Sitting of 20 March 1984

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

    Labour Statistics
    Mr. Wareingasked the Secretary of State for Employment what is the latest number who are now unemployed in Liverpool and on Merseyside; how many have been unemployed for 12 months or over; and if he will make a statement.
    The Under-Secretary of State for Employment (Mr. Alan Clark): On 9 February the total number of unemployed claimants in the area covered by the Liverpool and Toxteth jobcentres was 15,046, and the total number in the Merseyside special development area was 141,674. The number unemployed for over 52 weeks in these areas on 12 January was 8,522, and 67,706.
    Mr. Wareing: Are not these appalling figures testimony to the fact that the Government's economic recovery is far, far away from the people of Merseyside? How can the Minister's Department contemplate slashing 1,300 places from the YTS scheme, affecting places such as the Old Swan boys club in an area of particularly high unemployment within Liverpool, when there have been protestations from all and sundry, including the Bishop of Liverpool? What action will the Minister take about that, and what action are the Government contemplating to bring permanent jobs to Merseyside?
    Mr. Clark: I do not accept that the picture is as dark as the hon. Gentleman paints it. Vacancies notified to the jobcentres are up by 32 per cent., placings are up by 16 per cent. over the last year, and there are over 10,000 young people on the young workers scheme. As to his allegation that the mode B1 places have been cut, there is a place on the youth training scheme for every person who wishes to take one up.
    Mr. Porter: Does my hon. Friend agree that, while these figures are rather bad, the situation is not helped by the activities of the majority of the Labour members of Liverpool city council, who have behaved like raving lunatics in relation to finance? Does he agree that if they would only come to their senses the prospect for employment in Liverpool, and on Merseyside, would be very much better?
    Mr. Clark: I entirely agree with my hon. Friend. It is not for me to digress on the internal ramifications of the
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    Labour party and the various allegiances that it adopts, but it will have noted that its own leader has refused to align himself with the policies of the Labour majority on the city council.
    Mr. Alton: Does the Minister not accept that, with one in five of the local population out of work, there are no grounds for complacency? Given that the large majority of the unemployed are construction workers, does the Minister not think that it is time that the Department, with other Government Departments, looked at the possibility of a major capital works scheme, such as a tidal barrage across the Mersey, to create construction workers' jobs?
    Mr. Clark: The hon. Gentleman asks for a major capital works scheme. He should recognise that the city of Liverpool benefits from the public purse in the following sectors. It has special development area status, it has a development corporation, it has an inner city partnership, it has an enterprise zone, and it has recently been chosen as an experimental freeport location. He may well feel that other and neighbouring areas may be asking themselves why they, too, cannot benefit.
    Mr. Nicholls: Surely if these figures are testimony to anything, they are testimony to the fact that, since 1973 at least, that particular authority has been under the control of the Labour party, as recently, or of the Liberal party?
    Mr. Clark: Of course it is a tragic proof that this great city, once a pillar of the nation's commercial strength, should have been reduced to its present plight by the doctrinaire idiocies of the Labour party majority on the city council.
    Mr. Sheerman: Is not the Minister yet again, by his answer to my hon. Friend, attempting to mislead the House? He has mentioned the youth training scheme. Is not the figure for youth unemployment only 1 per cent. different from what it was a year ago? Does he accept that young people are no longer being attracted to the youth training scheme, either in Liverpool or nationally, and that there are 370,000 young unemployed who are not joining the youth training scheme? There is something wrong with the scheme if the Government have to give such an answer to the House.
    Mr. Clark: I do not accept that view. The scheme is an excellent one and would benefit from the support of influential people such as the hon. Member, councillors and trade union leaders, who should draw the attention of young people and their parents to its benefits.

    Youth Training Scheme
    Mr. Colvinasked the Secretary of State for Employment if he is now satisfied with the safety provisions for those on the youth training scheme.
    The Minister of State, Department of Employment (Mr. Peter Morrison): Yes, Sir. However, I can assure my hon. Friend that the safety provisions of the scheme are kept under review in order to ensure their continued appropriateness and effectiveness.
    Mr. Colvin: Is my hon. Friend satisfied that the Health and Safety at Work etc. Act 1974 adequately protects trainees, particularly in relation to inspections and inquiries? What arrangements is he making to ensure that the provisions of the Act are adequately checked and

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    updated, particularly in the case of the youth training scheme, which is now becoming a permanent and valuable part of training provision for our school leavers?
    Mr. Morrison: I agree with the latter part of my hon. Friend's supplementary question. In January this year my hon. Friend the Minister of State tabled the Health and Safety at Work (Youth Training Scheme) Regulations, which put all youth trainees on the same basis as employees.
    Mr. James Hamilton: Is the Minister aware that my hon. Friend the Member for Monklands, West (Mr. Clarke) has raised on the Floor of the House the case of two lads who had fatal accidents? One of the employers was fined heavily, which made it crystal clear that he was to blame. In the other case the sheriff stated that in his view sufficient safety regulations had not been in operation. Is it not time that the Minister took action before there are more fatal accidents?
    Mr. Morrison: The hon. Gentleman and I will agree that one accident—certainly one fatal accident—is one too many. However, I can assure the hon. Gentleman, as I have assured my hon. Friend, that, with the further tabling of regulations in January this year, everything possible is being done both by the Health and Safety Executive and by the Manpower Services Commission.
    If any hon. Member in any part of the House has any constuctive thought to put to me on the matter, I am always prepared to listen. The health and safety of the trainees is of paramount importance.
    Mr. Needham: No scheme is perfect, but does my hon. Friend agree that the youth training scheme is excellent and that it is high time it had the full support of all right hon. and hon. Members on the Opposition Benches?
    If the scheme suffers at all, it is by its link with the youth opportunities programme, for which the Labour Government were responsible.
    Mr. Morrison: Yes, I agree with my hon. Friend. It is regrettable that Labour Members do not back the scheme, as many of their supporters do. I also agree that the YTS is a training scheme, not a special employment measure like the youth opportunities programme. If only Labour Members talked to the trainees, they would be impressed by their enthusiasm for the training that they receive.
    Mr. Martin: Is the Minister aware of a recent press report to the effect that the Government are to pay retired civil servants £90 a day to advise on safety on the youth training scheme. If the Government are serious about the safety of the young people on the scheme, surely they should not use retired people in that way, particularly as nearly 4 million people are unemployed?
    Mr. Morrison: I am not aware of the press report or press release to which the hon. Gentleman refers. Nine specialist advisers have been appointed to the nine regions to consider health and safety—matters about which the hon. Gentleman and I are both concerned.

    Jobcentres (Advertising)
    Mr. Haynesasked the Secretary of State for Employment if he is satisfied that jobcentres have ceased advertising jobs at illegally low rates of pay.
    The Minister of State, Department of Employment (Mr. John Selwyn Gummer): I am satisfied that jobcentres take all reasonable steps to avoid advertising jobs at levels of pay below wages council minimum rates.
    Mr. Haynes: How can the Minister be so confident that jobcentres are not advertising jobs at illegally low rates of pay? He knows very well that the Government deliberately stopped the document, "Times, Rates of Wages and Hours of Work" which informs people of wages councils' rates. Why does the Minister not answer that question instead of the one that he answered just now?
    Mr. Gummer: I did not answer that question because it was not the question that was tabled. The hon. Gentleman asks why I am confident. The reason is that the long-standing instructions to our staffs in jobcentres state quite clearly that if they are in any doubt whether a vacancy offers at least the legal minimum rate they should seek advice from a wages inspector. The hon. Gentleman knows perfectly well that the range of wages levels that wages councils give is substantial and that the right person from whom to get that information is the wages inspector.
    Mr. Thurnham: Does my hon. Friend consider that wages councils do anything to help the unemployed?
    Mr. Gummer: My hon. Friend will accept that the Government are carefully examining wages councils, as we believe that, if it is shown that wages councils reduce opportunities for people, the Government ought to take action. We are seeing whether that is so.
    Mr. Evans: Does the Minister agree that the best way to stop some sweatshop employers paying their employees illegally low rates of pay is substantially to increase the number of wages inspectors? Does he agree that the Government should instruct them to prosecute every case of wilful neglect of the law that they discover?
    Mr. Gummer: The fact remains that the work of the wages councils inspectorate, the number of cases followed up and general activity on this front are similar to that which obtained under the Labour Government. If what they were doing was insufficient, why on earth is the hon. Gentleman complaining about us now?

    Labour Statistics
    Mr. Jannerasked the Secretary of State for Employment what steps he is taking to reduce the number of those registered as unemployed for over 52 weeks in the city of Leicester.
    Mr. Alan Clark: As the hon. and learned Gentleman knows, the best way we can help the long-term unemployed is by establishing the economic conditions in which industries can become more competitive and start to expand. In the meantime, help is available through the community programme, which has made excellent progress towards the objective of providing up to 130,000 temporary jobs for the long-term unemployed.
    Mr. Janner: Directing myself to the question, will the Minister tell the House how many people in the city of Leicester, which was once so prosperous, have now been unemployed for more than 12 months? Does he accept that one awful by-product of this increasing and lengthy unemployment is the growth of sweatshop labour, which is a cause for much worry to all of us in the city of Leicester?
    Mr. Clark: The hon. and learned Gentleman did not table a precise request for the number of unemployed during that period of time, but I shall ensure that he gets the figure. He should recognise that unemployment in Leicester is below the national average and below the average for the east midlands. Indeed, unfilled vacancies at jobcentres have increased by 37 per cent. in the past year.

    Skillcentres
    Mr. Ray Powellasked the Secretary of State for Employment how many people are currently attending skillcentres; and how this compares with the position 12 months previously.
    Mr. Peter Morrison: There were 11,484 people in training in skillcentres on 30 January 1984, the latest date for which figures are available. At 31 January 1983 the number in training in these establishments was 13,131.
    Mr. Powell: Is the Minister aware that that drop of some 2,000 is appalling? Is he further aware that apprenticeship schemes throughout the country have been cut by employers and that that will create a burden? If we have an upturn in the economy as the Government predict, where shall we find the trained personnel that we need? Is it not nonsense to talk about closing job training centres when we should be putting more money into increasing them and the number of available jobs?
    Mr. Morrison: I am not aware that the drop is appalling, because the training division of the Manpower Services Commission is spending its money more sensibly. Is the hon. Gentleman aware that, as a result of the way in which it purchases its training, 2 per cent. more people will be trained in 1984–85 than in the previous year? That seems to me to be a more effective way in which to achieve our aims.
    Mr. Ashby: What is the under-used capacity of the skillcentres? What steps is my hon. Friend taking to reduce it?
    Mr. Morrison: My right hon. Friend the Secretary of State and I have been negotiating with the Manpower Services Commission on that matter. In the year ahead the gap between the amount of purchasing and the cost of running the skillcentre training agency will be about £24 million. My right hon. Friend has agreed with the MSC that that gap should be closed to zero in the year beginning 1986.
    Ms. Richardson: The Minister will be aware that only 3 per cent. of trainees at skillcentres are women. Effectively, the Government are denying women the right to training opportunities on an equal basis with men while the Government do not provide, for example, nurseries at skillcentres, child care allowances and, most important, more flexible training hours. It is difficult for women with children to take the opportunities that should be on offer while rigidity exists in the skillcentres.
    Mr. Morrison: The hon. Lady puts her finger exactly on the point. My right hon. Friend the Secretary of State has said in the White Paper that we want more flexible and more relevant training. That might mean the training is not provided in the skillcentres. Whether the training occurs there or elsewhere is relevant only to the extent that the training is of the type that trainees want.

    Labour Statistics
    Mr. Lofthouseasked the Secretary of Slate for Employment what is the latest number of people unemployed; and how many of them have been unemployed for more than 12 months.
    The Secretary of State for Employment (Mr. Tom King): On 9 February the total number of unemployed claimants in the United Kingdom was 3,186,000. The number unemployed for over 52 weeks on 12 January was 1,188,000.
    Mr. Lofthouse: Is the Secretary of State aware that, in the next financial year, the Government and the National Coal Board are about to add 20,000 miners to those figures, including 1,000 miners in my constituency? Bearing in mind that those miners will be in their early 50s, has his Department any plans to encourage future employment in the mining areas? Do the Government plan to commit young miners to an industrial desert?
    Mr. King: The best hope for the unemployed and those facing job losses because of pit closures is a general improvement in the economy. I am encouraged at the progress being made. I am delighted that my right hon. Friend the Chancellor has decided to abolish the tax on jobs that was introduced by the last Labour Government. I am delighted that the confidence flowing from my right hon. Friend's Budget has resulted in an immediate reduction in interest rates. Both those measures will make a substantial contribution towards helping the employment scene.
    Sir Kenneth Lewis: Does my right hon. Friend agree that those over 55 who are now long-term unemployed are those least likely to obtain jobs again? Is there not, therefore, a case for either a higher form of unemployment benefit or some bridging income that will take those people to the retirement pension level and thus look after that group?
    Mr. King: Our first ambition is to provide the best possible opportunities for people to obtain jobs. Although the employment position differs in different parts of the country, it is encouraging that this year, compared with last year, there has been a significant increase in job placements. I do not necessarily take my hon. Friend's approach to this matter. Long-term unemployment benefit is a matter for my right hon. Friend the Chancellor, but I take note of my hon. Friend's point.
    Mr. Flannery: Is it not the height of hypocrisy for the Government to have been prating for the past fortnight about allowing miners who wish to go to work to do so when all hon. Members know that the Government are closing pits at a rate that will put scores of thousands out of work? When the Government are putting millions of working people out of work, why do they not realise that their policy is causing unemployment? Why do the Government not begin reflation of the economy and get the working people back to work?
    Mr. King: I do not regard the hon. Gentleman as an authority on hypocrisy when he chooses to make that sort of comment and when he supported a Government who closed pits at twice the rate of the present Government and who invested half as much as we are investing in new and more productive capacity.
    Mr. McQuarrie: I accept what my right hon. Friend says about the long-term effect on most industries of the removal of the national insurance surcharge. Does he agree, however, that, particularly in rural areas, those over 55 and the young are unable to obtain work because of the scarcity of jobs in those areas? Will he give thought to finding a solution to this severe problem?
    Mr. King: The whole House—indeed, anybody who has studied these problems—recognises the real difficulties faced by the more elderly in the search for work. I cannot go further than my comments today, although I hear what my hon. Friend says.
    Mr. John Smith: Is the Secretary of State not ashamed of the fact that in five years of Conservative rule the number of long-term unemployed has steadily climbed to the scandalous total of 1,188,000? As the Government appear to have no special measures in mind to alleviate their condition, is it not long overdue that they should be given the elementary social justice of long-term supplementary benefit?
    Mr. King: I note that the right hon. and learned Gentleman was a member of a Cabinet which succeeded in doubling unemployment and which had no solution to that problem. I note, too, that I am a representative of a Government who are spending substantially greater sums in trying to solve these problems with a range of special employment measures. The problems are, of course, extremely difficult. The first requirement in our handling of expenditure is to ensure that we give the best chance of employment to people, which means continuing to pursue the economic policies that were amply reinforced by my right hon. Friend in his Budget.
    Mr. Ron Daviesasked the Secretary of State for Employment how many people over 50 years of age his Department estimates to be unemployed at the latest available date.
    Mr. Alan Clark: The number of unemployed claimants aged 50 years and over in the United Kingdom on 12 January, the latest available, was 574,692.
    Mr. Davies: Is the Minister aware that in these days of Tory Britain, those 500,000 are effectively consigned to the scrapheap? If there is logic in applying the long-term rate of supplementary benefit to people over 60 who have no prospect of work, why is there not logic in the argument that long-term supplementary benefit should be extended to the over-50s who have no prospect of work?
    Mr. Clark: The hon. Gentleman draws attention to a particularly difficult sector of the labour market where there will be many individual cases of frustration and disappointment. We hope that employers will recognise the value of the experience and skills of people in this age group and will alter their recruitment practices to take advantage of them. When the hon. Gentleman says that logic would indicate a certain course, he must also allow that resources oblige another one.
    Mr. Bill Walker: Is my hon. Friend aware that among those over 50 who are unemployed are a number in my constituency who have been unemployed since the mills closed down under a Labour Government? Those people have the opportunity of finding jobs only in the service sector and tourism, and recent measures taken by the Government have done something for that sector.
    Mr. Clark: I am obliged to my hon. Friend for drawing the attention of the House to that fact. It is in the service sector that the new jobs are expected to come fastest.
    Mr. Penhaligon: How many more people in this category are in effect unemployed because they have some savings and are, therefore, disqualified from receiving supplementary benefit? Is it the Government's intention that those in this category shall eventually be reduced to claiming supplementary benefit as they see the efforts of their lifetime's work gradually being eroded?
    Mr. Clark: If it is possible to ascertain how many potential claimants there are in that category, I shall ensure that the hon. Gentleman has the information he needs.
    Mr. Lord: How much in redundancy payment is likely to be obtained by somebody aged 50 after a lifetime spent in the coal industry?
    Mr. Clark: Approximately £30,000.
    Mr. Evans: Does the Minister have any idea of the despair of many of the 574,692 aged over 50 who have become unemployed under the Tories and who feel that they have no chance of ever getting another job? Will the Government formulate policies either to get this group of people back into employment or to give them a decent standard of living which will allow them to remain unemployed until they qualify for retirement pension?
    Mr. Clark: As I have told hon. Members, there are cases of individual distress and frustration in that sector of the labour market. The hon. Gentleman asks what the Government will do. Resources limit the extension of supplementary benefit along the lines that many would like. It would cost £480 million to extend it across the board, and £220 million to extend it just to those with dependent children.
    Mr. Teddy Taylorasked the Secretary of State for Employment what are the current unemployment percentages in the United Kingdom and in each current or former member state of the European Free Trade Association; and what were the corresponding figures in 1972.
    Mr. Gummer: For the United Kingdom, the latest figure on an OECD standardised basis is 13·4 per cent. in January, compared with 4·3 per cent. in 1972. For the other countries, the latest available figures range from 16·7 per cent. for the Republic of Ireland in November last year to 0·8 per cent. for Iceland for 1982, but as there are a number of figures from differing sources I will with permission publish the complete information in the Official Report.
    Mr. Taylor: Do not the average figures show that we have not done a service to our working population by withdrawing from that outward-looking and non-bureaucratic organisation, which co-operates fully with the Common Market but does not get involved in its bureaucratic and interventionist nonsenses? Might it not provide an answer to our current problems in Brussels if we reapplied to join that excellent organisation?
    Mr. Gummer: The views of my hon. Friend and myself are well known. I believe that we have gained considerably in jobs through membership of the European Community. In this country 2½ million jobs depend on our exports to the rest of Europe, and many of them would be lost if ever we left the Community.
    Mr. Wilson: As the United Kingdom's economy has been declining steadily for some 30 years, going back before our entry into the EEC, does not the blame for our high unemployment rest on the shoulders of successive Labour and Tory Governments, who have proved incompetent to deal with the economy?
    Mr. Gummer: The hon. Gentleman is right to say that a major way of getting ourselves out of our economic problems is through our own efforts, which is why the Government's policies are most likely to produce the economic rejuvenation that we look for.
    Following is the information:

