Sitting of 16 July 1984

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

    Llandough Hospital
    Mr. Ron Daviesasked the Secretary of State for Wales if he will make a statement on the future of the Llandough hospital.
    Mr. Colemanasked the Secretary of State for Wales what discussions he has had concerning the proposed closures at the Llandough hospital.
    The Parliamentary Under-Secretary of State for Wales (Mr. Wyn Roberts): Far from being closed or contracted, Llandough hospital is being expanded at a total cost of about £7 million. Its future is therefore assured.
    I understand that proposals have been made by a sub-committee of the Medical Research Council that the pneumoconiosis unit should be closed. This proposal will be considered by the council in October, and while it is primarily a matter for it and my right hon. Friend the Secretary of State for Education and Science, I have asked to be kept informed.
    Mr. Davies: I am grateful for that reply and the note of hope that the Under-Secretary included in his answer. Does he accept that if the pneumoconiosis unit closes that
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    will be an appalling blow to the medical and social services in Wales and to the morale of the Welsh people? Will he undertake to ensure that the Secretary of State will fight at Cabinet level for the maintenance of the unit, and if he is unsuccessful in that fight, as he is responsible for both the health and education services, will he guarantee to make available additional resources to secure the future of the unit?
    Mr. Roberts: I agree with the hon. Gentleman that the unit has a long and distinguished history and that it has done valuable work. I remind him that it is the responsibility of the Medical Research Council, which set up a sub-committee to examine the workings of the unit. My right hon. Friend's responsibility is limited in the sense that the land and the buildings for the unit are leased from him, but the Medical Research Council is the responsibility of my right hon. Friend the Secretary of State for Education and Science.
    Mr. Coleman: Is the Under-Secretary aware that as long ago as 1943 Llandough hospital became associated with the treatment of pneumonconiotic miners? Is he aware that as a result of that the Government of the day brought pneumonconiosis into the schedule of compensatable illnesses and diseases? Was he consulted by the Medical Research Council when it made this proposal, and if so, what did he say? What will he do to prevent the council from closing the unit, which is vital to the south Wales mining community?
    Mr. Roberts: No decision has yet been taken to close the unit. We have a proposal from a sub-committee of the Medical Research Council, which is to be considered by the council in October. The hon. Gentleman may be interested to know that there are 11 beds associated with the unit's work, and the South Glamorgan authority has made it clear that those beds will continue in use.
    Sir Raymond Gower: Is it not a fact that some years ago strong undertakings were given to develop the hospital, which until recently was in my constituency, as a district general hospital with greatly enhanced facilities? Will my hon. Friend take that into account'' Are the undertakings being fulfilled, since the hospital is

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    admirably sited to cater for the hospital needs of the people in the Vale of Glamorgan and the western parts of the city of Cardiff?
    Mr. Roberts: I am happy to assure my hon. Friend that we are planning for the development of a 90-bed obstetric unit with associated work, some of which is already in progress, to extend the catering, pharmaceutical, X-ray and residential facilities of the hospital at a cost of more than £7 million. It will probably be the biggest development in south Glamorgan since the building of the University hospital of Wales. The obstetric unit is intended to replace that at St. David's.
    Mr. D. E. Thomas: Does the Minister accept that he cannot get away so easily from his Department's responsibility for science and research policy in Wales? Why, if the Medical Research Council and the science board are not prepared to fund the essential pneumoconiosis research in the present unit, does not his Department fund the research on the customer-contractor principle, which it has failed lamentably to do over the years?
    Mr. Roberts: The hon. Gentleman must agree that the progress and direction of research is a matter for the Medical Research Council, not for me or my right hon. Friend. As to the financing of the unit, he will know from the exchange between my right hon. Friend the Prime Minister and the right hon. Member for Islwyn (Mr. Kinnock) on 28 June about the funding of the Medical Research Council that in 1979–80 it received £54·4 million, and in the current year it has received £117·2 million.
    Mr. Barry Jones: Is not this much-loved hospital, which provides a vital service to our mining communities, worthy today of a ministerial vote of confidence? Will the Minister undertake to tell the Medical Research Council that hon. Members do not wish the unit to be closed?
    Mr. Roberts: The hon. Gentleman was clearly not listening to what I said. I talked about a £7 million development of the hospital. I have also told the House about the pneumoconiosis unit. The proposal advanced by the sub-committee is still at an early stage, in that it will be considered by the Medical Research Council in October.

    Transport Infrastructure
    Dr. Marekasked the Secretary of State for Wales what plans he now has to issue a consultation paper on transport infrastructure.
    The Minister of State, Welsh Office (Mr. John Stradling Thomas): I assume that the hon. Member is referring to the consultation paper on local choice in public transport. This was issued on 12 July, and a copy has been sent to the hon. Gentleman.
    Dr. Marek: The Minister will realise that public discussion about the railway infrastructure in Wales is a good thing. Does he also realise that for the Green Paper to be given proper consideration in the Principality it must be seen that proper financial considerations are laid down for any changes? Will he assure the House and Welsh local authorities that that will be the case, and that any changes made as a result of the Green Paper and the consultation
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    period will be more than changes for the sake of possible cuts being seen to be made by local authorities rather than by central Government?
    Mr. Stradling Thomas: The hon. Gentleman raises a very important point, and I can give him a broad assurance in response. We shall welcome views on the detailed financial arrangements. It is a genuine consultation paper. In determining the overall grant required we must take into account the existing public service obligation grant for that service. It is intended that the effect of those suggestions should be financially neutral, so that no change in the effective level of Exchequer support is implied by them.
    Mr. Alex Carlile: People throughout mid-Wales are anxious about the future of the Shrewsbury to Aberystwyth railway line and of the Cambrian coast line. Will the Minister assure the House that those two lines are regarded as an essential part of the infrastructure of transport in Wales and that neither line will be closed or made the subject of what is euphemistically called bus-for-rail substitution?
    Mr. Stradling Thomas: There are at present no proposals for the closure—
    Mr. Carlile: That is not answering the question.
    Mr. Stradling Thomas: With respect, I shall answer the question in my way. There are no proposals for the closure of any lines. Of course, I cannot give an assurance into the long-distance future. Change takes place inevitably, but I can assure the House that there are no proposals to close any railway lines in Wales.
    Mr. Hooson: Is my hon. Friend aware that there will be much satisfaction in Wales at the transfer of greater control of local transport problems to county councils?
    Mr. Stradling Thomas: I am sure that my hon. Friend is right. As I have already stressed, it is a consultation paper and we wish to discuss with the local authorities greater opportunities for local democratic choice.
    Mr. Roy Hughes: Does the Minister appreciate that the Government's proposals as a whole are a recipe for anarchy on our roads and will result in higher fares and reduced services? Is this not yet another example of the Government's privatisation measures, where the vultures are on the sidelines ready to feed from the choice pickings of public industry? Will not the old, the very young, the poor and the sick suffer yet again?
    Mr. Stradling Thomas: No, I do not agree with the hon. Gentleman's conclusions. Experience shows that where greater choice and competition are introduced the public get better service, not worse.

    Local Authorities (Capital Expenditure)
    Mr. Gareth Wardellasked the Secretary of State for Wales if he will undertake not to cut local authorities' capital spending during the year 1984–85.
    The Secretary of State for Wales (Mr. Nicholas Edwards): Discussions on local authority capital spending in 1984–85 are continuing within the framework of the Welsh Consultative Council on Local Government Finance.
    Mr. Wardell: I thank the Secretary of State for that reply, but I would be grateful if he will now say whether

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    he will oppose any Cabinet move to impose any capital moratorium on local authorities in Wales, where it is blatantly obvious that the construction industry is already suffering from the imposition of VAT on building alterations and the phasing out of industrial building allowances? Cuts in capital expenditure would constitute a fatal blow for thousands of employees in the building industry—the largest industry in Wales.
    Mr. Edwards: I have already indicated to the Welsh Grand Committee my concern that, far from being cut, capital programmes are running ahead of plans. We are discussing with local authorities the best way of dealing with this situation.
    Mr. Best: Does my right hon. Friend accept that local authority expenditure is part of total identifiable public expenditure and that, therefore, the Government have a duty to control it? Does he also accept that, more than anything else, local authorities need continuity and an understanding of what will happen in the future, particularly in the housing sector, in so far as that can be ascertained?
    Mr. Edwards: I understand the need for continuity. As my hon. Friend said, that is an important part of our total public spending programme, and we have spelt out our long-term plans for that programme. We must consider seriously substantial overspending in any particular area.
    Mr. Anderson: Housing has been the easy target for Government cuts since 1979. Will the Secretary of State now assure the House that the housing crisis will not be worsened by yet again forcing housing to bear the main burden of the current proposed cuts?
    Mr. Edwards: We are talking about a possible overspend on housing expenditure programmes and, therefore, whether it is necessary to restrain those programmes from running ahead of spending. We are not talking about cutting them from the levels that have been spelt out previously.
    Mr. Wigley: Is the Secretary of State not aware that building and construction firms throughout Wales, particularly in Gwynedd, from where I have received representations, are petrified that we are about to see yet another cycle of stop-go-stop, thus making it impossible to plan ahead in terms of investment and employment? Will the Secretary of State now think seriously about how to get a more coherent form of planning capital expenditure with local authorities so that we can avoid these problems?
    Mr. Edwards: The builders must remember that any problem at present arises from the fact that we are running ahead of our plans, and that they have work on their books which they are carrying through to the end of this financial year. They may be concerned about not getting further additional work on top, but they have substantial work under existing spending programmes.
    Mr. Barry Jones: From the hesitant, fencing replies that we have heard, we fear the worst. Will the right hon. Gentleman commit himself to fighting in the Cabinet against any imposition of cuts?
    Mr. Edwards: I have made it perfectly clear that I am concerned about the fact that we are running ahead of our spending targets, and I am discussing with local government the best way of dealing with that.

    Coal Industry Dispute
    Mr. Gristasked the Secretary of State for Wales what is his latest assessment of the effects of the miners' strike on the economy of South Wales.
    Mr. Ray Powellasked the Secretary of State for Wales what discussions he has had with the chairman of the National Coal Board regarding the effect of the miners' strike on the industrial and commercial economy in Wales.
    Mr. Raffanasked the Secretary of State for Wales if, when he next meets the chairman of the Welsh Confederation of British Industry, if he will discuss the effects of the miners' strike on the Welsh economy.
    Sir Raymond Gowerasked the Secretary of State for Wales what is his latest assessment of the effects of the coal strike on the Welsh economy and on industrial production in the Principality; and if he will make a statement.
    Mr. Bestasked the Secretary of State for Wales what is his latest assessment of the effect of the coal miners' strike on the steel industry in Wales.
    Mr. Nicholas Edwards: While reports indicate that there is no widespread impact on Welsh industry generally and the British Steel Corporation is continuing to take steps to ensure that steel production is maintained, those in employment in Wales will recognise the threat to jobs that a continuation of this damaging strike entails.
    Mr. Powell: On a point of order, Mr. Speaker.
    Mr. Speaker: I shall take it now, exceptionally.
    Mr. Powell: I tabled question No. 7, and I object to it being couple with question No. 4 when it is not directly related to it. My question asks the Secretary of State if he has met the chairman of the National Coal Board.
    Mr. Speaker: The hon. Gentleman knows that I have no responsibility for the way in which Ministers group questions. It is not a matter for me.
    Mr. Powell: Further to that point or order—
    Mr. Speaker: Order. I have nothing more to say.
    Mr. Powell rose—
    Mr. SpeakerOrder. It is not a matter for me. It is a matter for the Minister.
    Mr. Grist: Does my right hon. Friend agree that it is apparent that the only people likely to gain from this senseless strike are oil tanker crews and nuclear power constructors, and that the worst losers will be those engaged in the coal and coal-associated industries?
    Mr. Edwards: All these questions are about the effect of the strike on the economy of Wales. I agree that the strike can do nothing but damage to jobs in other industries and people not directly affected by it. It is deplorable that a strike involving about 200,000 people in two industries should have such threatening consequences for so very many more in a host of other industries.
    Mr. Powell: I realise now why the Secretary of State wanted to group my question with these others. It is clear that he has not yet met the chairman of the National Coal Board. For five months now I have been asking him when he intends to meet the chairman. I wonder whether he was

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    invited to the senior Cabinet meetings today to discuss the strike. The impact of the strike on Wales, especially when it comes to 120 or 130 lorries travelling from Port Talbot to Llanwern and the danger that they cause in the middle lane of the motorway when other motorists are trying to leave the motorway is such that it is time that the Secretary of State took some action, went to the chairman of the National Coal Board and convinced him that the miners have won the strike. Why do they not get round a table and settle it, because there is only one matter in dispute?
    Mr. Edwards: It is quite clear that the miners have not won the strike. The Government are determined that violence and intimidation shall not triumph. I can tell the hon. Gentleman that I was present at the meetings this morning and that one of the matters discussed was that the windows of 32 of the lorries carrying coal from Port Talbot this morning were smashed by strikers. I hope that the hon. Gentleman will join me in condemning that disgraceful violence.
    Mr. Raffan: Does my right hon. Friend agree that those miners on strike must realise that it is their industrial action that has driven up interest rates, that it is their industrial action that is damaging Welsh industry and that it is they who are destroying other Welsh people's jobs? Does he also agree that, by kow-towing to Scargill, Opposition Members are aiding and abetting this destruction of jobs and that they, too, are job wreckers?
    Mr. Edwards: I agree entirely, and I hope that Opposition Members will heed the warnings of the chairman of the British Steel Corporation, who said that this strike threatened the whole recovery to which BSC employees had contributed so much.
    Sir Raymond Gower: In view of the splendid achievements at Llanwern and Port Talbot, would it not be a great tragedy if what had been achieved was damaged by the long continuance of this strike? Is not the future progress of the steel works in South Wales of infinite importance to the coal mining industry in South Wales?
    Mr. Edwards: My hon. Friend is quite correct. The chairman of the BSC pointed out that there were 20 United Kingdom pits which could produce the qualities of coking coal needed in steel production. As he said, it seems an unbelievable policy deliberately to try to drive steel out of business when that would only cut the demand for coal permanently, leading to even greater damage to job prospects in the coal industry than the strike has caused already.
    Mr. Best: Does my right hon. Friend agree that it is unforgivable that the Leader of the Opposition, a Welsh Member, should show such little concern for the great achievements of those in the steel industry at Port Talbot and Llanwern and should instead align himself with a demagogue, by losing his self control, ripping up a speech and showing greater concern for the job wreckers than for those who have achieved so much in the steel industry?
    Mr. Ron Davies: On a point of order, Mr. Speaker.
    Mr. Speaker: Order. I suspect that I know what the hon. Member for Caerphilly (Mr. Davies) is going to say and I should like to say it first. We do not want speeches at Question Time.
    Mr. Ron Davies: I was not going to say that.
    Mr. Edwards: I agree that it is deplorable that the Leader of the Opposition should apparently associate himself with a political strike which must be gravely damaging to jobs in industry generally.
    Mr. Foot: Does not the right hon. Gentleman understand that the Leader of the Opposition—together with every sensible person in this country—wants to see the dispute brought to an end under the proper procedures agreed under "Plan for Coal"? Does the right hon. Gentleman understand that his Government's breach of those procedures has led to the current serious situation? Before he rushes in with a reply, will he recall that he gave me some misleading replies three weeks ago and had to send me a letter of apology, which I received this morning? Apparently, we must go on educating him. We want a proper, negotiated settlement of the dispute, and the right hon. Gentleman ought to be doing something at least to try to achieve that.
    Mr. Edwards: I confirm that I wrote to the right hon. Gentleman and apologised for the fact that when I referred to Labour Governments I had forgotten that his career as a Minister had been so remarkably brief. I had not appreciated how much he wished to dissociate himself from the record of Labour Governments since he was elected to the House.
    The right hon. Gentleman knows perfectly well that all Labour Governments have recognised that pits had to be closed if they could not produce an economic and beneficial product. That is what the strike is about: the determination of the NCB to run a sensible, profitable and economic industry and not have it destroyed for political reasons.
    Mr. Coleman: If the Secretary of State and Conservative Members are so concerned about the health of the steel industry, why do they not put pressure on the Prime Minister to settle the coal dispute?
    Mr. Edwards: I must make it clear that no one in the Government will put any pressure on the management of the NCB that would allow decisions about the future of that industry and the viability of pits to be dictated by a political demagogue or anyone else.
    Mr. Ron Davies: If, as a result of the damage being done to the Welsh economy by the mining and docks disputes, the Government declare a state of emergency, will the Secretary of State ensure that troops are not used against miners in south Wales?
    Mr. Edwards: No such decisions have been taken, but I can tell the hon. Gentleman that the Government will carry out their obligations to the country as a whole and will take whatever steps may be needed.
    Mr. Harvey: Will my right hon. Friend give the House an assurance that, in view of the extreme intimidation and distress undergone by so many moderate miners in the dispute, and in view of the enormous courage shown by those miners, the Government have no plans to try to persuade the NCB to bring the dispute to a speedy conclusion that negates the essential principles on which the board is standing?
    Mr. Edwards: I confirm that that is exactly the position. It would be intolerable if the NCB's hands were tied when it had to decide whether pits had a future. It must not be bullied and bounced into that by inexcusable violence and intimidation.
    Mr. Barry Jones: Rather than adopting a sneering, hard-line approach, the right hon. Gentleman should be encouraging the Prime Minister to effect conciliation. Is it not in the Government's power to resolve the dispute speedily and to ensure a successful outcome to the dispute in this week's talks?
    Mr. Edwards: Mr. Scargill has refused to discuss the inclusion of the word "beneficial" when considering whether a pit has a future. If we cannot discuss whether a pit has a "beneficial" future, we are hardly in a position to talk seriously about conciliation.

    Derelict. Land
    Mr. Rowlandsasked the Secretary of State for Wales what estimate he has made of the amount of derelict land in Wales.
    Mr. Nicholas Edwards: The latest estimate by the Welsh Development Agency is that there are currently around 13,000 hectares of derelict land in Wales.
    Mr. Rowlands: Is the Secretary of State aware that the local authorities have submitted their priority schemes to the Welsh Development Agency and that they amount to more than £100 million? Is he further aware that if we carry on with the reduced budget levels it will take nearly 15 years to deal with those priority schemes? Will the right hon. Gentleman ensure that the agency does not make land reclamation something of a Cinderella programme?
    Mr. Edwards: There is no question of making land reclamation a Cinderella. The Welsh Development Agency has to assess its priorities. Expenditure in the current year, including expenditure on the land reclamation scheme that will probably take place in Cardiff, is likely to be of the order of £10·5 million, which is about the same level as it has been for the past year or two.

    Dairy Farmers
    Mr. Geraint Howellsasked the Secretary of State for Wales what extra plans he has to help dairy farmers in the county of Dyfed; and if he will make a statement.
    Mr. Nicholas Edwards: Dairy farmers in Dyfed, as elsewhere, will be helped by the measures we have already announced. The reserve set aside for hardship cases and the outgoers scheme will all help to ameliorate the effects of quotas on those most affected. In addition, dairy farmers in Dyfed will benefit from the extension of the less-favoured area.
    Mr. Howells: I am sure that the Secretary of State is well aware of the fact that many dairy farmers in Wales are in financial difficulties. As he is in charge of Welsh agriculture, may I seek to persuade him once again to go to Brussels to ensure that those dairy farmers are adequately compensated? Given that he went to Brussels to make sure of a good deal for the sheep farmers in Wales, can he tell the House and the Welsh agriculture industry why he should discriminate against the dairy industry?
    Mr. Edwards: As I pointed out in the Welsh Grand Committee, I learnt some lessons from that visit to Brussels. As the hon. Gentleman knows perfectly well, we have set aside 2·5 per cent. of quota to deal with hardship cases, and later this week the House will debate the rules
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    under which that quota will be administered. That will be the appropriate time for discussing the matter in further detail.
    Mr. Raffan: Is my right hon. Friend satisfied that applications for consideration as special cases will be processed rapidly? Will he ensure that if the local panels are inundated they will be increased or enlarged?
    Mr. Edwards: Claim forms will be issued to every dairy producer as soon as possible after the necessary regulations have been approved by the House. As I have said, those regulations are to be debated later this week. There will then be only five weeks in which those who consider themselves eligible can put in a claim. We intend to proceed with all possible haste and to have three panels within the Principality dealing with the claims as they come in.
    Mr. Alex Carlile: In considering milk quotas, why has the right hon. Gentleman not been prepared to address himself to the problems of the specialist dairy rearing sector? Many of that sector's members face virtual immediate bankruptcy, so why are they to receive no relief from the Government at this difficult time?
    Mr. Edwards: I have, of course, seen the letter that the hon. and learned Gentleman wrote on the subject, and, indeed, he mentioned the subject on Wednesday in the Welsh Grand Committee. We have acknowleged that there will be knock-on effects elsewhere in the industry, and that was one of the factors that we had to take into account when setting the total level of quota distribution and the scale of the leavers' scheme. We have no special measure with which to deal with the particular problems of those in the specialist dairy rearing sector.
    Mr. Roy Hughes: When will the Secretary of State realise that farmers throughout Wales are badly affected by the quota system and that that has ramifications for other industries and communities? Will he bear in mind that there is a feeling throughout the farming industry that this could well be the thin edge of the wedge, and that other farm products such as cereals may be next on the list?
    Mr. Edwards: Of course, as a Member of Parliament for Dyfed, I fully appreciate the effect of quotas and the damaging consequences for individuals. That is why we have listened carefully to the representations made. and why we are making several changes in the regulations to be debated in the House this week. I wish that the hon. Gentleman would make his position clear. When referring to the other products, is he arguing that there should be no cutback on the surpluses and the present expenditure an the CAP, or is he characteristically trying to have it both ways, and to get credit from the farmers while urging savings on the CAP?

    Labour Statistics
    Mr. Barry Jonesasked the Secretary of Stale for Wales how many people, unadjusted and inclusive of school leavers, are unemployed in Wales; and by what percentage unemployment has increased since May 1979.
    Mr. Nicholas Edwards: Last month there were 162,941 unemployed claimants in Wales. In May 1979 the estimated number of claimants was 77,177. That represents an increase of 111·1 per cent.
    Mr. Jones: Does not the prospect of water rationing in south Wales point to lay-offs and job losses? Why has the right hon. Gentleman been so laggardly and lackadaisical in his approach to the completion of the Wye-Usk water transfer scheme?
    Mr. Edwards: I am glad that on this occassion the hon. Member for Alyn and Deeside (Mr. Jones) is not so lost for words that he is unable to ask a supplementary question. I had hoped that he would welcome the fall in the number of unemployed by 5,858 since he last asked a similar question. We have made ample capital provision available to the Welsh water authority. It takes its own decisions on the planning of its capital programme.
    Sir Anthony Meyer: What contribution to the long-term and short-term employment prospects in Wales has been made by the Leader of the Opposition in his outright support of the miners' leader who seeks to destroy simultaneously the coal and steel industries in Wales?
    Mr. Edwards: I find it profoundly shocking that the leader of a major political party should associate himself with violence and intimidation and with a strike that can only do grave damage to jobs and add to unemployment.
    Mr. Abse: Is the Secretary of State not abusing the miners and failing to answer the Opposition's demands about the impact of water rationing that is about to come to south-east Wales? Will the Secretary of State acknowledge his personal culpability for failing to monitor works that could have been completed in south-east Wales, but for his neglect? Is the Secretary of State proud of having made an industrial waste out of south-east Wales? Is he about to add to his accolade by making southeast Wales into a Sahara?
    Mr. Edwards: We have spent about £75 million on improving the facilities for transporting water to the industrial areas of south-east Wales. I have no doubt that a water shortage would cause inconvenience, but it will create nothing like the damage and consequences caused by the strike which the hon. Gentleman and his hon. Friends are encouraging.

    Information Technology Companies
    Mr. Hoosonasked the Secretary of State for Wales whether he is satisfied that the Welsh educational system is providing the most desirable mix of well-qualified recruits to enable information technology companies to grow in Wales; and what consultations he plans with the employers and educational institutions most involved in this issue.
    Mr. Nicholas Edwards: I have had widespread consultations with employers and educational institutions and will continue to do so.
    Mr. Hooson: What specific steps have been taken to encourage the development of suitable courses in Wales?
    Mr. Edwards: In the advanced further education pool for specific information technology courses in 1983–84, £100,000 was made available to support four courses offering 30 degree places and 30 sub-degree places at higher education institutions in Wales. That figure was increased in 1984–85. In the non-advanced further education area, support grants are being introduced in 1985–86 to encourage the development of information technology courses.

    Overseas Companies (Job Creation)
    Mr. Gwilym Jonesasked the Secretary of State for Wales if he will estimate the number of jobs in Wales currently provided by overseas companies.
    Mr. Nicholas Edwards: The most recent estimates indicate that foreign-owned companies in Wales employ some 42,000 people.
    Mr. Jones: I welcome that answer and the considerable progress that my right hon. Friend has been able to achieve in attracting jobs from outside companies. Is he aware of the concern about the future of WlNvest?Can he make a statement about its future?
    Mr. Edwards: Some time ago the Government announced that they were reviewing their inward investment operations. Officials have prepared a report, which has not yet been considered by Ministers. When it has been considered we shall have something to say about it. WINvest has done, and is doing, valuable work and has dealt with a large number of applications in recent months.
    Mr. Rowlands: Surely the publicity about water rationing cannot be an attractive proposition to overseas companies coming to Wales. Will the Secretary of State give a categorical assurance that he will make a statement to the House before the recess about water rationing and its impact on industry in Wales?
    Mr. Edwards: If I think that there is anything to report to the House, further to what I have already told hon. Members, I shall consider doing so. Far more damaging for the prospects of inward investment than any temporary water shortage is the damage being done by the industrial disputes with which the Leader of the Opposition has associated himself.

    Council House Sales
    Mr. Knoxasked the Secretary of State for Wales how many council houses have been sold to sitting tenants in Wales since May 1979.
    Mr. Wyn Roberts: A total of 36,885 council dwellings were sold to sitting tenants in Wales between May 1979 and 31 March 1984. In addition, 1,796 dwellings were sold by the Cwmbran development corporation and Mid Wales Development.
    Mr. Knox: What effect does my hon. Friend think the Housing and Building Control Act 1984 will have on council house sales in Wales?
    Mr. Roberts: I am glad to tell my hon. Friend that it will have a promotional effect when it comes into force in August. It extends the right to buy to groups of tenants who do not benefit under the current arrangements. It increases the maximum discount to 60 per cent. and introduces the right to buy on a shared ownership basis. This will give even more people the opportunity to enjoy the basic security and satisfaction of home ownership.
    Mr. Roy Hughes: Does the Minister appreciate that the building and construction industry is concerned not so much with the sale of council houses as with the threat of a moratorium on local authority capital projects? Is he aware that Mr. Michael Manser, president of the Royal Institute of Building Architects, points out in a letter to me today that such a move would be highly detrimental to the industry and would increase unemployment.
    Mr. Roberts: My right hon. Friend the Secretary of State has already dealt with that matter during Question Time today. Last Wednesday I made a statement about the issue in the Welsh Grand Committee. We hope that about £200 million will be spent on housing in Wales during the current year.

  CHURCH COMMISSIONERS

    Clergy (Pay)
    Mr. Chapmanasked the hon. Member for Wokingham, as representing the Church Commissioners, what proportion of the Church Commissioners' expenditure last year went to ministerial pay, including national insurance contributions and pensions and housing for the clergy.
    The Second Church Estates Commissioner, Representing Church Commissioners (Sir William van Straubenzee): Ninety per cent.
    Mr. Chapman: That is a high figure, and I recognise that little expenditure of the Church Commissioners is on bureaucracy and administration. In the light of the appalling damage done to the south transept of York Minster, can my hon. Friend confirm that the Church Commissioners will use their good offices to ensure that our fine, ecclesiastical architectural heritage is properly insured against—if this is not too inappropriate a phrase—acts of God?
    Mr. Speaker: Order. That question did not have a great deal to do with pensions, housing and ministerial pay of the clergy.
    Sir William van Straubenzee: I am glad to say that the percentage of expenditure on administration is 6 per cent., which I think is acceptable. The Church Commissioners are not responsible for the sort of insurance mentioned by my hon. Friend. Any incumbent who now contemplates inviting the Bishop of Durham to preach will probably wish to look carefully at his insurance.
    Mr. Peter Bruinvels: Has my hon. Friend seen an article in today's Daily Telegraph, entitled "Pay vicars by what their flock will produce", and relating to a report from the Institute of Economic Affairs? Does that idea have some sympathy and support within the Church Commissioners? Obviously, market forces may be helpful. The clergy, for instance, could publish figures about any increases in membership and this would directly affect their final salary.
    Sir William van Straubenzee: I do not read the Daily Telegraph, but the article has been drawn to my attention. The essence of modern financing in the Church of England is that it is very much a responsibility of the laity. Therefore, I do not think that it is worth exploring the idea of paying clergy by results alone.
    Mr. John Mark Taylor: In the context of the resources of the Church of England, can my hon. Friend give any encouragement to those of my constituents who would like a Church of England secondary school in Solihull?
    Sir William van Straubenzee: I cannot answer the question on behalf of the Church Commissioners, because it is not their responsibility. If, personally, I can assist my hon. Friend in any way, :[hope that he will write to me.

    St. Alban's, Teddington
    Mr. Jesselasked the hon. Member for Wokingham, as representing the Church Commissioners, what information the Commissioners now have concerning the current position and the future prospects for the building of the redundant church of St. Alban's, Teddington.
    Sir William van Straubenzee: The London diocese has reported to the Commissioners that it has been unable to find a suitable alternative use for the redundant building. The alternative courses for consideration under the relevant statute are demolition of the building or preservation by the redundant churches fund.
    Mr. Jessel: Is there any prospect of the redundant churches fund finding the necessary money, as it would now cost more than £300,000 to make St. Alban's safe and sound? The expert advice was that the only viable way to produce such a fund would be through an office block, which was not wanted by those living nearby and, in any case, had been prevented by local authority decisions. Do the Commissioners accept that, in the end, demolition is the only likely course?
    Sir William van Straubenzee: I must be careful not to prejudge the issue in any way. The Commissioners must study the matter and take advice from their statutory advisers. There are two possible courses of action, and I cannot for one moment forecast which will be chosen.

    Clergy (Pay)
    Mr. Greenwayasked the hon. Member for Wokingham, as representing the Church Commissioners, what percentage of clergy stipends for the latest year for which figures are available were paid by direct lay giving compared with 10, 20 and 30 years ago; what cash figures are involved; and if he will make a statement.
    Sir William van Straubenzee: As the answer contains a number of figures, I will, with permission, circulate it in the Official Report. However, I can tell my hon. Friend that the proportion of lay giving for clergy stipends has risen from 25 per cent. in 1963–64 to 43 per cent. in 1983–84.
    Mr. Greenway: Are not those figures remarkable? Does my hon. Friend consider that the laity get value for money? If so, how does he measure that value?
    Sir William van Straubenzee: The figures are, I admit, remarkable. The proportion of giving by the laity will, so far as can be foreseen, continue to rise, particularly as standards rise in terms of pensions, stipends and housing. I would not want to enter into speculation as to how one measures those.
    Mr. Frank Field: The Commission and the laity are to be congratulated on raising the pay of the clergy. Does the hon. Gentleman consider that the current level of pay is either fair or adequate?
    Sir William van Straubenzee: It is a substantial improvement on anything in the past, taken in conjunction

    15
    with housing—with house, rents and outgoings being totally free, as they should be — but there is always room for improvement, and it is that which the laity is seeking to achieve.
    Mr. Stokes: Does my hon. Friend agree that the increase in the proportion paid by the laity is extremely gratifying? Is he aware that although some of us are frequent critics of the clergy, and of the higher clergy, we believe, nevertheless, that they do wonderful work for the pay they receive?
    Sir William van Straubenzee: That is right, and I am certain that financial consideration is the last thing that motivates the clergy.
    Mr. Peter Bruinvels: Does my hon. Friend attribute this remarkable turnround to more covenanting throughout the country and perhaps to the fact that the laity now has knowledge of where the money is going?
    Sir William van Straubenzee: I should like to think that the educative process undertaken by the Church Commissioners, in particular, is bearing fruit because, as my hon. Friend says, it is now possible for the laity to be far better informed than before. The use of covenanting is an important part of the process.
    Mr. Skinner rose—
    Mr. Speaker: If I call the hon. Member for Bolsover (Mr. Skinner) to ask a supplementary question, will he do me a favour and stick to the subject please?
    Mr. Skinner: It will make a novel change if hon. Members stick to the subject, Mr. Speaker.
    Does the hon. Member for Wokingham (Sir W. van Straubenzee) appreciate that when people are collecting money from the laity to finance the clergy, they come up against many other people making other collections? Is he aware that a problem which they are coming up against today, and why they are probably not collecting as much as they otherwise would, is that people all over the country, even in Finchley, are collecting money for the miners? They are collecting money hand over fist—
    Mr. Speaker: Order.
    Mr. Skinner: I am not quite done, Mr. Speaker.
    Is the hon. Gentleman further aware that if only the emphasis in church magazines was changed in support of the miners, the collections on behalf of the miners could stop and the amounts collected for the clergy would go up?
    Sir William van Straubenzee: On the whole, there is not much competition. My observation is that members of all churches have taken a balanced view of the matter and that, in particular, they have an abhorrence and horror of the kind of intimidation that they have been witnessing.
    Following are the figures:
    For 1983–84 the percentage of clergy stipends paid by the laity was 43 per cent. the cost to the parishioners being £32·7 million.
    In 1973–74, 10 years ago, the laity met £5·7 million or 23 per cent. of the cost of clergy stipends.
    In 1963–64, 20 years ago, the laity met £3·7 million or 25 per cent. of clergy stipends.
    No figures are available for 30 years ago.

  THE ARTS

    Victoria and Albert Museum
    Sir David Priceasked the Parliamentary Under-Secretary of State answering in respect of the Arts what
    16
    help the Government intend to give to the trustees of the Victoria and Albert museum to deal with the state of physical deterioration in the museum's buildings.
    The Parliamentary Under-Secretary of State for the Environment (Mr. William Waldegrave): The Victoria and Albert museum is receving a substantial share of the resources for the national museums' and galleries' building and maintenance programme in the current year. Provision for future years is being reviewed as part of the 1984 public expenditure survey.
    Sir David Price: Will my hon. Friend confirm that the present state of repair of the Victoria and Albert building has been classified by the Property Services Agency as desperate, that it will cost more than £25 million to put right and that, under the present financing arrangements, there is no way in which the trustees can raise that money without generous help from the taxpayer?
    Mr. Waldegrave: There is no question but that the answer to the latter part of my hon. Friend's question is yes — the taxpayer will have to help in this matter. Recently, the chairman of the trustees and the trustees met my right hon. and learned Friend the Chief Secretary. I know that the trustees are putting figures of £25 million or £26 million on the cost of what needs to be done. The seriousness of the position is well known to my right hon. and noble Friend the Minister for the Arts.
    Mr. Tony Banks: It is well known that the Victoria and Albert museum trustees wish to impose some form of charges for admission to the museum. Will the hon. Gentleman confirm that the British museum is actively considering admission charges? What sort of early warning mechanism is the Office of Arts and Libraries operating whereby it can say exactly which museums and art galleries are proposing to impose charges?
    Mr. Waldegrave: It is entirely up to the trustees of particular museums to come forward with schemes, if they choose to do so.
    Mr. Buchan: Does the Under-Secretary of State not realise that to a large extent those museums have been given the green light by the Office of the Minister for the Arts? Does the hon. Gentleman recall that the last time the Government tried to impose charges they were clobbered? That was done under the present Prime Minister. Will the hon. Gentleman remind the Prime Minister that we will not tolerate a retreat to private enterprise on this issue?
    Mr. Waldegrave: The policy has been the same for a number of years — if the trustees of collections have wanted to come forward with schemes, my right hon. and noble Friend the Minister for the Arts and his predecessors have agreed to look at the proposals.

    Royal Shakespeare Theatre
    Mr. Alan Howarthasked the Parliamentary Under-Secretary of State answering in respect of the Arts if the Minister for the Arts will assess the consequences for the future of the Royal Shakespeare theatre at Stratford-on-Avon of the proposed construction of a radio transmitter at Bearley.
    Mr. Waldegrave: My right hon. Friend the Secretary of State for the Environment is currently awaiting the inspector's report following the public local inquiry into

    17
    this proposal. I can, however, assure my hon. Friend that the views of the Royal Shakespeare company and others who have expressed concern and were represented at the public inquiry will be fully taken into account by my right hon. Friend before a decision is made.
    Mr. Howarth: I urge my hon. Friend to take seriously the considered statements by the joint artistic directors and the general manager of the Royal Shakespeare theatre that the effect of radio frequency interference and the proposed transmitter on computerised sound and lighting, box office systems and other sensitive electronic equipment at the theatre would mean that closure of the theatre was inevitable? Will my hon. Friend urge his right hon. and hon. Friends at the Department of the Environment to prevent the BBC and the Foreign and Commonwealth Office from perpetrating an act of vandalism which they and everyone else would come very much to regret?
    Mr. Waldegrave: I assure my hon. Friend that those considerations will be taken fully into account by my right hon. Friend the Secretary of State.
    Mr. Meadowcroft: What co-ordination exists between Government Department, to ensure that artistic considerations are properly supported when they go before inspectors at such inquiries?
    Mr. Waldegrave: I do not believe that any special arrangements are needed. Evidence that is relevant to such a planning inquiry will, of course, be put before that inquiry and before my right hon. Friend.
    Sir Dudley Smith: Is my hon. Friend aware that the proposed transmitter was roundly condemned on the BBC programme, "Start the Week", which came from Stratford this morning? Is my hon. Friend also aware that, in the interests of not only the Royal Shakespeare theatre but many people in south Warwickshire, he would be doing the country a great service if he persuaded the BBC and the Foreign and Commonwealth Office not to engage in what my hon. Friend the Member for Stratford-on-Avon (Mr. Howarth) rightly called "an act of vandalism"?
    Mr. Waldegrave: As this is a planning matter, I can go no further than to say that these matters will be drawn to the attention of my right hon. Friend the Secretary of State.

    East Midlands
    Mr. Jannerasked the Parliamentary Under-Secretary of State answering in respect of the Arts whether Her Majesty's Government will take steps to encourage the theatre in the east midlands.
    Mr. Waldegrave: My noble Friend is concerned to encourage theatre and other arts throughout the country, within the resources available.
    Mr. Janner: Do the resources available include the so-called "Glory of the Garden" development policy and, if so, will the Minister confirm that Leicester's brillaint but hard-pressed Haymarket theatre will qualify for both aspects of the grant—that to which it is entitled as of right and that which it will receive because it has always succeeded in raising a substantial proportion of what it needs from sources other than the Arts Council?
    Mr. Waldegrave: As the hon. and learned Gentleman is doubtless aware, the Haymarket receives a substantial
    18
    sum from the Arts Council—£323,000 at present—and, as I understand it, there is no proposal in the strategy document to change the relationship between the Arts Council and the Haymarket theatre.
    Mr. Hickmet: Is my hon. Friend aware that the opera house at Buxton, which is also used as a theatre, has been renovated in recent years? Is he further aware that the Buxton festival is now one of the most important regional festivals in Europe and that it has been starved of funds by the Arts Council? Accordingly, will my hon. Friend ask the chairman of the Arts Council to ensure that adequate funds are made available to the Buxton festival so that it can continue to put on world-class performances?
    Mr. Waldegrave: It is not for me or my noble Friend to make representations on behalf of particular companies. Companies must make their own representations to the Arts Council, whose duty it is to make the decisions.

    Opera and Ballet (Subsidised Tickets)
    Mr. Proctorasked the Parliamentary Under-Secretary of State answering in respect of the Arts what was the average public subsidy for each ticket sold for performances of opera and ballet in the United Kingdom in each of the last three years; and if he will make a statement.
    Mr. Waldegrave: Figures from the Arts Council for the years 1980–81 to 1982–83 are £14·7, £15 and £19 for opera, and £4·9, £6·1 and £6·5 for dance. Decisions about individual levels of subsidy are of course for the Arts Council, and not my noble Friend.
    Mr. Proctor: As one who opposes the subsidising of any goods or services, may I ask my hon. Friend to tell the House what the logic is of subsidising the rich in that way?
    Mr. Waldegrave: I believe that it is well understood in the House that it is impossible to maintain a major opera company without public subsidy. I hope my hon. Friend will welcome the fact that the new policy of the opera house is to make up to 40 per cent. of its tickets available at lower prices than in the past.
    Mr. Jim Callaghan: Is it the Government's intention to subsidise the Duccio "Crucifixion", which Manchester is trying to keep in this country?
    Mr. Waldegrave: My noble Friend has today announced an extension of a month in the stop order on the picture attributed to Duccio, but it is for the national heritage memorial fund to decide whether to make further funds available.

    Welsh Arts Council
    Mr. Wigleyasked the Parliamentary Under-Secretary of State answering in respect of the Arts when the Minister for the Arts last met the chairman of the Welsh Arts Council; and what subjects were discussed.
    Mr. Waldegrave: My noble Friend regularly meets the chairman of the Arts Council of Great Britain about matters of current concern. He does not have formal meetings on a regular basis with the chairman of the Welsh Arts Council, although informal meetings do take place.
    Mr. Wigley: Does the Minister feel it appropriate to have a meeting with the chairman of the Welsh Arts

    19
    Council in view of the difficulty that it has had with the development plan currently under consideration, because drama in Wales, particularly among small companies, will be hit hard by lack of resources? Will he seriously consider, with the chairman of the Welsh Arts Council, the availability of adequate resources to meet the needs of a bilingual community, and one which includes many areas of scattered population?
    Mr. Waldegrave: The considerations which the hon. Member mentions at the end of his question are taken into account by the Welsh Arts Council. I shall draw the hon. Gentleman's request for a meeting to my noble Friend's attention.

    Temba and CAST Theatre Companies
    Mr. Tony Banksasked the Parliamentary Under-Secretary of State answering in respect of the Arts what funds have been made available by the Arts Council to the 7:84, Temba and CAST theatre companies in the last year.
    Mr. Waldegrave: In 1983–84 the subsidies received by these three companies were £89,100, £69,300 and £45,540 respectively.
    Mr. Banks: Is it not a fact that, because of the representations made by various Ministers, the Arts Council has clearly, in its document "Glory of the Garden", set out to eliminate political theatre? Do not the figures that the Minister has given relate to political theatre? Would the Minister care to comment on the instructions issued by Westminster city council, which show clearly that it is placing political limitations on theatre grants, as it has said that it will not give grants to any theatre that does not come up to the political standards that it has set?
    Mr. Waldegrave: The answer to the second question is, no, as that is not a matter for me. The answer to the first question is that the hon. Gentleman has, not uncharacteristically, shot himself in the foot. He has
    20
    explained to us on many occasions how one could not stop political theatre in this country unless one were to stop the production of Shakespeare.

    Questions to Ministers
    3.30 pm
    Mr. Dafydd Wigley: On a point of order, Mr. Speaker. My point of order concerns Welsh Question Time, and the linking of six questions on the coal industry—that is 4, 7, 10, 11, 15 and 19. Although these were taken together, only three supplementary questions were taken, and therefore the debate on the coal industry was severely curtailed and it was impossible to hear all the opinions of the House. When the Secretary of State, or any other Minister, says at the beginning of answering a question that "with permission" he will group questions together, whose permission is he seeking, as the hon. Member for Ogmore (Mr. Powell) refused to give that permission?
    Mr. Speaker: Order. It is a courtesy to the House when a Minister says "with permission". It is entirely up to the Minister how questions are grouped. I think that the hon. Member will readily understand that if I called everyone who wished to speak on every question we would get through very few questions. I am concerned to ensure that as many hon. Members as possible have their questions reached.

    Ministerial Statement
    3.31 pm
    Mr. Chris Smith: On a point of order, Mr. Speaker. You will recall that I raised with you on Thursday and again on Friday morning the question of—
    Mr. Speaker: Order. I shall stop the hon. Gentleman there because I have written to him about this matter, and he should await my letter before he raises this point of order again.

Business of the House
3.32 pm
The Lord Privy Seal and the Leader of the House of Commons (Mr. John Biffen): With permission, Mr. Speaker, I should like to make a short statement about the business at the end on Wednesday.
The business will now be as follows:
Motions on the Dairy Produce Quotas Regulations and on the Dairy Produce Quotas (Definition of Base Year Revision Claims) Regulations.
It may be for the convenience of the House if it is proposed that the motions be taken together and that three hours be provided for the debate.
Mr. Peter Shore: This is an unexpected statement, and a bad one. Surely the Leader of the House is aware that when hon. Members saw on the Annunicator that there was to be a business statement they expected that the Government would take the opportunity to announce the rearrangement of business for a statement and a debate on the implications of the High Court's condemnation of the serious matter of the breaching of the rules of natural justice by the Government's failure to consult the employees of GCHQ, Cheltenham. When can we expect a debate, or if not a debate an early statement, on this most important matter?
Although we are in favour of additional time to debate these new, additional, ill-judged dairy produce quota regulations, the Leader of the House must know that they make it virtually impossible for any producer to apply for an additional milk quota because of bad weather in 1983. We shall have no chance between today, when the regulations are made, and Wednesday, when they are debated, to have the necessary consultations with the interests concerned. Will the Leader of the House reconsider this foolish decision to have a protracted, late-night debate on so important a subject?
Mr. Speaker: Order. The Leader of the House's statement is on the debate on Wednesday on milk quotas, and we cannot have a re-run of Thursdays' business questions. We have three other statements, applications under Standing Order No. 10 and an important debate to follow.
Mr. D. N. Campbell-Savours: On a point of order, Mr. Speaker.
Mr. Speaker: Order. I am on my feet. We cannot have a re-run of Thursdays' business questions.
Mr. Campbell-Savours: On a point of order, Mr. Speaker. I believe that we are discussing Wednesday's business. Therefore, would it not be in order to raise matters that could form part of Wednesday's business?
Mr. Speaker: That is exactly what I am saying.
Mr. Bowen Wells: Does my right hon. Friend's statement mean that on Wednesday we shall now debate the motions on the rate support grant supplementary reports for England and Wales? Are the milk quota debates in substitution for those debates, or not?
Mr. Biffen: They are additional.
Mr. Merlyn Rees: As the Leader of the House is rejigging the business for Wednesday, will he allow a little time at 3.30 pm for the
22
Prime Minister to make a statement? The right hon. Lady has addressed the House on many occasions about GCHQ. We now learn that the Government's action has been found to be unlawful. Therefore, it is important for the Government to come to the House and tell us their response to the judgment. The Leader of the House has only to say that he will go to the Prime Minister. He told us on the news at 1 pm yesterday that the right hon. Lady was very approachable. Will he approach her today and ask her to come to the House and make a statement?
Mr. Biffen: Perhaps, in the context of that generous question from the right hon. Gentleman, I could say that the text of the judgment concerning GCHQ has been available for only a very short time. It is currently being considered. Perhaps, in the circumstances, the matter might be considered through the usual channels.
Mr. Nicholas Budgen: Has there been a change of substance in regard to the milk quotas? Many of us who are anxious to see the reform of the common agricultural policy will want to know whether the distortion of the market mechanism is even worse than it was, or whether on balance we can support it because it is a slight reduction in the cost of the enormous surpluses.
Mr. Biffen: I shall not be drawn by my hon. Friend's ideology, but on Thursday I was urged by many, including the Leader of the Opposition, to offer more time for this topic. More time is being offered, and I should have expected a vote of thanks.
Mr. A. J. Beith: How did the Leader of the House come to discover a second set of milk regulations of which he had not been advised on Thursday? Was it a helpful way of finding time? If so, does he realise that he could simply have lengthened the time for the existing debate? Although we welcome the time that is being given, the second regulations created additional complications.
With regard to the right hon. Gentleman's prepared reply on the subject of GCHQ, will he undertake to make a statement later today on the Government's intentions?
Mr. Biffen: On the latter point, I have nothing to add to what I have said. On the former point, as the hon. Gentleman is closely identified with the dairy industry I should have thought that he would know that the question of the base years has caused great anxiety. Therefore, I am sure that he is delighted that the Ministry of Agriculture, Fisheries and Food has been able to bring forward the regulations so that they can be debated later this week.
Mr. Tony Marlow: As many right hon. and hon. Members will be considering their position with regard to the milk quota debate on Wednesday night, will my right hon. Friend confirm that if the motion falls on 'Wednesday night it will be impossible for the Government to bring in regulations before October, and that in the meantime the existing system for milk will continue to apply?
Mr. Biffen: That is precisely the kind of question which my right hon. Friend the Minister of Agriculture, Fisheries and Food will have more time to answer, now that he has three hours.
Mr. Willie W. Hamilton: Although the debate on Wednesday on the dairy industry is important,

23
does the Minister think, in the light of the Government's continued assertion that everybody must obey the rule of law, and in the light of the fact that the Government have now been declared by the High Court to be in breach of the law, that a debate on GCHQ would be infinitely more important than any other that is likely to take place?
Mr. Biffen: The hon. Gentleman will have heard my comments on the GCHQ judgment, and I do not think that I can helpfully add to them.
Mr. Daffyd Wigley: Will the Leader of the House confirm that both sets of regulations are subject to approval by both Houses of Parliament, in which case, if the other Chamber were to reject either of them, the Government would withdraw them and reconsider their position?
Mr. Biffen: I think that the hon. Gentleman is right in supposing that the regulations are subject to confirmation by both Houses, but I find it extraordinary that the Plaid Cymru, of all parties, should now be sneaking towards the House of Lords.
Mr. John Morris: I am encouraged by the right hon. Gentleman's statement on GCHQ, but will he bear in mind that the Government have been turned down not only by the High Court but by the International Labour Organisation?
Mr. Speaker: Order. The right hon. and learned Gentleman is doing what I ruled to be out of order. We should only ask the Leader of the House questions on his statement, which is about Wednesday's business.
Mr. Morris: I am asking the Leader of the House whether, in the course of Wednesday's business, in view of the importance of the matter, the debate or statement that we should have could cover not only the High Court's adverse decision, but that of the ILO.
Mr. Speaker: Order. The point is that the business for Wednesday was announced as being consideration of the rate support grant supplementary reports for England and Wales, and a motion on the dairy produce quotas regulations. What the Leader of the House has done is to extend the time for the milk debate.
Mr. Morris: With respect, Mr. Speaker, that is precisely my point. The business for Wednesday has been changed in one material respect—that of time. If that time is available, I consider that it could be better used for the consideration of this grave matter.
Mr. John Gorst: Further to that point of order, Mr. Speaker.
Mr. Greville Janner rose—
Mr. Speaker: Order. Raising points of order takes up the time of the House. I wish I knew what is in the hon. and learned Member's mind. He has been rising to put a question on this matter. I hope he is not trying to gain advantage by raising a point of order?
Mr. Janner: On a point of order, Mr. Speaker. The hon. Member for Hendon, North (Mr. Gorst) and I sit on the Select Committee on Employment, which meets on Wednesdays. The Select Committee came to the unanimous view that GCHQ—
Mr. Speaker: Order. This is exactly what I feared would happen if I called the hon. and learned Member. We are asking the Leader of the House questions on his statement about extending the time for the milk regulations debate.
Mr. Gorst: On a point of order, Mr. Speaker. May I associate myself with at least one aspect of the Opposition's attempt to raise this matter? The answer very much dictates whether one should raise the matter of GCHQ under Standing Order No. 10 or whether one should seek an opportunity on Wednesday during the slice of time under discussion. I put it to you, Mr. Speaker, that it might be possible for you to reconsider whether we raise the question of GCHQ—
Mr. Speaker: Order. It may be of interest to the House to know that I have a Standing Order No. 10 application on this subject and that it will be raised later today.
Mr. Tam Dalyell: Is the question of the milk regulations on Wednesday more important than the advice of the House of Commons on whether the Government should appeal on GCHQ?
Mr. Biffen: If I may address myself strictly to the business which I have placed before the House, I assure the hon. Gentleman that the milk regulations are very important indeed.
Mr. Teddy Taylor: In view of the continuing interest of my right hon. Friend in containing public expenditure, can he say whether the additional one and a half hours will enable the Government to make plain whether they are reconsidering compensating those who leave milk production, only to produce other items which are already in structural surplus and costly to the taxpayer?
Mr. Biffen: Those are matters which my right hon. Friend the Minister of Agriculture will wish to answer in the debate. He will now be able to do so at greater length.
Several Hon. Members rose—
Mr. Speaker: Order. We must move on.

Personal Pensions
3.43 pm
The Secretary of State for Social Services (Mr. Norman Fowler): With permission, Mr. Speaker, I should like to make a statement on personal pensions.
When I set up the inquiry into provision for retirement, I said that one of its first tasks would be a study of personal pensions. This followed proposals to enable people to arrange their own individual pension plans as an alternative to joining an employer's scheme or the state earnings-related scheme. Under the proposals, people would accumulate their own fund which they could take with them when they changed jobs.
Evidence on these proposals was taken at four public sessions of the inquiry, and I also received 1,700 submissions and letters. In addition, I commissioned market research which demonstrated a substantial potential demand for personal pensions. I am today publishing a short consultative document outlining the Government's proposals and next month will be publishing a longer document which will summarise the evidence received.
The Government believe that the demand for personal pensions can and should be met. We propose that all employees should be given a right to take a personal pension. They will be free to choose the pension arrangements that suit them best. This right will extend both to those who belong to employers' pension schemes and to those now in the state earnings-related scheme. Nearly half of the work force now belong to occupational schemes which are contracted out of the state earnings-related pension scheme. The Government recognise that such schemes play a vital part in pension provision. We have therefore devised a system that will sit alongside and not threaten employers' schemes.
The proposals would allow those opting for a personal pension to contract out of the state earnings-related scheme. A minimum contribution to their personal pension would be required to ensure that they provided themselves with an adequate income in retirement. Different arrangements would operate for people who already belong to compulsory contracted-out schemes and those who do not, but the common aim is to ensure that all those who choose a personal pension are treated alike while not adversely affecting the financial viability of occupational pension schemes. I hope that this approach will meet the worries of many of those pension interests which gave evidence to the inquiry.
The essence of the Government's proposals is freedom of choice and flexibility. By giving all employees the right to a pension that they can take with them, we shall remove another obstacle to job mobility. People must have as wide a range of choice as possible of bodies with whom they may place their personal pension investments. The consultative document suggests a range of these but recognises the need for an adequate framework of consumer protection. We shall aim to keep restrictions to a minimum, but there must be safeguards against, for example, misleading promotion.
The House will recognise that the proposals are far reaching and that all concerned with the provision of pensions will want to study and comment upon their detailed implications. That is why I have published them as a consultative document. I shall welcome all views that
26
are expressed over the next few months. These are vital issues, and before proceeding with any legislative measures we shall want to be sure that the legitimate interests of all those concerned are recognised.
I should make it clear that the general principles underlying the proposals for personal pensions are ones to which the Government are committed. We have already gone a long way towards improving the position of occupational pension scheme members. I have announced our intention to legislate to safeguard the pension rights of early leavers. I have published proposals to give them a statutory right to a transfer value and to give more information about their schemes. Personal pensions extend choice for members of schemes and will also provide a major new option for people who at present have no alternative to the state earnings-related pension scheme by allowing contracting-out on an individual basis.
The proposals that I am announcing today give people more choice in the way they save for their old age. They are aimed at giving everyone in work a new right—the right to choose a personal pension.
Mr. Michael Meacher: Is the right hon. Gentleman aware that these are potentially damaging and retrogressive proposals? Is he aware that that is perhaps not surprising as they come from such a politically loaded and unrepresentative committee which comprised five people? Unprecedentedly, it comprised two Ministers, a Right-wing economist, the chairman of the Life Offices Association and Mr. Mark Weinberg, the managing director of Hambro Life, who has a huge vested interest in the proposals to the extent that he is expected to become a millionaire as a result of them. We deplore the partisan bias in that committee which will make a killing for some people in the City and expose thousands of people to the pitfalls of a hard sell from insurance companies, which will be strongly against their long-term best interests.
Is the Secretary of State aware that "personal pensions" is simply a breezy new title for the old-fashioned money purchase schemes, which have been overwhelmingly rejected because of their major disadvantages? Personal pensions do not provide benefits that relate to earnings at or near retirement, which is what people want, and they throw risks on people who are least able to bear them. Moreover, they undermine the central principle of the pooling of risks against unforeseen events such as long-term illness or disability.
Is the Secretary of State aware that these proposals will, contrary to what he said, almost certainly undermine final salary schemes, which are overwhelmingly preferred as the best option; will destroy a structure that has taken 20 years to settle down; and will expose the pension industry to its greatest enemy — uncertainty — by throwing pensions back again into the political cauldron? The Opposition will not allow the partnership in Labour's state-earnings-related pension scheme of 1975—the best deal that the pensioner ever had—to be overturned in this way.
Apart from that decisive reason against the proposals, is the Secretary of State aware that they will not achieve the goals that the Government claim for them; they are not the best or the only means of solving the problem of early leavers; they will not reduce the power of the financial institutions, as the insurance companies will simply replace the pension funds as institutional investors; and

27
they will not create a right to personal wealth because an individual who decides to manage his own portfolio may well prove incompetent and lose his pension security? Is he aware that there are wholly inadequate safeguards against the hard-sell sharks, as can be seen from the current market for buy-out policies—they are sometimes called section 32 schemes—whose advertisements often do not make clear what is guaranteed and what is a projection on a highly optimistic basis?
Will the Secretary of State acknowledge that, although for some people there would be gains under the proposals, for large numbers of others the benefits would be reduced in an unfair and arbitrary way? Finally and above all, is he aware that pensions require consensus, which means the agreement of the Opposition, if the long lead-time of planning is not to be frustrated by political conflict? The Secretary of State will not get consensus if he confines his decisions to a packed and prejudiced committee such as this one.
Mr. Fowler: Even by the standards of the hon. Member for Oldham, West (Mr. Meacher) that was a ridiculously hysterical response. Once again he places his faith in the maximum of restrictions and the minimum of freedom. It should be pointed out to him that no one is being compelled to take a personal pension. We are giving people a choice. Every time we try to do that, the hon. Gentleman, speaking apparently for the Opposition, opposes it.
I remind the hon. Gentleman that the proposals will benefit about 11 million people who are not covered by occupational pension schemes. There are those in schemes who, as the Gallup poll showed, would prefer to make individual arrangements. There are those who want to change jobs frequently during their careers and want to make better pension arrangements. There are women in work. The proposals break down another barrier to job mobility.
As for endangering occupational pension schemes, the Government want further to encourage occupational schemes, not reduce them. We have therefore devised proposals that meet the demand for personal pensions without endangering existing occupational schemes. On consumer protection, I am making it clear in the document that we shall publish that we shall consult on that, on a cooling-off period and on all such issues.
The hon. Gentleman should not come to his silly and instant judgment on these proposals, especially on the bogus grounds that he presented to the House this afternoon.
Sir Geoffrey Finsberg: Is my right hon. Friend aware that some pension schemes are non-contributory? Will he assure us that no opportunity will be given for employees who have non-contributory schemes to get into this scheme and make transfers of portable pensions?
Mr. Fowler: We are proposing that the right to a personal pension should apply to everyone in all sorts of schemes, but I assure my hon. Friend that we shall listen carefully to all the points made about the schemes.
Mr. Michael Meadowcroft: The principle of portability is fine, but the question is whether,
28
on balance, it is a benefit to move towards opening a Pandora's box of street corner salesmen with the potential of exploiting the many individuals who cannot afford expert and objective advice. Does the Secretary of State agree that he must give much more attention to safeguards and must give guarantees to people, or the benefits will prove to be the freedom of the fox in the hen run.
Mr. Fowler: We shall do everything possible in the consultation period to discuss and consider sensible measures of consumer protection. The hon. Gentleman will agree that we do not want so many restrictions upon personal pensions that it makes their growth unviable; but given that, I entirely share his view that we should consider measures of consumer protection. I ask the hon. Gentleman to examine the market research that we have carried out, which shows that about 80 per cent. of those not covered by pension schemes are interested in personal pensions. The House should consider extending their rights as well as the existing rights of people who are already covered.
Mr. Peter Hordern: I congratulate my right hon. Friend on putting an end to the Victorian paternalistic system which allows an occupational pension to be paid in full only to those who have served a lifetime in one company. Is it not truly astonishing that the spokesman for the Opposition, the hon. Member for Oldham, West (Mr. Meacher), appears to align himself with the narrow, restrictive vested interests of the City, which are interested only in preserving full pension rights for a narrow minority of people who are covered by occupational pension schemes? When will my right hon. Friend introduce legislation to carry out this ambitious and hopeful scheme?
Mr. Fowler: I have, unfortunately, listened to the hon. Member for Oldham, West (Mr. Meacher) previously, and very little astonishes me about the views that he expresses. We propose that a personal pension — a pension that someone arranges for himself and can take with him when he changes jobs or becomes self-employed — shall become a right for employees. There should now be a consultation period on the proposals in the document. That will come at the end of November and proposals for legislation will follow it.
Mr. Brynmor John: The Secretary of State mentioned the 11 million people in the state pension scheme. How many of those does he believe will contract out of that scheme and take up personal pensions? He talked about safeguarding the occupational pension schemes. What steps will he take to safeguard the state income-related scheme? What protection will he afford to those who invest in personal pensions? Will it be a complete game of roulette, or does the right hon. Gentleman envisage a safety net?
Mr. Fowler: I envisage some consumer protection restrictions and some restrictions on the providers of personal pensions. As to any risk to the national insurance fund, when the hon. Gentleman has read the consultation document he will see that people with personal pensions will bear the investment risk themselves and the national insurance fund will not take up any of the shortfall on the guaranteed minimum pension. It is, of course, extremely difficult to forecast the demand, but the Gallup poll showed that about 80 per cent. of those not covered by

29
pension schemes were interested in personal pensions. The poll showed that there was a substantial demand for personal pensions from those in pension schemes and especially from those not covered by occupational pension schemes.
Mr. Roger Freeman: Is my right hon. Friend aware that his statement is warmly welcomed by Conservative Members, based as it is upon freedom of choice and upon encouraging individuals to make provision for their own pensions as well as relying on the state scheme? In the interests of a free and wide debate, will my right hon. Friend publish the report to the Minister on the scheme by the Occupational Pensions Board?
Mr. Fowler: I am grateful to my hon. Friend for his support, and I give him the assurance that the Occupational Pensions Board's report will be published. It will be published in the document that I shall be publishing, but if the board wants to publish it prior to that, it is entirely free to do so.
Mr. John Fraser: As the Government preside over a record number of bankruptcies, will the right hon. Gentleman confirm that an individual pension will be exempt from any claims by a trustee in bankruptcy and that, if the funds of the subscriber with an insurance company are put in jeopardy by the insolvency of that company, they too will be protected?
Mr. Fowler: Yes, I can give such assurances. Obviousy, we shall want to give that kind of protection.
Mr. Tim Eggar: Is my right hon. Friend aware that his statement will be widely welcomed. Is not the attitude of the hon. Member for Oldham (Mr. Meacher) extraordinary, because if his fears are well grounded no one will opt for portable pensions and, therefore, by definition he has nothing to worry about? Will my right hon. Friend also confirm that employers' contributions will be transferable into portable pensions?
Mr. Fowler: In reply to my hon. Friend's second point, personal pensions will be available as of right to all employees who should be able to contract out of the state earnings-related scheme. The test of contracting out should be based on the level of the contribution, not on the guarantee of benefit, and special arrangements will be made for schemes contracted out. My hon. Friend will find that the points he has raised are covered in the consultative document. I am grateful for his support.
Mr. Charles Kennedy: Will the Secretary of State further share with the House his views on how the shortfall will be met? If, as he said in his statement, he is anxious to increase job mobility, and if the shortfall is not assisted by Government support, is there not a danger that the opting out scheme will become a greater liability on employers and could result in a possible tax on jobs similar to the national insurance surcharge, which was abolished in this year's Budget?
Mr. Fowler: I do not think that it will remotely have that effect. Pension scheme costs should not go up as a result. Personal pensions will be contracted out of the state earnings-related scheme and will therefore benefit from a rebate of national insurance contributions. That rebate will go to the personal pension. Frankly, I do not believe that the dangers to which the hon. Gentleman alluded will come about.
Mr. Tim Smith: I welcome what my right hon. Friend has said, for the simple and important reason that it will increase choice, but what guarantees will there be for existing occupational pension schemes? Is there not a danger that some small schemes in particular may, in these circumstances and depending on conditions, feel that it is not worth continuing?
Mr. Fowler: I do not think that they will feel that, and I very much hope that they do not. We want to encourage further occupational schemes, not to reduce them. In the consultation document we have sought to devise proposals which will meet the demand for personal pensions without endangering existing occupational schemes. Clearly, I shall listen to what the National Association of Pension Funds and other pension interests have to say.
Mr. Denis Skinner: Is not the Government's avowed intention to ensure that those who rely on the state scheme will suffer once people begin to pull out at the top end? Cannot an analogy be drawn with what the Government, encouraged by their supporters, did to weaken the NHS by giving the so-called freedom of choice to buy into private medical insurance? Will not the net result be the same, and will not these proposals damage the state scheme? The only beneficiaries will he the insurance companies and about 50 of the Secretary of State's right hon. and hon. Friends who will line their pockets as a result of their association with those companies.
Mr. Fowler: No. That is about as silly as the comments of the hon. Member for Oldham, West (Mr. Meacher) — [HON. MEMBERS: "Not quite."] My hon. Friends correct me—not quite as silly.
The hon. Member for Bolsover (Mr. Skinner) is correct—we believe in giving the public choice. That is right, particularly when 11 million people are not covered by occupational pensions. The only logic of the hon. Gentleman's argument is a system under which both health and pensions should become a state monopoly. He is welcome to make that suggestion, but I doubt whether the public will support him.
Mr. Andrew Rowe (Mid-Kent): Does not my right hon. Friend agree that there are a range of reasons for supposing that the traditional pattern of earnings is likely to change and that many people will be earning much more in the middle of their careers than at the end? Does not this scheme provide the kind of flexibility or response that we all need?
Mr. Fowler: It should not be assumed that everyone wants to be a member of a final salary scheme, for the reasons that my hon. Friend has stated. We are setting out one further option.
Mr. Tony Banks: May I push the Secretary of State further on his reply to his hon. Friend the Member for Enfield, North (Mr. Eggar)? Will employers' contributions be transferred over with portable pensions?
Mr. Fowler: There will be no obligation on the employer to make a contribution, but there will be no restriction on him doing so if that is what he wants. The national insurance rebate will be transferred, but that is different.
Mr. Tim Yeo: Does my right lion. Friend agree that the success of personal portable pensions

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depends heavily on the continued availability of tax reliefs on contributions to those schemes? Will he bear that in mind in any discussions that he may have with his right hon. Friend the Chancellor before next year's Budget?
Mr. Fowler: Yes.
Mr. Michael Stern: I congratulate my right hon. Friend on the start of what is potentially the greatest increase in the freedom of an individual to control his own life since this Government introduced the legal right to buy council houses. I invite him to contrast the attitude of the hon. Member for Oldham, West (Mr. Meacher) with the Opposition's well-known regard for individual democracy at all levels, particularly in the Labour party.
Mr. Fowler: My hon. Friend is right. The personal pension proposals add to other reforms planned by the Government and protect the rights of early leavers, the right to transfer value and provision on disclosure. Taken together, these amount to some of the most substantial reforms in occupational private pensions over the last 20 or 30 years.
Mr. Tony Marlow: As I understand it, if someone is a member of a company pension scheme, he pays the money himself and the company pays some money into the fund on his behalf. If my right hon. Friend is saying that those who opt for the private pension will not get the contribution from the company, there is no real choice and they would be better to stay with the company.
Mr. Fowler: There is no obligation on the company to make a contribution, but what makes this different from, for example, section 226 schemes, is that people will benefit from the rebate of national insurance contributions. That will be a substantial step forward. I very much hope
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that some companies will decide that in the interests of employment policy they will want to make a contribution to personal pensions, but that will be a voluntary decision.
Mr. Meacher: Will the right hon. Gentleman answer three questions which he has dodged throughout these exchanges? What exactly is his guarantee that personal pensions will not threaten the occupational schemes? What safeguards will there be against the hard-sell sharks? What guarantee does he offer that no one on a contracted-out personal pension will end up below the poverty line on a supplementary pension?
Mr. Fowler: On the third point, by setting the minimum contribution we shall seek to ensure that that does not happen.
As I have said before, personal pensions will be contracted out of the state earnings-related scheme. They will therefore benefit from a rebate of national insurance contributions. The effect of the proposals set out in the consultation document will mean that at one and the same stage they will meet the demand for personal pensions without endangering the existing occupational scheme. For example, the rebate proposals mean that the scheme's finances will not be upset if the younger members leave the occupational scheme. The hon. Gentleman will have received a copy of the consultative document and will find the details set out there.
As for consumer protection, I have made it clear already that we shall consult further on that. In my view, such matters as cooling-off periods and exaggerated projections of return are factors in respect of which we shall want to safeguard the public. However, I find the approach of the hon. Member for Oldham, West quite extraordinary. It is clear that he is entirely opposed to the freedom of choice of the public even when it is demonstrated that half the working population are not covered by occupational pensions. Frankly, I think that the hon. Gentleman will live to regret the words that he has uttered today.

Dock Strike
4.10 pm
The Secretary of State for Transport (Mr. Nicholas Ridley): With permission, Mr. Speaker, I should like to make a statement about the clock strike.
Registered dockers are on strike at all ports in the dock labour scheme. Dockers are also on strike at the non-scheme ports of Montrose and Shoreham and, as regards freight traffic, at Dover, Felixstowe and Portsmouth. Ferry services for passengers, cars and coaches are continuing to operate.
As I told the House last week, the Transport and General Workers Union called the strike because of an alleged breach of the scheme by the British Steel Corporation at Immingham. Last Thursday, the National Dock Labour Board, under the procedures in the dock labour scheme itself, decided that the scheme had been breached. By the following day the British Steel Corporation had remedied the matter for the future to the satisfaction of the Immingham dockers.
Despite that, the union has not called off the strike. Discussions between the union and the National Association of Port Employers in the national joint council for the ports industry broke up on Friday evening without any agreement being reached. I understand that the union is insisting the NAPE should guarantee that there will be no breaches of the scheme in future. The port emloyers have reaffirmed their willingness to honour fully their obligations under the scheme and believe that alleged breaches of the scheme should continue to be determined by the dock labour boards under the statutory procedures.
It has been said that dockers fear that the Government intend to abolish the dock labour scheme. Let me make it absolutely clear that the Government have no plans to change or abolish the scheme. There is therefore now no reason whatsoever for the strike.
I understand that both the union and NAPE have now accepted invitations from ACAS to discuss the dispute. I wish them all success. This strike can only damage many jobs in the ports, and in other industries, too. It is not in the interests of dockers, their families, their fellow workers in other industries, or of the country.
Mr. John Prescott: The House will welcome the intervention by ACAS into this escalating docks dispute at scheme and non-scheme ports. Is the Secretary of State aware that I welcome his confirmation today, as I said in an intervention during his last statement, that there was a clear breach of the scheme in law by the British Steel Corporation at Immingham?
May I ask the right hon. Gentleman to repeat the substance of his interview on the radio programme "The World This Weekend", especially his inflammatory remarks about the use of troops?
Has the right hon. Gentleman taken the opportunity to discuss with representatives of the dock workers the contents of his speech on 12 April at the port workers' lunch, when he clearly expressed his sympathy with a call to abolish the scheme, which I warned him at the time would lead to industrial dispute? Is not he aware that his speech, along with his infamous 1978 Ridley plan specifically to dismantle the coal and dock industries, has contributed largely to the fears that have triggered off this dispute? The talk of troops by him now can only serve to inflame it.
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These fears can only make the job of ACAS much more difficult. Will the right hon. Gentleman say that he is now prepared, not only not to change the scheme, but to meet the dock workers to reassure them about the future of the scheme and of the docks in which they work?
Mr. Ridley: I am glad that the hon. Gentleman at least welcomes the intervention of ACAS and I hope that he wishes it well. However, the National Dock Labour Board found that there was a breach at Immingham. Now that the breach has been remedied by the employers, is the hon. Gentleman recommending the Transport and General Workers Union to send the dockers back, since the original cause of the strike has now been proved to be cured?
At no time over the weekend have I mentioned the word "troops". I repeat that the Government stand ready to take any action that eventually becomes necessary to make sure that the essential affairs of the country are kept running.
Since both this week and last week the Government have given undertakings that there are no plans for changing or abolishing the national dock labour scheme, that removes any excuse for the strike. Is the hon. Gentleman now prepared to advise the dockers to go back to work on the ground that they have been misled about the cause of the strike?
Mr. Michael Brown: As my right hon. Friend said, the original cause of the dispute has now been resolved and settled. While wishing ACAS well in its attempt to try to break the deadlock, may I ask my right hon. Friend to say what role ACAS can play, bearing in mind that this does not appear any longer to be an industrial dispute? Is it not a political dispute?
Mr. Ridley: There is a great difference of opinion between Mr. Scargill, who says that it is a political dispute in support of the miners, and the Transport and General Workers Union, which says that it is entirely to do with the national dock labour scheme. I hope that their discussions this morning have succeeded in sorting out that essential difference, because it seems to me that the unions owe it to the dockers to tell them what is the cause of the dispute.
Mr. Richard Wainwright: The Secretary of State has given a welcome assurance now that the Government have no plans to change the scheme. Is it the fact that ACAS, in its difficult task, will not be asked from any quarter to consider amendments to the existing national dock labour scheme?
Mr. Ridley: I cannot answer for what anyone says to ACAS. But only this House of Parliament can change the scheme. It would need the Government to propose legislation to the House before the scheme could be changed. In case anyone did not hear me on the last 20 occasions that I said it, I repeat that the Government have no plans to do that.
Sir Paul Bryan (Boothferry): Is my right hon. Friend aware that at Felixstowe and at Dover the dockers were given no choice before being ordered out on strike? Is not this a repetition of what happened in the coal dispute and yet further proof that these are purely political strikes and have nothing to do with the welfare or grievances of the workers?
Mr. Ridley: It is right that we should have enacted the legislation, which my right hon. Friend the Secretary of State for Employment is bringing to completion, ensuring

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that workers should be consulted in a secret ballot about whether they wish to go on strike. It is evidently plain that at no stage in the docks dispute have any workers been consulted in a secret ballot. Indeed, the evidence from Dover this morning about the nature of the vote is very disturbing.
Mr. Gavin Strang: When will the Government recognise that neither the Transport and General Workers Union nor the National Union of Mineworkers will be humiliated or defeated? How much damage will be done to the country's economy and social fabric before settlements are reached that reflect the legitimate aspirations of these workers to defend their jobs?
Mr. Ridley: I ask the hon. Gentleman, in turn, what are the aspirations of the Transport and General Workers Union? All its requests about this strike have now been shown either to be settled or to be groundless. Can the hon. Gentleman use his influence—since he says that he has it—to get the dockers to accept that they have been called out on strike on false pretences and that it is high time that they went back?
Mr. Robert Adley: We have just listened to a statement from my right hon. Friend the Secretary of State for Social Services about the rights of individuals with respect to pensions. Taking up the remarks of my hon. Friend the Member for Boothferry (Sir P. Bryan), may I remind my right hon. Friend that the House has a responsibility to see that individuals are not bullied and intimidated into taking strike action when they have no choice in the matter? Will my right hon. Friend share my utter contempt of a once great political party that will support any strike by anyone anywhere at any time regardless of the rights or wrongs of the issue involved?
Mr. Ridley: Both points made by my hon. Friend require to be taken seriously by the House. We owe it to all citizens, including those who are members of trade unions, to ensure that they are protected from harassment, intimidation and pressures of the sort that my hon. Friend described. I agree that when we have an Opposition who sink to the depths of supporting a strike that is as flimsy in origin and as unjustified as this one, we have a problem in our political system.
Mr. Kevin McNamara: Will the Secretary of State admit that the guilty party in the strike—the British Steel Corporation—is a major port employer, a member of the National Association of Port Employers and a signatory to the national dock labour scheme? It knew all the implications of its action when it decided to use non-registered labour at Immingham to unload ships.
Will the right hon. Gentleman also admit that the case going before ACAS is on a narrow point, merely asking for procedures to be adopted to prevent strikes arising in the future over the use of non-registered labour? If the right hon. Gentleman really wanted to settle matters today, he could say that not only are there no plans for changes, but that he and the Government have no intention of introducing any changes in the lifetime of this Parliament.
Mr. Ridley: There were two breaches of the dock labour scheme. The first was the one at Immingham to
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which the hon. Gentleman referred. The second was not using the procedures to sort out that alleged breach but instead calling the entire national dock labour force out on strike, before the procedures had been used. It takes two to make a bargain and the unions should stick to the terms of the dock labour scheme, just as much as the employers should.
On the hon. Gentleman's second point, I do not believe that it is possible to go further than to say that the Government have no plans. I cannot give a stronger undertaking than that, and I repeat it.
Mr. Richard Hickmet: Bearing in mind how events arose at Immingham, is not the strike demonstrated to be political by the fact that Mr. Connolly, the dockers' leader, informed the dockers at the ore terminal at Immingham that, notwithstanding the fact that they originally wanted to load ore to go to Scunthorpe, they would lose their cards, jobs and incomes if they did so? Consequently, they stopped working. Has not the strike been engineered by the docker's leaders, in support of Mr. Scargill and his efforts to defeat this democratically elected Government?
Mr. Ridley: Whatever happened at Immingham, I want to make it abundantly clear that that matter has been resolved. Both the unions and the employers at Immingham have come to an agreement that that grievance no longer exists. As it was the original cause of the strike and it has been removed, I defy any Labour Member to tell me what on earth is the reason for the strike.
Dr. Oonagh McDonald: Is the right hon. Gentleman aware that his failure to give a commitment that the Government have no plans to alter or abandon the dock workers' scheme during the lifetime of this Parliament may prolong the strike with damaging consequences for the economy and the docks, including my own at Tilbury? Why cannot the right hon. Gentleman utter the words "no plans to change … during the lifetime of this Parliament"?
Mr. Ridley: The hon. Lady knows full well that if the unions had been frightened on this point they could have asked the Government to discuss it either before or after the strike. Let me point out how absurd the position is. We have a strike based—if this is the reason—on stopping the Government doing something that they have said that they will not do. That is clearly an absurd position. It is no good trying to make a meal out of it; there is nothing there at all.
Mr. Michael Howard: Has my right hon. Friend had his attention drawn to reports of remarks, made after the so-called vote at Dover this morning, by Mr. Shaun Walsh, the freight shop steward at the eastern docks? He said, "We are not happy with this vote at all. It was two thirds against coming out and one third for. We want to run the port as we are running it now." Is it not disgraceful that the men who work at Dover, many of whom live in my constituency, were denied a ballot? Will my right hon. Friend condemn this latest attempt by the trade union leadership to run away from democracy and force its members to take action that they do not wish to take?
Mr. Ridley: I agree with my hon. and learned Friend and I believe that a proper secret ballot should have been

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held. I am sure that all hon. Members who are democrats will agree with us that it would have been better to have a proper ballot. In view of that sort of manipulation, the only redress lies in the dockers at Dover deciding for themselves what they want to do, making their own decision and going ahead with it.
Mr. Allan Roberts: Will the Secretary of State admit that the Government and the National Coal Board claimed that they had no plans to close pits that are now under threat? The Government's statement that they have no immediate plans to destroy the dock labour scheme is not adequate. The right hon. Gentleman needs to commit the Government for the lifetime of this Parliament.
If the right hon. Gentleman wants to help ACAS, will he give an undertaking that no coal will be brought through non-scheme ports from such countries as Jaruzelski's Poland and be handled by non-scheme labour to break the coal strike? Will the right hon. Gentleman withdraw the free market that he has introduced into port scheme development, which will destroy the scheme by the back door, as we predicted in the House three weeks ago?
Mr. Ridley: I intend to leave it to ACAS, which is independent and has the task of seeking to conciliate between the two sides and seeing whether they can find a solution. I do not intend to pre-empt the efforts of ACAS by giving any pledges of the sort that the hon. Gentleman seeks.
Mr. Mark Robinson: My right hon. Friend was right to mention the threat to jobs caused by the dispute. Once again, the steel workers at Llanwern find themselves in the firing line. Will my right hon. Friend give the House an assurance that if ACAS is unable to resolve the dispute the Government will take whatever steps are necessary to ensure essential supplies to industries that are affected?
Mr. Ridley: My hon. Friend is right to emphasise the threat to jobs. The jobs of some dockers will be at risk if the strike persists, but the jobs of many millions of their fellow workers and trade unionists in industries throughout the land will also be at risk. If any group is clearly identified as job wreckers, it is those who strike on such flimsy grounds as existed in this case.
Mr. Ian Wrigglesworth: Does the Secretary of State agree that it is in the overwhelming interests of everyone that the dispute be ended at the earliest possible opportunity? With that in mind, and now that ACAS has become involved, will the right hon. Gentleman and other Ministers refrain from making provocative statements so that ACAS can get on with the job of getting people back to work?
Mr. Ridley: I agree with the hon. Gentleman that the sooner the strike is ended, the better. We hope that ACAS will be able to bring about that conclusion. However, nothing that I or my right hon. Friends have said has been provocative. We have merely been trying to tell the truth to the nation and to the dockers.
Mr. Tim Rathbone: Will my right hon. Friend restate the Government's responsibility not only for those who wish to go back to work, but for all those who want to go to work anywhere in this country and rely on
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the economy for their pensions? Will he also restate the Government's commitment to lay contingency plans if they should be needed?
Mr. Ridley: I entirely confirm what my hon. Friend says, and that the Government are determined to maintain the right of those who wish to go to work to do so. I further confirm that the Government will take all necessary precautions and actions to protect the economic life, and the rest of the life, of this country.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to allow questions on the statement to continue for a further 10 minutes.
Mr. D. N. Campbell-Savours: Will the Secretary of State resist any request or demand for any change in the dock regulations from any person or organisation during the lifetime of this Parliament?
Mr. Ridley: I repeat that we have no plans to alter or abolish the dock labour scheme.
Mr. Ivan Lawrence: Is my right hon. Friend aware that just one of the companies in my constituency, Pirelli, will have to lay off between 1,200 and 1,400 people in two weeks' time unless it can clear its imports from the docks, that an important contract to provide tyres to Toyota is now at risk because it cannot export them, and that the Labour party's support for a bogus strike following upon its wholehearted support of the other bogus strike involving the mining industry shows to those in my constituency and the country at large just which party is the true party of unemployment in this land?
Mr. Ridley: How can Labour Members, who have protested their concern about unemployment year after year in this House, sit there mute, saying nothing in condemnation of the strike, when the jobs of my hon. and learned Friend's constituents and those of many other of my hon. Friends' constituents are at risk? Who are the job wreckers now? Who are the guilty men?
Mr. Jeff Rooker: Does the Secretary of State appreciate that he could not be accused of misleading the House in respect of the commitment that he has given about changing or abolishing the dock labour scheme even if there was such a proposal in the next Queen's Speech? In the nature of things, his words and commitments today can apply only to the present Session unless he gives a commitment that covers the lifetime of this Parliament.
Mr. Ridley: I fear that I must disabuse the hon. Gentleman. He should know that the next Queen's Speech is very far along the road to being drafted.
Mr. Christopher Chope: Does my right hon. Friend accept that he has probably bent over backwards to be patient and statesmanlike in his dealings over the dispute? Can he confirm that at this stage the employees, or trade union representatives, are still in breach of the terms and conditions of the national dock labour scheme?
Mr. Ridley: Yes, Sir. The grievous thing is that the strike was called because of an alleged breach, which turned out to be a breach, by the employers, but nobody ever suggested—
Mr. Peter Snape: It cannot be an alleged breach if it is a proven breach.
Mr. Ridley: I said that it was alleged to be a breach, and turned out to be one. When is the hon. Gentleman going to condemn the breach of the scheme which was involved in taking the men out on strike before the dispute had been put to the negotiating and conciliatory machinery?
Mr. Ron Leighton: Is the Secretary of State aware that his protestations at the Dispatch Box are pathetic? Is he further aware that he personally is the principal cause of the dispute in the docks? It was his hostile and injudicious remarks at the employers' lunch that put a question mark over the dock labour scheme. Moreover, is he aware that we have all read the so-called Ridley report, which advised the Government on how to take on the unions? In pursuit of that report, the Government have made the biggest botch-up of industrial relations to be seen in many of our political lifetimes. He is the guilty party.
Mr. Ridley: Before the strike began, my hon. Friend the Minister of State, Department of Employment, in a reply to a question, said:
"Whilst the operation of the dock labour scheme continues to be questioned, there are no plans to abolish it at present"—[Official Report, 2 July 1984; Vol. 63, c. 42.]
That is what I have said too.
Mr. John Townend: Will my right hon. Friend confirm that the Government will not allow themselves to be blackmailed by the dockers' trade union, that they will not allow trade unions to dictate what legislation should come before this House, and that if, in future, it is found to be in the national interest to change or abolish the national dock labour scheme, the Government will not feel restrained by today's statement?
Mr. Ridley: I confirm my hon. Friend's view about the need to protect the House with regard to passing such legislation as it sees fit, including legislation on trade unions. However, I fear that I must disappoint him by giving him the same answer that I have given to Opposition Members—that we have no plans to alter or abolish the dock labour scheme.
Mr. Tom Clarke: Does the Secretary of State realise that if he really wanted a solution to the problem he would have concentrated on the reference to ACAS and would not have made the controversial statements that he has been giving from the Dispatch Box? Trade unionists are worried about confidence, just as investors are about the value of the pound against the dollar. Trade unionists will not have confidence in this Government as long as 4 million people remain unemployed.
Mr. Ridley: Confidence will be restored if the dockers as well as the miners return te, work. I can think of no greater blessing or boon to our overseas competitors and of no greater opportunity for damaging this nation's economy than that offered by these two strikes, particularly as there seems to be no foundation for the dock strike.
Sir Kenneth Lewis: If the Transport and General Workers Union refuses, in its discussions with ACAS and the employers, to settle the dispute, the situation will become very serious. The people of this country will then see that the NUM and the TGWU are taking on not the Government but the country as a
40
whole. Will my right hon. Friend and, perhaps, the Prime Minister do something that they might be reluctant to do, but which will be very necessary, and call in the TUC to point out to it that there is great danger to the whole trade union movement if it does not get its people back to work and prevent a national catastrophe?
Mr. Ridley: My hon. Friend has rightly drawn attention to the risk to the country, but the two strikes are also putting the livelihoods and jobs of many of those unions' members at risk. The tragedy is that they were not consulted before the action was taken. There is no question about the Government calling in the TUC. It is self-evident, and must be so to the TUC, that the damage done to the trade union movement by those disputes is very great indeed.
Mr. Tam Dalyell: What contingency plans are there to supply fortress Falklands? Is the Secretary of State aware that I have been told by Mr. Derek Tedder of the National Union of Seamen at Avonmouth that no dispensation has been given, that the Romney sailed three hours before the strike started, and that it is extremely doubtful whether the next ship, the Orepesa, will sail? What do the Government intend to do? Is not it time to think of putting the £3 million a day which, according to The Sunday Times, is being spent on fortress Falklands into investment in the docks as well as many other things?
Mr. Ridley: I very much hope that essential ships for the Falklands and St. Helena will be allowed to sail, and that our essential exports and imports will also be allowed to move. However, I am glad to find one Opposition Member who appears to question the point and validity of the strikes.
Mr. Derek Conway: Is my right hon. Friend aware that a factory in my constituency gained an important export order that would create an additional 40 jobs in Shrewsbury, but that those jobs are now in jeopardy as a result of the dispute? Will he do whatever is possible to ensure that the public are aware that the real job wreckers are Opposition Members?
Mr. Ridley: I shall certainly do just that. Perhaps my hon. Friend would care to draw the plight of his constituents and the number of jobs at risk to the attention of the TGWU, in case its heart is softer than those of Opposition Members.
Mr. Tony Banks: Since the Secretary of State has not seen fit to give an assurance, can he say whether he stands by his earlier wish to make changes in the dock labour scheme?
Mr. Ridley: I have given my assurance, which included the words we shall not "change or abolish the scheme".
Mr. Matthew Parris: Since both sides have agreed to put the matter to ACAS, what is to stop a return to work while the ACAS report is awaited?
Mr. Ridley: The answer eludes me.
Mr. Prescott: Is the Secretary of State aware that his talks about ballots on this particular day comes a little hard when the courts have declared that the Government are guilty of an illegal act? The Secretary of State has not made clear his intentions for the dock labour scheme. He

41
says in his statement that he has "no plans" to abolish it, but is he aware that a number of employers have plans to change the scheme?
Can he assure the House that he does not intend to bring forward plans to the House during the life of this Parliament to change the national dock labour scheme? Is he aware that if he could give that assurance he would go a long way to making the matter clear within ACAS?
I have been asked whether I will encourage a return to work. Can the Secretary of State join me in endorsing the statement put out by the trade union at the breakdown of negotiations asking for a condemnation of future breaches of the dock labour scheme and accepting that non-registered labour can be employed on dock work only under the circumstances provided by the dock labour scheme 1967 and subject to prior agreement with the trade union? I fully endorse those words. Can the Secretary of State do the same? If he can, he will see the return of the dockers to work.
Mr. Ridley: The hon. Member for Kingston upon Hull, East (Mr. Prescott) knows that, whatever the port employers may say, the only way that the scheme can be changed is by legislation in this House. I have given a pledge that the Government have no plans to do that.
The hon. Gentleman mentioned the trade union's demand to alter the scheme. That is a matter—
Mr. Prescott: It is not a change in the scheme.
Mr. Ridley: Of course it is a change in the scheme.
Mr. Prescott: The right hon. Gentleman does not understand it.
Mr. Ridley: Of course I understand it. The unions are asking that they and they alone should decide how to classify dockwork and that is a threat to other people's jobs.—[HoN. MEMBERS: "No."] That is what the unions want.
Why did the unions not raise the matter before they went on strike? When did they seek to negotiate with the employers? They suddenly came up with the idea the moment that the Immingham dispute was shot from beneath them. The hon. Gentleman's exposition of his position is disgraceful. Why on earth cannot he get up and say that the strike should be finished and wrapped up, and that the men should go back to work?

