Sitting of 12 July 1984

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

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

  1. Juries (Disqualification) Act 1984.

  2. Data Protection Act 1984.

  3. Mental Health (Scotland) Act 1984.

  4. Child Abduction Act 1984.

  5. Cycle Tracks Act 1984.

  6. Video Recordings Act 1984.

  7. Animal Health and Welfare Act 1984.

  8. Agricultural Holdings Act 1984.

  9. Matrimonial and Family Proceedings Act 1984.

  10. Selby Bridge Act 1984.

  11. Swavesey Bye-ways Act 1984.

  12. Charing Cross and Westminster Medical School Act 1984.

  13. Anglian Water Authority (King's Lynn Tidal Defences) Act 1984.

  14. Cardiff City Council Act 1984.

  Mr. Skinner: On a point of order, Mr. Speaker. When a Government have been elected on a manifesto, it is strange not to pass Acts of Parliament——
  Mr. Speaker: Order. The Clerk will now proceed to read the titles of the Private Bills set down for consideration this day.

PRIVATE BUSINESS
  SHREWSBURY AND ATCHAM BOROUGH COUNCIL BILL [Lords]
  As amended, considered; to be read the Third time.
CORNWALL COUNTY COUNCIL [Lords] (By Order)

  COUNTY OF LANCASHIRE BILL [Lords] (By Order)
  Orders for consideration, as amended, read.
  To be considered upon Thursday 19 July.

  NOTTINGHAMSHIRE COUNTY COUNCIL BILL [Lords] (By Order)
  Order for further consideration, as amended, read.
  To be further considered upon Thursday 19 July.

Oral Answers to Question
  NATIONAL FINANCE

    Gay's the Word Bookshop
    Mr. Chris Smithasked the Chancellor of the Exchequer what representations he has received in respect of the recent raid by Her Majesty's Customs and Excise on Gay's the Word bookshop in Marchmont street.
    Mr. Simon Hughesasked the Chancellor of the Exchequer on what date the decision was taken to issue the seizure notice served on Gay's the Word bookshop by the Customs and Excise on 6 June.
    The Economic Secretary to the Treasury (Mr. Ian Stewart): The decision to issue the seizure notice was taken on 6 June. Eighty letters of protest have been received, of which 26 were forwarded by hon. Members. There have also been nine written questions on the matter.
    Mr. Smith: Will the Minister tell the House why the decision was taken to use the customs procedures against an entirely non-commercial organisation which provides a much valued service? Will he also tell the House why the bookshop and its directors are still suffering harassment by officers of the Customs and Excise, and whether any political impetus was placed behind the original decision?
    Mr. Stewart: I am surprised to hear the hon. Gentleman describe the import of obscene and indecent articles as a "much valued service". I should have thought that most hon. Members would think that the Customs and Excise ought properly to enforce the Customs Consolidation Act 1876, which charges it with prohibiting the import of obscene and indecent articles, and that the Customs and Excise needs to take whatever steps are necessary to prevent that taking place.
    Mr. Hughes: Does the Minister realise that by his answer he has prejudged an important issue? No decision has yet been taken on whether the literature is obscene or indecent. Will the Minister assure the House that he and his right hon. Friend the Chancellor of the Exchequer will look into the crucial matter of the workings of the Customs and Excise, which deal by one standard with one set of literature because it is imported, and by another with literature that is produced here, and selectively against one outlet of that literature when it is readily available in many other places?
    Mr. Stewart: I certainly have not prejudged the issue. However, in many judgments the courts have said that the Customs and Excise must rely on the normal meaning of the words "obscene and indecent", and if it judges the articles to be such it should apprehend them. The matter will no doubt be resolved in due course through the courts, and I hope that the hon. Gentleman will at least accept that that is an entirely impartial way of dealing with it.
    Mr. Adley: Why is my hon. Friend surprised that Labour Members support the import of obscene and indecent material?
    Mr. Stewart: I am surprised that anyone should believe that there should be discrimination in favour of

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    importing obscene and indecent articles. I should have thought that the whole House would support what has been done.
    Mr. Dobson: The bookshop is in my constituency. Will the Minister confirm that none of my constituents has complained about it, but that many parents in the area are worried about the massive increase in heroin addiction? Does he think that the Customs and Excise should give priority to stopping the import of heroin, rather than playing the fool with a bookshop?
    Mr. Stewart: Increased numbers of Customs and Excise staff are devoted to dealing with the drug problem. However, I hope that the hon. Gentleman is not suggesting that they should not also deal with the import of obscene and indecent articles.

    Personal Taxation
    Mr. Nichollsasked the Chancellor of the Exchequer if he will consider the scope for reductions in personal taxation in the forthcoming year, taking into account the conflicting demands made by the social services allocation.
    The Chancellor of the Exchequer (Mr. Nigel Lawson): The Cabinet has reaffirmed the need to keep public spending at broadly constant levels in real terms. On this basis, there is a reasonable prospect of further cuts in personal taxation in next year's Budget.
    Mr. Nicholls: Will my right hon. Friend accept that his achievement and that of his predecessor in reducing rates of income tax while fully protecting retirement pensions against inflation reflects great credit upon him? Does he agree that in our desire to achieve further cuts in income tax we should keep in the forefront of our minds the need to protect those pensions?
    Mr. Lawson: I am grateful to my hon. Friend for his comments. Of course the Government are committed to maintaining the purchasing power of the old-age pension, and I am glad to say that since we have been in office we have done a little better than that.
    Mr. Kirkwood: If the Chancellor has any spare resources to give away, will he consider child benefit as a cost-effective way of giving help to the most needy families in the country? Will he especially ask his Department to recalculate his recent memorandum for the Select Committee on the Treasury and Civil Service and use a much broader base than the 100,000 acute cases?
    Mr. Lawson: I think that the memorandum produced by the Treasury for the Select Committee on the Treasury and Civil Service, and published by that Committee, is a considerable help in elucidating the problems of the poverty trap and the unemployment trap, which are misunderstood by many hon. Members. Child benefit is at its highest level in real terms. But we must decide whether to give priority to increases in child benefit over revalorisation or increases in tax thresholds, because clearly the same pound cannot be spent twice. The priority decided by me and my hon. Friends hitherto— and I think that we should adhere to it—is that it is more important to use the resources available to increase tax thresholds.
    Mr. Powley: Before he gives out money, will my right hon. Friend remember, as I am sure he does constantly,
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    that he is giving out taxpayers' money? Does he agree that before we listen to demands from the Opposition to increase pensions, social services and public expenditure, we should remember that those increases would increase the borrowing requirement, lead to inflation and affect the value of the pound, and that money has to be earned before the Government can give it out?
    Mr. Lawson: My hon. Friend is right. His strictures would be more properly addressed to the Opposition, who have never understood them. We have succeeded in getting the borrowing requirement down, and—as I said when I answered the original question—provided that we succeed in keeping public expenditure constant in real terms the growth in the economy can be applied to reductions in taxation, which it is the Government's firm commitment to achieve.
    Mr. Skinner: He will be asking Argentina to bail him out.
    Mr. Speaker: Order. I must tell the hon. Member for Bolsover (Mr. Skinner) that it bores the House to death to hear his constant interruptions from a sedentary position. I must ask him to desist, please.
    Mr. Skinner: I was only making the point——
    Mr. Speaker: Order. Mr. Hattersley.
    Mr. Hattersley: Referring to the social services allocation as mentioned in the original question, will the Chancellor now tell us when he proposes to announce the cuts in public expenditure which the Treasury has told various newspapers will be part of the right hon. Gentleman's response to the depreciating pound?
    Mr. Lawson: The Treasury has said nothing of the sort.

    Departmental Costs
    Mr. Thurnhamasked the Chancellor of the Exchequer if there are now any estimated reductions to the estimated running costs of Government Departments listed in his answer of 9 April to the hon. Member for Bolton, North-East, Official Report, column 90.
    The Chief Secretary to the Treasury (Mr. Peter Rees): Yes. Provisional outturn for 1983–84 is nearly £70 million less than the estimate published on 9 April.
    Mr. Thurnham: I thank my right hon. and learned Friend for his encouraging reply. Has he any further initiatives in mind?
    Mr. Rees: Yes, indeed. Various efficiency studies are being carried out by the efficiency unit under Sir Robin Ibbs. The financial management initiative has also been launched, which aims to secure tighter control of running costs, and there is, of course, continuing pressure on Civil Service numbers.

    Money Supply and Inflation
    Mr. Norman Atkinsonasked the Chancellor of the Exchequer if he will define the relationship between money supply and the rate of inflation.
    Mr. Lawson: Experience throughout the world has shown there can be no reduction in inflation without a reduction in the rate of growth of the money supply.
    Mr. Atkinson: If money supply reflects the level of demand and both the Chancellor and the Treasury are now saying that inflation is not demand led, but is indeed wage pushed, is not money supply, in the opinion of the Chancellor, merely a barometer? Surely the Chancellor himself does not believe that by adjusting the barometer he can change the weather.
    Mr. Lawson: If, as I understand it, the hon. Gentleman is treasurer of the Labour party, I am not surprised that that party has gone bust.
    Picking on just one of the hon. Gentleman's errors, it is not at all the position of the Government that inflation is caused by wage push. That is the position of the Opposition Front Bench. The Government's position is that what wage push causes is unemployment, and that is one of our main problems today.
    Mr. Dorrell: As my right hon. Friend said that one of the indicators that give him an idea of the monetary conditions in the economy is the foreign exchange rate, does he not think that the fluctuations of recent days in the foreign exchange market reinforce the case for Britain joining the European monetary system?
    Mr. Lawson: There are always likely to be fluctuations in the foreign exchange market. The biggest fluctuation in recent weeks and months—indeed over a little longer—has been between the dollar on the one hand and other currencies, European currencies in particular, on the other. That would in no way be affected by joining the EMS.
    If one looks at the key currency of the EMS, the deutschmark, which is the linchpin, one can see that during the five years that the Government have been in office the value of sterling against the deutschmark has declined by 5 per cent., whereas during the five years that the Labour party was in office it declined by 36 per cent.
    Mr. Wrigglesworth: Does the Chancellor remember claiming that the low interest rates that obtained were a result of his successful economic policies in keeping the public sector borrowing requirement down and stopping crowding out? Will he now accept responsibility for the increase in interest rates, or will he accept that he got it wrong before and that factors other than those of which the Government tried to convince the country affect interest rates?
    Mr. Lawson: I have always made it clear that there are a number of factors. It behoves us to control those factors that are within our control. But there has still been a considerable change. When the Government of which the hon. Gentleman was then a supporter left office, British interest rates were 4 per cent. above American rates, and, indeed, that sort of difference has been the historical norm. Today, despite the recent rise in British interest rates, which I regret, they are still marginally below American rates as against the 4 per cent. above when the Labour party left office.
    Mr. Yeo: Will my right hon. Friend make it clear that the one thing that is under the control of this Government is the relative level of interest rates against international rates, and particularly North American rates? Does he agree that, without responsible control of the monetary aggregates of this country, interest rates would be much higher than they are in the United States? Does he further
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    agree that if we were to follow the spendthrift policies advocated by the Labour party and the Alliance, we would face interest rates of close to 20 per cent.?
    Mr. Lawson: My hon. Friend is right. If the Labour party's policies were put into operation they would cause us to suffer much higher interest rates than those that we have today. That is not to say that I welcome the present level; I do not. It is higher than is justified by monetary conditions in this country, and I hope that it will not last long.
    Mr. Robert Sheldon: Is not the Chancellor's optimism a little misplaced here, given that the earlier exchange rate and interest rate crises under this Government took place against a background of rising North Sea oil output and rising demand for oil and this crisis is taking place against a background of prospective falling North Sea output and falling North Sea oil demand?
    Mr. Lawson: This is in no sense a crisis. While I regret the present level of interest rates, which incidentally are still lower than they were for a large part of the Labour Government's period in office, there has been one important development. In the past a level of this sort presented a severe burden to business and industry. Today, however, there has been such a substantial improvement in company liquidity and profitability that, although this is a disappointment to British industry, it will not affect it anything like as much.

    Value Added Tax
    Mr. Greenwayasked the Chancellor of the Exchequer what items subjected to value added tax in other European Economic Community countries are exempted from that tax in the United Kingdom; and if he will make a statement.
    Mr. Ian Stewart: The position varies somewhat between one member state and another, but the proportion of consumer spending subject to a positive rate of VAT in the United Kingdom is one of the smallest in the European Community.
    Mr. Greenway: Is my hon. Friend aware that, although before and during the recent Euro-elections my right hon. Friends the Chancellor and the Prime Minister and several others in the House and outside made it c fear that VAT would not be extended to food, the Labour party leadership continued to say in a mendacious way, during and after the elections, that it would be? Will my hon. Friend confirm that the Labour party was completely misleading the electorate in saying that and that there is no question whatever of VAT being extended to food in this country under this Government?
    Mr. Stewart: My hon. Friend is absolutely right, both about VAT on food and about the disgraceful and irresponsible behaviour of the Labour party during the European elections, when it constantly tried to assert that the position was not as stated.
    Mr. Rooker: In that case, will the Minister confirm that the present VAT regime will be maintained until the next general election?
    Mr. Stewart: I am not prepared—[HON. MEMBERS: "Ah."] I am not prepared to give any assurance about future taxation under VAT, income tax or any other form

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    of taxation. We finished the Report stage of this year's Finance Bill only a few hours ago, and I do not propose to speculate on what may be contained in future Bills.

    Construction Industry
    Mr. Parryasked the Chancellor of the Exchequer what representations he has received since he last answered oral questions from employer organisations and trades unions in the construction industry concerning his Budget proposals.
    Mr. Peter Rees: My right hon. Friend has received a number of representations from bodies representing the construction industry in recent weeks.
    Mr. Parry: The Chief Secretary and the Chancellor will be aware of the concern expressed both by building employers and trade unions in the construction industry. They will also be aware of the massive unemployment rate in the industry. Does he not agree that, in this critical period, the Government should assist the industry rather than attack it?
    Mr. Rees: I think that the hon. Gentleman has overlooked the fact that, by abolishing the national insurance surcharge, we shall probably have contributed £20 million in cash to the construction industry in 1984–85, and £60 million in 1985–86.
    Mr. Heddle: Does my right hon. and learned Friend agree that there is widespread concern in the construction industry about rumours of a moratorium on capital spending? Will he take this opportunity to deny that rumour?
    Mr. Rees: My hon. Friend is right to the extent that preliminary indications suggest a danger of overspending, but the appropriate response has not yet been determined.

    Inflation
    Mr. Formanasked the Chancellor of the Exchequer if he will make a statement on the prospective rate of inflation.
    Mr. Lawson: I expect inflation to decline further from its present low level of 5 per cent. As my hon. Friend knows, the Government's ultimate objective is stable prices.
    Mr. Forman: In view of the recent unwelcome rise in interest rates, which is particularly unwelcome to house buyers and sections of British industry, does my right hon. Friend recognise that it is now even more important to achieve stability in prices, and that the sooner that is achieved the better it will be for our economy?
    Mr. Lawson: I agree with my hon. Friend. It will, of course, take some years to achieve that stability in prices, but we are determined to get there.
    Mr. Wainwright: Is the right hon. Gentleman aware that commentators and others now agree that there is a serious risk of a rise in the inflation rate this autumn, and that earnings are rising at virtually double the current rate of inflation? Is not the only way of reducing unemployment to start a selective reflation, protected by a decentralised incomes policy?
    Mr. Lawson: I know that the hon. Gentleman's view is deeply cherished by the Liberal party, but it is a recipe
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    for inflation, and for industrial distortions and inefficiencies. The plain fact is that inflation is well on track, although in the short run the RPI will unfortunately be affected by the increase in mortgage rates, which I regret. I hope, however, that the present high interest rates and the increase in mortgage rates will be relatively short-lived.
    Mr. Beaumont-Dark: Does my right hon. Friend agree that the plight of sterling has nothing to do with internal factors, and that that is why the 3 per cent. increase in interest rates is an unwelcome response? Does he not agree that it would have been better to encourage the exchange rate to bear the burden and the risk, instead of endeavouring to change a policy that has been so successful on the inflationary front at home
    Mr. Lawson: My hon. Friend is, unaccustomedly, slightly mistaken. The pressure was not on sterling. Indeed, as I mentioned earlier, the rate of exchange against the deutschmark has moved only slightly. The pressure was on domestic money market interest rates at home, and it was to that pressure that the clearing banks were forced to respond.
    Mr. Ashley: The Chancellor said that inflation was well on track. Can he also say that unemployment is well on track? Having manoeuvred himself into the position of having to choose between inflation and recovery, will he tell us whether he regards mass unemployment as a greater evil than gentle inflation?
    Mr. Lawson: Inflation is seldom gentle. I assume that the previous Labour Government sought to achieve the right hon. Gentleman's objective of gentle inflation; but, while they were in office, inflation rose to 26 per cent.—which is anything but gentle—and we have had the task of struggling to bring it down. Not only did the Labour Government see inflation running at that level, but they saw unemployment double. That was not because they wished it to do so, but because they were suffering from the delusion that inflation and unemployment are alternatives to each other, whereas in fact they go hand in hand. One of the key reasons for bringing down inflation is the achievement of conditions in which unemployment can also fall.
    Mr. Terry Davis: Let me bring the Chancellor back to what is happening under his stewardship. If he is so confident that the rate of inflation will fall, despite higher interest rates and higher import prices, will he tell us which factors will be involved?
    Mr. Lawson: Import prices have not been rising. They have been falling in sterling terms because of the decline in commodity prices. There is also every sign that seasonal food prices, which weigh heavily in the index, will fall. Furthermore, the Government will persist in their firm grip on the money supply, which has brought inflation down to its present level of 5 per cent. and will continue to bring it down.

    Manufacturing Output
    Ms. Clare Shortasked the Chancellor of the Exchequer if he will estimate the decline in manufacturing output since 1979.
    The Financial Secretary to the Treasury (Mr. John Moore): Output in the economy as a whole is at an all-time high. In the three months to April manufacturing output is estimated to have been 10¾ per cent. below its average level in 1979. But this is more than compensated by the fact that output in the rest of the economy is well above its 1979 level.
    Ms. Short: Will the Financial Secretary admit that a disastrous consequence of his Goverment's policies since 1979 is that manufacturing output in Britain is still below its 1979 level, and that there can be no real recovery in the British economy without a recovery in manufacturing industry? Does the hon. Gentleman agree that the levels of investment and of imports and exports of manufactures show that the decline is continuing?
    Mr. Moore: I am sure that the hon. Lady will recognise that a relative decline in manufacturing is nothing new in the United Kingdom or in the OECD as a whole. I am sure that, in fairness, she would accept that manufacturing employment as a percentage of employment in the United Kingdom was 35 per cent. in 1974 as against 31 per cent. in 1979 and 27 per cent. today. The relative decline in output and employment has continued over a long period.
    Mr. Stokes: Is my hon. Friend aware that the decline in manufacturing industry is in part due to strikes—of which there are some at present—which are invariably supported by Opposition Members?
    Mr. Moore: My hon. Friend is right to remind the House of one of our basic competitive weaknesses. The tragedy is that since 1975 United Kingdom unit labour costs have risen more than twice as fast as those of our competitors.

    Falkland Islands (Airport)
    Mr. Dalyellasked the Chancellor of the Exchequer whether any recent payments have been made from the Contingencies Fund in connection with the construction of the airport in the Falklands.
    Mr. Peter Rees: No.
    Mr. Dalyell: In that case, who is paying the unforeseen costs of lugging thousands of tonnes of tillite and quarzite rock 8,000 miles from Bristol and Oxford to the Falklands—from the northern hemisphere to the southern hemisphere—for the Margaret Thatcher international airport? Does the Treasury accept The Sunday Times figure of £3 million a day for the Falklands? Where does expenditure on the Falklands come in the Government's list of priorities for this week? Is it sacrosanct?
    Mr. Rees: I can reassure the hon. Gentleman that Falklands expenditure is not sacrosanct. The items to which he refers are carried by the Ministry of Defence budget.
    Sir John Biggs-Davison: Will not the outlay on the enlargement of the airfield enable military expenditure on the Falklands to be greatly reduced and the islands' economy to be improved?
    Mr. Rees: That is indeed our hope.
    Mr. Hattersley: Having accepted and answered—I believe uniquely—a question about the use of the
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    Contingencies Fund, will the Chief Secretary publish in the Official Report how much of the fund has already been used because of the miners' strike, spending by local authorities, an estimated error in the unemployment figures, and other Government over-expenditure?
    Mr. Rees: I believe that the right hon. Gentleman is confusing what used to be called the Contingencies Reserve and is now called the Reserve with the Contingencies Fund. The two are quite different.
    Mr. Hattersley rose——
    Mr. Speaker: Order. We often get answers that we do not like.

    Construction Projects
    Mr. Adleyasked the Chancellor of the Exchequer if he will make a statement on the availability of Government guarantees for major construction projects funded by the private sector in so far as they affect the public sector borrowing requirement.
    Mr. Peter Rees: No genuinely viable projects in the United Kingdom should require a Government guarantee.
    Mr. Adley: Is that not a slightly optimistic answer from my right hon. and learned Friend? Does he agree that, for example, the Channel tunnel project, on which I shall not ask him to comment specifically, can be funded by the private sector, but that it requires political guarantees against cancellation by either the French or British Government now or in the future? Is there not a difference between political and financial guarantees, and does the Treasury recognise that?
    Mr. Rees: Yes, we do. My hon. Friend will have noticed that in my reply I specifically said
    "projects in the United Kingdom"
    As my hon. Friend will appreciate, the Channel tunnel project will straddle two countries.
    Mr. Wainwright: In that connection, will the Treasury now abandon the superstitious practice that anything that has the faintest hint of a Government guarantee is automatically added to the public sector borrowing requirement, and adopt the realistic policy of other developed nations?
    Mr. Rees: I hesitate to comment on what other developed nations may do in this regard, but it is, of course, only if the guarantee is called that it becomes a charge on public expenditure.

    Borrowing Requirement
    Mr. Gouldasked the Chancellor of the Exchequer what has been the extent of over-funding, defined as the extent to which the rate of gilts has exceeded the levels necessary to finance the Government's borrowing requirement over the last three months for which figures are available.
    Mr. Ian Stewart: None, Sir.
    Mr. Gould: Does the failure to fund the borrowing requirement during the past three months signify a welcome conversion of the Treasury to a more relaxed monetary policy, or is it yet another instance of the Chancellor and the money markets being at cross

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    purposes? If the latter, when must we expect the inevitable emergence of another Budget, which will impose further cuts on public expenditure?
    Mr. Stewart: It is neither of those two things. I am sure that the hon. Gentleman, who is a student of these matters, will know that the PSBR is very heavily front-end loaded this year for normal seasonal reasons, but more particularly because of the withdrawal of postponed accounting for VAT on imports in the autumn. Were the Government to overfund the full extent of the PSBR in the early months of this year, it would produce very heavy distortions in money markets.
    Mr. Allan Rogers: Will the Economic Secretary take the opportunity—if not now, later—to correct two statements made by his right hon. Friend the Chancellor of the Exchequer when he misled the House earlier during Question Time?
    Mr. Speaker: Order. The question must relate to this particular question, not to previous ones.

    Married Man's Tax Allowance
    Mr. Squireasked the Chancellor of the Exchequer whether he now proposes to bring forward legislation reforming the married man's tax allowance.
    Mr. Moore: My right hon. Friend has no immediate plans to bring forward legislation.
    Mr. Squire: Does my hon. Friend accept, in line with the now aging Green Paper, that this allowance is a relic of a bygone age when the majority of women did not work outside the home? Will he, as a special birthday treat for me today, announce that the £3·25 billion should, instead of its present location, be diverted to assisting the relief of family poverty through increasing child allowance?
    Mr. Moore: I am tempted to wish my hon. Friend "Happy birthday" and then to sit down, but I notice from the papers this morning that today is also the anniversary of the birthday of Julius Caesar. I am not sure of the connection with my hon. Friend, but in this context I have to tell him that the Green Paper made it clear that the far-reaching distributive effects of any changes merit serious study. I know that my hon. Friend would want us to take considerable care over this recommendation, however aging he may believe the Green Paper to be.
    Mr. Marlow: Would the Government prefer couples to marry or to live in sin? If the former, will my hon. Friend produce a taxation policy that fits the priorities?
    Mr. Moore: There is obviously no question as to one's personal preference. There is no evidence that, in practice, many couples choose not to marry, or to get a divorce, to take advantage of the tax rules. However, I recognise the point that my hon. Friend has made and I accept that the present position is open to criticism in a number of respects. That is one of the aspects being studied.

    International Debt
    Mr. Skinnerasked the Chancellor of the Exchequer what recent discussions he has had with other Finance Ministers regarding international debt and the banking crisis; and if he will make a statement.
    Mr. Lawson: The problem of international debt was thoroughly discussed at the London economic summit and is kept under close review.
    Mr. Skinner: In view of the tidy mess that the Chancellor of the Exchequer and his colleagues on the Treasury Bench have made of this country's economy, does he really think that he is a fit and proper person to tell the Finance Ministers of Brazil, Argentina and Mexico, with their begging bowls, how to run their countries and get out of difficulties? Will he take my advice and send MacGregor, that financial whizz kid, out there; and if he has any difficulties getting him out of the country, will he shove him in one of those diplomaic bags and get in with him?
    Mr. Lawson: The hon. Gentleman will not be surprised to learn that, not for the first time, I do not propose to take his advice.

    Manufacturing Industry
    Mr. Nellistasked the Chancellor of the Exchequer when he expects investment in manufacturing industry to return to the level of 1979.
    Mr. Moore: Investment in manufacturing industry is recovering strongly. The June DTI investment intentions survey suggests that total non-North sea industrial investment will run close to the 1979 level this year and will set a new record in 1985.
    Mr. Nellist: As opposed to the Tory backwoodsman's comments earlier in Question Time, is not the real reason for the decline of the British manufacturing economy that manufacturing investment is less than 80 per cent. of what is necessary merely to cover the depreciation of the machinery that is being worn out? It is not workers who are to blame for the lack of competitiveness with Europe, Japan or America, but the Chancellor's friends in industry and in the banks who refuse to invest in Britain.
    Mr. Moore: I know that the hon. Gentleman will not need to be reminded of the wise words of the Wilson committee, that lack of profitable opportunities is the main obstacle to investment. I know that the hon. Gentleman, revelling in good news, will be happy to know that manufacturing investment is strongly rising and is up by 11 per cent. in the six months to March.
    Mr. Budgen: Will my hon. Friend confirm that, though there may be disadvantages for other sectors of the economy, manufacturing industry, particularly in the west midlands, will benefit from a lower sterling exchange rate and also from lower oil prices?
    Mr. Moore: My hon. Friend is right to draw attention to the reality of the way in which currencies reflect markets and, to the extent that they do and are properly recorded, benefits may accrue to our manufacturing industry.
    Mr. Bermingham: Does the Minister agree that the increase in bank rate must perforce affect the amount that industry can invest in new machinery and thus increase investment? Has not the time come for the Government to consider whether there should be differential interest rates, especially where investment is involved?
    Mr. Moore: The hon. Gentleman should remember what my right hon. Friend the Chancellor said about the appalling levels of profitability when the Labour

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    Government were in office. The increase in profitability of industry, combined with the increase in liquidity, ensures that the manufacturing sector, as well as other sectors of the economy, can bear the strain of the current higher interest rates.

    Investment (Income Tax Relief)
    Mr. Freemanasked the Chancellor of the Exchequer whether he has received any representations concerning the extension of income tax relief for investment in corporate trades to individuals purchasing shares in a small firm investment company operating with the approval of the Inland Revenue.
    Mr. Moore: We have had representations on this from time to time. We have considered these carefully, but we remain unpersuaded of the case for extending the business expansion scheme in this way.
    Mr. Freeman: Is my hon. Friend aware of the strong support on the Government Benches for the great success of the business expansion scheme, compared with the almost total indifference on the Opposition Benches to the level and state of private sector capital investment? Will my hon. Friend assure the House that he will consider the CBI proposals for a sensible extension to and change in the business expansion scheme?
    Mr. Moore: My hon. Friend is right to remind the House of the success of the business expansion scheme. All hon. Members should welcome the fact that preliminary figures indicate that in 1983–84 approximately £55 million was invested in individual target companies, and approximately 8,000 to 10,000 individual investors were investing in 300 target companies. That shows the success of the scheme already. I shall certainly consider the points made by the CBI in terms of its potential extension.

  PRIME MINISTER

    Engagements
    Mr. Alex Carlileasked the Prime Minister if she will list her official engagements for Thursday 12 July.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
    Mr. Carlile: Will the Prime Minister tell the House how much further she expects interest rates to rise before the pound becomes stabilised against the dollar? Will she also tell us what advice she would give to those in business whose investment plans have been scuppered by the stark collapse of her economic strategy?
    The Prime Minister: My right hon. Friend the Chancellor of the Exchequer has already said something about interest rates. It is very disappointing that they have had to go up. How long they will stay up depends on the industrial strikes that we are now experiencing. For the 17 weeks of the coal strike we managed to withstand increases in interest rates and hold them well below those of the United States, but, because of the industrial strikes, they have now had to go up.
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    There is a danger that investment—particularly in small businesses—will be hit. That is one of the most worrying aspects. As for larger concerns, my right hon. Friend has already pointed out that profits are in good shape. Furthermore, the liquidity position of industries is good.
    Mr. Fairbairn: Will my right hon. Friend take the opportunity, when Mr. Robert Mugabe visits Edinburgh shortly to receive an honorary degree of doctor of law, to remind him of the civilised characteristic of the law, of Scotland that no man may be detained without trial for more than 110 days? If he accepts the degree, should he not apply that doctrine in his own country?
    The Prime Minister: My hon. and learned Friend makes his point extremely well. I am sure that it will be heard in the appropriate quarters.
    Mr. Kinnock: Does the Prime Minister realise that the Chancellor of the Exchequer told the nation on television last night that nothing has gone wrong? Does she know that people in the money markets, the banks and the mortgage companies do not believe that? Does she believe it?
    The Prime Minister: I think that if the right hon. Gentleman had listened to my previous reply he would have had the answer to that question. Perhaps he was not listening.
    Mr. Kinnock: I was listening, and I have heard the right hon. Lady before. Despite the circumstances, she did today what she always does—blame everybody but herself. Is that not what is wrong with this Government and the reason for the rise in unemployment, the mortgage rate increases that are coming, the rises in interest rates, the falling pound and the personal difficulties which people face? When will the Prime Minister pay the price with her own job?
    The Prime Minister: If the right hon. Gentleman cares to examine some of the figures about which I have often spoken to him across this Box, he will see that gross domestic product is up 3 per cent. from a year ago, industrial output is up 3.5 per cent., investment is up 10 per cent., productivity per head is up 6 per cent., and profits are up about 25 per cent. I am sure that he will have been delighted to see a very good report this morning about how the steel industry is withstanding its problems. Those are the figures of an economy which basically is in good shape.
    Mr. Kinnock: Interest rates have gone up 2 per cent., with no beneficial effect for the British economy.
    The Prime Minister: I am well aware of what the right hon. Gentleman says. I remind him that it was the Labour Government who took Britain to the IMF and reduced it to the level of a debtor country. This Government have been paying back the debts incurred by the Labour Government, and we have nearly halved them.
    Mr. Baldry: Was not Sir Terence Beckett correct in saying last night that the chief cause of the latest increase in interest rates was external and that the country's underlying position is one of good, steady growth and low inflation? Is it not also somewhat sickening to witness the way in which the Labour party gloats whenever Britain runs into difficulty?
    The Prime Minister: Yes. When interest rates go up, it is bad news for Britain and bitterly disappointing. What is even more disappointing is that bad news for Britain is good news for the Labour party—or, at least, that is how it seems.
    Dr. Owen: How can the Prime Minister come to the House on Tuesday, claim that the economy is in good shape and, perhaps even more important, that inflation is under control, and, two days later, brazenly defend a situation in which interest rates have risen, the pound has collapsed and we face the prospect of higher mortgage rates? Can the right hon. Lady tell us exactly when she thinks the economy is going to be in bad shape and what is likely to happen to inflation in nine months' time?
    The Prime Minister: If the right hon. Gentleman had listened, he would have heard why I said the economy is in good shape. I will repeat it. Compared with a year ago, GDP is up 3 per cent., industrial output is up 3·5 per cent., investment is up 10 per cent., inflation is steady, productivity per head is up 6 per cent., profits are up, and liquidity is good. The right hon. Gentleman was a member of a Labour Government who took this country to the IMF and made it a debtor country and doubled Britain's international debt. I am a member of the Government who have had to pay it back, and we have halved it.
    Mr. Montgomeryasked the Prime Minister if she will list her official engagements for 12 July.
    The Prime Minister: I refer my hon. Friend to the reply that I gave earlier.
    Mr. Montgomery: At some time during her busy day, will my right hon. Friend study the manifestos of the Labour and alliance parties? I note that the Labour party pledged to abolish a tier of local government and to set up unitory authorities and that the alliance pledged to destroy the metropolitan county councils and the Greater London council. Does my right hon. Friend not think it nauseating that those parties should try to make cheap political propaganda out of something that they pledged to do?
    The Prime Minister: Yes. I am aware of the two manifestos. The GLC is now responsible for only 9 per cent. of services in London and, under this Government, education will, for the first time, have a directly elected authority.
    Mr. John Fraser: What will the Prime Minister do to protect the construction industry from the devastating effect of an increase in mortgage interest rates, which is likely to come about tomorrow, putting those rates about 8 per cent. above the level of inflation?
    The Prime Minister: I agree with the hon. Gentleman that it is disappointing that interest rates have risen, and it is particularly disappointing that mortgage rates may go up. The Labour Government suffered from a similar phenomenon. The sooner industrial strikes are over, the quicker the interest rate will go down. I hope, therefore, that the Labour party will start supporting the 23·5 million people who are in work and working well, not the 200,000 who are on strike.
    Mr. Andrew MacKayasked the Prime Minister if she will list her official engagements for 12 July.
    The Prime Minister: I refer my hon. Friend to the reply that I gave earlier.
    Mr. MacKay: Does my right hon. Friend not feel that it is unfortunate, to say the least, that certain Left-wing Labour-controlled authorities are irresponsibly squandering ratepayers' money by funding striking miners, especially when it takes taxpayers' money to protect those miners who wish to exercise their right in a free society to go to work?
    The Prime Minister: We pay for the coal industry in many ways. The taxpayer pays in heavy subsidies when the coal industry is running, but the taxpayer and the ratepayer pay when the coal industry is on strike.
    Mr. Dixon: Will the Prime Minister explain to people outside the House the justification for the legislation brought in by the Government which means that the dependants of the Yorkshire Ripper, who is in gaol for the protection of society, are cared for better by the Government than the dependants of a Yorkshire miner who is on strike in defence of his community? Will she also explain to the public why the wives and children of murderers are cared for better by the Government than the wives and children of strikers?
    The Prime Minister: I have heard the answer given many times. The miner who is on strike has a very good job, should he choose to return to it.
    Mr. Meadowcroftasked the Prime Minister if she will list her official engagements for Thursday 12 July.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Meadowcroft: Is not the inexorable outcome of the recent trend in inflation exacerbated by yesterday's increase in interest rates? There is bound to be a rate of inflation of 7 per cent. by December. Given that the stated objective of the Government is a reduction in inflation, what credibility will they then have?
    The Prime Minister: I should point out to the hon. Gentleman that inflation is at its lowest rate on an annual average for 15 years. That is far lower than the rate current during the life of the Labour Government, who his party supported and attempted to keep in office. The effect upon inflation will depend on how long interest rates have to stay up. I hope that that will not be for too long, but it will depend to some extent on how quickly industrial strikes are ended and people return to work. There are good jobs waiting. The irony is that workers who are among the most highly paid in Britain are on strike and damaging the prospects of the 23·5 million of those who are in work.
    Mr. Stern: Will my right hon. Friend take a moment in the course of her day to remind Labour-controlled local authorities that, in the settlement arrived at in Liverpool this week, there is naught for their comfort in continuing to overspend?
    The Prime Minister: Yes. I note that the Liverpool city council decided to reduce its expenditure substantially by about £38 million, which is a reduction of 15 per cent. I note that that has been held up as a tremendous victory by the Opposition. I wonder what they would say if the Government brought in a reduction of 15 per cent. in public expenditure. Perhaps for the first time they would support us.
    Mr. Hardy: Is the Prime Minister aware that over three quarters of the 1983 school leavers in the Rotherham

    1357
    metropolitan area are still without work and that those now leaving school face an even worse prospect? How can she tell those young people that the economy is in good shape?
    The Prime Minister: Because of the figures that I have given. As the hon. Gentleman will be aware, the numbers in work are going up, but I am afraid that that is not having a great effect on reducing the numbers on the unemployment register. For reasons which the hon. Gentleman will knows, over the past six years the working population has risen by 1 million and it will continue to rise because of the number of school leavers until about 1989. In the meantime, I point out to the hon. Gentleman that every school leaver is guaranteed a place on the youth training service. Indeed, there was a surplus of youth training service places over the numbers who were demanding them last year.
    Mr. Thurnhamasked the Prime Minister if she will list her official engagements for Thursday 12 July.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Thurnham: Will my right hon. Friend assure law-abiding trade unionists that it is the law of Parliament which prevails, not that of comtemptuous kangaroo union courts?
    The Prime Minister: Yes. The law is made by a democratically elected Parliament, administered by a totally independent judiciary, and it should be upheld.
    Mr. James Lamond: Does the Prime Minister recall her rather anti-American outburst at the Dispatch Box on 8 December last year when she said that American financial policy was extremely damaging to our economy and that in future great danger would arise from it? Is this the point at which our economy has been extremely damaged and is this the great danger about which she was speaking?
    The Prime Minister: As the hon. Gentleman is well aware, we have managed for some time to keep our own interest rates well below those in the American markets. Right now they are just about the same. If the hon. Gentleman thinks that it is damaging to raise interest rates, he himself has made the point.
    Mr. Kirkwoodasked the Prime Minister if she will list her official engagements for 12 July.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave earlier.
    Mr. Kirkwood: Are there any circumstances in which the Prime Minister foresees herself authorising further public expenditure cuts in the autumn?
    The Prime Minister: We are at the time of the year when we look at public expenditure for the coming year. As I had hoped the hon. Gentleman would know, a
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    statement was made when we last considered the matter. We intend to hold to the public expenditure totals already published.
    Mr. Barronasked the Prime Minister if she will list her official engagements for Thursday 12 July.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave earlier.
    Mr. Barron: I invite the Prime Minister to answer the question that was asked earlier and to tell the House why the families of striking miners have £15 a week deducted from any supplementary benefit that may be available to them when the families of people in gaol do not have that sum deducted.
    The Prime Minister: That is the law that was passed through this House by a democratically elected Government.

    Questions to Ministers
    3.30 pm
    Mr. Chris Smith: On a point of order, Mr. Speaker. In reply to a question I asked earlier, a Treasury Minister seemed to many hon. Members to give a response which prejudged a decision that the courts might be called upon to make about the nature of material held by Customs and Excise. Will the Minister read in the Official Report the text of what he said and perhaps seek your indulgence, Mr. Speaker, to correct it in the House tomorrow if he wishes to do so?
    Mr. Speaker: I was also listening carefully, as I always do to matters that may be sub judice. I did not hear anything in the Minister's reply that was sub judice.
    Mr. Alex Carlile: Further to that point of order, Mr. Speaker. The hon. Member for Christchurch (Mr. Adley) used the word "obscene" to describe certain items seized by Customs and Excise from a book shop. Will you look at the Official Report, Mr. Speaker, and ask the hon. Gentleman to withdraw the word "obscene"?
    Mr. Speaker: Order. I think that the word is frequently used—but not, I hope, too frequently. I shall look to ensure that all is well.
    Mr. Dennis Skinner: I know that during Question Time and when calling people generally, Mr. Speaker, you attempt to ensure that the people who are called are many and varied and represent all sections of the House. On this important day, when there is crisis all around us, I wonder why you did not manage to catch the eye of the right hon. Member for Cambridgeshire, South-East (Mr. Pym), the leader of the faction that is trying to——
    Mr. Speaker: Order. I thank the hon. Gentleman for the compliment which he seeks to pay me. I can call only those who rise.

Business of the House
3.33 pm
Mr. Neil Kinnock: Will the Leader of the House state the business for next week?
The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): Yes, Sir. The business for next week will be as follows:
MONDAY I6 JULY—There will be a debate on the Gower report, Cmnd. 9125, on the review of investor protection in the financial services sector, on a motion for the Adjournment of the House.
Motion relating to the Value Added Tax (General) (Amendment) (No. 2) Regulations.
Motion on the Appointment of Bishops measure.
TUESDAY I7 JULY—Estimates Day (3rd Allotted Day).
The Estimates for consideration will appear in the Official Report. There will be a debate on Estimates relating to the United Kingdom diplomatic representation in the Commonwealth Caribbean and aid to Grenada, followed by a debate on Estimates relating to the Property Services Agency.
The Question will be put on all outstanding Votes and Estimates.
Motions relating to the Public Telecommunication System Designation Orders.
WEDNESDAY I8 JULY—Motions on the Rate Support Grant Supplementary Reports for England and Wales.
Motion on the Dairy Produce Quotas Regulations.
THURSDAY I9 JULY—Motions on orders and regulations on social security uprating of benefits, and on the Pensioners' Lump Sum Payments Order.
Remaining stages of the Capital Transfer Tax Bill [Lords] which is a consolidation measure.
FRIDAY 20 JULY—Motion on Members' car mileage allowance, and on office, secretarial and research allowance.
Motion on the Lord Chancellor's Salary Order.
Motions on the European Community Document 5064/84 on the withdrawal of Greenland from the Community, and 4692/81 and 4465/84 on the Right of Establishment—Pharmacist.
MONDAY 23 JULY—Opposition Day (19th Alloted Day)—the topic for debate to be announced.
[Estimates Day (3rd Allotted Day)
1. Class II, Vote 1 (Overseas Representation:

Diplomatic, Consular and other Foreign and Commonwealth services)

Subhead A1 (Salaries)

Class II, Vote 8 (Overseas Aid)

Subhead C1 (Loans: allocated)

Subhead C2 (Grants: allocated)

Subhead D1 (5) (Service overseas and regional technical co-operation programmes: Caribbean and Pacific.)

2. Class XIV, Vote 1 (Civil Accommodation Services) (PSA of the Department of the Environment)

Subhead A3: Maintenance and Running Costs

Subhead C1: Acquisitions and New Works costing over £100,000

Class XIV, Vote 2 (Administration and Miscellaneous Services) (PSA of the Department of the Environment)

Subhead A2: General administrative expenses.

Debate on the Estimates in Class II to be concluded not later than half-past seven o'clock.]
[Debates on European Documents on 20 July Relevant Documents:

(a) 5064/84

Withdrawal of Greenland from the Community

(b) 4692/81

Right of Establishment—

4 4 6 5/ 8 4 Pharmacists

Relevant reports of European Legislation Committee:

(a) HC 78-xv (1983–84) para. 1.

(b) HC 78-xxvii (1983–84) para. 1.

Mr. Kinnock: In view of the speculation in the press about the reorganisation of the Ministry of Defence, will the Leader of the House give us an assurance that the Secretary of State for Defence will at an early date make a statement to the House on that subject?
Further on the subject of defence, will the right hon. Gentleman inform the House when we can expect the three Services day debates? If they cannot take place before the recess, may we have his assurance that they will take place at an early date after the House returns from the recess in the autumn?
The right hon. Gentleman will be aware that only one and a half hours after 11.30 pm have been allocated for the debate on the milk regulations next Wednesday. As it is likely that a large number of Members want to voice an opinion on this very important matter, will he undertake to extend the time allotted to discussion of the regulations?
Mr. Biffen: Of course we shall be very happy to consider, through the usual channels, whether there should be an extension to the proposed one and a half hours debate on the milk regulations on Wednesday because we recognise the widespread interest in the topic.
May I also confirm that it is our intention to have the Services day debates as early as is feasible after our return in the autumn? Of course, I take account of the importance of the statement on any reorganisation being made by my right hon. Friend the Secretary of State for Defence.
Sir Kenneth Lewis: The Leader of the House will be aware that the Government's programme is subject to what is happening in another place and to certain amendments which will come from there. Is the date when we rise for the summer recess also dependent on what happens in another place? If not, will he tell us why we cannot be told today, in reasonable time, so that those Members of the House who have children will know whether we shall finish at the end of July or go into August?
Mr. Biffen: I would sooner give a reliable judgment than a speedy judgment. Therefore, I have not this afternoon made a statement about the recess dates, but I realise that a statement will be expected of me next week.
Mr. J. Enoch Powell: In connection with the Appointment of Bishops measure to be debated next Monday, is the right hon. Gentleman aware that I have represented to him the desirability of a Government statement on the measure in view of the signification of the Queen's consent to it?
Mr. Biffen: Yes. That is under sympathetic consideration.
Mr. A. J. Beith: Will the Leader of the House recognise how important it is to give more time to debate the milk regulations? Will he

1361
recognise, too, how difficult it is for the Chair to call Members according to the conventions of the House when the areas most affected are represented either by discontented Members of his own party or by Members of the Liberal party and not by those on the Labour Benches?
Incidentally, which party will the right hon. Gentleman be inviting to choose the topic for debate on the 19th Allotted Day? Will it be another life support job for the Labour party?
Mr. Biffen: May I say how much I deprecate any talk of discontented Members on the Conservative Benches. Therefore, I assure the hon. Gentleman that, in the mood of fraternity that overtakes this House in July, we shall certainly consider the question of an extension of the debate on the milk regulations.
Finally, the hon. Gentleman knows perfectly well of the procedures of the House under which the debate will take place on Monday 23 July. I can say no more on that.
Mr. Robin Maxwell-Hyslop: As the coming weekend will be the only opportunity for right hon. and hon. Members to discuss with their constituents the final version of the milk quota regulations before the House takes a decision, will my right hon. Friend ensure that that information will be available at the Vote Office before the House rises today? Will he also ensure that a statement is made before the House considers the milk quota regulations about whether outgoers payments will be tax free?
Mr. Biffen: I accept the importance of the points raised by my hon. Friend and will see what can be done.
Mr. D. N. Campbell-Savours: May we have an emergency debate on the economic crisis?
Mr. Biffen: With a degree of ingenuity, that might just about be squared with the Third Reading of the Finance Bill.
Sir Geoffrey Finsberg: In the same spirit of fraternal greetings that my right hon. Friend spoke about, will he accept that there are many contented right hon. and hon. Members who may not feel the need for an extension of the debate on the milk regulations?
Mr. Biffen: It is my job to refer such matters to the usual channels rather than try to be an arbiter on the Floor of the House.
Mr. George Foulkes: Does the Leader of the House recall that more than two years ago the House was preoccupied week after week with the future of the Falkland Islands? When will the House have the opportunity to discuss positively the future of the Falkland Islands and the possibility of the restoration of normal relations between Britain and Argentina?
Mr. Biffen: The hon. Gentleman will appreciate that that matter is not in the business announced for next week, but we shall soon have the chance to debate matters that arise in relation to the Consolidated Fund Bill and he may like to try then.
Several Hon. Members rose——
Mr. Speaker: Order. I realise that business questions represent precious Back-Bench time, but we have three statements and an important debate to follow, so I shall limit business questions to 3.50.
Mr. Albert McQuarrie: The debate on car mileage, secretarial and research assistance allowances will take place on Friday. That causes considerable anxiety to right hon. and hon. Members who have previous engagements for next Friday and will be unable to take part in that important debate. Therefore, can he arrange for the debate to take place on a day other than next Friday?
Mr. Biffen: Obviously I have much sympathy with my hon. Friend, and in an ideal world the debate would take place during the week in prime time. But similar business has often been debated on a Friday. At this time of year, time is at a premium, so that the debate must stand.
Mr. Eddie Loyden: Has the Leader of the House been able to give further consideration to the point that I raised previously on business questions? I refer to the need for an early debate on drug abuse. The right hon. Gentleman conceded that it is a very serious matter. The House should be given an opportunity to discuss it and to reach a decision on the action to be taken.
Mr. Biffen: I have a feeling that the hon. Gentleman may find that the debate which is to take place this Friday will offer him an opportunity to discuss that matter.
Mr. John Townend: Will my right hon. Friend take note of early-day motion 812 which calls for the abolition of wages councils?
[That this House views with great concern the detrimental effect that wages councils have on the free working of the labour market and in particular the loss of job opportunities for young people; believes that the ending of such restrictions will enable the cost of labour to move to market levels and thereby create new jobs; and therefore calls on Her Majesty's Government to abolish wages councils as soon as its international commitment allows.]
It has been signed by 111 Members. Is he aware that it has been signed by the chairmen of the Back-Bench finance, trade and industry and small business committees? Will the Government make an early statement about their attitude to the future of wages councils?
Mr. Biffen: I shall draw that point to the attention of my right hon. Friend the Secretary of State for Employment.
Mr. Jack Ashley: I refer to a different aspect of the drug problem. Is it not a matter for deep concern that some senior civil servants who advise on the safety of medicines choose to move from their Department to the drug industry? Some of those firms are less than careful about drug safety. Many Members of Parliament are paid by the drug industry for advice. Therefore, is it not time to have a full discussion about what is happening in the drug industry?
Mr. Biffen: If the right hon. Gentleman wishes to develop those allegations of impropriety, the debate tomorrow will be a most appropriate occasion on which to do so.
Mr. Edward Leigh: Is my right hon. Friend aware that, although the cows in the London borough of Hampstead may be contented, they certainly are not contented in the rural county of Lincolnshire, and that Lincolnshire Members would favour a longer debate on the milk regulations?
Mr. Biffen: I note what my hon. Friend says. As I said in reply to the Leader of the Opposition, this is a matter for further consideration.
Mr. Don Dixon: Has the Leader of the House seen early day motion 867 standing in my name and in those of my hon. Friends about a national maritime policy, bearing in mind that since 1979 this country has lost more than 30,000 British seafarers' jobs and more than 30,000 shipbuilding jobs, and that as an island nation we cannot allow that to go on?
[That this House, concerned at the loss of 30,000 British seafarers' jobs since 1979 and also the loss of over 30,000 jobs in the shipbuilding, ship repair and marine engineering industry, and recalling that nearly 100 per cent. of the United Kingdom's exports and imports are carried in ships and because shipping, shipbuilding, ship repair and the marine engineering industry still employs nearly 290,000 people, believes that, as an island country, the United Kingdom must retain a ship owning, shipbuilding, ship repair and marine engineering capability, and that that industry must have political and financial support during the current world recession; and therefore calls upon Her Majesty's Government urgently to establish a Cabinet Committee and appoint a Minister of Shipping to oversee and co-ordinate a national maritime policy.]
Will the right hon. Gentleman arrange an urgent debate to discuss a maritime policy for this country, because we must be the only maritime nation that does not have one?
Mr. Biffen: As I said, the week after next there will be generous opportunities for Back-Bench initiatives in debates, and I recommend the hon. Gentleman to try his hand then.
Mr. Richard Hickmet: Has my right hon. Friend seen the annual report of the British Steel Corporation, and is he aware of the substantial improvement in that concern's economic performance—an economic improvement that was masterminded by Mr. MacGregor? Will he find time for a debate on the improvement in the financial operations of the corporation and the lessons that can be learnt from that by the coal mining industry?
Mr. Biffen: No provision has been made for a debate in Government time in the business that I have just announced, but I shall certainly bear in mind my hon. Friend's observations, particularly as they demonstrate a remarkable success in the industry.
Mr. Laurie Pavitt: As the Medical Research Council today reached an agonising decision about cutting £2 million from next year's research projects on breast cancer, cot deaths and rheumatoid arthritis, will the Leader of the House arrange for the Secretary of State for Education and Science to come to the House next week and make a statement so that hon. Members may consider ways in which the matter can be redressed?
Mr. Biffen: I shall certainly draw the matter to the attention of my right hon. Friend the Secretary of State for Education and Science.
Mr. John Stokes: Can my right hon. Friend give an assurance that he will not hesitate to come to the House next week to announce any measures that may be necessary as a result of the dock strike?
Mr. Biffen: Certainly.
Mr. Ron Lewis: Are we to assume from the reply that the right hon. Gentleman gave to my hon. Friend the Member for Jarrow (Mr. Dixon) that there will be ample time for hon. Members to have a discussion? Are we to assume that the House will rise for the summer recess after next week?
Mr. Biffen: No. That is a jolly good try, but I am not prepared to have finessed from me the expected date of the recess. In the Back-Bench debates that are normally associated with the Consolidated Fund there will be an opportunity for the House to have the maritime debate that was mentioned.
Mr. Tim Yeo: In view of the plaintive cries from the alliance Benches about the allocation of time, the frequency of which is exceeded only by requests for the introduction of proportional representation, does my right hon. Friend agree that there is a valuable opportunity to experiment with PR through the allocation of parliamentary time to minority parties in proportion to their representation in this House?
Mr. Biffen: Of course, that would initially be a matter for consideration by the Procedure Committee and the House generally.
Mr. Allen McKay: Does not the Leader of the House consider that we should at last have a debate on this country's industrial problems? Does not he realise that we have a mining strike, that there is the possibility of a steel strike now that the dock strike is beginning to bite, and that other trade unions could follow suit? Does not he accept, irrespective of the gloss that the Prime Minister puts on it, that the situation is serious? As we are coming up to the recess, although the right hon. Gentleman has not yet announced it, will he tell us whether it is his intention to have a debate on those problems, or will he recall the House if things get worse during the recess?
Mr. Biffen: The hon. Gentleman has made that point on a number of occasions in recent weeks. This afternoon's debate on the Third Reading of the Finance Bill is about the economy. All the factors that he mentioned have an intimate relationship with the economy, and I should have thought that, without too much ingenuity, one could make the speech then.
Mr. Michael Stern: Is my right hon. Friend aware of the imminent publication of the report from the Overseas Development Administration on the official inquiry into the fire at King Edward memorial hospital, Port Stanley? In view of the widespread interest in the report on both sides of the House, will my right hon. Friend consider finding time for a debate on the report before the recess?
Mr. Biffen: I think that the normal convention is to await the Government's response to such a report. Perhaps it would be best if we followed that procedure.
Mr. Peter Pike: Will the Leader of the House recognise that the concern felt by local government about a possible moratorium on local government spending, on housing in particular, will have only been added to by an answer given earlier? Does he accept that

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it would be wrong for such a moratorium to be announced during the recess? Will he arrange for a statement and for a debate, if appropriate, before the recess?
Mr. Biffen: In no sense do I wish to confirm the premise on which the hon. Gentleman is asking that question, but I shall draw the attention of my right hon. Friend the Secretary of State for the Environment to the anxieties to which the hon. Gentleman has drawn attention.

Mr. Umaru Dikko
3.51 pm
The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe): With permission Mr. Speaker, I shall make a further statement about the abduction of Mr. Umaru Dikko.
I told the House on 9 July that police inquiries were continuing. As a result of these inquiries four men, three Israeli nationals and one Nigerian national, have each been charged with kidnapping—a common law offence—and with administering drugs with intent to kidnap. They have been remanded in custody.
The police inquiries also disclosed evidence which appeared to implicate members of the Nigerian high commission. It was in those circumstances that, as I told the House on Monday, the Nigerian high commissioner was asked to allow the police to interview members of the Nigerian high commission staff. I have to inform the House that the Nigerian Government declined to comply with this request.
Accordingly, the high commissioner was seen again yesterday. He was told that we had noted the Nigerian Government's denial of any involvement in Mr. Dikko's abduction. However, in the light of the circumstances that I have described, he was told that a counsellor, Mr. Peter Oyedele and an attaché, Mr. Okon Edet, must leave the country within seven days, that is, by next Wednesday 18 July. The high commissioner stated that his Government were recalling him for consultations. He has now left the country.
I am sure that the whole House will join me in expressing the hope that these events will not inflict lasting damage to our long-term relationship with Nigeria, a Commonwealth country with which we have had good relations over many years.
The present situation is not of our making, but, as I have made abundantly clear in earlier statements to the House, Her Majesty's Government are bound to take the gravest view of any evidence which appears to implicate members of diplomatic missions in serious crimes in this country.
Mr. George Robertson: The Foreign Secretary is right to underline the seriousness of the incident as well as the importance of maintaining British-Nigerian relations, not just because of the trade between our countries, but because we are long-standing Commonwealth partners. It is equally important that we make it clear that this country will not, in any circumstances, allow the import on to our streets of other countries' quarrels, whether or not covered by diplomatic immunity. The message from this country and the House to the Nigerians or to anyone else who is aggrieved must be this: use courts, not crates.
Nigeria has endangered relations by protesting official innocence while, at the same time, illegally holding the British Caledonian jet and refusing to waive immunity for people to be questioned. However, if President Buhari is correct—perhaps we should give him the benefit of the doubt — we should demand full co-operation in a continuing joint investigation to establish precisely who organised the finance and carried out the deplorable, outrageous and illegal act. We should expect him to assist in ensuring that the perpetrators are quickly brought to justice.

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I have two additional questions. The Nigerian accredited mission to Britain is 122 strong, which is larger than that of either the Soviet Union or the United States of America. In the light of the Libyan episode and what was said after that, why was the mission allowed to grow to such a vast and disproportionate size, with all the attendant problems?
Secondly, on Tuesday evening, BBC radio broadcast regular reports that British intelligence had had prior knowledge of a possible abduction but had not informed Scotland Yard. Despite that, Scotland Yard acted with inspired success in this instance. However, as the reports mysteriously disappeared from the radio and newspapers on Wednesday, will the Foreign Secretary confirm their truth? It would be intolerable if inter-agency rivalries were to inhibit the pursuit of international criminals, and it is the responsibility of Ministers to ensure that they do not.
Finally, I ask—as I did on Monday—whether the Foreign Secretary will seriously consider a Commonwealth initiative on diplomatic baggages.
Sir Geoffrey Howe: I am grateful to the hon. Gentleman for what he said at the outset about the serious view which the whole House takes of the events. He also spoke of the importance which we attach to long-term relations between this country and Nigeria. I do not doubt that the strength of the message presented by the Government and underlined by the House—namely, that we will not tolerate illegal behaviour which represents a possible violation of diplomatic immunity—will have been underlined by the hon. Gentleman's remarks.
The hon. Gentleman asked about the prospect of further co-operation in the investigation of the offence. I told the House of our request and the response received. I take account of the hon. Gentleman's further request in that respect, but he must take into account the reply that we received.
The hon. Gentleman drew attention to the size of the Nigerian high commission. It must be remembered that other missions here also have substantial staff. I speak not only of nearby countries. India—another large Commonwealth country—has a significantly larger staff here than has the Nigerian High Commission. A further factor to take into account is that approximately 70,000 Nigerians are in this country.
However, I shall certainly examine the size of missions here, in the light of my statement to the House on 1 May.
The hon. Gentleman mentioned the possibility of a Commonwealth initiative on terrorism, a matter which was raised in questions on my statement on Monday. I have undertaken to consider that matter. It will, of course, take its place alongside the other initiatives that we are already taking in the European Community and took at the economic summit.
The hon. Gentleman also inquired about intelligence reports which were apparently broadcast on the radio on Tuesday or Wednesday night. In a sense, he answered his own question by drawing the House's attention to the fact that those reports disappeared. Ever since the change of Government in Nigeria it has been common knowledge that the new Government were interested in the return of several people from our country, including Mr. Dikko. However, we were not aware of a specific threat to him.
Mr. Mark Carlisle: In view of my hon. and learned Friend's remarks about Nigeria being a member of the Commonwealth, and in view of the Nigerian Government's insistence that they were not involved in the incident, will he tell the Nigerian Government that their statement is bound to be weakened in the eyes of many if they refuse to allow members of their diplomatic mission to be interviewed?
Sir Geoffrey Howe: My right hon. and learned Friend is, of course, absolutely right. Indeed, that point was raised in the House when my right hon. and learned Friend the Home Secretary made his statement on Friday of last week, and it was drawn to the Nigerian Government's attention during the exchanges which took place this week.
Mr. Malcolm Bruce: I acknowledge that the incident to which the statement relates is sensitive and embarrassing to both the British and Nigerian Governments. However, perhaps the Foreign Secretary will recognise that two of my constituents have been detained in police custody in Lagos for seven weeks—without having been charged or bailed—in respect of supposed offences of servicing an aircraft which subsequently broke the embargo. Will he give me an assurance that he will recognise that their release and early bail is a high priority and that this particular development will not be allowed to prejudice their circumstances?
Sir Geoffrey Howe: I am glad that the hon. Gentleman has taken this opportunity to remind the House once again of that matter. As he knows, representations in respect of these two detainees have been made at ministerial level and on several other occasions by our high commission in Lagos. No charges have been preferred against them and their continued detention is quite unjustifiable. I am glad to say that the high commission has regular consular access to them, and certainly we shall continue to press the point that the hon. Gentleman has made.
Mr. Ivor Stanbrook: If the Commonwealth means anything, it means that its other members are entitled to extra sympathy and understanding of their problems and the benefit of the doubt if they make mistakes. Is my right hon. and learned Friend aware that Nigeria is not Libya, that General Buhari is not Colonel Gaddafi, and that not a single life has been lost due to the current military regime in Nigeria? Some stupid people have taken the law into their own hands, but, my right hon. and learned Friend knows, as well as do most people in Nigeria, and perhaps in this country, that the Nigerian Government had good reasons for wanting the return of Alhaji Umaru to Nigeria. Will he not be so heavy-handed in dealing with friends, and distinguish more carefully between friends and enemies?
Sir Geoffrey Howe: I well understand the basis of my hon. Friend's points and, as I indicated earlier, I also understand the extent of the anger in Nigeria about the previous conduct of certain Nigerian nationals now present in this country. However, having said that, and having recognised the importance of maintaining good relations between this country and Nigeria in the long term, it would not have been possible to treat the events of last week as though nothing had happened. I am certain that my announcements carry the support of the whole House, regretful though it must be to have to make them.
Mr. John Fraser: Without in any way condoning what has happened, will the Foreign Secretary recognise the concern of many thousands of Nigerians, who live frugally and sometimes precariously in this country, about the filching of hundreds of millions of pounds from Nigeria by former Cabinet Ministers? Will the Foreign Office therefore offer every possible facility to a Third world country to have repatriated to it funds which may have been illegally lodged in this country?
Sir Geoffrey Howe: However much one may understand the force of the hon. Gentleman's point, it is not possible for the Government to make such arrangements. If people in this country are wanted back in their own country—for instance, Nigeria—for the investigation of offences, it is, of course, open to the Nigerian Government to make an application under the Fugitive Offenders Act, but no such application has been made.
Sir Anthony Kershaw: Is my right hon. and learned Friend aware that this interruption in the very good relations with a great and friendly Commonwealth country is to be much deplored, but was it not impossible for him to overlook the matter? Will he bring home to the Nigerian Government the fact that if we had more confidence in the way in which their judicial system is working, extradition might be a proper way for them to proceed?
Sir Geoffrey Howe: My hon. Friend is right to underline that point, but, notwithstanding our concern for relations between our two countries, it would not have been possible to overlook the events that occurred. Extradition under the Fugitive Offenders Act is, of course, an option open to the Nigerian Government. In hearing any application made under that Act the courts would, of course, consider the merits in all respects.
Mr. John David Taylor: As the Foreign Secretary must have had good reason to request the departure of two officials of the Nigerian high commission, does he believe that they were acting on their own initiative, or on behalf of the Nigerian authorities?
Sir Geoffrey Howe: It is not possible for me or anybody else to give a firm view about such understandable questions. As I have said, the Nigerian Government have denied responsibility, but, without the police authorities being able to question members of the high commission, it has not been possible for us to carry the matter to a conclusion.
Mr. Dennis Walters: Bearing in mind that three of the arrested kidnappers were Israeli citizens, one of whom is a prominent doctor in Israel, and the fact that only last week the Israeli Government were involved in an act of piracy on the high seas, is my right hon. and learned Friend entirely satisfied that there is no Israeli Government involvement?
Sir Geoffrey Howe: The position today is the same as it was when I was asked that question on Monday. There is no evidence of Israeli Government involvement.
Mr. Tam Dalyell: Given the various shades of grey in the Dikko case, and the issue of political asylum, is this an occasion on which we should consider very strongly British self-interest, as, indeed, the French and Germans would consider their self-interest in similar circumstances? Is it not a fact that we do as much trade
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with Nigeria as with almost the rest of Africa put together? In the past British Leyland at Bathgate depended on Nigeria, and its successor might well depend on engine and truck exports to Nigeria again. I make no apology for putting this point, because thousands of jobs are involved. Can this be constantly borne in mind?
Sir Geoffrey Howe: That point has been taken fully into account in reaching the decision that I have announced to the House. The hon. Gentleman need make no apology for what he has said. This country has wide-ranging and long-standing trading relations with Nigeria. On those trading relationships depend jobs in this country and the prospect of prosperity for Nigeria. Having said that, one has to say that it is not possible to behave as though the events of the last seven days did not happen. I hope that the hon. Gentleman's observations about the importance of trading links will be borne in mind by him and other Opposition Members with regard to trading links with other countries.
Sir Frederic Bennett: As there have been several references to extradition being an alternative method of obtaining the return of Mr. Dikko to Nigeria can my right hon. and learned Friend say whether there are any alleged grounds which come within our extradition law which the courts would enforce? I am sure my right hon. Friend will agree that it would be wrong for us to give the impression that if the Nigerian's were to go for extradition it would be allowed, irrespective of the decision of our courts.
Sir Geoffrey Howe: There can be no question of any such special prior indication. I told the House on Monday, and I did so again today, that no application has been received under the Fugitive Offenders Act 1967 for the extradition of any persons. We are aware of a stated intention by the Nigerian Government to seek the extradition of Mr. Dikko and others. Any request received in proper form will be considered on its merits in accordance with the provisions of the statute.
Mr. John Home Robertson: The Foreign Secretary told the House on Monday that Mr. Dikko had the status of a temporary visitor in the United Kingdom. What future has that status, in view of the fact that he could face perfectly legitimate legal proceedings in Nigeria?
Sir Geoffrey Howe: It is not for me to answer for Mr. Dikko's reasons for being in this country. He was admitted as a visitor, as I told the House on Monday, together with a large number of other Nigerian nationals.
Sir Dudley Smith: In view of this and other happenings, does my right hon. and learned Friend gain any impression that our European partners and, indeed, other countries of the free world are sympathetic to the idea that the Vienna convention ought to be modernised and widened?
Sir Geoffrey Howe: I have no doubt that our European partners and those countries represented at the London economic summit take a very sympathetic view of the case that we have been making for the closest possible study, not only of the Vienna convention, but of the other measures which the countries of the world need to take together to prevent abuse of diplomatic immunities. We are still conducting our review of the Vienna convention, as, indeed, is the Foreign Affairs Committee. The House

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must recognise that it is not just the convention, but the way in which it is, and the extent to which it can be enforced that is important.
Mr. Ron Brown: In view of the kidnap bids, the House still needs to know why Mr. Dikko and other Nigerian crooks were made welcome in this country, bearing in mind that many genuine refugees, particularly from Pakistan, are repeatedly turned away from these shores.
Sir Geoffrey Howe: All people who come to this country are dealt with by the immigration authorities in accordance with the relevant legislation applying to their status. The Nigerians of whom I have spoken are in this country as visitors. I told the House on Monday, I think, that Mr. Dikko was here as a visitor for six months from a date in June.
Mr. W. Benyon: It will take years to renegotiate the Vienna convention, and the British public are thoroughly fed up with what is going on. Will the Government consider unilaterally abrogating those parts of the Vienna convention which deal with diplomatic baggage?
Sir Geoffrey Howe: I must tell my hon. Friend that the matter is not as simple as that and should not be so regarded. The Vienna convention was not introduced as a diplomatic nicety or for the protection of diplomats of this or any other country. Its provisions are often necessary for the protection of British interests. Around the world, British interests are formidable. This country has always has always lived by trade and for many years has sent its citizens to work abroad. There are more than 5 million British citizens outside this country engaged on work from which we all benefit. The problem is to reconcile those interests and the need to protect them, through our own diplomatic service, from the manifest abuses which can sometimes take place. It is for that reason that I announced the very strong attitude that this country will take to any violations of the convention that are detected.
Mr. Andrew Faulds: In view of the massively corrupt practices of Mr. Dikko and other such characters still in Britain, would it not be advisable for the Government to review the arrangements under which such gentlemen seem to put down roots, by purchasing properties worth £500,000 in some cases? Are they purchasing such properties in the likely event of a six months' stay?
Sir Geoffrey Howe: The hon. Gentleman has drawn attention to a problem which deserves very serious consideration. As I said in the House on Monday, his right hon. Friend the Member for Morley and Leeds, South (Mr. Rees) in a broadcast interview on Monday, I think, expounded the difficulties that would be involved if we fundamentally changed without very careful thought the basis on which people who come to this country are allowed to remain here. I accept the hon. Gentleman's point. The problem is changing in nature and growing. The matter deserves very close study, but it would not be right to jump to swift or dramatic conclusions in the belief that it is an easy one.
Mr. Eldon Griffiths: Is my right hon. and learned Friend aware that what has been revealed
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by the Nigerian diplomatic kidnap as by the Libyan diplomatic murder, has done no more than lift the veil from the diplomatic lawlessness which is not uncommon among certain embassies in London? Many people have very little confidence that the Foreign Office is dealing with the problem effectively.
The cipher is the only part of an ambassador's diplomatic baggage which must be kept absolutely inviolate. Will my right hon. and learned Friend take steps to ensure that steamer trunks, crates and containers which too often carry items as booze and arms— and now people, as we have just seen—are not given the same status as the cipher bags, which, of course, are critical?
Sir Geoffrey Howe: My hon. Friend is understandably persistent in drawing attention to the problem. There is no doubt that any abuse of diplomatic immunities undertaken to promote lawlessness should cause the gravest possible concern, but if my hon. Friend studies the provisions of the Vienna convention he will find, as I know other hon. Members are finding——
Mr. Eldon Griffiths: I have studied them.
Sir Geoffrey Howe: Of course, I know he has. One cannot emphasise too strongly that any proposed change must be compatible with the inescapable need properly to protect our own diplomatic traffic.
Several Hon. Members rose——
Mr. Speaker: Order. I have to protect further business. I shall allow questions to be asked for another five minutes, and I hope that in that time every hon. Member who is standing will be called.
Mr.Tony Banks: Subject to British court requirements, will the Foreign Secretary assure the House that Mr. Dikko will not be allowed to stay beyond the period of the six months temporary entry which he now has? Many of my constituents, or friends and relatives of my constituents, cannot even get a six-month visitor's entry permit. Why should Mr. Dikko be allowed to stay beyond the six months? Clearly, we should want him out of the country.
Sir Geoffrey Howe: The hon. Gentleman mentioned the requirements of British courts. One point beyond doubt is that all people in this country, on whatever terms they are present, are obliged to comply with the laws of the United Kingdom. In relation to Mr. Dikko, my right hon. and learned Friend the Home Secretary will have heard the point raised by the hon. Member and will certainly take account of it.
Mr. Jonatham Aitken: I congratulate my right hon. and learned Friend the Foreign Secretary on his wise and restrained handling of this matter so far. In view of certain reports now circulating in Nigeria, will he make it clear that the Government would take an extremely grave view if his justified expulsion of Nigerian diplomats from London were to be met by totally unjustified reprisals, such as expulsion of British diplomats from Lagos?
Sir Geoffrey Howe: I welcome the chance to underline my hon. Friend's point. However, we see no reason why the Nigerians should take or propose retaliatory action. If retaliation were taken, we should have to reconsider the

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matter. As the House has emphasised, it is in nobody's interests to widen or to prolong the dispute. I repeat that I see no reason why retaliatory action should be taken.
Mr. Dennis Skinner: Is the Foreign Secretary aware that some of us have more than a sneaking suspicion that the Government are trying to make a seven-course dinner out of a can of boiling water? Three statements have been made since last Friday on this issue. The nation is in the midst of an economic crisis, but we have not had a statement about the British economy, which is in ruins.
Does the hon. and learned Gentleman appreciate that he could have settled the problem with Nigeria fairly simply? The Nigerians have been up to their necks in debt with Britain for many years, and bureaucrats and politicians have been living fat off British workers as a result of some transactions. Long before this matter began, a telephone call would have made absolutely clear to the Nigerians how Britain felt about it. Some of us think that the Foreign Secretary seeks to divert attention from the crisis in Britain and that that is why the Prime Minister is sitting next to him.
Sir Geoffrey Howe: If the House had to follow every one of the hon. Member's sneaking suspicions, it would be disastrous. His observations on this matter have been as shallow and unhelpful as usual.
Mr. Robin Maxwell-Hyslop: As Her Majesty's Government must be vigorous in their condemnation of all such action what protests did they make against the piracy committed by Israel in international waters against a Cypriot vessel and the kidnapping of non-Israeli citizens on board, bearing in mind our special position with the sovereign bases in Cyprus?
Sir Geoffrey Howe: That is an entirely different question, which does not rise out of this one.
Mr. John Wheeler: I recognise that my right hon. and learned Friend pays due tribute to the special relationship between the United Kingdom and Nigeria, a valued Commonwealth country, but a most serious crime has been committed on British streets, which would normally carry a sentence of imprisonment if there were a conviction. The Nigerian Government have not fully co-operated with the United Kingdom on this matter, and many people regard this is as very serious. Will my right hon. and learned Friend make it clear that the present Nigerian high commissioner would not be welcome if he attempted to return to the United Kingdom?
Sir Geoffrey Howe: As the full extent of the high commission's involvement has not been established, it would be inappropriate for the high commissioner to return to this country.

