Sitting of 19 July 1984

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS
    MERSEYSIDE DEVELOPMENT CORPORATION BILL (By Order)
    Read the Third time and passed.

    CORNWALL COUNTY COUNCIL BILL [Lords] (By Order)
    Order for consideration read.
    To be considered upon Wednesday 25 July at Seven o' clock.

    COUNTY OF LANCASHIRE BILL [Lords] (By Order)
    Order for consideration read.
    To be considered upon Tuesday 24 July.

    NOTTINGHAMSHIRE COUNTY COUNCIL BILL [Lords] (By Order)
    Order for further consideration, as amended, read.
    To be further considered upon Thursday 26 July.

Oral Answers to Questions
  HOME DEPARTMENT

    Crime Prevention
    Mr. Evennettasked the Secretary of State for the Home Department what progress has been made in developing his Department's approach to crime prevention.
    Mr. Ottawayasked the Secretary of State for the Home Department what priority he gives to crime prevention strategy; and if he will make a statement.
    The Minister of State, Home Office (Mr. Douglas Hurd): Crime prevention is crucially important, and there has been encouraging progress on the lines urged in our joint departmental circular in January. Police forces have launched a wide variety of local initiatives. Twenty-two forces have started neighbourhood watch schemes and 11 more plan to do so. We and the Schools Council have produced a teaching package for secondary schools. We shall be launching a television and press crime prevention campaign in London and the midlands in October.
    Mr. Evennett: As crime prevention has a vital role to play in our fight against crime and the criminal, what contributions have the neighbourhood watch schemes made to crime prevention, and is my right hon. Friend satisfied that these are being implemented quickly enough?
    Mr. Hurd: These schemes are gathering speed and there are now, for example, 390 neighbourhood watchdog schemes in London alone. I agree with my hon. Friend about their importance. They help to deter criminals and prevent crime, and they bring police into close touch with the communities they serve.
    Mr. Ottaway: Does my right hon. Friend agree that one of the best ways to prevent crime would be to block the loophole whereby criminals from this country are able to go to Spain without fear of prosecution? Would not the best way to block this loophole, rather than signing a bilateral treaty with Spain, be to sign the European convention on extradition, which, contrary to popular belief, provides a measure of protection to the suspect?
    Mr. Hurd: My right hon. and learned Friend the Home Secretary has taken an initiative with the Spanish Government and arranged that official discussions should take place. On the wider point, my right hon. and learned Friend has also said that we propose to issue a consultative Green Paper later this year, so that we may consider whether there are ways in which our own requirements on extradition might be relaxed. That is a necessary first step to clear our minds before we further consider the European convention.
    Mr. Fatchett: Does not crime prevention depend to a great extent on public co-operation? Is there not in many parts of the country profound alienation between the police and the mining communities? What steps does the Minister intend to take to restore confidence in the police within those communities?
    Mr. Hurd: Of course crime prevention depends on co-operation, and that co-operation is forthcoming. As to the policing of the miners' dispute, the hon. Gentleman should address his questions to those who decided to run the dispute on the basis of violence and intimidation.
    Mr. Loyden: Does the Minister agree that the major role of the police in combating crime has been deeply affected by the provocative use of police on picket lines, and that crimes such as muggings, loan sharking and the use of drugs are not being dealt with because of the way that the police are being directed into a political battle against the miners?
    Mr. Hurd: There is no evidence for that. Once again, I do not think that many people would agree with the implication that the police should remain inactive when they see efforts being made illegally to prevent those workers who have decided to work—whether at the coal face or driving lorries—from doing so.
    Mr. Proctor: Given that there is growing public concern about the increasing number of armed robberies in which criminals use shotguns, why is my right hon. Friend reluctant to revise the law on shotgun certificates?
    Mr. Hurd: We do not see any clear connection between those two points. However, as we have already announced, we intend to introduce proposals for increasing the penalties available to deal with those who use firearms in the course of violent crimes.
    Mr. Dubs: How can it help crime prevention when incidents occur such as at Calverton colliery in Nottinghamshire, in which, according to our evidence, women pickets were humiliated, degraded and abused——
    Mr. Speaker: Order. I am sorry to stop a Front Bench spokesman, but this question concerns crime prevention.

    Prisons (Building and Refurbishment)
    Dr. Twinnasked the Secretary of State for the Home Department what resources have been committed to the Government's accelerated programme of prison building and refurbishment.
    The Secretary of State for the Home Department (Mr. Leon Brittan): We are currently planning to build 14 new prisons at an overall cost of about £246 million. In addition, we are spending almost £72 million this year on repair and redevelopment of the existing prison estate.
    Dr. Twinn: I welcome my right hon. and learned Friend's commitment to resources to the prison programme. Will he comment on how that commitment will help the problem of prison overcrowding?
    Mr. Brittan: Fourteen new prisons will provide about 6,600 new places, and, in addition, some 4,000 new places will be provided at existing establishments. The effect of that, on present trends, is that we should eliminate prison overcrowding by the end of the decade.
    Mr. Meadowcroft: Does the right hon. and learned Gentleman agree that even when a prison extension is urgently needed, as at Leeds prison, it is hardly the most popular development in any neighbourhood? Might it not be a good idea to be generous to those whose homes will be demolished by such extensions, by giving them some compensation for the disturbance?
    Mr. Brittan: I am sure that it is right that proper compensation should be made. However, I think that there is an increasing understanding that arrangements can be made for building prisons in a way that does no harm to the local community. After all, prisons meet an important social need.
    Mr. Chapman: Has my right hon. and learned Friend estimated the resources wasted during new prison and extension building as a result of design changes being made after construction has commenced? That causes a significant increase in contract prices. With good management, those changes should be sorted out before construction begins.
    Mr. Brittan: I have not made any such estimate, but if my hon. Friend has an example of where excessive cost has been caused as a result of what he has described, I should naturally want to look into it very carefully.
    Mr. Jun Callaghan: Do the Government intend to implement the proposals of the past and present Select Committees on Education, Science and Arts in connection with prison education and improving the resources, buildings and refurbishments available to prisons?
    Mr. Brittan: On that score, I have nothing to add to what my right hon. Friend the Minister of State said in the debate earlier this month.

    Shops Act 1950
    Mr. Montgomeryasked the Secretary of State for the Home Department when he expects to be able to publish the report of the committee of inquiry into the proposals to amend the Shops Act.
    The Parliamentary Under-Secretary of State for the Home Department (Mr. David Mellor): As soon as possible after my right hon. and learned Friend the Home Secretary has received it—which we expect to be in the early autumn.
    Mr. Montgomery: Does my hon. Friend agree that the present law has been brought into disrepute by random prosecutions on the part of local authorities? Should not the law be changed so that it is more in line with present shopping trends?
    Mr. Mellor: As I said in February last year, when the House unceremoniously turfed out a proposal to do just that, the present law is deeply anomalous and unsatisfactory.
    Mr. Latham: Is my hon. Friend aware that, while most of us agree with him about the present law, there are plenty of divided opinions about the best way to solve the problem? Is he further aware that if he brings forward firm proposals to the House some of us will expect them to be dealt with on a free vote?
    Mr. Mellor: It has been the opinion of successive Governments that that is what should be done. It is not for me to anticipate what the climate will be like once the report has been received. One reason that lay behind our decision to establish the report was to try to find more common ground than was apparent when we last debated the matter.
    Mr. Pavitt: When the report is received, will the hon. Gentleman give serious consideration to the problems that arise for employees who are on rates and conditions under the Union of Shop, Distributive and Allied Workers, compared with competition arising from places which are completely independent? Will he give serious consideration to the rights of workers in this respect?
    Mr. Mellor: The inquiry had the benefit of a number of assessors, including an assessor nominated by USDAW, who, I feel sure, brought that sort of point to bear on its deliberations.

    Prison Officers (Recruitment)
    Mr. Woodasked the Secretary of State for the Home Department how many more prison officers will be recruited to man the new and refurbished prisons which are planned.
    Mr. Hurd: Of the 5,000 extra prison officers whom we plan to recruit between 1 April this year and 31 March, 1988, 1,230 will be needed to man new or refurbished accommodation. I am circulating in the Official Report the establishments concerned, the number of prison officers estimated to be needed for each, and the year in which they are expected to come into operation.
    Mr. Wood: I thank my right hon. Friend for that information. It is important for the proper conduct of prisons that we have both the right numbers and morale in the prison service. Is my right hon. Friend happy in both those regards?
    Mr. Hurd: I am not happy yet. I agree with my hon. Friend that prison officers do a remarkably difficult job well and that both their numbers and morale are of high importance.
    Mr. Corbett: Is the Minister aware that excessive amounts of overtime are being worked by prison officers? What plans does he have to increase numbers so that workshops can be reopened and prisoners got out of their cells, in which they are locked for far too long?
    Mr. Hurd: I have just answered that question. Part of the increases that have been decided on are needed to man new or refurbished accommodation and part to deal with the kind of problem that the hon. Gentleman mentions.
    Following is the information:

    Prison Service, England and Wales

    New and Refurbished Accommodation 1984–88

    Prison

    Number of prison officers

    1984–85

    Channings Wood

    20

    Erlestoke

    10

    Highpoint

    40

    Holloway

    30

    Wayland

    165

    1985–86

    Stocken

    120

    Brixton

    5

    Appleton Thorn

    100

    Castington

    30

    Medomsley

    5

    Leyhill

    5

    Deerbolt

    10

    1986–87

    Feltham

    210

    Hollesley Bay Colony

    5

    Full Sutton

    310

    1987–88

    The Mount (Bovington)

    165

    Air Weapons
    Mr. Chapmanasked the Secretary of State for the Home Department if he will report progress on initiatives to discourage the misuse of air weapons.
    The Minister of State, Home Office (Mr. David Waddington): Consideration of any further initiatives must wait until we have a clearer indication of the success of the recent campaign. In the meantime, all the publicity material produced for the campaign, including the leaflet and television filler films, will continue to be available. Other local initiatives are a matter for chief officers of police.
    Mr. Chapman: I thank my hon. and learned Friend for that information. Bearing in mind the strong evidence that the number of cases of the misuse of air weapons escalates during school holiday times, will he give sympathetic consideration to an immediate national media campaign to warn parents of their responsibilities in respect of the use by their children of these weapons?
    Mr. Waddington: My hon. Friend does the country a service by keeping the matter of the misuse of air weapons in the public eye. We have not yet had the statistics of offences involving the misuse of air weapons since the time of the publicity campaign. It is probably better to wait until they are evaluated before deciding on what should be the next step.
    Mr. Eastham: It is estimated that there are 4 million airguns, shotguns, rifles and pistols in circulation in Britain today. Is it not about time that we took more positive action to deal with the matter? Is the hon. And
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    learned Gentleman aware that it is estimated that the damage from airguns alone is costing the country between £3 million and £4 million a year?
    Mr. Waddington: The hon. Gentleman knows well that there are laws controlling the use of weapons of all sorts. Indeed, the number of laws is legion. The question is whether to produce new laws and thereby involve the police in the expenditure of more time on the enforcement of those new laws would be the best use of police resources.
    Sir John Farr: Is my hon. and learned Friend about to prepare an analysis of the results of the last Home Office campaign? Will he put the results in the Library? Will he turn his mind to the question of whether enough money was spent on the campaign, which was run on a limited budget?
    Mr. Waddington: I do not think that my hon. Friend would expect me to give a full answer to that quesion now. I have said already that the next step must be to look at the statistics on offences involving firearms since the time of the campaign. We can then decide where we shall go next.
    Mr. Wrigglesworth: In view of the overwhelming evidence that the abuses and damage caused by these guns take place among young people, does not the hon. and learned Gentleman think that the time has come, despite the publicity campaign, to change the law to restrict the access of young people to those guns and to make it clear to the country that the guns are not overgrown toys but dangerous weapons?
    Mr. Waddington: The hon. Gentleman is right to make that last point. One must not lose sight of the fact that there are already considerable restrictions on the purchase and hire of such weapons—for instance, they cannot be purchased or hired by people between the ages of 14 and 17. I must repeat the point that I originally made and emphasise that, happily, in 1981 and 1982 there was a fall in the number of crimes involving the use of air weapons.
    Mr. Stuart Holland: The Minister must be aware that it is considerably easier to purchase shotguns than other kinds of firearms. The hon. and learned Gentleman has referred to imposing more difficulties on the police. Is he aware that, for example, the Lambeth police community liaison committee has made representations to him about the issue of shotguns? Will he respond to those representations?
    Mr. Waddington: When one is considering imposing more controls on shotguns, one must remember that a determined criminal will try to evade any level of control. That is clear from the fact that hand guns are used frequently in the commission of crime, although there are very stringent controls on their possession and use.

    Prison Overcrowding
    Mr. Charles Wardleasked the Secretary of State for the Home Department how he intends to reduce prison overcrowding; and if he will make a statement.
    Mr. Brittan: I have accelerated the major building programme initiated by my predecessor. By 1991 this will provide 6,600 places in new prisons and a further 4,000

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    as a result of redevelopment in existing prisons. I have reduced the minimum qualifying period for parole from 12 months to six months and I am pressing ahead with measures designed to reduce the number of drunkenness offenders, other fine defaulters and mentally disordered offenders in prison.
    Mr. Wardle: I am grateful to my right hon. and learned Friend for reaffirming his long-term strategy. Does he agree that some prisons, such as Northeye in my constituency, which was designed to hold 250 category C prisoners and now takes 400 prisoners of all types, are not only overcrowded but seriously understaffed? Is he aware that the governor of Northeye, the board of visitors and the Prison Officers' Association are anxious to have adequate staffing ratios in the interests of local communities as well as prison employees?
    Mr. Brittan: There is no doubt that a number of prisons experience the difficulties to which my hon. Friend refers. The only way to deal with those difficulties is to embark upon the building and refurbishing programme that I have described and to provide the necessary staff, which, as the House has already heard this afternoon, is being done.
    Mrs. Renée Short: Does the Home Secretary agree that the rehabilitation of offenders is impossible in the grossly overcrowded and disgusting conditions that obtain in all our male prisons today and have obtained for some decades? What are the right hon. and learned Gentleman's proposals for alternative methods of treatment, without waiting for new prisons to be built?
    Mr. Brittan: New prisons are being built. The Government have addressed themselves to the problem mentioned by the hon. Lady, rather than merely paying lip-service to it. I have repeatedly stressed every time that I have an opportunity to do so the importance of alternatives to custody. In addition, recently I issued the Green Paper on intermittent custody, more popularly known as weekend or day imprisonment. I am glad that, although it has met some criticism, the Magistrates' Association, for example, has followed the distinguished lead of the all-party penal affairs group in welcoming proposals of this kind.
    Mr. Leigh: Will the control review committee's report on difficult prisoners make any difference to my right hon. and learned Friend's decision?
    Mr. Brittan: Yes, I regard the report of that committee as an extremely important document. I am glad to have had the opportunity to welcome it and to set some of its proposals in action. By enabling better control of the small number of difficult and disruptive prisoners in the prison system, the life of prisoners and staff will be greatly ameliorated.
    Mr. Soley: Does the Home Secretary accept that, if some of the recommendations of the Hodgson committee were accepted, they would significantly reduce the prison population by allowing the courts to confiscate the proceeds of crime and thereby impose shorter sentences across the board?
    Mr. Brittan: As the hon. Gentleman will be aware, during the course of this Parliament I intend to introduce legislation to deal with the confiscation of the proceeds of
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    crime The Hodgson committee report will be studied carefully to decide the form that such legislation should take.
    Mr. Alexander: Does my right hon. and learned Friend agree that a more effective and supportive after-care system would result in fewer prisoners going to prison? Has he any plans to improve or change the after-care system?
    Mr. Brittan: The financial and staffing support that the Government are giving to the probation service is an earnest of our interest in what my hon. Friend has mentioned.
    Mr. Dubs: Does the Home Secretary agree that, despite his various proposals for prison building and changes in parole, he still expects the prison population to increase substantially over the next few years? What does he think the prison population will be in 1990?
    Mr. Brittan: Forty-seven thousand.
    Mr. Meadowcroft: Will the Home Secretary tell his right hon. Friend the Secretary of State for the Environment that, unless he relents on rate-capping, local authorities will have no resources and many of the alternatives to custody projects will be thwarted by lack of resources in the community?
    Mr. Brittan: The Government's proposals that affect local government are designed to accommodate the Government's proposals as they affect the affairs of the Home Office.

    Channel Islands
    .Mr. Foulkesasked the Secretary of State for the Home Department when he now expects to visit the Channels Islands.
    Mr. Brittan: I am planning to visit the Channel islands in the early autumn.
    Hon. Members: Hear, hear.
    Mr. Foulkes: I wish the Home Secretary well on his visit. However, is he aware that, when he arrives, he will find that he has stirred up a hornets' nest by, quite rightly, asking the Channel Islands to contribute to the foreign affairs and defence costs of the United Kingdom? While I welcome that, as I am sure many hon. Members would welcome it, in view of the anxiety expressed in the House at the way in which those islands encourage tax dodging, and as we are defending Guernsey in the European Court of Human Rights on a strange decision that it made, would it not be better for the Home Secretary to institute an investigation into the constitutional relationship between those islands and the United Kingdom?
    Mr. Brittan: I see no need for any such investigation. The request that I made for the islands to consider contributing to the United Kingdom costs, not just in respect of defence but in respect of international representation on their behalf, has nothing to do with the other matters that the hon. Gentleman has raised. If what I have done is the work of a hornet, my imagination does not allow me to describe the insect that would be an appropriate description of the hon. Gentleman.
    Mr. Durant: Will my right hon. and learned Friend accept from me that he will receive a nice welcome in the

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    Channel Islands? Will he take no notice of the views of the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) about taxation? The islands are an independent nation in respect of their own taxes. They are allowed to run their own tax system and they should be allowed to continue doing so.
    Mr. Brittan: I am grateful to my hon. Friend for his reassurance. I assure the House that I much look forward to my visit and am heartened by the round of cheers that the announcement evoked.

    Drug Addiction, Hampshire
    Sir David Priceasked the Secretary of State for the Home Department what information he has as to the changes in the level of drug addiction in Hampshire over recent years, and, in particular, whether there has been an increase in the use of heroin.
    Mr. Mellor: As in many other parts of the country, it appears that there has been an increase in the level of drug addiction in Hampshire and that heroin is now more readily available than hitherto.
    Sir David Price: Is my hon. Friend aware that the situation is much worse than appears from the official figures that he gave to my hon. Friend the Member for Southampton, Test (Mr. Hill) yesterday? Is he prepared to initiate joint action by Government Departments and local authorities on a matter which falls between various spheres of authority and clearly needs to be master-minded by someone?
    Mr. Mellor: I agree with my hon. Friend on both points. We acknowledge that the figures for registered addicts underestimate the number of people addicted to opiates to the extent that they should probably be multiplied by five to give an accurate idea of the situation. In exactly the spirit of my hon. Friend's question, my right hon. and learned Friend the Home Secretary is setting up an inter-departmental working group of Ministers, to be chaired by me. We intend to develop Government policy especially on the crucial aspect of co-ordinating the various agencies which must work together if the problem is ever to be defeated.
    Dr. M. S. Miller: Is there not an element of complacency in the Minister's remarks, in view of the enormous increase in addiction to hard drugs in the past 10 to 15 years? Do the Government intend to wait until we reach the situation that obtains in some parts of the United States before action is taken to hammer the problem so that the youth of this country can be protected?
    Mr. Mellor: I do not believe that there is any complacency. If there were, I should greatly regret it, because the last thing that we feel about this problem is complacent. Since the Government took office we have taken a range of initiatives which have led to a dramatic increase in the seizure of heroin. The Misuse of Drugs Act has been amended to control barbiturates, under the schedule. The aim of the working group is to develop our policies. We are in no sense complacent about what we have achieved so far. We wish to build on those achievements, recognising that we are dealing with a serious and deteriorating situation.
    Mr. John Browne: Does my hon. Friend agree that the Government should provide more resources for rehabilitation and consider much harsher sentences for drug trafficking? Will he also investigate accessibility to drugs, including the misuse and abuse of doctors' prescriptions, with a view to tightening controls on the lines of the apparently good control of ammunition and firearms certificates?
    Mr. Mellor: We are taking action on all those matters. There are powers to send drug offenders to prison for a very long time and we propose to take action to allow the courts to deprive traffickers of the proceeds of their crime. On the prohibition of drugs, as I said earlier, barbiturates are now controlled under the Misuse of Drugs Act and we shall continue to take action along similar lines if drugs now freely available become subject to abuse. Firm action will be taken against doctors issuing prescriptions negligently or for ill motives, including prohibiting them from practising while disciplinary proceedings are taking place, if that seems appropriate. I am sure that all those measures will be welcomed by both sides of the House.
    Mr. Kilroy-Silk: What faith can we have in he Government's determination to reduce the flow of heroin into Hampshire and other parts of the country when they have reduced the number of uniformed customs staff by 900 and when the Home Secretary makes a well-publicised announcement in December that he will be sending one full-time customs officer to Pakistan but does not send him there until 13 April and brings him back on 15 May?
    Mr. Mellor: As ever, the hon. Gentleman trivialises the situation. Since the Government took office the number of specialist customs investigators dealing with heroin has doubled. [Interruption.] If the hon. Gentleman will keep quiet, I will give him the answer that he needs. As a consequence, 38 kg of heroin was seized in 1980, 212 kg in 1983 and 193 kg so far this year, including 100 kg in May and June alone. That is a measure of our success, although it also reflects the increase in the amount of heroin coming into the country. That is why we propose further measures. If the hon. Gentleman thinks that simply increasing the number of customs officers in the green channel will help when 40 million people pass through London's airports every year, that is certainly wishful thinking.

    Independent Prosecution Service
    Mr. Watsonasked the Secretary of State for the Home Department when he expects to receive the report from the management consultants who have been investigating the cost benefits of the proposed independent prosecution service.
    Mr. Mellor: The consultants' report is expected early next year. I should make it clear that they are investigating, not the cost benefits of the independent prosecution service, but what structure and working practices it will be most efficient and cost-effective io adopt.
    Mr. Watson: Is my hon. Friend aware that a large number of county prosecuting solicitors feel that they can offer a full and cost-effective service within their existing local responsibilities? Will he therefore do his best to

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    ensure that, under the new national system that he has announced, as great a degree as possible of local control and autonomy will be retained?
    Mr. Mellor: I take my hon. Friend's point. Our intention is not merely to retain the local autonomy which already exists, but to enhance it. We want more decisions to be taken locally.
    Mr. Hirst: In considering the future of the independent prosecuting service in England and Wales, will my hon. Friend take as an example the independent prosecuting system in Scotland that system has existed for many years and commands widespread public support and confidence, not least because it removes the invidious situation in which the police have to lead in prosecutions?
    Mr. Mellor: As ever, my hon. Friend pats his country of origin on the back. On this occasion, I cannot deny the truth of what he says.
    Mr. Ryman: The establishment of the independent prosecution service is to be welcomed, but how much will it cost? If it is to be done properly, huge sums of money will be involved. How do the Government reconcile that fact with their present policy of cutting public expenditure in every sphere?
    Mr. Mellor: We are introducing the new system because we accepted the Royal Commission's view that an independent prosecution service is a crucial safeguard of the integrity of the criminal justice system. We brought in the management consultants to ensure that there is no waste. We believe that liberating police officers currently engaged in full-time prosecutions will be beneficial, and we do not believe that the additional cost of the service will in any sense be burdensome.

    Television Licences (Sheltered Housing)
    Mr. David Atkinsonasked the Secretary of State for the Home Department how many representations he has received about charges for television licences in private sheltered housing.
    Mr. Hurd: We have received rather more than 100 representations from hon. Members, and about 40 from members of the public, about concessionary television licences for retired people in privately managed sheltered housing schemes.
    Mr. Atkinson: Does my right hon. Friend agree that there is an inconsistency, and indeed an injustice, here? In the case of private sheltered housing for the elderly a licence fee is charged for every television set, but a concession has recently been granted to private hotels with up to 15 sets to allow them to pay only one licence fee. Will my right hon. Friend now consider granting the same concession to private sheltered housing for the elderly?
    Mr. Hurd: Under the new arrangements that we propose, hotels which are now in practice paying for only one set will, above the threshold of 15, pay for one set in five. I hope that—in Bournemouth as elsewhere—that arrangement will be seen to be fairer. We are, at the same time, extending the concession to disabled people in sheltered accommodation and to certain types of housing association housing not now covered.
    Mr. Allen McKay: Why does not the Minister grasp the nettle and abolish television licensing altogether for old-age pensioners, with a view to phasing out licences for everybody?
    Mr. Hurd: If we introduced the scheme which the hon. Gentleman suggested in his first breath, the colour television fee for other licence holders would rise to £70 for that reason alone.
    Mr. Chope: Does my right hon. Friend not agree that the introduction of advertising would ensure that the BBC would not have to raise the licence fee and that the cost of living of virtually every family in the country would be reduced by £1 a week?
    Mr. Hurd: That is a wider question, which no doubt we will have other opportunities to discuss.
    Mr. Winnick: We certainly do not want advertising on BBC television or radio. Why can the Government give tax concessions to the richest people in the community—as they have done in four of five Budgets—and yet deny to many people, including the elderly who live on their own, the natural justice of not having to pay the full television licence fee?
    Mr. Hurd: A free licence for all pensioners, such as the hon. Gentleman has consistently argued for, would reduce licence revenue by about £250 million a year—one third of the total. His argument would be more complete if he told us how that money was to be found.

    Coal Industry Dispute
    Mr. Yeoasked the Secretary of State for the Home Department how many police officers have suffered serious injury while on duty in connection with the miners' strike since he last answered oral questions.
    Mr. Brittan: Of 100 police officers injured between 20 June and 17 July, four of the injuries are recorded as being serious.
    Mr. Yeo: Will my right hon. and learned Friend join me in paying tribute to the courage and commitment of police officers who are serving on special duties in connection with the miners' strike? Does he share the growing sense of public outrage that police officers, whose real work should be the prevention and detection of crime, are being put in the front line and receiving violence from politically motivated pickets who are in the pay of Mr. Arthur Scargill?
    Mr. Brittan: I welcome the opportunity to reaffirm my highest regard for the work that the police are doing in this respect. I also welcome the opportunity to repeat that we do not want this to go on for one moment longer than is necessary and that we deeply regret that persistent and organised violence by those who are running the strike has necessitated such a police presence and response.
    Mr. Hardy: Although I regret any injury to police officers and hope that no further injuries will be experienced, does the Home Secretary agree that other people who are involved in the miners' strike have suffered injury or have had unsatisfactory experiences in circumstances that arouse deep concern? In view of that and the need to ensure that relations between the police and the public in the coalfields are satisfactory once again in

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    the future, does he agree that there should be an independent and impartial inquiry into law and order in the dispute?
    Mr. Brittan: I do not accept that. I should accept without hesitation that, if the number of pickets of each place of work were reduced to the six that the National Union of Mineworkers recommended, policemen would not have been injured and nor would anyone else.
    Mr. Favell: Is my right hon. and learned Friend aware that, of the four pits in the Bolsover constituency, three are now working, thanks to excellent policing? Is he able to assure miners at the fourth—the Whitwell colliery—that they will benefit similarly if they wish to return to work?
    Mr. Brittan: The job of the police is to ensure that anyone who wants to work is able to do so and is not prevented from working by bullying or violence. They will continue to do that job everywhere.
    Mr. Barron: Will the Home Secretary be a little more specific? How many police officers were injured at the Orgreave coking plant in my constituency on 18 June? How many miners were injured when they were brutally attacked by some of those police officers?
    Mr. Brittan: I do not have information about miners' injuries, as they are under no obligation to report them to me or anyone else. As to the hon. Gentleman's implied allegation about police conduct, he is entitled to make a complaint under section 49 of the Police Act 1976. No doubt he will do so, in which event it will be considered properly.
    Mr. Mark Carlisle: Does my right hon. and learned Friend agree that one of the disturbing facts is that although a great many people have been charged with offences arising out of the miners' dispute, including offences involving violence, very few cases have been decided by the courts? Does he agree that justice must be seen to be done, and that it must be seen to be done as soon as possible and not several months after the event?
    Mr. Brittan: I agree with my right hon. and learned Friend that it is desirable that cases be brought to court as soon as possible. Delays in bringing people who are charged with criminal offences to trial are always a matter of concern. My right hon. and noble Friend the Lord Chancellor and I are ready to consider what assistance or advice might be given to any court that finds it has an exceptionally heavy load of cases. I know that my right hon. and noble Friend the Lord Chancellor is prepared to meet requests from the courts for the assistance of stipendiary magistrates.
    Mr. Kaufman: the Opposition greatly regret and sympathise with the police who have been injured on the picket line, just as we sympathise with all others who have been injured there, including relatives of the two miners who have died on the picket line. In view of the many allegations about police action on the picket line that are coming forward, is the right hon. and learned Gentleman aware, first, that a public inquiry into what is taking place on the picket lines and into police activity is now essential? Secondly, is he aware that the best way of bringing these incidents to an end is for the strike, which has been deliberately provoked by the Government, to be settled by the Prime Minister?
    Mr. Brittan: As the right hon. Gentleman knows perfectly well that complaints made against the police have not yet been determined, I cannot see how he can possibly say that there is a case for a public inquiry without knowing the results of the ordinary constabulary procedure.
    In relation to the right hon. Gentleman's more general allegation, he might like to consider the point that I put to his hon. Friend the Member for Wentworth (Mr. Hardy). Does he not agree that if the original NUM guidelines for six pickets at any workplace were adhered to, there would be no police, no injuries arid no complaints?

  PRIME MINISTER

    Engagements
    Mr. Nellistasked the Prime Minister if she will list her official engagements for Thursday 19 July.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today.
    Mr. Nellist: Is it not a fact that the Tory Government, having prepared for and provoked the miners' strike in the hope of starving the miners back to work and demoralising other sections of workers, have utterly failed in that intention due to the determination of the miners and their families, and to the support of other working people? Is not the Prime Minister, in her provocative action, heading rapidly towards a general strike, but one different from the general strike that was provoked by her predecessor Mr. Stanley Baldwin in 1926, in that the Labour movement is a hundred times stronger today? Therefore, is not the Prime Minister heading, not for an industrial Falklands but, like a Napoleon, for a political Waterloo?
    The Prime Minister: No, this strike is not of the Government's making. No Government have done more for the mining industry. No Government have ever had such good plans for the future of coal than this one, whether in terms of pay, investment or compensation for voluntary redundancies. That is well known in the industry. With regard to the breakdown of the talks, at the end of last night's talks the only point at issue was the entirely unreasonable demand by the NUM that pits should stay open, regardless of whether they are beneficial to the industry. The NUM leaders must know as well as anybody that no industry can operate on such a basis. No Government could ever accept such a blank cheque upon the taxpayer.
    Sir John Wells: Will my right hon. Friend find time to consider today, against the background of the dock dispute, the vital necessity to maintain a healthy horticulture industry, particularly in perishable fresh food production in this country?
    The Prime Minister: I can understand my hon. Friend's concern for those who are trying to get perishable produce from one side of the Channel to the other, who have been the first to suffer as a result of the dispute. It is ironic that those driving such produce on to the ships across the Channel are members of the same union as the one that called the strike.
    Mr. Simon Hughesasked the Prime Minister if she will list her official engagements for Thursday 19 July.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Hughes: As it has become known that the Prime Minister will tell her Back Benchers tonight that there will be no change in the style and direction of her Government—[Interruption.]—will she tell the House what changes there will be in the overwhelming mandate that she claims for her local government policies when the Tory candidates fight the four GLC by-elections on 20 September?
    The Prime Minister: I really thought that we had done rather well in our style, in winning two general elections and two Euro-elections. With regard to artificial stunts over GLC by-elections, we shall have nothing to do with such gimmicks at the ratepayers' expense.
    Mr. Andy Stewart: Is my right hon. Friend surprised that the Opposition have shown no enthusiasm for Mr. Justice Megarry's decision yesterday in favour of the Nottinghamshire miners, in comparison to their mega-enthusiasm on Monday for Mr. Justice Glidewell's decision?
    The Prime Minister: As I said very firmly on Tuesday, everyone must be subject to the rule of law, otherwise the rule of law is at an end. I hope that everyone will accept that, as I most certainly shall.
    Mr. John Morris: The Prime Minister will recall that on Tuesday she asked an hon. Member to withdraw. Will she use some of her valuable time today to reflect on an answer that she gave to the effect that a decision of Mr. Sam Silkin, a former Attorney-General—no longer in the House—was invalid, when she quoted the words of the Master of the Rolls? Was not that particular decision of the Court of Appeal reversed by the House of Lords and the propriety of Mr. Silkin upheld, particularly by Lord Dilhorne, a former Attorney-General? In the words of Lord Edmund-Davies, any observation by the Court of Appeal questioning the conduct of Mr. Silkin was to be deplored. In those circumstances, will the right hon. Lady unreservedly withdraw any suggestion of impropriety by Mr. Silkin and any suggestion of invalidity over his action?
    The Prime Minister: Most certainly I shall withdraw. I note that Mr. Sam Silkin was wise enough to use the facilities of the law, and to the highest authority.
    Mr. Roger King: In her busy day, has my right hon. Friend received a delegation from Opposition Members, a telephone call, a letter or a kissogram, congratulating her Government on the provision of an extra 250,000 new jobs as a result of her policies?
    The Prime Minister: I think that my hon. Friend is referring to figures given yesterday illustrating that there were about 260,000 new jobs last year and, I believe, also some 330,000 new jobs in the service sector. It is indeed good news, but the reason why unemployment is not falling faster is that the number of people of working age is rising faster than the number of new jobs.
    Mr. Pikeasked the Prime Minister if she will list her official engagements for Thursday 19 July.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Pike: Does the Prime Minister accept that she still has no positive policies to deal with the real problem facing this country and that as a result of the Government's policy, the miners are out, the dockers are out, 3 million people are out of work and the Government were caught out over GCHQ? Unless the right hon. Lady has some real policies to offer, does she not think that the best answer would be "Maggie Out"? Would that not be welcomed throughout the country?
    The Prime Minister: No, Sir. The miners are not out because of Government policies. They have a very good pay offer, excellent investment and compensation that are better than that offered under any previous Government. The miners have been called out—I believe that some of them do not know why, and I believe that many of them would thoroughly like to go back. It is strikes that destroy jobs. Opposition Members support strikes, so it is they who are destroying jobs.
    Mr. Crouch: Does my right hon. Friend agree that one of the worst developments in war occurs when each side digs in and trench warfare results? Does she not think that the time comes when the matter has to be taken out of the hands of the generals by the statesmen? Does not she feel that that is the time when a peace treaty can be drawn up which offers justice for the present and hope and prosperity for the future? Does she not feel that the present conflict in the coalfields——
    Mr. Speaker: Briefly.
    The Prime Minister: No, Mr. Speaker. There have been seven days of talks, which included some 35 hours of discussion. The talks are stuck on one issue. That is the question whether the pits should stay open regardless of whether they are beneficial to the industry. One simply cannot have all pits staying open regardless of whether they are beneficial. It is not fair to Britain. It is not fair to the people who purchase coal. It is not fair to those who rely on reasonable energy costs. In the end the strike will have to be solved by management and work force. I do not think that any person intervening will help that process.
    Mr. Kinnock: Will the Prime Minister recognise that she is totally misrepresenting the position of the talks, the NUM, and the response of the NCB when she makes the claim that no will accept pit closures in any circumstances? The cost of the strike is now nearly £2,000 million. When will she intervene to help a settlement instead of interfering to hinder a settlement?
    The Prime Minister: I understand that it is agreed that pits should close if they are exhausted, that they should close because of geological faults, and that they should close for a third reason. It is over that third reason that the talks have broken down. The NCB has said that pits should not be mined unless they are workable and can be mined beneficially. That is not very different from the tripartite report on "Plan for Coal" which was signed by Eric Varley, the noble Lord Gormley and the noble Lord Ezra, which said:
    "Inevitably some pits will have to close as their useful economic reserves of coal are depleted."
    Does the right hon. Gentleman accept that?
    Hon Members: Answer the question.
    Mr. Kinnock: Does the right hon. Lady not understand that all the arithmetic offered back in March and the arithmetic on which she is now working is redundant? Is

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    she aware that the chairman of the NCB understands, as he said yesterday, that there are changed circumstances, and that as late as 11 o'clock last night the NUM asked that the talks be adjourned and resumed this morning, but that was refused? There are people working for a settlement. Why will she not use her power to create conditions in which a settlement is possible?
    The Prime Minister: Because, as the right hon. Gentleman knows, the talks have broken on one point—the closure of uneconomic pits. I notice that the right hon. Gentleman now wants further talks, if further talks would resolve that one point. But does the right hon. Gentleman accept the tripartite report on "Plan for Coal" which said:
    "Inevitably some pits will have to close as their useful economic reserves of coal are depleted"?
    If so he accepts the closure of uneconomic pits. If so, why was he reported as saying on Saturday that there is no alternative but to fight—all other roads are shut off?
    Mr. Kinnock: I understand the need for talks. In fact, my right hon. Friend the Member for Salford, East (Mr. Orme) has been working for seven weeks to get talks going, against the will of the Prime Minister and in spite of the Government. We understand the need for talks and the need for a settlement. I am going to ask the Prime Minister again not to dodge the question and evade her responsibility—[Interruption.]—but to ensure that she provides the conditions which she has refused to do, in which a settlement on "Plan for Coal", for which we have been asking for 20 weeks, can actually be resolved. Will she understand? Will she work? Will she talk? Will she negotiate? Will she do anything but carry on the destruction that is still her only stock in trade.
    The Prime Minister: I understand the right hon. Gentleman only too well. That is his trouble. Will he say whether he accepts—[Interruption.]
    Mr. Speaker: Order. The House heard the question from the Leader of the Opposition. The Prime Minister is seeking to reply to it.
    The Prime Minister: The right hon. Gentleman referred to "Plan for Coal". I have it here. Will he refer to the tripartite report on "Plan for Coal" signed by Mr. Varley, Lord Gormley and Lord Ezra, which said:
    "Inevitably, some pits will have to close as their useful economic reserves of coal are depleted"?
    Is the right hon. Gentleman's policy the same as, or different from, that of the last Labour Government'?
    Mr. Golding: On a point of order, Mr. Speaker. I believe this to be Prime Minister's Question Time. Now that she sees where real influence lies and where responsibility is accepted, she is turning this into—[Interruption.]
    Mr. Speaker: Order. I must hear the point of order. I cannot hear what the hon. Gentleman is saying.
    Mr. Golding: Can you rule, Mr. Speaker, that this is Prime Minister's Question Time and that the Prime Minister is not entitled to turn it into an evasive Question Time in which she tries to question the Leader of the Opposition?
    Mr. Speaker: Order. The Prime Minister answers questions. [HON. MEMBERS: " She does not."] Order. The Prime Minister answers questions that have been put to her. That is the plain fact of the matter.
    Mr. Maxwell-Hyslop: Further to that point of order, Mr. Speaker. Question Time is not only about asking questions. It is also about hearing the answers to them. May I ask that at Prime Minister's Question Time, you preserve the right of the House to hear the Prime Minister's replies?
    Mr. Speaker: It is getting towards the end of July, but I seek to do that.
    Mr. Heifer: Further to that point of order, Mr. Speaker. It is not only a question of hearing the answers. We should also like to hear the questions.
    Mr. Speaker: I do not think that we need persist with this. I am well aware that Prime Minister's Question Time is rowdier these days than it has been in the past. It is difficult for the Chair to control that. I must leave it to the good sense of the whole House to conduct our proceedings with decorum.
    Mr. Madden: On a point of order, Mr, Speaker. You will recall that on Tuesday the Prime Minister referred to the Cheltenham affair and said:
    "As the Government will be lodging an appeal later today it would be inappropriate for me to make any further comment "—[Official Report, 17 July 1984; Vol. 64, c 171.]
    I understand that on Independent Television news today the right hon. Member for Taunton (Mr. du Cann) referred to the Cheltenham affair as a "hiccup" and went on to say——
    Mr. Speaker: I must stop the hon. Member. What goes on on television is not a matter for me.
    Mr. Allan Roberts: If it is contempt of the House, it is.
    Mr. Speaker: What goes on on television is not a matter for me. The hon. Member knows that I am responsible for what goes on in this House, not for what goes on outside it.
    Mr. Madden: I appreciate that, but I think that it is important for you, Mr. Speaker, to hear what the right hon. Member said.
    Mr. Speaker: Order. It is not a matter for me and I am not interested in it.
    Mr. Eadie: On a point of order, Mr. Speaker. You have already expressed your anxiety about Prime Minister's questions. Will you do something about the trend that Prime Minister's questions are taking, through your powers as Mr. Speaker? Nowadays the Prime Minister tries to show the House that she has the ability to read, and today we had an example of that. The right hon. Lady was guilty of gilding the lily in her description of the "Plan for Coal". Therefore, will you have words with the powers that be about the Prime Minister's attitude at Question Time?
    Mr. Speaker: I cannot be held responsible for anybody's attitudes. I notice that there are no fewer than 104 questions to the Prime Minister, all of which are open questions. The matter is in the hands of the House. If the House wishes to put down definitive questions to the Prime Minister, hon. Members may do so. I have no control over the fact that all of today's questions are open questions.
    Mr. James Callaghan: Further to that point of order, Mr. Speaker. As the Prime Minister now seems to be

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    asking the questions, I wonder whether it would solve the problem if she and my right hon. Friend the Leader of the Opposition changed places?
    Mr. Madden rose——
    Mr. Speaker: If the hon. Member seeks to raise a matter of privilege, he should write to me in the usual way.
    Mr. Madden: On a point of order, Mr. Speaker. I would appreciate your guidance about matters that would clearly be a breach of privilege if said by an hon. Member in the House, but which, according to your recently expressed view, are not a breach of privilege if said outside the House. We seek your guidance as to what the rules of sub judice are when a distinguished and senior parliamentarian, anticipating a decision, said — [Interruption.]
    Mr. Speaker: Order. We have a busy day before us and, as I said earlier, if the hon. Member seeks to raise this as a matter of privilege, he should do so in the normal way and write to me.
    Sir John Wells: Further to your ruling about the open question, Mr. Speaker, would it be more convenient if you took powers to call first those questions to the Prime Minister that were more specific?
    Mr. Speaker: That would have been impossible today.
    Mr. Pavitt: Further to that point of order, Mr. Speaker. Before we had the open question system every other question was transferred to the Department involved. Is it possible to table questions that are not open questions?
    Mr. Speaker: That has always been possible, and a few years ago that was frequently done. It would be much more profitable for the House if definitive questions were put down to the Prime Minister.
    Mr. Harry Ewing: Yesterday I raised a point of order about the failure of the Scottish Office to advise hon. Members when questions were being linked. It would be wrong of me not to place on record today my appreciation of the profound apology that I received from the Scottish Office this morning.
    Mr. Ashton: On a point of order, Mr. Speaker. You have just ruled that the right hon. Member for Taunton (Mr. du Cann) can say things outside the House that he cannot say inside the House——
    Mr. Speaker: Order. I repeat that, if any hon. Member alleges a breach of privilege, he should write to me in the usual way.

Business of the House
3.40 pm
Mr. Neil Kinnock: Will the Leader of the House state the business for next week?
The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): The business until the summer Adjournment will be as follows:
MONDAY 23 JULY — Consideration of Lords amendments to the Health and Social Security Bill.
Motion on the British Steel Corporation (Borrowing Powers) Order.
Motion relating to the Education (Assisted Places) (Scotland) Amendment Regulations.
TUESDAY 24 JULY — Consideration of Lords amendments to the Trade Union Bill.
WEDNESDAY 25 JULY — Proceedings on the Consolidated Fund (Appropriation) (No. 2) Bill.
At seven o'clock the Chairman of Ways and Means has named opposed private business for consideration.
THURSDAY 26 JULY — Motion for the summer Adjournment.
Consideration of any Lords amendments which may be received to the Housing Defects Bill.
FRIDAY 27 JULY — Motion on the Caribbean Development Bank (Further Payments) Order.
MONDAY 30 JULY — Consideration of any Lords amendments which may be received to the Local Government (Interim Provisions) Bill.
TUESDAY 31 JULY — Opposition Day (19th Allotted Day). There will be a debate on an Opposition motion termed "The Shambles of the Government's Economic, Employment and Industrial Policies." [HON. MEMBERS: "Say it again!"] It would sound no sweeter the second time round.
WEDNESDAY I AUGUST—It will be proposed that the House should meet at 9.30 am, take questions until 10.30 am and adjourn at 3.30 pm until Monday 22 October.
Mr. Kinnock: I thank the right hon. Gentleman for telling us the business for next week and until 1 August. Does he know that the Minister of State, Department of Trade and Industry, promised a full debate in the House on the new regional policy before the House rose for the summer recess? If it is impossible to squeeze in such a debate before then, what is the earliest date on which we can have that promised debate?
In view of yesterday's interest rate movements in the London money markets, can the right hon. Gentleman assure the House that if there are further unfortunate increases in lending rates during the next week or so he will ensure that a statement is made to the House? Will he also ensure that a statement is made to the House before the summer recess about the talks with the Argentine Government in Switzerland?
Finally, will the right hon. Gentleman ensure that the Prime Minister is here on 31 July to answer the Opposition motion?
Mr. Biffen: On the final point, my right hon. Friend the Prime Minister needs no challenges from the right hon. Gentleman.
I realise that the House is greatly interested in the Argentine talks, and I shall be in touch with my right hon. and learned Friend the Foreign Secretary to see how best the House may be informed of their progress.
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I realise the anxiety about a possible movement in interest rates and take note of the right hon. Gentleman's concern. I have no doubt that that issue could be included within the ambit of the debate planned for Tuesday 31 July.
As to when we can provide a debate on regional policy, perhaps we might pursue that through the usual channels.
Mr. Michael Fallon: Is my right hon. Friend aware that industrial Teesside is coming to a halt? May we have a debate on the extent to which striking dockers and miners are becoming the mothers and fathers of unemployment in my constituency and other constituencies?
Mr. Biffen: I take my hon. Friend's point. That is a contribution that could help to inject some profound common sense into the debate that is to arise on the Opposition Day on 31 July.
Mr. A. J. Beith: Is it not an exceedingly powerful weapon in the hands of Government that they can free themselves from parliamentary questioning for up to three months, even if the economic or industrial situation worsens drastically in that time? Will the Leader of the House receive favourably requests for a recall of the House if they come from a substantial number of hon. Members from any party to prevent any possible serious worsening of the industrial or economic situation?
Mr. Biffen: The hon. Gentleman is right to draw the attention of the House to the fact that there is a Standing Order that provides that Mr. Speaker can recall the House in circumstances such as those to which he refers.
Mr. Teddy Taylor: In view of the decision of the Common Market Assembly to set up a committee to consider the desirability of bringing in legislation to oblige drivers in Britain and the Republic of Ireland to drive on the right, will my right hon. Friend arrange for the Government to make a statement on their policy on this and say whether such legislation could be imposed by majority vote and whether the veto will apply?
Mr. Biffen: There are more ways of killing that cat than my hon. Friend has suggested, but I shall draw his point to the attention of my right hon. Friend the Secretary of State for Transport.
Mr. Dave Nellist: Before the Government decide to use their troops against the miners and the dockers, will the right hon. Gentleman arrange before the Adjournment for the summer recess for the Home Secretary to explain to the House the deterioration in the standard of police activities against miners, the new curfew arrangements now being imposed against young miners in places such as Fitzwilliam and west Yorkshire, and the nearly 5,000 arrests that have taken place during this dispute? After the summer Adjournment date, the Government have at least three months to do what they wish to do without scrutiny or questions in Parliament.
Mr. Biffen: In a fraternal way, I recommend to the hon. Gentleman the proceedings on the Consolidated Fund (Appropriation) (No. 2) Bill on 25 July.
Mr. Robin Maxwell-Hyslop: Without implying any criticism of my right hon. Friend, because it has been the habit for more years than I can remember, may I put this to him? When he announces public business

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for the coming week, he says what it is, but when it is opposed private business he does not tell the House what it is. We would have a better attendance on the important occasions when we discuss private business if on Thursday my right hon. Friend told the House what the opposed private business was. I should be most grateful if my right hon. Friend would be good enough to consider that point, which I do not think has been raised before.
Mr. Biffen: My hon. Friend speaks with such seeming common sense that I know that there must be powerful arguments against his suggestion. I shall look at the matter and see whether I can help.
Mr. Brian Sedgemore: Is it not time that we had an opportunity to debate the mounting evidence of bribery, corruption and terror in Oman, and the respective roles of the Prime Minister, the Home Secretary and defence chiefs?
Mr. Biffen: The joy of the Consolidated Fund (Appropriation) (No. 2) Bill debate is that it is a menu of many courses. I suggest that the hon. Gentleman tries to serve one.
Mr. Peter Bottomley: Is the debate on 31 July on the economy a substitute for the debate that the newspapers tell us the Opposition have promised on the coal and docks disputes? If it is, may I give notice to my right hon. Friend and to you, Mr. Speaker, that I intend to challenge the Leader of the Opposition to say not only that he condemns violence but that he has asked intimidating——
Mr. Speaker: Order. The question must be addressed to the Leader of the House and not to the Leader of the Opposition or to me.
Mr. Bottomley: Does my right hon. Friend accept, in the terms of that debate, that those who claim to represent the Transport and General Workers Union should speak in that debate as though they represent all of their members and not just their favourite sons?
Mr. Biffen: My hon. Friend shows what a lively occasion that debate will be. Therefore, I hope that every member of the Opposition Front Bench will be there and that none will be deflected by premature holidays.
Mr. Allan Roberts: Has the Leader of the House seen the report in The Guardian and other newspapers today to the effect that the proposals outlined in yesterday's statement by the Secretary of State for the Environment to interfere with local authority capital expenditure may be illegal? Given this Government's record for breaking the law, will he undertake that during the recess those proposals will not be amended and that a moratorium on capital expenditure will not be introduced without the House being recalled or until there is a statement after the recess?
Mr. Biffen: I confess that I have not yet got round to reading The Guardian today, but I shall immediately convey the anxieties expressed by the hon. Gentleman to my right hon. Friend the Secretary of State for the Environment, who can then take them into account.
Mr. John Stokes: As the coal strike is likely to continue for some considerable time,
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will my right hon. Friend ask my right hon. Friend the Prime Minister to consider making a ministerial broadcast next week so that the nation may fully understand all the issues involved?
Mr. Biffen: I shall most certainly convey that suggestion to my right hon. Friend the Prime Minister.
Mr. Don Dixon: May I draw the right hon. Gentleman's attention to early-day motion 867, on national maritime policy?
[That this House, concerned at the loss of 30,000 British seafarers' jobs since 1979 and also the loss of over 30,000 jobs in the shipbuilding, ship repair and marine engineering industry, and recalling that nearly 100 per cent. of the United Kingdom's exports and imports are carried in ships and because shipping, shipbuilding, ship repair and the marine engineering industry still employs nearly 290,000 people, believes that, as an island country, the United Kingdom must retain a ship owning, shipbuilding, ship repair and marine engineering capability, and that that industry must have political and financial support during the current world recession; and therefore calls upon Her Majesty's Government urgently to establish a Cabinet Committee and appoint a Minister of Shipping to oversee and co-ordinate a national maritime policy.]
Given that the importance of shipping has been demonstrated in the past few days and that shipbuilding workers are anxious about the fact that on the instructions of the Secretary of State for Trade and Industry the chairman of British Shipbuilders yesterday withheld information from the Select Committee on Trade and Industry about future plans for British Shipbuilders, may we have a debate on maritime policy before the recess?
Mr. Biffen: I acknowledge at once the importance of maritime policy, but perhaps the hon. Gentleman will consider the advantages offered by the debates on the Consolidated Fund Bill.
Mr. Harry Greenway: As it is now some weeks since the report of the Farm Animal Welfare Council on the slaughter of animals was published, and as there are important implications for slaughtering policy, will my right hon. Friend arrange for an early statement to be made rather than recommend me to go for a debate on the Consolidated Fund Bill? After all, this important matter concerns the country.
Mr. Biffen: I think that my colleagues are undertaking the appropriate consultations at present. But I shall, of course, draw their attention to that point.
Mr. Tam Dalyell: As there are such things as Xerox machines, is it satisfactory that the House should have had to wait until Wednesday to obtain a copy of the judgment of Mr. Justice Glidewell? Should not hon. Members have had that judgment at the time that the Prime Minister was cross-questioned? If we had had it, we would have been able to ask even more detailed questions about what prompted her, on 22 December, to give those instructions to her officials out of the blue, three days before Christmas. We could also have pressed her as to precisely what event caused her to give them.
Mr. Biffen: I shall, of course, look into any problems about the speed with which documents can be made available. I shall see what can be done to help.
Mr. Ian Lloyd: Does my right hon. Friend expect the Government to make a statement before the summer recess on the publication of the report of the Civil Aviation Authority on the reorganisation of British airlines?
Mr. Biffen: I am not in a position to answer that question, but I shall draw the attention of my right hon. Friend the Secretary of State for Transport to the interest shown in that report.
Mr. Donald Coleman: As a result of the drought, a very serious situation now exists in Wales, and particularly in south-east Wales. It is exacerbated by the fact that plans have not been implemented to deal with such droughts. Will the right hon. Gentleman arrange for the Secretary of State for Wales to make a statement to the House next week on the desperate situation in Wales?
Mr. Biffen: I shall certainly draw the attention of my right hon. Friend the Secretary of State for Wales to that request.
Mr. Patrick Nicholls: Has my right hon. Friend had a chance to consider the findings of the Warnock report? In view of the grave moral and ethical implications of that report, will he arrange an early debate so that the issues may be discussed?
Mr. Biffen: It so happens that I have with me Hansard of 18 July last, at columns 203–4 of which was given the most comprehensive answer to that question.
Mr. Robert N. Wareing: In view of the overwhelming support in the country, and especially among disabled people's organisations, for the Chronically Sick and Disabled Persons (Amendment) Bill, which I introduced last November, and in view of the fact that in the other place it received support through all its stages there, will the Government now restore at least a little of their honour and allow a proper Second Reading to take place and a decision to be made by this House on my Bill on 27 July? Failing that, will the right hon. Gentleman have words with his immediate superior and ask her whether any opportunity is likely to occur for my Bill before we prorogue?
Mr. Biffen: I have no proposals to provide privileged status for any private Member's Bill on 27 July.
Mr. John Watts: Will my right hon. Friend impress on the Secretary of State for Transport the urgency of having a debate on the Civil Aviation Authority report on airline competition policy in view of the threat which some of the proposals in that report pose to the livelihood of many of my constituents who work for British Airways, in particular the proposal to transfer a chunk of its business to other British airlines?
Mr. Biffen: I note — indeed, wholeheartedly acknowledge—the validity of the points that my hon. Friend makes. Although I realise that this proposition may sound a little threadbare, the Consolidated Fund Bill would give him the chance to make precisely the arguments that he wishes to adduce.
Mr. Jeremy Corbyn: Does the Leader of the House not think it disgraceful that no serious debate on foreign policy is planned between now and the recess? What plans does he have to ensure the correctness of the Government's position on arms sales and policy in
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central America should the Americans decide to invade Nicaragua between now and the resumption of Parliament in October?
Mr. Biffen: I join the hon. Gentleman in regretting that the pressure on time and business is such that we cannot have a further debate on foreign affairs so soon after the last one, but I shall refer the points he makes to the Foreign Secretary.
Mr. Tony Marlow: As I am sure that my right hon. Friend is very much in favour of effective democratic legislative control over Executive power, will he give an undertaking that we shall not again have to go through that which happened last night, when an important and sensitive measure having a major impact on the well-being and livelihood of thousands of British farmers was debated for only three hours after midnight, without the possibility of many points being put forward and without the possibility of any amendment being made; or is he prevented from giving such an undertaking by the European Communities Act?
Mr. Biffen: No, but we must recognise that the debate last night was but one of several that have taken place on this topic. It is a matter of major significance, and I appreciate that as much as anybody, given my constituency interest.
Mr. Nicholas Winterton: I did not speak either.
Mr. Biffen: I am sorry that my hon. Friend did not speak. His views, nevertheless, were vigorously communicated in the short and succinct fashion of that interruption.
I assure my hon. Friend the Member for Northampton, North (Mr. Marlow) that there is nothing novel about the use of statutory instruments for issues of this kind. I hope that the House will not disparage the idea that, because business is transacted late at night, it is treated as being second class. Historically, many of the most important decisions have been conducted in those circumstances.
Mr. John Evans: May I bring to the attention of the Leader of the House the widespread concern and dissatisfaction about the apparent haste with which decisions on the travel-to-work areas of Great Britain are being rushed through without any real consultation with local authorities or hon. Members? Will he ensure that these changes are not made until the House has debated them if necessary, after the recess?
Mr. Biffen: The hon. Gentleman raises a serious point. I shall be in touch with my appropriate right hon. Friends to see what can be done to meet it.
Mr. Peter Bruinvels: Is my right hon. Friend aware that many lives have been lost on unlit parts of Britain's motorways? A great deal of anxiety is felt throughout the country and on both sides of the House about the matter. I and the hon. Member for Hamilton (Mr. Robertson) produced a pamphlet called "Light up the Roads", and the hon. Member for West Bromwich, West (Miss Boothroyd) reviewed the problem in "The House Magazine". Because fatalities on Britain's motorways at night cost £200,000 per accident, will my right hon. Friend arrange for the Secretary of State for Transport to make a statement in the House on this important subject?
Mr. Biffen: The best encouragement that I can offer my hon. Friend is to say that he should convert his pamphlet into an Adjournment debate.
Mr. D. N. Campbell-Savours: Following revelations about the suspicious circumstances surrounding the death of Mr. Robin Edgar Walsh in a prison in Oman in July 1983, will the Leader of the House arrange for a full statement to be made by a Foreign and Commonwealth Office Minister? Will the right hon. Gentleman ask for a statement from the Home Secretary about why, in the case of Mr. Robin Edgar Walsh, the Home Secretary used an exemption certificate for the clearance of the remains when it is maintained that the right hon. and learned Gentleman should have followed the procedures set out in the Coroners Act 1887 which would have provided for a full investigation into Mr. Walsh's death?
Mr. Biffen: I shall, of course, take up that matter with the relevant Minister in the Foreign and Commonwealth Office and with my right hon. and learned Friend the Home Secretary.
Sir Dudley Smith: When the House returns in the autumn, will my right hon. Friend use his undoubted influence with the Government Front Bench and, through the usual channels, with the Opposition Front Bench to limit Front-Bench speakers to speaking for half an hour or less in other than major debates such as on Supply Days? Is my right hon. Friend aware that last Friday the two Front-Bench speakers took up the best part of two hours in opening the debate, and therefore effectively killed it? Many right hon. and hon. Members on both sides of the House are becoming exceedingly tired of that practice.
Mr. Biffen: I have great sympathy with what my hon. Friend said. I have no doubt that his point will be marked and will be read in Hansard.
Mr. Michael Meadowcroft: Recalling the sympathetic comment a few moments ago from the Leader of the House about the lack of a debate on foreign affairs, is the right hon. Gentleman aware that the talks in Berne with the Argentines about the future of the Falkland Islands have broken down because of the refusal of British representatives to discuss sovereignty? Is it not therefore imperative that there should be a debate in the House forthwith on the future of the Falklands?
Mr. Biffen: I imagine that the hon. Gentleman heard the answer that I gave to the Leader of the Opposition on that topic. That matter is under immediate and active consideration.
Mr. Nicholas Winterton: Will my right hon. Friend find time, if not before we rise for the summer recess then shortly afterwards, to debate the interesting Public Accounts Committee report on the investment by this country of substantial funds in the De Lorean enterprise in Northern Ireland? The report's findings were highly critical of the Government and Ministers, and I believe that it merits a full debate in the House. Will my right hon. Friend, bearing in mind my involvement in that affair, find time to enable many of us who have been done by very badly by the Government to put the truth of the case to the House and the nation?
Mr. Biffen: My hon. Friend, more than any other person, is entitled to make that request. I believe that there
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is a convention governing the debating of reports of the Public Accounts Committee, and within that convention I shall consider my hon. Friend's request.
Mr. Robert Parry: The Leader of the House will have seen early-day motions 547, which is supported by 59 hon. Members—
[That this House congratulates the Democratic People's Republic of Korea for calling for tripartite talks with the Governments of South Korea and the United States of America for the peaceful re-unification of Korea; and, as this is the official policy of Her Majesty's Government, calls upon the Foreign Secretary to use his influence with the American Secretary of State to help realise the aspirations of all Korean peoples for a free, independent and united Korea.]—
and 743, which is supported by 90 hon. Members—
[That this House welcomes the statement by Pope John Paul II supporting the peaceful re-unification of Korea; notes that this is the official policy of Her Majesty's Government; and calls upon Her Majesty's Government to support the call for tripartite talks between North Korea, South Korea and the United States of America, for the withdrawal of the 40,000 United States troops based in the South and for the removal of all nuclear missiles which will help to realise the aspirations of all Korean peoples for a free, independent and united Korea, and for the cause of peace and détente in the Far East.]
They deal with the peaceful reunification of Korea. As reunification is the Government's official policy, will the leader of the House ask his right hon. Friends to conduct discussions with the American Secretary of State to ascertain whether we can achieve that aim?
Mr. Biffen: I shall certainly pass on that request.
Mr. Chris Smith: Is the Leader of the House aware that the Secretary of State for the Environment has said that he will be making a statement to the House before the recess on those local authorities that he intends to designate under the Rates Act? Will the Leader of the House make time for a proper and full debate on that designation list rather than have simply half an hour of questions on a statement made by the Secretary of State for the Environment?
Mr. Biffen: There is much virtue in the House rising on Wednesday 1 August, and I have established a programme which fully extends us until that date. I hope that the hon. Gentleman understands that a vigorous Question Time is one of the real advantages for the House.
Mr. Greville Janner: Will the right hon. Gentleman give time for a debate on the manner in which nuclear weapons are transported from one part of the country to another, especially the circumstances in which nuclear weapons were recently taken through Leicester during the rush hour without warning to the police and fire authorities? If the right hon. Gentleman proposes to reply that I should raise this matter during the debate on the Consolidated Fund Bill, will he give some assurance that the Government will provide an answer to my questions rather than a series of refusals to answer, which I have so far received when raising this matter which is of great concern to all the citizens of Leicester?
Mr. Biffen: I am sorry, but such is the nature of this world that the hon. and learned Gentleman must take his chance on both the timing and quality of the reply.
Mr. David Winnick: If it is true that the Prime Minister decided that the recess should be earlier than originally planned so that she would have one less headache, does the Leader of the House accept that as long as the economy is in its present state, with industrial disputes in the mining industry as well as in the docks, it would be wrong for Parliament to be away for 2½ months? Will he therefore recognise that, as long as those conditions prevail, there will be much pressure for the House to be recalled?
Mr. Biffen: The hon. Gentleman said rather less elegantly what was said by the hon. Member for Berwick-upon-Tweed (Mr. Beith), and I shall reply with equal charity.
Mr. Eddie Loyden: Although I accept the right hon. Gentleman's eagerness to tell us about the opportunities provided by the Consolidated Fund Bill — of course, it is not necessarily a panacea for dealing with all the frustrations that hon. Members feel when raising questions—will the right hon. Gentleman give consideration to the House debating the docks dispute before it adjourns?
Mr. Biffen: If the dispute is still in progress at the time of the Opposition Day debate, it must be central to that occasion.
Mr. Richard Holt: Is my right hon. Friend aware that many of us are worried that British citizens remain incarcerated without charge or trial in Libya and that it is time that a statement was made in the House to bring some form of moral pressure to bear on the regime in Libya to get our citizens out of gaol and bring them back to this country?
Mr. Biffen: That is a very serious point, and I shall refer it to my right hon. and learned Friend the Foreign and Commonwealth Secretary.
Mr. Tony Lloyd: Given the Prime Minister's clear indifference to the dispute in the mining industry and her determination not to involve herself in bringing the dispute to a quick end, will the Leader of the House pay serious attention to the need to hold a full debate on the financing of the police operation in the dispute, especially its crippling impact on local, county and police authorities such as those in Greater Manchester?
Mr. Biffen: I am sure that the hon. Gentleman would not expect me to endorse his remarks and the premise to his question about my right hon. Friend the Prime Minister. I understand the seriousness of the issue that he raised, but I must point out that we have a very crowded programme of business already, and I cannot add to it.

Consolidated Fund (Appropriation) (No. 2) Bill and Oral Questions
Mr. Speaker: I have two statements to make. The first is about the debate following the Consolidated Fund.
The debate on the motion for the Adjournment will follow the passing of the Consolidated Fund Bill on Wednesday 25 July. Hon. Members should submit their subjects to my office not later than 9 am on Tuesday 24 July. A list showing the subjects and times will be published later that day. Normally the time allotted will not exceed 1½ hours, but I propose to exercise a discretion to allow one or two debates to continue for longer, up to a maximum of three hours. Where identical or similar subjects have been entered by different hon. Members whose names are drawn in the ballot, only the first name will be shown on the list. As some debates may not last the full time allotted to them, it is the responsibility of hon. Members to keep in touch with developments if they are not to miss their turn.
My second statement is about the tabling of oral questions. The details of the implications of the announcement by the Leader of the House on the dates for giving notice of questions are available in the Table Office. I have directed the Table Office to hold a shuffle for questions this evening at 6 o'clock instead of the customary 4 o'clock.

Film Industry (Policy)
4.10 pm
The Minister for Information Technology (Mr. Kenneth Baker): With permission, Mr. Speaker, I should like to make a statement about the British film industry.
The British film industry is undergoing a renaissance. We are fortunate to have so many talented producers, writers, directors, actors and outstanding technical skills in film-making. Several companies in Britain have achieved commercial success in quality films. Channel 4 has effectively encouraged the thriving independent production sector.
However, cinema attendances have continued to decline dramatically. From an annual average of 338 million in the 1960s they have dropped to 66 million in 1983. In the same period the number of screens declined from some 3,000 to 1,300. Against that background we have drawn up the following proposals which are contained in the White Paper published today.
Our first and most important conclusion is that the outdated Eady levy on cinema receipts must be ended. Introduced to recycle money from the cinemas to the producing companies it has become an extra tax on seats which cinemas cannot afford. Its revenue in real terms has fallen by six sevenths. It is an elaborate and unfair burden on the industry's weakest sector. The Government propose to bring in legislation to end this in 1985, and at the same time to wind up the British Film Fund Agency, the Cinematograph Films Council, and the National Film Finance Corporation. The legislation will also repeal eight Acts of Parliament and 25 statutory instruments relating to films.
I have considered carefully the case for extending an Eady-type levy to television or to videos. I am, however, convinced that no sort of recycling mechanism is sensible. A levy on TV could lead to an increase in the BBC licence fee and ITV companies are already paying a subscription to Channel 4 which will be financing film-making at a level of about £8 million a year. In their review of copyright the Government are still examining the question of a levy on blank video and audio tapes to protect copyright owners and we intend to invite further comments on this. I have been able to make satisfactory arrangements to replace the money which the Eady levy raised.
Revenue from the Eady levy has in the past provided finance for the NFFC, which has done valuable work to encourage emerging young talent in the British film industry. It has contributed to many notable films including "Gregory's Girl" and "Another Country" and fostered talent which has come to the fore in such international successes as "Chariots of Fire" and "Local Hero". The valuable contribution made with Eady levy finance will in future be secured by a new company in the private sector whose shareholders will initially provide contributions of over £1 million annually. The Government, in addition, will make £1·5 million a year available for five years to co-finance low and medium-budget films to be made in Britain. A further £500,000 a year for five years is to be made available to help in the early stages of the development of film projects. The new company will therefore be able to deploy more than double the resources that NFFC has had in recent years. It is an important new deal for the British film industry.
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The National Film and Television School is well respected, and enjoys an international reputation. We have secured independent funding for five years which will more than replace the current level of the Eady contribution. Lord Wilson of Rievaulx and the interim action committee on the film industry recommended updating the equipment at the school and the Government will provide £250,000 for this purpose in 1985–86.
The British Film Institute Production Board also receives a small Eady contribution and I propose, in consultation with the Cinematograph Films Council, to see whether a final payment out of the Eady levy can be made.
During the passage of the Finance Bill through Parliament, my right hon. Friend the Chancellor of the Exchequer made two amendments specifically to help the film industry. First, qualifying investment in film projects will now come within the scope of the business expansion scheme. This will be a valuable incentive to equity investment in film and will help the small producers who have lately gained the confidence of the City.
Secondly, in addition to the measures announced in the Budget, my right hon. Friend has announced that films will have a further option to write off expenditure on a cost recovery basis against income as it arises, instead of spreading it over the income-producing life of the film. The industry will therefore not normally pay tax on its profits until all expenditure has been written off. This will give greater certainty for those investing in films.
I am very pleased that the industry is pressing ahead strongly with plans for British film year in 1985. This will focus attention on film in education and industry as well as in entertainment. In particular it will aggressively promote the sales of British films overseas.
Our policy is to free the film industry from Government intervention and from an intrusive regulatory regime dating from the days of the silent films. Our policy will clear the way for the industry to operate in a more confident framework and to consolidate upon its success.
Mr. Bryan Gould: Is the Minister aware that this long-delayed statement marks a black day for the British film industry? His failure to take the opportunity offered him by his review to place the industry's finances on a sound basis comes as a further body blow to an industry already sadly damaged by the Chancellor's withdrawal of capital allowances.
Does the Minister recognise that his refusal to extend the principle of the Eady levy to television and video, which are of course the modern equivalent of the cinema box office, means that he has failed to provide a reliable source of finance upon which expansion can be based? The money that is to be contributed by television and video is pitifully inadequate, conditional and guaranteed for three years only. It would be helpful if the Minister would confirm that latter point. It in no way meets the debt that those industries owe the film industry. It will, in any case, largely be money that they would have spent for their own purposes.
Will the Minister give an assurance that his failure to implement a levy on video cassettes does not mean that he has closed his mind to the introduction of some levy as a solution to the problems of the music industry? Will he guarantee that that industry will not have to suffer the same damaging delay as has caused such confusion and uncertainty in the film industry?