Merrel Drug Company
4.43 pm
Mr. Jack Ashley: 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 need for the Government to take action to restrict wherever possible the use of drugs supplied to the National Health Service by the Merrel drug company in view of that company's discrimination against the parents of children in Europe who may have suffered damage as a result of the use of the drug Debendox, compared with those parents so affected in the United States."
The matter is specific because the drug company has offered to pay £92 million to children in the United States who have claimed damages. The company has no intention of paying money to children in Britain who have made a similar claim. This outrageous discriminaion overlooks the fact that geography is irrelevant. The sole criterion for paying compensation for damage should be whether children have been damaged by the drug.
The matter is important because by this manoeuvre the Merrel drug company is trying to evade the legal consequences of using that drug. It now says that the drug was safe. It would say that, would it not? No company would pay £92 million without good reason. The proposed settlement is a £92 million surrender document. It is a surrender to powerful interests in the United States, who have felt for these children. The company has no intention of paying compensation to children in Britain. That is wrong and discriminatory.
The matter is urgent because Merrel should be told immediately that the British Parliament has no intention of accepting discrimination against British children. The Government should take immediate action. The Government have a powerful weapon, because they are major customers of the Merrel drug company and can advise British general practitioners to use drugs from other companies where possible.
I suggest a selective boycott of the Merrel company by the Government, using National Health Service purchasing powers, until this discrimination against British children is ended. The Government should fight for our children.
Mr. Speaker: The right hon. Member for Stoke-on-Trent, South (Mr. Ashley) 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 need for the Government to take action to restrict wherever possible the use of drugs supplied to the National Health Service by the Merrel drug company in view of that company's discrimination against the parents of children in Europe who may have suffered damage as a result of the use of the drug Debendox, compared with those parents so affected in the United States."
I listened carefully to what the right hon. Gentleman said, but I regret that I do not consider the matter to be appropriate for discussion under Standing Order No. 10 and, therefore, I cannot submit his application to the House.

Dock Strike
4.46 pm
Mr. Michael Brown: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 1Q, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the national dock strike."
The matter is specific because nearly all the main ports in Britain are strike-bound and no discharge of cargoes is taking place. The matter is important because now that the original cause of the dispute, which started at Immingham dock in my constituency, has been removed, the strike has escalated into a clear attempt by industrial means to challenge the democratic process. Dockers are now on strike for no reason.
The House will soon rise for the summer recess. There should, therefore, be an immediate opportunity for this serious matter to be debated. The implications of the strike and the reasons for its escalation have a direct bearing on the country's survival. The strike is now clearly designed to challenge the Government's authority, and has nothing whatsoever to do with the dispute which started at Immingham in my constituency.
Mr. Speaker: The hon. Member for Brigg and Cleethorpes (Mr. Brown) 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 national dock strike."
I listened with care to what the hon. Gentleman said, but I regret that I do not consider that the matter is appropriate for discussion under Standing Order No. 10 and, therefore, I cannot submit his application to the House.

GCHQ, Cheltenham
4.49 pm
Dr. David Owen: I beg to ask leave to move the Adjournment of the House—
Mr. Tam Dalyell: On a point of order, Mr. Speaker. I believe that I was the first to give notice—
Mr. Speaker: Order. I do not know how the hon. Gentleman can know that.
Dr. Owen: 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,
"Mr. Justice Glidewell's judgment that the ban on trade union membership for anyone working at GCHQ is invalid, of no effect and a breach of the rules of natural justice."
The matter is specific because, it relates only to GCHQ. It is important because in taking a decision without prior consultation on a matter that Mr. Justice Glidewell referred to as one of fundamental rights, the Prime Minister—as First Lord of the Treasury and, therefore, Minister responsible for the Civil Service — has acted unlawfully — an action without precedent and, in the words of the judgment, against the rules of natural justice. Never in our history has a British Prime Minister been found guilty in a British court of law and been placed in the dock on an issue that is, without doubt, without precedent in living memory.
The matter is urgent because the judgment was made after 12 o'clock today, so it was not possible to table a private notice question for answer by the Prime Minister. It is urgent also because it is an issue on which this House should take an opinion, preferably before the Government make up their minds whether to appeal. We have been told that the Government are urgently considering an appeal. I suspect that many hon. Members, on both sides of the House, want the opportunity to make a case for why the Government should not appeal and why they should re-enter negotiations to reach an accommodation with the unions about a no-strike and no-disruption agreement.
Many hon. Members have shown great interest in the matter and have given evidence to Mr. Justice Glidewell in written affidavits. As there has been no discussion in the House about GCHQ for many weeks, it is urgent that the House expresses its view on this vital matter.
Mr. Speaker: The right hon. Gentleman asks leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the decision by the High Court on the trade unions at GCHQ."
I listened with care to what the right hon. Gentleman said, but I do not consider that the matter he has raised is appropriate for discussion under Standing Order No. 10 and I cannot, therefore, submit his application to the House.
Mr. Dalyell: On a point of order, Mr. Speaker. Either before or after the right hon. Member for Plymouth, Devonport (Dr. Owen), I submitted an application on similar lines to those that he set out. I submit that he has not put the case properly. He did not emphasise the argument which must appeal to you—as a Speaker who has constantly said that he is concerned that the voice of

45
Parliament should be heard before and not after the event — about the crucial nature of the Government's statement that they may appeal.
The voice of the House of Commons should be heard before, and not after, any decision is made. By Wednesday, it will be too late. I am making an absolutely bona fide point of order. It is not a Johnny-come-lately submission. I asked questions about GCHQ on 18 December, long before the Foreign Secretary's statement. That is important because, in a sense, I feel that I was unwittingly partly responsible for the chain of events that followed—
Mr. Speaker: Order. What is the point of order for me?
Mr. Dalyell: In December I was told—
Mr. Speaker: Order. What is the point of order that the hon. Gentleman wishes to put to me? I am well aware of his considerable interest in and knowledge of this matter. He must put a point of order to me, or we must move on.
Mr. Dalyell: It is a point of importance, upon which the right hon. Member for Devonport did not touch. In mid-December I was told that GCHQ at Cheltenham had decoded the crucial orders to the Belgrano — [Interruption.]
Several Hon. Members rose—
Mr. Speaker: Order. I do not think that I want any help. I am answering a point of order. May I say to the hon. Gentleman and to other hon. Members that I listened exceedingly carefully to what the Leader of the House said in his business statement earlier this afternoon about the milk regulations debate on Wednesday, and to what he said about GCHQ. I believe he said that he was proposing to discuss the matter through the usual channels. If anything comes of those discussions I shall, of course, bear in mind the hon. Gentleman's interest in this matter. I cannot go beyond that this afternoon.
Mr. Peter Tapsell: The hon. Member for Linlithgow (Mr. Dalyell) twice this afternoon, in the hearing of the House, said that he had made an application under Standing Order No. 10, which clearly he was not granted. Have the rules of the House been changed? I have always understood that if an hon. Member applies for a Standing Order No. 10 debate, and that is not allowed by the Chair, it was strictly out of order ever to refer to it. Yet the hon. Member for Linlithgow has been allowed to make a submission on the subject that he wished to raise under Standing Order No. 10.
Mr. Speaker: Order. In fairness to the hon. Member for Linlithgow (Mr. Dalyell), it must be said that he submitted an application under Standing Order No. 10. and there is nothing wrong in his mentioning that. The news of the GCHQ judgment came after 12 o'clock, so there was no possibility of my considering a private notice question on the subject. The hon. Gentleman was within his rights to submit an application under Standing Order No. 10. It so happens that I had a further application from the right hon. Member for Plymouth, Devonport (Dr. Owen). The order in which the applications were received does not matter. It is a matter for the Chair. However, it is a fact that I heard from the right hon. Gentleman before I saw his written submission. Those are the facts.
Several Hon. Members rose—
Mr. Speaker: Order. No further points of order can arise on this matter.
Mr. Tapsell: Further to that point of order, Mr. Speaker. I do not pretend to be an expert on constitutional procedure, but I have sat in the House for a long time. With great respect, it appears that you have elaborated on what appears to be a new constitutional practice. If an hon. Member makes an application under Standing Order No. 10, will he now be allowed to refer to that and to ride on the tails of an application from another hon. Member? Does whether an hon. Member applies before or after 12 o'clock govern the matter? The rules appear to be in a state of flux.
Mr. Speaker: Order. The hon. Gentleman has been here long enough to know the rules. By way of explanation, I can tell the House that there was no opportunity before 12 o'clock for any submission to be made. The hon. Member for Linlithgow was within his rights to seek to make a further application under Standing Order No. 10. However, in the light of what I said to the right hon. Member for Devonport, I could not have accepted any submission from the hon. Member for Linlithgow. I allowed his point of order because he had made an application. Had there not been a previous application from the right hon. Member for Devonport, the hon. Member for Linlithgow would have been heard.
Several Hon. Members rose—
Mr. Speaker: Order. I do not need any help.
Mr. John Gorst: On a point of order, Mr. Speaker. With great respect, I do not wish to offer you help but to seek your advice. In view of your reference to the change of business announced by the Lord President of the Council, will you afford him an opportunity now to assure the House that no decision about an appeal will be made before the usual channels have discussed the matter?
Mr. Speaker: Order. The right hon. Gentleman is in the Chamber and has heard what I have heard.
Mr. Nigel Spearing: Further to that point of order, Mr. Speaker. I believe that the House, under Standing Order No. 10, has given you instructions to reach your conclusions without giving reasons — although occasionally people may hear things to indicate, and give some understanding of, your reasons. Is it not the case that, under Standing Order No. 10, the important phrase is "in time"?
The Leader of the House said that there may be some conversations between the usual channels about a debate on this matter. Through you, Mr. Speaker, I ask him for an undertaking from the Government that there will be no decision on the matter referred to by the hon. Member for Hendon, North (Mr. Gorst)—that is, a decision on an appeal — until and unless those conversations have concluded and there is a further opportunity for any hon. Member, possibly my hon. Friend the Member for Linlithgow (Mr. Dalyell), to raise an application under Standing Order No. 10 where the phrase "in time" can be applied by you accordingly.
Mr. Speaker: That is not a matter for me.
Dr. Owen: I rise on a different point of order, Mr. Speaker, and I seek your guidance on what the House can

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do in circumstances such as those which have arisen today. The House understands that the ruling on private notice questions is for the convenience of both Ministers and the House. However, there must be a capacity for the House to respond to events, particularly in respect of an announcement that is made after 12 o'clock and especially when there is in an announcement an indication that the Government already knew the judgment that was likely to be made.
I ask you, Mr. Speaker, to give us advice on what should be done, bearing in mind that the GCHQ issue on the last occasion was not discussed in the House for nearly eight weeks, that an application for the Adjournment of the House under Standing Order No. 10 was, within your discretion, refused and that the usual channels then conspired not to have a debate.
The reference today to the usual channels has caused some confusion on the Opposition Benches. As you know, Mr. Speaker, we are excluded from those talks. What is meant is a discussion between the Labour party and the Conservative party for the mutual convenience of themselves in the management of the House. That mutual convenience stopped a debate on GCHQ and other issues.
The other parties in the House also have rights. How else, on a really urgent matter of business, can we ensure—particularly on the Adjournment, because it is often easier for the House to form a view across the parties in such a forum and, as it were, by vote, to put a warning shot across the Government's bows—that we have a debate? What other procedures are open to us?
Mr. Speaker: It would have been necessary to have had the information before 12 o'clock for a private notice question to have been considered. The news did not come out until after 12 o'clock, so that there was no possibility of that happening. The remarks of the Leader of the House were made before the right hon. Member for Plymouth, Devonport (Mr. Owen) made his Standing Order No. 10
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application. I have no knowledge about whether conversations have or have not taken place, though I should be surprised if they had.
Mr. Peter Bruinvels: On a point of order, Mr. Speaker. I seek your guidance. Is it in order for one hon. Member to describe another as a "Tory scab" in the way that the hon. Member for Bolsover (Mr. Skinner) did—[Interruption.]—and is that not an unparliamentary expression?
The hon. Member for linlithgow (Mr. Dalyell) said that he had had difficulty hearing what the hon. Member for Plymouth, Devonport (Dr. Owen) said when making his Standing Order No. 10 application. Are you aware, Mr. Speaker, that it is difficult for hon. Members on these Benches to hear when there is continuous heckling from the hon. Member for Bolsover?
Mr. Speaker: The answer to the first part of that point of order is that personal abuse in this place should always be avoided. The answer to the second part is that interruptions from a sedentary position always disrupt our proceedings. I hope that they will not occur.
Mr. Dennis Skinner: On a simple point of order, Mr. Speaker. We listened with care to the way in which the Leader of the SDP tried to make his Standing Order No. 10 application. He did not explain it properly and my hon. Friend the Member for Linlithgow (Mr. Dalyell) had to do the job for him. It became apparent that there had been two Standing Order No. 10 applications. May I ask you, Mr. Speaker, at what time my hon. Friend the Member for Linlithgow made his application and at what time he was followed by the leader of the SDP making his application? May I also know why the leader of the SDP received preferential treatment over my hon. Friend?
Mr. Speaker: The application of the right hon. Member for Devonport was handed to me before I received that of the hon. Member for Linlithgow (Mr. Dalyell).

Investor Protection (Gower Report)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Neubert.]
5.5 pm
The Secretary of State for Trade and Industry (Mr. Norman Tebbit): This debate provides an opportunity for the House to share its thoughts on developments in the wider debate on the financial services sector. We should not restrict ourselves to a narrow concept of "the City", which is an increasingly inadequate term to describe an array of services offered and sought in the wider financial markets throughout the world.
Nor should we be narrow-minded about investor protection, as though the investor's interest was in conflict with that of the market, its operators and other users. I hope to present my White Paper on the Government's policy towards these matters in the autumn, and I hope that it will be possible to bring forward a Bill in the 1985–86 Session. These issues have been widely discussed outside this House. I have given them a good deal of thought and have begun to reach some provisional conclusions, but before putting those to the House in the form of firm proposals, I think it right that I should listen to, and take account of, the views of the House, though I would be surprised if unanimity broke out on this issue today.
For many years these issues had been a rather non-controversial area, but in recent times a number of events have brought them to a greater prominence. First, there was the reference of the Stock Exchange practices to the Restrictive Practices Court; then, on 27 July last year, the announcement by my right hon. Friend the Member for Hertsmere (Mr. Parkinson) that the chairman of the Stock Exchange had put forward proposals which formed an adequate basis for legislation to withdraw the exchange from the ambit of the restrictive trade practices legislation; and then the publication, some six months later, of Professor Gower's proposals.
These events heaved a massive brick into the once tranquil waters of the City, sparking off a process of change and reform — both within the Stock Exchange and beyond it—more radical than the City has seen for many years, a long way from the so-called "sell out to the City" of which the ignorant and biased complained at the time.
For instance, the plans of the Stock Exchange for a new dealings system will demand new measures of investor protection. I have made plain the importance that I attach to this, and to meeting the December 1986 deadline. Hon. Members who follow these matters will doubtless raise them in detail during the debate. They will be aware that discussion continues about such issues as the publication of trading information.
This has been billed in some ways as a debate on Gower. It may go even wider than that. While views on Professor Gower's prescriptions may differ, I wish to pay tribute to him for providing what I think is a unique anatomy of one of the world's major financial centres.
For a while, it seemed that even informed opinion on what reforms were needed, and how they might be accomplished, was not merely divided but irretrievably fragmented. My impression is that the common ground is now reappearing.
The purpose of the debate is not for me to announce firm conclusions but to enable me to take account of the
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views expressed, though I will indicate the direction in which my thoughts are moving. A number of important responses to the Gower report have emphasised that my Department should remain the regulatory authority, and it has certainly shown itself as a competent regulatory authority. But I see my role and that of the Department in rather broader terms—not only to regulate the industry but to foster it.
My first objective is that the financial services sector should be able to provide services to British industry and commerce, to private investors and to Government in the most efficient and economical way, and in a way that is fully competitive internationally. We start with some tremendous assets: the happy accident of a geographical situation midway between the Americas and the far east, our long-established reputation for speed and ingenuity, not to mention our freedom — one established by deliberate policy of this Government — from onerous exchange controls.
I hope the House needs no reminding of the major importance of the City to private sector industry and commerce and to Government. It is in the City that my right hon. Friend the Chancellor funds the PSBR, that industry and commerce seek capital, that individuals and institutions invest savings, and whence, in addition, we received a net contribution to our balance of payments surplus in 1983 of an estimated £2·6 billion.
My second objective is to see the maximum freedom for market forces to stimulate competition and encourage innovation. In matters such as openness to newcomers and price competition, the financial services sector — and some other parts of the services sector—still have some catching up to do.
Thirdly, I would aim for a regulatory framework which is responsive to international developments and is not merely a cover for protectionism. The best firms—big and small—in the City are well aware of the need to stay ahead of our competitors lest business moves overseas.
My fourth concern is that the British financial services sector should be both competitive and a "clean" place in which to do business, and moreover that it is seen to be so. Our regulatory framework must command the confidence of users, both here and abroad. It does not take many scandals to sully the reputation of a multitude of decent traders. There can be no conflict of interests in this matter between producer or provider on the one hand and the customer on the other. Unless the markets command the confidence of potential customers, here and abroad, they will not attract the business they need to prosper and develop.
Finally, I want to achieve a regulatory framework which is clear enough to shape, but not yet so tight as to cramp the pattern of structural change in the City, but which has the resilience not to be simply overrun by events.
One danger of Government regulation is that it can have an ossifying effect. As the House knows, it is difficult to find time to keep the law up to date with a fast developing business world. The rules, therefore, must be robust enough to cope with developments in practice and technique. They must be broadly-based, so that they are appropriate for the whole range of dealings, from professionals-only dealings to dealings more generally.
Mr. Tam Dalyell: On page 45, Gower recommends:
"Recognised self-regulatory agencies should be empowered to apply to the courts for the issue of subpoenas to compel attendance of witnesses and production of documents required in connection with their disciplinary proceedings."
Does the right hon. Gentleman accept that crucial recommendation?
Mr. Tebbit: No; such matters will become clear in the White Paper. This is a debate in which I am seeking to set out the general thrust of my thinking. I shall listen to the views of the House before I come to firm conclusions. I am sure that that is the correct way in which to deal with the matter.
Mr. Dalyell rose—
Mr. Tebbit: The hon. Gentleman has had more than a fair share of the time of the House. I think that I should proceed with my speech so that other hon. Members have the opportunity to catch Mr. Deputy Speaker's eye.
So much for my objectives. How might they best be secured? I see market forces as the most potent weapon available, and I propose to rely on them to the maximum extent feasible. That extent is not easy to define, but I should set out at least some of the requirements for market forces to operate effectively to that end.
First, there should always be a high standard of disclosure. There can be no effective play of market forces without good market information. All the relevant facts must be exposed in a way that enables the potential client to compare like with like and draw the appropriate conclusions. If the investor draws the wrong conclusions, on the basis of fair disclosure—venturing all or part of his savings on an avowedly speculative and high-risk venture which fails for straightforward commercial reasons — he cannot look to any regulator for compensation for losses arising from his own misjudgments.
Secondly, it means a rigorous application of competition policy, tolerating practices which inhibit competition only in so far as they are essential to provide reasonable protection against malpractice.
Thirdly, it means vigorous enforcement of the criminal law, as expressed in existing statutes such as the Theft Act 1968 and in a simplified and clearer investment law.
I was pleased that my right hon. Friend the Chancellor of the Exchequer in his recent perceptive and wide-ranging speech to the Bow Group emphasised that point. The House will be aware that my powers under section 109 of the Companies Act 1967 will support a new standing fraud investigation group, reporting to the Attorney-General, staffed by people from my Department, the office of the Director of Public Prosecutions and the police. The existing procedures for trying complicated fraud cases are under review also by the Roskill committee. I look forward to its report in due course. I firmly believe that a sharp increase in the probability of conviction of fraudsters would strengthen the hand of the overwhelming majority of honest City businesses and improve the confidence of their customers.
Those three elements will in my view go a long way towards meeting the objectives that I have outlined today, but alone they will not do enough to give investors the necessary confidence. Caveat emptor and pursuit of swindlers alone cannot suffice in this area. I am certain
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that confidence cannot be achieved without supplementary measures aimed at making fraud and near fraud less likely to occur.
The orders signed over a year ago by my hon. Friend the Member for Reading, East (Sir G. Vaughan) to raise the standards required of licensed dealers in securities show the sort of things I have in mind by way of what I called "Supplementary Measures". For example, it is right that people in the investment business should be what are known as "fit and proper" persons. That implies, among other things, appropriate financial standing, relevant experience, and a background free from offences involving dishonesty. Similarly, we would expect to see business being conducted in a way that safeguarded the investor against malpractice. The ingredients might include separate client accounts, compensation, disclosure of interest in transactions for clients and the principle that in any conflict of interest the client's interest should be paramount.
We need to establish how best these and other appropriate conditions can be established. I should prefer the safeguards to be provided through institutions devised and largely administered by the financial services industry itself. I know that many Labour Members — who as Socialists support the centralist or corporatist approach—would no doubt rather see the Government in charge of every detail, even at the cost of a massive bureaucracy that would regulate the financial services sector to death. They should consider first the advantages of self-regulation. It means that practitioners, close to the intricacies of their various businesses, run their own affairs. Such self-regulatory agencies can enforce not just the letter, but the spirit, of their rules; and they will if we ensure that regulation is in their own best interests.
The agencies should be equipped to act quickly and flexibly and to pay for themselves, since the financial services industry and its users reap the benefits of a clean and healthy market.
Mr. Nicholas Budgen: My right hon. Friend said that he thought that his Department should be the main regulatory body. What role does he assign to the Bank of England in supervising those markets?
Mr. Tebbit: I think that my hon. Friend slightly misheard me. I said that my Department had a good record as a regulatory authority—it is a very competent one—not that it should look for a new empire. I know that the Governor of the Bank of England has no wish to add to the bank's formal regulatory responsibilities, and I am sure that he is right. I do not believe that there is a difference between my Department and the Governor on these issues.
Mr. Hugh Dykes: I appreciate that this is a preliminary debate, but there is an important point in connection with the Bank of England's plans to draw up a system for gilt-edged dealing, the Stock Exchange being responsible for the other dealing systems. Is there not a danger that in so doing, and switching jobbers and brokers to primary dealers and broker-dealers, it will create a closed shop, even unwittingly? Will my right hon. Friend give a pledge that that will be deliberately avoided?
Mr. Tebbit: I shall wait, if I may, to see the final conclusions that are reached on that point. The Bank of England is, of course, a not inconsiderable customer in the

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market. The fear that has been expressed is that if conclusions were reached about the way in which that market should be operated it might prejudice conclusions about the way in which other parts of the market, which might not have the same requirement, should operate. I am sure that the Stock Exchange Council is well aware of those considerations. I was much encouraged by the fact that in the last few days the council was able to make a unanimous report which bore on some of those problems.
Mr. Robert Sheldon: This is an important point. While I fully accept what the Secretary of State says about the value of self-regulating bodies, is it not essential that there should be some back-up provisions? That is the crucial aspect—whether it is the Bank of England or some other body.
Mr. Tebbit: The right hon. Gentleman has come to the point that I was about to make. Of course these self-regulatory arrangements need to be underpinned by statute while at the same time leaving a flexible operation that can adapt to changing business circumstances.
I believe that the institutions — the self-regulatory authorities as they have come to be known—should be relatively few in number and based on functions or types of business activity rather than on traditional patterns. They should include lay members, users as well as practitioners, to guard against the danger of them becoming closed shops or cosy clubs.
The House will be aware of the small advisory groups established with my blessing and that of my right hon. Friend the Chancellor of the Exchequer. One deals with insurance and is chaired by Mr. Fields, the chairman of the Life Offices Association, and the other is chaired by Mr. Jacomb of Kleinwort, Benson and is interested in the whole of the securities industry outside insurance. I hope that they will advise on workable systems of self-regulatory bodies for the investment and insurance industries.
While I await the advice with interest, I cannot necessarily be bound by it any more than I can be bound by that of the many other informed bodies and individuals who have been kind enough to offer advice. I hope that the Governor's group will help us to tackle some of the difficulties that a system of self-regulatory agencies would doubtless present. For example, how might such a system deal with the grey area; with overlapping functions; with diverse functions and potential conflict of interest? Who will regulate those firms or institutions—an increasing number, growing not least because of our action on the Stock Exchange—which do not fit straightforwardly into a single SRA? Should there be—this goes back to the point made by the right hon. Gentleman—as many have suggested, an intermediate or co-ordinating body to liaise between Government and the agencies?
We should need to resolve first whether such a body is neccessary and, secondly, if so, what form it should take. I am sure that hon. Members who take part in the debate will put their views on these complex matters on record.
I shall end by saying what I think about these matters at present. I have not yet come to my final conclusions, but I am inclined to the view that a number of self-regulatory authorities should be set up on a functional basis. There should be as few as possible and they should cover as much of the area as possible; and, though voluntary bodies, they should have statutory backing. If
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there were but one SRA — clearly most unlikely — it would need no "intermediate authority". It would be all things. It would, in effect, be a voluntary Securities and Exchange Commission. If there were to be a proliferation of SRAs, a co-ordinating body—the intermediate body—will be inevitable.
I sense a degree of movement of informed opinion in recent weeks towards toning down the ideas of the enthusiasts for a Securities and Exchange Commission and an acknowledgement of a possible role for an intermediate body among those who were formerly devoted to the system of first-tier SRAs alone. However, I am still prepared to listen to the arguments and to be convinced one way or the other. However we operate the system, it is clear that the SRAs will need to be seen to be responsive to the needs of the investors., as I have said, and not just to become cosy clubs regulating their own affairs for the benefit of their own members.
Mr. Jonathan Aitken: I fully understand and support my right hon. Friend's enthusiasm for these self-regulatory authorities, but will he take care to ensure that they have the necessary teeth to be seen to do the job properly? Is my right hon. Friend aware that the pattern of self-regulation set by Lloyd's of London—the last legislation from his Department—has resulted in circumstances that are akin to trying to clean out the Augean stables with a toothbrush? This is woefully inadequate, and much stronger powers are necessary if this side of the City is to be regulated properly.
Mr. Tebbit: I cannot agree with my hon. Friend's analogy of the clean-up exercise. The form and thrust of my speech must be plain, because once again someone has asked a question about the paragraph to which I propose to come.
Sir Anthony Grant: Before my right hon. Friend leaves that point—
Mr. Tebbit: I have not come to it.
Sir Anthony Grant: —and following the intervention by my hon. Friend the Member for Thanet, South (Mr. Aitken), is my right hon. Friend aware that the criticism, if criticism there be, of the regulations flowing from the Lloyd's Act 1982 are that they are too strenuous and too detailed, not that they are too weak?
Mr. Tebbit: I am not going to become involved in a discussion on the size of the toothbrush or the extent of the clearing-up exercise, but the SRAs will need power to discipline members, and there will need to be an effective appeal mechanism against expulsion or exclusion from the market, and powerful incentives for would-be traders to operate within rather than outside the SRAs.
I believe that it is right at this stage for the House to give its views, which I fear may not be unanimous, but I hope that at least we shall find some degree of unanimity on the future of the financial sector and upon its vital importance to the country. I hope that we shall find a reasonable degree of unanimity on the approach of the so-called SRAs. I should be particularly grateful for the views of hon. Members on whether an intermediate authority is needed and, if so, what sort of powers it should have and how it should be operated.
I am sure that, above all, we shall agree that the financial services sector must have a proper regulatory

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system. I hope that the debate will mark a further step towards a consensus on how the future might best be assured in relation to the regulatory systems.
Mr. Dykes: In the light of recent press reports, does my right hon. Friend fear that the process of reform and change of the Stock Exchange will be inevitably slowed down as a result of the recent council elections?
Mr. Tebbit: I am firmly of the opinion that the deadline of December 1986, which was entered into in the agreement between my right hon. Friend the Chancellor of the Exchequer and the Stock Exchange, must be met. Sir Nicholas Goodison was kind enough to make it plain to me recently that it is the view of the Stock Exchange Council that that deadline can be met.
5.29 pm
Mr. Peter Shore: I shall comment on the speech of the Secretary of State for Trade and Industry before putting to the House the tentative views of the Opposition.
First, I express my gratitude and, I believe, that of most hon. Members to Professor Gower for the quality of his report, the clarity of its analysis, the detail of his proposals, the methodical and comprehensive consultation with virtually all the interests involved and his remarkable industry in providing not merely a part I report, but shortly, and with the assistance of Sir Arthur Stainton, formerly the first parliamentary counsel, providing us with a part II Bill to implement his recommendations. This is a remarkable achievement and Professor Gower deserves the thanks of the House.
I make plain the great importance which the Opposition attach to the necessary protection of investors from, as Professor Gower succinctly put it,
"ignorant fools as well as from convicted crooks."
Wealth is still unevenly shared, but there has been a rapid growth of compulsory or quasi-compulsory saving, principally in the form of pension funds and the massive growth of owner-occupation, mortgage lending and building society accounts, together with the traditional taking out of life and industrial insurance policies. There can be no doubt that that means that millions of our fellow countrymen, many with quite modest incomes and savings, have a direct interest in effective investment protection and defence against financial fraudsters.
As to the approach of the Secretary of State, I shall not cavil at his prospective offer of a White Paper later in the autumn. It is right on the Adjournment—although we have had to wait for it—to have a fairly open debate. It makes good sense to hear what the House has to say, as there are many hon. Members on both sides of the House who have a great deal to contribute from their own direct experience. However, the right hon. Gentleman has missed something of an opportunity. He has underplayed his role, perhaps uncharacteristically — he is not normally accused of lacking in self-assertion—and has not given a sufficient lead in terms of the direction of his thinking. At this stage of the debate, the House and many outside would have welcomed that.
The right hon. Gentleman should not necessarily have reached conclusions, but he should have given the House a further steer. That is my judgment on his speech, and I should be surprised if it were not shared by a substantial
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number of people both in the House and outside. Later, I shall address two or three of the interesting and difficult questions with which the Gower report presents us.
Mr. Tebbit: The right hon. Gentleman must accept that if I had given anything beyond the steer that I have given, I should have specified the precise place at which I intended to arrive in my White Paper. That would have been the wrong way to approach this issue. This is a matter on which there are not partisan positions and no God-given solutions to the problems. We have to find the solutions in a constructive way.
Mr. Shore: This is not a matter of partisan division, but it is a matter of giving sufficient intellectual leadership and analysis to enable others more easily to formulate their views and to try to reach conclusions.
Common sense suggests, as the right hon. Gentleman suggested, that there will be sectors where the search for greater security and protection could conflict with the broad economic objective of internationally competitive and efficient markets. This conflict is more apparent than real, because nothing is more likely to damage long-term confidence in markets than situations where, through lack of regulation of investor protection, large-scale and continuing frauds are allowed to occur.
A balance has to be struck and we would be foolish if we did not recognise that the immediate reason for establishing the Gower investigation was the string of collapses of stockbrokers and investment managers, including such well-known names as Hedderwick, Sterling Gumbar Norton Warberg and Halliday Simpson, not to mention the still more serious defaults at Lloyd's that were revealed shortly afterwards. It was that that gave the impetus and occasion for this latest and most searching review of the legislation and machinery for investment protection.
The central purpose is made manifest in the terms of reference, set out in July 1981 by the right hon. Gentleman's predecessor but two, the present Leader of the House. The terms of reference were:

"(a) to consider statutory protection now required by (i) private and (ii) business investors in securities and other property …

(b) to consider the need for statutory control of dealers in securities, investment consultants and investment managers; and

(c) to advise on the need for new legislation."

It is important to remind ourselves of the main thrust of the Gower report, because recent ministerial speeches have tended to give investor protection a second place in the Government's approach to the securities market.
The Secretary of State for Trade and Industry broke an almost Trappist silence on the Gower report in a speech on 26 June, which he largely repeated today in the earlier part of his speech. In it, he outlined the main objectives of the change that he was seeking and said
"first, I am keen to see a financial services sector able to provide services to British industry and commerce, private investors and Government in the most efficient and most cost effective way and which is internationally competitive. That, beyond all else, must be our main objective."
That aim is very important but "beyond all else" — particularly in the context of this speech which was the Secretary of State's first response to the Gower report—must mean, and must have been intended to mean, above consideration for investor protection. That is a mistaken judgment. Adequate investor protection is crucial to the success of our financial services sector.

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Furthermore, I can find no evidence to support the view that those financial services that are under statutory control, for example, general and life insurance, are in any way, as a consequence of such control, lacking in efficiency and therefore in competitiveness. I see no reason to disagree with Professor Gower's conclusions when he states that unless proposals along the lines that he has advanced are implemented
"further serious scandals undermining public and international confidence are … inevitable."
He goes on to say, with the common sense that distinguishes the whole report, that
"if they were implemented, scandals would not be wholly prevented, but I believe that they would be fewer and that when they occurred less irremediable damage would be suffered."
We have to bear those obvious caveats in mind. We are seeking, not perfection, but a substantial improvement in the present regime.
As things now stand, we have an uneven and fragmented system for investment protection. Most of our main financial institutions are regulated by specific Acts of Parliament. Insurance companies are covered by recent legislation, such as the Acts of 1974, 1976, 1980 and 1981, and companies by the 1967 Act and the more recent 1980 Acts. Building societies have not been the subject of serious legislation for many years, while banks have been the subject of more recent legislation, in the form of the Banking Act 1979.
In addition, we have the Prevention of Fraud (Investments) Act 1958, which is of a general nature and seeks to deal with the dangers of irregularities and fraud over a wide area of financial services and markets. There are also a number of self-regulatory bodies or other agencies, with their own constitutions and rules of membership. The Stock Exchange is the most important of these, but the category also includes the take-over panel, the London Metal Exchange, the Gold Futures Exchange and the London International Financial Futures Exchange. There are also those markets—commodity markets come to mind—where self-regulation is either minimal or non-existent. There is a substantial range.
I do not think that many would be prepared to dispute Professor Gower's central conclusion—I am surprised that the right hon. Gentleman did not state this himself in fairly vigorous terms—that a new and more systematic regulatory system is now urgently required.
I mentioned earlier some of the cases which led to Professor Gower's appointment. He quotes in his report from the 1981 annual report of the Commissioner of the City of London police, who asserts that the problem
"stems from the inadequacy of legislation which exists for the purpose of protecting depositors and of controlling the activities of the companies in the business and handling funds on behalf of the investing public. The Acts have sought to control by registration and their failure arises from inadequacy in procedures for vetting applicants and for the lack of requirement for any controlling authority to exercise supervision over the trading of companies whose registration has been accepted. They"—
the Acts—
"are ineffective because they cannot control the dishonest companies whose activities they were intended to curtail."
The annual report of the Commissioner of the City of London police goes on:
"The result is that the Fraud Squad has been called upon to investigate the failure of investment companies whose financial difficulties could have been observed at a much earlier stage by a competent authority making standard supervisory checks, e.g.
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examinations of audited accounts. The problem is likely to remain with us until legislation, regulation and control is made more effective."
That has been the theme of successive annual reports of the City of London police.
The 1980 report of the City of London police described fraud as the
"growth industry of the 1970s",
and noted that it increased fivefold during that decade. The returns of the City of London police show that in 1980 its fraud squad had 150 cases tinder investigation, involving £30 million; at the end of 1981 it had 90 substantial cases, involving £54 million; at the end of 1982 it had 96 substantial cases, involving £100 million; and at the end of 1983 there were no fewer than 103 cases under investigation, involving £115 million.
Therefore, Professor Gower is right to find the present statutory protection inadequate, and I certainly endorse his first and central proposal that the Prevention of Fraud (Investment) Act 1958 should now be replaced by a new and more powerful Investor Protection Act. The present system of registration must be changed, and again I agree with Professor Gower's proposal that a new Act, with minor exceptions,
"would make it a criminal offence to carry on any type of investment business unless registered".
It is also important that registration should be with the Department of Trade and Industry or the commission, the rival merits of which I shall turn to later.
While Gower is entirely clear about the need for strengthening the basic investor protection statute, there is in his report—although, I think, not in his own mind—less clarity about the roles of self-regulation, of a Securities Commission and of the Department of Trade and Industry.
In Gower's first discussion document, published in January 1982, he made plain his preference then for a Securities Commission which would have executive, judicial and legislative powers over the whole spectrum of activities covered by the securities industry. While falling short of the scope of the American Securities and Exchange Commission — which I think, perhaps unnecessarily, strikes great terrors into many people in the City—nevertheless, it would be following down a path already well-trodden in Canada, Australia, New Zealand and Japan.
As Gower made plain in his January 1984 report—the one that we are discussing now — it was considerations of practical politics which moved him away from his own intellectual conviction and preference and to the advocacy of the Department of Trade and Industry as the principal statutory regulator. Gower discussed four possible options for undertaking that role — the Department of Trade and Industry, the Office of Fair Trading, the Bank of England, and the Securities Commission. I am sure that Gower was right not to recommend either the Office of Fair Trading or the Bank of England for the role. I think that he should have stuck to his own preference and advocated a Securities Commission. There are strong practical reasons for favouring that approach.
First, there is the usual problem—I say it with some experience of the Department concerned — of playing both a sponsoring and a regulatory role. I noted the stress which the Secretary of State put upon the sponsoring role

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for the financial services which he foresaw for the Department of Trade and Industry. However, the two functions do not sit easily together.
Secondly, the skills needed for effective regulation of the markets are of a high order and require men and women who are accustomed to moving with the pace of market events. The Department of Trade and Industry has had many excellent people in its companies and other divisions, but it gives the impression—I think it is the reality — of lumbering behind its fast-moving adversaries.
Thirdly, there is the very practical problem that such is the difference in rewards between Civil Service jobs and equivalent jobs in the City that there is a very high turnover of top personnel in the Department of Trade and Industry. It is a real problem. On top of that, there are limitations on numbers, or tardiness in response to increased work loads, which are a clear drawback.
In his report Gower gives a rather striking illustration of the difficulties of trying to undertake the task by having a beefed-up Department of Trade and Industry, or the appropriate divisions of it. At the top of page 21, he says that
"it has struck me as remarkable that in the relevant part of the Companies Legislation Division there is no post for a qualified lawyer or chartered accountant and that of 47 officials presently working in this area only four were in the division at the beginning of 1980."
That is a fairly damning indictment. I am not damning the Secretary of State. I am saying that that in a sense is often how Departments work. I know that a contrary argument is put—
Mr. Tim Smith: There is a simple answer. The legal advice is provided to the Department by the solicitor's branch, as the note in the report says, and the accountancy advice is provided by the accountancy services division of the Department.
Mr. Shore: I am certain that if we were to examine the history of the turnover of personnel in those two divisions, and if we were to look at the insurance division, we would find a similar movement of people and personnel to the kind that Gower described.
Mr. Tebbit: I should not want to pose in the role of mediator between the right hon. Gentleman and my hon. Friend the Member for Beaconsfield (Mr. Smith), but I think the right hon. Gentleman and I would probably agree that in reality the position is somewhere between the two stark ones outlined by Gower and by my hon. Friend. We have a very good legal division and a very good accountancy services division. The turnover is lower, particularly in the legal division, as the right hon. Gentleman knows from his experience. I am glad that the right hon. Gentleman does not damn me, because in doing so he would damn himself as well, as one of my predecessors.
Mr. Shore: Unless the position has changed enormously, the legal division is horribly overburdened with work. It was in my time, and I am sure it is still today.
Mr. Tebbit: No, just right.
Mr. Shore: Given what has been happening in regard to company collapses and the volume of cases involving fraud, I should be amazed if the division were on top of the work load that it now has.
It is my belief that most of the difficulties—I do not say all of them—which the Department of Trade and Industry has faced, and continues to face, would be overcome with an independent Securities Commission, although it would be a body, like the ECGD, which was responsible to the Secretary of State and, in its public reports, to this House. As Gower envisages, the commission would take the initiatives in proposing new regulations—although it would be for the Department and the House of Commons to approve them—and it would certainly be its responsibility to enforce all relevant regulations.
There is, of course, the closely related but separate question to which the right hon. Gentleman referred of dealing with fraud when particular cases have been identified. The present system is woefully inadequate. In relation to the magnitude of the task that they have to undertake, our fraud squads are pitifully undermanned. The length of the investigations is such that those involved have, long before the inspectors have identified their complex misdeeds, been able to leave the country and take most of their ill-gotten gains with them. Swiss bank accounts remain virtually impenetrable. I have noted the Chancellor's announcment of a new permanent fraud investigation group to be established in the department of the Director of Public Prosecutions early next year, and what he and his right hon. Friend the Secretary of State for Trade and Industry have had to say about the committee under the chairmanship of Lord Roskill, which is examining the conduct of serious fraud trials. There is much to do in that area, and we shall look forward to opportunities of debating these matters at a later stage when the proposals have become clearer.
Mr. Anthony Nelson: I should like to refer to the right hon. Gentleman's remarks about the structure of the commission, because we must understand exactly what the Opposition propose. Does he propose that there should be a commission over and above, and in addition to, self-regulatory agencies, or just that there should be a commission like the Securities Exchange Commission in the United States, with no self-regulating agencies, all the firms being directly supervised by the commission?
Mr. Shore: The only problem in dealing with the hon. Gentleman's question is in what order to do so, as I was just about to turn to the self-regulatory agencies, which are the other main instruments which Gower recognises for improved investor protection.
Mr. Gerald Bermingham: Before the right hon. Gentleman considers self-regulatory agencies, may I ask whether he agrees that the art will be in catching fraud before it commences, rather than—with Roskill—dealing with the fraud after it has been committed? That must be at the heart of the legislation.
Mr. Shore: I entirely agree with my hon. Friend. My remarks about the Roskill committee were in parentheses. We must address our minds to the problem of how to prevent fraud, rather than how to pursue more successfully — although that is important, too — those who have broken through the screening and the net.

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Self-regulatory agencies are inevitable and necessary for day-to-day regulations and to shoulder a substantial part of the enormous volume of work that regulation and invigilation requires. I doubt whether four such self-regulatory bodies — or even six — will be enough. However, that is another matter for more detailed discussion.
The main problems are, first, how to ensure that self-regulatory bodies are not primarily concerned simply with looking after themselves, but are turned directly upon the task of investor protection, and, secondly, who is to regulate the self-regulators.
In this context, the most important institution that we have to discuss is the Stock Exchange. The Stock Exchange has a long history of self-regulation, yet it was the failure and malpractice of a number of stockbroking firms which immediately preceded—if it did not lead to — the setting up of the Gower committee. The other danger, that the system of self-regulation could be a cover for a linked series of restricted practices, was the reason why the Stock Exchange rule book was referred to the Restrictive Trade Practices Court some years ago.
When we debated the Stock Exchange Bill on 22 November 1983, the right hon. Gentleman the Secretary of State went out of his way to praise the changes which, in the past few months, had taken place in the organisation of the Stock Exchange. He pointed out that lay members were now being appointed to the Council of the Stock Exchange; that a new membership appeals body had been set up; that non-members of the Stock Exchange would be able to serve as non-executive directors of limited corporate members of the exchange; and that minimum commissions were to be dismantled.
I do not wish to go over that debate again, except to remind the House that, for the Opposition at any rate, the virtue of having that Restrictive Trade Practices Court inquiry was to increase understanding of the major changes taking place in the Stock Exchange and to be able to discuss, in an informed way, the implications of those changes for investor protection.
The truth is that whether or not, under scrutiny, the system would have been justified, the previously established rules of the Stock Exchange provided a threefold defence for the investor. First, there was the system of minimum commissions. Secondly, there was the single capacity system, and, above all, the rule that required a stockbroker to act as an agent, not as a principal. Thirdly, there was the rule which forbade outside interests from acquiring a dominant stake in broking firms. Those were formidable barriers to conflicts of interests, and formidable guarantees for the investors.
Mr. Peter Tapsell: And compensation.
Mr. Shore: Yes, and compensation, which has been there throughout.
All that protection—except compensation—is to be swept away by 31 December 1986 and-as most of us suspect—at a substantially earlier date. However, what is to be put in its place remains obscure. What is clear, however, is that the new rules of the Stock Exchange are too important to be left entirely to the Stock Exchange Council itself. It is precisely such a function of examination and approval that an independent Securities Commission could be expected to undertake.
The task of regulating the self-regulators will be far better accomplished by a self-standing Securities
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Commission than it would be by either the Bank of England or by an attempt to revive the near-spectral Council for the Securities Industry. There may be some who think that that council could form an alternative to an independent Securities Commission. I refer them to pages 24 and 25 of the Gower report, and I should like to quote from the report's penultimate sentence on the matter. It says that
"there is a limit beyond which the relationship between Governmental regulation and self-regulation ceases to be a partnership and becomes a takeover. For the CSI to undertake the Statutory role envisaged for a commission would exceed that limit — in effect, would be a takeover of the CSI by the Government".
The case against that suggestion is cogently stated in those words.
The Governor of the Bank of England is awaiting the report of his recently-chosen 10-man council. The Stock Exchange is about to reveal the proposed rules of its new trading system. Those rules, incidentally, were not among the subjects of the discussion document put before council members in April. There are also the working groups to which the Secretary of State referred, covering insurance and the other markets. With so much going on, it is indeed right that we should wait — although, I trust, not for very much longer—for the White Paper, or perhaps the White Paper with green edges, to which the Secretary of State referred in his opening speech.
We need a White Paper which addresses itself at least to the questions that I have raised today, so that we can focus upon the proposals and problems that we have to overcome, and do so in a more concentrated way, well before the legislation is introduced.
5.59 pm
Mr. Peter Tapsell: I should begin by declaring an interest as I have tried to earn my living in various sectors of the City of London for the past 30 years. I am a member of the London Stock Exchange and a shareholder in the stockbroking firm for which I work.
I speak wholly and solely for myself. I do not know whether any of the 65 partners in my firm would agree with anything that I am about to say and I certainly do not speak for any wider group. As I have some serious reservations about what has happened in the City during the past 12 months and about what is projected to happen in the next couple of years, perhaps I should begin by saying what I favour and what I believe in. What I believe in can be summarised under seven headings. Perhaps I should add that I believe in them because they are in the national interest. I believe in fixed commissions, in single capacity dealing, in self-regulation, in the maintenance of the highest standards of business ethics and investor protection, in the giving of objective and independent investment advice to clients and in the preservation of the importance of the City of London as a great international financial centre under British ownership and British control.
The events that have stemmed from the agreement between the chairman of the London Stock Exchange and my right hon. Friend the Member for Hertsmere (Mr. Parkinson) about one year ago, which led immediately to the proposed abolition of fixed commissions, put my other six priorities at risk. No one who was present when my right hon. Friend the Member for Hertsmere announced his agreement, and certainly nobody who reads the debate in Hansard, could have believed that, only 12 months

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later, we should be discussing these matters in such a wholly transformed atmosphere. Even the Gower report now looks "old hat" as it discusses matters that would have been overtaken by events. Although the measured and reasonable presentation of my right hon. Friend the Secretary of State today would not have led one to guess it, everyone who reads a financial newspaper and anyone who enters a City luncheon room will know that the City is in a state of revolutionary flux and is deeply worried about its future.
In my speech on the Restrictive Trade Practices (Stock Exchange) Bill on 30 November last year, I said that I thought that the proposed abolition of fixed commissions would prove a great disaster for the City and Britain. That is still my view. There is not much point labouring that aspect now as it seems to be water under the bridge. I am afraid that I shall probably feel more strengthened in that view as the years go by and I shall not be surprised if it is eventually thought wise to reintroduce fixed commissions.
I do not believe that the whole of the rest of our financial system, which is well geared to the British national character, can work without some central lever on which everyone can depend. The analogies with the United States seem extremely far fetched. I have gone back and forth to Wall street for the past 25 years and I know the Japanese and German markets rather less well. They all have their strengths and weaknesses. The fact remains that the British system suits the British character and it has evolved because of that. People who think that it is possible suddenly to transform the London Stock Exchange and City institutions generally into an extension of Wall street do not understand this. It would be rather like turning the House of Commons into Congress or the Senate. Above all, anyone who claims to be a Tory should understand that a few academics, financial journalists, civil servants and politicians, who do not give the impression of having made great fortunes because of their profound feeling for financial markets, cannot suddenly reorganise an institution that has grown up over the centuries. Moreover, it has served the country extremely well and helped us to win every war from the time of Louis
Mr. Budgen: I am extremely attracted by my hon. Friend's argument. Will he explain why it is necessary for stockbroking firms to attract a great deal of capital to operate more efficiently? If one third of its share capital is bought for a vast sum by an outside institution, how does that add to a company's operating capital?
Mr. Tapsell: I do not want to give a great lecture on the workings of the City, but I shall try to answer my hon. Friend briefly. At present, stockbrokers deal as agents. Therefore, if someone telephones me and tells me to sell $100 million worth of United States bonds and invest them in yen bonds, I do not need much money to do so. I need only a telex machine or a telephone. It is the type of transaction that I or my colleagues do almost every day of the week, if not in that size. However, if we have to become principals, to run a book and to take into our own ownership that $100 million worth of bonds and perhaps hold it for a few days or weeks in the hope of finding a seller of Japanese bonds at the right price to match it, we need massive capital. The only way in which to get massive capital is from the banks which, to judge from the
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international monetary situation, are neither overflowing with money nor terribly secure. Nevertheless, they are anxious to put money into stockbroking firms. I entirely agree that the 29·9 per cent. will provide a wholly inadequate amount of capital for that task. That is why there is pressure to go up to 49 per cent. and even to 100 per cent. Therein lies the danger, as the big money is American, German and Japanese. Many leading stockbroking firms might either pass under foreign control or find that foreigners start new stockbroking operations in London. However, I do not want to be too distracted from the main thrust of my argument.
Mr. Tim Renton (Mid-Sussex): I entirely understand my hon. Friend's defence of the ancien régime in the Stock Exchange. As my brother has for many years been a partner in the same firm of stockbrokers as my hon. Friend, I am delighted to know—as I do—that it has been successful. Surely the growing dealings in leading British blue chips offshore, notably in New York in American depository receipts, is a clear sign that if nothing is done to the present system and unless more flexibility is added to it, there is a great danger of even leading British stockbroking firms such as my hon. Friend's losing out to other markets which are much more flexible.
Mr. Tapsell: It is my view and experience that the movement towards dealings in United Kingdom stocks on Wall street has been almost entirely due to stamp duty. The 2 per cent. stamp duty which, too late in the day, has now been reduced to 1 per cent. in the Budget made it impossible to compete in London. One therefore had to deal in New York. If we had not had to pay 2 per cent. stamp duty, the problem would not have arisen. Even 1 per cent. stamp duty makes a big difference. The price at which one deals in New York or London is almost identical but the Americans pocket the 1 per cent. difference.
The implications of the Parkinson-Goodison agreement, if I might use that colloquialism, were not understood at the time. If they had been, there would not have been this great drama of rapid change. It is astonishing that the full implications of abolishing fixed commissions were not understood at the time. When my old, dear and late friend John Davies was appointed Secretary of State for Trade and Industry in 1970 he found a group of civil servants who were keen to get rid of fixed commissions. He asked me to talk to him about it. I explained then that if fixed commissions were abolished, one would inevitably have to be abandon single-capacity dealing and everything which has flowed from it.
When Government Departments have an attractive idea on file, they try it on every Minister of any Government until they find a buyer. They eventually found a buyer in the present deputy leader of the Labour party, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). It is to be regretted that since 1974 successive Conservative Secretaries of State did not reverse his decision to put the matter to the Restrictive Trade Practices Court, which put the Stock Exchange into its unhappy position. It is to the credit of my right hon. Friend the Member for Hertsmere that he seized that nettle.
However, for the Stock Exchange and the City the damage had to a considerable extent been done. We now face a damage limitation operation. Let me spell out the knock-on effects of the abolition of fixed commissions.

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When one gets rid of fixed commissions, the tremendous drop in the incomes of stockbroking firms makes it virtually impossible to continue with single capacity. They must become market makers to make sufficient money to continue, and to become market makers they need enormous sums of capital
Dual capacity will create all the problems, as is evident. The irony is that during the last Session, having found many scandals in Lloyd's of London and having concluded after endless debates that they stemmed primarily from dual capacity, we imposed single capacity on Lloyd's to overcome scandals and fraud. Yet in this Session, although we still have a Conservative majority and Government, we are doing the opposite with the Stock Exchange. No Minister has attempted to explain why what was right for Lloyd's is wrong for the Stock Exchange.
I realise that Lloyd's and the Stock Exchange are not exactly analogous. Their business differs greatly. Yet the basic problem of dual capacity is the built-in conflict of interest. My experience in the City is that almost everyone is honest. During 30 years of dealing, usually through dealers, often in large amounts and usually on the telephone, I have been involved in only three disputes about settlement. Two of those were with overseas institutions. It is extremely rare in the City of London to meet anyone who is not as good as his word. Some speeches today seemed to suggest that the City was infested with crooks and fraudsters, who were all out to do each other down. In any barrel of apples there will be the odd rotten one. One must guard against that and protect the public from it. One should not give the impression that that is what it is all about. The crook in the City is extremely rare. He is usually found fairly quickly and punished severely.
With the breakdown of single capacity and the movement into dual capacity — I am sorry to say this because I believe in self-regulation—we shall be driven step by step to something close to a full-blooded Securities Exchange Commission. The proliferation of self-regulation agencies sounds fine in theory, but each time there is a scandal there will be an outcry in the press and the Labour party to the effect that the SRA is not sufficiently strong, must he strengthened and that there must be appeals from it. Meanwhile the prestige of the City will be impaired, the authority of the Bank of England will be undermined and great political credit will be lost by a Conservative Government and especially Treasury Ministers.
Much as I regret saying it, if we are to follow this road we should forget about the SRAs and opt for a full-blooded securities commission. Professor Gower was right in his original recommendation, given the fact that we are opting for dual capacity, which I do not advocate.
The SEC in Wall street has a staff of more than 2,000, a budget of more than $100 million a year. Enormously highly paid lawyers scramble over everything, and everybody. Practically no investment advice can be put on paper for fear of being sued. The thought of having to move into that world fills me with horror. I am astonished that a Conservative Government should take steps that will lead to the establishment of this vast new Government bureaucracy, which will greatly reduce the efficiency, earning power and competitiveness of the City of London.
The irony is that, having said that that would get rid of single capacity, all the allegedly best brains in the City have been summoned by the Government and the Bank of
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England to a committee to advise on building what are rather oddly called Chinese walls. They want to put us back into single capacity again while we are operating dual capacity. I do not know why Chinese walls are so called, but I have visited the Great Wall of China. It has this characteristic: It has never kept anybody in or out. It is merely an immensely big and long wall and every time a wave of invaders crossed it, the wall was made longer and bigger. That is exactly what will happen to the SRAs.
When President Nixon was taken to the Great Wall, he showed great respect. When his Chinese interpreter asked him what he thought of it, he reflected long and hard, and then said, "It is a great wall". I have not the smallest doubt that my right hon. and hon. Friends on the Treasury Bench will build a succession of great walls. I went on a bitterly cold day in January when the wind was howling across the wall and I had to hang on to my fur hat. I did not dare stop because various British statesmen, including the Prime Minister, had niches marking the points that they had reached. I was determined to get as far as they had before stopping. Otherwise I would have turned back. My interpreter said to me, "Mr. Tapsell, this bitter wind is the only free gift that China has ever had from Russia". I tell my right hon. Friend that a chill wind will blow across his Chinese walls to the Treasury during the next few years. I suspect that we shall lurch from scandal to scandal as a result of moving into dual capacity, particularly as it is to be internationalised.
The British tradition has been to act solely in the interests of the client. Since the abolition of single capacity in America, the American position has been to make "real" money by dealing on own account. Anything a client earns is subsidiary to that. The top people in any of the great American finance houses will confirm that they make all their big money by dealing in huge amounts as principals. The amount they receive in commission from their clients, which has been slashed to almost nothing, is derisory by comparison. I doubt whether that system will work here because even with an infusion of foreign capital I doubt whether we shall have the money to take enormous positions in foreign bonds and 24-hour trading.
Mr. Anthony Beaumont-Dark: I sympathise with that case. My hon. Friend makes a valid point about the SEC, the huge cost and the idea of protecting the investor. Does he agree that the facts show that there are more frauds on a much bigger scale than occurs in London, despite the Chinese wall? It may be why it is called the Chinese wall because everything can get over it.
Mr. Tapsell: I agree with my hon. Friend, who is an experienced stockbroker from a position slightly north of where I normally sit. I do not wish to be rude to our American friends because the standard of integrity of those whom I know is as high as anybody's. However, the fact is that the general standard of commercial ethics on Wall street is lower than that in the City of London. That is precisely why they need such an enormous paraphernalia of control.
As to the technical problems that will arise, it seems to be generally agreed that the market in the shares of smaller companies will be greatly reduced. Indeed, it will be difficult to find stockbroking firms that will wish to make a book in the shares of smaller companies. One of the strengths and glories of the London Stock Exchange has

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been the enormous range of shares in which one can deal; I am talking not about size, but about the number of companies whose shares are quoted, which is vastly greater than on Wall street or any other stock market. Since the Conservative party is supposed to believe above all in bringing forward smaller businesses, and that the economic resurgence and future of Britain depends upon the small developing business, to pursue policies that will make it much more difficult for the small business to get its shares quoted and traded on the Stock Exchange seems extraordinary. However, it is inherent in the policy.
That brings me to the wider liquidity problem of the market, and especially gilts. The gilt market is vitally important to every Government if they are to fund their debt. The general belief of the people to whom I have talked who deal in the gilt market is that dual capacity will greatly reduce the liquidity of that market. One of the biggest operators in building society gilts, who has an enormous portfolio of gilts, told me that at present he can expect to deal with absolute confidentiality and without moving the market in 25 million shorts at any time; his estimate is that when dual capacity is introduced he will be able to deal in no more than 5 million shorts in any one place. The market will be slower, less liquid and less confidential. I cannot imagine why that should be in the interests of the Government.
If I may be allowed to take a leaf out of the book of Lord Wilson of Rievaulx and quote myself for a moment—I do it simply to save time—speaking in France to the annual conference of the Association of International Bond Dealers on 17 May this year, I said this to 2,000 bond dealers from 26 countries — [Interruption.] I mention that because no one challenged what I am about to quote in the prolonged question time that followed. I said this to an audience of people who deal professionally in British bonds:
"To what extent will the British bond market go 'off-shore'? The proposed dismantling of the minimum commission and single capacity arrangements in Britain highlights the question. The British bond market is the third most liquid bond market in the world. It is a perfect new market for 24 hour traders. The large US and Japanese institutional bond dealers, with their massive trading resources, have the capacity to run huge 24 hour books in British bonds and to dominate the British bond market from their Tokyo and New York offices while Britain sleeps. Hitherto, they have been prevented from doing so by the minimum commission rules of the London Stock Exchange and by the fact that only the London Jobbers have access to the British 'Market', in the form of the Government Broker. No doubt the British Government has a plan ready for dealing with this new possibility, but it has yet to be revealed".
It has still to be revealed.
"Unless there is Governmental action, the capacity of the Bank of England to influence the British bond market may be reduced. The capacity of markets in other time zones to influence the British market will grow. I do not believe that any Government will wish to have as little influence over its domestic bond market as many of them at present have over their exchange rate"—
a point which has more force to it today than when I made it in May.
On technical grounds, whether one is dealing with equities or gilts, the case for dual capacity must still be made, and no one has attempted to make it. I do not say that I am necessarily right, and anyone who is dogmatic about such complex matters is a fool, but these questions must be seriously examined in public before decisions are taken that will influence the country enormously. The
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miners' strike, which naturally dominates our thinking, will be over in a few months, one hopes, and will be forgotten; but the decisions that we take during the next year about the organisation of the City of London will influence Britain's prosperity for a generation to come. The argument has not yet been fundamental enough.
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Alex Fletcher): My hon. Friend has referred several times to the important decisions that are being made about the future of the financial services sector. Presumably the eloquent points that he is making to the House today — I am delighted to hear them—have already been made in the City and on the Stock Exchange, because he should be aware that that is where the decisions are being made.
Mr. Tapsell: With great respect to my hon. Friend, the decisions are not being made there. The Council of the Stock Exchange was unanimous in wishing to retain fixed commissions and single capacity dealing. It has been pushed into this position, and the Bank of England and Ministers have been leap-frogging each other since the Parkinson-Goodison agreement with public speeches announcing suddenly that dual capacity was here and here to stay. We never hear a speech that does not contain a sudden new announcement with which the Stock Exchange must live. It is untrue to say that the decisions have been taken as a result of market forces. They are being imposed upon the Stock Exchange and the City by politicians.
Mr. Alex Fletcher: The decision on dual capacity was essentially made by the Stock Exchange. Recently the House passed some EC orders and the Government deliberately and happily avoided making a decision on whether there should be single or dual capacity on the Stock Exchange, leaving that matter for the practitioners.
Mr. Tapsell: I do not wish to argue this matter with my hon. Friend, but everyone whom I know in the City believes that the changes are being imposed from outside. A specific example—I could give him many—is that the chairman of the Stock Exchange, for whom I have the highest regard and who has given magnificent leadership to the Stock Exchange, has been asked repeatedly by members of the Stock Exchange in public and in private who he does not fight harder for single capacity. Every time his answer is that the Bank of England has told him that it wanted dual capacity in the gilt market and he deduces that if there had to be dual capacity there it had to be introduced everywhere. If the chairman of the Stock Exchange continues to say that, I assume that it is true.
I do not believe that the drive for dual capacity originates in the Bank of England, which is much too wise a body to commit itself to that view. The drive for dual capacity comes from Ministers, and the Bank of England is merely passing on the view of the Department of Trade and Industry and the Treasury. I may be wrong about that, but I know that the chairman of the Stock Exchange—I am not repeating a private conversation—has said many times publicly and privately that the Bank of England wants dual capacity in the gilt market. It is no good the Minister saying that the Stock Exchange is making the running in this matter and is evolving the change; that is not the case.
I urge my right hon. and hon. Friends, when considering the future and the White Paper, not to become

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too caught up in the fashionable nostrum of the moment. As the House knows, I was sceptical about the claim that control of the money supply could solve all our problems between 1979 and 1981. I shall not rehearse all the arguments now, but there are some extraordinary nostrums. In the 1960s the fashionable thing was the industrial conglomerate. Now no one has a good word to say about the industrial conglomerate, but in the 1960s all the experts said that we should go for that. In the 1970s everyone said that we should go for consortium banks, but every such bank has been a failure and no one now believes that consortium banks are good.
Now we have reached the stage where the fashionable thing is for everyone to do everyone else's job. Only last week a Minister, or it may have been the Governor of the Bank of England, said that building societies would be free to turn themselves into banks or even stockbrokers. Because of this feeling that everybody can do everyone else's job, I could not understand why there was such an outcry when that unfortunate vet helped with an operation. It seemed to me wholly consistent with Government economic policy. Certainly in Lincolnshire the vets are very much better qualified to perform operations on human beings than the average building society manager is to run an equity portfolio. If we are to be honest, we should at least be consistent.
There has been a great deal of talk about capital. Of course that is important, but vastly more important than that is expertise, integrity and judgment. Those are in very short supply in the City as in politics and all other occupations. They cannot suddenly be produced by the wave of a wand. Lots of new conglomorate institutions playing around with hundreds of millions of extra dollars, yen and deutschmarks on the London market will be a disaster unless we have greatly improved the amount of expertise available to them.
We need only read of what happened to the Union Bank of Switzerland in the Eurodollar bond market recently to see how unwise it would be for the Halifax building society to be urged to move into that market next month—not that I have anything against the Halifax, which owns my house, but as a mortgagee I would prefer it to stick to the job at which it is expert.
I began with a reminiscence of a conversation with John Davies, and I wish to return to that period. I have probably been in the House and the City for far too long and have seen all this happen before. I have a strong sense of déjà vu about it.
When the Bank of England produced its Green Paper on "Competition and Credit Control" in 1971, the City press said how marvellous it all was, as did all my Right-wing friends who are now running the show. I was the only person who attacked the Green Paper publicly, which I did within three weeks of its publication. I received a letter from a very senior member of the Bank of England shortly afterwards expressing astonishment that someone with a City background and my experience should attack it. He said that the Green Paper was the thing that he was most honoured to have been connected with in his 40 years as a central banker, and he claimed that it would do wonderful things for Britain.
What I predicted in my speech on the Green Paper in 1971 is exactly what happened. It led to a massive increase in the money supply before anyone had heard of such a thing and before the statistics were much recorded. Ironically, the only three hon. Members who protested
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about the rising money supply in 1973 were the present Leader of the House, the present Lord Bruce-Gardyne and me.
Mr. Peter Hordern: My hon. Friend was all for it.
Mr. Tapsell: My hon. Friend is post-dating his remarks. If he looks at the speeches that I made in January and February 1973, of which I shall send him copies, he will see that I pointed to the dangerous rise in the money supply. But in 1973 Treasury Ministers were only just beginning to have the money supply figures put before them.
That is what was started by "Competition and Credit Control". It was followed by the property boom and the secondary banking crisis. That contributed as much as anything else to the destruction of that Conservative Administration.
I predict that if we now go forward with these policies, it will all end in tears—not only tears for the investor but tears for Ministers also.
6.35 pm
Mr. Doug Hoyle: I start from a different standpoint from the hon. Member for East Lindsey (Mr. Tapsell), to whom I listened with rapt attention. As vice-president of ASTMS it is obvious that I am interested in those who work in the financial institutions and in those with small savings.
The hon. Member for East Lindsey said that the Government were moving the Stock Exchange into an extraordinary world, but to many ordinary people with whom I deal the Stock Exchange is an extraordinary world.
We talk of protection for the ordinary person and protection for the investor, but the two are now synonymous because many ordinary people now have savings that require protection. That is one of the reasons why I and many of my Labour colleagues welcome the Gower report. It is long overdue, because many ordinary people and trade unionists seek to protect their future by the purchase of life and endowment policies.
One of the difficulties about such schemes is that at present they do not extend to offshore contracts. The recent collapse of Signal caused panic among brokers because it left people unprotected. Many large brokers have been prepared to pay out. Indeed, I understand that the British Insurance Brokers Association is now advising brokers that if they intend to participate in unprotected investments they must draw that fact to the attention of those on whose behalf they make such investments. That should have been done a long time ago.
Mr. Bermingham: Does my hon. Friend agree that it would be even better if BIBA went further and made the broker responsible for the bad advice that he gives, in that if a broker advises on the validity of a policy, especially one with an offhsore base, he should be liable to damages if the policy goes down?
Mr. Hoyle: I could not agree more. My hon. Friend makes an extremely good point with which I entirely agree. In certain cases brokers have met such a commitment, but on a purely voluntary basis. I agree that they ought to be responsible for bad investment, and the risk that they take with small investors' money.

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Unfortunately, because of the Government's policies, many workers are now becoming redundant. At the time it may seem as if they receive a large amount of redundancy, although to me it seems like a meagre amount. Many such people are now being advised on how to invest that money. In many cases such advice is sound, but in many other instances the advice is given by cheapskates and crooks or people who are running close to the wind. Consequently, some redundant workers have seen their redundancy pay vanish like snow overnight because of the bad investment advice that they have received. That in itself proves the need for protection.
Pension protection is also long overdue. That has been made even more urgent by today's disgraceful statement by the Secretary of State for Social Services that people will be able to make their own pension provision. Apparently they can remove their present pension and make their own provision. Unless protection is given to such people, when they reach retirement age they may find that they have no pension because they have made bad investments and have been taken like lambs to the slaughter by people against whom they have no protection.
For all these and other reasons I welcome the Gower proposals, with their emphasis on control, regulation and consumer protection. However, I part company from Gower when he suggests self-regulation because in my view, that is not good enough; indeed, in part of his analysis Professor Gower stresses the need for stronger and more powerful measures than self-regulation. In the kind of ocean in which people will be investing, which is infested by sharks and other predators, self-regulation on its own will not be effective.
The Government's agreement with Gower about self-regulation contrasts sharply with their attitude towards trade unions. They have brought in legislation to regulate the trade unions. That is another instance of the way in which the Government treat the interests of unions, which are there to protect workers, in one way, and take a different attitude towards the privileged and wealthy and their vested City interests.
If these institutions are left with a system of self-regulation, to whom will they be accountable? In my view that is not the way forward. The proper way forward is to establish a standing commission on a statutory basis which is responsible to Parliament. Its prime function should be that of consumer protection.
I instance as an example the legislation introduced by a Labour Government when they set up the Insurance Brokers Registration Council. It was done following the pressure of unions in the industry, such as my own. It was welcomed at the time, but it was not adequate to provide the necessary protection. It was found lacking because its powers were too few, its resources were insufficient and there were too many loopholes. People discovered that they could set themselves up as advisers and consultants and thus avoid the regulation that this body sought to impose. This has happened even in cases where the Insurance Brokers Registration Council has refused registration. The companies involved are still active. They have simply dropped the description "insurance broker" and they have become consultants and advisers. But whatever the nomenclature, if registration has been
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refused their operations should be stopped. I point that out to show how, although the council was a good idea, it lacked power.
In his original discussion document, Professor Gower talked of the lack of an appropriate framework for pension schemes, and this needs urgent consideration. A new pensions Act is required to replace our ancient trust laws. It is on those laws that our present pension scheme edifice rests. We need a new Act, and it ought to provide a stronger role for the Occupational Pensions Board. That board ought to register each scheme, and investment managers and others involved in pension schemes should be brought within a regulatory framework.
Finally, there has to be some form of statutory control over the investment industry. I think that this theme will run through the speeches of others of my hon. Friends. Protection must be given to the public in this way. It must be provided by a statutory commission which is responsible to Parliament.
The commission needs to be charged with the task of administering a new investors' Act. That is the way forward. If we go down that path intermediaries of all kinds, regardless of the views of the City, must be subject to licensing and control. What is more, if the intermediaries are the agents of companies, proper training must be provided in the future.
I do not believe that self-regulating professional agencies can provide the protection that is needed for the ordinary investor against the frauds, rogues and cheats who operate in this area. Protection is essential because investment is now envisaged over a wider area. Being drawn into the investment net, ordinary people will now be providing their own pension funds, which in my view is a very dangerous path to follow. Only Government control can provide adequate protection for the investor.
This is a very important debate and it is one which will show the contrast between the approaches of the two sides of the House. Looking across to the Government Benches, I see many hon. Members with interests which they admit freely. They will be arguing the case for the City, as the hon. Member for East Lindsey did so eloquently, although I notice that some of his hon. Friends dissented from his views. But the Government are now sailing the ship in a way which sooner or later will lead to statutory control rather than self-regulation. They may start with a form of self-regulation, but it will be found that it is not enough and that sooner rather than later statutory controls will have to be introduced. As my hon. Friend the Member for St. Helens, South (Mr. Bermingham) said, the real danger is that often it is too late: if possible, we want to try to protect the consumer against the fraud and not allow him to lose his money and look for some way of protecting him after the horse has left the stable.
There is only one way that we can go forward, in my view, and here I move away from the Gower report. We must have statutory control, regulated by Parliament. Only in that way can the small investor be adequately protected. We should not be overawed by City interests.
6.49 pm
Mr. Anthony Beaumont-Dark: This is a most interesting debate. I was fascinated by the contribution of my hon. Friend the Member for East Lindsey (Mr. Tapsell) who, like me, is a stockbroker, but

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who, unlike me, represents the very largest in the City, whereas I am by nature and size of much more modest means.
The problem that the City faces was shown, in a way, by an intervention by the Parliamentary Under-Secretary of State during my hon. Friend's speech. The Under-Secretary seems to think that the Stock Exchange is putting forward all these ideas because it believes that they are in the best interests of the City. But the Stock Exchange is as free in its negotiations as Czechoslovakia was in its negotiations with Germany in 1936. It has to accept the inevitable. If only Ministers would not think that when they become Ministers they must be seen to be doing something and that all change is for the good.
Investment protection should be meant to protect not stockbrokers and institutions, which are well able to look after themselves, but investors. Under the existing system, there is overriding protection for investors. Before pressure was put on the Stock Exchange it went further than any other institution that I know of to protect investors and to make sure that brokers are honest and that the compensation fund; even in the dreadful days of 1973–74, protected every investor. I know of no other institution whose members have to let their regulatory body walk through their doors, at a moment's notice, and examine any piece of paper in their offices. I believe that that is right, and the Stock Exchange implemented that system, not because it was forced to do so, but because it realised that it was the only way to retain the confidence of investors.
It has been said that we must compete, but I have never seen London have any problems in competing with other countries. In Japan, America, South Africa, South America and elsewhere the reputation of the British investment world is higher than that of the investment business of any other country.
There are problems with free commission. Big grocers, such as Sainsbury's, can get the biggest discounts, and the biggest investors will make sure that they are charged much less commission and get a better price for their shares. The small investor will get a worse price and will almost undoubtedly pay a higher commission. I do not call that good Conservative change.
The Secretary of State and his cohorts talk as if the end of 1986 is a sacrosanct date—like looking forward to the end of a great war—but I beg them not to hang the small and medium-sized investor on the great urgency that 1986 must be the date. The changes that must be made if the small and medium-sized investor is to be protected are so profound that the Government should perhaps aim for 1986, but they should not put a set date ahead of the protection and the needs of the small investor.
It is said that the changes will help competition. I have never heard such nonsense. We shall have ever bigger conglomerates swallowing up ever more people and we shall be left, not with a freer marker, but with a much narrower market. We will have six to eight people deciding, like great mandarins, what prices are, where shares are dealt, what they are worth, and so on. Companies will be owned, not by individual investors, but by a few huge conglomerates, most of which will be Japanese or American.
The Government will have to decide what they mean by "competition" and what they mean by "British". To say that we live in a free market and that anything goes, which is what the Secretary of State said—as though we were
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talking about a rummage sale at Marks and Spencer's—ignores the fact that the future of the City cannot be decided on the basis that everything is up for sale. We must have a British market and ensure that not everything is controlled from overseas. If we allow the City and our institutions and banks to come under foreign influence, who runs whom? It is important that much of the City and this country remains under British ownership.
Mr. Renton: My hon. Friend referred to the role of the small or private investor after the great changes have come about. Is it not at least noteworthy that in recent years the number of small and private investors has been falling in this country, but that between 1975, when minimum commission was abolished in New York, and 1981 the number of brokers diminished, but 28 per cent. more investors owned shares? The analogy with New York is not perfect, but surely that example shows that the changes will not necessarily be the death knell for the private investor, and may even be exactly the opposite.
Mr. Beaumont-Dark: I did not say that they would be the death knell, but I believe that they will be damaging. One of the differences between the Americans and us is that they have grown more prosperous since 1971, and the same cannot be said of this country.
If one believes that smaller companies have a big part to play—about 12,000 companies can be dealt with in this country—we must remember that if the market is closed into a few hands we shall be able to deal in fewer companies and that fewer companies are likely to get quotations for their shares. We shall head—some will approve of the move—towards banks and conglomerates controlling nearly every other company.
We shall not be allowed to turn back the clock. Anyone who thinks that we are talking about investment protection should ensure that the changes proposed are for the better. I do not believe that having a person acting for a buyer and a seller and acting as a principal will benefit the investor. He will be able to fix his price.
In spite of all the activities of the 2,000 people on the American Securities Exchange Commission, who crawl over everybody—the SEC costs $280 million a year to run—there are more frauds in America than there are on our Stock Exchange, which is run on a self-regulatory basis.
I wish to leave two thoughts with Ministers. First, are we really concerned about the small and medium-sized investor? If so, let us not look on 1986 as a set date. I hope that, instead of putting the date first, the Government will put the interests of investors first.
Secondly, I repeat the plea that I made in November. Will the Government give at least some thought to how the City is to be controlled? Does the Secretary of State think it a good idea that nearly all banks, insurance companies and brokers should be owned by the Japanese and the Americans? Does he care whether this country is controlled by overseas interests? If not, that is fair enough, but many hon. Members do care.
We do not want to resist change, but we do want to resist changes that will end up being a disaster for this country. If we are not careful, the events outlined by my hon. Friend the Member for East Lindsey could come about. People look at all the new ideas and say, "Aren't they marvellous?" Nearly every idea has been put forward as an improvement, but nearly every one has turned out

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to be highly dangerous. We all know what happened with the secondary banking crisis and with the consortium banks. It was thought to be a good idea to own something overseas, but I bet that the Midland bank wishes that it had never heard of Crocker. What good did that do? It only took money away from this country. I hope that my hon. Friend the Under-Secretary of State will not be too glib or laid back, because if he is, what will be left of the City and the small and medium-sized investors?
7 pm
Mr. Ian Wrigglesworth: This debate has been something of a rerun of our previous debate on the agreement between the chairman of the Stock Exchange and the former Secretary of State for Trade and Industry, and so far we have not concentrated sufficiently on the proposals contained in the Gower report. The agreement reached between those two inevitably has a profound impact on the City and has implications for the report's recommendations, but it is not central to that report, as it deals with many other parts of the City that are important but are not necessarily directly affected by the changes to the Stock Exchange.
I believe that the hon. Members for East Lindsey (Mr. Tapsell) and for Birmingham, Selly Oak (Mr. Beaumont-Dark) are misleading the House and the country in their rather reactionary approach to the reforms that are being introduced in the City. What has happened in the United States is not half as bleak and bad as they have made out. In The Economist of 14 July there is a very good report that demonstrates how in many respect, the market has flourished, consumers are better off and there are more investors on the Stock Exchange. Some of us happen to believe that it is time that the City, which has preached to the rest of the country about the need for competition, initiative and hard work, should undertake a little bit of that itself. I believe that the consumer will benefit from the increased competition that will result from these reforms.
However, as I believe the hon. Member for East Lindsey said, the agreement between the former Secretary of State and the chairman of the Stock Exchange was reached not to bring about the massive reforms now under way but to prevent them from taking place. I do not think that either he or the chairman of the Stock Exchange foresaw what would happen. I do not want to come between the hon. Member for East Lindsey and the Government Front Bench, but he should not blame the former Secretary of State for the agreement that he came to. He was probably trying to pursue the course that the hon. Gentleman wanted.
I echo the tribute paid to Professor Gower by the right hon. Member for Bethnal Green and Stepney (Mr. Shore). It is one of the best reports that I have seen for a long time. I say that not only because of its thoroughness and the wisdom of many of its recommendations, but because, as we have often found, such reports are of no use unless they take account of the politics of the subject matter. I believe that Professor Gower has taken into account the politics of the City, the House and the country generally. He has produced a masterly compromise between self-regulation and the role of Government. I endorse that compromise, because unlike some, I believe that the issue is not just about investor protection.
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I join with those who have said that the City has a very good record of service to this country. Before the debate began, I checked on the way in which the City has developed over the past few years in terms of employment. Unlike many sectors of our economy, employment is a growth area in the City. I am sure that that will continue and, indeed, I hope that the City will continue to increase the employment opportunities that it offers for people in London and the south-east, with the spin-off that it has for other parts of the country. Thus, I do not want the City's operations to be damaged unnecessarily by new regulations.
The hon. Member for East Lindsey seemed almost to be against self-regulation, let alone state regulation. However, I should point out that Conservative Members sometimes hold up other countries as being great examples of free enterprise at work in all its glory, but they are much more regulated than the City will ever be under legislation at present on the statute book and under that proposed in the Gower report. I can think of two countries that are probably an archetypal example of that. The first is Hong Kong where, for much longer than in this country, there has been considerable legislation to control the operation of the Stock Exchange and to control the banking sphere. The second is the United States, where there has been much more regulation and, I think, too much. It is much too legalistic in its approach to these matters and gets tied up in hopeless knots, not only in this area, but in many others as well. It relies far too much on the law. There has been much more regulation in the United States than we have ever seen in this country, yet it has not prevented enterprise from flourishing, markets from developing or the economy from growing. Thus, although I do not want to go as far as the Americans have, Conservative Members should not suggest that legislation will necessarily gum up the works and stop the City developing.
I support the general thrust of the Gower report and should like to see the combined system of self-regulation under a statutory umbrella introduced. It is a right that we should have self-regulation, because it is much better to have the minimum regulation necessary to ensure that markets operate competitively and effectively, and that the interests of investors are assured. There are examples of that in certain parts of the City, but self-regulation should be extended to those areas in which it does not already exist.
With the provision for the appointment to self-regulatory agencies of representatives who are independent of the industry and representative of investors, we can ensure that that job is being done properly and adequately. I think it necessary that self-regulatory agencies should operate under an umbrella. The intermediary or co-ordinating body should not be the Department of Trade and Industry. Although some complimentary things have been said about that Department, I do not regard its history in these matters as being unstained. It has often not been as effective in policing our companies legislation as it might have been. In addition, given the constraints that exist on civil servants and Ministers, a Government Department is not the right sort of body to get its sticky fingers involved in supervising the City or, for that matter, very many other institutions. I should much prefer to see the commission suggested by Professor Gower being established independently of the Department and consisting of professionally qualified people who have experience, who

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can do the job effectively on behalf of the public and investors, and can report to the Government, acting as a check on the work of the self-regulatory agencies.
Mr. Bermingham: How could a self-regulatory agency possibly regulate, for example, the doorstep sale of small insurance policies? Gower envisages much more than merely the movement of stocks and shares on the Stock Exchange. Does not the hon. Gentleman agree that the solution may lie not in one answer but in a combination of self and statutory regulation?
Mr. Wrigglesworth: I agree with the hon. Gentleman. It is not adequate just to set up new machinery. Indeed, the report recommends several legislative changes relating to the insurance sector which that sector does not oppose. They are overdue, and the law needs clarification. I am not sure that the distinction between investment insurance and protection insurance is as clear as it should be.
There is a case for clarification in new legislation. We certainly need the new legislation suggested in the report, as well as the institutional framework to police it. I accept that whatever regulatory framework one sets up someone will always attempt to get round it. There is always one bad apple in the barrel. We must ensure that as far as possible we protect investors by establishing the legal, institutional and regulatory framework necessary.
I am pleased that we are not proposing that the Bank of England should take greater responsibilities in these spheres than it already has. The bank has not asked for that. It has been said that it is difficult for a sponsoring body to act as a regulatory body. I believe that the bank is already too heavily involved in regulating the City. I have resisted extending that over many years. It is just about possible to justify the bank supervising the banking sphere because of its close connections, but I even have doubts about that. The bank has a specific role, central to the City's affairs, which makes it a customer, sponsor and spokesman for the City. That is inappropriate to the role of protecting the investor. I endorse the view that the Bank of England should not be given greater responsibilities in these spheres.
It is necessary for the City to accept the changes that are taking place. I have found in conversations with people involved in different industries in the City that there is a marked divide between the younger and newer people, and the longer established institutions and individuals in the City.
I am pleased that the hon. Member for East Lindsey was here to put the view of those who are resisting change, but I do not think that he claimed to speak for the whole of the City. I am sorry that we are not hearing the views of those on the Opposition side of the House who want to abolish the City.—[HON. MEMBERS: "Where are they?"] That is a good question. The only Opposition Members here are Labour's friends of the City rather than Labour's opponents of the City. I regret that. I can see that we shall not be given the views of hon. Members who represent Liverpool, Coventry or some parts of London who take a different view.
The report is a good compromise between self-regulation, voluntarism and a statutory framework. I hope that the Government will accept the recommendations and will not seek to give the Department of Trade and Industry statutory responsibility for supervising the self-regulatory agencies, but that they will give the responsibility to a
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commission which is at arms length from the Department and which can perform the job for investors more effectively than civil servants in a Government Department.
7.14 pm
Mr. Peter Hordern: I declare an interest. I was a member of the Stock Exchange for many years and I am now a member of Lloyd's and a director of investment trust companies. I have been interested in the City all my working life.
I enjoyed enormously the speech by my hon. Friend the Member for East Lindsey (Mr. Tapsell). It was most entertaining, but it sounded like a long lament for lost, or perhaps losing, days. Profound changes have taken place perhaps rather too quickly. It is most unlikely that they will be reversed. We have to think in terms of the present position and what might be done. I agree that Gower, who reported in January this year, is already out of date. If Gower knew the present position, he would have overcome his doubts about having a supervisory authority such as a Securities and Exchange Commission.
At the beginning of the report Gower states that regulation in the interests of investor protection
"should be no greater than is necessary to protect reasonable people from being made fools of."
That is as far as one can reasonably go. Every investor should be able to deal with the City without the risk of falling foul of people who are more anxious to get business done than to give good advice. That is an important consideration.
Gower also said that self-regulating agencies would not secure freedom from the competition provisions in the treaty of Rome. Perhaps the Minister will tell us the exact position under the treaty of Rome and whether self-regulatory agencies will be sufficient. Will self-regulation be sufficient to give the investor the protection that he deserves? The changes have come about because of the change from agent to principal. It is a most important distinction. When a stockbroker acts for his client, he does so as an agent. His client knows that he is solely responsible for him. The stockbroker will give advice to his client, undeterred by any other considerations. It is beyond unerstanding to believe that the quality of advice which will in future be given by financial advisers will not be rather different from that which has obtained for many years.
If one is part of a large financial conglomerate, however well-intentioned one might be, one is bound to be influenced by the scale of wares that one has to sell in that financial conglomerate. The nature of the distinction between agents and principal is important to grasp. The responsibility of an agent is plain and well understood. It has worked well for many years.
I agree that the passing of the agent is to be lamented. We must now address our attention to what might take its place in the future. It has gone, not because of the abolition of minimum commissions, as so many people say, but because of the Government's need to sell their gilt-edged securities more efficiently. The reason for that is that the sale of Government securities and the transaction of business in Government securities is handled by two firms of jobbers. I have the greatest respect for both the firms. I have no doubt that they can carry on the business of selling Government stocks for a long time.

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But the whole weight of placing Government funds on the market presently rests on a rather narrow base. It does not surprise me that the handling of Government debt will now be carried out by principals acting as they do on Wall street and forming a much wider and more broadly-based market. It is logical that if that happens in the gilt-edged market it should also happen in equities. However much we may object to the process, that will happen.
Mr. Alan Howarth: Does my hon. Friend agree that, if that is the reason, it is a rather odd reason, coming at a time when the Government's intention is to reduce the public sector borrowing requirement or even, over the horizon, to dispose of it? Therefore, if their requirements in funding diminish, why should they want a completely different system?
Mr. Hordern: I only wish that my hon. Friend were right, but I fear that such prognostications have been made before. Whoever handles Government debt will be as busily employed in future as he has been in the past. I like to think that he will be no more busily employed, and those of us who believe in the importance of Government debt and monetary control—and have done for much longer than my hon. Friend the Member for East Lindsey—hope that the new arrangements will be more than adequate and will not be too sorely tested.
There are practical questions involved. Because of the change from agent to principal, the client's interest will not be uppermost—it will be the success of the financial organisation and anyone who works within it. It is easy to observe the enormous rewards that are being offered in the City for responsible jobs — yet those jobs are no different in scope from being a bookie on a racecourse.
For every foreign exchange dealer who succeeds, because of the operation of the markets there is certain to be someone who fails. Substantial sums are being offered to foreign exchange dealers, a great deal of blood will be spilt over unsuccessful deals and many people will be dismissed. That is entirely a matter for them, but the increased investment in the financial institutions means that large results will be expected and short cuts will be taken. I am concerned that the investor should not be the victim of those short cuts.
We must consider whether the self-regulatory agencies are sufficient protection for the outside investor. My right hon. Friend the Secretary of State said that he was thinking about four or five such agencies to cover most of the aspects of the City. It would be a good idea if lay people were appointed to those bodies. I understand that the insurance body will have an ombudsman to whom those feeling aggrieved about their treatment can apply for redress. Even so, the self-regulatory bodies will be composed of people who know the business well and work in it.
Anyone who has looked at and experienced the operation of the Law Society and the protection of solicitors will know that that body is not always anxious to deal quickly with complaints about solicitors. I do not think that the primary objective of the self-regulatory agencies will be the protection of the client—it will be to promote the objectives of its industry and to ensure that the market operates properly.
Those are desirable objectives, but it is important in legislation to have primarily in mind the protection of the
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investor. I doubt whether the forming of self-regulatory agencies will be sufficient to guarantee the proper protection of the investor.
Should the Department act as guardian of the investor? For all the reasons expressed by the right hon. Member for Bethnal Green and Stepney (Mr. Shore), I do not think that the Department is the right instrument. It does excellent work, but it cannot keep up with the fast and fleet footwork in the City. Therefore, I have reached the reluctant conclusion that we need an umbrella organisation. It does not matter what that is called — whether the SEC or anything else. I do not wish it to be as cumbersome an instrument as the SEC in the United States. I am sure that an umbrella organisation is required to which an aggrieved investor can appeal if he feels that the self-regulatory agencies have not given him sufficient protection.
What would be the nature of the task of such an organisation? It must have rights that are set out in legislation. For example, it should have the right to investigate any complaint, and have sufficient powers to do so. I also believe that the self-regulatory agencies should have the right to examine members' accounts whenever they wish to do so. It is not sufficient to say that, because members of the Council of the Stock Exchange have never had the right to examine members' accounts, lay members should not have that right if they so wish. The changes that have taken place have been rapid and important, and we must keep in mind the protection of the investor.
An umbrella organisation should have the power not only to investigate complaints but to pass on to the Director of Public Prosecutions any case that it believes has transgressed the law. I was attracted by the suggestion in the Gower report of composing a new form of commercial court. The treatment of fraud, the length of time taken to bring prosecutions to court and the number of frauds that take place are a disgrace. A special court could deal with commercial wrong-doers. The judge could be assisted by two lay people with commercial backgrounds and expertise to deal summarily with those who have broken the law. What is currently happening is a disgrace, especially the number of cases that are dropped because of the difficulty of persuading a jury of intricate financial frauds. I hope that when my hon. Friend the Under-Secretary replies he will consider—
Mr. Bermingham: I listened with interest to what the hon. Gentleman said about fraud trials. I appreciate that Roskill has not yet reported. Does he agree that the fundamental basis of any fraud is that it is a criminal offence and should be prosecuted as a criminal offence in a criminal court? If we accept that, the fastest way to obtain a prosecution is to give the supervisory board the right to prosecute.
Mr. Hordern: I would not be averse to that suggestion.
Mr. Budgen: It might be better to have a specially qualified jury rather than a special court. There is a danger that if someone were acquitted by a special court the public would not have confidence in that court.
Mr. Hordern: I am grateful to my hon. Friend for that suggestion. It was one that I had not considered. I was discussing the recommendations in the Gower report. No doubt my hon. Friend will enlarge on his suggestion in his contribution.