    Unemployment rates compared with 1972

    Latest date

    Annual average 1972

    United Kingdom*

    13·4 (January)

    4·3

    Republic of Ireland║

    16·7 (February)

    6·0

    Denmark†

    10·6 (November)

    1·7

    Portugal‡

    7·6 (1982)

    2·5

    Finland*

    6·2 (December)

    2·5

    Austria*

    4·2 (September)

    1·2

    Sweden*

    3·2 (January)

    2·7

    Norway*

    2·7 (November)

    1·7

    Switzerland•

    1·0 (December)

    0·1

    Iceland║

    0·8 (1982)

    0·5

    * OECD standardised seasonally adjusted unemployment rates, expressing unemployment as a percentage of the total labour force.

    Source: OECD.

    † Seasonally adjusted registered unemployment as percentage of total labour force. Source: OECD "Main Economic Indicators"—supplemented by labour attache reports.

    ‡ Estimates from labour force survey. Source: "OECD Economic Outlook".

    ║ Registered unemployed—basis of rate calculation not known. Source: "ILO Year Book of Labour Statistics".

    ¶ Seasonally adjusted registered unemployment as percentage of civilian working population. Source: OECD "Main Economic Indicators".

    • Registered unemployed as percentage of working population. Source: labour attache report and "ILO Year Book of Labour Statistics".

    Unit Labour Costs
    Mr. Rathboneasked the Secretary of State for Employment if he will provide the latest information on comparative unit labour costs in Great Britain and in the European Community as a whole.
    Mr. Tom King: Information for the European Community as a whole is not available. The annual change in unit wage and salary costs in the third quarter of 1983 was up 2 per cent. in United Kingdom manufacturing, minus 3 per cent. in West German mining and manufacturing and plus 12 per cent. in French engineering.
    Mr. Rathbone: Does my right hon. Friend agree that that is a most unhealthy base for the continued upturn in the economy projected by the Government, which we all want?
    Mr. King: I hope that the House took careful note of those figures. We take some encouragement from the reduced rate of inflation, but should heed the warning that our unit costs are rising. Although the question deals specifically with Europe, it is worth noting that unit costs are falling in Germany and the United States, and are static
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    in Japan, which shows that we cannot afford to relax, and how important it is to ensure that we keep our prices competitive.
    Mr. Litherland: What consolation is the Minister's answer to the work force of the Phillips Rubber Company in Manchester, which has been sacked and locked out merely because its crime was to ask for an increase on £46 a week for a 40-hour week?
    Mr. Speaker: Order. The hon. Gentleman's supplementary question has nothing to do with question 9.
    Mr. Yeo: Does not the significance of my hon. Friend's answer lie in the French figures, which show the cost of the disastrous Socialist policies pursued there? Does he accept that if we were to take account of the Opposition's suggestions and criticisms made after last week's Budget, Britain, too, might go down that route?
    Mr. King: The idea that Socialist policies offer salvation to France was not reflected at the Council of Ministers meeting, when the French Minister had to face adverse publicity following the announcement that France would have to lose 500,000 jobs in steel, cars and shipbuilding because of its problems. I am surprised that hon. Members argue about this, because we shall not get export orders, or the jobs that go with them unless we stay competitive.
    Mr. Maclennan: To what does the Secretary of State attribute the relative deterioration in our competitiveness under his Government, and what does he propose to do about it?
    Mr. King: At present our increase in productivity is about 6 per cent., which is similar to that of Germany, but our wage increases in the past year have been substantially in excess of those in Germany, and greater than our increase in productivity.
    Mr. John Smith: Given what the Chancellor said last night and what the Secretary of State has said today, would it not be fair to describe Government policy as consisting of the following proposition: that profits should be as high as possible and wages should be as low as possible?
    Mr. King: I wonder how the right hon. and learned Gentleman, who is always calling for investment, thinks investment comes without profits. That is important to this country's recovery. It is no coincidence that we are now starting to see more jobs in this country—[HON. MEMBERS: "Where?"] I know that hon. Members get upset at good news, but if they care to study the Employment Gazette they will see that the latest figures show that more people are at work and that we are creating more jobs. It is no coincidence that that is happening at a time when the profit performance of industry is improving.

    Unemployed Persons (Assistance)
    Mr. Andrew F. Bennettasked the Secretary of State for Employment what retraining programmes and official assistance is available to unemployed people between 40 and 50 years of age.
    Mr. Peter Morrison: The Government support the retraining of unemployed people, including those between 40 and 50 years of age, through the training opportunities scheme. Trainees are paid a weekly allowance and help may also be given with travelling expenses and lodging costs.
    Mr. Bennett: Does the Minister appreciate how demoralising it is when people in that age group are out of work for 12 months or more and how difficult it is for them to get training opportunities? Does he accept that one of the best opportunities was provided by the skillcentres? Why are the Government under-using the skillcentres and not encouraging people in that age group to go to them, where they may receive sympathetic treatment, which helps them to regain their self-confidence and become more able to contribute as much as others to the labour market?
    Mr. Morrison: I assure the hon. Gentleman that in retraining there is no bar on people in the 40 to 50-year-old age bracket. I entirely accept his point that the transition from an erstwhile skill to a new skill is important. With regard to the skillcentres, the hon. Gentleman must understand that we are getting value for money, which means that more money is available in the long term to train more people.
    Mr. Hickmet: May I remind my hon. Friend that in Scunthorpe, in my constituency, 11,000 men have been made redundant since 1981, and that the incentive for the new industries that we wish to come into the constituency depends upon specific training programmes under the Manpower Services Commission being marketed to them? I ask my hon. Friend to consider the possibility of a specific training programme being set up in Scunthorpe so that the town can be made more attractive to certain industries.
    Mr. Morrison: I appreciate what my hon. Friend says. I assure him that the aim behind the new adult training strategy that my right hon. Friend the Secretary of State has agreed with the MSC is for specific training relevant to the future.
    Mr. Campbell-Savours: Why did the Government cut the community programme, with its retraining element? Surely that was a senseless and irresponsible act. Is the Minister aware that in the county of Cumbria our places on the programme have been reduced from 1,700 to 900 over a period of only 18 months, with a loss of 700 jobs? Is it not utterly irresponsible for the Government to put people on the dole in this way? Will the Secretary of State restore the figures for Cumbria, because we want our community programme places back?
    Mr. Morrison: The hon. Gentleman will appreciate that after the community enterprise programme, with 30,000 places, the community programme, with 130,000 places, was introduced. That is no cut—it is a fourfold-plus increase.
    Mr. Greenway: Will my hon. Friend consider changing his policy and fund 40 to 50-year-olds on courses at skillcentres 100 per cent.? That would help the Perivale skillcentre, for example, very much.
    Mr. Morrison: My hon. Friend will be aware that every trainee at a skillcentre receives an allowance, so all the trainees are funded. Of course, the training is given to them free of charge.
    Mr. Sheerman: Will the Minister offer some hope to the large number of people between the ages of 40 to 50? Is he aware that there is potential in the Open University to experiment with courses for the unemployed and for the long-term unemployed? Is he further aware that the Open
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    Tech is in danger of having to invent the wheel again because there is no proper communication between the Open University, with its resources, and the Open Tech? Does he realise that money may be wasted by the way in which these courses are being rapidly expanded to help retrain that age group?
    Mr. Morrison: The hon. Gentleman does not quite understand what the Government are doing. As a result of the adult training strategy the numbers who are receiving training in the 40 to 50 year age group will be substantially increased. The Open Tech programme was launched by my right hon. Friend the Member for Waveney (Mr. Prior) when he was Secretary of State for Employment. I should have thought that the hon. Gentleman would commend that initiative, not deride it.

    Youth Training Scheme (Hospitals)
    Sir William van Straubenzeeasked the Secretary of State for Employment what representations he has received as to the effect of the youth training scheme on hospital wards already training nurses and ancillary staff.
    Mr. Peter Morrison: I have received no direct representations on that subject.
    Sir William van Straubenzee: I wish to make it quite clear that my question is prefaced by warm support for the youth training scheme. Will my hon. Friend keep a monitoring eye in case ward sisters, especially those who already have a rightfully heavy programme dealing with trainee nurses, become unduly overburdened by having in addition YTS trainees at the same time?
    Mr. Morrison: I am grateful to my hon. Friend for his warm support for the YTS. I assure him that the director of the Manpower Services Commission was in touch with the chief executive of the English National Board for Nursing Midwifery and Health Visiting about schemes in hospitals. My hon. Friend's point was also made by the director of the MSC.
    Mr. Ashton: Would it not be better to get the 4 million people back to work and have 4 million more national health stamps coming in every week, as we used to have, which could be used to create permanent jobs? Would that not be a better system?
    Mr. Morrison: The hon. Gentleman presumably understands that a job exists only when a product or a service is produced of a quality such that both he and I would wish to buy it. That is the simple answer.
    Mr. Wrigglesworth: If the Minister is tempted by the Secretary of State to cut back in the sphere that his hon. Friend the Member for Wokingham has just mentioned, will he restrain any further cutbacks in training in the mode B1 system of the YTS to ensure that we do not establish a two-tier system, which would be a great disadvantage to the scheme?
    Mr. Morrison: The hon. Gentleman will be aware that at present on the mode B1 system there are 55,000 young trainees and 90,000 approved places. Next year we plan to have up to 70,000 trainees. Each approved unfilled place costs £2,000 although nobody is trained.

    Government Employees (Collective Agreements)
    Mr. Dalyellasked the Secretary of State for Employment if he will list the European Economic

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    Community countries where there are restrictions as a result of collective agreements on the freedom of some or all Government employees to take industrial action; and if he will indicate the groups of employees and the restrictions in each case, respectively.
    Mr. Tom King: Restrictions on the freedom to take industrial action of some or all Government employees in certain EEC countries arise principally as a result of legal prohibition. However, some Government employees in certain EEC countries are covered by legally enforceable collective agreements, which create an obligation not to take industrial action during their currency and that limits the freedom to take industrial action of those concerned.
    Mr. Dalyell: Why deny Government communications headquarters' employees a no-strike agreement?
    Mr. King: The matter was fully debated in the House. I set out the problems that exist and explained why the trade unions' proposals, which were genuine, fell short of the Government's requirements. The Government were supported by the Select Committee, which made it clear that it was the Government's overriding responsibility to ensure that their objectives were achieved.
    Mr. Robert Atkins: Is my right hon. Friend aware that there is a restrictive agreement with a number of unions in the Health Service in Lancashire and many other counties to prevent the Association of Professional Ambulance Personnel, which represents a majority of trade union members in Lancashire, from participating in industrial negotiations with the health authority? Does the Minister agree that that is disgraceful?
    Mr. Speaker: I must draw the hon. Member's attention to the fact that the main question relates to Government employees.
    Mr. John Smith: With reference to GCHQ, which was the basis of my hon. Friend's question, can the Secretary of State tell the House why the Government rejected the option of a ballot at GCHQ to see whether the employees wanted to join the union?
    Mr. King: The Government have a clear responsibility for national security. That is recognised in domestic legislation and in International Labour Organisation conventions. It was the Government's judgment that it was in the interests of national security and that the primary function of those agencies was such that they should operate as the Government proposed.

    Community Programme
    Mr. Kenneth Carlisleasked the Secretary of State for Employment how many people are employed in the community programme at the latest available date.
    Mr. Alan Clark: On 29 February, the latest date for which figures are available, there were almost 112,000 people employed on the community programme.
    Mr. Carlisle: Does my hon. Friend agree that this is an excellent programme for the long-term unemployed and for the community? Does he understand that in Lincolnshire there is great anxiety because the number of places on the scheme is being reduced by one third? It is wrong and it is bad management to ask anyone to reduce a programme at short notice by that amount. Will he undertake to restore the numbers on the scheme to their original level?
    Mr. Clark: I am grateful to my hon. Friend for the appreciative remarks that he has made about the scheme. I know that he played a significant part in getting it off to a successful early start in Lincolnshire. He must accept that those who got off to an early start received more than their original allocation. Now that the scheme has proved successful throughout the United Kingdom it is necessary to adjust the allocation to its original figure in response to the dictates of fairness. There are Government constraints, and in the past three months the House of Commons has approved £25 million for the scheme. I hope that my hon. Friend will accept that I cannot give an undertaking to increase that allocation in the near future.

  PRIME MINISTER

    Engagements
    Mr. Colvinasked the Prime Minister if she will list her official engagements for Tuesday 20 March.
    The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): I have been asked to reply.
    My right hon. Friend is attending a meeting of the European Council in Brussels.
    Mr. Colvin: In asking my right hon. Friend to convey to the Prime Minister our best wishes for success, may I also ask whether he is aware that on the home front, as a result of the Budget, 100,000 fewer pensioner households will be paying income tax than was the case under Labour? Does that not show that, as well as being a Budget for business and jobs, it is also a Budget for pensioners, and that we can get the priorities right, even if Opposition Members fail to recognise that?
    Mr. Biffen: I shall gladly convey best wishes to my right hon. Friend in her task at the European Council meeting. The House will be aware that she will be reporting on that tomorrow. My hon. Friend is right to draw attention to the pensioner households that will be taken out of tax as a result of my right hon. Friend's Budget, and further to observe that it is an extraordinarily well-judged and well-balanced Budget in what it offers and in terms of industry and social judgment.
    Mr. Kinnock: On the subject of the treatment of pensioners, is the right hon. Gentleman aware that as a consequence of the Health and Social Security Bill pensioners will have to meet huge increases in the cost of their spectacles? Does he also understand that the greater their need to change their spectacles, the higher the cost will be? How can he possibly defend that?
    Mr. Biffen: The right hon. Gentleman will be aware that arrangements are made for the provision of National Health spectacles for pensioners. For the totality of pensioners, I have no doubt that the lifetime of this Government and Parliament will show an increase in pensioner living standards compared with what happened under the Labour Government.
    Mr. Kinnock: I am sorry that the right hon. Gentleman does not appear to be aware that pensioners no longer qualify for National Health Service spectacles. The only people who do qualify are the very poor and children under the age of 16. Is he aware that pensioners will now have to pay £70 to £80 for spectacles which they have been able