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Does the Minister accept that the demise of the National Film Finance Corporation, which has done such good work with such limited resources, will be bitterly regretted by all those who care about the future of the British film industry?
This privatisation, like so many other privatisation measures, surely cannot be explained, even at a time of financial crisis, by the need to save the small amount of public money involved. It clearly arises from misplaced ideological zeal for turning the future of the industry over to market forces despite the fact that, as the Monopolies and Mergers Commission found, nothing remotely resembling a free market exists in this area.
Finally, does the Minister understand that he cannot, in good faith, express pride in real achievements such as "Chariots of Fire" and "Gregory's Girl" while at the same time announcing a policy that will inevitably bring much closer commercial and cultural surrender to the Americans, which will threaten the whole future of a valuable British industry?
Mr. Baker: The hon. Gentleman did not pay much attention to what I said, and his speech must have depended upon the rather inaccurate leaks that have occurred during the past few days. He should have appreciated that the amount of money that the National Film Finance Corporation has had available to it over the past few years is between £1 million and £1·3 million. The proposals that I have put before the House will increase that to about £3 million a year over the next five years. That is a combination of public and private sector money.
I am not persuaded that a levy on video cassettes and blank tapes which will be recycled from one end of the industry to another is appropriate for this or any other industry. I have said in the White Paper and in my statement that the Government are still examining the question of a levy on blank video and audio tapes.
In the copyright Green Paper published in 1981, the Government came down against such a levy, but since then we have received many representations and it is clearly a matter of great interest. We are saying that we will have a further consultative period. It is an issue that evokes strong feelings both ways. There is a lobby that is completely opposed to a levy on blank tapes—roughly the consumer interest; there is a lobby that wants a levy on blank tapes—the copyright owners, the record and film companies. It is a complicated matter and the issue must be put in the public arena for debate. We are preparing to do that later this year and early next year. At the same time, the Common Market will be producing a Green Paper.
I emphasis that our consultations about a blank tape levy will be for copyright purposes—that is, to protect copyright owners, not to recycle funds, as I believe that the system of recycling money from one end of the economic process to the other is entirely inappropriate.
Mr. Roger Gale: Is my right hon. Friend aware that the abolition of the Eady levy is likely to be the kiss of life for many small cinemas and will be especially welcome to a constituent of mine who runs an excellent establishment at Westgate-on-Sea? Is he further aware that the injection of Government and other money into a new company is likely to be extremely attractive to the independent production industry? On my reckoning, about £3 million a year is to be made available. May we
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have an assurance that that money will not have to be used exclusively for film finance but can be used to service loans, which can provide far greater sums for small independent cinema and television production?
Mr. Baker: Grants will be made available to the successor to the NFFC and must be used to promote and develop low and medium budget films. How that is done will be up to the management of the company, but I emphasis that funds will be available on a greater scale than the NFFC has enjoyed for many years. The new company will take over from the NFFC and we imagine that the date of transfer will be some time in the late summer or autumn of next year.
Mr. Clement Freud: The film industry will welcome the Minister's announcement of business expansion scheme contributions for that industry, but is he aware that the White Paper still causes considerable fear in the industry and that he should not take too much pride in creating a pigmy to replace a dwarf? How will artistic film-makers be encouraged to contribute in an industry ever more geared towards the commercial and the pornographic? Will the Minister promise to use his best efforts to allow the House to debate this important subject?
Mr. Baker: As the hon. Gentleman knows, the latter point is a matter for my right hon. Friend the Leader of the House, but I should be very happy for a debate to take place.
On the artistic and cultural element, we have specifically provided a fund of £500,000 per year for film project development.
Mr. Freud: That is peanuts.
Mr. Baker: It is about twice what is now available. That money will be available for teams of young script writers, producers and directors to work out ideas. The British Film Institute Production Board also makes films of particular cultural interest and the White Paper package provides funds for that work to continue.
Mr. Tim Brinton: I welcome much of the White Paper, but I feel that it does not go far enough. Did my right hon. Friend consult the report of the Select Committee on Education, Science and the Arts, on which I served in the last Parliament, which dealt with the film industry in some detail? Did he also consider the enormous importance of uniting Government responsibility for film, television and most of the performing media in one Department and removing the present muddles?
Does my right hon. Friend agree that the main problem for the feature film industry in this country is its lack of attractiveness to high-risk capital from British investors? Does he further agree that the White Paper proposals do not go far enough towards creating a fund? My right hon. Friend has given reasons for rejecting the idea of an Eady levy on television programmes, but did he fully consider that simply collecting ½p per estimated viewer of each feature film shown on television could produce a fund of £20 million to protect and attract investors?
Mr. Baker: There has been a substantial increase in investment in films—a trend which continues strongly this year. Since the terms of the Budget became known, Goldcrest has been able to go to the market to raise more than £12 million for investment in films and Thorn EMI is investing between £20 million and £25 million in new

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films this year. There is a flow of money back into films as an investment, but we do not want a return to the days when many people invested in films through what can only be described as highly imaginative financial dealings—the main interest was tax avoidance rather than investment in film—because one cannot build a strong, vibrant and confident industry on that basis.
As for a television levy, I believe that my hon. Friend underestimates the extent to which television is going into feature film-making. Channel 4 has spent £8 million this year in the independent production sector and several of the large independent companies are making feature films for the first time. I hope that my hon. Friend will appreciate that that is a significant increase in British feature film-making in the television sector.
Mr. Tom Clarke: Is the right hon. Gentleman aware that Members of Parliament who have waited two years for his statement will be as disappointed with it as the film industry, because it is utterly inadequate to produce the investment that the industry needs? Is he aware that he has taken away the Eady levy without putting anything substantial in its place and that the Government's attitude is reflected in the very small amount of money being given to the British film year? Will the Minister give us the figures?
The Minister suggested that my hon. Friend the Member for Dagenham (Mr. Gould) had relied on leaks for his information. Does he think that Mr. Hassan depended on the same leaks when he resigned from the NFFC, given that most of his predictions proved to be entirely correct?
Mr. Baker: His predictions did not prove to be correct. Mr. Hassan resigned from the NFFC because he wanted to go into private film production, which is an expression of great confidence on his part. I have spoken to Mr. Hassan, for whom I have a high regard, and I am sure that he will be very successful in his career in promoting and developing the private film industry. He announced his intention to go into private film production two or three months ago. At that time he said that he regarded the £1·5 million then available to the NFFC as too small. It has now been doubled. The hon. Gentleman suggests that the industry will be disappointed with the proposals, but to me all the signs have been that it is far from disappointed with them.
Mr. Jeremy Hanley: Is my right hon. Friend aware that I welcome his statement and his confidence—in my view well placed—in the British film industry and in the role of the local cinema, which has had a tough time of late? May I urge him, however, to give the earliest possible consideration to the case for a levy on blank audio and video tapes to protect those who suffer regular institutionalised theft of intellectual property?
Mr. Baker: My hon. Friend puts the case well. It is essentially a copyright case, but there are arguments on the other side. We have had many representations from consumer interests who object to having to pay extra for blank tapes just as they would object to paying a television levy of ½p or 1p per viewer for the screening of films. We must balance the differing points of view. We shall be setting out the case for and against and also the complexity
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of the scheme. It is relatively easy to collect a great deal of money from a levy on blank tapes. It is infinitely more difficult to distribute it and to find a fair way of determining how many times a tape has been listened to at home or how many times a film has been copied. There are genuine administrative problems of fairness and equity in such a system.
Mr. John Fraser: Why are the Government allowing the video industry to export millions of pounds of profit to Japanese manufacturers without recycling some of the profits on video hire to the film industry? Is he aware that video hire is emptying the cinemas and involves a great deal of counterfeiting without recycling much money back into film-making?
Mr. Baker: It is a curious concept that one should impose a levy on the hardware of an industry and recycle the proceeds to another part of the industry — production. The development of the video industry, the cable industry and DBS will provide new opportunities for the producing side of the film industry. About 150 quality films are made in the English language each year and there is a demand for at least double that number. The demand is the result not just of the cinema but of television, video and DBS. I am sure that the British film industry—with the talents at its disposal and the support that I have given it today—will be able to make use of that opportunity and make many more films to meet the demand.
Mr. Tim Smith: My right hon. Friend's commitment to the National Film and Television School in Beaconsfield will be very welcome, but could he expand on his statement that there will be independent funding for five years? What form will the funding take, how much money will there be and what will happen after the five-year period?
Mr. Baker: The National Film and Television School at Beaconsfield has an international reputation for excellence, and we should be proud of it. I realise that it is in my hon. Friend's constituency. The school receives just over £500,000 a year from Eady. I have secured undertakings for £600,000 for the next five years. In addition, I will provide a grant of £250,000 next year to re-equip the school for the production of films.
Mr. Chris Smith: The Minister has not referred to the need to save and preserve the archives of historic film held by the institutions that he intends to abolish or privatise. Much of that material is rapidly and dangerously deteriorating. Will the Minister assure the House that he will consider this major problem and that, when he brings forward the legislation, he will take steps to tackle the issue?
Mr. Baker: That is an important point. The role that the hon. Gentleman urges me to take on is very well fulfilled by the British Film Institute, which, in the course of the past 18 months, has raised substantial sums of money to preserve film. One of our oil companies is also providing substantial funds for the re-recording of the black and white films of the '20s and '30s.
Sir Kenneth Lewis: As one who occasionally goes to see a film, and who spends much more time switching off American rubbish on the television—there is far too much of it—I am glad that my right hon. Friend has done something about the industry. He is the first Minister to do so. The Opposition

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have been somewhat churlish in their response to his statement. I have the impression that many talented British producers and directors have difficulty in finding support and money, and have to turn to other countries such as America. I believe that "Chariots of Fire" faced that problem. How will the Minister's proposals help the independent producer, who is not helped by the big distributors, by giving him the support that has been lacking in the past few years?
Mr. Baker: I thank my hon. Friend for his kind words. He is quite right. The independent producer is one of the most important elements in British film-making. Independent producers have been very creative, and there is much talent in our country at the moment. My proposals will help the independent producers in several ways. First, they will enable films to benefit from the business expansion scheme. Investors will be able to invest up to £40,000 a year in film projects and receive the tax benefits individually. The industry has pressed me for that innovation again and again, and I am glad that the Chancellor, in the Budget, extended the business expansion scheme to that area.
The successor to the NFFC, on which the Opposition have poured scorn, will have available at least £3 million a year, or possibly more, for low-budget and medium-budget films. Traditionally, those films are the most difficult to finance. It is relatively easy to raise large sums of money to make a new James Bond or Walt Disney film, but much more difficult to raise money for "Local Hero", or a film about two people running in the 1924 Olympics. My proposals will make it easier for young producers—in particular the producers of short films, as making short films provides useful experience — to get into the business.
Dr. Norman A. Godman: Anyone who has seen "Gregory's Girl" and "Local Hero" will acknowledge that there is much film-making talent in Scotland. How will these proposals encourage such talent in Scotland and in other communities physically far removed from London? Will such talent and potential talent have equality of opportunity?
Mr. Baker: Creative talent in Scotland is not limited to the film industry, but some strikingly successful young producers and directors happen to have come from Scotland. They have been helped through the NFFC and will continue to be helped by its successor. I am sure that there are many more talented people where they came from.
Mr. Mark Fisher: How can the Minister of State, with a straight face, talk about freeing the industry from Government interference, when he knows that the industry has suffered from terminal neglect by Governments of both parties for most of the past 30 years? The financial package that he has announced and the changes in the Budget do not provide a secure financial base for profitable and innovative industry for which the Financial Secretary promised support during discussion of the Finance Bill. Does not that mean that the Government will be virtually the only Government in Europe—either East or West — who do not support a national film industry or recognise that the national Government have a responsibility to do so? The Minister's statement does not announce the renaissance of the industry. The right hon. Gentleman is sounding the death knell for everything other than the purely commercial side of the industry. He has done nothing to help a film industry which reflects the culture of this country. The statement is a disgrace.
Mr. Baker: The hon. Gentleman cannot have heard what I have just said. We are abolishing the fiddly and intrusive regulatory regime. We are abolishing three quangos, and repealing eight Acts of Parliament and 25 statutory instruments. At the same time we are providing a framework within which more money can flow from the private and the public sector into the creative side of the film industry, about which the hon. Gentleman is so concerned. I believe that all areas of the industry will be grateful for the proposals.
I am also relieving the cinemas of a tax on cinema seats which amounts to some £4·5 million a year. I hope that that change will make cinemas more attractive. I hope that they will become places where one can take the family.

Housing Benefits
4.38 pm
The Minister for Social Security (Dr. Rhodes Boyson): I beg to move,
That the draft Housing Benefits (Increase of Needs Allowances) Regulations 1984, which were laid before this House on 6th July, be approved.
I hope that it will be for the convenience of the House if, in dealing with these regulations, I also mention the prayers on housing standing in the name of the Leader of the Opposition:
That an humble Address be presented to Her Majesty, praying that the Housing Benefits (Miscellaneous Amendments) Regulations 1984 (S.I., 1984, No. 941), dated 5th July 1984, a copy of which was laid before this House on 6th July, be annulled.
That an humble Address be presented to Her Majesty, praying that the Housing Benefits Amendment (No. 3) Regulations 1984 (S.I., 1984, No. 940), dated 3rd July 1984, a copy of which was laid before this House on 6th July, be annulled.
That an humble Address be presented to Her Majesty, praying that the Housing Benefits (Subsidy) Amendment Order 1984 (S.I., 1984, No. 1001), dated 17th July 1984, a copy of which was laid before this House on 17th July, be annulled.
Mr. Deputy Speaker: If that is the wish of the House.
Dr. Boyson: Four separate statutory instruments dealing with housing benefits are covered in this debate. The first two of these—the Housing Benefits (Increase of Needs Allowances) Regulations and the Housing Benefits (Miscellaneous Amendments) Regulations—are concerned with uprating. The Housing Benefits (Increase of Needs Allowances) Regulations put into effect the Government's proposals for increasing the needs allowances which were set out in the statement which my right hon. Friend the Secretary of State made to the House on 18 June. With the exception of the needs allowance addition for a dependent child, which I shall come to shortly, the needs allowances are to be increased by the usual formula—by 4·8 per cent. The needs allowance for a dependent child will be raised by 50p more than is required to maintain its value and as my right hon. Friend made clear in his statement on 6 February, we also propose, and regulations will be brought forward later, to give a further increase of £1 from April 1985. That will mean an overall rise of over 16 per cent. since November 1983, a real help to low income families with children.
The old and new rates of all of the amounts are set out in the Housing Benefits (Miscellaneous Amendments) Regulations and will apply from November. In all cases, they have been uprated in line with the traditional formulae and in one case by significantly more. We are providing for the total disregard, in the calculation of housing benefit, of any living away from home allowance paid by the Manpower Services Commission. This allowance is currently £40 per week and, at present, the amount that is ignored is £15. This is a considerable improvement which will help all those who have to live away from home while attending training courses run by the commission.
I should also mention the principal earner's disregard. This is the amount of the claimant's earnings that is ignored when calculating entitlement to standard housing benefit. The disregard is intended to take account of the extra expenses of going to work, such as income tax, national insurance and fares. It is calculated in such a way that those work expenses are exactly covered at the point where a person's income net of those expenses equals the
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single person's needs allowance. The traditional formula produces a new rate of ·17 as opposed to the current rate of £17·45. The formula works both ways. In 1981, when tax allowances were not increased, the disregard leapt from £9·60 to £15·25. The reduction this year is due to the fact that personal tax allowances were increased ahead of inflation in the last Budget. I want to make it clear that this does not mean that wage earners on housing benefit will receive 45p less in benefit. Because of the way in which housing benefit is calculated, for most wage-earners the effect on benefit will be in the range of 4p to 17p and this will in all cases be far outweighed by the increases in the needs allowances. All wage earners will therefore get more benefit at the 1984 uprating, on top of the higher personal tax allowances which have also been in effect since April.
The main changes in the Housing Benefit Amendment (No. 3) Regulations are the second phase of the package of measures that was previously announced to restrain the rate of growth of the social security budget. The House has had several debates on these issues. The first stage took effect in April and the second stage measures will come into effect in November.
I should like to put those proposals in perspective. The cost of the social security programme has risen constantly recently. It will be about £39 billion in 1985–86—nearly 30 per cent. of total public expenditure. Despite the financial constraints of recent times we have maintained all of the key elements of social security and we are spending 27 per cent. more in real terms than when we first came into office in 1979. This vast and growing programme cannot be exempt from restraint. It must be kept within overall expenditure targets if our economic strategy is to continue to bear fruit. [Laughter.] There will be little laughter if we discuss the rate of inflation under the Labour Government. I might be forced to remind Opposition Members what happened.
Mr. Charles Kennedy: In view of the Minister's proud boast that the Government are spending 27 per cent. more in real terms, will he say how much that calculation is affected by the simple fact that, as a result of what the Minister regards as the success of Government policies, so many more people are either unemployed or entirely dependent on the state because they are denied the right to provide their own means as they do not have a job? How much does the huge increase in the number of unemployed people account for the percentage increase that the Minister has claimed for benefits?
Dr. Boyson: I am grateful to the hon. Gentleman for raising that point. I hoped that somebody would. That issue was raised in our debate on poverty and wealth about three weeks ago and I gave a calculation which I worked out at the Dispatch Box. I now have the figures. Spending on social security since 1979 has increased in real terms by £7·7 billion. Of that, £1 billion goes on the extra 650,000 pensioners as compared with when we came into office and £3·25 billion is due to the higher number of the unemployed. If we add those figures, we find that the Government have still spent an extra £3 billion in real terms on social security since coming into office. I thank the hon. Gentleman for raising that point. I hoped that somebody would.
We must avoid a return to high inflation rates, which are disastrous for business and industry.
Mr. Brynmor John: Does the £3·25 billion increase arise because of the level of long-term unemployment and the additional people who receive supplementary benefit?
Dr. Boyson: I shall write to the hon. Gentleman tomorrow if I am wrong — but I am usually right. [Interruption.] I am surprised that Opposition Members ask questions if they do not believe the answers. I am glad that the scepticism of my right hon. and hon. Friends is not as intense. The £3·25 billion is for the unemployed, whether they receive unemployment pay or supplementary benefit. The Government still now spend between £3 billion and £3·5 billion more in real terms on social security than did the Labour Government. I am grateful to Opposition Members for giving me the opportunity to stress that point.
Mrs. Margaret Beckett: Perhaps the Minister would like to put something else on the record. According to my calculations for the period that he has quoted, about £50 billion has accrued to the Government from the North sea alone. He has been allowed £3 billion of that for what he describes as real increases in benefits. How much of the rest went on tax allowances for the wealthy?
Dr. Boyson: I shall not be drawn into matters that we discussed in our previous debate. On my calculations, North sea gas provides 5 per cent. at most of gross national product in any year. One hopes for a regular 5 per cent. per annum growth in economic production rather than dependence on the North sea. That is the Government's aim.
Mr. John Fraser: The hon. Gentleman talks about restraint of public subsidy, but does he understand that the rise in mortgage interest rates which was announced last Friday adds about £500 million to £600 million in a full year to the subsidy that the Treasury gives on mortgage interest relief for owner-occupiers? Why are the Government happy to bear that increase while they are reducing the subsidy for housing costs for people who rent rather than buy their homes?
Dr. Boyson: Time and again we ask the Opposition what their policy on mortgage interest relief is. Anyone who reads our debates would believe that mortgage interest relief finds no favour with Opposition Members, although it is popular with the mass of the population. I have the figures with me of the amounts——
Mr. John Fraser: Will the hon. Gentleman give way?
Dr. Boyson: The hon. Gentleman must listen. I have not reached the end of the sentence. The average amount given to each individual who receives housing benefits is higher in money terms than mortgage relief. About 7 million households are receiving housing benefits and about 7 million households receive mortgage relief. The sum spent on housing benefits is near £4 billion and the sum spent on mortgage relief is about £3 billion. So the amount of money paid for housing benefits is higher than that for mortgage relief.
Mr. Fraser: Will the Minister now answer my question?
Mr. Ralph Howell: My hon. Friend says that 7 million people are receiving one sort of benefit and that 7 million people are receiving another. Is he aware
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that that covers about 75 per cent. of households? That ridiculous situation must be resolved. We are all handing money round to each other and the only people who do not benefit are those who have paid off their mortgages.
Dr. Boyson: I know that my hon. Friend has studied, and written on the problem for many years. I am aware that something has been published on social security almost every day for the past fortnight. Surveys are being conducted in the Department. I welcome my hon. Friend's observation. The proper targeting of social security is being debated all over the country. It is right that that should be done.
Mr. Michael Meacher: I was so enjoying the Minister's speech. Will he answer the question put to him by my hon. Friend the Member for Norwood (Mr. Fraser) and say how he justifies cutting housing benefit substantially in November for those on low incomes when those on high incomes will receive at a stroke £500 million to £600 million more from the increased mortgage interest relief?
The Minister boasts about the extra £3 billion in real terms in social security payments. Leaving aside the increased number of pensioners and payments to the greater number of unemployed, what are the three main components in that extra £3 billion of social security?
Dr. Boyson: I shall not give a list of the components of social security expenditure, otherwise there will not be enough time for hon. Members to contribute to the debate. I shall just reply on the question of mortgage interest relief.
I should be very surprised if a calculation could not be made — we shall have one made — to show that the proportion of mortgage interest relief under the Government of 1974–79 going to people who bought their houses was higher than the amount given in housing benefits at that time. Housing benefits have increased far more under this Government.
Mr. Meacher: The Minister is not answering the question that was asked.
Dr. Boyson: Perhaps not, but I am answering this question.
We have considered carefully where savings could be made. Only after considering all the available options did we conclude that housing benefit was the fairest and most reasonable area in which to make reductions. Although it is means-tested it goes to one in three households in Great Britain, including some on average incomes and above. That feature has been recognised by the Social Security Advisory Committee, which wrote in its report on the original housing benefit proposals arising from the autumn statement:
"There are some aspects of the housing benefit scheme which extend financial help further up the income ladder than anywhere else in the social security system and if cuts in social security spending are essential it might be reasonable to take resources from there rather than from the means-tested safety net."
The expenditure on and coverage of housing benefit has increased sharply over the past five to 10 years. Expenditure on standard benefit and its forerunner schemes has more than doubled in real terms in those years. When indexed for inflation, it rose from just over £500 million in 1972–73 to nearly £1,400 million in 1983–84.
Mr. John: Will the Minister give way?
Dr. Boyson: No, I shall not give way. I intend to give these figures to the House, although the hon. Gentleman may not like them.
The level of rebates as a percentage of earnings in the past five years has risen from 3·6 per cent. to 4·9 per cent. In that period, average rent rebates have increased in real terms from about £5·50 to more than £8 per house. Even though we have sold many council houses to their tenants, which is one of the successes of our Government, the number of council tenants in Great Britain receiving standard housing benefit has increased from 1·2 million in 1978–79 to 1·8 million last year. That shows how far the payments have escalated.
Mrs. Beckett: Will the Minister give way?
Dr. Boyson: I shall give way to the hon. Lady when I have made this point.
We now have an overall housing benefit scheme with more than 6·5 million recipients, costing nearly £4 billion. That means something over £3·50 a week per household. Clearly, some sensible degree of control is necessary, and would have been necessary whichever Government were in power.
The savings from the overall package are relatively modest, amounting to less than 5 per cent. of total housing benefit expenditure. We have designed the changes so that, as far as possible, they affect households with relatively high incomes and those with working non-dependants who can be expected to contribute more to housing costs. By modifying and phasing our original proposals, we have materially lessened the impact on individuals. I remind the House that no one on supplementary benefit or below the needs allowance will be affected by the November changes. We have protected the most vulnerable.
Mr. John: The hon. Gentleman complains that some people on and above average earnings are getting housing benefit. Does he not recognise that that is the result of the Rossi price index, which cut housing benefit and put it on to a different index from the general index of prices? Now the Minister complains about what his Government created.
Dr. Boyson: I was not complaining. I am sorry that the hon. Gentleman read that into my tone of voice. I was merely stating the position. We had to make a decision on that basis.
Mrs. Beckett: Can the Minister reconcile what he is saying about the extent to which benefit is paid, based on the income scale, with the answer that he gave me on 20 June setting out gross income levels at which rent rebates will no longer be payable? The answer did not include figures that even approach the level of average earnings. The Minister claims that benefit is payable in many circumstances to those with above-average incomes. Can he account for his differing replies?
Dr. Boyson: I gave the figures in the last debate on this matter. I shall turn them up later. I did not bring the figures with me today because I presumed that we were all well-read before the debate began. I thank the hon. Lady for showing me the figures at this stage, but I regret that I am unable to speak and read at the same time. I am sorry to disappoint the Opposition by not giving the figures.
Mr. Robin Squire: Before the Minister leaves housing benefits and the staggering figures that he
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has just announced for the scheme will he join me in hoping that the independent review that his right hon. Friend announced will produce recommendations for a streamlined scheme to reduce the cost of administering the complex system, which reaches many households? I hope that the system will be more understandable to those who benefit from it.
Dr. Boyson: I am grateful for my hon. Friend's remarks. I can only concur with his sentiments. He points to the reasons for the survey. I shall refer to the review later in this speech, if ever I get to that part.
The change contained in regulation 2(6) concerns the introduction of non-dependant deductions, or assumed contributions towards housing costs, for young people aged 16 to 17. The deductions are at the lower rate, which will stand in November at £3·30 per week overall.
The deduction recognises the reality in most households where help with housing expenses is expected from a working 16 or 17-year-old. Rather than making cuts right across the board, we thought it right to make some savings where the non-dependants could reasonably make a contribution. This proposal is not entirely new. A deduction for 16 to 17-year-olds has in one form or another been a well-established part of the supplementary benefit scheme, as operated under Labour Administrations, and was discontinued only with the introduction of the housing benefit scheme.
We believe that the amount of the assumed contribution is far from unreasonable. The average weekly wage of male 16 to 17-year-olds is expected to stand at over £67 in November, and for females in that age group it will be over £61. A contribution of up to £3·30 a week towards household costs in these circumstances is not, by any stretch of the imagination, excessive.
We have also taken steps to protect certain individuals. The deduction does not apply to 16 to 17-year-olds on supplementary benefit, on a youth training scheme or noncontributory invalidity pension.
The second proposal is to increase the rent taper above the needs allowance from 26 per cent. to 29 per cent. Viewed in another way, benefit will be reduced by 3p for every £1 of income above the needs allowance. Only the relatively better-off households will be affected, when their income exceeds the needs allowance. For pensioners, from this November, that will be over £10 above the basic retirement pension.
The third change concerns the weekly minimum amounts of benefit payable. The minimal of from 10p to 50p would be raised from 20p to 50p for rent rebates and allowances, and for rate rebates. Clearly it makes administrative sense to reduce the number of small payments so that local authorities can concentrate their effort on those needing more help. There will be no change in the minimum payments for poorest claimants—those with incomes below the needs allowances and those on supplementary benefit including housing benefit supplement. Again, we have ensured that the most vulnerable are covered. Minimum payments will remain at 20p for rent rebates and allowances and 10p for rate rebates. We had originally suggested increasing the rents minima to £1 last year but changed our view after consultation. The Social Security Advisory Committee accepted the fact that the minima were due for an increase because they had not been increased for many years.

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Our original proposals for November also included a modification of the criteria for eligibility to the high-rent schemes that offer more generous rebates. Those schemes were originally, in 1972, meant for authorities with exceptionally high rents — 150 per cent. over the average for the country — but over the years the qualifying thresholds have been eroded. We felt that a change was overdue.
We therefore proposed to raise the current thresholds from 120 per cent. of average local authority rents and 115 per cent. of average private sector rents to a more realistic level of 130 per cent. in both cases. However, as hon. Members will recall, my right hon. Friend the Secretary of State undertook to consider with local authority associations how a limit on losses from the taper and high rent changes in November could be brought into effect.
Following discussions with the local authority associations to see whether a cut-off point was possible, we decided that the increases in the high-rent scheme thresholds, which were originally deferred from 1 April, should be deferred again from November this year until April 1985. About 90,000 households are covered by the high-rent scheme, of which more than half are pensioner households. The postponement of the change will limit the amount of benefit lost by those people who would otherwise have experienced the largest reduction in November, while avoiding administrative difficulties for local authorities.
We considered ways of limiting the maximum losses incurred by individuals. However, after consultation with the local authority associations we decided that that would be unacceptably complex and cumbersome. In the words of the Association of Metropolitan Authorities in a letter to us:
"the administrative burden that would have to be taken on by the local authorities would be in every sense disproportionate to the benefit to the individual claimant".
Deferment of the high-rent scheme changes represents effective yet operationally simple protection. Thus, on the suggestion of the local authorities, we have delayed until April introducing the new high-rent levels.
As with the April measures, we have with the November changes sought to protect the poorest families. Out of over 6·5 million recipients, about 5·75 million, including 3·5 million pensioner households, will not be affected by the taper and minima changes. The bulk of the losses will also be small. Average weekly losses from the November taper and minima changes will be about 42p a week—32p for pensioners. I also stress again that no household on supplementary benefit and no family below the needs allowance need lose from the November changes.
I shall now move on to the other changes in the Housing Benefits Amendment (No. 3) Regulations 1984. In response to recommendations made by the Social Security Advisory Committee in its report last December, we are making improvements to the provision under which the lower rate of non-dependant deduction can apply to non-dependants who are sick or unemployed. If that matter is raised in the debate, I know that my hon. Friend the Under-Secretary will be able to give the details.
Finally, we are taking steps to eliminate an area of possible abuse of the housing benefits scheme. Most overseas students are admitted to this country on condition that they support themselves without having recourse to public funds, including housing benefit. That is the
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agreement on which they enter. However, the regulations themselves do not preclude an overseas student from eligibility for benefit. Consequently, if an overseas student chooses to ignore his entry conditions and claim housing benefit, there is nothing in existing regulations to prevent it being awarded to him. That is unacceptable. Therefore, we are amending the regulations to ensure that overseas students for whom housing benefit is not intended are excluded from eligibility for it.
Mr. John Fraser: Does the Minister realise the burden that that will put on multiracial boroughs such as Lambeth and Southwark, and that it will require housing benefit officers to start looking at the passport and entry conditions of those who claim housing benefit? Does he not realise that we are already taking an enormous amount of money from foreign students who are bringing foreign exchange into this country, and that the least that we could do is leave the scheme as it is for them?
Dr. Boyson: I always believe — I trust that the Opposition do as well—that when people sign a contract of entry, they intend to carry it out. That is what I do when I sign anything, and I expect anyone from here or abroad to do the same. Does the hon. Gentleman now agree with me?
Mr. Fraser: We disagree about the eligibility for benefit. What will happen when a housing benefit authority sees that a student is in breach of his immigration conditions? Will there be a breach of the normal wall that is supposed to exist between the Home Office and the Department of Health and Social Security over the enforcement of immigration control?
Dr. Boyson: Foreign students take courses in this country and many move on to postgraduate work; they do much for the advancement of the universities. I should like to make that clear. We are dealing not with all the students who come into this country but with one section of students who enter under various conditions, scholarships and so on. If they come in under the condition that they will receive not one penny of support from the taxpayer, that should be adhered to. Perhaps I am naive in believing that people should carry out the contracts that they sign, but I shall continue to believe it, and I imagine that the overwhelming majority of the British people would do the same.
The Housing Benefits (Subsidy) Amendment Order 1984 is important and bears out what has been said in other debates. The purpose of this short amendment order is very simple. Once again it has been brought to our attention that a local authority — Sheffield — is looking for ways of increasing its revenue at the expense of the housing benefit subsidy system. In this case, it is proposing a new rent structure from next month that would increase rents considerably for all tenants. In the case of tenants in receipt of housing benefit, the increase would mean that the council would do a few minor repairs for them. Housing benefit tenants would be given no choice in the matter. Other tenants would be given the option of doing their minor repairs themselves in return for a repairs grant from the council. Needless to say, the repairs grant would roughly equal the rent increase.
A system which, leaving aside housing benefit, would automatically mean higher net payments for poorer tenants strikes Conservative Members as decidedly odd We have

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concluded that the real reason for the different treatment of tenants depending on their benefit status, was simply that the council was looking for a device to milk the housing benefit subsidy system. We made it clear by the inclusion of new provisions in the main 1983–84 subsidy order, considered by the House in February, that we are not prepared to tolerate such a ploy. One of those provisions was specially designed to close an earlier loophole that Sheffield was thinking of using to increase its income at central Government's expense. We warned the local authority associations on that occasion that if we learned of any other proposed abuses, we would act quickly to block them. That is what we are doing now and will do again if it becomes necessary.
I hope that our evident determination in this area will mean that any council that might have thought of following Sheffield's example will now turn its mind instead to discharging responsibly its housing benefit functions rather than wasting time on a cat and mouse game with the Government. I am confident that the great majority of hon. Members will share those sentiments and deplore the attempts that have been made to milk the system. I have no doubt that, given the amounts of money involved, if a Labour Government were in power the same orders would be before the House, despite the artificial indignation that now comes from the Opposition. If we had not put down this amendment order there could have been a net profit to Sheffield of £5 million a year and, if other authorities did the same, a transfer of several hundred million pounds a year from central Government funds to local authorities. No responsible Government of any colour in Britain could allow that to happen when it had not been budgeted for and when it was done by an arrangement made by the local authority.
Mr. Meacher: Will the Minister give the total saving in a full year, which he has not so far given either in parliamentary answers or in the debate, from all the changes in each of the orders?
Dr. Boyson: I do not have that figure now. My hon. Friend the Under-Secretary will give it later. I could give an estimate but I know that the hon. Gentleman prefers accuracy. When we started it was about £55 million. The relevant figures seem to be arriving by divine guidance, if not by lightning, as at York. I now have the figure for the November changes and it is between £45 million and £50 million. My estimate is certainly worth a top second if not a first-class degree.
Mr. Tony Favell: Will my hon. Friend confirm that housing benefit is now costing £3 per week per worker in Britain?
Dr. Boyson: I can confirm that my hon. Friend is as near right as can be.
In the coming months the housing benefit review, under the independent chairmanship of Mr. Jeremy Rowe, will be looking at the scope and structure of the scheme and at ways of improving its administration. Evidence is being submitted to the review and I look forward to its findings.
However, it is fair to say that taken together, all the housing benefit regulations being debated today constitute an important step in the control and development of the scheme. The value of the needs allowances has been
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maintained and there has been a 50p real increase in the child needs additions, with a further £1 rise to follow in April 1985. There have been several technical amendments making sensible changes and, at the recommendation of the Social Security Advisory Committee, a beneficial one for sick and unemployed non-dependants.
Finally, available resources are being better targeted on those in greatest need. If we are to curb inflation and ease the burden on taxpayers, particularly poorer families and pensioners, we must restrain all increases in public expenditure, and that includes the social security programme.
I fear that the Opposition will promise, as they usually do, to spend more on almost every item of social expenditure, forgetting that there is always a bill. The electorate, however, will not forget that the bill was 112 per cent. inflation under the 1974–79 Labour Government, and that more than half of our people's savings — including those of pensioners — were wiped out. This Government are determined that that will not happen again, and I have no doubt that in that aim we shall have the support of the great majority of British people.
5.13 pm
Mr. Michael Meacher: The central argument in the debate is about whether there is any justification at all for further cuts in housing benefit. We have just been told by the Minister that they total £45 million to £50 million. We have listened to the Minister's speech and to many, what I can only describe as weasel words, to justify a whole array of mean and niggardly cuts in the instruments. The Minister's argument, which was the centrepiece of his speech, was that the Government were on the scrounge for cuts and their eye fell on housing benefit. The justification for that was that there are 6 million recipients of housing benefit and that the cost is nearly £4 billion.
What the Minister did not say—and it is the central issue — is that the cost of housing benefit is so great because the Government have put up rents by such an unprecedented amount that there are many people today who, unfortunately, are dependent on means-tested housing benefit. That is the central reason for this situation. That is why it is so unfair for the Minister to say that a Labour Government would act in the same way. The Labour party would never have got into the situation in which the Government find themselves today.
Our first and major reason for praying against the housing benefit instruments is the fact that they have been brought forward at all when, as the Minister said at the end of his speech, the Government have set up a housing benefit review precisely to examine the scope and structure of the scheme. The purpose of the review ostensibly is to find out whether housing benefit is helping those most in need. The review team has been given an appropriately short time scale and is expected to report in the autumn. Yet the Government are rushing to put through further major cuts even though they must clearly pre-empt the results of that inquiry. Surely there could scarcely be a clearer sign that the review is simply a smokescreen for further cuts. So eager are the Government to get on with the business of cutting benefits that they cannot even wait for a few months for their own review to be completed.
The instruments are now bringing forward yet further additional major cuts in housing benefit for both

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pensioners and low-paid families. It is no good the Minister saying, as he did, that the poorest people are protected. They are not. By any standards many poor people will be hit by the cuts in November. They are damaging and unfair. They are damaging not only because the cuts are large, not only because they are at the expense of the poor, but because they are part of a series of deliberate cuts that the Government clearly have no intention of stopping.
The Secretary of State's statement yesterday in response to pleas to put a limit on housing benefit losses arising from the cuts by postponing the high rent scheme until April 1985 is like someone who has hit a person three times in the face then turning round and saying that he wants to limit the damage so he will not hit him a fourth time. That is really what it amounts to and that is not needed at all.
This time round the Government are making three main cuts in housing benefit—an increase, as the Minister said, in the rent taper from 26p to 29p, a withdrawal of all benefit entitlement of more than 50p in the case of those with incomes above the needs allowance, and the introduction of a deduction from eligible rent when a household contains a non-dependant aged 16 or 17 who is not on supplementary benefit or non-contributory invalidity pension.
The first cut alone will penalise 1,130,000 households. That figure was given in an answer to a question asked by the hon. Member for Brighton, Kemptown (Mr. Bowden). A large number of them are pensioner households. It would be bad enough if that were a one-off but it is in fact part of a continuing and rapid erosion of rent rebates that the Government have been engineering over the past 18 months. Let me give an example provided by the Shelter Housing Aid Centre, which is extremely helpful to all hon. Members. A single pensioner with a gross income of £70 a week and paying an average local authority rent had a rent rebate of £3·93—nearly £4—in March last year. In April, when housing benefit was introduced, the Government cut it to £2·88 a week. In April 1984, the Government cut it again to £1·57. Now it is proposed to cut it yet again in November to only 78p a week. I do not know what conclusion other hon. Members draw, but it seems clear to me that the Government believe that pensioners are so well off that they are able to bear these continual cuts.
That gives the lie to the Government's constant boast that they have honoured their pledge to pensioners by uprating pensions in line with prices. They give with one hand, but they take away with the other. That has happened four times with housing benefit in the past 18 months and no doubt the process will continue after November.
For low-paid families on about two thirds of national average earnings and with two children, the same pattern of increasing cuts is apparent. Assuming an average local authority rent, they had a rent rebate of £3·24 a week in March 1983. By November, that will have been phased out completely.
It is not just that low-paid families are being hammered into the ground by never-ending cuts. They are also being trapped in their poverty, because the taper increase exacerbates the poverty trap. From November, low-paid workers with a rent rebate will face a marginal tax rate of 77 per cent. How can that be right or fair when the highest-paid directors — men like Mr. Giordano, who is the highest paid on £500,000 a year — are liable to a
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marginal tax rate of only 60 per cent? How can the Government justify worsening the poverty trap? I know that it is difficult to remove it, but the Government are gratuitously worsening it.
Mr. Favell: The hon. Gentleman has been talking about cuts in housing benefits for low-income families. Will he also say something about the cuts in tax for those families in the past two or three years?
Mr. Meacher: The tables issued by the Treasury at Budget time show that the total tax take from all families, except those on incomes of over £30,000 a year, who have made a killing, has increased substantially. That applies not only to those on average earnings, but to those on well below average earnings and those on two or three times average earnings. I am sure that the hon. Member for Stockport (Mr. Favell) is anxious to score a political point, but the facts go against him. Even worse than the losses due to the taper is the Government's continuing vendetta—I use that word advisedly—against young workers on low wages living in council houses. How else can one explain why the Government have picked upon 115,000 such families to take a cut of £3·30 a week as a result of the introduction of non-dependant deductions for 16 to 17-year-olds in work? One third of those families live on supplementary benefit.
That will undoubtedly increase the tension between young people and their families. It will also increase the pressure on young people to leave home to avoid that deduction. There is some evidence of that pressure, but we do not have all the evidence that we need.
The Government's argument is that steep increases in contributions towards housing costs can reasonably be expected from relatives over the age of 16 because, in the words of the Secretary of State,
"the non-dependant should make a contribution rather than the taxpayer."
If that is the logic, why does that logic not apply to non-dependants living in households receiving tax relief on their mortgages? There are about 1·25 million such households and SHAC has calculated that such a move would produce savings of about £269 million—a vastly greater sum than that being saved by all the cuts that we are debating.
Why do the Government not follow that course? Is it because non-dependants in rent rebate families are likely to be working class, living in council houses and voting Labour, while non-dependants in tax relief households are likely to be middle class and voting Conservative? It is difficult to think of any other explanation. That is why we say that the cuts are so blatantly politically motivated. That is what we find so objectionable about them.
There is another reason why we reject the proposals. Housing benefit continues to be the biggest administrative fiasco that we have seen in this country since the war. Despite soaring organisational costs, there is little or no sign that bungling is being brought under control.
The Minister's figures suggest that administrative costs this year will total £56 million, compared with last year's estimate of only £17 million. What will be shown for the extra £40 million of taxpayers' money, which is being squandered on what is supposed to be a streamlining operation?
I have a few examples from citizens' advice bureaux in various parts of the country. They have all arisen in the past two or three months. A CAB in Lancashire reported:

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"We have had several inquiries relating to the changes in Housing Benefit effected in April 1984, most of which have been concerned with a reduction of benefit due to non-dependants. Often there has been no explanation as to why benefit has gone down and in many cases a higher deduction than is correct has been made. There have also been cases where the DHSS have not informed the local authority regarding changes in non-dependant status."
A national survey carried out by the CAB found that miscalculations of housing benefit were made in a staggering one in four cases. In more than three quarters of those cases, there were underpayments. Overpayments were made in less than a quarter. That is after the scheme has been in operation for 15 months. Surely that is an unprecedentedly bad record. It is farcical in a scheme that is supposed to be a streamlining operation.
People are still being forced into financial crisis by the bungling that occurs. I know that local authorities try hard and I do not wish to say anything against their sincere efforts to improve the administration of an incredibly complex scheme. The structuring of the scheme makes it difficult to operate.
The CAB in Norwich gives an example. It says of a woman claimant:
"She used to get £18·76 rent rebate and was told it was reduced to £18·34 from 1.4.84. When she went to her bank she found none had been paid in since 2.4.84. She rang the District Council and was told that a mysterious £64 had appeared on figures from DHSS so they were withholding rebate. No one told her about this or why it had arisen. She pays £25 rent, earns £23·50 and has £24 maintenance. She has an unemployed girl of 17 and is down to her last £14 with an electricity bill of £70 outstanding."
I am not quoting cases that have been carefully chosen to demonstrate the difficulties. There are dozens of such cases in CAB files. The hon. Member for Kemptown forcefully makes the point in the House that similar things happen to pensioners who are perhaps least able to look after their own interests.
My third and last case comes from the Hatfield CAB. It states:
"An elderly pensioner claimed supplementary benefit and certificated housing benefit for the first time. Her daughter asked the DHSS whether her mother would have to pay rates. She was told her mother didn't have to pay anything. The pensioner now has £100 of arrears, a court summons has been taken out and bailiffs have been to the house. The local authority refuses to accept anything less than £10 per week in repayment, even accepting the DHSS's response."
The Opposition intend to vote against these instruments because we believe that they are wrong on five separate counts. They are wrong because they pre-empt the review that the Government have set up. The Government should perhaps have listened to their friends on The Times, who on 14 February said that until the housing benefit review had reported, the Government should forgo their savings from the scheme.
The instruments are wrong because they are, yet again, hitting hundreds of thousands of poor pensioners and poor families, who have already suffered financial hardship from earlier cuts. They are wrong because they penalise the poor while letting the rich off scot free. In a parliamentary answer on 7 March 1983 the Minister, referring to executives who earned more than £30,000 a year, said that they got more than £30 a week in mortgage interest relief. It seems that that will be increased to about £35 a week. It is wrong that the rich have not been required
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to give up a penny. How can the Government justify the rich retaining that money at the expense of the poor who have already suffered from cuts?
The instruments are wrong because administrative costs continue to soar while organisational bungling continues unabated. I hope that Conservative Members will agree that if a saving must be made it would be much more just to make it by limiting mortgage interest relief to the standard rate. That would save £160 million a year, which is three times and more than the savings that will be made from these niggardly, mean and nasty cuts. For those five reasons we reject the instruments. They are ill-advised, unjust and spiteful and the Government should withdraw them.
5.32 pm
Mr. Andrew Bowden: I shall not repeat in any detail my views and objections to the housing benefit scheme because they are well known to the House. I deeply regret the way in which the scheme has operated during its first year and the Government's intentions to impose further alterations to the scheme in November 1984. It is painfully clear from the origins of the housing benefit scheme that it was put together quickly, and was botched. I has turned out to be complicated and difficult to administer. It was introduced as a result of the demands made by the Chancellor of the Exchequer of the Department of Health and Social Security to find additional reductions in its budget.
The operation of this scheme during the past 12 months has been a disaster for local authorities, who in many cases have been thrown into turmoil. Above all, the scheme has caused real hardship and great stress and strain for a large number of those who are entitled to claim housing benefit.
I was delighted when my right hon. and hon. Friends decided to appoint a housing benefit review in February. I welcomed the words of the Minister when he said:
"The review is to examine the structure and scope of the scheme to ensure that it is as simple as possible, and that help is concentrated on those most in need. The aim is to improve its administration by local authorities."—[Official Report, 14 February 1983; Vol 54, c. 215.]
The housing benefit review was then appointed under the chairmanship of Mr. Jeremy Rowe. On 11 July I gave evidence to that review. I wish to put it on record that I was most impressed by the open-minded and constructive approach of all its members. It was a most enlightening hour, which I hope will mutually benefit both future recipients and the review board in coming to its decisions. The board's briefing papers also impressed me.
I admit that I had initial misgivings and feared that the Minister might wish to restrict the approach of the review board, but clearly from the way in which it is working in practice—I am delighted to pay tribute to the Minister for this—that will not be the case. In the background briefing which the board sent to me and the other joint chairmen of the all-party parliamentary group for pensioners and which we were asked to consider in submitting our written and oral evidence, there were a number of phrases which showed clearly how wide the board's review was to be. It stated:
"The review team would welcome evidence on all aspects of housing benefit and in particular the three broad areas set out in the terms of reference."
Those three areas included the scope of housing benefit, the structure of housing benefit and the administration of housing benefit. The explanatory notes to those headings

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made it clear that the housing benefit review body had the widest possible chance to present a report of great significance for the Government's consideration.
In the light of the Department's decision, which was right, I was bitterly disappointed that the Department found it necessary to proceed with the changes and alterations in housing benefit in November. I do not go so far as to say, as Opposition Members have said, that that has undercut, destroyed or undermined the work of the review body, but it has not helped. I hope that if the review body in its report makes out a strong case for fairly drastic changes, even if they contradict the changes that have already been made by the Government, the Government will have the courage and determination to accept the report and reverse those changes. It would have been far better if the Government had delayed and put on ice their intentions for November. I regret that they have decided to proceed with the cuts which will affect many groups in society, not least more than 1 million pensioners.
The decision is also bound to create a great many additional problems for local authorities. I have no doubt that many local authorities were over the hump and beginning to see their way out of the tremendous tangles created by the scheme. In some cases those tangles were partially the responsibility and fault of local authorities, and in others, of the DHSS. Now that the worst is over they will, horrifyingly, be confronted with another batch of changes, which will inevitably create confusion and uncertainty within local authorities.
The changes will also confuse many claimants, bearing in mind the fact—I say this with great respect—that not many hon. Members understand the housing benefits scheme. I do not claim to have anything like a full understanding of it. Sometimes when I have spent hours poring over it during late night and early morning sittings in the House, I finish my study and think, "Perhaps I have a pretty good grip of it"; but then I wake up the next morning and realise that I still know very little about it. If it affects hon. Members in that way — the hon. Members in the Chamber this afternoon will have given much time and thought to it—what must it mean to the average claimant? It must be like trying to do Arabic maths with a dash of an antiquated or dead language thrown in. It is impossible. For the many claimants who are completely unable to cope with or understand what is going on, the new scheme will create stress and strain.
The standard housing benefit scheme is difficult enough to understand, but we take another enormous leap into complexity when we consider the housing benefit supplement. Many people have never heard of it. The take-up rate for ordinary supplementary pensions is low, with about 10 per cent. of pensioners who should claim it not doing so. On the figures provided by the Department, I estimate that the take-up rate for housing benefit supplement is, unfortunately, much higher than 10 per cent.—I suspect that the figure is much nearer 40 per cent. and could even be 50 per cent. As the House knows, the housing benefit supplement makes up the difference between standard housing benefit and what a recipient of the latter would have received had he been allowed to claim supplementary benefit. I just about understand that.
Pensioners who are entitled to claim the housing benefit supplement are in the disgraceful position of being shuffled backwards and forwards between local authority offices and DHSS offices. By the time some of them have been backwards and forwards two or three times they have
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no idea whether they are coming or going, they are thoroughly fed up with the process and, in many cases, they decide not to proceed with their claims for the housing benefit supplement to which they are entitled.
During the past 15 years inflation has had a catastrophic effect upon those who receive small private occupational pensions, who live on incomes marginally above the state pension and supplementary pension rates. I must say bluntly to Opposition Members that they are more responsible for that than anyone else. I understand why the hon. Member for Oldham, West (Mr. Meacher) makes the best of the case that he has in front of him this afternoon—I regret that he has so many weapons to use—but it i s a bit much for him to tell the House that the Conservative Government give with one hand and take away with the other. He quoted some examples that are difficult to refute, but the most cruel method of giving with one hand and taking away with the other is inflation. It destroys the value of people's savings during their working lives. They prepared all their lives for retirement and, adding their basic state pensions, occupational pensions and the little savings they had in the banks, they believed that their retirement would be reasonably comfortable.
However, a series of policies imposed by Labour Governments completely undermined the financial positions of many pensioners. As my hon. Friend the Minister said, in one period of Socialist Government the inflation rate was well in excess of 100 per cent. What did that do to the small occupational pensioners, or to those who worked all their lives and, by the sweat of their brows, managed to save a little money? That was the cruel way of giving with one hand and taking away with the other.
Mrs. Beckett: None of us wishes to see high inflation Although we are all impressed by the passionate way in which the hon. Gentleman speaks about the sufferings of people who worked all their lives to build small savings, does he recognise that under the present Government as many and more people do not have, and never expect to have, an opportunity to build savings or security for their old age, or even their middle age, because of the policies of his Government?
Mr. Bowden: That is an incredible statement. It is comforting to know that the Opposition Front Bench spokesmen do not want high inflation. I am sure that when they came into office previously they did not want high inflation, but we still had it. In some years inflation was more than 25 per cent., and at one stage it was moving rapidly towards 30 per cent. a year. Should the Labour party take office again, which is unlikely, I have no doubt that exactly the same would happen. The hon. Lady is trying to tell the House that today fewer people have the opportunity to provide for their old age, but she should examine what is happening. A steadily increasing number of people are buying their properties and saving more money. More and more people understand that it is now worth saving money because the present inflation rate will not undermine the value of their savings. That should be warmly encouraged and I wish it to be greatly extended in the years ahead.
Ms. Clare Short: We all recognise that some pensioners who had savings—it was a minority — suffered from high inflation, especially before the introduction of granny bonds. But the hon. Gentleman should compare that position with the present.

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Millions of people are unemployed and in my area poverty is rampant—one can see it on the streets in a way that one never could before. My hon. Friend the Member for Derby, South (Mrs. Beckett) is right. Workers who are made redundant at the age of 50 or 55, who have no hope of working again and who must live on supplementary benefit, cannot begin to plan for their old age. The hon. Gentleman must face the truth that life for people who are preparing for their old age is worse now than at any time since the second world war.
Mr. Bowden: The hon. Lady is trying to extend the debate into a wide economic debate, and I dare not tread that path. However, I must make it clear to the hon. Lady that the seeds of many of today's economic problems were sown by Labour Governments. They allowed inflation to run rampant, we priced ourselves out of world markets and we had five people doing four people's work; those are the root problems with which the Conservative Government are surely and steadily dealing. Within a few years we shall have dealt with them completely. I must move away from that tack before I run the risk of being out of order.
Small occupational pensioners will be badly affected by the cuts in housing benefit. Quite rightly, the Conservative Party has agonised for many years, both in and out of government, on how best to help this section of the community. It was difficult, not to say impossible, to do this by increasing basic rates of the pension, and therefore it could only be done by looking for special ways and means. One way in which we have been able to help, and are still helping, although not to the same extent, was through the housing benefit scheme. This was giving some positive assistance to those on occupational pensions, whose pensions had been undermined by inflation and who were therefore entitled to a considerable increase in their income—through housing benefit.
Linked to that is a ridiculous position, about which we all know. A person may be in receipt of housing benefit, before the new regulations came into operation this year, of £6, £7 or £8 a week and perhaps more, but on the other hand could be paying £4, £5 or £6 a week in tax. Clearly, much more thought has to be given by my right hon. and hon. Friends to help that section of the retired—those living on small occupational pensions which, by and large, are not inflation-proof and are dropping in value, even I regret to say, to some extent under this Government. It is not as bad as it has been in the past, but such people are still not getting a fair return for a life's work.
There is evidence that those views are not mine alone but are held by many of my right hon. and hon. Friends. I draw the Minister's attention to early-day motion 893. This motion is so important that I shall read it out so that it will go into the record of my speech. The main sponsor is my hon. Friend the Member for Hornchurch (Mr. Squire) and the motion is supported by some distinguished right hon. and hon. Friends. It says:
"That this House, noting that the aims of a unified and simplified housing benefit scheme have not to date been achieved, welcomes the independent review announced by the Government; and urges the adoption of a single taper unified housing benefit scheme, along the lines advocated by the London Housing Aid Centre (SHAC), to ensure: (a) the elimination of separate assessments by the Department of Health and Social Services and local authorities, (b) the ending of complexities such as housing benefit supplement, (c) the removal of inequities
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in the treatment of those both in or out of work, (d) a drastic reduction in administrative costs and (e) a scheme which is easy for the general public to understand."
The Under-Secretary of State for Health and Social Security, my hon. Friend the Member for Braintree (Mr. Newton), tragically is not in his place at the moment, but perhaps my hon. Friend the Minister will convey my message to him. I hope that when he winds up the Under-Secretary will tell the House that the Government will look closely at that early-day motion in relation to the report that he will eventually receive from the housing benefits review body. Where the two dovetail — they will in many instances—I hope that the Government will give careful consideration to implementing the recommendations of that early-day motion.
Even at this stage—I fear that it is almost too late—could not my hon. Friend the Minister think again about the proposals for November? He is a fighter. Perhaps tomorrow morning, when he gets into his office, he might like to pick up his phone and call a senior Treasury Minister and say to him, "You will have to whistle for your £50 million. I am not going to implement those housing benefit cuts." There would be a gasp, a choking sound—I have no doubt about that——
Ms. Clare Short: Why tomorrow? Why not make him do it today?
Mr. Bowden: I want my hon. Friend to have the night to think it over. If he really pushed this, he could succeed. He should decide what his approach should be. If he decided that he would do this, I believe that he could still win, tough though the fight might be. I beg my hon. Friend to give this some thought. If he felt that he was able to do this, I should want him to prepare his case carefully. I know it is not easy to think about the implications if he decided to take such a course of action. However, he might still decide to pick up his phone and go through to the Treasury Minister and bluntly state the situation and the views that have been expressed in the House. I was going to say that if either my hon. Friend the Minister or the Under-Secretary can give me an assurance now—this is my answer to the hon. Member for Birmingham, Ladywood (Ms. Short)—that that is what they will do, I should be delighted to tell them that I shall be in the Government Lobby tonight. If they cannot give me such an assurance, it will not be possible to do that.
5.56 pm
Mr. John Fraser: The Minister opened this debate with all the cheerfulness of a workhouse master who, for reasons of economy, has to double up both as a pedagogue and a clown, but there is nothing in these regulations to be cheerful about. In my constituency and in my borough of Lambeth, they represent further poverty for those who need encouragement.
The Minister is right to tell us that the benefit changes do not affect certificated housing benefit—that is to say, the amount of people's social security benefit is not affected because their rent and rates are reimbursed in full. However, if they have had the misfortune to do what the Government are encouraging them to do—hard though it is—and have gone out to work on low wages, they are likely to be penalised. That is true of my constituency, where there is a great deal of poverty.
Let me give three examples. First, there is the reduction in the earnings disregard. It is true that it is only of 45p,

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but it seems quite unnecessary to interfere with the programming of benefits by reducing the earnings disregard from £17·45 to £17 when it is bound to go up next April. That is one small example of how those who are earning will be poorer.
My second example is of the contribution from the nondependent child aged 16 or 17. If the child is on social security, he will not have to contribute as a non-dependant, as the Minister has said. In Lambeth, the forecast for unemployment for school leavers at the end of 1984 by the Manpower Services Commission youth group is for 60 per cent. unemployment among the 16 to 17-year-old school leavers. If one is lucky enough to obtain a job, often on low wages, he will be contributing notionally something to the rent of his parents. In practice, that does not happen in many households, and where the parents find their income cut because of a notional contribution by the earnings of a 16 or 17-year-old a great deal of tension arises and the cohesion of the family is ruptured.
If the child at first got a job after leaving school but has been made redundant after a year and is then in receipt not of social security benefit but of unemployment benefit, that child, as against the child who has never had a job, will have to make a contribution. As I understand the regulations—the Minister will correct me if I am wrong—somebody who goes into a youth training scheme will be a non-dependent child receiving an allowance. He will have to make a contribution to his parents. That is one of the meanest ways of rupturing family unity and of depressing still further the poverty levels of those who are not on supplementary benefit but are very close to it. In my constituency, it will mean a reduction in living standards, and an increase in poverty and family tension. I ask the Minister to heed the advice given by the hon. Member for Brighton, Kemptown (Mr. Bowden) to regulate such matters, and to fight with other Ministers against the depredations of the Treasury.
The figures for my constituency are not available, but I represent a borough where one man in four is out of a job. That is the measure of the poverty. I represent a borough in which 50,000 households out of a total population of only about 200,000 are in receipt of housing benefit. What possible contribution can it make to the cohesiveness and tranquillity of society to set about such mean cuts when the amount of public money going to the richer sections of society and to those able to buy their houses is being increased?
In answer to the Minister's question, I should point out that I am in favour of assistance for those buying their homes. I have never been opposed to that. The Labour party has said that there should be rough equality between those renting and those buying. Thus, I am not trying to drive any wedge between those two groups. However, it strikes me as mean and petty to make the poor poorer and the rich richer — yet that is the result of this Government's policies.
I turn to a point which I raised in an intervention concerning the new regulation 11(a). I may be wrong, but I believe that the immigration rules are being imported for the first time into rules that deal with social security. My hon. Friend the Member for Peckham (Ms. Harman) has asked to be associated with my remarks. I urge the Minister to consider the effect of importing them on multiracial boroughs such as Southwark and Lambeth. If someone claiming housing benefit at the local authority housing office claims to be a student but seems to have a
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foreign accent — perhaps African, West Indian, American or Australian—the local authority staff are bound to ask whether he is a foreign student with limited leave to be here. Thus, those who have permanent leave to be in the United Kingdom but who, for example, were born in Jamaica or West Africa or who have, as happens in inner city areas, adopted a sort of Caribbean accent from their peers will be questioned not only as to their level of poverty but as to their immigration status. It is inevitable that black applicants for housing benefit will come under more suspicion and are more likely to be questioned about their status than white applicants.
I ask the Minister to consider most seriously the consequences of those trying to run a social agency suddenly finding themselves involved in what may appear to be — even if it is not in practice — a form of immigration control. Perhaps such matters can be dealt with by the Home Office. But the moment that there is a breach in the wall of confidentiality as between those who administer social benefits and those who administer our immigration laws, the peace and tranquillity that has existed in race relations in housing will take a turn for the worse. For years we have been trying desperately to get town halls to understand the need for equal opportunities in housing. I urge the Minister to think again about the most retrograde step of importing immigration control into the administration of housing benefit.
Mr. John: Will there not be an ever greater furore than occurred when it was discovered that information from legal aid applications was being filtered out of the DHSS?
Mr. Fraser: That is bound to be so. Some of those who administer housing benefit will be faced with a crisis of conscience. It is a very difficult problem, because if such questions are not asked the officers of the council or the councillors themselves will be liable to surcharge for paying out a benefit to which the applicant is not entitled. An argument does not gain strength from repetition, so l simply urge the Minister to think again.
Will the Minister consider making the administration of this benefit less chaotic and speedier? Hardly a day goes by without my receiving a letter from a constituent saying that he applied for housing benefit not a month or three months ago, but 12 or 15 months ago. Often constituents in the private sector have applied for housing benefit but it has not yet been paid.
There is a statutory duty—which the Minister is not prepared and has no power to enforce—to respond to the application within 14 days. It is quite unacceptable that many of my constituents who are old, and who live in private accommodation, should be under pressure from housing associations or private landlords because their housing benefit has not been decided or paid out. I know that one of the problems is that, for example, in Lambeth a huge number of people apply for housing benefit. Of course, if Lambeth takes on more staff, the Minister's colleagues from the Department of the Environment will rate-cap the authority. Because Lambeth is penalised, it is fined £2·80 for every extra £1 it pays in wages to speed up the system. That will be even worse next year. Furthermore, the Government do not even fully reimburse the authority for the costs involved.
That is one constraint on taking on extra staff to administer housing benefits. It is true that mistakes have been made in Lambeth through adopting a computer

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programme that was far too sophisticated and that did not have sufficient manual back-up. I do not say that the blame rests wholly with the Government, although it does when it comes to reducing the level of benefit. But the scheme is chaotic and it is wrong that members of the public should have their right to benefit denied, or at least delayed, for so long.
There are one or two contributions that the Government can make. First, they can exempt local authorities entirely from rate-capping penalties or any other constraints if they should take on extra staff or undertake expenditure on computer programmes or whatever it may be in order to administer the benefit quickly and efficiently. There should be a total exemption, because they are acting only as agents of the Government.
Secondly, the Government can stop tinkering with the scheme every six months. It is difficult enough to have to do a recalculation when a person's income changes. I believe that changes in the scheme should be kept to a maximum of once every 12 months. The Government should look a year ahead in a spirit of generosity so that benefits are not cut. They should at least minimise the amount of recalculation and clerical work that has to be done in town halls. I am very disappointed about the speed at which the benefit is administered in my borough, although that is not my only concern about the scheme.
I ask the Minister to reconsider those matters.
6.8 pm
Mr. Charles Kennedy: The hon. Member for Norwood (Mr. Fraser) has spoken very knowledgeably about his constituency and the borough of Lambeth. Perhaps there could not be a greater geographical contrast than between his area and mine, in the Highlands of Scotland. Yet I am sure that we would both agree that the level of unemployment in Lambeth, at 25 per cent., is roughly similar to that in certain areas of my vast, spread-out rural constituency in the Highlands. That shows how the Government's general economic policy, which provides the backdrop for the shabby decisions on housing benefit, has had its effect throughout the country. The system of housing benefit has been subject to objections from persistent critics on the Government Benches as well as from Opposition Members, and it is, perhaps, sad that there has been little alteration or deviation from that policy.
There has been little willingness to take some of these considerations on board. Although a review is now taking place, there is, even at this late stage, an apparent unwillingness on the part of the Government to have any delay whatever, lest that be regarded as a climbdown or, perhaps more accurately, lest it loses the Government some money.
It is appropriate, therefore, that before we depart for the recess we debate this issue and remind the Government of the cross-party opposition—opposition at the least and, in certain circumstances, extreme scepticism—to some of the proposals that are being introduced. The Minister permitted me to intervene in his opening speech to query some figures. He spoke with evident satisfaction about the way in which £3 billion more in real terms was being spent across the board on social security benefits.
Ms. Clare Short: Because there are so many unemployed.
Mr. Kennedy: The hon. Lady makes an important point. To be fair to the Minister, he added that another £3·25 billion was being spent as a result of the rise in unemployment.
I am sure that the hon. Member for Birmingham, Ladywood (Ms. Short) and I find common ground in asking—as the Minister is pleased to be able to spend £3 billion extra on social security—if he would not have been even more delighted if double that amount could have been devoted to social security, instead of the extra money being frittered on unemployment benefits resulting from the economic policies which he has supported. In other words, of the £6·25 billion of which he was speaking, half has gone on increasing social security and half on providing insufficient support for people to do nothing when they would rather be working and helping to support themselves.
Housing benefit is an important subject which should receive our attention. Hon. Members who correspond with the Minister on constituency issues will agree that the hon. Gentleman is always reasonable and open-minded and that he goes to great lengths to explore the problems we raise with him. I appreciate that greatly. I find it difficult to set that approach alongside the inflexible approach which overcomes him when he reaches the Dispatch Box.
He slogged away manfully in defence of the organisational shambles which is housing benefit and he could say little to support the Government's proposals on housing benefit. As the Minister was speaking, I thought of the description that a distinguished journalist once gave of the present Foreign Secretary when he was Chancellor of the Exchequer. He said that he was like a barrister who continued to plug away at the defence of his client after his client had changed his plea to guilty. There was an element of that in the Minister's speech today, because, against the facts—even against the arguments deployed by his hon. Friends — he manfully continued with a defence that almost everybody knows has become redundant.
Given that a review is taking place, I cannot understand the unwillingness of the Government to delay housing benefit cuts, or at least to agree to make such alterations in the autumn in line with what may be suggested when the review is completed. That goes to confirm our suspicion about the review. It must be inconsistent, at a practical level, to set an in-depth look at housing benefits alongside ad hoc decision-making about housing benefits. The two do not, with any sense of consistency, stand together.
Hon. Members will agree that the housing benefit system is too complex. Pensioners and others who throughout their lives have adhered to the ethic that there is something unprincipled, even immoral, about being in debt—people who have never been in debt but who, because of the fiasco of the housing benefits system, have found themselves, on paper, informed that they are massively in debt—have been driven to distraction, even to the point of becoming ill. That has been the effect on some who have come to discuss these problems at my surgery.
The complexities of the system are bound to affect the take-up rate, particularly of the elderly. It is complex enough even to put off those of us who are used to paperwork and may not be as intimidated as others are.
Leaving sympathy, charity, compassion and any other Treasury Bench voodoo terms on one side, the Minister

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must agree that to have cut the earnings disregard from£18 to £17 in the last two years has, at the least, from the point of view of housing benefit, reduced work incentives for those in low-paid categories. The Minister argued that in the Budget the tax allowances were raised by more than the rate of inflation. Giving with one hand and taking with the other applies in this context, for almost half of that tax allowance has been reclaimed through the reductions in earnings disregard. As I say, leaving sympathy and compassion aside, it must be a fact, based on the philosophy of the Government, that that action will inhibit the incentive for people to take on employment. For that reason alone, the Government should re-examine the matter.
I thank the Minister for his comments about MSC and travel allowances, a subject on which I have corresponded with him, and I thank him for the help that he has given to me in relation to a constituent. What he said is good news. I regret that it is on the margin, so to speak, and that to a great extent it is mitigated by the intransigence that has been forced on him by his colleagues at the Elephant and Castle and the Treasury.
The Government should realise that when they play around with housing benefit and adjust figures and so on they are not just indulging in a mathematical exercise. For those on low incomes—for pensioners and the most disadvantaged sections of society—the Government are taking decisions that have a profound effect on people's lives.
I add my voice to the plea made by the hon. Member for Brighton, Kemptown (Mr. Bowden) to the Minister for Social Security. The Minister may want to make a phone call by the end of the debate or by tomorrow morning. I do not know to what extent the hon. Gentleman subscribes to British Telecom's view of "Buzby", which is to make someone happy with a phone call. If the hon. Gentleman made that phone call and took the decision we want, he would make happy those hon. Members who had taken an interest in this issue during several debates. More importantly, he would bring considerable comfort to those who stand to lose and suffer considerably from the effect of the measures that he wishes to pile through the House.
I ask the Minister of State to display conviction politics. I ask the hon. Gentleman not to head towards a firm decision, buttressed by his large majority in the Lobby, but to say that he is willing to listen to the review's findings in autumn. I hope that until then he will be willing to forgo the measures that he wishes to push through the House this evening. I hope that, at the very least, he will make back-dated decisions if the review comes up with worthy recommendations at variance with what has been decided so far. Information along those lines from the Treasury Bench will be welcomed. Unless those decisions are forthcoming, I am obliged to say on behalf of my hon. Friends in the Liberal party and my colleagues in the Social Democratic party that we shall join the official Opposition and, I imagine, several Conservative Members in opposing the instruments.
6.21 pm
Ms. Clare Short: Hon. Members who have spoken in this debate have objected to the cuts in housing benefit on two grounds: first, because they are cuts in the income of some of the poorest people on low pay, including young workers; and, secondly, because the housing benefit scheme has been a complete
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mess since its inception. It continues to be a mess. The mess may not be as bad as it was at the scheme's beginning, but it will become worse after these cuts. Because the scheme is such a mess, the Government have been forced to undertake to review the scheme. During that review, however, the Government are introducing further cuts. That is completely unacceptable and against the spirit of their undertaking to review the scheme. I agree with those hon. Members who have called on the Minister of State to look at the matter again, even at this late stage.
The Government are picking on the low paid with these changes and are worsening the poverty trap. The Government claim that they are anxious to eliminate the poverty trap, but it is no good their telling us in words that they believe in one thing, but by their actions proving that they do not. The change which is being deliberately implemented will worsen the poverty trap for the low paid.
I take exception to some of the remarks of the hon. Member for Brighton, Kemptown (Mr. Bowden), who has taken a courageous stand in opposing many previous housing benefit changes, and intends to do so again today. The pity is that there is only one of him. I very much disagreed with the hon. Gentleman when he talked as though we discuss benefits without reference to the Government's economic strategy. We well know that the Government have deliberately used unemployment as their anti-inflationary policy—there is no doubt about that. They have deliberately sought to reduce the income of people in work and to bring down wages to increase profits, because, they claim, that will lead to higher investment and greater efficiency. In practice, it does not work.
Part of the Government's strategy is to increase significantly the number of people living on low pay.
Mr. Andrew Bowden: At the risk of being ruled out of order, Mr. Deputy Speaker, I ask whether the hon. Lady can give the average rate of inflation and the average rate of wage increases during the past 12 months.
Ms. Short: I do not have those figures in my head. I know that they are available, and I could easily obtain them. I assume that, if the hon. Member for Kemptown knew the figures, he would have given them rather than asked the question.
Mr. Bowden: During the past 12 months, the average rate of inflation has been 5·1 per cent. and the average rate of wage increase has been 7·4 per cent. That totally disproves what the hon. Lady said about wages having been forced below the rate of inflation.
Ms. Short: It does not totally disprove what I said. There is no doubt that the Government want to reduce pay levels. Shortly after 1979, they were more covert about that aspect but they now openly admit it in speeches about the economy and their objectives. All sorts of moves have been made to reduce the protection that was formerly available for the low paid.
The Government accept that if they reduce wages more people will be living on low pay. That is a necessary part of their strategy. They deliberately set out to cut supplementary benefit for young people and to cut the allowances paid under the youth training scheme. Indeed, they have destroyed the training value of YTS by making the reduction of pay levels of young people their top priority. That is no secret. It would be ridiculous for