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Self-regulating agencies and some form of umbrella organisation are not the only forms of protection that are needed. There should be transparency in dealings, and interest should always be declared at every stage. It might be worth considering going beyond that, with the publication and registration of member firms' assets. Some banks do it automatically, with advertisements showing the size of their assets compared with the deposits that they have. The public has a right to know the net worth of any financial organisation with which it is dealing. The compensation fund should continue to exist in each of the different markets An ombudsman should be appointed to each of the self-regulating agencies and those SRAs should have lay members.
The publication of the White Paper will be an important event in the control of investment in the City in a fast-moving situation. Though many of my friends in the City do not believe it necessary, I believe that, on balance, there should be an umbrella organisation to supervise all the operations in the different markets of the City, and I hope that my right hon. Friend will take note of what is being said in this debate.
7.32 pm
Mr. Stuart Bell: It is a pleasure to speak following the hon. Member for Horsham (Mr. Hordern). I listened with interest to his objective view about the need for an umbrella organisation.
The hon. Member for Stockton, South (Mr. Wrigglesworth) said that no hon. Member was present from the Labour party who wished to abolish the City. That subject can perhaps be left for another debate on another occasion. While I have no pecuniary interest in what we are discussing, I should put on record the fact that I am a member of Lloyd's.
I have been reading a book about the City of London in the late 1950s and 1960s. The book, by Charles Gordon, is being serialised in The Sunday Times. That takes me back to a world I knew when a young man working in the City. I worked there as a typist, not as an employee of the distinguished firm which is represented by the hon. Member for East Lindsey (Mr. Tapsell). I worked in the City in the days of the bank rate trauma of 1957 and the inquiry that followed. I recall the stock market falling like a stone, waiting on the likes of Charles Clore to pick it up from the floor. I saw it picked up at later times by the British Motor Corporation and by Peninsular and Oriental.
Those days have a bearing on this debate because the world I then knew in the City was a world of bowler hats and rolled umbrellas. In that world, jobs went to placemen by appointment under the old boys' network. That world did not recognise merit other than the merit of selling short or quietly buying shares in a company, and then announcing a takeover bid and selling the shares as the price soared. I recollect one transaction involving a company owned by Charles Clore in which Mr. Clore justified the sale of shares in a rising market by saying that he wished to keep the price down.
To be sure, that world existed prior to the introduction of capital gains tax. Indeed, the transactions to which I have referred brought that tax about. It was a world, however, which the hon. Members for East Lindsey and for Birmingham, Selly Oak (Mr. Beaumont-Dark) will remember because it was a world of "My word is my bond".
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When the bowler hats and umbrellas went, so, too, did the philosophy of one's word being one's bond. The pirates turned professional. Even the professionals now accept the need for regulation. There was a touch of inevitability in the remarks of the hon. Member for East Lindsey; the day had to come when we should end up with a full-blooded securities commission.
The question which preoccupies hon. Members in all parts of the House is whether there is self-regulation or regulation by Government fiat, edict or legislation. We welcome the open approach of the Secretary of State in stating his intention to publish a White Paper in the autumn, followed by legislation in the 1986–87 Session.
The real dilemma for the Government is whether they go the whole hog with a securities commission or let the City get on with it by way of self-regulating bodies. II is a genuine dilemma, well recognised by the City, which acts in some ways as though it were a race against both time and the Government. That view is justified by some of the remarks that have been made in this debate and by some comments in the weekend press.
My right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) referred to the fact that 10 wise men had been appointed by the Governor of the Bank of England, and they would suggest an overall regulatory structure for the City of London and that they would have their plans ready by the end of the month. We note that the top insurance bodies met for the second time last Thursday to try to find a way of policing insurance salesmen and intermediaries. We all also note that tomorrow the Stock Exchange will describe in detail its plans to replace jobbers and brokers with competing market makers.
All of that suggests to me that it is being done to show the Government that the City is prepared to have some kind of self-regulation, but that it should be what it says and does not require outside interference. That reminds me of the Council for the Securities Industry, which was set up in 1978 as part of the City's defensive response to the Labour proposals of 1974 for greater statutory regulation. The City is now seeking, through its institutions, to preempt Government action by its own measures.
Much depends on the reasoning behind the self-regulation. The Labour party has long taken the view—it did so in a statement at the first party conference which I attended in 1975 — that industrial and economic planning must be supported by a coherent framework of financial planning. We have long been interested in—and we are not entirely satisfied that we have achieved it. despite many statements to the contrary, including one made by the Financial Secretary to the Treasury last week during the Report stage of the Finance Bill—increasing industrial investment.
We do not believe that economic equality is likely to be brought about by our becoming a share-owning democracy. We believe in a fundamental and irreversible shift in the balance of wealth and power to workers and their families, but that will hardly come about through the Stock Exchange.
We must also take into account the fact that share ownership is heavily concentrated in the hands of a few. Some years ago the Stock Exchange admitted that fewer than 5 per cent. of the adult population invested their money in shares. I doubt whether the position has changed dramatically since then. The market is in the hands of institutions, with market analysts and people who work

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with computers and international telephones having open lines to other markets of the world. As often as not, the little investor is the last one on to a rising share and the last one out when it falls.
In the view of my hon. Friends and I, it is hardly likely that self-regulation will help that investor. Indeed, there is running through the Gower report a thread which is as much a part of England as rain is to cricket. It is that a fool and his money are soon parted and that there should be no investor protection for that sort of person. Gower said that the degree of regulation should be no greater than is necessary to protect reasonable people from being made fools of. That sentiment was echoed more strongly by the Secretary of State when he said that in a speculative high risk venture, which fails for straightforward commercial reasons, an investor cannot look to any recovery of losses arising from his own misjudgments. In short, if the private investor is fool enough to buy when the market value is high and sell when it is low, so be it. That principle would hardly merit much worth in what the Prime Minister would like to see—a share-owning democracy.
With interest rates increasing by two percentage points in a day and shares falling like a stone, it is not surprising that the instinct of the working man is to move away from rather than towards the stock market. Those working for ICI in the Teesside area — the hon. Member for Stockton, South knows of this—who participate in its shares schemes take the first available opportunity to sell their shares, regardless of the Prime Minister's exhortations. They are living proof that the country as a whole is not particularly worried about the concept of a share-owning democracy. It hardly augurs well for those who believe in a share-owning democracy to let it be too widely known that such a democracy is built on the premise that a fool and his money are soon parted, but that amateur investors are welcome and, indeed, invited so long as they leave their money behind when they go.
Self-regulation may provide a framework for the professionals in the City, who will always do well from their dealings. The Gower report will assist them in their professionalism, but an inter-related structure of self-regulatory agencies, backed by statute and supervised by the Department of Trade and Industry or a standing commission, will hardly assist the amateur punter. I am reminded of the Punch cartoon in which a man wishing to commit suicide will do so if it kills him. Similarly, if some people insist on pitting their money against the skill and expertise of professionals, all their savings in the bank will not help them.
We have not finished with the dilemma in which the Government find themselves — whether to have a securities commission or self-regulating bodies. A securities commission would have to deal with the mystique of the City, which has its own way of doing things. The hon. Member for East Lindsey said that the financial centre of the City is typically English and cannot be compared with the stock exchanges of Wall street and Japan. The City has habits and customs which go back hundreds of years and cannot be easily regulated by outside bodies. Those customs include the concept of fiduciary relationships, of agent and principal, and of gentlemen's agreements, which might not raise conflicts of interest between gentlemen but might well raise the eyebrow of a judge in a court of law. The Secretary of
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State referred to the concept of caveat emptor, and made a salutary statement when he said that in a conflict of interest the clients' interest should be paramount.
Regularisation and regulation of such complexities in the City might kill the very markets that the Government are seeking to protect, making the investor feel less rather more secure, so that no move is made but that it has with it an accompanying writ. Hon. Members have referred to the possible benefits to solicitors, barristers and others in the legal profession from any additional complexities in the City. Lawyers rather than investors might benefit from a securities commission that does not know what it is about. We have heard a great deal of the securities commission set up in the United States in 1934 by President Roosevelt when there was no self-regulation. We have heard about its cost and how bureaucratic it was. The Gower report suggested a securities commission along the lines not of the one in the United States but of those in Canada and Australia. Professor Gower sought to point out the dangers to which I have referred and how to avoid the complexities and difficulties that any self-regulating body would discover.
The dangers and avoidance measures associated with a securities commission might apply equally to a self-standing commission, but its rules would not impose restrictions on competition greater than would be necessary for the protection of investors and the orderly conduct of the business or market. The Secretary of State said that the regulations could have an ossifying effect on the City.
My hon. Friend the Member for Warrington, North (Mr. Hoyle) referred to "predators". I believe that the world is full of predators and that, sooner or later, all good things must come to an end. Just as the bowler hat and umbrella and the concept of "my word is my bond" have gone from the City so, too, have the standards of integrity which the nation has a right to expect from its financial market place—not in all cases, but in sufficient cases for the Government to have inspired this report.
Mr. Bermingham: Does my hon. Friend not agree with me that there is a distinction between discipline and a code of conduct, which would be self-regulation, and the legality and illegality of the deed carried out, which could be regulated by statute? The distinction between the two should be made clear. That distinction has been and still is important in the City.
Mr. Bell: I agree with my hon. Friend's concept of a self-regulating body, the courts and certain criminal aspects. We are dealing with a structure, which the Labour party would like to see, within which the Department of Trade and Industry eventually has full responsibility with a self-standing commission. Below that level there is a series of self-regulating bodies.
Financial collapse always accompanies economic collapse, as we have seen from 1929 in the United States, through to the collapse of the second mortgage specialists and the secondary banks in 1974–75, to which the hon. Member for Selly Oak referred. The hon. Member for East Lindsey made an excellent dissertation on how that collapse occurred because of the Government's legislation and documentation in 1971 on competition and credit control. That led to a massive increase in the money supply and, therefore, to the bust of 1973.
Those of us with knowledge of the City will recall 17 December 1973 when credit controls were ruthlessly

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imposed by the Chancellor of the Exchequer, leading to the collapse of the second mortgage specialists and the secondary banks. In 1981 a series of City brokerage firms collapsed. Those collapses led to the Secretary of State for Trade and Industry undertaking the review that we are debating.
The Opposition have no interest in financial, let alone economic, collapse. What has happened before can happen again — to an even greater extent if the Government persist in believing that the market is a law unto itself and does not need to be overviewed in the national interest. That market does not operate on what is real; it operates on what it perceives to be real, and because of the power of the market, such perceptions become self-fulfilling prophecies.
The fact that the Government are seeking at present to talk themselves out of a financial crisis will be of no consolation to people who see the markets talking themselves into one, and coming pretty close to demanding by their actions a series of public expenditure cuts, beginning with local authority capital spending cuts, to satisfy the markets' version of reality.
The Labour Opposition have not entirely abandoned hope of ever seizing again the commanding heights of the economy and requiring for that purpose an appropriately regulated City of London. We believe, therefore, in a securities commission with executive, judicial and delegated legislative powers, as described by my right hon. Friend the Member for Bethnal Green and Stepney. Those executive, judicial and delegated legislative powers would cover the whole of the securities industry.
Professor Gower has rightly pointed out that we would not be alone in that. I have already referred to the United States securities commission and similar institutions which have been set up in Canada and Australia. There are, of course, similar institutions in France and Belgium, our Common Market partners. That does not mean that we should abandon the present self-regulatory bodies—the Stock Exchange Council, the Panel on Take-Overs and Mergers or the Council for the Securities Industry. We recognise that there are enormous practical difficulties in bringing the diverse investing institutions and markets under direct statutory regulation.
The Labour party has accepted—its own report of the financial institutions study group says so—that it would be exceedingly difficult to define different activities tightly enough to ensure that those activities were separated to eliminate conflict of interest, and that the interpretation of the statutes and their application in particular cases would be constantly open to challenge in the courts.
My impression, as I read the Gower report, was that Professor Gower was dying to say that there should be a self-standing commission. In his recommendation, he consistently holds back from saying so forthrightly, contenting himself with a wink and a nod, possibly because he was not clear what the Government wanted. The Secretary of State was sufficiently opaque as to what the Government want. We hope that if there is opaqueness in relation to what the Secretary of State is thinking, he will rely upon the House to assist him in that thinking, and that this debate will be a constructive and worthwhile contribution to what happens to the securities industry of the City of London.
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If Professor Gower were bold enough to widen his remit, not just to advise on the need for new legislation, but to prepare it, he should also have been more forthright in saying that he wished to have a securities commission.
It is difficult to see how the Council for the Securities Industry could retain its role as an umbrella and co-ordinating body of self-regulating agencies if a self-standing commission with a responsibility to the Department of Trade and Industry is to be set up.
Should the CSI be expanded along the lines recommended by Professor Gower, there may never be a self-standing commission. That would be detrimental to the City as a whole and detrimental to those markets which are not covered by the CSI and which may not have any satisfactory self-regulating bodies of their own. We know that at present the CSI is made up of users and practitioners of the securities industry. The professor has perceived that danger because he has declared that all the rules would be less vital if it were decided to establish a self-standing commission.
Mr. Shore: There is an ambiguity in what Gower says on that point. It is important to be clear that he is not recommending that the CSI should be revived and strengthened as a substitute for what was clearly his preference — a securities commission. He should be acquitted of that charge, although, in a curious way—because he is also thinking of what is acceptable to the Government as distinct from what is desirable—he refers to it again later.
Mr. Bell: I am grateful to my right hon. Friend for that intervention. I was seeking to say that should the CSI be expanded along the lines that Professor Gower recommends, there might never be a self-standing commission. Those were, my views of the likely consequences of strengthening the CSI rather than going whole hog for a securities commission. While I acquit Professor Gower, I take upon myself the responsibility of saying that I fear that that might be an unforeseen consequence of his recommendations.
In his report Professor Gower has drawn attention to the Wilson committee's criticism of the CSI, that it should strengthen its administrative infrastructure. Gower has described its principal organisational handicaps. He surmises that those handicaps will become more severe under the new regulatory structure. We therefore come to the point that my right hon. Friend assisted me with: whether by strengthening the CSI we somehow interpolate that as a new type of securities commission—a self-standing commission. I believe that that would be second best. If I may change metaphors, should the Government put the cart before the horse, we may end up with a strengthened CSI falling short of the full self-standing commission and, consequently, we would never have the self-standing commission for which I believe Professor Gower yearns and which has the support of the Opposition.
It is important that a Labour view on Labour documentation and thoroughness of investigation into the workings of the City should be put on record with the remarks that we have heard from my right hon. Friend. I wish that I could believe that the Secretary of State will pay more than lip service to the Gower report and not leave the City of London to regulate itself. I hope that he will grasp the nettle of a thorough, tough-minded securities

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commission; that he will not leave the City of London in the hands of the professionals—the old boys on the same old-boy network, where scandals, when they arise, can be hushed up; where the losses can be swept under the carpet or into a Bank of England lifeboat; where money will continue to make money at the ultimate expense of the nation in increased bank rates, mortgage rates, reduced investment in manufacturing industry, losing rather than creating jobs, a world of money not a world of industry; and where, if there are fingers to be burnt, they will be those of the investing public. I am sure that Professor Gower did not have that in mind. It is not what the Opposition have in mind and I hope that it is not what the Secretary of State has in mind.
7.58 pm
Mr. Anthony Nelson: I regret that, unlike some of my colleagues, I cannot start my speech with a declaration of some enormous shareholding in a profitable firm of stockbrokers I rise with some temerity as one of the first non-stockbrokers to speak from the Conservative Benches. However, I take no little interest in investor protection, and as one who submitted evidence to Professor Gower I hope that I may have something to contribute.
I listened with interest to the speech of the hon. Member for Middlesbrough (Mr. Bell), who seemed to exemplify the ideals about which he was preaching. He engaged in the familiar rhetoric of demanding an irreversible shift in wealth towards the working people, and reminded us that he started as a typist and is now a member of Lloyd's. If that is what he means by such a shift, that is the sort of property and asset-owning democracy which I, too, would like to encourage.
As the hon. Gentleman's speech progressed, he appeared to fall more between the views of his right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) and those of his hon. Friend the Member for Warrington, North (Mr. Hoyle) than he was prepared to admit. There appears to be a difference of opinion between Labour Members, which it is important to recognise and clarify. Some, like the right hon. Member for Bethnal Green and Stepney, believe, as I do, in a supervisory commission, with continued existence of self-regulating agencies under it. There are others—I do not know whether this was the body of the representation made by the Labour party in its document to Professor Gower—such as the hon. Member for Warrington, North who believe in all the paraphernalia of a full statutory commission, an abandonment of self-regulatory agencies interposed between the two, and full legalistic control.
I was surprised that the hon. Member for Warrington, North stopped there. I thought that he would go on to suggest the nationalisation of stockbrokers, but as so many banks seem to be taking over stockbrokers, and as the Labour party is still committed to the nationalisation of banks, he may regard that as a fait accompli.
The speech of the hon. Member for Warrington, North and that of my hon. Friend the Member for East Lindsey (Mr. Tapsell) marked the extreme parameters of this debate. My hon. Friend engaged in a valiant rearguard action for the City, but times have changed, and it behoves
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us to consider much more carefully the need for greater protection of investors, a phrase which barely passed his lips in a speech of not inconsiderable length.
It is important to use this opportuntiy of debate to impress on my right hon. and hon. Friends on the Front Bench that there is a case, as my hon. Friend the Member for Horsham (Mr. Hordern) has made out, for some umbrella or supervisory body between the Department and the market with the self-regulating agencies. I should like to nudge my right hon. Friend the Secretary of State a little further down the line than I sensed his draft blueprint for the future regulation of investment would take him. He seemed to feel that at this stage he had to be persuaded that there was a case for such an intermediary body and that his judgment on whether to introduce it or propose it would depend on the number of self-regulatory agencies in existence. This was not the main criterion which Professor Gower intended in chapter 3 of his report when deciding whether there should be an intermediary commission or whether these powers should be invested in the Department of Trade and Industry.
If we are not to introduce such an intermediary body and are to rely on self-regulatory agencies, which are not themselves uncharted territory, for the Council of the Stock Exchange already exists, we are dealing with little more than the status quo. There will be no change in the present circumstances. We already have such self-regulatory agencies, and, apart from a securities Act which will update and amend the worst provisions of the prevention of fraud legislation, in all other respects the City will be broadly left as it is in terms of self-regulatory and investment markets. That will not be adequate.
This debate provides an important opportunity for the House to influence the future framework and regulation of the securities market. It is more essential that we do so today, when so many changes are taking place in the market, than when Professor Gower's review was commissioned back in 1981 following scandals involving Norton Warberg and other licensed security dealers, in which many people lost a large part of their savings.
The report is a valuable contribution to this debate, and I agree with much of the analysis and many of the detailed recommendations in it. However, it is not a Green Paper and I do not agree with the proposed advisory framework of relying on self-regulatory agencies, with a large gap between them and the supervisory powers of the Department of Trade and Industry. That is a minimalist approach, and the thrust of my right hon. Friend's speech was also minimalist, in terms of reform of the present system of self-regulation.
We need a new framework which, in striking the balance between the need for more adequate regulation and the need to preserve a significant amount of caveat emptor, will improve significantly the protection of investors and deter some of the worst malpractices which we have seen recently, and may see at an even worse level in the years to come.
In political terms, I sense that Parliament will not be satisfied with a framework of legislation which is minimalist and which, to all intents and purposes, preserves the existing system. Already we have seen, apart from the extremes of opinion to which I referred earlier, something which I hope will not be regarded as the politics of consent. That is some sort of middle consensus on both sides of the House—certainly from the hon. Member for Stockton, South (Mr. Wrigglesworth) representing the

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SDP and my hon. Friend the Member for Horsham—concerned with the need for such greater regulation and a supervisory body. The arrival of financial supermarkets, the growing incidence and complexity of fraud cases, the consequences of uncovered positions in a bear market and the impact of current amalgamations on the interest of small investors will all require a more comprehensive and formal system of registration than we have now.
My right hon. Friend the Secretary of State also said that he felt that a supervisory body such as that which I would favour would not be necessary if the number of self-regulatory agencies was relatively small. I put it to him that in the evolution of the City it will not be possible to rely on a small or large number of self-regulatory agencies alone to police and to ensure common standards of propriety in the organisation of these financial and capital markets.
I can give an example. It is now current practice for major merchant banks to have, not only a dealing room which engages direct in the stock market through passing instructions to brokers, not only a dealing room which engages direct with other dealing rooms in other banks in the passing of instructions between principles, and so provide their own market, and not only an investment division which looks after advisory and non-discretionary portfolios on behalf of other people, but an underwriting department and a corporate finance department and, increasingly, shareholdings — minority and possibly majority in the course of time—in stockbroker and stock jobbing firms.
It is not enough to say and to hope that each of those aspects of one bank will be treated at arm's length and that each of those aspects, whether it is the dealing room, the corporate room or something else, can be channelled into different self-regulatory agencies, such as the Acceptance Houses Committee in the case of the merchant bank, or the Council of the Stock Exchange in the case of the investment dealing activities.
I can tell the House what the reality is from my experience. Everyone in the City knows that, despite the formal attempt to treat these activities at arm's length, the underwriting stock gets shoved on to the investment department, to be placed among the shareholders there. There is principal dealing by the dealers in the dealing room and by the managers in the investment division as well. All these divisions are mixed up together, and the same standards of propriety should apply to them all.
It is essential that, even if there are self-regulatory agencies which represent all these divisions, there is a supervisory body which can insist on the highest standards of behaviour and ensure that the interests of investors are more adequately protected. Therefore, a securities Act is needed which, as well as amending many unsatisfactory provisions of the Prevention of Fraud (Investments) Act, will recognise the supervisory commission. I do not care if that is a beefed-up CSI or a new statutory body, because the difference is purely one of nomenclature.
It is also essential that such a commission be recognised in law and made responsible for overseeing and co-ordinating the activities of the self-regulating agencies beneath it. The chairman of the commission—this is an important point—would be appointed by the Secretary of State for Trade and Industry and not by the Governor of the Bank of England. The chairman of the Council for the Securities Industry—the record of incisiveness and
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leadership of the present chairman in the City leaves a great deal to be desired—is appointed by the Governor of the Bank of England.
My right hon. and hon. Friends will be aware that there is increasing suspicion in all parts of the House as to the involvement of the Bank of-England not in matters which are purely monetary or to do with placing the Government's debt, but in making qualitative judgments about the equity markets in which they should not be involved. Even though such an appointment as chairman would be made by the Secretary of State, he would be required to liaise and consult very closely with the Governor of the Bank of England on matters of mutual concern, such as, most obviously, the gilts market. They would have a common interest in policing that market and ensuring its efficiency.
It should be an offence to carry on business in securities unless registered with a self-regulatory agency which is represented on the supervisory commission. There should be no option, as Professor Gower recommends, for individual firms or SRAs to register direct with the Department of Trade and Industry. They should register with and be part of a self-regulatory agency and subscribe to its standards, or they should not be in the business at all.
Such a framework would be a considerable advance on the minimalist option put forward by Professor Gower and, I fear, currently being entertained by the Department of Trade and Industry. On the other hand, it would not amount to setting up a Securities and Exchange Commission such as has been established in the United States, as much of the supervisory and regulatory work would continue to be conducted through the SRAs.
It is a matter for the House and the Committee which considers any securities Bill to judge — it is a very important judgment — the balance of responsibilities between the supervisory commission and the SRAs. I am sure that there will be differences of view across the Floor of the House on that matter, but I believe that if we fail to institute such a commission we shall hasten the day when the full paraphernalia of a legal Securities and Exchange Commission will be demanded. I hope that my right hon. and hon. Friends have not set their minds against independent supervision and tougher regulation.
It would be an error of judgment to underestimate the scandals that may occur in the future. It would also be a mistake to assume that continuation of the status quo will be acceptable to this House, to investors or the public, or that total self-regulation is in some sense inherently desirable. Lest it be thought — I refer these remarks particularly to my right hon. Friend the Secretary of State — that greater regulation offends the free market philosopher, it is worth pointing out that the whole purpose of such a framework would be to ensure that the investment markets are, indeed, free and fair.
The worst sorts of activity in recent years, such as dawn raids mounted at short notice, and covert build-ups of shareholdings, have acted to the detriment of a free and fair market, because they have denied many people the opportunity to sell their stock at a certain price, and have sought to use the market mechanisms for wholly improper purposes. If we can regulate that sort of activity we may end up with a freer and fairer market — the sort of market to which my right hon. Friend ought to aspire and to which, if his words this afternoon are to be taken literally, he does indeed aspire.

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The danger of limited reform is that insufficient account will be taken of the protection of investors. Too often the existing self-regulatory bodies are concerned with establishing working arrangements between investment firms which will avoid criticism, fraud or pecuniary loss. What is needed is a new commission which will orient its objectives and policies more overtly towards the interests of investors whom the market is there to serve. The danger of inadequate reform is that it will hasten the imposition of the full legal paraphernalia of an SEC, which would not be in the interests of the City of London or of investors.
The City and the Government should draw lessons from the Lloyd's Act and recognise that the writing is on the wall for the present system of unfettered self-regulation and that, if a full Securities and Exchange Commission is to be averted, a comprehensive and more adequate framework of supervision will need to replace the existing system.
8.14 pm
Mr. Gerald Bermingham: I agree with much of what has been said in the debate, from whichever side of the House it has come, but I am worried that the debate has tended to become too concentrated on the stock market, the Stock Exchange and the dealing in securities on that Stock Exchange. I would not diminish in any way the role which the stock market has to play in our financial institutions, but it is not the only field in which investment and investment securities are dealt with. Indeed, the Gower report ranged over a far wider and broader scope than the stock market.
There has been the odd scandal on the Stock Exchange, but in the past 100 years or so the rule of "My word is my bond" has been the rule of the Stock Exchange. In my dealings with many people in the market over many years I have always found that to be the case. Indeed, the House should recognise that the Stock Exchange has kept to that principle for a long time. Let us not begin by rushing in and assuming that all is wrong. Let us for once start at the other end and ask ourselves what is the objective that we seek to achieve.
During the speech of my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) I suggested to him that the object must surely be to prevent fraud rather than, through Roskill and others, to seek to cope with fraud once it has occurred. How do we prevent fraud? How do we prevent ordinary people from being taken for a ride? It is not often that an institution is taken for a ride. It is usually Mrs. Smith, with her £500 life savings, or Mr. Brown, with his redundancy money, as my hon. Friend the Member for Warrington, North (Mr. Hoyle) rightly said. Who takes them for a ride? It is not a stockbroker, but invariably a door-to-door salesman who comes along with the Bernie Cornfield type of insurance policy and tells the householder how to get rich quickly—"Pay £1,000 a year and in 20 years you will have £300,000 back." Unfortunately, people fall for it.
The lure of fool's gold is as old as time. Mr. Smith puts down his £1,000 and in the third year he finds that the offshore fund has decamped from one offshore site to another offshore site. I was about to say, Mr. Deputy Speaker, that the poor man has not a hope in hell. Certainly that is often where the door-to-door salesmen deserve to be sent in such cases, because the householder
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has not a hope of getting back a penny of his investment. We have seen such frauds on many occasions in the past 20 years, and Gower was equally aiming at that sort of mischief.
If we start with the question, "How do we protect the man in the street?", we have to ask ourselves whether the ways in which certain of our institutions—not the large national ones, but those on the fringe—are currently constructed, controlled and regulated are satisfactory. The answer, regrettably, must be no.
The forms of investment range from buying shares through a stockbroker to trading in options, the metal markets, the gold market, various other forms of insurance market, option contracts, and so on. I agree with what the hon. Member for Chichester (Mr. Nelson) said about large trading houses. The reality is that there is no way in which we can persuade a company that part of the building should be regulated by one division and part of it by another. That just will not happen. The reality is that the people whom we permit to deal, trade, sell or advise in respect of various different types of investment contract have themselves to be regulated by some appropriate body.
That regulatory body must supervise—in much the same way as the British Medical Association, the Law. Society and the Bar Council—the terms and conditions on which people can enter the profession, for want of a better word. We must begin with the regulation of the conduct of persons who trade or deal in these matters. We must get the regulations right. We must ensure that the regulatory bodies have teeth to enforce the rules. That is where the crunch comes. We must, for example, make it a criminal offence to deal in any security without the appropriate licence.
Having reached that point, we have to ask ourselves the next question: how do we control the bodies that regulate? Regulation is concerned with discipline and codes of conduct. It does not necessarily involve itself with the law, or the question of what is or is not legal. Those two concepts are very different, but in discussing the Stock Exchange today there has been a tendency for hon. Members to mix them up. The idea of a Stock Exchange with its disciplinary body and its own code of conduct is fine, but some of us are talking about the legality or illegality of acts which can or cannot be carried out. There is a distinction, and we must not allow future legislation to blur that distinction.
I believe that the question of what should or should not be legal should be laid down by Parliament, and that there should be a separate commission whose duty it is to look after the regulatory bodies as they deal with each separate field of investment. At the end of the day, I do not necessarily want to see a large, octupus-like creature with tentacles everywhere. I want to see a clearly defined form of criminal law—an amendment of the Prevention of Frauds (Investment) Act, which is long overdue. We need to enable unlicensed dealers who deal in certain set ways to be prosecuted, and we need to ensure that the prosecution is speedy. If there were a Securities Commission—whatever it was called—with power to initiate prosecution, just as the police force can initiate prosecution, there would be speedy prosecutions and that would be a good thing.
The basic problem would, however, remain. I have already referred to it, with reference to Lord Roskill. We would be dealing with the result of the fraud. The way to avoid fraud is to ensure that those who deal in these

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matters are properly regulated and supervised. 'There should be proper training and grounds for admission. People should know what they are doing, and the public should be able to trust them.
I should like to utter a cri de coeur on the question of advisers. It is an open secret that a lawyer who gives one the wrong advice can be sued. A stockbroker who gives the wrong advice can also be sued, as the Nicholson case showed many years ago. It should also be possible to sue an insurance broker or agent who gives one rotten advice. I see the Parliamentary Under-Secretary nodding in agreement. The key lies in training and in the supervision of the way in which the particular interest groups conduct and control the affairs of their members. The ultimate sanction should be the liability to answer for one's mistakes.
The Gower committee was formed in 1981 and reported in 1983. The world has moved on a long way between 1981 and 1983. We should approach the question of investor protection with the aim of ensuring that those who deal in the various investment markets are rightly trained, rightly controlled, and ultimately answerable personally for their mistakes. If we balance that objective with a commission to supervise the bodies which control the various groups, and give that commission the right to prosecute people for stepping outside the rules, we might give greater protection to those who seek to invest their savings in our own country. If this House could achieve that, we would make a great contribution to people's security.
8.25 pm
Sir Anthony Grant: The hon. Member for St. Helens, South (Mr. Bermingham) has made an interesting speech. I shall not follow it, except in pointing out that, as a lawyer, the hon. Gentleman must know that it is possible to sue in negligence anyone who owes the duty of care, including stockbrokers and insurance brokers as well as lawyers and accountants. I have myself known such cases. We want to achieve a state of affairs where that does not need to be done, and people do not have to engage in the complexities of litigation.
I agreed with the right hon. Member for Bethnal Green and Stepney (Mr. Shore) that the Gower report is a remarkably able document. It is one of the best reports that we have seen. Professor Gower is to be congratulated. I do not, however, agree that the Government should commit themselves more firmly at this stage. This is not the right moment for commitment. I do not expect my hon. Friend to give any Government commitment today, other than to say that the Government have listened to the debate and will produce a White Paper—and that they will heed my remarks and those of hon. Members with whom I agree, and will disregard the remarks with which I do not agree.
The debate must be seen against a background of three factors. First, the City of London and its great institutions are vital to our economy. They have kept our economic ship afloat by their contribution to our invisible earnings for many years. Secondly, wider share ownership throughout the community is vital. Many years ago, I was a member of the wider share ownership council, with my late and much lamented colleague, Viscount Macmillan. We believed that it was in the public interest that the ownership of shares should be spread more widely.
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The Opposition prattle about the need for a redistribution of wealth. The spread of the ownership of shares is one of the most important features of such a redistribution, and should be achieved not just indirectly through insurance polices, pension funds or trade unions but directly by participation through investment in the private sector. That is—or should be—in accordance with the Government's philosophy. In addition to spreading home ownership more widely, we should spread the ownership of British and other industries. I hope that the Government will seek to turn more earners into owners.
Thirdly, although the overwhelming majority of people operating in the City are honest and honourable men, there are opportunities for large-scale fraud of which a minority can take advantage. I agree with the hon. Member for St. Helens, South that for the vast majority of brokers and others operating in the City, the slogan "my word is my bond" applies, as it always has. However, there are scandals, and those who suffer by them may be tempted to comment "When a man says 'my word is my bond', one would be well advised to ask for his bond." It is essential that the City should have a good reputation. The City and the Government have an obligation to ensure that confidence exists, at home and abroad, in our institutions.
I am in the presence of many distinguished stockbrokers. There is my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark), my hon. Friend the Member for East Lindsey (Mr. Tapsell) and my hon. Friend the Member for Horsham (Mr. Hordern). In such company, I must tiptoe delicately when discussing Stock Exchange matters.
There seemed to be rather higher hopes for abolition of fixed commission than were justified. Some time ago I used to belong to the legal profession in which there was a tremendous hullabaloo about abolition of scale fees, such as for conveyancing. We were told that everything would be marvellous and that the customer and the consumer would benefit when scale fees were abolished. I do not think that there was any noticeable reduction in fees—indeed, they probably increased—but there was a great deal of uncertainty. There is an enormous advantage in having certainty, in knowing where one stands, what the commission will be and what the fee will be. I do not know whether abolition of fixed commission forced the need for dual capacity.
I was responsible for taking the Lloyd's Bill through the House. I recall that one major feature that was called for in the reform of Lloyd's was divestment, to separate the underwriting capacity from the brokering capacity. That was regarded as essential to fair dealing and the need for it to be seen that dealing was fair. I remember some distinguished stockbrokers saying, or writing in the press, that it was right to separate underwriting from brokering. We did so with loud approval from the public and, as far as I am aware, stockbrokers. Now the move is in another direction. Events have overtaken us and we are told that dual capacity is to come in.
Whatever decision the Government take, they should not neglect the interests of smaller brokers. When he agreed to the original deal, the smaller broker did not understand that dual capacity was to emerge. He is embarrassed about that and fears that he will be squeezed out by the great monoliths—the Bank of England, the big institutions and foreign companies. I make that plea to my hon. Friend the Minister as the smaller broker is

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synonymous with the smaller investor. The Stock Exchange has today sent me a simple booklet entitled "An Introduction to the Buying and Selling of Shares." It is written in such simple language as to be offensive to some of my hon. Friends, but even I can understand it. It is clear that the Stock Exchange has in mind the need to encourage small private investors. I congratulate it on that.
Mr. Tom Sackville: Does my hon. Friend agree that the over-the-counter houses need some encouragement especially as, for example, shares quoted on the OTC are not allowed as collateral by banks and because we have the new threat of cowboy stockbrokers cold calling from Holland much the same market of private investors that the OTC is trying to appeal to?
Sir Anthony Grant: I do not pretend to be an expert on this matter. No doubt my hon. Friend is right. He has made his point.
I was pleased to see in the Gower report a reference to investment clubs. They are not to come within the purview of regulations, except in so far as they have a professional adviser. It is sad that investment clubs have fallen a little by the wayside. They started in the 1960s amid great enthusiasm and excitement. They were social and educational just as much as they were about making money. Indeed, they sometimes lost money but they provided knowledge of what was going on. I know that one such club comprised shop floor workers. They looked at the Financial Times each day even more avidly than they looked at the Daily Mirror. If they did that now, they would probably have a better idea of what is going on from the financial point of view. It is unfortunate that successive Governments, through their financial policies, have worked against investment clubs.
As to insurance, I declare an interest in Bowrings, which is a large firm of brokers, and it should be remembered that I took the Lloyd's Bill through the House. That Bill was concerned with Lloyd's internal matters. No outside policy holder suffered the loss of 1p as a result of the scandals that emerged in Lloyd's. The swindle was entirely internal. When I took that Bill through, some of my hon. Friends told me that it was too draconian. I am now told that it is only a toothbrush to clear out a stable. I have heard from Lloyd's that the measures that the new council is taking and the new powers that it is putting through have gone a long way to regulate the market and to restore confidence in Lloyd's, especially overseas and, in particular, in America. Rivals are only too keen to seize on a scandal to use it to their own advantage. I am told that the new regime is having a valuable effect and that Lloyd's is regaining its international reputation.
The Gower report refers to insurance, which should be studied carefully. I am aware that the British Insurance Association is conscious of the need for the highest possible standards if insurance is to be developed. As the hon. Member for St. Helens, South said, it is possible for fast-talking people to persuade rather simple and naive people to take out policies that they do not want. In general, however, the United Kingdom is under-insured as compared with many other western countries. Nothing should be done to inhibit the extension of proper and responsible insurance, which is a valuable bulwark against misfortune.
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I saw in The Times a reference to the need for some control over clients' money. It is now 18 years since I introduced a private Member's Bill which dealt with clients' money accounts. It never got past Second Reading but there was widespread support for it. I could never understand why lawyers who held clients' money had to put it in a separate account and to account for the interest whereas estate agents, stockbrokers and others did not. I hope that that might be included in any legislation that the Government introduce.
As to how we might achieve what we want, by instinct I prefer self-regulation to Government regulation. It has proved much more sensible and effective. I was interested in the possibility of self-regulating agencies but I have listened carefully to what my hon. Friends the Members for Chichester (Mr. Nelson) and for Horsham have said about there being a danger of a self-regulation agency becoming no more than a trade association which looks after the interests only of its members. I should like some form of self-standing commission, but I am sure that the Department of Trade and Industry is not the right body to do the regulation. I served for four years in that Department—before the time of my right hon. Friend the present Secretary of State and the right hon. Member for Bethnal Green and Stepney.
The civil servants in the Department of Trade and Industry were the finest, most dedicated, most honourable and most intelligent in the world, let alone Britain. The system, however, is not geared to policing so dynamic and varied an activity as private investment. The hard work of the lawyers in that Department has been referred to. The hard work is not on advising on or dealing with frauds and scandals but with advising on the mass of legislation that successive Governments have put through. The Department is too slow and ponderous, and tends to shut the stable door after the horse has bolted. When it moves into action, it is rather like a steamroller being used to crush the ants in the strawberry bed. What we really need in the City garden is a swift, efficient and selective weedkiller that will not inhibit the principal dynamic growth. I shall not pursue these analogies further because I might get into grave difficulties. I am against the Department being involved. There should be some form of self-standing commission with statutory backing. It might be necessary for the Government to find out how Lloyd's has worked and where it has gone wrong.
Professor Gower and the House throw the ball back into the Government's court. We look forward with interest to the White Paper and ultimately to the legislation. I only hope that Ministers will have in the forefront of their minds the need to maintain the City and its institutions as the leading body in the financial world in Britain's interest, and at the same time the need not to neglect to spread share ownership widely throughout the community and to recognise the needs of the small man. Without that wider share ownership, the foundations of free enterprise and a free society will fail.
8.40 pm
Mr. Tam Dalyell: The hon. Member for Cambridgeshire, South-West (Sir A. Grant) told us that we would learn more about the happenings in the Daily Mirror from the Financial Times than from the Daily Mirror. I spent the weekend in Scotland defending Bob Maxwell in relation to the Sunday Mail and the Daily Record, and,

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whatever view one takes about that, the power of the City institutions cannot be in doubt. The Maxwell-Mirror episode underlines that.
I hope that I can be forgiven for saying that life in the House has been less picturesque than it was when Bob Maxwell was the Member for Buckingham. Hon. Members who remember that time will recall how he entertained us. There is more good in him than bad. He is one of the few men to have created an industry for the development of scientific literature, which has given wealth and jobs to his fellow countrymen.
I received at three days' notice an invitation to friends in the City to meet Professor Gower, and so had to read his report quickly before going to Sheppards and Chase. It revealed how well written it was. I congratulate Professor Gower on his clarity and on the extremely good English in which he presents this complex document. The Minister has worked hard on the subject and will appreciate, as much as other hon. Members, Professor Gower's work.
There is a delicate balance between self-regulation and statutory control. Like other hon. Members, I tiptoe with trepidation into the affairs of the City of London, but my view is that the protection of investors should be a matter for a commission. The running of the markets—I do not mind which of my colleagues hears this—is best left to the professionals who make the day-to-day judgments. I am not sure that tampering with the running of the markets will do us much good in the medium or long term.
However, the trouble is that there is a new type of integrated financial service group, which combines functions that used to be separate. There are potential conflicts of interest within the new institutions where there were few conflicts of interest before. I agree strongly with the hon. Member for Chichester (Mr. Nelson) and my hon. Friend the Member for St. Helens, South (Mr. Bermingham) that there are conflicts of interest which cannot be resolved by different departments of one company.
Some hours ago I interrupted the Secretary of Slate to ask a question. I repeat it now. On page 45, paragraph 5, recommendation (b) of the Gower report states:
"Recognised self-regulatory agencies should be empowered to apply to the courts for the issue of subpoenas to compel attendance of witnesses and production of documents required in connection with their disciplinary proceedings."
The Government may not have made up their mind, but there are crucial questions, and this is one, about which we are entitled to know their thinking. If they do not accept that recommendation, it will lead to all sorts of other problems.
The financial markets are becoming increasingly fragmented. Ten years ago private investors would seldom get involved, for example, in commodity markets or financial futures, but now it is different. The business of investment is no longer confined to City banks and to a comparatively few brokers. For that and other reasons, we need some sort of commission. On top of that we have increasingly international markets. Self-regulation may be all right when it applies to a small group of firms with similar interests and a major commitment to the activity being regulated, but it is far less satisfactory if it attempts to cover diversified giants with customers and shareholders in other markets and other countries.
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When the Minister replies—he has applied his mind in great detail to the subject—I hope that he will tell us about the new developments which can come under the generic heading of,
"the internationalising of the markets."
I wonder whether it is possible to draft rules that are tight enough to protect investors, and flexible enough to encourage desirable competition? I listened carefully to the opening statement of the Secretary of State and I think that he said that it was a question of how the back-up to such rules would be provided.
On the question of whether there should be an overall supervisory function within the Board of Trade—I do not mind saying this as a Socialist because I believe it to be true—there should be constraints from politicians. Inevitably the function cannot be detached from Government Departments, and, therefore, political decision making. That subject may not lend itself to what will inevitably be seen, justifiably or unjustifiably, as direct political control.
On the Prevention of Fraud (Investments) Act 1958, which should be brought up to date — whether there should be an intermediary authority is another matter—I come down strongly on the side of a securities commission. The American securities commission does not seem to be the bee's knees. Nevertheless, I am on the side of a securities commission rather than of the Department of Trade and Industry. I am not criticising Department of Trade and Industry civil servants, but a sponsoring role does not go easily with the regulatory role. As my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) said, the two formulas do not sit easily together. I do not think that it is a question of slavishness in the DTI but of whether or not it is a job for civil servants. I do not believe that it is.
Other hon. Members wish to speak, but we would fail in our duty if we did not ask about commodity markets. That is an important part of the Gower report. Page 38, recommendation (c), is crucial. It states:
"Contracts for commodity or financial futures or options and life insurance contracts should be included within the definition of investments."
The Government must have a view on that recommendation, and I ask whether they accept it.
I entered the House of Commons at a time when an influential Back-Bench Member of the Macmillan Government was the late Sir Henry d'Avigdor-Goldsmid. He was a bullion broker and I used to listen to him talking about the bullion markets. What is the attitude of the Government in the 1980s to the role of the bullion and metal markets in relation to what we should be doing for developing countries?
This is neither the time nor the place to go into detail, but that point brings me to what I regard as an important question, although it may be one for the Leader of the House rather than for the Minister. We shall have a Bill in 1986. May I make a constructive suggestion: that the Standing Committee on that Bill be appointed at the beginning of the Session and that in November and December it should have the opportunity to operate, as it is empowered to do, like a Select Committee and should hear witnesses not only from the City but from elsewhere. Although the hon. Member for East Lindsey and several other hon. Members obviously know a great deal about the subject, most hon. Members are untutored in such matters. If hon. Members are to do a serious job—it is important

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that they do—there should be an opportunity in the early autumn to ask questions of those in the City and outside it who can answer on such matters.
Then I suggest a respite and that the Bill goes into normal Standing Committee in March, April or May. I emphasise the importance of the suggestion and I ask the Minister whether he is sympathetic to the idea of a Scrutiny Committee considering the issues as soon as Parliament returns after the summer recess in 1985 and then returning to the subject when its members are better informed.
The hon. Member for Stockton, South (Mr. Wrigglesworth) jibed that the Labour party was represented this evening by what he called the Labour friends of the City. I have never indulged in blanket attacks on the City of London and I am not greatly impressed by them, but, having said that, as a Labour Member of Parliament I wish to make a plea to the City in general. I represent an area which the Minister knows well and which has tremendous industrial problems at Bathgate. Some of those problems are questions of bridging finance and tiding over finance for the heart of British manufacturing industry. If companies such as the North British Steel Company are not helped to tide over what many of us believe are their temporary problems—they have reinvested in the foundry industry — on fairly favourable terms, firms are bound to go under. It will mean the deindustrialisation of the country, because if Britain is to be an industrial country it needs a foundry industry.
I say to the City: for goodness sake, look at what is happening in the north and do what you can, if only in your own medium and long-term interests, to make it possible for firms such as the North British Steel Company to carry on their technical expertise and to continue in the casting industry. I am talking about one of the three or four most modern foundries in Europe being in difficulty. The City has responsibilities. Some of us will not jibe or sneer at City institutions or attack them in general terms, but the condition for that is that the City must help industry in these difficult times to ensure that we have a manufacturing base, which is to our mutual advantage.
Mr. Hoyle: Pleas to the City are no good when trying to obtain finance for industry, and City institutions have been reluctant to invest in industry, especially if the investment must be long term. Britain has slipped behind in new technology. Some of it is now coming forward, but it has taken a long time and we have succeeded only where the Government have invested money. If the City was acting in the national interest, it would have invested in such industries.
Mr. Dalyell: I promised to sit down at 8.55 pm, so I simply register the fact that, as always, my hon. Friend has made an important point.
8.55 pm
Mr. Tim Renton (Mid-Sussex): I agree with the suggestion of the hon. Member for Linlithgow (Mr. Dalyell) about how the Financial Services Bill might be tackled in the 1985–86 Session, and it would be helpful if my hon. Friend the Minister would take that suggestion on board. Like other hon. Members from both sides of the House, I declare an interest in this matter. I started work
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in the City exactly 30 years ago in the shipping department of a firm of international merchants and commodity brokers. Despite being a graduate, my starting salary was the princely sum of £300 a year—a sum that many foreign exchange dealers or stockbrokers now earn in a day. I spent a pleasant 20 years with that firm and in the 10 years since I have beeen a member of Parliament I have been fortunate to maintain a working connection with the City as a name at Lloyd's and as a consultant to a firm of stockbrokers. I say "fortunate" purposely because we have every reason to be proud of the City. Despite the occasional scandals, which we all deeply regret, the City is one of the most successful parts of "GB Ltd.", and it is worth remembering that during the past year net private sector invisible earnings were more than £4 billion, compared with £1 billion 10 years ago.
But, as the hon. Member for Linlithgow said, Parliament is untutored in City matters. That does not apply to my expert colleagues who have spoken this evening and who are clearly very knowledgeable, but it applies to the vast majority of our colleagues. Although it is only four stops on the tube from Mansion House to Westminster, there is an ocean of ignorance between those four stops.
In The Economist an inset to the article that has already been mentioned in the debate was headed,
"To some, the City will always be a mystery."
That is certainly true of Parliament and of civil servants, the most recent example being the affair of Enterprise Oil and RTZ. RTZ saw an opportunity fairly and legally within the terms of the prospectus, and it tried to take advantage of that opportunity. It did so with about £200 million of its shareholders' money at a time when stock markets were falling and there was an oil glut. However, it believed that the assets of Enterprise Oil were worth more than the investors and their professional advisers believed at the time. That is not much of a crime, yet from some of the comments made one would have thought that it came into the category of at least a misdemeanour.
RTZ was advised in this matter by the house of Rothschild. Lord Rothschild repeated on radio last week the famous story of his ancestor Nathan Rothschild who, by virtue of having special couriers and his own ships, received advice of the British success at Waterloo 24 hours before anyone else did. According to Lord Rothschild, Nathan first went to No. 10 Downing Street to tell the Prime Minister, Lord Liverpool, of this success but was told by the butler that his Lordship was asleep and could not be woken up. So he went on to the Stock Exchange, bought all the Government consols that he could find and made a very handsome profit.
The difference between Rothschilds two weeks ago and Nathan in 1815 was simply that on this occasion they did not bother to warn the Department of Energy in advance about what they intended to do, but in each case what they did emphasised the remarks by Keynes about the animal spirits of business men. Apart from being a leading economist, Keynes was pretty good as a business man, as the present wealth of Kings College, Cambridge, bears witness.
Mr. Anthony Beaumont-Dark rose—
Mr. Renton: I hope that my hon. Friend will forgive me if I do not give way, but one of my hon. Friends wishes to speak after me and I want to allow him time to do so.

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Keynes had animal spirits himself. In fact, the animal spirits of business men are more easily indulged when dealing with money—be it investment advice, insurance policies, life insurance, pension schemes and so on—than when dealing with drop forgings or printed textiles. It is precisely because of those animal spirits and the speed and vivacity with which the City moves that it is totally impossible for any Minister of the Crown of any party, or for his civil servants, to be responsible for the day-to-day policing of the City. They will always be left behind, and left gasping.
I regret to say that insider trading is the most blatant recent example. I worked a good deal with my right hon. Friend the Member for Hertsmere (Mr. Parkinson), both in opposition and immediately when we were in government, on trying to find a definition of insider trading which would be declared a criminal offence, and would be workable. The Labour Government were working on that in 1978–79, but their suggestion was dropped in the 1979 election. We further amended it and it was incorporated in the Companies Act 1980.
Insider trading was then a defined criminal offence. But I am told that, as a result, far less is now being done to chase up insider trading and to bring those who indulge in it to book than happened previously when it was not a criminal offence and was policed simply by the Stock Exchange. That is a clear example of where self-regulation is often more effective in practice than statutory law.
In saying that, I have absolutely no doubt that regulation is needed, and must govern the largest and most successful firms as well as the smallest and most insignificant. If the City has had a fault in recent years it has been that the successful giants have got away with things that it was impossible for the minnows to get away with.
On balance—and picking up the phrase of one of my hon. Friends that the Gower report was masterly in compromise — I go along with the suggestion that a number of self-regulatory agencies should report to an umbrella organisation. Whether that umbrella organization should be a commission or intermediate body or son of CSI remains to be revealed, but it will be needed.
Who precisely will man this umbrella organisation? Clearly it must do a lot better and be more effective than the CSI. That point was well made in The Economist last week, when it said:
"In an increasingly competitive environment, the City can ill afford to second its best brains to police the City … Good financiers are good at making money, not poring over appeals from hapless licensed dealers. Bad financiers are likely to be bad at both."
That point must be taken on board by the Government in considering the framework of future legislation.
It is clear that before the Government decide on their legislation the committees appointed by the Governor of the bank will report back to the Bank of England. I am sure that the thrust of their suggestions will centre around what is practicable and workable within the City. Clearly the self-regulatory agencies must not just be trade associations. If they are, they will very quickly become cartels again. They must be genuine policemen and innovators and therefore must embrace users and consumers and lay people as well as the professionals. Apart from that I urge my hon. Friend not to think of creating a massive quango with too many powers that will not be effective at the end of the day.
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My hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) asked whether these changes were likely to lead to a diminution of private and small investors in the stock market. I hope very much that they do not, and I am encouraged to see that another part of the article in The Economist takes as its title the theme "Personal investors might stage a come-back". It emphasises that private investment has flourished in Wall street since minimum commissions were abolished and since all the changes of 1975.
We are all agreed about the vital need for protection for the investor. I am much less worried about the large investor. I am sure that he is capable of taking care of himself. If he is done once, he will not trade with that primary dealer or investment bank again. He will move his business. But the small investor must worry us all. In future years I can see the small investor going into Barclays bank, being able to get Stock Exchange prices on a VDU screen over the counter and immediately deciding, on the bank manager's recommendation, to buy 100 ICI. He may not even have to go to his bank. He may do it on a VDU screen in his own home. All that is potentially exciting, but the man has to be able to ascertain that the price quoted by his bank manager and at which he deals is a fair and decent one at the time. For that reason I support the view that there will have to be a last trade tape showing both the volume and time of dealing. In that way anyone who wants to bother to check back will be able to discover what was the going rate at the time of his deal.
That takes up the point made by other hon. Members that there must be full transparency of interest and prices at a time when we move into dual or even triple capacity within the City financial institutions.
I greatly enjoyed the speech by my hon. Friend the Member for East Lindsey (Mr. Tapsell), even if I did not agree with all of it. He asked whether these changes were necessary. I have the feeling that if the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) had not originally referred the Stock Exchange to the Restrictive Practices Court five years ago it is possible that over the intervening five years the Stock Exchange would have changed itself slowly, step by step, and we would not have this great revolution which is upon us now.
The effect of that case being referred to the court was that nothing happened on the Stock Exchange for five years. Then my right hon. Friend the Member for Hertsmere in effect pulled the stopper out of the bottle in July last year. The genie came out and thereafter no one knew precisely where it would go or how fast. The genie is now firmly out of the bottle. It cannot be put back, even by the Labour party. That being so, I end on two cautionary notes in which I give some support to my hon. Friend the Member for East Lindsey.
Size really is not everything. Looking back over the history of the past 20 years, we see that from textiles and breweries to the steel industries disasters have flowed from mergers. It has been the disappearance of small specialist firms in all those industries that we now come greatly to regret. The Schumacher view that small is beautiful can apply just as much to the financial services industry as we now realise it does to manufacturing industry generally. We must not forget that.
Secondly, there is a great danger of foreign domination because of the vast capital size of some of those who will be allowed in as primary dealers. It is worth remembering that American Express has a market capitalisation of four

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times that of the United Kingdom's six biggest quoted merchant banks put together. Salomon Brothers reported in its most recent annual report open positions amounting to $20 billion—the approximate equivalent of our public sector borrowing requirement for two whole years.
When the Americans and Japanese are allowed in as primary dealers it is essential that the capital requirements should be adequate, but they should be limited to what is necessary, there must be limits on trading ratios to capital and there should be not only a Chinese wall, but a positive iron curtain to prevent capital from being moved from the parent company to the trading subsidiary. That will ensure that everyone who starts as a primary dealer is on genuinely equal terms.
I am not a protectionist — if London is to be an international financial centre it must indeed be international—but I do not want the market dominated by Americans and Japanese in 10 years' time, as has happened with silicon chips and video recorders. We have to think through very carefully what is happening and get it right rather than wonder in 10 years' time why we did it at all.
9.11 pm
Mr. Tom Sackville: I have about three and a half minutes to remind the House of one strong sector of the City which has not been mentioned, but which may be affected by the proposed measure. It is the Eurobond market, of which London is clearly the centre.
May I quote some figures to demonstrate the importance of that market? Last year about $48 billion of new bonds were issued, and $28 billion of Eurobonds were issued in the first five months of this year. Likewise, in the traded secondary market, over $30 billion passed through the clearing system last week alone. About three quarters of that involved London-based houses.
We are discussing, not necessarily protection for the sake of the investor, but rather the protection of the investor to maintain confidence in a sector which is extremely important to London. Its earnings run into hundreds of millions of pounds, it provides much employment and it attracts enormous investment from overseas.
The Eurobond market illustrates the fact that self-regulation must be the way forward. The famous fraud of only a couple of weeks ago, which was perpetrated by one trade selling bonds to a dummy company at the other end of the world at or near the lower end of the daily trading spread and later selling at the higher end to an accomplice in another house, could not have been investigated effectively by anyone except the professionals in the industry. Outside bodies would not know where to start.
On the other hand, there are considerable dangers of over-regulation in the Eurobond market. The most that is needed is an expert body which can investigate quickly and cleanly and act quickly to bar or suspend individuals or firms and arbitrate in any disputes. In the current scandal the two institutions have agreed to arbitration, but they might not have done.
Whatever body is set up, I ask Ministers to remember that it must not frighten the Eurobond market away from London. The important thing to remember is that New York has failed to replace London as the centre of the Eurobond market, not just because of the United States'
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withholding tax, but mainly because of the fear of over-regulation and of interference by the Securities and Exchange Commission. Even if the United States' withholding tax was removed, as threatened, there is no reason to suppose that New York would attract a great volume of that market unless we failed to heed the lessons and made the mistake of going for a full-blooded SEC, which would then do great damage to the market.
Therefore, I believe that London can, and will, remain the clear centre of the Eurobond market, with all the benefits that accrue to this country as a result.
9.15 pm
Mr. Bryan Gould: At the beginning of what already promises to be another bad week for the Government, it is a pleasure to commend them on something for a change. They are to be congratulated on having arranged this debate before decisions have been made and minds have been made up. As a result, we have been rewarded with a very useful debate. A wide range of opinions have been expressed by Back Benchers, and that range has been perhaps a little surprisingly wide on the part of Conservative Members. An even more surprising fact is that the debate outside this House, as represented by participants on the Government Front Bench, has expressed an even wider range of views. On the one hand, the Chancellor—no doubt on the prompting of the Bank of England—has clearly said that he favours a self-standing commission, and, on the other, the Under-Secretary of State has gone on record equally clearly—and perhaps even more clearly—as saying that he is not in favour of a self-standing commission, and that his Department should do the job. The Secretary of State has neatly straddled the two by saying nothing.
Mr. Tebbit: Will the hon. Gentleman quote the section of the speech by my right hon. Friend the Chancellor of the Exchequer in which there is such a firm diversion from the views of my hon. Friend the Under-Secretary of State? We are all looking at shades of opinion, and sooner or later we shall come up with consensus.
Mr. Gould: We are all accustomed to leading politicians expressing themselves in somewhat veiled terms, but in his speech to the Bow Group just a fortnight ago the Chancellor of the Exchequer said:
"If anything, developments in the markets since Gower have perhaps strengthened the case for some kind of umbrella body."
That is very much in contrast to the remarks of the Under-Secretary of State. In interviews with Financial Weekly, he has gone on record as saying that he is firmly opposed to umbrella bodies, and sees no case for anything other than four self-regulatory agencies and the Department of Trade and Industry. However, the Secretary of State is tempting me to anticipate a later part of my speech.
This debate takes place against a background of substantial change in the City. But we must be careful to ensure that those changes are not allowed to overshadow the original purpose of the Gower report. In essence, it is about investor protection. It was prompted by a series of scandals in the City, such as the collapse of Norton Warburg, where many savers lost their savings. It arose because the City failed first to regulate efficiently, and secondly to punish efficiently when the regulation failed.
Mr. Tapsell: The hon. Gentleman must exclude the Stock Exchange from his censures. Neither a lack of regulation nor a lack of punishment existed there.
Mr. Gould: One of the weaknesses of this debate has been that it has concentrated almost exclusively on the Stock Exchange. The Gower report, of course, deals with many other institutions. Indeed, the problems thrown up by lack of effective regulation and enforcement in many of them prompted the setting up of the Gower committee. Of course, those failures not only damaged the interests of investors but, as many hon. Members have pointed out, they damaged the City's reputation. Unfortunately, as the hon. Member for Bolton, West (Mr. Sackville) mentioned, those days are far from behind us. Even now, we are in the midst of a new rash of frauds in the Eurobond market.
In his report, Professor Gower set out to put the City's house in order. It is essential that that should be done if the City is to prosper. We must not forget that fundamental issue. I join others who have paid tribute to Professor Gower for the tremendous job that he has done. We accept his fundamental and central recommendation that a new investor protection Act should regulate these matters.
Professor Gower's general case for regulation by statute is accepted by Ministers. Apparently even they now recognise that competition alone cannot be the answer to all the problems. That is a welcome recognition—one might even call it a conversion. We wait with interest to see how far it is extended to other spheres.
Competition and regulation should not be regarded as being mutually exclusive. Some unease is felt at the prospect of competition being excluded because of regulations, if that means that restrictive practices are allowed to flourish. If there is to be some restriction of competition, it is even more important to have clear, statutory safeguards for the investor and consumer.
The fundamental concern of the Gower report is overshadowed by the tremendous pace of change which has begun in the City. The change is astonishing. It was unleashed, I believe unwittingly, by exempting the Stock Exchange from restrictive practices litigation. It is ironic that that decision — which I believe was designed to forestall and inhibit change—has allowed that change to roar ahead. The hole in the dyke has become a total breach in the wall. I know that the Secretary of State argues otherwise. There is no harm if he wishes to keep peddling an improbable story, but no one in the City believes what he has to say.
The problems which Professor Gower addressed take place in a context in which minimum competition is to go, at least by the end of 1986, when single capacity is to go and the 29·9 per cent. rule about outside ownership is to go. We are now in the era of comprehensive financial institutions, offering the full range of financial services. Many people call them financial supermarkets. That means that the old institutional safeguards have gone. The City is now to be peopled—one might say invaded—by brash newcomers and outsiders. The old conventions will go. The old cosy, clubby atmosphere will go. The City is now freewheeling. It is spinning in a maelstrom of change and is in many senses out of control.
At this time, when the City needs the maximum certainty, assurance and guidance from the Secretary of State and his colleagues to meet the challenge from foreign institutions, the Secretary of State is failing the City. The institutions themselves are simply not capable of working out the right answers. The Stock Exchange Green Paper is a witness to the mess into which it can put itself. I see
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no prospect of all the conflicting interests in the various parts of the City being able to work their own way through this difficult and changing situation.
What structure should we aim at? It is almost universally agreed that a major role can be played by self-regulation. No one wants detailed, day-to-day administration by bureaucrats. However, we should not lose sight of the fact that self-regulation is a privilege to be earned and justified. The trouble with self-regulation—I am not alone in believing this—is that it is fatally easy for it to be regarded as a means of identifying, perhaps unwittingly, the wider public interest with the promotion of one's own self-interest. We cannot allow that to develop because the record of self-regulation inspires little confidence. If the Secretary of State would like to tell me whether he is satisfied with the record of the City's scandals and frauds during the past three years, I shall gladly give way.
Mr. Tebbit: I shall be happy to do so. Of course I am not satisfied—if I were, I would not be proposing any changes. I shall draw the hon. Gentleman's remarks to the attention of my right hon. Friend the Secretary of State for Employment.
Mr. Gould: The Secretary of State's remarks are so opaque and subtle that their true significance escapes me.
The record of the City inspires little confidence. No other institution with a record as bad as the City's—which we could detail if we so wished — would be accorded further latitude. The changes put a premium on the clearest and most effective regulation. That is in the interests of the City, as well as in the interests of everyone else.
Professor Gower says that the fault has been not that of self-regulation, but self-regulation not subject to effective surveillance. The central question—accepting that self-regulation will be given a further trial—is who should monitor and supervise that? Gower identifies two major options. He dismissed the Office of Fair Trading and the Bank of England. The two major options are the Department of Trade and Industry and a self-standing commission. Clearly, the professor preferred a self-standing commission. For practical and political considerations, he suggests in his report a supervisory role for the DTI.
There is little doubt that subsequent events—even subsequent to the publication of the report — have immensely strengthened the case for a self-standing commission. We do not need to speculate too outrageously to conclude that Professor Gower, if given the opportunity to write another report — and and we look forward to the second volume—would strengthen his preference for a self-standing commission. The Director General of Fair Trading has reached a similar view.
Even more surprising is the shift of view in the Conservative party, and also within the City. The Chancellor of the Exchequer has said that he is in favour of a commission. Virtually all Conservative hon. Members have accepted the case for such a commission—
Mr. Tebbit: No.
Mr. Gould: The right hon. Gentleman was not present, and does not know what his hon. Friends said.
Mr. Tebbit rose—
Mr. Gould: No, I shall not give way. I invite the right hon. Gentleman to read Hansard to confirm what I have said.
What is surprising is the shift of opinion in the City. Many of those to whom I have spoken have reached the view that there is an increasingly strong case for a commission. The more intelligent people in the City recognise that, in this new position, there is a major job to be done. There is a crying need for proper regulation if investor protection is to be properly established and if confidence in the City is to be maintained and promoted. It is doubful whether the DTI could do the job—not because of the abilities of those who staff the Department, but because it is inappropriate to the role of civil servants. They lack the necessary expertise; there is too rapid a turnover of staff at senior level; it is difficult for one Department both to sponsor and to regulate; there is evidence that sponsoring Departments are too easily colonised by those whom they try to regulate, and the supervision that might be expected from a Government Department might on the one hand be too remote and on the other too heavy—it would be applied at the wrong time, in the wrong way and on the wrong issues.
Mr. Nicholas Baker: The hon. Gentleman starts from the premise that self-regulation is a privilege, as he said a short while ago. I suggest that he is wrong about that because self-regulation can be justified only in the public interest. If he thinks that it is a privilege, he may come to the wrong conclusion.
Mr. Gould: When we consider that in the past year or two scandals have cost investors tens of millions of pounds, yet those concerned have still gone unpunished, it is clear that continuing self-regulation, though desirable, has to be regarded as a privilege which must be justified. However, the hon. Gentleman intervened some minutes after I had dealt with that point, and I do not wish to retrace my steps.
I now come to the case for a self-standing commission. In addition to having the great merit of being in line with the Labour party's long-held view on these matters, a self-standing commission would offer a body with which the City could identify, could develop a relationship, in which it would have confidence and which would be staffed by people who knew and understood the City.
It has always seemed to me remarkable—at least initially, when this debate began some months ago—that so many of those who, generally speaking, opposed central bureaucratic control wanted supervision by the DTI, whereas the Labour party, which is often accused of having exactly that desire, was the party propounding the idea of a self-standing commission.
Such a commission would deal far more easily than would a Government Department with comparable bodies in other countries. It is not insignificant that many other countries have taken that course. The commission would also be the most obvious, certainly the best fitted, body to undertake the pre-vetting of prospectuses, one of the important tasks identified by Professor Gower.
Mr. Nelson: The hon. Gentleman appears to be trying to persuade the House that everybody is coming round to a position long held by the Labour party. The position put earlier by his right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) was a marked departure from the line held traditionally by the Labour party and
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expounded earlier in the debate by the hon. Member for Warrington, North (Mr. Hoyle). That was that there should be only an SEC with full legal powers and many firms controlled by it. The right hon. Member for Bethnal Green and Stepney—in a significant departure which the hon. Gentleman should endorse, if he believes it—said that not only should there be that commission, but that there should be self-regulating agencies with considerable autonomy of control over the firms represented on it.
Mr. Gould: I am glad that I allowed the hon. Gentleman to intervene because obviously I failed to make clear what I said earlier, which was that, like my right hon. Friend the Member for Bethnal Green and Stepney, and like the Labour party for a considerable time—perhaps the hon. Member for Chichester (Mr. Nelson) has been reading outdated documents—I am in favour of a role for self-regulatory agencies. We think it essential, however, that there should be adequate monitoring and supervision and that that can be done effectively only by a self-standing commission. We go further and say that that commission must have adequate powers not just to monitor but to investigate and, in the end, to enforce. Rather like the SEC, it should have the power to ask for injunctions and to compel disgorgement.
Much of the opposition which initially arose to the concept of a self-standing commission was based on horror stories about the American SEC. It was regarded as a highly bureaucratic, lawyer-ridden body. There are now many other models, perhaps more congenial ones, and the Ontario Securities Commission is one. We have become, as it were, sufficiently mature not to be mesmerised by stories about an SEC which has, no doubt, in any case, improved its procedures.
We need clear guidance from Ministers about the way in which they are thinking. At least the Chancellor, though not as clearly or in as much detail as one might have wished, gave an inkling of the way in which his mind is moving. We did not get that from the Secretary of State today.
In the end, it does not much matter in which way a commission is set up; if it does, it is premature to consider that question now. I do not mind if it is the son of CSI or something else, provided that it has a statutory framework in which to operate. The decision on the nature of the commission will determine other major questions, such as the number, nature and powers of the self-regulatory agencies. Without a commission, there is a case for a small number of self-regulatory agencies because they would need to have substantial powers and great responsibilities. It would be wrong to load those powers and responsibilities on to such voluntary bodies.
With so few self-regulatory agencies there would be too great a degree of compression. Too many smaller interests in the City would feel that their interests would be submerged. It should be possible to have sufficient self-regulating agencies so that virtually every firm in the City can register through one of them. Ideally, we should try to avoid direct registration and supervision of individual firms.
We do not, however, want too many self-regulatory agencies, for the reasons given by some Conservative Members. If there were too many, they would become simple trade associations. There is a powerful case for identifying and organising self-regulatory agencies on a

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functional rather than institutional basis, because the dividing lines between City institutions are becoming increasingly blurred.
My preference is for between four and a dozen self-regulatory agencies. The more there are, the greater the need for a commission to supervise them.
Major practical problems still remain to be addressed. Only two or three of the self-regulatory agencies which are likely to be recommended currently exist. Great problems lie ahead in establishing such agencies and getting them functioning in the time available. We cannot expect City institutions with their clear sectional interests to arrive at the right solutions to those questions.
There are other uncertainties, some of which might be partly resolved by the Stock Exchange paper, which is to be published tomorrow. I quickly enter one caveat—I am disturbed at the apparent resistance which will be expressed in that paper to the principle of transparency. I agree with the hon. Member for Mid-Sussex (Mr. Renton) that we want the greatest possible disclosure which modern technology offers. That is the essence of clear and effective regulation. We need also a mechanism for ensuring that the City will not be completely dominated by huge institutions. The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) made that point, and a recent opinion poll conducted in the City bears him out. About 62 per cent. of all brokers in the City believe that private investors will pay more and receive less protection because of these changes. About 52 per cent. of them—this bears out what the hon. Member for East Lindsey (Mr. Tapsell) said — are opposed to the abolition of single capacity.
That leads me to a substantial point. One of the great dangers facing us in this rapidly changing city is the foreign domination of our major financial institutions. One of the major objectives of this enormous change is to produce vast international financial conglomerates. I am afraid that, unless we have talked about this issue in advance and have mechanisms in place to deal with it, we shall one day wake up too late and find not only that the foreign earnings and all the other advantages brought to us by the City have gone, because they have been repatriated elsewhere, but that the extremely delicate relationship of the Bank of England with the mechanisms that enable it to fund the borrowing requirement to sell the goods have suddenly passed under the control of institutions that have no relationship with the Bank of England.
A Labour Government would refuse to follow the present Government's sorry example during the past week or two and would seek to follow an independent fiscal and interest rate policy. We would not wish that objective to be jeopardised by allowing our financial institutions to be part of a vast international money market in which the interests of the British Government were of no concern.
We have had a useful debate, but we have reached the point when we need clear guidance from Ministers. The stakes are enormous, as the hon. Member for East Lindsey said. We all have a substantial interest in an efficient, profitable and competitive City. The pace of change and the forces which are now ranged against the City in terms of international competition mean that, even if we take all the right decisions, the odds are not as high as they should be in favour of the City maintaining its pre-eminent position. We cannot afford to be complacent. We need to make the right decisions. They are a precondition to ensure that the City continues to survive and prosper. We needed
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clear intellectual analysis and guidance from the Secretary of State as to where his political mind was leading him. We did not receive it. We now look to the Under-Secretary to remedy that omission.
9.40 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Alex Fletcher): This has been an interesting and worthwhile debate, and I believe that the House has agreed that it is taking place at the right time in view of the changes that are occurring in the City of London and elsewhere. My right hon. Friend and I are glad to have had the opportunity to consult the House.
The speech of the hon. Member for Dagenham (Mr. Gould) was remarkable. At a time of radical change in the City, he was extremely conservative. At a time of need for radical change in the trade union movement, he was silent, like the rest of his colleagues.
We are talking about the need for investor and consumer protection in the City and in financial services, but I am bound to say that it is high time that we had protection for the members of trade unions, let alone those who have suffered from the breakdown of services, which happens all too frequently.
In thanking the House for its contribution to the debate, I should like to add my thanks to Professor Jim Gower for the excellent report that he has presented to the House and the country, and for the stimulus that it has given to this debate and to the wider ranging debate that is taking place in the City and elsewhere.
The next step in the development of the Government's proposals will be the advice of the Governor of the Bank of England's advisory group, which we expect to be available within a few weeks. That should show how far the securities industry can deliver the kind of institutional structure for which we are looking to provide what my right hon. Friend called supplementary measures to maintain appropriate conduct of business rules and thereby ensure that the system is equipped with preventive as well as retributive teeth.
Unless the system includes arrangements designed to nip fraud in the bud, if it does no more than punish the malefactor after the event, it will not command the confidence of the investor at home or overseas. Unless the financial services sector is clean, and is seen to be clean, it will find itself short of customers. There is sufficient and growing international competition to ensure that that is the case.
The Governor's group will also influence our thinking on whether some kind of intermediary body is necessary and, if so, what form it might take. At the same time, we expect to be receiving and considering the life insurance industry's response to my invitation to put forward by the end of August proposals for a possible self-regulatory body to cover the selling of life insurance and related products, such as unit trusts, by intermediaries and other salesmen. Although a feature of today's debate has been that not a great deal has been said about the insurance sector, I am sure the House will agree that the arrangements made there are equally important in the reorganisation that is taking place. We shall consider the proposals of the insurance group against the views that have been outlined today.
We want to see what the industry can agree to deliver before settling the Government's plans. I remind the House that our intention is to publish a White Paper in the autumn.
Mr. Bermingham: Will the Minister confirm that in those reviews the Government will impress upon the insurance industry the need for full disclosure and liability?
Mr. Fletcher: I agree with what the hon. Gentleman says, and with what the hon. Member for Dagenham said on the same subject. Disclosure is a fundamental part of investor protection.
Before responding to particular points, I shall briefly recapitulate the approach set out by my right hon. Friend the Secretary of State. The extent to which we envisage relying on market forces has been variously criticised as naive, a fraudster's charter and an inadequate response to mischiefs of the sort that brought about Professor Gower's report. To some extent, we have asked for this by sharing our ideas with the House while they are still at the formative stage. I think that the House has, however, accepted that this debate has been worth while, so that the Government can benefit from the views that have been expressed today.
Our plans are still incomplete, and deliberately so, for the reasons that we have given. However, I put it to hon. Gentlemen who have questioned our general approach that there are few forces as powerful as market forces. The rider that we attach to this — disclosure — and the vigorous enforcement of the criminal law and the availability of instruments of competition policy will, in combination, give market forces a firm push in the right direction. I doubt whether a bureaucratic straitjacket can achieve any set of objectives more efficiently and effectively than market forces properly channelled. Market forces are the most powerful weapon for the protection of the investor, but they are not our only one. We recognise the need for conduct of business rules to make it more difficult for malpractices to occur in the first place.
We would prefer such measures to be administered largely by the financial sector itself, but with statutory backing. We believe that this will be the most efficient and cost effective approach. Some hon. Members, such as my hon. Friends the Members for Chichester (Mr. Nelson) and for Mid-Sussex (Mr. Renton), have asked what my right hon. Friend and I envisage when we speak of self-regulation. Let me try to explain briefly what it does not mean. It does not mean amateur arrangements in the City. It does not mean, with respect, the Salvation Army in the City, or some group of self-appointed City vigilantes. Nor does it mean the present system of SRAs, some of which operate effectively in the City. Self-regulatory agencies must not be cosy clubs operating simply for the benefit of their members. They should be bodies underpinned by statute, with their fundamental rules of conduct set by the Government. That is the basis on which we consider self-regulatory agencies in the various discussions and debates that are taking place.
Mr. Renton: When my hon. Friend uses the words "underpinned by statute", will he consider the suggestion that self-regulatory agencies, either individually or through the organisation if there is to be one, should report annually to the Secretary of State on how they have discharged their duties, and such reports should be laid before Parliament and debated briefly, if necessary?
Mr. Fletcher: That may be. We wish to underpin by statute because, in operating in a particular sector or in the
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City generally, the SRAs would require authority from a statute to make sure that the business of the financial sector was conducted responsibly. In return for that authority, the House may look for some annual report or some other such action.
The right hon. Member for Bethnal Green and Stepney (Mr. Shore) criticised my right hon. Friend the Secretary of State for insufficient steer, but having promised to steer himself said only that we should have a commission. That was all, apart from an interesting resume of the Gower report. I was surprised that he ignored the importance of competition in protecting the interests of the investor. I was also surprised that he supported the separation of sponsorship of the financial sector and its regulation, because the two are not incompatible.
Mr. Shore: The hon. Gentleman has explained his position on SRAs. What does he think about having an independent Securities Commission? Does he think that there should be such a body? If not, why not? Who is to regulate the self-regulators? Does he think that it can be done by the Department of Trade and Industry, or does he think that it requires an expert commission with statutory powers?
Mr. Fletcher: Those are matters which my right hon. Friend will decide in preparing the White Paper. We want an effective regulatory body with the minimum of bureaucracy. I do not believe that it has to come directly from Government. I hope that the benefit of the experience of the City and City practitioners will be evident in such a body. If it were underpinned by statute, it might work very effectively. We are not choosing between, on the one hand, some amateur body and, on the other, a Government quango. We might find, in the typically British way, some method whereby voluntary arrangements, as I have said several times, can be underpinned by statute.
My hon. Friend the Member for East Lindsey (Mr. Tapsell) made an important and lively contribution to the debate. I think that the House generally enjoyed it, respecting his experience in these matters. In an intervention, I tried to point out to my hon. Friend that it was the Stock Exchange, and not the Government, that ruled on the question of single capacity. Despite the fears which my hon. Friend properly expressed in an earlier debate concerning foreign takeovers and foreign companies, they are not ruling today in the City. City firms themselves decided the extent of foreign ownership.
The Government's interests are largely confined to the efficiency of the market, to fair competition and to investor protection. I was a little surprised—perhaps I should not have been — that my hon. Friend, as a practitioner in the City, was so strongly critical of so many of the decisions made by his colleagues and contemporaries in the City with regard to the changes that are taking place. I am sure that my hon. Friend has deployed his arguments equally forcefully in the City. He drew a comparison with Lloyd's but he agreed that there was only a superficial resemblance between the activities and business taking place in Lloyd's and those taking place on the floor of the Stock Exchange. I think that the House generally appreciates and understands that.
I was glad to hear my hon. Friend's outspoken criticism of an SEC. He seems to feel that it is inevitable, given the course that we are at present treading. I would encourage him not to be so fearful and to think that it is not

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necessarily inevitable. There are ways and means — which I hope the House will support later—whereby, as I said to the right hon. Member for Bethnal Green and Stepney, practitioners can still manage their own affairs in the City in a responsible way with the necessary backing and support of the Government.
I agree with my hon. Friend's fears about bureaucracy and constant legal wrangles, and the fact that business cannot be conducted in some parts of the world—not least in the United States—without a team of lawyers representing each side of the negotiations. It is important, in designing a new system for the City, to maintain the informal and reputable way in which business is conducted and the good reputation of the City as a whole.
My hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) was rightly concerned about the small and medium investor, but, as was pointed out to him, the present system has not exactly increased the number of small private investors. I believe that increased competition among brokers themselves is the way to ensure that the poor performance is reversed. As my hon. Friend the Member for Mid-Sussex said in an intervention, brokers will respond positively to the new competitive conditions that are being brought about. He mentioned December 1986. We believe that that date can be met without any penalty being imposed on investors or anyone else in the City.
The answer to the point about foreign takeovers is that the City remains essentially British, without any special Government protection. My hon. Friend the Member for Mid-Sussex expressed fears about this some months ago. He will agree that, in that respect at least, things have gone well since then. He and my hon. Friend the Member for East Lindsey seemed to suggest that the Stock Exchange was being dragged screaming into the changes that are taking place. The Stock Exchange was anxious to make changes in the London market, but was becoming increasingly inhibited by the fact that the case was before the Restrictive Practices Court. The Stock Exchange accepted the Government's proposals for abandoning fixed commissions and introducing competition into its own affairs and the affairs of the City in general. Thai was what sparked off the changes.
Mr. Shore: Did the hon. Gentleman say, "the Government's proposals"? They were the Stock Exchange's proposals.
Mr. Fletcher: I understand the right hon. Gentleman's allusion. The Stock Exchange was glad to be released from the restrictive trade practices case so that it could undertake the changes that have now taken place in the City.
In answer to my hon. Friend the Member for Selly Oak, I say that I cannot believe that the City, which thrives on competition and is enthusiastic about competition for
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everyone else, does not believe that competition is to its own advantage too. Competition is good for the financial services industry and for the investor.
Mr. Beaumont-Dark: Is my hon. Friend saying that the City is afraid of competition? He has deliberately missed my point, which is that the great financial conglomerates will lessen competition rather than widen it. How can it be good for competition that fewer people should be doing business?
Mr. Fletcher: I believe that there will be more business to be done, and that many alert stockbrokers will take advantage of the greater degree of competition open to them.
The hon. Member for Stockton, South (Mr. Wrigglesworth) criticised the DTI. He seemed to forget that the Department is bound by the Prevention of Fraud (Investment) Act 1958, which we all agree needs to be thoroughly revised. I hope that that revision will be an important part of the financial services Bill which we hope to introduce in the 1985–86 Session. The hon. Gentleman, too, called for a commission. It is odd that those who are most critical of the Government are usually the first to demand more government every time a new problem arises.
I am sorry that I did not hear much of the speech of my hon. Friend the Member for Horsham (Mr. Hordern). He referred to the position of self-regulatory bodies under the Treaty of Rome. There is not much reference in EEC documents to transactions such as this. However, in terms of competition policy, we would be subject to Brussels. The position would resemble that of domestic competition policy. I agree with my hon. Friend the Member for Horsham that, when the Government have to depend on only two firms of jobbers, the base is too narrow. That is an area in which we are likely to see a change.
My hon. Friend asked whether self-regulatory agencies would be sufficient to protect investors. My view is that there is no point in having self-regulatory agencies unless they can—and are seen to—protect the interests of the investor. That is the main feature of their task. My hon. Friend is thinking of an independent agency operating at arm's lengh. He did not ask for a commission as such. There is a difference between an independent agency managed by practitioners and a bureaucratic quango.
Mr. Hordern: If the Secretary of State does not set up some umbrella organisations as well as the self-regulating agencies, there will be some ugly problems on his desk.
Mr. Fletcher: I think my hon. Friend will agree that, from time to time, we have sufficient problems without inviting more. I am sure that his advice is given with much experience and wisdom and, if it is right, my hon. Friend the Secretary of State will pay a great deal of attention to it, as I shall. I am grateful to my hon. Friend for his contribution to the debate.
It being Ten o'clock the motion for the Adjournment of the House lapsed, without Question put.