    905
    to get on the National Health Service for £30? If he agrees with my view of that, and I suspect that he does, why does he not have changes made on Report?
    Mr. Biffen: I say at once to the right hon. Gentleman that my observations about pensioners' living standards took account of the recent changes in the legislation governing spectacles. It is a very short-term piece of politics to engage in scare talk of £80 for a pair of spectacles. It would be nice to have the debate carried further on Report, and we shall welcome that.
    Mr. Porter: Will my right hon. Friend take time today to indicate to the Government of the Republic of Ireland the gratitude of Her Majesty's Government that McGlinchey was so rapidly extradited to Northern Ireland? Does this not indicate——
    Mr. Speaker: Order. I must warn the hon. Gentleman and the House that this matter is sub judice.
    Mr. Blairasked the Prime Minister if she will list her official engagements for Tuesday 20 March.
    Mr. Biffen: I have been asked to reply.
    I refer the hon. Gentleman to the reply I gave some moments ago.
    Mr. Blair: Regardless of the merits, does the right hon. Gentleman not agree that the blanket setting-up of road blocks to prevent the free movement of citizens is a serious invasion of civil liberty and has no basis whatever in law? Prior to the introduction of this arbitrary emergency power, what consultations and discussions took place between the Government and chief constables?
    Mr. Biffen: As to the first point, which I understand is the subject of legal action, I cannot comment upon any individual case, but there is no doubt about the general legal situation. If a constable reasonably concludes that persons are travelling for the purpose of taking part in a picket in circumstances where there is likely to be a breach of the peace, he has the common law power to call upon them not to continue their journey.
    Mrs. Jill Knight: May I draw the attention of my right hon. Friend to the fact that my right hon. and learned Friend the Minister for Health, during the Committee Stage of the Bill dealing with charges for spectacles, has noted that a number of elderly people who will face extreme extra charges if they are not allowed to have National Health Service spectacles will be the subject of some consideration? Can he back up the suggestion of his right hon. and learned Friend with an assurance to the House that people will not be penalised if their sight is very bad?
    Mr. Biffen: I am grateful to my hon. Friend for her comment. I am certain that in this matter, as on social services issues generally, my right hon. Friend the Secretary of State for Social Services needs no instruction from the Opposition Benches.
    Mr. Benn: Can the Leader of the House tell the House by what statutory authority police have occupied the Speedwell rooms in Chesterfield and the Ashgate hospital? Will he give a categorical assurance that the Government have not put the armed forces on to alert?
    Mr. Biffen: I can give the right hon. Gentleman an assurance that the armed forces have not been put on alert.
    Mr. Maxwell-Hyslop: In the context of the Prime Minister negotiating with other Heads of Government in the EEC, would it not be timely for her to remind the other Heads of Government that the reason for the unanimity rule is that the EEC should not destroy itself by taking decisions that are unacceptable to any member State?
    Mr. Biffen: I agree with that view.
    Mr. Andrew MacKayasked the Prime Minister if she will list her official engagements for 20 March.
    Mr. Biffen: I have been asked to reply.
    I refer my hon. Friend to the reply I gave some moments ago.
    Mr. MacKay: Is my right hon. Friend aware that many British companies are now experiencing considerable difficulties in securing orders in the Gulf because the Governments in that area—[Interruption.]—rightly resent the irresponsible muck-raking carried on in this House by Labour Members who have tried, unsuccessfully, to damage the Prime Minister's reputation? Do they realise how much harm they are doing to British industry? Doe they realise how many jobs are at risk because of their action?
    Mr. Biffen: I have no evidence of contracts lost, but I am sure my hon. Friend is right to say that the matters to which he referred could well make life that much more difficult for British exporters in the area. One thing is certain: what makes for grubby politics is rarely good for this country.
    Mr. Haynes: Is the Leader of the House aware that people outside the mining community, ordinary folk, are concerned about the over-reaction of the police in the miners' dispute, which clearly shows that the Government are taking the course of establishing a police state? Will the right hon. Gentleman tell the House and the public outside whether they are planning to move to a one-party state?
    Mr. Biffen: There is rarely an industrial dispute that cannot be made worse by the rhetoric of politicians, but to talk about a police state or the Government trying to connive at a one-party state is a straight absurdity. In my opinion, the police have performed a most important role in enabling those who wish to work to exercise that right.
    Mr. Robert Atkinsasked the Prime Minister if she will list her official engagements for 20 March.
    Mr. Biffen: I have been asked to reply.
    I refer my hon. Friend to the reply I gave some moments ago.
    Mr. Atkins: Does not my right hon. Friend applaud the speed with which the Irish Garda recenty accomplished the capture of Mr. Dominic McGlinchey? Does he not also applaud the increasing co-operation between security forces on both sides of the border? Will he pay tribute to the Taoiseach for standing up to the extremists who are trying to upset him, particularly in the United States of America, since that must bode well for future Anglo-Irish relations?
    Mr. Biffen: I join my hon. Friend in congratulating the Garda on securing the captivity of Mr. McGlinchey. I also agree with my hon. Friend on the other points that he raised and in hoping that this will augur continued and improving relations between this country and the Irish Republic.
    Mr. Fatchett: Is the Leader of the House not concerned that only 179 Conservative Members have signed early-day motion 585 about the Prime Minister? Does the Leader of the House feel that that low number can be accounted for by the fact that many Conservative Members agree with the right hon. Member for Old Bexley and Sidcup (Mr. Heath), who feels that the Prime Minister should make a statement to the House?
    Mr. Biffen: I am sure that connoisseurs of early-day motions will be more than satisfied by the time the final number has been tallied.
    Mr. Dobsonasked the Prime Minister if she will list her official engagements for Tuesday 20 March.
    Mr. Biffen: I have been asked to reply.
    I refer the hon. Gentleman to the reply I gave some moments ago.
    Mr. Dobson: Will the Leader of the House say whether he believes the chairman of the Conservative party, who said that the "Panorama" programme on Right-wing infiltration of the Tory party was incorrect, or whether he believes the chairman of the Young Conservatives, who said that it was correct?
    Mr. Biffen: The "Panorama" programme is itself now the subject of legal representations and I shall very properly curtail my comments on that account. Let me say at once, however, that it would not need the proposition of a comparison between my hon. Friend the chairman of the Conservative party and the chairman of the Young Conservatives for me to say without question that my hon. Friend has conducted his chairmanship and investigation of this issue with total integrity. The fact that the matter is now being considered for reference to the Broadcasting Complaints Commission is a sign of the very serious concern felt about it.
    Sir Anthony Grant: Is my right hon. Friend aware that in answer to a recent question of mine the Prime Minister stated that more than £1,000 million a year of public money is pumped into Merseyside? Are the taxpayers getting value for their money, and would it not be a good thing if the Liverpool council stopped whining and started obeying the law?
    Mr. Biffen: The very statistic that my hon. Friend quotes is a reason why there would be very little public tolerance of a revolt by the Militant Tendency councillors on the Liverpool council.

Royal Dockyards
3.31 pm
Mr. Gordon Brown: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent attention, namely,
"the plan now being considered by the Secretary of State for Defence to hand over to private commercial contractors responsibility for the royal dockyards, including the responsibility for refitting Britain's strategic nuclear deterrent, Polaris."
The matter is specific because a report has been prepared by the personal adviser to the Secretary of State for Defence which has profound and disturbing consequences for the two great naval dockyards at Plymouth and at Rosyth, which is in my constituency, and for the 25,000 loyal civil servants who work there.
The matter is urgent because the report to which I refer has already been accepted for further study by the Admiralty Board and because negotiations about the privatisation of the dockyards are already taking place with commercial contractors, the plans evidently to be finalised before 31 March.
The report has been commissioned, received and apparently acted upon without the knowlege of the House. The matter is of the utmost public importance because in the report no consideration has been given to the consequences for national security of changes that would place the responsibility for our independent nuclear deterrent, Polaris, in commercial and perhaps even foreign hands. Only two lines of the 3,000-word document are concerned with national security and it is clear that the report as a whole has simply subordinated all questions of national security to those of commercial advantage. Our nuclear deterrent is being treated by the Government as if it were a fast-food franchise.
Perhaps the most unsavoury aspect of this disturbing case, and the reason why urgent consideration of it is necessary, is that the author of the recommendations, who is personal adviser to the Secretary of State for Defence, is not only vice-chairman of the Defence Manufacturers
910
Association but chairman of a number of arms companies with financial links in Egypt, West Germany, America and Singapore and chairman of a holding company which, according to the latest Ministry of Defence statistics, benefits by at least £25 million a year from British defence contracts.
In view of all this, and of the silence so far of the Secretary of State for Defence on a matter vital to national security, I ask that the House debate this question without delay.
Mr. Speaker: The hon. Gentleman asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the plan now being considered by the Secretary of State for Defence to hand over to private contractors responsibility for the royal dockyards, including the responsibility for refitting Britain's strategic nuclear deterrent at Her Majesty's Dockyard in Rosyth."
I have listened carefully to what the hon. Gentleman has said, but I regret that I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 10. I cannot, therefore, submit his application to the House.

Royal Dockyards
  PARENTS' AID (No. 2)
  Mr. Jerry Hayes, supported by Mr. Andrew Rowe, Mr. Gerald Bowden, Mr. David Alton and Ms Clare Short, presented a Bill to give full party status to parents or guardians in care proceedings; to allow parents or guardians or custodians and certain relatives to apply to the court for an order giving them access to their children in local authority care and to regulate the conditions of such orders; and to require local authorities to prove the need to remove parental rights in court: 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 134.]

  STATUTORY INSTRUMENTS, &c.
  Ordered,
  That the Fish Farming (Financial Assistance) Scheme 1984 (S.I. 1984, No. 341) be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Archie Hamilton.]

Marks of Origin
3.35 pm
Mr. Jonathan Sayeed: I beg to move,
That leave be given to bring in a Bill to provide for the prominent indelible marking or permanent affixing on all mechanical or electrical goods, over a certain value, of the flag of origin of the country that provides the highest content by value of the goods, excluding final assembly.
Despite its long description, the purpose and the application of the Bill are straightforward. The principle that I wish to establish in support of the Bill is one of effective consumer information. As we are prohibited from restrictive trade practices by EEC and GATT regulations, it is essential that I start by showing why this measure would not constitute a breach of those regulations. Although I hope that improved consumer knowledge will cause a shift towards British-produced goods, it is necessary that I show that this measure is equitable.
I suggest that it can be shown that this Bill is a consumer protection rather than a trade protection measure, as surveys before the Trade Descriptions (Origin Marking) (Miscellaneous Goods) Order 1981, as well as the Gallup poll of 1982, show that the overwhelming majority of consumers not only favour but are in urgent need of better origin marking. Our personal experience shows that a British name does not always mean British goods. For instance, we all know the name of Vauxhall, a well-known, so-called British manufacturer, but I have here a large advertisement for a Vauxhall Carlton car which is not British but completely made in Germany. Electronic goods often have so many stickers and labels on them that it is difficult to determine the country of origin even when the origin marking is in English and the label not hidden or torn.
The use that consumers make of the flag of origin on goods is their own business, but I believe that if they are reminded that every £35,000 worth of imported goods means the loss of one man's job for a year, that the proportion of consumer spending on imported goods is 25 per cent. and that import penetration in key areas of our economy is damaging that economy it may persuade them to buy British. I suggest that up till now there has been a lack of origin marking, and consumers have not been able to make the informed choice that they have the right to make. I hope that the existing trade descriptions legislation that will in the summer be considered in the European court will be successfully defended. But I would ask that the Government consider adding to the 1981 order the use of the flag of origin. The final proof that this Bill is not a trade protection measure must be that we have no objection to other countries taking similar measures.
The French and the Danes have had to withdraw their origin marking. However, the Community should be forward looking and I suggest that there is no reason why the EEC should not welcome a standardised system of marking by coloured flags. It is a better standardised system because it is not subject to language barriers. If it enables British or European consumers to choose British or European goods rather than Japanese or far eastern goods we should all be well satisfied.
To show that indelible flag marking is desirable, I shall refer to the existing legislation and show why that has many short comings. First, the Trade Descriptions (Origin
912
Marking) (Miscellaneous Goods) Order 1981 does not cover mechanical goods. Secondly, it is not sufficiently effective. It states that
"goods to which the order applies"
are
"marked or accompanied by a clear indication of origin'".
That is a sensible idea, but it does not work, because nowhere in the legislation is the method stated, and the methods used are so varied that in a substantial purchase, with a mass of other information, no one recognises the origin, and we have not acquired the habit of checking for the origin of products.
If an indelible and prominent flag—and by "prominent" I mean on a surface visible when the article is in use—were placed on these goods, the consumer would be helped by the simplicity of the measure to look automatically for the country of origin, and this knowledge would become part of the purchasing decision. The value of permanent indelible marking is, in essence, that it gives an awareness of origin. It will affect the pattern of choice and remind people of the responsibility that they bear as consumers in our economy. It will also ensure that people who buy goods from overseas will have continually to justify their purchase of goods other than British or EEC products. I beleive that this is a good thing.
An objection may be that a flag is disfiguring. However, paper labels stuck on with non-water-soluble glues are often far more disfiguring and flying the flag is most unlikely to be disfiguring on the front of a car or by the switches of an electrical machine.
This Bill asks for indelible or permanently affixed markings. By doing so it shifts the responsibility to the manufacturer, whereas the current position is that it is the retailer who is responsible. So this simplification of industrial bureaucracy would offset any marginal price increase that the affixing of a flag might cause.
It is also important to realise that there is the option of a permanently affixed flag or an indelible mark. Therefore, the home supplier who had a large export market would be able to mark goods destined for the home market but not those destined for overseas.
Any trade description measure must face up to the reality that complete items are often made up of parts of different origins. The Bill recognises that by stating that the country of origin is that which supplies the highest content by value, excluding final assembly and profit margin. In other words, the Union Jack will be on principally British goods, not on those just assembled in Britain. The present criterion of "last substantial change" leaves the door wide open for the foreign components to be assembled here and sold as British goods, and that is a profound fault in the present legislation.
This is not a trade restriction measure. It is an equitable trade information measure. If it helps us to identify United Kingdom and European goods and to promote sates of United Kingdom and European goods, and helps the consumer to contribute to the creation of jobs in this country and Europe, I am sure that we shall all be well satisfied.
I commend the Bill to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. Jonathan Sayeed, Mr. David Alton, Mr. Paddy Ashdown, Sir Geoffrey Finsberg, Dr. Alan Glyn, Sir Anthony Grant, Mr. Michael J. Martin, Mr. Roy Mason, Mr. Hal Miller, Sir David Price, Mr. T. H. H. Skeet and Mr. George Walden.

Marks of Origin
  MARKS OF ORIGIN
  Mr. Jonathan Sayeed accordingly presented a Bill to provide for the prominent indelible marking or permanent affixing on all mechanical or electrical goods, over a certain value, of the flag of origin of the country that provides the highest content by value of the goods, excluding final assembly: And the same was read the First time; and ordered to be read a Second time upon Friday 6 April and to be printed. [Bill 131.]

Picketing (Criminal Law)
Mr. Max Madden: On a point of order, Mr. Speaker. On Friday, the Attorney-General made a long statement in the form of a written reply which, in part, stated:
"there is no doubt that if a constable reasonably comes to the conclusion that persons are travelling for the purpose of taking part in a picket in circumstances where there is likely to be a breach of the peace, he has the power at common law to call upon them not to continue their journey and to call upon their driver to take them no further. Any person who fails to comply with a police request in those circumstances will be committing the offence of obstructing a police officer in the course of his duty."
The Attorney-General added:
"I hope that this re-statement of the legal position, which the Lord Advocate agrees reflects the main principles of the law of Scotland also, will serve to remove any doubts that might remain in any quarter about the strict limits within which pickets may seek to press their views on their fellow-citizens."—[Official Report, 16 March 1984; Vol. 56, c. 279–80.]
It seems curious, Mr. Speaker, that the Attorney-General did not seek an opportunity to make a statement to the House either on Friday or yesterday. You rightly stopped questions on this issue this afternoon on the ground that the matters in question were sub judice. As the courts are looking for the latest guidance from Law Officers and their attention will be drawn to the Attorney-General's statement, which was made in the form of a written reply to a written question, I hope that it will be possible for you, Mr. Speaker, again in the interests of the House, to make representations to ascertain whether the Attorney-General would be prepared to answer questions on these matters from the Dispatch Box. To many of us, his statement in a written answer represents a considerable reduction in civil liberties and the powers to picket as many of us understood them.
Secondly, Mr. Speaker, notwithstanding your actions today in stopping questions on the ground of the sub judice rule, will you be prepared to give advice to the Table Office to enable those of us who are concerned by the substance of the statement made by the Attorney-General on Friday to table questions in the hope that we shall be able to clarify the legal grounds on which his view rests? Many of us do not believe that the statement provides a satisfactory explanation of the law as many of us understand it to be.
Mr. Speaker: The hon. Gentleman raises an important issue. I am bound by the sub judice rule, as are all other Members. I am sure that what the hon. Gentleman has said on the interpretation of the law will have been noted and heard by those sitting on the Treasury Bench. It is not for me to say whether a statement should be made or not made.
Mr. Dennis Skinner: Further to that point of order, Mr. Speaker. I am concerned about the sub judice rule. It seems that a number of those outside the House can take part in discussions while we are not allowed to ascertain, for example, why there are certain rules that the police can adopt in, for instance, escorting those who decide to take part in a National Front demonstration in a city wich has a high proportion of black people living within it. What are the rules that apply to football coaches travelling in this country from areas which suggest that violence may take place? The same considerations apply to those travelling abroad for international matches. It seems that these matters can be discussed by people

915
outside the House. On "The World at One" today, Sir Robin Day and a professor of law from I think, the London School of Economics took part in a longish discussion about why the Kent miners could in some circumstances manage to win the case yet in other circumstances would be unable to do so.
It seems strange that, in these circumstances, the House is subject to the sub judice rule. We would like to ask the Attorney-General why those who decide to participate in National Front demonstrations are escorted by the police whereas the Kent miners are not allowed to leave Kent. There are many other instances in which a significant part of the population would argue that a breach of the peace is likely to be occasioned and yet restrictions are not imposed. However, the Kent miners and their friends are being kept away from other counties. This is a strange interpretation of the law. It is strange also that Parliament has received from the Attorney-General only a written answer to a written question.
With the exception of a few comments that some of us managed to make during yesterday proceedings, it appears that the Government will not be questioned on this severe incursion into the civil liberties and freedoms of our people, which are to be further reduced. It is a matter not just for the miners but for the many constituents in every constituency who are concerned about it. It is therefore imperative that we have a statement from the Attorney-General, or from another Government Minister, so that my hon. Friends and other hon. Members can put questions.
Mr. Speaker: Order. There is nothing to prevent a general discussion on these matters. What we are inhibited from discussing is specific cases that are before the courts. That we cannot do.
Mr. Madden: Further to that point of order, Mr. Speaker. I am grateful to you for your tolerance. I raised earlier a second issue, whether the Table Office would accept questions relating to the statement made on Friday by the Attorney-General. Would you be prepared to inquire into the acceptability of such questions? It would be helpful to all hon. Members I think, to have your guidance on this matter.
Mr. Speaker: The Table Office is also bound by the sub judice rule. That is the problem that faces us. However there are ways of getting questions in order, and the hon. Gentleman, as an experienced Member of the House, will probably know how to do that.
Mr. Jerry Hayes: Further to that point of order, Mr. Speaker. Is it not right that the sub judice rule applies not only to this House but universally, and the points that the hon. Member for Bolsover (Mr. Skinner) raised regarding discussions of what could happen, that is hypothetical questions, would not come within the sub judice rule anyway as it applies only to matters which are pending before the courts?
Mr. Speaker: The hon. Gentleman explains, rather more clearly perhaps, what I have already sought to say.