INMOS
4.19 pm
The Secretary of State for Trade and Industry (Mr. Norman Tebbit): With permission, I should like to make a statement about INMOS.
When the House debated INMOS last month, I explained that the Government had two objectives: to ensure the company's early transfer to the private sector; and to find a private sector source for the additional capital and support the company needs if it is to realise its full potential.
This morning Thorn EMI and the British Technology Group announced that they had reached agreement in principle for the purchase by Thorn EMI of the National Enterprise Board's shareholding in INMOS at a price of £95 million.
A sale of the NEB shareholding to Thorn EMI would meet the objectives I set out. Thorn EMI has assured me of its determination to develop INMOS and of the importance it attaches to fulfilling the aims of the company's management. It has the financial, technical and managerial resources to do so. This proposal will assure the continued transfer of technology to Britain and British industry's access to this technology.
The House also expressed concern that the Government should receive a fair price for INMOS. The Government's total investment in INMOS is £65 million, in addition to which certain guarantees have been provided. The Thorn EMI offer of £95 million for the NEB's share of the equity implies a value of about £125 million for INMOS. It offers a fair return on the Government's investment, and Thorn EMI will assume responsibility for the guarantees. The offer will fall to be considered by the Director General of Fair Trading, who will advise me in due course.
Tribute is due to the founders of INMOS and to the work force in Britain and America, who have created a company with a most promising future in this advanced and fast growing industry. It is their skill and dedication that have enabled the Government's investment to bear fruit.
I am glad to tell the House that the transaction has the support of both the British Technology Group and the board of INMOS, which consider that the participation of Thorn EMI will strengthen their company and help it to achieve its objectives. The INMOS board has said it regards Thorn EMI as an ideal partner.
I hope that the House will agree that this represents a satisfactory outcome. INMOS has found a strong and committed parent company. Thorn EMI has gained an attractive investment in a key industry of the future. The Government have secured a fair return on the taxpayers' investment, which vindicates support for the company and the continued development of INMOS' technology within the United Kingdom. I therefore commend to the House this welcome conclusion to a matter in which I know many hon. Members have taken a keen interest.
Mr. Peter Shore: I readily join with the Secretary of State in acknowledging that tribute is due to the founders of INMOS, including the Labour Government, and to the work force in Britain and America who have created a company with such a promising future. I join with him in what amounts to a public celebration of the achievements of this most successful public enterprise.

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After our debate on INMOS on 21 June, the Secretary of State will not be surprised to learn that the Opposition, and indeed many Conservative Members, will welcome particularly that part of the statement that promises continued United Kingdom ownership and control of INMOS. Will he not have the honesty and grace to acknowlege that the House helped at least to steer him away from the crass folly—and worse—of accepting last month's offer by the American AT and T company to buy up and to break up INMOS and then to hive off separately the R and D establishment at Bristol?
Is the Minister aware that the sale of INMOS, just when it is moving into strong and growing profitability, is patently ideological in its motivation and financially far less rewarding than it would have been if he had had the guts to stand up to the Treasury and tell it to wait? Is he satisfied that, in the light of its poor record, in such high technology areas as nucleonics and body scanners, Thorn EMI has the right people at the top level to make the correct strategic decisions for the development of INMOS?
What guarantees have been given—I found none in the statement—for the continuing autonomy of INMOS within the vast and sprawling Thorn EMI group? Does the right hon. Gentleman think, therefore, that it would have been prudent to have retained a golden share or its equivalent to ensure that the new owners do not subsequently sell-off INMOS to an overseas company and to maintain its continued independent management within the Thorn EMI group?
Mr. Tebbit: It is regrettable that the right hon. Gentleman should add sheer impudence to the reckless stupidity that he exhibited in the debate on INMOS a few weeks ago. He knows perfectly well that his reckless remarks then came close to prejudicing the deal and thereby damaging the British interest. I told him so at the time and he pretended not to understand. I repeat today that the right hon. Gentleman's conduct came close to prejudicing the deal.
The right hon. Gentleman's carping, ill-informed and ill-natured remarks about Thorn EMI contrast with reality. Thorn EMI has made far more good commercial decisions that the NEB or the right hon. Gentleman and his hon. Friends, who landed us in adventures such as De Lorean, of which he is no doubt still very proud. If he throws enough money at problems, some of it is bound to bounce back, but very little has done so. If INMOS is as good an investment as I believe it to be, and he believes it to be, it is absurd to suggest that Thorn EMI would want to get rid of it.
Mr. Mark Robinson: I congratulate my right hon. Friend on his statement. INMOS is in my constituency in Newport and it has been known since 1980 that if it reached profitability it would be placed in the private sector. I welcome the fact that the uncertainty has now ended, and I compliment my right hon. Friend on finding a British solution, for which some of us have argued for a long time. Does he agree that INMOS's contribution in terms of jobs—the number has doubled since I entered the House—is continuing to increase and offers future prosperity?
Mr. Tebbit: I thank my hon. Friend for his remarks. It was paramount in our consideration to find the right
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industrial solution for the company. I believe that that has been found and that Thorn EMI has all the qualities required to make a success of it. I am very glad to have been able to collect £95 million for the taxpayers to help make up the NEB losses of £31 million on NEXOS, £4½ million to date on Aragon, £7·2 million on INSAC and £75 million on Alfred Herbert. That was the result of the sheer brillance of NEB decisions.
Mr. Paddy Ashdown: Has not the British taxpayer had to provide about £150 million to launch and sustain INMOS? Has not a United States independent valuer this year assessed the value of INMOS at £200 million? Is not this year's turnover predicted at £100 million? Is not this year's profit, based on first quarter returns, predicted at £30 millon? In the light of those facts, how does the Secretary of State justify, except in terms of his own narrow dogma, the sale of this profitable company with a high potential for only £95 million to one of the Government's friends?
Mr. Tebbit: Broadly, the answer to most of the hon. Gentleman's questions is no. But let me specify more clearly some of the matters on which he is wrong. First, he compares speculative valuations of the company at some considerable time in the future with the price achieved for 76 per cent. of the company's equity. So he is in a fairly muddled condition. [Interruption.] The hon. Gentleman asked a series of muddled questions. He must be quiet and listen to the clear answers that he is getting.
The hon. Gentleman got himself thoroughly muddled about the extent of the taxpayers' investment. The taxpayers' investment has been £65 million, and, in addition, certain guarantees have been given. As I made clear in my statement, the Thorn EMI company has taken responsibility for the guarantees.
Mr. Michael Grylls: Will my right hon. Friend accept that most sensible people recognise that this high technology company will be much better off in the private sector, and that most Members wish it well in the private sector, under successful managers, in Thorn EMI?
Mr. Tebbit: I am sure that my hon. Friend is right. There is no good reason why the taxpayer should be called upon to provide the investment for companies of this kind. The launch of the company has been successful; it will now go successfully into the private sector. That is what should be done. If there are people in the Labour party or in the trade union movement for example, who think that this is an undervaluation, I am amazed that they did not come forward and make an offer for it themselves.
Dr. Jeremy Bray: Can the Secretary of State say what undertaking Thorn EMI has given to INMOS of its total independence of management? Can he confirm that under the take-over rules Thorn EMI is bound to offer the founder and other employee shareholders the same price that it has paid to BTG? Does he think it any wiser to ease the incentive on management by taking out its equity interest than it is in the interests of the British taxpayer to sell out prematurely?
Mr. Tebbit: The best answer that I can give to the hon. Gentleman's question is that the INMOS board on which Mr. Barron sits has recommended the offer to BTG. Thorn EMI has expressed the wish to retain the company's existing skills, and I hope that, having firmly established

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the company's future, there will be every opportunity of securing those. Of the three founder members, only Mr. Barron and Dr. Petritz remain with the company, and their precise position will be decided in discussion with Thorn EMI. Both, of course, are members of the INMOS board which supports the present deal. I think therefore it would be reasonable for the hon. Gentleman to assume that the founder members support the deal and are happy with the arrangements.
Sir John Farr: I congratulate my hon. Friend on concluding this deal with the British company. To some Conservative Members, however, what is more important than the cash gained is the fact that the company will remain under British control.
In view of the fact that in this country we are so low in the world production league of chips as to be almost invisible, to see INMOS go overseas at a later date would be fatal. Can my right hon. Friend tell the House—he has already been asked this by the right hon. Member for Bethnal Green and Stepney (Mr. Shore)—what further control there is on the company? Have we erected any barricade or barrier to prevent total or part disposition of this very important state shareholding to an overseas buyer at a future date?
Mr. Tebbit: I am grateful for my hon. Friend's remarks. I do not think that he should underestimate the extent of the abilities of this country in the semi-conductor field. There are 10 factories already producing semi-conductors in the United Kingdom. [Interruption.] My right hon. Friend the Minister for Information Technology has just reminded me. If the hon. Member for Bolsover (Mr. Skinner) would listen to my right hon. Friend, he would learn a great deal more than he does by constantly yacking with his ears shut and his mouth open.
The prime logic of the deal has been the industrial logic, and making sure that there is a good future for INMOS. The best security against any future disposals of INMOS is the success of the company. If the company is successful, Thorn EMI will not wish to dispose of it.
Mr. Tam Dalyell: Does the Secretary of State recollect that when I participated in the INMOS debate I said that I had spent several hours at INMOS in Newport as its guest in December? Therefore, may I ask him specifically two questions? When he talks about developing INMOS, what does that mean in terms of research and development? Does it mean expansion at Bristol, expansion elsewhere or expansion at a Welsh university? What precisely does it mean?
Secondly, may I ask the Secretary of State this as gently as possible? He told my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) that his speech in the INMOS debate had prejudiced the deal. I listened carefully to my right hon. Friend, with whom I have not always agreed, and he made a most powerful, serious speech. What hard evidence is there that my right hon. Friend prejudiced this deal?
Mr. Tebbit: First, the company will be developed in a manner which is satisfactory to the board of the company. [AN HON. MEMBER: "That means nothing."] The hon. Gentleman says it means nothing. I am telling him that the present board of INMOS is satisfied that the arrangement provides adequately for the future development of the company, and I agree with the board of the company.
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Secondly, with regard to the speech of the right hon. Member for Bethnal Green and Stepney (Mr. Shore), I am surprised that the hon. Member for Linlithgow (Mr. Dalyell) does not understand that, when difficult commercial negotiations are going on that type of speech is the least helpful thing that can happen, when I was being asked by the right hon. Gentleman for pledges to exclude many of the potential would-be purchasers. It was hardly the way to secure the best deal for the British Government.
Mr. Richard Page: Will my right hon. Friend accept that Conservative Members greet the sale with relief as well as congratulations, as it is one of the few NEB companies which has given a modest return on the money invested and compares favourably with the very long list of liquidations and bankruptcies which litter the way among NEB companies which have been promoted by the Labour party? Will my right hon. Friend assure the House that, if an opportunity arises to sell any of the other companies in the British Technology Group, where suitable, he will immediately do so?
Mr. Tebbit: I thank my hon. Friend and I give him the assurance that we shall continue to look for good homes for other companies in the NEB-BTG portfolio.
Mr. Ian Wrigglesworth: Is the Secretary of State aware that the success of INMOS is very welcome news and the retention of its ownership in this country is a great relief to all those who feared that it might go abroad?
Can the Secretary of State clarify two points? First, how does he justify the claim that this offer is a fair return on the Government's investment? Did the Government consider other methods of selling the shares, such as a tender offer or a public flotation of the shares, in order to allow the market to judge the value of the company? Secondly, can he say a little more about the position of the founder members, who are are so crucial to INMOS? Am I right in thinking that the shares will now be valued at some £5 million per founder member? If that is the case, might there not be a temptation for them to leave the company, thereby doing it considerable damage?
Mr. Tebbit: First, of course we considered many other possible routes for the disposal of this company. The flotation possibilities were not particularly attractive. They were a little way down the road and somewhat speculative. To have got the best price, the majority of the shares would probably have been sold in the United States. Even so, we did not see the opportunity to sell a controlling interest in the company—certainly not in the immediate future—and, if that route had been taken, the Government might well have lost control of it at some time or another, while still being responsible for a good deal of its debt. It was therefore not an attractive route.
I think that I had better leave the founder members to speak for themselves. I understand that Mr. Barron, in particular, has been making statements to the press today through the board of INMOS, and has indicated his satisfaction with the deal. I am sure that he will stay with the company.
Mr. Jonathan Sayeed: During the debate on INMOS, I asked for assurances from my right hon. Friend that the company would not be sold at a bucket-shop price, and that its technology and expertise

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would not be dispensable. I am very grateful for his statement. The company was sold at a sensible price to a British firm, and the statement will be most welcome in Bristol, where part of INMOS is based.
Mr. Tebbit: I thank my hon. Friend for what he has said, and emphasise again that I consider the deal to be a good one, particularly on industrial grounds. It was those grounds which had priority, and not the question of exactly how much we could squeeze out at the end of the day. [Interruption.] Yes, indeed. We have made it plain many times in the House that our priorities in the privatisation programme relate to the long-term economic effects, as opposed to the immediate cash effects.
Mr. Roy Hughes: Does the Secretary of State appreciate that there is bound to be concern about the rather cynical approach that he has adopted, both in the debate a week or so ago and in his statement this afternoon? Does he further appreciate, bearing in mind the huge public investment in the firm, that there is also bound to be concern about its future development—plans are already under way—and about employment prospects in Newport? Can the right hon. Gentleman say anything concrete which may at least alleviate the present concern of employees in Newport?
Mr. Tebbit: Let me tell the hon. Gentleman—in case he missed it on the first, second and third occasions —that the deal has the support of the board of INMOS, whose members regard Thorn EMI as an ideal partner. I suspect that the hon. Gentleman's anxiety arises from his frustration at seeing a successful deal.
Mr. Hugh Dykes: Does not my right hon. Friend agree that the Government should be congratulated on this excellent deal? Does he not think that, after the damage done by the Opposition in the original discussions, it is appalling for the right hon. Member for Bethnal Green and Stepney (Mr. Shore) to cast aspersions on the high-technology abilities of Thorn EMI, one of the most successful groups in the country?
Mr. Tebbit: I agree with my hon. Friend. Not content with having prejudiced the deal before, perhaps in ignorance, the right hon. Gentleman has tried today to prejudice it in full knowledge by attacking the competence of Thorn EMI. I only wish that his Government had shown half its competence.
Mr. Tim Wood: Despite the ill-judged and carping criticisms of Opposition Members, I assure you, Mr. Speaker, that Conservative Members warmly welcome the statement, and are delighted that Thorn EMI is making this investment. I am sure that the development of INMOS will be much more successful as a result. I wonder whether anything can yet be said about the future of the various INMOS development and manufacturing centres.
Mr. Tebbit: I do not think that it would be right for me to add anything to what was said by the board. The company's future will depend on its success in developing its products, and I believe that the chances of such success have been increased by the deal announced today.
Mr. Brynmor John: The right hon. Gentleman praises the workers, but does he accept that they are justifiably concerned about the level of employment in, for example, south Wales? Does he expect employment to remain static or to increase, or will it be a matter of the board of INMOS judging that employment can go hang so far as profits are concerned?
Mr. Tebbit: Unless there are profits, there will not be employment. The future and the expansion or otherwise of the work force depend upon the success of the company, and not upon windy rhetoric in the House. I believe very strongly, as does the board of the company, that the prospects of success have been enhanced.
Mr. Ian Lloyd: We all wish the new arrangements every success, but the Secretary of State will be as aware as I am— if not more so—of the quite exceptional conditions that obtain in the semi-conductor industry. He will know that our largest company is 30th in the world league, and that in Japan and the United States exceptional sums of Government money have been spent,—and are continuing to be spent—in support of the private sector. What is the basis of his confidence that Thorn EMI INMOS will be able to climb up the league from 30th position without further public support?
Mr. Tebbit: It is a confidence that I share with the management of the companies concerned.
Mr. Shore: The Secretary of State prefers to accuse and abuse rather than answering questions; we are all familiar with his technique by now. The more uneasy he is about answering the fundamental question, the more abusive he is. We have heard the way in which he has replied to his hon. Friend the Member for Havant (Mr. Lloyd), for example. He knows perfectly well that he came perilously near to betraying the national interest by agreeing to sell the firm to an American company. He considered the proposition before him very seriously; I know it, he knows it, and that is why he is reacting so strongly.
Let me repeat the question that the right hon. Gentleman did not answer. In virtually all their privatisation deals the Government have insisted on retaining a golden share—or at least some control mechanism—because the national interest has been involved. Enterprise Oil is the most recent example, but it is by no means the only one. Why are they now denying themselves the possibility of a say in the future of this semi-conductor firm and in the same semi-conductor industry? That industry will be crucial, involving as it does the transputer development which—as the right hon. Gentleman ought to know—is probably of world-shaking importance.
Mr. Tebbit: I must congratulate the right hon. Gentleman on his sheer courage in putting his head above the parapet to get it thumped once again. [Interruption.] Perhaps the hon. Member for Wigan (Mr. Stott) would cease interrupting from a sedentary position for once. I did not seek to take a golden share because the British Government have no wish to have such a share in Thorn EMI Ltd., and, quite clearly, we could not have continued to seek to control a company which we had sold to another company.

Bus Industry
The Secretary of State for Transport (Mr. Nicholas Ridley): With permission, Mr. Speaker, I should like to make a statment about the bus industry.
The Government have now completed the review of the bus industry to which I informed the House on February 14. Bus passengers and taxpayers are not being well served. Over 10 years, the cost of local bus services have risen by up to 30 per cent. in real terms. Fares have gone up by over 30 per cent. in real terms. Subsidies have risen while services and usage have declined. Rural bus services are causing serious concern. The discipline of competition in the market place can bring great increases in efficiency, and cuts in fares. This has been shown by the deregulation of coach services in 1980. If new ideas and new services are allowed to flourish, then the total public transport market can expand, with advantage to operators, workers, and, above all, passengers. It is the users of buses who should come first, and they are the less well-off members of our society. The Government's proposals are set out in a White Paper published today in the names of myself and my right hon. Friends the Secretaries of State for Scotland and for Wales. Copies are now available in the Vote Office.
We propose to introduce legislation at the earliest opportunity to remove restrictions on competition in local bus services. We shall abolish road service licensing throughout Great Britain, except for the time being in London where new arrangements have just been introduced. We attach the highest priority to maintaining standards of safety, and quality supervision of operators will continue to be tightened, with more resources devoted to the purpose.
Local authorities will be responsible for providing subsidy to socially necessary services which are not otherwise viable in a free system. They will let contracts on the basis of competitive tenders. Support for these services will thus be made specific and transparent. Concessionary fare schemes for the elderly and disabled will continue, but must be open to all operators on an equitable basis of costing.
These policies will benefit rural communities, for whom public transport links are vital. Rural passengers will benefit from competition, more flexibility and new ideas. In addition, we shall take two special measures to aid rural transport. The first is a transitional grant, paid to operators of rural services. This will last four years, reducing in equal steps from a starting level of up to £20 million. The second is a special fund of up to £1 million a year to finance innovation in rural transport. I am glad to say that this will be administered by the Development Commission in England. Similar arrangements will be made in Wales and Scotland. We shall explore ways for making wider use of services run by education, health and social service authorities and the Post Office, and simplify the law on voluntary operation of minibuses.
The structure of the bus industry must be changed to remove the dominance of very large public sector operators and to allow competitors an opportunity to enter the market. Passenger transport executives will be required to break down their operations into smaller units as separate companies. The National Bus Company will be reorganised into smaller free-standing parts, which will be transferred to the private sector. District councils who own
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bus operations will be required to put them at arm's length into companies, which they will still own, but to which subsidy will be provided only through tenders, and made transparent. Agreements between bus operators will be made subject to the Restrictive Trade Practices Act 1976. We will widen the opportunities for taxis and licensed hire cars by introducing new rules enabling them to carry several passengers at separate fares in certain circumstances. We shall issue consultation papers on the detailed implementation of a number of these proposals.
These changes reverse a policy of protection which has lasted for over 50 years. This straitjacket is now producing high-cost and inadequate services. The Government's proposals will give the opportunity for the many able managers in the bus industry and for others with enterprise and initiative to offer better services to the public at less cost.
Mr. John Prescott: I wish to protest at the outset at what I know is the normal practice of providing a copy of this White Paper of 80 pages 20 hours after the press receive it.
The White Paper means nothing less than a return to a Beeching policy on the buses. The Tories chopped the railways in the 1960s and they are taking a Beeching axe to the buses in the 1980s. The Government are set on a course of destroying our nationwide regulated bus network. They are turning back to the 1920s with a free-for-all on the profitable routes, to the detriment of those who do not live in the high streets.
Where is the evidence of the need for such a radical change in the country's road transport structure? All the professional reports, including those commissioned by the Minister's own Department, have questioned his assumption that a reduction in public subsidies will lead to a better, cheaper transport system.
Is the Minister aware that the whole bus industry and the professional experts are opposed to the policy that he is advocating today? Does anyone, other than the Secretary of State, support these damaging and unjustified proposals? Is he also aware that, in his much-vaunted trial area experiments, cowboy operators with unsafe coaches have raced along the high streets of Hereford, touting for business and forcing the commissioners to act in the cause of public safety against one of them, while rural services have been reduced?
Does the Minister recall that the last Tory transport experiment, supposedly encouraging competition, saw British Coachways, which was launched amid much flag-waving by his predecessor, collapse within 12 months, leaving the public sector to pick up the pieces? That record compares most unfavourably with the proven success of Labour transport policies in the London and metropolitan council areas, which have produced more services with lower fares and more people travelling. That success is the real motivation for this vindictive measure.
Why does the Minister in the White Paper applaud the success of the National Bus Company and then reward it by proposing its privatisation and break-up into smaller units? What is to be the size of the proposed units, and what will happen to the units that remain unsold because they are unprofitable? Will he take note of the report, published this week, by the stockbrokers Grieveson Grant—not known as a Socialist group—stating that the break-up of the National Bus Company was the option likely to produce the least return for the Government? Will

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he pay attention to these warnings from his friends in the City, or does he intend to go down the Enterprise Oil road taken by his right hon. Friend the Secretary of State for Energy?
Will the new form of municipal and passenger transport authority bus operations receive revenue support? What conditions will he impose? How will he deal with their extra cost arising from training, administration and employee pension schemes, which are not carried by private competitors, giving them an unfair advantage in competing for contracts?
What threats are posed to the traditional cab trade especially in London by the Minister's proposals? Will he confirm that the fuel tax rebates will be available to all operators? What conditions, if any, does he have in mind to impose on revenue financial support? Why is he not guaranteeing in statute the provision of concessionary fare schemes for pensioners and disabled people, as he has in London? What estimate has he for savings at the expense of those concessionary schemes?
Will the Minister confirm that the major slump in the provision of services will be in the rural areas? Will he accept that the White Paper's reiteration of experiments such as post buses cannot provide an adequate alternative service? What is his estimate of the difference between the £20 million grant that he proposes for subsidising unprofitable rural services, and the present level of public support for such services in rural areas?
I assume that the Secretary of State will guarantee a debate before the proposals are put into legislation. What period does he allow for such debate before legislation? Will it be only the summer months before the Tory party conference, when he will go, with all the rhetoric at his command, to announce a new policy for the bus industry?
The result of this policy will be that the young, the old, the pensioners and the women who depend on public transport will end by paying higher fares for diminished services, with the burden placed yet again on those least able to bear it.
Mr. Ridley: The hon. Gentleman reacted with typical exaggerated bellicosity and with a list of questions that would cause the House to sit almost as long as it did yesterday if I tried to answer them all. He claims that the White Paper was leaked early—I have not heard that before—but he certainly has not taken the opportunity of reading it because he would have found the answers to most of his questions there. The policy is intended to expand public transport by making it cheaper, through competition in the profitable areas.
Another point that the hon. Gentleman has apparently not picked up is that, particularly in rural areas, where public transport may not be viable, there are to be refined arrangements for ensuring that subsidy continues and is directed at obtaining value for money by bringing the transport to the passengers and taking them where they want to go, rather then throwing money at the problem, as no doubt he would prefer. We have designed the proposals for the benefit not of the bus industry but of bus travellers; it is they who have suffered.
The experiment in Hereford and Worcester has been highly beneficial to passengers. There has been a 38 per cent. reduction in subsidy from the county council and a
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cut of up to 40 per cent. in fares, with the same network, or a better one in some areas. I have a message from the West Midlands traffic commission chairman, which says:
"No apparent difference discerned since Trial Area introduced in July 1981 … No extra technical problems, checks by Vehicle Examiners running as per normal, no extra disciplinary cases heard."
I find it extraordinary that the hon. Gentleman should complain about the performance of stage coaches under deregulation. Those services have been smartened up, improved, made cheaper and more numerous, and have carried an immensely larger number of people in great comfort since the dead hand of regulation was removed from them.
I turn to the report that the hon. Gentleman has had from a stockbroker; it is extraordinary how the Labour party has suddenly tried to make allies in the City. Even if competition in the bus industry and privatising large parts of it result in less take for the Exchequer, provided that the result is better rural and urban transport I believe that it is a very good deal. That is what the White Paper is about. We are seeking fair competition; we shall come to the details of that later. There is no threat to the cab trade in London; indeed, there will be extra opportunities through the introduction of shared taxi facilities, which was requested. The fuel duty rebate will remain as at present and concessionary fare schemes will continue to be the responsibility of local authorities, as they have been. Indeed, the Labour party has always said that that should be so. Finally, the policy will be of benefit to bus travellers, especially in the rural areas, and to those who have had to pay the enormous and mounting subsidies, which are quite unjustified, for both rural and urban areas.
Several Hon. Members rose——
Mr. Speaker: Order. I repeat that there is an important debate to follow this statement. However, I fully recognise the importance of the subject to hon. Gentlemen. Therefore I propose to allow questions on this subject until 5.30. If the hon. Gentlemen involved put their questions briefly, I hope to be able to call them all.
Mr. Terence Higgins: May I enthusiastically congratulate my right hon. Friend on his proposal to implement the ideas that were set out in the Conservative election manifesto? I reject the points made in the filibuster from the Opposition Front Bench. Is not the increase in competition likely both to improve consumer choice and reduce prices to consumers, and is not that to be welcomed? Is my right hon. Friend aware of the great sense of injustice felt by some of those who suffer on account of the arrangements for concessionary fares because of the vast disparity between small areas, because they are dealt with on a local basis and may cover a single route? Will he consider carefully whether this might not be better done on a county-wide basis so that there will not be such great disparities between small areas?
Mr. Ridley: I am grateful to my right hon. Friend for his clearly sensible and helpful reaction to an important new transport policy. During the past 10 years, the costs of big bus operators, and fares, have increased by about 30 per cent. in real terms. That shows the enormous scope for savings to be made by having more efficient units in the industry.
On my right hon. Friend's second point, I recognise the difficulties but I believe that the question whether county

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or district councils should arrange concessionary fares is primarily one for local government. I am sure that that is something to which the House will wish to return when it considers the legislation.
Mr. David Penhaligon: Is the Minister aware that many of us are worried not so much about choice in rural areas, as about maintaining a bus service? Who will decide finally what is a socially necessary service? Will it be the Minister, the county authority or some Whitehall bureaucrat? The theory is that if it is the Minister, the bus service as we know it in rural parts of the country will, in effect, disappear.
Where will the £20 million come from? Is it real new money, or is it taken from the transport grant, to be allocated again afterwards? Is the Minister's attitude to public transport provision such that the savings that he may obtain through an increase in efficiency will be used to increase the scale of public transport in Britain, or does he hope that the saving will reduce the net Exchequer contribution to maintaining a fabric of service in rural and urban areas?
Mr. Ridley: I believe that the policy will bring about the maintenance not only of the hon. Gentleman's bus services but, in some cases, even some choice. It will operate in the following way. Where a service does not operate in the free market because no operator considers that running a service is viable, the county or district council may call for tenders to run a specified route or small network and will be able to accept the lowest tender so as to award a contract to that operator and subsidise him for a specified number of years. The £20 million help for rural areas during the transition to the new regime will be paid to the operators, so is new money in the sense in which the hon. Gentleman meant it. The savings will be obtained not only from an increase in the internal efficiency of bus operators but by ensuring that the transport in all parts of the country is just right to meet the needs of each area but is not excessive, which, as we all know, happens in some areas.
Mr. Colin Shepherd: I wish to set the record straight as regards the negative comments by the hon. Member for Kingston upon Hull, East (Mr. Prescott). The citizens of Hereford relish the transport experiments because buses arrive when they want them and go where they want them to go, and at fares that are less than half what they paid previously. Furthermore, the bus operators are nice to them. They do not wish to see any detraction from the new freedom and the service that have been achieved since the experiment began. Will my right hon. Friend also accept that people in the residential areas of Hereford will feel reassured by the lessons that have been drawn from the trial experiment when too many of the buses have jockeyed for position at the same time? There will be a welcome for the determined approach that he has set out clearly in the White Paper to bring that problem under control and thereby get the best of both worlds. May I encourage my right hon. Friend in this endeavour?
Mr. Ridley: I congratulate the county council of Hereford and Worcester on having blazed the trail to show just what this policy can do. I advise the council that in reward it will have little if any further changes or adjustments to make because of the great experience it has found in being able to operate a sensible system in this
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way. I add that we have strongly noted the point made by my hon. Friend about behavioural control on the road. In the White Paper he will find that there are proposals to give power to the new licensing authorities to take away an operator's licence if his drivers behave in an anti-social manner on the roads.
Mr. Martin Flannery: On a point of order, Mr. Speaker.
Mr. Speaker: I shall take the point of order afterwards.
Mr. Flannery: May I raise the point of order now, Mr. Speaker?
Mr. Speaker: Order. I am saying that I will take it afterwards and that it will still be relevant to this subject.
Mr. David Marshall: The Secretary of State has announced the break-up of the National Bus Company. Will he tell us whether he intends to do the same with the Scottish Bus Group at some future date? What is his estimate of the effects of the White Paper on services operated by Strathclyde PTE? Does he not realise that the proposals in the White Paper will be to the long-term detriment of the travelling public in Strathclyde and throughout Britain?
Mr. Ridley: The hon. Gentleman will know that there is a special chapter on Scotland in the White Paper. My hon. Friend the Parliamentary Under-Secretary is present and will be giving detailed answers to questions about Scotland which any hon. Member may ask. [HON. MEMBERS: "When?"] In answer to the hon. Gentleman's question, there is no intention of making changes to the Scottish Bus Group.
Mr. Robert Adley: Is my right hon. Friend aware that the account of the bus services described by the official spokesman for the Opposition as some sort of current panacea, is not one that would be recognised by my constituents? On the whole, sensible people agree that changes and innovation are badly needed in the rules and regulations for buses, which have been unchanged for so long. Nevertheless, does not my right hon. Friend agree that there is no magic panacea for public transport and will he promise to keep an open mind on the way in which the experiments are working? Finally, will he at least consider an increase of the £1 million which he mentioned as an innovation fund that presumably has to cover England, Scotland and Wales?
Mr. Ridley: The White Paper contains a large number of proposals to consult on all sorts of specific, transitional and technical issues arising out of the policy. We shall pursue those consultations fully and vigorously.
With regard to my hon. Friend's final point about the innovation grant, the Development Commission has kindly undertaken to use that £1 million in helping new operators to get into the business. It reckons that it is about the right amount that is necessary, and probably the most that it would be able to handle.
Mr. Peter Hardy: The Secretary of State has given the House a great deal to think about. Obviously, a number of the contradictions in his speech will have to be considered later. However, as he confessed a commitment to lower fares, better services and the principle of public subsidy, may I, as a resident in South Yorkshire, ask him when we may expect those remarkable advantages to come to us?
Mr. Ridley: As the hon. Gentleman speaks for a south Yorkshire constituency, I advise him that there are two ways in which to lower fares. One is the way in which South Yorkshire county council has lowered them—by massive subsidies from the ratepayers. The other is the way in which I have lowered them on the air routes between London and Amsterdam—by introducing competition.
Mr. Conal Gregory: I am sure that the House will welcome the statement made by my right hon. Friend in terms of de-regulation. He has rightly had his attention drawn to the Hereford and Worcester where the services have been increased and the fares reduced by up to 40 per cent. I also commend the ESCORT scheme for public rural services in East Sussex and hope that that is extended as a result of the enterprise about which my right hon. Friend spoke today. My electors are dissatisfied that the national subsidy of £923 million is spent recklessly, as my right hon. Friend said, in places such as the people's republic of south Yorkshire, and that in west Yorkshire the citizens of York must contribute £4·7 million.
Mr. Ridley: I am grateful to my hon. Friend. There are lessons to be learnt from the ESCORT project. We shall try to learn them and incorporate them.
I am also grateful to my hon. Friend for pointing out that if the cost of concessionary fares is included, the bus industry probably costs taxpayers and ratepayers slightly more than the railway industry, whereas a few years ago it was costing them hardly anything. The Government had to curtail the rapid increase in the cost to taxpayers and ratepayers if there was ever to be sense and fair competition in transport.
Mr. Nigel Spearing: The Secretary of State reminded the House that this legislation will mark the end of 50 years of regulation. Will he confirm that that regulation was introduced by a Conservative Government to improve facilities for travellers at a time of rising and buoyant demand? As his new proposals are also supposed to help the travelling public, will he assure the House that if the results do not come up to his expectations, the legislation will permit re-introduction of regulation?
Mr. Ridley: The connection is even closer because when the 1930 legislation, bringing in regulation, was introduced I believe that my uncle, Euan Wallace, was Minister of Transport.
Mr. John Home Robertson: Bring him back.
Mr. Ridley: I am equally sure that if we brought him back he would be one of the most enthusiastic supporters of the legislation that I propose.
Mr. John Cartwright: With the spectre of rate capping hanging over local authorities, how does the Secretary of State expect them to provide subsidies for socially necessary bus services? If authorities are unable to pick up that financial burden, what will happen to those essential bus services?
Mr. Ridley: At the moment local authorities provide large sums of money which are much smaller per head of the population in the shire counties than in the metropolitan areas. They will still have their own resources to finance socially desirable services. In rural areas those resources will increase with the new grant that I announced today.
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If we are to reduce overspending in metropolitan areas—that is necessary if we are to reduce the appalling burden of rates in those areas—it should be welcomed as helpful that we are showing local authorities a way of obtaining better value for money—more transport for the same money— and saving money that is being wasted by using the forces of competition and private enterprise to provide a service cheaply and properly.
Mr. John Maples: May I tell my right hon. Friend how welcome his statement is and how welcome it will prove to be to taxpayers and passengers. Does he not agree that this is the right way to set about reducing the massive public subsidies paid for bus services? However, perhaps he can find some words of condolence for the Opposition for having slaughtered yet another of their sacred cows.
Mr. Ridley: I am sorry to have to agree with my hon. Friend that this is probably one of the last areas where a centrally planned bureaucratic service has been allowed to survive. It is the last remnant of Socialist ideology. Perhaps that is why the hon. Member for Kingston upon Hull, East (Mr. Prescott) reacted with such over-exuberance.
Mr. Roland Boyes: I am amazed and staggered that the Secretary of State is not aware of the high international reputation of the integrated passenger transport system in Tyne and Wear. Has the Secretary of State had an opportunity to study the report of MCP Limited of Liverpool, which found that 282 million passenger journeys were made in 1973. Because of the falling population, the rise in unemployment and the greater number of motor cars it was forecast that the number of passenger rides would fall to 250 million, whereas they rose in 1983 to 311 million passenger rides. Is it not a scandal that the right hon. Gentleman allows political vindictiveness to interfere with such a successful system as that of Tyne and Wear? Is that not outrageous and insulting to the passengers and population of that area who not only need but care for what the councillors of that area do not want changed.
Mr. Ridley: I do not quite see the reason for the hon. Gentleman's alarm. If, when and where there is an efficient and cheap system of public transport it can perfectly well thrive and improve in the bracing conditions that will exist in future. Moreover, I believe that the policy that I am announcing will have that effect and will make much more possible cheap and socially desirable public transport throughout the whole country. If the hon. Gentleman feels that any of the areas that he mentioned will not be able to survive competition from the private sector, he has a problem and it is high time that the problem was addressed by those areas.
Mr. Eric Cockeram: Does my right hon. Friend recall that when his predecessor announced the policy of deregulation and competition on inter-city coaches, the Jeremiahs on the Labour Benches predicted doom and gloom, whereas the travelling public increased their use of these facilities, with better service and lower fares, by millions of journeys per year. Will he therefore, as his new policy unfolds, take note of the views of the travelling public rather than those of Labour Members who are more concerned with preserving a monopoly and the position of the transport industry unions?
Mr. Ridley: My hon. Friend is right about the dramatic and startling effects on long distance coaches of deregulation. He is equally right in pointing to the constant weakness which the Opposition reveal. They are interested in the welfare not of the passengers but of the transport organisations.
Mr. Ken Eastham: May I assure the Minister that his statement today will create great anxieties, especially among old-age pensioners who are so dependent on public transport? Is it not a fact that this statement is concerned only with profits? May I assure the Minister when he makes observations about private companies, that they run clapped-out vehicles that are not worthy of public transport. Finally, if as a result of this Government's policy, public transport completely collapses, will the Minister provide everyone with pogo sticks?
Mr. Ridley: One does not have to go more than 100 yards from the Palace to see a large number of private coaches used for stage carriage, tourism and excursions from all countries of Europe, but mainly from this country. They are of a much higher standard than those run in many other cities by public enterprises. I make the point very forcefully that it is the private sector and deregulation that has led the trail to improved standards of coaches. I do not know why the hon. Gentleman thinks that that will not happen as a result of this policy.
Mr. Gerald Malone: Is my hon. Friend aware that the deregulation of coach services in Scotland has led to increased services between cities in vehicles of incomparable quality, far beyond the standard of those offered by public authorities? Does he agree that there is delight on the Conservative Benches at the possibility of those facilities being extended to more cities in Scotland and further delight that his policies will result in some truth being restored to the adage, "There will be another one along in a minute?"
Mr. Ridley: I am grateful to my hon. Friend and I believe that he is right. It is the Conservative party which has the perception to see that services and quality can be improved and costs reduced all at the same time, as we have shown with long distance coaches.
Dr. John Marek: The White Paper entitled "Buses" presented by the right hon. Gentleman states on page 4, paragraph 2.3:
"supervision of the quality and safety standards of public service vehicles and operators will be maintained and tightened."
Will the Minister give the House an assurance that the average age of the current operating stage carriage vehicle fleet will not get older as a result of his proposals? If he cannot give that assurance, has his Department made an estimate of how much older the fleet will become?
Mr. Ridley: We wish to enhance the control of safety standards. We intend to amalgamate the traffic commissioners and the licensing authorities, which will become regional authorities. That will ensure that inspection of both heavy goods and public service vehicles is tightened up and improved and, where necessary, staffs will be increased. I do not know what the average age of vehicles will be, but we wish the average condition of vehicles to be improved, whatever their age.
Mr. Peter Fry: Clearly the results of the measures announced this afternoon will take some
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time. I hope that, unlike most of my right hon. Friend's immediate predecessors, he will be in office long enough to see the results.
There is much talk about the subsidy of an individual service. I remind my right hon. Friend that there is considerable cross-subsidy within an individual service, especially late-night and weekend operations. What steps will be taken to ensure that operators do not take over a service running a route at highly profitable parts of the day but denying people in urban areas late-night and weekend bus services?
Mr. Ridley: I am grateful to my hon. Friend, especially for his opening remarks which I am sure were addressed to my right hon. Friend the Prime Minister.
Cross-subsidy takes place within a service or mini network, much of which it is in the interests of the operator to continue because it provides goodwill and a complete service. Operators wishing to run less profitable or more profitable routes or buses will be free to do so. If a late-night or weekend service is not in their interests, there is nothing to stop a local authority asking for tenders to run a socially desirable service.
If it is a socially desirable service, would it not be more sensible that its cost should fall on taxpayers and ratepayers, rather than on passengers who may be less well off on the more populous routes?
Mr. Bill Michie: I am a little concerned about what has just been said. I understand that subsidies will be available to the private sector and, if no profit can be made, the local authority will carry the can.
I refer to the Minister's comments about improved prices—I do not know whether they will be up or down—and the betterment of services. Is he saying that he will match the position in south Yorkshire, with its bargain fares? Will he match or improve the service routes within Sheffield and south Yorkshire county council area? Will he increase passenger mileage, cost-effectiveness or the safety record of public transport? Will the cost per passenger mile be decreased? Will he defy about 500,000 plus people who signed a petition in south Yorkshire?
Mr. Ridley: Fares should find their true level by the process of fair competition between different operators who all need to make a profit to stay in business. It is easy to bring fares down by milking ratepayers and taxpayers, but, as I said to the hon. Member for Kingston upon Hull, East (Mr. Prescott), the Government do not believe that that is the right way. The right way has been shown by halving the cost of air fares between London and Amsterdam simply by introducing competition.
Mr. David Harris: Is my right hon. Friend aware that his statement will be welcomed not only by Conservative Members who represent rural areas and who believe that the present system has led to a fossilised and over-subsidised service in many areas, but by many small enterprising operators who have been prevented from giving the public the services that they want?
Mr. Ridley: I entirely agree with my hon. Friend. It is an odd concept that to improve bus services one should forbid small people from coming into the market to provide them. That prohibition should have been removed years ago. Having visited two of the trial areas and heard what has happened, I believe that this new-found freedom

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will provide opportunities for many new companies, new small firms which may in due course grow into sizeable companies.
Mr. D. N. Campbell-Savours: Is the right hon. Gentleman aware that we had trial deregulation in the county of Cumbria, following the 1981 Act, when a cowboy operator— Yeowarts— set up and cost me rural routes in the Lake District part of my constituency? Does the right hon. Gentleman recall that on that occasion I was given clear undertakings on the Floor of the House during the Report stage of the 1981 Act that I would not lose those rural routes? I did. Does the right hon. Gentleman accept that everyone outside the House should remember that as the supreme example of the Government's deception in implementing this policy?
Mr. Ridley: I think that the hon. Gentleman will find that we have learnt the true lessons of the Yeowarts experience, and that next time those mistakes will not occur. I think he will find that his constituents get a better and a cheaper service. He would be wise to keep his criticisms until they are proved to be justified.
Mr. David Maclean: May I whole-heartedly congratulate my right hon. Friend on bringing forward these excellent proposals, particularly those which are designed to help transport in rural areas? Will he take special care on this occasion to ensure that county councils which are hostile to private enterprise are not allowed to sabotage these proposals?
Mr. Ridley: I am grateful to my hon. Friend. It shows that Cumbria speaks with two different voices, and I think that his is the right one. In the legislation we shall propose that county councils, in seeking tenders for socially desirable routes, will not be allowed to accept a tender higher than the lowest one, because we are determined that there shall be equal opportunities for all operators.
Mr. Alex Carlile: Will the Secretary of State for Wales or—if he needs a mouthpiece—his right hon. Friend assure us that the Government recognise the special problems that exist in Wales, and in rural Wales in particular? Will he tell us how much new money will be available for services in Wales? Will he assure us that there will be more bus services in rural Wales? Will he assure us that the network will be maintained so that there is easy and efficient transfer from routes owned by one operator to routes owned by another?
Mr. Ridley: My right hon. Friend the Secretary of State for Wales is here, and I am sure that the will wish me to assure the hon. and learned Gentleman that his concern will be taken into account as policies develop. My right hon. Friend is publishing a paper today that will apply to Wales. May I point out that the £20 million annual declining transitional grant will apply to Wales and Scotland as well as to England.
Mr. Peter Snape: Does the Secretary of State accept that his statement this afternoon that passenger transport executives will be required to break down their operations into smaller units is the opposite of the recommendations of the Monopolies and
1392
Mergers Commission inquiry into the West Midlands passenger transport executive—an inquiry set up by his own Department, which praised the operation and efficiency of that PTE? Is it not political vandalism for the right hon. Gentleman to wreck what is, in effect, a proven success?
Does the right hon. Gentleman accept that, as well as the Association of Metropolitan Authorities, the Conservative-controlled Association of County Councils has already expressed its opposition to the market place nonsense that he advocates this afternoon? Is he aware that the president of the ACC is Viscount Ridley, who, I understand, is not the right hon. Gentleman's uncle, but his brother? Will the right hon. Gentleman this weekend take advice from the obviously more sensible side of his family? What effects will the Government's proposals for PTEs have on section 20 grants which are at present paid to British Rail? The Opposition believe that the Nigerians tried to kidnap the wrong Minister of Transport.
Mr. Ridley: The hon. Gentleman put his finger on an important point. He said that, in a public monopoly, we need a monopolies commission to see whether it is efficient and effective or not, but, where there is fair competition, competition does the trick and we then do not need to use the Monopolies and Mergers Commission.
Section 20 grants will continue as at present. It is becoming a very curious world when the Labour party relies upon the House of Lords for so much of its advice.
Mr. Martin Flannery: On a point of order, Mr. Speaker. I wanted to raise a point of order. The fact that you did not take it rendered it irrelevant, as most points of order normally are.
Mr. John Home Robertson: On a point of order, Mr. Speaker. You will have heard the Minister of Transport, when he was replying to a question asked by my hon. Friend the Member for Glasgow, Shettleston (Mr. Marshall), imply that he did not understand the Scottish section of the statement. He said that Scottish Members of Parliament would have an opportunity to put questions to the Secretary of State for Scotland and he pointed out that the Parliamentary Under-Secretary for Scotland was sitting on the Government Front Bench. I wonder whether you have had any notice, Mr. Speaker, that Scottish Members of Parliament are to have such an opportunity in view of the clear statement made by the Secretary of State for Transport.
Mr. Speaker: I have not had any indication this day.
Mr. George Foulkes; Further to that point of order, Mr. Speaker. Surely you will agree that as the whole of chapter 7 applies to Scotland—it contains important matters such as that in paragraph 7·13, which foreshadows a major reduction in grant to the rail network in Strathclyde—hon. Members should be given an opportunity to put questions to the Secretary of State for Scotland. Can you arrange for such an opportunity, Mr. Speaker?
Mr. Speaker: Whether statements are made or not is not a matter for me. The hon. Gentleman knows that. The Scottish Office Minister who is present will have heard what has been said.

The Economy
5.37 pm
Mr. Roy Hattersley: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important——
Mr. John Prescott: The Prime Minister is leaving. She is running away—frit.
Mr. Speaker: Order. This is unseemly.
Mr. Hattersley: The Prime Minister has gone to look at the indicators. They are down again.
I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the deteriorating economic situation of this country."
That the subject is specific and important cannot be in doubt, as one fact demonstrates. During the last seven days the value of the pound has steadily depreciated, not only against the dollar, but at a faster speed against major European currencies. The immediate consequence of that depreciation has been an increase in domestic interest rates, which is bound to affect inflation, investments, profits and mortgage rates. The failure of the House to discuss these matters would be utterly incomprehensible to millions of families who are desperately worried about their jobs, mortgage repayments and standard of living.
The Third Reading of the Finance (No. 2) Bill—which follows—offers the House no real chance to discuss those matters because in such debates we are required to confine our comments to the contents of the Bill. The fast deteriorating economy requires a far wider forum of discussion than a Third Reading debate allows.
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Therefore, Mr. Speaker, I put a simple proposition to you and the House. The British economy is not yet in crisis, but it will be unless some policies are swiftly and radically changed. The House of Commons should have the opportunity to argue for those changes, and to argue for them now.
Mr. Speaker: The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the deteriorating economic situation"
—[Interruption.] Order. I am terribly sorry, but the right hon. Gentleman has provided me with a very bad photocopy, which I cannot read.
Mr. Hattersley: With the greatest respect, Mr. Speaker, I supplied you with a quite different copy from the one that you have. However, I am glad to repeat the Opposition's concern, about the deteriorating economic situation of this country, which should be debated here and now.
Mr. Speaker: I shall start again. The right hon. Member asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the deteriorating economic situation of this country."
I listened carefully to what the right hon. Gentleman said, but I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 10 and I cannot, therefore, submit his application to the House.

Orders of the Day

  Finance (No. 2) Bill
  Order for Third Reading read.
  5.42 pm
  The Chancellor of the Exchequer (Mr. Nigel Lawson): I beg to move, That the Bill be now read the Third time.
  This has been an important Finance Bill, so I do not complain about the record time devoted to it, especially in Committee upstairs. I pay tribute to my right hon. and learned Friend the Chief Secretary and the rest of the Treasury team—not forgetting the Lord Commissioner—who bore the heat and burden of the days and nights in Committee.
  The Bill gives effect to the major changes in taxation which I put before the House when I presented my Budget on 13 March. It was a tax reforming Budget, and this is a tax reforming Bill. However, the Budget was about more than tax. It was also a reaffirmation of the economic strategy which the Government have pursued, without wavering, since 1979. As such, it set the course for this Parliament—and beyond. The Government remain committed, now as then, to defeating inflation, to sound money and to encouraging enterprise, efficiency and competition. The medium-term financial strategy remains the key.
  With firm control of public spending and borrowing, and lower monetary growth, we can continue to secure lower inflation and sustain steady growth in output. On that basis, we can look forward to reductions in taxation over the remainder of this Parliament. We remain committed to bringing the burden of taxation back down to more acceptable levels to provide the incentives needed to promote and to sustain higher levels of growth and employment.
  The Budget deliberately took the long view, seeking to tackle some of the deep-seated distortions embedded in the tax system, to reform and reshape company taxation and, in general, to encourage enterprise and efficiency and a more productive Britain.
  The Budget was also a budget for jobs, not because it espoused long discredited notions of demand management—of course not — not because it pumped money into the economy, which would simply fuel inflation and imperil prospects for growth, but because it was directed at the essentials—at at lower inflation and making the economy work better. In this we have reversed the conventional post-war wisdom of the appropriate roles of macroeconomic and microeconomic policy.
  The view once was—and still is, I take it, on the Opposition Benches—that economic growth was to be secured by a macroeconomic policy, notably the fiscal stimulus provided by an inflated Budget deficit, while inflation was to be tackled through microeconomic policies, that is to say, by the panoply of controls, sanctions and subsidies that go to make up an incomes policy, which, as we know, the Leader and Deputy Leader of the Labour party still favour, even though many on their Benches do not.
  It is the settled conviction of Her Majesty's Government that the proper roles of macropolicy and of
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  micropolicy are precisely the opposite of those assigned to them by the post-war conventional wisdom. It is the defeat of inflation, and not the pursuit of growth and employment, which should be the objective of macroeconomic policy, and so it is today, and it is the creation of conditions conducive to growth and employment which should be the objective of microeconomic policy, and not the vain attempt to suppress price rises by controls and subsidies.
  Mr. Robert Sheldon: Before the right hon. Gentleman goes further in condemning macroeconomic policy, will he say something about the United States experience, which has been quite satisfactory in that respect?
  Mr. Lawson: The United States performance in macroeconomic policy has not been satisfactory. Look at the level of interest rates in the United States, which is one of the matters to which I shall turn in a moment. The United States has indeed been successful in creating jobs, in a way that western Europe has not been, but that is due to its microeconomic policy, to which I shall refer in a moment. Indeed, it is striking that many more jobs were created in the United States during the time when it had a very low Budget deficit than over the past few years when it had a high one.
  It is the insight to which I have just referred that has restored the central role of monetary policy, with declining monetary growth in harmony with prudent fiscal policy as the essential means of defeating inflation. This was a truth which I believe was dimly perceived by the right hon. Member for Leeds, East (Mr. Healey) and his fellow pink monetarists when he was Chancellor. Instead of microeconomic policy consisting of even more numerous forms of intervention and interference, its role is now properly seen as allowing markets to work better.
  As I said a moment ago to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), the United States has demonstrated over the past 10 years that relatively free markets, the spirit of enterprise, and workers who prefer to price themselves into jobs rather than out of them are a powerful engine of employment. It is a lesson which western Europe as whole has yet to learn, and it is that which provides the context for the Government's Budget strategy.
  Our tax policy can be simply stated. The tax system should have a broader base so that tax rates can be lower. High tax rates destroy incentives, and a broad base means fewer distortions. Resources can then be allocated by market forces instead of responding simply to the configuration of the tax system. In that spirit, the Budget raised personal allowances well ahead of inflation—by 12½ per cent.—and ended the pernicious 15 per cent. surcharge on those living on investment incomes.
  The combination of high rates and special reliefs to which I have alluded encouraged companies to concentrate their efforts on reducing their liability by tax planning, at the expense of pursuing genuinely profitable opportunities. This was particularly marked in investment decisions where the effects of excessively generous first-year allowances could have the absurd result of turning an investment with no pre-tax profit, or even a pre-tax loss, into one with a post-tax profit. As a result, while company investment in Britain is at a level comparable with our competitors, profitability on that investment has been very

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  much lower. By the time the changes in the Bill are completed in 1986, Britain will have the lowest rates of company tax of any country in western Europe and our capital allowances will be much the same as the average.
  The changes that we have made also reduce the bias in favour of capital investment and against jobs—a bias which is unacceptable at a time of high unemployment. To provide a further boost to jobs, we abolished the notorious tax on jobs—the national insurance surcharge—introduced by the Labour Government.
  I was greatly encouraged by the response to the tax reform proposals in the Budget. The general structure of these reforms has stood the test of detailed examination in the House of the Finance Bill, and it has not changed during the Bill's passage, but we thought it right to make detailed changes to take account of representations received, or points made in the debates, about the effect on particular industries.
  In considering such representations, it is always necessary to strike a careful balance. On the one hand, it may be right to allow for the special situation of some industries as they face the transition to the new system. On the other hand, it is essential not to jeopardise the general structure of the reforms, since one of the defects of our taxation system has been the proliferation of special exceptions and concessions over the years. One tends to lead to another. Therefore, careful judgment was involved. I am satisfied that the Bill has been improved as a result of the changes that we have made.
  I shall briefly describe to the House some of the main changes made during the passage of the Bill. First, with indirect taxes, I see the extension of the VAT base as an essential part of the Budget strategy and a necessary counterpart to the reduction in income tax. Moving from taxing earnings to taxing spending gives people more freedom to decide how to spend their money.
  We recognised the special difficulties which the standard rating of alterations would carry for listed buildings. An amendment was therefore moved, and carried, on Report for the zero rating of alterations to listed buildings where they required, and have received, listed building consent from the planning authority. I believe that this measure to protect our heritage was widely welcomed in the House and in the country.
  Secondly, we have made a number of changes in the new rules governing capital allowances. They are broadly designed to help with the transition to the new system and to allow greater flexibility in the use of allowances. These changes will therefore be beneficial to all industries, but perhaps I should, in particular, say a word about the effect on shipping. This industry operates in a specially demanding international environment. It will now enjoy free depreciation on new ships. This continues into the new regime the special treatment which it received under the old.
  Thirdly, I shall mention the concerns of the film industry which have received some publicity. This industry will, as a result of amendments to the Bill, be able to choose between getting capital allowances on the new basis or writing off costs on revenue account against income as it accrues. Investment in British film companies will henceforth be eligible for the business expansion scheme.
  Fourthly, and lastly, I shall mention a major change in the treatment of furnished holiday lettings. Again, as a result of amendments to the Bill, these lettings will, if they
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  satisfy certain conditions, receive tax treatment similar to that given for trades. We have also relaxed the conditions. These changes will bring considerable benefit to a large number of people and have been widely welcomed especially by right hon. and hon. Members representing holiday areas.
  I shall now move away from the detailed provisions of the Bill and say a word about the financial markets. This week's rise in interest rates has clearly been a disappointment, in particular to those with mortgages, but such short-term fluctuations cannot, alas, be avoided. However, there is no reason to expect that this will seriously damage the recovery.
  At a time when profitability is rising fast and company liquidity is buoyant, higher interest rates are much less difficult for companies to cope with. It is when profits are low that business is vulnerable. Fortunately, our policies and conduct of the economy over the past few years have raised company profits to a greatly improved level. Indeed, profitability rose by 40 per cent. between 1981 and 1983 and is still rising fast.
  We have experienced interest rate fluctuations before, and we have surmounted them. The last occasion on which base rates moved to 12 per cent. was in July 1982, and they fell back to 9 per cent. within four months. One thing of which we can be sure, of course, is that if the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), was in office and attempting to put his party's programme into effect, interest rates would be very much higher. They would not be around the same level as American rates, as they are today. They would not even be 4 per cent. higher than American rates, as they were at the end of the period of office of the last Labour Government, two and a half years after the right hon. Gentleman's conversion by the IMF, which would be 16 per cent. or more today. They would be well above that.
  Mr. Dennis Skinner: Is the Chancellor of the Exchequer aware that during this Government's period of office the differential between the average interest rate level and the average level of inflation is greater than at any time since the end of the war? That is why he has a problem and why the interest rates might easily go above the 17 per cent. which the Tory Government introduced in its first year of office after 1979.
  Mr. Lawson: The hon. Gentleman is saying that inflation under this Government is very much lower than it was under the Labour Government. That, of course, is true, and is one of the most important achievements of the present Government.
  The Government's approach to monetary policy is clearly set out in the medium-term financial strategy. The objective is to maintain monetary conditions which will ensure downward pressure on inflation. The assessment of monetary conditions gives equal weight to narrow and broad measures of money. It also takes account of other indicators, including the exchange rate.
  We have targets for money, but we do not set targets for the exchange rate or for interest rates. In today's financial markets, such targets are not practical options. There is a worldwide market in money and Governments can no longer set rates by fiat. It can be positively counterproductive to resist strong market pressures of the kind that we have seen in the last few days. That is not to say that there is no scope for Government action, but nowadays

  1399
  official influence on market rates is more indirect and less a matter of day-to-day movement than it was a decade ago. The result is that interest rates and the exchange rate are bound to fluctuate in the short term in response to market uncertainties and external pressures.
  The recent rise in base rates was in no way initiated by the Government, as I think the House is well aware. Rates rose in response to strong market pressures. An important factor has been the high level of American rates, which is widely expected by the market to persist for some time and possibly to increase further. Our rates had become substantially decoupled from American rates, with our rates some 2¾ per cent. lower, but that did not prove sustainable at a time when industrial unrest at home temporarily unsettled the markets.
  Dr. Jeremy Bray: With the inability to sustain the disjunction between American and British rates, and with the effect coming through the exchange rate, does the Chancellor of the Exchequer not believe that it would be helpful to make explicit what is plainly implicit in what he is doing—namely, a trade-weighted exchange rate index of around 76 as the effective target of his current monetary policy?
  Mr. Lawson: We do not have an exchange rate target. We never have one. Many hon. Members have at various times suggested that whatever happened to be the effective rate of the day was the target, but then it was changed. We have demonstrated by action that there is not an exchange rate target. We have monetary targets. Of course we have taken the exchange rate into account, but that is not the same as having an exchange rate target, which would be folly in the present circumstances.
  Mr. Stuart Bell: Are the Chancellor's targets for monetary growth being met?
  Mr. Lawson: Yes, we have two targets—for broad and for narrow monetary growth. The narrow target is bang in the middle of the range and the broad target is slightly above the range, although it has been within the range over the past 12 months as a whole. It is far less above the range now than it was at this time last year. The hon. Member for Middlesbrough (Mr. Bell) will recall, as I know he follows these matters, that by the end of the year the figure was within the range.
  The current bout of industrial unrest has undoubtedly affected the markets, but it is clear that, despite the attempts of a few determined people to whip up industrial unrest, over the past five years we have dramatically reduced our vulnerability to such disruption. Industrial relations and working practices in the private sector are greatly improved. That in part accounts for the marked increase in productivity. Areas of economic activity which were once under militant union monopoly have eased their way out from under the unions' tyranny.
  In the public sector, too, things have changed. The steelworkers have shown that good sense will prevail where union leaders have their members' interests at heart, and workers understand that strike action will succeed only in damaging their own industry, their own jobs and their own families. Many thousands of miners who are now at work have shown equal grasp of that essential truth. Mr. Scargill, having three times failed to win the approval of
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  his members in a ballot on strike action, has now recognised that a strike can be organised only in defiance of the miners' democratic rights and with the backing of kangaroo courts.
  In the last days of the Labour Government it was not just strike action that gave markets the jitters: it was as much the fear of what settlement might be made with the benefit of "Government intervention", as it was called—in other words beer and sandwiches at No. 10. How frequently that Government intervened to guarantee that fundamental problems remained entrenched and unresolved, storing up bitter consequences for the future. How often Labour stepped in to ensure that strikers' pay was increased by more than the country could afford, thus adding inexorably to the gathering momentum of unemployment. That is what happened. Even if, in some quarters, the reality has been slow to dawn, the truth is that all that has substantially changed.
  Meanwhile, I see nothing in the domestic monetary situation to justify a sustained period of interest rates at this level. The June money figures were disappointing—that is broad money, as I mentioned to the hon. Member for Middlesbrough. However, it is never wise to put much weight on one month's figures. MO, one of the two main measures of money, to which we give equal weight, is performing well, by any standards. The year-on-year growth in sterling M3 is less than 10 per cent. and growth over the current target period has so far been less than it was over the comparable period last year. On that occasion, we ended up well within the target range over the year as a whole.
  In spite of what has been suggested, the exchange rate is not giving a different message. There is no lack of confidence in sterling. The dollar has been exceptionally—indeed, many would say absurdly—strong against all leading currencies. The deutschmark-sterling rate is now around the same level as it was at the time of the Budget and more than 5 per cent. above the low point reached in March last year. Moreover, inflation is well under control, and Monday's producer price figures confirmed the indications from the latest CBI review.
  Mr. J. Enoch Powell: As the right hon. Gentleman has returned to the subject of the exchange rate and interest rates, will he account for the fact that the movement in the exchange rate is not an alternative—instead of additional—to the adjustment of domestic interest rates, or is it his view that the movement of the exchange rate has not fully offset the effect of American interest rates?
  Mr. Lawson: It is a matter of the market's view of whether the exchange rate has offset the movement in interest rates. It is not a matter of my or the Government's view. The point is that in recent days there was considerable pressure on domestic money market rates, which had pushed them up well above the rate which validated the bank lending rate. It was that pressure to which the banks eventually had to respond. When the market can take a more dispassionate view of the United Kingdom situation, I have every expectation that the fundamental soundness in the economy will be reflected by a resumption of the trend towards lower interest rates. The policies which I outlined in the Budget provide the best way to put us back on that trend. No doubt the Labour party will try to portray this week's disappointing news on interest rates as a serious setback to the recovery.

