Sitting of 13 March 1984

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

  Trident Programme
  Dr. David Clarkasked the Secretary of State for Defence what is the latest estimate of the cost of the Trident programme.
  The Secretary of State for Defence (Mr. Michael Heseltine): I have recently submitted a figure of £8,729 million to the Public Accounts Committee and the Select Committee on Defence. This is the estimate prepared by my Department for this year's recosting of the defence programme.
  Dr. Clark: Has the Secretary of State seen the report of the National Audit Office that suggests that savings of about £500 million are included in the figure that he has announced? Is that saving at the cost of British jobs, because the missiles are being prepared and refurbished in the United States? Does that not make a mockery of the right hon. Gentleman's claim that it will be an independent nuclear deterrent, because the missiles are entirely dependent on the United States?
  Mr. Heseltine: As the House knows, the missiles are being purchased from the United States, but they will be under the operational command of the Royal Navy through the appropriate controls.
  I must tell the hon. Gentleman that the savings are those that we identified by taking the decision to go for servicing at King's bay. The savings are of the order of £500 million, but we now think they may be higher. Certainly they have been taken into account.
  Mr. Wilkinson: As the period of maximum expenditure on the procurement of Trident will come after 1985–86, when the increase in defence expenditure in real terms will be markedly reduced, will my right hon. Friend examine the possibility of procuring Ohio-class boats from the United States and building them under licence in this country, as the 24-tube SSBN could constitute major savings in expenditure?
  Mr. Heseltine: I am grateful to my hon. Friend for his suggestion, but we have taken the decision on procurement of the appropriate boat. It is our view that over the period of procurement the Trident system will absorb 3 per cent. of the total defence budget, and 6 per cent. of the equipment budget.
  Dr. Owen: As the dollar-sterling exchange rate has been used in the calculations, does that not increase
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  demonstrate what many of us have been saying—that this will make a big inroad into the improvement of our conventional defence forces?
  Mr. Heseltine: I an sure the right hon. Gentleman will realise that the increasing level of defence expenditure takes account of the point that he raised. I have followed precedents in coming to the estimates that I have provided, about which I have informed the House today. The sterling-dollar exchange rate on which the figures were calculated was taken in June 1983 at £1 to $1·53. It has been a precedent for Governments to take updating procedures that are relevant to the preparation of the Estimates—in this instance for 1984–85 and for the 1984 long-term costings. I have followed those precedents.
  Mr. Terlezki: How many jobs will the Trident programme create in Britain?
  Mr. Heseltine: I do not have the precise figure, but about 55 per cent. of the cost will be incurred in this country. We have the opportunity, which has been negotiated with the United States, for British contractors to tender for work that is available generally in the programme.
  Mr. Denzil Davies: Is the Secretary of State aware that even today's figure of almost £9 billion is still hopelessly optimistic, because almost half the costs are wholly outside the right hon. Gentleman's control on the foreign exchange markets and in the hands of American arms manufacturers? Is the right hon. Gentleman aware that most independent analysts put the cost in excess of £10 billion? Why does he not recognise reality and cancel that extravagant and irrevelant status symbol and totem pole?
  Mr. Heseltine: The simplest answer to the right hon. Gentleman is that I believe that Britain should have an independent nuclear deterrent. In that policy I am subscribing to the views of all Labour Governments since the war.

  Experimental Aircraft Project
  Mr. Robert Atkinsasked the Secretary of State for Defence if he will make a statement on the current Government funding for the experimental aircraft project.
  The Minister of State for Defence Procurement (Mr. Geoffrey Pattie): We are continuing to provide substantial financial support for the experimental aircraft programme in accordance with the terms of our contract with British Aerospace.
  Mr. Atkins: Is my hon. Friend aware of the great importance of making up the loss of funding on the experimental aircraft project caused by the withdrawal of Messerschmitt Bolkow Bloehm from participation in the programme, especially as it is vital to give the future European fighter aircraft a flying start from a British base?
  Mr. Pattie: Yes, I assure my hon. Friend that I am aware of the importance of that project. I have no doubt that British Aerospace will be in touch with my Department in the near future about that matter.
  Mr. McNamara: When British Aerospace comes knocking on his door, will the Minister give a favourable reply and be rather more generous compared with the

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  niggardly support for the project that has been given hitherto and with the support that the French industry has received from its Government for the ACX?
  Mr. Pattie: All requests from British Aerospace will be considered sympathetically, as they have been hitherto. The hon. Gentleman's supplementary question is extraordinary when set against the substantial amounts of aid that have been announced over the past few weeks.

  Missiles (Cost)
  Mr. Kirkwoodasked the Secretary of State for Defence what has been the amount of money spent, in the past 10 years, on (a) missiles and (b) the platforms which launch them.
  Mr. Pattie: Figures for the past 10 years are not readily available in the form required. However, I can tell the hon. Member that, in line with the Government's policy of shifting the emphasis from weapons platforms to the weapons themselves, the balance of spending has shifted substantially in favour of missiles. It is estimated that, whereas six years ago about 35p was spent on missiles for every pound spent on platforms, we are now spending about 50p on missiles for every pound spent on platforms.
  Mr. Kirkwood: Is the Minister aware that that welcome trend will be appreciated by all Opposition Members who are worried about the increasing escalation in costs of planned military hardware procurement? Will the hon. Gentleman give an assurance that he will take into account the proposals contained in the British Atlantic Committee's report, "Diminishing the Nuclear Threat", that relate to rapid expenditure on platforms vis-a-vis missiles?
  Mr. Pattie: I have read most carefully the publication to which the hon. Gentleman referred. The considerations set out in that publication are important and are among those that we must bear in mind.
  Mr. Boyes: Will the Minister ensure that, when these missiles are deployed, they will not be under the command of half-crazed junkies? Many of my constituents are extremely worried that 13 United States air force personnel have recently been expelled from Greenham common because they were found to be drug addicts. I should like the Minister to give an assurance that that situation will not continue.
  Mr. Pattie: That supplementary question hardly arises from the question on the Order Paper.

  Queen's Flight
  Mr. Willie W. Hamiltonasked the Secretary of State for Defence if he will make a statement on the proposed modernisation of the Queen's Flight of aircraft; and what is the estimated total cost of this proposal.
  Mr. Pattie: I have nothing at present to add to the reply that I gave to the question from my hon. Friend the Member for Welwyn Hatfield (Mr. Murphy) on 22 February 1984.
  Mr. Hamilton: In view of the fact that within the hour the Chancellor of the Exchequer will be demanding further cuts in public expenditure—[HON. MEMBERS: "How do you know?"]—on services such as housing, health and
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  education, does the Minister agree that this sort of extravagance could be cut out without harm or damage to anyone?
  Mr. Pattie: No.
  Sir Geoffrey Finsberg: Does my hon. Friend accept that many of us feel that the modernisation of these aeroplanes is long overdue, especially as they are seen as examples of British aviation when they go abroad? We would rather have aircraft of the future than museum pieces.
  Mr. Pattie: I accept what my hon. Friend says. He will be aware of the plans to which I have referred. We hope that the BAe146 will provide the satisfactory service that is necessary.

  Defence Expenditure
  Mr. Cartwrightasked the Secretary of State for Defence whether he intends to carry out a major review of the United Kingdom's defence spending and commitments.
  Mr. Heseltine: No. I am satisfied that the planned defence programme remains in balance with the resources available.
  Mr. Cartwright: How does the Secretary of State square that somewhat complacent assessment with the recently published views of a distinguished group of military experts—including a former permanent secretary at his own Department—first, that no long-term strategy underlies the 1981 defence review and, secondly, that escalating defence costs require the establishment of a logic of priorities? How can that logic be established without any prior review?
  Mr. Heseltine: There are machineries for determining priorities within the Ministry of Defence. I was able to answer as I did because, under the present Government, there has been an increase of about 23 per cent. in real terms in the defence budget. That increase was designed to give us the opportunity to pursue a round objective within the defence programme.
  Mr. Franks: In view of recent speculation in the national media that the Trident programme may be abandoned because of escalating costs, will my right hon. Friend unequivocally state that the Trident programme remains part of Government policy?
  Mr. Heseltine: I can give my hon. Friend that assurance.
  Mr. Canavan: Will the Secretary of State admit that the Government have a distorted sense of priorities for public expenditure? Are they not planning to spend increasing billions of pounds of public money on the manufacture of weapons of war and mass destruction, while no doubt later this afternoon the Chancellor will be trying to justify further cuts in essential social services and in the National Health Service, including a 700 per cent. increase in prescription charges—
  Mr. Speaker: Order. Questions must be confined to defence matters.
  Mr. Heseltine: There is nothing distorted about a sense of priorities that has kept Europe at peace for the longest period in contemporary history.
  Mr. Conway: I congratulate my right hon. Friend on the expansion of the Territorial Army and its better equipping. However, if he has an opportunity to review defence expenditure, will he consider further expanding the Territorial Army to take account of the growing waiting list of men who wish to enlist in its battalions?
  Mr. Heseltine: I hope to make a statement on that subject in the near future which my hon. Friend may find acceptable.
  Mr. Douglas: When reviewing defence expenditure, will the Secretary of State remember the British manufacturers who are worried about the tilting of the balance of scientific and technological expenditure towards the United States, which strengthens not only America's superiority in defence but its non-military superiority, too?
  Mr. Heseltine: I shall bear that point very much in mind. I am constantly in touch with British industry about it. Among other things, I have had to remind British manufacturers of the commitment of the Labour party to reduce our conventional defence expenditure by nearly one third.
  Mr. Neil Thorne: Will my right hon. Friend assure the House that he will not seek to restrict training—in particular, the training of infantry battalions—to England, and that regiments originating in Scotland, Wales and Northern Ireland will be trained in those locations, especially in view of the importance of those areas for the training of such regiments?
  Mr. Heseltine: There cannot be a precise match between training and recruitment and the basing of the various parts of the armed services, but the Ministry of Defence is well aware of the vital part played by all parts of the country in our defence effort.
  Mr. Denzil Davies: When will the Secretary of State stop playing with his MINIS and recognise that our defence commitments are hopelessly overstretched? Is it not a fact that, with the decline of its industrial base—especially under the present Government—Britain cannot afford Trident, a proper contribution to NATO, a fortress Falklands policy and interventions in almost any part of the world decreed by an American President?
  Mr. Heseltine: We are maintaining our contributions to all those matters. However, I do not accept the right hon. Gentleman's definition of the North Atlantic Alliance with the Americans. If the right hon. Gentleman believes that the defence budget is overstretched, which vital interest would he abandon?

  Falkland Islands
  Mr. Bellinghamasked the Secretary of State for Defence by what proportion he envisages the Falklands garrison will be reduced once the airport is completed.
  Mr. Heseltine: The size and shape of the Falklands garrison depends on a number of factors, and I am not prepared to speculate about what kind of reductions will be possible when the new airfield is completed.
  Mr. Bellingham: I am grateful to my right hon. Friend for that reply. Does he agree that while no effort should be spared in trying to resume normal relations with Argentina, it is difficult to do that when that country flatly
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  refuses to recognise the cessation of hostilities? Does he further agree that the purchase of British Airways TriStars as tankers will act as an effective force multiplier?
  Mr. Heseltine: I agree that the capacity for air-to-air refuelling that the TriStars will give us is a substantial addition to our defence capabilities. I agree also that it would be a major gesture towards the restoration of normal relations in the south Atlantic if the Government of Argentina announced the formal end of hostilities.
  Mr. Johnston: As the whole point of constructing the airport was to lessen the requirement to have troops on the island, the Secretary of State must have some idea about the consequences of its completion?
  Mr. Heseltine: Yes, but the hon. Gentleman will appreciate that other factors beyond the ability to reinforce would have to be taken into account. That includes present diplomatic relations with Argentina.
  Mr. Michael Marshall: Does my right hon. Friend accept—I understand that he cannot give precise figures—that a strategic value will come into play when the airport is completed? Will that not facilitate the process of future negotiations with Argentina and strengthen the Western Alliance?
  Mr. Heseltine: It is widely felt that there are virtues associated with the Falkland Islands which for some time were not pursued as energetically as they might have been. We have that very much in mind.
  Mr. Strang: Does the Secretary of State agree that the figures that he frequently quotes of the cost of fortress Falklands and the large additional costs of fuel and keeping soldiers there mean that the true cost of the garrison is about £1 billion a year? In those circumstances, does he accept that it would be quite outrageous if the Prime Minister were allowed to veto an offer by the Argentine Government to enter into negotiations without preconditions on sovereignty.
  Mr. Heseltine: The hon. Gentleman's latter question is more for my right hon. and learned Friend the Foreign Secretary than for me. The House will be aware of the message that my right hon. Friend the Prime Minister sent to President Alfonsin when he was first elected. That is the best answer that I can give the hon. Gentleman on that matter.
  As to the precise costs of the Falklands garrison, the hon. Gentleman's figures is very much in excess of the real running costs because he has included capital replacement costs of a substantial amount of equipment that was lost in the Falklands war.
  Sir John Biggs-Davison: Do not those who would throw away the sacrifices of our fighting men and rat on the Falklands grossly exaggerate the future costs of defending them? When the airfield is completed, will there not be considerable savings and will not the matter be seen in proper proportion?
  Mr. Heseltine: I am sure that my hon. Friend is correct. There will be potentially significant savings. That is one of the reasons why we took the decision to invest in the airfield.
  Mr. McNamara: With regard to people making a profit at the expense of our service men, what will be the true cost of the land for the proposed airfield? Will it be

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  the usual grazing price paid for land at existing use value or will it have an inflated value of £273,000 which has been widely reported in the press?
  Mr. Heseltine: The hon. Gentleman will be aware that this matter is being negotiated by my right hon. Friend the Secretary of State for the Environment, who deals with property matters on behalf of the Government. The contract has not yet been signed. All these matters are being taken into account in the current negotiations.

  Cruise Missiles
  Mr. Flanneryasked the Secretary of State for Defence by what date the next flight of 16 cruise missiles will be operational in the United Kingdom.
  Mr. Parryasked the Secretary of State for Defence by what date he expects the next flight of 16 cruise missiles to be operational in the United Kingdom.
  The Minister of State for the Armed Forces (Mr. John Stanley): I cannot add to the reply that my right hon. Friend the Secretary of State for Defence gave to the hon. Member for Woolwich (Mr. Cartwright) on 17 January.
  Mr. Flannery: Does the Minister seriously think that the British people will feel reassured by that answer? [HON. MEMBERS: "Yes."] Is he not eager to conceal the nocturnal ramblings of these horrific weapons around our countryside because the British people have clearly shown that they oppose the deployment of cruise missiles? If not, why does he not bring them all out in full daylight and tell us when they will all come out?
  Mr. Stanley: I am sure that the great majority of the British people will have been delighted that the claim made by CND that cruise missiles could not be deployed operationally has been falsified by events.
  Mr. Parry: Will cruise missiles be sited at the Burtonwood base? Is the Minister aware that the people of Merseyside are utterly opposed to any such siting?
  Mr. Stanley: The bases for cruise missiles remain as they were when deployment was first announced. As to operational deployment, the hon. Gentleman will be aware that we give no advance information on the location of nuclear weapons.
  Mr. Warren: Will my hon. Friend make it clear to the House that cruise missiles are not a first-strike weapon and that NATO does not have a first-strike nuclear policy?
  Mr. Stanley: My hon. Friend is entirely right on both points.
  Mr. D. E. Thomas: As the House has spent considerable time debating the relatively small numbers of land-based cruise missiles, will the Minister make a full statement to the House before the deployment in June of sea-launched cruise missiles? Will he also make urgent representations to his American counterpart about the American philosophy on the use of these weapons, which is that they should form a strategic reserve after world war three?
  Mr. Stanley: The hon. Gentleman will be aware that the question of sea-launched cruise missiles is for the American Government, as they are not deployed by NATO. He referred to the small numbers of ground-launched cruise missiles in this country. I hope that, by
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  way of perspective, he will take into account of the fact that the numbers of SS20s facing the West have been trebled since the end of 1979, when there were 81 missiles. There are now 243 SS20s facing the West—a total of 729 SS20s warheads. I hope that Opposition Members will take greater account of the extent of the threat facing us.
  Mr. Cormack: Will my hon. Friend see whether he can find enough money in his budget to send the hon. Member for Sheffield, Hillsborough (Mr. Flannery) and his hon. Friends to see the Red square parade next year, so that they might better understand just why cruise is necessary?
  Mr. Stanley: I am grateful to my hon. Friend for his comments. I am sure that the hon. Members to whom he has referred would find such a visit instructive.
  Mr. Hoyle: Is the hon. Gentleman aware that his Department's refusal to say whether missiles are based at Burtonwood is of great concern to the people of Warrington and the north-west? Should they not be allowed to know the dangers that they are facing?
  Mr. Stanley: The hon. Gentleman will be aware that, throughout the period of every Labour Government since the war, it has been the policy of such Governments, as well as of Conservative Governments, not to say where nuclear weapons will be deployed operationally.
  Mr. Bill Walker: Does my hon. Friend agree that, in addition to the many SS20s facing these shores, the Soviet Union has a substantial number of submarines already equipped with cruise missiles, which represent another factor that we must take into consideration?
  Mr. Stanley: I am grateful to my hon. Friend for that remark. He is entirely right to say that the Soviet Union has a substantial programme for bringing into operational service strategic cruise missiles, and that includes sea-launched as well as ground-launched missiles.
  Mr. Denzil Davies: Why do not the Government accept and admit that the deployment of cruise missiles has been a terrible mistake and at least agree not to deploy any more? Has not deployment created a mood of isolationism in both Europe and the United States and made it much more difficult to get any consensus on defence policy in Britain?
  Mr. Stanley: What would have been a great mistake would have been for this Government not to have continued with the twin-track decision, the foundations of which were so well laid by our predecessors.

  Royal Ordnance Factories
  Mr. Fisherasked the Secretary of State for Defence whether he will ensure that there is no diminution of the legal and trade union rights of any employee working for or in the royal ordnance factories.
  Mr. Pattie: The Transfer of Undertakings (Protection of Employment) Regulations 1981 provide for the automatic transfer of existing trade unions' rights from one undertaking to another. Employees transferring to the incorporated royal ordnance factories organisation will therefore continue to be entitled to remain members of, and be represented in negotiations by, the same trade unions to which they currently belong in their Civil Service employment.
  Mr. Fisher: Will the Minister address himself to the legal rights and, in particular, the pension rights of ROF employees? Will he say when he will publish details on pension rights, what they will cost, how they will be funded, and what the terms will be?
  Mr. Pattie: As the hon. Gentleman knows, the Standing Committee will deal with those matters shortly. I hope that the information he seeks will be freely available by then.
  Mr. Greenway: Will my hon. Friend confirm that it is against Queen's Regulations for service personnel to join trade unions and that there is absolutely no thought in his mind about changing the position?
  Mr. Pattie: That is correct.
  Mr. McNamara: Will the Minister reconsider his reply to my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Fisher)? Tradesmen are entitled to retain their trade union membership in the services so long as they do not play an active part. That is readily understood and has been practised in the armed services for generations.
  Mr. Pattie: As the hon. Gentleman knows, that membership has a particular form of restriction attached to it, which was the spirit of the question asked by my hon. Friend the Member for Ealing, North (Mr. Greenway).

  Falkland Islands
  Mr. Dalyellasked the Secretary of State for Defence what has been the cost of his Department's facility trips to the Falkland Islands (a) for the journalists working on national newspapers, (b) journalists working in local newspapers and (c) journalists working with radio and television.
  Mr. Stanley: Complete information going back to the Falklands conflict is not available, but over the past six months the notional cost of (a) was about £5,000, (b) about £36,000 and (c) about £29,000.
  Mr. Dalyell: What do the Government expect to get out of those trips?
  Mr. Stanley: We believe, as apparently did our predecessors, who followed the same practice, that it is of value for members of the national and local media to be able to cover defence activities outside the United Kingdom.
  Mr. Leigh: In view of the fact that the hon. Member for Linlithgow (Mr. Dalyell) has asked 696 questions since 1982 concerning the Falklands campaign—[Interruption.]
  Mr. Speaker: Order. The hon. Member must confine his question to defence matters.
  Mr. Leigh: Does my hon. Friend believe that, instead of inviting journalists to the Falklands, it might be cheaper to invite them to the hon. Gentleman's castle in Scotland, which I believe is known as The Binns, so that he can bore journalists instead of the House?
  Mr. Stanley rose—
  Mr. Dalyell rose—
  Mr. Speaker: Order. I know what the hon. Member for Linlithgow (Mr. Dalyell) will say, but that will delay Question Time. I sympathise with the hon. Gentleman, but I think that we should hear the Minister's answer.
  Mr. Stanley: It is probable that the cost of facilities provided for members of the media is somewhat less than the cost of answering the questions tabled by the hon. Member for Linlithgow (Mr. Dalyell).
  Mr. Dalyell: My questions can be costed only in relation to policy, which is presumably not very expensive because Ministers often know the answers; otherwise the answers relate to facts that should be available in any case. The real costs—
  Mr. Speaker: Order. I thought that the hon. Gentleman was seeking to defend himself against a charge. I cannot allow an extension of his question.

  Helicopters
  Mr. Farrasked the Secretary of State for Defence if he will make a statement on plans for co-operation with Italy for future helicopter production for defence purposes.
  Mr. Nichollsasked the Secretary of State for Defence what is the present position as regards the European helicopter project EH101; and if he will make a statement.
  Mr. Pattie: The main development contract for the EH101 helicopter was signed in Rome last week, on 7 March. This completes the launching process into programme full development so that we can now look forward to the successful development and introduction into naval and commercial service of this important aircraft, in collaboration with our Italian partners.
  Mr. Farr: I thank my hon. Friend for that information. Can he say how many helicopters will be ordered for use by the Royal Navy and what progress the Ministry of Defence is making towards getting a British engine, such as the one produced by Rolls-Royce, to power the new helicopter?
  Mr. Pattie: The Royal Navy order will be for about 70 aeroplanes. It is expected that the helicopter will initially have American GE700 engines, but we hope to announce soon a collaborative venture with France on the RTM322 engine. If the venture is successful, the engine will be available for inclusion later in the life of the aeroplane.
  Mr. Nicholls: Will my hon. Friend accept that his announcement, coupled with the announcement last month of about £60 million launch aid for Westland Aircraft's helicopters, will be welcome news throughout the west country, not just in the Yeovil area?
  Mr. Pattie: I am grateful to my hon. Friend for that comment.

  Greenham Common
  Mr. Andrew MacKayasked the Secretary of State for Defence if he will make a statement on security at the Greenham common base.
  Mr. Stanley: I cannot add to the reply that I gave my hon. Friend on 17 January.
  Mr. MacKay: Will my hon. Friend take this opportunity to congratulate all the British and American personnel who took part in last Friday's exercise involving cruise missile launchers, the success of which was satisfying to a great many patriotic people in this country?
  Mr. Stanley: I am grateful to my hon. Friend. I should like to echo his congratulations to the American and British service personnel involved. I should also like to thank the Thames Valley police.
  Mr. Skinner: Will the Minister confirm that since the Yanks have been at Greenham common, several of them have been sent back to America because they were high on drugs? Was that the reason why the base held that operation in the middle of the night? Is it not ironic that 300 or 400 journalists can go trailing round a few cricketers in New Zealand and Pakistan, yet little information has been shed on this important matter, when the life and death of the nation could be decided, in some cases, by Americans on drugs?
  Mr. Stanley: If the hon. Gentleman had seen the answers that I have given some hon. Members recently, he would have seen that all the individuals concerned were, we understand, in non-sensitive clerical posts.

  East Atlantic (Escort Vessels)
  Sir Patrick Wallasked the Secretary of State for Defence what plans he has to increase the number of escort vessels in the North Atlantic Treaty Organisation's east Atlantic area.
  Mr. Stanley: I announced in November that two additional frigates will be retained in the Fleet until April 1985. We are continuing to assess the optimum balance to be struck between expenditure on surface ships and on submarines, and also between expenditure on ship numbers and on ship capabilities.
  Sir Patrick Wall: Is my hon. Friend aware that both SACLANT and CINCHAN have said that we are so deficient in escort vessels that we cannot carry out our operational tasks? Will my hon. Friend remember the 50 American destroyers that we were given in the last war? Would it not be better to mothball old frigates than sell or scrap them?
  Mr. Stanley: Of course I am aware of what my hon. Friend says about the views of the naval commanders to whom he referred. However, we shall have increased defence expenditure by about 20 per cent. in real terms by 1986–87. We have not yet taken a final decision on whether we shall create a standby squadron or put the ships that would go into the standby squadron into the running fleet.
  Mr. Duffy: Is the Minister aware that only three destroyers and seven frigates are currently on order, that only six frigates have been ordered by the Government since May 1979, and that one destroyer and five frigates are to be withdrawn from the active fleet this year, and six frigates next year? Is he further aware that the result will be that by the late 1980s we shall have an operational fleet of only about 20 surface ships, not even the 35 to 40 operational out of the 50 that the Minister hoped would be available to the fleet?
  Mr. Stanley: The hon. Gentleman must take into account the fact that as well as numbers of ships there is the crucial matter of the capabilities of the ships and their survivability. I hope that he will take into account the fact that spending on the Royal Navy in real terms is about £750 million more than it was when we came into office.
  Mr. Sayeed: Will my hon. Friend note the effective trials of the Scads-Reliant-Arapaho project? Will he consider assisting the merchant fleet itself in the north Atlantic by increasing the capability of merchantmen to defend themselves?
  Mr. Stanley: I assure my hon. Friend that that matter is under active consideration. I can confirm from my recent visit to the Reliant that the Arapaho concept is extremely valuable and will be of great use to us operationally.
  Mr. McNamara: When will the Government reply specifically to the charges of the C-in-C Channel, Admiral Staveley, about the shortage of destroyers and frigates, particularly minesweeper-hunters, on which the admiral was not prepared to put a figure, for defence reasons? The Government are compeletely naked, because they are distorting their defence expenditure by puting the Navy's budget into Trident rather than into conventional warships.
  Mr. Stanley: That is not correct, as can be seen from the figures for the percentage of the Trident programme in the defence budget. Of course, every operational commander could do with more assets. However, the central point that the House will want to take into account is that if we had the expenditure programme on defence that the Labour party promised us at the last election expenditure would be about one third down on what it is now.

  Ship-to-ship Missiles
  Mr. Sackvilleasked the Secretary of State for Defence when he now expects to make a decision on procurement of a ship-to-ship missile for the Royal Navy.
  The Under-Secretary of State for Defence Procurement (Mr. John Lee): Very shortly.
  Mr. Sackville: In view of my right hon. Friend's recently announced plans for more common policy meetings between the services, does the Minister agree that it would be a step in the right direction for the Royal Navy to procure the same anti-ship missile system as the Royal Air Force and the Fleet Air Arm?
  Mr. Lee: The excellent plans that the Secretary of State announced yesterday have no direct bearing on this competition. Obviously my hon. Friend is right in saying that communality plays a part in our procurement policy, but I remind him that air-launched Sea Eagle is in service with the Royal Air Force and the surface Harpoon and Exocet with the Royal Navy.

  Cruise Missiles
  Mr. Norman Atkinsonasked the Secretary of State for Defence if he will describe the command structure and to whom the United States military personnel are accountable in regard to the defence of the cruise missiles bases in the United Kingdom.
  Mr. Stanley: As has been the case for many years, United States military personnel based in this country are accountable to their military superiors in their national chain of command, as are, for instance, United Kingdom military personnel based in Germany. In addition, in exercising day-to-day operational control of the cruise

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  missile defence force, the United States Air Force commander acts in accordance with a policy approved by both Governments.
  Mr. Atkinson: Does the Minister recognise that it is outrageous that foreign nationals in Britain should not be subject to British jurisdiction? Is he aware that, although both the Royal Air Force and the American forces have denied that warning shots were fired at women at Greenham common recently, the women still insist that that happened? Does he agree that under the arrangements that he announced it is impossible for the women to subpoena American troops and to bring them to court to answer the charges laid by the women?
  Mr. Stanley: The hon. Member does not completely understand the operation of the Visiting Forces Act 1952. Perhaps he would care to read the excellent speech by the Under-Secretary of State for the Home Department, my hon. Friend the Member for Putney (Mr. Mellor), on 19 December, where that is fully set out. There is no foundation for the hon. Gentleman's allegation that shots were fired by USAF service men at Greenham common. I am surprised that the hon. Gentleman keeps repeating an allegation that has no foundation.
  Mr. Denzil Davies: Has not the Minister made a shameful admission, to the effect that he and his Department have no ultimate responsibility for American troops in Britain? Is not the constitutional position clear? American troops are responsible to their officers and then to their commander-in-chief, who is the President of the United States. No bit of paper can alter that constitutional fact.
  Mr. Stanley: The right hon. Gentleman ignores the fact that the legislation under which American troops in Britain operate today has operated for 30 years under Governments of all political complexions.

  US Air-land Battle Plan
  Mr. Stan Thorneasked the Secretary of State for Defence whether the united Kingdom Government have been consulted about the United States air-land battle plan.
  Mr. Stanley: Air-land battle has been official United States army doctrine since 1982 and applies to United States army forces worldwide. NATO nations, including the United Kingdom, have been made aware of this doctrine.
  Mr. Thorne: Will the Minister confirm that this plan involves first strike use of cruise missiles from the United Kingdom?
  Mr. Stanley: No, Sir, it does not.

  Major Weapons Systems
  Mr. D. E. Thomasasked the Secretary of State for Defence if he will publish in the defence White Paper a list of major weapons systems separately classified as strategic, intermediate and conventional.
  Mr. Heseltine: The Defence White Paper for 1984 will, as in previous years, have a section on the balance of forces, which will cover deployment of nuclear and conventional weapon systems and will include charts showing numerical comparisons.
  Mr. Thomas: Will the Secretary of State explain in the defence White Paper why land-based cruise missiles are classified as intermediate weapons, whereas sea-launched cruise missiles, which will be deployed in June, are classified as strategic weapons related to the American national deterrent?
  Mr. Heseltine: We can try to deal with that in the White Paper, which will seek to explain specifically the large and comprehensive range of cruise missiles available to the Soviet Union, which must be set in balance with those of the United States.

  Falkland Islands
  Mr. Soamesasked the Secretary of State for Defence what is the average tour of duty for an infantry regiment in the Falkland Islands.
  Mr. Stanley: The average tour of duty for an infantry battalion is five months, including transit time.
  Mr. Soames: Will my hon. Friend take time today to thank our fighting troops in the Falklands, who do a marvellous job? Does he agree that the quicker we can arrive at a just, honourable and lasting peace with Argentina and bring the troops home, the better it will be?
  Mr. Stanley: I am glad to join my hon. Friend in paying tribute to the forces of all three services in the Falkland Islands. It is the Government's wish that the Argentine Government should bring about a long-delayed but much-needed cessation of hostilities.

  PRIME MINISTER

    Engagements
    Mr. Gouldasked the Prime Minister if she will list her official engagements for Tuesday 13 March.
    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 fun-her meetings later today. This evening I hope to have an audience of Her Majesty the Queen.
    Mr. Gould: If expenditure on the common agricultural policy were brought under control, which seems unlikely, would not that remove the need for an increase in EC tax revenue? In either case, can the Prime Minister confirm that, at a time when other public spending programmes are being savaged, there will be no increase in the 11·2 per cent. of total VAT revenues that we are currently obliged to pay to the Common Market?
    The Prime Minister: There would have to be a sharp reduction in the amount spent on the common agricultural policy, not merely bringing it under control. The hon. Gentleman will recall that a much bigger proportion of the budget is spent on the CAP than was envisaged when we joined the Community. Control of it would be insufficient to obviate the second of our demands, which is that there must be an equitable system of financing EC expenditure. That is separate from the amount spent, and we must solve that issue once and for all.
    Mr. Rost: Will the Prime Minister today send a message to Mr. Arthur Scargill reminding him that,

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    although he may be a Marxist, we live in a democracy where those who do not wish to join a suicidal strike should be given the opportunity to say so through the ballot box, rather than be coerced, intimidated and bullied by mobs of flying pickets?
    The Prime Minister: As my hon. Friend is aware, people have a right to go to their places of work and to go about their lawful duties peaceably. Any difficulty with the maintenance of peace and the enforcement of criminal law is the responsibility of the chief officer of police concerned. If there is violence or intimidation on picket lines, the overwhelming majority of our people would give their full support to the police in dealing with those matters, as would the overwhelming majority of miners.
    Mr. Maginnis: Is the Prime Minister aware that for the second time in a few months a farmer in my constituency has been murdered by the IRA, close to the frontier with the Irish Republic? What message does she have for people who are likely to be victims, such as Ronnie Funston, of the IRA's genocide along the frontier, and will she instruct the Secretary of State for Northern Ireland to protect my constituents? It can be done.
    The Prime Minister: The majority of hon. Members would join me in praising the work of the Royal Ulster Constabulary, the Ulster Defence Regiment and the Army in protecting the citizens of Northern Ireland and in trying to eradicate violence. They would be very grateful if we were to show our appreciation.
    Mr. Terry Davisasked the Prime Minister if she will list her official engagements for Tuesday 13 March.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Davis: Will the right hon. Lady find time today, perhaps during her Chancellor's Budget statement, to reflect on that part of the Budget that has already been announced—the increase of 15 per cent. in the charges paid by people who are unfortunate enough to be ill? Will she explain why her Government have singled out this group of people to be treated so unfairly?
    The Prime Minister: The prescription charges have gone up, but they are a smaller proportion now of total expenditure than they were some time ago. This Government have an excellent record over the National Health Service. The Labour Government could not match either the expenditure or the number of patients who have been treated under this Government on the National Health Service.
    Mr. Chope: Will my right hon. Friend take the opportunity of inviting the Leader of the Opposition to condemn the violent picketing by miners on the picket lines today?
    The Prime Minister: I join my hon. Friend in hoping that the right hon. Gentleman will condemn any intimidation and violence or mass picketing that may have occurred. Most people would be glad to condemn intimidation, mass picketing and violence on the picket line.
    Mr. Maxtonasked the Prime Minister if she will list her official engagements for Tuesday 13 March.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Maxton: Will the Prime Minister explain what is so special about her hon. Friend the Member for Edinburgh, Central (Mr. Fletcher) that he can bungle the Stonefield Vehicles Ltd. issue, preside over the selling of a college of education at 10 per cent. of its valuation price, make indiscreet remarks to the press that have since been repudiated by the Secretary of State for Scotland and a Treasury minute, and yet still remain part of her Government?
    The Prime Minister: I read the PAC report and the reply, and there was no personal condemnation of my hon. Friend the Under-Secretary. I deeply resent what the hon. Gentleman said, and I have nothing to add to the Government's formal reply to the Committee's report that was published yesterday. I see no reason to condemn my hon. Friend the Under-Secretary of State who is responsible for corporate and consumer affairs.
    Mr. Couchman: During her busy day, will my right hon. Friend seek time to contact Mr. Ian MacGregor to assure him of the support of all sensible hon. Members in his efforts to bring viability to the coal industry?
    The Prime Minister: I shall be glad to do so. Mr. MacGregor has demonstrated his faith in the future of the coal industry by recommending the Government to invest in the Asfordby coal mine, a recommendation which the Government accepted. This Government's record is that we have invested the equivalent of £2 million a day for every day that we have been in power. That is faith in the future of the coal industry.
    Mr. Kinnock: Will the Prime Minister understand once and for all that I now condemn, and always have condemned, violence in pursuit of industrial disputes, even when it occurs among people who feel impotent in the face of the destruction of their jobs, their industry and their communities? Will she now desist, and encourage her hon. Friends to desist, from trying to make cheap points, which do not bother me, but which are absolutely contemptuous of the interests of many ordinary people in our country?
    The Prime Minister: I welcome what the right hon. Gentleman has said. I therefore accept and hope that he will fully protect the right of ordinary people to go to their place of work unhindered by unlawful picketing.
    Mr. Barronasked the Prime Minister if she will list her official engagements for Tuesday 13 March.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Barron: Will the Prime Minister tell the House whether she has ever met Mr. Jamil Amyuni, who is the middle-east director of Cementation International? If so, can she tell us where it was and what was discussed?
    The Prime Minister: I have met most people in the construction industry at one time or another.
    Mr. Hayward: Does my right hon. Friend agree that the recently announced investment in Wrexham by a Japanese high technology company, following on the announcements of American companies, confirms that the British economy is now on a sound track, which I hope will be further confirmed later this afternoon?
    The Prime Minister: The record of the electronics industry in Britain is extremely good. In the United

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    Kingdom, the electronics industry is expecting to grow at least 12 per cent. during 1984, with data processing growing at 32 per cent., and integrated circuits at 21 per cent. There was also, of course, very good news today. Today's figures indicate that industrial production in the three months to January rose 1·5 per cent. on the three months previously, and is now running 4·5 per cent. above the same period a year ago.
    Mr. Tim Smithasked the Prime Minister if she will list her official engagements for Tuesday 13 March.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Tim Smith: Now that the contract of the chief executive of the Property Services Agency has been terminated by mutual agreement, will my right hon. Friend do everything that she can to ensure that his successor has the proper qualifications and experience to root out fraud and corruption at PSA, and to implement proper management control systems?
    The Prime Minister: My hon. Friend is correct. The service contract of the chief executive of the Property Services Agency has been terminated by mutual agreement. My right hon. Friend the Secretary of State will be answering a question later today. He is very anxious that the task of following up the Wardale Touche Ross report should be pursued vigorously, and he came to the conclusion that the task should be placed in other hands. I shall, of course, take fully into account what my hon. Friend said about finding a suitable replacement. In the meantime, I should like to thank Mr. Alfred for the work that he has done while he has been at the Property Services Agency.
    Mr. Eadie: If the right hon. Lady is feeling inclined to send messages today, will she send a message to Mr. Ian MacGregor, the chairman of the National Coal Board, telling him that conciliation is the language of her Government, rather than confrontation, and that, if he continues to engender conflict in the mining industry, she will ask for his resignation?
    The Prime Minister: There is no confrontation on the part of Mr. MacGregor. A person who has recommended as much investment into the coal industry as he has is not in a position of confrontation, but is demonstrating his faith in the future. The Government will not intervene in this matter. The Government will leave the National Coal Board to deal with the matter as it thinks fit.
    Mr. Favell: Sympathising with those miners unfortunate enough to work at uneconomic pits, but does my right hon. Friend agree that high fuel costs contribute to job losses in other industries?
    The Prime Minister: Yes. If we were able to concentrate much more on the profitable pits the coal industry would have an even better future, because the price of coal might then be lower, and therefore we should be able to have far more exports than we do now. If major contracts with the Central Electricity Generating Board could be fulfilled at a lower price, the price of electricity could thus be brought down.
    Mr. Alton: Has the Prime Minister had the chance to consider the implications of the recently published Ministry of Defence 1953 document which demonstrates conclusively that British service men were deliberately
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    exposed to the effects of radiation during the atomic tests in the south Pacific in the 1950s? Does she not agree that it is time to review section 10 of the Crown Proceedings Act 1947 to allow service men to have the right to sue? Does she not further agree that it is time to review the compensation procedure available to service men? Will she make available all the information that was published at that time, which is obviously of great concern to many of the widows and bereaved relatives of these men?
    The Prime Minister: As the hon. Gentleman is aware, I have answered many questions on this in detail. He will be aware that a very extensive survey is taking place of those who were involved in the tests. Of course, he and I will await the results, but it will take quite a time to get them.
    Mr. Maloneasked the Prime Minister if she will list her official engagements for Tuesday 13 March.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Malone: Will my right hon. Friend confirm that the coal industry is now consuming £17 per year for every man, woman and child in this country and that the annual cost of support is one fifth of the cost of running the National Health Service? Does she agree that it is the Government and Conservative Members who support the future of the coal industry, and the Opposition and.Mr. Scargill who are interested only in supporting the past?
    The Prime Minister: The Government's record of investment in the coal industry is unrivalled. The taxpayers have demonstrated their faith in the industry to the extent that total public expenditure on the coal industry this year will be £1,388 million.
    Mr. Nellist: Mr. Speaker—[Interruption.] Mr. Speaker—[Interruption.]
    Mr. Speaker: Order. We have a very important day ahead of us. Mr. Nellist.
    Mr. Nellist: Does the Prime Minister agree that, having given the miners four years' continuous advice to increase production, when productivity at the coal face or per man is increased to produce a 55 million-tonne stockpile at the pithead and the power stations and the miners ask for their share they are given 25,000 redundancies? Is she surprised at the anger over the destruction of that industry?
    The Prime Minister: On productivity, "Plan for Coal" called for an increase of 4 per cent. per year. That was in 1974. There has been an increase of only 4·7 per cent. in 10 years. Productivity actually fell in the late 1970s and reached the 4 per cent. target only last year. More than 300 coal mines were closed in 11 years of Labour Government. In nine years of Conservative Government only 92 pit closures occurred.
    Mr. Dalyell: On a point of order, Mr. Speaker. In relation to the attack made on me—[Interruption.]
    Mr. Speaker: Order. I gave the hon. Gentleman an opportunity at Question Time, but I will give him another one.
    Mr. Dalyell: Is not the reality that answering questions becomes very expensive in circumstances in which Governments have something to hide?
    Mr. Speaker: Fortunately, I am not responsible for the answers to questions.

Concessionary Television Licences for State Retirement Pensioners
3.32 pm
Mr. Allen McKay: I beg to move,
That leave be given to bring in a Bill to provide for concessionary television licences for state retirement pensioners and others.
I am aware of the importance of our later debate, but the House should also be aware of the importance of the subject of my Bill and its effect on 9 million pensioners. On 6 October 1982—[Interruption.]
Mr. Speaker: Order. Will the House please listen with attention to the hon. Gentleman?
Mr. McKay: On 6 October 1982, I presented a similar Bill on which the House divided. That Bill was accepted by 187 votes to nil, clearly expressing the will of the House. On 19 April 1983 the House again accepted the Bill but unfortunately, yet again, the Government did not give it time to proceed any further. This is the third time of asking. Acceptance of today's Bill will reinforce the will of the House and is in accordance with my stated intention to pursue the matter until it is finally resolved.
The House will recall that the Wireless Telegraphy (Broadcast Licence Charges and Exemption) Regulations 1970 which brought in concessionary licences was extended by my right hon. Friend the Member for Morley and Leeds. South (Mr. Rees) when he was Home Secretary. On 23 February 1983 the then Secretary of State, now Lord Whitelaw, announced a further extension of the provisions following representations from my hon. Friend the Member for Bolsover (Mr. Skinner). That extension was to provide for physically disabled and mentally disabled persons living in local authority residential accommodation and residents in those categories of sheltered housing in which elderly persons now receive the concession. If my information is correct—it comes from a good source—it is to be regretted that the promise in that statement has not yet been carried out.
In addition, some local authorities, such as my own, Barnsley metropolitan authority, help senior citizens not in receipt of a concessionary licence by making a small contribution towards the cost of a licence. It is not inconceivable that such contributions will disappear owing to the Government's rate-capping Bill.
The present national scheme does not take into account the fact that a large number of pensioners are debarred because their accommodation does not come within the rules of the scheme, although they live in circumstances which are the same as, or little different from, the circumstances of those who are eligible. While 550,000 pensioners receive concessionary licences, 4·8 million pensioner households do not—some in the public but most in the private rented and owner-occupied sector. This is clearly most inequitable, and it is a matter of concern to many right hon. and hon. Members and certainly to all pensioners and pensioner organisations.
In a year in which the cost of a television licence is likely to be increased substantially, which will make the present VAT position much worse, the Government should take action. My Bill will give them a chance to do so. The right approach is undoubtedly to increase pensions
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and benefits to a level that will enable people to meet the cost of a licence themselves, but obviously this will not happen. Until it does, there is need for a concessionary system, but such a system must be fair and equitable.
Television is necessary to millions of pensioners. It provides entertainment, companionship, a sense of security, and information to those unable to buy newspapers. It is particularly necessary to those in isolated places or isolated within the community. The present situation causes bitterness and animosity. To cover those households without non-pensioners would cost £170 million. To cover all pensioners would cost £250 million. This could be raised by increasing the basic rate of tax by one quarter of a penny and VAT by one third of 1 per cent.
But why not dispense with television licensing altogether and avoid all the anomalies? [Interruption.]
Mr. Dennis Canavan: On a point of order, Mr. Speaker. Is it in order for the hooligans on the Government Benches to be hampering my hon. Friend's valuable speech? If we did it during the Chancellor's speech, I have no doubt that you would call us to order.
Mr. Speaker: I do not think that I need any help from the House. The House is waiting for a very important statement, but the hon. Member has every right, as have all Back Benchers, to be heard in silence.
Mr. McKay: Thank you, Mr. Speaker. It would be remiss for Back Benchers to give up Back-Bench time to Front Bench Members.
Why not dispense with television licensing altogether, thus avoiding possible anomalies, the cost of £715 million being funded by raising the basic rate of income lax three quarters of a penny and VAT by 1 per cent.? My party is pledged, on forming the next Government, to phase out licences for state retirement pensioners during the lifetime of that Parliament.
The Chancellor can at this late stage take three opportunities. He can announce that concessions will be extended to all state retired pensioners. He can announce the phasing out of licences for those state retired pensioners within the remaining lifetime of this Parliament. He can announce that my Bill, if accepted, will be given Government time and Government blessing. The Bill, if supported and allowed to proceed, w ill allow us to discuss, argue, question and explore the whole question and bring in an Act protecting existing recipients and a system of concessionary TV licensing which will be more fair and equitable to all.
Question put and agreed to.
Bill ordered to be brought in by Mr. Allen McKay, Mr. Joe Ashton, Mr. Geoffrey Lofthouse, Mr. William O'Brien, Mr. Alec Woodall, Mr. David Winnick, Mr. Peter Hardy, Mr. Michael Welsh, Mr. Martin Flannery, Mr. Derek Foster, and Mr. Dennis Skinner.
Mr. Allen McKay accordingly presented a Bill to provide for concessionary television licences for state retirement pensioners and others: And the same was read the First time; and ordered to be read a Second time upon Friday 23 March and to be printed. [Bill 123.]

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

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1. Consolidated Fund Act 1984.

2. Restrictive Trade Practices (Stock Exchange) Act 1984.

3. Occupiers' Liability Act 1984.

4. Tourism (Overseas Promotion) (Scotland) Act 1984.

5. Merchant Shipping Act 1984.

6. Education (Amendment) (Scotland) Act 1984.

7. Pensions Commutation Act 1984.

8. Orkney Islands Council Order Confirmation Act 1984.

9. Western Isles Islands Council (Kallin Pier, Harbour Jurisdiction) Order Confirmation Act 1984.

10. Ullapool Harbour Order Confirmation Act 1984.

WAYS AND MEANS

  Budget Statement
  Mr. Deputy Speaker (Mr. Harold Walker): Before I call the Chancellor of the Exchequer, it may be for the convenience of hon. Members if I remind them that, at the end of the Chancellor's speech, as in past years, copies of the Budget resolutions will not be handed around in the Chamber but will be available to hon. Members in the Vote Office.
  3.40 pm

  INTRODUCTION
  The Chancellor of the Exchequer (Mr. Nigel Lawson): This Budget will set the Government's course for this Parliament.
  There will be no letting up in our determination to defeat inflation. We shall continue the policies that we have followed consistently since 1979. These policies provide the only way to achieve our ultimate objective of stable prices. To abandon them would be to risk renewed inflation and much higher unemployment. As a result of our determined efforts, inflation is at its lowest level since the 1960s. Economic recovery is well under way and employment is growing.
  These achievements are a tribute to the courage and foresight of the five Budgets presented by my distinguished predecessor, whose duties unfortunately keep him in Brussels today.
  I shall do nothing today to compromise those successes. But there is much that I can do to build upon them.
  My Budget today has two themes—first, the further reduction of inflation; and, second, a series of tax reforms designed to enable the economy to work better, reforms to stimulate enterprise and set British business on the road to profitable expansion, reforms that will help to bring new jobs.
  I shall begin by reviewing the economic background to the Budget. I shall then deal with the medium-term financial strategy; with monetary policy and the monetary targets for next year; and with public borrowing and the appropriate PSBR for the coming year. I shall then turn to public expenditure, including the prospects for the longer term. Finally, I shall deal with taxation and the changes in the structure of taxation which will pave the way for cuts in taxes in subsequent years, for this will be a tax reform Budget.
  As usual, a number of press releases, filling out the details of my tax proposals, will be available from the Vote Office as soon as I have sat down.

  THE ECONOMIC BACKGROUND
  I start with the economic background.
  Since 1980, inflation has fallen steadily from a peak of over 20 per cent. For last year as a whole it was down to about 4½ per cent., the lowest figure since the 1960s. And with lower inflation have come lower interest rates.
  This in turn has led to an economic recovery whose underlying strength is now beyond dispute. Whereas in some previous cycles recovery has come from a self-defeating stimulus to monetary demand, this time it has sprung from sound finance and honest money. Lower inflation and lower interest rates benefit industry, business and consumer confidence alike.
  Across the economy, total money incomes grew in 1983 by about 8 per cent., of which 3 per cent. represented real growth in output. Although there is still room for improvement, this is a very much healthier division between inflation and real growth than the nation experienced in the 1970s. Output in the second half of 1983 is now reckoned to have exceeded the previous peak, before the world recession set in, and is still rising strongly.
  Productivity, too, has continued to improve rapidly. Just as over the past year many have wrongly predicted an end to the recovery, so some have tried to dismiss the sharp rise in productivity as a flash in the pan. Yet in 1983 manufacturing productivity grew by 6 per cent. for the second year in succession. Unit labour costs across the whole economy are likely to show the smallest annual increase since the 1960s. This has allowed a welcome and necessary recovery in real levels of profitability.
  Higher profits lead to more jobs. The number of people in work increased by about 80,000 between March and September last year. The loss of jobs in manufacturing has slowed down sharply, while jobs in services increased by getting on for 200,000 in the first nine months of last year.
  But further progress is needed. Although our unit wage costs in manufacturing rose by under 3 per cent. last year, our three biggest competitors, the United States, Japan and Germany, did better. The employment prospect would be significantly improved if a bigger contribution to improved cost performance were to come from lower pay rises.
  Demand, output, profits and employment all rose last year. Home demand has played the major part in the recovery so far. Lower inflation reduced people's need to save, and real incomes rose. Personal consumption increased by over 3½ per cent. compared with 1982. Fixed investment rose rather faster than consumption, with investment in housing and services particularly strong.
  Our rate of economic growth last year was the highest in the European Community. For much of 1983 our export performance was affected by weak demand in many of our overseas markets, while imports rose slightly faster than home demand. But by the end of last year world trade was clearly moving ahead again, and in the three months to January manufacturing exports increased very substantially. The balance of payments on current account last year is estimated to have been in surplus by about £2 billion.
  Our critics have been confounded by this combination of economic recovery and low inflation. Even the pessimists have been forced to acknowledge the durability of the recovery. It is set to continue throughout this year at an annual rate of 3 per cent. Inflation is expected to remain low, edging back down to 4½ per cent. by the end of this year. With rising incomes and low inflation, consumption will continue to grow. And, encouraged by improved profitability and better long-term growth prospects, investment is expected to rise by a good 6 per cent. this year.
  Looking abroad, too, economic prospects are more favourable than they have been for some time. Output in the United States should continue to grow strongly this year, and recovery is spreading to the rest of the world.
  Of course, there are inevitable risks and uncertainties. The size and continued growth of the United States budget deficit is a cause of widespread concern and keeps interest rates high, exacerbating the problems of the debtor countries. And the need to finance the United States deficit
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  by inflows of foreign capital has kept the dollar artificially high and led to a massive and growing trade deficit, greatly increasing the pressures for protectionism within the United States.
  A second potential risk is disruption in the oil market. The United Kingdom and, indeed, the whole world economy inevitably remain vulnerable to any major disturbances in this market.
  But despite these risks there is a growing sense throughout the industrialised world that the recovery this time is one which can be sustained. The essential requirement is the continued pursuit of prudent monetary and fiscal policies.

  THE MEDIUM-TERM FINANCIAL STRATEGY
  For the United Kingdom, the medium-term financial strategy has been the cornerstone of such policies. It will continue to play that role—to provide a framework and discipline for Government and to set out clearly, to industry and the financial markets, the guidelines of policy. Too often in the past Governments have abandoned financial discipline whenever the going got rough, and staggered from one short-term policy expedient to another. The temptation to accommodate inflationary pressure proved irresistible, and the nation's longer-term economic performance was progressively undermined.
  The medium-term financial strategy was designed to remedy this, by imposing a disciplined financial framework which would also ensure consistency between monetary and fiscal policies, and a proper balance in the economy. It is so designed to ensure that the more inflation and inflationary expectations come down, the more room is available for output and employment to grow.
  People now know that the Government intend to stick to their medium-term objectives. They understand that the faster inflation comes down, the faster output and employment are likely to recover. The increasing degree of realism and flexibility in the economy owes much to the pursuit of firm and consistent policies within the MTFS framework.
  Originally the MTFS covered four years. In this first Budget of a new Parliament it is appropriate to carry it forward for five years. So the MTFS published today in the Financial Statement and Budget Report—the Red Book—shows a continuing downward path for the monetary target ranges over the next five years and a path for public borrowing consistent with that reduction. It takes full account of important influences such as the pattern of North sea oil revenues and the level of asset sales arising from the privatisation programme.
  For the two final years of the new MTFS, which lie beyond the period covered in last year's public expenditure survey and last month's White Paper, the Government have not yet made firm plans for public spending. But the MTFS assumption—and at present it is no more than an assumption—is that the level of public spending in 1987–88 and 1988–89 will be the same in real terms as that currently planned for 1986–87.
  The precise figures set out in the MTFS are not of course a rigid framework, lacking all flexibility. As in the past, there may need to be adjustments to take account of changing circumstances. But no changes will be made that might jeopardise the consistent pursuit of the Government's objectives.

  MONETARY POLICY
  Monetary policy will continue to play a central role. Further reductions in monetary growth are needed to achieve still lower inflation.
  Over the 12 months to mid-February the growth of sterling M3 has been well within the 7 to 11 per cent. target range, with M1 at the top of the range and PSL2 a little above it. While in the early months of the target period most measures of money showed signs of accelerating, since the summer growth in all the target aggregates has been comfortably within the range. And nominal interest rates have continued to decline in line with falling inflation.
  Other evidence confirms that monetary conditions are satisfactory. The effective exchange rate has remained fairly stable, despite the international uncertainties which I have described.
  If monetary policy is to stay on track, its practical implementation must adapt to changes in the financial system and in the significance of different measures of money. There is of course nothing new in this. Over the years we have more than once altered the target ranges and aggregates to take account of such changes. But the thrust of the strategy has been maintained.
  One important development has been the decision to give a more explicit role to the narrow measures of money. Sterling M3 and the other broad aggregates give a good indication of the growth of liquidity. But a large proportion of this money is in reality a form of savings, invested for the interest it can earn. In defining policy, it is therefore helpful also to make specific reference to measures of money which relate more narrowly to balances held for current spending.
  It was for this reason that M1 was introduced as a target aggregate, but it has not proved entirely satisfactory for that purpose. With the rapid growth of interest-bearing sight deposits, M1 has become an increasingly poor measure of money held to finance current spending. The signs are that this will continue.
  Other measures of narrow money have not been distorted to the same extent. In particular, MO, which consists mainly of currency, is likely to be a better indicator of financial conditions than Ml. There is also the new aggregate M2, which was specifically devised to provide a comprehensive measure of transactions balances. This may also be a useful guide but, being new, still needs to be interpreted with particular care.
  In the past two years, it has been possible to set a single target range for both broad and narrow measures of money. But this will not normally be the case; for narrow monetary aggregates tend in the long run to grow more slowly than broader measures. Thus, this year's Red Book sets out two separate—though overlapping—ranges.
  The target range for broad money will continue to apply to sterling M3 and for the coming year will be set at 6 to 10 per cent., as indicated in last year's MTFS. The target range for narrow money will apply to MO and for next year will be set at 4 to 8 per cent. [Interruption.] Opposition Members ought to sit quiet. They have a lot to learn.
  To avoid any possible misunderstanding, let me stress that the use of MO as a target aggregate will not involve any change in methods of monetary control.
  The two target aggregates will have equal importance in the conduct of policy. And the authorities will continue to take into account other measures of money, especially
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  M2 and PSL2, which include building society liabilities, as well as wider evidence of financial conditions, including the exchange rate. As in the past, monetary conditions will be kept under control by an appropriate combination of funding and operations in the money market.
  So far as funding is concerned, the public sector's borrowing requirement, as I shall shortly explain, will be significantly lower in the coming year. In financing it, the role of national savings will remain important. This year's national savings target of £3 billion is likely to be achieved: the target for the coming year will again be £3 billion.
  Precise monetary targets for the later years will be decided nearer the time. But, to give a broad indication of the objectives of monetary policy, the new MTFS, like previous versions, shows monetary ranges for a number of years ahead. These ranges are consistent with a continuing downward trend in inflation: they demonstrate the Government's intention to make further progress towards stable prices.

  PUBLIC SECTOR BORROWING
  I turn now to public borrowing. Just as the classical formula for financial discipline—the gold standard and the balanced budget—had both a monetary and a fiscal component, so, too, does the medium-term financial strategy.
  The MTFS has always envisaged that the public sector borrowing requirement would fall as a percentage of gross domestic product over the medium term. By 1981–82 we had brought it down to 3·5 per cent. of GDP.
  Since then, however, there has been little further fall. The latest estimate of the PSBR for the current year, 1983–84, remains what it was in November—around £10 billion, equivalent to 3·25 per cent. of GDP. This is significantly above what was intended at the time of last year's Budget and would have been higher still had it not been for the July measures.
  We now need a further substantial reduction in borrowing in order to help bring interest rates down further as monetary growth slows down. Sterling interest rates are, of course, also influenced by dollar interest rates; but that makes it all the more important to curb domestic pressures. In contrast to virtually the whole of the post-war period, United Kingdom three-month and long-term rates are now lower than American rates. As long as American rates remain near their current level, it is highly desirable that this advantage be maintained.
  The higher level of asset sales we are planning as the privatisation programme gathers pace is a further reason for reducing the PSBR significantly in the coming year. Asset sales reduce the Government's need to borrow. But their effect on interest rates may be less than the effect of most other reductions in Government spending programmes.
  Last year's MTFS showed an illustrative PSBR for 1984–85 of 2·5 per cent. of GDP, equivalent to around £8 billion. But I believe that it is possible, and indeed prudent, to aim for a somewhat lower figure, I am therefore providing for a PSBR next year of 2·25 per cent. of GDP, or £7·25 billion.
  The House will recall that in November I warned that on conventional assumptions, including the 1983 Red Book's PSBR figure of £8 billion for next year, I might

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  have to increase taxes slightly in the Budget. I am glad to report that the latest, and more buoyant, forecasts of tax revenue in the coming year have improved the picture. A PSBR of £7·25 billion will require no overall net increase in taxation.
  Moreover, while the measures I shall shortly announce will, after indexation, be broadly neutral in their effects on revenue in 1984–85, they will reduce taxation in 1985–86 by well over £1·75 billion. And the MTFS published today shows that there should be room for further tax cuts not only in 1985–86 but throughout the remainder of this Parliament, provided that we stick firmly to our published plans for public expenditure to 1986–87 and maintain an equally firm control of public spending thereafter.