Public Accounts
3.53 pm
Mr. Robert Sheldon: I beg to move,
That this House takes note of the Sixth to Thirtieth Reports from the Committee of Public Accounts of Session 1981–82, of the First Special Report and First to Eleventh Reports of Session 1982–83, of the First to Ninth Reports of Session 1983–84 and of the Treasury Minutes and Northern Ireland Department of Finance Memoranda on those Reports (Cmnd. 8620, 8757, 8759, 8828, 8995, 9071, 9178 and 9191).
My first duty in presenting the Public Accounts Committee reports to the House is a particularly happy one. It is to pay my personal tribute, and offer the thanks of the House, to my predecessor, Joel Barnett, now Lord Barnett. He is of course much missed by the Committee, and by the House, and his work set standards of good sense and kind good humour which are difficult to emulate. My thanks must go also to Sir Albert Costain, who played a notable part in the previous Committee.
Of my colleagues, I can say only that their dedication astonishes me. When I was first a member of the Public Accounts Committee in 1965, it was difficult to obtain a quorum for even important matters. Today, we have almost a full complement of members at each meeting and, when one allows for the mass of paper which our lucid and eloquent Civil Service presents to us, that dedication is clear and gratifying, and is of benefit to the House.
The gratitude of the Committee must also be extended to our Comptroller and Auditor General, Sir Gordon Downey, who, to general satisfaction, was knighted earlier this year. The relationship between him and the Committee is indeed a crucial one. Complete confidence is required between the two for the work to be carried out efficiently, and both he and the Committee understand this. Sir Gordon and his National Audit Office have the essential confidence of us all.
Of the other officers who serve us, I should mention the Comptroller and Auditor General for Northern Ireland, Mr. Dennis Calvert, and his Exchequer and Audit Department. We have been calling upon his advice more frequently than usual, because of our investigation into the De Lorean motor company. We value his help and his expertise.
The Treasury Officer of Accounts, Mr. Clifford Judd, the accounting officers who come before us, and the witnesses who present these matters to us, have a general agreement with the Comptroller and Auditor General over matters of fact. It is essential that these be cleared before they come before the Committee. The crucial work of the Committee could not be carried out unless there were this general clearing of facts and acceptance of a large amount of the material before it reaches our deliberations. So it is that we have to thank those people who present the reports to us and come before us for that essential work.
This debate is the first that the House has had since the enactment of the National Audit Act. That was the measure introduced by the right hon. Member for Chelmsford (Mr. St. John-Stevas), and, as a result of that Act, which was squeezed in on the very last day before the Dissolution of the House for the general election last summer, the Comptroller and Auditor General is now clearly established as an Officer of the House. As a result of that Act, there will now be a wider range of reports, and we are also enabled to undertake value-for-money audits.

917
We were disappointed that the Act did not extend to the nationalised industries. It was a pity that the chairmen and others concerned with the nationalised industries did not realise how the House and the Public Accounts Committee operate. They frequently base their views on the actions of Ministers, and sometimes they form an incorrect view and do not realise that the work of the Public Accounts Committee would have been directed only to securing value for money and efficiency in the organisations. That is the way in which we carry out all our investigations.
It is a great shame that it was not considered that the Public Accounts Committee, far from being an interfering busybody, could have been a valuable ally in making sure that the nationalised industries had clear guidelines set for their operations and were enabled to get on with their task without excessive interference from Government Departments. I am sure that we shall return to that point in due course. After all, the Public Accounts Committee has been on record for a long time as being in favour of pursuing public money wherever it may go. In the United States and in other countries, public money is followed to ensure that it is used purposefully, that it is used for the purposes that Parliament intended, and that the way in which it is spent ensures the best value for money. That is something to which we must unquestionably return.
There are 46 reports before us. The number is so high largely because the general election took place last year and, therefore, there was no debate then. As a result, very few hon. Members will be able to do more today than skate over a few of the reports.
In the Public Accounts Committee, even more than in most Select Committees, there is an all-party consensus. That is essential for the working of the Committee. That consensus is easier to achieve in the PAC than in most other Committees. The members of the Committee all have a respect for each other because we have an important duty which is clear, accepted and understood. That duty is to ensure that money is spent as Parliament has authorised and—within the objectives that have to be set out by any Government—in the way that produces the best value for money.
That is the work of the Committee, and we approach it in three ways. First, we ask that any initiative on the spending of public money should have clearly stated and measurable objectives. Secondly, we ask that the monitoring of progress towards those objectives be undertaken so that any failures or inadequacies can be noted and corrected in sufficient time to maintain the original schedule. Thirdly, we ask that the final outcome should be capable of being measured against those objectives. There is the setting of the objective, the monitoring of progress towards that objective and, finally, the need to be able to compare the result achieved with the original objective.
Mr. Michael Latham: Would the right hon. Gentleman not mention one other matter that is important in the Committee's work? It is that in our questioning and our subsequent discussions we deliberately moderate our language.
Mr. Sheldon: The hon. Gentleman is absolutely right. The understatement of the PAC's reports is a noted feature of the House, and the Committee does not lose from that. Indeed, it gains because when a normally quiet person
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raises his voice it is an indication that something is amiss. When someone constantly shouts, no modulation is possible and it is not possible to judge the extent of the indignation. That is right and it is a tradition that we would do well to follow. I imagine that it has lasted for a century or more. I am grateful to the hon. Gentleman, who plays such a notable part in our deliberations.
The setting of objectives, the monitoring of progress towards them and the ability to compare the outcome are crucial. We had a good example of all three factors being missing in our debate on the new Estimates. Two weeks ago the House debated one of our reports on premature retirement. The idea behind premature retirement was that the number of administrators in the NHS would be reduced. There was an absence of objective in that no one knew how many were to be dismissed, there was no monitoring of how many would accept voluntary redundancy, and even at the end it was not possible to compare the number who had left voluntarily with the original estimate because it was not known how many had gone or how many were expected to go. That defied the basic criteria that we must set ourselves and others in the public service whose accounts we monitor.
Each of the 46 reports could form the basis of an interesting debate, as did the report on early retirement that I have just mentioned. It might be useful for me to pick out a few themes to give the flavour of the Committee's work and to deal with some serious issues. We are not here just to apportion blame. Our major task is to improve the effectiveness of the expenditure of public money and ensure that we get value for the money that the Government raise from the taxpayer. That must be and remains our task.
I shall give a range of the questions that we ask ourselves and those who come before us. One of the most important considerations must be cost effectiveness and efficiency. We regularly see big spending Departments such as the Ministry of Defence and the Department of Health and Social Security and, within it, the National Health Service. Reports 16 and 17 from the 1981–82 session deal with them. Another consideration is financial control and accountability. In that regard we have the Chevaline report to which I shall refer later. We also consider matters such as taxation, tax avoidance, Customs and Excise and Inland Revenue. We also cover wider subjects such as Civil Service manpower and investment appraisal. We make recommendations as to how these matters might best be tackled and handled.
I shall consider the black economy first. In our twenty-second report of 1981–82 we considered Customs and Excise and the Board of Inland Revenue as well as some other Departments. They pointed out the difficulty in recruiting staff and retaining trained inspectors. The evidence showed that that was a serious problem for the Inland Revenue. It was asked what were its criteria for the extra staff who were expected to produce savings well in excess of their cost. We were conscious that if we raised extra taxation to employ more people to carry out investigations, we must consider the revenue that they would be able to raise and the cost of raising it. The Committee concluded that the employment of investigative staff gave excellent value for money. The Committee was pleased that the revenue departments were trying to improve their information on costs and output as a better basis for decision-making.

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We pointed out in the sixth report of the 1981–82 Session on the control of Civil Service manpower that the critical question is not how many civil servants are employed, but what work is obtained from those who are engaged. We repeated in the twenty-second report on the Inland Revenue that the reduction in Civil Service numbers must be balanced by the value to the taxpayer of investigative work. It is the size of the bill to the taxpayer rather than the number of civil servants employed that counts.
In our second report of 1983–84 we considered fraud in the DHSS and in the Inland Revenue. It is valuable to compare the investigative work that we thought desirable in the Inland Revenue with that done in the DHSS. We discovered that in the Inland Revenue, £92,000 was obtained from each official whereas £38,000 was obtained in the DHSS. We also noted that the Inland Revenue estimated the total of the black economy at £4 billion and that the DHSS was unable to give a figure. It strikes me, as I would imagine it does most people, that it should be easier to assess the amount of fraud in DHSS payments than to assess the size of the black economy. Whereas the Inland Revenue was able to do one the DHSS was unable to do the other. At paragraphs 25 and 26 of the second report for 1983–84 we said:
25. We note that most of the detected fraud is perpetrated by individuals for small sums and that DHSS have been giving increasing emphasis to stopping unjustified benefit payments rather than to prosecutions, although the latter are generally successful. We accept that it is more important to maximise savings than to prosecute in every possible case, though we consider it important for DHSS to maintain prosecution at all levels of deliberate fraud, as a deterrent. We understand this to be the Department's attitude.
26. We are surprised at DHSS's attitude to the paucity of information on the extent of undetected fraud. The large gaps which they admitted in their knowledge of this area mean that their existing management information, even after reassessment, will remain an unsatisfactory basis for determining the most cost effective deployment of staff on anti-fraud activities. We are also disappointed that DHSS could offer no informed guess as to the possible cost to the Exchequer of undetected fraud, whether as a result of their benefit studies, their economic advisers' work or the Rayner scrutiny.
It was the lack of information that we thought wrong. Whereas the Inland Revenue was able to make out a strong case for increasing its investigative staff on the basis of its assessment, however vague it might have been, and assess the value of increasing investigative work, the DHSS was unable to make that type of comparison and therefore was unable to say how far investigative work is being best applied. We said that the DHSS should undertake to present some estimate to us in due course as we believed that its task was easier than that of the Inland Revenue.
The Committee's ninth report for the Session 1981–82 dealt with the Chevaline improvements to the Polaris missile system. The Chevaline project commenced in 1972 at an expected cost of £175 million. The latest estimate is £1,000 million or, in 1972 prices, £530 million. The programme is several times its original cost in real terms. The project was expected to be fully operational last year—five years late. The Government intend that Chevaline will be replaced in the early 1990s by the United States Trident 2 missile system.
The Committee is concerned not with defence policy but with financial management and control. The fundamental principle is and must be full accountability to Parliament. It is unsatisfactory and unacceptable that vast
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sums should be spent on these matters without accountability. It is imperative that there is full accountability to Parliament.
We produced a critical report, and are now receiving information on defence projects costing more than £100 million during their lifespan. It is essential that the House knows about large expenditures on defence projects. Many people were offended by the fact that there was a massive defence project about which members of the Cabinet, let alone hon. Members generally, were completely unaware. By a special minute, the Committee of Public Accounts obtains information about those expensive projects, monitors them and asks for further investigation by the Comptroller and Auditor General.
I turn to the Committee's twenty-fifth report for the 1981–82 session on the Property Services Agency In the period 1979–80, 35 frauds were notified by the Property Services Agency. The Committee believed that the Property Services Agency played down the significance of the detected cases in its regional organisations, and the Committee said so. The Committee stated:
"We do not consider that comparison of these cases with the broad statistics for convictions in the country as a whole can be meaningful; nor did we think it realistic to compare frauds involving long term collusion or conspiracy among civil servants, where the losses are uncertain, with measurable `shrinkage' in department stores. We therefore trust that PSA will not minimise the possible implications of detected serious frauds, nor act on the assumption that the degree of irregularity which has been detected is acceptable."
That is a serious matter. We have long been proud of our high standard of public life. We must be aware of the uncertain foundations on which that rests—the incorruptability of civil servants. A standard or ethos among civil servants means that, if any one were discovered in breach of what was held to be the morality by which the Civil Service lives, some people would be outraged. Not only would that outrage be known, but the offences would rapidly become known as well. That is largely the position at present. The task of the PSA and the House of Commons as a whole is to ensure that we retain that attitude through difficult and trying days.
Obviously, the decline in the number of civil servants and the possible diminution of morale because of that and other matters are among the factors that make it even more necessary to ensure that the PSA's efforts to improve the effectiveness of the measures to prevent fraud and irregularities are continued. The Committee has expressed that belief repeatedly.
The Committee had before it an examination of the Wardale report. Only a week or two ago, the Committee took evidence on that report. We shall, therefore, be issuing a further report on the subject. This must be a matter of continuing concern. It is clear that standards of public life must always be higher than standards in certain private organisations, even if it means that we must pay more to achieve that. The standards that come when public money is spent are different from other standards and must be retained.
The Hamilton college of education was discussed in the debate on the Consolidated Fund Bill, but that should not preclude hon. Members from examining the matter. We are interested in improving the standards of public accountability rather than in making any political points. I wish to ensure that when public property is sold the best value is obtained for it. The Committee's ninth report for 1983–84 dealt with the Hamilton college of education.

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That college was built in the mid-1960s for £2 million. It provided residences for 600 students on 51 acres. A decision was made to close the college. Some hon. Members opposed that decision, but that matter does not worry us at present. Our interest is simple and clear, and the Committee can be wholly united on this point. Our task is to ensure that we get value for money on all occasions. The Halliday committee established the ground rules for the sale of property. Those rules followed the sale of Robroyston hospital in 1977. The PAC report states:
"Departments are stongly recommended to take professional advice from the Chief Valuer (Scotland) and the Solicitor's Office".
The Chief Valuer said that in favourable circumstances—I stress that point—the property might realise £6 million. Paragraphs 6 to 8 of the Committee's report state that the Chief Valuer recommended,
"appointing a commercial selling agent with whom the District Valuer would co-operate; the District Valuer would be able to advise on the choice of agent and make the first attempt to obtain reliable planning guidance. The Solicitor's Office also advised that a commercial estate agent might know of some specialised pockets of potential purchasers in the commercial sector who would be interested in out of the ordinary property.
SED and the Jordanhill Board of Governors agreed that the sale should be handled by the College's own solicitors, who it was felt had as much experience in selling properties as estate agents. The appointment of these solicitors was approved before SED received the Chief Valuer's letter of 9 December. They did not contact the Chief Valuer again until offers for the property had been received.
The College was advertised in each of four papers (The Times, The Scotsman, The Glasgow Herald and The Times Educational Supplement) for one issue in the period 14–18 December 1981"
I draw the attention of the House to the fact that that was just before Christmas,
"and one issue in the period 11–15 January 1982"
in the new year,
"About 40 brochures … were issued as a result of the adverisements, but only four offers were received."
The placing of the advertisements and the failure to take the Chief Valuer's advice made the Committee feel sure that that was no way to market a property as valuable as Hamilton college. The governors recommended acceptance of two offers amounting to £680,000, although by then security costs had amounted to £106,000. An amount of £574,000 was obtained for properties which, admittedly, under favourable circumstances, was estimated to realise £6 million. The failure to advertise in such obvious journals as the Estates Gazette surprised the Committee. When the governors intimated that that was the best price they had received, they consulted the Chief Valuer for Scotland and the Solicitor's Office. The advice received was,
"that experienced estate agents should be appointed to market the property and that the District Valuer should be involved in exploring planning possibilities with the local authority."
We say in paragraph 16 of our report:
"We were astonished to learn that SED had approved the appointment of the Jordanhill College's own solicitor as selling agents without waiting for the advice for which they had asked; and had then made no attempt either to change their decision or to discuss with the Chief Valuer their rejection of his advice."
That, we thought, was language which was strong and apposite to the circumstances of the situation. We made it clear that on any future sales of this kind proper attempts should be made to market property adequately.
Mr. John Maxton: Does my right hon. Friend agree that it is not the practice of the PAC to place responsibility for actions on Ministers rather than on
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civil servants? In other words, responsibility is normally put on the Department generally and not on a particular Minister?
Mr. Sheldon: That is right. Ours is one of the few Select Committees which does not take evidence, in the normal manner of speaking, from a Minister. Indeed, we have a Minister on the Committee, and we are always pleased to see the Financial Secretary. It is traditonal for the Financial Secretary to attend only once, but I have made it clear to him a number of times that we should be happy, and benefit from his advice, to see him more often, though we know the pressure of duties on him. Our task is to make sure that the procedures which we consider to be sensible are followed, that the Department tries to ensure that it obtains the value for money that is its task and that lessons are learnt for the future.
As a result of the National Audit Act 1983, we are undertaking value-for-money audits. Such audits always have been undertaken, but invariably they have followed the certification procedures. Those procedures are designed to make sure that the money has gone to the purposes for which Parliament voted it and has not disappeared into somebody's pocket. As a result, the Comptroller and Auditor General and the National Audit Office—the Exchequer and Audit Department, as it was—have in the past found some instances where better value for money could have been obtained, and investigations have been carried out.
As a result of the new National Audit Act, that cumbersome procedure is no longer necessary. When dealing with a substantial volume of expenditure or some new procedure, they can initiate straight off a value-for-money audit, and some of the first of those will be coming forward in the next few weeks; and eventually we shall come before the House and explain the way in which they have worked and how valuable have been their contribution to improving the standard of expenditure of public money.
The seventh report on the nationalised industries concerned us in respect of the way in which corporate plans are prepared. We recommend that sponsor Departments should seek to ensure that all nationalised industries prepare corporate plans annually and provide in them certain essential information, as specified in the 1978 White Paper.
That is important because only when one has corporate plans can one compare one industry with another. Only then can the Government say where public investment can best go. Only when comparing one nationalised industry, in which money can usefully be spent, with another nationalised industry or public body, perhaps where money can less usefully be spent, can the allocation of expenditure be prepared in a sensible way. We hope that that will be done and we look forward to the implementation of that recommendation in due course.
I have spoken of the matters that have been concerning us. We shall be taking evidence on value for money on such matters as the Trident programme; we are at present looking into the De Lorean case—the amount of money that was spent in establishing the motor company in Northern Ireland—and inevitably that will take up more of our time than is usual in an inquiry, but we feel that that is essential in the interests of learning a number of newer