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anyone to pretend that it is. An open part of the Government's economic objectives is their aim to reduce wage levels and therefore to increase the number of people living on low pay. That fact cannot be contested.
It is no good Ministers or Conservative Members saying in economic debates, "Yes, of course, wage levels must be reduced," and then during debates about poverty, low pay and supplementary benefit pretending that they are sorry that people are living on low pay. It is not good enough to pretend that we should compartmentalise those factors, because they are all part of the Government's strategy. The Government are deliberately increasing the number of people on low pay. They are increasing also the number of unemployed, although on this occasion the cut will not hurt them. As the months grind by, there will constantly be cuts in housing benefit which will make poorer the people living on low pay.
A couple of days ago, we were talking about the fact that in 1984 poverty is visible when one walks around the streets. When I was a child, some people at school with me had the white, grey faces of poverty, thin clothes and poor shoes. Their skin showed that they were not living in decent conditions, obtaining good food, and so on. That sight disappeared during the 1960s and 1970s. It has disappeared in areas like mine. I represent the area in which I went to school, so I am talking about people who live in the same part of the country. All the children who went to school wore warm clothes and good shoes, and the whiteness of poverty disappeared. I see that poverty again in the streets of Birmingham. Two days ago, my hon. Friend the Member for Derby, South (Mrs. Beckett) said to me that she saw that poverty in her part of the country.
This is not a matter of political debate or hoo-ha. We are talking about the fundamental quality of people's lives and whether children can grow up healthy in 1984. The consequences of the Government's economic and benefit policies is that all that poverty, suffering and ill-health will return in increasing proportions.
The other part of the Government's attack is on the 16-year-olds and 17-year-olds who are lucky enough to have a job, but, goodness me, there are few of them. One in every two under-18-year-olds is unemployed or temporarily on the youth training scheme. Our young people cannot leave school, expect to get a job and get started on their lives. The vast majority of them are unemployed. That is the new experience of Great post-1979 Tory Britain when we are told that the economy is being improved and refined.
Many of them are earning less than 16 and 17-year-olds used to earn. That is an open and deliberate part of Government policy. Ministers representing the Department of Employment frequently say that it is desirable that the wages paid to young people should be cut. They claim that it will increase the numbers in work. They have been busily cutting, but the numbers in work have been declining. That, however, is another argument. Those 16 and 17-year-olds who are lucky enough to have a job, although at lower wages than people of that age could expect five or 10 years ago, are the second group that is under attack. It is expected that in future they will pay more towards the family budget.
Our fear is that that will break up families. When 16 and 17-year-olds leave school and start to earn a living, it is a time of tension in all families. Life is changing, young
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people are becoming adults and conflict within families is normal. It is worse in families with no money. It is an expensive time of life. Young people want to go out, dress up and do all sorts of things. There has been a number of similar benefit changes over the past few years and we fear that the present changes will increase tension within the family and cause 16 and 17-year-olds to leave home, go on the streets, come to live in London and engage in all the desperate things that are happening to young people. The current heroin epidemic must be connected with the conditions in which our young people are living and their lack of hope.
The Government undertook to do research so that we would know whether the changes were increasing the break-up of families. I hope that the Minister will tell us whether the research has been started, what progress has been made, whether there are any results, and whether we are right. I suspect that we are and that one of the effects of this mean change—this further attack on the young—is that more families are breaking up.
The Government claim that they cannot afford to look after the poor better. They claim constantly that public expenditure must be held down. That is another gross untruth, because in the Finance Bill massive tax concessions are being made to the rich as they have been year after year. It is part of the openly declared Government strategy of making Great Britain more unequal so that, they say, we will be greedier, more competitive and more enterprising. The Government say that that will make the market economy flourish and we will become more efficient. There is no evidence of that. The strategy is not working. Our output is lower than it was in 1979, but the Government deliberately gave massive tax handouts to the rich in the Finance Bill.
When we debate supplementary benefit, the Government tell us that there is no money. That is not true. There is money. They are giving it away to the rich because they believe that they are deserving. They are taking it away from the poor. There is no excuse for that, and the Government cannot pretend that there is. We compartmentalise policy discussions in the House and it is not good enough for them to pretend that there is not enough money for supplementary benefit for the poor when they can afford to give a great deal away to the rich.
There has been a massive increase in spending on defence and so-called law and order. There have been fantastic increases in police pay. Many of us think that it cannot be an accident to take from the poor, generate unemployment and then spend more on the forces of law and order because one is worried that the poor may become uppity and start to protest, so that a bigger stick is needed to hold them down with. There is money to build new prisons. The Government can find money when they want to for their political priorities. When they decide that the rich should be given money, to spend more on law and order, and to build prisons, there is plenty of money. When we ask for money for the poor, the Government suddenly do not have any. That excuse will not do, and we will not accept it.
The Government are aware, and have admitted, that the scheme is a mess. It has been a disgraceful chaos. We could all give examples from our own cities and constituencies of old people who run into arrears of rent for the first time. They cannot bear to be in arrears and they have therefore paid the rent and live on less than the

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survival level measured by the benefits that we provide. They do not spend money on food, clothing and heating so that they do not run into debt.
I do not know whether Conservative Members are aware—I do not believe that they can be—that when people grind along, just about managing on their money, debt is serious and painful. If people just manage to cope for years and years on their money and then receive a letter saying that they owe £400 in back rent, it is an inconceivable amount of money for them to find. It breaks people up. More than one person has come to my advice bureau and told me that they are contemplating killing themselves. They have cried. It has not been just an empty threat. That is what has been happening to people in Great Britain in 1984 because the Government were mean-minded when they designed the housing benefit scheme. The Government tried to save a little money. They did not put enough into administration. The scheme was too complex. Instead of making the level of benefit sufficiently generous so that the administration would be simple, they held back. That is the fundamental problem.
There has been a mess everywhere. Many people have suffered badly. Those of us who attend to our constituency cases are aware of that and the Government have conceded that. They have admitted that they made a muck of the scheme. They have set up an inquiry to review the scheme to see whether it can be improved. That is welcome, but before the inquiry can report they impose further cuts which will create further chaos.
Last week I visited the housing benefit department of Birmingham. Initially the administration was very bad. It has become somewhat better, but I still receive letters from people who are owed masses of money but who are sent letters saying that they will be evicted.
The part of the scheme relating to the private sector is in difficulties now. The council sector is not as bad as it was. I asked whether Birmingham was worse than anywhere else in the country. The officials told me that it was not. I know about Birmingham through my own experience but, from what I was told, I know that we are talking about the whole country. Matters are a great deal better than they were, but there is still a backlog of about 10,000 cases. The officials told me that when the changes are introduced in November the scheme will be thrown back into chaos.
There is an inquiry to review the scheme because it is known to be chaotic. Local authorities are trying to cope. They have increased the staff who run it, but they have been given no undertaking by the Government that they will not be penalised by another aspect of Government policy—one, I presume, that we are not supposed to talk about today. The Government are trying to cut local government expenditure and the number of staff employed.
Will the Minister tell me how the extra staff who have been taken on in cities such as Birmingham to make the scheme run better will be treated for the purposes of the penalties being imposed upon local government staffing levels? That is an important question, and I should be grateful for an answer.
I was told in Birmingham last week that the scheme was working better but was still not perfect, and that it would become more chaotic in November. That is intolerable. The Government are undermining the value of the
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undertaking that they gave to review the scheme. It is wrong to introduce further cuts and complications before the scheme has been reviewed and starts to work well.
The Government have a number of questions to answer. How is the review going and when shall we know the results? Is the money spent on mortgage tax relief being taken into account? Is the review dealing with the total housing subsidy paid out by the Government? If not, the Government should admit openly the bias and limitation of their policy and of the review.
I apologise for not being present to hear the Minister's opening remarks, but we were here until 3 am today and one has to do one's mail some time. I had intended only to listen to the debate, not to speak, but I was shocked to see so few Members in the Chamber.
Dr. Boyson: There are not many on the Opposition side either.
Ms. Short: It does not matter which side. People should know the truth. There should be more Members present to discuss a matter that is causing so much distress to so many of our constituents. Nevertheless, I sincerely apologise for missing the Minister's opening speech. That was perhaps balanced by the fact that I missed the bulk of the opening speech for the Opposition, too.
Having worked in Whitehall, I know that the appeal made to the Minister by the hon. Member for Kemptown was unrealistic. If the Minister sleeps on the matter and rings up the Treasury tomorrow morning with such a plea, nothing will happen. Indeed, once he sleeps on it he will not even be tempted to try.
There is only one thing for the Minister to do and I shall be happy to give way if he wishes to do it. He must stand up now and say that he agrees with our arguments—I am sure that in his heart he agrees with us—and that he will withdraw the regulations. We are told that he is a brave and courageous Minister. Let him show his courage by withdrawing the regulations. He will then be sacked, but he will have shown that he has guts. In any case, the Government's unpopularity is increasing so much that there will have to be a change. If the hon. Gentleman distances himself from the current Administration he may well improve his future political career in the Conservative party. I appeal to him to show that he is indeed such a fine man as the flattering descriptions claim, that he has courage, that he cares about the poor and that he intends to review and improve the housing benefit scheme.
6.42 pm
Mrs. Margaret Beckett: I am tempted to pause to give the Minister time to respond to the touching appeal made to him by my hon. Friend the Member for Birmingham, Ladywood (Ms. Short), but it seems that he does not intend to do so. Although there have been many contributions, the debate has been interesting and useful. It must also have been a difficult one for the Minister and for his hon. Friend the Under-Secretary of State.
No one has asked why the regulations have been introduced, because we all know the reason. The simple, straightforward and ultimately compelling reason for the Government was the wish to save money. As my hon. Friend the Member for Ladywood rightly said, that is not because the Government are forced to save money in this area but because they have chosen to do so. Of the many

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dishonest facets of the Government's behaviour, one of the most consistently dishonest is the claim that they are constantly forced to do unpleasant things because the money is not there. In fact, the money is there, but the Government deliberately choose to spend it for the benefit of those who are already wealthy and to penalise the most vulnerable and the worse off in our society.
The scheme shares many characteristics with the rest of the Government's record. First, it is an administrative shambles. No one has sought to pretend otherwise from the moment that it was introduced. The only argument has been whether it is a greater shambles in Birmingham than in London or in one authority compared with another and who is most at fault.
Secondly, in common with many other Government schemes, this scheme seems to consist of arbitrary, ad hoc rules designed to save money in various ways. The Government have cast about for any nit-picking measure that they can devise and any little regulation that can be slipped in to save a few hundred thousand pounds or a couple of million here or there because they have lost the battle with the Treasury about saving money on the scheme.
Thirdly, the scheme shifts the blame and the burden of housing support on to someone other than the Government. If there is any utterly consistent characteristic of the Government — this is true of the Prime Minister even more than of other Ministers—it is that whatever goes wrong is someone else's fault. It is pathetic to see Ministers casting around for someone to blame for the dozens of things that go wrong daily under their Administration. They never admit that anything is their fault or the result of their actions. They always insist that they are in no way to blame.
In this case, not only the blame but a substantial administrative burden has been shifted on to local authorities, apparently without any understanding of the need to provide extra assistance to the authorities so that they can cope with the additional burden. I echo my hon. Friend the Member for Ladywood in asking for assurances from the Minsiter today that his colleagues at the Department of the Environment will not penalise local authorities for doing the Government's dirty work for them as there is no question at all of the authorities wishing to carry out such work.
The final characteristic that the scheme shares with so much else in the Government's record is that it deals with the poor more harshly and on a different basis from the rich. In his opening remarks the Minister sought to deal with two basic themes. He is too shrewd to attempt any major defence of a scheme that is recognised by every commentator and by anyone with experience of it as utterly hopeless. Instead, he tried to give the impression that the Government were being not merely generous but almost too generous to the poor, implying that the Government were so worried about their over-generosity that they felt compelled in the interests of the poor themselves to claw back some of the money through the cuts now proposed.
The Minister talked about the large earnings of people drawing housing benefit, suggesting that it was undesirable that people with above-average earnings could draw benefit and that the scale rates must be too generous.
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Ministers must recognise, however, that a person on above-average earnings can be entitled to housing benefit only if he has to pay a substantially above-average rent. The scale rates applying to average rents come nowhere near average male incomes. The Minister's comment thus applies only if the rent is excessive.
As my hon. Friend the Member for Oldham, West (Mr. Meacher) said in opening, excessive rents themselves are largely the result of Government policy. In this case, the culprit is not the DHSS but the Department of the Environment and the Government's overall economic strategy of substantially cutting support for local councils. Here again, therefore, the Government are criticising people for things that are caused entirely by the Government's own policy.
I sympathise greatly with the hon. Member for Brighton, Kemptown (Mr. Bowden) about the difficulties and complexities of the scheme. All of us—including, no doubt, Ministers—who speak on these matters do so with some trepidation. The hon. Member for Kemptown, too, seemed to be emphasising what one might charitably describe as the Minister's mistake in implying that the scheme was over-generous and gave away resources unnecessarily.
The hon. Member for Kemptown referred to the housing benefit supplement. He remarked on its complexity, and said that it was difficult to justify. However, I think that he was aware of the only reason for the existence of that supplement, which is as follows. Let us take the case of a married couple with two children, paying rent of £15 a week—a sum which is by no means uncommon — and who, because of the Government's success in keeping down wages in many of the most low-paid occupations, are earning incomes which are below even the short-term rate of supplementary benefit and yet are still on the rebate side of the scheme. Although their earnings amount to less than the short-term rate of supplementary benefit, they could end up paying a proportion of their housing costs. It is in order to avoid that aspect of the poverty trap that the housing benefit supplement was introduced. That is a clear rebuttal of the Minister's suggestion that the scheme is too generous. It is so ungenerous that the Government are forced to complicate it by special measures to deal with such people.
In particular, the Minister sought to imply that the Government are being generous to those who are really poor. I am afraid that that, too, is not true. Many hon. Members have referred to what may be the worst aspect of the cuts — the increases in the non-dependant deductions which are applied to young people. My hon. Friend the Member for Oldham, West and others highlighted the damaging effects that those cuts are likely to have, but I must return to the point again, because the contrast is so sharp, so significant, and so typical of everything that the Government do.
My hon. Friend quoted the Secretary of State's remarks on 6 February about the taxpayer's contribution. The Secretary of State said that "rather than the taxpayer, a non-dependant living in the house of someone claiming housing benefit should be expected to make a contribution to housing costs."
One could ask whether that is a valid argument, but if it is so vital that a young person with earnings who is living in someone else's household — probably that of his parents—should make a contribution, why is that only the case when the taxpayer's contribution takes the form

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of housing benefit? Why is it not a matter of concern when the young person is living in a household where mortgage relief is applicable? In such a household, the income is likely to be substantially greater and the need substantially less.
Let us consider the situation of a typical family with a high income and a high mortgage and one or two non-dependent children living at home. We might stretch a point and think of those hypothetical children as, say, Mark and Carol. Those children may have substantial incomes of their own. However, if they choose to live in their parents' household, not a penny will be required from them to lift the taxpayer's burden. It is only those whose families are already disadvantaged, whose families meet the Government's somewhat harsh criteria for entitlement to housing benefit, who are expected to make such a contribution.
Finally, still with the Government's claim to generosity in mind, I should like to follow an example set by the Government. Ministers constantly look back to the record of the previous Labour Government. I propose to look further back, to the record of the Conservative Government which preceded them. There was then a scheme of housing support. I want to highlight two facets of that scheme. We all recognise that in such a scheme of housing support, wherever the level of needs allowance falls, there is additional help for those who fall below the level and less help for those above it. Looking back to 1972, we find that, as one would expect, the treatment of those whose income is below the needs allowance is the more generous. That seems to be logical, because they are the people in the greatest need.
Today, we have heard the Minister warmly commending what his Government have done for the poor. However, the previous situation has been reversed. Among those who are able to benefit from the scheme as it now stands, the less income they have, the more harshly they are treated. The taper is worse for those below the needs allowance than those above it. That is ridiculous, even by the Government's standards.
Secondly, I am interested in the record of previous Conservative Administrations in relation to the level at which all benefit is lost. Today, all entitlement to benefit will be lost in a family where the income is £34 above the level of the needs allowance for that family. Over 10 years ago, in 1972, all entitlement to benefit was not lost until such a family earned £50 above the needs allowance. Those are not figures in real terms. They are cash figures. The difference is even worse than it appears to be at first sight.
We hope and expect that not only the hon. Member for Kemptown, but all the hon. Members who signed the early-day motion will join us in the Lobby. In particular, we intend to vote against the regulations dealing with the taper on the present scheme.
We note that the Government are engaged on a housing review. We have expressed astonishment that, when such a fundamental review—as it has been termed—is being undertaken, the Government should press ahead with these changes. We regret the fact that the review is precluded from examining anything other than the housing benefit scheme, and is not considering the side of housing support which deals with owner-occupiers. Perhaps the Under-Secretary can tell us that he will reconsider that point.
Most of all we regret the fact that—being consistent in this respect at least—the Government, claiming to be
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faced with the need to look for savings, have chosen once again to look to the poor rather than the rich. For that reason, if for no other, we shall vote against the regulations tonight.
6.57 pm
The Parliamentary Under-Secretary of State for Health and Social Security (Mr. Tony Newton): I have had an irresistible feeling this afternoon that I am watching an old and familiar film that I have already seen 10 times. Unfortunately, the hon. Member for Oldham, West (Mr. Meacher) and his comments on housing benefit do not have the same addictive qualities as Julie Andrews in "The Sound of Music".
The fact that this has been a re-run of some old and tired arguments from the Opposition was reflected in the fact—acknowledged engagingly by the hon. Member for Birmingham, Handsworth——
Ms. Clare Short: Birmingham, Ladywood!
Mr. Newton: I am sorry. I was wrongly advised from on high. The new constituency includes the old constituency of Handsworth. The hon. Member for Birmingham, Ladywood (Ms. Short) engagingly acknowledged that the Opposition had had the greatest difficulty in sustaining the debate and wheeling in enough hon. Members to trot out the tired old arguments. However, that is a matter for the Opposition.
The debate has had three main elements. The major purpose of discussing both housing benefit and uprating in general is to enable us to discuss the uprating of housing benefit needs allowances, which has attracted relatively little controversy or comment. I entirely understand that—it is for the good and sufficient reason that it is being uprated in a perfectly normal way and will help many tenants because the needs allowances will be increased in line with the normal formula which reflects, among other things, changes in housing costs. It is right for me to remind the House of those beneficial changes as they have not received much attention except from my hon. Friend the Minister for Social Security.
The hon. Member for Norwood (Mr. Fraser) raised a specific point arising from the main uprating of housing benefit needs allowances. He said that there was little point in reducing the earnings disregard, despite the fact that it arose from applying the normal formula, because, he said, it will only go up again in April. I am afraid that I was not present when he made that point. The reduction in the disregard is a sign of the Government's success in reducing the burden of income tax on the low paid, as it is the result of the rise in tax thresholds. Moreover, the changes occur in November so that the low paid who receive housing benefit have already benefited from lower taxation since April. Although I can see that it can be argued whether 45p merits a change, I should say that the original cause was the increase in tax allowances, the benefit of which is already felt by those who are affected.
The second major theme of the debate was the miscellaneous changes in the various measures. They were given relatively little emphasis, partly, I imagine, because they are favourable. Oppositions tend not to comment on what the Government are doing when the results are favourable. Some of the changes are detailed and complicated, but almost all are beneficial. They are being made constructively in response to the comments that the

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Social Security Advisory Committee made earlier this year or in respeonse to specific suggestions that have been made by local authorities on how we can help them by simplifying and improving the scheme. I should like to emphasise that latter point to Opposition Members and my hon. Friend the Member for Brighton, Kemptown (Mr. Bowden).
Perhaps I should spell out in a little more detail the proposed change to apply the lower rate of non-dependant deduction to non-dependants who are sick or unemployed. Under the existing regulations, claimants must make a special application for the lower rate deduction, which cannot take effect earlier than in the week in which the claim is decided. The Social Security Advisory Committee recommended that the lower deduction should be backdated to the start of the claim if the conditions were satisfied then and that local authorities should make a positive inquiry into whether a non-dependant receives one of the qualifying benefits. We accepted both of those recommendations and this package contains the necessary amendments to give effect to them. The fact that claimants will no longer have to make separate applications for the lower deduction will make it easier for people to benefit. I am sure that both sides of the House welcome that.
We are making two other, albeit minor, changes that will benefit some claimants. When a non-dependant has just left school, he is normally unable to claim supplementary benefit in his own right until the end of his entitlement to child benefit—normally roughly at the end of the school holiday. If, however, he works during that time, he will be treated as a non-dependant for housing benefit purposes and may be expected to contribute towards the family's housing costs. In certain circumstances such as, for example, sickness or unpaid holidays, the fact that a non-dependant cannot claim supplementary benefit could result in his not receiving any income from which to make that contribution. That is clearly undesirable. To avoid such difficulties, we are providing for non-dependant deductions to be waived when a school leaver cannot claim supplementary benefit.
Ms. Clare Short: Big deal.
Mr. Newton: It is not a big deal in the great sweep of things, but it could be quite important to claimants who are expected to make a contribution from low income. The fact that we have taken the trouble to examine and tackle that problem makes pretty fair nonsense of much of what the hon. Lady said in her speech.
Ms. Short: Will the Minister admit that young people used to be entitled to benefit immediately after they left school and that the present Government took away that entitlement, thus creating the anomaly that he now claims great credit for correcting?
Mr. Newton: The cause of the anomaly is a good deal more complicated than that. Of course I acknowledge that the Government changed supplementary benefit entitlement, and I am prepared to defend it, if necessary, as it corresponds with another aspect of the reality of the way in which most people operate on leaving school. The fact remains that we have recognised the problem and tackled it.
We are amending the housing benefit regulations so that, if certificated housing benefit is in payment for two
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homes—that can happen in limited circumstances—a deduction for amenities that are included in the rent, such as heating, will be made only in respect of the dwelling in which the claimant lives. There is a limit to what can be regarded as available for fuel costs in the supplementary benefit scale of rates, and the amendment will help to ensure that claimants are not expected to pay more than is reasonable. I acknowledge that those changes are small but I hope that the House will welcome them.
The hon. Member for Norwood mentioned overseas students. Local authorities will have to make additional inquiries to establish which students are affected. That should be fairly straightforward in the majority of cases, but it is a sensitive matter. I accept that the hon. Gentleman has raised a serious point and we shall issue detailed guidance to authorities.
I need say little else about the miscellaneous changes except that I am fascinated and encouraged that nobody except my hon. Friend the Minister and the hon. Member for Oldham, West has said one word throughout the debate about the proposed regulation to deal with Sheffield council's attempted fiddled rent scheme to raise the amount of money that the city takes from housing benefit. I say that I am encouraged because——
Mr. Roland Boyes: The Minister should withdraw the word "fiddled".
Mr. Newton: If the hon. Gentleman prefers the expression "ripped off' to "fiddled", perhaps we can happily agree.
Mr. John Fraser: It could be called tax planning.
Mr. Newton: I was encouraged by the fact that the Opposition have become realistic enough not to attempt to defend Sheffield city council's proposition. It is extraordinary to suggest providing the minimum service at maximum cost, all at someone else's expense. That might be classified the ultimate Socialist scheme.
Mr. Tony Lloyd: I remind the Minister that yesterday the Secretary of State for the Environment called Sheffield the model of efficiency and said that it was an example to all other authorities. Obviously the Under-Secretary should talk to his right hon. Friend.
Mr. Newton: I do not imagine that my right hon. Friend, when he said that, had it in mind that Sheffield proposed to charge its poorest tenants the most rent——
Ms. Clare Short: To get the money back from the Government.
Mr. Newton: Yes.
Mr. Robert Kilroy-Silk: I like the idea of that.
Mr. Newton: It is a scheme to charge the poorest tenants the highest rent to attract additional subsidy from the Government. It is disguising that by providing a minuscule service which seems to consist primarily of easing doors after decoration. The council proposes to charge £5 a week to other tenants for that service and make them a repairs allowance of £5 a week. If Sheffield city council is spending an average of £5 a week to ease the doors of all of its tenants' properties after redecoration, we do not have to look far to see where it can make further economies.
Mrs. Beckett: Would it not be simpler for the Minister to admit that, as so often happens with the Government,

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the left hand does not know what the right hand is doing and that the Secretary of State for the Environment does not know what the DHSS is doing from one day to the next?
Mr. Newton: The Government have a consistent local government policy. My right hon. Friend the Secretary of State for the Environment is anxious to restrain increases in local authority expenditure. The DHSS is concerned that local authority expenditure is not sustained at a high level at the expense of the taxpayer and of other social security claimants. That would happen if Sheffield was allowed to get away with its proposals.
The main thrust of the debate is in relation to old ground—the spring package following the autumn statement of major changes in the housing benefit scheme. There is genuine merit in the overall strategy underlying housing benefit, despite the undoubted problems with some aspects of its introduction. I believe that that view is supported on both sides of the House.
The strategy replaced supplementary benefit help with rent and rates, as well as local authority rebates and allowances, with a single scheme administered by local authorities. In doing so, it has largely resolved the so-called "better off' problem—that is to say, the problem of claimants not knowing whether they would be better off on supplementary benefit or with rebates.
I respect the sincerity of my hon. Friend the Member for Brighton, Kemptown (Mr. Bowden) and I have noted his views. He implied that, under the housing benefit scheme, there had been a sudden need for beneficiaries to scurry between the DHSS and local authorities. It is inaccurate to say that the problems that they face have become increasingly complex.
The complexities of the "better off' problem under the previous scheme, when the two detailed systems of support, and of housing costs ran side by side, were at least as great as under the present scheme. In my view, the previous scheme was more complex.
The number of claimants, the amount of housing benefit and, to some extent, the increased difficulties of administration, are greater than anticipated. It is easier now to establish entitlement to housing cost, and it is likely that the take-up of benefits has increased, especially among pensioners who were so confused that they did not know their entitlement.
Ms. Clare Short: As I said in my speech, last week I visited the offices where the scheme is administered in Birmingham. Mr. McGrath, who is running the scheme, said that one of the merits claimed for the scheme was that it would deal with the "better off' problem. It does not do so. In practice, it is so complex that people still cannot work out whether they will be better off.
Mr. Newton: I accept that the new scheme has not entirely resolved the "better off' problem. That is why the housing benefit review was set up. We intend and expect that the review will deal with the problem. The problems encountered by the existing scheme should not be exaggerated as if the previous one had operated perfectly and avoided the difficulties that we are describing.
Mr. Andrew Bowden: I understand my hon. Friend, and I accept that the previous scheme was far from perfect. The difference is that the previous scheme was clear cut. Rebates were dealt with by local authorities, and rent
566
entitlement was dealt with entirely by the DHSS. Now, the scheme works well if one is entitled only to standard housing benefit and difficulties arise when one is entitled to housing benefit supplement. Pensioners and others must go to the local authority office and to the DHSS office to sort out one specific entitlement in housing.
Mr. Newton: I understand my hon. Friend's point. Housing benefit supplement is one of the most difficult areas of the scheme. That is one of the reasons why we have asked Mr. Rowe to conduct the review, and why my hon. Friend is looking into these matters.
I must emphasise that we have made a vigorous effort to overcome one aspect of the housing benefit supplement problem. We have issued a formula to local authorities which should help them to identify readily most of the pensioners who are entitled to housing benefit supplement. I cannot undertake that all local authorities will use the formula or apply it in the way that we should like, but we have sought to tackle the problem. I hope that what emerges from the review will enable the problem to be tackled more effectively.
The hon. Member for Norwood asked some detailed questions. He gave the impression, when referring to non-dependant deduction for 16 to 17-year-olds, that the youngsters on the youth training scheme would be expected to contribute, where unemployed youngsters and those on supplementary benefit would not. That is not the case. The regulations continue the exemption of young people on YTS. They are not expected to make the contributions payable by other 16 to 17-year-olds.
Several general points were raised by the hon. Member for Oldham, West and by other hon. Members. We heard much about the poverty trap, in terms that seemed to overlook entirely the fact that the shallower the tapers for housing benefit — that is to say, the further up the income scale that housing benefit is allowed — the broader will be the poverty trap. More people will be subject to deductions over and above the tax threshold. The hon. Gentleman was really saying that we have slightly deepened the poverty trap for some groups, but have narrowed it. It is a matter of judgment where to strike the balance between narrowing the poverty trap and making it shallower or deeper, but it is misleading to suggest that we have increased the poverty trap without recognising the distinction between its width and its depth. I hope that the hon. Gentleman will acknowledge that at least.
I am tempted to say that the logic of what the hon. Members for Oldham, West, for Ladywood, and others say about the poverty trap would reduce those receiving housing benefit to nil. The quickest and easiest way of eliminating the poverty trap is to eliminate the benefits that give rise to it—the means-tested benefits that rise a long way up the income scale. If Opposition Members are to be serious contributors to the debates on social security, they must think more seriously about the poverty trap than they seem to have done this evening.
The hon. Member for Oldham, West, and to some extent the hon. Member for Ladywood, spoke in terms of a vendetta against 16 to 17-year-olds. Let us be clear that we are talking about 16 to 17-year-olds in work. Young men earn an average wage of £67 a week, and young women and average of £61 a week. We expect them to contribute only £3·30 a week to household costs, including

567
rates. If that is construed as a vendetta against young people, I think that Opposition Members are living in a dream world.
Mr. Meacher: Rent rebate families are basically poor families. If it is not right that the non-dependant deductions should apply to better-off families who are getting tax relief on mortgages, why should not the taxpayer be relieved on the mortgage interest burden?
Mr. Newton: I should like to ask the hon. Member for Oldham, West a question or two. I do not know whether that is in order, Mr. Deputy Speaker.
We have heard much about mortgages this afternoon. We now have it firmly on the record that it is official Opposition policy, as I understand it, to restrict mortgage interest relief to the basic rate of tax. That will be of interest to a number of people. I hope that the hon. Gentleman will confirm my understanding of his remarks this afternoon. But let us now go beyond that. The hon. Gentleman is now suggesting that he intends to reduce mortgage interest relief for families on the basic rate of tax according to their children's income. Is that or is that not the policy of the Opposition?
Mr. Meacher: No, it is not. It is perfectly clear that it is not. The argument was that, if it is right for non-dependant deductions to be made in respect of poor families who are on a rent rebate — that is the Government's policy, not our policy — why is it not right for it also to be done for richer families getting mortgage interest relief? That is a problem for the Government because it is their policy, not ours.
Mr. Newton: In that case, may we take it that the Opposition's policy is to pay housing benefit regardless of the income coming in to households, in other words, to pay subsidies for rent regardless of the ability of people living in the household to contribute to those costs? If so, not only would the benefit bill be increased beyond what the Government think it should be, but, in what I would regard as a profligate and irresponsible way, that would consume money that could be better used for beneficiaries who need additional benefit and for whom we are not able to do sufficient.
Ms. Clare Short: Will the Minister give way?
Mr. Newton: I shall not give way again. The House is anxious to bring the debate to a conclusion.
Ms. Short: What about research?
Mr. Newton: We are looking at that matter in the wider context of a review of benefits for children and young people. The hon. Lady will understand that it is a difficult area. It would require long-term and complex research. It is in that broader context that we are considering the matter.
That brings me to the point on which I should like to end because in a way it reflects the attitude of the Opposition throughout the debate. We have heard a great deal about losers and problems, but we have heard nothing about the million pensioners who gained an average of £1 a week when housing benefit was introduced. We have heard nothing about the million families who will gain first this November and then next April from the real increase in the children's needs allowances under the housing
568
benefit scheme. Above all, we have heard nothing that reflects the fact that the vast majority of the least well off tenants on housing benefit, whether pensioners or others, are left untouched by the package, which does no more than make a modest and sensible economy in the social security budget from those on housing benefit who are among the better off of those who receive social security benefits. It is a reasonable, sensible and balanced policy. I have no doubt that it will have the support of my right hon. and hon. Friends in the Lobby.
Question put and agreed to.
Resolved,
That the draft Housing Benefits (Increase of Needs Allowances) Regulations 1984, which were laid before this House on 6th July, be approved.
Motion made—[Mr. Meacher]—and Question put,
That an humble Address be presented to Her Majesty, praying that the Housing Benefits Amendment (No. 3) Regulations 1984 (S.I., 1984, No. 940), dated 3rd July 1984, a copy of which was laid before this House on 6th July, be annulled: —
The House divided: Ayes 170, Noes 271.

Division No. 417]

[7.25 pm

AYES

Abse, Leo

Eadie, Alex

Adams, Allen (Paisley N)

Eastham, Ken

Alton, David

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

Anderson, Donald

Ellis, Raymond

Archer, Rt Hon Peter

Evans, John (St. Helens N)

Ashdown, Paddy

Fatchett, Derek

Ashley, Rt Hon Jack

Faulds, Andrew

Ashton, Joe

Flannery, Martin

Atkinson, N. (Tottenham)

Forrester, John

Barnett, Guy

Foster, Derek

Beckett, Mrs Margaret

Foulkes, George

Beith, A. J.

Fraser, J. (Norwood)

Bermingham, Gerald

Freeson, Rt Hon Reginald

Bidwell, Sydney

Freud, Clement

Blair, Anthony

George, Bruce

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

Gilbert, Rt Hon Dr John

Boyes, Roland

Godman, Dr Norman

Bray, Dr Jeremy

Golding, John

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

Gould, Bryan

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

Hamilton, W. W. (Central Fife)

Brown, Ron (E'burgh, Leith)

Hardy, Peter

Bruce, Malcolm

Harman, Ms Harriet

Buchan, Norman

Harrison, Rt Hon Walter

Callaghan, Jim (Heyw'd & M)

Healey, Rt Hon Denis

Campbell-Savours, Dale

Heffer, Eric S.

Carlile, Alexander (Montg'y)

Hogg, N. (C'nauld & Kilsyth)

Carter-Jones, Lewis

Holland, Stuart (Vauxhall)

Cartwright, John

Howell, Rt Hon D. (S'heath)

Clark, Dr David (S Shields)

Hoyle, Douglas

Clarke, Thomas

Hughes, Dr. Mark (Durham)

Clay, Robert

Hughes, Robert (Aberdeen N)

Clwyd, Mrs Ann

Hughes, Sean (Knowsley S)

Cohen, Harry

Hughes, Simon (Southwark)

Coleman, Donald

John, Brynmor

Conlan, Bernard

Johnston, Russell

Cook, Robin F. (Livingston)

Jones, Barry (Alyn & Deeside)

Corbett, Robin

Kennedy, Charles

Cowans, Harry

Kilroy-Silk, Robert

Cox, Thomas (Tooting)

Kirkwood, Archy

Craigen, J. M.

Lamond, James

Crowther, Stan

Leadbitter, Ted

Cunliffe, Lawrence

Leighton, Ronald

Cunningham, Dr John

Lewis, Ron (Carlisle)

Dalyell, Tarn

Lewis, Terence (Worsley)

Davies, Rt Hon Denzil (L'lli)

Litherland, Robert

Davies, Ronald (Caerphilly)

Lloyd, Tony (Stretford)

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

Lofthouse, Geoffrey

Deakins, Eric

Loyden, Edward

Dewar, Donald

McCartney, Hugh

Dixon, Donald

McCrea, Rev William

Dormand, Jack

McDonald, Dr Oonagh

Dubs, Alfred

McKay, Allen (Penistone)

Dunwoody, Hon Mrs G.

McKelvey, William

569

Mackenzie, Rt Hon Gregor

Ross, Ernest (Dundee W)

McTaggart, Robert

Rowlands, Ted

McWilliam, John

Sedgemore, Brian

Madden, Max

Sheerman, Barry

Marek, Dr John

Sheldon, Rt Hon R.

Marshall, David (Shettleston)

Shore, Rt Hon Peter

Mason, Rt Hon Roy

Short, Ms Clare(Ladywood)

Maxton, John

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

Maynard, Miss Joan

Silkin, Rt Hon J.

Meacher, Michael

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

Meadowcroft, Michael

Snape, Peter

Mikardo, Ian

Soley, Clive

Millan, Rt Hon Bruce

Spearing, Nigel

Miller, Dr M. S. (E Kilbride)

Stewart, Rt Hon D. (W Isles)

Mitchell, Austin (G't Grimsby)

Strang, Gavin

Morris, Rt Hon A. (W'shawe)

Straw, Jack

Morris, Rt Hon J. (Aberavon)

Thompson, J. (Wansbeck)

Nellist, David

Thorne, Stan (Preston)

Oakes, Rt Hon Gordon

Tinn, James

O'Brien, William

Torney, Tom

Orme, Rt Hon Stanley

Warden, Gareth (Gower)

Park, George

Wareing, Robert

Parry, Robert

Weetch, Ken

Patchett, Terry

Welsh, Michael

Pavitt, Laurie

White, James

Pike, Peter

Wilson, Gordon

Powell, Raymond (Ogmore)

Winnick, David

Prescott, John

Woodall, Alec

Redmond, M.

Wrigglesworth, Ian

Rees, Rt Hon M. (Leeds S)

Young, David (Bolton SE)

Roberts, Ernest (Hackney N)

Robertson, George

Tellers for the Ayes:

Rogers, Allan

Mr. Frank Haynes and Mr. James Hamilton.

Rooker, J. W.

NOES

Aitken, Jonathan

Forth, Eric

Alexander, Richard

Fox, Marcus

Alison, Rt Hon Michael

Franks, Cecil

Amery, Rt Hon Julian

Fraser, Peter (Angus East)

Atkins, Rt Hon Sir H.

Freeman, Roger

Atkins, Robert (South Ribble)

Fry, Peter

Baker, Rt Hon K. (Mole Vall'y)

Gale, Roger

Benyon, William

Galley, Roy

Berry, Sir Anthony

Gardiner, George (Reigate)

Biggs-Davison, Sir John

Gardner, Sir Edward (Fylde)

Boscawen, Hon Robert

Glyn, Dr Alan

Bottomley, Peter

Goodhart, Sir Philip

Bottomley, Mrs Virginia

Goodlad, Alastair

Bowden, Gerald (Dulwich)

Gow, Ian

Boyson, Dr Rhodes

Grant, Sir Anthony

Brandon-Bravo, Martin

Greenway, Harry

Brittan, Rt Hon Leon

Gregory, Conal

Brooke, Hon Peter

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

Brown, M. (Brigg & Cl'thpes)

Griffiths, Peter (Portsm'th N)

Browne, John

Grist, Ian

Bruinvels, Peter

Ground, Patrick

Bryan, Sir Paul

Grylls, Michael

Buck, Sir Antony

Gummer, John Selwyn

Butcher, John

Hamilton, Hon A. (Epsom)

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

Hamilton, Neil (Tatton)

Chapman, Sydney

Hanley, Jeremy

Clark, Dr Michael (Rochford)

Hannam, John

Clark, Sir W. (Croydon S)

Hargreaves, Kenneth

Clegg, Sir Walter

Harris, David

Colvin, Michael

Harvey, Robert

Coombs, Simon

Haselhurst, Alan

Cope, John

Havers, Rt Hon Sir Michael

Couchman, James

Hawkins, Sir Paul (SW N'folk)

Crouch, David

Hawksley, Warren

Dorrell, Stephen

Hayhoe, Barney

Douglas-Hamilton, Lord J.

Haynes, Frank

Dykes, Hugh

Hayward, Robert

Farr, Sir John

Heathcoat-Amory, David

Favell, Anthony

Heddle, John

Fenner, Mrs Peggy

Hickmet, Richard

Fletcher, Alexander

Hicks, Robert

Fookes, Miss Janet

Higgins, Rt Hon Terence L.

Forman, Nigel

Hind, Kenneth

Forsyth, Michael (Stirling)

Hirst, Michael

570

Hogg, Hon Douglas (Gr'th'm)

Newton, Tony

Holland, Sir Philip (Gedling)

Nicholls, Patrick

Holt, Richard

Normanton, Tom

Hooson, Tom

Norris, Steven

Hordern, Peter

Onslow, Cranley

Howard, Michael

Oppenheim, Rt Hon Mrs S.

Howarth, Gerald (Cannock)

Ottaway, Richard

Howell, Rt Hon D. (G'ldford)

Page, Sir John (Harrow W)

Howell, Ralph (N Norfolk)

Page, Richard (Herts SW)

Hubbard-Miles, Peter

Parkinson, Rt Hon Cecil

Hunt, David (Wirral)

Parris, Matthew

Hunt, John (Ravensbourne)

Patten, John (Oxford)

Hunter, Andrew

Pawsey, James

Hurd, Rt Hon Douglas

Peacock, Mrs Elizabeth

Jackson, Robert

Pollock, Alexander

Jenkin, Rt Hon Patrick

Powell, William (Corby)

Jessel, Toby

Powley, John

Johnson Smith, Sir Geoffrey

Prentice, Rt Hon Reg

Jones, Robert (W Herts)

Price, Sir David

Jopling, Rt Hon Michael

Proctor, K. Harvey

Joseph, Rt Hon Sir Keith

Raffan, Keith

Kershaw, Sir Anthony

Rathbone, Tim

Kilfedder, James A.

Rees, Rt Hon Peter (Dover)

King, Roger (B'ham N'field)

Renton, Tim

King, Rt Hon Tom

Rhodes James, Robert

Knight, Gregory (Derby N)

Ridley, Rt Hon Nicholas

Knight, Mrs Jill (Edgbaston)

Ftidsdale, Sir Julian

Knowles, Michael

Roberts, Wyn (Conwy)

Knox, David

Robinson, Mark (N'port W)

Lang, Ian

Floe, Mrs Marion

Lawler, Geoffrey

Ross, Stephen (Isle of Wight)

Lawrence, Ivan

Rost, Peter

Lawson, Rt Hon Nigel

Rowe, Andrew

Lee, John (Pendle)

Ryder, Richard

Leigh, Edward (Gainsbor'gh)

Sainsbury, Hon Timothy

Lennox-Boyd, Hon Mark

St. John-Stevas, Rt Hon N.

Lewis, Sir Kenneth (Stamf'd)

Sayeed, Jonathan

Lightbown, David

Scott, Nicholas

Lilley, Peter

Shaw, Sir Michael (Scarb')

Lloyd, Ian (Havant)

Shelton, William (Streatham)

Lloyd, Peter, (Fareham)

Shepherd, Colin (Hereford)

Lord, Michael

Shepherd, Richard (Aldridge)

Luce, Richard

Silvester, Fred

McCrindle, Robert

Sims, Roger

McCurley, Mrs Anna

Skeet, T. H. H.

Macfarlane, Neil

Smith, Sir Dudley (Warwick)

MacGregor, John

Smith, Tim (Beaconsfield)

MacKay, Andrew (Berkshire)

Soames, Hon Nicholas

MacKay, John (Argyll & Bute)

Spencer, Derek

Maclean, David John

Spicer, Jim (W Dorset)

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

Spicer, Michael (S Worcs)

McQuarrie, Albert

Squire, Robin

Madel, David

Stanley, John

Major, John

Steen, Anthony

Malone, Gerald

Stern, Michael

Maples, John

Stevens, Lewis (Nuneaton)

Marland, Paul

Stewart, Allan (Eastwood)

Marlow, Antony

Stewart, Andrew (Sherwood)

Mates, Michael

Stokes, John

Mather, Carol

Stradling Thomas, J.

Maude, Hon Francis

Sumberg, David

Mawhinney, Dr Brian

Tapsell, Peter

Maxwell-Hyslop, Robin

Taylor, John (Solihull)

Mayhew, Sir Patrick

Taylor, Teddy (S'end E)

Mellor, David

Temple-Morris, Peter

Merchant, Piers

Thompson, Donald (Calder V)

Meyer, Sir Anthony

Thompson, Patrick (N'ich N)

Miller, Hal (B'grove)

Thorne, Neil (Ilford S)

Mills, lain (Meriden)

Thornton, Malcolm

Mills, Sir Peter (West Devon)

Thurnham, Peter

Miscampbell, Norman

Townend, John (Bridlington)

Mitchell, David (NW Hants)

Townsend, Cyril D. (B'heath)

Moate, Roger

Tracey, Richard

Montgomery, Fergus

Trippier, David

Morris, M. (N'hampton, S)

Trotter, Neville

Morrison, Hon C. (Devizes)

Twinn, Dr Ian

Morrison, Hon P. (Chester)

van Straubenzee, Sir W.

Murphy, Christopher

Vaughan, Sir Gerard

Needham, Richard

Viggers, Peter

Nelson, Anthony

Waddington, David

571

Wakeham, Rt Hon John

Whitfield, John

Waldegrave, Mon William

Whitney, Raymond

Walden, George

Wiggin, Jerry

Wall, Sir Patrick

Winterton, Nicholas

Waller, Gary

Wolfson, Mark

Walters, Dennis

Wood, Timothy

Ward, John

Yeo, Tim

Wardle, C. (Bexhill)

Young, Sir George (Acton)

Warren, Kenneth

Younger, Rt Hon George

Watson, John

Watts, John

Tellers for the Noes:

Wells, Bowen (Hertford)

Mr. Michael Neubert and Mr. Tristan Garel-Jones.

Wells, Sir John (Maidstone)

Wheeler, John

Question accordingly negatived.

Social Security
7.34 pm
The Minister for Social Security (Dr. Rhodes Boyson): I beg to move,
That the draft Social Security Benefits Up-rating Order 1984, which was laid before this House on 6th July, be approved.
I hope that it will be for the convenience of the House if at the same time we deal with the following motions:
That the draft Supplementary Benefit Uprating and Additional Requirements Regulations 1984, which were laid before this House on 6th July, be approved.
That the draft Child Benefit (Up-Rating) Regulations 1984, which were laid before this House on 6th July, be approved.
That the draft Family Income Supplements (Computation) Regulations 1984, which were laid before this House on 6th July, be approved.
That the draft Pensioners' Lump Sum Payments Order 1984, which was laid before this House on 6th July, be approved.
That the draft Supplementary Benefit (Requirements and Resources) Amendment Regulations 1984, which were laid before this House on 6th July, be approved.
That an humble Address be presented to Her Majesty, praying that the Supplementary Benefit (Miscellaneous Amendments) Regulation 1984 (S.I., 1984, No. 938), dated 3rd July 1984, a copy of which was laid before this House on 6th July, be annulled.
That an humble Address be presented to Her Majesty, praying that the Family Income Supplements (General) Amendment Regulations 1984 (S.I., 1984, No. 979), dated 11th July 1984, a copy of which was laid before this House on 13 July, be annulled.
That an humble Address be presented to Her Majesty, praying the Child Benefit (General) Amendment (No. 2) Regulations (S.I., 1984, No. 939), dated 3rd July 1984, a copy of which was laid before this House on 6th July, be annulled.
That an humble Address be presented to Her Majesty, praying that the Child Benefit (Residence and Persons Abroad) Amendment Regulations 1984 (S.I., 1984, No. 875), dated 26th June 1984, a copy of which was laid before this House on 29th June, be annulled.
The instruments are accompanied by a report from the Government Actuary on the effects of the uprating on the national insurance fund, by a statement on the uprating of mobility allowance, and by the report of the Social Security Advisory Committee, including the Secretary of State's reply. The effect of this package of instruments is to put into effect the uprating of benefits which my right hon. Friend the Secretary of State announced on 18 June, to provide for payment of the £10 Christmas bonus, and to make certain other changes.
I do not wish to repeat the main details of the changes in the individual benefits. I propose to confine myself to the main features of the uprating and to the more important changes.
On the uprating, the majority of benefits will be increased by 5·1 per cent. in line with the movement in the retail price index to May, while the supplementary benefit scale rates will be increased by 4·7 per cent. in line with the RPI, excluding housing. That is the method that has been followed in previous years.
As in 1983, the uprating is based on the historic movement in prices in the 12 months to May this year. The Government are convinced that the historic method is the best way of determining benefit rates. It may take some of the excitement out of the uprating announcement, but it means that pensioners can watch the movement of the RPI and work out what increase they will be getting in November.
Mr. Jeff Rooker: I am sorry to interrupt the Minister so soon. Will not the pensioners

573
also think that it is not without significance that, two years running, May will have had the lowest RPI of any of the 12 months? Will they not see a conspiracy in the way that the building societies drop the mortgage rate just at the right time to affect the May RPI only to raise it after the uprating has been announced?
Dr. Boyson: It is always a pleasure to give way to the hon. Gentleman to cleanse him of the conspiracy theory which could poison his temperament unless we help to release the demon from inside him.
It is as well to remember that the forecast method was adopted by a previous Labour Government only to save them spending the equivalent of £1 billion on an uprating on the historic method. But in five years out of seven the forecast was wrong. The hon. Gentleman would not bet on horses if he were wrong five times out of seven. In the long run, people cannot lose by the present method because, whatever the increase from May to May, it is paid to them in the following November. In the long run, there can be no loss at all attached to the historic method. It is much more likely to be correct than the method used by the hon. Gentleman's Government.
In total, the uprating will add over £1·5 billion to the social security budget in a full year, taking it to £39 billion —almost one third of all public spending. That is £700 per man, woman and child in Britain. In real terms, indexed for inflation, we are spending 27 per cent. more on social security than was the Labour Government in 1979.
If Labour Members require, I can give figures to show that after allowing for the increase of unemployment and for the increase of 650,000 pensioners, there is still between £3 billion and £3·5 billion more in real terms being spent than when the Labour Government left office in 1979. So, whatever we are doing, we are certainly not eating humble pie as a result of the money that we are spending on social security.
Ms. Clare Short: The Minister makes a fascinating and important point, and I can instantly think of some reason why that might be so. For example, we know that there has been a massive increase in rents. Therefore, the cost of housing benefit has gone up. We also know that there has been an increase in low pay, so presumably entitlement to family income supplement has gone up. Can the hon. Gentleman give us any more details, or will he undertake to give on another occasion an analysis of exactly where the £3·5 billion is being spent?
Dr. Boyson: Nothing would delight me more than to address Labour Members on this subject. Perhaps they would tear up their party cards afterwards. By sheer chance, I have some figures with me. Between November 1978 and November 1984, the increase in the RPI is expected to be 76·4 per cent. During the same period, family income supplement will have gone up by 119 per cent., one-parent benefit will have gone up by 112·5 per cent., mobility allowance will have gone up by 100 per cent. and the retirement pension, widow's pension and the attendance allowance will have gone up by between 83 and 83·7 per cent. I could list all the figures and I am sure that it would give great pleasure to hon. Members on both sides of the House to see how well we have done under difficult circumstances.
Mr. Rooker: What about the death grant?
Dr. Boyson: People are living longer. They see the satisfaction of living under a Conservative Government. I wish the hon. Member for Perry Barr long life.
Mr. Brynmor John: As the hon. Gentleman took well over two months to reply to a letter in which I outlined the case of a lady in my constituency who had to bury six of her family on the present death grant, does he not realise that his flippancy and stupidity are beyond measure? We were told in 1979 that the death grant was to be re-examined, and an announcement was expected at Christmas 1980. That announcement has still not been made. Will the hon. Gentleman treat more seriously a subject which causes great worry to many people?
Dr. Boyson: I do take it seriously and I receive hundreds of letters on the subject. The Labour Government were in power for five years and did nothing about the death grant. I do not intend to eat humble pie on that. When my hon. Friend the Member for Hornsey and Wood Green (Sir H. Rossi) held my post, he circulated a consultation document. The Labour Government never did that. The only reason why nothing was done was that there was no agreement in the responses to that consultation paper. We accept that there is a problem and we know that it causes concern. However, we will not bow to the Labour party.
Mr. Tony Lloyd: The Minister refers to his desire to consult about the death grant. It is interesting to compare that attitude with the Government's approach on other matters, such as the GCHQ affair, when they refused to consult. Is it not time that the Government decided to increase the death grant in the interests of all those who are suffering because it is so low?
Dr. Boyson: The Labour Government did nothing to change the basis of social security. They tinkered with bits and pieces, but did nothing radical. We have set up four surveys—on children and young persons, supplementary benefits, pensions and the age of retirement, and housing benefit. When we receive those reports, we shall make our decisions. The Government may be attacked for giving too much consideration to various matters, but we have asked the survey teams to report by the end of the year. I do not doubt the good intentions of the Labour party; I do not doubt anyone's good intentions—there are no demons inside me. However, we do not bow to the Labour party, because the Labour Government did nothing.
Mr. John: This is a serious matter.
Dr. Boyson: I know that it is a serious matter and I will give the hon. Gentleman some serious figures.
By November this year, pensions will have increased by 83·6 per cent. since the Government came to office, against an expected rise in prices of 76·4 per cent. At the same time, more people are benefiting from the build-up of the earnings-related pension scheme. The maximum earnings-related addition for a newly retired person is over £15 a week.
Ms. Clare Short: That was the Labour Government.
Dr. Boyson: Yes. When Labour do something worthwhile, we agree with it. Labour Governments are bound, even by accident, to get things right occasionally, and we give them credit when they do.
I remind hon. Members that the last Labour Government presided over inflation of 112·6 per cent.

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between 1974 and 1979. Inflation under this Government, over a similar period, has been 63 per cent. We do not like that, but it is only just over half the rate under Labour. Runaway inflation is a disaster for pensioners, anyone with savings or those living on fixed incomes. The improvement in controlling price rises is the Government's most important gift to pensioners.
Mr. John: The Minister refers to inflation between 1974 and 1979, but will he recall that pensions were 20 per cent. higher in real terms in 1979 than they were in 1974?
Dr. Boyson: I will check the hon. Gentleman's figures tomorrow, but I do not doubt that he is correct. However, let us remember that all those who saved in piggy banks, building societies or the Post Office savings bank lost more than half their money under the Labour Government. I know the working class as well as any Labour Member, having been born into it. People saved all their lives so that they could have a decent retirement and their savings were destroyed. The people who suffer from inflation are not the rich, but the poor. It always amazes me that Labour Members do not understand that. Poor people do not invest in foreign stamps, gold or land; they rely on their savings. Inflation destroys the pride of the poor and hardly touches the rich.
Apart from the benefits that we are pledged to protect, we will this year maintain the value of all the main benefits, including family income supplement, mobility allowance and the supplementary benefit scale rates. Child benefit will be maintained at its highest ever level. The retirement pensions earning rule will again be increased by more than inflation — from £65 to £70 a week. Following last year's increase of 14 per cent., that underlines our intention to abolish the limit when resources permit.
I wish to deal with two issues in depth—"creep" and the scale margin.
Mr. Rooker: What is "creep"?
Dr. Boyson: Most people know that we do not have 52 weeks in a year. We have 52 weeks and one day in a year. In a leap year, we have 52 weeks and two days. That is creep; it creeps on.
Mr. Rooker: This is the first time that the Minister has mentioned "creep".
Dr. Boyson: I have a heading on my speech. Here it is—"creep". I have not made it up.
Mrs. Margaret Beckett: Will the hon. Gentleman accept that, as the Government crept two weeks forward in 1980, there is no need for them to creep forward another week this year? Should they not be creeping back?
Dr. Boyson: If the hon. Lady could add up, she would know that we must go back a week every four or five years. I will explain what would happen if we did not "creep".
The uprating this year will take effect on 26 November, which is 53 weeks after the last uprating. Some hon. Members seemed to think that that was a trick designed to deprive pensioners of a week's benefit increase. It is nothing of the sort. When we introduced the requirement
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that upratings should take place by the end of the month of the anniversary of the last uprating the right hon. Member for Salford, East (Mr. Orme) recognised what he called
"the problems of the British calendar".
"Creep" is part of the problems of the British calendar. Every year contains one day more than 52 weeks and a leap year contains two days more than 52 weeks.
The right hon. Member for Salford, East accepted the need for the uprating to be fixed to prevent it sliding forward. In a debate in the Standing Committee on the Social Security Bill 1980 he said:
"We are trying to set a date in the middle of the month which would become more or less fixed" — [Official Report, Standing Committee E; 12 February 1980, c. 317.]
We must have an interval of 53 weeks every few years or the uprating will slip forward gradually until it moves right out of November into October. The mathematicians among us will realise that in 50 years' time we would be uprating in mid-summer. If we had upratings every 52 weeks, as Opposition Members seem to want, the date would creep forward every year until, by my reckoning—Opposition Members should check that and inform me if I am wrong—around the year 2243 we would be uprating on 1 January, with another uprating on 31 December—two upratings in one year.
Mr. Rooker: That is almost three centuries from now.
Mr. Boyson: We are optimists and live long. We plan for the future. Opposition Members are supposed to be the planners' party, but we are looking after the next 200 years.
Mr. Andrew Rowe (Mid-Kent): Would the problem be eased if we were to adopt the Greek calendar? That would also solve the vexed problem about Easter.
Dr. Boyson: I am sympathetic to that view. However, we must sort out social security before we adopt the Greek calendar.
Mr. Rooker: It is nearer 300 years.
Dr. Boyson: The double uprating would occur in 300 years' time, not 200 years' time. I admit that I was totally wrong. It is nice to know that the Opposition are right from time to time.
I should now like to mention two of the more important changes we will be making. To start with the supplementary benefit changes, I should like to refer to two changes in particular which will come into effect in August. First, people on supplementary benefit will in future be able to claim reimbursement of fares to visit relatives in residential homes and hostels. Until now fares have been payable only for visits to close relatives in hospital, and this extension represents a further step in the Government's commitment to community care by ensuring that a person discharged from hospital to a residential home or hostel can continue to receive visits.
When my hon. Friend the Member for Braintree (Mr. Newton) replied to the previous debate, he pointed out that, although the concessions were small, they were important to the individuals involved because without them they could not fulfil their social and family duties.
Secondly, in order to provide an incentive to supplementary benefit claimants to take on part-time work, we shall extend single payments for work expenses

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to people taking up part-time work of not less than 15 hours a week. This will include people working on projects under the community programme.
I turn to the vexed problem of the available scale margin. As hon. Members know, weekly payments of supplementary benefit consist of: first, the "scale rate"—an amount for claimants' normal living expenses; and, secondly, in some cases, an extra amount for special expenses, such as special diets or heating needs.
In 1966, under the Labour Government, a standard long-term addition to the scale rate was introduced for supplementary pensioners and others, except unemployed people, who had been getting national assistance or supplementary benefit for two years or more. One reason for its introduction was to provide an extra margin of expenditure for these groups and, for example, to help towards the purchase of new household equipment. But it was also intended to reduce the need for discretionary additions to weekly benefit, the number of which had grown rapidly in recent years, and to limit the need to ask detailed questions about special expenses is something with which all hon. Members would agree. The Labour Government of the time therefore decided that the "long-term addition", at that time 45p, should be offset in full against any weekly payments for special circumstances, including payments for extra heating costs, to avoid double provision for the same expense. The long-term payment was introduced at 45p instead of making a payment in another way. That was sensible, and I do not attack the Labour Government for it. I am merely filling the background to the available scale margin.
During the Second Reading debate on the Bill, the Minister of Pensions and National Insurance in that Labour Government, the right hon. Margaret Herbison, said:
"The purpose of this long-term addition is a simple one. It is to remove in these cases the need to inquire into the small day-to-day expenses for which the bulk of the discretionary allowances are now made. Under the new scheme no special inquiries will be necessary in long-term cases, unless there are indications that there is chronic ill-health or disability giving rise to such heavy expenditure that further provision is necessary. Thus, one of the features of the existing scheme which has both made it difficult for the elderly person to estimate what he would be likely to receive if he applied and which has been a source of embarrassment and dislike to those who have applied will be eliminated." — [Official Report, 24 May 1966; Vol. 729, c. 341.]
Long-term supplementary benefit was introduced at 45p instead of giving the benefit in other ways.
Mr. Rooker: Given that the year was before decimalisation, will the Minister tell us whether we are talking about 3s. 9d. or 9s.?
Dr. Boyson: I shall have to check that. What was the year of decimalisation?
Mr. Rooker: It was 1971–72.
Dr. Boyson: In that case we are talking about 45p in current terms. The amount does not matter for my argument. Long-term supplementary benefit then was at a higher level so that benefits would not have to be paid out in other ways. People did not have to apply for it, but received it regularly.
In effect, therefore, the long-term rate was intended to pay for most special expenses for which additions had been given under the National Assistance Act 1948, so removing the embarrassment to claimants of claiming and also reducing administrative costs in dealing with claims.
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The long-term addition was increased to the equivalent of 50p in 1968, by the then Labour Government, who continued to offset all of it against additional requirements in 1972 the Conservative Government of the time increased the long-term addition of long-term supplementary benefit to 60p, but, for the first time, part of the addition was not offset. The amount available to be offset remained at 50p.
The following year, 1973, the Conservative Government decided to incorporate the long-term addition into a new set of long-term scale rates. They also decided to keep the amount to be offset—now for the first time known as the "available scale margin"—at 50p. That Government also decided in 1973 that the ASM should no longer be offset against additions for heating. If we had continued as before, the available scale margin would have been off-set against them. Since then, as we all know, the difference between the long-term and the short-term rates has steadily increased. From November 1984, for example, a couple on the long-term rate will be £11·55 better off than they would be on the ordinary rate. But the amount of this extra benefit which is offset against additional payments for special expenses—the available scale margin—has not been increased since a Labour Administration put it up to 50p 16 years ago. It therefore seems reasonable, and arguably long overdue—and within the then Labour party's philosophy — that we should increase the margin to bring it up to the relatively modest level of £1.
It is a modest increase. My hon. Friend the Member for Braintree made the point in the debate on disabled people on 29 June. He said:
"the chief Opposition Front Bench spokesman on social security, the hon. Member for Oldham, West (Mr. Meacher) described the difference between 50p and £1 as paltry when the proposal was announced. It does not lie in the mouths of Opposition Members now to pretend that there is some massive attack on the rights of the sick, disabled and elderly"—[Official Report, 29 June 1984; Vol. 62, c. 1330.]
Nor is it unreasonable that the margin should be offset against heating additions, as it was until 1973. But we are not applying the margin to heating additions for children, who do not receive the long-term scale rate. Indeed, for the first time we are exempting additional payments for children's laundry and for boarding-out fees from the available scale margin, which will benefit more than 3,000 families who would otherwise have problems. Therefore, what we are doing with the available scale margin is taking a modest step back towards the original principle underlying it when it was introduced by the Labour Government. It is equivalent to a return to clause 4 of the Labour party's constitution — [Interruption.] I have clause 4 here in case anyone wishes me to read it. If I decided to be mischievous, I could compare this step back towards first principles with the Labour party moving back to its basic objectives—to clause 4 of its constitution.
Mr. John: Does the Minister recognise that I asked a question at the time of the announcement, which elicited the response that this was a severe cut to 1·8 million people on long-term supplementary benefit? So I do not accept any charge of inconsistency from the Minister.
Dr. Boyson: I have never said that the hon. Gentleman was inconsistent. All that I said was that if one followed the Labour party's principle the figure would now be £11·55. The figure for the available scale margin was equivalent to the difference between their long-term and

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short-term rates. Hon. Members may not like it, but one can see that from previous debates. They may have changed their minds—they would be right to do so—but that is what happened in the beginning. It may hurt them now, but those are the facts.
Our changes to the available scale margin should also be seen—Opposition Members must listen to this—in the context of improvements made by the Conservative Administration in the coverage of the long-term supplementary benefit rate. From 1966 to 1980, only pensioners and other claimants who had been in receipt of supplementary benefit for two years or more—except the unemployed who have never been able to qualify—qualified for the long-term rate. In 1980, the Conservative Government reduced the qualifying period for non-pensioners to one year. Similarly, in 1981, the Conservative Government changed the rules so that unemployed men aged more than 60 could qualify after a year; and in 1983 the Conservative Government again extended the rules so that men aged more than 60 qualified automatically without having to wait for a year. Those provisions did not exist under the Labour Government who were in office until 1979. We have also solved the invalidity trap by taking into account time spent in receipt of long-term incapacity benefits against the qualifying period for the long-term rate of supplementary benefits. Those are major achievements.
At the same time as proposing changes to the available scale margin, we plan to extend the scope of heating additions, as my right hon. Friend the Secretary of State announced in the House on 18 June. We propose to introduce new automatic heating additions at the higher rate of £5·20 for supplementary pensioner householders aged more than 85. It is estimated that about 90,000 people will gain from this. We are also extending automatic heating additions to all supplementary pensioner householders aged more than 65, as a result of which a further 80,000 people will gain.
I remind the House that in 1979 the Conservative Administration introduced automatic heating additions for householder claimants with children aged under five and for supplementary pensioners aged 75 or more. In 1980, we reduced the qualifying age for supplementary pensioners to 70. Therefore, the Conservative Government have considerably increased the range of people entitled to heating additions.
We have also increased the real value of heating additions. Between November 1978 and November 1983 we increased the basic rate by about 140 per cent. compared with an increase in fuel prices of about 100 per cent. That tells the hon. Member for Birmingham, Ladywood (Ms. Short) where the extra money has gone. Therefore, heating additions are worth more than ever before. We expect to spend about £400 million on heating additions this year, after allowing for the savings from applying the available scale margin to heating additions. That represents about £140 million more in real terms than was spent in the final year of the Labour Administration. There is no question about what the Conservative Government are doing to help people in need.
Mr. Rooker: It is to pay the gas tax.
Dr. Boyson: The average price of gas has increased by only 2 or 3 per cent. during the past two years, but when
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the Labour party was in office it was increasing by that amount almost every six weeks. The hon. Member for Perry Bar should not say too much on that point. I have great respect for the hon. Gentleman, but he is not on a winning wicket with that point.
Apart from the uprating of child benefit, which I have already mentioned, two sets of regulations on child benefit are before the House. The first are the Child Benefit (Residence and Persons Abroad) Amendment Regulations 1984, which reduce the period during which child benefit is payable on a temporary absence abroad from 26 weeks to eight weeks.
Ms. Clare Short: Why?
Dr. Boyson: If the hon. Lady listens to the next sentence, she will understand. Child benefit is linked to residence in this country, and the new period of eight weeks will be sufficient to take account of holidays and other short visits abroad and will avoid short breaks in payments. In its report, the Social Security Advisory Committee considered that, on the whole, the change was reasonable. I hope that hon. Members have absorbed that sentence.
Mr. Max Madden: What justice is there in British citizens, or the children of British citizens living in this country perhaps with relatives, who can receive child benefit although they may reside here only for a short period, whereas child benefit is denied to the children of other British citizens who, for cultural and traditional reasons, visit their countries of origin often for much longer than eight weeks? Why are they denied child benefit if they are away for more than eight weeks but other British citizens are not denied it? That is discrimination and injustice, whether or not the Social Security Advisory Committee believed so.
Dr. Boyson: People see plots everywhere. If people are abroad for more than eight weeks, whether they are black, white or striped, they will not receive child benefit. There is no discrimination involved. It is the same for everyone, including Labour Members, Conservative Members and even alliance Members. I notice that one of the latter has joined us. We make rules for everyone who lives here. We are not discriminating on the grounds of race, religion or sex. Eight weeks would appear to be a reasonable period. The school holidays in Britain last for only four weeks, so those children should not be out of school for any longer.
Ms. Clare Short: Will the Minister give way?
Dr. Boyson: I shall give way, but I trust that the hon. Lady will not try to say that this is a conspiracy.
Ms. Clare Short: Why has the rule been introduced? The Minister knows, because we talked about this matter last week when I visited him, that families who originate in the West Indies or the Indian subcontinent have parents, aunts and uncles living abroad who are often not allowed to visit them here. Families, especially those with children aged under five, wish to visit their grandparents. It is clear that the change will hurt especially the Asian community. I wish to know why the Minister has introduced it. If he does not explain, I shall conclude—I believe rightly—that it is intended to discriminate against the Asian community.
Dr. Boyson: Again, hon. Members see conspiracies everywhere. For one thing, the normal school holidays are

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four weeks, not eight weeks. It strikes me that the biggest discrimination is taking children out of school for long periods. Those who understand child benefit will know that it is linked to the payment of tax, and people cannot pay tax if they are not here. The period of eight weeks is fair enough.
Mr. Rooker: What does it have to do with tax?
Dr. Boyson: The two are linked. We do not have time to run round every rabbit warren, so let us move on.
Mr. Rooker: The Minister does not know what he is talking about.
Dr. Boyson: The same could be said of Opposition Members.
The Child Benefit (General) Amendment (No. 2) Regulations 1984 and the related amendments to the Supplementary Benefit (Conditions of Entitlement) Regulations clarify and simplify the arrangements which cover the benefit entitlement of unemployed people who are studying. I know that many constituents will raise this point with hon. Members, so to reduce the number of letters that I shall receive, perhaps hon. Members on both sides of the House will pay close attention to what I say. The regulations introduce a statutory definition of full-time education, for child benefit and supplementary benefit purposes, of more than 12 hours' instruction a week, excluding homework, meal breaks and unsupervised private study. The main effect is to clarify the amount of study that unemployed young people aged between 16 and 19 can do during the three-month qualifying period for the 21-hour rule without putting their supplementary benefit entitlement at risk.
The changes were welcomed by the Social Security Advisory Committee as introducing a clear definition of full-time education for child benefit and supplementary benefit purposes. The committee ended its comments by saying:
"We are particularly glad that the proposed definition is in terms of hours of supervised study, since we understand that a number of difficulties have been caused by the inclusion of homework within the 15 hours allowed."
That has nothing to do with saving or spending. We are trying to amend the difficulties of administering a system based on 15 hours of study, of which a changeable amount could be homework, about which nobody knew. With general agreement, we have pinned the requirement down to 12 hours of instruction, and whatever is done as homework is in addition. This has not been done to decrease any benefit but to make it simpler for the institutions and the benefit officers to know what is going on.
There are two sets of regulations before the House that concern family income supplement. The first regulations are straightforward and increase the FIS levels from 27 November. The second set of regulations give effect to the proposal announced by my right hon. Friend the Secretary of State on 18 June that changes in the FIS level should, like all other changes in circumstances, only be taken into account when a new award is made. This is achieved by a simple revocation, but there are a numer of provisions leading to renewal awards that I have no time to explain.
Certain decisions have been made about this so that on balance, people do not lose out. If any hon. Members have queries about this, I am sure that my hon. Friend the Under-Secretary of State will deal with them later.
Mr. Rooker: The end of innings batsman.
Dr. Boyson: My hon. Friend is a very effective end of innings batsman, as we saw before the Division at the end of the previous debate.
I have mentioned some of the more controversial changes that will take place in November, but I shall also remind the House about an improvement that we shall be making, and one of which I am particularly glad in a year in which we celebrate the 40th anniversary of D-day. We are able to direct some special help to elderly war widows. War widows receive differing amounts, according to the year in which their husband was killed. These days, pensions are built in to service conditions and today widows of service men killed have better conditions than do widows whose husbands were killed in the second world war. By this change, we are helping widows whose husbands who fought in the first or second world wars. We propose to increase the existing age allowances by over 15 per cent. and to introduce a new rate of £12·50 a week at the age of 80. Some 50,000 war widows will benefit from these improvements.
With regard to uprating, hon. Members will know about the strike by a number of computer staff at the Department's central office at Newcastle, which is currently disturbing payments of retirement pension, widow's benefit and child benefit. I deplore this action, as it is causing concern and anxiety to pensioners and other beneficiaries. We remain ready to resume negotiations, which the unions broke off to take strike action, and therefore I welcome a recent initiative by the Advisory, Conciliation and Arbitration Service, reported in a number of newspapers that hon. Members will have read this morning, to bring both sides together. The Government gladly accept this offer. I hope that this inititative will also be welcomed by the unions and that a speedy settlement can be achieved, so that there will be no delay in the uprating.
Given an early return to normal working, I am confident that the uprating will be completed broadly on time. I can assure the House, however, that whatever happens, no pensioner will lose any of the increase as a result of the dispute. Every effort will be made to pay the increases with as little delay and inconvenience as possible.
This year's uprating package is fair both to those who receive benefits and those who pay for them. Many of those who are in work are having to learn that pay rises have to be earned by increased productivity. It is right that during a recession we should be particularly concerned about those who are most in need, but we also have to strike the right balance. We believe that this uprating will maintain the real value of all the main benefits and scale rates, and it also concentrates some small but worthwhile improvements where help is most needed.
8.14 pm
Mr. Michael Meacher: As is so often the case with the Minister, we have had a great deal of knockabout. We have heard a lot about "creep" in the year 2243, we have had a lengthy diatribe about the Labour Government in the late 1960s, we have had many selective statistics about previous selected years, but we have had rather little about some of the more important aspects of these regulations.
I make it clear that we are opposing the uprated regulations not because we oppose uprating but, because,

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as with so many previous Tory uprating regulations under this Government, these regulations are pitted with hidden cuts. Once again, the Government have used what should be a relatively straightforward and routine operation for a major cuts exercise, worth more than £100 million.
I shall respond first to the Minister's remarks at the end of his speech. In one other important respect, the Government have seriously mishandled this uprating exercise. I refer to the current dispute at Newcastle and at Washington. That has clearly been provoked by the Government, as I shall go on to explain. As a result, the Government have put the uprating date of 21 November at risk.
Dr. Boyson: Nonsense.
Mr. Meacher: The Minister protests loudly, but perhaps he should listen to me first.
Dr. Boyson: It would help for me to intervene now, as I do not believe that the Government have provoked anything. I have been involved in this episode from the beginning, and the Government have bent over backwards to keep the office working. It would help considerably if the Opposition, instead of making cheap remarks, would ask the unions, as we have done, to accept the conciliation of ACAS.
Mr. Meacher: My remarks are not cheap, but I am more than happy to recommend that there should be a resumption in negotiations. As the Minister mentioned this dispute, it is only fair that the other side should be put.
The Government's proposals, which led to strike action being taken, were made on the basis of saving money by running shifts in a cheaper way and by, in effect, taking money out of members' pockets and expecting them to work more unsociable hours for pleasure. Originally, it would have cost the Department £44,000 to meet the trade union's demand to protect the position of employees. Industrial action has been going on for so long that it has already cost well over £10 million, and the costs rapidly escalate every week.
It is to be hoped that both sides will return to serious negotiation through the mediation of ACAS on this issue, so that pensioners and other beneficiaries will not be disadvantaged because of the uprating date. That requires a recognition from the Government that greater efficiency, which we support, cannot be obtained by worsening employees' take-home pay and conditions of service. I hope that there will be a speedy conclusion of the dispute.
I repeat that there are £100 million-worth of cuts in this package. This is detailed in a parliamentary answer that my hon. Friend the Member for Pontypridd (Mr. John) received on 21 June. In it, the Minister listed the additional expenditure involved in these regulations, which comes to £29·4 million. The cuts, listed in the same place, total £97 million—those are the Government's figures. However, the Minister has excluded from the cuts set out in the answer the one week delay in the uprating for pensioners and others. That date should have been 19 November, but it has been put back to 26 November.
The Minister's defence of this, by reference to "creep"—an interesting word which may come into the social security vocabulary but which nobody had heard before tonight — is farcical. As long as there is a 52-week
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interval preserved between upratings, there is no reason why upratings should not come forward one week in the calendar year every five or six years. The Minister seems concerned about "creep". Is he satisfied with the Government's achievement four years ago, when there was a delay at the expense of the pensioner of two weeks in the uprating which saved the Government £100 million? There is absolutely no reason this time why pensioners should be deprived of the uprating for one further week. The order represents a further cut by the Government. The Minister may disagree, but I believe that the cost of the delay for the further five days amounts to between £35 million and £40 million. Therefore, all told, the cuts in this package amount to about £135 million.
The nastiest element in the package has been referred to by the Minister and is the change in the obscure "available scale margin". Indeed, we are grateful to the Minister for the history lesson that he gave us. However, that is the name given to the 50p that is currently deducted from the total of weekly additions that those on long-term supplementary benefit receive, except where the additions involve heating, blindess or age. I think that I have got that right, but it is, indeed, a very obscure point.
I believe that there are more than 2·25 million claimants on the long-term rate. Almost by definition, they are some of the poorest people in Britain. However, 80 per cent. of them will lose out as a result of the changes proposed in the regulations. That is why we shall vote against them. Nearly 1·5 million of them will now have between 50p and £1 a week taken away from them and pensioners—I am sure that the hon. Member for Brighton, Kemptown (Mr. Bowden), who is not in the Chamber at present, will be concerned about this—will be the largest group. Of course, we are very concerned about that. Families with children—which were recently identified in the Policy Studies Institute report as suffering the greatest hardship of those on benefit—will also be forced to take a cut. Indeed, 80,000 of them will lose between 50p and £1. In our view, this is a particularly mean, nasty and unnecessary measure. It is screwing £86 million—that is the total—out of the very poor, despite the fact that in the last Budget, four months ago, the Government gave away more than £700 million to the very rich through the abolition of the investment income surcharge, a halving of stamp duty on stock exchange transactions, a relaxation of capital transfer tax and a raising of the higher rate thresholds. It is the contrast in the treatment between the poor and the rich that we find so absolutely objectionable.
If there must be public expenditure cuts—and we do not accept that—the very least that is fair is that the money should be taken equally from all sections of the population or, as we would say, that more should be taken from the rich who can bear it more. As has happened so many times before, the Government have done the exact opposite. Moreover, in doing this, the Government are flying in the face of the advice that they have received from their own civil servants.
In a pamphlet entitled "Social Assistance" the Whitehall inquiry recommended:
"abolition of the 50p offset would simplify the scheme and achieve a greater measure of equity."
Those are not our words. It is not often that the Government now set up an independent inquiry. They prefer to stack them with Ministers, but a few years ago they had an independent inquiry and that was its conclusion. Given that this Government are the most

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inequitable in modern times it is perhaps not surprising that, instead of abolishing the available scale margin, they are doubling it.
Our next objection is to the whole range of cheese-paring cutbacks in benefits for children. Instead of the Government taking a positive view—as any Government should do, in the circumstances—of the overall benefit framework needed in child care, they have given us a whole series of nasty little cuts that are the very opposite of a planned and sensible system. There is no way of rationalising such cuts. One example is the delay in the family income supplement uprating. For the first time, the Government are decreeing that existing claimants will not receive the new level of benefit until, or if, they make a fresh claim.
That trip wire involves an £11 million cut. It will affect 200,000 of the poorest families in this country and will take away £65, on average, from a typical two-child family. It will also deprive some families of as much as £100 to £150. That is a big cut, as anyone who has ever tried to live on FIS will know. It means that this year the Government are increasing child benefit by £36.40 for a two-child family, but are at the same time not only cancelling that child benefit increase for the lowest paid families on FIS but, as one can quickly see from the figures, extracting a further major cut of £30 million from those poorest families with children. That cannot be right.
Another example of the Government's cuts mentality that destroys a rational system of child care involves the abolition, this November, of the short-term child dependency additions. Surely, in logic and fairness, families should receive the same level of benefit for their children regardless of whether they are in work. That is the only fair and proper system that will preserve incentives. But the Government have systematically reduced the real value of the child dependency additions to those out of work. We believe that that is wrong, for the reasons that I have given. Another example of inequity in child support arrangements under these regulations is the meanness of the child benefit increase. I am only too glad to offer in support of my case a quote that comes from an unusual quarter. The Conservative National Women's Committee recommended:
"Child benefit should be increased in line with any increase in tax allowances … remembering that child benefit has replaced the former system of child tax allowances."
That is absolutely right. However, whilst the personal tax allowances will have increased by about 13 or 14 per cent. between April 1978 and November 1984, child benefit will have increased over the same period—assuming that the Government's inflation forecast is about right—by only 2·7 per cent.
I am indebted to the Child Poverty Action Group—as no doubt all hon. Members are—for its excellent advice on such debates and for some of its calculations. But as it has made clear, on that basis, if child benefit were to be increased by the same amount in real terms as tax allowances, it would rise in November to £7·60 instead of £6·85. In other words, there should be an increase of £1·10 instead of the Government's 35p. That is the measure of the shortfall in the increase in this crucial benefit, which perhaps lies right at the heart of the social security system.
Our last major objection to these regulations is their unjust and discriminatory treatment of young people, whether in work or unemployed. In our previous debate, I used the phrase "a vendetta", and the Minister did not
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like it. But if I give my reasons, he may see why I feel so strongly. First, it is surely incongruous that it is now proposed that school leavers' earnings should lead to a deduction in their parents' benefit. Surely a 16 or 17-yearold recent school leaver, who is considered old enough to support himself or herself when in work, is equally entitled to an independent income when unemployed. Surely that is a sensible principle.
Secondly, the Government are introducing new rules under these regulations regarding unemployed young people which will make part-time study much more difficult. The Government propose that under the so-called 12-hour rule—the system is incredibly complicated for hon. Members, so I hate to think what it is like for unemployed youngsters—young people aged under 19 who have not yet been unemployed for three months will not be entitled to benefit if they study for more than 12 hours a week. What a rule to introduce into the social security system. The effect will be that thousands of genuinely unemployed young people who want to improve their job prospects by study while looking for work will be denied the opportunity to do that. That cannot be right, even by this Government's philosophy.
We are not opposed to uprating in principle, but we oppose these uprating measures for five reasons. First, we oppose them because interspersed in these upratings are major and damaging cuts of about £110 million. Secondly, we oppose them because, under the social security regulations, cuts are being directed exclusively at the poor while, at the same time, under the Government's Budget orders this year, much larger sums are being given away in huge tax reliefs directed exclusively at the rich.
Thirdly, we oppose them because thousands of families on family income supplement—nobody disputes that they are among the poorest families in work—will lose far more than they gain from the child benefit uprating by simultaneous cutbacks in the operation of FIS. Fourthly, we oppose them because they deliberately deprive young unemployed people of the opportunity for part-time study so as to improve their job prospects.
Fifthly, we oppose them because, yet again, the Government have turned their backs on what we believe is now a central deficiency in the social security system, and that is the need to extend the long-term rate of supplementary benefit to the long-term unemployed; I know that that finds echoes among some of the more civilised elements on the Government Benches.
Because, in so many ways, these uprating measures are more about cuts—mean, niggardly and unjust cuts at that—than about uprating, my hon. Friends and I will be voting against them tonight.
8.32 pm
Mr. Andrew Rowe (Mid-Kent): I wish to pursue a narrow point which the hon. Member for Oldham, West (Mr. Meacher) laboured earlier, because it is a point with wider implications. I speak about the benefit for those wishing to study.
Even within the narrow confines of our present policy, why must we have this restriction? Is it not more to do with policing the benefits system than with adding any advantage to the recipients of benefit? The SSAC has said that it does not believe that the qualifying period is the best way to separate bona fide from frivolous students. Yet we persist with it. Will the Minister explain why?