  PUBLIC EXPENDITURE
  The public expenditure White Paper setting out our spending plans for the next three years was approved by the House last week. Today I want to consider the important issue of Government spending in a rather wider perspective.
  For far too long, public spending has grown faster than the economy as a whole. As a result, the tax burden has steadily increased and income tax has extended steadily lower down the income scale.
  We have seen a massive enlargement in the role of the state, at the expense of the individual, and a corresponding increase in the dead weight of taxation holding back our economic progress as a nation.
  This process has to stop. But it has arisen because much public spending is directed to eminently desirable ends. This raises difficult issues which deserve the widest possible consideration and debate.
  The Government are therefore publishing today, in addition to the customary Budget documents, a Green Paper on the prospects for public spending and taxation over the next 10 years. It examines past trends, discusses the pressures for still higher spending, and examines the rewards for the individual and the benefits for the economy if these pressures can be contained.
  The Green Paper concludes that, without firm control over public spending, there can be no prospect of bringing the burden of tax back to more reasonable levels. On the assumptions made in the Green Paper, the burden of taxation will be reduced to the levels of the early 1970s only if public expenditure is kept broadly stable in real terms over the next 10 years.
  The Government believe that the issues discussed in the Green Paper merit the attention of the House and the country.
  In contrast to previous years, I have no package of public expenditure measures to announce in this Budget. The White Paper plans stand.
  I can, however, make one announcement, which I think the House will welcome. Within the published plans the Government have been able to provide the National Heritage Memorial Fund with additional resources which will enable it, among other things, to secure the future of Calke abbey. My right hon. Friend the Secretary of State for the Environment will be announcing the details later today.
  The House will recall that proposals for the new rates of social security benefit to come into force in November are not now made at the time of the Budget. Following last
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  year's legislation to return to the historic method of uprating, price protection is measured by reference to the retail price index for May. My right hon. Friend the Secretary of State for Social Services will be announcing the new rates of social security benefits, including child benefit, when the May RPI is known.
  Before leaving Government spending, I should add a word on public sector manpower. At the beginning of the last Parliament, the Government set themselves the target of reducing the size of the Civil Service from 732,000 in April 1979 to 630,000 by April of this year. That target will be achieved. We have now set ourselves the further target of 593,000 by April 1988. I am confident that a smaller Civil Service will continue to improve its efficiency. The tax changes that I shall be announcing today will reduce manpower requirements by at least 1,000 in my own Departments, which will help towards meeting the 1988 target.

  TAX REFORM
  I indicated at the outset that this will be a radical, tax-reforming Budget. It will also significantly reduce the overall burden of tax over the next two years taken together. And I hope to have scope for further reductions in future Budgets.
  My proposals for reform are guided by two basic principles: first, the need to make changes that will improve our economic performance over the longer term; second, the desire to make life a little simpler for the taxpayer.
  But I am well aware that the tax reformer's path is a stony one. Any change in the system is bound, at least in the short term, to bring benefits to some and disadvantages to others. And the disapproval of the latter group tends to be rather more audible than the murmurings of satisfaction from the former.
  Some commentators have suggested that our entire income-based tax system should be replaced with an expenditure-based system. Even if a root-and-branch change of this kind were desirable, it would, I believe, be wholly impractical and unrealistic.
  But I do not believe we can afford to opt for the quiet life and do nothing. So I have chosen the middle way: to introduce reforms, some of them far-reaching, within the framework of our existing income-based system. I shall also be proposing transitional arrangements where I believe it fair and appropriate to do so.
  The changes I shall be proposing today fall into three broad categories. These are the taxation of savings and investment, business taxation, and the taxation of personal income and spending.

  SAVINGS AND INVESTMENT
  First, the taxation of savings and investment. The proposals I am about to make should improve the direction and quality of both. And they will contribute further to the creation of a property-owning and share-owning democracy, in which more decisions are made by individuals rather than by institutions.
  I start with stamp duty. This was doubled from its longstanding 1 per cent. by the post-war Labour Government in 1947, reduced by the Conservative Government in 1963, and once again doubled to 2 per cent. by Labour in the first Budget presented by the right hon. Member for Leeds, East (Mr. Healey) in 1974. I am sorry that he is not

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  in his place today. At its present level it is an impediment to mobility and incompatible with the forces of competition now at work in the City, following the withdrawal of the Stock Exchange case from the Restrictive Practices Court.
  I therefore propose to halve the rate of stamp duty to 1 per cent. The new rate will apply straight away to Stock Exchange deals. It will also apply from today to other transactions where documents are stamped on or after 20 March.
  For the home buyer, the new flat rate 1 per cent. stamp duty will start at £30,000. Below this level no duty will be payable. As a result of this £5,000 increase in the threshold, 90 per cent. of first-time home buyers will not have to pay stamp duty at all.
  Reducing the rate of duty on share transfers will remove an important disincentive to investment in equities and increase the international competitiveness of our stock market. It should also help British companies to raise equity finance.
  In addition, I have four proposals to encourage the issue of corporate bonds. I shall go ahead with the new arrangements for deep discount stock and the reliefs for companies issuing Eurobonds, and for convertible loan stock, which were announced but not enacted last year. And I propose to exempt from capital gains tax most corporate fixed interest securities provided they are held for more than a year. As such securities are already exempt from stamp duty, this means that the tax concessions for private sector borrowing in the corporate bond market will now be virtually the same as for Government borrowing in the gilt-edged market.
  The reductions in stamp duty will cost £450 million in 1984–85, of which £160 million is the cost of the relief on share transfers and £290 million the cost of the relief on transfers of houses and other buildings and land.
  Next, life assurance. The main effect of life assurance premium relief today is unduly to favour institutional rather than direct investment. It has also spawned a multiplicity of well-advertised tax management schemes and no fewer than 50 pages of legislation attempting to deal with its abuse. I therefore propose to withdraw the relief on all new contracts made after today. I stress that this change will apply only to new, or newly enhanced, policies, taken out after today. Existing policies will not be affected at all. The change is estimated to yield about £90 million in 1984–85.
  I am also proposing to curtail the special—but unfortunately widely abused—privileges for what are known as "tax exempt" friendly societies, and bring them into line with the normal rules for friendly societies doing "mixed" business. However, the limits within which in future all friendly societies will be able to write assurance on a tax exempt basis will be increased from £500 to £750.
  I have also reviewed the tax treatment of direct personal investment. The investment income surcharge is an unfair and anomalous tax on savings and on the rewards of successful enterprise. It hits the small business man who reaches retirement without the cushion of a company pension scheme and impedes the creation of farm tenancies. In the vast majority of cases it is a tax on savings made out of hard-earned and fully-taxed income. More
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  than half of those who pay the investment income surcharge are over 65, and of these half would otherwise by liable to tax at only the basic rate.
  I have therefore decided that the investment income surcharge should be abolished. The cost in 1984–85 will by some £25 million, building up to around £350 million in a full year.
  Finally, I propose to draw more closely together the tax treatment of depositors in banks and building societies. These institutions compete in the same market for personal deposits. I believe that they should be able to do so on more equal terms as far as tax is concerned. One source of unequal treatment has already been removed, with the recent change made on legal advice in the tax treatment of building societies' profits from gilt-edged securities. They are now treated in the same way as those of the banks have always been.
  But the major source of unequal treatment, against which the banks in particular have frquently complained, is the special arrangement for interest paid by building societies. The societies pay tax at a special rate—the "composite rate"—on the interest paid to the depositor, who receives credit for income tax at the full basic rate.
  This system, which has worked well for the past 90 years, has both an advantage and a disadvantage. The disadvantage is that a minority of depositors, who are below the income tax threshold, still pay tax at the composite rate. It has not, however, stopped many of them from using building societies because of the competitive rates these have offered. The advantage of the scheme is its extreme simplicity, particularly for the taxpayer; most taxpayers are spared the bother of paying tax on interest through PAYE or individual assessment, while the Revenue is spared the need to recruit up to 2,000 extra staff to collect the tax due on interest paid without deduction.
  In common with my predecessors of all parties over the past 90 years, I am satisfied that the advantage of the composite rate arrangement outweighs the disadvantage. It follows that equal treatment of building societies and banks should be achieved, not by removing the composite rate from the societies but by extending it to the banks and other licensed deposit takers.
  Non-taxpayers will still continue to be able to receive interest gross, should they wish to do so, by putting their money into appropriate national savings facilities. But the purpose of the move is not, of course, to attract savings into Government hands: as I have already announced, next year's target for national savings will be the same as this year's and last year's; and the total Government appetite for savings, which is measured by the size of the public sector borrowing requirement, is being significantly reduced.
  The true purpose of the move is simple: fairer competition and simplicity itself. The great majority of individual bank customers will, when it comes to tax, be able to forget about bank interest altogether, for all the tax due on it will already have been paid. And it will be easier for people to compare the terms offered for their savings by banks and building societies.
  The purpose of the change is not to raise additional revenue. The composite rate arrangement is designed to collect no more tax than would be due at the basic rate from all depositors under existing arrangements.
  However, the Inland Revenue will be able to make staff savings of up to 1,000 civil servants. Moreover, this figure

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  takes no account of the substantial numbers of additional Inland Revenue staff who would have been required to operate the present system as the trend towards the payment of interest on current accounts develops.
  Accordingly, I propose to extend the composite rate arrangements to interest received by United Kingdom-resident individuals from banks and other licensed deposit takers with effect from 1985–86. The composite rate will not apply either to non-residents or to the corporate sector. Arrangements will also be made to exclude from the scheme certificates of deposit and time deposits of £50,000 or more.
  Taken together, the major proposals I have just announced on stamp duty, life assurance premium relief, the investment income surcharge, and the composite rate, coupled with other minor proposals, will provide a simpler and more straightforward tax system for savings and investment. They will remove biases which have discouraged the individual saver from investing directly in industry. They will reinforce the Government's policy of encouraging competition in the financial sector, as in the economy as a whole. And they are part of a package of measures designed to enable interest rates to fall and reduce the cost of borrowing.

  BUSINESS TAXATION
  I now turn to business taxation. Here the Government have two responsibilities towards British business and industry. The first is to ensure that they do not have to bear an excessive burden of taxation. The second is to ensure that, given a particular burden, it is structured in the way that does least damage to the nation's economic performance.
  The measures that I am announcing today will, taking the next two years together, result in a substantial reduction in the burden of taxation on British business. And, in addition, I shall be proposing a far-reaching reform of company taxation.
  Responses to the corporation tax Green Paper in 1982 showed a strong general desire to retain the imputation system. I accept that. But other changes are needed.
  The current rates of corporation tax are far too high, penalising profit and success, and blunting the cutting edge of enterprise. They are the product of too many special reliefs, indiscriminately applied and of diminishing relevance to the conditions of today. Some of these reliefs reflect economic priorities or circumstances which have long vanished, and now serve only to distort both investment decisions and choices about finance. Others were introduced to meet short-term pressures, notably the upward surge of inflation.
  With inflation down to today's low levels, this is clearly the time to take a fresh look. And with unemployment as high as it is today, it is particularly difficult to justify a tax system which encourages low-yielding or even loss-making investment at the expense of jobs.
  My purpose, therefore, is to phase out some unnecessary reliefs in order to bring about, over time, a markedly lower rate of tax on company profits.
  First, capital allowances. Over virtually the whole of the post-war period there have been incentives for investment in both plant and machinery and industrial, although not commercial, buildings. But there is little evidence that these incentives have strengthened the economy or improved the quality of investment. Indeed, quite the contrary: the evidence suggests that businesses
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  have invested substantially in assets yielding a lower rate of return than the investments made by our principal competitors. Too much of British investment has been made because the tax allowances make it look profitable rather than because it would be truly productive. We need investment decisions based on future market assessments, not future tax assessments.
  I propose to restructure the capital allowances in three annual stages. In the case of plant and machinery, and assets whose allowances are linked with them, the first year allowance will be reduced from 100 per cent. to 75 per cent. for all such expenditure incurred after today, and to 50 per cent. for expenditure incurred after 31 March next year. After 31 March 1986 there will be no first year allowances, and all expenditure on plant and machinery will qualify for annual allowances on a 25 per cent. reducing balance basis.
  In addition, from next year annual allowances will be given as soon as the expenditure is incurred and not, as they are today, when the asset comes into use. This will bring forward the entitlement to annual allowances for those assets, such as ships and oil rigs, for which some payment is normally made well before they are brought into use.
  For industrial buildings, I propose that the initial allowance should fall from 75 per cent. to 50 per cent. from tonight, and be further reduced to 25 per cent. from 31 March next year. After 31 March 1986 the initial allowance will be abolished, and expenditure will be written off on an annual 4 per cent. straight line basis.
  When these changes have all taken place, tax allowances for both plant and machinery and industrial buildings will still on average be rather more generous than would be provided by a strict system of commercial depreciation.
  The changes in the rates of allowances will not apply to payments under binding contracts entered into before midnight tonight, provided that the expenditure is incurred within the next three years.
  There will be transitional tax arrangements for certain investment projects in the development areas and special development areas. When a project in those areas has had an offer of Industry Act selective financial assistance and also attracts regional development grants, the existing capital allowances will continue to apply to the expenditure to which the selective assistance is related. These arrangements will cover projects for which offers have already been made between 1 April 1980 and today. Similar arrangements for regional development grants were, of course, announced by my right hon. Friend the Secretary of State for Trade and Industry in his White Paper last December.
  Over the same period to 31 March 1986 most other capital allowances will be brought into line with the main changes which I have announced. The Inland Revenue will be issuing a press notice tonight giving full details of these proposals.
  Next, stock relief. As the House will recall, this was introduced by the last Labour Government as a form of emergency help to businesses facing the ravages of high inflation. Those days are past; and the relief is no longer necessary. Company liquidity has improved and, above all, inflation has fallen sharply. Accordingly, I propose not to allow stock relief for increases in prices after this month.
  The changes that I have just announced, in capital allowances and stock relief, enable me to embark on a major programme of progressive reductions in the main rate of corporation tax. For profits earned in the year just ending, on which tax is generally payable in 1984–85, the rate will be cut from 52 per cent. to 50 per cent. For profits earned in 1984–85 the rate will be further cut to 45 per cent. Looking further ahead, to profits earned in 1985–86, the rate will go down to 40 per cent.; and for profits earned in 1986–87 the main rate of corporation tax will be 35 per cent.—no fewer than 17 percentage points below the current rate.
  All these rates for the years ahead will be included in this year's Finance Bill; and when these changes are complete our rates of capital allowances in this country for the generality of plant and machinery will be comparable with those in most other countries, while the rate of tax on profits will be significantly lower.
  The substantial reduction in the rate of corporation tax will bring a further benefit. Our imputation system allows a company to offset in full all interest paid. But only a partial offset for dividends is allowed. Companies thus have a clear incentive to finance themselves through borrowing and in particular bank borrowing rather than by raising equity capital. The closer the corporation tax rate comes to the basic rate of income tax, the smaller this undesirable distortion becomes.
  Of course, the majority of companies are not liable to pay the main rate of corporation tax at all. For them it is the small companies' rate, at present 38 per cent., which applies. I propose to reduce this rate forthwith to 30 per cent. for profits earned in 1983–84 and thereafter. A tax regime far small companies which is already generous by international standards will thus become markedly more generous.
  The corporation tax measures I have just announced will cost £280 million in 1984–85. In 1985–86 the cost will be £450 million—made up of £1,100 million by way of reductions in the rates, only partially offset by a £650 million reduction in the value of the reliefs. During the transitional period as a whole, these measures should have a broadly neutral effect on the financial position of companies. But when the changes have fully worked through companies will enjoy very substantial reductions in the tax that they pay.
  Business and industry can go ahead confidently on the basis of the corporation tax rates I have announced today, which set the framework of company taxation for the rest of this Parliament.
  Over the next two years, these changes will cause some investment to be brought forward, to take advantage of high first-year capital allowances—a prospect made all the more alluring for business since the profits earned will be taxed at the new, lower rates. But the more important and lasting effect will be to encourage the search for investment projects with a genuinely worthwhile return and to discourage uneconomic investment.
  It is doubtful whether it has ever been really sensible to subsidise capital investment irrespective of the true rate of return. But certainly, with over 3 million unemployed, it cannot make sense to subsidise capital so heavily at the expense of labour.
  These changes hold out an exciting opportunity for British industry as a whole: an opportunity further to
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  improve its profitability, and to expand, building on the recovery that is already well under way. Higher profits after tax will encourage and reward enterprise, stimulate start innovation in all its forms, and create more jobs.
  I now turn to some more detailed measures affecting business.
  The business expansion scheme, introduced last year as a successor to the business start-up scheme, has been widely welcomed as a highly imaginative scheme for encouraging individuals to invest in small companies. It is already proving a considerable success. It now needs time to settle down, and I have only one change to propose this year.
  The scheme was designed to offer generous incentives for investment in new or expanding companies in high-risk areas. The ownership of farmland cannot be said to fall within this category, and I therefore propose that from tomorrow farming should cease to be rated as a qualifying trade under the scheme.
  Next, in keeping with what I have said about removing complexity and distortions, I propose to abolish two reliefs in the personal tax field which were introduced at a time when this country suffered from excessively high rates of income tax. As we have reduced those rates, the reliefs are no longer justified.
  The first is the 50 per cent. tax relief—falling after nine years to 25 per cent.—applied to the emoluments of foreign-domiciled employees working here for foreign employers. These employees are often paying much less tax here than they would either in their own country or in most other European countries. At present income tax rates, the need for this relief has clearly disappeared. Moreover, it is open to widespread abuses. It is, for example, possible for someone whose parents came here from abroad, and who has himself lived here all his life, to enjoy this relief, if he works for a foreign company. That cannot be right.
  I therefore propose to withdraw the relief for all new cases from today. For existing beneficiaries, the 25 per cent. relief will cease on 6 April, and the 50 per cent. relief will be phased out over the next five years.
  I also propose to withdraw the foreign earnings relief for United Kingdom residents who work at least 30 days abroad in a tax year. This relief, too, harks back to the days of penally high income tax rates. It, too, has been exploited, in particular by those who prolong their overseas visits purely in order to gain a tax advantage. I propose to withdraw the matching relief for the self-employed who spend 30 days abroad, and for those resident in the United Kingdom who have separate employments or separate trades carried on wholly abroad. The relief will be halved to 12½ per cent. in 1984–85 and removed entirely from 6 April 1985.
  However, I am not making any change to the 100 per cent. deduction given for absences abroad of 365 days or more. In addition, I have authorised consultations by the Inland Revenue about a possible relaxation in the rules governing the taxation of expenses reimbursed to employees for travel overseas.
  The abolition of these reliefs will eventually yield revenue savings of over £150 million and represents another useful step in the removal of complexity and distortions in the tax system.
  I need to set the car benefit scales for 1985–86 for those provided with the use of a car by their employer. Despite the increases over recent years, the levels still fall short of

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  any realistic measure of the true benefit. I am proposing an increase of 10 per cent. in both the car and car fuel scales with effect from April 1985.
  Unnecessarily high rates of tax discourage enterprise and risk taking. This is true of the capital taxes, just as it is of the corporation and income taxes. It is a matter of particular concern to those involved in running unquoted family businesses. The highest rates of capital transfer tax are far too high and badly out of line with comparable rates abroad. I propose therefore, in addition to statutory indexation, to reduce the highest rate of capital transfer tax from 75 per cent. to 60 per cent. For lifetime gifts I propose to simplify the scale so that the rate is always one half of that on death.
  For capital gains tax I will, as promised, bring forward in the Finance Bill proposals to double the limit for retirement relief to a figure of £100,000, backdated to April 1983. A consultative document on other possible changes in this relief is being issued next week. I am proposing no other changes this year in capital gains tax beyond the statutory indexation of the exempt amount from £5,300 to £5,600. However, the tax continues to attract criticism—not least for its complexity—and that is a matter to which I hope to return next year.
  We have done much to improve the development land tax. Early in the last Parliament, my predecessor increased the threshold from £10,000 to £50,000. I now propose a further increase to £75,000, which will reduce the number of cases liable to the tax by more than one third.
  Next, share options. The measures introduced in the last Parliament to improve employee involvement through profit-sharing and savings-related share options schemes have been a notable success. The number of these schemes open to all employees has increased from about 30 in 1979 to over 670 now, benefiting some half a million employees. To maintain and build on this progress I propose to increase the monthly limit on contributions to savings-related share option schemes from £50 to £100. I have also authorised the Inland Revenue to double the tax-free limits under the concession on long-service awards, and to include within these limits the gift of shares in the employee's company.
  But, beyond this, I am convinced that we need to do more to attract top calibre company management and to increase the incentives and motivation of existing executives and key personnel by linking their rewards to performance. I propose therefore that, subject to certain necessary limits and conditions, share options generally be taken out of income tax altogether, leaving any gain to be charged to capital gains tax on ultimate disposal of the shares. The new rules will apply to options meeting the necessary conditions which are granted from 6 April.
  I am sure that all these changes will be welcomed as measures to encourage the commitment of employees to the success of their companies and to improve the performance, competitiveness and profitability of British industry.
  As the House knows, the Government are deeply concerned at the threat which the spread of unitary taxation in certain United States states has posed to the United States subsidiaries of British firms. With our European partners we are monitoring the situation closely, and await with keen interest the imminent report of United States Treasury Secretary Regan's working group. It is essential that a satisfactory solution is found and speedily implemented.
  United States firms operating in this country are not, of course, taxed on a unitary basis.
  I now turn to oil taxation. Last year's North sea tax changes were well received, and there has been a substantial increase in the number of development projects coming forward and a new surge in exploration. Work on no fewer than 128 offshore exploration and appraisal wells started last year—an all-time record.
  The Government are already committed to a study of the economics of investment in incremental development in existing fields. This is of increasing importance, and in consultation with my right hon. Friend the Secretary of State for Energy I therefore propose to review this area with the industry, and to legislate as appropriate next year to improve the position. To prevent projects being deferred pending this review, any changes will apply to all projects which receive development consent after today.
  Meanwhile, I am taking two measures to prevent an unjustified loss of tax from the North sea. First, in addition to the PRT measures on farm-outs which I announced last September, I am limiting the potential corporation tax cost of such deals. Second, I propose to repeal the provision which allows advance corporation tax to be repaid where corporation tax is reduced by PRT. I have also reviewed the case for extending last year's future field concessions to the southern basin, but have concluded that an additional incentive here is not needed.
  I have just two further changes affecting business to propose, both of which will come into force on 1 October.
  Ever since VAT was introduced in this country, we have treated imports differently from the way our main European Community competitors treat them. While they require VAT on imported goods to be paid in the same way as customs duties, we do not. Under our system an importer does not have to account for VAT on his imports until he makes his normal VAT return, on average some 11 weeks later. During this time the importer enjoys free credit at the taxpayer's expense. But when one British business man buys from another, he gets no such help from the taxpayer: he pays his VAT when he pays his supplier.
  The European Commission has for some years now been seeking, with our full support, to get a system like ours adopted throughout the Community. But the plain fact is that in all that time the Commission has made no progress whatever.
  I must tell the House that I am not prepared to put British industry at a competitive disadvantage in the home market any longer. Should our European partners at any time undergo a Damascene conversion and agree that the Commission's proposal should be accepted after all, then of course we would revert to the present system. But in the meantime I propose to move to the system used by our European competitors. We shall provide the same facilities for payment of VAT on imports as apply to customs duties. That means that most importers will be able to defer payment of VAT by, on average, one month from the date of importation. But that is all.
  As I have said, this change will apply from 1 October. By bringing forward VAT receipts, it will bring in an extra £1·2 billion in 1984–85, some of which will be borne by foreign producers and manufacturers. There will of course be no increased revenue in subsequent years.
  The second change I propose to make on 1 October concerns the national insurance surcharge. This tax on jobs was introduced by the Labour Government in 1977 at the rate of 2 per cent., and further increased by the right hon.
  Member for Leeds, East in 1978 to 3½ per cent. During the last Parliament, this Government reduced it to 1 per cent., and we are pledged to abolish it during the lifetime of this Parliament.
  Given the impact that this tax has, not only on industrial costs but also—at a time of high unemployment—on jobs, I have decided to take the opportunity of this my first Budget to fulfil that pledge. Abolition of the national insurance surcharge from October will reduce private sector employers' costs by almost £350 million in 1984–85, and over £850 million in a full year. It will thus be of continuing help to British industry. As before, the benefit will be confined to the private sector.
  The House will, I am sure, agree that a Budget which substantially reduces the Government's demands on financial markets, which abolishes the national insurance surcharge and which cuts the rates and simplifies the structure of corporation tax is a Budget for jobs and for enterprise. It offers British industry an opportunity which I am confident it will seize.

  PERSONAL TAXATION: TAXES ON SPENDING
  Having announced major reforms of both the taxation of savings and investment and the taxation of business, I turn now to third and final area in which I propose to make progress on tax reform. This is the taxation of personal income and spending.
  The broad principle was clearly set out in the manifesto on which we were first elected in 1979. This emphasised the need for a switch from taxes on earnings to taxes on spending. My predecessor made an important move in this direction in his first Budget, and the time has come to make a further move today. To reduce direct taxation by this means is important in two ways. It improves incentives and makes it more worthwhile to work, and it increases the freedom of choice of the individual.
  Having regard to the representations I have received on health grounds, I therefore propose an increase in the tobacco duty which, including VAT, will put lop on the price of a packet of cigarettes, with corresponding increases for hand-rolling tobacco and cigars. This will do no more than restore the tax on tobacco to its 1965 level in real terms. These changes will take effect from midnight on Thursday. I do not, however, propose any increase in the duty on pipe tobacco.
  I propose to raise most of the other excise duties broadly in line with inflation, so as to maintain their real value: not to do so would run counter to the philosophy I outlined a moment ago. But with inflation as low at it now is, the necessary increases are on the whole mercifully modest.
  I propose to increase the duties on petrol and derv by amounts which, including VAT, will raise the price at the pumps by 4½p and 3½p a gallon respectively. This does no more than keep pace with inflation. The changes will take effect for oil delivered from refineries and warehouses from 6 o'clock this evening. I do not propose to increase the duty on heavy fuel oil, which is of particular importance to industrial costs.
  There is one excise duty which I propose to do away with altogether. Many of those who find it hardest to make ends meet, including in particular many pensioners, use paraffin stoves to heat their homes. It is with them in mind
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  that I propose to abolish the duty on kerosene from 6 o'clock tonight. I am sure that this will be welcomed on all sides of the House.
  The various rates of vehicle excise duty will, once again, go up roughly in line with prices. Thus, the duty for cars and light vans will be increased by £5, from £85 to £90 a year. However, in the light of the reassessment by my right hon. Friend the Secretary of State for Transport of the wear and tear that various types of vehicle cause to the roads, there will be reductions in duty for the lightest lorries, offset by higher increases for some heavier lorries. All these changes in vehicle excise duty will take effect from tomorrow.
  However, I propose to exempt from vehicle excise duty all recipients of the war pensioners' mobility supplement. In addition, the existing VAT relief for motor vehicles designed or adapted for use by the handicapped will be extended, and matched by a new car tax relief. The effect will be that neither VAT nor car tax will apply to family cars designed for disabled people or substantially adapted for their use.
  I now come to the most difficult decision I have had to take in the excise duty field. As the House will be aware, the rules of the European Community, so far as alcoholic drinks are concerned, are designed to prevent a member state from protecting its own domestic product by imposing a significantly higher duty on competing imports. In pursuit of this, the Commission has taken a number of countries to the European Court of Justice.
  In our case, the Commission contended that we were protecting beer by under-taxing it in relation to wine. We fought the case, but we lost; and I am now implementing the judgment handed down by the court last year. Accordingly, I propose to increase the duty on beer by the minimum amount needed to comply with the judgment and maintain revenue: 2p on a typical pint of beer, including VAT. At the same time, the duty on table wine will be reduced by the equivalent of about 18p a bottle, again including VAT.
  We have thus complied with the court's judgment, and I am happy to be able to tell the House that the Italian Government have, after discussions, given us an undertaking that they will comply with earlier court rulings on discrimination against Scotch whisky.
  As for the rest of the alcoholic drinks, cider, which increasingly competes with beer but attracts a lower duty, will go up by 3p a pint. The duties on made wine will be aligned with those on other wine, and I propose to increase the duty on sparkling wine, fortified wine and spirits by about 10p a bottle, including VAT. All these changes will take effect from midnight tonight.
  These changes in excise duties will, all told, bring in some £840 million in 1984–85, some £200 million more than is required to keep pace with inflation. The addition is, of course, due to the increase in tobacco duty.
  The remainder of the extra revenue I need to enable me to make a substantial switch this year from taxes on earnings to taxes on spending must come from VAT. I propose no change in the rate of VAT. Instead, I intend to broaden the base of the tax by extending the 15 per cent. rate to two areas of expenditure that have hitherto been zero rated.
  First, alterations to buildings. At present repairs and maintenance are taxed, but alterations are not. The borderline between these two categories is the most

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  confused in the whole field of VAT. I propose to end this confusion and illogicality by bringing all alterations into tax.
  I recognise that this will be unwelcome news for the construction industry, but construction will of course benefit very greatly from the reduction in the rate of stamp duty which I have already announced: £290 million of the cost of that reduction in 1984–85 relates to transfers of land and buildings, and of that £290 million over 90 per cent. relates to buildings and building land. Nevertheless, to allow a reasonable time for existing commitments to be completed or adjusted, the VAT change will be deferred until 1 June.
  Secondly, food. Most food is zero rated, but food served in restaurants is taxed, together with a miscellaneous range of items including ice cream, confectionery, soft drinks and crisps, which were brought into tax by the right hon. Member for Leeds, East. Takeaway food clearly competes with other forms of catering, and I therefore intend to bring into tax hot take-away food and drinks, with effect from 1 May.
  The total effect of the extensions of the VAT coverage which I have proposed will be to increase the yield of the tax by £375 million in 1984–85 and by £650 million in a full year.
  The total impact effect on the retail price index of the VAT changes and excise duty changes taken together will be less than three quarters of 1 per cent. This has already been taken into account in the forecast which I have given to the House of a decline in inflation to 4½ per cent. by the end of the year.
  The extra revenue raised in this way will enable me, within the overall framework of a neutral Budget, to lighten the burden of income tax.

  PERSONAL TAXATION: INCOME TAX
  Since we took office in 1979, we have cut the basic rate of income tax from 33 per cent. to 30 per cent. and sharply reduced the confiscatory higher rates inherited from the last Labour Government. We have increased the main tax allowances not simply in line with prices but by around 8 per cent. in real terms. It is a good record, but it is not enough. The burden of income tax is still too heavy.
  During the lifetime of this Parliament, I intend to carry forward the progress we have already made. For the most part, this will have to wait for future Budgets, particularly since I have thought it right this year to concentrate on setting a new regime of business taxation for the lifetime of a Parliament—and beyond. But, as a result of the changes to taxes on spending which I have just announced, I can take a further step in this Budget.
  I propose to make no change this year in the rates of income tax. So far as the allowances and thresholds are concerned, I must clearly increase these by the amounts set out in the statutory indexation formula, based on the 5·3 per cent. increase in the retail price index to December. The question is how much more I can do, and how to direct it.
  I have decided that, this year, the right course is to use every penny I have in hand, within the framework of a revenue-neutral Budget, to lift the level of the basic tax thresholds, for the married and single alike. It makes very little sense to be collecting income tax from people who are at the same time receiving means-tested benefits. Moreover, low tax thresholds worsen the poverty and
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  unemployment traps, so that there is little if any financial incentive to find a better job or even any job at all. There is, alas, no quick or cheap solution to these problems. But that is all the more reason to make a further move towards solving them now.
  I propose to increase the other thresholds in line with the statutory indexation requirement, but by no more. The first higher rate of 40 per cent. will apply when taxable income reaches £15,400 a year and the top rate of 60 per cent. to taxable income over £38,100. The single age allowance will rise from £2,360 to £2,490 and the married age allowance from £3,755 to £3,955.
  For the basic thresholds, statutory indexation would mean putting the single and married allowances up by £100 and £150 respectively. I am glad to say that I can do considerably better than that. I propose to increase the basic thresholds by well over double what is required by indexation. The single person's allowance will be increased by £220, from £1,785 to £2,005; and the married man's allowance by £360, from £2,795 to £3,155.
  This is an increase of around 12·5 per cent., or some 7 per cent. in real terms. It brings the married man's tax allowance for 1984–85 to its highest level in real terms since the war. It means that the great majority of married couples will enjoy an income tax cut of at least £2 a week, and it means that a large number of people, those with the smallest incomes of all, are taken out of income tax altogether. Some 850,000 people—over 100,000 of them widows—who would have paid tax if thresholds had not been increased will pay no tax in 1984–85. That is 400,000 more taken out of tax than if the allowances had merely been indexed.
  All these changes will take effect under PAYE on the first pay day after 10 May. Their cost is considerable—some £1·8 billion in 1984–85, of which roughly half represents the cost of indexation.
  This is as far as I can go on income tax this year, within a broadly revenue-neutral Budget for 1984–85. But, so long as we hold to our published planned levels of public spending, there is an excellent prospect of further cuts in income tax in next year's Budget. These would be on top of the measures I have announced in this Budget which, as I have already told the House, will reduce taxation in 1985–86 by well over £1¾ billion, with business taking the lion's share.

  CONCLUSION
  I have, Mr. Deputy Speaker, completed the course I charted at the outset this afternoon. I have described the recovery and how the Government plan to sustain it and assist the creation of new jobs. I have reaffirmed our commitment to further reductions in inflation, by maintaining sound money and by curbing Government borrowing. I have embarked on a radical programme of tax reform, abolishing outright two major taxes—the investment income surcharge and the national insurance surcharge—and I have been able to propose measures which will significantly reduce the burden of taxation over the next two years. I commend this Budget to the House.
  Mr. Deputy Speaker: Under Standing Order No. 114, the first motion, entitled "Provisional Collection of Taxes", must be decided without debate.

  PROVISIONAL COLLECTION OF TAXES
  Motion made, and Question,
  That pursuant to section 5 of the Provisional Collection of Taxes Act 1968 provisional statutory effect shall be given to the following motions—

  (a) Spirits (Motion No. 2).

  (b) Beer (Motion No. 3).

  (c) Wine and made-wine (Motion No. 4).

  (d) Cider (Motion No. 6).

  (e) Tobacco products (Motion No. 7).

  (f) Hydrocarbon oil (Motion No. 8).

  (g) Vehicles excise duty (Motion No. 9).—[Mr. Lawson.]

  put forthwith, pursuant to Standing Order No. 114 (Ways and Means Motions), and agreed to.
  Mr. Deputy Speaker: I shall now call on the Chancellor of the Exchequer to move the motion entitled "Amendment of the Law". It is on that motion that the Budget debate will take place today and on succeeding days. The remaining motions will not be put until the end of the Budget debate next week and they will then be decided without debate.

Budget Resolutions and Economic Situation

  AMENDMENT OF THE LAW
  Motion made, and Question proposed,
  That it is expedient to amend the law with respect to the National Debt and public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

  (a) for zero-rating or exempting any supply;

  (b) for refunding any amount of tax, otherwise than by a provision relating to supplies to, and importation by, a government department within the meaning of section 27 of the Value Added Tax Act 1983;

  (c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or

  (d) for any relief other than relief applying to goods of whatever description or services of whatever description.—[Mr. Lawson.]

  [Relevant documents: European Community Document No. 10156/83, Annual Economic Report 1983–84, together with the final version as adopted by the Council.]
  5 pm
  Mr. Neil Kinnock: The more I see of Budgets, the more I am convinced that they are ceremonial occasions.
  In the weeks of nudges, winks and leaks that precede Budget dates, in the Sunday family photographs—they were rather nice this year, I thought—in the speculations on what tipple or tincture the Chancellor of the Exchequer will use in his flask, in the stroll that usually takes place before he presents his Budget, in the battered brief case, in all those collected traditions there is a certain choreography. Now, after the Chancellor has sat down, we move to the next act. Scene 1 is the departure of large numbers of hon. Members from the Chamber. Scene 2 of the traditional act—I persuade myself that it is irrelevant to the performance on the Opposition Front Bench, because it always takes place—is the response by the Leader of the Opposition.
  First, I congratulate the Chancellor of the Exchequer on presenting his Budget. It is a traditional ceremony of congratulation, but I do it with more earnestness than is usual, because I think that it only took the Chancellor one hour and 20 minutes to present his Budget. If he deserves congratulations for nothing else, he deserves warm congratulations on the brevity with which he delivered his statement.
  I am told that it is an ordeal to stand at the Dispatch Box and deliver a Budget speech, that it is a physical ordeal for Chancellors to be on their feet for such long periods, and I am prepared to believe it. Of course, millions of people who work an 8-hour day standing on their feet would not believe that it was such an ordeal, but I am sure we all understand that it is the apex of some strain and anticipation on the part of the Chancellor. Therefore we can accept that it is a strain. [Interruption.] Others may say, like Prospero, that the ceremony is an "unsubstantial pageant", and although it was shorter this year than previously, it was not so much—again, as Prospero said—"rounded with a sleep" as I have noticed on the Government Benches on previous occasions.
  Like all previous Leaders of the Opposition, I am at the unique disadvantage in having to respond to the Budget without the benefit of the Red Book. As far as I know, no one—other than conceivably the Prime Minister, who

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  told us a few years ago that she was speaking off the cuff—ever sought to crave the understanding of the House on that basis, and I do not believe that anyone should. However, it is a little like reporting a rugby match that one has left at half-time. It does not often bother sports commentators that they do not see much of the match, but it bothers us.
  However, we have had the advantage—or disadavantage—of seeing the play over the past five years, and we have also had the ominous warning that the policies of those five years are to be continued by the Chancellor. Indeed, that was his opening remark. The unemployment and under-employment of labour, capital and skills and other resources that we have experienced in those five years are to continue. The five years that have resulted in a loss of our world trade share are to continue. The policies that have brought five years of cuts and closures are to continue. The policies of five years of waste—£40,000 million worth of North Sea oil revenues—are to continue. The policies of five years with allowances and concessions that have most benefited the rich but no concessions to benefit the poor in real terms are to continue. During those five years we have seen the income tax burden cut by £1·2 billion and the national insurance burden increased by £3·4 billion. Those policies are to continue. [Interruption.] On that basis, and on the generality of what we heard from the Chancellor of the Exchequer this afternoon, I have to say that this Budget does much more for the City of London than it does for the country of Britain. [Interruption.] There are features—
  Mr. Deputy Speaker: Order. The Chancellor of the Exchequer was given a very fair hearing, and I think that the House should extend the same courtesy to the Leader of the Opposition.
  Mr. Kinnock: I think that the disturbance is largely due, Mr. Deputy Speaker, to some of the new boys who are not used to the felicities. I shall try to avoid felicities altogether in future.
  The congratulations, or at least the commendations, extend to part of what the Chancellor said. It is true that last year my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) urged on the then Chancellor a further raising of the income tax thresholds and the abolition of the national insurane surcharge. So it is natural for us to commend those steps today. However, we had hoped that in changing the income tax thresholds the Chancellor would not do it in such a way as to confer further benefits on people earning, say, more than £20,000 a year. We happen to believe that what resources are available to him should be concentrated or targeted on people of modest and low incomes—incomes of around £20,000 and less. It is sad that he has used resources to reward those who already have. There may have been a much more efficient way of using the inducements—such as they are—of lowering income tax among people whom the Prime Minister has been known to call in the past the wealth creators in our society.
  There are commendable steps. The introduction of the new procedure for the collection of value added tax is to be commended. Regrettably, I cannot say the same for what I consider is a quite indefensible extension of value added tax to take-away foods. They are not in competition
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  with restaurant-served or cafe-served food. Indeed, the very act of taking away is generally used by people on lower incomes as a way to reduce their food bills.
  Then we heard that VAT is to be charged on home extensions. It is extraordinary that the Prime Minister told us, just three or four weeks ago, that she wanted a do-it-yourself economy. Nevertheless, now the Chancellor is imposing VAT on home conversions and extensions, done either by the individual or by the construction industry. The construction industry, having lost 350,000 workers in the last four years, having lost such a lot of its trade, having lost public sector contracts and presiding over the lowest year for housing starts for many years past. cannot afford to lose any trade, including the home extension trade.
  If we look further into the Chancellor's measures there are other areas worthy of considerable criticism. I am sure that my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley), who will speak tomorrow from the Opposition Front Bench, will take them up in detail, but some require immediate response.
  First, I believe that the extension of the composite rate from building societies to banks will damage the interest of the small saver. It is an absolute evasion for the Chancellor to suggest that those small savers can be shoved out of the banks and into the national savings system. There is no question but that some people will be unfairly disadvantaged by that.
  The abolition of the investment income surcharge is an equally partisan act, a deliberate act in favour of those who need no such further assistance. As the right hon. Gentleman knows, the threshold at which that surcharge became payable was in excess of £7,000 a year. It is extraordinary that the Chancellor is removing that surcharge of 15 per cent., while requiring that people on very low earned incomes still have to pay a 9 per cent. rate of national insurance charge. That, again, is typical of the Chancellor's distortion of values. The reduction in capital transfer tax and capital gains tax contributes nothing to the general welfare or production of our society.
  One other point I wish to refer to has particularly damaging potential in a country where we must be stimulating, and trying to induce and encourage, investment in companies of all sizes as much as possible. It is folly to take the gamble of reducing capital allowances, or any of the other allowances, in order to try to induce people to increase their investment in buildings or in machinery. The Chancellor did not give an overall figure for the kind of losses to the Exchequer that will be so sustained, but, given that our private investors show little enough appetite already for undertaking investment in manufacturing production in the country, in my view it would be foolish for a Chancellor even to take the chance that this change might militate further against the possibility of their spending money on developing and improving our productive potential in this society.
  This was—so we were told—supposed to have been a broadly neutral Budget. Perhaps in general terms it will turn out to be broadly neutral, but the phrase "broadly neutral" has an air of benevolent inactivity about it. The impression conveyed by the use of the phrase is that it was assiduously offered weeks before the Budget to mitigate or to take the edge off any protest that might be building up, and to try to blunt the reception that the Chancellor might receive. It is the kind of phrase that is intended for those purposes. Although it does not entirely succeed—

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  as in the case of the right hon. Member for Old Bexley and Sidcup (Mr. Heath), for instance—I am sure that it does have an effect on the kind of pressures that could be imposed on the Chancellor by Conservative Members. However, it conveys the idea that, if a Budget is not actually going to do any good, at least it will not do too much harm.
  The problem is that, for the effects of an allegedly "neutral" Budget to be truly neutral, the country and its people must begin from a standard of equity and a parity of treatment, of justice and of opportunity, and obviously the people of this country do not begin from that standard. Neutrality that relieves the obligations of the rich while maintaining the obligations of the moderately well-off and the poor is not a neutral Budget. Neutrality in the face of a 13 per cent. fall in manufacturing output is not neutrality; it is abdication. Neutrality in the face of a 40 per cent. fall in manufacturing investment is unforgiveable inertia. Neutrality in the face of a rise of 2 million in unemployment, and in the face of the existence of 1 million long-term unemployed, is not neutrality; it is plain bare-faced malice. Neutrality when the number of people poor enough to claim supplementary benefit has doubled in the years of this Government's life is not neutrality; it is disdain for the needs of the poor of this country. What we have witnessed in the last five years is not neutrality, and nor is what we have heard this afternoon. It is a conspiracy against the basic interests of the British people, their needs for development, for expansion, for employment, for care and for opportunity.
  We are told that the Prime Minister, against all that background, is batting for Britain. I believe that the Chancellor of the Exchequer is battering Britain, and his Budget this afternoon changed none of my views about the general direction that he wants to follow, and the disadvantages that it will impose upon the people. The inflation rate that they say is worth all of this history of contraction, of reduction, of stagnation, of public expenditure cuts and of disadvantage is their jewel in the crown. I begin to think that that jewel is actually made of paste. Everybody is in favour of lower inflation rates. We welcome them. [HON. MEMBERS: "Do something about it."] Hon. Gentlemen say, "Do something about it." We ask where it has come from. We are frequently told that the slump and the difficulty are a product of the world environment of depression, but inflation rates have been falling elsewhere, a product of the deflation that is afflicting other similar countries. We have a lower inflation rate, not because of any effective actions of this Government or the one before them. We have a lower inflation rate that is similar to, if not precisely the same as, the fall in inflation rates of all the other members of the OECD. [Interruption.] If hon. Members wish to check this, I will cheerfully furnish them with all the figures that they could possibly want from authoritative sources that they cannot possibly deny. We have at most a slight margin of lower inflation, and a slight improvement on the general OECD average. The price that we have paid for that 0·5 or 1 per cent. margin is a massive contraction in our capability to produce, to invest, to develop and to employ.
  We listened to the Budget, and we listened to what the Government said. We are told again, as the Chancellor of the Exchequer said this afternoon, that there is a great
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  recovery in process that can be encouraged only by the kind of measures that he offered this afternoon. I say that that is absolute rubbish.
  What we have is a recovery that goes more to the date of the last general election than does any contrivance of this Government, or any stimulus that they have given to the economy, a recovery based entirely on a credit boomlet. As to the major components of expansion, in 1983 consumer spending rose by £6 billion and Government consumption and investment rose by £3 billion. Of that consumer expenditure £4 billion was financed by credit, by hire purchase, by overdrafts and by credit cards, and all the Government's expenditure was financed by borrowing.
  Here we have a recovery, so-called, coming entirely from that extension of borrowing, that increase in credit, from a Government who are headed by a woman who repeatedly tells us that borrowing is an activity that has descended directly as one of the devil's works. If it was such a devilish contrivance and if we had a regime in which, as the Prime Minister says, no one spent more than he earned, the current system of commerce would come crashing to the ground. But we do not have such a regime. We have a Government who actually got elected on tick by taking credit from a consumer boom that they sponsored by a temporary relaxation of credit raising. That was par for the course. It has been the same with all the Prime Minister's favourite nostrums. She was supposed to be helping middle managers. What will the Budget do for them? Those earning more than £20,000 have been the only ones to benefit from a tax reduction in five years of Tory Government. Today's shifting of the thresholds may add a few more, but it will not bring in the great army supposedly waiting with pent-up energies and enterprise to be released from the Labour Government by the Tories who would lift the burden of tax from them. Anyone earning less than £20,000—middle managers and everyone else—has paid more tax under the Tories, not less.
  The people at the top, as the Prime Minister used to call them—the wealth creators—have received plenty of concessions, reliefs, bonuses and inducements. The only people to benefit significantly from any of the Government's tax concessions up to and including today's budget have been those on very high incomes. They have not rewarded the Prime Minister's faith or the country's hopes by doing anything that has actually subscribed in any dependable fashion to the continuing prosperity of the country. Last year those people shifted £10,000 million worth of desperately needed investment capital out of this country. They have ignored the blandishments, the encouragement and the exhortations of five years of Tory Government and have presided over the collapse of manufacturing investment. No Government who put their trust in the very rich will obtain much reward because even the CBI and the Institute of Directors are asking for tax cuts paid for by public expenditure cuts. The Institute of Directors makes no bones about being a reverse Robin Hood. From every other source and every other lobby, however, the call is to expand the economy, to put in more money, to ensure that demand makes production more worth while so that we can forestall continued import penetration and build for the future.
  The Government have some questions to answer arising out of the Buget and the fact that they have had five years to correct the economy in their terms. Those questions

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  must be asked. When do they expect to get production back to a stable, steady growth rate of 3 per cent. per year? When do they expect to get back the 1·6 million manufacturing jobs and the 700,000 service and construction industry jobs that they have lost in their period of office? When do they expect to restore investment to the 1979 level? When will they ensure that Britain once again sells more manufactured goods to the rest of the world than it buys from the rest of the world? When will they restore our share of world trade to where it was in 1979? Those questions demand answers from a Government who presume to hold office for the next three or even four years and who say that they intend to stick to the same policies which have brought many parts of the country over the lip of ruin. Governments have to answer those questions, and this Government especially must answer them.
  I envy the Government their power—power which they could use to do good, to provide care for the needy and help for the helpless. I envy them their power to sponsor production, to induce investment and to generate employment. I envy them all that power from the bottom of my soul—and from the bottom of that same soul I despise their utter failure to use that power for the advantage of the people of this country.
  5.24 pm
  Sir Kenneth Lewis: The Leader of the Opposition always has a difficult task to perform in opposing the Budget as soon as the Chancellor has sat down, but his task is easier than mine in that he can simply oppose the Government root and branch whatever Budget has been produced. I did not expect to be called immediately, so I must collect my thoughts very quickly in supporting my right hon. Friend the Chancellor in what I believe is an excellent Budget. I am pleased to be called so soon, however, as my right hon. Friend the Chancellor is one of my colleagues, with a constituency in the east midlands. I appreciate that he has had to leave to attend a meeting upstairs, but I shall prompt him to read my comment that both in the style of his presentation and in its content his first Budget has been a triumph. I only hope that he can keep up in successive Budgets the high standard and fast pace that he has set for himself. I hope that this Budget will be the first of several which will allow him to get rid of the devil of excessive taxation that this country has suffered from for too many years.
  There were only two aspects of the Budget that I did not much like. As a smoker, I was upset to hear that I shall have to pay a good deal more for the small panatella cigars that I smoke. [HON. MEMBERS: "Change to a pipe. "] I understand that pipe tobacco has got away scot free and I am glad about that because many pensioners smoke pipes. I do not propose to change to a pipe, so I shall just have to suffer the tax.
  I was also somewhat disappointed as I have just bought and sold houses. Clearly, I did that too soon as I have given my right hon. Friend the Chancellor and the Government tax that they would not have had if I had waited a little longer. Nevertheless, I am glad that there has been a cut in stamp duty, on both house and share sales. I believe that this will help the City to earn more money. It is not a matter of simply helping the City, as the Leader of the Opposition suggested. Of course it helps the City, but it helps the City to earn more money. The City is a very high earner for this country, but it has been losing
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  business because of the stamp duty. My right hon. Friend the Chancellor has thus cut taxation to gain revenue, which must be a good thing.
  I thought that my right hon. Friend would abolish the national insurance surcharge, but I did not think that he would have the nerve to do so at a stroke. The fact that he has done so pleases me especially as I and some of my hon. Friends, as well as a couple of my right hon. Friends, had a battle with the then Chancellor in the last Parliament on this very matter. We succeeded in convincing the then Chancellor that there was a need for cuts, but he never quite got rid of the surcharge. He led the field, however, in reducing it and now my right hon. Friend has ditched it altogether. It was always a bad tax. It was brought in by the Labour party, not by us. It rose to the extent that it became a deterrent to the employment of labour. Therefore, it was a tax that cost jobs. With 3·5 to 4 million unemployed, we cannot afford taxes that cost jobs.
  In the statement that the Chancellor made today he said that this was to be a tax reform Budget, helping industry and helping jobs. Certainly it is the beginning of tax reform. The corporation tax cuts that have been announced will be helpful to small businesses in particular. Perhaps it is not realised by many people that a lot of small businesses do not have the chance to take advantage of the 100 per cent. capital allowances. They do not make the amount of profit that would enable them to spend in order to claim 100 per cent. capital allowances. But at the end of the year they still have to pay tax because they need to plough back in order to build up reserves. They need to do this to strengthen their capital base, to expand the business, and a man cannot plough back in a small business unless he first pays his tax. I believe that there is a case for exempting altogether from tax the first £20,000 or £30,000 of profit in a business. But short of this, at any rate the reduction in corporation tax which my right hon. Friend has announced today will be particularly beneficial to small businesses.
  The assistance on capital transfer tax will also be helpful to small businesses because the problem about capital transfer tax as it affects small businesses is that it is too often imperative for small businesses to be sold. They are then swallowed up by larger businesses. Anything that can keep small businesses on the ground, active and employing people, growing and employing more people must be good. Therefore, I am pleased that the Chancellor has taken that point.
  I know that the Opposition will feel justified in making a good deal of party capital out of the fact that investment surcharge is being got rid of—indeed some of them may genuinely feel that getting rid of the investment surcharge is simply helping the rich. But the right hon. Gentlemen on the Opposition Front Bench have got to recognise that there are many people who have no extra pension from their employment, because pensions from employment have only started to take off in the last 20 years. Before and just after the war, many employers did not provide pensions—in fact, pensions by companies started, I suppose, only in the middle 1960s. So many people are not getting very large pensions and some are not getting any pension at all from their employment. They have saved a little. Therefore, the investment income they are getting, which is at present surcharged, takes the place of a pension, and they have to pay an extra 15 per cent. tax on that.