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lessons; and we are continuing our examination following the Wardale report into frauds at the PSA. We have an extensive programme.
The Committee has much work ahead of it and the House should be gratified that so many people have dedicated themselves to providing the means by which this House is able to control the expenditure of money and to make sure that, whatever else happens, the taxpayer has confidence that some people care about these matters and are determined to ensure that standards in public life continue to be improved to the best of our ability.
4.26 pm
Sir Michael Shaw: I am glad of this opportunity to speak following the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). We understand that through no fault of his, he was unable to be present at our deliberations the other day. We missed him and we are glad to have him leading us today. It is right for me to say from these Benches how much we support his warm words of thanks to the man who formerly represented Heywood and Middleton, Lord Barnett, who was Chairman of the Committee during most of the deliberations on the reports that are now before the House. We remember him not only with affection but with admiration for the skilful way in which he led us through our discussions and inquiries.
We also echo the right hon. Gentleman's comments about the former hon. Member for Folkestone and Hythe, Sir Albert Costain, who probably set a record for service to the PAC. No debate of this sort would have been complete without him. He always seemed to achieve his objective by appearing quite late in the debate, whereupon he would sum up in his own inimitable way the conclusions that had been reached by the Committee, always finding a few points of his own that were completely individual but relevant to the discussion. We miss him.
As the right hon. Member for Ashton-under-Lyne said, we are today discussing 46 reports, together with Government reports. The mind boggled at being told late in the weekend that one would have to address the House on those reports, particularly when one had a complete constituency programme built through the weekend. Nevertheless, hon. Members taking part today will have done a great deal of homework on the relevant documents.
As I read the reports, I felt that the work of the PAC was developing all the time. As the right hon. Member for Ashton-under-Lyne pointed out, there have been some significant changes during the period about which he spoke, as a result of which we shall find that our responsibilities have increased. We are lucky in having Sir Gordon Downey as our Comptroller and Auditor General. He is fashioning his new department well and is of invaluable support to us in the help that he gives.
A. number of inquiries that are on the stocks will make us think carefully about the Committee's future role and how best to discharge it. Some of the matters that we are looking into are bigger than those we have considered before. It would be wrong for me to say more at this juncture because we shall finalise them in future reports.
I emphasise, as I did last week when I spoke about the National Health Service, and as did the right hon. Member for Ashton-under-Lyne this afternoon, that the PAC takes an all-party approach. Speaking quietly is part of it. If we got excited and used extravagant words, that all-party approach would quickly break down. As it is, tempers are
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kept cool, the facts are considered as they are and conclusions are drawn that may be unpleasant to one side or the other. We have a duty to the House to play it that way. The House would be the loser if the party element were carried to all its activities.
There are 46 debates—reports, I should say.
Mr. Latham: One debate.
Sir Michael Shaw: Yes, one debate. The more significant fact is that most of the reports were drawn up by a different Committee. Many of those who were deeply involved, including some hon. Members present today, are no longer on our Committee, being engaged now on other duties. Much of the value of those reports lies in their being implemented quickly, and discussed as quickly as possible. The value of debates such as ours this afternoon is lost when so many reports are involved. Some of them have taken a long time to produce, and discusssions on some of the earlier reports began in 1981. That is a long time ago. Many different people were involved at that date.
Having said that, I am bound to question whether we need more frequent debates. I believe that we do, but our next query is, "Do all the reports need debating?" That is much more questionable. Knowing the habits of Leaders of the House, as I do, I believe that more debates are unlikely. If it were possible to limit the number of debates, some reports could be taken on the nod, leaving room for those that are more controversial or that are worthy of discussion, which is perhaps a better way to put it.
I have heard one or two hon. Members, who should perhaps know better, ask whether the PAC is really effective. No doubt other hon. Members have heard that question asked, too. They believe that our tone is not strong enough, yet recent events have shown that even the mildest review—I shall go no further than that—seems to have the most alarming effects. The Committee is effective. The only way forward, if earlier reports are wanted, is to insist on that and to accept at the same time that it might be possible to draw lines around what is necessary for discussion and what we can get through on the nod.
Many of the reports have been largely overtaken by events, although those events have been partly influenced by the reports. Although there have been no debates on certain reports, they have had an effect and helped events. The right hon. Member for Ashton-under-Lyne mentioned the Property Services Agency in relation to frauds and irregularities. We are still working on that a second time around, as it were.
The financial arrangements for the Exchequer and Audit Department are water under the bridge, but the report was effective and valuable. The PAC is inquiring into drugs, sales of Government shares and costs paid to opticians. The reports on drugs and opticians must have had an effect on later Government action. In spite of a lack of debate—we would have welcomed an earlier debate—the Committee has not been without effect on those matters.
This afternoon, I shall raise two matters from the many issues that could be raised from all these bundles of paper. The Chevaline improvement was also raised by the right hon. Member for Ashton-under-Lyne. We were all rather shocked at the escalation in project costs from £175 million to £1,000 million within about 10 years. Our

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criticism, as we said in the report, is that the costs were not disclosed and that there was no requirement that they should be. That will not do, and must stop. It cannot provide for proper supervision of expenditure by Parliament. The fact that the escalation was largely unknown is a very serious criticism.
The ninth report of 1981–82 concluded:
"There is no doubt … that the history of the Chevaline up to 1976 was an unhappy one and is open to serious criticism on grounds of failure to recognise and provide contingencies against the major problems involved in a complex and novel field."
This is the point that I want to emphasise. We go on to say:
"It is not the task of this Committee to deal with policy objectives in defence matters."
We had that matter out when discussing one of the torpedo developments. We criticised the financial arrangements, and the laxity in expenditure on development. We came in for a good deal of criticism because of our strictures on the development costs. Ministers and others thought that we were trying to criticise the weapon itself, whereas we were criticising the control over expenditure. I emphasise, as the report says, that it is not our job to establish the quality of defence expenditure. That is for the Select Committee on Defence. Our job is to see that cost is kept under control, and we must always keep that problem well in mind. There is a clear difference between our duty and that of other Select Committees. The PAC deals entirely with costs and the control of costs, on behalf of Parliament.
We end the report by saying:
"Full accountability to parliament in future is imperative."
We can maintain that only be getting the information and, where necessary, by criticising it. The quality of the weapons concerned is not a matter for us to discuss.
My other point is about the second report of the Public Accounts Committee, 1982–83, entitled:
"Development of Internal Audit in Central Government".
The PAC was greatly concerned at the lack of an adequate system of internal audit and of adequate staff to carry out the work. In 1981 we were concerned at what we called the standard of internal audit in central Government. In the second report, we welcomed the introduction of a basic training package for new entrants. During discussions on the first report, evidence was taken as a result of my questioning, which is referred to in the second report, on page 19. I asked Sir Anthony Rawlinson:
"Reverting to the last report, one reread the evidence of Sir James Hamilton and Sir Brian Hayes and I got the strong impression at that time that they were very much in favour of having most, if not all, of the internal audit staff, doing a tour of duty from the main body of their staff and they felt that this was a good thing: I frankly doubted it in many cases but that was their view. Has there been a basic change of view in the departments on this?"
Sir Anthony replied:
"There has not been a change of view."
If the internal audit department is regarded solely as a stepping stone in the career of a civil servant, who is moving just for a tour of duty into the internal audit side and then back to his normal duties, I doubt very much whether the job of the internal audit department is done well. I was told that that gives the staff added interest, but I do not believe that anybody in the internal audit department who expects to go to another branch of the same department in two years' time will be unduly critical of what is going on in that department. Perhaps it is a good thing to spend some time in the other department, but the
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main control and thrust in it must come from somewhere else. There must be much more training of specialised staff, such as accountants, within the Departments and the Civil Service in general. I am glad to note that in our report we received an assurance that that was beginning to happen and that there were special training courses and so on.
I raised this matter the other day, and still have not received an answer. There is in the Civil Service, proud though we should be of the quality of our civil servants, an outdated notion that, if one is to advance in the Civil Service, one must aim at being a policy adviser. So much work in the Civil Service revolves around management, not policy. In the past not enough emphasis has been laid on the need for management skills.
Therefore, I should like to ask when we shall get a replacement for Sir Kenneth Sharp. His work brought the importance of that aspect of work in the Civil Service to the fore and much more to its rightful place. Time and again, as we saw in the report on early retirement that we discussed last year, matters have not been managed correctly or objectives set out clearly. The follow-through has not been watched carefully, so the results were not compared properly. That work must be done on a much wider scale in future. Every time a new project comes forward, let us have proper planning. We should not just establish the policy and go ahead with it. That is not the way to do it. One may think of a good policy, but let us work out the management consequences before we get cracking. Therefore, I ask again: when shall we get a first-class successor to Sir Kenneth Sharp?
4.45 pm
Mr. William O'Brien: I should like to express my appreciation to the present Chairman of the Public Accounts Committee, my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), for his guidance as Chairman. In the Committee, the Chairman gives a lead with searching questions and in-depth consideration of the subjects, which is most inspiring. As a new member of the Committee, I find the help and guidance given by the Chairman most encouraging.
There are 46 reports before us. As was said by my right hon. Friend and by the hon. Member for Scarborough (Sir M. Shaw), many subjects are covered by them. I shall refer to the eighth report of 1982–83, which is entitled:
"The Joint Financing of Care by the National Health Service and Local Government."
It has been said that many of the reports have been overtaken by events. The last time that the House considered a report by the PAC was in March 1982. It is obvious, therefore, that some reports have been overtaken by events. The eighth report fits that description in some respects. It states in paragraph 1:
"The aim is, so far as possible, to provide complementary services through the NHS, which provides hospital, primary and community health care, and local authorities, which provide social services including residential and day care, home helps and meals on wheels."
One can see that events in local government and the Health Service have developed to such an extent because of economic controls that the recommendations in the eighth report are now outdated. In this report, as in others, and in the meetings of the PAC, the theme is value for money and accountability, as was said by the Chairman. We must accept that there must be some demonstration of accountability. In many instances the Committee extracts

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information about who is accountable for what responsibilities and duties. In the recent past, such matters have been highlighted in more than one instance.
The work of the Committee of Public Accounts and the way its reports have been presented, ensure that people who are accountable carry out their duties responsibly. The eighth report relates to the work of the Department of Health and Social Security and joint financing by that Department and by local government.
The Committee has spent, and will spend, many hours considering the work of the DHSS, the services it provides and their value to the people in need of and receiving them. The cost of services must be considered in terms of their value to the Department and to the people receiving them.
The principle behind joint financing is that the long-term services normally provided by the DHSS may be better provided by local government health and social services. In under two years the report affected Government policies, and Government policies also affected the principles behind and the work outlined in the report. The points made in the report can be influenced by various Secretaries of State. That is illustrated by the Department of the Environment.
The Department of the Environment is responsible in the main for monitoring local government expenditure. A change in the level of government expenditure can influence joint financing by the area health authority and the social services department in local government. It is clear, therefore, that the reduction in rate support grant and the effect of proposed legislation could influence the level of services provided by joint financing.
Paragraph 2 of the eighth report states:
"Jointly planned social services projects will normally be financed by the local authorities primarily responsible for them from their ordinary budgets. In order to help finance such projects in the short term health authorities in England have since 1976–77 contributed towards the costs of specific capital schemes, such as the provision of day centres, and to revenue expenditure on, for example, additional social workers".
Against that background I support the view that much of the information contained in the report can be overtaken by events brought about by Government policies and the decisions taken in the Chamber.
The report continues:
"As the NHS funds are being used, health authorities need to be satisfied that such jointly financed schemes are in the interests of the NHS as well as the local authority and could be expected to make a better contribution to total care than if the funds were directly applied to health services".
Even that recommendation is out of date because of developments in the Health Service over the past 12 months. Value for money and accountability are matters for which—I agree with other hon. Members—some Departments must have a rolling programme. The Committee should take particular interest in the DHSS to ensure that it is up to date with the report's comments.
Paragraph 11 states:
"We note that health and local authorities will jointly specify the detailed purposes for which the grant is to be expended, the services to be provided and their cost".
We live in a changing world and therefore we should request opportunities to consider particular health services, in conjunction with social services, to ensure that we get value for money and the services necessary to maintain the increasing numbers of the elderly, and those long-term mental patients whom the local authorities' social services departments are being requested to take over.
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It is suggested that Health Service resources should not be tied down to long-term patient services, which can be maintained in the local government sector. There is nothing wrong with that approach, providing we ensure that resources are available to care for those people and to maintain the service.
Paragraph 12 states:
"As to the effectiveness of joint finance and the associated new scheme"—
at that time, people were referring to new schemes—
"we accept that since the policy of successive Govemrnents in providing alternative care outside hospital is to improve the quality of life, community services could be cost effective and good value for money even if they cost no less and possibly cost more".
That view was expressed in the report then, but it is not being considered by various Departments. I refer to the Department of Health and Social Security and the Department of the Environment that caters for local government social services.
Paragraph 12 of the eighth report states:
"care outside hospital is to improve the quality of life, community services could be cost-effective and good value for money even if they cost no less and possibly cost more."
That view should underly our examination of the matter.
The same paragraph continues:
"However, we consider that there are a number of reasons why the cost-effectiveness of the schemes in meeting this policy objective will need to be kept under review by the health departments."
The Committee should keep that point in mind because it has an effect on the way of life of many people. We have a responsibility to consider the services provided to the people who need them at the same time as we discuss value for money and accountability.
Paragraph 13 states:
"First, since district health authorities will be able to guarantee continuing annual payments to local authorities and voluntary organisations for people transferred to community care, they will be entering into virtually open-ended commitments involving a permanent transfer of NHS funds."
Although that paragraph states that there will be continuing annual payments for services we know that the Government are trying to maintain public expenditure levels and that some of the joint financing of annual payments being made in the late 1970s and early 1980s has been cut. Paragraph 13 continues:
"Second, the sums involved could be substantial, especially in view of the expected rise in the numbers of very elderly, who will undoubtedly place a high demand on community care."
We have had reports from various Departments which show that the number of elderly people in communities is increasing and that the responsibilities placed on local authority social services departments are also ever-increasing. That matter should be kept under review and there should be reports from the PAC to ensure that we are receiving value for money at all times.
Paragraph 13 further states:
"Third, DHSS expect it to take years to transfer into the community the 20,000 mentally affected in-patients presently in hospital, since health authorities will be obliged to make the transfers at no extra cost and could therefore find it difficult to finance community care facitilites in advance of realising NHS savings."
That is correct. There is a policy of transferring the responsibility for National Health Service patients to the local authorities. We should accept the report's recommendation to keep that matter under review.
The recommendations of the Royal Commission on the National Health Service run side by side with the points I have been making. The commission published a

