man in the yard. I am not prepared, therefore, to accept a criticism of the Government that they are not doing their part in dealing with this crisis.
  Returning to the question of demand, one can see why owners are—I was going to say "reluctant" to buy ships but I do not think that that is the word; they are refusing to buy ships. Freight rates are now lower than they were in 1976. In other words, if an owner has a ship available for charter, he will obtain for carrying freight less than he would have got seven years ago, despite the change in the value of money during that time. In real terms, the freight rate has more than halved in the past seven years. Against that background, one can hardly give a ship away.
  There is sometimes talk of solving the problem by a policy of scrap and build, but for many owners it is a policy of scrap and pay the creditors. Ships are now being scrapped when they are only seven years old, and then they are not being replaced. The fact that the Western merchant fleets are declining does not help. The reductions in the merchant fleets of the world are taking place mostly in the European countries—the British, French, West German, Norwegian and Italian merchant fleets — while the increases are occurring in places like China, Saudi Arabia and other emerging and developing countries.
  Mr. Douglas: And Taiwan.
  Mr. Trotter: For some reason, the figures for Taiwan are included among those for China. I do not know why that is so, but the hon. Gentleman is right to mention Taiwan.
  I should have liked to hear from the right hon. Member for Bethnal Green and Stepney his view of why British shipowners, when they order ships — and they are ordering very few at present, just a handful—do not place the orders in this country. I hope that that is an issue which the right hon. Gentleman has explored, although he did not enlighten us with the results of any inquiries that he had made.
  I have asked the question many times, but I regret to say that the answers that I receive are that there is too long a history of delay, with serious consequences for the shipowner if the ship is not delivered on time. I believe that we now have yards which are capable of good delivery. Unfortunately, reputations are a long time changing and I echo the suggestion by hon. Members that our shipowners should seek to buy their ships in this country if at all possible.
  In considering competition, figures have already been given for Korea in particular. That country is rapidly emerging as a major producer, and I have been warning the House about the situation since I was there in 1976. I have said, in previous debates from my observations there, that they work 73 hours a week for £60 a week. The workers in the shipyards are constructing ships with steel made in steelworks in which, no doubt, the wage rate is similar. Mr. Ken Douglas, a well-respected manager in the British industry who retired recently, has estimated that the Koreans have a £3 million advantage on the assembly of a ship with a £10 million sale price as a result of those wage figures alone, plus of course the further advantage from the low wage rates involved in the production of any of the parts of the ship that are made in their low-wage economy. It is true that they do not have trade unions there. Perhaps they will come in time, but that will not happen quickly. The people who work in the yards there, though badly off by our standards, are however far better off than their neighbours down the road and their brothers who are ploughing the fields with oxen. In an emerging country the people in the yards are basically pleased with their present standard of living, even if it is extremely bad by our standards. It is clear that that competition is here to stay; we must face it and tackle it. The only answer is increased productivity in our yards. A feature that sticks in my mind is the number of times that that has been said by myself and others in the House. The Geddes report way back in 1966 and the Booz-Allen report in 1972 both spelt out the need for change. Unfortunately, that change has not taken place to the extent necessary. We must all hope that it will happen at the 11th hour. Only if it does will the industry have a future. It is as simple as that.
  Apart from increasing productivity by changing working methods, a critical feature is the number of hours actually worked each day in the yards. I am not being offensive in saying that, but I have seen figures that show a lack of productive work when our people are within the gates of the yard. I am not blaming those individuals. I am blaming the attitude of all in the yard, the management as well as the men. We are deluding ourselves in thinking that adequate productivity can be achieved if, as is said by some management, only four and a half hours are being worked by some of the men in a yard. That is a reflection on management as much as on men. That cannot continue
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  in any yard that wants to stay open. The work force must understand that as much as we do. The message must be put over to them in language that they understand and accept. That can be done and it is beginning to be done in the better yards where management is facing the challenge.
  The yards have varied in their efficiency and in their reaction to change over the past few years. There have been deathbed repentances in some yards and in some instances repentance has perhaps come from the grave. Others, fortunately, have learnt the lesson, and I believe that we are now seeing significant improvements in some yards. Pay elsewhere in western Europe tends to be higher than in our yards because fewer working hours are required to build a ship.
  The House has not said nearly enough on that subject and I very much regret that one of the Select Committees has not taken the subject on board. Some extremely interesting statistics could be unearthed on the number of hours taken to build a standard type of ship in Britain compared with those needed by our competitors in western Europe to build an equivalent ship. That is the way to success in providing work and better pay for the workers in the yards. If we can match western Europe on the time it takes to build ships, we shall get the work and also be in a position to pay higher wages.
  We have seen a sad contraction in the number of yards and the people employed in them. The hon. Member for Birkenhead (Mr. Field) spelt out clearly the fear at Cammell Laird. I pray that that yard will survive. Clelands, one of the smaller shipyards, which is situated in my constituency, is closing. It is a small comfort that many of the men have been found jobs at Swan Hunter up the river, but for how long they will have that employment I do not know. We must hope that Swan Hunter will have sufficient work to keep them all in employment. It is a great relief to me and to us all on Tyneside that Swan Hunter is held in such high regard by the Royal Navy and has so much naval work. I am not being rude about Cammell Laird when I say that I was told by Swan Hunter that the delivery of a destroyer at Cammell Laird one year early meant a somewhat longer delivery time than that usually performed by Swan Hunter.
  It is difficult to decide which yards will have to go when there are no orders. I was most disappointed at the decision of British Shipbuilders to close Clelands. There has been no substantial investment in that yard for many years. It has the appearance of being old and is certainly not one of the yards with modern facilities. However, it had the great advantage of a very good labour force. I believe that it has not had a single late delivery in recent history. That is something that cannot be said of all the other yards. It has a good reputation with its customers, and it is liked by the Royal Navy. It has built a number of small naval auxiliaries. I very much regret that British Shipbuilders felt it necessary to close the yard and move whatever work might come along to other yards in other parts of its empire.
  I accept that with the few orders that are available, not all the small yards in the division could remain open. There is only enough work for half of them, but it is particularly unfortunate that a yard which has a good labour force and which has done its stuff and worked hard should close.
  Has the massive Government aid that has been given to the industry been used correctly? Have we obtained the

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  best value for money? I am not sure that we have, but I do not criticise my right hon. and hon. Friends on the Government Front Bench for that. The way in which the money has been spent has been dictated very much by the international restraints that are upon us, imposed by the EC and other international bodies of which we are members.
  It seems extraordinary that we are unable to use all the intervention fund that is available in the current year. It is extraordinary that about three quarters of it will not be used. By international agreement, we are allowed to subsidise the ship prices that we offer by only 15 per cent. or 17 per cent. That is not a large enough subsidy to obtain orders. We would have to subsidise by twice that extent if we were to obtain orders. What happens if there is no work for the yards and a huge loss? The taxpayer will have to meet the bill to pay for the men to do nothing. Surely the money would be better spent on reducing the prices we quote. That does not make sense. I do not believe that we have always made the best use of the taxpayer's money and the same is no doubt happening as much in Germany and every other shipbuilding country in western Europe. The artificial restraints in subsidy that are being imposed by the EC are ruining the industry in western Europe. I am one of those who favour our membership of the EC. It must be right to work with our colleagues over the Channel, but one hears of tortuous regulations that are being prepared to control the life and work of commercial travellers—that is the sort of thing upon which they set their heart in Brussels—while we have an industry that has been in a desperate, mortal crisis for five or six years, it is relevant to ask what Brussels has done. The answer is that it has done nothing constructive to help.
  What is the main feature of the problem? The answer is competition from the far east. Nothing has been done by Brussels to help any of the countries of the EC on that front. Brussels should play a major part in tackling the problem that the European industry faces. All governments should get together to try to use the money that is provided for their industries in a way that will provide orders, work and jobs. We want jobs, work and orders, and not subsidies to pay for empty berths in the yards. I hope that that will be taken on board by my right hon. and hon. Friends on the Government Front Bench. I hope that the Minister will comment on that when he replies.
  I am sure that merchant shipbuilding will continue in Britain. There will be shipbuilding on the Clyde, the Tyne, the Wear and Tees in future, but it will be very much less than hitherto and much less than we would all want. The British people accept not just that we have a maritime tradition but that we have a current maritime need. They accept that we must build merchant ships. I believe that the Government have accepted that and will continue to do so. I believe also that shipbuilding cannot continue without a partnership between the Government, management and men. The Government will have to continue to provide financial assistance in the foreseeable future. In my view, like all European Governments, they will have to do so for a long time. Management and men must work together to ensure that we achieve the best possible use of the yards.
  We now have an agreement at national level. The hon. Member for Birkenhead, who speaks with much knowledge of the industry, wisely reminded us that it is at national and not local level. I think that we shall see the implementation of the agreement locally in the weeks
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  ahead. We must do so if there is to be any future for shipbuilding in Britain. Quite clearly, the future lies in implementing the agreement.
  The industrial relations director of British Shipbuilders, Mr. Maurice Phelps, spelt the message out in Shipbuilding News. He wrote:
  "We have all heard it before but we have not done it. I regret we have not done more since nationalisation to improve performance. We urgently need to have the best working practices and the most effective manning levels. We must do all of this and we must do it now. If we do not, we are wasting our time and we can fold up this industry."
  I believe that that message is now understood in the industry and that there will be a future for it.
  8.10 pm
  Mr. Ron Brown: The Secretary of State mentioned Leith, and that is a curious honour if ever there was one. I do not know where the right hon. Gentleman has gone, but perhaps he is selling bikes to Nissan.
  Leith has a famous history, going back about five centuries, and certain milestones must be mentioned. In 1511 the Great Michael was built in Leith—a warship which never fired its guns in anger, and no doubt the English will appreciate that point. More recently, Leith pioneered new technology for shipbuilding. In 1832 the Sirius, which was built in Leith, was the first steam-driven paddle vessel to cross the Atlantic. In the 1880s Leith pioneered the development of steam vessels.
  Leith's record in two world wars is recognised world wide. Recently, German documents have revealed Leith's contribution to the war effort, and it is a good one. A leading shipbuilding authority said:
  "Leith has a heritage of enterprise, skill and craftmanship created and maintained in circumstances of which we should be extremely proud."
  What went wrong? The boom period disguised the fact that owners had milked the industry dry. They had taken the profits and run, ignoring the future. The bosses' philosophy was this: in the good times we do not have to invest; in the bad times we cannot afford to invest.
  What happened in 1977 when the shipbuilding industry was nationalised? Many owners were paid huge sums of money which they did not deserve. Had it been up to me, most of them would have been gaoled. I have said that before in the Chamber and I do not mind repeating it. Labour Governments have been far too generous in taking over neglected industries such as shipbuilding. The people who run those industries have been proved consistently to have thought about themselves, not about the national interest. They have repeatedly bled the country dry.
  The other day a Social Democratic party Member said that we must take stock, and he was right for once. We must face the reality. It is no use bemoaning the past. We know that the shipbuilding industry is suffering from unfair competition during a world slump. The former chairman of British Shipbuilders said:
  "European shipbuilding cannot compete with the false prices and financial packages being quoted by the Koreans and Japanese. Unless the EEC acts vigorously without delay the European shipbuilding will become extinct. We have to persuade the Government to do something."
  This Government have done very little.
  In 1972, shipbuilding represented 9·8 per cent. of United Kingdom investment. Today that investment is down to less than 1 per cent. About 60 per cent. of our imports and 60 per cent. of our exports are moved on

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  foreign ships. It is easy to use flags of convenience, and that is part of the explanation for that action. Many owners take advantage of cheap labour and exploit workers, whether they work on ships or in shipyards. Subsidies are a fact of life. The European Community depends on giving generous subsidies to farmers to over-produce. That is all right for Conservative Members who have broad acres. They can justify that action. It is all right if the subsidy helps them, and the Tories are good at helping themselves.
  The Government's most recent answer was to appoint Mr. Graham Day, the Canadian whiz kid, to take over British Shipbuilders. He has admitted that his main job is to slim down the industry—a type of Dr. Beeching. I am sure that that is bad medicine for the industry, as we have already seen. He has made it clear that he will do the Government's bidding and privatise some yards and close others. Last week, he decided to close three yards, including Henry Robb of Leith.
  Mr. Gerald Malone: Is the hon. Gentleman suggesting that the whole of British Shipbuilders can continue on the same basis as at present? Is he saying that it should be maintained at this level? Does he not accept that some slimming down is essential?
  Mr. Brown: There may be an argument for slimming down or reorganisation, but it is not justified in the case of Robbs. It was said that Robbs lacked orders. That was an artificial position. When the announcement date was declared last week, Robbs were in the running for Ministry of Defence work. Overnight the circumstances changed, and lo and behold I was told by the Minister of State for Defence Procurement that Robbs had overpriced itself. That was the first time the Minister had said that Robb's prices were too high. Clearly, the Minister cobbled together a story to try to justify Mr. Graham Day's actions.
  Robbs did not deal only with Ministry of Defence work. The people in Leith know that Robbs was in the running for three major orders, and perhaps for many others. It was in the running for the order from RASCO, with the Ras-Lano project in Libya. Today I saw the Libyan ambassador, who confirmed that Robbs was still in the running for that order. Unfortunately, Robbs no longer exists as a company. Robbs was also in the running for an order with the Suez Canal authority. In a few weeks' time it would have been considered for a ferry order with Cal-Mac, but that is not possible now. Robbs has been starved to death. It has been killed off—it did not die off—because of a decision by the Government and Mr. Graham Day, who has been appointed to do a job for Government.
  British Shipbuilders wants the best of both worlds. It wants orders and it wants to close a number of yards. It wants to slim down the industry by fair means or foul, and I am afraid that it will do so mostly by foul means. Ironically, the small ships sector is the growth area for shipbuilding. In that sector, Robbs had a chance, but it is not getting it. Officially the yard is closed but, ironically, work continues. The Ministry of Defence unfortunately forgot that there was a small research submarine in the yard. The work force has kept faith with the Ministry of Defence, while neither the Government nor Graham Day have kept faith with the work force. The men are doing the refit on that vessel as promised. They respect the customer and are showing that in practice. Having said that, I admit
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  that no work force in any yard is perfect. All groups of workers have made mistakes, but most mistakes were made by management in the boardrooms.
  If we want a new beginning, management must listen to the workers and take them into its confidence. When I first met Mr. Graham Day and put that point to him he agreed that changes were needed, but when I asked whether he would take the shop stewards into his confidence and let them meet potential customers he said that that was too radical. If that happened, the shop stewards would get to know what was going on. There was a great deal of horsetrading and double-dealing going on. Management do not want change because they reflect the attitude of the Government.
  If British Shipbuilders was not playing fair with employees, Mr. Graham Day, representing British Shipbuilders, has not played fair with Parliament. He did not have the courtesy to consult local Members of Parliament and to explain the position before announcing that a yard was to be closed or slimmed down, as the jargon goes. He may eventually see me because I have asked to see him, but it will be well after the closure announcement and he is unlikely to change his mind about Henry Robb.
  Shipbuilding needs a new deal all round. It is not a lame duck industry, although it would be a dead duck if the Conservatives had their way. With a little care the patient can be revived and recover, but the Conservatives will not give it that care because their attitude is selfish. They want to get the maximum out of it for themselves and maximum profits for their friends.
  Other Governments—even capitalist Governments—do not take such a reactionary attitude. They believe in intervening to help their industries, but the Conservatives have repeatedly made it clear that that is not the attitude here. The chaos faced by the industry under the Tories is clear proof that we need a Labour Government to sort out the mess. Public ownership must be turned into Socialist ownership involving the work force. Worker participation and workers' control is needed more than ever, because that is how real democracy will be achieved in this country, not by people like me getting up and talking about it. It is a matter of involvement. We need it in shipbuilding and in every aspect of the economy.
  Whatever is said and done today—the voting will no doubt go the Tory way—the struggle for Robbs will go on and we shall look after the submarine like the good workers that we are.
  8.23 pm
  Mr. Jonathan Sayeed: It is a shame that the hon. Member for Edinburgh, Leith (Mr. Brown) did not follow the lead of my hon. Friend the Member for Tynemouth (Mr. Trotter), who spoke so knowledgeably about the real problems that face the shipbuilding industry. The hon. Member for Leith did not even bother to analyse the problem, which is the first thing that we must do.
  The story of British shipbuilding is a deeply depressing one. Our market share in world shipbuilding fell from 40 per cent. in 1926 to 20 per cent. in 1956 and is now only 3 per cent. As the size of ships has increased, the number of vessels built in this country has decreased even faster. Employment in the industry is less than half the level of 1956 and the decline has been more marked in every year that has followed a very large pay rise.

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  Despite the decline in numbers, however, productivity is still below pre-nationalisation levels. Ten months ago, 91 tonnes of shipping were laid up and idle—64 per cent. more than the figure nine months previously—and there is little sign of that trend abating. In November 1983 this country had 1·8 billion tonnes in warship orders on its books but only 0·5 billion tonnes in merchant orders. World new orders declined from 14 billion tonnes to 11·3 billion tonnes in the five years following nationalisation. British Shipbuilders' share of the market declined even faster, from 2·3 per cent. in 1977 to 1·8 per cent. last year.
  Every aspect of this deeply gloomy litany makes one thing clear. There is no simple solution. There is no panacea, and things will not improve for a long time because world overcapacity is still 40 per cent.
  Mr. Michael Colvin: My hon. Friend may be aware that the laid-up tonnage in the world today almost exactly equals the total annual capacity of all the shipbuilding yards in the world working flat out. The average life of ships is 20 years but the average age of those actually in service is only 8½ years, so the future looks even gloomier for the shipbuilding industry.
  Mr. Sayeed: I am grateful to my hon. Friend. He echoes the point made by my hon. Friend the Member for Tynemouth. That is why I say that there is no easy solution.
  Although world capacity is bound to fall, the process will be very gradual. We must therefore seek methods at least partially to ameliorate the desperate problems of what is undoubtedly a major strategic industry in an island with the proud maritime tradition of ours. The greater the problems, the greater must be our determination to slow down and in some cases even to halt the decline of that industry.
  I therefore awaited some feasible, practicable suggestions from Her Majesty's loyal Opposition. In this, a debate of their own choosing, I hoped to hear fresh ideas, radical thoughts and evidence of real understanding of the practical and technical problems of the industry. I hoped to hear realistic proposals for halting the decline and stagnation. I hoped to hear how we could consolidate and rebuild the industry. But I was deeply disappointed. That is perhaps not surprising. An Opposition led by a man who in his first major speech as Leader of the Opposition castigated the Government for not spending £2 million to save £18,000 per year—a return of 0·9 per cent.—must suffer from exceptional economic illiteracy.
  Mr. Douglas: Stick to shipbuilding.
  Mr. Sayeed: It all comes down to the same thing, because in the end one has to make some money out of it some time.
  Mr. Douglas: How much are you making out of the Falklands?
  Mr. Sayeed: We have peace in the Falklands. That is what we have got out of that.
  I hoped to hear constructive ideas from the Opposition, but all that we heard were proposals for the continued nationalisation of British Shipbuilders, a nationalised shipping line and counter-productive and unworkable protectionism — the same old doctrinaire policies that have sapped this nation's wealth and assisted in its decline. Perhaps I expected too much from the Opposition parties, and perhaps I should suggest to my right hon. Friend that,
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  if he wants some practical suggestions, he should look to the Government party and to his hon. Friends, because we will give him some proposals that will assist him in his task.
  The demise of British shipbuilding is not inevitable. Steps are being taken, and further steps should be taken. None of these steps will be easy, and they will require a degree of flexibility and a willingness to accept change that regrettably has not characterised the industry in the past.
  Dr. Godman: On both sides.
  Mr. Sayeed: I fully agree—both management and workers.
  Dr. Godman: That is the most sensible thing the hon. Gentleman has said.
  Mr. Sayeed: British Shipbuilders is right, therefore, to pursue rationalisation, it is right to press for acceptance of its survival plan, and it is right to eradicate the bane of shipbuilding—counter-productive demarcation, and the restrictive practices which have gone on for so long.
  We on this side will offer every support for British Shipbuilders to become as competitive as north European yards. The Government are right, of course, to assist shipbuilding in this country by increasing warship orders and increasing the borrowing powers to £1·2 billion while the industry reorganises itself. It is right to press ahead with the injection of private capital to denationalise Vickers, Vosper Thornycroft and Yarrow warship yards. The Government are also right to encourage management buy-outs. I wish Readheads, Tyne and Wear Ship Repair and Grangemouth dockyard, management and workers, the best of luck. Indeed, it is those managements and workers who keep telling us that their firms would be viable institutions if they were allowed to get on with the job. I am pleased that we have given them the opportunity, and the right, to follow policies that have proved so successful in the National Freight Corporation. I wish these new capitalists the best of good fortune.
  None of us would deny that, although the measures that have been taken are welcome and essential, there remains a profound problem, the merchantmen yards. There is, I repeat, 40 per cent. overcapacity in world yards. Despite the intervention fund and improving world and United Kingdom trade, despite a better exchange rate that assists us and despite the new sense of realism of management and work force, those factors in themselves are not enough. We have heard what is happening in Austin and Pickersgill, at Govan, at Smiths dock, at Ferguson Aisla and at Hall Russell and the rest, and it is deeply worrying, because all these merchant yards are in very deep plight. Despite the Government's sensible initiative, therefore, much more needs to be done to avert what is undoubtedly a catastrophe in merchant shipbuilding.
  I ask my right hon. Friend to consider policies that fall into two parts, the one fiscal and the other practical. I recommend, following the 1981 start-up scheme and the 1983 business expansion scheme, that the latter be widened to allow for vessels on charter, for, as my right hon. Friend no doubt knows, the present regulations exclude this type of trade from qualifying, although it is a high-risk trade and competing against highly subsidised foreign flags. I therefore ask my right hon. Friend to consider most expeditiously the proposals put forward by the General Council of British Shipping.
  Mr. Trotter: Does my hon. Friend agree that it is particularly galling that, in the North sea, where there is intense competition in the offshore supply vessel market from the Norwegians, many of those ships are subsidised by the sort of scheme that he suggests the Government should introduce?
  Mr. Sayeed: I am grateful to my hon. Friend. He makes an excellent point in amplification of the general point that I was making.
  On the practical side, I remain convinced that we need to encourage British shipowners to fly the British flag in ships manned by British crews and built in British yards. I am convinced that one of the ways we can do this is to consider the extension of the Scads-Arapaho-Reliant project. For those who are not aware of what is currently happening, this is a project to determine the feasibility of outfitting merchantmen in time of conflict with self-protection weapons systems, sea-to-air and sea-to-surface missile defences, or as helicopter control ships or auxiliary fixed-wing carriers, and to date the trials have been very successful. It is estimated that the cost of converting, outfitting and providing missile weapon systems for seven ships—of those seven ships, two are auxiliary fixed wing carriers, two helicopter control and operation vessels, one amphibious support ship and two landing and logistic craft — will be £170 million, a minuscule amount compared with how much it would cost for purpose-built vessels.
  I do not pretend they will be as good as purpose-built vessels, but I would encourage my right hon. Friend to discuss the project with the Secretary of State for Defence to ascertain whether it may be possible to get funds from the defence Vote to encourage owners to have British flag vessels built in British yards fitted for, but not with, a defence capability and able to be speedily converted—whether it be a ro-ro ship into an assault ship, a bulk carrier into a helicopter carrier, a container vessel into a logistic ship or a crude carrier into a fixed-wing aircraft carrier. All of these are practical. I understand that, providing the vessels are fitted with a deck strengthening system that does not inhibit their effective use as merchantmen and that they carry no armaments, such financial assistance would not contravene any treaty or international obligations that we have.
  There are other measures, small in themselves, but effective in their totality. I am certain that we need, as a nation and as community, to increase and to police the safety standards on board vessels. That includes the manning standards and the provision of equipment. By so doing and by ensuring that our partners in Europe do exactly the same, we shall keep out some pretty ratty, ropey and dangerous vessels and make sure there is a better chance of their being scrapped and other vessels being built. We need to encourage British shipping generally, and that could be done by reforming the pilotage situation and abolishing the docklabour scheme. By assisting British shipping, we will assist British shipbuilding.
  When the Opposition asked for the debate, we on this side hoped for some fresh thinking from Opposition Members. With few exceptions, the positive ideas, the practical ideas, the ideas that hold out any hope for the future, have come from this side of the House. I for one, and I am sure my right hon. and hon. Friends, will be voting against this sterile and threadbare motion standing in the Opposition's name.
  Mr. Deputy Speaker (Mr. Paul Dean): Order. The House will wish to know that the wind-up speeches are expected to begin at about 9.10 pm. As six hon. Members still hope to speak in the debate, brief speeches will be a great help to everybody.
  8.40 pm
  Mr. Bob Clay: When the Government's amendment appeared on the Order Paper the cat was out of the bag, because it became clear that the Government's policy was to privatise not only naval yards but, as Opposition Members have suspected for some time, every other part of the industry—if there is any left.
  The only thing to make up our minds about is whether the Government believe that there will be anything left for their privatising friends to get their greedy hands on. Apart from the quite hypocritical accusation that no positive suggestions have been made by Opposition Members, all that we have heard from Conservative Members is a continual misunderstanding, and in some cases quite vitriolic and vicious abuse, of the trade unions and workers involved in British Shipbuilders.
  If more shipyard workers listened to such debates and read the Official Report, and if more of them had been in the Strangers Gallery earlier today to listen to Conservative Members — and particularly to the Secretary of State, although his speech was not the only one of its kind—the chances of the new agreements being accepted at a local level would be in jeopardy. Shipyard workers are sick and tired of the hypocritical advice of, and frequent slanders by, Conservative Members about their working practices and about what they have, or have not put into the industry. I resent Conservative Members even talking about productivity. You do not talk about productivity when you know nothing about the industry, and have not talked to the families of those who suffered, even since nationalisation. Some of the demarcation disputes and restrictive practices that you talk about have saved the lives as well as the health of our workers—
  Mr. Deputy Speaker: Order. I do not think that the hon. Gentleman intends to accuse me of that.
  Mr. Clay: I apologise, Mr. Deputy Speaker. By "you" I meant "Conservative Members".
  My hon. Friend the Member for Sunderland, South (Mr. Bagier) referred to the shipbuilding industry in Korea. He spoke about the wage rates and asked whether that was what Conservative Members sought in Britain. He pointed out that there were no trade unions in Korea, that to strike there was a criminal offence and that strikers ended up in gaol. He rightly asked whether that was the vision that Conservative Members had of Britain's shipbuilding industry. It certainly seems to be.
  As Conservative Members take such offence to my remarks about productivity, it is worth mentioning that in Korea a survey was carried out in 1982 not by the United Nations or a Socialist organisation, but by the Korean Ministry of Labour. The survey found that out of 3,480,000 workers, 1,230 were killed that year at work, and another 18,300 lost an arm or leg, or were suffering a complete mental breakdown which was directly attributable to the nature of their work. That is 30 times, or more, the rate for manufacturing industry in Britain.

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  The hon. Member for Tynemouth (Mr. Trotter) offered us a brief respite, and the hope that there was some glimmer of understanding among Conservative Members when he referred to conditions in South Korea. I hope he agrees that we cannot ask British shipyard workers to compete in any way with such conditions. Hon. Member after hon. Member has confirmed that the competition comes from the far east and, in particular, from Korea. They should address themselves far more to the conditions that exist there. We shall never have, or even want to have, the sort of murderous productivity of those Korean yards.
  People ask what the solution is. In his analysis of what was wrong, the Secretary of State seemed to be in some difficulty. Half the time he refused to recognise that there was a world recession. Indeed, when he wanted to slander and condemn the record under nationalisation, he did not want to know that the industry had been operating in a world recession. However, when the finger was pointed at his Government's record, the only problem seemed to be the world recession, and no other explanation seemed possible.
  Whatever the problems, however severe the recession, and whatever is said about the fact that only eight merchant orders are expected this year for British yards, it might be useful if the Minister could explain how the Sanko Steamship Co. in Japan has put in 125 orders altogether during the past 12 months. I believe that 113 were placed last year and that there have already been another 12 this year. Obviously, given the nature of the Japanese conglomerates, that steamship company has substantial connections with the Japanese Government and the Japanese banking sector.
  Despite the world recession and the complete lack of demand, 14 companies in Japan, with more than that number of yards, have full order books and work until 1986 as a result of one order which was clearly placed as a result of Government intervention and inspiration. It is sustaining the whole of the Japanese merchant shipbuilding industry. As a crisis measure, why on earth cannot this Government do something similar, or insist that British Shipbuilders do something similar. The EEC's absurd non-interventionist, or negatively interventionist, strategies would make that difficult, as the hon. Member for Tynemouth mentioned, but why do we not say that the survival of our shipbuilding industry is more important than complying with EEC regulations and conventions with which other countries do not comply?
  Why do not we use some public money? I think that the hon. Member for Tynemouth was hinting that we should substantially increase the amount of money available for intervention. Earlier today the Secretary of State announced something that would probably involve £35 million of taxpayers' money.
  Mr. Trotter: I was suggesting, not that the intervention fund should be increased, but that it should be used. At present three quarters of it is not used because the rate of intervention is not sufficient to obtain the orders.
  Mr. Clay: I am grateful to the hon. Gentleman for that clarification. I thought I said that the percentage available had been increased. Like me, I think that the hon. Gentleman was suggesting that we should be talking about a subsidy of at least 35 per cent., if not 40 or 50 per cent. This afternoon the Secretary of State was enthusiastic
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  about that £35 million and was apparently happy to give it away to a Japanese company to create, initially, 400 or 500 jobs. If that plant does not come to Sunderland, may we please have the £35 million for something else? If that £35 million was used to subsidise 20 SD14s, and so brought down their price from £7·2 million to £5·5 million, those ships would be bought and would keep the yard going for the next two or three years with 1,000 more workers than at present. That is what we should be doing during the next two or three years. If only £200 million or £300 million of subsidy money was used in that way we could fill all Britain's merchant yards with orders, just as the Japanese have done.
  Instead, the Government are interested only in deliberately running down the industry. Scandalously, orders were turned away from Clelands to justify the closure of that yard. The Government are also deliberately running down the larger merchant yards so that they either have to close or are sold for a song to private buyers. The Government's strategy is to allow yards such as Austin and Pickersgill and the two Sunderland shipbuilders yards, which have useful facilites and assets to be sold to private buyers for a song.
  When the upturn comes that Graham Day keeps predicting, those private buyers will tell the workers that they can return to work on their terms. Those terms will look more and more like those of the South Korean industry. I bitterly resent the way in which privatisation has taken place. I object to the fact that the work force at Sunderland Forge was told late yesterday afternoon, without any time for discussion or consultation, that they would be disposed of—a charming term—by the end of the year. Sunderland Forge is in my constituency, and I resent the fact that the first I knew of that was when the local newspaper rang me and said that the shop stewards had told the paper about it. The management was denying it. Two hours later the managemet confirmed it. What a scandalous way to treat 400 people, many of whom had put their lives into that place, which made a profit last year. The Government seem to be obsessed with privatisation. That is the only policy they have. It will be nonsense if they proceed like this.
  I conclude by quoting someone whom I do not think could be accused of being a Socialist theoritician or ideologically motivated, Mr. J. P. Cashman, deputy secretary of Lloyd's Register. Speaking at a conference on shipbuilding organised by Tyne and Wear county council "Save Our Shipyards" campaign at the end of last year, he said:
  "Who must make the decisions which are necessary, to produce effective corrective measures? To my mind the solution, or part of it, no longer lies in the hands of the speculator or entrepreneur as in the heyday of private enterprise. I believe the fate of, certainly the direction taken by, world shipping in general will be decided on political grounds. Shipbuilding has proceeded too far along the road towards total state subsidy and control to survive indefinitely as an industry of private initiative and enterprise."
  That was said, not by a Socialist or by someone ideologically committed to nationalisation, but by someone who seems to understand more than anyone on the Government side of the House the reality in which we are operating.
  If the Government do not take heed and yards are allowed to close, in my constituency unemployment rates will rise. At present they are 31·2 per cent. in Red House, 38·9 per cent. in Downhill, 36·8 per cent. in Southwick,

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  41·3 per cent. in South Hylton and 53·5 per cent. in the East End. These are areas where the majority lives within a mile of the shipyards. Those rates will go up to 60 or 70 per cent. If the Government carry on with this policy, and if they allow shipbuilding communities to go under and unemployment rates in those areas to rise to 60, 70 and 80 per cent., it will be Conservative Members who will live to regret it.
  8.52 pm
  Mr. Michael Colvin: I always look for common ground in this place. Something said by the hon. Member for Sunderland, North (Mr. Clay) seemed to echo a cry which went out from both sides of the House—that is, for some sort of a new deal for British Shipbuilders. In the nine point productivity plan now agreed at national level, I believe we have that deal. I trust that he and other Opposition Members will be using their best endeavours to persuade yards in their constituencies to agree that productivity plan and to give British Shipbuilders the kiss of life that it so urgently needs.
  I should like to concentrate my brief remarks this evening on three aspects of the shipbuilding industry: first, state aid to the industry; secondly, the private shipbuilding and ship repairers' sector; and, thirdly, the Government's plans for privatisation and their effect on fair competition.
  There is no shortage of state aid to the industry in the United Kingdom. Since nationalisation shipbuilding has received approximately £1,000 million in grants and loans from the Exchequer. If British Shipbuilders had remained in the private sector, the companies would certainly have needed assistance, but they would also have had to face up to the need for rationalisation much sooner, and the cost to the Exchequer might well have been less.
  It has often been suggested that foreign shipbuilding competition benefits from unfair subsidies. That is not so. Details published by the Department of Trade and Industry show that although there is some variety as to the method of subsidy, the United Kingdom is not really out of line with other countries. Unfortunately, state aid in the United Kingdom, and in Europe as well, has been used over the years to cover up bad performance rather than to modernise. So where do we go from here?
  As hon. Members are aware, the EEC's directives on aid to shipbuilding were intended to stop competition between member states in the provision of aid. It is generally agreed that we need to look again at the nature of Common Market assistance and perhaps bring it more into line with what happens on the other side of the Iron Curtain in the Comecon countries.
  We need a balance between capital and operating aid, with help for capital investment on research and development and the introduction of computer-assisted design and manufacture. On the operating side a case can be made for the Community-wide home credit scheme which is now being discussed, albeit at the early stages. That could bring shipping and shipbuilding closer together, something stressed by the right hon. Member for Bethnal Green and Stepney (Mr. Shore). It would enable competition to take place within the Community and it would encourage intra-EEC trade in components. That is most important because shipbuilding is now largely an assembly industry.
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  We must work together within Europe to increase competitiveness and, it is hoped, completely reject any state supported system intended simply as a jobs preservation exercise, because that in the long run would destroy the industry once and for all. I certainly agree with my hon. Friend the Member for Tynemouth (Mr. Trotter) that the workings of the intervention fund need an urgent overhaul.
  No debate on shipbuilding would be complete without a mention of the private sector. When the industry was nationalised in 1977 a number of the smaller companies were left outside British Shipbuilders. Of these, 31 became members of the Ship Repairers and Shipbuilders Independent Association. That does not represent the whole of the private sector, but it is representative. About one third of these were shipbuilders and about two thirds ship repairers. Today exactly half of those companies have gone out of business. As we have frequently said on this side in previous debate, that has been due in no small part to unfair competition from British Shipbuilders. I appreciate that that has been acknowledged by my hon. Friend the Minister of State, who will be replying to the debate, but I wonder why the Government have done so little to rectify the situation.
  It could even be said that with the decision to privatise the ship repairing division of British Shipbuilders, the problem of unfair competition has grown. For example, Tyne Shiprepair Ltd. is being sold to a management buy-out which will save the 850 jobs. The British Shipbuilders Act 1983 has made that possible. How can those companies already in the private sector, who have managed to survive hitherto, compete with the sort of offers being made to the employees of Tyne Shiprepair, which seem to indicate a massive subsidy, if not directly from the Government, then from its parent, British Shipbuilders?
  I should like the Minister to explain how the new owners of Tyne Shiprepairers Ltd. can guarantee all the workers they employ 12 months work. There is considerable concern on this side of the House that the company may have been promised work on royal fleet auxiliaries; the refit of Sir Tristram has been mentioned. This is no more and no less than subsidised or rigged competition which will drive even more private companies out of business. Only this week the Humber Graving Dock announced 500 redundancies because of this very proposal by Tyne Shiprepairers.
  Royal Fleet Auxiliary work is extremely important to our ship repair companies, whether in the state or the private sectors. That is why there is considerable anxiety in the industry about the Ministry of Defence's proposal to commercialise the Gibraltar royal naval dockyard with a scheme that will cost the British taxpayer at least £28 million in capital and £14 million in Royal Fleet Auxiliary work over three years.
  Admittedly, the money can be made available to A and P Appledore, which bid successfully for the dockyard scheme, only when it manages to negotiate a new workers charter with the labour force. But as Mr. Joe Bassano and his Socialist and Labour party, which is based on the Transport and General Workers' Union, did so well in the Gibraltar general election last Thursday, it is highly unlikely that Appledores will succeed in driving the hard bargain that it will have to achieve to make the dockyard competitive in the face of competition from Algeciras, Cadiz and Malta. If it does not, the project will surely fail

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  either because Appledore does not get the money or because if the Government give way—I strongly hope that they will not—the workers will price themselves out of business.
  At the moment, those workers have parity with workers in the United Kingdom. That makes them at least 50 per cent. more expensive in labour terms than their Mediterranean competitors. Alas if the scheme is successful it could remove 10 per cent. of Royal Fleet Auxiliary work from British yards. At the moment that work is regarded as good bread and butter business.
  I remind the House that with no state support for independent ship repairing and only intervenion fund assistance for shipbuilding, the private sector has had to face the worst recession that the industries have ever known. They have also had to meet intense competition from the state — supported corporation and from overseas. The result has been major redundancies and closures following substantial losses which private enterprise cannot endure for long, unlike state-supported industries which are financed by Government-backed loans.
  The prospects for ship repairing in the United Kingdom show that there will be no increase in demand and that there will therefore be further contraction in the overall capacity if state-owned facilities are returned to the private sector. The independent shipbuilding industry has witnessed the transfer of one yard to state ownership and the closure of other yards because of the recession in shipbuilding. The survival of remaining yards with only intervention fund assistance is a tribute to their remarkable determination. I trust that the price of keeping British Shipbuilders afloat and privatising some of its companies will not be the elimination of companies that are already in the free enterprise sector.
  9.1 pm
  Dr. Norman A. Godman: I can tell the hon. Member for Banff and Buchan (Mr. McQuarrie) that I have every confidence in Mr. Duncan McNeill and his fellow shop stewards. Whoever organises and manages Scott Lithgow and the building of the Britoil rig will find a shop stewards committee that is receptive to the organisation of working practices. I should like the Secretary of State and the Minister to follow the honourable initiative of the hon. Member for Banff and Buchan who visited my constituency. I should like Ministers to speak to the management and work force at Scott Lithgow.
  I can also tell this House, Trafalgar House and every other house in Britain that my major concern since becoming the Member of Parliament for Greenock and Port Glasgow has been to ensure the completion of the Britoil rig at Scott Lithgow. That is still my prime objective. As a Socialist I believe that the best way forward is to renegotiate the Britoil contract with Government support. If such a renegotiation were accomplished, Scott Lithgow could go from strength to strength.
  If today's newspapers are to be believed it would appear that the Prime Minister has acknowledged the social effects of closure at Scott Lithgow. I believe that the right hon. Lady has said that they would be devastating. In reply to my question about the follow-on effect of a closure at
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  Scott Lithgow, the Scottish Office in the shape of the Under-Secretary of State for Scotland suggested that if Scott Lithgow were to close another 3,000 jobs would be lost in industries that supply it with goods and services.
  I am not an uncritical reader of newspapers, but I am pleased that it would appear that the Prime Minister believes that if the management and work force at Scott Lithgow can put a good performance behind them, albeit under new ownership, that could lay the foundation for a successful future for the yard. Such observations stand in sharp contrast to the unpleasant denigration of management and work force that has been indulged in by Ministers and by members of the board of British Shipbuilders. My concern is for the completion of the Britoil rig and the retention on the lower Clyde of as many jobs as is humanly possible.
  However, major questions must still be answered. No one has offered an adequate explanation of how privatisation of Scott Lithgow will safeguard 4,000 jobs. It is my objective to save as many jobs as possible. What will happen if the animated attempt to sell off the yard falls through? There should be a public inquiry into this sorry affair. Failing an inquiry, Parliament should subject the issue to another form of critical examination.
  What is the position of Mr. Graham Day and his board? What is their collective view on the offshore engineering industry? A recent brochure produced by British Shipbuilders offshore division has on its front cover a picture of a semi-submersible structure built by Scott Lithgow. Inside the brochure, we find the statement:
  "An impressive track record has also been established in work for the offshore oil industry, the specialist companies in the Offshore Division having constructed heavy-duty semi-submersibles and DP"—
  that is dynamic positioning—
  "drillships … The formation of the Offhore Division has enabled the highly-specialised knowledge required to meet the changing needs of the industry, as it develops into deeper and harsher waters, to be concentrated in two major production facilities, Cammell Laird Shipbuilders Ltd. and Scott Lithgow Ltd."
  What has happened to that commitment to Scott Lithgow? There is a wide gap between the appearance and the reality of British Shipbuilders' commitment to this vital industry.
  I have said before, and others, including the Minister of State, Department of Energy have said that activity in the North sea and elsewhere will increase this year. The offshore oil and gas industries are in a very buoyant and active phase.
  Why, with a bright future being predicted for the oil and gas industries and the construction yards, does British Shipbuilders appear unwilling to approach the Government for help? Why are the Government willing to cover Scott Lithgow's losses by giving money to a privately owned yard, but not to British Shipbuilders? Why is that assistance denied to British Shipbuilders? Part of the answer may be in British Shipbuilders' reluctance to ask for help.
  There are further questions to be answered, but I am well aware that time is racing on. The recent developments surrounding Scott Lithgow represent something of a trial — that may sound absurd to some Conservative Members — for the badly maligned management and work force of Scott Lithgow, and the people of Scotland. Some, however, seem willing to put their trust in the work force. Trafalgar House is not the only company with an

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  interest in Scott Lithgow, and British Shipbuilders has said that one of the company's most valuable assets is the skill and expertise of the work force.
  The Scottish people, with vigorous help from newspapers such as the Daily Record, the Glasgow Herald, the Evening Times in Glasgow and, of course that illustrious journal the Greenock Evening Telegraph, have helped to influence thinking on Scott Lithgow. A change has taken place in the public's perception of Scott Lithgow.
  The Glasgow Herald states:
  "For the moment we can take stock of progress so far and conclude that Scotland is ahead in the fight for Scott Lithgow."
  However the question remains concerning British Shipbuilders' seeming reluctance to engage as comprehensively as it could in the offshore construction industry. There are a number of questions surrounding the negotiations. I saw that the Minister shook his head when an article from the Daily Telegraph was quoted, about submarine work being given to a privatised Scott Lithgow.
  My primary objective since I became a Member of the House has been that that rig, the most advanced of its kind in the world, should be built on the lower Clyde. Allied to that objective, I wish to see as much retention of a highly skilled work force as is humanly possible. I believe that with the right encouragement from the Government, the rest of us and the trade union movement —there have been mistakes on both sides in the past—and with changing public perception and the willingness of the shop stewards and the management to negotiate a workable working agreement, Scott Lithgow has a healthy future.
  9.11 pm
  Mr. Don Dixon: The only reason why I am winding up for the Oppositon is that, unfortunately, my hon. Friend the Member for Falkirk, East (Mr. Ewing) is ill. I shall try to emulate the speech that he would have made.
  I was more than pleased by the speech of my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore). When he was first appointed Secretary of State for Trade and was in charge of shipbuilding, I had my reservations. However, Mark Twain said that when he was 16 he thought his father was a fool. By the time he was 21 he was amazed how much his father had learnt in those short years.
  I was disappointed, if not surprised, at the speech of the Secretary of State for Trade and Industry. The more I listened to him, the more I was convinced that the person was right who said that if the Prime Minister sacked him she would qualify for a Queen's award to industry.
  Since 1979 we have had several debates on the shipbuilding industry. Unfortunately, each one has been when redundancies have been about to occur. It is the same today. I have been accused of being emotional while speaking about the shipbuilding industry. I make no apologies for that, having worked in the industry all my working life. I have lived since I was born, and still live, among the families of shipyard workers. I know the hardships which they have had to face over the years. I know the hardships which my grandparents and my father faced. It annoys me at times when I hear Conservative Members pontificating about what the workmen should
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  do, when some of them have never seen a pair of overalls, let alone worn a pair. We have heard such speeches in the debate.
  There was never a positive policy for shipbuilding until the industry was nationalised in 1977. It was taken out of the hands of private enterprise, which had lost the initiative in world markets. The industry is a classic example of the failure of competitive capitalism to create proper conditions for the workers, or the industry to benefit the economy. To hear some of the speeches made in the debate, one would think that British shipbuilding had been nationalised since the beginning of the century. It was in private hands until it was nationalised in 1977. As my right hon. Friend the Member for Bethnal Green and Stepney said, if it had not been nationalised in 1977, and if the Labour Government had not contracted the Polish order, there would have been no shipbuilding industry.
  People talk about restrictive practices, but what they are talking about is trained men doing jobs which they are capable of doing. When we talk about demarcation, we are talking about demarcation created by the employers, not by the trade unions or the tradesmen. If the management cannot organise the electricians, plumbers and boilermakers, it is about time that the management was changed. It is not a matter of demarcation.
  The Government amendment refers to privatisation. During all the years that I worked in the industry it was in private hands. The shipbuilding and ship repair industries were a jungle until nationalisation in 1977. It would turn the clock back to put the industries into private hands.
  We should treat like with like when we talk about productivity. When the shipyards were in private hands, they were starved of investment, year after year. The Paton report of 1962, the Geddes report of 1966 and the Booz-Allen report of 1972 all shared a common theme — the lack of investment in the British shipbuilding industry. After the war the industry had full order books, but the owners would not invest a halfpenny. It is not so long since the men in the yards were pushing shell plates around on wooden bogies. The central problem is investment. Let us consider the equipment of the Japanese and Korean shipyards. Japan invested £600 million last year in its seven shipyards, and South Korea has invested £400 million year after year.
  Too much of the recent publicity about the problems of British Shipbuilders has focused on productivity and delivery dates. The Prime Minister has accused parts of British Shipbuilders of dismal performance. The right hon. Lady and her Government should remember that it is not so long since they pinned a medal on one of the directors of Swan Hunter for the efforts of the 2,000 workers on the Tyne in getting the task force ready for the Falklands dispute.
  Many of my colleagues were upset—and rightly so—when the Secretary of State for Scotland compared the record of Britain's work force with that of the paddyfield labour force in Ayrshire. All the publicity has missed the major problem, which is the massive slump in orders being placed throughout the world. Worldwide demands have fallen from 35 million tonnes in 1975 to 14 million tonnes, and there appears to be little prospect of recovery in the immediate future. A major crisis is building up in the British yards because of the lack of orders.