  1401
  On television last night the right hon. Member for Sparkbrook gleefully set about what he is best at—running down his country and urging investors to take their money elsewhere because what is bad for Britain is good for the Labour party. Fortunately, the economy is in sufficiently robust health to take in its stride both the rise in interest rates and the effusions of the right hon. Gentleman. How different that is from the situation under the Labour Government. We all remember the right hon. Member for Leeds, East executing a U-turn at Heathrow, cancelling his visit to the annual meeting of the International Monetary Fund and the World Bank and scurrying back to try to regain control. We remember, too, the humiliation to which this country was subjected when the IMF told the Labour Government that they would have to adopt responsible economic policies before we could qualify for another cent of credit.
  This Finance Bill confirms the course that we have set towards the steady improvement of the workings of the economy. What, by contrast, does the Labour party now offer? The red party has become the scarlet woman, Walworth Road Lil, obeying every whim of her militant trade union sugar daddies, a party now so enslaved and dependent that it cannot even summon the breath to condemn the savage violence inflicted on trade unionists who want to work and on their wives and families by the bullies who fear the ballot box. [Interruption.] Labour Members do not like that. They cannot take the truth, because it hurts. How well the right hon. Member for Sparkbrook epitomises his fallen party. Every now and then he shows a flicker of his hidden conviction and even the faintest hint of courage, but then once again he feels the twitch on the thread and he is back in line, condemning miners who wish to go back to work and assuring his party that however extreme its manifesto at the next election he will support it.
  We look forward to hearing in a few moments an all-to-rare contribution from the right hon. Gentleman to our discussions on economic matters, but I doubt whether he will have much to say about the fundamentals—the fact that inflation is down to 5 per cent., growth is robust and has continued at an annual rate of about 3 per cent. since the trough of the recession in 1981, and profitability has increased sharply and is still rising. As a proportion of GDP, industrial and commercial companies' gross trading profits net of stock appreciation are at their highest level since the early 1960s. Investment has moved steadily ahead since the trough of the recession, rising by 11 per cent. across the whole economy in the six months to March and the investment intention surveys show that that trend is likely to continue strongly in the coming year. Productivity in manufacturing has risen by an unprecedented per cent. per year for the past three years and now stands about 13 per cent. above its pre-recession peak.
  Against that background, there is no question whatever of our changing course. The turbulence of markets comes and goes like bad weather, but we shall see it off. The industrial unrest at home, for all the encouragement that the Opposition may choose to give it, will not succeed in undermining the soundness of the British economy. The Government have a clear and consistent strategy based on firm control of public expenditure, lower Government borrowing and a proper monetary discipline, and a strategy for lower taxation which leaves people with more of their own money to spend as they wish. This Finance Bill
  1402
  begins the task of reforming and simplifying the tax system and reducing the tax burden to more acceptable levels. It raises income tax personal allowances to their highest real level for more than a decade and puts company taxation on a sound footing for the future. I commend it to the House.
  6.10 pm
  Mr. Roy Hattersley rose——
  Mr Speaker: Before I call the right hon. Gentleman, I should like to say that earlier this afternoon I accused him of providing me with an indifferent photocopy of his application under Standing Order No. 10. I have now seen his original letter, which is quite distinct. I apologise to the right hon. Gentleman for a mistake which was mine, not his.
  Mr. Hattersley: Thank you, Mr. Speaker, for those words, which, as the House will agree, are typical of your conduct, but which nevertheless are a welcome demonstration of how we should all behave when we make the occasional error.
  Having expressed my genuine admiration for your response to that small error, Mr. Speaker, I must say that the Chancellor of the Exchequer has responded to his immense errors exactly as I would have expected. If the only people who had lost confidence in the Government had been the members of the Labour party, the Chancellor of the Exchequer could indeed have continued to swim along in the sea of complacency that characterises all that he does. But the people who are saying that the economy is deteriorating—and deteriorating fast—are not simply those on the Opposition Benches.
  Mr. Lawson indicated dissent.
  Mr. Hattersley: The Chancellor shakes his head. That must be because, as the Prime Minister often says at Question Time, we cannot all be well informed. At 4 pm today, the Press Association reported that
  "Governments faced major collapse of confidence in the City as price of leading shares crashed following two per cent. rise".
  The Chancellor must understand, if he is to have the remotest hope of putting right some of the errors which he has perpetrated, the nature of the loss of confidence in his policies and what he stands for. Before I deal as best I can with the contents of the Bill—as is normal on Third Reading—I should like to spend two or three minutes explaining to the Chancellor the nature of his errors and the tragedy which faces this country if those errors are persisted in.
  First, the pound has been depreciating against the dollar for a very long time. Throughout that period of depreciation, my right hon. and hon. Friends and I have never once raised that issue with the Chancellor or the Treasury Bench as being a matter which was their responsibility and for which they were properly to be blamed.
  I have not shared the Prime Minister's beliefs about the reason for that depreciation. The right hon. Lady has always said that the depreciation of the pound against the dollar was wholly the result of the United States deficit, and the interest rates in the United States which had been raised to finance that deficit. The Prime Minister would be right to attribute part of the depreciation to that, and since it was at least part of the cause the Opposition have never thought it right to say that the Government's record

  1403
  on the depreciation of the pound against the dollar was leading this country to ruin. Remembering the right hon. Gentleman's conduct in opposition, I am sure that if under a Labour Government the pound had sunk from 2 dollars to 1.30 dollars or just above, the right hon. Gentleman would have been performing in the House day after day undermining confidence just as he now accuses the Opposition of doing.
  The right hon. Gentleman talks about the Opposition talking down the pound, and glorying in the failures of the country. To accuse the Opposition of talking down the pound and rejoicing in discomfiture has been the refuge of panic-stricken Chancellors down the ages. The blame lies with the right hon. Gentleman and with the policies that he follows.
  Had nothing happened in the past 10 days apart from the depreciation of the pound against the dollar, no one would have wished to discuss these matters this afternoon or believed that the country was facing an incipient crisis. We would have said—as we tried to say at the time—that if the dollar was moving up, and if it was the result of the United States deficit, and if it was caused by interest rates in the United States being too high, it would have been sensible for the Prime Minister to have used the London summit not as a public relations exercise but as an opportunity for the industrialised countries to come together in a compact to end the difficulties brought about by the American deficit.
  The Prime Minister did not want the London summit to take that form. Indeed, she prevented the Prime Minister of Canada from raising those matters when he tried to do so. The Chancellor will remember the day. It was the day on which he accused the Secretary of the United States Treasury of being weak-minded.
  The London summit was arranged as a public relations event, and if the Government now claim that our problems are all the responsibility of the American deficit and American interest rates, it was criminally irresponsible of the Prime Minister to do nothing about those subjects when she had the chance. The Chancellor ought to understand the difference that has come about in the past week. That difference is that the pound has begun to deteriorate against the effective exchange rate—the average of European currencies. That has happened because the money markets, the people about whom the Government are supposed to know, with whom the Government are supposed to work and who the Government represent, have lost confidence in the Government's policy.
  The Chancellor says—in part I concede that he is right— that part of the problem is the result of the dispute in the coal industry. Of course it is. There cannot be a 19-week strike without there being an effect on the economy, especially if it results in the British Government and British oil companies selling less oil abroad to keep more in Britain to run power stations. If the strike results in our importing more oil and exporting less and all sorts of adjustments to industrial production, output and exports, of course it will influence international confidence. That is one of the reasons why the Opposition think that the Prime Minister should have used her good offices to bring the dispute to an end rather than use her pressure to keep it going in the hope of having a knockdown, drag-out victory over the miners.
  1404
  The Chancellor says that the dispute in the coal industry is partly to blame. He must not think that the Opposition or the country think that that is a criticism of the Labour party, for it is a criticism of the Prime Minister for allowing it to go on far longer than necessary. If the crisis is caused by the coal dispute, it is caused by the Prime Minister's instructions to the chairman of the National Coal Board.
  I want to tell the Chancellor something else in this, I regret, ugly part of my speech. He said that other disputes have had an effect on confidence. I do not think that the docks dispute will have the type of effect on our economy that was once the case. When the Labour party was in power and the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) was Chancellor, he and other Labour Chancellors presided over docks disputes that had a disastrous effect on the economy because we then exported more manufactured goods than we imported. Docks disputes prevented our exports from being sent abroad. Under the present Chancellor, the docks dispute has quite a different effect as we now import more than we export, so the result of a docks dispute is a halt to disastrous imports coming in.
  The Chief Secretary to the Treasury (Mr. Peter Rees): Earlier this summer, the right hon. Gentleman said that if he had been a Nottingham miner he would have been on strike. If he were an Immingham dock worker, would he now be on strike?
  Mr. Hattersley: What I said about being a coal miner applied exactly and entirely to the rules that I should apply if I were a member of any of those trade unions. I happen to have a strong view of loyalty. It is one of the things that the Chancellor holds aginst me. He says that I am never prepared to rebel against my party, by which he means that I am perpetually and permanently loyal to the Labour party. I plead guilty on all charges. I should be in exactly the same position with my trade union. What I said about the coal mining dispute I meant and I repeat. If there were an official dispute and I was called out on strike, of course I should come out on strike.
  Mr. Tony Baldry: The accusation that Conservative Members make is that the loyalty of hon. Members such as the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) is that they have a loyalty to the Labour party but none to the country.
  Mr. Hattersley: I propose to treat that trivial intervention with the contempt that it deserves. My vision for Britain is of a more equal society. The Labour party is the only possible instrument by which that can be achieved. That is my definition of patriotism, which concerns the Labour party's success and prosperity.
  The Chancellor does not understand the circumstances of the past 10 days during which confidence has disappeared. I said that he does not understand. I suspect, however, that he does understand but that he does not take it sufficiently seriously to tell the House in all honesty what he fears. In his less guarded moments he admits that there is a crisis in the markets. After an intervention he spoke of the markets being able to take a more dispassionate view of what is happening. He knows that that confidence is not present, for three or four specific reasons.
  First, there is the effect of the dispute and the feeling of fear throughout those countries where we have creditors

  1405
  that the Prime Minister is less concerned with running an efficient economy than with striking a pose of belligerence, toughness and unyielding character.
  Secondly, the consequences of the coal dispute have demonstrated to our creditors what the British economy will be like when permanently we cannot export oil and permanently we import it. In a few years, the great boom, the unconvenanted benefit that has kept this country out of bankruptcy over the past five years, will be gone. People realise that the oil is likely to run out and the circumstances of the coal mining dispute will be repeated month by month and year by year.
  Thirdly, there is growing understanding that the Government are not concerned with the real economy, the underlying economy, the need for investment, growth, employment and exports.
  The Government are obsessed with numbers. Again today the Chancellor treated figures such as the money supply as if they were mystic symbols out of the Old Testament. As long as we pay obeisance to them, everything will go right. If he has not learnt this week that everything will not come right simply by applying these formulae, the conditions and prospects of the country are desperate.
  I propose, if you will allow me, Mr. Deputy Speaker, under the new rules governing debates for Third Readings, to return, at least in passing, to the economic implications of the Bill, what the Chancellor proposed in the Budget, and what has been debated so long and hard in Committee. Neither the Chancellor nor I were members of that Committee, but I pay tribute to my right hon. and hon. Member Friends who fought the Bill clause by clause for a record time with determination as well as lucidity.
  Mr. Peter Rees: That is one way of describing it.
  Mr. Hattersley: Well, at least none of my colleagues went to the leader of their party and whined that they had been treated badly by the other party.
  Mr. Peter Rees: Substantiate that.
  Mr. Hattersley: That report appeared in a most reputable newspaper. If it is not true, the right hon. and learned Gentleman has the right, and the duty, to protect the Prime Minister as well as himself and write to that newspaper to make it clear that he never made such a complaint against Labour Members.
  I repeat my tribute to my right hon. and hon. Friends and I remind them, the House, and the Chief Secretary of the circumstances in which they debated the Bill. They debated it in the terms set for it by the Chief Secretary himself in the Second Reading debate, in which he said that the Bill
  "shows a firmness of purpose on financial strategy".—[Official Report, 10 April 1984; Vol. 58; c. 248.]
  He then went on to particularise the Government's determinations—to reduce the rates of monetary growth and public expenditure, and to reduce the pressure of inflation and interest rates, and so provide financial stability.
  Those are the claims with which the Bill began its passage through the House. It ends its passage not with a reduced rate of monetary growth, but with a growth in the money supply that is 40 per cent. above the targets on one indicator and 6 per cent. above another. It ends its passage not with a firm reduction in inflation but with an anticipated increase. It ends its passage not with reduced
  1406
  interest rates but with increased interest rates, and not with economic stability but with the uncertainty and lack of confidence that the stock market and the international exchanges now demonstrate.
  I hope that the Chief Secretary recalls the phrase
  "a stable currency is a pre-condition of more general economic stability".
  It comes from the guide to Tory candidates circulated during the last general election campaign. There may be some poor, misguided Tory Members who fought their seats on that promise of financial stability, who will now trail into the Lobby as if the promise has come true. We all know that, despite that promise, the strategy on which this Finance Bill is based is a clear failure by any standards. It is a clear failure by our standards because it does not take into account the principal moral imperatives of any decent economic policy — the need to reduce unemployment.
  I am delighted that the Prime Minister is still in her place. When she went through, at her usual panic speed, the Government's economic achievements in the past five years, she said not a word about unemployment. Some things may have improved, but employment has spectacularly deteriorated. The great condemnation of the Government and their economic strategy is that they have no plans for, or interest in, reducing overall umemployment. That is to judge the Government by our standards. To judge the Government by their own standards of the money supply and interest and inflation rates, their strategy is in a shambles.
  I shall qualify that statement at once. The economic strategy of the Conservative party is an overwhelming success in one particular, which has been reinforced by the Finance Bill. The Government are determined to redistribute income from the poor to the rich. That part of the Government's economic policy has been triumphantly successful.
  Let me tell the Chancellor how that has come about. He has increased the overall burden of taxation, as did his predecessor for five years. The Chancellor shakes his head. Does he not agree with that assessment? The Financial Secretary is always telling us in written answers, as his most recent written answer confessed, that the overall burden of taxation in the past five years of Conservative government, since the day when Labour left office, increased by £22·5 billion.
  It is pernicious that much of the additional burden is carried on the shoulders of those who are least able to pay. We all know that the only recipients of tax relief under the Government are men and women, or families, with substantial earnings. The Finance Bill has reinforced that trend in little, mean ways.
  The Government have introduced VAT on take-away food and home improvements. The tax will fall disproportionately on the lower paid. If I had to think up a little package of measures that typified the meanness of the Bill, I would think of VAT on fish and chips, which is perhaps matched by the abandonment of investment income surcharge. I would think of the Chancellor's pretence that he had done something for the poor, in the chortling and cheering that he induced on Budget day by saying that he had knocked rather less than 1p from the price of a gallon of paraffin. That is the measure of the Budget's shoddiness.
  The debates about VAT in Committee and elsewhere have done nothing to convince the Opposition that the

  1407
  uncertainties we fear and feel about the future of VAT in this country are unreasonable and will not one day be shamefully realised.
  We have not had a proper assurance about VAT on food. We continue to ask for an assurance—not in the Finance Bill today, but in the lifetime of this Parliament—that VAT will not be put on food. We do so in the light of the Chancellor's obsessive desire to do what he coyly calls widening the tax base and in the Prime Minister's craven agreement to increase own resources to the European Economic Community. The conjunction of those two factors must lead us to fear the extension of VAT to food. Until the Chancellor or the Prime Minister is prepared to tell the House and the country that VAT will not be levied on food in the lifetime of this Parliament, our reasonable suspicions will remain.
  What is more, that is an example of the movement of tax benefits away from the poor and towards the rich, and of the tax structure as it affects direct taxes. The Government have failed to alleviate poverty, as they might have done. At the same time, they have given enormous concessions to men and women in higher income groups. We have compared time after time the reduction in income tax allowance by 12·5 per cent. with the increase in child allowance of no more than 5 per cent.—less than half that amount.
  Every hon. Member knows that when the child allowance was replaced by child benefit the idea was that the benefit should be adjusted at Budget time so that the recipient would get more or less what she would have got if she had been receiving child allowance and it had been indexed. Yet the Chancellor chooses to discriminate in favour of the direct taxpayer—and, therefore, discriminates most in favour of those who earn most—and against the family.
  Our criticism of the direct tax structure that the Chancellor proposes is also a criticism of his proposals on company taxation. He rejoices in the abolition of the national insurance surcharge. I also rejoice, and I give him that little victory. My right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) pressed for the abolition a year ago, my right hon. Friend the Member for Leeds, East (Mr. Healey) introduced the surcharge six years ago, I welcomed the abolition on Budget day, and I welcome it again now.
  However, it is wrong to pretend that the abolition of the surcharge will compensate for the other things that the Budget has done to reduce employment. I give one example. There was much rejoicing on the Conservative Benches yesterday over the reduction in corporation tax. However, when that reduction is set against the removal of capital allowances, industry will be paying more as a result of the Budget, at least in the short term—this year and next year. If one adds that to the amount that will be charged to industry as a result of the imposition of VAT on the work involved in house improvements and alterations, one sees that the net effect of the Budget, at least for the next two years, is more likely to depress employment prospects than to enhance them.
  The change on corporation tax, balanced by the removal of capital allowances, will work adversely against industries that are most in need of assistance—the new industries which are developing and want to invest. They
  1408
  want to install new plant and machinery to create more jobs, but they are on the margin of profitability and the Budget has penalised them.
  The tragedy of the Budget is not simply its content but the framework within which it operates. That framework is doomed to failure, because it is concerned not with the realities of the economy but with the myths of the economy. The Chancellor persists in his stubborn view that if he holds the monetary aggregates to figures that were conjured out of the air and called the medium-term financial strategy, everything will automatically come right. It will not, even if the right hon. Gentleman hits his targets. But he does not and cannot hit those targets. What will he do when his target is not hit? He will go in again for the same old dreary round of cuts and squeeze in the belief that he can eventually improve economic activity by reducing it in the short term.
  Everybody knows—even though the Chancellor denied it today—that an operation is going on in the spending Departments to ensure that there will be less spending than was previously planned.
  The Secretary of State for the Environment was asked by one of my hon. Friends about a capital moratorium. The right hon. Gentleman said in a written answer that he would be making a statement shortly. I suppose that it is possible that that Secretary of State will come to the House to say that he has nothing to say. But that is unlikely. The implications are clear: capital works in the public sector are soon to be cut again.
  The Chancellor still believes that every time that he is blown off course he can swim back by cutting public expenditure, increasing unemployment, paying more in unemployment benefit, putting more pressure on the public sector borrowing requirement and keeping the hurdy-gurdy going round and round.
  I said earlier that the tragedy of the events of the past 10 days was that the confidence that we should be enjoying, having benefited from the unconvenanted boom of North sea oil—a benefit which no other British Government has enjoyed—has been lost by the Government. I revise that opinion now. The real tragedy is that the Chancellor of the Exchequer and the Prime Minister have clearly learnt nothing from the events of the past week, and the same dreary deterioration will go on and on until the Government are removed.
  6.34 pm
  Mr. Roy Jenkins: This is a year, if ever there was one, to recall the old adage of Iain Macleod: that if a budget looks good in March—I add if it was bouncily presented in March—it will almost certainly look bad by July. That is not always true. Nor is the converse, which was also propounded by Iain Macleod: that if it looks bad in March, it will look good by July. The Foreign Secretary's budget looks pretty drab in every season of the year.
  The Chancellor came to the House and presented his Budget like a resplendent spring bird with a good deal of strutting self-confidence. I congratulated him on his lucid presentation and even on some of its substance. However, I also said that it was frivolous about the central problems of the economy. Today that frivolity is increasingly self-evident. However much the Chancellor tries to shrug it off, he cannot convince anybody but himself.
  There is no doubt that our financial management is in a mess, and a worse mess than in any comparable country

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  in our interdependent world. We have a reeling currency with much more of a shadow over its future than over Monsieur Mitterrand's French franc. Our interest rates are far higher than those in Germany, and we have a much higher rate of inflation. The Chancellor particularly put forward low interest rates as the Budget's special contribution to industry and said that they were far more important and valuable than a stimulus to public sector investment in its impact on the industrial prospects. Yet we have less growth and fewer jobs than the United States and we have a more dangerous base of unemployment, from which to go into a possible recession than any other country, except perhaps Belgium and Ireland. A comparison in any respect with Japan hardly bears thinking about. In addition the money supply, especially the PSL2—the broad money—is way off target.
  All those considerations are of varying importance. I have never believed that it was possible to get them all right at one time, but to get them all wrong at the same time requires incompetence on an awesome scale. That is precisely what the Chancellor has done. The Chancellor seemed almost to be arguing in a statement last night that the pound was not too low and perhaps should go even lower, and that no one should be perturbed about its recent collapse. If that is his view it does not say much for the effect of the Government's policies upon the level of British competitiveness or for the sense of previous exchange rate policies.
  Mr. Lawson: I should make it clear that that is not my view. The right hon. Gentleman made comparisons with other Community countries, and he has a distinguished record in the European Community. Would he, in all fairness, agree that last year Britain had the highest rate of growth in the Community and that the Commission's forecast is that this year Britain's rate of growth will be second only to that of Germany?
  Mr. Jenkins: I made a comparison with the rate of growth and the creation of new jobs in the United States. My comparisons on the rate of interest in Germany, the rate of growth in the United States and other matters were all strictly accurate, and the Chancellor does not deny that. However, he is not now saying that the pound is too low. He appeared to say yesterday that there was no need to be perturbed about the recent collapse in the exchange rate level of the pound.
  It is also possible—I am not sure whether it is the Chancellor's view—to take the view that Governments or central banks should do nothing about exchange rates. That is a mistaken policy, and I do not believe that it is the right hon. Gentleman's view, whatever he may proclaim in public. In view of the attachment which the Government have proclaimed to low interest rates, and if the Chancellor believes that the Government and the central bank should not be concerned with exchange rates, it is by no means clear why interest rates have increased twice during the past six days. Nor is it clear why, as the hon. Member for Bolsover (Mr. Skinner) said in one of his more sensible interventions—it was one of his rare interventions, delivered on his feet—the real rate of interest of 7 per cent. is at an historically high level.
  It is impossible for anyone except the Chancellor to deny that the reaction to the problem by the Government or the bank, or the two in combination, has been extremely clumsy during the past week. There are two rules when
  1410
  trying to deal with such a problem: first, if we must move, we must not do it too late; and, secondly, when we move we should not do too little and then have to do it again. During one week the Chancellor has broken both rules. First, he moved rather too late and clearly not enough and, secondly, he had to move by another two points within four days. There is no question but that the Chancellor has broken both rules, and his approach during the past six days has been bumbling.
  Then there is the Government's unamiable tendency, some of which springs from the personality of the Prime Minister, to blame everyone but themselves for everything that goes wrong. They blame the United States for having high interest rates. We all wish that they were lower, but America's massive structural deficit and Mr. Volcker's method of dealing with its consequences are not new factors. They were wholly predictable before this week, although, if anything, the Chancellor predicted them wrongly. He said that world interest rates would fall. Mr. Reagan is supposed to be the Prime Minister's best friend and, to some extent, her financial apprentice—at any rate, she hoped that he would be. The reason why the undesirable but predictably high United States interest rates hit Britain so much worse than they hit Germany is the inherent weakness of our economy which the Government, contrary to their protests, have deepened and not in any way cured. Sterling will have a rough ride during the next few years.
  The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) put his finger on it when he said that it would have a rough ride when the market took more into its consciousness what the position of Britain would be when the oil had gone—a time not far distant—and it was replaced by an oil deficit.
  The tendency of this Government is to blame everybody — strikers included—but themselves. I do not take exactly the same view of the strike as the hon. Member for Bolsover but it is clear that the Government welcome industrial confrontation——
  Mr. Skinner rose——
  Mr. Jenkins: I will not give way. I am anxious to conclude my remarks.
  Mr. Skinner: Did not the right hon. Gentleman agree with the Leader of the SDP and attack the strikers?
  Mr. Jenkins: I agree with the Leader of the SDP on all issues, as I am sure the hon. Gentleman knows.
  As for the irrational market forces about which the Chancellor was complaining this afternoon and which he hoped in time would take a more dispassionate view of circumstances than they do at present, it was not long ago that this Government were almost claiming to have invented market forces, or at any rate to have set them free and given them their proper role.
  Hence, we have the position of this unerring Government beseiged by an improbable conspiracy of President Reagan, Mr. Scargill and malevolent market forces, all of which does not quite seem to add up or to ring true. It was not market forces, Mr. Scargill or even Mr. Reagan which put the right hon. Gentleman, with his blustering maladroitness, in the position of Chancellor of the Exchequer. That was done by the Prime Minister, who excluded many wiser people on grounds of ideology, not of competence.

  1411
  Although market forces did not make the right hon. Gentleman Chancellor—and I do not know what he would say about his recent performance if he were writing as financial editor of the Sunday Telegraph, which he once did—ironically, market forces may bring his meretricious Chancellorship to a fairly early and inglorious end.
  6.47 pm
  Mr. Tony Baldry: It is a distasteful experience to hear so many Opposition Members trying to dance on the grave of Britain. I remind the House that yesterday Sir Terence Beckett wisely said that the chief cause of the latest rise in interest rates was external. He went on to say that our underlying situation was one of steady growth and low inflation. One cannot reconcile that view of the president of the CBI with anything that we have heard this afternoon from the Opposition Benches.
  As the hon. Member for Banbury, it is not surprising that I wish to deal with the question of agriculture. I recognise that the Budget did a considerable amount to assist agriculture in Britain. It increased the basic thresholds, abolished the investment income surcharge, reduced the top rate of capital transfer tax and increased the development land tax threshold.
  However, as my hon. Friend the Financial Secretary has recognised, farming, by its nature, does not incorporate, and thus agriculture is likely to be seriously affected by the switch as between corporation tax and capital allowances, something which everywhere else is to be welcomed as encouraging jobs. My request to the Chancellor is that during this year he should monitor the effects of that change on agriculture, and if it is seen to hit agriculture particularly harshly, he should, in next year's Budget, make an exemption for agriculture in relation to capital allowance reliefs.
  The other small matter that I want to urge upon my right hon. Friend is that at a time when many British farmers are experiencing difficulties not of their own making as we rightly seek to grapple with the problems of overproduction of milk, while I recognise the concessions that were made yesterday in relation to stock relief on a herd basis, none the less there is still much more that can be done. We should recognise that as many dairy farmers will have to get rid of somewhere between 10 and 20 per cent. of their herds, to have to be taxed on such disposals not unsurprisingly makes them feel slightly hard done by. Although there is some small justification for that, it would be a measure of generosity if the Exchequer were to consider a one-off concession at some stage during the coming year to give some assistance to such dairy farmers.
  Like, I suspect, every other Conservative Member I warmly welcome the Chancellor's Budget and soundly deprecate the tactics that are being advanced by the Opposition, who constantly seek to talk down Britain. One imagines that they would only be happy and smiling if all British industry were brought to a halt by the dock and mining disputes. I suspect that that is the only thing that would give them cheer. To those of us who are confident and believe that the Government are on the right track, I simply say on behalf of British agriculture that I hope the Chancellor will give close attention to how it fares during
  1412
  the coming year to see whether the balance is right and perhaps to make any necessary adjustments in his Budget next year.
  6.51 pm
  Mr. Stuart Bell: I am grateful for the opportunity to follow the hon. Member for Banbury (Mr. Baldry). I hope to lay to rest what is obviously a political ploy of the Government somehow to distort the crisis and make it into a situation where the Labour party, either through its Front Bench or in the country, is seeking to talk down the pound, to the detriment of Britain. We shall not be deflected by such arguments from the serious nature of the crisis—as we would call it—which has afflicted the markets—as the Chancellor would call it—by that kind of language. When the hon. Member for Banbury intervened in the speech of my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) and asked him about his loyalty to the Labour party as opposed to the country, my right hon. Friend answered him aptly. I repeat that they are not mutually exclusive. Loyalty to the Labour party does not disavow loyalty to Britain.
  None of us in the debate and who have followed the 150 hours of the Committee stage of the Finance Bill have anything other than care, compassion and concern for the fate of our country and for the 6 million house owners who tomorrow will learn what the rise in the mortgage rate will be a direct consequence of the Government's policies. I say that advisedly, because yesterday the Government had two options available to them. One was to allow interest rates to take the strain of what was happening in the United States. The other was to allow the Bank of England to intervene. The Government chose not to allow the Bank of England to intervene, but rather to place the burden of what was happening in the United States upon the British people. That was a choice which the Government made, which they will have to live with. Unfortunately, it is also the choice which the British people will have to live with.
  Mr. John Maples: If the Labour party had been responsible for the situation, would it have let the pound slide and done nothing about interest rates?
  Mr. Bell: I shall not pursue that avenue of Conservative propaganda at the moment. When faced with a crisis, Conservative Members ask what we would have done. I shall not do so for two reasons. First, we are not in government, and, secondly, it becomes rather stale to refer to what the Labour party did from 1974 to 1979 when we have a Tory Government which is going into its sixth year. We shall not allow the public to be deflected into considering what we would be doing because we are not in office.
  We lay the blame for the present economic difficulties fairly and squarely at the Government's door, and we shall not be deflected from that. We shall tell the people why their mortgage rates and the cost of living are going up. We shall tell them why the inflation rate that was forecast by the Chancellor in his Budget statement of 13 March will not be achieved. We shall let the people know who is responsible.
  The Chancellor of the Exchequer has a belief in the market, and it is reflected in everything that he says. It is reflected in what he said when he was asked about a target

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  for the exchange rate and said that there was no such thing under this Government, and that the market, as he perceived it, would fix the target.
  The target of the present situation is that what the Chancellor of the Exchequer believes of the market is not what the market believes of the Chancellor. The Chancellor consistently, even in reply to my intervention this evening, refers to the MO, or "Little Mo" as I call it—the definition of money supply based mainly on currency—and says that that is on target. He was a little more reluctant to say that the M3 target, now running at about 14 per cent., was the yardstick of the City of London. The City of London does not look, as the Chancellor does, at "Little Mo"; it looks at M3. The City sees the Chancellor's Budget target being overshot, and although the Chancellor may hope that that overshooting will regularise itself between now and the end of the year, it is what the market perceives the monetary target to be that really counts.
  The Bank of England has taken, and continues to take, the view that if monetary aggregates rise too fast, the strain must fall on public expenditure, so there may have to be public expenditure cuts. The City of London's perception of the market is different from that of the Chancellor, and that is what has brought us to the pass in which we now find ourselves. If the market perceives that there is an overshoot in the money supply, public expenditure cuts become a self-fulfilling prophecy.
  The Chief Secretary, at Question Time today, did not entirely rule out, nor could he, the possibility of public expenditure cuts in the future—even in the imminent future—depending again on how the market preceives the money supply and on what is happening in the United States. Those are the real criteria which the markets and the City of London will be considering.
  The Chancellor of the Exchequer said that somehow we had decoupled our interest rates from those of the United States. It was my feeling at one stage during this year that the Government were congratulating themselves on decoupling our interest rates from those of the United States. Now the Government are saying that they regret the decoupling, and that it is because of the difference between our interest rates and those in the United States that our rates must rise. It is the British taxpayer, through what happened yesterday and what will happen tomorrow, who will make his own contribution to the United States Budget deficit. We say that it is a wrong philisophy, a wrong way to look at the question, and the wrong consequence for our people.
  The Chancellor of the Exchequer referred to macroeconomic policy and to microeconomic policy. He referred extensively to his speech on the occasion of the fifth Mais lecture on 18 June. What he is really saying is that he has dismantled macroeconomic and microeconomic concepts and has replaced them with uninhibited, unbridled and unmitigated market forces and monetarism. The Chancellor of the Exchequer will not countenance that deficit spending really works. He always turns against what is happening in America and says that it cannot be done here.
  The right hon. Gentleman calls it the United States conundrum and regards as heresy the concept that deficit spending will create jobs. If he were to accept that deficit spending would create jobs, the basis of the Government's policy would be destroyed. Therefore, he looks, as he suggested during his speech at the Mais institute, for other
  1414
  phenomena. He talks of the unique position of the dollar as the world's reserve currency. The concept in the 1960s was that a reserve currency in the form of the pound sterling was a drag weight upon the British economy. It is now being said that the United States dollar is a world currency reserve and that that is the source of and explanation for the massive expansion of the United States economy.
  The Chancellor took the view in his Mais lecture, in his new-found definition of macroeconomic policy and microeconomic policy, that macroeconomic policy goes to the conquest of the inflation, while microeconomic policy goes to the conquest of unemployment. The reality, as we see in our daily lives, is entirely different. The Chief Secretary intervened in the speech of my right hon. Friend the Member for Sparkbrook and referred to Immingham. The policies which the Government are seeking to follow are designed to remove restraint, and the issue at Immingham is the removal of the dock labour scheme. The scheme is considered to be a restraint, but its removal will not lead to more employment. Its passing is likely to make men at Immingham out of work, which is why there is a strike.
  If it is the Government's policy to accommodate inflationary pressures—the phrase was used by the Chancellor in his Budget speech—why did the Government not allow the Bank of England to step in and maintain the value of the pound, rather than allow interest rates to do the job for them? As I have said, it is the Government's intention that the British people, not the Bank of England, should take the pressure.
  The Chancellor said during his speech at the Mais institute in the City that the climate was changing. That speech was made on 18 June. Certainly the climate is changing. The Government have challenged the bastions of trade union and local government power. The Chancellor referred to that when he talked about militant union monopolies. The Government thought that they could deprive Cheltenham trade unionists of their rights, that they could deprive miners of their jobs, that they could ride roughshod over their own Back Benchers and that they could do the same to the leaders of the Liverpool city council, the GLC and the metropolitan authorities. All these areas of conflict and challenge were of the Government's own choosing, and even on the grounds of their choosing they have fled from the battlefield leaving their rhetoric behind them.
  The miners' strike has entered its 19th week and the Government have been beaten into a compromise at Liverpool. The ponderous weight and authority of the other place ensured that the Government reversed their decision to abolish free elections. This is what the Chancellor describes as the climate of change. In the eyes of the Government, it is clearly change for the worse. The goals of the former Chancellor, who is now the Foreign Secretary, were boldly and nobly taken on by the present incumbent.
  As the right hon. Gentleman said in his Mais lecture, the goals were to conquer inflation and to restore the British economy to growth and prosperity. We are witnessing the consequences of a policy which is entirely unbalanced. It is a policy which I would describe as a cloak of many colours, and the cloak is tattered if not bloodstained. If there are marks upon it, they must be the marks of tears of those who have lost their jobs as a result of the medium-term financial strategy.

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  The Government have failed to understand the impact of their own policies and the very inflation which they seek to curb. The pound is falling like a stone through the floor of credibility. This will make North sea oil more expensive as well as other raw materials that are used for manufacturing purpose. The consequences will seep through into interest rates and act like a hypodermic needle that is shot into the skin, thus pushing up the cost of borrowing and mortgage interest rates and destroying the Chancellor's target for inflation at the end of the year. It is not that the Government are off course; it is that they do not know that they are off course. They persist in drawing atttention to "Little Mo" when the market, which the Chancellor insists is sovereign in these matters, insists on using M3.
  As we come to the end of the debate on the Finance Bill, the miners are on strike for the 19th week. There is a dockers' strike and an overspill of the miners' strike into the steel industry. Industrial action is about to be taken by teachers. There is a threat to the capital spending of local authorities. There is a change to the M3 indicator of money supply, which today has surpassed, even by the Chancellor's reckoning, the Government's annualised monetary targets. Interest rates have increased by 2 per cent.—that is taking two bites at the cherry, because last week interest rates increased by 1 per cent. Mortgage rates will increase, thereby causing increased inflation. That is what the Prime Minister described as an economy in good shape. If that is an economy in good shape, we are entitled to ask: what is an economy in bad shape?
  We have sat through 150 hours of debate on the Finance Bill, through Report and Second Reading. We have seen the euphoria which greeted the Chancellor's Budget statement evaporate. As Mr. lain Macleod said, a Budget may begin with euphoria but that euphoria can and does disappear.
  The Government should look at their policy and philosophy. They should look compassionately at the people and think of the unemployed and of the long-term future of our country when North sea oil begins to run out. They should consider all those factors and think again. If they do so, they will gain the congratulations not only of the Opposition but of the country as a whole.
  7.7 pm
  Mr. Nigel Forman: On 12 July, following more than 150 hours of debate in Committee, I still believe that this year's Budget and Finance Bill were good. I especially like the fact that the legislation introduced the first instalment of a sensible three-year programme on corporate taxation. I also take it to be the first instalment of what I hope will be a four-year programme on personal taxation.
  I shall devote a few brief remarks to the subject of personal taxation, because it involves the future course of the Government's economic policy. I should like the Government to bear very much in mind the fact that the strategy of moving to a broader tax base and lower rates of tax by tackling the problem of tax expenditures and achieving lower rates of taxation should take account of the need to ensure that the benefits of that approach are fulfilled at the same rate as costs are incurred.
  Clearly, benefits will be obtained. The first instalment has already come in the shape of raised tax thresholds on
  1416
  income tax, but we must see to it that the two other forms of benefit—lower rates of income tax and a gentler gradient of those rates through the income tax bracket—are steadily implemented during the four-year period. Otherwise, we shall discover that the Government have introduced the cost side of the reforming programme without giving sufficient parallel benefits. If we are to take radical steps in removing relief for life assurance premiums and pension contributions and in limiting mortgage relief to the standard rate, the benefits of that strategy must parallel its costs. If we do not manage to do that, we shall find ourselves in the difficulty to which Brian Walden referred in a recent newspaper article. He pointed out that the public would not easily understand or support a one-sided approach to an otherwise imaginative two-sided policy.
  The same cautionary words apply to the extension of the tax base, to which my right hon. Friend referred in his opening speech. That might be worth doing in specific cases to ensure that revenue is buoyant, but it should not be done simply for the sake of doctrine—especially if it involves extending VAT to essential fresh food.
  We all know that the pattern of spending of the poor, the pensioners and the unemployed includes a large element of spending on fresh food. It would not be supported in the country if we were to adopt that idea as an aspect of our policy.
  I very much welcome the abolition of the national insurance surcharge. As I said at the outset of our discusions some months ago, it was a tax on jobs. I hope that we will extend that principle to the positive side; we should think of introducing sensible labour subsidies wherever possible, for example by reducing national insurance contributions for younger employees or giving further support to the job release scheme, the community programme and the enterprise allowance. I hope that my right hon. Friend will think seriously about all those possibilities between now and his next Budget.
  If we are to stick to the approach that macroeconomic policy is designed to control inflation—and as I said earlier, I hope to see inflation eliminated and stable prices achieved—and if we rely on microeconomic policies to boost employment and improve the prospects for employment, it must not be only a matter of the Treasury passing the buck to other Departments in Whitehall but of the whole Government being seized of the need to introduce sensible microeconomic policies, whether in the sphere of public procurement, housing policy, education policy or portable pensions. A whole range of microeconomic policies need to be introduced during the four-year period ahead.
  We have a reasonable chance of offering not simply hope to the millions of British people who are now languishing in unemployment but a real prospect that they will join the ranks of those in work whose personal disposable income has increased by such a substantial margin in recent times.
  I welcome the Budget. I am relieved that the Finance Bill is shortly to obtain its Third Reading. I wish my right hon. Friends well.
  7.13 pm.
  Mr. Richard Wainwright: In March, the Chancellor was buoyant, sparkling and playing up fully to the captive Conservative media. Today, he wore the air of a Minister administering a Government in

  1417
  decline. He also had the rather ashamed air of someone caught out in a double folly. As the House knows, the Chancellor has arranged that in this fiscal year virtually the whole of the Government's borrowing will take place in the first six months. What an extraordinary feat to destroy the Government's credit at the very time when they have decided to do their borrowing. Not only the Chancellor but the Government will pay dearly for that double folly.
  Earlier in our debates, there was an interesting dialogue about the extraordinary, perhaps inadvertent, success of the United States economic administration. The Chancellor, not for the first time, attributed almost the whole of that success to what he described as the American people being willing to price themselves into employment. I wish briefly to point out the obvious—in order to price oneself into employment, employment must be available. That is certainly not the case in Britain because the Government refuse to run a counter-cyclical deficit of the proper size.
  With regard to this business of people pricing themselves into employment, I take the example that is all too painful at the moment—the state of drought and restrictions on the use of water. The Chancellor says that people should price themselves into jobs, but were they to queue up outside the water authorities and say, "All we want is a pick and shovel and a subsistence wage," and to ask to be set on the repair of mains from which about one third of the nation's water is leaking owing to previous neglect, the water authorities could not take them on. There is no way in which large numbers of the unemployed can price themselves into employment in a country that is so badly administered that the employment opportunities are simply not there.
  Reference has also been made to the Chancellor's remarkable Mais lecture, when he was still in confident mood and before he was so greatly deflated. He seemed to believe then that he was on his way to canonisation or possibly even divine status. He spoke of himself as:
  fighting, and changing, the culture and psychology of two generations."
  On the right hon. Gentleman's own suggestion, we have a second John Wesley, or, perhaps more accurately, a second Northcliffe on the Treasury Bench. However, it has all turned to ashes in this miserable and extremely lengthy Finance Bill.
  All the excitement that was generated on Budget day by the rejigging of corporation tax has largely turned to ashes. As company accountants, finance directors and bank managers did their sums, they realised that manufacturing industry will have additional burdens under the new corporation tax regime.
  Substantial distortions have been introduced in the Bill. On Budget day the Chancellor spoke of being a crusader against distortions in the tax system, but the way in which he is altering capital allowances produces some of the greatest distortions of all time. I shall quote a random example from today's edition of the Yorkshire Post, in which the correspondent on industry writes:
  "Changes in the tax laws relating to industrial buildings are due to come into effect next spring … The difference in tax saving to a company considering the merits of moving into larger premises, dabbling in the rental market or simply wanting to get off the ground will be so large that it is essential to make the decision now before time runs out."
  A great army of industrialists will be converging on a relatively small number of competent architects, expecting that at the end of the day they will all get well planned
  1418
  buildings. A Gadarene rush has been precipitated by the structure of the Finance Bill. In future, industry will pay dearly for the distortion that has been introduced, rushing industry into capital expenditure.
  Part of the trouble is that there is no one in the Cabinet with real industrial experience to tell the Chancellor to come off it, and to point out to him the negative effects of destabilising corporation tax in this dramatic but unproductive manner. I commend the work of the Institute for Fiscal Studies, which assumed a realistic rate of inflation over the next few years and showed that most manufacturing sectors will be more heavily taxed.
  I refer to the personal side of taxation and benefits. The Finance Bill, like the Budget, ignores the needs of the poor, those with large families, those who have been unemployed for more than 12 months and school-leavers who are without benefits. The Government's motto seems to be that as they are creating misery, they will lose fewest votes by concentrating all the misery on certain sections of the population rather than sharing the burden throughout the country. The Finance Bill is grossly unfair in the way in which it concentrates the burdens on those least able to bear them. All that may be good psephology, but it is poor patriotism. My right hon. and hon. Friends and I will vote against the Bill.
  7.19 pm
  Mr. Mark Fisher: The policies of the Government and, in the past year, of the Chancellor have brought our industrial economy to its knees. The country is now racked by unemployment, industrial underinvestment, spare capacity, disastrous loss of skills, record numbers of bankruptcies, huge deficits in manufactures and the self-destructive cuts in public investment and public expenditure, all of which contribute to a constant widening of the gap between those like us who are lucky enough to have and those in our society who have not. It is the people of this country who are suffering as a result of the Government's policies.
  Even after the last disastrous fiasco of a week, the Chancellor today showed no flicker of self-doubt, no glimmer of self-criticism. In his view, everything was fine. It was fine for the Government to have no view on the exchange rate or on interest rates and to allow investment to be determined solely by market forces. In effect, it was fine for the Government to disown their responsibility for the economy and industry of this country. The right hon. Gentleman's speech was wholly unworthy of his high office and utterly unconvincing. Instead of an analysis of what was wrong and a coherent programme to show what the Government intended to do to put it right, we sat through what was no more than a loud—mouthed, braggart Back Bench performance, slagging off the miners and the Opposition but doing nothing constructive about the problems facing the Chancellor.
  The right hon. Gentleman's Budget speech, admittedly, was different. At that time he tried to court popularity to establish his personal reputation. He claimed then, as he claimed today, that the Budget was a radical reform Budget. As the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) has said, no one would deny that it was a well-performed and vigorous Budget speech and the Chancellor's right hon. and hon. Friends cheered when he finished. In Committee, however, under the longest scrutiny of any Finance Bill, the right hon. Gentleman's proposals crumbled to nothing. The claims of reform

  1419
  proved to be largely a shuffling of cards. Moreover, to our surprise and disgust, such redistribution as there was tended to be from those who did not have advantages in society to those who did.
  The Chancellor was right to recognise the need for reform of both corporate and personal taxation. We believe that such reform is necessary to create a vigorous industrial sector and a more just society, but the right hon. Gentleman's proposals failed to address the problems and indeed had the opposite effect. The right hon. Gentleman raised personal taxation thresholds, but he knew that this would not deal with the poverty trap. For the first time ever, he refused to include child benefit. When it was finally increased in May, the increase was far too small. It should have been 95p. He acknowledged that it was a difficult problem, but he chose the least effective, the least targeted and the least efficient route to a solution. Changes in child benefit would have been the right way at least to try to give a fair deal to the deprived in our society. By raising thresholds, the right hon. Gentleman wasted millions of pounds of taxpayers' money.
  The right hon. Gentleman was quite right to hold that corporation tax with all its allowances and exemptions had become a fiasco. It now accounts for only 2·7 per cent. of tax revenue and it is complex and ineffective. Reform would have been welcome, but the Chancellor bungled it. The transition period will have the opposite effect to that which he intended. It will create tax artificialities, which he sought to eradicate. The ending of capital allowances will be a positive disincentive to investment, especially in manufacturing industry. When investment has already fallen by 42 per cent. in the past four years, that is a disaster.
  As the hon. Member for Carshalton and Wallington (Mr. Forman) said, the Chancellor's real target should have been tax expenditures, but with the exception of life assurance relief the right hon. Gentleman has failed to do that and I very much doubt whether he will have the courage to grasp that nettle in the future despite his hon. Friend's comments. The Budget postured and promised a great deal, but it has only tinkered with the economy. This country remains just as economically unjust on a personal level and just as much in industrial decline. The Budget failed the unemployed, it failed the young people leaving school this year and searching for jobs, it failed the deprived, it certainly failed industry and, in so doing, it failed the country.
  The Chancellor's failure in his Finance Bill and Budget are trivial compared with the failures in the real economy which were taking place while the Bill was in Committee. Broad money—M3—was rising rapidly, and the real marginal rate of interest rose to a historic and disastrous high of 7 per cent. The fact that the economy will be a black hole when North sea oil runs out is ignored.
  It was clear from the Chancellor's failure to rise to the occasion this afternoon that he does not have the first idea what to do. It was a hack speech. Chunks of it, indeed, were taken almost word for word from the Mais speech. The Chancellor had nothing new to say. He had no response to make to the events of the past week. He repeated words that he had already circulated in a public press release.
  Today the Chancellor was glib. He could not—or would not—rise to the occasion. The people and
  1420
  industry of this country will suffer as a result of his failure to do so. The Finance Bill and the Chancellor have failed the country miserably. The Opposition condemn the Finance Bill.
  7.26 pm
  Mr. Jeff Rooker: Unfashionably, I propose to talk a little bit about the Bill. The other day I advised my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) that on Third Reading he could not talk about what is not in the Bill—he could talk only about what is in it. It appears that there has been a change of which I was not aware, and that I was wrong. I have learned a lesson for another day.
  Our proceedings end as they have progressed—without The Guardian being present. I hope that we shall hear no more complaints from that august newspaper about our efforts in this Chamber to scrutinise finance legislation.
  I shall not refer in detail to the scrutiny by the Committee. It showed the fraudulent nature of the image which the Chancellor presented when he presented his Budget. I shall give two small but important examples. First, when the Chancellor raised the tobacco tax, he gave the distinct impression that he was doing something for the health of the nation. There were headlines about it. However, it was made abundantly clear in Committee that there was not a shred of evidence to support that claim. Secondly, the Chancellor grossly misled hundreds of thousands of people who are disabled and who drive motor vehicles. We spent many hours in Committee trying to put right the misleading impression in the Chancellor's Budget speech. That was done by means of the analysis of the clauses and the transmission of long letters from Ministers to members of the Committee.
  The tax burden is now heavier. It does not matter how Ministers try to juggle the figures; in real terms, the tax burden is £22·5 billion greater this year than it was in the final year of the Labour Government. That is the Government's figure, and it can be found in the Official Report.
  The tax burden is heavier for the married couple with average earnings. They would have required an income tax reduction of 3·7p in the pound, after the measures in the Finance Bill came into effect, to restore their income tax payment to the same proportion of their earnings as it occupied in the final year of the Labour Government.
  Had we had an opportunity to debate amendment No. 10—to reduce the basic rate by a penny in the pound—we would have made that case in greater detail. Even with the 12·5 per cent. increase in the threshold, the income tax burden has increased for a family on average earnings by 3·7p in the pound.
  No hon. Member could deny that the Bill contains an attack on charities. Between the hours of 8 and 10 this morning, we heard a sustained critique—from hon. Members on both sides of the Chamber—of changes to VAT on building work, as they affect charities. We hope that that will be corrected, but we shall have to wait either for the third Finance Bill this year or for next year's Finance Bill.
  The Bill provides massive tax handouts for the well-off. The Chief Secretary approves of that because his starting point is different from mine. However, if we add the changes in capital transfer tax, capital gains tax, development land tax, investment income surcharge and

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  income tax, it is possible to find £1 billion that has been given to the well-off. The Chancellor had the brass neck to tell us that he was doing a good turn by the pensioners when he abolished investment income surcharge. He forgot to tell us that a person needs about £80,000—though not necessarily in the bank—before he pays that surcharge. The Chancellor could not bring himself to admit on Budget day that that was the sort of pensioner he was speaking of.
  The hon. Member for Carshalton and Wallington (Mr. Forman) warned us about future changes in VAT. We have still not been told why the clear, commitment in the Conservatives' 1979 manifesto not to impose VAT on food, fuel, housing and transport was not repeated in the 1983 manifesto. We are entitled to know the status of that clear 1979 commitment. The Chancellor is on record as saying, shortly after the Budget in a radio interview that was reported in the financial press, that he does not feel bound by the 1979 commitment because it was not repeated in 1983. We do not know whether there is to be a distinction between fresh food and inessential fresh food. Nevertheless, the Government will widen the VAT base next year.
  I should like to make as strong a plea as I can to Treasury Ministers, if any of them are still at the Treasury next year. When he moved the Second Reading—the day that the Government passed a closure motion on the debate for the first time in 60 years—the Chief Secretary said that the Budget was a reforming one in respect of corporation taxes. We are warned that we might get a reforming budget next year in respect of personal taxation. Today, there has been published the latest report of the Institute of Fiscal Studies on the reform of the social security system. I know that the institute has held private seminars for civil servants, Ministers and Back Bench Conservatives. Some of my hon. Friends have also participated. Before there is any substantial messing around with the income tax or the social security system, the aims that are implicit in that report should be examined in detail by the Government.
  I am not suggesting that the Opposition rubber stamp those proposals but we welcome the report because the national insurance system is a fraud and does not work as intended. The income tax system could be acceptable. It is widely accepted because of its security, confidentiality and inherent fairness. Nobody regards it as a means test although, by definition, it has to be one. It contains a proposal that would enable us to get to those whom we represent the money that we vote them in the House. The present interaction of the tax and social security systems does not fulfil that function, and it should be examined before the Government start looking at one part in isolation, with an eye on next year's Finance Bill.
  The Opposition do not like the Bill and will vote against it. Anyone who is listening to our proceedings should be aware that it is not worth the £9·75 that is printed on the cover. Do not buy it—it is a bad buy. We are the Labour party and we fight bad Tory Bills.
  7.34 pm
  The Chief Secretary to the Treasury (Mr. Peter Rees): It is three months and two days since we had the Second Reading of the Bill. In a sense—speaking for myself and perhaps for some of my hon. Friends and some Labour Members—I have lived with this Bill.
  Dr. Oonagh McDonald: What about the hon. Ladies?
  Mr. Rees: I beg the hon. Lady's pardon.
  I never develop an affection for any legislation, but this one has become part of our life. I have encountered many Finance Bills, and I do not think that the House would welcome it if I went back over their history. It is remarkable how the theme and structure of the Bill—[Interruption.] Hon. Members should give me a chance. I have been on my feet for only a few seconds.
  The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) and my right hon. Friend the Chancellor have tried to set the Bill in its economic context, and that has been helpful for the debate. The right hon. Member for Sparkbrook obviously wanted the Bill to go out 'with a bang and not a whimper, but I do not know whether he has succeeded. He does not have a particularly good track record as a Cassandra. After all, he forecast a doubling of inflation by the end of 1983, and mercifully we are still waiting for that.
  The right hon. Member for Sparkbrook made an interesting speech which perhaps at times was a little cavalier with the facts. As my right hon. Friend the Chancellor said, it is undeniable that the rise in interest rates is an unattractive phenomenon. How long it will last remains to be seen, and it is impossible to forecast the consequences. However, this rise is supportable if, as we confidently assert, the economy is sound and the lines of the Government's economic strategy are firm. As a country, we shall be well capable of surviving the fevers of a feverish July. I shall remind the House of some of the factors that lead me to make that prediction. After all, we have a combination of 3 per cent. growth and 5 per cent. inflation, which is the lowest since the 1960s.
  The gross domestic product is at the highest ever level. GDP growth is the highest in the European Community in 1983, and the OECD forecasts that this year our growth will be among the highest in the Community. That growth is broadly and soundly based. Business investment is up 8 per cent. in the six months to March, compared to the previous six months. Non-oil export volume is up 9 per cent. over the past year. About 200,000 new jobs were created between March and December last year.
  To me, those facts do not show an economy on the point of collapse. I know that the right hon. Member for Sparkbrook, having spent his formative years in Government at a time when an annual crisis was a regular political and economic phenomenon, tends to view our performance through slightly distorted lenses. Those are the facts, and they are the reasons why we assert with confidence that the recent interest rate increase is not heralding, as the right hon. Gentleman forecast, the collapse of our economy or our economic strategy.
  Nor do I detect any reasonable alternative. The right hon. Gentleman, in one of the bursts of candour that are one of the more endearing features of his Ruskin lectures, emphasised that in the country as a whole there is doubt about the Labour party's apparent inability to offer a convincing alternative counter-inflation policy. He sketched lightly the possibility of a prices-incomes policy that would have sat a little uneasily with his loudly proclaimed loyalty to the Labour party and trade union institutions. I shall leave him, on some other occasion. to reconcile those strands in his thinking.

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  If politics is about choice, the Labour party in the 12 months since the last general election has offered the country precious little choice. This was evident in its approach to the Finance Bill. I do not know what we are to make of the Labour party's priorities when we spend four hours debating the fiscal implication of subsidies to employers who provide nurseries for employees. That may be a laudable objective, but to spend four hours on it when so many other aspects of the Bill could have been examined shows a curious set of priorities. What, too, are we to make of amendment No. 10? The right hon. Member for Sparkbrook did not refer to it, but it was dealt with by his hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker). I agree that the hon. Gentleman did not have political reasons for deciding not to move the amendment. It was done in deference to the time already taken up by other amendments. The principle underlying that amendment—a cut of 1p in the basic rate of income tax—was extraordinary.
  If the hon. Gentleman is joining the Conservative party in our move towards a better balance in the tax structure, I welcome him as our newest recruit. That would be a massive conversion beside which the conversion of St. Paul would pale into insignificance.
  Mr. Rooker: Perhaps I did not make clear in my brief remarks that we tabled the amendment to give the House the first opportunity in more than 150 hours to debate personal taxation. That was not discussed on the Floor of the House, nor could it be discussed in Committee.
  We could not table an amendment to chop 3·7p in the pound from income tax, to reduce it to its level when Labour was in power, because we could not table the necessary amendments to find the extra money. We could have tabled an amendment for a token penny, as I made clear in my reference to the £1 billion tax handout to the well-off.
  Mr. Rees: I am touched by the hon. Gentleman's fidelity to the rules of order and relevance. They were not very apparent to me or to my right hon. and hon. Friends when we were discussing the Bill in Committee Room 10. [Interruption.] The House and the country can judge my contribution from Hansard rather than from prejudiced sedentary interventions of the hon. Member for Birmingham, Hodge Hill (Mr. Davis).
  I should like to speculate on how that cut, which would have cost £950 million this year and more than £1 billion in a full financial year, would have been financed. Who was it designed to benefit? We have been reminded ad nauseam about our tax reliefs by the right hon. Member for Sparkbrook and by his hon. Friends. They were referred to as handouts. I was reproved the other day for describing non-contributory social security benefits as handouts. Evidently it is a sensitive use of the phrase to describe tax reliefs as handouts. Perhaps we shall iron out that fine semantic point on another occasion.
  How are we to evaluate the proposals of a party that would have given 30p a week to a person on half average earnings, £1·20 per week to a person on average earnings and £3 a week to a person with twice average earnings, or more? What sort of priorities can we extract from an amendment in those terms? When the right hon. Gentleman moved from his general economic theme to the details of the Bill, he had to scrape the barrel to describe
  1424
  the extension of VAT to take-away foods and home improvement grants as discrimination against the least well-off in our society. His evaluation was, I am afraid, as faulty as ever.
  The hon. Member for Middlesbrough (Mr. Bell) persists in seeing public expenditure cuts in our policies. Perhaps he has not read the previous public expenditure White Paper or, indeed, our announcement last week that we are holding public expenditure broadly stable. That is not to say that some programmes will not be increased—for example, in the National Health Service. That means that there must be corresponding economies in other programmes.
  To reassure the hon. Gentleman on one point, I am pleased to be able to tell the House that, following the agreement reached at the Fontainebleau summit, the European Parliament budget committee has today voted the release of our 1983 budget refund of £440 million net from the reserve chapter of the 1984 budget. I am sure that that news will warm the hearts of hon. Members on both sides of the House. Hon. Members will find a basic identity of view there.
  I hoped that we would hear at least the contribution of an elder statesman from the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), but his contribution today was in marked contrast to that which he made in the Budget debate. I am unaware of what caused him radically to reassess his view. The structure of our policies is the same, and the Bill faithfully translates into law, or will do when it receives its Third Reading, the broad budgetary themes outlined by my right hon. Friend the Chancellor of the Exchequer. Perhaps it was because the right hon. Gentleman was surrounded by his erstwhile hon. Friends that just a touch of bitterness entered his benign and urbane character. That would make me sad.
  Mr. Roy Jenkins: It may be that just a touch of disaster has entered the Government's management of the economy.
  Mr. Rees: We respect the contribution that the hon. Gentleman made when he was Chancellor of the Exchequer and I am sorry that it did not receive in his party or in the country the appreciation that it perhaps deserved. I know that that is often the fate of Chancellors, but at least I can say that the massive contribution of my right hon. Friend the present Chancellor of the Exchequer is deeply and properly appreciated.
  My hon. Friend the Member for Carshalton and Wallington (Mr. Forman) made an elegant and notable speech. He sat with admirable fortitude and self-restraint for many hours in Committee Room 10 and we deeply appreciated his speech today and wished that there had been more opportunities for such speeches.
  Mr. Terry Davis: There were plenty of opportunities.
  Mr. Rees: I wonder. If the hon. Member for Hodge Hill reflects on the record that the Opposition announced with such pride, he may not feel that the Opposition scrutinised the Bill with quite the care and constructive approach that I know he would like to characterise his every activity.
  Labour Members did not concentrate sufficiently on the amendments made to the Bill. There was a concession on alterations to listed buildings and a concession on industrial life assurance policies caught in the pipeline on

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  Budget day. I know that that was a matter of particular anxiety to the hon. Member for Hodge Hill. The Government endeavoured to meet his worry, and I am sure that he will agree that we did so in full measure.
  Major help was provided for proprietors of furnished holiday lettings and for caravan site proprietors. There was the VAT improvement on aids for the disabled and we made further improvements to the share option scheme which I am sorry did not command the universal support of the Committee or the House. I believe that those improvements carried that imaginative concept a stage further.
  Following wide consultations, improvements were made to the provisions on offshore funds and the control of foreign companies. The revision of capital allowances will be of great benefit to the shipping and film industries, among others.
  There were also the amendments to the herd basis. My hon. Friend the Member for Banbury (Mr. Baldry) made a perceptive contribution on that matter, and details of the outgoers scheme will be announced soon by my right hon. Friend the Minister of Agriculture. Those who take advantage of the scheme will be able to take their receipts as capital receipts, because they are giving up part or whole of their business, in which case they will, admittedly, be subject to capital gains tax; but I hope that the threshold of over £5,000 will go a long way to mitigate the tax bill. Alternatively, the scheme will probably be able to be structured in such a way that payments can be taken as trading receipts and offset against accumulated losses. That provision will be made specifically in deference to the representations made to us.
  The examination of the Bill was a long one. The hon. Member for Perry Barr complained, as he was entitled to do, that the Second Reading debate was closured. It gives me no pleasure to recall that the closure came after three Labour Members had made speeches aggregating four and a half hours. I leave them and those who study our debates in Hansard to judge whether the points that they made justified such long speeches. I am not absolutely certain whether we use our time entirely rationally. Sometimes there is an element of irrationality. [Interruption.] We should leave that to those outside. I am happy to stand by its judgment. [Interruption.] The hon. Member for Great Grimsby (Mr. Mitchell) is adept at making contributions from sitting and standing positions.
  Mr. Austin Mitchell: The House prefers it when I am seated.
  Mr. Rees: I join company with the hon. Gentleman on that.
  I commend the Bill to the House. It is a good and improved Bill. It will benefit individuals, companies and the economy. It forms part of a consistent tax strategy and will be worked out against a firm economic and fiscal framework, which involves a firm control of public expenditure. The Bill is consistent with our economic strategy, which is both sound and seen to be sound. I ask my right hon. and hon. Friends to support the Bill.
  Question put, That the Bill be read the Third time:—
  The House divided: Ayes, 331 Noes, 168.

  Division No. 408]

  [7.51

  AYES

  Adley, Robert

  Alexander, Richard

  Aitken, Jonathan

  Amery, Rt Hon Julian

  1426

  Ancram, Michael

  Forth, Eric

  Arnold, Tom

  Fowler, Rt Hon Norman

  Ashby, David

  Fox, Marcus

  Aspinwall, Jack

  Franks, Cecil

  Atkins, Rt Hon Sir H.

  Freeman, Roger

  Atkins, Robert (South Ribble)

  Fry, Peter

  Baker, Nicholas (N Dorset)

  Gale, Roger

  Baldry, Anthony

  Galley, Roy

  Banks, Robert (Harrogate)

  Gardiner, George (Reigate)

  Batiste, Spencer

  Gardner, Sir Edward (Fylde)

  Bellingham, Henry

  Garel-Jones, Tristan

  Bendall, Vivian

  Gilmour, Rt Hon Sir Ian

  Benyon, William

  Glyn, Dr Alan

  Best, Keith

  Goodlad, Alastair

  Bevan, David Gilroy

  Gorst, John

  Biffen, Rt Hon John

  Gow, Ian

  Biggs-Davison, Sir John

  Gower, Sir Raymond

  Blaker, Rt Hon Sir Peter

  Grant, Sir Anthony

  Body, Richard

  Greenway, Harry

  Bonsor, Sir Nicholas

  Gregory, Conal

  Bottomley, Peter

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

  Bottomley, Mrs Virginia

  Griffiths, Peter (Portsm'th N)

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

  Grist, Ian

  Bowden, Gerald (Dulwich)

  Ground, Patrick

  Boyson, Dr Rhodes

  Grylls, Michael

  Brandon-Bravo, Martin

  Gummer, John Selwyn

  Bright, Graham

  Hamilton, Hon A. (Epsom)

  Brinton, Tim

  Hamilton, Neil (Tatton)

  Brittan, Rt Hon Leon

  Hannam, John

  Brown, M. (Brigg & Cl'thpes)

  Hargreaves, Kenneth

  Browne, John

  Harris, David

  Bruinvels, Peter

  Harvey, Robert

  Bryan, Sir Paul

  Haselhurst, Alan

  Buck, Sir Antony

  Havers, Rt Hon Sir Michael

  Budgen, Nick

  Hawkins, C. (High Peak)

  Bulmer, Esmond

  Hawkins, Sir Paul (SW N'folk)

  Burt, Alistair

  Hawksley, Warren

  Butcher, John

  Hayes, J.

  Butler, Hon Adam

  Hayhoe, Barney

  Butterfill, John

  Hayward, Robert

  Carlisle, John (N Luton)

  Heath, Rt Hon Edward

  Carlisle, Rt Hon M. (W'ton S)

  Heathcoat-Amory, David

  Cash, William

  Heddle, John

  Chapman, Sydney

  Henderson, Barry

  Churchill, W. S.

  Hickmet, Richard

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

  Higgins, Rt Hon Terence L

  Clark, Dr Michael (Rochford)

  Hind, Kenneth

  Clark, Sir W. (Croydon S)

  Hirst, Michael

  Clegg, Sir Walter

  Hogg, Hon Douglas (Gr'th'm)

  Colvin, Michael

  Holland, Sir Philip (Gedling)

  Conway, Derek

  Holt, Richard

  Coombs, Simon

  Howard, Michael

  Cope, John

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

  Corrie, John

  Howe, Rt Hon Sir Geoffrey

  Couchman, James

  Howell, Rt Hon D. (G'ldford)

  Cranborne, Viscount

  Howell, Ralph (N Norfolk)

  Critchley, Julian

  Hubbard-Miles, Peter

  Crouch, David

  Hunt, David (Wirral)

  Currie, Mrs Edwina

  Hunter, Andrew

  Dickens, Geoffrey

  Hurd, Rt Hon Douglas

  Dicks, Terry

  Irving, Charles

  Dorrell, Stephen

  Jackson, Robert

  Douglas-Hamilton, Lord J.

  Jenkin, Rt Hon Patrick

  Dover, Den

  Jessel, Toby

  du Cann, Rt Hon Edward

  Johnson Smith, Sir Geoffrey

  Durant, Tony

  Jones, Robert (W Herts)

  Dykes, Hugh

  Kellett-Bowman, Mrs Elaine

  Edwards, Rt Hon N. (P'broke)

  Kershaw, Sir Anthony

  Eggar, Tim

  Key, Robert

  Emery, Sir Peter

  King, Roger (B'ham N'field)

  Eyre, Sir Reginald

  King, Rt Hon Tom

  Fairbairn, Nicholas

  Knight, Gregory (Derby N)

  Fallon, Michael

  Knight, Mrs Jill (Edgbaston)

  Farr, Sir John

  Knowles, Michael

  Favell, Anthony

  Knox, David

  Fenner, Mrs Peggy

  Lamont, Norman

  Finsberg, Sir Geoffrey

  Lang, Ian

  Fletcher, Alexander

  Latham, Michael

  Forman, Nigel

  Lawler, Geoffrey

  Forsyth, Michael (Stirling)

  Lawrence, Ivan

  1427

  Lawson, Rt Hon Nigel

  Rees, Rt Hon Peter (Dover)

  Lee, John (Pendle)

  Renton, Tim

  Leigh, Edward (Gainsbor'gh)

  Ridley, Rt Hon Nicholas

  Lennox-Boyd, Hon Mark

  Ridsdale, Sir Julian

  Lester, Jim

  Rifkind, Malcolm

  Lewis, Sir Kenneth (Stamf'd)

  Roberts, Wyn (Conwy)

  Lightbown, David

  Robinson, Mark (N'port W)

  Lilley, Peter

  Roe, Mrs Marion

  Lloyd, Ian (Havant)

  Rossi, Sir Hugh

  Lloyd, Peter, (Fareham)

  Rost, Peter

  Lord, Michael

  Rumbold, Mrs Angela

  McCurley, Mrs Anna

  Ryder, Richard

  Macfarlane, Neil

  Sackville, Hon Thomas

  MacKay, Andrew (Berkshire)

  Sainsbury, Hon Timothy

  MacKay, John (Argyll & Bute)

  St. John-Stevas, Rt Hon N.

  Maclean, David John

  Sayeed, Jonathan

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

  Scott, Nicholas

  McQuarrie, Albert

  Shaw, Giles (Pudsey)

  Madel, David

  Shepherd, Colin (Hereford)

  Major, John

  Shepherd, Richard (Aldridge)

  Malins, Humfrey

  Shersby, Michael

  Malone, Gerald

  Silvester, Fred

  Maples, John

  Sims, Roger

  Marland, Paul

  Skeet, T. H. H.

  Marlow, Antony

  Smith, Sir Dudley (Warwick)

  Marshall, Michael (Arundel)

  Smith, Tim (Beaconsfield)

  Mates, Michael

  Soames, Hon Nicholas

  Maude, Hon Francis

  Speller, Tony

  Mawhinney, Dr Brian

  Spencer, Derek

  Maxwell-Hyslop, Robin

  Spicer, Jim (W Dorset)

  Mayhew, Sir Patrick

  Spicer, Michael (S Worcs)

  Mellor, David

  Squire, Robin

  Merchant, Piers

  Stanbrook, Ivor

  Meyer, Sir Anthony

  Stanley, John

  Miller, Hal (B'grove)

  Steen, Anthony

  Mills, Iain (Meriden)

  Stern, Michael

  Mills, Sir Peter (West Devon)

  Stevens, Lewis (Nuneaton)

  Miscampbell, Norman

  Stewart, Allan (Eastwood)

  Mitchell, David (NW Hants)

  Stewart, Andrew (Sherwood

  Moate, Roger

  Stewart, Ian (N Hertf'dshire)

  Monro, Sir Hector

  Stokes, John

  Montgomery, Fergus

  Stradling Thomas, J.