929
consultative paper called "Patients First". We should study that closely, because if we are to pursue the principles and policies I have mentioned we should keep those matters in mind.
The Chairman of the Committee and the hon. Member for Scarborough expressed appreciation for the work of the Comptroller and Auditor General. I believe that the Committee is well served by Sir Gordon and his staff. The Committee receives regular constructive reports from them and, in the long term, that also serves the House. I wish to be associated with the appreciation already expressed for the work done by that Department.
One of the first questions that I asked Sir Gordon was about audit control. The new arrangements for audit have been referred to, but computer auditing is one of the matters that worried me. There is greater reliance on, and increased services provided by, computers in all Government Departments. If the Committee is to do its job effectively and maintain the spirit and principle of ensuring value for money and accountability, that must apply right across the board. It is against that background that I questioned the value of computer auditing. The Committee was advised that there are sufficient trained accountants and other people in the Auditor General's Department to ensure that there is a proper audit of the computers.
Various frauds have been referred to. Without a doubt, computers will provide the greatest opportunities for fraud if we do not keep them under control. I was satisfied by the report that that matter is well in hand.
Nationalised industries have been mentioned. As a new member of the Committee, I was to some degree disappointed and surprised to find that the PAC is not involved with expenditure by nationalised industries. I was concerned with nationalised industries before I entered the House and I thought, therefore, that we should be studying the operations of nationalised industries and their expenditure of public money. I hope that some time there will be an item on the agenda of the PAC that will allow us to examine the matter and to make out a case for studying the expenditure of nationalised industries. I hope that we shall consider that in the near future.
The point has been made that the Committee must ensure that the money allocated by Parliament to the various Departments is spent for the purposes for which it has been approved. The Committee can monitor that aspect of expenditure. The Committee spends time questioning civil servants and pressing for details on expenditure. It specialises in asking questions and in trying to bring forward reasons as to why money has been spent on certain things. When there has been a request for additional money the Committee makes extensive inquiries about it. Because of the experience of the officers and members of the Committee, it would be helpful to the nationalised industries and to the House if we were given the opportunity to ask questions and to comment, as has happened on defence and the National Health Service.
The reports that are before us are voluminous in number and in content and should be given all the consideration they merit by the House. I hope that there will not be a two-year time lag before future reports are debated.
5.11 pm
Mr. Michael Morris: I should like to be associated with the remarks of the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) and of my hon. Friend the Member for Scarborough (Sir M. Shaw) about our former chairman and colleagues who were previously on the Committee, particularly Sir Albert Costain. In addition, I should like to pay tribute to the right hon. Member for Ashton-under-Lyne. It is a pleasure to serve under his stewardship, not least because I am now getting coloured pieces of paper to differentiate one subject from another.
Before I go into the substance of some of the reports, I point out to my hon. Friend the Member for Bosworth (Mr. Butler) that although I shall not be commenting on Northern Ireland matters today, the De Lorean inquiry has opened a Pandora's box which leads me to believe that the Committee has been perhaps a little too sympathetic to Northern Ireland's financial problems. I suspect that when we next discuss public accounts, my hon. Friend, if he is still in his present position, will be fairly busy.
I contrast this debate, covering as it does 46 reports dealing with over 60 subjects, with what happened recently when we had one day's debate on Estimates covering just two subjects. I think that you will confirm, Mr. Deputy Speaker, since you were in the Chair, that each of those debates was substantially over-subscribed. Allied with the plethora of Fridays when we discuss private Members' motions, that suggests that something is wrong with the organisation of the parliamentary timetable. Although it is not the responsibility of my hon. Friend the Financial Secretary to the Treasury, I hope he will draw the attention of the Leader of the House to the fact that we cannot go on in this manner. We lose immediacy, as has already been said, but also—this is important—the opportunity for hon. Members who are not on the Public Accounts Committee to add to our deliberations by debating these matters so long after the event.
When I saw the large number of reports, I was tempted to comment upon many aspects, including the National Health Service, one of my first loves but one on which we had a good debate recently. I suspect that my hon. Friend the Member for Crawley (Mr. Soames), who may seek to catch your eye, Mr. Deputy Speaker, may have one or two additional points to make on that.
I was very tempted to go into the Ministry of Defence in some depth because it is a little time since we have considered the financial dimensions of that Ministry on the Floor of the House. In our Committee we used to be traditionally served up by the Ministry of Defence with the fact that it had overspent by between £250 million and £500 million. It became a regular tour de force with the then permanent secretary, now retired, as to what his latest assessment of overspending would be. Indeed, we have great problems. My hon. Friend the Member for Scarborough has referred to the Chevaline report, the ninth report of 1981–82, and the fact that Parliament did not know what was going on, despite it being a £1,000 million programme. My hon. Friend quoted paragraph 19. The concluding paragraph, paragraph 20, sums it up in the last sentence when it says:
"Full accountability to Parliament in future is imperative."
If I put "Trident" in brackets after that, I hope the Ministry of Defence will recognise that the Public Accounts

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Committee will expect and, if it does not get it, will seek full information on the financial implications of that programme.
If the rumours of an underspend this year of about £280 million on top of the £240 million cut that the Ministry of Defence took earlier in this financial year are correct, we have come from an overspending of £500 million to an underspending of £500 million. While I am sure that my hon. Friend the Financial Secretary and the Treasury will be delighted if they have that sort of money in hand, it is just as bad in financial planning to underspend as it is to overspend.
I want to deal in depth with just two issues, although they are covered in several reports; the first concerns staff and the second the nationalised industries. Starting with staff, the twenty-second report of 1981–82 was concerned with the Board of Inland Revenue, Customs and Excise and the Department of Health and Social Security. As my hon. Friend the Member for Scarborough has mentioned, the black economy was estimated by the Inland Revenue at about £4 billion. The Inland Revenue said in its evidence to us that it believed it could make some inroads into the problem by the recruitment of 400 extra staff, of whom 70 would be exploring experimental areas. The results that department has achieved are interesting. It gave us evidence that with 1,870 investigators it had raised £173 million, or £92,000 per member of staff. Customs and Excise give us evidence that with 4,000 extra investigators it had raised £150 million, or £37,500 per person. The Department of Health and Social Security, dealing with fraud, with 2,500 staff had raised £40 million, or £38,000 per person. In addition, through the fourth category of employers' contributions, where new selective techniques have been used in my constituency amongst others, it was reported that £25 million had been raised in 40 weeks—or £170,000 per person.
I support wholeheartedly the efforts of my right hon. Friend the Prime Minister to reduce the global number of civil servants. That overhead factor is far too high in relation to our GNP. I go all the way with the Prime Minister in her attempts to reach a target of 630,000. She has got very close to that in two Parliaments, with a reduction of 100,000 in overall numbers. My hon. Friend the Financial Secretary should note that there are Departments of State where people of calibre—I emphasise "calibre"—could usefully be redeployed.
I had a petition from my Inland Revenue staff in Northampton 1 and 2 districts, complaining about the closing of PAYE files. I had to tell them that I had little sympathy with their petition because most of the files were inactive or had tiny amounts. However, I was sympathetic to stiffening up the investigating element of senior tax officers and senior tax inspectors. In paragraph 11, the report refers to the need for special measures to secure and retain the required specialist staff. I hope very much that the Government will take on board that paragraph, because those senior officers are extremely valuable members of the public service, and we should support the work that they do.
That, in a sense, was the secondary issue that I wanted to raise. The primary issue that I want to raise this evening concerns the broad public sector and, in particular, I want to refer to the sale of public assets. The issue covers a great number of reports. When we look back on the period in office of my right hon. Friend the Prime Minister, I believe that one policy aspect of her Government and of my right
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hon. Friend the Chancellor that will be remembered is the successful return to the private sector of the monoliths of many of our nationalised industries. I pay tribute to my hon. Friend the Member for Eastbourne (Mr. Gow), who was here a few moments ago, because between 1974 and 1979 he pricked the House with a continuous flow of ten-minute Bills to denationalise one public sector area after another. He provided the necessary stimulus to many of us to look at the area in great detail.
I want to consider three aspects of policy connected with the disposal of assets—the disposal of assets of a non-trading nature, the disposal of assets of a trading nature, and the flotation or privatisation of those assets. I shall take each separately, because there are different implications in each of them. I am sure that the hon. Member for Glasgow, Cathcart (Mr. Maxton) will enjoy the first one, which is the 1983–84 ninth report on Hamilton college.
Mr. Maxton: I shall.
Mr. Morris: The Chairman of the PAC has already referred to the details of that disposal, but I think that it is worth setting the scene. It was closed in 1980, sale agreed at £680,000, replacement value of £20 million, cost of £2 million, no public sector bodies interested in it, guidelines firmly laid down by the Halliday committee in 1980. The chief valuer was absolutely right when he made a clear recommendation and said that the value might be £6 million. The Scottish Education Department chose to ignore that, and went along with the board of governors' recommendations, and used a local solicitor. The key lesson for any Government, of whichever political party, is that where agreed procedures are laid down they must never be flouted unless a conscious decision is taken to do so. That is the implication of that exercise.
For another disposal of assets of a non-trading nature, I go back to the eighth report of 1982–83 on surplus NHS lands and buildings. I knew that I would not be able to resist the temptation to go hack to the Health Service. The procedure here is that health authorities seek the professional advice of the Inland Revenue 'valuation office. In that report we were told that, in 1981–82, 1,424 acres of surplus NHS land had been sold for £20 million. That was a valuable contribution to the Exchequer. However, it was interesting that, at 31 March 1982, a further 6,445 acres were awaiting disposal—nearly 10 per cent. of the whole NHS estate. I do not know what the figure is today, but I am willing to bet that it is still substantial. May I add, for the record, that for 10 years I have been trying to persuade the health authority to sell about 15 acres at Mansfield hospital, right in the middle of Northampton. The report gives examples of land that has been held for over 12 years, in the hope that the health authority would get a better price some time in the future.
That was the story in England. In Scotland, the situation is almost as dismal. In 1978–79 and since, according to the evidence there, there has been little effort at disposal, and the reason given for most of that is the fiasco of the Robroyston hospital.
Then we go to Wales. It is amazing how, whenever we go to Wales, we find something even more interesting. We were told in the inquiry that there was little information about how much land was surplus in Wales, apart from the fact that it was estimated, at March 1982, that 1,080 acres were surplus to requirements. That was 26 per cent. of the

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land stock of the Health Service in Wales, yet no one had done a proper analysis of whether that was the absolute amount.
There are incentives to sell, but I suggest that they have not worked to date. Paragraph 30 of that report suggests that there should be a notional rent charge for under-used assets. However, the Treasury did not favour such an approach. I hope that my hon. Friend, when he winds up, will tell us that the Treasury has changed its mind or found an alternative stimulant to health authorities to sell. Indeed, the Treasury minute went on to say in paragraph 53 that
"the introduction of legislation to provide departments with the power to seek planning permission"
was being considered. That was to obtain any gain, rather than to sit on it for 12 years. Again, I am not aware of any progress on that front.
So much for the disposal of assets of a non-trading nature. I come to the disposal of assets of a trading nature. Here I refer to the twentieth report of 1980–81, which was picked up again in the third report of 1983–84, relating to the Department of Industry and British Leyland at Bathgate. That report suggested that performance indicators were needed in the accounts of a national industry such as British Leyland, and that it was necessary for all nationalised industries to consider having them. May I point out to my hon. Friend the Minister that it is not necessary—it should be mandatory for the annual accounts of any company operating under public ownership to contain performance indicators. Indeed, I go further. There should be a common accounting basis. It makes a mockery of a situation in which the underperforming nationalised industries always give their figures on a historic basis, and those that are doing well always do it on a current costing basis. Clearly, both hide the truth. I hope that before long the Treasury will say, "Enough is enough," and that we shall have a common basis.
That report went on to say, reassuring the Committee to a degree, that 75 per cent. of the asset sales that we considered then had been covered by the memorandum of agreement but—inevitably, there is the "but"—the evidence was that British Leyland had failed to consult the Department on a major and substantial transaction which had an element of tax avoidance. I say again to my hon. Friend the Minister that it ill becomes the public sector to be in the vanguard of tax avoidance schemes, because inevitably there are major dangers of charges of tax connivance. That is something that we as parliamentarians cannot accept.
Finally, the report has the salutary paragraph that refers to the definition of the value of disposals. We talked about a "probable cash value" realisation which
"was substantially less than the book value of the assets"
which was substantially less than the actual cash value that we got. These were semantic discussions, but they serve to show that, when we are dealing with the valuation of assets in the public sector, the one thing we want is a realistic valuation and not one that looks good on paper but bears no relation to real life.
On the third aspect, which has come to be known as privatisation, I refer to the tenth report, dealing with the Department of Industry and the sale of assets. In paragraph 24 the report quite rightly says that the maximum return
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to the Exchequer is not the only criterion to be used when it comes to floating off a public sector company, but that there are other policies which it may well be necessary to take on board. We say in the report that Parliament has the right to expect the maximum return "consistent with the policies" of the Government of the day. In that report we looked at British Aerospace, Cable and Wireless and Amersham International, and the sale of British Petroleum shares on two different occasions.
The report took the view that it was fair to suggest that in the British Aerospace sale the Department of Industry had followed a learning curve: errors were made but, in a sense, they were understandable errors. Then we had the launch of Britoil, when a substantial amount of the stock was left with the underwriters. As we say in our report, it is easy to look back with hindsight. Nevertheless we drew certain conclusions, one of which is that we have an obligation as a Parliament and as a Committee of Public Accounts, no matter how enthusiastic we may be as individual Members to liquidate the vast majority of the public sector—I will nail my colours to the mast because I believe that that is the right policy—to tackle this vexed question of the value of assets prior to sale. A recent, very interesting report analysed oil companies and showed that Britoil was the only one whose share price reflected only 50 per cent. of the asset valuation, when all the others were very much in line.
I point out to my hon. Friend the Financial Secretary that this question will not go away. As we go into the very large-scale privatisation of British Telecom and British Airways, to name just two—and we have a programme in the public expenditure White Paper of at least £2 billion a year for the foreseeable future; I hope, for all our sakes, that that is an underestimate and I shall encourage my hon. Friend to take it further—there must be as professional a valuation of the assets as we can obtain before the launch. In that way, we will, consistent with whatever the policy of the Government may be, contrive a fair deal for the taxpayer.
Across these three categories of disposal of public sector assets—trading, non-trading and ownership—the Treasury must urgently review the guidelines on the sale of land and building assets by all Departments of State. We need to ensure once and for all that in England, Wales, Scotland and Northern Ireland each Department of State is fully aware of the guidelines, so that in 12 months' time we do not find thrown up in the PAC some other Department of State that has forgotten to use them.
Secondly, I re-emphasise my earlier point about ensuring that all public sector accounting is done on a common basis. Whilst it cannot be done overnight, we should have a target date for a clear-cut analysis of historic cost accounting or current cost accounting. Thirdly, we need consensus on the valuation of assets prior to sale.
Turning to the seventh report of 1983–84 on the nationalised industries, the House will recall that the Government in their wisdom rejected the Bill presented last summer by my right hon. Friend the Member for Chelmsford (Mr. St. John-Stevas), for which I was the unofficial whip, and thereby the opportunity for Parliament and the PAC to monitor the performance of nationalised industries. It was claimed at the time that the combination of financial targets and the reports of the Monopolies and Merger Commission would be more than adequate to keep a steady hand on the tiller of the nationalised industries.