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  I thought that my right hon. Friend might halve the investment surcharge. I was not sure that he would take it away altogether. I make no objection to his doing away with it, however, because it is a tax on savings. Furthermore, it is a tax on comparatively modest savings. The right hon. Member for Islwyn (Mr. Kinnock) is shaking his head. One can get an income of about £7,000 a year on about £70,000 of capital. That is not a very large amount of capital. There are people who get that by selling a house and, when they are very old, going into smaller accommodation. In that way they add to their pension.
  It is true that this will help some people who are quite well off, but the balance of advantage must lie in giving support to those people who depend upon their investment income to take the place of the pension which they have not got.
  Then there is my right hon. Friend's value added tax on take-away food. I suppose we could call this a takeaway Budget. When I come down the Ml, I go in to one of the motorway service areas for a break and a cup of coffee. If I take the cup of coffee out to my car, I do not pay VAT on it. If I have the coffee sitting down in the premises, I do pay VAT. So the Chancellor has gained revenue and at the same time done away with what is a rather stupid anomaly. It is a little wider than that. A range of food has also been brought into VAT.
  The best action my right hon. Friend has announced this afternoon on VAT—and I am surprised that this has not been taken before and glad that it has been done now—is to make certain that countries importing into this country are covered by the same rules as we are when we are exporting to their countries. I was amazed to hear my right hon. Friend say that we would get as much as 1·2 billion income from this. It is probably a once-for-all income but it will certainly help in the present year. There certainly is a great need—and some of us have been saying this for some time—for a get-together of what were once thought to be the terrible twins, the Chancellor of the Exchequer and the Secretary of State for Trade and Industry, to deal with imports, because this country is suffering from a heavy sucking-in of imports, destroying our manufacturing base. We really are no longer in a position to countenance playing according to the rules while other people play according to their own rules. We have to see that British industry is given a fair deal, not only on exporting but on its ability to compete in the home market against the cheap imports that we have been drawing into this country for too long.
  Finally—and this is the main emphasis of the Budget—there is the switch of tax, so that a large number of people are taken out of tax altogether. This is what we wanted the Chancellor to do; this he has done. We have been in a ridiculous situation in this country in which people at the lower end of the scale have been picking up benefits and at the same time having to pay tax. My right hon. Friend has taken twice the number of people out of tax as might have been justified if he had simply played it on the basis of the rise in inflation. That is good. I hope that he can do more in subsequent Budgets. If we do not get a large number of people at the lower level out of tax we shall continue to be in trouble in the way our social security system works. Furthermore, we shall continue to be in a situation in which there is a disincentive to work.
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  So what the Chancellor has done in resisting giving further handouts up the scale among higher earners and in taking the lower-paid out of tax has the full support of those of us in the Conservative party who believe that at the lower end of the scale there should be no tax and that social security benefits should be equally geared to those who are in the lower income brackets. At present social security benefits go too high up the scale. They should be adjusted so that we can give more to those in real need. The starting point of that is to get the people at the lower end out of tax. That my right hon. Friend has done. I commend him for an imaginative and realistic Budget, a Budget that is fair and a Budget on which he can build for the future.
  5.40 pm
  Mr. Ian Wrigglesworth: My hon. Friends on the alliance Benches will want to judge the Budget by the answers to three questions. First, will it buttress the growth that we have seen over recent months? Secondly, will it improve the competitiveness of British industry? Thirdly, will it help the least well-off members of our society who have borne the greatest burden of the recession over the past few years? The judgment that we would come to in answering those three questions is that the Budget is a bit of a curate's egg—good in parts and rather bad in others.
  We are disappointed by the macro-economic and growth aspects of the Budget. Although the Budget will probably become known as the beer, chips and baccy Budget, the main message contained within it is that there is little hope for those who are unemployed that they will be able to find employment in the year to come and be able to get out of the poverty trap that many of them face. The growth that we have seen—I take issue with the Chancellor here—is not, as he said, a recovery
  "whose underlying strength is now beyond dispute".
  I and my hon. Friends do not accept that for one minute. The recovery that has started is not firm or of great strength; it is slender. It is a weak sapling and it needs to be nurtured and strengthened by Government action if it is to be sustained.
  We want to see British industry thriving. We want greater wealth to be created and we want to reduce unemployment. But the Chancellor's forecasts in the early part of his Budget do not encourage us to think that that will be achieved. As the Leader of the Opposition has pointed out, the growth of recent months has substantially come from a boost in consumer expenditure that has been financed largely by increased personal borrowing and the reduction in the savings ratio. It is unlikely that that consumer boom will be continued. Indeed, it was a consumer boom of that sort that the Chancellor's predecessor condemned roundly at the time of the 1979 election. The consumer boom needs to be sustained by increases in capital expenditure which have not been forthcoming in the Government's expenditure White Paper that we debated last week. There has been no reference to such capital expenditure in today's Budget.
  We should like to have seen selective increases in capital expenditure that would justify some of the asset sales that the Government are making. The Chancellor will be able to keep down public sector borrowing by the massive sale of public assets which will be spent not on reinvestment in capital projects but on the Government's current expenditure. As I have said before, here we have

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  a Government who are selling the family silver to pay the grocery bills. That is not good accounting. It is not good for the economy and it will not underpin the growth that has begun. Therefore, on the macro-economic policy that the Chancellor has announced this afternoon he gets very low marks indeed. Nor has he encouraged us to think that he has sustained the growth that has begun.
  The Chancellor has fared somewhat better on improving competitiveness. We welcome the abolition of the national insurance surcharge, on which we have previously asked the Government to act. He has reduced the tax burden on businesses, and that will help their competitiveness and help them to grow. It will also help them in the export markets. We welcome the fact that the burden of taxation on the business sector has been reduced. We look now to industry to increase its productivity further and to increase its share of markets abroad so that some further growth can be forthcoming from industry.
  However, the Chancellor has been unable to introduce the changes in the taxation system that he set as one of his objectives. He wanted reforms in savings, business and personal taxation that would be his mark and would benefit the country. In a number of ways the Chancellor has failed to achieve his objectives. He has not helped the less well-off in our society. Indeed, he should have given them the highest priority, but instead, even though some of the changes that he has announced may have been justified in different circumstances, he has helped the better-off again in this Budget. The reduction in capital gains tax and the abolition of the investment income surcharge might have been justifiable if the economy were better, but when we have over 3·5 million unemployed and millions of people below the poverty line it is unacceptable that the Chancellor should be going out of his way to help the better-off sections of our society in this Budget. The Chancellor has got the balance wrong. He should have moved to help the less well-off rather than those with substantial capital and incomes behind them. We shall seek to amend the changes that the Chancellor is proposing in those spheres in order to switch the balance in the direction that I have described.
  The Chancellor has also increased the income tax threshold. While that is welcome in many respects because it takes more people out of the tax net, nevertheless it helps all taxpayers, many of whom, like hon. Members and others in our community, do not need that tax relief at present, although it is always welcome. We have many less well-off in our society and it is to them that any tax relief should predominantly be directed. It is for that reason, that, instead of the Chancellor's adopting his broad-brush approach, we have proposed a system of amalgamating the tax and the benefits system so that the relief that the Chancellor can give is directed much more effectively at the poor within the community. Generally speaking, they consist of those who have families, and we look forward to hearing how large an increase the Government will introduce in child benefit after May. We hope that that will be substantial because it is towards child benefit and families that any relief that can be given should be directed.
  During my time in the House I have often heard talk of the thousands of people who are being taken out of the tax net. It is a wonder that anyone is left in the tax net. However, people go back into the tax net during the course of the year. It is much better if revenue is available for the relief of poverty, that it should be directed to those families
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  who are really suffering from poverty rather than we should have the broad-brush approach that the Chancellor has adopted on this occasion.
  Through the indirect tax burdens, such as the extension of VAT, the Chancellor has taken a retrogade step. We cannot be entirely critical because it is a broad-brush approach. The decision to extend VAT to take-away foods will be a tax on those who use that service because they cannot afford restaurant prices. Certainly people from the north make great use of take-away food facilities. and will deeply resent the burden now being put on fish and chips and the other take-away foods that sustain many members of our community.
  The Chancellor has also extended VAT to building alterations, yet the construction industry is the last industry upon which the Chancellor should place burdens. One in five of the unemployed are from the construction industry. We wanted to hear the Chancellor say that he would take steps to help the industry and to help get some of its unemployed workers back to work. There is a great benefit in helping the industry because it is labour intensive with a low import content. The industry uses home products for its bricks and other materials, so any growth in the industry would not damage our balance of payments. We are disappointed that the Chancellor has imposed the VAT burden on the industry.
  We are prepared to accept the other excise duties. It is now accepted by both sides of the House that the Chancellor virtually indexes the excise duties on drinks and other such items. I shall not comment on the balance between beer and wine—[Interruption.] Some hon. Members tempt me to do so. We welcome, even though with slight surprise, the fact that the Chancellor has not gone all the way on beer duty. Those of us in the north feared that there would be a 3p or 4p increase. We recognise the burden placed on the Chancellor by the European court, but he has increased the duty by only 2p, which is a relief. However, that increase will not please many of our constituents.
  I have dealt with the main points that concern us. I wish to emphase what I said at the beginning of my speech, which is that the major disappointment is that there is no change on the macro-economic front. The demand in the economy is not being increased. Our hope that the Chancellor would underpin the recovery that has now begun by introducing proposals for capital expenditure—to get people back to work and to increase the wealth of the country—has not been fulfilled
  We condemn the Budget on those macro-economic grounds, although we are grateful for the help being given to industry. We regret that the Chancellor is not helping the poor in our society. We hope that during the coming year he will realise that the policies on which he is intent will maintain unemployment at 3·5 million. We hope to demonstrate that that is unacceptable to the people of this country. We want him to return to the House with proposals for capital expenditure increases that will start getting people back to work.
  5.54 pm
  Mr. Robert Banks: I am most grateful for the opportunity to make an early intervention in the debate, to express a reaction to the statement of my right hon. Friend the Chancellor of the Exchequer.
  I wish first to congratulate my right hon. Friend on the manner in which he made his statement and also on its

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  content. Many journalists have been speculating during the last few weeks leading up to the Budget about what sort of budget it would be—as is usual. Many were saying that it would be a standstill Budget—perhaps a touch here and a touch there. Others were saying that there could be a new fundamental reformist Budget on the way. My right hon. Friend has managed to combine the two. In many cases, simply by use of the index, he has altered certain of the tax rates; on the other hand, he has instigated a reformist campaign.
  I want to take one or two points from the Budget and comment on them. When my right hon. Friend referred to MI as being replaced by MO, I found that difficult to follow. We shall need some elucidation on that later. I shall have to study carefully the implications of that statement.
  I especially congratulate my right hon. Friend on reducing stamp duty. That is a valuable step towards making it possible for many more people, especially small investors, to enter the share market. That market should be open to all investors, small and large. It will also be immensely valuable for house purchase. It will provide a great incentive to those, especially first-time buyers, faced with considerable expenditure when buying a house.
  I agree with my hon. Friend the Member for Stamford and Spalding (Sir K. Lewis) on the importance of the abolition of the investment income surcharge. That is an important step in encouraging people to conserve their savings and their capital. It is something that we must extend to all parts of the community in order to encourage people to put more of their money and their savings to one side to provide for the extras that they will need in their retirement.
  On the subject of capital allowances, all in all it is a step in the right direction. What is absolutely right is that businesses should make their decisions on the basis of their business expertise, and not be unduly influenced by the allowances available to them. In many cases those allowances distort their decisions and can be counterproductive in the longer term.
  What is important in the way in which that question has been dealt with by the phasing down of capital allowances is how it has brought forward investment. This is the time, if ever there was one, to invest in business. We have heard a glowing statement from my right hon. Friend on the progress that our economy has made during the past few months. Growth in production is up by 6 per cent. With the confidence that industry now has in itself to perform, we stand at a point in our history when we can use that to invest in new plant, new ideas and, in particular, new companies.
  In order to do that, we need all the expertise available to us. For that reason, I regret that my right hon. Friend has withdrawn the tax concessions for foreign nationals employed in this country. We need those people in our industry. If they have the expertise, it is as well for them to be here rather than in their own countries or another country where they can compete with us. We need all the people that we can draw to this country to make our economy work.
  I especially congratulate my right hon. Friend on his bold step in abolishing the national insurance surcharge. I am sure that that will be welcomed by hon. Members in
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  all parts of the House because it will be a huge incentive to industry. More money will be available for the investment that I have described.
  On the changes on tobacco, spirits and petrol, I think that my right hon. Friend has it absolutely right. Exactly the right decisions are being made. I do not think that anybody in his right mind could quibble with the small increases that have been made or, indeed, with the decreases that will be made on table wines.
  The question of VAT and building work alterations is, I think, a difficult one. Undoubtedly we all want to see many old and dilapidated buildings restored and improved. This obviously will be a hindrance to it. Nevertheless, there has been an anomaly in the sense that VAT was payable on some building works but not on others. Of course, it would have been nicer, better and more encouraging for the construction industry if VAT had been taken off both sides, so to speak, but I regret that VAT at this juncture has now been imposed on the alterations that will be made to buildings.
  I can to a certain extent counteract that by welcoming considerably the imposition of VAT to be payable within a month on imports. This is really long overdue and it will be a great benefit. I understand that about £1·2 billion will accrue to the Exchequer in this financial year as a result.
  Above all, one has to welcome the raising of the tax threshold. This is something that I think has come as a surprise because my right hon. Friend the Chancellor of the Exchequer has taken a larger step than many of the pundits would have predicted. I particularly welcome this move. I do not think that we can deny, however rosy the picture we can present of our present situation, that this country has huge problems to contend with. We must take into consideration the problems that we have had to contend with in inflation, a depressed economy and everything else. We have, of course, the problem of long-term unemployment. This is not peculiar to our country, because it is happening to all countries in the western world.
  All the predictions from OECD, the EEC and elsewhere point to a rising trend and a hardening trend in the numbers unemployed. Therefore, we have to turn our minds most particularly to how we should handle this particular situation. It bears, of course, heavily on the young. I believe that the schemes that have been brought in to provide work opportunities have been immensely successful. Those whom I have spoken to who have partaken of those schemes have all spoken well of the instruction that they have derived from them and the value that they have obtained.
  But it is the people at the other end of the scale, perhaps in the late fifties, who do not yet qualify for a pension, who are forced to live on social security, who do not have the benefit of long-term social security, and who really do not have a very strong hope of getting employment, who concern me most. I think that what we have to do in this area is not to pretend that there is hope for employment to the point of 65, to the retirement age, but to come to terms with the fact that there is a good possibility that these people may get part-time earnings. This is the area that I think we need to tackle by raising the level of part-time earnings which people in this particular age bracket can obtain before losing their right to benefits. This will improve their income considerably. It is a very difficult

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  period for anybody in that time of life when he is called upon to adjust to a position of unemployment before reaching retirement age.
  Of course, I recognise that a study is being undertaken on reducing the retirement age, and that I welcome. We shall look forward to hearing what that report has to say.
  I spoke of the huge problems that face this country. One of the greatest problems is, of course, the long-term decay which we have experienced over the years and the effect that this has had on our infrastructure. We have to a certain extent imposed on ourselves our own sites of dereliction by demolishing buildings and then finding that there was nobody there to put up new buildings instead. I have particularly in mind, of course, our inner cities. Coupled with that are the areas of planning blight where grand schemes were proposed. The planners had to bear those schemes in mind but nothing was done to the property and it went into decay. We have those areas to consider. We have the central parts of our infrastructure, whether it be our Victorian sewers or our unfinished road network, which because it is unfinished causes all our congestion and the time and money that is lost through trade being held up.
  Then there are the repairs that we have to consider to those buildings which were put up in the 1950s and even the 1960s, where there are leaking roofs. I can tell you, Mr. Deputy Speaker, of several schools, and certainly hospitals, in my constituency which were constructed on this pattern and which have proved to be very costly to maintain and have produced innumerable problems.
  So the Government have a huge problem to deal with. I believe that they can deal with it in two distinct ways. One way is by marrying as much private capital as possible to dealing with some of the new developments that are necessary, and this is being done in the enterprise zones. Not least, for example, is the excellent work of the London Docklands development corporation. I hope that in time these enterprise zones can be replaced as they become developed by new areas in different parts of the country.
  Clearly there has to be a very careful balance as to how many enterprise zones are established because the money is not available to deal with them all, but I think that private capital does have a major part to play in getting these zones off the ground. Local authorities themselves have a great deal that they can do, particularly in cases where there are rows of semi-derelict houses which could be auctioned off or even, for that matter, given away to people who will, in fact, bring them round, possibly with the aid of a grant and their own endeavours.
  But it is the expenditure on maintaining our infrastructure that is of vital importance. If we maintain our infrastructure now, we shall be saving ourselves money in the long term. This brings me to the question of the borrowing requirement, which is set, as I understand it, at £7·5 billion. We may find it necessary—I would support this—to extend that borrowing requirement if it is necessary to use the money to maintain our infrastructure in such a way as to prevent us from storing up excessive expenditure in later years by not keeping our buildings and our structures up to scratch.
  The expenditure generally has to be divided between capital projects, the maintenance of our existing buildings and, of course, our running costs. Our running costs include, of course, the cost of running the welfare state. That is a very difficult and expensive balance to achieve. However, I congratulate my right hon. Friend the
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  Chancellor of the Exchequer on reducing the size of the Civil Service and establishing a new target which will, in fact, bring us to 590,000 civil servants by the end of the next six-year period.
  My right hon. Friend the Chancellor of the Exchequer has given us a Budget which offers a stimulus to industry, and which will rejuvenate our industry on which everything else depends. Without a strong industry we shall never have the money to do all the things that we require to be done. I support all that my right hon. Friend has done, but in particular I would say that on the textile front there is an area where in fact he has the liberty to undertake measures to improve investment in new machinery to support the textile industry. The opposition in Europe has received considerable grants and, in particular, the grants in Belgium have increased dramatically in the last year from 6 billion Belgian francs to something like 40 billion Belgian francs.
  I do believe that there is an unfair competitive element within our own EEC which my right hon. Friend could have taken some steps to rectify in this Budget to assist what is our third largest exporter in manufactures, Our technologies are doing well. Tourism is doing immensely well. There are 200,000 more people employed in the service industries. I made a note at this point to seek to persuade the Chancellor—as I have done in the past—to bring the hotel building allowances from 20 per cent. up to the 75 per cent. building allowances enjoyed by industries. With the measures that the Chancellor has announced, that point is out of date, but tourism must be placed on the same footing as industry.
  The future of this country rests with our industries and, not least, on the new small businesses that are beginning to emerge. I personally give the fullest support to my right hon. Friend for the measures that he has announced and, in particular, the measures to give help and assistance to all those in business who are seeking to make this country once again an economic stronghold.
  6.11 pm
  Mr. Donald Stewart: The hon. Member for Harrogate (Mr. Banks) says that this Budget will stimulate industry. That may be so, but, unfortunately, in many parts of the country there is no longer any industry to be stimulated. The Chancellor talked about the changes in share transfer duty, the abolition of the investment income surcharge, and cutting corporation tax, as if it was general practice in the country for everyone who is of age to dabble on the stock exchange. I was reminded of a remark made years ago by the late Lord Butler, when he was Chancellor. It was long before my time here, but I read it. During a freeze—though not a freeze on the scale to which we have recently become used—he said that the trouble with the country was that we had all been enjoying far too much pheasant and port. Unfortunately, that was far from being the staple diet of the inhabitants of the United Kingdom.
  It is a cliché to say that the Budget is a curate's egg. That phrase could be applied to every Budget, and I may have been guilty of using it in the past. However, there are certain things in the Budget which will be welcomed on both sides of the House. The abolition of national insurance surcharge is extremely welcome. One wonders why that tax was brought in in the first place by a Labour Government, and why the Conservative Government retained it. Clearly it had no justification.

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  I welcome the 10p increase on cigarette tobacco. I bear no malice towards cigarette smokers—although I should declare an interest in that as a pipe smoker I feel some relief at the action taken by the Chancellor—but I welcome the increase on health grounds. The Government should be using this tax as a means to discourage people from smoking cigarettes. The increase is a wise move.
  I am strongly opposed to the new tax on petrol and derv and the tax on cars, which will hit my constituency extremely hard because we have no other form of transport. The Western Isles are suffering from the loss of £2 million, which is causing severe difficulties in all aspects of the work of the local council. The money has been spent on defence and other matters of that kind. The petrol tax and the duty on cars will add to our difficulties. They will be extremely unpleasant medicine for my area, and similar rural areas.
  I welcome the abolition of the duty on kerosene, which will help poor people who use kerosene to heat their homes.
  The tax on a bottle of spirits, including 10p on whisky, is not as drastic as was forecast. I do not pretend that this is a shattering tax, but the Chancellor should have borne in mind the position of the whisky industry. The volume of whisky exported in 1983 fell by 9 per cent., and was no higher than the figure for 1974. In the next few years the sales of whisky both in the export and the domestic market will have to pick up considerably. Last year there were many lay-offs in the industry. In February this year, the Distillers Company announced its intention to lay off 800 workers at its 34 malt distilleries. The Chancellor might have remembered that before applying the extra duty.
  The imposition of VAT on alterations to buildings is complete regression. It is an extremely bad tax in every way. As the hon. Member for Stockton, South (Mr. Wrigglesworth) has pointed out, one in five of the unemployed are from the construction industry. Something should be done about putting people back to work in that industry. As the hon. Gentleman pointed out, it could be done with materials bought on the home market which do not need to be imported. As the hon. Gentleman also pointed out, the Government are preventing the proper maintenance of the housing stock and going out of their way to impose 15 per cent. VAT on alterations to buildings. In my constituency, the number of houses which are below a tolerable standard is one of the highest in the country. The tax will be an appalling imposition on people who want decent homes.
  The tax on take-away food is divisive in terms of area, and also divisive as between poorer people and the better off. A tax on food is most unwelcome in view of what the Chancellor has done for the better-off sections of the community.
  I commend the Chancellor for the improvement in the tax allowances. This will be welcome, although we must not fall into the trap of thanking the Chancellor for taking less of our money than he has taken in the past. There is something to be said for taking the smallest incomes out of the tax bracket. However, although Chancellors try to do so from time to time, we never seem to be able to put an end to the poverty trap.
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  I am appalled that VAT on charities is to remain, and that there is no word about removing the surcharge on electricity, which is another tax that cannot be avoided.
  The Chancellor took great credit for the balance of trade figures, but these are largely due to the trade in oil which last year brought in £6,924 million as against a deficit in the balance of trade in other goods of £7,878 million. The favourable balance is largely based on the Government's ability to corner the oil from the Scottish sector of the North sea—which we believe is Scotland's oil. Even in a British context, the oil has been grossly wasted. An asset has been squandered, when it should have been used to rebuild the nation's industrial base. Scotland has not derived much benefit from the oil.
  Scotland's outlook continues to be bleak. The Fraser of Allander report for February 1984 concluded that business optimism in Scotland appeared to be less buoyant than for the United Kingdom as a whole. There is not much in the Budget that will change that.
  This is a Budget for the better off. There is nothing to bring about substantial reductions in unemployment. There is nothing to give hope to young people on the dole. Despite one or two excellent moves, the Budget is on the whole—as the Chancellor said—designed to keep the Government on the path that they have marked out. That is the most chilling news of all.
  6.19 pm
  Mr. David Knox: It is always a pleasure to follow the right hon. Member for Western Isles (Mr. Stewart). He is one of the most popular Members in the House. I found myself in agreement with several of the points that he made. I shall return to them in due course. The right hon. Gentleman always sets a good example when he speaks in the House—the example of brevity. I hope that, to some extent, I shall follow him in that respect.
  I should like to thank you, Mr. Deputy Speaker, for calling me at this early stage in the Budget debate. I congratulate my right hon. Friend the Chancellor on the manner in which he delivered his first Budget speech. It was commendably short and interesting and my right hon. Friend held the House throughout. That is an achievement that has not been the mark of the Budget speeches of all his predecessors, certainly not in the 14 years during which I have been here. I shall have some critical remarks to make later but much that my right hon. Friend has done is greatly to be welcomed.
  I welcome the large increase in the basic thresholds for income tax. My right hon. Friend has increased them by more than double the amount required, although that is no more than the House has a right to expect, bearing in mind the fact that he was one of the authors of the Rooker-Wise-Lawson amendment less than 10 years ago. The change will take almost 1 million of the lower-paid out of income tax. That cannot be other than good for them and administration. Nobody likes to pay increases in excise duties but my right hon. Friend has proposed modest increases and made them reasonably acceptable.
  I also welcome the abolition of the national insurance surcharge. It is a bad tax at any time and is even worse at a time of high unemployment, as it is a tax on jobs. I am glad that it is going—it should never have been introduced. I welcome, too, the changes and reductions in corporation tax. I have long felt that it was a tax on efficiency. It penalises success and any reduction can only

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  be welcomed. I am pleased about the improved incentives for share schemes. For many years I have been a member of the Wider Share Ownership Council and believe that spreading ownership is beneficial economically and socially. I have some doubts about the proposals concerning life assurance. The changes that my right hon. Friend proposes may be technically correct, but I am not so sure that they are politically wise. I hope that he will think again about them.
  This Budget, like all Budgets, will eventually be judged not on the "technical changes" it makes but on its general effect on the well-being of the British economy. It is in that respect that I find it most disappointing. My right hon. Friend has said that it is a broadly neutral Budget. I believe that it falls short of what is needed in present circumstances. The British economy is operating substantially below capacity—buildings and capital equipment in the private and public sectors are not fully utilised, more than 3 million people are out of work and we have under-utilised capacity of 15 per cent. and probably much more. Unfortunately, the Budget will do nothing to bring any of that unused capacity into use. The under-utilised buildings and capital equipment will increasingly be incapable of achieving their full productive potential if they are not used. Worse still, in the absence of rising demand, they will not be replaced. In other words, new capital investment will not take place on a large enough scale. We shall continue to have 3 million people out of work with all the economic waste and social corrosion that that involves. The situation might well get worse.
  My right hon. Friend was quite bullish about economic growth. He rightly claimed that we have had 3 per cent. growth in the past 12 months and he forecast that we can look forward to another 3 per cent. growth this year. The growth of the past 12 months has not stopped unemployment rising. It is therefore reasonable to assume that, at the very best, with the same rate of growth this year, we can expect only a stabilisation in the level of unemployment and possibly not even that. We are told, however, that things are going well just now. What will happen when the economic cycle turns down again, as it will? When that happens, it is inevitable that unemployment will once again start to rise steeply. Even if we could have steady growth at, say, 3 per cent. for a few years, that provides no prospect of unemployment falling from its present disgracefully high level. There appears to be no prospect of the slack in the economy—there is at least 15 per cent., as I have already said—being taken up. That is politically and socially unacceptable.
  We live in a country that once enjoyed the highest standard of living in the world. That is no longer the case. We are now well down the international league. Unless one believes that the appetite of the British people to increase their personal consumption has been satisfied—demands for wage and salary increases do not give that impression—there is great potential for increased demand in consumer goods and services, the production of which would use up the slack and provide jobs for the jobless. Unless one believes that our social and public services are perfect and that no one wants to increase or improve them—evidence of that is pretty thin—there is great potential for increased demand to improve social and public services, the provision of which would utilise the slack and bring the unemployed back into employment.
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  On the one hand, we have potentially a substantial increases in demand for goods and services and therefore for the labour to produce them. On the other, we have considerable spare capacity. The task of Government is to match the two. That is the way back to a high level of economic activity and a return to full employment.
  I do not believe, never have believed and do not think that there is any evidence to persuade one to believe that that can happen on its own other than very temporarily and by sheer chance. It requires skilful management by Government to get right the balance between total effective demand in the economy as a whole and supply potential. The Government did that between 1945 and 1970 and I find it difficult to understand why so may people today no longer believe that it is possible. I include Opposition Members in that group. In practical terms what is needed now and what I believe the Budget should have provided is a steady increase in demand over and above the increase that my right hon. Friend believes will take place. I believe that that should be brought about partly by reducing taxes, so increasing personal consumption, and partly by an increase in investment in the public sector.
  I know the argument that if we increase personal consumption further we shall merely suck in imports. There is much truth in that argument, but if we cannot take some risks in that respect now when we have North sea oil I shudder to think what will happen when the oil runs out. I believe that some of the increased consumer demand will find its way into the domestic market and encourage British manufacturing industry, which has been so badly clobbered in the past five years.
  The argument for increased investment in the public sector is more clear-cut. Much of it would he in construction, which is not import-intensive. In parenthesis may I add that I regret the VAT change announced this afternoon affecting construction. An increase in investment in the public sector, particularly in construction, would not only bring into use some of the idle capital equipment and labour, but would add to our stock of housing, to our sewers, roads and so on, all of which have been allowed to deteriorate over the past 10 years, and all of which will have to be replaced eventually. Surely, at a time when there is so much slack in the economy, we should be pressing ahead with such investment.
  Of course, tax cuts and increased public investment would involve an increase in the public sector borrowing requirement, and why not? At the moment, the PSBR seems to be the virility symbol of the British economy—as long as it is low, it does not seem to matter that there are 3 million out of work. Is it not time that we got this nonsense out of the system? The level of public borrowing should be determined by our position in the business cycle. In conditions of depression such as those at present, the Government should not be afraid to run deficits, even quite high deficits. In conditions of high economic activity, the Government should run surpluses, even quite high surpluses. By doing this sensibly and by managing the economy in this way, we would avoid both underheating and overheating the economy and we could also have a much more stable economy than we have had in recent years.
  I am afraid that my remarks about the economy in general are somewhat gloomy, but I do not see anything in the Budget that will raise the level of economic activity, other than marginally, and help to reduce the level of unemployment. In the debate on the Gracious Speech last

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  June, I expressed the view that the Government should, in this Parliament, give the same priority to the reduction in unemployment that they gave to the reduction in inflation in the previous Parliament. I see little evidence in today's Budget that there has been this change in priority.
  6.33 pm
  Mr. Roy Hughes: This is the Chancellor's first Budget and we would all agree that he has an awesome task. Before the Budget there was speculation, which was confirmed by the Chancellor, that this would be essentially a neutral Budget. How such a proposition could be seriously considered when there are 3 million to 4 million unemployed is beyond belief. Perhaps it is a sign of the Government's new cynical approach to this greatest social evil of our time. We know that the Chancellor has tinkered with taxation and some of the results are beneficial, but some are not. It is not true to say, as he did, that recovery is well under way.
  Many predicted that, with such a high level of unemployment, there would be violence on the streets. By and large, fortunately, that has not happened. Nevertheless, our young people have become part of the lost generation. Even the Prince of Wales has come to realise that delinquency is associated with unemployment. There is an old saying that the devil finds work for idle hands, and that is true today. In generations to come, we shall reap the whirlwind for trying to solve Britain's economic problems by the maintenance of a large pool of unemployed.
  What applies to youth applies equally to elderly people. What a soul-destroying experience it must be when a man of 50 is faced with the fact that he is unlikely to work again. We have seen the wasting of the bonanza of North sea oil. It has been squandered on unemployment benefit. What a tragedy this is, as the right hon. Member for Western Isles (Mr. Stewart) has already pointed out. That money should have been spent on regenerating the British economy. Our people should have been put back to work to build a new Britain. At the same time, they would regain their self-respect.
  Admittedly, as a result of the Government's policies and general deflationary policies throughout the world, inflation has come down, but it is becoming clear that this trend in itself does not necessarily produce jobs. The Government's monetarist experiment has proved to be a disaster, as the alternative Conservative Front Bench, led by the right hon. Member for Old Bexley and Sidcup (Mr. Heath), readily acknowledges.
  This Budget should have been about steps to reduce massive unemployment. It should have been about ironing out the inequalities in our society, which have become so much more marked, particularly with our low level of economic activity. For example, the pensioners should have been given a far better deal. They tend to spend the addition that they receive and so give an immediate stimulus to the economy. We should have rebuilt the infrastructure of the United Kingdom. Surely a period of economic recession is the time to tackle this. We could make a start by replacing our Victorian sewers, for instance. Many new roads are required, as is railway modernisation, housing, schools and hospitals, but what do we have?
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  In the past couple of days I have had a news release from the South Wales region of the National Federation of Building Trades Employers. It contains a statement by the president, Mr. John Richards, who says:
  "Building contractors in Wales are still looking for the light at the end of the recession tunnel. Even the hitherto buoyant repair and maintenance sector is now suffering … Public sector expenditure plans already announced by the Welsh Office point to a further decline in the building industry."
  He went on to call for action in this Budget. Instead, the Government have put VAT on home extensions, modernisation and so on, at a time when there are literally hundreds of thousands of building workers standing in the dole queue. In view of the standard of some of the housing in areas in Wales such as the town that I represent, much more needs to be done. All that we have seen from the Chancellor is additional taxation. We should appreciate that the message that I have quoted from the president of the NFBTE comes from people who are normally great supporters of the Conservative Government.
  Our publicly owned industries are also crying out for investment. For instance, the south Wales coalfield with all its rich seams of anthracite, which is in such great demand in markets of the world, should be developed, and now is the right time. Had it been developed, we might have avoided the present conflict in the industry.
  Charity begins at home. At Llanwern, the steel industry is crying out for new investment, yet, despite that basic need for new investment, there is accelerated movement towards investment overseas as a result of the Government's policies.
  It is reckoned that 11 million people subscribe to pension funds, with accumulated savings of £60 billion. That wealth is essentially created in this country, yet much of it is invested overseas. The amount involved has doubled since 1979, when the Government were elected. This afternoon, the Chancellor should have announced measures to ensure that those funds, or the best part of them, would be invested in British industry. Likewise, measures to stimulate the economy tend to suck in imports, as the hon. Member for Staffordshire, Moorlands (Mr. Knox) said.
  Last week, I went to Turin to visit the Fiat motor industry. The first factory that I visited in Turin employed no fewer than 44,000 people, and another factory within the same organisation just down the road employed a further 10,000 people. My estimate was that the cars produced there have 95 per cent. local content. Fiat supplies more than 55 per cent. of the Italian home market. We witnessed evidence of the introduction of advanced technology. Vehicles like dodgem cars with no drivers were going to and fro taking an engine here or dropping it there. The so-called woodpeckers were popping out at a preordained time to fix a screw here and a nut there, yet, as the vice president of Fiat told us, the company will remain labour-intensive.
  A successful motor industry is vital to this country, too. I was glad to hear of the investment plans by the Talbot Motor Company. At least that French multinational seems to recognise that British workers can be efficient producers of motor cars. The behaviour of the Ford Motor Company and Vauxhall Motors annoys me, however, and I should have liked to hear the Chancellor announce action to be taken about that. Those companies are playing fast and loose with Britain. Vauxhall places glossy advertisements

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  in the Sunday papers with the slogan "Better by Design." They do not tell the British people, of course, that the cars are wholly designed in Germany.
  The Ford Motor Company at Dagenham is a further example. Company representatives boasted to me when I visited the Dagenham plant about the small quantity of British steel being used in their vehicles. It is even more criminal that Ford and Vauxhall are supposed to be British motor manufacturers, yet each year they import thousands of motor cars into Britain. I shall give an example of an hon. Member who bought a new Ford Grenada car, the parts of which were all made in Germany. He was able to unearth all the paperwork, and it included the statement, "Please ensure that Dunlop tyres are fitted to this vehicle", presumably to give the impression that the car was of British manufacture. Such mass imports distort our economy as well as deceive the British people. The Chancellor should have done something about that.
  The Budget holds out no hope for me or for people without a job, living in poor circumstances. The country needs a new Chancellor and a Government with policies to tackle the terrible problem of unemployment.
  6.46 pm
  Mr. Peter Bottomley: The country would do rather better with a new Opposition than a new Chancellor. The reception that the House gave to my right hon. Friend's Budget statement shows that much of what was said came as a surprise to the Opposition, who were not quite sure what to say. My view was confirmed by the speech of the right hon. Member for Islwyn (Mr. Kinnock), the Leader of the Opposition.
  There are serious concerns about this country's economy, and both my hon. Friend the Member for Staffordshire, Moorlands (Mr. Knox) and the hon. Member for Newport, East (Mr. Hughes) touched on the critical importance of creating the conditions under which unemployment will start to fall. That requires output to rise faster than the rise in productivity. We need to create effective demand within this country and make sure that we can produce goods and services so that we start meeting the demand from this country and overseas.
  There is no shortage of demand in this country. The problem of effective demand can be met by effective supply. I recall the years when Government support to nationalised industries, including British Leyland, was rising year after year, yet the number of cars produced per employee was falling year by year. There is no point in leading ourselves into cloud-cuckoo-land by arguing that an ever-increasing money supply or level of public subsidies to ailing industries will do any good.
  This morning's news about the dairy side of the common agricultural policy showed that it is possible to analyse a problem and make proposals to deal with it and that there are simple solutions to simple but tough problems. My right hon. Friend showed the same attitude this afternoon by removing distortions in our tax system, which I thoroughly support.
  I would have gone a stage further, however. The absence of any mention in the Green Paper about the cost of mortgage interest relief on house purchase leads me to hope that my right hon. Friend will come forward next year with proposals to bring common sense into the mortgage interest relief system, so that help is concentrated at the time of family formation, when people need it.
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  The Chancellor has proposed measures on life assurance premiums. The question whether they should all be introduced at once and what will happen to existing life policies in the future can be taken up in further debates on the Budget and the Finance Bill. The way in which the Chancellor showed that he was willing to tackle some of the flotsam and jetsam of tax reliefs and allowances and concentrate help where it is most needed and will be most productive deserves the support of hon. Members on both sides of the House and, indeed, on both sides of the Conservative party.
  I would deal with measures that would lead to greater employment, but my hon. Friend the Member for Moorlands has ably done that already. I echo his plea that the Government should show the same effective concern for that, even though they may not have the same indirect power as they have been shown to have over the level of inflation. As I said in the public expenditure debates a week or so ago, there are limits to what the Government can effectivly do to the economy. There are limits to the effect of financial changes on people's behaviour. The Government should make fiscal and tax changes where possible and be willing to tackle many of the vested interests not tackled in the past and brought out into the open because it was thought to be politically unwise.
  I rest my general principles of taxation on the idea that the tax base should be as broad as possible and the rates of tax as low as possible. That is why I am willing to talk about matters such as mortgage interest relief, and go along with the Government's proposals on take-away food and VAT on building alterations.
  Speaking as one who has seen a number of take-away food shops brought into his constituency in the past few years, I believe that putting VAT on take-away food will stop the artificial incentive to customers buying food, taking it into the street to eat it, and being rather careless about where they leave wrappers. It is worth while to encourage people to eat their food inside the place in which they bought it. That provides greater employment for those inside, who are paid to clear up afterwards, and is better than leaving it to the public services to clear up in the street.
  There are difficulties for every affected group. They apply just as much whether we are dealing with the milk surplus, people in the life assurance industry or many other professions and trades that are beginning to find that their practices are being examined more carefully by the Government, who are trying to introduce greater competition. Throughout trades and services, we should leave the people a more unfettered choice on how they use their money. My right hon. Friend the Chancellor is absolutely right to deal with the distortions of the various opportunities for people to save money. I should like to see, in time, not a great Professor Meade approach to taxes on spending, but more rationality in the way in which we deal with savings.
  It is also right to be willing to say openly, as I do, that by giving help to people to become prosperous we are more likely to start generating the increase in employment seen in the United States not only over the past year or two, but over the past 200 years. I have always believed that it is right, in opposition to Labour Weekly, which normally believes that it is wrong, that someone should be able to take a wartime gratuity, build up a business that employs hundreds of people, make hundreds and thousands of pounds, but pay a good proportion in taxation. That is

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  worth while and right. It is not exploitation of one person by another. What I regard as exploitation is what Labour Weekly used to do. On page 13 it would tell people how to win £500,000 in the football pools using Labour Weekly's perm No. 47. I think that I have used that example often enough for Labour Weekly to have dropped its football pool forecasts.
  We must encourage people to do what will help themselves most and will also help others. The general thrust of the Budget is to get rid of artificial distinctions between investment income and earned income. It should be openly stated that, whether on the company or personal side, high rates of taxation are counter-productive, lead to distorted decisions and should be eliminated.
  In the past, I have spoken about the importance of child benefit. I am not in a position to talk much about that, nor has the matter been raised in the debate, because those announcements will be made by my right hon. Friend the Secretary of State for Social Services in June. It is important to realise that child benefits should be regarded as a tax allowance and should be seen on the right side of the public expenditure estimates.
  As long as the Government make proposals, however spaced out over the years, which radically tackle all the distortions in the economy, I for one am willing to defend them to the interested groups that might be offended. The general thrust of what the Government are doing is a necessary reversal of much of what has happened in the past 20 years. It is possible to create prosperity. The Government are approaching the matter in the right way, and I give them my whole hearted support.
  6.55 pm
  Mr. Austin Mitchell: I shall not follow the hon. Member for Eltham (Mr. Bottomley) in his attempt to praise the Budget with faint damns. The essential nature of the Budget it that is is moving deckchairs on the Titanic. It does nothing about the fundamental problems of the economy. As with the curate's egg, there are parts of the Budget that we can praise and parts that merit condemnation.
  In that context, I cannot follow the hon. Gentleman's remarks on take-away food, representing, as I do, a constituency that provides the fish, surrounded by a county that provides the chips. In imposing VAT on take-away food, the Chancellor has made a monstrous attack on working people. What he has also done with regard to manufacturing industry shows a serious weakness. Industry has been badly battered by the way in which the Government run the economy. The cuts in the allowances for new building and equipment will create a serious difficulty for that industry, which needs investment and stimulus to grow.
  VAT is also being imposed on building improvements. When improvement grants are being cut, to tax those improvements adds insult to injury. That will cause a serious setack to attempts to modernise our housing stock.
  It is difficult to justify the measures that are being taken when the Chancellor is handing out considerable sums to the Government's friends and the better-off sections of society, particularly with regard to investment income surcharge, stamp duty on stocks and shares and the changes in capital gains tax and capital transfer tax, all of which are wrong, when the right hon. Gentleman should
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  be spreading the burdens of taxation evenly and fairly and 7 million people are on benefit, many below the poverty line.
  Conservative Members have been desperate in their attempts to find something to praise about the Budget. The real problem is that it focuses attention on the conjuror's balls in the air. The conjuror's trick is to keep the balls in the air, but now the conjuror's feet are sinking in the mud—indeed, he is sunk in the mud up to his knees. The basic economic difficulties of the country have become worse rather than better. The Budget does nothing about that.
  The right hon. Gentleman has prevented himself from doing anything about those problems because of the tight constraints that he has put on himself through the medium-term financial strategy, which was his own invention and which, masochistically, has been tightened in the Budget, but most of all he has done so because of his curious obsession with the public sector borrowing requirement, as if one could measure an economy and the effect of Government measures on the economy in that one index. The Institute for Fiscal Studies makes this point. It is as if a company chairman came to the annual shareholders' meeting and talked only about the company's new borrowing. He would not be chairman of the company for long if he ignored all the other factors—output, employment and the shape of the real economy. The Chancellor is concentrating on just one measure. His obsession with public sector borrowing and getting down the PSBR have distorted his approach in the Budget.
  We are in a disastrous economic situation, for which Government measures are largely responsible. The pound has been put up to an unrealistically high level, affecting our exports and bringing in a flood of imports, because of the way in which interest rates have been kept unnecessarily high and, most important, because of the contractionary stance that the Government have taken in their fiscal policy, when it is essential to maintain an expansionary stance. That has made our economic difficulties worse than they should have been. Employment in manufacturing, because of the contraction of manufacturing, largely forced by the Government's measures, is down 20 per cent., almost entirely accounting for the increase in unemployment that has taken place. That increase—
  Dr. Alan Glyn rose—
  Mr. John Browne rose—
  Mr. Mitchell: I shall not give way. I am keeping a close eye on the time.
  That increase in unemployment will continue, because there is nothing in the Chancellor's Budget to tackle that major social and economic problem that besets the country. The Chancellor seems to think that recovery comes automatically with the decline of inflation. No other advanced industrial country seems to be obsessed with that. What is there, once inflation is reduced even to nil, to bring about the recovery that we all want? That recovery must be invested for, planned for, organised for, worked for and indeed deficit-financed for, because one has to produce to increase demand for the products of industry. Without that increase, there can be no recovery. Because the Chancellor is maintaining a deflationary stance, and once expenditure on unemployment is allowed for, one

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  sees that the right hon. Gentleman is taking a contractionary stance towards the economy. Thus there can be no genuine recovery.
  What the Chancellor cites as recovery is essentially a candy-floss recovery that is going on in the high streets but not in the factories, in the shops but not in employment. It cannot happen in the those places, because the people are raiding their savings and taking advantage of the relaxation of credit to buy more, mainly imports. That can have no effect on output.
  The recovery that we see cannot be sustained. The Chancellor has done nothing to sustain it by doing nothing about the fundamental problems of the economy. That is a tragedy which reduces the performance of the Budget, although we talk about its different aspects, essentially to moving deckchairs on the Titanic. I shall conclude with that thought, because I am anxious that my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) should start with a clean slate tomorrow and with the wisdom of having read my speech, for his edification and that of the House.
  Debate adjourned—[Mr. Neubert.]
  Debate to be resumed tomorrow

  British Railways (No. 2) Bill (By Order)
  Order for Second Reading read.
  7 pm
  Mr. Patrick McNair-Wilson: I beg to move, That the Bill be now read a Second time.
  It is once again my pleasure to propose the Second Reading of a British Railways Bill. It follows in the well established pattern of Bills promoted by the British Railways Board to help to modernise the railway system and to ensure that the dynamic industry which British Rail is is given every opportunity to streamline its functions. Although the Bill deals with structural matters concerned with railway operation, it goes hand in hand with the wider issues of rail investment.
  It is extremely encouraging to announce that the board now looks forward to an increase in investment between now and 1986 of 40 per cent.—£380 million—and that the services to the customers—the passengers and those who use the freight services—are also being improved. Great strides have been made to provide passengers with much more up-to-date information about train journeys. Forty-one new travel inquiry bureaux have been established at a cost of over £500,000, and a further 13 are currently being brought up to standard. If one adds to that the electrification of new lines and the building of new rolling stock, one sees that we can be justly proud of the pattern of activity within British Rail.
  The Bill is divided into six parts and follows the normal pattern of such Bills. Part I contains the standard provisions: the incorporation of general Acts, many of which go back to the early part of last century when railway building was going on apace, and the application of part I of the Compulsory Purchase Act 1965.
  Part II deals with the works which the Bill sets out and which hon. Members will no doubt have studied and seen explained in the explanatory memorandum. I should perhaps draw the attention of the House to one or two of those works because they are significant. Clause 5 deals with work No. 1 which involves the building of a new railway on the course of an old, discontinued line at Swinton in Yorkshire. That plan is similar in some respects to one which was envisaged by the south Yorkshire passenger transport executive in the past. As it is now considering reopening the Swinton station, I hope that the work will find general approval.
  Work No. 2 concerns a line extension in Birmingham between Bordesley and the former Snow Hill station to provide a comparatively short length of track—about 452m—which will enable trains to pull clear of the platform and provide a stabling facility at the same time. Works Nos. 3 and 4 are simply bridge widening projects. Work No. 5 is again related to a piece of track. In the past there were two pieces of track at the Rufford colliery in Nottinghamshire, which were duplicating the activities of the system. They are now linked together to produce a more efficient and effective system. It will be a new chord railway.
  Clauses 6 and 7 relate to works Nos. 1 and 2, to which I have just referred. Clauses 8 and 9 deal with bridge rebuilding. Clause 10 is the first contentious provision in the Bill. The hon. Member for Denton and Reddish (Mr.

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  Bennett), who was principally worried about the matter, is not in his place. The board seeks to stop up and divert certain crossings in east Sussex. The objection stems from the anxiety of the ramblers about the effect of that on the footpaths. These diversions are being considered because of the decision to electrify the Tonbridge-Hastings railway. Obviously that creates a hazard to pedestrians and others who try to cross the track. The board believes that the cost of providing the necessary platform to cross the third conductor rail—a live rail—would be excessive and, therefore, by the simple re-routing of the existing footpaths pedestrians will be able to continue with their leisure activities, whether rambling or otherwise. The board has further undertaken not to close the existing footpaths until the new diversions have been established, publicly opened and proper signposts have been put in place. I hope that those who have so far objected about the three crossings at Mountfield—Lot's Wood, High Hurst and Selmes Webbs—will see the logic of the board's proposals.
  Clause 11 deals with matters with which hon. Members who have followed the progress of similar Bills over the years will be familiar—the alteration of the status of level crossings, and the closing of two level crossings, one at Wickford, Essex. I assure the House that the local police, ambulance and other services raise no objections to its closure. For the second crossing at Cattishall No. 15 in Bury St. Edmunds all authorised users have agreed to its closure.
  Clauses 13 and 14 relate to the construction of new crossings at Fareham in Hampshire and at Oswestry in Shropshire.
  Clause 15 is the next contentious provision. I shall deal with it as best I can because my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh) has properly expressed anxiety at the plans which the board has put forward. The night-time closure of level crossings, and crossings in general, is only ever implemented after most careful and searching deliberations. The plan in clause 15 deals with the night-time closure of two crossings, both in Lincolnshire and in the constituency of my hon. Friend. One is at Holton Gate House and the other at Smithfield road and both are in the district of West Lindsey in Lincolnshire. Under the Bill the Holton Gate House crossing will be closed from 2300 hours until 0600 hours each day. That decision has been accepted. However, the Smithfield road crossing, which the Bill proposes to be closed between 2200 hours and 0600 hours each day, is a matter of some concern.
  I must make it clear immediately that, although the manned crossing will be closed to vehicles, those on foot and horseback can pass unaffected. Lincolnshire county council and the National Farmers Union have no objection to the proposals, but West Lindsey district council and the Grasby, North Kelsey and South Kelsey parish councils object. Their objection is based upon the fear of a diminution in the public right of access and the effect that closure might have on access for emergency services. The board takes this matter seriously. Indeed, it was so concerned that a traffic census was taken at the crossing to clear up doubts about how much it was used. In a seven-day period last year, it was discovered that there was
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  traffic on only two days. On one day there were four cars and one motor cycle, and on another day there was only one motor cycle.
  The board has considered all the objections put to it, which my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh) has come to the House to explain to us. However, I must tell him that, since he has now visited the site and had an opportunity to examine the problem, the board, recognising his genuine concern, is happy to alter the timing of the closure to accord with that of the Holton Gatehouse crossing, so that it will close at 2300 hours each day. I hope that my hon. Friend will accept that change in the timing and will allow the clause to pass.
  Part III of the Bill deals with the purchase of land for works and other purposes. Part IV deals with various protective provisions. Part V relates to a 200m limit of jurisdiction for Sealink in the river Stour at Parkeston quay.
  Part VI deals with miscellaneous provisions. I should elaborate clause 31, which relates to the decision to extend the powers provided by section 54 of the British Transport Commission Act 1949 for constables of the British Transport Police to search and arrest employees of the board and those employed on the commission's property. Normally that extension of powers, which the House will understand is an inherited power, has led to five-year extensions, and the present extension will run out in 1985. The Police and Criminal Evidence Bill currently passing through Parliament enshrines the permanent powers provided in section 54. However, the Bill is not yet law, so clause 31, which extends the powers until 1 January 1988, is included in the Bill as a precaution. I am advised that when, as we hope, the Police and Criminal Evidence Bill becomes law, this power can be withdrawn.
  The Bill is a modest measure compared with others which those of us who have followed the history of this legislation have seen in the past. It is, as can be seen by the fact that the Benches are largely empty tonight, not a contentious measure. I hope that I have been able to explain the broad outlines of what the Bill seeks to do, and if any hon. Members wish to raise points I shall try to answer them. I hope that, with that explanation, the House will give the Bill a Second Reading.
  7.15 pm
  Mr. Edward Leigh: It was my objection which resulted in the Bill being opposed private business and which caused this debate. I do not object to the Bill as a whole. My constituents will be relieved to hear the comment of my hon. Friend the Member for New Forest (Mr. McNair-Wilson) that the Bill is concerned to improve investment in British Rail.
  However, as my hon. Friend said, I was concerned about the night-time closure of Smithfield crossing in my constituency. I have received many representations during the past few months about the closure of that level crossing. As my hon. Friend said, I received representations from West Lindsey district council and from the parish councils of Grasby and North and South Kelsey. This may seem a parochial matter to debate in this august assembly, but it causes great concern to my constituents, who live in a rural area where access is often difficult. If Smithfield crossing is closed, some of my constituents will have to travel three miles out of their way to cross the railway line.

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  However, I appreciate British Rail's difficulties in manning the crossing. In answer to my hon. Friend's point about the census that was taken at the crossing, may I say that there is strong local feeling that if the crossing were better manned more people would use it. I do not intend to get into an argument about personalities on the Floor of the House, but my constituents have strong views on the matter. I felt so strongly about it that I was prepared to speak for a considerable time to talk out the Bill so that my constituents could see that their case had been adequately heard. However, I am not anxious to detain the House in that way. The hon. Member for West Bromwich, East (Mr. Snape) is here tonight. I have had the pleasure of listening to his speeches during our 80-hour consideration of the London Regional Transport Bill, but I would not wish him to have to listen to one of my speeches for as long as three hours.
  Since my hon. Friend has made such a wise concession, which I am sure was a result of my representations, those of the local councils, and then a long site meeting between local residents and British Rail last Saturday, he will be delighted to hear, as will the House, that I withdraw my objection to the Bill.
  7.18 pm
  Mr. Peter Snape: The House will be grateful to the hon. Member for New Forest (Mr. McNair-Wilson) for the comprehensive way in which he introduced this largely non-controversial measure. Normally in such debates we also enjoy a contribution from the hon. Gentleman's brother—the hon. Member for Newbury (Mr. McNair-Wilson)—and I hope that we shall continue to do so in future, because both hon. Members always make a valid contribution to our debates.
  The hon. Member for Gainsborough and Horncastle (Mr. Leigh) will be relieved to know that my speech will be much shorter tonight than some of those that I made during the progress, if it can be called that, of the London Regional Transport Bill. I want to comment briefly on clause 5.
  I join the hon. Member for New Forest in welcoming the proposals to reinstate the former Swinton curve between the Sheffield-Wakefield line and the Doncaster-Barnsley line, which I understand will reduce the journey time for north-east to south-west high-speed trains. That is most welcome.
  I shall say a few words about the other part of clause 5, dealing with works in the Birmingham area. As the Minister knows, I have recently expressed some interest in the matter, because the area is not far from my constituency.
  There is a long history to the proposal to include the works in the Bill. We are approving—I hope—proposals to reopen either a closed stretch of railway line or what is at present a closed station in Birmingham. I do not want to express controversial views on such a non-controversial Bill, but if minds had been a little more open some years ago there would have been no need for these proposals. Virtually since the closure of Snow Hill station in Birmingham strong feelings have been expressed by political groups and various other interested parties in and around the city that the reopening of the station would be desirable.
  The latest attempt to bring that about arises from a TPP application which the West Midlands county council submitted to the Department of Transport last July,
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  specifically relating to this proposal. The West Midlands county council provided additional details of the proposal in October last year, and I, with two of my hon. Friends, submitted written questions about the future of the proposal earlier this year. Perhaps I might paraphrase the replies that I received to those questions.
  I was told that the Department was submitting the scheme to further inspection and required further details from the West Midlands county council about exactly what was involved. However, some controversial statements were purported to have been made and appeared in the press in the Birmingham area in January this year. If f may paraphrase again, they said in effect that approval had been deferred because the scheme was not scheduled for completion until after 1986—that is, after the demise of the West Midlands county council. Subsequently, that allegation has been denied by the Department of Transport, and I accept that. However, the Department continues to believe that it needs more details about the scheme, and letters have been exchanged continually since the initial application.
  As recently as 6 March this year, the county surveyor, who has overall responsibility for transport in the West Midlands, submitted this scheme among the other new starts for 1984–85. The scheme is third in the county council's list of priorities. Top of its list is a new bus station at Dudley. Second is the proposed Wolverhampton ring road. The third is this scheme, mentioned in clause 5, the rebuilding of Snow Hill station.
  We are talking about an amount for grant of £244,000 in the financial year 1984–85, rising to £3·5 million in the following financial year. The overall total for the scheme will amount to £10 million.
  One reason given by the Department for the delay in approving this scheme is the need to consult the district councils involved. The district council that immediately comes to mind, of course, is Birmingham city counci. As recently as this week, a letter was sent by the city planning officer to the director-general of the West Midlands county council. I have been given permission to quote extracts from the letter, although I have not seen it myself. The city planning officer's view of the scheme was that the
  "City has consistently supported the re-opening of Snow Hill station".
  The letter went on to say:
  "The cross-city line"—
  which is what will result, once Snow Hill station is rebuilt—
  "will be beneficial to the city centre".
  I do not know whether the Department of Transport feels that the other district councils concerned have to be consulted on the matter. If we are to have joint boards—as yet, no one knows whether that is to be so—clearly they will have representatives of the other district councils. I am not authorised to speak on their behalf, but the fact that the sponsoring body, the West Midlands county council, is so strongly in favour of the redevelopment of Snow Hill station, and that the city council itself, which is under a different political control from the county council, has itself expressed strong support for the scheme, shows the depth of feeling that exists in the area. I do not expect a yea or a nay from the Under-Secretary now, but I hope that he will bear those views in mind.
  Only yesterday, I understand, the West Midlands county council submitted an application under the

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  European regional development fund for finance towards the Snow Hill scheme. The county council realises that any finance granted would count against any capital allowances, but it is nevertheless anxious to pursue this scheme. It is true, of course, that the county council does not need Government permission to go ahead with the scheme, but clearly, to qualify for grant, such permission would be necessary.
  I hope, therefore, that I have illustrated the depth of feeling that exists in the area about this scheme. I warmly welcome the Bill, but I ask the Minister to remember that a considerable number of years have already gone by since the proposal to reopen Snow Hill was first mooted and that any further delay will inevitably lead to higher costs in the future.
  7.28 pm
  The Under-Secretary of State for Transport (Mr. David Mitchell): My hon. Friend the Member for New Forest (Mr. McNair-Wilson) has assisted British Rail, not for the first time, and rightly spoke of the way in which British Rail is improving, and the changes that it is bringing about. In doing so, he demonstrates his personal insight into the way the railway system is changing and meeting the challenge of our time, as well as his interest in the railways.
  It may help if I intervene now to give a brief outline of the Government's view of the Bill. The Government have considered its content, and have no objection in principle to the powers sought by the British Railways Board.
  A number of points have been raised during the debate which it may be appropriate to consider in Committee. My hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh) has referred to the night-time crossing at Smithfield road level crossing, and the timing of its closure. I understand that he is now satisfied with the changes that have been made to meet the points put forward so vigorously by him as the local Member of Parliament on behalf of his constituents.
  The hon. Member for West Bromwich, East (Mr. Snape) welcomed a number of the works. He did his best not to become controversial, but he obviously found it difficult. He referred to the Snow Hill service. I know that he will not expect me to comment on that this evening. He will know that the expenditure concerned runs for more than one financial year. It is important to know the degree of priority, along with many other attractive propositions that the passenger transport authority views for the scheme, since it would be imprudent to agree support for it for one year without knowing the extent to which the
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  PTA would wish to see it supported as a top priority in subsequent years, in competition with various other opportunities for transport grant.
  A petition has been deposited by the Ramblers Association. However, the petitioners will be able to present their case in Committee. I therefore recommend to the House that the Bill be given a Second Reading, and allowed to proceed in the usual way to Committee, where its provisions can be considered in greater detail.
  7.31 pm
  Mr. Patrick McNair-Wilson: Before I reply to the points that have been raised, I thank my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh) for accepting the concession which I outlined relating to the crossing in his constituency. I congratulate him, as did the Minister, on his determined representations leading to this change, which I hope will be satisfactory to his constituents, particularly those who use this crossing.
  I also thank the hon. Member for West Bromwich, East (Mr. Snape) for his kind remarks about my brother, the Member for Newbury (Mr. McNair-Wilson). I will pass those remarks on to him when I next see him, and I know that he will appreciate them very much.
  The hon. Gentleman welcomed the broad provisions of the Bill, and I thank him for that. I should like to add a word about his comments on the works at Snow Hill. I wish to make it clear that the works covered in clause 5 will not in any way prejudice the restoration of the railway on to Handsworth and Smethwick East. The hon. Gentleman will know that, for a long time, one of the major obstacles to development has been the uncertainty over Snow Hill station. He will also know, I am sure, that, now that proposals for a mixed development exist on the site, including bus-rail interchange facilities, which have been agreed between the board and the Birmingham city council, there is every possibility that the development will go ahead. Stage one will be the restoration of the railway between Bordesley and Snow Hill, in conjunction with the commercial development of the Snow Hill site. Stage two will be the restoration of the railway northwards from Snow Hill.
  I recognise the real interest in this development, and I hope that the provisions in the Bill will help to give it a fresh impetus. I thank the hon. Gentleman for giving his welcome to the proposals outlined.
  With those explanations of the points that have been raised, I thank my hon. Friend the Minister for his support, and I hope that the Bill will now be able to go forward to be examined by the Examiners.
  Question put and agreed to.
  Read a Second time and referred to the Examiners of Petitions for Private Bills.

  Wytch Farm Oilfield
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Thompson.]
  7.34 pm
  Mr. Geoffrey Lofthouse: I am grateful to have the privilege to speak in this Adjournment debate, and to present what I believe is a scandal arising out of a Government decision.
  First, I wish to inform the House that, as a member of the Select Committee on Energy, I received papers yesterday from the British Gas Corporation, arising out of the request from the Chairman of the Select Committee for answers to certain questions. I wish to give the House the categorical assurance that, knowing full well that I was to speak in this Adjournment debate, I have not looked at the papers that were sent to members of the Select Committee yesterday, although the envelope is in my possession.
  I have always condemned the Government's decision and, indeed, their policy in selling off assets belonging to the people of this country. The instruction to the British Gas Corporation to do just that with its share in the Wytch farm oilfield was in my view an appalling decision. If the sale goes through, it will rob the British people of assets of over £200 million. While that is bad enough, the serious question that arises concerns the legalities of the instructions given by the then Secretary of State to sell the oilfield off to a certain bidder at a certain price.
  Arising out of the Attorney-General's repeated refusal to answer the questions of hon. Members, there has been no alternative but to seek—as we have done, and in which we have been successful—an Adjournment debate.
  There is a curious history to the transaction, which has been imminent for a very long time.
  Mr. Tam Dalyell: Before my hon. Friend deals with the history, I believe that he is referring to the answers that were given by the Attorney-General at the last Attorney-General's question time, following a substantive question by me, which followed a substantive question three weeks earlier by my right hon. Friend the Shadow Attorney-General. Will my hon. Friend accept that, although technically the Attorney-General may be right, given all the circumstances of Wytch farm, and the promises that were made during the consideration of the Oil and Gas (Enterprise) Bill, those of us who were on the Committee will remember very well the undertakings that were given? In the spirit of that Committee stage, it is unsatisfactory for the Attorney-General to shelter behind the internal workings of Government, and it behoves him to be much franker.
  Mr. Lofthouse: I share my hon. Friend's views. If the Attorney-General had been more forthcoming, it might well have been unnecessary to initiate this Adjournment debate.
  The history of the matter is very curious. The transaction, which has been imminent for so long, and which may be about to be concluded, is very interesting. Various estimates have been made of the value of this asset, but the true economic value of the shares appears to be approximately £400 million. The Government are certainly anxious to dispose of this valuable asset, but I understand that the corporation has not shown the same enthusiasm. After some years of consideration, however,
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  the corporation may be about to comply with the Government's wishes despite its belief that it is being made to sell at a price substantially below what it regards as the value of the assets. The question for the corporation is whether it is protected in law for what it is about to do. I hope and assume that the House would wish to ascertain whether that is so.
  In October 1981 the then Secretary of State for Energy directed the corporation to dispose of its interest in Wytch farm under section 7(2) of the Gas Act 1972. The order setting out the direction was debated in Parliament and approved.
  In March 1983 the Secretary of State for Energy instructed the corporation that the Government considered it both commercially justifiable and in the national interest for the corporation, in the light of offers received, to take forward negotiations with the Dorset group of oil companies, and instructed the corporation to proceed accordingly. I understand that at that time the Dorset group was the highest bidder. One may argue about whether the highest bid represents the market value, but I am not just talking about market value. I am talking about the true economic value of the shares.
  An instruction of that kind rather than a statutory direction is an unknown animal in this part of the statute book. Why did the Secretary of State give an instruction apparently without the force of law behind him when he could have issued a more detailed direction under the Oil and Gas (Enterprise) Act 1982 which by then had come into effect? He seems either to have forgotten that or to have been unhappy about those statutory powers, which might have given him aid—or perhaps it was because the second direction would have had to be drafted properly according to the statute and debated in Parliament.
  It was easier to take the chairman of the board on one side and twist his arm so that the board would undertake to do as the Minister told him, but can the board be happy about that unless the Government find a way to absolve the board? The board may find itself in considerable difficulty and in breach of its statutory duties. To protect their personal position, the members of the board are entitled to a proper direction from the Government or to be absolved in some way if their position is found wanting by the courts.
  Against that background and the way in which these matters have been handled, it is difficult to see consistency in the Government's professed respect for law and order. The Conservatives claim to be the party of law and order and to stick to the rules. They never fail to refer to actions on picket lines and rightly try to get Opposition Members to associate themselves with their position. I share that view, but the Government cannot preach law and order in one respect if they are not prepared to stand by the law in another, and it seems clear that in this instance they have failed to do so. If the Government were confident that their instruction was within the framework of the law, the Attorney-General should have found no difficulty in saying so to my hon. Friend the Member for Linlithgow (Mr. Dalyell).
  The problem for the British Gas Corporation now is whether the sale, if completed, can be held to arise out of an unlawful instruction and, if so, who will carry the can. Will it be the corporation for carrying out the instruction which the Secretary of State had no statutory power to make, or will it be the Secretary of State himself? As I have said, I understand that the sale is imminent.