  Moore, John

  Sumberg, David

  Morris, M. (N'hampton, S)

  Tapsell, Peter

  Morrison, Hon C. (Devizes)

  Taylor, John (Solihull)

  Morrison, Hon P. (Chester)

  Taylor, Teddy (S'end E)

  Moynihan, Hon C.

  Tebbit, Rt Hon Norman

  Mudd, David

  Temple-Morris, Peter

  Murphy, Christopher

  Terlezki, Stefan

  Neale, Gerrard

  Thatcher, Rt Hon Mrs M.

  Needham, Richard

  Thomas, Rt Hon Peter

  Nelson, Anthony

  Thompson, Donald (Calder V)

  Neubert, Michael

  Thompson, Patrick (N'ich N)

  Newton, Tony

  Thorne, Neil (Ilford S)

  Nicholls, Patrick

  Thurnham, Peter

  Normanton, Tom

  Townend, John (Bridlington)

  Norris, Steven

  Townsend, Cyril D. (B'heath)

  Onslow, Cranley

  Trippier, David

  Oppenheim, Philip

  Trotter, Neville

  Ottaway, Richard

  Twinn, Dr Ian

  Page, Sir John (Harrow W)

  Vaughan, Sir Gerard

  Page, Richard (Herts SW)

  Viggers, Peter

  Parkinson, Rt Hon Cecil

  Waddington, David

  Parris, Matthew

  Wakeham, Rt Hon John

  Patten, Christopher (Bath)

  Waldegrave, Hon William

  Patten, John (Oxford)

  Walden, George

  Pattie, Geoffrey

  Walker, Bill (T'side N)

  Pawsey, James

  Wall, Sir Patrick

  Peacock, Mrs Elizabeth

  Waller, Gary

  Pollock, Alexander

  Walters, Dennis

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

  Ward, John

  Powell, William (Corby)

  Wardle, C. (Bexhill)

  Powley, John

  Warren, Kenneth

  Prentice, Rt Hon Reg

  Watson, John

  Price, Sir David

  Watts, John

  Prior, Rt Hon James

  Wells, Bowen (Hertford)

  Proctor, K. Harvey

  Wheeler, John

  Raffan, Keith

  Whitfield, John

  Raison, Rt Hon Timothy

  Whitney, Raymond

  Rathbone, Tim

  Wiggin, Jerry

  1428

  Winterton, Mrs Ann

  Young, Sir George (Acton)

  Winterton, Nicholas

  Wolfson, Mark

  Tellers for the Ayes:

  Wood, Timothy

  Mr. Carol Mather and Mr. Robert Boscawen.

  Woodcock, Michael

  Yeo, Tim

  NOES

  Adams, Allen (Paisley N)

  Hart, Rt Hon Dame Judith

  Alton, David

  Hattersley, Rt Hon Roy

  Anderson, Donald

  Haynes, Frank

  Archer, Rt Hon Peter

  Hogg, N. (C'nauld & Kilsyth)

  Ashdown, Paddy

  Holland, Stuart (Vauxhall)

  Atkinson, N. (Tottenham)

  Home Robertson, John

  Bagier, Gordon A. T.

  Howells, Geraint

  Banks, Tony (Newham NW)

  Hughes, Dr. Mark (Durham)

  Barnett, Guy

  Hughes, Robert (Aberdeen N)

  Beckett, Mrs Margaret

  Hughes, Roy (Newport East)

  Bell, Stuart

  Hughes, Sean (Knowsley S)

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

  Hughes, Simon (Southwark)

  Bermingham, Gerald

  Janner, Hon Greville

  Bidwell, Sydney

  Jenkins, Rt Hon Roy (Hillh'd)

  Blair, Anthony

  John, Brynmor

  Boothroyd, Miss Betty

  Jones, Barry (Alyn & Deeside)

  Boyes, Roland

  Kilroy-Silk, Robert

  Brown, Hugh D. (Provan)

  Kinnock, Rt Hon Neil

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

  Kirkwood, Archy

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

  Lambie, David

  Brown, Ron (E'burgh, Leith)

  Leighton, Ronald

  Bruce, Malcolm

  Lewis, Ron (Carlisle)

  Buchan, Norman

  Lewis, Terence (Worsley)

  Caborn, Richard

  Lloyd, Tony (Stretford)

  Callaghan, Jim (Heyw'd & M)

  Lofthouse, Geoffrey

  Campbell-Savours, Dale

  McDonald, Dr Oonagh

  Carter-Jones, Lewis

  McKelvey, William

  Cartwright, John

  Mackenzie, Rt Hon Gregor

  Clarke, Thomas

  McWilliam, John

  Clay, Robert

  Marek, Dr John

  Clwyd, Mrs Ann

  Marshall, David (Shettleston)

  Cocks, Rt Hon M. (Bristol S.)

  Martin, Michael

  Coleman, Donald

  Mason, Rt Hon Roy

  Conlan, Bernard

  Maxton, John

  Cook, Robin F. (Livingston)

  Meacher, Michael

  Cowans, Harry

  Meadowcroft, Michael

  Cox, Thomas (Tooting)

  Michie, William

  Craigen, J. M.

  Mikardo, Ian

  Crowther, Stan

  Millan, Rt Hon Bruce

  Davies, Rt Hon Denzil (L'lli)

  Miller, Dr M. S. (E Kilbride)

  Davies, Ronald (Caerphilly)

  Morris, Rt Hon A. (W'shawe)

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

  Morris, Rt Hon J. (Aberavon)

  Deakins, Eric

  Nellist, David

  Dewar, Donald

  Oakes, Rt Hon Gordon

  Dixon, Donald

  O'Brien, William

  Dobson, Frank

  O'Neill, Martin

  Dormand, Jack

  Orme, Rt Hon Stanley

  Dubs, Alfred

  Owen, Rt Hon Dr David

  Duffy, A. E. P.

  Park, George

  Dunwoody, Hon Mrs G.

  Parry, Robert

  Eastham, Ken

  Patchett, Terry

  Edwards, Bob (W'h'mpt'n SE)

  Pavitt, Laurie

  Evans, John (St. Helens N)

  Pendry, Tom

  Fatchett, Derek

  Penhaligon, David

  Faulds, Andrew

  Pike, Peter

  Fields, T. (L'pool Broad Gn)

  Powell, Raymond (Ogmore)

  Fisher, Mark

  Prescott, John

  Flannery, Martin

  Redmond, M.

  Foot, Rt Hon Michael

  Rees, Rt Hon M. (Leeds S)

  Foster, Derek

  Richardson, Ms Jo

  Foulkes, George

  Roberts, Allan (Bootle)

  Fraser, J. (Norwood)

  Robertson, George

  Freeson, Rt Hon Reginald

  Rogers, Allan

  George, Bruce

  Rooker, J. W.

  Gilbert, Rt Hon Dr John

  Ross, Ernest (Dundee W)

  Godman, Dr Norman

  Sedgemore, Brian

  Golding, John

  Sheerman, Barry

  Hamilton, James (M'well N)

  Sheldon, Rt Hon R.

  Hamilton, W. W. (Central Fife)

  Shore, Rt Hon Peter

  Hancock, Mr. Michael

  Short, Ms Clare (Ladywood)

  Hardy, Peter

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

  Harrison, Rt Hon Walter

  Silkin, Rt Hon J.

  1429

  Skinner, Dennis

  Wardell, Gareth (Gower)

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

  Wareing, Robert

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

  Weetch, Ken

  Snape, Peter

  Welsh, Michael

  Soley, Clive

  Wigley, Dafydd

  Spearing, Nigel

  Williams, Rt Hon A.

  Stott, Roger

  Winnick, David

  Straw, Jack

  Woodall, Alec

  Thomas, Dafydd (Merioneth)

  Wrigglesworth, Ian

  Thorne, Stan (Preston)

  Young, David (Bolton SE)

  Tinn, James

  Torney, Tom

  Tellers for the Noes:

  Wainwright, R.

  Mr. Allen McKay and Mr. Austin Mitchell.

  Wallace, James

  Question accordingly agreed to.
  Bill read the Third time, and passed.

  CAPITAL TRANSFER TAX BILL [LORDS]
  Read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. Major.]
  Committee tomorrow.

  BUSINESS OF THE HOUSE
  Motion made, and Question proposed,
  That, at the next sitting of the House on which Motions are moved on behalf of the Committee of Selection, such Motions may be proceeded with, though opposed, for one and a half hours after the first Motion has been entered upon, and, if proceedings on the Motions have not been disposed of by that hour, any Amendments to the first Motion which may have been selected by Mr. Speaker may be moved, the Questions thereon shall be put forwith, and Mr. Speaker shall then put the Question upon the said Motion and any Questions necessary to dispose of the other Motions and of any Amendments moved thereto which have been selected by him; and that, notwithstanding the practice of the House, each Motion shall be regarded as a single Motion. —[Mr. Major.]
  Question put:—
  The House divided: Ayes 263, Noes 10.

  Division No. 409]

  [8.06 pm

  AYES

  Adams, Allen (Paisley N)

  Edwards, Rt Hon N. (P'broke)

  Adley, Robert

  Eggar, Tim

  Alexander, Richard

  Emery, Sir Peter

  Amery, Rt Hon Julian

  Eyre, Sir Reginald

  Ancram, Michael

  Fallon, Michael

  Arnold, Tom

  Farr, Sir John

  Ashby, David

  Favell, Anthony

  Aspinwall, Jack

  Fenner, Mrs Peggy

  Atkins, Robert (South Ribble)

  Fletcher, Alexander

  Baker, Nicholas (N Dorset)

  Forman, Nigel

  Baldry, Anthony

  Forsyth, Michael (Stirling)

  Banks, Robert (Harrogate)

  Forth, Eric

  Batiste, Spencer

  Fowler, Rt Hon Norman

  Bendall, Vivian

  Fox, Marcus

  Benyon, William

  Franks, Cecil

  Best, Keith

  Freeman, Roger

  Biffen, Rt Hon John

  Gale, Roger

  Blaker, Rt Hon Sir Peter

  Garel-Jones, Tristan

  Body, Richard

  Glyn, Dr Alan

  Boothroyd, Miss Betty

  Goodlad, Alastair

  Bottomley, Peter

  Gorst, John

  Bowden, Gerald (Dulwich)

  Gow, Ian

  Boyson, Dr Rhodes

  Gower, Sir Raymond

  Brandon-Bravo, Martin

  Grant, Sir Anthony

  Bright, Graham

  Greenway, Harry

  Brinton, Tim

  Gregory, Conal

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

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

  Browne, John

  Griffiths, Peter (Portsm'th N)

  Bryan, Sir Paul

  Grist, Ian

  Buck, Sir Antony

  Ground, Patrick

  Bulmer, Esmond

  Grylls, Michael

  Butler, Hon Adam

  Gummer, John Selwyn

  Butterfill, John

  Hamilton, Neil (Tatton)

  Carlisle, John (N Luton)

  Hargreaves, Kenneth

  Carlisle, Kenneth (Lincoln)

  Harris, David

  Carlisle, Rt Hon M. (W'ton S)

  Harvey, Robert

  Cash, William

  Haselhurst, Alan

  Chapman, Sydney

  Havers, Rt Hon Sir Michael

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

  Hawkins, Sir Paul (SW N'folK)

  Clark, Dr Michael (Rochford)

  Hayes, J.

  Clegg, Sir Walter

  Hayhoe, Barney

  Cocks, Rt Hon M. (Bristol S.)

  Haynes, Frank

  Coleman, Donald

  Heathcoat-Amory, David

  Conway, Derek

  Heddle, John

  Coombs, Simon

  Henderson, Barry

  Cope, John

  Higgins, Rt Hon Terence L.

  Corrie, John

  Hind, Kenneth

  Couchman, James

  Hirst, Michael

  Cranborne, Viscount

  Hogg, N. (C'nauld & Kilsyth)

  Crouch, David

  Holt, Richard

  Crowther, Stan

  Home Robertson, John

  Currie, Mrs Edwina

  Howard, Michael

  Dorrell, Stephen

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

  Douglas-Hamilton, Lord J.

  Howe, Rt Hon Sir Geoffrey

  Dover, Den

  Howell, Rt Hon D. (G'ldford)

  du Cann, Rt Hon Edward

  Howell, Ralph (N Norfolk)

  Durant, Tony

  Hughes, Dr. Mark (Durham)

  Dykes, Hugh

  Hunt, David (Wirral)

  Eastham, Ken

  Hurd, Rt Hon Douglas

  1431

  Jackson, Robert

  Mayhew, Sir Patrick

  Jenkin, Rt Hon Patrick

  Mellor, David

  Jessel, Toby

  Merchant, Piers

  Johnson-Smith, Sir Geoffrey

  Meyer, Sir Anthony

  Jones, Robert (W Herts)

  Miller, Hal (B'grove)

  Key, Robert

  Mitchell, David (NW Hants)

  King, Roger (B'ham N'field)

  Montgomery, Fergus

  King, Rt Hon Tom

  Moore, John

  Knight, Gregory (Derby N)

  Morris, Rt Hon A. (W'shawe)

  Knowles, Michael

  Morris, M. (N'hampton, S)

  Knox, David

  Morrison, Hon P. (Chester)

  Lamond, James

  Moynihan, Hon C.

  Lamont, Norman

  Murphy, Christopher

  Lang, Ian

  Needham, Richard

  Latham, Michael

  Nelson, Anthony

  Lawler, Geoffrey

  Neubert, Michael

  Lawson, Rt Hon Nigel

  Newton, Tony

  Lee, John (Pendle)

  Nicholls, Patrick

  Leigh, Edward (Gainsbor'gh)

  Norris, Steven

  Lennox-Boyd, Hon Mark

  Oppenheim, Philip

  Lester, Jim

  Ottaway, Richard

  Lightbown, David

  Page, Sir John (Harrow W)

  Lilley, Peter

  Page, Richard (Herts SW)

  Lloyd, Ian (Havant)

  Parkinson, Rt Hon Cecil

  Lloyd, Peter, (Fareham)

  Parris, Matthew

  Lord, Michael

  Patten, Christopher (Bath)

  McCurley, Mrs Anna

  Patten, John (Oxford)

  Macfarlane, Neil

  Pattie, Geoffrey

  McKay, Allen (Penistone)

  Pawsey, James

  MacKay, Andrew (Berkshire)

  Peacock, Mrs Elizabeth

  MacKay, John (Argyll & Bute)

  Pollock, Alexander

  Maclean, David John

  Powley, John

  McQuarrie, Albert

  Prentice, Rt Hon Reg

  McWilliam, John

  Price, Sir David

  Major, John

  Proctor, K. Harvey

  Malins, Humfrey

  Raffan, Keith

  Malone, Gerald

  Rathbone, Tim

  Marland, Paul

  Rhys Williams, Sir Brandon

  Marlow, Antony

  Ridley, Rt Hon Nicholas

  Marshall, Michael (Arundel)

  Rifkind, Malcolm

  Mason, Rt Hon Roy

  Roberts, Wyn (Conwy)

  Mates, Michael

  Robinson, Mark (N'port W)

  Maude, Hon Francis

  Rossi, Sir Hugh

  Mawhinney, Dr Brian

  Rowe, Andrew

  1432

  Rowlands, Ted

  Thatcher, Rt Hon Mrs M.

  Rumbold, Mrs Angela

  Thompson, Donald (Calder V)

  Ryder, Richard

  Thorne, Neil (Ilford S)

  Sackville, Hon Thomas

  Thurnham, Peter

  Sainsbury, Hon Timothy

  Townsend, Cyril D. (B'heath)

  St. John-Stevas, Rt Hon N.

  Trotter, Neville

  Shepherd, Colin (Hereford)

  Vaughan, Sir Gerard

  Shersby, Michael

  Waddington, David

  Sims, Roger

  Wakeham, Rt Hon John

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

  Walker, Bill (T'side N)

  Smith, Sir Dudley (Warwick)

  Wall, Sir Patrick

  Smith, Tim (Beaconsfield)

  Waller, Gary

  Soames, Hon Nicholas

  Warren, Kenneth

  Speller, Tony

  Watson, John

  Spicer, Jim (W Dorset)

  Watts, John

  Spicer, Michael (S Worcs)

  Wells, Bowen (Hertford)

  Squire, Robin

  Welsh, Michael

  Stanbrook, Ivor

  Wheeler, John

  Stanley, John

  Whitfield, John

  Stern, Michael

  Wiggin, Jerry

  Stevens, Lewis (Nuneaton)

  Williams, Rt Hon A.

  Stevens, Martin (Fulham)

  Wolfson, Mark

  Stewart, Allan (Eastwood)

  Wood, Timothy

  Stewart, Andrew (Sherwood)

  Woodcock, Michael

  Stewart, Ian (N Hertf'dshire)

  Yeo, Tim

  Stradling Thomas, J.

  Young, Sir George (Acton)

  Sumberg, David

  Tapsell, Peter

  Tellers for the Ayes:

  Taylor, Teddy (S'end E)

  Mr. Robert Boscawen and Mr. Carol Mather.

  Tebbit, Rt Hon Norman

  Temple-Morris, Peter

  NOES

  Alton, David

  Wainwright, R.

  Bruce, Malcolm

  Wallace, James

  Cartwright, John

  Wrigglesworth, Ian

  Howells, Geraint

  Meadowcroft, Michael

  Tellers for the Noes:

  Owen, Rt Hon Dr David

  Mr. Simon Hughes and Mr. Michael Hancock.

  Thomas, Dafydd (Merioneth)

  Question accordingly agreed to.

  Mentally Handicapped (Riding Scheme)
  Motion, made, and Question proposed, That this House do now adjourn.—[Mr. Major.]
  8.17 pm
  Mr. Harry Greenway: I am sure that in introducing an Adjournment debate on sport—in this instance riding—the House will join me in wishing my hon. Friend the Member for Lewisham, East (Mr. Moynihan) good luck as he takes off tomorrow morning for the Olympic games, where he will be in the British eight and fighting for Britain, as he does in so many excellent ways. I am sure that we all wish him well. We shall be watching for him and rooting for him.
  The debate is directed to another sort of sportsman and one with which the world is in great sympathy, and that is the mentally handicapped rider. For 20 years I have been interested in, supporting and working for children and adults who have been taking part in riding schemes that have been promoted for most of that time by the Mencap riding fund that is run by a gentleman called Joe Royds of Hereford, who has done a magnificent job. He has travelled about the world and this country begging for money, with which he has produced enabling schemes for the mentally handicapped to ride. We have all found that there is tremendous benefit to the mentally handicapped who participate in these schemes.
  In recent years, especially during the incumbency of my hon. Friend the Minister of State, Department of Employment, the schemes have had magnificent support from the Department of Employment. My hon. Friend has taken a central part in ensuring that the schemes are well supported and well regarded. I pay tribute to him on behalf of the mentally handicapped, who cannot speak for themselves, and thank him for all that he has done. The riding schemes for the mentally handicapped differ from those for the disabled, which come under the aegis of the British Horse Society. The two run together, but not as one. I pay great tribute to the Riding for the Disabled association for the marvellous work it does for people of all ages, but especially for children, who suffer from a handicap—blindness, deafness, autism, maladjustment, educational subnormality. The chairman of the association is Mrs. Patricia Langford, who is to be congratulated on all that she and her scheme does.
  I have worked with both schemes for 20 years and have been especially involved in promoting schemes for mentally handicapped children and other children with special difficulties and needs in London schools. Twenty years ago, I founded a riding scheme for mentally handicapped children and ordinary children who suffer no disability but live in high rise city flats. They have no access to the countryside, and are not permitted to have animals—not even a mouse—in those flats. That riding scheme celebrated its 20th anniversary in May 1984. We had a marvellous party for the children, and some of those who participated in the scheme 20 years ago were there. It was a thrilling experience. Many of those children have gone on to become involved in careers of one sort or another involving horses, but that is a separate story.
  The riding schemes sponsored by Mencap are financed under the Manpower Services Commission's community programme which is designed to provide temporary
  1434
  employment for the long-term unemployed and projects of value to the community. I gather from the MSC that Mencap has contracted to provide about 750 jobs, many of them part time, in nine projects. About 350 of those jobs involve starting schemes to provide assistance for the mentally handicapped. The community programme participants assist the handicapped to ride. They help to maintain the horses and learn animal husbandry, if they are interested, as well as how to assist the handicapped.
  The MSC is sending me detailed information on what is happening under some of those schemes which have recently come into being. Basically, all the schemes have one objective—to get mentally handicapped children and adults on horseback to receive the therapy that will bring to them. The Mencap projects have undoubtedly been successful. That fact has been recognised by the Ministry and especially my hon. Friend the Minister of State. That has been shown by the fact that the projects have been given funding for a second year.
  The handicapped have profited from riding, experiencing confidence and a sense of worth in their participation in the project. The severely mentally handicapped, who have more obvious disabilities, have profited from contact with the long-term unemployed who are involved in the community projects. That is a notable benefit of the scheme. It is a moving experience to help mentally handicapped people in that way. The mentally handicapped quickly form a relationship with other people if those people are sufficiently relaxed. If one does what is needed—leading a horse, helping a child or adult to mount, and helping a child while he is on a horse or pony—one experiences the natural gratitude of and a sense of relationship with the mentally handicapped, and that is hugely rewarding. The Government have done a great thing in fostering that scheme, and bringing out those aspects. Mentally handicapped adults do not gain great therapy from riding, but they have a greatly enhanced sense of dignity and socialisation. The mutual distrust between the handicapped and the non-handicapped is weakened.
  Great help is given to the mentally handicapped through horse contact. It is rewarding to both riders and helpers in every sense. I know that it is an expensive project, and I am grateful for the resources committed to it by my hon. Friend the Minister. Two thirds or three quarters of children aged between 5 and 16— the age range that profits most—achieve great benefits from riding, and it is, therefore, therapy. A rider's outlook on himself is changed by the magical powers of the horse. He changes from an individual feeling like a failed vegetable to one feeling a real person with a chance and purpose in life. That change is a catalyst for the acceptance of further learning of all skills—primary, personal and, in some cases, secondary and social.
  I could say a great deal on the subject, but I want now to consider the figures involved and urge my hon. Friend to do even more, if he can. Mencap has undertaken to sponsor 750 places under the community programme, and 61 per cent. of those are for riding projects directly for the mentally handicapped. The localities of the riding projects are Blackburn, Leeds, Liverpool, Darlington, Glasgow, Halifax, Rochdale, Caterham in Surrey, and Sheffield. That is a limited spread, welcome though it is. I remind the House that the mentally handicapped live in all parts of the country, and I am sure that the House will share my sense of aspiration for a spread of this excellent activity.

  1435
  I should like to have such a project in Ealing in my constituency as I know that many adults and children would benefit greatly from it.
  Each of the schemes has been approved by the Manpower Services Commission for a second year of funding from 1 March 1984. In addition, approval has been given for the establishment of a 10th project in Wales, which will start on 1 September 1984. It is very welcome because it is the first scheme outside England. There is much to be said for giving help in as wide an area as possible.
  A person of distinction recently watched riding activities for the mentally handicapped, and wrote to me describing them. He said:
  "A wide variety of mentally handicapped people—differing from each other in age, sex and physical and mental ability—got a great deal of very visible pleasure from their riding. Some of that, I would guess, came from being the centre of attention in a large institution where people can easily be dwarfed by buildings or "lost" in the crowd. Some came from the sense of achievement; some from being up in the air and looking down at the rest of the world for a change; and some from the relationship from the young helpers—a natural and unpretentious relationship. I dare say that the physical contact with the horse also played its part."
  That individual wrote to me as a non-horse person, and said that he could not pretend to judge. But I can judge because I have ridden horses and ponies all my life and am a qualified instructor in all aspects of horse care and riding, including show jumping, cross country riding and so on. I have always been interested in the value of this sport for the underdog who has no other chance in life. My effort has been to bring people who do not have a chance by birth or any other way into relationships with horses. One can see the value of that.
  It is nice to see you in the Chair, Mr. Speaker. I am charmed and touched that you should take the Chair for this debate at the end of such a long sitting. I know that that shows your warm interest in the subject.
  It is worth recounting that there is something between the horse or pony and the mentally handicapped person; there is an indefinable rapport. One cannot describe it, but one can see it. Some mentally handicapped people cannot sit on horses, but to most of them it is natural. When they sit on horseback or ponyback, there is living communication between the two. It is of huge benefit to horses because they become totally relaxed, however difficult, thoroughbred and awkward they might be in other circumstances. Mentally handicapped people are always relaxed. Being high up is nice for them. There is also an extraordinary acceptance of the movement and feeling of the horse, and the smells that come from it. The unity of moving together gives an incentive to speak, live and find something new in life. The fact that we manage to do that for the mentally handicapped, who cannot speak for themselves, means that we are giving something in a world in which so many of them have absolutely nothing. What could be better. My correspondent went on to say of what he saw:
  "It is clear that the riding schemes have a part to play in the much wider process of socialisation—habilitation—which needs to precede the movement of mentally handicapped people from large hospitals"—
  my correspondent saw the riding at a hospital—
  "to a small community unit or ordinary house, and the more normal life that goes with it. For those who are living in the community, this is one dimension of the normal range of
  1436
  activities that they can enjoy and can share with others. For the young unemployed people who make it possible, there is the chance to work with horses, to do something useful that folk are willing to come to see and to write up, and to get to know and work alongside mentally handicapped people, obviously also offers something of importance."
  This is not an area for sentimentality. It is not necessary. To be unduly sentimental is to insult the mentally handicapped. They do not need it and do not look for it. They have a marvellous way of establishing relations with people such as their own families and those whom they have never met before in a very short space of time, as well as with animals.
  As a society we must always take advantage of the chances of greater civilisation that proper systems, encouragement and relationships with the mentally handicapped give us. Having the horse and the pony—with all that that means—as allies in this important area is of the highest value. I ask my hon. Friend the Minister to say that the Government not only will continue to support to the excellent work that has been allowed to start, but will go further, as funds permit. The phrase "as funds permit" can often be a little nebulous and meaningless, but let funds permit at an early stage. Let us have great expansion this year and next year, but always with proper control because that is fundamental. I have pleasure in asking the House to accept my words on this important subject.
  8.34 pm
  Mr. Humphrey Malins: I am most grateful to my hon. Friend the Member for Ealing, North (Mr. Greenway) and to my hon. Friend the Minister for allowing me to say a few words in this important debate and to echo the comments of my hon. Friend the Member for Ealing, North who has such an outstanding reputation in this area.
  On 9 June, in company with you, Mr. Speaker, and other Croydon Members, I was privileged to be present when the Mencap riding fund launched its project at St. Lawrence's hospital in Caterham, a very fine hospital serving a wide area full of caring people. I know that for you, too, Mr. Speaker, it was a heartwarming day. The purpose was to launch the scheme established by Mencap in conjunction with the Manpower Services Commission.
  The demonstration that we saw showed what could be achieved and how much benefit could be derived from riding by handicapped and physically disabled people. We saw the powerful, therapeutic bond established between the horses and their handicapped riders and it was encouraging to see how riding could help people to get better. I am sure that statistics will show that handicapped people can be helped to get better and better through these schemes. St. Lawrence's hospital not only serves its own residents but provides immense help to the surrounding community and the many non-resident handicapped people in the area. As we know, the Croydon health authority is also greatly interested in the project and well aware of the benefit that it brings.
  I strongly support the comments of my hon. Friend the Member for Ealing, North. I believe that these riding schemes are the thing of the future for the handicapped, especially for children. Youngsters can be seen to improve constantly and to gain confidence through riding. In many cases, they get back to complete normality. At the end of the day, I believe that money will be saved as a result of the schemes because it costs so much to look after the

  1437
  serverely handicapped. As well as providing enormous pleasure and improvement for them, public money can be saved. I know that you, Mr. Speaker, admired the scheme at St. Lawrence's enormously as did I and other Croydon Members, including my hon. Friend the Member for Croydon, South (Sir W. Clark) and my hon. Friend the Financial Secretary who are thoroughly involved in this. We wish the project all the very best for the future.
  8.38 pm
  The Minister of State, Department of Employment (Mr. Peter Morrison): It is not often that one is able to associate you, Mr. Speaker, with a particular cause, but, as my hon. Friend the Member for Croydon, North-West (Mr. Malins) so ably said today, and indeed informed me beforehand, I know that Mencap is something very special to you.
  We should not be able to discuss this subject had not my hon. Friend the Member for Ealing, North (Mr. Greenway) raised it on the Adjournment, and I am extremely grateful to him for doing so. I am also very grateful for his kind words about my own association with the community programme.
  I begin by saying that I agree entirely with my hon. Friend's comments about our hon. Friend the Member for Lewisham, East (Mr. Moynihan) who leaves tomorrow to take part in the Olympic games. I am sure that the whole House wishes him every success. I hope that he will return with a gold medal, not least because I have never seen one and I should like to do so.
  The community programme, which is so closely associated with Mencap, is an important part of our general strategy to help the long-term unemployed back into the world of work. The real way of getting them back into work is to follow sensible economic and financial strategies which will set the economy to rights, but meanwhile, we are spending about £2 billion on special employment and training measures. That vast sum of money is currently giving direct help to about 624,000 people.
  Many of these measures help the long-term unemployed. Apart from the community programme, there is the enterprise allowance scheme, from which 34,000 people have benefited, more than 10,000 of whom have been long-term unemployed. Our voluntary projects programme, which is closely connected with charities such as Mencap, provides work-relates opportunities for unemployed people to take up on a voluntary basis. More than half the participants in that programme are long-term unemployed. The job release scheme also helps the long-term unemployed.
  The community programme was announced by my right hon. and learned Friend the then Chancellor of the Exchequer—now the Foreign Secretary—on 9 March 1982. It is a successor to the community enterprise programme, which provided 30,000 temporary jobs to help the long-term unemployed. The community programme will provide up to 130,000 places. My hon. Friend asks for more places for the programme because it is doing such good work. He will appreciate that there has already been a significant expansion. The community enterprise programme provided only full-time jobs, but the community programme provides both full and part-time jobs. Our target is 130,000 filled places, and at the end of May 116,000 places had been filled. Each year, some 200,000 unemployed people will participate.
  1438
  I should remind the House that the cost is large. Some £500 million in taxpayers' money is committed to the programme. But—money aside—we are dependent upon sponsors to come forward with ideas to help the unemployed and benefit the local community. My hon. Friend has ably pointed out the benefit to Mencap.
  The work proposed must improve the long-term employment prospects of those who take part. If a sponsored application is to succeed, the proposed work must be of direct and tangible benefit to the community. It must also be work not done in the normal course of events. Those eligible to take part must have been unemployed for more than 12 out of the previous 15 months if they are aged over 25. If they are aged between 18 and 24, they must have been unemployed for six out of the previous nine months. Of the entrants, 55 per cent. are in the 18 to 24 age group, and 3·5 per cent. are registered disabled. Last November we announced that the programme would extend to October 1986 and that the target of 130,000 filled places was to be retained.
  My hon. Friend would like more places to be provided. Competition for places is now intense. The projects are considered by local area manpower boards, on which industry and other organisations are represented. It is those boards' role to decide which of the many projects that they consider will do most to improve the employment prospects of participants and provide direct and tangible community benefits.
  In view of the competition for places, no guarantes can be given that individual projects will have their funding renewed at the end of each year. There is a wide variety of projects under the community programme. There are environmental schemes to clear up eyesores—I have seen a few—there are schemes that encourage energy conservation such as loft insulation for elderly people and there are schemes involved in construction or renovation work on buildings that are used by the local community. There are also schemes such as the Mencap riding scheme, which helps disadvantaged groups socially.
  I am genuinely grateful—I know that the Manpower Services Commission is as well—for the contribution of voluntary organisations such as Mencap to the success of the programme. The sponsors are local authorities to the tune of 47 per cent. and voluntary organisations to the tune of 40 per cent. Other voluntary organisations help disabled people under the community programme. The National Elfrida Rathbone Society, Outset, Physically Handicapped and Able Bodies and Schemes for the Deaf also make a significant contribution.
  If hon. Members did not know of Mencap's valuable work before today, thanks to my hon. Friend the Member for Ealing, North they do now. It is principally an organisation of parents. It operates throughout the United Kingdom and provides a range of services for mentally handicapped people, their families and professionals who work for them. It aims to improve provision for mentally handicapped children and adults by increasing public knowledge and concern, and by mounting projects such as the riding schemes to show that mentally handicapped people can be trained to expand their capabilities.
  Mencap's secretary-general is Brian Rix and it was involved in the community programme from the start. Mr. Joe Royds, the manager of Mencap's riding fund, has made an outstanding contribution for a considerable time. In a letter, he wrote:

  1439
  "the Community Programme has been published and the situation has changed from dead slow to full steam ahead! It has been seen as the green light for us, which indeed it specifically is."
  The first riding scheme was at Great Barr in Birmingham and was funded under the old youth opportunities programme from 1979 to 1982. It was sponsored as a community projects scheme by the Walsall Guild for Voluntary Service. The riding schemes were not considered suitable for funding under the youth training scheme, so Mencap started negotiations in October 1982 for support under the community programme. Its first agreement to act as a national community programme agent was signed in February 1983. Its current agreement, which started on 1 March 1984, is for 730 places. Riding projects now account for 61 per cent. of them. The driving force behind the riding schemes has been Mr. Joe Royds. I have met him and I have been deeply impressed by his drive and determination to get his projects off the ground.
  Projects such as these do not happen by mistake, but thanks to hard work and personal commitment. That is what Mr. Royds and, no doubt, many others in Mencap's organisation have been doing. They have been working hard and committing themselves personally. As a result, they now have nine schemes across the country, and my hon. Friend the Member for Ealing, North referred to some of them. They include Liverpool, and Sheffield, and the right hon. Member for Glasgow, Govan (Mr. Millan) will
  1440
  be pleased to hear that there is one in Glasgow. There is a further project for 50 places in the pipeline. This was approved on 10 July by the area manpower board, and will operate in Newport, Gwent.
  As my hon. Friend pointed out, the scheme's aim is to improve the skills and self-confidence of mentally handicapped children and adults. I have no doubt that the leaders and the helpers, working together with the mentally handicapped, achieve that aim. In an article in the Horse and Hound in July 1983 it was said:
  "The leaders and helpers appeared to forget themselves completely in their devotion to the job. Their reward is not the fifty quid a week less bus fares, but seeing the results of their labours. When you have changed an unresponsive dullard into a lively child you tend to forget the rate for the job."
  I am sure that is what all those who participate in the scheme feel.
  I am grateful to my hon. Friend the Member for Ealing, North for raising this matter on the Adjournment. It is nice, for once, to be able to discuss something on which there is no disagreement in the House. We all know that Governments, voluntary organisations and those who are less fortunate are working together in harmony. I am genuinely grateful to my hon. Friend for this opportunity to debate the contribution that Mencap and those involved have made to the community programme since its inception.
  Question put and agreed to.
  Adjourned accordingly at eight minutes to Nine o' clock.

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  Handicapped Persons (Housing Benefit)
  Handicapped Persons (Housing Benefit)
  Insurance Benefits
  Insurance Benefits
  Non-departmental Public Bodies
  Non-departmental Public Bodies
  Under-fives
  Under-fives
  Tameside and Glossop Health Authority (Managerial Appointment)
  Tameside and Glossop Health Authority (Managerial Appointment)
  Liverpool Area Health Authority (Women's Health Care)
  Liverpool Area Health Authority (Women's Health Care)
  Liverpool Area Health Authority (Ministerial Visit)
  Liverpool Area Health Authority (Ministerial Visit)
  Specialist Claims Control Teams
  Specialist Claims Control Teams
  Miners (Loans and Donations)
  Miners (Loans and Donations)
  Heating Additions
  Heating Additions
  Sellafield (Black Report)
  Sellafield (Black Report)
  Diet and Cardiovascular Disease
  Diet and Cardiovascular Disease
NATIONAL FINANCE
  Stamp Duty
  Stamp Duty
  International Debt
  International Debt
  National Debt
  National Debt
  Tax Credit Scheme
  Tax Credit Scheme
  Wage Settlements
  Wage Settlements
  Company Profitability
  Company Profitability
  Literature (Importation)
  Literature (Importation)
  Manufacturing Industry
  Manufacturing Industry
  Company Liquidity
  Company Liquidity
  Interest Rates
  Interest Rates
  Enterprise Oil
  Enterprise Oil
  Companies (Capital Issues)
  Companies (Capital Issues)
  European Community (Own Resources)
  European Community (Own Resources)
  Capital Allowances
  Capital Allowances
  Corporation Tax
  Corporation Tax
  Economic Progress
  Economic Progress
  Privatisation
  Privatisation
  Take-away Food (VAT)
  Take-away Food (VAT)
  Inflation
  Inflation
  Productivity
  Productivity
  Economic Progress
  Economic Progress
  Value Added Tax
  Value Added Tax
  Public Sector Borrowing Requirement
  Public Sector Borrowing Requirement
  European Community Budget
  European Community Budget
  Retail Price Index (Television Licence Fee)
  Retail Price Index (Television Licence Fee)
  Investment
  Investment
  European Community (Budget Repayment)
  European Community (Budget Repayment)
  Pensions (Adjustment Delays)
  Pensions (Adjustment Delays)
  Coal Industry Dispute
  Coal Industry Dispute
  Bogus Charities (Tax Relief)
  Bogus Charities (Tax Relief)
  Departmental Staff
  Departmental Staff
  Disabled Persons and Charities (Taxation)
  Disabled Persons and Charities (Taxation)
  Disabled Persons (Income Tax Relief)
  Disabled Persons (Income Tax Relief)
  Building Alterations (VAT)
  Building Alterations (VAT)
  Non-departmental Public Bodies
  Non-departmental Public Bodies
  Home Owners (Tax Relief)
  Home Owners (Tax Relief)
  Business Start-up and Expansion Schemes
  Business Start-up and Expansion Schemes
FOREIGN AND COMMONWEALTH AFFAIRS
  Extradition
  Extradition
  Hong Kong
  Hong Kong
  Non-departmental Public Bodies
  Non-departmental Public Bodies
  Mr. Robin Walsh
  Mr. Robin Walsh
  British Prisoners (Oman)
  British Prisoners (Oman)
  Gibraltar (Air Space)
  Gibraltar (Air Space)
  Gibraltar (Border Restrictions)
  Gibraltar (Border Restrictions)
  Extradition Treaties
  Extradition Treaties
  EC (Spain)
  EC (Spain)
  Chemical Weapons
  Chemical Weapons
  Falkland Islands (Hospital Fire Inquiry)
  Falkland Islands (Hospital Fire Inquiry)
Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Exeter): The CHAIRMAN OF COMMITTEES on the Woolsack.

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

Juries (Disqualification) Act,

Data Protection Act,

Mental Health (Scotland) Act,

Child Abduction Act,

Cycle Tracks Act,

Video Recordings Act,

Animal Health and Welfare Act,

Agricultural Holdings Act,

Matrimonial and Family Proceedings Act,

Selby Bridge Act,

Swavesey Bye-Ways Act,

Charing Cross and Westminster Medical School Act,

Anglian Water Authority (King's Lynn Tidal Defences) Act,

Cardiff City Council Act.

Anglo-Spanish Relations
Lord Boyd-Carpenter: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are aware of the speech made by the King of Spain on 12th June in which demands were made for the transfer to foreign powers of two British territories; and whether in the interests of Anglo-Spanish relations they will ask the Spanish Government to seek to restrain such unfriendly utterances.
The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): My Lords, I am not aware that the speech to which my noble friend refers included a reference in the terms described. We have, however, expressed our regret to the Spanish Government at the terms of the joint Spanish/Argentine communique which was issued on 13th June and which my noble friend may have in mind.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that if he reads The Times for the appropriate date he will see a report of the speech, which apparently has not been challenged? If he satisfies himself in that way, will he suggest to the Spanish Government that putting sentiments of this kind into
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the mouth of a much respected monarch does no good to Anglo-Spanish relations?
Lord Trefgarne: My Lords, I believe that our reports of the speech to which my noble friend refers differ from those which may have appeared in the press; but our views about the communiqué are, of course, quite clear.
Lord Brockway: My Lords, do the Government accept the principle of self-determination by the people of these territories, as to who should govern them?
Lord Trefgarne: Yes, my Lords, of course.
Lord Harmar-Nicholls: My Lords, does my noble friend think that the terms of the communiqué augur ill or well as regards the chances of Spain, with our support. joining the EEC?
Lord Trefgarne: My Lords, the communiqué was not all bad because, for example, it said that they were hoping to solve their problems by peaceful means. With regard to the possibility of Spain's entry into the European Economic Community, we have of course made our position clear on that matter.

Airline Industry: Reports
3.3 p.m.
Baroness Burton of Coventry: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have as yet received the report of the inspector on the public inquiry into the siting of London's third airport and that from the Civil Aviation Authority on the future development of the British airline industry and, if not, when they expect to do so.
Lord Trefgarne: My Lords, neither of these reports has yet been received. My right honourable friend the Secretary of State for Transport expects to receive the Civil Aviation Authority's report on its review of airline competition policy within the next few days, and that of the inspector into the Stansted/Heathrow Terminal 5 inquiries later this summer.
Baroness Burton of Coventry: My Lords, may I ask the Minister (as he was asked this question in the debate on 27th June and did not give an answer) whether he is able to say that following the publication of the Civil Aviation Authority's report there will be a debate in both Houses of Parliament? May I also ask him whether that debate will take place before the Government announce a decision?
Lord Trefgarne: My Lords, if the noble Baroness is referring to the Civil Aviation Authority's report, then I have to say that the matter of a debate is not one for me but is one for the usual channels. I am certain that they will take note of the views of the noble Baroness. I imagine that it will also rather depend on what the report says.
Lord Peyton of Yeovil: My Lords, will my noble friend bear in mind that, as is not unusual, there are various versions—or one version, really—of the Civil Aviation Authority's report on the future of British Airways? Will my noble friend be good enough to inform his right honourable friend the Secretary of State for Transport that there would be considerable anxiety if the Government were to take action which would have the effect of inflicting lasting damage on the competitive capacity of British Airways and would also cause to that airline a considerable burden of redundancy? May I echo the plea of the noble Baroness that before any decisions are taken there should be a debate in this House?
Lord Trefgarne: My Lords, lasting damage is the last thing that my right honourable friend would wish to inflict upon British Airways or any other company. As to the question of a debate, that is not a matter for me but I have no doubt that many noble Lords will want to express their views to their respective Chief Whips on the matter.
Lord Bruce of Donington: My Lords, can the Minister give an indication as to when the report will be available to your Lordships' House?
Lord Trefgarne: My Lords, I imagine that my right honourable friend will want to publish the report in due course. Indeed, it may be possible that the Civil Aviation Authority will do so before then; but that will be a matter for them.
Baroness Burton of Coventry: My Lords, may I ask the Minister, in case I misheard him, whether he is aware that it does not seem to me, anyway, to be a matter of what is contained in the report, as to whether or not we have a debate? Does he not agree that on a matter so important as this the House should have a debate irrespective of what the report contains?
Lord Trefgarne: Again, my Lords, that is not a matter for me. The noble Baroness will very likely want to raise this matter in your Lordships' House anyway; but it might be that if the report does not propose any major changes the pressure for a debate will be less.
Baroness Burton of Coventry: I am sorry, my Lords, but the Minister—
Lord Beswick: My Lords, is the noble Lord aware that he has not answered the question put by the noble Baroness? This is not simply a matter for the usual channels. The usual channels may not be operating during August, September and October. I believe the fear is that a decision might be taken while the House is in Recess. Will the noble Lord assure the House that that will not be the case? Also, does the noble Lord accept that there is more than one view about what will happen if British Airways relinquish routes which were awarded to them when they were the national flag carrier?
Lord Trefgarne: My Lords, I certainly agree that there is more than one respectable view about what the right way forward may be in these matters. I am afraid I cannot go so far as to give the noble Lord the assurance he seeks, but I am certain that my right honourable friend will have the consideration he mentioned very much in mind.
The Earl of Kinnoull: My Lords, can my noble friend confirm that, in the event of any transfer of routes, there would have to be legislation to implement it?
Lord Trefgarne: My Lords, in the absence of a decision to do what my noble friend is anticipating, I cannot answer his question.
Baroness Burton of Coventry: My Lords, is the Minister aware that, like the noble Lord, Lord Boyd-Carpenter, in a recent debate, I am taking no sides in this issue until I have seen the report? But I will press him on what he said. Does the noble Lord recall that he said a minute or two ago that it would depend on what was in the report, as to whether or not it will be necessary to have a debate in this House? That is surely not the case. If the House wishes to debate that report, then surely the contents are not a matter of concern at the moment.
Lord Trefgarne: My Lords, I was not seeking to establish the circumstances in which such a debate may or may not take place. That will be a matter for noble Lords and noble Baronesses when they see the report and decide for themselves whether the matter is such that they wish to raise it.

Trade with Germany
3.9 p.m.
Lord Ezra: 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 latest figures and trends in the balance of our visible trade with the Federal Republic of Germany.
Lord Lucas of Chilworth: My Lords, in the first five months of this year there was a crude deficit of £1.6 billion on our trade with the Federal Republic of Germany. Exports and imports have been increasing at similar rates over the past 18 months.
Lord Ezra: My Lords, in thanking the noble Lord the Minister for that information, may I ask him whether or not he is aware that during the course of 1983 our adverse balance on manufactured goods with Germany alone was no less than £5 billion; and that adverse trend is now looking worse so far this year? In view of the fact that we are also encountering similar difficulties with other countries—although not on such a large scale—would the noble Lord the Minister not agree that it is now time to take very urgent action to correct this trend, and would he kindly advise the House what the Government have in mind?
Lord Lucas of Chilworth: My Lords, if I might perhaps correct the noble Lord, Lord Ezra, my understanding is that the crude balance of trade deficit for 1983 with the Federal Republic of Germany was in fact £3.6 million and not £5 million.
Noble Lords: Billion!
Lord Lucas of Chilworth: Billion. Noble Lords will wish to know that the Federal Republic of Germany take 10 per cent. of United Kingdom exports, and that is some seven and a half times larger by value than the 1973 level. Compared to world trade, which was only five times larger, it shows a healthy improvement.
As to what the Government are doing, the noble Lord, Lord Ezra, will know that the British Overseas Trade Board through a variety of their agencies—the European Trade Committee, of which he was such a distinguished chairman at one time, the Export to Europe branch, regional offices and commercial posts—play their part. The total Government support for exports and export promotions is estimated to be £113.5 million in this current year.
Lord Bruce of Donington: My Lords, is the noble Lord the Minister aware that the initial figures which he gave related quite correctly to the visible trade figures, which of course include oil, whereas the supplementary question addressed to the noble Lord the Minister by the noble Lord, Lord Ezra, related to manufactures? Could the noble Lord supplement his original figure by giving the House the deficit in respect of trade in manufactures? Is the noble Lord aware that the position which it discloses—let alone that disclosed by the visible trade figures—is, of course, quite disastrous whatever comparisons the noble Lord may make? Is the noble Lord aware that there is a view already widespread in this country that it is for the Government to take active steps in correction of this matter?
Lord Lucas of Chilworth: My Lords, the figure for which the noble Lord, Lord Bruce of Donington, asks is in fact minus £4.9 billion in manufactured goods. I have answered, I think, what the Government have done, and I reiterate answers which I have given on other occasions stating that it is largely for British industry itself to accept those policies which would help it to become more competitive and more efficient in providing goods at the right kind of price and at the right kind of timing. The Federal Republic of Germany and indeed the world are desirous of buying from us. As I have said, the Government have spent £115 million in support of that endeavour.
Lord Hawke: My Lords, is the noble Lord the Minister aware that in the early days of this century when I was a small boy similar complaints were made about German inroads into our trade, and the policy of the Conservative Party in those days was to protect British industry?
Lord Lucas of Chilworth: My Lords, I am quite sure the Government are well aware of what might have happened in the early part of the century; I must confess to my noble friend, that I am not. I can say that it is the policy of the Government to avoid protectionist policies; we believe in free enterprise and free and fair competition across the world.
Lord Roberthall: My Lords, would the noble Lord the Minister not agree that the general trade pattern is one of multilateralism, and that you cannot deduce very much from attempting to look at bilateral balances?
Lord Lucas of Chilworth: My Lords, indeed I agree with the noble Lord, but since the original Question was directed only to the Federal Republic of Germany, I felt obliged to answer it in those terms. The noble Lord is, of course, quite right.
Lord Beswick: My Lords, when the noble Lord talks about free and fair competition, has he in mind that British manufacturers would now have to borrow at something like 14 or 15 per cent.?
Lord Lucas of Chilworth: My Lords, I am aware of that. The noble Lord, Lord Beswick, will appreciate that the rise in interest rates to which I think he refers reflects market pressures to which clearers have been obliged to respond. Base rates were last at 12 per cent. in July 1982, and the House will no doubt recall that by November of that year they were down again to 9 per cent.
Lord Stoddart of Swindon: But, my Lords, are the Government not being utterly complacent about this matter, because in addition to the deficit on manufactured goods which we have with the Federal Republic of Germany there is a further deficit with the rest of the EEC which last year produced an overall adverse balance of £8,000 million—equivalent to 800,000 jobs? If the Government allow this adverse balance to increase and continue, then they will never get hold of the unemployment problem and reduce unemployment in this country. Will the Government be less complacent and do something?
Lord Lucas of Chilworth: My Lords, I totally refute the allegation that the Government are complacent. Since there have been surpluses in our balance of trade right across the world over the last four years. I find the implication behind the noble Lord's question not proved.
Lord Thorneycroft: My Lords, will the noble Lord the Minister encourage Lord Roberthall to continue educating the noble Lord, Lord Ezra, in the principles of multinational trade?
Lord Lucas of Chilworth: My Lords. I am sure that the noble Lord, Lord Ezra, needs no education; his experience is too deep and too long for that.
Lord Ezra: My Lords, in view of the intervention of the noble Lord, Lord Thorneycroft, with whom I had much contact in the British Overseas Trade Board, may I now say that of course I see the importance of multilateralism. My question was related to the Federal Republic of Germany as one of our major competitors. What I should like to ask the noble Lord the Minister is this: if the Federal Republic of Germany have built up such a very positive balance in their manufactures with us both in motor-cars and in other products, can we not at least study the way in which they have achieved this, both by the policies of government and by the reactions of industry, and see if we can follow in that direction?
Lord Lucas of Chilworth: My Lords, I thought when the noble Lord, Lord Ezra, put his first supplementary question that he and my noble friend were going to engage in a question and answer session. Since I understand that his last question was addressed to me, I think I should say that the European Trade Committee have set up two special working parties to study particular aspects of our trade relationship in Germany, and I hope that that will give the noble Lord, Lord Ezra, some encouragement in the underlying question.
Lord Nugent of Guildford: My Lords, is my noble friend aware that the Government's policies in progressively reducing inflation, and so increasing the competitive edge to industry in this country, have given a massive improvement in our capacity to win markets back—an improvement which no other government have been able to achieve for very many years? Is my noble friend aware that industrial disputes, which increase costs, are the high road to losing that competitive edge? Is he aware that Germany has just suffered from a very serious disruption throughout her steel and motor-car industries which will undoubtedly affect the balance of trade in the current year somewhat in our favour?
Lord Lucas of Chilworth: My Lords, I am most grateful to my noble friend Lord Nugent of Guildford because he does, of course, put his finger on the point. I had avoided reciting again the policies of the Government, all of which have made their proper contribution to our economic improvement across the world. Of course, I agree with my noble friend that the cessation of production of whatever it may be—manufactured goods or, indeed, commodities—for whatever reason, does have a very adverse effect upon our trade with other countries.

Housing in Scotland: Space Regulations
3.20 p.m.
Lord Hatch of Lusby: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they propose to abolish the regulations governing minimum space in houses in Scotland.
The Earl of Caithness: My Lords, my right honourable friend the Secretary of State issued a consultative document on 8th June with proposals for the removal of housing space standards and other associated requirements from the building standards regulations. While removing these unnecessary restrictions, the proposals incorporate a number of essential safeguards for health and safety.
Lord Hatch of Lusby: My Lords, may I ask the noble Earl who has answered my Question five brief and simple supplementary questions? First, is it the case that the Barratt solo flats which are being built in Scotland contravene the 1958 regulations? Secondly, is it the case that every application made by Barratt to the Secretary of State for Scotland for dispensation has been granted? Thirdly, is it true that last year Barratt
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gave the Conservative Party £10,000? Fourthly, is it the case that Barratt provided Mrs. Thatcher with free transport during the 1979 election? Finally, is it the case that the chairman of Barratt, Laurie Barratt, was given a knighthood in 1982?
The Earl of Caithness: My Lords, supplementary questions numbers three, four and five are totally irrelevant to the Question on the Order Paper. With regard to the noble Lord's first two supplementaries, the responsibility for the issuing of building warrants rests with local authorities. There has been a relaxation by the Secretary of State of certain regulations separating the area between bathrooms and living accommodation. As far as I am aware at the moment, no other regulations have been breached.
Lord Carmichael of Kelvingrove: My Lords, will the Minister accept that in allowing the solo flats to go ahead the Secretary of State did waive building regulations and, in fact, reduced the requirements and made the regulations for private building a good deal less onerous than those for public building? Is he aware that there is great anxiety in Scotland about any thought of diminution of housing space? Does he appreciate that only desperation for a roof over their heads, plus a very hard sell by certain companies—reputed to be in the nature of £2,000 per house on advertising—is forcing people, in particular young couples, to take these houses, which they are then finding very great difficulty in selling if they need to move to another place? Finally, has the Minister visited any of these houses being built? I can assure him that even in their showroom condition—that is, with everything looking right and properly and scientifically laid out—the space is quite abominable. It will be a tragedy if there is any reduction at all in space in Scottish housing.
The Earl of Caithness: My Lords, I think the main point of the noble Lord's supplementary question concerned a relaxation of building standards. As far as I am aware, my right honourable friend the Secretary of State did not relax the building regulations: he relaxed the space regulations, which are totally different. As the noble Lord might be aware—and I am sure he is—there are no space regulations in England and Wales. It is an historical event in Scotland. To deprive the Scottish public of a wide choice of flats, such as solo flats, would not be to their advantage.
Lord Carmichael of Kelvingrove: My Lords, I am sorry to come back to the noble Earl the Minister, but that is precisely the reason for the anxiety in Scotland. We were cursed for very many generations with quite inadequate space in our houses. Is the noble Earl aware that there is great terror that if we continue as we are and space regulations are reduced further we could get back to the terrible problems of the single-flat house that was the curse of Scotland for so many years?
The Earl of Caithness: My Lords, as the noble Lord is no doubt aware, the consultation paper to which I have already referred is the second of the consultation papers. It is right to summarise the result from the first consultation paper that all sectors agree that the requirements relating to housing need to be simplified.

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I omitted to answer an earlier supplementary as to whether I have visited these solo flats. I have not visited the flats in Scotland, but before I was given the privilege and honour of joining the Front Bench I was responsible for building some in England.
Lord Peyton of Yeovil: My Lords, did my noble friend note the way in which the noble Lord, Lord Carmichael, in asking his supplementary question in no way echoed, and by implication dissociated himself from, the innuendoes cavilled by the noble Lord, Lord Hatch of Lusby?
The Earl of Caithness: My Lords, I did note that.
Lord Mishcon: My Lords, on a lighter note than that heavy one, would the noble Earl, who is doing so well in his new position, consider cultivating a Scots accent similar to that of my noble friend Lord Carmichael?
The Earl of Caithness: My Lords, having been at a village school in Scotland many years ago, I did have a very broad Scots accent. I am sorry to disappoint the noble Lord because it has become a little more Anglicised.
Lord Hatch of Lusby: My Lords, the noble Earl the Minister answered my first supplementary questions by pointing out that the regulations come under the local authorities. Is he aware that the applications were made to the local authorities and were turned down by the local authorities, that Barratt then appealed to the Secretary of State for Scotland and that on every occasion the Secretary of State for Scotland gave his dispensation? Is this purely a coincidence with the last three of the supplementary questions I asked?
The Earl of Caithness: My Lords, I think that would be an improper link between the two.

Business
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Trefgarne will, with the leave of the House, repeat a Statement to be made in another place on Mr. Dikko. This will be followed by my noble friend Lord Lucas of Chilworth, who, again with the leave of the House, will repeat a Statement on the bus industry.
It may also be for the convenience of your Lordships if I announce that the Report stage of the Trade Union Bill will be adjourned for dinner at approximately 7 p.m. for a short period. During this adjournment the Education Support Grants Regulations 1984 will be taken.

London Transport Bill
Read a second time, and committed to an Unopposed Bill Committee.
Bournemouth Borough Council Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Trade Union Bill
3.28 p.m.
Report received.
Clause 1 [Duty of trade union to hold elections for certain positions]:
Lord McCarthy Lord McCarthy moved Amendment No. 1:
Page 2, line 5, at end insert—
("() Where persons have been elected as voting members of the principal executive committee of a trade union by virtue of the votes of members of a class within the meaning of section 2 below, nothing in this Part shall prevent the rules of the trade union from providing that those persons may co-opt one further voting member to the committee subject to such conditions as the rules may prescribe.").
The noble Lord said: My Lords, at this point we return to the debate which we had during many sittings at Committee stage and which relates to whether or not trade unions are to be allowed indirect elections. As a Committee we rejected a whole series of alternative ways of providing for an element of indirect election within the general acceptance of the provisions of Clause 1. We decided that we would not allow those alternatives which were related to the question of choice; we would not allow the members of the unions to choose whether or not to have direct elections. We decided that we would not accept an amendment which suggested that if the majority of an executive should be directly elected, perhaps a minority could be indirectly elected. That was rejected.
We rejected what I insist on calling the parliamentary system—although that seems to annoy the noble Earl—which was proposed last time by the noble Lord, Lord Howie. It says that if the election of the executive is direct, why can it not from among its number select an inner committee? That was rejected. Indeed, all kinds of alternative ways of trying to provide for indirect election have been rejected. So we have come along at the Report stage with what I think the House must agree is the de minimis proposal.
What we are saying in this amendment is let the whole of the principal executive committee be directly elected in the classes or groups specified by the provisions of Clause 2 of the Bill; and in each class, as it might be by occupation, grade or region, let that class have the right under the Bill indirectly to elect one person—one single addition to the principle of direct elections; one indirectly elected person for each alternative class. But the great majority of course would be elected directly.
I would remind the House that many speakers on the Government side in this debate were not convinced that it was necessary to make indirect elections an issue of principle, if all the other things introduced in the Bill were to become law. In their own Green Paper at paragraph 39 the Government said:
"The system of indirect elections, described above in paragraphs 28–29, is deep-rooted in some trade unions. It is argued in its favour that it reflects the basis on which different organisations came together to form present day unions and that, given the diversity of occupational and other groups within many unions, it may be a fairer method than direct elections of ensuring a representative outcome".
Indeed, the noble Lord, Lord Beloff, in moving his amendment (which we shall be discussing subsequently today) said:
"if, as I hope, the Government accept the principle of this amendment, they should be able at a later stage to introduce a more elaborate version"—
which indeed they have done—
"which would make special arrangements to fit in with the needs of particular unions, where the circumstances of the workforce make postal ballots difficult to provide (as we dealt with earlier today) for indirect elections where these seem to be more appropriate and are already the practice in certain unions."—[Official Report, 19/6/84; col. 256–7.]
He later pointed out the fact that the principle of indirect elections is very widely spread in all kinds of institutions of great repute and respectability. He mentioned, as I remember, certain heads of state who were indirectly elected.
So far all that the Government have done is to fall back on their principle that unions are different. They are different from clubs, professional associations, employers' organisations, limited companies and Parliament, and because of their difference they cannot have indirect elections. I beg the noble Earl at this late stage to try to give us a rationale for this endless insistence on difference—a difference which goes on to justify an absence of indirect elections. It is no good him saying it is because trade unions are more powerful than clubs. They are not more powerful than nation states. I would argue that on many occasions and in many ways they are not more powerful than employers' associations, professional associations or indeed large companies.
What is it about trade unions in the narrow term which prevents them legitimately asking for a minority of indirectly elected people on their national executives? In so far as the Government have put forward any argument—and I have read the Committee stage with great care in an attempt to find out that argument—it seems to have something to do with what they call the enormity of immunities. So far as employers' associations and companies are concerned, and so far as we are talking about the immunities that trade unions enjoy in a trade dispute, so do employers' associations and companies; yet we do not impose upon them this unique and bizarre restriction that they should not have indirect elections.
If we talk about the principle of indirect elections in connection with Parliament, companies or any other institutions, the reason for it is self-evident. It is accepted that it would be lunatic to expect the electorate to elect every single Member of a Government. How could they know how to match the team—the comparative expertise and skill needed to make up the team. It is accepted that it would be ridiculous to expect companies to let shareholders elect executive directors. How could they possibly know the proper balance of skill and expertise required in the team? Only in trade unions must there be universal direct suffrage.
We are saying that even at this late stage the Government should accept that that is frankly a lunatic position to adopt. I believe—and I am trying to be fair—that the Government have blundered into this 100 per cent. insistence on direct elections really because they wanted a whole range of other things,
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including postal ballots, specifying the way that people should be elected, moving away from branch elections, and so on. Many of those things may well be justified from the point of view of some of their supporters. I am not arguing that at the moment. I am saying that, having had all this, to insist at this late stage on resisting a modest small amendment, which is just trying to suggest that there might be a minute fraction of the members of a national executive who could be selected on in direct principles, is obstinacy taken to the point of lunacy.
Lord Campbell of Alloway: My Lords, the noble Lord invokes rationality; but in a long speech, wide of this narrow amendment, he gives no justification, and states no purpose for or object that would be served if this de minimis provision were adopted. It appears that this can be nothing other than yet another manifestation of the preconception which was adopted at Second Reading that unions should in some way be treated as if they were a committee of a club.
The Minister of State, Privy Council Office, and Minister for the Arts (The Earl of Gowrie): My Lords, long years of debating with the noble Lord, Lord McCarthy, lead me to beware of Greeks when they bring forward gifts, even in the form of very modest amendments like this one. Modest or not, it is in effect very similar to one which we debated at the Committee stage of the Bill on the 19th of last month. On that occasion it was the noble Lord, Lord Wedderburn, who proposed that only a majority of the voting members of a trade union's governing body should have to be elected directly and by secret ballot, and that unions should be left to elect up to 49 per cent. of their executive members in any way that they thought fit. The House will I think recall that in response I was obliged to say that that would undermine the very simple principle on which Part I of the Bill rests, and surely we should all strive where possible to keep legislation as simple as we can. The principle was that every voting member of a trade union's governing body should be democratically accountable to the union's membership. That is not a complex proposition to understand. The amendment which the noble Lord, Lord McCarthy, has now moved differs in its approach from the earlier one but it would still undermine this very simple and fundamental principle that those who have votes on a union executive—all of them and not just some of them—should be subject to the Bill's requirements. The noble Lord's amendment would allow any group of executive councillors who had been elected by a particular occupational, geographical or sectional constituency within the union to co-opt a further voting member onto the executive.
Democratic accountability is the keynote of this Bill, and it is essential that the requirements of Part I should apply to every voting member of a union's principal executive committee. These persons are, after all, the key day-to-day decision-makers in a union. The way each and every one of them casts his or her vote can have a profound and immediate effect on the lives and jobs of the union's immediate members, and often on the wider community as well. As I have had to say to the noble Lord so often, that and of course the rather unique privileges which exist

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(and, we acknowledge, must exist for unions under our law) are the real differences between trade unions and other organisations. It is only reasonable therefore that all those with voting powers should genuinely reflect the views of the union's membership and that the members should feel this to be so.
Having said that, I of course accept that some unions may wish to bring the experience of, say, permanent regional or trade group officials onto their governing bodies without subjecting them to election. The House should be aware, however, that there is nothing in the Bill to stop them doing so provided these co-opted members do not have voting powers. Such persons can under the Bill attend executive meetings, they may speak at meetings, they may advise the elected executive members; the only thing they may not do is to have a vote when it comes to the final decision-making unless they themselves have been elected in accordance with the statutory requirements.
In framing the Bill we have already made ample provision for different interest groups within a union to be represented on the governing body. We took careful note of existing practice within trade unions and we made sure that executive seats could continue to be allocated and elected on an occupational, geographical or sectional basis. It is therefore quite unreasonable to suggest that the Bill will prevent the unions from ensuring that all sections of their membership are properly represented. On the contrary the Bill guarantees union members real representation for the first time in trade union history. The Government therefore cannot accept that co-opted executive councillors would serve members' interests better than councillors whom members have chosen for themselves and chosen directly by means of free and fair elections. I must therefore ask your Lordships to reject this amendment.
Lord McCarthy: My Lords, the noble Lord, Lord Campbell of Alloway, says that we have made no case. The case is the case which justifies this practice existing in all other associations. It is felt by all other associations, including government associations, professional associations and companies, to be helpful if they can have at least some and in many cases all of their executive elected by systems other than direct elections so that they can balance the executive and make sure that they have the right mix of expertise and so on.
That is the case. It is a case which people, strangely enough, accept in all other institutions and they will not accept it in trade unions. Yet these people never argue, prove, or put forward any facts as to why it is that in trade unions the existing practice of using an indirect element has led to all kinds of appalling consequences.
The noble Earl, Lord Gowrie, says that the great thing that is wrong with this is that it would result in his simple, fundamental principle being qualified in some way. This is not simple legislation. The Government have in the past passed much legislation in our field which is infinitely more complicated than the kind of amendment that I am proposing today.
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Section 17 of the Employment Act 1980 is acknowledged to be one of the most tortuous pieces of legislation ever put forward in the field of employment law. That has been said by the noble and learned Lord, Lord Denning, and by the Master of the Rolls, Lord Donaldson, and others.
We are not suggesting that the Government go away and produce a complicated and tortuous way of providing a place for indirect elections. We are saying in our amendment how it should be done. It would not be complicated. It is no argument to say that trade unions are not the same as clubs. The noble Earl frequently says that the reason why he has to do it this way is because the principal executive of a trade union is a key body whose decisions affect the wider community, all the members and so on.
All these arguments could be made not only in regard to clubs but also in regard to many professional associations, some of which operate closed shops, large national and multinational companies and indeed Parliament itself. So the argument of power and responsibility will not wash and we do not withdraw this amendment.
On Question, amendment negatived.
3.45 p.m.
Lord Howie of Troon Lord Howie of Troon moved Amendment No. 2:
Page 2, line 22, at end insert—
("() Where the rules of a trade union provide for the indirect election of members of the principal executive committee by an electorate which is itself elected by a secret postal ballot at an election in relation to which section 2 has been satisfied, the principal executive committee may opt to waive the obligations of this section provided that—

(a) within twelve months of the commencement of this section and at intervals of not more than every five years thereafter the trade union holds a secret postal ballot to which the provisions of section 2 apply in which the question is whether the members wish the provisions of this Part to apply or the union's existing procedures for the election of the principal executive committee to apply; and

(b) the members of the union vote in that secret ballot by a majority of those balloted to retain the existing method of election of the principal executive committee of the union.").