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  Without new orders, the last delivery date for Govan shipyard is April 1984; for Smiths docks, June 1984; and for Austin and Pickersgill, December 1984. The engine build capacity is also in serious trouble, as was mentioned by my hon. Friends the Members for Sunderland, North (Mr. Clay) and for Sunderland, South (Mr. Baiger). The Government must address themselves to the workload crisis.
  The trade unions have co-operated with British Shipbuilders to raise productivity. According to the chairman of British Shipbuilders, the new agreement will raise productivity to a level on a par with that of northern European yards. It is a pity that the chairman did not show the concern expressed by the trade unions when the industry was threatened with a national strike on 6 January. Mr. Day went on holiday to Canada for three weeks and left the union negotiators to sort out the problems with a director. That is not the sort of behaviour that we expect from someone who is responsible for a vital industry.
  A great deal of nonsense is talked about high wages. A recent survey carried out by a trade union at a British Shipbuilders' establishment showed that 62 per cent. of the manual workers were in receipt of some form of state benefit. During the period when the shipyard workers fell from 3rd to 19th in the wages league, the members of the board looked after their money. The 1981 report showed that the 17 full-time and part-time members cost £215,000. In the 1982–83 report, the figure was £398,618 for the 14 part-time and full-time board members. In effect, the average payment for the board members of British Shipbuilders increased from £12,681 in 1980 to £28,472 in 1983—an increase of 128 per cent. At the same time the workers dropped from third place to 19th in the wages league.
  There is a view in certain parts of the House that the taxpayer would be better off if British Shipbuilders were allowed to disappear, in view of the losses that it is making. That view is factually wrong, and it displays, too, a callous disregard for the fate of the workers and their families. This year British Shipbuilders had a wages bill of about £500 million. As a consequence it paid to the Exchequer a total of £180 million in income tax and national insurance. British Shipbuilders stands to lose £120 million. That is a drain on the Exchequer, but in net terms the Exchequer is still £60 million better off than it would be if the industry were to die.
  If the industry did not exist, £280 million in exports would be lost. Sixty per cent. of the cost of a ship is for materials, and that is not accounted for by British Shipbuilders. Nearly all of that is supplied by United Kingdom families. If the industry did not exist, 30,000 people making steel, engines and other components would not be needed. They would no longer pay at least £100 million a year in income tax and national insurance.
  Those who say that money spent on the shipbuilding industry should be spent elsewhere are wrong. If the industry disappeared, the Exchequer would lose receipts of £280 million in order to save the £120 million which it is paying in subsidies at the moment. That is economics gone crazy. The taxpayer would not be better off; he would be worse off by £160 million. One must also take into account the cost of maintaining 90,000 people on the dole. It costs £6,000 a year to keep a shipyard worker out of work. It costs £6,000 to subsidise him in the present state of world shipping.
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  The Government, the media and the nation must stop being complacent about the disastrous situation in the industry. They must stop saying that it would be a blessing in disguise if the industry were to disappear. The situation is critical, not just for the workers, but for the future of the industrial base and for our ability to create exports and maintain social services.
  We want action to stop the lifeblood draining away from the industry. By October 1983, 30,000 jobs had been lost. In October 1983 British Shipbuilders announced another 2,069 redundancies. In January 1984 the rundown of Scott Lithgow was announced, with another 4,000 job losses. Last Wednesday a further 1,872 job losses were announced, with three yard closures—Clelands, Henry Robb and Goole.
  The hon. Member for Tynemouth (Mr. Trotter) and my hon. Friend the Member for Edinburgh, Leith (Mr. Brown) referred to Henry Robb. The Observer of 10 October 1983 said:
  "As attempts are made to avert a national strike in British Shipbuilders, three yards face closure — because of an unexplained hold-up in accepting £50 million worth of naval orders. Contracts for at least 14 ships are in the pipeline from the Ministry of Defence—and they seem tailor-made for the three small yards, Henry Robb at Leith, Clelands at Wallsend and Goole on Humberside. But BS has said that 1,500 workers face redundancy because of a lack of fresh orders at the yards which will run out of existing work within a few weeks. Despite renewed assurances from BS that work for the yards is being actively sought, it appears acceptance of the orders is being deliberately delayed to get the closures out of the way".
  I am convinced that British Shipbuilders decided to close Clelands last October. British Shipbuilders deliberately delayed placing the orders there. There was an ash carrier for the CEGB. British Shipbuilders had the letter of intent in November. The technical drawings were done, yet the order was transferred to another yard. I believe that if there were a national strike, Mr. Day would say that Clelands would not open its gates again.
  The Government's response has been inadequate. There is overcapacity in every country. Each country is taking measures to buy work. Prices offered by the Asian yards are 35 per cent. lower than those offered by British shipbuilders. In the Financial Times on 25 January there was an article about the problems faced by the French. It was reported that the French Government had decided to give the French shipbuilding industry an additional £290 million to £330 million in subsidy this year, and had blocked an order from a French shipping company for four ships from a Yugoslav shipyard.
  My hon. Friend the Member for Sunderland, South said that Japanese shipowners had placed orders for 113 cargo ships to keep the Japanese shipbuilding industry going. All kinds of attractive credit arrangements are being offered. Other countries are buying their way out of their problems. The Government are incapable of appreciating the point, or they do not care.
  How long will British Shipbuilders fight according to the Marquis of Queensberry rules when every other country is involved in all-in wrestling? The Government are like the little boy standing on the burning deck. They are pursuing a policy of privatising warship yards where there is Ministry of Defence work, but they have no policy for the others.
  A concerted policy of intervention is needed to protect the nation's vital interests. As my right hon. Friend the Member for Bethnal Green and Stepney said, we are an island nation dependent upon our maritime industry for our

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  survival and defence. We live on an island in a world which is two thirds covered by water. About 90 per cent. of the value of our trade is carried by ships. It is essential for us to have a shipping industry and the capability to build and maintain the ships.
  British shipowners such as Cunard and P and O and operators in the North sea must be persuaded to place orders in British yards. The Government have a range of carrots and sticks which they could use. Tax relief on ships built in non-EEC yards must be removed. Incentives must be offered to place work in British yards. Shipbuilding communities, the Exchequer and the taxpayer would benefit.
  There will be jobs on the Sun Oil contract for Cammell Laird and the BP advanced SWOP project, and the renewal of the QE2's engines is being discussed. Those jobs must be placed in British yards to keep them busy. Only then can the work force produce the high levels of efficiency which have been asked for by British Shipbuilders.
  The Government own British Shipbuilders. Britoil said that three quarters of the blame for the problems with its contract at Scott Lithgow was down to bad management. We have heard enough about blaming the work force for that. It is a problem which British Shipbuilders' owners must cure. The Government must stop making statements which undermine customer confidence in British Shipbuilders. The industry can and will deliver. It needs Government support and coherent policies to enable it to survive. Without that it cannot survive, whatever efforts are made by the dwindling work force.
  My right hon. Friend the Member for Bethnal Green and Stepney spoke about the social consequences of closures. There is a close relationship in shipbuilding communities between the working and living environment. There is a remarkably strong community spirit among shipbuilding workers. For example, a survey conducted not so many years ago showed that at the Swan Hunter Wallsend yard, 62 per cent. of the work force either lived in Wallsend or adjacent towns. The situation on Wearside is even more marked. A survey of the work force in Austin and Pickersgill showed that 37 per cent. lived within one mile of the yard and that only 5 per cent. lived more than five miles away.
  Some people say that Graham Day and his board are Shipbuilding Security reincarnated. Let me enlighten those hon. Members who do not know about Shipbuilding Security. That organisation was set up in the 1930s and comprised merchant bankers, shipowners and shipbuilders. At that time there was overcapacity and a world slump, and they went around the country, bought the shipyards, closed them down and sold the assets, with no worry about the social consequences.
  Those vultures came to Jarrow in 1934 and bought the Jarrow shipyard. It was subsequently closed and a 40-year embargo was placed on the building of ships. Afterwards, Ellen Wilkinson wrote a book called, "The Town that was Murdered: The Life Story of Jarrow". My father and grandfather were two of the 5,000 men who were thrown on the scrap heap in 1934. My grandfather never worked again. My father did, in 1939 when the ships were needed, and if he refused to work overtime he appeared before a tribunal and was fined. The ships were not needed in 1934
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  but they were needed in 1939. The same can be said of the Falklands campaign, when the workers were praised by the Prime Minister and some of her Cabinet colleagues.
  For a long time Tyne and Wear county council has conducted a "Save Our Shipyards" campaign. Had the Secretary of State for Industry and the Minister of State done as much as Michael Campbell and Jim Cousins— the leader and deputy leader of Tyne and Wear county council—the industry would not be in its present state. Tyne and Wear has tried in every way to attract orders for the shipbuilding industry. It is a pity that the Government do not take a leaf out of its book.
  Not so long ago P and O placed a £90 million order for one of the largest cruise liners ever to be built, and that went to Finland. When my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) wrote to the Prime Minister, she replied that that order could not be placed with British Shipbuilders because we did not have the finishing trades to carry it out. What nonsense. Joiners, electricians, plumbers and so on are out of work in the Tyne and Wear area.
  We require a relaxation of the financial limits and the maintenance of the intervention board at an adequate level. There must be incentives for British shipowners to have their ships built in British yards. We must maximise United Kingdom offshore orders for the North sea oil and gas industries. There must be long-term planning for public sector ordering, especially for naval vessels. We must introduce a scrap and build policy to upgrade British shipbuilding standards and to accelerate orders for new ships.
  Those are the things that the Government should do. They should not repeatedly blame the workers for the problems now faced by the shipbuilding industry. The Opposition are concerned about the industry. That is why my right hon. Friend the Leader of the Opposition will visit the Tyne on 27 February at the invitation of the GMBATU. He will speak to the shipbuilding workers, because he is more concerned than the Government about the plight of the industry and the shipbuilding communities.
  As an island race we depend on exports and imports for our survival. Therefore, it is indisputable that the main form of transport is by sea, and that means ships. Our ability to build those ships is of the utmost importance to our economic and strategic survival.
  Nobody doubts, on the defence side, that we should build vessels for our Navy. Everybody with knowledge of the industry agrees that merchant shipping, naval building, ship repairing and engine building are all part of the whole and that the condition of one affects the others. It would be absolute nonsense to sell off the warship yards and expect merchant shipbuilding to survive, and I hope that the Minister will say something positive in reply to the debate.
  Questions need to be answered about Tyne Shiprepairers. It was said that that yard had gone through a traumatic experience when it was nationalised. In fact, British ship repairers were not nationalised in 1977. The shipbuilding industry was nationalised and the ship repairing industry volunteered to be nationalised. The shop stewards at Tyne Shiprepairers have estimated that the entitlement under the shipbuilding redundancy scheme for the employees there totals £10·7 million. There has been

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  a £4·2 million buy-out. What has happened to the £6·5 million of redundancy money to which the 985 workers are entitled?
  May we be told how much the owners of Tyne Shiprepairers paid for that industry? Were the two directors who bought it out on British Shipbuilders' payroll? Are Abbott and Burns the only directors of Tyne Shiprepairers, or are there other directors who are still employed by British Shipbuilders with an interest in Tyne Shiprepairers? I hope that the Minister will answer those and other questions, and comment on the constructive suggestions that my right hon. and hon. Friends have made in the debate.
  9.37 pm
  The Minister of State, Department of Trade and Industry (Mr. Norman Lamont): I think that I am right in saying that this is the first time that the hon. Member for Jarrow (Mr. Dixon) has spoken from the Opposition Front Bench. I hope, therefore, that it is in order for me to congratulate him on his speech and his appearance there. He speaks with first-hand knowledge of this subject, as I know because he and I were members of the Standing Committee last year on the British Shipbuilders Bill, now an Act. We welcome the sincerity and expertise that he brings to debates on shipbuilding.
  I hope that the House will bear with me if, at the outset, though not at length, I refer to the international situation on shipbuilding because it is extremely important. Indeed, I was surprised that the right hon. Member for Bethnal Green and Stepney (Mr. Shore) did not press us rather more about the international regime and what was happening in the EC. It is important to place the matter in the international context because, as has been said time and again in the debate, this is an industry which worldwide is facing a massive crisis of over-capacity.
  We have seen not just one but two severe recessions within a decade in shipbuilding. We had scarcely got out of the first before we had the second. In addition, there has been added the problem of new emerging nations developing their own shipbuilding industries and selling ships at prices with which it is difficult for the developed countries to compete.
  The effect of this crisis, as I said to the right hon. Member for Bethnal Green and Stepney when I intervened in his speech, has been felt not just in Britain but throughout western Europe whose shipbuilding industries have contracted more than ours. Since 1975, employment in the shipbuilding industry in Europe has halved. Perhaps the right hon. Member for Bethnal Green and Stepney was seeing the crisis too much in a national and not enough of an international context.
  Mr. Frank Dobson rose—
  Mr. Lamont: I will give way shortly.
  A real question is being posed, and that is whether shipbuilding can survive in western Europe.
  Mr. Dobson rose—
  Mr. Lamont: I shall give way in a moment. I shall make my speech in my own way and then I shall allow the hon. Gentleman to intervene.
  The very fact that the question is being asked—"Can shipbuilding survive in western Europe?"—emphasises
  350
  that we must be as competitive as we can. That is why we must ensure that we match the best levels of productivity, certainly in Europe.
  Mr. Dobson: Why does the Minister think of shipbulding in an international context? Does he recall that when the Prime Minister went to China she launched a ship in Shanghai and asked what better she could do than launch a ship which had been built in China and financed by funds from Hong Kong? Does he think that she would have done better to launch a ship on the Tyne, the Wear, the Clyde or the Mersey?
  Mr. Lamont: The hon. Gentleman may remember also that at that time British Shipbuilders had rather extensive interests in China and was hoping to do some business by selling technology to China. The response to the international situation must be an international one. That is why the previous Labour Government accepted the principle that aid to the industry should be degressive. That is why they negotiated the fourth directive. The EC dimension—[Interruption.] Mr. Speaker, may I appeal to you for your protection?
  Mr. Speaker: I do not know what is going on.
  Mr. Dennis Skinner: The hon. Member for Wolverhampton, South-West (Mr. Budgen) was casting a slur upon Mark Thatcher. That is what was going on.
  Mr. Speaker: The Minister will now continue.
  Mr. Lamont: The previous Labour Government accepted the fourth directive and the principle that it is wrong to continue to have ever-growing subsidies that add to capacity, drive down ship prices and exacerbate the problem. That directive was succeeded by the fifth directive, which expires at the end of the year.
  I expected the right hon. Member for Bethnal Green and Stepney to ask what the Government see as the future for the EC regime after the expiry of the fifth directive. We have had many discussions with Commissioner Andriessen and the Commission, about the regime that might replace the existing fifth directive. We have tried to bring home to the Commission the reality and the seriousness of the lack of orders.
  It may interest Labour Members to know that given the present level of subsidy it is extremely difficult for yards in western Europe to get orders. We have drawn the commission's attention to that and we have said that, whatever the overall level of subsidy may be, we would like the intervention fund to be applied more flexibly. We have suggested that it might be applied so that there is a greater intensity of application of fund for particular orders. We should like to apply the intervention subsidy more flexibly.
  We cannot act alone; we must get the agreement of other countries. If other countries are not under the same pressure because they are more competitive than us, that underlines the need for us to reach, at the very least, the best standards of European competitiveness and productivity. In the meantime, while we are trying to advance the case in Europe, we have said that we are prepared to give help on a case-by-case basis to get orders. The House recognises that orders are extremely few and far between. The long-term aim must be, as it was with the previous Labour Government, to reduce aids and to approach a viable industry.

  351
  A number of hon. Members, espeically the hon. Member for Birkenhead (Mr. Field), have suggested that we should take a lead on behalf of the shipping industry, direct our attention to credit terms and ascertain whether there is anything that would encourage the shipping industry to place more orders in the United Kingdom. We are looking at that aspect all the time. On several occasions, I have put specific propositions to the General Council of British Shipping to ascertain whether alterations in our credit arrangements could encourage more orders to be placed within the United Kingdom. That is not something that has just happened recently. I have been trying for a considerable time to make progress in discussions with the industry.
  We cannot go down the road of compulsion. Shipping is an important industry employing 65,000 to 70,000 people, compared with 17,000 in merchant shipbuilding. If we could achieve an alteration that could help the industry, we would be keen to pursue that course. My hon. Friend the Member for Romsey and Waterside (Mr. Colvin) referred to an EC-wide home credit scheme, which is being discussed within the Commission. If that scheme develops, it might help the European industry. Our ideas must be consistent with that scheme.
  Not surprisingly, a large part of the debate has been taken up with the crisis at Scott Lithgow. Last week, I explained that British Shipbuilders had explained to us their figures showing that it was cheaper for British Shipbuilders to acquiesce in cancellation than to continue with the contract. I emphasise that renegotiation is not a matter just of altering the words in the contract but means putting more money into a contract under which there have already been huge losses. The commercial judgment of British Shipbuilders is that it does not wish to continue with this contract on which there have been losses of more than £40 million on a rig which is only one third completed.
  Much has been said by Conservative Members and much said in return about the statements on the record of Scott Lithgow. I shall not go over that again. The yard's financial performance cannot be denied, wherever the blame lies—it has not been good. I emphasise that I and my right hon. Friend the Secretary of State have never said that the position at Scott Lithgow is the fault of just the labour force. It is extremely difficult to come to a conclusion that management does more than carry a large part of the blame for its position. Having made that admission, I do not believe that it alters the conclusion. British Shipbuilders must be the best judge of its management resources, how they are best deployed — [HON. MEMBERS: "Who?"] British Shipbuilders, at the board level and its chairman, are the best judges of whether the position is retrievable. Building Shipbuilders believes that it would not be right and could be expensive to renegotiate.
  Last week, when I said that there was just a glimmer of hope and a possibility of a private takeover of the yard, great scepticism was expressed. Negotiations are taking place with live, breathing human beings. Trafalgar House is one of a number of parties with whom discussions are taking place. Hon. Members have expressed some scepticism about whether Trafalgar House could complete the order and whether is suitable for such a company to do so. Trafalgar House has a number of offshore interests. Its
  352
  subsidiaries include Cleveland Bridge and Sea Platform Constructors Ltd. Trafalgar House may have to buy expertise or form a partnership with other people, but that is a matter for it. It would not be interested in the contract and a deal with the yard unless it felt that there was something that it could develop.
  Dr. Godman: The Minister should spend more time talking about the future of Scott Lithgow rather than about his perception of its history. Does he intend to visit Greenock and Port Glasgow in the near future?
  Mr. Lamont: I have not had an invitation and I have no immediate plans to do so, but I have met people from the yard — I met some only yesterday — and I am familiar with their views. I am certainly prepared to listen and talk to them, but I very much hope that the attitude will not be like that adopted by some who came with the Scottish TUC to see the Prime Minister yesterday. As my hon. Friend the Member for Banff and Buchan (Mr. McQuarrie) emphasised, they took the attitude that it was unacceptable for private enterprise to take over the yard. I hope that everyone, including the Opposition, will welcome that opportunity and not oppose it for reasons of dogma because it is private enterprise and not nationalisation. I hope that they will also not oppose it because it robs them of their favourite solution of throwing money at problems. The Government have said that they are prepared to wipe the slate clean and this could be the beginning of a fresh start for the yard. We must all hope that that will be the case.
  Mr. Dixon: If Scott Lithgow is taken over by a private company will the Minister ensure that all the workers receive their full entitlement from the British Shipbuilders redundancy scheme?
  Mr. Lamont: I think that that assurance can be given. They will be eligible for the redundancy scheme.
  Not surprisingly, a large part of the debate has been taken up with the closure of some of the smaller yards such as Robb, Goole and Clelands, but the plain fact is that there is a dearth of orders. Hon Members may say that particular orders might have gone to those yards, but that must be a judgment for British Shipbuilders as to how the business is to spread. The fact remains that there is not enough work to go round and to maintain all the capacity that we have.
  Paradoxical though it may seem, I do not believe that the scenario is all gloom. There is one point of common ground between Government and Opposition. We decided that the Labour party was right to appoint Graham Day to British Shipbuilders the first time round, and we now have a chairman who is a first-rate manager and will do much to raise the morale of the company and to improve its management.
  The right hon. Member for Bethnal Green and Stepney called for a new strategy. Mr. Day is developing a new product and marketing strategy. Although in the long run this country may not be able to compete right across the board in merchant shipbuilding, there may be areas of the market in which we can compete, perhaps less often with the far east but with other countries in western Europe.
  Mr. Day is also taking steps to get the corporations swiftly out of ship repair. I profoundly believe that that is right. Whatever the arguments for nationalisation of shipbuilding, it made no sense to include ship repair, as

  353
  was amply demonstrated by the fact that until the offshore work came along losses per head in ship repair were larger than in any other division.
  My hon. Friends the Members for Brigg and Cleethorpes (Mr. Brown) and for Romsey and Waterside (Mr. Colvin) asked about the management buy-outs that have occurred in some British ship repair yards. I can assure my hon. Friends that those ship repairers have not been given assurances that Government work or MOD work will be steered in their direction. Any guarantees that have been given to the labour force have been made by the management of the new yards, and they are not ones to which the Government are a party. However, it is right—and I hope that both sides of the House will agree—that British Shipbuilders, in those circumstances where ship repair yards might have closed completely leaving no jobs—800 jobs would have gone at Tyne Shiprepairers—should give a little help to get the buy-outs to happen and to get those ship repair yards into the private sector.
  Mr. Day is also making rapid progress on our plans to press ahead with the privatisation of warship building.
  Mr. Ernie Ross rose—
  Mr. Lamont: We are discussing prospects with potentially interested parties. Opposition Members have expressed their continued opposition, but I do not entirely believe their fears and anxieties about employment in a privatised warship industry. In the old private enterprise days, when the warship yards were in private ownership, we actually managed to get some export orders. We have not had a single warship order from abroad since British Shipbuilders was nationalised.
  The most encouraging evidence that the corporation is at last getting to grips with its problems is the agreement that has been reached between the management and trade unions about more flexible working practices. I am sure that everyone on this side of the House would agree that that is long overdue. We have had restricted practices in our shipbuilding industry that have been positively medieval. The debate within the unions recently has been not about pay, but about working practices. If we want to have a shipbuilding industry, we simply cannot afford to maintain restrictive practices of that kind. I liked the definition of the hon. Member for Jarrow of restrictive practices: trained men doing jobs for which they were trained. The hon. Gentleman ought to look ahead. We simply cannot afford to maintain those attitudes to restrictive practices in our—
  Mr. Ernie Ross rose—
  Mr. Lamont: No, I am not giving way. We have been criticised for not giving enough money to British Shipbuilders. I rather feared that the opposite criticism might have been made, that we have poured money into British Shipbuilders, £900 million since 1979, and the largest part of that money has gone into merchant shipbuilding, an industry employing only 17,000 people today, and in 1979 even, only 25,000 people. There are so many other industries that could have done with £900 million. The textile industry, which has received very little—
  Mr. Bagier: The Government are writing off merchant shipbuilding.
  Mr. Lamont: I am not writing off merchant shipbuilding, and I do not think that anyone should
  354
  maintain that £900 million is other than substantial support by the Government. This is not the time to go on pouring money into an industry. It is a time to get an industry to face up to its problems. Unless we get a better reputation in the market place, shipbuilding in this country will not survive.
  Opposition Members criticised us because jobs have gone, but they know full well that, in the first year of nationalisation, 8,000 jobs disappeared. They know that their own Ministers in 1977 and 1978 said that a contraction of the industry was inevitable. They know that, if we are going to maintain a merchant shipbuilding capacity, it will have to contract further. Their own Minister in 1977 and 1978 used to tell their own Back Benchers that money was not unlimited, that competitiveness mattered, that getting ships delivered on price, and on time, mattered, but now, of course, it is all different. We cannot wonder that the trade unions did not listen. They did not listen because they have heard it before. They had heard it many times from the then Labour Government, and nothing was ever done. The problem was that the unions heard it again and again. But this time we have a Government and a management who mean business, and who have the determination to create a competitive industry. Some of my hon. Friends may have been put off by the hypocrisy of Opposition Members, others by their naivety and yet others by their irresponsibility with public money, but I am sure that all my right hon. and hon. Friends agree that the combination of all three is absolutely intolerable.
  For that reason, I urge my right hon. and hon. Friends to reject the motion and to vote in favour of the amendment.
  Question put, That the original words stand part of the Question:—
  The House divided: Ayes 198, Noes 285.

  Division No. 150]

  [10 pm

  AYES

  Adams, Allen (Paisley N)

  Clark, Dr David (S Shields)

  Alton, David

  Clarke, Thomas

  Anderson, Donald

  Clay, Robert

  Archer, Rt Hon Peter

  Cocks, Rt Hon M. (Bristol S.)

  Ashley, Rt Hon Jack

  Cohen, Harry

  Atkinson, N. (Tottenham)

  Concannon, Rt Hon J. D.

  Bagier, Gordon A. T.

  Conlan, Bernard

  Banks, Tony (Newham NW)

  Cook, Frank (Stockton North)

  Barnett, Guy

  Cook, Robin F. (Livingston)

  Barron, Kevin

  Corbett, Robin

  Beckett, Mrs Margaret

  Corbyn, Jeremy

  Beith, A. J.

  Cowans, Harry

  Bell, Stuart

  Craigen, J. M.

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

  Crowther, Stan

  Bermingham, Gerald

  Cunliffe, Lawrence

  Bidwell, Sydney

  Cunningham, Dr John

  Blair, Anthony

  Dalyell, Tam

  Boothroyd, Miss Betty

  Davies, Rt Hon Denzil (L'Ili)

  Boyes, Roland

  Davies, Ronald (Caerphilly)

  Bray, Dr Jeremy

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

  Brown, Gordon (D'f'mline E)

  Deakins, Eric

  Brown, Hugh D. (Provan)

  Dewar, Donald

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

  Dixon, Donald

  Brown, Ron (E'burgh, Leith)

  Dobson, Frank

  Bruce, Malcolm

  Dormand, Jack

  Buchan, Norman

  Douglas, Dick

  Caborn, Richard

  Dubs, Alfred

  Callaghan, Jim (Heyw'd & M)

  Duffy, A. E. P.

  Campbell, Ian

  Dunwoody, Hon Mrs G.

  Campbell-Savours, Dale

  Eadie, Alex

  Canavan, Dennis

  Eastham, Ken

  Carlile, Alexander (Montg'y)

  Ellis, Raymond

  Cartwright, John

  Evans, Ioan (Cynon Valley)

  355

  Evans, John (St. Helens N)

  Meacher, Michael

  Fatchett, Derek

  Meadowcroft, Michael

  Field, Frank (Birkenhead)

  Michie, William

  Fields, T. (L'pool Broad Gn)

  Mikardo, Ian

  Fisher, Mark

  Mitchell, Austin (G't Grimsby)

  Flannery, Martin

  Morris, Rt Hon A. (W'shawe)

  Foot, Rt Hon Michael

  Morris, Rt Hon J. (Aberavon)

  Forrester, John

  Nellist, David

  Foster, Derek

  Oakes, Rt Hon Gordon

  Foulkes, George

  O'Brien, William

  Fraser, J. (Norwood)

  O'Neill, Martin

  Freud, Clement

  Orme, Rt Hon Stanley

  George, Bruce

  Parry, Robert

  Godman, Dr Norman

  Pendry, Tom

  Golding, John

  Penhaligon, David

  Gould, Bryan

  Pike, Peter

  Gourlay, Harry

  Powell, Raymond (Ogmore)

  Hamilton, James (M'well N)

  Prescott, John

  Hamilton, W. W. (Central Fife)

  Radice, Giles

  Harman, Ms Harriet

  Redmond, M.

  Harrison, Rt Hon Walter

  Rees, Rt Hon M. (Leeds S)

  Hart, Rt Hon Dame Judith

  Richardson, Ms Jo

  Hattersley, Rt Hon Roy

  Roberts, Ernest (Hackney N)

  Healey, Rt Hon Denis

  Robertson, George

  Heffer, Eric S.

  Robinson, G. (Coventry NW)

  Hogg, N. (C'nauld & Kilsyth)

  Rooker, J. W.

  Holland, Stuart (Vauxhall)

  Ross, Ernest (Dundee W)

  Home Robertson, John

  Ross, Stephen (Isle of Wight)

  Howell, Rt Hon D. (S'heath)

  Ryman, John

  Howells, Geraint

  Sedgemore, Brian

  Hoyle, Douglas

  Sheerman, Barry

  Hughes, Dr. Mark (Durham)

  Sheldon, Rt Hon R.

  Hughes, Robert (Aberdeen N)

  Shore, Rt Hon Peter

  Hughes, Roy (Newport East)

  Short, Ms Clare (Ladywood)

  Hughes, Sean (Knowsley S)

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

  Janner, Hon Greville

  Silkin, Rt Hon J.

  John, Brynmor

  Skinner, Dennis

  Johnston, Russell

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

  Jones, Barry (Alyn & Deeside)

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

  Kaufman, Rt Hon Gerald

  Snape, Peter

  Kennedy, Charles

  Soley, Clive

  Kilroy-Silk, Robert

  Spearing, Nigel

  Kinnock, Rt Hon Neil

  Steel, Rt Hon David

  Kirkwood, Archibald

  Stewart, Rt Hon D. (W Isles)

  Lambie, David

  Strang, Gavin

  Lamond, James

  Straw, Jack

  Leadbitter, Ted

  Thomas, Dafydd (Merioneth)

  Leighton, Ronald

  Thomas, Dr R. (Carmarthen)

  Lewis, Ron (Carlisle)

  Thompson, J. (Wansbeck)

  Litherland, Robert

  Tinn, James

  Lloyd, Tony (Stretford)

  Torney, Tom

  Lofthouse, Geoffrey

  Wainwright, R.

  Loyden, Edward

  Wallace, James

  McCartney, Hugh

  Wardell, Gareth (Gower)

  McDonald, Dr Oonagh

  Wareing, Robert

  McKelvey, William

  Weetch, Ken

  Mackenzie, Rt Hon Gregor

  Welsh, Michael

  Maclennan, Robert

  White, James

  McNamara, Kevin

  Wigley, Dafydd

  McTaggart, Robert

  Williams, Rt Hon A.

  McWilliam, John

  Wilson, Gordon

  Madden, Max

  Winnick, David

  Marek, Dr John

  Wrigglesworth, Ian

  Marshall, David (Shettleston)

  Young, David (Bolton SE)

  Martin, Michael

  Mason, Rt Hon Roy

  Tellers for the Ayes:

  Maxton, John

  Mr. Frank Haynes and

  Maynard, Miss Joan

  Mr. Allen McKay.

  NOES

  Adley, Robert

  Atkins, Rt Hon Sir H.

  Aitken, Jonathan

  Atkins, Robert (South Ribble)

  Alexander, Richard

  Baker, Nicholas (N Dorset)

  Alison, Rt Hon Michael

  Baldry, Anthony

  Amery, Rt Hon Julian

  Batiste, Spencer

  Amess, David

  Beaumont-Dark, Anthony

  Ancram, Michael

  Bellingham, Henry

  Arnold, Tom

  Bendall, Vivian

  Ashby, David

  Benyon, William

  Aspinwall, Jack

  Berry, Sir Anthony

  356

  Bevan, David Gilroy

  Hamilton, Hon A. (Epsom)

  Biffen, Rt Hon John

  Hampson, Dr Keith

  Biggs-Davison, Sir John

  Hannam, John

  Blaker, Rt Hon Sir Peter

  Hargreaves, Kenneth

  Body, Richard

  Harris, David

  Bonsor, Sir Nicholas

  Harvey, Robert

  Boscawen, Hon Robert

  Hawkins, C. (High Peak)

  Bottomley, Peter

  Hayhoe, Barney

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

  Hayward, Robert

  Bowden, Gerald (Dulwich)

  Henderson, Barry

  Boyson, Dr Rhodes

  Hicks, Robert

  Braine, Sir Bernard

  Higgins, Rt Hon Terence L.

  Brandon-Bravo, Martin

  Hirst, Michael

  Bright, Graham

  Hogg, Hon Douglas (Gr'th'm)

  Brinton, Tim

  Holland, Sir Philip (Gedling)

  Brittan, Rt Hon Leon

  Hooson, Tom

  Brooke, Hon Peter

  Hordern, Peter

  Brown, M. (Brigg & Cl'thpes)

  Howell, Rt Hon D. (G'ldford)

  Bruinvels, Peter

  Hunt, David (Wirral)

  Bryan, Sir Paul

  Hunter, Andrew

  Buchanan-Smith, Rt Hon A.

  Hurd, Rt Hon Douglas

  Budgen, Nick

  Jackson, Robert

  Bulmer, Esmond

  Johnson-Smith, Sir Geoffrey

  Burt, Alistair

  Jopling, Rt Hon Michael

  Butler, Hon Adam

  Knight, Mrs Jill (Edgbaston)

  Butterfill, John

  Lamont, Norman

  Carlisle, John (N Luton)

  Lang, Ian

  Carlisle, Kenneth (Lincoln)

  Lee, John (Pendle)

  Chalker, Mrs Lynda

  Lester, Jim

  Channon, Rt Hon Paul

  Lightbown, David

  Chapman, Sydney

  Lilley, Peter

  Churchill, W. S.

  Lloyd, Ian (Havant)

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

  Lloyd, Peter, (Fareham)

  Clark, Dr Michael (Rochford)

  Lord, Michael

  Clark, Sir W. (Croydon S)

  Luce, Richard

  Clarke, Kenneth (Rushcliffe)

  Lyell, Nicholas

  Clegg, Sir Walter

  McCrindle, Robert

  Cockeram, Eric

  McCurley, Mrs Anna

  Colvin, Michael

  McCusker, Harold

  Coombs, Simon

  Macfarlane, Neil

  Cope, John

  MacGregor, John

  Cormack, Patrick

  MacKay, Andrew (Berkshire)

  Couchman, James

  MacKay, John (Argyll & Bute)

  Cranborne, Viscount

  Maclean, David John.

  Critchley, Julian

  Macmillan, Rt Hon M.

  Crouch, David

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

  Currie, Mrs Edwina

  McQuarrie, Albert

  Dickens, Geoffrey

  Malins, Humfrey

  Dicks, T.

  Malone, Gerald

  Dorrell, Stephen

  Maples, John

  Douglas-Hamilton, Lord J.

  Marland, Paul

  Dover, Denshore

  Marshall, Michael (Arundel)

  du Cann, Rt Hon Edward

  Mather, Carol

  Durant, Tony

  Maude, Francis

  Dykes, Hugh

  Mawhinney, Dr Brian

  Eggar, Tim

  Maxwell-Hyslop, Robin

  Emery, Sir Peter

  Mayhew, Sir Patrick

  Evennett, David

  Mellor, David

  Eyre, Sir Reginald

  Merchant, Piers

  Fairbairn, Nicholas

  Meyer, Sir Anthony

  Fallon, Michael

  Miller, Hal (B'grove)

  Farr, John

  Mills, lain (Meriden)

  Fenner, Mrs Peggy

  Mills, Sir Peter (West Devon)

  Fletcher, Alexander

  Miscampbell, Norman

  Fookes, Miss Janet

  Mitchell, David (NW Hants)

  Forman, Nigel

  Moate, Roger

  Forsyth, Michael (Stirling)

  Monro, Sir Hector

  Forth, Eric

  Montgomery, Fergus

  Fowler, Rt Hon Norman

  Moore, John

  Fox, Marcus

  Morrison, Hon C. (Devizes)

  Fraser, Peter (Angus East)

  Moynihan, Hon C.

  Fry, Peter

  Mudd, David

  Gale, Roger

  Neale, Gerrard

  Glyn, Dr Alan

  Needham, Richard

  Goodlad, Alastair

  Nelson, Anthony

  Gower, Sir Raymond

  Neubert, Michael

  Greenway, Harry

  Newton, Tony

  Grist, Ian

  Nicholls, Patrick

  Grylls, Michael

  Nicholson, J.

  Gummer, John Selwyn

  Normanton, Tom

  357

  Norris, Steven

  Shaw, Sir Michael (Scarb')

  Onslow, Cranley

  Shelton, William (Streatham)

  Oppenheim, Philip

  Shepherd, Colin (Hereford)

  Oppenheim, Rt Hon Mrs S.

  Shepherd, Richard (Aldridge)

  Ottaway, Richard

  Silvester, Fred

  Parkinson, Rt Hon Cecil

  Sims, Roger

  Parris, Matthew

  Skeet, T. H. H.

  Patten, John (Oxford)

  Smith, Tim (Beaconsfield)

  Peacock, Mrs Elizabeth

  Soames, Hon Nicholas

  Pink, R. Bonner

  Speller, Tony

  Pollock, Alexander

  Spence, John

  Powell, William (Corby)

  Spencer, D.

  Powley, John

  Spicer, Jim (W Dorset)

  Prentice, Rt Hon Reg

  Spicer, Michael (S Worcs)

  Proctor, K. Harvey

  Squire, Robin

  Pym, Rt Hon Francis

  Stanbrook, Ivor

  Raffan, Keith

  Stanley, John

  Rathbone, Tim

  Steen, Anthony

  Rees, Rt Hon Peter (Dover)

  Stern, Michael

  Renton, Tim

  Stevens, Lewis (Nuneaton)

  Rhodes James, Robert

  Stevens, Martin (Fulham)

  Rhys Williams, Sir Brandon

  Stewart, Allan (Eastwood)

  Ridley, Rt Hon Nicholas

  Stewart, Andrew (Sherwood)

  Ridsdale, Sir Julian

  Stewart, Ian (N Hertf'dshire)

  Rifkind, Malcolm

  Stradling Thomas, J.

  Rippon, Rt Hon Geoffrey

  Sumberg, David

  Roberts, Wyn (Conwy)

  Tapsell, Peter

  Robinson, Mark (N'port W)

  Taylor, John (Solihull)

  Roe, Mrs Marion

  Taylor, Teddy (S'end E)

  Rossi, Sir Hugh

  Tebbit, Rt Hon Norman

  Rost, Peter

  Terlezki, Stefan

  Rowe, Andrew

  Thomas, Rt Hon Peter

  Rumbold, Mrs Angela

  Thompson, Donald (Calder V)

  Ryder, Richard

  Thompson, Patrick (N'ich N)

  Sackville, Hon Thomas

  Thorne, Neil (Ilford S)

  St. John-Stevas, Rt Hon N.

  Thornton, Malcolm

  Sayeed, Jonathan

  Thurnham, Peter

  Shaw, Giles (Pudsey)

  Townsend, Cyril D. (B'heath)

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  Tracey, Richard

  Wells, John (Maidstone)

  Trippier, David

  Wheeler, John

  Trotter, Neville

  Whitfield, John

  Twinn, Dr Ian

  Whitney, Raymond

  van Straubenzee, Sir W.

  Wiggin, Jerry

  Vaughan, Sir Gerard

  Winterton, Mrs Ann

  Viggers, Peter

  Winterton, Nicholas

  Waddington, David

  Wolfson, Mark

  Walden, George

  Wood, Timothy

  Walker, Bill (T'side N)

  Woodcock, Michael

  Walker, Rt Hon P. (W'cester)

  Yeo, Tim

  Waller, Gary

  Young, Sir George (Acton)

  Walters, Dennis

  Wardle, C. (Bexhill)

  Tellers for the Noes:

  Watson, John

  Mr. Tim Sainsbury and

  Watts, John

  Mr. John Major.

  Wells, Bowen (Hertford)

  Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 33 (Questions on amendments), and agreed to.
  Mr. Speaker forthwith declared the main Question, as amended, to be agreed to.
  Resolved,
  That this House, recognising the seriousness of the problems facing the merchant and offshore shipbuilding industries, supports the efforts of the Government and British Shipbuilders to create a more efficient and competitive industry; endorses the Government's policy of returning as much as possible of the industry to the private sector; and welcomes the new mood of realism shown by the Shipbuilding Negotiating Committee in agreeing the British Shipbuilders proposals for changes in working practices.

Industrial Tribunals
10.14 pm
Mr. Robert Maclennan: I beg to move,
That an humble Address be presented to Her Majesty, praying that the Industrial Tribunals (Rules of Procedure) (Equal Value Amendment) Regulations 1983 (S.I., 1983, No 1807), dated 7th December 1983, a copy of which was laid before this House on 9th December, be annulled.
The history of the Government's attempt to take account of the equal pay directive and to render into English law the requirements of the European Community's directive is a sorry tale. We have already had a debate upon the regulations that were designed to give effect to the requirement of equal pay for work of equal value. Tonight's debate is on the procedural regulations, which are designed to enable a claimant before an industrial tribunal to have the benefit of the substantive rules that the House considered on an earlier occasion.
The statutory instrument that the Government have laid was considered by the Joint Committee on Statutory Instruments. In its thirteenth report, it drew to the attention of the House the aspects of the procedural regulations that it considered unsatisfactory. That helpful report concluded:
"In the Committee's view the status afforded to the expert's report is not made clear by the procedural Regulations, which should have provided further elucidation on this crucial matter."
The importance of the debate turns on three major issues. The first is that the Government have systematically — I do not say "deliberately" — misled Parliament about the effect of the procedural regulations. They are so seriously vitiated as to call in question whether, by amending or seeking to amend our domestic law, we have complied with the requirements of the equal pay directive.
The second issue is whether the regulations, by defective drafting, infringe the right of the claimant or, for that matter, the party against which the claim is made, to enjoy due process of law. I argue that that is denied by the provisions of the procedural regulations, which are seriously contradictory and defective.
The third important issue that the House must consider is the practical consequences for those who seek to establish or resist a claim, flowing from the obscurity of the law. Inevitably it will be contested if it stands in its present form, not only through all the courts of the realm—I predict to the House of Lords—but to the European Court, where an earlier judgment found that this country was in breach of the equal pay directive. As the purpose of the procedural regulation is to put that matter right, I have no doubt that the Minister and the House will want to be sure that, by assenting to a defective regulation, we are not defeating that objective.
On the putative misleading of the House, I refer especially to the words of the Earl of Gowrie in another place on 5 December. He sought to reassure another place about the effect and impact of the rules. The Minister will be only too familiar with the changes that were made by the Government following a number of criticisms both in another place and in this House. Amendments were made on the powers and rights of the expert involved. The Earl of Gowrie said in reply to my noble Friend Lady Burton:
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"we have now allowed the parties the right to cross-examine the expert and to bring their own expert evidence. I hope that from that it will be apparent that the expert can be challenged and that his report is simply evidence on the question of the value of the jobs at issue. It is for the tribunals to decide what weight to attach to all the evidence, and ultimately to decide the issue." — [Official Report, House of Lords, 5 December 1983; Vol. 445, c. 926.]
That that was a serious misrepresentation of the position was clearly the view of the Joint Committee on Statutory Instruments when it raised the matter with the Department. It couched its complaints in wider terms than I shall use tonight. It stated:
"Rule 7A requires that in cases involving an equal value claim, except in certain restricted types of case, the Industrial Tribunal may not determine an equal value claim without obtaining an expert's report … the Rule might have the effect of leaving the expert to decide the question rather than the Tribunal as a whole."
The Committee expressed the fear that the procedure in rule 7A was incompatible with the Community obligation to secure judicial process and with the Earl of Gowrie's statement. It also pointed out that the rule was obscure.
The Department's reply stated — these words are important because they were profoundly misleading and compounded the Government's offence:
"there is no provision in the Rules restricting such evidence and such examination only to the preliminary issue of the admissibility of the report as evidence. Further, there is no provision in the Rules affording special status to the report once it has been admitted."
I shall query that point later.
In paragraph 7, the memorandum stated:
"The expert's function is to produce a report on the question of equal value but his report is no more than evidence and may be controverted by other evidence in the normal way."
That, essentially, was a reassertion of Lord Gowrie's statement.
In a debate today in another place, Lord Denning stated that he did not agree with a word of the Department of Employment's evidence to the Select Committee, and that he firmly believed that the procedural rules effectively deprived both parties of the right to judicial process, and do not conform to the requirement of the rule of law.
That is the view of Lord Denning. That is the view of the majority of those who have spoken on the matter in another place. What is clear is that the regulations are contradictory and confused as to whether and how the ACAS-appointed independent expert can be questioned. In consequence, the regulations fail to satisfy the European equal pay directive requirement for judicial process.
The matter is not simply, as I believe it has been stated in the report of the Joint Committee, that the Department of Employment' s answer to the Committee' s strictures was unclear. I believe it to be positively misleading. It is certainly true that rule 8(2B) provides that the parties may bring their own expert evidence. It is also true that in rule 8(2A) it is expressly provided that the expert who prepares the report may be called for cross-examination, but no mention has been made in another place or in the Department of Employment's memorandum of the effect of rule 8(2C). I draw the attention of the Minister to that rule, and ask him to explain to the House what precisely the Government intend by it.
It is clear from rule 8(2C) that the expert's report is in fact treated not merely as a finding of fact but in effect as a judgment, and that the judgment of the expert replaces that of the tribunal itself. The tribunal may reject the expert's reports only on one of the three grounds which have been given in rule 7A(8) — that he has not

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complied with a procedural stipulation, that his judgment could not reasonably have been reached, or that in some other way the report was unsatisfactory. In particular, the tribunal cannot reject the report because it disagrees with its conclusion that the applicant's work is not of equal value, or because it disagrees with the reasoning leading to that conclusion, unless it disagrees so strongly that it considers that
"the conclusion … contained in the report could not reasonably have been reached".
The key question posed by rule 8(2C) is whether the parties can in practice challenge the factual basis of the expert's report. According to the Government, the expert's report
"may be controverted by other evidence in the normal way."
Rule 8(2C) provides that apart from the minor exceptions to which I have referred,
"no party … may question any witness upon … any matter of fact upon which a conclusion in the report of the expert is based."
It is difficult to see how that wide exclusion can be reconciled with effective rebuttal of the expert's report. If evidence cannot be given about the factual basis of the report any cross-examination of the expert will be seriously restricted. The proper scope and effect of rule 8(2C) seems bound to create uncertainty and lead to complex litigation.
If rule 8(2c) is interpreted in such a way as to make the expert's report virtually conclusive, it will be arguable that the new procedure fails to guarantee judicial process and is, therefore, contrary to the provisions of the equal pay directive.
I regard the failure of the Department of Employment, in answer to the Joint Committee's inquiry, to refer to the provisions of rule 8(2C) as amounting to what the lawyers would politely call a suppressio veri. The serious consequence of that is that an appellant before a tribunal is placed in a position in which no other appellant before an industrial tribunal is placed. There is no precedent in any judicial procedure affecting the civil rights and obligations of our citizens in any court or tribunal in the evaluation of expert evidence for parties to be prohibited from asking questions about the basis of the expert's report or putting forward evidence of fact to rebut it. That is the nub of the matter. It is a simple point, although the construction of the language of the regulations, due to what Lord Denning called their "tortuousity", is extremely difficult.
There can be no doubt that an important point of principle, of law and of the protection of the individual's right is at stake. Lest anyone doubt the importance of the point about judicial process, I should like to quote the words of Lord Diplock, the senior Lord of Appeal, on what is meant by
"The due administration of justice",
because if these procedures do not satisfy his criteria as they are set out in what I believe is the locus classicus, then the statutory instrument is defective and will result in the kind of litigation that is to be deplored and which we must seek to avoid.
Lord Diplock said in Attorney-General v. Times Newspapers reported in "Appeal Cases 1974", at page 309:
"The due administration of justice requires first that all citizens should have unhindered access to the constitutionally established courts of criminal or civil jurisdiction for the determination of disputes as to their legal rights and liabilities;
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secondly, that they should be able to rely upon obtaining in the courts the arbitrament of a tribumal which is free from bias against any party and"—
these are the most important words in this context—
"whose decision will be based upon those facts only that have been proved in evidence adduced before it in accordance with the procedure adopted in courts of law; and thirdly that, once the dispute has been submitted to a court of law, they should be able to rely upon there being no usurpation by any other person of the function of that court to decide it according to law."
The right to equal pay for work of equal value is of great importance for those people who have been discriminated against for too long. If the Government are seeking to avoid their responsibilities for giving effect to a right which has been conferred by European legislation by resorting to tortuous language and obscure legal procedures, they are acting unworthily. I hope that the Minister will undertake to withdraw the regulations and that he will not require the House to vote against them.
10.35 pm
The Under-Secretary of State for Employment (Mr. Alan Clark): I should like briefly to set out the Government's position, and with the leave of the House I shall reply later to any points that are raised.
The regulations arise from the amendment that we made to the Equal Pay Act to allow women to claim equal pay for work of equal value — [HON. MEMBERS: "Reading."] At least I am reading in English. The main regulations which effected this change were the Equal Pay (Amendment) Regulations 1983, which were approved on 20 July and in another place on 5 December.
The regulations with which we are now concerned are the industrial tribunal procedure regulations which govern the tribunal procedures in cases brought under the new provisions of the Act. In particular, they instruct the tribunal in its dealings with the independent expert from whom, under the new provisions, tribunals are required to commission a report on whether two jobs are of equal value.
I can well understand the concern expressed about the intelligibility of the regulations to women seeking to make a claim, but I must explain that this complexity arises for two reasons, both of which are well-founded.
First, the regulations build on the general rules of procedure for industrial tribunals. This is necessary in order to provide a logical and practical framework within which the tribunal can operate and also to cater for situations in which an individual wishes to pursue a claim under more than one head—for example, for both equal pay and unfair dismissal.
Secondly, they set out precisely the steps to be taken in relation to the commissioning and consideration of the expert's report. Indeed, they do so in greater detail now than in the consultative draft reflecting the changes made in response to concern expressed by many that they should make quite clear how the expert would work, and also give the parties sufficient opportunity to challenge his conclusions.
The House well knows that in all legislation there is a tension between simplicity and justice. In our efforts to moderate this we have taken part in full and lengthy consultations.
The draft regulations were issued on 6 September, and we received a substantial number of comments.
Mr. Barry Sheerman: Be honest. How many?
Mr. Clark: We received representations from a number of bodies, notably the Equal Opportunities Commission, the Fawcett Society and others concerned with this subject—and very constructive they were. We took the consultation process most seriously, and after careful consideration of the comments made considerable changes to the regulations.
These were primarily in response to three main criticisms. First, there was uncertainty as to how the expert would work and whether parties to cases would have a chance to comment on facts and the representations of other parties. In the light of this we altered the regulations to ensure that parties get such an opportunity.
Secondly, there was concern that the independent expert's report would be insufficiently open to challenge — quite rightly, I believe. We therefore altered the regulations to allow parties to cross-examine the expert, to call an alternative expert witness, and to ask the tribunal to put written questions to the expert.
Thirdly, there was criticism on the grounds that tribunals would be likely to reject cases on an employer's defence that material factors justify unequal pay before the independent expert's report was commissioned. We therefore rephrased the regulations to make it clear that such rejections will be limited to clear-cut cases where it is perfectly obvious that the claim cannot succeed.
These changes were widely welcomed by those who had commented on the draft, including the chairman of the Equal Opportunities Commission. Indeed, they were welcomed as very significant by a number of the Government's critics in another place.
Mrs. Renée Short rose—
Mr. Clark: I shall be replying to the debate and, if the hon. Lady has an opportunity to speak, I shall reply to any points that she makes.
In another place, the noble Lord McCarthy said, referring to the changes in the regulations that had been made:
"Most important of all, since the draft was placed before this House last October (and as the noble Earl said) very significant changes—which I welcome on behalf of this side of the House —were made in the procedural rules dealing with the role of the expert". — [Official Report, House of Lords, 5 December 1983; Vol. 445, c. 886.]
The noble Baroness, Lady Lockwood, said—
Mr. Deputy Speaker (Mr. Harold Walker): Order. Is the Minster quoting from the Official Report of the other place?
Mr. Clark: I was, Mr. Deputy Speaker.
Mr. Deputy Speaker: Other than quoting from a Minister's speech, it is not in order to quote from debates in another place.
Mr. Clark: I apologise, Mr. Deputy Speaker. I understand that Lord McCarthy is the representative in the other place of Labour Members who moved the prayer and I thought that I would be in order in quoting from his speech, but I apologise for being out of order.
In the light of what we have done, these comments by some of our former critics—[Interruption.] I hope that Opposition Members will approach this subject in a constructive frame of mind. I am sure that the hon. Member for Barking (Ms. Richardson), who will be winding up for the Opposition, will do so. I believe that
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we have made great progress in altering the procedure regulations, putting them in such a form that they will be acceptable, and I shall pay great attention to any suggestions that the hon. Lady makes.
Mr. Greville Janner: Before the Minister sits down—
Mr. Deputy Speaker: Order. I understand that the Minister has concluded his speech.
10.42 pm
Ms. Harriet Harman: Despite the Equal Pay Act and the Sex Discrimination Act, women remain very low paid. Overall, women earn on average less than three quarters of men's earnings. This is due to a number of complex factors, some of which the law can deal with, but some of which it cannot, including, for example, the inequality of division of labour in the home and the extra responsibility women have for bringing up children and looking after the home. There is also the question of the different sort of education that boys and girls receive at school. Therefore, this is by no means a simple matter.
However, there is also blatant discrimination against women in relation to pay at work. Even though women are doing very skilled jobs, those skills tend to be undervalued, and, because there is a gap in the law, at present that inequality is not remedied. That is why the British Government were taken to the European Court.
The method by which they have sought to remedy the situation and bring us into line with the Treaty of Rome on this matter is completely wrong. The House should not be asked to do it by way of an order, followed by long and complicated regulations. It should be done by way of amendment to a statute to enable Committee stage discussions to take place. Instead, we have had an order which met with a great deal of opposition, followed by prolonged consultations, with redrafted regulation brought back to the House. That is not the way to deal with a complex issue which affects the pay, and particularly the low pay, of many thousands of women.
The regulations fail to meet the objections which have been made, because they are far too complicated. We are not dealing here with a situation involving High Court judges and claimants represented on legal aid. There will be a solicitor, a part-time chairman of a tribunal and lay representatives. Although the employer may have legal representation, legal aid is not available to a claimant before a tribunal, and that is why I say that there will be lay representation.
As we are talking about a lay tribunal, the rules and regulations must be accessible. Unfortunately, the regulations are virtually unintelligible and make things worse. Matters could be put right by the use of simple language, and amendments have been submitted to the Minister by the National Council for Civil Liberties and other organisations. The amendments would do the job and provide a clear and simple set of measures, but account has not been taken of them.
The tribunal is able to refuse to consider a claim for equal pay for work of equal value if there are no reasonable grounds. This was a cause for complaint during the consultation period. The regulations do not set out what constitutes "no reasonable grounds" and the tribunal will be able to kick out a case before hearing any evidence. That will be possible as there is no guidance in the regulations on what "no reasonable grounds" amounts to.