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  Therefore, I respectfully suggest to the Minister of State today that the Government will be failing in their duty if they do not stop the sale.
  Mr. Dalyell: It may be asked why some of us are too impatient to wait until Sir Denis Rooke has given his evidence to the Select Committee on Energy. It is precisely because Select Committees by their nature take time and because the sale is imminent that we look forward very much to the Minister's answer today. If I may say so, Mr. Speaker, I hope that as we have some time in hand some of the rest of us may be allowed to have a say after the Minister has spoken.
  Mr. Lofthouse: I am not in a position to know whether the Select Committee will decide to take evidence on that aspect, although I hope that it will do so. I believe, however, that the position is so serious that if we cannot get assurances from the Minister of State today he has an obligation to the House by virtue of the position that he holds to stop the sale at least until the Select Committee has decided whether to take such evidence and, if it decides to do so, until it has reported. I see no ground for any Government or any reasonable Minister to refuse such an application.
  If the Government encourage the selling off of the country's assets at under 50 per cent. of their true economic value, their policy can only be the doctrinaire view that privatisation should be carried out at any cost. If that is so, let the Government say so and let the people of this country decide whether they share that view. It is a scandal that in the same period of time the same person—the former Secretary of State for Energy, now Chancellor of the Exchequer—can be instructed to give away the country's assests to the tune of £220 million while at the same time instructing the chairman of the gas and electricity authorities, without any statutory power to do so, to increase gas and electricity prices.
  I am not a great legal mind, but I believe that the Secretary of State has no statutory powers to give such instructions to the chairman of a nationalised industry either to increase prices or to sell off assets. His only power is the threat hanging over the heads of the chairman of nationalised industries that if they do not carry out the Government's instructions they will be kicked out. That is his only possible lever. I should hope that people in such powerful positions would be big enough and brave enough to resist such instructions when they know full well that the person making them has no statutory power so to do.
  Will the Minister of State confirm whether the instruction by the Secretary of State in March 1983 to sell off these shares was legal? Had he the legal powers to do that? If not, who would take the responsibility for selling off something outside the law? Will he agree that the sale of the British Gas Corporation share in Wytch farm oilfield will not take place until the legal position is clear and the Select Committee on Energy has at least had an opportunity of examining the matter, and that if the Committee decides to do so the Government will wait until it has taken evidence?
  7.51 pm
  The Minister of State, Department of Energy (Mr. Alick Buchanan-Smith): I am grateful for the opportunity to debate this subject in the House. It is certainly important
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  and I am very glad of the chance to put the record straight on a number of the issues which the hon. Member for Pontefract and Castleford (Mr. Lofthouse) raised. However, the kind of language which he used in the early part of his speech, describing this matter as a scandal and robbing the people, is quite out of place in relation to the subject itself, to what has taken place and to what I shall be saying in this debate.
  Listening to the hon. Gentleman, I began to wonder what new information he would bring before the House which it had not had already. I feel that to some extent we were treated to a replay of some of the debates we have had previously regarding the general issue of privatisation. The principle of this issue has been debated at length in the House on a number of occasions, and the Government's policy is absolutely clear on it.
  Mr. Lofthouse: The right hon. Gentleman will recollect that I made it clear that, if we had been able to get answers on the legality question from the Attorney-General, I probably would not have initiated this Adjournment debate tonight.
  Mr. Buchanan-Smith: I am grateful to the hon. Gentleman for clarifying that point. I hope that later I shall give him further clarification.
  By way of background, may I say that, although I know that the hon. Gentleman does not agree with me on this, I think he understands the generality of the Government's case in relation to the sale of these assets, which simply stems from our belief that there are certain activities, of which the oil production activity of the British Gas Corporation is one, which it is not appropriate for such an organisation to carry out and which are better carried out by the private sector.
  I certainly do not mean to belittle the achievements of the British Gas Corporation or its staff in regard to oil production. I know from my experience in recent months that there are few corporations, private or public, which could have achieved with such skill the switch to North sea gas carried out so successfully by the British Gas Corporation. I pay tribute to the corporation for its skill and professionalism in appraising and developing the Wytch farm field. It has been a job well done and the policy decision which the Government have taken is no reflection on the corporation's conduct or ability to develop that asset.
  The question remains, however, whether there is a better way to run those parts of the industry which could survive and prosper in a freely competitive situation. I would find it difficult to find a clearer example than the oil industry of an industry which should be in the private sector. Indeed, we are the only major industrialised Western country in which such a significant amount of natural resources have been held in the public sector. I believe that that is of significance.
  We have already taken a number of significant steps in the direction of returning nationalised oil assets to the private sector—for example, the successful flotation of the majority shareholding in Britoil. We are also proceeding now with our preparations to create the new British venture based on British Gas's former North Sea interests, Enterprise Oil.
  The Wytch farm sale is another facet of that same policy, and it is entirely consistent with our fundamental policy objectives. It is unavoidable, of course, that from

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  time to time British Gas will strike oil in its search for gas both on shore and off shore. I certainly do not question in any way the corporation's motives or competence. I believe, however, that it is in the interests of no one, including the corporation, for it to become involved in owning and operating oilfields. Indeed, it is difficult to see any reason why a publicly owned gas utility, whose main statutory duty is, as one would expect, to supply gas to consumers as economically as possible, should devote its energies and resources to fringe activities such as developing and operating an on-shore oilfield, particularly when this task could more easily and more naturally be carried out by the private sector.
  It is not unfair to say that this is something with which the last Labour Government were not totally out of sympathy. For particular purposes they sold off a certain amount of BP shares. Perhaps even more interestingly, they took powers under section 12 of the Petroleum and Submarine Pipe-Lines Act 1975 to transfer the oil interests of the Gas Corporation to BNOC. Since they took those powers, clearly even they found it questionable whether British Gas should be involved in oil exploration and development on the scale which it then was.
  I make no apology for dwelling on these background points because it is important in a debate such as this to set our policy in context because some of the policy may not necessarily conflict with what I divine to be the intentions of the previous Labour Government as embodied in their legislation.
  The hon. Gentleman asked me a number of questions about the current position in relation to the sale, and I am very happy to deal with that. As the House knows, the Government's intention to initiate a sale of British Gas's 50 per cent. interest in what is known as PL.089, which includes the Wytch farm field, was announced as long ago as the summer of 1981. The then Secretary of State for Energy, my right hon. Friend the Member for Guildford (Mr. Howell), laid before Parliament a draft direction under section 7 of the Gas Act 1972, which required the corporation to dispose of its interests in the licence on 26 June of that year.
  On 27 July a motion to disapprove the direction failed to find favour with this House, and the direction entered into force on 13 October 1981. That, of course, is the basis of the legality of the sale of Wytch farm.
  One of the main points which the hon. Gentleman raised concerned the legality of the instruction which my right hon. Friend the then Secretary of State—now the Chancellor of the Exchequer—gave to the British Gas Corporation on 30 March 1983. There should be no confusion. That was an instruction and, as such, it is not legally binding. I am sure that the BGC will make its view clear when it gives evidence to the Select Committee. My understanding is that the BGC is aware that the instruction is not legally binding and that it would not be illegal to conclude a sale at a price below the BGC's view of its economic value, provided that it was of the opinion that that was a reasonable course of action in all the circumstances.
  Mr. Dalyell: Am I right in interpreting the Minister's remarks as meaning that no final decision will be made until the due processes of the Select Committee have been gone through and that no irrevocable steps will be taken until the Committee has done its work?
  Mr. Buchanan-Smith: That is not what I said. I shall deal with the timetable in a moment. We halve still to receive the final proposal from the BGC. The matter is still under consideration. I and my predecessor have told the House that when that conclusion is reached it will be reported to the House. We do not know how that will fit into the Select Committee's timetable. It must take its own decisions. Consideration is well advanced, but I do not know when the Committee and the BGC will submit their conclusions to my right hon. Friend. I hope that I have made that clear.
  Presumably the view of the BGC will be available to the Select Committee. Indeed, the hon. Member for Pontefract and Castleford implied that that is already available, although, properly and fairly, he did not use it. I repeat that it would not be illegal for the BGC to conclude a sale at a price below its view of the economic value so long as it was of the opinion that to do so was reasonable in all the circumstances. I understand that that is the BGC's view. I accept that the hon. Gentleman may wish to see a different course of action flowing from it.
  Mr. Lofthouse: Will the right hon. Gentleman clear up one point? He has conceded that the Secretary of State has no legal powers to instruct the BGC to sell its shares in the oilfield. Why, if there are no statutory powers to enforce it, is the oilfield being sold when the BGC does not want to sell it?
  Mr. Buchanan-Smith: The BGC, knowing the legal situation, decided to act on that instruction. I have spelt out the BGC's view and perhaps the hon. Gentleman will read carefully what I have said. There is no question of the Government or the BGC doing anything illegal and nothing has taken place that we believe to be illegal. The hon. Gentleman said that the instruction had been given illegally, but there is a significant difference between that and saying that the instruction is not legally binding. I am endeavouring to be helpful. I am not trying to cloud the issue. I hope that when the hon. Gentleman reads what I have said his understanding will be clearer, because I have spoken advisedly.
  The BGC has to make its own decision on what it believes is a reasonable course of action in all the circumstances and on the value. As far as I am aware, it has not yet reached that conclusion, but as soon as it does it will undoubtedly convey that view to my right hon. Friend and we shall, if necessary, continue discussions and then report the conclusions to the House as we have promised. We have no intention of ducking that undertaking which I have already freely given.
  The hon. Gentleman referred to valuations which formed one of the reasons for the debate tonight. As the hon. Gentleman knows, the sale was conducted by the BGC. The Government accepted its advice that the sale should be carried out by means of an open tender to the oil companies. The BGC felt that that was the best way to ensure that a proper price was achieved which the Government have always made clear was an essential element in the successful conclusion of the sale. Once the necessary preparation for the sale had been made, BGC invited tenders, in July 1982. Several bids were received and the auction process went through several rounds. The BGC and the Government agreed that the best bid was that made by the Dorset consortium of five independent British companies.

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  As my right hon. Friend the Chancellor of the Exchequer made clear in May last year when he was Secretary of State for Energy, British Petroleum, which owns 50 per cent. of the licence interest, said that it did not intend to exercise its right to match the Dorset group's bid. That fact, together with the tendering process, hardly suggests that the Dorset offer was below market value or that the assets in question were being sold off at a knockdown price. It is clear that the market was thoroughly tested. The hon. Gentleman fairly made the point that he was interested not only in that but in whether the assets had been properly valued by the market. The real value of the assets is a slightly more difficult area of debate, but I believe that in our society and economy the testing of the market is the proper way to deal with the matter.
  Mr. Dalyell: Will the Minister give a reference for his quotation from remarks by the Chancellor of the Exchequer when he was Secretary of State for Energy?
  Mr. Buchanan-Smith: I cannot give the Hansard reference, but my right hon. Friend informed the House of the British Petroleum decision on 9 May 1983.
  Mr. Dalyell: The right hon. Gentleman appears to have given different impressions at various times. He gave a different view in Committee from the view that he gave from the Dispatch Box. That is why I have asked for the reference.
  Mr. Buchanan-Smith: I hope that the information that I have given the hon. Gentleman will help him to check the facts. I was not in the Department at that time. I have checked the record throughly, and I believe matters to be absolutely clear.
  The hon. Member for Pontefract and Castleford asked whether the market had been sufficiently tested. I believe that it was tested properly, for the two major reasons that I mentioned earlier—the tender procedure with the different rounds that occurred and the fact that British Petroleum did not seek to match the bid, which it had the right to do.
  There is a question whether the valuation is relevant or properly related to what the hon. Gentleman and others may feel is a proper valuation of the assets. I cannot enter into that matter in great detail tonight. Obviously the corporation will express a view. The Select Committee might cross-examine the corporation if it chooses to take matters further. I counsel a certain amount of caution. The hon. Gentleman spoke of a knockdown price and of instructions for sale at a certain price to a certain bidder. It is not quite as clear cut as that. He mentioned a value of £400 million. No doubt the matter will be open to further scrutiny.
  I assure the hon. Gentleman that I am not trying to duck my responsibilities. Until I have the final conclusions from the corporation it would be wrong to comment in detail. Nevertheless, one significant factor is the valuation put on the assets by Wood Mackenzie and Company, a well-known firm of stockbrokers. It is generally accepted in the House and in the oil industry as having a well informed and authoritative view on such matters. In February of this year it produced a paper that analysed the position at Wytch farm. It is the most up-to-date published
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  independent valuation. It makes a valuation at a 10 per cent. discount rate—much depends on the discount rate applied to a valuation—of £165·5 million.
  I am not founding anything on that. The hon. Gentleman mentioned a certain figure, and I am also mentioning a certain figure—one that has come from an extremely authoritative source based on certain assumptions. I commend the paper to the hon. Gentleman. The firm has no direct interest in the matter. It is acknowledged that the company gives an objective analysis of oil matters. Many of the figures that are bandied about are based on hypothesis, which is dangerous. I shall not enter into the game of comparing one figure with another. The time to do that will be when we have the final recommendations and conclusions from the British Gas Corporation. I give that figure only to put the matter into perspective.
  The BGC went through the process of tendering and a number of rounds of biddings. As the result of that, both the corporation and the Government agreed that the best bid came from the Dorset bidding group. At that stage the bid was only in an outline form and it was not possible to form a final view. The Government concluded that the offer was sufficiently attractive to merit detailed negotiations with a view to completion of the sale. It is no secret that, although the bid was clearly the best available from the market, the BGC felt that it was not sufficiently attractive. Against that background, my right hon. Friend the then Secretary of State for Energy told the corporation that the Government felt that it would be commercially justifiable and in the national interest to proceed. I have already described to the House what I understand to be the corporation's legal view of where it stands on that matter.
  Resulting negotiations have, as we all know, proved to be fairly long and complex. It is only recently that the last remaining details have been sorted out and the final versions of the necessary various agreements been produced. As I have already said, I understand that the BGC has yet to reach a final view on the deal that has emerged from these deliberations. It has not formally remitted the details of the transaction to the Government, together with any advice that it might wish to give. It is entitled—and we would expect it—to present its views to the Government. That is why I cannot say what will happen.
  Hon. Members will understand that the Government must consider all the aspects of the sale, including any impact resulting from the Budget changes announced today, before we reach any final conclusion. It would be wrong for me, in my position of responsibility, finally to make up my mind before I am in possession of the full facts. However, no one should take that responsible attitude as a sign of any weakening of our commitment to carry through our policy. We intend to proceed to a sale. However, that must rightly depend on the final conclusion of the BGC and the views that it expresses. I wish to make it absolutely clear that the Government still believe that the sale should go ahead. I say that in direct reply to the hon. Gentleman's direct question.
  I hope that I have dealt not only with the general background but with some of the narrative—which is important. The hon. Gentleman has given us an opportunity to focus our attention on the issue. I hope that I have clarified the legal position that he mentioned, and also the position of the valuation. I commend the Government's policy to the House. The sale of the BGC interest in Wytch farm will reduce the size of the public

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  sector and the effect that it has on the public sector borrowing requirement—both of which are correct, proper and important economic policy aims.
  It is even more important that we are taking an important step forward towards our aim of opening nationalised industries to private capital and increasing competition in both the public and private sectors. I believe that this will be achieved without damaging the development of the gas industry or the interests of gas consumers. Indeed, the Government expect both the gas industry and gas consumers to benefit from the implementation of their general policy, of which the development we are discussing is but a small part. The House has been kept informed at all stages. The essential and original legal processes were debated in the House, and that is the basis on which we have proceeded. A judgment on valuation can be made when we receive the conclusions of the British Gas Corporation. If the Select Committee decides to proceed to a further inquiry, the Government will pay attention to anything that it may say.
  When the Select Committee has wished to act swiftly in considering any issue, it has shown itself capable of doing so, and it has done so in recent weeks. I have no doubt that it will form its own opinion once it has considered the papers from my Department and the corporation.
  Mr. Lofthouse: Can the Minister give an assurance that if the corporation decides on the basis of a commercial judgment that it does not want to continue the negotiations leading to a sale it will not be subject to pressure from the Government to go ahead with the proposed sale?
  Mr. Buchanan-Smith: I cannot give an undertaking on such a hypothetical circumstance. If the corporation took such a view, it would be necessary to know its reasons for arriving at it. The central and most important issue is still to be presented to my right hon. Friend the Secretary of State and myself by the corporation, but over the past seven or eight months my right hon. Friend and I have had regular discussions with the corporation on several smaller but complex issues that have arisen during the negotiations. We have managed to resolve the problems as we have gone along. I should be happy if the corporation were to speak for itself, but I believe that the smaller issues have been dealt with amicably, sensibly, and constructively. I do not wish to prejudice the final stage of the negotiations by saying that in one set of circumstances we would do one thing and that in another set we would do something else. I believe that at the final stage we can bring matters to a satisfactory and positive conclusion.
  Once again, I thank the hon. Member for Pontefract and Castleford for raising this issue on the Adjournment debate. I hope that I have been positive and constructive in my response so that he understands where matters stand. I shall consider seriously what he has said in what I hope are the final stages of the negotiations.
  8.24 pm
  Mr. Tam Dalyell: The House owes a debt of gratitude to my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) for raising this issue at such a timely stage so that it is not too late, even at the eleventh hour, to take a different course.
  I listened to the Minister of State with considerable care. I chose not to contribute to the debate before he
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  replied as I wanted to hear precisely the argument that he chose to deploy. As always, the right hon. Gentleman was courteous and civil. He was a great deal more courteous and civil than the former Secretary of State for Energy the Chancellor of the Exchequer, when he was taking the Oil and Gas (Enterprise) Bill through Committee.
  It may be thought that I have no direct constituency interest in the issue in question. However, I have a vested interest of the mind because, along with my right hon. Friend the Member for Morley and Leeds, South (Mr. Rees), my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) and a number of other colleagues, I spent many hours in Committee Room 11 discussing this and related issues. Once one has invested so much time and energy in a particular subject, the matter becomes a sustained issue.
  The Minister and I have been colleagues for nearly 20 years as Scottish Members. He is one of a decreasing number of Ministers who cares about the informed opinions of his parliamentary colleagues and about the House of Commons. Therefore, I do not understand why he cannot say that no irrevocable step will be taken until the Select Committee has reported.
  The Select Committee on Energy, on which I do not have the privilege to serve, comprises a number of serious and distinguished colleagues who will not arrive at a view lightly. It is something of an insult to them that the Minister is unable to say, "We shall wait until you have reported, provided that the time taken is within reason." I think that I have the assent of my hon. Friend the Member for Pontefract and Castleford in saying that there would be no unnecessary procrastination on the part of the Select Committee. I am sure that it would tackle the issue seriously and with dispatch. In any event, the Conservative majority on the Select Committee would not allow any delaying tactics.
  Why cannot the Minister say clearly, as I am sure would be his personal wish, "Of course we shall wait until the Select Committee has heard Sir Denis Rooke's evidence and the evidence of others involved and has come to a conclusion"? Those of us who have listened attentively to the Minister are still not clear about the difficulties that would be caused by waiting for the Select Committee's report. I shall, of course, allow the Minister to intervene if he is able to put my fears at rest.
  Mr. Buchanan-Smith: The Select Committee has invited answers to a number of questions from my Department, from my right hon. Friend the Secretary of State and from the corporation. It has not decided yet whether it will investigate those matters. I understand that the evidence is already in the hands of the Committee. The hon. Gentleman's overtures have, as always, been made reasonably and constructively, but we do not know whether the Select Committee will carry out a further investigation. It may be that it will not do so. A conclusion has not been reached, but if the Select Committee quickly submits a view my right hon. Friend will clearly pay attention to the views of the House as expressed by the Committee.
  Mr. Dalyell rose—
  Mr. Lofthouse rose—
  Mr. Dalyell: I give way to my hon. Friend the Member for Pontefract and Castleford.
  Mr. Lofthouse: I have already said that the Select Committee has not yet decided what will be its next investigation. However, it will meet tomorrow morning to decide on what issue it will next take evidence.
  Mr. Dalyell: It is not right to discuss the business of private meetings, nor shall I do so, of groups within the House. However, I understood that Sir Denis Rooke had told a number of us that he was submitting evidence. It was on that ground that it was thought right not to press him too hard. Sir Denis behaved perfectly properly and I understood that he was submitting evidence.
  Mr. Lofthouse: Sir Denis was submitting evidence on the request of the Chairman of the Select Committee to answer certain specific questions. That is the evidence to which Sir Denis referred. I understand that he has submitted that evidence.
  Mr. Dalyell: Until these matters are considered, I hope that the Minister will take on board the feelings of a number of hon. Members.
  The second question is about the reserves. I understand that the Wood Mackenzie report, published in February, is based on data that became available last year. It is said that the reserves in the Wytch farm complex—for that is what it is—are in fact markedly greater than 160·5 million, and that the latest geological survey reveals considerable supplies of gas or oil at a much deeper level than has hitherto been thought to exist in Dorset.
  Do the Government have any information about the reserves being significantly larger in this area than was thought at the time when the data were collected for the Wood Mackenzie assessment?
  Mr. Buchanan-Smith: I cannot answer the hon. Gentleman's point specifically, but I assure him that before we or the British Gas Corporation come to a conclusion on this matter we will look at the most recent credible data. All the data are available to us and we will consider the decision in the light of them.
  Mr. Dalyell: That is a most useful assurance.
  There is then the question of precedent. Many of us feel that if we simply allow the Wytch farm argument to go by default we shall be setting a precedent for the other onshore discoveries that we hope will be made. One's experience in this House is that sometimes matters that looked fairly simple—for example, one thinks of Amersham International—turn out to be far more complex and far more detrimental to the long-term interests of the Treasury and the public purse than they appeared at first glance.
  The Minister complained that my hon. Friend used the phrase, "robbing the people". But in this case the Government are selling off public assets—and how. My hon. Friend is not the only one who is using the phrase, "robbing the people". It is widely thought that, with their privatisation plans, the Government are selling the silver to meet the household needs of the moment.
  We are concerned about the long-term assets of the country, and my hon. Friend's use of the word "scandal" is potentially proper. Until we have more information, I myself would hesitate to use that word but, potentially, that is what we are discussing.
  The Minister went on to say that he thought that the British Gas Corporation was not fit to carry out these procedures.
  Mr. Buchanan-Smith indicated dissent.
  Mr. Dalyell: Before the hon. Gentleman interrupts me, I admit that he then went on to praise the competence of the corporation. I would like to know how he substantiates the use of that word—
  Mr. Buchanan-Smith: I doubt whether I used the words "not fit". If I had done so, I would not have praised the corporation. What I think I said—and what I meant to say—was that I did not think it appropriate for the British Gas Corporation to carry out work in the oil area.
  Mr. Dalyell: I believe that Hansard will record that the word "fit" was used, but I accept the Minister's explanation. I accept that—in circumstances that made many of us extremely uncomfortable—the Labour Government sold off shares in British Petroleum. However, that Government did not sell off control, and that made a great difference. I am not persuaded that there is a parallel between the actions of the Labour Government in relation to BP—not that I approved of them—and what is now proposed.
  I should like to ask the Minister some specific questions. Is the Minister confident of the legality of his predecessor's instruction to the British Gas Corporation urging the corporation to sell Wytch Farm to the Dorset bidding group? The Minister will say that he answered that question in his reply.
  Mr. Buchanan-Smith indicated assent.
  Mr. Dalyell: The Minister nods his head, but it was not clear to me that he was certain of the legality of that instruction. Is he certain? The Minister is usually most cooperative.
  When one turns up a stone, creepy-crawly things may come out. I was not persuaded that the answer to that question was yes. I believe that the Department of Energy is not quite sure of the legality of what is happening. I can only assume from the Minister's silence that the Department is not sure of its legal ground.
  Mr. Buchanan-Smith: At the risk of prolonging the debate, I must say that I thought that I had made the position clear. The British Gas Corporation had a clear understanding of the legal basis of that instruction.
  I used my words with great care. I made the great distinction that my right hon. Friend's instruction was not legally binding. The British Gas Corporation chose to act on it, and may have some comments on it when we come to a conclusion. My words were clear, and I used them carefully and advisedly.
  Mr. Dalyell: The Minister has not answered my equally careful question. Is he confident of the legality of the instruction of his predecessor to the British Gas Corporation urging it to sell Wytch farm? I suspect that the Minister's words are well chosen in the sense that they are ambiguous, and that the Department is not sure what a court ruling would be.
  Mr. Lofthouse: That is right.
  Mr. Dalyell: I had my suspicions when my right hon. and learned Friend the Member for Aberavon (Mr. Morris) put the first question to the Attorney-General. I followed up his question three weeks later. We would not have put down questions to the Attorney-General if we had not wanted to find out about this subject.

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  The Department's lawyers are careful. I do not think that they are persuaded of the legality of what they are being asked to do. We must pursue this point, because it has emerged clearly from this debate that the Department's lawyers are not persuaded of the legality of what is happening. If they were, the Minister would give a confident answer at the Dispatch Box. It is now on record that he has not done so.
  Mr. Buchanan-Smith: The hon. Gentleman is trying to twist what I said. Neither my right hon. Friend nor I claimed that the issue was legally binding. My right hon. Friend told the corporation at the time that it was the Government's view that it would be in the national interest and commercially viable for it to proceed with the negotiations. On that basis, the corporation undertook to do so. The Government have never claimed that their request carried legal force.
  The hon. Gentleman is well aware that Ministers often urge industries to follow a particular course of action in the national interest. It would be absurd if every discussion with an industry had to take the form of a legally binding direction. The Government gave an instruction, as they were entitled to do, on the basis of which the corporation acted, no doubt having taken advice. On this matter the Select Committee has asked the corporation questions. I have already stated clearly what I understand to be the corporation's view. No doubt it will make that view clear to the Select Committee as requested.
  Mr. Dalyell: We have a difficulty here. I raised this point with my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) who is a Queen's counsel and now the shadow Employment Secretary. I do not want to put words into my right hon. and learned Friend's mouth, but the gist of what he told me is that when he was a junior Minister at the Department of Energy officials occasionally raised the issue of instructions but never brought it to a head because it is a grey area. The obvious question that I must ask is, if the instructions are not legally binding, what happens if Sir Denis Rooke says that they are against the interests of the corporation? What happens if he objects to the break-up of that efficient organisation? I am not saying that he will say that—I cannot speak for him—but the question is reasonable.
  If the Minister says that the instructions are not legally binding, is it not open to the chairman of the British Gas Corporation to ask why he should go ahead against his judgment after many years experience in the industry? We are talking of a man who has been in the gas industry for more than 40 years. He was a distinguished gas engineer who made his name during a crisis in the industry by fixing an accident in the east of London. In that way he came to the attention of the chiefs of the gas industry. He has extremely deep roots in his industry. If he says that, in the light of his experience, he judges that it is against the interests of the industry that he has served all his life and loves to go ahead and break up an efficient set-up, why should he be told, "You must do it", if it is not legally binding? I think that the Government are in great difficulty. I suspect that the Minister's answers will be read by the members of the Select Committee. I do not see where the power comes from to force the corporation to do things that are against its better judgment. I see that my hon. Friend the Member for Pontefract and Castleford nods in agreement and that the Minister is beginning to look a little uncomfortable.
  Mr. Buchanan-Smith: The hon. Gentleman would have done better to listen to what I said.
  Mr. Dalyell: I listened carefully.
  Mr. Buchanan-Smith: I do not think that the hon. Gentleman did listen, because I made it clear that my understanding is that the British Gas Corporation accepts that it would not be illegal for it to conclude a sale at a price that it regarded as below the economic value, as long as the corporation believed that that was a reasonable course of action in all the circumstances. I have therefore already answered the question that the hon. Gentleman is now trying to put.
  Mr. Dalyell: The Minister has not answered the following question—wherein lies the pressure in the Department, other than saying that the chairman of a nationalised industry will be removed—thank heavens he has a contract—to force the chairman to do something against his better judgment?
  Mr. Buchanan-Smith: I do not know whether he will do that.
  Mr. Dalyell: Nor do I. I cannot speak for Sir Denis Rooke. However, having gone through many hours upstairs, some of us have something of a history in this matter. There are deep questions here about the power of the chairman of a nationalised industry. I see that a note is coming from the Government's advisers.
  Mr. Buchanan-Smith: It is about the time that I was going home.
  Mr. Dalyell: It is not about the time to go home but about the substance of the issue. If the Minister wishes, I shall give way. Of course, it might be one of those inconvenient notes. If it is not, he should let us into the secret.
  Mr. David Winnick: Read it out.
  Mr. John Home Robertson: I think that we should be told.
  Mr. Dalyell: We are getting nearer the heart of the matter. Coming down to these jocularities from a sedentary position affects the fortune of the House. Ministers normally get away with a great deal. They have half-hour Adjournment debates in which an hon. Member speaks for 15 minutes and the Minister replies for 15 minutes and that is the end of the matter. As ill luck would have it, from the Department of Energy's point of view, it has worked out that we have probed a little deeper. As we probe, however, we turn over stones from under which merge all these creepy-crawly difficulties. The first is that the Government are not at all certain by what right they can tell Sir Denis Rooke to do things in his industry that are against his better judgment. In that case, they had better bring the instructions, as they are entitled to do under recognisd parliamentary procedures, to the Floor of the House. On round one, it is full points to the Opposition.
  I wish to ask the Secretary of State whether it is his policy to ensure that nationalised industries for which he is responsible are to be privatised at full economic value—or whether he wishes any other criteria to be adopted—and if he will make a statement. I have read that question out as there is some difficulty with the Table Office in putting it down as I wish. It raises the criteria to

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  be adopted in the assessment of economic value. I think that my hon. Friend the Member for Pontefract and Castleford will agree that the Minister was somewhat vague about the methods of evaluation.
  Is it sufficient to rely on the estimates by Wood Mackenzie? It is part of the myth of this place for those who are interested in the oil industry that Wood Mackenzie valuations have some mystical authority. The Government ought to have some different assessment, because Wood Mackenzie might not be wholly disinterested. I choose my words carefully because I do not like saying things in the House that I do not say outside. Wood Mackenzie is a commercial operation and I am not sure that a private firm in its position should be the sole arbiter of the value of publicly owned assets. What are the other criteria of valuation?
  Are the Government prepared to accept the British Gas Corporation's valuation of Wytch farm? That is a civilised and precise question. Would the Minister like to intervene? Here we go again—he does not reply. Great difficulties arise because those who say, "We shall take over a public asset at a notional value", should be clear about the notional value on which the assets are assessed. Throughout many hours in Committee, it was not clear from the former Secretary of State for Energy, the present Chancellor of the Exchequer, whether he had a clear idea as to how these valuations were to be made.
  Is there to be another Amersham International? Is that to be what happens? If there is a sell-off, and we are talking about criteria, to whom are the assets going to be offered? Is there to be any special offer for people employed by the BGC or the oil industry? Is there to be an effort to sell off shares to small shareholders as the Government thought proper when they sold Amersham International? I remember what happened in that case—shares went to big investors.
  Therefore, I repeat the question: what are the criteria to be adopted? Could we have some statement on this issue?
  There is a difficulty because the Minister has fairly recently come to the Department; in a sense, I am an old sweat, and old sweats have been through the mill upstairs and have had to listen, hour after hour, to the present Chancellor of the Exchequer, the present Economic Secretary to the Treasury and the present Minister of State, Home Office and know rather more about these matters than this Minister. I am not criticising him, because if one comes from the Ministry of Agriculture, Fisheries and Food and is thrown into this problem one may not know much about it. The Minister should send a dispatch rider to find out from those who do know about the criteria. It is no good the Minister sitting there like a Buddha smiling away.
  Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. The hon. Gentleman must make his own speech. The Minister has already made a 32-minute speech, and we cannot have a cross-examination, although the hon. Gentleman is entitled to make his own speech.
  Mr. Dalyell: I am not pretending to make a speech, Mr. Deputy Speaker. I am trying to conduct a serious interrogation, for which for once we have been given the opportunity on the Floor of the House, about what the
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  Minister has said. One of the difficulties of the House is that far too seldom do we get the opportunity to probe in some detail to what Ministers have been saying.
  Mr. Deputy Speaker: Order. The hon. Gentleman has every right to probe, but this is a debate, and he must make his own speech and not expect a dialogue or cross-examination.
  Mr. Dalyell: I may have every right to make my own speech, but I am not having much success where it matters—in the outside world. It has become clear that, beyond his brief, the Minister does not know much about this subject. It is outrageous that Governments presume to tell the great industries how to go about their businesses when the Ministers who give these directives know so pitifully little about the subject. We are disrupting an industry that on the Government's criteria is working. Nobody says that the BGC is conducting its business badly. However, when one asks questions, Ministers become more and more vacant.
  Mr. Lofthouse: Does my hon. Friend agree that the crucial thing is that the Government give instructions when they have no statutory powers to do so, and that that has been conceded by the Minister? Is he aware of the conclusions of the Select Committee on Energy on this in February 1982? It said:
  "It is clear from the evidence submitted to us that the Wytch Farm field is significant both in terms of the Corporation's activities and its contribution to United Kingdom oil reserves … In the context of our duty to scrutinise expenditure we think it right to stress the need to ensure the sale produces the maximum return for the nation. It is the responsibility of both the Corporation and the Department of Energy to ensure that this happens."
  By no stretch of any imagination can the terms under negotiation meet the above statement. If the corporation is taking instructions from the Government, who have no statutory powers to issue them, it is selling off the field outside its commercial judgment.
  Mr. Dalyell: That is a correct assessment of the situation.
  My interest in this matter is not recent; it goes back a long way, to the time when there were six pits in my constituency, where there is only one now. I had much to do with the then chairman of the coal board, Alf Robens, who was a friend of mine. He may have had faults, but he was a remarkable nationalised industry chairman. He expressed his contempt, as a former politician, for the constant changing of Ministers at important technical Ministries.
  I am not blaming the Minister personally, but this is part of the trouble. This merry-go-round of Ministers that is part of the British system means that they come new to a Ministry, possibly knowing very little, despite all their responsibilities, about particular industries. It then becomes clear, when they are pressed, that they cannot defend these policies. That is forgiveable if the policy is the result of advice from the technical advisers, but when it is the result of dogma and not of technical necessity it is much less forgiveable.
  What estimate has the Secretary of State for Energy made of the assets of Wytch farm, and what estimate has been made by the BGC? This is a simple question. Does he know the answer? That is the difficulty. The Minister comes to the Dispatch Box to make speeches that profoundly affect an industry's future and is asked simple

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  questions about whether he knows the estimate, but he remains dumb. That is either because the Minister is fed up—he has known me for 20 years and knows that it is easier to shut me up by giving answers—or because he does not know the answer. I am not sure whether the Minister will get much advice from the Scottish Whip but if the Minister sent his Parliamentary Private Secretary to the Box he might get some answers.
  Mr. Lofthouse: Perhaps I can help my hon. Friend the Member for Linlithgow (Mr. Dalyell), the Minister and House by saying that the British Gas Corporation's valuation is £450 million. The bid by the Dorset group is £160 million, £80 million of which is dependent on the Dorset group reaching a favourable profit figure.
  Mr. Dalyell: It is a highly relevant question, which must be put in writing by the British Gas Corporation when its officials read this debate in the Official Report. It might seem as if we are all talking to ourselves but the Press Gallery is, rightly, rather more full than I have ever seen it at this time on Budget day. It is fuller because the press judges that there is considerable interest in the issue. It is important for its own sake. If we were discussing the Budget, and Back Benchers were making Budget speeches there would be no one in the Press Gallery.
  Very important issues are at stake. By not answering the questions, the Minister has got into a position where I am much less friendly towards him than I was at the beginning of my speech. The Minister is debasing Parliament.
  Ministers are there to answer questions and I can only assume, to make it crystal clear, that they have no estimate of the assets of Wytch farm and do not know what estimate has been made by the British Gas Corporation. Thus ignorance is piled upon ignorance.
  I want to ask the Secretary of State only whether he has requested the British Gas Corporation to inform the Department of its estimates of the value of the corporation's assets at Wytch farm, and, if not, why not? Now the Minister is sulking, so I shall repeat the question, which is whether the Secretary of State has requested the British Gas Corporation to inform his Department of its estimates of the value of the corporation's assets at Wytch farm and, if not, why not? The question is clear enough. The fact that there is no answer speaks volumes.
  I see that my hon. Friend the Member for Walsall, North (Mr. Winnick) is attending the debate. Ever since he has represented his south London constituency, he has been seriously interested in the interrogation and scrutiny of the House of Commons. He is also a fair-minded man and I shall give way if he wishes to interrupt me. When Ministers are struck dumb it usually means that they are uncomfortable about their policies.
  Mr. Buchanan-Smith indicated dissent.
  Mr. Dalyell: The Minister shakes his head. I have asked him twice in a civil and agreeable way to answer my question. No answer is forthcoming. I can only assume that, once again, as happens with Governments, controversial policies are being put forward based on pretty empty knowledge, which brings the whole system into disrepute. That has happened before in the House. Some hon. Members have referred endlessly during debates to the constitutional measures in relation to Scotland and Wales. This very Minister was all in favour
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  of it to start with, until he discovered all the difficulties involved. Just as when he went blandly ahead in the 1970s and made many statements in Edinburgh and elsewhere on the subject of the constitutional arrangements of the United Kingdom, so he comes to the House to make a statement on a matter that he does not know very much about and expects us to ask questions, but resents us when we try to interrogate him. He had better get back to Ag and Fish, which he knows a lot about.
  Mr. David Winnick: I am grateful to my hon. Friend for giving way. Does he agree that what probably happened was that the Minister expected that he would have to reply to an effective speech—it obviously was—by my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse), who initiated the Adjournment debate, and that that would be the end of it? The Minister has discovered, first, that there is another speaker and, secondly, that my hon. Friend is pressing him with questions to which he did not expect to have to reply. The basis of his thinking beforehand was clearly that this would be an ordinary Adjournment debate. Now it has not turned out quite in that way, because the previous business has been completed. Having been pressed time and again in the past half-hour by my hon. Friend to answer those questions, the Minister cannot do so. Surely that shows the weakness of the policy and, I am sure my hon. Friend will agree, the need for much more detailed parliamentary scrutiny of this important issue.
  Mr. Dalyell: This is disreputable behaviour by the Government Front Bench, but it is a tactic that we know so well. As soon as my hon. Friend the Member for Pontefract and Castleford had made his careful and proper speech, what happened? Along came the Government Whip, in his most charming way—it was the the hon. Member for Calder Valley (Mr. Thompson)—and asked me whether I would speak then. I said, "I have no interest in speaking now." I said, "Look" Donald, I do not speak until I have heard what is said. Perhaps the Minister will satisfy me with his answer. There might be no need for me to make a speech." I have never made a speech without a purpose. There is no point in speaking just for the sake of speaking.
  I am concerned about what might happen to one of our great industries. In the past hour, the Minister has been found out. I see that the hon. Member for Aberdeen, South (Mr. Malone) is looking resentful. He hopes to catch your eye, Mr. Deputy Speaker, on a second Adjournment debate. I shall tell him how he can facilitate the second Adjournment debate—by interrupting his right hon. Friend the Minister, who is his parliamentary neighbour, and saying, "Look, mate, you had better answer some of these questions."
  Mr. Deputy Speaker: Order. This Adjournment debate is very wide, but we should discuss the subject rather than the procedures of the House.
  Mr. Dalyell: I can see that you are becoming slightly irritated, Mr. Deputy Speaker.
  Mr. Deputy Speaker: I am not.
  Mr. Dalyell: I ask for your patience, Sir. This is precisely the trouble. According to "Erskine May", Adjournment debates are based on scrutiny and interrogation of Ministers. If the hon. Member raising the subject has 15 minutes and the Minister has 15 minutes to

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  speak, one does not get far, but if, by parliamentary accident, the debate lasts a little longer, the inadequacies are revealed. What is now revealed is the fact that the Minister knows very little about the issues at stake.
  Mr. Deputy Speaker: Order. I am anxious only to help the House and to protect the procedures. That is all. The hon. Gentleman is getting dangerously near to tedious repetition, because he keeps saying that the Minister does not know his subject. All I am anxious to do is to help the House and the hon. Gentleman.
  Mr. Dalyell: Now we have it from the Chair that the Minister does not know his subject.
  Mr. Deputy Speaker: Order. That is very unfair. The hon. Gentleman knows that I did not say that. He should withdraw his comment.
  Mr. Dalyell: If I have misinterpreted the thought in your mind, Mr. Deputy Speaker, I apologise.
  Mr. Buchanan-Smith: The hon. Gentleman had better apologise to me as well.
  Mr. Dalyell: The Minister is now becoming irritated, saying that I had better apologise to him. In that case, he should answer the questions that I have asked him. It is no good becoming irritated and not answering the questions.
  I want to ask the Secretary of State what he believes to be the statutory duty that the British Gas Corporation must fulfil in disposing of its assets at Wytch farm.
  Mr. Winnick: That is an important question.
  Mr. Dalyell: It is a very important question. The Minister did not answer the question about statutory duty. Therefore, I repeat my question. I ask the Secretary of State for Energy what he believes to be the statutory duty that the British Gas Corporation must fulfil in disposing of the assets that it has at Wytch farm. What is the Government's concept of the statutory duty? The record will again be blank because there is no answer.
  The Minister is getting irritated, but so am I, because a number of my colleagues, among them my hon. Friend the Member for Merthyr Tydfil and Rhymney, my right hon Friend the Member for Morley and Leeds, South and my hon. Friend the Member for Wentworth (Mr. Hardy) and I spent many hours sweating our guts out on behalf of the House in Committee to settle these matters. Not all the discussions took place on a party basis, because we took our jobs seriously. I take the matter seriously, but I do not think that the Minister does.
  Mr. Robert C. Brown: Perhaps my hon. Friend would care to ask the Minister what valid reason, other than doctrinaire politics, the Government have to demand that the British Gas Corporation should sell off the only onshore oilfield in Britain which is making a profit for British taxpayers.
  Mr. Dalyell: I hope that my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Brown) will catch your eye, Mr. Deputy Speaker, to develop that point, because that is precisely what it comes down to. There is one reason and one reason only for following this course. That is sheer, uninformed, ill-conceived, badly-thoughtout, political dogma. That is what it is all about. There has
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  been no technical consideration whatsoever in this matter, and had there been a respectable technical case the matter would never have been put forward in this way.
  My only outside job has been as a weekly columnist of New Scientist for 16 years. In that connection I talked to many people; not all were Labour, SDP or Liberal voters but some were Conservative voters. It is clear that those who know about the industry see no earthly reason for doing this. The Minister misled the House when he said that the matter was about the injection of private capital. What private capital is needed to do anything about Wytch farm? It is not necessary. That was a red herring, and people who bring in red herrings often do so because they have no better argument. Political dogma is causing the trouble. The matter is not about the gas industry but about getting assets in the short term for the Chancellor of the Exchequer—Ah! Someone from the Opposition Front Bench has just arrived. That is excellent. It is about time that other hon. Members joined the debate, although I do not blame hon. Members for being absent because the debate came at an unexpected time.
  I shall tell my hon. Friend the Member for Motherwell, South (Dr. Bray) what is happening. We have been here for almost an hour. The Minister has no technical reason for bringing about the privatisation of Wytch farm and he cannot answer the simplest careful questions that I have put to him about the gas corporation. Some hon. Members spent many hours in Committee going over the matter, yet Ministers at the Department of Energy are acting in bad faith.
  I am not getting angry to put it on, but because I am genuinely angry. Some hon. Members want to do their best for the country but find that there is a frivolity about the answers, or the lack of them.
  Mr. Home Robertson: Dumb insolence.
  Mr. Dalyell: My hon. Friend the Member for East Lothian (Mr. Home Robertson) says, "Dumb insolence." It is dumb resentment. I know that the Minister is getting angry, but that is not good enough. It is all very well for him to get annoyed, but Ministers are present to answer questions. These are precise questions that were not answered in his speech. My anger is not faked but genuine.
  The Minister said that the British Gas Corporation decided to act on instructions. That is a very egregious way of putting it, because members of the Select Committee and people who read the newspapers know that the corporation, left to its judgment, would not have acted on any such instructions. The corporation made it clear, did it not, from the beginning that it did not want to do this? My hon. Friend the Member for Newcastle upon Tyne, North knows a great deal about the gas industry, and I am glad that he will take part in the debate, because he has often spoken about the industry. The fact is that the technical judgment of the corporation was totally different from what the Government now want it to do.
  It is no good having a great session of trying to browbeat Sir Denis Rooke. He is a considerable figure and a formidable leader of a nationalised industry. Those of us who, in our parliamentary capacity, have met Sir Denis Rooke on several occasions know that he has the gas industry at heart. What do the Government mean when they say that the corporation decided to act on instructions?
  Mr. Winnick: I do not wish to seem to be defending a Conservative Minister—that would be most unfortunate, and indeed unusual—but does not my hon. Friend agree that this stupid policy of privatisation and the whittling away of assets that belong to the community as a whole stems directly from the blindness and the dogma of the Prime Minister and the Chancellor of the Exchequer? My hon. Friend's fire should be directed at them. Would it not be appropriate for the Prime Minister, the Chancellor and the Secretary of State for Energy to be present to defend what my hon. Friend rightly described as an indefensible policy?
  As I said earlier, I have no desire to defend the Minister, but he clearly lacks a detailed knowledge of such affairs. That is not in dispute. The real culprits are the Prime Minister and the Chancellor of the Exchequer, who have abandoned the national interest in pursuit of this senseless policy of privatising every vital asset that belongs to the community.
  Mr. Dalyell: I must tell my hon. Friend in all seriousness that the Chancellor of the Exchequer is unlike any previous Chancellor whom I have known. He is light years away politically from Selwyn Lloyd or Reggie Maudling, and I simply do not know what the shade of Ian Macleod would think about some of the actions of the Government.
  When he was in Committee Room 11, the Chancellor of the Exchequer was a political thug. I do not like political thugs, because they often bully Back-Bench Members. When pressed, the Chancellor is often wrong. He is not all that well briefed, and I do not think he is very clever either, but that is by the by.[Interruption.] I see some Conservative Members smiling with approval. They know exactly what I am getting at. I am not making too much of a political point here, because if the Conservative Chancellor of the Exchequer were the right hon. Member for Worthing (Mr. Higgins), as he should be, that would be a different matter.
  I came to this House at a time when a civilised man was the Chancellor of the Exchequer, and he was concerned about the national interest. I refer to Reggie Maudling. He would have made absolutely sure that his junior Ministers answered debates and took part in arguments. The characteristic of this Government—it comes from the top—is that, when Ministers are pressed, they do not answer. I do not want to be led astray into making known my opinion of the present Prime Minister, but it was she who ordered the sinking of that ship, Belgrano.
  Mr. Deputy Speaker: Order. We are discussing oil. The hon. Gentleman must not stray too far.
  Mr. Dalyell: Before my hon. Friend the Member for Newcastle upon Tyne, North speaks, I would point out that the Minister said that the British Gas Corporation would find it not unattractive to proceed with. I do not know where he got that from, but I think that those were the words used. Ministers should be careful before they start putting words into the mouths of the British Gas Corporation. Will the Minister interrupt me and say that the corporation actually approves of what his Government are doing? Has he the face to say that? The fact is, as we all know perfectly well, and as those who have experience of the gas industry know perfectly well, that it does not in any way approve of what is happening.
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  The Chancellor of the Exchequer claims, in the words of the Minister, that the sale would be "commercially justifiable". I do not believe for one moment that the British Gas Corporation agrees that it is commercially justifiable. We would like to see the Government's evidence for suggesting that it is commercially justifiable. On what basis is it commercially justifiable? It is not commercially justifiable from the point of view of the United Kingdom Treasury, but commercially justifiable from the point of view of political dogma. That is what it is all about.
  May I say, in conclusion, before my hon. Friend the Member for Newcastle upon Tyne, North and others speak, that the instructions are not given legally. They are not legally binding. I hope that, when senior officials of the gas corporation read this in the morning, they will feel it incumbent upon them to show this debate to their lawyers, to get a legal opinion, possibly counsel's opinion, and then to do their duty. If they do their duty, it will mean that Sir Denis Rooke and his colleagues will act in what they think is the commercial interests of the great industry that they represent.
  The Minister talks about an auction process. Are we to have an auction like Amersham? Is that to be the basis—something of a rip-off? I do not normally indulge in the language of my hon. Friend the Member for Fife, Central (Mr. Hamilton), but we must be very clear about who will benefit from this sell-off. I suspect that it will not be the constituents of my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman). I do not think that many of those who get compensation from the events at Scott Lithgow will be able to invest in Wytch farm. We know that it will go to those in our society who are among the best off. Indeed, the tenor of the Budget was that we have gone back on unearned income to pre-Lloyd George. Those who depend on unearned income will benefit from this, not those who need it most.
  It is all very well to say that oil and gas do not go together, and that somehow the British Gas Corporation is not the appropriate organisation to deal with oil, but that is technical rubbish. Oil and gas are found together, and it is spurious, technical balderdash and gobbledegook to say otherwise. We are in the infants class, that is the truth of the matter.
  I must say to the Minister, therefore, that I am genuinely angry. My anger is not feigned. I think that the Minister's performance was disgraceful. I think that the policy is ill-conceived and, indeed, malicious and that it ought to be thoroughly examined by the Select Committee and by the senior officials of the BGC to whom I shall send the Hansard report of this debate, with a comment about the Minister's shame in not answering these questions.
  9.25 pm
  Mr. Robert C. Brown: First, I congratulate my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) on raising this debate at such an opportune time. I apologise that, due to other engagements, I was unable to be present to hear what was undoubtedly a learned and enlightening speech. I offer him my profound apologies. I apologise to the Minister for not having been present to hear what I understand was a disgraceful reply to my hon. Friend's superb speech.
  I speak with a background of 30 years' experience in the gas industry, first in private hands, and subsequently in public ownership. I entered the gas industry in 1937 as

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  an apprentice. I spent just short of 30 years in it before I entered the House. I finished my period of service in middle management. I am immodest enough to say that, had it not been for the intervention of politics which brought me to this place, at this point in my life I would probably have been in a senior management position, so the gain of the House was clearly the loss of the British gas industry. Normally I am a modest man, as my hon. Friend the Member for Linlithgow (Mr. Dalyell) knows.
  Very early in my life in the gas industry, I learnt that senior management in the industry was comprised of people who were far from politically motivated. On the contrary, if anything, they were a-political. They were certainly not Labour-oriented people in the old days of the Newcastle and Gateshead gas company, which I remember with affection, although the industry was then in private hands. I make no secret of the fact that I looked forward to the day when the people of this country would own one of its major industries. In 1949, of course, that happened. I was more than delighted, as a Member of Parliament, when the British gas industry exploited onshore oil in this country for the first time. No doubt all hon. Members are aware that the gas industry has done well by the development of the exploitation of the North sea oilfields surrounding our shores.
  However, we must ask why the private oil industry did not exploit the onshore resources, which would have been a much cheaper buy than the under-sea resources now being exploited in the North sea. It was left to the British Gas Corporation to lead the way in onshore oil development. I share the anger of my hon. Friend the Member for Linlithgow (Mr. Dalyell) at the way in which doctrinaire politics and sheer dogma are forcing a highly efficient, publicly owned industry to sell a great asset—Wytch farm oilfield.
  I shall repeat a question that I asked earlier. What reason could there be for demanding that British Gas should sell that worthwhile and profitable enterprise in Dorset? The answer is that there is no reason. I do not apologise for repeating my remarks, because there is no reason—apart from political dogma—why this Tory Government should demand that a publicly owned industry should sell a very profitable enterprise. If the Minister has the brass neck to suggest that there is any reason other than dogma he will be laughed out of court, as he well knows.
  Reference has been made to Sir Denis Rooke. In the past 30 or 40 years, management in the gas industry has not changed much, and Sir Denis Rooke is a typical senior manager. He has one interest, and that is the gas industry.
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  But the interests of the British gas industry can only be those of Great Britain limited. We should all want to share that interest. However, it is clear that Conservative Members do not share it, because for the doctrinaire reasons of private profit the Wytch farm field represents for them a very lucrative proposition. They think that it should be not in public but in private hands. That is what this debate is all about.
  I could debate the issue at length, as we did in Committee Room No. 11, but I shall not do so tonight. It is all on the record. The powerful case that we then made in that Committee has been echoed by my hon. Friends in the Committee on the Rates Bill and in other Committees. They are winning all the arguments, because the Government have no arguments left other than those of political dogma. The demands of this Government on Wytch farm bode very ill for the people of Great Britain. I spent 30 years in a gas industry that was privately and then publicly owned, and I know how I used to bristle when people suggested that we were a bunch of lazy layabouts working for a no-good industry. I started work there when I was 16, and developed a great pride in the industry.
  That indeed is the attitude of the people who developed the industry and developed Wytch Farm oilfield. How do they feel about a Government which for no other reason than bitchiness, because it is a public enterprise making a profit, cannot bear to see it continue? The same can be said across the whole spectrum of public ownership.
  I do not accept the concept which has been fostered by this Government that there is nothing good about public enterprise. I am not one of those people who think that the profit motive is evil. I do not think that at all. If industries such as gas and electricity, and if British Airways and Cable and Wireless, can make a profit for the people of Great Britain, that is a laudable thing. I see no evil in the profit motive.
  If there has got to be monopoly, I do not see anything evil in monopoly in itself. The evil is when monopoly is in private hands, as we shall see after the passing of the Telecommunications Bill, when the monopoly at present in the hands of the state becomes a private monopoly. That is when it becomes evil. I see nothing wrong in a public monopoly like the British gas industry serving the British people faithfully. But it is being forced into a corner by this reactionary Tory Government as they sell off the assets of the British people.
  That is exactly what Wytch farm oilfield is, and I share the anger of all my hon. Friends that the Government should be taking this type of action. They should hang their heads in shame and the British people should give them their reward at the ballot box next time.