The noble Lord said: My Lords, this takes up where we left off during the Committee stage of the Bill. I must say that, after the debate that we have just had, I turn to Amendment No. 2 with a certain amount of misgiving, which I hope will be totally misplaced.
When we last discussed this, I reminded the Committee that my interest in trade unions was slightly different from that of those on both Front Benches. That is so in this respect: that they were quite naturally concerned about the big trade unions which are such a predominant part of and interesting factor in our economic situation. That is not my line of country at all. I am interested in small trade unions, usually those which recruit from among professional people, white collar workers and especially professional engineers. It is from groups such as that that the amendment which I put down before and which I put down again today emanate. They emanate principally from the engineers and managers' associations with which many of your Lordships will be familiar.
Before going on to deal with Amendment No. 2, in which I have been supported by my noble friend Lord Beswick, who has similar trade union connections to

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me, I should like to set the scene by reminding your Lordships of the Green Paper entitled Democracy in Trade Unions, which my noble friend Lord McCarthy mentioned earlier on today. The Green Paper preceded this legislation. We all know that a Green Paper is not binding on the Government. It is a consultative document but it must by its very nature be indicative of something about a way of looking at things. It shows not only the views of the general public but, since it is a Green Paper coming from the Government, it must show at least to some extent, though perhaps not entirely, the way the Government look at things.
The provisions of a Green Paper are intended for serious consideration, for reflection, for discussion and with any luck possibly eventually for adoption. The part of the Green Paper, Democracy in Trade Unions, which strikes me most forcibly in this particular context is in paragraph 13, which is headed: "The case for legislation". That must be a very important paragraph in today's considerations. The view expressed in the Green Paper was quite rightly that union members were entitled to expect that their unions were democratic institutions responsive to the wishes of the members. That is what paragraph 13 says. The Government felt that attempts to reform the trade unions and make them live up to that expectation had been few or painfully slow.
Then the paragraph went on to say—and I think this is important and I quote it—
"The Government therefore believes that the time has now come for legislation to assist this process forward"—
that is, the process of reform—
"Voluntary reform is still the desired aim and the most desirable means. Any legislative steps which are taken must provide a full opportunity for unions to take the initiative, with the support and involvement of their members, in introducing more democratic arrangements".
That is a totally unexceptionable comment with which I, for one, entirely agree. The Government Front Bench and I are totally agreed on that proposition. The important words are "voluntary reform". What that should really mean is that legislation is required where voluntary reform is not forthcoming or has not already happened.
As I have tried to explain previously, obviously unconvincingly, that voluntary reform has already happened in the unions with which I am concerned. These unions already are, and, indeed, in the case of one of those for which I speak, this has been the case for no less than 71 years, democratic institutions responsive to the wishes of the members. I am not here using the word "democratic" in the somewhat peculiar way that it is sometimes used in industrial disputes. I am using it in exactly the sense that it is meant in paragraph 13 of the Green Paper and in exactly the sense that the Government understand the word. It is exactly the sense, I am absolutely certain, in which the Minister uses it.
The unions for which I speak already act in the manner that the Government want. In so far as they already act in that way, the case for legislation in their respect falls. It falls utterly, or so I think. The Green Paper has more to say than that. Paragraph 18, which is also important, says:
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"The Government is conscious that any legislation must take into account the wide variety and complexity of existing electoral arrangements".
My whole case rests upon the fact that this is exactly what the Government's proposals do not do. The federal unions, which I have spoken about and discussed in some detail previously, already have a complex electoral arrangement which fits the Government's fundamental requirements. There is no question that the extremely simple proposal that the Government are intending to impose on everyone does not meet the Government's own requirement in paragraph 13. The Government's proposals are not conscious of the fact that legislation must take into account the wide variety and complexity of existing electoral arrangements.
I do not wish to deal again with paragraph 54. We discussed it in some detail at the Committee stage. Amendment No. 2 is concerned with a proposal that some unions might in some circumstances—noble Lords will see that these are limited circumstances with which the Government cannot possibly disagree—opt out of the proposals in the legislation. It is impossible, I believe, to read the Green Paper without believing that the Government were sensible, or have been sensible, of the complex arrangements to which I referred earlier. I do not see that the Government did not at one time regard as a feasible alternative to their proposals the possibility that, where the arrangements were clearly democratic and clearly defensible, the unions concerned could opt out of the Government's proposals.
It is disappointing to reflect that during the Committee stage and again, I think, today, the Government, for a reason that I do not find convincing, although I understand it, have elevated the idea of direct elections into a principle. During the Committee stage the noble Earl and I had a brief exchange across the Floor about principles. I contended then, and still contend, that the question of whether or not elections are direct or indirect is not a principle. The principle is accountability, and there is no difference between the Government and myself in that respect. We both want accountability. The method of election is merely one means of getting accountability. If it is achieved by direct election, well and good. If it is gained by indirect election, every bit as good.
I believe that the Government have gone further than perhaps they intended. If the accountability is obtained in a manner that is acceptable to trade unionists, who are essentially moderate, well behaved and law-abiding and who fit the Government's stereotype of a good trade unionist in every way, how can it be wrong for them to be allowed to decide how they want to run their own affairs? In this amendment, which has been redrafted since the Committee stage, we have gone as far as we possibly can to try to meet every objection that the Government could make and have made. I hope sincerely that the Government will today think again and this time accept the amendment rather than reject it as they did a week or two ago.
Lord Campbell of Alloway: My Lords, I have great sympathy with the amendment in the terms in which it was proposed. But the problem is that, if it was

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accepted, the effect, surely, would be unwelcome. One understands, of course, the position of those small groups of white-collar workers—the engineering unions, the professional unions and the federal unions—which are, as the noble Lord, Lord Howie of Troon, states, in a different position. The problem is that it would be neither practical nor prudent to draw up a list of trade unions to be exempt from the principle of direct elections or accountability—it comes to much the same thing—without driving a carriage and four through Part I of the Bill. For that reason, I oppose the amendment.
Lord Wedderburn of Charlton: My Lords, having had from my noble friend Lord McCarthy, in the usual way, the pure milk of moderation in his amendment, my noble friend Lord Howie has produced, if he does not mind my saying so, also characteristically, an amendment of pure milk and water moderation. In many ways, I, and, I am sure, my noble friends are happy to support it, although not perhaps on the ground that it would bring relief from the "dogmatic tight bandage", as the noble Lord himself once called it, of Government regulation of the procedure of internal union affairs for election of the national executive committee, only to small professional trade unions.
I did not follow the noble Lord, Lord Campbell of Alloway, when he said that it was understood that some small white-collar trade unions were perhaps in a different position. I did not follow him for a reason regarding which, in some small measure, I may depart, although I am not sure that he implied this, from my noble friend Lord Howie. Of course, it is true that many small professional trade unions have, as he put it, for 71 years, had a record of democracy in their association which it is difficult to fault. But this is also true of many of our larger trade unions.
Indeed, the debates in your Lordships' Committee, when I read them, were notable for a particular phenomenon. That was the difficulty that those who criticise had of finding particular illustrations of a lack of democracy, in concrete illustration, in these trade unions as a whole. So I say that my noble friend has brought forward an amendment which would indeed be useful to trade unions as a whole, as some very small modification of this dogmatic assertion—because that is what is at the root of it—that for these organisations alone in our country this particular method of direct election is the only way to democracy.
That point has never been proved. My noble friend puts forward a modification. Noble Lords seem to be surprised, but that is the issue. The noble Lord, Lord Campbell, asked my noble friend Lord McCarthy, "What is the purpose of amendments like this?" The purpose is that the members might want to do it a different way. In this case, there could be many trade unions which might want to adopt something by majority vote. After all, the Government have given their own conditions on the majority vote; their own conditions on the secrecy of the ballot; their own conditions on five-yearly elections; their own conditions on everything except the one dogmatic point for which they have advanced no real argument
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at all—namely, that there can be no element of indirect election.
As my noble friend has said, it is an element which is in every other association and every other company. Rio Tinto Zinc can do it. RTZ can have a procedure where their national executive committee, with executive functions, can be elected indirectly. Does not the noble Lord think that they have got a certain amount of power? I thought the Government rather felt that that particular organisation was quite powerful just at the moment. Indeed, it has the biggest immunity in this land, and that is limited liabilty.
The noble Earl talks today about rather unique immunities, as opposed to the enormity of the immunities which appeared in Committee. Perhaps some time later he will cite the precise sections which today give to trade unions these rather unique immunities. I put that to him, not necessarily for answer now but when he has a moment for reflection. Perhaps he will tell us which of the trade dispute immunities, which of the restraint of trade immunities, are peculiar to trade unions; and, if they are not peculiar to trade unions, why the other persons and bodies to which they do apply do not appear in this Bill.
So there is no argument in immunity; there is no argument in power. There is an argument that my noble friend has put forward. I think that, with modification, it would be even more useful than he, with his usual moderation, suggested. We on these Benches support it.
4.2 p.m.
The Earl of Gowrie: My Lords, I am glad that after the milk of moderation of the noble Lord, Lord McCarthy, and the milk and water of the noble Lord, Lord Howie of Troon, we have had a slightly stronger brew to cheer us up from the noble Lord, Lord Wedderburn.
The noble Lord, Lord Howie, told us that he turned to his amendment with a certain amount of misgiving. I think he was right in that. I do not want to repeat all the arguments which we advanced before, both in this House and in another place, during debates on indirect elections, although I would just say to the noble Lord, Lord Wedderburn, that time and again I have endorsed two principles which I hope will console him. One is that I accept altogether the need for immunities from actions in tort for trade unions, but I have always said that there would have to be corresponding responsibilities and liabilities, not least in this field of election. Secondly, on many occasions I have drawn to the noble Lord's attention the fact that over the last 100 years or so company law has not been unforthcoming in your Lordships' House or in another place. I do not think this argument from imbalance is at all well founded. If I could just attend to the amendment, I think we would get on rather faster.
A noble Lord: My Lords, will the noble Earl give way?
The Earl of Gowrie: My Lords, I will give way in a moment.
I want to emphasise that the House did express a view on this on an earlier occasion, and my right

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honourable friend did consider the House's view. I said that we would look at it, and we have. The Government are aware that a number of unions are naturally reluctant to give up their systems of indirect election; and we recognise that all change, particularly when one is comfortable in one's system, is rather unwelcome. But we cannot accept that indirect elections are compatible with our commitment to give every trade union member a real and powerful say in the running of his own union.
The essence of a democratic election is that the voter should have a real choice between rival candidates. If there is no such choice, then any number of good intentions about how such a choice might be made, if there were one, are frankly worth no more than the paper they are written on. To give just one example: the noble Lord's amendment would allow unions to leave the election of their executives in the hands of delegates to the annual conference—precisely the system that is currently in use in a number of major unions such as the postal workers, the post office engineers and the Society of Civil and Public Servants. Typically, their conferences are attended by some 600 or 700 delegates. The reality is that it is wholly unrealistic to expect that there would be a contested election for each and every such delegate, just as it would be unrealistic to expect a union to hold 600 or 700 separate postal ballots.
Moreover, even if all the lower-tier elections were contested, and even if they were conducted by an impeccable secret postal ballot, there could still be no guarantee that those elected would cast their votes for the governing body in the way in which the union members themselves would wish. If anyone doubts what I am saying, they need only cast their minds back to the sorry spectacle of some of the elections within the Labour Party itself in recent years. One such was the election of the deputy leader of the party as recently as 1981. In that election, the House will remember, the TGWU consulted their members, who indicated majority support for Mr. Healey. But when their so-called representatives came to the casting of the union's 1¼ million block vote at the conference they cast it first for Mr. Silkin and then for Mr. Benn. I doubt that on that occasion Mr. Healey was too impressed with indirect election as a system.
The noble Lord, Lord Howie, referred to paragraph 54 of the Green Paper, where the Government did indeed put forward the possibility of an opting-out clause in any legislation on union elections. But I have to say that that proposal did not meet with wide support in the consultations on the Green Paper. At that stage the Government had not decided what final form the legislation should take. The House will recall that a variety of legislative forms were canvassed in the Green Paper; for example, directly requiring detailed changes in union rules along the lines of companies' legislation and requiring unions to secure approval of their electoral arrangements from some public authority. It is arguable that an opting-out clause might have made sense if the Government had adopted one of these very detailed approaches. But there can be no justification for allowing unions to exempt themselves from the fundamental democratic principles which are all that the Bill before your Lordships contains.
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The noble Lord, Lord Howie, said that in the context of union elections the views of union members should be paramount. The Government do not dispute that. We believe that every trade unionist should have the chance to vote directly for one or more members of his union's principal executive committee. That is what the Bill provides, and, as I said on the previous amendment, it will for the first time give many union members a real choice of executive members and real influence over their decisions. I have to say that systems of indirect election cannot, for the reasons I have given, guarantee that effective say which members both deserve and desire and for which, as I do not tire of reminding the House, they voted overwhelmingly. Therefore, I must ask your Lordships to reject the amendment.
Lord Wedderburn of Charlton: My Lords, before the noble Lord sits down, may I say that it might have been better to put this question to him before he ranged widely over the Bill and the Labour Party Conference? Perhaps I may put it now. He made a statement at least to the effect that it was different for companies with their limited liability immunity because they were regulated by law; and trade unions' immunity in trade disputes was the one that he cited for trade unions. Would he not accept that, in respect of the massive immunity for limited liability, there is no structure of regulation for one single type of election to the executive boards or committees or bodies of companies, and nothing whatever like it?
Secondly, would the noble Earl accept or not that the immunity in trade disputes attaches to every person who acts in contemplation or furtherance of a trade dispute, which includes employers as well as trade unions? I am sure the noble Earl will not mind my adding that he will know that I regard this as a legal form of a right to withdraw labour and a right on the employers' side to take action in a trade dispute. It does not specifically, in any law whatever, apply to a trade union as such.
The Earl of Gowrie: My Lords, no one doubts the right to withdraw labour, but I would remind the noble Lord that it is not the commercial companies of this country that are presently disrupting its industrial recovery.
Lord Howie of Troon: My Lords, it is not the unions for which I speak, either, who are disrupting anything. I must refer very obliquely and kindlily to the intervention of my noble friend on the Front Bench, Lord Wedderburn. When I distinguished between little and big unions I was not making much of a point except that the ones which I had particularly in mind were peculiarly innocent of any of the alleged and unproven charges of crimes which have been bandied back and forth across the Floor of this House and elsewhere. That was all I meant—no more than that.
As I said at the outset, I was a little dismayed by the tone of the ministerial reply to the last amendment. I must say that I am even more dismayed having heard the ministerial reply to this amendment. As my noble friend Lord Wedderburn reminded your Lordships, we have gone as far as possible to meet every single one of the Government's conditions as to how the elections

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ought to be run. That is a very strong point in support of this particular amendment. We have tried to meet the problems and difficulties which the Government foresee might arise.
I was particularly dismayed when, in the middle of his speech, the noble Earl the Minister drew attention to trade union conferences. This amendment is not about trade union conferences. I was even more dismayed when he drew attention to the mode of electing the leadership of the Labour Party. This issue is not about electing the leadership of the Labour Party. It so happens that I regard the method adopted by the Labour Party, of which I have been a member for quite a long time, as—and I think that this is the proper word—demented. At any rate, it is not very good. I would agree with the noble Earl in many of the things that he said about it, but that has nothing whatever to do with the amendment. It was in the nature of a herring of one colour or another—a smokescreen drawn across the argument. There is nothing about it in the amendment.
We are talking here about indirect elections by electorates which themselves are elected by a system of secret ballots. It has no relevance to the type of trade union conferences to which the noble Earl referred, nor to the leadership elections in the Labour Party. I am amazed that the noble Earl should produce such an argument, especially in debate with me. He knows perfectly well how much I agree with many of the things that he says. He can bandy that type of argument about wherever he likes, but this is no place for it. It demeans the debate between us. The whole strength of this House is that the Government should be swayed by debate, at least to some extent, and in replying to the debate one should in fact reply to the debate.
However, it is quite clear that the Government have no intention of moving in this matter, although I and my friends have gone as far as humanly possible to meet the Government and their particular difficulties and worries. I do not intend to divide the House. I said before when we debated this matter that the Government should have time to think again. There is still Third Reading to come. Perhaps the Minister and his colleagues will heed what I have said and will pay attention to my strictures because they are sincerely meant. I hope that they will think again about this matter and come back to it on Third Reading. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

Nigerian Ex-Minister, Mr. Umaru Dikko: Abduction
4.15 p.m.
Lord Trefgarne: My Lords, with your Lordships' permission I should like to repeat a Statement to be made in another place by my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs about the abduction of Mr. Umaru Dikko. The Statement reads as follows:
"I told the House on 9th July that police inquiries were continuing. As a result of these inquiries four men, three Israeli nationals and one Nigerian
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national, have each been charged with kidnapping—a common law offence—and with administering drugs with intent to kidnap. They have been remanded in custody.
"The police inquiries also disclosed evidence which appeared to implicate members of the Nigerian High Commission. It was in those circumstances that, as I told the House on Monday, the Nigerian High Commissioner was asked to allow the police to interview members of the Nigerian High Commission staff. I have to inform the House that the Nigerian Government declined to comply with this request.
"Accordingly, the High Commissioner was seen again yesterday. He was told that we had noted the Nigerian Government's denial of any involvement in Mr. Dikko's abduction. However, in the light of the circumstances I have described, he was told that a counsellor, Mr. Peter Oyedele and an attache, Mr. Okon Edet, must leave the country within seven days, that is by next Wednesday, 18th July. The High Commissioner stated that his Government were recalling him for consultations. He has now left the country.
"I am sure the whole House will join me in expressing the hope that these events will not inflict lasting damage to our long-term relationship with Nigeria, a Commonwealth country with which we have had good relations over many years.
"The present situation is not of our making. But, as I have made abundantly clear in earlier statements to the House, Her Majesty's Government are bound to take the gravest view of any evidence which appears to implicate members of diplomatic missions in serious crimes in this country".
My Lords, that concludes the Statement.
Lord Elwyn-Jones: My Lords, the House will be grateful to the noble Lord for repeating the Statement by the Secretary of State for Foreign and Commonwealth Affairs in another place. While the Statement is right to stress the importance of maintaining our long-standing and friendly relations which Nigeria, is it not also right—as, indeed, the Statement implies—to say emphatically that we shall not tolerate the commission of acts of violence on British territory or the importation, by whoever it may be, of violent quarrels from other countries on to our own shores? I think it is right to raise some questions which perhaps are more directly to be answered by the Nigerian authorities than by the noble Lord.
If, as is claimed by them, the Nigerian Government and their High Commission in London and its staff were not involved in the alleged abduction of Mr. Dikko, are we not entitled to require full co-operation from the Nigerian authorities in joint investigation as to who was responsible and for whom they were acting; who organised this operation; and who financed it? Would it not also strengthen the Nigerian Government's protestation of innocence in this affair if the members of the High Commission staff who were at Stansted at the material time were made available to be questioned by the police? Does not the refusal of that request tend to confirm, rather than

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allay, the suspicion that the Nigerian authorities were indeed involved?
Already we have been troubled by the illegal holding up by the Nigerian authorities of the British Caledonian plane. There is much to be made good already out of this dreadful affair and I ask these questions of the Nigerian authorities in the interests of good relations between us. But there are many questions that have been left, as yet, dangerously unanswered.
Lord Kennet: My Lords, I have little to add to the pungent questions asked on behalf of the Labour Opposition. Can the Government go any further than they have on earlier occasions about the background to this affair in extradition law? Are we to believe the press, that Mr. Dikko was a billionaire, and is it correct that the Government do not extradite persons to countries where they are likely to stand secret trial? If that is the case, is it not almost an extension of the secret trial system onto our soil in Britain that such persons should be attempted to be kidnapped in the way which happened in this case?
The Statement hopes that this matter will not cause lasting damage to our relations, and indeed I am sure that the whole House shares that hope. But if it does, is it not clear that that damage will not be of the making of this country? Will the Government confirm once more that they will not compromise the integrity of our own laws, however much oil money may be involved, by sparing the secret agents of a military tyranny on our soil? Lastly, perhaps I may remind the Government that we are awaiting a statement at the end of a review on the workings of the Vienna Convention, dealing with diplomatic bags and diplomatic baggage. Can the Govenment now give us a date when we may expect that review to be reported to Parliament?
Lord Trefgarne: My Lords, I am grateful to both the noble and learned Lord and the noble Lord for their response. Perhaps I may deal first with the questions put to me by the noble Lord, Lord Kennet. I am afraid that I am not yet in the position to tell him when my right honourable friend's examination of the provisions of the Vienna Convention will be complete; but I can tell him that it is underway. As for the legal position of foreigners resident in this country, of course they have to obey our laws—not only laws of the kind which we have seen broken recently, but also the immigration regulations.
On the question of extradition, no application in due legal form has yet been received in respect of anybody. We are aware of the Nigerian Government's intention to seek the extradition of Mr. Dikko and others. Any request in proper form will be considered on its merits, and in accordance with the provisions of the Fugitive Offenders Act 1967. The noble Lord asked me about the personal circumstances of Mr. Dikko. I am afraid that I have no information about that and cannot comment on the reports that I have seen.
Turning to the remarks of the noble and learned Lord, Lord Elwyn-Jones, generally I agree with the assertions which he made at the outset of his remarks. As he anticipated, most of the points he put to me were
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really matters for the Nigerian Government. We very much regret that they were not able to agree that we should question some of their officials at their High Commission. Two of them at least were implicated in this matter, and that was why we thought it appropriate that those officials should leave the country.
Lord Molloy: My Lords, can the noble Lord confirm that the Nigerian Government will be requested to give an explanation? Will he not agree that the vigilance of people at Stansted seems to indicate that in a country where there is the greatest freedom there is also the greatest vigilance against any form of attempted murder? When the Foreign Office made inquiries of the Nigerian High Commission they said that the case should not be opened because it came under the aegis of being dispatched officially by the Nigerian High Commission to Nigeria. Have the Nigerian Government yet proferred any reasons as to whether or not that is true?
Lord Trefgarne: My Lords, the Nigerian Government have denied any involvement in this very serious matter. Nevertheless, I have to say that police inquiries have suggested that some Nigerian High Commission officials were implicated. That is as far as I can go.
Baroness Macleod of Borve: My Lords, can my noble friend say whether Mr. Dikko has regained his health, and if he has whether he is now at large?
Lord Trefgarne: My Lords, I understand that Mr. Dikko has now left hospital, though no doubt the long-term effects will take a little longer to dissipate.

Trade Union Bill
4.25 p.m.
Consideration of amendments on Report resumed.
Lord Beswick Lord Beswick moved Amendment No. 3:
Page 2, line 38, at end insert—
("(7A) Where the conditions mentioned in subsection (7C) below are satisfied, subsection (1) above shall not apply to a person who is a voting member of the principal executive committee of a trade union by virtue of holding a position in that union, the principal purpose of which position is to have responsibility (either by himself or with other members of that union) for:

(a) the finances of the union as a whole; or

(b) the formulation of specialist policy proposals for the union as a whole; or

(c) the relations of the union with a trade union of which it is a member falling within subsection (1) of section 4 below; or

(d) any combination of the matters mentioned in paragraphs (a), (b) and (c) above.

(7B) For the purposes of subsection (7A) above, "specialist policy" means policy relating to one or more aspects of the objects of the trade union, as defined by the rules of that union and "formulation of specialist policy proposals" includes the consideration of such matters as may be necessary or expedient for the formulation of such proposals.
(7C) The conditons mentioned in subsection (7A) above are that—

(a) the person holding the office in question has been elected, pursuant to the rules of the trade union, to such office for a period not exceeding five years;

(b) the number of persons to whom subsection (7A) applies does not exceed half the total number of voing members of the principal executive committee of the union;

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(c) there is in effect in relation to the union a resolution (however framed) whereby the trade union resolves that subsection (1) above shall not apply to it (called in this Part an "exempting resolution").").

The noble Lord said: My Lords, for the third time I am returning to a theme which we have just been discussing. I am proposing to ask for an even more modest concession from the Government, and I hope that on this occasion the noble Earl will be able to say that the Government are prepared to move a little. I suggest that the amendments that I, together with my noble friend Lord Howie of Troon, have tabled are really a test of the Government's readiness to be flexible and to listen to reasonable arguments.
On Second Reading I endeavoured, as did my noble friend Lord Howie, to put the case for certain smaller trade unions for additional flexibility in Part I of this Bill. We wanted to enable those unions to retain the systems of elections to their principal executives which they had developed over the years and which were proving successful in present operation. In saying that they were successful, I am going by the declared and democratically expressed view of the whole of the membership of the organisations which I have in mind. From one or two remarks that were made by noble Lords opposite I gathered that they thought the case was not unreasonable. I am sorry that the noble Lord, Lord King, has now left his seat because I was hoping that he would confirm what I have to say about the reasonable and responsible behaviour of the members of one union which I have particularly in mind—namely, BALPA. The noble Earl himself said that he would look at the position of BALPA, and we have had certain correspondence.
I did not press the case at the Committee stage because there were other amendments (and we have had two others today) within any one of which it would have been possible to secure what was wanted by the bodies which I had in mind, and they have of course been considered today. But one after the other the Government have resisted these amendment; they have turned down what was said in the discussions.
However, in this amendment we have tried to meet the Government's doubts, and I am moving what is a very narrow and specific proposal indeed. I hope that I can show the noble Lord, Lord Campbell of Alloway, that in this case there is an object to be served. Conceivably the batch of proposed new subsections which I have tabled and the proposed new clause may seem complicated, but the issue is a very simple one. I am advised that the proposed new clause is modelled on the legislation in the Trade Union Act 1913, and the rest on the subsections of the current Bill. There is no point of principle involved in the subsequent amendments standing in my name.
The nub of the case is in Amendment No. 3. This would provide that members elected by the annual delegate conference as chairmen of certain specialist committees would also serve as voting members of the executive committee. This method of indirect election of this limited number of executive committee members—and I emphasise the limited number involved—would be in accordance with rules that have been agreed, and would be agreed in the future, by a secret postal ballot of all individual members of the
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union. The amendments which I move provide that the expression of opinion on the rules will be by ballot held not less frequently than every five years.
In the correspondence with the noble Earl he points out, quite fairly, that the flexibility already brought into the Bill would permit separately constituted sections within the association to elect their own representatives to the principal executive committee. But the noble Earl went on to say that, in line with the basic principle that he has been setting down so firmly, all voting members will have to be directly elected either by the entire membership or by a particular grouping of that membership.
I wonder whether he properly appreciates what it is that I am asking for here. I am asking for a refinement of the very principle which he has laid down. I am asking that in a limited number of cases certain defined positions on the executive should be filled by direct election not by a particular group, which he said would be in order, but by the representatives of all the groups assembled together at the annual delegate conference. To emphasise the democratic character of this arrangement it is proposed that the rules governing it shall be approved, as I say, by a secret postal ballot held not less than once in five years.
It might be asked why there should be this effort in such a case to seek this refinement. As my noble friend Lord McCarthy has said—and said so often and so well—each union has its own characteristics and each has its own environment within which to work. I think it will be generally agreed that in the case of BALPA there is a rather different environment. There are not large numbers of members working side by side and getting to know each other, and getting to know each other's personal qualities. At any one time a significant number of the membership of BALPA will be spread in different countries throughout the world. Indeed, at any one time I suppose that quite a number will not be on this earth at all.
In such circumstances, it is not unreasonable to assume that the personal and professional qualifications of candidates for the executive committee who are to chair, respectively, the technical, international and financial sub-committees are better known to those more active members who get together at the annual delegate conference. If the entire membership of intelligent and responsible people agree by secret ballot with that assumption, I am now suggesting to noble Lords that really we are not qualified to say that we, or Whitehall, know better than they. I beg to move.
Lord McCarthy: My Lords, the noble Lord, Lord Howie of Troon, has threatened to bring this issue back to us at Third Reading. Apart from that possibility, this is the final time of asking. The noble Lord, Lord Beswick, has put his position and his argument in terms of BALPA in his characteristically moderate and convincing way. He has clearly spelled out once again, as we have tried to spell out on this side, the fundamental functional justification of indirect elections in the case of trade unions. There are many instances—BALPA is one, but there are others—where the membership is so scattered, where the level of turnover is so large, where the knowledge of the detailed experience and expertise required is so

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thinly spread, that it is only common sense, and where it stands to reason, that some small provision should be made for a form of indirect election. That is the argument. It is an argument which, as we have demonstrated, is accepted for all other institutions because it is a reasonable and sensible argument. In fact, until the passage of this Bill it was accepted for trade unions even by this Government.
We have never been given a satisfactory reason why, in the form put forward by the noble Lord, Lord Beswick, or in any of the other eight alternative forms in which we have put this before the Government, it could not be accepted by them. We have even suggested that they might like to say, "We don't like numbers one to eight; we will take it away and come back with number nine". Even at this late stage they could say, "We will go away and think and try to find a way of introducing an element of indirect election". But I am afraid that Lord Beswick's eloquence and persuasiveness are not going to move the Government.
Therefore, as this is the last time of asking I simply want to ask the noble Earl for a second time—not an eighth time, because he did not answer the questions when the noble Lord, Lord Wedderburn, asked him just now—whether it is not a fact that companies, despite the fact that they have limited liability (which is a form of immunity which far exceeds the immunities granted to trade unions), do not have imposed upon them any system of direct elections. Indeed, they are far freer to decide the way in which they are going to select their principal executive committee than trade unions will be under the Bill. How does the noble Earl justify that?
It is the immunity argument that the noble Earl has used as his last ditch defence again and again. Can he get out of his last ditch and say whether there is any form of immunity granted to trade unions that does not also exist for anybody else involved in a trade dispute? He cannot resist the amendment on those grounds, either.
Lord Howie of Troon: My Lords, I rise briefly because I was mentioned by my noble friend a moment ago. It was not my intention to threaten to bring something forward during the Third Reading stage. What I was hoping was that the Government would reflect upon the arguments they have heard today, and will continue to hear today, and which they heard at the Committee stage, and would bring something forward. That would be appropriate. It is especially apposite here because the Government's principle appears to me to be based on a general view of trade unionism as a whole, whether that view is right or wrong; whereas these amendments, which I moved earlier and which are now being moved by my noble friend Lord Beswick with my support, are not general, they are specific.
What we are asking the Government to do is to think, first, whether their general view is right; secondly, whether their proposals, which are based on their general view, are right; and, thirdly, whether they should now think of some of the specific problems which their general view and general solution have thrown up. We are asking them, they having had some time to view these matters and listen to us, and still having some time to think about them, perhaps to
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think that the specific views might be more important than they think and might in the end be less damaging to the Government's general view than they themselves fear.
Lord Campbell of Alloway: My Lords, the case of BALPA as argued by the noble Lord, Lord Beswick, worries me because it seems to be a special case. It seems to be a reasonable argument, and I do not quite see how one can fit it into the general structure of Part I. But if there were a way, surely some consideration ought to be given to the sheer reasonableness of the case as against the practical problems that arise in that special case.
4.40 p.m.
The Earl of Gowrie: My Lords, I am grateful to the noble Lord, Lord McCarthy, and to his noble friend Lord Howie of Troon for reminding us that with these amendments we are once again concerned with the proposition that not all voting members of a union's principal executive committee should be subject to the Bill's election requirements. In saying that, I appreciate that the noble Lord. Lord Beswick, who moved the amendment—unlike the noble Lord, Lord McCarthy, who was seeking to widen the principle—was looking for an exemption for a limited and specific range of executive members. He made a very good case indeed, if I may say so, and it was obviously a case that impressed itself on my noble friend Lord Campbell of Alloway.
I must say quickly to the noble Lord, Lord McCarthy, that on the wider issue of immunities, as I said in an intervention in the previous debate, I do not contest the issue of immunities though I think immunities bring with them rather specific rights and responsibilities. My point in respect of companies was that companies are liable to over 100 different criminal offences. Almost any objective observer would feel that the policing of companies was rather greater in legislative terms than that of trade unions. It was the noble Lord rather than I who was seeking to make a balance of that kind.
In respect of what the noble Lord, Lord Beswick, said on the narrower rather than the general principle, I appreciate that he provided for such exemptions to be allowed only where the members of the union agree to such a proposal in a secret ballot. I must congratulate him not only on the way in which he moved the amendment, but on the careful drafting of the amendments to which he has clearly given a great deal of thought. I am afraid that I must repeat that I can see no justification for moving away from the simple and basic—and I would say admirable and rather beautiful—proposition of this legislation that those who have a vote on a union executive should be directly accountable to the union's members through an individual secret ballot.
I do not want to go over ground which has been covered previously, but I would merely remind the House that there is nothing in Part I of the Bill to prevent a union bringing specialists onto its executive by any means of election or appointment it chooses provided only that these specialists are not given voting rights. There are already a number of major trade unions which have for example, finance officers,

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solicitors, trustees or research officers on their governing bodies in a purely advisory capacity. Similarly, it is the norm, rather than the exception, for union general secretaries not to have a vote on their union executives even though they may be members of them. In BALPA the general secretary, the deputy general secretary and the treasurer, while they may not vote on the executive, have—and I quote from the BALPA rule book:
"full liberty to express their opinions and advise the Council on any matter relating to the affairs of the Association".
So it is quite clear that there is nothing novel in the proposition that I am putting forward that union executives comprise two groups of members—those who have voting rights and those who do not.
I suggest that it is also another example of the Bill's flexibility that it does nothing to inhibit unions from bringing specialist, non-voting members on to their executives, but where executive members are given direct power to take executive decisions—those decisions which can affect members of the wider community—through exercising voting rights, then the Government believe that they should, without exception, be simply and directly accountable to the union's members.
Turning once more to BALPA I am aware that there are a number of what might be called ex officio seats on the national executive council which are currently elected at the annual delegates' conference. As I have explained, there will be nothing to prevent BALPA from continuing to select these officers in this way when the Bill is in force, so long as they do not have voting rights on the executive. While I can understand BALPA's reluctance to change its present arrangements, I must ask the House to recognise that a fundamental point of principle is at stake here. If a union chooses to give an officer voting powers on its executive then it is only reasonable that that officer should be democratically and directly elected by the union's members in accordance with the fundamental principles of Part I of the Bill. Even with the sympathy given by my noble friend Lord Campbell of Alloway to the amendment, I do not think, as he acknowledged, that we can quite get past that hurdle. Therefore, while I appreciate the great care that has gone into the drafting of these amendments, regrettably, I do not think that that alone can make them acceptable. They would undermine one of the very basic principles of legislation, and I hope that with those considerations in mind the noble Lord, Lord Beswick, would agree to withdraw them.
Lord Beswick: My Lords, in my fairly long existence in this House I do not think I have ever heard a Minister from the Box opposite be so kind about an amendment and then refuse to accept it. On the points with which he disagreed, I am afraid the noble Earl is under a misapprehension. I am not talking about two categories of executive members of the committee; I am talking about pilot members. The chairman of the technical committee of BALPA is not an executive; he is a member of BALPA, like anyone else. I am asking that if he is elected by fellow members to the central executive committee he should not be a second-class member, able to talk but not able to vote.
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I find it inconceivable that the noble Earl should resist this amendment. He said that we had gone so very far to meet the doubts he expressed, whether rightly held or otherwise; but he had these doubts, and we have tried to meet them. There really is a special case here, and if the noble Earl cannot meet it I am afraid that he is exhibiting that kind of dogmatic—I was going too far I think, but that kind of resistance to discussion and reasonable democratic argument that is the cause of this Government crumbling today. That is what is the trouble with this Government: they will not, or apparently cannot, listen to an argument when it is reasonably put forward. I have endeavoured to put it forward reasonably, and I think I ought to ask the House to express its opinion upon the amendment.
4.47 p.m.
On Question, Whether the said Amendment (No. 3) shall be agreed to?
Their Lordships divided: Contents, 58; Not-Contents, 124.

DIVISION NO. 1

CONTENTS

Ardwick, L.

Listowel, E.

Bernstein, L.

Llewelyn-Davies of Hastoe, B

Beswick, L.

Lloyd of Hampstead, L.

Birk, B.

Lockwood, B.

Bottomley, L.

Lovell-Davis, L.

Brockway, L.

McCarthy, L.

Caradon, L.

Mishcon, L.

Carmichael of Kelvingrove, L.

Molloy, L.

Collison, L.

Mulley, L.

Cooper of Stockton Heath, L.

Oram, L.

David, B. [Teller.]

Phillips, B.

Dean of Beswick, L.

Ponsonby of Shulbrede, L.

Denington, B.

Ross of Marnock, L.

Ennals, L.

Scanlon, L.

Ewart-Biggs, B.

Shackleton, L.

Gaitskell, B.

Stallard, L.

Gallacher, L.

Stewart of Alvechurch, B.

Gosford, E.

Stewart of Fulham, L.

Graham of Edmonton, L.

Stoddart of Swindon, L. [Teller.]

Hayter, L.

Houghton of Sowerby, L.

Stone, L.

Howie of Troon, L.

Strauss, L.

Hughes, L.

Taylor of Blackburn, L.

Ilchester, E.

Underhill, L.

Irving of Dartford, L.

Wedderburn of Charlton, L.

Jacques, L.

Wells-Pestell, L.

Jeger, B.

White, B.

Jenkins of Putney, L.

Willis, L.

Kearton, L.

Wilson of Rievaulx, L.

Leatherland, L.

NOT-CONTENTS

Abercorn, D.

Cameron of Lochbroom, L.

Alport, L.

Campbell of Alloway, L.

Ampthill, L.

Carnegy of Lour, B.

Ashbourne, L,

Cathcart, E.

Auckland, L.

Clitheroe, L.

Avon, E.

Cockfield, L.

Bathurst, E.

Coleraine, L.

Bauer, L.

Cork and Orrery, E.

Belhaven and Stenton, L.

Cottesloe, L.

Beloff, L.

Cox, B.

Belstead, L.

Craigavon, V.

Berkeley, B.

Croft, L.

Bessborough, E.

Dacre of Glanton, L.

Boyd-Carpenter, L.

Denham, L. [Teller.]

Broxbourne, L.

Denning, L.

Bruce-Gardyne, L.

Digby, L.

Caithness, E.

Dilhorne, V.

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Dormer, L.

Middleton, L.

Drumalbyn, L.

Milverton, L.

Dundee, E.

Minto, E.

Eccles, V.

Mowbray and Stourton, L

Ellenborough, L.

Munster, E.

Elliot of Harwood, B.

Murton of Lindisfarne, L.

Elton, L.

Norfolk, D.

Faithfull, B.

Northchurch, B.

Fanshawe of Richmond, L.

Nugent of Guildford, L.

Ferrier, L.

Onslow, E.

Fraser of Kilmorack, L.

Orkney, E.

Gisborough, L.

Orr-Ewing, L.

Glanusk, L.

Peyton of Yeovil, L.

Glenarthur, L.

Polwarth, L.

Gormanston, V,

Portland, D.

Gowrie, E.

Reigate, L.

Greenway, L.

Renton, L.

Gridley, L.

Renwick, L.

Halsbury, E.

Russell of Liverpool, L.

Hankey, L.

St. Aldwyn, E.

Hardinge of Penshurst, L.

St. Davids, V.

Hawke, L.

Saltoun, Ly.

Henley, L.

Selborne, E.

Home of the Hirsel, L.

Selkirk, E.

Hylton-Foster, B.

Sempill, Ly.

Inglewood, L.

Skelmersdale, L.

Ingrow, L.

Somers, L.

Ironside, L.

Spens, L.

King of Wartnaby, L.

Stamp, L.

Kinnaird, L.

Strathspey, L.

Lane-Fox, B.

Swinton, E. [Teller.]

Lauderdale, E.

Terrington, L.

Lawrence, L.

Teviot, L.

Lucas of Chilworth, L.

Teynham, L.

McAlpine of West Green, L.

Thomas of Swynnerton, L

McFadzean, L.

Thorneycroft, L.

Macleod of Borve, B.

Trefgarne, L.

Mancroft, L.

Ullswater, V.

Margadale, L.

Vaizey, L.

Marley, L.

Vaux of Harrowden, L.

Marsh, L.

Vickers, B.

Massereene and Ferrard, V.

Vivian, L.

Vlaude of Stratford-upon-Avon, L.

Waldegrave, E.

Whitelaw, V.

Merrivale, L.

Wise, L.

Mersey V.

Resolved in the negative, and amendment disagreed to accordingly.

The Bus Industry
4.55 p.m.
Lord Lucas of Chilworth: My Lords, it may be for the convenience of the House if, with permission, I now repeat a Statement which has just been made in another place by my right honourable friend the Secretary of State for Transport on the subject of public road transport. The Statement is as follows:
"The Government have now completed the review of the bus industry of which I informed the House on 14th February. Bus passengers and taxpayers are not being well served. Over 10 years, the cost of local bus services have risen by up to 30 per cent. in real terms. Fares have gone up by over 30 per cent. in real terms. Subsidies have risen while services and usage have declined. Rural bus services are causing serious concern. The discipline of competition in the market place can bring great increases in efficiency, and cuts in fares. This has been shown by the deregulation of coach services in 1980. If new ideas and new services are allowed to
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flourish, then the total public transport market can expand, with advantage to operators, workers, and, above all, passengers. It is the users of buses who should come first, and they are the less-well-off members of our society. The Government's proposals are set out in a White Paper published today in the names of myself and my right honourable friends the Secretaries of State for Scotland and Wales. Copies are now available in the Vote Office.
"We propose to introduce legislation at the earliest opportunity to remove restrictions on competition in local bus services. We shall abolish road service licensing throughout Great Britain, except for the time being in London where new arrangements have just been introduced. We attach the highest priority to maintaining standards of safety, and quality—supervision of operators will continue to be tightened, with more resources devoted to the purpose.
"Local authorities will be responsible for providing subsidy to socially necessary services which are not otherwise viable in a free system. They will let contracts on the basis of competitive tenders. Support for these services will thus be made specific and transparent. Concessionary fare schemes for the elderly and disabled will continue but must be open to all operators on an equitable basis of costing.
"These policies will benefit rural communities, for whom public transport links are vital. Rural passengers will benefit from competition, more flexibility and new ideas. In addition, we shall take two special measures to aid rural transport. The first is a transitional grant, paid to operators of rural services. This will last four years reducing in equal steps from a starting level of up to £20 million. The second is a special fund of up to £1 million a year to finance innovation in rural transport. I am glad to say that this will be administered by the Development Commission in England. Similar arrangements will be made in Wales and Scotland. We shall explore ways for making wider use of services run by education, health and social service authorities and the Post Office, and will simplify the law on voluntary operation of minibuses.
"The structure of the bus industry must be changed to remove the dominance of very large public-sector operators and to allow competitors an opportunity to enter the market. Passenger transport executives will be required to break down their operations into smaller units as separate companies. The National Bus Company will be reorganised into smaller free-standing parts which will be transferred to the private sector. District councils which own bus operations will be required to put them at arm's length into companies, which they will still own, but to which subsidy will be provided only through tenders and made transparent. Agreements between bus operators will be made subject to the Restrictive Trade Practices Act. We will widen the opportunities for taxis and licensed hire cars, by introducing new rules enabling them to carry several passengers at separate fares in certain circumstances.

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"We shall issue consultation papers on the detailed implementation of a number of these proposals.
"These changes reverse a policy of protection which has lasted for over 50 years. This straitjacket is now producing high cost and inadequate services. The Government"s proposals will give the opportunity for the many able managers in the bus industry and for others, with enterprise and initiative, to offer better services to the public, at less cost."
My Lords, that concludes the Statement.
Lord Underhill: My Lords, I wish to thank the noble Lord the Minister for repeating this Statement made by his right honourable friend in the other House. I also wish to thank the Government Whips for letting me have a copy of the White Paper at 3.50 p.m., which I have not read because I anticipated that the Statement might be read soon after then. Frankly, 79 pages cannot be dealt with in answer to a Statement. Is it correct that the press had a briefing with a copy of the White Paper at 11 o'clock this morning? If so, should not that facility also have been made available to Members of the House?
This is an appalling Statement. It reflects a polemical stance rather than one concerned with transport considerations, and will be disastrous for the future of a nationwide bus network. General praise has been given from time to time to the National Bus Company. Why, then, is it now proposed to fragment the National Bus Company and to sell off the separate units? How many small units will there be? What will happen if one unit, because it is in a national network, is unprofitable and cannot be sold? Do the Government understand the principles of cross-subsidisation? Do the Government recognise that a free-for-all will mean that the private sector, which is obviously there for business purposes, will be interested only in the profitable routes at the most remunerative times? This must naturally be to the detriment of the network, particularly in the rural areas.
As the list of Ministers presenting the Statement includes the Secretary of State for Scotland, and as there is no reference to the Scottish Transport Group, will the Minister confirm that there is to be no interference with the Scottish Transport Group set-up? Are the Government relying upon what has happened in the three trial areas, even though these are untypical areas? Where is the report on those trial areas? We were promised a Transport Road Research Laboratory evaluation of the trial areas. We have not seen it. Is the Minister aware that, based on the Secretary of State's recent speeches, which seemed to forecast these proposals, the Association of County Councils declared its opposition to any free-for-all deregulation and stated that, in its view, this would have a damaging effect on transport in the counties? Has not the Association of Metropolitan Authorities, of which I have the honour to be the president, also declared its concern at the Minister's forecasts and declared its complete opposition? In addition to the opposition voiced by these two important local authority associations, is it not the case that the
1068
professional bus men have also opposed these projected proposals as advanced in the speeches of the Secretary of State?
Has not the Coach and Bus Council, which represents more than 90 per cent. of all the operators—public, local authority and independent—voiced its warning at deregulation and free-for-all proposals? Does not the report of the National Bus Council, although rather restrained, also make it quite clear that in their view the proposals will be disastrous for a national bus network? Is the White Paper a consultation paper, or is there to be consultation only on how to carry the proposals into effect? If it is for consultation, if all professional bus men and the local authority associations oppose the White Paper proposals, will the Government not proceed with their projected legislation?
The Statement refers to the maintenance of standards of safety by independent operators. Why is there no reference in the Statement to no less favourable working conditions, pension schemes and training? If there is to be fair competition, surely those must be maintained as well: yet there is no reference to them in the Statement. A consultative letter to the local authority associations and the GLC, issued only on 6th July, stated that,
"transport supplementary grants for 1985–86 will be paid only on capital highways expenditure".
Does that statement, together with the references in today's Statement, herald an attack on subsidies to transport as a public service?
Reference is made to the setting up of district council transport companies. What is really meant by the words,
"subsidy will be provided only through tenders"?
Does the Minister recognise that local authority bus undertakings take into consideration social benefits? Does he further recognise that it would be disastrous if those are obliterated in the interests of purely private sector profit operations? Is not the attack on the Passenger Transport Executive structure in total conflict with the successful transport policies which have been brought to the metropolitan conurbations?
These are only a few of the questions which arise from the Statement. I am certain that there will be very many more when we have had time to read the White Paper. As professional men oppose these proposals and as local authority associations oppose them, I must ask that before there is any suggestion of legislation on the lines of the Statement there should be a full debate on the White Paper proposals, which I am certain no one other than the Minister has read.
Lord Tordoff: My Lords, we, too, are grateful for the courtesy of the Government in repeating this Statement in this House. It is extremely difficult for us to review even the Statement at such short notice. It is certainly not my intention to embark upon a Second Reading speech at this moment. I must say that I am greatly impressed by the grasp of the noble Lord, Lord Underhill, of the whole subject, but I do not believe that now is the time to go into the sort of detail which he has raised with the Minister. It seems to me that there are likely to be many other matters contained in the White Paper which relate to the Statement and to

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the questions that he has asked. If I may, I shall confine myself to making one or two general remarks rather than asking detailed questions.
There are things in the Statement with which one can concur. The statement that rural bus services are causing serious concern is something on which no-one would cast doubt. The question of how that should be put right is a matter which we must debate at much greater length later on. The statement that it is the users of buses who should come first and that they are the less well-off members of our society is also true. It seems to me, though, that one of the ways forward in public transport is to encourage some of the better-off members of our society to use public transport by making public transport more efficient and more attractive to the population at large.
It is a dramatic Statement in many ways, and what it says about the abolition of road service licensing throughout Great Britain is something which we will have to consider with the greatest care. It is a major step in the reorganisation of buses in this country, and I certainly would not want to go into detailed comment on that at this stage. Then there is the statement that rural passengers will benefit from competition. I must beg leave to question that in at least one respect.
I think the possibility of introducing new forms of public transport in rural areas is greatly to be encouraged, and one looks to the White Paper to see what ideas are proposed. But I must say that, if it is going to be just a market economy in rural transport, then I fear that rural passengers will suffer, because in many of these cases the private sector simply will not pick up the rural services which are unprofitable and the rural communities may well suffer because of that.
There are suggestions that there are to be various degrees of funding. The £1 million a year to finance innovation in rural transport is an interesting thought. I just wonder whether £1 million a year is not so small as to have very little impact on a complex problem.
The National Bus Company's reorganisation was something which I think many of us expected. When a number of amendments that I put down to the London Regional Transport Bill were so firmly rejected by the Government; and, when they refused to consider any possible integration of London Country Bus Services into the London Transport system, one felt that this was a straw in the wind and that one was going to see the break-up of the National Bus Company. Basically, I think that is to be regretted. The National Bus Company has done a very good job in a number of difficult areas over recent years and I feel that it will lead to the disintegration of that very worthy organisation and possibly the loss of a useful contribution to the whole matrix of transport.
The item on taxis seems to me not to go far enough, but again one must look at the White Paper to see precisely what is meant by that. Certainly the use of private hire vehicles and taxis in rural areas to pick up services which rural bus services no longer cater for is an area that we should be prepared to explore.
Let me say in conclusion from these Benches that we do not object to increased competition provided that that competition is fair. We recognise that an element of competition may well, in certain instances, improve
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the efficiency and the services, and it is greater efficiency that we want to see. But what we worry about is the fragmentation of public transport and the loss of services in difficult areas, particularly in rural areas but also in urban areas.
All I can say at the moment is that we shall need to debate this White Paper when we have had a chance to study it and, as a very minor tributary of the "usual channels", I shall certainly use what efforts I can to ensure that your Lordships are able to debate this matter at an early stage. I do not believe that we should let the summer go by without having at least a preliminary look at this before the legislation is put before us and the whole thing is being hurried through in the next Session. However, I am grateful to the noble Lord for his Statement.
5.12 p.m.
Lord Lucas of Chilworth: My Lords, it is customary to thank noble Lords on each of the main Opposition Benches for their response to a Statement. I very much regret that this afternoon I am not able to do that, because I find that the response of the noble Lord, Lord Underhill, was singularly hostile, which demonstrates to me the inability of the Opposition to meet challenge with change. Quite to the contrary, of course, the noble Lord, Lord Tordoff, while recognising that the Statement and the proposals, so far as he has been able to see them, are dramatic, accepts some of the fundamental principles underlying the White Paper; and I am grateful to him.
Perhaps I may just pick up one or two points because, as both noble Lords have said, we cannot have a debate this afternoon and, in so far as a debate is required, both noble Lords, and indeed your Lordships, will recognise that it is not within my grant to accept or not to accept that suggestion. No doubt the usual channels will meet in due course.
The noble Lord, Lord Underhill, asked a number of questions, and I will try to answer as many as I can within the constraints of time. He asked me particularly about the Scottish Transport Group. If he turns to page 7 of the White Paper—and of course I accept that he has not had time to go through all the pages: it is not usual in any event—he will see there is no suggestion that the Scottish Transport Group is to be disbanded.
He asked me whether the trial areas experiment was the basis of the suggestions contained in the White Paper. No, my Lords: the trial areas are not the whole basis for the policy, but they have provided important evidence about the likely effects of deregulations, particularly in rural areas. In particular, they have shown that there is considerable room for subsidy saving. There was 38 per cent. saved in Hereford and £65,000 from education budgets on the cost of school seasons. But, contrary to the fears of critics of some two or three years ago, there has been no collapse of services, and indeed our information is that the service standard is better in many respects.
The noble Lord suggested that there was going to be a "free-for-all". Again, he will see that the responsibilities of the traffic commissioners are to be extended, support for their services is to be improved

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and there should be no (I use inverted commas) "free-for-all", because that is not what a free competitive society is about.
The noble Lord suggested that the professional bus men, and in particular the BCC, were wholly opposed to what was suggested in the White Paper. That is not so, though it may be his interpretation of what he has learned from recent meetings between professional bus men in the independent sector and from the Bus and Coach Council, both of which had meetings with my right honourable friend the Secretary of State for Transport only a few days ago. It is certainly my department's impression and my right honourable friend's impression that they were fairly enthusiastic about the principles underlying the White Paper. In that context, perhaps I may use the expression that the White Paper, while setting down the Government's policy in this matter and the principles that are to be employed in executing that policy, is, frankly, tinged with a little green, in that many of the details of the implementation of that policy are open to consultation.
The noble Lord, Lord Tordoff, if I may say so with very great respect, took a rather more rational view of my right honourable friend's Statement. He reserves his comment until he has further studied the White Paper. He asked particularly about the rural area and expressed some doubts; but perhaps I may just say to him that we believe the policies outlined in the White Paper will lead to opportunities for smaller operators to enter the field of rural transport without the bureaucracy and regulation that have hitherto prevented them from doing so.
There is, as I repeated in the Statement, a sum of £20 million, certainly in the first year, and a descending scale of additional grant over four years, which should help to "lift off- rural transport services. The innovation grant, while the noble Lord questioned the sum of £1 million, will certainly help to tackle the long-standing problems of service cuts and high fares in rural communities, particularly by encouraging voluntary, or indeed commercial services, which need an injection of what I may call "pump-priming money", and this will be provided by that grant. I think that answers his implied question when he asked whether the rural areas are to be motivated merely by a market economy. The answer is no. The Government are very well aware of the need for the provision of bus services in rural areas, particularly where motor car ownership per household tends to be lower than in the cities and where, for social, business, health and a wide variety of other reasons, there is a need for people to go into the towns and the cities. So I cannot accept that these proposals should lead in any way to a loss of services.
The noble Lord mentioned Amos, but I think he will probably appreciate that when Amos made their two applications to the licensing authorities there were a number of unanswered questions which left the commissioners with no alternative but to refuse the applications. The noble Lord spoke about taxis, and again I think that, if he looks carefully at the earlier pages, although the White Paper is 79 pages long, he will find that nearly all that noble Lords need to concern themselves with is in pages 6 to 9. I think I
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have answered the questions which both noble Lords have asked me on this matter.
Lord Boyd-Carpenter: My Lords, is my noble friend aware of the fact that the comments of the noble Lord, Lord Underhill, have a strange similarity to those to which I was exposed nearly 29 years ago when I was able to secure some modification of the rigidity of road service licensing? Is he aware that to many of us the Statement made today is not only of the greatest importance but is the culmination of efforts made over many years to relax the elaborate and bureaucratic controls upon bus transport which have had so much to do with both its cost and its inadequacy?
Is he aware, therefore, that the liberation and liberalisation of bus transport will make a major contribution, particularly in the rural areas, where it will give an opportunity for the small operator who is discouraged by all the bureaucratic paraphernalia at the moment to come in and offer locally very valuable services? Therefore, is my noble friend aware that many of us regard his Statement this afternoon as a historic one of major importance?
Lord Peyton of Yeovil: My Lords, while I would not ask my noble friend—
Lord Lucas of Chilworth: My Lords, I wonder whether my noble friend will allow me, first, to answer my noble friend Lord Boyd-Carpenter. I am most grateful to my noble friend for his contribution. Of course, noble Lords will recall that my noble friend Lord Boyd-Carpenter made such a distinguished contribution in the field of transport and of public transport not so very many years ago, and the impact still remains. I am aware of very many of the points which my noble friend made, and, of course, I concur with him. He is quite right in saying that this is an historic occasion. This sets a new pattern, a new train, so to speak (although we are talking about road transport) in a system that has remained unaltered for 50 years, and it is to be welcomed. Since many of those in the road transport industry have great innovative and entrepreneurial skills, I have little doubt that the rewards which we seek by the White Paper will be achieved.
Lord Peyton of Yeovil: My Lords, while it is certainly not my intention to invite my noble friend to take another deep dive into the detail of this matter, I should like to ask him whether he was particularly struck by the old world detachment from reality shown by the noble Lord, Lord Underhill, in his long catechism of questions, the underlying gist of which—that all is at present well with the bus industry—is something which is far from the case.
Lord Lucas of Chilworth: My Lords, again I am grateful to my noble friend Lord Peyton. He, too, had a distinguished career as a Minister in the Department of Transport, and I accept what he says. I can only underline what I said in my first response to the noble Lord, Lord Underhill. He appears to be staying 50 years behind, and I am very surprised and disappointed.
Lord Teviot: My Lords, is my noble friend aware that quite a lot of us have been rather loquacious on this subject this afternoon? However, is my noble friend aware that the noble Lord, Lord Underhill, got his White Paper at 3.50 p.m. and I did not get mine until 4.30 p.m.? They were dutifully sitting on the windowsill in the Printed Paper Office, bound but not open at that time. So the noble Lord was privileged. The noble Lord was able to ask a lot of very important questions which my noble friend has answered. However, my questions to my noble friend are much more trite.
I wish to know, first, that Government policy is that the essential needs of the travelling public for public transport will be paramount; secondly, that the quality of service that we now enjoy in public road passenger transport will be maintained; and, finally—a rather different subject—I should like to know about the withdrawal of bus services. My noble friend will be aware that this bus policy document is not entirely to do with the fragmentation of the National Bus Company; it contains a lot of other important points. My noble friend will be aware that whenever there is a withdrawal of permanent rail services there is always an outcry. I should like to know what policy the Government will pursue if bus services are to be withdrawn for one reason or another.
Lord Lucas of Chilworth: My Lords, I think my noble friend has asked me four questions, and I can deal with them quite shortly. The user is particularly paramount in our consideration of bus policy, and, as he no doubt studies the White Paper over the weekend or over the next weeks, he will see that that is so. It is the user, then the operator and so on. My noble friend asked whether there will be a maintenance of the quality of public transport services which we now enjoy. I have to say to him that many do not enjoy it, because they find it inadequate; but I can see no reason why that minimal standard should not be maintained. The whole object of the proposals in the White Paper is, to improve the quality of the service which users enjoy.
My noble friend also asked me about the withdrawal of services. I think that that will depend very much on the conditions which occasion a withdrawal. But he will notice in the White Paper that it is necessary for operators to register their service with the traffic commissioners—what I might call the timetable and the fare structure. Before being granted a licence, they will have to accept as a condition of licensing and registration a period in which it will not be possible to withdraw a service. In the unhappy event of the withdrawal of a service, it will be for the local authority to determine the method by which that service should be replaced.

Trade Union Bill
5.30 p.m.
Consideration of amendments on Report resumed.
[Amendments Nos. 4 and 5 not moved.]
Clause 2 [Requirements to be satisfied in relation to elections]:
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 6:
Page 3, line 31, leave out subsection (6) and insert—
("(6) Every person who is entitled to vote at the election must—

(a) he allowed to vote without interference from, or constraint imposed by, the union or any of its members, officials or employees; and

(b) so far as is reasonably practicable, be enabled to do so without incurring any direct cost to himself.

(6A) So far as is reasonably practicable, every person who is entitled to vote at the election must—

(a) have sent to him, at his proper address and by post, a voting paper which either lists the candidates at the election or is accompanied by a separate list of those candidates; and

(b) be given a convenient opportunity to vote by post.").

The noble Earl said: My Lords, in moving this amendment I should like to take with it Amendments Nos. 7 and 9 through to 14, 16 and 19 through to 22.
Amendment No. 7: After Clause 2 insert the following new clause—
("Modification of section 2 requirements.
.—(1) Where a trade union proposes to hold an election and is satisfied that there are no reasonable grounds for believing that the requirements of section 2 of this Act would not be satisfied in relation to that election if subsection (6A) of that section were to apply as modified by this section, it may proceed as if for paragraphs (a) and (b) of subsection (6A) there were substituted—

"(a) have made available to him—

(i) immediately before, immediately after, or during, his working hours: and

(ii) at his place of work or at a place which is more convenient for him';

or be supplied with, a voting paper which either lists the candidates at the election or is accompanied by a separate list of those candidates; and

(b) be given—

(i) a convenient opportunity to vote by post (but no other opportunity to vote);

(ii) an opportunity to vote immediately before, immediately after, or during, his working hours and at his place of work or at a place which is more convenient for him (but no other opportunity); or

(iii) as alternatives, both of those opportunities (hut no other opportunity).").

Amendment No. 9: After Clause 2, insert the following new clause:
("Register of members' names and addresses
.—(1) It shall be the duty of every trade union—

(a) to compile and maintain a register of the names and proper addresses of its members; and

(b) to secure, so far as is reasonably practicable, that the entries in the register are accurate and are kept up-to-date.

(2) The register may be kept by means of a computer.
(3) Any duty falling upon a branch under this section by reason of its being a trade union shall be treated as having been discharged to the extent to which the union of which it is a branch has discharged that duty instead of the branch.").
Amendment No. 10: Clause 3, page 4, line 32, after ("the") insert ("Certification Officer or to the").
Amendment No. 11: Page 5, line I, after ("the") insert ("Certification Officer or, as the case may be, the").
Amendment No. 12: Page 5, line 19, at end insert—
("(7A) In making an enforcement order which requires the union to hold a fresh election, in any case where the application relates to an election which has been held, the court shall (unless it considers that it would he inappropriate to do so in the particular circumstances of the case) require the fresh election to be conducted—

(a) in accordance with such provisions as may be made by the order; and

(b) with a postal ballot (that is to say, as if section (Modification of section 2 requirements) were omitted from this Part).").

Amendment No. 13: Page 5, line 23, leave out from ("of") to end of line 26 and insert ("such period as the court considers appropriate").
Amendment No. 14: After Clause 3, insert the following new clause:
("Proceedings before Certification Officer: supplementary provisions.
.—(1) Where the Certification Officer makes a declaration under section 3 of this Act and is satisfied that—

(a) steps have been taken by the union with a view to remedying the declared failure or securing that a failure of the same, or any similar, kind as that of the declared failure does not arise on the part of the union; or

(b) the union has agreed to take such steps;

the Certification Officer shall, in making the declaration, specify those steps.
(2) On an application to him under section 3, the Certification Officer (whether or not he makes a declaration) shall give reasons for his decision in writing; and any such reasons may be accompanied by written observations on any matter arising from, or connected with, the proceedings.
(3) The making of an application to the Certification Officer under section 3 shall not be taken to prevent the applicant, or any other person, from making a subsequent application to the court under that section in respect of the same matter.
(4) Where such a subsequent application is made, the court shall have due regard to any declaration, reasons or observations of the Certification Officer in the proceedings before him which are brought to the notice of the court in the proceedings before it.
(5) On an application made to him under section 3, the Certification Officer shall—

(a) make such enquiries as he thinks fit; and

(b) where he considers it appropriate, give the applicant and the trade union an opportunity to be heard.

(6) The Certification Officer may regulate the procedure to be followed on applications to him under section 3.").
Amendment No. 16: Clause 6, page 8, line 5, at end insert—
("'the Certification Officer' means the officer appointed under section 7 of the Employment Protection Act 1975;").
Amendment No. 19: Page 8, line 12, at end insert—
("'post' means a postal service which—

(a) is provided by the Post Office or under a licence granted under section 68 of the British Telecommunications Act 1981; or

(b) does not infringe the exclusive privilege conferred on the Post Office by section 66(1) of that Act only by virtue of an order made under section 69 of that Act;").

Amendment No. 20: Page 8, line 14, at end insert—
("`proper address', in relation to any member of a trade union, means his home address or any other address which he has requested the union in writing to treat as his postal address;").
Amendment No. 21: Page 8, line 28, leave out ("and").
Amendment No. 22: Page 8, line 30, at end insert—
("and
'working hours', in relation to an employee, means any time when, in accordance with his contract of employment, he is required to be at work.").
Taken together, these amendments represent the Government's response to your Lordships' debate on 19th June and the Committee's very clear verdict on the issue of postal ballots. I first express my congratulations to my noble friends Lord Beloff and Lord Renton, who moved and spoke to the earlier amendments in Committee, and my gratitude to them for adding their names to mine in respect of the Government's response.
These amendments are extensive and they make major changes to this Bill. I make no apology on either account because these amendments indicate how seriously we took the decision of the Committee on 19th June. They also reflect the Government's determination that all the provisions in this Bill should be coherent and workable. That is an objective which I know is fully shared by my noble friend Lord Beloff and by the other movers of the original amendment.
My noble friend acknowledged that his amendment was intended to establish a principle and that it was not a fully worked-out legislative vehicle for implementing that principle.
A word about this principle. When my noble friend moved his amendment, he said that:
"direct postal ballots should be the norm and departures from this norm should have to be justified".—[Official Report, 19/6/84; col. 257.]
That is precisely what these amendments are designed to achieve. The amendments encompass four major changes to the Bill. In the first place, the basic provisions governing voting in union elections have been recast so that there is a clear presumption that ballots will be postal except in those cases where a workplace ballot is—perhaps because of the circumstances of a particular union or of a particular election—equally or more likely to meet all the requirements of the legislation as to secrecy, convenience of voting, and freedom from interference or constraint. I remind the House that these are the basic requirements of the legislation. That is the effect of Amendments Nos. 6 and 7.
Secondly, there is an entirely new statutory duty on all trade unions to compile and maintain an accurate and up-to-date register of their members' names and addresses. Thirdly, the High Court is given a duty—not a discretion but a duty—in cases where a workplace ballot is manifestly in breach of the legislation to order an election to be conducted by postal ballot. Finally, there is an entirely new and additional right of complaint to the certification officer in the case of any breach of the requirements of Part I of the Bill.
Before I turn to each of these amendments in more detail, I must remind your Lordships that most unions have not even got as far as the workplace ballot: the majority of unions still elect their leaders at branch meetings held outside working hours in union offices or other places well away from any of their members' places of work. Theirs is the democracy of the activist. The price of actually casting a vote is to give up a whole evening and travel miles at the voter's own expense. And that is only part of the story in many instances: voting is often by show of hands and the actual pattern of voting is distorted by what I have always felt to be the Ruritanian device of the block vote. This Bill gets rid of all that.
The Bill will force unions to abandon these discredited practices. But, more than that, it will oblige any union which is not prepared simply to adopt postal balloting to consider whether a workplace ballot—the only alternative the legislation will allow—can possibly meet all the very stringent democratic safeguards that the Bill provides. Can a workplace ballot be secret? Can the union guarantee that none of its members will be at risk of intimidation or any other constraint on the voter's freedom to vote for the candidate of his or her choice? Can a workplace ballot be free of malpractice or manipulation? Perhaps above all, will a workplace ballot give members the opportunity to vote at a time and place which is convenient to them? Only if all these requirements are satisfied will it be safe for a union to depart from the requirements of Clause 2 and opt for a workplace ballot.
Furthermore, let no one think that this is a decision any union can afford to take lightly or without the most careful consideration. That is true even of those comparatively few unions which have always conducted their elections by workplace ballot. A decision to opt for workplace ballots will be subject to challenge by the members of the union concerned in the High Court at every stage; even, as I shall explain, before the first election due after the Bill comes into effect.
It is not the case, as even some commentators friendly to the amendments have stated, that the union is judge and jury in its own case. At every stage trade unions will be answerable to their own members and, through them, to the courts. That is the remedy throughout this Bill. It is and always has been the Government's view that it is far better for the enforcement of this Bill to be in the hands of union members themselves and not of some external, Government-sponsored institution. It is the rights of ordinary trade union members that the Bill sets out to guarantee. It must be for those members themselves—and not some third party—to decide when and how to use those rights.
Turning now to the detail of what we propose, Amendment No. 6—which is the amendment immediately before us—provides quite simply that anyone who is entitled to vote in a union election must be sent a voting paper at his home address, or whatever other address he chooses to give, and must be allowed to return his completed voting paper by post at no direct cost to himself. With this amendment, Clause 2 of the Bill—which contains all the Bill's basic voting provisions—establishes a clear presumption that union elections will be conducted by postal ballot.
In moving his original amendment, my noble friend Lord Beloff recognised that there are some circumstances in which postal ballots are impractical or undesirable and where workplace ballots—provided that there are proper democratic safeguards—can be a necessary and valid way of conducting elections. That was a great relief to me because it has always been my profound belief that we should not, as it were, outlaw the ballot at the place of work.
The purpose of Amendment No. 7, which takes the form of a new clause to follow the present Clause 2, is to put flesh on my noble friend's recognition of that factor. It is in effect an exemption clause but not one which provides a detailed list of exceptions or for case-by-case exemption at the hands of an external agency. Again, it has been a very strong view of mine that this whole legislation could be at risk if we are too stringent in the requirements we put on any external agency.
In essence, this new clause requires any union which is contemplating holding an election by workplace rather than postal ballot to satisfy itself that in the circumstances of that union and of that election a workplace ballot will meet all the Bill's requirements as regards secrecy, convenience of voting, and freedom from interference or constraint. If a union opts for a workplace ballot and has manifestly made the wrong decision, it will be subject to challenge in the courts by its members even before the election is held. That is the significance of the words "reasonable grounds" at
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the beginning of the new clause. If the members believe that their union has made the wrong decision, they can seek an injunction in the High Court to force the union to change its mind.
Also, this new clause has to be read in conjunction with Amendment No. 9, which imposes an entirely new statutory duty on all trade unions to compile and maintain an accurate and up-to-date register of their members' names and addresses. Without such a register, no union can operate a fully postal ballot, so this is a giant step forward. Indeed, it was and remains part of the Government's case that without registers of union members' addresses an immediate and universal requirement for postal ballots would be quite ineffective. But the obverse is equally true: once unions are place under a duty to maintain a register they will be denied the argument that it is simply impractical for them to operate postal ballots. They will not be able to use that argument either to the courts or, even more importantly, to their own members.
That brings me to the second amendment which bears directly on workplace ballots, and that is Amendment No. 12. This provides a further check on any union which holds a workplace rather than a postal ballot. If it is not challenged by its members before the election but it is subsequently found that the actual conduct of the election has fallen short of the legislation's requirements—for example, that there has been intimidation or some other malpractice—the High Court has a duty (and not, as previously, a discretion) to order any re-run of the election to be conducted by post unless that is plainly inappropriate. In other words, any union which opts for a workplace ballot will know that, however plausible that choice may seem before the event, if it proves to be mistaken in practice the union will face having to hold the election all over again by postal ballot. We have sought to sharpen the impact of this remedy by removing altogether the built-in delay of six months before a court order under this part of the Bill becomes enforceable. That is the effect of Amendment No. 13.
I believe the cumulative message of these amendments to the trade unions is clear and unmistakable. Postal balloting is and should be the norm. A union should adopt workplace balloting only if it is confident that it can justify its decision to its members before the election and that there will be no risk of breaches of the legislation occurring during the election. If the union gets it wrong on either count, it will get no second chance.
I turn now to the last amendment in this group, and that is Amendment No. 14. This provides a right of complaint to the certification officer about a breach of any provision in Part I of the Bill. This is additional to the right of complaint directly to the High Court which is already provided in the Bill. Its advantage is clearly informality, flexibility and lack of cost. Any union member will be able to bring any breach of Part I of the Bill to the certification officer's attention at the cost of a postage stamp. The certification officer will be under a specific duty to investigate any complaint, and if he decides it is well-founded he will make a legal declaration to that effect and publish his reasons. If that does not prove sufficient to secure a remedy of the breach, the members can go to the High Court to seek an enforceable order. The High Court will be required

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to take account of the certification officer's declaration and of the reasons he has given for making it.
I hope I have said enough to show that we have thought very long and very hard about the whole issue of postal ballots since we debated it in your Lordships' Committee. I believe the Bill is better for these amendments. The gap between my noble friends who moved the original amendment and the Government has never been, as I argued at an earlier stage, a wide one. It has always been a matter of means and not ends. I trust that with these amendments we have bridged that gap, and, as I said, I greatly welcome the fact that my noble friends have felt able to add their names to mine.
This Bill does what we promised to do in our manifesto. It has the support of the overwhelming majority of ordinary trade union members. They voted for it at the last general election when for the first time in our history a clear majority of trade union members deserted the Labour Party. They want the rights that this Bill will give them. They want an effective, democratic voice in the running of their own unions.
Lord Molloy: My Lords—
Noble Lords: Order.
The Earl of Gowrie: We owe it to them to ensure that the Bill gives as many trade unionists as possible a practical opportunity to cast their votes in union elections.
Lord Molloy: My Lords—
Noble Lords: Order.
The Earl of Gowrie: That is perfectly clear in the manifesto, and it is perfectly clear what this legisation is about; it is about the actual casting of votes, and we owe it to the trade unionists of this country to give them the full protection of the law against intimidation and malpractice. My Lords, I beg to move.
5.45 p.m.
Lord Rochester: My Lords, I think it may be for the convenience of the House if I now speak to Amendment No. 8 so that we may have a general debate, although I understand that technically I cannot move Amendment No. 8 until Amendment No. 7 has been moved.
Amendinem No. 8: As an amendment to Amendment No. 7, after Clause 2, line 2, leave out ("is satisfied that") and insert ("satisfies the Certification Officer that—

(i) the requirements of subsection (6A) of section 2 are inappropriate in the particular circumstances of the case; and

(ii) ").