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It remains the position under the regualtions that a woman cannot claim if there is already in existence a job evaluation scheme, unless she can prove that that scheme is discriminatory, either directly or indirectly. That is very difficult to do. It will not be enough for her to show that a proper evaluation of her skills gives her a higher rate and equal pay with someone else if a job evaluation scheme is in existence. In that circumstance, she will be unable to claim equal pay for work of equal value. This is an open invitation to employers to introduce a job evaluation scheme.
The employer can argue—perhaps this is the most serious deficiency—that he does not have to give equal pay for work of equal value because the market value of a woman's job is less than the market value of a man's job. We were asked by Europe to intervene in the market because the market discriminates against women and pays them only 75 per cent. of what the market sees fit to pay men. The point of the regulations was to enable intervention to take place so that the balance could be corrected and women could have equality at work.
Mr. Eric Forth rose—
Ms. Harman: If the expert can argue that a woman is paid a low rate even though she is doing work of equal value because the market undervalues her work, the exercise becomes pointless and circular. That is a major flaw.
The regulations provide no means of remedying discriminatory collective agreements. Each woman will have to make her own separate claim. It is usually the position in the real world that large groups of women are employed to do the same job, but the regulations provide no power to end discriminatory collective agreements. They should have made provision for the Central Arbitration Committee to be brought in to consider collective agreements, as it did in the early days of the Equal Pay Act 1970 when there were separate men's and women's rates. In those days the committee had a useful role. Why can it not be brought in to remedy discrimination in collective agreements at this stage?
The regulations reinforce the point which came over clearly when the Government introduced the regulations, which is that the Government do not take the issue seriously and that this is a paper exercise for the sake of trying to appear as if they were complying with Europe. The message comes over clearly that the role of women at work is not regarded as important and that women should regard work in the home as their main sphere of influence and importance. It will be a travesty if the regulations and the order are understood to be a step forward for women. They are nothing of the sort. I should be the first person to vote in favour of the regulations if I thought that they would help the millions of low-paid women, but they will not do so, and that is why I shall vote against them.
10.49 pm
Mr. Teddy Taylor: The most interesting aspect of the speech of the hon. Member for Caithness and Sutherland (Mr. Maclennan) was that he spent all his time arguing whether the regulations conformed with a Common Market directive and not whether they made common sense. I appeal to those who are thinking of looking at these regulations with favour to decide whether they make common sense.
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I sympathise with the Under-Secretary at being forced to bring in a ridiculous set of regulations that are based on the assumption that wages should he fixed because of an assessment by a tribunal of what is work of equal value. How on earth can Conservative Members, who believe that wages should be determined by market forces and free collective bargaining between employers and trade unions, suggest the introduction of a new type of statutory European pay policy to determine wages? Surely, nothing could be more ridiculous that that basic proposition.
The regulations state that we will create a new group of paid officials called experts. Those chaps will have to rush around to firms—not trade unions which should be working for equality if they believe that is worthwhile—that are struggling for survival and to maintain employment and keep their profits. Those so-called experts will make their assessment — not a business assessment—of what is work of equal value and report to the tribunal which will then make a determination.
Who will pay for all those ridiculous people? In recent weeks, the Government have rightly asked us to support cuts, reductions and curbs in public spending on areas that most of us would agree are important — the Health Service and local authorities. We believe that in the public interest if we are to have a sound economy we must control public spending. How can I return to my constituencies in Southend and say, "We want to cut Government spending, but the Government will spend a pile of money employing a group of so-called experts who will go around to your factories to assess what is the value of one job compared with another?"
Who will the experts be? How many will there be? How much will it cost? Is this not a ridiculous measure?
If hon. Members examine the regulations, they will see that the experts appointed to the tribunal will have the power not only to make a report and say what work is of equal value, but to require people to give them evidence even though they have nothing to do with the issue—for example, Miss A, who is a textile operator, may take the view that her work is comparable in value to that of someone who is working as a clerk at the communications headquarters at Cheltenham. Textiles are relevant to that organisation about which I do not wish to talk.
Ms. Clare Short: Does the hon. Gentleman think that there should be legislation in Britain to outlaw race discrimination? Should an organisation and officials go around giving instructions about how black and white people should be treated? Should we have any standards of health and safety at work? Should officials say what those standards should be? Does the hon. Gentleman want to regulate the labour market, or is it just the treatment of women that he does not want regulated?
Mr. Taylor: The hon. Lady should not be ridiculous. Of course I believe, as do all decent people, in equal rights before the law. The question is what should the law be? I am wholly opposed—as I was on the statutory pay policy—to outside experts, civil servants and any other people walking into a manufacturing business and saying what wages people should pay. If Conservative Members and those who believe in common sense support anything, we support that.
Does the Under-Secretary mean, as the regulations state, that anyone can be summoned to give evidence? An

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expert looking at the position of a textile operator and of a managing director's secretary to assess whether the work is of equal value, who takes the view that Mr. So-and-So, — the marketing director of ICI, someone in his department or a person at university—has material that might be relevant, has the power under the regulations to require that person to give the information within a specified time.
According to the regulations, anyone could be asked to do that. Does that mean that employers doing a good job, looking after their employees well, running a satisfactory business and with nothing whatever to do with the dispute at some other factory will be required to provide all kinds of evidence in writing by a specified date? The Minister is well aware that many firms in this country are struggling to survive, trying to sell things in the market so as to create jobs for men and women. It is ludicrous bureaucratic interference for ridiculous experts employed by ridiculous tribunals to ask those firms to supply as much information as the tribunals and experts want within a specified period.
Mr. Forth: Does my hon. Friend agree that the likely result of such arbitrary wage-setting for women would be that tens of thousands of women would lose their jobs as the price of their labour in the market was artificially forced up?
Mr. Taylor: It is not right for the Government or anyone like that to fix wages. The right way to assess wages is through free collective bargaining and the right people to fight for workers are trade unions working in a free situation and not being interfered with by civil servants, experts or anyone else. The whole exercise proposed in the regulations is completely contrary to what Conservative Members stand for, and I should have thought that it was equally contrary to the beliefs of Labour Members.
Can these experts really ask anyone whom they think may have relevant information to provide it within a specified time? And what happens if the people do not provide it? There are later references to all kinds of dreadful penalties that may land on people if they do not comply. If I was working in industry, doing my best for my employees and my customers, none of whom had any complaints about me, I should take it very hard if some silly expert employed by a silly tribunal told me to drop everything and forget about my customers and my workers because the tribunal wanted information for an assessment in an equal value claim.
The Minister may say that there are exceptions because the tribunal has power to let people off if it believes that they have good grounds for refusing to comply, but there is no definition of good grounds. The Minister has given us no guidance on that. Does it mean good economic grounds? If a person says that he is trying to get export orders so as to employ people and pay their wages is that a good ground? If the Government or anyone else think that there are security implications, is that a good ground? Is it a good ground if the person does not wish to reveal what goes on in his factory, what he pays and why? There are certain commercial secrets. If firms have a suitable arrangement whereby they pay their workpeople according to certain schedules, that is surely their business. Will the Minister at least assure us that good grounds will include matters which are commercially confidential? It would be
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outrageous for people not working for the courts, not appointed by the law and not parliamentarians to be given the right to demand all kinds of information just because someone thinks that it is relevant to an equal value claim. I hope that the Minister will answer those questions.
Finally, must we really go ahead with this ridiculous business of bringing in all these laws that we do not want and which Parliament has not approved because Common Market directives force us to do so? This morning I looked at the file of measures going through this week. There is even a new regulation about noise emission from vacuum cleaners. Goodness knows why the Common Market wants to pass a law about that, but even if 635 Members of this House wish to vote against it we can do nothing about it because Common Market laws must be brought in whether we want them or not. We are being presented with all kinds of regulations—for example, the labelling of grape nuts. I do not know why we want to label grape nuts, but we are going to have to do it, whether we want it or not.
I appeal to the Minister; is there no end to this business whereby we are being forced to bring in ludicrous regulations that we all know the Minister and all sensible people must regard as a load of rubbish? Is there nothing we can do to stop this flow?
I am afraid that I did not vote in the last debate on the amendment regulations, and that was not because I did not sympathise with the Minister. He has to bring forward the regulations and there is nothing he can do about it, even though he thinks they are the biggest load of rubbish ever to come before the House. It has got to be done, because they are Common Market regulations. Here we are at it again. I appreciate that the Minister tried to water them down. This point was made my the hon. Member for Peckham (Ms. Harman) in a very sincere speech referring to the attempt to water the regulations down as much as possible. We know that is what the Government have done. There is no point in trying to hide it. The Government are trying to water the regulations down a bit, and still keep within the law.
Surely the Minister must accept, if we believe in a free enterprise economy and letting market forces determine prices and water, if we believe in free trade unions and their rights to negotiate freely in the market, that we do not want to introduce any new prices board, incomes board, experts for tribunals and others who are going to fix wages and upset wages patterns.
I hope that the Minister will at least say to the House kindly tonight that the regulations are a load or rubbish. Can he not say that the Department of Employment knows that the regulations are rubbish, but sadly he has got to put them forward because of a Common Market law? I think it would clear the air a great deal for everyone if the Minister would tell us what the Government really think about these ridiculous regulations, with specific answers on the three questions of detail that I have asked.
11.1 pm
Mr. Greville Janner: I am sure that we have all enjoyed that knockabout speech from the Left wing of the Conservative party. We will take into account the fact that from the Minister's own reaction to it he no doubt agreed with every word that the hon. Member for Southend, East (Mr. Taylor) said. Nevertheless, he is now forced into the position that he will have to put forward the

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regulations. However miserable they may be, and however defective, he has said in refusing to give way that he will reply to the questions that we shall raise.
I challenged the Minister on the last occasion when the regulations came before the House to explain the meaning of the procedural clauses in the predecessor regulations to those now to be amended and upon which they are based. I draw the Minister's attention once again to regulation 3(2A)(1)(a), of the 1984 regulations. I challenge him to explain what the regulations mean. Some of us have been to professors of logic to try to understand the meaning and have emerged with the statement that nobody has the slightest idea.
Regulation 2A(1) of the Equal Pay (Amendment) Regulations 1983 says:
"Where on a complaint or reference made to an industrial tribunal under section 2 above, a dispute arises as to whether any work is of equal value as mentioned in section 1(2)(c) above the tribunal shall not determine that question".
The tribunal comes to the question, and it shall not even determine it unless
"it is satisfied that there are no reasonable grounds for determining that the work is of equal value as so mentioned;"
In other words, the tribunal can determine the question only if there are no reasonable grounds for saying that the work is not of equal value.
It is absolute illogical rubbish, but not for the reason given by the hon. Member for Southend, East, whose idea of equality is to let everybody claw as best they can towards equality in a world traditionally designed to ensure that they get none. It is also a world in which he, with all his complaints about the need for free trade unions in a free bargaining situation, is no doubt going to vote for the removal of the rights of free trade unions in Cheltenham and other parts of the United Kingdom. This is a meaningless and impossible regulation for any tribunal to interpret.
We look at the new regulations and ask ourselves whether they give guidance to those who will be trying to interpret them. The answer is, none at all. They make the wood thicker, the darkness deeper, and the night more impenetrable. There is no way in which anyone, even a skilled lawyer brought up in the high degrees of logic, can understand what they mean.
Therefore the only certainty is that they will be challenged and that there will be litigation. There can be no doubt that the Equal Opportunities Commission will take the regulations back to Europe, whence they came. This Parliament will be involved once again in reconsidering other new regulations although the Government had the opportunity to put these into order.
It is not the lawyers but the Equal Opportunities Commission that will do that. The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food should know that is true. Even she should rejoice over the fact that we are making a little progress towards the equality for women which is so long overdue.
One other matter has not been dealt with. The Minister said that there was concern over the uncertainty of how the experts would work. If the hon. Member for Southend, East had done his homework he would not have bothered to ask where the experts would come from. We know the answer to that. The Advisory, Conciliation and Arbitration Service is in the process of selecting them. However, it is not bound to train them. It is not to supervise or to train them. It is only to select them and to give them two days' briefing, during the course of which they will simply be
370
told what to do. ACAS is not going to say which job evaluation scheme each is to put into effect, or which method they are to use.
If the hon. Member for Southend, East would move even into the 19th century he would realise that job evaluation schemes are in operation in all sorts of industries throughout the country. There is nothing new about them. However, the problem is that no one knows which ones the experts are to put into effect. They are not told or asked how to do that. There is to be no uniformity. There is to be only a variety of impossibilities and uncertainties which will render the regulations a laughing stock.
The Opposition will vote against the regulations, but not because we hold any of the views of the hon. Member for Southend, East. I do not know, or even care, whether he votes with us. However, if he does so, we shall find ourselves in the same Lobby as him but for entirely different reasons. Our reasons are totally worthy and his are totally unworthy. We are in favour of equal pay and rights, and we believe that it is for the law to provide them, because industry will not do so without the force of law. Industry should provide equality, but it does not do so.
Mr. Teddy Taylor: If the hon. and learned Gentleman thinks that outside inspectors and experts can do a better job than trade unions, why not just get a group of bureaucrats to determine the just wage of everyone working in Britain?
Mr. Janner: I would be very much in favour of trade unions having that power. I would have kept schedule 11 to the Employment Act and would not have repealed the Fair Wages Order. I would not have driven the trade unions out of the bargaining process as the Government are doing at every step, supported by the hon. Gentleman. He should be ashamed of himself.
We should have certainty for ACAS. It should be told what the rules are. Its experts should be properly instructed. Those who go to tribunals should know what they are about. We could have avoided costs. The Government's good intentions in allowing the experts to be cross-examined—for which we are grateful—could have been promoted by a decent set of regulations which were understandable. However, all that we can do now is to challenge the Minister to explain them, in the full belief that he cannot do so.
11.7 pm
Ms. Jo Richardson: I am glad that the debate has been held, because it has provided us with an opportunity for some plain speaking. It should be made plain, for example, that the regulations are concerned not with some small part of our lives but with low pay for women. That is the long and short of it. The Government should have introduced an order that did the job properly in the first place, without prompting from the European Court.
It is also necessary to make it plain that, by introducing the regulations, the Government have hampered women in their attempt to obtain equal pay for work of equal value. The original regulations did not speak plainly. They were a mess. I have read them several times and, frankly, I still cannot understand them. The legalistic, though welcome, speech of the hon. Member for Caithness and Sutherland (Mr. Maclennan) confused me even more.

371
The introduction of equal pay for work of equal value, which should have been done years ago, has been a depressing and saddening experience. At the beginning of this year the original regulations came into effect, 18 months after the Government were taken to court and then went, dragging their feet, into consultation. They consulted many bodies. Can the Minister tell us how many, if any, of the bodies whom he consulted thought that the Government were doing this the proper way? I am almost willing to bet that there was hardly one ally outside the House who thought so. The long overdue concept of equal pay for work of equal value is being brought into effect in a complex, costly and obstacle-ridden way.
The Government have taken no notice of the weighty opinion not just of individuals and organisations but of bodies like the Equal Opportunities Commission, which is in a sense an arm of Government. It is carrying out the Government's intentions on this matter. The Trades Union Congress has not been satisfied. Although the Minister has said that on procedure he consulted a number of bodies which appear to be satisfied, most trade unions are not satisfied with the extent of the amendments. The Government have given way on three points, but, if I have read the regulations correctly, every woman who makes a claim still has to go through about six stages before she can be sure that she has established the claim properly.
I want to ask the Minister about the experts. I do not share the view of the hon. Member for Southend, East (Mr. Taylor). We should have equality officers and proper codes of practice from the Equal Opportunities Commission. Nevertheless, it is something that there will be experts and that claimants can cross-examine them. Who will the experts be, and how have they been recruited?
I understand that an advertisement for experts appeared in The Sunday Times and perhaps in other newspapers some months ago. A friend of mine, who is a full-time trade union official and an expert in job evaluation, decided to apply because the advertisement said that the job was not full-time and could be done on a flexible basis. She also thought, and I agree, that it would be a good idea if some of the experts on job evaluation about equal pay for work of equal value were women, who would understand it better. So she persuaded three or four of her colleagues, not in the same union but in the same sort of work, to apply at the same time. They are all highly qualified professional people with direct experience of the kind of work which they believed they would be asked about at an interview or to do, if appointed. I understand also that about a dozen members of the Association of Professional, Executive, Clerical and Computer Staff, the union to which I belong, applied for jobs as experts. None of them has even been given an interview.
I should like to know who has been appointed. I believe there were about 600 replies to the advertisement and that 12 experts have been or are about to be appointed, with 12 in reserve. I should like to know what sort of people they are, their qualifications, expertise and experience and, of course, how many of them are men—or chaps, as the hon. Member for Southend, East would say—and how many are women.
Many of my hon. Friends have made speeches on this matter in the past few months. I am surprised that the Government did not take the weighty opinon that was
372
expressed in the other place into account when they considered the directive. We have a right, in the cause of equality, to ask the Minister to take these regulations back and to think again about what he does about the directive.
The Government have already issued one leaflet which is supposed to be a guide for women who want to claim equal pay. I have read it and it bears no relation to the procedure which the Government are now asking us to approve. I should like to read paragraph 3 of schedule 1 of the regulations not so much for its content as its complexity, just to show the House what it is like. The Minister said that the regulations are superimposed on the rules of industrial tribunals. That alone makes the matter terribly difficult to understand. See if you, Mr. Deputy Speaker, can understand this. Paragraph 3 reads:
"In paragraph (1) of Rule 8,"—
rule 8 being the industrial tribunal—
"at the beginning, there shall be inserted the words "Subject to paragraphs (2A), (2B), (2C), (2D) and (2E) of this Rule".
Which rule I am not sure. It continues:
"(2) In paragraph (2) of Rule 8"—
I thought that we had just dealt with rule 8—
"for the words "paragraph (1)", there shall be substituted the words "paragraphs (1), (2A), (2B), (2C) and (2D)".
(3) In Rule 8, after paragraph (2), there shall be inserted"—it then goes on to deal with (2A), (2B), (2C), (2D) and (2E).
I defy anyone to cut through all of that unless, as my hon. and learned Friend the Member for Leicester, West (Mr. Janner) said, they are eminent barristers—I am not sure that even they would be able to do so well. If Mrs. Joan Jones who is making a claim against her employer is expected to face the regulations she will not be successful unless she is a trained barrister, and if she is a trained barrister she is not likely to make a claim for equal pay for equal work because she will be getting it anyway. The whole thing is a mess and the Government should take it away.
The serious point in all this is the fact that the Government are not committed to eradicating low pay and achieving genuine equality for women. It is important to keep spelling that out. A long time ago the International Labour Organisation showed that women make up one half of the world's population, make up one third of the official labour force, put in two thirds of all of the hours that are worked and own one tenth of the world's wealth. Through these regulations, the Government are not contributing one iota to correcting the imbalance which exists in Britain, let alone the rest of the world. I therefore invite my hon. Friends and other hon. Members to vote against the regulations. I advise the Government to think again.
11.21 pm
Mr. Alan Clark: With the leave of the House, I shall reply to the debate.
This is a tortuous and complex matter. In the light of earlier episodes, the House will appreciate that the last thing that I want to do is to seem flippant.
I remind the House of the Schleswig-Holstein question, which was regarded as the most intractable of all historic conundrums of the 19th century. Bismarck said that only three people ever understood it — one was the chancellor, who was dead, one was a professor of politics at Munich, who was in the lunatic asylum, and the other was himself, and he had forgotten.

373
I have had a note about the principal point raised by the hon. Member for Caithness and Sutherland (Mr. Maclennan). It is complex, and I hope that the House will forgive me if I quite shamelessly read it.
The new rule 8(2C) says that no party may give evidence upon or question any matter of fact upon which the conclusion in the expert's report is based. This provision will not prevent parties from bringing to the tribunal's attention the mistakes or omissions of fact in the expert's report. Parties will have two opportunities to do that. The provision will not prevent the parties from bringing evidence in support of such matters. It merely seeks to ensure that such evidence is brought at the appropriate time.
Under the new rule 7A (3)(b) and (c) the expert will be required to prepare a written summary of all the information and representations made to him, and to send it to the parties, inviting comments, before preparing his report. His report must contain the summary sent to the parties and a brief of any representations from parties on that summary. One would expect errors of fact or omissions to be identified and put forward by the parties at that preliminary stage. If, however, the final report still contained a mistake or omission, the parties would be able to bring that to the tribunal's notice and to call evidence in support of that contention before the tribunal admitted the expert's report in evidence. The new rule 7A(8) sets out the grounds on which a tribunal can decide to reject a report. They can include errors or omissions.
Rule 8(2C) therefore applies only after the expert's report has been admitted by the tribunal's evidence. It would surely be superfluous to reopen questioning on facts at that late stage and would serve only to lengthen tribunal proceedings and encourage parties to withhold relevant evidence from the expert, which everyone would regard as undesirable.
Mr. Maclennan rose—
Mr. Clark: I shall not give way, as I have quite a lot of ground to cover.
Mr. Maclennan rose—
Mr. Clark: I shall give way in a minute. I should like to deal first with the points made in the debate. My hon. Friend the Member for Southend, East (Mr. Taylor) raised—
Mr. Maclennan: Will the Minister give way?
Mr. Clark: No. I have answered the hon. Gentleman's point. If I have time, having dealt with the speeches of other hon. Members, I shall return to him.
Mr. Maclennan rose—
Mr. Deputy Speaker: Order. The Minister clearly is not giving way. It would help the House if we allowed him to get on with his speech.
Mr. Clark: My hon. Friend the Member for Southend, East made a speech—with which I must admit a certain instinctive sympathy — from his traditional libertarian standpoint. He expressed his misgivings about the level to which European laws are intruding on our laws. Certainly, that element of intrusion is largely responsible for the complexity that attaches to the order. He asked where the experts would come from and who would pay them. They will be appointed by ACAS, and there will be 12 of them initially. They will not have power of entry into premises
374
nor the power to require evidence. They will simply make a report to the tribunal, and it is for the judical body to ask for such evidence as may be relevant to the information that it seeks.
The hon. Member for Barking (Ms. Richardson) asked me which statutory bodies we had consulted at this early stage. The Equal Opportunites Commission, which the hon. Lady cited as a body discontented with the regulations, has a statutory duty to follow events in this area. Its chairman has expressed her gratitude for and agreement with the changes in the procedural regulations. We are discussing only the procedural regulations, and not the order, tonight. The chairman said that she was grateful and pleased that the Secretary of State had met the main points of dissatisfaction with the procedural regulations.
The Government have done their best to make the procedural regulations conform with the various representations that we have received during the consultative process.
I ask the House to show a constructive rather than a critical attitude. It is our duty to give the regulations a fair wind and see how they work in practice—
Mr. Maclennan rose—
Mr. Clark: I shall not give way. I have answered the hon. Gentleman's points. He would do better at this stage to give the regulations a fair wind and see how they work in practice. It is possible for representations to be made if there are obvious defects. The regulations have only just come into force. It is better to approach them with a constructive attitude.
I urge the House to reject the prayer because, unless it does so, at the very least it will leave women's legitimate equal pay claims stranded. There will then be no way in which women can bring their legitimate claims before a tribunal and there will be no practical way of determining them.
The procedural regulations have altered virtually out of recognition. The hon. Member for Caithness and Sutherland knows that when they were first laid there was no procedure for cross-examining witnesses and that the parties involved could not call separate witnesses. We have made two major alterations to the procedure, and they are intended to make the regulations equitable. If we do not allow the regulations to go forward that will mean that women with legitimate claims—
Mr. Maclennan: On a point of order, Mr. Deputy Speaker. The Minister said quite clearly, in the recollection of the House, that he would give way to me after he had answered the questions asked by other hon. Members. He had answered those questions five minutes ago, and he has refused—
Mr. Deputy Speaker: Order. As the hon. Member knows, whether a Minister or any other hon. Member gives way is a matter for that hon. Member himself.
Mr. Clark: The hon. Member for Caithness and Sutherland, through his prayer, is obstructing—
Question put:—
The House divided: Ayes 188, Noes 251.

Division No. 151]

[11.30 pm

AYES

Adams, Allen (Paisley N)

Ashdown, Paddy

Alton, David

Ashley, Rt Hon Jack

Anderson, Donald

Ashton, Joe

Archer, Rt Hon Peter

Atkinson, N. (Tottenham)

375

Banks, Tony (Newham NW)

Home Robertson, John

Barnett, Guy

Howells, Geraint

Barron, Kevin

Hoyle, Douglas

Beckett, Mrs Margaret

Hughes, Dr. Mark (Durham)

Beith, A. J.

Hughes, Robert (Aberdeen N)

Bell, Stuart

Hughes, Roy (Newport East)

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

Hughes, Sean (Knowsley S)

Bermingham, Gerald

Hughes, Simon (Southwark)

Bidwell, Sydney

Janner, Hon Greville

Blair, Anthony

John, Brynmor

Boothroyd, Miss Betty

Johnston, Russell

Boyes, Roland

Jones, Barry (Alyn & Deeside)

Bray, Dr Jeremy

Kaufman, Rt Hon Gerald

Brown, Gordon (D'f'mline E)

Kennedy, Charles

Brown, Hugh D. (Provan)

Kilroy-Silk, Robert

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

Kirkwood, Archibald

Brown, Ron (E'burgh, Leith)

Lambie, David

Bruce, Malcolm

Lamond, James

Caborn, Richard

Leadbitter, Ted

Callaghan, Jim (Heyw'd & M)

Leighton, Ronald

Campbell-Savours, Dale

Lewis, Ron (Carlisle)

Canavan, Dennis

Litherland, Robert

Carlile, Alexander (Montg'y)

Lloyd, Tony (Stretford)

Clark, Dr David (S Shields)

Lofthouse, Geoffrey

Clarke, Thomas

Loyden, Edward

Clay, Robert

McCartney, Hugh

Cocks, Rt Hon M. (Bristol S.)

McDonald, Dr Oonagh

Cohen, Harry

McKay, Allen (Penistone)

Concannon, Rt Hon J. D.

McKelvey, William

Conlan, Bernard

Mackenzie, Rt Hon Gregor

Cook, Frank (Stockton North)

Maclennan, Robert

Cook, Robin F. (Livingston)

McNamara, Kevin

Corbett, Robin

McTaggart, Robert

Corbyn, Jeremy

McWilliam, John

Cowans, Harry

Madden, Max

Craigen, J. M.

Marek, Dr John

Crowther, Stan

Marshall, David (Shettleston)

Cunliffe, Lawrence

Martin, Michael

Cunningham, Dr John

Maxton, John

Dalyell, Tam

Maynard, Miss Joan

Davies, Rt Hon Denzil (L'lli)

Meacher, Michael

Davies, Ronald (Caerphilly)

Meadowcroft, Michael

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

Michie, William

Deakins, Eric

Mikardo, Ian

Dewar, Donald

Mitchell, Austin (G't Grimsby)

Dobson, Frank

Morris, Rt Hon A. (W'shawe)

Dormand, Jack

Morris, Rt Hon J. (Aberavon)

Douglas, Dick

Nellist, David

Dubs, Alfred

Oakes, Rt Hon Gordon

Duffy, A. E. P.

O'Brien, William

Dunwoody, Hon Mrs G.

O'Neill, Martin

Eadie, Alex

Orme, Rt Hon Stanley

Eastham, Ken

Parry, Robert

Evans, loan (Cynon Valley)

Pendry, Tom

Evans, John (St. Helens N)

Penhaligon, David

Fatchett, Derek

Pike, Peter

Field, Frank (Birkenhead)

Powell, Raymond (Ogmore)

Fields, T. (L'pool Broad Gn)

Prescott, John

Fisher, Mark

Radice, Giles

Flannery, Martin

Redmond, M.

Foot, Rt Hon Michael

Rees, Rt Hon M. (Leeds S)

Forrester, John

Richardson, Ms Jo

Foster, Derek

Robertson, George

Foulkes, George

Robinson, G. (Coventry NW)

Fraser, J. (Norwood)

Rooker, J. W.

Freud, Clement

Ross, Ernest (Dundee W)

George, Bruce

Ross, Stephen (Isle of Wight)

Gilbert, Rt Hon Dr John

Ryman, John

Godman, Dr Norman

Sedgemore, Brian

Golding, John

Sheerman, Barry

Gould, Bryan

Sheldon, Rt Hon R.

Hamilton, James (M'well N)

Shore, Rt Hon Peter

Harman, Ms Harriet

Short, Ms Clare (Ladywood)

Harrison, Rt Hon Walter

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

Hart, Rt Hon Dame Judith

Silkin, Rt Hon J.

Hattersley, Rt Hon Roy

Skinner, Dennis

Haynes, Frank

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

Heffer, Eric S.

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

Hogg, N. (C'nauld & Kilsyth)

Snape, Peter

Holland, Stuart (Vauxhall)

Soley, Clive

376

Spearing, Nigel

Weetch, Ken

Steel, Rt Hon David

Welsh, Michael

Strang, Gavin

White, James

Thomas, Dafydd (Merioneth)

Wigley, Dafydd

Thomas, Dr R. (Carmarthen)

Williams, Rt Hon A.

Thompson, J. (Wansbeck)

Winnick, David

Tinn, James

Wrigglesworth, Ian

Torney, Tom

Young, David (Bolton SE)

Wainwright, R.

Wallace, James

Tellers for the Ayes:

Wardell, Gareth (Gower)

Mr. John Cartwright and

Wareing, Robert

Mr. Don Dixon.

NOES

Adley, Robert

Durant, Tony

Aitken, Jonathan

Dykes, Hugh

Alexander, Richard

Eggar, Tim

Alison, Rt Hon Michael

Evennett, David

Amery, Rt Hon Julian

Eyre, Sir Reginald

Amess, David

Fairbairn, Nicholas

Ancram, Michael

Fallon, Michael

Arnold, Tom

Farr, John

Ashby, David

Fenner, Mrs Peggy

Atkins, Rt Hon Sir H.

Fletcher, Alexander

Baker, Nicholas (N Dorset)

Fookes, Miss Janet

Baldry, Anthony

Forman, Nigel

Batiste, Spencer

Forsyth, Michael (Stirling)

Beaumont-Dark, Anthony

Forth, Eric

Bellingham, Henry

Fowler, Rt Hon Norman

Bendall, Vivian

Fox, Marcus

Benyon, William

Fraser, Peter (Angus East)

Berry, Sir Anthony

Fry, Peter

Bevan, David Gilroy

Gale, Roger

Biffen, Rt Hon John

Goodlad, Alastair

Biggs-Davison, Sir John

Greenway, Harry

Blaker, Rt Hon Sir Peter

Grist, Ian

Body, Richard

Grylls, Michael

Bonsor, Sir Nicholas

Hamilton, Hon A. (Epsom)

Boscawen, Hon Robert

Hampson, Dr Keith

Bottomley, Peter

Hargreaves, Kenneth

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

Harris, David

Bowden, Gerald (Dulwich)

Harvey, Robert

Boyson, Dr Rhodes

Hawkins, C. (High Peak)

Braine, Sir Bernard

Henderson, Barry

Brandon-Bravo, Martin

Higgins, Rt Hon Terence L.

Bright, Graham

Hirst, Michael

Brinton, Tim

Hogg, Hon Douglas (Gr'th'm)

Brittan, Rt Hon Leon

Holland, Sir Philip (Gedling)

Brooke, Hon Peter

Hooson, Tom

Brown, M. (Brigg & Cl'thpes)

Hordern, Peter

Bruinvels, Peter

Howell, Rt Hon D. (G'ldford)

Buck, Sir Antony

Hunter, Andrew

Budgen, Nick

Hurd, Rt Hon Douglas

Bulmer, Esmond

Jackson, Robert

Burt, Alistair

Johnson-Smith, Sir Geoffrey

Butler, Hon Adam

Jopling, Rt Hon Michael

Butterfill, John

Knight, Mrs Jill (Edgbaston)

Carlisle, John (N Luton)

Lamont, Norman

Carlisle, Kenneth (Lincoln)

Lang, Ian

Chalker, Mrs Lynda

Lightbown, David

Channon, Rt Hon Paul

Lilley, Peter

Chapman, Sydney

Lloyd, Peter, (Fareham)

Churchill, W. S.

Lord, Michael

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

Luce, Richard

Clark, Dr Michael (Rochford)

Lyell, Nicholas

Clark, Sir W. (Croydon S)

McCrindle, Robert

Clarke, Kenneth (Rushcliffe)

McCurley, Mrs Anna

Clegg, Sir Walter

McCusker, Harold

Cockeram, Eric

Macfarlane, Neil

Colvin, Michael

MacGregor, John

Coombs, Simon

MacKay, Andrew (Berkshire)

Cope, John

MacKay, John (Argyll & Bute)

Cranborne, Viscount

Maclean, David John.

Crouch, David

Macmillan, Rt Hon M.

Currie, Mrs Edwina

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

Dickens, Geoffrey

Malins, Humfrey

Dicks, T.

Malone, Gerald

Dorrell, Stephen

Maples, John

Douglas-Hamilton, Lord J.

Marland, Paul

Dover, Denshore

Marshall, Michael (Arundel)

377

Mather, Carol

Shelton, William (Streatham)

Maude, Francis

Shepherd, Colin (Hereford)

Mawhinney, Dr Brian

Silvester, Fred

Maxwell-Hyslop, Robin

Sims, Roger

Mayhew, Sir Patrick

Skeet, T. H. H.

Mellor, David

Smith, Tim (Beaconsfield)

Merchant, Piers

Soames, Hon Nicholas

Meyer, Sir Anthony

Speller, Tony

Miller, Hal (B'grove)

Spence, John

Mills, Iain (Meriden)

Spencer, D.

Miscampbell, Norman

Spicer, Jim (W Dorset)

Mitchell, David (NW Hants)

Stanbrook, Ivor

Moate, Roger

Stanley, John

Montgomery, Fergus

Steen, Anthony

Moore, John

Stern, Michael

Morrison, Hon C. (Devizes)

Stevens, Lewis (Nuneaton)

Moynihan, Hon C.

Stevens, Martin (Fulham)

Mudd, David

Stewart, Allan (Eastwood)

Neale, Gerrard

Stewart, Andrew (Sherwood)

Needham, Richard

Stewart, Ian (N Hertf'dshire)

Nelson, Anthony

Stradling Thomas, J.

Neubert, Michael

Sumberg, David

Newton, Tony

Taylor, John (Solihull)

Nicholls, Patrick

Terlezki, Stefan

Nicholson, J.

Thomas, Rt Hon Peter

Normanton, Tom

Thompson, Donald (Calder V)

Norris, Steven

Thompson, Patrick (N'ich N)

Onslow, Cranley

Thorne, Neil (Ilford S)

Oppenheim, Philip

Thornton, Malcolm

Oppenheim, Rt Hon Mrs S.

Thurnham, Peter

Ottaway, Richard

Townsend, Cyril D. (B'heath)

Parris, Matthew

Tracey, Richard

Patten, John (Oxford)

Trippier, David

Peacock, Mrs Elizabeth

Twinn, Dr Ian

Pink, R. Bonner

van Straubenzee, Sir W.

Pollock, Alexander

Vaughan, Sir Gerard

Powell, William (Corby)

Viggers, Peter

Powley, John

Waddington, David

Prentice, Rt Hon Reg

Walden, George

Proctor, K. Harvey

Walker, Bill (T'side N)

Raffan, Keith

Waller, Gary

Rathbone, Tim

Walters, Dennis

Rees, Rt Hon Peter (Dover)

Wardle, C. (Bexhill)

Renton, Tim

Watson, John

Rhodes James, Robert

Watts, John

Rhys Williams, Sir Brandon

Wells, Bowen (Hertford)

Ridley, Rt Hon Nicholas

Wells, John (Maidstone)

Ridsdale, Sir Julian

Wheeler, John

Rifkind, Malcolm

Whitfield, John

Roberts, Wyn (Conwy)

Whitney, Raymond

Roe, Mrs Marion

Winterton, Mrs Ann

Rossi, Sir Hugh

Winterton, Nicholas

Rost, Peter

Wolfson, Mark

Rowe, Andrew

Wood, Timothy

Rumbold, Mrs Angela

Woodcock, Michael

Ryder, Richard

Yeo, Tim

Sackville, Hon Thomas

Young, Sir George (Acton)

Sainsbury, Hon Timothy

St. John-Stevas, Rt Hon N.

Tellers for the Noes:

Sayeed, Jonathan

Mr. John Major and

Shaw, Giles (Pudsey)

Mr. David Hunt.

Shaw, Sir Michael (Scarb')

Question accordingly negatived.