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Without wishing to be harsh, I submit to my hon. Friend that the submission now looks pretty weak. It has not worked for the National Coal Board, as we found in the recent debate on a Supplementary Estimate of £290 million, when we were also told that there would be another £200 million in the wings and, in addition to that—sotto voce—would be whatever was decided as a wage settlement. It has not worked for the Electricity Council, which suddenly discovered that it needed an extra £300 million out of the back pocket.
I will not detail the conclusions of the seventh report—they are there to be read—but they clearly show that in the case of British Telecom, the British Railways Board and the National Coal Board the Departments' controls were not working, that the financial planning did not exist and that there was no reporting. In almost every aspect that we examined, the Departments of State were failing systematically to monitor those nationalised industries. We looked at only three. I assume, being slightly mischievous, that they were probably the best three. We were not allowed to look at the others. They were probably a great deal worse—but I may be unfair to my hon. Friend.
We have to find a way—I hope that it will be whilst I am in the House, and I have every intention of remaining here for a good many years—for Government and Parliament to monitor what happens to public sector money, particularly in the nationalised industries.
5.37 pm
Mr. John Maxton: I agree with the hon. Member for Northampton, South, (Mr. Morris) that we must always keep very careful control of the spending of public money. We have to make sure that the money is spent on providing the services that it is supposed to be spent on. It is not the job of the Committee of Public Accounts to try to save money at the expense of the services that are being provided by the Department that it is considering. There is sometimes a danger of hon. Members on the Government Benches falling into that trap—not those who are members of the Committee but some of their hon. Friends.
I should like to echo what has been said by those hon. Members who have referred to our Chairman and past Chairman and the way in which they have guided the Committee. Both have done a tremendous job. My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), the present Chairman, has undertaken a difficult task in following Lord Barnett. Nevertheless, he is fulfilling it with a quiet confidence and skill which most of us on the Committee much appreciate.
I pay tribute to a member of the Committee who served on it for a long time but who has now left, although he is still an hon Member. I refer to my hon. Friend the Member for Fife, Central (Mr. Hamilton). When I first went on the Committee, I remember the advice he gave me and the honourable and worthwhile part he played in our discussions.
The PAC is a unique Committee in many ways, and I consider it a privilege to be on it. It is unique in terms of its age, because it is the oldest. It is unique because it does not consider things in the same political way as the other Committees. It looks at spending and does not question Ministers. It is unique in one other way, in that it is the one Select Committee with a member of the SDP on it, although when the alliance parties were fighting over the
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places on the Select Committees recently they conveniently forgot that fact. The Committee has that privilege, and I am glad to see that the hon. Member for Caithness and Sutherland (Mr. Maclennan) has now joined us. I hope that he will speak later.
The PAC has its failing. We have a separate accounts department supporting the Northern Ireland Office and giving us evidence purely on Northern Ireland. There is a separate Scottish Office, which has as much power in Scotland as the Northern Ireland Office has in Northern Ireland, and, as a Scottish Member, I find it strange that we do not have a separate Scottish accounting office. After all, we have separate Scottish law, and that law is sometimes different in terms of accountancy. We have specially trained accountants. Someone who wants to be an accountant in Scotland will find it difficult to get a job elsewhere, just as someone who has trained in accountancy elsewhere will find it difficult to get a job in Scotland. In view of the uniqueness of the Scottish Office, there may well be reason for having a separate Scottish accounting office.
I do not see the two Ministers from the Scottish Office who are present nodding in agreement with me. They may feel that their affairs and how they spend money would be more carefully looked at if there were such an office considering purely Scottish matters. Some hon. Members may suggest that I am perhaps getting rather political in what I am saying. However, the PAC, in carrying out its job, tries to act in a non-political way. It is right that when the members of the Committee are working together in the Committee, questioning and drawing up and finalising reports, they must try to get a consensus and to cross political barriers.
Once those reports are produced and we have debates such as this, that political consensus should not continue. I am sure that Conservative Members do not expect me to be non-political—and the Committee and the 46 reports provide an enormous amount of political ammunition for both sides of the House, although that may be less true of the minority parties. There are many things in the reports that attack the philosophy that I stand for, and there are many things that give me ammunition for my political philosophy.
We should not follow the line that these debates are academic. I find it disappointing that almost the only hon. Members wishing to contribute to the debate are members of the PAC. That is wrong. These reports are full of political ammunition for other hon. Members to use. I have spent some time this afternoon trying to persuade some of my hon. Friends who have special interests in, for example, the Health Service, the Scottish Development Agency, hospitals, drugs, and so on, to make a speech in this debate. Now is the time for them to do so.
Mr. Robert Maclennan: I follow and agree with the hon. Gentleman's argument about the non-partisan nature of the Committee and feel that it supports the position of the alliance parties. Nonpartisan probing of the Government can be as effective as the brickbats that the hon. Gentleman is more accustomed to throwing across the Chamber. He should not judge the effectiveness of the PAC by the attendance in the Chamber. Its effectiveness is almost the reason why the Chamber is empty. We have done our work well.
Mr. Maxton: I shall return to the hon. Member's point about effectiveness. As a member of the SDP, he should

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know that it claims that it is not involved in the dirty party politics in which the rest of us get involved. The personal sniping in which his party indulges at elections and in the House makes nonsense of that claim. The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) is looking at me aghast, and I agree that the Liberal party indulges in it slightly less than the SDP in Scotland. I cannot be too rude to the hon. Member for Caithness and Sutherland, who was best man for a friend of mine, and I have to be careful what I say about him. However, the SDP indulges just as much in party politics as the other political parties, and its only problem is that it is a minority party and therefore cannot take part in the discussions between the two major parties about political philosophy.
Let me deal briefly with the effectiveness of the Committee. It is worrying that some of the recommendations, even relatively minor ones, of the Public Accounts Committee are not taken up by the Treasury. For example, we produced a report on dog licences in the 1982–83 Session. It was a minor report and not of any great importance, but it makes it clear that we are spending considerable sums of money to collect small sums of money from 50 per cent. of dog owners. We are spending roughly £4 million to collect less than £1 million. That is not an effective use of money and it is not an effective way to control the nuisance of dogs—and I have to say that for my wife's benefit because she does not like dogs. Here, surely, is a small matter that could have been dealt with in either of the last two Budgets, but it has not been. The licence could either have been abolished, or its cost could have been increased, and local authorities could have been given the revenue from the new, increased expenditure. I should like to see introduced a one-off dog licence of £ 100, which would make sense. The money would be paid to the local authority to ensure that there were proper dog control powers and organisations to make owners look after their dogs. Why has the Chancellor not taken up this matter and dealt with it?
We shall be reporting later on vehicle excise duty, which again the Chancellor has increased. The Public Accounts Committee has taken evidence showing that large numbers of people evade the duty. So we must find other ways of dealing with it.
Those are examples of the ways in which, I believe, the Public Accounts Committee is sometimes not effective in getting across the message that it ought to get across to the House and to Ministers. I do not think that Ministers pay sufficient attention to the Committee.
I come to the report which most Members are probably expecting me to deal with. I am grateful to my right hon. Friend the Member for Ashton-under-Lyne for concentrating his speech on what, in terms of the money which we on the Public Accounts Committee deal with, is a relatively unimportant matter. Quite rightly, because of the seriousness of what the report says and of the underlying principles involved, he made considerable play with it. I refer to the ninth report, the one on the sale of Hamilton college of education.
It is a damaging report. It is, as my right hon. Friend said, worded in the understated way in which the Public Accounts Committee usually drafts its reports. Unfortunately, the Government and, in particular, the Under-Secretary of State for Trade and Industry, the hon. Member for Edinburgh, Central (Mr. Fletcher), who was
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the responsible Minister at the Scottish Office at that time, have used and, I think, deliberately misunderstood the way in which the Public Accounts Committee operates in order to evade their responsibility.
As I have done before on this matter, I declare something of an interest. Prior to coming to the House, I was employed in the college when it was a college of education. The hon. Member for Eastwood (Mr. Stewart) was on my side in the campaign which we fought for some time to keep the college open when the hon. Member for Edinburgh, Central was attempting to close it. I therefore admit that when looking at the report I had a certain bias, because I was concerned, not just about the cost and the cash lost but because I had a personal involvement in it. That personal involvement also meant that I knew what was involved in the assets of the college, which no other Member of the House knew. I include even my hon. Friend the Member for Hamilton (Mr. Robertson), whose campaign against the sale was totally justified by the Public Accounts Committee's report.
It was a disgrace to sell those assets. The main building contained more than 30 teaching rooms, a major hall with almost full theatre capacity, a 25m indoor heated swimming pool—which, by the way, had been completely renovated in the two years prior to my leaving the college—a games barn, two gymnasiums, art rooms and television studio facilities, as well as halls of residence for 650 students.
To sell those assets for £680,000 was a disgrace. In Northern Ireland—and I am glad to see that one Northern Ireland Member, the hon. Member for East Antrim (Mr. Beggs) is present—the estimate for building a nine-classroom primary school was £450,000. Yet a man is able to buy that building in Hamilton as a private school, with all the facilities that I have described, including playing fields, for £680,000.
It is quite clear from the report that this sale was bungled. Nobody has claimed, despite what hon. Members on the Government Benches said during a recent debate in the House, that we could have got £6 million for it. It must be pointed out, however, that the chief valuer said not that that was an ideal price or that it was the price that could be obtained in the most favourable circumstances but that that was the price that it ought to be possible to get in favourable circumstances. I admit that at present, under the economic regime of this Government, circumstances are not favourable for those who are attempting to buy that sort of property. Even so, if we look at the chapter of accidents—to which I will return later—that led to the sale, we see that the sale price ought to have been much better.
There was a failure to advertise properly. The report deals with that quite clearly. There was a failure to advertise in the proper papers. There was no attempt, as my right hon. Friend the Member for Ashton-under-Lyne said, to advertise in commercial estates papers, the Estates Times in particular. The property was advertised at the wrong time of the year—just before Christmas and just after the new year—and, as far as The Times is concerned, it was not even advertised on the day on which commercial property is usually advertised. It was tucked away among other advertisements, and anybody who wanted to buy commercial property would certainly not be looking for such advertisements on that day.
The Government failed to take the advice of the chief valuer. They failed to employ an estate agent. Also, they

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employed the college solicitors, one of whose partners was a member of the board of governors. It should have been seen that there was a danger of a conflict of interest and those responsible should have steered well clear of employing that firm. There is no imputation that anything wrong took place, but it should not have been done like that. Public bodies have to make quite sure that there is no chance of that sort of thing hanging over them. The right people to sell the property were not employed.
Having got offers, having taken advice again from the chief valuer, after having ignored his advice in the first place, the Government again ignored it on the basis that it would cost money to readvertise the property. I cannot imagine any Member of the House who owns his own house and has to move out of it because he is changing his job who would advertise it for, say, £40,000 on this side and £150,000 or £200,000 on that side, not expecting to get that price.
In Scotland, of course, we often do not put in the advertisement what the price will be, as was done with the Hamilton college case. But if a property is advertised at £40,000 and somebody offers £4,000 for it, I cannot seriously believe that any hon. Member would accept that offer and not bother to put more advertisements in the papers, even though it was costing him money to maintain the property. Of course he would readvertise the property and, if necessary, go on readvertising it until he got an offer near to his price, even though it would mean losing money on maintenance of the property.
Knowing the Scottish college of education system very well, I do not put any of the blame for this sale on the Jordanhill board of governors. The blame rests entirely on the Scottish Education Department, because it controls the purse strings of the colleges of education in Scotland. Having seen them operating, I know that boards of governors in Scotland do very little without the agreement of the Scottish Education Department. They certainly did not sell the Hamilton college at that price, or even give advice to sell the college at that price, without the fullest consultation with the Scottish Education Department and without its consent.
One of the problems is that the PAC does not call Ministers before it. My right hon. Friend the Member for Ashton-under-Lyne stated that it is not the responsibility of the Committee to call Ministers before it. Therefore, it makes no attempt within its report to blame Ministers for any shortcomings. However, Hamilton college was not a small piece of property on the fringes of the Scottish Education Department's concern. It was not something about which there had been no debate. It was not a school which had been standing empty for two or three years and in which no one was very interested. It was not as though there had been no fight over its closure.
There had been a massive public campaign over two years to keep the college open. Very few Scottish Labour Members had not taken some part in the campaign and some of us had taken an extremely active part. The college fought against closure and so did the Church of Scotland and the Roman Catholic hierarchy in Scotland. It is almost impossible to find an organisation in Scotland that did not try to keep it open. Even some Conservative Members were not prepared to back the Minister during the campaign to keep the college open. The Minister who is now responsible for education in Scotland, the hon. Member for Eastwood, who replaced the then Minister with responsibility for education, the hon. Member for
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Edinburgh, Central, campaigned to keep the college open because many of his constituents attended it and trained as teachers within it. I pay tribute to him for the part which he played in the campaign. It was a high-profile campaign and a great deal of publicity attached to it. I refuse to believe that in those circumstances the then Minister played no part when the college was closed and transferred to Jordanhill.
Mr. Maclennan: The hon. Gentleman is making a powerful argument in support of the thesis that ministerial involvement contributed to the appalling mess surrounding Hamilton college. The officials who sought to defend what had been done before the Committee indulged in arguments that were pure casuistry in seeking to distinguish between Hamilton college and the case already covered by the rules set out in the Halliday report. They argued that the Hamilton college case was not covered because the college was, for certain reasons, a peculiar property and, although publicly owned, was administered by the college. Is that weakness of argument by the officials not indicative that there was something more to the Hamilton college issue than that which met the eye?
Mr. Maxton: I entirely agree with the hon. Gentleman. I think that there was an attempt to advance that argument, which was entirely unreal. The Treasury response to the PAC's report, which is the response of the Scottish Office, has destroyed that argument. That response is to accept the Halliday report on the sale of all public property and not only that which is deemed to be Crown property. Although I was one of those who questioned the officials as hard as I could—the civil servants who appeared before us and represented the Scottish Education Department—I felt rather sorry for them. They were trying to defend the indefensible. They were having to try to defend decisions which I do not think were theirs. I do not think that they would have recommended them to the Minister in the first place. They were having to defend the Minister without naming him and without his being made accountable.
The Minister was responsible for reasons beyond the strict legal approach, although even that responsibility appears to be denied by the Government. I am certain that it was the Minister who said, "Sell. Get rid of the college as quickly as possible as it is nothing more than an embarrassment to me. For as long as the building stands empty in the middle of Hamilton, the people of Lanarkshire will be aware that their college of education has been destroyed. For as long as it remains, it will be a monument to the campaign that they fought. Get rid of it as quickly as possible."
When the offer came from Christian schools, a private school, I believe that the Minister said, "That is marvellous. That is agreed. We can keep the college in the hands of the education sector. How embarrassing it will be for Labour Members who are fighting the closure to find that the college will be turned into a private school." I think that the Minister said, "Get rid of it. We can and out what we can get for the residencies in addition to the college itself."
Miller Homes Northern Limited put in an offer for the residencies, which it is to convert into flats. I am no builder, but the hon. Member for Banff and Buchan (Mr. McQuarrie) suggested that kitchens and bathroom suites worth about £15,000 and £ 10,000 respectively would be

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put into the luxury flat conversions. I do not believe that. Each unit will cost Miller Homes about £4,000. That will be the cost of purchasing the original building. The renovation may cost £4,000, £5,000 or even £10,000, but the profit that Miller Homes will make as a return on its capital will be outrageous. It is disgraceful that the taxpayers' money should be used to allow a private company such as Miller Homes to make that sort of profit.
I am not opposed to private companies building houses and I am not opposed to them making a profit on those houses. However, when that profit is made at the taxpayers' expense, I do not think that it should be tolerated.
It is my view that the Minister, the hon. Member for Edinburgh, Central, was closely involved, and that involvement raises a major constitutional issue. A week ago today I asked the Prime Minister how it was that the then Minister, the Minister in charge of the sale and who carried out the sale for a price that was 10 per cent. of the valuation, could remain a member of the Government. The Prime Minister replied to the effect that she had read the PAC report and could find no personal condemnation of the Under-Secretary of State. She added that she deeply resented what I had said and that she saw no reason to condemn the hon. Gentleman.
My right hon. Friend the Member for Ashton-under-Lyne has made it clear that in PAC reports we do not condemn Ministers. He will appreciate that I asked him to clarify that issue. In trying to evade her responsibilities on behalf of the Minister by saying that no personal condemnation appeared in the report, the Prime Minister was either deliberately evading the issue or trying deliberately to cover up for a Minister who, at best, has been incompetent and, at worst, was deliberately acting against the public interest. Alternatively, the Prime Minister is so ignorant of the way in which the PAC and the House operate that she is not worthy to be a Member of this place or to lead the Government.
The then Under-Secretary of State for Scotland, the hon. Member for Edinburgh, Central, presided over the sale. Even if I were prepared to say that he had no personal involvement, that it was a Civil Service decision and that civil servants made the mistake, have we now reached the stage when there is no ministerial reponsibility for the actions of the Civil Service? Can there be such blunderings and mistakes without their leading to the resignation of a Minister? It is incredible that we have reached that point. Even now, it is not too late for the Prime Minister to take the opportunity to get rid of the Minister who bungled the matter and who, in my view, has been deliberately involved in the whole episode.
This is not the first time that the Minister has been involved in the closure and sale of public assets. My hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes), in a recent Adjournment debate, pointed out the Minister's involvement in Stonefield Trucks, which is mentioned in one of the PAC reports. The report makes it clear that Stonefield Trucks was sold at an under-valuation to Gomba Trucks, as it became known. The hon. Member for Eastwood is puckering his eyebrows, but he replied to the debate in which he was asked a number of questions which he has not yet answered. I hope that he will be able to give the Minister something with which to reply later.
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I raise the issue of Stonefield Trucks briefly to make a comparison in two ways. First, the same Minister is involved in a bungling mistake. Secondly, there is a comparison to be made, such as the Scots make, concerning the sums of money involved in keeping employment in Ayrshire and keeping what was an interesting vehicle development alive and thriving, which could have resulted in orders, because orders were in the pipeline when the company was eventually closed. The comparison is between those sums of money and the sums of money that were poured into De Lorean Cars which the PAC has recently examined.
One has to ask why Northern Ireland seemed able to get money to keep De Lorean alive when, in Scotland, Stonefield Trucks was not able to get a similar sum of money. The answer to the question is very worrying, because it appears to be that violence succeeds and that, if there were no violence in Northern Ireland, the country would not receive the sums of money that it does in the way that it does. I hope that that is not the answer we will be given by the Government, on the principle that, if one makes enough noise and creates violence, one is offered more money than one would otherwise get.
There are many other points in the reports on which I should like to comment. There is a report on the cost of prescribing drugs in the National Health Service. When I compare the profitability of the drug companies, as set out in the report, with the sums of money poured into other parts of the National Health Service, it makes me sad that the pockets of the drug companies should be so lined by the exploitation of people's illnesses. The profit margin is 25 per cent.——
Mr. Willie W. Hamilton: Much more than that.
Mr. Maxton: My hon. Friend says that it is much more than that. In the Health Service, 25 per cent. profit is allowed, but, as he knows, because he was a member of the Committee at the time of this inquiry, when the accounting officer at the DHSS was asked what happened if the companies went over the 25 per cent. allowable margin for profitability, he replied that there was a grey area. When asked what grey area was allowed before clawback was considered, he replied that it was 10 per cent. Ten per cent., therefore, is the grey area. In other words, one is really talking about profit margins of 35 per cent. I then asked about advertising and backing—because we all know that drug companies do a great deal of that—and the reply was, "In the cost of production, we allow for 10 per cent. to cover packaging and advertising." In other words, in the production of drugs that are prescribed to people, one is talking about costs of approximately 55 per cent. It is astonishing that such money is being spent on the production of drugs when the Government are trying to cut down on every other area of National Health Service expenditure and are refusing to consider the generic prescribing of drugs which could save so much money.
Many other reports could be mentioned, but the report on drugs companies illustrates the role of the Public Accounts Committee. It illustrates that this Committee, comprised of members of the whole House, is not afraid to make reports that criticise Governments, of whichever party they may be formed, and is prepared to say things which would not necessarily reflect the political philosophy of individual members of the Committee.