At Second Reading of the Bill I said that the practical difficulties associated with the establishment of statutory machinery needed to make more extensive use of postal ballots should not be underestimated. During the debate in Committee on whether Clause 2 should stand part of the Bill I reaffirmed that, in having voted for the amendment
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moved earlier by the noble Lord, Lord Beloff, I had not departed from that position. Speaking on behalf of my noble friends, I added that we should be pleased to join in consultations aimed at producing before Report stage amendments designed to uphold in a realistic way the principle that had been agreed by the Committee, and aimed also at securing the widest possible support within the House.
Against that background, I should like first gladly to acknowledge that the Government's new amendments which the noble Earl the Minister has just spoken to, go a long way to meeting the views expressed in the memorable debate that we had in Committee on the whole question of postal ballots. That applies particularly to the statutory duty which will now be placed on trade unions to compile and keep up to date a register of their members' names and addresses. In addition, I very much welcome the proposed amendment to Section 1 of the Employment Act 1980 under which payments may be made to trade unions towards expenditure incurred in respect of ballots held under Clause 2 of this Bill.
However, the Government's amendments do not, in our view, go far enough in upholding the principle which noble Lords accepted in Committee. As I understood it, the principle was not simply that postal ballots should be a statutory norm, but implicit in that principle was the recognition that the Bill should not place responsibility for challenging dubious electoral procedures on individual trade unionists. If I may put it more positively, the interests to be protected were to be those of trade union members and not those of trade union officials. My noble friends and I considered this principle to be of such importance that we have made its establishment the purpose of an amendment which I hope to move later.
Under the Government's new Amendment No. 7, a trade union can still hold a workplace ballot if it is satisfied—as the noble Earl has just told us—that there are no reasonable grounds for believing that this would be contrary to the basic purpose of the Bill of ensuring that elections reflect the majority view of union members. But that, as The Times put it in a powerful leading article yesterday, still leaves a union as judge and jury in its own cause. In contrast, under our amendment it would be necessary for the union to satisfy an independent person (the certification officer) that a postal ballot to be held under the conditions set out in subsection (6)(a) of Section 2 of the Bill would be, in the precise words of Clause 3,
"inappropriate in the particular circumstances of the case".
It was this very principle, that the onus should be placed clearly on the trade union from the beginning rather than subsequently on the individual—or indeed at any time on the individual, I think I should add in the light of one of the points made by the noble Earl—that enabled me to vote with conviction at the Committee stage for the amendment of the noble Lord, Lord Beloff.
It has been said that if our amendment were enacted this might contravene ILO Convention No. 87. That stipulates, among other things, that workers' organisations should have the right to draw up their constitution and rules, and to elect their representatives in full freedom. It lays down also that the public

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authorities should refrain from any interference which would restrict this right or impede the lawful exercise thereof. I do not see how what is proposed in our amendment can reasonably be held to deny workers' organisations the right to elect their representatives in full freedom. Rather, it would seem that acceptance by Parliament of our amendment would enlarge that freedom. In any case, if the Government were to judge that acceptance of our agreement would involve interference on their part, which would restrict the right to which I have referred, how much more do all the new Government amendments appear to suffer from the same defect!
There is a further point which I should make here. The Government's four pages of new amendments to Part I were tabled only three days ago; yet in fairness to the House in general we felt obliged to table our amendment in response within 24 hours. My noble friends and I are an impecunious lot. Your Lordships will hear more about that when we discuss Part III. We do not have the services of experienced parliamentary counsel and draftsman. It is therefore possible that there are technical flaws in Amendment No. 8 in relation to the provisions of Part I as the Government are now seeking to amend it. But even if that should prove to be the case, I hope that our amendment will be debated at this stage as a matter of principle; for any but the most technical defects could surely, with goodwill, be put right at Third Reading.
Like the noble Earl, Lord Gowrie, I am glad that branch ballots are, as I understand it, now to be outlawed. I do not deny that turnout at union elections is of great importance, nor that workplace ballots tend to produce more votes than do postal ballots. The question nevertheless remains whether the quantity of votes recorded is of greater importance than the quality as measured by the degree of assurance voters have that there is freedom from potential interference in the ballot.
There may be some noble Lords who think that we have not gone far enough in opposing the Government's proposals. Indeed, instead of tabling this amendment we could simply have opposed the Government amendments, and for all I know have defeated the Government in a Division. I say that because, for reasons entirely different from our own, most noble Lords on the Labour Benches may be expected to vote against the Government amendments. However, we have taken the view that to adopt such a course would amount to no more than crude political opportunism on our part, and we are not in that game.
I meant what I said in Committee on behalf of my noble friends in the debate on whether Clause 2 should stand part of the Bill that our desire was not to hinder but to help the Government solve this problem. Your Lordships should therefore feel entirely free to consider our amendment on its merits. Indeed, I suggest that the House would be failing to fulfil its primary function if it did not give the closest scrutiny to the Government's new proposals and to our suggested extension of them. Accordingly, our amendment will stand or fall according to the view the House takes of it. If it fails, we shall not then vote against the Government's amendment because, apart from what I have just said, that might have the effect
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of leaving in the Bill subsection (6) of Clause 2 as it now stands. I fancy that the noble Lord, Lord Beloff, would be the first to agree that that subsection is not at present in a suitable form to be returned to another place.
In conclusion—
Lord Broxbourne: My Lords, perhaps the noble Lord will allow me to add just one explanatory sentence. I have been following his most interesting argument with great attention and respect. He referred to the position under ILO Convention No. 87, and he pronounced the very clear opinion that there would be no breach. But would it not be rather more complex than that? If a trade union made a complaint under Article 24 of the ILO constitution, the governing body of the ILO would then refer it either to a committee of inquiry or to the International Court of Justice itself, and according to what they find there is some provision for sanctions under Article 33 of that constitution. Of course, the noble Lord may be right, but there are these procedures and remedies. Therefore, are Ministers not at least prudent to have regard to the possibility of them being invoked?
Lord Rochester: My Lords, I thank the noble Lord, Lord Broxbourne, for his intervention and I acknowledge readily that I am not so well versed in these matters as I feel sure he is. I can only express the opinion of a layman in these matters, for what it is worth, and no doubt this will form part of the debate which I hope will now take place.
There is one further point that I should like to make as briefly as I can before I conclude. From the Labour Benches it may be said that even more than in the case of the Government's proposals our amendment seeks to make an invidious distinction between trade unions and other institutions in imposing special statutory constraints on unions in the election of members of their principal executive committees. To that I would say that trade unions enjoy special legal immunities and, as is today all too evident, they wield enormous monopolistic power; more particularly where, in the public sector, there are closed shops. My father was one of the Liberal Members of another place who, in 1906, gave the trade unions those immunities. He would be horrified if he were allowed now to see how, in the form of flying pickets and other such manifestations, the power provided by those immunities has been, and is continuing to be, abused.
I suggest that our amendment gives expression in a realistic, equitable and more accurate way than the first of the Government's proposed new clauses which your Lordships will find under Amendment No. 7. I suggest that our amendment gives better expression in those respects to the principle concerning postal ballots which the Committee agreed to. For that reason I trust that it will commend itself to noble Lords opposite, to noble Lords on the Cross-Benches and even to some Labour Peers. It is in that constructive spirit that I have sought to speak, and it is in that same spirit that I hope later formally to move the amendment.
6 p.m.
Lord McCarthy: My Lords, the noble Earl has made it clear that he is moving, as it were, as part of a general debate a whole series of amendments, but we have made it clear through the usual channels, and it has I think been accepted, that we do not quite agree that all these things go together in one universal package. We see why the Government say that, but we consider that in particular Amendments Nos. 10, 11 and 14, dealing, as they do, with the position of the certification officer, and bringing the certification officer into the debate and into the Bill in a way that he has not been there before, raise separate questions, and we would want to debate them separately when Amendment No. 10 is called.
I have to deal first, and quickly, with the amendment spoken to by the noble Lord, Lord Rochester, because he has brought the certification officer in in another way. I am bound to say that I was not clear (maybe it is my fault) from his speech whether he was offering the certification officer in his sense—bringing him in at his point in the Bill; and if the Government accept that, then the certification officer goes out in every other respect—or whether indeed that role for the certification officer as the person who is to decide whether someone can go forward on a workplace ballot (that is really what he is saying) is something in addition to be added to all the other roles of the certification officer in this clause. I take it from the way that the noble Lord is nodding that he is going to add it to the general role of the certification officer. That is one of the things that we find objectionable.
What we feel about that proposal is that it transfers the say-so as to whether a workplace ballot can get through the fine mesh of Clause 2 of the Bill from the member or the union executive to an administrative officer of the state. We think that that is rather corporatist and surprising coming from the party that the noble Lord represents. Indeed, we feel that it would also give the certification officer in the context of the whole of the Bill a very unfortunate mix of roles. He would be the person who would be deciding whether a person could go forward to a workplace ballot. If he said that he could, and some member subsequently thought that his rights had been infringed under Clause 2, he could come in as someone to say whether there had been an infringement. He would then make a report, and his report might very well be brought in front of a member of the High Court, if that is the way that the union members wanted to play it. We believe that that would be an involvement of the certification officer in a way that would seriously undermine his general role.
We feel—and this is what we shall be arguing subsequently when we come to Amendment No. 10—that the Government are in very grave danger, even without the amendment advanced by the noble Lord, Lord Rochester, of doing to the certification officer what they did to the old registrar.
The 1970 Conservative Government, by the Industrial Relations Act 1971, dragged a respectable, long-standing institution of the trade union registrar into the height of political controversy. As a result, there was a boycott of the registrar and all his works, and it was necessary to create another office with
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another name (called the certification officer) and not to have the same kind of thing but to produce it in other means and to call it a list. We feel that it is very dangerous, if the Government want to do these things, to drag into this exercise an institution which is now as respected as the certification office and which performs a wide range of functions, including, for example, overseeing amalgamations. For all those reasons we would be against the amendment.
We also feel that it is against the ILO Charter. We would quote on that the report of the Committee of Experts in 1983 at paragraph 172 when it said that it considered:
"that the legislation which regulates in detail the internal election procedures of trade unions"—
and we think that this would do so—
"is incompatible with the rights of trade unions recognised by Convention 87".
That is what we have to say about the noble Lord's amendment.
I should like now to focus on the Government amendments and to ask what they do, comment on what I believe that they do and look at their justifications. The first point to make is that the amendments provide trade union members with the right to vote without interference and constraint but not a right to vote without interference and constraint in the way in which that offer was made when this Bill went through the other place, because the Government have taken out a particular implication as it existed when the Bill went through another place; and they have done it by the novel means of actually taking out words. What the amendment before the House now says is that there will be no interference,
"imposed by, the union or any of its members, officials or employees".
In other words, the protection against interference is protection against interference by the union and the union's officials. No other form of interference is envisaged or protection offered. But after the Bill had gone through the other place subsection (6) of the draft which came from the Commons said:
"Every person who is entitled to vote at the election shall … be allowed to vote without interference or constraint … and … shall so far as-is reasonably practicable",
and so on.
It is, "without interference or constraint". There is no mention of the union or its members, and therefore it would have been possible to argue—and this was a debate which we had with the noble Earl in Committee—that this part of the Bill might be used to protect a union against interference from an employer in its election processes or by a third party in its election processes, even if he was writing articles in the Sunday Times. But that has been taken out. The only form of protection that we have now is protection against the union.
In that connection, I must remind the noble Earl of what he said at col. 644 on 25th June when I asked him on an old amendment what was going to come of Clause 2. In reply to our amendment he said:
"One of the Government amendments withdrawn from the Marshalled List because of the amendment accepted in the name of my noble friend Lord Beloff would have made it absolutely clear that a trade union would not be liable for interference or constraint on the part of the employer".

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I repeat that:
"on the part of the employer".
I asked him at col. 645:
"Would the noble Earl tell me which amendment it was which did what he has said".
Subsequently he said that it was Amendment No. 22. I said that I was sorry; I was afraid that that was not the case. That amendment had been changed—and it has been changed now it has come back as this amendment to take out the general protection and to limit protection against interference by a trade union and to do nothing for the trade union against interference from an employer.
In the light of what the noble Earl said when we discussed that in Committee, I should like, first of all, to ask him whether he will accept an amendment, say, on Third Reading, which would put that back, or indeed whether he will subsequently be accepting our Amendment No. 25 which tries to put that back in respect of Clause 8. That is the first major thing that is in this amendment.
The second thing which is in the amendment, of course, is a new draft of subsection (6) which we debated last time, which is intended to give us workplace ballots if the union is prepared to take the risk. That is essentially what is there. My question to the noble Earl then is, if that is the case, and there it is sitting there, what becomes of some of the objections which he put forward with such eloquence when we discussed this in Committee?
One of the major objections which he advanced was that he said that the amendment of the noble Lord, Lord Beloff, would provide that there would be a real risk that legislation would come to a dead letter because the leaders of the trade unions, who are implacably opposed to it, would simply not allow it to work because they would attack and boycott a vast new quango which would be forced to be created in order to make postal ballots the norm. That was his argument. In Hansard at col. 280 he said:
"Clearly no existing organisation could possibly take this on. It would be well beyond the capacity of, for example, the Electorial Reform Society".
He said that therefore one of the reasons for opposing this amendment was that the Government did not want to create a monster quango.
Where is the monster quango? If the Government now say that you do not need a monster quango what became of the argument that the noble Earl was giving us at the time? How does it come about that first of all the monster quango was needed and that is why you could not have the amendment, and now that the Government are forced to accept the amendment the monster quango has disappeared—unless of course the certification officer is the seeds of the monster quango? The noble Earl the Minister shakes his head. I am glad to hear it. So where is the monster quango?
The second argument the noble Earl used was about high turnout. He said it was more important still to think about high turnout. In col. 278 of Hansard he said:
"The issue between my noble friend Lord Beloff and myself is simply this. Are postal ballots or workplace ballots more likely to maximise the number of votes cast? Should the one, so to say, cancel
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out the other? I believe that even leaving aside the perhaps rather special case of the miners' union, with its turnout of 80 per cent. or more … or the CPSA"—
he gave an example of that—then he said:
"That is substantially higher than the average turnout in postal ballots".
That is of course true. All the evidence from Undy and Martin is that workplace ballots at least double the turnout on postal ballots. That was one of the reasons given by the Government in Committee for not accepting this amendment. My question therefore is, once again, why have the Government changed their minds?
I can think of only one reason. It must be that they have been convinced by the advocacy of those who spoke in favour of the amendment at the time. It cannot be for any other reason. Therefore, I have very carefully re-read the debate and the arguments used by those who favoured the amendment at a time when the noble Earl opposed it. I was looking for examples of intentional malpractice, corruption, intimidation, impersonation or failure to issue papers, or of stuffing ballot boxes or false counting: all kinds of intentional malpractice as against unintentional negligence which we do not deny. As I tried to say on Committee, all voluntary associations are pray to unintentional negligence, but I am talking about intentional malpractice.
I stress to the House that I am trying to be fair. I have read with very great attention once again the speech of the noble Lord, Lord Beloff. At col. 255 of Hansard he referred to a Member of the House who in 1872 alleged that working men were fearful of their officials. At column 256 of Hansard he recalled the experiences of Mr. Frank Chapple and Mr. Eric Hammond in the ETU scandal some 25 years or so ago. At column 257 he referred to a union—and it is not clear in the context whether the union is NALGO or NUPE—who supports the Morning Star. At column 258 he referred to a sub judice internal inquiry into alleged malpractice in the Transport and General Workers' Union, Bristol branch. At column 259 he referred to the fact that the CPSA had a lower turnout in recent workshop place ballots. In column 259 again he referred to the allegations of malpractice which are now being followed in the courts in relation to the election of the general secretary of the National Union of Mineworkers.
That is the sum total of the concrete examples that we had. They are allegations of cases going through the courts. They are statements about things which are, frankly, neither here nor there and there is one concrete scandal, 25 years ago. Yet the astonishing thing is that he noble Lord, Lord Beloff, did far better than anybody else who from this narrow vision contributed to the debate. Because I have read the debate with great care, and I cannot find a single noble Lord who gave an example which the noble Lord, Lord Beloff, had not already given. There are no other examples. I am glad to see that the noble Lord, Lord Marsh, is in his place. He gave no specific examples that had not been mentioned by the noble Lord, Lord Beloff. The noble Lord, Lord Marsh, said:
"Do not tell me that political parties and trade unions do not indulge in a little gentle massaging and manipulation of ballots. That is a degree of naivety that I will accept from some noble Lords—".

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He said:
"Ballot rigging has been widespread for generations in trade unions, and all sides have been involved in it".—(Official Report, 19/6/84; cols. 261–262.)
He gave no examples except the examples of the noble Lord, Lord Beloff.
The noble Lord, Lord Harris of Greenwich, said, in conclusion, at col. 271:
"What about intimidation, which we all know perfectly well takes place in a number of trade unions?"
He gave no details.
"What sort of pressure can be brought to bear on honourable men of this character when they suspect that grossly improper practices are taking place?"
He gave no details.
I find it astonishing that we should have had this debate and that the noble Earl—and I say this with no disrespect—after making one of his more persuasive and eloquent speeches, and not convincing his colleagues, can himself be convinced and come to this House and produce this amendment on arguments of this kind. Therefore, we shall be opposing this amendment or this series of amendments.
I should like to ask the noble Earl, in conclusion, a number of questions. Going back to what I said at the beginning, my first question is: what is the case for not restoring the wording of the first version of subsection (6) as it went through another place? Why not protect against employer interference as well, especially since the noble Earl told us that in fact he was going to do so?
Secondly, what point can there be in creating a situation where the trade union is told: you can go for a workshop place ballot if you want to but all the time you are at risk. You are at risk from the certification officer; you are at risk even after the election from a member who argues that in some unspecified way you have not acted reasonably?
I must say I thought that if the noble Earl was going to come before us with what he thought was a workable version of the amendment of the noble Lord, Lord Beloff, he would have spelt out a bit what those exceptional circumstances were. He might have said that they were where the union has a particular diffused membership or a high level of turnover, or something of that kind—something objective. But no; we have gone back to the old friend reasonableness and the trade unions have to take the risk.
Finally, I should like to say something about unions in the public sector. If I may take the noble Lord at his word, when he was speaking on the Committee stage he was saying that he believed that workshop based ballots were perfectly good things which could be run correctly by proper unions, and, if they were run correctly, because they produced a higher rate of turnover in a sense they were preferable. No way! The Government have an opportunity. Whether a trade union can run a workshop based ballot in any event depends upon the help which they get from the employer. Above all, to get the register correct, to get the facilities, to get the boxes out, to get the returns back, depends upon the employer. Where trade unions effectively use workshop based ballots they have got good relations with the employer.
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What about the public sector unions? What about the Civil Service unions? What about the unions directly under the control of the Government? The CPSA now operates a workshop based ballot. Will the Government be encouraging it to do so? Will they be encouraging people throughout the public sector? Will they be granting the necessary facilities, which will be difficult to grant, so that trade unions in the public sector, if they so wish, can still continue to operate workshop based ballots? Or is the presumption in favour of postal ballots to be taken to the point where those facilities will not be given?
6.20 p.m.
Lord Marsh: My Lords, this is a rare occasion for me because the arguments of the noble Lord, Lord McCarthy, are certainly arguments that I could not take issue with. The noble Lord made a devastating attack upon the Government. There is great truth in what he says. The burden of his case, which cannot be challenged by the Government, is that many of the arguments that have been placed in support of these amemdments are very different from the case that the Government made on previous occasions.
The only issue on which I disagree with the noble Lord is that I think the Government are to be congratulated on the extent to which they have moved away from the case which they were arguing previously. The amendments in the list before us are fundamental amendments. Everyone can make arguments that there should be some changes in them. But they are amendments that are fundamental, that change the whole aspect of this section of the Bill and change it to the good. The argument has been made again, and it will go on being made, of the enormous difficulties of postal ballots. In 1945, the country decided that it was going to hold a general election. It balloted the British Armed Forces from the jungles of Burma to the deserts of North Africa and thoughout a devastated Europe. And 1,034,069 postal ballots were delivered to this country in 1945. It is an absurdity to say that in 1984 with the modern aids that exist it is not possible to ballot a trade union.
One of the interesting things—one of the enjoyable things—about this place is that actually governments up here seem to listen to the arguments, and one does not know what is going to happen. That is what makes it fun to attend. Sometimes, the Leader of the House and the Whips have a different sense of humour and fail to see the joke. I had certainly not expected that the Government would have been defeated as decisively as they were. Neither had I believed that they would move in terms of compromise so far as they have moved on this issue. There are still problems that exist.
I have had sent to me since the last debate one of the envelopes provided by one union that ballots its members by post. They send the members a brown paper envelope in which they put the ballot paper so that it is impossible to see what is on the ballot paper. On the front, it says that the ballot paper must be enclosed in the envelope immediately and delivered to the branch secretary immediately, not open. There is no chance of the branch secretary seeing through that. The next line says that ballot papers sent direct to head office will be disqualified. So it has to go to the local branch secretary, the chap in the workplace. But it is sealed.

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It also says that the name, card number and branch must be inserted by the member. A space is given for the name of the man voting, his union card number and his branch number. As we said on a previous occasion, a local branch secretary, seeing the actual name of the man on the ballot paper, does not have to open the ballot paper to find what is inside. He knows in many cases which way people would have voted. So there is this sort of abuse that exists, and I believe it is wrong.
The noble Lord, Lord McCarthy, has made his case. He takes objection to the fact that the Government have changed their mind on the matter. I believe that many of us will express appreciation for it and congratulate the Government on having the courage so to do.
Lord Renton: My Lords, I understand that there may be a desire on both sides of your Lordships' House to reach a decision before 7 o'clock. I shall therefore be brief. I, too, should like to congratulate the Government on these well-conceived and workable proposals and particularly to express to my noble friend Lord Gowrie my apprecication of the part that he played in reaching them. I believe sincerely that these proposals will be a big step towards real democracy in our trade unions. Whatever may be felt by some of their leaders and by the Front Bench opposite about them, their members, I am confident, will welcome these proposals when they see the opportunities that they give.
The only specific point that I wish to make is in reply to the interesting speech of the noble Lord, Lord Rochester. The part that he and his noble friends played in helping us to reach a decision on the matter of principle was, indeed, a valuable part. As to his amendment that brings in the certification officer at an earlier stage and makes it necessary for the union to satisfy him before holding a workplace ballot, I would simply say this. I think it is better that we should give the union first a chance to get it right on its own responsibility. As my noble friend Lord Broxbourne pointed out, that would seem to be more consistent with the declaration of the ILO. It is surely better to hold the certification officer in reserve in case anything goes wrong instead of making it a condition precedent for him to exercise his authority.
Lord Molloy: My Lords, the House will I think take full cognisance of what the noble Lord, Lord Marsh, had to say, with his great background of experience as a trade union officer. I knew him as a trade union officer when he certainly did not hold the views that has expounded today. That was when he was a fully paid official of a trade union. The noble Lord has of course every right, as he progresses through life, to change his mind, for better or for worse, and obviously in this case for better—financially better. One would think that it is not impossible—we all know that it is possible—for the votes of anyone in a general election to be checked. Everyone has a number. That number is stamped on every ballot paper. If necessary, in some grave emergency of a swindle, that could be examined.
As the noble Lord, Lord Marsh, said, there were millions of people overseas in 1945 who used their ballot vote. There were also I suppose millions who
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used the vote by proxy. I hope that we are not confusing them. But nothing can equal what the noble Earl, Lord Gowrie, said in a previous debate. Of all those millions who voted either by proxy or by ballot paper—I ask your Lordships to consider this—no one knew how they voted. Indeed, in the last general election, the Conservative Party won handsomely and had more votes than the other parties, although the other parties between them had more votes than the Conservative Party. The probability is that Jews, Catholics, non-religious people, Anglicans, businessmen and trade unionists—proportions of them—voted for the Conservative Party.
What cannot be ascertained—I hope that it will be withdrawn—is that some machinery was secretly used in the last election to decide that most trade unionists voted for the Conservative Party. That was either an extraordinarily serious thing to have said or, as I hope, an extremely foolish thing to have said. No one can say how Baptists, Catholics, trade unionists or anyone else voted in the last election in this country. I think now that it might have been said as a smart political point but there can be no proof unless there existed some machinery to enable the noble Earl, Lord Gowrie, to make that claim. He should either say that he meant it as a party political point or that what he said was not true.
Baroness Cox: My Lords, I stand here today feeling deeply ambivalent. On the one hand, I greatly appreciate the concessions that have been made in the direction of postal ballots. On the other, I am concerned about a number of omissions that I know worry many moderate trade unionists. I welcome the fact that the amendments proposed by my noble friends shift the centre of gravity of the Bill towards the presumption that postal ballots should be the normal way of conducting elections in keeping with the amendment which was moved so effectively in Committee by my noble friend Lord Beloff. I also welcome warmly the requirement that trade unions should compile and maintain up-to-date registers of their members, and I appreciate greatly the provisions that enable individual trade unionists to take complaints to the certification officer rather than having to go directly to the courts.
So far, so good. But it is what is missing that is causing deep disappointment to many moderate trade unionists, especially the fact that the presumption for postal ballots is so weak that it can easily be ignored, and the fact that there is no requirement whatever for any form of independent scrutiny to forestall potential malpractice. These omissions highlight perhaps the basic characteristic of both the Bill and the Government amendments—that they provide for constructive change on a premise of goodwill and good faith, but they fail to give adequate safeguards for situations where these do not pertain. Indeed, these omissions are so serious that one experienced trade unionist has commented, "The wheelers and dealers and bully boys will be laughing".
Therefore, I should like to ask my noble friend the Minister if he will consider the following suggestions as constructive and helpful ways of allaying the anxieties of trade unionists who have to face the problems of the real world. Naturally, I do not expect an answer this

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evening, but I hope that some consideration might be given to these points before Third Reading or in another place.
First, whether, in accordance with Section 3 of the 1980 Employment Act, the Secretary of State might consider issuing a code of practice containing guidelines on procedures for issuing and counting ballot papers, and whether failure of a union to meet the requirements of such a code of practice could give union members the right to complain to the certification officer; secondly, that provision might be made for candidates to choose their own scrutineers to monitor all stages of an election; thirdly, that in the case of workplace ballots advance notice should be given of an election, and that failure to do so might render that ballot invalid; and also that the results for each local workplace ballot should be published at the workplace so that voters would have some idea of the extent to which published results reflect their voting, fourthly, that a date be given on which the regulations in this part of the Bill are to come into effect; fifthly and finally, that on a longer time scale some indication be given of a date by which there will be some assessment of the extent to which the Government's intentions that postal ballots should become the norm will have been achieved.
In conclusion, may I say that I hope I do not sound churlish with regard to the very real concessions which the Government have made in the form of the amendments before us, which I welcome most warmly. However, I must also be prepared to consider with an open mind the amendment in the name of the noble Lords, Lord Rochester and Lord Aylestone; to consider the extent to which it might help to strengthen the likelihood of more unions adopting postal ballots. Should that amendment be unsuccessful, naturally I will support those in the names of my noble friends. I hope that some of the suggestions I have put forward on behalf of moderate trade unionists will be considered sympathetically here or in another place.
6.33 p.m.
Lord Houghton of Sowerby: My Lords, on 19th June I did not speak on the amendment, though I voted for it. This afternoon we are in the same position as we were in then. Your Lordships' House seems to be anxious to hurry to a point of registering a vote on matters which in my opinion have not yet been considered fully and which are gravely mistaken. I fear that we are on the way to another fiasco in trade union legislation. I voted for the amendment last time, not because I thought that a postal ballot was free of difficulties—in fact, I emphasised them on another occasion, probably earlier in the same debate—but because it was the best scheme on offer which fulfilled the principles which I think we must stick to when dealing with electoral law.
If a form of election is imposed by law upon a body like the trade union movement, in the interests of its members the system of election should be laid down as clearly and definitely as in the Representation of the People Act. This is electoral law. There are more people going to vote in elections for trade union executive committees than will vote for the whole of
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the parish councils in Britain. There will be 10 million members, and members of their families, who will be voting in organisations which they have either joined voluntarily or have had to join, which wield power in the land and have almost absolute power over their working conditions and many matters affecting their lives and their livelihood.
This is no small matter, and we are discussing this in an air of complete unreality. We have not the cooperation of those who are affected most by what we are proposing to do. In your Lordships' House this afternoon we have no voice of the practising trade union movement. We are legislating in a vacuum. However, I understand that the Secretary of State saw representatives of the TUC after our vote on 19th June, to ascertain their views upon, I assume, the practicability of fulfilling the intentions of the House at that time. I understand he was told that it was almost impracticable and that if this went forward as the House decided on 19th June there would be widespread default on the law; and that there was nothing they could do about it and the law would have to take its course if that was going to be it.
How can we legislate under these conditions? How can we introduce a scheme of electoral law that is going to be unspecific in many respects and is going to leave all sorts of problems inside the unions themselves? I believe that if we are not prepared to regard this as an important exercise in electoral law we had better leave it alone. There should be a standard electoral system throughout organisations of this kind and it should not be regarded as wholly discriminatory against the trade union movement itself.
I know that noble Lords opposite will say, "But this means that we can't get on with this part of the Bill". This is the tragedy. There are too many people in the land, in your Lordships' House and in the other place, who feel that we must do something; however unwise it may be, we must do something. But without co-operation, with a hostile trade union movement, at any rate in the leadership, then it is going to be extremely difficult to get any constructive approach to the requirements of this law. If we had a standard system of electoral law for bodies, not only those in the trade union movement but probably some others as well, then those bodies should be given time and help to prepare for it.
I believe that this halfway house opens up all sorts of problems for whoever is going to be responsible for seeing that the law is observed. If we do not regard what we are doing in the trade union movement as of sufficient importance to establish a standardised national electoral law, outside the public election system, then why are we playing about with it at all in legislation? The provisions for a union to decide, on a double negative, that the alternative it has to a postal ballot could be regarded as satisfying the conditions of the postal ballot open up room for argument.
The amendment itself says:
"Where a trade union proposes to hold an election and is satisfied that there are no reasonable grounds for believing that the requirement of section 2 of this Act would not be satisfied in relation to that election,"
then it can do something different. The words, "reasonably practicable" and "reasonable grounds"

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are littered in this legislation. Somebody has to decide what those reasonable grounds may be. We are opening up a course of litigation which will be gravely harmful to the peace and the constructive approach of trade unions to their obligations in the field of industrial relations.
Quite frankly, I do not see how this can be remedied by the amendment that is being proposed. It seems to me that if we are to subject the trade union movement to the discipline of the law as regards an electoral system, then we must satisfy the members in whose interests we are doing it that the system we are imposing upon their union is fiddle-proof, free of serious abuse, and is fair and efficient. If those conditions are not satisfied then it is a betrayal of the members. It is a betrayal of the members to subject them to a statutory system of election which has flaws and faults and room in it for abuse and inefficiency and then to say, "The law is protecting you. The law is bestowing democracy upon you", when in fact it is not doing anything of the sort, or at least may not be doing anything of the sort.
Cannot your Lordships see that this will not fill the bill, because you are not sufficiently definite about the system you want and you are allowing too much room for other activities and alternatives to the electoral system which is purporting to be the standard and foolproof scheme? It seems to me that in these circumstances, if one cannot make a proper job of it, then it should not be in legislation in this form at all: it should be in the form of requiring the rules of unions to satisfy certain conditions in this field of elections in the same way as the rules of trade unions have to satisfy other legislation in other respects as regards the administration of their affairs. Then it should be left to the normal course of certification to ensure that the rules provide for one of the properly authenticated systems of election which Parliament will set out for the unions' consideration. However, I cannot feel that this is taking us where we want to go. There could be nothing worse than another Conservative Trade Union Bill which is totally unsatisfactory, widely ignored and probably in some cases openly defied.
Look at the conditions at present. The legislation that we have already passed regarding the actions of trade unions is in scraps of paper all over the land. The trade union law at the moment is being defied all over the place. Civil rights of recovery of compensation are not being utilised because people are afraid to use the powers that Parliament has given to them to recover damages for unlawful acts. It is a shambles and we are regarding these as suitable conditions, in the absence of an authoritative voice from the trade union movement as proper counsel, for what we are doing today. My Lords, I deeply regret this. We are making a grave mistake.
Lord Campbell of Alloway: My Lords, although I follow the noble Lord, Lord Houghton of Sowerby, I cannot, with respect, follow his argument because it was wholly negative and largely beside the mark. I should have thought that Her Majesty's Government were greatly to be congratulated on what is, after all, a
1094
useful, constructive and workable compromise which has been achieved. And as a middle way between what were apparent irreconcilables, these amendments surely serve the interests of all members of trade unions irrespective of any political affiliation or none.
Lord Harris of Greenwich: My Lords, I speak following two addresses, one by the noble Baroness opposite and the other by the noble Lord, Lord Houghton, I have a high regard for both but, unhappily, this afternoon I agree with only one, and that is the noble Baroness, Lady Cox. I am bound to say to the noble Lord, Lord Houghton of Sowerby, for whom, I repeat, I have a warm regard, that I find the argument about whether the trade unions are graciously going to obey the law, unacceptable in a democratic society. As I understood it, the suggestion that he made a few moments ago was that some delegation of members of the TUC General Council had told the Secretary of State that there was a risk that if the amendment which was carried during the Committee stage was carried through on to the statute book, there would be—and I think that this was his phrase—widespread default of the law. The implication of that is that there is not widespread default of the law already.
What is going on in the National Union of Mineworkers at present? Following a clear decision by the Vice-Chancellor, Sir Robert Megarry, an injunction was granted not on the basis of the 1980 Act or the 1982 Act, but on the basis of the rules of the National Union of Mineworkers. What happened? Mr. Scargill ensured yesterday that that decision by Sir Robert Megarry was defied by the union conference. Worse, we had an abusive attack by the Communist vice-president of the National Union of Mineworkers on the Vice-Chancellor himself. In my judgment this type of thing is entirely unacceptable in a democratic society. Trade unions have to observe the full range of democratic responsibilities.
We have to accept that this debate today is taking place at a moment of high crisis in industrial relations. We have a major dock strike. We have a strike by a large section of the National Union of Mineworkers and there is no sign of it ending. Sterling remains under heavy pressure despite a rise of 2¾ per cent. in interest rates in a period of only seven days. Our debate on these amendments today is taking place in that context and I believe that it is right for the House to recognise that, because the general industrial situation is highly relevant to the debate which we are having this evening. We have the dispute which has been caused by the Transport and General Workers Union at the docks in order to support Mr. Scargill. Mr. Scargill has, of course, decided to have his strike without the ballot that is required by the rules of the National Union of Mineworkers.
It is right for us also to recognise that what we have been witnessing night after night on television of the violence and the intimidation that has been taking place in the Nottinghamshire coalfield, in the Derbyshire coalfield, in Lancashire and in Scotland, demonstrates all too clearly to what lengths the militant leaders of one major trade union in this

1095
country are prepared to go in order to suppress democratic rights within their own organisation.
The amendments moved by the noble Earl, Lord Gowrie, on the more limited question to which we are addressing ourselves at the moment do, I recognise at the outset, represent an improvement to the Bill as it arrived in this House. I can say that as one of the sponsors of the amendment which was passed on that occasion. However, it is true that under Amendment No. 9, which is an important amendment, unions will be required to maintain a register of names and addresses of members of the union. That is a most important improvement to the Bill and it is right that we should say so today without any form of qualification whatever.
But of course there is still—and this is the point which the noble Baroness made a few moments ago—no absolute requirement that a secret postal ballot shall take place. Indeed, Amendment No. 7 allows the union to decide whether or not there shall be such a secret postal ballot. Worse, there is still no requirement that secret ballots shall be supervised by an independent agency with the responsibility for ensuring that such ballots are fairly and honestly organised. This is despite the clear evidence—and I hope I shall not give too much pain to the noble Lord, Lord McCarthy, for having returned to it—in the series of allegations that Mr. Heathfield, to take just one example, may not have been properly elected General Secretary of the National Union of Mineworkers, and also despite the evidence that there has been a series of highly questionable practices in the recent election for the post of General Secretary of the Transport and General Workers' Union.
I think we should deal with this fundamental question. I unreservedly welcome the improvements which have been made to the Bill by the series of amendments which have been tabled today by the noble Earl, Lord Gowrie. But I return to the point made by my noble friend Lord Rochester a few moments ago, that it must be for the certification officer to decide, and not for the union, whether, in the final analysis, a union should be compelled or otherwise to have secret postal ballots. In my view it is quite wrong to allow the union to decide this, particularly when there has been a series of the gravest allegations of impropriety in trade union elections.
The Earl of Gowrie: My Lords, we have had a very considerable debate on this issue on two occasions, in Committee and on Report, and my sense of the feeling of your Lordships' House, though I am very much in the hands of the House, is that your Lordships would now like to proceed towards a conclusion. I have to say that I do not think I have ever taken part in a series of debates which has been so interesting in this particular field of industrial relations law. I think that the noble Lord, Lord Houghton (who is one of the Members of your Lordships' House who, through my listening to him, has taught me most about this field) is a little too gloomy. He says that the trade union movement is hostile to this legislation and so it may not stick, but he added his own qualification when he said, "at least so far as the leadership is concerned".
1096
As we know, one of the difficulties of industrial relations in Great Britain is that for historical reasons trade unions are automatically catapaulted directly into the party political debate through a formal connection with one of the great political parties of the state—a connection which is not very greatly borne out in any evidence that we have in terms of the affiliation or loyalties of their membership, which tends to float or to follow other considerations in deciding the party to vote for, but which for historical reasons we understand. It seems to me that, although it is quite fair for the noble Lord, Lord McCarthy, to tease me and to quote back at me some of the cautionary arguments that I used (and to which I still hold) in respect of my noble friend's points of view—because this is an area which is fraught with difficulty—nevertheless he did me less than justice if he assumed that I would not listen to the wishes of the House. These wishes were not expressed by a small part of even one particular section of your Lordships' House; they were very widely felt. At that stage, at least, they were even supported by the noble Lord, Lord Houghton, himself. Therefore, we came to the view that we should bow to the wishes of the House, but in the context of making the proposal workable. I argued that I believe we now have it workable at an earlier point in this Report stage.
At this stage the only point I would add is the point raised by the noble Lord, Lord Rochester, in his amendment to my amendment. If we were to require the unions to satisfy the certification officer before holding a workplace ballot, I suggest that we would alter the very essence of the Bill's approach, and it is this approach that I particularly recommend to the attention not only of the noble Lord but also of his noble friend Lord Harris of Greenwich and of my noble friend Lady Cox.
Far from the duty in the new clause being a duty owed by a union to its own members, I have no doubt that the unions would be able to present it as a gross external interference by the state itself in their internal affairs. Equally, I have no doubt—and here I must be very blunt with your Lordships—as to what the result would be. It would be a golden gift to that small section of the union membership, but which nevertheless is its high command, in their resistance to these changes. Most, if not all, of our major unions under their present leaderships would be urged not to go within a mile of the certification officer. We would be risking a classic boycott situation for little gain, because I have no doubt that, if workplace ballots do not work, both the certification officer and the High Court will be used, not least by those who have an interest in standing in those workplace ballots.
As I have said, we have had a good run over the course, and I think it is now time that we came to a conclusion. The Government have listened very carefully; they have moved in the direction which your Lordships want. I shall, of course, listen to the further representations that have been made to me by my noble friend Lady Cox and others in respect of a code of practice. I think that we now have it about right, and that we should establish it in legislation and let it settle down. I have no doubt whatever that it will be widely welcomed and widely used. I beg to move.
6.58 p.m.
On Question, Whether the said amendment (No. 6) shall be agreed to?
Their Lordships divided: Contents, 142; Not-Contents, 44.

DIVISION NO. 2

CONTENTS

Airedale, L.

Kinnaird, L.

Airey of Abingdon, B.

Kirkwood, L.

Amherst, E.

Kissin, L.

Ampthill, L.

Lane-Fox, B.

Attlee, E.

Lindsey and Abingdon, E.

Auckland, L.

Lloyd of Hampstead, L.

Avon, E.

Long, V.

Aylestone, L.

McAlpine of West Green, L.

Bathurst, E.

McFadzean, L.

Bauer, L.

Macleod of Borve, B.

Belhaven and Stenton, L.

Mancroft, L.

Beloff, L.

Margadale, L.

Belstead, L.

Marley, L.

Birdwood, L.

Marsh, L.

Boardman, L.

Massereene and Ferrard, V.

Boothby, L.

Maude of Stratford-upon-Avon, L.

Boyd-Carpenter, L.

Broadbridge, L.

Mayhew, L.

Brougham and Vaux, L.

Merrivale, L.

Broxbourne, L.

Mersey, V.

Bruce-Gardyne, L.

Middleton, L.

Burton of Coventry, B.

Monson, L.

Caithness, E.

Mottistone, L.

Cameron of Lochbroom, L.

Mowbray and Stourton, L.

Campbell of Alloway, L.

Munster, E.

Carnegy of Lour, B.

Murton of Lindisfarne, L.

Chelwood, L.

Newall, L.

Cockfield, L.

Northchurch, B.

Colville of Culross, V.

Nugent of Guildford, L.

Colwyn, L.

Ogmore, L.

Cork and Orrery, E.

O'Neill of the Maine, L.

Cottesloe, L.

Onslow, E.

Cox, B.

Orkney, E.

Craigton, L.

Orr-Ewing, L.

Croft, L.

Pender, L.

Daventrv, V.

Perth, E.

De La Warr, E.

Polwarth, L.

Denham, L. [Teller.]

Portland, D.

Diamond, L.

Quinton, L.

Digby, L.

Rathcreedan, L.

Dilhorne, V.

Reigate, L.

Drumalbyn, L.

Renton, L.

Duncan-Sandys, L.

Renwick, L.

Eccles, V.

Roberthall, L.

Ellenborough, L.

Rochester, L.

Elliot of Harwood, B.

Ryder of Warsaw, B.

Elton, L.

St. Aldwyn, E.

Falkland, V.

St. Davids, V.

Ferrier, L.

Saltoun, Ly.

Feversham, L.

Seear, B.

Gainford, L.

Sempill, Ly.

Gardner of Parkes, B.

Simon, V.

Gladwyn, L.

Skelmersdale, L.

Glanusk, L.

Somers, L.

Gormanston, V.

Spens, L.

Gowrie, E.

Stedman, B.

Greenway, L.

Strathcarron, L.

Grey, E.

Suffield, L.

Gridley, L.

Swinfen, L.

Halsbury, E.

Swinton, E. [Teller.]

Hampton, L.

Teviot, L.

Hankey, L.

Thomas of Swynnerton, L.

Hardinge of Penshurst, L.

Thorneycroft, L.

Harris of Greenwich, L.

Tordoff, L.

Henley, L.

Trenchard, V.

Home of the Hirsel, L.

Ullswater, V.

Hooson, L.

Waldegrave, E.

Hylton-Foster, B.

Whitelaw, V.

Inglewood, L.

Wigoder, L.

Ingrow, L.

Wilson of Langside, L.

Ironside, L.

Winchilsea and Nottingham, E.

Kilmarnock, L.

1098

NOT-CONTENTS

Ardwick, L.

Lovell-Davis, L.

Balogh, L.

McCarthy, L.

Bernstein, L.

McIntosh of Haringey, L.

Birk, B.

Milner of Leeds, L.

Boston of Faversham, L.

Molloy, L.

Bottomley, L.

Nicol, B.

Brockway, L.

Oram, L.

Carmichael of Kelvingrove, L.

Pitt of Hampstead, L.

Collison, L.

Ponsonby of Shulbrede, L. [Teller.]

David, B.

Dean of Beswick, L.

Ross of Marnock, L.

Ennals, L.

Scanlon, L.

Gallacher, L.

Stewart of Alvechurch, B.

Gosford, E.

Stewart of Fulham, L.

Graham of Edmonton, L. [Teller.]

Stoddart of Swindon, L.

Stone, L.

Hatch of Lusby, L.

Underhill, L.

Houghton of Sowerby, L.

Wallace of Coslany, L.

Irving of Dartford, L.

Wedderburn of Charlton, L.

Jacques, L.

Wells-Pestell, L.

Jeger, B.

Willis, L.

Jenkins of Putney, L.

Winterbottom, L.

John-Mackie, L.

Wootton of Abinger, B.

Resolved in the affirmative, and amendment agreed to accordingly.
7.7 p.m.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 7:
[Printed earlier: col. 1074.]
The noble Earl said: My Lords, I have already spoken to this amendment. I beg to move.
Lord Rochester Lord Rochester moved, as an amendment to Amendment No. 7, Amendment No. 8:
[Printed earlier: col. 1079.]
The noble Lord said: My Lords, I think that the principle of this amendment to the Government's amendment is abundantly plain to your Lordships. The debate has been such as to cause me to feel that it would be appropriate for me to put that principle to the test, and without more ado or more words on my part I beg to move this amendment.
7.8 p.m.
On Question, Whether the said amendment to the amendment (No. 8) shall be agreed to?
Their Lordships divided: Contents, 39; Not-Contents, 134.

DIVISION NO. 3

CONTENTS

Airedale, L.

Kissin, L.

Amherst, E.

Mais, L.

Attlee, E.

Marsh, L.

Aylestone, L.

Mayhew, L.

Bauer, L.

Monson, L.

Burton of Coventry, B.

Munster, E.

Cox, B.

Ogmore, L.

De La Warr, E.

Rathcreedan, L.

Diamond, L.

Roberthall, L.

Feversham, L.

Rochester, L.

Gladwyn, L.

Seear, B.

Grey, E.

Simon, V.

Halsbury, E.

Spens, L.

Hampton, L.

Stedman, B. [Teller.]

Hankey, L.

Tordoff, L.

Harris of Greenwich, L.

Wigoder, L. [Teller.]

Hooson, L.

Wilson of Langside, L.

Howie of Troon, L.

Winchilsea and Nottingham, E.

Kilmarnock, L.

Kirkwood, L.

Winterbottom, L.

1099

NOT-CONTENTS

Airey of Abingdon, B.

Lindsey and Abingdon, L.

Ardwick, L.

Long, V.

Auckland, L.

Lovell-Davis, L.

Avon, E.

McAlpine of West Green, L

Bathurst, E.

McCarthy, L.

Bellwin, L.

McFadzean, L.

Belstead, L.

McIntosh of Haringey, L.

Birdwood, L.

Macleod of Borve, B.

Birk, B.

Mancroft, L.

Boardman, L.

Margadale, L.

Boothby, L.

Marley, L.

Boyd-Carpenter, L.

Massereene and Ferrard, V.

Broadbridge, L.

Maude of Stratford-upon-Avon, L.

Brougham and Vaux, L.

Broxbourne, L.

Merrivale, L.

Bruce-Gardyne, L.

Mersey, V.

Caithness, E.

Middleton, L.

Cameron of Lochbroom, L.

Milner of Leeds, L.

Campbell of Alloway, L.

Molloy, L.

Carmichael of Kelvingrove, L.

Mottistone, L.

Carnegy of Lour, B.

Murton of Lindisfarne, L.

Chelwood, L.

Newall, L.

Cockfield, L.

Nicol, B.

Collison, L.

Northchurch, B,

Colwyn, L.

Nugent of Guildford, L.

Cork and Orrery, E.

Onslow, E.

Cottesloe, L.

Oram, L.

Craigton, L.

Orkney, E.

Cranbrook, E.

Orr-Ewing, L.

Croft, L.

Pender, L.

Daventry, V.

Perth, E.

David, B,

Pitt of Hampstead, L.

Dean of Beswick, L.

Polwarth, L.

Denham, L. [Teller.]

Ponsonby of Shulbrede, L.

Digby, L.

Portland, D.

Dilhorne, V.

Quinton, L.

Drumalbyn, L.

Reigate, L.

Duncan-Sandys, L.

Renwick, L.

Eccles, V.

Ross of Marnock, L.

Ellenborough, L.

Ryder of Warsaw, B.

Elliot of Harwood, B.

St. Aldwyn, E.

Elton, L.

St. Davids, V.

Ennals, L.

Saltoun, Ly.

Ferrier, L.

Scanlon, L.

Gainford, L.

Sempill, Ly.

Gallacher, L.

Skelmersdale, L.

Gardner of Parkes, B.

Somers, L.

Glanusk, L.

Stallard, L.

Gosford, E.

Stewart of Alvechurch, B.

Gowrie, E.

Stewart of Fulham, L.

Graham of Edmonton, L.

Stoddart of Swindon, L.

Greenway, L.

Stone, L.

Gridley, L.

Strathcarron, L.

Hardinge of Penshurst, L.

Suffield, L.

Hatch of Lusby, L.

Swinfen, L.

Henley, L.

Swinton, E. [Teller.]

Home of the Hirsel, L.

Teviot, L.

Homsby-Smith, B.

Thomas of Swynnerton, L.

Hylton-Foster, B.

Thorneycroft, L.

Inglewood, L.

Trenchard, V.

Ingrow, L.

Ullswater, V.

Ironside, L.

Underhill, L.

Irving of Dartford, L.

Waldegrave, E.

Jacques, L.

Wallace of Coslany, L.

Jenkins of Putney, L.

Wedderburn of Charlton, L.

John-Mackie, L.

Wells-Pestell, L.

Kinnaird, L.

Whitelaw, V.

Lane-Fox, B.

Resolved in the negative, and amendment to the amendment disagreed to accordingly.
7.17 p.m.
On Question, Amendment No. 7 agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 9:
[Printed earlier: col. 1074]
Lord Houghton of Sowerby: My Lords, may I ask a question? If a statutory duty is imposed on the unions, is any statutory duty imposed on the members? Is there anything in this which requires or can compel a member of a union to supply his private address to his union? Does this have to be in the rules? Some members may take the view that they do not want their union to know their private address in case the pickets get hold of it. This seems to be an extraordinary duty to impose on trade unions when there is no means of fulfilling it.
The Earl of Gowrie: My Lords, we have not imposed this duty. It can be any address supplied by the member, including the address of the place of work.
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie rose to move Amendment No, 10:
[Printed earlier: col. 1074.]
The nobe Earl said: My Lords, I have already spoken to this amendment.
Lord Wedderburn of Charlton: My Lords, I had understood, and this puts us in considerable difficulty, that it had been agreed that there would be a separate debate on Amendment No. 10 and those amendments that go with it.
The Earl of Gowrie: My Lords, I apologise to the noble Lord. My original brief said "Amendments Nos. 9 to 14 inclusive", but I see that I have put in my bad handwriting beside it that there should be a separate debate on Amendment No. 10. It might be for the convenience of the House, if we are to have a debate on Amendment No. 10, that the House should now adjourn for supper. I therefore beg to move that further consideration of the Bill on Report be adjourned for three-quarters of an hour.
Moved accordingly and, on Question, Motion agreed to.

Education Support Grants Regulations 1984
7.20 p.m.
The Earl of Swinton: My Lords, I beg to move that the draft Education Support Grants Regulations 1984 which were laid Before this House on 22nd June be approved.
We had valuable debates in this House about the Education (Grants and Awards) Bill earlier in this Session. Since the Bill received Royal Assent there has been full consultation with the appropriate local authority associations. On 12th June, in a written parliamentary Answer, I recorded that the expenditure supported in England in the 1985–86 financial year through education support grants would not exceed £30 million in cash, involving a maximum of £21 million being paid in education support grant. In that same parliamentary Answer I set out the purposes which the Government envisaged will be supported through education support grants in 1985–86 in England, a provisional assessment of the amount of

1101
expenditure to be supported for each purpose, the provisional assessment of the number of LEAs to be supported and the likely length of support.
I should like to say a few words about each of the purposes set out in the schedule prior to commenting on the regulations themselves. So far as the proposed £1 million of expenditure is concerned on the management and appraisal of school teachers there are shortly to be consultations between the department and the local authority associations about the composition and balance to the consortium of local education authorities who would draw on past experience, current practice and interest to develop new assessment and management practices in their areas.
The proposal to use ESGs to build on progress already made in improving the quality and relevance of the teaching of mathematics in schools has been widely welcomed both in this House and elsewhere. The local authority associations felt strongly that ESGs could valuably be used to support projects designed to improve the effectiveness and relevance of science teaching within primary education. The suggestion that ESGs be used to provide microelectronic equipment designed or adapted for use by children with special needs was, like science teaching, also stongly supported by your Lordships.
The proposal to use ESGs for pilot projects for records of achievement has been welcomed both here and in the other place. The purpose of such projects will be to establish educationally satisfactory and cost-effective ways of recording achievement by pupils and students in secondary schools. The intention is that pilot projects to improve the quality of education provided in primary schools in urban areas will involve enabling teams in assisting the head and staff of selected urban primary schools in raising pupil performance.
The aim of supporting four pilot projects concerned with improving the quality or range of the curriculum provided in primary schools in rural areas is to encourage examination of what are the most cost-and educationally-effective ways of providing an adequate curriculum in small isolated rural schools which have to be retained. The local authority associations thought that education support grants had potentially a valuable part to play in encouraging projects designed to meet the needs of ethnic minority pupils and students, to promote racial harmony or in other ways to equip pupils and students for life in a multi ethnic society. Hence the addition of this item to the original list.
The proposal to assist LEAs to mount re-training and up-dating courses directed towards the needs of industry and commerce was not one of the possibilities discussed when the enabling Bill was going through Parliament. It has been added, as the initial costs since setting up PICKUP courses are high, and may present a barrier to the desirable expansion of such courses which, once established, can be self-financing.
The activity we envisage receiving most grant is the proposal to support £13 million of expenditure to extend the use and awareness of information technology in non-advanced further education
1102
courses. The programme involving expenditure on hardware, staff development and courseware is aimed to assist authorities in providing courses which take account of increased use of information technology and the world of work. Another addition to the list of possibilities is the proposed use of grants to support projects directed towards identifying and assessing the educational needs of the adult unemployed and assisting authorities in co-ordinating and redeploying existing resources so that these needs are met as effectively as possible.
The use of ESGs to promote the adoption of management information systems in institutions of further education is a further suggestion put forward by the local authority associations which seems to us to be a sensible use of education support grants.
The last item in the schedule, Developing the knowledge and appreciation of the heritage and culture of Wales, applies only to pupils in schools in Wales. This has been added following consultations between the Welsh Office and the Welsh Joint Education Committee and the Welsh Counties Committee. My right honourable friend the Secretary of State for Wales will be responsible for the operation of ESGs in Wales. He envisages that £2 million worth of expenditure will he supported through ESGs in the 1985–86 financial year on this and the other activities listed in the schedule to the regulations with two exceptions.
To turn now to the details of the regulations themselves, Regulation 3 limits the education authority expenditure which can be supported by the grants to expenditure incurred for or in connection with any of the educational purposes specified in the schedule to the regulations which has been approved for this purpose by the Secretary of State. Regulation 4 specifies that grant shall be paid at the rate of 70 per cent. of approved expenditure, which is the maximum rate allowed under Section 1(3)(b) of the Act. I hope that your Lordships will acknowledge that the use of a standard rate of 70 per cent. responds to the concerns expressed when the Education (Grants and Awards) Bill was going through this House. Regulation 5 is concerned with the time and manner of the payment of grant and with the conditions attached to payment. These important details have been the subject of careful consultation with the approriate association.
Regulation 6 enables grant to be paid in support of payments by authorities to other bodies, providing that the expenditure incurred by such bodies is for or in connection with one of the purposes detailed in the schedule. Regulation 7 provides for the aggregate amount of expenditure which can be approved (under draft Regulation 3) in respect of any one financial year, to be determined by reference to the amount of planned current expenditure on education specified in the rate support grant reports for England and Wales relating to that year.
The aim of education support grants is to encourage local education authorities to redeploy a limited amount of expenditure into areas of particular importance. It is our view that they will have an important contribution to make to promoting continuing improvements in the education service and in assisting local education authorities to respond to changing needs. The list of activities to be supported in

1103
1985–86 has been carefully prepared. It takes account of views expressed both in Parliament and by the local authority associations. We hope therefore that these regulations will be welcomed by this House and that each LEA will consider carefully the most constructive way in which education support grants can be used to promote continuing developments in the education service within its area.
Moved, That the draft regulations laid before the House on 22nd June be approved.—(The Earl of Swinton.)
7.30 p.m.
Baroness David: My Lords, I should like to thank the noble Earl the Minister for giving us the explanation of the regulations. I have to say that he did so at a rather fast speed, so that if I ask some questions to which perhaps his speech gave the answers, I apologise, but it was difficult to keep up. Although both the local authority associations and the Opposition maintain their dislike for the Education (Grants and Awards) Act in that it takes rate support grant money away from the local authorities, I have to admit that the Government have kept to the timetable which was proposed for consultation and for the laying of the regulations—at least, to within a week or two. I understand that there have been full consultations with the local authority associations, and that some of their objections and suggestions, if not all of them, have been paid heed to; for instance, the pilot projects to meet the educational needs of those from ethnic minorities were added to the list, but the projects to improve the quality of education provided in primary schools in urban and in rural areas, which the local authorities disliked, the Secretary of State insisted should be kept in.
I should like to ask one or two questions about the sum of £30 million. I do not know whether the Minister can tell us what percentage of rate support grant that is supposed to be: it was half of 1 per cent. in the Bill, but I take it that it is not that amount. At the Committee stage I think it was said that the expenditure would be likely to increase from year to year; that it would start at a low level and would become higher as the years went by. I presume that is still the position.
I should like to make a few general comments. I am glad that the grant will be payable at the rate of 70 per cent. of approved expenditure. This we tried to make sure of when discussing the Bill, but our amendments were not accepted. We were then told that the rate would he between 50 per cent. and 70 per cent., so we are pleased about that. As to the payment of the grant, is it to be paid in advance or in arrears? The explanatory note refers to expenditure, "incurred or to be incurred". If it is to be paid in arrears, are the local authorities happy about that?
As for the projects proposed, I am surprised by the number. It was 12 in the Written Answer of 12th June and in the draft circular, and it is 13 in the draft regulations, where the development of the knowledge and appreciation of the heritage and culture of Wales has crept in. I was slightly surprised by this. When we were discussing possible activities during the Committee and Report stages, the noble Baroness,
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Lady Cox, criticising our proposals at col. 86 of the Official Report for 5th March, said:
"there is a danger that a predetermined commitment to an excessive number of projects will lead to a fragmentation of funding, with insufficient money to do justice to all the projects deemed appropriate for financial support".
The Minister himself said at col. 89 of the Official Report:
"There is a need to restrict the number of areas of the education service which might receive assistance through education support grants, if we are to make the most cost-effective use possible of the limited resources available. Hence my right honourable friend did not include science education among the possible areas for support."
I am sorry that we do not have the noble Baroness, Lady Cox, with us now. I thought she was here earlier, and I hoped that she might be here to comment tonight. However, we do have the teaching of science as part of primary education as one of the categories, and there does seem to have been a change of opinion about the total number to be supported. I wonder whether the Minister can explain to us the reason for that change of opinion since the Bill was discussed.
Then there is the number of the authorities expected to participate: the majority in the case of the teaching of maths; about half in the case of the provision of micro-electronic equipment for use by children with special educational needs; a substantial number for the pick-up courses and for the provision of data processing equipment for use in the management of further education establishments; about half for the educational needs of the unemployed; down to four for improving the quality of the curriculum provided in primary schools in rural areas; and a small number for the pilot projects to meet the educational needs of the ethnic minorities. I am sorry about that. I am mystified as to how this distribution came about. Is it firm, or may it, too, be changed according to the bids coming in from the authorities? Fragmentation, which was feared, seems a very real possibility. On the other hand, of course, as we did not like the idea of money being taken from every authority to be handed back to some, I suppose there is some consolation in the fact that a very large number of them will get some of their money handed back.
Most of the projects proposed are worthy and acceptable, although I would certainly query the propriety of helping some primary schools in urban and rural areas at the expense of the totality of primary schools. What does surprise me, as I thought the objective of the ESGs was to improve the standards in schools, is that four categories do not apply to schools, and two of those four do not even apply to further education establishments. Should these grants really be used for training for employment? As the Secretary of State said on Second Reading:
"The purpose of the Bill is to influence the deployment of resources in education by local education authorities".—[Official Report, Commons. 14/11/83; col. 634.]
Should there not be an additional and separate fund for the education and training of the unemployed? Indeed, I know there is one, but should that not be expanded rather than taking the money from the local authorities for this?
Is not PICKUP, a pilot project set up already by the Department of Education and Science, an innovation

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and an area where surely the Manpower Services Commision should contribute? Could the Minister give an explanation why £13 million—nearly 40 per cent. of the total—should be allocated to Item J on the list, for the development of the use of information technology at further education establishments by providing equipment, course materials and computer software? It seems a very large percentage of the total. How many colleges of further education will benefit? The majority of local education authorities are assessed as likely to be supported, so one would suspect that the number of colleges would be small; but I should like to have an answer on that.
Speaking generally, one has the fears which the noble Viscount, Lord Ridley, expressed in Committee, at col. 137 of the Official Report for 14th February:
"that this Bill is taking away a certain amount of resources … from the less enterprising authorities and giving it to perhaps the most enterprising".
Will the more innovative local education authorities apply for grants, probably for things they are doing already, and the less innovative, the ones that really need help and a spur to change, be content to sit back and let things go on as they are? Finally, I ask: what criteria will there be for deciding on the activities and on the authorities to be chosen as the recipients of these grants?
7.37 p.m.
Lord Kilmarnock: My Lords, we, too, should like to thank the noble Earl for explaining the regulations. Certainly the most noticeable thing about them is that the shopping list has become considerably longer than was envisaged when the Government introduced the Bill. The question therefore arises whether the funds will be adequate to satisfy all these aspirations.
The complaint when the Bill was before the House was that this was not genuinely new money, but money taken from the rate support grant and redistributed by central government. Does the noble Earl agree that this is the moment to consider whether there should not be some genuinely new money on the table? The noble Baroness, Lady David, referred to the allocation of a very large proportion—£13 million—to the development of the use of information technology at further education establishments. We would certainly not disagree with the Government that that is a very important aim, but would the noble Earl not agree that it would be more appropriate to make that expenditure under the Government's general information technology campaign, rather than load it on to the programmes which are covered under the Bill?
What I am suggesting to the noble Earl is that if he is going to stick to £30 million, then that £30 million should be allocated among the other projects with which the Government have come forward, and that the £13 million which the Government have proposed for the development of the use of information technology should not be drawn from this fund but should come from the monies which the Government have allocated for the general promotion of information technology in this country. Will the Government give consideration to that?
Lord Stewart of Fulham: My Lords, I think that the regulations illustrate the point which several of us made when the Bill was being discussed: that, really, the money for the projects ought to be new money and not money taken from local education authorities. Now that we see the way it is going to work spelt out, that point becomes even more clear. However, we have discussed that and I do not want to develop it further here. In addition, I have only one question to ask. It has probably an extremely common-sense answer which I ought to know, but I am afraid that I do not. Regulation 5(3) describes what is to happen to applications relating to approved expenditure during the quarters commencing 1st April, 1st July and 1st October. What do you do about applications for the other quarter of the year?
The Earl of Swinton: My Lords, I feel that this matter has received a welcome, albeit a somewhat lukewarm one, from some of the speakers. Nonetheless, I should like to thank them. As the noble Lord, Lord Stewart of Fulham, said, the question of, as it were, new money was something that we went into in great detail at all stages of the Bill and I am not going to be drawn on that except to say that of course it is all government money—it is all taxpayers' money anyway—wherever it goes; and I thought I stressed that when the Bill was going through. So I have not really anything to add to that, except that I am afraid there is no question of the Government finding a lot of additional money for these projects at the present time.
We believe that the list of activities to be supported has the general consensus of those involved in education. The list includes suggestions made by the relevant local authority associations. Account has been taken of concerns expressed in Parliament in finalising the list of purposes to be supported, the rate of grant and various administrative details set out in the regulations and the circular.
Following what I thought were very constructive discussions with the associations, we believe that individual local education authorities will want to respond to the availability of education support grants in a positive way. The test now of whether or not the list of activities is right will be the reaction of the individual local education authorities. It will be up to them to decide whether or not to bid for ESG support.
The noble Baroness, Lady David, mentioned the timetable for this, and with the agreement of the local authority associations a draft of the circular setting out in some detail the purposes which the Secretary of State envisages will be supported through education support grants in England was sent to each local education authority on the 12th June. Copies of the draft circular were placed in the Libraries of both Houses. The final version of the circular will be issued early next week. As the local authority associations wanted decisions on bids to be announced prior to the settling of the 1985–86 budgets, the circular asked for bids to be back with the department by 1st October. It is then intended that decisions on which bids have been accepted will be announced in December on a similar time-scale to the announcement of details of the 1985–86 RSG settlement.