Maternity Services (Thanet)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Sainsbury.]
11.42 pm
Mr. Jonathan Aitken: I am grateful for this opportunity to raise the subject of the maternity services in Thanet—an important aspect of the NHS in the constituencies of my hon. Friend the Member for Thanet, North (Mr. Gale) and myself.
Before coming to the specific topic of maternity services, I want to make the general point that in the allocation of today's NHS resources, my hon. Friend and I are anxious that Thanet may be in danger of becoming the poor relation— the Cinderella—of the Canterbury and Thanet health district.
During the last 10 years in the House, I have often voiced my longstanding misgivings about the administrative wisdom of the 1974 shotgun wedding between Canterbury and Thanet as an outsized health district. As my hon. Friend the Member for Canterbury (Mr. Crouch), who is carefully listening to the debate, will confirm, both areas have such demographically different populations that conflicting priorities and other difficulties are bound to arise from time to time.
We are discussing one such difficulty tonight — a specific problem within the maternity services. But before dealing with the details of that problem, it is right to put the matter in its true perspective by emphasising that Thanet is fortunate in the fundamentally high quality of its maternity services.
These are based at the Margate hospital in the Edith Greaves maternity unit, which contains 56 beds and which last year successfully and happily delivered 1,496 newborn Thanet babies into the world. It is a modern, well-equipped and efficient ground floor unit, complete with its own operating theatre and ante-natal clinic.
It is staffed by a team of dedicated professionals—doctors, consultants, midwives and nurses—to whom I am glad to pay a warm and well-deserved tribute. Nothing that I say should cause any expectant mother to fear that this team will ever let her down, or that there is any foreseeable slide away from the high standards of excellence which the unit extols.
It is, of course, essential in the world of obstetrics—a world in which babies often arrive at inconvenient nocturnal moments—that a maternity unit is adequately covered by a fully trained medical staff at all times.
This adequate medical cover is provided in Thanet at present only by operating a schedule which is exhausting, which is unworkable in the long term and which would be unlawful according to the DHSS's own regulations if it were not for a device known as a variation order. Under this order, one registrar at the Edith Greaves unit, who of course works there every day, is, in addition, on duty for no fewer than nine out of every 14 nights. That is an intolerable burden for anyone to carry. The Department recognises this, for after negotiations with junior doctors a year or so ago, the DHSS introduced new regulations making it unlawful for a doctor to work more than seven out of 14 nights in addition to normal day working in a hospital. The situation in Thanet therefore is unacceptable, other than as a short-term and temporary expedient.
Yet already, the variation order has been renewed once, and although it is due to expire for the second time on

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31 March, there are rumours that the regional administrators may seek to renew it again. Will the Minister give an assurance that this round-the-clock working by a hospital registrar for nine out of 14 nights should not continue at the Edith Greaves maternity unit beyond the end of March. The present registrar, Mr. Panch, for all the excellent work that he has done, cannot and should not be allowed to continue on this present schedule.
The trainee GPs who are attached to the maternity unit are not professionally trained to take charge of the unit, and it is right that they should not do so. A new solution must, therefore, be found, and it should be a new appointment of a senior house officer who can divide the night duty with the registrar. At present, this appointment of a senior house officer is being stalled and held up at the region, and I do not know why this should be the case. It should not be for financial reasons, because, extraordinary though it sounds, the appointment of a new senior house officer would actually save the NHS money, provided that the appointee's contract ensured that he would provide cross cover between obstetrics and gynaecology on a regular basis.
This cross cover is at present being provided on a complicated, technical and expensive pay formula for junior doctors, and it should be replaced by a new arrangement in which the new senior house officer's contract would be an important and money-saving element. I am, therefore, in the surprising position of arguing tonight for an improvement in the NHS which would also save money.
The hour is late and my hon. Friend the Member for Thanet, North hopes to make a brief contribution to the debate. I conclude with the thought that although this short debate may be helpful in ending an unacceptable situation in Thanet's maternity services, it would not have been necessary if an alert administration team at the region had been a little more actively sympathetic to the obvious needs and requirements of Thanet.
My hon. Friend the Member for Thanet, North—and, no doubt, the Minister—sincerely hope that it will not be necessary to have to ballot for an Adjournment debate every time a Thanet NHS problem gets stalled by administrators. Alas, we have several problems — in orthopaedics, in geriatric care, and now over the future plans for Thanet's hospitals. But our constituents will not lack vigorous parliamentary advocacy if the NHS administrators move as sluggishly as they seem to have done over the maternity services problem, which I hope will now be solved quickly.
11.50 pm
Mr. Roger Gale rose—
Mr. Deputy Speaker (Mr. Harold Walker): Does the hon. Gentleman have the consent of the Minister as well as that of the hon. Member for Thanet, South (Mr. Aitken) to intervene in the debate?
Mr. Gale: Yes, Sir. I am extremely grateful to you, Mr. Deputy Speaker, to my hon. Friend the Member for Thanet, South (Mr. Aitken) and to my hon. Friend the Under-Secretary of State for allowing me to intervene in the debate. Given the lateness of the hour, I shall be as brief as possible.
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I endorse everything that my hon. Friend the Member for Thanet, South has said about the excellence of the maternity unit at Margate hospital. I took the opportunity —I was privileged to do so shortly before Christmas—of visiting the unit. It was patently apparent—there was a wealth of new-born babies on Christmas Eve—that babies do not arrive to order. It might be possible in an ordered world to schedule the staff who are attendant on the unit, but in a disordered world, which properly it is, that is not possible. On Christmas Eve, the young man to whom my hon. Friend has referred, was worked extremely hard. I add my compliment to that of my hon. Friend on the work of the unit.
The problem that my hon. Friend has raised will, we hope, be solved by the medical manpower board in the only manner that seems to us reasonable under the regulations that now apply. There is the suggestion that a post may be transferred from medicine to obstetrics and gynecology. We hope that in that way the board will be able to overcome the problem.
This issue highlights the special problems of a district that has two hospitals, two centre bases, with the senior staff, particularly, travelling between the two bases and endeavouring to serve both hospitals at the same time. My hon. Friend and I believe that the RAWP system does not take that fully into account in the allocation of staff, especially in the reallocation of the balance between senior and junior staff.
In addressing our remarks to my hon. Friend the Under-Secretary, both my hon. Friend the Member for Thanet, South and I hope that the Department will recognise the need for a fair degree of flexibility in the formula if it is to meet our specific needs.
I endorse what my hon. Friend said about the other problems that face medical needs in Thanet. We look forward to the rationalisation of the Thanet hospitals and the rebuilding programme, which we both believe is essential to the provision of services in the area. We have, as is generally recognised, an age imbalance in the area. If we are to redress that balance and provide the services that will attract young people and the industry that we hope to bring there, it is vital that the medical services that the area needs are provided. We both regard the rationalisation of the hospital services as an essential ingredient in the growth of the area.
11.53 pm
The Under-Secretary of State for Health and Social Security (Mr. John Patten): I am glad that my hon. Friend the Member for Thanet, South (Mr. Aitken) has raised this important issue, for a number of reasons apart from the specific and important case to which he referred. It has caused me to consider the problems facing the Canterbury and Thanet district health authority, a district with which I am not hitherto familiar. It will not surprise my hon. Friend to hear me say that when I remind him that there are 192 districts throughout the land.
It was interesting to ascertain the average level of provision in the district's area, which I understand is more or less on target in terms of resource allocation. My inquiries about the nature of medical politics in the district demonstrated to me that there is a certain amount of tension between the Canterbury end and the Thanet end. I hope that that is constructive rather than conflicting tension. It is a feature with which I am familiar in the Oxford district health authority in my constituency, where

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the people of Banbury, who are 18 to 20 miles to the north of Oxford, sometimes feel in a similar position to that of the people of Margate when they consider provision in Canterbury. Overall average levels of provision should demonstrate that all is well in a district health authority such as the Canterbury and Thanet district health authority, but the overall picture can mask considerable variations within the authority.
I was interested to hear what my hon. Friend the Member for Thanet, South said about the Edith Greaves maternity unit. I was delighted by the warmth with which he described the level of care that is provided by the medical and nursing staff. I was equally pleased to hear his sentiments echoed by my hon. Friend the Member for Thanet, North (Mr. Gale).
I seem to have done little else today except listen to my hon. Friend the Member for Thanet, South. I woke up at 7.15 am to his dulcet tones on the "Today" programme, and this afternoon he was speaking on a ten-minute Bill on another issue of great importance to his constituents — straw and stubble burning. In the dying moments of the day he is raising another issue of great interest to his constituents, who certainly cannot criticise him for not being as assiduous today as he is every day.
The point raised by my hon. Friends the Members for Thanet, North and for Thanet, South is important. I should be the first to agree that the rota currently being worked in obstetrics and gynaecology is not satisfactory, and I hope that that will not last much longer. I hope that my hon. Friend the Member for Thanet, South will understand that I shall not offer any detailed comments on this matter. It would not be appropriate for me to do so, as this is primarily a local service matter within the broad framework laid down by my right hon. and learned Friend the Minister for Health. It is better that detailed service arrangements are worked out within the local framework.
Local people would be the first to criticise central Government if the man from Whitehall appeared to know best. In this case it would not be the man from Whitehall —oh, that we were in such elegant surroundings—but the man from the Elephant and Castle. None the less, there is cause for concern and I should like to offer my hon. Friends some reassurance. I shall draw this debate to the attention of the chairman of the district health authority and make sure that he is aware of the views of my two hon. Friends. I am glad that my hon. Friend the Member for Canterbury (Mr. Crouch) is listening to this debate as well.
My hon. Friend the Member for Thanet, South is right in saying that, in general, rotas more onerous than one in two are prohibited for all junior medical staff. A little over a year ago my right hon. and learned Friend the Minister for Health announced a programme aimed at reducing the hours of duty worked by some junior doctors. That programme was agreed with the profession and welcomed by health authorities and the Select Committee on Social Services. Regular rotas more onerous than one in two have been prohibited since last July.
As my hon. Friend the Member for Thanet, South said, provision exists to vary the terms and conditions of service of junior doctors where necessary. It was agreed with the professions and the health authorities that variation orders might be granted by the Department if ending a particular rota would cause particular difficulty in providing or maintaining a service. I assure my hon. Friend that we are fully committed to seeing that rotas more onerous than one in two are ended as soon as possible.
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We recognised that it might not be possible to achieve that objective everywhere immediately—Thanet hospital is one such example. We agreed with the professions and health authorities that where ending existing rotas would cause serious difficulties for services they would be reviewed by a special professional panel at regional level. That panel and the regional health authority would then make recommendations to the DHSS.
I am glad that most authorities have succeeded in ending those rotas, but some still remain. The particular rota to which my hon. Friend the Member for Thanet, South referred has been reviewed by the regional panel, and on its advice a temporary variation order is outstanding until 31 March to give the regional and district health authority the time and opportunity to ascertain how the present unsatisfactory position can be brought to an end.
I understand that the district is examining this matter closely and will shortly be submitting proposals to the South-East Thames regional health authority for consideration. It is a matter for decision within the region, and I hope my hon. Friend understands that it would not be right for me to comment in greater detail on deliberations which are continuing between the district and the regional health authority. I think that he may be assured, however, that his concern has been or will be noted by the district health authority.
Both my hon. Friends spoke of the creation of a new senior house officer post at the hospital. That is an interesting idea, but I hope that they were not suggesting that an additional post should be created in the district health authority area, as that would fly in the face of the way in which we are trying to develop the hospital services. It would not be open to a district in this kind of difficulty simply to create an additional junior post to try to get out of the difficulty. The reason is that the Government — and, I believe, the profession and the Select Committee—want a much greater proportion of patient care to be provided by fully trained doctors as soon as possible. I know that that view is shared by my hon. Friend the Minister with responsibility for the disabled, who, with characteristic courtesy, has come to the Chamber at this late hour to support me in my comments. That new policy drift simply could not be achieved if we experienced once again an uncontrolled expansion in the junior grades, especially the senior house officer grade, such as occurred in the 1970s, which I and, I believe, the profession regarded as a very bad development, leading merely to an imbalance between senior and junior staff in the medical staffing structure.
We are very conscious that health authorities would have faced an impossible task if their existing junior posts had simply been frozen. Instead, therefore, we announced that regions would be expected to agree with the Department a ceiling on the total number of SHO posts that could be filled at any one time. My hon. Friend the Member for Thanet, North referred to the need for flexibility. We have provided flexibility by allowing regional health authorities scope to redeploy posts between districts or, where service or planning needs dictate, between specialties—a matter to which both my hon. Friends referred. Our broad objective is to secure a better balance in hospital medical staffing structure, which we believe is absolutely correct in the interests of patient care. Nevertheless, we have given health authorities that additional flexibility.

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I end on this positive note. Although I share my hon. Friends' desire that the rota problem be ended as soon as possible, other developments affecting maternity services in the Thanet area are extremely positive. I refer especially to recent developments in midwifery and midwifery recruitment, which is of critical importance in that maternity unit. I understand that although there have been difficulties in the past in this context they are now almost over and the situation is extremely healthy. The excellent Canterbury and Thanet midwifery training school has a waiting list for places, which is a very good sign, and the small number of existing vacancies for staff midwives is expected to be filled very soon following a carefully planned recruiting exercise. Happily, too, more and more
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midwives trained in the Thanet area are choosing to remain in that area and thus to be involved in the delivery of all those Thanet babies to whom my hon. Friend the Member for Thanet, South referred.
With the continuing development of midwifery services and the close attention of the district health authority to sorting out the specific problems that my hon. Friends have raised, I hope that in the not-too-distant future those problems will be solved and I heartily hope that it will not be necessary for my hon. Friend the Member for Thanet, South to ballot for a further Adjournment debate on this issue.
Question put and agreed to.
Adjourned accordingly at four minutes past Twelve o'clock.

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

Lord Mulley
The Right Honourable Frederick William Mulley, having been created Baron Mulley, of Manor Park in the City of Sheffield, for life—Was, in his robes, introduced between the Lord Thomson of Monifieth and the Lord Cledwyn of Penrhos.
The Earl of Snowdon—Took the Oath.

Youth Training Projects
Baroness Lockwood: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government when they expect the Manpower Services Commissions's pilot project in Birmingham to commence, involving a continuation of youth training scheme for a second year for those young people unable to find immediate work.
The Minister of State, Privy Council Office, and Minister for the Arts (The Earl of Gowrie): My Lords, the Manpower Services Commission does not propose to fund any such pilot project, I understand that the project in question, which will operate outside the scope of the youth training scheme, is being organised by the City of Birmingham education department.
Baroness Lockwood: My Lords, I thank the noble Earl for his reply, but I find it somewhat disappointing. Would he not agree that this is the kind of pilot project that should be encouraged, particularly as it is hoped that the youth training scheme will become part of the modular system of training in place of the fast-declining traditional apprenticeship system? Will the noble Earl undertake, through his right honourable friend the Secretary of State, to encourage the Manpower Services Commission and local authorities to mount such pilot projects in other places?
The Earl of Gowrie: My Lords, on the subject of training, the noble Baroness will be aware that I made a fairly lengthy Statement on training in your Lordships House yesterday. I hope that the noble Baroness will kindly look at that Statement, because I think she will find that it contains much to encourage her. On the subject of the City of Birmingham education department's pilot project, I have nothing but praise for their initiative in this regard; but, as I have said, it is not part of the Manpower Services Commission's youth training scheme, and to extend
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that to two years would of course be enormously expensive and could have a deleterious effect on the prospects of real employment for young people.
Lord Kilmarnock: My Lords, as the noble Earl told us yesterday that some 300,000 youths are now engaged on the youth training scheme—and I believe that the Government's original aim was 460,000—does it not give a little latitude, perhaps, for some diversion of resources into a second year for some of these young people?
The Earl of Gowrie: My Lords, the Government take the view that it would be best to devote resources and the skills and dedication of very many people involved in the youth training scheme—not least employers—to improving its quality on a constant basis. I rather doubt whether to extend it would have that effect.
Baroness Lockwood: My Lords, does the noble Earl agree that, in the White Paper issued yesterday, it says that one of the objectives of the training programme is to improve training, particularly in the field of apprenticeships? Would the noble Earl not agree that the Birmingham initiative could be part of this improvement?
The Earl of Gowrie: My Lords, as I said, I have nothing but praise for the Birmingham initiative. But if the noble Baroness will look at my Statement she will see that the Government are channelling more resources into training this year than at any time in our history.
Lord Leatherland: My Lords, I should like to ask the noble Earl the Minister whether the Government will please look again at this suggestion as it is of some importance to hundreds of thousands of people. Will he bear in mind that the civic motto of Birmingham is "Forward"?
The Earl of Gowrie: My Lords, I am afraid I did not hear the second part of the noble Lord's supplementary question, but I think he was again trying to draw me into praise of the City of Birmingham, and that, as someone who resides within an hour of it, I am delighted to do.
Lord Leatherland: My Lords, if the noble Minister wishes to find something to praise in Birmingham, he can take note of the fact that I was born there.

Greenham Common Demonstrations: Costs
2.54 p.m.
Lord Orr-Ewing: 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 the total sum that has been raised by fines imposed on demonstrators at Greenham Common, and what has been the total cost of repairs to public property and of the extra police deployment.
The Parliamentary Under-Secretary of State, Home Office (Lord Elton): My Lords, the Chief Constable of Thames Valley tells me that up to 27th January fines totalling some £8,156 have been imposed on people arrested by civilian police officers. In addition, fines totalling some £1,631 have been imposed on people arrested by the Ministry of Defence police.
The damage done to Ministry of Defence property caused by protestors is estimated at £145,000. We understand that the Thames Valley Police authority estimates the additional cost of policing Greenham Common in the current financial year as some £2.8 million.
Lord Orr-Ewing: My Lords, I thank my noble friend for that piece of information. Is he aware that the long-suffering taxpayers, and particularly the local ratepayers, find it very dispiriting and discouraging to see fences and other public property constantly destroyed and repaired, and destroyed again by the same people? Would it not be natural—as in the case of other transgressions whether it be burglary, shoplifting or even driving—for the fines to be progressively increased to make sure that people are aware that they are destroying public property for which other people are having to pay?
Lord Elton: My Lords, the level of fines is of course entirely a matter for the courts. Information available to the police does not record whether people who have been convicted more than once have received a higher penalty for the second offence. However, it is open to the court to take account of a previous conviction in determining what penalty to impose for a second or subsequent offence, and indeed for trying the patience of the court.
Lord Molloy: My Lords, is the noble Lord aware that the damaging of property and causing unrest have been the excuses put forward for using retributive measures by tyrants thoughout the centuries? Would it not be much better if the type of permission acknowledged by the British people as being their right—that is to say, the right to demonstrate in this country, at Parliament, at Greenham, at town halls and so on—were given and extended in the Soviet Union and other fascist countries? Therefore, the £200,000 that might be involved is very cheap for an honourable, free society?
Lord Elton: My Lords, we have an honourable and free society and in it people are free to demonstrate honourably—they are not free to break the law or to cause criminal damage. In saying that, I can find no similarity with the overtones of tyrants thoughout history.
Lord Boyd-Carpenter: My Lords, arising from my noble friend's answer to a previous question, is it not in accordance with accepted standards of penology that repeated and deliberate defiance of the law by the same person is met, and properly met, by very much increased penalties?
Lord Elton: My Lords, I am sure that my noble friend is right, but speaking on behalf of Her Majesty's
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Government it is not for me to give advice to the courts.
Lord Mishcon: My Lords, is it not a fact that it would be very proper for such matters to be left to the courts? Would the noble Lord the Minister accept from this Front Bench, as I am sure he would anticipate, that no one condones damage to property or illegal behaviour but that the asset that we have of freedom of speech and the right to demonstrate is invaluable and certainly could not even be measured in millions of pounds?
Lord Elton: My Lords, indeed it could not be measured even in millions of pounds, and that is why we take such a careful and disapproving view of those who nibble at the edge of such rights by using the right to demonstrate freely to commit illegal, irresponsible and damaging acts.
The Earl of Lauderdale: My Lords, would not my noble friend agree that, without in any way inhibiting the liberty of the subject, which we treasure, the time has come to consider some measure—legislative or otherwise—which would make it possible for those who damage property to be compelled to help pay for its repair?
Lord Elton: My Lords, indeed the courts are empowered to require compensation to be paid by those committing damage and the magistrates' courts can do so up to a level of £1,000.
Lord Hooson: My Lords, would the noble Lord not agree that the benches who have to deal with these matters have to consider and balance very finely the great problem of creating martyrs by simply increasing penalties, as noble Lords have implied in their questions, and that the creation of martyrs in this situation might be the very last thing that your Lordships' House would want?
Lord Elton: My Lords, I and the Government have the greatest confidence in the magistracy of this country and, while I do not doubt that the comments of my noble friend and others will be of interest, I repeat: it is not for the Government to tell the magistrates how to discharge their functions.
Lord Gisborough: My Lords, can my noble friend say whether the fines are being paid or whether they are being ignored?
Lord Elton: My Lords, I believe I am right in saying that most of them have been paid, but that some of them have not, and where they have not been paid there has subsequently been custodial treatment of the offender.
Lord Jenkins of Putney: My Lords, would the noble Lord say how many women demonstrators have been imprisoned and what has been the cost of their imprisonment?
Lord Elton: My Lords, I am afraid that my answers do not discriminate between men and women.

Moped Driving Test: 16 Year-Olds
3 p.m.
Lord Strathcarron: 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 propose to take to encourage 16 year-old riders of mopeds to take the driving test.
Lord Lucas of Chilworth: My Lords, last July the Department of Transport issued a discussion paper which considered the scope for encouraging 16 year-old moped riders to take training and pass the moped test. My honourable friend the Minister of State for Transport has been studying the responses to this paper and will be making positive proposals shortly.
Lord Strathcarron: My Lords, I thank my noble friend for his reply. However, it would be nice to know how long "shortly" will be. Can my noble friend say whether the Government's measures on training are having any noticeable effect on road safety?
Lord Lucas of Chilworth: My Lords, recognising my noble friend's interest in this matter as chairman of the British Motor Cycle Safety Foundation, I can also recognise his supplementary questions. "Shortly" has been described in your Lordships' House in various ways. My noble friend will appreciate that when one is considering compulsion for 16 year-olds, one has to make very sure that one does not also greatly affect 17 year-old motor cycle riders. My noble friend will recognise that the level of casualties is unacceptably high. Therefore, the matter is of some complexity and my honourable friend the Minister would want to get it as near right as possible.
On my noble friend's second supplementary question, frankly, it is a little too early to assess the full impact of the measures in terms of their effect on casualties. It is certainly noteworthy that in the third quarter of 1983—the latest period for which figures are available—motor cycle casualties (and this includes moped casualties) were down by about 12 per cent. compared with the same period in 1982. However, I have to say that the total number of deaths and casualties in 1982, with moped riders at 3,109 and with motor cycle riders at 16,904, is much too high and a very serious matter.
Lord Underhill: My Lords, I think that there would be general agreement over the seriousness of the figures which the Minister has just given. In the light of the fact that in the general classification of motor cycle casualties over half of them are teenagers, can the Minister say whether that figure also applies to moped riders, or is the figure greater?
Lord Lucas of Chilworth: My Lords, if I understand the noble Lord, Lord Underhill, correctly, he is talking about ages. He will probably recall that moped riders are invariably between the ages of 16 and 18; learner motor cycle riders start at 17 years and, having passed Part 1 and Part 2 of the test, would then progress to a larger machine. Therefore, the two sets of figures that I have given embrace both groups.
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If your Lordships will allow me, this gives me the opportunity to remind the House—and indeed motor cycle riders—that the provisional licences start to expire from 1st October this year. I strongly urge all riders who have not yet taken training and passed both parts of the motor cycle test to attend to that matter with a good deal of urgency; otherwise, of course, they will lose one year on the road.
Lord Nugent of Guildford: My Lords, can my noble friend tell us whether there are sufficient off the road facilities for training motor cyclists to accommodate all those who require this training?
Lord Lucas of Chilworth: My Lords, according to our information, there is a surfeit of off the road training facilities throughout the country.
Lord Strathcarron: My Lords, will my noble friend agree that, provided a 16 year-old moped rider has undertaken a recognised course of training and passed a test of competence, he should be allowed to ride a restricted performance 125cc machine displaying L-plates, and then take the second part of the test when he is 17 years old?
Lord Lucas of Chilworth: My Lords, I recognise what my noble friend is saying; I do not think that I can completely agree with him. Although it is an attractive proposition to induce 16 year-olds to take tests with the probability of an exemption for moving on to other machines, certainly those who were consulted in July and August of last year were not unanimous in their views on this aspect. It is for that reason that my honourable friend has found some little difficulty in arriving at the right kind of solution.

Transport Supplementary Grant Settlement
3.5 p.m.
Lord Underhill: 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 are the principles behind the transport supplementary grant settlement 1984–85 announced by the Secretary of State on 14th December 1983.
Lord Lucas of Chilworth: My Lords, the principles behind the 1984–85 settlement were, as in previous years, to allocate the available resources and grant between county councils in accordance with the Secretary of State's judgments of their transport policies and needs.
Lord Underhill: My Lords, I thank the Minister for that reply, which I do not think has given us the full facts. May I ask whether it is not the case that the transport supplementary grant has been reduced by 11 per cent. overall, and that the rate of grant above the threshold has been reduced from 70 per cent. to 55 per cent.? Has not this led to a substantial switch of grant from the GLC and the metropolitan areas, where the needs of transportation are the greater, and as the Government have accepted a higher rate of

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expenditure on transport from the various local authorities, does this mean that a higher contribution will be required from the rates in those particular areas?
Lord Lucas of Chilworth: My Lords, I am sorry that the noble Lord, Lord Underhill, finds my original Answer inadequate. I did, in fact, answer precisely the Question on the Order Paper. The noble Lord asked me whether the transport supplementary grant has been reduced by 11 per cent. I have to tell him that from last year the grant has been reduced from £456 million to £400 million, and that is a reduction in cash terms of 12·3 per cent. That there was a reduction from 70 per cent. to 55 per cent. in the marginal grant rate above the threshold is quite correct. It was done in order to make good certain imbalances that had occurred in previous years. I might add that there is nothing sacrosanct about the 70 per cent. marginal grant rate, in that the 1973 circular, which led to the introduction of TSG in the Local Government Act 1974, envisaged that the rate of grant would eventually be reduced to 50 per cent.
The switch to which the noble Lord refers is, of course, correct. I have referred to the correction of an in balance. Nevertheless, at the end of the day, the Greater London Council enjoys a grant of £20.95 per head of population; the metropolitan counties £9.37 per head of population; and the shires, £5.30. The GLC and the metropolitan counties enjoy 60 per cent. Of the total grant that has been made available.
Lord Mowbray and Stourton: My Lords, can my noble friend confirm that there has not yet been any government which, when looking for ways to cut back, have not taken advantage of the transport side of life? Can my noble friend confirm that he, personally, will be as sad as I am that transport has to suffer these cutbacks? Nevertheless, I should like to receive confirmation that this is part of a cutback which is general to all governments and that, unfortunately, this Government are no exception?
Lord Lucas of Chilworth: My Lords, I am just not old enough to remember whether it is "any" government. I suspect that most governments have used the weapons to hand. However, I can tell my noble friend that the transport supplementary grant reduction is very much in line with Her Majesty's Government's general policy of reducing the central Government contribution to local spending. To turn to a piece of detail which my noble friend raised, may I remind the House that an increase of 8 per cent. is being made in the accepted expenditure for the maintenance of roads, while there has been a small fallback in that for rail and bus, which is largely within the control of the local authority itself.
Lord Cledwyn of Penrhos: My Lords, is the noble Lord not aware that however he dresses it up a cut of 12.3 per cent. Is substantial? Would he agree that this leaves the authorities with three possibilities: to increase the rates; to increase the fares; or to cut the services? Which does he recommend?
Lord Lucas of Chilworth: My Lords, I recognise what the noble Lord, Lord Cledwyn of Penrhos, says: that this reduction is quite a considerable amount. I personally would not accept one of the three solutions which he offers. I believe that there are plenty of grounds for greater efficiency in the cutting of costs which would affect the balance.
Lord Underhill: My Lords, that reply does not deal with the point that the Government have themselves accepted a 3.4 per cent. increase in expenditure on transport by the local authorities. The Government have accepted a higher expenditure and yet at the same time, in the Minister's own words, it is——
Noble Lords: Question!
Lord Underhill: My Lords, I am asking the question. I am asking the Minister: is it not a fact that at the same time that the Government have done that, in the Minister's own words they have reduced the grant by 12.3 per cent. to meet a higher accepted rate of expenditure?
Lord Lucas of Chilworth: My Lords, I have not worked out the percentage to which the noble Lord, Lord Underhill, referred. I accept that his arithmetic is correct. I confirm again that there is a reduction in the grant. Nevertheless, there is no reason for us to suppose that that amount of money which local authorities wish to spend above and beyond the grant. Which is only a supplementary grant to support desirable schemes, cannot be found from much greater efficiency and the cutting of costs within their transport organisations. We discussed this matter over a year ago. I brought before your Lordships a number of instances, and I stand firm on what I said then a year ago.
Lord Molloy: My Lords, can the noble Lord give the House an assurance that as a result of the cuts that he has told us must be imposed there will be in no way any form of increased unemployment?
Lord Lucas of Chilworth: My Lords, I did not refer to cuts: I referred to a reduction in the level of transport supplementary grant. Noble Lords opposite may find that somewhat humorous. I am not particularly anxious to have the noble Lord, Lord Molloy, put words into my mouth. I cannot give him the assurance from this Box because it is not within my province; it is within the province of the local authorities.

Business
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Cockfield will, with the leave of the House, repeat a Statement to be made in another place on Nissan. This will be followed by my noble friend Lord Belstead who, again with the leave of the House, will repeat a Statement on the Fisheries Council 31st January 1984.

Business of the House
The Lord President of the Council (Viscount Whitelaw): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That leave be given to the Lord Gray of Contin to advance the Report stage of the Tourism (Overseas Promotion) (Scotland) Bill [H.L.] from Thursday the 23rd to Monday the 6th of February.—(Viscount Whitelaw.)
On Question, Motion agreed to.

European Council: March Meeting
3.14 p.m.
Lord Ezra Lord Ezra rose to call attention to the need for Her Majesty's Government to take a more constructive attitude at the forthcoming meeting of the European Council in March in order to help to resolve the essential problems of the Community and to realise its full potential, particularly in international affairs; and to move for Papers.
The noble Lord said: My Lords, the Motion which I shall be introducing today is of fundamental importance, not only to this country but to all the member countries of the European Community. We have seen that at the last meeting of the European Council, in Athens in December, there was a total failure to reach agreement on the matters needed to get the Community on its course again. We now have a meeting due to take place under the presidency of M. Mitterrand towards the end of March, when the agenda which was agreed at Stuttgart in June of last year will be taken up again.
I believe it is of crucial importance that we and the other members of the Community should make a determined endeavour to resolve the outstanding problems. I am sure that this House would wish M. Mitterrand every possible success as President of the Council to resolve these problems. He has indeed started by having private conversations with the heads of state and heads of government of the other member countries in order to prepare for this important work.
The issue we have before us is the very existence of the Community. We have shown as a nation that we believe that a large part of our destiny lies in Europe. We have decided by various manifestations of the popular vote that we should become party to the European Community. It is therefore important that we should play our role in making sure that that Community succeeds.
Before I get on to discussing the issues with which we are all familiar, and make certain suggestions as to how we may overcome them, I should like to refer to what I believe are certain difficulties of an organisational nature preventing the Community from coming to effective agreement. The first remarks I should like to make are in regard to the European Council itself. The European Council is a meeting of heads of state and governments of the European Community. It was idea which was launched by M. Pompidou in the latter 1960s.
The intention was that these eminent personalities at the top of their respective countries would be
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discussing between themselves broad strategic issues. Unfortunately, as time has gone on, the European Council has actually taken on the detailed work of decision-making within the Community. The result of that has been that instead of the decisions being reached through the normal processes laid down in the treaty, to which we subscribed as a country when we joined, decisions on even the most detailed matters are now being deferred until they can be dealt with by the heads of state and governments. At their next meeting they have allotted themselves only two days in which to do this, and it would not be surprising if, as happened at Athens, they have no time to come to agreement. There, all the heads of state and government had their briefs on milk quotas, cereal prices and goodness knows what other detailed matters, and the thing ended in complete disagreement.
Therefore, I think that the first thing we might humbly propose to the heads of state and governments is that they might perhaps decide on a self-denying ordinance. I hope they would agree that the decision-making processes of the Community should revert back to where they were intended to be—between the responsible Ministers and the officials serving them—and that they themselves should limit themselves to the strategic issues.
Indeed, this point was raised in an important debate in the European Parliament on 13th December, and I would draw your Lordships' attention to what the noble Baroness, Lady Elles, had to say on the subject, and what Sir Fred Catherwood had to say, quite apart from the speech by M. Thorn, President of the Commission, when he addressed the Parliament. That seems to me to be one impediment in the way of making the Community go forward: that decision-making has now moved to an area where it should never have been, and beyond the heads of state and government, at any rate in terrestrial terms, there is no further recourse.
I think that in all these matters—I see the right reverend Prelate sitting there; I do not know whether spiritual guidance could help us in these matters—it is desirable that there should be some ultimate body which can decide these things and which is not committed to the detailed negotiations.
A second matter that I would refer to on the organisational aspects is the use of the veto. In the Community the veto was introduced as a result of pressures by General de Gaulle in the mid-1960s. As a result of the so-called Luxembourg Compromise of 1965, it was agreed, contrary to what is laid down in the Treaty, but nevertheless agreed, that in matters which were of vital concern to a particular country it could exercise the veto. I regret to tell your Lordships that this right of veto has been massively abused and since that period no fewer than 300 vetoes have been imposed on such relatively small matters, for example, as a veto imposed by the German Government to prevent the acceptance throughout the Community of the qualifications of architects. How that can be regarded as fundamentally affecting the interests of that particular country is difficult to decide.
There are many other instances of this use of the veto. I think the time has come when this should be

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reviewed. It might well be, as we all hope, that in Brussels in March there will be agreement, but then that agreement could be negatived by the indiscriminate use of the veto in its application. This is something we should look at seriously.
The third area of the organisational operations of the Community to which I should like to draw attention is the role of the Parliament. We have in the European Parliament on the British side and all the other countries' sides, some very eminent personalities devoting much time to these affairs. But, apart from their ability to hold up the budgetary decisions, they have no real authority. Now that we are coming up to the second elections to the European Parliament, when many eminent people will be appointed to represent their countries in that Parliament, we should be leading in a re-examination of the rôle of the Parliament in order to make the whole Community organisation more democratic.
But what we are concerned with primarily in this debate today is the United Kingdom's position in the forthcoming negotiations. I regret to have to say that the impression abroad of the United Kingdom position is very negative. The position that the United Kingdom Government actually hold in this matter is, in my opinion, not as negative as is thought. We have had the benefit in this House of hearing what Ministers have had to say. I have read carefully what Ministers have said in another place. I think that the view taken of Community affairs is fairly broad, but it is regrettable to have to say that, for those of us who go abroad a great deal—I am one of them—the impression that people have in other Community countries is that we are obsessed with the recovery of our overpayments to the exclusion of all other considerations. I do not believe that is correct, but I should like to state that it is the view.
It is very important that in the run-up to the March deliberations we should correct that impression. If the Government's view, as I believe it is, is that the issues in the Community are wider than the mere recovery of overpayment, as we regard it, I think we should undertake a major campaign to make that clear, because our many friends abroad have the impression that we are solely concerned with the recovery of those monies. This would be a very unfortunate basis on which to go into these renewed negotiations.
There are in fact many issues to which the heads of state and governments should be addressing themselves at present. The time has come when we need to raise the whole level of the European debate. We need to start considering the fundamental issues which confront our various nations. Of course we want to get the budgetary position right; of course we want to resolve the problems of agriculture; of course we want to ensure that efficient use is made of whatever resources we dedicate to the Community, but we must not lose sight of the fact that we as a group of nations came together to try to have an impact on world affairs of a beneficial nature. We are like-minded countries with democratic systems and we have, for the moment, abdicated the discussion of the major issues affecting the world to the two big powers. Because the European Community has not been able to resolve its
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internal problems its external presence has been diminished.
Thus the priorities are very simple. We need quickly to sort out our internal differences and we need very quickly to start asserting ourselves as a group of like-minded nations in the external debates of the world.
If your Lordships will allow me, I should now like quickly to deal with some of the internal problems. I shall not start with agriculture or the budget or the United Kingdom contribution, because I believe that internally there is something far more important than those. As a country, we are, like our other fellow countries in Western Europe, going through a massive period of structural change. We are now reaching a period when we are at the start of a change the like of which we have not known since the first industrial revolution. This is not something which has come about simply because of the recent recession. It has come about also because of the fundamental development of technology and the emergence of the newly industrialised countries, known as the NICs, which have moved into the basic industrial activities in which we previously led. This is because they have started from scratch with new equipment and new motivations, and, in steel, shipbuilding and textiles (one could name a whole range of these enterprises), they have secured a dominant position.
The result of all these things is that we have at present an unemployment level in the European Community of no fewer than 13 million persons. We have, as we know, some 3 million in the United Kingdom. That is the outward manifestation of this structural change which is taking place. We all know that it will not go away overnight and so it is my opinion that the first thing that the European Council should be concerning itself with is the implications of this structural change, the implications for our economy, for our society, for our way of life and for our financial position. This is the fundamental issue which we should be considering together. It is indeed a problem that we should be considering in this country in much greater depth than we are doing at the moment.
We ought to be doing the same with our colleagues abroad. That means that we ought to be re-examining the role of the Regional Fund and the Social Fund; and I must say that it disturbs me very much indeed that the United Kingdom should be one of the very few countries which are holding up the ESPRIT project. If I may explain to your Lordships who may not be familiar with it, the ESPRIT project is one by which the 10 most technologically advanced companies of the Community are banding together in providing half the resources necessary, the other half to be provided by the Community in order to develop the next phase of information technology, so that we can compete with the big strides being made by the United States and Japan. No single West European country can meet that challenge; we can only meet it together. I think it is sad that the United Kingdom should be one of the few countries standing in the way of that development.
If we are to cope with the structural change which we now face, we have to make sure not only that we are in the vanguard of technological development but that we also have clearly defined policies for the

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retraining and restructuring of industry and for the proper support of those who, through no fault of their own, are thrown out of jobs. All these things form part of what I believe, from the internal point of view, is the most important issue to which the European Council ought to be addressing themselves.
We next come to the very important problem of agriculture which we cannot avoid talking about, because agriculture takes up about two-thirds of the total Community budget, which is equivalent to £15 billion, of which £10 billion goes on agricultural support. I am not personally involved in agriculture. With my noble friend Lord Gormley, I was involved in another industry which dealt with the land, but we dealt with under it, not on top of it. So I recognise the problems that anybody dealing with physical factors has to cope with.
I think the farmers of this country and in the rest of the Community have achieved a remarkable amount in the last 10 or 15 years. From being an area which was dependent on massive imports of food from elsewhere, we have now become more than self-sufficient in most food products. The efficiency of our farming has enormously improved; and so we have to be very careful how we deal with this farming problem.
I do not think there is any solution in forcing prices down or altering thresholds in such a way that the farming community could be set right back in their achievements, but I believe the farming community would be the first to admit that there have to be modifications made to the CAP. I had the advantage recently, in preparation for my contribution to this debate, to have a chat with Sir Richard Butler, president of the NFU. It was clear to me that he and his members were ready to face the problems so long as they took account of the fact that solutions could not be rushed. If there is a criticism one could make, it is that this problem was not realised sooner. We have allowed the farm problem to go on too late—to the point now at which we are forced to take radical measures.
We should have recognised several years ago—indeed, I believe the Commission was continually drawing attention to this—that it was time to start modifying the farm support system in the Community. We have gone on and on, building up the cost of those operations until now we are faced with a situation where, if we take measures which are really draconian, we would harm the farming community beyond measure, and if we take inadequate measures it would be very difficult for us to resolve the financial problem in the Community.
This has arisen, I regret to say, through delaying a decision on these matters for so long; and so there is a very difficult issue to be faced here. Nevertheless, proposals have been put forward by the Commission following on the Stuttgart agenda. I am of the opinion that if we have the proposals discussed at the proper levels in the Community and not just left for heads of government to decide, we could get near an agreement on what might be achieved.
We next come to the related budgetary problem. The fact is that, whereas nearly 90 per cent. of those employed in the Community are in industry and in services and some 10 per cent. in farming, the
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disbursements from the Community budget are in the ratio of 65 to 66 per cent. to farming and the remainder to the rest. Therefore, this disequilibrium has to be corrected over a period of time. It is going to take time. I do not think, as I have indicated, that we can rush the solution of the farming problem without seriously harming the achievements of farming. Equally, we have very pressing problems on the industrial front on restructuring and on technological development.
Then, we have the problems of the new entrants, Spain and Portugal. We are all agreed, on political grounds, that they must be welcomed in the Community, but they are countries in great economic difficulty and they will undoubtedly present further burdens for the rest of us. Therefore, I think it is virtually certain that if, on the one hand, we are trying to solve the farming problem without too serious a disruption and, on the other hand, we recognise the difficulties on the industrial front, as well as realising that in enlarging the Community we are welcoming in two countries that are in great economic difficulties, some increase in the resources available to the Community will be inescapable. We shall be unable to do all these things within the present resources. I am very glad, reading carefully the debates in another place, that Her Majesty's Ministers of State have made it clear that their minds are not closed on the subject and that they are prepared to consider this.
Then we come to the question of the sharing of the burdens. I think everybody agrees that the situation now is one that cannot go on and that the British position in particular, with the special circumstances of Britain, has been the one that has suffered most. Although since 1980 a number of rebates have been agreed, I think the Government are right in saying that that cannot continue. We have got to find a long-term solution to this problem.
The solution is not impossible. The Commission have proposed a way round it and Her Majesty's Government have proposed a way round it. I believe there is general agreement that this has got to be resolved and I would have thought that if people of good will got together, they would be able to resolve it. What it needs, however, is for the European Council and heads of government to be very firm that they want the Stuttgart agenda to be carried out and to be very firm in stating that they have the political will for these matters to be resolved. But I very much hope that they will not try to resolve them themselves, because they will get into a bargaining situation in which, with their knowledge of the subject—being heads of state and of government they cannot know everything, however important they may be—the time available will not enable them to deal with these very difficult and complicated matters.
The importance of resolving these issues is not only because the Community internally cannot continue without their solution, but also because it would enable the Community as a body of like-minded countries to exert much more influence in international affairs. At the moment, we are weak in the world's deliberations. The big debate on nuclear arms is going on between the two super-powers. If we speak up on our own account—any one of us in the European Community—our voice will be drowned. If

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we were to speak together in that big debate, as a concentration of populations with like-minded views held by people who are likely to be at the very centre of any possible nuclear conflict (we hope that it will never occur), we could play a very big role.
We should also like the heads of state and of governments of the Community to be discussing, having resolved by determination the internal problems, the problems in the Middle East and in Central America, and the big sovereign debt problem. All these are matters of very great moment to us all, on which as individual European countries we can have very little impact. But grouping ourselves together we could make a considerable impact. So my thesis is that as a group of countries we want to resolve these problems, and we must devise ways to do it. The objective is not only to resolve a number of internal problems, but also to make sure that the Community can play its role in international affairs.
The Community is now at its turning point, and there are three possibilities ahead. At the worst, if Brussels does no better than Athens, and if there is total disagreement, then the Community could disintegrate into an unseemly squabble over what would appear to be matters of detail. Each country would then be forced to take its own measures to cope with the consequent situation, and the whole concept of European co-operation would suffer a setback for several years. That is the worst possibility.
The medium possibility is that we could have a botched-up attempt to cope with the situation for a short period, trying to get through for a year or so. But that would be bad, too, because as a result the fundamental issues would get worse. So we hope that the outcome will be different from that: that we shall have the European Council recognising that it must leave the detailed negotiations of these very complicated issues to the appropriate Ministers and officials; that it should concern itself with strategy; and that the main issues with which it should concern itself are the problems of restructuring and world peace. My Lords, I beg to move for Papers.
3.45 p.m.
The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): My Lords, your Lordships will be grateful to the noble Lord, Lord Ezra, for introducing his Motion today, and I welcome the opportunity created by the noble Lord to set out the Government's approach to the current negotiations on the future of the European Community. Your Lordships will derive added pleasure from the fact that my noble friend Lord Fanshawe is to make his maiden speech.
Let me say at the outset that the Government are fully committed to enabling the Community to realise its full potential, both in the interests of the member states themselves and so as to permit the Community to play the full role in international affairs to which the noble Lord has alluded. The noble Lord, Lord Ezra, would be the last to claim that the British Government should not fight, and fight hard, for British interests. But in calling on the Government to take a more constructive attitude in the next European Council,
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the noble Lord implies that if only we were to press our case a little less vigorously then we could achieve a breakthrough which would resolve the Community's current difficulties.
I regret to say that I do not think that the issue is as simple as that. For the question we have to answer, and which underlies the noble Lord's Motion, is: what kind of Community are we working for? Britain has never been a country to pay lip service to grand and unrealisable schemes promising European union but ignoring the steps needed to achieve it. We do have clear and far-reaching ideas for the future development of the Community, which I shall describe in a moment, but we also believe strongly that the Community's blueprint is already laid down in the Treaty of Rome and that fulfilment of the treaty, in letter and in spirit, is the best way of determining the direction which the Community should take.
The Community as a whole is now faced with a crisis which the authors of the Treaty of Rome could not have foreseen. The Community's future viability depends upon how we resolve that crisis. The easy way out would be to agree that the Community should be allowed to increase own resources while settling, in exchange, for vague commitments about the control of expenditure and about resolution of the budget problem, which is a Community problem but one which has affected Britain in an acute form. I hope that that is not what the noble Lord means by "a more constructive attitude". It would be irresponsible to commit ourselves to raising more revenue without first ensuring that we have achieved the essential reforms which would prevent a recurrence of our present problems; nor would the Government recommend such an outcome to Parliament, which must ratify any increase in own resources.
The approach which the British Government have adopted throughout the negotiations is not to close our minds to an increase in own resources but to say that such an increase would be considered on two conditions: first, provided that we achieve control of agricultural and other expenditure; and, secondly, provided it is accompanied by a fair sharing of the budget burdens. We cannot ignore the fact that the common agricultural policy is consuming 65 per cent. of the budget. There is, therefore, less money available for other policies to which the Community should be devoting itself.
We must ensure that Community spending, particularly agricultural spending, is properly under control; in other words, finance must determine expenditure, and not the other way about. Similarly, it is right for the British Government to seek, not a special deal on the budget but that the Community should honour its obligations, which are implicit in the Treaty of Rome and explicit in the commitments we have received, to ensure that we do not bear an unfair budget burden.
The problem has been recognised. But it has until now been dealt with in a series of ad hoc settlements. Now that other member states are seeking major changes to the basis of the Community's finances, it is right that we must insist that the problem of budget inequity is dealt with on a fair, lasting and systematic basis.

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In June 1983, Community heads of government, meeting in Stuttgart, reached agreement on the terms of reference for a major negotiation intended to resolve these problems. The fact that the terms of reference for the post-Stuttgart negotiations include both a solution to the United Kingdom budget problem, as an integral part of the Community's revised financial arrangements, and the need to find ways of controlling CAP expenditure, is a measure of how far we have moved in the Community since the Government took up these issues after we took office in 1979. What was at that stage regarded by other member states as exclusively a British problem has now been recognised for what in reality it always was—a problem for the Community as a whole.
It was of course a major disappointment that, following the far-seeing programme laid down at Stuttgart, the Athens European Council failed to take any decisions. What is important now is to avoid trying to apportion blame but rather to ensure that there is no repetition of Athens and that decisive progress is made at the next European Council on 19th and 20th March. Your Lordships should be in no doubt that the British Government will play their full part in helping to ensure that solutions are reached. My right honourable friend the Prime Minister has already had talks with the French President on 23rd January and with the Italian Prime Minister on 27th January. There will be other bilateral talks between now and the March European Council.
In turning to the detail of these negotiations, let me start with the CAP. The basic problems of the CAP stem from the fact that developments in farming technology and the development of larger and more efficient farming units—the noble Lord, Lord Ezra, referred to these during his speech—have resulted in a steady increase in agricultural productivity in a situation of static or declining consumption. This, combined with the provisions of the common agricultural policy, which provide for virtually unlimited price support, regardless of the level of production, has inevitably resulted in the wholesale generation of surpluses. The Community is therefore faced with the problem of how to dispose of surplus produce for which there is no economic market in the Community and which can only be exported at enormous budgetary cost and to the detriment of our commercial relations with third countries.
If we are to tackle the fundamental problem of agricultural surpluses, it will be necessary to pursue a rigorous policy of price restraint, involving no increases for products in structural surplus and a review of the market regimes for each commodity so that all production is no longer guaranteed, irrespective of the market situation. In considering ways of reforming the CAP, we must avoid solutions which either increase the burden on consumers or attempt to transfer the problem to third countries.
Necessary though these reforms are, we do not consider they will be sufficient in themselves. In our view, therefore, the commodity-by-commodity approach must be reinforced by the setting of a strict financial guideline for the CAP to ensure that it does not continue to devour the lion's share of the budget and to rise, as it did last year, by 30 per cent. in one
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single year. This guideline would provide the frame-work within which the Commission would make its price proposals and the Council take decisions on CAP prices each year.
This brings me to the second main group of problems covered by the post-Stuttgart negotiations, namely, the Community's financial arrangements. The Community's present financial arrangements stem from agreements reached by the original six member states in 1970. They clearly reflect the interests and needs of the original members. We recognised at the time these arrangements were drawn up that they were likely to be disadvantageous to the United Kingdom both with regard to contributions to the Community budget and with regard to receipts, because the way in which Community expenditure had developed resulted in agriculture taking up a dominant share of the budget.
We drew this problem to the attention of our future partners in the negotiations for United Kingdom accession. Their response was to assure us that, should the operation of the Community's financial arrangements result in the development of an unacceptable situation for a member state, the Community institutions would devise appropriate solutions. This assurance, since restated on a number of occasions, has provided the basis for our subsequent claims for redress.
As a result of the negotiations which have taken place since the present Government came to office in 1979, we have secured a total refund for the years 1980 to 1983 amounting to more than £2,500 million. This is approximately two-thirds of our unadjusted net contribution over that period and represents a satisfactory outcome to the Government's efforts during this period to secure alleviation of the inequitable burden placed on us by the operation of the Community's financial arrangements.
Had it not been for the resolute approach adopted by this Government, the level of redress which we would have secured would have been very much less. Had we acted differently we could justifiably have been accused of neglecting the fundamental interests of the British people. I would also note in passing that in achieving this successful outcome we have inadvertently, but no less happily, brought about a sea change in the policy of the Labour Party, or at least in the attitude of its leader. Mr. Kinnock has now discovered that thanks to our efforts Britain is better off in the Community than outside it. Needless to say, the British people had come to that conclusion long before he did.
The recent problems concerning the 1982 risk-sharing refunds and the difficulties with the European Parliament over the 1983 refunds reinforce our view that we must now get away from ad hoc arrangements and devise a new system which will provide a solution to the problem of budgetary imbalances for as long as the problem lasts. We have put forward our "safety net" proposal with this in mind and a number of other member states have put forward alternative ideas. We remain firmly convinced that what is needed is an equitable and durable system providing a satisfactory level of redress. Your Lordships would not expect us to continue to put up with a situation in which the United

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Kingdom remains the second largest net contributor to the budget while ranking only seventh in terms of Community prosperity.
There remains the question of possible new own resources for the Community. If existing Community policies, notably the CAP, operate unchecked, the Community will, later this year, come up against the 1 per cent. VAT ceiling. A number of member states have argued that forthcoming enlargement of the Community and the need to develop new policies mean that the Community's own resources should be raised above the 1 per cent. ceiling. We have not dismissed that case out of hand. We have made it clear to our partners that we are ready to consider such an increase, subject to the two conditions of effective control of existing Community expenditure, particularly the CAP, and a lasting solution being found to the problem of budgetary inequities.
This brings me to the third main aspect of the post-Stuttgart negotiations, namely, the development of new Community policies. Our commitment to Community membership is not a negative one. We are anxious to see it develop in new areas in which, by acting together, the Community can achieve more than member states acting alone.
We face major technological challenges. We should make the most of our collective strength in the new technologies to take on the competition of the United States and Japan. We must also tackle more mundane problems, many of them not a question of new initiatives but of implementing the original Treaty of Rome. We want to see completion of the Common Market. This means removal of the remaining barriers to the mobility of goods and services; streamlining of frontier formalities to ease the passage of goods traffic; liberalisation of transport, including air transport; and implementation of a liberal regime for non-life insurance services. We have made firm proposals in all these fields—and in others, including the area in which the noble Lord. Lord Ezra, has outstanding expertise; namely, solid fuels policy. We believe that the Community should devote to solid fuels the same amount of attention it has given to other energy sources, including nuclear and oil. All our proposals are cost-effective; many of them are cost-free. Indeed, if, as we are trying to do, we could minimise delays for commercial traffic at Community frontiers, that alone would save £500 million per year.
I share the frustration expressed in the Motion that the internal problems of the Community are damaging its image in the world and distracting it from playing the international role that it should. Its role is already very important. In the external field, it has been making, and will, I trust, continue to make, a leading contribution to the maintenance and strengthening of the open trading system, which is essential if there is to be a sustained and balanced recovery in the world economy. We attach the greatest importance to the commitments in this area assumed at the Williamsburg summit and at the OECD Ministerial.
The Community has already—with the declaration of the December Foreign Affairs Council—started to implement those commitments, and we look to other developed countries to do the same. The member
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states of the Community already work together to help meet the needs of the developing countries, both through favourable trade access and through aid. The Community gives a third of all aid given by developed to developing countries—a half in the case of aid to the least developed. We very much want to see a successful outcome to the current negotiations on a successor to the second Lomé Convention, which expires in 1985.
But Europe's promise is still greater than its performance. We have long felt that the Ten, with their shared interest and ideals, should make a much more significant impact in international affairs. The United Kingdom has played a leading part in the development of political co-operation. In the British presidency in 1981, my noble friend Lord Carrington was able to achieve some useful improvements, and the successes of political co-operation since have not been negligible. Particularly topical is the Stockholm disarmament conference—the latest product of the CSCE process. The Ten have played a key role in steering this in directions helpful not just to Western interests but to peace and stability in Europe. The Ten have a long way to go before their joint political influence matches their economic might. But the example I have just cited shows that we can act together. We need to learn to do so more consistently.
I should add that the post-Stuttgart negotiations must of course lay the framework not only for the present Community of Ten but for the future Community of Twelve. Both Spain and Portugal were disappointed at the outcome of Athens. We need to get on as fast as we can with the accession negotiations so that Spain and Portugal can join the Community by 1st January 1986, as they wish.
The decisions which the Community will have to take in 1984 are vital for its future development. By concentrating on these problems the Government cannot be accused of being unconstructive. My right honourable friend the Foreign and Commonwealth Secretary likened the European Community to a car with a flat tyre. The flat tyre should not be the most interesting thing about the car; but until you have repaired it, you cannot drive the car at all, let along get anywhere in it. The Community now has an opportunity to set itself on a sound basis. It should be a giant on the world stage; but it is now hamstrung. Of course we are negotiating in the British interest; that is what your Lordships would expect of us. But we are negotiating also in the interests of the Community as a whole.