  North Sea Oil
  9.37 pm
  Mr. Gerald Malone: It is a great privilege to be able to—
  Mr. Tam Dalyell: On a point of order, Mr. Deputy Speaker. Could it go on the record that the Minister did not reply to our points on the last debate?
  Mr. Deputy Speaker (Mr. Paul Dean): That is not a point of order. It is on the record, presumably.
  Mr. Malone: I thought it was about to be a great privilege to introduce this Adjournment debate on the question of the development of North sea oil, but I am at a loss to know how to proceed. I had always understood that debate in the House did not proceed by way of interrogation. I am at a loss because I usually take an example from the hon. Member for Linlithgow (Mr. Dalyell), who is, of course, a much more experienced Member than I. But if there has been any disgrace in the House in the course of the last few moments it has been quite simply in his performance. The House is not a barrack room in which cross-examination is indulged in other than at Question Time. If the hon. Member for Linlithgow had cared to pose his questions in a speech, I am certain that they would have been answered by my right hon. Friend. Indeed, if my right hon. Friend made any mistake, it was to indulge at the beginning of his speech the hon. Member for Linlithgow's eccentricity. This is the first occasion on which his eccentricity has been exceeded by his lack of courtesy. I hope that it will be the last that I shall see in the House.
  The question of North sea oil is vital not only for the country but, in particular, for my constituency. That is why I am delighted—
  Mr. Robert C. Brown: I am sure that on reflection the hon. Gentleman will agree with me that when he talks about my hon. Friend the Member for Linlithgow (Mr. Dalyell) and refers to eccentricity and lack of courtesy he is making a grave error. Eccentricity I think my hon. Friend would accept, but lack of courtesy is a charge that could never be sustained against him.
  Mr. Malone: I might well be prepared to accept that if the hon. Gentleman had listened to the speech of the hon. Member for Linlithgow, but he did not, and I am afraid that in those circumstances I am not prepared to withdraw my comments.
  North sea oil is vital not only for Britain but for my constituency. It is worthwhile recollecting at the outset of the debate how important it is. Britain's North sea oil industry now employs directly about 100,000 people. It earns enormous revenues for the Treasury and it has transformed the United Kingdom's economy.
  Mr. Geoffrey Lofthouse: On a point of order, Mr. Deputy Speaker. Have we now left the debate on the Wytch farm oilfield?
  Mr. Deputy Speaker (Mr. Ernest Armstrong): Yes. We are now on the second Adjournment debate.
  Mr. Malone: Not only has it transformed the United Kingdom's economy but it has transformed the north-east of Scotland. It has crossed the boundaries of technology which had been set by the oil exploration industry in the
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  past and it has resulted in the commissioning of ever more advanced platforms from the United Kingdom. It has given the United Kingdom's industry an opportunity that would otherwise have been absent.
  It is worthwhile having a look at the stage at which we have arrived. Up to now, some £30 billion has been invested in the North sea. One third of the proven resources have been exhausted and a difficult future lies ahead. Two thirds of the oil remains to be exploited and one of the difficulties is that the new fields that remain are more marginal than those that were first discovered and the risks are higher—not only the physical and technological risks but also the financial risks that have to be taken by the enterprises that go into the North sea to exploit its resources.
  One question that is bound to be asked by any company deciding whether to invest in new fields in the North sea or whether to invest further in fields that are already being exploited is whether further capital expenditure is worth it. There have been times when that might not have seemed to be the case. As more marginal fields have been brought into play, so the returns have been lower. Fields have needed much more capital-intensive investment to exploit them satisfactorily and there have been many doubts, in particular among the major oil companies, as to whether reinvestment, particularly in fields where enhanced productivity is required, would take place at all
  Enhanced productivity is important because at least half of the investment in the North sea that will take place over the course of the next few years will be in existing fields where there is an attempt to pull out more oil and companies will be deciding whether to invest in enhanced recovery methods, whether to invest in further drilling programmes from platforms already in place, and whether to develop many small deposits of oil that surround those platforms with some of the more technologically advanced sub-sea well head systems that are currently being developed in Britain and elsewhere.
  Stakes are high. When we talk about new fields that are to be developed in the North sea and additional investment in existing fields, we are talking about a figure between £50 billion and £60 billion. It is an enormous investment and it is about twice what has already been invested in the North sea. The House should bear in mind that in the past investment in the North sea has always exceeded expectations, as have the results of that investment. More fields have been discovered and more oil has been brought on stream.
  A critical issue in the North sea today which faces not only the Government but British industry is the export of the technology that will be used in the North sea over the next few years. There could well be as much benefit from investment in that type of technology and its export as there ever will be from investment in the North sea itself. Vast offshore oilfields remain in the world to be exploited. There are offshore fields in Canada, Australia, and India, as my right hon. Friend the Minister knows only too well having recently returned from there. Indeed, it is estimated that the majority of the future oil supplies to be found in the world will be offshore and the North sea has provided the test bed for the technology that will enable all that oil to be exploited.
  The Government, in two successive Budgets, have raised the curtain on what will now be the second act of the North sea story. Prior to last year's Budget, there was a lack of coherence in the tax structure affecting the North

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  sea and the way in which taxation was collected from oil and gas supplies. It is worth bearing in mind that until last year the average percentage of take from any North sea development was more than 90 per cent.
  Many Governments have approached the taxation of the North sea asset on the basis of "Let us see how it goes". Taxes were not introduced on a basis that would encourage a depletion policy; they were not introduced on a basis that oil companies would be encouraged to invest in the future. They were introduced on a willy-nilly basis, one following the other—for example, advance petroleum revenue tax was brought in to meet a certain position as it arose.
  To some extent, that is not surprising. When initial investment in the North sea took place, the companies making the investment estimated that they would get a return of about $7 per barrel on the oil extracted. The difference between what they realised and their calculations at the point of decision was enormous. The oil upon which they based their decision to invest capital when they thought it would return $7 a barrel is now fetching about $29.
  Perhaps during the first phase of North sea development it was natural that Governments approached the question of revenue raising with something less than a wholly coherent policy. The ground was moving far too quickly beneath them. But the rate of return from the North sea has now changed. I do not think that there will be a return to the days when a barrel of oil will produce anything like the $7 on which previous investment was based. The rate of return will be squeezed, profit margins will be squeezed, and it will be the Government's duty to ensure that the tax regime is such as to encourage continued investment.
  The Government's response to that new position has been most encouraging. Last year's Budget included the proposals for the Petroleum Royalties (Relief) Bill, now incorporated in legislation. That has resulted in a vast increase in exploration in the North sea. It is worth making the point that there had been a static period for about two years as oil companies wondered whether they would invest in future. The Government showed their good intentions and introduced that important legislation. I suggest that the current exploration, with the possibility of 19 or 20 new fields coming on stream in the not-too-distant future, is a direct result of that legislation.
  In addition, the good news of several taxation changes was announced in today's Budget. I especially welcome the Chancellor's statement that he will consider taxation changes in respect of the incremental oilfields. That is something for which the oil companies have been looking. My right hon. Friend has pledged to discuss the matter with them and to bring forward legislation, perhaps next year. The oil companies will welcome that.
  Similarly, capital allowances can now benefit small companies as they can be set against assets when the capital is invested and not when the asset is brought into use. That is especially important in respect of the North sea. It takes a long time to develop an important asset and deploy it in the North sea. The change will make a great difference to small companies which are under-capitalised and which need to get their cash flow right. Both those announcements will be of great benefit to the future of investment in that area.
  There have been some disappointments in the past with the performance of British companies and the way in
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  which they have participated in some areas of North sea development. I know that my right hon. Friend the Minister is only too well aware of my slight scepticism of the figures issued by the Offshore Supplies Office about the participation of British industry.
  When expressing scepticism about the involvement of British companies in the North sea, I do not seek to set up a protectionist barrier. Protectionism would be fatal for a country which intends to use its industry to exploit the North sea resource and overseas resources. I ask my right hon. Friend to confirm that, no matter how bad the state of British participation in the North sea might be, the Offshore Supplies Office will not try to disguise the true position. It is only by there being no protectionism within Britain and no concealment of poor performance, wherever it may be, that we shall get an industry that will be able genuinely to compete abroad.
  Industry was uncertain at the beginning of the North sea story but it is not so uncertain now. British firms are winning many orders and it is reassuring that they are winning them in high technology sectors. It is difficult to select only one or two firms in the Aberdeen area which have been successful because so many of them have enjoyed success, but there are two particular firms which have been successful in the high technology area. One of them is the Wood Group, which will go on to become an important international competitor in that market. An interesting entry into high technology development in the North sea is the partnership between Weir Pumps of Glasgow and an American partner. These two undertakings have developed an example of down-hole technology which they are marketing under licence. It is sweeping the field and taking an ever increasing share of what is a difficult market. They are manufacturing all the items that go into this technology from British products. It is an entirely British product that is going down hole.
  Mr. John Maxton: There is a strike at Weir Pumps.
  Mr. Malone: I am sorry to hear that there is a strike, but that does not seem to be holding the firm back in its endeavours to get into North sea developments. I cite the firm as a clear example of the way in which British technology should go.
  I ask my right hon. Friend to ensure that the next stage of development sees something further coming from the Offshore Supplies Office. It is important that the highest standards of design and quality should be encouraged in British industry when it is participating in the oil industry in the North sea and abroad. It is a demanding industry worldwide and one in which we shall succeed only if the highest standards are achieved.
  We are at the crossroads in North sea oil development. We are probably about to make the largest single investment in any industry that has ever been made by the United Kingdom. It is a success story that we shall win in the second act rather than in the first. At the end of the day British industry will rise to the challenge and we shall have prosperity from North sea developments that will continue long after North sea oil has gone. I believe that the industry will continue to be an export leader in the United Kingdom.
  9.58 pm
  Dr. Norman A. Godman: It is of some interest to me to take up the

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  remarks of the hon. Member for Aberdeen, South (Mr. Malone). He represents an area which I know well, for I challenged his predecessor in the contest for the seat during the 1979 general election. I think that I helped his predecessor to leave the consituency. It is now represented by a man who is very well known in Aberdeen for his dead parrot.
  The hon. Member for Aberdeen, South talked about the export of technology, and the Minister knows of my deep concern about export orders in the offshore construction industry. The hon. Gentleman discussed the export of offshore technology from Britain to Canada, Australia and India. and I should like to see that development take place. I believe that British and, particularly, Scottish industrial organisations have much to offer developing offshore industries in other countries.
  I am deeply disturbed by recent developments in the industry. One example is the placing of the Sun Oil order with the Gotaverken-Arendal Company of Sweden. This is a matter of regret. We certainly have the capability in Scotland to build the structures that are the subject of the order. Scott Lithgow certainly has the skills, enterprise and knowledge to build such a structure, and there are other organisations in Scotland that could build that rig. Is it riot possible that the placing of this order in Sweden will encourage a trend towards the placing of orders outwith the United Kingdom? That could happen despite the honourable efforts of the Minister to discourage such a development.
  What is the value of the work that will come to Scotland from that order, in terms of work subcontracted to a Scottish yard, and will the Department of Energy be ignored in the future where such contracts are concerned? It is essential for the Scottish industry not just in the north of Scotland but on the lower Clyde that the orders should come to Scotland. We have the skills and the knowledge to produce semi-submersible vessels and structures, but now we hear that it is on the cards that the order for the British Petroleum single well oil production system may also be placed abroad despite the fact that both Cammell Laird and Harland and Wolff are keen to acquire the order. British Petroleum's Government-appointed directors—if not BP itself—have an important responsibility to ensure that the order is placed within the United Kingdom. If it is allied with the Sun Oil rig order, are we not beginning to talk about the export of orders rather than the export of technology? We might go in the opposite direction from that pointed out by the hon. Member for Aberdeen, South and talk of importing technology in this important field.
  Mention has been made of the massive sums of money that are to be invested in offshore developments. Much of that money will go to the offshore construction industry. What is the Minister's view about the Sun Oil order going to Gotaverken-Arendal, and how will he react if the BP order is placed outwith the United Kingdom?
  I should also like to know something about the Department of Energy's view of current developments at Scott Lithgow. To me privatisation is very much the second best alternative, but Trafalgar House and Howard Doris may come to the lower Clyde, and they have between them the capability and nous to build such structures. How does the Minister view developments at Scott Lithgow and elsewhere, in the light of the placing of the Sun Oil order abroad and the likelihood that the BP order will also be placed abroad?
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  I apologise for intervening in an Adjournment debate, but these issues are vital to my constituency. When the dust has settled around the current negotiations over the acquisition of Scott Lithgow, we want to see orders placed at that yard. We want to see the prospect of employing 4,000 people or more at Scott Lithgow rather than the figure of about 2,000 which has been bandied around by observers and journalists.
  9.59 pm
  The Minister of State, Department of Energy (Mr. Alick Buchanan-Smith): I congratulate my hon. Friend the Member for Aberdeen, South (Mr. Malone) on taking the opportunity of a second Adjournment debate to raise a subject that is of considerable importance to his part of Scotland and the rest of the United Kingdom economy. I know that he represents—
  It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Mather.]
  Mr. Buchanan-Smith: My hon. Friend the Member for Aberdeen, South speaks with real authority as he represents some of the most vigorous firms and individuals that are exploiting the United Kingdom continental shelf to the advantage of the entire country. I congratulate him on advancing his case in such a forthright way. I share much interest in these matters as I also represent part of the city of Aberdeen and many of my constituents are also in the forefront of development.
  I am delighted to see that the hon. Member for Oldham, Central and Royton (Mr. Lamond) is present. I am sure he agrees that other cities should follow the example of Aberdeen. I do not intend to reiterate what my hon. Friend the Member for Aberdeen, South said about the economic importance of the industry. We must remember that about 3,000 companies in the United Kingdom are now involved with North sea oil in some way. With regard to what the hon. Member for Linlithgow (Mr. Dalyell) said in the previous Adjournment debate, I should point out that I have considerable first-hand experience of the oil and gas industry. One does not have to be in a position of responsibility in Government to understand these matters. It has come home to me since taking over my job in the Department of Energy that many new and old companies in many parts of the United Kingdom have benefited tremendously from the industry.
  Perhaps I shall be excused for mentioning a traditional company—British Ropes—that is to be found in the heartland of Britain that was in the forefront of our industrial revolution. The company was built up on our naval skills in an earlier age and has recently proved to be one of the finest examples of firms that export technology. It is successful against worldwide competition. It scored a world first in technology with the Exxon leader tower guiderope mooring system within 100 miles of New Orleans in the heartland of the American oil industry. It is a fine example of many enterprising companies that are to be found in the United Kingdom.
  My hon. Friend was also right to point out that we are moving into a new phase of development that will require the development of more capital-intensive and difficult fields. I am grateful for his welcome of the budgetary changes.
  The Chancellor said that he would consider the problem of incremental oilfields, which is vital to the subject.

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  Whatever the decision may be, whether it is a decision to make changes or new proposals, the fact that it will be back dated to today is further proof of the commitment by the Government to this new stage of development of our oil industry and the marginal fields. If we could get greater reserves through better methods of exploitation of reserves, that would enhance oil recovery, which would be to the benefit not only of the oil companies but of the United Kingdom as a whole and would improve the continuity of supplies from the continental shelf.
  Mr. Maxton: What effect will there be from the changes in the capital allowances and the reduction in corporation tax? New industries trying to get in new investment need capital allowances, whereas the older companies with high profitability benefit from changes in the corporation tax. How will this benefit the industry?
  Mr. Buchanan-Smith: What the Chancellor announced today about these changes will be of net benefit to the offshore oil industry, although the industry will make its own assessment. I have no doubt, from its response a year ago—to which the Chancellor referred in his speech—that it will realise that the British Government are firmly behind the continuing development of the North sea and other areas of our coast.
  One thing that my hon. Friend the Member for Aberdeen, South did not mention was the current licensing round that I announced a few weeks ago, which takes us out into the marginal areas of deep water where new technology is required, in waters of depths up to 2,000 m. This demonstrates that we in the United Kingdom industry are at the forefront of the technology and underlines what my hon. Friend said. I hope that we shall make sure that we can export that technology and the hardware that goes with it where it may be appropriate. It is not just technology that we want to export overseas, but everything else that goes with it.
  As my hon. Friend knows, my right hon. Friend the Secretary of State has taken initiatives in one of the newest areas, China, where our experiences could be particularly appropriate. A few weeks ago I visited India, another country that is successfully and efficiently developing. Its offshore reserves are important and when it moves into its deeper waters, as it will do, our technology may help. I found out how many people in that country look to the technology developed by British companies.
  The significant thing—as in any country with a young industry such as ours was—was that we had to rely initially on the technology of others. We have now developed our own technology and have something to show the rest of the world. This is one reason why I strongly support the export policy and why the work of my Offshore Supplies Office will be directed in that way. It will give a continuity to the industry that will go beyond the exploration and development stage of our oil resources.
  If we are to survive in the oil industry we have to be international, as the oil industry is international. We cannot try to develop our industry on a national basis because if we did so we should not be taking the full benefits that it offers us both now and for the future.
  My hon. Friend rightly said that he hoped that we would continue our policy of making sure, through the Offshore Supplies Office, that we shall continue to have a good
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  share of the activity on the continental shelf. I give him that assurance. Equally, I accept that the purpose of the Offshore Supplies Office is to give British companies, and to ensure that operators give British companies, a full and fair opportunity to quote and participate in such development.
  That is not being done in a protectionist sense, because we would lose the opportunity for our industries to become international and competitive. One of our successes, which I saw in India where British companies are operating, is that we have already demonstrated that we are competitive on the international scene. I gave a few moments ago a striking example of that success in the American offshore industry where we have proved ourselves to be competitive. I assure my hon. Friend that we shall do our best to support our industry so that it can be competitive and take advantage of those opportunities overseas.
  My hon. Friend the Member for Aberdeen, South mentioned our assessment of the performance of British companies and questioned whether it was a real one. I believe that it is real because, given that we are dealing with an international industry and that we want British companies' to act internationally, the proper way to make an assessment of British participation in work on the continental shelf is by dealing not with brass-plate companies but with those that base their activities here, are manufacturing here and are creating British jobs. That is the basis of our assessment of the participation of British companies.
  I share my hon. Friend's concern that overseas companies are most interested in our development of new technology, such as that carried out by the Wood Group and Weir Pumps, which I commend. the more that we can do to encourage the development of such new technology, the better. I hope that my hon. Friend will be encouraged by what was done in the eighth licensing round, when we required successful licensee companies to discuss with us the research, development and technology that they would use within the newly licensed areas. We have had very successful discussions with companies so far, and I intend that they will be a feature of the ninth licensing round. They will probably be further refined in the light of our experience in the eighth round.
  The companies successful in obtaining licences to work on the United Kingdom's continental shelf will require the increasingly important new technology to work in frontier areas. It is important for new technology to be transferred to British companies, as we can ensure continuity only in that way.
  I know the difficult time that the hon. Member for Greenock and Port Glasgow (Dr. Godman) and his constituents have had and of their considerable concern, anxiety and worry in recent months. I thank the hon. Member for the constructive part that he has played, which I would expect of him and any other hon. Member in making sure that the long-term interests—I stress that they are long-term—of his constituents are properly served. I am delighted that I and my Department have been involved in trying to find a solution to the great difficulties. I hope, for the sake of Greenock and Port Glasgow and the United Kingdom offshore industry as a whole, that we shall have the capability to build the semi-submersibles required in the next generation of development.

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  I would have been bitterly disappointed, and would have shared in the disappointment of the hon. Gentleman and his constituents, if we had not been able to preserve and continue the first-class facilities at Greenock and Port Glasgow. I refer to the physical facilities in terms of yard space as well as the capability in human terms, which is equally important. It would be a tragedy if the skills that have been built up over generations in our older shipbuilding industries were lost to the new generation of offshore industries, where our future must lie to an increasing extent.
  Therefore, I commend and support the efforts of those such as Howard Doris and Trafalgar House, which have come together to try to find a solution. I only hope that over the next few days and weeks, in co-operation with everyone concerned, not only a satisfactory but a lasting solution will be found. That is in the interests not only of Greenock and Port Glasgow but of the industry as a whole. We need an effective construction and fabrication industry with a semi-submersible capability.
  I am optimistic that a soundly based, effective and proper solution will be found. However, that will be only the start, and it will be difficult to reach that starting point. After we have got there, we must remain competitive. I make no apology for preaching this to the House. I think that it is accepted by everyone in the House that, if we are to be competitive, full and fair opportunity should be given. I shall do my damnedest to make sure that our firms and yards are given a full and fair opportunity. However, in being given that opportunity, it is up to the management and the work force to make sure that they take advantage of it by being competitive. This is a highly competitive world. If we are not competitive, we shall be looking only to a short-term and not to a long-term industry that has the export opportunities to which my hon. Friend the Member for Aberdeen, South and I have referred.
  Prices are important in competition. That is where the dedication of the work force and the initiative and enterprise of the management have a crucial part to play. However, quality is also important. The industry requires an incredibly high standard of quality of workmanship. I hope that everyone will rise to that. We must also make sure that we can deliver on time—indeed, ahead of time. It is significant that the companies and yards that have been most successful are those that have the best records for delivery and quality.
  Therefore, if we can put together a deal for Scott Lithgow, which I hope we can, that will be only the start. I hope that everyone will continue their endeavours in making a start on carrying through the operation to a successful conclusion. The Offshore Supplies Office and I will do everything possible to ensure that those people are given full and proper opportunity to compete. I say that as much in relation to the British Petroleum orders that will be eventually placed as in relation to others.
  The hon. Member for Greenock and Port Glasgow referred specifically to Sun Oil and the development of the Balmoral field. I make no secret of the fact that last summer, when the development was coming forward, I welcomed it. It is a marginal field, and I have always appreciated that. However, it was going to use a different
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  technique—a floating production facility—for that field, which was another new development in the North sea. I am sad to have to report to the House—I say nothing that I have not already said to the company—that the performance of Sun Oil and its co-partners in the development has fallen far short of what I would expect from a major American oil company, according to experience in recent years. It falls far short of what I would expect of any company which, through the licence and development approvals that it has been given by Her Majesty's Government, has had the opportunity to operate on the United Kingdom continental shelf. I am sad to have to say that. Some hon. Members have expressed exactly that point of view to the company.
  I make no secret of this fact. I have already had two meetings with the company and its partners. I expect to have a third meeting tomorrow. Before the meeting I hope that the company will decide what it will do. I say that not only because I am concerned about its performance—I have made my concern absolutely plain to the company and its partners—but because, although the company has given me an assurance that it will meet a United Kingdom content of over 70 per cent., which other operators in the North sea have met in recent years, I have serious doubts about its ability to perform to that standard. I say that with sadness rather than in anger. It has not given British yards a full and fair opportunity to tender for this work as we expected it would. If it gives the main contract for this work to an overseas yard, I shall have serious reservations about whether it will achieve what it has said to me it will achieve. It told me that it could achieve a United Kingdom content of more than 70 per cent. If it puts the order abroad I, my Department and the Offshore Supplies Office will monitor closely its performance while carrying out its development plans and building the structure during its assembly. Because of my doubts we shall have to monitor the position continually and carefully over the entire development period.
  At the end of the day it is vital to me, my Department, the Government, the House and the nation, given our tremendous assets in our continental shelf and given that it is open to the Government through their licensing procedures and the procedures for approving development plans, that we have companies as licensees and approved as operators, that put forward development plans to us, in whose performance we have confidence and which we believe will perform correctly and in the best interests of the United Kingdom.
  I have said to the company and its partners that, if the performance falls short of our expectations, I shall scrutinise carefully future attempts by those involved in such developments if they apply for approval, development or licences to explore the United Kingdom continental shelf. It is my duty to make sure that we have companies operating in whose performance we have confidence.
  I thank my hon. Friend the Member for Aberdeen, South for initiating the debate and the hon. Member. for Greenock and Port Glasgow for his contribution. We are dealing with one of the most exciting areas of the British economy. My Department and I are committed to continuing development and confidence and to making

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  sure that we develop these resources in the best way possible to the best advantage of the nation, both within the United Kingdom and overseas. I assure the House that I am fully committed to that.
  Question put and agreed to.
  Adjourned accordingly at twenty-three minutes past Ten o'clock.

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

Sporting Links with South Africa
Lord Chalfont: 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 their policy towards sporting links with South Africa is in full accordance with the provisions of the Gleneagles Agreement of 1977.
Lord Skelmersdale: My Lords, yes. The Government's policy is entirely founded and consistent with the 1977 Commonwealth Statement on Apartheid in Sport as reaffirmed by my right honourable friend the Prime Minister and other Commonwealth leaders at successive Commonwealth Heads of Government meetings, most recently at New Delhi in November last year.
Lord Chalfont: My Lords, I thank the Minister for that Answer. Will he accept that my supplementary question is purely in the spirit of objective inquiry, because the Gleneagles Agreement seems to me to be somewhat ambiguously drafted? Is it in fact the policy of Her Majesty's Government not to encourage sporting links with countries where, as the Gleneagles Agreement says,
"sports are organised on the basis of race, colour or ethnic origin",
or is it the policy of Her Majesty's Government to discourage sporting links with South Africa while the policy of apartheid remains in force there?
Lord Skelmersdale: My Lords, the latter.
The Earl of Lauderdale: My Lords, can my noble friend make it clear whether he is talking about an agreement or a statement? In his reply he referred to a statement but the Question refers to an agreement. Is it a binding agreement?
Lord Skelmersdale: My Lords, the Gleneagles Agreement was a communiqué which was signed and reaffirmed, as I said, by all the Commonwealth Heads of Government.
Lord Cledwyn of Penrhos: My Lords, will the noble Lord go a step further and say that Her Majesty's Government unequivocally condemn the proposed tours of South Africa by British Rugby Union teams?
Lord Skelmersdale: My Lords, we have been consistently doing all that we can to point out to the Rugby Football Union that this is totally undesirable and counter-productive to its purposes.
Lord Bruce-Gardyne: My Lords, is my noble friend sure that his reply to the noble Lord, Lord Cledwyn of Penrhos, is altogether wise? Is it not at least arguable that if this tour of South Africa took place, and as a result we were drummed out of international sport, we might be saved a great deal of embarrassment from the visitations of the younger members of the English and Scottish populations ripping up the towns of Western Europe whenever we play?
Lord Skelmersdale: My Lords, that is a point of view, but I would consider it distinctly undesirable.
Lord Hatch of Lusby: My Lords, does the noble Lord agree that the phrase in the Gleneagles Agreement which calls for:
"every practical step to discourage contact and competition with teams from any country where sports are organised on the basis of race, colour or ethnic origin",
is a direct reference to the whole character and foundation of the system of apartheid?
Lord Skelmersdale: Yes, my Lords, most certainly. That was behind my answer to the supplementary question of the noble Lord, Lord Chalfont.
The Earl of Kimberley: My Lords, is my noble friend aware that the other day one of the leading BBC sports commentators stated that all sport in South Africa is now multi-racial? Does he consider that that is a sign of straws blowing in the wind?
Lord Skelmersdale: My Lords, certainly there has been some easement of the policy of apartheid in sport in South Africa; but since sport is principally founded in schools, which are still segregated, I do not think that I can agree with the point of view which my noble friend has just expressed.
Lord Brockway: My Lords, as an old rugby player may I ask the Government whether they would express to the Rugby Football Union their strong disapproval of the proposed rugby tour of South Africa?
Lord Skelmersdale: My Lords, I thought that I had already said that my honourable friend the Minister for Sport has been consistently doing that over the past few months. I shall also have an opportunity in an Unstarred Question tomorrow to add my own words of discouragement to that particular sporting body.
Lord Orr-Ewing: My Lords, is my noble friend aware that the Gleneagles Agreement of 16th June 1977 has, so far as I can check with the Library and other places, never been debated in either House? Might it not be desirable at some time to have a debate? Secondly, is not the difficulty with the Gleneagles Agreement (which was fully justified at the time at which it was agreed) that it cannot be easily modified? Do the Government have any ideas of how it might be modified as South Africa adjusts itself and gets away from the abhorrent policy of apartheid?
Lord Skelmersdale: My Lords, as far as a debate is concerned, if there is sufficient call for one I am quite sure that the usual channels will consider it in their usual manner. I am afraid that I cannot remember

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what the second part of my noble friend's supplementary question was. If my noble friend would repeat it, I shall then be able to answer it.
Lord Chalfont: My Lords, may I ask the Minister one final question which is in two parts? Will he confirm—because I want to be absolutely clear about this—that the Government interpret the Gleneagles Agreement as requiring not integration in sport but the total abolition of apartheid; and, secondly, are the Government convinced that in no other country in the world—especially in the British Commonwealth—is sport organised on the basis of race, colour or ethnic origin? Are the Government totally convinced that that exists nowhere else in the world except in South Africa?
Lord Skelmersdale: My Lords, as far as the second part of the noble Lord's supplementary question goes, I am afraid I do not have any idea as to that. As far as the first part goes, yes, he is quite right. Implicit in the original Gleneagles Agreement was the condemnation of apartheid.
Lord Chalfont: My Lords, I do beg the leave of the House to return to this because that is not the answer to my question. I know what is implicit in the Gleneagles Agreement because I have read it with great care. Do the Government interpret this as being binding upon British policy, that before sporting links with South Africa may be resumed apartheid has to be abolished? That must be a simple yes or no answer.
Lord Skelmersdale: My Lords, I am afraid that it is not as easy as that. The membership of any organisation, whether international or national, carries with it both benefits and obligations. Depending on the point of view that noble Lords take as to whether being a party to the Gleneagles Agreement is a benefit or an obligation—and we have had both ideas expressed in our exchanges this afternoon—then it would be for a general consensus of those same Heads of Government to change the policy which all governments would then follow were this to be seen to be desirable.
Lord Gisborough: My Lords, would my noble friend look into the question of what other governments have discrimination and, in particular, for example, the discrimination against the "untouchables" in India; and, if so, what justification there is for having one policy against one country with discrimination, and a different policy for another country with another discrimination against different people?
Lord Skelmersdale: My Lords, yes, I will certainly look at that: but it is another Question.
The Earl of Lauderdale: My Lords, my noble friend just used the term "agreement" again, whereas earlier he said that it was a statement. Can he confirm that what we are talking about is a statement or a communiqué, and nothing that is remotely like, say, a treaty?
Lord Skelmersdale: My Lords, it is a communiqué which is commonly referred to as the Gleneagles Agreement.
Lord Elwyn-Jones: My Lords, in the meantime, is the noble Lord aware that his forthright statement condemning apartheid will be welcomed throughout the Commonwealth and throughout, I venture to think, most of the Benches of this House?
Lord Skelmersdale: My Lords, I am grateful to the noble and learned Lord.
Lord Shinwell: My Lords, but if it is merely a matter of apartheid, why not include Russia?
Lord Vaux of Harrowden: My Lords, is the noble Lord the Minister aware that there is no such thing as discrimination or apartheid in sport in South Africa today?
Lord Skelmersdale: My Lords, that is quite a stunner and is certainly not my understanding of the situation.
Lord Vaux of Harrowden: My Lords, but it does happen to be correct.
Lord Wallace of Coslany: My Lords, is the noble Lord aware that he has battled very well in extremely difficult circumstances and very tricky questions?
Lord Skelmersdale: My Lords, I am grateful.
Lord Milverton: My Lords, will my noble friend the Minister—
Noble Lords: Next Question!

Nationalised Industries: Indirect Taxation
2.48 p.m.
Lord Ezra: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether it is their policy to use profitable nationalised industries as a means of raising indirect taxes.
The Parliamentary Under-Secretary of State, Department of Energy (The Earl of Avon): My Lords, the Government consider that the national interest is best served if nationalised industries are run on sound economic and commercial lines. It is not Government policy to use profitable nationalised industries as a means of raising indirect taxation.
Lord Ezra: My Lords, I am indebted for the noble Earl's reply. May I ask him, however, how he reconciles what he has just said with the recent findings of the report issued by the Energy Committee in another place in regard to the intended electricity price increases? Is he aware that they found that there was, in their opinion, no economic or commercial ground for such increases; and that, to use their own words, the only plausible reason for such increases was the determination of the Government to raise additional revenue?
The Earl of Avon: My Lords, my attention has been drawn to that report; and I gather it contains a number of recommendations which are being carefully considered. The reply is expected within the timescale recommended by the Procedures Committee.
Lord Barnett: My Lords, why does the noble Earl dens the truth of the situation? Is it not a fact that during the course of a public expenditure exercise, the Government decided to increase the external financing limits of the nationalised industries, some of whom therefore had to increase prices higher than they themselves would have liked? What is the difference between that and an indirect tax increase?
The Earl of Avon: My Lords, in the Labour Government's last paper in 1978 by the new Member for Chesterfield, it was stated that the principle that prices should reflect the costs of supply on a continuing basis, while providing an adequate return on capital, is now firmly established. That is what the Government believed. May I remind the party opposite that under Labour, electricity prices increased by 170 per cent., which is about 2 per cent. every six weeks.
Lord Beswick: My Lords, is the noble Earl aware that he cannot find a comparison with the Labour Government compelling a nationalised industry to put up the prices one day and then the following day criticising that increase for being above the RPI?
The Earl of Avon: My Lords, we did not compel the industries to put up their prices.
Baroness Burton of Coventry: My Lords, may I ask the Minister whether he has noted paragraph 46 of the report of the Select Committee on Energy, which says that the electricity industry is being required by the Government to make a payment to the Treasury in 1984–85 of some £360 million over and above the figure of £380 million which would be consistent with the financial target? May I also ask the noble Earl whether he is aware, too, that. contrary to all recognised practice, that payment has been imposed on the industry and has not been agreed?
The Earl of Avon: My Lords, the pricing decisions remain ultimately matters for the industries. The noble Baroness, I know, will not expect me to comment at the moment on the recommendations of the Select Committee.
Lord Simon of Glaisdale: My Lords, has it ever been argued that Government funding of the losses of unprofitable nationalised industries should properly be treated as remission of indirect taxation?
The Earl of Avon: My Lords, I am grateful to the noble and learned Lord for putting the other side of the coin.
Lord Shinwell: My Lords, may I ask the noble Earl whether he admits—as he must admit—that both gas and electricity are profitable industries? He admits that. Then, if they increase prices, is that not profiteering? Is not profiteering part of Conservative policy?
The Earl of Avon: My Lords. I think that we ought to get this matter in perspective. Profits should, I think, he seen in the context of the vast resources employed. British Gas earned a real rate of return of 4·2 per cent. on assets of over £12 billion between 1980–81 and 1982–83, and for the same period the electricity supply industry's rate of return was 2·3 per cent. on assets of over £30 billion.
Lord Bruce-Gardyne: My Lords, can my noble friend explain to the House why in certain quarters it should apparently be deemed to be perfectly moral to use oil supplies for the purpose of revenue raising, but not, seemingly, to use electricity supplies for the same purpose?
The Earl of Avon: My Lords, I am grateful to my noble friend for that helpful supplementary question.
Lord Hooson: My Lords, as there is no commercial reason for increasing gas or electricity prices, what reason do the Government really give for raising them? If it is not indirect taxation through the back door, what is it?
The Earl of Avon: My Lords, I think that this is the first general increase for two years, well below both inflation and a rise in the industries' own costs. The idea is to reduce the dangers of an abrupt and large increase in the next year and also to increase the industries' confidence and their ability to meet the external financial limits.
The Earl of Lauderdale: My Lords, will my noble friend not agree that over a number of years it was common ground between the two parties that energy prices must in some way be devised to meet the long-range marginal costs of replacement—that was the formula used—and that this is an application of that principle? We are also agreed that, as we are a revising Chamber, it is not incumbent on us to accept as gospel everything that comes up from the other place.
The Earl of Avon: My Lords, I am intrigued by my noble friend's comments. In the Guardian of last Saturday there was a letter which put forward some other aspects regarding the Select Committee's report.
Lord Molloy: My Lords, would not the noble Earl agree that, bearing in mind that the industry is making a large profit, this unnecessary increase will bring about a needless twist to the prices spiral on the one hand, and on the other hand, will make life much more difficult for the poorer of our citizens, in particular the disabled? Does he not also agree that the whole affair is completely out of balance and is damaging to both industry and the moral structure of the country?
The Earl of Avon: My Lords, I should like to correct one point. This is of course a domestic rise, not an industrial one. I wish to say straight away that we believe that this is a prudent rise—and I would use the word "prudent" in both cases where the noble Lord, Lord Molloy, used a stronger word. At the same time we are now paying in benefits over £380 million a year, and this has risen substantially with inflation, whereas of course prices have not.
Baroness Gardner of Parkes: My Lords, will my noble friend confirm that there has been considerable help for the poorer people mentioned by the noble Lord. Lord Molloy, in particular in the reduction of standing charges for those who are consuming only small quantities of gas and electricity? Will the Minister confirm that in that regard there has been a marked improvement?
The Earl of Avon: Yes, indeed, my Lords; the industries have moved towards that position. There has of course also been a standstill in the standing charges. I should like to take this opportunity to welcome back the noble Baroness from her trip to the States.
Lord Ezra: My Lords, in the light of the supplementary question asked by the noble Lord, Lord Bruce-Gardyne, will not the noble Earl agree that in the discussion of this matter it would be much simpler if the Government were to admit that this was a revenue raising operation?
The Earl of Avon: My Lords, simplicity may be a certain party's watchword; it is not mine.
Lord Irving of Dartford: My Lords, will the noble Earl bear in mind that certain industries, such as the paper industry, are already at a grave disadvantage vis-à-vis their competitors from other countries because of the high price of energy in this country? Perhaps this was an instance in which it was not necessary to have an imposte of this kind, hut rather to agree with the many submissions of the paper industry and other industries that they should obtain their energy at competitive prices?
The Earl of Avon: My Lords, I should like to repeat that this is a rise in domestic prices, not in industrial prices.
Lord Alexander of Potterhill: My Lords, as a shareholder in the nationalised industries, do I gather that it is an offence for a nationalised industry to make some return to its shareholders?
The Earl of Avon: My Lords, perhaps this is a good opportunity on behalf of the House to pay a warm tribute to the gas and the electricity supply industries and the excellent work that they are doing at the moment.

Archaeological Services: Metropolitan Counties
2.56 p.m.
Baroness Lockwood: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what funding and administrative arrangements they plan to make for the archaeological service in the areas of the metropolitan county councils referred to in the White Paper, Streamlining the Cities (Cmnd. 9063).
The Minister of State, Department of the Environment (Lord Bellwin): My Lords, the Department of the Environment provides grant-aid towards the investigation and recording of specific archaeological sites and monuments. After 1st April, 1984 this grant will continue but will be administered by the Historic Buildings and Monuments Commission. The Government are considering future arrangements for archaeological services at present provided by the metropolitan county councils themselves, in the light of the response to the White Paper, Streamlining the Cities.
Baroness Lockwood: My Lords, I thank the noble Lord for his Answer. However, I wonder whether he realises the extent of concern there is, for example, in the Yorkshire Archaeological Society and in many other such regional and national societies of this nature? Is the noble Lord aware that this is a question of not only taking over the recording and the excavation of sites, but is much more than that? For example, does he know that in his county and my county of West Yorkshire some very important findings have taken place relating to the Iron Age?
Is he further aware that the work behind such excavation and recording is deeply integrated in the metropolitan counties' support services, in terms of legal support, technical support, and so on? Can the noble Lord give some assurance to those who are involved in archaeology that a comprehensive service similar to that now being provided by the metropolitan counties will be available in the future, so enabling this support to continue?
Lord Bellwin: My Lords, I am very pleased that the noble Baroness refers specifically to an area which both she and I know so well. Yes, of course, we are concerned about that matter and the particular service involved, too. But I see no reason why what is proposed should lead to any deterioration in the service. In any case I would advise the noble Baroness to be a little patient until we come up with more specific details at the end of the day in response to the consultation, and I suspect that she will not be as concerned then as she seems to be now.
Lord Graham of Edmonton: My Lords, is the Minister aware that his noble friend has told the London and Middlesex Archaeological Society that he hopes—and I stress that word—that the needs of archaeology will be taken into account by London boroughs when they consider how to work more closely together in the future? In view of the poor record of London boroughs working together, is it not a fact that London, and indeed the nation, should expect that their historic sites and artefacts should rest on more than the hopes of a Minister or pious ministerial statements?
Lord Bellwin: My Lords, I am sorry that the noble Lord feels that my response is, to quote him, "a pious ministerial statement". I would have ascribed more to it than that. If the noble Lord will read carefully what I said in my initial reply, he will see that the specific type of instance that he mentions is in fact to be dealt with by the Historic Buildings and Monuments Commission.
Baroness Lockwood: My Lords, I wonder whether the Minister would give advice to his own department along the reassuring lines of that which he has given to the House this afternoon. I wonder whether he is aware, for instance, that a letter from his department went to the Council for British Archaeology saying that it is for the archaeological units concerned to consider their own future in the light of the proposals for the abolition of the metropolitan counties. Will the noble Lord confirm what he has just said, and will he please see that information is conveyed to those who are responding on behalf of his department?
Lord Bellwin: My Lords, I am not sure that I can add much to what I have already said. I am still satisfied at the end of the day, that the boroughs and districts themselves will be no less responsible in attitude than I think they have always been. What is different now is that in the last 10 years in the case of the metropolitan districts and areas, and in the last 20 years in the case of London, there have been built up certain types of bodies which are doing good work. I remain very confident that the authorities which will succeed will be as responsible as everyone else has been in the last few years.
Lord Shackleton: My Lords, is the noble Lord aware that the archaeological service has already received one blow by the decision, through inadequate funding, to stop the Ordnance Survey supporting archaeological work? Will he bear that in mind?
Lord Bellwin: My Lords, yes; I hear what the noble Lord says.

Falkland Islands Airfield: Cost of Land
3.2 p.m.
Lord Beswick: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what price per acre they have paid, or are paying, for land bought for the new airfield in the Falkland Islands: what was the total cost of this land and how the price per acre compares with that of similar land recently sold to non-government buyers.
The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): My Lords, the contract of sale has not yet been signed.
Lord Beswick: My Lords, I thank the noble Lord for that Answer, but is it not a fact that the price has already been agreed? Is it not also a fact that responsible people in the Falkland Islands believe that the price so agreed is up to 30 times that being paid in the open market for similar land? If that is the case, should it not be explained to the public why the Government are paying this exorbitant amount?
Lord Trefgarne: My Lords. I do not think that it would be appropriate for me to give details of how the price was arrived at. I can say that it happened after negotiations with the Falkland Islands Company. I can
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also say that it took account of the land value, severance of the company's land and damage sustained to other property and earnings as a result.
Lord Beswick: My Lords, the noble Lord is now admitting that the price has been agreed. Am I right in saying that the price so agreed is up to 30 times that of similar land now being offered in the open market?
Lord Trefgarne: My Lords, that depends upon how you calculate the value of similar land.
Lord Shackleton: My Lords, is the noble Lord aware that these figures are well known, that other farmers have donated land for an artillery range, as Chartres has done, and that another farm has provided islands for conservation? Will the noble Lord not now consider suggesting that the land should be donated in return for restoring the property of the Falkland Islands Company?
Lord Trefgarne: My Lords, it is the case, of course, that compulsory purchase could have been used to acquire this land, but as it was possible to reach agreement by negotiation the Government preferred to reach their conclusions that way. As for the value of other land in the islands, there is no single figure, as the noble Lord perhaps suggests. Indeed, land prices in the Falkland Islands are based not on the acreage of land but rather on its productivity, measured, for example, by the number of sheep that it could sustain.
Lord Gisborough: My Lords, can my noble friend say whether this increased value of the land reflects some existing or adjacent infrastructure, such as tarmac and drainage and so on?
Lord Trefgarne: My Lords, there were certain facilities on the land that has been acquired, and that, too, had to be taken into account.
Lord Elystan-Morgan: My Lords, what is the price agreed upon, and what is the total acreage now being acquired?
Lord Trefgarne: My Lords, that is a confidential matter between the Government and the Falkland Islands Company.
Lord Bishopston: My Lords, have the questions and answers this afternoon not brought into focus the points that have been made on all sides of the House over recent months about the importance of land reform in the Falklands? Is the Minister aware that there is a monopoly situation in the Falklands whereby one company alone owns about 43 per cent. of the land and, indeed, other facilities without which the operation and use of that land would be worth very little? Is he unaware of the facts that have been drawn to his attention by my noble friend Lord Shackleton: that the Falklands are there today because of the sacrifice of lives and the expenditure of considerable financial and other resources to win the war, and that up to the present time about £2,000 million has been expended, quite rightly, to defend the islands? These are surely factors that should be taken into account. Will the noble Lord remind the Falkland Islands

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Government that they have powers, as the Shackleton report shows, to deal with land reform? The ownership and use of land is the very key to development in those islands.
Lord Trefgarne: My Lords, I think that the noble Lord is suggesting that we should have confiscated the land required from the Falkland Islands Government. That was the sort of thing that we set out to stop when we sought to remove the Argentinians.
Lord Shackleton: My Lords, is the noble Lord aware that it is ridiculous to use the word "confiscation"? Local authorities and governments frequently use compulsory powers. Is he not aware that the going price for land—which, as he says, is related to its productivity and the number of sheep carried—is moderate for quite good land? It cannot possibly cost more than about £2 an acre. Is he not aware that this is really a scandal?
Lord Trefgarne: My Lords, as I said earlier in reply to the noble Lord, Lord Beswick, there were other considerations as well; for example, severance of the company's land and damage sustained to other property and earnings as a result. When I was talking about confiscation to the noble Lord, Lord Bishopston, just now—and I agree, of course, that there are or would be compulsory purchase powers available, but the Government took the view that these were not appropriate in this case—I was, of course, referring to confiscation without any compensation at all.
Lord Beswick: My Lords, the noble Lord talks about damage to land. There is some land still being cleared of mines at great public cost and some danger to life. Is the Coalite and Chemical subsidiary to be allowed to exploit that land when it is so cleared?
Lord Trefgarne: My Lords, I am sorry to have to tell your Lordships that there is no mine clearance going on in the Falkland Islands at the moment. As your Lordships may recall from a Written Answer I gave to a Question the other day, we have had to say that we cannot proceed at the moment to further mine clearance because of the nature of the mines involved.
Lord Broxbourne: My Lords, as my noble friend is aware, when land that is subject to compulsory purchase is bought by agreement instead the normal practice is for the price paid to reflect what would be paid on an assessment of compensation in arbitration on compulsory purchase. Will he confirm that that principle has been followed in this case?
Lord Trefgarne: My Lords, yes.
Lord Diamond: My Lords, as the noble Lord has made clear that the contract has not yet been entered into, and as it is perfectly clear from comments made in various quarters of the House that there is great anxiety about the proposed price, will the noble Lord use his good offices to see that there is further negotiation and that the contract is not entered into at the price contemplated at present?
Lord Trefgarne: My Lords, no.
Baroness Seear: My Lords, will the noble Lord agree that the evasiveness of his replies has left in a great many people's minds a suspicion that was not there before, and that it would be greatly to the benefit of the House if he would give us more precise information in reply to precise questions?
Lord Trefgarne: My Lords, as I have said, this is a confidential matter between—
Noble Lords: Why?
Lord Trefgarne: As I have said, this is a confidential matter between the Government and the owners of the land. When land is acquired by private treaty, such as in this case, it is almost always confidential with regard to price.
Lord Cledwyn of Penrhos: My Lords, is the noble Lord aware that a very large sum of public money is involved, or so we are now given to understand? Is he aware that a figure of over £250,000 has been mentioned? That is 33 times as much as the land would be sold for in the open market. Will the noble Lord be good enough to assure the House that the contract will not be signed until a full statement on the cost of this land has been made by his right honourable friend? Is he aware that there will be considerable public disquiet if that does not happen?
Lord Trefgarne: My Lords, I am afraid that I cannot give that assurance, but I can say that the price referred to in a newspaper report which I saw on Sunday is not correct.
Lord Molloy: My Lords, when the Minister says that the deal is confidential, does he mean the details of what has been entered into or the details of the people with whom the Government have done business? For example, can he tell us with whom the Government have been deliberating on these elements which he calls confidential?
Lord Trefgarne: My Lords, the company from whom we are purchasing the land—namely, the Falkland Islands Company.
Lord Bishopston: My Lords, surely the Minister must appreciate the considerable disquiet in all parts of the House about this matter? If the Government have decided to have a runway in one area and the land is owned by a certain company, how do they hope to ensure that only a reasonable price is paid for that land? If the price offered by the Government does not satisfy those who are the owners, then the price they are asking would surely be far too high. This is a monopoly situation not only in land but in other facilities as well. Surely the Government should think very carefully before disregarding the views expressed so strongly by the House this afternoon?
Lord Trefgarne: My Lords, if the British Government had sought to acquire this land by a compulsory purchase arrangement, the price would have been subject to independent arbitration, and the Government took that into account in reaching their agreement with the Falkland Islands Company.
Lord Beswick: My Lords, perhaps I may ask the last question. The noble Lord said that the price quoted in the Sunday press was incorrect. I saw the figure myself. Does he mean that, instead of £33 it should have been £30, which is what responsible people in the Falkland Islands think it was? Will the noble Lord bear in mind that there is great feeling not only in this House but in the Falkland Islands themselves? There is much disquiet that an absentee landlord appears to be doing very well out of the war.
Lord Trefgarne: My Lords, when I said that the figure given in the press report was inaccurate I was referring not to the price per acre hut to the total sum included in that report.
Lord Derwent: My Lords, is it not unfortunate that this has turned into a debate?
Lord Mishcon: My Lords, whether the debate be unfortunate or not, Question Time is meant for the very purpose that these questions are being asked. Will the noble Lord the Minister recollect his original reply to a very open question, which was that contracts had not yet been signed? Would he agree that that gave the impression to the House that this matter was still under negotiation? If the reply to the question was that contracts had not yet been signed, is the noble Lord saving that indeed what is confidential before a contract is signed is not confidential afterwards? Would he also be good enough to say quite openly to the House upon what independent guidance this price was fixed?
Lord Trefgarne: My Lords, the Government have available to them a number of advisers on these matters and all their views were taken into account.
Lord Mishcon: My Lords, no—
Noble Lords: Order!
The Lord President of the Council (Viscount Vslitelaw): My Lords, I obviously would wish to respond to the noble Lord. I did not get up in any way to stop him from speaking. I think it would be fair for him to ask his question. I have been, as Leader of the House, extremely tolerant. We have spent 36 minutes on these Questions. I am most conscious that if any of the Government Ministers are being questioned severely by the House it can be no part of my business as Leader of the House to interrupt that process—quite the reverse. However, I equally feel that 37 minutes is a long time and I know that the noble Lord would agree with that. Would it be reasonable for me to suggest that he asks his question and then after that we move on to next business?
Lord Hale: My Lords, is the Leader of the House aware—
Noble Lords: Order!
Lord Mishcon: My Lords, I wish to reply courteously to the noble Viscount the Leader of the House and say that I believe that most noble Lords in this House would have wished that he could have
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answered these questions himself, and then we would have got franker answers. Would the noble Lord the Minister be good enough to direct himself to the question which I asked, which was: will he please say upon what independent advice as to value this contract was negotiated? Will he please be good enough to indicate the profession or the nature of the adviser upon whom the Government have relied?
Lord Trefgarne: My Lords, as the noble Lord may be aware, the Property Services Agency is normally the agency that advises the Government in these matters, and in this particular case it was indeed the Government's principal adviser.

Dinner
Lord Denham: My Lords, it may be for the convenience of the House if I announce that dinner will be available at the usual time of 7.30 this evening.

Consolidated Fund (No. 2) Bill
Read a second time; Committee negatived.
Then, Standing Order No. 43 having been dispensed with (pursuant to Resolution of 12th March). Bill read a third time, and passed.

Mental Health (Scotland) Bill [H.L.]
Read a third time, and passed, and sent to the Commons.
Pensions Commutation Bill
Read a third time, and passed.
Western Isles Islands Council (Kallin Pier, Harbour Jurisdiction) Order Confirmation Bill
Read a third time, and passed.
Ullapool Harbour Order Confirmation Bill
Read a third time, and passed.

Education (Grants and Awards) Bill
3.19 p.m.
Read a third time.
Clause 3 [Regulations]:
Baroness David Baroness David moved the following amendment:
Page 4, line 10, leave out from ("shall") to end of line 1 and insert ("have regard to the advice as to priorities for expenditure to be assisted by education support grants of an advisory body to be established by him and including persons nominated by the Secretary of State and by such bodies representing local education authorities as appear to him to be appropriate.").
The noble Baroness said: My Lords, we are having a third try to get the consultation procedure more firmly written into the Bill. But this time this is a new amendment and different from the ones which we tabled in Committee and on Report. We are asking for a good deal less than we asked for at the Committee and Report stages. We are not asking that parents, teachers and industry should, of necessity, be on the advisory board, but the amendment leaves the way open for the Secretary of State to nominate such people if he thinks it appropriate. The door is not finally closed.
We ask for an advisory board with representatives from local authority associations on it. Not surprisingly, local education authorities are suspicious of what Ministers may do after some of the surprises and shocks which have been given to them by this Government. I cannot agree with the noble Baroness, Lady Cox, who said at the Report stage:
"On the question of seeking advice, I think that the Secretary of State is already committed, and has already shown himself to be committed, to widespread consultation."—[Official Report, 5/3/84; col. 99.]
After the Training for Jobs White Paper was published and, indeed, after the technical vocational education initiative was announced—and there was no consultation in either case—we are not altogether happy about the arrangement unless consultation is written into the Bill. Therefore, local authorities would be much happier if a body was set up which would ensure that consultations would be full and that their points of view about activities, regulations and allocation of grant could be expressed. Their anxieties about expense in bidding, financial arrangements, and so on, could be brought into the open.
I very much hope that this much more modest amendment, which does not ask for a quango—it asks for nothing like that—will find favour with the Minister and that there will be a bit of give here. If the intentions of the Government are as the noble Earl has said, I can see no reason why he should turn down this amendment. I beg to move.
Lord Kilmarnock: My Lords, we on these Benches support this amendment moved by the noble Baroness, Lady David. As she said, it is the third attempt to introduce an element of consultation into the Secretary of State's proceedings. I think that the noble Earl will probably recall that in the consultation paper, which was issued by the Department of Education on 24th March 1983, the Secretary of State made it quite clear that, with regard to special education initiatives, the proposals were intended to forge a new partnership between central and local government. I hope that that intention has not been lost sight of. It seems to me that the amendment of the noble Baroness goes some way towards achieving that. It is a somewhat weaker amendment than those that were moved at previous stages. But I think that it fulfils that recommendation on partnership which actually formed part of the Government's own consultative document.
I should like to make one other point. Again from the consultative document it was clear that there were a great many candidates for help under this type of scheme, and it would therefore seem only prudent of the Secretary of State to provide himself with an
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advisory body which would enable him to sift all these various claims on the funds that he is proposing to use for this purpose. Therefore, on those grounds I very much hope that the noble Earl will see his way to accepting this relatively modest, but I think helpful, amendment which the noble Baroness has moved.
Lord Alexander of Potterhill: My Lords, I find some difficulty in accepting this amendment, for a very simple reason. So far as the education service is concerned, the concept of partnership between central and local government was very greatly affected by what happened in 1958. In fact, it was no longer a partnership; it was complete control on the part of the local authorities. That is the position which has obtained from 1958 until now.
As I understand it, this Bill has one very simple purpose. Where the Secretary of State believes that something of national importance should be done in the education service, the Bill gives him a very limited power to invite authorities to take part in such an engagement and to provide the money for that purpose. I can find no reasonable justification for having an advisory body to tell him what is in the national interest. If he needs advice, he is able to take it at any time. It seems to me that this amendment is designed to prevent the Secretary of State from having even the very limited power which this Bill seeks to provide.
Baroness Lockwood: My Lords, I should like to support my noble friend in this amendment. As she has said, it has been considerably changed since the discussion at Report stage. For example, we have taken aboard some of the comments of the noble Earl the Minister at that stage when he referred to the fact that evaluation will be an on-going concern and will be built into the mechanism of the system. In the light of that we have confined this amendment purely to the question of advice on the projects themselves and advice on the priority subject.
I know that priorities lie at the heart of this particular Bill, but perhaps I may return to this whole question of partnership and follow the argument advanced by the noble Lord, Lord Kilmarnock. If Sir Keith was really serious in his Sheffield speech and in the consultative document about there being a partnership in education, then surely the partnership should operate in determining what the priorities should be. I am sorry that the noble Lord, Lord Alexander, with all his experience, should once again take us back to 1958, because we are concerned with the present Bill, and it is the Secretary of State himself who has invoked this term "partnership". If it is to be a partnership, it means that the views of the local authorities have to be taken very seriously indeed.
We know that the Bill provides for consultation, but, in the light of recent history, I think that local authorities would feel much happier if formalised consultation was written into the Bill in the form of the establishment of an advisory body. Having said that, it is clear that in the long run the final decision will be taken by the Secretary of State himself. It will be he who determines the priorities, because the body will be advisory. But he will determine the priorities in the light of the advice that has been carefully given by a

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statutory body. In view of this, I hope that the noble Earl the Minister will see his way clear to accepting the amendment.
The Earl of Swinton: My Lords, as the noble Baroness, Lady David, said, this amendment differs from those moved at earlier stages, in that it defines more precisely the purposes of the advisory body; namely, to give advice to the Secretary of State about the areas of education to be supported by education support grants. However I have to say that I still do not regard an advisory committee as necessary or desirable. In explaining why this is so, I am afraid that I must once again cover ground which I covered at earlier stages.
When the noble Baroness, Lady David, moved a similar amendment at Report stage she said that she did not think that:
"informal meetings between the Secretary of State and the chairmen of the two associations' committees and possibly an officer are enough, which is all that might take place if something is not written into the Bill"—[Oflicial Report, 5/3/84; col. 98]
I really do think that the noble Baroness was being a little unfair when she said this. In putting forward this Bill the Government have responded to the concerns expressed by the local authority associations. That is why the Bill included such provisions as the statutory limit on the level of expenditure that could be supported through ESGs. Education, the journal of the local education world, described the Bill as "bending over backwards" to meet concerns of the local authority interests. My right honourable friend the Secretary of State has had three meetings with leaders of the local authority associations about the Bill when the chairmen of the AMA and ACC were accompanied by a number of their committee members and advisers. As I have said several times before, my right honourable friend looks forward to a further meeting when, as I hope, this Bill has received Royal Assent.
The noble Lord, Lord Kilmarnock, spoke about an element of consultation being written into the Bill. I really do not think that this is necessary. Consultation has taken place and is going to continue to take place. The Bill already makes special provision for the interests of the local authority associations, by requiring the Secretary of State to consult them before laying regulations. This requirement respects the special position of the local authorities as it will be they who will be invited to incur expenditure supported by ESGs. The views of other interests will not be ignored. My right honourable friend meets the teaching unions regularly, his commitment to the importance of parental views and parental choice is well-known. I can give noble Lords and noble Baronesses opposite an assurance that views expressed about the activities which might be supported by education support grants will be carefully considered by my right honourable friend before regulations are laid here and in another place.
The noble Baronesses have spoken with feeling about the importance of local authorities' views. However, members of the party opposite have not always been noted for their defence of local authority freedom. The Education Act 1976 was not noted for its deference to the values of local authority choice and
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discretion. On the contrary, it imposed the comprehensive principle upon local authorities, regardless of their views and the wishes of the local electorate. That is why the repeal of that Act was one of the actions taken when the Government came to office in 1979. Indeed, we have had a more recent example of the weight placed by the Opposition on local authorities' views, in our debate on this Bill. To my regret, an amendment was made at the Report stage which would prevent local authorities from using these grants in selective schools for any purpose whatsoever, whether the local authority wished to do so or not. So much for the views of the local authorities.
Finally I should remind noble Lords and noble Baronesses of the example of the legislation introduced by the then Labour Government in 1969 under which grants are paid under the urban programme. That Act contains no advisory body; indeed, it includes none of the checks and safeguards which we have included in the present Bill. Yet the sums of money involved there are far greater—£150 million compared with, at most, £30 million to £35 million.
Setting up another advisory body would in fact mean another—I was tempted to say quango, but I shall say body. It would inevitably generate subcommittees and masses of paper. Its creation would run counter to the general concern, which I know is shared by local authority interests, to keep the amount of administration involved to a minimum. We do not judge that the advisory body would contribute significantly to the consideration of the activities to be supported. I can assure the noble Baronesses and the noble Lord, Lord Kilmarnock, that my right honourable friend will consider carefully the views expressed to him about the activities to be supported. I hope that with the assurances I have given today, coupled with the assurances I have given on previous stages of the Bill the noble Baroness will feel able to withdraw this amendment.
Lord Kilmarnock: My Lords, before the noble Earl sits down, may I ask whether he would not agree that the consultative document to which I referred described the proposals as a way of making the partnership between central and local government with regard to educational services more effective? Would he therefore not agree that it is reasonable to institute some modest machinery to make this possible?
The Earl of Swinton: My Lords, I really do not think that I can go over all the arguments again. There have been many safeguards written into this Bill on all sorts of matters which were worrying local authorities and I do not think that it is necessary to have this extra body, and quite honestly I do not think that it would achieve anything.
Baroness David: My Lords, I am disappointed with the Minister's answer. It makes one wonder how real are the promises of partnership given by the Secretary of State. However, we have at least given the whole matter a good airing three times, and have received a number of assurances from the Minister about what is going to happen when this Bill becomes an Act. We

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shall watch with great interest to see whether the promises are kept, and the assurances given are respected. In the meantime, I will withdraw this amendment.
Amendment, by leave, withdrawn.
The Earl of Swinton: My Lords, I beg to move that the Bill do now pass.
Moved, That the Bill do now pass.—(The Earl of Swinton.)
3.35 p.m.
Baroness David: My Lords, I should just like to say a few words about this. At Second Reading I said that this Bill, though short and of limited aims, was important because of its implications for local authorities, their expenditure and their powers. It is a step in the direction that the Government are going. It is followed by the rate-capping Bill and the legislation promised in the White Paper, Streamlining the Cities—all depriving local government of powers they have traditionally held to manage their own affairs. They have been hurt by the imposition of the technical vocational education initiative thrust on them with no consultation, and they have been made really angry by the publication of the White Paper, Training for Jobs, again proposing taking education money from the rate support grant to be used for further education purposes, and no consultation at all.
The purpose of the Bill, to provide the Secretary of State with specific grant for innovation and experiment in the curriculum, we did not disagree with. What we did strongly object to was that the money for this purpose should be taken from the rate support grant—money local authorities looked on as theirs to choose how to spend. All opposition parties took this line, but unfortunately the amendments we all put down to rectify this were not passed.
We also attempted to press an amendment to prevent expenditure by local education authorities on projects that they had bid for under the terms of the Bill—the 30 per cent. to 50 per cent. of the cost they had to find—pushing them over the edge into the penalty area if spending targets were set again next year. So that they would, as it were, be fined for taking on the task the Government wanted them to take on.
We were unsuccessful in carrying the vote, but I should like to remind the Minister, and ask him to remind his ministerial colleagues—and I quote from col. 175 of Hansard of 14th February—of his words:
"If targets were set in 1985–86, the Government would consider carefully all representations that might be made by local authorities, including any about the treatment of expenditure supported by education support grants. Indeed, the law requires the Government to do so. So this question will not be overlooked: if local authorities are concerned and wish to raise it, it will be carefully considered."
So there was some slight satisfaction from that, although his final words in col. 176 were:
"The grants are not intended to encourage an increase in the total amount spent by local authorities. Hence the Government have taken the view that it would be inconsistent to exempt, or disregard expenditure approved for education support grants from targets and hold-back."
That was not quite so satisfactory. Government action, when the time comes, will be carefully watched.
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However, I think that at both Committee and Report stages we cleared up a number of matters we were unsure about at Second Reading. I would say that we have a much better idea of what the programme and timetable will be: when the amount to be subtracted from the rate support grant will be decided, when the activities that will be chosen for experiment will be known, the proportion of grant to be paid by the department and the LEA respectively, and when LEAs will know whether their bids have been successful or not. So that is some slight advance.
I hope too that we cleared up what will happen to any money not spent out of the grant. I take it that it will go back into the general rate support grant fund, and that money the local authorities may not have been able to spend fully by the end of the financial year can be carried over into the next one. I am not sure that local authorities will be quite so pleased about the grants being paid in arrears, as the noble Earl said in col. 78 at Report stage. However, the noble Lord, Lord Kilmarnock, whose amendment dealt with that, may have some comments on that.
I believe that we have had useful discussions on the activities that might possibly be supported by the grants. We ranged widely. I hope that some attention will be paid to the views expressed. I am sorry that the one amendment we had today was not more favourably considered, so we have lost out on that too.
Finally, I should like to thank those on this side of the House who took part in the debates and supported amendments, and the noble Earl for his always courteous and good-humoured efforts to make the Bill, and how it is intended to work, clearer to us. He certainly had to battle very much on his own, as I believe the only voice to be raised from the Government Benches besides his own was that of the noble Baroness, Lady Cox. I hope that that does not signify an indifference to education on those Benches.
Lord Kilmarnock: My Lords, I do not in fact intend to follow the noble Baroness's suggestion of reverting to the matter that I raised at Report stage in my amendment, which was designed to find out what might happen to any surplus money. I carefully read the noble Earl's reply, and I must say that on balance I thought that he largely satisfied my concern. He also clarified what would happen to the carry-over of any money which had not been spent. This was a useful exercise.
Those of us who have taken an interest in this Bill end where we began: on a note of lament that there is no new money available for these schemes and that it is simply being extracted from the totality of the rate support grant. Having said that, obviously we wish the scheme well. We hope that the Government—alas!, without the advisory body which the noble Baroness has proposed—will make a wise choice of schemes. I have read of some that they had in mind at the time of the consultative document, and all of them are such that we could support, such as curricula changes in mathematics, a more practical slant for the final years and various issues of that nature.
I hope that the Government will bear one thing in mind, regardless of what happens in another place to the amendment moved by the noble Lord, Lord

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Stewart of Fulham, and passed, on the restriction of expenditure under this scheme to non-selective schemes. I hope the Government will bear in mind and take on board that this money really should be used on experiments which are directed at the bottom 40 per cent. of the educational heap. The Government have already provided money for the higher flyers through the assisted places scheme. I am not sure that we are entirely against this idea of forging links between the maintained system and the private sector, but they have provided new money for the assisted places scheme, which is a scheme designed largely to help potential high flyers.
The worrying thing about the education system in this country at the moment is that we need to direct our attention to the bottom 40 per cent. of the heap, the people who leave school with one CSE or with no qualification at all. I hope that the Secretary of State, in selecting these schemes, will bear this in mind. I should like to think that the Bill has provided something of a quid pro quo to the assisted places scheme, but for the less advantaged and the less well-endowed children in our educational system. Having said that, we on these Benches wish the scheme well and hope that the Government will give some consideration to what we have said during the course of the debates on the Bill in your Lordships' House.
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, is my noble friend answering?
3.43 p.m.
The Earl of Swinton: Yes, my Lords. This Bill has been carefully considered by the House. By my reckoning it had been the subject of debate for nearly nine hours before today's proceedings began. Three former Secretaries of State have participated in the debates, and for that we are grateful. I should express my thanks also, most warmly, to my noble friend Lady Cox, who have been such a staunch pillar of support at my back. I should also like to thank the noble Lord, Lord Alexander of Potterhill, from the Cross-Benches, who, with his enormous knowledge of matters educational, has lent his weight to the debate. It would be churlish of me not to thank the noble Lord. Lord Kilmarnock, and the noble Lord, Lord Beaumont of Whitley, on the Alliance Benches, who have taken part: and finally, and certainly not least. the two noble Baronesses on the Front Bench opposite who have been so courteous. Though we disagreed at times, as the noble Baroness, Lady David, said, we seem to have got on fairly amicably across the Table. My thanks and congratulations, too, to the noble Baroness, Lady Lockwood, on this her first effort on a Bill from the Dispatch Box opposite.
There is, I believe, general support for the broad principles of the Bill. It gives effect to the recommendations of the Select Committee on Education, Science and Art in another place, that:
"The DES should have the ability, or use existing powers where it has them, to fund direct such new developments on a temporary basis as may seem to it to be desirable".
During the debate on the Second Reading, the noble Baroness, Lady David, said that as regards the
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principle of the Bill there should be a power conferred on the Secretary of State to grant-aid developments which seem to him important. There are no powerful objections to that. The noble Lord, Lord Beaumont of Whitley, described the Bill as a step in the right direction. The noble Lord, Lord Kilmarnock, said that it is hard to disagree with the purposes for which the proposed grants might, in the Secretary of State's view, be used. My noble friend Lord Ridley told us that the Association of County Councils has no quarrel at all with the objectives of the Bill.
These expressions of general support for the Bill have been most welcome. Of course we have had our disagreements about particular aspects of the Bill, and these have been fully debated. One amendment has been made to the Bill, and that will now be considered in another place. I shall not comment on it here and now although I must tell your Lordships that since the same amendment was soundly defeated in another place at an earlier stage, and seeing that this is Budget Day and also the first day of the famous National Hunt Festival at Cheltenham, to use a racing term I certainly should not like to be the person to have my money on its chances there.
I can assure noble Lords and Baronesses that I have carefully noted the points which have been made about the operation of the grant and, in particular, the purposes for which the grant would be used. I am again grateful to the noble Baroness, Lady David, for pointing out what interesting debates we had on these matters: and these points will be taken into account when my right honourable friend the Secretary of State comes to discuss these proposals with the local authority associations and, subsequently, seeks the approval of this House and another place.
On the subject of new money, which was brought up in this debate on the Motion, That the Bill do now pass, both by the noble Baroness and by the noble Lord, Lord Kilmarnock. I should say that it has been suggested that the Government should explicitly make additional resources available to provide for education support grant. This suggestion has been made at various stages of the Bill and has been one of the disagreements between this and the other side of the House. As I have said on a number of occasions, the Government take the view that the grants should not in themselves lead to increased overall levels of expenditure, as the aim of the exercise is a limited influence over the deployment of resources. We are talking about grants totalling, at most. £33 million in 1983–84 terms. They will form part of total local authority grant, which in 1983–84 exceeds £11¾ billion.
The decision about the proportion of the Government's plans for expenditure to be met by aggregate Exchequer grant in 1985–86 will not be made until next autumn. I can assure the House that the Government will take a wide range of factors into account, including the expenditure to be supported by specific grants, before making a decision about the level of grant for 1985–86.
It might be of interest to your Lordships if I said a few words about the future timetable of this legislation.
Discussions have already started at official level with the local authority associations about the activities

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that might be supported by ESGs and the details of the Bill's implementation. My right honourable friend hopes to have a further meeting with the local authority associations shortly. Following the meeting at elected member level, draft regulations and a draft circular will be prepared which will be shown to the associations in draft. So there is even more consultation envisaged than I mentioned in the debate on the last amendment.
We would hope by late May or early June to be in a position to issue the promised statement setting out in some detail the activities to be supported through ESGs in 1985–86. and to lay the regulations. I hope that at about midsummer's day we will be debating those regulations.
We should ideally want to give local authorities the earliest possible notice of which activities are going to attract grants. The timing will depend on when regulations are made, but we would hope that a circular inviting bids would issue early in July inviting bids by the end of September. Our aim would be to announce what bids would be supported in November or December. The timetable I have mentioned as a possibility is provisional, but it reflects views expressed by the local authority associations at official level. We expect that individual local authorities would want to know as early as possible whether they should plan to receive education support grants in the, coming financial year. The clear impression we have gained so far from the associations is that it would be helpful to know which bids had been accepted prior to the settling of budgets.
Finally, I should remind your Lordships that this Bill will not affect the fundamental financial relationship between central and local government. Nor will it affect local authorities' continuing responsibilities for the education service. The Bill is a modest measure, but one which, I hope, will contribute towards the continuing improvement in the quality of our education services. Our education authorities over the years have pioneered many imaginative developments. Education support grants will enable the Secretary of State to help local authorities to innovate and to pursue practical developments in areas which are agreed to be of special importance.
On Question, Bill passed, and returned to the Commons with the amendment.