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The noble Baroness also asked me about the percentage represented by the £30 million. The statutory limit of half of one per cent. represents about £50 million: hence, £30 million of expenditure represents about 0.3 per cent. of the planned expenditure on education. It will be slightly bigger than £30 million in 1986–87—I think the noble Baroness also asked me that—partly because some of the projects will not start until September 1985.
On the payment of grant, the associations have agreed the arrangements for payment in areas of the grant; but for the first three quarters the authorities can put their claims in before the end of the quarter. These arrangements were welcomed by the local authority associations.
I must apologise if I did not catch all the questions of the noble Baroness. I shall read with interest the points that she made and I will write to her about any points that I may have missed out. I think the noble Baroness asked me whether the £13 million being spent on information technology was not rather a large sum. I agree that it is a large proportion of the total, but of this we envisage £10 million being spent on hardware. We envisage that this would enable in 1985–86 about half of the FE colleges to purchase about £40,000 worth of equipment each. But much will depend on the number of bids received from the different authorities.
As I say, provision has been made, allowing them to support approximately half the colleges, and it is to be hoped that a similar scale of funding will be available for the financial year 1986–87. However, much will depend on the number and quality of the bids received for 1985–86. Acceptance of bids for hardware will normally be contingent on satisfactory proposals for staff training and the general development of IT across the curriculum in colleges. All LEAs may bid in respect of one or more colleges in their area to become centres for the provision of in-service training, but we envisage that only a relatively small number will be supported. Similarly, although all the LEAs may bid under the courseware development head, we envisage that only a relatively small number will accept it. As to how the colleges will be chosen, we shall rely on advice, particularly from HMI, to identify colleges which have already built up strength in this area.
The noble Baroness also made a strong point I think about spending money on small rural schools—against, I would admit, the advice though probably not of the strong objections of the local authorities—and we feel that there are some authorities that are doing extremely well in this area. Support for pilot projects on the enrichment of the rural primary school curriculum is not intended to shore up small schools where there is a strong case for closure on educational and financial grounds. One of the criteria to be used in selecting projects for support will be evidence of the policy in the authorities concerned for taking out of use surplus places in rural areas as well as urban areas. Nevertheless, in many isolated rural areas, small schools have to be retained because of the length of journeys to alternative schools. We feel that some work on this would be of extreme assistance.
I must admit that the associations showed some scepticism about the activity and the one concerned
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with urban primary schools as well. But we concluded that a limited number of pilot projects with closely-defined aims could produce worthwhile results. We originally had in mind that some projects would start in 1985–86, with some further projects starting in 1986–87. In response to the concern of the associations, my right honourable friend made it clear that there would be no presumption at this stage that further projects would start in 1986–87 and much would depend on the number and quality of the bids received.
The main point of the noble Lord, Lord Kilmarnock, was again about the new money. I apologise to the noble Lord, Lord Stewart of Fulham, for keeping him waiting: I am afraid the question has vanished somewhere in the pile of paper that I have before me. The answer, even though I do not have the question, is that this is covered by Regulation 5(4) and this covers payments over the full year, including the final quarter.
These are important regulations, setting out as they do the purposes to be supported by ESG in 1985–86, and they represent an important innovation by the Government but one that does not change the fundamental relationship between a partnership as between central and local government and education.
On Question, Motion agreed to.
Lord Skelmersdale: My Lords, I beg to move that the House do now adjourn during pleasure until five minutes past eight.
Moved accordingly, and, on Question, Motion agreed to.
[The sitting was suspended from 7.49 until 8.5 p.m.]

Trade Union Bill
Consideration of amendments on Report resumed.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 10.
[Printed earlier: col. 1074.]
The noble Earl said: My Lords, I beg to move.
Lord Wedderburn of Charlton: My Lords, it has become somewhat customary for me to speak to an amendment after dinner to an excited and somewhat less than crowded House. But I can assure your Lordships that the reason why I am speaking to Amendment No. 10—and I am sure that the noble Earl will not object if I refer also to Amendments Nos. 11 and 14, since they patently go to the same substance of the matter—is, as my noble friend Lord McCarthy explained, that we are perhaps at one with the noble Earl in thinking that these are what he called in our earlier debate major changes in the Bill.
[Amendments Nos. 11 and 14 printed earlier: cols. 1074–75.]
Whereas the earlier amendments, Amendment No. 6 and those that went with it, went more to what one might call the substance of the matter, Amendments Nos. 10, 11 and 14 go very much to the machinery. They go to the machinery by bringing in the certification officer as an additional mechanism whereby an aggrieved member may complain. It is therefore of fundamental importance to consider in what ways and for what reasons the certification officer is brought in.
I say at once that we are not yet clear why the certification officer, as a mechanism of complaint, was brought into the Bill at all. I say immediately that, on any reading of the amendment moved by the noble Lord, Lord Beloff, which became the new subsection (6) of Clause 2 of the Bill in Committee, there was no requirement to introduce another mechanism for complaint.
The certification officer at the moment has what might be called certain administrative functions and certain judicial or quasi-judicial functions. His administrative functions include the list of trade unions which he keeps and various functions relating to amalgamations and mergers. His judicial functions include, of course, the decisions upon complaints by members in respect of the merger procedure under the 1964 Act, or the political fund and their place in regard to it under the 1913 Act, and over all the judicial or quasi-judicial matters there is, of course, an appeal to the Employment Appeals Tribunal.
Against that background, perhaps I should mention one most salient fact. It is that the certification officer took over one of the most valued traditions in British trade union law. That was the tradition of the old registrar, the pre-1971 registrar, who had been such an important piece of machinery in the smooth working, not just of trade unions but of industrial relations as well.
Against that background I must ask a number of questions. First, the jurisdiction that is given to the certification officer in these new amendments, and especially in Amendment No. 14, is not a judicial or quasi-judicial function, as appears directly. It is investigatory; it is, if one wanted to use the technical term, inquisitorial, as against being purely adversarial. That is to say, there are two fundamental approaches to judicial and jurisprudential litigation. The first is the adversarial system, upon which English law and Scottish law is to a large part based; the second is inquisitorial. If one does not like that technical term, then perhaps the lay word "investigatory" is better.
It is the first rule of English law, and of some civil law systems based on the inquisitorial method, that where there is a cause before the court, or where a person must decide matters, then both sides must be heard. What do we find in subsection (5) of the new clause? We find that the certification officer shall give the applicant member and the trade union an opportunity to be heard,
"where he considers it appropriate".
Why? What on earth is the reason for that?
Secondly, even in regard to that apparent mixture of investigatory and judicial or quasi-judicial mechanism there is no appeal to the Employment Appeal Tribunal. Why? If this is meant to be a judicial procedure, then why has there not been followed the precedent which has been followed in all the statutes since 1975, and which went back to the 1913 Act, even, and was inserted there? That precedent was that there should be an appeal at least on questions of law. Sometimes in the Government's own legislation, in 1980 and 1982, they have made the appeal to the Employment Appeal Tribunal on law and on fact; but there is nothing here of that kind.
Third, it is a fundamental principle of any sensible system of jurisprudence that no party should be put in double jeopardy; that no party should have to answer the same claim twice. That is precisely what these clauses do. The member who is aggrieved is given the possibility of two bites at the cherry. He can go to the certification officer (and the noble Earl will correct me if I am wrong) and yet there is nothing to prevent him, if he fails before the certification officer, from going before the court for a second try. The trade union can be dragged before the certification officer and completely cleared by him, but it can then be taken to the High Court. If it loses in the High Court then it must go to the Court of Appeal and to the Judicial Committee of your Lordships' House, the House of Lords in its judicial role. Why?
Indeed, it seems absurd that a union member can go first to court and then to the certification officer, although I apprehend that the certification officer might make a rule of procedure not allowing that to happen. One would have thought that the Government would have provided for that in the Bill. The certification officer can not only make his own procedure (and that is understandable) but he has also to
"make such inquiries as he thinks fit".
before the hearing, if he considers a hearing to be appropriate. There is confirmed the investigatory or inquisitorial character of the new jurisdiction that is being thrust upon the certification officer.
This Bill, in respect of its procedures, begins to be a lawyer's paradise. There are antennae in the Temple quivering with delight at the thought of the fees which can he earned in these dual procedures and from the complex mechanisms which they will involve.
There is a further matter of the most extraordinary importance. In subsection (2) of the proposed new clause the certification officer is told that he must give the reasons for his decision in writing. That is very sensible. But then he is told:
"any such reasons may be accompanied by written observations on any matter arising from, or connected with, the proceedings".
Not only can he make a decision, not only can he give his reasons for the decision, but he can make observations
"on any matter arising from, or connected with, the proceedings".
The Government are quite fond of the words "connected with", except in respect of a definition of a trade dispute, where they did not like them because they are supposed to be very broad. Indeed, the Government told us that in respect of a definition of a trade dispute the words "connected with" were so broad that they could encompass almost anything. Presumably that is true here. What do the Government imagine that the certification officer is going to talk about except the reasons for his decisions and the findings of fact which he has made? What are these "observations" going to be? Are they going to be on the desirability of union policies, or on matters connected with officers of the union? These will of course be "connected with" if not "arising from" the matters which are before him. Surely on Third Reading the noble Earl must come back and tell us that he intends to amend some of this awful phraseology.
A further factor is that if this matter goes to the certification officer first, the court is not bound by his findings of fact. This brings us back to my first question. The court must pay due regard to the officer's declaration and to his reasons. Indeed, it is stated quite clearly in subsection (4) that the court must do so in respect of his observations. But if the court is not bound by the certification officer's findings of fact, even, then will not any member who loses before the certification officer go to the court? Is it fair that members should have that opportunity without impediment but that the union should have no opportunity to go to the court if the certification officer decides against it?
To press the matter a little further, if there is no appeal to the Employment Appeal Tribunal even on questions of law, there is only one course open to the union, and that will be to go for judicial review in the High Court—what used to be called certiorari. There will follow the most appalling set of squabbles about the procedures. With great respect to those involved in drafting them, these provisions have not been thought through.
Finally, I wish to mention two further matters. When he makes his observations, the certification officer will in my submission be drawn into just that further role which the noble Earl has told us yet again tonight he does not wish to see the officer occupy. That is to say, if the certification officer feels impelled to make observations about the general situation of the union, how will it be possible for him to avoid making suggestions to the union about the way it keeps its register, and about the way certain matters are organised, quite outside the actual litigation?
Quite apart from that, one of the great merits of the certification officer is that on his present jurisdictions he does engage, and quite properly in terms of his administrative jurisdiction, in informal contacts with trade unions which are in difficulty. That is why the certification officer is of such enormous importance (as was the pre-1971 registrar before him) in the on-the-ground administration of trade union and industrial affairs.
Two things will surely happen. The certification officer will be drawn in because of the jurisdiction given him in this clause, which is investigatory and which invites him to make observations; and also because of the tradition of informal contact. It must follow that when trade unionists do not like what he is saying they will regard him as an agency statutorily-imposed upon the structures of their unions, which the noble Earl has told us he does not wish to see happen. In other words, the Government, having set out on this path, will find that the administration of the clauses they have proposed, as at present drafted (and this does not necessarily mean that those clauses could not be re-drafted), will take the Government into the quagmire which the noble Earl has told us he does not wish to enter.
A word about the ILO. I have argued before your Lordships, as my noble friend Lord McCarthy has argued tonight, that the 1983 report of the committee of experts made it quite clear that detailed regulation, and especially detailed regulation in respect of anything like an agency, is offensive to free elections
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according to Convention 87. It is because these amendments are particularly relevant to that that we thought it important to raise them separately tonight. I may say that the Government give no one great confidence about their recognition of obligations under the ILO conventions by the way they have handled the GCHQ affair; but one hopes that they will consider the matter afresh in this light.
I pass to my final two points. The first is a very practical point. Is it not the case that the office of the certification officer will need tremendous expansion on the Government's own amendments? If so, where is the money to come from? At the moment the certification officer works under the ACAS budget. The net cost in the year to March 1983, according to the 1983 report, was £216,607. It is impossible to imagine the certification officer handling all the matters with which he will have to deal under these amendments without a considerable expansion of cost to the public purse. If there is to be that cost, then it should be fully revealed, although of course I am aware that it is more a question for another place than for here. No doubt before it goes back to the other place the expenditure question will be raised.
Finally, it may be said: of course, the certification officer will not act in any way which is unreasonable under these powers; he may have the powers of a big brother under these clauses to investigate, to say what he will, to fashion the union registers and the like, but he will not act like big brother. Indeed, that confidence which has existed between trade unions (and the registrar in the old sense) and the certification officer might make one hope that that would be so. But if he is not going to act like that, why give him big brother powers?
As to the last three debates—that is to say, the debates on the 1980 Bill, the 1982 Bill and on this Bill—I have never been reminded more of the debates of your Lordships' House in 1971 than I have been this evening. I read them very carefully, although of course, I was not here. This evening reminded me of those debates where there was a warning that the registrar (as he was transmuted in that Bill) would be someone not just unacceptable to the trade unions and to trade unionists. We are not just talking about a few trade union leaders, and the noble Earl the Minister deludes himself if he thinks that in this matter, where the internal process of the union and its relations with the law are at stake, there are just a few people at the top of a trade union who are concerned. The same warning was issued in 1971 on just this aspect.
The real decision for the Government is whether or not they will reconsider if they wish to have the certification officer. Will they ask themselves first the question: why? Secondly, will they ask themselves the question: is he to be a judicial officer supplementary to the court? This is rather the way in which the noble Earl presented him. If he is, why not amend the clauses so that he appears as a judicial officer and not as an investigatory agency? Lastly, if he is to be a judicial officer, why not adopt the, by now, traditional power of appeal to the employment appeal tribunal for either party, at least on matters of law?
If the Government do not respond to questions of that sort on amendments which, I quite understand,

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have had to be put together rather rapidly, there will be further confirmation that they are treating trade unions as something different; that they are treating trade unions as bodies and trade unionists as persons to whom the rules of double jeopardy do not apply; to whom the rules of natural justice do not apply; to whom the fundamental rules of our legal system do not apply. On that basis, I very much hope that your Lordships still hear something tonight from the noble Earl the Minister to indicate that he will reconsider at least some parts of Amendments 10, 11 and 13.
8.25 p.m.
The Earl of Gowrie: My Lords, the noble Lord, Lord Wedderburn, is one of the two or three people in the country, I would say, who are most interested and most expert in industrial relations law. This is one of the reasons why it is always a pleasure to listen to him and I always find it instructive. But like a lot of experts, he does, I think, sometimes fail to see the wood for the trees. I have listened very carefully to him and it seems to me that he has failed to take account of a very fundamental point.
The fact is that no union will be in any way at risk of being "hauled through the courts"—to use a phrase, I think, which he used—enriching lawyers en route, as he seems to be anxious to avoid if the union complies with the law which Parliament has passed, and which I think even those of your Lordships who disagree with it have not criticised as being framed in a particularly complex way. The basic principles of this Bill are extremely simple, and I have gone over them many times.
We recognise, of course, that back-up systems and systems of appeal are necessary. This is precisely why by these amendments a union member who believes that his union has infringed one or more of the requirements of Part I of the Bill—and, as I said, they are incredibly simple requirements—will now have a choice of remedies open to him. He can complain to the court as the Bill originally provided, or he can complain under my amendment by means of a simple letter to the certification officer. This is not simply a matter of two bites at the cherry; it is a matter of trying—as the noble Lord and his colleagues are always eager to try to persuade us to do—to make things reasonable and flexible, easy to understand, and a matter of trying to avoid unnecessary litigation.
Trade unions will have everything to lose by refusing to co-operate with the certification officer and ignoring any declaration the certification officer makes. If a trade union does not try to refute evidence of a breach which one of its own members has put before the certification officer, it will increase the chances that it will be faced with a legal declaration. If it ignores a declaration, it will increase the chances that it will face an enforceable order from the High Court. If it seeks to boycott the whole process of complaint to the certification officer, the existing route of complaint directly to the High Court will be unaffected. That protects the complainant, but equally well it gives a reasonable incentive for the trade union to settle the matter, and we are constantly being urged that the aim and end of industrial relations is to get sensible settlements.
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On one or two specific points, the noble Lord asked me about the jurisdiction of the certification officer. He wanted to know why the applicant should not be given a right to be heard. The fact is that it may not be appropriate to hold an oral hearing where a complaint is trivial. Quite clearly, the certification officer will always give the parties an opportunity to be heard in the case of any serious complaint; but we do not want to initiate legislation which can lead to people playing games. I think again the noble Lord would endorse that in respect of his position, let alone ours.
On the matter of double jeopardy, I think the noble Lord, Lord Wedderburn, which is rare for him, misunderstands the provisions. No union will find itself in double jeopardy because the certification officer has no order-making power; the certification officer may make a declaration but only the court can make an order against the union. We would assume that it would be sensible, as I said earlier, for the union to avoid the costs and irritation of litigation by, on the whole, taking seriously what this sensible fellow has to say.
On the issue of the judicial review, again, in a manner that I think is surprising from him, the point of the noble Lord is misconceived. If a union wishes to challenge a declaration of the certification officer, the opportunity will come if and when the applicant goes to the court to ask for a declaration and an enforcement order. At that stage the court will be considering the matter from first principles, although it will, of course, be required to take into account the certification officer's declaration and the reasons for it. We are quite accustomed throughout the whole corpus of industrial relations legislation—whether put forward from these Benches or from the Benches of the noble Lord—to having the courts take into account codes of practice; there is nothing novel about that.
The noble Lord also asked about there being no need to involve the certification officer under what I might describe as the Beloff amendment. The amendment, which was approved in Committee, contained a clear call for an independent body to be involved in the electoral process. These amendments respond to the clear wish of the House for some independent element in the process of dealing with complaints under Part I. But—and this is the crux of the issue—they do so in a more practical way, in my contention, than the way suggested by the noble Lord, Lord Rochester, at a previous stage of this evening's proceedings.
The last point I make is really an echo of something I said before. No union need be at risk of this kind of expensive and damaging legislation, because it is extremely easy to comply with these laws in respect of elections, ballots and the rest. However easy or however difficult an enforcement procedure may be—and we have tried to make it as easy as possible—those who obey the law of the land have nothing whatever to fear and have been given every incentive to avoid enforcement procedures. It is only where a union fails to comply with the statutory duty concerning these basic democratic rights for its members that it is liable to be in jeopardy. If unions do so fail to comply, there seems to us to be every justification for giving their own members the adequate, effective and easy to understand remedies that we propose.
Lord Wedderburn of Charlton: My Lords, I am sure the noble Earl will not mind if I ask him two questions, because it may save time on Third Reading. As a preliminary to them, of course we are not concerned with whether the union obeys the law of the land. Good procedures are devised so that those who break the law by mistake, or those who wish to enforce the law, can have proper remedies throughout.
The two questions are these: first, are we correct in understanding that if a member complains to the certification officer and the trade union wins its case in regard to its allegations of fact and its arguments of law, nevertheless that member can still go to the court without any impediment? That is the kind of case referred to in the broad sense of double jeopardy.
Secondly, and perhaps more important because the noble Lord said something about this just now, if the trade union loses before the certification officer, do I understand the noble Earl to be saying that the trade union itself has no locus standi for any kind of complaint unless it be judicial review to the High Court? I was doing the Government a favour in saying that the union at least had the right to go to the High Court for judicial review, because, if you do not go for judicial review, is it not the case that the union cannot change the decision of the certification officer under these clauses? It has no appeal to the EAT and it has no right to go to the High Court. What the noble Earl said as I understood him—and I should like to make sure that I have it right—is that the way in which it could he reopened is if the member went to the High Court; which goes back to the first question.
The Earl of Gowrie: My Lords, the point of the certification officer is to get a sensible settlement out of the court, so to say; but this legislation does not propose to make the certification officer into a kind of judge. I do not think the noble Lord, with his deep knowledge and reverence for the traditions of the trade union movement, would want the certification officer turned into a kind of judge. As I said, the officer may make a declaration but only the court can make an order against the union. What the certification officer finds has to be taken into account by the court. That is no great novel precedent.
If the certification officer throws out a stupid case and if, then, a rather litigious individual decides to take that case to the court, I should think that all the odds would be that the court would throw it out again with costs. Nevertheless, it is the right of all of us, whether members of unions or not, to go to the courts in civil litigation and I cannot believe that the noble Lord is seriously proposing that the individual member should in this case, uniquely, not be allowed to do so.
Lord Houghton of Sowerby: My Lords, I should like to ask a question. Would the function of the certification officer extend to pronouncing upon the new clause that we have after Clause 2, which states:
"Where a trade union proposes to hold an election and is satisfied,
and so on? I presume that the responsibility for feeling satisfaction rests upon the union. However that condition may be reached, whether at a delegate conference or at a meeting of the executive council, or whatever, would the certification officer be brought
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into any challenge to the grounds upon which the union was satisfied it being held that they ought not to have been and that they had no reasonable grounds?
What I am getting at is this. If the certification officer is to be the assessor of the judgment of a union, whether it was reasonably arrived at or whether there were considerations that had to be brought to bear upon their judgment, then this is really a judicial function and not that of a certification officer. Without being disrespectful to the certification officer, I am thinking how dangerous it may be to introduce a functionary between the complainant and the courts. We have got this in connection with the Video Recordings Bill—and I hate to refer to it—where the British Board of Film Censors is to be the designated authority with statutory powers to be judges in the first instance for the purposes of classification but the courts are still in the background to judge the fundamental question of obscenity and obscene publications. Here we have a certification officer who is virtually a court of first instance and, if people are not satisfied with what he declares, then recourse to the courts is still possible.
I think that is a very dangerous intervention of bureaucracy between the complainant and the court. If we are to have an officer in this position he may be a designated authority like the Parliamentary Commissioner or the Chairman of Tribunals but he will be somebody with authority. How can we go on clutching on to a functionary who is there for an entirely different set of purposes and use him as a kind of court of first instance in matters of grievance between members and their unions? That is the real complaint, and I endorse what was said by my noble friend who has just sat down—I am sorry, his name escapes me, which is ridiculous and shows I am nearer 90 than 80. That is the question, anyway.
The Earl of Gowrie: My Lords, there is nothing wrong, if I may say so, with the noble Lord's memory where union practice or industrial relations law is concerned; but I think that, while that is certainly the case, he does misunderstand this point. One can use phrases like "court of first instance" and so on, which are rather intimidating, but in practical life we all know that we sometimes appeal to a third party to try to sort out matters. This third party is not a novel figure invented by the Government and suddenly imposed upon the unions. This is not the industrial relations court in the 1971 Act, or the rest of it. This is a reasonably familiar figure—the certification officer.
It is also quite untrue to say that the certification officer has no jurisprudential locus whatsoever—that he is, as it were, the central heating man or is engaged in a totally different set of functions. He already has a number of important jurisdictions under the 1913 Act and also under the Trade Union (Amalgamations, etc.) Act 1964. He is a reasonably well placed fellow to try to get a decent or reasonable settlement and sort things out.
A member could complain to the certification officer about anything in Part I if he believed that the trades union's action was manifestly wrong. But, as I said just a few moments ago, it is the clear intention of our amendments that, where complaint to the

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certification officer brings about a satisfactory resolution of the matter, that should be recorded so as to avoid any need for recourse to the courts. The certification officer is not a High Court judge; we are not trying to turn him into one and we are not trying to deny the right of members, if the certification officer cannot sort out the matter, or if the union does not accept his ruling, to take ordinary civil proceedings. That is the simplicity and logic of the law which has here been presented.
Lord McCarthy: My Lords, this is a new amendment, we have not debated it, and it is very important. I should like to make sure that I have the noble Earl's position clear. The question that I think the noble Lord, Lord Wedderburn, is trying to ask is this. If the union wins, in the sense that a member complains and the matter goes to the certification officer, and the certification officer decides for the union and makes a declaration in favour of the union, as we understand it, the noble Earl is saying that the member can go to the court and challenge that declaration. That is fine. What we are asking is, suppose that the members win—
Lord Wedderburn of Charlton: No. The union.
Lord McCarthy: Suppose that the union wins—no. My first case was if the union won. My noble friend is confusing me. My first case was that the union won, and we know that the workers can go to the High Court. Now we get the case where the workers win. If the workers win, and if the declaration of the certification officer is in favour of the workers, can the union appeal to the High Court? The Minister seems to be saying no, but we think that is unfair.
The Earl of Gowrie: My Lords, I do not see that the situation would be at all problematic here. Of course, the trade union can defend itself if the members take it to the High Court. We can all go to the High Court.
Lord McCarthy: For what?
The Earl of Gowrie: What is the problem? I may be very dense but I do not quite see the difficulty being presented to me by the noble Lord.
Lord Wedderburn of Charlton: My Lords, I wonder whether the noble Earl would think this is a useful way forward. I apprehend that we have presented to him—I say this with no disrespect; as I say, these matters have been prepared with great rapidity—some problems which could perhaps not be fully covered by the present clauses, such as the position that my noble friend has just managed to put to the noble Earl, in spite of my most ill advised attempt to advise him in a different direction; namely, the position, for example, where the union faces a decision by the certification officer. It is no good saying that he is not a High Court judge, because he is given powers to make a declaration.
The noble Earl and I would be at one on one thing, and that is, where a person with a power to make a legal declaration makes it, there is, if not a legal, at any
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rate a strong moral, duty to obey. Indeed, the jurisprudence experts debate whether it is legal or moral on that borderline.
But the certification officer has the power to make a declaration, and say the union loses, the union cannot appeal except, as the noble Earl says, to the High Court. I suggest to the noble Earl that that procedure to go to the High Court, which is quite outside this Bill, is one of extreme complexity and something that should be considered again. If he considers that procedure for judicial review outside this Bill and puts it side by side with the rights of the member who loses before the certification officer, he might find that the matter was perhaps unfairly balanced. I wonder whether perhaps we could proceed on the basis that he will say at least that he will look at the matter again.
The Earl of Gowrie: My Lords, of course I accept that some of these arguments are complex, and part of the purpose of Report stage is that we should all sleep on things, look at the text and see whether we can resolve our differences without—dare I say it?—even getting so far as to appeal to the certification officer. But in fact I again feel that the noble Lord, Lord Wedderburn, is somewhat snowing us with expertise and complexity where none is needed.
I am talking about a situation where somebody is aggrieved and somebody thinks that something is wrong. It is appealed to the certification officer, and we all hope—and I think that nine times out of ten our hope will be realised—that the certification officer, who, as I said, has a jurisprudential locus, so to say, under previous Acts, will be able to sort the matter out. But of course, if he does not, or if the applicant remains aggrieved because the union loses and will not give way to the applicant, then the High Court could find in favour of the union. In the long run the High Court is the court of final decision here, although indeed there are later stages, including that all the way up to your Lordships' House. But I think that the point that the noble Lord is missing is that it might be that the applicant won and the union was aggrieved; the union therefore presumably would not give way to the suggestions of the certification officer. The applicant would remain aggrieved and would go to the High Court. The High Court could then find in favour of the union. I am not a lawyer but that would seem to me to be common sense.
On Question, amendment agreed to.
8.47 p.m.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 11.
[Printed earlier.]
The noble Earl said: My Lords, I think I have spoken to this amendment. I beg to move.
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 12:
[Printed earlier.]
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 13:
[Printed earlier.]
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 14:
[Printed earlier.]
On Question, amendment agreed to.
Clause 4 [Exemption for certain trade unions]:
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 15:
Page 6, line 1, at beginning insert—
(" () This Part does not apply to any organisation which—

(a) is a trade union within section 28(1)(a) of the 1974 Act (Meaning of Trade Union);

(b) is a section, branch or other constituent part of another trade union; and

(c) was not separately entered on the list of trade unions maintained under section 8 of the 1974 Act (List of Trade Unions) on 1st January 1984 and is not subsequently entered on the list after that date.").

The noble Lord said: My Lords, it is perhaps somewhat remarkable that one comes at this stage of the Bill to a question that is quite fundamental to Part I of the Bill. I preface my few remarks with this comment. It is, I think, not only my view but that of some of my noble friends that when we come to Third Reading there will be, as we have just seen, rather a large number of matters which, because of its nature and the way in which the Bill has been put together, it might be important for your Lordships, if this House is to discharge its function, to look at rather carefully.
This amendment addresses the issue which may be posed as this question: to whom or to what does Part I of the Bill apply? My noble friend Lord Howie raised the issue, in part at least, by an amendment in Committee, but it was left uncertain, and it is to that question that this amendment relates. There is in one sense a very easy answer to that question. The noble Lord, Lord Gray of Contin, at col. 693 of the Official Report on 25th June answered it in this way:
"Part I of the Bill as a whole covers all those organisations which meet the statutory definition of a trade union, save for certain trade union federations".
The problem is best described in this way. The definition of a trade union to which the noble Lord referred in Section 28 of the 1974 Act, if I may summarise it, describes a trade union other than a federation, as an organisation permanent or temporary which consists wholly or mainly of workers and is an organisation whose principal purposes include the regulation of the relations between workers of that description and employers or employers' associations. The nub of the question is an organisation which regulates relationships between workers and employers or employers' organisations.
The problem is—and we debated this in another area where the Bill refers to a section of the union—that a section of a union, or a group in a union, or a branch in a union, or a body in a union, can in law itself be a separate trade union. That may sound rather absurd; but one can see why this is if one approaches bodies to which this amendment is not directed—and I insist, "not directed".
If one takes the National Union of Mineworkers—not for any relevance to present day occurrences but because they are the best example structurally—that union is still very much a federation, and the separate areas are clearly separate trade unions and are noted as such on the list of trade unions.
The noble Lord, Lord Gray of Contin, in answering further to the same debate (at col. 696 of Hansard for 25th June) said:
"I can perhaps clarify the position, because it is really quite clear. If a group inside"—
and I stress "inside"—
"a trade union meets the statutory definition of a trade union under the 1974 Act, then Part I of the Bill applies".
The Government themselves have accepted that this is so by yet again one of their provisions; namely, a provision in one of their amendments which deals with the position of where there is a duty upon a trade union and upon a branch. The new clause in Amendment No. 9 (3), tells us that:
"Any duty falling upon a branch under this section by reason of its being a trade union shall be treated as having been discharged to the extent to which the union of which it is a branch has discharged that duty instead of the branch".
That has appeared in previous legislation, but it is clear that a branch—as the Government say themselves—may itself be a trade union. Nothing that I say tonight is meant to decide the question of whether or not a particular branch or section of a union is itself a separate trade union. However, I say that it is a widespread problem.
Perhaps I may refer merely to two trade unions and their rule books—and, after all, the Government have had, since last October to consider them. First of all, there is the Electrical and Electronic and Plumbers Trade Union (the EEPTU). They have a white collar section which has two subsections: the BICC Staff Association—which has its own rules and its own committee—and the Association of Managerial and Electrical Executives, (the AMEE), which has its own rules in a schedule to the EEPTU rule book, has its own committee, does its own negotiating and is clearly capable of being held separate. I put it no higher than that tonight. It happens that the AMEE comes rather close to the Government's scheme, but not exactly so. It is not quite enough for it to get within Clause 2 as I read the rules.
Is it really the Government's intention that Part I should apply not only to the EEPTU as such, but also to the BICC Staff Association separately—that they must have a postal vote; that they must maintain a separate register of members? Or is it the Government's intention that it should apply to the AMEE? The noble Earl must pay attention to this because as the Bill stands at the moment it clearly applies to all of these. If it be thought that those are quirkish, let me refer to the ASTMS rule book. That discloses that the ASTMS has sections with negotiating functions, and in greater or lesser part separate rules and executive committees, of the following kind.
There is a section for the medical practitioners' union. There is the Prudential section. There is the Royal Group section. There is the Midland Bank staff section. There is the Forward Trust Group section. There is the Clydesdale Bank staff section. There is the Pearl Assurance Company section. There is the Pearl Federation section. There is the Midland Bank section. There is the Kodak Senior Staff section. There is the Engineer Surveyors section, There is the Liverpool Victoria managers' group section. There is the Courtaulds section. There is the Refuge

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section—which is perhaps a section into which those drafting this Bill should by now make themselves affiliated. There is the Reckitt and Colman section. There is the telephone contract officers section.
In respect of those sections which, among others happen to be held to be separate trade unions—and on the present evidence I would not be able to know exactly which would and which would not, but there is no doubt some of them do—is it the intention to have a separate postal ballot within them all? I am sure that as a reasonable man the noble Earl would agree that that would be absurd.
If that is absurd then it is difficult to draw the line. With this amendment we have tiled to set out some possible answer other than that which my noble friend Lord Howie put forward last time. I simply rehearse what it says. It refers to excluding groups within what normally in lay parlance would be called a trade union. We are trying not to have a separate postal ballot for every branch. It refers to a group within the union which is a trade union under the definition—that is paragraph (a)—which is a section, branch or other constituent part of a wider trade union—that is paragraph (b)—and which was not separately entered on the list of trade unions on the 1st January. We have chosen that last phraseology as a trial run at this stage. Of couse the date could easily be negotiated. However, we thought it right to say that those trade unions that chose to register upon the list as being unions holding themselves out as being separate unions, like one of the branches of the National Union of Mineworkers which I quoted in Committee, should be estopped from denying under this scheme that they are not separate unions and they must hold a postal ballot.
But where a group inside the union has never gone on the list, and does not enter the list, the mere fact that the legal definition—which is not just in the 1974 Act, it has taken over from what was basically a 19th century definition—brings a branch, section or group within the definition of trade union, surely cannot be within the Government's intention to lay upon it the obligations which the trade union at the moment is under in Part I.
I am encuraged in the view and suggest to the noble Earl that the logic of the Bill now is that that cannot be so and that further amendments must be made. The very subsection of the new clause which I cited—namely subsection (3) of Amendment 9—takes from the branch, which is a trade union in law, the obligation to maintain a register. Surely it must also take from it all the other obligations of Part I. You cannot have that subsection which says you need not keep a register and then put upon the branch, which is a trade union, the obligation to have a postal ballot.
I am sure the Government are not unreasonable in this matter, and I urge the noble Earl to give us some comfort and avoid litigation—because that is what there will be—about this matter, when in some formula or another it can be dealt with at this stage. I beg to move.
The Earl of Gowrie: My Lords, giving comfort and avoiding litigation are among my major aims in life;
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but this amendment would exempt those sections, branches, or other constituent parts of trade unions which are trade unions in their own right, within the statutory definitions but which were not listed as such by the certification officer on 1st January 1984 and are not subsequently so listed.
But the Government believe that all the organisations which meet the statutory definition of a trade union should be covered by the requirements of Part I since, by definition, they are in the business of negotiating between workers and employers. The reason why we adhere to this simple proposition is again very simple. The starting point of the Bill is the utterly straightforward test that all those organisations which meet the definition of a trade union in Section 28(1)(a) of the Trade Union and Labour Relations Act 1974 should have to comply with the provisions of the Bill.
I understand that we have before us—to adapt Shakespeare's phrase in the dedication of his sonnets—the only begetter of the Trade Union and Labour Relations Act of 1974 in the person of the noble Lord, Lord Wedderburn. So I cannot quite see what he is complaining about. That definition provides that a trade union is an organisation which—I quote the Act, and no doubt I am quoting the noble Lord—
"consists wholly or mainly of workers of one or more descriptions and is an organisation whose principal purposes include the regulation of relations between workers of that description or those descriptions and employers or employers' associations".
In ordinary parlance, to be a trade union an organisation must be in a certain business. It must be in the business of representing its members in negotiations with employers. Part I of the Bill will simply ensure that the leaders of any organisation which meets that test are genuinely representative of the membership. I appreciate that the noble Lord has considered this issue carefully and has gone to some lengths to devise a formula in his amendment that avoids some of the difficulties associated with earlier amendments in this area, but the formulation of his amendment produces some peculiar anomalies all of his own. These arise because, under this amendment, the issue of whether or not a section, branch or other constituent part of the union was exempt from Part I would depend on whether or not it was listed by the certification officer on one particular date, as I said at the beginning.
So, quite apart from the anomalies that can be thrown up by subsequent amalgamations, changes of name, transfers of engagement and the like—the ordinary flow of human life where organisations are concerned—there is also the fact that it is not compulsory for an organisation that meets the statutory definition of a trade union to apply to be included in the certification officer's list. Indeed, in his report for 1983 the certification officer noted that 60 trade unions had made annual returns for the year but had not applied to be listed. To the extent that any of those unions were constituent parts of other unions, they would, under this amendment, be exempt from the requirements of Part I of the Bill simply because they had not chosen to apply.
This is sufficient reason—there are, of course, others—to make it clear why the Government cannot

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accept the amendment. It would turn the simple proposition in the Bill, that Part I applies to all trade unions that meet the statutory definition save for certain federations, into a highly complex and (dare I say it?) highly Wedderburnian requirement depending upon an arbitrary test as to whether a union was listed on one particular date. For that reason, as well as for others that I could enumerate, although that seems to me to be the sterling one, I believe that the House should reject the amendment.
Lord Wedderburn of Charlton: My Lords, I beg the noble Earl to sleep on this with a turbulent mind. The date was not put in for Wedderburnian reasons. With great respect, it was put in for Gowrie-an reasons. If we had not put in a date and simply said that they are not on the list, people would have said that they could take themselves off the list and that the South Yorkshire area of the National Union of Mineworkers could get itself out of the Bill. We are trying to be severely practical. What the noble Earl has said must be considered by your Lordships. I am sure that another place will come back to it. This is a new amendment, remember; it has to go to another place.
Another place will now know from the Government that if a branch in Yorkshire turns out, according to the High Court and the tests in Cope v. Crossingham, a case of 1909 which I cited in Committee, and the definition in the legislation, to be a separate trade union, then that branch has to hold a separate postal ballot. What is more, it has to hold it without any duty to keep a register. It is told that you do not keep a register under subsection (3) of the new clause—a point to which the noble Earl did not address himself. I suggest, therefore, either that the new subsection (3) is taken out or that the Government, for heaven's sake, should stop this nonsense of putting an obligation for postal ballots upon sections, groups and branches of unions up and down the land.
We have objections to the postal ballot, yes, but for the purpose of this debate I am not questioning the postal ballot. I am saying, "Have your postal ballot according to the best rules and mechanisms, and, for goodness sake, think of some better ones". But the obligation should not be put upon branches up and down the land unless the wish is to kill the trade union movement in a flood of paper and especially to put it in a deliberate anomaly by saying that it does not have to keep a register but it does have to have a ballot. What kind of government is that? So far as the 1974 definition is concerned, the noble Earl should not be strangled with our definition. He can always change it. The Government can change anything; they have shown that. So far as our definition is concerned, I do not complain about it, but I shall not have an easy mind if I see it perverted by legislation that is quite absurd. I say that in all seriousness because this is a subject about which I care deeply. I do not want to see the trade union law of this country, irrespective of postal ballots, have this sort of thing put into it—a starting point.
I give the noble Earl one final illustration from the illustrations that I gave previously. The Clydesdale Bank staff section of the ASTMS has in paragraph 11 of the relevant rule a separate general committee by
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which its business is to be managed. It has for the Clydesdale Bank a union side and a joint committee with management, all within the union rules, clearly regulating relations with management. Is it the Government's intention that the Clydesdale Bank section of the ASTMS should have a separate postal ballot without any register? I have never heard such a crazy piece of legislation. I shall withdraw the amendment for a good reason. I believe that Hansard will disclose to the Government that there is a need to do something about this situation.
The Earl of Gowrie: My Lords, before the noble Lord withdraws the amendment—I am one of those most eager that he does so—I really think that for Hansard and the record we should get some things clear. The noble Lord has distorted what I said. I said that I was perfectly content with the definition in the 1974 Act. The noble Lord has been arguing that the Bill without his amendment will apply to every sort and condition of union branch—
Lord McCarthy: Many.
The Earl of Gowrie:—and that there will be confusion. His point is that the unions will be confused, that there will be confusion within them as to whether branches or sections are or are not covered by the legislation. That is what I find wholly unreal. The reality is that, in the vast majority of cases, the practical test of whether some particular part of a trade union is itself a trade union is quite simple. It is whether it is listed as such by the certification officer.
Lord McCarthy: No.
Lord Wedderburn of Charlton: No.
The Earl of Gowrie: Let me finish the point, and then the noble Lord can get up again. The vast majority of sections and branches of trade unions are not listed as trade unions because they have not applied to be listed. They have not applied because they know, and the members of branches and sections concerned know, that they do not meet the statutory definition. But the position is different in those sections of trade unions that retain a substantial degree of separate organisation and which, in practice, have separate executives and bargain directly with employers. Where such organisations meet the statutory definition of a trade union, it is clearly right that Part I of the Bill should apply to them irrespective of whether they happen to have chosen to seek listing by the certification officer. I do not think there is really so much difference between the noble Lord and myself as he is seeking to claim.
9.8 p.m.
Lord Wedderburn of Charlton: My Lords, I am not quite sure whether the noble Earl is sitting down, or I am sitting down, but I wonder whether I may address a questioning remark to him. As I understood it, at one point he said that one was a trade union only if one was on the list. But I think that was my misunderstanding, because he ended by saying that one was a trade union if one met the definition.
There are four features of trade unions which are entirely separate in law. One is the definition; the

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second is the listing; the third is the question of independence; and the last is the question of recognition. They are totally separate. It is quite right to say that one chooses whether or not one is listed. May I ask the noble Earl this. It is not meant to be a catch question, because his reply to me is that it is quite simple; there is no problem. Is the Clydesdale Bank section of ASTMS a separate trade union?
The Earl of Gowrie: My Lords, I do not know anything about the Clydesdale Bank section of ASTMS, and the noble Lord would not expect me to. The simple fact of the matter is that if it is engaged in the business of representing its members in negotiation with employers, and if it is elected by its members to do this, it will be covered by the Bill.
Amendment, by leave, withdrawn.
Clause 6 [Interpretation of Part I and transitional provision]:
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 16:
[Printed earlier: col. 1075.]
The noble Earl said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 17:
Page 8, line 8, at end insert—
("'offshore worker' means any person in employment to which section 127 of the Employment Protection Act 1975 (employment for purposes of activities in territorial or other offshore waters) applies, other than one who is in such employment in any area where the law of Northern Ireland applies'")
The noble Earl said: My Lords, with this amendment, I should like to speak also to Amendment No. 18.
Amendment No. 18: Page 8, line 10, after ("seaman") insert ("or offshore worker").
These amendments will effect a relatively minor but nonetheless desirable modification to the Bill's application. They are designed to give trade union members working on offshore installations to which the law of Great Britain applies, the same voting rights under each part of the Bill as their colleagues in Great Britain itself. As such, they bring the Bill into line with earlier legislation. There can be no good reason why members of trade unions based in Great Britain, who are working in places were the law of Great Britain applies, should not benefit from the provisions of the Bill. Therefore I commend these provisions to your Lordships.
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 18:
[Printed above.]
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 19:
[Printed earlier: col. 1075.]
The noble Earl said: My Lords, in the previous debate I spoke to Amendments Nos. 19 to 22 inclusive. If it is the will of the House I would move these en bloc.
The Deputy Speaker (Lord Ampthill): My Lords, the Question is that Amendments Nos. 19 to 22 be agreed to en bloc?
Lord Wedderburn of Charlton: My Lords, I have a question on Amendment No. 20, if I may address it to the noble Earl. It was raised on the previous amendment, which sets up the register, by my noble friend Lord Houghton when he commented that it was the duty of every union to maintain the register in the way there set out. One of the obligations of the union is to maintain a register with the proper address. Therefore, the "proper address" definition becomes a matter of some importance.
The noble Earl will know that the definition of "proper address", as in Amendment No. 20, says that it,
"means his home address or any other address which he has requested the union in writing to treat as his postal address".
Will the noble Earl consider whether some time should be put in there? If, on the day of the ballot, he notifies the union in writing of a new postal address it is rather unfair to expect the union necessarily to get a postal ballot paper to him. Surely the provision should be that he request the union in writing at least some period before the ballot in order to be fair in the matter.
The Deputy Speaker: My Lords, the Question is that Amendment No. 19 be agreed to?
On Question, amendment agreed to.
Amendment No. 20:
[Printed earlier: col. 1075.]
The Earl of Gowrie: My Lords, without prejudice, if I may use that term, I will look into the point which the noble Lord has made, which may be well founded. Perhaps we can return to it at a later stage.
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendments Nos. 21 and 22:
[Printed earlier: col. 1075.]
On Question, amendments agreed to.
Clause 7 [Industrial action authorised or endorsed by trade union without reference to a ballot]:
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 23:
Page 9, line 39, at end insert ("otherwise than by reason of any failure which—

(i) was not caused by lack of reasonable care on the part of the trade union;

(ii) did not materially affect the result of the ballot; and

(iii) ought fairly and reasonably to be excused in all circumstances, having regard to the period of time available to the trade union following the date of commencement of this Part.").

The noble Lord said: My Lords, this amendment relates to that obligation of the union under Part II of the Bill which is required before it and its officials acquire legality for inducing or organising industrial action of any kind. There are three requirements in Clause 7, and this relates to the third; namely, the obligation to comply with Clause 8. In the interests of brevity I will say only this about Clause 8, to which this

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amendment and the clause refer. I know the noble Earl is constantly saying that the procedures under this Bill are really very simply, but I ask him to accept that there could be a situation in which many people in real life would find some difficulty and might make an honest mistake.
The noble Earl's reply to many amendments often is, "All you have to do is to obey the law". He did the same in 1980 and in 1982. A great deal of lawbreaking is unintentional, and if you pitch your duty too high then you catch people who in all fairness really should not be caught and who should be excused.
This amendment says that if the failure to abide by the procedures of Clause 8—it might be giving a ballot paper to a member to whom it should not be given, or it might be some honest mistake in the records which meant that someone failed to get a vote when he should have got it—was, first not caused by lack of reasonable care (and it is a very high standard that is required even by this amendment) and, secondly did not materially affect the result of the ballot; and if, finally, it ought fairly and reasonably to be excused, then the union should be excused. As regards that last matter, the period of time between the enactment of this measure or the coming into force of Part II and the default should be taken into account.
We say that for the following reason. To organise strike ballots under the procedures of Clause 8, whatever the noble Earl may think, will be a matter of some difficulty for some unions. Even if you take a union which wishes to comply and decides to comply in all honesty with this measure, it may have to change its rules or it may wish to change its rules, or in the interim before a change of rules it may find the procedure difficult to stomach, and yet this part is coming into force, at any rate as the Bill stands, within two months.
Perhaps a fault in our discussions is that we discuss unions as though they were some metaphysical entity. There are people involved; there are officials involved who are trying to do a job of work running unions and trying to do work for their members. If one of those union officials does something that he should not do under Clause 8, but does not mean to do it, if in doing it he did not lack reasonable care and ought to be fairly excused; and if it did not affect the result, then surely—if you take into account especially, perhaps, the length of time between the coming into force so rapidly of this part of the Bill and the time of perhaps three months after that date, when the union had not been able to change its rules—that official should not be laid open to the ravages of common law liability and damages. I insist that it is not just a question of union liability. The Government made it quite clear in Committee that they mean to make not just the union liable, but each official who is involved in the inducement of breach of contract or inducement of interference.
The noble Earl has said once before that all of this is covered by the words "reasonably practicable". I could only argue the opposite in detail by going through every measure. I merely put forward the proposition that if one looks at the Bill there is no defence of reasonable practicability which would
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apply to every one of the possible mistakes, and the proper measure is the type of measure that we suggest. I ask the Government to look at this sensibly, because if on their own premises—and I am not putting this forward as my argument—they really want to get some goodwill for this measure in Part II (and I suspect that it will be pretty hard to get) then not to include something of this nature would seem, even from their point of view, to be rather unwise. I beg to move.
The Earl of Gowrie: My Lords, I have to say that I rather doubt whether there will be immense practical difficulties standing in the way of compliance with the balloting provisions of the Bill. As the noble Lord has told us, balloting provisions are subject to tests of reasonable practicability. The provision of a voting paper and of a convenient voting opportunity to every member entitled to vote does not seem to me to present enormous difficulties. The requirement that voters should incur no direct cost to themselves seems to me to be fairly easy to ascertain. As regards the arrangements to secure the secrecy of the ballot, one would not need to be an immense expert in this field to satisfy oneself that those provisions were there. I should not have thought that it would be a very sophisticated judgment to decide that all those aspects could be reasonably and practicably seen to.
As a result of the amendments which we tabled during the Committee stage, no liability will result from any interference with the opportunity to vote by people outside the union—and that is something that we shall come back to in the context of the next amendment—and we have also tried to meet the noble Lord's well-found point (if I may put it that way) that a lot of law-breaking is the result of honest mistake rather than of venality of some kind. We have made it clear that there will be no penalty for any accidental miscounting of votes, providing this does not affect the result of the ballot.
Equally, there is nothing in Part II of the Bill to say that a voting register is the only way of ensuring that the provisions relating to voting are complied with. As an alternative to supplying a voting paper to each member, for instance, the union may if necessary make voting papers available at the workplace. And, as an alternative to postal ballots, the union may, as we saw from the debates before dinner, organise workplace ballots. Neither of these alternatives will necessitate a voting register so long as the trade union takes other precautions to ensure that all the balloting conditions are fulfilled—and they are the conditions which I have said are simple ones; and there is no need for a trade union to fear being held to be in breach of Clause 8 if it was not reasonably practicable to compile such a register in the particular circumstances of the case.
I think that I have said enough to explain why the Government do not believe that any need exists (in relation to the practical requirements set out in Clause 8 of the Bill) for any further mitigation of the obligation on trade unions to comply with those requirements. No doubt we shall come on to the other reasons why noble Lords opposite believe that commencement two months after Royal Assent is too soon, in the context of Amendment No. 40, and I shall then try to explain to the House my view that those also are unfounded. But in respect of this amendment,

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I believe that the noble Lord is worrying too much, and for the reasons that I have given I hope that he will feel able to withdraw it.
Lord Wedderburn of Charlton: My Lords, I am not reassured. I understand what the noble Earl says. Of course, he is right in saying that the Government inserted an, amendment to say that an inaccuracy in the counting should be disregarded if it is accidental. That is as far as they went. What is special about counting? Let us take the provision that every person entitled to vote in the ballot must be allowed to vote. That is fundamental. The Government want that. Let us suppose that an honest mistake is made that somehow removes the opportunity. The Bill contains nothing at all which, tout court, gives the union an escape. But I heard what the noble Earl said. It is the final word on this matter from the Government. In the eyes of many people the Government are being quite unreasonable. What they did for counting they should do for Part II. Where the mistake is without carelessness and is within the area of reasonableness, there should be a defence. They will not do that. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 8 [Requirements to be satisfied in relation to ballots]:
9.27 p.m.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 24:
Page 10, line 41, leave out ("at") and insert ("in").
The noble Earl said: My Lords, I beg to move this amendment, which is simply designed to make a drafting correction.
On Question, amendment agreed to.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 25:
Page 11, line 22, leave out from ("interference") to ("and") in line 24 and insert ('or constraint").
The noble Lord said: My Lords, in congratulating the Government on the last amendment, we can also hope that they will look kindly upon this one which, for the purposes of sensible procedure, I apprehend should be taken with Amendment No. 28.
Amendment No. 28: After Clause 8, insert the following new clause:
("Statutory duty not to interfere or impose constraint.
.—(1) A trade union or other person contravenes this section if it or, as the case may be, he causes any interference to, or imposes any constraint upon, a member of a trade union in contravention of subsection (5)(a) of section 8 above.
(2) Subsection (1) does not create an offence but the obligation to comply with it is a duty owed to each of the following—

(a) a member of a trade union entitled to vote in a ballot under this Part; and

(b) a trade union or other person who may be adversely affected by the contravention;

and any such breach of duty shall be actionable accordingly (subject to the defences and other incidents applying to actions for breach of a statutory duty).").
My noble friend Lord McCarthy made some remarks to your Lordships earlier about this matter, and I shall remind your Lordships of it in this way. He raised the matter on Amendment No. 6. The Bill has always demanded that members must be allowed to
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vote without interference or constraint. Constraint is normally understood to be in the nature of a physical impediment, and obviously interference has a rather wider meaning. Indeed, interference has a much wider meaning, because when we looked at breach of contracts of employment and interference with contracts of employment, it was quite clear that the Government adopted the rather questionable doctrine that interference included anything that delayed or hindered the performance of a contract, even if there was no breach of duty. Therefore, it is quite clear that the Government take the very widest possible view of "interference" as a word, and nothing has ever fallen from their collective lips, as it were, which suggests that it is any different here.
Until quite a late stage in your Lordships' House the Bill was of that character. Indeed, that seemed to be quite sensible. As a matter of fact, the situation is rather more important here than when my noble friend referred to it under Amendment No. 6, because, although it may be important to ensure that a member votes without interference or constraint when he is electing his national executive committee, I would consider that the Government might take the view that it is even more important that he votes without interference or constraint when he is deciding whether or not to support a strike or industrial action. Therefore, this is a rather important provision.
The debates in another place—and the earlier debates here contain a reference to it—show that the interference referred to might be from the union, or from an employer, or from a third party. If we are looking at the position of industrial action, then, rather more realistically—or perhaps rather more possible than in the case of elections to the union national executive—there could be some interference by an employer or third party with an interest in the dispute. One wants to prevent that, and the Government's Bill always did so until a late stage in this House.
One would want to avoid, for example, the situation where an employer said to members of a union, "Don't vote for this suggestion, or I won't engage you". I take that example deliberately because it does not run into the rather obscure question of an existing employee being told, "Don't vote for this, or I won't give you overtime", or the like, because that could conceivably be within present legislation. I do not take that example because that would run us into a legal argument, which the noble Earl tonight seems rather willing to have.
I take the example of, "Don't vote for that, or I won't engage you", because that is clearly not within the existing legislation. I say that that is interference, and the Bill once covered that but does not cover it now. In a late amendment the Government have brought in a formula which is quite different. Your Lordships will find in both Parts I and II the formula that members and workers involved in the strike here are to be allowed to vote without interference or constraint by the union or its officials or employees.
The Government argue that that is to protect the union. We quite understand that. Over the interference or constraint we were perhaps all at fault in not noticing the obscurities. But we say that if you are going to make this clearer, why do you impliedly

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permit interference from outside by the employer or third parties? Accepting that the union must not constrain and must not interfere—and note that it is not just intereference by unlawful means: it is the same point we had in regard to the contract of employment; it is interference generally—what about the employer who makes threats that are not unlawful for some other reason? Is that to be allowed?
What about third parties who take action to interfere with trade union elections and with, here, decisions to strike or not to strike? It goes further than that. Existing legislation, which is relevant to this Bill, includes the same formula. The regulations for the funds for trade union ballots which the certification officer administers—not an administration that will be improved by this Bill if these amendments go forward and are enacted—are regulations of 1981 and 1982. Those regulations in 11(d) state that those entitled to vote must be allowed to vote without interference or constraint. If you do not do that, then you cannot get the money from the certification officer. Are the Government going to amend that to "interference or constraint by the union or its officials or employees"? If not, why not?
What we have done in these amendments is to propose that the Government's original formula be accepted; that interference or constraint be generally regarded as obnoxious. The only way we can seek to do that (and this takes one to Amendment No. 28) would be to adopt the Government's type of formula, which they have used many times—to make it a wrong, and not a criminal wrong, but a civil wrong, in regard to the duty owed to the members of the union and any other person, including the union, who might be adversely affected—not to interfere with, or to constrain, members in respect of elections.
That is a method of doing it. If the Government have a better method for adopting their original and better proposal, then that is splendid. What will not do is for the Government merely to tell us that they have changed the formula to protect the union. They have changed the formula to protect the union, with the consequence that third parties are clearly, on interpretation of the Bill, no longer covered and no longer owe a duty not to interfere. It is on that basis that I beg to move this amendment.
Lord Rochester: My Lords, I rise simply to ask the noble Earl whether there is anything to be lost by the Government accepting the point that has been made by the noble Lord, Lord Wedderburn, so that it can be shown that they are even-handed in their approach to this matter and will not brook interference or constraint from any quarter.
The Earl of Gowrie: My Lords, Amendment No. 25 would have the effect of reverting to the position before the Government's Committee stage amendments whereby a trade union could be held liable for interference or constraint imposed by a third party. Amendment No. 28 would impose a statutory duty on all persons, including employers, not to interfere with or constrain union members' ability to vote.
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It seems to us that Amendment No. 25 would be undesirable from the trade union point of view. Whatever may be said on Amendment No. 28, Amendment No. 25 would have the effect of reimposing liability on a trade union for actions over which it has no control. Immunity depends on all the provisions in Clause 8 being satisfied, and we know of these from the last debate. The union could, therefore, lose its immunity as a result of Amendment No. 25 through the actions of third parties. I would be very puzzled if I really believed that the noble Lord, Lord Wedderburn, wanted that to happen.
In relation to Amendment No. 28, which is designed to add not only a new clause but also a completely new dimension to the Bill, of course I endorse the sentiments behind it, and I am glad that the noble Lord, Lord Rochester, has given me the chance to underscore that. It is clearly desirable that trade union members should be able to vote without interference or constaint from any source. But the amendment we are considering here could have all sorts of unexpected ramifications. For example, what about the employer who has good reason for not wanting to release his employees to vote at the particular moment nominated by the trade union? Is he to be bound by this provision to accept any balloting arrangements which the trade union chooses to nominate without having any say in the matter?
Section 2 of the Employment Act 1980 presently gives trade unions the right to request the use of employers' premises for ballots on a number of matters, including industrial action. An employer who refuses such a request may be required to pay compensation to the trade union except where it can be shown that it was not reasonably practicable to accede to the request. But in the new clause proposed here, the employer would be liable for any constraint on the union members' ability to vote, whatever the practicalities of the situation—even, for example, where a trade union had arranged a ballot which would require all union members to be absent from work at the same time and where this would seriously disrupt the production process.
We should therefore draw our minds back and concentrate on the main purpose of the Bill, which is to ensure that trade unions make proper arrangements to ballot their members. I am sure that the motives of the noble Lords opposite are admirable, and, indeed, I share some of them. But I cannot recommend that your Lordships accept, at this very late stage, a particular bolt-on addition to the Bill. In the light of what I have said about the Government's reasons for modifying the original reference to interference and constraint, I hope that both amendments will be withdrawn.
Lord Wedderburn of Charlton: My Lords, this is perhaps one of the most disappointing answers throughout the long course of disappointing answers in this Bill. If the noble Earl thinks that the amendment as drafted would have the ludicrous effect of possibly making a union liable for the act of a third party then of course, he can easily propose two or three extra words to stop it. That is the first point.
Secondly, anyway, I do not believe that Amendment No. 25 would mean that, in the context

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of Amendment No. 28. And I think that that is clearly the better reason. Thirdly, he says that this introduces a new dimension to the Bill. Why? He says that he endorses the sentiment behind it! I think that I quote him correctly. "Endorses the sentiment behind it"!—We are not dealing with sentiments; we are dealing with legal liabilities. It is either desirable to stop interference from any source or it is not.
The Government really cannot tell us that they do not pick on trade unions if they now, by an amendment after eight months, say, "Oh well, the interference is only dealing with the union itself"—and they do so in that terrible way, the worst way by which you reject a candidate, which is always to say that it is in his own best interests. "Of course, it is in the union's own best interests" that they be protected by this formula, interference by the union, its officials or employees. The noble Earl then says that it will create anomalies. He says, "Let us suppose that you take the case of the employer who for some good reason cannot release all the workers for the date when the union wants to hold a ballot". I hope that I reasonably accurately summarise his example.
We moved an amendment in Committee which suggested a form of words which would deal with the situation where the employer was being reasonable or unreasonable in respect of the union's liabilities under Part I or II of the Bill. We suggested that where the employer was unreasonable there should be one result, and that where he was reasonable there should be another. If the noble Earl wishes to put that back in, if he wants to adopt our amendment now, then that is splendid. Our draft is defective. But how on earth can anyone, unless he is bound hand and foot, without reason simply to have to reject amendments, reject amendments of this kind completely—other than saying that he wants to improve the drafting or that he wants to take in an amendment that we moved before and was rejected—when he says that it is desirable to reach this result? Presumably it is desirable in law; because that is what we make here. We do not make sentiments, we make laws and they bind real people. These real people are going to be people who vote; and they are people who vote under the provisions of this Bill, upon strikes and industrial action.
There will be some of them—and I say this now with confidence—just as no doubt there will be cases where some union official puts some interference into the process, who are interfered with or constrained by employers or third parties. We say that there should be a legal duty not only that those members should have a right but that the trade unions should have a right to say that the third party shall not interfere in its elections. That is what our amendment says. Any person, the union or a member or any other person adversely affected, should be invited to stop it. The Government are not serious. I beg leave to withdraw the amendment.
The Earl of Gowrie: My Lords, before the noble Lord sits down, I may not be able to satisfy him but I might be able to reduce his disappointment to some degree because my advice is that as a result of what he suggests I may need look again at the wording of the regulations on funding of ballots. I am sure that that is
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not even half a loaf, but I do not want to spoil the noble Lord's evening altogether.
Amendment, by leave, withdrawn.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 26:
Page 11, line 25, leave out from ("practicable") to end of line 6 on page 12 and insert ("be enabled to do so without incurring any direct cost to himself.
(6) So far as is reasonably practicable, every person who is entitled to vote in the ballot must—
(a) have made available to him—

(i) immediately before, immediately after, or during, his working hours; and

(ii) at his place of work or at a place which is more convenient for him;

or be supplied with, a voting paper; and

(i) a convenient opportunity to vote by post (but no other opportuntiy to vote);

(ii) an opportunity to vote immediately before, immediately after, or during, his working hours and at his place of work or at a place which is more convenient for him (but no other opportunity); or

(iii) as alternatives, both of those opportunities (but no other opportunity).")