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If we accept the need for a qualifying period, then this change — which, given that it did not accept the principle, was recommended by the advisory committee—is a modest improvement. Under the previous rule, the 15 hours a week excluded homework and there were some horrifically mean-minded cases where young people were caught studying at home — no doubt under the bedclothes with a torch—and debarred from benefit. Now at least they can undertake unlimited homework. From his experience as a headmaster, does the Minister consider that the 12 hours allowed to young people is enough to enable a student to study for two A levels, remembering that that qualification is the gateway to higher education?
The problem is only a symptom of a much wider conundrum. For historic reasons, supplementary benefit still carries the connotation of something for nothing. It is understandable that groups in society who are in work, who earn low wages and who nevertheless manage to keep their homes neat and their children tidy, should feel resentful when they see other people who, in their eyes, are doing nothing, bringing home in some cases a sum not unlike that which they work so hard to achieve. Indeed, Beveridge perpetuated the idea of a work test.
But we are now in new circumstances and the Government, for example, find themselves, for entirely compassionate reasons, in a difficult dilemma. I, like all Conservative Members utterly detest involuntary unemployment. Ministers have constantly repeated their detestation of it and are wholly committed to reducing it. So that nobody, inside or outside the House, should misunderstand that message, Ministers come here regularly and speak as though the ending of unemployment were not only the goal of policy but as though a return to full employment would be a return to normality. That carries with it the implication that the traditional principles of the benefits system should endure unaltered, with the work test still, in certain ways, in place.
I believe that the time has come to move from that position. In one part of our policy the Government are encouraging people to leave work voluntarily. Early retirement and job-sharing are examples, and the people who accept them are, in a sense, heroes of the Great British monarchy as they make their contribution to easing the unemployment problem.
At the same time, however, the Government are persisting in rules that lay down that if one is not available for work—if one is not competing in that market which is so hopelessly overcrowded at present—one shall have no benefit. There is nothing heroic about the people at that end of the scale. Yet those who have the least chance of finding employment in society are the low skilled and the poorly qualified.
This provision hits at them, and it hits them at the very moment when they are taking steps to better their chances of finding work. It is then that they are cut off from benefit. That is absurd and, non-Conservative and it must be changed.
The Government must now accept that even without political strikes, it will take many years to end unemployment. To say that is not to presage a relaxation in the war against it. However, it changes the assumptions behind the benefit rules. It opens the path to accepting the principle — which has existed in practice for many
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people—of a guaranteed minimum income which would eliminate destructive policy rules such as those we are discussing. I hope that the Minister will comment on the remarks that I have made.
8.38 pm
Mr. Tony Lloyd: I shall be brief because several other hon. Members, particularly on these Benches, wish to speak in the debate.
As I listened to the Minister, I thought it curious to view him as the human face of the Tory party. I also found it curious to listen to the history lesson that he gave, containing almost no comment about the deficiencies that my hon. Friend the Member for Oldham, West (Mr. Meacher) highlighted.
It is as well to realise that we are discussing the stark contrast between the Government's treatment of the rich and of the poor. In this year alone, we are witnessing the cumulative effect of tax cuts, in the main to the rich, of about £4 billion. Yet, as my hon. Friend the Member for Oldham, West said, the Government are imposing cuts on the poor of about £135 million, an act of almost monumental pettiness compared with the amount that the Government are giving away.
I was interested to hear the Minister of State say that child benefit was linked to the taxation system. I believe that that statement raised some eyebrows among Labour Members. If the Minister is prepared to defend that position, he must defend equally the view of my hon. Friend the Member for Oldham, West, who said that the uprating of child benefit falls considerably behind the operation of tax thresholds and tax bands. If child benefit is linked to taxation, that link should be formally analysed. Child benefit should be uprated to the level of £1·10 to bring it back into line with the various tax thresholds during the past five years. I hope that the Minister will say when that action will be taken.
It is important for the House and the country to recognise that, despite the Minister's protestations the action on changing child benefit regulations involving residents and persons abroad is especially squalid. How much money do the Government intend to save? Even if the Minister is right in his submission that the action was not taken to discriminate against various ethnic groups — and who am I to challenge his view? — the Government have taken an incredibly mean-minded step because the measure will save almost no money. It will, however, cause genuine worry to many members of the Asian and various other ethnic communities who, because of family habits and practices, take children abroad for considerably longer than eight weeks. It is important that we recognise that the measure will hurt individual families.
Slightly more than half of my constituency is in the Conservative-controlled borough of Trafford, in which discretionary grants for students have not existed for many years. It may not seem wholly unreasonable to hon. Members to accept that many of my constituents in the student age group think that the supplementary benefit regime should support those who wish to pursue education when they know very well that they have no opportunity to go into full-time employment. My constituents are discriminated against because the local authority denies them the right to grant and because there is no acceptable provision from central Government sources through the benefit structure. That discrimination would not occur in

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other areas—for example, in Manchester where some of my other constituents live. It is time that we reviewed the position of students vis-a-vis those claiming supplementary benefit, but that has not been done in these regulations.
The most disgraceful aspect of the uprating involves those who are denied the long-term rate of supplementary benefit. We are talking about a mere £485 million, which would allow the Government to bring in this reform. That figure can be contrasted with the £4 billion which the Government are giving away to the very rich in tax cuts. We can, therefore, note the Government's precise priorities—they talk about the poor as the peripheral and the uprating of benefits for them as a residual part of the Treasury's calculations. The rich will again inherit the benefits of our society.
If we accept the definition of "poverty" as a prison with glass walls, the poor, who once again have not been given an acceptable standard of living in our society, will look out of their glass-walled prisons and deeply resent the Government's actions.
8.44 pm
Mr. Alistair Burt: Looking back through Hansard one notes that debates on changes in social security benefits tend to follow an all too predictable pattern. The Government of the day make a case that, despite economic difficulties and crises of one sort or another, they have ensured that the benefit system has protected those whom they consider to be the very poorest from the effects of rising prices and poverty. The Government get a certain amount of support from their Back Benchers—apart from tonight—and a certain amount of criticism from the same source. I shall have to do both jobs.
For their part, the Opposition, regardless of party label, launch a predictable attack claiming financial mismanagement, that more money should be spent to protect more people and that, given the chance, they could do things much better. That last point flies in the face of all previous evidence, which tends to suggest that when they were last in government they behaved more or less the same as those they seek to criticise from the Opposition Benches.
To a certain extent, that same pattern of debate has been followed today, and for a few moments I shall probably continue in the same fashion. There is little doubt that the present Government have succeeded in convincing the vast majority of British people that public expenditure, no matter how it is given away, is largely financed by the taxpayer. The free lunches in the British economy brought about by the post-war boom began to vanish in the late 1970s, and reality was brought home with a vengeance during the 1980s. Those who watched the very fine television series recently on BBC2, "All Our Working Lives", cannot fail to have been impressed by a cogent analysis of British industrial history which in a nutshell demonstrated that one can write whatever one likes upon the wall, but one cannot always make a fool read it.
If the day of reckoning has arrived for British industry, it cannot be far away for our benefit system because, stripped of various pleas for more money for this or that group of disadvantaged people, this debate should really be about the system that underpins the various benefits.
Despite the claim that severe ideological pressure has coloured the Government's thinking towards public finance, there is little real evidence to suggest that the
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benefit system has been destroyed in the manner claimed by some Opposition Members. Real spending on social security benefit has continued to increase since 1979. Despite the financial constraints of recent years, the Government have maintained all the key elements of the social security scheme and are spending a greater percentage in real terms on that scheme than when they first took office.
Facts and figures on the Government's record have already been given. I believe it is fair to say that the very poorest in our society have been protected. It would always be nice to spend more; but to examine social security uprating solely in the light of "how much money can we give?" is fatally unrealistic. The link between public expenditure and the economy generally is now accepted by all and was certainly accepted by the last Labour Government who failed on occasions to achieve a naive, though well-meant, earnings-linked target. If there is one thing more cruel than poverty, it is a party, whether in government or opposition, which raises the hopes of the poor and then dashes those hopes due to the unreality of its economics.
Especially helpful this year has been my right hon. Friend the Chancellor's raising of tax thresholds and the continuing attention paid to heating additions. Perhaps the DHSS would have to pay out less in heating additions if it were able to fire a warning shot over the bows of the Treasury to convince it not to put its fingers in the energy scene unnecessarily. To force electricity prices up—albeit by a minute percentage compared with the previous Labour Government—and then to raise heating additions to allow the poorest to pay for them is surely an object lesson from the "How Not To Do It Book of Political Savvy and Administrative Expertise". Certain things in the Government's benefit record have not been so good.
I spoke in the last housing benefits debate before today's and, without rehearsing all those ideas, I still think that it is crass to have a major review to decide how best housing benefit should be administered and to whom, while at the same time persisting with the sort of changes that produced the pressures to have the review in the first place. It will be no compensation to those who have been suffering because of the effect or threat of changes for the review at the end of the day to say, "We do not think those changes should have been made, and we shall now restore what has been lost."
It makes neither political nor administrative sense and it would have been far better to wait, as many commentators suggested, for the housing benefit review to complete its deliberations before any further decisions on housing benefit were made. Similarly, the reduction in supplementary benefit for more than 1½ million pensioners is most unwelcome. According to the Child Poverty Action Group, 20,000 families will lose up to 50p per week and 80,000 families will lose between 50p and £1 per week.
For the families on low incomes these reductions, the equivalent perhaps to just a few cups of tea for those of us in the House of Commons, can mean a great deal. A reduction in supplementary benefit does not make it easy for those of us on these Benches to seek to establish our claim that we intend to protect the poorest in our society.
Pious exhortations from the Opposition about what we should do ring a little hollow. One cannot seriously sit on th Opposition Benches and support two of the most

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damaging strikes in the British economy in recent years and expect that same economy to be strong enough to provide more money for the people one claims to protect.
The days of the great claims for money to support more groups in society, regardless of the state of the public purse, have surely gone, and rightly so. In much the same way as politically motivated strikes in the docks and mines are sabotaging the economy, the same economy that last year managed to hand out nearly £1 billion to the mining industry, a demand for a great increase in public expenditure, willy-nilly, will sabotage the economy. In the same way that industrial strikes are often the worst thing for the working man, so a vast increase in public expenditure could be the worst thing to affect the poor.
We must face the fact that, like the National Health Service, the claims for expenditure on social security relate to a bottomless pit. It is difficult to find the correct balance and this Government, in much the same way in all fairness as all previous Governments, have tried to do their best. We are fast approaching a time when the public expenditure indicators on social security trends suggest that doing our best will not be enough.
I find it a great disappointment that neither this Government nor any previous Government have considered—though I now urge it upon them as a matter of great urgency — a fundamental and deep-rooted reform of the social security system along the lines set out by the Institute of Fiscal Studies in its recent publication entitled "Reform of Social Security".
It is that which goes to the heart of the problem that we have been discussing. The benefits system has few friends but many flaws. We have created a baffling system of means-tested benefits with many means-related benefits subject to different tests. We have created circumstances where few of those who administer the benefits truly understand the complexities of the benefits that they administer. Depending upon which Sunday paper one reads, either 5p or 10p of every pound of social security that is handed out is spent on administration.
In housing benefit alone, we have succeeded in creating a system designed to simplify which has produced only further confusion. If the social security system were designed to prevent poverty, it does not. Although we do not face—and claims to the contrary are fatuous—the poverty that the country faced in the 1930s, some 1·3 million households still struggle around the poverty line. There are a further 1·5 million households just above that.
The system created the poverty trap, a system which flies in the face of attempts by men and women to cloth themselves with the respectability of work without being financially penalised for so doing. The system has created marginal tax rates of over 100 per cent. for some families with children. In addition to the poverty trap, we have created the unemployment trap.
The system is so complicated that we know that many thousands of people eligible for benefits do not even claim them. What pressure would there be on the economy if the take-up were 100 per cent.? We have created a system which we know, and about which we tell ourselves from time to time and about which we do nothing, gives money to those people who do not need it and denies money to those who do.
The benefit of the system put forward in the Institute of Fiscal Studies' report is that it deals with some of those
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fundamental problems. It tries to tackle the unemployment trap, the poverty trap, the black economy problems and the problems of low take-up by a simple system that combines tax credits with benefit credits. It can be done, and using new technology it is something that we should think about.
The acceptability of a social benefit and welfare system lies not just in the minds of those who receive the benefit, and should not be judged solely upon that, but also in the minds of those who pay for the system. In my view, the current social security system fails both tests. A pensioner saw me recently in my surgery and asked me why she should receive benefits with one hand and yet pay tax on them with the other. The complicated system of to and fro has gone on long enough.
Few of us in the House expect miracles from any Government. There is no production line for them, and we understand the constraints which tend to prevent them occurring, but we charge the Government not just with an obligation to present generations to create an economy which will be strong enough to allow individuals to provide for themselves, and a benefit system which will ensure that those who cannot so provide are assisted, but we also charge the Government with an obligation to future generations. That obligation takes the form of a charge upon Government to read the writing on their own wall, to anticipate problems and take action in good time to prevent them. With social security, that writing is well and truly upon the wall.
A combined tax benefit system has much to recommend it, and it is clear from the public reaction to the Institute of Fiscal Studies' publication that there is scope for thought and immediate consideration of how the system might work.
Mr. Rowe: Does my hon. Friend agree that in the short term, the major preoccupation should be to ensure that the many reviews which the Government have had the courage to initiate should not take decisions which make the combined system of which he is such a proponent more difficult to attain? There is no doubt that it will take a long time to introduce.
Mr. Burt: Absolutely. The short-term reviews of social security are to be welcomed, but I believe that to describe them as fundamental and radical would probably be wrong. They will be too short-term for that. I doubt whether the reviews will result in anything more than realistic tinkering with the present system and also whether a full-scale, detailed review along the lines that I am suggesting would be affected by any results of the current review. We shall need to wait and see what they produce. I believe that, with the best will in the world, it will be only tinkering with the present system.
A tax credit and benefit credit system, coupled with technological changes which are now available to us in the 1980s, and which were not available before, might just be what the country has been waiting for. Whether it is such an opportunity will demand long-term detailed scrutiny. I believe that it is the task of Government to give the suggested combined tax benefit system that detailed scrutiny. I believe that we fail in our obligations to future generations if we turn down the chance now.
The Government have been in power for some five years and are likely to remain in power for some time. However, this issue transcends party politics, because the administration and infrastructure of a social security

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benefit system can be agreed between parties and set up without politics coming into it. It becomes a political issue when we decide how much money we give to a system and where that money is distributed, but it cannot be argued by anyone that we all seek the most efficient use of our resources, and the present flaws in the social security system suggest that that is not presently the case.
We should recall that the success of the Beveridge proposals, in the first instance, was that they were laid upon a bedrock of consensus through work done at a time of national peril over a period during the second world war. Those proposals could not be perfect, and some of their frailties have now been rather cruelly exposed. It would be good for the reputation of politics, good for us in the House, and good for the reputation of a Western democracy if people outside the Chamber could see the parties looking at a potential disaster and avoiding it in the same reasonable way that many people outside might employ to resolve their differences given a chance. There is no need to be naive. Party politics will enter into the matter soon enough, but the bulk of the work can be done without that.
The Conservative Government have the chance to take the first steps to such a reform by welcoming the IFS proposals and considering how best to assess their feasibility. They have the time, the means and the blueprint. They have the need. I hope to goodness that they have the compassion. It is also about time that they had the will to stop patching the system and sort it out. Many Conservative Members will not rest content until our party is identified not just as the party which will give the country the sound economy needed to satisfy and secure the aspirations of the people but also, through its strength of purpose and economic welfare policy, as the party for those who find themselves in financial difficulties through no fault of their own.
There have been shining moments in history when the Conservative party has been so identified. The greatest son of my constituency, Sir Robert Peel, whose various offices included that of Prime Minister, said after the repeal of the corn laws that he hoped that he might be remembered with sympathy and fondness in the homes of the poor for the fact that their bread was no longer leavened with a sense of injustice. As our tax benefit system continues to rob Peter to pay Paul, occasionally robbing the poor to pay the better-off, it would be a good thing indeed if a Conservative Government could set in train the removal of the sense of injustice from the bread of the social security system.
9 pm
Mr. Archy Kirkwood: I follow the hon. Member for Bury, North (Mr. Burt) in his condemnation of the premature introduction of upratings while the Government are reviewing the benefit system. It is right that that should be put on record today. I certainly do not follow the hon. Gentleman in his economic analysis. If the Government dig huge holes and put people out of work they have no right to squeal about the cost of supporting the unemployed afterwards. They should restimulate the economy, with a certain amount of inflation and the taxation necessary to redistribute wealth towards those most in need.
I listened with interest to the hon. Gentleman's comments about a tax credit scheme. I believe that there is much to be said for amalgamating the taxation and
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benefit structures. I, too, have studied the IFS report. It is an interesting contribution to the general debate, but I do not support all its conclusions. In the short term, I believe that the emphasis must be on increasing child benefit.
I should say at once that I intend to follow the hon. Member for Oldham, West (Mr. Meacher) in voting against the regulations, principally for the reasons that he gave. First, they disguise cuts of more than £100 million. Secondly, I could never advise my colleagues to subscribe to the proposed changes in the available scale margin. Thirdly, the changes miss an opportunity to achieve a whole range of improvements.
I should say at this point that we welcome the Government's decision to go for arbitration in the DHSS strike in Newcastle and Washington. The decision comes rather late in the day, but I hope that arbitration will be successful as I am worried that many old people going on holiday will suffer if the dispute is not speedily resolved.
I am especially concerned at the way in which the upratings will affect pensioners. The remainder of my comments will thus fall into two sections, dealing first with pensions and then with other benefits. The number of pensioners in poverty, as defined by claims for supplementary benefit, including certified housing benefit, is estimated in the Government's recent public expenditure White Paper as about 1·8 million. The category in receipt of standard housing benefit covers 2·43 million, 160,000 claim housing benefit supplement and it is estimated that a further 880,000 are entitled to benefit but do not claim it. All those are official estimates. Rounded up, they show that more than 5 million households — more than half our pensioners — are experiencing some poverty.
I subscribe to the view of the hon. Member for Birmingham, Perry Barr (Mr. Rooker) who adverted to the fact that it is a strange coincidence that for the past two years, since the historic method was adopted, the uprating month has been May. In that month, in each of those years, the retail price index was at its lowest. It will be interesting to see what happens in future.
Many things could have been done to alleviate the lot of the pensioners. I do not wish to make extravagant claims. Government Members often say that Opposition Members can make extravagant claims because they do not have the responsibility for raising revenue. That is fair enough. Nevertheless, the Government should make it clear what priority they give to some important aspects of supplementary benefit and pension regulations as they apply to old-age pensioners.
First, the capital limit is a cause of much concern, as I know from dealing with pensioner pressure groups and individual pensioners in my constituency. I regret the fact that the Government have not taken this opportunity to raise the capital limits for entitlement to supplementary benefit or single payments. The Government should lift the limits again. I believe that about 160,000 families are prevented from claiming benefit because of the capital requirements. Among them are many pensioners on very small fixed incomes.
Another cause of concern is the problem of unclaimed benefit. The Government are not doing enough about that. Some 880,000 pensioner households have incomes below the poverty line, it is estimated, and the weekly amount unclaimed is £5 or so. We need imaginative schemes that would increase the take-up. Such schemes would probably

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necessitate taking on more DHSS staff. There should also be more house visits, particularly in rural areas, as old folk find it difficult to check their benefit entitlements. We on these alliance Benches would countenance any increase in expenditure that the employment of more DHSS staff for such work would entail.
I have already referred to the retail price index in connection with the month in which the uprating is carried out. As I have said many times in these debates, I believe that the RPI itself is flawed, as it relates to pensioners in a substantial number of ways. Age Concern estimates that, in the period 1974–1982, inflation has increased for pensioners by more than 12 per cent. more than it has increased for any other comparable group in society. We must use the RPI figures with caution when discussing the needs of the elderly.
The Government should clarify their views about the frequency of upratings. In this white-hot technological age, it must be possible to uprate pensions twice a year. There are arguments about whether the weekly books could be changed, and so on. However, I have a quotation here—I shall not read it out—which shows that in 1974 the present Secretary of State for Health and Social Security tried to persuade the then Secretary of State, Mrs. Castle, to consider a bi-annual increase. There is no argument against such a change. The upratings would then be much fairer and would keep up with the cost of living in a much more efficient way. The rate of increase chosen in these uprating regulations—the various benefits are to be increased by 5·1 per cent. or so—will be quickly overtaken by the rate of inflation in the next six months. In regard to pensions, the Conservative pledge of 1979 to abolish the earnings rule is still unfulfilled. I accept that there have been changes but they have not gone far or come fast enough. I should like the Government to make it clear how they intend to approach that.
I have often stressed the need to increase pensions above the minimum price relationship. The Social Security Advisory Committee's second report made it clear that pensions would inevitably fall behind the cost of living unless they were given occasional upgradings above the minimum price relationship provided for in the Social Security Act 1980. The Government's promise in their strategy statement of 1981 entitled "Growing Older" promised:
"As the economy improves, elderly people will share in that improvement".
They are not at the moment.
Two regulations concern child benefit. The first uprates child benefit by 35p and the second affects children who are temporarily abroad. The alliance parties would like a 95p increase. Such an increase has been costed and put into our published tax credit scheme. The changes in the upratings are a form of anti-family taxation and the best short-term means of increasing the resources available for people who need them most is to increase child benefit by at least 95p. The Government must come clean on what future they think child benefit has. It was formerly understood that child benefit increases should match those in personal allowances. I deeply regret that that is not happening. I agree with what has been said about the practicalities, difficulties and potential discrimination of the changes in child benefit regulations for those who go abroad.
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In regard to the family income supplement regulations, according to the Child Poverty Action Group the Government will save about £11 million and about 200,000 families will be affected. Their losses will vary, according to their circumstances, from £65 to £150 a year. That will effectively wipe out the child benefit increase that many families have succeeded in getting. The Government could not expect our support for the family income supplement regulations.
The first supplementary benefit regulation concerns young people and people who apply for refugee status and the second affects the available scale margin. According to figures supplied by the Child Poverty Action Group, the Government will save up to £86 million a year, 400,000 people will lose up to 50p a week, 1·4 million people will lose between 50p and £1 a week, 20,000 families will lose up to 50p a week and 80,000 families will lose between 50p and £1 a week. Many pensioners will also be worse off.
The Government should address their mind to the extension of the long-term rate of supplementary benefit to the long-term unemployed. That is long overdue and the social security advisory committee argued the case cogently. The Government should restore the taxation of invalidity benefit. That is also an old chestnut but long overdue.
I am prepared to accept that, if one took a calculator and costed everything I have recommended to the Government it would be impossible to achieve at a stroke. The Government have missed an opportunity to bring forward the uprating benefits and make their position clear on some of these issues. Some benefits could have been marginally improved, with modest increases. The Government should make their long-term position clear. Regretfully, I must tell the Government that we shall be following the hon. Member for Oldham, West into the Lobby tonight.
9.15 pm
Mr. Brynmor John: Anybody in the country who is observing the House tonight must think that it is a crazy place. We are talking about uprating the state benefits of 40 million people — or uprating state handouts, as the Chief Secretary to the Treasury called them in the economic debate. We are discussing the benefits in barely an hour more than we devoted to the bishops on Monday night. That is a crazy scale of priorities, when Opposition Members who are willing and able to participate in the debate must cut short their remarks so that my hon. Friend the Member for Derby, South (Mrs. Beckett) will have a fair chance to make the summary of our case in the time that she deserves.
I do not care whether these debates are arranged through the usual channels. It is high time that we came back to a sense of reality. No one observing the debate would think that we treated them with anything other than contempt by debating a matter of such importance in 2½ hours. Frankly, there is no other point that I really want to make. I could have done so, but I do not want to make a point that is slipped in because it is quick and meretricious.
I believe deeply that this subject touches the poorest of this country. The contempt with which the country will view these proceedings is not helped by the Minister of State. He must choose whether he is to be a statesman or

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a buffoon. There is a great war within him. I am bound to tell him that, to the detriment of his reputation, the George Formby side of his nature came out very markedly.
The subject should not be treated with undue solemnity, but nor is it a frivolous subject. The regulations that we shall pass tonight mean that people will have to live on these benefits for a year, week in and week out. In many cases the benefits will be the sole source of income.
The combination of the time allowed and the way in which the debate has been treated forces me to say that the debate on this subject is unworthy of the House of Commons. I wish to take no further part in it.
9.18 pm
Mr. Roy Galley: I was grateful to hear the remarks from the Liberal Benches because, from the general tenor of remarks from the Opposition Benches, one would not have thought that we were discussing an increase in public expenditure of some £2 billion. Instead, the Opposition have concentrated on so-called cuts of just over £100 million.
One would not have thought, from the tone of the debate, that child benefits had been increased in the past five years by about 3 per cent. more than the rate of inflation, or that, with an inflation rate of 76·4 per cent., child benefit has increased by more than 79 per cent. in that time. One wonders, therefore, what will produce a balanced approach from Opposition Members. With an inflation rate of 76·4 per cent., we are increasing pensions by more than 83 per cent. over five years.
The Government's record on social security in terms of total expenditure and expenditure in take-up of mobility and invalidity allowances and so on has been very good. The real increase in specific benefits has been extremely good. One wonders from the tone of the debate what would satisfy Opposition Members. Do we have to pay more and more so that eventually we get into the bankruptcy court, as we did in 1977?
I support the remarks of my hon. Friend the Member for Bury, North (Mr. Burt). We are faced with a series of documents of inordinate complexity. We are changing 50p here and 50p there. We are determining the price of a duffle coat and a pair of underpants. It is incredible that Parliament should be involved in such details. Every week millions of payments are made from families to the state and from the state to families. There are over 12 million payments of child benefit, over 9 million payments of pensions, over 1 million payments of unemployment benefit and hundreds and thousands of payments of many other benefits. Constant transfers are going on.
I wonder whether my hon. Friend the Minister groaned when my hon. Friend the Member for Bury, North yet again mentioned tax credit, or what is better termed the integrated tax-benefit, system. The matter has been raised many times in the House, and has been a long saga. My hon. Friend the Minister might say later that, on the basis of the estimates of benefit not taken up and other factors, it could cost about £6 billion or £7 billion more than the £39 billion that we are now paying in the social security budget. Therefore, it is important to draw to the attention of my hon. Friend the suggestion of the Institute for Fiscal Studies that its proposals would result in a reduction of about £10 billion in public expenditure. It would mean a considerable redistributive effect. One cannot have such a reduction without a significant redistributive effect. There may be a case, particularly for child benefit for those
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who are better off and some other benefits, for having a certain amount of redistribution at that end of the scale. That shows that an integrated tax-benefit system need not involve greater public expenditure.
I urge my hon. Friend to look closely at that principle while he is carrying out his reviews and to consider the fact that the administration of social security now costs over £1·6 billion.
9.23 pm
Mr. Jeff Rooker: I want to introduce some sour grapes into the debate, as the Minister of State would expect.
Since 1979 the Christmas bonus, the age addition to retirement pension, death grant, maternity grant, supplementary benefit, additions for blindness and for a claimant over the age of 80 have all fallen in real terms. That fact will not be changed after the uprating instruments have been passed. The Government have not struck a blow for a single one of those benefits since 1979. They have finally abolished the child dependency addition to no less than 13 other benefits. Sickness benefit, invalidity pension, maternity allowances and unemployability supplement were cut by 5 per cent. in 1980, and that cut has not been restored. I obtained that information from one of the Minister's parliamentary answers earlier this year, which he will recollect. All those benefits have been cut. Therefore, there is no credit for the Government.
I reiterate what my hon. Friend the Member for Pontypridd (Mr. John) said about the management of our affairs, but in the short time available I want to concentrate on one aspect — the Prime Minister's view of the situation. On 28 June the Chief Secretary to the Treasury, from the Dispatch Box, referred to the social security programme as state handouts. I wrote to the Prime Minister and asked whether that was the kind of language used around the Cabinet table. I received one of the most ill-tempered letters from the Prime Minister which I have ever received. It was not only ill-tempered but grossly inaccurate.
On 5 July she claimed that the rise in the RPI has been only 71 per cent., including housing costs. She meant excluding housing costs. Whoever drafted the Prime Minister's letter was inaccurate. Including housing costs the RPI is about 76 to 77 per cent. Therefore, the Prime Minister was wrong on that count.
The Prime Minister had the brass cheek to say that spending on the sick and disabled will be increased by 30 per cent. in real terms without pointing out that there has been a cut of 66 per cent. on expenditure on benefits to the short-term sick. She then repeated the claim that has been made here tonight that child benefit is at its all-time high. I refute that claim. It is not possible to take child benefit on its own. As the Minister said, child benefit is just another name for the combination of child tax allowances and family allowance. Although child benefit will go up in November, the Government will not have put child support to the taxpayer back to the level of 1976–77 under the Labour Government. So the Prime Minister is not telling the truth when she claims that it is at an all-time high.
It is worth putting the figures on the record. In 1976–77 the maximum child tax allowance was £365 and child benefit for the second child and above—one has to take that because the system was slightly different — was £1·50. So child support for a basic rate taxpayer in

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1976–77 under the Labour Government was £202·10 a year. From November child benefit will be £6·85 a week, equivalent to £365 per annum. But in 1976–77 prices that is only £1·60. That compares with £202 under the Labour Government. It is no good the Under-Secretary of State shaking his head. Those figures cannot be denied. So child support to taxpayers is nowhere near what it was under the Labour Government. It is about time the Prime Minister took that point on board. She is making misleading assertions. Obviously if the Government change the name of the benefit and only count their assessment of it from that year, they are open to accusations of juggling the figures.
The Chief Secretary let the cat out of the bag when he referred to the social security system as state handouts. He did not qualify that. At Question Time last Thursday he qualified it by saying that he was referring to the non-contributory part of the social security system; but he did not say that the week before. He was referring to widows' pensions, retirement pensions, unemployment benefit, any national insurance benefit, maternity grant, mobility allowance, attendance allowance and all the benefits for the disabled. The Chief Secretary called those state handouts.
Yet this year we have had a Budget in which tax reliefs have been given to owners of stud farms, employees earning £100,000 a year by means of tax options, and woodland owners, of which the Chief Secretary is one. Even to individuals, well over £1 billion has been given to high-rate taxpayers. There have been tax handouts in respect of stamp duty, development land tax, corporation tax, and capital gains tax, and higher rate taxpayers have been given over £1 billion. But none has been given to the people we are discussing tonight.
Tax reliefs total £45 billion—more than the cost of the social security system. There is an imbalance in our affairs. Some Conservative Members have referred to that in relation to the Institute of Fiscal Studies report. Unlike one or two Conservative Members, we do not agree entirely with that report, and nor did the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood). However, it is right to put it on the agenda. We need to find a different way of ordering our affairs, but we are not prepared to discuss a way that takes £10 million off social security benefits so that the Government can use it to give tax handouts to their masters in the City. That is not on offer.
If the Government can come up with a way of ensuring that the money involved in the regulations gets to the people who are eligible to receive it, they will receive our whole-hearted support. But they will not run an effective take-up campaign. They know that about £700 million of social security benefits are not taken up.
The additional requirements regulations increase the allowances for clothing for the first time for a few years. Earlier this year, Parliament discussed massive tax handouts to the rich. Tonight, we are discussing regulations which include sums as little as 75p for stockings and tights for women and 90p for plastic pants for children.
Many of the people for whom such help is available will not receive it, because they do not know about it and because neither they nor the operators of the social security system on the desks — I do not criticise them individually—fully understand the system. If they did,
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the Minister and his colleagues would not have to sign so many letters to hon. Members and occasionally send out circular letters to us all saying, "Please do not write to us; go to your local office." Ministers are signing thousands of letters a year, and that it is only the tip of the iceberg.
After five years in office, the Government cannot claim that they have had great success in increasing the take-up of benefits. Frankly, it is not in the interests of the Treasury that the Government should succeed. That is why the DHSS is not given the money to ensure that the benefits that we are being asked to approve get through to our fellow citizens. That is a shame and a moral disgrace and it reflects on the Treasury and DHSS Ministers who go along with it and stay in office.
9.33 pm
Mrs. Margaret Beckett: For the second time this evening, we have heard suggestions from the Minister and from Conservative Members—though one or two of them made criticisms — that the Government are being generous to the poorest members of our society. The timing of the presentation of the instruments suggests that most of them are urgently needed.
Most of what the Minister said about the Government's generosity has been demolished by my hon. Friends. I add only one comment to their criticisms. The Minister outlined a list of achievements by the Government, but he failed to mention that they have introduced five pieces of legislation on social security — quite apart from the many amending regulations that seem to crop up with amazing frequency—and every piece of that legislation has contained net savings in the provision made for social security and for the welfare state.
Although the Government may have been forced by circumstances into making some increases, they have done all that they can to take back from other groups among the poor the sums that they have given to some of the most needy. At the same time, as my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) pointed out, they have given, given, and given again to the rich.
The matter of the death grant was raised by my hon. Friend the Member for Pontypridd (Mr. John). The Minister mentioned his anxiety about the different recommendations he had received and the amount of time that would be needed to consider the death grant. The Minister and the Government are inconsistent, in that for changes in something like the death grant there is never enough time. Such matters must be considered thoroughly and reported on. Yet with regulations such as these, which, as the SSAC pointed out, contain 52 changes, for which the draft regulations were not available even to the Committee, let alone to those who wished to comment on them, and for which the consultation period lasted only two months, the Government are in a hurry. They hurry to take away benefits, yet they are dilatory in handing them back, except to the wealthy.
The SSAC pointed out in several contexts the Government's inconsistency in rushing through many of the changes in the proposals while at the same time announcing what they claim will be a fundamental review. As we will probably not have another such debate before the autumn, I point out to the Government that many of us are cynically wondering whether these reviews are simply a cover for a set of decisions that the Government have already made, which are governed by the amount of

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money that the Government have decided to make available. That would not be the first time that that has happened. I hope—although I doubt it—that we shall be proved wrong in that respect.
I should like the Under-Secretary, either when he replies to the debate or in a letter, to answer a question about the regulations which deal with allowances for laundry. This is only one question in the myriad of proposals. The SSAC and the Secretary of State referred to the circumstances in which public laundrettes are available. The Under-Secretary will know from his correspondence that it is difficult to see whether the rules will be applied consistently or whether it will be easy and convenient for the benefit offices to say, "If there are other accessible facilities such as a laundrette available, they must be used in all circumstances." When the Minister considers the implementation of the regulations, will he ensure that guidance is given, either in the S manual or however he chooses, so that the regulations are interpreted in the reasonable way suggested by the SSAC and scope for less reasonable interpretation does not exist?
There are plenty of omissions in the regulations. They omit to extend the long-term rate to the unemployed. That is probably the greatest piece of injustice that the Government continue to perpetrate. They omit to restore the 5 per cent. abatement of some benefits and to extend the invalid care allowance—the only benefit where we discriminate against people purely because they are married women. They omit to increase the earnings disregard. Many people have called for that, as they have done for long-term supplementary benefit. That is especially worrying today when the disregard is so small and people fall foul of it for other reasons.
Apart from the sins of omission, there are the sins of commission. The most notorious one is the available scale margin. The Government intend to save £86 million despite their generosity to the poor. Of that figure £74 million is expected to be saved at the expense of pensioners. Few pensioners will share the Government's view that they have been generous to pensioners especially when they realise the amount that the Government will save in these petty ways.
There are delays in the implementation of FIS. The review will take place only on the year's anniversary. That will cost the poorest families tens and perhaps hundreds of pounds. There is a change in the entitlement to child benefit which will, as the Minister must know in his heart, whatever he may choose to say in the Chamber, unquestionably discriminates against Asian families and other ethnic minorities.
Although it is not mentioned at great length in the body of the SSAC comments, I note the final comment on the amending regulations, which refers to the restriction on benefit that will be paid for a child who is born abroad. Has it occurred to the Minister or his advisers that for strict Hindus or Muslims there are restrictions on travel after birth? It is difficult to understand how the Minister can argue in those circumstances that the changes will not be discriminatory. I also note from paragraph 9 of the comments on the proposed changes that they are unlikely to apply to people travelling on business, but only to people travelling on holiday, especially in the circumstances in which many families travel to the Indian subcontinent.
Perhaps the worst aspect of these many complicated and difficult changes are those which penalise initiative among
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the people who already have the least hope. I pay tribute to the Conservative Members who had the courage to mention that criticism. The change in the rules with regard to young people who are allowed some period in education and still to draw benefit is, to some extent, welcome; but the underlying philosophy behind it, and the assumption that the rules which were satisfactory when there were plenty of jobs for most people should be even more rigidly applied today, is wholly unsatisfactory and unreasonable. Not only the Government but society will, in the end, suffer from narrowing the initiatives available to young people.
The regulations perpetuate the changes made to the single payments for furniture and other such items, which are desperately needed by many people trapped in often expensive furnished accommodation which, although expensive, is frequently appalling. However, again no hope can be held out to those people because the Government have changed the regulations and deprived them of hope.
The group of changes and the rules confine many of our young people to dead-end jobs, dead-end accommodation and dead-end dole queues. All of us, not just the Government, will suffer from that.
The Minister and some of his hon. Friends have told us repeatedly about the Government's generosity. Has the Minister had an opportunity to study the report commissioned by his department from the Policy Studies Institute on the reform of supplementary benefit? If he has examined it, I do not understand how he can stand at the Dispatch Box with a straight face and talk about the achievements of the Government. An article on the report states:
"Three out of five adults are missing standard items of clothing such as a warm coat or change of shoes, both for themselves and their children. More than half are in debt, often over fuel bills. Half run out of money most weeks"—
as did the hon. Member for Derbyshire, West (Mr. Paris) when he tried to live on supplementary benefit.
Apart from that general experience of people who live on supplementary benefit, I quote from the conclusions of the article on the report:
"The problem for the Government … is that most changes that would simplify the system look likely either to cost money, or to exclude people from payments which they may not be getting but which, on the evidence of the PSI study, they do actually need."
The Government have made much of the reviews that they are undertaking. When we see those reviews and the choices and decisions which the Government make on them, we shall judge whether they are prepared to have a simplified system that gives a fair entitlement to all. If not, people will not receive payments which they desperately need.
Mr. Speaker: Mr. Anthony Nelson.
9.45 pm
The Parliamentary Under-Secretary of State for Health and Social Security (Mr. Tony Newton): Newton.
Mr. Robert N. Wareing: He has only one eye.
Mr. Newton: I can see that the hon. Member for Liverpool, West Derby (Mr. Wareing) has decided to make me disabled, as well as the Minister responsible for the disabled.

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I have a great deal of sympathy with the comments made by the hon. Member for Pontypridd (Mr. John) about the slightly absurd way in which we have ended up debating this large and important series of instruments. It is something that both Front Benches — without revealing any secrets about how the arrangements are come to—and all of us who are concerned might bear in mind for future occasions. I apologise, at least on behalf of the Conservative party, to the hon. Member, who did not feel able to contribute to the debate in the way in which he undoubtedly would have wished. We have noted his point.
I shall try to respond as well and as seriously as I can in the relatively short space of time left to me, to the specific points made by hon. Members on both sides of the House. I start by referring to the points made by the hon. Member for Derbyshire, South (Mrs. Currie)—I beg the hon. Lady's pardon—Derby, South (Mrs. Beckett).
Mrs. Beckett: There is an important difference.
Mr. Newton: My hon. Friend the Member for Derbyshire, South also regards this as an important distinction. I do not want to upset the pair of them. It is difficult enough to when one upsets one of them.
I noted the remarks made by the hon. Member for Derby, South about laundry additions. She raised a complex point, and it is one that I shall look into and write to her about, as she suggested.
The hon. Members for Oldham, West (Mr. Meacher) and for Roxburgh and Berwickshire (Mr. Kirkwood) referred to the Newcastle dispute. I place it firmly on record that the origin of the dispute were Government proposals, not dreamed up by a Minister but arising from an audit report conducted by other civil servants, which suggested that we were not running the Newcastle benefit computer system as efficiently and effectively as we could. It suggested that, by changing the working arrangements, we could make economies in public expenditure that we estimate at about £700,000, and not the £40,000 or so that the hon. Member for Oldham, West mentioned. In all seriousness, if he were a Minister, he would also have felt that, faced with such a report, it was right for both senior official management and ministerial management to respond by proposing changes that would maximise efficient use of resources in administering the benefit system. It was in that spirit that we approached the matter.
The hon. Member for Oldham, West spoke very much in terms of protecting the earnings of those who are currently engaged in particular forms of shift working at Newcastle, and we accept that. I know that I can speak for my hon. Friend the Minister in saying that we recognise the proper concerns about protecting earnings of existing workers in that part of the complex. We have already made proposals that would protect them for at least two years, subject to review after that period. We are prepared to consider a negotiation about modifications of those proposals.
However, we should be concerned—it is important to make this point—about the suggestion that we should perpetuate these arrangements and take new people into the system on what can be seen as an artificial and
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excessive earnings level. We accept the need to consider the protection of existing workers and we have shown our willingness to do that in the negotiations.
I am grateful to the hon. Member for Oldham, West for what he said about welcoming our willingness to accept conciliation by ACAS. If I read his words aright, he was urging the union to accept that also. Generally speaking, he said this in a constructive spirit, which is the way in which we approach this. We are willing to resume negotiations and hope to bring to an end this difficult dispute. I am sure that no hon. Member would wish to see an uprating threatened by any unnecessary continuation of the dispute.
I turn to some of the more contentious issues raised, and shall begin with what has been said about family income supplement. In the course of the many remarks made by Opposition Members, no one acknowledged that the unique factor about FIS is that it is not normally changed during the course of the year's award for any reason other than an uprating. Its whole merit as a benefit and its simplicity of administration stem from the fact that once it has been assessed on the basis of the family's circumstances, including its income at the time of assessment, it stays in payment over a year, regardless of changes. If the family gain an extra child, it does not change. Most importantly of all, if the family's income suddenly increases, even dramatically, it does not change. No other changes in circumstance are taken into account during a year's currency of FIS.
Looking back, it is odd not that we now propose to change the one curiosity of taking account of the uprating alteration, but that from the very beginning it was felt sensible to maintain the rate of benefit throughout the year in which the award has currency. In the context of that basic method of operating FIS, I believe that the proposal that the uprating changes should also be excluded from consideration until the award falls due for renewal makes sense.
However, I accept that there may be problems this year, particularly as FIS awards are normally for 52 weeks and, for reasons connected with the calendar, there will be a 53-week benefit year this year. Earlier, my hon. Friend the Minister was unable to include in his speech our transitional proposals to help to deal with that problem. In general, as I have said, most renewal awards will be treated in the same way as new awards, in that the assessment will be based on the prescribed levels applying at the date of commencement of the award. But there are two easements. First, people whose awards terminate on 19 November, and who successfully renew their awards, will receive one week at a rate based on the 1983 levels and 52 weeks at a rate based on the 1984 levels. Had it not been for the fact that the period between the 1983 and 1984 upratings was 53 weeks, they would have been able to renew this year with the advantage of the new levels, and we do not think that they should be penalised because of the coincidence of the 53-week period and the change that we propose.
Secondly, those who make a successful renewal claim following an award that terminates on either 5 or 12 November 1984 will be given the choice of an award based on the 1983 levels, but running consecutively from their previous award, or an award based on the 1984 levels but running from 27 November. Effectively, that means that those people can break the cycle of renewal and obtain the advantage of the 1984 levels if that is what they wish to

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do, rather earlier than they could do under the general provisions now existing. I apologise if that seems slightly complicated, but I thought it important that I should try to make it as clear as possible.
The question of child benefit overseas exercised the minds of the hon. Members for Stretford (Mr. Lloyd) and for Birmingham, Ladywood (Ms. Short), and several other hon. Members. I should make it clear that the majority of those who receive benefit under the current rules for up to 26 weeks travel not to the Indian subcontinent but to the middle east, the United States of America and South Africa. Only 17 per cent. travel to the Indian subcontinent. In other words, 83 per cent. do not.
Of course, I accept that hon. Members have expressed sincerely felt concern. However, we have given an undertaking to the Social Security Advisory Committee that we shall monitor the effect of the proposed new regulations on families in general. I ask the House to accept that these regulations were not in any way conceived as an attack on the interests of ethnic minority families. Indeed, when considering the proposals, Ministers specifically asked for the figures that I have just given, to ensure that they would not appear to be—and could not statistically be shown to be — directed at ethnic minority families, but rather at the more general problem of people leaving this country for some considerable time. In those circumstances, most reasonable people would feel that such people should not continue to be entitled to child benefit.
Another point that exercised hon. Members on both sides of the House was study by the unemployed. As this whole area will be considered by the review of benefits for children and young people, I do not feel it appropriate tonight to respond beyond that to the broader comments that my hon. Friend the Member for Mid-Kent (Mr. Rowe) and others expressed.
The three months' qualifying period is not affected by the regulations. Our purpose is only to make as sensible and workable as possible the existing arrangements, which are necessary within the existing system for distinguishing between those who are genuinely unemployed and seeking work, whom we do not wish to prevent studying while they are unemployed, and those who are, in effect, full-time students who have opted out of the employment market.
Ms. Clare Short: The Minister is probably aware that Youth Aid did research—I was involved in parts of it—on this question which showed that the regulations were so complex that few young people were taking the benefit of them. It showed that some colleges had gone to enormous trouble to provide 15-hour courses to comply with the old regulations. This change will destroy those courses. It will, therefore, damage the opportunity for young, unemployed people who want to study.
Mr. Newton: I accept that this is a complex area. Against what the hon. Lady said, there were cases where youngsters, under the old 15-hour rule, were ruled out on homework grounds because homework was included. It was a muddy area which was causing increasing confusion. We have now reduced the period from 15 to 12 hours but have excluded homework, so that there is absolute clarity.
Additional hours can be spent in doing homework. Many youngsters who were cut out by the previous rules, because of the amount of homework they did, now have
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clarity. I believe that it will be much easier—the SSAC shared this view—for courses, and, above all, for young people to plan their activities in the certainty of what the rules are, rather than leaving it to accidents of interpretation in benefit offices.
Ms. Clare Short rose——
Mr. Newton: I must not give way further.
Frankly, I do not believe that it is beyond the wit of colleges which had carefully devised courses to get within a rule of a vague character to devise courses to get round a rule which is much clearer and more straightforward.
I hope that I do not offend the hon. Member for Birmingham, Perry Barr (Mr. Rooker) when I say that in two respects his contribution was significantly below his usual level. His comparisons of the real value of child benefit with the tangle of different tax allowances for children of different ages that existed in the past was so meaningless as to be positively misleading.
The hon. Gentleman was able to make the point only by taking the most extreme case. If the same extreme case were applied to the record of the last Labour Government, one could say that the real value of child support fell sharply and dramatically from £8 a week to less than £7. I do not press that charge against the hon. Gentleman, but if he uses misleading statistics, he must not complain if he gets them quoted back at him, and I hope that he will not do it again.
I say not only to the hon. Member for Perry Barr but to the whole House that the notion that, whatever we may do in the uprating, this Government are not interested in getting benefits to those who should have them, is absolute and utter nonsense. In the last two years, claims for both mobility allowance and attendance allowance have risen by 20 per cent., with considerable encouragement from the Government. We have recently introduced a free telephone service designed to improve our advice and information services throughout the country. The take-up of one-parent benefit has risen sharply and we are continuing to make extensive efforts to get the benefits; to the people who deserve to have them.
Question put and agreed to.
Resolved,
That the draft Social Security Benefits Up-rating Order 1984, which was laid before this House on 6th July, be approved.
Motion made—[Dr. Boyson] —and Question put,
That the draft Supplementary Benefit Uprating and Additional Requirements Regulations 1984, which were laid before this House on 6th July, be approved:—
The House divided: Ayes 244, Noes 168.

Division No. 418]

[10 pm

AYES

Amery, Rt Hon Julian

Clarke, Rt Hon K. (Rushcliffe)

Atkins, Robert (South Ribble)

Clegg, Sir Walter

Baker, Rt Hon K. (Mole Vall'y)

Colvin, Michael

Bottomley, Peter

Coombs, Simon

Bottomley, Mrs Virginia

Cope, John

Bowden, Gerald (Dulwich)

Crouch, David

Boyson, Dr Rhodes

Dorrell, Stephen

Brandon-Bravo, Martin

Douglas-Hamilton, Lord J.

Buck, Sir Antony

Dykes, Hugh

Burt, Alistair

Emery, Sir Peter

Butcher, John

Farr, Sir John

Butler, Hon Adam

Favell, Anthony

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

Fenner, Mrs Peggy

Cash, William

Finsberg, Sir Geoffrey

Chapman, Sydney

Fletcher, Alexander

Clark, Dr Michael (Rochford)

Fookes, Miss Janet

Clark, Sir W. (Croydon S)

Forman, Nigel

607

Forsyth, Michael (Stirling)

Luce, Richard

Forth, Eric

McCrindle, Robert

Fox, Marcus

McCurley, Mrs Anna

Franks, Cecil

Macfarlane, Neil

Fraser, Peter (Angus East)

MacKay, Andrew (Berkshire)

Freeman, Roger

MacKay, John (Argyll & Bute)

Fry, Peter

Maclean, David John

Gale, Roger

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

Galley, Roy

McQuarrie, Albert

Gardner, Sir Edward (Fylde)

Madel, David

Garel-Jones, Tristan

Malone, Gerald

Glyn, Dr Alan

Maples, John

Goodhart, Sir Philip

Marland, Paul

Goodlad, Alastair

Marlow, Antony

Gow, Ian

Mather, Carol

Grant, Sir Anthony

Maude, Hon Francis

Green way, Harry

Maxwell-Hyslop, Robin

Gregory, Conal

Mayhew, Sir Patrick

Griffiths, Peter (Portsm'th N)

Mellor, David

Grist, Ian

Merchant, Piers

Ground, Patrick

Meyer, Sir Anthony

Gummer, John Selwyn

Miller, Hal (B'grove)

Hamilton, Hon A. (Epsom)

Mills, Iain (Meriden)

Hamilton, Neil (Tatton)

Mills, Sir Peter (West Devon)

Hanley, Jeremy

Miscampbell, Norman

Hargreaves, Kenneth

Mitchell, David (NW Hants)

Harris, David

Moate, Roger

Harvey, Robert

Montgomery, Fergus

Haselhurst, Alan

Morris, M. (N'hampton, S)

Havers, Rt Hon Sir Michael

Morrison, Hon C. (Devizes)

Hawkins, Sir Paul (SW N'folk)

Morrison, Hon P. (Chester)

Hawksley, Warren

Murphy, Christopher

Hayes, J.

Needham, Richard

Hayhoe, Barney

Nelson, Anthony

Hayward, Robert

Newton, Tony

Heathcoat-Amory, David

Nicholls, Patrick

Heddle, John

Normanton, Tom

Heseltine, Rt Hon Michael

Norris, Steven

Hicks, Robert

Onslow, Cranley

Higgins, Rt Hon Terence L.

Oppenheim, Philip

Hind, Kenneth

Ottaway, Richard

Hirst, Michael

Page, Sir John (Harrow W)

Hogg, Hon Douglas (Gr'th'm)

Page, Richard (Herts SW)

Holland, Sir Philip (Gedling)

Parris, Matthew

Holt, Richard

Patten, John (Oxford)

Hooson, Tom

Pawsey, James

Hordern, Peter

Percival, Rt Hon Sir Ian

Howard, Michael

Pollock, Alexander

Howarth, Gerald (Cannock)

Powell, William (Corby)

Howell, Rt Hon D. (G'ldford)

Powley, John

Hubbard-Miles, Peter

Prentice, Rt Hon Reg

Hunt, David (Wirral)

Proctor, K. Harvey

Hunt, John (Ravensbourne)

Raffan, Keith

Hunter, Andrew

Rees, Rt Hon Peter (Dover)

Hurd, Rt Hon Douglas

Renton, Tim

Jackson, Robert

Rhodes James, Robert

Jenkin, Rt Hon Patrick

Ridley, Rt Hon Nicholas

Jessel, Toby

Ridsdale, Sir Julian

Johnson Smith, Sir Geoffrey

Roberts, Wyn (Conwy)

Jones, Robert (W Herts)

Robinson, Mark (N'port W)

Jopling, Rt Hon Michael

Roe, Mrs Marion

Joseph, Rt Hon Sir Keith

Rowe, Andrew

King, Roger (B'ham N'field)

Ryder, Richard

King, Rt Hon Tom

Sainsbury, Hon Timothy

Knight, Gregory (Derby N)

St. John-Stevas, Rt Hon N.

Knight, Mrs Jill (Edgbaston)

Sayeed, Jonathan

Knowles, Michael

Scott, Nicholas

Knox, David

Shaw, Giles (Pudsey)

Lang, Ian

Shaw, Sir Michael (Scarb')

Lawler, Geoffrey

Shepherd, Colin (Hereford)

Lawrence, Ivan

Shepherd, Richard (Aldridge)

Lawson, Rt Hon Nigel

Shersby, Michael

Lee, John (Pendle)

Silvester, Fred

Leigh, Edward (Gainsbor'gh)

Sims, Roger

Lennox-Boyd, Hon Mark

Skeet, T. H. H.

Lightbown, David

Smith, Sir Dudley (Warwick)

Lilley, Peter

Smith, Tim (Beaconsfield)

Lloyd, Ian (Havant)

Soames, Hon Nicholas

Lloyd, Peter, (Fareham)

Spencer, Derek

Lord, Michael

Spicer, Jim (W Dorset)

608

Spicer, Michael (S Worcs)

Vaughan, Sir Gerard

Squire, Robin

Viggers, Peter

Stanbrook, Ivor

Waddington, David

Stanley, John

Wakeham, Rt Hon John

Steen, Anthony

Walden, George

Stern, Michael

Wall, Sir Patrick

Stevens, Lewis (Nuneaton)

Waller, Gary

Stevens, Martin (Fulham)

Walters, Dennis

Stewart, Allan (Eastwood)

Wardle, C. (Bexhill)

Stewart, Andrew (Sherwood)

Warren, Kenneth

Stokes, John

Watson, John

Stradling Thomas, J.

Watts, John

Sumberg, David

Wells, Sir John (Maidstone)

Taylor, John (Solihull)

Wheeler, John

Taylor, Teddy (S'end E)

Whitfield, John

Temple-Morris, Peter

Whitney, Raymond

Thompson, Donald (Calder V)

Wiggin, Jerry

Thompson, Patrick (N'ich N)

Winterton, Nicholas

Thornton, Malcolm

Wolfson, Mark

Thurnham, Peter

Wood, Timothy

Townend, John (Bridlington)

Yeo, Tim

Townsend, Cyril D. (B'heath)

Young, Sir George (Acton)

Tracey, Richard

Younger, Rt Hon George

Trippier, David

Trotter, Neville

Tellers for the Ayes:

Twinn, Dr Ian

Mr. John Major and Mr. Michael Neubert.

van Straubenzee. Sir W.

NOES

Abse, Leo

Dubs, Alfred

Adams, Allen (Paisley N)

Dunwoody, Hon Mrs G.

Alton, David

Eadie, Alex

Anderson, Donald

Eastham, Ken

Archer, Rt Hon Peter

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

Ashdown, Paddy

Ellis, Raymond

Ashley, Rt Hon Jack

Evans, John (St. Helens N)

Ashton, Joe

Fatchett, Derek

Atkinson, N. (Tottenham)

Faulds, Andrew

Barnett, Guy

Fields, T. (L'pool Broad Gn)

Beckett, Mrs Margaret

Flannery, Martin

Beith, A. J.

Forrester, John

Bermingham, Gerald

Foster, Derek

Bidwell, Sydney

Foulkes, George

Blair, Anthony

Fraser, J. (Norwood)

Boothroyd, Miss Betty

Freeson, Rt Hon Reginald

Boyes, Roland

Freud, Clement

Bray, Dr Jeremy

George, Bruce

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

Gilbert, Rt Hon Dr John

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

Godman, Dr Norman

Brown, Ron (E'burgh, Leith)

Golding, John

Bruce, Malcolm

Gould, Bryan

Buchan, Norman

Hamilton, James (M'well N)

Callaghan, Rt Hon J.

Hamilton, W. W. (Central Fife)

Callaghan, Jim (Heyw'd & M)

Hardy, Peter

Campbell-Savours, Dale

Harman, Ms Harriet

Carlile, Alexander (Montg'y)

Harrison, Rt Hon Walter

Carter-Jones, Lewis

Haynes, Frank

Cartwright, John

Healey, Rt Hon Denis

Clark, Dr David (S Shields)

Heffer, Eric S.

Clarke, Thomas

Hogg, N. (C'nauld & Kilsyth)

Clay, Robert

Holland, Stuart (Vauxhall)

Clwyd, Mrs Ann

Howell, Rt Hon D. (S'heath)

Cohen, Harry

Hoyle, Douglas

Coleman, Donald

Hughes, Dr. Mark (Durham)

Conlan, Bernard

Hughes, Robert (Aberdeen N)

Cook, Robin F. (Livingston)

Hughes, Sean (Knowsley S)

Corbett, Robin

Janner, Hon Greville

Cowans, Harry

John, Brynmor

Cox, Thomas (Tooting)

Johnston, Russell

Craigen, J. M.

Kennedy, Charles

Crowther, Stan

Kilroy-Silk, Robert

Dalyell, Tarn

Kirkwood, Archy

Davies, Rt Hon Denzil (L'lli)

Lamond, James

Davies, Ronald (Caerphilly)

Leadbitter, Ted

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

Leighton, Ronald

Deakins, Eric

Lewis, Terence (Worsley)

Dewar, Donald

Litherland, Robert

Dixon, Donald

Lloyd, Tony (Stretford)

Dobson, Frank

Lofthouse, Geoffrey

Dormand, Jack

Loyden, Edward

609

McDonald, Dr Oonagh

Rooker, J. W.

McKay, Allen (Penistone)

Ross, Ernest (Dundee W)

McKelvey, William

Ross, Stephen (Isle of Wight)

Mackenzie, Rt Hon Gregor

Rowlands, Ted

McTaggart, Robert

Sedgemore, Brian

Madden, Max

Sheerman, Barry

Marek, Dr John

Sheldon, Rt Hon R.

Marshall, David (Shettleston)

Shore, Rt Hon Peter

Maxton, John

Short, Ms Clare (Ladywood)

Maynard, Miss Joan

Silkin, Rt Hon J.

Meacher, Michael

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

Meadowcroft, Michael

Snape, Peter

Mikardo, Ian

Soley, Clive

Millan, Rt Hon Bruce

Spearing, Nigel

Miller, Dr M. S. (E Kilbride)

Strang, Gavin

Mitchell, Austin (G't Grimsby)

Straw, Jack

Morris, Rt Hon A. (W'shawe)

Thompson, J. (Wansbeck)

Morris, Rt Hon J. (Aberavon)

Thorne, Stan (Preston)

Nellist, David

Tinn, James

Oakes, Rt Hon Gordon

Torney, Tom

O'Brien, William

Wardell, Gareth (Gower)

Park, George

Wareing, Robert

Parry, Robert

Weetch, Ken

Patchett, Terry

Welsh, Michael

Pavitt, Laurie

White, James

Penhaligon, David

Wigley, Dafydd

Pike, Peter

Williams, Rt Hon A.

Powell, Raymond (Ogmore)

Wilson, Gordon

Prescott, John

Winnick, David

Radice, Giles

Woodall, Alec

Redmond, M.

Young, David (Bolton SE)

Rees, Rt Hon M. (Leeds S)

Roberts, Ernest (Hackney N)

Tellers for the Noes:

Robertson, George

Mr. John McWilliam and Mr. Lawrence Cunliffe.

Rogers, Allan

Question accordingly agreed to.

Social Security

  BUSINESS OF THE HOUSE
  Ordered,
  That, at this day's sitting, the capital Transfer Tax Bill [Lords] may be proceeded with, though opposed, until any hour.—Mr. David Hunt.]

SOCIAL SECURITY
Resolved
That the draft Child Benefit (Up-Rating) Regulations 1984, which were laid before this House on 6th July, be approved.
That he draft Family Income Supplements (Computation) Regulations 1984, which were laid before this House on 6th July, be approved.
That the draft Pensioners' Lump Sum Payments Order 1984, which was laid before this House on 6th July, be approved.
That the draft Supplementary Benefit (Requirements and Resources) Amendment Regulations 1984, which were laid before this House on 6th July, be approved.—[Mr. David Hunt.]

Orders of the Day

  Capital Transfer Tax Bill [Lords]
  Considered in Committee.
  [MR. ERNEST ARMSTRONG in the Chair]
  Clauses 1 to 15 ordered to stand part of the Bill.

  Capital Transfer Tax Bill [Lords]
    Clause 16

      GRANT OF TENANCIES OF AGRICULTURAL PROPERTY
      Amendment made: No. 1, in page 9, line 33, leave out subsection (2) and add—
      '(2) Expressions used in subsection (1) above and in Chapter II of Part V of this Act have the same meaning in that subsection as in that Chapter.'.—[The Solicitor-General.]
      Clause 16, as amended, ordered to stand part of the Bill.
      Clauses 17 to 114 ordered to stand part of the Bill.

    Clause 115

      PRELIMINARY
      Amendment made: No. 2, in page 77, line 20 at end insert—
      (3A) For the purposes of this Chapter the breeding and rearing of horses on a stud farm and the grazing of horses in connection with those activities shall be taken to be agriculture and any buildings used in connection with those activities to be farm buildings.'.—[The Solicitor-General.]
      Clause 115, as amended, ordered to stand part of the Bill.
      Clauses 116 to 164 ordered to stand part of the Bill.

    Clause 165

      TAX ON CAPITAL GAINS
      Amendment made: No. 3, in page 111, line 39, at end add —
      '(3) In any case where—

      (a) payment of an amount of capital gains tax is postponed by virtue of Schedule 14 to the Finance Act 1984, and

      (b) any of that capital gains tax becomes payable in accordance with paragraph 11 of that Schedule by reason of the receipt of a capital payment by a close relative of the beneficiary, as mentioned in sub-paragraph (3) of that paragraph, and

      (c) all or part of the capital gains tax becoming so payable is paid by the close relative,

      the payment by the close relative shall be treated for the purposes of this Act as made in satisfaction of a liability of his.'.—[The Solicitor-General.]
      Clause 165, as amended, ordered to stand part of the Bill.
      Clauses 166 to 168 ordered to stand part of the Bill.

    Clause 169

      FARM COTTAGES
      Amendment made: No. 4, in page 113, line 36, at end add—
      '(2) Expressions used in subsection (1) above and in Chapter II of Part V of this Act have the same meaning in that subsection as in that Chapter.'.—[The Solicitor-General.]
      Clause 169, as amended, ordered to stand part of the Bill.
      Clauses 170 to 219 ordered to stand part of the Bill.

    Clause 220

      INSPECTION OF PROPERTY
      Amendment made: No. 5, in page 142, line 37, leave out
      'or, in Northern Ireland, to a fine not exceeding £20.'.—[The Solicitor-General.]
      Clause 220, as amended, order to stand part of the Bill.
      Clauses 221 to 278 ordered to stand part of the Bill.
      Schedules 1 to 7 agreed to.