Nissan Car Plant Project
4.4 p.m.
The Chancellor of the Duchy of Lancaster (Lord Cockfield): My Lords, I will, with permission, repeat a Statement made in another place by my right honourable friend the Secretary of State for Trade and Industry. The Statement is as follows:
"With permission, Mr. Speaker, I should like to make a further statement on the Nissan project. I am pleased to inform the House that the Government and Nissan have reached an

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understanding on the basis for a Nissan car plant in the United Kingdom. The president of Nissan, Mr. Takashi Ishihara, and I have signed heads of agreement today. These are being published and copies will be available in the Library of the House later today.
"Subject to a satisfactory outcome of negotiations with United Kingdom trade unions and local authorities, Nissan will proceed with the construction of a car plant on a green field site of substantial acreage (probably around 800 acres) within a development or special development area.
"The first phase will be a pilot plant, to begin production in 1986, providing an assembly capacity of 24,000 cars a year based on imported kits. These will be treated as though they were built-up imports in the context of the discussions between the Society of Motor Manufactureres and Traders and the Japan Automobile Manufacturers Association, both of whom have given their agreement to this arrangement. During this phase Nissan intend to gain experience of general operating conditions in the United Kingdom, to develop effective relationships with local component manufacturers, and establish the prospects for further development.
"In the light of this Nissan will decide, not later than 1987, whether to proceed to Phase 2, which will provide capacity for 100,000 units on a full manufacturing basis. If Nissan decide to proceed to Phase 2, production would start by 1990 at 60 per cent. local content on an ex-works price basis. Full production would be reached in 1991, with 80 per cent. local content being achieved and maintained from the middle of 1991.
"In addition to regional development grants the Government will also be ready to provide selective assistance of up to £35 million if Nissan proceed to Phase 2; this is equivalent to 10 per cent. of the total capital costs of both phases. In Phase 1, the plant will employ directly between 400 and 500 people, and in Phase 2 around 2,700 people; but particularly in Phase 2, the potential total direct and indirect employment will be considerably greater.
"This project represents an important opportunity to create fresh investment and jobs in the motor industry. It will introduce a major, efficient new domestic customer for the United Kingdom components sector; and it represents a constructive step forward in the dialogue between Europe and Japan on trade and investment. For these reasons I am sure that the House will join me in welcoming the Nissan project to the United Kingdom."
My Lords, that concludes the Statement.
Lord Bruce of Donington: My Lords, we are grateful to the noble Lord, Lord Cockfield, for repeating the Statement made in another place. Before passing definitive judgment on the Statement, naturally we should like an opportunity of examining the heads of agreement as soon as we have been able to retrieve them from the Library.
We on this side of the House give a welcome to this project in so far as it has been described to us. We note that there is to be a pilot plant. We note that it will be
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based on imported kits; in other words, there will be no immediate manufacturing capacity here as distinct from pure assembly. The initial gain of between 400 and 500 jobs—which we should like to be reassured by the Minister is a net figure—must be set against the job losses in this particular industry which have occurred since 1979. Some 170,000 jobs have been lost in the vehicle manufacturing industry since this Government took office, and a further 150,000 in the components side of the industry. So the gain in employment, on the assumption that it is a net gain, is a very small one. Nevertheless, if there is a gain we must certainly welcome it.
We would of course note that there will be substantial advantages to Nissan as a result of this project, and we certainly would not wish to begrudge them in any way; and particularly, of course, it will, if consummated, give them a right of entry into the European market—something which I imagine will bring a sense of gladness to the shareholders and directors of Nissan. There will also be other advantages to Nissan, in terms of the regional development grants to which the Statement refers, and also in connection with selective assistance. I should like to ask the noble Lord how the amount of selective assistance has been determined before it is known whether the company is going to move into an ordinary development area or a special development area. I believe that the practice—the noble Lord will correct me—is to determine selective assistance after the nature and amount of the regional development grant has been determined.
Another point arising on that about which the House would like to be informed is: are these terms to Nissan in conformity with the current rates and formulae for the determination of these grants? Are they, for example, in excess of the grants that would have been given to British firms or other firms coming into the country after the proposed revision of the regional development grants; that is to say, if the press reports of reductions of the order of £150 million are going to be achieved? In other words, would the noble Lord assure us that undue advantage is not being taken of the current rates by arriving at agreement at this time rather than after, as and when, the new rates and new regional aids come into operation?
In general, we welcome the proposal. We would like to have further information about it. In the meantime, we would express pleasure that this very important company, which is known to have efficient management and very good and constructive management attitudes towards those who work for it, has decided to come to the United Kingdom, thereby expressing full confidence in the ability of the workforce of the United Kingdom, often derided in other quarters, to perform the work that is required.
4.14 p.m.
Lord Diamond: My Lords, I too should like to give a welcome—so far as these Benches are concerned a very warm welcome—to the Statement which has been made by the noble Lord the Chancellor of the Duchy. I can see nothing but benefit accruing to this country, both in the general concept and in the way it is proposed to deal with it in two stages; in terms of competition and efficiency, in terms of opening minds

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as to labour relations. I should like to ask the noble Lord if he would be good enough to explain a little more fully the basis of the figure of assistance which has been agreed, both in relation to this company and in relation to other companies, be it of British, European or other origin, which might otherwise have taken place, so that noble Lords will have a better idea of how the figure would stand in relation to other investors.
I do not know whether the noble Lord can tell us anything (because it is not necessarily his responsibility) about discussions which have taken place between the prospective employer and their present employees, the unions, in Japan. It might be of interest to know how they have overcome any difficulties there, if the noble Lord has any information on that topic. The only other more detailed question that I think would be helpful to your Lordships' House would be if the noble Lord the Chancellor of the Duchy could go a little further in asessing the net gain in employment in Phase 2 when it is fully developd. It is inevitable that there will be some loss of employment to some present employers; I should have thought it inevitable that that will take place as a result of competition. There will, on the other hand, be much direct increase in employment. I do not know whether the Government have worked out what the net benefit in employment is likely to be.
Lord Cockfield: My Lords, I am most grateful to the noble Lord, Lord Bruce of Donington, and to the noble Lord, Lord Diamond, for the very warm welcome they have given Nissan and their entry into the United Kingdom. I would be very anxious to join my welcome to the welcome they themselves have expressed.
As the point was raised by both noble Lords, may I start with the question of the effect on employment. In Phase I there will be only a relatively small effect outside the immediate Nissan project itself. But, of course, we all hope very much that it moves on then to Phase 2, where there is direct employment of 2,700. The best estimate the Department of Trade and Industry have been able to make of the total employment effect in Phase 2—that is, taking the effect on the component suppliers, any possible repercussive effects elsewhere, the influence on exports, the influence on imports, and taking a range of central assumptions—is a figure of 6,000 net. That is inevitably of course an estimate; but it indicates that the project brings with it an employment gain over and above the direct employment.
It is perfectly true, of course, as the noble Lord, Lord Bruce of Donington, said, that there is a substantial advantage to Nissan, in the sense that when they move to Phase 2, where there is a high local content of production, it gives them entry to the EEC market. But of course that is of great benefit to the United Kingdom as well. There are major benefits to the United Kingdom from this project: one is import substitution—that is, we hope that most of the output will replace cars which would have been imported into the United Kingdom. Nissan are equally determined to make the most of the export opportunities that this project opens up for them. The fact that it is an
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advantage to them is something that we and they very much welcome.
With regard to the question about how the selective assistance was determined, the figure was taken as 10 per cent. Of the total investment, taking Phase 1 and Phase 2 together, the total investment being approximately £350 million. Of course, it was a negotiated figure, because it is the essence of selective assistance that it is discretionary in amount. That, of course, is in addition to the standard regional assistance which is available to any other firm and which is at 15 per cent. in the case of a development area and 22 per cent. of eligible capital in the case of a special development area. As regards the new regime, the position is that transitional arrangements have been made and any company falling within those transitional arrangements, as Nissan do, will in fact be entitled to the 15 per cent. or 22 per cent. as appropriate; so there is no special discrimination in favour of Nissan there.
The noble Lord, Lord Diamond, asked how the company in Japan succeeded in getting the agreement of the unions. There were long and complex discussions, as I believe the noble Lord knows, and it was a very considerable achievement that they ended up as happily as they did. It is a very good augury for the future in the United Kingdom that Nissan are now opening up discussions with the unions. We believe we have met the major concerns very legitimately expressed by the unions about the local content, and we have in fact negotiated a high figure for the local content.
I think that answers the specific points raised. I entirely agree with the noble Lord, Lord Bruce of Donington, that one needs to read the heads of agreement, as I am sure he will, which are expressed in remarkably clear terms. In conclusion, I should like to say how much I appreciate the welcome that both noble Lords have given to the project.
Lord Bruce-Gardyne: My Lords, while joining in the thanks to my noble friend for the Statement, may I ask him whether he can confirm that if Nissan was to choose to go to a special development area the total cost to the taxpayer of the project, if it went through to Phase 2, would be in excess of £100 million? Can he also say what would happen if, having decided to proceed to Phase 2 of the project, Nissan found itself unable, perhaps for good and sufficient reasons, to achieve the 80 per cent. local content which has been suggested? Can my noble friend tell the House whether assurances have been obtained from the French Government that these British Nissan cars will be deemed to rank for free circulation? My noble friend will have seen the comment of the chairman of Renault on this matter in the past few days.
Lord Cockfield: My Lords, my noble friend raises three points. First, may I assure him that his arithmetic is approximately correct. As regards regional grant assistance, this is precisely the same figure to which any other company in similar circumstances would be entitled. On the 80 per cent. local content, we are satisfied that Nissan will succeed in achieving that sort of level. We will be monitoring progress, but I think it will be quite unrealistic now to start thinking in terms of Nissan failing to achieve that

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figure. We are confident it will be able to do so. The company is confident that it will be able to do so. It poses a challenge to our component manufacturers, but it is a challenge I am certain they will rise to.
The actual terms of the agreement with Nissan are commercially confidential, but I can assure my noble friend that care is taken to protect the interests of Her Majesty's Government. On the question of entering into Europe, we regard a car with this degree of local content as being a British made car, and on that point we are quite certain of our position.
Lord Ross of Marnock: My Lords, are we to understand from what the noble Lord said about the difference between a special development area and a development area that no firm decision has been made as to where this site is to be? I certainly welcome the Statement, and would welcome it even more if the site is to be in Scotland. There is one other matter on which I am rather curious. Can we take it now that if we put down Questions about the expansion of any firms into any place we will be given Answers on the financial aspects of the project? I was always under the impression that the Department of Trade did not disclose the financial aspects of any dealings it had with companies.
Lord Cockfield: My Lords, the noble Lord, Lord Ross of Marnock, is quite right in saying that no firm decision on the site has yet been taken. It is a matter for the company to decide. I understand it is looking at a number of locations but has not yet decided whether the final location will be in a development area or a special development area, but under the heads of agreement it will be in one or the other.
My own understanding is that the degree of information I have given is in line with that which has been given in corresponding cases previously. On the question raised by my noble friend Lord Bruce-Gardyne, this is, if I may say so, a simple matter of arithmetic on the basis of certain figures which emerged in the Statement itself.
Viscount Trenchard: My Lords, can my noble friend give the House a little more information on the timing of Phase 2? May I say that I, too, welcome this decision, having been at the Department of Industry and played a part in the negotiations for many months in 1979. I am entirely satisfied that the net employment benefits to this country can be very great indeed.
I should like my noble friend to make a little clearer whether the heads of agreement throw any light on the date at which the decision to go ahead with Phase 2 might be taken. If I understand my noble friend correctly, we are talking about Phase 2 commencing in the 1990s. Does that mean production or the completion of the factory? Can my noble friend be a little more explicit on that point? If the project goes ahead, is production likely to start in 1990, or not? Has my noble friend any information on whether the Nissan union in Japan has cleared and agreed the general principles behind Phase 2 as well as Phase 1?
Lord Cockfield: My Lords, on the first point raised by my noble friend the timetable is in fact set out very
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clearly and specifically in the Statement itself. It also appears in the heads of agreement. Nissan is to decide not later than 1987 whether to proceed with Phase 2. If it decides to proceed with Phase 2, production will start by 1990. Full production would be reached in 1991, with 80 per cent. local content being achieved and maintained from the middle of 1991. I suggest that that is a very clear and specific timetable. Looking ahead over a period of as much as seven years, as we are, it is as clear and specific a timetable as one could expect.
On the question of the unions in Japan, I gather that they accepted the proposition on the basis that I have announced to the House.
Lord John-Mackie: My Lords, is there not enough industrial land already developed and not used in this country without taking 800 acres of green land out of agriculture, which is getting scarcer every year?
Lord Cockfield: My Lords, I wonder whether there might not be some slight misunderstanding on this. The phrase that is used in the Statement is "greenfield site". I believe this is a technical phrase used by people who construct factories, and so forth. I understand that one can have a greenfield site which is not, in fact, a green field. The term refers to being able to start on a clear site, so that there is an easy, straightforward development project.
Lord Dean of Beswick: My Lords, I, too, welcome the announcement conveyed in the Statement repeated by the Chancellor of the Duchy, but, speaking as a former engineer, my welcome is somewhat guarded at this stage. There seems to be a sense of euphoria that the project has already succeeded, but I should like to press the Chancellor on the question put by the noble Lord from the SDP Benches regarding the second phase and the gaining of 6,000 jobs. Bearing in mind the history of the Japanese industrialists in the post-war period in regard to their capacity to flood domestic markets in other countries all over the world, very often with tragic economic, industrial and social consequences for the countries involved, can the Chancellor tell us that the jobs will not be at the expense of our own domestic motor car industry? Can he also tell us whether the Japanese can be held fast to the agreements that they make if they decide to open the tap further and damage our own domestic car-producing industry?
Lord Cockfield: My Lords, so far as the major point raised by the noble Lord, Lord Dean, is concerned, the figure of 6,000 that I quoted was a net figure which took into account all the repercussive effects—both the favourable ones (because it opens up a big, new market for our component manufacturers) as well as any that are potentially unfavourable on manufacturers in the United Kindom. But we believe that most of the production will be at the expense of imports, and therefore it is a clear net gain to the United Kingdom economy. With regard to the other point that the noble Lord raised, speaking as a previous Secretary of State for Trade, I would say that my own experience was that while the Japanese were very tough bargainers, they always adhered scrupulously to any bargain that they struck.
Lord Morris: My Lords, in answering one of the questions raised by my noble friend Lord Trenchard, my noble friend Lord Cockfield used the phrase "not later than 1987". By that does he mean not later than the start of 1987, or not later than the end of 1987?
Lord Cockfield: My Lords, my noble friend is trying to press me on the precise details of the timetable. I wonder whether I may look into his point, because on this I can do no more than tell him what is in the heads of agreement.
Lord Bruce of Donington: My Lords, may I press the noble Lord on one further matter of detail, and at the same time thank him very much indeed for the information that he has given? Will he define a little more closely what the Government intend should be meant by the phrase "60 per cent. local content"? It is indicated in the Statement as being on an ex-works price basis, but I venture to suggest that that basis may include the promotional costs, advertising, and a whole series of other matters that have no local content at all. Will the noble Lord mind defining a little more closely the term "local content" as he understands it?
Lord Cockfield: My Lords, the phrase is one which is customarily used in this field, and it carries its customary value. It includes, I am told, parts, materials, labour, and overheads.

EC Fisheries Ministers' Meeting: Brussels
4.34 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, with the leave of the House, I shall repeat a Statement being made in another place by my right honourable friend the Minister of Agriculture, Fisheries and Food. The Statement is as follows:
"With permission, Mr. Speaker, I wish to make a Statement on the Council of Fisheries Ministers meeting in Brussels on 31st January. Together with the Minister of State at the Scottish Office, I represented the United Kingdom.
"The Council reached agreement, on the basis of compromise proposals put forward by the Presidency and the Commission, on the total allowable catches and quotas for 1984 for all fish species other than North Sea herring. The scientific advice on the management of the herring stocks will not be available for a few more months. We obtained significant improvements over the original proposals on a number of stocks of interest to United Kingdom fishermen, in particular cod and haddock west of Scotland, western mackerel, and a variety of sole and plaice stocks in western and southern waters. We have a clear commitment from the Commission that every effort will be made in further discussions with Norway to secure an increased availability of North Sea cod. We secured greater flexibility for our fishermen in respect of the closure of the mackerel fishery north-west of Scotland. The Council has therefore for the first time set total allowable catches and quotas early in
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the year to which they relate. This is an important achievement, since it gives fishermen throughout the Community a secure basis on which to plan their catching and their marketing operations.
"Pending receipt of the full scientific advice on herring in the North Sea, the Council approved interim arrangements, which the Commission had agreed with Norway. Under this agreement, up to 31st July Norway will be free to fish for 15,000 tonnes, while the member states of the Community will have quotas totalling 54,300 for the same period. The allocation of these quotas has been carried out on the basis of the key agreed at the Council on 14th December. The question of the distribution of member states' quotas between the three areas of the North Sea will be studied and a report made to the next Council in March. While I expressed concern at the relative size of the interim allocation to Norway, I accepted the proposal on the basis of a clear Council declaration confirming the declaration agreed on 3rd to 4th October concerning the distribution of North Sea herring as between Norway and the Community and emphasising that the interim arrangements agreed for the early months of 1984 do not prejudice the definitive allocation for 1984 and for subsequent years.
"The Council also agreed on the conclusion of a reciprocal fisheries agreement for 1984 with Sweden, an agreement with Senegal on access to fishing opportunities there on an improved basis, and a new agreement with Seychelles on access to tuna fishing opportunities.
"Finally, I raised the question of progress on the arrangements for improved enforcement of the common fisheries policy. I was told that as of today nine of the 13 Community inspectors would be in post and that, while it has not been easy getting hold of people of the right quality and experience, the remaining four inspectors had been nominated and would be in post within the next few months. As to the Community logbooks and landing declarations, consultation on their text and format has now been completed and tenders for printing will be issued in the next few days.
"This Council therefore marked another important step in transforming the common fisheries policy into a living and working reality."
That concludes my right honourable friend's Statement.
Lord John-Mackie: My Lords. We are all very pleased that the Minister has made the Statement, and we thank the noble Lord for passing it on to us. The way in which the Minister has given credit to the whole Council of Fisheries Ministers for reaching the agreement says much for him. I took to task his predecessor, who, more than a year ago, came back from Brussels and spoke about what he called "a triumph for Britain". I just want to mention that I think that the Minister should be commended for the way in which he has handled that particular matter.
Press comment which I read before hearing the Statement was more impressed with the speed with which the agreement has been reached this year, bearing in mind that the 1983 agreement was

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concluded only last December. Of course, if one has just concluded one decision, it is probably quite easy to come to another; nevertheless we are grateful for what has taken place.
Via my colleague in another place, I have been in touch with the Scottish Fisheries Federation. Broadly speaking, the federation is fairly happy with the agreement, but, quite frankly, it is worried about the Norwegian situation, and I am glad that the Minister has dealt with it to quite an extent. The federation feels that though the fishermen may get the extra cod, they may have to give up some herring to Norway in order to get it. I wonder whether the Minister would care to say something about that.
I was intrigued to hear that the total allowable catch of herring is 34,500 tonnes, according to the figure I have been given, and that with more scientific evidence, which I gather from the Minister will not be available for a while, it could probably be increased by another 20,000 tonnes. This is an increase of 57 per cent. and seems a very large figure resulting from a scientific decision to be made in a month or two. I wonder whether the Minister is able to clarify the matter.
The fishermen are also a little worried about some of the boxes where they are forbidden in the meantime to fish for herring. I take it that this issue will be resolved at the same time as a decision is taken on the extra catch that they may take. There is not much more that I need say except to refer to a revealing letter which appeared in the West Highland Free Press last week from a skipper—a very honest skipper—who said that there would never be proper control until there was far better policing than exists at present. It has taken all this time to appoint nine Community inspectors when 13 are needed and it will be a while before the other four are appointed. The log books have not yet been printed.
Fishermen are very suspicious of one another. They are suspicious that the policing of the total allowable catch will not be satisfactory. That is one of their complaints. Otherwise, we welcome the Statement. As the fishermen say, we hope that it will be a living and working reality.
Lord Grimond: My Lords, we, too, welcome the Statement. It is good news for the fishing industry that we have made some progress rather earlier than usual in the year. I should like to ask three questions. Can the Minister tell us more of what the total allowable catch, particularly for haddock, cod and herring, is, and whether the extra mackerel catch that was wanted in the Minch has been granted? Secondly, can he say when the Minch will close for mackerel. Thirdly, can he say more about herring, over which some disquiet has already been expressed?
I understand that it is an interim agreement on herring. It is not entirely clear to me what interim means. Does it mean a temporary agreement running up to July? Does it mean that further catches of herring by member states and the Norwegians will be allowed after 31st July? I take it that it does. Norway will therefore get even more than the 15,000 tonnes mentioned in the Statement. There is grave misquiet in case this becomes a precedent. I notice that the
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Minister of Agriculture, Fisheries and Food is well aware of this. Can the Minister say whether the Norwegians have given an explicit undertaking that this will not be a precedent? If no such undertaking has been given, there will be considerable disquiet in the industry.
Lord Belstead: My Lords, I am grateful to the noble Lords for the reception that they have given to this Statement. It is, I think, important, if I may follow what the noble Lord, Lord John-Mackie, said about agreement being reached early in 1984, which was perhaps not so difficult having reached the previous agreement so late in 1983. It is nonetheless important that we have got agreement early in the year to which the agreement relates so far as marketing arrangements are concerned. It is, incidentally, the second Council in a row that can be called successful. This is to the credit, I believe, of my right honourable friend the previous Minister, to whom the noble Lord referred, as well as my right honourable friend on this occasion.
The noble Lord asked me whether, in seeking extra North Sea cod to which the Statement refers, we might find ourselves paying compensation from the point of view of other fish. All I would say is that this has to be worked out. Undoubtedly, there has been over-fishing by states, including member states. But we do not accept that compensation should necessarily be paid in North Sea herring. I must be perfectly clear about that fact. The noble Lord referred specifically to the herring fishery and to the very high percentage that Norway has gained by the temporary agreement struck with the Commission. I take the noble Lord's point. But the advantage is, of course, that the fishery is open and that a Commission working party is to consider what it would be possible to do to allocate quotas between areas of the North Sea and report to the next meeting of the Council.
In answer to both noble Lords, I should like to make the point that the agreement about the opening of the North Sea herring fishery is on an interim basis up to 31st July. It is established that the agreement with Norway is without prejudice to long-term shares between Norway and the Community. The Council has confirmed its declaration of 3rd and 4th October on this subject. In reply to the noble Lord, Lord John-Mackie, I would simply say on the policing arrangements that it is not for want of pressure from my right honourable friend that there has not been speedier progress. I am glad that it is clear from the Statement that we have just about got policing arrangements in place.
The noble Lord, Lord Grimond, asked me when the Minch fishery would close. This is the Scottish fishery north of 58 degrees North. It will remain open throughout the month of February. The arrangements, I understand, for the end of the year are not quite so favourable, although we have agreement, subject to review, that the fishery would remain open until the end of December and not close until January. The noble Lord asked me about quotas for various fish. I wonder if I can look at the specific points that he asked. I should, however, like to take up the point about mackerel. There is an increase of 25,000 tonnes in the total allowable catch, still within the figure

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recommended by scientists and in accordance with United Kingdom pressure for caution in respect of conservation.
Lord Ross of Marnock: My Lords, can the noble Lord say what is the total allowable catch of demersal stocks of cod and haddock this year compared with last year? Secondly, am I right in thinking that there is still a considerable way to go and some hard bargaining to take place in negotiations with Norway? So far as I am concerned, the British Minister seems to be adopting the right and desirable attitude. There is no justification in history in the whole pattern of Norwegian fishing for their exaggerated claims in respect of quotas of herring.
I should like to strengthen the point put by my noble friend Lord John-Mackie. We cannot talk of having a real common fisheries policy when we have not got common fisheries control. There are no log books or certification of landings. Nothing of that sort has yet been achieved. At the end of last year, we were told that it would be April. It is now February and the Minister now says that it will take a few months. I know that it is not his fault. We have plenty of experience of this in our own fishing. However, we can have no confidence in quotas once they are given—they have still to be worked out even among ourselves in the north, central and south sub-areas of the North Sea for herring—until there is proper control.
Lord Belstead: My Lords, the answer to the first question of the noble Lord, Lord Ross of Marnock, is that in respect of cod west of Scotland, the United Kingdom quota is to be 13,150 tonnes. That is about half way between the Commisssion's proposals, as they were first put forward, and the 1983 figures. For cod west of Greenland, which is of interest, as the noble Lord knows better than I, to distant water vessels only, the quota is 2,740 tonnes. That is the same figure as 1983.
I was grateful for what the noble Lord said about the fault so far as policing arrangements are concerned. I should like, if I may, to put it a little more firmly. It is because my right honourable friend the Minister brought heavy pressure to bear at the first common fisheries policy meeting, I think, that he attended, that we have got so far as we have. I am glad that this Statement makes it clear that the arrangements for policing are just about in place.
Baroness Hornsby-Smith: My Lords, I should like to join in offering congratulations to my noble friend the Minister for the speed with which he has been able to complete these negotiations. Nine inspectors are already appointed, and four appointments are pending. It seems to me that 13 inspectors for the whole of our fishing coastline are totally inadequate. I should like to inquire whether they work Civil Service hours or whether they work a 24-hour shift. It is our experience in the south-west that the pirates who over-fish their quota do so late at night; they sneak into a berth and sneak out again at 4.30 or 5 o'clock in the morning, between the hours of duty of the inspectors. We have ample evidence of the way in which French
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and other boats have done that on the south coast. It strikes me that 13 inspectors, if there is to be a 24-hour patrol, are totally inadequate.
If I understood my noble friend aright, the negotiations on the herring quotas are not completely finalised. Can we have some assurance that we shall not have a repetition of what happended last year, when the Danes not only fished far beyond their quota but took more fish out of the North Sea than the entire quota granted to all the EEC fishing countries put together? We are desperately worried that, if the quotas are unduly delayed, this may happen yet again.
Lord Belstead: My Lords, perhaps I may first answer my noble friend's criticisms or doubts about the adequacy of the policing arrangements. I really think that we shall have to see how they go. The Government will very much bear in mind the remarks which my noble friend has made. So far as concerns policing arrangements as they relate particularly to the south-west, I would only add that I am glad to have noticed from the activities in the Council that the fishermen in the south-west—and, indeed, it is fair to say, the Welsh fishermen, too—should benefit from the improvements to the Commission's proposals which have been made as regards the total allowable catches for sole and plaice.
As regards herring, my understanding is that the interim agreement is enough to get us going without anybody being accused of over-fishing before a final agreement is reached. But I come back to the point on which the noble Lord, Lord Grimond, particularly asked for an assurance. This is an interim agreement; it is without prejudice to final agreement later on about herring.

European Council: March Meeting
4.53 p.m.
Debate resumed.
Lord Bruce of Donington: My Lords, we on this side of the House are most grateful to the noble Lord, Lord Ezra, for having given us the opportunity to discuss a very limited aspect of EEC affairs to which he has ventured to draw the attention of the House in his Motion. We also look forward with very keen interest to listening to the maiden contribution of the noble Lord, Lord Fanshawe of Richmond, whose reputation in another place, not always of a non-controversial character, has reached us here. We welcome his presence here and we wish him every success in the endeavours that he makes to contribute to the deliberations of your Lordships.
When I read the Motion standing in the name of the noble Lord, Lord Ezra, I looked forward to receiving his suggestions, and presumably the suggestions of his party and the Alliance, as to exactly in what way, in what manner, could Her Majesty's Government adopt,
"a more constructive attitude at the forthcoming meeting of the European Council".
I was looking forward to a whole series of suggestions as to exactly what changes in this regard the noble Lord had in mind. The noble Lord will forgive me if I

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say that he was very modest on that account, and that really what his suggestions amounted to was that we should somehow try to dispel the very widespread impression in Europe, which seemed to lay heavily upon his soul, that we were being obstructive in some way and that in general our efforts as a nation within the European Community were not very highly regarded throughout the Community. He referred to the distinct impression that he had and he referred to it as an impression abroad of the United Kingdom.
Instead of making any specific suggestions as to how the Government might be more constructive, the noble Lord proceeded to address himself—as, indeed, is very appropriate in your Lordships' House—to what the Council of Ministers and the European Council should do. However, what we are very interested in is what the Government are going to do. I do not think that the noble Lord, Lord Ezra, helped us very much as regards what he thought the Government ought to do, save perhaps in two respects. He made some expression of dismay that the Government had not taken a more active part in the ESPRIT project, whereas it is well-known that the reasons for the Government not arriving at agreement with their colleagues in the other member states was particularly that this is what is termed "non-obligatory expenditure" corresponding very much to what we have in the United Kingdom, corresponding to expenditure subject to cash limits. Her Majesty's Government had already laid down, and I think very correctly, that they were not prepared to discuss increases in non-obligatory expenditure outside the context of the financial settlement that they had already requested, and sometimes even requested in most temperate terms, from their colleagues in the Community.
So I do not think that the Government—and I am sorry to embarrass the noble Lord with my support in this regard—can be accused of being non-communautaire or anti-Community, in declining to give assent to embark upon this non-obligatory expenditure until the settlement, which they quite legitimately required, had been reached.
Lord Mackie of Benshie: My Lords, would the noble Lord not agree that a non-obligatory expenditure might well be a very wise investment?
Lord Bruce of Donington: My Lords, certainly; I entirely agree. But as the noble Lord will be aware if he has studied the treaty—and he most certainly has done so—we are required to keep the contributions within a 1 per cent. VAT limit. We are now nearly up to that limit and Her Majesty's Government have quite correctly insisted that, before they give their assent to exceeding that limit, whether or not it be by obligatory expenditure—which we in this country in our own budget call "demand expenditure"—they want an overall settlement.
The noble Lord did begin to mention the common agricultural policy, and I thought for one moment that he was going to give some support to the very widely held view throughout your Lordships' House, and I think throughout the country, that the common agricultural policy has got to be drastically reformed. At that point I thought the noble Lord rather stopped
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short and said that the common agricultural policy needed reform but we had to proceed very slowly. I await with interest to hear what other members of the Alliance have to say on this matter but at no point did I gather that, under the existing arrangements, the noble Lord wanted any limitation on agricultural expenditure. If I am wrong in that, the noble Lord will clarify it.
Lord Ezra: My Lords, perhaps I can clarify that point. I said that it had been generally recognised that we must have modification of the common agricultural policy. I said that the problem we now face has been exacerbated by the fact that we have allowed it to run on for as long as we have. But, on the other hand, in seeking any solution I said that if we were too drastic we could undo the benefits which we had achieved for the farming community over past years. Those were the remarks I made.
Lord Bruce of Donington: My Lords, I am obliged to the noble Lord. Those are precisely the remarks I recollected. But, of course, in political terms they have the advantage of being completely non-committal. They express a pious sentiment, with which I do not disagree, but they lack the cutting edge which one rather expects from those who apparently desire to break the mould of British politics.
My criticism of the Government is, in fact, that they are being rather too co-operative. Perhaps I could express it in this way. Your Lordships will remember that the Prime Minister is very definite in her statements. With some justification, she is reputed to be inflexible; once she makes up her mind, that is the end of the matter, and she will not be shifted. I mention that within the context of the increase in the Community's own resources. In this regard I think that the Government are being a little too constructive or too co-operative within the context referred to by the noble Lord, Lord Ezra, because on 11th June 1980, at column 178 in another place, Austin Mitchell asked whether the Prime Minister would give an undertaking,
"that Her Majesty's Government have not and will not agree to lift the present ceiling on revenue for value added tax under the own resources formula of the European Economic Community".
The Prime Minister replied in these terms:
"We are determined to ensure that the 1 per cent. ceiling is not breached. The Foreign Affairs Council recently reaffirmed the conclusion, adopted by Community Finance Ministers in February, that the growth of agricultural expenditure should be considerably reduced so as to keep total spending within the ceiling".
We have now departed rather significantly from that. The Prime Minister has departed to a point where she is prepared to consider an increase in the VAT ceiling, provided that the budgetary matters affecting the United Kingdom are dealt with. I should have thought that that is being very conciliatory. What more does the noble Lord require? Does he require that Her Majesty's Government turn over like a spaniel waiting for its tummy to be rubbed, or something of that kind? What more can the Government do in that respect? Indeed, they have gone too far.
It is quite clear from what the noble Lord, Lord Ezra, has said that he and those for whom he speaks regard the national interest as something which should

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be volunteered from time to time by the United Kingdom, but not by the other member states of the EEC, as evidence of goodwill towards the Community, and that the Community will not progress unless the United Kingdom is prepared to regard its national interest with rather less intensity than that of the other member states.
Lord Ezra: My Lords, I do not wish to interrupt again, but I really must correct that impression. I do not recall having said anything of the sort. The line I was taking was that I believed that, by coming forward with positive proposals to resolve these very real problems of the Community, we could serve both our own interests as a nation and the interests of the Community.
Lord Bruce of Donington: My Lords, the noble Lord protests too much, because he will recall saying a little later in his remarks that, in relation to the other great powers of the world, we, as a nation, were relatively unimportant; that the voice of the United Kingdom, speaking as the United Kingdom, is of little consequence as compared with the combined voice—if it ever is a combined voice—of Europe. I venture to dispute this.
I do not take the view that, because the United Kingdom can no longer send gunboats up the Yangtze or fly Tiger Moths over the North-West Frontier, that because it cannot display the military might which at one time passed for its greatness, and that because it can no longer assert itself in the same military sense, it is not capable—on its own if necessary; in collaboration with its Commonwealth if possible, and indeed if desirable, which I believe it is—of playing an effective part in world affairs. I do not think that the interests of the United Kingdom need necessarily be polarised round the limited land mass occupied by members of the EEC. I do not consider that all the time we must take the posture that, if we are not in Europe, where else should we go? Why do we have to go any place else? We are here, exactly, now; and the Continent, on its part, is quite privileged to be as close to us as it is. Certainly!
I well remember an occasion at one of the committee meetings of the European Community, which I had the honour to attend, when a Luxembourger, who shall be nameless, looked rather superciliously across at the benches occupied by the British members of the European Assembly and said somewhat sneeringly "Well, of course, you British are the other side of the Channel. You would not understand how things go on here", to which I replied—rather quietly for me—"if it had not been for that Channel, you would not be sitting round this table now". There was a deathly hush after that.
I do not wish to beat the jingo drum in this House. It is a very dangerous thing to beat, as we well know from some of the media exposure of the recent Falklands campaign. But there is such a thing as pride in one's own country that need not in any way be jingoistic. There can be the pride of our country in probably having given a number of countries in the world their legal systems which otherwise would not have them. We have had the opportunity in our
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history—and this is history, not nostalgia—of influencing world events in the cultural and legal sense, and in a whole series of other ways. We have done it more recently by the exercise of our moral example. Therefore, I do not think that the United Kingdom needs to contort itself at every turn in order to gain the pleasurable comment of other countries in Europe.
So far as we are concerned we should like to be friendly with everybody. We do not wish to behave with arrogance against any other nation or any other people. We do not see, either, why we should behave with puppy-like subservience to a Community which exists at the moment only in the form of a common agricultural policy which brings very little benefit to the country as a whole, whatever benefits it may bring to the farming community and to the shires of the United Kingdom. This is our view. We want co-operation.
We think that after taking the common agricultural policy out of the EEC—and everybody for the past 10 years has been agreeing every year that it has been in crisis and needs to be reformed—we would have nothing left that could not be easily accomplished by the Council of Europe to which this country still belongs, and in which it started off by indicating its desire and its purpose to participate in the affairs of Europe.
In regard to the Motion put forward by the noble Lord, Lord Ezra, I would say this: the Government have so far been much too soft with their opposite numbers in the European Community. One does not want to evoke too much emotion in this matter, but we are not far away from the day when British lorry drivers were hijacked by the French who did not like the way in which we were apparently interpreting EEC rules. Only this morning we were supposed to lie down under a proposal presumably emanating from that well-known Anglophobe M. Gaston Thorn for the recovery of some £450 million which we are alleged to have been overpaid through some fault in the way that we deal with our own milk marketing here.
These are facts, and they cannot be wished away. If people are going to co-operate with the United Kingdom, and nations are going to co-operate with the United Kingdom, believe me, my Lords, I am all for it, and so are those for whom I venture to speak in this House. We want the area of world co-operation extending far wider than it is. But what we feel on this side of the House—and I must repudiate the suggestion made by the noble Lord that Mr. Neil Kinnock considers on balance that we are better in than out of the Common Market; he must find his own documentation for that—is that our association with our Commonwealth is of far greater importance, and should take a far greater priority, than participating in what, aside from the common agricultural policy, has been a miserable charade.
5.14 p.m.
Lord Fanshawe of Richmond: My Lords, I have listened with great fascination to the not uncontroversial remarks of the noble Lord, Lord Bruce of Donington! I can assure noble Lords that I shall endeavour to keep to the tradition and be as uncontroversial as I possibly can. Your Lordships will

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also be aware, as many of your Lordships have served in the other place, that some of us who have arrived here from that other place have gone through the experience of making a maiden speech before. By a coincidence, I made my first maiden speech in the Palace of Westminster exactly 24 years ago tonight.
As your Lordships who have served in that House will know, it was a somewhat daunting experience, in that maiden speeches on major debates tend to take place to a fairly empty House after a long series of perhaps controversial parliamentary Questions. On my day it was a day when the Prime Minister was answering Questions, and I rose to my feet and nervously launched into my maiden speech. I was delighted to see a few Benches below me the right honourable gentleman the Member for Woodford, Sir Winston Churchill, sitting listening to me with rapt attention. I was deeply flattered, but totally lost my nerve when three minutes later he wisely decided that I was talking a lot of nonsense, rose to his feet, and walked out of the Chamber for some refreshments. Your Lordships' House has a more traditional and sensible arrangement whereby you inflict on yourselves the necessity, I understand, of remaining in your seats throughout a maiden speech. This is comforting to this new Lordship here this evening.
It is a great pleasure for me to have the chance of making my maiden speech on this particular subject of Europe. I congratulate the noble Lord, Lord Ezra, on coming forward with this important debate at this time. I had the privilege of spending nearly four years as one of the Ministers of my noble friend Lord Home in the Foreign Office between 1970 and 1974, and as such helped him and Geoffrey Rippon in the negotiations which came to a successful conclusion in 1972. That breakthrough was caused, in my view, by the distinguished contribution made by my noble friend Lord Soames, sitting in front of me, who at that time was ambassador for Britain in Paris when he made the major breakthrough in the Elysée which enabled the British Government of that day to make the final decision. This achieved agreement with our friends in Europe and we entered the Community.
I also had the experience of working with my noble friend Lord Whitelaw on the all-party Executive Committee of Britain in Europe as one of the three Conservative representatives on that all-party operation, which I think had a triumphant success in that the referendum proved that the British people were wholeheartedly in favour of this country's joining the European Community.
It is therefore, with that background, perhaps surprising that I should say this evening that I am delighted about the somewhat abrasive quarrelling which is going on in the Community today about how we deal with the financial arrangements for the European Community. It is time that a dose of realism was felt within Europe. The arguments and the discussions about the method of running the Community, which have reached a high pitch, certainly, of publicity over the past few months and culminated in the failure of the summit meeting in Athens, have brought home to all the countries of the Community the real need to get the system right, and get it right quickly.
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My noble friend Lord Trefgarne, in a speech which I welcomed as setting out Government policy, underlined the importance that the Government attach to trying to get some sort of solution which will, and must, include some rearrangement of the common agricultural policy, and will, and must, include some rearrangements of the own resources policy. It is clear to all of us that the CAP must now be changed. This is the view of most countries in the Community. I think it is even the view of France. It is certainly the view of Germany, the Low Countries, and Britain. I think it will be changed.
There is also the need to tackle the problem of the 1 per cent. VAT contribution. I was glad to hear my noble friend Lord Trefgarne say from the Dispatch Box this afternoon that the Government do not dismiss the possibility of making changes here, if of course we reach agreement first on the overall budget position. I believe that while waiting for the budgetary position to be dealt with the Community will continue to function. We have the income coming in at 1 per cent. VAT and that will enable the bills to be met.
Then we come to the question of the wider world outside. Most of us must have been disappointed and unhappy that the Athens Conference did not reach any agreement or discuss and have clear decisions on issues such as Spain and Portugal, which the noble Lord, Lord Ezra, mentioned in his speech. I would add the problems of the Lebanon and Cyprus, and East-West relations. If there was anywhere that the Community, if it were working together as a unit, should be bringing its views to bear it is in the possible rôle of European countries in Cyprus, the rôle of the various European countries standing beside our American allies in the Lebanon and the even more important area of East-West relations.
Will the Community survive all these quarrels and difficulties? I do not take quite the gloomy view which the noble Lord, Lord Ezra, takes although I realise that he was producing encouraging and important suggestions for us to consider this afternoon. I believe that the Community will survive. It is in nobody's interests that it should disintegrate. I think agreements will be reached because the governments and the heads of state and government are determined that they will be reached and that they will be reached this year.
The second area of concern that I should like to mention to your Lordships has not been raised by any of the noble Lords who have spoken so far in this debate; namely, that of the relationship between Europe and the United States of America. The noble Lord, Lord Ezra, and the noble Lord, Lord Bruce of Donington, in his robust remarks, made it plain that there was a world outside Europe. All of us realise this. It is important that Europe as a whole operates within that world and brings its influence to bear; the influence of the whole of Europe being so much more than the influence of the various parts that make it up. There is building up in America at present a dangerous wave of isolationist pressure upon the American Administration which we should not ignore. Many of your Lordships might have read a interesting article last week in the Economist on this subject.
Europe sees the United States of America as trigger happy, protectionist, inward-looking and perhaps

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simplistic. How does the United States see Europe: protectionist, inward-looking, squabbling and quarrelling—the noble Lord, Lord Ezra, mentioned that in his remarks—and the feeble will among Europeans in dealing with both East-West relations and defence?
Your Lordships know, we all know, that that is not true and that these are extremist attitudes on both sides of the Atlantic. But, at the same time, there are real problems. Governments must deal with these problems which face us at this time. How will they do it? Governments are cautious. They always have been and I know, having been a Minister, that Governments do not take decisions until they no longer can avoid taking them. This applies to Governments in Europe and across the Atlantic, including of course the Government in the United Kingdom. The United States is pre-occupied with a very important presidential election which will increasingly concern them during the forthcoming months ahead. All of us who have spoken so far in this debate have said that Europe is pre-occupied in studying its own navel and trying to make sure it sorts out its own problems during the forthcoming meetings. But both Europe as a whole and the United States of America are inextricably locked together. We are locked together in defence, through the world economy and economic policies and through history. I do not believe that either the Americans or ourselves—I talk as a European—will allow this close link between our two nations to split.
So where does this leave us now? Europe will recognise the situation by the United Kingdom continuing to provide the leadership which the Prime Minister and Foreign Secretary have provided in a series of meetings with their determination to get the financial and structural arrangements of the Community right and to get them right quickly. Thereby we shall have a stronger and united Europe which will prove a more influential and respected friend with the United States Administration and which will have its effect on the United States electorate, which is about to embark on electing a new president.
A debate like this can be immensely useful in achieving these objects. I am glad to have had the opportunity to make my maiden speech in it.
5.26 p.m.
Lord Walston: My Lords, it is not a duty, it is a genuine pleasure to congratulate and thank the noble Lord, Lord Fanshawe of Richmond, for the speech to which we have just listened. I can assure him that even if there were no such convention in this House as that to which he has referred concerning maiden speeches, not a single noble Lord who was listening to him at the beginning of his speech would have had any temptation or inclination to leave. We listened with rapt attention and, so far as I am concerned, with almost entire approval and agreement with what he has said. We are fortunate to have his very great experience both ministerially and in another place to help us in this Chamber.
I am also most grateful to my noble friend Lord Ezra both for giving us the opportunity of debating this
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highly important and topical subject and also for the content of his speech, for raising our eyes above the narrow horizons, to which most people who address themselves to the Common Market confine themselves, and to pointing us in a much more exciting direction.
I must confess I was slightly disappointed that the noble Lord, Lord Trefgarne, did not respond in a similar manner, but I understand the constraints to which he is subjected and I am sure his heart is in the right place even though his tongue did not always mouth the right words.
I am grateful to the noble Lord, Lord Bruce of Donington, because he has answered a question which a long time ago puzzled me, though I must confess I had forgotten it until I listened to his speech. Some of your Lordships may remember that many years ago, in the days when we were still subjected to fogs, there was a headline in the Evening Standard which read, "Fog in the Channel. Europe cut off". I often wondered who could have written that. Clearly it must have been Lord Bruce of Donington, or at least it was inspired by him.
I shall ask your Lordships to bear with me if I start my speech by referring to a subject which may seem rather wide of the subject we are discussing, but I am encouraged to do so by some remarks of my noble friend Lord Ezra and also by the fact that I believe it illustrates a point which is of considerable importance.
We are fortunate in this country in that, quite apart from the Channel which surrounds us, we are surrounded by neighbours of more or less like mind, with similar forms of government, similar attitudes, similar histories and similar traditions. Other countries are not all so fortunate. The Soviet Union is not fortunate in that way at all and it has had to take certain steps in order to safeguard, as it sees best, its own frontiers. We know how it has done so—by military occupation and domination from the Baltic to the Black Sea, and more recently extending into Afghanistan. That is a policy we certainly do not approve of in this country, but we could or should understand it. Whatever one's feelings about it may be, it is a policy which can hardly be said to have succeeded because the countries in question are no more well disposed to the Soviet Union now than they were when the Soviet tanks first rolled in. In fact, one can say that the opposite is true. It is entailing for the Soviet Union a great deal of expenditure, both military and economic, and has earned for the Soviet Union a very large degree of ill will in the uncommitted world.
The United States is in a similar position, or in a position which at least bears some similarity to that of the Soviet Union. It has on its southern borders a large series of countries whose governments are not similar to its own and whose attitudes in very many cases are different. But when events have taken place in those countries—the first of them being Cuba—where a government is overthrown, the United States has reacted, and is still reacting—we see it in Nicaragua, El Salvador and Grenada—in a way (and I take no pleasure in saying this) which is more reminiscent of the actions of the Soviet Union than of a civilised European country.
It has reacted with force. It did not say to Castro, when he first came there—and this goes through a