Royal Assent
The Lord Chancellor: My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:

Consolidated Fund Act,

Restrictive Trade Practices (Stock Exchange) Act,

Occupiers' Liability Act,

Tourism (Overseas Promotion) (Scotland) Ac

Merchant Shipping Act,

Education (Amendment) (Scotland) Act,

Pensions Commutation Act,

Orkney Islands Council Order Confirmation Act,

Western Isles Islands Council (Kallin Pier, Harbour Jurisdiction) Order Confirmation Act,

Ullapool Harbour Order Confirmation Act.

Cable and Broadcasting Bill [H.L.]
3.51 p.m.
Read a third time.
Clause 2 [Meaning of "cable programme service" etc.]:
Lord Elton Lord Elton moved Amendment No. 1:
Page 2, line 6, leave out first ("in") and insert ("at")
The noble Lord said: My Lords, this is a technical amendment designed to achieve consistency in the drafting of the Bill. I beg to move.
Lord Mishcon: My Lords, to show the reasonableness of the Opposition throughout this measure we have no objection to that amendment.
On Question, amendment agreed to.
Clause 4 [Power to license services]:
Lord Elton Lord Elton moved Amendment No.2:
Page 4, line 37, leave out from ("or") to end of line 39 and insert ("paragraph (a) of subsection (5) above, conditions included by virtue of that paragraph in a licence authorising a person to provide a licensable service may require that person")
The noble Lord said: My Lords, I welcome the way in which the noble Lord opposite welcomed the last amendment and I hope that he will agree with this one in the same reasonable tone, because this also is a minor drafting amendment designed to achieve consistency of drafting of Clause 4(6) of this Bill and Clause 7(6) of the Telecommunications Bill, which contains an equivalent provision dealing with licence conditions. I beg to move.
Lord Mishcon: My Lords, in order to show consistency as well as reasonableness we have no objection to that amendment.
On Question, amendment agreed to.
Lord Elton Lord Elton moved Amendment No. 3:
After Clause 4, insert the following new clause:
("Publicity etc. with respect to certain licences.
.—(1) This section applies where the Authority propose to grant a licence for the provision of a prescribed diffusion service in any area.
(2) The Authority shall publish, in such manner as they consider appropriate—

(a) a notice stating that they propose to grant a licence for the provision of such a service in the area and inviting applications for the licence; and

(b) in the case of each application received, the name and address of the applicant and such of the information included in the application in pursuance of section 5(1) below as they consider appropriate.

(3) The Authority shall also take such steps as they consider appropriate—

(a) to ascertain the opinions of the public in the area about the prescribed diffusion service and any related services proposed to be provided there; and

(b) to encourage the making of comments and suggestions about those services by members of the public in the area,

and shall take account of those opinions and any such comments and suggestions received by them.
(4) In this section and section 6 below "related service", in relation to a prescribed diffusion service, means a service (other than a telecommunication service) provided by means of the same telecommunication system.").
The noble Lord said: My Lords, it may be for the convenience of the House if with this amendment I speak to Amendments Nos. 4, 6 and 10.
Amendment No. 4: Page 5, line 17, leave out subsections (2) to (5) and insert—
("(2) Before deciding whether or to whom to grant a licence, the Authority shall consult with—

(a) the licensing authorities for the purposes of Part II of the 1984 Act; and

(b) in the case of a licence for the provision of a prescribed diffusion service in any area, every local authority whose area consists of or includes the whole or any part of that area.").

Amendment No. 6: Clause 17, page 17, line 16, leave out from beginning to ("consult") in line 17.
Amendment No. 10:
The telecommunications Act 1984
Schedule 2, page 52, line 43, at end insert—
45. After subsection (10) of section 7 of the Telecommunications Act 1984 (power to licence telecommunication systems) there shall be inserted the following subsections—
"(10A) Before the Secretary of State or the Director decides whether to grant or revoke a licence under this section which authorises the running of a telecommunication system to which subsection (10B) below applies, he shall consult with the Cable Authority established under section 1 of the Cable and Broadcasting Act 1984.
(10B) A telecommunication system is one to which this subsection applies if—

(a) any person proposes to provide or is providing, by means of the system, a licensable service within the meaning of Part I of the said Act of 1984; and

(b) notice of that fact has been given to the Secretary of State or the Director.").

All the amendments arise from an undertaking which I gave when we considered this Bill on Report. The main point of substance in this group of amendments is in Amendment No. 10, which will add two new subsections to Clause 7 of the Telecommunications Bill. Clause 7 of that Bill contains the powers of the Secretary of State and the Director General of Telecommunications to license the running of telecommunication systems. The amendment requires those authorities to consult with the Cable Authority before deciding whether to grant or revoke a telecommunications licence in certain circumstances. Those circumstances are where the telecommunications licensing authorities have been given notice of the fact that the telecommunication system in question is to be or is being used for the provision of a cable programme service which requires a licence from the Cable Authority.
It is necessary to define the circumstances in this way because, as I said on Report, much of the work of the telecommunications licensing authorities will be concerned with matters which do not affect the Cable Authority's functions.
The remaining amendments extend the Cable Authority's own duties to consult the telecommunications licensing authorities so that the respective duties of consultation mirror each other. Under Clause 5(4) of the Bill as it stands, the Cable Authority are to consult the telecommunications authorities before granting a prescribed diffusion service licence and, under Clause 17(2)(b), they are to consult those authorities before revoking such a licence.
Under the amendment before us, the Cable Authority will be required to consult the telecommunications authorities before deciding whether to grant or to revoke any licence for a licensable cable programme service. The first two amendments also make some technical adjustments to make the Bill's drafting clearer. They separate out from the existing Clause 5 those matters which deal directly with publicity in respect of applications for prescribed diffusion services and they place them in a clause of their own. Clause 5 is thus left to deal solely with the details which applications must contain and the consultation procedures which the authority must follow before granting or refusing a licence.
In view of the considerable support voiced during the Report stage for the principle of reciprocal consultation between the Cable Authority, on the one hand, and the Secretary of State and the director, on the other, I believe that these amendments should be welcome to your Lordships. I beg to move.
Lord Mottistone: My Lords, on behalf of myself and my colleagues here and my noble friend Lord De La Warr, who, regrettably, has not been able to be here for this debate, I wish to thank my noble friend the Minister for the trouble that he has taken to ensure that there is proper reciprocal consultation between the two authorities in the Telecommunications Bill and this Bill and to welcome the arrangements that he has made. I can do no more than thank him.
Lady Saltoun: My Lords, I must apologise to the noble Lord for not having been in my place when he opened these proceedings this afternoon. I am beginning to wonder whether this is really your Lordships' House and not part of Looking-glass Land and whether the parliamentary draftsmen are not chessmen in disguise. To have an amendment to the Telecommunications Bill (which is what the consultation amendment in this Bill really is) seems to me to be both back to front and upside down. Having stood on my head to understand it, I can only thank the noble Lord, Lord Elton, for that very important amendment and for his patience and understanding of the problem that it takes care of. I hope that he feels the right way up at the end of it all.
Lord Campbell of Alloway: My Lords, may I be allowed to support this amendment and also to apologise for not having been in my place? Since the first day of the Committee stage of this Bill, my noble friend the Minister has kept an open mind as to whether, using his own words, it was necessary to introduce further statutory incentives as to good behaviour. Not only has he kept an open mind but he has stood by the concession made on Report notwithstanding the Division. As the mover of that amendment, which evoked the concession which is now faithfully reflected in these amendments, it gives me singular pleasure to be able to take part in this encomium, and to express a measure of gratitude which is quite sincere and in no way tarnished by my noble friend's inability to meet us on certain other aspects of such statutory incentives. But, as he must be aware, there is a measure of discontent over these provisional cable licensing arrangements. One can but hope that consideration may be given to the

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introduction of some appropriate procedural safeguards before this Bill reaches the statute book.
Lord Winstanley: My Lords, I think that the time has come when I should indicate that noble Lords on these Benches are as reasonable as are the noble Lords who sit with the noble Lord, Lord Mishcon, although we have not yet heard whether the reasonableness which the noble Lord exhibited on Amendments Nos. 1 and 2 is to be continued on this particular one. Perhaps I should indicate that we are prepared to support these amendments.
Lord Mishcon: My Lords, I should like to make my position clear. I cannot claim parentage of the amendments which led to this amendment but my noble friends and I claim to be members of the family who encouraged the birth. I do not oppose this amendment.
Lord Elton: My Lords, I am most grateful to all noble Lords, whether they are relatives or midwives, for the very courteous way in which they acknowledged the Government's approach to this problem. I understand the noble Baroness's difficulty; and the reason why we have to conduct ourselves in this way to achieve this result has something to do with the relative stages of progress of the two Bills through Parliament. I think what matters is that we have achieved as much as we can in line with what she and her noble friends and others wish. I am sorry we have not been able entirely to satisfy my noble friend Lord Campbell of Alloway but he has been most gracious in expressing his disappointment. I would hope to be equally gracious in acknowledging it.
On Question, amendment agreed to.
Clause 5 [Application for licences and prior consultation]:
Lord Elton Lord Elton moved Amendment No. 4:
Page 5, line 17, leave out subsection (2) to (5) and insert—
("(2) Before deciding whether or to whom to grant a licence, the Authority shall consult with—

(a) the licensing authorities for the purposes of Part II of the 1984 Act: and

(b) in the case of a licence for the provision of a prescribed diffusion service in any area, every local authority whose area consists of or includes the whole or any part of that area.")

On Question, amendment agreed to.
Clause 6 [Matters to be taken into account]:
Baroness Trumpington Baroness Trumpington moved Amendment No. 5:
Page 6, line 30, at end insert—
("() the extent to which the applicant or each applicant proposes to include in the programmes matter which is calculated to promote the understanding or enjoyment of the programmes by persons who are deaf;").
The noble Baroness said: My Lords, when we considered this Bill on Report the noble Lord, Lord Winstanley, moved an amendment which was intended to add to the Bill a requirement for the Cable Authority to bear in mind the needs of the deaf. Your Lordships will recall that I somewhat inelegantly made it clear that we accepted that the deaf had a special claim in respect of television, and that we accepted the principle underlying the noble Lord's amendment,
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and that we ourselves would bring forward an appropriate amendment.
Clause 6 deals with the matters which the authority are to take into account during the licensing process, and we think that is the appropriate place for a provision dealing with the needs of the deaf. Accordingly, the present amendment adds to the list in Clause 6(2) a requirement for the authority to take into account applicants' proposals to include in their programmes matter designed to promote the understanding and enjoyment of the programmes by the deaf. We believe that this will encourage applicants to think seriously about the special needs of the deaf in drawing up their plans. Once they have undertaken to take particular steps, the authority have it in their power under Clause 4(5) to write conditions into the licences to require the promises to be honoured. I am so glad that we have been able to meet the wishes of the House over this, and I beg to move.
Lord Winstanley: My Lords, I have no wish to prolong these proceedings unnecessarily, but obviously it would be churlish of me not to acknowledge the efforts of the noble Baroness, Lady Trumpington, and those of the noble Lord, Lord Elton, in this matter. Your Lordships may recall that I moved a similar amendment originally and I think it is true to say that when the noble Baroness replied on behalf of the Government at that time most of us knew of her sympathy for the deaf. The work she has done on behalf of those with hearing handicaps is well known to all of us, and therefore I think we all regretted that on that occasion she had to display some degree of reluctance for not being able to help with the amendment as much as she might have wished. We are very glad indeed that she has been able to find a formula which will permit this provision to be appropriately inserted into the Bill in the right place. It meets the needs of a very large section of the public—one that is becoming increasingly larger—with hearing impairment and those who are disadvantaged in relation to television and broadcast services perhaps more than any other single group.
The other point about the hearing-impaired is that they can be assisted by the use of new techniques, and they are indeed being so assisted in broadcasting by the BBC and the independent companies. It would have been regrettable had some effort not been made to ensure that they are similarly assisted in relation to cable services as and when those services come forward.
I should like just to pay tribute to the excellent work of all those concerned with the Deaf Broadcasting Campaign, and in particular Mr. Austin Reeves, who has done so much to alert Members of your Lordships' House and of another place to the needs of the deaf in this regard. Your Lordships will recollect that when this matter was debated at an earlier stage we dealt with it very rapidly; first, because we were anxious to adjourn during pleasure for dinner, and, secondly, because we knew somebody was in the Gallery of your Lordships' House who was "signing" the debate for deaf people, and it would have been regrettable if we had not dealt with it during the presence of that person. It was for that reason that we dealt with it so rapidly, but I should like formally to extend my sincere

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thanks to noble Lords opposite who have done so much to bring this forward. I welcome this amendment, and am very grateful indeed for it.
Lord Mishcon: My Lords, my noble friends and I would like to join with the noble Lord, Lord Winstanley, in thanking the noble Baroness for her part in obtaining this amendment, which is very welcome. The noble Baroness described her contribution as "inelegant". May I assure her immediately that we never see her in that light, nor do we ever so hear her. Mention by the noble Lord of the Deaf Broadcasting Campaign gave me much pleasure, because their literature was substantial in nature and, if I may say so, very sensitive in content and it reached all of us who are interested in this matter. My noble friends and I were delighted to support the noble Lord, Lord Winstanley, when he moved his amendment and we are grateful to the Government for having accepted it.
On Question, amendment agreed to.
Clause 9 [General provisions as to programmes]:
Lord Mishcon Lord Mishcon moved Amendment No. 5A:
Page 9, line 21, at end insert—
(", the intention being that the maximum proportion is in each case so obtained regard however being had to availability, practicality and the desirability of maintaining standards.").
The noble Lord said: My Lords, the proceedings so far have been so harmonious that I am hoping very much that they will continue in the same way. There is no reason why they should not, because there was a common purpose at the very beginning of this Bill when the Second Reading debate took place. I ventured from these Benches in my Second Reading speech to quote from the report of the noble Lord, Lord Hunt, and I did it in the following way:
"At its best, cable can help both business and the individual by providing new methods of working, buying and selling direct from the home, increased facilities for education and training in the home, services like electronic mail and telebanking and a greatly increased and enriched choice of home entertainment".
The report continued:
"At its worst, however, it could lead to a waste of resources, risks to privacy and a lowering of the quality of broadcasting. It is therefore crucially important that the right decisions are taken".
Throughout that Second Reading debate, and throughout the Committee and Report stages, from all sides of your Lordships' House anxiety was expressed at the possible—indeed probable—lowering of standards which would occur if imports of cheap programmes were allowed without any proper limitation. Certainly I remember the contributions that were made on that occasion, notably by the noble Lord, Lord Hill, from the Cross-Benches, which emphasised that it was not just a question of cheapening cable, with all that that might entail, but also something which would lead inevitably to the cheapening of the programmes of the BBC and ITV.
Therefore, we came forward at Committee stage with amendments which tried to deal in the main with specific proportions of the programmes which ought to be EEC orientated—or perhaps it would be better to describe them as originating in EEC countries with performers coming from the same countries. The
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noble Lord the Minister replied perfectly fairly—as did others of your Lordships—that that was not a very sensible way of approaching a problem, which he agreed was a very real one. To put a proportion in an Act without knowing what the future might hold and what, year by year, might be the problems of programme production, and so on, was not a sensible way of dealing with this matter.
So we came forward at Report stage with another amendment. We dropped the idea of the fixed proportions, which had been negotiated by the authority with independent television. We came forward with an amendment which referred to the maximum practicable proportions and we left out the fractions. That was again answered by saying that there was a common purpose but we had not achieved it. because, apart from other things, what was the justice of making it the maximum, when one could not tell whether one was excluding by insisting upon a maximum in an Act of Parliament the most excellent material that might come from outside the EEC? Therefore, to leave it at the maximum practicable was not a wise way of getting over an acknowledged difficulty and a very worthy aim.
So we were all left to think again, and what we have tried to do by this amendment is to meet all the arguments that have arisen up till now, to try to give into them and to use the same words that the Bill now uses; namely, the words "proper proportions". Left on their own, they are meaningless. To whom are they deemed to be proper? What is a proper proportion? Must it have regard to various matters, and so on? But we have kept those words, we have not altered the Bill and we have added what I hope we were all trying to embrace, by inserting right at the end,
"the intention being that the maximum proportion is in each case"—
that means in regard to the programmes and the performers—
"so obtained regard however being had to availability"—
which means the availability of the programmes and of the performers—
"practicality"—
that means that it all depends on the nature of the programme; there would be different considerations if it were a pure advertisement programme, if it were another type of pure film programme, and so on—
"and the desirability of maintaining standards."
That covers the point about the extremely excellent product which is available from, for example, the United States and which is competing with another programme offered from inside this country. Obviously, there would be no desire, if it were a case of one or the other, to exclude the excellent American programme, if such it be, because of standards which we want to keep up.
I am hoping that at this the last stage when we can do it we put the imprint of this House upon the need to carry out what Hunt hoped would be carried out, so that we legislate for standards for a proper EEC quota of programmes and stop what might be a flooding of the cable market by cheap, insensitive and socially harmful programmes of the type which we have mentioned in our debates.
I do not think that I can add to this speech by mere repetition, because your Lordships all know the arguments, and I commend this amendment to the House. I hope that the Government will find it possible to accept it, because this is what we have all been trying strenuously to achieve in the course of the passage of this Bill. I hope that your Lordships will feel we have now found a set of words which is truly applicable to what has been our aim. I beg to move.
Lord Aylestone: My Lords, as the noble Lord, Lord Mishcon has said, this is the third attempt. The problem from the beginning was that we have not felt that the words "proper proportions" were adequate to cover what we really need. What we really need is the 86 per cent. of EEC material, which for this purpose includes the EEC, Britain, Australia and New Zealand. We appreciate that it is impossible to achieve 86 per cent. at the moment and we want to get there as soon as possible. I think that these words are the strongest and the best that we have yet had and we on these Benches have pleasure in supporting the Opposition.
4.17 p.m.
Lord Hill of Luton: My Lords, as the noble Lord, Lord Mishcon, has said, this is the third attempt to secure something more precise than "proper proportions". The first attempt, if I may add this to his history, was an attempt to apply to the newcomer the restrictions that have applied since October of last year to independent television. If I may refresh your Lordships' memories as to what that meant, it did not mean an automatic application of a 14 per cent. limit on imported material. In October 1983, independent television, in the light of experience, issued this set of regulations covering certain exemptions. They exempt all material originating in the EEC; 1½ per cent. extra for Commonwealth material; all information, news, sport and educational material subject to IBA consideration; material of outstanding quality; material of cultural or educational value; and any programme originating in countries from which substantial ethnic minorities have come.
That is what was sought to be applied in the amendment which I moved in the Committee stage, but it was rejected. I suspect that it may not have been sufficiently appreciated—it is my fault if it was not so sufficiently appreciated—that what the amendment sought to do was not blindly to apply 86 per cent. and 14 per cent. Broadly speaking, it began with 86 and 14 and, in the light of experience, it was embellished in the way that I have suggested. That was rejected. But I am very grateful to the noble Lord, Lord Mishcon, for putting down this amendment today because it affords a last opportunity to do what we seek.
We now come to the final stage and I just want briefly to recapitulate the argument. The argument at the outset was that despite precise figures, there would, inevitably, be an inflow of foreign material, notably material that has earned its corn in the States and is now available very cheaply. Some of it is good; some of it is fair; and some of it is shocking. I shall not refer, because I suspect the noble Lord, Lord Jenkins of Putney, will refer to it, to its effect on employment. In his speeches, the noble Lord, Lord Jenkins of Putney,
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has emphasised that side of it, with which he is more fully acquainted than am I.
I want to dwell on just one problem: the effect of the unlimited importation of American and other material, but mainly American material. The advent of cable, with its dependence upon advertisements, obviously means that for some time the income of independent television will be reduced. I suspect that it will have to compete, as it competed with the BBC nearly 30 years ago when independent television was introduced, by emphasising and dwelling on the trivial. In my days at the BBC it used to be said that the way to win an audience and to defeat your opponent was to put on an American film. The trivial material which would flow in—this is the depressing part of it—would win an audience, just as rounded material wins today an audience in the press. To that extent, it would invite independent television, in competition with a new rival, to lower its standards, which have risen magnificently over the years since those early days, in order to hold the audience.
As to the BBC, the result would be—I am not in any way disputing the case for competition—a fall in the average audience. What does the BBC do in such circumstances? I hesitate to prophesy, but I know in my heart of hearts that it would go down market in order to compete, with more triviality of material, just as it competed with its original competitor, independent television.
My one concern is the effect that the absence of proper control over imported material will have on the existing services. We may criticise the existing services. When one has more time available for viewing one tends to become more critical, because one sees too much and exercises selection too little. When the income of the BBC goes down, it is all the more difficult for them to make a case for a wholly justified increase in the licence fee if standards have been lowered. If the audience went down to the level it reached at the beginning of independent television-24 per cent. of the whole audience—I believe that it would have a profound impact on the BBC. This is the one aspect of the Bill about which I feel competent to make an offering, and I say to your Lordships that I have no doubt that the absence of proper restraint upon imported material, other than that which applies to independent television, would, whether we like it or not, damage existing standards.
We have two fine services. We can curse this or that programme hut, to use a hackneyed phrase, we have, without a shadow of doubt, the best television services in the world. Why risk their quality by failing to apply, not a severe restraint on imported material but the kind of qualified and modest restraint which has been imposed upon independent television? Left without proper restraint, 1 believe that, without a shadow of doubt, standards would fall, which would be a tragedy.
As to the amendment which the noble Lord, Lord Mishcon, has moved, he knows, as I know, that it is the best we can hope to get at this late stage of the Bill. During the course of the Bill the noble Lord the Minister has shown wit and charm and has brought delight to many of us. Therefore let him make a modest addition to the high reputation that the Bill has brought him by admitting these modest words. They do not do much. However, as the House has rejected

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what I believe to be the right and proper course, let us grab at the thread which this amendment presents. For Heaven's sake, let us not ignore the argument of quality. Do not let the desire to make it pay be the basic reason for not applying a restriction of any kind, apart from the word "proper", to the newcomer. I hope, therefore, that the noble Lord will make himself even more delightful now than he has been throughout the Bill by showing just a little modest reaction—no more than words, not even figures. At least it would be something with which to escape from the consideration of the Bill.
Lord Jenkins of Putney: My Lords, the speeches which have been made so far will, I am sure, have the effect of persuading the noble Lord the Minister to accept Amendment No. 5A. Therefore I shall not stand long between your Lordships and the announcement for which we are impatiently waiting. If by any chance we should be mistaken. I would not wish to stand long between your Lordships and the Lobbies. I am quite convinced that, moved as they will have been by the previous speeches, noble Lords will seek to persuade the Government by these means if, by any chance, we have failed to persuade them already.
The only other point I have to make is to explain why there are two amendments on the Marshalled List which seek the same ends. It is due to a breakdown of liaison, for which I am responsible. Seeing yesterday that on the Marshalled List there was no amendment, I put down an amendment, only to discover that one had already been put down in advance. Therefore we discover two amendments on the Marshalled List. I hope that it will be unnecessary for me to move my amendment as a result of this one being either accepted or otherwise carried. Therefore I shall reserve whatever I might have to say on the general subject until we see the happy outcome of this amendment.
Lord Elton: My Lords, the noble Lord, Lord Mishcon, brings us back to an important subject. I hope I made it clear on the earlier occasions when we discussed it that there is nothing between the two sides of the House on the desirability of securing the greatest possible benefit from cable for the programme production industry in this country and throughout Europe. That is why we have three specific provisions in the Bill to point the Cable Authority and its licensees in the right direction. At the licensing stage, the authority has got to take account of applicants' intentions with regard to the use of British and other EEC programming. The authority has then got to include in the licences whatever conditions it considers necessary to ensure that a proper proportion of such programming is actually included, and each year it has to tell the Home Secretary in its annual report how things are going.
The noble Lord's amendment arrived on the Marshalled List at the eleventh hour, and, uncharacteristically, I have to say that I have no complaint about that. The noble Lord consulted me as to its propriety, and I was glad to agree. Indeed, I had a secret hope that the noble Lord might at least have discovered a qualifying formula which would achieve what all of us want, which is a clear statement of what
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the words "proper proportions" are intended to convey; not a static 86 per cent. and not a uniform proportion across a possible total of 32 channels, but a progressive preferment of EEC material such as the noble Lord, Lord Hill of Luton, sought to achieve at Committee stage with his amendment. That is something which would require the Cable Authority to aim at what the words in the Bill have led the public service broadcasting authorities to deliver—and, as the noble Lord, Lord Hill of Luton, has said, they are two fine services which without a shadow of a doubt are among the best in the world—using those words over the years.
Since I had that flutter of hope when we spoke, it grieves me to say that I have a difficulty with the noble Lord's amendment now, as I did with his amendment at Report stage. Although I very much sympathise with the spirit of the amendment, I have difficulties with the formulation. The noble Lord may say that if that is so I should at least accept the principle and agree to take the wording away for a later stage in another place. But our whole problem here concerns the drafting rather than the principle, on which we are broadly agreed. So I do not feel that it would be honest to give such an assurance.
The noble Lord's amendment seeks to qualify the word "proper". That is the long and the short of the problem, because "proper" is an absolute term and it cannot meaningfully be qualified. The words in the amendment either mean the same as "proper", in which case it seems more economical to have one word than 26, or they mean something different, in which case "proper" could not be left in the Bill side by side with these words.
I have a further difficulty in that the exact expression "proper proportions" is the one used in the Broadcasting Act for the IBA's duty in respect of independent television, Channel 4 and independent local radio. I believe it is widely agreed that the IBA have interpreted that duty in a most effective way, and that the term "proper proportions" has been highly effective in that Act. If experience is anything to go by, therefore, we do not need a better definition. If we start to qualify or depart from the idea of "proper proportions" in this Bill, there is a real danger that we shall cast doubt on whether it is appropriate in the Broadcasting Act.
If the words differ, the meaning must differ; if the meaning differs, the duty must differ. It must follow that the IBA are required to do something different—and presumably something less in value—than what we are demanding of the Cable Authority. If that happens, then it follows that by trying to raise the standard for one we risk lowering the standard for the other. In each case we want the highest standard consistent with the circumstances of each authority.
The noble Lord, Lord Jenkins of Putney, has argued for a formulation that is very similar to the one rejected in Committee when considering an amendment from the noble Lord, Lord Hill of Luton. In view of what was said by the noble Lord, Lord Jenkins of Putney—and I hope he will not think I am being discourteous—I believe that I am right in thinking that he has now sworn allegiance, as it were, to the amendment of his noble friend, and that it

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behoves me to address myself only to that amendment. Is he content?
Lord Jenkins of Putney: My Lords, I am content to address myself only to the amendment of my noble friend.
Lord Elton: My Lords, it sounded like a catechism, but it has clarified my mind and I am grateful. I have to say that I find it very hard to maintain an unyielding line in the face of the eloquent enthusiasm and patient arguments of the noble Lord, Lord Mishcon. Indeed, we are toilers in the same vineyard, and I myself spent a good deal of time over the weekend and at other times considering alternatives and in discussion with those who understand parliamentary drafting much better than I do.
I have to say that I felt as disappointed as the noble Lord when others convinced me that both he and I have failed to improve on what is already in the Bill. My hands itch to do something better but, infuriatingly, I have not been able to devise the thing that it is better to do. We shall certainly go on thinking, but, much though we should like to come up with a formulation which everyone can rally around, we have not yet been able to think of anything which both makes good law and constitutes an improvement on what is already in the Bill. I cannot give an undertaking that we shall be more successful when the Bill is in another place.
Noble Lords who are in unison in support of this amendment are, I hope, assured that the Government have the same intentions as they have. They perceive the success of the formulation in this Bill as it has been used in the Act—and that, I believe, is a reassurance that the Government's perception is correct. The noble Lord, Lord Hill of Luton, asked us not simply to produce conditions—and he will forgive me if I am not exactly right—and suggested, using a slightly pejorative tone of voice, that we might be trying to make cable pay. We are not only trying to make cable pay: we are trying to make cable good. If we make it so constrained as to goodness that it cannot achieve what your Lordships want, it will not pay and there will be no cable at all.
The great difficulty I have had since we started debating this matter has been that if one puts too tight a ring-fence around British productions and around EEC productions, then the only way in which the authority could meet what would be a statutory and specific obligation would be to recycle ad infinitum inferior material from the British market. From that point we have moved steadily further to try to find something sufficiently flexible which will allow the authority to use only that material in the British market which is sufficient to satisfy what we all see as the optimum, but not so great as to drive out the necessary competitive ingredient from abroad and the necessary supply to keep up a new flow of good material on the screen.
At the end of it all I am deeply grateful to the noble Lord, Lord Mishcon, who is tireless in his pursuit of an aim to a degree that I find admirable—particularly from his position on the Opposition Benches, where he does not have cohorts of people to support him in this respect. I am embarrassed by the support I have in the
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face of the noble Lord's lack of support and the excellence of his amendments. The fact remains that I am convinced that what he has on the Marshalled List actually weakens the concept of "a proper proportion". That concept has been the touchstone of excellence for the IBA over many years, and I must advise your Lordships not to depart from it.
4.37 p.m.
Lord Mishcon: My Lords, to say that I am disappointed with that reply, despite the very kindly words which the noble Lord the Minister used at the end of his speech, would be the understatement of the day. I am hoping that in another place at this time certain more encouraging statements are being made on behalf of the Government.
I wonder whether I may answer the Minister's point. I shall do so as briefly as I can. I must confess—and the Minister knows me well enough to realise that I mean this respectfully—that I was reminded of a barrister who, having received his brief and having been paid his fee, says, "For this I must go on talking although I have a hopeless case, because I have a brief and I must do justice to it in the best possible way I can".
Reference was made to a previous Act and to the fact that these words occur there and relate to independent television. We have been told throughout this debate—not only today but on previous occasions—that cable must not be treated in the same way as independent television and that the separate proportion has to be achieved by one against the other. We have been told that they are not the same thing and that they do not have the same purpose. We have bowed to that, and we are bowing to it in this amendment.
The Broadcasting Act has been put before us by the Minister as being the absolute pillar of clarity. The fact is that the term "proper proportions" was used then—and if I remember correctly there was quite a debate about it—because, facing the unknown as they were and before any negotiations had taken place, nobody could think what words to use and so they hit upon the vague words "proper proportions". The reality is not that those words have led to a satisfactory conclusion but that the negotiations that have taken place have resulted in a proper conclusion.
The noble Lord may like to hear once again the description of the very Act which he held before us as the tablets of stone—and the great prophet Moses may have wanted to present them to his people if he did not have to break them when he went down. This is how the noble and learned Lord the Lord Chancellor, who was not then in that exalted position, described that Act. For all I know he may well have been thinking of the words that have been held up before us. This is what he said when that Act was a Bill before your Lordships:
"I think I can honestly say that since my father took office in Mr. Bonar Law's Administration in 1922 I have followed in record almost every major Parliamentary occasion in either House of Parliament. I must say that I can recall no occasion whatever in your Lordships' House during that period of time in which a major Bill proposed by a Conservative Government has met with such a chorus of opposition from quarters normally either independent or friendly to the Conservative cause, stretching from the most reverend Primate to noble Lords of unrivalled experience in public service on all sides of the House".—[Official Report, 22/7/54; col. 1336.]

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That was what the noble and learned Lord, Lord Hailsham, who was then, as I said, not occupying the great position that he holds now, thought of the Act which we are now asked to copy because it has worked out so well. I am not trying to criticise that Act. I am merely saying that there was severe opposition in all quarters to that Act that we are now having quoted to us.
The real argument is—and I shall leave it at this—that at the present moment there is no guidance whatsoever to an authority, the personnel of which we do not know and the quality of which we do not know. There is no guidance to industry or to anyone else. There is merely the use of the term "proper proportions". The noble Lord the Minister says either that means something and you leave it on its own or it does not means something in which case you have to put something in its place. That is how I understood what he was saying. That is a tortuous argument. What you have to do if you are using vague general words like "proper proportions" is to give some guidance, to allow flexibility and to say to the authority and to everybody, "Look, 'proper proportions' ought to be the result of your exercise from time to time when you take into account all the things that the noble Lord the Minister has said—availability, practicability and the maintenance of standards". It is the very least that your Lordships can do before the Bill leaves this House.
The noble Lord the Minister was frank. He said that he had been trying to find words but he could not find them. At least we have found words. They are not objectionable; they are helpful, and I ask your Lordships to support them.
4.44 p.m.
On Question, Whether the said amendment (No. 5A) shall be agreed to?
Their Lordships divided: Contents, 99; Not Contents, 109.

DIVISION NO. 1

CONTENTS

Allen of Abbeydale, L.

Glenamara, L.

Ardwick, L.

Graham of Edmonton, L. [Teller.]

Aylestone, L.

Beaumont of Whitley, L.

Grey, E.

Beswick, L.

Hale, L.

Bishopston, L. [Teller.]

Hampton, L.

Blyton, L.

Hanworth, V.

Bottomley, L.

Hatch of Lusby, L.

Bowden, L.

Hayter, L.

Brockway, L.

Hill of Luton, L.

Brooks of Tremorfa, L.

Hughes, L.

Bruce of Donington, L.

Hunt, L.

Carmichael of Kelvingrove, L.

Hunter of Newington, L.

Cledwyn of Penrhos, L.

Hylton-Foster, B.

Collison, L.

Jacques, L.

Dacre of Glanton, L.

Jenkins of Putney, L.

David, B.

John-Mackie, L.

Diamond, L.

Kalder, L.

Donaldson of Kingsbridge, L.

Kilmarnock, L.

Donnet of Balgay, L.

Kinloss, Ly.

Elwyn-Jones, L.

Kirkhill, L.

Elystan Morgan, L.

Lawrence, L.

Ezra, L.

Leatherland, L.

Fisher of Rednal, B.

Listowel, E.

Foot, L.

Llewelyn-Davies of Hastoe, B.

Gaitskell, B.

Lloyd of Hampstead, L.

Gallacher, L.

Lloyd of Kilgerran, L.

George-Brown, L.

Lockwood, B.

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Longford, E.

Shinwell, L.

McGregor of Durris, L.

Simon, V.

McIntosh of Haringey, L.

Stedman, B.

Mackie of Benshie, L.

Stewart of Alvechurch, B.

MacLehose of Beoch, L.

Stewart of Fulham, L.

Mar, C.

Stoddart of Swindon, L.

Milford, L.

Stone, L.

Mishcon, L.

Strabolgi, L.

Molloy, L.

Taylor of Blackburn, L.

Mulley, L.

Tordoff, L.

Nicol, B.

Underhill, L.

Northfield, L.

Wakefield, Bp.

Peart, L.

Wallace of Coslany, L.

Perry of Walton, L.

Wells-Pestell, L.

Ponsonby of Shulbrede, L.

Whaddon, L.

Porritt, L.

White, B.

Reilly, L.

Wigoder, L.

Rochester, L.

Willis, L.

Ross of Mamock, L.

Wilson of Langside, L.

Sainsbury, L.

Wilson of Rievaulx, L.

Seear, B.

Winstanley, L.

Shackleton, L.

Winterbottom, L.

NOT-CONTENTS

Abinger, L.

Liverpool, E.

Adeane, L.

Loch, L.

Alexander of Tunis, E.

Long, V. [Teller.]

Allerton, L.

Lucas of Chilworth, L.

Avon, E.

Luke, L.

Bauer, L.

Lyell, L.

Belhaven and Stenton, L.

McAlpine of Moffat, L.

Bellwin, L.

McAlpine of West Green, L.

Beloff, L.

McFadzean, L.

Bessborough, E.

Mackay of Clashfern, L.

Cairns, E.

Mancroft, L.

Campbell of Alloway, L.

Marley, L.

Campbell of Croy, L.

Massereene and Ferrard, V.

Cathcart, E.

Merrivale, L.

Cayzer, L.

Mersey, V.

Chelwood, L.

Milverton, L.

Clitheroe, L.

Molson, L.

Constantine of Stanmore, L.

Montagu of Beaulieu, L.

Cottesloe, L.

Morris, L.

Cox, B.

Mottistone, L.

Cranbrooke, E.

Mowbray and Stourton, L.

Daventry, V.

Northchurch, B.

Denham, L.

Nugent of Guildford, L.

Effingham, E.

Onslow, E.

Elgin and Kincardine, E.

Orkney, E.

Ellenborough, L.

Orr-Ewing, L.

Elton, L.

Peyton of Yeovil, L.

Enniskillen, E.

Polwarth, L.

Faithfull, B.

Portland, D.

Fortescue, E.

Quinton, L.

Fraser of Kilmorack, L.

Rankeillour, L.

Gisborough, L.

Rochdale, V.

Glanusk, L.

St. Davids, V.

Glenarthur, L.

Saltoun, Ly.

Gormanston, V.

Sandford, L.

Grantchester. L.

Sandys, L.

Gray of Contin, L.

Selkirk, E.

Gridley, L.

Sempill, Ly.

Hailsham of Saint Marylebone, L.

Sharpies, B.

Skelmersdale, L.

Hawke, L.

Swinton, E. [Teller.]

Henley, L.

Terrington, L.

Hives, L.

Teviot, L.

Holderness, L.

Thomas of Swynnerton, L.

Home of the Hirsel, L.

Thorneycroft, L.

Hood, V.

Trefgarne, L.

Homsby-Smith, B.

Trenchard, V.

Jessel, L.

Trumpington, B.

Kaberry of Adel, L.

Vaux of Harrowden, L.

Killearn, L.

Vickers, B.

Kimberley, E.

Vivian, L.

Kintore, E.

Westbury, L.

Lane-Fox, B.

Whitelaw, V.

Lauderdale, E.

Wise, L.

Lindsey and Abingdon, E.

Yarborough, E.

Resolved in the negative, and amendment diasagreed to accordingly.
4.54 p.m.
Lord Jenkins of Putney Lord Jenkins of Putney moved Amendment No. 5B:
Page 9, line 21, at end insert—
("() The words "proper proportions" in paragraph (d) above mean such proportions as are comparable mutatis mutandis with those proportions included in the programmes of the BBC and the IBA.").
The noble Lord said: My Lords, that Division result was such a close run thing that I have hopes that this amendment will command your Lordships' support. My reasons for that hope are as follows. It seemed to me that such was the eloquence of my noble friend on the Front Bench that the noble Lord, Lord Elton, had the most difficulty in persuading himself to the task of refusing what my noble friend was asking him to do. He obviously found himself most reluctant indeed to reject the amendment. I therefore feel that he may now be in the mood to say, "Well, I had to do that". He may be looking for a get-out, and I offer him that get-out in Amendment No. 5B. I offer him the opportunity of doing what I am pretty sure he wants to do, and that is to give the authority the little push, the little necessity, the teeth that it must have.
Why is it that the authority must have those teeth? The noble Lord, in reply to my noble friend, spoke of his good intentions. We all know what happens to good intentions. I have personally no doubt of those good intentions; but in politics we are not so much concerned with the intentions of the legislator, as with the consequences of the legislation. It is this with which I think we are troubled here. The consequences of this legislation, however good may be the intentions of the legislator, are likely to be disastrous indeed.
I do not think that we are exaggerating here. If the authority do not have the power and the intention to resist the onrush of foreign material with which they will be faced when coming into office, the onrush of triviality—and this is the problem with which they will be faced—if they do not have firm guidelines to resist that, if they are left with the necessity of deciding for themselves what is a proper proportion, they will be unable to resist the commercial pressures upon them. The reason they will be unable to resist is they are likely to be in the position of having either to give way or by not giving way possibly to close down one or more of their clients. That is the problem they face.
Triviality is popular, and a client may come to the authority and say, "Look, unless I am permitted to transmit 70 per cent. of this popular stuff—I know it comes from across the Atlantic, and I know that it is really the sort of pap which ought not to be fed to people—this station is going to be in trouble". The commercial pressures on the authority therefore to give way will be enormous. The words "proper proportions" are no protection against those pressures. It was only the negotiation of a fixed amount under those words which enabled the excellence of our present television stations to be established. Those having been established, if we now undermine them at this stage, we shall not only introduce something which we do not want, which will be very much worse than a "son of television", we shall be also undermining as the noble Lord, Lord Hill, has eloquently pointed out, the standards of the existing stations. This is our problem.
How have I sought to get over that? I want to suggest in my amendment that the words "proper proportions" mean such proportions as are comparable, mutatis mutandis, with those proportions included in the programmes of the BBC and the IBA. With the phrase "mutatis mutandis" in the amendment, noble Lords might have thought it came from my noble friend rather than from me; but the purpose of those words of course is to say in shorthand other things being equal in the different circumstances. The object of the exercise is one which I think on consideration the noble Lord, Lord Elton, will find himself able to accept. What would be the position if this amendment was passed? The words "proper proportions" will stand; but then if the authority says: "What, then, do proper proportions mean?"—at the moment they mean nothing, no guidance at all. But with these words in the Bill they mean comparable proportions to those included in the programmes of the BBC and the IBA—but other things being equal.
I looked up the wording in a dictionary to make sure this would give the authority the necessary power to make a very different proportion from 86 per cent., which is the proportion on which the IBA and the BBC operate. One dictionary says, "with the necessary changes" or "the necessary changes have been made". Then the question arises: what, then, are the necessary changes which the authority would have to apply? They are very considerable indeed. I conceive that under this, the changes required would be so great as to bring about, if necessary, in the mind of the authority a total reversal of the present proportions, and that it might therefore permit the authority to say, in a special circumstance, even 86 per cent. of foreign material can come in; but they would have to think very carefully about that—very carefully.
The authority would have to ask, "Are these changes necessary? Have we got to go to this extent?" The authority would have to refer all the time to the existing 86 per cent. British proportion and ask to what extent was the change necessary in the particular case, so as to bring down the 86 per cent. to whatever proportion it judged to be necessary in order to enable the station to survive. In some circumstances the authority might take the view that the level to which it was necessary to reduce the proportion was so low that it was not worthwhile for the station to survive.
In other words, the authority would be placed in the position of taking intelligent decisions, but against a yardstick of some kind. At the moment there is no yardstick. What I am proposing is a very flexible yardstick and all it means is that the authority must look at the situation as it is at present in the existing stations before it makes up its mind. The authority can apply the proportion flexibly. There may be a certain proportion for one station and a different proportion for another station, if that is what the authority in its wisdom desires.
I recall that in the previous debate the noble Lord the Minister was so visibly moved in this direction that at one stage I thought that he might find himself almost inadvertently walking over to this side of the Chamber. The noble Lord, Lord Elton, was previously so visibly moved in favour of the general principle in the proposal that I hope he will now say, "This is the

667
answer I have been looking for, and I accept it". I beg to move.
Lord Mottistone: My Lords, I should have thought that my noble friend's earlier argument made it completely clear that he would not agree with the amendment that has just been moved. In addition to what my noble friend said earlier, I would add that I believe that the amendment is perhaps not being quite fair regarding the question of the reliance that should be placed upon the Cable Authority itself. It seems to me that there will be chosen for the authority the same kind of excellent people, such as the noble Lord Lord Hill, who were chosen to lead the other bodies such as the IBA, and I think that we should trust them a little to make a judgment on this particular point. To imply that they will need to have their hands held very tightly by Parliament in the ways that have been suggested, in particular by the noble Lord, Lord Jenkins, is going a little far. I hope that your Lordships feel that this amendment needs to be rejected even more firmly than the previous amendment, which, looking backwards so to speak, was an improvement on it.
The Lord Bishop of Wakefield: My Lords, I wonder whether the noble Lord the Minister would be willing to give an assurance to us, because over and over again at different stages we have debated this issue and have sought to find the right formula of words which has been so elusive. It may well be that in his heart the Minister cannot find his way to agree to the words put forward by the noble Lord, Lord Jenkins of Putney. Therefore I wonder whether in his reply the noble Lord can tell us whether or not the Secretary of State will be willing to give some guidance or code to the authority which will reflect the very considerable unease that has been expressed at each stage of the proceedings on the Bill in this Chamber, our very real concern for the maintenance of adequate and proper standards, as well as the unease expressed here that the words "proper proportions" are inadequate as we now have them. If the noble Lord the Minister is able to say that there will be an agreement to give a positive encouragement to the authority to look for the maximum practicable amount of British and EEC programmes, I think that that would reassure some of us, even in our disappointment at not being able to find the right wording all the way through in the actual amendments.
Lord Winstanley: My Lords, I should like briefly to join the right reverend Prelate in his plea to the noble Lord the Minister to find some kind of formula which would enable us to leave this particular part of the Bill in a mood of total unanimity. It seemed to me that in his reply to the previous amendment the noble Lord, Lord Elton, really grasped the point. He said quite clearly that he wanted to do the kind of things which we said the amendment was designed to ensure were in fact done. But he placed all his arguments against accepting those words on the ground that the word "proper", according to him, was a word which was precise, specific, and capable of rigid definition. I feel that perhaps the noble Lord was mistaken there. It seems to me that what is proper to one person sometimes seems to be grossly improper to another,
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and I should not have thought that the word "proper" was as specific as all that.
However, it is clear that the noble Lord, Lord Elton, really wants done the kind of things that we all want done. It is also clear that this amendment of the noble Lord, Lord Jenkins of Putney, will not be carried; indeed I would doubt whether we shall even divide on it. So far, the mood in our debate on the Third Reading has been one of reasonableness. We have had reasonableness displayed by noble Lords on the official Opposition Bench. We have had reasonableness coming from the Cross-Benches. We have even had reasonableness coming from the noble Lord, Lord Mottistone. Since there is so much reasonableness about in your Lordships' House, is it not time that we had a little reasonableness from the Government? I hope that the Minister can make some remarks of encouragement. We acknowledge that he has not yet been able to find the proper words, or words which he would regard as acceptable. If he would undertake to make some effort to try to find better words, many of us would leave the debate happier than we shall otherwise do.
5.6 p.m.
Lord Elton: My Lords, obviously I did an amazingly bad job on the last amendment if I left your Lordships under the impression that I was not convinced by my own arguments. I can only apologise for what I hope was an uncharacteristically poor performance at the Dispatch Box. All that I was doing was expressing the temperate and reasonable way in which I was viewing the arguments of those who resisted me, rather than using the full fury of personal commitment which is necessary when perhaps issues are more burning in your Lordships' minds. But clearly they burn more brightly than I had appreciated.
I am, for most of the reasons which noble Lords have adduced in the course of four or five separate debates, wedded to the idea of seeing that there is in cable, as there is under the IBA, what we all regard as a proper proportion of material produced in the EEC and in this country. But when I say "what we all regard as proper", each one of your Lordships has a different solution as to how we can describe what we mean by "proper"; and the right reverend Prelate fell back on a term which we discussed in detail and at length at the previous stage of the Bill: the "maximum practicable". But the "maximum practicable" means incorporating every kind of moving trash that you can get on the screen, provided that you can have that before you introduce excellent stuff produced in America, South America, or Australia; and there are very good films being produced in Australia and America. I regret it if I cannot persuade the right reverend Prelate of what I am saying, but the fact is that the words "maximum practicable" would have that effect in law.
We are not now discussing conversations that the authority will have in the future with its friends; we are discussing cases that the authority will be fighting in the future in the courts. Therefore we must be precise in the meaning of the words that we use, and that is why I am defending the words "proper proportions", with I hope more convincing vigour than I did before. I believe that, if I were to yield in the way which noble

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Lords now suggest, the authority would be in difficulty in the courts and the result of that difficulty could well be exactly the opposite of what your Lordships are seeking to achieve.
We do not want parity of hours of imported or EEC material. We have already discussed that. If there are 32 channels of completely different and specialist interests, the proper proportion will be different in each. What we are trying to describe is the kind of tension that there shall be in the mind of the authority when it is deciding what shall be the proper proportion, so that it recognises that it must always be as high as is fit, but what is fit will differ from occasion to occasion. The noble Lord, Lord Jenkins of Putney, suggested that, on some occasions, it might actually be an inverted proportion of 86 per cent.—was it?—imported and 14 per cent.—was it?—domestic products. That might be the case.
I am, however, anxious to see that the authority has a base that is familiar and understood on which to stand when it has to go to the courts. What do I find when I survey the field? What is familiar, what has been tested over the years, and what has produced, as the noble Lord, Lord Hill of Luton, says, without a shadow of doubt, the best service in the world? The answer is the words in the Act. What are the words in the Act? The words in the Act are "the proper proportion". I am therefore not being unreasonable. I hope that I have demonstrated a certain commitment to the argument that apparently was not clear in what I said earlier.
I do not wish to spend long on the economic arguments for allowing into this country a proper proportion of material from outside for the health of the market. I am sure that my noble friends will be aware of this. I am also sure that noble Lords opposite, if they wish to, will be aware of it but that they will discount it if they want to. So there is no point in trotting that horse out again. And talking of horses, those of your Lordships who were engaged in the Data Protection Bill will know what I mean when I say that what we are looking for is a unicorn. We found it in the last Bill, but we have not found it in this one. The noble Lord, Lord Winstanley, will recall that we were searching for a phrase. I wish that our hunt had been as happy.
I can say to the right reverend Prelate, not that my right honourable friend the Home Secretary will publish guidelines, but that the authority will be required to report to my right honourable friend every year on how it is implementing this requirement. There will be an occasion to debate it in both Houses of Parliament. That seems to me a very adequate watchdog.
I should like finally to say this. There seemed to be a moment of amusing irony in the address that the noble Lord, Lord Hill, made in his speech on the last amendment. I should have acknowledged the almost embarrassingly courteous and kind things that he said about me on that occasion. I hope that your Lordships will see the virtue that I have in resisting him. The noble Lord said that there was a great danger of a flight—I think that was the phrase he used—to the trivial if we proceeded without a proper restraint. We are driven back to the word "proper" at every turn. All that I can say to your Lordships is that you know what
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is proper, I know what is proper, and the Secretary of State will know what is proper. The authority will have to say what it has done and pursued, and that will be debated in Parliament. Then you will be able to see that it has been proper. If it has not been proper, you will know what to do about it. I hope, therefore, that you will manage without this amendment.
Lord Jenkins of Putney: My Lords, so will the commerical interests know what is proper. Their idea of what is proper will be very different from the idea of the noble Lord of what is proper. To leave no control at all is something that should not be done. We have, however, heard in this debate words which, when they are read in another place, will result, I believe, in the other place carrying out what we here tonight have failed to do. It is clear that if at this stage I was to press the amendment the result might be that, instead of a victory, we should find ourselves, this being so much later, in a slightly more defeated position than we were before. Therefore, I do not think that we shall take the risk. Unconvinced as I am by the noble Lord, Lord Elton, whose last speech I liked rather less than some of his earlier ones, nevertheless I beg leave at this stage to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 17 [Power to revoke licences]:
Lord Elton Lord Elton moved Amendment No. 6:
[Printed earlier.]
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 3, which your Lordships received in a rather more friendly and welcoming manner. I beg to move.
On Question, amendment agreed to.
Clause 22 [Copyright in cable programmes]:
Lord Elton Lord Elton moved Amendment No.7:
Page 21, line 34, leave out from ("service") to end of line 35 and insert ("means a cable programme service within the meaning of Part I of the Cable and Broadcasting Act 1984 or a service which would be such a service if references in section 2(1) of that Act and section 5(1) of the Telecommunications Act 1984 to the United Kingdom were omitted.").
The noble Lord said: My Lords, might I, with your Lordships' leave, speak also to Amendment No. 9.
Amendment No. 9: Schedule 2, page 42, line 44, leave out from ("in") to end of line 45 and insert ("the Copyright Act 1956").
These are technical amendments designed to ensure that in certain circumstances the protection conferred by the Copyright and Performers' Protection Acts can extend to cable programme services from outside the United Kingdom, I beg to move.
On Question, amendment agreed to.
Clause 26 [Incitement to racial hatred]:
5.17 p.m.
The Earl of Selkirk The Earl of Selkirk moved Amendment No. 8:
Page 25, line 14, after ("up") insert ("and in particular").
The noble Earl said: My Lords, I should first apologise to my noble friend for not speaking on this amendment either at Committee stage or on Report. It