The noble Earl said: My Lords, I am so dazed by having tried to help the noble Lord, Lord Wedderburn, that I have lost my place in the brief! This amendment makes a number of drafting changes. It will improve the drafting of the provisions to which it relates and bring them in line with those applying in Part I. I beg to move.
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 27:
Page 12, line 43, leave out ("and")
The noble Earl said: My Lords, this amendment removes an extraneous "and". I beg to move.
On Question, amendment agreed to.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton had given notice of his intention to move Amendment No. 28:
[Printed earlier: col. 1129.]
The noble Lord said: My Lords, I spoke to this Amendment with Amendment No. 25 and it went with it. It may be technically not moved but I mention this that it may be printed.
[Amendment No. 28 not moved.]
9.40 p.m.
Lord Aylestone Lord Aylestone moved Amendment No. 29:
Before Clause 9, insert the follow ing new clause:
("Amendment of 1913 Act s. 5.
.—(1) For sections 5 and 6 of the 1913 Act there shall be substituted the following section—
"5. —(1) A member of a trade union may at any time give notice that he wishes to contribute to the political fund of the union and, on the adoption of a resolution of the union approving the furtherance of political objects as an object of the union, notice shall be given to the members of the union acquainting them of the procedures for contributing to the political fund of the union, and that an appropriate contribution form can be obtained by or on behalf of a member either by application or by post from the head office or any branch office of the union or from the office of the Certification Officer.
(2) Any notice under subsection (1) above to members of the union shall be in a form, and shall be given, in accordance with the rules of the union approved for the purpose by the Certification Officer, having regard in each case to the existing practice and to the character of the union.
(3) Effect shall be given to the wish of members to contribute to the political fund of a union by a separate levy of contributions to that fund from the members of the union who have completed the contribution form referred to in subsection (1) above, and the rules shall provide that no moneys of the union other than the amount raised by such separate levy shall be carried to that fund."
(2) For the purposes of section 5 of the 1913 Act (as substituted by the preceding subsection) any trade union which has adopted such a resolution as is therein specified shall be deemed to have adopted the same on the day when this Part of this Act comes into force.").
The noble Lord said: My Lords, at Committee stage, at about two and a half hours later than this hour, we discussed this same amendment, and I then discussed it briefly, which I propose to do now. We purposely put it down again so that we could study what the Minister said in his reply to the amendment. The noble Lord, Lord Underhill, and the Minister both spoke on that occasion and we have read carefully what both of them said. The subject matter of the amendment is pretty well known because it has been discussed on every occasion when we have had an industrial relations Bill before us, but I am afraid that the result has been the same. We have never got anywhere with it but let us hope that on this occasion tonight it may be easier.
The position is this. The Trade Union Act 1913 permits a trade union, after a ballot, to set up a political fund. Members of the union who desire not to pay into that fund may, by signing a form known as a "contract out", contract out from paying into the fund. But we know from experience and from the figures that are provided that the number of people who contract out from paying into the political fund is very small indeed. One accepts that the majority of members of the unions who pay into the fund contribute to it at the request of a branch officer or of their colleagues or mainly, perhaps, because they have no desire to be any different from their workmates. Many thousands of members who pay would certainly not do so if it were possible for them not to have to go through the procedure of applying for a contracting out form, which can be difficult—I put it no stronger than that. I would not use the word "intimidating".
What may be the difficulty, one may ask? The difficulty is the one I have described. It is never very easy in the company of colleagues to say, "I do not wish to pay into this political fund because all the money goes to one political party which I do not support nor yet vote for". The amendment on the Marshalled List simply amends the 1913 Act and alters the procedure so that those members of trade unions which have a political fund and who wish to pay into it, to make the contribution, can do so by signing another type of form, a contracting in form.
There is a view held in the official circles of many trade unions that contracting out is not a fad and is as democratic a system as contracting in. It is a view which we on these Benches share. How can it be possible, if one is more or less in one way or another forced to contribute to a political fund, to go through the procedure of contracting out? One can understand the view of the Official Opposition when they oppose it. We do not bite the hand that feeds us. That is precisely the position at the moment with the fund.
Nor, on the other hand, can we quite understand the Government's attitude, having read what was carefully—unquestionably carefully—said by the noble Earl when he replied previously. If I paraphrase him, he said that contracting out does not safeguard the position of those who have no desire to pay. With that we agree absolutely, but the Government seem to have taken no action to put that right other than to reach some sort of agreement, which we understand is called Statement of Guidance for the Trade Unions, presumably with the TUC—a system whereby all that the unions have given an undertaking to do is to make contracting out more clearly understood by their members.
What that may mean is difficult for us to appreciate. It can mean nothing; on the other hand it can mean a trade union official speaking to every one of his members and explaining, "If you don't want to pay, this is the way to stop it". We think that would be hardly likely to apply. So in fact the statement of guidance which the Government have apparently negotiated with the unions to prevent dealing with the question of contracting out is fairly worthless.
I should like, in speaking to this amendment, in absolute fairness to refer to a later amendment, No. 42, which stands in my name and those of my noble colleagues, because we would regard it as being absolutely fair—and I am aware that the official Opposition have a somewhat similar amendment down—to say that shareholders of companies which make a contribution to a political party are not always aware (in fact they may seldom be aware) of the political party to which that sum of money is being paid.
The Companies Act 1967 requires companies to state whether they make charitable or political contributions, but it does not require them to say to which political party they are made. We do know where the money goes that is paid into trade unions' political funds, and we feel it would be an absolute fairness to hold and wait for any adjustment made to the present political fund arrangements from contracting out to contracting in, until such time as there has been a change in the 1967 Companies Act. We appreciate that may take some time, but we think it is probably the only fair thing to do. So I beg to move this amendment and I would ask your Lordships on all sides of the House seriously to consider whether contracting in is not a more democratic and fairer method than contracting out. I beg to move.
Lord McCarthy: My Lords, the noble Lord, Lord Aylestone, says—and, with great respect, I have to say that I resent this—that we on this side of the House will oppose his amendment because nobody bites the hand that feeds him. This is not the basis on which we oppose this amendment. We oppose it on grounds of equity, on grounds of comparison and on grounds of the undertakings which the Government have given to the trade union movement.
The noble Lord, I am afraid, has got those undertakings rather wrong and I am afraid that I have to begin by repeating with approval what the noble Minister said on 25th June, at column 754 in Hansard. He was referring in particular to the very specific undertakings which were given to the TUC in

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their negotiations with the Secretary of State for Employment, and he said this:
"In the discussions which followed, the TUC indicated that they were willing to take remedial action and they put before the Government a draft statement which was subsequently endorsed by the General Council. My right honourable friend the Secretary of State for Employment told the TUC that, provided this statement was endorsed and issued to member unions with their committed support, then the Government would not make changes in this Bill to the law on contracting out".
Of course, that is not quite true, or rather the Government did not totally observe that undertaking because, as we said at Committee stage, the Government did introduce an amendment to effect contracting out, to make it much easier for workers to contract out; now all they have to do in situations where there is a check-off (which affects 75 per cent. of trade unionists) is to inform the employer that they want to contract out. Nevertheless, having made that concession, the Government are under an obligation to make no more. The noble Earl went on to say:
"But he [the Secretary of State] also made it very clear to the TUC that this undertaking was given only on the understanding that the TUC guidance proves to be effective. If it does not, then the Government reserve the right to introduce legislation to guarantee the free and effective right of choice. As the Secretary of State has also observed, the case for legislation in the event that the TUC's guidance proves ineffective will be immeasurably strengthened by the fact that they have first been offered a voluntary arrangement".
Then the Minister explained in some detail what the TUC's statement of guidance involves. He said that it
"is designed to ensure three things: that trade union members are aware of their rights; that no difficulties are placed in the way of those who want to exercise those rights; and that more information is available to union members about how political contributions are spent".
If the noble Lord, Lord Aylestone, wants to see the TUC's statement of guidance, it is available to him.
The noble Earl concluded:
"We should now give the TUC's guidance a chance to operate, and we must all hope that it will be effective. But if it is not, then as my right honourable friend has made clear, we reserve the right to bring forward further legislation, and if we do so then it will be on the basis of proven need".
We stand upon that. If that is what the Government say, if that has been accepted, then our first basis for opposing this amendment is that the Government must observe their undertakings. They must observe the promises which they have given to the Trades Union Congress in respect of contracting in and contracting out.
My second argument would be that, as is very rarely ever admitted by those who introduce proposals for changing the system of contracting in and contracting out, in this one field we have had ever since 1913 a proven system of remedying the grievances of those who say that they have been discriminated against, or have lost their job, or have lost their job rights, and so on, as a result of refusing to pay the political levy or as a result of trying to contract out of paying the political levy. This is one of the functions of the certification officer. It is one of the reasons why we for our part, on this side of the House, have tried to keep the certification officer out of the controversial parts of this Bill. Nevertheless, this proven system exists, and, as my noble friend Lord Underhill said when he spoke to this amendment at the Committee stage, we know, as a result of the activities of the certification officer,
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that there is no escalation or increase in the number of complaints from people about the operation of this system.
In 1980, the certification officer had 20 complaints, in 1981 he had 12 complaints, in 1982 he had 21 complaints and in 1983 he had 23 complaints, of which only a small minority dealt with the failure to refund, most of which were incorrect and dismissed because they were based on incorrect facts, and none of which required a formal hearing to put it right. I do not expect noble Lords on the other side of the House to accept it when I say this, but I say it all the same: these figures are the consequence, the result, the upshot of a ceaseless campaign which is put forward with considerable amounts of money and a great deal of effort by the Freedom Association and many related bodies, seeking to find to the best of their ability complaints to the certification officer about contracting in—and what do we find? We find that in 1980 there were 20, in 1981 there were 12, in 1982 there were 21 and in 1983 there were 23 and not even a single formal hearing. Those are the facts of the situation.
Of course, the situation has now been changed to the advantage of the person who wants to contract out, because, as a result of the Government in some measure going back on the undertaking which they gave to the Trades' Union Congress, as a result of an amendment which we have passed in this House, all a member needs to do now if he wants to contract out is to inform his employer. His employer is under a legal obligation to strike him off the check-off and to let him contract out without further ado, so that he can either drop out if he has not got a check-off, refuse to pay if he has not got a check-off, ask the employer to take him off if he has a check-off, and if he is in any difficulty go to the certification officer. All the evidence we have is that unions observe the rulings of the certification officer and that there are very few such rulings.
Finally, I come to the argument on comparison. As a result of this Bill there will now exist a unique degree of limitation on the exercise of what I prefer to call political rights among trade unions. As a result of this Bill, we shall have a comprehensive definition of what is to count as political purposes and as political objects from the point of view of restricting the extent to which trade unions can spend on political objects out of their general funds. These limitations are of a kind that do not exist in respect of employers or any other type of organisation in this country. We now have a unique degree of limitation.
We now have a virtually watertight, automatic way in which anyone who wishes to do so can contract out of the obligation to pay for those political purposes, and we have an undertaking from the Government to observe the application of that system under the TUC guidelines and wait to see what happens. In those circumstances, I do not see how any fair-minded person can support this amendment.
9.56 p.m.
Lord Boyd-Carpenter: With due respect, I do not think that the noble Lord, Lord McCarthy, can get away with the age-old argument that because there have been only a limited number of complaints in

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connection with contracting out, that means that there is very little cause for complaints. The essence of the situation (and I believe that many of us have come across this, and certainly those of us who served in another place came across it in our constituencies) is that one does encounter trade union members who are nervous of exercising their right to contract out because of the reaction of their workmates. If that is so, they will of course be equally nervous of making a complaint, because the fact of their making a complaint will quickly become known to their workmates. Although it is a nice superficial argument that there are only a limited number of complaints and so there cannot be much trouble, it is an argument which entirely ignores the realities of the sitation.
The situation is a strange one. The noble Lord, Lord McCarthy, will remember that there were published recently certain interesting statistics as to the proportion of members of particular unions who contributed to the political levy. Certain branches of the Transport and General Workers' Union showed a figure of more than 90 per cent. In at least one case the figure was 100 per cent. It really passes human belief that all that proportion of members of those particular unions were such enthusiastic supporters of the Labour Party that they desired to contribute. It is a very obvious inference that they paid because of the pressure upon them.
I confess that I am very unhappy about the system of contracting out. The situation is undoubtedly made difficult by the arrangements which my noble friend and the Government have made with the TUC. I certainly would not wish to press the Government to break that agreement, although I am extremely sorry that they ever made it. But the Government have made that arrangement and so they are morally bound by it—unless, as may well be the case, the TUC fails to deliver the goods.
It is because of that situation that I cannot, however regretfully, support the amendment of the noble Lord, Lord Aylestone; because it would place the Government in the position of being forced to break their word. Whatever noble Lords opposite may think of Her Majesty's Government, I am sure they would agree with me that honourable men do not break their word, and that the members of the Government are honourable men.
I will make only one further comment on the speech made by the noble Lord, Lord Aylestone, in respect of the habitual, facile and somewhat misleading analogy between company political contributions and the trade union levy. There is surely a very substantial difference. If a shareholder in a company objects to a political contribution, he can attend the company's annual general meeting and object. But, more practically, he can sell his shares and invest in another company which does not make the contributions of which he disapproves. That is a totally different position to a man working in a particular trade who has no alternative place to which he can go. Therefore, the analogy with companies—though it seems to me it is an obvious one and has a touch of superficial fairness about it—is really rather a bad one. Companies now have to report when they make political contributions, their shareholders can ask
1140
questions about it, or their shareholders can realise their shares and invest elsewhere. I should have thought that there is very little need, whatever is done regarding the political levy in the unions, for further legislation in respect of companies.
Coming back to the main point, if the matter were open and free I should have been very happy to support the noble Lord, Lord Aylestone, and I very much respect him for having brought this amendment forward, but I think the Government have made it rather difficult for some of us.
Lord McCarthy: My Lords, before the noble Lord sits down—because he did refer to what I said—may I ask him whether he appreciates that he has done it again? Does he appreciate what we have had to put up with throughout this Bill? He comes across men, you do get men, he knows these chaps—we are never told their names or the circumstances; we live in a fog of generality.
Lord Boyd-Carpenter: My Lords, I can only say that the noble Lord, Lord McCarthy, has done it again because I have heard him make that precise point at least twice before. I can only tell him as a matter of human experience that in the days when I was a member of another place I spoke to people in that position in my own constituency, and I have had discussions with them. The noble Lord must take it from me.
Baroness Seear: My Lords, the noble Lord rejects the analogy with the contributions made by companies. Of course, it is not a precise parallel, but why should the shareholder who strongly disapproves of money being paid to a political party by the company in which he invests, either have to put up with that or else sell the shares in a company which is profitable to him and in which he wishes to invest? It is surely not part of the purposes of a company—or I would not have thought it was a proper part of the purposes of a company—to support political parties as such. Quite apart from that argument, if, as the noble Lord, Lord Boyd-Carpenter, says, he disapproves (as we on these Benches disapprove of contacting out—we would prefer to see contracting in) surely it is obvious that to be even-handed with employers, even if the parallel is not precise, is going to have a far greater impression of fairness to people to whom you are appealing to make this change than if you say you are applying it only to the trade unions.
The noble Lord, Lord McCarthy, gave us the figures of not complaining as if this were the only fact on which to base the case against contracting out. It would be very much more interesting if he gave us the figures for what happens to contributions to the political levy during the period when contracting out was removed. That gives a much better idea of the genuine support, surely, for contributions to the political fund.
May I also make the point that I was surprised that the noble Lord, Lord Boyd-Carpenter, felt that this House should be bound by an arrangement which had been entered into between the Government and—
Lord Boyd-Carpenter: Would the noble Baroness allow me to intervene? I think she misunderstood me.

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I should never venture to suggest that the House would be bound. I merely said that I felt bound if it came to a vote.
Baroness Seear: My Lords, I accept the point which has been made by the noble Lord, Lord Boyd-Carpenter. But surely one has to make the point to the noble Lord, Lord McCarthy, as well as to the noble Lord, Lord Boyd-Carpenter, that the law of this land is not made by agreements between the Government and anybody else outside Parliament, but is made inside Parliament. Therefore, the whole basis of the argument of the noble Lord, Lord McCarthy, falls to the ground.
Lord McIntosh of Haringey: My Lords, perhaps I may refer back again to the noble Lord, Lord Boyd-Carpenter. All of us in this House—because the Cross-Benches are empty—have made a political commitment, and some of us receive opprobrium because of our commitment. Will the noble Lord consider (I know he is in no position to reply, but perhaps he will consider in his mind) whether the difficulties involved in contracting in may not be greater when the problem of opprobrium among workmates and among employers arises, and whether the personal difficulties which he described so graphically might not be greater with a system of contracting in?
10.6 p.m.
Lord Houghton of Sowerby: My Lords, had it not been for the Conservative Party we should already have had a change in the financing of political parties. It was a Conservative Party in Opposition that stood in the way. The Liberal Party and the Labour Party were both committed to state aid. Michael Foot, in his latest book, reiterates that. I presume that the Liberal/SDP Alliance is in favour of changing the basis of financing our political parties. It is the Government party, therefore, that stands in the way.
Quite honestly, all this talk about reforming the political levy and changing the form of contracting in or out, or the exclusive use of the funds of the political levy for the Labour Party, and so on, is all a waste of time because the changes that will have to be brought about will be quite different from that. It does not matter whether we have contracting in or contracting out, the political fund is still objectionable in modern terms. Moreover, the funds of one of the principal political parties are at stake. This was described recently as the drip-feed of the Labour Party, and that is what it is. Any change which may affect the finances of a major political party is not a trade union matter, it is a political matter.
I have pleaded before, and I do so again. Why can we not leave it where it is, for the moment at any rate, and see how it goes? I do not think this is a solution: it is purely a face-saver or a stop-gap, or whatever one likes to call it. It is not a solution but merely a tiding over to a later date when we shall have to consider this matter more fundamentally. We are the only political system in Europe that has this affiliation of the trade union movement to a social democratic party. Indeed, throughout the world in parliamentary democracies some form of state aid is available. Our present system
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is completely outdated, due to the obsession of the Conservative Party at the time, which it has discarded since, for the voluntary principle. We have been discussing the voluntary principle today all right! And we have been discussing the voluntary principle on other legislation recently. Really and truly, the Tories do not believe in the voluntary principle, except when we get a matter like this cropping up and they think that the Labour Party ought to do without the levy on the trade union members, and so on.
There is a great deal about the political levy that is objectionable which has not been disclosed so far, and I would not disclose it in front of the children. We must adjust ourselves to the more fundamental reform, cut the cackle on the political levy and consider what the real purpose of our political activities in our democracy is going to be.
Lord Mayhew: My Lords, I feel sure that I am speaking for a number of my noble friends in saying that if we had an adequate system of state finance, as the noble Lord, Lord Houghton, suggests, we would be far less inclined to keep the House up tonight on an amendment about contracting in rather than contracting out. As it is, although I am diffident about intervening in a debate on industrial relations, I have been rather provoked by the remarks of the noble Lord, Lord Underhill—
Noble Lords: Oh!
Lord Mayhew: I am sorry, my Lords, I meant the noble Lord, Lord McCarthy. Both are former colleagues of mine who, I am afraid, I have failed to identify. The point about the speech of the noble Lord, Lord McCarthy, as far as I was concerned, was that he stirred echoes. He reminded me that four or five decades ago I was myself using the same arguments in favour of contracting out. Indeed, I have to confess that in another place in 1947 I actually voted for contracting out. This is what diplomats call an explication de vote, about 37 years late.
I should like to try to indicate to the noble Lord, Lord McCarthy, why some of us feel that it might have been right to vote for contracting out four or five decades ago but are now completely convinced that it is wrong. This issue is not only an issue of principle, as my noble friend Lord Aylestone was saying; it is not only an issue of democracy and justice. It is an issue of money and power. There is no question about that. Contracting out as against contacting in increases the political power of the unions and the political power of the Labour Party; and that is what it is about.
Four or five decades ago sensible people could argue that it was in the interests of the great majority of the British people that the political power of the unions should be increased.
Lord Mottistone: My Lords, is the noble Lord not veering off to make a Second Reading speech? Is this not a particular amendment at Report stage rather than a debate on principle? Would it not be rather quicker if the noble Lord was not making a Second Reading speech?
Lord Mayhew: My Lords, my contributions in this House on the subject of industrial relations are extremely few and very brief indeed. What I am saying is very relevant to the amendment. I am arguing that contracting in would reduce the political power of the unions and the Labour Party, and I believe that to be right at this time. I believe that great changes have taken place in the past 40 years. Instead of greater political power for the unions being in the interests of most working-class families in this country, it is against their interests today. In those days, and when I was campaigning with the unions in the countryside before the war, a person could be sacked for joining a union. Now people can be sacked for not joining a union. The whole thing has changed completely. Arguments that were relevant and important 40 or 50 years ago, such as those used now by the noble Lord, Lord McCarthy, are no longer relevant, useful and valid today. Therefore I very strongly support this amendment.
The noble Lord, Lord Boyd-Carpenter, said that over 90 per cent. of the membership of some unions had contracted in and were payng the levy. He did not say that in some unions only 15 per cent. pay the levy. How does one account for that? The noble Lord, Lord McCarthy, has not accounted in any way for that extraordinary discrepancy between one union and another, over 90 per cent. paying the political levy in one and only 15 per cent. in another.
As my noble friend Lord Aylestone said, the time has surely come to change that system to enable people to decide whether they wish to join the Labour Party instead of asking them to decide whether they do not wish to do that. It is a simple issue. In the conditions today, where the power of the unions is not only too great but is known to be too great, and said to be too great by the great majority of trade union members, let alone the general public, it is time for a change.
The Earl of Gowrie: My Lords, whatever the differences between us, I think that all of us in Parliament are something of a family, and there is nothing that a family more enjoys than a nice squabble about money. I myself must hesitate to draw your Lordships' attention to my opinions on this issue. I am sure that then others would jump up and we could prolong this agreeable squabble through most of the night. I think that the fact of the matter is a simple one, but I cannot, I think, come to it without drawing the attention of the House to a genuine and unusual phenomenon of political change which has taken place. If one looks at these Committee and Report stages of the Bill, and if one wants to read the fiercest speeches against trade union practices and procedures on this and many other issues, one finds them coming not from my noble friends or myself but from previous Ministers in Labour Administrations. I simply draw that to the attention of your Lordships for what it is worth.
Lord Dean of Beswick: Would the noble Lord give way? I am grateful to him for giving way. He must be aware that two of those ex-Ministers have just spoken.
The Earl of Gowrie: That is precisely why I drew the House's attention to the point. But I had in mind not only the previous Chief Whip and the previous
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Defence Minister but also the noble Lord, Lord Harris of Greenwich, and the noble Lord, Lord Houghton, in another context and the noble Lord, Lord Marsh, earlier today. If the House does not draw its conclusions from this, I have no doubt that the country will.
The issue here is a simple one. Amendment No. 29 would replace the existing system of contracting out of paying the political levy by one of contracting in. The Government sympathise with the amendment and our feelings about it were admirably summed up in the words of my noble friend Lord Boyd-Carpenter. However, the issue is not that we are against unions supporting the Labour Party. It is my belief that the bulk of union members would probably wish to continue to support the Labour Party, and that would be an admirable thing from their point of view perhaps to do. The issue for us is the individual rights of individual members of unions. Both my noble friend and the noble Lord, Lord Aylestone, have made a powerful case that the contracting-in system would protect those individual rights better. That is why the Government have very considerable sympathy for the amendment. We share the view that contracting out has not always worked as it should. That is why we promised in our election manifesto to discuss the problems with the TUC. As a result of those discussions, the TUC issued guidance to its affiliated unions designed to ensure that all union members were aware of their rights and able to exercise them freely and effectively.
I want to lay great emphasis on this manifesto commitment. We did not make a commitment to make this change. We made a commitment to discuss it with the TUC and as a result of the discussions we have undertaken to hold our hand on legislation, to change the present contracting-out system while reserving the right to legislate in future should the guidance which they have issued not prove to be effective.
We are not in business to clobber the unions or the Labour Party in this respect—though in many other respects we are precisely in business to clobber the Labour Party. What we are trying to do is to see that unions treat their own members fairly, and if they do not treat their own members fairly, as they have undertaken to do, we shall be watching and we shall be waiting with legislation which would, I imagine, in many respects be very similar to the kind proposed by the noble Lord, Lord Aylestone, tonight. But meanwhile it would be wrong in our view to damn the unions out of hand and, as I say, we shall be watching and waiting.
Lord Aylestone: My Lords, at this time of night I do not intend to reply to the question that has been put to me about why some of us left the Labour Party. There is a case to be put there that can perhaps be discussed not here but outside on some other occasion. All I want to say in closing the discussion on this amendment is that our real concern is not with the people who pay the political levy to whomever it may go. We are concerned about the people who pay the political levy to parties to which they would prefer not to contribute. Under those circumstances I think the House should test the position by calling a Division.
10.19 p.m.
On Question, Whether the said amendment (No. 29) shall be agreed to?
Their Lordships divided: Contents, 25; Not-Contents, 54.

DIVISION NO. 4

CONTENTS

Airedale, L.

Lloyd of Kilgerran, L.

Ampthill, L.

Mayhew, L.

Attlee, E.

Ogmore, L.

Aylestone, L. [Teller.]

Robson of Kiddington, B.

Beaumont of Whitley, L.

Rochester, L. [Teller.]

Chandos, V.

Saltoun, Ly.

Diamond, L.

Seear, B.

Foot, L.

Simon, V.

Gladwyn, L.

Tordoff, L.

Grey, E.

Wigoder, L.

Grimond, L.

Wilson of Langside, L.

Hooson, L.

Winchilsea and Nottingham, L.

Kilmarnock, L.

NOT-CONTENTS

Airey of Abingdon, B.

Hatch of Lusby, L.

Avon, E.

Hornsby-Smith, B.

Bauer, L.

Irving of Dartford, L.

Belhaven and Stenton, L.

Jeger, B.

Bellwin, L.

John-Mackie, L.

Belstead, L.

Kissin, L.

Birk, B.

Long, V.

Boardman, L.

Longford, E.

Boyd-Carpenter, L.

Lucas of Chilworth, L.

Brougham and Vaux, L.

McAlpine of West Green, L.

Caithness, E.

McCarthy, L.

Cameron of Lochbroom, L.

McIntosh of Haringey, L.

Carmichael of Kelvingrove, L.

Maude of Stratford-upon-Avon, L.

Carnegy of Lour, B.

Cockfield, L.

Mottistone, L.

Collison, L.

Murton of Lindisfarne, L.

Craigton, L.

Polwarth, L.

Dean of Beswick, L.

Ponsonby of Shulbrede, L.

Denham, L. [Teller.]

Ross of Marnock, L.

Eden of Winton, L.

Shannon, E.

Elliot of Harwood, B.

Skelmersdale, L.

Elton, L.

Stewart of Alvechurch, B.

Elwyn-Jones, L.

Stewart of Fulham, L.

Ennals, L.

Stoddart of Swindon, L.

Gallacher, L.

Swinton, E. [Teller.]

Glanusk, L.

Underhill, L.

Gowrie, E.

Wedderburn of Charlton, L.

Graham of Edmonton, L.

Resolved in the negative and amendment disagreed to accordingly.
10.27 p.m.
Clause 10 [Ballots: supplementary provisions]:
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 30:
Page 14, line 6, at end insert—
("(1A) After subsection (1) of section 4 of the 1913 Act there shall be inserted the following subsections—").
The noble Earl said: My Lords, this is purely a drafting amendment. It simply makes clear that the subsections to which it refers are to be inserted into Section 4 of the 1913 Act and are not to be taken to be subsections of Clause 10 of the Bill. It will remove the confusion which caused the printers to number incorrectly the sub-paragraphs in an amendment to Clause 10, which was introduced during Committee stage. The amendment is designed to remove any cause of confusion when the Bill is read in future, as it will be very frequently. I beg to move.
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 31:
Page 14, line 15, leave out from ("practicable") to end of line 39 and insert ("be enabled to do so without incurring any direct cost to himself.
(1D) So far as is reasonably practicable, every person who is entitled to vote in the ballot must—

(a) have made available to him—

(i) immediately before, immediately after, or during, his working hours; and

(ii) at his place of work or at a place which is more convenient for him;

or be supplied with, a voting paper; and

(b) be given—

(i) a convenient opportunity to vote by post (but no other opportunity to vote);

(ii) an opportunity to vote immediately before, immediately after, or during, his working hours and at his place of work or at a place which is more convenient for him (but no other opportunity); or

(iii) as alternatives, both of those opportunities (but no other opportunity).").

The noble Earl said: My Lords, this is another drafting amendment. I beg to move.
On Question, amendment agreed to.
Clause 14 [Political objects]:
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 32:
Page 20, line 4, leave out ("or").
The noble Earl said: My Lords, with the leave of the House, I should like to speak to Amendments Nos. 32, 33, 34, 35 and 38 together. Why should this not be acceptable?
Amendment No. 33: Page 20, line 5, after ("candidate") insert ("or the holding of any ballot by the union in connection with any election to a political office").
Amendment No. 34: Page 20, line 10, leave out ("at which business of a political party is transacted") and insert ("the main purpose of which is the transaction of business in connection with a political party").
Amendment No. 35: Page 20, line 14, leave out from ("advertisement") to ("not") in line 17 and insert ("the main purpose of which is to persuade people to vote for a political party or candidate or to persuade them").
Amendment No. 38: Clause 16, page 22, line 38, after ("ballot") insert ("other than the reference in section 14(1))").
Lord Wedderburn of Charlton: My Lords, will the noble Earl give way?
The Earl of Gowrie: Yes, My Lords.
Lord Wedderburn of Charlton: My Lords, my noble friends and I had understood that Amendments Nos. 34 and 35 were to be taken separately. They involve a Government concession, which naturally we rejoice in. The other amendments are amendments that we would wish to oppose.
The Earl of Gowrie: My Lords, my understanding was that I would speak to Amendments Nos. 32, 33, 34 and 35 together, together with Amendment No. 38, which is purely consequential to Nos. 32 and 33. All these amendments are concerned with the revised definition of political objects in Clause 14. May I not speak to them and then noble Lords can pick and choose which of my remarks they wish to oppose? I am sure that they will find something if they look hard enough. Amendments Nos. 34 and 35 have been tabled in response to concerns expressed by noble Lords opposite during the Committee stage—in fact, I do not think that they will able to find anything, however hard they try!

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Amendment No. 34 relates to paragraph (e) of the new definition which deals with political meetings and conferences. During the Committee stage, the noble Lord, Lord Dean of Beswick, argued that the present formulation would catch union expenditure on meetings where any of the items on the agenda, however inconsequential, were the business of a political party. The noble Lord accepted that the costs of a meeting called with the main purpose, for example, of promoting or supporting a candidate for a senior position in the Labour Party should come from the political fund: but he was concerned that a branch meeting which is mainly concerned with ordinary union business might also have to be financed from the political fund just because one of the subjects discussed was an issue such as, to use the noble Lord's example, the question of who should be nominated to fill a vacant position in a constituency Labour Party.
We have looked at this paragraph again, as my noble friend Lord Gray of Contin agreed to do, and Amendment No. 34 is designed to make clear that only meetings which are held primarily to transact party political business need be paid for from political funds. In re-examining the paragraph, however, we realised that the phrase "business of a political party" could be unduly restrictive since it might be held not to cover meetings held to decide such questions as which union members should be included on panels of parliamentary candidates, how to cast union votes at a party conference and so on. This is why the revised formulation refers to meetings:
"the main purpose of which is the transaction of business in connection with a political party".
Amendment No. 35 deals with a concern expressed by noble Lords opposite relating to paragraph (f) of the new definition, which covers the various different forms of political communications. The noble Lord, Lord Underhill, suggested that paragraph (f) as presently formulated might be held to cover communications aimed against particular aspects of Government policy as part of an industrial campaign by a union, because—to quote the noble Lord:
"It could be held that this activity is endeavouring to persuade persons not to support the Government but to support another political party".—[Official Report, 25/6/84; col. 771.]
It is not, as Government spokesmen have made clear on a number of occasions, our intention to place new restrictions on trade unions' ability to conduct political—as opposed to party political—campaigns. There is a dividing line to be drawn, and the present formulation,
"taken as a whole … seeks to persuade"
was intended to reflect the line currently contained in the 1913 Act definition. Although not spelt out explicitly, it already carries—in our opinion—a test of predominant purpose. On one view, therefore, we would have been right to say to noble Lords opposite that we had considered their concerns and concluded that they were unfounded. However, whatever else may be the case, the debates on paragraph (f) in this House and in another place have shown that its present formulation can lead to considerable confusion and offer scope for widely differing interpretations. We entirely concur with a view expressed by the noble Lord, Lord Underhill, during Committee stage that the position ought to be as clear
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as possible. We have therefore tabled Amendment No. 35 with a view to greater clarity. I hope noble Lords opposite will welcome the amendment in the spirit in which it is offered.
The trouble sometimes with looking again at things is that other matters then may catch the eye. Amendments Nos. 32, 33 and 38 are the product of this process. It has always been our intention that expenditure incurred in holding ballots within trade unions to decide how the union's block vote should be cast in, let us say Labour Party leadership elections, should be reflected in the revised definition. I am sure that even noble Lords opposite would accept that such expenditure is clearly party political and should be made from political funds. We had taken the view that expenditure of this sort was covered in the phrase "in connection with the … candidature", but on re-examination we were not so sure. So Amendments Nos. 32, 33 and 38 are simply designed to make matters clear and certain. I hope that what I have had to say will have convinced your Lordships that this series of amendments will make desirable improvements to the revised political objects definition, and that they will receive the support of the House. I beg to move.
Lord Wedderburn of Charlton: My Lords, I was under a misapprehension. We had thought that amendments Nos 32, 33 and 38 were to be taken separately, and I addressed my remarks to them. My noble friend Lord Dean, who is perhaps better at rejoicing than I am, will deal with the happier amendments, Nos. 34 and 35, although I am sorry to be deprived of an opportunity, not least tonight, to rejoice.
The noble Earl is right that the Bill will be read many times because it is so difficult to understand, and, therefore, we read this amendment very carefully. The noble Earl has repeated the Government's own self-imposed guideline—which, indeed, they failed to keep (which is the reason for making changes in Amendments Nos. 34 and 35, with which we shall deal)—not to extend controls on trade unions' political funds beyond the 1913 territory. It would be our contention that the new amendment in fact transgresses that principle, which has been put forward many times by the noble Earl's right honourable and honourable friends in another place, by the noble Viscount, Lord Long, on 25th June at col. 767 of Hansard, and now by the noble Earl himself tonight.
The reason for that is as follows. The noble Earl says that this involves expenditure in relation to block votes. Yet the amendment is concerned with any expenditure on:
"the holding of any ballot by the union in connection with any election to a political office".
Of course, we know by now that "political office" includes an office within a party, and we have said before that we think that that generalisation goes beyond the 1913 Act in certain ways.
However, there are two ways of putting the question. First, the noble Earl said that they thought that the sort of things they had in mind were not already covered by expenditure which the Bill already covers: namely, expenditure:
"in connection with … the candidature of any person",

1149
the word "candidature" of course, having the extended meaning which goes with the definitions of "candidate" and "political office". He did not quite explain why; it was as though they were just tidying up a loose end. He mentioned block votes, but obviously they are block votes:
"in connection with any election to a political office".
The other way of putting the point is concerned with the words "in connection with". Indeed, the Government have had trouble with the words "in connection with" before: if I am not wrong, they had to take them out of another paragraph at a previous stage. What other kind of ballot can there be "in connection with"—other than the one which the Bill already covers in connection with candidature?
The phrase "in connection with" is a very wide phrase indeed; it is not "related to". Indeed, the noble Earl will remember the changes in trade dispute definition which the Government themselves made in 1982, which specifically took out the words "in connection with", which they said was too wide a formula, and inserted matters which were related "wholly or mainly to" certain issues.
Perhaps I may take the example of candidates in a local Labour Party. Indeed, let us remember that here it may not be a local Labour Party. Let us take something which could be tested without anyone in this House having a direct interest. Let there be a candidate for office within the Ecology Party. Let us assume that the union knows that many of its members are interested; that it has discussed the matter with those persons; but that there is an issue as to whether a nuclear power station should be sited in the area.
Let us suppose that the union, which organises many workers in this field, takes a decision on policy (for the purposes of the argument it does not matter whether the decision is for or against) relating to industrial matters, to social matters—to the totality of the issue. If it has persons who are going along, either by themselves or it could be as delegates—it might be that they have some association with this local organisation—who will take sides on the election of a person to office within the party, that would be covered by the clause. Yet the union has decided a matter of policy which is surely within the same logic as the amendment at which my noble friend Lord Dean is about to rejoice—namely, that the main purpose for the union in its deliberations is an industrial purpose. It would have taken this decision whether or not there had been any such party, because it had to resolve union policy on the matter at whatever level, be it regional or local.
This paragraph lacks the main purpose test. It is another example of the Government going too far without the main purpose test. But examples of that sort, given the wide meaning of the words "in connection with", surely go beyond what the noble Earl wishes to reach. If he is saying that he is not sure that the present Bill would catch a block vote decision, and a ballot behind a block vote decision, on, say, the treasurership or leadership of the Labour Party, I am not sure why the present Bill does not do that, but if the Government wish to firm that up then suitable
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words could be found. These are not those words. They go more widely, and on our Benches we would ask the Government to reconsider this amendment carefully.
10.41 p.m.
Lord Dean of Beswick: My Lords, I am grateful to my noble friend Lord Wedderburn for the way he has spoken to these amendments and the way he introduced the two with which I shall be briefly dealing. Earlier in the proceedings today the noble Lord, Lord Houghton, made the comment that there was a lack of grass-root trade union opinion and views in this House. For my sins, perhaps I can claim still to be the nearest to that point of view and to bring in that knowledge, having been a shop steward until I became a Member of another place just ten years ago.
I am grateful to the Minister, because I got the impression on the night that I was speaking to these amendments that I was being listened to sympathetically by the noble Earl and the noble Lord, Lord Gray of Contin, who dealt with them in Committee. I certainly do not ascribe the success of the Government bringing forward these proposals to any powers of eloquence of mine, when I realise the overwhelming points in the Bill which have been dealt with more than adequately by my two noble friends Lord McCarthy and Lord Wedderburn.
In some respects it was almost a case of my being given the short straw of the one which probably had a chance of being successful. I was able to show that the main functions of trade unions when they meet are not to discuss political items. Often the item that becomes political is not on the agenda when they start the meeting. Most branch meetings of trade unions commence with the minutes of the last meeting, matters arising, and correspondence. Most of the political matters that trade unions deal with at branch meetings come out of correspondence. Often it is a political item which is dealt with in a couple of minutes. It arises from the correspondence, and sometimes there is not that much debate about it. That is why I referred to the question of nominations for such things as municipal panels for local authority elections, and parliamentary panels which take place once after each general election.
I was beginning to lose hope that the Government would move in any direction towards giving the trade union movement a sympathetic hearing. I was disappointed last week when I moved an amendment on the Health and Social Security Bill designed to retain for trade unions their historic right of nominating people to the various appeal tribunals and panels. Even that amendment fell on deaf ears. However, I am grateful to the Minister for these. I think they will be well received. They are probably far more important amendments on the fundamentals of trade unions and their political rights and the way they run their business. On this occasion the Government have listened sympathetically. On behalf of my noble friends and myself and the movement as a whole, I welcome the amendments in the spirit in which they have been moved, and I express my appreciation to the noble Earl.
Lord Houghton of Sowerby: My Lords, may I make a comment? One of the beauties of English law is the number of people who immediately devise ways and means of getting round it. Any trade union leader of any experience could write a correspondence course on how to evade the conditions of the Trade Union Act 1913 and they will be doing the same here.
I remember calling a meeting of my own executive committee in 1945 for a reasonable amount of normal business, but we said "When the meeting is concluded we will all stay behind, if you please, because one of our assistant general secretaries (who was just coming back from the Navy) thinks he would like to stand as a parliamentary candidate at the general election". So we concluded our official union business and then we all gathered together to see how we could promote the candidature of Mr. James Callaghan. That is how a Prime Minister was made. We all put our heads together about how to raise the money and what circularisation we would do for more money and so on. No trouble at all; no problem, and there will not be any problem with many of the activities that are intertwined with union work. One can always bring a union meeting to an end.
Then there is another device which at public meetings I used to find others indulging in greatly: saying to the meeting, "I am not allowed to tell you to vote Labour at the general election, so I cannot tell you to do that". This kind of evasion goes on, but nobody takes any notice of that. If it were all about voting Labour, or for any other party, it would be caught. But there is enough genius for evasion around in the land today for laws of this kind to offer very few difficulties for those who want to get round them.
There are some things that would have to be faced, such as the financing of candidatures. The basic things in the 1913 Act are there and I think they are, in the main, sufficiently specific to keep irregularities in check. As for the rest, I think it will all come out in the wash.
The Earl of Gowrie: My Lords, the noble Lord, Lord Wedderburn, criticised me and the noble Lord, Lord Dean of Beswick, was grateful to me. This is the classic softening-up technique of the tough cop who makes way for the nice one who praises you and will offer tea and a cigarette. I suppose that I am very easily disarmed. On the points raised by the noble Lord, Lord Wedderburn, it was simply because of the uncertainty of the phrase "in connection with the … candidature" that the Government felt that it was necessary to spell out that the balance on how to cast union votes at elections to political office was covered. The aim was simply to make matters clearer and perhaps to avoid the difficulty that that admirable assistant secretary once found himself in.
When the noble Lord, Lord Houghton, was talking I was reminded of the only recently-ended advertising campaign that we have seen round the streets along the lines that, "I am not allowed to tell you about Winston cigarettes so here is a picture of a tart leaning against a bar". Your Lordships will remember that that is how they tried to get round the situation.
The Government accept that expenditure on balance to determine how to cast a union's block vote
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in general elections is not covered by the 1913 Act, but it could not reasonably be claimed that the omission was anything but anomalous. What could be more party political than that? What possible justification could there be for using general funds for this perfectly respectable purpose? As I said during the Committee stage, the Lord Chancellor in 1913 readily accepted that the definition might not catch everything that ought to be caught. It is hardly surprising that this aspect was overlooked, but it is an aspect that could involve significant amounts of expenditure and we believe that it would be wrong for us to overlook it now.
I am grateful for the words of the noble Lord, Lord Dean of Beswick, and I shall relate them to my own soft cop in the more accommodating person of the noble Lord, Lord Gray of Contin. I hope that the noble Lord, Lord Wedderburn, will not press his amendments.
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 33:
[Printed earlier: col. 1446.]
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendments Nos. 34 and 35:
[Printed earlier: col. 1446.]
The noble Earl said: My Lords, I have spoken to these amendments, as to Amendments Nos. 32 and 33. With the leave of the House, I would move Amendments Nos. 34 and 35 en bloc.
On Question, amendments agreed to.
Clause 15 [Collection of union dues by employers]:
Lord Rochester Lord Rochester moved Amendments Nos. 36:
Page 21, leave out lines 19 to 22 and insert ("wishes to contribute to that fund, then (and not otherwise)").
The noble Lord said: My Lords, I should like to deal with the next two amendments together, if I may.
Amendment No. 37: Page 21, line 24, leave out ("no") and insert ("the appropriate").
They relate to the so-called check-off system under which employers collect trade union subscriptions from the pay of their employees on the union's behalf. Under this system, even where a union member has contracted out of the political levy, he is unable to require his employer to stop deducting the levy from his pay. By inserting Clause 15 into the Bill at the Committee stage, the Government have now ensured that when a trade union member certifies in writing to his employer that he is exempt from the obligation to pay the levy or has notified his union that he objects to paying it, the employer may not deduct the relevant amount from the individual's pay.
My noble friends and I have already made it plain that we are opposed to the contracting-out system but, following earlier discussions on Amendment No. 29, we now have to recognise that we are stuck with it, at least for the time being. We see no reason, however, why that system should extend to the arrangements under which an employer deducts the political levy from an employee's pay.
As a matter of principle, surely, such deductions should be made only if, as the case of other deductions, the individual has indicated positively to his employer that that is his wish. As far as this amendment is concerned, there can be no agreement—or, at least, I take it that there has been no agreement—between the Government and the TUC; and, so far as I know, the matter did not feature in the Conservative Party manifesto at the last election. I trust, therefore, that on this occasion, by accepting these amendments, the Government will ensure that the more positive approach to this matter suggested in the amendments is adopted for the future. I beg to move.
Lord McCarthy: My Lords, I have only two points to raise as a result of what the noble Lord has said. First, this is covered by the understanding which the Government has with the TUC because the understanding with the TUC is that the Government will not change the present contracting-out arrangements. It was on that basis that we complained about the Government's amendment which has now been passed and which says that an employer can cancel the check-off on the initiative of the individual worker. This whole question of dealing with the contracting out and contracting in position was covered by the agreement.
Secondly, I do not see any particular reason why we should make a specific reduction in the trade union levy in the case of there being a check-off. If there is a check-off, it has to be consented to. It cannot be introduced without the agreement of the worker. The worker has to agree to the check-off, and if he does not want to agree to it, there is no check-off. At the same time, he can or need not agree that he wants the subscription deducted in respect of political funds. It is not a question of making a distinction between one way of collecting the contribution and another, and it was covered by the agreement with the TUC.
The Earl of Gowrie: My Lords, these amendments would have been the natural corollary to Amendment No. 29, which we debated earlier. Had it been decided to change the political levy from contracting out to contracting in, it would have been entirely logical to consider what adjustments were needed in the provision dealing with the collection of the levy by means of the employer check-off. In the absence of such a change, the amendments take on a different character. They would, as the noble Lord, Lord McCarthy, has implied, have the effect of introducing contracting in by the back door, so to speak for the majority of trade union members—probably about 70 per cent.—who pay their union subscriptions through the check-off.
I hope therefore that since we have gone over this ground and have taken it to a Division today, the noble Lord will not press the amendment, which would in a sense provide a back door solution to what he was unable to obtain by the front door. That said, the general aims of the noble Lord and his party are sympathetic to the Government. I repeat what I said, that we shall be examining the unions' commitment very carefully and we will legislate along the lines that the noble Lord would like if in this respect they step out of line.
Lord Rochester: My Lords, I am disappointed with the reply of the noble Earl. As my noble Leader, Lady Seear—I do not think that I have had occasion to call her that before in the House—said in the case of the debate on contracting in, the Liberal and Social Democrat Alliance cannot be held responsible for the agreement which, it seems, the Government have reached with the TUC covering this matter as well as the matter of contracting in. However, at this time of night, I see no point in taking the matter further, and therefore with great reluctance, on what we see as a matter of principle, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 37 not moved.]
Clause 16 [Interpretation]:
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 38:
Page 22, line 38, after ("ballot") insert (" (other than the reference in section 14(1))")
The noble Earl said: My Lords, this amendment is consequential. I beg to move.
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 39:
Before Clause 17, insert the following new clause:
("Amendment of ss. 1 and 2 of Employment Act 1980. 1980 c. 42.
.—(1) Section 1 of the Employment Act 1980 (payments in respect of secret ballots) shall have effect as amended by subsections (2) to (4) below.
(2) In subsection (3) (ballots to which the section applies)—

(a) in paragraph (b) (election provided for by union's rules) at the end there shall be inserted the words "or in relation to which section 2 of the Trade Union Act 1984 is required to be satisfied"; and

(b) after paragraph (e) there shall be inserted—

f) obtaining a decision on a resolution for the purposes of section 3 of the Trade Union Act 1913".
(3) After subsection (3) there shall be inserted the following subsection—
"(3A) Notwithstanding anything in subsections (2) and (3) above, this section does not apply to any ballot held by a trade union, if—

(a) the purpose of any question to be voted upon is the obtaining of a decision of the kind mentioned in paragraph (f) of subsection (3); and

(b) the ballot is held at a time when there is no resolution in force in respect of that union under section 3 of the Act of 1913."

(4) In subsection (5) (ballots to be conducted so as to secure that those voting may do so in secret) the word "may", where it last occurs, shall be omitted.
(5) In section 2(2)(b) of the Act of 1980 (ballots to which section 2 applies to be conducted so as to secure that those voting may do so in secret), the word "may" shall be omitted.").
The noble Earl said: My Lords, I hope that I can speak to this amendment very briefly. As your Lordships will be aware, Section 1 of the Employment Act 1980 and subsequent regulations established the funding of a ballots scheme under which certain postal ballots held by trade unions qualified for public funding. The new clause ensures that all ballots required under the various parts of the Bill, to the extent that they would not otherwise have qualified, will similarly qualify for funding so long as they are carried out by post. I am sure your Lordships will agree that it is entirely right to provide further encouragement towards postal balloting. I beg to move.
Lord McCarthy: My Lords, there is a sense in which one welcomes this amendment. It is the sense that, since the Government are imposing upon trade unions the necessity to have periodic ballots in the case of political levies, and since they are imposing upon them a preference whereby they are going to end up, as a result of the provisions of the Bill, probably, having postal ballots—and, indeed, most ballots for political funds are carried out by postal ballots—one ought, I suppose, to be pleased that the Government are making the money available, and in that sense I welcome the amendment. But the fact is that there is something strange about this amendment—something, one might almost say, curiously mean about this amendment.
The money is being given, yes, if a trade union is to have a ballot to maintain its political fund, but not if a trade union is to have a ballot to establish its political fund, because the consequences of subsection (3)(b) are that that will not be allowed. Subsection (3)(b) says that if,
"the ballot is held at a time when there is no resolution in force in respect of that union under section 3 of the Act of 1913",
then there can be no application for money. Within the logic of the scheme, I want to ask the noble Earl: what is the justification for making this exclusion? Why is it that if the Transport and General Workers' Union (which has been affiliated to the Labour Party since its establishment) has to run a ballot—as, indeed, it has to run a ballot next year—it can, if it wishes, go and get money if it can satisfy the certification officer under the terms of the 1980 Act; but if NALGO, which recently had a ballot for the establishment of a political levy, which it lost, wished to have another ballot next year or the year after in order to see whether it could establish the decision for a political levy, even if it did it by postal ballot, it could not have the money? What is the logic of it?
Take the case of a union like the ASTMS. It is generally said that that is one union which is going to find it extraordinarily difficult to cover the very large number of members who contract out—something like 90 per cent. of the union. If the ASTMS finds it extraordinarily difficult to get a ballot in favour of a political levy the first time round, it can ask for money and, because it has a levy now, it can get the money; but if it loses, the next time it comes back it cannot get the money. What is the logic? What is the sense? Why be so mean when, for once, you are being rather logical? Why on earth say that if you have not get the resolution you cannot apply for money under the 1980 Act?
The Earl of Gowrie: I think the answer is a simple one, and it is not a question of being a trade-off between logic and generosity. The ballots in this Bill are a new statutory requirement, and, as my honourable friend the Parliamentary Under-Secretary, Mr. Clark, said in Standing Committee in another place:
"We would be making provisions for public funding for a review of ballots, this being entirely reasonable because they are a new statutory requirement".
There is, of course, no limitation on the number and frequency of ballots which unions may hold in the hope—perhaps the vain hope—of setting up a political
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fund. It was never the Government's intention to offer a blank cheque for this purpose, and it would seem to me to be an abuse of taxpayers' money if we were to do so.
Lord McCarthy: My Lords, before the noble Earl sits down, would he not agree, then, that if that was the intention of the Government the best way they could have done it would have been to introduce some qualification to say that you can get the money only once every five years or once every three years, but not to say that you cannot get the money at all?
The Earl of Gowrie: My Lords, I do not see that that would do anything other than establish the principle on a more limited basis than the noble Lord would like, but which I would say is unjustified. As I argued in my original statement, we are trying to deal with a new statutory requirement here, we are trying to meet the costs of it, we are trying to encourage a move towards personal ballots and all are covered by the provision of funds. But to give the kind of open-ended commitment for all kinds of political activity on central taxpayers' money would seem to me to be misplaced.
On Question, amendment agreed to.
Clause 18 [Short title, commencement and extent]:
11.6 p.m.
Lord McCarthy Lord McCarthy moved Amendment No. 40:
Page 23, line 11, leave out ("two months") and insert ("one year").
The noble Lord said: My Lords, we return now to the question of when Part II of the Bill is to come into effect. The House will, I hope, remember that we had an amendment at the Committee stage in which we tried to extend the period of Part II of the Bill, because we said that the Government had, reasonably enough, accepted that there should be delay in the introduction of Part I and that conditions to make effective Part I of the Bill applied equally—indeed, to more effect—to Part II of the Bill.
In other words, it will be more difficult, I would argue, for trade unions to come into conformity with Part II of the Bill dealing with strike ballots, than for them to come into conformity with Part I of the Bill dealing with elections. We said that we would return to this on Report, partly because it seemed possible to me that the Government were unduly constricted by the brief which they had, since it appeared from the reply we had from the noble Earl in Committee, that the Government accepted to some extent the position that we were putting forward, because the noble Earl said at col. 873 of the Official Report for 26th June:
"the Government recognise that it would be unrealistic to expect unions to make changes overnight. That, in a nutshell, is why, subject to any further considerations which may be occasioned by our response to the amendment of my noble friend Lord Beloff, it is our intention to introduce Part I"—
not Part II—
"by a commencement order, so that it takes effect a little over a year after Royal Assent."

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That is where we get our 12 months from in the amendment before the House. The noble Earl went on:
"That will provide the necessary time for unions to bring their arrangements into line with what Part I of the Bill requires."
So in terms of Part I of the Bill, in terms of the problems of unions changing their rule books, he met the point and accepted the point. Yet he went on to say,
"I do not see, however, that these concerns apply in any real sense to Part II of the Bill, because Part II faces trade unions with what is essentially a very simple proposition. If they intend to organise industrial action and wish to avoid liability under the civil law for doing so, they will need to hold a proper ballot first. The practical implications of holding a ballot will vary considerably, according to the scale and other circumstances of the industrial action which they may be contemplating."
We sought to argue—and, maybe, we did not argue it properly—that, in fact, a union cannot carry out this essentially simple proposition of organising industrial action under the terms of this Bill, unless it has rules to govern what it does; that all unions have some rules in their rule books to govern industrial action and that those rules will have to be changed, so that members of the union who may not be aware of the detailed provisions of this Bill—there are such people—going about their daily business, reading their rule book and doing what they know they must do because it is in the rule book, will, by that very process, be carrying out the law. That, presumably, is the argument that underlies the acceptance by the noble Earl of the fact that he needs 12 months to carry out Part I of the Bill. We are saying that if rules need to be changed to carry out Part II of the Bill (and rules do need to be changed) then one needs to have 12 months to do that.
As I said on that occasion, and as the Undy and Martin study showed, trade union rule books will need more radical revision if they are to conform with Part II of the Bill. Trade unions must compile accurate registers, and the Bill has placed some new impositions on the unions today in respect of compiling a register. But the register which the unions will have to compile in relation to strikes will be much more complex.
Very often it will have to be a multi-union register because there will be a multi-union collective bargaining unit. A bargaining unit is constantly changing. The membership of the bargaining unit is constantly changing. One union as large, for example, as the Transport and General Workers' Union may have hundreds and hundreds of different bargaining units which will straddle branches, regions, trade groups, and so on. The Government have placed an imposition upon the unions, although at this moment we are not cavilling at that. They have placed the imposition on the unions that if they are to have a lawful, official strike then they must hold a ballot under the provisions of this Bill.
We say that that will take a little time. In answering this point at an earlier stage of the Bill, the noble Earl made the most remarkable comment, and I wonder whether he actually got it from the brief. The noble Earl seemed to be saying that the way out for trade unions was to fragment the bargaining structure. He said at one stage, although he did not use these words, "Well, it will be all right where the bargaining unit is on a small scale". He said:
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"Where this is on a small scale, there should be no difficulty in setting up the necessary arrangements in a short space of time".—[Official Report, 26/6/84; col. 873.]
I agree that that might be so if the bargaining unit is small enough; if it consists of only five members of a union—five dinner ladies, as it might be—then it would be quite easy to bring them into a postal ballot. But suppose one is bargaining with all the dockers, or all the miners, or all the engineers employed by British Leyland; they may be in membership of seven different unions. Or suppose one is bargaining with construction workers all over the country in four different unions. Are the Government seriously saying that implied in their Bill is a desire to fragment bargaining structures; to make it impossible for unions to run national strikes because they will not be able to ballot on national bargaining as a result of the Government introducing the Bill in two or three months?
What the noble Earl said on that occasion, I suggest with great respect, was either something of a daft answer which he did not really mean, or we must see it as a further attempt to make matters difficult for trade union leaders; to make official, large-scale national industrial action difficult if not impossible. If that really is the intention of the Government they ought to say so; if not, they should accept this amendment. I beg to move.
The Earl of Gowrie: My Lords, I dealt during the debate on Amendments Nos. 17 and 18 with the suggestion by the noble Lord, Lord McCarthy, that trade unions will have practical difficulties in complying with Part II of the Bill within two months of Royal Assent. I believe that the House was convinced by what I said earlier; that the balloting provisions could be complied with, if trade unions so chose, without inordinate difficulty.
What other arguments does the noble Lord have for deferring the commencement date? He has raised again the fact that the commencement of Part II will be sooner than for Part I of the Bill. But there were good reasons for allowing a longer timescale for commencement of the provisions on elections. In most of our major unions the existing electoral systems fall far short of the basic principles which Part I of this Bill establishes and, while there can be no reasoned objection to the requirements which Part I lays down, the Government do of course accept that for many unions major changes will need to be made to their existing systems. So it would be unrealistic to expect the unions to make such changes overnight.
The noble Lord, Lord McCarthy, made much during the Committee stage of the suggestion that trade unions would need time to enable changes to be made to their rule books. This, indeed, was repeated by the noble Lord, Lord Wedderburn, earlier this evening. That argument would only wash, surely if trade unions' rules relating to strikes were substantially incompatible with what is in the Bill—as some are in relation to elections. But this is simply not the case. That being so, I do not quite understand the use that the noble Lord was making in this context of something I did or did not say at an earlier stage. As a matter of courtesy, I will simply undertake to reexamine what I said.

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Less than 25 per cent. of the trade unions examined by Messrs. Undy and Martin, whom the noble Lord quoted, have any form of mandatory requirement for ballots before strikes. Where trade unions' rules do require ballots, or alternatively give their executives discretion to hold them, I am not aware of any which are incompatible with what is in the Bill. And to the extent that their rules require the actual strike decision to be taken by one body or another, as many in fact do, there is nothing in the Bill to change that position. The Bill says nothing about who must take the decision to authorise a strike call: it simply tells those who make that decision what conditions must be satisfied if the trade unions are to comply with the Bill. Trade unions will certainly need to take steps to ensure that the necessary practical arrangements are made, as we discussed earlier. But I would be very surprised indeed if any of their rule books actually prohibited them from doing what is necessary, or if they failed to invest their executive bodies with sufficient authority to take such steps.
In any case, the crux of the matter here is—just as I said in reply to the noble Lord, Lord McCarthy, during Committee stage—that no one is telling trade unions that they must organise strikes. The position is quite different from that relating to elections, which of course they are required to hold under their rule books. As I concluded before, if trade unions cannot—in the modern parlance—"get their act together" in time, then they must simply not call the strike until they have done so. If they choose to go ahead with the strike and deprive themselves of their immunity, that is entirely a matter for them—though it is of course also a matter for which they will be answerable to their members if the funds of the union suffer as a result. I hope that what I have said will have convinced your Lordships that there are no grounds in this particular context for enabling trade unions to act less promptly than other organisations which have to respond—as we all do—to legislation. I hope, therefore, that the noble Lord will agree to withdraw his amendment.
Lord McCarthy: Before the noble Earl sits down, would he not admit, since he has quoted Undy and Martin, that what Undy and Martin show is that you can divide trade union rule books into three groups? There are those which allow, in effect, the executive to decide when there will be a strike; there are those which allow certain delegate conferences to do it; and there are those which consult the members, often by ballot. But, under the provisions of this Bill, everybody has to do it by ballot; everybody, indeed, has to have a mandatory ballot. In order to have a mandatory ballot, Undy and Martin say that in something like 80 per cent. of unions—if not more—you would have to change the rules. This is the argument! Does not the noble Lord the Minister accept the argument?
The Earl of Gowrie: My Lords, I see the logic of what the noble Lord is saying, but I do not think he is admitting the logic of what I have been saying. Here are a number of unions which have ballots. Where trade union rules require ballots or give a discretion for them to be held, surely there is no situation in Undy and Martin or elsewhere which is incompatible with
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the provisions of the Bill. We are simply drawing the provisions of the Bill sufficiently widely to require ballots.
On Question, amendment negatived.
The Deputy Speaker (Lord Airedale): My Lords, in calling Amendment No. 41 I have to point out that, if this were agreed to, I would not be able to call Amendment No. 42.
Clause 18 [Short title, commencement and extent]:
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 41:
Page 23, line 12, leave out from ("shall") to end of line and insert ("not come into force until such day as the Secretary of State may by order made by statutory instrument appoint; but the Secretary of State shall not appoint a day for that purpose until:

(a) the publication of a report by a committee which shall be appointed by him within one month of the passing of this Act, consisting of such persons as he may select, for the purpose of inquiring into the law and practice of expenditure on political objects (within the meaning of the 1913 Act) by trade unions, companies and other bodies and associations; or

(b) the expiry of a period of two years beginning with the day on which this Act is passed,

whichever is the earlier.")
The noble Lord said: My Lords, we are coming near to the end of a hard Report stage. It occurred to me that the noble Earl has, I think I am right in saying, dealt unaided with this Report stage. I was about to remark that the Government have, like Pharaoh, made our lives bitter with hard bondage; but that would be unfair because his service, too, has been hard service in the field. However, it is perhaps time for his heart, therefore, to mellow and look with favour upon a very modest proposal.
In Committee we advanced an argument on what might be called the broad issue; that is, the issue of political funds viewed as a social phenomenon is not one that involves trade unions alone. Indeed, it is only in this country that it is seen in the way that it is, as involving trade unions alone—I mean, of course, in regard to regulation and not disclosure, which is quite a different issue. It is because of the Osborne case, as we all know when we reflect quietly at home, and without that case it would have been dealt with very differently. That decision of 1910 has given us a most unhappy bequest.
The amendment asks that the part of the Bill that deals with political objects in very new ways—as we see it, imposing very severe restrictions on trade union rights to engage in political activity and discussion—should not come into force until either a period of two years has run, which would perhaps take the noble Earl and the Government to the point where they were still in office so long as the economy remained in good shape, or until the publication, if before that date, of a report upon what I call the broad issue.
The broad issue, I apprehend, is really agreed between ourselves and noble Lords on the Liberal Benches in the sense that their amendment shows that they, too, see the issue as a very serious question relating to how political parties should be financed. Alternatively, if one wants to go a little more narrowly

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than that for immediate issues, there is the question of, first, what are the facts?—who is giving what to political parties should be brought into the light of day more clearly than it is—and secondly, what is the law about it and how should we deal with this very difficult matter?
The noble Lord, Lord Houghton, engaged in a much more wide-ranging discussion and gave his views in Committee but I apprehend that he, too, agrees that there is this broad issue. I say to noble Lords with whom we disagree on one or two points that on this matter it seems to me that there is not much point in discussing whether we are talking about contracting in or contracting out. We shall disagree on that, no doubt. But that there is a broad issue relating to financing of political parties by trade unions, companies, insurance companies, banks, cooperatives, or whatever they may be, is surely common ground.
On many occasions the Government have answered that point by saying that companies are not like trade unions. Of course, one can say that companies are not like co-operatives and that banks are not like insurance companies, and there is a sense in which that is true. But it will not do to sweep the broad issue under the carpet by saying that a shareholder can sell his shares. One might answer by asking why should an investor be so constrained when it is not in the law that he should be? Indeed, it not only affects the shareholder but also affects consumers and employees, in respect of whom duties are now owed by directors.
In Committee on 25th June the noble Earl, at column 761 of Hansard, suggested of companies,
"They do not have powers in the same way over the lives of ordinary people",
as trade unions do. I say that that surely is unacceptable in the purpose of this broad issue. Companies have vast powers over the lives of ordinary people.
The noble Earl also said that the tendency to concentration was covered by anti-trust and antimonopoly legislation. That is something with which my noble friends and I would probably disagree in terms of its efficacy; but let the issue be considered in that context in the highest concentrated economy of Western Europe. Millions of pounds are given to the Conservative Party, and very large sums are given to other organisations, which will undoubtedly now fall within the new definition of political objects in this Bill, as it amends the 1913 measure.
For example, the documents of Aims of Industry state that it is campaigning for free enterprise against nationalisation, and that it has the support of 1,000 companies and associations which in turn represent 30,000 companies. It is also stated in its literature that it advises companies that donations to Aims of Industry are not political donations. The Economic League stands in very much the same place. As for British United Industrialists, since it deregistered as a company in 1967, information about that organisation is shrouded in mystery.
Of course there is a party interest in this matter. I say from a party point of view that we have a right to know more about some of these donations. But I also say
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from a much broader point of view that it cannot be right to allow this festering sore of the Osborne judgment—because that is what it is—to go on as the basis of the discussion for all time.
Therefore, the Government, even at this very late stage, might show a great deal of social wisdom if they said: "Very well. We believe that our Bill is right. It must come into force at a date which normally would be before the next general election, but we agree that it will be postponed"—after all, the amount going to the Labour Party, or indeed to any other party, in the period will not be all that great; on the evidence that we have, the amount going to the Conservative Party would probably be greater—"and there will be this inquiry. We will set up a small body of broad character, which will ask for evidence quickly, will establish some facts, will show what the law is, what its development is and how our proposals fit into that".
The Government have re-opened the settlement of 1913, and I stress that. No doubt the Act of 1913 has defects. Noble Lords on the Liberal Benches will say that one of its defects is contracting in and contracting out. But to re-open the social compact at a time when consensus in our society is—heaven knows!—fragmented enough is a very serious step to take. Therefore, as an act of wisdom in the late evening of the Report stage, as the Minister draws near to the end of it, we have some hope that the noble Earl, although of course he cannot at this stage accept the amendment, will at any rate agree to consider with his right honourable and honourable friends the issue which the amendment places before the Government. I beg to move.
11.28 p.m.
Lord Rochester: My Lords, my noble friend Lord Aylestone has already spoken to the principle underlying this amendment in moving Amendment No. 29. In our view there needs to be a much more even-handed approach as between contributions made by individuals to trade unions and those made by companies to a political party. We know very well that there are differences between the two cases, particularly in the scale of funding and in the degree of regulation of companies that already exist. It is simply that we consider that there is an urgent need to find ways to finance political parties that are different from and fairer than those that now exist.
Once again noble Lords on the Labour Benches have contrived at a late stage to have their amendment placed on the Marshalled List just before one that we had tabled earlier. But since, on this occasion, unlike the last, there is no great difference of principle involved between us, and since at this late stage of Report my noble friend and I feel nothing but warmth towards the noble Lords on the Labour Front Bench, and indeed to the noble Earl, who has borne the heat and burden of the day for the Government, we are very ready to give our support to this amendment.
The Earl of Gowrie: My Lords, the noble Lord, Lord Wedderburn, said in his usual beguiling way that he was bringing forward at the end of the evening a modest proposal. Unfortunately for him, I am an Irishman, and I am an admirer of that great high Tory

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writer, albeit one beloved by Michael Foot, Jonathan Swift. So I know enough to be suspicious of modest proposals. They may urge one to eat one's young, and I do not propose to eat my own fledgling Bill this evening!
I congratulate the noble Lord, as so often, for the ingenuity Which he continues to display in devising reasons for deferring the commencement of this part of the Bill. Although comparison between companies and trade unions has arisen again in his speech, I shall be only fairly brief in my references to it because it is pretty well trodden ground in the context of the debate so far, and possibly also because of the remarks liable to be made later by the noble Lord, Lord Aylestone, and the noble Lord, Lord Rochester, or, indeed, which have been implied by the noble Lord, Lord Rochester, on behalf of the noble Lord, Lord Aylestone.
It will not have escaped your Lordships' notice that the Bill which we are considering is the Trade Union Bill. That is what it is about: trade unions and the process of democracy within unions. Whatever the merits or demerits of the law governing political donations by other bodies, and whatever the arguments for and against the funding of political parties by other means, I do not think these have a place in a Bill about trade unions.
The review ballots which are provided for under Part III of the Bill could only possibly have wider implications if large numbers of trade unions were at present handing out their members' money for party political purposes against the wishes of the majority of those members. If the members want those payments to be made, then noble Lords opposite have nothing to fear. If the members want their representatives to play the part of power brokers in the processes of the party opposite, then there is nothing in this Bill to deny them that, in my view, rather dubious benefit. However, if the members do not want these things, what possible justification can there be for postponing their right to make their wishes known to those who purport to represent their interests? What is there in this Bill to which trade unions can object? If members of trade unions such as ASTMS, where only 10 per cent. or so contribute to the political fund, are genuinely content with the present situation, then that contentment will presumably be reflected in the result of their ballot.
Finally I should like to address myself to a recurring complaint made by noble Lords opposite: that other voluntary organisations, such as women's institutes, cricket clubs and the like, are not subject to the same controls on political spending as those applying to trade unions. I will not dwell on the question of how much money such organisations contribute to political parties, nor on the issue—though it seems to me to be a crucial one—of how voluntary being a member of a trade union actually is. But the fact is that party political involvement is a factor which colours the whole way in which a trade union represents its members.
Parliament therefore decided in 1913 that all the members of a trade union should be consulted before it spent their money on party political purposes. That principle is no longer upheld in practice because of the passage of time. Trade union members want the right to be consulted and the Government wish to give them
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that right as soon as this can be practically arranged. So, beguiling as the arguments of noble Lords opposite may seem, their intentions must be seen for what they are—to put off for as long as possible the evil day when a ballot must be held. I urge your Lordships not be seduced by so modest a proposal, and indeed to reject it.
Lord Wedderburn of Charlton: My Lords, the noble Earl continues to be hard on this matter. I would be suprised if Jonathan Swift would have approved of what one might call his defence by way of semantic gambit. In a trade union Bill, companies have no place. It is rather like saying that in an employment Bill, limitations on the right to strike have no place, or that bodies should not be considered in relation to the title of the Bill. The title and scope of the Bill are the Government's choice. And, of course, for eight months they forgot to put employers' associations in the Long Title. Then they realised that it was also concerned with employers' associations. All these are semantic moves around a board. I understand that the noble Earl has to make them.
There are, surely, three major points. The noble Earl says first that the Bill will allow members of the union to express their view if they want it. There is no Act that says that shareholders must have a statutory right to express their view if they want it. But even in regard to trades unions themselves, the noble Earl, with the greatest respect, has never understood a very simple point. He has never produced a rule book that prohibits someone moving resolutions to reconsider the political fund. The fact that it has not happened much may say something about the overwhelming understanding in trade unions. But there is that fact, and it is silly to say that the Bill introduces the right for the members for the first time, or to imply that it does so, because it just is not so.
Secondly, it is not just a question of members having extended rights under statute. The trade union objects, as defined, have been redefined. We say that if they have been redefined, the position of other organisations should be concerned. The mere fact that you have defined the title of your Bill so as to protect one party against another, be it a political party or a party with a small "p", cannot be a defence to the logic of an argument. Thirdly, it is a signal fact that trade unions are regulated by law strictly (and in future will be more tightly so) as no other association in our land is. I did not mention cricket clubs or women's institues. But if the noble Earl wants to mention them, then we can take them as well. It is, however, in relation to companies and other organisations such as British United Industrialists that I say that consideration should at least be given—by a Government that has more than a short term perspective of limiting trade union rights in regard to the broadest sort of social controversy—to a broad issue committee that would try to produce a better basis.
This issue will not go away—the issue of which bodies give money to political parties, on what basis and under which regulation of law. The fact that it has come up under the Trade Union Bill is adventitious. It came up under the Companies Bill, and if we have another Companies Bill, as we probably shall, we will make sure that it comes up there. It will be no good

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saying that you must not do something that equates companies with trade unions because the Bill is only about companies. It is a silly way to legislate. It is time for a sensible approach to this matter. No doubt one day we shall end up considering again support for political parties from other sources. But that seems a long way off. What we should do is get ourselves into a position where we can at least see how bodies support political parties today.
If we fail to do that, this point of division will grow, and the Government need not think that it will go away. The final remarks of the noble Earl reflect a very simple fact. Trade unions are a part of the labour movement. They are not likely to stop being so whatever happens to Bills of this kind. On that basis, I have no alternative—I am unhappy to have to take this course—but to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 42 not moved.]
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 43:
Page 23, line 13, after ("II") insert ("and section 15 of this Act").
The noble Earl said: My Lords, this is a technical amendment relating to Clause 15, which was introduced during Committee stage and which deals with the employer check-off. Your Lordships will be aware that the Bill is not intended to impinge upon the jurisdiction applying in Northern Ireland, and this amendment would ensure that no statutory obligations attach to employers in Northern Ireland as a result of Clause 15 of the Bill. On this basis, I beg to move.
Lord Wedderburn of Charlton: My Lords, I wish to say a few words about this amendment. I listened carefully to what the noble Earl said. It introduces a quite major factor. He has not really explained, at least to our satisfaction, why Clause 15 should be included under this provision. It seems to us that it might well be a matter to which we would want to advert on Report stage, in the context of Part III as a whole.
The Earl of Gowrie: My Lords, we are just finishing the Report stage, so the noble Lord's last point is a little confusing. Perhaps he meant Third Reading.
Lord Wedderburn of Charlton: Yes, my Lords.
The Earl of Gowrie: My Lords, I am not quite clear if the noble Lord wants me to explain to the House why the Bill does not extend to Northern Ireland. Is that right?
Lord Wedderburn of Charlton: My Lords, I should like the noble Earl to say a word about it.
The Earl of Gowrie: My Lords, I am very happy to do that. This simply follows the precedents of our earlier employment legislation. It is the practice of the Secretary of State for Northern Ireland to consult with the industrial partners in the province before deciding whether to extend the provisions there. This has not yet been done in the case of the 1982 Act.
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 44:
In the Title, line 4, leave out ("and") and insert ("to require trade unions to compile and maintain registers of members' names and addresses;").
The noble Earl said: My Lords, if I may, I should like to speak to Amendments Nos. 44 and 45 together.
Amendment No. 45: Line 6, at end insert ("; and to amend sections 1 and 2 of the Employment Act 1980.").
These are the final amendments of a long and very interesting Report stage. Not even the excitements of Mr. Dikko, the proposals in the bus White Paper or the 19 supplementary questions of the noble Lord, Lord Underhill, were allowed to detain us for very long from consideration on Report. I am most grateful for the assiduity that the whole House has shown and the interest noble Lords have demonstrated in the Bill.
These are the final amendments before us, and therefore I can be extremely brief. Both amendments amend the Long Title of the Bill and are consequential upon Government amendments already carried. I beg to move.
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 45:
[Printed above.]
On Question, amendment agreed to.

Portsea Harbour Company Bill
The Queen's consent signified and Bill reported from the Unopposed Bill Committee with amendments.
House adjourned at a quarter before midnight.

  ADJUDICATIONS: ADVANCE DISCLOSURE OF EVIDENCE TO PRISONERS
  ADJUDICATIONS: ADVANCE DISCLOSURE OF EVIDENCE TO PRISONERS
  FALKLAND ISLANDS: HOSPITAL FIRE REPORT
  FALKLAND ISLANDS: HOSPITAL FIRE REPORT
  ATHEROSCLEROSIS: RESEARCH
  ATHEROSCLEROSIS: RESEARCH
  CHILDREN IN MENTAL HANDICAP HOSPITALS
  CHILDREN IN MENTAL HANDICAP HOSPITALS