Value Added Tax
10 pm
Mr. Jeff Rooker: I beg to move,
That an humble Address be presented to Her Majesty, praying that the Value Added Tax (General) (Amendment) (No. 2) Regulations 1984 (S.I., 1984, No. 929), dated 5th July 1984, a copy of which was laid before this House on 6th July, be annulled.
It is somewhat remarkable, although understandable, that the Opposition have had to lay a prayer under the negative procedure to enable Parliament to debate about £1·2 billion which was a central part of the Chancellor's Budget statement. Were it not for this debate, the House would have had no chance to debate the change, any of the problems and uncertainties that surround it and such a large sum of money.
I do not propose to go through the details of the regulations—that is the Minister's job. I merely want to ask him a few questions. As far as I am aware, the Government are following the correct legal procedure. I say that because the Leader of the House left one of his constituents with the impression in May that these matters were being dealt with in the Finance Bill. I suspect that many people have looked in vain in the Finance Bill for this part of the Chancellor's Budget statement.
I wish to ask the Minister some questions because of speculation surrounding the background to the change. Is there still any argument between Customs and Excise and the clearing banks about the terms of the guarantees required for those who import into Britain and who will be required to pay VAT between six and eight weeks earlier than would otherwise be the case? I do not intend to divert the Minister on to other areas of policy but is he confident that there will be no blockages at the ports from 1 October when the new scheme takes effect? There has been much discussion about that in the media, especially in regard to Dover which is represented by the Chief Secretary to the Treasury. Does any trading organisation have any outstanding inquiries or queries with the Government? Are any meetings between the Government and trading organisations regarding implementation of the order still on the agenda? Have any steps been taken to protect exports from Britain if there are blockages at the ports because imports have been held up? Exports are not affected by the order but could be affected by physical difficulties in the docks. Such difficulties should be foreseen and planned for.
I did not expect to have to raise my next questions but it has been put to me by some of my right hon. and hon. Friends. Are any special arrangements due to be made to cope with the problems of importers who must pay VAT at the ports on objects that arrive and have an unknown value? I refer to objects that have been imported for auction with a view to being exported shortly afterwards. There will obviously be some difficulty in levying VAT on such objects. I assume that the Minister will give us the latest with regard to the 14th draft directive of the EEC on harmonisation of VAT at the ports. As I understand it, if an agreement could have been reached in the EEC, the Government might not have pursued this course of action in the regulations. Much to my surprise I have also discovered that there is a seventh VAT directive on works
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of art, which may or may not be affected by the operation of the regulations. That probably also relates to my previous question about objects of unknown value at the point of import.
The Opposition do not oppose the regulations, and any sign to the contrary was simply a misunderstanding. It is clear from the Chancellor of the Exchequer's Budget statement that importers have in general been obtaining an easement in cash flow, which could be taken as an importers' handout at the expense of domestic producers because they have not been required to pay VAT for up to 11 weeks after the importation of the goods involved. That does not apply to domestic producers. It is unsatisfactory, especially in a nation that is sinking under a tide of imports. The Chancellor of the Exchequer is right to attempt to equalise treatment, and there can be no argument about that.
The Chancellor's problem—this matter will affect the House and the nation next year—is that he used the once-and-for-all bonus of £1·2 billion that arose from moving forward the date for payment of VAT. He will gain that only for one year. He used that money in his Budget judgment for the PSBR calculations. That clearly means that next year he must find the same sum again from another source, either on a once-and-for-all basis or on a recurring basis, even to maintain the status quo of the PSBR, public expenditure and taxation. It is a target that he must reach. I do not know where he will find that money, and I do not expect the Minister to tell us, but I shall venture a suggestion.
Clearly it is on public record that the Government do not intend to maintain the existing regime of VAT indefinitely. That intention is in letters written by Ministers. It is also on public record that the Chancellor briefed the Sunday press after the Budget and, like a child sucking up to its mother, the press sucked it all in and wrote it down. It is clear that the Chancellor intended to spread the burden of VAT, either through a two-tier rate or by extending VAT to areas such as public transport, construction and fuel. That is clear from the press reports of 18 and 19 March 1984.
About a week after the Budget the Chancellor said in a radio broadcast:
"We are free to do what we think is right but I have no plans to move in that direction."
He was talking about the fact that the Conservative Government between 1979 and 1983 were pledged not to put VAT on food, fuel, housing and transport, but that no such pledge was given in 1983. Clearly one way in which the Chancellor could scoop up £1 billion-plus is by extending VAT.
I invite the Minister at least to tell the House some of the ways in which the Chancellor could make up the shortfall that will occur because the regulations involve a large sum on a once-and-for-all basis. To try to run the economy on such a piecemeal basis, where such a large sum is involved, is unacceptable.
I said at the outset that I accept the legality of our formalities and that we must debate this Opposition prayer. Although the procedure which allows the Customs and Excise to make their own regulations is all right, there is an argument for "capping" the money. Where a regulation can affect our economy to such a great extent — it could be more than £1 billion — the original legislation should be amended so that this can be done only by affirmative order. It should not be possible for the

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Customs and Excise to issue regulations that could have such a devastating effect, equivalent to more than a penny in the pound on income tax, in such a way that the House of Commons cannot debate the matter. They could issue regulations when the Government cannot find time to debate a prayer. I hope that Ministers will bear that in mind when drafting the clauses for next year's Finance Brill.
10.11 pm
Mr. Toby Jessel: I am second to none in supporting the ending of the postponed accounting of value added tax. It has made possible many other tax reductions in the Finance Bill. The hon. Member for Birmingham, Perry Barr (Mr. Rooker) referred to the effect of the change on articles of unknown value, such as works of art for auction, and I ask my hon. Friend the Minister whether the Government will consider the way in which the proposed measure could affect the business of fine art auctioneers in London such as Sothebys and Christies.
London is one of the great arts capitals of the world. I speak not only of museums, art galleries, architecture, the stage, concert halls, opera and ballet—thus bringing in both visual and performing arts—but of our fine arts auction houses. Those parts of London's heritage comprise a network of art and of tradition that is very important to Britain. It is a priceless national asset which should be treasured and fostered. If we damage one strand we can damage all of them, because visitors to Britain derive much pleasure, enjoyment and interest from those activities, which in turn can generate their spending on other parts of London's heritage.
The fine art auction houses are in a highly competitive business. London is in sharp competition with New York, Geneva and increasingly with venues in the far east and other parts of the world where articles of art and history are auctioned. If international sellers can easily choose to go elsewhere because they do not like London — they are free to do so—marginal factors can tip the balance and affect their choice, and those effects can snowball. Many art objects that are sold in London have been imported for sale only to be re-exported if they are brought by foreigners, and deferred VAT would straddle that time interval, which is typically two or three months and can be as much as four. If those people must pay VAT where they did not have to pay it previously, although they can reclaim it on export, the cost of interest in the meantime must be financed by someone. That is bound to increase the overall cost of the operation and to undermine London's position as a centre of the international art market.
The amounts involved are not huge from the point of view of Government revenue. I have not attempted to work our the figure and I do not know whether the Minister of State has sought to do so. However, at a rough guess, I believe that it amounts to probably less than £2 million a year, and might even be less than £1 million, for the whole of the art market. That is not large in terms of Government revenue, but by sheer nuisance value it could in the long run significantly damage the prosperity and earning capacity of the British fine art auction market. Such damage would, I suggest, be out of all proportion to the marginal increase in revenue that the Government might receive.
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I ask the Minister to consider whether he and the board of Customs and Excise can find some way of solving this difficulty.
Sir Peter Mills: I share exactly my hon. Friend's views and believe that something must be done. Is not the simple answer a delay of payment of VAT until these things are actually sold and exported?
Mr. Jessel: I am grateful to my hon. Friend. That is what happens at present, because the tax is, and has been, deferred, but that is now in jeopardy because of the change proposed in the Budget. I warmly agree with my hon. Friend and am grateful for his intervention. In view of that added weight, I hope that my hon. Friend the Minister will carefully consider this matter.
10.16 pm
Mr. Ian Wrigglesworth: I do not seek to oppose the regulations, but I wish to draw attention to some anxieties about them that have been expressed to me. Before doing so, I support what the hon. Member for Birmingham, Perry Barr (Mr. Rooker) said about placing a limit on the size of funds covered by regulations of this sort. We are talking about substantial sums of money. There seems to be a case, which should at least be considered — possibly at the time of the next Finance Bill — for a change in the way in which we deal with matters of this sort.
I do not wish to oppose these measures because they introduce equalising treatment for exports and imports, and clearly it is to the advantage of our economy that we should be on all fours with other countries.
I wish to express anxiety about the immediate impact that the introduction of these regulations will have. They will affect small importers, of whom there are many, whose cash flow will be hit considerably and who may find it difficult to get the guarantees necessary from the banks to sustain the burden placed on them by this change. Many small importing firms engaged in quite legitimate business will, I believe, be hit hard by the imposition of these regulations later in the year. I should be grateful if the Minister can assure us that he has their plight in minds, and I shall be interested to learn of the ways in which he feels he can help people in these difficulties.
The hon. Member for Perry Barr spoke of the possibility of some congestion at Dover. That could happen at other ports if goods are delayed through the deferment of VAT no longer taking place, and consequently it may take some time for companies to raise the funds. Indeed, they may possibly not pick up the goods at all. That may be so in a small minority of cases, but considerable fears have been expressed that this may lead to delays and congestion. I should be grateful if the Minister could reassure us on that point.
Both those things may combine to cause considerable difficulties for manufacturing businesses, as well as art and auctioneering businesses, which import raw materials and parts and whose supplies could be interrupted by the introduction of these regulations. I should like to think that the Government had borne these worries in mind in drafting and introducing the regulations. I should be grateful if the Minister could give some assurances about them.
10.20 pm
Mr. George Walden: I support what my hon. Friend the Member for Twickenham (Mr. Jessel)

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said. I agree with the economic logic of this measure, but if logic is pushed too far and is too pure it gives rise to anomalies, and there has been an anomaly in respect of the art market.
The philosophy of the measure is to give equal VAT treatment to imports and domestic sales, but the effect on the art market will be precisely the opposite. If, for example, an exhibition is mounted here of pictures that are imported, in future the VAT will have to be paid at the moment of importation. Probably only a few of those pictures will be sold—I seem to remember that even Cézanne and Matisse were not immediate sell-outs—and the rest will go back abroad. During the long interval an extended loan will be made to Her Majesty's Customs and Excise. No worthier body for such a loan could be imagined, but it is hard on the people financing that loan.
My point is essentially the same as that of my hon. Friend the Member for Twickenham. This is a self-evident anomaly which I hope it is not too late to correct.
10.22 pm
Mr. Archy Kirkwood: I intervene on the basis of the implementation of the instrument rather than its principle. The arguments about the principle have long since been made and are past. The change has been visited upon us. But I wonder what steps the Government took, subject to the obvious constraints of Budget secrecy and the difficulties that that produces, of trying to consult the trade about the effects of the change made by the Chancellor of the Exchequer.
I am worried about the combination of the congestion plus the higher costs involved, and perhaps I can tempt the Minister to say how the position has changed now that interest rates have altered since the decision was taken. All these together may be considered as some sort of non-tariff barrier on imports. If that happens and if the congestion is as bad as some of the worst estimates suggest, that will be bad for trade generally.
I am told that the Government have received about 22,000 applications for delaying payments to the 15th of the following month. If that is true, they will have to process an application every two minutes to be ready for 1 October in a sensible way. There are 50,000 firms involved, and the effects will be felt most drastically by the small companies involved, which have to pay these higher rates and cope with the additional bureaucracy.
I reinforce what was said earlier about the Government's position under the 14th VAT directive. Does it mean that the old system, which is technically the system that has been adopted by the EEC, is out of the window for all time? It is right to ask the Government for their long-term views and what they think about the 14th directive now that this change has been made.
If my information is right, 60 per cent. of our trade is with the EEC and 70 per cent. of that is what is known in the trade as "innocent" consignments. VAT is waived on these consignments. Customs officers will now have to check their "innocence", their guarantees and their security if VAT is to be paid. That must involve the Customs and Excise in a great deal of additional work.
An EEC report in 1981 on difficulties encountered in international traffic stipulated that the collection of VAT under the new system led to more border delays than anything else, while directive No. 83/643 on procedures
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and formalities at Community borders asked for customs formalities to be kept to the minimum. It seems that the changes that we are discussing will do nothing to assist that. I am certainly worried about the knock-on effect on exports if ports are clogged up.
If the Government are to make any sense of the regulations, much more effort is needed to ensure that companies are aware of the effect of the change, so that the majority have their papers in order to minimise the delay. The Chancellor of the Exchequer should use his influence to ensure that the banks take as relaxed a view as possible in trying to help small clients with their cash flow problems. He should also consider, when special cases can be made, waiving the requirement to guarantee cheques to pay VAT.
The hon. Member for Birmingham, Perry Barr (Mr. Rooker) was right to ask about how we will deal in future with regulations involving vast sums of money. This procedure is inadequate. We should look at that for the future.
Having studied the 1980 order that the regulations amend, I think that there is an irrefutable case for the consolidation of some of these regulations. The 1980 order is a pig's breakfast. Will the Government give us some idea of what they expect to happen when the scheme is implemented and what is to happen to the principle of the 14th EC directive?
10.26 pm
Mr. Patrick Cormack: My hon. Friend the Minister of State, Treasury will be relieved to know that I do not intend to make a long speech. We have been round the VAT course regularly recently, but I wish to support my hon. Friends the Members for Twickenham (Mr. Jessel) and for Buckingham (Mr. Walden).
My hon. Friend the Member for Buckingham said that there was a certain logic in the regulations. Unfortunately, logic and common sense do not always go hand in hand, and the regulations are a good example of that.
My hon. Friend the Member for Twickenham made a point that should not be lightly dismissed when he spoke of London being the centre of the world art market. There is considerable anxiety, particularly in our major auction houses, about the implications of the regulations. I hope that my hon. Friend the Minister of State will pay proper regard to the impeccably sensible suggestion made by my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) in a brief but trenchant and telling intervention. If the Minister meets that point, he will go far to allay the fears raised in recent days.
10.28 pm
Mr. D. N. Campbell-Savours: I shall be brief and I apologise for not having been here earlier, but I was otherwise engaged.
Representations have been made to me about the implementation of the regulations. I supported the proposal in the regulations, particularly as I have had some experience of clearing goods through Dover. However, I understand that at the time of the Budget it was not clear, particularly to clearing agents in Dover, what effect the proposal might have.
I am informed that much confusion is expected by clearing agents and hauliers and that hauliers are worried that if there are inaccuracies in the documentation,

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particularly the VAT entry submissions, landing officers may decide to hold up vehicles, which may stand idle at Dover at a cost of about £120 a day.
I refer particularly to Dover because at that port there are many trailer units accompanied by tractors. There is no driver or tractor accompanying most commercial goods cleared by Customs, but much of the trade through Dover comprises tractor-accompanied containers on trailers.
Perhaps the Minister will address himself specifically to the problems of the small agent. Mr. Richard Pelts, the manager of the Anglo Overseas Transport Company, which has an office in Dover's eastern dock, spoke about a complication that would arise over a guarantee and said:
"Even if we do provide guarantees for all our customers, we could still get caught up in delays, not of our making."
Of course, that view is also expressed by many clearing agents in Dover, as well as by many hauliers.
Some weeks ago, an article appeared in the Financial Times under the headline,
"Taxing Times at the Ports".
It was written by Mr. Andrew Taylor, and its opening paragraphs set out simply and clearly the general view of those who use the facilities at Dover. He said:
"Britain's bustling south east and east coast ports could face chaos and confusion this autumn. Lorries may be held up for many hours and imports delayed as a result of the Chancellor's plans to raise an extra £1·2 billion in VAT payments by the end of the financial year. The warning is made by Mr. Jonathan Sloggett, chief executive of the Dover Harbour Board, which runs one of Britains busiest ports handling billions of pounds of trade each year with the Continent. Mr. Sloggett warns that changes in the way in which VAT on imports is to be collected—to be introduced on 1 October—will seriously disrupt traffic in key ports like Dover and threaten the future of hundreds of small import businesses"
In the same article there is a reference to the problems faced by small agents who find difficulty in raising the required bank guarantees to cover the VAT liabilities of the firms for which they act as hauliers. The House deserved to be given an undertaking that all those businesses, particularly in Dover, will be fully protected through the introduction of this arrangement. Even now there are still people who are confused and concerned about the implications of this scheme. There is a feeling that the larger freight agents, who are in a position to raise the necessary bank guarantees, are in a better position than those who are not as well-heeled or whose trade references are not so substantially backed by assets.
Therefore, we need some undertaking that the smaller hauliers and freight agents will be thoroughly protected and that the larger operators will not be able to benefit from Government legislation at the cost of the smaller ones.
10.33 pm
The Minister of State, Treasury (Mr. Barney Hayhoe): I thank hon. Members for having given a general welcome to the regulations. As a Member of Parliament rather than as a member of the Government I share the concern expressed about the procedures being followed. However, according to legal advice, we are following those procedures absolutely correctly. As hon. Members will realise, I questioned whether we were proceeding in the right way, and I was assured, on the legal advice available, that we were proceeding in the only proper way under the law.
However, I think it only appropriate to draw the attention of my right hon. Friend the Leader of the House
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to the points made about the procedure, and whether it is appropriate that such a significant sum—£1·2 billion—should be raised by regulations. They have been properly laid in accordance with the law of the land, and are subject to a negative resolution of the House, but I shall make that point to my right hon. Friend the Leader of the House. It is obviously not a matter for me to decide, but it may well be a matter for the Select Committee on Procedure.
This is the formal way in which we implement what the Chancellor said in his Budget statement about the change in the arrangements for VAT of imports. The change received a broad welcome in all parts of the House since it was thought wrong to continue to allow British industry to be at a competitive disadvantage because our fellow members of the European Community would not implement the 14th directive and operate a postponed accounting system throughout the Community. We ought to convince our fellow members that this was the best way were were supported in our stand by the Commission, but we failed to achieve success. It seemed right, therefore, to make the change.
The hon. Member for Birmingham, Perry Barr (Mr. Rooker) asked whether the problems between the Customs and Excise and the clearing banks over the terms of the guarantee had been solved. At the meeting on 5 July all outstanding points were dealt with to the satisfaction of both parties. The form of the guarantee presently available, when it is reprinted, will contain miniscule alterations. All concerned accept that it is satisfactory. No further delay should occur because of the uncertainty about the form of guarantee, although banks may be unwilling to give guarantees for other reasons. I hope that the substantial number of applications for guarantees — totalling not 20,000 but 30,000—will be processed at goodly speed.
Several hon. Members mentioned worries about hold-ups at the ports. Particular reference was made to Dover and to comments by the person running the Dover harbour board. I do not wish to introduce a note of controversy into the debate, but whatever the difficulties flowing from this measure, they are as nothing compared with the difficulties flowing from the strike that is stopping the movement of freight and therefore damaging—
Mr. Campbell-Savours: Will the hon. Gentleman give way?
Mr. Hayhoe: No. One must put these matters in perspective. Those who are affected by the present ban on freight and the blockage of freight through Dover are the people referred to in the discussions that we have had tonight.
Mr. Campbell-Savours: Does the Minister accept that advance clearance can be obtained for freight held tip abroad—a facility available, at Dover—and that there should be no delay in documentation?
Mr. Hayhoe: I do not know whether that applies to what I was saying. Little additional documentation is required and little, if any, physical checking for the majority of import entries. More customs staff are deployed to help with that small additional paperwork and about 100 additional staff are being deployed to help implementation.
Customs planning is based on the need to keep traffic flowing smoothly. The main delaying factor is likely to be

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the failure of importers and agents to establish either adequate deferment guarantees or to make funds available quickly. If importers meet those obligations, the delays should be minimal.
There has been widespread consultation between the Customs and all interests. There have been about a dozen seminars in London, Brighton, Bristol, Southampton, Manchester, Gateshead, Glasgow, Canterbury and so on. A widespread series of meetings has been held so that all the detailed points could be discussed. Those meetings have gone well, and many of the worries have been dissipated. I hope that there will be a smooth transition in bringing in the new system. On the inter-relation with exports, the port managements, in co-operation with Customs, will do everything possible to ensure that any delays for traffic coming into Britain will not affect traffic going out.
I was asked about meetings with trade organisations. I have already referred to the seminars. I have read in the press that people want to see me and I have just received a letter from the British Importers Confederation, making a specific request for a meeting. I have readily agreed to a meeting with trade interests.
The point that has exercised the minds of a number of my hon. Friends—including those for Twickenham (Mr. Jessel), for Torridge and Devon, West (Sir P. Mills) and for Buckingham (Mr. Walden)—has been the special problems of the art world. A substantial number of hon. Members will have received representations on that point. I have had consultations with some of those affected. Officials are already discussing the difficulties with the various trade interests, to seek solutions that overcome their difficulties without undermining the Chancellor's Budget expectations. It was no part of the Chancellor's Budget to erode or undermine the position of the British art market as the centre of, the auctioneering efforts. I know that some hon. Members are worried about the bloodstock industry, where similar considerations apply. All those matters are being discussed, and I hope that we can find ways to overcome the difficulties.
I was grateful for the general support of the hon. Member for Stockton, South (Mr. Wrigglesworth). He referred to the problems of small importers. The Customs are holding discussions. However, £1·2 billion is being raised by the changed provisions, and that cannot be raised without some additional burden being shared by those having to meet that substantial sum. There is no magic about it—it will be that amount of money coming to the Government earlier than they would otherwise expect. I would not wish to pretend otherwise.
The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) referred to background. There have been long discussions. In 1980, a careful look was taken at the whole position, and at that time the decision was against going ahead. In 1983, the NEDC concerned with the knitting industry made a powerful case both in public and in the NEDC in favour of the changes. There have been discussions in the NEDC and elsewhere, and the Chancellor took those into account in reaching his judgment. Of course, the Chancellor did not involve the NEDC or those who make representations either way in his decision—it was a decision made by him on the basis referred to in the House.
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I was asked about the long-term position of the Government. I reiterate what the Chancellor said in his Budget statement, that we still support the 14th directive. We would like to see the postponed accounting system, which we now have, continued. If the miracle occurred and our partners in the Community all made the change before 1 October, there would be no difficulty in the Government taking the necessary action, as the Chancellor said he would. But that is living in a world of fantasy, because we know that that will not happen. However, if at a later stage, we or others can persuade the Community to move to the postponed accounting system, the Chancellor has made it clear that he would be prepared to tell the House that we should revert to the arrangement.
Mr. Rooker: Regarding the importation of goods for the art world, while we are grateful for the Minister's remarks, may I remind him that it is four months since the Budget? I find it remarkable that, based on the representations that I have received and my knowledge of the matter, this matter, has just arisen. There was no mention in press notice No. 895 issued on Budget day, that this change would be made by order; one assumed that it would be made as part of the Finance Bill. However, the final sentence of the press notice read:
"There will be consultation with representations of trade bodies affected in due course."
Did not the Government think of the art world at that time? Or has the art world come to the Government? It seems odd that such an important industry should be in this position four months after the Budget.
Mr. Hayhoe: I am not entirely clear about the timing, but the first representations that I received directly from the art world were in the course of the last few weeks. I am aware that documents have been circulated, but perhaps they were concerned with other major events. As for the bloodstock industry, which I said was a related matter, it reacted and discussions will take place. I hope we shall find ways of resolving these problems. It is clear that the whole House wishes, if it is at all possible, to find a way to resolve the issue so as not to damage the art market interest and the associated interests that go with it.
Mr. Cormack: Will my hon. Friend not say "if it is at all possible," because it is possible?
Mr. Hayhoe: I will not be tempted by my hon. Friend, who tries it on quite regularly, and gets roughly the same response each time. I hope that he will accept that I have gone a considerable way to indicating where my thoughts lie in the matter. I hope that officials, with good will, can find the appropriate solution.
Mr. Rooker: I beg to ask leave to withdraw the motion.
Motion, by leave, wihdrawn.

Statutory Instruments, &c.
10.43 pm
Mr. Deputy Speaker (Mr. Ernest Armstrong): With the leave of the House, I shall put motions Nos. 3 to 6 on the Order Paper formally.
Motion made, and Question put forthwith pursuant to Standing Order No. 79(5) (Standing Committees on Statutory Instruments, &c.).

Statutory Instruments, &c.
  INTERNATIONAL IMMUNITIES AND PRIVILEGES
  That the draft International Tropical Timber Organization (Legal Capacities) Order 1984, which was laid before this House on 18th June, be approved.—[Mr. Lang.]
  EDUCATION
  That the draft Education Support Grants Regulations 1984, which were laid before this House on 22nd June, be approved.—[Mr. Lang.]
  CONSUMER PROTECTION
  That the draft Pedal Bicycles (Safety) (Amendment) Regulations 1984, which were laid before this House on 22nd June, be approved.—[Mr. Lang.]

  COMPANIES
  That the draft Companies Acts (Pre-Consolidation Amendments) (No. 2) Order 1984, which was laid before this House on 25th June, be approved.—[Mr. Lang.]
  Question agreed to.

Appointment of Bishops Measure
10.49 pm
Mr. Deputy Speaker (Mr. Ernest Armstrong): We now come to the Church of England (General Synod) (Measures).
Mr. J. Enoch Powell: I beg leave to raise with you, Mr. Deputy Speaker, a point of order of which I have given notice to the Chair and of which, I believe, the Leader of the House is aware.
The House will see from the Order Paper that this instrument requires the Queen's consent, which is, of course, given on the advice of Ministers. The Queen's consent is normally associated with Government measures and, in that connection, would be taken for granted. However, it is from time to time made available to enable a debate to take place on something which is not a Government measure. But that occurs in circumstances where, if the proposal should eventually go through other stages, the Government would be in a position, were it contrary to Government policy, to prevent it at some stage from passing.
In these respects, I submit to you, Mr. Deputy Speaker, that this instrument is peculiar because it is, I take it, not a Government measure. Moreover, it emanates from an assembly in which, unlike this assembly, the Government enjoy neither a majority nor decisive influence. If the motion to be moved is passed by the House and the other place, the measure will be presented automatically for Royal Assent. In that sense, this is the last as well as the first opportunity that the House has for expressing an opinion on it and that the Government have of exercising any influence which they wish to bring to bear.
In those circumstances, Mr. Deputy Speaker, I submit that it might naturally be assumed from the Queen's consent being made available that the measure enjoys the Government's support and approval. If that is not the case, I submit to you, Mr. Deputy Speaker, and to the Leader of the House that the Government owe it to the House to make it clear, before the debate commences, whether that is the case.
The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): On a point of order, Mr. Deputy Speaker. I should like to help the House and express my appreciation to the right hon. Member for South Down (Mr. Powell) for raising this point. To remove doubt, I confirm my understanding that the signification by a Privy Councillor of the Queen's consent to a motion does not necessarily imply the Government's support for the measure.
Mr. J. Enoch Powell: Further to that point of order, Mr. Deputy Speaker. I am obliged to the Lord Privy Seal for what he said. There was, however, a note of ambiguity in his remarks when he said that the signification does "riot necessarily" convey the Government's support. I believe that the House would assume from the exchange that has just occurred, and in the absence of any specific statement from the right hon. Gentleman, that this is not a measure to which the Government are a party or on which the Government, as a Government, have a view.
Mr. Biffen indicated assent.
Mr. Powell: I am glad to see the right hon. Gentleman's assent.
Mr. Biffen: I am happy to confirm that view.
Queen's consent, on behalf of the Crown, signified.
10.52 pm
The Second Church Estates Commissioner, Representing Church Commissioners (Sir William van Straubenzee): I beg to move,
That the Appointment of Bishops Measure, passed by the General Synod of the Church of England, be presented to Her Majesty for Her Royal Assent in the form in which the said Measure was laid before Parliament.
In the present circumstances, it is important for me to start by stressing what this Measure is not about. I draw upon the 188th report of the Ecclesiastical Committee reporting to both Houses of Parliament. On page 3 the Committee states:
"The Ecclesiastical Committee draw attention to the fact that the Measure in no way affects the legal position whereby all bishops are appointed by the Crown. What it does is to change the procedure that has to be followed for the purpose of carrying Crown's appointments into effect".
I stress that this Measure is not concerned with sifting of names, the making up of lists, the presentation of names to the Prime Minister and the advice tendered to the Sovereign. All that takes place before this Measure starts to operate. That appointment having been made, rightly and respectfully vested in the Sovereign, we must consider the present procedure.
The present procedure is laid down by the Appointment of Bishops Act 1533. It is none the worse for being an old Act. It is one in a series, as many of my hon. Friends will remember, whereby the King in Parliament ousted the Pope. In 1534 the Act provided two methods by which a bishop might be elected. In the first, the Crown gives the dean and chapter licence to elect but couples it with a letter telling them whom to elect. In the second, the Crown issues letters patent to the archbishop of the province asking him to consecrate the chosen man.
The first method — the "election" method — is normally used for filling the diocesan bishoprics. There has never been a case in which the request to elect has been refused. That is not surprising. I am sure that hon. Members have read, among others, the evidence of Professor McClean, given to the Ecclesiastical Committee. It is a new and helpful innovation that such evidence is now available to all hon. Members before they reach a decision. What was brought out was that this system has never been a free election. It has always been controlled by the Crown, the Papacy, or both.
Until the House so enacted in the late 1960s—when the appropriate penalties were abolished—a refusing chapter was subject to the pains of praemunire, which I understand to be, although not personally, painful and unpleasant in terms of one's personal possessions. It is therefore not surprising that no dean and greater chapter refused the request of the Sovereign so to elect.
Dr. Brian Mawhinney: Were there occasions when the dean and chapter, before agreeing with the recommendation, satisfied themselves that the prospective bishop believed the tenets of the Christian belief?
Sir William van Straubenzee: Assuming for a moment that the dean and chapter were presented with a candidate whom they believed did not believe the tenets of the Christian faith, there is no example in all the years that I have surveyed in which any such dean and greater
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chapter have refused to elect such a man. If it is believed that this method of election is an effective defence against such a man, it has proved completely ineffective for a long time. Those who look upon it as a great bulwark and defence do not, it seems to me, have much to lean on.
I move to the second method set out in the Act. The 1534 Act simply says that the archbishop is to confirm the election. The truth is that if the dean and greater chapter refuse to act in the first place, the Crown would simply use the second method and say that the archbishop is to confirm the election. The Act does not lay down the procedures now followed. They are known to have existed in their present form at least by the reign of Charles II, but they have force only by way of prevention, and not by way of an Act of Parliament.
This measure abolishes election, and, to judge by certain current events, allows the more effective method to be used. The measure abolishes what I think, without the use of extreme language, I can call the farce of election. It leaves confirmation as the only method, and in that way—to make a serious point—it develops the historic thread, going back to the system of confirmation. At the same time, the Measure strengthens and improves it by setting out the procedures, removes it from a purely legal ceremony described in evidence which I am sure hon. Members on both sides of the House have read, removes it from the substantial fees payable to the legal luminaries concerned, and removes it from a ceremony conducted by the vicar-general.
Mr. William Powell: What would be the position if the archbishop refused to confirm under the letters patent?
Sir William van Straubenzee: The real strength in the archbishops of the two provinces, in the event of their ever being pushed to a point of being presented with elections which were wholly unacceptable, lies in the power of consecrating or not consecrating. The measure removes the appointment from a purely legal ceremony centred on the Vicar-General—who is a legal officer—and in which substantial fees are payable, to one conducted by the archbishop of the province, which is essentially a pastoral occasion, the details of which are set out in the Measure for all hon. Members to see. It still retains the historic thread of the confirmation, which is of great antiquity.
The House would not wish me to go in detail into every clause of the order, but the House expects any person introducing a measure such as this to at least—
Mr. Harry Greenway: It is important for my hon. Friend to make clear to the House in what circumstances he thinks that an archbishop might refuse to consecrate.
Sir William van Straubenzee: I do not think that I can be asked to speculate on the conditions on which so serious an occasion as the refusal to consecrate a man or, possibly in future a woman, might—[HON. MEMBERS: "No."]—I have to keep the sexual options open. I cannot speculate, and cannot be reasonably expected to do so. It is true that up to now this has not happened, but in the event of real pressure for an unsuitable person—
Mr. Peter Bruinvels: Name him.
Sir William van Straubenzee: —it is best for the archbishop not to consecrate. It is a very serious right that

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is vested in him. [Interruption.] I do not think that I can reasonably be asked to speculate as to names or as to the degree of participation. We must all hope, surely, that such a situation does not—
Several Hon. Members rose—
Sir William van Straubenzee: Several of my hon. Friends are leaping up and down. There is plenty of time, and I give way first to my hon. Friend the Member for Leicester, East (Mr. Bruinvels).
Mr. Peter Bruinvels: Will my hon. Friend try to explain to me the one point about which I am uncertain? [Interruption.] Suppose that, after the consecration in any particular diocese of a suffragan bishop, he transfers to a new diocese as a full bishop. Surely the archbishop would not then be able to stop the consecration from going ahead, because the man has already been consecrated, and one is left then only with the enthronement.
Sir William van Straubenzee: There is no question then, of course, of a consecration—that is perfectly true—but, with great respect to my hon. Friend, who follows these matters very carefully, the enthronement has no legal significance whatever. It is increasingly a ceremony of great importance to the diocese in question, because it is a ceremony of welcome, but in the legal order of matters it has no importance as such. I hope that I have answered my hon. Friend's question.
Mr. William Powell: Is not the reason why there has so far been no refusal of consecration that it is the act of election which actually vests the new diocesan with the powers which he is to exercise as diocesan? By abolishing election the archbishops will be put into the position of deciding whether or not the man should have the powers which the Crown wishes him to have.
Sir William van Straubenzee: I think that that is not necessarily the case. There has been historically—I go back many years — an occasion when, as is now generally known from the biographies and so on, which we can all read, the archbishops of the time seriously considered whether a man should be consecrated. They gave the matter very careful thought.
Several Hon. Members rose—
Sir William van Straubenzee: We have plenty of time. I am simply saying that on that occasion, having given the matter careful thought, they did not decide to refuse or to withhold the right of consecration. [Interruption.] I am simply reporting to the House, I hope fairly, that it has never actually been witheld.
Several Hon. Members rose—
Sir William van Straubenzee: There is a queue. I give way to my hon. Friend.
Mr. Greenway: My hon. Friend referred to "real" pressure and said that the archbishops "might" refuse. That is a most important phrase. What does it mean? Does it mean that the sort of pressure that was mounted against the Bishop of Durham—rightly, in my opinion—would be "real" pressure and would be accepted by the Archbishop of York as a suitable ground upon which to refuse to consecrate?
Sir William van Straubenzee: With respect, I think that this is an occasion on which we have to have trust in
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the men concerned as being persons of sufficient stature, and who, if faced, in circumstances which I profoundly hope would never occur—[Interruption.] I would regard it as a very sad day for the state and the Church of England. I am asked whether faced with a name that was totally unsuitable, they would actually refuse the right of consecration. I really do not think that in fairness I can be asked to seek to put clothing over this skeleton to any greater extent than I have done.
Mr. Nicholas Budgen: Is not election an act of authority cloaked in the appearance of democracy? Does that not conform with the ambiguity of many institutions in our constitution and should not be lightly dismissed as a mere farce?
Sir William van Straubenzee: I am grateful to my hon. Friend for helping me with my argument. He does not often do that. He used the word "cloaked" in democracy. With his unerring eye, he has gone to the centre of the point. It is just cloaked.
Mr. Budgen: What is wrong with it?
Sir William van Straubenzee: What is wrong with it is that, if I might put it bluntly, it is a farce.
Mr. Budgen: No.
Sir William van Straubenzee: Well, that might be the sort of democracy that appeals to my hon. Friend, but to most of us it is unacceptable. I am simply saying that it is better to rest on the second alternative of an ancient and honoured act, which is that of confirmation which this Measure, if the House so approves, as I trust it will, will develop and be introduced in the second half of the 20th century.
Mr. John Butterfill: There is one matter that puzzles me in clause 1(3), where it refers to
"before the consecration or, if there is no consecration, before the enthronement".
Does the measure envisage the possibility of there not being consecration.
Sir William van Straubenzee: It must, because it is perfectly possible for a bishop who has been properly consecrated to be moved to another diocese. The present diocesan Bishop of Oxford was moved from another diocesan post. In the senior bishoprics that happens quite frequently. The measure must so provide. My hon. Friend gives me the opportunity to explain the clauses briefly, because I think that the House will soon weary of my voice—[HON. MEMBERS: "No."]—even if I do not.
The clauses are explained in general terms on page 6 of the report. I hope that hon. Members see the wide terms of clause 1. I draw attention to the importance of the date for appointment being recorded — because it affects Parliament—as it determines the date on which those so appointed by formal appointment will be called to another place. I hope that clause 1(5) appeals to the majority who believe that all lawyers are grossly overpaid and which
"Excludes the prescription of a fee for any specific duty imposed on a legal officer by virtue of this Measure."
This process, which I have ventured—I hope not unfairly — to summarise for the House, has been tolerated. It could be argued that, until now, there has been some form of safeguard, however shadowy, against a harmful appointment being made by an unfettered Prime Minister, yet, as I have shown, no chapter has refused to

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elect and archbishops have never refused to consecrate. However, it was still felt that there was a measure of long-stop.
The final objections were swept away in 1977 when the party leaders agreed to new arrangements for the appointment of bishops. I shall not go into them in detail, but they come into effect regardless of this Measure. The House knows that two names are submitted to the Prime Minister upon certain understandings. That happens before this Measure or the 1534 legislation comes into effect.
Sir John Wells: I wish to ask my hon. Friend two questions. First, he referred to the 1977 understanding between the leaders of the parties. That is clearly like the usual channels, and a matter for the Patronage Secretary. It does not have the force of law. The gossip of three worthy gentlemen is not the force of law.
Secondly, my hon. Friend made great play of saving lawyers' fees. Is this the first of a new series of Measures which the Synod is bringing forward to save us humble people in the pews from paying fees to lawyers when a new rector or vicar is appointed?
Sir William van Straubenzee: Yes, provided I survive, I shall bring in a further measure with further relief in that respect. We must see how we get on. I must be careful, because we have a long way to go yet.
My hon. Friend and I were in the House during the period in question. He may recollect, as I certainly do, that all three party leaders took the consultation exceedingly seriously. I cannot believe that a Conservative Member could contemplate that the Prime Minister, then the Leader of the Opposition, would agree to such a change without the most careful thought and widespread consultation, which she certainly undertook. I willingly concede that the same applied to the leaders of the other parties.
This is a constitutional matter, which was carefully and thoughtfully considered by the leaders involved. It is in operation, but it works only before either the present law or, if the House approves it, this change in the law, comes into effect.
My final duty is to call the House's attention to the fact that this was carefully debated. The voting figures in the General Synod are set out in the report. They are overwhelming and show that the small number who opposed the Measure did so because they thought it should go further.
I am grateful for the fact that at such a late hour the House has turned out in such large numbers to consider a matter which some, though none of us, may consider to be a matter of detail. It will be greatly appreciated by the Church of England. I hope that on hearing my advocacy the House will feel on consideration that it is a matter to which it can give its approval.
11.19 pm
Mr. J. Enoch Powell: The Second Church Estates Commissioner said several times during his speech that there is plenty of time. To the scandal of the House, there is not. More than one third of the time which our Standing Orders allow for discussing this measure has already elapsed, for we have, in our unwisdom, decided to treat measures which are sent to us by another assembly for a single consideration as though
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they were Statutory Instruments made by virtue of Acts passed by this House and another place. So I shall be as brief as I can.
It can come as no surprise to the authors of this measure that it seems unlikely to be welcomed whole-heartedly by the House this evening. Both formally and informally, the strong objections of instinct and of reason which were felt to such a Measure were conveyed in time to those who framed and passed it. I am not the only person in the Chamber to whom this appears to be an act of wanton vandalism—an act which illustrates the gulf between the General Synod and the ordinary feelings of the general public, and the gulf between the bureaucracy of the Church and the nature and historical sense of the Church of England.
Since at least the early middle ages, bishops in the Catholic Church have been elected by the chapter, whether it be a monastic or a secular chapter, of the cathedral church from which they take their names: but of course their appointment has been of deep interest to the lay authority. The relationship between the two processes was, and in a sense still is, an unsolved dilemma—the claim of the Church to elect freely its own and the claim of the lay authority that those displeasing or resistant to it should not be placed in positions of prominence.
At the English Reformation we solved this problem in a typically English way that has proved satisfactory for close upon five centuries. It was to combine the two methods side by side—to combine the congé d'élire under the Great Seal with the Letters Missive prescribing the required name. If any hon. Member believes that I am unserious in describing that as a solution, I remind the House that the solution by the Church of England of a much deeper, more painful, and ultimately insoluble conflict, was resolved in the Elizabethan prayer book by putting the two alternative interpretations side by side.
This measure would destroy that. It would destroy that settlement, if one wishes so to call it. It would wipe the memory of it from our statute book and uproot it from the history of the Church of England. So we naturally turn—and we have cause to be specially grateful for the work of the Ecclesiastical Committee and the evidence which it has laid before the House — to the reasons advanced for it. The professor who is vice-chairman of the House of Laity said:
"I think quite seriously the Doctrine of the Holy Spirit receives more attention in the church now than perhaps it did in times past."
That is remakable statement in the year 1984—is it not?—that the doctrine of the Holy Spirit is now taken more seriously than it has been at any time during the past four and a half centuries in the Church of England. The professor went on:
"I think people see this as offensive, frankly, that it should go on."
I mean no jocularity, but for 450 years no transept has been struck by lightning during the continuance of a procedure whereby the Holy Spirit was invoked on the deliberations of dean and chapter who nevertheless had to obey the Letter Missive. I say that what is a ludicrous travesty is to pretend that after 450 years there is an illumination today which enables us to see absurdities where those who went before us saw only wisdom—a wisdom which is part of the wisdom which sustains the Church of England.

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If that were all that there was in the measure, I should be content to treat it as a piece of frivolous meddling and request my colleagues to tell the Synod not to trouble the House with legislation of so little moment. Unfortunately, it is clear from the evidence submitted to the Ecclesiastical Committee that there is a very serious purpose and a very dangerous context to this measure. It is a purpose and a context which repudiates the sentence which the Second Church Commissioner quite rightly emphasised from the report of the Ecclesiastical Committee, which said:
"the measure in no way affects the legal position whereby all bishops are appointed by the Crown."
I must trouble the House with one other quotation—from the evidence of the Bishop of Rochester. It is his reference on page 11 to the change which had taken place. He said that the overriding feeling was that we wanted a practice that was consistent
"with the fact that Mr. Callaghan, when he was Prime Minister, and Mrs. Thatcher, when she was Leader of the Opposition, and the then Leader of the Liberal party agreed to a change of practice in the appointment of bishops—a far-reaching change, the first change really since 1533. It was the fact that elected representatives of the laity as well as the clergy were to take part in the nomination of those from whom the Prime Minister would make the recommendation to the Crown which so altered the balance as to show up what many have felt for a long time was the offensiveness of the Dean and Chapter's bogus election."
So now we know what we are dealing with. The General Synod is saying, "We have an election of bishops now. We have a new sort of election of bishops, invented in 1977. We have an election carried out by elected representatives, lay and clerical. Therefore, as the Church of England is now in a non-bogus sense electing its bishops, let us sweep away the manner of election and appointment of bishops which was laid down in 1533."
This is not an end. This is a beginning. This is the General Synod saying to the House of Commons, "We now have an internal election in the Church of England which throws up the persons whom the Crown will have to appoint as bishops. Let us therefore acknowledge that we have gone far to reducing to unreality the proposition that patronage in the Church of England is lay and the bishops are nominated and appointed by the Crown."
So the anxiety—here it is in the evidence—to sweep away the historical form was prompted by the determination of the General Synod to carry the Church of England further and further towards a system of internal self-government.
It is possible to have an internally self-governed church in this country, but it will not be the national church, it will not be the Church of England. The church is the Church of England because of royal supremacy, because there is royal—and that is to say, lay—supremacy. It is for that reason that it is the church of the people and the church of the nation, and can never be converted into a mere sect or a private, self-managing corporation.
Therefore there is a symbolism and more than symbolism in the measure. I offer to the House the suggestion, and I believe that the House should offer to the General Synod the warning: "Do not imagine that you can destroy forms in the Church of England without also destroying substance. More than that, do not imagine that you can reduce to nugatory proportions the reality of the royal supremacy without undermining the foundations of the Church of England itself. Take heed what you do." I hope that the House will make it clear to the General Synod that the measure does not have its approval.
11.31 pm
Sir Peter Mills: The House has every right to discuss these matters. I strongly support the right hon. Member for South Down (Mr.Powell); the House should be the long stop, and it has proved wise in the past to have a long stop. The House must continue that role.
I am glad that so many hon. Members are present. That is usually the case when we have such debates, and long may it continue. The established Church cannot have it both ways and it would do well to heed what we say tonight.
It is not a question whether one is a member of the Anglican Church. It is the duty of Parliament to have a say in these matters. I must declare an interest. I was converted to the Anglican faith about 42 years ago. I am a diocesan reader in the Church of England and I love it very much. I want the link between the Church and the state to continue. It would be a sad day for the faith and for our Christian heritage if we lost that link.
It is no good the Synod or the Church saying that if Parliament decides on these matters and goes against their wishes, that will separate us even more. They cannot have it both ways.
Not much has been said about clause 1(4) which lays down what is required of an incoming archbishop or bishop. It says:
"On the occasion of the reception and recording of a nomination the person nominated shall"
do various things, including
"give his consent to be archbishop or bishop … take the oath of allegiance"
—that is an interesting requirement in the light of recent events—
"be vested with the spiritualities."
It is important that the bishop or archbishop should know what is required of him. I remind the House of the scriptures, especially the first book of Timothy, chapter III, which spells out what is required of a bishop:
"This is a true saying, If a man desire the office of a bishop, he desireth a good work. A bishop then must be blameless, the husband of one wife, vigilant, sober, of good behaviour, given to hospitality, apt to teach; Not given to wine"
—that is an interesting requirement—
"no striker, not greedy of filthy lucre; but patient, not a brawler, not covetous;"
It is interesting to note that it goes to mention:
"Holding the mystery of the faith in a pure conscience."
A requirement of a bishop is to hold to the faith. It continues:
"For they that have the office … and great boldness in the faith which is in Christ Jesus."
It is extremely important that we remember the conditions that were laid down in the original Church of what is required of a bishop.
There is a great unease among the members of the Church of England at what is taking place. They are disquieted and there is real concern. The Church needs to consider carefully what is required of an incoming bishop or archbishop.
I humbly suggest that there are two things that are required as we see in holy scripture. First, it is essential that the faith should be maintained. Any weakening of the faith in respect of the Virgin Birth and the ressurection is something which is as terrible to contemplate as the future of the Church of England. Secondly, we need bishops who

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have a pastoral vision. We need more and more pastors in the Church of England. I hope that that will be noted by the Synod.
Dr. Mawhinney: Peterborough will have the next bishop to be appointed, as the present bishop has announced his retirement. I understand that Peterborough is the next in line. Will my hon. Friend accept from me that in expressing the two things that are needed in the Church of England he has expressed clearly and succinctly my desire for the appointment of the new bishop and, I believe, the overwhelming desire of the majority of my constituents?
Sir Peter Mills: I agree with my hon. Friend. Appointments will have to be made for Peterborough, Exeter and Winchester. I hope that the Synod will listen to the House on these matters. It is extremely important that it should.
I am glad to have had the opportunity of making a short speech in this debate. These are crucial matters for the future of the Church of England and do not let anyone say that we should not be concerned with them. We must, and beware if we do not.
11.37 pm
Sir John Biggs-Davison: I am obliged to my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) for reminding the House that, whatever our beliefs, we have a duty to examine this measure, which is to abolish things which are nearly as old as Westminster hall. The measure has been brought to us late at night with a minimum of information, although I pay tribute to the exposition of my hon. Friend the Member for Wokingham (Sir W. van Straubenzee), for a scandalously short debate.
The Church of England has a new system of elected diocesan committees electing people to the Crown Appointments Commission, which makes the actual nomination. When the new system was introduced I remember the then Dean of St. Paul's writing to The Times on 8 November to say that a major weakness lay in the absence of rules laying down how the diocesan representatives would be selected. In the event, the non-synodical layman was eliminated and the diocesan representatives were reduced from five to four. Many will have noticed the letter that appeared in yesterday's Sunday Telegraph from the Rev. J. D. Brown, vicar of Westhampnett, Chichester, in which he stated:
"The ordinary clergy and laity"—
he is speaking of the new system—
"in the dioceses have little say in the choice of their bishops, who are in danger of becoming a self-perpetuating clique."
There have been earlier moves for the abolition of the congé d'élire from the time of Edward VI. In 1965, the measure was defeated by substantial majorities in the Church Assembly. This time, few voted against the Measure. But the hon. Member for Birkenhead (Mr. Field), who was on the committee, may have been right when he suggested that
"the elect, the vanguard of the Church, find it offensive"—
that is the system that it is proposed to abolish—
"not … the person in the pew."
My experience in the Roman Catholic Church is that the voice of a synod, a national pastoral congress or something of the kind is not necessarily the voice of the people of God.
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In committee, Mr. Pattinson put the hon. Member for Birkenhead in his place by using the words, "this sort of flummery". But when a peer is introduced in the other place, a Privy Councillor kisses hands with another "sort of flummery".
Are we being asked to do away with a mere legal formality? As my hon. Friend the Member for Wokingham said, the penalty of Praemunire is not available, and has not been since 1967. But even when that penalty was available, not all canons or even deans felt intimidated. Although it has been said that someone nominated has never been turned down in such a way, I believe that in 1733 the Crown was forced to withdraw a nomination to the See of Gloucester as a result of the stand made by the dean and chapter. There are better known cases, of which hon. Members will be aware. However, I shall not detain the House by referring to them.
In conclusion, the form of election that it is proposed to abolish amounts to more than flummery. As has been said by my hon. Friend the Member for Wokingham it is not "a great bulwark". He called it "a shadowy safeguard", and so, indeed, it has usually proved to be, but who knows what, in unforseeable circumstances, a future dean and chapter might do? I submit that the case for abolition has not been made out.
11.42 pm
Mr. Patrick Cormack: In introducing this measure, my hon. Friend the Member for Wokingham (Sir W. van Straubenzee) treated the House to his customary display of lucid exposition, but I thought that he treated the subject less seriously than it merited. Time and again he used the word "farce", and said that we were abolishing a farce.
However, we are debating something far more significant and important than a farce. We are talking about what has been called a shadowy safeguard. It is, nevertheless, a safeguard. Many of us are extremely concerned about many of the trends in the established Church of England. It is the established Church of England, and so long as it remains so, it is not only the right but the duty of hon. Members of all political persuasions and creeds to take an intelligent and constructive interest in the way in which it conducts its affairs. That is why I was particularly glad to hear the brief but extremely telling speech of my hon. Friend the Member for Epping Forest (Sir J. Biggs-Davison). He is a Roman Catholic, and we all know him to be a devout Christian and a man who takes his duties towards the established Church extremely seriously. That was borne out in a letter that he wrote to The Daily Telegraph about a fortnight ago.
It would be dishonest to pretend that we are not all conscious of recent events. All hon. Members who take an interest in such affairs will have been profoundly concerned by much of what was said by the Bishop-elect of Durham and those who took part in the debate as to whether he should be consecrated.
Mr. David Crouch: He is extremely wise.
Mr. Cormack: He may be wise, but I do not believe that it is wrong for me or for any other hon. Member to ask whether a man is best equipped to convert and to lead—to be the pastor to whom my hon. Friend the Member

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for Torridge and Devon, West (Sir P. Mills) referred—if he professes agnosticism on some of the main tenets of the Christian faith.
My hon. Friend, the Member for Canterbury (Mr. Crouch) may mutter about being "extremely wise", but he might be extremely wise if he listened for a moment or two. The service of consecration is much in our minds — the service of consecration which the Bishop of Durham and every other bishop has to go through. Although I noticed a new liturgy in York when the Bishop was consecrated, I prefer to take my stand from "The Book of Common Prayer". I confess that the debate that we had on the worship and doctrine Measure about 10 years ago was one of the best and most constructive debates in which I have taken part in the House of Commons.
When a bishop is consecrated according to "The Book of Common Prayer", he is asked:
"Be you ready, with all faithful diligence, to banish and drive away all erroneous and strange doctrine contrary to God's Word; and both privately and openly to call upon and encourage others to the same? … Will you deny all ungodliness and worldly lusts and live soberly, righteously and godly in this present world …?"
He is also asked:
"Will you be faithful in ordaining, sending, or laying hands upon others?"
Is it surprising that a man, wise as a professor of theology perhaps, who expresses doubt as to the truth of the Virgin Birth and the fact of the Ressurection—and we have heard that—should be questioned about whether he is the sort of man best equipped to lead the Church of England in the dark and difficult days of the 1980s?
I may be asked what that has to do with this measure, but in the opinion of the House it has quite a lot to do with it. The whole manner and method of the appointment of bishops, the manner in which the leaders of our established Church of England are set upon their course of leadership is touched upon by this Measure.
It might be a trifling thing, and the abolition of a farce, but those of us who sit on the Ecclesiastical Committee are sometimes a little perturbed about the arrogance—I use the word advisedly and deliberately—of the Synod of the Church of England, when it comes to consider the role of Parliament because in effect it says, "If you question the wisdom of what we are doing in Synod, you are moving us towards disestablishment." That threat is implicit, time and again, in what is said to the Ecclesiastical Committee. Yet that committee, a unique body composed of Members of both Houses, has a duty, which we sometimes shirk for fear of a confrontation. I do not seek confrontation. I would not welcome it. I would be reluctant to disturb the delicate balance between Parliament and Synod.
Yet, a balance presupposes that there are two sides, and that one side should not always be up and the other down. I regret that there are friends in the Synod who treat Parliament as though it were a dead letter. I hope that, tonight, Parliament will show carefully and deliberately, but very determinedly, that it is not a dead letter—that those of us who are members of the Anglican Church, and others, are concerned, perturbed and worried. It may be the sweeping away of a measure 450 years old that has something of the semblance of a farce, but for many of us it is far more than that—it is the erosion of part of the delicate and precious fabric of the Elizabethan settlement. That is what it is all about.
Mr. Jerry Wiggin: I took part in the worship and doctrine Measure debate, and I agree
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with my hon. Friend in his judgment of the importance of that debate. But one of the distressing features of the debate—and my hon. Friend and I were sitting on the Opposition Benches — was the appearance of the Government Chief Whip and the arrival of many hon. Members who had not attended the debate, when it came to the vote. While I am sure that the presence of no fewer than four members of the Whips Office is coincidental, I think that my hon. Friend will agree that this debate should be treated as being free from party—
Mr. Deputy Speaker: Order. We are discussing the mechanics and procedures of election. If the hon. Gentleman follows this road, we shall get away from the debate.
Mr. Cormack: Of my charity, I assume no more than interest on the part of every hon. Member present. I was much reassured—as I am sure everyone was—by the reply given by my right hon. Friend the Leader of the House to the telling, important and apposite point raised by the right hon. Member for South Down (Mr. Powell).
11.52 pm
Mr. Stuart Bell: I feel somewhat modest in rising at this stage of the debate, following upon the remarks of the hon. Member for Staffordshire, South (Mr. Cormack) and on the lucid, cogent and racy speech of the right hon. Member for South Down (Mr. Powell), who has sought to place this short debate in the context of the Church, the state, and the fact that we have an established Church whose Synod may take a different view from Parliament on its role.
I found the remarks of the right hon. Member for South Down most serious. He spoke of frivolous meddling and of bishops being appointed by the Crown, and he used the word "logic". As I listened to him, I thought of President Pompidou, some years ago" speaking in France, where there is a separation of church and state. When he was asked a question about the church, he said, "I am riot responsible for the church, thank God."
We in the House are responsible for the church to the extent that we have an established church. Hon. Members have made that point clear. It is nothing short of remarkable that, at this hour on a Monday night, we should be listening to a serious and enlightened debate on the making of minor and consequential amendments to sections 3 and 4 of the Appointment of Bishops Act 1533. I shall not take issue with the hon. Member for Wokingham (Sir W. van Straubenzee) on whether the Act was passed in 1533 or 1534. It will be of interest to have a peep in the Commons Library and read the original Act, written in old English. We would come across the ancient Act with modem words inserted into it.
Even at this hour of the evening, I could intrigue the House with an interesting and novel description of how the Act was passed, but I shall decline from doing that.
Once this instrument is approved tonight, if it is approved, there will be a commingling of the old and the new text—there will be, so to speak, new wine in old bottles—and as an example of how quickly Parliament can act when it wishes, it is useful to remind ourselves that these changes were first proposed in the time of Lord John Russell's Administration.
I humbly suggest—I say "humbly" in view of the learned speeches to which we have listened tonight—

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that there is nothing in this measure that would have prevented a professor of theology from becoming the Bishop of Durham. Indeed, the Church missed its opportunity to impose a veto, for reasons of doctrinal purity, at the end of the last century. Now, the only refusal available to the dean and chapter would be on the ground that the bishop was not the man he said he was, not in theological but in physical terms. But even if that turned out to be the case, it would be too late to prevent his appointment. Even were the dean and chapter to fail in their duty and not elect, the appointment would go ahead pursuant to a letter patent rather than a letter missive.
There was some discussion earlier of the purpose of the consecration and the various ceremonies. Reference was made to parts of the ceremony for the election of a bishop, including the announcement, the consecration and the enthronement. Before those stages, however, comes the legal ceremony in which the validity of the election is confirmed in the court of the vicar general of the relevant province. Thus, even if there was no consecration, that would not prevent the election of a bishop.
Much has been said about the professor of theology who has risen to become the Bishop of Durham. The choice has been made and while this House takes, and expresses, an interest in such matters, I am sure that now that the Bishop of Durham has been elected, the House will follow his progress with interest and will be disposed to his success. I shall be content if he goes as far as one of his illustrious predecessors, Dr. Ramsay, who not only had the honour of confirming me into the Church, but of proceeding to the Archibishopric first of York and then of Canterbury.
The measure comes before the House with the overwhelming support of the General Synod legislative committee. I am sure that the General Synod will take into account the views of the hon. Member for Staffordshire, South (Mr. Cormack) and the strong feelings that other hon. Members have expressed on the various issues involved. It also comes with the support of the House of Bishops, the House of Clergy and the House of Laity.
Being removed from the 1533 Act is the notional election by the dean and chapter, and the confirmation of the election, of the bishop or archibishop in the court of the vicar general of the relevant province. I often feel that it is pity that we cannot simply transmit that which is being repealed directly into the constitution of the Labour party. The system set forth in 1533 provided for the election of a bishop by a letter missive from the Crown. Those who gathered for the election, often numbering about 40, were obliged to nominate the person named in the missive, and if they failed to do so, the person was appointed by a letter patent.
As that provision is apparently redundant to the Church, it would be useful in assisting Labour hon. Members to be reselected, and I commend that procedure. Conservative hon. Members will see that my right hon. and hon. Friends are all here to support me. Older hands will recall the advice of a Leader of the House to a new hon. Member. "Those are my enemies on the Benches opposite," said the new hon. Member. "No," replied the Leader. "Those are your parliamentary colleagues opposite. Your enemies are behind and around you." I am in a fortunate position on these Benches tonight.
The debate is an unforeseen consequence of the Crown Appointments Commission and the vacancy in see
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committees. When the Church had little say in who its bishops might be — that right of appointment being reserved for the Crown—it may be that there was a sense of participation, albeit empty, which brought the clergy together and gave it a feeling of having a say in its affairs.
Since the system has changed since 1977, the procedures must change with it. The state has given an undertaking that no person will be appointed as a bishop who has not been nominated by the Church in that procedure. The hon. Member for Wokingham referred to the change in 1977. The cost to the Church, of the present procedures is 500 guineas per appointment. The hon. Gentleman not only touched on that point but struck fear into the ecclesiastical bar by suggesting that he had another measure in the pipeline. I cannot remember when the guinea ceased to be legal tender—if it has ever done so—but it must be many years since payments were made in guineas. Many years ago, when I was a freelance newspaper reporter, I was paid in guineas. We are witnessing nothing short of the dismantling of a certain legal bureaucracy within the Church which sprung from the workings of the 1533 Act and which has been enjoyed ever since by lawyers and bureaucrats.
Reference has been made in the committee to disgruntlement, dissatisfaction and disquiet in the Church about this form of non-election, especially as the Holy Spirit was invoked to give guidance in the choice. That dissatisfaction was amply revealed in the votes of those participating in the debate in the General Synod. Even when votes were cast — the hon. Member for Wokingham touched on this point — they were cast because the measure did not go sufficiently far. One day it will be interesting to learn why the measure did not go far enough and what additional reforms were felt to be required in an Act already 450 years old. I am hardly likely to find that out tonight or tomorrow. Suffice it to say that 43 deans and chapter have gone along with this measure, and therefore it must be considered as one that meets with their approval.
I congratulate the parliamentary draftsmen on so skilfully and artfully taking out sections 3 and 4 of the Appointment of Bishops Act as they relate to the dean and chapter of the cathedral of the vacant see and inserting a new text, in modern English, which has the effect of bringing those sections up to date but without in any way repealing the statute. As someone who sat through 59 sittings of the Police and Criminal Evidence Bill and 150 hours of the Finance (No. 2) Bill, I commend the draftsmen for their brevity.
As I understand it, the full powers of the House and the other place will be limited by section 4(3), which declares:
"This Measure shall come into force on such day as the Archbishops of Canterbury and York may jointly appoint."
I trust, however, that once the measure has the full approval of Parliament, those archbishops will not unduly delay its implementation. We are told that some five bishops per year are appointed in accordance with the 1533 statute, and that the figure may be as low as three. I should feel happier if the archbishops took note of the fact that the Opposition would welcome an early enactment of the measure, so that what has been described as the "flummery" of the old system is not prolonged unduly.
I am sure that it will give pleasure to hon. Members to know that the Labour party has no intention of dividing the House on this issue.
12.4 am
Rev. Ian Paisley: The hon. Member for Torridge and Devon, West (Sir P. Mills) drew the attention of the House to a portion of holy scripture that Paul wrote to Timothy. There is a parallel passage in Titus, and one of the characteristics and qualifications of a bishop is
"Holding fast the faithful word as he hath been taught, that he may be able by sound doctrine both to exhort and convince the gainsayers."
The hon. Member for Staffordshire, South (Mr. Cormack) underlined a point that was in many of our minds about the recent election and consecration of the new Bishop of Durham.
The Church of England has declared itself on the mystery of the faith in its fine 39 Articles. I should like to put on record what those articles say about two important fundamentals of the Christian faith—the deity of our Saviour and his bodily resurrection. Article 2 says:
"Of the Word or Son of God, which was made very Man. The Son, which is the Word of the Father, begotten from everlasting of the Father, the very and eternal God, and of one substance with the Father, took Man's nature in the womb of the blessed Virgin, of her substance: so that two whole and perfect Natures, that is to say, the Godhead and Manhood, were joined together in one Person, never to be divided, whereof is one Christ, very God, and very Man; who truly suffered, was crucified, dead, and buried, to reconcile his Father to us, and to be a sacrifice, not only for original guilt, but also for all actual sins of men."
"Of the resurrection of Christ."
article 4 says:
"Christ did truly rise again from death, and took again his body, with flesh, bones, and all things appertaining to the perfection of Man's nature; wherewith he ascended into Heaven, and there sitteth, until he return to judge all Men at the last day."
There can be no clearer definition of the cardinal doctrines of the faith than those precious words. I say that as one who is not a member of the Church of England, as the House is aware. The Church of England has no jurisdiction where I come from, because the Church of Ireland was disestablished by the House.
The House has done well to put on record the sorrow of heart at an attack on the person of our Lord Jesus Christ and those important doctrines.
Those are matters that interest the whole nation and many nonconformists are anxious that the Church of England should retain those great distinctive doctrines of the Christian faith. I should like to speak further, but I am aware that many of my colleagues want to get to their feet, and I wish to hear the reply.
12.9 am
Viscount Cranborne: As always, the House should be extremely grateful to my hon. Friend the Member for Wokingham (Sir W. van Straubenzee), as he introduces, year after year, yet more extraordinary effulgences from the Synod of the Church of England. However, the House should be even more grateful to the Ecclesiastical Committee, whose 188th report is before us because, as the right hon. Member for South Down (Mr.Powell) so rightly pointed out, the real nature of the Measure before us becomes very clear in the evidence given to that committee on 10 April.
Professor McClean gives three interesting reasons for this measure. The House might like to note the order in which those reasons were given. The first was, on page 7, that he regarded this method of election as "quite outmoded". That has been said about partiotism a
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thousand times over God knows how many years, and as soon as anybody starts talking about something being outmoded in the context of the Church of England. I reach for the spoons. There is no doubt that in the past few years the number of acts of vandalism committed by the Church of England in the holy name of fashion is extraordinary. I have only to refer my hon. Friend the Member for Wokingham to a rather enjoyable debate that the House was good enough to allow the last Parliament over the massacre of the Prayer Book to make him see what I mean.
The second reason given for the proposed change was that it was
"wasteful of both time and money".
That may be so, but it is interesting how much time and money are being spent on the Measure tonight, keeping us all up late at night, because of the sums of money that the Church of England regards as important. I am the last person to decry so outmoded an expression of value as 500 guineas. We regret the passing of the guinea, but it is interesting that the good professor is able to use the word "outmoded" and then, with a perfectly straight face, use guineas as a measure of expense. It must be clear that if we are considering a procedure that is both wasteful of time and money, we should ask ourselves whether the balance of expense is against those who are proposing this Measure, rather than against those who are opposing it.
The nub of the matter, and of the point raised by the right hon. Member for South Down, comes in the third reason. The method of election is, says the good professor,
"in some respects wrong in principle."
What does he mean? Again, we must be indebted to the proceedings of the Ecclesiastical Committee. Under cross-examination from the hon. Member for Birkenhead (Mr. Field), who has taken a consistent interest in these matters, on page 10, Mr. Pattinson among other things, finally comes clean over what is meant by that phrase. He says:
"The invocation of the Holy Spirit in relation to guidance for a choice where there was no choice struck people as offensive."
In effect, Mr. Pattinson and Mr. McClean are talking about a church that derives its authority not from the historical Elizabethan compromise of 1559 and before but from within itself and from the democratic will of its members.
This is a view that is taken by the churchmen of all denominations other than the Church of England and the Roman Catholic Church, particularly Protestant denominations in the United States of America—that is their privilege. However, we have here a clear tendency for the Church of England to go that way.
The reason why I oppose the measure is clear. We are talking about evidence of a new explanation, in the 20th century as to the source from which the authority of the Church of England is derived. It is a question not of democracy but of authority. The right hon. Member for South Down put it much better that I can put it. He said clearly—and I agree with him—that the basis of the stability of the Church of England over the last 450 years or so has been the compromise between Church and state—the compromise about where authority comes from in the state, and the stream of authority to the Church, on the spiritual side, from the priesthood. That compromise was hard-won, it was elegant, and it has lasted. We are seeing here an attack on the basic authority of the Church of England. Whatever my hon. Friend the Member for Wokingham may say, it is simply not good enough to substitute the 1977 settlement for what was done in 1533.

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If my hon. Friend agrees with me—and I suspect, sadly, that he does not — that this is a matter of authority, is it right to rely, for authority in the Church of England, exclusively on the recommendations of the report of a committee submitted to the Prime Minister? If that is the basis of the safeguards, surely this sort of matter becomes more important rather than less. Much as I respect my hon. Friend in every way, I cannot go down the path that he advocates, which is purely one of undermining the basis of the settlement and stability of the Church of England, which has been established ever since the 16th century.
12.16 am
Sir William van Straubenzee: The requirements of the House are such—and I make no complaint of it—that I have only single minutes in which to respond to the debate. Therefore, hon. Members in all parts of the House will, I hope, acquit me of discourtesy if I cannot in that time answer every point. The procedures of the House are not within my control; I am their prisoner.
No hon. Member of this House has heard me complain that there should be taking part in our debates those whose allegiance is not to the Church of England. No one has ever heard me make that complaint. It is a totally and absolutely proper exercise of the duties of hon. Members of this House—whatever their religious allegiances or lack of religious allegiances—to take part. I am the last to make any complaint about that.
Nobody has heard me complain or threaten that if the measure is not approved tonight, it will inevitably lead to the disestablishment of the Church of England. [Interruption.] That was put forward as an argument earlier, as though it were a threat. I must, with respect, deal with that alleged threat. I have never uttered it, it is not my view, and I take no exception whatever to a different point of view from mine being expressed, nor do I think that it is in any way an improper thing to do.
If there are—and plainly the debate reveals that there are—hon. Members who are anxious about the way in which the appointment of men to the bishoprics of the Church of England is working, this measure, with great respect, is not the method by which to express that anxiety, because it comes into operation only after that system has operated. For example, in the see of Durham, which has been referred to by some but not by me, the present systems operated. The Dean and Greater Chapter of
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Durham elected the present bishop of Durham. If the system gives the safeguards that some especially my hon. Friends, think that it gives, we can see from recent days that that is demonstrably not the case. If there be hon. Members who are anxious about the operation of the system, perhaps I might say that I am most willingly at their disposal as a channel to ensure that their anxieties are understood. I shall most willingly do so in the inquiry and the investigation that are afoot. It is important that the views of hon. Members are known and I am happy to be the channel through which those views are known.
I have done my best and I can do no more to commend the measure to the House. It would be regrettable if this House, having entrusted to the Synod since 1919 the delegated legislation, should, on a narrow point, refuse assent—but the matter must now be put to the free vote of this honourable House.
Question put:—
The House divided: Ayes 17, Noes 32.

Division No. 410]

[12.21 am

AYES

Alton, David

Rhodes James, Robert

Brooke, Mon Peter

Taylor, John (Solihull)

Buck, Sir Antony

Thompson, Donald (Calder V)

Clarke, Rt Hon K. (Rushcliffe)

Waller, Gary

Cope, John

Wardle, C. (Bexhill)

Crouch, David

Wrigglesworth, Ian

Dover, Den

Garel-Jones, Tristan

Tellers for the Ayes:

Hunt, David (Wirral)

Sir William van Straubenzee and Mr. Christopher Murphy.

Lester, Jim

Neubert, Michael

NOES

Aitken, Jonathan

Mawhinney, Dr Brian

Baldry, Anthony

Mills, Sir Peter (West Devon)

Beith, A. J.

Nicholls, Patrick

Biggs-Davison, Sir John

Norris, Steven

Bowden, Gerald (Dulwich)

Paisley, Rev Ian

Brown, M. (Brigg & Cl'thpes)

Percival, Rt Hon Sir Ian

Bruinvels, Peter

Porter, Barry

Budgen, Nick

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

Burt, Alistair

Soames, Hon Nicholas

Carlisle, John (N Luton)

Stevens, Lewis (Nuneaton)

Cash, William

Thompson, Patrick (N'ich N)

Cormack, Patrick

Warren, Kenneth

Cranborne, Viscount

Wells, Sir John (Maidstone)

Greenway, Harry

Wood, Timothy

Hargreaves, Kenneth

Lightbown, David

Tellers for the Noes:

Lilley, Peter

Mr. William Powell and Mr. Jerry Wiggin.

Lloyd, Peter, (Fareham)

Question accordingly negatived.

Heart Disease
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Douglas Hogg.]
12.32 am
Mr. Jonathan Aitken: With this debate the House moves away from the episcopal saving of souls towards the medical saving of lives, for the prevention of heart disease is a most important health issue which, until recently, has been tragically neglected by public opinion, by large parts of the food industry and by the Government Departments which should be most interested in it. The results of that neglect show in a series of deeply disturbing statistics, which prove that not only is heart disease the biggest killer in Britain but that, with the possible exception of Finland, Britain leads the world as the country with the highest incidence of heart disease, deaths from heart attacks and strokes.
To enlarge on those statistics, each year approximately 250,000 British people die of cardio-vascular disease, of whom 175,000 die specifically of coronary heart disease. In plain language, that means that heart attacks and strokes cause 40 per cent. of all male deaths and 38 per cent. of all female deaths. The nearest rival as a cause of death is cancer, representing 24 per cent. of male and 21 per cent. of female deaths. Among men who have the misfortune to die under the age of 65, 30,000 a year, or one man in every 11, are killed by heart attacks—again, by far the biggest cause of death in that age group.
That loss of life and the disability which often precedes it become even more unacceptable as the realisation grows that many deaths from heart disease are preventable. One need only consider some international comparisons to understand that there seems to be a peculiar, if not downright sinister, local dimension to the heart disease problem, which makes Britain the heart attack capital of the world.
For example, why should the British heart disease figures be six times higher than Japan's or two and a half times higher than Italy's, and significantly higher than those of any other European country? Why should the British total of heart attack deaths have remained at their present high levels for the past 20 years, while during the same period in such countries as the United States of America and Australia there has been a steep decline, showing an overall fall in heart attack deaths of more than 25 per cent. per annum? If we in Britain had seen anything like the Australian or American decline in heart disease we should have approximately 45,000 fewer heart attack fatalities a year. So why has not it happened?
The answers to some of those questions can be found in the growing consensus of expert medical opinion, whose reports confirm a clear link between our national pattern of diet and our record of heart disease. Over the past 10 years or so there have been studies from more than 20 expert medical committees, the most notable being the Royal College of Physicians' report in 1976, the NACNE report in 1983 and the Canterbury conference report in 1984. All confirm the thesis that heart disease can be prevented on a substantial scale by following some simple basic rules of diet and lifestyle. The Canterbury report, for example, estimated that 40,000 heart attack deaths a year can he prevented. Other experts have put the preventable deaths figure at estimates ranging from 25,000 to 75,000 a year.
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All this evidence about the preventability of heart disease has been mounting for some considerable time. In some quarters the Government have been criticised for the apparent inertia of their response. For example, the recent best-selling book "The food scandal" by Geoffrey Canon and Caroline Walker is, as the title suggests, an attack on what the authors consider to be officialdom's scandalous reluctance to implement the recommendations of NACNE and other reports.
The Government's policy so far could be described as waiting for COMA, a report of the DHSS committee on medical aspects of food policy. Although waiting for COMA has seemed to some observers almost as interminable a process as "Waiting for Godot", by a piece of fortuitous timing the COMA report was finally published some four days after I was lucky enough to secure this Adjournment debate in Mr. Speaker's ballot. So tonight is the first parliamentary opportunity to debate COMA and to hear the Government's response to it.
The COMA report is a cautious but authoritative document. In broad terms it confirms the statistical evidence outlined earlier in my speech. It supports the thesis that heart disease and diet are linked. Although it avoids estimating the figure of heart disease deaths that could be prevented each year, COMA believes that several important policy changes are necessary towards Britain's food and dietary patterns. It asserts that these changes would be likely to reduce our present high levels of heart disease if they encouraged people to eat less fat, less salt and no more sugars than at present.
Perhaps the most important recommendations of COMA are those which tackle the much neglected subject of food labelling. Having identified the excessive intake of fat and fatty acids as the principal villain in heart disease, COMA argues strongly in section 2.4 that all manufactured foods should be clearly marked with a simple labelling code warning the public when the fat content is high. In addition, COMA insists that the contents of manufactured foods must be clearly labelled with percentage by weight figures of their various ingredients, including fat, salts and sugars.
I take the view that it is a serious criticism of both the food industry and the Government that manufactured foods are not already labelled with the sort of minimum nutritional information that gives the public the opportunity to know which foods may increase the risk of heart disease and which foods are best for healthy eating. We need a policy of full disclosure on food labelling.
To illustrate my point, I ask my hon. Friend the Parliamentary Under-Secretary to reflect for a moment on the differences in contents labelling between a pair of socks and a packet of sausages. I have here a pair of socks. They are well labelled, as the law requires. They say clearly how much of the socks are made of fibre, where they were made, how to wash them, and what their exact contents are. They are 80 per cent. cotton, 20 per cent. nylon, they were made in Hong Kong, they should be washed in warm water and given a minimum spin—all information which is very helpful and informative.
I also have with me a packet of sausages, and the labelling might be described as a highly edited version of the contents. There is a long list of such contents as colour, spices, salt, sodium and so on, but there is no mention of the quantities involved. Rather puzzlingly, there is also no

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mention of fat, though even an O-level chemist such as myself could easily discern a large quantity of killer fat in these sausages.
I hope that my hon. Friend the Under-Secretary of State for Health and Social Security, who is to reply, will note the sharp contrast between the labelling required by law for an ordinary pair of socks and the misleading labelling of a packet of sausages and many other foodstuffs. I press my hon. Friend to tell us when and how he expects to bring in regulations that will impose adequate food labelling on the food industry.
My hon. Friend will not have an easy task, because he is sure to encounter resistance from vested interests such as some sections of the food industry, its lobbyists and its marketing organisations. We have only to look at the advertising activities of the Milk Marketing Board, whose motto might as well be, "Fat is good for you", and then look at section 5:4 of the COMA report which says the exact opposite, to realise what an uphill struggle a labelling change, warning of the dangers of excessive fat intake, will be.
I hope that my hon. Friend will not fall back on the old clichés about voluntary discussion and self-regulation. He must take power under section 7 of the Food and Drugs Act 1955. He has the opportunity to do so, and I hope that the Government will impose mandatory regulations as soon as possible.
When my hon. Friend brings in the reform of food labelling, he will need to seek the full co-operation of the Ministry of Agriculture. That should be easily forthcoming, because the British fanner has nothing to fear and much to gain if our national dietary habits change in the direction signposted by COMA. On the other hand, the milk lakes and butter mountains produced by the EC are likely to perpetuate high rates of heart disease if they are consumed. I hope that COMA' s support for reforming that aspect of the common agricultural policy will be noted by the Government.
If reforming the CAP seems a distant target, let me come closer to home. I hope that my hon. Friend the Under-Secretary will take on board the enormous savings that could be made in the National Health Service and other departmental budgets if some of the ideas set out in COMA were implemented. The costs of heart disease are astronomical, not only in human terms, such as bereavements, disability and anxiety, but in pure economic terms. No one has begun to measure the costs of premature deaths and retirements or absences from work because of heart disease-induced sickness. However, we can estimate that the rising cost to the NHS of treating heart disease is now running at about £350 million a year.
For example, in my constituency, the Canterbury-Thanet health district fills about 22 per cent. of its acute beds in local hospitals with heart patients. In Thanet and every other health district, substantial savings could be made if we could only achieve the levels of heart disease prevention that prevail in many other countries.
My only purpose tonight is to argue for a shift in emphasis by the Government towards a campaign for heart disease prevention. I believe that a revolution in food labelling is the most important step in that campaign, but it must be accompanied by a major educational effort, in schools, in the media, among doctors and in Government and Parliament. I hope that my hon. Friend will not neglect
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the leaders in the campaign so far — the Coronary Prevention Group, which currently receives a derisory grant of only £3,000 a year from the Government, compared with the £750,000 given to other worthy organisations, such as the Royal Society for the Prevention of Accidents, for their worthy work in preventing important, but numerically less significant causes of death.
Much should be done to convince the public that far too many British people are digging their graves with their teeth and needlessly increasing their risk of heart disease and heart attacks. I recognise that no Government can prevent people from eating foolishly if they choose to do so, but Governments can ensure that those who wish to eat wisely are not made fools of either by nutritional ignorance or by misleading food labelling. The medical experts have given their judgment, COMA has reported and I hope that my hon. Friend will rise to the challenge by starting the campaign for heart disease prevention.
12.45 am
The Parliamentary Under-Secretary of State for Health and Social Security (Mr. John Patten): I rise to welcome this important debate which has been initiated by my hon. Friend the Member for Thanet, South (Mr. Aitken), who has shown a characteristic interest in heart disease prevention. My hon. Friend the Member for Swindon (Mr. Coombs), who is also greatly interested in these issues, is decorating the somewhat sparsely inhabited Benches when comparison is made to the previous debate on the appointment of bishops when 40 to 50 right hon. and hon. Members were present.
My hon. Friend the Member for Thanet, South has given us some of the facts on coronary heart disease and it is worth while recapitulating one or two of them. In 1982, the most recent year for which we have figures, coronary heart disease claimed over 155,000 lives in England and Wales, a quarter of all deaths. An increasing proportion of victims are under 65 years and many are in their 40s and 50s. Coronary heart disease is the commonest cause of death among middle-aged men. That means, as my hon. Friend said, an enormous toll of human suffering from disabling illness and bereavement. It means also the loss of about 30 million working days a year in England alone. There are at any one time about 7,000 National Health Service beds in use by patients with heart disease and my hon. Friend can speculate on the considerable cost of those beds and the cost to the NHS.
It is important for us all to realise that we do not know, in the House or in the scientific community, all the causes of coronary heart disease; it would be foolish to pretend otherwise. However, we know that in many instances its onset can be delayed or prevented, or the prognosis can be improved, by changes towards a generally healthier lifestyle. I shall refer to three ways in which a healthier lifestyle can help to prevent the onset of coronary heart disease, two of which my hon. Friend did not deal with at any great length. I hope that he will forgive me for mentioning them. One cause of coronary heart disease is smoking and another is hypertension. I appreciate that diet was the main theme of my hon. Friend's speech.
Cigarette smoking is known to be a major cause of coronary heart disease. The Royal College of Physicians, in its latest report entitled "Health or Smoking", estimates that smoking is responsible for 20 per cent. of all deaths

149
from heart disease. That is over 30,000 deaths a year in England and Wales alone. Many of those deaths will be among people in early middle years of life.
An important part of our strategy for the prevention of the onset of early heart disease must be to discourage smoking and to present the necessary information in a non-nannying way so that we draw attention to the risks that attach to smoking. The Health Education Council, which the Government fund, is active in alerting the public to the dangers of smoking. Earlier in the year I announced to the House that we are giving the HEC an additional £500,000 to spend on anti-smoking campaigns, bringing its total spending on smoking education and information in 1983–84 to about £2·5 million. That is money that is well spent. The Government are maintaining their own efforts to discourage smoking, especially among young people.
As far as we can see at the moment, hypertension, or high blood pressure, is perhaps second in importance to smoking as a risk factor for coronary heart disease. People with blood pressure in the top 20 per cent. of the range are about twice as likely to develop coronary disease as those whose blood pressure is in the bottom 20 per cent. Hypertension could well reduce the life expectancy of a 35-year-old by 40 per cent. or more. In turn a number of factors may lead to hypertension, including obesity and, in particular, diet and its salt content.
That leads me neatly on to trying to answer the points raised by my hon. Friend the Member for Thanet, South about diet, the COMA report and the Government's initial reactions to it. One of its key recommendations was that individuals should try to lessen their salt intake, either directly or indirectly, from manufactured products. That may make a considerable contribution towards lessening hypertension or high blood pressure. We greatly welcome the report of the expert panel of the committee on medical aspects of food policy, which was published last week. It considers the significance of the relationship between nutrition and cardio-vascular disease.
As my hon. Friend has said, the report contains several important recommendations for Government, food producers, for the food processing, retailing and wholesaling industries, for medical practitioners and, in particular, for the public. As he said, the report is based on the best possible scientific evidence available. It is significant that among the membership of the panel that produced that report are such distinguished medical experts as Professor James, who chaired the NACNE working party, and Professor Rose, who chaired the important World Health Organisation working party that produced another report on diet. All the medical experts, under the excellent chairmanship of Professor Philip Randle — who is distinguished not only for being a Fellow of the Royal Society but also for being, at 6 ft 9½ in, the tallest practising professor in any British university—have produced a report to which the Government must respond.
My hon. Friend asked me how we would respond. The report came into our hands on 15 June, and by any standards in Government, we produced and published it quite quickly. I was personally committed to its rapid publication, and my right hon. Friend the Secretary of State and I made sure that it was published as quickly as possible. However, we are now faced with a twofold task. First, we must consult all interested bodies about its contents, and secondly, we must translate its contents into
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a form that the public can readily understand. I have no scientific training, and I found some parts of it, with its formulae and scientific terms, hard to understand.
However, my right hon. Friend the Secretary of State has asked the British Nutrition Foundation and the Health Education Council to ask their joint advisory committee on nutrition education—now to be called JACNE—to turn the advice from the report into practical guidance which the average consumer who is interested in the relationship between diet arid a more healthy lifestyle, and in the prevention, among other things, of coronary heart disease, can readily understand.
We have already sent copies of the report to several interested bodies, including, very importantly, the Royal College of Physicians and the British Cardiac Society. We must consult all the bodies involved as quickly as possible about the implications of the report before we can take any further decisions about the report's interesting suggestion that we should have a regular series of reviews about the relationships between diet and cardio-vascular disease.
I am sure that it is a mistake to publish such reports only once every 10 years. The pace of knowledge is changing so much that we need more up-to-date evidence provided in a more up-to-date way.
I have been asked to give the Government's view on one of the issues which stems from the report—the right of the consumer to know as much about the fat content of a packet of sausages as is already known about the contents of a pair of stockings. His point is well made and the Government recognise it. That is why some weeks ago, in advance of the receipt of the report, the DHSS and the Ministry of Agriculture, Fisheries and Food began consultations with the food industry about the prospects for the realistic fat content labelling of foodstuffs so that the package of sausages that my hon. Friend showed to the House can have an adequate label that people can understand.
When I look at lists of food contents I find it hard to relate them to anything that I understand. We must ensure, when and if—I hope that it is when rather than if—fat labelling is introduced that the consumer can readily understand the information on the label.
My hon. Friend is doubtful about the willingness of some food manufacturers to introduce such labelling, but I was reassured at the weekend to see that one or two large dairy products firms had inserted large advertisements in newspapers pushing low-fat cheese and other products, relating their advertising campaign to the report. That shows that the food industry realises how consumers, Government and medical opinion will mould demand, but that it is able to appreciate marketing opportunities.
The British farming industry and the food processing industry have nothing to fear from the report's recommendations. It simply means change, not decline. In that context I am pleased to see the warm welcome given to the report by my right hon. Friend the Minister of Agriculture, Fisheries and Food and other Ministers. That should not be overlooked.
The family doctor has an important role when tackling diet, hypertension and smoking. The GP and the practice nurse are in the front line when helping to prevent coronary heart disease. All the advice in the world from Ministers, books and articles will be no substitute for the individual advice by doctors or nurses to an individual. No one national diet or menu is right for every individual. The structure and tradition of general medicine in Britain is

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well suited to anticipatory care. The GP will see at least once in five years about 90 per cent. of all the patients registered with him.
Increasingly, GPs — certainly those in my constituency—when they see their patients, especially the middle-aged, are taking the trouble to record blood pressure and to identify those most at risk from heart disease. They can then advise them on how to reduce risk, and to provide treatment. Part of that will be concerned not only with smoking but with important issues of diet and the need to reduce the intake of saturated fats, salt and too
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much sugar. I acknowledge the valuable part played by the Royal College of General Practitioners in encouraging GPs to take a more practical approach to the prevention of heart disease.
I thank my hon. Friend for raising this important point. We cannot escape the fact that, unless we can convince the public to change their lifestyles and to think more about the way in which they live, we shall not be successful in reducing the appalling rate of heart disease. That is why I am so grateful to my hon. Friend for raising the subject tonight.
Question put and agreed to.
Adjourned accordingly at one minute past One o'clock.

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  Hospital Building Programme
  Hospital Building Programme
  NHS (Expenditure)
  NHS (Expenditure)
  Staff Statistics
  Staff Statistics
  Mentally Handicapped Children and Adults
  Mentally Handicapped Children and Adults
ENERGY
  Combined Heat and Power (Edinburgh)
  Combined Heat and Power (Edinburgh)
  North Sea Oil
  North Sea Oil
  OPEC
  OPEC
AGRICULTURE, FISHERIES AND FOOD
  Aujeszky's Disease
  Aujeszky's Disease
  Milk Quotas
  Milk Quotas
  Eggs (Imports)
  Eggs (Imports)
  Mr. Whitehead (FEOGA Loan)
  Mr. Whitehead (FEOGA Loan)
  Milk
  Milk
  Cereals
  Cereals
  Milk Outgoers Scheme
  Milk Outgoers Scheme
SOCIAL SERVICES
  Single Homeless Persons
  Single Homeless Persons
  Hospital Beds
  Hospital Beds
  Advice Services (Exhibition)
  Advice Services (Exhibition)
  Vitamin and Mineral Deficiencies
  Vitamin and Mineral Deficiencies
  Medications (Charges)
  Medications (Charges)
  Dental Payments (Capitation System)
  Dental Payments (Capitation System)
  Benefits (Dewsbury)
  Benefits (Dewsbury)
  Chiropodists
  Chiropodists
  Dental Treatment
  Dental Treatment
  Southwark (Pensioners' Allowances)
  Southwark (Pensioners' Allowances)
  Attendance Allowance
  Attendance Allowance
  Stoma Statistics
  Stoma Statistics
  Dentists
  Dentists
  Maternity Units
  Maternity Units
  Interspecies Fertilisation
  Interspecies Fertilisation
  Women (Pensions)
  Women (Pensions)
  Long-stay Patients
  Long-stay Patients
  Civil Defence
  Civil Defence
  NHS (Premature Retirement Scheme)
  NHS (Premature Retirement Scheme)
  Dr. John Griffin
  Dr. John Griffin
  Greenwich Health Authority (Health Visiting Staff)
  Greenwich Health Authority (Health Visiting Staff)
  Newcastle Computer (Dispute)
  Newcastle Computer (Dispute)
  Occupational Pensions
  Occupational Pensions
  Blood and Blood Products
  Blood and Blood Products
  Benefits
  Benefits
  Retirement Pension
  Retirement Pension
  Coal Industry Dispute
  Coal Industry Dispute
  NHS (Veterinary Surgeons)
  NHS (Veterinary Surgeons)
  Heating Additions
  Heating Additions
  Paediatricians (Expenses)
  Paediatricians (Expenses)
  Supplementary Benefit
  Supplementary Benefit
  Pensioners (Housing Cost Assistance)
  Pensioners (Housing Cost Assistance)
  Supplementary Pensioners
  Supplementary Pensioners
  Housing Benefit
  Housing Benefit
  Dentists (Earnings)
  Dentists (Earnings)

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

Tourism in the UK and Hotel Tariffs
Lord Gainford: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether a fall in the number of tourists visiting the United Kingdom is expected following the recent increase in hotel tariffs greater than the increase in the rate of inflation.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, the latest indications suggest that there will be a continued increase in the number of tourists visiting the United Kingdom during 1984. The British Tourist Authority estimate that over 13 million visits will be made to the United Kingdom this year compared with 12½ million in 1983. Provisional results from the International Passenger Survey for the first four months of this year show that the number of visits has increased by 12½ per cent. compared with the same period in 1983.
Lord Gainford: My Lords, I thank my noble friend for that encouraging answer. Can he tell me whether there is any additional increase to the British economy by British families taking holidays in this country, as well as the roaring trade done by British travel agents for the millions of families who go abroad during the summer season?
Lord Belstead: Yes, my Lords, there is an addition to the British economy. The balance on the travel account for the first four months of this year was £60 million, compared to a deficit of £26 million for the same period of last year. This reflects the fact that we now have a very buoyant domestic trade with an estimated increase in spending of some 19 per cent. by British tourists last year over the previous year.
Lord Ponsonby of Shulbrede: My Lords, reverting to the noble Lord's original Question, which suggested that the recent increase in hotel tariffs was greater than the increase in inflation, is the noble Lord the Minister aware that for three-star hotels and hotels of a lesser category than that the increase is no higher than the rate of inflation?
Lord Belstead: My Lords, I am grateful to the noble Lord, Lord Ponsonby, for that information. I did not have that. My information is of a slightly different kind. A recent survey covering the year to April of this year suggests an average national increase of 7.6 per cent. for a single room and 6.9 per cent. for a twin room compared with a 5.2 per cent. increase in the retail price index over the same period. But those
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figures take no account at all of the various discounts which are so very often offered by hotels.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that at least some of the increase in hotel prices recently was due to the decision of the Wages Council to introduce compulsory increases in hotel and catering industry wages, particularly for juveniles, in excess of the rate of inflation?
Lord Belstead: My Lords, I take note of what my noble friend has said. My noble friend's supplementary question underlines the need for us to be very careful about the rate of wage increases.
Lord Avebury: My Lords, is not one of the main reasons for the buoyancy of the tourist trade the fall in the value of the pound, which has had disastrous effects on every other area of the economy in terms of the increases in prices of raw materials and finished goods; whereas the tourist trade is the only trade to benefit from this weakness in the pound?
Lord Belstead: My Lords, many factors affect the level of incoming visitors to this country. These include the state of the world economies, exchange rates and our ability to provide high quality tourist attractions and facilities. When the noble Lord, Lord Avebury, says that the one reason for the buoyant tourist trade—
Lord Avebury: My Lords, I did not say that. I said one of them.
Lord Belstead: My Lords, when the noble Lord ascribes a single reason for an increase in the tourist trade to the temporary comparative weakness of the pound I would say that it is because we offer good facilities in this country. If the noble Lord does not believe me, all he need do is go into Parliament Square and ask the hundreds of visitors to this country who are to be found there.
Lord Ponsonby of Shulbrede: My Lords, is the noble Lord not also aware that the average price of a New York hotel room in dollar terms is now very much higher than the average price of a London hotel room?
Lord Belstead: My Lords, again I am grateful to the noble Lord, Lord Ponsonby, for that question. He has, indeed, assisted me in answering effectively the noble Lord, Lord Avebury.
Viscount St Davids: My Lords, on the subject of the value of dollars, should not these visitors to our shores buy their pounds rather fast before the value of the pound goes up very considerably, as it certainly will when this coal strike is successfully ended?
Lord Belstead: My Lords, I am most grateful to the noble Viscount for the confidence he quite rightly shows in the affairs of this country.