    Schedule 8

      CONSEQUENTIAL AMENDMENTS
      Amendments made: No. 6, in page 195, line 3, leave out sub-paragraph (2) and insert—
      (2) In subsection (3)(d)(ii) for the words "Chapter 11 of Part IV of the Finance Act 1982" there shall be substituted the words "any provision, apart from section 79, of Chapter III of Part III of the Capital Transfer Tax Act 1984".
      (2A) In subsection (5)(a)after the words "Act 1976" there shall be inserted the words "or section 31 of the Capital Transfer Tax Act 1984" and for the words "section 76 of that Act" there shall be substituted the words "section 30(2) of the Capital Transfer Tax Act 1984".'
      No. 7, in page 195, line 13, leave out sub-paragraph (2) and insert—
      (2) In paragraph 18(2)—

      (a) after the words "section 22 of the Finance Act 1975" there shall be inserted the words "or section 4 of the Capital Transfer Tax Act 1984", for the words "that Act" there shall be substituted the words "the Finance Act 1975" and after the words "section 77 of the Finance Act 1976" there shall be inserted the words "or under section 31 of the Capital Transfer Tax Act 1984"; and

      (b) in paragraph (a), for the words from "subsection (7)" to "Act 1976" there shall be substituted the words "section 32 of, or paragraph 3 of Schedule 5 to, the Capital Transfer Tax Act 1984".'.—[The Solicitor-General.]

      Schedule 8, as amended, agreed to.

    Schedule 9

      REPEALS
      Amendments made: No. 8, in page 201, line 23, column 3, at end insert—

      'Section 47'.

      No. 9, in page 201, column 3, leave out line 29 and insert—

      'Sections 101 to 107.'.

      No. 10, in page 201, line 31, column 3, at end insert—

      'In Schedule 14, paragraph 16.'.

      No. 11, in page 201, column 3, leave out line 32, and insert—

      'In Schedule 21, paragraphs 1 to 17, 19(b) and 20 to 26.'.—The Solicitor-General.]

      Schedule 9, as amended, agreed to.
      Bill reported, with amendments.
      Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 58 (Third Reading), and agreed to.
      Bill accordingly read the Third time, and passed, with amendments.

Citizens' Band Radio (Emergency Services)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. David Hunt.]
10.15 pm
Mr. Frank Haynes: The Government brought in legislation in favour of the licensing of citizens band radio. I welcomed that legislation. I welcomed the decisions that were made. However, one result of that legislation is that far too many people are now breaking the rules—or, in fact, breaking the law. Many of them have amplifiers which are illegal. They are far too powerful. The code name for them is "burners". When people use such appliances, problems are created for the emergency services. For example, if a fire appliance is sent to an incident, more often than not in the county of Nottinghamshire one finds that the appliance, once it is on its way, has great difficulty in keeping in close contact by radio with the central control because CB enthusiasts block out contact with central control. It is easy to understand the seriousness of that. A life that could be saved might be lost because an appliance cannot receive directions. Moreover, an ambulance might be required, but the firemen cannot contact control to ask for one because of interference. The result is that a fireman must find a telephone.
The Nottinghamshire fire brigade has tried hard to overcome the problem. It has spent a fair amount of public money on filters. They have not worked. The amplifiers that some people use are far too powerful and well above what is allowed for by the regulations. Some aerials are massive and also beyond the regulations. In the main, CB enthusiasts are sensible. It is only a few who cause problems.
Communications experts have identified several reasons why approved and licensed radio equipment becomes illegal. They are, CB radio equipment being serviced or retuned by unqualified people in the mistaken belief that the transmission power will be increased, powerful booster amplifiers being used to override other transmissions and to increase the distance of cover, and illegal radio aerials being installed on rooftops or high masts.
I should like the Minister to give some idea how he will deal with this serious problem. I am not speaking just for my constituency but the whole of Nottinghamshire, as emergency services throughout the county have contacted me. If the problem is nationwide—it might be—no doubt the Minister will know about it.
I recently tabled a question to the Minister asking him how many prosecutions there have been for breaching the regulations. He said that, in the first half of this year, 688 people had been prosecuted under the Wireless Telegraphy Act 1949 for the unlicensed use of CB radio equipment. It should be borne in mind that some people have licences and equipment that they should not have. The prosecutions to which the Minister referred relate only to unlicensed use. I appreciate that the Department has a difficult job, but it is responsible for sorting the problem out.
I know that the Minister could stand at the Dispatch Box tonight and use all sorts of technical phrases associated with the problem. I do not want him to do that. I do not want to go into it myself, as long lists are involved. The

613
important point is that the nation, especially in Nottinghamshire, has a first-class emergency service which is being interfered with. That is costing a lot of money and we are not getting very far in finding a solution. It could cost lives—indeed, it may have cost lives in the past.
It is my responsibility to bring the matter here, and to hear the Minister's replies from his Department. I hope that we can overcome the problem for the people who require emergency services and do away with this sort of interference, in the interests of all concerned.
10.27 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher): I shall accept the guidance of the hon. Member for Ashfield (Mr. Haynes) and not go into the technical details of the phenomena which are causing any distortion of radio signals.
I fully understand the hon. Gentleman's concern about the problems caused to the emergency services in his constituency, and in the Nottingham area. The hon. Gentleman has done the House a great service. The debate gives us the chance to re-assert the fact that the mass of CB radio users are responsible people but that there is an irresponsible minority which, shall we say, has a less than agreeable attitude to life and has perhaps used radios in a way that may inadvertently have caused serious problems for the emergency services.
Interference to the radio communications of the emergency services, from whatever source, is a very serious matter. The RIS, which is currently operated by British Telecom, will be transferred to the DTI on 7 August, with an option for the employees to decide between that date and 2 October whether to become DTI employees. With that in mind the Department has a great interest, in that we shall have a total responsibility for the operation of RIS. The hon. Gentleman's remarks are timely. If the hon. Gentleman finds that I am somewhat
614
vague when trying to explain some of the difficulties in Nottinghamshire, it is only because we are in a delicate position as the transfer of control is about to be effected. Before August, total control cannot be exercised by my Department.
It is important to bear in mind that in the area of Nottinghamshire over which RIS operates, the total complement of staff has been reduced, for one reason or another, from four to one, through early retirement or retirement of past employees on compassionate grounds.
It is right that I should send a full copy of the report of tonight's debate to BT, and ask it in the light of the 25 per cent. staff coverage whether they will take the hon. Gentleman's remarks as seriously as I have done, and to find some way in the short term of addressing the problem caused to the emergency services in his area.
When the RIS is within the ambit of my Department after the transfer we shall see what we can do to address the priorities. We shall certainly put the problem of interference to emergency services as a top priority for the work of whoever will sponsor and administer the Department.
It is with those observations in mind that I endorse what the hon,. Gentleman has said. Before I resume my seat, I offer him the reassurance that under the new Telecommunications Act for the first time we shall have powers to confiscate illegal equiptment—radios, aerials not to specification, boosters used unfairly, AM radios, and so on. We shall be able to take the equipment away as evidence, which we cannot do at the moment. The Government are helping with those powers. We believe that we should focus on the more serious aspects of interference caused by CB. In particular, the problem that the hon. Gentleman has in his area will be treated with the highest priority.
Question put and agreed to.
Adjourned accordingly at half-past Ten o'clock.

ATTORNEY-GENERAL
  Students Union Funds
  Students Union Funds
  Solicitors (Compensation Fund)
  Solicitors (Compensation Fund)
  Mr. Robin Walsh (Inquest)
  Mr. Robin Walsh (Inquest)
AGRICULTURE, FISHERIES AND FOOD
  Nitrates
  Nitrates
  Butter Subsidies
  Butter Subsidies
  Agricultural Holdings (Short-term Lettings and Licences)
  Agricultural Holdings (Short-term Lettings and Licences)
TRANSPORT
  Financial Management Initiative
  Financial Management Initiative
  Malaysia (Flights)
  Malaysia (Flights)
  Stoke-Derby Link Road
  Stoke-Derby Link Road
  Railways (Construction and Alteration)
  Railways (Construction and Alteration)
  Underground Railways (Inspections)
  Underground Railways (Inspections)
  British Rail
  British Rail
  Severn Crossing
  Severn Crossing
  A16 (Louth Bypass)
  A16 (Louth Bypass)
THE ARTS
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  Local Government Reform
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  Level Crossings (Accident Statistics)
CIVIL SERVICE
  Civil Servants (Political Activities)
  Civil Servants (Political Activities)
WALES
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  Mountaineering Expeditions
  Nitrates
  Nitrates
  Dairy Farmers
  Dairy Farmers
EMPLOYMENT
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  Health Checks
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  Jobcentres (Supervacs)
  Technical and Vocational Education Initiative
  Technical and Vocational Education Initiative
  Travel-to-work Areas
  Travel-to-work Areas
  Skill Shortages
  Skill Shortages
  Labour Statistics
  Labour Statistics
TRADE AND INDUSTRY
  Citizens Band Radio
  Citizens Band Radio
  American Technology (Access)
  American Technology (Access)
  Trafford Park (Decline)
  Trafford Park (Decline)
  Regional Industrial Policy
  Regional Industrial Policy
  Weighing Machines
  Weighing Machines
  South Africa
  South Africa
  Airline Charter Market
  Airline Charter Market
  Origin Marking
  Origin Marking
  British Aerospace
  British Aerospace
  Hotels (Registration and Classification)
  Hotels (Registration and Classification)
ENERGY
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  Glasshouses (Fuel Conversion)
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  Financial Management Initiative
  Draught-proofing Materials
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  Neighbourhood Energy Action Scheme
  Neighbourhood Energy Action Scheme
  Battersea Power Station (Asbestos)
  Battersea Power Station (Asbestos)
NORTHERN IRELAND
  Housing Executive (Squatters)
  Housing Executive (Squatters)
  River Foyle (Bridge)
  River Foyle (Bridge)
  Schoolchildren (Examination Courses)
  Schoolchildren (Examination Courses)
  European Regional Development Fund
  European Regional Development Fund
  Kinsale Gas Project
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  Remanded Persons
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HOME DEPARTMENT
  Forensic Science Service
  Forensic Science Service
  Violent Crime
  Violent Crime
  National Reporting Centre
  National Reporting Centre
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  Immigration Laws
  Pre-trial Custody
  Pre-trial Custody
  Metropolitan Police (Code of Conduct)
  Metropolitan Police (Code of Conduct)
  AMA (Police Committee)
  AMA (Police Committee)
  Prisoners (Open University Places)
  Prisoners (Open University Places)
  Crime Prevention
  Crime Prevention
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  Sunday Trading
  Coal Industry Dispute
  Coal Industry Dispute
  Air Weapons
  Air Weapons
  A1 (Road Blocks)
  A1 (Road Blocks)
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  Accused Persons (Publicity)
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  Police Liaison Committees (London)
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  Civil Defence Volunteers
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  Prisoners (Drugs)
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  Shops Act 1950
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  Criminal Activities (Hodgson Report)
  James Farrell (Trial)
  James Farrell (Trial)
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  Imprisonment (Options)
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  Bearley Transmitter
  Bearley Transmitter
  South Africa House (Demonstrations)
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  Doctors (Drugs Prescribing)
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  CID (Overtime)
  Drug Addicts
  Drug Addicts
  Football Matches (Policing Costs)
  Football Matches (Policing Costs)
  Demonstrations
  Demonstrations
  Cremation
  Cremation
  Mr. Robin Walsh
  Mr. Robin Walsh
  Mr. Arthur Angell
  Mr. Arthur Angell
  Drug Abuse
  Drug Abuse
  Mr. Dikko
  Mr. Dikko
  Doctors (Drugs Misuse)
  Doctors (Drugs Misuse)
PRIME MINISTER
  Rothienorman
  Rothienorman
  Trade Unionists
  Trade Unionists
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  Cyprus
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  Underground Railways
  EC (Intervention Food)
  EC (Intervention Food)
  Engagements
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  Campsie Glen
  Departmental Offices, Manchester
  Departmental Offices, Manchester
  Minuteman Missiles
  Minuteman Missiles
  General Sir Timothy Creasey
  General Sir Timothy Creasey
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  Security Services
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  Departmental Costs
NATIONAL FINANCE
  Shipowners (Investment Incentives)
  Shipowners (Investment Incentives)
  Tax Credit Scheme
  Tax Credit Scheme
  Waste Paper (Palace of Westminster)
  Waste Paper (Palace of Westminster)
  Scotch Whisky (Italian Taxation)
  Scotch Whisky (Italian Taxation)
  Money Supply
  Money Supply
  Civil Service
  Civil Service
  Imported Literature
  Imported Literature
  Petrol (Tax)
  Petrol (Tax)
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  Residence (Tax Relief)
  Double Taxation Relief
  Double Taxation Relief
  Estates Administration
  Estates Administration
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  Residency Income
  Dependent Relative Allowance
  Dependent Relative Allowance
  Tools and Special Clothing
  Tools and Special Clothing
  Meal Vouchers
  Meal Vouchers
  Police Officers and Firemen (Pensions)
  Police Officers and Firemen (Pensions)
  Directors' Travelling Expenses
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  Expenses, Allowances and Benefits
  Expenses, Allowances and Benefits
  Miners' Free Coal
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  Businesses
  Businesses
  Doctors and Dentists
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  Overseas' Provident Funds
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  Tax Payments (Standing Orders)
  Tax Payments (Standing Orders)
ENVIRONMENT
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  Welfield Site, Hatfield
  Welfield Site, Hatfield
  Housing Statistics
  Housing Statistics
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  London STOLport
  Agricultural Building (Planning Consent)
  Agricultural Building (Planning Consent)
  Quernmore Valley (Mushroom-growing Units)
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OVERSEAS DEVELOPMENT
  Uganda
  Uganda
FOREIGN AND COMMONWEALTH AFFAIRS
  Jeanette Schoon
  Jeanette Schoon
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  Bangladesh (Entry Clearance Office)
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  EC (Democratic Principles)
  Mr. Robin Walsh
  Mr. Robin Walsh
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  Mr. Angell
  Mr. Charles Ogilvie-Forbes
  Mr. Charles Ogilvie-Forbes
  Oman (British Nationals)
  Oman (British Nationals)
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  Oman (Rumais Prison)
EDUCATION AND SCIENCE
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  Teachers (Pay)
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  Clinical Academic Staff (Pay)
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  Local Education Authorities
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  Examinations (Hay Fever)
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  Work Experience and Training (Integration)
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  Schools (Site Transfers)
SCOTLAND
  CALMAC (Subsidies)
  CALMAC (Subsidies)
  Financial Management Initiative
  Financial Management Initiative
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  Forestry Commission
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  Housing (Occupancy Rights)
SOCIAL SERVICES
  Family Practitioner Services (Computers)
  Family Practitioner Services (Computers)
  NHS Contracts (Allocation)
  NHS Contracts (Allocation)
  Benefit Claimants (Burnley)
  Benefit Claimants (Burnley)
  Housing Benefit
  Housing Benefit
  "Children in Care"
  "Children in Care"
  Dentists
  Dentists
  Pregnant Women (Diet)
  Pregnant Women (Diet)
  Hip Replacement Operations
  Hip Replacement Operations
  Drug Dependence Units
  Drug Dependence Units
  Accommodation (Single Payments)
  Accommodation (Single Payments)
  Maternity Benefits
  Maternity Benefits
  Draught-proofing Materials
  Draught-proofing Materials
  Statutory Sick Pay Scheme
  Statutory Sick Pay Scheme
  Furnished Flats (Survey)
  Furnished Flats (Survey)
  Supplementary Benefit
  Supplementary Benefit
  Home Telephone Service
  Home Telephone Service
  Geriatric Facilities
  Geriatric Facilities
  Brook Advisory Centre (Grant)
  Brook Advisory Centre (Grant)
  Pre-school Playgroups Association (Grant)
  Pre-school Playgroups Association (Grant)
  Child Benefit
  Child Benefit
  Merrell Drug Company
  Merrell Drug Company
  Debendox
  Debendox
  Newcastle Computer (Dispute)
  Newcastle Computer (Dispute)
  Misuse of Drugs (Report)
  Misuse of Drugs (Report)
DEFENCE
  Drug Offences
  Drug Offences
  Dreadnought Hospital
  Dreadnought Hospital
  Export Orders
  Export Orders
  General Sir Timothy Creasey
  General Sir Timothy Creasey
  Minuteman Missiles
  Minuteman Missiles
  Royal Army Medical Corps (Recruits)
  Royal Army Medical Corps (Recruits)
  Ascension Island
  Ascension Island
Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Liverpool): The LORD CHANCELLOR on the Woolsack.

Proposed Transmitter: Bearley
Lord Boyd-Carpenter: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether on receipt of the report of the inspector resulting from the recent public inquiry into the proposal for a massive radio transmitter complex at Bearley, near Stratford-on-Avon, they will publish it, and defer any decision on the proposal until there has been time for full discussion of the proposal inside and outside Parliament.
Lord Skelmersdale: My Lords, the public inquiry provided a full opportunity for the investigation of the proposal and the Secretary of State is confident that the inspector's report will provide him with an account of all the relevant arguments for and against it. He has no reason to depart from the normal procedure of publishing the report with his decision. In short, the answer to my noble friend's question is, no.
Lord Boyd-Carpenter: My Lords, following that very disappointing reply, may I ask my noble friend whether he is aware of the fact that in matters of this particular kind, raising national issues in respect of a place of national importance, Parliament also has a right to be consulted before, rather than after, the decision has been taken?
Lord Skelmersdale: My Lords, my right honourable friend is not convinced that this is an issue of national importance in the way that the Windscale inquiry, for example, was. If my right honourable friend were to publish the inspector's report before reaching his decision, that would merely encourage those who disagree with the inspector's conclusion to seek to reopen the argument. It would, in turn, require all parties to the public inquiry to be given the opportunity to comment on any new evidence produced. Since there has already been held a wide-ranging public local inquiry at which it was open to anyone to seek to give evidence, my right honourable friend sees no justification for a further public debate that might in turn lead to a reopening of the public inquiry with all the delays that would be involved.
Lord Strabolgi: My Lords, following what the noble Lord, Lord Boyd-Carpenter, has said about national importance, may I ask the noble Lord the Minister whether the Government are aware that this proposed transmitter is of vital importance to the BBC's external services in their broadcasts to Eastern Europe and the Soviet Union, if they are to maintain audibility for Britain's voice?
Lord Skelmersdale: Yes, my Lords; this is, of course, one of the points that will have been taken into account by the inspector. All of us will read with interest what he has to say on the matter when the report is finally published after my right honourable friend has made his decision. When I talked about matters of national importance, I meant, of course, in the planning context.
Lord Morris: My Lords, would my noble friend not agree that to use in the Question the term "massive…complex" is somewhat misleading in this context, bearing in mind that, in terms of transmitting power, the proposed transmitting station at Bearley will be the smallest of all the five transmitting stations of the BBC's external services?
Lord Skelmersdale: My Lords, I have not the least idea of the answer to that question. My noble friend may be right, or he may be wrong. I am quite convinced that the answer to it will be found in the inspector's report.
Lord Ardwick: My Lords, does the noble Lord agree that whether the decision is made before or after a parliamentary debate, the principle remains the same—that the BBC is in urgent need of a first-class transmitter in order that its excellent services may be fully audible, that the transmitter must be built with minimum damage to the environment and to other people's electrical installations, and that the decision should be made with the cost as not the primary basis, but the secondary basis?
Lord Skelmersdale: My Lords, again, the noble Lord might be absolutely correct. We shall await the inspector's report with interest. If my right honourable friend were to publish the report before coming to a decision on the matter, that would, in effect, produce an appeal against the inspector's recommendation. That, again, would be an undesirable precedent, with repercussions on our entire planning system. I remain unconvinced of the justification for proceeding in any other way.
Lord Nugent of Guildford: My Lords, is my noble friend aware that in assessing the importance of this subject, the theatre at Stratford-on-Avon should be regarded as not only a national institution of importance, but also an institution of international importance? People come from all over the world to the theatre there. Is he aware that strong evidence shows that the interference in the theatre would be very significant from this transmitting station being set up just outside Stratford? Therefore, does he appreciate that this is a matter of very major artistic significance not only to us in this country, but to the world generally? Will my noble friend kindly take that dimension on board and pass it on to his right honourable friend?
Lord Skelmersdale: My Lords, I am grateful to my noble friend for his question. I accept, of course, that the theatre at Stratford-on-Avon is of international importance. But this was one of the factors that led my right honourable friend, although he had no need to do so, because the site in question is Crown land, to set up

1623
a local public inquiry in the first place. As regards any possible technical aspects, my right honourable friend also had a scientific assessor sitting alongside the inspector so that those matters could be properly evaluated.
Lord Jenkins of Putney: My Lords, is the noble Lord aware that while it would be possible for the Royal Shakespeare Theatre to be put out of action as a result of this—
Noble Lords: No.
Lord Jenkins of Putney: Indeed, that is so. I do not wish to spend time upon this, but it must be accepted by noble Lords that evidence, whether it was right or wrong, was given to the inquiry by the Royal Shakespeare Company and other people suggesting that the lighting equipment and several other items of electronic equipment that the Royal Shakespeare Theatre uses would be put out of business by the very powerful 300 kilowatt transmitter, consisting of five masts 300 feet high. One does not wish to go into all these details, but having regard to them, and to the fact that three other sites are available to the BBC, as well as to the fact that you cannot take up the Royal Shakespeare Theatre and move it somewhere else, is this not a case for a public inquiry and examination in this House before the decision is made?
Lord Skelmersdale: My Lords, I think that the noble Lord has misunderstood what I said earlier. What I said was that, although there was no statutory need for a planning inquiry, my right honourable friend thought that a planning inquiry was appropriate in this case. The planning inquiry has now been held, and my right honourable friend is awaiting the inspector's report. As to the technical matters to which the noble Lord referred, yes, evidence to that effect was given at the inquiry.
Lord Bancroft: My Lords, will the noble Lord cast his mind back to the terms of his original Answer and confirm that it constitutes an acceptance of the proposition that the sequence of decision, publication and debate of planning inquiry reports is governed by convention and not by statute, and that that sequence can be varied according to the dictates of fairness and common sense? Secondly, will the noble Lord cast his mind forward and confirm that the Government have intimated that the report of the Sizewell inquiry will be debated before a Government decision is reached? Thirdly, will he cast his mind back to the late 1970s and confirm that the then Secretary of State for the Environment took steps to ensure that there was a debate on the Windscale issue before a Government decision was reached? Finally—
Noble Lords: No.
Lord Bancroft: Finally, would he agree that a matter of national importance is a subjective issue?
Lord Skelmersdale: My Lords, I have already referred briefly, in a previous answer, to Windscale. But the Sizewell inquiry is, of course, still in progress.
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The Government recognise the public interest in the wide-ranging issues raised by the application of the CEGB to build a pressurised water reactor. The question of a debate will be a matter for the usual channels at the appropriate time. As to the noble Lord's conclusions that he drew from my original Answer, yes, I confirm that the procedure that has been established has become a normal form and that there is nothing statutory about it.
Lord Boyd-Carpenter: My Lords, does my noble friend appreciate, from the questions that have been put to him, the very widespread concern there is about this proposal and its impact on Stratford? Does he also appreciate that while everybody wants to ensure that the BBC gets a good, and a technically efficient, site for its most important transmissions, this proposal raises such serious public issues that it is quite wrong to exclude Parliament until a decision has been taken?
Lord Skelmersdale: My Lords, I accept that my noble friend has put forward a point of view, with which I must confess I do not agree. I should have thought that the logic of the tenor of the questions, both today and when I answered a similar question a fortnight or so ago, is that the House either does not trust the objectors to present their case thoroughly, or does not trust the inspector to make a fair report, or, as a last resort, does not trust my right honourable friend to come to the correct conclusion.
Lord Maude of Stratford-upon-Avon: My Lords, is my noble friend aware that as the former Member of Parliament for Stratford-upon-Avon I was responsible for persuading the then Secretary of State for the Environment to set up this public inquiry? Is he aware that in doing so I was seeking to strike a fair balance between the legitimate apprehensions of my constituents and what seemed to me the very great urgency for the BBC to acquire a high-powered transmitter for its overseas services? Is he aware that I thought that what I was doing was submitting this proposal to a technical inquiry, to be followed by a quasi-judicial decision by the Secretary of State? It did not occur to me that this would become a matter of parliamentary debate between the submission of the report and the decision. I should have thought that it was better to leave this to the normal procedure.
Lord Skelmersdale: My Lords, I am most grateful to my noble friend. Perhaps he can exercise his powers of persuasion continuously, rather than just on the original occasion.
Lord Harmar-Nicholls: My Lords, is my noble friend aware of the dangerous statement that he made in answer to the supplementary question before the last one? Is it suggested that Parliament, by carrying out its proper duty of examining anything which is in the public interest, does not have trust in either the officials or the Ministers of the day? Does giving that kind of an answer indicate that there is some conflict of view as to what are our various functions?
Lord Skelmersdale: No, my Lords; I do not think it is right for me to reconsider the answer I gave earlier, because what I was saying was that with that logic, as

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I see it, in view, it is not right to change the procedure which normally is adopted on these occasions.

Hong Kong: Future
3.13 p.m.
Baroness Phillips: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are satisfied that there are sufficient safeguards for the people of Hong Kong after 1997, in view of the reception given to the visiting delegation by the Government of China.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, we are at present examining with the Chinese Government how it might be possible to arrive at arrangements which would secure for Hong Kong after 1997 a high degree of autonomy under Chinese sovereignty and would maintain stability and prosperity and the present way of life. We are seeking a binding international agreement in which these arrangements would be formally recorded.
Baroness Phillips: My Lords, I thank the Minister for her reply. Is she aware that the people of Hong Kong, a territory always loyal to the British, are greatly concerned about the future? They feel that any agreement which is arrived at must be acceptable equally to the people of Hong Kong as to Britain and China. Is she aware that they are particularly concerned that there may be a loss of rights such as their basic law, or, indeed, some of their other freedoms?
Baroness Young: My Lords, we are of course aware of the concerns and the views of the people of Hong Kong. Indeed, there is a continuous process of consultation with the people of Hong Kong on all matters relating to the territory's future. A wide range of channels has evolved through which people make known their views. We value our regular discussions with the Governor and the unofficial members of the Executive Council. In addition, there are ministerial visits to Hong Kong and the reception of Hong Kong delegations to London.
Lord Kennet: My Lords, in view of the Peking proposal for a joint commission between Britain and China before 1997—in the meantime, that is—have the Government anything to say about the recent proposal of the elected Hong Kong Urban Council that that joint commission should be joined by people of Chinese descent; that it should be a tripartite commission between Britain, China and people of Chinese descent in Hong Kong?
Baroness Young: My Lords, I note what the noble Lord has to say, but, of course, all matters of detailed discussion in the negotiations, which are still going on, are confidential.
Lord Fanshawe of Richmond: My Lords, is my noble friend aware that there is deep concern in Hong Kong regarding the suggestion that there should be a joint Anglo-Chinese condominium to run Hong Kong between now and 1997, and will she give an assurance that Her Majesty's Government have in mind no such proposal?
Baroness Young: My Lords, I am glad to be able to reassure my noble friend that we shall continue to fulfil our responsibilities in the period up to 1997. We shall continue to provide the framework within which the Hong Kong Government can administer the territory and plan for its future.
Lord Cledwyn of Penrhos: My Lords, is the noble Baroness aware that we warmly welcome the publication of the proposals to extend democratic procedures in Hong Kong, although we wish that they might have gone a little further? Can she inform the House how the Green Paper in which the proposals are contained is now going to be processed? Secondly, can she tell the House what is the purpose of the Foreign and Commonwealth Secretary's visit to Hong Kong next week? Is it related to the proposals for an increase of democracy there? Will he be seeing the council or other representative bodies? Could she enlighten the House on the purposes of his visit?
Baroness Young: My Lords, if I might take the last point first, I would say that my right honourable friend will be continuing his series of discussions with the Chinese Foreign Minister and with other Chinese leaders on all aspects of Hong Kong's future. His purpose is to carry the talks forward at the highest level. On the other point that the noble Lord raised, I would refer him to the answer that was given yesterday in another place by my right honourable friend the Secretary of State. We are seeking, by the publication of the Green Paper, to set out the tests of acceptability to an agreement in Hong Kong.
Lord Cledwyn of Penrhos: My Lords, I am obliged to the noble Baroness. Am I mistaken in thinking that the Foreign Secretary is going to Hong Kong as well as to Peking to see the Chinese Foreign Minister? My question was directed to the possibility of a Hong Kong visit, and to ask what the purposes of that might be.
Baroness Young: My Lords, he will be going to Hong Kong and he will be continuing his discussions with people in Hong Kong.
Lord Grimond: My Lords, would the noble Baroness agree that up to now it has been a principle of our dealing with the colonies that formally, so to speak, the whole population should be consulted about their future before it is decided? Do we understand from her statement that, welcome as may be these consultations with certain officials, in the case of Hong Kong there is going to be no such procedure, which, as I say, has been the common form in dealing with the future of all other colonies?
Baroness Young: My Lords, the noble Lord will be aware of the publication of the Green Paper, which

1627
sets out various ways in which the views of the people of Hong Kong may be made known to the British Government. If he was referring to the possibility of a referendum, which is one of the matters which from time to time has been suggested, I would say that we believe that, given the special circumstances of Hong Kong, a referendum is not a feasible option.
Lord Campbell of Alloway: My Lords, can my noble friend the Minister confirm that in the interim period there will be no alteration of the judicial structure of the colony?
Baroness Young: My Lords, I have already indicated in an earlier answer to the noble Lord, Lord Fanshawe, that in the interim and transitional period up to 1997 we shall continue to provide the framework within which the Hong Kong Government can administer the territory.
The Duke of Norfolk: My Lords, is my noble friend aware than many of us on this side of the House are very confident about the way in which the Government are negotiating these matters, and that above all we do not wish to see the mind of President Deng Xiaoping prejudiced?—because at this particular moment China is moving towards capitalism. Indeed, it has opened up the free markets and is moving further and further towards capitalism. Moreover, is my noble friend aware that the more we try to make demands which are unwise the more we shall cause the opposition in China to prejudice the possibility of China becoming capitalist and the possibility of it being quite reasonable for Hong Kong to join it?
Baroness Young: My Lords, I thank my noble friend for his question. It is of course our wish to maintain both the stability and the prosperity of Hong Kong.
Lord Whaddon: My Lords, is the noble Baroness aware, along with all the other concerns of the people of Hong Kong, of the worries of the various churches now active in Hong Kong that they might not find it as easy to continue after 1997? Will Her Majesty's Government bear in mind those concerns?
Baroness Young: My Lords, the Government will bear in mind the concerns of the churches along with the concerns that have been expressed by other people in Hong Kong.

South Atlantic Fund: Psychiatric Cases
3.22 p.m.
Lord Molloy: 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 make representations to ensure that servicemen who served in the Falklands War and who now suffer from psychiatric disability will benefit from financial help from the South Atlantic Fund.
The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): My Lords, the operation of the South Atlantic Fund, and the decisions taken for the disbursement of funds held by it, are entirely matters for the trustees of the fund. However, I am informed that the trustees of the South Atlantic Fund and the authorities of the Service benevolent organisations, which are working closely with the fund over the handling of individual cases, are all fully aware of the need to take into account psychiatric as well as other disabilities when they make judgments on payments appropriate to need. Certain grants have already been made in such cases.
Lord Molloy: My Lords, I am grateful to the noble Minister for his reply. However, is he aware that this has been the subject for debate at the national conference of the Royal British Legion and at the metropolitan area conference of the Royal British Legion, of which I have the privilege to be president? Moreover, is he aware that at those conferences grave anxieties were expressed as to how the matter was being investigated with regard to those servicemen who fought in the Falklands and who could be described as difficult or perhaps psychiatric cases? There was no problem whatever with the DHSS because they said, "Yes, they are entitled to everything", but there was some disquiet with regard to the manner in which those responsible for administering the South Atlantic Fund were looking at these particular cases.
Lord Trefgarne: My Lords, I am sorry to hear about the disquiet to which the noble Lord has referred, but I believe that the facts are as I have described them. I understand that the trustees of the South Atlantic Fund have considered the claims from men suffering from psychiatric illness in the same way as they have considered claims from men suffering from physical injuries. One of the factors that they have had to take into account is the extent to which such illness was suffered as a result of the conflict. That is of course much more difficult to determine in psychiatric cases than in physical injury cases. I can tell the noble Lord that I think that there have been about a dozen cases so far.
Lord Molloy: My Lords, I should like to thank the Minister very sincerely for the interest that he has shown. I do not consider the matter closed. I may have to pursue it in other fields, but I am very grateful for his deliberations, for the way in which he has examined the matter, and also for what he has told the House this afternoon, which I can assure him will be readily accepted with great approval by the Royal British Legion.

Acid Rain
3.25 p.m.
Lord Stoddart of Swindon: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have calculated the costs to the electricity supply

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industry and electricity consumers of implementing the EEC Commission proposals on acid rain contained in the "Large Plants" directive.
The Parliamentary Under-Secretary of State, Department of Energy (The Earl of Avon): My Lords, I understand the additional annual costs to the electricity supply industry in England and Wales are estimated to be approximately £350 million. This is equivalent to an electricity price increase of around 4 to 5 per cent.
Lord Stoddart of Swindon: My Lords, I am most obliged to the noble Earl for his Answer to my Question. However, would he agree that the increased costs would be quite serious not only for the domestic consumer but also for industrial consumers as well and would indeed put up our industrial costs and injure our competitive position? Would the noble Earl also agree that, although the "Large Plants" directive may he popular in certain quarters in a "sloganish" type of way, it may nevertheless not be the correct and most effective route towards dealing with the effects of acid rain on the environment, although it may prove to be the most expensive? May I have the noble Earl's assurance that the Government will resist any attempts to implement the "Large Plants" directive until proper and wide-ranging research has taken place into the reasons for acid rain and the best way of curing it?—and that would include afforestation policies which have been embarked upon by many countries throughout Northern Europe.
The Earl of Avon: My Lords, I can confirm to the noble Lord that the capital cost of reducing SO2 emissions by 60 per cent. by 1995 would be nearly £1·5 billion, which is obviously a sum that we should find difficult to produce and it would, indeed, take the edge off our competitiveness. The United Kingdom is willing to seek further substantial emission reductions but on a reasonable time-scale. It is for this reason that the Government's research expenditure in this field is now set at £5 million per annum. We are prepared to negotiate constructively on directives with our European partners and that, no doubt, we shall do.
The Earl of Lauderdale: My Lords, can my noble friend say whether this directive has been closely studied by Sub-Committee G of the European Scrutiny Committee and whether a report on the subject will shortly be forthcoming?
The Earl of Avon: My Lords, my understanding is that Sub-Committee G is at the moment taking evidence on pollution. My department submitted evidence to it in May.
Lord Chelwood: My Lords, in regard to my noble friend's reply about a reasonable time-scale, would he be good enough to tell the House what views the Government have formed about what is known as the "30 per cent. Club" which seven countries, now including France, have joined as an earnest of the seriousness with which they take this subject and of their good intentions? Is it Her Majesty's Government's intention to join this club, which would at least take us roughly half way as far as the Commission is asking us to go?
The Earl of Avon: My Lords, the difficulty of joining a club which issues a starting date of 1980 is that all countries have different trends. In our particular country our emissions have already fallen by 37 per cent. since 1970, which is not a record but it is something of which we are very proud. However, in answer to my noble friend, we are saying, yes, to further substantial SO2 reductions to a reasonable time scale; yes, to parallel NOX reductions; yes, to further strengthening of our research; and above all, yes, to an international agreement.
Lord Gisborough: My Lords, will my noble friend attach the greatest importance to speed as regards this matter—because, if the results are proved to be positive, there may, by 1995, be no more forests and no more fish in Norway to save?
The Earl of Avon: My Lords, I think that my noble friend is altogether going too far. There is totally insufficient scientific evidence to establish a clear link between emissions and environmental damage and no guarantee whatever that the substantial expenditure required by the directive would be cost-effective.
Viscount Hanworth: My Lords, would the noble Earl agree that nitrous oxide emissions may be just as harmful as sulphur emissions and that the two together may be even worse than either? Therefore, would he not think it unwise to concentrate entirely on the sulphur emissions?
The Earl of Avon: Yes, indeed, my Lords. I could add, of course, hydrocarbons as well.
Lord Nugent of Guildford: My Lords, is my noble friend aware that the scientific evidence with regard to cause and effect of acid rain is by no means conclusive and that his cautious approach to this matter, as representing that of the Government, is fully justified? Is he aware that, when the Report of the Select Committee of this House on this subject is published, he will find this point fully substantiated?
The Earl of Avon: My Lords, I am grateful to my noble friend for his remarks. I look forward to the publication with enthusiasm.
Lord Stoddart of Swindon: My Lords, will the noble Earl take especial note of what his noble friend Lord Nugent has just said—that we may, in fact, land up having more haste with less speed, and that speed will not necessarily find the right solution—indeed, it might find the wrong solution to the wrong problem?
The Earl of Avon: My Lords, I hope that my answers have not shown excessive speed, and I believe that the Government's policies are right.

Business: Summer Recess
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Cockfield will, with the leave of the House, repeat a Statement that is to be made in another place on film policy.

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It may be for the convenience of the House if I announce that the Committee stage of the Ordnance Factories and Military Services Bill will be adjourned for dinner at approximately 7 p.m. for a short period, and that during this adjournment the Commons amendments to the Repatriation of Prisoners Bill will be considered.
It may also be for the convenience of your Lordships if I announce that, subject to the progress of business, it is proposed that the House should rise for the Summer Recess on Wednesday 1st August and return on Tuesday 16th October. The House will not now be sitting on Friday 27th July.
Baroness Llewelyn-Davies of Hastoe: My Lords, I should like to ask the noble Lord the Chief Whip a question about the business arranged for 23rd July. The House has known for some time that a debate on the report of the EEC Select Committee on Agriculture and the Environment and on the report of the Science and Technology Committee on research into the same subjects had been arranged for 23rd July. It had been understood that, hopefully, Government business would be light on that day in order to allow a reasonable time for the debate.
We learn today that the Third Reading of the local government paving Bill has been put down for that day, so it is hardly likely to be a light occasion; and on that day there will almost certainly be Statements after a long weekend at such a time of national disarray. Is it not unfortunate that in those circumstances, and as the House is sitting until 1st August, no Government business should have been arranged for Friday, 27th July? Is it not unfortunate that the reports of two Select Committees of your Lordships' House, for which the Government are obliged to give us time, should be treated in this way?
Lord Denham: My Lords, I can assure the noble Baroness that absolutely no discourtesy was intended to two Select Committees of your Lordships' House, which are very highly respected in this House. I understand that for reasons of timing it was desirable that the debate on these two reports should be held in July rather than in some earlier month. As the noble Baroness, from her past experience, will remember, this makes it very much more difficult to give a congenial time to such an important debate.
I think that the noble Baroness is probably being unduly pessimistic. The calculation by my office is that the Third Reading of the London Government (Interim Provisions) Bill—
Lord Ponsonby of Shulbrede: "London Government," my Lords?
Lord Denham: My Lords, that was a Freudian slip; I mean the Local Government (Interim Provisions) Bill. The estimation of my office is that this will take about three hours plus, in which case I think this double debate could be expected to come on between 6 and 7 o'clock. I do not think that this could be regarded as being very bad in July, if it can be arranged. Whereas I think the noble Baroness was being over-pessimistic, I hope that I am not being over-optimistic.
Baroness Llewelyn-Davies of Hastoe: My Lords, I am sure the House will agree that the noble Lord must be being over-optimistic. There are bound to be amendments on Third Reading from all parts of the House. Lately, Third Readings have been taking much longer. I am sure there will also be Statements about the various national happenings. I know that serious discussions have taken place through the usual channels, and I do not accuse the noble Lord of discourtesy. Nobody knows better than I how difficult the arrangement of business is. Nevertheless, I think that the House has been treated rather badly over this.
Lord Denham: My Lords, I am of course always willing at any time to listen to representations from any quarter, and most of all from the noble Baroness the Deputy Chairman of Committees. Perhaps we could talk about this outside. I must remind the noble Baroness, although I am sure that she will need no reminding, that sometimes, in order to try to meet worries such as those that she has, one creates more difficulties because noble Lords have possibly made their arrangements and to "unstick" such arrangements causes more trouble. But, of course, I shall listen to anything that any noble Lord says to me about this outside the Chamber.

Building Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Ordnance Factories and Military Services Bill
3.38 p.m.
Lord Trefgarne: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into corn mittee.—(Lord Trefgarne.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 1 [Transfer schemes]:
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 1:
Page 1, line 6, at beginning insert—
("Subject to an affirmative resolution of each House of Parliament").
The noble Lord said: I beg to move the first amendment with which we are to deal this afternoon. Line 6 on page 1 of the Bill deals with ordnance factory transfer schemes. We are talking about the very important matter of the sovereignty of this House over matters such as the transfer of ordnance factories out of public ownership into private ownership.
Clause 1 begins:
"The Secretary of State may make a scheme which".
We are saying that, subject to an affirmative resolution of the House of Commons, the Secretary of State may make a scheme. At the moment the Secretary of State

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has the right to do what he wishes, as he wishes, and when he wishes without the agreement of Parliament. No doubt the Minister will draw my attention and that of the Committee to certain ways in which there may be a circumscription on that statement.
Clause 3(9) of the Bill merely states that:
"Within the period of one month beginning with the day on which a scheme comes into force, the Secretary of State shall lay before Parliament a copy of the scheme".
We shall be dealing with and concentrating very much on the whole basis of transfer, which is the scheme, or schemes, and what they contain. Perhaps I may read to the Committee the detail of a Parliamentary Question which was asked by my honourable friend Mr. Kevin McNamara, who speaks on these matters in another place. It reads:
"To ask the Secretary of State for Defence if he still proposes to place in the Library, before the end of the Summer Recess, the proposed Memoranda of Understanding and the Scheme under the Ordnance Factories and Military Services Bill."
We are attempting at this late stage fully to understand the intentions of the Government. This is the reply given by the Minister of State on 18th July:
"It remains the Government's intention that the Scheme to be made under the Bill, if enacted, will be placed in the Library as soon as work upon it has been satisfactorily completed and certainly not later than the day on which it takes effect".
I draw the attention of the Committee to the particular problems that must arise, in that this stage of the Bill is taken before the House rises and the remaining stages take place in the overspill, so there are special problems about Members being fully aware of matters which are laid in the Library. The Answer goes on from the words,
"and certainly not later than the day on which it takes effect,
to say,
that is to say the Vesting Day of the new ROF Company."
We shall come later to the significance of the vesting day.
"Correspondingly, if considerations of commercial sensitivity allow, my right honourable friend would also hope to publish the Memorandum of Understanding between himself as 100 per cent. shareholder of the Company and the Chairman of the Board as soon as it has been completed and agreed. Again, this would be on or before the day on which it becomes effective, which will also be Vesting Day."
In our view, Parliament must retain control in the interests of national security and commercial interests, and, equally importantly, must retain control of patents and intellectual property rights. We shall return to those matters in later amendments.
There is an enormous welter of detail that has yet to be revealed, and we are quite uncertain as to how the Minister satisfies and squares up to the responsibilities of Parliament with the procedures he has in mind: for instance, the structure of the company, or companies, that may be established at a later date and the methods whereby the Government intend to introduce private capital—because that is what this is all about in respect of changing the basis of control.
In another place on 21st May, at columns 739 and 740, the Minister of State said:
"At a later stage but, we hope, a not much later stage, we propose to seek the introduction of private capital into the company."
He further went on:
"We will at a later date put forward detailed proposals on privatisation in the light of the circumstances at the time".
If Parliament is to have effective control over these matters then guarantees must be in the Bill. The Bill draws up just about the loosest possible mechanism for dismantling the profit-making, efficient and highly successful Royal Ordnance Factory organisation, which is vital to the defence of the nation and the operational efficiency of the armed services. There is no dispute between the Minister and me on the latest points I have made on efficiency, effectiveness, and satisfaction of the national interest. What we are concerned about is, given that the Government have their will, how does Parliament exercise its responsibilities in these matters?
I want to draw the attention of the Committee to an article in The Times on 14th June by Jonathan Davis, headed, "The Many Pitfalls of Privatisation", in which he referred to the evidence of Sir Kenneth Couzens, the Permanent Secretary of the Department of Energy, and Mr. Peter Lazarus, the Permanent Secretary to the Department of Transport, to the Public Accounts Committee on 6th February 1984. The article went on to say:
"the report's other main conclusion that stands out appears to be that a combination of the volatility of the stock market—and the inability of both merchant banks and underwriters always to read it correctly—makes it inevitable that the Government will always be groping for the right solution in privatisation issues".
The article concludes:
"Given the scale and importance of the flotations to come in the next year this is hardly encouraging. The chances of the Government avoiding another Amersham or Britoil may not be that high".
The severe difficulties which emerged when Britoil and, certainly, as recently as last month, Enterprise Oil were floated remain within the memory of many Members of your Lordships' House, and the problem for the Government of securing effectively their will in respect of ensuring that no monopoly ownership occurs. We are dealing today and at other times with how it is possible to achieve the Government's imperative—that is to privatise—and at the same time to ensure that it is not possible for some owner, whether he is British or in fact foreign, to be able to take complete control over one or more or all of the factories involved.
We also have experience of the sale of the Mirror group of newspapers, where it was possible, as a result of the determination of an individual, to circumvent what appeared to be a settled situation. Flotations have ceased to be flotations; individuals have been able to put forward a sum of money sufficient to be attractive. We had the situation yesterday by announcement of the sale of Sealink, where, instead of the matter being floated, an owner came along who is not British or British-based, but foreign-based, and who was able to put up a sum of money which was found to be attractive not only to the Government but to the advisers of the Government as well.
All we raise with the Minister is that it is important, particularly with the sale of our ordnance factories (whether wholly or in part; whether there is a holding company or there are groups) to recognise that, regarding Clause 1—which deals with the scheme whereby these things will take place—it is not unreasonable that a measure of parliamentary control should be introduced.
The Minister may be able to convince the Committee that after the Bill gets Royal Assent there is no need for Parliament to be bothered any more about what happens to our ordnance factories. I believe that most people here will want to have at least some opportunity for this House, and particularly the other place, as regards the Minister and those to whom he is likely to sell our national assets, to have some exercise of parliamentary control. I beg to move.
3.48 p.m.
Lord Diamond: I want to support everything that the noble Lord, Lord Graham, has said on this important amendment at the commencement of our discussions on the Committee stage of this Bill. The background to this amendment is a proposal which has been opposed by all opposition parties in both Houses. It has been opposed by the representatives of more than 50 per cent. of the electorate at the last general election. It is being put forward by the representatives of some 42 per cent. of the electorate who voted Conservative at the last general election.
It has been opposed by all sorts of expert advice, ex-Conservative Ministers—indeed an ex-Secretary of State for Defence himself. It is against that background that we examine the method by which the Government propose to give effect to their dogmatic proposal. It is a very risky one, playing fast and loose with the defences of this country. It is against that background that the Government propose this Bill. In all my experience of legislation, which I daresay is as substantial as that of any Member of your Lordships' House, I have never seen a Bill which consults Parliament so little, and indeed which scorns Parliament in the way it gives all powers to the Government and to the Minister and none to anybody else.
It is an enabling Bill—with a capital E. This difficulty will come up on several amendments. It is bound to come up in particular on this amendment because against that background it is naturally of vital importance and of vital interest to Parliament to know whether a scheme being proposed under this Bill, under the enabling powers of the Secretary of State, will be broadly acceptable, broadly unacceptable, totally unacceptable or whatever the case may be.
The details of the scheme will naturally affect the reaction of Parliament and of those who are opposed to the principle of the Bill, which we can do nothing about at this stage, and will affect them considerably. We therefore press the Government very strongly to take one step backwards and to pay some regard to the fact that Parliament exists. It exists not to deter or to prevent a Government from carrying out proposals, but to examine them, and if possible to improve them.
As the Minister knows, these proposals will give an opportunity to your Lordships' House to discuss any proposal made under the Bill, any scheme which is proposed, but no more than that: just a discussion. The Government need not be anxious about it. All that we can do, if an affirmative resolution is put before us after being passed by another place, is to listen to what the Government propose, to make suggestions, to seek to persuade (if we think there are
1636
matters on which persuasion ought to be exercised), and nothing more than that. We cannot delay the Government nor prevent them from having their will, nor should we, but we want the right to consider what the Government are doing. We want the Government to take one step backwards and realise that they and the Secretary of State himself are Members of Parliament.
Lord Mayhew: My noble friends I know would want me to express our warm support for this amendment. Following the argument of my noble friend, I ask the Government: what are they afraid of in allowing us an affirmative order? This is not a paving Bill. They will not be defeated in the House of Lords if an affirmative order comes before us. They will not be defeated in the House of Commons. The truth is, I am afraid, that this whole Bill is designed precisely to prevent us from exercising any parliamentary influence on the things that really matter in the privatisation of the ROFs.
The truth is that the Government will argue that they will tell us after the deed is done all about what they have done. We shall, no doubt, be able to put down parliamentary Questions and receive an answer after the event. We shall be able to know about it and study it, but we shall have lost the opportunity of advising the Government, of exerting genuine pressure on the Government. I think it is an abuse that we should have a Bill of this kind, an enabling Bill, which removes from us any chance of affecting the real guts of the problem which is before us. I therefore have the warmest enthusiasm for this amendment. I hope that it will be pressed to a Division. I am sure that if it is my noble friends will want to support it.
Lord Trefgarne: In responding to the arguments that have been put forward, I am conscious that both on this amendment and on a number of amendments that follow we shall be covering territory already explored in some detail in another place. I make no complaint of that. But the effect of this amendment would be to require the Secretary of State to seek the authority of both Houses of Parliament before he made a scheme. But this is precisely what he is doing now in bringing this Bill before Parliament. This is an enabling Bill which permits the Secretary of State to make schemes, as well as to determine when they shall come into force. If Parliament gives its authority to these actions covered by the Bill, what would be the point in asking for the same authority again somewhat later on?
No doubt what the noble Lord really has in mind is that the House should be told of the details of the intended transfer before giving its approval to any schemes. But this is not achieved by the amendment, which requires the Secretary of State to come to the House before a scheme is made—which covers the drafting of the scheme, not simply its coming into force. In any case, the Bill already defines and limits the types of assets to be transferred. Clause 2 provides that the property, rights or liabilities to be transferred must be attributable to the operations of the ROFs or be certified as such by the Secretary of State. As regards the destination of the property etc., the Government have already announced their intentions for the future company structure of the ROF companies.

1637
In all this we accept the constitutional principle that legislation permits the Government to take certain actions or exercise certain powers without specifying exactly how these are to be implemented. This enabling Bill allows the Secretary of State to set up companies to carry on the business of the ROFs by transferring defined property from the Crown. The exercise of these powers is an administrative, not a legislative, function. The Secretary of State will of course remain answerable to Parliament, after the event, for the way in which he has exercised his powers, but that is a different question. For example, if there is concern about the return which the Secretary of State obtains for the transfer of Crown property, these financial aspects can be examined by Parliament in the normal way.
I therefore ask your Lordships to reject this amendment on two grounds: first, because it merely adds a further unnecessary process of debate after the principles have already been agreed to, assuming enactment of this Bill, of course; and, secondly, because the detailed intentions of the Government have already been made clear to Parliament and publicly, so that further debate is unlikely to achieve anything more. I hope that the noble Lord will be persuaded by these considerations.
Lord Graham of Edmonton: First, may I express appreciation for the support that the amendment has received from the other Benches in your Lordships' House. The noble Lord, Lord Mayhew, used the phrase, "What can the Government be afraid of?" I had already asked, "What can be lost by having this?" The Minister has indicated that what would be lost would be the Minister's ability to proceed without as full a disclosure and as full a public comment by those who are interested in the nitty-gritty and the details as might be made in this matter. The Minister must know that one of the prime functions of Parliament is to expose to the public gaze matters which might otherwise not be sufficiently made known to others outside this place. The other noble Lords who have spoken have said, quite fairly, that the principles upon which the Bill received its Second and Third Readings and passed from another place to here were that, although they will be challenged, the reality of parliamentary arithmetic quite clearly indicates that it will make progress.
Although the Government have spoken in general terms we feel that there will be people vitally interested in the details. For example, there are the employees who are employed within the organisations. They will not merely want to know that there are schemes which will take account of various matters, but want to have an opportunity of scrutiny. Not only are there the employees, but there are many thousands of ex-servicemen at all levels and every rank of seniority who will be interested in what will happen. When one talks about the destination of property, there will be another group of people who will want to know.
I do not want to use pejorative language, but the Minister should understand that there is a genuine interest, not merely an attempt to put a brake on the passage of these matters. What are we talking about?
1638
Perhaps one or two hours, if that, and we realise the preciousness of parliamentary time. We are really saying that we have a responsibility. I think that the Minister again was helpful when he said that in his view what we have are administrative matters and not legislative matters. In other words, once the legislation has approved the principle, what we are talking about and what we want are really administrative matters, and we ought not to be involved in them.
The Minister might be looking upon the sale of an ordnance factory in the same way as the sale of a ship, a mine, a piece of railway stock, or whatever it might be. We happen to believe that there is an even more vital principle in Parliament wanting to exercise its rights in these particular matters. I am very pleased to be advised that if we press this matter to a Division, there will be support around the Committee. I believe that the best way is to test the will of the Committee by pressing this matter to a vote.
4.1 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 102; Not-Contents, 97.

DIVISION NO. 1

CONTENTS

Airedale, L.

Jacobson, L.

Ardwick, L.

Jacques, L.

Attlee, E.

Jeger, B.

Balogh, L.

Jenkins of Putney, L.

Banks, L.

John-Mackie, L.

Beaumont of Whitley, L.

Kilmarnock, L.

Beswick, L.

Leatherland, L.

Birk, B.

Listowel, E.

Blease, L.

Llewelyn-Davies of Hastoe, B

Boston of Faversham, L.

Lloyd of Hampstead, L.

Bottomley, L.

Lloyd of Kilgerran, L.

Briginshaw, L.

Lovell-Davis, L.

Buckmaster, V.

McIntosh of Haringey, L.

Burton of Coventry, B.

Mackie of Benshie, L.

Caradon, L.

McNair, L.

Carmichael of Kelvingrove, L.

Mayhew, L.

Carver, L.

Milford, L.

Cledwyn of Penrhos, L.

Mishcon, L.

Collison, L.

Molloy, L.

Davies of Leek, L.

Mulley, L.

Dean of Beswick, L.

Nicol, B. [Teller.]

Diamond, L.

Oram, L.

Donaldson of Kingsbridge, L.

Paget of Northampton, L.

Donnet of Balgay, L.

Peart, L.

Elwyn-Jones, L.

Phillips, B.

Ennals, L.

Pitt of Hampstead, L.

Ezra, L.

Plant, L.

Falkland, V.

Ponsonby of Shulbrede, L. [Teller.]

Fitt, L.

Gaitskell, B.

Rathcreedan, L.

Gallacher, L.

Rea, L.

Gladwyn, L.

Rhodes, L.

Gosford, E.

Rochester, L.

Graham of Edmonton, L.

Sainsbury, L.

Grey, E.

Sefton of Garston, L.

Hampton, L.

Shannon, E.

Hanworth, V.

Simon, V.

Hatch of Lusby, L.

Stallard, L.

Hooson, L.

Stamp, L.

Houghton of Sowerby, L.

Stewart of Alvechurch, B.

Hughes, L.

Stewart of Fulham, L.

Hunt, L.

Stoddart of Swindon, L.

Hylton-Foster, B.

Stone, L.

Ilchester, E.

Strabolgi, L.

Irving of Dartford, L.

Strauss, L.

1639

Taylor of Blackburn, L.

Whaddon, L.

Taylor of Mansfield, L.

White, B.

Thurso, V.

Willis, L.

Tordoff, L.

Wilson of Langside, L.

Underhill, L.

Winstanley, L.

Wallace of Coslany, L.

Wootton of Abinger, B.

Wells-Pestell, L.

NOT-CONTENTS

Ampthill, L.

Luke, L.

Auckland, L.

McAlpine of West Green, L

Avon, E.

Mancroft, L.

Bauer, L.

Margadale, L.

Belhaven and Stenton, L.

Marley, L.

Beloff, L.

Maude of Stratford-upon-Avon, L.

Belstead, L.

Bessborough, E.

Merrivale, L.

Birdwood, L.

Molson, L.

Boyd-Carpenter, L.

Montgomery of Alamein, V

Caithness, E.

Mottistone, L.

Campbell of Alloway, L.

Mowbray and Stourton, L.

Campbell of Croy, L.

Moyne, L.

Chelwood, L.

Murton of Lindisfarne, L.

Clitheroe, L.

Newall, L.

Cockfield, L.

Norfolk, D.

Cork and Orrery, E.

Northchurch, B.

Daventry, V.

Nugent of Guildford, L.

De Freyne, L.

O'Brien of Lothbury, L.

Denham, L. [Teller.]

Onslow, E.

Eccles, V.

Orkney, E.

Elton, L.

Orr-Ewing, L.

Fanshawe of Richmond, L.

Pender, L.

Ferrier, L.

Plummer of St. Marylebone, L.

Fraser of Kilmorack, L.

Gainford, L.

Porritt, L.

Gisborough, L.

Rankeillour, L.

Glanusk, L.

Renton, L.

Gormanston, V.

St. Davids, V.

Gray, L.

Saltoun, Ly.

Greenway, L.

Sandys, L.

Gridley, L.

Seebohm, L.

Hailsham of Saint Marylebone, L.

Sempill, Ly.

Skelmersdale, L.

Halsbury, E.

Soames, L.

Henley, L.

Somers, L.

Hives, L.

Southborough, L.

Home of the Hirsel, L.

Stodart of Leaston, L.

Hornsby-Smith, B.

Strathcarron, L.

Ironside, L.

Sudeley, L.

Keyes, L.

Swinton, E. [Teller.]

Killearn, L.

Terrington, L.

Kilmany, L.

Trefgarne, L.

Kinnaird, L.

Trumpington, B.

Kinnoull, E.

Ullswater, V.

Kitchener, E.

Vaux of Harrowden, L.

Lane-Fox, B.

Vivian, L.

Lauderdale, E.

Whitelaw, V.

Long, V.

Wise, L.

Lucas of Chilworth, L.

Young, B.

Resolved in the affirmative, and amendment agreed to accordingly.
4.9 p.m.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 2:
Page 1, line 9, leave out ("or to different companies").
The noble Lord said: This amendment goes to the heart of another aspect which greatly worries Members on this side of the Committee. It is the current intention under Clause 1, which speaks in terms of a scheme which provides for,
"the transfer to a company or to different companies".
In effect, we want to leave out the words "or to different companies". The "different companies" aspect, in our view, is very serious.
The amendment is important because it enables the corporate unity of the 13 establishments to be maintained as one under public ownership in the new company for the purposes of maintaining both employment and the efficiency that arises out of the highly integrated production chains in the factory. There is no question but that, although each factory has its own esprit de corps and pride, the Royal Ordnance factories collectively are looked upon as a unity and as an entire complex.
The Government proposals—and no doubt the Minister will say a little more about them—are for a holding company and four fully owned subsidiary companies acting as operating divisions. So already there is the possibility, but not the certainty, that there could be at least four separate companies and ownerships. There could very well be more, but let us look simply at the arrangement whereby there will be four.
At the moment there is one set of administrative costs for headquarters, marketing structure, financial structure, personnel management structure and the like. Here are a Government who believe in efficiency saying, "Although we have a unity of all of those efficiency tools, we intend to create four separate structures to manage something almost precisely the same".
We believe that that is not on. Certainly the interests of the workforce, as well as a great many other interests, are at stake. Quite simply, this amendment is saying to the Government, "Well, all right; you have the power to sell, sell as one block, and do not divide them." I beg to move.
Lord Diamond: I should like to support very strongly, but briefly, what the noble Lord, Lord Graham, has said about this matter, I understand, although it has not been made absolutely clear, that the Government may want to sell in terms of four separate companies. It is not absolutely clear from what the noble Minister said at Second Reading, but he may want to reserve the power to do that. I beg him, as a businessman, not to commit such business nonsense. He surely must give the new owners, under any scheme he makes, the opportunity to decide whether they want to run the business as a whole or in parts. All the evidence of previous examination has pointed to the same result. Every businessman in your Lordships' House would agree with me, I am sure, that it is virtually criminal, that it is commercial folly to divide up a business like this, with all the additional overheads, the lack of integration, and the damage to well-proven loyalties that result from dividing it up. No businessman would dream of running it in this way, in which the Government want to have enabling power and may want to use it. If the Minister wants to avoid destroying the morale and usefulness of these factories, I beg him to leave them as one unit.
Lord Trefgarne: I am sorry to say that I am not able to accept this amendment. We have already announced our intention to establish a holding company and four subsidiary companies, wholly owned by the holding company which, in turn, will be wholly owned by the Secretary of State. The Bill is drafted in such a way as to enable this to the done, and

1641
we are taking the necessary preliminary steps accordingly.
The Opposition have made clear that the intention behind the amendment is to allow the Secretary of State to set up only one company and therefore to maintain the ROF enterprise as a single entity. But in fact, the structure we have proposed is basically the same thing. The subsidiary companies will be answerable to the holding company, which will determine general questions of policy for the group as a whole. But with the kind of structure, the subsidiary companies will be free within certain limits to take their own commercial decisions, making them better able to exploit particular opportunities as they arise. We believe that this arrangement will be better for the competitiveness that we are seeking, as well as for the profitability of the group as a whole.
The Government certainly recognise that there are links and certain inter-dependencies between the individual factories which make up the ROF organisation. But these links can, and will, be preserved within the structure we propose. As subsidiaries of the holding company, the divisional companies will be perfectly able to trade on a sound commercial basis between factories within the same division and between divisions.
As I have said, the holding company will remain responsible for some general policy aspects of the enterprise; for example, personnel matters, and the policy for research and development. Although each subsidiary company will be expected to develop its own R & D capability, we recognise that overall direction for R & D, for example, may be required from the holding company. The structure we propose allows for that.
Inevitably, the setting up of subsidiary companies will facilitate, if this course is proven to be desirable, the disposal of divisions of the ROFs separately to the private sector. We have made clear that if this proved attractive, such a possibility has always been on the cards. However, as seen at this moment, the most likely course for privatisation will be a flotation of shares in the enterprise as a whole. Again, the company structure we have proposed will enable either course to be followed.
I should emphasise that the grouping of factories within the subsidiary companies has been chosen as the most logical grouping of factories which undertake work of a similar nature to each other, but this does not rule out the possibility that further schemes may be made to transfer assets from the holding company to the subsidiary companies, or between subsidiary companies, to create the best possible organisation for privatisation. In no way does any aspect of these possibilities damage the commercial interests of the Royal Ordnance factories; indeed, we have left the possibilities open expressly so that we can provide for their best commercial interests. I hope, therefore, that the noble Lord will not wish to press his amendment.
Lord Graham of Edmonton: The Minister's reply is wholly unsatisfactory and not acceptable because at the beginning he indicated, quite rightly, that the whole purport of the views on this side of the Committee is that there is a unity, not merely an
1642
interchangeability of interest between the factories, but he said that they can all work more efficiently. There is an esprit de corps among the Royal Ordnance factories. Although the Government say that this is almost like a halfway house, it is not 13 separate businesses; it could be four. There is no guarantee as to what might happen in the fullness of time—and it could be sooner, rather than later. The separate companies, which are responsible to the holding companies, by a means of a financial device—I am not talking about a legislative one—could be broken down even further. We have what we regard as a national asset, which we wish to keep together, and therefore I shall test the opinion of the Committee.
4.18 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 103; Not-Contents, 97.

DIVISION NO. 2

CONTENTS

Airedale, L.

Lawrence, L.

Ardwick, L.

Leatherland, L.

Attlee, E.

Listowel, E.

Aylestone, L.

Llewelyn-Davis of Hastoe, B.

Banks, L.

Beaumont of Whitley, L.

Lloyd of Hampstead, L.

Beswick, L.

Lloyd of Kilgerran, L.

Birk, B.

Lovell-Davis, L.

Blease, L.

McIntosh of Haringey, L.

Boston of Faversham, L.

Mackie of Benshie, L.

Bottomley, L.

McNair, L.

Briginshaw, L.

Mayhew, L.

Buckmaster, V.

Mishcon, L.

Burton of Coventry, B.

Molloy, L.

Caradon, L.

Mulley, L.

Carmichael of Kelvingrove, L.

Nicol, B. [Teller.]

Peart, L.

Carver, L.

Phillips, B.

Cledwyn of Penrhos, L.

Pitt of Hampstead, L.

Collison, L.

Plant, L.

Davies of Leek, L.

Ponsonby of Shulbrede, L. [Teller.]

Dean of Beswick, L.

Diamond, L.

Donnet of Balgay, L.

Rathcreedan, L.

Elwyn-Jones, L.

Rea, L.

Ennals, L.

Rhodes, L.

Ezra, L.

Rochester, L.

Falkland, V.

Sainsbury, L.

Fitt, L.

Seear, B.

Gaitskell, B.

Sefton of Garston, L.

Gallacher, L.

Shackleton, L.

Gladwyn, L.

Simon, V.

Gosford, E.

Stamp, L.

Graham of Edmonton, L.

Stewart of Alvechurch, B

Grey, E.

Stewart of Fulham, L.

Hall, V.

Stoddart of Swindon, L.

Hampton, L.

Stone, L.

Hanworth, V.

Strabolgi, L.

Hatch of Lusby, L.

Strauss, L.

Hayter, L.

Taylor of Blackburn, L.

Hooson, L.

Taylor of Mansfield, L.

Houghton of Sowerby, L.

Thurso, V.

Hughes, L.

Tordoff, L.

Hunt, L.

Underhill, L.

Hylton-Foster, B.

Vickers, B.

Ilchester, E.

Wallace of Coslany, L.

Irving of Dartford, L.

Wells-Pestell, L.

Jacobson, L.

Whaddon, L.

Jacques, L.

White, B.

Jeger, B.

Wigoder, L.

Jenkins of Putney, L.

Willis, L.

John-Mackie, L.

Wilson of Langside, L.

Kilmarnock, L.

Wootton of Abinger, B.

Kirkhill, L.

1643

NOT-CONTENTS

Ampthill, L.

Macleod of Borve, B.

Auckland, L.

Mancroft, L.

Avon, E.

Margadale, L.

Bauer, L.

Marley, L.

Belhaven and Stenton, L.

Maude of Stratford-upon-Avon, L.

Beloff, L.

Belstead, L.

Merrivale, L.

Bessborough, E.

Molson, L.

Birdwood, L.

Montgomery of Alamein, V

Boyd-Carpenter, L.

Mottistone, L.

Caithness, E.

Mowbray and Stourton, L.

Campbell of Croy, L.

Murton of Lindisfarne, L.

Chelwood, L.

Newall, L.

Cockfield, L.

Norfolk, D.

Cork and Orrery, E.

Northchurch, B.

Daventry, V.

Nugent of Guildford, L.

De Freyne, L.

O'Brien of Lothbury, L.

De La Warr, E.

Onslow, E.

Denham, L. [Teller.]

Orkney, E.

Eccles, V.

Orr-Ewing, L.

Elliot of Hanvood, B.

Pender, L.

Elton, L.

Plummer of St. Marylebone, L.

Fanshawe of Richmond, L.

Ferrier, L.

Porritt, L.

Fraser of Kilmorack, L.

Quinton, L.

Gainford, L.

Renton, L.

Gisborough, L.

St. Davids, V.

Glanusk, L.

Saltoun, Ly.

Gormanston, V.

Sandys, L.

Gowrie, E.

Seebohm, L.

Gray, L.

Sempill, Ly.

Greenway, L.

Shannon, E.

Gridley, L.

Skelmersdale, L.

Hailsham of Saint Marylebone, L.

Soames, L.

Southborough, L.

Henley, L.

Spens, L.

Hives, L.

Stodart of Leaston, L.

Home of the Hirsel, L.

Strathcarron, L.

Homsby-Smith, B.

Sudeley, L.

Ironside, L.

Swinton, E. [Teller.]

Kinnaird, L.

Terrington, L.

Kinnoull, E.

Thomas of Swynnerton, L.

Kitchener, E.

Trefgarne, L.

Lane-Fox, B.

Trumpington, B.

Lauderdale, E.

Ullswater, V.

Leathers, V.

Vaux of Harrowden, L.

Long, V.

Vivian, L.

Lucas of Chilworth, L.

Whitelaw, V.

Luke, L.

Wise, L.

McAlpine of West Green, L.

Young, B.

West Green, L.

Resolved in the affirmative, and amendment agreed to accordingly.
Viscount Long: I think this is the moment to take the Statement. I beg to move that the House be now resumed.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Film Industry
4.26 p.m.
The Chancellor of the Duchy of Lancaster (Lord Cockfield): My Lords, with permission, I will repeat a Statement on the British film industry made in another place by my right honourable friend the Minister of State for Industry and Information Technology. The Statement is as follows:
"With permission, Mr. Speaker, I should like to make a Statement on the film industry.
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"The British film industry is undergoing a renaissance. We are fortunate to have so many talented producers, writers, directors, and actors; and outstanding technical skills in film making. Several companies in Britain have achieved commercial success in quality films. Channel 4 has effectively encouraged the thriving independent production sector.
"However, cinema attendances have continued to decline dramatically. From an annual average of 338 million in the 1960s they have dropped to 66 million in 1983. In the same period the number of screens declined from some 3,000 to 1,300.
"Against this background we have drawn up the following proposals which are contained in the White Paper published today.
"Our first and most important conclusion is that the outdated Eady levy on cinema receipts must be ended. Introduced to recycle money from the cinemas to the producing companies, it has become an extra tax on seats which cinemas cannot afford. Its revenue in real terms has fallen by six-sevenths. It is an elaborate and unfair burden on the industry's weakest sector. The Government propose to bring in legislation to end this in 1985, and at the same time to wind up the British Film Fund Agency, the Cinematograph Films Council, and the Naional Film Finance Corporation. The legislation will also repeal eight Acts of Parliament and twenty-five statutory instruments relating to films.
"I have considered carefully the case for extending an Eady-type levy to television or to videos. I am, however, convinced that no sort of recycling mechanism is sensible. A levy on TV could lead to an increase in the BBC licence fee and ITV companies are already paying a subscription to Channel 4 which will be financing film making at a level of £8 million a year. In its review of copyright, the Government are still examining the question of a levy on blank video and audio tapes to protect copyright owners and we intend to invite further comments on this.
"I have been able to make satisfactory arrangements to replace the money which the Eady levy raised.
"Revenue from the Eady levy has in the past provided finance for the NFFC, which has done valuable work to encourage emerging young talent in the British film industry. It has contributed to many notable films including 'Gregory's Girl' and `Another Country' and fostered talent which has come to the fore in such international successes as `Chariots of Fire' and 'Local Hero'. The valuable contribution made with Eady levy finance will in future be secured by a new company in the private sector whose shareholders will initially provide contributions of over £1 million annually. The Government, in addition, will make £1½ million a year available for five years to co-finance low- and medium-budget films to be made in Britain. A further £500,000 a year for five years is to be made available to help in the early stages of the development of film projects. The new company will therefore be able to deploy more than double the resources which NFFC has had in recent years.