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was just one of those things. I am afraid that I was unable to be present. The clause with which I am dealing comes under the heading "Miscellaneous". I cannot understand why it was not associated with Clause 9 which deals essentially with the quality of broadcasting. I gain the impression that someone slipped it in at the last minute, although I may be quite wrong about that.
The point that I wish to make is that the clause creates a new crime for which a person might well be put in prison. That crime is stirring up hatred against a racial group. In order to get a conviction for that crime two things have to be shown—that you stirred up hatred and that it was directed against a racial group. Let us suppose that it is shown that you aroused hatred but that it is not shown to be against a racial group. What is the result? The result really is that one has a statutory indication that one is free to stir up hatred on any subject. That is the clear indication that emerges. To my mind, this means that hatred is perfectly permissible always so long as it is not connected with a racial group.
I do not wish to go into details. However, may I ask how this applies to religion? If you were to stir up hatred, for instance, against Christianity you would be perfectly safe because Christianity has no possible racial connection. If you were to stir up hatred against Islam you would be perfectly safe. The Moslems extend from Morocco to the Philippines and there is no particular racial connection at all. I suppose that if you stirred up hatred against Judaism it might get you convicted. If you stirred up hatred against Hindus, that would also get you convicted because there is a clear racial association. On the other hand, Buddhism has clearly no racial association. Shinto is, of course, closely connected with Japan. My amendment relates to hatred that is likely to be stirred up and in particular against a racial group.
I want to be clear. I am saying here that you could involve yourself in a crime by stirring up hatred in any circumstances. I think that that is right. Do we want the possibility of hatred being, if you like, bounced off satellites, put into tubes or cables and directed into anyone's bedroom, sitting room or kitchen? Do we really want that to happen? Or should we not make it clear that it is most undesirable? This provision is very nearly giving a statutory authority to stir up hatred. It is giving a statutory indication that hatred would not be a crime in many circumstances. I am not giving anything away on this amendment. I am merely broadening the clause to deal with what I believe most people in the House regard as an undesirable trait. I hope very much that the noble Lord will consider the amendment, or alter it so as not to allow the broad indication I have suggested to take place. I beg to move.
Lord Elton: My Lords, I am grateful to my noble friend for his explanation of the amendment. I have been awaiting with some apprehension his words since he first put down the amendment. I wonder if I may say two things. First, let me get a drafting matter out of the way. It would not have been appropriate to put Clause 26 together with Clause 9, because Clause 9 comes in a group of clauses concerning the duties of
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the authority in respect of programme standards and other matters. Clause 26 is the right place, alongside other provisions which amend the general criminal or civil law. Therefore, I hope that my noble friend will accept that this was not slipped into the Bill as an afterthought. It was inserted in its proper place in the construction of the Bill.
What I think my noble friend is asking is why racial hatred has been singled out as so much worse than anything else. He asks, for example, why not add class hatred? I think in fact he mentioned religious hatred, but I have chosen class hatred as an example. I have great sympathy with that proposition, but I must point out the facts of the matter.
This Bill is addressed exclusively to a tiny area of human activity. It is not the proper vehicle for creating a new offence which in logic should be an offence in every area of activity and not just in one. Incitement to racial hatred is already an offence known to the law and I assure my noble friend that we are not creating a new one. If my noble friend will look at Section 5A of the Public Order Act 1936, as amended by the Race Relations Act 1976, he will actually find chapter and verse, and it is reflected also, for instance, in the Theatres Act 1968.
Incitement to racial hatred is an offence, but incitement to hatred generally is not an offence. The effect of my noble friend's amendment would be to make incitement to hatred generally an offence and, of course, it could be hatred of anything, not merely the type of theological hatred to which he has referred or the racist hatred which is incorporated in the Bill as drafted. It could be hatred of any person, thing or activity at all. I can think of many examples where, in fact, incitement to hatred may actually be a good thing—for example, hatred of litter, of sloth, or of greed. One can preach against those matters, and no doubt right reverend Prelates will have done so effectively on many occasions. But I am afraid we cannot legislate against them in general terms.
So there is an offence. The purpose of including this in the Act is simply to see that there is not an area of activity where there is an offence protected, as it were, from the effects of the law on proper human conduct. I hope that my noble friend will see fit to leave things as they are.
The Earl of Selkirk: My Lords, if I may say so with great respect, I do not think that my noble friend's reply was very impressive. The point I was making is that I have no objection to the clause as it stands, but I have objection to the implication that it could extend hatred to any other subject. My noble friend says that it does not matter: we have no law against hatred. One can stir up hatred on Hyde Park Corner or on The Mound in Edinburgh or in other places. "I hate cruelty" and "I hate the bomb" do not stir up hatred.
We now have a new situation with information being bounced from all parts of the world. I see no reason why we should allow hatred of any sort to be transmitted in these cables. It is quite different from a general law against hatred. I can hate all sorts of things but that is entirely different from stirring of up hatred. My noble friend quoted the Public Order Act 1936. I am not sure whether that really deals with the public broadcasting of the stirring up hatred. This is quite

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different from speaking in public or speaking from pulpits for one reason or another. We would be allowing hatred to go through a tube into people's bedrooms, sitting rooms, kitchens. My noble friend acknowledges that the Bill allows hatred in any form one likes as long as it does not have an ethnic context. I only ask him to look at the matter. I think these words could be used and, in fairness, I think that my words do, to all intents and purposes, cover the point. They would not permit hatred to take place.
I do not want to press the point further, but I ask my noble friend to look at the matter pretty carefully. I do not think he intends to give a semi-statutory authority, which this provision implies. It implies that if one does not have an ethnic side then one is pretty free to stir up hatred as one likes. In my view that is quite wrong, and I ask my noble friend to look at it again.
Lord Elton: My Lords, I am in the obvious difficulty that this is a very late stage in the Bill and I cannot, therefore, undertake to take away and come back with a digested form of response to what my friend says. I find the concept that he has addressed in his speech an exceedingly interesting one. Indeed, I should add that I am speaking with your Lordships' leave because this is my second intervention. However, I fear that what I said previously, and perhaps did not sufficiently elaborate, remains the principal restraining fact in my mind; namely, that there are many things other than hatred which are deplorable, such as greed or envy, but which are constantly stirred up by the media, sometimes unintentionally. If we are to address ourselves to the task of defining that emotion and those aspects of it which could harmlessly he stirred up and those which could not, and to defining what is "stirring up", as opposed to accidentally producing in ways which may look less than accidental to some more familiar with the field than others, then we should be embarking upon a very large area of legislation and, indeed, philosophy.
I will of course read what my noble friend has said with the greatest care, and I will ensure that it is read by my colleagues as appropriate. So my noble friend need not feel that his words are wasted on this occasion if, as I believe he intends, he does not press his amendment. I am grateful to him for his explanation.
The Earl of Selkirk: My Lords, I am grateful to my noble friend. My own feeling is that a prosecution under this clause would be extremely difficult. However, it is the principle of allowing hatred to go through public channels like this that I find personally offensive. I will only say that I am grateful for what my noble friend has said, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 2 [Minor and consequential amendments]:
Lord Elton Lord Elton moved Amendment No. 9:
[Printed earlier.]
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 7. I beg to move.
On Question, amendment agreed to.
Lord Elton Lord Elton moved Amendment No. 10:
[Printed earlier.]
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 3. I beg to move.
On Question, amendment agreed to.
An amendment (privilege) made.
5.29 p.m.
Lord Elton: My Lords, I beg to move that the Bill do now pass.
Moved, That the Bill do now pass.—(Lord Elton.)
Lord Mishcon: My Lords, the noble Lord, Lord Hill of Luton, in the course of a very persuasive speech paid compliments to the noble Lord the Minister for his conduct of this Bill throughout its proceedings. I specially did not follow the noble Lord, Lord Hill, in the eulogies which he was uttering at that time, but only for one reason, and that was that I did not want the noble Lord the Minister to think that I, in moving my amendment about which I felt so deeply, was using corrupt means in order to get him to accept it. At this moment I wish that I had done so, because at least it might have had some type of effect; but knowing the noble Lord the Minister I doubt it.
However, at this stage, on behalf of my noble friends and myself, I would like to do what I have done on previous occasions and that is to pay a tribute to the good humour, the tolerance, the patience and the broad-mindedness that the Minister has shown in dealing with a very difficult Bill. I do this in all sincerity and the noble Lord knows it.
I say that it is a difficult Bill because this is one of those occasions—and when the Minister mentioned the Data Protection Bill I thought this—when one would have wished to have some sort of expert evidence at the Committee stage in order to see what those engaged in this industry—whether they are engaged in cable-laying, programming or supplying—had to tell us about their aims, their possibilities and their limitations.
By this Bill we are unleashing upon the public a force which we cannot resist—a technological development that we ought not to try to force back but, indeed, that we ought to encourage. Yet we wonder where the authority is coming from, what sort of personnel will make it up, what sort of programmes we shall find, what sort of reception there will be from the public, how starved (if that be the right word) certain areas will be, and how over well supplied other areas will he. We did not have that expert evidence and we tried our best.
We on these Benches had some very major concerns. We wanted very badly—and we had support from many quarters of the House for this—to uphold standards; we wanted a minimum code, and we were especially thinking of those who might be applying for an area without facing any competition; and we wanted a quota. I ask for no forgiveness for repeating the results of two Divisions. The result of the Division on our amendment on the code was 107 against to 106 in favour. The result of the Division today on the quota amendment was 109 against to 99 in favour. Therefore, I hope that the strength of feeling

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represented by those figures (which show a view expressed from all quarters of the House, meaning that there is no political content in that vote) is sufficiently telling in a democracy for the Government to take it very seriously. When this Bill goes to another place I hope that those figures will be altered, so that there is a majority for what those of us who proved to be just in a minority were trying to achieve.
We also sought to prevent this question of licensing being subject to any sort of wrongful commercial taint. Being able to see into the future in untried, uncharted territory is difficult to do, but we tried to do it by an amendment with which the Minister expressed himself in sympathy. The amendment copied the appropriate provision in the Broadcasting Act and it was to try to ensure that the Cable Authority would refuse the grant of a licence to someone who already had a licence, if it felt that that would be lawful, and would produce an undesirable monopoly. I think I am right in saying that the noble Lord the Minister thought that he might be able to produce a suitable amendment; he was kind enough to say that we on this side had the difficulty of preparing a rather awesome draft in order to cover that situation. I remember spending quite a few hours trying to adapt the provision in the other Act, which, of course, related to independent television in very different circumstances, because it is not a question of a licence there.
With his usual courtesy, the noble Lord the Minister explained at the Report stage that he had been inundated with promises that he had made—and he had brought that inundation upon himself—to reconsider and to prepare amendments, and he was not ready at the Report stage. I appreciate that the same reason may well apply, does apply, even now to the Third Reading. It is a shame that that provision will not be in the Bill when it goes to another place. I hope that it will be well understood in another place that the matter was well argued here and accepted on behalf of the Government.
I pay tribute to the occasions when the noble Lord the Minister has made concessions. As a result of amendments tabled by my noble friends and I and by those in other parts of your Lordships' House, the Bill has been improved by the Government either accepting the amendments or by tabling amendments of their own. On one occasion among other objects we were aiming at the involvement of the community and we wanted the authority to be open over publicity in regard to applications. The Bill has been improved by an amendment which we ventured to put down and which dealt with the particulars that would have to be publicised in regard to every application. The noble Lord the Minister quite rightly pointed to certain defects in our amendment, but he very properly, courteously and helpfully brought forward one of his own which is now incorporated in the Bill.
It would be selfish of me if I mentioned amendments for which other people were responsible which have been incorporated in this Bill, because it is for them to mention them. When we are leaving so much to another place to deal with I do not think that it is a very happy situation. This House, with its special expertise and its procedure, which does not have incorporated in it such dreadful instruments as
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guillotines, from the point of view of time has an opportunity of giving as much consideration as our legislation deserves.
As a relative newcomer to your Lordships' House, it always makes me unhappy when I think that when we were responsible for a Bill first—as we are with this Bill—we leave it in a state that many of us regard as unsatisfactory. Perhaps I may give but one example of that. I know that the British Copyright Council, which is a very worthy and respected body, tried very hard to point out the lack of clarity which there was in the Bill relating to copyright matters. This was discussed and amendments were tabled, but unfortunately we have been unable to deal with them, certainly in a way which would satisfy the British Copyright Council and those learned and experienced in copyright law. Another place will have to do that job; presumably we were not able to.
However, I conclude as I started by saying that this Bill, which deals with a very important matter for the public, leaves this place with your Lordships having given as much consideration as they can to the protection of the public, their morals, their ethics and their commercial well-being. I would be the last person in the world to blame the noble Lord the Minister for any defects that there may be which I have tried to point out. I thank him again for the unending courtesy which he has paid to my noble friends and me.
5.40 p.m.
Lord Winstanley: My Lords, on behalf of my noble friends on these Benches, I wish to join the noble Lord, Lord Mishcon, in the well-earned tribute he has paid to the noble Lord. Lord Elton. We would wish to support that tribute with all possible strength and sincerity. The noble Lord has been helpfulness itself at the various stages of the Bill. On these Benches we have supported this Bill, and not because we are desperately enamoured of the prospect of further entertainment channels on television, but because we have believed in the benefits which could flow to the community as a whole from the ultimate establishment of a cable communications network in our society.
Indeed we have some doubts as to the viability of cable. Bearing in mind that cable is being brought in on the back of an entertainment service with the ultimate aim of establishing a communication service whereby we could have interactive services, we wondered whether it was right to require the broadcasters, which is what they are, to be responsible for the costs of the whole infrastructure of something which is really for the public benefit. We should perhaps have liked to see that spread in another way, but so he it. it is being done in this way. Whether it will be successful we shall have to wait and see, bearing in mind that it will be seven or eight years before the investors get any return on their capital, and bearing in mind that the capital required for this venture will be very substantial. In addition, we now have to consider the possible impact of DBS—direct broadcasting by satellite—on the cable companies, which could be profound. But we have supported this all the way through because of the future value we see in interactive services.

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At this point I should like to return to a matter I raised on an amendment moved by the noble Lord, Lord Howard of Henderskelfe, at an earlier stage of the Bill, to which the noble Lord, Lord Elton, replied. At the time he said that he could not answer the particular point I had made, but that he would be willing to consider carefully anything else which I said about it to him afterwards. Accordingly I wrote to him in some detail on this subject on 8th March. I hope that, before we finally say goodbye to this Bill, the noble Lord will say something to me on this particular point.
The point I raised was that it was always understood, and it was implied, that the cable operator would be licensed to provide for entertainment and interactive programming exclusively in its franchise area. Providing the appropriate technology to accomplish this—that is, the provision of the cabling for interactive services as well as broadcasting services—required an incremental investment of some £10 million to £15 million over and above that required for the provision of simple entertainment services. When I raised this matter on the earlier amendment. it was said that there was now some doubt as to whether the franchise holder was in fact the holder of a licence for the future interactive services—and it is for that that much of their investment is being made—and the noble Lord at one stage in the debates on that amendment said that the interactive services were not licensable.
What does that mean? Does it mean that anybody can mount interactive services without a licence? Or does it mean that the franchise holders, when they have been awarded a licence for broadcasting services, may then find that somebody else is later given a licence to mount the interactive services for which they have already made a substantial investment? Or, indeed, what does it mean? It seems to me that, if we include it within the definition of licensable services, interactive services, with the exception of simple teletext services and interactive services designed solely for business use, we could deal with this problem.
There is some uncertainty about this particular matter. He was uncertain when I raised it before, when he said that the interactive services were not licensable. Could we now know where we are? Are the franchise holders receiving proper protection if they make this investment which they are now required to make in order to co-operate with, and further, the Government's information technology strategy, which is what this is all about? If they make that investment so that they can later mount interactive services, are they then going to find later that there is an obstacle to them so doing, or that a licence to do that is going to be given to somebody else altogether? I doubt whether it is the Government's intention that that should happen.
The White Paper underscored, as did the selection process for successful franchise applicants, the vital importance of the cable systems having the capacity to provide data and interactive services. But, as the noble Lord said, these are not licensable. They are not at the moment licensable. Are they going to be? To whom are the licences going to be awarded? Before we say goodbye to this Bill I hope that the noble Lord will be
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able to answer that point and perhaps be able to assure us that it is a matter which will be looked at in another place, or that he can assure us that the point is adequately dealt with in the Telecommunications Bill, although I do not think it is. I should like to hear something about it.
I should like to join in the thanks which have been given to noble Lords on the Front Bench for the manner in which they have co-operated with other noble Lords in getting improvements made to this Bill. The Bill is much improved from the form in which it originally reached your Lordships' House. Again I should like to say how grateful we are on these Benches to the noble Lord, Lord Elton, for his courtesy and helpfulness and his ability to listen, which is something we find very welcome indeed.
Lord Mottistone: My Lords, I too should like to thank my noble friend for the courtesy with which he has handled our various amendments and the way in which he has endeavoured to meet us when he can, and in particular for Amendment No. 10 that we considered today. He has reminded us of the unicorn in seeking a conclusion. There is one point about that. The unicorn was only eventually revealed because we had two stabs at the Data Protection Bill. I would not suggest that every time we want to solve a very knotty problem we should have a general election in order to make sure that it happens.
The noble Lord, Lord Mishcon—and I mean this with great seriousness, and it applied equally to the Data Protection Bill—suggested that we have a special committee to take expert advice from outside in this House, where we have, if you like, a somewhat more relaxed approach and a more general view about matters of technicalities than is perhaps the case in another place. We might with good purpose consider that more deeply. We are getting these Bills which are, in a sense, technically more than many of us can handle, and it would be helpful if we could have some sort of stage when all of us together can get advice from experts. Some of us get advice from some experts, and when we present it to the House we cannot be perfect in how we do it and we are always suspected by noble Lords opposite of being insidiously political, and we suspect them of the same thing. In some cases this is not so. For what you might call technical Bills dealing with new frontiers it would be a new procedure which might be worthy of consideration by your Lordships as a whole. I just back up what the noble Lord, Lord Mishcon, had to say.
Lord Mishcon: My Lords, the noble Lord, Lord Mottistone, is so kind to give way. I only want to make it clear that that was a personal observation. I have no authority to make it on behalf of my Front Bench.
Lord Mottistone: I am sure, my Lords, but I, speaking from the Back-Benches, can say what I think in this sort of respect. I hope that this Bill, which is much improved, will receive a fair run in another place, and that it will not be long before it reaches the statute book.
Lady Saltoun: My Lords, I too should like to pay a final tribute to the noble Lord for his unfailing

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helpfulness, courtesy and patience with amendments to this Bill. I shall not try that patience any further—on this occasion!
Lord Ardwick: My Lords, at the beginning of the Committee stage of this Bill I regretted that we were legislating in the dark, that we knew little of the concrete intentions of the would-be cable operators, and that it was a pity that the Government were reluctant to pass on to us such knowledge as they must have gained about their intentions from the 11 pioneers who had been, or were being, granted preliminary licences. The noble Lord, Lord Elton, who has shown us so much help and courtesy during the course of this Bill, nevertheless began by gently rebuking me for starting the Committee stage with Second Reading observations; but I do not think those observations fitted into that category. I was concerned that we were about to examine clauses and amendments about something which did not yet exist and could not be visualised with any accuracy. Even now we do not have an estimate of how many companies, in how many areas, would be offering how many channels in five or ten years' time. We do not know how many of those channels will be devoted to traditional broadcast entertainment and how many to new forms of communication. Will cable really give us local television and access television? Will there be sufficient revenue to encourage the programme providers to create new and original material? I have grave doubts whether that is imminent.
It is not only we, the legislators, who are operating in the dark, or, at best, in the twilight: I suspect that the Government and the investors, too, or the potential investors, are full of doubts and uncertainties about the future of cable. Nobody can be sure what the public response will be against a background of four broadcast television programmes which, by world standards, must be judged as excellent, plus the rich resources of video. Will a sufficient number of people feel the need for still more home entertainment which they are willing to pay for and to go on paying for? That is the reality.
It is the inability to answer these questions which, to me, made some of the arguments during the course of the Bill rather theoretical. When we were discussing, for example, the minimum standards which cable television should maintain or the proportion of British to EEC material which should be used, we had to assume that cable will become a large, mature and thriving industry. That was the only practical assumption that we could make. Yet one had the sense all the time that the Government had a fear of overloading the industry in its early years of struggle to attract a fee-paying audience of sufficient size. It was considerations of this kind, not of a traditional party character, which divided Government and Opposition. However, the Government have made some generous compromises, and the other place will start off with a better Bill as a result of our amending efforts and of the Government's own second thoughts.
One conspicuous weakness remains. It is the unnecessary ignorance that we have of the size and composition of the Cable Authority. I can understand the Government's reluctance. They see the danger of
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the Cable Authority appearing to be a close parallel to the IBA. That is dangerous at this stage because the IBA plays a strongly positive role in encouraging programme companies to aim at excellence, even though excellence is usually costly and diminishes the profits of the company which practises it. That kind of directed aim is proper to a mature and profitable industry, but one can see the Government's fears of applying it to a new struggling industry which has to attract what may really be risk capital. So the Government have set out to make a sharp, clear distinction between broadcasting and cable television, even to the point of wanting to avoid the complaint machinery set up to judge the BBC and the ITV. Nevertheless, I hope that when we see the Bill again we shall have learned more about the authority, because the authority is a body which will require not only expert knowledge of several subjects but a good deal of wisdom, too.
The Bill is better than the one we received, but it is capable of further improvement, which I am sure it will receive elsewhere.
The Lord Bishop of Wakefield: My Lords, I speak very briefly and apologise for speaking so late in the debate at this stage. I should also like to add my word of gratitude and appreciation to the noble Lord. Many of us in many parts of the House have been concerned over the last 18 months, as this Bill has developed, that the invention and development of cable television should not be at the expense of the public service broadcasting and the standards of public service broadcasting which we in this country uniquely enjoy. Therefore, over and over again, we have heard speeches expressing concern about standards, about the desire to ensure that as many people as possible from the British television industry have opportunities to work in cable and to create programmes, about handling complaints and so on. We are grateful to the Government for the concessions they have made and for the way they have met some of these anxieties.
Like all your Lordships, I should like to express my gratitude to the noble Lord the Minister for the way he has helped us in the debate. He has lived with this matter now for 18 months, and we have all admired the grasp that he has of the Bill, the lucidity with which he interprets it and the care with which he has responded to all our debates. I should like to thank him warmly for his care and courtesy, and for the way in which he has listened to us as we have been trying to contribute to the debate; and I should like to congratulate him on the great achievement he has made in the whole process.
5.57 p.m.
Lord Elton: My Lords, your Lordships have been more kind than I could suspect or hope for in the remarks that you have made. We have here a piece of legislation dealing with the future which we can, as the noble Lord, Lord Winstanley, has said, see only darkly. We are seeking in that future to protect the standards to which the right reverend Prelate properly directs our attention. Like the noble Lord, Lord Mishcon, I have no authority to comment on the ideas espoused by him personally, and by my noble friend Lord Mottistone, for a special committee. However, I

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know that the Whip on duty was paying close attention to the remarks and that the remarks of neither will go unheeded.
The noble Lord, Lord Winstanley, asked me one direct question. He will forgive me if I forbear to answer it on the record for the simple reasons that he wrote his letter on 8th March and, I think with commendable promptitude, we replied on 9th. He has not actually received it, but doubtless it will be sitting on his doormat when he gets home or wherever it should be.
Lord Winstanley: Will I like it, my Lords?
Lord Elton: There is no accounting for taste, my Lords,
The noble Lord, Lord Mishcon, has mentioned some of the changes that the Government have not made to the Bill. I should mention briefly some of the ways in which they have changed it. We have given a licensee the right to make representations before the authority varies the licence and, in another place, we shall bring forward an amendment to make it clear that once a particular licence is issued the authority cannot vary its length without the licensee's consent. We have put the authority under a specific duty to make certain details of licence applications public so as to facilitate the local consultation process. We have responded to your Lordships' wishes by requiring the authority to have regard to the special needs of the deaf and the interests of the local voluntary organisations.
The Bill is now clearer on the question of recordings which the Cable Authority will be able to ask the operators to produce and I am glad we have been able to go some way towards meeting the anxieties which my noble friend Lord Glanusk expressed on Second Reading. I believe we have improved the drafting of the two key clauses which deal with the must-carry rule and protected and listed events. More remains to be done and I assure your Lordships that this is not the last that you will see of this Bill. There have inevitably been some points which we have not had time to get right, but where we have given undertakings we shall honour them in another place.
We shall give effect to the clearly expressed views of your Lordships and may I remind the noble Lord, Lord Ardwick, that the Broadcasting Complaints Commission should be responsible for complaints relating to unjust and unfair treatment or unwanted infringement of privacy in cable programmes. We shall give the Cable Authority a duty to guard against accumulations of interests, which the noble Lord, Lord Mishcon, is properly concerned with, in separate cable companies which could lead to results adverse to the public interest. We shall introduce new provisions to guard against the dishonest reception of cable and DBS services. They do not look as if they will be easy to get right, but I assure your Lordships that we shall come up with something. We shall also be considering carefully what further clarification might be given to the application of the Copyright Act to cable. The difficulty about that has been alluded to this afternoon.
It is a subject of extraordinary complexity, but we now have four pages of text and another two and a half pages of schedule in the Bill which must improve the existing provisions considerably.
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How much more we shall he able to do in the other place in this area in advance of the more general overhaul of copyright legislation remains to be seen. At this stage the best that I can say is that we are confident that we shall be able to deal with one or two of the more limited propositions which have been put to us, but less sure about those which raise rather broader issues.
The noble Lord, Lord Mishcon, wished that less might remain to be done. I agree with him. If on this occasion we were the revising House I would agree with a good deal more fervour, but we are not and we must have some confidence in the other place's ability to do the job which we have started. May I return thanks to the noble Lord, Lord Winstanley, for his support from time to time on the Bill? He made very clear our inability, as I say, to foretell the future and he was echoed in this by the noble Lord, Lord Ardwick, who very properly recognised the necessity of making cable pay if cable is to exist at all.
Your Lordships have been very kind and patient in your dealings with this Bill and I will not try your patience much further. I should like only to thank noble Lords who have taken an interest in the Bill for achieving a number of improvements to it and sending it away, on the whole, rather better than when it came here. I should like at this point to pay tribute to the hard work of all noble Lords—noble Lords on the Opposition Benches in particular but those on the Back-Benches around the House. I think that Ministers should recognise that while they are salaried and supported by an army of advisers, everybody else is unsalaried and unsupported. And the Bill is better for the work of these noble Lords as it is for that of the Government, and that is a service done to the country which ought to be recognised.
Not all of your Lordships who have been engaged in this work are here to see the completion of their task. I hope that they will have a chance to read my thanks to them in the columns of the Official Report, tinged faintly with jealousy, I should add, where they are read in sunnier climes. We must now possess ourselves in patience until we see what becomes of this measure in another place. Until we see that message, we must bid it farewell. My Lords, I hid it farewell with a word of gratitude. I cannot match the generosity, the excessive generosity, of the remarks that your Lordships have made about me but I do reciprocate them and it has been a pleasure, as they say, to work with your Lordships.
On Question, Bill passed, and sent to the Commons.

Tenants' Rights, Etc. (Scotland) Amendment Bill
6.2 p.m.
The Minister of State, Scottish Office (Lord Gray of Contin): My Lords, I beg to move that this Bill be read a second time. This Bill extends the rights of council tenants in Scotland. It increases the discounts available to tenants wishing to buy their own houses who have lived in public housing for more than 20 years. It makes further changes to the right to buy, and it introduces a right to repair for those tenants who continue renting.

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It is clear that the Government's policy on council house sales has been closely in tune with the wishes of Scottish tenants. Since 1979, more than 85,000 public sector tenants in Scotland have expressed an interest in buying their homes. Over 46,000 sales have been completed, and over 1.000 new applications are being received every month. In broad terms, we will shortly reach the stage where one in every 20 eligible tenants will have bought their homes. There are, however, some groups of tenants who merit more generous help towards buying their homes, and some areas of the existing legislation which have led to unnecessary difficulties. The present Bill deals with these matters as well as extending the rights of those who remain renting. With your Lordships' permission, I should like to turn now to consider its detailed provisions.
Clause 1 increases the maximum discount available when a tenant exercises his right to buy from 50 per cent. after 20 years' tenancy to a new ceiling of 60 per cent. after 30 or more years' tenancy. We believe that this change will be of particular benefit to older tenants wishing to buy, for whom the additional entitlement could be crucial to their decision. We believe that there are some 350,000 tenants in Scotland who stand to benefit from the extra discount. Secondly, Clause 1 reduces from three years to two the length of tenancy which qualities a tenant to exercise the right to buy, and in consequence adjusts the discount scale to start at 32 per cent. after two years rather than 33 per cent. after three years. This change will extend the right to buy to a further 30,000 tenants.
Finally, Clause 1 replaces local authorities' discretion to count time spent living in a house as a child of a tenant towards the qualifying period for the right to buy with a requirement to do so. Some authorities have made clear that because of their general opposition to the right to buy they have no intention of exercising this discretion, even in the most deserving cases. This is clearly contrary to the spirit in which your Lordships endorsed the earlier legislation, and it gives rise to very real inequities. We have concluded that it would be fairer to the tenants concerned to replace the present discretion by a requirement that in all cases councils must count time spent as child of a tenant.
Clause 2 is concerned with the tenancies which may be counted towards the right to buy and discount. Section 1(10) of the 1980 Act lists a number of Government bodies whose former tenants may count their tenancy towards their entitlement, including the armed forces, the Forestry Commission and the health boards. We have received a number of representations that periods spent as tenants of other Government bodies should also qualify, and Clause 2 extends the list to include the coastguard service, the lighthouse service, the United Kingdom Atomic Energy Authority, the Ministry of Defence and a state hospital. The clause also empowers my right honourable friend to add further bodies to the list by order should this prove desirable.
Clause 3 was introduced in response to representations in another place. It repeals the present restriction on submitting second applications to buy one's council house within 12 months of withdrawing
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an earlier application. This ban on re-applications was designed to deter frivolous applications. There is no corresponding ban under the English legislation, and this does not appear to have caused them any problems. We believe that the time has now come when the ban on re-applications in Scotland can be repealed. Taken with the transitional provisions in Clause 1, this means that tenants who stand to benefit from the changes in the Bill, and who, when the Bill takes effect, have not yet accepted an offer from their landlord to sell the house at a certain discount, or who have withdrawn their application in anticipation of the legislation, may submit a fresh application straightaway. Those who have submitted an application but not yet received an offer when the Bill takes effect will, of course, be entitled to an offer on the basis of the new arrangements.
Clauses 4 and 6 were introduced following representations made by the islands councils which received widespread support in another place. Islands councils, unlike the district councils, are both housing and education authorities, and teachers who rent houses from the islands councils therefore have the right to buy or to continue renting once their employment as a teacher has come to an end, even though their house is provided specifically for a teacher in a particular school.
This has caused problems in remote areas for the islands authorities; and Clause 4 empowers islands councils to apply to my right honourable friend for consent to refuse an application to buy if the house concerned is required by the council in connection with its functions as an education authority. Clause 6 deals with the related problem and provides that an islands council may apply to the sheriff court for recovery of possession of a teacher's house once his employment has ended. The islands council would, of course, need to satisfy the court that it required the house for the accommodation of another teacher and that suitable alternative accommodation had been offered to the present tenant.
I should now like to turn to our proposals for strengthening the rights of the many tenants who will continue to rent their homes. Clause 7 proposes a significant new addition to the rights which we introduced in 1980, which have become known as the tenants' charter. It enables my right honourable friend to introduce a scheme, to be detailed in regulations, giving public sector tenants a right to carry out repairs which would otherwise be the responsibility of their landlord, and to be reimbursed. Clause 5, which was introduced following representations in another place, extends the right to public sector tenants of tied housing who are excluded from security of tenure but who enjoy a number of the other rights of the tenants' charter. We believe that the introduction of the right to repair, which is a manifesto commitment, will help to alleviate the widespread dissatisfaction with local authority repair services and will give redress to those tenants who have to wait an inordinate length of time for even routine and relatively minor repairs.
My department has consulted a range of interested organisations about the detailed operation of the scheme, and there have also been very full discussions on these proposals in another place. As a result, many useful and constructive suggestions have been made

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for the working of the scheme, and the Government have already accepted some changes to the proposals. For example, the Bill has been amended in another place to provide that disputes arising under the right to repair scheme might be referred to independent arbitration, as an alternative to the sheriff court.
Most of the responses received on the department's consultation paper have related to matters such as the time limits and procedures to be observed under the scheme, the repairs which would be excluded from the scheme and the appropriate levels and methods of payment. We are still considering these comments, the last of which were only received last month, prior to drafting the necessary regulations. Indeed, your Lordships' own views will be an important stage in the process of reaching final decisions on the scope of the scheme. We have undertaken to make the regulations setting up the scheme available in draft in due course, and we will provide a further opportunity for interested organisations to comment before they are laid before Parliament.
This Bill makes a number of useful changes to the right to buy and the tenants' charter. I believe that these changes are in tune with the wishes of tenants in Scotland for greater freedom and choice in housing matters. There is considerable evidence that there is a much stronger preference for owner-occupation in Scotland than is reflected in the existing tenure pattern. The right to buy gives many people currently living in council houses what is probably their only practical chance to become home owners, and the majority of the provisions in this Bill are intended to improve and extend the application of that right. We are equally concerned, however, to extend the rights and freedom of tenants who do not wish to buy. For these tenants, the proposed new right to repair would be a significant and welcome addition to the provisions of the tenants' charter.
I commend this Bill to the House and trust that your Lordships will give it your support. I beg to move that this Bill be now read a second time.
Moved, That the Bill be now read a second time.—(Lord Gray of Contin.)
6.15 p.m.
Lord Carmichael of Kelvingrove: My Lords, this Bill is really a very small thing in relation to Scotland's housing needs: in fact, in Scotland the Government have such a poor record in housing that one could be forgiven for harbouring the thought that the highly controversial subject of council house sales was being specially introduced to divert attention from their failure in the whole field of house building. The Government keep stressing the importance they give to house ownership. I believe it is one of the great myths that this Government and the party opposite have been perpetrating on the people of Scotland for a long time. The figures are that in 1978–79, under a Labour Government, in the private sector in Scotland 16,600 houses were built. In 1979 there were 15.400 and in 1980, with the present Government in power, the figure had fallen to 9,700. That was after the promises made by the party opposite during the 1979 election.
There has been some improvement since then, but the figures for public and private house building in
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Scotland are still well below the figure inherited by the present Government from the Labour Government in 1979, and we thought that our figures then were very inadequate in many cases to meet Scotland's problems. Perhaps the cruellest blow of all, in terms of housing in the private sector, was the way in which the Government abruptly cut the improvement and repairs grants, leaving very many people not knowing where they stood and leaving many local authorities with real problems in terms of legal commitments to contractors and house owners.
In the area of Glasgow which I represented and where I still live, the great improvements to properties, largely because of the far-sightedness of the Labour Government and that of the Scottish Office under my noble friend Lord Ross of Marnock, meant that many families are able to live in the inner cities again; and had those improvements not been made, houses would certainly have been demolished. They were able to improve some of our oldest and what we now see as some of our best tenement property, which allows families to live in decent conditions. New roofs, new windows and guttering have given all those houses and flats a new lease of life and made decent homes for people to live in.
I am aware that we are not discussing improvement or repair grants on that scale today, and particularly in the second part of the Bill dealing with house repairs. But I believe that it is important to put this Bill into perspective and to point out that we as a party have always been conscious of the importance of housing, whether public or private. We have done a great deal in both sectors—much more, I would suggest, than the party represented by the noble Lord who introduced this debate. The increase in the rebate from 50 per cent. to 60 per cent. maximum may be seen by some people as another attempt to divert attention from the real problem of housing by dealing with what is undoubtedly a controversial matter, particularly in Scotland.
I should like to make it absolutely clear that we have never opposed the right of local authorities or public bodies to sell houses or other property that were surplus to requirements. The real objection we have always had in respect of the selling of council houses was that it was not the local authorities which were able to make a decision on the basis of the needs of their electors and citizens: the decision as to whether it was right or not to sell certain properties was taken away from them and given to individual tenants, without any thought of waiting-lists which the councils still had the problem of dealing with. The arguments have all been put so often that I am sure the Minister will be well briefed for his replies. But perhaps he will be good enough to bring up-to-date some of the figures which we have been given on the sale of council houses.
When the original decision was made to permit tenants to purchase houses at these high discounts, we on this side said that the best houses would be snapped up and that very few flats or even houses in the less desirable areas would be sold. We believed that the best of our houses were being removed from the rented sector, and that the opportunity of people to transfer out of less desirable areas would be greatly reduced. We have had very few figures from the Government to

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show whether or not that is true. We still suspect that it is true and that very few houses in less desirable areas have been bought by their tenants.
I know that the Scottish Office monitors all the facts about the sale of houses, and I wonder whether the Minister could write to me or could give me some answers tonight about some of the points which people in Scotland would like to know about. For example, I do not know—and I doubt whether anyone outside the Government knows—the precise details of how figures are kept. But I am sure that we could easily be told how many sales inquiries for houses and flats have been made in Scotland: how many flats and terraced houses have been sold; how many two in a block or semidetached houses have been sold; what is the breakdown between post-war and pre-war houses—because, by and large, pre-war houses were built on estates that are considered more desirable than the others—and what are the proportions, as well as how many system-built houses, both pre-war and post-war, have been sold.
These are important figures for us to know. I have never seen them published, but they would give us some measure as to whether our criticisms that the Government were doing great damage to the housing situation in Scotland were true. It would also be interesting to have the figures broken down into the 56 housing authorities in Scotland. I should also like to know—I did not see it in the report of the Committee stage in the other place—whether there is any estimate of the additional purchases that are likely to be made because of the increase in the discount from 50 to 60 per cent.
I was very interested to hear the explanation of the noble Lord, Lord Gray, of the next part of the Bill dealing with the tenants' rights of repair, particularly when he said that great attention was paid to this aspect during Committee stage in another place. I read the report of that Committee stage with great interest, as well as Circular 268 which was issued by the Scottish Development Department. I was very glad that we had a circular from the SDD which was truly and genuinely consultative.
But having read it, and having looked at the report of some of the proceedings in Committee in the other place, I was left with the strong feeling that the people who drew up Circular 268 were shouting "Help", because there is very little in the circular that gives us any assurance—I say this with sadness—that this scheme will really work. I do not blame those people and I think that they have tried very hard. They have tried to put together a scheme that was thought of by Ministers as a sensible, reasonable and genuine attempt to find a way to get modest repairs done quickly and inexpensively. But I am sure that the actual working out of any such scheme has been a bit of a nightmare.
The truth is that repairs in the rented sector, whether the property is owned by private or public landlords, have never been easily organised. I am sure that the Minister, with his experience of surgeries when he was in another place, knows that a very high proportion of the people who went to see him were concerned about the difficulty of getting repairs done in both public and private housing. The whole question of timely repairs
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is so important. Over many decades, the problem has been ignored by landlords—public and private, but mainly private—and, if they had been done at the proper time, much of the rehabilitation of which I spoke earlier would not have been necessary. Expensive repairs would not have been needed, if some of the basic repairs had been carried out when they should have been.
The Minister referred to the fact that there are already common law rights for the ordinary tenant to have his repairs carried out. He indicated that the Government are looking at some way of making an appeal rather than going to the sheriff, which is a recognition of the difficulties that there are for ordinary people in fighting any sort of bureaucracy. Despite having the right to have repairs done, they are frequently ignored and only the most tenacious and self-confident tenants, with the stamina, the money and the expertise, will pursue and, if necessary, prosecute their landlords, whether in the public or the private sector.
I am aware of the experiment in Havering. I do not know of any experiments of a like nature that are taking place in any other part of the country. Perhaps the Minister will be able to let us know about this scheme before the Committee stage, because I should certainly like to discuss with the people of Havering their experience of the repair system that is operating there. I understand that it is very much a curate's egg and good in parts, but I should like to find out what their experience has been. If the Minister knows of any other examples that I could follow up. I should be delighted to hear about them, because I believe that there is very little experience in this field.
I know that Shelter, Age Concern, the Scottish Consumers' Council and other groups have all expressed real fears and reservations about this Bill. I am sure that they will all be consulted again by the Minister and by the SDD before any final decisions are taken. Also, I hope that we in this House will be given an opportunity of discussing these reservations fairly exhaustively. Jobbing work in the building industry, which is the type of repair that we are talking about, is notoriously difficult to monitor. It is particularly difficult to see whether a job is done properly and at the correct time, but is the best insurance against heavy maintenance, and perhaps even the total loss of a property.
I do not believe that the scheme put forward in this Bill is a workable solution, and I would have been much happier if a scheme had been put forward by the Government which was totally separate from the whole question of the purchase of municipally and publicly owned housing. Housing repairs are a major problem and they should be dealt with on a cross-party basis. By tacking this on to a Bill about the purchase of houses, the Government have not done a service to the idea and to a very good intention.
The controversial question of selling houses which have been built at public expense has damaged what could have been at least part of the solution to housing repairs. At least it would have been a start. Something needs to be done about housing repairs in both sectors of housing. I hope that the Bill will bring that about, but I very much doubt whether it will. We shall put down amendments for the Committee stage. By then,

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because of what happened in another place, the Minister will have a great deal more information to give to the Committee. Therefore, I hope that by cooperation and consultation this part of the Bill will be improved and made to work, otherwise many houses in Scotland will be lost altogether. In order to save them we need to do something very soon.
6.31 p.m.
Lord Mackie of Benshie: My Lords, we on these Benches can back the idea of the ownership and sale of houses to tenants with perhaps more fervour than can those who sit on the Benches of the Labour Party. However, the Government have an extraordinary facility for upsetting those who are sympathetic to their ideas by producing extraordinary legislation. When we dealt with the Tenants' Rights, Etc. (Scotland) Bill, which we are now amending, all sorts of practical objections were raised not only by the Labour Party but by those in local authorities up and down the land who support the Government, but for extraordinarily doctrinaire reasons the Government paid no attention to them.
My party supported the Second Reading of this Bill in the other place in the hope that the Government would pay some attention to them. One or two good features were incorporated in the Bill during the Committee stage, and the three clauses which the Bill originally contained when it arrived in the other place have been expanded to seven. Nevertheless, despite the figure which the Minister gave to us, I do not understand why the bribe, the incentive to buy, has been increased to 60 per cent. Since the Minister is very delighted with the progress being made in Scotland, with 1,000 new applications being received every month, it is most extraordinary that the incentive has to be increased. It does not appear to me to be logical for the party of sensible business and hard thinking to adopt such a course. One wonders why the Government are doing it. I hope that the Minister will be able to assure us that the Government are not doing it to raise as much money as possible and then to spend it as ordinary income in order to keep down their contribution. I hope it does not mean that we are selling off capital assets at a cheaper and cheaper rate in order to support current expenditure. However, that is what this kind of action appears to be.
If the Government are serious about the provision of houses, the money they receive should go towards supporting a capital account—which the Government should support even further—in order to build new houses for sale to tenants on a co-operative basis. The Government cannot say that the sole objective is to sell houses. I am in favour of people owning their own homes. They look after them far better, because of the pride of ownership. Ownership is excellent. However, the other factors appear to have been totally ignored by the Government. One has only to look at the building industry to see the enormous amount of unemployment which exists. Nearly half a million construction workers are unemployed in Great Britain. They are each being supported at a cost of well over 100 a week. Scottish firms are working at 70 per cent., and under, of their capacity. In view of the need to revive the economy in a sensible way, the Government ought to be allying their sale of houses to
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the provision of capital to increase the stock of houses for private sale, if necessary, and councils ought to be encouraged to provide houses for those on the appallingly long housing lists which still exist in Scotland. Very little in the Bill will achieve that result.
The Bill contains one or two sensible features. One clause will allow the islands, in particular the Orkney and Shetland region, to apply to the Secretary of State for permission not to sell tied housing to teachers. It is extraordinary that this power cannot be granted to the islands councils. It is being dealt with the wrong way round. The Government are going the right way about making local councils far less responsible than the councils at which they are now aiming. The Orkney and Shetland Islands are not the only places where teachers are provided with council housing. They may not necessarily be provided with their accommodation by the local authority, but there are plenty of places where this happens.
There are many other factors of rural life for which the Bill makes no provision. An example is the provision of retirement houses for farm workers. The tied house system, in my experience, and probably in the experience of many other people who might oppose it in principle, works very well in practice if there is a retirement house for the agricultural worker to go to when he retires. In Angus and a number of other counties, such provision has been made and it is of immense value to the community. If a farm worker has provided his own accommodation—which is what he has been doing by means of his service—for 40 years at no cost to the community, he deserves to have a retirement house in his own area to which he may go.
The Government have made it very difficult for councils to retain the small houses which they have built for retirement. They cannot be bought by the people who live in them. If they are sold, they are nearly always bought by the family because they know that it is a good investment. However, it is not a right which the people who live in those houses particularly want, nor is it one that they can really take advantage of; and it is of considerable embarrassment to the local councils.
I am glad that the Government have recognised in the Bill that Orkney is a special case. If, however, they look around the countryside of Scotland they will see that there are many other special cases. It is a great pity that the Bill does not contain a number of other clauses—though I hope we may be able to add them during the Committee stage—which would benefit the rural community and do a great deal of good for the people of this country.
Turning to repairs, we all know of councils whose record is quite appalling. No council's record is very good, particularly those of the large councils. We know of many instances where people can wait for repairs until they die without those repairs being carried out. We know also that repairs cost a great deal of money in many cases. But when the Government are framing the regulations they will need to pay attention to the difficulties which may arise. Quite competent people looking at this clause have said that it might end up creating bigger delays in repairs and much more paperwork and expense than a much simpler system of forcing councils to pay more attention to this matter might do. We will await the regulations when they

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come before Parliament, but I was particularly pleased to hear the Minister say that there was to be time for a great deal of consultation all round the place with people who know. I see from the Minister's nodding that he does confirm that.
I will say little more. This is not one of the great, stirring Bills. Your Lordships are not present here in large numbers and I dare say that a great deal more interest has been roused by what has been going on in another place today than by this Bill. But this Bill is important to a lot of people in Scotland and we shall have to work hard in Committee to improve it still further.
6.41 p.m.
Lord Wilson of Langside: My Lords, as my noble friend Lord Mackie of Benshie, has said, this Bill, albeit simple, is of some importance to the people of Scotland. I would express the hope—and if I were a praying man, I would pray—that the Minister and the Government will give the fullest and most careful consideration to what my noble friend said, particularly in the opening part of his speech, which surely went to the crux of the Scottish housing problem.
The noble Lord, Lord Carmichael of Kelvingrove, dwelt on this point also in his opening remarks. He asked some very pertinent, sensible and useful questions—which I hope the Minister will be able to answer. But listening to the noble Lord's opening remarks, it seemed that he was tending to paint a picture of only the Labour Party being truly concerned with the Scottish housing problem, glossing over the circumstance that perhaps the Labour Party have had their fair share, in both national and local government, of dealing with that problem. They must accordingly share the blame with other governments who have not dealt with the problem as radically and effectively as they should have done. This little Bill comes to us from another place at least better than when it first went there. We shall wish to consider a number of matters in Committee which will further improve the Bill.
The noble Lord, Lord Carmichael of Kelvingrove, said that his party had never opposed the sale of houses. He was referring to the provisions in the 1980 Act which preceded this Bill. I am not sure that this is a crucial matter which we need to dwell upon at any length. It has been argued over by the dogmatists of both parties, and perhaps of all parties, ad nauseam and I do not wish to add to that. But there is some evidence of Labour councils—and I live in the district of one of them—dragging their feet over this matter. If this evidence is well-founded, I wonder whether the Government have applied their minds to putting the matter right; to putting right the anxiety that some of the dogmatists in local government—particularly in Scotland—aim to frustrate, in this context, the will of Parliament. I wonder whether the Minister and the Government have given any thought to corrective action that might be taken in this area.
This is the kind of Bill upon which it is immensely difficult to make a Second Reading speech and I am sure that everything that can be said has been said. I would give a reserved welcome to the Bill. Certainly the noble Lord, Lord Gray of Contin, in introducing
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this Bill, made the best of it—as he always does. Much of what is in the Bill is welcome and no doubt, after your Lordships have considered the Bill in Committee, it will be in even better shape.
6.46 p.m.
The Earl of Selkirk: My Lords, I welcome this Bill for two reasons. First, it is infinitely better drafted than the English Bill; one can read it very nearly with pleasure, which one certainly cannot do with the English Bill. Secondly, one of the gravest weaknesses in Scotland is the very low percentage of owner-occupation. It must be one of the lowest percentages in Western civilised countries. The general feeling in this country is that something of the order of 80 per cent. to 90 per cent. of the population want to own their houses. In Scotland, the figure today is something in the region of 38 per cent. or 40 per cent.—which is not very much more than half the level existing in England at the present time.
This Bill will be a great step forward and I hope it will be taken advantage of to the full. The noble Lord, Lord Carmichael of Kelvingrove, said that the position is very serious in Scotland. We must think of this: for half a century, Parliament, on all sides, has sought earnestly to improve housing conditions. It is sad that it has not been more successful. This is not a party matter. I believe that almost all of us have the same picture of what we want to see in housing, but no doubt we want to apply different methods. I must say that the results today are unsatisfactory. This is a small but important measure which I believe will be of value and I hope it will be extensively used. The figures which my noble friend has given are encouraging.
I was interested in the special position of educational housing. Is my noble friend sure that education is the only type of occupational housing which may cause difficulties? There are many other types, such as those for coastguards and lighthouse keepers. Incidentally, a much wider range of people comes within the scope of this Bill: for example, the Atomic Energy Authority and defence—which are not, I think, in the English Bill—and certainly I do not remember coastguards or lighthouse keepers being in the English Bill. That is an admirable thing. I want to ask my noble friend, how does Trinity House come into all this? I was not aware that Trinity House had any property in Scotland; I am only interested to know.
Finally, may we please have an assurance that this Bill with the 1980 Bill be consolidated at an early date? It is not good practice to have two Bills affecting land tenure within four years of each other. That is not fair on those who have to make developments. Can my noble friend the Minister give some assurance that he is thinking benevolently about trying to get this Bill consolidated as early as possible?
6.49 p.m.
Lord Ross of Marnock: My Lords, I think that we are grateful to the noble Lord the Minister for having given us the benefit of his wisdom in respect of the Bill and told us what it contains. It is true that when it first saw the light of day it effectively had only two clauses and an introduction clause, Clause 3. It now has nine clauses, so let us congratulate the Government on their fertility in spawning legislation.

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Even at Second Reading we were told about a very important forthcoming amendment. At Second Reading we were told about one of the new rights, but the Minister did not go too far on this. I think that about the only thing the noble Lord, Lord Mackie of Benshie, welcomed were the new clauses relating to education. He gave a very gloomy speech for an enthusiastic supporter of the Government's right to buy. He touched on many of the things which we dealt with in the 1980 Act and which the Government would not listen to. I am surprised at even his memory of enthusiasm at that time. It should have been damped by now.
The most important thing right away is the fact that the Government have decided to extend the discount from 50 to 60 per cent. The upper limit was 20 years' occupation and the discount was 50 per cent; now it will be 30 years and over and up to 60 per cent. We are talking about a considerable sum of money. We should remember that these are not the Government's but local authorities' assets. On the simple matter of discretion, which the noble Lord, Lord Mackie of Benshie, wanted, it is a denial of discretion to local government when authorities are told that they must sell off their assets if somebody who qualifies wants to buy them.
I believe that there has been a great rush in Scotland to buy houses. I think the number is about 40,000 out of 1 million. That was the figure quoted by the Secretary of State at Second Reading. He says that with the extension in the Bill 350,000 will now be able to buy. I should like what I am about to say to be confirmed by the Government. We have had very few statistics as to how the proposal will work out. Forty-one per cent. of those who have bought their houses have done so at the upper limit—20 years or more. Many people who would have been entitled to the extension in the Bill have already bought their houses. If only they had waited, they would have had another bonus.
I do not know the reason for or the logic behind this legislation, unless the Government merely want to get rid of the burden of supporting local authority housing through the housing support grant. If we look at the figures, we find that Government support for housing has been decimated. It is just not the case that local authorities will be able to build on the basis of what they will get from this. They are not building and the Government are refusing the capital to build. The story that my noble friend Lord Carmichael of Kelvingrove told about the Government's attitude to housing is true. It never was worse. Over 155,000 people in Scotland are waiting for housing. They cannot get it. There are no new houses because so few are being built. That is the local authority side of the problem. My noble friend Lord Carmichael also spoke about the inadequacy of private building. I do not think that today's news will help in any way over modernisation if it is to become more costly.
Let us look at this business. The legislation makes two changes. What a change of heart for the Conservatives! This may have happened when the noble Lord was in another place. I remember what two noble Lords said. One of them has now departed this world. In those days council tenants were shiftless. The one who is still with us described them as second-class
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citizens. I remember how they used to photograph their cars and say their rents were far too low.
Why is the Secretary of State doing this? Why is he giving them the benefit of this 60 per cent.? The words that he used are interesting. He said that the change would be:
"of particular benefit to older tenants wishing to buy"—
the Minister also said that—
"and recognises the additional years that they have been contributing"—
at one time they were sponging but now they are contributing—
"through rents, to the maintenance of their homes".—[Official Report, Commons, 25/10/83; col. 183.]
The Government recognise that after all these years: for 30 years these tenants have been supporting housing. That is not what the Conservatives have been saying for the past 50 years. They are doing this because it suits them.
I admit that people are getting benefit. What has been happening though? What was the average cost of a house in Scotland? I think that I have the figures here. They were worked out by the Scottish Consumer Council and not by the Government. The average selling price was £15,227. The average discount was 45 per cent., so in other words the price was £8,375. That is almost £7,000 given away. Under this legislation anyone buying will get an extra £1,500. What is the justification for that, unless it is just a mad scramble to up the number of those who own their own houses?
The noble Earl, Lord Selkirk, deplored the lack of owner-occupation in Scotland, but the whole thing is historical. There was a mobile population. Scots people went about looking for work. The Scots moved from one place to another. They moved to England and back to Scotland. No one took exception to the fact that there were houses available for them to rent. Many a good Scottish laird lived long enough off the rents that he got for tenement property in Glasgow until we decided, through legislation, that they were unfit for human occupation. Governments were left with this legacy of poor housing in Scotland, which is one of the worst situations in Europe. It was not the local authorities which put up the slums or made money from them. It was the people supported by noble Lords opposite. The cry was mobility of labour. When owner-occupation became the thing between the wars, what was happening in Scotland? There was unemployment. People who are unemployed do not buy houses. I remember in the town in which I live that many a person got a house on a council estate (and was proud of it) because the person already there could not pay the rent. There is a whole history to the Scottish attitude to housing. This is why I deplore what the Government are doing.
We are to have the 60 per cent. because it was introduced in England. We have the sudden change in the reduction of the qualifying period from three to two years because that was done in England. There is no independent thought. Do not tell us about manifestos. If anyone should know that the Tory Party manifesto in Scotland was discarded, it is the noble Lord the Minister. Had people liked that manifesto, he might still be in another place.
Lord Gray of Contin: My Lords, in Ross and Cromarty they did not like that of the party of the noble Lord either!
Lord Ross of Marnock: My Lords, I can assure the noble Lord that the fact that we have 42 Members in the other place and the Government have only 21 means that they are in a permanent minority in Scotland, and will remain so. But let us get back to this matter. What justification is there for someone moving into a house, paying rent for two years and then being eligible for a discount of 32 per cent.? Is there any businessman on the other side of the House who can justify that? You get into a house, you pay the rent for two years and then you are entitled to a 32 per cent. discount on the value of that house if you purchase it. This is a give-away, an absolute give-away.
I am not going to claim to be able to justify this or support it; but we do not vote against such Bills on Second Reading in this House. It is a great pity we do not, because the generosity of this Government in respect of public property—be it Hamilton College or be it somebody else's property, council property—is really astounding from the point of view of people who claim to be businessmen.
I am not going to speak very long on the repair side. My noble friend has said more or less what I should have liked to say. I should like people to have the right to have repairs done. Some local authorities are good, some are bad. I can tell your Lordships of some private landlords who are good and some who are bad. I wish we could apply this to private tenanted property as well, but I suppose that will come later, this great right to buy and right to repair.
I noticed that the noble Earl, Lord Selkirk, was delighted about this Bill, and the way it was written. What comfort can we take from these words:
"The Secretary of State may"—
and no doubt the noble Earl, Lord Selkirk, will change this when we come to Committee, because, if they really mean it, it is "he 'shall' do it"—
"by regulations make a scheme entitling a tenant,"
and so on. We are not going to see it; we do not know it. They have put out a circular at the moment and are asking for comments. They do not yet know what they are going to do. I have heard various suggestions: that the repairs are not to be minor repairs; that they are to cost at least £20, and the upper limit is going to be £200.
May I again remind the noble Earl, Lord Selkirk, that this has nothing to do with the major things that may be required, and many of these houses will need structural repairs. How much will it take to repair a house in, say, the Gorbals, for which there is this pervasive, insoluble problem of dampness? Is that going to be dealt with under this provision? Of course it is not. So let us not kid people about what is going to be done here, and let us not kid people about how easy it is gong to be. If you are going to employ somebody to do a thing, you have got to be covered by insurance for that person doing it.
Furthermore, the local authority must be assured that what is being done is right in respect of them, because thereafter they have got to bear the
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responsibility for it. No private landlord will accept repairs simply because they have been done. If he did not do them, if he did not authorise them, he will not accept liability for what happens thereafter. When you take into account the delays, the notices, the counter-notices, the number of days given for this, the number of days given for that, bureaucracy will run riot over this thing.
What about the old lady who wants something done to her house that may cost £25,000 or £30,000? The suggestion has been made in the Bill that eventually she will go to the sheriff. There is no old lady living in a local authority house who will go to the sheriff over this or anything else if she can help it; and yet she has to spend the money before she is reimbursed.
I hope the Members who receive the Age Concern (Scotland) leaflet will be assured about this one, because they think that the majority of old people in receipt of housing benefit will not be able to afford to carry out a repair and then wait for the landlord to reimburse them. So we are talking now about a repair benefit to a minority of people. Do not discount the number of old people who are in local authority housing. There are 264,000 pensioners in Scotland who live alone, the majority on housing benefit, and the majority of them live in local authority houses. Do not talk about these people buying their own homes and weaving their way through all the regulations, which even we have not seen yet.
The noble Lord did say he was going to produce them. Is he going to produce them before we have finished? I have not seen them; no one has sent me this particular paper. I believe it is in the Library, where I will get a copy; but this is not the final paper. So do not let the noble Lord under-estimate the difficulties. We all want the repairs done, and we want them to be done speedily; but the local authority should be given the money to do them. That is what is holding them back in many cases just now.
This is a Bill of very limited ambitions, and will not achieve what the Government suggest. They say that 350,000 people will benefit. They will only benefit if they can use the right. Many of them will not want to use the right, many of them will not be able to use the right; so please do not give us this maximising of figures that do not mean a thing in this respect.
I am delighted that we are going to have the noble Lord, Lord Mackie of Benshie, and the noble and learned Lord, Lord Wilson of Langside, at the Committee stage with amendments to this Bill. I certainly look very kindly and carefully towards them in view of the kind of things they have said. The same goes, too, in respect of the noble Earl, Lord Selkirk. I am perfectly sure he will, as he has done before, try and make this Bill a little more readily understandable; but let him look again at Clause 7 with these regulations. The intention is there, but it has got to be translated into regulations, which we have not seen—and when we see them I bet most of the old-age pensioners in Scotland, for whose benefit this is going to be done, will not be able to understand a word.
7.5 p.m.
Lord Gray of Contin: My Lords, we have had a useful if short, debate, giving this Bill a welcome to this House—if not on all sides, a welcome for what it