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whole range of American Administrations—quietly, "Well done; you have overthrown an oppressive, undemocratic and unjust régime, You have introduced, in a country where there are enormous extremes of wealth and poverty, an administration which is pledged to bringing about greater equality, increasing education and health services and so on. We shall help you. We demand from you, to the best of your ability, proper restitution for the property you hake taken from American citizens, but what you are aiming at is in line with what we citizens of the United States stand for".
It has not said that. It has reacted with fear and horror and has said, "Here is the first outpost of the Soviet Union, our enemies, right on our doorstep, within a few hundred miles of our borders". It first reacted with some form of military attempt, which failed, and then with an economic boycott. And so this has continued all the way through in the whole of its relationships with Latin America and particularly with Central America. Wherever governments have appeared which have attempted to bring about a more just form of régime—maybe too Left-wing for the desires of many of us and in many cases certainly not democratic, but also in many cases replacing governments which were not democratic—and a rather more equitable distribution of wealth and a rather better life slightly closer to American ideals, the American reaction has invariably been one of fear, horror, opposition, and of support for the original régime or for those who are trying to overthrow the new one. It has not worked, and it is not working in the Caribbean area. It is not working in Central America——
Lord Soames: My Lords, it has nothing to do with the subject at all.
Lord Walston:——and I do suggest that it would have been of enormous value to the United States through this whole period if there had been not simply the voice of the United Kingdom (a little whispering voice, if indeed there ever was one) but the strong voice representing 270 million people with the whole European tradition behind them, friendly towards the United States and sharing all the basic values. And if that voice had said to them, and were to say to them now, what our views are here, what we believe is the right attitude to take—we cannot impose our will on them; of course not—as other noble Lords have said, as a group of European Foreign Ministers or as the European Council, speaking with one voice, whether it be about Southern Africa, Central America, the Middle East or South-East Asia, there is the weight and the influence which we should be able to exert.
After all, it was—was it not?—the intention of the founding fathers of the European Economic Community that it should not remain purely an economic community the whole time, but that it should build up in this great economic and industrial complex a super-power, if one wishes to use that word, which would be neither the super-power of the Soviet Union, with its very manifest faults, nor the superpower of the United States, with its very manifest virtues but also, one has to admit, with certain views based largely on the lack of experience that we in
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Europe have—to build up just such an organisation and an agglomeration of like-minded countries, that would contribute substantially to world peace and would not simply contract out and become a little Scandinavia, leaving the great powers to decide the fate of he world.
But we have to admit that during these last years, having got over the initial teething troubles of the Community and having set it on the right course, increasingly all the meetings of the Community, whether in the Council of Ministers or in the European Council or wherever it might be, have been taken up with haggles over the £400 million, who owes whom what, what is more just for the poor, what is my money, and things of that kind. Therefore, other and far wider and more vital issues have been neglected. Those of us who, like the noble Lord, Lord Fanshawe, and the noble Lord, Lord Soames—and we are looking forward very much to hearing what he says—earlier worked for Europe and for our accession to Europe did not work solely in order to have an organisation which devoted its time to discussing surpluses of butter or olive oil; we worked for something very much more important than that.
The Community can still be that, but leads have to come from all the countries concerned and they are regrettably absent. Above all, I believe—I hope this is not unduly chauvinistic—leads should come from this country. The noble Lord, Lord Bruce, reminded us (in rather less temporate terms than my own) of the contribution it made to the saving of Europe between 1939 and 1945. This is a country, with a huge industrial base, with great wealth from oil and other resources, but above all with long traditions of parliamentary democracy and peace-keeping throughout the world. Surely it is for us to take the lead now, make the Community into what the founders wished it to be, and not let it deteriorate into what it is in danger of becoming.
5.40 p.m.
Lord Soames: My Lords, it gives me infinite pleasure to be the first speaker on this side of the House to whom it falls to congratulate my noble friend Lord Fanshawe on what was, without any doubt, an excellent and refreshing speech on this tricky subject of Europe. It gives me such pleasure for a number of reasons. First, he and I have been friends, not only politically but in the holidays as well, for some 20 years or more; and, secondly, he and I have been involved closely together in this European saga before, during and after British entry, and I have the greatest respect for the part that he played therein. He has ministerial experience in the Foreign Office, and he knows a great deal not only about Europe but also about other parts of the world; and, of course, he has considerably more general political experience as well. So I believe that the speech was an outstanding example of what speeches should be on a subject such as this—unlike every speech that has been made during this debate—and I am sure your Lordships will join me in hoping that we shall hear frequently from him. Though it is a formality to say that, in some ways, on this occasion I personally feel it most deeply.
I fear that I cannot be so complimentary about the noble Lord, Lord Bruce of Donington. He said that he

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thought the Prime Minister had gone too far in telling our partners that she could envisage a situation where the United Kingdom Government could agree to an increase in national contributions to the Community. He also said that, anyway, our partners are very lucky to be so close to us geographically. If that is the view of the party for which he is the spokesman on these matters, it is rather a shame that they have changed their minds and now say that they are in favour of the Community, because I promise your Lordships that that is no way to run that railroad. If he thinks that that is the way in which a future Labour Government will treat the Community, then I trust, when the next election comes around, that that is the sort of stuff that we shall hear, because the people will have none of it.
Having got that off my chest—I am sorry that the noble Lord is still smiling; I hoped that he would look sad—I must add my gratitude to the noble Lord, Lord Ezra, for promoting this timely debate. I agreed very much with the thrust of his Motion. But I did not agree with everything he said and I rather shared the feeling of my noble friend Lord Trefgarne, when he replied to him, that there was an inference that, perhaps, we need not push too hard here and there over certain issues which are more vital to this country than to others. The test here should be whether or not it is vital in the Community's interest to press on these matters—I shall come to them later in my speech.
There is no doubt that, before the Community can play any role in the world for which its history and its economic and political strength have fitted it, it has to resolve these major internal problems which have bedevilled it for so long. Until those are solved, the Community will not be taken seriously elsewhere as a major force in world affairs, and neither will it deserve to be.
The solution to these problems has been so long postponed—at best, they have been patched up on a year to year basis—that the moment of truth has arrived. The bad news is that, as a result, these problems have now grown to such vast proportions as to create very major political difficulties for all individual member states. The noble Lord, Lord Ezra, referred to agriculture, and he was quite right. The problems of the CAP have been allowed to dribble on for much too long. I remember when I was at the Commission pressing very hard and asking, "Should not finance Ministers be involved in the price fixing, as well as agricultural Ministers?" But it never happened; it has been only agricultural Ministers. Each one has scratched the other's back. One wanted an increase in the price of wheat, another wanted an increase in the price of milk and another wanted an increase in the price of tomatoes or whatever it was, and they said, "Look, old boy. I'll not get in your way if you don't get in mine". That piled Pelion on Ossa year after year. That is the bad news.
Ironically the good news is, as I said, that the moment of truth is arriving with the Community's impending bankruptcy, so that a failure to agree on a major package of change during the course of the next few months would put at risk and imperil the Community's very existence. As I firmly believe that there is not one member of the European Community
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who wants it to disappear, I, like my noble friend Lord Fanshawe, have a certain degree of confidence, for I believe that this will concentrate wonderfully the minds of member governments.
My noble friend Lord Trefgarne said that this is a crisis which the founding fathers of the Community could not have foreseen. Let me suggest to him that the reason they did not foresee it is that they always believed that the Community's interest would be properly served by the member states. They never foresaw the situation where every member state would think in a totally selfish and nationalistic manner, and they believed that the Community's interest would get its fair share of attention. That is what has not happened and that is why they could not have foreseen it.
I think there is now general agreement on the importance to each country of its membership of the Community, and also appreciation that the Community is stronger than the sum of its parts in both economic and political terms, in spite of what the noble Lord, Lord Bruce, told us. I could give him a number of examples where member states of the Community have benefited in international negotiations—I was lucky enough to have experienced some of them myself—from being a Community, instead of negotiating as individual countries of 50 million or so people. So I think that that can be taken as read and understood.
Yet, in the Council of Ministers, the Community's interest is given but scant attention, and those meetings have consistently been portrayed by the national press in all our member countries as gladiatorial contests between different national interests, with winners and with losers. This time round, with the threat of bankruptcy hanging over the Community's head, I hope that more regard will be paid to the general interests of all members and to those of the Community itself.
How would an independent observer view the problems which are facing the Community? First, he would be struck by the fact that it is about to go broke. He would be amazed to see that, despite this, the cost of the common agricultural policy had been allowed to increase by no less than 30 per cent. in the last year, at a time of very great financial stringency in all member states, and that it now represents some 65 per cent., or more, of the total Community budget. This figure might be appropriate for a community of developing nations where about 80 per cent. of the people work on the land, but it is certainly not appropriate for a community of advanced European nations where, on average, about 8 per cent. of the people work on the land. That would, I believe, astonish him somewhat.
This observer would also be astonished that the arrangements for national contributions to the Community have become so ill-balanced that year after year the Community's further development is shelved while member states, and their Ministers, spend months arguing about how the burden of costs for a particular year should be more equitably shared.
Common sense, and the Community interest, would surely prompt our observer friend to demand that governments should agree during the next few months to create, first, new and effective machinery to

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limit the rate of increase of agricultural spending in relation to the Community's total expenditure and, secondly, a more equitable long-term financing arrangement which takes some account at least of the relative prosperity of different member states. Common sense and Community interest would also demand that solutions must be found to all those problems before governments agree to increase national contributions to the Community.
As one who has, I hope, shown a keen awareness of the Community interest during the past 20 years or so, I do not believe that these issues to which I have just referred should on this occasion be either burked or ducked. They must be faced up to. If they are not faced up to and resolved now, they never will be. I say this, not because I believe that if those issues are resolved it will benefit this country but because the Community interest demands it.
Having said that, I would make two pleas to the Government through my noble friend Lord Trefgarne. First, such solutions may be fine and dandy for us, but because they have been allowed to grow so large they will create very considerable political difficulties for some of our partners. Although I do not believe that the objectives of obtaining modifications to the common agricultural policy and a long-term financial agreement should in any way be jeopardised, we must be aware of other nations' difficulties, which also have Parliaments like ours and which also have public opinion to think about and elections to face.
So while, as I say, Community interest demands that these problems should be resolved on a long-term basis, we must show understanding and goodwill towards the needs of our partners, provided that those needs can be shown by them to be in the interests of the Community as a whole and are not just mere national interest—in the same way as I honestly and earnestly believe, with the experience I have behind me of these matters, that what Her Majesty's Government are asking for here is genuinely in the Community's interest.
Secondly, I would ask Her Majesty's Government to consider how we are going to arrive at such a package. May I call in aid the experience which I had during the course of the enlargement negotiations, when my noble friend Lord Home of the Hirsel was Foreign Secretary? The preparations were laid by long, serious and private diplomacy with a number of countries. Comparatively few ministerial meetings were held. Their object was largely to tie up the ends which diplomacy had left untied. So far as I remember, there was one heads of government meeting on a bilateral basis. It took place when Mr. Heath went to see President Pompidou. But it was only a brief meeting. Everything had been agreed, to a very large extent at least, before that meeting took place. That is what heads of government and heads of state meetings ought to be about. They ought to put their imprimatur on agreements arrived at by those whose job it is to make those agreements—that is, the Foreign Secretary and diplomats. It was not until the entry negotiations were completed that there was a general meeting of heads of government and heads of state.
We seem now to have arrived at a somewhat different situation. Heads of government, who are
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extremely busy people and who have lots of things to worry about, visit one another. They spend one day doing it because they cannot afford any more time. The impression is given that it is for heads of government to decide these matters. Of course it is for heads of government to lay down the guidelines and to keep an eye on these matters. The March meeting is only a couple of months away. If it fails, as I fear it will, because I do not believe that the preparations have been adequate——
Lord Bruce of Donington: My Lords, can the noble Lord describe to the House what role he thinks COREPER should undertake in the next six weeks or so?
Lord Soames: My Lords, undoubtedly it plays its part. It is a meeting of the permanent representatives of all the member states meeting in Brussels. It always has played its part, it always will and, if anything, it should, in my view, play more rather than less a part. But there has got to be proper preparation. If the March meeting fails, the next meeting will be in June. With France having the presidency and being intent upon having a successful presidency—as is every country when it has it—and with France having particular problems, I believe it to be vitally important that during its presidency, France, which did so much to create Europe, should succeed in saving the Community from its own destruction.
Lord Gladwyn: My Lords, would the noble Lord give way?
Lord Soames: No, please, I must go on; I have been talking for too long as it is.
I think heads of government should encourage those in more lowly stations of life to get on with the work, give them broad instructions and tell them they have to find a way. It is no use leaving a lot of unresolved matters to summit meetings.
It is just possible that the next few months may prove to be a watershed in the Community's history. It may just be, as Lord Fanshawe thought, that the impending financial crisis will prove to be the catalyst—given the political will—for what are generally acknowledged to be much-needed internal reforms of the Community, leading to a stronger Community, more relaxed with its internal relationships, and more self-confident abroad.
We will soon see, and it is my hope that Her Majesty's Government will play a leading part in that development, showing a good and proper mixture of determination on the one hand, and understanding and flexibility on the other.
6.1 p.m.
Lord Mackie of Benshie: My Lords, I, too, should very much like to congratulate the maiden speaker: a curious tone for noble Lords who have spent years in the other place, but I greatly enjoyed his speech and look forward to hearing him many times again.
I also greatly enjoyed the speech of the noble Lord, Lord Soames, and agreed with practically every word he said. I always find it interesting to hear him giving tongue in a bluff and forthright manner, and then to

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reflect that this bluff and forthright manner must conceal considerable cunning as he has been so successful in negotiations and diplomacy in the past. I wholly approved of his remarks about the speech of the noble Lord, Lord Bruce of Donington, which I also greatly enjoyed. Really, it revealed once again that the basic contradictions of the Labour Party are still there and are still being expressed openly to the confusion of the rest of the party, and I must say rather to the delight of the Liberal Party and their allies on these Benches.
In his speech the noble Lord, Lord Ezra, put the main points, or the broad point about agriculture, but I should like to develop that matter a little because we are having a tremendous amount of nonsense talked about agriculture at the present time. There is a sort of campaign against it on the ITV and the BBC, all having distorted programmes on what is actually happening in agriculture.
I have been a member of your Lordships' EEC Scrutiny Committee, Sub-committee D, for about eight or nine years, and in the whole of that time the farmers on that committee have been saying that what is wrong with the policy is that we are not tuning it properly. People are talking about the reform of the CAP. In fact, the CAP in its present form is here to stay. What is wrong is that there has not been the political will to look into the future. As the noble Lord said, at every meeting of agricultural Ministers ridiculous bargains were struck and no council ever had the collective sense to see that the CAP for the long-term interests of the farming community really could not go on ignoring the laws of supply and demand in the way that it had done. All the sensible farmers in this country are perfectly well aware that because of this the cutbacks must be a great deal more stringent and the financial loss they will suffer must be greater because of the lack of foresight in the past, but they are prepared to take it if it is fairly done across the Community.
I think we really must watch, as my noble friend Lord Ezra said, that we do not throw the baby out with the bathwater, because the CAP has been most enormously successful. When, for example, people talk of being able to buy grain in the world at far lower prices than the CAP prices, the fact is that 10 years ago we were, in Europe, an importing nation to a considerable degree. We are now responsible for 25 per cent. of the world trade in grain. If that 25 per cent. were not going onto the world market, I leave your Lordships to imagine what the world price of grain would be; it would be a great deal higher than it is now.
When the noble Lord, Lord Bruce of Donington, says that the support for farming in this country has been a disaster for us, he really ought to look at the actual facts. I have some of them here. I will not bore your Lordships with many figures, but it is a fact that, if you take it two ways, in 1973—and I am now moving the prices up to present-day prices—the total import of food, feed and live animals into this country was something like £8,500 million. By 1982 that had dropped by £2,000 million to £6,440 million. If you take it the other way and multiply up the food production figures in this country in the same way, in
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1973 the value of gross agricultural output was something like £5,000 million, and in 1982 it had gone up £5,900 million. The actual rise was about £700 million, and when you multiply that by three you again get £2,000 million which agriculture has saved importing into this country.
That is a great deal of money, and when you also consider that for the first time in history our manufacturing imports are greater than our manufacturing exports, it would be very foolish to endanger this contribution which agriculture is making to our financial well-being. I therefore think that the Government are going the right way about it, as far as we can see from the excellent session we had in Sub-Committee D this morning with the Minister of Agriculture. They are prepared to look at the views of the rest of Europe, and they are prepared to adopt some of their methods so long as they are fairly applied across the Community.
In this country we keep forgetting that because we grew only half of our food and we bought half from abroad, it was much cheaper for us to finance the farming community in this country by deficiency payments, whereas on the Continent the original Six had always kept up agriculture by a simple method of protection. Who is to say that ours was a better method, really? In fact, their industrial output and their industrial prices certainly did not seem to suffer because the price of food was higher there than it was here.
So I think we have got to consider their attitudes as well as our own. That we have got to cut the cost, there is no shadow of doubt, but I think it has got to be done fairly gradually. The cuts this year have got to be hard; but more than anything I think the farming community all over Europe needs to know where they are going. They need to know that they are going to have a consistent policy; that they can look forward for five years, and that for five years, for example, the price of grain will not go up. One of the worst things that happened—and the Commission were to blame here, too—was that in 1982 they raised the price by a substantial amount, having said for the previous two years they were all for a prudent pricing policy. So, consistency is one of the things that we must go for.
I will not go into detail, but I want to say something about the bargaining which is going on. Both the noble Lord, Lord Bruce of Donington, and the Minister rather chided my noble friend Lord Ezra for saying that we should perhaps be a little less pushy in our bargaining. My noble friend did say that, but just because you bargain in a more reasonable way it does not mean that you will get any less out of it than if you bargain in a particularly strident way. For example, I know as a result of the weather we have been having in Scotland recently that if one gets into a motor car and puts one's foot hard down on the accelerator in snow, one will get nowhere. But if one takes it gently, one is apt to get somewhere. My noble friend Lord Ezra had a great deal of experience in bargaining with a very skilled bargainer—the noble Lord, Lord Gormley, who appeared to get far more for his members by that method than his successor appears to be getting by his.
I therefore think that the Government should heed my noble friend's advice and try to improve our image. If you go into negotiations with people knowing

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that you want to make a success of the partnership, then they will be more reasonable. But if you holler and shout all the time that Britain is what you are fighting for, then they will say that it is not a real partnership. That was very good advice from my noble friend, and I was glad to hear it echoed by the noble Lord, Lord Soames.
I repeat that we are in Europe for very much more than simply our economic advantage. We are in Europe also for our very survival in a strange and difficult world. I believe that most noble Lords who are at the kind of age at which most of us are, and who know about the last war, acknowledge that the main purpose is for us to knit, together, all Christendom, instead of warring, to make Europe into a really cohesive unit which can do something for the peace of the world as well as for the prosperity of its citizens. That is the tone and the object of my noble friend's Motion, and I have much pleasure in supporting it.
6.12 p.m.
Lord Hatch of Lusby: My Lords, the noble Lord, Lord Mackie of Benshie, and other previous speakers, mentioned that there are members of the Labour Party who think differently from others. That is not altogether extraordinary. If he has to comfort himself with pleasure for the Liberal Party because there are people in the Labour Party who hold different views, then the fortunes of the Liberal Party must be even lower than those indicated by the opinion polls.
There are members of all parties who hold different views about the EEC, and indeed about most international policies. I make no bones about the fact that I was always opposed to British entry into the EEC. I was opposed not on the traditional ground of extreme nationalism, which I regret—but on the exact opposite ground; I considered that joining the EEC was joining a rich man's club, whereas true internationalism would have spread our influence a great deal wider. It is being spread wider and will, I hope, continue to be spread through such organisations as the Commonwealth and the United Nations.
I wish particulary to thank the noble Lord, Lord Ezra, for introducing this debate and for the remarkable speech he made at the beginning of it. But perhaps I may draw his attention to one point which, I believe he would agree, should be corrected right from the start. The noble Lord gave a list of manufacturing commodities produced by the newly-industrialised countries, which might be considered as competitors in the industrialised world. He included in that list textiles. I have made this point before in your Lordships' House and I want to keep emphasising it. The import of textiles into this country from the developing countries has been steadily declining, whereas the import of textiles into this country from the industrialised world has been continually increasing.
If one looks at the percentages, one can see that is so. I am sure that the noble Lord, Lord Ezra, would not wish to deceive not only this House but, far more important, the workers in the textile industry, because that argument is often used in the trade union movement as a canard for import control on that
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precise commodity which always starts an industrial revolution. It should be clearly known that the rapid increase in textile imports into this country has come increasingly from the developed world—from America and Western Europe—and not from the developing world. The proportions will show that.
Having said that, I should like to take up the most imaginative and constructive point made in the noble Lord's speech, when he mentioned the necessity to raise the level of the European debate and to face fundamental issues. I want to face simply one issue this evening; the relationship and responsibility of the European Community for the developing world. I will take just one example to show the significance of this aspect. It is the best example for those who believe that the European Community has been promoting the economic development of developing countries. It is the case of the Ivory Coast, which has been known as the economic miracle of Africa and which, during its first 10 years of independence, had an annual growth rate of 10½ per cent. and a per capita growth rate of 5 per cent; achieving what is, for Africa, the remarkable figure of an average income per head of 286 dollars.
This is the economic miracle. It was of course the relic of French colonial rule. During the period of French rule, the economy of the Ivory Coast depended almost entirely on the export of cocoa, coffee and timber, although there was some diversification upon independence. But the important issue, whether the Ivory Coast was under French rule or independent, was that the plantations which produced those crops were owned almost entirely by foreigners. When, after independence, economic advisers persuaded the Government that the objective should be to increase exports of agricultural products, it was exports produced on those foreign-owned plantations which almost entirely dominated the Ivory Coast's economy.
Agriculture did increase. It increased by about 5 per cent. in the first 10 years. Industry increased by a great deal more; by more than 18 per cent., mainly as import substitutions—but note that no major industrial plant was ever installed on the Ivory Coast. It was the use of local materials as import substitution, rather than the growth of an industrial base, which formed the economic policy of the government. That led, as we have seen all over the world, to a rapid increase in urban populations. The population in the capital of the Ivory Coast, Abidjan, increased from 125,000 to more than half a million. Again, this is typical of the third world as a whole.
It is also interesting to note that it was during this period—at the height of French influence in the EEC in the post-colonial period—that French investors saw the opportunities of places such as the Ivory Coast, and particularly the Ivory Coast, for investing capital, securing privileged French trade concessions (inevitably, the French Government secured almost unanimous support for their foreign policy from the ex-French colonies), and now becoming the associated states of the EEC and able to use development funds and capital drawn from the whole of the EEC.
What was the result? The first result was a tremendous increase in the European population of the Ivory Coast itself; it trebled its numbers during the first 10 years after independence and reached a figure

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of 35,000. But what were they doing? They were in charge of banking, they were in charge of industry, they were in charge of commerce, they were in charge of technological developments, they owned the plantations and they were advisers to the government. In fact, well after independence, five years after, there were more private funds being sent overseas from the Ivory Coast—not just more, but twice as many private funds—than all the foreign aid and private capital combined. There was in fact a drain of capital from the Ivory Coast. Where did the drain go? It went to France and via France to the EEC.
In other words, it was countries like the Ivory Coast that were subsidising the EEC. They were subsidising it by the creaming off of their surplus capital, transformed into francs, expatriated from Africa and other developing countries to Western Europe, and they were subsidising the growth of the EEC economy. This was directly subsidised by the activities of the European capitalist combines, plus a large number of multinational companies, operating in the developing world and exporting their capital in this case to the European Community.
But what was happening to the people themselves? What was the economic miracle so far as the Ivory Coast themselves were concerned? Well, again typical figures: the contrast in living standards between the urban and the rural populations in the Ivory Coast was calculated to be one to 12; townsmen bought eight times more consumer goods than the typical average rural dweller. Only about half of the increased export earnings actually went to the peasants, and over 2 million people in the Ivory Coast alone, that is 85 per cent. of the people, remained as subsistence peasants.
Of course, the theory was, the theory often still is, that if you create a self-sustaining economy that will then be inherited by the Africans. It has not been inherited by the Africans in the Ivory Coast. It is still owned by the Europeans, and it is still exporting its capital to develop Western Europe. Then there is the theory of the "trickle down", that Africans will become middle class, that they will be able to increase their living standards as a result of the European activities in these countries. It has not happened. It did not happen in the ill-fated Central African Federation; it is not happening in the ex-French colonies that are now associate members of the EEC.
Yes, agriculture has been expanded; yes, more is being produced and a great deal more is being exported, but the Ivory Coast is still a net importer of food. It has not been an effort and a policy designed to increase the food production of the country itself; it has been an effort to increase the export of cash crops, thus again subsidising the economy of the already developed European countries. And, as we have heard this afternoon, there is the surplus of European agricultural produce. Where does it go? A great deal of it goes to third world countries. And what does it do there? It undercuts the local farmers; in many cases it actually handicaps the growth of indigenous agriculture.
Again, the government's resources, which are very largely dependent on commodity prices, are dependent on what is decided in London metal
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markets, in the commodity markets, or in Washington or in New York, but not in the countries themselves. In this case, in the case of the Ivory Coast, the Government's revenues depend almost entirely on the price of cocoa. When there was a slump in the price of cocoa in 1971 there was an immediate financial crisis, leading on to that debt burden we have heard mentioned, and rightly mentioned, so often in this House in various debates, the debt burden which is threatening not just the developing countries but the whole financial structure and stability of the world.
The debt burden of the Ivory Coast increased by 30 per cent. in the first 10 years of independence. It was the IMF that pointed out that, whereas 75 per cent. of public investment could be guaranteed from internal sources at the beginning of independence, that figure had fallen to 60 per cent., and this was during a period of comparatively high export prices.
So what happens? The government has to impose austerity with all the political pressures that a policy of austerity is bound to bring, and with the additional burden—as I think most noble Lords, even those who are firm supporters of the EEC, would agree—of the degree of protectionism which is a constant feature of the policy of the European Economic Community. And, of course., so far as our Government is concerned, when they removed exchange controls in 1979 what happened? That new capital did not go to the developing countries either directly or through Europe. It went into the developed countries. The investment from this country in Western Europe from 1979 to 1982 rose by 700 per cent.; the investment in North America rose by 40 per cent.; investment in this country rose by under 15 per cent. That is a measure of the investment which was going into the already developed world, indeed going into the countries where we find our major competitors.
We are approaching the time for renegotiation of the Lomé Convention. I have a great deal of admiration for what has been done at Lomé; although I do not think it is enough; I think it often takes wrong directions. I think there is a great deal too much charity and not enough solid hard digging work in giving the technological advice to newly developing countries to enable them to produce more themselves, to become more self-sufficient, to produce more food, to develop their own manufacturers.
I hope that the Government will have something to say tonight about their plans for the new Lomé Convention because, quite frankly, many of us who were originally opposed to British membership of the EC recognised that the EC is there to stay for the time being. Just as we disapproved of the structure of the House of Lords but recognised that it was going to exist and should be used, so in the same way we believe that as the EC exists it should be used for constructive purposes so long as it remains an international institution.
Surely the whole theme of the opening speech of the noble Lord, Lord Ezra, and the theme I would support 100 per cent., is that the European Community and all its institutions are on trial. Unless they can face, meet and solve the fundamental challenges of the human race, of human kind, and make a significant contribution to these fundamental human issues, the

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EC will go down into the dustbin of history. The EC is on trial. If it succeeds it will survive. If it does not succeed in facing these basic issues and, above all, the issue that divides the world into rich and poor—and it has the opportunity to do so—and build bridges instead of using the developing world to subsidise the industrialised West; unless it recognises that the survival of the West depends upon the revival of the developing world; unless the EC takes that view it has no chance of surviving. If it does take that view it will have the support of those of us who were originally opposed to British membership.
6.32 p.m.
Lord Banks: My Lords, I hope the noble Lord, Lord Hatch of Lusby, will forgive me if I do not follow him into the interesting territory he has just been exploring. My noble friend Lord Ezra performed a valuable service today by raising this important matter and I should like to underline the case he has made in support of the Motion. That case is based on the assumption that we want to see the European Community play a significant role in the world and that we want to see Britain play a significant role in the European Community. The noble Lord, Lord Bruce of Donington, has never wanted that and has always made that very clear in this House. He did so again today. But we are not discussing whether Britain should be in the Community. We are looking to a future in which we assume that that will be the case.
The Athens summit, as many noble Lords said, was a failure. At its conclusion it was not possible for the heads of government to agree on a common communiqué and we may well ask who or what was to blame. Much of the European press judged that national sovereignty was the culprit. One Luxembourg paper said:
"We all seem to have forgotten that Europe has become an absolute necessity".
It went on to criticise the bickering which took place in Athens as "pathetic". It condemned the inefficiency of the European Council. But if national sovereignty is rightly blamed in general, the British Government in particular came in for considerable criticism. One Danish paper described the summit as,
"Thatcher versus the rest".
The word "intransigent" was much in use. My view is that, while it would be absurd to try to lay all the blame at the door of the British Government, they can be criticised, as my noble friend Lord Ezra said, on account of the image which the Government have managed to create and also for a reluctance to make concessions.
I am convinced of two things. First, that while it is right to seek reform of the common agricultural policy; right to seek to reduce over-production; right to seek to help the poorest rather than the rich, and right to seek to eliminate waste, it is perhaps unrealistic to suppose that a significant reduction can be obtained in the total at present spent on agriculture. It may well be spent differently. We were told earlier this afternoon by the noble Lord, Lord Trefgarne, that the amount of the Community budget which is now taken by the common agricultural policy is 65 per cent. If one refers back to 1974 one sees that at that time it was 75 per cent. That is contrary to the general impression.
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Most newspaper reports suggest that there has been a steady increase in the percentage taken by the common agricultural policy, and use such phrases as, "the policy which now takes two-thirds", as if that is a peak which has just been reached whereas, although there have been fluctuations from year to year, the general trend over the past 10 years has been for the percentage to decline. The population involved in agriculture in the Community in the past 20 years has halved and there has been a steady decline from 1958 onwards.
We must bear in mind that a freeze in farm prices overall, such as the Commission is now very understandably recommending, does mean a reduction in real income. It means a reduction in real income for all farmers, including British farmers. When we reflect on the militancy which we have seen among farmers on the Continent recently we must realise the importance of what the noble Lord, Lord Soames, said. We must realise the difficulty in which the governments of our partner countries are placed in this matter.
I wonder whether in these circumstances it is sensible to argue, as I understand the British Government argue, that savings must be made in the common agricultural policy to finance other expenditure within a total budget not significantly increased. I understand that the Government are prepared to consider the possibility of increasing the resources and the expenditure of the Community but not until this first exercise has been carried out. I shall be most grateful if the noble Lord, Lord Trefgarne, can tell me whether that is the position which the Government take and whether they feel, in view of the situation I have described, that that position is tenable. Surely we can only expect a substantial reduction in the percentage taken by the common agricultural policy if the total EC budget is itself substantially increased.
Lord Bruce of Donington: My Lords, I am most grateful to the noble Lord for giving way. Will the noble Lord consider the possibility of transferring substantial sums from the "guarantee" section of the EC budget to the "guidance" section? That would accomplish a limitation to the unrestricted nature of the obligatory expenditure under the guarantee section and a reinforcement under the guidance section for the assistance of small farmers, and would in fact accomplish the purpose of limiting agricultural expenditure.
Lord Banks: My Lords, I certainly would be prepared to consider that, but within the limitations that I set out earlier that affect the agricultural position generally and the political difficulties relating to that.
My second conviction is that the problem of the British contribution will not be solved until the budget of the EC is substantially increased through spending on other common policies from which we shall gain more than we do from the CAP. I think it is important to realise that the figures that we are discussing are relatively small. The EEC budget takes rather less than 1 per cent. of the gross domestic product of the EEC, or about 2 per cent. of the expenditure of national governments. As the noble Lord, Lord Trefgarne, earlier told us, the British Government have secured

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rebates which I think have averaged about £800 million over the past three years. But, of course, when compared with £125,000 million, which is the total Government expenditure, £800 million is not so large as may at first be suggested. So we see that the figures on which the whole argument is based are comparatively small.
We must remember that the contribution from the United Kingdom is not "our money", as it has I think been described by the Prime Minister, for it has been agreed by the member governments that it comprises part of the resources of the Community. When we ask for a rebate, however justified we may be, we are asking that the Community should return money which is its money; which has been collected in our country, but which is part of the resources of the Community.
I know that the British Government are not seeking a juste retour—a return equal to the national contribution. They have made that plain. To insist on that would be to undermine the basis of the Community. Nevertheless, a continual battle for refunds of Community money as the way to correct the imbalance—and I fully recognise that there is an imbalance—fosters ill-feeling.
As we have heard, next month the leaders will try again, and I should like to suggest that at the meeting the British Government put forward a package under five heads. The first is that there should be an immediate increase in the percentage of VAT available to the Community, from 1 per cent. to the 1.4 per cent. which is generally recognised to be necessary; and I would regard that as an interim measure. Secondly, plans should be prepared immediately for a progressive expansion over a fixed period of time of the Community budget, and personally, as I have said before in this House, I should like to see it increased to the 2½ per cent. which was recommended some years ago by the McDougall Committee.
Thirdly, I should like to see a link established between the rate of VAT paid by each country and the ratio between net contribution to the EEC and national gross domestic product. Thus the rate of VAT would vary from the norm for particular countries in accordance with changes in that ratio, and that would prevent any country suffering a severe imbalance. It would also end refunds, since any correction would take place in the contribution in the following year. Fourthly, I should like to see a reform of the CAP broadly on the lines which have been put forward by the Commission. Fifthly, I should like to see a simultaneous advance on these fronts which would be fully monitored by the Commission, the Council of Ministers, the European Council and the Parliament.
An agreement of such a kind would enable the EEC to concentrate on other matters—on improving the structure to be built on this financial base. I have in mind, for example, as part of that plan, increasing the regional and social funds; eliminating the non-tariff barriers, which according to Guido Carli, the president of the EEC industry unions, are losing the Community a sum equal to twice the Community budget; and improving the decision-making machinery by using majority voting wherever possible.
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In conclusion, I should like to remind the House that the European Economic Community has a higher population than the United States, Japan or the Soviet Union. It has a higher gross domestic product than any of those countries; and it has a higher share in world trade than any of them. If the financial basis can be firmly established, and if these other reforms can be carried through, then, as other noble Lords have said, we can give to the Community the political coherence and the influence in the world which the facts I have just enumerated would justify.
6.45 p.m.
Lord Bruce-Gardyne: My Lords, I should like to join with other noble Lords who have thanked the noble Lord, Lord Ezra, for introducing this debate this afternoon. Obviously the timing is admirable, as we still have a few moments to look forward to the March summit. Certainly the debate has produced a number of varied and important comments for the Government to take account of, including those made in the admirable maiden speech of the noble Lord, Lord Fanshawe of Richmond, and, if I may say so, the particularly magisterial contribution from my noble friend Lord Soames.
The robust independence advocated by the noble Lord, Lord Bruce of Donington, has been much admired on various sides of the House. However, I must confess that occasionally it occurred to me to reflect on the contrast with what actually happened when the last two Labour Governments were in power. I should not have thought that robust independence was precisely the attitude that those two Governments adopted to the brokers' man from the International Monetary Fund, though perhaps they did not have very much choice.
The noble Lord, Lord Ezra, expressed some anxieties about the prospects for the Community and the summit which lies ahead, and these have been echoed on both sides of the House. I certainly share those anxieties. I confess that I am perhaps almost more worried than are some other noble Lords who have spoken, because it seems to me that there is a substantial prospect of two possible outcomes. One is the outcome which the noble Lord, Lord Ezra, called a "botched compromise" and my noble friend Lord Trefgarne I think referred to as "the easy way out"; in other words, an agreement to increase the resources of the Community, coupled with what I believe used to be called "solemn and binding undertakings" about the restraint of agricultural expenditure, and a few douceurs on the budget.
I think that there is possibly an even more serious hazard than that, though I agree with both my noble friend and the noble Lord that that would be a profoundly unsatisfactory outcome. What worries me is that I think there is another possibility, which is that the summit will end in profound disagreement. It seems to me that if that were to happen, it would be very unlikely that the £450 million rebate which was provisionally pledged to Her Majesty's Government at the time of the Stuttgart summit last summer would actually be paid.
There appears to be some considerable prospect that if it were not paid it would be decided to withhold it

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from the contributions which we are due to make to the Community thereafter. I am sure that that would be a popular course. However, I confess that I wonder about its wisdom. I say that because, as I understand it—and I am sure that other noble Lords who are yet to speak in the debate will correct me if I am wrong—if, for whatever reasons, we were to withhold our contributions, the Commission would have very little choice but to arraign us before the European Court. In turn, the European Court, as I understand it, would have very little choice but to pronounce that we were actually in breach of our treaty obligations, and that other member countries were therefore entitled to erect trade barriers against us. For myself, I must admit that I would not lay overwhelming odds against some such eventuality occurring.
Comparisons have been made with the empty seat attitude taken by de Gaulle in the 1960s. But there is a difference between telling the club you will not attend any meetings and telling the club that you are not paying half your sub. In the latter eventuality the committee is, I suggest, liable to feel it necessary to take action against you. That would be a hazardous course for us to embark upon.
What are the alternatives? The noble Lord, Lord Ezra, and the noble Lord, Lord Banks, were in favour, I think, of achieving a better financial balance in the Community by expanding the resources available to the Community. We have had suggestions in the past of an energy levy, or some such. I must confess that I do not find the common agricultural policy such a beautiful animal that it invites cloning. I believe that if we went that way we would not find that our budgetary problems were particularly eased. We might be liable to find that while there would be some more cash, perhaps, for questionable causes at home, there would be still more cash available for the expansion of agricultural expenditure.
I have always felt—at least, I have always wondered—whether we have not perhaps conceivably been pursuing the wrong target. Much has been said on both sides of the House tonight about the manifest unfairness of the present budget distribution. I have to say that I wonder whether that is really the way that it is universally seen in the capitals of Europe, and not only in Paris. Surely, the fact is that as we entered the Community a country with a small and efficient agricultural sector which had committed itself and maintained a commitment to import a significant proportion of its food from third countries, notably in the Commonwealth, the likelihood that we would face substantial budget contributions—disproportionate contributions, if you like—was there from the start. Our partners might be inclined to say that if there is a disproportion between the contribution we make to the budget and our low standing in the prosperity of the Community, we have perhaps but ourselves to blame.
I must honestly say that I cannot see that we can ever expect to have many friends in the pursuit of budgetary redistribution. On the other hand, I have often suspected that our ability to achieve significant reforms in the common agricultural policy and particularly in the pricing structure of the common agricultural policy, which is the essence of it, might be rather greater than we usually allow for.
Lord Soames: My Lords, on my noble friend's last point about the budget contribution, I am sure that he will remember that during the entry negotiations we made a good deal of fuss, saying that we were sure that if the arrangements as they then were continued, as we were prepared to let them continue, we were pretty sure in our own minds that they would lead to an inequitable situation. A statement was made by M. Jean Francois Deniau on behalf of the Commission saying that, if that occurred, then evidently a solution would have to be found and new arrangements would have to be made. I go along with much of what my noble friend says about our imports from the Commonwealth, and having to pay for them across the exchanges. On the other hand, I believe that in effect this was bound to be inequitable, and I believe it still is.
Lord Bruce-Gardyne: My Lords, I entirely take my noble friend's point. All that I would say on the other side is that to our partners we, as possessors of North Sea oil—an asset that they do not possess—and hence running for the most part a substantial balance of payments surplus, do not strike them as most obviously in need of special treatment. That is the trouble.
I was about to refer to my noble friend's speech. If we are to go baldheaded for change in the pricing structure of the common agricultural policy, as I believe we should, then we have to make some changes in the arrangements. One important point made by my noble friend is that we have to get the agriculture negotiations out of the monopoly hands of the Ministers of Agriculture. It seems to me like asking the National Union of Burglars to take care of the plate. You are liable to get unsatisfactory results that way. Secondly, I believe—and it is, I know, more of a minority point——
Lord Mackie of Benshie: My Lords, would the noble Lord not agree that the panacea of getting the finance Ministers to sit in on the negotiations might result in exactly the same outcome because certain countries gain financially from a rise in prices and others do not? The finance Ministers, in my view, would take much the same view as the agricultural Ministers according to which country they came from.
Lord Bruce-Gardyne: My Lords, I would only say to the noble Lord, for whom I have the greatest respect, that he must know different finance Ministers from those I know. I believe that they have rather different priorities.
The second change we have to make is I accept, a somewhat heterodox view. I have always believed that if we want to achieve reform of the common agricultural policy it is to the French that we must look. It is essentially the Germans, with their need to preserve the weekend farmers of Bavaria in hopelessly uneconomic operations, who are the prime movers in seeking, for instance, ultra-high cereal prices. This is not to the benefit of the French, who, I believe, are increasingly coming to see it. Unfortunately, it has always seemed to me that the Foreign Office is obsessed with the notion that it is to the Germans that we must look although, time and again, it has been

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proved that this has been a hopeless support to lean upon. Of course, the Quai d'Orsay and the Foreign Office have always regarded each other with the profoundest antipathy, and that is an attitude that we have also to overcome.
I believe that if we could get alongside the French there might be a chance of moving in that direction. On one matter, however, I submit that we should be very cautious. There have been a number of references this evening, naturally, to the proposal for an increase in own resources. It has been widely agreed that we should not concede this unless our other requirements are met, but that if we do then this obviously must follow. I submit to your Lordships that if we get the fundamental changes in the agricultural structure, the pricing structure, that we need, then the increase in own resources may not be required. But if we grant the increase in own resources, I see no chance whatever of getting the sort of reform of the common agricultural system that we need. I hope that we shall be very cautious indeed about moving on that position. Unlike the budget, we have a cast-iron right to insist that the own resources of the Community cannot be increased without our sanction. I suggest to my noble friend who is replying to the debate that we would be well advised to yield that sanction only with the greatest caution and the greatest care.
6.59 p.m.
Baroness Seear: My Lords, Liberals backed the idea of the European Community right from its earliest inception. We backed it because we believed that it matched the economic, social and political realities of the second half of the twentieth century. When we backed it, we knew that it involved some sacrifice of sovereignty, or rather a recognition of the diminution of sovereignty, which was in any case taking place. We certainly did not back it to create a union des patries, to create the Gaullist conception of the nations of Europe coming together but each trying to get the most that it could for itself out of something which was then misnamed a community. I would argue, as the noble Lord, Lord Soames, has argued far more eloquently than I can, that unless the idea of community is recaptured in reality, and unless people are prepared to work to that idea, what will happen to this so-called European Community will be the creation of an entity—if, indeed, entity it is—which is scarcely worth preserving and as regards which the community idea will be practically buried.
What in fact is going on? We all pay a certain amount of money into the European Community. We grumble about the amount we pay in; and we grumble about the amount we do not get out. We then, both as governments and as individual pressure groups, do our damnedest to get as much money back from Brussels as we possibly can. I will spend two days this week in Brussels doing just that, and I will be surrounded by people who are trying to do exactly the same thing.
But what an extraordinary way to behave—to think only in terms of national interest! After all, if we are only concerned to pay money in and then get it back again, it would be rather more sensible—would it not?—to keep the money in the country in the first place. It seems to me that there is very little point in
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sending it to Brussels in order to be able to recover it again with considerable loss en route, which is inevitably the case when it is being handled by bureaucrats, however incorruptible. There is a very great delay, the money is sterilised for a considerable period of time when it could be put to use, and the costs of administration reduce the amount of money which can in fact be spent.
Yet, in reality, that to a considerable extent is what is going on at present. All the cries of, "Our own money" and, "We want our money back" which are understandable in some cases—and I am not denying that there are things that are very considerably wrong with the way in which the money is distributed—all emphasise the protectionist, nationalistic approach to the Community, which is the very opposite of the idea of the unity of the European Community which was put forward by Monnet and Schuman and which we supported back in those early days.
I shall not speak for long, because most of the points have been made, and made far better than I can make them. However, the point I want to make is that we have to look again at what we are really trying to do in the development of a European Community and to capture something of that idea of unity which was behind it in the first place and which, if it is lost, means that the whole exercise becomes increasingly futile. Of course, we must ensure that the important issues of the CAP and the amount that the country pays are dealt with. But they are really very small issues compared with what one is trying to do in the development of the European Community. At least can we not begin by trying to ensure that that big market of Europe really is the free trade market which it was intended to be, and which today it most certainly is not. The type of tit-for-tat approach which is growing up does no credit to us or to any of the other members, and certainly gets us nowhere as a community.
Of course, it is monstrous that French farmers in Brittany attack and knock about the drivers of British lorries taking in what they so inelegantly call "sheepmeat". But it does not make it any better when we do precisely the same thing with poultry and disguise what we are doing with all sorts of high sounding speeches about the protection of health in this country, when what we are undoubtedly really doing is protecting the poultry farmers in the United Kingdom. That is repeated over and over again. It is trivialising and debasing the whole idea upon which the Community was founded.
So, first, I would urge Her Majesty's Government not to be party to these protectionist attempts to allow vested interests to get away with phoney excuses for not allowing goods to come into this country within what is meant to be a free trade market, a free market for all the member countries of the European Community. I urge them to oppose it, to fight it and to make clear to public opinion that that is not what the European Community is all about. Secondly, I would urge Her Majesty's Government to pursue far more vigorously, as a major objective of the European Community, those activities which can so much better be done on a European scale than they can be done by member countries, or indeed which cannot be done by member countries at all.