Resource Allocation in the NHS
2.42 p.m.
Baroness Lane-Fox: 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 progress has been made since 1979 in reducing regional variations of health service provision under the RAWP system.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Glenarthur): My Lords, since 1979–80 we have reduced the gap between the best and worst funded RHA by more than a third—from 22 per cent. to 14 per cent. This represents substantial progress towards our aim of achieving a fairer distribution of resources across the country.
Baroness Lane-Fox: My Lords, I thank my noble friend the Minister for that very informative reply and ask two more questions. First, what are the current plans for adapting resource allocations where there are population changes? Secondly, where there is depopulation in London, what are the measures to protect the finances of the London teaching hospitals, having due regard to their international role of leading the world in medical research and care of the sick?
Lord Glenarthur: My Lords, in the past RAWP targets were calculated on historical population data, although we did take account of population growth in making actual allocations. Next year we shall be using population projections in the formula, and this should take a better account of expected population growths. I hope that that answers my noble friend's first question.
So far as medical teaching in London is concerned, certainly London's health authorities fully recognise the importance of reconciling teaching and service needs. So far as closures and things like that are concerned, proposals that are referred to Ministers will be carefully scrutinised, and the effects of any change on the Secretary of State's duty to provide reasonable facilities for medical education will be taken into account.
Lord Leatherland: My Lords, does the noble Lord the Minister realise that the Question refers to the RAWP system? What is it?
Lord Glenarthur: My Lords, RAWP stands for the Resource Allocation Working Party.
Lord Ennals: My Lords, does the noble Lord accept that we are satisfied that the RAWP fair shares policy, which was initiated by the previous Labour Government, has been continued to the real advantage of the traditionally deprived regions, and that we are grateful for his indication that the gap has been narrowing? Does he also accept that the benefit for the other regions is being achieved at the expense of real cuts in services in the overfunded Thames regions at a time when in real terms growth is virtually nil?
Lord Glenarthur: My Lords, we do not accept that, because the Thames regions are receiving no growth this year, and can expect reduced allocations in future, they have no scope for improving services. That is of course the important fact. We are requiring all authorities to undertake a sustained cost improvement programme to release resources for improving patient service, and we shall look to the Thames regions to tackle that vigorously. I think that there is still too much emphasis on the need for additional resources without making the best use of what we already have.
Lord Bruce of Donington: My Lords, the noble Lord will correct me if I am wrong, but am I right in believing that it was always the avowed policy of the party opposite to level up rather than down?
Lord Glenarthur: Yes, my Lords, but we are talking about the fact that historically London has been overprovided because there has been a move away from London, and the regions have been underfunded. That is why it is necessary to do it this way.
Lord Molloy: My Lords, is the noble Lord aware that that answer will not do, with the best will in the world? All over the country there are vast lists of people waiting for things, and the RAWP provision is not being fulfilled. Simply to meet demands by cutting back resources and closing hospitals is not a sensible way to tackle the difficult problem that the Government face.
Lord Glenarthur: My Lords, perhaps progress towards RAWP has been too slow. As the noble Lord will appreciate, the fact is that it is not a perfect science. He will also know that I have on many occasions rehearsed the achievements towards not just increased expenditure to the National Health Service throughout the country, but also, in particular, as against closing hospitals, opening new ones.

EEC Expenditure Regulations: Cash Limits
2.46 p.m.
Lord Bruce of Donington: 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 will list the EEC regulations governing expenditure under Titles 1 and 2 of the EEC Commission's Operational Budget (Official Journal L 12 of 16th January 1984) that require amendment to make such expenditure subject to cash limits established by an EEC budget in order to enforce budget discipline; and whether they will confirm their intention to use their veto under the Luxembourg Convention to prevent any price increase in the Annual Price Review which would result in established cash limits being exceeded.
The Chancellor of the Duchy of Lancaster (Lord Cockfield): My Lords, as my noble friend the Prime Minister explained in her Statement in another place on 27th June, which was repeated in your Lordships'

1175
House, the European Council has agreed that net expenditure relating to agricultural markets should increase less than the rate of growth in the own resources base. Finance Ministers are now working on the precise measures to guarantee the effective application of this principle. It is premature to speculate what form these measures might take.
Lord Bruce of Donington: My Lords, I thank the noble Lord for that reply. Is he aware that agreements expressed in such general terms at EEC summits are quite meaningless? Is he also aware that there is established by law a network of regulations which ensures the payment out of money on a demand-led basis, and that the only way to limit that expenditure is simply by fixing cash limits—a fact of which he is well aware in other, more domestic fields? Is the noble Lord additionally aware that any agreement to increase the VAT resources beyond the existing 1 per cent., without firm guarantees of the imposition of cash limits on that demand-led expenditure, will be entirely worthless? Will he please answer the last part of the Question on the Order Paper?
Lord Cockfield: My Lords, so far as the first part of the noble Lord's supplementary question is concerned, the agreement of the heads of government on the need for budget discipline was clearly expressed both at the Brussels meeting in March and at the Fontainebleau summit. It was then remitted to the Finance Ministers to turn those general agreements on points of principle (which is where one has to start) into concrete proposals. The Finance Ministers are meeting this week, on Thursday, 19th July, to discuss those matters. I would have thought the right thing to do was to await the out-turn of that meeting.
So far as the second part of the noble Lord's supplementary question is concerned I do not think that it would be profitable to discuss at this stage what measures should or need be taken in relation to agreements which have not yet been reached.
Lord Bruce of Donington: My Lords, is the noble Lord aware that those answers are quite unsatisfactory? The uncontrolled expenditure of the European Community under Titles 1 and 2 exceeds £9½ thousand million a year—all uncontrolled, all demand-led. Is he aware that the last price review, which remained the one controlling mechanism as long as the provisions of the Luxembourg Convention held, has now apparently gone by the board, without protest even, by the Government? Does the noble Lord intend to insist, in future, that the annual price review is of vital national importance to the United Kingdom within the provisions of the Luxembourg Convention and will he ensure that in future, if necessary, it is enforced?
Lord Cockfield: My Lords, I do not accept, either in principle or in detail, the interpretation which the noble Lord endeavours to place upon events. May I start by reminding him that under the various agreements that this Government have negotiated we have paid £3,000 million less to the European Community than we would have paid under the arrangements bequeathed to us by the Labour
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Government. I am certain that this is the major reason for the noble Lord's indignation about these matters. I entirely agree with him that expenditure on the common agricultural policy needs to be kept within bounds. There was clear agreement between the heads of government on that principle. It now rests with the Finance Ministers to turn that agreement on principle into practical proposals.
May I also say that the agreement to the increase in own resources is entirely dependent on a satisfactory outcome on the other matters, and it will be open to Parliament to vote on this matter when the regulations are drawn up, when agreement is finally reached.
Baroness Llewelyn-Davies of Hastoe: My Lords, may I ask the noble Lord whether the announcements about the own resources and the possible postponement of the increase coming about would affect the 1986 budget, and could he indicate, in that case, what the implications are for the enlargement of the Community by Spain and Portugal?
Lord Cockfield: My Lords, the point made by the noble Baroness is an important one. One of the principal reasons for the proposed increase in own resources is to pay the cost of enlargement. The communique makes it quite clear that the increase in VAT, which is necessarily linked to the other matters—it is not a separate matter; it is linked to budget discipline and the control of agricultural expenditure—should come into force not later than 1st January, 1986.

Local Authority Spending Levels
2.52 p.m.
Lord Dean of Beswick: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government when they will be able to announce the permitted levels of local authority spending for the next financial year.
The Minister of State, Department of the Environment (Lord Bellwin): My Lords, my right honourable friend hopes to make an announcement later this month.
Lord Dean of Beswick: My Lords, in view of the fact that it must have a bearing on next year's financial agreements, could the noble Minister tell us what really happened in the settlement between the Government and the Liverpool City Council? Did the Government suffer a humiliating defeat, as printed in Militant Tendency's newspaper, or was an accommodation reached under agreed criteria? If the settlement was reached on the latter basis, would the same criteria be afforded to the local authorities in Manchester, Leeds and Sheffield in order to avoid any confrontation in the future?
Lord Bellwin: My Lords, I am glad to say that Liverpool was treated no differently from any other authority in England. They received no special concessions. They received nothing on rate support grant, nor on targets, nor penalties, nor disregard, nor

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HIP allocations. They have gained nothing which they could not have gained in the normal course of discussions with my department about their programme. Liverpool have cut their proposed expenditure from £261 million to £223 million. Their claim that there has been a massive concession is frankly a smokescreen to cover their humiliating climbdown and the total failure of their attempts to confront the Government.
Lord Dean of Beswick: My Lords, before the Minister finally sits down, may I press him and ask him whether he is aware that in the press over the weekend there have been two projections? One is that there will be a moratorium on local government spending for the next financial year. Secondly, in the Sunday Times yesterday it was predicted that the rate support grant will be cut to 49 per cent. from, I think, 52 per cent. this year. If this policy is pursued and either of those figures is used as a criterion, is that not a recipe for future confrontation?
Lord Bellwin: My Lords, I can make no observations at all on the likely rate support grant settlement. As to the point about a moratorium, I certainly cannot comment on that, either, but I hope, as does the noble Lord, that that will not come about.
Lord Evans of Claughton: My Lords, will the noble Minister not agree with the comment in The Times today from the former leader of the Liverpool City Council, Trevor Jones, that much of the so-called victory that the Labour-controlled council has had is thanks to the considerable reserves of over £20 million built up by the Liberal administration in the previous year?
Lord Bellvvin: My Lords, had there been a "victory", I would have been interested to know the reason for it. I can certainly say that, far from being a victory, it was indeed exactly what I said; namely, a humiliating climbdown by those concerned.

Business
Lord Denham: My Lords, it may be for the convenience of the House if I announce that the Report stage of the Local Government (Interim Provisions) Bill will be adjourned for dinner at approximately 7 p.m. for approximately one hour, and that during this adjournment the Third Readings of two Scottish consolidation Bills, the Committee stage of the Prescription and Limitation (Scotland) Bill and the Education (Northern Ireland) and University of Ulster (Northern Ireland) Orders will be taken.

Local Government (Interim Provisions) Bill
2.57 p.m.
Report received.
Baroness Birk Baroness Birk moved Amendment No. 1:
Before Clause 1, insert the following new clause:
("Restriction of terms of councillors elected in 1985.
PART A PROVISION FOR ELECTIONS IN 1985 AND SUBSEQUENT LIMITATION OF TERMS OF OFFICE
.—(1) The Secretary of State shall have power after the passing hereafter by Parliament of an enactment which provides for the abolition of the Greater London Council and the metropolitan county councils and the transfer of their functions, to make an order to restrict to a term expiring not before 1st April 1986, the period of office of councillors of the Greater London Council and the metropolitan county councils elected in accordance with the provisions of the principal Act on 2nd May 1985, for the electoral divisions as set out in Schedule (Composition of Greater London Council and Metropolitan County Councils pending a decision by Parliament on their continued existence).").
The noble Baroness said: My Lords, in moving this amendment, which stands in not only my name, but also the names of the noble Lords, Lord Evans and Lord Hayter, and the noble Baroness, Lady Stedman, I feel that we are in a very difficult position in regard to this Bill today. Two thirds of the original Bill have been taken out since Committee stage. It would have been far more proper and far more advantageous to the House in its discussion of the Bill if Parts I and II had been recommitted. This should have been the Committee stage of those parts of the Bill, and not the Report stage which we are on today.
Further, only one day has been allocated for Report. We on these Benches certainly feel—and I think many other noble Lords also feel—that this Bill is not receiving the kind of attention that it should.
This amendment which I am moving is the most important amendment this afternoon. It sustains the clear decision taken by the Committee of this House on 28th June and complements that amendment by ensuring that elections take place in May 1985. It also grants power to the Secretary of State to limit the terms of those elected, once the main abolition Bill has been passed. In that way it is, therefore, linked to Amendments Nos. 19 and 50.
Amendment No. 19: Before Clause 8, insert the following new clause:
(" Review of metropolitan county council electoral divisions.
.The Secretary of State shall, not later than one month after the passing of the Act, direct the Local Government Boundary Commission for England to carry out a review of the boundaries and electoral divisions of any metropolitan county for which such a review has not been completed under the principal Act within the previous twelve months, and to make proposals by 1st March 1985.").
Amendment No. 50: Before Schedule I, insert the following new schedule:
(" SCHEDULE
COMPOSITION OF GREATER LONDON COUNCIL AND METROPOLITAN COUNTY COUNCILS PENDING A DECISION BY PARLIAMENT ON THEIR CONTINUED EXISTENCE
1. Pending a decision by Parliament on their continued existence, the composition of the Greater London Council and the metropolitan county councils shall be one member elected for each of the electoral divisions in accordance with the provisions of the principal Act.
2. In respect of the Greater London Council the electoral divisions shall correspond with the Parliamentary constituencies in Greater London.
3. In respect of a metropolitan county, the electoral divisions shall correspond with proposals made to the Secretary of State by 1st March 1985 following a review by the Local Government Boundary Commission for England pursuant to section (Review of metropolitan county council electoral divisions) above and in relation to any such proposals this paragraph shall have effect in place of paragraph 4(b) of Schedule 9 to the Principal Act.").
The clear decision on 28th June was taken, in the words of my noble and learned friend Lord Elwyn-Jones, who moved the amendment in Committee to,
"prevent the Secretary of State from ordering the cancellations of elections to the Greater London Council and to the six metropolitan county councils".—[Official Report; col. 1035.]
Let us be quite clear that the compromise proposed by the Government to extend the terms of office of sitting councillors to April 1986 is in no way a viable substitution for holding elections in May 1985. The Government amendment not only suspends the elections, but does so before the House of Lords has had an opportunity to make a decision on the abolition Bill, the provisions of which are still unknown not only to this House, but, seemingly, also to everyone else: or, if that is not so, they are a very closely guarded secret. Really, we cannot be expected to buy a legislative pup of this kind. Indeed, the order cancelling the May elections would have to be made by mid-March at the latest, before this House could have even a sniff of Second Reading. Even the amendment that is now part of the Bill, providing that any order should be subject to affirmative resolution of both Houses of Parliament, does not meet the case in this instance. As we discussed in Committee, it is the practice, as we are all aware, of this House not to vote against an order that has been passed by another place. So, although to discuss affirmative orders has some value, it has no real value in this instance.
The Government's extension of terms is to run to April 1986. Yet both past experience and present forecasts indicate that, if it is to be properly done, it will be impossible to complete the abolition handover by April 1986. Indeed, resisting in Committee on 3rd July an amendment which sought to make 1st April 1986 the final deadline for the, now happily deceased, interim councils, the Minister said, at column 180:
"To put a specific deadline in this Bill is not only unnecessary but it prejudges Parliament's timetable for considering the main Bill, and prejudges Parliament's consideration of that Bill since it is that Bill which will specify the abolition dates".
Further, the Leader of the House, when questioned on the use of the reference to "into 1986", when he made a Statement on 5th July, said that it basically meant April.
Let us look at this a little more carefully. The main abolition Bill is highly unlikely to be enacted before July 1985—at the earliest. The joint boards and quangos which will inherit most of the functions of the GLC and the metropolitan county councils cannot be created until then. On the Government's timetable they will have at the most nine months before abolition proper sets in. It takes nine months to produce a baby, but I reckon that it takes much longer to produce a quango. In the metropolitan counties, for example, 18 new joint boards and 36 district councils will have to decide levels of service, appoint staff, reorganise departments, transfer assets (which is a very complicated job), re-allocate debts, reorganise superannuation and insurance and pool information—to mention just a few of the functions with which they will be concerned.
The problems of disbanding the GLC are even greater. Central government will have to decide how to reorganise the rate support grant and the rate
1180
equalisation scheme in London. Government departments will need to reassess the new powers and role. Therefore, the councillors whose terms are extended could be in situ 18 months, or even two years, without being elected, and they would include those who would not want to stand for re-election, anyhow, as many have indicated. Yet a proposal to extend the unelected councils for longer than 12 months would, I am sure, not be acceptable to either your Lordships or to people outside. The Government have quoted that well-known fallback "precedent" in order to justify what they are doing in order to cancel elections. They claim that extension of terms accords with the precedents. But there is no precedent for either cancelling elections or extending terms in advance of the main legislation. In 1963 the tenure of LCC councillors was extended in the London Government Act and elections for the new GLC were held in 1964. In 1972 elections to authorities facing abolition were allowed to proceed although the Local Government Act was not implemented until 1974. Therefore, there are no real precedents for this. Even if there were, they would be bad precedents, which should be strictly ignored.
The Leader of the House will, I am sure, be at his most persuasive when he speaks. He will rightly say that the interim councils have been dropped. I do not think that the Government could have done less than that. But, I beg you, my Lords, beware his golden tongue which will caress Amendment No. 5, which stands the name of the noble Lord, Lord Bellwin, and which is the Government's alternative. However, this will not do. The House of Lords will still be constitutionally by-passed, since the elections will be cancelled before we have seen the abolition Bill. Extending the terms of office in this way without elections is undemocratic, dangerous and unprecedented.
We demonstrated, on 28th June, by a very large majority, our opposition to abolishing elections before the main Bill has passed all its stages in both Houses. Many noble Lords—the majority, of course—from all sides of the Chamber spoke against the Government Bill and in every case mentioned the problem of elections and the by-passing of the House of Lords, both of which are important points. Nothing that the Government are offering has altered that one iota. Today, our essential task is to safeguard the constitution and our parliamentary democracy. We can do that, and decently maintain our consistency, only by voting for this amendment. I beg to move.
The Lord President of the Council (Viscount Whitelaw): My Lords, the amendment which has just been moved by the noble Baroness deals with elections to be held to the GLC and the metropolitan county councils in May 1985. On 5th July, I told the House that the Government proposed to introduce amendments providing for the existing members of the Greater London Council and metropolitan county councils to continue in office, but without elections next year.
The noble Baroness's amendment—from what she says, she clearly agrees with its terms—must therefore be regarded as an alternative to the Government's proposals. Thus it might be helpful to your Lordships

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if I was to speak to the Government's amendments at this point. The amendments which enable the present members of the GLC and metropolitan county councils to continue in office are Nos. 2, 4, 5, 7 to 11, 48, 49, and 51 to 53. Amendments Nos. 37 to 39, and 54, to which my noble friend Lord Bellwin will be speaking in greater detail later on, are to prevent unreasonable actions by the outgoing authorities.
Amendment No. 2: Clause 1, leave out Clause 1.
Amendment No. 4: Clause 2, page 2, line 18, leave out ("order shall be made under subsection (2) above") and insert ("such order shall be made").
Amendment No. 5: Clause 3, leave out Clause 3 and insert the following new clause:
("Suspension of elections and extension of terms of office
3.—(1) No ordinary elections of councillors of the Greater London Council or for a metropolitan county shall be held after the coming into force of this Part of this Act; and any such councilor—

(a) whose term of office would, apart from this section, expire on 7th May 1985; or

(b) who is elected to fill a vacancy occurring after that date, shall, unless he resigns his office or it otherwise becomes vacant, continue to hold office until 1st April 1986.

(2) In section 7(2) of the principal Act (elections of metropolitan district councillors) the reference to a year of election of county councillors shall be construed as a reference to a year of election of councillors for a non-metropolitan county.
(3) In sections 89(3) and 90 of the principal Act (filling of casual vacancies) as they apply to the Greater London Council and a metropolitan county council references to the date on which a councillor or person would regularly have retired shall be construed in accordance with subsection (1) above; and in the said section 89(3) the words after the semi-colon shall not apply in relation to those councils.
(4) Section 8(2)(a) of the principal Act and paragraph 6(2) of Schedule 2 to that Act are hereby repealed.").
Amendment No. 7: Clause 4, leave out Clause 4.
Amendment No. 8: Clause 5, leave out Clause 5.
Amendment No. 9: Clause 6, page 5, line 4, leave out subsections (1) and (2).
Amendment No. 10: Page 5, line 17, leave out ("a council whose members are appointed under this Part of this Act") and insert ("the Greater London Council or a metropolitan county council").
Amendment No. 11: Page 5, line 25, leave out subsections (5) and (6).
Amendment No. 48: Clause 11, page 9, line 12, leave out subsection (5).
Amendment No. 49: Clause 13, page 9, line 17, at end insert—
("() For the purposes of this Act the constituent councils are—

(a) in relation to the Greater London Council, the London borough councils and the Common Council; and

(b) in relation to a metropolitan county, the councils of the metropolitan districts comprised in the county.").

Amendment No. 51: Schedule 1, leave out Schedule 1.
Amendment No. 52: Schedule 2, leave out Schedule 2.
Amendment No. 53: Schedule 3, leave out Schedule 3.
Amendment No. 37: After Clause 10, insert the following new clause:
("Control of disposals of land.
.—(1) Neither the Greater London Council nor a metropolitan county council shall after the passing of this Act dispose of any land except with the consent of the Secretary of State.
(2) Any consent under this section may be given either in respect of a particular disposal or in respect of disposals of any class or description and either unconditionally or subject to conditions.
(3) This section has effect notwithstanding anything in section 123 of the principal Act (general power to dispose of land) or in any other enactment; and the consent required by this section shall be in addition to any consent required by subsection (2) of that section or by any other enactment.
(4) It is hereby declared that section 128(2) of the principal Act (protection of purchases etc.) applies to any disposal of land to which this section applies.
(5) In this section references to disposing of land include references to—

(a) granting or disposing of any interest in land;

(b) entering into a contract to dispose of land or to grant or dispose of any such interest; and

(c) granting an option to acquire any land or any such interest; and references in this subsection to an interest in land include references to any easement, right or charge in, to or over land and to a licence to occupy land.").

Amendment No. 38: After Clause 10, insert the following new clause:
("Control of Contracts.
.—(1) Except with the consent of the Secretary of State neither the Greater London Council nor a metropolitan county council shall after the passing of this Act enter into a contract which (with or without other matters) provides for—

(a) the carrying out by or for the council of building or engineering works in respect of which the consideration exceeds £250,000;

(b) The carrying out by or for the council of maintenance works in respect of which the consideration exceeds £100,000;

(c) the supply by or to the council of goods in respect of which the consideration exceeds £100,000;

(d) the provision by or to the council of administrative, professional or technical services in respect of which the consideration exceeds £100,000; or

(e) the use by another person of any vehicle, plant or apparatus of the council, or the use by the council of any vehicle, plant or apparatus of another person, in respect of which the consideration exceeds £100,000.

(2) Where the consideration or any of the consideration under a contract is not in money, the limits specified in subsection (1) above shall apply to the value of the consideration; and any necessary apportionment shall be made of consideration which is referable to two or more of the matters mentioned in that subsection or to any of them and other matters.
(3) For the purpose of determining whether a limit specified in subsection (1) above is exceeded in the case of any contract, there shall be taken into account the consideration under any other contract or contracts entered into by the council in the previous twelve months (but not earlier than the passing of this Act) so far as relating, in a case within paragraph (a) or (b) of that subsection, to works of the same or a similar description to be carried out on the same or adjacent land or, in a case within paragraph (c), (d) or (e) of that subsection, to goods, services, vehicles, plant or apparatus of the same or a similar description.
(4) Any consent under this section may be given either in respect of a particular contract or in respect of contracts of any class or description and either unconditionally or subject to conditions.
(5) A contract shall not be void by reason only that it has been entered into in contravention of this section and a person entering into a contract with a council to which this section applies shall not be concerned to enquire whether any consent required by this section has been given or complied with.
(6) In this section—
"building or engineering works" includes any work involved in the laying out of land, the improvement of land or buildings, the construction or improvement of a highway and any work of demolition;
"maintenance works" includes work for the maintenance or repair of land, buildings or highways, the gritting of a highway and the clearing of snow from a highway.").
Amendment No. 39: After Clause 10, insert the following new clause: ("Disqualification for contravention of sections (Control of disposals of land) and (Control of contracts).
.—(1) If, on the application of a constituent council or a local government elector for the area of a constituent council, it appears to the High Court that the Greater London Council or a metropolitan county council has made a disposal in contravention of section (Control of disposals of land) above or entered into a contract in contravention of section (Control of contracts) above, the court may order any person responsible for authorising the disposal or contract who is, or was at the time of the conduct in question, a member of the council to be disqualified for a specified period for being a member of any other local authority.
(2) In sections 80(1)(e), 86(b) and 87 (1)(d) of the principal Act references to Part III of the Local Government Finance Act 1982 shall include references to this section.").
Amendment No. 54: In the title, line 12, after ("of') insert (", and disposals of land and contracts made by,").
These amendments have been introduced in response to the decision of your Lordships on 28th June, when what is now Clause 1 was inserted into the Bill.
Baroness Birk: My Lords, I wonder whether the noble Viscount will give way for one moment. I understood that there had been a certain amount of discussion about grouping. The later amendments which the noble Viscount mentioned are not in the original groupings. The original groupings cover Amendments Nos. 1, 19 and 50 and Nos. 2, 4, 5, 7, 8, 9 and 11. I really must protest. I carefully did not refer to the later amendments, but the Leader of the House did.
Viscount Whitelaw: My Lords, I am grateful to the noble Baroness. I hope that she will excuse me. I made it very clear that I understood that these amendments would be discussed separately later, and that my noble friend Lord Bellwin would reply to them in detail. I hope the noble Baroness would feel that it was reasonable for me, as it was part of the statement which I made on 28th June, to refer in general terms to these amendments, but in no way prejudicing the discussion which will follow. I hope that that would be felt reasonable by the noble Baroness, because, on the whole, I feel that it is my duty to explain what I did say as part of the package in my statement on 5th July.
I have decided to set out the Government's proposed new package myself because I feel that the Government's reaction to your Lordships' vote raises issues concerning this House and its relations with another place, wider than this Bill. Such issues, in my judgment, should properly be dealt with by the Leader of the House.
The Government believe that your Lordships' decision was based principally on two objections to the Bill as introduced. The first objection—and by far the most widely and strongly held—was to the proposal for nominated transitional authorities. In particular, objection was taken to the fact that political control of one of the authorities would have changed when the nominated authority took over. Noble Lords in all parts of the House felt that this was undemocratic and would be a bad example to set for the future.
The second objection which was raised—this was referred to by the noble Baroness—was to the cancellation of the elections to the Greater London Council and the metropolitan county councils due to be held in May 1985. It was clearly right for the Government to give careful attention to the decision taken by this House in a matter which raised what were, in many people's minds, constitutional issues.
As I indicated to the House on 5th July, and as will be apparent from the amendments which have been tabled, the Government have accepted the view expressed by your Lordships so far as the transitional authorities are concerned. They have therefore decided that the present membership of the Greater London Council and the metropolitan county councils should be extended until those authorities cease to exist as a result of the main abolition Bill, if that Bill is approved by Parliament.
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The noble and learned Lord, Lord Elwyn-Jones, criticised the provisions of the Bill as giving the Government,
"the power to impose upon local governments and their electorates nominees of different councils, differing in functions and duties from the county councils, elected for a different purpose, and, significantly, of a different political persuasion".—[Official Report, 26/6/84; col. 1037.]
The course which the Government are now proposing meets this objection completely.
As I also indicated on 5th July, it would clearly be unreasonable and wrong for actions to be taken by the outgoing authorities between now and the date of abolition which might prejudice the position of the successor authorities. I would very much hope that such actions would not take place. If they were to take place, it would certainly not be in the interests of the people that these authorities have been elected to serve. But the Government must, in order to safeguard the position of the successor authorities, take account of the suggestions that prejudicial actions may take place. We have therefore decided to introduce the three new clauses contained in Amendments Nos. 37, 38 and 39. These provisions are entirely aimed against irresponsible action. Amendment No. 37 requires the consent of the Secretary of State to be given to all disposals of land by the outgoing authorities. Amendment No. 38 requires such consent to be given before certain contracts above prescribed values are entered into.
Both amendments empower the Secretary of State to give general consents to particular classes or descriptions of disposal or contract, and it is my right honourable friend's intention to make full use of this power so that the proper conduct of the authorities' affairs is not impeded.
The third new clause, Amendment No. 39, buttresses the first two new clauses by providing for the disqualification of council members who are responsible for authorising illegal disposals or contracts. Such disqualification can be ordered only by the High Court. It is not proposed to invalidate transactions undertaken in contravention of the new provisions, and thus there is no question of the rights of third parties being prejudiced.
The Government have not accepted the argument advanced by some of your Lordships—and in particular in the amendment which has just been moved by the noble Baroness—that there should be elections to the Greater London Council and the metropolitan county councils during the passage of the abolition Bill through Parliament.
There has been a danger throughout the discussion on this Bill to regard the issue as simply one of the Greater London Council. Whatever may be the disagreement with me otherwise, many noble Lords will agree that much of the argument has centred on that particular point. But all the metropolitan county councils are involved. I understand that elections, if held, would involve some 14 million voters. And what would be the outcome of all the work and all the activity involved in that? It would be the election of councillors, if the abolition Bill passed through Parliament, for less than a year. How could this be justified?

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Furthermore, the elections would be held when the main abolition Bill was before Parliament and might well have passed through another place and had its Second Reading in this House. Surely none of us in Parliament can neglect the dangers inherent in a sort of referendum taking place on an issue which is the subject of parliamentary proceedings. I can think only too clearly of the sort of undesirable precedent that would create on other occasions; and so, I believe, would many of those noble Lords who are advocating an election today.
Nor of course do I lack powerful allies in expressing doubts about the wisdom of elections. The Opposition's own spokesman in another place, the honourable Member for South Shields (Dr. David Clark), said on the Second Reading of this Bill that he sympathised with the Government's wish not to hold elections. He went on to suggest that the natural thing to do in those circumstances was to let the existing local authorities continue—which is exactly what we are now proposing. I must emphasise to noble Lords that he is, after all, the spokesman of the Opposition in another place, and that is what he said.
During the Second Reading debate in this House many noble Lords, in making the case against the Government, made reference to speeches made by my right honourable friend the former Prime Minister, the Member for Old Bexley and Sidcup, and other ex-Cabinet colleagues of mine over the years. I can now pray them in my support. Mr. Heath originally in April, on Second Reading of this Bill in another place, argued that the right way to deal with the problem of the elections was for the existing councillors to continue until the changeover. My other colleagues have also indicated their support for this course.
My conviction that the cancellation of elections to the outgoing authorities is the right approach is strengthened by the fact that it has been done in the past. Both in 1963, at the time of the setting up of the GLC, and in 1972, at the time of local government reorganisation in England and Wales, provision was made for the cancellation of elections. In both cases the terms of office of existing councillors were extended—as is now proposed in the Government's amendments before your Lordships. Certainly—and I say this at once, to concede the point made by the noble Baroness—on those occasions the cancellation was done in the main Bill abolishing the authorities. But in this case, in view of the timing of the elections, there is no alternative but to introduce the necessary provisions in this Bill.
One ground of objection raised by some of your Lordships to the cancellation of elections was that the cancellation was to be effected by an order made without reference to this House, while the main abolition Bill was still in another place. My noble friend Lord Bellwin indicated at Committee stage that the Government were willing to accept an amendment—tabled by the noble Lord, Lord Spens, the noble Earl, Lord Halsbury, and the noble Lord, Lord Shaughnessy—providing that the order cancelling the elections should be subject to approval by both Houses of Parliament. In the event that amendment was withdrawn, but Amendment No. 4 before your Lordships today has the same effect. It will provide a further opportunity for your Lordships to
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consider this matter, and will I hope set at rest any fears that proper regard is not being paid to the views of this House.
Lord Ennals: Not at all.
Viscount Whitelaw: My Lords, "Not at all" may be the view of the person who said that, but it does not happen to be my view.
I believe that on behalf of the Government I have made a quick and positive response to your Lordships' vote on the 28th June. I am entitled to point out that the Government have made a substantial concession to the views of this House, particularly when one remembers that the Bill had a majority of 128 on Third Reading in another place. As a Government, we have paid, as I see it, proper respect to this House as a revising Chamber. I do not believe that any Government could be expected to go further, and few would have gone as far.
I hope that the noble Baroness will not press her amendment because, for all the reasons I have given, I believe that the Government's package is one which should command the support of the whole House.
3.22 p.m.
Lord Evans of Claughton: My Lords, I am presented with a difficult problem in following the noble Viscount, who has spoken with great persuasive powers as he always does. Before I refer to the matters about which he has spoken at some length, I wish to refer briefly to the point made by the noble Baroness, Lady Birk, which is of very great importance to your Lordships' House. The noble Baroness made the point that what the Government are doing at Report stage is virtually introducing a new Bill. They are putting forward some very far-reaching amendments indeed which those of us on the Opposition Benches have had comparatively little time to consider. I should have thought that it was a great pity in the conciliatory atmosphere that the noble Viscount has been propounding, that we have not been conciliated so that we could have had the Bill recommitted and then considered these entirely new points, certainly about financial controls, in the atmosphere of a Committee stage rather than at the Report stage.
Having said that, I expect that some of your Lordships will think that the concessions that the Government have made are sufficient. Indeed, to be quite frank, I and my noble friends thought a very great deal about the proposal that was being put forward for allowing the existing councils to run a further year. But I must say that, after mature reflection, we came to the conclusion that, in view of the thrust of your Lordships' arguments on 28th June, the proposal would not be sufficient to satisfy the views expressed then about the Government's proposed legislation. Admittedly, the amendment that was carried in your Lordships' House has been observed to the extent that it cures the "nominated councils" concept which was totally repugnant to a very large majority of your Lordships. But it does not do anything else. It cures only the change in political control that might result from a nominated council.

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However, the other objections that were made during the debates at Committee stage, and I think on Second Reading, are still valid. The proposal that the noble Viscount has put forward does change the electoral arrangements before the main legislation will have passed through both Houses of Parliament, and maybe before the main legislation has reached your Lordships' House. Therefore, I feel that the very clear opinion of your Lordships passed in the amendment on 28th June has not been observed in the amendments that have now been put forward.
I must go on briefly to say that I think the Government are being extremely sanguine in believing that they will be able to predict the timescale to April 1986. It is my belief—and I have some support from the right honourable gentleman the Secretary of State—that April 1986 certainly might not see the end of the problems about the changeover that will take place. He admits I think that the staffing problems will certainly not be resolved by that time. However, as regards the Government's legislation to abolish the metropolitan counties and the Greater London Council, I certainly agree very warmly with the noble Viscount that we have had far too much time and energy concentrated on the Greater London Council and apparently the mutual hate campaign between the Government and Mr. Livingstone, and far too little time spent on the very considerable work, activities and benefits that the metropolitan councils have given to the areas under their control.
The main Bill will involve the setting up of at least 18 joint boards, and it will involve at least 36 district councils in taking over the existing powers of the counties and the Greater London Council. As someone who has spent a large part of his life in local government, I cannot see how, for example, the harmonisation of standing orders, how the financial regulations and the working practices—all entirely different from council to council—can be sufficiently co-ordinated in the timescale that the amendment envisages.
Therefore, I must say that while one concedes that there has been a concession made by the Government in extending the life of existing councils, it seems to me that if the timescale that I predict is the one that results, and the life of these councils has to be extended beyond April 1986, then the old councils—the Greater London Council and metropolitan councils—will have served a very long additional term. They will be serving six or seven years when they were only elected for four years, which might well not be the wishes of the electorate at all by that time. They will be very stale councils.
Therefore, although strong arguments have been presented for the course suggested by the Leader of this House, I feel that we should stick to what I believe was the principle enunciated in the amendment that was carried, and that we should persist in that view. As one who served on a district council and a metropolitan county council, I can hardly bear to think how difficult it will be when reorganisation goes through to get, for example, the 10 district councillors of Greater Manchester to agree among themselves as to who will do what and how they will do it. How will these councillors with multifariously different attitudes and
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internal jealousies be persuaded to work together? I know that they will have to work together eventually—it will be forced on them. But I do not believe that the proposals meet the wishes of this House in terms of elections, and I do not think that the timescale described by the Government is realistic or can be carried through. Therefore, I hope that your Lordships will support the amendment which has been moved by the noble Baroness.
Lord Molson: My Lords, it is in the honourable tradition of this House to deal with broad matters of principle and not to allow itself to be unduly restricted by matters of minor amendment. On no occasion could this be more applicable than when the large issue of contstitutional principle has been raised. The Opposition—both Oppositions—have done their best to raise this matter—I think quite rightly—to a matter of the gravest constitutional importance. Therefore, I think that my noble friend the Leader of the House was entirely right to deal with its matter on the broadest lines. It would have been impossible to raise the great issues which have been discussed not only in this House but in the press and throughout the country if he had not presented the general picture of all the amendments which the Goverment propose to move as a single comprehensive whole. It represents an acceptance by Her Majesty's Government of the considered opinion of your Lordships' House. Thanks very largely to the tact and persistence of my noble friend the Leader, this Government, possessing as they do a great majority in another place, have bowed to what I am sure is the right constitutional doctrine: that your Lordships are right in making amendments to Bills which come from another place.
This matter could not have been dealt with by a number of small amendments. I hope that your Lordships will bear with me if I pursue the argument that, so far from abandoning any of the principles for which your Lordships have voted, in point of fact the series of amendments (not a single one, but all of them taken as a whole) represents the establishment of an important constitutional principle in which the Government have accepted the considered opinion of your Lordships.
Personally, I feel obliged to deal with this matter in a little detail, but it is entirely in line with the general matter because, unwittingly, I have been involved on the air in defending the views that I put forward and, unexpectedly, Mr. Kenneth Livingstone appeared on the air on the same occasions. I hope that I convinced the large audience which I was addressing of the correctness of my views, but apparently I failed to convince Mr. Livingstone! Even in these solemn matters humorous incidents occur.
On one of these occasions when I had spoken over the air, I came to the House and found a message waiting for me from my noble friend the Leader of the House asking me to come to him in his room at 6 o'clock. It was slightly reminiscent of an invitation to my housemaster's room! I arrived there, not punctually, but five minutes early and I told my noble friend that on ITV at 6 o'clock what I had said was likely to appear on the screen, and I understood that perhaps Mr. Livingstone would appear at the same time. My noble friend said that he would be very

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interested to hear what I had had to say. I replied that I, too, should be very interested to hear what I had said, and I added that I was also rather nervous.
However, when the television set was turned on at 6 o'clock it turned out to be on the wrong channel and on the screen appeared Wimbledon. Although Wimbledon was more beautiful and more interesting than Livingstone and Molson would have been, we did not feel that it was relevant to the matters under discussion, so my noble friend turned off the set and we returned from Wimbledon to Westminster.
I am sorry to see that today the six county borough councils have been spending their ratepayers' money on whole-page advertisements putting forward their political views. I regard that as an abuse of the ratepayers' money. Because, for example, those ratepayers say that the Government are treating your Lordships' House as a rubber stamp—and the Marshalled List proves exactly the opposite—and because we who had to vote against the Government on two occasions had to support the amendments that were available, it has been argued that we were in favour of preserving the Greater London Council and the other councils, and, as the noble Baroness has suggested today, of elections in May 1985. When I put my name to the amendment that was carried, I made it plain to my co-signatories that I was supporting the main issue and not in the least supporting anything that might follow from that, however logically it might follow according to the line of reasoning of the noble and learned Lord, Lord Elwyn-Jones.
I have consistently made it plain that, in supporting amendments to this Bill, I am not supporting either the proposal to preserve those councils or the elections of May 1985. I hope that when I try to establish that your Lordships will acquit me of any egotistical desire to repeat my own previous speeches. But I have to do so in order to justify the line which I have taken and, which indeed your Lordships have also taken.
On the first occasion, on the Second Reading debate on 11th June I said at column 920 of Hansard:
"I am not voting against the Second Reading of this Bill. I am not voting against the abolition of the … metropolitan county councils. How could one do so at the present time when the Bill has not even been published? I am voting in favour of drastic amendment of this Bill during its Committee stage here".
I then went on to criticise what was proposed for the interim and I said that the proposal was:
"in my opinion so irrational and so undemocratic that I doubt whether it will survive critical scrutiny in your Lordships' House".
Well, it has not. Later, I said:
"Without making any commitment, I have every intention of supporting my noble friends on the Government Front Bench in the abolition of these authorities." [Col. 921.]
I then continued:
"your Lordships may think it suitable to carry amendments against the Govenment". [Col. 921.]
And your Lordships did so.
On 28th June (at col. 1038 of Hansard). I said:
"When we come to the main Bill to abolish the Greater London Council and the metropolitan county councils I shall vote for the Second Reading."
After criticising the Greater London Council for abusing its power and spending the ratepayers' money irresponsibly, I continued:
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"In relation to abuse of its power in general, Parliament can at any time impose restraints by rapid legislation and possibly by this Bill if suitable amendments were made."
That is exactly what is being proposed at the present time. I said:
"Can we not have an arrangement which would be acceptable at any rate to Tory Peers who cannot go along with the Government as this Bill is at present drafted but who support the main objective, as I do? But I repeat that the end does not justify the means." [Col. 1040.]
This series of amendments do exactly that.
I hope that I have not wearied your Lordships with this ratiocination supported by relevant quotations from my previous speeches, and I have shown that the Government have met, by these amendments, all the arguments of constitutional principle raised in earlier debates on which some of your Lordships voted against the Government and I think a number of my noble friends abstained from voting. We can, without any inconsistency or abandonment of any principle, vote for this amendment. I hope and believe that by a large majority we shall do so.
Lord Boyd-Carpenter: My Lords, which amendment?
Lord Molson: My Lords, I am obliged to my noble friend; but I have said that we are discussing the general issue on this matter as was indicated by the Leader of the House.
If I may end on a facetious, even perhaps a frivolous, note I would say again what I said on 5th July. A medieval judge, in a well-known dictum, said:
"The Devil himself knoweth not what is in the minds of men".
Mr. Livingstone was recorded as saying that a settlement on these lines was not in the minds of your Lordships. I have shown that a settlement of this kind was in the minds of some of your Lordships. So Mr. Livingstone—who in the opinion of many of us was uniquely qualified to know the extent of the Devil's knowledge—flatly contradicted the judge when he claimed to know what was in your Lordships' minds. But the judge was right, and Mr. Livingstone was wrong.
3.44 p.m.
Lord Diamond: My Lords, I am getting up at this point because I thought that nobody else was rising in order to expand on what my noble ally has said with regard to this series of amendments. I thought it was appropriate that the Alliance point of view with regard to the future of all these councils should be made clear, and why. First, I must start by acknowledging my agreement with what the Leader of the House said at the start of his speech, and my appreciation for what he has done.
All of us are deeply indebted to him not only for listening to the debate and the result of that debate on an earlier occasion, but in succeeding, in spite of the very large majority in another place, in spite of—I hope I am not being too frank—the attitude normally displayed by cabinets with regard to the importance of events in your Lordships' House, and in spite of the attitude of this particular Cabinet, in being able to persuade his colleagues to accept a major departure from original policy.

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Some of your Lordships may feel—I think most of you would feel, and I certainly would feel—that honour is therefore satisfied. Indeed, that is so. But that is very different from saying that your Lordships' duty, on appropriate occasions, to make the other place think again is equally fully satisfied. I do not think it is, and I shall explain why as shortly as I can.
The Alliance has gone to considerable trouble to consider these matters in great depth. We had a very high powered commission considering these matters for some two to three years, the results of which were incorporated in the Alliance manifesto. That manifesto made it absolutely clear that it was our desire to bring the people much closer to their representatives in local elections, and that the way of achieving that would be to remove one tier of government; to set up regional authorities; to devolve upon those regional authorities all those responsibilities which need not be carried out in Whitehall; and finally would be to see that the regional authorities were appropriately represented in your Lordships' House. The suggestion was that some substantial number, possibly 50 per cent., of a revised second Chamber should consist of regionally-elected representatives in your Lordships' House to go along with another 50 per cent. of appointed persons as Lords in Parliament.
That is a totality of ideas which together make a great development in local government coupled with a desirable reform in your Lordships' House. It is therefore not easy to relate those principles to the particular issue which is before us now. We are in the usual position of wishing that we were not in Ballybunion—however attractive a place that is, especially if you are a golfer—and wishing that we were not starting from there on our journey. But we are. We have to turn our minds to what we now should do in relation to the general issue before us at this present time.
We said we would give it very careful consideration when our Leader made his important statement. We did not respond in any other way. We said that we would give it very careful consideration. We have done so; and we have reached the conclusion that the weightiest argument of all is the right of individuals to elect their representatives in self-government. I can think of no more weighty argument than that. That it is put to us in contradiction that it will cost a fair sum of money is not a weighty argument against it.
Nobody is more keen on saving money than I am. It is in my blood and I have had a great deal to do with it. Nobody can say "No" to ideas of expenditure in more than 52 varieties better than myself. Nevertheless, it is not right that a sum of money should be set as an argument against the principle of the right of electors to decide in these important bodies how their affairs should be run, how they should be governed for at least 12 months and possibly for 24 months. That is the substantial argument which outweighs every other. We do not count arguments in this House; we weigh them and that is the weighty one.
There is no basis whatever for suggesting that there is a solid precedent for doing what we are doing. The only precedent is in an enabling Bill, in the main Bill itself. If the Government had not made such a cock-up
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of all these arrrangements and if, instead of trying to introduce a paving Bill which now looks ridiculous (assuming that the Government's amendments will be accepted), they had introduced one Bill and were proposing in that one Bill to make these arrangements, then they would not have been anticipating the will of Parliament. It would have been totally different and that probably would have been acceptable to a great number of your Lordships. But they have not done that.
Therefore I repeat that there is no substantial precedent for what is now proposed. It would be more than dangerous, it would be wrong to deny in these circumstances the people of these vast areas the right to determine their own self-government. Therefore we shall vote in that sense.
Lord Harmar-Nicholls: My Lords, I think that we ought to be concentrating upon the first amendment moved by the noble Baroness, because that is what is likely to be put to the test first. I could not help feeling what a consummate actress the noble Baroness was when she was moving that amendment. She was quite superb in the way she presented a case which has no substance in it as though it was serious. A lot of it was humorous in a way—
Lord Elwyn-Jones: My Lords, no.
Lord Harmar-Nicholls: My Lords, in a minute I will show the noble and learned Lord what I mean, by quoting. The noble Baroness spent a lot of her time saying that the timetable for getting alternatives could not be done in months. She even went on to suggest that it would take years. Those of us who have been in Parliament for any length of time know perfectly well that the timetable is what Parliament makes it. She talks about two years to do these things. We know perfectly well that if the will is there and if the general desire to move forward is there on all sides it can be done in any period one likes to lay down.
On issues much more important than this we have seen things go through all their stages and organisations set up in weeks. So the very idea of suggesting that one of the problems in accepting the alternatives my noble friend has put forward is that the timetable would not allow it is a nonsense and I think she knew it would be a nonsense—
Lord McIntosh of Haringey: May I, my Lords?
Lord Harmar-Nicholls: No, my Lords. I have just got on my feet. Next the noble Baroness said that there were no precedents for this. Then she half gave way on that and said there were precedents for extending the life, but there was no precedent for its happening before the main Bill and what it stood for had been gone through. But, if we had to be tied so deeply into that as a precedent, there never would have been a precedent in the first place. In order for there to be a series of precedents to rely on in the future someone has to set a precedent at some time.
I am arguing that on this issue at this time if one takes all the circumstances into account—first the need for the legislation, then the personalities involved who are trying to frustrate the legislation—if ever there

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was an occasion to set a precedent (and Heaven knows it is a small one) this is the time to do it. I say that with full confidence because it was clear to me when our manifesto said that we would abolish the Greater London and the metropolitan councils, that what is being suggested now by my noble friend—or something like it—would have to precede the eventual main legislation.
When on Second Reading we agreed, with a big majority almost equal to that on the first amendment in the Committee stage, it must have been obvious to anybody who had any understanding of parliamentary procedures that this sort of thing was inevitable to get the main legislation, backed up by a manifesto, backed up by a big Parliamentary majority which shows that the country wanted it—
Lord McIntosh of Haringey: My Lords, will the noble Lord give way?
Lord Harmar-Nicholls: No, my Lords. Then what did the noble Baroness say?
Noble Lords: Sit down! Give way!
Lord Harmar-Nicholls: My Lords, what did the noble Baroness say? She said that even if there were precedents we ought to ignore them. I took down her words. She said that even if there were precedents they ought not to be followed, so where is the sanctity of precedent in this argument, having said that?
It reminds me of the story of the husband who had a wife who was sometimes unreasonable. She gave him two ties for his birthday. He thought, "I'd better wear one", and when he came down she looked at him and said, "So you didn't like the other one then?". The argument of the noble Baroness reminds me of that.
It was clear to me when we dealt with this at the Committee stage that there was nothing that my noble friend and his colleagues in the Government could do which would satisfy the Opposition on this. They did not intend to be satisfied on it. It was perfectly clear that that would be their attitude and it is clear with the amendment that they have now moved, which would mean a new Bill altogether.
That word "constitutional" is always being thrown out with great emphasis in your Lordships' House. Nothing unconstitutional, nothing even verging upon being unconstitutional, will happen if we follow the advice of my noble friend. We do not have a written constitution which is being breached. It cannot be unconstitutional if the Government continue to do what they have done up to now. They have not moved an inch, or tried to move an inch, without first getting the approval of both Houses of Parliament. If that does not make it constitutional, I do not know what will. All this talk about being unconstitutional makes a nonsense of our being able to recognise changing circumstances and the changing world which we see coming upon us all every day. If we allow this argument of being unconstitutional when Parliament is being made the body that is to decide what will happen, then we are moving along a road upon which I think it will be almost impossible to continue with what we call a parliamentary government.
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The noble Lord from the Liberal Benches spoke about its not being democratic. He made a great point that people must be elected to make these decisions and that there is something undemocratic if we do not do that. On that I agree with him. Ultimately it is the voters who ought to have the power to decide and have to suffer the consequences if their decision is right or wrong. But in this instance the only suggestion that I have heard is that people elected to other councils should be called upon to implement what it will eventually be their responsibility to implement later on. I have heard no suggestion that anybody other than elected councillors would do this—I give way because I have quoted the noble Lord.
Lord Diamond: My Lords, the noble Lord clearly was not listening to what he himself said on an earlier occasion when he supported the Government.
Lord Harmar-Nicholls: My Lords, I am making perfectly clear what I have always felt and I have said it on all occasions, because, as I said in my last speech on the Committee stage, I have actually operated what is suggested and has been suggested by the Government up to now. There is no question of stepping into the dark and not knowing what will happen. What we have suggested in the terms as I have understood them is that we shall go back and will operate more or less the system that existed before the local government Act which brought the metropolitan boroughs and the Greater London Council into being. I have reminded your Lordships that 10 or 12 smaller authorities, all of whose members were elected, got together and had to organise the regional health service and that sort of thing. All that has been suggested here is that we should revert to something that has worked. It is not only words, but something which has actually been in operation and worked successfully.
I believe that if your Lordships' House were on this occasion to follow the advice of the noble Baroness and were to support this wrecking amendment, that would be unconstitutional in its long-term effects and, I believe, undemocratic in its long-term effects—and for this reason. Every Government, if they are to face up to their responsibilities, have to be aware of the precedents, yes. They have to be aware of the rules of law, yes. But they have also to take into account the atmosphere which they experience every day, and everybody on all sides of this House knows that if you extend the life of the people who are at present in charge of the Greater London Council you are extending the life of people who want to put a dagger in what you think is important legislation; and they would do that.
I want to warn my noble friend that, although he has suggested Amendments Nos. 37, 38 and 39, the very fact that he felt he had to put down those amendments shows that he has doubts whether the people there will work as they ought to work. The fact that he has to incorporate those amendments in order to try to give himself statutory power to enforce his views is confirmation that he thinks (as I do) that Mr. Livingstone and his friends will pay no attention to whatever is passed. They will use every minute and every bit of power they have, right to the end, to frustrate this legislation, which has the authority of the

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manifesto and the people of the country behind it. I hope that my noble friends and those who are not committed on understandable loyalty-to-party grounds will recognise this for what it is, and will not allow the amendment of the noble Baroness to have the approval of this House.
The Lord Bishop of Liverpool: My Lords, I acknowledge the concession that the Government have made and the irenic way in which the noble Viscount the Leader of the House put forward the case, but I believe the question still remains, as I felt the noble Lord, Lord Diamond, put it quite plainly, whether the package which the Leader of the House has commended to us has restored a proper democratic accountability. I want to make just one or two very brief points.
The noble Viscount the Leader of the House spoke of a whole package, not simply this one amendment, which included the amendments just referred to, Amendments Nos. 37, 38 and 39, which limit expenditure to £100,000 and £250,000. I have been meeting this morning with the Bishops of the London diocese, and they have been speaking to me. Those of us who have care of great buildings, for example, know that £250,000 sounds a great figure but can scarcely do more than offer some repair to an ancient church. We are talking about perhaps two years of budget restrictions which are far more than preventing unreasonable spending, It would be taking away any serious capacity to act during that period of time. I believe that such capping proposals should be introduced, if they are to be introduced, as part of the substantive Bill.
The metropolitan county councils, such as Merseyside, for example, which are responsible for the overview of wide and important matters which continue during a period of two years, are making positive intervention where the needs are greatest. I do not believe that in this way, before the substantive Bill is brought forward, that capacity to act should be taken away. At the root of the anxiety in your Lordships' House behind the amendment that was carried recently was a firm opposition to implementing intentions until the main decision has been properly taken by Parliament.
Lord Kaldor: My Lords, may I say something in the unusual role of a constitutional lawyer? I fear that in this debate the main issue between the two sides—one wanting elections and the other passionately wishing to avoid elections—does not come to the surface. But supposing that in those elections the large majority of people elected were those who approve the changes proposed in the coming Bill abolishing the metropolitan county councils and the Greater London Council, I suggest that noble Lords opposite would have no objection. Similarly, I do not think that noble Lords on this side would be so keen on pressing for elections if they thought that those elections would provide a mandate for the Government to proceed with these reforms.
The Government say that they do not need this mandate; that the proposals were in the manifesto, and that constitutes a mandate. I think that this is a serious
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20th century corruption of the doctrine of the manifesto. The fact that some proposal or other appears in an election manifesto which contains perhaps 50 other proposals does not mean that all the people who vote for that party approve of every one of those things which are in the manifesto. All that it means is that they want to vote for that party and that they approve of their ideas as a whole.
In the 19th century, in Gladstone's day, the doctrine of the mandate meant something quite different. It meant that to introduce a change like this, a constitutional change, you dissolved Parliament and went to the country with this sole issue before the electors. You then received a mandate or you did not receive a mandate. It was true of the Irish Home Rule Bill, it was true of the Parliament Act 1911 and it was true of the introduction of protection, for which Stanley Baldwin dissolved Parliament in 1923. But I do not think that you can maintain that the mere fact that this figured in a manifesto is an adequate substitute for asking the people immediately affected—and the electorate of the constituencies are the people immediately affected—whether or not they are in favour of this change. Holding the elections would be an ideal way of finding out.
4.8 p.m.
The Earl of Perth: My Lords, when the original Bill was introduced into your Lordships' House, many of your Lordships had two main worries. One was that it was a gerrymandering Bill and the second was that it would in some way denigrate from the powers of this House. I feel that the noble Viscount the Leader of the House has met us today, in his preliminary speech, on both of these points. For example, the political colour of the Greater London Council and the metropolitan councils is to remain unchanged during what I would call the interim period. So much for the gerrymandering. Then we had the anxiety that in some way or another this was derogating from the powers of your Lordships in particular. Again, this point has been met because we have been told that nothing will happen until the abolition Bill has received the Royal Assent. So, my Lords, it seems to me that our main worries have been removed.
The noble Lord, Lord Evans, suggested that we should have a new Bill. I do not see why we should have a new Bill because, after all, what are these amendments but asking your Lordships to approve the abolition of the GLC and of the metropolitan counties, which was in the Conservative manifesto.
I think that the main argument of the noble Baroness, Lady Birk, and others, has been, "Oh well, it will mean probably more than nine months—it may be a year and perhaps even two years—before the Bill becomes law and therefore before the abolition takes place". Some of your Lordships will remember the time when it was proposed by the Government that the LCC should be abolished and that the GLC should be put in its place. I was present in the House at that time and I well recall the tremendous fight that was put up by Lord Morrison of Lambeth to try to stop that change. Day after day, night after night, clause after clause and word after word, he challenged the then Government. All of that, I suppose, took about six weeks. If that happened at that time, I can see no

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reasons why, if the Government really want to get something through, it should not happen again. Maybe it would be over a month or two; April is one thing; a little later in the year, say June or July, is another—but, broadly speaking, I cannot possibly imagine why the Government, if they want to, cannot get this Bill through both Houses within a year.
That being the case, I feel two things. One is that the amendment of the noble Baroness, Lady Birk, should not he accepted by your Lordships; the other is that, for the reasons I have tried to outline, the main amendments—I am sure that many in your Lordships' House are grateful for their being moved or put down—meet most of our worries and therefore we should support them.
4.12 p.m.
Lord Molloy: My Lords. I believe that in his speech the noble Lord, Lord Harmar-Nicholls, more or less exposed the difficulties that the Government Benches are in. He made it transparently clear—something which we all knew—that we have no constitution in this country, and at the conclusion of his speech he pointed out that this measure is in no way unconstitutional. That I submit is the confused attitude in which the Government find themselves after the decision of your Lordships last month. The fact of the matter, brutally put, is that: it was not anticipated by Her Majesty's Government; it has thrown them into a terrible dilemma; and they must somehow or other seek means to evade responding to a fundamental decision made in your Lordships' House.
I believe, too, that the new clause moved by my noble friend Lady Birk, with the support of the noble Lords, Lord Evans of Claughton and Lord Hayter, and the noble Baroness, Lady Stedman, is a reasonable new clause to make a part reality of what this House decided and what the majority in this House wanted. The only way to say "Nay" to that is to say that when we voted against the Government the last time we made an error and now we are going to withdraw. That will in no way enhance the status of this House because, if I may say so, the majority of people—I have no actual firm evidence other than that gained from talking at public meetings—found that the decision of your Lordships' House was courageous; not so much that it caused the Government to have second thoughts but that it defended democracy. A great many people smiled at the fact that it was in this House of Peers that democracy was defended. That is something of which I believe we can indeed be very proud.
The noble Viscount the Leader of the House, Lord Whitelaw, made the point that the Government felt uneasy about the attitude of some councillors, whom they are not going to vote against, whom they are not going to urge voting against in their party publications, but whom they are going to demolish. When the noble Viscount, Lord Whitelaw, said that—I regretted it, because he had made a reasoned speech—he returned to the birthplace of this entire measure. It was born out of hate and venom. Both are very bad advisers.
It seems to me that subsequent clauses, on which I cannot speak yet, will once again try to ignore the desire of this House and ignore the opinion of ordinary
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people. What can we do, whatever we think of them, other than look at the various polls? When it suits our purpose we say, "Look at this poll, look at that poll", and so on. But we all know that when the polls are not in our favour we are not sure whether they are very good. When they are in our favour then, of course, they are quite remarkable. We all know too that, by and large, within a 5 per cent. or 6 per cent. margin, they are fairly accurate. This weekend a MORI poll of Londoners revealed that 61 per cent. of the people of our capital city approved of what was done in this House just last month. Londoners believe that your Lordships were right to defeat the Government a couple of weeks ago.
Then, I believe, the noble Viscount, Lord Whitelaw, made a vitally important point. He said that we cannot talk about constitutions—unless we are the noble Lord, Lord Harmar-Nicholls; then we can talk about constitutions which we are going to rape, talk about things which are unconstitutional, and then say we have no constitution. I do not know how you work that one out but it is a problem for the noble Viscount.
The noble Viscount, Lord Whitelaw, made an important point when he referred to the London Government Bill of 1962. Here perhaps is where the present Government went wrong and where the Conservative Government which introduced the London Government Bill in December 1962 were so right. First, the Bill was based on a Royal Commission—no Royal Commission for this Government. It was based on a White Paper. The White Paper was debated in another place and it was debated in your Lordships' House. Various amendments were made; some were accepted by the Government of the day, who appeared first of all hostile. But we have got to see what that Government adhered to when they were asked by the Royal Commission to adhere to certain fundamentals. If the only answer we have is that Royal Commissions are a nuisance, then why set them up in the first place? If they are going to set them up, I believe it is incumbent on the Government to take some degree of notice of what they recommend.
The fundamental recommendations of the Royal Commission on the London Government Bill were adhered to by the Conservative Government of the day. It did them very great credit. The result was that, when the elections took place in London, the opposition parties tried to use that point but lost and were defeated because of the upright behaviour of Sir Keith Joseph and his colleagues in another place. That is so totally absent in the behaviour of the present Administration.
The Royal Commission stated,
"that it is best to give as much power and responsibility as possible to those who are in the closest touch with the people for whose benefit local government services are provided".
It also said:
"We believe that there is a serious danger that unless local government can be rehabilitated in the way we suggest there will be a drift towards some form of regional administration, with a good deal of intervention by the central Government".
The former Conservative Government of 1962 took cognizance of that and avoided introducing anything which might he redolent of that form of totalitarianism. I should like now to quote what was

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said by Sir Keith Joseph, when he opened the Second Reading debate:
"In a most cogent chapter of its Report, Chapter 13, the Royal Commission considers and rejects two alternatives. First, that the central Government should fill the gap in the local administrative structure. The Commission says that this would be the death knell of responsible local self-government in greater London. [Official Report, Commons, 10/12/62; col, 53.]
He added:
"The Commission is plainly right".
Later he went on to say this:
"The Bill will ensure that there is a body directly elected by the people of London charged with responsibilities for watching over the whole physical environment in the interests of London as a whole and having powers and resources to match its responsibilities." [col. 54.]
It was on that basis and that argument that the Conservative Party later fought that great election for the GLC, and they won. I feel it is a sad thing today that the Government which created this GLC and based it on democracy—that that same party—should now be building a new structure which is totally alien to the whole concept of democracy as we have seen it grow up. It is pushing us back a few hundred years. This issue has been discussed in many other parts of Europe and America with unbelief in some places that we should be doing this. I believe that the new clause moved by my noble friend Lady Birk is a move in the right direction for us to make a reality of the views that your Lordships expressed, not in favour of either Government or Opposition, but for what I believe is the general desire of Londoners and the ordinary people of our country.
Lord Boyd-Carpenter: My Lords, as I understand it, your Lordships are formally discussing Amendment No. 1 in the name of the noble Baroness, Lady Birk, but together with it are discussing Amendment No. 5 in the name of my noble friend the Leader of the House. It is therefore perhaps useful to seek to look at one as against the other. Contrary to the form of the Bill as it originally came to your Lordships, they both provide for the continuance of the GLC over the further year which, as your Lordships will recall, under the earlier provisions would have been dealt with by representatives of the successor constituent authority. The basic distinction is that the noble Baroness's amendment provides for an election at the normal time for the GLC, whereas my noble friend's amendment provides for an extension of the term of office of the present incumbents.
I quite appreciate that there are Members of your Lordships' House, like the noble Lord, Lord Diamond—and I am sorry that he is not, I think, in his place at the moment—who attach such importance to the electoral process that that would seem to them to be a decisive difference. But I would ask your Lordships to reflect a little further on this matter. Obviously, if you are setting up a body with a full term of life in front of it, it is proper that it should be elected according to the ordinary rules of election for that body. But on no view is that being done in this case. The date spoken of for termination of the GLC under these proposals is April 1986: that is to say, the life of the new council will be something under 11 months. I wonder whether, if the noble Lord, Lord Diamond, were here—
A noble Lord: He is!
Lord Boyd-Carpenter: My Lords, I am much obliged. I wonder whether the noble Lord, Lord Diamond, has contemplated how far he carries his argument about the supremacy of elections. There must come a point of time in respect to which it is not worth going through the whole electoral process, not only for the expense—and I am bound to say that I thought some noble Lords opposite, who had served in government with the noble Lord, Lord Diamond, when he was Chief Secretary to the Treasury, looked a little surprised at the way he brushed away questions of the control of expenditure—but there must come a point on the time-scale at which it is a waste of money and a waste of effort to have an election.
Therefore it is very much a matter of judgment for your Lordships whether 11 months comes within that time-scale or not, but what I think more important is: what would that election be about? Plainly the issue that would be discussed—certainly by the present incumbents of the GLC—would be the continuance of the GLC. But that, ex hypothesi, is an issue which would be before Parliament and almost certainly by then at a very advanced stage in our discussions. It would he quite impossible for anyone putting up for an electoral term of 11 months to put forward any constructive policies or plans for London.
The election would be either about matters which this House would then be concerned with, or it would be about trivialities. Therefore it seems to me that to go through the farce of an election for the purpose simply of rather dogmatic democratic consistency would be a mistake, and that it is better and simpler to take the ladies and gentlemen who have been elected to the GLC and give them a further year.
Lord Howie of Troon: My Lords, I wonder whether the noble Lord would permit me to intervene just for a second?
Lord Boyd-Carpenter: Of course, my Lords.
Lord Howie of Troon: My Lords, I think the noble Lord is quite right when he says that such an election would be limited in its scope. It is quite likely that it would be in the nature of a referendum on whether the matters which were, as he puts it, before Parliament at that time were right or wrong. But would he be right in suggesting that such a thing would be trivia? I would have thought that such an election, if it dealt with whether or not it was right to retain the GLC, would be a matter of very great importance, and it would be something upon which the electors as a whole could properly be asked for their opinion, rather than for Parliament itself to arrogate the total right to decide.
Lord Boyd-Carpenter: My Lords, I take the noble Lord's point, but I think that he under-rates the question of the time-scale. At the time when this referendum, as he calls it, would be taken, the abolition Bill would certainly be through another place and probably quite well advanced in this House; and it really would be fantastic to believe that the outcome of that referendum would have any influence on events.
Lord Howie of Troon: My Lords—
Lord Boyd-Carpenter: My Lords, I am not myself a great believer in referenda—
Lord Howie of Troon: I am!
Lord Boyd-Carpenter: My Lords, I personally believe that they have done a good deal of harm on occasion; but, even if one is a great believer, the referendum should be taken before the moment of decision and before the legislation is introduced, not after, and therefore—
Lord Howie of Troon: My Lords—
Lord Boyd-Carpenter: My Lords, I am sorry: if the noble Lord wants to intervene again I will happily sit down; but if he speaks from a semi-sedentary position he is a little more difficult to follow. I take it the noble Lord is quite happy to accept that what is essential, if you believe in referenda, is to have them taken at the right time when they can influence decisions. If they are taken at a time when it is too late to influence decisions they probably annoy the people who have taken part in them quite a bit when they see how futile their particular manifestation of opinion has been.
This is therefore the difference between continuing the present GLC for another year or having this election. When I spoke in this House on the last occasion this Bill was before us, I made the same point about the futility of an election of a body for a few months, and I am very happy to leave the point there, although I do feel that one can exaggerate the significance of the election.
But what has been done has been to meet the major point, about which I know a lot of noble Lords felt very strongly, of the change in the political complexion of the GLC. That point has been met and so, I think, has the point about the position of this House. I think I am not exaggerating if I say that these rather striking decisions, in the circumstances, reflect the calibre and quality of our present Leader of the House and his courageous willingness to take what cannot have been, in the circumstances, an easy decision.
I have only one more point. The right reverend Prelate referred—and we shall be coming to them a good deal later this evening—to the clauses in which power is taken to restrain expenditure by the GLC during its final year. We can discuss these then, but I would only say to the right reverend Prelate, with great respect, that there are a very large number of people in this House who would be horrified at the idea of leaving the ratepayers of London to the depredations of the present majority of the GLC. Not only have they indulged in great extravagance but they have gone out of their way to say that on their way out they will indulge in a scorched earth policy. If the Government were not to come forward with restrictions of this kind I, and I think a good many others in this House, would find it very difficult indeed to support this proposal. I hope that the right reverend Prelate, whose genuine sympathy with the causes for which he works we all recognise, will appreciate that something of this sort is essential in the circumstances and the only question perhaps—and we shall come to this—is whether the
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safeguards proposed are adequate. The GLC is a great spender. Some control must be exercised and I hope that he will reflect on that.
4.31 p.m.
Baroness Seear: My Lords, the noble Lord, Lord Boyd-Carpenter, and speakers on the Government side have all emphasised that this is only for 11 months. Both the noble Baroness and my noble friend Lord Evans questioned whether it is possible to do a transfer of this scale in 11 months, and surely the burden of proof is on the Government to show that so large an undertaking can be undertaken in so short a time. If that is not so, then the argument based on 11 months, which was the burden of the speech of the noble Lord, Lord Boyd-Carpenter, falls, and surely the obvious thing is that it will not be done in 11 months.
The only other point that I wish to make is about the assumption that this will be a referendum to support Councillor Ken Livingstone and his friends. Here I speak as a London ratepayer and I happen to be represented in the GLC by no less a character than Councillor Ken Livingstone himself. I am absolutely longing for the opportunity to cast my vote against that gentleman and to get a less extravagant council in to handle the transfer. Surely it is in everybody's interest that you have a different council handling the transfer, but you cannot do that unless your have an election.
Lord Ingrow: My Lords, I am grateful to my noble friend the Leader for his reference in his opening remarks to the metropolitan counties. I have no part in the London argument, nor in the personalities thereof, but one must remember that the major part of the metropolitan counties existed without a two-tier authority for the whole of their existence until 10 years ago, and few people think that they are better managed now under a two-tier system.
But I should like to make two points that have come out of the discussion, the first of which is about the deferring of elections. I go back—being a little older—longer than some people, but I remember being elected to a council on 1st November 1946. In those days, the borough elections were held in November. I was elected for a term of three years, but in the interim period it was decided that the elections should move to the spring in order to encourage greater turn-outs and everybody got another six months.
Every councillor in a borough council who was in office on 31st March 1948 had a further six months of office. All mayors did and they had extra mayoral allowances for those additional six months. That included all those councillors who were elected to councils when the British public did not vote as well as they might have done in 1945. They would all have come out in 1948. Instead they went on till 1949, six months later—perhaps Labour councils lasted longer than they would have done—and had an extra rate-fixing session.
But nobody then thought that it was a terrible thing. Extending for another six months was the practical way, the economical way, the way that suited the public, and everybody did it without any argument. Those who say that it is monstrous to deprive the

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public of the chance to vote—perhaps wrongly, because we have not been invaded for a long time and therefore we do not value the secret vote as we should—have the wrong idea, which many top politicians of all parties have, that there are vast cohorts outside this hall waiting to canvass solidly for three weeks every night with other people writing envelopes. All parties will say that a lot of people think there have been quite a lot of elections, and for many people there will not be tears if there is not an election in the metropolitan counties next year.
My other point is the one raised about the length of time to achieve the handover. The noble Baroness and the noble Lord, Lord Evans of Claughton, raised the point. I think the noble Lord said that he has spent a lifetime in local government. If you have spent a lifetime in local government, I am sure you do not believe that it can be done in 12 months. I am not scoring a point. I have spent only half a lifetime. But the fact remains that if you have had to exist in business all your life, except for the statutory period of six years or so in the army, you find that a very large number of things can be done very quickly indeed, if they have to be done. Business and the armed forces would not survive unless they were able to act fairly quickly. Local government is a fairly leisurely occupation, but it will have to be a good deal less leisurely in order to meet the deadlines. I am quite sure that all those very capable chief executives can fit in with any period that Parliament lays down and, therefore, I hope that those objections to the general argument, which I find slightly bogus, will not influence your Lordships on either the practical point or the moral point.
Lord McIntosh of Haringey: My Lords, the noble Lord, Lord Harmar-Nicholls, made two points which I would welcome the opportunity, within the rules of order of a Report stage, to debate with him very briefly, and I shall now attempt to do so. The first point he made was that the timing for any legislation is in the power of Government and Parliament to determine, and that there is no reason why legislation should not be brought forward quickly and brought into force quickly if the Government so decide.
The second point he made was that the manifesto commitment of the Conservative party at the last election to the abolition of the GLC and the metropolitan counties carried with it a manifesto commitment, which ought to be observed, to any measures that were thought necessary in any paving Bill. One can hold one or other of those views—I happen to think that they are both wrong—but certainly, in logic, one cannot hold both of them.
If the noble Lord is right in his first point, and the timing of legislation is the prerogative of Government and Parliament, why has Parliament not seen the main Bill which would provide for the abolition of the GLC and the metropolitan counties? The answer must be that the Government have not found it possible to bring forward such a Bill and they are forced to bring forward a paving Bill in its place. That is where the Government have found themselves in such enormous difficulties.
I do not deny the possibility that in certain
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circumstances Governments would be right to bring forward preparatory legislation, paving legislation, in anticipation of later decisions of Parliament. But such paving legislation can, I suggest, only be such as increases the liberties of the citizen, not legislation which—as in this Bill which comes before us now, or the preceding paving Bill which came before us on Second Reading and in committee—actually restricts the liberties of individuals. That is the difference with a paving Bill. That is why any paving Bill of this kind which restricts the liberties of the 14 million people in London and in the metropolitan counties is unacceptable. I am surprised that so many noble Lords do not see that that is the fundamental objection to the Bill. I cannot see into the minds of the 190 Peers who voted for the amendment during the Committee stage, but I presume that that was in the minds of a considerable number of the 190.
The only other point I want to make was brought forward by the noble Lord, Lord Boyd-Carpenter. He objects to referenda. I do, too; I agree with the noble Lord. However, he queried the validity of elections next year on the ground that the election would be about something which he does not like. I should have thought that by now political parties had learned that they may attempt to persuade the electorate about what elections should be about but that in the end it is for the electorate to decide. I should have thought that the evidence of February 1974 was sufficiently in the memories of most of your Lordships to make that point clear. The Heath Government wanted the election to be about who rules the nation. The electorate thought otherwise. I find it very disdainful of the noble Lord, as an attitude towards the electorate, to think that because he has a view about what an election should be about the electorate themselves should not decide what that election should be about.
Lord Boyd-Carpenter: My Lords, as the noble Lord has made a personal reference to me, may I say that the point I was trying to make, which I hope I made clearly and which I shall try to do again now, is that when you stand for elective office you must put forward the policies which you will implement if elected. I was making the perhaps fairly obvious point that if you are going to be elected only for, say, 10 months, there will be very few policies which you can honestly and sincerely put forward. That is not disdainful; that is realistic.
Lord McIntosh of Haringey: My Lords, I was not suggesting that the noble Lord was being disdainful to the councillors. Of course they must put forward the policies upon which they wish to be elected. I cannot imagine that any of the parties contesting an election on 2nd May 1985 would lose the opportunty to put forward those policies and seek to persuade the electorate of them. If, however, the noble Lord believes that what would happen would be that the electorate would express a view on the Government's policies on abolition, I think he is right, and then I insist that it is disdainful of him to suggest that the electorate should not make up their own minds on that matter.
Viscount Whitelaw: My Lords, with the leave of the House, may I say that I believe your Lordships are

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keen to come to a decision on this issue and that therefore I should reply very briefly to the points which have been made.
The noble Lord, Lord Evans of Claughton, recognised the concession which I had made but felt that by prolonging the life of the councils they were likely to be prolonged for six or seven years instead of one year. I bow at once to the noble Lord's considerable knowledge of local government. Such knowledge has been paraded by the noble Lord and also by my noble friend Lord Ingrow. I have to admit that I have no experience at all of local government. I believe that my friend Lord Ingrow had a point when he said that if a reasonable time limit is set—I emphasise the word "if"—and if there is goodwill on both sides, this will be in the interests of the ratepayers of the various areas concerned. I speak as a ratepayer in London, though sometimes I wish I did not. If there is goodwill on both sides, my noble friend Lord Ingrow believes that this could be achieved in the time available, and I very much hope that he is right.
My noble friend Lord Molson spoke with pleasure of what has been done. I am grateful to him for the very generous remarks which he made. I noted that some speakers have said, as my noble friend mentioned, that it is going to be claimed in the advertisements that this House is a rubber stamp. It is interesting to note how many different things you are accused of doing when you are in politics. At one moment you are accused of trying to make people a rubber stamp; at another you are accused of driving them into a wicked surrender. All sorts of arguments are put forward.
I do not accept the rubber stamp view, for this reason. I would say to the noble Lord, Lord Diamond, to the noble Lord, Lord Molloy, and to others who spoke on the same basis that it is important to remember what is the role of this House. I stressed that role in my opening speech and I come back again to it.
It is surely correct to say—though I speak subject to correction by those who know much more about it than do I—that this House is a revising Chamber and that it asks the Government in another place to think again. I felt it to be my duty to go to my colleagues and make suggestions as to how we could reasonably meet the views of this House. Those noble Lords who questioned whether I was able to go far enough must recognise that I was doing so against the background of the elected Chamber of the House of Commons having passed the Bill by a majority of well over 100. That is the basis upon which I went to my colleagues. I see in front of me some of those who in the past have occupied my position. I reckon they know very well that if one goes to one's colleagues against that background it is an achievement to get—properly, as I see it—a concession for this House. I do not believe, as I said in my speech, that it would have been possible to go further.
I must say to the noble Lord, Lord Molloy, that he was a trifle hard when he said that I was evading responding to the views of this House. However, I take what he said in the best of parts and turn to what was said by the right reverend Prelate the Bishop of Liverpool. I regret that he is not in his place because I wanted to say something nice about him, which he might be surprised to hear, and also something very
1206
firm to him, which he might also be surprised to hear. What I am going to say that is nice about him is that I recognise fully that in putting the point which he made about expenditure on Merseyside he is representing his very considerable concern about the problems in that area. From my period of office as Home Secretary I recognise the great contribution he has made.
That is the kind remark which I want to make. Against that background, I hope that I may also be allowed to point out to the right reverend Prelate that the clauses which are going to be discussed will in no way limit expenditure. The position is that the Secretary of State will have to give his consent. Provided that the kind of projects which the right reverend Prelate submits are satisfactory, I believe that consent will be given. I hope that the right reverend Prelate will realise that in using the words "not limited" he was not wholly correct. I hope, too, that we shall be able to meet the very real point which he made. If the right reverend Prelate has been unable to hear my remarks, perhaps he will read what I have had to say on this matter.
The noble Lord, Lord Kaldor, spoke about manifestoes and 20th century corruption. I have to say to the noble Lord that I suppose I was swept into that phrase about 20th century corruption with very good company. Many noble Lords in all parts of the House who have been in government, and also those who advise governments, recognise that at times they quote the manifesto and that at other times they stand upon what has been put forward in the manifesto. We are all entitled to do that. I have never put too much stress on ours, but we are entitled to put some stress upon it. In the past, the noble Lord has, I am sure, put some stress upon his and I do now, but not too much. I believe that neither of us is guilty of 18th, 19th, or 20th century corruption in so doing.
I am grateful to my noble friend Lord Perth for what he said, because I genuinely believe that we have met the charge. I minded very much personally the charge of gerrymandering. I minded it all the more when that charge came from some of those whom I greatly respect and from some of those who had been colleagues in Cabinet with me—one, indeed, a Prime Minister whom I served for a very long time. I found that to be deeply distressing. I am very glad that by the amendments which have been made that charge has been completely removed, and I am very grateful to my noble friend Lord Perth for what he said.
My noble friend Lord Harmar-Nicholls told his story—I hope this will not be thought to be too light a point—of someone who had been given ties on his birthday. I have to say to your Lordships that this year I was given no ties on my birthday, merely a very sharp defeat for the Government in your Lordships' Committee at that time, from which I hope I have taken the appropriate lessons—always a proper thing to do.
The noble Lord, Lord Howie of Troon, actually welcomed the idea that if there was an election held, it might be considered to be a referendum. I must say I was interested, on the other hand, to find the noble Lord, Lord McIntosh of Haringey, taking the opposite view—and they are quite close together on the same Bench—that if it was going to be a referendum, he

1207
would greatly dislike it. I hope that the two noble Lords will decide between them. Personally I should dislike it if it were a referendum—and I stick to my point which I made during my initial speech; namely, that, there must be at least a danger that if councillors are going to be elected for only one year, that will be the result of that election. It may well not be. Many would like it not to be, but there is surely at least a danger; and I think the noble Lord, Lord McIntosh of Haringey, was genuine enough to admit it.
The noble Lord, Lord Diamond, said something which was slightly surprising to me. He said that of course cost did not really matter. I must say, looking back at my time with him in another place, I found that, coming from him, surprising, but perhaps he would do me the credit of realising that I had thought that criticism might be made if I gave the cost of these elections, and so I was scrupulously careful not to do so. I think he was therefore firing at a target—even if it was me—from which I managed to get away at that time. I think there is a point here, but I equally agree with him that we should not over stress it.
The Leader of the Liberal Party, the noble Baroness, Lady Seear, again mentioned the point made by the noble Lord, Lord Evans of Claughton, about the period likely to be more than 11 months. I do not believe that this should be so, always provided that every effort is made on all sides to make sure that it can work. I believe that it can, and I believe that it should.
The noble Baroness also said, on the question of a referendum, that, as a constituent, she was longing to cast her vote against Mr. Livingstone. Perhaps it would be fair for me to say to the noble Baroness—indeed, it surely is fair; and I think this is the important point which I was making against a referendum—that she will have every opportunity in this Chamber to cast her votes (and very powerful votes) as to exactly what she wishes to see when the abolition Bill comes before this House. My argument is that this is the proper place in which these matters should in the end be discussed. That is why I was against a referendum—partly on the grounds of the short period of time, and partly on the grounds of the dangers of a referendum.
Of course I understand the views of those who would have liked to see this House go further, who still believe that even for a period of 11 months there should have been an election. Of course there are strong arguments for that. But I maintain that, having received a very clear message from your Lordships on 28th June, it was right for me to go to my colleagues. I do not think any noble Lord in this House would imagine that it was possible to go and get everything that everybody in this House wanted, particularly in view of the very strong views expressed in another place.
I feel that I have done the best I can for this House. I have stood up for this House as a revising Chamber, I must say, at a very difficult time, on a very difficult Bill, and it is on that basis that, despite the feelings of some noble Lords, I hope I may be able at this time to command considerable support in the Chamber for what I have sought to do in the best interests of the House of Lords.
1208
I think the noble Baroness, Lady Birk, put her case very reasonably, but I am sorry that, on the basis I have mentioned, I must ask the House to vote against her amendment, and thereafter to vote for those of the package I have put forward. I hope that your Lordships will feel that this has been a reasonable debate, that the Government have taken up a very reasonable position, and I therefore ask for support for what we have done.
Baroness Birk: My Lords, the noble Viscount the Leader of the House really has my admiration. He has made a tremendously good job of what is fundamentally a very bad case, for which he personally is not responsible. He was extremely fair when he agreed that the other precedents that have been quoted were, in the main, in legislation, which is the point which I and others have been making continually. But he also said that because on this occasion there was not time, the proposal had to be in this Bill. What we are being asked to do is to vote in a way that would be quite contrary not only to how we voted before, by a large majority, but also to the constitutional issues as they concern this House and to the whole concept of elections, because the Government did not have the time to bring forward their main Bill and include all these proposals in it. That really is not good enough. With great respect, we cannot be asked to do that.
I find the argument about elections and whether it is going to be a referendum quite extraordinary, because what we are talking about are elections which should normally take place. The way they are dealt with by individual people involves their own individual vote and their own individual right. It is interesting to notice that since the last vote we had on this matter in this Chamber, when the amendment was carried by a large majority, in the metropolitan county councils, according to a MORI poll, 60 per cent. were against the cancellation of elections and 16 per cent. for, while in the GLC, 61 per cent. were against the cancellation of elections and 13 per cent. for the cancellation. I find it very difficult to understand the attitude of noble Lords opposite to the point that if there were elections, it would mean, particularly in London—and I must say that, while they said that we did not concentrate on the metropolitan counties, they have spent most of the time discussing the GLC—that voters would take the opportunity to vote for what they wanted and against what they did not want, so that it would be a proper democratic vote.
If I may say so with respect, I do not think there is very much in the argument that the tension would be taken off the elections as the Bill was going through Parliament. The whole point on the question of delay—which has not been satisfactorily answered—is that the setting up of alternative councils when abolition takes place will be so complicated. The councils will be so vast and so difficult to administer that there will be a very real problem about time. It is not just a question, as the noble Lord, Lord Harmar-Nicholls, seemed to think, of rushing something through Parliament. That is only the beginning of it. It is then a question of how you deal with the functions afterwards.
These are very serious constitutional issues. We are not dealing with taking odd snipes at different people,

1209
at different parties, or even at one another in this House. What we are concerned with is the major change that is envisaged in a large number of local authorities before the main Bill is passed, let alone before it has even been published.
I think we have to take this question very seriously. I must say, with great respect, the Leader of the House, with great dexterity, was able to divert our attention from the amendment which we are discussing. This is the one that would deal with the cancellation of elections and which, in so doing, would by-pass the constitutional position of the House of Lords. The noble Viscount diverted our attention by speaking in general terms—and he had a right to do so—about the whole Bill and about what was going to happen in later clauses. We are not at the moment discussing the later clauses. We are discussing the question of the cancellation of elections. I think there are many noble Lords in this House who must still be unhappy. Having voted as they did on 28th June, they cannot possibly be satisfied by the case that has been put forward today by noble Lords opposite. I hope that noble Lords will stick to the line that they took on 28th June, since in the main nothing fundamental has changed since then, and that they will support my amendment.
4.59 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 155; Not-Contents, 248.

DIVISION NO. 1

CONTENTS

Airedale, L.

David, B.

Allen of Fallowfield, L.

Davies of Leek, L.

Amherst, E.

Dean of Beswick, L.

Ardwick, L.

Denington, B.

Attlee, E.

Diamond, L.

Avebury, L.

Donaldson of Kingsbridge, L

Aylestone, L.

Donnet of Balgay, L.

Balogh, L.

Elwyn-Jones, L.

Banks, L.

Ennals, L.

Barnett, L.

Evans of Claughton, L.

Beaumont of Whitley, L.

Ewart-Biggs, B.

Bernstein, L.

Ezra, L.

Beswick, L.

Falkender, B.

Birk, B.

Falkland, V.

Birkett, L.

Feversham, L.

Blease, L.

Fitt, L.

Blyton, L.

Foot, L.

Boothby, L.

Gaitskell, B.

Boston of Faversham, L.

Gallacher, L.

Bottomley, L.

Galpern, L.

Bowden, L.

Gardiner, L.

Briginshaw, L.

Gifford, L.

Brimelow, L.

Gladwyn, L.

Brooks of Tremorfa, L.

Gosford, E.

Bruce of Donington, L.

Graham of Edmonton, L.

Buckmaster, V.

Greene of Harrow Weald, L.

Burton of Coventry, B.

Grey, E.

Campbell of Eskan, L.

Grimond, L.

Caradon, L.

Hampton, L.

Carmichael of Kelvingrove, L.

Hanworth, V.

Chitnis, L.

Hatch of Lusby, L.

Cledwyn of Penrhos, L.

Hayter, L.

Collison, L.

Head, V.

Cooper of Stockton Heath, L.

Hirshfield, L.

Darcy (de Knayth), B.

Hooson, L.

1210

Howie of Troon, L.

Pitt of Hampstead, L.

Hughes, L.

Plant, L.

Hunt, L.

Ponsonby of Shulbrede, L. [Teller.]

Ingleby, V.

Irving of Dartford, L.

Prys-Davies, L.

Jacques, L.

Rea, L.

Jeger, B.

Ritchie of Dundee, L.

Jenkins of Putney, L.

Rochester, Bp.

John-Mackie, L.

Rochester, L.

Kaldor, L.

Ross of Marnock, L.

Kearton, L.

Sainsbury, L.

Kennet, L.

Scanlon, L.

Kilbracken, L.

Seear, B.

Kilmarnock, L.

Sefton of Garston, L.

Kirkhill, L.

Serota, B.

Lawrence, L.

Shackleton, L.

Leatherland, L.

Shepherd, L.

Lee of Asheridge, B.

Simon, V.

Listowel, E.

Stallard, L.

Liverpool, Bp.

Stamp, L.

Llewelyn-Davies of Hastoe, B.

Stedman, B.

Lloyd of Kilgerran, L.

Stewart of Alvechurch, B.

Lockwood, B.

Stewart of Fulham, L.

Longford, E.

Stoddart of Swindon, L.

Lovell-Davis, L.

Stone, L.

McCarthy, L.

Strabolgi, L.

McIntosh of Haringey, L.

Tanlaw, L.

MacLeod of Fuinary, L.

Taylor of Blackburn, L.

McNair, L.

Taylor of Mansfield, L.

Mar, C.

Tordoff, L. [Teller.]

Mayhew, L.

Underhill, L.

Milford, L.

Wallace of Coslany, L.

Milner of Leeds, L.

Wedderburn of Charlton, L.

Minto, E.

Wells-Pestell, L.

Mishcon, L.

Wheatley, L.

Molloy, L.

White, B.

Mountevans, L.

Wigoder, L.

Mulley, L.

Willis, L.

Nicol, B.

Wilson of Langside, L.

Ogmore, L.

Winchilsea and Nottingham, E.

Oram, L.

Paget of Northampton, L.

Winstanley, L.

Peart, L.

Wootton of Abinger, B.

Phillips, B.

NOT-CONTENTS

Airey of Abingdon, B.

Burton, L.

Alexander of Potterhill, L.

Caithness, E.

Alexander of Tunis, E.

Caldecote, V.

Allerton, L.

Cameron of Lochbroom, L.

Ampthill, L.

Camoys, L.

Annaly, L.

Campbell of Alloway, L.

Annan, L.

Campbell of Croy, L.

Arran, E.

Carnegy of Lour, B.

Ashbourne, L.

Carnock, L.

Astor, V.

Carr of Hadley, L.

Auckland, L.

Cathcart, E.

Avon, E.

Cayzer, L.

Bagot, L.

Chelmer, L.

Balfour of Inchrye, L.

Chelwood, L.

Barber, L.

Clitheroe, L.

Bauer, L.

Cockfield, L.

Belhaven and Stenton, L.

Colwyn, L.

Bellwin, L.

Constantine of Stanmore, L.

Beloff, L.

Cork and Orrery, E.

Belper, L.

Cornwallis, L.

Belstead, L.

Cottesloe, L.

Bessborough, E.

Cowley, E.

Bethell, L.

Cox, B.

Biddulph, L.

Craigavon, V.

Boardman, L.

Craigmyle, L.

Bolton, L.

Craigton, L.

Boyd-Carpenter, L.

Crathorne, L.

Brabazon of Tara, L.

Crawshaw, L.

Braye, L.

Croft, L.

Brentford, V.

Cross, V.

Bridgeman, V.

Dacre of Glanton, L.

Broadbridge, L.

Daventry, V.

Brookeborough, V.

Davidson, V.

Broxbourne, L.

De Freyne, L.

Bruce-Gardyne, L.

De La Warr, E.

Buckinghamshire, E.

De L'Isle, V.

1211

Denham, L. [Teller.]

MacLehose of Beoch, L.