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It is an important new deal for the British industry.
"The National Film and Television School is well respected and enjoys an international reputation. We have secured independent funding for five years which will more than replace the current level of the Eady contribution. The noble Lord, Lord Wilson of Rievaulx, and the Interim Action Committee on the Film Industry recommended updating the equipment at the School and the Government will provide £250,000 for this purpose in 1985–86.
"The British Film Institute Production Board also receives a small Eady contribution and I propose, in consultation with the Cinematograph Films Council, to see whether a final payment out of the Eady levy can be made.
"During the passage of the Finance Bill through Parliament, my right honourable friend the Chancellor of the Exchequer made two amendments specifically to help the film industry. First, qualifying investment in film projects will now come within the scope of the Business Expansion Scheme. This will be a valuable incentive to equity investment in film and will help the small producers who have lately gained the confidence of the City.
"Secondly, in addition to the measures announced in the Budget, my right honourable friend has announced that films will have a further option to write off expenditure on a cost recovery basis against income as it arises, instead of spreading it over the income-producing life of the film. The industry will therefore not normally pay tax on its profits until all expenditure has been written off. This will give a greater measure of certainty for those investing in films.
"I am very pleased that the industry is pressing ahead strongly with plans for British Film Year in 1985. This will focus attention on film in education and industry as well as in entertainment. In particular, it will aggressively promote the sales of British films overseas.
"Our policy is to free the film industry from Government intervention and from an intrusive regulatory régime dating from the days of the silent films. Our policy will clear the way for the industry to operate in a more confident framework and to consolidate upon its success".
That, my Lords, completes the Statement.
Lord McIntosh of Haringey: My Lords, I should like to express our thanks to the Minister for repeating the Statement made in another place. I wish I could say the same about the availability of the White Paper itself. My honourable friend in another place was supplied with a copy of the White Paper by the Minister's right honourable friend some time ago, and yet when I went to the Printed Paper office at 2.15 this afternoon I was told that the White Paper was embargoed until 3.30. I think the House will agree that this makes it extremely difficult for the Opposition to make the kind of effective and constructive comments that we like to make on Statements of this kind. It is particularly galling that this should be the case because we have been waiting two years, since July 1982, for this White Paper.
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No fewer than three Government Ministers have tried to deal with this admittedly difficult problem, and have failed to do so. I wonder whether the Minister will agree that the incentive finally to come up with a White Paper has arisen from something which is quite remarkably omitted from the White Paper and from the Statement; that is, the abolition in the Finance Bill of 100 per cent. capital allowances. I wonder whether the Minister will agree that that has been widely seen by the film industry as being a body blow to investment in films of a much greater significance than any of the measures which are being put forward today. Before I forget to do it, I think it is necessary to pay tribute, on one particular aspect, to the protection for the British Film School at Beaconsfield and for the money that is to be given for renewing the equipment there.
The Minister referred in the Statement to the outdated Eady levy. It is certainly true that the Eady levy arose in a very different situation in the cinema, when receipts in the cinema itself were virtually the only receipts available to the film industry. But will the noble Lord not agree that the situation is now very different and that a great part of the film industry's receipts come from open network broadcasting, from cable and from video, and will eventually come from direct broadcasting satellite? Does he not agree that the rational thing is not to abolish such a levy but to bring it into line with modern circumstances and to have it coming from all the sources of income to the film industry?
The Minister referred to the new arrangements for depreciation, which are to be cautiously welcomed. But the British Film and Television Producers' Association made a specific request, to which he did not refer, for depreciation allowances of 50 per cent. on completion, 25 per cent. on first showing and 25 per cent. in the next year. I wonder whether the Minister can tell us how his proposals, as announced in the Statement, compare with that request, and whether it is his view that the BFTPA is likely to be satisfied with the arrangements that he is proposing.
The Minister referred to the replacement for the existing levy, rather as if the Eady levy was equivalent to the National Film Finance Corporation. In fact, the Eady levy produced £4.8 million in its last year and the National Film Finance Corporation received only £1.5 million of it. I wonder whether the Minister would care to comment on whether the up-to-£1½ million from private sources and the £1½ million from the Government are likely to equate to the total amount available from all public sources, which has been the case in the past.
I wonder whether the Minister would like to comment on the lack of reference to international experience in this matter—a remarkable omission from the White Paper, when we are likely to be the only country in the world without secure support for our national film industry. For example, in France there are a large number of fiscal devices available to help the film industry, such as relief for refurbishing cinemas, relief for training expenditure, allowances for low budget films and funds for additional prints. Since many of these measures are largely self-financing, I wonder whether the Minister would undertake to look

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at opportunities of that kind, in addition to the proposals that he is making.
The fundamental point about this Statement is that the facts of what it is introducing are not matched by the rhetoric of the Statement itself. In paragraph 7.2 of the White Paper we read that,
"it is … not surprising that prospective financial backers are reluctant to take further risks by commissioning unknown film makers";
and yet in paragraph 7.3 we read that the Government's policy is to be firmly based in the private sector. Is there not a conflict between those two statements, and is that conflict resolved by the measures now proposed? I wonder whether the Minister will bear in mind that, so far as the film industry is concerned, it is security of income over a period of years that is necessary. These measures, which involve a commitment by the Government for five years and a commitment by the private sector for three years, in no way match the security which has been available in the past from statutes.
4.40 p.m.
Lord Beaumont of Whitley: My Lords, I, too, should like to thank the Minister for repeating the Statement. As is so often the case with this Government, the energy and enthusiasm with which they wield the axe is not completely matched by the thoroughness with which they do the replanting. Most Members of your Lordships' House will agree that the Eady levy was unsatisfactory in a great many ways and that it is not at all a bad thing that we should be moving on from it. However, the question is whether the Eady levy is going to be replaced by anything which is more satisfactory. We shall have to wait and see.
We, too, should like to wait and see the White Paper—of which, unlike the noble Lord, Lord McIntosh of Haringey, I have not had any sight—before making up our minds on this question. However, I see from the Statement that recycling is rejected. I believe it has been rejected too easily. In particular, I see that the Government are still considering the question of blank tapes. Do I gather from the way in which the Statement is worded that the possibility of using a levy from blank tapes to recycle money back to the film industry has not necessarily been ruled out? I should be glad of an assurance upon that point.
Finally, and most importantly, if the Government are clearing the undergrowth in the industry, will they not also clear the forest in the Government? In other words, if simplification is to take place, is this not an ideal opportunity to unify the whole of the film industry under one ministry, preferably that concerned with the arts, and stop it being divided between the Board of Trade and the department with responsibility for the arts, as it has been so unprofitably divided for so long?
I hope that we shall have an opportunity to debate the White Paper. It is quite clear from the announcement made earlier today that a debate cannot occur in the immediate future. All I can say is that that is a very great pity and that your Lordships should be given an opportunity to debate this matter as soon as possible.
Lord Cockfield: My Lords, I am grateful to both noble Lords for their comments. I am sorry that the noble Lord, Lord McIntosh of Haringey, should give such a grudging welcome to what is an imaginative initiative by the Government—one which, in fact, offers the developing film industry an extremely helpful deal.
As one of the Ministers who has in the past been responsible for these matters, let me assure the noble Lord that the time taken to deal with these issues has nothing whatever to do with the somewhat devious motives that he tried to impute to the Government. It was due to a desire to consult the widest possible range of opinion. The noble Lord will find embodied in the White Paper a long list of bodies and distinguished individuals who have been consulted, who have made their views known, and whose views have been taken into account.
I am very sorry about the point which the noble Lord raised about the availability of the White Paper. I shall certainly look into it. There are certain practices and procedures to be followed and I shall certainly inquire to see whether or not something has gone wrong.
Perhaps I may say first of all that the arrangements which we now propose modernising go back in some instances as far as 1927. They relate to a period and an era which has long since passed. In the early 1950s, in the cinema-going days of the noble Lord, Lord McIntosh of Haringey—and mine, too—the number of attendances at cinemas exceeded 1,250 million per annum. That figure has now fallen to 66 million per annum. I do not suggest that this is due to the fact that your Lordships who used to go to the cinema are now tied down in your Lordships' House. It is due to a complete change in the social habits of our people. It is not surprising that a system which was created to deal with the circumstances which existed many years ago is now out of date and desperately needs modernising.
May I make this comment about the Eady levy. It is perfectly true, as the noble Lord, Lord McIntosh of Haringey, says, that it now raises approximately £4½ million per annum, which is only a fraction, in real terms, of what it used to be. But something between one-half and two-thirds of that money goes back into the pockets of the distributors, many of whom, or most of whom, are American controlled. The amount of money which actually comes back into British film production is very little. The finance now being made available under these proposals for the National Film Finance Corporation is more than double what it was under the old Eady levy system. It is for this reason that I was somewhat perturbed that the noble Lord, Lord McIntosh of Haringey, felt that we were dealing with the film industry in a less than generous manner. The noble Lord paid tribute, of course, to what is being done for the National Film and Television School. I am glad about that. I am glad that its future has been secured.
The simple truth of the matter is that the Eady levy had proved, over time, to be completely unsatisfactory. Moreover, the legislation which deals with the Eady levy and the NFFC expires next year, anyway. Therefore something to replace it was going to be essential. May I say also that at no time has the

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lifetime of the Eady levy ever exceeded five years. In other words, it has had to he renewed at five-yearly intervals. Therefore the fact that the arrangements for the NFFC extend also to five years is no less a period of guarantee than existed under the Eady levy.
However, the most important point of all is that immense new opportunities are now opening up in television. The Statement refers to the fact that Channel 4 is spending £8 million a year on films. We have direct broadcasting by satellite to come. There will be cable broadcasting. The bodies responsible for the regulation of both of these have, as part of their remit, a requirement to give special support to the United Kingdom film producing industry. The future of the film industry lies in these expanding markets, and I am very glad to be able to say that the industry is showing a spirit of enterprise which puts the noble Lord, Lord McIntosh of Haringey, somewhat in the shade. It is this spirit of enterprise which offers great hope for the future.
The noble Lord, Lord Beaumont of Whitley, referred specifically to blank tapes. The point was dealt with in the original Green Paper, I think it was, on copyright. We have now said that there will be a further period of consultation. We are looking to people to put forward their views on this very important and, if I may say so, somewhat contentious matter. We can decide what to do only in the light of those representations.
The noble Lord also suggested that we should have a single ministry for dealing with films, in somewhat the same way as we have a Minister for the Arts. Questions of organisation of government are matters for my right honourable friend the Prime Minister. I shall of course draw her attention to what the noble Lord has said.
Finally, I should like to pay tribute to the part which has been played in all these matters by the noble Lord, Lord Wilson of Rievaulx, who, as chairman of the interim action committee, has done so much to ensure progress in this field. We look forward to his continuation in office as a spur and an encouragement to the rest of us.
4.50 pm.
Baroness White: My Lords, as a former member of the Cinematograph Films Council, which is to be abolished, may I say how glad I am that its advisory duties are to be taken over by my noble friend. May I also pay a brief tribute to the late Sir Wilfred Eady, because although times have now greatly changed, and I accept that the present arrangements are less than satisfactory, nevertheless when the Eady levy was introduced—and it has lasted a considerable time—it was a very ingenious method, devised by one of the most resourceful people the Treasury has ever produced, of protecting the British film industry against retaliation by the very much larger English language industry of the United States.
Lord Cockfield: My Lords, I am most grateful to the noble Baroness for what she says. The Cinematograph Films Council of course did a very good job of work in the years in which it existed, but most of its functions were concerned with regulatory matters, and these will
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now disappear. Its advisory functions will be subsumed in a new body in which the Interim Action Committee will take the lead.
Lord Lloyd of Hampstead: My Lords, as chairman of the National Film and Television School and a member of Lord Wilson's Interim Action Committee, I should like to say that I welcome a number of features of the White Paper, which obviously I have not had a chance adequately to absorb as yet, but I am bound to say also that I have some reservations which I do not think I can expatiate upon at this stage. All I can appropriately do now is to ask one or two questions.
I should like to say that I recognise—and it is widely recognised—that the Eady levy has outlived its usefulness. One's only real doubt is whether the Government have done enough by way of replacing it. At least one derives a little encouragement from what the noble Lord the Minister tells us when the says that consideration is still being given to the whole question of a levy on blank tapes. This, in the view of many people connected with the film industry, is thought to be a very practicable avenue by which necessary funds for the film industry can be assured. Those of us who are connected with that industry look forward to the appearance of the Government's consultative paper. In that connection, I would ask when it is anticipated that this paper will appear.
The next specific question I should like to ask is in relation to the body which is to continue the function of the National Film Finance Corporation. As I understand the White Paper, it is the Government's notion that although it is to be replaced by a commercial organisation (a commercial company) that body is to proceed on lines similar to those of the NFFC, for which they express considerable approval in the White Paper. From my knowledge of its activities, I can certainly testify to the fact that the corporation has done an extraordinarily good job and in many ways one regrets its passing. In particular, I refer to the resignation of Mr. Mamoun Hassan, its director.
We are told that the National Film Finance Corporation is to be replaced by a commercial corporation representing various unspecified organisations and, of course, everything is going to depend upon who is to run this new body. All we are told here is that it will be the usual company organisation, with an independent chairman. I presume this means that the Government will nominate the independent chairman, but one wonders who will appoint the board, since the company is to deal with some £1·1 million a year and yet will also have at its command considerable public funds. One hopes, therefore, that the membership of the board will be carefully considered and will not be governed by purely commercial considerations.
My second point is in relation to the film school. Naturally, I very greatly welcome the warm way in which the Government have expressed their support for the school, and I welcome, too, their admiration —which I know is widely felt both here and abroad—for its quite remarkable achievements, if I may say so, over very few years since its foundation. We are told that the Eady levy money—roughly £500,000—is to

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be replaced by a subvention from three sources —namely, the cinema, the independent television companies, and the BBC—but we are not told in the White Paper how this money is to be assured. For instance, what organisation at present exists among the cinemas to guarantee that they can produce whatever is to be their proportion of the money? We are told that what is proposed should ensure the payment of some £600,000 a year for five years, and I, and I am sure your Lordships, should like to know exactly by what process and what mechanism is this to be assured.
Lord Cockfield: My Lords, I did, of course, have the great pleasure of meeting the noble Lord, Lord Lloyd of Hampstead, when, as Secretary of State for Trade, I saw a number of members of the Interim Action Committee, and we discussed many of these matters. Many of the points he raises are, of course, matters of detail, and I accept that they are important matters. I shall note what he has said and ensure that his points are followed up.
As to the consultative document on blank tapes, there is yet no date fixed for its publication, but we of course realise the extent of the interest in it.
So far as the composition of the board of the successor body to the National Film Finance Corporation is concerned, it is important to remember that this will be a private sector company and that it will derive a great deal of its finance from the private sector. The Government will approve the chairman, and there will be a Government director; otherwise the members of the board will be appointed by the industry itself.
With regard to the film school, the replacement finance is rather more generous than the amount of the Eady levy which it has hitherto received, the figures being of the order of £600,000 against £500,000. We appreciate the immense value of the school and the contribution it has made.
Perhaps I may also pick up one other point and join the noble Lord in the tribute which he has paid to Mr. Mamoun Hassan, the director of the NFFC, who has done an outstanding job in this field but who feels that he now wants to get back into film production. It will be awfully important to ensure that whoever succeeds him is a man of real quality.
Lord Auckland: My Lords, obviously, without a sight of the White Paper it is difficult to comment very much on this Statement which, judging from what has been said, I generally welcome. Is my noble friend aware of the number of cinemas which have closed down, in particular in the provinces. The closures deprive people, particularly those who live in areas where Channel 4 cannot always be received.
As a consumer perhaps I may ask my noble friend to pay tribute to the enormous work done by the Rank Organisation over the years in this area, especially in regard to exports. I urge him to take up the point made by the noble Lord, Lord McIntosh, about refurbishing some of our cinemas. In the area of Surrey where I live five cinemas have closed down and so only our local repertory theatre shows films. While one can see these films on television, it is surely desirable—bearing in
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mind the enormous potential of the cinema industry and in particular, if I may say so, the Pinewood Studios—that the British film industry is helped, not necessarily by subsidy, but by as much encouragement as possible. I hope that the White Paper, which will, no doubt, be seriously studied, will be debated as soon as possible.
Lord Cockfield: My Lords, I am grateful to my noble friend for what he says. Perhaps we are beginning to wander a little wide and, as he himself has said, the most valuable thing would be for us all to study the White Paper. The removal of the Eady Levy is a specific measure that will help the cinemas. The simple truth of the matter is that the essential habits of our people have changed so dramatically, and many of the developments to which he referred are a reflection of those changing social circumstances.
Both my noble friend and I—and, no doubt, the noble Lord, Lord McIntosh, too—were brought up in an era when there was no television and when the cinema and the theatre (if one was lucky enough to live in a place where there was a theatre) were the main forms of entertainment and, often, of instruction. We now have television, we have the explosive growth of video, we have cable, and we have DBS. Our institutions have to reflect these changes.
Lord McIntosh of Haringey: My Lords, the noble Lord the Minister in his first reply saw fit to contrast the enterprise of the film industry with my personal lack of enterprise. I may assure him that I will resist any temptation to make personal comments about him.
Lord Cockfield: My Lords, I am awfully sorry if the noble Lord thought that I was making a personal comment; my remarks were not in any sense intended to be a personal comment. But if the noble Lord will reread his remarks, he will find that he exhibited—if I may use the phrase—a lack of enthusiasm for the Government's plans which he may find entirely justified but to which I felt it perfectly legitimate to refer. I assure the noble Lord that there was never any intention of any kind of making a personal comment.

Ordnance Factories and Military Services Bill
5.2 p.m.
House again in Committee on Clause 1.
Lord Lloyd of Kilgerran Lord Lloyd of Kilgerran had given notice of his intention to move Amendment No. 3:
Page 1, line 10, after ("liabilities") insert ("other than intellectual property and rights or liabilities relating thereto").
The noble Lord said: The purpose of Amendment No. 3 and of Amendment No. 4, was to prevent the Government committing another folly in relation to this matter, to use the phrase used by my noble friend Lord Diamond in speaking to a former amendment. Since I prepared to submit some matters in relation to this amendment the whole scenario and the whole background have been changed by the two remarkable defeats suffered by the Government this afternoon. In

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the circumstances, I should like to examine the effect of those defeats on the Government this afternoon and reserve what I have to say, if anything, for Report stage.
[Amendments Nos. 3 and 4 not moved.]
Baroness Vickers Baroness Vickers moved Amendment No. 5:
Page 2, line 15, at end insert—
("() A scheme shall provide that the Articles of Association of any prescribed company shall include the draft Article set out in Schedule (Limitation on Shares).").
The noble Baroness said: In speaking to Amendment No. 5, I should like to make it clear that this Bill was not in the Conservative Party manifesto and so I consider that I can speak as freely as I like. Also, I have no connection with the armaments firm of Vickers; I thought that I ought to make that completely clear.
My connection with the Royal Ordnance Factories was during the war when I visited the factories on behalf of the Ministry of Supply in connection with the welfare of the women working in them. Whether they were men or women, the people there were doing extremely fine work. I shall never forget how at nights—particularly in Woolwich, for example—they put up with the air raids and so on and still carried on with their work.
Following what has been said by the noble Lord opposite, I consider that this is an enabling Bill and I would ask the Minister again, as I did on Second Reading, whether he can tell me what is the hurry about this Bill. The amendments to which I am speaking today were put down because we were worried about the future of our armed forces and whether they would have adequate supplies. Also, this development may affect the jobs of 20,000 people. I should like to have some information from the Minister that is not quite so vague as the information we have previously been given.
One of the points about this amendment of mine is that it may not prove as helpful as the articles of association drafted by the Government, because I understand that they cannot be challenged, but the importance of the issue of foreign control should be included in this Bill.
The amendment is also important because it goes to the heart of the problem of acquiring control of the ordnance factories, if and when they are sold off. Again, there is nothing in the Bill about acquiring control. In my opinion, there should be cast-iron guarantees preventing ordnance factories from falling into foreign control. The draft article imposing a limitation on shareholdings is in the schedule and I am not going to discuss that now. I should just like to point out to my noble friend that this amendment is based on that; it does provide some guarantee and confers on the Secretary of State certain powers, as stated in the schedule.
The principle behind the articles of association is that the company is required to maintain a register of shares, or any interest in shares, held by people not of British origin; in other words, who are not British citizens. The number of shares to be held must be entered in a register and must not exceed, I understand, 15 per cent. of the total issued share capital of the company.
The issue of foreign control is of the utmost importance in the privatisation of the Royal Ordnance Factories, and, in the interests of national security, the articles of association should be enshrined in legislation. When replying to the debate in another place, the Minister said that the Bill, if given these articles of association, would not be as flexible as the Secretary of State might require. Once a Bill becomes an Act, any change in the articles of association would require amendment to the Act. I therefore suggest that this amendment is of national importance. I can see no reason why the Secretary of State should not come to Parliament to seek consideration of an agreement to any change. This is very important and should be included. It is Parliament and not the Treasury which should control the future. I hope therefore that my noble friend the Minister will take an interest in this and give a satisfactory reply. I beg to move.
Lord Trefgarne: I had understood that it might be for the convenience of the Committee if we take Amendment No. 14 with my noble friend's amendment, together of course, with Amendment No. 38—which I believe she agrees is linked with it.
Amendment No. 14: Page 3, line 22, at end insert ("and
() each transferor company and each transferee company is required under its Memorandum and Articles of Association to issue to the Secretary of State a single share of a nominal value not exceeding £1 giving the holder the right to veto any changes in the structure of the company or of its business.").
Amendment No. 38: After Schedule 3, insert the following new Schedule—

SCHEDULE
LIMITATION ON SHARES
PART I
Limitation on Shareholdings
1. It is a cardinal principle that the Company should be and remain under United Kingdom control.
2. In this Article:—
"Corporation under Foreign Control" means any corporation (other than a Foreign Corporation):—

(i) of which one-third or more of the directors (or persons occupying the position of directors by whatever name called) are Foreigners or Foreign Corporations or are accustomed to act in accordance with the suggestions, instructions or directions of a Foreigner or of a Foreign Corporation; or

(ii) of which shares carrying more than thirty per cent. of the votes which are ordinarily eligible to be cast on a poll at General Meetings of the corporation are for the time being held by a Foreigner or by a Foreign Corporation or by a Corporation under Foreign Control;

"Excess Foreign-held Share" means any Foreign-held Share of which particulars are entered in the separate register maintained by the Directors pursuant to paragraph 4 of this Article and which the Directors decide are Foreign-held Shares in excess of a Permitted Maximum as defined in paragraph 4 of this Article;
"Foreign Corporation" means:—

(a) any corporation other than a corporation which is incorporated under the laws of any part of and which has its principal place of business and central management and control in the United Kingdom; or

(b) a government or government department or government agency or body other than of the United Kingdom or any part thereof; or

(c) any municipal, local, statutory or other authority or any undertaking or body established in any country other than the United Kingdom; or

(d) any other legal entity of any kind whatsoever the legal nature of which is determined by reference to laws (and whether statutory or otherwise) of any country other than the laws of any part of the United Kingdom.

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"Foreigner" means any individual who is not a British citizen, a British Dependent Territories citizen or a British overseas citizen by virtue of the British Nationality Act 1981.
"Foreign-held Share" means any Share (other than a Qualifying Share) of which any Owner is a Foreigner, Foreign Corporation or Corporation under Foreign Control;
"Owner", in relation to any Share, means:—

(a) any person with an "interest" in any Share which would be taken into account in deciding whether a notification to the Company would be required under Part IV of the Companies Act 1981 (as in force as at the date of the adoption of the Articles and notwithstanding any subsequent amendment or repeal thereof), but shall for the purposes of this Article include the interests referred to in section 71(a), (b), (e) and (j) of that Act; and

(b) to the extent not already covered in (a) above, any person with or to whom any holder of any Share has agreed or committed himself or become obliged (whether or not in a manner legally binding) to exercise or refrain from exercising any voting rights attached thereto in accordance with that person's suggestions, instructions or directions.

"Qualifying Share" means any share in the capital of the Company which is at the material time held by, or by a nominee or custodian trustee for, the trustees of:—

(a) any retirement benefits scheme for the employees of a business or undertaking carried on (wholly or mainly) in the United Kingdom otherwise than by a Foreigner or Foreign Corporation which is, or is treated by the Commissioners of Inland Revenue as, an exempt approved scheme for the purposes of the Finance Act 1970; or

(b) any charity which is registered under the provisions of the Charities Act 1960; or

(c) any exempt charity within the meaning of that Act other than (in any such case) a retirement benefits scheme, charity or exempt charity of which the majority of the Trustees are Foreigners, Foreign Corporations or Corporations under Foreign Control.

"Scheme Share" means any share in the capital of the Company which is at the material time held by the trustees of any profit sharing scheme established by the Company and approved by the Board of Inland Revenue in accordance with the provisions of Chapter III of Part III of the Finance Act 1978;
"Share" means any share in the capital of the Company (not being a Scheme Share) which ordinarily carries the right to vote on a poll at General Meetings of the Company;
"United Kingdom" for the purposes of this Article shall include the Channel Islands and the Isle of Man.
3. The Directors shall not register any person as a holder of a Share (other than an original allottee under an issue of Shares by way of capitalisation of profits or reserves made pursuant to these presents) unless there has been furnished to them a declaration (in such form as the Directors may from time to time prescribe) signed by or on behalf of such person (or, in the case of a corporation, sealed by the corporation or signed on its behalf by an attorney or duly authorised officer or agent of the corporation), together with such evidence as the Directors may require of the authority of any signatory on behalf of such person, stating that, upon registration of such Share in the relevant name or names, either (i) such Share will not be a Foreign-held Share or (ii) such Share will be a Foreign-held Share. The Directors shall in any case where they may consider it appropriate require such person to provide such evidence or give such information as to the matters referred to in the declaration as they think fit. The Directors shall decline to register any person as a holder of a Share if such a declaration or further evidence or information is not provided or given.
4. The Directors shall maintain a separate register in which shall be entered particulars of any Share which:—

(a) has been acknowledged by the holder (or by any one of joint holders) to be a Foreign-held Share; or

(b) has been declared to be a Foreign-held Share by virtue of a declaration of the Directors made pursuant to paragraph 8 of this Article;

and in either case which has not ceased to be a Foreign-held Share.
5. If at any time the aggregate number of Foreign-held Shares of which particulars are entered in the register maintained pursuant to paragraph 4 of this Article results in more than 15 per cent. of the votes which are ordinarily eligible to be cast on a poll at General Meetings of the Company being exercisable in respect of Foreign-held Shares ("a Permitted Maximum") Excess Foreign-held Shares shall be dealt with in accordance with paragraph 9 of this Article. It shall be for the Directors to decide whether or not a Foreign-held Share is an Excess Foreign-held Share but, in making any such decision, the Directors shall, so far as practicable, have regard to the order of date in which particulars of Foreign-held Shares have been, or are to be, entered in the separate register as aforesaid save in circumstances where such would, in the opinion of the Directors, be inequitable when the Directors shall apply such other criterion or criteria as they consider appropriate.
6. Subject as hereinafter mentioned, the Directors shall remove from the register maintained pursuant to paragraph 4 of this Article any Foreign-held Share if there has been furnished to them a declaration (in such form as the Directors may from time to time prescribe) signed by or on behalf of the holder of such Foreign-held Share (or, in the case of a corporation, sealed by the corporation or signed on its behalf by an attorney or duly authorised officer or agent of the corporation), together with such evidence as the Directors may require of the authority of any signatory on behalf of such holder stating that such Share is no longer a Foreign-held Share. The Directors shall also in any case where they may consider it appropriate require such holder to provide such evidence or give information as to the matters referred to in the declaration as they think fit. The Directors shall not remove from such register any Foreign-held Share if such a declaration or further evidence or information is not provided or if they are not satisfied that the Share is not a Foreign-held Share.
7. Subject to the provisions of this Article, the Directors shall, unless any Director has reason to believe otherwise, be entitled to assume without enquiry that all Shares, other than those particulars of which are entered in the separate registers maintained by the Directors pursuant to paragraph 4 of this Article, are not Foreign-held Shares. Nevertheless, the Directors may at any time give notice in writing to the holder (or to any one of the joint holders) of a Share requiring him to make a declaration (in such form as the Directors may prescribe) within such reasonable period as may be specified in the notice as to whether or not the Share is a Foreign-held Share.
8. Whether or not they have given a notice under paragraph 7 of this Article, if at any time it appears to the Directors that a Share which they have not treated as a Foreign-held Share may be such a Share, they shall give notice in writing to the holder (or to any one of joint holders) requiring him to show to their satisfaction that such a Share is not a Foreign-held Share. For this purpose failure to make a declaration pursuant to paragraph 7 of this Article shall be sufficient reason for the Directors so acting. If within 21 days after the giving of such notice (or such extended time as in all the circumstances the Directors shall consider reasonable) they are not so satisfied, the Directors shall declare such Share to be a Foreign-held Share, and enter the same appropriately in the register maintained pursuant to paragraph 4 of this Article.
9. The Directors shall give notice in writing to the holder (or to any one of the joint holders) of any Share which appears to them to be an Excess Foreign-held Share requiring him to transfer such Share to another person so that it will cease to be a Foreign-held Share (a "Notice of a Required Disposal") and informing him of the restrictions attached to such Share by virtue of paragraph 10 of this Article. If within 21 days after the giving of a Notice of Required Disposal (or such extended time as in all the circumstances the Directors shall consider reasonable) such notice is not complied with to the satisfaction of the Directors the Directors shall arrange for the Company to sell the Share specified in such Notice at the best price reasonably obtainable to any other person so that the Share will cease to be a Foreign-held Share. For this purpose the Directors may authorise in writing any officer or employee of the Company to execute on behalf of the holder or holders a transfer of the Share to the purchaser and may issue a new certificate to the purchaser. The net proceeds of the sale of such Share shall be received by the Company whose receipt shall be a good discharge for the purchase money and shall be paid over by the Company to the former holder or holders upon surrender by him or them of the certificate for the Share, but such proceeds shall in no circumstances carry interest against the Company.
10. On the giving of any Notice of Required Disposal, the then registered holder of any Share specified in such notice shall not in respect of such Share be entitled to receive notice of, or attend or vote at, any General Meeting of the Company or meeting of an class of shareholders of the Company; and the rights to attend any such meeting (whether in person or by proxy) to speak and to demand and vote on a poll attaching to such Share shall accordingly transfer from the then registered holder and vest in the Chairman of any such meeting. The chairman shall be informed by the Directors of that fact.
11. Any notice given pursuant to paragraphs 7, 8 or 9 of this Article may relate to more than one Share and shall in any event specify the Share or Shares to which it relates.
12. The Directors shall not be required to give any reasons for any decision of declaration taken or made in accordance with this Article.
PART II
THE SPECIAL SHARE
13. The Special share may be held only by, or transferred to, a Minister of the Crown or person authorised in writing by such a Minister to hold the same on his behalf.
14. Each of the following matters shall be deemed to be a variation of the rights attaching to the Special share:—

(i) the amendment or removal of all or any of Articles and;

(ii) the voluntary winding-up of the Company;

(iii) any disposal which, alone or when aggregated with any other disposals forming part of, or connected with, the same or a connected transaction, constitutes a disposal of the whole or a material part of the assets of the Company and its subsidiaries (in this Article referred to as "the Group");

(iv) any disposal which, because of its size, is required by the Council of The Stock Exchange to be consented to or approved by the Company in general meeting; and

(v) the issue of any shares in the capital of the Company with voting rights attached thereto not identical with those of the Ordinary shares.

15. For the purpose of paragraph 14(iii) of this Article, a part of the Group's assets shall only be deemed to be material if—

(i) its book value, calculated by reference to the then latest audited consolidated accounts, or the total consideration to be received on its disposal, is not less than 15 per cent. of the book value of the net assets of the Group; or

(ii) the average profits attributable to it represent at least 15 per cent. of the average profits of the Group, being the average for the last three years (or such shorter period) for which audited accounts are available and after deducting all charges except taxation and extraordinary items;

and the book value of any assets and the attributability of profits thereto shall, in each case, be conclusively determined (at the request of the Special Shareholder) by the Auditors and be subject to such adjustment as the Auditors consider appropriate.
16. The Special Shareholder shall be entitled to receive notice of and attend all General Meetings and meetings of the holders of voting shares but may not speak or vote at such meetings.
17. On a return of assets in a winding-up of the Company, the Special Shareholder shall be entitled to repayment of the captial paid up on the Special share in priority to any payment to other members. The Special share confers no further right to participate in the profits or assets of the Company.
Provision to be inserted in Articles dealing with Directors
18. It is a cardinal principle that at least three quarters of the directors at any time should be persons who are either British citizens or British dependent territories citizens or British overseas citizens by virtue of the British Nationality Act 1981 (referred to in these Articles as "British Directors"). Accordingly there shall at all times be not less than six British Directors and not more than two directors who are not British Directors (the latter being referred to in these Articles as "Foreign Directors").
19. Before accepting his office any intended director shall furnish the Company with a declaration (in such form and with such accompanying evidence as the directors may from time to time prescribe) signed by him stating that on appointment he either will be, or will not be, a British Director. Any British Director shall likewise immediately inform the Company in writing if at any time he should cease to be qualified to be a British Director.")
If that is to your Lordships' convenience, I am quite happy to deal with Amendment No. 5 and Amendment No. 38 as proposed by my noble friend.
The Government have already announced publicly their commitment that the articles of association of the privatised company shall include provisions preventing any foreign takeover of the new Royal Ordnance Company. There has never been any question of the Government's intention in this regard. We have made it clear from the outset that foreign control of the company would not be countenanced.
Towards the end of Committee consideration of this Bill in another place, my honourable friends made available copies of the intended draft articles. I have gone very carefully through the new schedule which my noble friend would, by her amendments, see added to the Bill and there seems to be a remarkable correspondence between it and the draft articles to which I have referred. I would not assert that they are word for word the same, but there is a sufficient similarity to enable me to be able to repeat the Government's assurance that these provisions—or something very much like them—will be incorporated in the articles of association of the new Royal Ordnance Company.
For those of your Lordships who have not examined the articles in detail, let me provide a brief explanation of how they work. They require the company to set up a register in which shall be entered particulars of all shares owned by foreign nationals or in which a foreign national has any kind of interest. Before any person may be registered as a holder of a share, he is required to declare whether or not it is owned, or any interest in it is owned, by a foreign national. If the directors have any reason to believe that a share which is not included in the register of foreign-held shares is in fact one such share, they may make appropriate inquiries and demand appropriate information.
As a result, the register of foreign-held shares will be comprehensive and complete. It is then provided in the articles that the numbers of shares appearing on the register of foreign-held shares shall not exceed, in the aggregate, 15 per cent. of the total issued share capital of the company. As the Committee will appreciate, that percentage is too low to enable even all foreign shareholders acting together to exercise any kind of control over the new company.
Lord Diamond: May I intervene for one moment? I am most grateful to the noble Lord. Can he say why any number of foreign shares is appropriate?
Lord Trefgarne: I am not sure why it is necessary to exclude every conceivable foreign shareholder, provided of course that the limit is kept at the level that I have suggested, where no vestige of control is conceivably possible.
The articles provide, in addition, for the issue of a special share to the Secretary of State. This special share will enable him to veto any alteration of the articles. The avoidance of foreign control provisions are therefore entrenched. The special share also entitles the Secretary of State to veto the disposal of any material part, or all, of the assets of the company. He can thus prevent the sale of part of the business to

1659
any foreign interest—or for that matter to any British interest. Finally, the articles require that at least three-quarters of the directors should be British citizens.
I should add, in case the quesion might have occurred to any Members of the Committee, that the discrimination between British citizens on the one hand and foreign nationals on the other would normally be contrary to the provisions of the Treaty of Rome, and therefore illegal. But Article 223 of the Treaty provides:
"Any member state may take such measures as it considers necessary for the protection of the essential interests of its security which are connected with the production of or trade in arms, munitions and war material".
We are advised that these provisions of the Treaty of Rome will enable the company to adopt articles of association which discriminate in the way I have mentioned.
In the circumstances I have to say that the Government look with some sympathy upon these amendments. However, there is an overriding reason why we should not put into this Bill a statutory obligation of this kind. We do no know what circumstances might occur in the future which would require a change in the articles. For example, we may find that they do not work in quite the way intended, and that they could be improved; or, that they work some injustice and require amendment in that respect. It may even be that in the changed situation of five or 10 years from now we find that circumstances are such that, even while we maintain our commitment that there shall be no foreign control of this company, we can dispense with some of the articles altogether. If we put into this Bill a requirement that the company shall include these articles in its articles of association, changes of this kind may prove impossible without an amending Act of Parliament. I think the Committee would agree that this could be a ridiculous situation. Given the exigencies of the parliamentary timetable, any future alteration of these articles would be virtually impossible.
I am pleased to be able to repeat the Government's assurance that articles to the same effect as those set out in the proposed new schedule, even if they are not the same word for word, will be incorporated in the articles of association of the new Royal Ordnance company. Having regard to that assurance, I hope my noble friend will see fit not to press her amendment.
Lord Diamond: Perhaps I may say a few words, since the noble Lord has referred to Amendment No. 14, which I do not propose to move. Amendment No. 14 refers to a foreign shareholding and, by the argument, objects to a foreign shareholding of 15 per cent. I merely want to say to the noble Lord that 15 per cent. of the holding in one company held in one pair of hands is a very dangerous holding. It is not a question of one share: it is a question of 15 per cent. of the total shareholding. It is quite normal for a Government, in circumstances such as these, to prevent the shareholding in one pair of hands going above 10 per cent. I think, therefore, that this is a bad provision. They should limit it to nil.
Lord Mayhew: May I ask a single, specific question? If these articles of association are on the same lines as
1660
the schedule, then they permit, do they not, any foreigner, without any control, to buy any factory, patent or asset of the ROFs, provided only that it is less than 15 per cent. of the net assets of the ROF? Will the noble Lord comment on this and on the implications?
Lord Trefgarne: I do not think the noble Lord has understood the arrangements correctly. The control of activities of that sort is covered by the special share issued to the Secretary of State, to which I referred during my remarks.
Baroness Vickers: As my noble friend the Minister has been quite sympathetic in his reply, I should like to ask him whether it will be possible to see these revised articles of association by Report stage.
Lord Trefgarne: If my noble friend has not seen them, I shall certainly see that she has a copy.
Baroness Vickers: In view of that, I think I shall withdraw the amendment.
Lord Graham of Edmonton: Objection!
The Deputy Chairman of Committees (Lord WellsPestell): The Question is that this amendment be agreed to. As many as are of that opinion—
A noble Lord: It has been withdrawn.
The Deputy Chairman of Committees: There has been an objection.
5.16 p.m.
On Question, Whether the said amendment (No. 5) shall be agreed to?
Their Lordships divided: Contents, 99; Not-Contents, 105.

DIVISION NO. 3

CONTENTS

Airedale, L.

Gaitskell, B.

Ardwick, L.

Gallacher, L.

Attlee, E.

Gladwyn, L.

Aylestone, L.

Gosford, E.

Balogh, L.

Graham of Edmonton, L.

Banks, L.

Grey, E.

Beaumont of Whitley, L.

Hall, V.

Beswick, L.

Hampton, L.

Birk, B.

Hanworth, V.

Blease, L.

Harris of Greenwich, L.

Boston of Faversham, L.

Hatch of Lusby, L.

Bottomley, L.

Houghton of Sowerby, L.

Briginshaw, L.

Hughes, L.

Buckmaster, V.

Irving of Dartford, L.

Burton of Coventry, B.

Jacobson, L.

Carmichael of Kelvingrove, L.

Jacques, L.

Carver, L.

Jeger, B.

Cledwyn of Penrhos, L.

Jenkins of Putney, L.

Collison, L.

John-Mackie, L.

Davies of Leek, L.

Kaldor, L.

Dean of Beswick, L.

Kearton, L.

Diamond, L.

Kilmarnock, L.

Donnet of Balgay, L.

Kirkhill, L.

Elwyn-Jones, L.

Leatherland, L.

Ennals, L.

Listowel, E.

Ewart-Biggs, B.

Llewelyn-Davies of Hastoe, B.

Ezra, L.

Lloyd of Kilgerran, L.

Falkland, V.

Longford, E.

Fitt, L.

Lovell-Davis, L.

1661

McGregor of Durris, L.

Simon, V.

McIntosh of Haringey, L.

Stallard, L.

Mackie of Benshie, L.

Stewart of Alvechurch, B.

McNair, L.

Stewart of Fulham, L.

Mayhew, L.

Stoddart of Swindon, L.

Mishcon, L.

Stone, L.

Mulley, L.

Strabolgi, L.

Nicol, B. [Teller.]

Taylor of Blackburn, L.

Oram, L.

Taylor of Mansfield, L.

Peart, L.

Thurso, V.

Phillips, B.

Tordoff, L.

Pitt of Hampstead, L.

Underhill, L.

Ponsonby of Shulbrede, L. [Teller.]

Wallace of Coslany, L.

Wells-Pestell, L.

Rathcreedan, L.

Whaddon, L.

Rhodes, L.

White, B.

Rochester, L.

Wigoder, L.

Sainsbury, L.

Willis, L.

Seear, B.

Wilson of Langside, L.

Sefton of Garston, L.

Winterbottom, L.

Shackleton, L.

Wootton of Abinger, B.

NOT-CONTENTS

Avon, E.

Lawrence, L.

Barber, L.

Long, V.

Bauer, L.

Lucas of Chilworth, L.

Belhaven and Stenton, L.

Luke, L.

Bellwin, L.

McAlpine of West Green, L

Beloff, L.

Macleod of Borve, B.

Belstead, L.

Mancroft, L.

Bessborough, E.

Margadale, L.

Blakenham, V.

Marley, L.

Boyd-Carpenter, L.

Marshall of Leeds, L.

Broadbridge, L.

Massereene and Ferrard, V.

Caccia, L.

Maude of Stratford-upon-Avon, L.

Caithness, E.

Campbell of Cray, L.

Merrivale, L.

Chelwood, L.

Molson, L.

Cockfleld, L.

Montgomery of Alamein, V.

Coleraine, L.

Mottistone, L.

Daventry, V.

Mowbray and Stourton, L.

De Freyne, L.

Murton of Lindisfarne, L.

Denham, L. [Teller.]

Norfolk, D.

Drumalbyn, L.

Nugent of Guildford, L.

Eccles, V.

O'Brien of Lothbury, L.

Ellenborough, L.

Onslow, E.

Elliot of Harwood, B.

Orkney, E.

Elton, L.

Orr-Ewing, L.

Fanshawe of Richmond, L.

Pender, L.

Ferrier, L.

Porritt, L.

Fraser of Kilmorack, L.

Quinton, L.

Gainford, L.

Rankeillour, L.

Gardner of Parkes, B.

Renton, L.

Gisborough, L.

Renwick, L.

Glanusk, L.

Richardson, L.

Glenarthur, L.

St. Aldwyn, E.

Gormanston, V.

St. Davids, V.

Gray, L.

Saltoun, Ly.

Greenway, L.

Sandford, L.

Gridley, L.

Sempill, Ly.

Hailsham of Saint Marylebone, L.

Skelmersdale, L.

Soames, L.

Harmar-Nicholls, L.

Southborough, L.

Henley, L.

Stamp, L.

Hives, L.

Stodart of Leaston, L.

Home of the Hirsel, L.

Sudeley, L.

Hornsby-Smith, B.

Swinton, E. [Teller.]

Hylton-Foster, B.

Thomas of Swynnerton, L.

Ilchester, E.

Trefgarne, L.

Ironside, L.

Trumpington, B.

Killearn, L.

Ullswater, V.

Kilmany, L.

Vaux of Harrowden, L.

Kinnaird, L.

Vivian, L.

Kinnoull, E.

Westbury, L.

Kitchener, E.

Whitelaw, V.

Lane-Fox, B.

Young, B.

Lauderdale, E.

Resolved in the negative, and amendment disagreed to accordingly.
5.25 p.m.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 6:
Page 2, line 15, at end insert—
("() A scheme shall expressly prohibit any diminution or elimination by any prescribed company or companies of the legal and trade union rights of any employee working for or in the Ordnance Factories.").
The noble Lord said: This is considered to be a very important amendment, not only on this side of the Committee but among many other people, and especially by the ROF trade union members. The Minister may very well say that there is no need to write such matters into the Bill, but the union members with whom we have discussed this, without casting aspersions on the Ministers with whom they have negotiated, feel that they would be much happier—as indeed, I believe, would your Lordships—to see this written into the Bill so that there can be no dubiety.
The Minister will tell us that he has absolute confidence that those to whom the factories are sold will respect the need for, and their obligations to, good industrial relations in the way that this and other Governments have. Unhappily, we are in the middle of trying to resolve the GCHQ issue. We cannot take it for granted that the Government, or indeed a company, will not find a pretext to whittle away something that is now accepted as a right and a safeguard. I beg to move.
Lord Trefgarne: I believe that this amendment is unnecessary. The legal and trade union rights of any employee, whether in the Royal Ordnance factories or elsewhere, are protected by legislation already. As I am sure your Lordships are aware, the Employment Protection (Consolidation) Act 1978 guarantees the right of employees to belong to and to take part in the activities of a trades union. If a company tries to dismiss an employee for belonging to, or taking part in the activities of, a trades union, that employee can seek redress in an industrial tribunal. No employer may contract out of these provisions of the 1978 Act. Employees of the ROFs will be entitled to all their trades union rights at the date of transfer, and the company will not be able subsequently to deprive them of those rights, so the amendment is redundant.
Concern has been expressed about the application of the 1978 Act to employment under the Crown. While a Minister of the Crown may certify that the Act should not apply on grounds of national security to any particular Crown employment, such an exemption would be impossible in the new company. Employment within the new ROF company would not be Crown employment as defined by the 1978 Act, and there would accordingly be no power to exempt such employment from the provisions of the Act. In no way can the Government remove or diminish the trades union rights of any employee after vesting day.
I trust that the noble Lord will therefore withdraw his amendment. It is unnecessary on policy grounds, and would, I think, set a dangerous precedent by allowing a scheme to override a statute if that statute is in disagreement with the scheme. Schemes will be made to accord with Acts of Parliament, and not to override them.
Lord Stoddart of Swindon: I do not think that the Minister has answered satisfactorily the points raised by my noble friend. It is all very well to talk about protection under the 1978 Act, but the fact is that people now working at the Royal Ordnance factories have had conditions of service, and ways and means of negotiating settlements and negotiating on grievances that will not be protected under the 1978 Act. We are talking here about the consultative arrangements that were available within the Whitley Council and, indeed, the generally good arrangements for civil servants to consult their employers and to settle internal differences. I do not think, frankly, that the Minister's reply to my noble friend in any way deals with the matter. We believe that the amendment is a reasonable and a good one, and indeed a very necessary one. We shall therefore press it to a vote.
5.31 p.m.
On Question, Whether the said Amendment (No. 6) shall be agreed to?
Their Lordships divided: Contents, 95; Not-Contents, 105.

DIVISION NO. 4

CONTENTS

Airedale, L.

Kilmarnock, L.

Ardwick, L.

Kirkhill, L.

Attlee, E.

Leatherland, L.

Aylestone, L.

Listowel, E.

Banks, L.

Llewelyn-Davies of Hastoe, B

Beaumont of Whitley, L.

Lloyd of Kilgerran, L.

Beswick, L.

Longford, E.

Birk, B.

Lovell-Davis, L.

Blease, L.

McGregor of Durris, L.

Boston of Faversham, L.

McIntosh of Haringey, L.

Bottomley, L.

Mackie of Benshie, L.

Bruce of Donington, L.

McNair, L.

Buckmaster, V.

Mayhew, L.

Burton of Coventry, B.

Meston, L.

Caradon, L.

Mishcon, L.

Carmichael of Kelvingrove, L.

Mulley, L.

Carver, L.

Nicol, B. [Teller]

Cledwyn of Penrhos, L.

Oram, L.

Collison L.

Peart, L.

Davies of Leek, L.

Phillips, B.

Dean of Beswick, L.

Pitt of Hampstead, L.

Diamond, L.

Ponsonby of Shulbrede, L. [Teller]

Donnet of Balgay, L.

Elwyn-Jones, L.

Rathcreedan, L.

Ennals, L.

Rhodes, L.

Ewart-Biggs, B.

Rochester, L.

Ezra, L.

Seear, B.

Falkland, V.

Sefton of Garston, L.

Fitt, L.

Shackleton, L.

Gaitskell, B.

Stallard, L.

Gallacher, L.

Stewart of Alvechurch, B.

Gladwyn, L.

Stewart of Fulham, L.

Gosford, E.

Stoddart of Swindon, L.

Graham of Edmonton, L.

Stone, L.

Grey, E.

Strabolgi, L.

Hanworth, V.

Taylor of Blackburn, L.

Harris of Greenwich, L.

Taylor of Mansfield, L.

Hatch of Lusby, L.

Tordoff, L.

Houghton of Sowerby, L.

Underhill, L.

Hughes, L.

Wallace of Coslany, L.

Irving of Dartford, L.

Wells-Pestell, L.

Jacobson, L.

Whaddon, L.

Jacques, L.

White, B.

Jeger, B.

Wigoder, L.

Jenkins of Putney, L.

Willis, L.

John-Mackie, L.

Wilson of Langside, L.

Kaldor, L.

Winterbottom, L.

Kearton, L.

Wootton of Abinger, B.

1664

NOT-CONTENTS

Ampthill, L.

Lauderdale, E.

Avon, E.

Lawrence, L.

Barber, L.

Lindsey and Abingdon, E.

Bauer, L.

Long, V.

Belhaven and Stenton, L.

Lucas of Chilworth, L.

Bellwin, L.

Luke, L.

Beloff, L.

McAlpine of West Green, L.

Belstead, L.

Macleod of Borve, B.

Bessborough, E.

Mancroft, L.

Blakenham, V.

Margadale, L.

Boardman, L.

Marley, L.

Boyd Carpenter, L.

Marshall of Leeds, L.

Caccia, L.

Massereene and Ferrard, V.

Caithness, E.

Maude of Stratford-upon-Avon, L.

Campbell of Croy, L.

Chelwood, L.

Merrivale, L.

Cockfield, L.

Molson, L.

Coleraine, L.

Montgomery of Alamein, V.

Daventry, V.

Mottistone, L.

Denham, L. [Teller]

Mowbray and Stourton, L.

Drumalbvn, L.

Murton of Lindisfarne, L.

Eccles, V.

Norfolk, D.

Ellenborough, L.

Nugent of Guildford, L.

Elliot of Harwood, B.

O'Brien of Lothbury, L.

Elton, L.

Onslow, E.

Fanshawe of Richmond, L.

Orkney, E.

Ferrier, L.

Orr-Ewing, L.

Fraser of Kilmorack, L.

Pender, L.

Gainford, L.

Quinton, L.

Gardner of Parkes, B.

Rankeillour, L.

Gisborough, L.

Renton, L.

Glanusk, L.

Renwick, L.

Glenarthur, L.

St. Aldwyn, E.

Gormanston, V.

St. Davids, V.

Gray, L.

Saltoun, Ly.

Greenway, L.

Sandford, L.

Gridley, L.

Sempill, Ly.

Hailsham of Saint Marylebone, L.

Skelmersdale, L.

Soames, L.

Hanson, L.

Southborough, L.

Harmar-Nicholls, L.

Stamp, L.

Henley, L.

Stodart of Leaston, L.

Hives, L.

Sudeley, L.

Home of the Hirsel, L.

Swinton, E. [Teller]

Hornsby-Smith, B.

Terrington, L.

Hylton-Foster, B.

Thomas of Swynnerton, L.

Ilchester, E.

Trefgarne, L.

Ironside, L.

Trumpington, B.

Killearn, L.

Ullswater, V.

Kilmany, L.

Vaux of Harrowden, L.

Kinnaird, L.

Vivian, L.

Kinnoull, E.

Westbury, L.

Kitchener, E.

Whitelaw, V.

Lane-Fox, B.

Resolved in the negative, and amendment disagreed to accordingly.
5.38 p.m.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 7:
Page 2, line 28, at end insert ("and the consideration of the transfer under this subsection shall be such consideration as shall be certified as being fair and true by the Comptroller and Auditor General.")
The noble Lord said: With the score at 2 all, we will decide the result by penalties, I think. This amendment deals with the clearly very difficult problem of the valuations and satisfaction because the situation has been looked at objectively. The Minister is in a far better position than we are to talk in terms of the valuations. We respect the confidentiality in these matters, but certain public statements have been made as to the likely asset value. On later amendments we shall be talking in terms of the possible figures that might be obtained. It would appear that, in cash terms, we are giving away a great national asset for very little.
This amendment was debated originally in another place. On that occasion it was withdrawn on the strength of the statement that the Government would consider how best to achieve the tightening up and clarification which at that time they admitted we required. They did this by a subsequent amendment which went some way towards meeting the points that had been made. However, it would seem that the amended subsection does not cover the main thrust of the arguments we have about the valuation of assets and protection for the public and also for the taxpayer. This amendment provides that before certain assets of value are transferred the Comptroller and Auditor General should undertake terms of valuation.
The Tenth Report of the Public Accounts Committee, for 1981–82, dealt with the problems, still unresolved, of the sale of shares in British Aerospace. In this House on Friday, 22nd June, the Minister said, at col. 572, in relation to the introduction of private capital, that the Government,
"cannot decide now the exact means, whether by flotation of shares in the whole organisation, by direct sale of parts or of subsidiary companies, or by entering into joint ventures".
An earlier debate and a decision against the Government's intentions in respect of how to dispose of the Royal Ordnance factories may very well have a bearing on this debate. I respect the fact that the Report stage in your Lordships' House may be a suitable opportunity to look at this again.
What we are inviting the Committee to do is to agree that we ought not to support measures of this kind, about which there is no information. What we are seeking is to say that when valuations are even contemplated and have been worked through, the Comptroller and Auditor General ought to be brought into the picture. Perhaps the Minister is going to say that this amendment has his sympathy, but that there are other ways. He may say that if we are not satisfied with the present wording of the Bill but agree to withdraw this amendment, his officials and others will look at other forms of words and on Report stage seek to meet our point. We are far from satisfied with the present intentions and the present coverage by the Bill of those intentions. They do not meet fully our desire to make sure not only that the public get the maximum to which they are entitled but also that some people do not get more than the amount to which they are entitled. I beg to move.
Lord Diamond: I want to support everything that the noble Lord, Lord Graham, has said. As is the case with most of the amendments we are moving, this amendment is very much in the interests of Parliament and parliamentary scrutiny. As I understand it, it was desired to consider at the same time Amendment No. 8, and I should like to speak to that also.
Amendment No. 8: Page 2, line 36, after ("value") insert ("(being the value as certified by an Independent Professional Valuer)").
Amendment No. 8 deals with the valuation being a valuation of an independent professional valuer. It is a very simple point. The Bill as at present constructed, as far as I can read it, does not require a valuation to be made by any expert at all. The valuation could be purely arbitrary, and that is very unsatisfactory. The Government must know that there is a very recent example—Sealink is the one I am referring to—where
1666
differences of view about valuations can well be maintained. In their own interests, the Government ought to see to it that the valuation on the basis of which the Treasury accepts the consideration for the sale of these assets is a valuation which can stand up to examination. The only way one can achieve that, in three short words, is by having an independent professional valuer.
Lord Trefgarne: As your Lordships will appreciate, the purpose of subsection (3) of Clause 1 of the Bill is to protect the creditors of any company out of which property is transferred by means of a scheme made under Clause 1(1)(b) or (c). It provides that a company from which property is transferred should be paid for, either in cash or by the transfer to that company of property to equivalent value; or, failing that, that the distributable reserves—which belong to the Secretary of State in his capacity as sole shareholder—should be written down to an equivalent value. The purpose is to keep intact the assets of the company immediately available for the payment of creditors. Your Lordships will understand that the distributable reserves of a company are not ordinarily available to the creditors, except in the event of a winding-up.
Of course, in order to comply with the provisions of his subsection, it will be necessary to value the property transferred. In any case where it is necessary to certify the value of property, appropriate experts would be employed to do so. Ordinarily one might expect to use the company's auditors, who will be responsible for certifying the accounts of the company as representing a true and fair picture of its position. The Royal Ordnance Company's auditors will be the distinguished and highly reputable firm of Messrs. Coopers and Lybrand. They may be expected to make any necessary valuation for the purposes of this clause. They may, of course, act in conjunction with other expert valuers if the property which requires valuation is land, buildings, or other assets upon which a specialist opinion would be advisable or useful.
I would not suggest that the Comptroller and Auditor General would produce anything but a thoroughly competent and accurate valuation of property for the purpose of this clause. It is, however, difficult to understand why he should be required to act under this particular subsection, and not elsewhere in the Bill. There is good reason why, in fact, he should not be required to act at all. It is our intention to set up an independent company, which would be free of any suggestion of Government control. It is important not only that the company should be free of such control, but that it should be seen to be free. For the company to be subject to a statutory obligation to deliver up its books and records to the Comptroller and Auditor General, for however limited a purpose, would not ensure the appearance of independence upon which the company's success in the market place will inevitably depend.
There is no reason to suspect that any valuation made under the provisions of this subsection, or for that matter under any other provision in the Bill, will be other than independent, fair and reasonable. There is no reason, therefore, to involve the Comptroller and Auditor General, or any other arm of Government. Thus, if the Government's policy with regard to the

1667
Royal Ordnance Company is to bear fruit, the Government have no option but to oppose this amendment.
Those were my observations on the amendment proposed by the noble Lord, Lord Graham. Turning now to the second amendment we are considering, that is, Amendment No. 8, to which the noble Lord, Lord Diamond, was speaking, I want to say that in establishing the Royal Ordnance factories as a public limited company the Government are seeking to put the company in the same position as it would have been if it had been trading as a company for a period of time. In a sense, of course, it will have been, since its trading activities after vesting day will be a continuation of the trading activities of the Royal Ordnance Factories Trading Fund.
If the company had been in business previously as a separate company, it would have a set of accounts which, in the normal way of any such company, would reflect its current trading position. Accordingly, when the capital structure of the new company is decided upon—and this has yet to be done—we shall attempt to give it that form which is best calculated to assist the company's future trading prospects. We expect that the opening account will follow closely the closing accounts of the Royal Ordnance Factories Trading Fund. But there may need to be some differences, because we shall be dealing with an independent commercial entity, and no longer with an adjunct of Government. These accounts, as I have said, will reflect the trading position which we believe will constitute an appropriate starting point for the company. They will not purport to show the net asset value of the company, which is not the purpose of trading accounts.
I would emphasise this last point because I have the impression—and I hope that I am not doing the noble Lord, Lord Diamond, an injustice—that Amendment No. 8 seems to be based upon a misapprehension that it is indeed the function of the statutory accounts of a company to set out its asset value. I think that this would be the case only if the accounts were prepared for the purposes of a winding up, or an asset sale.
We are, as it happens, at the moment in the process of obtaining an independent valuation of all the fixed assets which it is intended to transfer to the new company. But the values so found will not necessarily be reflected in the opening accounts. It is quite likely, for example, that the value of the fixed assets will appear in the accounts calculated on a depreciated historic cost basis. This would be a normal and far from exceptional procedure. The effect of this amendment would be to require the accounts to be produced on a basis which might not be the most satisfactory one for the purposes of the future trading position of the company.
I hope that it is not necessary for me to assure your Lordships that there is no suggestion of transferring assets to the new company at an undervalue. If we proceed to a flotation of the shares in the company, which at this point, as I have said, would appear to be the most likely method of introducing private capital, the prospectus will need to disclose the value of the company's assets. Obviously the value, as determined by our independent valuers, and disclosed in the
1668
prospectus, will influence the amount which investors are prepared to pay for the shares. But it will be only one of several factors which will determine the share price. The value which the Government ultimately receive for the company will, therefore, be to some extent affected by the market value of the assets, but will not be dependent on that value.
Of course, while the shares are wholly owned by the Secretary of State, the question of their value does not arise. During this period the Government investment in the Royal Ordnance factories will, in effect, be maintained, though in a different form. But the value of that investment will not be changed.
I cannot, therefore, accept Amendment No. 8. To do so would be to saddle the company with an obligation which might not be in its best commercial interests. I very much hope that the noble Lord will take that point on board and that he will not move his amendment when we come to it. I also hope that the noble Lord, Lord Graham, will see fit to withdraw his amendment.
Lord Graham of Edmonton: I accept completely that the Minister has sought to give assurances in the absence of these amendments. First, he has sought to assure the taxpayer and the public that there are mechanisms which will ensure that as far as they are concerned these assets, which eventually are to be sold, will be sold at a fair price. Secondly, he has sought to assure those who purchase that the price at which the assets will be offered is a fair price. However, the Minister will be well aware of the comparatively enormous sums of money which are made by other people who are involved in the business of the flotation of shares. One can easily see valuations placed upon assets to be sold, which take into account the costs which have to be borne by the money market and those who deal in it. We have seen millions and millions of pounds paid and added to the asset value.
I am a professional in a secretarial sense but not in the very exact science, these days, of professional valuation. There is a range of assets that are to be valued. At present nominal or sometimes notional values are placed in the accounts. Indeed, the trading accounts system is just a collection of accounts. I imagine that some surprises could be struck. The Ministry must have some idea. They have said no more than they said earlier during the public part of the exercise; namely, that perhaps it might be £250 million or £300 million. One does not know, but one could be surprised. We simply want it to be appreciated that we are against the sale at all, but that if the sale is to take place we want to be satisfied that the best professional and independent advice is sought.
I want to press the Minister a little more on the role of Messrs. Coopers and Lybrand, who I think he said were the Ordnance factory auditors and who have statutory obligations. Can the Minister tell us a little more about their role in the valuation? From my limited knowledge, to be competent to audit involves more than adding up columns on a sheet, because from an accountancy point of view one needs to be satisfied on a range of other matters. We are talking here in terms of millions of pounds. Yesterday we had the strong feeling on this side of the House that the Sealink assets were certainly worth a great deal more

1669
than the figure which professional advisers had advised the Government was a fair price. In other words, there is room for argument as to the precise amount of money which it is possible to get—not even what the assets are worth but what one ought to ask the market to pay. If we are to sell public assets we are concerned that the public should receive the maximum price and that no-one else should get a slice of the action in any other way.
I do not know what the noble Lord, Lord Diamond, will do as regards Amendment No. 8. However, my inclination at the moment as regards Amendment No. 7 is that we should read very carefully what the Minister has said and take advice from outside the House on whether the basis upon which the Minister is to proceed is likely to obviate what all too sadly has been evident recently under this Government—namely, that whoever receives the price of a public asset when it is sold, there are other people who in our view are not entitled to a slice of it but who also get some of the action.
Lord Trefgarne: I am not sure whether the noble Lord, Lord Graham, wants me to dilate on the duties of the auditors of the company. I will do my best "off the top of my head", as they say, to help the noble Lord. As I recall the position—and I confess that I am not an expert in these matters, but I believe that the noble Lord, Lord Diamond, is an expert—the arrangement is that the auditors are appointed by the directors under the Companies Act. The auditors' duties are laid down in the Companies Act. But as far as the question of the valuation is concerned, I believe that the arrangement—and this applies to every company—is that the directors propose a valuation of the assets involved in their company and it is up to the auditors to decide whether they are able to accept that valuation or not either in the light of their own knowledge or in the light of any expert opinion that they may take.
In terms of property—and I referred to this in my remarks just now—the directors themselves very often obtain a valuation by experts of the property involved in their company and submit those figures to the auditors for inclusion in what are eventually the audited accounts and balance sheet.
Lord Diamond: With great respect, the noble Lord has got it very nearly right. Of course, the directors only appoint the auditors in an interim way until their appointment can be confirmed by the shareholders, because the auditors are responsible to the shareholders of a company. The noble Lord has got it quite right and, with great respect, I thought that the noble Lord, Lord Graham, had got it quite right when he said that this seemed to be an appropriate occasion to consider very carefully what the Minister has had to say with regard to Amendment No. 7. However, Amendment No. 8 is a different matter and I shall move it when I am fortunate enough to catch the Chairman's eye.
Lord Graham of Edmonton: If it will assist the Committee, in the light of what the Minister has said
1670
and pending further consideration of future action, I beg leave to withdraw Amendment No. 7.
Amendment, by leave, withdrawn.
5.59 p.m.
Lord Diamond Lord Diamond moved Amendment No. 8:
[Printed earlier.]
The noble Lord said: I beg to move Amendment No. 8 and I do so in the light of what the noble Lord the Minister has been good enough to explain. In short, I am saying that his explanation is not good enough. First, there is the argument, which is plain to everybody, that to the extent that this clause—and we are now dealing with subsection (4)—affects the consideration which may be received by the Government, by the Treasury, at any time for these assets, it is vitally important that they should be valued by an independent valuer. The Government have some defence if there is an independent valuation; they have no defence if there is just an arbitrary internal valuation.
I may be wrong, but the noble Lord has made an assertion but has not indicated the basis for that assertion. He has asserted that the value will be the value put forward by independent valuers. I see nothing in the clause which confirms that, or which is the basis for that assertion. As I read the clause, it merely refers to valuation, and the valuation could be a completely arbitrary one.
So the first point concerns anything which may ultimately affect the receipts by the Treasury for the sale of any of these assets. The second point is the immediate point that this is bound to affect the tax situation between the purchaser and the vendor, and, therefore, there should be a valuation, if only to satisfy the purchaser and the Inland Revenue. Therefore, until the Minister points out to me that I am wrong in my assumption that there can be an arbitrary valuation, and that somewhere or other in the Bill there is a specific provision for an independent valuation, I am quite sure that that independent valuation ought to be inserted in the Bill. I beg to move.
Lord Trefgarne: I am not certain that there is much more that I can say to help the noble Lord. When I spoke just now in response to his amendment, while we were debating the earlier amendment of the noble Lord, Lord Graham, I pointed to the role of the auditors. The noble Lord was subsequently good enough to say that I had got it roughly right. I hope that the noble Lord is not suggesting—I am sure that he is not—that auditors of the distinction of the firm that I mentioned or, indeed, any firm of auditors, being professionally qualified people, as they must be, would be other than independent and unbiased. No doubt some are better than others, but I am quite certain that the proposals that we set out in the Bill, and which are inherent in the proposal for the creation of a Companies Act company, provide for a proper and independent valuation of the assets, or at least for a proper and independent assessment of the value and a checking of the value. On reflection, I hope that the noble Lord will not press his amendment.
Lord Diamond: I must ask the question: where in the Bill does it say "independent valuers"? If that phrase appears in the Bill, I shall immediately withdraw my amendment. If it does not, inasmuch as both the noble Lord and Minister and I are in favour of independent valuers, let us include them in the Bill.
Lord Trefgarne: At the risk of boring your Lordships, and at the risk of repeating myself yet again, the valuers will eventually be the auditors of the company. They are the independent valuers; and independent auditors of the company are required to be independent and are required to be appointed under the Companies Act.
Lord Diamond: I am sorry; I must be boring the Committee, too, but I just do not see that, either. The noble Lord is sticking to a preconceived idea. I am sorry to be a little obstinate about this, but we are both after the same thing. We are both after protecting the state, and the safest way to do this is to see that the phrase goes verbatim and specifically into the Bill.
Baroness Phillips: Can the noble Lord, Lord Diamond, answer me this question? As I have understood it, the training and qualifications of a valuer, certainly in relation to property, are totally different from those concerned with accountancy. Are we talking about a valuer in the sense of a valuation officer?
Lord Diamond: I respond although I have no expertise and a poor memory, and it is a long time since I was a practising accountant. We are talking about a valuation by a valuer; not a valuation by a firm of accountants. Of course, they have certain duties, as do directors, in regard to valuations, as to whether or not they can regard them as reasonable. But the first essential is that there should be a valuation by someone who knows how to value. No practising chartered accountant claims to know how to value all these millions of pounds worth of assets. No sensible government ought to put themselves in a position of being liable to be criticised for not taking normal protective steps. Therefore, on behalf of all the parties in the Committee, I suggest that we pursue this.
Lord Trefgarne: If the noble Lord will allow me, I think that he is ascribing to the art or science of valuation (whichever it may be) rather more mystery than perhaps really exists. If we are thinking of property, I hastily accept that property is best valued by property valuation experts. I guess that it is more of an art than a science because the value of property goes up and down in some extraordinary ways.
I said during my earlier remarks that in those circumstances I would expect professional property valuers to be used. But if we are talking of a piece of equipment—for example, a machine—generally speaking, the art of valuation is very different. For example, one has a choice. Either one can value a piece of equipment by the historical method—in other words, one says that it cost £x y years ago, and therefore it is a simple mathematical calculation to determine its book value today—or (and this is sometimes used nowadays) one can use the current
1672
cost basis, where one determines the value of a piece of equipment by the cost of replacing that piece of equipment today. In the latter case, generally speaking, one arrives at a rather higher price than one did before.
That last process to which I referred—and I hasten to emphasise that I am by no means an expert on this—is very much a role for accountants and auditors, because it is a function which they perform all the time. But, as I have said, there are areas where specific expertise is required, and I have accepted that that is appropriate and that it will almost certainly happen in these cases.
Lord Diamond: At the risk of going one stage further, any sensible businessman would adopt neither of the suggestions made. If this amount of plant were to be valued, he would go to one of the well known practising firms which value plant of this size and dimension, and get a proper professional valuation.
Lord Graham of Edmonton: I wonder whether the Minister would take on board the suggestion that there need not be a difference between us here. We on this side of the Committee want to see those words written into the Bill because they are so clear. I am not at all certain whether the Minister could come up with different words which mean precisely the same thing, but perhaps the Minister would take this matter on board before the next stage. The noble Lord, Lord Diamond, will do what he wishes, and we are at one with him as regards the argument. But if the Minister says that there is no difference as to how it will work in practice, and that professional valuers will be used, even though they may be called something different, then we would want to see the colour of the money, we would want to see precisely what it is.
We do not doubt the Minister's integrity in these matters, but if he is unable to satisfy the noble Lord, Lord Diamond, on the form of words, we on these Benches will happily go into the Lobby with the noble Lord.
Lord Trefgarne: I do not want to seem intransigent about these matters. If the noble Lord, Lord Diamond, wants to withdraw his amendment in the context of my looking at this matter again, then I should be happy to do so. I am not sure that I shall come up with any better ideas than those which I have offered to your Lordships already, but if that would help the noble Lord I should be happy to give that assurance.
Lord Diamond: I am grateful to the Minister for his courtesy, but not for the content of his reply.
6.9 p.m.
On Question, Whether the said amendment (No. 8) shall be agreed to?
Their Lordships divided: Contents, 76; Not-Contents, 107.

DIVISION NO. 5

CONTENTS

Airedale, L.

Beaumont of Whitley, L.

Ardwick, L.

Birk, B.

Attlee, E.

Blease, L.

Aylestone, L.

Boston of Faversham, L.

1673

Bottomley, L.

John-Mackie, L.

Briginshaw, L.

Kaldor, L.

Broadbridge, L.

Kilmarnock, L.

Bruce of Donington, L.

Kirkhill, L.

Buckmaster, V.

Listowel, E.

Carmichael of Kelvingrove, L.

Lloyd of Kilgerran, L.

Carver, L.

Longford, E.

Cledwyn of Penrhos, L.

Lovell-Davis, L.

Collison, L.

Mackie of Benshie, L.

Davies of Leek, L.

McNair, L.

Dean of Beswick, L.

Mayhew, L.

Diamond, L.

Meston, L.

Elwyn-Jones, L.

Mishcon, L.

Ennals, L.

Mulley, L.

Ewart-Biggs, B.

Nicol, B. [Teller.]

Ezra, L.

Phillips, B.

Falkland, V.

Pitt of Hampstead, L.

Fitt, L.

Ponsonby of Shulbrede, L.

Gaitskell, B.

Rochester, L.

Gallacher, L.

Seear, B.

Gladwyn, L.

Sefton of Garston, L.

Gosford, E.

Simon, V.

Graham of Edmonton, L.

Stallard, L.

Grey, E.

Stewart of Alvechurch, B.

Hampton, L.

Stewart of Fulham, L.

Hanworth, V. [Teller.]

Stoddart of Swindon, L.

Harris of Greenwich, L.

Stone, L.

Hatch of Lusby, L.

Taylor of Blackburn, L.

Houghton of Sowerby, L.

Tordoff, L.

Hughes, L.

Underhill, L.

Irving of Dartford, L.

Wallace of Coslany, L.

Jacques, L.

Whaddon, L.

Jeger, B.