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It is now two and a half years since we had a superb debate in your Lordships' House on the European Community and information technology. Yet what do we find today? As my noble friend Lord Ezra pointed out, the ESPRIT experiment and plan is an attempt to develop on a European-scale information technology, but it is the British Government who are holding up the development of that plan in order to get small-scale advantages, although a number of British companies, among others, would stand to gain very considerably if the full go-ahead were given to the ESPRIT project. Again, there are other ways in which the European Community can further our interest if we are prepared to work on a Community scale and to recognise that the Community is a reality and that it is the best hope for a country such as ours which, on its own, can do so very little.
Thirdly, there is the political aspect about which others have spoken, but which I would underline as being one of the major reasons why in the early days the Community was backed in your Lordships' House, although it is not of course in the country as a whole today. People will remember why it was that so many of us at the end of the war were determined to see a politically united Europe, a political community; and we are prepared to press forward with that today. They have forgotten what a miracle it is that nobody now ever believes that France and Germany will be at war. These very real achievements which have come from the development of the Community are now taken for granted and discounted. But if the idea of the Community completely fades away, those political gains may at some time in the future be lost.
As my noble friend Lord Ezra has said, it is only by standing together as a European Community that we can hope to make the voice of Europe heard in the councils of the world where, as individual nations—although we do not like to face this—we count for very little today, where the balance of political power and of economic power is shifting not only away from this country but indeed away from Europe, and will do so unless we can stand as a group and make our voice heard and have some muscle in arguing with the other countries of the world.
I suppose it was 20 years ago that I listened to Paul Spaak, a great European if ever there was one, giving the Stevenson Lecture at Chatham House, in which he said:
"When the war ended you in the United Kingdom could have persuaded Europe to do whatever you wanted. We expected you all to come. We waited for you, and you didn't come. So we went on alone".
There was a sense of betrayal. We went in having failed to shape the Community as we could have done if we had gone in at the right time. The Community is now at a point where it must either go back and collapse, or go forward. We failed to take the lead 25 years ago. Let us take it now.
7.9 p.m.
Lord Gladwyn: My Lords, in the immortal words of Karl Marx, "a spectre is haunting Europe". That spectre is the possible collapse of the European Economic Community. I have not heard all the speeches in this debate which was so admirably
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introduced by my noble friend Lord Ezra, but I think that I have heard most of them. My impression throughout the debate has been that a note of anxiety or even alarm has been sounded by many speakers, perhaps the majority. It was not even totally absent from the speech of the noble Lord, Lord Trefgarne. I shall reserve to the end of my few remarks some thoughts as to what might actually happen if the Community really did break up, or at least became virtually inoperative.
However, first, I shall merely repeat what I think most speakers tonight have said. It is obvious—namely, that, unless, before the end of June or, at any rate, in June, we can arrive at some agreement on what I shall not call the "reform" of the CAP but what, to please my noble friend Lord Mackie of Benshie, I shall refer to as the "reorganisation" of the CAP, and on the problem of the United Kingdom's contribution to the Common Fund, we must contemplate the worst. For, if there is no Community agreement by then, the Community will simply run out of funds, and it is quite possible, as the noble Lord, Lord Bruce-Gardyne, said in an admirable speech, that, in spite of the reasons he gave, the United Kingdom would then be sorely tempted to withhold funds, notwithstanding a clear breach of its treaty obligations.
What fundamentally is the prerequisite of any agreement which will avoid collapse? It is simply that everyone concerned must agree to compromises or, in other words, must make sacrifices. M. Mitterrand gave some signs of moving in that direction before the Athens Summit. For even the French agree that there must be some change in the present system of the application of the common agricultural policy, whereby surpluses are produced in enormous quantities, with, as we know, terrible results. If they do so agree, it must be expected that they will have to make certain sacrifices, though it will indeed be difficult for them to do anything of the sort. We all know that Brittany is almost in a state of revolt and farmers in other parts of France are also on their hind legs. So any government in Paris would find it hard to make the necessary concessions, or sacrifices, in order to reach general agreement on some way of reducing surplus products, notably dairy products.
Again, it will not be easy for the Germans. They have a wonderful system of monetary compensation amounts for protecting their small farmers in Bavaria. Can they give that up? I think they should. Of course, if they did, it would help the French to a considerable extent. Will the Germans do that? Will they have a majority in the Bundestag to do that? I do not know. All these matters must go through national parliaments, and it will not be easy.
It will not of course be easy for us either. Most of us here would probably agree, although perhaps the Government will not, that, to some extent, we must moderate our present policy in regard to our contribution to the Common Fund. The case for doing so was made very eloquently by the noble Lord, Lord Bruce-Gardyne. In practice, I think that we shall have to do that if we are to reach general agreement, and I do not believe that, in the last resort, it would prove to be a great sacrifice on our part. On the other hand, if we are to get it through the British House of Commons, it will not be easy in the circumstances.

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Again, I think that any British Government would have difficulty in doing that.
For the reasons already given, I think that we ought also to accept certain sacrifices from the point of view of our own agricultural community. For instance, we should accept the proposals of the Community for the reform of the CAP. Again, that will not be easy, but we shall have to do it if there is to be agreement. Everybody will have to make concessions. Ireland, for instance, is now intent on producing every gallon of milk it possibly can and, as I understand it, is also in a desperate economic position. Can we really imagine that Ireland will give her agreement to a reform or reorganisation of the CAP as proposed by the Commission? I fear that that is very difficult to imagine.
Therefore, if there is general agreement with the sole exception of Ireland, what happens? Does Ireland have the power of veto on any proposal for reform of the CAP? Under the Luxembourg compromise, if Ireland does not agree, does it mean that there can be no agreement on a reform? Is that our position, or do we take the view that, in the last resort, the Treaty of Rome should apply and everybody should conform to some qualified majority vote? Alternatively, is it possible to imagine that there might be general agreement on some exemption for this little state, and perhaps even for Denmark? Who knows? I should like the Government's views on all these possibilities, if the noble Lord, Lord Trefgarne, can answer them.
Let us be optimistic. I believe that there is still reason for optimism. The reason is surely fear. Let us consider what is likely to happen politically if by any chance the Community breaks up in the sense that all the members revert to protectionism; that is to say, there is the reinstallation of tariff barriers and the disappearance of the existing Common Market, imperfect though we all know that may be. As the French say, "Il fault envisager le pire"ߞsometimes it is useful to contemplate the worst possibility. If the Common Market breaks up, I think there is considerable reason to supposeߞmore especially if the world recession and mass unemployment continue and there is no very significant revival of international tradeߞthat fairly shortly (as the result of new elections in a few years' time) we shall see the installation in Western Europe of "directed" economiesߞwar-time economiesߞno doubt operated by Left-wing governments of what one might without disrespect call a "Bennite" nature, which will not be at all well disposed towards America and probably more favourably disposed towards the Soviet Union. Politically speaking, it is not difficult to see what the result of such tendencies is likely to be.
All this makes it rather difficult to understand why there should be any tendency on the part of any "anti-Benn" elements in this country to insist on our withdrawal from the Community come what may, or even violently to oppose any concessions that the present Government may feel able to make in order for us to maintain the Market in being. In other words, the "ultra" patriotsߞand we have quite a number hereߞare always among the most shortsighted of our countrymen, and I am afraid that I must number among those to some extent infected by such myopia
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all politicians who are concerned to get back what is always called "our money" from the Common Fund, irrespective of any other consideration.
That is however a major heresy and I hope that in all circumstances the Government will be able to combat it. We have, of course, a strong case for a reasonable settlement of the vexed question of our contribution, but for pity's sake let us not overdo it or break over an odd £100 million or so. It seems to me insane to do so. The noble Lord, Lord Ezra, said that, in order to avoid deadlock, it was important not to have all decisions left to two or three days' debate in the European Council. Certainly, but let us hope that even now devoted officials of all the countries concerned are working night and day in Brussels to reach some kind of compromise behind the scenes. Surely also the Council of Ministers will have something to say on the subject and presumably will go on meeting as arranged? But the fact remains that, important though advance in other directions isߞit is essential if you likeߞin practice, it cannot happen until we have arrived at agreement on the two major outstanding issues to which I have already referred and which noble Lords have already mentioned. Once that hurdle is surmounted, we can get on, and we shall get on, to all kinds of useful reforms based, no doubt, on some increase in the Common Fund. Here, I do not altogether share the apprehensions of the noble Lord, Lord Bruce-Gardyne, as to the evil effects of increasing this by another 0.2 per cent. on VAT, or whatever it may be. However, that is a point that one can argue about.
Once set on this path, however, once the great hurdles have been overcome, we can then get on to consider such proposals as those recently agreed, temporarily, by the European Parliament for constitutional reform, which are by no means federalistic. The federal schemes put forward by the Popular Party, the Christian Democrats, were turned down. The actual scheme put forward by the Parliament now is essentially reasonable. It provides, for instance, for new means of forming the Commission; for ways of moderating the veto, having a suspensory veto, and so on; and of course for legislation being approved and ratified by the Parliament, and therefore giving it more power, and so on.
These are just sensible and good reforms which, if appliedߞand they could be applied if we get over the two major hurdlesߞcould in the next two or three years realise the dreams of many of the original Europeans and put us on the way to forming, not a federation of course, but a new kind of Community which would be a great service to the whole world. In order to achieve this, however, within the next few months all the politicians, all the heads of Government concerned, must have the will to take a political plunge. Let us hope they do so.
7.22 p.m.
Lord Bishopston: My Lords, we are all indebted of course to the noble Lord, Lord Ezra, for giving the House the opportunity to discuss and debate a matter of timely importance, because in more recent times even the most ardent pro-marketeer has seen the Community leaders lose the sense of fellowship and

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community, the idealism, and the vision which it once attracted, turning it into an institution where, as the noble Baroness, Lady Seear, said, among others, each member has to fight for his own corner, losing sight of the whole.
I felt that the Minister's opening speech was rather pedestrian because he seemed to lack the kind of vision and idealism to which we have been accustomed from people like Sir Winston Churchill, who spoke about marching onwards, the broad uplands, and going on to better days. The speech of the noble Lord, Lord Fanshawe—a speech which we welcome; and we are pleased to see him in this House—was one where he called for a dose of realism. That surely is the message which others have also given the House and the country tonight.
I was pleased that the noble Lord, Lord Ezra, has introduced the subject of the EEC realising its full potential, particularly in international affairs. That is most important now that our relationships both within the Community and outside, and with our allies the United States and beyond, have reached a very low ebb indeed. There have been numerous quotations which one could have taken from the press in recent days. Indeed, in Lombard in the Financial Times of 19th January, there is the following quotation:
"The European Community is in serious decline, stalled by bureaucratic inertia and national selfishness. It lacks a sense of direction, ambitious goals and, as a result, the capacity to avoid further decay. Its political leadership is weak and its priorities fatally distorted by an obsession with budgetary limits and balances, for which British diplomacy must carry a lot of the blame".
Of course, we all know others have spoken in similar vein.
It is important when discussing the Community to realise what it is all about. The Treaty of Rome, Article 2, says:
"by setting up a common market and progressively approximating the economic policies of member states, to promote throughout the community an harmonious development of economic activities, a continuous and balanced expansion, an increase in stability, an accelerated raising of the standard of living and closer relations between member states belonging to it".
Those are words which seem rather strange in the present situation we face and which causes us so much concern.
Looking at the present situation against that idealistic criteria none can appear optimistic. As the noble Baroness, Lady Seear, said, in effect there is bickering about who pays, and who gets what. There is the acrimony; the lack of balance; the surpluses; costs have all increased. These complaints have increased in the last four years.
I recall the time when we in the Ministry of Agriculture went to Brussels. We were told by the present Government, the then Opposition, that if we were nice to the Community and said, "We want Community membership and we are going to co-operate" we should get what we wanted. There is no evidence of that in recent days. Even today on the tapes there is the argument about whether the Milk Marketing Board money was legally paid to it or not, and whether it should be repaid. This is the situation.
I was glad to see the noble Lord, Lord Soames, in good form tonight. This House abounds in former Ministers of Agriculture. He referred to the
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gladiatorial role of those who went to Brussels. We have all done that. We know what he meant when he said that one country's Minister said: "If you scratch my back, I'll scratch yours". This is not the way in which a community of goodwill among equals should react. As the noble Lord, Lord Soames, said, there have been selfish, nationalistic procedures going ahead. Concern about the way things are going in the EEC has been voiced not only among leaders of all parties and organisations, trade and industry, and other bodies, but among world leaders.
I was pleased to hear the noble Lord, Lord Fanshawe, in his delightful maiden speech, mention the United States leader who this morning expressed the widespread exasperation of many Americans with their Western allies for not pulling their weight in the battle for world stability. He said that we are accused of contemplating our own navel, as the noble Lord, Lord Fanshawe, quoted. We were warned that the Americans alone should not be expected to bear the burden of containing the Soviets. This is not a defence debate, but we all recognise that it is the day-to-day economic and other difficulties which tend to make us lose sight of the more important things, and to lose our perspective.
May I mention one situation? If the Government had paid as much attention to the difficulties of the EEC, which have led to militant French farmers demonstrating in their French berets in Paris, as to the demonstrations of British women wearing woolly hats at Greenham Common fighting for Britain's interests, the CAP problems would be well on the way to solution. Now we are well into the second decade of EEC membership, and recent articles have expressed differing views—even from those in the Tory party—about conclusions.
There is nothing wrong with that, except that people look at the situation from various viewpoints as the noble Lord, Lord Soames, mentioned. As I said just before he returned to the Chamber, those of us who have been Ministers of Agriculture in Brussels have all had to behave like gladiators fighting for our national interest in order to protect those we represent, while sometimes forgetting the interests of the whole. This is not an easy situation to overcome.
Lord Soames: My Lords, first may I apologise most profusely to the noble Lord for not having been in my place when he began his speech. I was with Hansard and did not notice the switch over. If he was inferring that I was Minister of Agriculture at the time in Brussels, I am afraid I never had the opportunity to play this game. I had got that over before, so I could reserve the right to criticise.
Lord Bishopston: My Lords, I do not criticise the noble Lord for not being in the Chamber. The echoes of his stirring speech are still going round the walls. He was Minister of Agriculture and he was in Brussels, perhaps at two different periods. I am sure he has seen the gladiators bearing their lances and that must have been as plain as a pikestaff.
Our Government, like other members' governments have been looking for short-term solutions to long-term problems—this point has been made by others—by putting off urgently-needed changes. Let us

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take the common fisheries policy. Today the Minister has welcomed the catch settlement. I will not say what catch conclusion it is, but we can now catch such a percentage of fish in what used to be our own waters and are now within EC limits. It is noticeable that the EC states which produce wine do not consider sharing that in the same way as they want to share our fish. It is a point to remember when we are discussing catch settlements of fish that 60 per cent. of all the fish caught in EC waters is in what used to be United Kingdom limits, so it is really our fish. We say, "Aren't we lucky to receive a percentage of our fish back?" There must be a catch in it somewhere.
It is noticeable with both the CFP and the CAP that, when we go to Brussels, we come back happy even though with short-term and inadequate settlements, Indeed the announcement today on the CFP is an interim settlement which will have to be finalised later.
As the Minister says, the CAP represents 66 per cent. of the overall budget. The EEC is so unpopular with many people because they see the inadequacies of the CAP as being representative of the Community as a whole. This is something we should be changing. One of the reasons for the discontent, not to say the hostility, is due to that. Even ordinary people who only want ensured supplies of food at reasonable prices can see the foolishness of the régime which produces it.
It is timely to look at the Treaty of Rome and the objectives of the CAP. It talks about increased agricultural productivity, assurance of a fair standard of living for farmers, stabilisation of agricultural markets, guarantees for regular supplies of food and the maintenance of reasonable food prices. One needs to consider those criteria to see how far we have gone from the objectives of the treaty. The problem yet to be resolved, as many noble Lords have said, is how to balance sometimes conflicting objectives and what policies should be pursued to achieve them.
Most farmers and those concerned with food production in the United Kingdom look back to the good old days when British farmers knew who to go to for the policies they wanted—as former Ministers of Agriculture will know from the annual price review and the rounds of discussions with the NFU and other interests. They had security. They knew what and how much they could grow. They were assured of a fair return. They had a Labour Government to thank for that, because it was Tom Williams, of noble memory, who provided the floor of confidence that will be long remembered and the monthly cheque from the MMB, now at risk from UHT and other changes, gave a security which is fading fast.
British agriculture and food production has always been of a high standard because of that magic word "confidence". But the confidence is not always there when the control passes beyond the British Parliament to Brussels. That is one of the problems we have to tackle.
The Milk Marketing Board, to which I referred, has a great record of over half a century of service. As we know, the daily calls on our housewives by the milkmen have been greatly welcomed over the years. The Minister put up a token fight against milk imports. He bottled up some of his concern, but he has
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not been able to stop the imports. If we had been using such methods as the French have used on meat and other imports, he could have ordered that all milk imports coming in to this country went through one port for inspection. That might have held up the proceedings. It might have been appropriate if it had gone through a port near the French coast—say, in the Isle of Wight. Cowes would be an appropriate place in which to inspect it.
This is a serious matter because now, with the Community's demands about our importing meat and poultry, we risk the danger of animal diseases which could seriously affect our own disease-free herds and so affect our export trade as well. The noble Lord, Lord Soames, who nods his head, knows this very well.
Lord Soames: My Lords, he shakes his head, not nods it.
Lord Bishopston: My Lords, he is shaking his head and, unless he would like to intervene, I take it that he agrees with what I was saying. He knows only too well that this is one of the main factors.
Agriculture and food are tied up with Euro-jargon. We have intervention, when food it is taken off the market until the price rises. We have to pay for storage and transport running into enormous sums of money. Sometimes we have food being destroyed or being sold cheaply to foreign countries which can buy it cheaper than our own consumers. We have the import levies to keep out cheaper food which should be available to us here. We have the sluice gate prices, guide prices, farm gate prices, the green pound and the ECU. The least efficient farmers in the Community, as we all know, are allowed to go on producing with a good profit while the more efficient British farmers, who can produce more cheaply, are accused of adding to the surplus produced by their less efficient neighbours over the Channel. They are being punished for so-called over-production by the co-responsibility levy and other means.
I am sure no noble Lord here tonight will disagree with what I have been saying, but the fact that our industry has been so good should have been taken into account. The Community would have done better with CAP if it had recognised that the efficient producers should be encouraged and the less efficient not encouraged or even put out of business and helped by social and regional funds from the country concerned. I am sure there is no disagreement on that. There is no reason why the British housewife should pay for the economic policies of some of our fellow member states.
Lord Bruce-Gardyne: My Lords, I am most grateful to the noble Lord for giving way. I am not sure that I entirely follow his argument, if he will forgive me. If I understand him correctly, he seems to be saying that of course we should exclude foodstuffs if they happen to come from France, but at the same time we are mad to deny ourselves access to foodstuffs which come from third countries. There seems to be a conflict there and I wonder whether he can resolve it.
Lord Bishopston: My Lords, I am grateful to the noble Lord, but there is no conflict at all, because he

721
knows that when we have butter surpluses, the butter is sold abroad and the foreign housewife buys it at cheaper prices than we can get it here. There is a levy to protect the European economy. I was referring to the situation facing agriculture in this country, where we are forced to import meat and poultry from places where the standards of hygiene and animal health may not be as high as ours. As the noble Lord knows, it has taken us years to get rid of foot and mouth disease, swine vesicular disease, and so on. Those who have been abroad on agricultural exports know very well that farms with SVD or foot and mouth cannot export cattle to those countries for at least a year. This is one of the problems. I am not suggesting that we should be awkward by limiting imports. I am merely saying—I am sure the NFU and others agree with this—that we want to make sure that there are adequate controls to protect our own industry. That is not really a surprise to anyone.
The Labour Party says that there is a great deal to be done to improve the EEC. The international aspect of the speech of the noble Lord, Lord Ezra, is most important. There must be a wider, looser grouping of European states, greater co-operation inside and outside Europe, radical reform of the CAP, changes in industrial, energy and trade policy. There must be efforts to ensure that the needs of our hard-pressed people are considered and acted upon, with special mention being made of the unemployed and families. There should be a shift in the use of Community resources away from agricultural support and towards regional and social policies, especially in the less efficient producer countries. There should be changes to ensure that, while the unity and interest of the whole are safeguarded, the sovereignty of member states is not overlooked. There should be a reform of the European Communities Act 1972, which transferred to various community bodies considerable power over internal British legislation, especially concerning directives.
I was tempted tonight to go into some of the limitations concerning the survey and scrutiny of directives that come from Europe. They are often inadequate and not always debated, and when they come into effect it sometimes seems that the directives have been exchanged with new ones that have not been inspected. So there is not the adequate Parliamentary scrutiny which we surely deserve.
The House will be indebted, I am sure, to my noble friend Lord Hatch for his mention of the third world, because we are so concerned with our own problems that we do not lift our eyes beyond our own boundaries to see two-thirds of the world's population who do not have enough to eat, while we are wondering how to get rid of our surpluses.
The noble Lord, Lord Mackie of Benshie, following my noble friend's speech, spoke about the contradictions in Labour Party policy and said it was to the delight of his friends. If there were a vote tonight at the end of this debate, one wonders what the response would be. Perhaps I may remind the House that in another place this week there was a debate to take note of the Report on Developments in the European Community (Cmnd. 9043). The Government Motion was subject to an amendment by the Opposition and the amendment regretted that
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within the period under review (January to June of last year) the Government had continued to pursue in the institutions of the EEC the same negative and destructive policies in industry and the economy which have caused so much damage in the United Kingdom and the same regressive and divisive social policies which have widened inequality and injustice in the United Kingdom.
Let us see what happened at the end of the debate. The reactions of the Liberal and Social Democratic Parties are interesting, for four Social Democrat MPs voted for Labour's amendment and two voted against. Of the Liberals—here, thankfully, in force tonight—none voted for the amendment and five voted against. None of the other 12 Liberals voted at all. Presumably they abstained, were absent or were unable to make up their minds on a Motion on which I feel sure in other situations noble Lords present here tonight would have expressed views which might have been in support. So the SDP were split, and all the Liberals who did vote voted against an amendment criticising the economic and social policy of the Government of the party opposite. Therefore I am very pleased to have been reminded tonight of the need for unity.
Finally, may I say to the noble Lord the Minister, who referred to what he thought was a change of stance in Labour's EEC policy, that Labour is realistic facing the present situation. They are wanting to protect and advance Britain's interest in the Community and will be pressing constructively for such changes as will ensure that it works in the interest of all the people here and in Europe. I have already given some indications of how that may be done. Our policy, as we go towards the Euro-elections in June, is to stress that we are committed to seeking a new deal for Europe and a square deal for Britain. That is a job that must be done by our European MPs. We must raise our perspectives, lifting our eyes beyond the butter mountains and wine lakes in order to recapture the vision that once inspired us. I believe there is a dangerous vacuum now in Europe and, with the pre-election period in the United States, there is a great need for Britain to provide initiatives and actions which will ensure not only a peaceful but a more prosperous Europe.
7.45 p.m.
Lord Trefgarne: My Lords, I am conscious that in rising to speak a second time in this debate I may do so only with your Lordships' permission, and I hope I have it. If I have, may I start by saying how grateful we all are to the noble Lord, Lord Ezra, for initiating what has been a most useful and timely debate on the European Community as we embark upon a new phase of the negotiations on the future under the new presidency. May I also say how much I enjoyed the maiden speech of my noble friend Lord Fanshawe. It was, I believe, a particularly remarkable maiden speech, and I hope that we hear my noble friend again very soon and often thereafter.
The failure to reach agreement at Athens should not overshadow the extent of the progress that has already been made. It is the very essence of the importance of the policies of the European Community that underlies the difficulty of the decision-making process.

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If agreements had little value, no doubt they could be reached with little trouble; but the policies of the Community affect every man, woman and child, not only in this country but in every member state. Decision-making is therefore both difficult and crucial.
We must not make light of the present crisis or of the proposal that it should be dealt with by means of an increase in own resources. Neither must we be hesitant in participating in the decision-making in which all member states are trying to ensure that decisions are taken in accordance both with their own interests and with their conception of the role of the Community.
If I may, I will turn now to some of the specific points that have been made. The noble Lord, Lord Ezra, the noble Baroness, Lady Seear, and I think at least one other speaker have referred to the British position with regard to the ESPRIT programme. In short, we support it; but the Community does not have unlimited cash available, and before we embark on a major programme costing up to £400 million over five years we must be certain that we know where the money is going to come from. I understand that the German Government, who have a parallel interest in ESPRIT, have taken a similar view; but we hope that the programme can go ahead soon. I think that I may have enjoyed the support of the noble Lord, Lord Bruce, in that sentiment——
Baroness Seear: My Lords, is it correct, as I understand, that the Germans have withdrawn their opposition and that we remain the only people who are holding the programme up?
Lord Trefgarne: My Lords, I am advised that the Germans still have some reservations about the programme and that we are not alone in wishing to see a source for the money required before the go-ahead is given.
I will not dwell upon the position of the Labour Party and how it has changed in recent months on this matter. If I may say so, I think that the speech of the noble Lord, Lord Bishopston, represented a valiant effort to square a round circle but did not really, I think, convince anyone. The noble Lord complained that my own speech earlier was pedestrian compared with those of the late right honourable gentleman Sir Winston Churchill. No doubt it was; but so, I fear, was his.
The noble Lord, Lord Hatch, referred to the position of the European Community in the granting of aid to third world countries. Of course, I agree that the Community has a major role to play in the development programme, through arrangements for both aid and trade. I think I mentioned in my opening remarks the position of the European Community in terms of the percentage of total aid to developing countries that comes from the Community and Community countries. I will not repeat that now. Britain contributes 20 per cent. of the Community's total aid effort. We are working to improve the quality of Community aid by ensuring that it is spent where it is most needed and spent in the most cost-effective way.
724
The noble Lord also referred to the renegotiation of the Lomé Convention. That, too, I touched on briefly in my opening remarks. The negotiations, which opened formally on the 6th and 7th October 1983, have made only slow progress, I am afraid, and they will not be easy. Economic constraints and the demands of our bilateral and other multilateral aid programmes mean that we must be realistic about the financial resources that can be made available. But we are determined that the negotiations will be brought to a successful conclusion. One of our main objectives will be to ensure that the funds allocated under the convention, including those for STABEX, are spent as effectively as possible.
The noble Lord, Lord Banks, and several other noble Lords again asked me about the Government's position with regard to an increase in the 1 per cent. VAT ceiling. I think that I can do no better than repeat the words that I used in my opening speech. We have not dismissed that case out of hand. We have made it clear to our partners that we are ready to consider such an increase, subject to the two conditions of effective control of existing Community expenditure, particularly on the CAP, and a lasting solution being found to the problem of budgetary inequities.
The noble Lord, Lord Gladwyn, particularly asked me about the position of Ireland. I believe he was thinking about the CAP renegotiation procedures, as and when we come to them. I think our position is that we would certainly wish to see the provisions of the Luxembourg compromise maintained in such negotiations. So the essence of our position is: yes, the Irish will indeed have to form a consensus view when the decision on that matter comes to be taken.
Lord Gladwyn: My Lords, does that mean that the Irish effectively hold a veto on any reform of the CAP?
Lord Trefgarne: My Lords, I suppose it does, if you put it in those words. But we hope very much that it will not come to that and that it will be possible to persuade the Irish if they take some different view as to the merits of whatever proposals are then for discussion.
The noble Lord, Lord Banks, also asked about the safety net scheme, which is one of the principal proposals that we have made in this regard. It is now generally recognised by our partners that the Community budget has operated in a way which was clearly unfair to us, and which has made it harder to make progress towards the basic objectives of the Community. It is also recognised by a majority of member states that a lasting solution must be found that will put limits on the budgetary burdens of member states related to ability to pay, and that the ad hoc arrangements that we have had in recent years are unsatisfactory for all concerned. I hope that other member states will accept that it is only by establishing an equitable system for the future that a solution will be found, and that is what our safety net does. Incidentally, a number of other ideas have pointed in the same direction, and we shall continue to work for a settlement on the lines that we have suggested.
My noble friend Lord Bruce-Gardyne suggested—I think I understood him aright—that maybe there would be no need for new own resources if the CAP

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was adequately reformed. There would certainly be scope for substantial savings if CAP expenditure was brought under effective control, but even a strict financial guideline for the CAP would take a little time to bite. It would be a question of ratcheting the percentage down, year by year. We must also recognise that the accession of two relatively poor countries will be a net charge on the Community's finances.
Funds will also be needed if the Community is to develop new policies which are of real value to the United Kingdom, as well as to the whole Community. Moreover, provided that we secure an effective financial mechanism to correct budget imbalances, we should be paying substantially less to the Community, even with an increase in own resources, than we are now, without one.
The European Community faces grave challenges. There is, however, general determination among member states to work to reach agreement by the end of March. We shall not be inflexible. But our basic conditions—the control of agricultural and other expenditure and equitable sharing of budget burdens—must be satisfied. Agreement on these matters will put the Community on a sound footing and enable it to play a fuller role in international affairs, commensurate with its size and economic strength, reinforcing the traditional influence of its members. The time has come for a fair and lasting settlement, and this Government will grasp the opportunity to reach agreement on an overall package which will meet our essential national interests and, at the same time, strengthen the Community.
Lord Ezra: My Lords, I should like to express my appreciation to all who have spoken in this debate. It would have given me very great pleasure to identify a number of the points that have been made, and to underline them or comment on them. But we are at an advanced hour, there is other business to be transacted, so I shall limit myself to expressing my appreciation.
I mentioned that I thought it was time that the level of the European debate was raised. There is no doubt about the level of the debate in this House today, and I hope very much that the noble Lord, Lord Trefgarne, and his colleagues on the Government Bench will have noted—as I am sure they have, very closely—all the many views expressed, and will have deduced from them a number of helpful suggestions, which they will certainly need, to bring these very difficult negotiations to a satisfactory conclusion. My Lords, I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

Industrial Tribunals (Rules of Procedure) (Equal Value Amendment) Regulations 1983
7.55 p.m.
Baroness Seear Baroness Seear rose to move, That a humble Address be presented to Her Majesty praying that the regulations be annulled.
The noble Baroness said: My Lords, in moving the Prayer that these regulations should be annulled, I wish to assure your Lordships' House, especially at
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this late hour, that I do it in no desire to extend what your Lordships no doubt feel is the already overlong discussion about these regulations. I do it because I am genuinely confused about the interpretation of these regulations, and I am conceited enough to think that if I am unable to understand them there will be some other people who may have to use these regulations, both as members of tribunals and as applicants going before tribunals, and who will be as confused as I am myself.
Though I imagine that it is only people who have been through this argument before who are here tonight, I would remind your Lordships very briefly what all this is about. The equal pay for equal value regulations require that there should be an independent expert to inquire into any case regarding a claim that work is work of equal value as between a man and a woman in an undertaking. The argument has been about to what extent the report of that independent expert can be cross-examined in front of the tribunal.
I would remind your Lordships that there are two aspects of this issue, both of great importance, though of a very different order. The first, and, of course, the most important, is the whole legal principle of the right to cross-examine an individual expert in the judicial process and, along with this, the fact that the European directive requires that there should be a judicial process which will be applied to the determination of cases of equal pay for work of equal value. So the question is whether the examination of the independent witness provides what is required in terms of the judicial process, and the importance that the judicial process in this regard should be maintained.
As I understand it, there is no other place in British law in which there has been any question but that an independent expert should be cross-examined in front of the judicial authority, whatever that authority may be. That is the big general point. The other point is specific to the question of the determination of equal pay for work of equal value. I would argue that it is particularly important in this regard that there should be full examination of what the independent expert has said in front of the tribunal, because questions of value are inevitably, at the end of the day, to a considerable extent, questions of opinion. To maintain that you have absolute facts in regard to the nature of one man's job and one woman's job is to be very optimistic indeed. We all know that different independent experts, with the best will in the world and with complete integrity, may well come up with different decisions about the nature of that work. It is therefore inherent in the very nature of this issue that, even more than in many other cases, it should be possible to have that independent expert's report fully examined and cross-examined.
My confusion arises from the fact that I genuinely do not understand to what extent, as this regulation now stands, full examination of the expert's report can in fact take place. In the debate in your Lordships' House on 5th December 1983, at col. 926 the noble Earl, Lord Gowrie, said:
"I hope that from that it will be apparent that the expert can be challenged and that his report is simply evidence on the question of the value of the jobs at issue. It is for the tribunals to decide what weight to attach to all the evidence, and ultimately to decide the issue".
Many of us thought—I am sure that the noble Earl, Lord Gowrie, at the time thought—that this was the end of the matter: that now that it was possible fully to cross-examine the expert the general legal objection, that there was an inadequate opportunity to examine the expert, had been overcome and that there would be plenty of opportunity to discuss whether in fact the expert's evidence was valid and his conclusions correct. But Rule 8(3)(2C) provides that:
"no party to a case involving an equal value claim may give evidence upon, or question any witness upon, any matter of fact upon which a conclusion in the report of the expert is based".
How can you at one and the same time comply with Rule 8(3)(2C), which says that you may not question any witness upon any matter of fact upon which a conclusion in the report of the expert is based, and also claim that his report is evidence on the question of the value of the jobs at issue, et cetera?
There are two exceptions to Rule 8(3)(2C). One is Rule 7A(9), but of Rule 7A(9) the Joint Committee on Statutory Instruments has said:
"In the committee's view, the status afforded to the expert's report is not made clear by the procedure regulations which should have provided further elucidation on this crucial matter".
Therefore the Joint committee, like myself, is in doubt as to what really is implied.
There is the other exception—paragraph (2B) of Rule 8. Paragraph (2B) allows cross-examination in regard to the defence of the genuine material factor, which is an important but only one argument that can be advanced, and also if the expert has not arrived at a conclusion. But that leaves out the absolutely crucial consideration of what will presumably be the normal kind of report in which the expert produces his facts, argues from the facts to a given conclusion and presents it to the tribunal. It is that situation which we want to have the opportunity to cross-examine. I would repeat, as I said a few moments ago, that this is not only because it seems to us to be right in terms of due judicial process but because of the ambiguities which inevitably arise in cases of this kind, these so-called facts.
Let me take a case where it is said that a woman's job and a man's job are substantially different because they include a lifting operation which the woman undertakes only once in the course of a four-hour shift but which the man undertakes 25 times in the course of a four-hour shift. However, it is perfectly possible that there may be differences of opinion about the number of times that it happens. The expert witness may have examined the case on a rather unusual occasion. It may be that evidence could be called to show that on a great many occasions the woman carried out the lifting operation no fewer than 14 times in the course of an hour. This would subtantially alter the decision which would be arrived at. This is the kind of evidence that one might wish to call from somebody who was familiar with the job and who would disagree with the so-called facts which in all good faith the expert witness might have produced. One cannot be satisfied, therefore, with the regulations as they stand at the moment, both in terms of what they appear to mean and also because it is very difficult to understand what in reality they do mean. It is for this reason that
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reluctantly I am moving this Prayer that these regulations should be annulled.
I very much hope that the noble Earl, Lord Gowrie, will be able to clear up this uncertainty. I do not wish to have to pursue the matter any further. I am sure that we all want it to be settled. But surely, above all, a regulation must be clear. Nobody can possibly say that this regulation as it stands is clear. I beg to move.
Moved, That a humble Address be presented to Her Majesty praying that the regulations be annulled.—(Baroness Seear.)
8.7 p.m.
Lord McCarthy: My Lords, it is always pleasant to be able to agree with the noble Baroness, especially at this time of night. We on this side of the House find ourselves in total agreement with what she has said. The noble Baroness stated that the heart of the objections raised by the joint committee go to the role of the expert. This was not the issue which was debated when this general question of the statutory instrument was considered by the House on a previous occasion. At that time most of the debate centred on other defects, in particular on defects in the regulations. The Government had made last minute changes to the procedural rules. I say this now, because if I do not it is conceivable that the noble Earl may say it. I said on 5th December 1983, at col. 887 of Hansard:
"It is now clear that the expert can be cross-examined. It is now clear that the expert can be challenged by at least one expert witness. I readily admit that, in broad terms, those parts of the procedures now comply with at least Article 2 of the EEC directive and represent a fair judicial process".
As the noble Baroness has said, that is what we generally believed at the time this matter was debated. However, on further reflection, and in particular after having looked at the very cogent and persuasive report of the Joint Committee on Statutory Instruments—not a body which normally takes a line of this kind—we are bound to wonder whether in fact we were right. Therefore, the noble Baroness comes before the House to pray for the order to be annulled so that we may have some kind of explanation.
If I understand correctly the reply which the Department of Employment makes to the criticisms which are advanced by the joint committee—and if I do not understand it correctly I am sure that the noble Earl will correct me—it runs something like this: that what we have to appreciate is that running through all this is a kind of two-stage process. First, there is the question of how one determines the admissibility of the report. Secondly, there is the question of how one determines, having accepted the admissibility of the report, the justifiability of what the report actually says. The joint committee has got itself somewhat confused, because the rather restricted rights of access, cross-examination and the use of various techniques in trying to find out the justifiability of what is happening are limited to the question of determining admissibility.
When one is talking about admissibility, of course, it is a question of whether the expert has misdirected himself or whether he is being unreasonable, not whether he could be more reasonable if he tried. Once

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the tribunal accepts the admissibility, say the Department of Employment, if I understand their argument, then, of course, all is open. At that stage all reasonable questions can be raised and cross-examination of the experts can take place.
As the noble Baroness, Lady Seear, says, we are left with a number of doubts. First of all, we have doubts about the limiting consequences of Rule 8 (2C) and (2D), and how far this allows the parties to the process to cross-examine the experts, to introduce new facts of their own and to put themselves in a position where they can provide a kind of independent evaluation of what the expert says. We now have very severe doubts about that, but that will probably be developed by other speakers in this debate.
Secondly, having looked at the thing all over again and taken into account some of the criticisms which were made during the course of the debate, we have to wonder whether or not this curious spatchcock of a procedure—which has been made worse, I suggest, because the Government advisedly (and I admire them for this) tried to put in at the last minute something about cross-examination in order to make the procedure more acceptable to the House—is almost impossible to understand. This is a separate point. That, after all, is one of the points made by the joint committee.
What they propose at the end of the 13th Report, having made their criticism and having listened to the reply of the Department of Employment, is further elucidation of the status of the expert's report and the identification of the individual provisions in the explanatory note. I do not see how the Government can deny that. If they say it is clear, let them make it clear. These seem to me to be very modest requests. Surely the Minister could tell us tonight whether there will be, in fact, further elucidation of the status of the expert's report, and an identification of the individual provisions in the explanatory note.
The fact is that we now have an astonishing set of complicated different legal rules which ordinary people have to understand. First of all, we have a set of rules of procedures numbered 4 to 11 which are the original procedures which tribunals are supposed to follow, and then we have another set of amendments numbered 1 to 5 which amend those original procedures; but we have no consolidation. We do not have available to us on one piece of paper what the results of making those amendments are on the rules of procedure. Such rules and amendments to those rules that appear are further sub-divided into numbered paragraphs and lettered sub-paragraphs with and without brackets. As I say, this whole thing has never been consolidated into one piece of paper. Surely this is what further elucidation should mean.
The noble Earl said at column 883 of the Official Report of 5th December last—and this, I think, is one of the things which the House disagreed with him about, and is one of the reasons for the vote:
"We acknowledge this complexity, but we argue that it is, unfortunately, unavoidable."
I think that is our basic difference. We believe that it is complex, but such complexity cannot be completely unavoidable.
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The noble Earl also said, at column 924 on 5th December (and I asked him a question about this):
"We are also working on what I would call a child's guide to these regulations."
One of my questions to him tonight would be: what has happened to the child's guide? Maybe it has been published and I have not noticed it. He went on to say:
"In preparing its revised guide and leaflet for employers and employees, the Department of Employment will have very much in mind the need to make clear and simple the admittedly complex provisions of the amended regulations."
I suggest he would not wish (for all the reasons which the noble Baroness has put forward) to come to this House and say that in the light of the quite modest proposals of the report of the joint committee we can realy say that this is now clear.
I would say in conclusion that on these two central points we ought to expect a useful and helpful reply from the Government: first, the extent to which the expert can be cross-examined and the extent to which, as a result of that cross-examination, new facts and new evidence can be introduced; and, secondly, on the question of the complexity of the regulations as they stand, whether the Government can give some relatively simple explanation and some consolidation of all these provisions.
Lord Denning: My Lords, when we discussed this on a previous occasion I complained of the tortuosity and the obscurity of the regulations then under consideration. When I now read these regulations as to procedure I complain even more strongly of their tortuosity and their obscurity.
Let me remind your Lordships of the simple point with which we are dealing. Article 119 of the treaty prescribed equal pay for the same work, and the decision of that question was entrusted by our own legislation to an industrial tribunal. The directive cleared up an ambiguity there: equal pay for equal work also covers equal pay for work to which equal value is attributed. You might say, "equal pay for work to which equal value is attributed by the tribunal". That is the essential thing under this new directive. Our legislation must be such as to give equal pay for work to which equal value is attributed by the tribunal. That is where all this new system goes wrong.
As the report of the joint committee says, if you examine these regulations you see that it is not the tribunal which is deciding it; it is the expert to whom it is bound to be referred. That is how the regulations put it. "The expert", my Lords. I ask myself: who is he? He is apparently to be appointed by ACAS. What do they know of who is an expert? In what is he an expert? In the Law Courts, when I asked for an expert, I wanted to see, if he was an engineer, what his qualifications were; if he was an architect, what his qualifications were; if he was a lawyer, what his qualifications were. There are no qualifications that I know for a job evaluation expert. There is no course in any university, as I know, for the evaluation of jobs. I would suggest that this so-called "expert" is simply a third person appointed by ACAS.
How much better it would be for the person or persons who decide the case to be the legal chairman with the employers' side and the employees' side represented, as they are on the tribunal. In other

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words, the tribunal is the right and proper body to decide equal pay for work to which equal value is attributed. The tribunal is the right body, not an expert. That was the point of the joint committee.
As I read the regulations—and it is a very complicated business—these are the steps which a woman has to go through in order to make her claim for equal pay for work of equal value. First—and she receives no legal aid—she has to go to a specialist lawyer. No ordinary lawyer knows anything about it and no ordinary judge knows; I can tell your Lordships that. The woman has first to go to a specialist lawyer who is engaged in specialised industrial law. The employers, for their part, have to go to a specialist lawyer who specialises in industrial law. Those two sides then come up against each other.
But what do the regulations say? The two sides cannot go straight to the tribunal and ask the tribunal to hear any evidence, and so on. By law, the matter is compelled to be referred to an expert; I call him a so-called expert. The matter must be referred to him, and the two sides have to argue the case out before him. The representations and hearings must be dealt with entirely by that so-called expert. Look at all the expense of doing that, and the cost.
The expert then makes his report. In the ordinary way, in a court of law, the expert does not give his own conclusions; he simply states his findings and leaves it to the court to come to its conclusions. But under these regulations it is the expert who must state his conclusions. If his report is reasonable and satisfactory, the tribunal does not reject it. It is only if it is unreasonable and unsatisfactory that the tribunal can reject it. What happens then?
It is not the tribunal itself which can reject the report; the matter has to go to yet another expert. If the tribunal rejects the report of the expert because it is unsatisfactory or because it is unreasonable, the regulations expressly say that the tribunal cannot decide the matter for itself but must refer it to another expert. That is the first snag.
Eventually, the expert makes his report. All that having been done, whichever of the parties loses or is the party which the report is against goes to the tribunal. The tribunal has the report before it to consider. It can have lawyers before it, too. The tribunal can hear the witnesses on each side and the experts. They can all be cross-examined all over again. Just think of the cost. Here is the snag. It was said, "If we can cross-examine the expert, that puts everything right". It does not.
There is the very important provision to which the noble Baroness referred; Rule 8(2C) states:
"no party to a case involving an equal value claim may give evidence upon, or question any witness upon, any matter of fact upon which a conclusion in the report of the expert is based".
So you cannot go into the matter and cross-examine the expert or the witnesses on matters of fact which the independent so-called expert has put in his report. That destroys the whole value of the cross-examination. You cannot cross-examine as to matters of fact but have to accept what the expert says. Does that not make him the decider? Most cases depend on questions of fact. It is often a nice question but still it
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is a question of fact or a question of law. Most cases depend on decisions or on the determination of matters of fact, and that is the very matter which Rule 8(2C) says you cannot cross-examine the expert or any witness about.
I agree with the joint committee. If you read the regulations right through, you will see that the decision is taken out of the hands of the tribunal and put into the hands of an expert. I suggest—and I agree with the joint committee on this—that that is not good law. It is for the tribunal to decide the matter and it is wrong and invalid for the tribunal, or for any of our legislation, to pass the decision over and leave it to an expert.
In a court of law, one cannot ask a witness to answer the question, "Do you think he was negligent or not"? That is the very question the court has to decide. You cannot and should not ask the expert the very question the tribunal has to decide. Yet under the expert's report, his conclusion is made virtually unassailable unless the report is found to be unreasonable or unsatisfactory. In those circumstances, the tribunal may reject it, but still the matter has to go to another expert.
I have demonstrated the expense, cost and trouble involved in those procedures for the lady who is not legally aided and who has to deal with this matter under her own steam or get some association to help her before she even gets to the decision of the industrial tribunal, to which, by statute and by treaty, the decision is assigned. That is the real vice in all these provisions.
It will not stop there, of course. There will be an appeal to the employment appeal tribunal and then to the Court of Appeal. If I am right in what I think about all this, it may even go to the European Court in Luxembourg. That is why it seems to me that these regulations should be annulled. I agree entirely with the joint committee. The procedure leaves the decision not to the tribunal but to the expert.
Just think what that means, not only in terms of cost and the like but also in being entirely different from the other angle. When the tribunal has to decide the question of equal pay for like work or equal pay for work that is broadly similar, why should the tribunal not decide the question by itself, on proper evidence? The chairman can control matters. He can ask for an independent expert to report if he wants that to be done. He can control everything. There is no need to interpose an expert with all the great expense, delay and cost that that involves.
I would ask not only for that procedure to be annulled but that we go back to the same, simple procedure we have in the rest of these claims for equal pay for equal work. I support entirely what the joint committee said. The key matter under the present discussion is that you cannot cross-examine the expert or the witnesses, or deal with them, on any matter of fact on which the expert has stated his conclusions. That means, virtually, that one cannot quarrel with him.
This is an important matter. I understand that by convention we cannot divide the House and ask that this Motion be agreed to and for these regulations to be annulled. But I would say that I do not agree with one