Denman, L.

Macleod of Borve, B.

Digby, L.

Mancroft, L.

Dilhorne, V.

Marley, L.

Donegall, M.

Masham of Ilton, B.

Drumalbyn, L.

Massereene and Ferrard, V.

Duncan-Sandys, L.

Maude of Stratford-upon-Avon, L.

Dundee, E.

Ebbisham, L.

Merrivale, L.

Eccles, V.

Middleton, L.

Eden of Winton, L.

Milne, L.

Elibank, L.

Molson, L.

Ellenborough, L.

Monk Bretton, L.

Elliot of Harwood, B.

Morris, L.

Elphinstone, L.

Mottistone, L.

Elton, L.

Mountgarret, V.

Enniskillen, E.

Mowbray and Stourton, L.

Erne, E.

Moyola, L.

Faithfull, B.

Munster, E.

Fanshawe of Richmond, L.

Murton of Lindisfarne, L.

Ferrier, L.

Norfolk, D.

Fisher, L.

Northesk, E.

Forbes, L.

Nugent of Guildford, L.

Fortescue, E.

O'Brien of Lothbury, L.

Fraser of Kilmorack, L.

Onslow, E.

Gainford, L.

Orkney, E.

Gardner of Parkes, B.

Orr-Ewing, L.

Geddes, L.

Peel, E.

Gibson-Watt, L.

Pender, L.

Gisborough, L.

Penrhyn, L.

Glanusk, L.

Perth, E.

Glenarthur, L.

Peyton of Yeovil, L.

Gormanston, V.

Platt of Writtle, B.

Gowrie, E.

Plummer of St. Marylebone, L.

Gray, L.

Gray of Contin, L.

Portland, D.

Greenhill of Harrow, L.

Radnor, E.

Grey of Naunton, L.

Rankeillour, L.

Gridley, L.

Rawlinson of Ewell, L.

Grimston of Westbury, L.

Reay, L.

Haig, E.

Reigate, L.

Hailsham of Saint Marylebone, L.

Remnant, L.

Renton, L.

Halsbury, E.

Renwick, L.

Hanson, L.

Richardson, L.

Harmar-Nicholls, L.

Ridley, V.

Harris of High Cross, L.

Rochdale, V.

Harvey of Tasburgh, L.

Romney, E.

Harvington, L.

Rotherwick, L.

Hastings, L.

Rugby, L.

Henderson of Brompton, L.

St. Davids, V.

Henley, L.

Saint Oswald, L.

Hertford, M.

Saltoun, Ly.

Hives, L.

Sandford, L.

Home of the Hirsel, L.

Sandys, L.

Hornsby-Smith, B.

Savile, L.

Howard of Henderskelfe, L.

Seebohm, L.

Hylton-Foster, B.

Selkirk, E.

Ilchester, E.

Sempill, Ly.

Inchcape, E.

Shannon, E.

Ingrow, L.

Sharples, B.

Ironside, L.

Sherfield, L.

Jessel, L.

Skelmersdale, L.

Kaberry of Adel, L.

Soames, L.

Kemsley, V.

Somers, L.

Killearn, L.

Southborough, L.

Kilmany, L.

Spens, L.

Kinnaird, L.

Stanley of Alderley, L.

Kinnoull, E.

Stodart of Leaston, L.

Kintore, E.

Strathcarron, L.

Kitchener, E.

Strathcona and Mount Royal L.

Knutsford, V.

Lane-Fox, B.

Strathspey, L.

Lauderdale, E.

Swinton, E. [Teller.]

Lloyd of Hampstead, L.

Taylor of Hadfield, L.

Lloyd-George of Dwyfor, E.

Terrington, L.

Long, V.

Teviot, L.

Lucas of Chilworth, L.

Thomas of Swynnerton, L.

Lyell, L.

Torphichen, L.

McAlpine of West Green, L.

Townshend, M.

McFadzean, L.

Tranmire, L.

Mackintosh of Halifax, V.

Trefgarne, L.

1212

Trenchard, V.

Vivian, L.

Trumpington, B.

Waldegrave, E.

Tryon, L.

Westbury, L.

Tweedsmuir, L.

Whitelaw, V.

Ullswater, V.

Windlesham, L

Vaizey, L.

Wise, L.

Vaux of Harrowden, L.

Wynford, L.

Vickers, B.

Yarborough, E.

Resolved in the negative, and amendment disagreed to accordingly.
5.14 p.m.
Clause 1 [Commencement of Parts I and II]:
Lord Bellwin Lord Bellwin moved Amendment No. 2:
[Printed earlier: col. 1181.]
The noble Lord said: My Lords, this amendment having already been spoken to, I beg to move.
On Question, amendment agreed to.
Clause 2 [Commencement and termination of interim provisions]:
Baroness Birk Baroness Birk moved Amendment No. 3:
Page 2, line 7, after ("may") insert ("and in the event that a Bill for the abolition of the Greater London Council and the Metropolitan County Councils and for the transfer of their functions has not received Royal Assent by 31st July 1985, shall").
The noble Baroness said: My Lords, this may well be an amendment that the Government will be prepared to accept. If so, it would save time. It seeks to ensure that elections are reinstated if the main abolition Bill is not passed. The Government's main amendment proposes to extend the term of office of existing county councillors by cancelling the 1985 elections before the main abolition Bill is passed. I think that we are entitled to ask this: what happens if the passage of that Bill is delayed?
In answer to a Written Question from the noble Lord, Lord Nugent of Guildford, the noble Lord, Lord Bellwin, said that if the main Bill fails, then elections will be reinstated, to be held in May 1985 or later in the same year. But that obligation is not written into the Bill. This amendment would correct that and make sure that that provision is on the face of the Bill, thus avoiding the possibility of councillors continuing to hold office without having been elected to do so.
If for some reason the main Bill were not passed in the next Session, or for any series of reasons abolition were delayed, it is essential that councillors whose office is held over by courtesy of Parliament seek reelection. Under the Bill as at present drafted that need not happen. Although the Secretary of State has undertaken to reintroduce elections if the main Bill fails, the Bill does not require him to do so.
The provisions of the paving Bill are free standing. Apart from the will of Parliament, unforeseen events could also determine that the main Bill is not approved for enactment. However, under the Government's proposals the interim or intermediate arrangements could proceed, irrespective of the fate of the main Bill. That has a great deal of relevance to the later parts of the Bill, where, for example, a staff commission is to be appointed; councils and their officers placed under a duty to provide information: legitimate spending powers are to be centrally controlled; approval of structure plans, and other

1213
functions, are to be frozen; and the GLC and metropolitan counties will have a mandatory duty to undertake financial consultation.
All those provisions will take effect immediately. If the paving Bill is passed, they are likely to have been in operation for several months before the main Bill reaches the House of Lords. Those measures pre-suppose the abolition and are said to be dependent on it, but it would be clearly unacceptable that any of them should continue if the main Bill were not to be enacted; yet, as with the extension of terms of councillors, there is no guarantee in the Bill on their repeal if Parliament does not approve the abolition proposal.
The amendment seeks only to ensure that all the provisions of the paving Bill cease if the main Bill is not passed and that the status quo is restored as soon as possible. That procedure would reinstate proper control by Parliament over the actions of the Secretary of State and would remove any possibility that councillors would stay on, unelected, if the main Bill were to fall. It seems to me to be a sensible and practical amendment in the position that we are in, with a paving Bill leading on to the main legislation. I beg to move.
Lord Bellwin: My Lords, the truth is that this amendment is unnecessary. Should the main abolition Bill fail, the paving provisions will no longer be necessary, useful or relevant. The Government have always recognised that. That is why we have given our undertaking about the commencement order; why the power to repeal is included; why the Bill has the Short Title that it does; and why we have all come to call it the paving Bill. There has never been any question but that, should the main abolition Bill fail, the Secretary of State will exercise the power to repeal the paving legislation and restore the status quo as soon as is practicable. The amendment is not only unnecessary but, I submit, also undesirable. I recognise that a date, 31st July 1985, has been specified in answer to an objection which I put forward to a similar amendment in Committee which did not specify a date; the objection was that it was unclear at what stage a Bill could be deemed to have failed to receive Royal Assent. But by including a specific date we simply run into another objection. The amendment now before us would prejudge Parliament's consideration of the main Bill. It sets Parliament a deadline for considering a future Bill. Clearly that is not acceptable.
Lord Evans of Claughton: My Lords, I understand the view expressed by the noble Lord the Minister about the position if the Bill fails. I have been quite rightly subjected to a certain amount of well intentioned humour about the fact that I said it might go on very much longer than people had predicted. However, I wonder what would happen if, after the paving Bill, the main Bill dragged on through another place and through your Lordships' House for a very long time indeed. Would the position be that the councillors, given an extended term under the terms of this paving Bill, would then continue on almost indefinitely, something like the Long Parliament of the 17th century, or the Rump Parliament? Would it not
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be advisable that there should be some kind of terminus ad quem such as this amendment suggests, for that purpose if not for the other one on which the Minister has given an undertaking?
Lord Bellwin: My Lords by leave of the House, I hear what the noble Lord says. Of course, a hypothetical situation such as he describes could not be ruled out as impossible. However, if we are dealing here in terms of likelihood, I think not least because of much of what was said—and I would refer specifically to what my noble friend Lord Boyd-Carpenter said during the earlier debate—that in practical terms that really is not a scenario which seriously needs to trouble us. What ought to trouble us is the likelihood of the possibility that I have described and the undesirability of fixing a firm date in the way that this amendment does. I have no doubt at all that this would create all kinds of problems, and the Government cannot accept it.
Baroness Birk: My Lords, it causes me some slightly hitter amusement that on the other amendment we were told all the time that of course everything will be sorted out and the Bill will he through before the end of the session; that it is possible that the following year everything will be done so there need not be elections. Now the Minister is replying to this on the basis that in case the Bill is not through we should not put in this date. What we are concerned with is that, whether it is this date or another date, there should be something which does not let what will be a status quo just go on forever.
The noble Lord, Lord Evans, was quite right when he explained and added to what I said by saying that this could go on indefinitely if there is not something in the Bill which makes it quite clear that if the abolition Bill does not go through, this stops. The councillors will be sitting there. Are they to be ossified forever, sitting in their respective metropolitan councils, or the GLC, because there is nothing in the Bill? The Written Answer to a Question, or indications, from the Secretary of State are entirely different from having this on the face of the Bill. I think this is very unsatisfactory.
However, what I propose to do at the moment is to withdraw the amendment and have another look at it, taking into account what the Minister has said about the date. I would also ask him if he would look at it. I stress that this is not a party political point. I think the real problem here is that nowhere is there any intimation in the Bill of what happens if the abolition Bill, for some reason or other, does not get through, is unduly delayed or anything else which could happen. I do not know if the Minister would like to agree that he will look at it or take the point, because his answer seemed to be mainly concentrated on the question of the date.
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I am not sure what Question I ought to put. Is the noble Baroness withdrawing her amendment, or not?
Baroness Birk: My Lords, I was going to withdraw the amendment, but hopefully would have heard a word from the Minister. This is the problem with Report stage.
Lord Bellwin: Again, by the leave of the House, though I am anxious on Report not to keep asking for leave, may I say that of course I will, as I always do, read carefully what the noble Baroness has said and I will be in communication with her about it.
Baroness Birk: My Lords, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.25 p.m.
Lord Bellwin Lord Bellwin moved Amendment No. 4:
[Printed earlier: col. 1181.]
On Question, amendment agreed to.
Clause 3 [Suspension of elections and appointment of councillors]:
Lord Bellwin Lord Bellwin moved Amendment No. 5:
[Printed earlier: col. 1181.]
On Question, amendment agreed to.
Lord Alport Lord Alport moved Amendment No. 6:
After Clause 3, insert the following new clause:
("ILEA .
.—(1) Section (Suspension of elections and extension of terms of office) (1) shall not apply to the election to the Greater London Council by electors of an inner London borough for membership of the Inner London Education Authority.
(2) A councillor elected to the Greater London Council by electors of an Inner London borough for membership of the Inner London Education Authority—

(a) whose term of office would expire on 7th May 1985; or

(b) who is elected to fill a vacancy occurring after that date, shall, unless he resigns his office or it otherwise becomes vacant, continue to hold office until a date which shall be no later than 1st November 1985.

(3) An election to the Inner London Education Authority shall be held not later than 1st November 1985.
(4) At the election referred to in subsection (3) above one person shall be elected by the City of London to represent it on the Inner London Education Authority.
(5) Any person elected to membership of the Inner London Education Authority under subsection (2) above shall be a member of any body or authority which may as a result of any subsequent enactment be established to assume the responsibilities and functions of the Inner London Education Authority.
(6) Persons elected under subsection (3) or (4) above shall hold office for a period of four years from the date of the election and any vacancy arising during that period shall be filled by an election held in the electoral district where the vacancy has occurred.").
The noble Lord said: My Lords, it will be recalled that at Committee stage I sought to amend the Bill to allow the proposed elections of the ILEA to take place next May when, without this Bill, an election would in the ordinary course of events have been held. On that occasion I advanced the arguments in favour of this in the interests of the continuity of administration of education in inner London and of the future of the 300,000 children, the teachers and the staff of the ILEA who depend upon good administration for the effectiveness and standard of their education.
Amendment No. 5, to which your Lordships have just agreed, only affects marginally the problem with which I am attempting to deal. It means that the present ILEA will continue in office until 1986, after
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which presumably an election of some successor body will be held. This in turn means that for the next 20 months education in inner London will be administered by an authority under sentence of death, whose powers of decision on the important problems of adjusting accommodation and teaching staff in the face of falling pupil numbers, and on the urgent task of raising educational standards throughout education in London, will inevitably be reduced and whose motivation will be weakened.
At the end of that period a completely new body will be set up whose members will perhaps take a couple of years to get to grips with the important matters upon which decisions are urgently necessary now. In all, nearly four years of the future administration of education in inner London will consequently be jeopardised. My amendment seeks to advance the election to the new body by six months. Under my amendment an election will take place to the ILEA before 1st November 1985. On that occasion 36 members—35 for the inner London boroughs and one for the City of London—will be elected for a period of four years. These members will thereafter continue to hold office after the present GLC ceases to exist and will be members of any authority which subsequent legislation next year may bring into being. That legislation might, I suppose, increase the number of members by nomination by the inner London boroughs and the City as is at present the practice. The advantage of my amendment is that the period of uncertainty will be reduced and that there will be continuity of administration for London's education over the transitional period between the present GLC and the new structure for the government of London which the Government are seeking to introduce.
When I moved my amendment at Committee stage, my noble friend Lord Bellwin said that the Secretary of State for Education and Science, when discussing a similar amendment in another place, agreed that
"there are arguments here on both sides".
My noble friend went on to say:
"All these matters are not black and white, and open and shut … We have just on the balance reached the conclusion which I think is probably right".—[Official Report, 3/7/84; cols. 168–169].
Balance is the key word. The balance of the argument with which I am addressing your Lordships is not between two alternative courses of action to provide what is best for the future education of young people in inner London or what is the most practical as between two solutions to the administrative problems which the proposed new system for London throws up as a result of this and the succeeding Bill next year. The balance is simply between the interests of education, which have long term significance for the whole population of our capital city and which will affect the lives of a generation of its children with consequences that stretch out into the decades of the next century, and the short term political interests of the two contestants in the present controversy over the Government's proposals. It could be argued, on the one hand, that an election held for the ILEA next year would take on an undesirable and inappropriate political significance to the disadvantage of the Government. On the other hand, it could be argued that the prospect of an election to the Inner London Education Authority next year would weaken the

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energetic campaign that the GLC has mounted against abolition to the disadvantage of the majority party there.
I always hesitate, particularly in the presence of the right reverend Prelates, who assist us in our deliberations, to make reference to the Old Testament. I think however that I am right in saying that King Solomon gained favour in the sight of the Lord by asking, not for long life or for political success, but for judgment. I hope very sincerely that the Minister who replies will tell us that the judgment of the Government in this matter is that, after further consideration, the interests of education in the great capital city of ours outweigh the possibility of some small political embarrassment for the Government next year.
I know that whoever answers this debate may well argue that there would be advantage in waiting to include the provisions that I am suggesting in next Sessions's major Bill. At that time, he may well argue that the detailed arrangements for the future of the ILEA, its composition and its powers, will be clearer. The main Bill will presumably be passed and receive Royal Assent by the end of July 1985 in time for elections to be held in the subsequent October. That is really what the object of my amendment is. There may be advantages in arranging that the end of the term of office of members of the new ILEA should coincide with the borough elections that become due in 1990. That would enable my object to be achieved, the Minister may well argue, just as effectively as including it in this amendment in this Bill. Such arguments will no doubt weigh with your Lordships. But what really matters is that changes now apparently to take place in the manner in which London is governed should be carried out with the least interruption and damage to its greatest service—education. I hope very much that the Minister's reply will make it unnecessary for me to divide the House. But, if it is necessary, I hope that your Lordships' judgment will support the amendment. I cannot of course guarantee that if it is passed, we shall find favour in the sight of the Lord; but I know that we shall earn the gratitude of all those who have at heart the real interests of education in London. I beg to move.
Viscount Whitelaw: When I announced in this House the change that the Government proposed to make in relation to elections to the Greater London Council and the metropolitan county councils, I told my noble friend Lord Alport that I hoped to be able to tell the House at Report stage what had been decided on the timing of direct elections to the Inner London Education Authority. As noble Lords will know, the ILEA is a committee of the GLC. Unless reconstituted, it would disappear with the abolition of the GLC. The Government, as the House knows, have decided that the ILEA should continue in existence as a directly elected body. That decision has I think been welcomed by my noble friend and many others. We are fully aware of the importance of getting the timing of this important election right. The new ILEA must be elected in good time to allow it to prepare for a smooth takeover of its important functions. That is the burden of the extremely important amendment of my noble friend Lord Alport. I accept its importance. I accept, too, naturally, what my right honourable
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friend the Secretary of State for Education said in another place about the balance so far as the dates are concerned and the importance of getting this right.
My noble friend's amendment provides for the elections to be held not later than 1st November 1985. Whatever wisdom has been granted to me—and I should say to the right reverend Prelates, evidently not much—what has been granted to my noble friend is considerable, because I continue by saying that the Government are now firmly of the view that this is a matter best left to the main abolition Bill itself. The Government have been criticised for attempting to make major advance provisions in this Bill that would more appropriately be dealt with in the main Bill. Noble Lords may agree that this is such a provision. Our intention is to deal with the date of the ILEA elections together with the substance and dates of all other matters connected with abolition in the main Bill itself.
In my reply to my noble friend Lord Alport on 5th July, I said that I would come back with a clear indication of what the Government intends. I hope that he and the House will forgive me for perhaps going a little further than I should have done on that occasion. I certainly trust that what I have been able to put forward is the Government's firm decision to deal with this matter in the main abolition Bill. That has, however, this advantage. The Government, in finalising the provisions that we are putting into the main Bill, are considering carefully how the dates of various measures should be arranged in relation to each other. In making these decisions, we shall consider most carefully all the arguments that have been deployed in relation to this amendment. There will then he an opportunity for your Lordships to debate the Government's substantive proposals on timing when the main abolition Bill reaches this House. The Government's overriding concern will be to ensure that the date chosen is the most appropriate one for the proper continuation of educational facilities in London. I agree wholly with what my noble friend said—it was the main purpose of his amendment—that education must not suffer and that we must make certain that it does not.
I hope that my explanation will help to meet my noble friend's concerns. I can give him a categorical assurance that dealing with the date of elections to the new ILEA in the main abolition Bill rather than in this paving Bill will not preclude the holding of those elections in the Autumn of 1985 if that is the best course to follow. The Government will carefully note my noble friend's view. I shall see that it is brought to the attention to those of my colleagues most closely concerned. We have noted what he says is the best date. We shall consider that most carefully. When the abolition Bill itself comes forward, the matter, coupled naturally with our decision, will then be put before Parliament for full debate. I am grateful to my noble friend for having raised this important matter in the way that he has done. In the light of what he has said, I hope that he may now feel able to withdraw his amendment.
Lord Kilmarnock: My Lords, having supported the noble Lord, Lord Alport, in Committee, I should like to do so again, very briefly. In my submission, the

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sooner that elections to ILEA are organised and held the better. The noble Viscount the Leader of the House has spoken of deferring this decision to the main abolition Bill, which presumably would be likely to receive Royal Assent, if it does, some time in the summer of 1985. But it must be borne in mind that the existing GLC councillors will be in place for a further year from that date. Imagine the chaos of demoralised GLC councillors, in their last months, preoccupied with staff problems and the dismantling or handing over of existing services, with neither time nor will to deliver prompt decisions on key matters affecting London education!
If the Government want to argue, if the noble Viscount wants to argue, that there is no problem as ILEA's elections will follow immediately on the demise of the existing councils, they or the noble Viscount should first take into account the following obvious difficulties. The new body will need more than a few weeks to decide on the composition of its committees. The transfer of key staff from the GLC to the new body will take some time. During this process, decisions on the appointment of head teachers, on the repair and maintenance of buildings, and on the purchase of vital teaching aids and materials, will have to be deferred, to the detriment of teaching in the schools.
I should like to make a plea to the Government not to involve ILEA, quite unnecessarily, in the death throes of the GLC, if that is to be its fate. If these throes should be prolonged beyond the Government's target date, as many prophesy they will, ILEA will be left in limbo and elections will presumably be deferred for an indefinite period; and that cannot be right.
The noble Lord, Lord Alport, has made an excellent case for advancing by a few months the ILEA elections, to which the Secretary of State is committed, in order to ensure a smooth transition and lack of disruption to the education of London's children. One gathers from the noble Viscount's speech that the Government do not intend to accept the amendment, but I hope very much that they will bear these considerations in mind and attach to them the importance they deserve when they are deciding on the date for the ILEA elections.
Baroness David: My Lords, my name was put to the last amendment of the noble Lord, Lord Alport, at the Committee stage of the Bill, and I was strong in supporting him to have the elections for ILEA in May 1985. I have to confess that I find it more difficult to support the idea that the elections should happen by 1st November, and I think that, on balance, if they are not to be in May next, which would be the ideal solution for ILEA, perhaps it would be wise to wait to see what is in the main Bill. But I hope that all the considerations about transfer, the problems for the schools, for the officers and for the staff will be taken into account by the Government when the date of the elections for ILEA is considered.
Lord Alport: My Lords, I am grateful to the noble Lord, Lord Kilmarnock, and to the noble Baroness, Lady David, for the support which they have given on two occasions and the advice which they have given to
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your Lordships' House on this particular matter. Having listened very carefully to what my noble friend Lord Whitelaw has said, I think it would be difficult for me to proceed with this amendment on this occasion. Quite clearly—and I think that it is well recognised—there are still many details to be decided with regard to the arrangements for the government of London after the end of the GLC, and at present those are not clear. I believe it would be right to give further time for the Government to make up their mind with regard not only to the form of the new ILEA but also to the date when the elections should take place.
I would say only this, if I may. While one will wait for the major Bill to come next year, I hold myself free to introduce this subject if the provisions that are put forward in that Bill do not, in accordance with my view, fulfil the needs of education in London. In the meantime, while waiting for that Bill and thanking my noble friend for the reply which he gave, I beg leave to withdraw this amendment.
Amendment, by leave, withdrawn.
Clause 4 [Replacement of councillors]:
Lord Bellwin Lord Bellwin moved Amendments Nos. 7, 8 and 9:[Printed earlier: col. 1181.]
The noble Lord said: My Lords, by leave of the House, I beg to move Amendments Nos. 7, 8 and 9 en bloc.
On Question, amendments agreed to.
5.45 p.m.
Clause 6 [Supplementary provisions]:
Lord Bellwin Lord Bellwin moved Amendment No. 10:
[Printed earlier: col. 1181.]
The noble Lord said: My Lords, the purpose of this amendment is to enable the Secretary of State, if he considers it necessary for the transaction of business, to reduce the quorum of the council of an abolition authority below that specified in the Local Government Act 1972. The considerations to which I referred in moving the new disposals of land clause are relevant to this amendment also.
Your Lordships have already agreed that subsections (1), (2), (5) and (6) of Clause 6 will be omitted because they deal with appointments to the transitional councils, which will now no longer come into being. But subsection (3) will be amended so as to adapt the Secretary of State's power to reduce the quorum specified in the Local Government Act 1972 for meetings of the abolition councils, as they will now be.
As before, the power will be exercised only, first, if he considers it necessary for the transaction of business at council meetings; and, second, subject to annulment in pursuance of a resolution of either House. The purpose of the amendment remains the same as before—namely, to prevent council business from being disrupted by deliberate non-participation or the resignation of council members—and, like the other new counter-obstruction provisions, it needs to be seen in the context of the changed situation which I described earlier. I beg to move.
Lord Graham of Edmonton: My Lords, the Minister has made it quite clear that the purpose of the amendment is to negative any attempts by a council in situ to operate its own standing orders in accordance with the lights in which those standing orders were compiled; in other words, it is to anticipate an event which the Minister believes will happen. Of course, this is all part of a piece by the Government in this legislation. It remains to be seen whether or not those things come to pass; but what the Minister is doing is to seek powers to circumvent the possibility of a council exercising its own standing orders. In effect, what the Minister is doing is to amend the standing orders of the councils which are affected.
The House ought to take on board very carefully the draconian nature of the powers which the Government are taking. They are going to seek not only to reduce the quorum. I should like the Minister to tell us down to what number he feels it will be safe for him and his colleagues to leave a quorum in situ. I should like the Minister to spell out for us, before we make progress, the kind of actions which are likely to be the ones that will lead to this taking place: or is the Minister going to tell us before any actions at all take place—that is, in order to circumvent the very first retrograde action that the amendment of the standing orders is going to bring about?
Often standing orders refer to one-half plus one, or one-third plus one, depending on the numbers. Can the Minister tell us precisely the kind of amendment the Government have in mind? Are the Government going to take away the right of a council to exercise its own powers? If the Minister says he is going to take unto himself the right to reduce the quorum, what rights has the council left in respect of its own quorum and its own business?
To what extent is the Minister going to visit upon the council, its sub-committees and all of its other bureaucracy which is governed by standing orders, the effect of this amendment? It is all very well the Minister saying that it simply refers to a quorum, to those who need to be present in order for the business that is transacted to be valid. I can imagine some interesting situations which could arise. We need to be told the full extent of the powers which this simple amendment provides.
Sadly, the Government have not taken on board what they believe will be the situation before the abolition of the councils, but have anticipated the actions of certain councils in the event of progress being made as regards the abolition argument. So the Minister is simply telling us with all sweetness and light that all that he is doing is seeking to prevent a council conforming to its own standing orders. We want the Minister to tell us a little more of the circumstances in which he believes that he will need to act, and also a little more about the flesh on the bones of the amendment that he is proposing tonight. We need to know a great deal more.
Lord Bellwin: My Lords, by leave of the House, let me simply say that in terms of numbers it would, frankly, depend in each case upon how many people were turning up to ensure that the council's business was being conducted. If one is to assume that this is a draconian step which is being taken without any
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preconsideration, I would only have to refer the noble Lord—as I shall, if I am asked to do so, when we come to later amendments dealing with obstruction—to some of the statements made by many of the people who are currently working in these councils as to what they will do. If there is a sad aspect to this whole matter, it is that there are many people working in other of the councils concerned who would in fact seek, not only to disrupt but to prevent the council conducting its business. They are the ones who, as has so often been the case in the last few years in all matters of local government, have to pay a price, because there are those who say quite clearly, "Our intention is not only not to co-operate, but to seek to frustrate the policy; and if that means frustrating the operation of the councils, then so be it". We would be very remiss if we did not take powers to ensure that at least there be a quorum of people to conduct the council's business.
Any councillors who do not intend to act in an irresponsible way have nothing whatever to fear or to be concerned about as regards what this amendment seeks to do, because they will turn up and they will conduct the council's business. They are the elected members, and I should have thought it was their duty so to do. Moreover, that is their right and that is their opportunity. This could be described as a reserve situation to cover the possibility (I shall say no more than that, and I say less than others have said) that there will be those who do not want the council's business to function. It would be very irresponsible of government not to take some powers to do as we are proposing in this amendment, to enable them to ensure that the council can, in fact, operate.
Lord Graham of Edmonton: My Lords, by leave of the House, can the Minister be a little more specific about the circumstances in which these powers will operate? For example, if what we are now talking about becomes an Act of Parliament, can the Minister tell us by precisely how much a quorum will be reduced? If the Minister says that it depends, or that we shall have to wait and see, or that we shall have to anticipate, are we to await upon the intention of a councillor, or of many of them, not to turn up at a council meeting in order to take a decision? In other words, can the Minister tell us what will be the trigger?
The Minister talks in terms of generalities. The fact that a council does not like what a government are going to do is not news, it is not unique; it is happening all over the country. There are councils which are dragging their feet on a range of matters and which have done so not only over the last five years under this Government but for the previous five years under a previous Government. The Minister is asking us to make this an Act of Parliament, and, therefore, I want him to tell us the precise circumstances in which this piece of legislation will be used.
The quorum having been reduced, what leeway is there for accidents? With the quorum reduced, one assumes to a figure which will allow the minority who wish to attend the council meeting to make sure that there is a valid quorum, accidents can happen. What kind of leeway will there be? Shall we actually have the Minister in Whitehall altering figures, or is it going to be percentages? Whichever it is, what kind of leeway is

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there to take account of circumstances, whether or not there has been reluctance, which lead to accidents? The Minister needs to tell the House a little more.
Lord Bellwin: My Lords, again by leave of the House, the noble Lord referred to a council not liking what a government are doing. This has nothing to do with whether a council likes or does not like what a government are doing. This is simply about the conduct of the council's business—nothing more nor less than that. All that the Government are saying is that the council must continue to conduct its business. There are many people who have said, "We have no intention of enabling the council to conduct its business". They have not said it in those words, but they have said it in so many, and I shall give quotations if called to do so.
But the fact is that, faced with that type of situation, a government must have the power to enable there to be a quorum of members. The noble Lord asks, "How many should be a quorum?" You can fix the quorum at a lower figure, but that certainly does not stop others turning up. If the majority party wants to turn up, then that is what it ought to do. This whole discussion would have been unthinkable as recently as four or five years ago. It would have been absolutely unthinkable that people elected to office to represent the electorate should even talk of not turning up to conduct the council's business because that will frustrate Government policy. That is the type of scenario that we now see. It is so sad, and it cannot appeal to the noble Lord, Lord Graham, with his background in local government. We are putting this forward to make sure that the business is continued—there are no sinister motives or reasons. Whatever quorum is fixed, however low it may be, it is still within the power of the members and it is the right of the members—all of them—to turn up. Indeed, that is really all that the Government want them to do: to turn up and conduct the council's business.
On Question, amendment agreed to.
Lord Bellwin Lord Bellwin moved Amendment No. 11:
[Printed earlier: col. 1181.]
On Question, amendment agreed to.
5.58 p.m.
Lord Evans of Claughton Lord Evans of Claughton moved Amendment No. 12:
After Clause 6, insert the following new clause:
("Financial consequences of abolition.
.(1) Before the introduction into Parliament of legislation proposing the abolition of the Greater London Council and the Metropolitan County Councils and the transfer of their functions—

(a) The Secretary of State shall require the Audit Commission to inquire into and publish a report on the financial consequences of implementing proposals for the abolition of those authorities and the transfer of their functions; and

(b) That report shall be submitted to each House of Pariiament.

(2) The Secretary of State shall furnish to the Audit Commission conducting the inquiry referred to in subsection (1) of this section, a statement of the expected effects on public expenditure of the abolition of the Greater London Council and the Metropolitan County Councils and the transfer of their functions.").
The noble Lord said: My Lords, when considering this amendment I should be grateful if we could also turn our attention to Amendment No. 13.
Amendment No. 13: After Clause 6, insert the following new clause:
("Committee of inquiry.
.Before the introduction into Parliament of legislation proposing the abolition of the Greater London Council and the Metropolitan County Councils and the transfer of their function the Secretary of State shall appoint a committee of inquiry to inquire whether those authorities should continue in existence, and that committee of inquiry shall report on the matter.").
Both amendments seek to ensure that before the main abolition Bill is introduced into Parliament investigations are completed as to the need for, and the financial implications of, abolition. This paving Bill, as its name suggests, is intended to prepare the way for total abolition. There is, however, very considerable uncertainty about very many aspects of the abolition proposals which can be resolved only when the main Bill is discussed in another place and in your Lordships' House.
The evidence and financial estimates upon which the Government base their policy have not been made available, and it is suspected in some circles that those bases do not actually exist. In those circumstances, what these amendments seek to ensure is that information is gathered and assessed by independent bodies and presented to Parliament before Parliament is asked to consider the issue of abolition in the main Bill.
It might be thought that the Government, in seeking to be reasonable, would not wish to take the step of abolishing elections and by-passing precedent in an atmosphere of uncertainty and lack of information. However, to date the Government have refused to relax their determination to legislate with undue haste, without appearing to be sure of the consequences, and in the face of the 90 per cent. respondents who opposed the White Paper's proposals and who replied to the Government's request for submissions on the proposals.
The amendments bear directly on the Long Title of the Bill, which states that it makes:
"provision for the composition of the Greater London Council and metropolitan county councils pending a decision by Parliament on their continued existence".
Parliament can hardly take a fully considered, objective and balanced view of the future existence of these bodies when so little information is available to it. It is not enough to hope that more information may be made available by the Government when Parliament comes to consider the main Bill. These amendments seek to ensure that that information is made available and is required to be available.
So far as I can see, the Government have produced no evidence to support their proposals to abolish the councils, except that there is a general atmosphere that they should go and a feeling, engendered throughout the debates and discussions on these Bills, of a personal vendetta involved in the Government's proposals. There has been no independent investigation or inquiry set up by the Government to consider the functions, costs or operation of the Greater London Council or the metropolitan councils, the needs of their areas, or the relative effectiveness of alternative structures. A very interesting series of

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proposals has been put forward by the Conservative members of the Greater London Council for a London-wide body, with a different kind of constitution from the present one, but no consideration by this Government seems to have been given to the advice of their own friends.
Despite repeated requests, both here and in another place, Ministers have been unwilling to give any clear estimate of the costs which they claim that their proposals for the abolition of the six metropolitan councils and the Greater London Council would save. Again, they have refused to publish the public responses to the consultation on the White Paper, Streamlining the Cities. I gather that over 5,000 responses were received and, as I believe the Government have themselves conceded, less than 10 per cent. were in favour of the abolition proposals. In the face of this opposition from generally informed sources, the Government should surely concede the necessity for some kind of independent committee of inquiry to look into how best the present county-wide services should be administered, and these amendments seek to do just that.
In Committee on 3rd July, at cols. 234 to 240, there was a short debate on an amendment that I moved calling upon the Secretary of State to produce a report on the financial consequences of the abolition proposals. Your Lordships' Committee was then reminded that the only independent financial study, by Messrs Coopers and Lybrand, which was based on detailed information gathered from all the metropolitan counties and half the metropolitan districts, concluded that there would be likely to be extra costs—not decreased costs—of between £36 and £61 million per annum; and that is just in the six metropolitan areas, and excludes such extra costs as might be incurred in the Greater London area.
At that time the noble Lord the Minister opposed the amendment and he made a number of points; first, that the financial effects of abolition would depend on decisions to be made by the successor bodies once they have information on the existing Greater London Council and metropolitan county council services; secondly, that the time to debate the issue of costs should be during the debates on the main Bill; and, thirdly, that:
"The case must rest on the savings in administrative costs, overheads, and other things".—[Official Report, 3/7/84; col. 258.]
I propose here that before Parliament is asked to consider the main Bill, as the noble Lord the Minister suggested, the Audit Commission, which was set up under the 1982 legislation, should report on the financial effects of the abolition proposals in the light of the information which must have been gathered and will have been gathered under the later provisions of the paving Bill, and in the light of the Secretary of State's own assessment of the likely effect of his proposals on public expenditure overall.
Therefore, in moving these amendments I seek to meet Lord Bellwin's arguments: first, that the financial investigation would be conducted in the light of information gathered by the Secretary of State and by the boroughs and districts on the operation of the metropolitan councils and the Greater London Council services; secondly, that an informed debate about costs could then take place in your Lordships'
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House and in another place when the main Bill is introduced. Thirdly, it would ensure that an independent—I repeat, independent—study is made of the financial effects of removing a tier of government and redistributing the services of that tier—the services to be maintained, so the Government assure us, at the same level and at an equally high level among a mixture of boroughs, districts, joint boards, joint committees and central Government agencies.
In its submission on the White Paper, Streamlining the Cities, the National Union of Ratepayers' Associations stated:
"Before any fundamental alterations are embarked upon, evidence should be produced to show that the hopes of savings and better value for money have every chance of being realised in the future. The onus is on the Government to prove that its reorganisation plans will give … ratepayers a better deal".
Those comments were made by the National Union of Ratepayers' Associations and not by a political party or a group of Left-wing agitators. Presumably the ratepayers' association is the body of people most concerned to ensure that expenditure levels are kept down.
I believe that this amendment would ensure that the Government will have to discharge that burden before Parliament is asked to decide the issue on abolition. The Audit Commission was established under the Finance Act 1982 with extensive powers in respect of the economy, efficiency and effectiveness of local authorities, and we debated its powers and duties at great length in your Lordships' House during the passage of that Bill. If the Audit Commission, is appropriate for anything, it would seem to me to be particularly appropriate as the body to be asked to inquire into the costs of abolition and the likely cost of transferring functions to other bodies.
Without such reports, effectively, the Government seem to be asking Parliament to ignore the possible costs of their proposals, to ignore the possible costs or the possible savings which eventually will be contained in the main abolition Bill but whose first critical discussion was during the course of this paving Bill. I should have thought that the paving Bill provides the ideal opportunity to insert these amendments so that, when we discuss the main Bill, we shall have the fullest possible information about costs, expenses, and so on. Therefore, if we believe in open government and a full and effective discussion of the problems, I think it would be sensible for these amendments to be supported. I beg to move.
Lord Boyd-Carpenter: My Lords, this amendment and Amendment No. 13, to which I believe the noble Lord, Lord Evans, said he wished to speak, seem to me to be simply an attempt to involve the Audit Commission—and a wholly undescribed committee of inquiry in Amendment No. 13—in the processes of consideration of the forthcoming abolition Bill. This is an odd procedure. To talk, as Amendment No. 13 does, simply of a "committee of inquiry", without indicating its character, quality and function, seems to be quite extraordinary. But what strikes me even more about it is how derogatory this proposal is to the parliamentary process. If the Government are introducing complicated legislation of this kind with obviously substantial financial issues involved, then it

1227
is for the Government in another place and in this House to justify the proposals, including their financial aspects.
We heard a good deal a week of two ago about how certain former items in this Bill were derogatory to this House. It seems to me that the suggestion that none of us here is capable of probing the financial aspects of Government legislation is even more derogatory. This House is full of people with financial experience. It is full of people who have been directly involved in public finance. The idea that we are not capable—and would not regard it as our duty—of forcing the Government to give a clear account of the financial consequences for their measure seems to me rather offensive. I hope therefore that my noble friend will reject this amendment.
6.11 p.m.
Lord Sefton of Garston: My Lords, I find it strange to refer to an amendment of this sort as offensive and as in some way affecting the proper government of this country. If we were speaking of a Bill which was merely a financial Bill, and which dealt with certain statistics which dealt with certain matter of fact principles, then it might be that Parliament would be the only place to decide and to put forward the financial justification of the particular Bill.
However, the noble Lord starts from a premise that he assumes is right, and then builds a case upon a foundation which has no base at all. This is not just a Bill which talks about the financial consequences of doing something; a balance sheet that can be drawn up by the Government. The Bill we are discussing strikes at the root of government in this country, and I do not just refer to parliamentary government. If we have developed anything at all in this country that is of any use to mankind, it is a system of consent to government at practically every level from the grassroots right to the top. That is what we are talking about.
One of the major problems of this Bill, and the abolition Bill, is that it is undermining the consensus by which this country has operated for numerous centuries. It is undermining that consensus because now there is a wide feeling abroad among people who have spent a lifetime developing local government systems in this country. I only wish that some of the people who are here this afternoon to vote had in fact had some experience in local government.
Let me speak for Merseyside. Merseyside is a typical example of the problems being faced in this country both economically and socially. Merseyside is an area which for many years was dominated by the presence of Liverpool city council. It was the largest in a wide area, parts of which depended for their economic existence upon the existence of trade inside Liverpool. When people moved out to more luxurious areas like the Southport and Wirral areas they left behind problems of which we are seeing some manifestation now.
Merseyside has just gone through a traumatic experience, and gone through it mainly because that kind of consensus that should exist between central and local government has ceased to be. If we carry out
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the abolition Bill as the Government intend, I wonder what will they do when a local authority like Liverpool, hard pressed by economic problems, then starts once again to try to take decisions which central Government do not like? Will they abolish Liverpool? Within Merseyside that is where the problems are.
We shall have the abolition Bill after 10 years of a Merseyside county council. Supporters of that reorganisation from that side of the Chamber said that it would take perhaps five to 10 years for there to develop a new attitude towards local government and central Government. After 10 years the Government propose to get rid of it and substitute the kind of local organisation which led to the problems on Merseyside, and which led to the fragmentation of decision-taking inside Merseyside when it was so important to build up a consensus on Merseyside that would lead to a good society.
Now that has gone. What we are talking about now is whether or not the Government should go forward, and try to convince many good people on Merseyside who have spent a lifetime in local government that they want to take them with them; that they want to demonstrate that this is a good move; that after the change Merseyside will be a better place to govern, a better place to live in, and a better place socially. That is what the Government should be doing. But what are the Government doing?
Question after Question has been put down in this House as to the research which the Conservative Party or the Government have carried out into these proposals. There have been no answers. Question after Question has been put down in this House as to the consequences, financial and otherwise, of the proposals they were bringing forward. There have been no answers. The truth is that this Government are determined to do what they have decided to do inside the Conservative Party. They do it at their peril, because just as the consensus has been destroyed in this country, just as the alienation of millions of trade unionists has taken place, just as the alienation of moderately-minded people has taken place because of the economic pressures of 4 million people without a just standard of life, so it will happen in local government. The consensus will be gone completely.
At least if we carry this amendment it will demonstrate that the Government are prepared to show their cards on the table, and let all the financial consequences be examined in an independent way so that people inside local government can be taken along with any proposal. And we hope that, if the Government are shown by a proper and impartial examination to be wrong in certain things, they will be able to change their minds. It will at least get us away from the idea that the Government are determined to impose their will upon a local government system which is one of the most valuable things that this country has ever created.
I urge the noble Lord, Lord Bellwin—not because he happens to be the Minister concerned; and it is a fairly hopeless request—in the name of all the conversations that he and I have had in the AMC and other places, and I urge him because of all the beliefs that he held about local government, that we should preserve this local authority purpose, and that we should not

1229
fragment into the kind of local government that this Bill will impose on Merseyside, and to think again and have this inquiry.
Lord Bellwin: My Lords, may I say first that I would wish that the noble Lord, Lord Sefton, was as vehement in his expressions of concern about so many things. I know that he has these concerns—because I too gladly refer to the conversations not that we had, but that we still have from time to time—about what is happening in local government. In response to an earlier amendment I mentioned that we are discussing taking measures that five years ago would have been unthought of and unnecessary. There is so much going on in local government today which is anathema to those who are really concerned about the future of local government. I shall come to the points that the noble Lord made in a moment, but that had to be said in the beginning in that the noble Lord asked me something specifically referring to my background in local government.
Lord Sefton of Garston: My Lords, there is no one who has opposed what is going on in local government more than I have. There is no one who disagrees more with the abuse of power inside local government which is being operated in certain places. But am Ito say that over and over again? Because Ken Livingstone steps over the boundary, does that mean that the Government are going to change the whole system? Is it not just possible that if the Government tried another approach we could get local government back on to an even keel; we could once again re-establish in this country the consensus which used to exist between central and local government? We cannot, because the Government will not even try.
Lord Bellwin: My Lords, I should have begun my response with a quotation which reads as follows:
"We shall, therefore, legislate to create unitary district authorities which will be responsible for all of their functions in their area so that they can sensibly undertake. We shall, of course, consult carefully and genuinely before we introduce our legislation. However, we shall set up no more inquiries. We shall legislate. And we shall legislate so that these reforms will be enforced during the lifetime of the next Parliament".
That was Gerald Kaufman just prior to the general election on behalf of the Labour party. So whoever should be concerned about our having to set up inquiries and so on, I do not think it should be any of your Lordships opposite.
The debate we are having about the financial implications is one that we have had several times already. We had it on Second Reading, in Committee and I have had it in many places elsewhere. No doubt we shall have it again. The fact is that, however one sets out, one cannot tell now what will be the decisions taken on spending by local authorities for the first year when they will be taking over the planning cycle 1986–87. It is all right to quote Coopers and Lybrand, but if one reads them carefully one sees that they qualify everything they say all along by referring to assumptions that they are making. There is no objection to that, but they have to make assumptions.
Another equally famous—if that is the right word—certainly respected company, Price
1230
Waterhouse (who did not spend the time Coopers did, but no one can take away from them in any sense their reputation compared with Coopers) were willing to put their name to something quite different. One can argue this at length, but in thinking about it carefully one finds it makes no sense to try to base assumptions on the kind of assumptions that were made.
We have taken steps and made inquiries and there are reports from people in the North-West, from treasurers and leaders of councils in London with their projections on what they think will come about. Not only do they endorse our original thoughts about savings, but they go much further than we would. I would not want to put numbers, but the Government would say that seriously to consider taking out a whole tier of local government—a tier which has built up to employ in administration alone the numbers that there now are—and to say that there can be no savings, is to fly in the face of any logic. We do not accept that that is so. I have explained why we do not accept this business about another review. Of course, it means delay: that is what opponents of the Bill want to see. But we shall not get into that.
We have said, and your Lordships are aware, that the Secretary of State has given a firm and clear understanding that we will keep Parliament fully informed on the cost of and savings from this change. In particular, the Financial and Explanatory Memorandum of the main abolition Bill will state the expected effects on public expenditure. But there is no purpose in placing a clause in this Bill to produce an unnecessary report and to cause unnecessary delay before the information is available.
Quite apart from the objections that I have already raised, neither of these amendments has any place in the paving Bill. Both amendments seek to remove the Government's right to introduce and Parliament's right to consider a future Bill as and when it is expedient so to do. If Parliament wishes to place conditions or caveats on the main abolition Bill, those matters should be discussed as part of that Bill. That is all I want to say on the amendments.
I have one last word as I sit down. I keep saying that this is Report and I do not want to keep on bobbing up and down, but to respond to the noble Lord, Lord Sefton, the fact is that he knows as well as I do that just about everybody in the metropolitan districts, every district leader at the time of reorganisation and since and up to the time when the Government announced their intention to introduce abolition, was speaking out vociferously and fervently in favour of abolition. They know very well that while there may be an odd situation where they may not do better, the fact is that I believe very much that in a unitary authority the local people know best. How on earth Liberals, of all people, can oppose us on this I do not know, with their continued expression on wanting local government to be at as local a level as it can be. I do not accept that we have a better system working where I come from than worked before reorganisation; quite the contrary. If you can show me any services that have worked better I want to see them, and if you do I will show you another one that is worse. The fact is that I am far from convinced. I believe vehemently, as does the noble Lord, Lord Sefton, that abolition when it comes—it is

1231
not part of these amendments or of the Bill—will be better and will get us back to where we ought to be in local government, at the local level.
Lord Graham of Edmonton: My Lords, more than once the Minister has said that we have been over this ground before. These questions have been asked at Second Reading. The questions have been asked, but no answers have been given. The Minister says that it is not possible to give answers to certain of the questions, but I invite him to look forward to the situation when the alterations take place, the dust dies down, the figures are produced and the ratepayers are faced by a Bill which is infinitely more costly than what is paid now. The Minister cannot tell us that it will not be so, as he is unwilling to give us any figures. I imagine that people will then say, "We don't like that. Let's go back to where we were before". One of the premises upon which the abolition case has been built is that ratepayers' money is being wasted in a range of ways. Never mind the way in which grants are given, the whole bureaucracy is wasteful. When the Secretary of State announced his intentions in these matters he was not as coy as the Minister is now on one of the main planks. One of the main planks was that this would save money.
All these amendments are doing is to ask the Government to let us have some validation of the arguments that the Government have used. Who better to do that than—not a private organisation as respected as are Coopers and Lybrand, or anyone else—the Government's own Audit Commission? What on earth is wrong with that? I will say what is wrong. The Government have a timetable; they want to get this quick rather than right. If they get it quick and it turns out to be wrong, too bad, the damage has been done but it will not be damage in the Government's eyes. They will have achieved their objective. That is not to save money or to get local government reorganised, but to get rid of the local government units that are proving to be such an embarrassment.
The Minister could help us considerably by answering the questions that have been asked here this evening. The noble Lord, Lord Evans, says there is no evidence. What the Minister has said is that he has seen some interesting information from the North-West and from some of the treasurers in the metropolitan areas. The House may decide that something the Minister has seen, that we have not—the Minister will not tell us about it—is sufficient for us to pass a massive piece of legislaton.
I invite noble members opposite to contemplate the enormous hostage to fortune that they are giving. The noble Lord, Lord Boyd-Carpenter, in what I think will be looked upon as a memorable phrase, said that this House would be offensive if we were to force the Government to give a clear account of the financial consequences of their legislation. How offensive is that, not merely to your Lordships' House but to the whole concept of what we are supposed to be here for? We are supposed to be here not merely to ask the question but, before we pass the legislation, to be satisfied. The noble Lord, Lord Boyd-Carpenter, said that it would be derogatory and offensive if we were to force the Government to give a clear account of the
1232
financial consequences of their actions.
Lord Boyd-Carpenter: My Lords, will the noble Lord allow me to intervene? I have rarely met such a perversion of my argument. The point that I was making was that when the Bill—in this case the abolition Bill—is before Parliament it will be the function and the duty of both Houses of Parliament to get from the Government the financial consequences and to press them for all available details at that stage.
6.30 p.m.
Lord Graham of Edmonton: My Lords, I would simply say that Hansard tomorrow will reveal whether the premise upon which I made my criticism of what he said is valid or not. What the noble Lord is saying is, "Let us get on with it; let us pass the first piece of legislation to abolish the metropolitan counties and the GLC! Let us do that first and then let us see what case the Government wish to present later". There is no one in business who is looking at feasibility studies and there is no council which has had an idea put to it which will not ask how much it will cost, how much it will save and what will be the financial consequences, before taking the first decisions.
These are the first decisions in toto and what we are asking is that, before Parliament accepts the premises behind the first decisions, we should have some financial details. The Minister is entitled to say that the proper place for that is at a later stage. We are simply saying that the earlier we can do that, the better it will be as far as we are concerned. The noble Lord, Lord Boyd-Carpenter, said that it would be an odd procedure for us to involve the Audit Commission in the abolition Bill because both Bills hang together—but that is what we are doing.
My Lords, this is what we are driven to as an Opposition. We believe that the financial consequences, let alone the political and bureaucratic consequences, will be enormous. We are simply saying to the Government, "Why do you not put your money where your mouth is?"Why do the Government not say to us, "Here is the evidence"? If that means a delay of months or of a year, let us see the evidence. The Minister believes that when the evidence is produced the people will accept it. What we are saying is, "Produce the evidence first!" We have been invited to buy this particular pig in a poke. The questions that we have been asking have not been answered, and they deserve to be answered.
When the noble Lord, Lord Evans of Claughton, made his earlier remarks, what he said was that there is insufficient information of a financial character. We have been deluged—of course we have—with special pleading not only from the authorities but from the bodies that believe that they themselves are going to be affected. But there is no use in hoping that the information will come along later. We need the information at this particular time. There is no argument about it: the Government have certainly made their case based upon the financial savings. The noble Lord, Lord Evans of Claughton, actually began to deliver as far as he was concerned. Five thousand responses have been made to the White Paper and, as far as the Government are concerned, only 10 per cent. of the 5,000 are in favour of the abolition proposals.

1233
When the GLC had to look at this proposition, it made available all the submissions which had been put forward. Together with other noble Lords (not all of one political persuasion) I went to County Hall to look at them. In fact, some could say that that was a put-up job; hut, of course, they would—would they not?—because their grants are affected. But at least the evidence was there for us to see; and they are very worried people. And all that they are saying to the Government in respect of the financial case is, "Why do the Government not produce some figures?" We know why. It is because the original premise upon which the Government's case is made is one that is very shaky indeed.
As far as we on these Benches are concerned, what we are getting, sadly, in this debate are bias and prejudice from both sides of the argument. We are, each of us, the protagonists in these arguments, convinced that the other is wrong; that there is something malevolent about the actions that are being taken in proposing the matters and also that somehow or another we have got no right to oppose them. What we are saying is that when it comes to finance, there ought to be no argument. The Government have rested upon the premise that it is impossible to forecast the kind of programmes and the kind of work that is going to be done. I am simply saying that it is all very well but we want some figures which either can be accepted or can be criticised.
The noble Lord the Minister failed to take any account of the arguments of the National Union of Ratepayers. While they are not a political body, I think that one of the cases that the Minister and his colleagues have made in manifestoes and other places, is that the ratepayers are demanding these abolition steps. The National Union of Ratepayers are saying that before those steps are taken, the onus is on the Government to prove that their reorganisation plans will give ratepayers a better deal. We know what the ratepayers, in the main, mean by a "better deal": that is, not only value for money but also a reduction in the cost of the service. I hope that, when the noble Lord, Lord Evans, responds to this particular amendment, he will certainly press upon the Minister that the Government have run away from the opportunity they had. They had an opportunity not only to convince their own supporters, those behind them who have listened with care and diligence to the arguments but still have been denied the facts. They have not been given the facts by this side of the House because we are not prepared to speculate about the situation. The Government have rested their case on prejudice and bias and we believe that that could be negatived substantially if they were prepared to use proper financial yardsticks.
Lord Evans of Claughton: My Lords, I have listened to everything that has been said during the debate on this particular amendment. I am grateful to the noble Lord, Lord Sefton of Garston for his support. We have been members of the same council in opposition to each other for a number of years. He will know that over the period when I was on the county council and he was chairman of it, I was then (as I still am in principle)—surprise! surprise! to the noble Lord the Minister—opposed to the concept of metropolitan
1234
counties. However, I must say that the Government have made such a mess of this legislation that I am actually becoming quite fond of them. I think that the Greater London Council is a different matter. I believe that there is need for some kind of strategic planning and so on for a capital city.
I am anxious to have the information to enable me to find out what are the financial arguments for and against abolition of one tier of local government. I was never in favour of blank destruction of the county councils. I wanted them to be replaced by some form of regional government; and that is still broadly my view. I was rather surprised at the noble Lord, Lord Boyd-Carpenter, being so upset by this desire on my part that your Lordships and everyone else should have more information to enable them to come to a sensible decision as to whether the metropolitan county councils should go or should remain. I think that the arguments of the National Union of Ratepayers are very valid arguments in this context. I accept the fact that I merely suggested in my second amendment that the Secretary of State should set up a committee. I concede that it will have to be more specifically stated but I have sufficient trust in the Secretary of State to believe that, if my amendment were carried, the Secretary of State would set up a committee of inquiry which was of a balanced nature.
However, I believe that the Executive has access to far more information than do the Opposition parties. Therefore, if the argument on the main Bill is to be a sensible and deep-thinking argument, I think we are entitled to have more information than the Government seem to be making available to us. I think we should have it early, before the main Bill, rather than later during it. I think that that is a perfectly sensible proposal. I must say to the noble Lord the Minister that he may believe that Gerald Kaufman speaks for me but I want to assure him with great warmth that Gerald Kaufman does not speak for me, nor for my noble friends in either the Social Democratic or the Liberal Parties. I would like to remind the noble Lord the Minister that I was working away quite happily as a county borough councillor saying what a fine form of government county boroughs were when what happened but his previous Conservative Government came along and destroyed our beautiful unitary system and replaced it with a two-tier system in the metropolitan areas which none of us wanted at that time. It was forced on us. Now the Government, having realised their mistake, want to dismantle it without going into detail as to what are the financial implications and so on.
So I do not think that it is we on these Benches who have been inconsistent. I think that it is the Government who have been inconsistent. I believe that we should force them, in so far as we can—perhaps we are becoming a little arrogant but possibly what has happened today has made us slightly less arrogant—to provide your Lordships of all political persuasions and of none with the information that the National Union of Ratepayers wants and that any person sensibly interested in the future of local government should want and should be entitled to receive. Therefore, I seek to test the opinion of the House on this amendment. I beg to move.
6.40 p.m.
On Question, Whether the said amendment (No. 12) shall be agreed to?
Their Lordships divided: Contents, 107; Not-Contents, 197.

DIVISION NO. 2

CONTENTS

Airedale, L.

Lawrence, L.

Amherst, E.

Llewelyn-Davies of Hastoe, B.

Ardwick, L.

Attlee, E.

Lloyd of Kilgerran, L.

Aylestone, L.

Lockwood, B.

Balogh, L.

Longford, E.

Beaumont of Whitley, L.

McCarthy, L.

Bernstein, L.

McIntosh of Haringey, L.

Beswick, L.

MacLeod of Fuinary, L.

Birk, B.

McNair, L.

Blease, L.

Mar, C.

Blyton, L.

Mayhew, L.

Bottomley, L.

Milford, L.

Bowden, L.

Milner of Leeds, L.

Brimelow, L.

Molloy, L.

Bruce of Donington, L.

Mountevans, L.

Burton of Coventry, B.

Mulley, L.

Carmichael of Kelvingrove, L.

Nicol, B.

Oram, L.

Chitnis, L.

Phillips, B.

Cledwyn of Penrhos, L.

Pitt of Hampstead, L.

Collison, L.

Ponsonby of Shulbrede, L.

Cooper of Stockton Heath, L.

Prys-Davies, L.

Rhodes, L.

David, B.

Ritchie of Dundee, L.

Davies of Leek, L.

Rochester, Bp.

Dean of Beswick, L.

Rochester, L.

Diamond, L.

Ross of Marnock, L.

Ennals, L.

Sainsbury, L.

Evans of Claughton, L.

Scanlon, L.

Falkland, V.

Sefton of Garston, L.

Foot, L.

Serota, B.

Galpern, L.

Shackleton, L.

Gifford, L.

Simon, V.

Gladwyn, L.

Stallard, L.

Gosford, E.

Stedman, B.

Graham of Edmonton, L.

Stewart of Alvechurch, B.

Grey, E.

Stewart of Fulham, L.

Grimond, L.

Stoddart of Swindon, L. [Teller.]

Hall, V.

Hampton, L.

Stone, L.

Harris of Greenwich, L.

Stabolgi, L.

Hayter, L.

Taylor of Blackburn, L.

Hooson, L.

Taylor of Mansfield, L.

Houghton of Sowerby, L.

Tordoff, L. [Teller.]

Howie of Troon, L.

Underhill, L.

Hughes, L.

Wallace of Coslany, L.

Hunt, L.

Wedderburn of Charlton, L

Irving of Dartford, L.

Wells-Pestell, L.

Jacques, L.

Whaddon, L.

Jeger, B.

White, B.

Jenkins of Putney, L.

Wilson of Langside, L.

John-Mackie, L.

Winchilsea and Nottingham, E.

Kaldor, L.

Kilbracken, L.

Winstanley, L.

Kilmarnock, L.

Young of Dartington, L.

NOT-CONTENTS

Abinger, L.

Barber, L.

Airey of Abingdon, B.

Bauer, L.

Aldington, L.

Belhaven and Stenton, L.

Alexander of Tunis, E.

Bellwin, L.

Allerton, L.

Beloff, L.

Ampthill, L.

Belstead, L.

Annaly, L.

Bessborough, E.

Astor, V.

Biddulph, L.

Avon, E.

Birdwood, L.

Bagot, L.

Bolton, L.

1236

Boyd-Carpenter, L.

Hyton-Foster, B.

Brabazon of Tara, L.

Inchcape, E.

Braye, L.

Ingrow, L.

Bridgeman, V.

Ironside, L.

Brookeborough, V.

Kaberry of Adel, L.

Brougham and Vaux, L.

Kemsley, V.

Broxbourne, L.

Killearn, L.

Bruce-Gardyne, L.

Kilmany, L.

Caithness, E.

Kinloss, Ly.

Cameron of Lochbroom, L.

Kintore, E.

Camoys, L.

Kitchener, E.

Campbell of Alloway, L.

Knutsford, V.

Campbell of Croy, L.

Lane-Fox, B.

Carnegy of Lour, B.

Lauderdale, E.

Carnock, L.

Lindsey and Abingdon, E

Cayzer, L.

Long, V.

Chelmer, L.

Lucas of Chilworth, L.

Chelwood, L.

Lyell, L.

Cockfield, L.

McAlpine of West Green, L.

Colwyn, L.

McFadzean, L.

Constantine of Stanmore, L.

Mackintosh of Halifax, A

Cork and Orrery, E.

Macleod of Borve, B.

Cottesloe, L.

Marley, L.

Cowley, E.

Maude of Stratford-upon-Avon, L.

Cox, B.

Craigavon, V.

Merrivale, L.

Craigmyle, L.

Middleton, L.

Craigton, L.

Milne, L.

Crathorne, L.

Minto, E.

Croft, L.

Molson, L.

Dacre of Glanton, L.

Monk Bretton, L.

De Freyne, L.

Monson, L.

De La Warr, E.

Montagu of Beaulieu, L.

Denham, L. [Teller.]

Morris, L.

Digby, L.

Mottistone, L.

Dilhorne, V.

Moyola, L.

Drumalbyn, L.

Munster, E.

Duncan-Sandys, L.

Murton of Lindisfarne, L.

Dundee, E.

Northesk, E.

Eccles, V.

Nugent of Guildford, L.

Eden of Winton, L.

Onslow, E.

Elibank, L.

Orkney, E.

Ellenborough, L.

Orr-Ewing, L.

Elliot of Harwood, B.

Peel, E.

Elphinstone, L.

Pender, L.

Elton, L.

Penrhyn, L.

Erne, E.

Perth, E.

Erroll of Hale, L.

Peyton of Yeovil, L.

Faithfull, B.

Pike, B.

Fanshawe of Richmond, L.

Platt of Writtle, B.

Ferrier, L.

Plummer of St. Marylebone, L.

Fisher, L.

Fortescue, E.

Portland, D.

Fraser of Kilmorack, L.

Radnor, E.

Gainford, L.

Rankeillour, L.

Gardner of Parkes, B.

Rawlinson of Ewell, L.

Geddes, L.

Reay, L.

Gisborough, L.

Redesdale, L.

Glanusk, L.

Remnant, L.

Glenarthur, L.

Renton, L.

Gormanston, V.

Renwick, L.

Gowrie E.

Rochdale, V.

Gray, L.

Romney, E.

Gray of Contin, L.

Rotherwick, L.

Grey of Naunton, L.

Ryder of Warsaw, B.

Gridley, L.

St. Davids, V.

Grimston of Westbury, L.

Saint Oswald, L.

Haig, E.

Savile, L.

Hailsham of Saint Marylebone, L.

Selkirk, E.

Sharples, B.

Halsbury, E.

Sherfield, L.

Harmer-Nicholls, L.

Skelmersdale, L.

Harvey of Tasburgh, L.

Soames, L.

Harvington, L.

Somers, L.

Hastings, L.

Southborough, L.

Henley, L.

Spens, L.

Hertford, M.

Stamp, L.

Hindlip, L.

Stodart of Leaston, L.

Hives, L.

Swansea, L.

Home of the Hirsel, L.

Swinton, E. [Teller.]

Hornsby-Smith, B.

Taylor of Hadfield, L.

Howard of Henderskelfe, L.

Terrington, L.

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Thomas of Swynnerton, L.

Vaizey, L.

Torphichen, L.

Vaux of Harrowden, L.

Townshend, M.

Vickers, B.

Tranmire, L.

Vivian, L.

Trefgarne, L.

Whitelaw, V.

Trenchard, V.

Windlesham, L.

Trumpington, B.

Wise, L.

Ullswater, V.

Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.
[Amendment No. 13 not moved.]
6.50 p.m.
Clause 7 [Establishment and functions of staff commission]:
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 14:
Page 6, line 3, leave out from ("such") to ("shall") in line 5 and insert ("relevant authorities, bodies representative of such authorities and staff employed by them").
The noble Lord said: My Lords, with this amendment I should like to take Amendment No. 15.
Amendment No. 15: Page 6, line 5, leave out ("not later than one month after the passing of this Act").
The amendment seeks to broaden the requirements on the Secretary of State to consult before establishing the staff commission and to remove the current discretion as to which organisations are consulted. There is of course real pleasure that some consultation is taking place and what we are asking the Government to accept is that the consultation be widened.
Clause 7 requires the Secretary of State to consult such local authority associations or local authority unions as appear to him to be concerned, before establishing the commission. The commission is to be established within one month of the passing of this Bill. It is obvious from the Government's timetable that the consultation is not intended to be extensive.
In Committee the noble Lord, Lord Skelmersdale, at column 186, indicated some sympathy with the argument for greater consultation, but he rejected the grouped amendments on the ground that a veto might be given to individual authorities to block the establishment of the commission. What was Amendment No. 31 might have appeared to give rise to that veto and so it has not been re-tabled. Therefore, in our view the Government ought to be minded to accept the amendment that is now before the House.
As this amendment makes clear, there is no requirement on the Secretary of State to consult the local authorities directly affected by the abolition proposals; this is despite the fact that Clause 7 defines them as relevant authorities for starring purposes. Consultations are to be conducted, if at all, through local authority associations; that is, the AMA and the Association of London Authorities. As was made clear in Committee by the noble Lord, Lord Evans, and myself, this could place the AMA in particular in a very difficult position. The House might recall the argument that the AMA, which has to represent the views of disparate organisations within it, may very well have some difficulty in doing that, though it is not an impossibility.
In the same debate the noble Earl, Lord Kintore, also said, speaking from the Government's point of
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view, that all opinions should be represented in the consultations. The consultation process itself will take place in difficult circumstances. The main Bill will still be at an early stage of discussion during the one-month period and we are simply trying to forecast and anticipate when this present Bill will receive Royal Assent. The expectation is—I think not unreasonably—that when that happens, the main Bill will still be before Parliament, either in another place or here.
The first year of the staff commission's work will take place in a virtual vacuum, without the backing of an agreed abolition policy. We believe that in these circumstances it is important that the upper- and lower-tier authorities are given the opportunity themselves to take part in the consultation.
Again I quote the noble Lord, Lord Skelmersdale, who at column 189 complained that relevant authorities had not themselves instigated consultations with the Government since the publication of the Bill. With due respect to the Minister, that is not the point that we are trying to make in this amendment. As a matter of both principle and practice, all authorities affected should have the opportunity to engage in consultation at a serious level. If a number were then to choose not to take part in consultation, that would be a matter for them. The House might prefer to follow the words of the noble Lord, Lord Skelmersdale, on 3rd July, at column 188, when he said:
"My right honourable friend will be perfectly happy to consult with those who want to consult him".
All we are seeking is a form of words on the face of the Bill which will allow those who wish to consult the Minister to exercise their statutory right to do so. The trade unions, whose members will be affected, should also have a clear right so to do. I think the Minister can rest assured that without that written into the Bill, people vitally affected—both trade unions and local authorities—are unlikely to find a means whereby their views will be put.
What we want is the removal of the discretion, and we believe that there is a discretion on the Secretary of State to consult such trade unions or local authorities as he (that is, the Secretary of State) considers it proper to consult. The amendment would require such consultations to be offered to local authorities and their associations, as well as the trade unions. To date there has been no discussion with the trade unions over the implications of the break-up of the upper-tier councils, and the Minister has, I think, the opportunity to tell us whether that is correct. In other words, have there been consultations with the trade unions on the consequences of the abolition Bill? If in fact there has been no opportunity and consultations have not taken place, will the Minister tell us how he is going to set about consulting the trade unions on this matter?
In our view, the Government are moving with undue haste. I would repeat that they need to be right, rather than quick. We believe that our amendments are reasonable and they ought to have the support of a sympathetic Minister, who replied to the debate on the last occasion and who is in his place to answer them here tonight. I beg to move.
Lord Hooson: My Lords, from these Benches I should simply like to indicate that we support this

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amendment. We think it is very important that there should be the broadest consultation. It really is a criticism of the Government and their strategy that this consultation has not already taken place. I was moved to intervene because of a remark made by the noble Lord, Lord Bellwin, on the last amendment, when he twitted the Liberals, of all people, as being against the idea of unitary authorities. I am not an expert on local government, but in 1972 I happened to speak against the then Local Government Bill in another place, objecting to the way in which local government was being reformed. I said that I was in favour of unitary authorities, but that there should be a strategy for it all.
In view of the words uttered by the noble Lord, Lord Bellwin, and the fact that there has not so far been consultation, it seems to me that we come to the basic fault of the Government; that is, that there does not appear to be a strategy at all. What they appear to be doing is reacting to provocation, and they do not have a strategy. If there was a strategy, one would expect that there would he a plan for authorities throughout the country and a determination on where elected strategic authorities are required. It seems to me that it is terribly difficult to justify, for example, Essex having an elected strategic authority and the huge metropolis of London not having one. It is the absence of this kind of strategy as well as the absence of thinking about this matter that makes one feel that this is a highly rushed, hasty Bill, and that here we have an example of the lack of consultation beforehand.
I wish that the Government could convince me—and I have an open mind about the whole question of whether metropolitan authorities are necessary. I, and those on these Benches, should be very much happier if there was any sign of a strategy and a thought-out policy with regard to this matter, rather than a reaction to personalities and their, no doubt, in many cases, objectionable, performances. This amendment shows that there has been a complete lack of consultation so far, and, at the very least, the consultation should be broadened.
Lord Skelmersdale: My Lords, I think there is widespread agreement that a staff commission will be an essential part of this reorganisation, just as in other previous reorganisations: in the words of 1066 and All That, that it is a good thing. But I have to say to your Lordships that, in the Government's view, these amendments would throw into question the very existence of the staff commission. What we are proposing in Clause 7 is to set up such a staff commission along the lines of those established under previous reorganisations—exactly those lines. Such commissions, independent commissions, have been widely welcomed and have played a valuable role in ensuring fair treatment for staff. My right honourable friend (and when I referred to him in Committee I meant, as I do now, my right honourable friend the Secretary of State and not my noble friend Lord Bellwin) has made it clear that he intends to see that this commission match their predecessors, both in standing up for the staff, who obviously face an unsettling period, and in having a real understanding of the problems of both new and old employers.
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These amendments which we are now discussing would require the Secretary of State to consult individual staff and authorities, not just their representative bodies. They would, in effect, give any one authority or representative body consulted by the Secretary of State the power to veto or to delay indefinitely the establishment of a staff commission, irrespective of what any and all of the others think. Is that democratic? Is that really in the best interests of staff? Are the Opposition really saying that they are prepared to put those interests at risk in this way? The right and proper way forward is to establish the staff commission and for them to work out their modus operandi, and who they will consult with.
The real nub of these two amendments is when the consultations should take place. I readily accept the argument of the noble Lord, Lord Graham, that no consultations with the unions have as yet taken place, and the reason is that the unions have not wanted those discussions. They appear to take the attitude that, if they turn their back on the Government's policy, then it will go away and they will not have to bother about it. The noble Lord, Lord Hooson, spoke about the absence of thinking—I think I have the words right. If that does not display an absence of thinking, I should like to know what does.
Nothing we are doing will prevent the staff commission from consulting whoever they wish, and, indeed, the Government are open to views. The difficulty has been that some authorities have been unwilling to make their views known to us, and—I have said it before and I say it again—I wish to goodness they would. But we are dealing now with the need to establish a commission. I say to the House what I said in Committee. It is totally unacceptable to make the existence of such important safeguards a hostage to potential vetoes, which I strongly suspect would be politically motivated.
I am sure that the House will agree that the commission need to be in place at the earliest possible opportunity. It must be in the best interests of all the staff concerned that they begin the process of consultation with interested bodies and provide my right honourable friend with general advice on staffing issues without delay. The sooner they are set up, the sooner they can start to consider how to protect the interests of staff. They will not start their work in earnest until Parliament has settled the principle of abolition in the main Bill. Until then the commission will make their plans, will make contact with authorities and staff representatives and will ensure that no one tries to jump the gun. This must be right in the interests of staff, and I ask the House to reject these amendments.
Lord Graham of Edmonton: My Lords, I intend to withdraw the amendment, but can the Minister reiterate that which I believe he has implied and which his noble friend Lord Bellwin indicated during the last session? If no consultation has taken place because it has not been requested, and in view of the noises that were made that the Minister will be happy to see that consultations take place with those who wish to take part, will the Minister confirm that it is his understanding that the staff commission, outwith any obligation in the Bill, will be prepared to consult; that

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is, to receive representations from, and to discuss with, local authorities and trade unions who request them so to do?
I ask your Lordships to forget the arguments about politicisation; as to whether politics have stopped it. I simply want to have an assurance from the Minister that if a trade union or a local authority, which appeared not to have the opportunity as of right, nevertheless wished to exercise the opportunity—once the procedure starts and the staff commission begin to work, saying, "We are now prepared to consult and we have some obligations to do so"—it will be able to ask, "Will you also listen to what I have to say?" Can the Minister tell us to the best of his ability—because the staff commission will decide—that those who wish to make representations and to have discussions will have the opportunity of doing so?
Lord Skelmersdale: My Lords, with the leave of the House, I should like to respond to that. Yes, the noble Lord, Lord Graham, is perfectly right in saying that it will he for the staff commission to decide. But I can see absolutely no reason—and nor, I am sure, will any of my ministerial colleagues—why they should not decide in the way that the noble Lord has suggested.
Lord Graham of Edmonton: My Lords, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 15 not moved.]
The Earl of Caithness: My Lords, this might be a sensible time to move that further consideration on Report be now adjourned until five past eight.
Moved accordingly, and, on Question, Motion agreed to.

Rent (Scotland) Bill [H.L.]
Read a third time, and passed, and sent to the Commons.
Foster Children (Scotland) Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Prescription and Limitation (Scotland) Bill
Lord Carmichael of Kelvingrove: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Lord Carmichael of Kelvingrove.)
On Question, Motion agreed to.

Education (Northern Ireland) Order 1984
7.8 p.m.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Lyell): My Lords, I beg to move that the draft Education (Northern Ireland) Order 1984 be agreed to. This order, which was laid before the House on 7th June 1984, amends the Education and Libraries (Northern Ireland) Order 1972; and it incorporates in that order the procedures, contained in the Education (Northern Ireland) Act 1978, whereby certain grant-aided schools may become controlled integrated schools. The order enacts various recommendations contained in three important reports: first, the Astin Report on the management of schools in Northern Ireland; secondly, the Benn Report on voluntary schools in Northern Ireland; and, indirectly, the Warnock Report on the education of handicapped children and young people in Great Britain.
The order received considerable attention in Northern Ireland. It was considered by the Northern Ireland Assembly and commented on by some 150 other bodies and individuals. My honourable friend also met deputations from two of the Northern Ireland political parties. Arising from this wide-ranging consultation, 10 changes of substance have been made. The order is, as your Lordships will see, fairly long and detailed. Therefore I hope your Lordships will forgive me if at the outset I speak only to the broad principles of the order.
The Government announced in March 1981 that they had accepted most of the recommendations of the report of the working party on the management of schools in Northern Ireland. This will be more familiar to your Lordships as the Astin Report. The most significant of the Astin recommendations was that parents and assistant teachers should be represented, as of right, on the boards of governors of all grant-aided schools. These recommendations were given a general welcome, although views differed as to the proportions in which the various categories of membership should be represented on the boards of different types of school.
The Government's proposals for the future composition of boards of governors were first announced in September 1981 and they were translated into legislative form in the proposal which was published on 1st July 1983. It was obvious from the comments which were received that in particular transferors' representatives on the management bodies of controlled schools and the trustees of voluntary schools remained dissatisfied with their share of the total memberships of their respective boards of governors.
In the light of the views which were expressed, the transferor representation on the smallest board of governors of controlled primary and intermediate schools has been increased from three to four. This increases the voting membership of those boards to nine. In the case of the smallest board of governors of a maintained school and of a voluntary grammar school which has entered into an agreement with the department, or an education and library board, the number of members representative of the trustees or

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foundation governors has been increased from five to six. This increases their voting memberships to 10. I would add that there has been no change in the required numbers of parent and teacher governors.
Parents and assistant teachers who will be elected to the school board of governors by fellow parents and teachers must be given a responsible role in school management. The importance of that role, I am sure your Lordships will agree, cannot be enshrined in legislation. It is a role which must be developed by all members of the school board working together to further promote the welfare of the school and its pupils. We hope that the new school boards of governors will take the opportunity which is presented by this legislation to contribute in what we hope will be a meaningful way to the efficient management of their schools.
Aside from changes in the composition of boards of governors, the order implements a number of other recommendations contained in the Astin Report. To take one example, Article 25 requires school authorities to prepare schemes setting out the procedures for the suspension and expulsion of pupils. This article expresses the working party's concern about the urgent need for clarification and greater precision concerning suspensions and expulsions. As all of your Lordships will be aware, this is a very difficult area. Education and library boards have a statutory responsibility to ensure that children of compulsory school age are provided with suitable education and also to ensure their attendance. Voluntary school authorities do not have such responsibilities. Because of the contrasting nature of the different school authorities it is important to establish procedures which will, so far as is possible, be common to all grant-aided schools.
To achieve that end, Article 25 which is before us this evening will empower the Department of Education to prescribe certain fundamental matters which must be common to all schemes. Article 34 of what was the published proposal but which in fact is now Article 33 of the draft order contained a provision which would have given an education and library board the power to appeal to the department where it considered the board of governors of a controlled school was acting unreasonably in not giving consent to the redeployment of a teacher. The provision was based on a recommendation of Astin, but it was strenuously opposed by controlled school interests on the grounds that it was unacceptable that there should be a statutory provision whereby controlled schools could be required to accept teachers from voluntary schools while voluntary schools retained absolute control over their own teaching appointments. In the light of these views, my honourable friend concluded that the provision should be removed from the order.
I mentioned earlier the Benn Report on voluntary schools. Your Lordships may be aware that this recommended that voluntary grammar schools which become non-selective should have the choice of either having their revenue expenditure financed under the maintained school system or continuing to receive their recurrent grant direct from the Department of Education. Your Lordships will see that Articles 7 to 11 enable a school to exercise that choice and, if it
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wishes, to change its initial choice. The Benn Report also contained certain other recommendations which the Government accepted for the simplification of the present complex system of recurrent grant distribution to voluntary grammar schools. Your Lordships will see that Article 30 provides for its replacement by the block grant system.
May I now turn to the provisions in the order which amend the law on special education in line with the amendments which have already been made in Great Britain. Those amendments were based on recommendations of the Warnock Committee on the education of handicapped children and young people. While the committee was concerned only with Great Britain, the Government believe that many of the changes in the law which have been made in Great Britain are also relevant to Northern Ireland. In particular, there is no reason why the concept of special educational treatment for children categorised in one of 10 particular types of handicap should not be replaced by the new wider concept of special educational provision based on the special educational needs of individual children. The strong arguments which the Warnock Report put forward for this change of emphasis apply equally to Northern Ireland. The real need is that the teacher should have a clear statement of what is required to meet the needs of each child with serious learning difficulties.
There is also no reason why parents and children in Northern Ireland should not have the same protection in the arrangements for assessments and making statements of special educational needs as has been considered necessary in Great Britain. Parents of course have always been closely involved in the decision-making process where it was thought that their children might need special education; but this legislation makes specific provision for parents to be able to make their views known, and above all to talk to the professionals who are involved.
The order also includes the statement of principle that wherever possible children with special educational needs should be educated in ordinary schools. The integration of such children in ordinary schools has been a feature of special education in Northern Ireland for many years; but the Government hope that the statement of principle enshrined in legislation will provide a further stimulus. Clearly not all children with learning difficulties can be educated in ordinary schools and there will continue to be a need for separate special schools for some children.
These changes make up the bulk of the draft order that is before us this evening. There is also a large number of miscellaneous amendments. Of these miscellaneous amendments, perhaps I might draw your Lordships' attention to Article 27. This re-enacts existing legislation relating to the provision of milk, meals or other refreshment at grant-aided schools and institutions of further education and makes the service subject to arrangements approved by the Department of Education, instead of regulations, The arrangements to be approved by the Department of Education will, among other things, lay down requirements for the standard of school meals to be provided. Provision is also made in Article 27 to require facilities to be provided for pupils to eat food which they have brought with them to school.