Willis, L.

Jenkins of Putney, L.

Wootton of Abinger, B.

NOT-CONTENTS

Auckland, L.

Hanson, L.

Avon, E.

Harmar-Nicholls, L.

Barber, L.

Henley, L.

Belhaven and Stenton, L.

Hives, L.

Bellwin, L.

Home of the Hirsel, L.

Beloff, L.

Hornsby-Smith, B.

Belstead, L.

Hylton-Foster, B.

Bessborough, E.

Kilmany, L.

Blakenham, V.

Kinnaird, L.

Boardman, L.

Kinnoull, E.

Boyd-Carpenter, L.

Kitchener, E.

Brabazon of Tara, L.

Lane-Fox, B.

Brougham and Vaux, L.

Lauderdale, E.

Caccia, L.

Lawrence, L.

Caithness, E.

Lindsey and Abingdon, E.

Campbell of Alloway, L.

Long, V.

Campbell of Croy, L.

Lucas of Chilworth, L.

Cockfield, L.

Luke, L.

Coleraine, L.

McAlpine of West Green, L.

Colville of Culross, V.

Macleod of Borve, B.

Cork and Orrery, E.

Mancroft, L.

Craigavon, V.

Margadale, L.

Daventry, V.

Marley, L.

De Freyne, L.

Marshall of Leeds, L.

Denham, L. [Teller.]

Massereene and Ferrard, V.

Drumalbyn, L.

Maude of Stratford-upon-Avon, L.

Eccles, V.

Eden of Winton, L.

Molson, L.

Elliot of Harwood, B.

Montgomery of Alamein, V.

Elton, L.

Mottistone, L.

Fanshawe of Richmond, L.

Mowbray and Stourton, L.

Ferrier, L.

Murton of Lindisfarne, L.

Fraser of Kilmorack, L.

Napier and Ettrick, L.

Gainford, L.

Norfolk, D.

Gardner of Parkes, B.

Nugent of Guildford, L.

Gisborough, L.

O'Brien of Lothbury, L.

Glanusk, L.

Onslow, E.

Glenarthur, L.

Orkney, E.

Gormanston, V.

Quinton, L.

Gowrie, E.

Rankeillour, L.

Gray, L.

Renton, L.

Greenway, L.

Renwick, L.

Gridley, L.

St. Aldwyn, E.

Hailsham of Saint Marylebone, L.

Saltoun, Ly.

Sandford, L.

1674

Sempill, Ly.

Terrington, L.

Shannon, E.

Thomas of Swynnerton, L.

Skelmersdale, L.

Trefgarne, L.

Southborough, L.

Trumpington, B.

Spens, L.

Vaux of Harrowden, L.

Stamp, L.

Vivian, L.

Stodart of Leaston, L.

Westbury, L.

Sudeley, L.

Whitelaw, V.

Swinfen, L.

Wise, L.

Swinton, E. [Teller.]

Resolved in the negative, and amendment disagreed to accordingly.
6.17 p.m.
Lord Diamond Lord Diamond moved Amendment No. 9:
Page 3, line 18, at end insert ("and, without prejudice to the generality of the foregoing, every scheme shall contain a provision securing to the Ministry of Defence, whenever required, absolute priority in the supply of goods and services to that Department.").
The noble Lord said: I understand that it has been thought that it will be to the convenience of the Committee if we discuss Amendments 10 and 11 at the same time.
Amendment No. 10: Page 3, line 18, at end insert ("and without prejudice to the generality of the foregoing, every scheme shall contain the necessary provisions securing to the Ministry of Defence the supply at fair prices of the goods and services it may from time to time require.").
Amendment No. 11: Page 3, line 18, at end insert ("and without prejudice to the generality of the foregoing, every scheme shall contain such provisions as may be necessary to secure to the Ministry of Defence spare manufacturing capacity to the extent required by that Department so as to meet such emergencies as it may envisage.").
We all know that there is great anxiety lest the arrangements for the proposed transfers which the Government have in mind would result in a serious deterioration in the ability of this country to defend itself. That arises because the ROFs provide a number of things which no other commercial supplier supplies. In the first case they provide complete priority in case of need. That is not supplied in the ordinary way by a commercial manufacturer.
A commercial manufacturer of goods needed by the Ministry of Defence would have to have regard to the contracts he has made both to supply the Ministry of Defence of this country and to supply the Ministry of Defence of other countries. Therefore, he has to act in a purely commercial way. The ROFs provide the Ministry of Defence with something more than a commercial priority; they provide it with complete priority, and that complete priority is essential when difficulties arise in the judgment of the Ministry of Defence and the Secretary of State.
The second thing which they provide are goods of a kind which are not commercially convenient or profitable to provide but which the Ministry of Defence needs. You cannot get them provided by a commercial firm in the ordinary way because it does not suit for a variety of reasons. Maybe the run is far too short; maybe the plant required is far too complicated for the number of articles to be made.
A great number of reasons arise why it is totally unsuitable for a commercial firm, having regard to its duties to its shareholders and employees, to attempt to handle such a contract, and it therefore does not put in a bid for it. But the Ministry of Defence must have such articles in its own judgment in the defence of the

1675
country. Therefore, what is required is the same priority in terms of the supply of goods and services which it may from time to time require and which no other commercial outlet would provide.
The third thing which the ROFs provide at the present time is again vital in terms of the defence of our country: it is spare manufacturing capacity. By definition no commercial firm is going to provide spare manufacturing capacity. It is the duty of an ordinary commercial firm to have regard to maximum profitability, and that is to say to use its assets all the time and not to have them lying idle.
But it may be in the interests of the country when an emergency arises or is foreseen that there should be spare capacity kept for this very purpose, and that spare capacity is so kept, and is required to be kept, by the ROFs at the moment and is of course paid for by the Government. It is a proper cost which the country incurs as a kind of insurance policy against an emergency arising—an emergency which sometimes can be foreseen and sometimes cannot be foreseen. It is in those three different categories that great anxiety has been expressed by people of enormous authority in this field, such as an ex-Secretary of State for Defence. I have consulted two ex-Secretaries of State. I have consulted those who have great responsibilities, not on the political side, but on the service side. They have all come back with the same answer, that there is great anxiety lest, as a result of what the Government propose in the Bill, our defences should suffer. It is as simple as that.
I want to try to prevent a situation in which we are less capable of providing our defences than we are at the moment. That is why these three amendments ensure that when there is a change of the kind contemplated by the Government, these special provisions shall be included.
The Earl of Onslow: May I make a plea to the noble Lords opposite about this amendment? May I suggest to them that to divide as often as we have been doing this afternoon is to run the risk of bringing this Chamber into disrepute? We should divide when we are concerned about something that is really important, and not to try to behave like a rather faded mirror image of the place down the road. Let us consider what would have happened if, when the Labour Party was in power, the Conservatives had divided on five amendments on a Bill of this size. We would have been accused of gross irresponsibility. I suspect that that is the case this afternoon on this Bill.
Lord Carver: I wish to support very strongly the amendments proposed by the noble Lord, Lord Diamond. I endorse everything that he has said in support of his amendments. By the very nature of things, especially when given the vagaries of annual financing of defence, when there are no operations in prospect or in progress, the number of orders which the Minister of Defence can place for the kind of items which the Ordnance factories produce is small. There is great difficulty in even making the orders regular from year to year. When there is a sudden emergency—for instance, had the Falklands operation lasted much longer than it did—one item on which
1676
there is a most urgent need to increase production dramatically is ammunition. The amount of ammunition that is ordered year by year is small. That is perhaps the most important field—it is not the only field—which makes it of great importance that these three amendments should be accepted.
There are other fields; one of them, close to my own heart, is tank production in the Royal Ordnance factory at Leeds. Since the end of the Second World War we have relied entirely for the production of main battle tanks on that excellent factory, which has done an extremely good job. The production of tanks in that factory requires some very specialised machine tools of various types, such as those for handling, welding and machining complete tank hulls and complete tank turrets of enormous size. This is machinery which is used for no other commercial purpose.
We renew our tank fleet at long intervals. It would be quite impossible for a commercial firm, working on a commercial basis, to retain all the machine tools required in the production of many of the items from the Ordnance factories, unless something such as Amendment No. 11 is included in the Bill.
The enthusiasm of the present Secretary of State for extreme competition in every field—including not guaranteeing production to the firm which did the development, and even perhaps splitting production between different firms—to my mind makes these three amendments even more important. My own experience is in the tank field. At the beginning of the Second World War we had very poor tanks because before the war we had had no Government factory engaged in tank production. We relied entirely upon commercial firms. The tanks in which the father of the noble Earl who has just spoken and myself had to face the Germans in North Africa and elsewhere were the remnants of a commercial organisation and, thank heaven, we have not been in that situation since the end of the Second World War. I strongly support all these three amendments.
Lord Mulley: I should like very strongly to support the amendments proposed by the noble Lord, Lord Diamond, and supported by the noble and gallant Lord, Lord Carver. In my view the amendments go only part of the way to mitigating what I believe is a most serious prospect of damage to our armed forces. To the noble Earl, Lord Onslow, I would say that this is not a slight Bill; it involves a matter of grave importance because successive Governments for almost 400 years—the first Royal Ordnance factory was established in 1585—have thought it right (and I do not quarrel with the concept) to make the interests of defence paramount to any commercial interest.
I do not believe it is feasible to ask private investors and entrepreneurs to take on the great responsibilities of producing weaponry or ammunition which may not, in the event, be needed, and to ask them to do research at the behest of the Ministry of Defence in a way which would not be compatible with the maximisation of their profits or to the benefit of their shareholders. In every way that is possible the Royal Ordnance factories, over which I had some control and interest, operate on a very commercial basis within the limitations of putting first the interests of our own armed forces.

1677
I am quite certain that if this Bill is implemented and all the Royal Ordnance factories are privatised—that is a horrible word, and a horrible thing—in a number of years we shall not have a capacity to make tanks and probably not have a capacity to make tank guns. I believe that our tank guns are the best in the world. We may even have great difficulties about getting the ammunition at the time when we want it. It would be scandalous if, at a time of great emergency we had to depend on the possibility of getting supplies from other parts of the world, so that if we had to send our troops (heaven forbid) into another Falklands conflict or something like it, they would be adequately armed.
Equally, I believe that the employment factor is also not unimportant. My own experience was that the trading fund put the industries concerned on a sound footing. They were extremely well managed and they had a loyal and competent workforce. To destroy them in this way simply to meet some political dogma is worse than anything that could be alleged against some of the actions of the Governments in which I was proud to serve.
The Earl of Cork and Orrery: If my noble friend Lord Trefgarne is to reply to this amendment in the sense of resisting it, I should like him to know that 1, for one, extend to him my most heartfelt sympathy. I cannot believe that, if he were not speaking for the Ministry of Defence, he would be other than wholeheartedly in support of the amendment proposed by the noble Lord, Lord Diamond, the noble and gallant Lord, Lord Carver, and the noble Lord, Lord Mulley—with whose arguments I wish wholeheartedly to associate myself.
6.30 p.m.
Lord Mayhew: If I may briefly add some words of support to what has already been said in the House from various quarters and in support of my noble friend Lord Diamond, I do not think that the debate could possibly have more conclusively challenged the remark of the noble Earl, Lord Onslow, that these amendments are not important. I would assure him that to the people in the services or with service experience these are profoundly important matters that we are discussing in this amendment.
I had the honour to represent in another place for many years Woolwich and I know a great deal about the history and contribution of Woolwich Arsenal. In 1939, Woolwich Arsenal had, by design, a huge spare capacity. I believe that it expanded during the war, in spite of the appalling bombing, from employing something like 6,000 people to employing 33,000 people. If Woolwich Arsenal had been commercial in 1939, does one suppose that it would have kept that spare capacity? The tradition of the ROFs of serving the Ministry and of serving the armed forces is something very precious and something that we ought to be safeguarding.
It breaks my heart to see the Government obeying what really are only ideological considerations in this. I can see their minds imagining a perfect market in the production and sale of arms in this country—a whole lot of independent organisations competing against each other. But in the field of defence, this, of course,
1678
is a complete chimera. It cannot happen. You have one buyer in this country for arms. You have the Ministry of Defence dominating, making this firm's fortune, ruining that other firm, by its own decisions about purchases. The ideological concept of getting rid of the ROFs and making a kind of perfect competitive market in arms simply does not match the facts of defence. It breaks my heart as an ex-service man to see the Government behaving in this way towards the ROFs.
Lord Trefgarne: I fully understand your Lordships' concern about each of the matters raised by these amendments. They are serious points and deserve to be taken seriously. Of course, it is the department's responsibility to ensure that our armed forces are properly equipped with modern, efficient and effective weapons and at the right price; and that the necessary manufacturing facilities are available to ensure a continuous and reliable supply, to the extent that any foreseeable demand can be promptly met. The Committee will not, I hope, be surprised that these matters have already been the subject of detailed consideration within the Ministry of Defence. We should have been failing in our duty if we had not done so. But the conclusions we have come to are not such as would lead us to support these amendments.
The amendment seeks to insert in the Bill, under the cover of supplementary, incidental, consequential or transitional provisions, detailed constraints upon the future relationship between the Ministry of Defence and the company. While I foresee what I might describe as technical objections to this, the Government's essential concern about these amendments is that they are unnecessary; and not only that, but run counter to the Government's policy objectives. No one, of course, disputes the need to make appropriate arrangements to secure the supply of ordnance to the armed services at the right price and on the right terms and conditions. As I have said, such arrangements have already been the subject of active consideration within the department.
The intention is that all the essential arrangements will be made between the department and the company by contract. That is the sensible method of dealing with these issues, and one entirely consistent with Government policy. As regards reserve capacity, if we needed this, we could, of course, secure it, but by specific contracts on the company, to replace existing arrangements. It will be, moreover, a far more efficient method of securing these objectives than any provisions contained in a scheme could possibly be. For, once a scheme comes into force, its effect is fixed and cannot thereafter be changed. This is an inevitable consequence of the fact that the essential purpose of a scheme is to transfer property from one owner to another. Now, if arrangements of the kind which these amendments envisage were incorporated in a scheme, and were subsequently found not to be working properly, there would be no way of changing their fixed and settled effect except by the making of another scheme. And the noble Lord will know, because he will have seen Clause 3(4) of the Bill, that once the Crown has disposed of any shares in the company, no further schemes affecting the company can be made. One result of these amendments, if they were passed,

1679
might consequently be to saddle the department with an inefficient, or unworkable, arrangement which there was no means of changing.
A contractual arrangement, on the other hand, is entirely flexible. It may contain its own provisions for review. In any case it can be altered, or terminated, by the agreement of the parties. A new contract can be made remedying the deficiencies of the old one. The noble Lord may object that the company does not have to enter into any such contract, and that the matters in issue are so important that the risk, however remote, that this might happen, cannot safely be incurred. Of course there will be no legal compulsion on the company to enter into any such contract, although I would observe, in passing, that, once entered into, the contract would be legally binding and enforceable.
But let us be realistic. It is obvious that for the foreseeable future, and well beyond, the Ministry of Defence is going to be the major customer of the company. It may well be, in fact, that the department will always remain the company's largest single customer. It is hardly likely in the circumstances that the company will not wish to accommodate the department on this sort of thing. I would go further and say that there is practically no possibility of it. Of course, the company will say, "Yes, we will provide these services, if you will pay a proper price for them".
This is as it should be. There are ways of monitoring the costs of defence companies in order to ensure that the department does not pay an inflated price for its supplies. The same would apply to the provision of facilities, and, while it is important to ensure that the department is not overcharged for such services, it is equally important to ensure that it does pay their economic cost: and included in this cost will be a reasonable return to the company for providing them. The Government have no doubt, therefore, that whatever facilities may be required by the department, they are capable of being secured, and will be secured, by contract. This will be better than any provision in the Bill, or any provision in a scheme.
I am grateful to noble Lords for raising these important issues by means of these amendments. I give my assurance that the department has them all in mind. Whatever arrangements need to be made, in the judgment of the department, will be made. On the basis of this assurance, and in the light of the perhaps more technical matters to which I have referred, I hope that the noble Lord will see fit not to press the amendments.
Lord Diamond: I am most grateful for the consideration which the Minister has given to this matter, which his department has given and which the Ministry of Defence, no doubt, has given as well. I cannot imagine a responsible government putting forward a Bill like this without having considered these matters. But what the noble Lord is saying is, "You must trust us". He is saying, "We want to be rid of any constraints by Parliament. You must trust us. We know best how to run all this." I do not believe that Ministers and their Civil Service advisers do know best.
I believe that, in this one particular instance, there is one little corner of the commercial world which I
1680
know better than the Minister. Having spent 30 years in a commercial firm as financial adviser—and I no longer have any interest in it whatsoever—I know full well the limitations on a commercial firm providing what the ROFs are compelled to provide at the moment. The fact that the Minister thinks that he can find a commercial firm that will undertake on certain terms to enter into a contract for the time being—and a contractual arrangement, the Minister said, is very flexible—I accept with some reservation.
The present situation is that the reserves on which the country relies are 4 per cent., I believe, in the ROFs of the general supply of munitions that it requires. Now 96 per cent. is already provided by the private sector, and the Minister wants to get rid of the safeguard we have in that little 4 per cent. It is not asking a lot that we should make sure in the Bill that the country is committed and that every Government are committed—the Minister's Government or any subsequent Government—to this small 4 per cent. to ensure supplies on a non-commercial basis in the most vital field of our defence.
Of course, I am going to pursue this to a vote. I merely say to the noble Earl, Lord Onslow, that I do not challenge his sense of patriotism, and I hope he does not challenge mine.
Lord Graham of Edmonton: Before the matter is put to the vote, perhaps I can simply say to the Minister that there could be few amendments that have been tabled in your Lordships' Committee that he could more safely accept, even though he may not like to accept it, in order to demonstrate that the Government are willing to acknowledge from time to time that they have not got it absolutely right.
In the case of this Bill and of many others, this Government have shown a singular lack of appreciation of the fact that there are views other than their own which can improve the Bill. The Minister is not prepared, as I see it, to accept a single amendment. Any change that comes has to be fought for and voted on. The answer to why we vote so often is because, although there have been five Divisions, on every one except the last there has been a majority one way or the other in single figures. Of course, with a division like that, we know that the Government are certainly not prepared to give in.
What we have been invited to do, as the noble Lord, Lord Diamond, said, is to trust the Government. We trust the Government in general to have the best interests nationally. There is nothing in these amendments, in our view, which will diminish or weaken the broad sweep of the Bill, but it will give maximum assurance to those like the noble Lord, Lord Carver, and the noble Lord, Lord Mulley, and the noble Lord opposite, who speak from real experience of wanting to feel safe. This is what we are talking about—the national interest and security. Certainly if these matters are pressed to a vote we shall be in the Lobbies.
Lord Trefgarne: Before the noble Lord, Lord Diamond, decides what to do with his amendment, if he has not already made up his mind, I would ask your Lordships to get the matter into perspective. The noble Lord, Lord Diamond, referred to the fact that 96 per

1681
cent. no less, of the requirements of the Ministry of Defence are obtained from companies other than the Royal Ordnance factories. The arrangements we have with those companies which supply that 96 per cent. are of course satisfactory. Where it is necessary to provide the sort of facilities that the noble and gallant Lord, Lord Carver, has been referring to, then of course that is done. Those arrangements have worked.
What your Lordships are asking is that some peculiar arrangement should now be put into the Bill in respect of the Royal Ordnance factories for when they become on all fours equivalent to the rest of industry. I do not think that is an appropriate proposal.
6.45 p.m.
On Question, Whether the said Amendment (No. 9) shall be agreed to?
Their Lordships divided: Contents, 66; Not-Contents, 90.

DIVISION NO. 6

CONTENTS

Airedale, L.

Jenkins of Putney, L.

Ardwick, L.

John-Mackie, L.

Attlee, E.

Kaldor, L.

Aylestone, L.

Kilmarnock, L.

Birk, B.

Lloyd of Kilgerran, L.

Blease, L.

Longford, E.

Boston of Faversham, L.

Lovell-Davis, L.

Bottomley, L.

Mackie of Benshie, L.

Buckmaster, V.

McNair, L.

Carver, L.

Mayhew, L.

Cledwyn of Penrhos, L.

Meston, L.

Collison, L.

Milner of Leeds, L.

Cork and Orrery, E.

Mishcon, L.

Davies of Leek, L.

Mulley, L.

Dean of Beswick, L.

Nicol, B. [Teller.]

Diamond, L.

Phillips, B.

Donnet of Balgay, L.

Pitt of Hampstead, L.

Elwyn-Jones, L.

Ponsonby of Shulbrede, L.

Ennals, L.

Seear, B.

Ewart-Biggs, B.

Simon, V.

Gallacher, L.

Stallard, L.

Gladwyn, L.

Stewart of Alvechurch, B.

Gosford, E.

Stewart of Fulham, L.

Graham of Edmonton, L.

Stoddart of Swindon, L.

Grey, E.

Stone, L.

Hampton, L.

Taylor of Mansfield, L.

Hanworth, V. [Teller.]

Tordoff, L.

Harris of Greenwich, L.

Underhill, L.

Houghton of Sowerby, L.

Vickers, B.

Hughes, L.

Wallace of Coslany, L.

Irving of Dartford, L.

Wells-Pestell, L.

Jacques, L.

Whaddon, L.

Jeger, B.

Wootton of Abinger, B.

NOT-CONTENTS

Airey of Abingdon, B.

Campbell of Croy, L.

Alexander of Tunis, E.

Cockfield, L.

Ampthill, L.

Colville of Culross, V.

Auckland, L.

Colwyn, L.

Avon, E.

Craigavon, V.

Belhaven and Stenton, L.

Craigmyle, L.

Bellwin, L.

Daventry, V.

Belstead, L.

Denham, L. [Teller.]

Bessborough, E.

Drumalbyn, L.

Boardman, L.

Eccles, V.

Brabazon of Tara, L.

Eden of Winton, L.

Brougham and Vaux, L.

Elliot of Harwood, B.

Caccia, L.

Elton, L.

Caithness, E.

Ferrier, L.

Campbell of Alloway, L.

Fraser of Kilmorack, L.

1682

Gainford, L.

Gardner of Parkes, B.

Montgomery of Alamein, V.

Gisborough, L.

Mottistone, L.

Glanusk, L.

Mountevans, L.

Glenarthur, L.

Mowbray and Stourton, L.

Gowrie, E.

Murton of Lindisfarne, L.

Grantchester, L.

Napier and Ettrick, L.

Gray, L.

O'Brien of Lothbury, L.

Hailsham of Saint Marylebone, L.

Onslow, E.

Orkney, E.

Halsbury, E.

Orr-Ewing, L.

Hanson, L.

Pender, L.

Harmar-Nicholls, L.

Rankeillour, L.

Hives, L.

Renton, L.

Home of the Hirsel, L.

Renwick, L.

Hornsby-Smith, B.

St. Aldwyn, E.

Hylton-Foster, B.

Saltoun, Ly.

Kilmany, L.

Sandford, L.

Kitchener, E.

Sempill, Ly.

Lane-Fox, B.

Skelmersdale, L.

Lawrence, L.

Spens, L.

Long, V.

Stodart of Leaston, L.

Lucas of Chilworth, L.

Swinfen, L.

McAlpine of West Green, L.

Swinton, E. [Teller.]

Teviot, L.

Macleod of Borve, B.

Thomas of Swynnerton, L.

Mancroft, L.

Trefgarne, L.

Margadale, L.

Trumpington, B.

Marley, L.

Vaux of Harrowden, L.

Marshall of Leeds, L.

Vivian, L.

Maude of Stratford-upon-Avon, L.

Whitelaw, V.

Wise, L.

Resolved in the negative, and amendment disagreed to accordingly.
Lord Diamond Lord Diamond moved Amendment No. 10:
[Printed earlier.]
The noble Lord said: This amendment has been discussed and therefore I see no point in discussing it any further. I regard this as a very important amendment. Indeed, I recognise what is happening in terms of the Division Lobbies, but I feel I must ask your Lordships to give this amendment very favourable consideration and to support us in the Lobby if you possibly can.
6.52 p.m.
On Question, Whether the said amendment (No. 10) shall be agreed to?
Their Lordships divided: Contents, 63 Not-Contents, 90.

DIVISION NO. 7

CONTENTS

Airedale, L.

Gladwyn, L.

Ardwick, L.

Gosford, E.

Attlee, E.

Graham of Edmonton, L [Teller.]

Aylestone, L.

Bernstein, L.

Grey, E.

Birk, B.

Hampton, L.

Boston of Faversham, L.

Hanworth, V. [Teller.]

Bottomley, L.

Harris of Greenwich, L.

Briginshaw, L.

Hatch of Lusby, L.

Bruce of Donington, L.

Hughes, L.

Buckmaster, V.

Irving of Dartford, L.

Carver, L.

Jacques, L.

Cledwyn of Penrhos, L.

Jeger, B.

Collison, L.

Jenkins of Putney, L.

Cork and Orrery, E.

John-Mackie, L.

Dean of Beswick, L.

Kaldor, L.

Diamond, L.

Kilmarnock, L.

Donnett of Balgay, L.

Lloyd of Kilgerran, L.

Ennals, L.

Longford, E.

Ewart-Biggs, B.

Lovell-Davis, L.

Gallacher, L.

Mackie of Benshie, L.

1683

Mayhew, L.

Stewart of Alvechurch, B.

Milner of Leeds, L.

Steward of Fulham, L.

Mishcon, L.

Stoddart of Swindon, L.

Mulley, L.

Stone, L.

Nicol, B.

Taylor of Mansfield, L.

Phillips, B.

Tordoff, L.

Pitt of Hampstead, L.

Underhill, L.

Ponsonby of Shulbrede, L.

Wallace of Coslany, L.

Seear, B.

Wells-Pestell, L.

Simon, V.

Whaddon, L.

Stallard, L.

Wootton of Abinger, B.

NOT-CONTENTS

Airey of Abingdon, B.

Hornsby-Smith, B.

Alexander of Tunis, E.

Hylton-Foster, B.

Auckland, L.

Kilmany, L.

Avon, E.

Kitchener, E.

Belhaven and Stenton, L.

Lawrence, L.

Bellwin, L.

Long, V.

Beloff, L.

Lucas of Chilworth, L.

Belstead, L.

McAlpine of West Green, L.

Bessborough, E.

Macleod of Borve, B.

Boardman, L.

Mancroft, L.

Brabazon of Tara, L.

Margadale, L.

Brougham and Vaux, L.

Marley, L.

Caccia, L.

Marshall of Leeds, L.

Caithness, E.

Maude of Stratford-upon-Avon, L.

Campbell of Alloway, L.

Campbell of Croy, L.

Montgomery of Alamein, V.

Cockfield, L.

Mottistone, L.

Coleraine, L.

Mountevans, L.

Colville of Culross, V.

Mowbray and Stourton, L.

Colwyn, L.

Murton of Lindisfarne, L.

Craigavon, V.

O'Brien of Lothbury, L.

Craigmyle, L.

Onslow, E.

Daventry, V.

Orkney, E.

Denham, L. [Teller.]

Orr-Ewing, L.

Drumalbyn, L.

Pender, L.

Eden of Winton, L.

Rankeillour, L.

Elliot of Harwood, B.

Renton, L.

Elton, L.

Renwick, L.

Fanshawe of Richmond, L.

St. Aldwyn, E.

Ferrier, L.

Saltoun, Ly.

Fraser of Kilmorack, L.

Sandford, L.

Gainsford, L.

Sempill, Ly.

Gardner of Parkes, B.

Skelmersdale, L.

Glanusk, L.

Somers, L.

Glenarthur, L.

Spens, L.

Gowrie, E.

Stodart of Leaston, L.

Grantchester, L.

Swinfen, L.

Gray, L.

Swinton, E. [Teller.]

Greenway, L.

Teviot, L.

Hailsham of Saint Marylebone, L.

Thomas of Swynnerton, L.

Trefgarne, L.

Halsbury, E.

Trumpington, B.

Hanson, L.

Vaux of Harrowden, L.

Harmar-Nicholls, L.

Vivian, L.

Hives, L.

Whitelaw, V.

Home of the Hirsel, L.

Wise, L.

Resolved in the negative, and amendment disagreed to accordingly.
7 p.m.
Lord Diamond Lord Diamond had given notice of his intention to move Amendment No. 11:
[Printed earlier]
The noble Lord said: I think it will be the sense of your Lordships' Committee that, notwithstanding that this is a very important amendment indeed, the clock is pointing to a magical figure, and all those noble Lords who are anxious to vote for this amendment will, I hope, forgive me if I do not move it.
[Amendment No. 11 not moved.]
Lord Trefgarne: I understand that this would be an appropriate moment for us to discontinue our consideration of this matter. I therefore beg to move that the House do now resume.
Lord Ponsonby of Shulbrede: I take it that the House will not continue with this particular business before 8 o'clock?
Lord Trefgarne: I understand that the noble Lord's understanding of the matter is, as always, entirely correct.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Repatriation of Prisoners Bill [H.L.]
7.2 p.m.
The Parliamentary Under-Secretary of State, Home Office (Lord Elton): My Lords, I beg to move that the Commons amendments be now considered.
Moved, That the Commons amendments be now considered.—(Lord Elton.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[References are to Bill [158] as first printed for the Commons]
1 Clause 1, page 2, line 28, at end insert—
("(bb) in the case of a transfer into the United Kingdom of the effect in relation to the prisoner of the law relating to his detention under that warrant (including the effect of any enactment or instrument under which he may be released earlier than provided for by the terms of the warrant);").
Lord Elton: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 1. When this Bill was last before your Lordships on 10th April, I confirmed an undertaking which I had given by letter to the noble Lord, Lord Mishcon, concerning information to be provided about the effect of a warrant referred to in paragraph (a) of Clause 1(4). I agreed to see whether a Government amendment could be introduced making it clear that in the case of a transfer to the United Kingdom information about the effect of a warrant would include information about the earliest date of release and about provisions governing remission and release on parole. Amendment No. 1 is intended to fulfil that undertaking, and I hope your Lordships will agree that it provides the clarification required. My Lords, I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Elton.)
Lord Mishcon: My Lords, as one would have expected of the noble Lord the Minister, the undertaking has been faithfully fulfilled and, obviously, I am very gratified to see this amendment now before the House.
On Question, Motion agreed to.

COMMONS AMENDMENT
2 Page 2, line 37, leave out from ("unless") to end of line 39 and insert ("the requirements of this subsection were fulfilled in relation to the earlier warrant").
Lord Elton: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 2. This is a technical amendment designed to correct a deficiency in the drafting of the Bill. Clause 1(4) lays an obligation on the Secretary of State to satisfy himself, before issuing a warrant to supersede another, that reasonable steps were taken before the earlier warrant was issued to inform the prisoner fully of all relevant matters it was desirable that he should know before giving his consent to transfer. Provided that such reasonable steps were originally taken, there is no need for the prisoner to be given identical information yet again in the case of a warrant superseding an earlier one.
The Bill as drafted did not, however, allow for the possibility that in some cases there might be more than one earlier warrant. In that case, the most recent earlier warrant would not have been immediately preceded by the provision of information to the prisoner in accordance with paragraphs (a) and (d) of subsection (4) of this clause, although the Secretary of State would, of course, have needed to be satisfied that the prisoner had been properly informed before the initial warrant was issued. This amendment is designed to correct that deficiency, which, had it been last night, I should not have described in such detail. My Lords, I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Elton.)
Lord Mishcon: My Lords, perhaps I may be allowed an elaboration of speech by saying tonight, as distinct from last night, that we are very happy, too, with this amendment, which is really technical.
On Question, Motion agreed to.

COMMONS AMENDMENTS
3 Clause 7, page 10, line 19, leave out subsections (2) to (4) and insert—
("(2) Subject to subsections (3) and (4) below, it shall be the duty of the Secretary of State, in the case of the transfer of a person into the United Kingdom under this Act, to secure the payment to him by that person, or from some other source, of the amount of any expenses incurred by him in connection with the conveyance of that person to the United Kingdom; and for this purpose the Secretary of State shall have the same power as in any other case where he assists the return of a person to the United Kingdom to require a person to give an undertaking to pay the Secretary of State the whole or any part of that amount, to enforce such an undertaking and to make such other arrangements for recovering that amount as he thinks fit.
(3) Subsection (2) above shall not apply to the extent that in any case it appears to the Secretary of State that it would be unreasonable for him to exercise any of the powers conferred by that subsection either because of the exceptional circumstances of the case or because the means of the prisoner are insufficient to meet the expenses and their recovery, whether immediately or at some future time, from the prisoner or from any other source is impracticable.
(4) The expenses mentioned in subsections (2) and (3) above shall not include—

(a) any expenses of providing an escort for a person transferred into the United Kingdom under this Act; or

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(b) any expenses of the conveyance of such a person beyond the place at which he first arrives in the United Kingdom.").

4 Page 10, line 36, leave out ("recovered under") and insert ("received by him by virtue of").
Lord Elton: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 3 and 4. Amendment No. 3 gives effect to an undertaking that I gave to your Lordships on Third Reading. It was then suggested that the Secretary of State should have wider discretion to waive recovery of the travel costs of a prisoner transferred to the United Kingdom. Your Lordships felt that circumstances could arise in which it would be wrong to extract payment from someone who had been imprisoned abroad, and had in mind a situation similar to that of the American hostages detained in Iran. I said that we accepted the principle of widening the Secretary of State's discretion to waive recovery, and would consider a Government amendment to this effect. The new subsection (3) of Clause 7 meets the point by allowing waiver because of the exceptional circumstances of the case, as well as because of the prisoner's means and the impracticability of recovery from some other source.
At the conclusion of the Third Reading debate on 10th April, I referred to anxieties expressed at the Report stage about the provisions in Clause 7 relating to recovery of prisoners' travel costs. I said that we intended to consider the possibility of those provisions being made somewhat more explicit in the Bill, but reserved our position on the merits and feasibility of this. New subsection (2) in Amendment No. 3 makes it clear that where recovery of a prisoner's travel costs before transfer is not feasible, an undertaking to repay after transfer will be acceptable, in the same way as undertakings to repay are signed by stranded British tourists who receive financial assistance from consular officials abroad. By virtue of the final words of subsection (2), such an undertaking could be accepted from either the prisoner or anyone else willing to accept liability for payment.
We have not been able to go as far as some noble Lords (including, I think, the noble Lord, Lord Mishcon) would have liked, by providing that costs could be recovered from relatives only at the prisoner's request. We feel that such a provision would be too restrictive. I hope, however, that noble Lords will accept the repeated assurance that has been given, that there will be no question of putting pressure on prisoners' relatives to pay the travel costs. Amendment No. 4 is consequential on the amendments to subsections (2) and (4), since the new subsection (2) speaks of securing payment rather than recovering expenses. My Lords, I beg to move.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Elton.)
Lord Mishcon: My Lords, it would be churlish to do anything else but express gratitude for the distance that the Government have gone in regard to this matter, which troubled many of us and, as the noble Lord the Minister was kind enough to say, which also troubled me on behalf of my noble friends. We were so anxious that the spirit of this Bill should be kept and that, because of lack of means or because of the feeling that

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this was too heavy a liability to bear due to commitments to family or whatever it might be, no one who bore our nationality would have to say "No" to a chance to be repatriated.
All I can do, apart from expressing gratitude to the Government for having gone partly down this path, is to express the hope that the directions which go out upon this matter will make it as gentle as possible for prisoners to undertake this liability, since they may find it difficult to do so, even though it could be shown in a formal document that financially they are just about able to meet either the whole of the expense or some part of it. With the plea to the noble Lord the Minister that such a directive will go out and that the spirit underlying the carrying out of the clause will be as I believe the Minister as much as I would want it to be, I have to say that obviously we agree with the amendment.
On Question, Motion agreed to

COMMONS AMENDMENT
5 Clause 8, page 10, line 39, at end insert (" "international arrangements" includes any arrangements between the United Kingdom and a colony;").
Lord Elton: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 5. We hope in due course to enter into prisoner transfer arrangements with countries outside the Council of Europe, including United Kingdom dependencies overseas. It came to our attention that the Bill as drafted might not permit prisoner transfers between the United Kingdom and the dependencies. The amendment is designed to close this loophole. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Elton.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
6 In the Schedules, page 13, line 32, leave out ("1960") and insert ("1984").
10 Page 13, line 44, leave out ("1960") and insert ("1984").
Lord Elton: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 6. At the same time I wish to speak to Commons Amendment No. 10. Commons Amendments Nos. 6 and 10 replace references in paragraph 5(3) and 5(4) of the schedule to the Mental Health (Scotland) Act 1960 by references to the Mental Health (Scotland) Act 1984. These amendments are appropriate because Parliament has recently passed the 1984 Act consolidating Scottish mental health legislation. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Elton.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
7 Page 13, line 34, leave out ("or direction").
8 Page 13, line 37, leave out ("or direction").
9 Page 13, line 40, leave out ("or direction").
11 Page 13, line 45, leave out ("or direction").
12 Page 13, line 48, leave out ("or direction").>
Lord Elton: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 7, 8 and 9 en bloc. At the same time I wish to speak to Commons Amendments Nos. 11 and 12. These are purely drafting amendments, designed to remove redundant words from the schedule. I beg to move.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Elton.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
10, 11, 12 [Printed above.]
Lord Elton: My Lords, Commons Amendments Nos. 10, 11 and 12 are all consequential amendments. I beg to move.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Elton.)
On Question, Motion agreed to.
Baroness Trumpington: My Lords, I beg to move that the House do now adjourn during pleasure until eight o'clock.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended at 7.13 p.m. until eight o'clock.]

Ordnance Factories and Military Services Bill
House again in Committee on Clause 1.
Lord Diamond Lord Diamond moved Amendment No. 12:
Page 3, line 21, after ("consults") insert ("those employed by").
The noble Lord said: This amendment refers to a section in the Bill which states that before making a scheme the Secretary of State has to consult each transferor company and each transferee company. That is fine and obviously there is not a great deal of difference here between the Government and myself. My amendment is to make it clear that consultation means consulting everybody: consulting "those employed", by which I have tried to cover the board, the management, the staff, the workforce, everybody; and I hope that the noble Lord, the Minister, will be able to say that that was his intention and that is the proper construction of the Bill. I beg to move the amendment.
Lord Graham of Edmonton: With the agreement of the House, I wonder if we could discuss Amendment No. 15. It is broadly similar in context. The operative word is "broadly".
Amendment No. 15: Page 3, line 22, at end insert—
("and
() it has been broadly accepted by the majority of the workforce of the Royal Ordnance Factories.").
May I simply remind the House that a recommendation of the Strathcona Study Group said:
"We are also agreed that it is desirable that whatever solution is eventually chosen should be broadly acceptable to the ROF's workforce".

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The noble Lord the Minister will have the backing of legislation and we know the ultimate sanction of power and control which he will ultimately have. We are saying that we want to be satisfied, and we believe the trade unions want to be satisfied, about what is being proposed and that they have an opportunity to influence it; it must be broadly agreeable to the workforce. I am simply saying what I would wish to say on Amendment 15 without moving anything, because it is all of a piece with Amendment No. 12.
Lord Trefgarne: The workforce of the Royal Ordnance factories have, of course, a legitimate and understandable interest in the success of he ROF enterprise. The Government obviously wish to carry the workforce with it in making its proposals about the future. We are already consulting fully the trades union representatives of the employees about the change of status, and we have made available detailed information about the future organisation of the companies. I have no doubt that full consultation arrangements will be worked out before incorporation—I emphasise "before incorporation"—to provide for an effective dialogue between management and employees after the change of status. The workforce will be able to make their views known to management and through them to the Secretary of State as shareholder during the wholly-owned phase. So let us not pretend then that the workforce are being left out of any dialogue about the change of status.
The Bill provides for the Secretary of State to make further schemes during the wholly-owned period in order to make adjustments to the company structure if that is necessary. Clause 1(7)(b) requires him to consult the companies before he makes a scheme affecting them. So they will be given full opportunities to put their arguments to the Secretary of State. But in the final analysis, of course, the Secretary of State must retain the power to make a scheme in the light of the advice received, and the consent of the Treasury. We do not accept that there should be a means by which, as these amendments seek, the employees could veto any course of action which the Secretary of State may propose.
There is no such right in any other commercial company, such as the ROFs will be after incorporation. It is normal commercial practice that the interests of the company, and of the workforce, are protected by the directors and the shareholders. The workforce will be able to make their views known to the directors in the normal way. There is a clear provision in Clause 1(7) that the sole shareholder—the Secretary of State—must consult the company in the persons of the directors. This provision is adequate to ensure that the interests of the company and of its employees are taken into account if and when further schemes are planned, and before they take effect.
The amendments would also give rise to the possibility that the workforce will be at odds with the company management over a particular issue related to a supplementary scheme, and would be able to veto such a scheme whether or not it was in the best commercial interests of the company. This would simply not be acceptable. I hope therefore that the noble Lord will feel able not to press his amendment.
Lord Diamond: I listened very carefully to what was said by the noble Lord the Minister and he did not seem to me to be saying precisely that in subsection 7(b) "consultation" means anything more than consulting the board. He said they would consult the board and that would give them the opportunity. I am not suggesting a veto. I am suggesting that "consultation" there should be read as meaning "consulting those at all levels" and, indeed, with the recollection of Cheltenham fresh in the minds of the Government, I should have thought that they would have espoused the cause of consultation very warmly indeed. I should like to press on the noble Lord the Minister once more the simple question: in practice will consultation as referred to in 7(b) mean "consulting at all levels"?
Lord Graham of Edmonton: Before the noble Lord the Minister rises to reply, I wonder whether I might raise two points. I can see nothing wrong, quite frankly, with including the words of the amendment of the noble Lord, Lord Diamond. I am also intrigued to hear from the noble Lord the Minister that the employees have been fully consulted. I am certain that the Minister's words will be read with care by the employers. Part of the consultation process is that one listens to the other party, and I am bound to say that if what the noble Lord the Minister has said is true, I hope he and his advisers have done that.
I speak with no great authority, but having had consultations with those affected I am bound to say that the impression I get is that they are far from satisfied that the outstanding points dealt with in later amendments have actually been taken on board. There is a great deal of anxiety felt by those concerned. There is a world of difference between what has happened and the Minister feeling that opportunities are in existence for these people to make their views known. If all that happens is that views are represented to the Minister and he (I will not say "ignores them") listens to what has been said and takes no notice of them, there may be some disappointment.
The noble Lord the Minister has failed to answer the point I raised. The Strathcona Study Group said:
"We are also agreed that it is desirable that whatever solution is eventually chosen should be broadly acceptable to the ROF's workforce".
I realise that this was written some time ago, but would the noble Lord the Minister indicate what mechanism is available to ensure that the solution chosen is broadly acceptable to the ROFs workforce?
Lord Trefgarne: We shall, of course, be going deeply into this matter in later amendments. First of all, I should say this. What we are offering to the employees who want to move across is what is for all practical purposes identical terms and conditions under the new arrangements. We are still in the course of consultations with the trade unions. They have raised one or two points on which they are still seeking to make representations, and we are of course listening to them with the greatest care. We are certainly having constructive consultations, but that does not mean that the Government have to put themselves in the position of accepting willy-nilly everything that is suggested. We are entering and conducting the

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consultations with an open mind and in a constructive spirit, and I hope therefore that the noble Lord will be satisfied with that assurance which I believe was the one which he was seeking.
Lord Diamond: The noble Lord has not seen fit to answer my question precisely, and so all that I can do is read very carefully what he said and see whether it amounts to a satisfactory situation. If not, I shall return to this matter at a later stage. Meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.10 p.m.
Lord Diamond Lord Diamond moved Amendment No. 13:
Page 3, line 22, at end insert (", and
() each transferor company and each transferee company is required under its Memorandum and Articles of Association to provide for the appointment by all paid employees only of two employees as members of the Board of Directors.").
The noble Lord said: I beg to move this very important amendment, which would have the effect of ensuring that whenever a scheme is arranged by the Minister, the companies concerned shall have in their memorandum and articles of association provisions under which two board directors will be appointed by all paid employees, and by them alone. The suggestion is that they should be appointed by the employees. Once they are appointed, they will of course have the usual responsibilities of all directors; responsibilities which involve having regard to the welfare of the company and especially to the interests of the shareholders and the employees, as they are required to do under the Companies Acts.
There is no difficulty about this; it is not as though the directors would be responsible solely to a sectional interest. They would be responsible in exactly the same way as every other director is responsible, but the company would gain a number of advantages from their being members of the board, and I should like to remind the Minister of these.
First, such directors would have the advantage of being deeply involved in the work of the ROFs and of having great knowledge of how they operate, what goes well, and what causes difficulties. They can be just as valuable to a board as any outside non-executive director who is brought in because of the value of his experience in relevant areas. Not only would they have that experience, but they would provide a sense of participation which is valuable and which, according to both reports made on them, is one of the creditable aspects of the ROFs, and which, I am sure, the Government and any future shareholders will be anxious to maintain. I do not want to give your Lordships a lecture on industrial democracy. We all know that the arguments for industrial democracy are very sound and solid, and this is a method of working towards that.
I am a little anxious about the very form of the amendment I am proposing because I believe that the best way in which industrial democracy can develop is from the bottom, as it were, and it should not be imposed from the top. It is best that people should want to develop in such a manner and that employees'
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and employers' representatives and boards should wish to co-operate in this way. But it is essential that the Government give a lead. Here is a simple and useful opportunity for the Government to provide such a lead, by agreeing that two members of the board—and that is not a large proportion—should be appointed by all the employees, and by them exclusively. I hope the Government will regard this as a reasonable exercise in industrial democracy. I beg to move.
Lord Trefgarne: I fear that the proposed appointments of directors in a "representative" capacity would be quite inappropriate. It would not follow normal commercial practice, nor the Companies Acts provisions about election by the shareholders, and we see no reason for it. The Government quite understand and accept the legitimate interests of the workforce in the success of the ROF enterprise. The board of directors of the ROF company will have the same interests. It is notable that Section 46 of the Companies Act 1980 provides that the directors are to have regard to the interests of the company's employees in general, as well as to the interests of the company's shareholders. That duty is owed by them to the company as a whole, rather than to any particular faction or interest within the company.
We are consulting the trade unions fully about the change of status from the trading fund to Companies Acts companies. I have no doubt that full consultation arrangements will be worked out and, I hope, agreed before incorporation to provide for an effective dialogue between management and employees after the change of status. But that is a separate matter from the workforce nominating representatives as such to the company boards and, as I have explained, we believe that such nomination would not be appropriate.
The board will be constituted with the needs of the ROF organisation in mind, and I am confident that it will have the appropriate expertise and background, committed fully to the company itself. As in any other company, the workforce will have the means of expressing its views to the directors through their representatives. I hope this explanation will allay the anxieties in the noble Lord's mind and that he will not wish to press his amendment.
Lord Stoddart of Swindon: I cannot understand why the Minister and the Government are so intransigent about amendments of this kind. Bearing in mind all that we have seen over the past few weeks, with industrial misunderstanding occurring in many parts of industry, I thought that the Government would wish to take a new look at relationships between managements, shareholders and employees. The Minister said that such appointments would be "quite inappropriate" and not in accordance with normal practice. I submit that normal practice has not brought about the good labour relations which are desirable, not only in the ROFs but in many other organisations as well.
I entirely agree with the noble Lord. Lord Diamond, when he says that the working people of this country—in Royal Ordnance factories and in every

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other factory and workplace in the land—have a great deal to contribute. There is not a monopoly of wisdom among the usual board members. There is a great deal of knowledge, wisdom and know-how on the factory floor. It has been, and is, detrimental to the running of industry in this country that that expertise and knowledge has not been used. Here is an opportunity for the Minister to make a name for himself—
Lord Trefgarne: I have done that already!
Lord Stoddart of Swindon: Well, I think that we made his name for him earlier this afternoon, though perhaps he wishes that we had not done so. Nevertheless, the Minister could make a name for himself by accepting this amendment and acknowledging that we need to find new ways of bringing cooperation and understanding to industry and new ways of enabling employees to make a real contribution. That can be done on the board of directors, and in every other part of the workplace as well.
I have worked in industry for many years and have had quite a lot to do with joint consultation and negotiation. My experience has been that management do not have a monopoly of wisdom, they do not have a monopoly of know-how, and they would save themselves a good deal of time and make many fewer mistakes if they took into consultation—real consultation as decision-makers—those people in our factories, workplaces and offices who make a business work.
In an organisation that the Government are planning to set up, here is an opportunity for them to make history and to help the organisation. We do not agree with the set-up, but we are trying to help. Since the Government are determined to have their Bill, we are trying to help them to make it successful when it passes into law. One of the best ways in which they can do that is by taking the workforce into their confidence and giving them a real say in management and decision-making, not only at board level but at every level in the industry.
Lord Diamond: I am most grateful to the noble Lord, Lord Stoddart, for his support. I agree with everything he has said, both in words and in spirit. May I add this. He said he has had experience on the employee side. I have certainly had experience on the employer and management side. I can assure the noble Lord the Minister that a company works best when it has the advantage of close co-operation with the workforce. The workforce feel they are wanted, are being consulted, are sitting next to you, listening to what you are talking about and having an opportunity to put their oar in at the appropriate time.
I am sorry, but I have to say this. I am grateful to the noble Lord the Minister for having read his brief to us and told us what was the view of his department before this debate started. Now may I come on to the debate and ask him to be good enough to pay us the courtesy of listening to the argument. The argument is not—I repeat "not"; and these were the first words that I used when I moved the amendment—about having representative shareholders. I do not know why he got that into his head. I know it is in his brief, but it is not
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what we are talking about. These are not representative shareholders, representative directors, representing the workforce. These are directors appointed by the workforce to act in conjunction with all other directors, with the same responsibilities as all other directors have.
The Minister knows as well as I do that if you accept an appointment as director then you are governed by the Companies Acts and your duties are to look after the interests of the company, meaning the shareholders and the workforce, and not to look after a particular section. It is the same as any noble Lord who has sat in another place having been appointed for a particular constituency. His duty is to look after the constituency but also to look after the country as a whole. He is not concerned exclusively with constituency interests. Nor would the two directors appointed by the shareholders, in law or in any other way, be regarded as representative directors; that is to say, represenative of one section only—namely, the workforce.
So with the greatest respect to the Minister, everything he said from his brief may be perfectly correct but has nothing whatever to do with the amendment I am proposing. The amendment I am proposing is an exercise in industrial democracy, gently introduced, setting a standard, providing in this case for directors to be appointed in a certain way but serving with their colleagues on the board as they are required by law to do. I hope that with that further explanation the Minister will be good enough to turn his mind to that and say what is wrong with it and why the Government cannot accept it, having heard the argument.
Lord Trefgarne: the noble Lord says that these directors would not be appointed as representing any particular faction, but I think it is absolutely invevitable that two directors appointed specifically in accordance with the legislative provisions which the noble Lord proposes would be seen as representing the employees. After all, that is what it says in the amendment which the noble Lord is proposing to the Committee. I read from his amendment. It says:
"to provide for the appointment by all paid employees of two employees as members of the Board of Directors".
The noble Lord said—and I think this was echoed by the noble Lord, Lord Stoddart—that these directors would bring a special brand of expertise and experience to the boardroom table. I have no doubt that there are people on the shop floor of many industries, including no doubt the Royal Ordnance factories, who would indeed bring such expertise to the boardroom table. However, I am not convinced that we would necessarily acquire that expertise by forcing two representatives of the shop floor onto the board. The noble Lord indicated that some of the difficulties of current—
Lord Stoddart of Swindon: Would the noble Lord give way? I am most surprised at what he is saying. Nobody is suggesting that people should be forced to serve. We are suggesting that they shold be elected to serve, in exactly the same way as the 650 people in another place are elected to serve.
Lord Trefgarne: I agree, of course, that no individual would be forced onto the board. What I am putting to the Committee is that it is difficult to ensure that it is the expertise that is put on the board. Two persons must be found. I am not sure that it would be possible to be certain that we always found those with the expertise which we all agree would be desirable.
The noble Lord, Lord Stoddart, went on to suggest that some of the difficulties of current times might not have arisen had there been more worker representatives—if that is the right description—on the boards of some of the organisations that are having difficulty at the moment. If the noble Lord is suggesting that the present difficulties in the coal mining industry, for example, would not have arisen if Mr. Scargill had had a seat on the National Coal Board, then that is a proposal which may not appeal to everybody.
Lord Mayhew: Would the noble Lord just clear up one point? He argued quite correctly that directors are not supposed to represent either the shareholders or the workforce, but to take the general good of the company into consideration. He then objected to my noble friend's suggestion of two directors being elected by the workforce on the grounds that inevitably they would be considered as representing the employees. Why does the same argument not apply to directors elected by shareholders? Will they not widely be regarded as representing the shareholders?
Lord Trefgarne: I think that is probably correct: that the directors generally appointed by the shareholders, or at least whose appointment is confirmed by the shareholders, take into account the interests of the shareholders. But I would have to say that the interests of the company and the interests of the shareholders are very difficult to disentangle.
Lord Diamond: I am not going to let the Minister get away with this. What he is saying is totally opposed to current practice. There are dozens of the most respected companies in the City which have non-executive directors elected. In the first place, they are appointed by the board and then subsequently confirmed by the shareholders. They are drawn from a wide level of experience because of that experience. It is an insult to such directors to say that they are coming on to the boards solely to represent the companies from which they come.
For example, if you are fortunate enough to get someone who is a part-time director of the Midland Bank to serve on your board and to bring all his financial expertise, he is doing it for the benefit of the company on whose board he is now sitting. It is quite wrong to say that all he is concerned with is to represent the Midland Bank, to see the company's account goes to the Midland Bank, and that everything possible is done for the Midland Bank. He is concerned to see that the company is run as well as possible, and he is concerned to act in the interests of all the shareholders.
Why can the same remarks not apply to two individuals who are appointed by employees? If they are seen to be appointed by employees, that is a good thing, not a bad thing. Employees then know that they have
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some representatives who they hope will bear in mind all the interests of the company, including those of the workforce. It is a good thing. The employees will not feel that it is a case of "us" and "them" so much as they do under the present Government philosophy.
Lord Trefgarne: I think that the noble Lord is helping to make my case for me. All the examples that he quotes of the beneficial effect of non-executive directors being appointed to a company are advantages with which I would wholly agree, but those directors are not appointed because of some provision in the memorandum and articles or in an Act of Parliament. They are appointed because of the views of the shareholders, and indeed of the directors. I think that that goes to show that the best way is to leave it to the shareholders and the directors, and not put a provision into the Bill, as the noble Lord proposes.
Lord Diamond: I quite agree. I have already said that the best way is for people to want this to happen, rather than impose it on them. I agree with the comment that the Minister made on an earlier intervention about not forcing this on anybody. We shall be very happy to amend the wording of the amendment if he gives us any encouragement whatsoever, in any way that he likes, to provide that there is no question of forcing it—that is to say, if two suitable individuals are not available or do not want to come. My experience was not the difficulty of the board not wanting to get such assistance, but of the workforce not being happy about such assistance being made available, and the difficulties the other way round. But if the noble Lord can think of a way of wording it, we shall gladly word it that way.
The essence of the matter is that there should be some posture taken by the Government to show that they are encouraging that step forward in industrial democracy, which can be nothing other than for the benefit of these companies. I hope that he will consider that. I do not want to bore the House with repeating the arguments. I have repeated them sufficiently. The noble Lord realises what we are now after. We are not after representative directors in the sense of representing a sectional interest only. We are after an exercise in industrial democracy and an encouragement by the Government.
Having said that, I hope that the noble Lord will give the matter further consideration, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.32 p.m.
Lord Diamond Lord Diamond moved Amendment No. 14:
[Printed earlier: col. 1654.]
The noble Lord said: I move this amendment for the sake of discussion. It is very similar to the amendment which was moved by the noble Baroness, Lady Vickers, and I am not sure whether it was not included in the discussion that we then had. I move it to give the Minister an opportunity to say whether in fact such a provision is to be incorporated in any scheme which he puts forward. The provision is essential in order to protect the future of a company of this kind and the interests of the nation when a scheme is made and the

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companies develop in the years ahead. One is looking forward not to the first few years but to a long period of years. I hope that he will find the amendment acceptable. I beg to move.
Lord Trefgarne: I am pleased to be able to assure the noble Lord that the Government certainly intend that the new Royal Ordnance Company shall include in its articles of association an article creating a special share, carrying with it certain rights, which will be owned indefinitely by the Secretary of State or by some other Minister of the Crown. Among the rights which this share will confer on its holder will be a right to veto a disposal of the whole, or a material part, of the assets of the company and its subsidiaries. A part is deemed to be material if its value is not less than 15 per cent. of the book value of the net assets of the group, or if the average profits attributable to it represents at least 15 per cent. of the average profits of the group over the previous three years.
The share will thus confer on the Secretary of State complete power to prevent any alteration in the structure of the company or of its business. This power will he entrenched, because there will also be attached to the special share a right of veto over any change in the articles to abolish that share or to restrict the rights attached to it. I hope that this will have allayed the noble Lord's fears and that he will not wish to pursue the amendment further.
Lord Mayhew: I wonder whether I may remind the noble Lord that, when I asked him whether the golden share controlled the sale of assets worth less than 15 per cent. of the company, he said that I was mistaken, and that the golden share did in fact control the disposal of such assets. Will he now acknowledge that it is perfectly possible for a foreigner, or anybody else, to buy without any control at all any assets, provided that the amount is less than 15 per cent. of the assets of the company?
Lord Trefgarne: If I misled the noble Lord on an earlier occasion, I apologise. But if I remember rightly, we were talking about something else. Let me look up the words that I used previously; if I have anything to correct, I shall hasten to do so.
Lord Diamond: Having heard what the noble Lord has said, particularly about the words being entrenched—that is to say, that the provision is a reliable provision—I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 15 not moved.]
Lord Trefgarne Lord Trefgarne moved Amendment No. 16:
Page 3, line 29, leave out ("1981") and insert ("1983").
The noble Lord said: This amendment merely corrects a drafting oversight in the reference in Clause 1(8) to the Companies Acts. This subsection of the Bill contains a definition of "statutory accounts" in which there is a reference to the Companies Acts 1948 to 1981. Since 1981 there has been an additional Act, namely, the Companies (Beneficial Interests) Act 1983, which is to be taken as a body with the other
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Companies Acts since 1948. I am sorry about that omission. I beg to move.
On Question, amendment agreed to.
Clause 1, as amended, agreed to.
Clause 2 agreed to.
Clause 3 [Operation of schemes]:
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 17:
Page 4, line 24, at end insert ("but such day shall not be before 1st October 1985.").
The noble Lord said: As will be evident to noble Lords, the main purpose of this amendment is to delay the incorporation of the ROFs for one year. As it happens, it will be rather less than one year, because the Bill will not now receive Royal Assent until after 1st October, but nevertheless it is a significant delay. Indeed, it is all the more necessary that this amendment should be carried following the acceptance by your Lordships of amendments earlier today.
It is quite clear that the ROFs are well behind in the preparation of the transfer to a Companies Acts company. Parliament is being asked to approve something about which it has little, or inadequate, information. There is no memorandum of understanding and indeed no articles of association. The details of the new pensions scheme are only now being provided to the unions on a piecemeal basis. In fairness to the employees, they need considerable scrutiny by the trade unions, including legal advice.
The noble Baroness, Lady Vickers, asked in her Second Reading speech on 22nd June what the hurry was. That question still applies. What is the great rush to get the Bill onto the statute book? The ROFs are not a loss-making organisation. The Government are not concerned because they are making losses. The factories are not a burden on the state. They do not affect the PSBR, except of course favourably. They made £62 million profit for the Government last year. So why on earth are we rushing things? Why are the Government so determined and so anxious to press ahead with the setting up of this incorporated company just as soon as they possibly can? One is almost suspicious, but the noble Lord, Lord Trefgarne, who is an earnest, able and open-minded man, of course, gives the lie to that. Therefore, we do not want to be suspicious of the Government.
We rather feel, in fact, that they are pressing on and hastening on because of their dogmatism and their dogmatic approach to privatisation, regardless of the consequences and regardless that yet again there may be another banana skin in front of them. I would have thought, frankly, that they have had enough banana skins over the past year. I would have expected that they would want to make haste rather more slowly so that they did not trip on any more banana skins.
Lord Trefgarne: Has the noble Lord noted that it is not possible to import any bananas at the moment?
Lord Stoddart of Swindon: I understand that there are still a few in stock. I have no doubt that we can arrange for the Government to have a regular supply if that is their wish. But the fact is that, on every count,

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the Government are failing. They are failing to take into account the views—the proper views—of the trade union movement. They are failing even to take account of the Strathcona report, already mentioned by my noble friend in an earlier debate.
Strathcona stated clearly that any proposed change should be largely acceptable to the trade unions. The changes are clearly not acceptable to the trade unions, not on any basis that the unions wish to oppose Government policy but because the arrangements that are being made simply are not satisfactory to them and to the people who are employed in ROFs up and down the country. On that basis alone, there is a case for delay in order that further consultation can take place with the trade unions and that those areas where sharp disagreements remain can be dealt with and agreements concluded with the trade unions. That is a very good reason for delay.
There is no agreement with the trade unions on many matters, including pensions, continuity of employment and redundancy payments. These are all very important and vital matters to trade unions and individual members of trade unions. They affect their future, their livelihoods, their pensions. The fact that the trade unions are not satisfied with the assurances that they have so far been given ought to make the Government pause and welcome this amendment to give them a proper breathing space. A rushed job can only cause chaos, frustration and uncertainty.
The Bill, as we have noted, is already accident prone. It had two accidents earlier this afternoon. I hope and sincerely trust that there will be more accidents to follow at a later stage. The Government would be well advised for their own sake to accept this amendment. I am trying to be helpful. I do not like the Bill. I do not like what the Bill seeks to do. But, if the Government are determined to have their way, the Government will have their way.
Therefore, we on this side of the House, when the Government do have their way, wish to see that the organisation is set up on a reasonable basis which will satisfy the country, which will be as beneficial as possible for the country, bearing in mind the provisions of the Bill, and which will be satisfactory to the people who work in ROFs. I hope therefore that the Government will see the sense of this amendment and accept it.
Lord Trefgarne: It will be no surprise, I fear, that I must ask your Lordships to reject the amendment, which would delay our plans for incorporation of the ROFs for a year. The Government have introduced this Bill with a specific aim and for specific reasons. Your Lordships will understand that much work has been going on with the plan of a vesting day on 1st October. We have been forced to accept a delay in the passage of the Bill until the close of the Session in late October and, as your Lordships will be aware, we have tabled an amendment to Clause 17 to avoid further delay. As I shall explain when we reach the debate on the Clause 17 amendment, the Government want to see incorporation as soon as practicable.
Our plans have been clear for some time and we would not have asked Parliament for approval to this Bill which allows implementation of those plans if we
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could accept such a delay. We have explained the benefits that we see as flowing from the operation of the ROFs on a fully commercial basis. If we are to make the ROFs more efficient and to stimulate competition, the sooner we do this the better. As I have said, work is necessarily proceeding in parallel with the passage of this Bill. To delay the implementation of our plans would create uncertainty and work against the successful incorporation and subsequent privatisation of the ROFs. Again, we have accepted a deferment of vesting day and now plan to make it in early November rather than October, but we must avoid any slippage past that.
The Government are convinced that the best interests of all concerned, the ROFs, the workforce, the services and indeed the country at large, lie in an early change of status. It makes sense for this change to follow closely after Parliament has debated and considered the provisions of this Bill. I appreciate the concern that has been expressed about the need for more time to gain information about the change of status, but we have made available as much information as possible during proceedings on this Bill and separately. For example, the drafting of the MOU is now almost finalised. I cannot give a commitment that it will be published in full, but some of it certainly will be. There is, of course, difficulty about commercial confidentiality over certain sections of the document. We have articles of association in final draft, and indeed have given details of those concerned with the foreign control and special share, and we shall be able to give more information in due course.
As for the pension scheme to which the noble Lord referred indirectly in talking about the concerns of trade unions, the unions have, in fact, had full information about the proposed scheme and we are discussing it with them. We do not have agreement with them yet, but the unions do indeed have the information that they require and I hope that agreement is not far off. All the principles behind our planning and the outline of our planning, often in much detail, are now public. The noble Lord opposite may not like what we are doing. He has made that clear. I do not quarrel with that. But the noble Lord has adduced no good reason for this sort of delay to our getting on and establishing the ROFs on a sound commercial basis. I must therefore ask your Lordships to resist the amendment
8.49 p.m.
Lord Lloyd of Kilgerran: The noble Lord, Lord Stoddart, indicated a number of areas where the trade unions were unhappy about the results of the Government's policy. The noble Lord the Minister referred to one aspect—the difficulties and apprehensions of members of the staff of ROFs in regard to pensions. He gave the impression in his reply that the trade unions had been adequately questioned and asked to give their opinions.
I wonder whether he can confirm that the Institution of Professional Civil Servants has been consulted in regard to the effect of this legislation on the status of employees of ROFs when they have made inventions. I understand from the IPCS secretary that little information has been given to them about this aspect of the fear of employee inventors in the ROFs who

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qualify for awards to be given under the Patents Act. In that Act, Section 55 and later sections deal with how employees should be rewarded for the use of their inventions, and also with the awards made on an exgratia basis. If the noble Lord can give me an indication, not necessarily now but later, that there has been this kind of full consultation, it will be a great help to me in deciding what we do at the Report stage.
Lord Trefgarne: This was one of the matters covered by the earlier amendments to which the noble Lord had put his name and which, in the event, he did not move. I wonder if perhaps I may look into the point that the noble Lord raises, and if there is anything I can tell him, I will write to him before the next stage.
Lord Lloyd of Kilgerran: I thank the noble Lord.
Lord Stoddart of Swindon: I am extremely disappointed that the Minister has not seen fit to accept this very simple and, I should have thought, very helpful amendment. He tried to convince your Lordships that the trade unions were, if not happy, nevertheless satisfied that discussions and consultations were to their liking and acceptable to them. But my information is that the trade unions remain deeply apprehensive about the matters which I mentioned in regard to continuity of service, pensions and redundancy payments.
When I say, "deeply apprehensive", I mean deeply apprehensive. They are not at all satisfied with the assurances which have been given by the Government and they do not expect—and I should have thought that probably the Government do not expect—to get a satisfactory agreement (that is, satisfactory to the trade unions as well as to the Government) by the time Royal Assent to this Bill is given. Therefore, I urge the Minister to think again. I should not expect him to give a snap reply. I believe that there is a case for a delay for a year. I ask the noble Lord to consider what has been said and to read the debate. Perhaps we can return to the matter again at Report stage, after he has read what has been said. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Diamond Lord Diamond moved Amendment No. 18:
Page 5, line 3, at end insert ("and such consent shall be withheld in the case of a disposal to a person or body engaged in the production of articles or the supply of services normally produced or supplied by the Royal Ordnance Factories.").
The noble Lord said: I beg to move Amendment No. 18. I gather it would be for the convenience of the Committee if, together with this amendment, we discussed Amendments Nos. 19, 20 and 21; and also Amendment No. 33, which is consequential upon No. 19.
Amendment No. 19: Page 5, line 3, at end insert ("and such consent shall be withheld where the disposal would reduce the securities held by the Secretary of State to a figure of less than 40 per cent. of the total securities issued under a scheme.").
Amendment No. 20: Page 5, line 3, at end insert ("and such consent shall be withheld in the case of a foreign national.").
Amendment No. 21: Page 5, line 3, at end insert ("and such consent shall be withheld where a person or company would as a result of the disposal own either directly or indirectly more than 10 per cent. of the total securities available for issue under a scheme.").
Amendment No 33: Clause 7, page 6, line 39, at beginning insert—
("() This section shall have effect subject to the provisions of subsection 3(6).").
Amendment No. 18 states that consent to the transfer or sale by the Treasury of shares in the new company which takes over the factories,
"shall be withheld in the case of a disposal to a person or body engaged in the production of articles or the supply of services normally produced or supplied by the Royal Ordnance Factories".
The wording of it, as is the case with the wording of every amateur amendment-maker, may be totally inadequate, but I am sure the noble Lord the Minister knows exactly what is intended.
One of the principles which the party opposite supports and which it incorporates, allegedly, in this Bill is the principle of increasing competition—a basic principle without which it would find it very difficult to mount any argument whatever for this Bill. This is a proposal to assist the Government in carrying out their principles. This is a method of preventing the sale of the shares to competitors. I do not have to demonstrate to the Government that it is necessary to do that, because the Government know that in a recent case competitors did try, in fact, to buy up a very large proportion of one of the companies that was being marketed, and the Government had to intervene and make hasty, untimely and late rearrangements.
So I am hoping that the Government will take on board the need to protect protection, to encourage protection by making it impossible for people who are already competitors to buy up the shares under any scheme under which they would, in the event, have control over these factories. There would be merely a reduction in total competition over the whole field. That is the main argument for Amendment No. 18.
Amendment No. 19 deals with the sale of shares in such a way as to prevent the Government's holding being reduced to less than 40 per cent. Forty per cent. is a minority shareholding, and that means that the majority shareholding could be disposed of; therefore, there is nothing inconsistent in the logic of the Government wishing to transfer these factories to the private sector and their retaining a minority interest, namely, 40 per cent. But 40 per cent. is sufficient to give them some measure of protection in regard to supplies of essential munitions to the Ministry of Defence. That is the purpose of that minimum shareholding.
The next amendment deals with foreign nationals and suggests that the sale of shares to foreign nationals should not be permitted. This is no question of principle which divides the two sides of your Lordships' Committee; it is merely a matter of degree. The Minister has said already that we can rest assured that the control of these factories will not be transferred to foreign nationals. For the life of me, I cannot see why the argument there should be about control and not about possible interference. I think we shall be truly safe only if we have an exclusion of foreign nationals.
I believe the figure the noble Lord had in mind was a figure of 15 per cent. as the maximum holding by a single foreign national. That is far too much. That gives a real measure of interference by a foreign shareholder in the affairs of a company. There are