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word of the answer given by the Secretary of State's department to the joint committee. Let the Secretary of State take this matter back again. I would like him to throw out the whole thing and go back to the simple procedure before the tribunal. If not, I can assure your Lordships that lawyers hereafter will have a grand time before the expert and before the tribunal, and then before the employment appeal tribunal and right to the top—arguing that these regulations are invalid. Rather than have that long delay and expense, I would ask that these regulations in effect be withdrawn and replaced by the present ordinary procedure without any of this business of experts at all. I would support the Motion.
8.30 p.m.
Baroness Lockwood: My Lords, in the debate on 5th December last year, I think we were all agreed that we were dealing with a very complex subject. Some felt, regrettably, that the regulations themselves made the subject even more complex. I think what we have heard tonight underlines that, and perhaps a testimony to the complexity of the subject, the principal regulations and now the procedure regulations, is the fact that, on both, the Government had to take the regulations hack several times before they thought that had got it right. But, even now, it would seem that the Joint Committee on Statutory Instruments feels that the Government have not got it right.
In the December debate, the noble Earl referred to three amendments which had been introduced to the statutory procedural instruments to meet the criticisms of the Equal Opportunities Commission. At that time, as my noble friend said, we welcomed the changes to which the noble Earl referred, particularly the change which enabled the expert to be cross-examined in the tribunal and the parties to bring their own expert witness. Now, as the noble and learned Lord has explained, the real question is whether the tribunal itself is free to make its own judicial determination, as required by the EC equal pay directive.
It seems to me that there are two points here where this is in doubt. The first one is where the tribunal has to decide whether or not it is going to dismiss the case because there are no reasonable grounds for determining the question. As the noble Baroness, Lady Seear, said in the December debate, and as she has mentioned again this evening, the kind of situation that we are concerned with in equal value cases makes it very difficult for a tribunal to rule out a case without hearing the evidence, because we are dealing with a new situation and we are dealing with a situation where previously accepted assumptions are no longer applicable. Therefore, in this respect, the tribunal, if it does decide that there are no grounds for determining the question, appears really to be putting itself into a difficulty, because, despite what the noble Earl said in response to this very same question on 5th December, it does appear that there is some doubt as to whether or not an individual could appeal against such a situation. Certainly there is a difference of opinion as to the grounds on which such an appeal could be made.
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The second point already made by all the speakers this evening is whether or not the tribunal, having received the report from the expert, can make a really judicial determination. There are two avenues open to the tribunal: it can reject the report of the expert and it can call for a report from another expert. There is no certainty that, having called for a second expert report, the tribunal would feel able to accept that report. So the tribunal has that possibility only: it can reject the report, and it can call for another report. Or, alternatively, it can accept the report and can make its finding on the basis of the report. But what it cannot do is to amend the report in any way, to add to the report or detract from the report. It must accept it in its entirety. Therefore, as the noble and learned Lord has said, this is not really a judicial determination by the tribunal itself. It is one which, as I said in the previous debate. I think will be challengeable under European law.
Therefore we are in a situation where in relation to equal value cases tribunals will be placed in an entirely different situation from industrial tribunals in any other cases. Indeed, I would surmise that they would be in a different situation from those in any cases appearing before a judicial body in this country. They cannot hear expert witnesses, weigh up the evidence and decide how much of the evidence they are going to accept, then make their own finding. It is on that basis that I do feel that these procedure regulations are at fault, and, like other noble Lords who have spoken, I would hope that the Government could once again have another look at them.
8.37 p.m.
Lord Campbell of Alloway: My Lords, in a thin House and at a late hour, the noble Baroness, Lady Seear, and all noble Lords who have spoken in this debate, have done signal service in bringing an important matter before your Lordships' House for clarification. I have to confess, with respect to all noble Lords who have spoken, and in particular to the noble and learned Lord, Lord Denning, before whom I have had the privilege to appear on many occasions in other circumstances, that I take a wholly different view. I would ask your Lordships to bear with me while, if I may, I clarify certain misconceptions as I genuinely see them.
As a result of the 1982 decision we had to bring our domestic legislation into line with Community law, to afford attribution of equal value to dissimilar work where there is no job evaluation scheme. Statutory Instrument No. 1794 sought to amend the substantive law. This has been the subject of debate on a previous occasion and is not before your Lordships tonight. We are concerned with Statutory Instrument No. 1807, which amends the procedural law such as obtained under the old Statutory Instrument 1980 No. 884 for England and Wales and No. 885 for Scotland. Here may I say at once that I take aboard Lord McCarthy's point about consolidation of the regulations. That seems to me—I have not given my mind to it—with respect, a wholly valid point.
These equal value amendment regulations before your Lordships' House envisage that the question shall be decided on expert evidence alone as a general rule. This is implemented by Rule 8(2C), which precludes a

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party from giving evidence or cross-examining a witness, other than the expert witness—I emphasise it—
"on any matter of fact upon which a conclusion in the report of the expert is based."
The appropriate procedure laid down by these regulations is to require the expert to attend for general cross-examination on his report under Rule 8(2A). Herein, in my respectful submission, as I see it, lies the first crucial and cardinal misconception. There is a total freedom of cross-examination of the expert under 8(2A); also, on notice, to require that you should be able to call your expert to give evidence on the question on which the tribunal has already required an expert to report; and, my Lords, to cross-examine the expert called by the other parties.
The only exception to this general rule appears to be under Rule 8(2D) where the matter of fact upon which the conclusion of the report is based is relevant to the defence of genuine material factor in issue before the tribunal; or, if there is no conclusion in the report, on account of refusal or deliberate omission.
Furthermore, as a measure of safeguard, there is what the noble Lord, Lord McCarthy, has called the two-stage process. It is a form of preliminary challenge which may be mounted as to the admissibility of the report under Rule 7A(8) and the tribunal for such purpose may permit any party to give evidence, call witnesses and cross-examine on any matter relevant to such challenge. In submission, what conceivable injustice is there in this procedure?
On preliminary challenge, if the conclusion is unreasonable on correct information it may be challenged under Rule 7A(8)(b) and if for some other reason which includes an erroneous matter of fact upon which the conclusion is based—such as inevitably renders the report, to use the word in the regulation. "unsatisfactory"—it may then be challenged under Rule 7A(8)(c). But once the facts upon which the conclusion is based have survived the stage of preliminary challenge these facts may not be impugned by a party giving evidence or cross-examining a witness other than the expert under (2A). This preliminary challenge, furthermore, can be raised at any time at the hearing even as a preliminary submission.
Furthermore, as I have already stressed twice and stress again because it is a misconception that permeated the speeches already delivered, there is the overall right to cross-examine the expert, unrestricted under Rule 8(2A), and to call one's own expert under Rule 8(2B). Therefore, apart from a facility of preliminary challenge if it fails, the tribunal will have, if the parties so wish, reports from three experts in which matters of fact upon which conclusions are based may well differ.
The conclusions also may differ on the question of equal value. Here again I am bound to disagree with the noble and learned Lord, Lord Denning, because, with respect to him, the court merely discharges its customary functions. It is the court which tries it, not the experts. It is the court which discharges its customary function after cross-examination of these experts on their reports. The tribunal then reaches a
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reasoned decision on the question upon which it was requisite to seek expert assistance. Why was it requisite to seek expert assistance? It is now a question which lies within the province of these experts, or so-called experts.
This issue of "material difference", as provided by the substantive Regulation No. 1794, excluding reasons such as market forces factors, has become the subject not only of a series of fairly complex decisions in our own domestic law but equally complex and sometimes more complex in the European Court of Justice. It is, with the greatest respect, my personal view that it is largely the drag of complexity from the court across the water which drives our domestic courts into the situation of complexity with which they have to deal in our domestic laws. There are many branches of law where the whole issue of liability turns upon expert evidence. I give just one example: the medical negligence cases. In this area this clearly lies within the province of the expert.
Before concluding may I say in answer to the noble Baroness, Lady Seear, that there is the right to cross-examine an expert. Full cross-examination is preserved under Rule 8(2A). Therefore, there is no reason to question the validity of the statement previously made by my noble friend Lord Gowrie which, in my view, has been fully vindicated. The misconception could arise the other way round by construing the word "witness" in Rule 8(2C) as relating to an expert, which on no canon of construction could it.
In answer to the noble Lord, Lord McCarthy, I would respectfully say that his belief is well founded, as previously expressed. I have taken his point about consolidation, which is a good point of great value. As regards the speech of the noble and learned Lord, Lord Denning; yes, I agree that the regulation is drafted with a degree of obscurity. However, it is not, for the reasons I have sought to give, so obscure as to warrant the strictures which have been passed upon it. This is not a trial by experts as, on due analysis, I have sought to show. It is not right to suggest, in virtue of Rule 8(2A), that the expert cannot be cross-examined on the facts on which his conclusions are based.
As regards the noble Baroness, Lady Lockwood, I should like to ask her three questions. Why should a tribunal be able to amend a report? What useful purpose could that serve? What conceivable challenge could ever be mounted under European law? On the machinery for the determination of the question, Her Majesty's Government have found in these regulations an appropriate answer and, I suggest, a fair means of resolution.
Lord McCarthy: My Lords, may I ask the noble Lord a question to see whether I have understood him right and, if so, ask through him whether the Government will say that they agree with him? The noble Lord appears to be saying very clearly that these rules mean that one can have three reports—I take it that he means one which is the tribunal's initiated and authorised report; one from the employer, as it might be, and one from the union for the worker. Is the noble Lord telling us—and if he is telling us this, do the Government agree—that all three reports have equal status before the tribunal? Is he saying that they have

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equal access to facts, and can represent facts equally, even if those facts differ?
Is the noble Lord saying that they can use their own arguments, not simply arguments that they make in cross-examination, and that, so far as the worker is concerned—and this is a very important point—they have equal access and can go into the firm? Is the noble Lord really saying that the rules mean that there could be three reports with equal status before the tribunal, and the tribunal can decide between them? If that is the case, do the Government agree?
Lord Campbell of Alloway: My Lords, I shall try to answer the noble Lord directly. Yes, as I construe the regulations, there are three reports. No, I am not suggesting that they all have equal status. The status of the expert appointed by the court, I would have imagined, would have been on a different plane from the status of experts appointed by the parties. As I see it—I may be wrong—this question of status is rather like the status of a witness who goes into the witness box. They all go in equal, but they do not come out equal, and they have to be cross-examined. So at the end of the day the status reflects how they show up under cross-examination in the eyes of the tribunal. Therefore I would say, with respect, to the noble Lord that he is asking a somewhat academic question, which I am trying to answer, but I think that at the end of the day it is resolved by the impression that the witnesses make.
On the noble Lord's final point as to whether my Front Bench agree with me, I would say that they never have yet, and so I do not see why they should tonight. But that is my interpretation of the regulations.
8.52 p.m.
Lord Wedderburn of Charlton: My Lords, I had hoped that by now the noble Earl would have been at the Dispatch Box, following the speeches of my noble friend, the noble Baronesses, Lady Seear and Lady Lockwood, and the noble and learned Lord, Lord Denning. But alas! it is not so, and it seems that the Government are going to defend these quite extraordinary regulations. This is, I fear, another example of the Government being rather stubborn with their proposals in the area of employment law, as we have found on many previous occasions in which the noble Earl has been a fixture among his changing right honourable friends.
It is an area where this time the Government have, I would submit, got themselves into trouble for very simple reasons. They began with regulations that were, so to speak, a Stone Age rejection of judicial process, and they have tried to insert into that structure layers of improving Bronze Age and slightly more modern proposals; and the thing is a terrible mess. In this House on 5th December they were told that it was a mess, and though we were not then directly debating the procedural regulations, Hansard shows that they formed a substantial part of the debate. The joint committee has now put forward a case against the regulations as they stand.
I wish at once to make it clear that, with great respect, I do not agree with the noble and learned
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Lord, Lord Denning, that the expert has as it were no role to play. I believe that expert evidence on the matter of equal value will be very much required in whatever judicial body comes to determine the difficult issues at stake. I would say that legal chairmen of the tribunals, and indeed, with respect, perhaps chairmen of appellate courts, too, might, regardless of what courses the experts have or have not taken, do better with some expert guidance than they would without it.
But it is a question of balance. The issue is whether the regulations put the official expert—as we must now call him, because each side can now call expert evidence—in a position of predominance in the procedure which invalidates it, or may well invalidate it, as a judicial process in the British, as well as the European, meaning; and I apprehend that they do not differ particularly on this point.
The crucial issue is whether the tribunal effectively decides the issue on proper evidence. In their reply to the joint committee, the Government have said, yes, it does, because it hears and assesses all the evidence before it and decides accordingly. That is in the appendix to the joint committee's report.
But that begs another question. Does the tribunal have all the proper evidence to assess? It is no acccident that Rule 8(2C) has featured prominently in your Lordships' debate tonight. Indeed, one question that one could put to the noble Earl is: why in this modern formulation of the procedural rules is Rule 8(2C) there at all? Certainly one would ask, why is it there in this form? It belongs to the Stone Age, to the days when the expert could not be cross-examined. Yes, in that age one could understand it. But today in the form in which it appears it is rather puzzling.
The noble Lord, Lord Campbell of Alloway, cited the rule, and I should wish to do the same, since I depart from him somewhat in my understanding of its place and its context. I should like to take your Lordships on this brief route in the way in which I would argue the point. Rule 8(2C) provides that, with two exceptions,
"no party to a case involving an equal value claim may give evidence upon, or question any witness upon, any matter of fact upon which a conclusion in the report of the expert is based".
I now turn to the point that the noble Lord, Lord Campbell, made. When we come to the exceptions, we find that one of them, in Rule 8(2D) refers us, in the way that rules do, back to two other rules, (2A) and 2B), and there we find it clearly stated that the expert can be cross-examined when he is called before the tribunal. No one—certainly not I—would take issue with the noble Lord, Lord Campbell, that that is the case, because the rules state so very clearly. It is stated that the expert can be cross-examined and it would be rather daft (if I may use the word) to suggest that the rules say anything else.
But, with respect, that is not the point. Now the issue is not whether the expert can be cross-examined; the Government have given in on that, having moved on from their stone pick days. Now the issue is: can the parties adduce to the tribunal sufficiently—because it is a matter of balance—the facts upon which the tribunal may decide the issues in their totality? It is in regard to that issue that Rule 8(2C) is still somewhat of

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a mystery and in my submision something that gives the lie to the idea that these are acceptable regulations.
The two exceptions—except of course for the cross-examination of the expert and the bringing of one expert each by each party—relate, first of all, to Rule 7A(9) and Rule 7A(8) by reference, which are concerned with the "admissibility problem", as the Department of Employment answer in the appendix to the joint committee's report calls it. This is the stage at which the tribunal has to decide whether or not there are grounds for rejecting the report altogether. At this stage, the grounds on which evidence can be brought relate to the formalities, to a failure to be fair, (and here I wish to pause over the two other matters), to a reason which renders the report unsatisfactory for a material reason other than disagreement with the conclusion about equal value—and that does not really go to the point—or, as is stated in Rule 7A(8)(b), to where the conclusion of the expert could not reasonably have been reached on the facts as he has them, on the information supplied, and on the representations made to him.
There is no room there for new facts after those initial hurdles of admissibility have been overcome. As the Department of Employment correctly suggest, those are matters for the initial admissibility of the report. So 7(9) does not help the Government if they want to have a proper collection of evidence before the tribunal that a party may wish to bring other than the party's right to bring expert evidence. This is a matter of some importance. Rule 8(2B) now allows each party to bring an expert to give expert evidence. That does not comprise evidence as to all the matters of fact which the party may wish to bring as a crucial part of his attempt to demolish the case that is made either in the report, or in some other way, but certainly, so far as 8(2C) is concerned, in the report of the expert. The right to have an expert witness does not overcome the problem of 8(2C). Indeed, how could it? If the right to bring an expert witness let in any matter of fact, then of course 8(2C) would be repealed and the Government would sensibly have done away with it. And they have not done away with it.
Lord Campbell of Alloway: My Lords, I am grateful to the noble Lord. This is not an intervention of any type of spoiling nature. It is for clarification. I wonder whether the noble Lord agrees with my interpretation of C. I think that he does, but he has not said so. It is that, if you get a fact in that report that is erroneous, then you can bring that up under C and ask on admissibility to have the report cast out. Does the noble Lord agree with my interpretation?
Lord Wedderburn of Charlton: My Lords, the noble Lord refers to Rule 7A(8)(C). It is, of course, correct that at that stage of arguing about the admissibility, it must be possible to present to the tribunal a material reason that the report is unsatisfactory other than—this is the limitation—disagreement with the conclusion that the applicant's work is or is not of equal value or with the reasoning leading to that conclusion. The limitations of that proviso are extremely uncertain but they would certainly exclude some facts which a party would wish to adduce
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because they would go directly to the reasoning and to his conclusion. But that only concerns admissibility. I have stressed that I agree with the Department of Employment memorandum that 7(8) and 7A(9) are concerned only with that.
When we come to the issue of the conduct of the substantive case, there is only one area, apart from cross-examination of the expert, where we can go to find an exception to 8(2C). That is 8(2D), which deals with two matters. The first is the defence of genuine material factor, which is not at issue in the debate because we are talking about the facts relating to equal value, not the particular defence of genuine material factor, and the second is where the report of the expert contains no conclusion on the central question and the tribunal is satisfied that the absence of the conclusion is due to the refusal or deliberate omission of the person required to furnish information to do so. Those do not get anyone home. If they want to bring in the substantive trial of the action, if I may call it that, in the tribunal, after admissibility, a witness as to fact relating to the central matter, such as the example that the noble Baroness, Lady Seear, gave about the way in which the work is done and the occasions upon which the woman worker and the man worker do certain things that are central to the report of the expert, they do not seem to fall under any of the exceptions.
The noble Lord, Lord Campbell of Alloway, I suspect, knows, as I do, that there will be lawyers who will get these facts in. The structure is so complex that in a cross-examination, somehow, one will manage to get something in. One will stretch the rules. I apprehend that the tribunals will stretch the rules. But why should the tribunals have to stretch the rules? The Government have spent nearly two years—a year and a half—at this job. It is the simple matter of devising a procedure and, in disagreement with the noble Lord, I would say building in an expert, building in some provisions for expert opinion being rather more equal than the other equal witnesses. Yet they still cannot do so in a way that the joint committee thinks satisfies judicial process. Equally valid is the way that the joint committee has, with great politeness, told the Government that there is lack of the sort of clarity that one is entitled to accept.
For these reasons, I submit that the Government—I do not mean this in any offensive spirit but as a matter of sheer description—may be seen to be suffering from some curious hubris in this area if they refuse to take away a set of regulations which, from various points of view and standpoints, have been admonished in the terms that we have heard tonight and on earlier occasions.
9.6 p.m.
The Earl of Gowrie: My Lords, I feel slightly tempted to take myself off and appeal to the European Court of Human Rights. I had thought that I had accommodated your Lordships to a very large degree in these regulations and that you would, in fact, be rather pleased with me. When the Equal Pay (Amendment) Regulations were debated in this House on 5th December a number of your Lordships had serious reservations about them and were anxious that they were not fully in accord with European regulations. As a consequence, we made major

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changes. In particular, we altered the regulations to ensure that the parties would have the chance to comment on the facts and on the representations of other parties. We made provisions for parties to cross-examine the experts—I shall come to the issue of the experts later—and to call alternative expert witnesses. We also made provision for them to ask the tribunal to put written questions to the experts. We rephrased the original draft to make clear that tribunals should only reject cases without commissioning an expert report in clear-cut cases where it was obvious that the claim could not succeed.
Lord McCarthy: My Lords, will the noble Earl give way?
The Earl of Gowrie: Yes, my Lords, but first I should like to finish the point. A number of noble Lords—the noble Lord, Lord McCarthy; the noble Baroness, Lady Seear; the noble Baroness, Lady Lockwood; and my noble friend Lady Platt—expressed some satisfaction with the changes being made in the light of these consultations. The procedure regulations which we are considering today are identical to the revised draft regulations which were made available to your Lordships, with an explanatory note, before our debate in December. So, as I said earlier, I had hoped that your Lordships would at least be, guardedly, slightly more pleased with me.
Lord McCarthy: My Lords, the noble Earl seems to me—and I am asking him whether he accepts this—to be contradicting himself. As regards the first part of what he said, he seemed to be saying that, as a result of the debate on 5th December, he had changed something. But as I read the final schedule which is published here, I find that it is word for word the same as the draft that we had before us at 5th December. Is it not the case that after 5th December, when we debated both the regulations and the draft rules, absolutely nothing was changed?
The Earl of Gowrie: My Lords, the point that I was making was that we did take very closely into account, in looking at this legislation, the views of your Lordships' House. However, I take the point made by the noble Lord, Lord McCarthy, that the procedure regulations, with which we are concerned tonight, were not changed; but it was not represented to me that that was the area of difficulty. I tried to meet the House on the areas of difficulty which were presented to me and which I outlined a few moments ago as matters about which I had sought to try to accommodate the House.
Following their approval by Parliament the Equal Pay (Amendment) Regulations came into operation on 1st January and, as the noble Lord, Lord McCarthy, has just reminded us, they are not of direct concern to us tonight. But I think that they are relevant because I want to repeat the assurance that I gave in the House during our debate and subsequently, that it remains our conviction that the regulations are in full conformity with European law, and it is to achieve this that the Government have been working so long and hard taking on board the points which noble Lords have made.
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That being the case I rather doubt that your Lordships will want me to go into great detail on the procedure regulations now, although I will of course try to respond in just a moment to particular points raised in the course of debate. Before I do so, let me come to the particular point which nearly everyone raised—I think it was initiated by the noble Baroness—concerning the new Rule 8(2C) which says that no party may give evidence upon or question any matter of fact upon which a conclusion in the report of the expert is based.
I think that there is some misunderstanding of the purpose and effect of this provision and I make that comment particularly to the noble Lord, Lord Wedderburn. It will not prevent parties from bringing to the tribunal's attention mistakes or omissions of facts in the expert's report. Parties will have two opportunities to do this. And it will not prevent the parties from bringing evidence in support of such matters. It merely seeks to ensure that such evidence is brought at the appropriate time.
Under the new Rule 7A(3)(b) and (c) the expert will be required to prepare a written summary of all the information and representations made to him and to send this to the parties inviting comments before preparing his report. His report must contain the summary sent to the parties and a brief account of any representations from parties on this summary. One would expect errors of fact or omissions to be identified and put forward by the parties at this preliminary stage.
If, however, the final report still contains a mistake or omission, the parties will be able to bring this to the tribunal's notice and to call evidence in support of this contention before the tribunal admits the expert's report in evidence. The new Rule 7A(8) sets out the grounds on which a tribunal can decide to reject a report and these can include errors or omissions. The new Rule 8(2C) therefore applies only after the expert's report has been admitted by the tribunal as evidence. It would surely be superfluous to reopen questioning on facts at this late stage and would serve only to lengthen tribunal proceedings and to encourage parties to withhold relevant evidence from the expert. I think that we all view that as undesirable.
The provision for an employer to advance a material factor defence before as well as after an expert has reported has also been criticised. In our debate on 5th December the noble Lord, Lord McCarthy, described this as offering two bites of the cherry. But in some circumstances it seems only common sense to hear the material factor defence before the expert's report is obtained. It would be wrong to subject an applicant and her employer to the delay necessarily involved in the preparation of an expert's report and the possible inconvenience from his investigations in a case where, whatever the expert's conclusions on relative value equal pay would not be awarded. The regulations have, however, been so worded as to limit the initial consideration of a material factor defence to clear-cut cases where it is obvious that claims cannot succeed.
The fact that an employer can also put forward a material factor defence after an expert has reported will not mean that an employer will be able to deploy

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the same arguments twice with any hope of success. An employer rehearsing a rejected argument without fresh grounds or evidence would naturally be likely to get short shrift from a tribunal, and he could even in those cases incur the payment of costs.
The noble Lord, Lord McCarthy, was also concerned that a case could apparently be dismissed without a tribunal giving reasons. This is not so. The tribunal does not have to commission an expert's report when it is satisfied that there are no reasonable grounds for determining that the jobs to be compared are of equal value. In these circumstances it will dismiss the application. But where it does so the tribunal must give the reasons for its decision, and like all tribunal decisions these can be appealed to the employment appeal tribunal.
Lord Wedderburn of Charlton: My Lords, I hesitate to interrupt the noble Earl, but before he leaves the point entirely I want to make sure that we have the case aright. Is it not the case that after the expert's report has been admitted the only person who can call a witness upon matters of fact on which the conclusions of the report of the expert is based is the employer in respect of the genuine material factor?
The Earl of Gowrie: My Lords, I would need to study the noble Lord's words very carefully, but they sound as though they are consonant with what I was saying. However, I would need to compare his text with mine before I gave a "judgment"—and I use that word in inverted commas in this context.
I come now to the issue, which I acknowledge has been a damaging issue, that the regulations are too complex. Certainly as a Civil Service Minister with a strong drive to bring back Sir Ernest Gowers, or to show that he is alive and well in spirit, I have been worried about this aspect of the regulations. I think it was extremely difficult to avoid complexity when we were building on an existing Act which is complex in itself and when safeguards were necessary so that we could be fair to all. However, I would say to the noble Lord, Lord McCarthy, that we will try to explain the amendment as clearly as possible in a revised guide to the Act. A short leaflet, Equal Pay for Women—What you should know about it, has been available since the beginning of the year at job centres, employment offices, unemployment benefit offices, the EOC and citizens' advice bureaux, and a full guide to the Equal Pay Act, amended to take account of the equal value provisions, will be available shortly. Preparation of this guide has been delayed by the need to consult interested organisations and to await the outcome of today's debate in your Lordships' House. But I have been worried about this, and I wholly agree with my noble friend Lord Campbell of Alloway in his use of the phrase:
"the drag of complexity from the court across the water".
I rather regret this, but I think that noble Lords will recognise that equal value has been a somewhat complex and difficult concept in terms of our legislation.
It is precisely for this reason that I come to my penultimate point in answer, particularly, to the
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objections raised by the noble and learned Lord, Lord Denning, about the role of the expert. The question before the expert is whether jobs are of equal value. This is not a matter of legal expertise and of the famous common sense, so to say, with which the noble and learned Lord has imbued our legal system for so long, but of a particular set of experiences in respect of industrial relations. As the noble Baroness, Lady Seear, implied, this is not an expert science or specialism, but the experts do need to have industrial relations experience as a guarantee of their suitability and therefore of their expertise. It is for that reason that they are being drawn from the ranks of ACAS.
My noble friend Lord Campbell again directly answered, in my view, the anxiety of the noble and learned Lord, Lord Denning, that in some way experts would be taking over from the court. The court needs the expert evidence with its industrial relations experience, but it alone pronounces upon it. That is why there is, in our judgment, fair judicial determination.
Baroness Lockwood: My Lords, may I ask a fundamental question on this? If the tribunal, having heard from the official expert and the experts perhaps of the applicant, favours the evidence of the applicant, could the tribunal, in those circumstances, make a decision in favour of the applicant but in contradiction to the official expert's report?
The Earl of Gowrie: My Lords, that would be my understanding, yes. I cannot see why that should not be so as the tribunal is the final arbiter of the issue.
There was put to me the point about the three reports. The three reports all have equal evidential status in theory. In practice, tribunals are likely to have more regard to the report of the tribunal appointed expert—and I think this gain amplifies the answer I made to the noble Baroness—if only because it is impartial, whereas the evidence given by experts called by the parties is not literally impartial in a judicial sense. The parties' experts do not have any rights, and I am sure that the noble Lord, Lord McCarthy, understands that it would be most unusual to give witnesses called by one party rights of access, and the like. But this does not mean that the tribunal will always follow the report of the expert appointed by the tribunal. The evidence of the experts called by the parties can show that he is mistaken in his reasoning, or conclusion.
Lord Tordoff: My Lords, but not, as I understand it, in relation to fact. That is at the heart of this whole matter.
The Earl of Gowrie: My Lords, surely what it is at the heart of the whole matter is that the tribunal does in the end have to take a view and make a judgment. But where you are dealing with issues of work of equal value, you are not dealing with easily, or precisely, definable facts. Some appeal to expertise or evaluation is necessary in those instances.
To conclude, I would remind the House that the procedure regulations now before us reflect, as they must, the Equal Pay (Amendment) Regulations already approved by Parliament. They have been

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framed to provide a tribunal procedure which will be helpful and logical as far as the tribunal is concerned and will also, by giving the tribunals the greatest possible scope to consider parties' views, benefit applicants and employers concerned with the claim. This is the particular intent of the significant changes we made following consultations. The procedure regulations play an essential part in giving practical effect to women's right, from 1st January this year, to claim equal pay for work of equal value, as has been our aim in coming into conformity with European law. I therefore, in the interests of that, which I think we are all agreed is a desirable conformity, urge the House to reject the Prayer.
Lord Wedderburn of Charlton: My Lords, before the noble Earl sits down, may I ask him this? In view of the matters which have been discussed tonight could he perhaps consult with his right honourable friend, and then with the presidents of the tribunals in England and Wales and Scotland, to see whether experience will not quickly show, or whether their opinion is not, that some residual (exceptional no doubt) power should be given to the tribunal to admit fact after the admissibility of the expert's report?
The Earl of Gowrie: My Lords, I will undertake to see that my right honourable friend goes through this debate with a toothcomb. I believe that I have answered most of the substantive points which the noble Lord and others have put to me, but I will look at the debate and measure what noble Lords have said against what I have said. Perhaps I can work an informal consultative method by correspondence or otherwise to say why I feel that I have met the points that noble Lords have made.
9.25 p.m.
Baroness Seear: My Lords, we are grateful to the noble Earl, Lord Gowrie, for the attention he has given to the points and the replies he has given. I am sorry that he feels, as apparently he does, rather hurt that we have not adequately appreciated the efforts he has made since 5th December to improve on past performance. But as a former don he will know that there are no marks for trying; there are only marks for producing a better result. I am sorry to say that I am unconvinced that the noble Earl has produced a better result.
The crux of the matter remains this question of the establishment of fact and disagreement on fact and the ability of the tribunal to hear what different people with different views have to say about the alleged facts. As I understand it, the crux of our argument is about Rule 3(2C). As I understand the noble Earl, he has said that the argument about facts will take place, so to speak, in writing on the expert's report before it
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reaches the tribunal. One has the opportunity to take exception to the facts that have been put into the report in writing. That is quite different from being able to call before the tribunal one's witness to establish that the facts that have been put into the expert's report are not such as one accepts as being invalid. Therefore, I do not consider that the explanation that has been given by the noble Earl in regard to this crucial Rule 8(2C) meets the objections which have been put forward.
Nor can I accept what the noble Lord has said which is very much on the lines of, "We have tried, done our best, and you should be pleased with our efforts and that it is now clear". It is crystal clear that it is not clear and everyone who has spoken in your Lordships' House tonight, including the noble Earl, Lord Gowrie, has admitted that it is extremely confused.
I come in at the end of this debate where I started. If we in your Lordships' House are so muddled about what these regulations mean, after having heard the noble Earl as well as before, what hope is there even with a child's guide to the regulations—if anybody is able to produce a child's guide to these regulations: some child, some regulations!—that anybody will understand and make a success of interpreting what is admittedly a very difficult issue?
I am sure the noble Earl is extremely wearied about this subject and does not want to hear any more about it, but it is still with us and will continue to be with us; we cannot just wish it away by regarding it as a great bore. I once again make the suggestion that there is one way in which to overcome much of this difficulty. I have put it forward on Second Reading and on one other occasion; that is that we should move along the lines of having the job evaluation schemes within organisations as being approved as being free of sex discrimination. Once they are approved as being discrimination-free schemes, cases do not come to tribunals. I agree that this is somewhat outside the issue of the discretion of these regulations. But if we have established anything at all tonight it is surely that the interpretation and administration of these regulations will get us into a great deal of difficulty. I have not the slightest doubt that it will get the Government hack to the European Court sooner or later, whereas if we tried to work by establishing that schemes in organisations were free from discrimination, once that was adequate for meeting the case then we would not have this kind of case coming before the tribunals. I believe this would save us a very great deal of trouble, and I do urge the noble Earl to consider this very seriously and to discuss it with his noble friend and with his advisers—or perhaps just with his noble friend.
In view of the unfortunate fact that I gather it is not normal practice to divide the House on regulations of this kind, I wish to withdraw my Motion.
Motion, by leave, withdrawn.

Sea Eagle Missiles
9.31 p.m.
The Earl of Kimberley The Earl of Kimberley rose to ask Her Majesty's Government when they expect to announce their decision on British Aerospace's ship-launched Sea Eagle missiles.
The noble Earl said: My Lords, the very name Sea Eagle must surely conjure up a sleek, powerful and predatory bird of prey. There is the high-speed wave-skimming flight, coupled with extraordinarily keen vision, evolved by Marconi Space and Defence Systems, to seek out its prey. Add to this the talons and beak of the warhead, and we find that we have one of the most sophisticated missiles yet invented by man, and in particular by British Aerospace.
I do not apologise if I speak for 11 minutes instead of 10, because I think this is a very important subject; but I cannot apologise for the lateness of the hour. However, following the ravages of nationalisation and the subsequent Government-sponsored rationalisation, we are left in this country with one guided weapons company, British Aerospace, which is then expected to compete against foreign companies for a slice of the United Kingdom defence procurement budget.
A more recent innovation has been the introduction of the cardinal point specification, against which competing weapons are judged. If any noble Lord is doubtful I will give a very short précis. A cardinal point specification is a definition of a potential purchase, and it limits itself to the prime and essential requirements of the customer. It is then up to the supplier to provision equipment to meet or better the cardinal points and to interpret those aspects which are not specified but which are, or could be, attractive to the customer.
Personally, I have no objection to this because it must provide a keener edge to the competition. In the same vein it must be said that if British Aerospace wins a home contract in the face of foreign competition, then the company's chances of winning when it enters the overseas market must be enhanced. However, it is of interest to note that this single British source of guided weapons was not consulted during the specifying stages of the current competition to provide a new surface-to-surface guided weapon for the Royal Navy. I should like to know from my noble friend why the Royal Navy did not consult on this matter. Either way, British Aerospace has proposed a ship-launched variant of their Sea Eagle missile as the surface-to-surface guided weapon to equip a later version of the Type 22 frigate as well as the now well-publicised Type 23.
The company is competing against the United States with Harpoon, and against the French and Italian weapon proposals. My information is that the British Aerospace price on the table is highly competitive and that their proposals meet the operational requirements of the navy and, in many cases, far exceed them. Sea Eagle, I should add, has already been purchased by the Royal Navy and the Royal Air Force to equip Sea Harriers and Buccaneer attack aircraft. In other words, the Government have already made a considerable investment in this
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weapon, and what is now being proposed by British Aerospace is a modest further development investment with the benefits of larger production. Last July, after months of negotiation when faced with an almost identical choice concerning missile procurement for the Royal Air Force, the Cabinet finally decided to buy British in order to ensure that key technology remained in these islands.
The SSGW provides the surface fleet—our fleet—with its primary anti-ship or offensive weapon. Royal Navy warships, whether deployed in NATO areas or in other parts of the world, cannot always depend upon air cover in an offensive situation. Because, therefore, the SSGW is the major offensive but conventional weapon, the Royal Navy should have firm control over the weapon supply and they must also be assured that any developments or modifications to meet an increased or changed threat will be rapidly and securely responded to. An overseas buy cannot assure this; a purchase of the ship-launched Sea Eagle will.
Let us not forget that weapons designed by the United States, or other offshore weapons designed by other countries, are produced to meet the threat to their country of origin. It would therefore seem a strong probability that a weapon designed in the United Kingdom could meet, and continue to meet, a threat to the realm. Experience gained in the conflict in the Falklands demonstrated to the entire world the capabilities of British Aerospace and other British defence companies to meet the requirements of the weapon users.
In the field of technology, the investment in Sea Eagle has already been made; indeed, British Aerospace has already received an export order and it is hoped that there are more in the pipeline. It would, therefore, be a waste of resources if an alternative and offshore SSGW were to be purchased for our own surface ships. Despite protestations in some areas that an offshore buy would yield employment in this country, that employment would not be of a high technological nature and would probably be production-based with little prospect, if any, of re-export. There would be little or no employment in development, which must surely be the source of our future prosperity.
It can be argued that a weapon such as ship-launched Sea Eagle purchased at home would be cheaper than one of similar price from abroad, due to direct and indirect taxation returns to the Treasury. The Treasury would argue that such comparisons are the result of double taxation. Nevertheless, it is difficult to dispute the fact that a home purchase will yield funds to the Treasury from taxes and export levies. Thus, the sterling returns will at least offset a requirement in any one year for Government borrowing.
I have already mentioned that one member of the Sea Eagle family of weapons is to be exported, and it is to be exported to India. It is only a few months ago that the Indian Defence Minister implied very strongly that they would like to purchase 12 more Sea Harriers from Britain to add to the eight that they already have, as well as British Sea Eagle helicopter-launched missiles and British ship-launched missiles for their

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navy. So the competition to sell ship-launched missiles is high, but the market is expanding and British Aerospace is already receiving requests from other navies besides India to buy Sea Eagle. If the Royal Navy does not buy it, then it is unlikely that anybody else will want to buy it, and the country will lose a potential valuable export market, as well as one of the finest of missiles.
Much is made of employment and its expansion. In the case of the ship-launched Sea Eagle, British Aerospace is emphasising security of employment and retention and expansion of the technological base. Only then can there be employment expansion. We can at this moment accommodate the home market, but employment will also increase considerably if we have export orders.
British Aerospace is confident that they can supply on time and at the right price. To this end, considerable sums of money have been spent and committed to ensure that delays in decision-making are not reflected in the programme. The supplier of the missile home head, Marconi Space and Defence Systems, has also invested private venture funding to ensure that the schedules are met.
In summary, in the ship-launched Sea Eagle the Royal Navy will have the best surface-to-surface guided weapon available on the market today and in the future. A decision to buy any other would deny our navy its lines of supply and future design control and would deny British industry technological expansion in a field which will yield large exports.
I should like to ask my noble friend the Minister four questions. First, in their considerations on the future surface-to-surface guided weapon for the Royal Navy, have the Government taken into account that whichever weapon is chosen, be it Sea Eagle or Harpoon, it will form the primary offensive weapon of our surface fleet, and, as such, can the Government really be sure that they will have absolute control over supply and further design, should the decision go offshore?
Secondly, do the Government concede that an onshore purchase of the future surface-to-surface guided weapon for the Royal Navy—that is, British Aerospace's Sea Eagle—will, in Treasury terms, yield more, and predictable, feed-back to the Treasury, resulting in there being some reduction in Government forward borrowing?
Thirdly, do the Government concede that an offshore buy of the future SSGW for the Royal Navy could effectively put an end to future developments of this type of weapon in the United Kingdom and destroy the progress that has been made with respect to the Sea Eagle anti-shipping missile?
Fourthly, have the Government, in their deliberations on the future surface-to-surface guided weapon for the Royal Navy, taken into account the benefit to be gained by choosing the British Aerospace Sea Eagle in terms of the possible boost to exports, and in particular the support which a total British weapon fit could give to warship exports?
My noble friend will not have forgotten the battle that raged a few years ago over the initial launch of Sea
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Eagle, nor will he have forgotten Harm and Alarm, the Heavyweight torpedo, the Stingray torpedo and a few others. I maintain that it would be a tragedy if, after the air-launched and the helicopter-launched Sea Eagle, the ship-launched Sea Eagle were not given the go-ahead by Her Majesty's Government. These delays and indecisions cause much unnecessary hardship to our manufacturers, and in many cases the product in the long run turns out to be more expensive. Therefore, my final question tonight is: when do Her Majesty's Government expect to announce their decision on British Aerospace's ship-launched Sea Eagle?
9.44 p.m.
Lord Bishopston: My Lords, in initiating this timely debate the noble Earl, Lord Kimberley, has performed a service by bringing to the attention of the Government and of the House the subject of the special needs of Her Majesty's forces and how they might best be met. After his commendable speech I shall try to avoid repetition and will seek only to emphasise a few of what I believe to be the most important points.
Those who have to make decisions on these matters have a number of considerations which must be borne in mind. They include, first and foremost, the meeting of the specification and the factors affecting the performance of the project; factors which are crucial in ensuring their fulfilment and their reliability in service.
The need is, as the noble Lord has said, for a new surface-to-surface weapon system for the Royal Navy. In the case of Sea Eagle there are the advantages of a project which is of a known and trusted family of weapons, being yet a further development with the advantages of using the expertise of design, testing, production, logistic support and servicing, with lower cost and proven reliability.
It is always an advantage when we know the stable from which new ventures come. British Aerospace has over many years made an outstanding contribution to the needs of Her Majesty's forces. I am proud that for most of my working life outside the parliamentary scene I was engaged in the design of service and civil projects in companies which are now included in British Aerospace. I have maintained my professional links and I have had the benefit of some years as a United Kingdom delegate to the North Atlantic Assembly. That is to be recommended for anyone wishing to be fully conversant with the role and needs of Her Majesty's forces.
We are impressed not only that Sea Eagle is one of a family of weapons, but that it is being produced by a proven team of designers and manufacturers whose skills and know-how are available not only for that project but for our country's future needs. This, of course, is a very great asset when foreign suppliers are in the bidding. The new project is aided by using the advantages of past and present team effort through cost effectiveness, planning larger purchases of raw materials and sub-systems, and in-service savings with economy in terms of spares, support facilities and post-design services. Vital, too, is the security of re-supply and MOD control. These are great advantages over foreign suppliers.

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British supply of products and systems means also having our own control over changes necessary to meet new threats as the South Atlantic campaign proved. Most important, there is the export potential which can lead to an increasing vital overseas trade. Exports depend, as we know, on showing that the British Government have confidence in a project by themselves buying what they have the confidence to offer abroad, securing British jobs with the follow-up of spares and servicing, aiding longer-term employment prospects in many areas of Britain which have need of jobs at this time. Also important are the follow-up facilities which ideally, for reasons of security and supply, should be within our influence and not in overseas hands, as the noble Earl demonstrated.
To sum up, Sea Eagle, which is now on offer, is the development of a project which has already proved itself, as has been said, satisfying the Government's aim for a system aligning future requirements with equipment development planned by industry for world markets. It is part of a family of weapons already attracting overseas interest, as the noble Earl said, which may lead to significant export orders. It will ensure re-supply of this weapon with modifications under British control necessary to meet a changing threat.
Finally, the producers of Sea Eagle SL have the resources, the proven and skilled manpower and the design teams which must be kept working together not only for the sake of this project but if we are to get other projects as well. In addition, it has the cost effectiveness of an on-going programme. The present production is moving into a development project going into the future. It has the benefits, as the noble Earl said, of a pricing policy and a return on the significant investment by the Government and other sources in the development of Sea Eagle within the time-scales. Weighing up these vital factors so necessary to come to the right decision is never easy, but I trust this short but concerned debate may assist in that process.
9.50 p.m.
Lord Trefgarne: My Lords, my noble friend Lord Kimberley, in his characteristically informed way, has raised a subject which is both of importance and, understandably, of interest to many of your Lordships. I trust, however, that my noble friend will not be too disappointed, or even surprised, if I say at the outset that it will be some little while yet before my right honourable friend the Secretary of State will be able to announce any decision on the procurement of a new surface-to-surface guided weapon for the Royal Navy. I am afraid, therefore, I can only say that a decision will be taken as soon as is practicable and possible—words which will be not unfamiliar to my noble friend.
My noble friend has explained what the new missile system will do, but I should like to explain briefly why it is we require to order a new ship-launched missile at this time. The need for a surface-to-surface guided
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weapon which could be fitted to a wide range of ships arose in the late 1960s, and as a result the Exocet MM38 was adopted in 1970. As we found to our cost during the Falklands conflict, the Exocet family is an effective weapon system, but with the passage of time, and particularly in the face of improvements to Soviet defensive systems, it is now inevitably in the process of being overtaken.
The Type 23 frigate, the approved design of which was announced last October, will form the backbone of the Royal Navy's anti-submarine warfare surface force by the year 2000. To do this, the Type 23 will have an impressive performance and fighting capability, exploiting the very latest technologies—the new Spey gas turbine engine in its maritime form; vertical launch Seawolf; Stingray lightweight torpedoes and a 4.5 inch gun; in addition to the second generation surface-to-surface guided weapon system. In essence, the Type 23's combination of quietness, weaponry and sensors will make it an extremely effective antisubmarine frigate with a powerful general purpose capability. The ship will also provide a greater radius of operation and, with the benefit of modern technology, will require a smaller ship's company of only 143 men compared with 250 for the Type 22.
Thus, the destroyer/frigate force planned for the next two decades will have a hugely improved capability compared with the same force of even a decade ago. It is of course essential to ensure that every opportunity is taken to improve the fighting capability of the surface fleet by incorporating, in the design of warships, the flexibility to accept the very latest weapon technology developments. In this way, the Royal Navy will be able to maintain a credible and effective deterrent against the offensive capability ranged against us by the Soviet Union.
The surface-to-surface guided weapon is a major example of the Government's policy of competition in the field of procurement of material for the armed services. We place great emphasis on competition, and the discipline of the market place is often a very effective way to ensure that industry produces the right equipment for the services while giving the best value to the taxpayer.
In the implementation of our competition policy we try to align the Navy's needs with industry's abilities and interests. My noble friend referred to cardinal point specifications (or CPS), which are a fairly recent derivative of the performance specifications which have been used in defence procurement for some time. The CPS given to industry for a proposed project contains the briefest possible statement of the basic features of performance and support considered necessary to meet the Royal Naval application. The method is especially useful in equipment where firms have developed or are developing equipment to meet wider markets. Firms enter the competition on an entirely voluntary basis and the winner is selected through our normal procurement evaluation process.
It is therefore a principal feature of CPS that industry is invited to submit detailed proposals for the specification of equipment to meet the Royal Navy's basic operational requirement. I can assure my noble friend that in the case of the SSGW, British Aerospace were indeed invited to submit their proposed detailed specifications.

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It was in response to a CPS for the new surface-to-surface guided weapon that firms submitted bids: British Aerospace with a ship-launched version of the Sea Eagle missile; Aerospatiale with an advanced version of Exocet; Matra and Oto Melara with versions of the Otomat missile; and McDonnell Douglas with the Harpoon.
My noble friend asked whether we were sure that we would be able to control supply and further design if the decision went offshore. The security of supply and access to future developments are, of course, among the factors we are taking into account in reaching our decision. However, I should point out that we would not have contemplated inviting tenders from overseas if we had not been satisfied that the security of future supplies could he assured.
It is not surprising that there are a wide variety of factors which are involved in reaching a decision between contending systems. We have made great progress in our search to achieve better value for money and to enhance the competitiveness of United Kingdom defence industries. However, value for money is not synonymous with selection of the cheapest tender. When deciding on the purchase of an item of defence equipment, we have to take into account not only the initial cost, but, as far as we are able to calculate these things, the running costs and spare costs of the equipment, and we compare them with those of other options available to meet our requirement. Those calculations are not straight-forward. They create problems for items of equipment that might be at the frontiers of technology, but we do our best to make as complete and reliable an assessment as possible. In addition, performance, timescale, the results of an investment appraisal, and general economic, industrial and employment implications, including overseas sales potential and offset proposals, where relevant, are factors which we have to take fully into account.
My noble friend mentioned some of these considerations. He suggested that a purchase of Sea Eagle would yield more and predictable feedback to the Treasury than an overseas purchase. But I have to tell my noble friend that the acceptance of a United Kingdom tender which is internationally uncompetitive can have adverse effects upon the economy in terms of public sector borrowing, interest rates, rate of inflation or the exchange rate, which may outweigh any short-term economic or employment benefits.
My noble friend also suggests that a failure to purchase ship-launched Sea Eagle would effectively destroy all future prospects for the air-launched version of the missile, which is currently under development for the Royal Navy and the Royal Air Force. I must say that the Government have considerably more confidence in air-launched Sea Eagle than my noble friend seems to. Our decision to procure it for the Royal Navy and Royal Air Force, and the export success which has followed, were based firmly on its merits as a system, and did not depend on the subsequent or parallel development of a surface-launched version of the missile. We are, of course, taking account of the existence of the air-launched Sea Eagle programme in coming to a decision on our future surface-to-surface guided weapons, but this is only one among many factors to be considered.
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Incidentally, we already have several variants of one of the other competitors, Harpoon, in service.
My noble friend also referred to the export potential of surface-launched Sea Eagle, as part of a total warship package. This point also is one of the factors we have to take into account in reaching our decision. We are, of course, anxious to give support and encouragement to British industry and exports, but at the same time it is vital to ensure that the equipment chosen will meet the Royal Navy's operational requirement in terms of performance and timescale, and is competitively priced.
My right honourable friend is concluding with his colleagues a detailed evaluation of the tenders, and we are currently ensuring that we have the most up-to-date information possible. A decision will be made as soon as this process is complete. As I trust my noble friend will appreciate, it would not at this stage be appropriate for me to discuss the merits of each system. However, I can assure your Lordships that we are taking all the relevant factors into account—including those that my noble friend has mentioned—in reaching our decision.

Metals Society Bill [H.L.]
Presented, and read a first time.

Mental Health (Scotland) Bill [H.L.]
Reported from the Joint Committee with amendments, and re-committed to a Committee of the Whole House; ordered to be printed as amended.
House adjourned at one minute before ten o'clock.

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