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If there are any other matters on which your Lordships would like information, I shall do my best to deal with them. I shall be keen to hear the views of the House and will do my best to answer any questions. I commend the order to your Lordships.
Moved, That the draft order laid before the House on 7th June be approved.—(Lord Lyell.)
7.20 p.m.
Lord Prys-Davies: My Lords, on the 6th July when the House debated the Northern Ireland Act 1974 (Interim Period Extension) Order 1984 my noble friend Lord Underhill, anticipating the evening when this very lengthy, diverse and complex order would come before your Lordships' House, once again voiced criticism of procedures of Government which rely on Orders-in-Council which are not exposed to detailed scrutiny and which are unamendable. Indeed, this is the essential criticism which is constantly levelled against the use of Orders-in-Council in the Government of Northern Ireland. I believe that this criticism is relevant in the context of this order.
I have also been reading the Report of the Northern Ireland Assembly on the proposals as they then were which lead to the draft order. Generally speaking, the parties who gave written or oral evidence to the Assembly's Education Committee are broadly in sympathy with most of the new articles. I think it is appreciated that some of the articles create valuable new rights for parents and for teachers. But we have also picked up evidence of concern. There are grounds of concern about one or two of the provisions in the order. There is profound concern that the Government have missed a great opportunity to grant to severely mentally handicapped children the right to education in schools alongside their non-handicapped peers. I propose to return to this point.
The changes which the noble Lord the Minister has described in the management structure of the schools as recommended by the Astin Report are clearly supported although as the noble Lord expects there are reservations on numerous points of detail such as the total membership of the Board of Governors or how it should be comprised. There is particular welcome for the principle that both teacher and parent governors will be elected by secret ballot. Perhaps the Minister can tell the House when these proposals will be implemented.
There is also support for the provision to establish procedures to govern the suspension and expulsion of pupils referred to by the Minister—again, another Astin recommendation relating to a very difficult area. But we have picked up comments by a number or parties who argue that the procedures, although obviously welcomed, are no substitute for effective counselling and guidance, but the latter would of course involve additional expenditure.
There is widespread disappointment at the failure of the Government to make additional resources available to ensure that parts of the order are effectively implemented. This comes out very clearly in the comments on special educational provision based on the special educational needs of individual children. Again, the same message comes through in the comments on the principle that children with
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special education needs should wherever possible be educated in ordinary schools. These principles are of course widely accepted, and, to some degree, applied in Northern Ireland.
But one cannot substantially increase the level of integration without new resources being made available. If the new resources are not made available the ideal envisaged by the order will not be achieved. Indeed it has been said by some witnesses that the department is raising expectations of both educationalists and parents of children with special needs which cannot be achieved, at least in the short term, as the additional funding is not being made available. Indeed, one organisation which gave evidence suggests that the implementation be deferred until extra finances are quantified and made available for the purpose, but I do not know that we would go along with deferment. I appreciate that the Government consider that the provisions can be achieved without additional resources, but I am bound to say that that has been challenged by witness after witness.
I wish to refer in some detail to the widespread criticism of Article 16 which gives effect to the new Article 25E which relates to "children unsuitable for education at school", and which I accept is not a new provision. It is a restatement of the existing law. But this is the article which has attracted the strongest criticism and it is therefore clearly one of the most crucial provisions of the order.
The noble Lord the Minister referred to the Warnock Report, but 10 years after the publication of the Warnock Report parents of mentally handicapped children and teachers and voluntary organisations with a special interest in the mentally handicapped child find it difficult, unbelievable, that in one corner of the land the education department of central Government still accepts that there are children who are unsuitable for education at school and that this order should be a vehicle for perpetuating the exclusion of severely mentally handicapped children from the educational system. What is relevant in England, Wales and Scotland is equally relevant in the conditions of Northern Ireland. There are parents of mentally handicapped children in Northern Ireland supported by teachers and others who condemn the whole philosophy embodied in Article 25E. They go beyond that. They consider that it constitutes a denial of a human right and they are determined that this injustice should end.
My attention has also been drawn to a research study carried out in 1982 and 1983 by Eamon Dwyer of Ulster Polytechnic, and Mr. Swann of the Open University, into the education facilities provided by the Health and Social Services boards for the mentally handicapped children in Northern Ireland. I have not read the report. I have not seen a copy of the report, but I am advised that its authors came to the conclusion that the mentally handicapped children whom they saw were seriously disadvantaged. They exempt the staff from criticism but conclude that the facilities were inappropriate and inadequate, and presumably this will have retarded the child's development.
In another place on 26th June Article 25E came under heavy fire. In the opinion of many people, the

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Minister in the other place failed to deal adequately with the criticism of Article 25E. Some will say, and I will elaborate on this, that his reply was possibly misleading. The Minister claimed that the Assembly had recommended that the responsibility for the education of a mentally handicapped child should remain with the Department of Health and Social Security. However, I have been unable to identify authority for that view. Perhaps when the Minister replies he can guide us to the authority for his claim. I have been told that the Assembly's Health and Social Services Committee had argued in favour of the status quo—but they would, wouldn't they!
I wish to know whether the opinion of the Health and Social Services Committee has been adopted by the Assembly. If it has been adopted by the Assembly, it would appear to me that the Assembly is pursuing conflicting ends, or conflicting policies; unless, of course, the recommendation of the Health and Social Services Committee has been overtaken by that of the Education Committee. It is beyond dispute that the Education Committee of the Assembly strongly recommended that the responsibility be transferred to the schools, and as I read the report of the Assembly this recommendation was adopted by it. In his letter to the Assembly of 10th November 1983 to the Secretary of State for Northern Ireland—a letter which is reproduced as a foreword to the report of the Assembly, ordered to be published on 9th November 1983—the Speaker of the Assembly told the Secretary of State:
"The Assembly has recommended the amendment of the proposed new Article 25E to provide a right to education for all children".
It seems to me that that is the position adopted by the Assembly.
In the debate in the other place on 26th June, the Minister was also told that the Children's Legal Centre in London was then canvassing whether Article 25E should be challenged before the European Commission of Human Rights as being in breach of the fundamental human right guaranteeing the right of a child to education. Indeed, the Children's Legal Centre had informed the Minister in May that it considered that the article violated the convention. But, again, nowhere has the Minister dealt with this claim put forward by the Children's Legal Centre.
A parent in Northern Ireland told me on Saturday that he has the firm intention of going to the European Commission of Human Rights to challenge the article. Will the Minister inform the House whether his department has taken legal advice on whether or not this article is in breach of Article 2 of the First Protocol, which is the article which provides that no person shall be denied the right to education? If the department has sought advice, may we know what advice was tendered.
It is appreciated by all that it is too late in the day to amend the order and that the order cannot be delayed, but there is a wide group of parents and educationists in Northern Ireland, and here in London, who wait with great interest to learn whether the Government are prepared to reconsider Article 25E with a view to bringing in amending legislation which will bring the
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law in Northern Ireland on this subject into line with the legislation of England, Wales and Scotland. We would hope that there is at least a commitment to undertake such a review at an early date. If the Minister can come forward with an encouraging word, this debate will have been worthwhile. With the reservation I have mentioned, but an important reservation, we from these Benches give our support to the order.
7.35 p.m.
Lord Beaumont of Whitley: My Lords, we, too, welcome the order as a whole and thank the Minister for his exposition of it. I think that the weight and complexity of the order and the complexity of the explanations which the Minister was able to give without in any way being able to go into detail is some evidence as to the unsatisfactory nature of law-making as it refers to Northern Ireland at present. I do not think anyone denies that. The longer the present situation goes on, the more it is incumbent upon us to find some way in which Parliament deals with these matters whereby we, too, can have a say in what we are supposed to be passing.
The whole question of education in Northen Ireland is, of course, a fraught one which has been discussed in your Lordships' House from time to time. All of us want to see a much greater rapprochement between the communities in Northern Ireland. Many of us feel that this can best be tackled at a fairly early age through the education system. We know the difficulties which have been met in doing this and that the problems we meet there are merely in miniature the problems which we meet in the Province as a whole. However, again this is one of the areas where I think we must not miss the opportunity of reminding the Government that if we are to produce, in the long term, peace and justice in that unhapy part of the United Kingdom great steps forward will have to be made, and they will have to be made in many other fields as in this one.
We know that there are already experiments in joint education, but it is time, I think, that the Government tried to take some new initiative. It is too often the case that the initiatives in Northern Ireland are of the major kind, such as, "What are we going to do now about getting all the parties together round a table?" or, "What are we going to do about major governmental machinery?", and there is not enough concern about what can be done on a smaller scale. I think that it is in the area of education that we must undertake such an initiative.
Clearly we do not have the time to debate the details of this particular order, nor a real opportunity to amend it; and since we do not have that opportunity there is not the incentive to go into great detail tonight, but there are one or two matters which should be mentioned. Part II deals with school management and it is a good step forward that the aim of this part of the order is to increase parental representation on the school boards of governors. The closer we come to the English system, the better. I do not necessarily feel that about everything in this order and, indeed, we feel that it is good that there should be differentials between various parts of the United Kingdom on various matters. However, in this particular matter the United Kingdom appears to have taken a considerable step

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forward and the Government themselves have this very close at heart. It would be a good thing if we could progress as fast as possible towards the English system.
In that connection, I certainly pay tribute to the Northern Ireland Office for the way in which it has stuck out for the election of parent and teacher governors, since some people opposed that, preferring nomination. Nomination would have led to much abuse by the vested interests of the Province, as it is always liable to do, and this is a step forward.
Part IV concerns, "Education of Children with Special Educational Needs". I go along with many of the criticisms that have just been made about that matter. I think that it is a great pity that the care and education of some disabled children are left under the control of health boards, when in this country we have made major steps forward through the Warnock Report. Once again, I suspect that a system more in line with that which we are bringing into force in England would be preferable—although as we have said in England, so again I should like to repeat what has already been said about Northern Ireland: we realise that one of the problems is financial resources.
It seems to me that from this side of the House we cannot too often say that in such matters priorities must be set and financial resources found. If we are challenged to say where the financial resources should come from, I do not think that any of our parties would be in difficulty in pointing to resources from the Government's present programme. That is not the problem. The problem is what one puts forward. The whole question of the care and education of handicapped children demands the greatest possible care and provision of resources.
Part V is headed, "Miscellaneous and Supplementary". One thing that I do not think has been mentioned so far, and that is in Article 20. In England and Wales pupils cannot transfer to further education until they have reached their 16th birthday. In Northern Ireland pupils have been able to transfer during their 16th year—once they are 15. The Government have been changing that over the past few years voluntarily, and the order puts that into statutory effect. We are far from clear that that is a step forward. The flexibility of the old Northern Ireland system was probably a good thing. I know that it is a contentious matter, as are all matters concerning the age of compulsory education. But I think that there was not necessarily a case for changing the Northern Ireland system to that of the United Kingdom.
One other small point arises on Article 33. In England and Wales teachers can be compulsorily transferred when a school is being closed, if the only alternative is unemployment. Compulsory transfer means that the local education authority has to accept the teacher. The option of a central appointment is not available in Northern Ireland at the moment. Under the order the decision to employ a teacher can only be taken locally. We on these Benches are always supporters of local decisions and local control, but I feel that there should be some fall-back position whereby teachers in that situation need not necesarily find themselves out of a job. It is really a query to the Minister as to whether there cannot be found some way forward from that.
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Although I have one or two major queries and one or two minor ones, on the whole this order is a considerable step forward. There has been wide consultation in the Province and there is a wide measure of agreement. We certainly welcome it and congratulate the Government on what they have done.
Lord Blease: My Lords, I rise to support my noble friend who speaks from the Opposition Front Bench in the matters that he so ably raised concerning the education of mentally handicapped children in Northern Ireland.
If I may digress for one moment, I have a little matter that I should like to put to the House. This is the first opportunity that I have had to speak across the floor of the House with the noble Lord, Lord Lyell, since his appointment as Parliamentary Under-Secretary of State for Northern Ireland. I know that this is a little belated, but as I come from Northern Ireland I should like to join with others and place on record my earnest good wishes to him for a happy period in office, and success in dealing with the many problems of the Province. I understand that he is tackling his responsibilities in the Northern Ireland agricultural community with great enthusiasm.
One point was mentioned by my noble friend Lord Prys-Davies arising from the order on which I wish to press for action. It concerns the plight of the mentally handicapped children in the five-plus age group, for whom at present there are not adequate places in suitable educational establishments. I understand that the officers of the Belfast Active Group have written about that immediate issue to the Northern Ireland Department of Education and to the Inter-Departmental Working Group on the Education and Training of Mentally Handicapped Children.
I recently met the parents of some of the children in that five-plus age group. The Minister and his colleagues in the Northern Ireland Office, particularly Mr. Patten and Mr. Scott, will not need to be reminded by me of the great weight of distress, anxiety and concern that lies on the parents of those children. I feel sure that a little ministerial action and administrative rearrangement could alleviate that distress. May I ask the Minister to use his good offices to invite Mr. Nicholas Scott and other ministerial colleagues of his urgently to undertake the review mentioned by my noble friend on the Front Bench of the situation of the mentally handicapped five-plus age group in Northern Ireland? I wholly support my noble friend's remarks in connection with the order.
The Earl of Longford: My Lords, I rise for a moment or two to support my noble friends in their attitude to and criticisms of the order. I take the opportunity to congratulate the Minister on his assuming those heavy duties. I am sure that they will not get him down. I think that he has a natural buoyancy which perhaps is the most valuable quality one could possess in Northern Ireland. I am sure that he will restrain any tendency that he has to win any contest by physical means—I am referring to his exploits on the football field—when he is dealing with the inhabitants of Northern Ireland. I am delighted to see him here.
I am only sorry that the noble Lord, Lord Renton, is, as it were, incarcerated on the Woolsack, so that he

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cannot say what, I am sure, he would wish to say about the situation of the mentally handicapped. A discussion of the mentally handicapped without his contribution is rather devoid of its main attraction. I should like to think that he would sympathise with what has been said.
I am rising only to say ditto to what has been said on the subject of the mentally handicapped by my two noble friends. But amid all these congratulations I should like to press the noble Lord as to why the Government have not gone further. What is the explanation? Is it something to do with resources? In his opening remarks, the noble Lord gave us the impression that the Government were trying to give effect to the Warnock Report. He certainly said something about the Warnock Report, but it may have been rather cryptic. I think that we are entitled to ask what the hitch is. Why cannot what is being done in England be done in Northern Ireland? I end by repeating my wish that the noble Lord will have a very successful reign.
7.50 p.m.
Lord Lyell: My Lords, may I first of all thank all your Lordships who have listened to my exposition of a field with which until three months ago I was not entirely familiar. I regret that I am still familiarising myself with some of the more detailed aspects of Northern Irish education let alone the Warnock Report and other points of interest which have—I think, detained, is probably the wrong word—fascinated the House this evening.
We are very grateful for the attention that has been given by all of your Lordships who have spoken and even by your Lordships who have not spoken but who have stayed with us during the discussion of this particular order.
The noble Lord, Lord Prys-Davies, who opened the debate on the order this evening, and the noble Lord, Lord Beaumont, both mentioned the problems of dealing with what is in effect a fairly weighty matter by means of an Order in Council. I am sure that they and all your Lordships will accept that it is an especially important and interesting subject this evening. However, I do not think that I can go more deeply into the method of legislating by Orders in Council at present. I am afraid we shall have to continue this method of dealing with legislation, for the foreseeable future at any rate.
The noble Lord, Lord Prys-Davies, raised a number of questions. First of all the noble Lord asked about the implementation of various school management changes. The order requires boards of governors for all grant-aided schools to be constituted in accordance with the new provisions. We hope that this will be done by 31st December 1985. This will include the election of both parents and teachers to the boards of governors.
In the second group of his questions, the noble Lord asked about finance. His question was in particular directed at the new provisions for, and indeed the need for, special education. I would reply to the noble Lord by telling him that the provisions of the draft order largely replace and bring up to date what are existing arrangements. They are not expected to give rise to
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any additional expenditure either by education and library boards or by the Department of Education. I am sure your Lordships will be aware that the Government are satisfied that the provisions of the 1981 Act can be implemented without additional resources.
The noble Lord, Lord Prys-Davies, also asked me whether the boards might need to employ additional psychologists for educational purposes. I am given to understand that some local education authorities in Great Britain have appointed additional staff of this nature. However, I think the noble Lord would accept, and your Lordships who are specialists in this field would accept, that to make comparisons on this basis we should need to know the firm base from which the authorities started. If we take one example, we should need to know previous ratio of psychologists to pupils because, as your Lordships are aware, this may vary from one local education authority to another. The ratio of educational psychologists to school children in Northern Ireland is as good as the average elsewhere in the United Kingdom. We do not expect that the implementation of the new legislation before us this evening will create the need for additional posts, in this field at least.
The noble Lord, Lord Prys-Davies, led the main part of the debate. He was followed by other noble Lords, especially the noble Lord, Lord Beaumont, the noble Earl, Lord Longford and the noble Lord, Lord Blease. All were concerned with the education of mentally handicapped children. Perhaps I may just take a few minutes of your Lordships' time to try to spell out the particular position contained in Article 16, of the present order and Article 25(e) of the earlier legislation.
It all goes back to the responses which we received to the consultative document on the education and training of mentally handicapped children. These replies are still under consideration. I am afraid that no decisions have been taken about the future responsibility for the education of these particular children. The order that we have before us this evening simply makes it clear that the current arrangements for these children will continue. These arrangements are, of course, that education and library boards will determine the children who are unsuitable for education at school and they will refer them, for the attention which the children require, to the health and social services boards.
This particular term, which we have to define, of being "unsuitable for education at school", we have to read in the context of the Education and Libraries (Northern Ireland) Order 1972. This itself includes a definition of a school for the purposes of the order. This reading of the definition into the Education and Libraries Order 1972 does not mean at all that the children—and especially these particular children—are being denied in any way the right to education. Rather it means far more: that they are considered unsuitable for the type of education provided in the schools which come within the scope and within the terms of the order.
I am sure that your Lordships will be aware that these children attend institutions called special care schools. I do not think that anyone, least of all those of your Lordships who have spoken this evening, would

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dispute that these children do receive education which is entirely suitable to their needs, and above all their educational needs, at these particular schools.
The Earl of Longford: My Lords, may I interrupt at this point?
Lord Lyell: Please do.
The Earl of Longford: My Lords, the noble Lord may be going to answer my question but he has not yet answered it. Why should there be a different system in Northern Ireland from the one here?
Lord Lyell: My Lords, I am only about halfway through my comments.
The Earl of Longford: My Lords, I see.
Lord Lyell: My Lords, I hope to come to the noble Earl's point. I think that I have received specialist direction upon his particular queries and I hope to cover them. If I do not cover them, then before I finally sit down I shall certainly attempt to do so. However, perhaps the noble Earl will wait until I come to the final conclusion here. I hope that at least some of the argument will be laid bare.
The noble Lord, Lord Prys-Davies, mentioned what has been said in another place. He mentioned various legal centres. I am certainly aware that the present position has been challenged. I think it has been challenged by the Children's Legal Centre as being possibly in breach of the European Convention on Human Rights. However, I would say to the noble Lord and to the noble Earl that this is one of several comments which we have received in replies to the consultative document. We are considering in particular the detail as to whether this particular aspect of Article 16 needs further study, whether we can do anything further about it, or what might happen.
The noble Lord, Lord Prys-Davies, mentioned the involvement of the Northern Ireland Assembly. We are aware that they were originally opposed to Article 25(e), but I am sure the noble Lord will be aware that that article simply clarifies that the existing law will continue to operate. The Assembly itself did recommend no change. That is the advice that I have. If we clarify it, it is that the responsibility for the education and, above all, the training of mentally handicapped children should be retained by the Department of Health and Social Security and its agents, the health and social services boards.
The Assembly also recommended that the Department of Health and Social Security and the agents, the health and social services boards, should be given the statutory duty of providing education for mentally handicapped children; that is education combined with special care. That is another very important matter which we are examining at present.
The noble Lord, Lord Prys-Davies, raised the question of the Children's Legal Centre and its possible case. We are still consulting and discussing on this matter with the relevant departments. We have not yet obtained legal advice. We are in the course, naturally, of obtaining it among other consultations, but we have no definite legal advice as to how we shall respond to this putative case if it goes forward.
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The noble Lord, Lord Beaumont, asked me to comment on the encouragement of integrated education. We value his forthright encouragement. The policy of the Government is to encourage integrated education in Northern Ireland wherever there is a local wish for it. Certainly, the Government will welcome requests made in this field for controlled integrated status.
The noble Lord also raised what I think he called the flexibility of further education of children in Northern Ireland. The noble Lord will see that Article 20 provides the statutory base for the policy of ending the transfer of pupils to further education at 15 years of age by changing the law to ensure that, in future, further education may be provided only for persons over compulsory school age. The Government take the view that we are satisfied that the educational needs of pupils of this age would best be served by their remaining at secondary school until they are 16. But, in addition, the youth training programme is placing an additional workload on further education colleges. Indeed, the ending of transfer at 15-plus, if we can call it that, will release valuable resources in the colleges to enable them to cope with the extra demands being made on them possibly in other fields.
The noble Lord, Lord Beaumont, also asked me about the fallback provision of the redeployment of teachers. During the consultation period on the draft order, we found that there was considerable opposition expressed to the provision about the education and library board's power of appeal. It was pointed out fairly forcibly to us that such a provision might significantly dilute powers of controlled schools' boards of governors and might lead to controlled schools being forced to accept teachers unacceptable to them. Some education and library boards also opposed the provisions on other grounds. The boards would wish to avoid what they would see as unnecessary and unproductive friction between themselves and local school management bodies, and, therefore, in practice, they would not exercise their powers of appeal.
As a result, the Government concluded that the likely effectiveness of the appeal powers with regard to the redeployment of teachers would not be sufficient to outweigh the strength of opposition expressed to us on this measure. We would stress, however, that without the provision for the power of appeal the article will provide for increased flexibility in redeployment arrangements in that it will extend the board's power of redeployment to cover teachers employed in other board areas as well as its own.
The noble Lord, Lord Blease, raised a particular point. First, I thank him for his kind words, as, indeed, I thank the noble Earl, Lord Longford, for his kind welcome to my spell in Northern Ireland. I can stress to the noble Lord and to the noble Earl that if my first 100 days are anything to go by, I shall be more than happy; indeed, I am thrilled to be serving with such an excellent team and, above all, to know that I am trying to serve such marvellous people in Northern Ireland. It is more than rewarding to serve there, and, above all, to try and get right some of the detailed educational points this evening. The noble Lord, Lord Blease,

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mentioned the problem of mentally handicapped children. We shall, of course, consider the need for additional facilities for mentally handicapped children. We take on board the points that he has raised.
I hope I have gone most of the way, even if I have not covered every single point that has been raised by your Lordships. I am grateful to the noble Lord, Lord Prys-Davies, for warning me that he would be opening the bowling on Article 16. Thanks to him, I have had at least some more detailed reply available for him and for your Lordships. To conclude our deliberations on the order, I should like to stress that Northern Ireland has good reason to be proud of the quality of its educational service. The Government are convinced that the changes that the order will bring about are for the good of the educational service and, above all, for the good of the children and the young people of Northern Ireland. I commend the order to your Lordships.
On Question, Motion agreed to.

University of Ulster (Northern Ireland) Order 1984
8.7 p.m.
Lord Lyell Lord Lyell rose to move, That the draft order laid before the House on 6th June be approved.
The noble Lord said: My Lords, the order before us this evening facilitates the establishment of a new university institution in Northern Ireland. Following upon the final report of the higher education review group, the New University of Ulster and the Ulster Polytechnic entered into discussions about the creation of a new style of higher education provision to be formed by the merger of the two existing institutions. The two institutions agreed to the merger and have taken the necessary procedural steps to bring it about.
In November last year the New University of Ulster and the Ulster Polytechnic jointly petitioned Her Majesty the Queen for a charter for the new university institution to be created by their merger, and to be known as the University of Ulster. At the same time, the New University of Ulster sought that, if Her Majesty were graciously pleased to assent to this petition, she would, at the same time, revoke the charter of the New University of Ulster. A copy of the petition and of the draft charter and statutes was tabled in the House on 16th January this year. The charter contains many of the measures needed to bring about the merger, and, although the university charter is a matter for my noble friend the Lord President, there are a number of aspects of the charter to which I should like to refer briefly.
Firstly, this is the first merger in the United Kingdom of a university and a polytechnic, and as such it has attracted a good deal of interest on both sides of the Irish Sea. We have to emphasise, however, that in no sense is this merger a test-bed for higher education in the United Kingdom as a whole. It is, and, above all, was designed to be, the answer to the
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special problems facing higher education in Northern Ireland. If others can learn from it, so much the better.
Secondly, a unique feature of the charter is the requirement that no less often than every seven years an external review be carried out to assess how effectively the university is fulfilling the objectives laid down for it in the charter, and, above all, how effectively it is using the resources available to it. This is of particular importance because of the wide-ranging and challenging nature of those objectives, encompassing as they do work at all levels of higher education, including research, degree and non-degree work.
Thirdly, the draft charter and statutes were prepared jointly by the NUU and the Ulster Polytechnic, and at every stage in the drafting there has been wide consultation, including consultation with staff and students. The inauguration of the University of Ulster is planned for 1st October 1984. If Her Majesty is pleased to grant the university charter to the petitioners, certain legislation will be required to deal with those aspects of the merger which could not be included in the charter, and also to amend or repeal existing legislation affected by the merger. This short order now before the House contains these measures.
I turn very briefly to the provisions of the order. Article 3 transfers the assets and liabilities of the New University of Ulster and the Ulster Polytechnic to the University of Ulster. It also provides for proceedings in connection with anything transferred in this way to be continued in the name of the University of Ulster. I draw your Lordships' attention particularly to the provision in this article, in paragraph 4, for Magee University College, Londonderry, to be maintained as an integral part of the University of Ulster. Your Lordships may be aware that Magee College is a higher educational establishment, originally founded in 1865 by the Presbyterian Church in Ireland for the training of its clergymen. Its courses and entrants were broadened over the years, and, with the establishment of the New University of Ulster in 1968, it became a part of that university.
Article 4 dissolves the statutory corporate body known as the governors of the Ulster Polytechnic. This body will not be required following the merger, since its work will be subsumed in the council of the university, though some of the members of the governors have been nominated to serve on the university council. Some, however, are not continuing into the new institution. In particular, we should wish to thank—I am sure that all of your Lordships who are aware of the educational scene in Northern Ireland would want to do so—Mr. William McNeill, who has been chairman of the governors of the Ulster Polytechnic since it was established in 1969. We very much want to put on record his valuable and appreciated service over 15 years.
Article 5 provides a means of redress should any members of staff feel that the employment offered does not meet the criteria envisaged in Statute XXV, whereby all permanent employees at both the NUU and the Ulster Polytechnic were assured that they would be offered employment in the New University institution without diminution in pay, and that this employment would be as nearly as practicable upon

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the same terms and conditions as they enjoy at present.
If Her Majesty is pleased to grant the new charter, some minor amendments to existing legislation will he required. These are included in article 6 and in schedules 1 and 2. The latter repeals the whole of the Ulster College Act (Northern Ireland) 1968, which founded what was then the Ulster College and later turned into the Ulster Polytechnic.
I should like to pay our tribute to the work and the reputation of the New University of Ulster and the Ulster Polytechnic. Both were established in the late 1960s in response to the recommendations of the Lockwood Committee's report on higher education in Northern Ireland. The University of Ulster has determined to carry on, and build upon, the very best traditions of both of these institutions.
I am especially pleased to note that the noble Lord, Lord Grey of Naunton, the chancellor of the New University of Ulster, has agreed to act as chancellor of the University of Ulster. Under his very able leadership, I am confident that the University of Ulster will fulfil our expectations, and, in a new form of higher education provision, will meet the needs of Northern Ireland. The order before us this evening facilitates this creation, and I commend it to your Lordships.
Moved, That the draft order laid before the House on 6th June be approved.—(Lord Lyell.)
Lord Prys-Davies: My Lords, unlike the draft education order, this order is short and straightforward. I thank the noble Lord, Lord Lyell, for introducing the order, which, as he explained, is necessary to enable the merger of the New University of Ulster and the Ulster Polytechnic to be implemented. The move towards a merger did not have a very auspicious beginning. There was a feeling that the merger was being foisted upon these academic communities, and there were complaints about inadequate consultations. But not very much is to be gained now by going into detail about that early history.
We on these Benches welcome the merger of the resources of these two institutions, uniting a university with a thriving polytechnic. We agree with the Minister that the University of Ulster can be a model that befits the Northern Ireland situation and its requirements. We want it to be a success, and its council and staff deserve to succeed.
We note that the charter will provide for the role and, presumably, the standards of the new institution to be reviewed no less than every seven years. While we go along with this, we are also bound to express the hope that the monitoring will be undertaken in a way that will retain the confidence of those being monitored. Article 3 transfers the assets and the liabilities of both institutions to the University of Ulster, and the assurance in paragraph 4 of this article that Magee University College will be maintained in Londonderry as an integral part of the University of Ulster will be welcome.
But the merger will mean that the work circumstances of some staff will change, and there will be problems of redeployment. Therefore, we welcome
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very much Article 5, which makes provision for compensation to be paid to employees who decline or relinquish employment in the circumstances specified in the article. We believe that the new article is an improvement on the original proposal, as it contains the right of appeal to an industrial tribunal. But the terms and conditions of compensation are not known.
The merger will be implemented on 1st October. That is no more than 10 weeks away. On the assumption that this order is not likely to be thrown out, I should like to ask when the terms and conditions will be known. Can the Minister tell us whether or not the department is likely to offer guidance by, say, the end of this month? Meanwhile, we on these Benches support the draft order.
Lord Beaumont of Whitley: My Lords, we, too, should like to thank the Minister for explaining the terms of this order. I think we have some reservations about the nomenclature of the new university. Admittedly, it stems from two institutions which both had "Ulster" written into their title. Nevertheless, as everyone who has anything to do with Ireland knows, Ulster is nine counties, of which only six are in Northern Ireland. It is a fact that there has been a certain amount of resentment at this appropriation of the name "Ulster" for this university. I should be grateful if the Minister would comment on that observation, or tell us the thinking behind the adoption of that name.
The whole matter of the payments for voluntary redundancies and the improvement in conditions of service for those who formerly worked at the polytechnic appears to be costing more money than the Government originally thought possible. This was raised in another place by Mr. Soley, and it is a valid point. We should like some assurance from the Government that they have now come to terms with this and are able to say that the necessary money will be forthcoming.
I should like to ask only one other question. A conventional university charter assumes a vice-chancellor, who is always an academic, and a registrar and staff who are the civil servants of the university and who belong to a career structure of their own. Polytechnics on the whole have directors who deal with different aspects of the running of the polytechnics and who are almost all academics. There is not the same Civil Service structure.
Although, as the Minister has said, this merger is possibly not meant to be taken as providing guidelines for what may happen in other parts of the United Kingdom, nevertheless it is a trail-blazing exercise. It appears not to have adopted in full the university staff structure, but to have gone along, to a certain extent, the path of the polytechnics' structure. We should rather like to know whether that was the intention and, if so, what is the thinking behind this particular point? Apart from that, we certainly welcome the order.
8.22 p.m.
Lord Grey of Naunton: My Lords, I intervene very briefly. First I should like to support the order and to thank the noble Lord the Minister for his kind personal reference to me. As he has told your Lordships, I have an interest to declare, in that I am

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privileged to be the chancellor of the New University of Ulster and, if Her Majesty is graciously pleased to accede to our petition, to be the chancellor of the University of Ulster.
I do not this evening canvass the merits of merger; that die is cast. Suffice it to say that if there were to be a merger, as the Government have required, obviously the best course to follow would be such as produced the maximum co-operation and good will between the two parties who were merging. That has been accomplished, thanks to the labours of many devoted people who have put aside feelings that they may have had about the disappearance of the institutions which they had served. This order is part of that procedure. So we in the new university and in the university yet to be hope very much that the rest of the procedure which has been embarked upon will be quickly and happily completed.
Of course, it would not be Northern Ireland if there were not some little differences of opinion about what is what. It is not only in the three counties that are not part of the Province of Northern Ireland that some reservations have been expressed about the title of, "University of Ulster". The Queen's University of Belfast, which has long considered itself to be "the" university of Ulster, has had some feelings about it. But it is not only in university life that perfection is hard to attain in Northern Ireland. I think that we have come as near to it as we possibly can and I hope that the rest will be happily completed. With those words I commend the order to your Lordships.
Lord Blease: My Lords, for a number of years I was actively involved in the general work of both the New University of Ulster and the Ulster Polytechnic. For those reasons I should not like this occasion to pass without saying a few words in respect of the order. During the years I came to know something of the great sense of commitment, the dedication and the excellent academic and educational contribution made to Northern Ireland by the officials and staffs of both these institutions. We all know something of the tremendous community, social and economic difficulties with which each of these organisations has had to cope from initial establishment. However, we are also pleased to have witnessed the high hopes, the new aspirations, the sound ideals and the new opportunities for learning which the New University of Ulster and the Ulster Polytechnic opened up to many young people in Northern Ireland and, let me add, from the Republic and from overseas.
For many reasons I have a very warm regard for the New University of Ulster, its officials and staff. I know that they will continue to give of their best to the University of Ulster. I should like to add that I know that the choice of the noble Lord, Lord Grey, as the chancellor of the University of Ulster has been very well received in Northern Ireland. The noble Lord, Lord Grey, does not need me to sing his praises. He has very many friends in Northern Ireland. He has proved to be a great help, a great encouragement and a great stalwart in times of trouble in Northern Ireland. He has stood at the head of education in the Province in his efforts to keep it afloat and I know that he has numerous friends in many parts of the community in Northern Ireland.
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I join with noble Lords and others in wishing the merger every success, and I hope that the University of Ulster will have the facilities and resources, and will provide the opportunities for educational excellence, to enable it to contribute much that is necessary to the wellbeing and prosperity of the people of the Province. I support the order.
Lord Bowden: My Lords, I should like briefly to intervene because I knew the university at Coleraine very well when it was first being established. I should like to pay a very warm tribute to the genius of its first vice-chancellor, who tackled appalling problems with very great courage and skill and in a manner which to most people was really rather surprisingly untypical of academics. He had a curious mixture of the academic distinction which one expects of such a man and an enormous ability in practical affairs. I hope very much that his work will be remembered and that the tradition he established of a combination of academic distinction and practicability will be retained in the new institution; I am sure it will be.
Lord Lyell: My Lords, once again I should like to thank those of your Lordships who have devoted your time to this educational subject, which is on a somewhat different plane, and who have studied the order in detail. I assure the House that all the contributions that have been made this evening will be carefully noted and I shall do my best to answer the points that have been raised.
I thank the noble Lord, Lord Prys-Davies, for his welcome of the order and for what we hope will be achieved. The noble Lord asked me two questions. First, he asked about the review, and about monitoring. The monitoring of the new works and of the finance will be undertaken, in addition, by the working party of the University Grants Committee. Secondly, the noble Lord made reference to Article 5. I shall have to write to the noble Lord, but I hope that I shall be able to answer him satisfactorily by saying that regulations will shortly be made available. I cannot go into the exact timespan of "shortly"; but clearly they are underway and in preparation as regards compensation, which is covered in Article 5.
The noble Lord, Lord Beaumont, also had very kind things to say as well as one or two other comments on the institution. I stress to the noble Lord and to your Lordships who might be a little lost by the nomenclature of "Ulster" and what it means, that the title "University of Ulster" was the unanimous choice of the staff of both institutions. Your Lordships will be aware that the name "Ulster" appears in both present titles and as far as we are aware we have received no objections to this title for the new institution. The noble Lord, Lord Beaumont, also asked about the merger costs. I am able to inform him that for the first year the university will have what is known as "level funding" and it will therefore have the financial funding which would have been available to both institutions had they continued in their separate existencies. But in addition, the Government have made available a further sum—in the region of £360,000—to cover such items as superannuation costs.
The noble Lord, Lord Beaumont, also raised one

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other question on the staff structure. I would stress to him that this particular structure has been the subject of very close consultation and it has been designed to meet the requirements of an institution of the type which we envisage. I was very grateful for the kind words spoken by the noble Lord, Lord Grey, and we are very pleased that he has been able to make a contribution this evening. We thank him for his support. Of course, he will have been aware of the Government's gratitude to him from my earlier remarks.
We thank the noble Lord, Lord Blease, for his support for this new venture in Northern Ireland. We are sure that it will live up to the high traditions of learning and academic excellence, which are endemic in Northern Ireland. We are very grateful for the contribution of the noble Lord, Lord Bowden. We are confident that the spirit and the talent that he mentioned will be seen in the new University of Ulster.
In conclusion, I should like to pay the Government's tribute to those who have worked very hard over the past two years to bring about this merger. The union has been guided by the steering group under the chairmanship of Sir Peter Swinnerton-Dyer, and we should like to pay our tribute to him and to his group now that the task is virtually complete. We want to place on record our thanks to him and his colleagues on the steering group for the job which they have done so well in such a short time.
The actual work of knitting together the two institutions will fall to the council and the staff of the university, and in particular to the vice-chancellor designate, Mr. Derek Birley. We believe that one of the most encouraging aspects of the past two years has been the way in which the staff from both institutions at all levels have come together to plan the courses and the faculty structures for the University of Ulster. We believe that this spirit of co-operation has been fostered by Mr. Derek Birley. His work—and the work of the university—is only just beginning, but I am sure that all noble Lords who are in the House tonight and also those who read the report of the debate will join with me in wishing Mr. Derek Birley and the University of Ulster well. With that, I commend the order to your Lordships.
On Question, Motion agreed to.

Finance (No. 2) Bill
Brought from the Commons endorsed with the Certificate of the Speaker that the Bill is a Money Bill; read a first time, and to be printed.

Local Government (Interim Provisions) Bill
8.35 p.m.
Consideration of amendments on Report resumed.
The Deputy Speaker (Lord Renton): My Lords, the next amendment is Amendment No. 17.
Lord Graham of Edmonton: My Lords, we stopped at Amendment No. 16. There was a reference to Amendment No. 16 before we adjourned but Amendments Nos. 16 and 17 hang together.
Lord Skelmersdale: My Lords, I believe that Amendment No. 18 is also to be taken at the same time.
Lord Graham of Edmonton: My Lords, the noble Lord is correct.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 16:
Page 6, line 27, after ("duty") insert ("as provided for by subsection (A) below").
The noble Lord said: My Lords, it may help the House if I initiate what is likely to be a short debate on the philosophy behind Amendments Nos. 16, 17 and 18.
Amendment No. 17: Page 6, line 29, at end insert—
("(2A) The duty imposed a relevant authority under subsection (2) above shall only arise in respect of any direction given to that authority under that subsection after the passing hereafter by Parliament of the enactment which provides for the abolition of the Greater London Council and the metropolitan county councils.").
Amendment No. 18: Page 6, line 29, at end insert—
("() No direction under subsection (2) above may be given by the Secretary of State until he has consulted the commission or a relevant authority or bodies representative of staff employed by a relevant authority, as the case may be, as to its proposed terms.").
These amendments relate to Clause 7, which is the clause that relates to the staff commission. In effect, in Amendment No. 17 we are asking the Minister to respond to our desire that the directions which are to be given shall only become mandatory after the passage of the main Bill. As presently drafted, in our view the Bill is illogical for the following reason. Directions may be imposed on the commission or on local authorities before the main abolition has been decided. A period of over 12 months could arise if the commission was set up in, say, August 1984 and if this Bill secures Royal Assent before the House rises; clearly that is always possible.
The main Bill may very well be delayed until October 1985—we hope for ever. Thus, a period of more than a year would elapse. During that period directions could be given forcing local authorities to make preparations to receive staff or freeze recruitment in either the upper or lower tier authorities with no certainty that abolition would be approved. We rest on the premise that until Royal Assent is given to any piece of legislation, anything is possible. We are simply saying that if that extended period comes about, there would be uncertainty and potentially there would be considerable cost. We know that the noble Lord, Lord Bellwin, has said more than once that if the main abolition Bill does not make progress at any stage, steps will be taken automatically for the provisions in this Bill to be cancelled. We simply want to make sure that nothing wasteful as regards expenditure and nervous and emotional energy (which quite clearly will be very heavy) takes place before it is absolutely necessary.
When the matter was debated in general terms in Committee on 3rd July the noble Lord, Lord Skelmersdale, suggested (at col. 199) that the power to

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make such directions would only be necessary because the relevant body had refused to be co-operative or reasonable. Although that is a useful statement of the intentions of the Government in relation to these powers, their exercise need not be so restricted within the terms of the Bill. As set out, the subsection to which we wish to add gives power to issue directives, first, to the staff commission as to its procedures; and, secondly. to the local authorities as to the furnishing of information, the implementation of advice by the commission and the payment of commission expenses. We believe that this covers a very wide area. It is unlikely that the staff commission itself would be acting in a way that the Government would regard as unreasonable. Therefore, the intention must be to regulate its activities with directions which can then be made binding on the local authority indirectly affected.
We await with interest whether, this second time round, the Government are minded to take this step, or whether they intend to persist in imposing on local authorities at a dreadful time the further duty to make ready for an abolition that the Government intend to bring about, and for which we certainly are not ready. In those circumstances, why should local authorities be put to the inconvenience and worry of doing something which more than once the Minister has said will not be a fait accompli until it has been passed? Therefore, I beg to move Amendment No. 16 and speak to the related amendments.
The Deputy Speaker: My Lords, I should explain that I called Amendment No. 17 on the understanding that Amendment No. 16 had been disposed of before the dinner adjournment. I am grateful to the noble Lord, Lord Graham of Edmonton, because he has made it clear that he is moving No. 16 as a paving amendment to Nos. 17 and 18. The amendment before your Lordships is therefore No. 16.
Lord Mottistone: My Lords, I understand the point that the noble Lord. Lord Graham, is making. However, he casts his thought as to what will happen if the main Bill does not reach the statute book until October 1985. If, on the other hand, the main Bill is rather quicker, for whatever reason, surely things of the sort that this clause is trying to ensure are best discussed good and early so as to get them out of the way as soon as possible.
There is another way of looking at it. The noble Lord's amendment might cause delay which could have adverse effects on the staff concerned rather than good effects if the main Bill comes through reasonably quickly. This is an interesting balance, but on the whole I should not have thought that the amendment was helpful if you take the assumption, which I do, that the main Bill will be early rather than late.
Lord Graham of Edmonton: My Lords, may I respond immediately, by leave of the House? The noble Lord, Lord Mottistone, makes a fair point in saying that one can look at this either way, and, either way, there is likely to be chagrin on the part of one party or the other. All we say is that we would prefer to run the risk of having to move fast if it took place in October. The noble Lord, Lord Mottistone, is
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saying: why move fast? Why not move early even though it might be that it is wholly abortive? It is a fair point; it is a fair balance.
Baroness Gardner of Parkes: My Lords, I felt, listening to the noble Lord, Lord Graham of Edmonton, that his arguments were completely opposite to the arguments put forward earlier this afternoon, when he was saying how important it was for us to have information on exactly what everything is going to cost, and everything that is going to happen, and how we must have all that before we have the Bill. Now he is suggesting that all these parts of this Bill which would give us that very information, which would be helpful and would provide the answers he asked about earlier, should be put aside. That is one reason why I must oppose his amendment.
Another reason is that it may be necessary in terms of protection for the staff themselves. I have previously paid tribute to the high calibre of officers in County Hall, and I think highly of the officers' own staff. I was distressed to see this big heading:
"Ken attacks the staff association",
and a quote from him saying:
"The bigest obstruction to us carrying out our manifesto is the Government, and the second biggest is our own staff".
That is a quote from Mr. Livingstone. That does not sound like someone who is out to protect his staff's interests. It sounds as though he is already in conflict with them.
If there is progress and they work with the Government, as I hope and believe they will, there may be a greater conflict develop, and advice from the Secretary of State may be very necessary to help to smooth the path and protect the staff under those circumstances. For these various reasons, I would certainly oppose the amendments.
Lord Skelmersdale: My Lords, I am grateful to both my noble friends, but before commenting on what they have just said perhaps I may bring us back to the amendments on the Marshalled List, which seek, in various ways and to various extents, to constrain the Secretary of State's power to make directions under subsection (2) of Clause 7.
It may be of help if I make clear the reasons for including such a power. First let me say that this provision follows exactly the precedent set in earlier reorganisations. I hope and expect that the commission will work largely by laying down general principles, and then by influence and persuasion that it will secure the free acceptance of these by the parties concerned. However, some degree of enforcement may be needed, and the choice lies between giving a power of direction to the commission and reserving such a power to the Secretary of State to use on the recommendation of the commission. We do not wish to jeopardise the commission's essential role as an advisory body working by encouragement and persuasion. The subsection therefore reserves the power to the Secretary of State. It will be used, and only used, at the instigation of the commission themselves.
I repeat that this provision is well precedented. But let me also say that we see the exercise of this power as something of a last resort. Nevertheless, it is necessary if the interests of staff are to be fully safeguarded. My

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noble friend Lady Gardner is absolutely right: what we are talking about here is the proper interests of the staff concerned in this changeover. The sooner we get the staff commission organised and established as a going concern, the better off the staff will be and their interests safeguarded.
Amendments Nos. 16 and 17 seek to tie the power of direction to the main Bill. Perhaps I could explain why we decided to provide for the establishment of the commission in this Bill, because it is germane to the consideration of these amendments. If we had left it until the main Bill—which is what the noble Lord, Lord Graham, is seeking—it could not have been set up as a statutory body until the summer or autumn of 1985. That would be too late to begin effectively to protect the interests of the staff. We therefore decided to set it up in this Bill. I do not think that that prejudges the principle of abolition, as the staff commission will not begin its work in earnest until another place has approved the principle of the main Bill. Until then, the commission will make its plans, will make contact with authorities and staff representatives, and will ensure, as I have said, that no one tries to jump the gun.
My Lords, the commission will need to be getting on with its work whilst the main Bill is still in Parliament. The effect of these amendments would be to ensure that it could not properly begin its job until it was too late to be of benefit to the staff concerned. The noble Lord, Lord Graham, talked about the chagrin of one party or another. What I am determined about is that the chagrin of the staff shall be totally non-existent.
Amendment No. 18 would oblige the Secretary of State to consult with relevant authorities about the proposed terms of any direction before he could make it. But since a direction would normally only be necessary because the relevant body had refused to be co-operative or reasonable, one cannot help but wonder what point there would be in such consultations—unless it was a deliberate attempt to delay and frustrate the commission's efforts on behalf of staff. There is of course, nothing in the subsection as it stands to prevent such consultation should it seem worthwhile. There is nothing new in subsection (2) of Clause 7. It is a tried and tested formula which has been used twice in the past. I therefore ask your Lordships to reject these amendments.
Lord Graham of Edmonton: My Lords, I intend to withdraw the amendments, but there is a big difference in approach as to the next 18 months. The Government are clearly working on the premise that they have taken for granted the outcome of parliamentary procedures. They are assuming that their legislation will be approved, and they are entitled to do that. They have their majorities in both Houses.
Lord Bellwin: Sometimes.
Lord Graham of Edmonton: I am speaking of as recently as I can remember—and it hurts! Therefore, they are fully entitled to work on the premise that that which they consider to be proper and good legislation will be carried. Equally, we are entitled to work on the premise that until both Houses have had the opportunity of examining the Bill in detail and using all legitimate parliamentary procedures which are
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open to them, we are not prepared to facilitate the easy progress of any aspect of the Bill.
It was interesting of the noble Lord, Lord Skelmersdale, to allude to the fact that very little would be done until the other place had accepted the principle. Again, we are elevating the other place above this place in the hierarchy of sovereignty in these matters. If there is equality of sovereignty in these matters, then we ought to stipulate equally that it will not be until this place has acted as the Minister is entitled to believe that the other place will act, and that is to facilitate the passage of the Bill. It will not be easy, it will be argued about, and we will have heart-searching. There is likely to be very little amendment in the other place, but, as we have seen over the last few weeks, in this place it is possible for matters not to be taken for granted as they are in the other place.
I am grateful to the noble Lord, Lord Mottistone, for posing, quite fairly, not the dilemma—it is not a dilemma, for either Lord Mottistone or myself—but the approaches to these matters. There is no shadow of doubt to us on this side. We know the risk we are taking, and we know, too, of the opprobium that would be heaped upon us if, at very short notice, everything had to go through and everyone, including trade unions, would ask why we could not have had longer to carry it out. But that is the way of the world. They are asking us at the moment, though not directly I would hasten to add; but I know that they are interested in, and supportive of, the moves we are making. Nevertheless if at the end of the day it turned out to be a rod on their own backs, no doubt they would ask why they were not given more time.
The noble Baroness, Lady Gardner of Parkes, raised what she saw as the inconsistency in my argument that we ought to delay before taking action when contrasted with the earlier argument I used that we ought to take as long as we could, or as long as we needed, to get information. I was deploying the opposite arguments on each of two separate sets of circumstances. If I have been inconsistent, so, too, has the noble Baroness, because clearly she opposed my approach on this question, as no doubt she did on the other. Heads you win, tails you lose. It is "Gardner's Question Time".
Baroness Gardner of Parkes: My Lords, it was a question not of there being delay or no delay, but of information. Earlier the noble Lord was asking for audits on all kinds of accounts and for information to be produced. I have been consistent in both, I consider. But it is not a question of delay, as that was not the topic under discussion.
Lord Graham of Edmonton: My Lords, I am grateful for the explanation. I confess quite readily that part of the nexus of this argument is delay. There is a punishment. There is a detriment to the delay, which the noble Lord, Lord Mottistone pointed out. Things can be done hurriedly and perhaps in an angrier frame of mind, with less time. We are attempting to delay in this context. But the noble Baroness, Lady Gardner of Parkes, has demonstrated the use of remembering what political opponents have said by reminding me of earlier arguments. I have a little book full of quotes made by the noble Baroness, Lady Gardner of Parkes, which from time to time I intend to use. In these

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circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 17 and 18 not moved.]
[Amendment No. 19 not moved.]
Clause 8 [Information in connection with proposals for abolition of authorities]:
8.51 p.m.
Lord Evans of Claughton Lord Evans of Claughton moved Amendment No. 20:
Page 7, leave out lines 3 to 5 and insert—
("(1) This section has effect where an enactment has been passed by Parliament which provides—").
The noble Lord said: My Lords, I am looking through the amendments that we are moving along at a fairly fast pace and with this amendment I think we should consider Amendments Nos. 21, 24, 25, and 28.
Amendment No. 21: Page 7, line 13, at beginning insert ("Subject to subsection (2A) below").
Amendment No. 24: Page 7, line 18, at end insert—
("(2A) No request under subsection (2) above requiring the compliance of officers of the Greater London Council shall be made by the Secretary of State until he has consulted bodies representative of officers concerned with the proposed terms of any such request.").
Amendment No. 25: Page 7, line 19, at beginning insert ("Subject to subsection (3A) below").
Amendment No. 28: Page 7, line 24, at end insert—
("(3A) No request under subsection (3) above requiring the compliance of officers of a metropolitan county council shall be made by the Secretary of State until he has consulted bodies representative of officers concerned with the proposed terms of any such request.").
I hope that your Lordships will agree to that course of action, which I am sure is in the best interests of the pursuit of this debate. The purpose of these amendments is to limit the duty on local authorities and officers to provide the information needed to implement proposals, once they have been approved by Parliament. The clause, as it stands at present, places a duty on the Greater London Council, the metropolitan counties and their officers to supply the Secretary of State, the borough and district councils, with any information they may request. As currently drafted in Clause 8, the duty extends to that required to facilitate the formulation of the abolition proposals as well as their implementation. Section 230 of the Local Government Act 1972, requires that every local authority, every joint board and every joint committee are obliged to provide the Secretary of State with such information about their functions as he or either House of Parliament may require. The Secretary of State, therefore, already has the power that he requires to obtain information to enable him to formulate his proposals. It seems to me that any extension of those powers would be unnecessary.
In addition, such information is constantly supplied by local authorities under their obligation to publish information and in the continuing exchanges between them and Government departments, particularly when grant aid is sought, for example for land reclamation projects. The information is often extremely extensive and covers a great number of years, in particular in regard to the annual submissions for transport grants and the passenger transport executive's proposals.
Where further information has been sought by the Government, all authorities up to now have responded positively. In fact the metropolitan counties and the Greater London Council have consistently expressed the view that information on the abolition issues should be not only available, but widely disseminated. Earlier this evening I moved an amendment to try to make more information available about the financial benefits, or non-benefits, of the abolition of one tier of local government.
It should be noted that the Local Government Act 1972, which established the authorities which it is now sought to abolish, recognised that a review might be necessary after 10 years and before 15 years, and contained provisions in Clauses 46, 47 and 48 to make that review possible. On 30th May this year, however, the Secretary of State issued an order preventing the Boundary Commission from commencing its review of the metropolitan counties and districts, although it must be assumed that such a review will take place in the non-metropolitan or shire counties before the 15-year period expires in 1989. The Greater London Council and the metropolitan county councils have also suggested, in addition to the Boundary Commission review, a Royal Commission, a Parliamentary Select Committee, an examination by management consultants, the Audit Commissioners, as I suggested earlier this evening, and academic institutions, all of which proposals the Government have consistently refused. The metropolitan counties commission independent reports, therefore, on various issues, which I also mentioned earlier. There has been, for instance, the Coopers and Lybrand report.
It seems that while the metropolitan counties and the Greater London Council have gone to a lot of trouble to supply the information which they can obtain from various bodies, and have proposed other ways, the Government's record is less impressive. As I understand the clause as at present drafted, it obliges the Greater London Council and the metropolitan counties to provide information that the borough councils and district councils may require. It will be remembered that the noble Lord the Minister, Lord Bellwin, said, during the Committee stage on discussion of this principle, that,
"The principal object of the Bill is to allow the successor authorities every opportunity to prepare for their new responsibilities and for a smooth transfer of functions".—[Official Report, 3/7/84; col. 206.]
Once the main abolition Bill is eventually approved, there can be no objection to that, but until that time, as I see it, the successor authorities—the district councils, joint boards, and so on—cannot know for certain how the metropolitan counties' functions are to be devolved. In those circumstances, unless the Minister can explain the matter to my satisfaction, it does not seem to me that they could make sensible requests for information, since they cannot disclose the kind of information they want. Therefore at this stage of the paving Bill they do not require the power to do so—not until after the main Bill has been enacted.
As recently as 12th June this year, in answer to a question on the list of authorities to be rate capped, the Prime Minister said:

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"the rate capping measure has not yet been enacted. It is still before the other House and it would be somewhat premature to devise a list before the Bill has even become an Act".—[Official Report, Commons, 12/6/84; col. 759.]
The Rates Bill was nearing the end of a six months' Session in Parliament and received the Royal Assent within a fortnight of the Prime Minister's reply. The main abolition Bill has not been published; yet we are still being sought to require officers and local authorities to provide information, the nature of which they cannot possibly know. It seems to be totally in conflict with the Government's views earlier on over rate capping. I hope that the Government will either be able to explain to the satisfaction of your Lordships what seems to me to be a mystery or possibly to reconsider the matter and amend the legislation—perhaps not in the precise form of the amendments but in some form which will satisfy what seems to me to be a series of contradictory proposals. I beg to move.
9.2 p.m.
Lord Bellwin: My Lords, Clause 8 is an integral part of the measures we are taking in this Bill to pave the way to abolition. An important object of the Bill is to allow the successor authorities every opportunity to prepare for their new responsibilities and for a smooth transfer of functions. In order to be able to do that, they need information, and they need it as soon as possible.
That is why we have included Clause 8 in this Bill. It does not prejudge the main abolition issue; it prepares for that eventuality. It does so by extending existing powers under Section 230 of the Local Government Act 1972. It is a perfectly reasonable and appropriate paving measure.
This amendment would prevent Clause 8 from being used until the main abolition Bill had been passed. If this amendment is accepted, we might just as well delete the entire clause from the paving Bill and leave it for the main Bill. Yet the clause as it stands makes it explicit that its purpose is to facilitate the formulation of proposals to abolish the GLC and MCCs, as well as to implement such proposals in the event of their being approved by Parliament. So we have been at great pains in drafting this clause to show that the clause does not prejudge the main Bill, and to explain why the provision is needed in advance of it. Amendment No. 20 would effectively wreck one of the Bill's most important interim measures.
To deal with the other amendments, Clause 8 has two main purposes. It is intended to assist, first, in formulating the abolition proposals; and, secondly, subject to Parliament's approval, to help to implement those proposals by ensuring a smooth transfer of those authorities' functions to the successor authorities. On both counts, access to the information, I repeat, will be vital. It is therefore necessary for this Bill to ensure that such information will be available in the preparation of the abolition legislation, in the consideration of it by Parliament and in the run-up to abolition.
There is already a duty on every local authority to provide the Secretary of State with information about its functions. We have taken this opportunity to clarify that requirement for the particular purposes of abolition. Clause 8 therefore makes clear that the information which the GLC and the MCCs already
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have a duty to supply includes abolition. It also extends the requirement to enable the boroughs and districts to have direct access to this information.
Amendments Nos. 24 and 28 deal with requests for information made by the Secretary of State. They do not affect requests made by the boroughs and districts. The amendments would require the Secretary of State, before asking for information from a GLC, MCC or borough or district officer to consult
"bodies representative of officers concerned"
about the terms of the request. I understand the points that have been made. Your Lordships want to safeguard against the possibility that the Secretary of State might require information from an officer who simply does not have it; and I would say that concern is misplaced. The duty will be enforced by the courts, for example, through mandamus or by injunction.
These are discretionary remedies. The courts will apply common sense to the particular crcumstances of each case; and clearly it will be far from sensible to insist that someone provides information that he does not possess, and the amendments therefore are unnecessary. They would also be damaging in their effects. They would introduce uncertainty and delay to the process of acquiring information from the upper tier. There will be uncertainty about how the representative bodies should be chosen. The amendments are silent in this respect. They leave it to the Secretary of State to determine, or for the staff interests to say, or—however unlikely it may seem given the attitude of some staff—actually for agreements between the parties.
An authority determined to be obstructive would no doubt exploit these uncertainties to maximise delay, and the amendments are similarly silent on what constitutes consultation. This, too, would provide opportunities for delay if authorities choose to test each case in the courts. I hope that with these explanations the noble Lord will feel able to withdraw these amendments because we feel that Clause 8 is critical to the Bill, and I am sure that the noble Lord will, at least, accept that.
Lord Evans of Claughton: My Lords, I have listened to what the noble Lord the Minister had to say. I think the best course at this stage will be to read through his speech and reconsider the matter. At this stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 21 not moved.]
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 22:
Page 7, line 13, leave out ("and its officers").
The noble Lord said: This amendment seeks to delete the words "and its officers". The Minister has been clear—and I think quite fair—in pointing out that he is most anxious to ensure that officers are not placed in an invidious position, and he recognises that there could very well be something like a tug of loyalty between their responsibility to their employers, those who pay their wages and those whom they serve, and to the Government Minister and legislation which is before them. As presently drafted, Clause 7(2) and (3) impose a duty to supply information both on the GLC

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and the MCCs and their officers. May I remind the Minister that on July 3rd in column 209 he told the House:
"if an officer had to provide information despite his authority's wishes, there would be no question of his being in breach of contract of his employment".
He went on to say that,
"officers will not be in breach of contract if they go against their employer's wishes in this respect".
The fact remains that officers will in fact be in breach of contract if they go against their employer's wishes. Sadly, these matters will need to be tested sometimes in the courts. The Government and the House will have within their memory decisions that were made in the courts—one as recently as today—where actions by the Government are not always held automatically and ipso facto to be ones which the courts will hold up as reasonable.
What the Government are seeking to do is to place officers under a statutory duty to provide information, notwithstanding their employer's wishes. This quite clearly is the nub of the argument. There will certainly be occasions when it is the desire of a council not to have its officers provide the information. We simply ask: can it be right for the Government by legislation to be seeking to direct employees to do that which they might otherwise be expressly forbidden to do by their employers; something which the Government would never countenance for their own employees. In other words, the Government would not countenance some other body saying that there is another body which has the right to information from the employees of the Government. Yet the Government are saying to local government, "We are going to pass a law which says that we have the right to tell your officers"—that is the officers of local government—"that they must divulge information to the national Government".
If the Government are interested in the need for good relations, we honestly feel that the kind of approach implicit in this clause is hardly conducive to their attainment. There is yet another stage in this House through which the Bill must go at which, after we have listened carefully to what the Minister has to say, we may decide not to press the matter. But I certainly look forward to listening to what the Minister has to say. I beg to move.
Lord Bellwin: My Lords, I am not sure that I can add a great deal to what I said in Committee. We heard the argument that the provision would place officers in an invidious position, and that officers would have to choose between obeying the law and obeying their employers. But as I said in Committee, that is not the intention or the effect of the provision. On the contrary, the duty on officers is a protection for them. The officer's duty would be clear; it would be the same duty as we all share—to obey the law. If there were a conflict of demands, that would be the creation of the employing authority. I want to reassure your Lordships, as I did the Committee, that if the officer had to provide information despite his authority's wishes, there would be no question of a breach of his contract of employment arising. It is an implied term in every contract of service that an employee may not be required to do an unlawful act, or to refrain from carrying out a legal duty. So officers will not be in
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breach of contract if they go against their employer's wishes in this respect.
The placing of such a duty on officers is not unprecedented: so far as local authorities are concerned, there is a precedent in Section 23(5) of the Housing Act 1980, which relates to the right to buy. This provision has now been repealed by the Housing and Building Control Act 1984, which was passed last month. That Act repeals Section 23(5), but replaces it by Section 10, which is a wider power. Under Section 23(5), the obligation on landlords and their officers was to supply information which the Secretary of State needed in exercising his power to intervene in particular cases. The new provision introduced by Section 10 of the 1984 Act extends that obligation to assist the Secretary of State in deciding whether to intervene and in exercising his power to issue directions on conditions of lease. Section 10 of the 1984 Act is therefore a close if not exact precedent for what we are proposing in the paving Bill.
I feel sure that the first part of my remarks sum up the whole matter. I would not have thought that this was such a problem. There are many aspects here where clearly there is a great difference of opinion. I would have thought that this is not one of them. The concern expressed by the noble Lord, Lord Graham of Edmonton, is a fair one and I take it as such, but of all the various issues I would not have thought that this was one where there is a great difference between us.
Lord Evans of Claughton: My Lords, may I say briefly that I understand the point that the officers would be protected by obeying the law; but I rise only because I have been approached by quite substantial numbers of representatives of NALGO and other people engaged in local government at various levels, who said to me that they understand what the provision is but that their problem is that they have local authority councillors cheek by jowel with them telling them to do this or that or the other, and at the same time they have a remote—shall we say?—civil servant in Whitehall telling them to do something different.
They are very concerned—particularly in view of what the noble Lord, the Minister, himself said recently about the changed attitudes in local government—that their lives would be made almost intolerable. They would be obeying the law by doing what the civil servants tell them. However, they would be living in an atmosphere of great tension for some considerable time because they would be forced to disobey the instructions of councillors whom they have been used to obeying for some considerable length of time. The penalties for them obeying the councillors and disobeying the civil servants could be as serious as being sent to prison.
I am quite sure that the dilemma which this position imposes on local government officers in the rather tense atmosphere which exists at the moment is one which we as the House of Lords should consider, and we should seek to give as much comfort, assistance, advice and support as we can to local government officers who are in a very difficult position whether they obey the law or whether they choose to obey their local government masters.
Lord Graham of Edmonton: My Lords, the noble Lord, Lord Evans of Claughton, certainly poses the

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strain and I think, as a good local government man, as the Minister is and as I would profess to be, too, in all humility, at the end of the day good local councils are not going to place their officers under that intolerable strain. They are not going to make it very unhappy for the officer to decide what he needs to do. I suspect that at the end of the day, if the reality of the situation is the weight of the muscle or the penalty that is involved, no good council of any political persuasion is going to make it impossible for its officers to act honestly, fairly and professionally at the end of the day.
The noble Baroness, Lady Gardner of Parkes, has paid tribute, as I think everyone does, to the high standard of service given to all councils by council officers. Their professionalism is acknowledged, shared and enjoyed. I do acknowledge that the Minister wrote to me after the last debate, when I quoted the case of R. v. the City of Birmingham, which was a Court of Appeal decision in 1982, and asked how that squared with the 1980 Act. The Minister pointed out that it was overtaken in 1984; and of course I accept completely the rationale of the Minister's answer. But I wonder whether in fact he can say something about how that squares with the decision in 1982. I should like to repeat again what was said by the noble and learned Lord, Lord Donaldson, in the Court of Appeal decision in 1982. This is what he said, and it is above and beyond and outwith the issues of the 1980 Housing Act:
"As I have already said, all relevant information acquired by a local authority's social workers in the course of their duties, whether or not it be confidential, is acquired on behalf of the local authority, and becomes the authority's information."
We want the Minister to say a little bit more about transposing a council officer to the place of a social worker, the council officer being in possession of information, confidential or not, and the decision of the noble and learned Lord, Lord Donaldson—that is, whether if in fact that information is in possession of a council officer what Lord Donaldson was saying is applicable. In other words, is the information acquired on behalf of the local authority and does it become the authority's information? If it is the authority's information, what we are posing is: what is the necessity of asking an officer to divulge that which is not his to divulge because it belongs to the authority? If the Minister can help us to understand the juxtaposition of what he has told us is the position and what Lord Donaldson said, perhaps we can make progress.
Lord Bellwin: By leave of the House, my Lords, certainly this is an area of much sensitivity and I accept that without any question, but the problem is that the need for the information is extremely important. I think there is a fundamental flaw, if I may say so, in the analogy between the social worker, with his duty to maintain the secret information about an individual, and the officer of a local authority, with his knowledge of the authority's affairs—because, although I raised the noble Lord's eyebrows when I said this at the last stage, I am very much one of those who have always been great believers in the provision of information as widely as possible. I believe that that is a very important thing in local government.
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However, I am not without sympathy towards the point that is being made. I just know how essential this is. I cannot undertake to do anything other than to read carefully and look into what the noble Lord, Lord Graham, has said on this point. I cannot do more than that with it. I would propose to correspond with the noble Lord and to send him a copy of what I write to the noble Lord, Lord Evans, between now and the next stage.
Lord Graham of Edmonton: My Lords, in the light of that promise, though the noble Lord has given nothing away, I beg leave to withdraw the amendment.
Amendment, by leave withdrawn.
[Amendments Nos. 23 to 29 not moved.]
Clause 9 [Postponement of exercise of functions]:
9.21 p.m.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 30:
Page 7, line 25, leave out subsection (1).
The noble Lord said: Should this clause be enacted in its entirety, it would cause unwarranted delay to the review of the strategic planning framework within Greater London and the metropolitan counties. The Minister will be aware that we had a short debate on the position of the Greater London development plan and its continuing need for updating when the matter was before the House some two weeks ago. Even assuming that the main abolition Bill is passed in the form desired by the Government, development plan reviews would have to wait until district and borough councils had sorted themselves out and felt able to undertake this novel work. Such delay is particularly unfortunate in the seven metropolitan areas—those parts of the country suffering the most from economic decline and change. These areas need diligent and continuous planning, and their needs should not be ignored.
The period between now and the proposed abolition gives us the last chance to get a sensible up-to-date strategic planning framework for the metropolitan areas. If abolition goes through, structure plans will become fragmented and difficult to administer. Rather than arresting structure plan work, the Secretary of State should be pressing for a final round of structure planning before abolition overtakes us. In seeking to arrest structure planning work, the Government are ignoring the views of many influential bodies who see the urgent need for strategic guidance on such matters as housing land. Unless land allocations for development are brought up to date, there is every risk that major building programmes will be disrupted to the disadvantage of the building industry.
The Government appear to be unclear about the effect of their amendment. During consideration of Clause 8(1) on 22nd May in another place, Sir George Young said,
"No alterations to those [i.e. existing structure] plans are with my Department".—[Official Report, Commons; col. 968.]
He then went on to say that the crucial point on which the Secretary of State would decide on whether to invoke Clause 8(1) would be the timing of the

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submission. In fact, amendments to structure plans have been submitted by the Greater Manchester Council and the West Midlands County Council. Why should the Secretary of State be under no duty to consider this necessary updating?
The amendment removes an unnecessary complication from the Local Government (Interim Provisions) Bill. No other service rendered by the metropolitan counties has been singled out for similar attention within the Bill, and no good reason has been advanced for the arbitrary decision to stifle this valuable work. Like so much else in this Bill, the clause assumes that abolition has already been agreed to by Parliament.
In your Lordships' House at Committee stage the noble Lord, Lord Skelmersdale, stated on 3rd July at column 244 of the Official Report that for the Secretary of State to remain under a duty to consider development reviews would clearly be absurd. He said:
"It would be a waste of time, money and effort to have to consider alterations that could not be processed before abolition takes place".
But Parliament has not yet decided that abolition is to take place; nor has it decided when abolition is to take place; nor has it decided that the Government's proposals for 69 mini-development plans to replace seven structure plans is the most effective way to provide a strategic planning framework for the seven major conurbations. Yet Clause 9(1) assumes that Parliament has taken those decisions: otherwise, why does it seek to enable the Secretary of State to halt progress on strategic planning reviews?
One is tempted to wonder whether Clause 9(1) has been placed in the Bill merely in order to settle an argument between the Secretary of State and the Greater London Council which the Secretary of State has lost in the courts. In reality, it has nothing to do with any needed interim arrangements pending major legislation on the metropolitan counties. One of the prime reasons for setting up the GLC in 1965 stemmed from the finding of the Herbert Commission that there should be a strong integration of land use and planning and transportation policies within the capital. That need is as great today as it was then. There was no analysis included in the White Paper Streamlining the Cities as to the success or failure of the planning system at the metropolitan level. None the less, the White Paper and a further consultation document proposed fundamental changes in this respect.
The Government's proposal received very widespread criticism indeed from all quarters, not least from all of the major professional bodies acting in this field. In response to this universal criticism, the Government have suggested only minor modifications to a set of proposals that the profession knows will be unworkable. The clause which we are considering today paves the way for an unacceptable and chaotic hotch-potch to replace structure planning in the capital city of the nation.
The Secretary of State has already suffered and lost a long legal battle with the GLC over the alterations to the Greater London Development Plan. He refused to issue the regulations which the GLC sought to govern the alterations to the plan. After a High Court judgment he issued the regulations but then
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announced his intention to introduce legislation to remove his duty to consider the alterations. The clause before us, Clause 9(1), is that legislation, therefore despite losing in the courts, despite the wide recognition of the need to update the GLDP, despite enormous support for the alterations which the GLC is proposing and despite the fact that the alterations will be submitted to him in about six weeks' time, the Secretary of State wants to turn his back on the planning system and on his duties under it.
The result can only be damaging to London. Even if legislation to abolish the GLC is eventually enacted, there will still be a need for a London-wide view on planning. No one has ever suggested otherwise. The trouble is that the Government have made no coherent proposal to replace the present system. To replace one single structure plan for Greater London with up to 33 separate plans seems a curious and unworkable method of streamlining the government of London and a very odd way of curbing alleged extravagance. I beg to move.
Lord Skelmersdale: My Lords, like it or not—and the Opposition obviously do not—we are still considering a paving Bill designed to make interim provisions leading up to the abolition of the GLC and the metropolitan county councils and the transfer of functions to the lower tier. As part of these measures, Clause 9 will help to prevent unnecessary waste of time, money and effort. It does not prevent useful and worthwhile work from continuing and it most certainly does not prejudge abolition.
Under subsection (1) the Secretary of State would no longer be required, although he would still be able, to examine alterations to the Greater London Development Plan or to metropolitan county structure plans. This provision will be invoked where necessary to avoid abortive work. For example, there will be no point in continuing with such consideration where the alterations could not be processed before the time when abolition may or may not occur.
The amendment which we are considering would maintain the Secretary of State's duty to consider proposals submitted to him for the alteration of the Greater London Development Plan or of a metropolitan county structure plan. That would be absurd. It would be a waste of time, money and effort to have to consider alterations which could not be processed before abolition takes place and which might very well be inappropriate at the end of the day. In any of the scenarios which the noble Lord, Lord Graham of Edmonton, mentioned, each one of which would have a different result at the end of the day, a decision might very well be taken in the interim period which proved to be totally abortive.
There is at present an approved structure plan in force in Greater London and each of the metropolitan counties. However, the GLC and the county planning authorities are expected to keep their plans under review. Under Section 10 of the Town and Country Planning Act 1971, they may submit to the Secretary of State such alterations as they consider expedient. The Secretary of State may hold an examination in public under Section 9 of the 1971 Act before taking a decision on any alterations.
The White Paper, Streamlining the Cities, and my

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right honourable friend's recent announcement of a proposed simplified planning role which he is considering for the main abolition proposals, are well known to your Lordships. No change is to be made to the proposals for regional guidance, planning conferences, and the London Planning Commission, for example.
The position in London has attracted particular comment. I suspect that it is this which motivates the noble Lord's amendment. The history is well known, that prior to the last election the GLC had commenced work on the drafting of alterations to key policy issues, such as employment and offices, to update the GLDP. The Department of the Environment prepared regulations to govern the formal process of consultation, submission and examination in public of such amendments. However, our manifesto commitment to abolish the GLC led us to reconsider the laying of such regulations for the reasons I gave earlier. We concluded that it would be illogical to give the GLC formal powers now to amend a document which could ultimately be replaced by new plans to be prepared following abolition.
In Committee, the noble Lord, Lord McIntosh, referred to the fact that the GLC had challenged this decision in the courts and had obtained a ruling that the Secretary of State was under a duty to make the regulations. In announcing his intention to comply with this ruling, my right honourable friend made it plain that he still considered the GLC's proposals for amending the GLDP to be a wasteful extravagance in view of the Government's declared intention to introduce new planning arrangements for London following abolition. The actual content of the proposed alterations emphasises the point. They include such matters as policy for women and community areas. These and other issues can hardly be regarded as relevant to a land use structure plan.
The noble Lord, Lord Graham, referred to the remarks of my honourable friend the Parliamentary Under-Secretary in another place. I can tell him that the update of those remarks is that in the West Midlands alterations were submitted in June 1983 to update the approved plan and were the subject of an examination in public in December. My right honourable friends are considering the report of the panel who held the examination in public, and hope to publish proposed modifications later this year. In Greater Manchester, alterations were submitted in March this year which rolled forward the policies in the approved plan to 1991. The period for objections ended in April, and my right honourable friend is arranging for a short examination in public to be held later this year. Either of these cases, as I understand it—and if I am wrong I shall have to write to the noble Lord—would be held up by the proposals we are discussing in Clause 9(1). In South Yorkshire, West Yorkshire, Merseyside, Tyne and Wear there are no alterations to any of these four structure plans for the department at present. Indeed—although we now know that there are about to be—nor are there for London.
Therefore, when announcing that the regulations would be made, my right honourable friend also made it crystal clear that he would be seeking the approval of Parliament to the inclusion in legislation to be
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introduced in this Session of a power enabling him to defer consideration of such proposals, and of course this provision meets that commitment.
To sum up, it seems a waste of time and money to consider amendments to a plan which itself will be replaced in due course by the new planning arrangement which will operate in London and the metropolitan counties post-abolition. I therefore hope that the noble Lord will not pursue this amendment.
Lord Graham of Edmonton: My Lords, it is not my intention to press these amendments to a vote, but I think that all that the Minister has said is rather sad. All that the GLC is seeking to do is to keep in existence something which could very well be seen by its successors, if indeed there are to be successors, as appropriate. The Minister in fact gave the game away by seeking to point out two elements which are included in the plan, the policy for women and community areas.
By indicating that they are inappropriate the Minister shows the manner in which these matters are looked at by himself and his colleagues. I may very well consider that they are inappropriate and, in fact, other people with greater powers than either the Minister or myself may consider them inappropriate, but drawing the attention of the House to them indicates the kind of antagonisms which exist in certain ministerial minds towards these matters, particularly when the genesis for them is the GLC itself.
I simply want to say, and repeat, that when the GLC is abolished, if it is, and whatever other body is put in its place by the Minister and his friends—we do not know the precise nature—they may very well decide collectively, in one shape or another, to combine so that effectively what they will wish to re-emerge will, in fact, be the GLDP, writ large, but 18 months on. However, all that the GLC is asking from the Minister is to be allowed to proceed, for it to submit, and for him to act. If, in fact, his action is overtaken by the passage of the Bill and if, subsequently, the successors to the GLC show a disinterest in what is on offer, then, of course, they can persist and produce their separate plans—whether there are 32, whether it is on an area basis, or whatever it is.
The Minister fails to comprehend that by his action he is sterilising a great deal of economic activity, just as some of the economic activity which has been generated may very well be anathema to him. The fact that there is little progress on an already outdated plan, which will be outdated even further, could, I imagine, without being an expert, have a deleterious effect on development, planning, land use, building and the like. All of these things are detrimental, and the Minister has failed to take them into account. His attitude makes me more sad than angry because, in my view, there is a punitive and vindictive aspect to the Minister's action, particularly in his defiance of the actions of the court. He has made his position quite clear and I believe that this is one of the detrimental actions by the Government for which the people of London will have to pay. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 10 [Control of general expenditure powers]:
9.38 p.m.
Lord Bellwin Lord Bellwin moved Amendment No. 31:
Page 8, line 4, leave out ("Local Government Act 1972") and insert ("principal Act").
The noble Lord said: My Lords, this is a purely technical amendment bringing Clause 10 into line with the rest of the Bill where the Local Government Act 1972 is simply referred to, for ease of reference, as the "principal Act". I beg to move.
Baroness Birk: My Lords, many of us have discussed from time to time—the last time during the Housing Act—the difficulty of following reference in the delegated legislation and the problems it involves. It seems to me that to carry on with this and leaving out something which is perfectly clear, where we know which Act to turn to—the Local Government Act 1972—and inserting "the principal Act" is a retrogressive step.
I see that the noble Lord is shaking his head, but this has been going on for some time and it would at some point be a good idea to stop it and call Acts by the names they are known by so that it is easier to look them up.
On Question, amendment agreed to.
Baroness Birk Baroness Birk moved Amendment No. 32:
Page 8, line 5, at end insert—
("() Consent shall not be unreasonably withheld, and shall in any event be extended to the incurring of expenditure where the recipient person or body is, for all or part of any one financial year, in receipt concurrently of funding from monies voted by Parliament including Urban Programme, the grant-in-aid to the Manpower Services Commission and funds administered by the Department of Industry, and in receipt concurrently of funding from the European Social Fund, Regional Fund, or other sums.").
The noble Baroness said: My Lords, a series of amendments all dealing with the same subject are Amendments Nos. 32, 33, 34 and 36.
Amendment No. 33: Page 18, line, 10, leave out from beginning to ("expedient") in line 12 and insert ("The Secretary of State shall give his consent under this section within a period of two weeks from the Secretary of State's receipt of the application in respect of any expenditure to which this section applies unless he certifies that it is not").
Amendment No. 34: Page 8, line 14, after ("is") insert ("not").
Amendment No. 36: Page 8, line 18, at end insert—
("() The consent of the Secretary of State under this section shall not be required for any expenditure incurred under the said section 137 by way of a grant to any body or organisation where:

(a) such organisation or body has been in receipt of a payment from the council concerned within the previous two financial years; and

(b) the payment to be made to that body or organisation does not exceed the total amount so given in the previous two financial years.").

All the amendments refer to an amendment included by the Government at Committee stage dealing with Section 137 of the Local Government Act 1972, or—should I now say—the principal Act. As we know. Section 137 empowers any local authority to:
"incur expenditure which in their opinion is in the interests of their area or any part of it or all or some of its inhabitants",
up to the limit of the product of a rate of 2p in the pound.
What the Government are now proposing to do is to limit the ability of the GLC and the metropolitan county councils, after 1st April 1985, to incur expenditure under that section except with the prior consent of the Secretary of State. So far the Government have been unable to offer any positive argument to justify the need for that amendment.
What the Government are doing is relying on an accusation that the GLC and the MCCs may be planning to use their Section 137 precept powers in a way that they dislike. If we turn to the Official Report of 3rd July, at col. 250, that was the explanation given by the Minister. This takes no account of the responsible way in which the MCCs and the GLC have exercised their Section 137 powers to meet the local needs of their areas. There may have been some controversial objectives which the Government, and probably many ratepayers, do not like. They may dislike one, like another and not like a third.
Financially expenditure on those objectives amounts to only a small proportion of the total exercised by the MCCs and the GLC. Even so, the power is protected from misuse by the ability of any ratepayer to take action in the courts to challenge the propriety of any decision by a council to spend money under this section. Nevertheless, since 1974 there is no record of a successful challenge having been made.
The real worry is that the councils use their Section 137 powers to give grant aid to bodies such as marriage guidance councils, citizens' advice bureaux, councils of voluntary service and for one-parent families, and similar bodies. Many organisations in the voluntary sector are extremely concerned about that. I have no doubt that other noble Lords have been inundated with letters from those organisations which are very concerned about what will happen in the future.
The issue not only has a social side. Prior to 1979–80 most of the spending under that section was for those rather more social purposes. Since then the power has increasingly been used to assist economic development, frequently in combination with funds from the private sector, from the Government and from the EEC. The record of employment creation is very great. For the metropolitan county councils in the last year, £19 million out of a total of £22 million was used for economic development.
In its amended form the Bill will set a precedent likely to lead to the complete erosion of the main principle of Section 137, which is to give power to the councils to use their initiative and their own criteria. Further, once established, that precedent clearly has implications for lower tier authorities—in fact I think that that thought was floated during the Committee stage—and for any voluntary organisation receiving aid from one of those authorities. The whole clause is unnecessary. It is a further centralisation of power in the hands of the Secretary of State. It provides for retrospective and also pre-emptive deprivation of powers from democratic local government. It is both disrupting and confusing. It is also damaging to many worthwhile voluntary and community groups.
Further, the basis on which the Secretary of State will give consent under the new clause is far from clear.

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Subsection (3) requires the Secretary of State to be satisfied that,
"it is expedient for the council in question to incur",
the expenditure. The remainder of the subsection merely repeats the words of Section 137(1), but in effect removes the discretion as to what is of benefit to the area or the inhabitants from the council and gives it to the Secretary of State.
This series of amendments is aimed at trying to improve somewhat the very severe effect on many authorities. I have in front of me a letter from the Joint Docklands Action Group, which is very concerned about the job creation scheme, and the councillors would be left with little say and resources for development of their policies in many areas.
The first amendment, Amendment No. 32, which stipulates that,
"Consent shall not be unreasonably withheld",
seeks to restrict the Secretary of State's discretion. Since the Government's case appears to rest on allegations of asset stripping and related forms of sabotage of their abolition objectives, the amendment should cause no difficulty because it specifically seeks to exempt from the need for consent the incurring of expenditure where the recipient body, far from being a nefarious partner in perhaps a GLC attempt to asset strip, is so respectable as to be already in receipt of funds voted by Parliament and in varying degrees already audited by or under direct or indirect control or influence of the Government.
I think the Government may find that they can meet part of this point. The examples that we put in the amendment are the Urban Programme and the grant-in-aid to the Manpower Services Commission. I must apologise that there are some typographical errors in the way that Amendment No. 32 is now printed. It should read:
"Manpower Services Commission or funds administered by the Department of Industry or in receipt concurrently of funding from the European Social Fund Regional Fund".
The words, "or other sums", should come out.
Amendments Nos. 33 and 34 place the onus on the Secretary of State to determine and certify the incorrectness or illegality of any payment. The figures show that by far the greatest part of what the metropolitan county councils and the GLC spend under Section 137 is for objects of which the Government do not disapprove. The objects include grant-aiding bodies to provide advice and/or courses for the small businessman; offering small grants or loans to both start and establish small firms; financing training courses to eliminate skill shortages and easing the financial burden of recruiting and training additional staff through job incentive schemes. These are all objectives of which at one time or another the Government have stated that they are greatly in favour. They have stated that they are in favour of this type of initiative and this way of creating work. A number of these approaches have been funded by the EEC.
The Section 137 powers are also used to help larger firms through development companies such as the Greater Manchester Board. These companies, working closely with private sector institutions,
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provide services that can help a firm to relocate, to re-equip and to expand and management buy-outs to be effected. It would seem there again that, if consent has to be asked for all the time, all this is going to be slowed down. A great deal of this money will not find its way to where it is needed. It will really have a very damaging and destructive effect on what Section 137 was intended to be used for and the very important way it is developed both in the social and in the economic field.
The final amendment in this set is Amendment No. 34, which deals with the same points as, and is linked up with, Amendment No. 33. So what we are attempting to do in these amendments is to try to lessen the very harsh approach of the new clause which was put into the Bill at the last stage. We wish to make it more mellow and also enable the expenditure to be used in a way that is productive. As the Bill stands at the moment—one hopes that this is fairly rough drafting by the Government to which they will be prepared to accept amendments—it will affect to a great extent industry, social work and countless organisations that rely on Section 137, which, as the Minister must agree, has had considerable success, in order to continue the work that they are doing. I beg to move.
Lord Mottistone: My Lords, I noticed that in her fairly lengthy speech the noble Baroness made no mention of the ratepayers. Has she considered the safeguards for ratepayers which might be involved in the Government's present attitude and which her amendments would reduce? It is all very well being grand about the sort of things she has mentioned, but the ratepayers are very important.
Lord Bellwin: My Lords, it is rather sad that Clause 10 is necessary at all, but there should be no doubt in anyone's mind that it is necessary. The points that the noble Baroness advances, as I said earlier in the day, might well have carried weight some years ago, but they ignore the realities of today. It is not so long ago that all local authorities would unquestionably assist in implementing the law of the land as sanctioned by Parliament, however vigorously they might have opposed the passage of legislation during its consideration by Parliament. I am glad to say that for the vast majority of authorities that still remains the case: I wish to make that quite clear. But we cannot overlook the activity or, should I say, the activism of a minority of authorities that are bent on overturning both convention and responsibility. They seemingly canvass the proposition that the GLC and the metropolitan county councils would in due course, if Parliament willed the end of their existence, see to it that there was an orderly rundown of their affairs. In particular, they seemingly look to these authorities spending prudently under their discretionary power in Section 137 and, as my noble friend Lord Mottistone said, safeguarding their ratepayers in the process and smoothing the handover to the successor authorities.
Let us be clear. We are actually talking about considerable sums of money. In the case of the GLC, it represents, I think, £38·8 million a year. They are

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lesser amounts for the metropolitan counties, but we are still talking about great sums of money. I do not question the good faith of the noble Baroness and those who would support her view; but they must have no illusions about what could be in store. The assets that have been paid for and that are rightly those of the ratepayers could be eased from their control by financial sleight of hand. That has to be said. The potential scale of irresponsibility is enormous. As a Government, we would be irresponsible if persuaded to believe that the irresponsibility of some of the authorities concerned was so far fetched that no preventive action was called for.
In practice, the Government have no choice but to come to the assistance of London and metropolitan ratepayers who fear, with good reason, the last-minute excesses that could be visited on them. The object of this provision is to prevent such excesses taking place. It is our duty to ensure that in their final year the authorities act responsibly and that any temptation to do otherwise is removed. We cannot leave scope for displays of bravado intended (who knows?) to rally factional support at the expense of ratepayers as a whole.
It may well be helpful if I briefly set the record straight on three particular points. First, anxiety has been expressed—and the noble Baroness repeated it—about the impact which the provision could have on certain of the voluntary sector recipients of aid. I do not dispute for one moment that the genuine voluntary sector has benefited from grant aid and assistance made available under Section 137 by the GLC and the metropolitan county councils.
I made it abundantly clear at Committee stage, in introducing this provision—I gladly say it again—that such activity has absolutely nothing to fear from Government intervention. Our bona fides are demonstrated by the fact that on this front our record as a Government is second to none: and that bears repeating. We recognise both the value of voluntary sector work and its dependence in many instances, as the noble Baroness rightly said, on grant under Section 137. We shall give that recognition full practical effect when we come to exercise this provision.
Secondly, there are bound to be other categories of expenditure which will not be affected by the provision. I have in mind, for example, cases where the Secretary of State has approved projects under the urban programme and urban development schemes. Consent for payments under Section 137 in respect of such projects will follow.
Thirdly, we are not in the business of halting such useful work as can be, and frequently is, carried out by, for example, the Greater London Enterprise Board and the enterprise boards set up in some of the other metropolitan counties. We accept that enterprise boards can help to forge a vital partnership between the public and private sectors. Equally, however, we shall not be prepared to approve large payments to enterprise boards if they are accompanied by merely a skimpy, insufficient outline of their purpose, or if they are clearly intended to facilitate the control of substantial land or property holdings passing to a body one removed from the council and its ratepayers, and
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hence, in due course, from the successor body and its ratepayers. It is right that we should be clear and unambiguous on this point. There will be no getting round it.
In replying to Amendments Nos. 33 and 34, it seems right for me to set in proper perspective the remarks that have been made about the actual operation of the Clause 10 controls—not so much today by the noble Baroness, although she did touch upon it. I think it is important to say that we are alert to all that is involved there. We shall be concerned about that. We shall take all the necessary steps and do whatever is needed to enable the controls to work. If we are to afford the ratepayers of London and of the metropolitan county councils the protection they need, our procedures must be designed to work—not to appeal to the authorities under scrutiny.
In conclusion, I say again that it is regrettable that Clause 10 is necessary, but we have been driven to it by our increasing awareness of deliberate and orchestrated irresponsibility. The clause leaves with the GLC and the metropolitan county councils the initiative for expenditure under Section 137. There is no question of the Government taking over the authorities' role of making proposals; but there should be no illusions about the need to supervise that role.
The interests of the ratepayers in the abolition authorities, and, indeed, of the good name of local government as a whole, are both at stake. The very existence of Section 137 is increasingly coming under public scrutiny, and, frequently, public criticism. If a few authorities, by their unrestrained use of Section 137, can call into question the very existence of the power, then—I have said this many times in your Lordships' House—they do a disservice to its many worthwhile uses and to local government as a whole. The Government cannot, and will not, abdicate their responsibility in this matter, and that is why the provision has become essential.
10 p.m.
Baroness Seear: My Lords, the Minister has assured us that the Government recognise the importance of grants under Section 137 for the collaborative work between voluntary bodies and statutory bodies at local level. One had believed that the Government were very strongly in support of schemes of this kind and the noble Lord has assured us that this will continue. Judging from the correspondence that we are all receiving, the voluntary bodies are very far from assured that the position will continue as it has in the past. I know the Minister accepts the fact that this collaboration is a most important development. The extent of it is new. It is a real growth point. It is providing real jobs in areas where, but for it, they would not exist, and any setback to this new development would be disastrous.
The noble Lord says that worthwhile schemes will be supported, but that they will have to be supervised. That casts a shiver down the spine of any of us who are trying to make schemes of this kind work. Getting money out of the public authority at the end of the day is already worse than extracting teeth. It takes so long that a great many schemes are nearly bankrupt because of cash-flow problems before the money

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arrives. If on top of what happens already we have to have further supervision, the position of these schemes—especially those that are struggling into existence—will become quite impossible. Is there no way in which the Minister can devise a scheme in which he catches offenders but lets the great mass of legitimate schemes continue as they are at present?
Lord Bellwin: My Lords, by leave of the House, there are two points that I should like to make. The noble Baroness, Lady Seear, is quite right: there is concern and that is why I welcome the opportunity to say what I have said on this matter. Perhaps I should elaborate a little further by saying that the people who have written in have had a lurid picture painted for them. I am glad of the chance to make clear where the Government stand in this regard.
There is no supporting evidence at all to indicate other than what I have said is right. The matter is being discussed as if a power of consent had never been operated previously. That is just not so. For example, there is the case of consents to disposal of housing land. We are not entirely on untrodden territory when we talk about general consents. It must also be made clear that this whole provision will operate only for one year. It bears repeating that this is a temporary measure designed to deal solely with proposals for expenditure in the year 1985–86; that is all. Clearly we would not want to see good schemes lost because of a temporary measure and how it works.
I do not have the concern that I know some have, and I do not have that concern because I know the way in which we intend this to operate with general consents. It is only in certain areas, where we feel that it is absolutely essential to watch the situation, that we propose to do as I have said. So I take what the noble Baroness has said seriously, and I am glad of the chance to make clear to those who are concerned that they do not need to have that concern, and at the same time I ask the noble Baroness to understand why we feel as we do about the need for this clause.
The Earl of Longford: My Lords, I do not know whether the Minister will allow me to intervene for a moment, although I have not heard most of the past proceedings. However, I heard what the noble Lord was saying just now and so I hope I shall be in order in saying a few words on behalf of the voluntary bodies. The Minister must know that there is widespread anxiety and concern—he must at least agree about that. I do not know why he thinks that there should be so much concern if people had confidence in him and his colleagues. The truth is that they have no confidence. The whole of the voluntary world has no confidence as regards this particular matter—
Lord Boyd-Carpenter: No!
The Earl of Longford: My Lords, what did someone say? Does the noble Lord want me to give way? No. I hope that the noble Lord will not continue to interrupt from a sitting position; that is not like him. I was saying that it is perfectly obvious that the voluntary world has no confidence in the Minister and his colleagues. Why should they have confidence? As the
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Minister knows, the great majority of the citizens of London are against the abolition of the GLC. Is that disputed? Every poll shows—
Lord Bellwin: My Lords, they have spent millions on advertising—
The Earl of Longford: Noble Lords are getting awfully rattled. They are sitting there chatting away for all they are worth. I am asking for a moment or two. I am going on, but I want to point out that noble Lords are not observing the rules of the House by making all these interruptions from a sitting position.
Lord Plummer of St. Marylebone: My Lords, if the noble Earl would like someone to interrupt him, perhaps I may do so. The fact of the matter is that the despondency and despair of the voluntary bodies has been encouraged by the Labour Party, whose members go around spreading these stories and causing a great deal of unnecessary anxiety. The noble Earl comes here in the middle of the debate without knowing what has been said, and carries on with this entirely fallacious argument.
The Earl of Longford: My Lords, I am glad that the noble Lord had the courage to stand up and say what is manifestly false. That was a contribution to the debate.
Noble Lords: No!
The Earl of Longford: My Lords, everyone knows and every poll shows that the great majority of the citizens of London are against abolition.
Lord Graham of Edmonton: My Lords, why not have an election?
The Earl of Longford: My Lords, they are terrified of going before the electorate; they are scared stiff of going before the electorate. In those circumstances, it is not surprising that the voluntary bodies have no confidence in the Minister. Of course, what the noble Baroness, Lady Seear, said is perfectly true. If one is actually responsible for one of these voluntary bodies—if one is chairman, president or holds some such office—one knows perfectly well that when one speaks of the Minister having to approve one of these schemes, one is talking nonsense. How can this very enlightened, hardworking Minister or his colleague (who, for all I know, may be equally enlightened and hardworking) possibly approve all these schemes? It is a physical impossibility; it is a nonsense. I wanted to put that small point before the House before we proceed to a Division.
Lord Boyd-Carpenter: My Lords, I apologise to the noble Earl for having interrupted him from a sitting position. I can only explain that I was surprised that so normally reasonable a Member of this House as the noble Earl committed himself to so outrageous an observation as that which he made about the attitude of the voluntary bodies. The respectable voluntary bodies—and not all voluntary bodies are respectable—have far more confidence in my noble

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friends than they have in the noble Lord and his noble friends. There is really no reason whatever why they should have any apprehension.
However, it may well be that some of the so-called voluntary bodies that have been assisted, in particular by the Greater London Council, perhaps rightly, have very little confidence as to whether their grants will be continued once the GLC has been abolished. Let me remind the noble Lord of one or two of these bodies that have benefited from the Greater London Council. They include the English Collective of Prostitutes, Lesbian Line. London Lesbian and Gay Centre, the Campaign Against the Police Bill, and the Gay Bereavement Project. Those are the types of bodies that have been benefiting from the GLC and it is perhaps not unreasonable that they should have some apprehensions. As a ratepayer in London I think that it is quite outrageous that my money, contributed in rates, should be used for these perverted purposes.
Lord McIntosh of Haringey: My Lords, Lord Boyd-Carpenter's hit list of organisations of which he does not approve is becoming a little tattered. He has been using it over and over again at all stages of this Bill and at all stages of the Rates Bill. It is not a particularly effective list because the noble Lord does not actually give the figures of the amounts of money concerned.
We have made some progress in this debate in the sense that the noble Lord, Lord Bellwin, has paid tribute to the work of the Greater London Enterprise Board and other boards, which at the Committee stage he called the "so-called" enterprise boards. It is worthwhile to have that improvement in his attitude. I am grateful to him for what he now says about it.
But I spoke in the somewhat unreal circumstances at the end of the Committee stage more in sorrow than in anger about the problems that the Government would have over the implementation of this new clause. The fact of the matter is that it is neither possible nor probable that the Labour Party could, in this short time, have whipped up the kind of opposition to this new clause that there has been from voluntary bodies. Neither has it in fact happened; but the truth is that at all stages of this Bill the process of applying for grants under Section 137 continues. The voluntary bodies are already making their plans, quite properly, for 1984–85, and they have been applying to the Greater London Council, to the metropolitan counties and to other local authorities for finance for next year.
The point which the noble Lord, Lord Bellwin, has not adequately replied to—even when he has been making reassuring statements about general consents—is how he is going to deal with those applications which do not qualify for general consent, what extra staff he is going to have at Marsham Street to do this work, and how quickly he is going to deal with the applications. There is an amendment in this list on exactly that point. That, combined with the issue of the continuing and necessary work of the enterprise boards—not just the Greater London Enterprise Board but the West Midlands Enterprise Board, in particular—shows that the Government have not adequately thought out this new clause, and
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not adequately thought out their response to this series of amendments.
Baroness Hornsby-Smith: My Lords, we have heard a great deal about this, and not least from the noble Baroness. Lady Birk, who singled out organisations which she knows perfectly well would still have support from the Government. Members on this side of the House are just as keen on supporting legitimate registered charities and welfare organisations which do first-class work as are noble Lords on the other side of the House. But it is interesting, and a fact, that the 2 per cent. rate levy which is ultimately intended for local authorities to use at their discretion has been far exceeded by the GLC by the simple process of adding to the housing committee's budget and to the finance committee's budget monies going to some of these non-charitable and rather peculiar bodies named by my noble friend Lord Boyd-Carpenter.
In particular, the GLC is not a police authority, but it is sustaining a committee on the police for which it has no statutory authority. It is also financing a group which blatantly does its best to undermine the authority and status of our police force. No one on these Benches is challenging the work of these advisory committees, the citizens' advice bureaux, or the charities. I remember with deep regret a great national registered charity in this country—and I have consistently supported its Kent organisation—even though it was denied in the House of Commons by the Minister, deliberately putting out propaganda showing a free bus pass which is crossed out with a red cross and saying, "If the GLC is abolished, you will no longer get your free bus pass". That was an outrageous lie. It was against the charter of the Charities Commission. It is this type of abuse which Members on this side of the House, and ratepayers on both sides, object to.
Baroness Gardner of Parkes: My Lords, I believe that unless the Government retain these powers in the present Clause 10, the worthwhile and deserving charities to which the noble Earl, Lord Longford, referred would have great cause for concern, because I believe that the presently constituted Greater London Council would spend its Section 137 money on all the less deserving causes quite deliberately in order to worry the more deserving causes. This is what one has to be frightened of. There has been a deliberate scaremongering tactic by the present GLC to worry the genuine and highly thought of charities. There is no cause for that alarm because I believe that this clause gives the Government control over what the Section 137 money is spent on. They will see that it is well spent, in the genuine interests of those really deserving in London. The danger is that unless this clause is there, the money will instead be frittered away on far less deserving causes and the genuine charities will be left out.
Baroness Birk: My Lords, this has been an extraordinary and very depressing debate, with the exception of the speeches of the noble Baroness the Leader of the Liberal Party and my noble friends behind me.
Noble Lords: No.
Baroness Birk: It is perfectly true, my Lords. Quite frankly, I was amazed that more noble Lords who are concerned with various forms of charity, with enterprise and industry, did not speak up in a rather less prejudiced way. They gave us the same stories which we have heard before from noble Lords opposite. It is true that the noble Lord, Lord Boyd-Carpenter—who probably has the list in his mind and does not need to have it on a worn out piece of paper—produces the same number of charities or other recipients of money every time.
Lord Boyd-Carpenter: My Lords, if the noble Baroness will allow me, I would say that I have so large a list that I pride myself on producing a different group on each occasion.
10.18 p.m.
Baroness Birk: My Lords, I have heard that same list several times, but the noble Lord does not give the percentage that it comes to out of the very large total funds disbursed by the GLC.
Another point is that, once again, noble Lords on the Government side complain that so much of this argument centres around the GLC. They use the GLC all the time as a battering ram. The metropolitan county councils, of which we hear little from them, are also using Section 137. When I moved the amendment, I quoted a great many of the activities that they are carrying out and the amount of money going into job creation. However, this is all ignored because a certain amount of money goes to particular organisations of which individual Peers disapprove.
In a democracy we not only spend money, but have to sustain and suffer things that we do not always like as other people have rights and freedoms to indulge in them. I am sorry to give the noble Lord, Lord Boyd-Carpenter, so much publicity, but when he talks about "respectable" voluntary bodies, what he really means is the type of bodies of which he personally approves. When it comes to charity and voluntary bodies, we all have our particular favourites. We support certain groups and other people support other groups. That is a good thing; otherwise some charities would not receive any money.
Incidentally, the noble Lord, Lord Mottistone, mentioned ratepayers. He was quite right to do so, but he did not mention the amount of wealth creation that is going on through the exercise of Section 137. In any case, the ratepayer has a comeback if he or she wishes to use it.
What were worrying were the Minister's replies. So far he has made two fairly lengthy replies on this question. There has been nothing concrete. There has been a great deal of innuendo which, if it accurately reflects the views of the Government, gives them only a harsher and less compassionate look than does their present image, with which they are not doing very well.
The Minister also said that the Government cannot, and will not, abrogate their responsibility. This Government are taking that type of responsibility to such an extent that they are squeezing out local government altogether. They are taking everything to the centre and, as I think my noble friend Lord Longford pointed out, in any case when these
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decisions are undertaken by central Government, they are not undertaken by the Minister or the Secretary of State. They cannot sit down and go through all this every day and do all their other work, which mounts up as well. It means that this is done by bureaucrats in the department. The amount of time that it is going to take is one of the worries of the various voluntary bodies. It is not only the question of whether the funds will continue but the amount of time that it will take, the amount of delay and the financial problems that they will have meanwhile.
The other thing which worries me very much was that the noble Lord said that this was only a temporary measure. There is nothing in the Bill which says that it is temporary. It may end when the abolition as far as the GLC and the MCCs are concerned ends; but the Government have a rather unfortunate habit, when they grab on to something, of then using it in a different way. I think that when this was discussed in Committee the noble Baroness, Lady Gardner of Parkes, referred to districts and boroughs which she thought were overspending—and I am recalling this from memory—and the Minister in reply said, "That is for another day".
I believe that that is exactly what we are going to see. The Government are taking over tremendous powers all the time and they are not going to give them up very easily. When it comes to the work being taken over by the district councils and the boroughs, then this shutdown will probably follow and be carried over to them. We have really heard nothing that can give any hope that the Government are either seized of the problem or are prepared to do something constructive about it.
All that they do, I repeat, is to make innuendoes that people are doing this and that and we have to protect them. People do not need the sort of protection that the Government are trying to give. And, in protecting, they are creating far greater problems and far greater hardships. I feel, as do my noble friends, very strongly that the Government response to this is short-sighted, blunt, hard and harsh. It is a great pity that they will not say, "We will look at this", and that they just dashed this Bill off in a hurry and a panic in a fury against the GLC—for that is what it is all about.
If the Government had accepted the amendment that we moved earlier today and had agreed to the elections, then the voters of these places would have had the chance to indicate what they wanted. That is the answer to the noble Lord, Lord Boyd-Carpenter. Let them vote and let them say how they feel. If the money is being spent in a way that they disapprove of, let them vote out the present local councillors who are in power at this time. That is the way to do it; and not this way of grabbing everything to the centre and then not being able to cope with it in a proper manner. I find it absolutely awful and will want to look at it again and study carefully what the Minister has said, because I think that we shall then have to think of some other way of approaching this problem.
Baroness Gardner of Parkes: My Lords, before the noble Baroness sits down, may I point out correcting the statement that was made that it was not another district that was referred to in the previous debate, but another section—referring to Section 142? That I

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think is what the reply was given to about which the noble Baroness was speaking.
On Question, amendment negatived.
10.25 p.m.
[Amendments Nos. 33 and 34 not moved.]
Lord Bellwin Lord Bellwin moved Amendment No. 35:
Page 8, line 18, at end insert ("and either unconditionally or subject to conditions").
The noble Lord said: My Lords, this is purely a technical amendment, providing that any consents given under this clause may be either unconditional or subject to conditions. I beg to move.
Baroness Birk: My Lords, I do not think that this amendment is quite as simple as all that. It says,
"either unconditionally or subject to conditions".
That is a very wide span. While I suppose the Government could argue that this represents a rather wider and more reasonable approach, it opens the way for major interference by the insertion of any condition whatsoever into a particular payment. So the Secretary of State becomes a third party between the council and the recipient of a payment and thus, if one takes as an example the Enterprise Board, could have any particular government policy injected and imposed as part of the condition. If this is incorrect and it means something entirely different, perhaps the noble Lord the Minister will be kind enough to enlighten me.
Lord Bellwin: No, my Lords, and by the leave of the House, what the noble Baroness says is quite correct.
On Question, amendment agreed to.
Baroness Birk Baroness Birk moved Amendment No. 36:
Page 8, line 18, at end insert—
("() The consent of the Secretary of State under this section shall not be required for any expenditure incurred under the said section 137 by way of a grant to any body or organisation where:

(a) such organisation or body has been in receipt of a payment from the council concerned within the previous two financial years; and

(b) the payment to be made to that body or organisation does not exceed the total amount so given in the previous two financial years.")