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many trust holding companies which are closely consulted by operating companies in the City. They have far less than a 15 per cent. share in these companies and yet are thought fit to be consulted; I mean really consulted. The board is telling them what the company's developments are and consulting them about possible future developments.
A shareholding of 15 per cent. would be regarded as giving a single owner an entitlement in that way. I am only suggesting to the Minister that his argument is right. One has to protect the defence services by having a limitation in regard to foreign nationals' shareholdings. The conclusion of the argument, when it is carried to its full and logical extent, is total exclusion of foreign nationals. So much for Amendment No. 20.
Amendment No. 21 deals with an individual shareholding of more than 10 per cent. Again, this is not a matter of principle that divides us; it is a matter of degree. I have here a reference to Jaguar which says that the Government are restricting the holding of shares by individual holders to a maximum of 15 per cent. Why limit it? There is the argument of competition and there is the argument of preventing excessive control in a single pair of hands. Jaguar is nothing like such a vital interest to the country as are these ROFs—these factories manufacturing munitions for the Ministry of Defence. In their case, therefore, I suggest that the same argument applies and that the position ought to be more secure than in the case of Jaguar; the figure should be not 15 per cent. but 10 per cent. Those are the main arguments concerned. I beg to move Amendment No. 18.
Lord Trefgarne: As the noble Lord has explained, these amendments are concerned with the actions of the Government on privatisation of the Royal Ordnance Company. In transferring the Royal Ordnance factories from the public to the private sector, it is of course the Government's main purpose to increase competition. The Government would therefore not look with favour on a concentration of manufacturing resources in fewer hands following a flotation of shares in the new company.
When we come to a decision on flotation we shall need to consider carefully the issues raised about competition. We shall need to consider the situation at the time, in the light of whatever developments there have been in the market, and in the company's development of its business, and the development of business by its competitors.
I fear that Amendment No. 18 is in any case defective in that it would—unless, indeed, that is the noble Lord's intention—be very likely to render any Stock Exchange flotation impossible. The Stock Exchange would, I am advised, be unlikely to allow discrimination between prospective purchasers of shares in the way that he envisages.
It may be that, at least in the event of a Stock Exchange flotation, the Government will not part with all their interest in the company. But I believe that it would be quite wrong to saddle the Government with an obligation to maintain a specific stake of 40 per cent. There are many companies of considerable strategic importance in which the Government have
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an equity interest, but they are not constrained by an Act of Parliament to maintain that interest under all circumstances. Conditions change, and none of us can be sure that good reasons will not arise in the future for the Government to divest themselves of part or all of any residual shareholdings. It would be inadvisable to fetter in this way the Government's discretion to do whatever seems commercially, or economically, advisable in the future, and I cannot therefore accept Amendment No. 19.
As I have already explained, the Government have always maintained that they will not countenance foreign control of the new company. Provision by way of the articles of association will therefore enable a permanent control of foreign-owned shareholdings. Amendment No. 20 on the other hand, would not be effective to achieve this purpose. It would, no doubt, prevent an initial disposal by the Secretary of State to any foreign national, but it would do nothing to prevent that foreign national from subsequently acquiring the shares by purchase on the market. For that reason, the Government, I fear, cannot accept that amendment either. Incidentally, I should perhaps remind the noble Lord that the 15 per cent. limit is an aggregate of all foreign-held shares and not individual shareholdings.
Amendment No. 21 does, I recognise, raise an issue of substance. The issue is, whether it would be right to allow any single person or company to acquire a controlling interest in the new company. This issue goes beyond the question of competition, because such an interest might be acquired by a person or company which had, up to that point, no interest whatever in the defence industry. Yet the question could still arise should any single interest control this new company?
This is a matter which has been highlighted, of course, by the very recent acquisition by Rio Tinto Zinc in the shares of the Enterprise Oil PLC. In the light of this, and other general considerations, the Government will need to consider further whether there is a case for placing restrictions on the size of individual shareholdings.
But there are two points to make in this regard. First, the question cannot be considered in a vacuum. There is a great deal of work to be done in welding the existing Royal Ordnance factory organisation into a viable and competitive commercial company. We cannot be certain, at this stage, what the company is going to look like in a year or two's time. Nor can we tell what the state of the market will be then, or what will he the prospects of the defence industry as a whole. I believe, therefore, that it would be wrong to take a decision on this point now when conditions obtaining at the time of privatisation may be different—and could even suggest that an infusion of capital from some particular source was highly desirable.
It would, in any case, be wrong to deal with this issue by legislation. If, in the end, it is decided to restrict the size of individual shareholdings, the best method of doing this would be via appropriate provisions in the articles of association for the privatised company. There are precedents for this, and it would be a relatively simple matter to accomplish.
I hope the noble Lord, Lord Diamond, will forgive me if I suggest to him that Amendment No. 33 is

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unnecessary. Before the Secretary of State may dispose of any shares he must obtain the consent of the Treasury to that disposal. This is made abundantly plain by subsection (6) of Clause 3, and also by subsection (2) of Clause 5. In the light of all the assurances I have given I hope that the noble Lord's anxieties have been allayed.
Lord Diamond: My Lords, I am grateful to the noble Lord the Minister. Certainly the purpose of Amendment No. 33—which I did not dwell upon—was merely to get the assurance which the noble Lord has already given, and so there is no problem about that. As regards the other four amendments, what the Minister is really saying is that we are not poles apart, but that there may be slightly defective elements within these amendments—which is not all that surprising—and in any event what the Government want to do is to be perfectly free to consider them in their own time and in the circumstances of each individual scheme. That is characteristic of the Government's approach to the whole of this Bill: nothing goes into the Bill; everything remains in the free will of the Minister, whoever it may be at the time—and we have already expressed our dislike of that.
However, the noble Lord has said a number of things which I would want very carefully to consider, to see whether we cannot meet some of the objections to these amendments at a later stage and we shall no doubt return to those points at that time. In the meanwhile, I beg leave to withdraw Amendment No. 18.
Amendment, by leave, withdrawn.
[Amendments Nos. 19 to 21 not moved.]
9.8 p.m.
Lord Mayhew Lord Mayhew moved Amendment No. 22:
Page 5, line 3, at end insert ("and he is satisfied in terms of section (Profit sharing and savings-related share option schemes)").
The noble Lord said: I beg to move this amendment, and I understand that it would be convenient to deal with Amendments Nos. 31 and 32 at the same time.
Amendment No. 31: Clause 5, page 5, line 31, at end insert ("and he is satisfied in terms of section (Profit sharing and savings-related share option schemes)").
Amendment No. 32: After Clause 5, insert the following new clause:
("Profit sharing and savings-related share option schemes.
References in subsection (6) of section 3 and subsection (2) of section 5 to the Secretary of State being satisfied mean that he is satisfied that, at the time of the related disposal, the company whose securities are being disposed of has established, and operates or is about to operate, a profit sharing scheme which is capable of approval in accordance with Part I of Schedule 9 to the Finance Act 1978 and/or a savings-related share option scheme which is capable of approval under Schedule 10 to the Finance Act 1980.").
The purpose of these amendments is to ensure that before the Secretary of State disposes of any securities, he makes sure that the company concerned has made proper provision for a profit-sharing scheme in line with the Finance Act 1978 and/or a savings-related share option scheme in line with the Finance Act 1980. I acknowledge that in other privatisation schemes the Government have made provision for employee share ownership. No doubt the Minister will
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argue, in the familiar style, that we can trust the Government, that we can rely on them absolutely to do what we want, but, that he is sorry, he cannot incorporate it in the Bill. We have heard that argument many times and it is thoroughly unsatisfactory.
Perhaps the Minister will now argue that it is perfectly open to me, or any other noble Lord, to raise this question when we come to debate the affirmative order which must be passed by both Houses before any scheme can be made; perhaps that is the argument that he will use. If he argues in that way, I shall confine my remarks within an even shorter ambit than I had intended.
As it is, I want to make a new point. Is there any reason why the employees should not also profit from the new executive option scheme in the Finance Act 1984. Would the noble Lord look at that? I have made these amendments very flexible and they refer to the Finance Acts 1978 and 1980, but I should like the noble Lord also to look at this point, bearing in mind the record of ROF employees and also the fact that on the whole the group is labour-intensive and, to that extent, more amenable to employee share ownership.
One advantage of privatisation (although it does not justify privatisation in this case) is that it opens the way to employee share ownership. By my amendments the Government are given an opportunity to satisfy at least a proportion of the many critics of the Bill. I beg to move.
Lord Trefgarne: I should perhaps remind your Lordships that this Bill seeks to permit the incorporation of the ROF organisation as a Companies Acts company as the first part of a two-stage operation. The timing of subsequent privatisation, how it is to be done, and who will be involved, will be a matter for my right honourable friend the Secretary of State. This Bill merely lays down some guidelines which he will be required to follow.
The Government have already made clear that, when the time comes to reduce their stake in the ROF company, we would expect the board of the company to look favourably upon the early introduction of employee share ownership schemes. The present board of the ROFs has itself said that it would intend to introduce such schemes. In addition, noble Lords will be aware of the Government's record on previous privatisations regarding participation by employees in share offers. The noble Lord, Lord Mayhew, was good enough to acknowledge that. Of course, at the time of privatisation the Secretary of State will still be the 100 per cent. shareholder in the company and will be in a position to influence any decision on this subject.
In the light of all this, I believe that noble Lords opposite need have no fears about future employee participation in the success of the new company. Nevertheless, any employee share scheme is obviously some way down the road, and I do not accept that it is a matter to be dealt with in this Bill, which is concerned with the incorporation of the ROFs as a wholly Government-owned company.
The noble Lord, Lord Mayhew, asked me a specific question about the Finance Act 1984. I am sorry to have to tell the noble Lord that I do not have the answer to that question, but certainly I shall find out

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what is the position and write to him. With those assurances, I hope that the noble Lord will see fit not to press his amendment.
Lord Mayhew: If I heard the noble Lord aright, he said that the Government would expect the board of the company concerned to lay on a share ownership scheme. Surely the Government should require the board to lay on such a scheme. That is the difference between us. I would find it quite intolerable if when the Government dispose of the securities no scheme is drawn up. If the Government's intention is that a scheme of this kind should be devised, they should require the board to which they are disposing of the securities to make sure that that happens. I find the noble Lord's answer very disappointing.
The last thing I would want to do would be to expose the Government to another defeat in the Lobbies at this hour of night—for various good reasons. Therefore, I do not propose to press the amendment to a Division. But I should like the noble Lord to answer this precise point: why "expect" the board? Why have not the Government declared that they will "require" the board to lay on a scheme of this kind?
Lord Trefgarne: As a member of this Administration, I am very reluctant to require boards of companies to do anything at all. However, I have told the noble Lord that the Government, at the time of the flotation, will be the 100 per cent. shareholder in the organisation, and I think that he can be assured that matters will then proceed in accordance with his liking.
Lord Mayhew: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Vickers Baroness Vickers moved Amendment No. 23:
Page 5, line 3, at end insert ("and unless such disposal has been authorised by an affirmative resolution of both Houses of Parliament").
The noble Baroness said: I beg to move the amendment standing in my name on the Marshalled List. Tonight we have had a disappointing debate in more ways than one, when we think of this important organisation with 20,000 people working for it, and we get so little attention in this Committee, from either side, in regard to this matter. The purpose of the amendment is to have a written affirmative resolution before the Secretary of State sells off more shares. Apart from the technicality of winding up the trading fund as soon as the Bill is passed through Parliament, there will be no opportunity for Parliament to debate the next step, however important it is. There is no possibility after that for both Houses of Parliament to have a debate.
As I mentioned before, this Bill lacks information and is vague, which makes it all the more difficult for us to discuss it and debate it in this Committee. Once the Bill has passed through Parliament it will allow the Secretary of State to do what he wishes, as he wishes, when he wishes, without the agreement of Parliament. The Government have never been clear about the valuation of assets of the Ordnance factories; and the
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valuation impinges on the price. The Ordnance factories have intangible assets such as copyrights, patents, and designs, many of which are shared with the Ministry of Defence. Intellectual property rights can never be valued. As the noble Lord, Lord Lloyd of Kilgerran, said, there is also the question of inventions by the employees. Will they be protected in the future?
I understand that the workforce are concerned about the possibility of asset stripping. I wonder whether we can have more consultation with them and put their worries to rest if it is at all possible. I regret to say that this is a very undemocratic Bill. What is so strange is that we should be in such a hurry at the moment to get rid of this organisation when it made a profit of over £60 million last year. We should like to see whether the profit is to be the same in the years ahead.
If possible, I should like to see a delay, so that, with more consultation, we can get the fundamental propositions in this Bill to our liking. I hope my noble friend may be able to consider this because we are not subsidising this industry—it is paying its way—and I cannot see any reason for this hurried discussion. I beg to move.
Lord Trefgarne: I am afraid that, notwithstanding what my noble friend has said in support of it, I see a number of objections to this amendment. The real essence of the matter, as we perceive it, is whether or not there should be included in the Bill a specific requirement about subsequent discussion in Parliament, whether because an affirmative resolution is required, or otherwise, before the Secretary of State can dispose of any of his securities of the ROF company. If this is the essence of the matter, we have had a very full discussion of it in the other place and on Second Reading in your Lordships' House.
There has been much discussion in another place about the merits and demerits of privatisation, and, indeed, in your Lordships' House, too. I do not propose to lengthen this debate, other than by observing that what we are trying to do with the ROF organisation is to build on its success and to develop the ROFs; by the evolutionary measure which this Bill represents, into a fully-fledged commercial organisation as they will be as a Companies Acts company. We believe that this will increase the ROFs' commercial success and their profitability, and we also believe that it is not right to have done within government functions which are better done outside of it. A large manufacturing operation is clearly not appropriate to government.
Of course, the Bill is concerned with the initial incorporation of the ROFs as a commercial company, wholly-owned by the Secretary of State. We have made it clear that there is no reason why privatisation should be long delayed, and that the most likely route for this, if it can be achieved, is by a Stock Exchange flotation of the whole enterprise, though we do not rule out separate disposals should these make sense. Consistently with other measures, the Government would, of course, make clear their intentions to Parliament, and it would be up to Parliament to determine how far it wished to debate them either in advance of implementation, or subsequently. But a Stock Exchange flotation would be a commercially

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sensitive operation and it would not be right from the point of view of the ROFs themselves, any less than that of the Government, to tie action to specific parliamentary approval in the terms suggested in the amendment.
We have made clear our intentions for the period after incorporation of the ROFs. We would certainly propose to keep your Lordships and the other place informed of the progress of the company while it is wholly-owned by the Government. We would announce our intentions as regards the route and timing of privatisation as soon as we were able, and with as much detail as we were able to give. It would be unreasonable to go beyond that, in the light of all the factors involved in taking the required decisions, by circumscribing the Government's necessary flexibility. I must ask my noble friend, therefore, not to press her amendment. If she is not able to do that, I fear the Government must resist it.
Lord Stoddart of Swindon: I think the noble Lord really ought to think about this again because the noble Baroness, Lady Vickers, is on a very good point here. This is rather different from other privatisation measures, is it not? I see the noble Lord, Lord Cockfield, sitting here; he will be interested in this because of the privatisation of British Telecom. He could claim, and claim reasonably, that the Government wanted to sell British Telecom because they would receive a windfall of between £3,500 million to £4,000 million. In spite of our objections to that Bill, we could well understand the noble Lord's desire to acquire £3,500 million to £4,000 million for the Government. That commends itself to commercially-minded people.
When Enterprise Oil was sold there was a gain to the Government and a relatively good gain: when BNOC was sold there was a gain to the Government: perhaps even when Sealink is sold there will be some cash gain to the Government. In all those circumstances I suppose Ministers could say: "We are getting money into the Exchequer. We are making some money to assist in reducing the PSBR. Why should Parliament worry about that?" That is understandable, but on this Bill the position is quite different. There is no gain. No gain can be shown to the PSBR, to the taxpayer or to anyone else. Only a loss can be expected, because it is estimated that the sale of the ROF factories, if the Government are lucky, will net £300 million, £250 million of which will have to go to guarantee the pensions of existing employees.
Lord Trefgarne: I do hope the noble Lord will not persist in this line of argument. We discussed that fully at an earlier stage on this Bill and to the satisfaction of my noble friends I was able to dispose of that point.
9.24 p.m.
Lord Stoddart of Swindon: I do not know whether he disposed of that point to the satisfaction of his noble friends, but the Minister certainly did not dispose of it to my satisfaction. The fact is—and I do not think he is denying it—that the Government and the taxpayer, when all is taken into account, will not receive any gain from the sale of the ROFs. Indeed they will incur a loss as a result. Therefore I believe this is a different
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case from all other privatisation measures. Because the taxpayer will incur a loss and it could be a considerable loss—
Lord Trefgarne: No.
Lord Stoddart of Swindon: Well, by the Government's own reckoning they are likely to sustain a loss.
Lord Trefgarne: No.
Lord Stoddart of Swindon: I do not know when the noble Lord the Minister explained that he is not going to incur a loss. Perhaps he will wait until I finish.
Baroness Trumpington: Order!
Lord Trefgarne: Perhaps the noble Lord will look at the Official Report of the Second Reading debate.
Lord Stoddart of Swindon: I have not given way. Perhaps the noble Baroness will allow me to keep myself in order and will keep her noble friend in order. What I was going to say to the Minister was that perhaps after I had finished what I was going to say—and that will be very shortly—he can make his own reply. But in spite of what was said at Second Reading, the fact is that it is my own view and that of many other noble Lords that by the time the Government come to sell off this enterprise the taxpayer will face a loss.
It is in those circumstances that Parliament is entitled to have a say in exactly what happens when it comes to the disposal of the shareholdings. As I said earlier, I think that the noble Baroness, Lady Vickers, has done the Committee a great service in bringing forward this amendment because it gives your Lordships the opportunity to think again. It also gives the noble Lord the Minister the opportunity to accept an amendment from one of his noble friends; and I think he will do himself a lot of good with the Committee if he does so.
Lord Diamond: May I congratulate the noble Baroness, Lady Vickers, not only on having moved this amendment, enabling it therefore to be discussed with the most important matters that are being discussed, but on obtaining from the Minister more expressions of understanding and semi-undertakings than anyone else has been able to obtain on this side of the Committee. Your Lordships may wonder, therefore, why I am rising to address the Committee. It is because of the other things that the noble Lord went on to say.
Like the noble Baroness, I am very concerned indeed as to what is the cause of this great hurry. Now the Minister has told us. He is anxious to get this floated on the Stock Exchange. Of all the reasons that could give one any anxiety (that is, anyone who is interested in protecting the Stock Exchange) there is none more so than floating it on the Stock Exchange at the moment, when it is at the lowest that it has been for I do not know how many years. No doubt it might be higher when the Government succeed in their further plans in regard to the economy; but it is at a

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ridiculously low ebb at the moment and the FT index is lower than it has been, I think, for a number of years. I had better not chance a guess at what is the number, but it is a very low figure.
What the noble Lord is proposing is to float it at a time when the most recent flotation in terms of a company asking for money on the Stock Exchange resulted in 97 per cent. being unsubscribed; that is, 3 per cent. subscribed and 97 per cent. left with the underwriters. And this is the time when the noble Lord is anxious to hurry on in order to float this on the Stock Exchange, so that it can be floated at a time when the quotations are at their lowest and when the availability of capital is such that a reasonable offer made by an existing trading company which thought (on its best advice) that it could get the money it wanted found that 97 per cent. was left with the underwriters!
I am bound to say that the Minister has done nothing but give me the collywobbles. I am anxious about what the Government are going to do with the nation's assets. I do not know what the noble Baroness is going to do with her amendment, but I congratulate her on having moved it and having obtained this information from the Government.
Baroness Vickers: Following what the noble Lord, Lord Diamond, has said, I beg leave to withdraw this amendment and hope to discuss it again at Report stage.
Amendment, by leave, withdrawn.
Lord Diamond Lord Diamond moved Amendment No. 24:
Page 5, line 15, leave out line 1 and insert—
("(9) Not less than six weeks before the day on").
The noble Lord said: I beg to move Amendment No. 24, and I understand that it would be convenient for Amendment No. 25 to be discussed at the same time.
Amendment No. 25: Page 5, line 19, at end insert ("and such copy shall include any Memorandum of Understanding entered into by a Minister of the Crown and the Chairman of the Board of any Company referred to in subsection (4) describing the relationship between the Government as shareholder and any such Chairman.").
Page 5, line 15, at present states:
"Within the period of one month beginning with the day on which a scheme comes into force, the Secretary of State shall lay before Parliament a copy of the scheme."
That is, within one month beginning with the day on which the scheme comes into force. That is to say, within the period of one month after (I think that that is the interpretation to put on it) the scheme coming into force, the Secretary of State is going to be kind enough to inform Parliament about it, giving Parliament, again, no possible opportunity of discussing it beforehand. This is the objection we raised time and time again in your Lordships' Chamber. I do not know what has happened to the Tory Back-Benchers in the other place, I really do not. They seem to accept total exclusion from a share in advising the Government or participating in government on these matters. Certainly we do not accept that; we believe that Parliament has a part to play and sometimes we are successful in making the other House have a part to play by the decisions we take in this place.
It is in that sense that I move the amendment which provides that six weeks before the day on which a scheme comes into force the Secretary of State lays it before Parliament so that Parliament has some opportunity of seeing what is intended and making its views known. The next thing we shall be hearing from the Government is that affirmative resolutions will be made not more than one month after they have been given effect to.
I really do not know what is happening to this Government in terms of consulting the House. I think I have said enough to show that we are very, very anxious indeed that both Houses should be given an opportunity of understanding and seeing what is proposed by the Minister with regard to these arrangements in relation to a Bill which gives no information at all. The most we can rely on are the odd statements of Ministers in different places. The Bill gives no reliable information at all, and I hope the Minister will feel that what one is asking for is the minimum. So much for Amendment No. 24.
Amendment No. 25, which is somewhat related but is certainly not the same matter, deals with the memorandum of understanding which we all know the Minister proposes to have with the chairman of the board of any company which is to be set up—the memorandum of understanding describing the relationship of the Government to shareholders and the chairman of the company. It is a very good thing to have a memorandum of understanding, but there is no provision in the Bill for that memorandum of understanding to come before Parliament. So it is proposed that the memorandum of understanding should be disclosed.
At present, the section refers to the fact that the Secretary of State shall lay before Parliament a copy of the scheme, and so on. The amendment has the effect of adding the words which will result in that copy including the memorandum of understanding. That is a very reasonable provision. I hope both amendments will be accepted so that Parliament will have some knowledge of what the Government are proposing under this very wide enabling Bill and so that the Government will be willing to consult Parliament. The Government have a big enough majority in the other place to have the courage to consult Parliament. I have never known a government so frightened, when they have the odd 200 or 300 bodies lying about in the Division lobbies in the other place, I hope therefore that the Government will see fit to accept Amendment No. 24, which I now move.
Lord Trefgarne: My Lords, the Bill requires schemes made under it to be laid before Parliament within one month of their coming into force. Notwithstanding the terms of this provision, the Government are quite prepared to lay the first scheme before Parliament on vesting day, which will be the day on which the scheme takes effect.
I appreciate the desire of the noble Lord to see this scheme as soon as possible, and we shall try to accommodate that wish in so far as we can. However, if an amendment I am to move a little later in these proceedings obtains your Lordships' approval, the earliest date for vesting day would be 1st November 1984. This amendment would require that in such

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case the schemes shoud be laid before Parliament in mid-September. I must tell the committee frankly that work on the scheme may not be completed by that time.
For reasons which I hope to make clear to your Lordships later, we regard it as important that vesting day shall take place as soon as possible, and the Government could not accept a provision which would have the practical effect of delaying vesting day beyond the earliest date that it could be. I do, however, assure the noble Lord, Lord Diamond, that we shall publish the scheme at the earliest practicable opportunity. I hope that, with that assurance, he will be content to let the Bill stand as it is at the moment.
With regard to the noble Lord's second amendment, let me say that there is to be a memorandum of understanding between the Secretary of State and the board of the new Royal Ordnance Company. We have said that we shall publish this also except in so far as considerations of commercial sensitivity demand otherwise. I hope the noble Lord will understand the reasons for that qualification. I may say, however, that we would expect to be able to publish the memorandum of understanding substantially in full.
Work on the memorandum is not yet complete. We see no reason why it should not be made public,
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subject to the qualification to which I have referred, as soon as agreement has been reached by the parties on its terms, and I am happy to give an undertaking to that effect. In any event, we shall publish it, again subject to that qualification, not later than vesting day. In the light of these assurances, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Diamond: I am very grateful to the Minister. He has gone a long way towards meeting the essence of the points covered by these two amendments. Of course I accept the qualification of commercial matters, secrecy and so on. I accept that completely and, as I understand it, both amendments will be met in the sense that the Government have said they will do everything practicable to meet the sense of these amendments but will not be willing to have them incorporated in a Bill. So far as it goes, at Committee stage, that is satisfactory. We can come back to this at a later stage. I repeat my gratitude, and I beg leave to withdraw Amendment No. 24.
Amendment, by leave, withdrawn.
[Amendment No. 25 not moved.]
Clause 3 agreed to.
Schedule 1 agreed to.
Clause 4 agreed to.
Schedule 2 [Employment]:
9.38 p.m.
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 26:
Page 15, line 43, leave out paragraph 1 and insert—
(" 1. Any company or companies established pursuant to a scheme made under section 1(1)(a) shall by the appointed day (as defined in paragraph 2(7) below) make an offer of employment to each person employed immediately prior to the appointed day by the civil service of the State in the Royal Ordnance factories and in the ROF establishments at Westcott and at Waltham Abbey and, where a person thus becomes an employee of such a company or companies, then for the purposes of the Employment (Consolidation) Act 1978, that person's period of employment in the civil service of the State shall count as a period of employment by the company or companies, and the change of employment shall not break the continuity of the period of employment.
Notwithstanding the provisions of paragraph 1 above the terms and conditions applicable to any person who, pursuant to a scheme made under section 1(1)(a), becomes an employee of any company or companies should be no less favourable than the terms and conditions which were applicable to that person immediately before the appointed day (as defined in paragraph 2(7) below) under his employment in the civil service of the State.").
The noble Lord said: The purpose of this amendment is to write into the Bill a specific transfer of rights and offers of employment in the new company for those ROF employees facing compulsory transfer to the new company, and to include in the Bill itself the assurances repeatedly given by Ministers that staff transferred out of the Civil Service and into the new company shall have terms and conditions of employment which are no less favourable than those they currently enjoy in the Civil Service.
I think it would be convenient if I dealt with the first and second paragraphs separately. So far as the first paragraph is concerned, it would ensure that no one currently in employment with the ROFs could be made redundant by virtue solely of the change of status. Ministers have argued in another place that TUPE '81 ensures the transfer of contracts of employment, but there is some doubt about this.
First of all, legal opinion is divided as to whether or not civil servants have contracts of employment, since civil servants are employed at the pleasure of the Crown. Secondly, TUPE '81 specifically prevents employees from being able to take a case for unfair dismissal if they have been dismissed at the time of the transfer for an economic, technical or organisational reason. This is a very wide definition, and thus employees could be dismissed at the time of the transfer quite readily.
The amendment specifically refers to the two ROF establishments at Westcott and at Waltham Abbey, since these are research and development establishments, and it is therefore questionable whether or not they fall within the definition of an "undertaking" under TUPE '81. In fact, TUPE '81 defines an "undertaking" as including
"any trade or business but does not include any undertaking or part of an undertaking which is not in the nature of a commercial, venture".
ROFs Waltham Abbey and Westcott were part of the MoD R & D establishment, PERME, until 1st April. 1984. They will therefore figure in the ROF trading fund accounts for only six months before vesting day; that is, if the vesting day remains as 1st October.
That is a complicated business and I hope that the Minister will be able to make some reasonable reply. But the first part of the amendment seeks to set out, without any doubt and clearly, that by the appointed day an offer of employment must be made by the Secretary of State to every existing employee of the establishments named in the amendment. As the Minister very well knows, many employees have given long and devoted service—indeed, many tributes have been paid throughout the debates in another place and in this Chamber to the employees—and it is scant reward for such people that they should be shunted around like so many pieces of furniture. They are entitled to be treated as decent, dignified people who have served their employers and their country well.
Perhaps I may turn to the second part of the amendment. We are concerned that Ministers in another place have argued that it is unnecessary, and no doubt the Minister here will again argue that it is unnecessary, because of the inclusion of TUPE '81 regulations in the Bill. But TUPE '81 is capable of various interpretations and it is in an effort to ensure that the "no detriment" guarantee is specifically written into the Bill that the amendment has been drawn up and that I have moved it.
Despite the fact that the Ministers have said that TUPE '81 applies to transferred staff, and that, therefore, there will be no change in terms and conditions, except for minor ones relating wholly to the Civil Service scene—for example, the fact that the Civil Service Appeal Board can no longer cover staff in the new company—the trade unions are already experiencing attempts by ROF management unilaterally to change agreements on such conditions as recruitment and promotion procedures, even before vesting day. I should certainly be most grateful if the Minister would comment in particular on that, when he replies.
This part of the amendment seeks to ensure that when a person becomes the employee of a company or companies, he or she should be in a position no less favourable than was the case under the terms and conditions which were applicable in his or her employment within the Civil Service immediately before the appointed day.
It seems to me that the amendment, although a complicated one, is eminently reasonable. It is an amendment which would remove many of the doubts and fears which remain in the minds of the trade unions and the people employed in the Royal Ordnance factories. If the Minister could give assurances on this—indeed, if he could accept the amendments—it would make the Bill far more acceptable to the people working in the industry. I beg to move.
Lord Trefgarne: In answering the noble Lord, I should say at the outset that the Government recognise that it has always been the desire of the employees of the Royal Ordnance Factories—and rightly so—that the terms and conditions of their new employment in the ROF company shall be no less favourable, taken as a whole, than the terms and conditions of their employment in the Civil Service. For their part, the

1717
Government have always accepted this concern and have maintained their determination to ensure that employees do not lose by the transfer.
The Committee will be aware that the provisions of the Transfer of Undertakings (Protection of Employment) Regulations 1981—the noble Lord referred to these as "TUPE", and I shall, too—ensure that terms and conditions of employment are transferred. In effect, this will give the employees of the Royal Ordnance Factories all the protection which the Opposition are seeking by the second part of this amendment. In that sense, therefore, it is unnecessary.
As has been recognised, there are some exceptions to the application of TUPE. First of all, there are bound to be some small differences in circumstances between one employment and another, particuarly so where the first employment is in the Civil Service and the second is in the private sector. It follows logically that there are some situations in which the precise application of TUPE cannot be made. Indeed, this fact is recognised by paragraph 2(2) of Schedule 2 to the Bill. That paragraph expresses an intention that TUPE shall apply as nearly as possible in the circumstances, and the Bill has been amended to that effect. There is no covert intention behind this other than to say that any differences in the terms and conditions of employment to which TUPE applies shall he no more than is inevitable in the circumstances.
The result of the first part of the amendment would be that the contract of employment in the Civil Service would be terminated immediately before vesting day and a new contract would have to be negotiated to come into force on vesting day and apply thereafter. This would constitute a considerable backwards step. The application of TUPE ensures that the terms and conditions of the present ROF employees continue unchanged into the new employment. Where TUPE does not apply, there are negotiations for new provisions. The first part of this amendment takes all this apart by requiring a new offer of employment, thereby disapplying the provisions of TUPE. This hardly seems designed to be helpful except in delaying the transfer or confusing the issues.
The amendment that has been moved will have one particular effect in respect of redundancy procedures. Taken with the later amendment to leave out paragraph 3 of Schedule 2, the intention appears to be to require the Government to make some other provisions for employees who are unwilling to transfer to the new company. Those who could be deployed elsewhere in the Civil Service would no doubt be offered alternative postings. Of the others, some would probably be offered early retirement while the remainder would be entitled, under the terms of this amendment and other amendments to redundancy compensation.
I must question the reasoning behind such an intention. The Government will indeed do their best to find alternative places within the Ministry of Defence for those employees who do not wish to transfer to the new company. Indeed, a register has been opened giving all employees the opportunity to signify a desire not to transfer, if that is what they wish. But we have always said we cannot guarantee that it would be possible in every case to find alternative employment
1718
for those who do not wish to transfer. If this amendment and a related one are acceped, their effect would be to encourage all employees to seek alternative postings in the expectation either that they would receive a substantial redundancy compensation if no alternative post could be found for them or that the new ROF Company would, as a result of the Government allowing a refusal to transfer, be so starved of employees that it would be willing to offer very favourable terms and conditions to all employees, who could thus benefit by obtaining a job with the new company and at the same time gaining considerable redundancy compensation. It is not difficult to see that this would be an iniquitous use of public money.
It really makes no sense to introduce an artificial redundancy, out of considerations which are extraneous to the essential point that no one is going to be made redundant purely as a result of the transfer. Such a course would be exceedingly expensive and an administratively inconvenient way of dealing with the situation. The Government do not pretend that the establishment of the new company, and the transfer to it of those currently employed within the Ministry of Defence in the service of the ROFs, gives rise to no problems. Indeed, we are now in the middle of negotiations designed to deal with those problems. Clearly, the proper way to proceed is through negotiations with the recognised trades unions. However favourable the course implied in this amendment might be to the employees themselves, it is not the right way of dealing with the situation.
On the point of principle, the process of transition from employment in the Civil Service to employment with the new company will make very little difference in the actual day-to-day work of all those employed in the ROFs. In addition, the Bill provides that TUPE '81 shall apply to transfer the vast majority of the terms and conditions of service. The principle remains that the contract between the new company and its employees will be the same, in essence, as that between those employees and the Government. We therefore see no necessity for this amendment, which we believe will only give rise to problems, delays and inconvenience.
Before I sit down, perhaps I could reassure the noble Lord on one point. We believe that PERME, which he referred to as one of the research establishments, as part of the ROF enterprise as a whole—as it will be when the scheme is made—can be regarded safely as an undertaking for the purpose of TUPE '81. I understand that was an anxiety in the mind of the noble Lord, and I hope I have been able to set his mind at rest. As I said, we therefore see no necessity for this amendment, and I hope that the noble Lord will not press it.
Lord Diamond: Do I gather from the noble Lord the Minister that he is suggesting it would be for the convenience of the Committee if Amendment No. 28 were discussed at the same time? He has referred to it, but the noble Lord who moved the amendment did not.
Lord Trefgarne: No; I was seeking only to reply to Amendment No. 26.
Lord Stoddart of Swindon: I should like to thank the noble Lord for his very full explanation and for the assurance which he gave me about PERME employees. This is an extremely complicated matter; I recognise that. I also recognise that negotiations are still continuing. I think that under those circumstances, and bearing in mind that we are unlikely to come back to the Bill for Report stage, as I understand it, until after the Recess, the best thing one can do is to read what the noble Lord the Minister has said and give time for further negotiations to take place; and, if necessary, we can return to the matter at Report stage. Under those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 27:
Page 16, line 36, at end insert—
("() Any company or companies established pursuant to a scheme made under section 1(1)(a) shall consult and agree with the recognised trade unions on the setting up and the maintenance of suitable machinery to negotiate upon and settle the terms and conditions of employment to provide for reference to arbitration in default of settlement and to discuss other matters of mutual interest to the company or companies and their employees including efficiency in the work of the company or companies.").
The noble Lord said: This is another amendment which is crucial to the trade unions which are affected by the Bill. The noble Lord the Minister constantly refers, quite correctly, to the discussions which are going on. I apprehend that while the Minister acknowledges there are some difficulties and there is a long way to go, he feels that the discussions are going satisfactorily. In other words, there has got to be give and take, and eventually there will be agreement. The last thing that we on this side of the Committee wish to do is to stir up trouble or to imply that there are serious breaches of agreement. Up to now, and on the basis of what we have been told, we have kept the gloves on because as long as there is the possibility of the affected unions realistically and sensibly acknowledging that they have obtained as much as they can, there is no point in doing otherwise.
My noble friend Lord Stoddart has clearly indicated that with the months of August, September and half of October to come, there is almost a lifetime in which to try to get a settlement. There has, of course, been an attempt to get some form of agreement for six or seven months past; discussions have been going on all the time. I will not say that we have been told we are no further forward, but we have been told that on a range of points there is no satisfaction in sight.
I hope the noble Lord the Minister will take it kindly when I say that we are not going to press any of these points tonight. If we have to come back to them in October and have an indication that the unions affected are not satisfied, then we shall certainly be in the mood to be (shall I say?) a little more belligerent.
This amendment deals with a basic trade union right; that employees in an organisation should have the right to consultation and that there should be agreed trade union procedures and suitable machinery
1720
through which to negotiate. The Minister and his colleagues in another place have said more than once that employees will have no less favourable terms and conditions. One of the conditions they enjoy now is the right to negotiate and arbitrate, et cetera.
The Minister may tell me that the arrangements which exist under the Transfer of Undertakings (Protection of Employment) Regulations 1982 are meant fully to cover that situation. But correspondence I have received from a Mr. Howarth of 257 Rothsay Road, Blackburn, writing on behalf of the ROF in Blackburn, explains in detail that they are far from satisfied that TUPE '81 is adequate to give protection. I will read from one paragraph of his submissions:
"In a redundancy situation TUPE '81 not only fails to give adequate protection, but in fact detracts from existing rights (see enclosed EAT authority)"—
that is, the Employment Appeals Tribunal.
Lord Diamond: It is the Employment Assessment Tribunal.
Lord Graham of Edmonton: Yes, that is correct—whatever the noble Lord says; he must be right because he is on my side. The submission continues:
"Regulation 8(2) provides that a dismissal immediately before or after a relevant transfer which is for organisational, technical or economic reasons"—
and those are the reasons which will apply here—
"will, for the purpose of Section 57(1)(b) of the 1978 Act, be deemed to be for some 'other substantial reason'. This has been interpreted by the courts to mean that a dismissal as a result of a transfer cannot be a redundancy".
I cannot speak authoritatively on those judgments, but if they are born out of the Minister's resting on TUPE '81 to cover the kind of situations which are going to worry employees, then the real fact of the matter is that the employees do not accept that.
The amendment now before us seeks to ensure that suitable and acceptable bargaining machinery is set up in the new company to replace the joint Whitley Council committee at factory level and at new holding company level. The Whitley Council committee ensures that management and the recognised trade unions—those representing both industrial and non-industrial staff—meet on a regular basis within a formal framework, to consider problems of mutual concern and deliberate on their resolution. Many informal contacts are maintained in between those formal meetings.
The Civil Service is also covered by an arbitration agreement which provides for either side to seek to put an issue to arbitration if it has proved impossible to arrive at an agreed solution through discussion. I do not want a cast-iron agreement because the Minister has told us—and I accept this—that discussions are in progress. But I hope very much that the worries to which I have given voice tonight will, in his view, be assuaged in the course of discussions over the next 10 weeks. I beg to move.
10 p.m.
Lord Diamond: Perhaps the Minister will allow me to intervene at this stage. I am in a little difficulty because the noble Lord referred considerably to the redundancy question, which is again the subject of Amendments Nos. 28 and 29.
Lord Graham of Edmonton: Yes.
Lord Diamond: If it is for the convenience of the Committee, I will say a word about Amendment No. 28, but if the Minister prefers this to be left until a later stage I will leave it.
Lord Graham of Edmonton: Take it.
Lord Diamond: Very well; I will take both.
Amendment No. 28: Page 16, line 37, leave out paragraph 3.
Amendment No. 29: Page 16, line 37, leave out paragraph 3 and insert—
("3. Any company or companies established under a scheme made pursuant to section 1(1)(a) shall from the appointed day provide for redundancy compensation which is no less favourable than the compensation which would have been paid in the event of their redundancy from the civil service of the State.").
With the leave of the Committee, I will refer first to Amendment No. 28, which deals with redundancy. It is proposed to leave out a paragraph which says there shall be no redundancy payments in certain circumstances—or no redundancy rights; I have not got the words in front of me. There would presumably be no reason for putting that there unless there was a possibility of there being some rights if they were not specifically excluded. So if the Bill is going to exclude certain specific rights, then one wants to know what is being offered in exchange for those rights. That is the first question.
Then I come to the points which have already been alluded to and which give considerable cause for anxiety. These matters have been dealt with by the relevant employment appeal tribunal in two cases. One is Meikle v. McPhail and the other is Canning v. Niaz. Not only have they been dealt with by the relevant Scottish employment appeal tribunals, but the findings of those tribunals have been confirmed by the High Court. Therefore, the Minister cannot dismiss them out of hand.
The situation seems to be that this staff is not going to be protected for redundancy purposes. It is as simple as that. The authority is the authority of the High Court in two cases. One cannot dismiss that in any way at all. It has been suggested—and it may be—that the tribunals misdirected themselves and that there has been a slip-up at some point. However, all of us who are not lawyers know that the undertaking of the Government is that the employees shall not suffer any detriment at all by virtue of the transfer. Yet here is a huge hole being blown into that undertaking in relation to redundancy; namely, that there could be a situation in which a dismissal following a transfer under the TUPE regulations which can be described as being for an economic, technical or organisational reason, would not be a redundancy.
The practical effect of that would be that those concerned would get no redundancy payment if dismissed by the new employer shortly after a transfer.
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I do not know what "shortly" means. It certainly does not mean immediately. It may mean in a period when the Government are not in control of the situation. Therefore, if I were a member of staff I would be considerably concerned lest I lost out in both cases and had no claim for redundancy from my past employer and no claim for redundancy from my present employer, both on the authority of two relevant tribunal decisions supported by the High Court. I do not think I need go further into it than that.
The Government have said that they are an honourable Government and their intention is that the rights of the employees shall not be reduced in any substantial way. They have said that after all these arrangements and schemes have gone through they will make adjustments for the fact that they will no longer be civil servants and, subject to one or two limitations to which civil servants are subject, broadly they will have the same rights as they have at present. I have very real doubt as to whether that is the case.
Lord Trefgarne: Amendment No. 27 deals essentially with arrangements after the vesting day of the new company. It lays an obligation on the new company to conduct its negotiations and industrial relations in a certain way. I hope to carry your Lordships with me when I say that this surely must be a matter for the management of the ROFs to determine, not this Bill. It surely goes without saying, too, that, as a commercial organisation on a par with other companies, the ROFs will seek to maintain the best possible industrial relations by negotiation and agreement between management and the trades unions representing the workforce.
As we are all aware, the application of the Transfer of Undertakings (Protection of Employment) Regulations 1981—TUPE '81—to which I have already referred, to this transfer means that existing collective agreements, recognition agreements, consultation procedures, and so on, are transferred to the new company. They will all therefore be in place on vesting day. The special circumstances mentioned in Schedule 2 to the Bill, relating to the present employment under the Crown, will not affect this. This is not to say that some changes might not be made after vesting day in the light of changing circumstances. But this is true of any company, whose management would seek to notify, consult and negotiate with recognised trades unions if any change in terms and conditions or in the right of trades unions in the company was contemplated. In this sense the ROF company will be in no different a position from any other. But to do what the amendment seeks would be to put the new company into a situation virtually unknown in company law, in which requirements of the type referred to in the amendment were imposed by statute on the company.
It is clearly in the company's best interest to have the best possible industrial relations with its workforce. To raise scare stories about unilateral withdrawal by management of recognition of the trades unions which currently represent the workforce is irresponsible. Many of those trades unions already have members outside the Civil Service, so that the new status of ROF employees will not necessarily affect the standing of their trades unions.

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It is equally absurd to imagine that the new company will renege on collective agreements or on other terms and conditions of service, when to do so could seriously damage its commercial viability or lead to claims for constructive dismissal under the Employment Acts; nor will the Government have any locus to reach out and impose their own idea of industrial relations on the new organisation, which will act in this respect in the best interests of the company as a whole.
I certainly appreciate the sentiments behind the amendment. Indeed, the Government sympathise with its spirit: none of us wishes the ROF workforce any ill, but it is not appropriate to tie the company's hands in the way the amendment does. ROF management is already consulting recognised trade unions—unions recognised now and recognised after vesting day by the terms of TUPE '81—with a view to obtaining their agreement to setting up, and thereafter to maintaining, suitable machinery for negotiation at appropriate levels on all relevant matters. These matters will of course include terms and conditions of employment after vesting day, but will also extend to other matters pertaining to the company and its future, upon which it would be the best industrial practice to consult.
In these circumstances we believe that statutory provision in the Bill is unnecessary, given the existing protection afforded to employees under the Employment Acts, and could even be damaging. We have to give the ROFs the maximum degree of freedom to order their affairs in the way they wish. I hope therefore that this amendment will not be pressed.
I now turn to Amendments Nos. 28 and 29, to which the noble Lord, Lord Diamond, also spoke. The Government have often made it clear that we do not intend any employee to suffer as a result of the transfer of employmemt to the new ROF company. Staff will transfer on broadly the same terms and conditions of employment as they enjoy at present. As we have said before, this is secured by the transfer of undertakings regulations. The Government have already given a commitment that levels of redundancy compensation payable to existing ROF employees will not be made worse by the transfer.
The amendment of the noble Lord, Lord Diamond, (Amendment No. 28) and the first part of the amendment of the noble Lord, Lord Stoddart, (Amendment No. 29), to which I think we are also speaking, seek to delete the existing paragraph 3 from Schedule 2 to the Bill. I am afraid that I must resist that, because paragraph 3 is necessary to make it clear to the courts and to everyone else that there is no question of a purely technical redundancy arising from the transfer. ROF employees are transferring to a new organisation, but they will be doing the same job, in the same place, and on very similar terms. It is therefore clear common sense, and paragraph 3 spells it out in law, that the mere fact of the transfer does not give rise to an entitlement to redundancy payments.
This paragraph is included in the Bill for the more substantial reason that current Civil Service redundancy rules imply that a person could make a claim for redundancy on the grounds that he has been
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moved out of the Civil Service. But these rules do not take into account the fact that, as obtains in this case, the person will have been transferred with his job and his terms and conditions of service intact.
The Government have already publicly explained that a new redundancy scheme for transferred staff will need to be devised for the new ROF company. It will in effect be a replication of the Civil Service redundancy scheme, though some changes of a very minor nature will need to be made in it to take account of the changed circumstances. The Government have given a clear and unequivocal commitment that compensation levels for existing employees under the new redundancy scheme will be no worse than those currently enjoyed by staff in the Civil Service. The new redundancy scheme is currently being negotiated with the trade unions. In the light of that commitment, and those negotiations, I believe that Amendment No. 29 is unnecessary and I hope that the noble Lord will not press it.
The question has also been raised about redundancy compensation levels for new employees of the company after vesting day. The consultative document issued by the Government in March of this year spelt out the arrangements that would apply to these new entrants. The levels of redundancy compensation applicable to them will be in line with normal private sector practice. Such employees will not have been part of the Civil Service previously, and it would be most unwise to saddle the new company with an obligation to pay those employees taken on after vesting day redundancy compensation as high as that in the Civil Service. Such an obligation would impose a restrictive financial burden on the company, and could affect its future viability.
As I have said, the Government will honour their commitment to existing employees that they shall not suffer detriment as a result of the transfer, but after vesting day, the ROFs will be a commercial organisation which must conduct its affairs according to good commercial practice. The obligation implied by Amendment No. 29 would go against that and could prejudice future employment levels, if not the trading performance, of the new company. In the light of these considerations, I hope that both noble Lords will feel able to withdraw their amendments.
The noble Lord, Lord Diamond, referred to some court cases. I should like to consider those a little further. But, at first sight, I am advised that they are Scottish cases of somewhat doubtful authority. There is, I understand, an English judgment that is inconsistent with them. However, perhaps I may look into those cases further and give him a more considered response.
Lord Graham of Edmonton: For the convenience of the Committee, we have rolled in Amendments Nos. 27, 28 and 29 because they are part of a piece. I had something to say directly on Amendment No. 29, although, as the noble Lord, Lord Diamond, stated, I did, in making my case on Amendment No. 27 in respect of conditions, allude to redundancy. I wish simply to say that what, in fact, the trade unions want is what Ministers have said. On 21st May, the Minister of State said:

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"On this I repeat what we made clear on Second Reading and on Report, that compensation levels for existing employees will match"—
The Minister has constantly said "will be no worse than", but the Minister in the other place said "will match"—
"those currently provided for in the Civil Service pension scheme".—[Official Report, Commons, 21/5/84; col. 737.]
The Minister believes that he is supporting precisely the existing rights under the Civil Service pension scheme. However, paragraph 3 of Schedule 2 contains a proposal regarding redundancy compensation on the change of status from Civil Service to public company. The Minister has made a case of the burden that complying with existing rights will have on transfer. That may very well be right. It may be uneconomic and irksome on the new arrangements to carry forward existing rights.
I would, however, ask the Minister to listen to this. Under the Superannuation Act 1972, civil servants are entitled to redundancy compensation if they change their status. The Bill, if enacted, would remove this legal entitlement. The Minister is entitled to start off with something different from that which is already enjoyed by civil servants. If he is doing that, he should not say, and repeat, that they will be no worse off in the future than if there had been no change. The Minister has made a fair point that discussions are going on and that settlements, understandings, or a removal of misinterpretations are clearly possible over the next 10 weeks.
I do not intend to press Amendments Nos. 27 and 29, although not in the light of what the Minister has said. That is no disrespect to what he says. But until the trade unions tell me that they understand and accept what is going ahead, we shall continue to seek to press their case. I would wish to withdraw the amendment this evening, but I fully reserve the right to come back to this point, if necessary, in October. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Diamond Lord Diamond had given notice of his intention to move Amendment No. 28:
[Printed earlier.]
The noble Lord said: I am bound to move this amendment in order to continue the discussion on it. It is very appropriate that the noble Lord has cleared the agenda somewhat by removing his amendment. I think the Minister has said most of what we are asking for in regard to this amendment, dealing with redundancy. I think he has; of course, we will read the Official Report very carefully to make sure that he has. It is nowhere in the Bill, but I take the point that it is under discussion.
So I think the answer on Amendment No. 28 is that we will consider the matter very carefully, and, if satisfactory arrangements are made between the parties concerned—say, between the Government, as employer, and the trade unions representing the employees, the civil servants—then we would not wish to pursue it further at Report stage; but otherwise we would. Having spoken to the amendment in that sense, I do not ask the Minister to comment any
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further. I seek the Committee's permission to withdraw the amendment.
The Deputy Chairman of Committees (Lord Murton of Lindisfarne): I think the answer to the noble Lord, to save me confusion, is not to move the amendment.
[Amendments Nos. 28 and 29 not moved.]
10.17 p.m.
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 30:
Page 16, line 49, at end insert—
("() Any company or companies established under a scheme made pursuant to section 1(1)(a) shall on the appointed day set up a pension scheme for all those persons transferring from the civil service of the State and for all other persons employed by the company or companies, the provisions, contributions and benefits of which are no less favourable (both as to treating previous service as reckonable service and otherwise) than the provisions, as then in force of the Principal Civil Service Pension Scheme as governed by the Pensions (Increase) Act 1971.").
The noble Lord said: This amendment has three main objectives: first, to ensure that the Government guarantee that civil servants transferring to the new company or companies will have pension benefits which are no less favorable than those provided under the principal Civil Service pensions scheme, and are actually enshrined in the Bill itself; secondly, to ensure that there is a single pensions scheme for staff transferring to the new company or companies from the Civil Service and those recruited after vesting day; thirdly, to ensure that the pensions paid by the new company's or companies' pensions scheme are fully index linked in line with the index-linking provisions of the 1971 Pensions (Increase) Act.
Ministers have stated repeatedly that the present ROF employees who face compulsory transfer out of the Civil Service into the new company will have their current terms and conditions of employment protected by the 1981 Transfer of Undertakings (Protection of Employment) Regulations, or the old TUPE '81 again. But TUPE '81 specifically excludes pension benefits. Therefore, unless this amendment is included in the Bill, the ROF employees are totally unprotected in the legislation in a crucial area of their conditions of employment.
Ministers have stated repeatedly that they intend to provide the staff who transfer to the new company with pensions which are no less favourable than those provided under the PCSPS. This amendment seeks merely to enshrine in the Bill those ministerial commitments. To date, Ministers have given no guarantee as to the pensions provisions of staff recruited to the new company after vesting day. The ROF management have indicated that they intend to set up a second, much inferior pensions scheme for new recruits. That seems to us to be entirely reprehensible. The trade unions who will be representing those employees strongly reject the notion of two pensions schemes for staff who otherwise will have largely the same terms and conditions of employment and who will be working alongside each other, doing precisely similar work.
The industrial relations consequences of creating two categories of employee must be obvious to all. Anybody who has worked in an office, a shop or a

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workshop will know just exactly what resentment is caused among employees when one section of the employees doing exactly the same work in the same place is treated differently from another set as regards conditions of service. It will not make for good industrial relations and it will make for resentment among employees themselves.
Ministers have given assurances that the pensions for ROF staff transferred to the new company will be no less favourable than Civil Service pensions. This must include the Civil Service index-linking provisions as set out in the Pensions (Increase) Act 1971. The 1971 Act applies to a wide range of public sector employees—for example, the police, the armed forces, teachers, nurses, and indeed Members of Parliament, and, incidentally, employees and former employees of the CEGB (in which I have an interest) as well as to civil servants.
Ministers have said that the ROF pension scheme for transferred staff will be index-linked, but ROF management have put a limit on the employer/employee's contributions of 17 per cent. of the total pay bill. Possible detriment may therefore arise if the pension fund investments are not able to match index-linking during a period of high inflation and the 17 per cent. limit on overall contributions prevents additional contributions being made to the fund, even on a short term basis, in order to ensure full index-linking. That of course is a very serious worry and a very serious point indeed.
One appreciates of course that Ministers may not want to go too far, but the staff see it in an entirely different way. We had this matter before us during our debates on the British Telecommunications Bill and if I am not mistaken an amendment was written into the Bill to the effect that existing pension obligations would be honoured under all circumstances, even if British Telecom went into liquidation, and that in fact the obligations would be taken on by the Government.
I really cannot see why the Government are prepared to have obligations and make promises to one section while not—although they are not civil servants, nevertheless they are public servants—being prepared to undertake the same obligations and make the same promises and to give the same conditions to another set of employees. I hope that the Minister will consider this matter very seriously and will be able to give me the assurances for which I have asked. Indeed, I hope that he will accept the amendment.
Lord Trefgarne: I must say that I detect an air of mistrust of the Government on the part of the noble Lord—
Lord Graham of Edmonton: Never!
Lord Trefgarne: If I have misinterpreted the attitude of the noble Lord, then of course I hasten to withdraw. But the Government have made pledges about pensions for employees transferred to the new ROF company. We stand by those pledges and continue to negotiate with the trade unions about them. Our commitment is a matter of public record. I do not, therefore, agree that any provision about pensions needs to be written into the Bill. The Government
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have undertaken that pensions for transferred staff should be index-linked, and all work and all discussions with the trade unions have proceeded on that basis. Advice on the new company pensions scheme has been given to the Government by an independent firm of consulting actuaries. It is in the light of the actuarial calculation that a ceiling of 12 per cent. for employer contributions has now been proposed for the new pension scheme. Nevertheless, what we are talking about is a scheme designed from the outset to provide index-linked pensions.
The pension scheme which the company will be setting up will be governed by a trust deed and administered by an independent body of trustees, including both representatives of the workforce and independent members, as well as representatives of the company. The pension scheme will secure its funding from three sources. First, there will be a payment from the Exchequer representing the value of potential pensions earned to the point of transfer by those existing employees who opt to transfer to the new scheme. In addition, there will be the annual contribution by all employees in the scheme. We have suggested that this should be fixed at 6 per cent. of salary and an annual payment by the employer sufficient to ensure that all three sources of revenue taken together will be sufficient when the time comes to pay all pension entitlements in line with inflation. The assessment that the actuaries have made is that in all normal circumstances the income to the fund will ensure that there is enough money in it to meet all liabilities.
The noble Lord has questioned whether the fund can meet all liabilities in circumstances of high inflation. Without wishing to go too far into the details of the actuarial calculations, I should say that those calculations are remarkably less favourable both on inflation and on the return of investment expected than the present reality and the historical trends have shown. For example, over long periods investment in United Kingdom securities has produced a rate of return some 4 per cent. above inflation. Even with a high rate of inflation this assumption is not necessarily jeopardised. So it is simply not possible to relate the ceiling of employer contributions to any specific level of inflation.
The rate of return on investments also has to be taken into account. It has been asked, although I do not think that the noble Lord mentioned it tonight, why a ceiling for the upper level of the employers contribution has been set. Obviously, there has to be a limit on the amount of money that the company can devote to this purpose, as indeed to all other purposes, as a viable commercial entity. Obviously it cannot and should not pay more than it can reasonably afford. If payments up to the ceiling of 12 per cent. will enable index-linking in all normal circumstances, payment beyond that ceiling in extremely abnormal circumstances would, I suggest, be of no benefit because in that circumstance the trading situation of the company is likely to be so adverse and the economic situation of the country so uncertain that the index-linking of pensions makes no sense, even in the private sector or in the Civil Service.
I should also add that the ceiling of 12 per cent. is not a fixed absolute even if the present proposal before

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the unions is agreed by them. The company would have discretion to pay more than that, given a healthy trading position, so that there is an element of flexibility. I hope that these points will have reassured the noble Lord, but if he would like me to give him some further arguments I should be happy to do so.
Lord Stoddart of Swindon: I should very much like to study what the noble Lord the Minister has said. I certainly do not think that he has given me any reassurance about future new employees of the ROFs. But at this time of the night I should like to wait and study what he has said. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Whether Schedule 2 shall be the second schedule to the Bill?
Lord Diamond: I am sorry to detain your Lordships and I recognise that the hour is late, but on this question of adding Schedule 2 to the Bill I must return to the question of the future employees of the ROFs both in terms of their pension arrangements and in terms of their redundancy arrangements. Both those arrangements have been referred to on amendments within this schedule.
As I understand it, the Minister is contemplating that there will he first-class and second-class citizens in the employment of the new ROFs. Is he suggesting that this is a sensible way in which to run a business or to run any firm? It is a recipe for trouble of every kind and the worst possible industrial relations when two men working together on the same lathe, or on adjoining lathes, have different terms of employment. It is a quite impossible situation and no employer would seek to have that; it would not last.
I say, "two different terms of employment" because what is the Minister proposing? He is proposing that there shall be different redundancy arrangements, and proposing in particular that there should be different pension arrangements.
So far as I have understood it the Civil Service salary scales have always taken into account, especially when they have been looked at from outside in relation to what commercial salary scales are, the differences between the terms of employment of the civil servant and the terms of employment of a normal commercial employee. One of those differences has been the more favourable pension arrangements to which civil servants are entitled. That calculation has always been made in arriving at salary scales, and therefore civil servants are paid lower salary scales by virtue of the fact that they are getting higher pension benefits.
Now we come to a situation where you are going to have two classes of employee: one the ex-civil servant who is going to be paid the same level of remuneration, other things being equal, as he was paid before; and the other, a new employee who is newly joined, who, because he is getting less in terms of pension arrangements, must get more in terms of salary scale in order to make his situation equal. We are going to have the ridiculous arrangement that a new employee working side by side with an old employee is going to get more in terms of salary in his pay packet than the old
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employee by virtue of the fact that he has not worked as long within these factories.
It is absolute nonsense. It is an impossible situation in terms of normal employee-employer relations, and it is an impossible situation in terms of having good industrial relations, and it is an impossible situation in terms of trying to relate these pension and redundancy arrangements. The only solution is to give the new employees the same terms in all respects as the old employees—the same salary scales, and therefore the same pension rights. The Minister has so far said that those same pension rights will not be available. I think that this is a recipe for chaos, and I am bound to say so.
10.33 p.m.
Lord Trefgarne: I am sorry that the noble Lord takes that view. I have to tell him that I once worked in a company where I was a comparatively new entrant, and the pension scheme that I had the benefit of was actually less favourable than the scheme for some of the more senior employees in the company who had transferred in from another company which my company had taken over. The arrangements to which the noble Lord has drawn attention are not in fact particularly novel.
The other point that I should like to put to the noble Lord is that the pension scheme which is presently enjoyed by civil servants, and will continue to be enjoyed by those who transfer into the new companies, is a very favourable one indeed. There is no question about that. The Government therefore think it right that we should stand behind that scheme so far as the existing employees of the ordnance factories are concerned who transfer into the new organisation, but that we should not be required to stand behind it in respect of the new employees who subsequently join the new ordnance factory organisation.
I believe that it is right and proper that that new scheme should be the one that is set up by the new companies in the light of the new circumstances in which they find themselves, and that that scheme should not have the potential of being a burden upon the new company, as I think it would be if we were to follow the line proposed by the noble Lord.
Lord Stoddart of Swindon: I should like briefly to follow on what the noble Lord, Lord Diamond, has said and simply to emphasise what he has said. Despite what the noble Minister says his experience has been, the major bone of contention in the industrial scene is a disparity between people's conditions of service. If we are to make any progress at all in industrial relations in this country we shall have to standardise pensions and other conditions of service. I beg the Minister to take that very serious point because upon it hinges the future of the industrial relations, not only in the ROFs but in many other areas of employment as well. I beg him to think about this during the Recess. We shall undoubtedly return to it after the Recess, but I beg him and the Government to think about this point because the Government will be perpetuating a system which has proved to be disastrous in industrial relations in so many firms up and down the country.
Schedule 2 agreed to.
[Amendment No. 31 not moved.]
Clause 5 agreed to.
[Amendment No. 32 not moved.]
Clause 6 agreed to.
[Amendments Nos. 33, 34 and 35 not moved.]
Clause 7 agreed to.
Clause 8 [Vested liabilities on winding up.]
The Deputy Chairman of Committees: Amendment No. 36 not moved?
Lord Graham of Edmonton: Before I say that I do not wish to move Amendment No. 36, I should like simply to give a clear indication that we will return to this at the next stage.
Baroness Vickers Baroness Vickers moved Amendment No. 36:
Page 8, line 24, at end insert—
("() The Secretary of State shall be liable for existing pensions and redundancy payments.")
The noble Baroness said: This was actually my amendment, so I think I should say one small word about it. I listened with great interest to the noble Lord who has taken most of the points that I should like to put. But I still have two that I should like to present to the House.
First, I should like to mention a matter that has not been mentioned before, that
"The Employer may at any time terminate the liability of the Employer under the Scheme"—
this comes under paragraph 13 of the draft trust deed for the transferred pension scheme, which continues:
"by giving notice in writing to the Trustees indicating its reasons. Upon receipt of such notice the liability of the Employer shall be terminated except in respect of payments due on or before the date of such notice".
The other point that I should like to raise is that in the proceedings on the Telecommunications Bill, the Minister, Kenneth Baker, made the following comments. He stated that existing pensions obligations will be honoured fully, even if BT—in this case the ROFs—go out of business: the liability would go to the Secretary of State. I think this is a very important point. I hope that the Minister can tonight give me the assurance that the same arrangements will be made with regard to the ROF employees.
The only other point I should like to discuss is the question of the index-linked pensions. I gather that the trust deed prohibits changes to rules which would reduce benefits, so a successor company could not make changes. I should like to know, whether this refers to the ROFs under the existing pension scheme. I beg to move.
Lord Trefgarne: With respect to my noble friend, I think I dealt with these points, or ones very similar to them, on an earlier amendment. I am not sure whether she was in her place at that time, but perhaps my noble friend may not have understood that I was about to deal with parallel points. If my noble friend would like to study what I said in response to that amendment—although I would not want to put her under any obligation in that way—if she is then not
1732
satisfied perhaps she will come back to me at a later stage.
Amendment, by leave, withdrawn.
Clause 8 to 11 agreed to.
Schedule 3 agreed to.
Lord Trefgarne Lord Trefgarne moved Amendment No. 37:
After Clause 11, insert the following new clause:
("Building and planning contraventions.
.—(1) In this section expressions which are also used in the Building Restrictions (War-Time Contraventions) Act 1946 have the same meanings as in that Act.
(2) Where—

(a) any interest in or right over land is transferred in pursuance of a provision made by virtue of section 1(1)(a) above,

(b) during the war period works on the land not complying with a building law or with planning control were carried out, or a use of the land not complying with planning control was begun,

(c) the works remained, or the use continued, from the end of that period to the time of the transfer, and

(d) immediately before the coming into effect of the transfer the building law or planning control was unenforceable in respect of the works or use.

the works or use shall, at all times after the coming into effect of the transfer, be treated for all purposes as complying with the building law or planning control.").
The noble Lord said: This Government amendment has been tabled to deal with a potentially serious problem which could otherwise affect the Royal Ordnance factories after their incorporation as a Companies Acts company, arising from the operation of the Building Restrictions (War-Time Contraventions) Act 1946. This Act applies to building works and uses of land made or begun between September 1939 and March 1946, defined in the Act as the "war period". Very many buildings were constructed during the war for purposes connected with the war. The local authorities, who were and are responsible for the implementation of a number of planning, building control and health and safety measures, could have taken exception to buildings of the kind raised and to the locations in which they were placed. For obvious reasons they did not exercise their legal rights, and as a result those rights lapsed because the normal statutory period for making objections of six months or one year had in most cases expired.
The 1946 Act therefore revived the rights of the local authorities to take exception to these buildings where they contravened the various planning statutes, and placed a five-year limit on the time during which local authorities could exercise their revived rights. The limit of five years was considered necessary to avoid this sort of suspended right continuing in perpetuity, and to allow owners of the properties affected to know what their position would be likely to be in the event of the local authorities stepping in. At the expiry of the five years all property which had not been the subject of enforcement proceedings would be deemed to comply with the requirements of the various planning laws.
However, a large number of such buildings were constructed on Crown property, which is in any case exempted from the operation of planning laws except where the Crown is expressly included. The 1946 Act provided for the same measures to be taken by local authorities once the Crown interest in the land or buildings had ceased, and gave those authorities again

1733
five years from the date of the cessation of Crown interest in which to take steps to enforce planning control.
I do not want to go into all the detail that I have here on this matter, but it is, I believe, an unexceptionable proposal which I hope your Lordships will find acceptable. I beg to move.
Baroness Vickers: I should like to ask two questions, if I may. As these factories were under the Crown, they did not have the application of the Health and Safety at Work Act, and also factory inspectors were not allowed to visit them. I should like to know whether these two provisions will be changed.
Lord Trefgarne: My understanding is that the provisions to which my noble friend refers will be such that once the companies are set up in the private sector then, certainly, the effect of the Health and Safety at Work legislation and the other legislation, too, to which my noble friend referred, will apply. Perhaps I can look into the matter with more care and, if I am wrong, I will write to my noble friend.
On Question, amendment agreed to.
Baroness Vickers Baroness Vickers had given notice of her intention to move Amendment No. 38:
[Printed earlier: cols. 1654–7.]
The noble Baroness said: I think that we broached this subject earlier today and my noble friend the Minister gave me quite a nice reply. I think he is going to give me a copy of the articles of association which I can read, and I shall then see if I need to come back on them at a later stage.
[Amendment No. 38 not moved.]
Clauses 12 to 16 agreed to.
Clause 17 [Short title, etc.]:
Lord Trefgarne Lord Trefgarne moved Amendment No. 39:
Page 13, line 19, leave out subsection (2).
The noble Lord said: I hope that your Lordships will agree, at any rate, that my amendment has the merit of being clear and obvious in its intention. The Government's plan, since before the introduction of the Bill we are considering, has been to enable the ROFs to begin trading as a Companies Act company in October of this year. That was made clear in Parliament at least as long ago as January, when my honourable friend the Minister of State for Defence Procurement moved the Second Reading of the Bill in another place. We had hoped, while expecting and welcoming a very full discussion of the Bill in all its stages, that it would be enacted by the Summer Recess; and that, therefore, with the lapsing of two months the company could have a vesting day, with the making of a scheme, at the beginning of October.
Your Lordships will be aware that that timetable has gone a little awry. We would hope that noble Lords can complete their consideration of the Bill during October and that it may secure Royal Assent fairly soon thereafter, but Royal Assent will obviously not be
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secured before the end of October at the earliest. We have accordingly considered whether we should retain the provision in subsection (2) of Clause 17 of the Bill, or whether it would be reasonable to propose that it should be withdrawn. The provision was inserted in the Bill when first introduced into Parliament, not in response to any particular need but in deference to recent convention. We would have wished to adhere to that convention but we do not think that any practical difficulties will arise if we do not.
The Bill, as I think your Lordships will recognise, has no direct impact on the public and all those directly concerned—including particularly the workforce—have been told of our plans well in advance. In so far as the rights of third parties are affected by the legislation, we shall be taking steps to make information available about the initial scheme or schemes—which, as your Lordships know, is the mechanism for implementing the Act—as soon as they are made. I think it reasonable, therefore, to say that no individual who is affected in some specific way by the Act will be unaware, by the time of enactment, that he has been affected, and he will know in what way.
It is against this background that we have concluded that it would not be inappropriate for us to propose that the Act should come into immediate force following upon Royal Assent to it; and we see advantages in this course, not for any particular Government purpose, as it were, but in the interest of the avoidance of any uncertainty and in the interest of a successful launching of the ROF company. People are expecting the company to start its operations in October and the acceptance of this amendment will mean that we shall virtually achieve that objective and that the Secretary of State will be able to make a scheme in November rather than a delay until 1985 being incurred. I hope your Lordships will feel able to agree to this amendment. I beg to move.
Lord Graham of Edmonton: My Lords, the Minister has said more than once that the plans of the Government have been well-known for a considerable time; I do not imagine that anyone, including the Government, will have anticipated the decisions of your Lordships' House earlier today. It is quite clear from what the Minister said that the original plans were that the Royal Assent to this Bill would have been achieved before the Summer Recess.
Now, because of the Government's own handling of their business timetable, that has proved not to be possible. I am not going to anticipate what the Government will do, or try to do, when we return at the Report stage. All I would simply put on record is that your Lordships have spoken on a very crucial part of the Government's intentions, and if in actual fact that is persisted in at all stages here and in another place, quite frankly the Government's ideas about this Bill will be in a mess. Even if one anticipates that the will of the Government will prevail, we are looking at a situation where, within a matter of weeks, there is still an enormous amount to be done.
The question is that at the moment the unions do not know the organisation of personnel management at the holding company level or at divisional level or plant level. The unions do not know the financial

1735
structures of the companies. The Royal Ordnance factories have not yet decided on all the locations of their divisional headquarters. The scheme setting out the property and assets to be allocated to each of the divisions has not yet been finalised or valued.
Now all of those things are anticipated by the Minister to be uncertain in regard to the precise nature of the Bill, because we have yet to reach the Report stage. All can be done. The Government have, I think, already burnt their fingers in anticipating what would happen to this Bill and its contents. I think it would be a brave man who would hazard a guess as to the precise shape of the final Bill. Whatever the shape, it will not be known till towards the end of October; and there is all this other work to be done.
We do not intend to press any further matters to a vote here this evening. I simply say that the Government would be well advised not to anticipate too much that their will will prevail here or in another place when these matters are tested. The situation is quite unsatisfactory. The Government say their intentions are, and I quote, "to avoid uncertainty". By virtue of your Lordships' decisions in the House here today, uncertainty will be at least perpetuated, not as a result of what the Government want but as a result of what your Lordships' House wants for at least another 10 weeks. Long may the opportunity which your Lordships have taken prevail!
Whatever the outcome, it is very unsatisfactory. It is the Government's intention not to ride roughshod but to take far too much on their plate to get through with the willing collaboration of the employees. The collaboration is there, from the point of view of the spirit, but certainly arrangements will need to be worked out very, very carefully, and in an unhurried state of mind, over the next few weeks. The Government will not find that we shall oppose the amendment, though we certainly shall not support it. However, we await with interest what happens at the next stage.
Lord Mayhew: We on these Benches certainly do not wish to oppose the amendment, but it gives the Minister an opportunity to clear up the uncertainty which has arisen as a result of the decisions of the Committee today. In the light of those decisions what is the intention of the Government with regard to a timetable for vesting and for the introduction of the scheme?
It seems to me that a number of defects in the Bill have been exposed in the course of our debates today, and in addition a degree of uncertainty has been injected into the situation which, as the noble Lord, Lord Graham, has said, is very unsatisfactory and very harmful. Perhaps the Minister will take this opportunity to explain how the Government propose to handle the decisions taken by your Lordships.
Lord Trefgarne: I am afraid that I have no announcements to make in regard to that matter. The Government will, of course, have to consider the implications of the decisions which your Lordships took earlier today, and decide how to proceed.
Baroness Vickers: May I thank the noble Minister for the trouble he has taken over answering all our amendments? He has had a very long and tiring session on this, and I should like to suggest that we have plenty of time now to think out new amendments. Perhaps we shall be more successful in the future.
On Question, amendment agreed to.
Clause 17, as amended, agreed to.
House resumed: Bill reported with the amendments.

Merseyside Development Corporation Bill
Brought from the Commons, read a first time, and referred to the Examiners.
House adjourned at eight minutes before eleven o'clock.

  NORTHERN IRELAND: REPRESENTATION
  NORTHERN IRELAND: REPRESENTATION
  IMMIGRANTS: VISITS TO UK PRIOR TO ARRANGED MARRIAGE
  IMMIGRANTS: VISITS TO UK PRIOR TO ARRANGED MARRIAGE
  PRISON FORM F1150: RECORDING OF MEDICAL INFORMATION
  PRISON FORM F1150: RECORDING OF MEDICAL INFORMATION
  LIFE PRISONERS: RELEASE RECOMMENDATION
  LIFE PRISONERS: RELEASE RECOMMENDATION
  PUBLIC NOTICE: MIS-SPELLING
  PUBLIC NOTICE: MIS-SPELLING
  BIRDS: CONSERVATION
  BIRDS: CONSERVATION
  AGRICULTURAL HOLDINGS: LETTINGS AND LICENCES
  AGRICULTURAL HOLDINGS: LETTINGS AND LICENCES