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contains. But I have no doubt that by the time we have gone through our usual processes we will, as always, have discussed the Bill in detail and perhaps we may all be a little better disposed towards it.
May I first of all deal with some of the particular points which were raised by the noble Lord, Lord Carmichael, when he opened for the official Opposition? Lord Carmichael asked me about an estimate of additional sales as a result of the increase in discount. Perhaps I could say to him that our estimate is that, with the discount being increased from 50 to 60 per cent., between 350,000 and 400,000 local authority tenants will have the opportunity of perhaps benefiting in that way. I would perhaps elaborate a little more on that. He also asked me how many of these tenants will be encouraged to buy by the increased discount. Of course, it is speculative, obviously, but we think the additional figure might be around perhaps 4,000, subject to considerable variations. But there is little doubt that the number which I originally quoted, between 350,000 and 400.000, is the number of those who conceivably could benefit.
Lord Ross of Marnock: My Lords, could the Minister expand on that? He says now getting away from the 350,000 and is coming down to something like 4,000. Is that 4,000 annually or over a period?
Lord Gray of Contin: No, my Lords; it is 4,000 over a period, not 4,000 annually. I gave a number of figures in my opening remarks which dealt with the number of houses which have been sold, the number of transactions which had taken place. The noble Lord, Lord Ross, referred to 40,000. In fact, the figure is 46,000 at the present moment, and there are a great many inquiries, at the rate of about 1,000 a month, which is interesting.
The noble Lord, Lord Carmichael, also asked me about figures on sales. My department published a statistical bulletin in February this year giving details of sales completed, including size, type of dwelling sold, year of construction and the age of the houses sold, the average selling price, the average discount and the source of finance. I shall ensure that a copy of this bulletin is made available to the noble Lord, and also to the noble Lord, Lord Ross of Marnock, and to the noble Lord, Lord Mackie of Benshie.
The noble Lord, Lord Carmichael, also suggested that it was the best houses which were being sold. The situation is that, perhaps not surprisingly, the majority of sales have been of semi-detached and terraced houses with gardens, and that sales have tended to be higher in the more popular areas. This is as one might expect. But under local authority allocation policies it tends to be the older tenants who are probably at the peak of their earning powers and most interested in buying who qualify for the more desirable houses. However, sales are taking place across the board and across the middle range of the housing stock. Indeed, the initiatives that have taken place in Glasgow and Edinburgh have shown that even when the most unpopular houses (for example, multi-storey flats) are offered, it is not right to assume that no tenant will be interested in purchasing. Such houses can attract strong interest from people who wish to buy.
Lord Carmichael of Kelvingrove: My Lords, I wonder whether the noble Lord can give me some idea of how the sales in the rural areas compare with those in the urban areas? I understand that for perhaps obvious reasons the sales are very much higher in the rural areas—maybe even double. Can the noble Lord confirm whether that is the case?
Lord Gray of Contin: My Lords, as the noble Lord will appreciate, I do not have the exact figures before me, but I shall certainly endeavour to make them available to him. As one might expect, in the rural areas generally there is perhaps a greater desire to own one's home than there has so far been in the cities. This is a policy which we initiated and which is now catching on very well. People are seeing the benefits of home ownership and I believe that as time goes on we shall find that in the cities of Scotland more and more people will wish to own their own homes. Certainly it is our intention to give them every encouragement.
The noble Lord also asked about cuts in improvement grants. Here I would make the point that we have set aside £160 million for local authorities to spend next year under their Block B allocation, which is largely devoted to improvement and repairs grants. Glasgow will receive about half of that sum. We have ensured that authorities will have cover for commitments which they had entered into before we announced that the present arrangements would come to an end. We have always made it absolutely clear that the present arrangements were temporary. They have indeed made a significant contribution to the improvement of the private sector stock. I would remind the noble Lord, Lord Carmichael, that next year's figure of £160 million compares with expenditure of £39 million in 1978–79 and £51 million in 1979–80. So I do not think that he is on particularly strong ground when he criticises the present Government's performance regarding improvement grants. The Government have a very proud record on improvement grants, and very many properties have been improved as a result. I give way to the noble Lord.
Lord Mackie of Benshie: My Lords, will the noble Lord tell us whether or not the figures that he has given are adjusted to take account of inflation?
Lord Gray of Contin: No, my Lords, they are the actual figures of what is spent. But notwithstanding the inflation which has taken place, I think that the money which has been spent this year is very substantially ahead of inflation-adjusted figures.
The noble Lord, Lord Mackie, asked me what was the case for increasing discount to 60 per cent.; and the noble Lord, Lord Ross of Marnock, also raised this question with me. We took the view that the present discount did not adequately recognise the position of people who had more than 20 years' tenancy. They have been contributing to their homes through rents for many years and for them the extra discount could be crucial to their decision to buy. That was the reason why we decided to offer the additional incentive to those with the extra years of tenancy.
The noble Lord also asked me about sales of council houses to reduce current expenditure. The sale of

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council houses is releasing resources which may be used for capital programmes, in the form of either new building (where the requirements are largely to meet special need) or modernisation and sustenance of the stock. I can assure the noble Lord that the resources are not applied to support revenue expenditure.
There is one further query which the noble Lord, Lord Carmichael, raised with me which I think I should answer. It concerned the financial effect for local authorities of changes in discount. In broad terms we expect any reduction in receipts because of the extra discount to be offset by additional receipts from sales which would not otherwise have taken place.
The noble and learned Lord, Lord Wilson of Langside, raised the question of councils dragging their feet over sales. The position on this is that the Scottish Development Department monitors the situation as it affects different local authorities, and it wrote to local authorities which were failing to make offers within two months of inquiries or failing to complete sales within 12 months of inquiries. As a result of the action which the department has taken, most authorities, I am glad to say, are now making satisfactory progress as well as every effort to try to co-operate with tenants who seek to purchase.
Lord Harris of Greenwich: My Lords, the noble Lord implies that a number of authorities are not making progress. Is that so? If it is, which are those authorities?
Lord Gray of Contin: My Lords, I am sure that the noble Lord would not expect me to give him that information now, but I shall certainly write to him to let him know. However, I am happy to say that the vast majority of local authorities are now cooperating.
My noble friend Lord Selkirk welcomed the inclusion in the Bill of the lighthouse service, the Atomic Energy Authority, and other bodies, but he wanted to know how Trinity House fits in. Perhaps I should explain to my noble friend that Clause 2 does not in fact extend the right to buy to tenants of the lighthouse service, the Atomic Energy Authority, and such bodies. Those bodies let houses only in connection with employment with them and obviously it is important to the carrying out of their functions that they should be able to retain such houses. Clause 2 extends the list of bodies former tenancy of whose houses can be counted by tenants of council houses towards the qualifying period for the right to buy and towards discount. Therefore, the reference to Trinity House will enable a council tenant in Scotland, who was previously a tenant of the lighthouse service in England or Wales, to count that tenancy towards the qualifying period for the right to buy.
My noble friend Lord Selkirk also said that he hoped that before too long steps would be taken regarding the consolidation of legislation. He will appreciate that that is not directly a matter for me, but I take note of what he said and I shall make sure that it is passed on.
As on a number of previous occasions, the noble Lord, Lord Ross of Marnock, spoke last in the debate
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and he will appreciate that therefore a number of points which he raised have already been dealt with by me as a result of other speakers having raised them, too. The noble Lord asked what was the justification for giving tenants with two years' tenancy a 32 per cent. discount. Sales under the right to buy are sales of occupied dwellings where the tenants have full security of tenure. Any house sold on the open market to a sitting tenant commands a price substantially lower by 30 to 40 per cent. than its value with vacant possession. That is the answer.
In conclusion, I should like to reiterate that the Bill seeks to extend and to enhance the rights of public sector tenants in Scotland. It is, as I indicated earlier, concerned with freedom of choice. The proposed right to repair will give tenants the freedom that owner-occupiers have always taken for granted to put their own skills to use in carrying out repairs to their home or to engage a contractor to undertake necessary repairs in a way and at a time convenient to them. The improvements being made in the terms of the right to buy will extend real choice over housing tenure to an even larger number of tenants in Scotland, giving many what will probably be their only opportunity to satisfy their desire to become home owners.
I was disappointed that certain noble Lords opposite should seek to limit tenants' freedom and to restrict their choice. The benefits of the existing legislation are already plain to see. Instead of the drab conformity of soulless municipal housing, a welcome diversity is starting to break out in many areas. People, both owners and tenants, are starting to take a new pride and new interest in their homes. The Bill will keep up that momentum. The changes that the Bill makes in the existing tenants' rights legislation are, we believe, not only desirable in themselves but are necessary to keep pace with the changing aspirations of public sector tenants in Scotland. I commend the Bill to your Lordships.
Lord Carmichael of Kelvingrove: My Lords, before the noble Lord sits down, it is rather important to know whether the noble Lord will endeavour to give us the regulations so far as they have been evolved before the Bill goes into Committee so that we shall have something to work on and perhaps improve.
Lord Mackie of Benshie: My Lords, before the noble Lord gets up, will he take another question? Will he comment on the point that I was trying to make, but obviously did not make very clearly? If Orkney has problems about teachers' houses, cannot this apply to other rural authorities?
Lord Gray of Contin: My Lords, I cannot give the assurance that the noble Lord, Lord Carmichael, seeks. I can assure him that the regulations in their final form will not be decided until further consultation has taken place with the local authorities and other interested parties. We shall be deciding on what should go into the regulations as a result, among other things, of deliberations within this House. Therefore, the suggestions that may be put forward by noble Lords opposite will play a useful part in influencing the Government over what might be included in the regulations. It would not be appropriate for me to say that regulations will be completed before the Committee stage because the result of the

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deliberations of the Committee stage may well be a part of the final composition of the regulations.
So far as the difficulties mentioned by the noble Lord, Lord Mackie of Benshie, are concerned, where a mainland education authority lets a schoolhouse to a teacher, the teacher does not have security of tenure or the right to buy under the 1980 Act because the regional council is not a housing authority. This is why the situation is different for the island authorities, where they are both the education authority and the housing authority. So identical problems would not arise on the mainland and in the islands. With those few words, I am sure that we look forward to the other stages of the Bill and to its passage through your Lordships' House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Amusement Machines Bill [H.L.]
Report received.
7.24 p.m.
Clause 1:
Baroness Ewart-Biggs Baroness Ewart-Biggs moved Amendment No. 1:
Page 1, line 5, leave out from ("shall") to ("to") in line 6 and insert ("use, cause or permit the use of, any premises, vehicles, vessel or stall").
The noble Baroness said: My Lords, in moving this amendment I would like to assure the noble Lord, Lord Campbell of Alloway, that the purpose of the amendment and others which I am tabling this evening is truly an effort to make a positive contribution to his Bill. The noble Lord is well aware, I believe, that we on these Benches are fully in support of the spirit and the purpose of the Bill. In order to translate this support into something more tangible, I have, with the advice of the Association of Metropolitan Authorities, put forward these amendments with a view to strengthening the structure of the Bill. It is possible that what the AMA and I see as improvements will be regarded by the noble Lord, Lord Campbell, in another light and that he will consider them either not workable or unacceptable. I should like him to know, however, that they are put forward as a token of our concern that there is at present a lack of power to control amusement premises to the detriment of young children. There is ample proof that this is still so, and that there is a positive addiction to these machines.
We consider that the Bill is worthwhile. We hope, therefore, that the Government will put their weight behind the measure. If, however, as the Minister has inferred, they prefer to carry out some consultations and then bring forward proposals of their own later, we hope that this will be done with some urgency.
So far as Amendment No. 1 is concerned, I believe that the words at present used in the Bill where it reads,
"cause, permit or participate in the carrying on of business upon premises",
make the prohibition in Clause 1(1) too complicated. It would make assessment of what is actually going on in the premises easier if the words in my amendment were substituted, namely,
"use, cause or permit the use of, any premises, vehicles, vessel or stall".
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This leaves out any mention of business. It would be a better way of reflecting the object of the Bill which is, after all, to control amusement machines and not business. I beg to move.
Lord Campbell of Alloway: My Lords, I am most grateful, as always, to the noble Baroness, Lady EwartBiggs, and to the party opposite in particular for the very constructive support that they have given at all times and at all stages of this Bill which seeks only to introduce a system of local authority licensing and control to prevent addiction of those under the age of 16, and to provide planning control when none exists. It is to my great regret that I have to say that I am unable to accept the amendment as it stands. I want to give my reasons carefully so that the noble Baroness will not think that I am seeking to deal with it in a cavalier manner.
The problem is that the amendment to Clause 1(1) read in conjunction with the noble Baroness's amendment to Clause 1(4), which is reflected in Amendment No. 5, would, I am afraid, seriously undermine the whole structure of the Bill as it stands and as envisaged by the amendments which I propose to move. This, therefore, would not serve any valid purpose; it would not serve my purpose and it would not serve the purpose of the noble Baroness, Lady Ewart-Biggs.
Furthermore, it extends the incidence of the Bill to vehicles, vessels or stalls, which is inappropriate for two main reasons. First, it would include temporary and movable structures in respect of which, apart from practical administrative problems for the local authority, there is no proven need for control. But far more importantly, the form of the amendment lies in direct conflict with Amendment No. 9, which is to be moved later by the noble Lord, Lord Carmichael of Kelvingrove, and which makes it plain for the avoidance of doubt that movable structures—in particular a travelling showman's stall—are excluded. I have told the noble Lord that it is my intention to support that amendment.
Therefore, with the greatest respect to the noble Baroness, the problem is that the cast of the drafting in this amendment introduces the amendment to Clause 1(4)—that is, her Amendment No. 5—which in turn leads to the conflict to which I have referred. This conflict also affects Amendments Nos. 24 and 29. So, however well intentioned, the substitution of these words to seek to omit reference to "business" would, in fact, far from reducing complexity, add such a measure of complexity as to render it virtually impossible at this stage to pull the Bill together, and it would, therefore—although such is not the intention—defeat the formation of a valid Bill.
As this is the first amendment, I should like to say that I am always able to entertain further discussion with the noble Baroness or any noble Lord between Report stage and Third Reading to seek to improve the structure and the content of this Bill with a view to limiting its incidence to the bare minimum requisite to secure these twin objectives. But for the reasons given, I am afraid that I am unable to accept the amendment as it stands. I hope that my reasoning will have been sufficient or tight enough to convince the noble Baroness that I have taken the point seriously, but that

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I am unable to accept it. In those circumstances perhaps the noble Baroness may feel able to withdraw the amendment.
Baroness Ewart-Biggs: My Lords, I am very grateful to the noble Lord for that explanation. He is, without any doubt, better placed than I am to regard the effect of this particular amendment upon the entirety of his Bill. I will therefore accept his offer of a discussion later. I beg leave to withdraw the amendment for the time being.
Amendment, by leave, withdrawn.
7.34 p.m.
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 2:
Page 1, line 9, after ("fee") insert ("to the local authority which shall be charged against each such machine upon the premises").
The noble Lord said: My Lords, the purpose of this amendment is twofold. First, it acknowledges the very helpful amendment introduced by the noble Baroness, Lady Ewart-Biggs, at the Committee stage and it completes it in the manner in which we both informally agreed it might require completion. However, the amendment is also put forward to secure pro rata charges to protect the interests of the single user or users of few machines compared to the multiple users so that the licence fees are not extortionate. That is the sole object of the amendment. My Lords, I beg to move.
The Earl of Liverpool: My Lords, this is the first opportunity that I have had to speak on this Bill in your Lordships' House and I should like to apologise to the noble Lord, Lord Campbell, and the whole House, for not being present at Second Reading or the Report stage. My absence was due to long-standing business engagements. There are certain aspects of this legislation which the noble Lord, Lord Campbell, knows do concern me, and I am extremely grateful to him for sparing the time to discuss some of them with me yesterday.
I have an interest to declare in that I am a director of two companies based in the East Midlands—one operates a group of public houses and the other supplies all types of amusement machines. We do not, however, either supply or operate any arcades.
I listened carefully to the noble Lord, Lord Campbell, in moving this amendment. The noble Lord talked about the need to protect the small trader and therefore be proposed a pro rata charge. But I am, nonetheless, concerned about the question of charging a fee on the machines instead of the site itself. All amusement with prizes machines, with a cash pay-out of £3 in a combination of cash or tokens, are already required to pay a licence duty of £300 per annum. The costs of each local authority in implementing the legislation as proposed in the amendment will vary from area to area and it will, I believe, result in differing overheads for neighbouring operators. I believe that it would amount to an arbitrary tax but I would, perhaps, like to modify that in view of what the noble Lord said in moving the amendment. But I feel that there would be an additional burden here for every business which had even one machine on the
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premises, and that encompasses fish and chip shops, fast food take-aways and even petrol stations.
It is estimated by the trade that, excluding public houses, there are approximately 100,000 such machines currently in use. This amendment would put a substantial burden on local authorities to administer them and I believe that they are concerned about this at a time when they are trying to streamline their departments and cut overheads.
I do not wish to detain your Lordships unduly, but it would seem that the Bill comes before your Lordships ahead of any really substantive research into the extent of the problems which we are told emanate from arcades. Indeed, the noble Lord, Lord Elton, made this point during Second Reading. If a substantial case can be made to show that serious problems exist—and the noble Baroness, Lady EwartBiggs, did say that she had evidence—then I would support some form of legislation which had the benefit of a balanced judgment and consultation with all interested parties. But such indicators as are available to me would seem to show that the problems are not as intense or as widespread as the media would have us believe.
In an effort to quantify the problem, the Merseyside Council set up, as a registered charity, a body now known as the Merseyside Council on Gambling Addiction—MCGA for short. That was set up in May last year and its terms of reference were set out in a press release at the time. As it was the first body of its type to be set up in this country, I think that it is of interest. It said:
"Recently there has been much attention in the media given to allegations that excessive gambling occurring in amusement arcades is responsible for truancy, child prostitution, crime and various other evils. None of these somewhat alarmist statements have been substantiated with hard facts, and have been responsible for a confused and distorted view of the machine industry in general." "There is obviously a crying need for empirical research to ascertain the true situation. We believe that MCGA is in a unique position to administer and conduct such studies from a suitably unbiased standpoint."
I see that I may be losing the sympathy of the House in what amounts to a rather lengthy sortie on this Bill. But I am concerned that we should go forward with legislation if there is a true need for it.
A number of noble Lords conducted their research at first hand and brought these findings to the attention of your Lordships at Second Reading—particularly the noble Viscount, Lord Buckmaster. Indeed, I have conducted research into arcades in Margate. I was eagerly encouraged in this by my two sons aged 11 and 9, and of course they came with me. I visited at least four establishments and I can tell the House that on no occasion did I find that there was anything untoward, and all the sites were well supervised.
I am concerned that coastal arcades will be decimated by this Bill. I am concerned about the interaction of this Bill with existing legislation, and I believe that the Gaming Board shares my concern. I shall not detain your Lordships longer, but I do not think that I can support this amendment.
The Lord Bishop of Norwich: My Lords, we are grateful to the noble Earl for giving us that very full explanation—one might almost call it a Second Reading speech—of the points he made, and I am sure

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that we are most grateful for his openness in declaring such a very deep technical interest in the matter. From what I say it may appear that I support the amendment of the noble Lord, Lord Campbell of Alloway. The question of research can very often be used as a blocking device until a situation becomes so large that it is even more difficult to control. I believe that there is a sufficient amount of knowledge, which is gradually but steadily coming in, concerning the moral issues that arise on two fronts in the so-called amusement arcades.
One is the tendency of youngsters much younger than 16 years old to become concerned, first, with gambling and, secondly, with a desire to make more money. The Holy Scripture says that the love of money is the root of all evil; it is not the money, it is the love of it, and the love is encouraged by this. This means that it is very easy for rootless youngsters to become so caught up in the use of these machines that they turn to petty crime to get the money to play them. I am sure the noble Earl would be glad if the various Church bodies concerned with these moral issues heightened their research. The second area is the rather terrible one of the development here and there of young male prostitution coming from assignments in such places.
For those two very simple reasons I am quite sure that the attempt, under this amendment, to provide for care for both the single and the multiple uses means that we should support the amendment of the noble Lord, Lord Campbell. It means that, in the case of a single use, where obviously those two major evils of which I have spoken are much less likely to crop up, the point the noble Earl made about the pressure of money is a very small one if it is on a pro rata basis.
However, if I quote him right, the noble Lord himself said that his interest was concerned with amusement machines and he was concerned about multiple use. It seems to me that it is the multiple use area that this particular amendment hopes to contain. It will help the local authority so that the local authority will, in fact, over and against what the noble Earl says, be able to afford to control this potential danger. For that reason I hope that your Lordships will support the noble Lord, Lord Campbell of Alloway, in his amendment.
Baroness Ewart-Biggs: My Lords, I wonder whether the noble Lord, Lord Campbell of Alloway, could go a little further in his explanation of this amendment. Perhaps I am being rather stupid, but can he tell me whether he envisages that the operator of an arcade with many machines would pay the same fee as the owner of a single machine?
Lord Campbell of Alloway: My Lords, quite the reverse.
Baroness Ewart-Biggs: My Lords, I quite understand the noble Lord's explanation. If, for my benefit, he would repeat it, I should be very grateful.
Lord Campbell of Alloway: My Lords, I am very grateful to all noble Lords who have spoken on this amendment. There are always two views and it is right that both should be firmly and frankly expressed.
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Above all, I am grateful to the right reverend Prelate the Bishop of Norwich for what he said on the moral issue, which after all is the issue which has been concerning your Lordships' House. It is the issue which concerns the party opposite; it is the issue which concerns the noble Baroness, Lady Ewart-Biggs, and all sides of this House, and it is the issue which concerns me. I beg to move.
On Question, amendment agreed to.
Baroness Ewart-Biggs Baroness Ewart-Biggs moved Amendment No. 3:
Page 1, line 18, after ("contrivance") insert ("device, equipment or mechanism").
The noble Baroness said: My Lords, the purpose of this amendment is simply to make the definition of "amusement machine" much wider, for I think it is evident these days that the pace of technological development is very great. I think it would be right to say that especially in this field this advance is greatest. Therefore, perhaps through specifying the definition of "amusement machine" a little further, as I have tried to do in this amendment, future arguments based on technicalities may be avoided. I beg to move.
Lord Campbell of Alloway: My Lords, I am very grateful to the noble Baroness. The amendment is wholly acceptable.
On Question, amendment agreed to.
7.49 p.m.
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 4:
Page 1, line 18, after ("contrivance") insert ("other than such as may only provide goods, dispensing of cash, reproduction of sound or light, or means of telephonic communication) ").
The noble Lord said: My Lords, this amendment seeks to take on hoard a point which troubled my noble friend Lord Elton both at Second Reading and in Committee. There had to be some means of removing from the definition, which is a difficult definition, a device such as a telephone. My noble friend Lord Elton was good enough to write to me, and I have taken his advice. He is in no way responsible for this drafting. Alas! I am responsible for all the drafting, and that is why there is so much trouble with it. The amendment reflects the concern that the department felt about this aspect. I should add, of course, that the Government are in no way committed to this Bill—yet. I beg to move.
Baroness Ewart-Biggs: My Lords, would the noble Lord be good enough to tell me what he means by the "reproduction of light"? I understand all the others.
Lord Campbell of Alloway: My Lords, the operative word is "only", but one can substitute "exclusively". If one has a machine which produces only sound, such as a gramphone, or which produces only light, such as an electic light bulb, or is only a means of telephonic communication, it cannot fall within this definition of "amusement machine". It is difficult to draft. It is a simple concept; it was simply stated by my noble friend Lord Elton. I have done my best to meet it with this form of drafting. I cannot do more. It is on that basis that I have put it forward.
On Question, amendment agreed to.
The Deputy Speaker (Lord Hayter): My Lords, Amendment No. 5. I am instructed that, if this amendment is carried, I cannot call Amendments Nos. 6 to 9.
Baroness Ewan-Biggs Baroness Ewan-Biggs moved Amendment No. 5:
Page 2, line 1, leave out subsection (4) and insert—
("() Subsection (1) of this section shall not apply to premises, or a vehicle, vessel or stall where there is currently in force a licence for the sale of intoxicating liquor granted under the provisions of the Licensing Act 1964").
The noble Baroness said: My Lords, this amendment is purely to make subsection (4) of Clause I consistent with my suggested amendment to subsection (1) of Clause 1, which I have already moved. I beg to move.
Lord Campbell of Alloway: My Lords, would it be for the convenience of the House if, by leave, I could speak on Amendments Nos. 5 to 9, all of which are concerned with Clause 1(4) of the Bill, the exclusions subsection? I am grateful to your Lordships.
Amendment No. 5 proposes to remove Clause 1(4), the exclusions subsection, and substitute the words of the amendment. I have already referred to the problem of extending the definition of "premises", which gives rise to unacceptable consequences as regards extending the incidence of this Bill beyond what is necessary. But the area of exclusion proposed in this amendment is not sufficient to avoid anomalies under the Licensing Act 1964, a point which was well taken by the noble Lord, Lord Elton, at Committee stage and which is reflected—and again he was good enough to write to me about this without commitment—by my Amendments Nos. 6 and 7 which I propose to move in due course.
With the utmost respect, Amendment 5, although designed to be helpful, in fact adversely affects the structure of the Bill and does not afford a sufficient area of exclusion. This leads one to Amendments Nos. 8 and 9. Amendment No. 8, which stands in the name of the noble Lord, Lord Carmichael of Kelvingrove, is a complicated amendment. The conditions laid down in Section 27 of the Gaming Act relate to general restrictions as to the "Sale, supply and maintenance of machines" to which that Act applies. This Bill is not concerned in any way with the sale, supply or maintenance of machines.
Section 27(3)(a) to (c) of the Gaming Act is concerned with the sale, supply or use of machines,
"for use exclusively at a travelling showmen's pleasure fair or…on premises used or to be used—
(a) wholly or mainly for the provision of amusements"—
and this would include arcades, which the proposal is to exclude—
"(b) wholly or mainly for the purposes of a pleasure fair consisting wholly or mainly of amusements, or
(c) as a pleasure pier".
One has only to think for one moment to realise that to exclude such uses from the incidence of the Bill would defeat one of its main objects, which is to deny access to amusement machines to those under 16 if of the 5p or upwards variety. Such exclusions, even if they would virtually wreck the Bill, would provide vast scope for evasion: and an important distinction between access to premises and access to a machine in an operable state is drawn by Amendments Nos. 13 and 14, which I propose to move.
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In drafting those amendments, Nos. 13 and 14, the interests of those who run pleasure fairs and pleasure piers were very much upmost in my mind. There is no definition—I am dealing with Amendment No. 8—of the premises in Section 27(3)(a) to (c), only a description of uses to which such premises are put as excluding general restrictions as to the "sale, supply and maintenance of machines". The concept of this Bill is that it should apply to premises, irrespective of the use, whether exclusive or otherwise, which are the subject of Clause 1(4) as amended by Amendments Nos. 6 and 7. But a stall—and this leads one to the amendment which I propose to accept—at a travelling showmen's fair is not premises; it is a movable structure, and Amendment 9 should be accepted for the avoidance of doubt.
I am grateful to your Lordships for allowing me to deal with that gamut which in fact concerns the exclusion clause, but in the circumstances I am bound to oppose, for the reasons that I have given, Amendment No. 5, although in due course I propose to move Amendments Nos. 6 and 7 and to accept with gratitude Amendment No. 9, tabled by the noble Lord, Lord Carmichael.
Lord Carmichael of Kelvingrove: My Lords, I am most grateful for the explanation that the noble Lord has given of the effects of the amendments set down in my name. When I look at the amendments, particularly Amendment No. 8, I realise that he may well be (in fact, I am sure he is) absolutely correct that I have possibly taken the wrong subsection. Perhaps your Lordships will bear with me if I try to explain what I was trying to achieve.
In Amendment No. 9 I was trying to make clear that a showmen's fair, a travelling fair, was something quite different from any ordinary form of entertainment. It was something that one went along to in a particular mood and with a particular attitude, and therefore there was unlikely to be any great involvement other than for the short period that the fair happened to be on the common, in the public park or on the piece of ground. Therefore, I was anxious that that should be excluded from the operation of the Bill.
The next point that concerned me when I was approached by a number of people was that there are one or two other areas which almost come within the same category. Here I certainly take the point of the noble Lord, Lord Campbell of Alloway, when he talks about the difficulties of framing legislation. He is a skilled barrister and I am a layman, and therefore I can see the problems even more sharply than he can.
I would consider that a pleasure pier was in a different category from an arcade in some industrial city. The noble Earl who spoke earlier spoke about going to a place in Margate. I would say—perhaps because I do not go to Margate all that often—that Margate is rather different from an arcade in the middle of an industrial city, or even in a country town, because people tend to go to Margate for entertainment and for short or long holidays, depending on whether they are lucky or unlucky.
I feel that there are a number of areas that could be reasonably excluded from the operation of the Bill. I have the correspondence from the Merseyside Council on Gambling Addiction mentioned by the noble Earl.

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I had it sent to me possibly because I had amendments down. Perhaps the noble Earl could explain more fully, but I do not know what the Mersyside Council on Gambling Addiction is. I believe it is true that we have very little actual information on what the social effects are of arcades. I think it is probably something we all think we know about, but the facts may be different. I do not believe that the evidence sent to me by the Merseyside Council on Gambling Addiction is terribly powerful. Unless I was given a great deal more information, I would not be willing to take the ordinary arcades in industrial or rural towns out of the ambit of the Bill.
I was concerned to try to find a form of words that would include, first and primarily, travelling fairs and, secondly, the places which are by definition entertainment—places such as the Golden Mile in Blackpool and the pier at Brighton. That was my purpose. If I have failed in my purpose because I have used the wrong section of the Act, I apologise to your Lordships. Perhaps there will be a chance in another place or later in our consideration of the Bill to deal with the matter again. But if it is possible for us in the House to consider Amendment No. 9—I am not sure because of the ruling whether we can do so—I am pleased that the noble Lord, Lord Campbell of Alloway, has accepted the amendment.
Lord Diamond: My Lords, I rise shortly to support the noble Lord, Lord Carmichael of Kelvingrove, on Amendment No. 9, which I gather is under discussion at the moment, and it would perhaps save time in the long run if I said what I need to say now rather than to wait until the amendment is separately moved. I am grateful to the noble Lord, Lord Campbell of Alloway, for what he has already indicated. My purpose is to maintain the law as it stands, namely, that travelling fairs are excluded. It is simply that, and that is why I support it.
Baroness Ewart-Biggs: My Lords, I want to support what my noble friend Lord Carmichael of Kelvingrove has said, from one particular point of view. That is that he has made quite clear the dangers of interfering in any way with entertainment which is a family affair. The thought of interfering with that wonderful and totally innocent pleasure that a whole family can have together at a travelling showman's pleasure fair, or indeed at any of the holiday resorts, is of great concern. For this reason I am glad that my noble friend has made this point clear in putting forward his amendment, which I support.
The Earl of Liverpool: My Lords, I, too should like to support the amendment and the noble Lord, Lord Campbell of Alloway—
Lord Harris of Greenwich: My Lords, may I be absolutely clear which amendment we are discussing? Is it Amendment No. 5?
Lord Campbell of Alloway: My Lords, without leave of the House, I cannot speak twice. We are on Amendment No. 5. I sought leave of the house to deal with the other amendments, merely to speak to them because they were germane to the exclusion clause. But as I understand the procedure of your Lordships'
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House, Amendment No. 5 either has to be moved or withdrawn. Then, the next amendments are called and, as they have been spoken to, they have to be moved or withdrawn.
The Deputy Speaker (Lord Renton): My Lords, if Amendment No. 5 is agreed to, Amendments Nos. 6 to 9 inclusive cannot be called.
Baroness Ewart-Biggs: My Lords, I am sorry that I had not realised that the question about Amendment No. 5 had been put. I beg leave to withdraw Amendment No. 5.
Amendment, by leave, withdrawn.
8.5 p.m.
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 6:
Page 2, line 2, after ("to") insert ("a Justices on-licence including those granted for restaurants and guest houses in accordance with").
The noble Lord said: My Lords, I have spoken to this already. This is the point raised by my noble friend Lord Elton. It is merely designed to extend the exclusion to cover those aspects which are stated under the Licensing Act and the Theatres Act. I beg to move.
On Question, amendment agreed to.
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 7:
Page 2, line 3, after ("1964') insert ("or any licence granted under the Theatres Act 1968".).
The noble Lord said: My Lords, I have spoken to this amendment already. I beg to move.
On Question, amendment agreed to.
[Amendment No. 8 not moved.]
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 9:
Page 2, line 3, at end insert ("or the operation of amusement machines under conditions laid down in section 34 of the Gaming Act 1968 at a travelling showman's pleasure fair as defined in section 52(1) of that Act.").
The noble Lord said: My Lords. I have already spoken on Amendment No. 9, and I beg to move.
On Question, amendment agreed to.
Baroness Ewart-Biggs Baroness Ewart-Biggs moved Amendment No. 10:
Page 2, line 5, after ("34") insert ("of").
The noble Baroness said: My Lords, if I may I shall speak to Amendment No. 11 at the same time as moving Amendment No. 10.
Amendment No. 11: Page 2, line 5, leave out ("or) and insert ("(except paragraphs 6, 11 and 13 which relate to refusals and appeals and shall apply to refusals and appeals under this Act) to").
In its present form the Bill lacks a provision whereby an applicant for a licence may obtain a hearing by a licensing authority and appeal against refusal to renew or grant a licence. Under Clause 1(5) the Bill removed the provisions of Section 34 and Schedule 9 to the Gaming Act 1968, including the hearing and appeal provisions. These are to be found in Sections 6. 11 and 13 of the Gaming Act specified in my amendment and which, to put it briefly, provide for a hearing by a local authority committee prior to refusal, for grounds to be given for refusal and appeal to the court by the

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applicant. The court may allow or dismiss the appeal, or reverse or vary any part of a local authority's decision and deal with the application as if it had been made to the court in the first instance. Therefore, the object of this amendment is to preserve the rights and procedures which already exist in the Gaming Act 1968. I beg to move.
Lord Campbell of Alloway: My Lords, I cannot accept this amendment, I am afraid, for the following reasons. On analysis this amendment falls into two parts. The first part is paragraphs 6 and 11 of Schedule 9 to the 1968 Act which is applicable only to gaming machines, as defined under that Act, and do not extend to include amusement machines as defined under the Bill. These paragraphs make provision for a hearing, notice of decision, grounds of decision to be given to the applicant. The spirit of this part of the amendment of the noble Baroness, Lady Ewart-Biggs, is wholly subsumed, and indeed extended, by an amendment that I propose to move, No. 26, which provides for hearing and a reasoned decision.
The second part of the amendment of the noble Baroness relates to paragraph 13 of Schedule 9 to the Act of 1968. This relates to appellate procedure and designates quarter sessions as the appropriate forum. With respect, this runs counter to one of the main principles of this Bill spoken to and expressly approved on Second Reading and not challenged in any way in Committee. That was, that it was for the local authority to exercise the system of licensing and control, it being a matter for the local authority because they were best fitted, they knew the local conditions, and it was they who should exercise their discretion. If that he right—and it was right; and that was the principle that we agreed—then some form of automatic appellate procedure would be wholly inappropriate, I submit, in the circumstances.
Apart from the expense and uncertainty involved, that there should be a full appeal, a re-hearing de novo in the Crown Court and subsequent appeals on points of law, is not only inappropriate but far too cumbersome. With great respect, I would suggest that the only appropriate appellate procedure is by way of judicial review of such administrative decisions—for that is what they are—a procedure which is assisted by Amendment No. 26, to which I have referred and which I propose to move, which ensures that a hearing be afforded and a reasoned decision given.
Therefore, I have to say, with regret, that I am unable to accept the amendment for three reasons. It does not extend to and include amusement machines; the first part is subsumed and extended by Amendment No. 26, already tabled, and the second part runs counter to the principle of the Bill accepted on Second Reading and is cumbersome and, indeed. I would have suggested, inappropriate.
I want to say this having appeared to be rather churlish, which I do not wish to appear to be. I am indebted to the noble Baroness, Lady Ewart-Biggs, for affording us this opportunity for discussion, for clarification, on this important aspect of the Bill. My only hope is that, in the light of such clarification as I have been able to give her, she will feel able and sufficiently reassured to withdraw the amendment.
Baroness Ewart-Biggs: My Lords, I should like to thank the noble Lord, Lord Campbell, for that clear explanation and also for his explanation that the responsibility for this should be left with the local authority. The reason that I had originally thought my amendment preferable to the noble Lord's Amendment No. 26 was that my amendment preserves the well-tried system which has been operating under the Gaming Act until now. This is what gave me the idea that this was a better way of doing it. I am grateful to the noble Lord for having explained matters, and I now see that his own amendment, No. 26, covers this aspect probably in a better way. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 11 not moved.]
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 11A:
Page 2, line 6, at end insert—
("(to which the public has access other than machines excepted by subsection (4) above)").
The noble Lord said: My Lords, I beg to move this amendment. I should like to express my gratitude to my noble friend Lord Liverpool for his suggestion that this should be included for clarification. I accept that. It gives yet another instance of how very much indebted one is to all noble Lords who take the care to try to assist in the formulation of this difficult process of discussions. This amendment is for clarification. I beg to move.
The Earl of Liverpool: My Lords, I am indebted to my noble friend Lord Campbell for putting down this amendment at a late hour and speaking to it. Without it, it was my understanding that pubs and other unlicensed premises would be taken out of this Bill and the Gaming Act 1968. They would effectively have been consigned to a sort of no-man's-land with no means of renewing their permit. I am satisfied the amendment covers the point and I am happy to support it.
Lord Campbell of Alloway: My Lords, with respect, I do not accept, if my noble friend will forgive me, that the fears he has expressed could have materialised. But there are certainly other reasons why clarification is requisite. As what one says goes on record, I do not want to accept the way in which my noble friend has put it. The plain fact is that this amendment appears to be acceptable by way of clarification.
On Question, amendment agreed to.
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 12:
Page 2, line 28, at end insert—
("() The provisions of section 35 of the Gaming Act 1968 shall not apply to gaming machines to which Part III of that Act applies if such machines are situate upon premises licensed under subsection (1) above while such licences remain in force.").
The noble Lord said: My Lords, this is another of the ministerial points. Again, I wish to express my gratitude to my noble friend Lord Elton, who raised this at Committee stage. He also wrote to me about it. The object is to avoid conflict between the two sets of legislation, and to avoid doubt. I beg to move.
On Question, amendment agreed to.
Clause 2[Licences]
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 13:
Page 2, line 31, after ("fit") insert ("which shall obtain at all times when the public have access to any machine in an operable state such as is mentioned in section 1(3) above").
The noble Lord said: My Lords, with your Lordships' leave, with this amendment I will speak also to Amendments Nos. 14 to 20.
Amendment 14: Page 2. line 33, leave out ("enter the premises") and insert ("operate such machines").
Amendment 15: Page 2, line 33, leave out ("(without a parent or guardian)").
Amendment 16: Page 2, line 36, leave out first ("the") and insert ("such").
Amendment 17: Page 2, line 36, leave out ("mentioned in section 1(3) above").
Amendment 18: Page 2, line 40, leave out ("the") and insert ("any such").
Amendment 19: Page 2, line 40, after ("machine") insert ("to such maxima as obtain under Part III of the Gaming Act 1968 for gaming machines to which the public has access").
Amendment 20: Page 2, line 42, leave out ("at all times when the premises are open to the public").
These amendments all relate to drafting amendments to Clause 2(1) of the Bill. As to Amendment No. 13, it is a qualifying amendment which limits the jurisdiction of the local authority so that conditions may only be imposed when the machine is in an operable state: that is to say, when it has not been immobilised. This affords, for example, freedom from regulation as to hours of opening when the machine cannot be used. This is designed so that it may be to the advantage of such a person who has a single machine in a small establishment where the regulation of hours of opening, just because the machine happens to be there, would be appropriate. It is not the intention of this Bill to seek to assume or to give to the local authority any oppressive or unnecessary powers, and it is in that spirit that the qualification is introduced in Amendment No. 13, to restrict the power of the local authority.
Amendment No. 14 refers to Clause 2(1)(a). This is also a qualifying, restricting, amendment to curtail the incidence of the Bill so as to enable those under 16 to enter the premises but not to operate these machines. This is specifically designed to meet certain representations received from trade associations which otherwise might have felt that the Bill was acting harshly in preventing entry. I take on board the way that the noble Baroness, Lady Ewart-Biggs, has just put it—"the family considerations". This change of drafting is designed expressly to seek to assist family considerations.
Amendment No. 15 stems from a ministerial suggestion, and again I am grateful to the noble Lord, Lord Elton. Why leave out the words "without a parent or guardian"? It had not occurred to me, but apparently the view has been taken that the young ought to be protected from evil influences—and the right reverend Prelate the Lord Bishop of Norwich made some reference to this—and from those who pretend to be a parent or guardian. It has been pointed out to me by the Ministry in the letter that therefore the qualification in the Bill as it stands—"without a parent or guardian"—not only serves no useful purpose in practice but may indeed encourage the reverse effect. I accept the advice tendered.
Amendments Nos. 16 and 17 are drafting corrections. Numbers 18 and 19 refer to Clause 2(1)(c). This is introduced to avoid disparity—a point which was first made by the noble Lord, Lord Kilbracken, as is on the record in Hansard. The point was also taken up by my noble friend Lord Elton.
Amendment No. 20, which is the last of the series, refers to Clause 2(1)(d). That requires excision as a matter of drafting. It was originally part of the amendment introduced by the noble Baroness, Lady Ewart-Biggs, in Committee, but is subsumed by Amendment No. 13, and it would duplicate the drafting to have it twice. I have sought to explain it carefully so that the noble Baroness may not think that I have done any injustice, conscious or otherwise, to the original form of her amendment. The spirit is wholly maintained. Seriatim, then, I move Amendment No. 13.
The Earl of Liverpool: My Lords, I am somewhat concerned about this amendment because, if I understand it correctly, it would be possible for an arcade to switch off machines which are covered by this Bill. If they did that they could still have video machines, which are not so covered, pool tables and other forms of recreation operational, and children of any age could go into these places unaccompanied by a parent or guardian. I think that this is an anomaly, because the main thrust of the Bill, as I understand it, is, first of all, to protect children from a gambling addiction (if that is what occurs) and also to protect them from child sexual abuse. It is unlikely, I admit, that an arcade would switch off its machines hut, if it did, am I right in thinking that what I have suggested would obtain?
8.23 p.m.
Baroness Ewart-Biggs: My Lords, I should like to speak on Amendments Nos. 14 and 15, which I must admit I do not feel very happy about. I think it would be extremely hard to allow children into these premises and yet make sure that they do not use the machines. Indeed, I thought one of the main purposes of the Bill was to stop children going into some of these arcades and establishments because of the bad company they would encounter, and to avoid the possible dangers there might be within those places. So I feel that this is a dilution of the Bill which, to my mind, changes it very much indeed, because these amendments seem to stop the protection of children, which is what some of us have most in mind in connection with this Bill.
As I say, I think there is enough proof that children do run risks—I know that we have been through all this before on Second Reading—to satisfy many of us, especially those of us who have fairly young children, that these are bad places for children to be in. These amendments would allow children in without either parent or guardian, and therefore they would risk the dangers from which we would particularly wish to protect them.
Lord Carmichael of Kelvingrove: I wonder whether the noble Lord. Lord Campbell of Alloway, could perhaps explain slightly more fully the effect of Amendment No. 13. I think it may be one of the

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things that you get in British law occasionally which raises ridiculous anomalies. For example, what really is meant by "an operable state" of machine? Has a machine to be broken down, or would it be a question of one machine being switched off so that it was not operable although in two seconds it could be switched on again? I find it difficult. There are these rather silly anomalies, such as people not being able to buy cigarettes at a certain time or when you can buy butter but not cheese, and silly things like that, which we used to have in Britain. If we could have a definition of "operable" it might help us: and had there been a schedule to make things more flexible and explain more fully, it would be more understandable.
I realise, the more I look at this Bill and other Bills, how incredibly difficult it is to put intentions into words. We all know what is meant, but actually putting intentions into words is difficult. I can imagine the noble Lord, Lord Campbell of Alloway, wearing a different cap and in different circumstances, perhaps having a great deal of fun trying to find out what was meant by the word "operable". I would be grateful if he could perhaps go further and explain what is meant. There may be some clear legal definition, and I should be very happy if he could let us know.
Lord Campbell of Alloway: My Lords, I am grateful, again, to all noble Lords. Dealing directly with the point made by the noble Lord, Lord Carmichael, the problem is really this. If I can state the problem in plain English, then the drafting may fall into place. The problem is that there may be a fish fryer somewhere in Balham who has one of these machines and yet, under the Bill as it is drafted without these amendments, the local authority, because a machine is on his premises, is entitled to regulate his opening hours. That appears to be oppressive and therefore, to try to cope with what could be an oppression, I have sought to restrict the jurisdiction of the local authority to imposing conditions only when a machine is in an operable state. So the local authority can say to the fish fryer in Balham, "Switch it off, Charlie, at 10 o'clock and stay open as long as you like". That is what the amendment is designed to achieve.
As the noble Baroness is shrewd to observe, this does—I do not intend to deny it—involve a dilution of the Bill. But, if you move to a situation where a Bill could work injustice, then you have to dilute. I submit that it is an acceptable dilution, because the main purpose of the Bill, its twin purpose, to prevent access of those under 16 to the machines and to deal with the planning problem, is still fully implemented or sufficiently implemented without causing unfair oppression. If my noble friend Lord Liverpool will forgive me, I think that if I were to reply to the points he made it would be much the same sort of reply that I made on a previous occasion, and the hour is getting on.
On Question, amendment agreed to.
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 14:
[Printed earlier.]
The noble Lord said: My Lords, I have spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 15:
[Printed earlier.]
The noble Lord said: My Lords, I have spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 16:
[Printed earlier.]
The noble Lord said: My Lords, I have spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 17:
[Printed earlier.]
The noble Lord said: My Lords, I have spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendments Nos. 18 to 20:
[Printed earlier.]
The noble Lord said: My Lords, I have spoken to these amendments. I beg to move.
On Question, amendments agreed to.
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 21:
Page 3, line 4, after ("affected") insert ("by the positioning of any such machine as sought in the application")
The noble Lord said: My Lords, this is a qualifying amendment of limitation to avoid prejudice, in the sense that any local council which was prejudiced against machines as such might give an unfair decision. It is included as a result of a representation that I received from one of the trade associations and I hope that it commends itself to your Lordships. It may be over fair, but I commend it to your Lordships. My Lords, I beg to move.
On Question, amendment agreed to.
Baroness Ewart-Biggs Baroness Ewart-Biggs moved Amendment No. 22:
Page 3 line 8, leave out ("or").
The noble Baroness said: My Lords, may I speak to Amendment No. 24 at the same time, as Amendment No. 22 is a paving amendment to it?
Amendment No. 24: Page 3. line 11, at end insert ("; or
() that grant or renewal of the licence would be inappropriate, having regard to the layout, character or condition of the premises, vehicle, vessel or stall in respect of which the application is made.").
Amendment No. 22 seeks purely to ensure that premises are adequately and suitably kept, that the condition of the machinery and the physical appearance of the premises are of a generally high state and that they are maintained at a sufficiently high level. This amendment is purely to see that such premises are kept in a very high state of repair. My Lords, I beg to move.
Lord Campbell of Alloway: Yes, my Lords, Amendment No. 22 is a paving amendment, but, even

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so, the word "or", on ordinary drafting, is perhaps operative to govern paragraphs (a) to (d). But as to Amendment No. 24, that extends the incidence of the Bill to enable a local authority, in the exercise of its licensing functions, to take into account the layout, character or condition of the premises, and then to include vehicles, vessels and stalls. As to the layout, character or condition of the premises, one wonders whether this is truly necessary. I have an open mind on this, but I would have accepted the amendment if the definition of "premises" had not been extended to include vessels, vehicles and stalls, and I have already spoken on that aspect.
Therefore, for those reasons that I have already given, I am afraid that I cannot accept the amendment as it stands. But, in view of the information that I have given, perhaps the noble Baroness, Lady Ewart-Biggs, would care to consider whether she wishes to have further discussions with me, or whether she wishes to table an amendment on Third Reading which retains the layout, character and condition requirement. In those circumstances, I hope that she will not press the amendment.
Baroness Ewart-Biggs: My Lords, I am very grateful to the noble Lord for what he has said about this amendment. I tried to include the words "vehicle, vessel or stall" by means of a previous amendment. The noble Lord understands that I am seeking to ensure that these premises are roomy enough for people to move around in without bumping into each other and that I am trying to avoid the very dangers about which we have previously spoken: that children get too close to other people on these premises. The noble Lord has said that he will consider a shortened version of the amendment, for which I am very grateful. I shall therefore put forward a revised version of the amendment at Third Reading. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.41 p.m.
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 23:
Page 3, line 10, leave out ("all reasonable precautions") and insert ("every precaution").
The noble Lord said: My Lords, again this amendment is self-explanatory. It is my small homage to the noble Lord, Lord Harris of Greenwich, who took this point.
On Question, amendment agreed to.
[Amendment No. 24 not moved.]
Baroness Ewart-Biggs Baroness Ewart-Biggs moved Amendment No. 25:
Page 3, line 11, at end insert—
("() Where a person is convicted of an offence under section 3(1)(b) of this Act that person is the holder of a licence, the licensing authority may make an order revoking the licence.").
The noble Baroness said: My Lords, this new subsection (3) is designed to strengthen the powers of the licensing authority. It is right to say that the likelihood of the loss of his licence is a greater penalty for an operator than a fine, especially if the fine is to be decreased by the noble Lord, Lord Campbell of Alloway, in his Amendment No. 28. A fine on some of
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these premises might make very little difference to the profits made, whereas the loss of the licence would make a very great deal of difference. May I add that the reference in the amendment to Section 3(1)(b) relates to my Amendment No. 29. I beg to move.
Lord Campbell of Alloway: My Lords, I find myself in an embarrassing position. I said to the noble Baroness, Lady Ewart-Biggs, that I would accept this amendment. And in spirit I do accept it. However, I had not observed—and therefore I am grateful to the noble Baroness, Lady Ewart-Biggs, for mentioning it—that the amendment relates to her Amendment No. 29, which for various reasons I cannot accept. I accept wholly the spirit of the amendment. For reasons which will become apparent when I speak to Amendments Nos. 27 and 28, I shall not be in a position to accept Amendment No. 29.
However, at Third Reading I would accept—and this will be on the record—the whole spirit of Amendment No. 25. In view of the form of drafting which ties it into Amendment No. 29, an amendment which I cannot accept, I would ask the noble Baroness not to press Amendment No. 25.
Baroness Ewart-Biggs: My Lords, I am sorry about the reaction of the noble Lord, Lord Campbell of Alloway, to my Amendment No. 29 before I have reached it. However, I hope that I shall be able to present it to him in a way which will make him a little more optimistic. I thank the noble Lord for what he has said about Amendment No. 25 without the reference to my next amendment, Amendment No. 29. I should be grateful if we could talk about the amendments, as the noble Lord agrees with the spirit of Amendment No. 25, and find some way around the problem. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 26:
Page 3, line 11, at end insert—
("()In the exercise of their functions under this section the local authority shall afford the applicant for a licence an opportunity to make full written and oral representations, and shall give a reasoned decision.—).
The noble Lord said: My Lords, I have already spoken to this amendment. Its concept was introduced by the noble Baroness, Lady Ewart-Biggs, when we dealt with an earlier amendment. It is designed merely to secure natural justice for the applicant and a means of effective judicial review of administrative decisions. I beg to move.
Lord Harris of Greenwich: My Lords, I very much welcome the amendment. The noble Lord, Lord Campbell of Alloway, and I endeavoured to persuade the House—and we very nearly succeeded—on the Cable and Broadcasting Bill to include a similar provision. I am warmly in favour of local authorities and others being made to give reasoned decisions so that there is always the fall-back possibility of a judicial review. I am sure that this is the right way to deal with it. Therefore, I very much welcome the amendment.
On Question, amendment agreed to.
Clause 3 [Penalties]:
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 27:
Page 3, line 12, after ("Act") insert ("or of any condition imposed by virtue of section 2(1) above").
The noble Lord said: My Lords, this amendment relates to a drafting omission for which I am wholly responsible. I am grateful to the noble Lord, Lord Elton, for having pointed it out to me in a letter since the Committee stage, I beg to move.
On Question, amendment agreed to.
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 28:
Page 3, line 15, leave out ("£10,000") and insert ("£2,000").
The noble Lord said: My Lords, this amendment will no doubt cause your Lordships some concern. Why should one reduce £10,000 to £2,000? The position, simply, is that again since the Committee stage I have been grateful to the noble Lord, Lord Elton, who, contrary to the view which some of your Lordships might entertain, has taken some interest in the Bill since the Committee stage and has been most helpful, for having pointed out to me that it is all very well including £10,000, but the maximum fine in a court of summary jurisdiction has only just gone up to £2,000; therefore, would I mind very much reducing £10,000 to £2,000? As there is still Amendment No. 25, which I am comforted to know the noble Baroness will bring hack on Third Reading (that is, revocation of the licence) and as there is still the imprisonment section, I beg to move in the light of the advice that I have received—although, personally. I would much prefer to keep the figure at £10,000.
The Lord Bishop of Norwich: My Lords, I can see the argument of the noble Lord, Lord Campbell of Alloway, and I am glad that he has explained it to us. On a first reading of the amendment one receives the impression that because the figure has been reduced from £10,000 to £2,000, the seriousness of the offence is likewise reduced. Therefore, I am glad that the noble Lord has given the reason for this reduction.
It was Martin Luther King who once said that law cannot change people's hearts but that law can control heartless men. Because of the moral issues which have been mentioned on Second Reading and at various times tonight, it must, I believe, be clear to your Lordships' House—and later, I hope, to the country—that there is the serious danger that people will break what we hope will become a very good Act when it has been through its various stages both here and in another place. Reluctantly, therefore, I think we must agree to the amendment, so long as it is quite plain to all concerned that it does not weaken the strength of feeling underlying the promotion and activity of the Bill.
Baroness Ewart-Biggs: My Lords, I should like to thank the noble Lord, Lord Campbell of Alloway, for explaining the reason for this mind-boggling decrease, because it had not occurred to me. It does stress the importance of my Amendment No. 25. I believe we would agree that the sum of £2,000 as a fine—having heard at Second Reading about some of the profits
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that were being made through these machines—would not in any way be a deterrent. For that reason, this amendment focuses a great deal of attention on the provisions of Amendment No. 25.
On Question, amendment agreed to.
Baroness Ewart-Biggs Baroness Ewart-Biggs moved Amendment No. 29:
Leave out Clause 3 and insert the following new clause—
("Penalties.
3.—(1) A person who—

(a) uses, causes or permits the use of any premises, vehicle, vessel or stall contrary to section 1(1) above; or

(b) being the holder of a licence granted under this Act, or the servant or agent of such holder, without reasonable excuse, contravenes or permits contravention of a condition specified in the licence.

shall be guilty of an offence and liable on summary conviction to a fine not exceeding £10,000 or to a period of imprisonment not exceeding 6 months or to both.
(2) Proceedings under subsection (1) above may be instituted by the local authority.").
The noble Baroness said: My Lords, the entire substitution of this clause means that the person who is responsible for contraventions is more clearly specified together with the circumstances of the liability generally. The amendment introduces much more certainty as to who is liable and for what he is liable. It also incorporates the express right of a local authority to prosecute. After all, as it is the local authority who is already responsible for licensing administration, it seems only logical that it should be empowered to prosecute, too.
From another point of view, in this way all the dossiers can be kept together, making the process of monitoring very much more possible. This aspect is a very important one and should be kept in mind. The substitute clause suggested in my amendment makes the penalty clause much more reasonable. I beg to move.
Lord Campbell of Alloway: My Lords, I very much regret that I am unable to accept this amendment as it stands. I am unable to do so, first, because of the inclusion in it of the extension of premises and the concept of user, to which I have already spoken and which permeates through to this clause. Secondly, it does water down—if the noble Baroness will keep these most respectful criticisms in mind with a view to producing a new amendment at Third Reading—the concept of reasonable excuse. This point was made by the noble Lord, Lord Harris of Greenwich, in Committee and reflected in Amendment No. 23. Third, the amount of £10,000 raises problems to which we have already spoken. Lastly, subsection (2) is already covered in the existing form of draft.
I mention these matters not in a spirit of carping criticism but in the hope that, my having mentioned them, it will be possible for the noble Baroness and myself to engender discussion on the form and content of this penal clause on Third Reading. I do not say "re-open" discussions, because unfortunately we have not had sufficient opportunity to discuss these matters. I quite agree that the form of content of the penal clause is very important, but I hope the noble Baroness will acknowledge that I cannot accept her amendment in its present form for the various reasons I have given; it is for those reasons that I oppose this amendment.
The Lord Bishop of Norwich: My Lords, we are grateful to the noble Lord for telling us why he is unable to accept Amendment No. 29, and I think it would be delightful if he and the noble Baroness could get together in order to put suitable fears in the minds of potential customers. It is true that there is a lot of money in this area. I hope that by now your Lordships will have received the parliamentary video group document concerning video violence. It is a magnificent document, very fully researched. I shall be delighted to provide a copy to any Member of the House who would like to have one.
In exactly the same way, the unevenness in the magistrates' courts in that area is so pronounced that in the case of one particularly unpleasant video nasty, "I Spit on Your Grave", one magistrates' court produced a very small fine while another produced a very large fine with imprisonment. The same danger applies here. We have to be quite firm and definite about making it clear that the penalites do not make the danger of contravention worth while, so that once again heartless men will be firmly controlled. This will mean no loss of liberty because it is caring for the liberty of the children of our nation and so it is in fact a very liberalising Bill. I hope that the discussions between the noble Lord and the noble Baroness will he most fruitful. Time will tell.
Baroness Ewart-Biggs: My Lords, I would like to thank the noble Lord, Lord Campbell of Alloway, for explaining very clearly why he cannot accept this amendment. I do, of course, understand that it has already been sullied by parts of my previous amendments which he has also been unable to accept. I would like to think that the noble Lord accepts the purpose and spirit of this amendment and that he agrees that the proposed new clause would introduce much more clarity and a more logical way of seeing the responsibility of the local authority.
I hope that if we can get rid of those parts which the noble Lord has already committed himself to oppose then we might draw something out of it all which will still retain the purpose and the spirit which I am very keen on. I hope that we shall bring this forward again at Third Reading, and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 6 [Citation, commencement and extent]:
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 30:
Page 3, line 25, leave out ("Her Majesty") and insert (Vie Secretary of State").
The noble Lord said: My Lords, this amendment emanates from my noble friend Lord Elton, and I
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accept his advice. I am not quite sure why it has to be "the Secretary of State" and not "Her Majesty" but I want the Bill to receive a favourable reception when it reaches another place and so I beg to move.
On Question, amendment agreed to.
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 31
Page 3, line 27, leave out subsection (3).
The noble Lord said: My Lords, I again acknowledge my indebtedness to my noble friend Lord Elton, who raised this point at Committee stage. For this Act to apply to Northern Ireland would not be appropriate for various reasons which, at this late hour, your Lordships will not wish to hear about. I beg to move.
On Question, amendment agreed to.

British Railways Bill
Reported from the Select Committee that the locus standi of the petition of Woodsmoor Residents' Association was disallowed, and Bill accordingly committed to an Unopposed Bill Committee.
House adjourned at one minute before nine o'clock.

  PUBLIC RECORD OFFICE, KEW
  PUBLIC RECORD OFFICE, KEW