The noble Baroness said: My Lords, I mentioned Amendments Nos. 32, 33, 34 and 36, but I found that I had spoken only on Amendments Nos. 32, 33 and 34 because the Government have an Amendment No. 35 and Amendment No. 36 became mixed up there.
Amendment No. 36 attempts to avoid subjecting those bodies and organisation which are currently in receipt of a grant under Section 137 to unnecessary delay in negotiating extensions of grant aid during the remainder, or the extended term, of the GLC and MCCs. I will not go through the whole argument because it is basically the same argument as before. The vast majority of bodies and organisations in receipt of Section 137 money are involved in activities which are in no way controversial.
Clause 10, with which this amendment tries to deal, will create uncertainty in the financial planning and programming of bodies and organisations that had
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been anticipating continuing financial support in the period through until 1st April 1986. Proposals for giving grants in 1985–86 will in large measure be drawn up involving negotiations between the metropolitan county councils and the GLC and the potential recipient bodies during the autumn of 1984. Now, the Clause 10 provisions could set such negotiations at naught.
What the amendment seeks to do is to safeguard the interests of those bodies and organisations which are already in receipt of Section 137 money, but this would in no way restrict the Secretary of State's role in respect of any new arrangements for grant aid which may be in mind for 1984–86. Before the Minister replies on this, I should like to say that undertakings given verbally, however well meant, are not sufficient. They have to be in the Bill both for us to find them acceptable and for the people who are concerned, the recipients of grant payments, to feel some security themselves. I beg to move.
Lord Evans of Claughton: My Lords, may I briefly hope, even at this late hour and with all the evidence to the contrary, that the Government will consider this amendment favourably. Despite all the dark portents which noble Lords have indicated about the abuse of Section 137 payments, overwhelmingly they are for such estimable organisations that even the noble Lord, Lord Boyd-Carpenter, could not find them sinister—the Marriage Guidance Councils, the Citizens' Advice Bureaux. councils' voluntary services and similar bodies and organisations in the voluntary sector. They would come under this heading of grants that have been made for the last two years, and for some of the demands to be increased.
Anyone who has been involved with the voluntary sector knows how important it is for these organisations to be able to plan ahead and to have a very clear idea of the amount which they can expect to receive from the local authority, or otherwise, because if they have not got this they cannot plan their programme; they cannot continue to employ their staffs in any consistent way so that they can give the people who enjoy their services the benefit of those services and the continuity of them.
I would have thought that this was a very much easier way for the Government to pursue their plans. I do not approve of this clause in any event, but I think this would be a mitigation of it. Even the Conservative political centre has praised the attitudes of some metropolitan counties, and particularly the way in which Tyne and Wear have made good use of disbursements of a regular kind, such as the ones we are talking about in these amendments to help in the Tyne and Wear area. A great number of authorities, certainly in Merseyside, for instance, are using the Section 137 powers to assist economic development, to cut down unemployment and to help in finding employment for young people, very often in combination with private sector funds, Government funds and EEC funds. Once again, surely this kind of payment on a regular and consistent basis which has not been augmented should be exempt from the Secretary of State's approval; otherwise, I suspect that the whole burden and load of this meticulous inquiry being carried out on behalf of the Secretary of State by civil

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servants will bring some very important and useful activities to an unexpected close.
Baroness Seear: My Lords, I should like very much to support what my noble friend has said and to add one more point to the reasons why it is so undesirable that there should be this degree of interference from the centre. I know it is an unpopular point, but the fact is that our Civil Service is not trained and equipped professionally to make judgments of this kind. One is constantly finding oneself in the position in which people who have a great deal of knowledge, often backed with proper professional experience, are being judged by people who have no such knowledge. This is an outrageous way in which to conduct affairs.
Lord Bellwin: My Lords, the noble Baroness speaks as if every single payment made under Section 137 is as pure as the driven snow. In fact, it is not so. This Amendment No. 36 would exempt from the control procedure each proposal by an abolition authority for expenditure under Section 137 to grant aid a body which that authority had already grant aided during 1983–4 or 1984–5. I accept that the exemption would apply only up to the limit of the total amount of the payments given to the body during 1983–4 and 1984–5. I accept also that it would enable payments to he made without reference to the Secretary of State to a number of bodies, notably in the voluntary sector, who rely heavily on Section 137 grants and whose activities are unlikely in the event to be in question.
In practice, I do not doubt that a considerable number of bodies who have received grant aid during 1983–4 and 1984–5 will clearly continue to receive grant aid during 1985–6. The Secretary of State's approval will be readily forthcoming. That is the message which I relayed at Committee stage and which I have already taken pains to repeat today; but, for reasons which I referred to earlier, we cannot safely claim a universal rule to exempt every single recipient of Section 137 funds over the past two years from the Secretary of State's scrutiny.
It is unfortunately quite conceivable that such a body could be used as a vehicle for purposes which the consent powers are designed to frustrate. In particular, it would be imprudent, without supervision, to allow expenditure by these authorities or enterprise boards to carry on at the rate of the past two years combined. I am driven, inescapably, to the conclusion that the principle behind Amendment No. 36 should not in any form be introduced into Clause 10.
Lord Underhill: My Lords, I wonder whether I may intervene briefly, because the Minister must explain what he is after. If one looks at the proposed amendment, one sees that it can refer only to organisations which are already in receipt of grant, and the amount will not exceed the grant paid in the previous two years. Therefore, it can hit only at an existing organisation which is receiving grant. Let the Minister come clean. Which of the organisations receiving grant does he want to stop? We might then know where we are. We have had innuendoes and I have brought forward facts and figures, which have been denied by the Minister, to show that all the information in Marsham Street is not always correct.
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Therefore let the Minister come clean. Which of the organisations receiving grant does he want to stop? If he says that there is none, he can then approve this amendment without any worry at all.
Lord Bellwin: My Lords, by leave of the House, I again ask the noble Lord, Lord Underhill, and those who spoke earlier, whether they in turn will tell me that every single payment made under Section 137 in the past two years has gone to organisations which were proper recipients of monies. We are not talking in any way about genuine voluntary organisations. I have said again and again that they have nothing at all to fear. The fact is that there are millions and millions of pounds going to some of the enterprise boards and other bodies.
Is it so wrong that one should want to ask questions about to what precisely those monies are being applied? If any of those bodies are applying them correctly to job generation, which we are told about, and which I acknowledge, since I know some of them, they have nothing at all to fear. So why does anyone have anything to fear, if the purposes for which they are receiving the money are reasonable and proper? That is as good an answer as the noble Lord ought to expect on this amendment.
Baroness Birk: My Lords, it is quite clear that, once again, we have come up against a brick wall. My noble friend Lord Underhill was quite right, but again we have had vague replies. The Government do not seem to have confidence in any body or in anything. In any area of life or work there are people or organisations who sometimes do not come up to the standards which one would expect in every case, but you do not then put an absolute blanket over everybody else, which is exactly what the Government are doing.
These are small amounts. The Minister all the time talks about millions and millions of pounds and thousands of people, but he does not put a figure on all these miscreants. He just talks in a wide, broad way and turns down any form of amendment which is reasonable. These amendments are not wrecking amendments. They are trying to improve a clause which many of us here dislike intensely. We are trying to do something about the clause. I have spoken to four amendments on this clause tonight, with considerable support from my noble friends and from the Liberal Benches, and yet we have got no movement at all. It is a very distressing and dim outlook. The Minister does not have to worry. Neither the Labour Party, nor the Liberal Party, nor, indeed, anybody else, has to point this out to the voluntary bodies. They are worried sick about the whole situation and are waiting to hear from the Government about it. My Lords, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
10.40 p.m.
Lord Bellwin Lord Bellwin moved Amendment No. 37:
After Clause 10, insert the following new Clause:
("Control of disposals of land.
.—(1) Neither the Greater London Council nor a metropolitan county council shall after the passing of this Act dispose of any land except with the consent of the Secretary of State.
(2) Any consent under this section may be given either in repect of a particular disposal or in respect of disposals of any class or description and either unconditionally or subject to conditions.
(3) This section has effect notwithstanding anything in section 123 of the principal Act (general power to dispose of land) or in any other enactment; and the consent required by this section shall be in addition to any consent required by subsection (2) of that section or by any other enactment.
(4) It is hereby declared that section 18(2) of the principal Act (protection of purchasers etc.) applies to any disposal of land to which this section applies.
(5) In this section reference to disposing of land include references to—

(a) granting or disposing of any interest in land;

(b) entering into a contract to dispose of land or to grant or dispose of any such interest; and

(c) granting an option to acquire any land or any such interest;

and references in this subsection to an interest in land include references to any easement, right or charge in, to or over land and to a licence to occupy land.").
The noble Lord said: My Lords, the purpose of the new clause is to make disposals of land by the Greater London Council and the metropolitan county councils subject to the consent of the Secretary of State from the date of Royal Assent. My noble friend the Leader of the House has explained the considerations which led to the Government's response to the arguments put in both Houses and to the new clause agreed in Committee in place of Clause 1 of the Bill, as presented. The amendments to Part II of the Bill form the first limb of this response. This new clause, together with the other two new clauses, Amendments Nos. 38 and 39, to which I wish also to speak, are the second. What I have to say about Amendment No. 37 will apply generally to those amendments, too.
The first point is that the new clauses need to be seen in that context. They are a response to the specific situation in which we now find ourselves through the expression of your Lordships' will. I should like to say a little more about this because it is most important.
The Government have always recognised that there could be scope for obstructive or irresponsible actions on the part of the outgoing authorities. As long ago as 1st March I announced that the main abolition Bill would prevent these authorities from committing their successors, through fixed-term staff contracts or excessive compensation. The Bill, as presented to your Lordships' House, required the authorities to provide information to the boroughs and districts, and to consult them about expenditure. Even as these provisions began to be debated it became clear that they might not be sufficient to dissuade some of the abolition authorities from making mischief before they disappear. The Government therefore introduced Clause 10 which we have just been debating.
These proposals received a good deal of support in Committee as well as elsewhere but they were made—indeed, all our counter-obstruction provisions were made—in the context of authorities which would, under the Government's original proposals, have been controlled by the elected members of the successor boroughs and districts for their last 11 months. Those successor councils would have been keeping a close eye on any commitments into which the outgoing authorities might have been entering. This in itself would have acted as a powerful check.
The whole situation has now changed. The existing councils will now be in existence for much longer and the effect of the new amendments to Clause 3 will be to more than double from 9 to 20 months the period in which, if they choose, the GLC and the metropolitan county councils could take action which might seriously prejudice their successors. At the same time, the constraints which the coming into existence in May 1985 of the transitional councils would have provided will be absent.
I used the phrase "if they choose". It is indeed a matter of choice for those authorities. Nobody is saying that they have got to choose to be obstructive, and I continue to hope and believe that most of the councillors will behave sensibly and responsibly. But the present situation is not one in which it is possible for me to be over-optimistic.
I referred in Committee, when introducing the new clause providing for controls on Section 137 expenditure, to a number of things that had been said by various of the council leaders. I shall not repeat them now but, if called upon later, I shall do so. Suffice it to say that there is obviously a great responsibility on the Government to recognise that there really is a great danger here. Nobody who acts sensibly, responsibly and reasonably has anything whatsoever to fear from the new clauses. Only those who set out to undermine their successors by depriving them of assets or letting contracts which are not reasonably necessary for the discharge of their functions stand to fall foul of the new controls. I cannot say this too strongly.
Without making a great meal of it, there are those who argue that the new controls do not go far enough. They may be right; only time will tell. The Bill already contains a number of counter-obstruction provisions. We considered very carefully what further was needed. We are convinced that the clauses which we now propose are a realistic response to the threats—I hate to use the word but that is what it is—and the actions which we fear. They are not excessive but they show our clear determination not to allow the outgoing councils to use their longer period in office so as to frustrate the Government's objectives. I beg to move.
Baroness Birk: My Lords, we now seem to have reached the height of Government control and restriction. These powers that we are now discussing are virtually unprecedented. This is not something which has just been said by politicians, but is something which is felt by students of local government and academics who are concerned with it, and historians as well.
The control of the disposal of land means that the local authorities which have used the capital they get from the disposal of land to finance other activities are under obligation all the time to sell at the best possible price unless there is a special reason; and then they have to go to the Secretary of State. These powers are going to operate immediately this Bill is passed, and will not wait until abolition. They are being enforced by disqualification. The disqualification has to be ordered by the court, but there is no time limit set. This is a far greater extension of disqualification than anything we have ever known before.

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These measures are a further attack on local democracy. They pre-empt abolition because they have virtually immediate effect. The moment this Bill becomes law these powers come into operation, eight months within the normal term of office of the present administration. There exist already very firm legal provisions which can prevent this sale of assets at anything other than the market price. Local authorities already have to work within the scrutiny of the district audit. They also work within existing budgets and precepts, and have to abide by duties of reasonableness.
The Government have given no prior information on the criteria the Secretary of State would use in wielding his proposed powers. There is no information on the machinery, administrative processes and staffing to be set up. The volume of spending and the numbers of cases caught up by the triple net, now, of Section 137, disposals and contracts over £100,000—£250,000 for buildings—is so great that the DoE is likely to be swamped with applications for consent.
On the clause dealing with contracts, as I understand it, taking those restrictions alone, the GLC would be having to send for consent to the Secretary of State something in the region of 250 applications a week. It is going to be almost impossible for any local authority to be able to carry out the duties which are imposed on it, and provide services for people within this financial straitjacket. It means that for some authorities, if there is a great deal of money that is needed to be spent on something like snow clearing, this then has to go to the Secretary of State. What happens meantime? These sums of £250,000 for engineering works or building and £100,000 for maintenance and so on, may sound a lot of money just in figures, but when we are talking in London in terms of eight million people and, when we get to the metropolitan councils, of six million people, it is not a lot of money when you are having to build, maintain and look after what are very large communities indeed.
One sometimes gets the feeling that things could not get worse, but then the Government come up with something else which is very much worse. There is a point—perhaps the Minister will be able to explain it to me—on the clause dealing with disqualification. As I understand it, it says that somebody could be disqualified for doing something even if the thing that they are concerned with has not itself been declared void. There seems to be a tendency throughout all these amendments to increase the power to disqualify more and more people. Apart from the practical effects of these clauses, the effect on the relationships between local government and central Government are getting worse and worse under this Government. We now have a series of amendments on matters where the conflict, the tempers, the feelings are all very high and very easily aroused. It is absolutely disgraceful that the Government are taking these powers and treating the large local authorities as though they were small schoolchildren. For the Government to be engineering this and doing it in a way that has, I repeat, been unknown previously, by making what are considered to be the most extraordinary provisions, is something of which the House should take some account.
Lord Broxbourne: My Lords. I hope that even at this late hour I may have your indulgence to say a brief word in regard to this fasciculus of new clauses. Let me say at once that I support the principle underlying the new clauses on the necessity to impose restraints on profligate, reckless councils whose recklessness may indeed be accentuated by their sense of impending doom. Certainly nothing that the noble Baroness has said has eroded by one scintilla my conviction that the principle is right.
I rise mainly to say a cautionary word in particular regard to the content and drafting of Amendment No. 38. The new clause concerns the control of building and civil engineering contracts and represents a laudable effort to legislate simply on complex matters. However, building and civil engineering contracts, as your Lordships may know, are notoriously complex. I certainly know it. I have learnt it. I cannot properly say that I have learnt it to my cost, because, happily, it has been to my professional profit, but the long and laborious hours which I have spent on these matters in my professional capacity have shown me beyond peradventure their complexity. They have indeed been long and laborious hours spent in the interpretation of these contracts and in the resolution of the conflicts that arise from them.
The new clause in Amendment No. 38 prohibits the entering into construction contracts of over a specified amount—£250,000. That is a good intention but the wording gives rise to problems. The words "enter into a contract" are not defined in the new clause but, in my submission, they can only mean "conclude a contract binding in law". It is only at that stage—the conclusion of a contract binding in law—that the new clause contemplates the necessity to seek the consent of the Secretary of State.
As your Lordships will know, local authorities contract under seal. As your Lordships may or may not know, local authorities normally use the local authority edition of the contract issued by the Joint Contracts Tribunal, the present edition in force being the 1980 edition, with its articles of agreement and voluminous conditions of contract. But the formal conclusion of a building or civil engineering contract is only the final step in a long progression; each step involving the expenditure of money and time, not only by local authorities—although, of course, by them—but also by many other prospective participants in the contract work.
The council, as building owner, will start with the preparation of drawings, first in outline, and then detailed. Then a specification will have to be prepared, with detailed bills of quantities compiled by quantity surveyors. On the basis of those documents, an invitation to tender will be prepared and issued to prospective or possible tenderers, who in their turn will price the bills of quantities and base their tender upon that. Those tenders—not just one, but several—will be studied by the council's experts, and one will then be recommended for acceptance. Only after all those preliminary steps will the contract be entered into, as the clause lays down. Then, and then only, will the consent of the Secretary of State be required, then, and then only, will the provisions of the clause bite; that is to say, after all that expenditure has been incurred—expenditure which refusal of consent will necessarily render abortive.

1299
I see two potential injurious consequences possibly arising in that scenario. First, the expenditure by the council will constitute a burden on the ratepayer, without any control (because there is no control envisaged up to that stage), and, in the event, for no purpose if consent is ultimately refused. Secondly, there is the expense for would-be contractors, without any reasonable prospect of return—an abortive expenditure which in its way is injurious to the national economy. I respectfully make this submission to your Lordships in general and my noble friends on the Front Bench in particular. Consideration should be given to seeking a more precise, even if necessarily a more elaborate, scheme of control to fortify that welcome and necessary principle.
I think perhaps I should mention one other very sort point. Subsection (5) of the new clause states:
"A contract shall not be void by reason only that it has been entered into in contravention of this section".
Of course, if the contract is not void, as the clause says, the builder has a right to sue for payments under the contract or to sue for breaches of it. The council, in its turn, is likely to plead in its defence impossibility of performance by reason of refusal of consent by the Secretary of State, which is a necessary prerequisite to its performance of the contract.
I can see a very considerable legal tangle arising from that subsection. It may be profitable to lawyers—and who am I to say that that is a bad thing?—but it will not really reflect credit on the statute law, or indeed on those of us who in this House and the other place have the responsibility to make it. So may I respectfully ask my noble friend the Minister to have these points in mind? I appreciate this clause has been prepared at short notice. May I ask the Minister to see whether he cannot get a better drafting of this clause to underlie and promote the purpose giving rise to it? I reiterate that for that purpose he has my unqualified support.
11 p.m.
Lord Evans of Claughton: My Lords, I would not seek or have the temerity to pursue Lord Broxbourne's reasoning about the nature of the clause. I am sure that he is right. But what his speech underlines is the rash nature of how this added piece of legislation has been brought before us. He underlines the drafting difficulties. We on these Benches here have the very serious problem of trying to understand the complexity of its proposals at very short notice indeed. It is very sad that we should be considering such important amendments at 11 o'clock at night with so little preparation and clauses that are as I have said before today an entirely new Bill: a control of local government expenditure Bill. It is not a paving Bill at all. It is an entirely new adventure.
It is a sad reflection on the relationships between central and local government that the Government have found it necessary to put down these amendments because of what they fear some local authorities will do. It is sad that the relationships between local government and central government have reached this pass; and it is sad also that there are,
1300
as I am aware, local authorities that are irresponsible and have to be controlled. But I feel that the measures that the Government have taken to control them are unduly and unnecessarily draconian. Perhaps the noble Lord the Minister in his reply will tell us why Section 123 of the 1972 Local Government Act is not sufficient for his purposes. I think that was the section that the noble Baroness, Lady Birk, mentioned. Perhaps he would tell us why the Government believe that the powers they have at present to prevent asset stripping are not sufficient for them.
I know that there have been a lot of stories about how Liverpool City Council is going to be saved by Mr. Livingstone, by taking a lease on the town hall, but even I cannot really believe that that kind of Grand Guignol was meant to be taken seriously. I hope that it is not to deal with that kind of problem that the amendments are put down. In being put down in this broadly based way, they will interfere with the orderly disposal of assets of the metropolitan counties. I talk only here of the metropolitan counties, disposing, for instance, of police houses. As a policy of the police authority the county council in Merseyside are disposing of 200 police houses. I wonder whether each of them will now have to be scrutinised by the Secretary of State.
In the present committee cycle in Merseyside County Council, which is a six-week cycle, there are more than 20 transactions which might be affected by Amendments Nos. 37 and 38. Are they all to be scrutinised by the Minister? Presumably they will be scrutinised at the end of the six-week cycle after they have been through the council and then will come back to the council at some later date.
What will happen is that perfectly innocent, harmless transactions of a routine nature, which are vital for the future of local government in any form, are going to be completely bottled up in bureaucratic nightmares in Whitehall. I feel very seriously that if the Government found it necessary to introduce this kind of draconian legislation they might have put a lower limit or made exceptions of the kinds of transactions which are of a routine character and need not be caught by these particular amendments. I hope that noble Lords on the Government side of the House realise the dangers that they are imposing and the ridicule to which they are likely to expose themselves when the full force of this amendment comes to be seen in practice at local government level. I hope the Government have second thoughts.
Lord Hatch of Lusby: My Lords, this afternoon the noble Lord, Lord Molson, stated that those who had opposed the Government in the previous vote in Committee stage had done so because they objected to the suspicion of gerrymandering in taking away power from the metropolitan councils and the GLC, and in some cases changing the political nature of those authorities.
I do not agree with the noble Lord, Lord Molson because, as I tried to explain in a three-minute speech at that stage, there were those of us who also objected on principle to the removal of the right of the 14 million electors to exercise their vote, to choose their councillors and to dismiss their councillors, which

1301
would have saved a great deal of the anguish which has been shown on the other side of the House during this evening's debate. However, that is decided for the moment.
But may I point out to those who sympathise with the noble Lord, Lord Molson, that these three amendments are also a type of gerrymandering. They do not remove the vote from the electorate. What they do is remove control of council action and place it in the hands of central Government. As I said at the Committee stage, among all parties in this country there is a very honourable tradition of local democracy and the building of national democracy through local democracy, not least in the Conservative Party. I wonder whether it is not the case that tonight on the other side of the House there are noble Lords who do not feel somewhat uneasy at seeing central Government usurping the functions of elected local councilors, because that is surely at least dangerously close to digging up the roots of our democracy as a whole.
One may say that there is no danger now. But, referring back to what the noble Lord, Lord Harmar-Nicholls, said this afternoon, we do not have a written constitution. We do not have the protection of a written constitution. We can create, and we are tonight being asked to create, precedents. Those precedents can be used at other times for a much more dangerous purpose than is apparent in the amendments put down by the noble Lord, Lord Bellwin, tonight.
I would ask the noble Lord whether he does not realise that these amendments represent the kind of gerrymandering that was seen by his own colleagues, by many of his right honourable friends in another place, and, indeed, by many Conservative councillors in both the GLC and the metropolitan councils to be so offensive. I ask noble Lords, before taking the drastic step of passing the power of decision-making from elected local councillors, who form the roots of our democratic system, to central Government, and above all, to the Executive, to think carefully as to where we are going in the march which we have seen of adding to the power of the Executive at the expense of both Parliament and elected local authorities.
I would ask the noble Lord to consult his own supporters in the metropolitan councils and in the Greater London Council because, as I understand it, they have already expressed widespread dismay and, indeed, clear opposition, and have made threats that, if taken along this road, they will resign their seats on the basis that they are being denied the power to do the job for which they were elected by the people of this country.
Lord Jenkins of Putney: My Lords, I should like to ask the noble Lord, Lord Bellwin, for a specific assurance on a particular point relating to this clause. The assurance that I seek—I hope that noble Lords will agree that he may give it if he so wishes—relates to how the Secretary of State will use his powers under the new clause contained in Amendment No. 37. The specific reason for this is that negotiations have been taking place for a couple of years between the Theatres Trust and the Greater London Council concerning the
1302
ownership of a number of theatres. The Greater London Council is the freeholder of a number of theatres in London. The Garrick and the Lyceum are examples. There are a couple of others, quite apart from the complex on the South Bank, which is now extremely important. Negotiations have been taking place for the freeholds to be passed over to the Theatres Trust, which is a body set up by Parliament, brought into being by an Act carried under Conservative aegis, with trustees appointed by the Minister. The Arts Council is represented on it. It is a body set up for a specific purpose, and it is now trying to fulfil this purpose.
These negotiations have reached a fairly advanced stage. It is likely, of course, that some money will have to accompany the freeholds if they are transferred. The National Trust does not accept a freehold without a monetary accompaniment to it. In this case, the monetary accompaniment would be smaller, but in some cases it would be non-existent because the freehold might be profitable. Nonetheless, it would not have to be excluded. What I seek from the noble Lord is an undertaking that in exercising his powers under this Act the Secretary of State would not veto this whole proposition and make it impossible for the GLC and the Theatres Trust to complete their negotiations if both parties wish to do so. I hope the noble Lord will be able to give me that assurance.
I share very strongly the feelings which have been expressed in this House that we would be better off without these clauses at all. We would be better off not having to ask the noble Lord to give us the kind of assurances for which we are compelled to ask because of the existence of these clauses. The Government have changed their mind. Last week they were determined to get rid of the present administrations in the metropolitan counties and the Greater London Council, and this week they say they are going to preserve them, to sustain them in power. Mr. Livingstone must remain, whether or not the people of London want him to remain. The Government are going to deprive them of the power to dispose of Mr. Livingstone and are going to determine, by Government edict, that he shall remain for a period of time.
Since it is the Government's decision that the existing administrations shall remain, then surely it is a nonsense for the Government to say, on the one hand, "We are determined that you continue to exist", and, on the other hand, "We are equally determined to deprive you of the powers you already enjoy". Surely this is a complete and total nonsense. It illustrates the mess into which the Government have got themselves. Nevertheless, having said that, I want to say that if they are determined to get themselves into the mess—I hope we are going to try tonight to stop them from doing it—it might help to convince some of the noble Lord's colleagues, though I hope not too many of them, if he could tell us how the Secretary of State is going to do this. Is the Minister going to intervene and say, "No, this is not going to go ahead", or is he going to say, "Negotiations which are already in hand, provided they are reasonable and proper and are consented to between the parties, may continue and be completed"?
Lord Birkett: My Lords, I hope that even at this late hour your Lordships will allow me a moment or two. Alas, I must needs declare an interest. The last time I spoke on such an occasion, with equal reluctance on the part of the House, I was so keen to cut everything out that I actually forgot to declare my interest. The noble Baroness, Lady Gardner, took me to task for it. I work for the GLC, and it is for that reason that on Clause 38 I want to take just one minute of your Lordships' time.
I stand before your Lordships as a man who actually does the things that are set down in Clause 38. I do spend a hundred thousand pounds at a time—sometimes a quarter of a million at a time. I spend it on a great network of parks and open spaces, many thousands of acres of them. In particular, I spend it on two brand-new parks—I say "brand-new": they have now been going for 10 years and more; they were designed in 1943—at Burgess and Mile End. These parks regularly have within them contracts of this size. They have been supported over all this time by all political parties and generally applauded as something vitally necessary for London—as, indeed, are the rest of the parks. I should say that I think that even the noble Lord, Lord Boyd-Carpenter, would not find any of my parks anything except respectable. He will not be able to put them into his next list to read out to your Lordships' House.
However, no doubt I shall be assured that if everything is as respectable as I make it out to be, and as worthwhile and as generally admired, I have nothing to fear. But the truth is that everything I do in this direction will now be swept, quite unnecessarily, into this dustpan of legislation.
It seems to me that this is basically shotgun legislation of such a width and spread of fire-power as to encompass almost everything that could possibly be encompassed. I cannot believe that legislation so swift and so absolutely general as this should come before your Lordships' House so rapidly. I hope that your Lordships will think very carefully before agreeing to it.
Lord Bellwin: My Lords, by leave of the House, I should like to try to respond to the points that have been made. First, I point out to my noble friend Lord Broxbourne that of course we shall want to look very carefully at what he has said because clearly that could be of much importance. But for the moment let me just say that the new clause—and I am also talking to Amendment No. 38, which is being discussed in general—precludes a council from entering into a legally binding contract without consent, and consent may be applied for at any time beforehand—for example, before or after tenders are considered. Clearly, we shall want to consider very carefully what my noble friend said, and I assure him as to that.
To take up the points made by individual noble Lords, clearly I do not know the particular circumstances to which the noble Lord, Lord Jenkins, referred. I shall certainly want to look at them and try to give him—if I can—the assurance for which he calls. Whether or not I would be able to do so would, I presume, depend upon the facts. However, the basic intentions of what I have been saying are not unsympathetic to the type of scene which he has
1304
described. But I am sure that the noble Lord will understand if I say no more than that for the moment. I undertake to come back to him quickly with a response.
Likewise, the noble Lord, Lord Birkett, was absolutely right when he anticipated what I would say, because I do say it. As regards good schemes and good projects, it is not the intention of what we propose here in any way to interfere with the proper working of an authority. As long as that is the case, he certainly, as he anticipated, can smile and I am glad that he is able to do so.
As regards the noble Lord, Lord Hatch, of course I do not take offence at his reference to the word "gerrymandering". He has perhaps sometimes been known to be slightly intemperate. I do not like what he said and I disgree with it, but we shall not get further if I say more than that about it. I certainly do not take his point that political colleagues of mine on the GLC talk about resigning. I was at a meeting with them the other night when they said now bitterly they resented the fact that people said this about them. If any of them wish to do so, then they will declare themselves. Hitherto I have not heard such declarations.
There are only two other points that I want to make about this matter. First, subsection (2) of Amendment No. 37—and this should be said slowly and clearly so that everyone absolutely understands—empowers the Secretary of State to issue specific or general consents and these can either be conditional or unconditional. The Government are considering what categories of disposal might be suitable for general consents. We intend that as many consents as are reasonably necessary to ensure the proper conduct of the authorities' affairs should be granted immediately upon enactment of the Bill.
The objections missed two essential points. The first is that if the authorities concerned do not choose to try to make life difficult for their successors, then they have absolutely nothing to fear at all. It is only if they seize the opportunity to make mischief that the schemes will be affected.
The second point is that if the Government did not seek the means of protecting successor authorities and ratepayers in this way, then we should, quite rightly, be strongly criticised. If there are any lingering doubts in your Lordships' minds, then let me refer your Lordships to the typically distorted and excessive advertisements which have appeared over the weekend, because they may have helped to dispel them.
I have listened to what has been said. I repeat as regards both these amendments and new clauses that it is not the Government's intention to interfere with proper working. We shall not do so. There will be consents to make sure that there is not the whole conglomeration of difficulty which has been referred to. I am satisfied that, as a consequence of the early decision which your Lordships took the other week, this is a proper safeguard for people and that it will be recognised as such by the people.
Lord Hatch of Lusby: My Lords, before the noble Lord sits down—
Noble Lords: Order, order!
11.20 p.m.
On Question, Whether the said amendment (No. 37) shall be agreed to?
Their Lordships divided: Contents, 137; Not-Contents, 70.

DIVISION NO. 3

CONTENTS

Abinger, L.

Hanson, L.

Airey of Abingdon, B.

Harmar-Nicholls, L.

Alexander of Tunis, E.

Harvey of Tasburgh, L.

Ampthill, L.

Hastings, L.

Avon, E.

Henley, L.

Barber, L.

Hindlip, L.

Bauer, L.

Hires, L.

Bellhaven and Stenton, L.

Home of the Hirsel, L.

Bellwin, L.

Hornsby-Smith, B.

Beloff, L.

Inchcape, E.

Belstead, L.

Ingrow, L.

Biddulph, L.

Kaberry of Adel, L.

Birdwood, L.

Kemsley, V.

Boardman, L.

Kinnaird, L.

Boyd-Carpenter, L.

Kitchener, E.

Brabazon of Tara, L.

Lindsey and Abingdon, E.

Bridgeman, V.

Long, V. [Teller.]

Brougham and Vaux, L.

Lucas of Chilworth, L.

Broxbourne, L.

Lyell, L.

Bruce-Gardyne, L.

McAlpine of West Green, L.

Caithness, E.

Mackintosh of Halifax, V.

Cameron of Lochbroom, L.

Massereene and Ferrard, V.

Camoys, L.

Maude of Stratford-upon-Avon, L.

Campbell of Croy, L.

Carnegy of Lour, B.

Merrivale, L.

Carnock, L.

Middleton, L.

Carr of Hadley, L.

Molson, L.

Cathcart, E.

Montagu of Beaulieu, L.

Chelwood, L.

Mottistone, L.

Cockfield, L.

Mountgarret, V.

Coleraine, L.

Moyola, L.

Cork and Orrery, E.

Murton of Lindisfarne, L.

Cornwallis, L.

Norfolk, D.

Cowlev, L.

Northesk, E.

Cox, B.

Peel, E.

Craigmyle, L.

Penrhyn, L.

Craigton, L.

Perth, E.

Crathorne, L.

Pike, B.

Croft, L.

Plummerof St. Marylebone, L.

De Freyne, L.

Radnor, E.

De La Warr, E.

Rankeillour, L.

Denham, L. [Teller.]

Reay, L.

Digby, L.

Redesdale, L.

Donegall, M.

Remnant, L.

Drumalbyn, L.

Renwick, L.

Eden of Winton, L.

Romney, E.

Elliot of Harwood, B.

St. Aldwyn, E.

Elphinstone, L.

Saltoun, Ly.

Elton, L.

Sandford, L.

Enniskillen, E.

Savile, L.

Erne, E.

Skelmersdale, L.

Erroll of Hale, L.

Southborough, L.

Ferrers, E.

Swansea, L.

Fisher, L.

Terrington, L.

Fortescue, E.

Thomas of Swynnerton, L.

Gainford, L.

Torphichen, L.

Gardner of Parkes, B.

Townshend, M.

Geddes, L.

Tranmire, L.

Gibson-Watt, L.

Trefgarne, L.

Gisborough, L.

Trenchard, V.

Glanusk, L.

Trumpington, B.

Glenarthur, L.

Tryon, L.

Gowrie, L.

Ullswater, V.

Gray, L.

Vickers, B.

Gray of Contin, L.

Waldegrave, E.

Gridley, L.

Whitelaw, V.

Haig, E.

Windlesham, L.

Hailsham of St. Marylebone, L.

Wynford, L.

Yarborough, E.

Halsbury, E.

1306

NOT-CONTENTS

Ardwick, L.

Kilbracken, L.

Attlee, E.

Kirkhill, L.

Barnett, L.

Llewelyn-Davies of Hastoe, B.

Bernstein, L.

Lockwood, B.

Beswick, L.

Longford, E.

Birk, B.

Lovell-Davis, L.

Birkett, L.

McIntosh of Haringey, L.

Boston of Faversham, L.

Mar, C.

Bowden, L.

Mountevans, L.

Briggs, L.

Nicol, B.

Briginshaw, L.

Ogmore, L.

Carmichael of Kelvingrove, L.

Oram, L.

Cledwyn of Penrhos, L.

Pitt of Hampstead, L.

Collison, L.

Ponsonby of Shulbrede, L. [Teller.]

David, B. [Teller.]

Dean of Beswick, L.

Rea, L.

Denington, B.

Rochester, L.

Diamond, L.

Ross of Marnock, L.

Elwyn-Jones, L.

Seear, B.

Ennals, L.

Sefton of Garston, L.

Evans of Claughton, L.

Serota, B.

Falkender, B.

Stallard, L.

Falkland, V.

Stedman, B.

Gallacher, L.

Stewart of Alvechurch, B.

Galpern, L.

Stewart of Fulham, L.

Gifford, L.

Stoddart of Swindon, L.

Gosford, E.

Strabolgi, L.

Graham of Edmonton, L.

Taylor of Blackburn, L.

Grey, E.

Tordoff, L.

Hatch of Lusby, L.

Underbill, L.

Irving of Dartford, L.

Wallace of Coslany, L.

Jacques, L.

Wedderburn of Charlton, L.

Jeger, B.

Whaddon, L.

Jenkins of Putney, L.

White, B.

John-Mackie, L.

Winchilsea and Nottingham, E

Kagan, L.

Resolved in the affirmative, and amendment agreed to accordingly.
Lord Bellwin Lord Bellwin moved Amendment No. 38:
[Printed earlier: col. 1182.]
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
11.31 p.m.
On Question, Whether the said amendment (No.38) shall be agreed to?
Their Lordships divided: Contents, 130; Not-Contents 71.

DIVISION NO. 4

CONTENTS

Airey of Abingdon, B.

Caithness, E.

Alexander of Tunis, E.

Cameron of Lochbroom, L.

Ampthill, L.

Camoys, L.

Avon, E.

Campbell of Croy, L.

Barber, L.

Carnegy of Lour, B.

Bauer, L.

Carnock, L.

Belhaven and Stenton, L.

Carr of Hadley, L.

Bellwin, L.

Cathcart, E.

Belstead, L.

Chelwood, L.

Biddulph, L.

Cockfield, L.

Birdwood, L.

Coleraine, L.

Boardman, L.

Cork and Orrery, E.

Boyd-Carpenter, L.

Cornwallis, L.

Brabazon of Tara, L.

Cowley, E.

Bridgeman, V.

Cox, B.

Brougham and Vaux, L.

Craigmyle, L.

Broxbourne, L.

Craigton, L.

Bruce-Gardyne, L.

Crathorne, L.

1307

Croft, L.

Lyell, L.

De Freyne, L.

McAlpine of West Green, L.

De La Warr, E.

Mackintosh of Halifax, V.

Denham, L. [Teller.]

Maude of Stratford-upon-Avon, L.

Digby, L.

Donegall, M.

Merrivale, L.

Drumalbyn, L.

Middleton, L.

Eden of Winton, L.

Molson, L.

Elliot of Harwood, B.

Montagu of Beaulieu, L.

Elphinstone, L.

Mottistone, L.

Elton, L.

Mountgarret, V.

Enniskillen, E.

Moyola, L.

Erne, E.

Murton of Lindisfarne, L.

Erroll of Hale, L.

Norfolk, D.

Ferrers, E.

Northesk, E.

Fisher, L.

Peel, E.

Fortescue, E.

Penrhyn, L.

Gainford, L.

Perth, E.

Gardner of Parkes, B.

Pike, B.

Geddes, L.

Plummer of St. Marylebone, L.

Gibson-Watt, L.

Gisborough, L.

Radnor, E.

Glanusk, L.

Rankeillour, L.

Glenarthur, L.

Redesdale, L.

Gray, L.

Renwick, L.

Gray of Contin, L.

Romney, E.

Gridley, L.

St. Aldwyn, E.

Haig, E.

Saltoun, Ly.

Hailsham of Saint Marylebone, L.

Sandford, L.

Savile, L.

Halsbury, E.

Skelmersdale, L.

Hanson, L.

Southborough, L.

Harmar-Nicholls, L.

Swansea, L.

Harvey of Tasburgh, L.

Terrington, L.

Hastings, L.

Thomas of Swynnerton, L.

Henley, L.

Townshend, M.

Hindlip, L.

Tranmire, L.

Hives, L.

Trefgarne, L.

Home of the Hirsel, L.

Trenchard, V.

Hornsby-Smith, B.

Trumpington, B.

Inchcape, E.

Tryon, L.

Ingrow, L.

Ullswater, V.

Kaberry of Adel, L.

Vickers, B.

Kemsley, V.

Waldegrave, E.

Kinnaird, L.

Whitelaw, V.

Kitchener, E.

Windlesham, L.

Lindsey and Abingdon, E.

Wynford, L.

Long, V.

Yarborough, E.

Lucas of Chilworth, L.

NOT-CONTENTS

Ardwick, L.

Hatch of Lusby, L.

Attlee, E.

Irving of Dartford, L.

Barnett, L.

Jacques, L.

Bernstein, L.

Jeger, B.

Beswick, L.

Jenkins of Putney, L.

Birk, B.

John-Mackie, L.

Birkett, L.

Kagan, L.

Blease, L.

Kilmarnock, L.

Boston of Faversham, L.

Kirkhill, L.

Briggs, L.

Llewelyn-Davies of Hastoe, B.

Briginshaw, L.

Lockwood, B.

Bruce of Donington, L.

Longford, E.

Carmichael of Kelvingrove, L.

Lovell-Davis, L.

Cledwyn of Penrhos, L.

McIntosh of Haringey, L.

Collison, L.

Mar, C.

David, B. [Teller.]

Mountevans, L.

Dean of Beswick, L.

Nicol, B.

Denington, B.

Ogmore, L.

Elwyn-Jones, L.

Oram, L.

Ennals, L.

Pitt of Hampstead, L.

Evans of Claughton, L.

Ponsonby of Shulbrede, L. [Teller.]

Falkender, B.

Falkland, V.

Rea, L.

Gallacher, L.

Rochester, L.

Galpern, L,

Ross of Marnock, L.

Gifford, L.

Seear, B.

Gosford, E.

Sefton of Garston, L.

Graham of Edmonton, L.

Serota, B.

Grey, E.

Shackleton, L.

1308

Stallard, L.

Underhill, L.

Stedman, B.

Wallace of Coslany, L.

Stewart of Alvechurch, B.

Wedderburn of Charlton, L.

Stewart of Fulham, L.

Whaddon, L.

Stoddart of Swindon, L.

White, B.

Strabolgi, L.

Winchilsea and Nottingham, E.

Taylor of Blackburn, L.

Tordoff, L.

Resolved in the affirmative, and amendment agreed to accordingly.
11.40 p.m.
Lord Bellwin Lord Bellwin moved Amendment No. 39:
After Clause 10, insert the following new clause:—
("Disqualification for contravention of sections (Control of disposals of land) and (Control of contracts).
.—(1) If, on the application of a constituent council or a local government elector for the area of a constituent council, it appears to the High Court that the Greater London Council or a metropolitan county council has made a disposal in contravention of section (Control of disposals of land) above or entered into a contract in contravention of section (Control of contracts) above, the court may order any person responsible for authorising the disposal or contract who is, or was at the time of the conduct in question, a member of the council to be disqualified for being a member of that council and to be qualified for a specified period for being a member of any other local authority.
(2) In sections 80(1)(e), 86(b) and 87(1)(d) of the principal Act references to Part III of the Local Government Finance Act 1982 shall include references to this section.")
The noble Lord said: My Lords, without this new clause there would be no specific penalty for contravening the new controls which your Lordships have just agreed. I beg to move.
On Question, amendment agreed to.
Lord Alport Lord Alport moved Amendment No. 40:
After Clause 10, insert the following new clause:
("Exemption when acting as education authority.
Nothing in sections (Control of disposals of land) or (Control of contracts) shall apply to the Greater London Council when acting as an education authority for the Inner London area pursuant to section 30 of the London Government Act 1963.")
The noble Lord said: My Lords, I think I would be justified in saying that the concern which many of my noble friends and I have felt about the Government proposals in this and in the related Bill which will come to us next year has been based upon two considerations. First, the general tendency to devalue local government and those who serve in it; and, secondly, the apprehension that the upheaval which will result from the measures which are proposed or prospective will lead not to greater efficiency and economy but to administrative confusion and additional expense.
So far as London education is concerned, the two new clauses—Amendments Nos. 37 and 38 which we have just passed—will have both these latter consequences. These clauses will have a direct effect on the day-to-day running of the education service in London in three areas: the disposal of building sites; building work; and the supply of goods and services. The ILEA has been encouraged by successive governments to dispose of land and buildings that it no longer requires, and the funds derived from these are used to improve other schools. In the present year disposals will total £4.750.000. The new clauses would

1309
inevitably involve the delay of essential decisions with regard to these disposals and will have serious financial effects. The requirement that all contracts of more than £100,000 on maintenance and £250,000 on improvements should be referred to the Department of the Environment will lead to inevitable and damaging delays. There will be loss of income to the authority, and continued maintenance charges on buildings which should be sold and disposed of speedily will add further to the financial burdens of the authority.
At an earlier stage this evening my noble friend Lord Broxbourne explained from his very long experience the technicalities of the problems of contracts of this sort and the problems which will be involved not only for the authority but for those who tender for the contract. What will happen is that the Department of the Environment will refer each proposal to the Department of Education and Science—and this despite the undertaking given by my noble friend Lord Bellwin that approval will be given in certain cases.
We in this House have a wealth of experience of the working of Government departments. There are sometimes delays within the department and often these are inevitable. But consider the possibilities of delay when two departments are involved; one concerned with the financial implications of the proposal, and the other with educational needs. Who will arbitrate if there is a deadlock between the two? Will it be my right honourable friend the Prime Minister and the Cabinet? In the coming 12 months there will be 80 building and maintenance contracts carefully timed to coincide with school holidays and school reorganisation, and sometimes of a very urgent nature—for instance, dealing with asbestos removal. Delay in tendering and over-running of time limits will inevitably involve additional cost, and all will require central authorisation. Here, again, I would refer to the advice given to your Lordships by the noble Lord. Lord Broxbourne, earlier this evening.
The great bulk of the ILEA purchasing is done through the GLC's supplies department, which places large-scale contracts on the basis of London-wide heads and charges the ILEA for the goods supplied to it. Bulk purchase of this kind has advantages pricewise, as those of us who shop regularly at Marks and Spencer, Sainsbury's, or the Co-op know. And it is worth recording that this month the Audit Commission named the GLC's supplies department as the most efficient local authority purchasing organisation in England and Wales. At any time there are outstanding 120 contracts, valued at more than £100,000, almost all of which include goods for the ILEA and other education authorities in Greater London. These cover everything from books and school paper to sports gear, furniture, computers and food. Twenty-five million pounds a year is spent on behalf of the ILEA by the GLC's supplies department at a level of cost, on a bulk basis, greatly to the advantage of the public purse.
The control procedures now to be incorporated in this Bill will inevitably involve delay in the placing of large contracts, leading to shortage of stock, disruption of the educational process and increased cost by the placing of smaller contracts, which will result in a
1310
higher unit cost and then increased charge to overheads. Contracts will be placed during the next 12 months to run for two or three years, and even longer, and many of these will be over £100,000.
As there will be an elected ILEA, this will presumably have to operate a central supplies organisation of its own in due course. It will have to take over all the current contracts, and there will be a strong incentive, in this particular case of the education field, to ensure that contracts entered into by the present ILEA are prudent and economical. The fears of irresponsibility which lie behind the Government's two new clauses, therefore, even if well founded, do not apply to contracts for the educational buildings and supplies. There is, therefore, no reason why they should be subject to central control, with all the delays, complications and bureaucracy which would be involved.
My Lords, I must confess to you that the more I examine the consequences of the Government's legislation in so far as it affects London, the greater is my apprehension about the administrative confusion and additional expense which will flow from them. I fear that this will have some very undesirable consequences for the Government and for the Conservative interest in London between 1986 and the next general election.
Although this amendment is intended to ensure administrative continuity and efficiency in only one part of the local government field in our capital city, it is a very important field—the most important field of all. I therefore recommend this amendment to your Lordships and I earnestly hope that my noble friend, when he replies, will do so in a way which is favourable to the amendment and, if not, that the House will support any Division that takes place.
Baroness David: My Lords, I should like to support the noble Lord, Lord Alport, in this amendment. I think he has said everything that is necessary to be said. No doubt noble Lords opposite who are constant readers of the Financial Times will have read an article which appeared in that newspaper last Thursday, 12th July. The first paragraph of the article, which is headed,
"GLC tops list of efficient local authority purchasers",
reads:
"The Greater London Council tops the list of local authorities which run the most efficient purchasing divisions, according to a report by the independent Audit Commission, published today".
I should like to say that I chaired a committee which looked into the supply of books to schools. It was concerned not with how many books were sent to each school, but with how they got there, and with which were the most efficient organisations. When I and my committee visited the GLC's warehouse at South fields, where they dealt with all the orders, I was very much impressed by their efficiency. If they have to cope with all these contract demands which the clause which, unfortunately, has just been passed brings about, all this efficiency will be lost. The schools will be the losers, because they will get their goods, books and everything they want at a very much slower rate; and it is not only the GLC that they serve, but a good many counties and other authorities around

1311
London. So I hope very much that the House will support this amendment.
Lord Kilmarnock: My Lords, we on these Benches should also like to support the noble Lord, Lord Alport. We come back to ILEA, again, which, under the Government's proposals, is to be accorded exactly the same treatment as the GLC, although the Government have very different aims for both these bodies. So that is the first inconsistency. As the noble Lord, Lord Alport, pointed out, all ILEA land and buildings are vested in the GLC and many large education service contracts are entered into by the GLC departments on behalf of ILEA.
As the noble Lord has already said, ILEA has been encouraged by central Government to dispose of buildings released by falling rolls, but the effect on the disposal programme of these new clauses which the Government have introduced into the Bill is likely to be a slowing down of the rate of disposals by adding another tier of approval, thus inhibiting ILEA's chances of achieving its budget target. There will also be a discouraging effect on private sector buyers in making bids on the open market for surplus property, because they know that they will be faced with unspecified delays in addition to those already suffered, because of waits for planning consent and so on. It seems to me that in relation to ILEA these clauses will be distinctly counter-productive.
There is one other point, which is that the amendments propose ceilings of £100,000 on maintenance contracts and £250,000 on main or capital contracts. But it really must be borne in mind that ILEA has heavier building maintenance programmes than average, by virtue of its much higher proportion of pre-1900 school buildings. So that again means that practically every ILEA building or maintenance contract will have to go before the Secretary of State, and the mind boggles at the tremendous build-up of applications in the department.
The final point is the question of contracts for goods and services, which I think the noble Lord, Lord Alport, mentioned. I think I am right in saying that this is not really covered by his amendment, but it is another consideration which the Government ought to bear in mind. The GLC supplies department currently lets for ILEA approximately 120 contracts, valued at more than £100,000 each, almost all of which include goods and services required by ILEA and other education authorities in Greater London. We are not talking now only of contracts for new buildings or for maintenance. We are talking about exercise books, papers, text books, desks, chairs, school furniture, sports goods, protective clothing, floor coverings and so on. At this late hour, I shall not read the whole of my long list.
Many of these supplies of multifarious goods required for the proper running of schools can be achieved at a cheaper price on a larger contract, such as one over £100,000, but under the Government's proposals all these large contracts for this multiplicity of items are likely also to be caught in the net and will have to go to the Secretary of State. I am not making any ideological or political point, but is this practical,
1312
is it a sensible way to go about things and should not the Government think again about this?
Lord Bellwin: My Lords, I am afraid that it is simply not possible to draw a clear distinction between the GLC in its role as a local authority generally and the GLC in its role as an education authority. The fact that we propose to reconstitute the ILEA as a separate corporate body after the abolition of the GLC does not mean that there can be no risk in the education field of the kind of abuse with which the Government's new clauses are designed to deal. The fact that the ILEA has not itself, so far as we are aware, committed this kind of abuse is not a sufficient reason for trying to distinguish it from the GLC in this context.
I accept without question the argument that it is important not to impede or disrupt the education service or any other service which the GLC and the MCCs now operate. The Government will obviously be seeking to process the applications for consent as speedily as possible and we shall be studying as a matter of urgency the possibility that general consents, for which the Bill provides, may be applicable to some of the transactions which the GLC undertakes as an education authority. What I cannot do at this stage is to give my noble friend a commitment that that will be so. I would emphasise once again that nobody who acts responsibly, prudently and reasonably has anything to fear from these new powers. It will be our prime objective to ensure that such responsible actions are not impeded by the consent procedures, and those procedures are emphatically not intended to allow the Government to exercise detailed control over matters which are essentially for local decision.
A practical difficulty arises both with the new clause proposed by my noble friend Lord Alport and with any attempt to distinguish the operations of the ILEA from those of the GLC. Your Lordships will by now be familiar with the constitutional position that the GLC is the ILEA, acting through a special committee of the council, and that the ILEA has no separate corporate personality of its own. Thus, the GLC is a party to the contracts concerned, and it would be very difficult, if not impossible, to attempt to operate the distinction implied by my noble friend's new clause. In some cases it might be possible to say that the GLC was acting as an education authority, but in other areas where the eventual user or beneficiary was the ILEA the connection would be more tenuous and hard to disentangle. It is even possible that attempts to operate such a distinction could lead to delays in the handling of applications for consent and create more of a burden on the GLC.
Therefore on grounds at least of practicality, let alone principle, I hope that my noble friend will be willing to withdraw his new clause upon the absolute assurance, which I give him, that the Government will be taking steps to ensure that neither the education service of Inner London nor any of the other services which stand to be affected by the counter-obstruction measures will be unnecessarily impeded by the operation of these new but essential controls. I am absolutely in accord with my noble friend's concern about the working of these controls, and I ask him to accept that we shall look particularly closely at the position as regards the ILEA in terms of the consent

1313
position. With that assurance, I hope that my noble friend will feel able to withdraw his amendment.
Lord Alport: My Lords, I am afraid that I cannot accept my noble friend's argument that it is impossible to divorce the ILEA, even though it is associated with the GLC, from the GLC proper. The fact of the matter is that contracts are agreed by the ILEA and then passed to the supplies department of the GLC. There is an operative and administrative division between the two bodies. There is no difficulty in practice in that being carried out, whatever may be the imposition of controls over the GLC for matters other than those relating to both the building needs and the supply needs of the ILEA.
I am afraid that I cannot accept my noble friend's assurance. I know that it is given in good faith and that my noble friend will do his best in the Ministry to expedite decisions, but there are bound to be delays because there will be differences of opinion on many occasions between his department and the department of the Secretary of State for Education and Science. This is inherent in the Government's administration. Although my noble friend will, I am sure, extend every kind of goodwill, the fact of the matter is that this will harm education and make it more difficult for the Inner London Education Authority to carry out its functions properly, economically and efficiently. I am afraid that I cannot withdraw this amendment. Therefore, I hope that the House will divide over it.
11.59 p.m.
On Question, Whether the said amendment (No. 40) shall be agreed to?
Their Lordships divided: Contents, 30; Not-Contents, 102.

DIVISION NO. 5

CONTENTS

Alport, L. [Teller.]

Lovell-Davis, L.

Birk, B.

McIntosh of Haringey, L.

Carmichael of Kelvingrove, L.

Mountevans, L.

David, B.

Nicol, B.

Dean of Beswick, L.

Pitt of Hampstead, L.

Evans of Claughton, L.

Ponsonby of Shulbrede, L.

Falkender, B.

Rochester, L.

Gallacher, L.

Serota, B.

Gosford, E.

Shackleton, L.

Graham of Edmonton, L.

Stoddart of Swindon, L.

Grey, E.

Tordoff, L.

Jacques, L.

Underhill, L.

Kagan, L.

White, B.

Kilmarnock, L. [Teller.]

Winchilsea and Nottingham, E.

Kirkhill, L.

Llewelyn-Davies of Hastoe, B.

NOT-CONTENTS

Airey of Abingdon, B.

Brabazon of Tara, L.

Alexander of Tunis, E.

Bridgeman, V.

Avon, E.

Brougham and Vaux, L.

Bauer, L.

Bruce-Gardyne, L.

Belhaven and Stenton, L.

Caithness, E.

Bellwin, L.

Cameron of Lochbroom, L.

Belstead, L.

Camoys, L.

Biddulph, L.

Campbell of Croy, L.

Birdwood, L.

Carnegy of Lour, B.

Boardman, L.

Camnock, L.

1314

Carr of Hadley, L.

Kaberry of Adel, L.

Cathcart, E.

Kemsley, V.

Chelwood, L.

Kitchener, E.

Coleraine, L.

Lindsey and Abingdon, E.

Cork and Orrery, E.

Long, V. [Teller.]

Cornwallis, L.

Lucas of Chilworth, L.

Cowley, E.

McAlpine of West Green, L.

Cox, B.

Mackintosh of Halifax, V.

Craigmyle, L.

Maude of Stratford-upon-Avon, L.

Croft, L.

De Freyne, L.

Molson, L.

De La Warr, E.

Montagu of Beaulieu, L.

Denham, L. [Teller.]

Mottistone, L.

Digby, L.

Murton of Lindisfarne, L.

Donegall, M.

Norfolk, D.

Drumalbyn, L.

Northesk, E.

Eden of Winton, L.

Peel, E.

Elliot of Harwood, B.

Penrhyn, L.

Elphinstone, L.

Perth, E.

Elton, L.

Pike, B.

Enniskillen, E.

Plummer of St. Marylebone, L.

Erne, E.

Radnor, E.

Ferrers, E.

Rankeillour, L.

Fisher, L.

Redesdale, L.

Fortescue, E.

Renwick, L.

Gardner of Parkes, B.

Romney, E.

Gibson-Watt, L.

St. Aldwyn, E.

Gisborough, L.

Saltoun, Ly.

Glanusk, L.

Sandford, L.

Glenarthur, L.

Savile, L.

Gray, L.

Skelmersdale, L.

Gray of Contin, L.

Southborough, L.

Haig, E.

Torphichen, L.

Hanson, L.

Townshend, M.

Harmar-Nicholls, L.

Trefgarne, L.

Harvey of Tasburgh, L.

Trenchard, V.

Henley, L.

Trumpington, B.

Hindlip, L.

Vickers, B.

Hives, L.

Waldegrave, E.

Hornsby-Smith, B.

Whitelaw, V.

Inchcape, E.

Wynford, L.

Ingrow, L.

Resolved in the negative, and amendment disagreed to accordingly.
12.7 a.m.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 41:
After Clause 10, insert the following clause:
("Boundary Commission special review.
.—(1) Within 14 days of the passing of this Act the Secretary of State shall instruct the Local Government Boundary Commission for England to carry out a special review and to report to the Secretary of State within four months of receipt of that instruction.
(2) For the purposes of subsection (1) above, a special review shall consider only the areas of the metropolitan counties and Greater London and shall consist of a review of the boundaries of each district or borough in relation to their likely population and such allocation of functions as appears to the Commission to be proposed in the event of the abolition of the metropolitan county councils and the Greater London Council.
(3) In their report to the Secretary of State following a special review the Commission shall state what changes in local government areas appear necessary in the light of the special review including the alteration of the number of metropolitan districts within a metropolitan county or London boroughs within Greater London.
(4) The Secretary of State shall, within 28 days of receipt of a report from the Commission, lay the report before the House of Commons.")
The noble Lord said: My Lords, the purpose of this amendment is to require the Local Government Boundary Commission to conduct a review of districts and borough areas in the light of the abolition

1315
proposals. Under the Local Government Act 1972 the Local Government Boundary Commission is charged with making proposals to the Secretary of State for the Environment for effecting changes desirable in the interests of effective and convenient local government.
The boundaries of the existing metropolitan districts were drawn in 1972 in the context of an upper tier strategic county authority, and reflected the functions which were then conferred upon the lower tier councils. Under the Streamlining the Cities proposals, the districts are to inherit some services of a strategic nature currently undertaken by the metropolitan county councils.
There was much argument before the 1972 Act that the areas of some of the districts were too small. Clearly these arguments are bound to be revived with greater force if the current proposals become law. The Boundary Commission should now be considering whether the existing district boundaries will properly reflect their enhanced powers in 1986 to enable Parliament to be fully aware of the implications of the abolition proposals. I beg to move.
Lord Bellwin: My Lords, in formulating proposals for devolving the functions of the GLC and metropolitan county councils, the Government had to choose between preceding the changes by a review of the metropolitan districts and London boroughs and implementing any changes found necessary, or devolving the functions first and deferring the review until afterwards, so that they could then take account of the changes actually made and of experience gained in handling the devolved functions.
We chose the latter course, both for its practicality and for the very good reason that the commission's review would necessarily take some time, and we did not wish to delay one moment longer than we could avoid bringing relief to ratepayers from having to support the unnecessary expense of the upper tier authorities. It was an assumption implicit in our decision that the metropolitan districts and London boroughs are capable of carrying out the functions to be devolved to them. I'm fully confident that they are.
This amendment would in effect reverse our decision. It would require the commission to undertake reviews of 68 authorities in double quick time, based on assumptions about the precise delegation of functions in legislation that the House has not yet considered. I am certain that our decision to defer the commission's reviews until abolition and devolution of functions have been effected was the correct one. I hope that the noble Lord will feel able to withdraw his amendment.
Lord Graham of Edmonton: My Lords, I shall withdraw the amendment; but, in my view, the Minister—all too blithely—is making assumptions about the speed, if not the ease, with which the transfer will take place. For instance, may I draw his attention to the situation in West Yorkshire? An examination of the current size of the five districts in West Yorkshire reveals that it may be necessary to redraw the district boundaries to reflect the enhanced functions envisaged after 1986. Many options would be available. Should Calderdale and Bradford be combined, and also Leeds and Wakefield, to make more viable units, with
1316
Kirklees joined to one or other of those larger units? The Minister will have his own store of knowledge, ambition and aspiration in respect of those things. Those are matters which could be affected by the devolution of the powers.
Let us take Merseyside. Will the two smaller Merseyside districts of Wirral and Sefton be considered viable units to cope with the enhanced functions proposed for them? Should the current boundaries of Liverpool City be extended, if the city is to cope with the problems and fulfil its role as a regional centre? I have been given other illustrations.
The Minister may be satisfied that the manner in which the Government are proceeding is fully capable of taking account of the enormity of the upheaval. We suggest that there is a way to ask the Boundary Commission very quickly to see whether there is need for change in the way that we suggest in the areas within the metropolitan counties which are to be abolished. That of course is part of a continuing argument, which will not be resolved until after the event. I am prepared to wait and see. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 11 [Accounts and financial consultation]:
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 42:
Page 8, line 25, at beginning insert—
(" () This section shall come into force when an enactment has been passed by Parliament which provides for the abolition of the Greater London Council and the metropolitan county councils and the transfer of their functions").
The noble Lord said: My Lords, Amendment No. 42 is on the theme that we have deployed more than once previously today and at other times. Quite frankly, it is designed to delay the operation of Clause 11, in this instance, until Parliament has approved the main abolition Bill. Like the earlier clauses in the Bill, Clause 11 makes the assumption that abolition will take place in the manner and to the timetable proposed in the White Paper, Streamlining the Cities.
Clause 11, which will come into force as soon as the Bill is passed, will give special privileges to the boroughs and districts to challenge GLC and MCC expenditure and to be consulted on their proposed budgets. Those special privileges can be explained only if the GLC and MCC functions are to be taken over by boroughs and districts. That is a decision yet to be made by Parliament when it considers an abolition Bill. On the basis of the plan so far revealed, however, only 46 per cent. of GLC spending and 30 per cent. of MCC spending will be inherited by the boroughs and the districts.
Historically, the Local Government Acts of 1933 and 1972, and the Local Government Finance Act of 1982, provide that, "any person interested" is entitled to inspect a local authority's accounts, and a "local government elector" for the area to which the accounts relate may challenge them and pursue his challenge, if he thinks fit, through the courts. It is important that the right to challenge the accounts has been given only to local government electors of the area in question; in other words, those persons to

1317
whom the authority is responsible through the ballot box. No other type of person or body of persons has such a right. I beg to move.
Lord Bellwin: My Lords, this amendment would remove much of the point of Clause 11. Clause 11 is an important provision. This Bill is, after all, designed to allow the successor authorities every opportunity to prepare for the transfer of functions if and when abolition goes ahead. In order to be able to do so, they need some influence over the financial situation which they will eventually take over.
That is why we have included Clause 11 in this Bill. It in no way prejudges the main Bill; it is part of the paving process. The clause does not, therefore, confer undue power on the constituent councils. It gives them the same rights as local electors to object at audit; and it gives them an opportunity to influence decisions about expenditure and financing which will affect them. That is a perfectly reasonable and modest interest to confer on the constituent councils.
But if we were to accept this amendment, these provisions would be of little use. Waiting until summer 1985 would mean that it would be impossible for the constituent councils to be consulted before the GLC and MCC expenditure and financing were determined for 1985–86. It would be too late; and it might also be too late to challenge at audit of the 1983–84 accounts.
So Clause 11 gives the constituent councils the right degree of involvement in decisions which will affect them if abolition goes ahead. It will ensure that the GLC and MCCs must at least listen to the successor authorities before making decisions. To be effective, it has to come into operation as soon as this Bill is enacted. I hope that the noble Lord will appreciate this point.
On Question, amendment negatived.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 43:
Page 8, line 25, leave out subsection (1).
The noble Lord said: Amendment No. 43 has the purpose of removing the proposal to give districts and boroughs the right to challenge metropolitan county and GLC expenditure. The Minister will appreciate that these are all part of a piece with the earlier amendments, but nevertheless they deal with different parts of the Bill. Therefore, we have to attack the Bill whenever something that gives us offence takes place.
The right to challenge the accounts of a local authority has hitherto been given to the electors of the area of that authority, the people who can vote in elections to that authority and on whom its councillors ultimately depend for their seats. That principle has been repeated in the Local Government Acts 1933 and 1972, and the Finance Act 1982. The Bill proposes to extend that right to metropolitan district councils and to London boroughs. The Bill does not seek to extend the right to shire district councils but merely to create an entirely anomalous situation in Greater London and the metropolitan counties. The existing rights enable a local government elector to challenge first the auditor and then later, if necessary
1318
in the courts, the accounts and expenditure of the metropolitan county councils and the GLC.
The Government do not claim that local electors are unwilling or unable to exercise that right, nor do they show that there is any need for it to be extended. The amendment seeks to leave metropolitan county councils and the GLC on the same footing regarding financial responsibility as all other local authorities in the country. I beg to move.
Lord Bellwin: My Lords, the constituent councils will have a particular interest in the accounts for the years in question. They are accounts which relate to expenditure incurred in financial years in which the abolition proposals will have been very much in the minds of the authorities concerned. It is surely, therefore, entirely equitable and indeed necessary that the constituent councils have access and the right to object to the audit of the accounts of all three of these financial years, as any one of them might contain attempts to frustrate the task of the successor authorities.
There is no reason to think that constituent councils will abuse these rights. But if they did, the courts already have the power to award legal costs. They have a general power to award legal costs from any of the parties concerned. That discretion is important. There could be cases where, although the upper-tier authority was not found to be at fault, the constituent council have been perfectly justified in bringing the case to appeal—for example, because the upper tier had failed to give them all the facts. In such a case, the court might decide that it would be inequitable to lay all costs on the constituent council. I am advised that the normal principle of "costs follow the event" would ensure that constituent councils would have to pay all legal costs if they were in the wrong. That is surely sufficient safeguard against spurious challenges.
The Government are convinced that this is a necessary provision and one which extends to the successor authorities the same rights as individual electors already have. I hope that the noble Lord will perhaps be satisfied with that explanation.
On Question, amendment negatived.
12.21 a.m.
Lord Evans of Claughton Lord Evans of Claughton moved Amendment No. 44:
Page 8, line 32, leave out subsection (2).
The noble Lord said: My Lords, I should like also to speak to Amendments Nos. 45, 46 and 47 since they roughly refer to the same area, and this will also save time.
Amendment No. 45: Page 9, line 3, leave out from ("consultation") to end of line 7.
Amendment No. 46: Page 9, line 9, leave out from ("instrument") to end of line 11, and insert ("and no such regulations shall be made unless a draft thereof has been laid before and approved by a resolution of each House of Parliament")
Amendment No. 47: Page 9, line 11, at end insert—
(" () Before giving any such guidance as is mentioned in subsection (3)(b) above or making regulations under this section the Secretary of State shall consult the Greater London Council and each metropolitan county council.")
Amendment No. 45 is to remove the general power of the Secretary of State to prescribe what information

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of past or future expenditure is to be provided by the metropolitan councils and the Greater London Council. Subsection (3) will enable the Secretary of State to make regulations requiring the Greater London Council and the metropolitan counties to make available to constituent councils financial information of their past or proposed expenditure of a totally unspecified nature. It appears fairly obvious that the Secretary of State has no idea at this stage what sort of information he has in mind that he may require and is seeking some kind of blanket power to compel the local authorities to make available all kinds of information regardless of whether it is relevant or irrelevant, important or unimportant, and what its utility may be to the constituent councils.
The Greater London Council and the metropolitan counties are major elected organisations having contractual and other responsibilities to a large number of organisations and individuals. The disclosure of expenditure proposals in the blanket manner envisaged in paragraph (c) at present might well be prejudicial to the interests and rights of such organisations and such individuals. No clear requirement has been envisaged for power to be couched in such broad and unrestricted terms. Amendment No. 47 seeks to require the Secretary of State to have prior consultation with the authorities affected before giving guidance about consultation on budgets.
The power to give guidance is very wide. The courts have held that guidance can be perfectly proper even though it might result in a council being in breach of its statutory duties. It is important to ensure that the consequences of any guidance the Secretary of State proposed to give should be clearly understood on all sides before it is actually given. This amendment, following the previous one, requires prior consultation with the relevant local authorities. This duty to consult is already well precedented under Section 3(12) of the Local Government, Planning and Land Act 1980 which provides for consultation with the Secretary of State before he issues a code of practice or makes regulations relating to the publication of information.
It seems to me that these amendments would require the Secretary of State to be more precise in the already wide powers that he seeks to exercise and would limit his freedom to go on "fishing expeditions" that might cause difficulties, inconvenience or problems to a variety of organisations and private individuals. I beg to move.
Lord Bellwin: My Lords, Amendment No. 44 seeks to remove the subsection which requires the GLC and each of the metropolitan county councils to consult the borough or district councils in its area about its 1985–86 budget. These are the last budgets which will be implemented by the upper-tier authorities, and they will be important matters in the immediate run up to abolition. Therefore, the boroughs and districts have a reasonable and direct interest in them. It does not give them unreasonable powers. It does not give them any veto powers. But this provision will give the boroughs and districts an opportunity to influence decisions which will affect the state of affairs that they will inherit. I should have thought that was entirely
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reasonable. Subsection (2) is an important and necessary provision which will help towards a smooth transition.
Amendment No. 45 would remove the Secretary of State's discretionary power to make regulations prescribing what financial information the GLC and the MCCs shall make available to their constituent councils. It may help if I explain the circumstances in which we envisage that the power to make regulations would be exercised. It would be used only where upper-tier authorities were withholding information which the constituent councils needed as successor authorities. It is necessary as a safeguard. Provided all concerned behave responsibly, the power need never be used. But only by including it can there be a guarantee that constituent councils will get the information they need.
I had intended to speak also to Amendments Nos. 46 and 47. and if the noble Lord will bear with me, perhaps I may make a comment on them.
Lord Evans of Claughton: Yes, my Lords.
Lord Bellwin: My Lords, I am obliged. Amendment No. 46 makes any regulations prescribing what information on expenditure the GLC and MCCs must make available to the constituent councils subject to affirmative resolution, instead of negative resolution. I have said already that regulations under subsection (3)(c) would need to be made only if upper-tier authorities were being unto-operative in letting constituent councils have necessary financial information. If it proved necessary, the Secretary of State would be exercising a power recently conferred upon him by Parliament in order to ensure that the objects of the Bill were being met. In such a case, negative resolution is the appropriate and adequate safeguard. Affirmative resolution would merely lead to unnecessary delay.
Amendment No. 47 would require the Secretary of State to consult the GLC and the MCCs. May I say that I recognise there are precedents for imposing such requirements on Ministers? But surely each case has to be judged on its merits. In the present case the Government do not believe that it would be right to require the Secretary of State to consult the abolition authorities before acting under subsection (3)(b) and (c). I want to make it perfectly clear that there is nothing to prevent the Secretary of State from consulting them, if that seemed necessary or desirable. However, to make it a requirement so to do would make the procedure less flexible and more protracted. It would be necessary to give the authorities a minimum amount of time to respond, and, if the first round led to substantial differences of opinion, a further round of formal consultations would be necessary. That really would lead to delay. I hope that, with that explanation, the noble Lord will feel able to withdraw the amendments.
Lord Evans of Claughton: My Lords, I have listened carefully to what the noble Lord the Minister has said, and, broadly speaking, I am reasonably satisfied with the explanation he has given. I am a little taken aback that he does not seem willing to extend the consultation procedures provided already under the Local Government, Planning and Land Act—I

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mentioned Section 3(12)—to the metropolitan councils and the Greater London Council, which are coming to an end. Since the precedent has been established for the provision of information generally, it seems to me a pity that it is not being followed in this particular case. In view of the lateness of the hour, and the broadly satisfactory answer I have been given, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 45 to 47 not moved.]
Lord Bellwin Lord Bellwin moved Amendment No. 48:
[Printed earlier: col. 1181.]
The noble Lord said: My Lords, I should like to speak also to Amendment No. 49.
[Printed earlier: col. 1181.]
These are technical amendments which are consequential to the amendments on elections. I beg to move.
On Question, amendment agreed to.
Lord Bellwin Lord Bellwin moved Amendment No. 49:
[Printed earlier: col. 1181.]
The noble Lord said: My Lords, I beg to move.
On Question, amendment agreed to.
[Amendment No. 50 not moved.]
Schedule 1 [Number of councillors to be appointed by constituent councils]:
Lord Bellwin Lord Bellwin moved Amendment No. 51:
[Printed earlier: col. 1181.]
The noble Lord said: My Lords, I beg to move Amendment No. 51, and I should like to speak also to Amendments Nos. 52 and 53.
[Printed earlier: col. 1181.]
These three amendments are consequential upon the changes which have been made to Part II of the Bill by Government amendments. I beg to move.
On Question, amendment agreed to.
Schedule 2 [Consequential amendments.]:
Lord Bellwin Lord Bellwin moved Amendments Nos. 52 and 53:
[Printed earlier: col. 1181 ]
On Question, amendments agreed to.
Lord Bellwin Lord Bellwin moved Amendment No. 54:
In the Title: Line 12, after ("or) insert (", and disposals of land and contracts made by,").
The noble Lord said: My Lords, this amendment is consequential upon Amendments Nos. 37, 38 and 39. I beg to move.
Baroness Birk: My Lords, I must ask the Minister about this amendment. I cannot work out where it fits in and I am not sure whether there is a mistake and it should be inserted after the "or' or before. Can the Minister tell us where it goes?
Lord Bellwin: My Lords, by leave of the House, as I have said, this amendment is consequential upon Amendments Nos. 37, 38 and 39 and introduces controls on the disposals of land and contracts made by the GLC and the MCCs. Although the phrase:
"to control the general expenditure powers of those authorities",
which already forms part of the Long Title of the Bill, could probably encompass these additional provisions, it would be helpful and more accurate to describe them explicitly in the Long Title.
Baroness Birk: My Lords, does the Minister know exactly where it goes? On what line does it go? The amendment reads incorrectly. There is something the matter with it, apart from its content.
Lord Bellwin: My Lords, I cannot see anything wrong with it, but I do not have a copy, so perhaps that is understandable.
Baroness Gardner of Parkes: My Lords, perhaps I can help because I also was slightly puzzled. But as I understand it, it would read:
"to control the general expenditure powers of, and disposals of land and contracts made by, those authorities".
That is where the words should be inserted according to the amendment.
Lord Bellwin: My Lords, it goes in as marked and it is correct.
Baroness Gardner of Parkes: My Lords, it goes in at line 12 of the Long Title.
On Question, amendment agreed to.
House adjourned at twenty-six minutes before one o'clock.

Written Answers

  DIPLOMATIC IMMUNITY FROM SHOPLIFTING CHARGES
  Baroness Phillips Baroness Phillips asked Her Majesty's Government:
  How many prosecutions for shoplifting have been prevented by diplomatic immunity.
  The Parliamentary Under-Secretary of State, Home Office (Lord Elton)The Parliamentary Under-Secretary of State, Home Office (Lord Elton): In the period from 1st January 1974 to 31st May 1984 we received from the police 214 reports of incidents in which property was alleged to have been stolen from shops by persons who were immune from prosecution because of an entitlement to diplomatic immunity.

  MENTALLY HANDICAPPED CHILDREN
  Lord Stallard Lord Stallard asked Her Majesty's Government:
  What steps they have taken to implement health circulars HC(81)13/LAC(81)9 and HC(83)21/LAC(83)15 concerning children in long-stay abnormality hospitals; and

  1323
  When they expect to be able to announce a timetable for the closure of all children's wards in long-stay abnormality hospitals.
  The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Glenarthur)The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Glenarthur): Arrangements for alternative care for children who are in long-stay mental handicap hospitals in England, and the timetables for change, are for the health authorities concerned in consultation with the relevant local authorities. We made it clear in the two circulars that mental handicap hospitals do not provide a suitable environment for children to grow up in. Circular HC(81)13/LAC(81)9 asked health authorities to identify mentally handicapped children in their care and to review their needs jointly with the relevant local authority to decide the best way to make more suitable provision for those unsuitably located. The circular gave details of the £ for £ scheme, by which £1 million was made available for voluntary bodies to match funds raised for alternative provision for children in mental handicap hospitals. The follow-up circular HC(83)21/LAC(83)15 asked regional health authorities to monitor the progress their districts were making in ensuring the most appropriate provision for mentally handicapped children outside hospital and to be prepared to report progress in the run-up to the annual review meetings with Ministers. It offered the National Development Team's advice to authorities on their plans for mentally handicapped children and indicated that on all visits to mental handicap hospitals the team would be taking a special look at the children using these. The circular also gave details of the additional £9 million being made available to authorities with special problems for projects to provide small homely units for mentally handicapped children in hospital who will continue to need care in a health setting.
  Authorities have made considerable progress in planning and four projects under the £ for £ scheme and 30 under the £9 million scheme will help bring nearly 300 children out of hospital.

  CORONARY ARTERY BY-PASS SURGERY
  Lord Colwyn Lord Colwyn asked Her Majesty's Government:
  How many patients are currently waiting to undergo coronary artery by-pass surgery:

  (a) within the National Health Service;

  (b) under private arrangement.

  Lord Glenarthur Lord Glenarthur: We do not collect numbers centrally on the numbers of patients waiting for particular operations.

  BANKS' ANNUAL ACCOUNTS: EEC DRAFT DIRECTIVE
  Lord O'Brien of Lothbury Lord O'Brien of Lothbury asked Her Majesty's Government:
  What is their present position in negotiations on the European Commission draft directive (5692/81+Rev) on the Annual Accounts of Banks
  1324
  etc. taking into account the conclusions of the European Communities Committee 4th Report, Session 1981–82 (H.L. 42) and the subsequent debate (H.L. debates 8th February 1982).
  The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead)The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): The Commission issued a revision of its proposal for a directive on this subject on 14th March; an explanatory memorandum was submitted to Parliament on 13th April (5902/84). Discussions at expert level then began in Brussels in May; the Government expect these to continue for some time before recommendations can be made to the Council.
  We are taking full account of your Lordships' debate on the Select Committee's valuable report. But substantive discussion in Brussels of the coverage of the proposed directive has so far barely begun. On undisclosed reserves, the Government consider that the present proposal in principle runs counter to the trend towards the transparency and comparability of accounts established in other Community legislation.

  TRADE WITH IRAN
  Lord Avebury Lord Avebury asked Her Majesty's Government:
  What is their policy on the promotion of trade with Iran.
  Lord Belstead Lord Belstead: It is the Government's policy, subject to export licensing regulations, to encourage British companies to trade with all countries where there is a market for their goods unless an internationally recognised embargo is in force. There is no such embargo on trade with Iran.

  SPECIAL QUOTA VOUCHERS: APPLICATION DATES
  Lord Avebury Lord Avebury asked Her Majesty's Government:
  On what dates the applications for special quota vouchers were originally submitted of those United Kingdom passport holders who were invited for interview in July, August, September and October 1984 respectively.
  The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne)The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): Details are as follows:

  Invited for Interview

  Ordinary Queue Application Date

  Priority Queue (Compassionate Cases and Dependants aged 65+) Application Date

  July 1984

  Mid/Late November 1976

  Late December 1976 (Applicants who applied in 1976 but only attained the age of 65 in 1984) and February 1984

  August 1984

  Late November/Mid December 1976

  Early April 1984/Early May 1984

  September 1984

  Mid/Late December 1976

  Early/Mid May 1984

  October 1984

  Late December 1976/Mid January 1977

  Applications now being received are given three months' notice of interview date

  THE SINGLE HOMELESS: FUNDING
  Baroness Macleod of Borve Baroness Macleod of Borve asked Her Majesty's Government:
  Whether they will make a statement about the funding after the abolition of the GLC of voluntary organisations concerned with the single homeless and currently funded by that council.
  Lord Skelmersdale Lord Skelmersdale: My right honourable friend the Secretary of State for the Environment announced on 11th April [Vol. 58: col. 406–7] our decision that the main abolition legislation should include provision for a statutory basis for the collective funding by London boroughs and the Common Council of voluntary bodies serving London as a whole or an area wider than that of individual authorities. We have recently received a letter from the London Boroughs Association which records the Association's decision to support the proposal that these arrangements should, in principle, apply to projects forming part of the programme to replace the hostels previously owned by Rowton Hotels PLC. The association also envisages that the great majority of the projects now funded by the GLC and directly providing services for the single homeless will be recommended for grants under those arrangements; individual projects are to be assessed during the current year. We welcome this clear willingness by the members of the LBA to support the view that the London Boroughs should collectively assume responsibility for the funding of worthwhile voluntary activity in the housing field. This offers great reassurance to those organisations concerned about the arrangements for London-wide grants once the GLC is abolished. I am placing a copy of the association's letter in the Library of the House.

  EEC: UK FINANCIAL CONTRIBUTION
  Lord Diamond Lord Diamond asked Her Majesty's Government:
  If the new system for the United Kingdom's financial contribution to the EEC agreed at Fontainebleau had been in effect ab initio, what effect (in sterling terms) would that have had on the net payments actually made in respect of the past four years.
  The Chancellor of the Duchy of Lancaster (Lord Cockfield)The Chancellor of the Duchy of Lancaster (Lord Cockfield): During the past four years the Government had to negotiate ad hoc refunds each year. These were becoming progressively more difficult to negotiate. As a result, our refunds were on a declining trend. The agreement at Fontainebleau gives us a fairer and more soundly based system for the United Kingdom's financial contribution to the Community. The system is both lasting and automatic in its operation. It gives the United Kingdom from 1985 onwards a rebate of 66 per cent. of the gap between our share of VAT payments and our share of expenditure from the Community's "allocated budget".
  The table below shows the net refunds we would have received had the Fontainbleau system applied to the period 1980 to 1983 compared with those we actually secured:

  Net Refunds received

  Net Refunds if Fontainbleau system had applied

  £ million

  1980

  645

  388

  1981

  783

  392

  1982

  624

  679

  1983

  441

  629