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I wish that more hon. Members who are not members of the Committee would contribute to the debate. The number of hon. Members present in the Chamber has slowly increased since I began to speak, which I am sure has nothing to do with the fact that I am speaking but is due to the interest of hon. Members who are ready to address the House.
6.17 pm
Mr. Peter Hordern: I agree with the hon. Member for Glasgow, Cathcart (Mr. Maxton) that it is a great pity that more hon. Members are not taking part in the debate. As the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) said correctly when opening the debate, the House is discussing 46 reports of the Public Accounts Committee, and there is ample scope for any hon. Member to find a rich field in which to concentrate his remarks.
I join other hon. Members in congratulating the right hon. Member for Ashton-under-Lyne on the way in which he chairs the Committee. I have been fortunate to serve under a number of Chairmen over the years, and he is one of the better Chairmen, as was his predecessor Lord Barnett, of whom he spoke so warmly. I regret that Lord Barnett is no longer in the House, although not because I think he was a better Chairman than the right hon. Member for Ashton-under-Lyne. I regret that it was not my right hon. and hon. Friends who defeated Lord Barnett in the last election. His defeat arose because he was so candid in his opinions about his own Government that his own party would not reselect him in his constituency.
Mr. Robert Sheldon rose——
Mr. Hordern: Was not that the position?
Mr. Sheldon: Lord Barnett is a dear friend of both of us, I know. His constituency was fragmented into dozens of small pieces and formed no basis for a new constituency.
Mr. Hordern: It might be said in that case that there were three or four constituencies which took the opportunity not to re-select Lord Barnett—but of course I accept the right hon. Gentleman's explanation.
This debate concerns a new organisation, the National Audit Office, which takes the place of the old Exchequer and Audit Department. The nature of the work of that Department has changed over the years. The Comptroller and Auditor General, when he gave evidence to the Committee about the work of his Department, reminded us that there was a time when two thirds of the work was concentrated on value-for-money exercises. Now, he said, he spends three quarters of his time on certification—certifying that money has been properly spent. That is a great pity. The proportions should be reversed, and more time and attention should be paid by the Comptroller and Auditor General and his Department to value-for-money exercises. There is certainly scope for them.
When he gave evidence, the Comptroller and Auditor General said that he hoped to be able to spend half his time on value-for-money and half on certification by 1987. I consider that that rate of progress is a little slow. I hope that he will think again, and that the House will think it proper to allow him to take on extra support if he needs it to carry out the value-for-money exercises that members of the Committee have found useful and will find increasingly useful in the future.
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Some hon. Members will recall that members of the Committee were fortunate enough to visit the United States. So far as I can recall, that was the only expedition abroad that the Public Accounts Committee has ever made. It is not, alas, like some Select Committees, which seem to go abroad at the drop of a hat. In the United States, we investigated the work of the General Accounting office. We found that it had some 6,000 members of staff, of whom half were accountants, and that it concerned itself with value for money in all the departments of the federal Government and, indeed, wherever public money went. I am sure that that was the origin of the Bill brought in by my right hon. Friend the Member for Chelmsford (M r. St. John-Stevas) which brought the National Audit Office into the world. It is important that the National Audit Office should be more concerned with value-for-money exercises, if only because of the scope and the growth of public expenditure. When the right hon. Member for Ashton-under-Lyne and I came to the House in 1964, public expenditure was some 36 per cent. of gross domestic product. It is now 46 per cent., having reached 48 per cent. in 1976. We should not be satisfied that public expenditure should rise in that way unless we are sure not just that that money is being properly spent but that we are getting value for money. We have to judge the adequacy of existing mechanisms for ascertaining whether there is value for money.
When my right hon. Friend introduced his original Bills it was intended that the National Audit Office should be able to investigate the nationalised industries. There was a great deal of opposition to that from those industries. They felt that they already had the Departments crawling all over them, and, from time to time, the Monopolies and Mergers Commission. Now there was to be the National Audit Office as well. They refused, and because of shortage of time the House did not insist. Had we insisted, we might have lost the Bill.
We have to accept the consequences of that decision. The truth of the matter is that the nationalised industries have not been under proper surveillance 5y the Departments, and the Monopolies and Mergers Commission does not adequately fulfil the task that the Government have set for it. From time to time it presents admirable reports, but it is only at the invitation of the Government that it can examine a Department or a nationalised industry and issue a report. It cannot go in at any time and investigate what is going on, as the National Audit Office can.
Six or seven years ago, the Monopolies and Mergers Commission reported on the activities of the southern region of British Rail. It found that there was no point in having guards travelling on goods trains. There was nothing for them to do. I checked up recently and found that guards are still travelling on those goods trains. The commission also reported that only half of the working time of drivers was actually spent driving trains. Nothing has been done to put that right, either. If the National Audit Office was concerned with looking into the nationalised industries, as it should be, the Committee would receive regular reports about such matters and would be able to ask the Departments why they were not putting into effect the recommendations that had been made. At present, we cannot do so.
I take an example from the seventh report of 1983–84. When the Comptroller and Auditor General reported on the monitoring by the Departments sponsoring the British

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Railways Board and the National Coal Board, he reported that all the Departments agreed that there should be corporate plans but that neither the British Rail Board nor the NCB had been able
"to submit formal and fully worked up plans after November 1980 and January 1981 respectively."
They simply had not bothered to introduce corporate plans. I quote from paragraph 12 of our report:
"The Department of Industry stated that they accepted that there had been deficiencies in the corporate plans produced by British Telecommunications (BT), and in its whole system of financial control … Notwithstanding the deficiencies, the Department confirmed that they regarded corporate planning as the central feature of their monitoring process."
It appears that although the Department said that BT had produced no corporate plan, it felt that it was important that a corporate plan should be produced. Paragraph 14 states:
"In one specific instance the Department of Industry's monitoring arrangements had been unable to detect during 1981–82 that BT had failed to keep within conditions attaching to an increase in its EFL for that year. The Department explained that £33 million had been used by BT other than on capital expenditure for which an increase of £200 million in the EFL had been intended: they had taken this matter up with BT."
There was a lack of the tight control that we should be able to expect. Consequently, paragraph 19 states that
"the Department of Industry did not consider it appropriate to seek information on individual projects in BT's planned capital expenditure of over £10 billion."
Ten billion pounds is an awful lot of money.
Finally, in paragraph 25, the Committee stated:
"We observe that in 1981–82 there appears to have been considerable flexibility in the way the EFL system operated over all the nationalised industries. For that year the EFLs originally set totalled £2,390 million. Subsequently the limits for six of the industries (NCB, BNOC, British Gas, BT, Post Office and BRB) were increased by almost £1,000 million and the final external finance requirement totalled £3,254 million, an increase of 36 per cent."
That report was rather damning, and I awaited with some interest the Treasury's reply. In course of time, just this month, it appeared. I quote from paragraph 82:
"The Treasury and departments do not agree with the Committee's conclusion that sponsor departments may have been unable to ensure that EFLs operate effectively to provide a firm discipline on management of the industries on an annual basis … EFLs have been and continue to be a salutory financial discipline, and an effective short term control".
Therefore, the Treasury did not think that there was anything wrong in not meeting EFLs, but £1 billion is not an inconsequential amount and to go so far wrong in a total of about £3 billion is quite a large mistake. If the Treasury—and, thereby, the Government—says in its reply that it does not think it worthwhile doing anything about it, who will? That draws me to the belief that a great deal more importance and responsibility now attaches to the National Audit Office.
Our fourth report of 1982–83 concerned special employment measures. Apparently they are to cost £2 billion in 1984–85. We reported that no proper comparisons were being made on alternative methods of providing employment. For example, nothing was being done to compare whether a reduction in the burden of taxation might have achieved better results. It has all been done by extremely subjective judgments. The net cost of the young workers scheme was £5,355 per person. By any standards, that is a great deal of money. It is certainly a
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great deal of money when one considers that no proper assessment was made before the money was spent. The Treasury report refers to that as well. It says:
"The Treasury and the Department of Employment accept the need to compare the cost effectiveness of SEMs with one another … However, as the report has noted, valid comparisons are difficult where specific objectives differ".
I believe that the truth is that the scheme was the brainchild of my right hon. Friend the Prime Minister's personal economic adviser, Mr. Alan Walters, who felt that it was a good plan to get young people back into employment. That was a worthy enough objective. However, I do not believe that it matters how dignified such a source might be; it is still important that such methods be tried and tested before being put into practice at such enormous expense. We should remember that £2 billion is spent on such special schemes each year. I accept the youth training scheme, which costs £1 billion a year and serves a different purpose and, if I may say so, a very good one. However, this is another example of the lack of professionalism to be found throughout the Departments in these important matters. They just adopt a scheme and carry on with it, no matter what the criticism, and when they are criticised they try to find some half-baked reason to justify their action.
In our ninth report of 1981–82 we discovered the Chevaline project. Although the project had been going for many years it was first reported to the House in January 1980, when we were told that it had already cost £1 billion. In July 1981, Sir John Non, as he now is, said that the cost of Chevaline had gone bananas. In retrospect that was a happier expression to use in those days than it is today. Even so, how can we be confident that others of these great defence expenditures are not going exactly the same way? There are now 20 projects that cost more than £500 million and another 20 are costing more than £200 million. When they come before us they are not exactly flush with detail. We get merely a two-word description of the object—it might be radios—and some millions of pounds are attached to the figure. There is no way in which to decide on the practical effects of the weapons. I hope that they frighten the Russians as much as they frighten me. We remain to be satisfied that these great weapons of destruction have been properly evaluated with each other and with our NATO allies to ensure that our defence expenditure is as good and effective as it can be. I am not criticising the amount of money that we spend on defence. Like all of my right hon. and hon. Friends I favour it, but I question whether the money is being spent to the best purpose in conjunction with our allies. We should examine that matter further.
In our sixth report of 1981–82 we have a review by the Civil Service Department. It was a further analysis of the 1977 and 1978 staff returns. There used then to be a three-year inspection cycle of all of the departments in the Civil Service to see what they were doing. It was discovered that when the Civil Service's inspectors had taken part in the departmental inspections they found that they were able to recommend savings more than double those recommended by the inspectors in the department. I recollect a little gem in our original report, to the effect that, at the current rate of progress with staff inspection in the DHSS, it would take between seven and 28 years to get round once. That statistic stuck in my mind. I was therefore interested to see what had happened since. There are now many fewer staff inspectors. The technique has changed, as it is no longer thought necessary to look at all of the departments'

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operations. I entirely understand that it will do to take samples but it is interesting that, when there is criticism that it is hard for departments to meet, they merely change their method of operation to avoid the criticism being made in the future. I regard that as a rather peculiar form of progress.
I should like to deal briefly with the sale of assets, which is touched on in one of our reports. I know that my hon. Friend the Financial Secretary is interested in this matter. The price obtained does not concern me and I think that the House well understands that these matters are by no means easy to judge. My point is that when the assets of nationalised industries are sold, a pension fund is always attached to that nationalised industry and the pension fund is always index-linked and funded. When the National Freight Corporation was denationalised recently, we were told that the receipts from the sale amounted to some £50 million. I understand that the net receipts were not £50 million but £4 million because £46 million had been taken up in paying off the deficit of the pension fund. That is only the beginning of the problem. I have often said that the commitment to a funded index-linked scheme will cost an unconscionable amount of money. I envisage the problem cropping up again with British Airways and any other nationalised industry that is sold. My solution is that the people who are in receipt of an index-linked pension that is guaranteed should be paid, as is the case in the Civil Service, on a pay-as-you-go basis. That would be much cheaper for the Government and it would save a great deal of money. I see the hon. Member for Stoke-on-Trent, Central (Mr. Fisher) shaking his head and I should like to know why.
Mr. Mark Fisher: If I catch your eye, Mr. Deputy Speaker, I should like to elaborate at some length on some of what the hon. Gentleman has said.
Mr. Hordern: I may not be in the Chamber when the hon. Gentleman makes his speech. That is why I wanted him to reply now. I have made my point and I hope that my hon. Friend will mark it.
In defence, industry or employment, the evidence is that existing methods of control are, alas, insufficient. If cuts are demanded, they are found first, all too often, in research and capital investment. There is little appraisal of existing expenditure within individual Departments and still less between one Department and another. No weight is attached to one form of expenditure compared with another within a Department or between Departments. When it comes to the crunch of the public expenditure round, which happens every year, all those forms of expenditure are doggedly defended by their Ministers as though each one were sacrosanct, although some were dreamt up many years ago and have long since ceased to fulfil the purposes for which they were founded.
My hon. Friend and his colleagues at the Treasury do not have the resources to deal with the matter. It needs a much longer-term survey than they can apply, because they are so overworked in dealing with the whole of public expenditure. I wish that I could see the solution. I do not like to think of recommending that the Treasury should expand, but, failing that, a heavy responsibility falls upon the National Audit Office to carry out those types of surveys and value-for-money exercises. Ultimately those reports will be made available to the House. Although we
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may apply pressure and ask questions of the Executive about how it is proceeding with value-for-money exercises, ultimately it must be the Executive's role to ensure that the country and the House receive value for money.
6.41 pm
Mr. George Park: I have had the privilege of serving under both Lord Barnett and the present Chairman of the Committee, my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), who have different styles. They are both effective in asking the searching questions that are essential at hearings of the Public Accounts Committee. Under both Chairmen, as has been said, the Committee has had the benefit of the excellent reports from the Comptroller and Auditor General and his staff. The thread running through those reports is that we still have a long way to go before we can be satisfied that taxpayers' money is used to the best effect.
Hon. Members stressed the politeness of the Committee. Sometimes, when I hear long and opaque replies to questions put by the Committee, I get a Little impatient. I do not suggest that witnesses are trying to evade the questions, but sometimes I feel that in those instances it is possible that a more abrasive approach might achieve more positive responses.
The reports, which hon. Members have highlighted, show that the Committee must repeatedly return to major areas, such as size and the money involved in projects. In his excellent speech, my right hon. Friend the Member for Ashton-under-Lyne instanced from the Committee's twenty-second report the fact that the best course in dealing with tax evasion could be to engage more civil servants to ensure that more people meet their tax responsibilities and bring more revenue into the Treasury. My right hon. Friend did not continue, as is his habit, to draw the obvious inference that greater efficiency is not always achieved by reducing the Civil Service.
In examining aspects of, for example, the Ministry of Defence—the hon. Member for Horsham (Mr. Hordern) referred to this point—the Committee often runs up against the needs of national security. Those needs preclude me from going too far in giving instances even in this debate. Although I accept that weapons development frequently takes us to the frontiers of knowledge, we must still devise a more effective method of preventing and controlling massive overshooting of original estimates.
On several occasions in the debate the DHSS has been instanced, and I believe that will be repeated. In its seventeenth report, the Committee dealt with the costs of remedying defects in hospitals. It was evident that the lessons of initial errors have not been learnt and applied more recently. The irony was that, in the fourteenth report, attention was drawn to the fact that the consultants who had made the original errors were being paid an extra set of fees to correct their errors. In another report, the Committee dealt with the DHSS devolving responsibility to the regional health authorities. The guidelines were not sufficiently clearly laid down. There was the spectacle of officers being made redundant, given compensatory payments in one week, re-engaged the' week after and retaining those compensatory payments. That is not good enough.

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The Committee's eleventh report dealt with the Department of Education and Science and the University Grants Committee. My impression was that the UGC was not sufficiently accountable for the very large sums of money handed over to it. I concede that, as a non-university type, I am probably biased. Since the majority of hon. Members have gone through the university mill, they sympathise with and understand one another and are prepared to make concessions they would not make to me. In considering the use of money, especially other people's money, I do not differentiate between academics and the lumpen proletariat. They are all liable to get their fingers caught in the till.
It is clear that the Committee's work will not diminish, although the stamina of hon. Members on the Committee might, because we face fearsome paperwork in some of our studies. Sometimes I wonder how we get through all the paper to ask coherent and relevant questions of the witnesses we invite. Somehow we manage it. It is essential that, when taxpayers' money is being spent, the PAC should be allowed to ascertain whether it is being used to the best effect. No obstacle should be placed in the Committee's way in achieving that aim.
6.48 pm
Mr. Michael Latham: It is a pleasure to follow the hon. Member for Coventry, North-East (Mr. Park). I was especially glad that he began by saying that Committee members need to be abrasive in these matters. I remember, as I as sure does the hon. Gentleman, that during recent questioning the hon. Gentleman lost patience with an especially turgid witness and turned on him with considerable effect. That is an example of where the hon. Gentleman's approach effectively came into play.
Each hon. Member who has spoken in the debate, especially the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), the Committee's excellent Chairman, talked about the Committee's dual role. That must remain the focus of hon. Members' attention. Above all, there is need to get value for money in public spending. I agree with the hon. Member for Normanton (Mr. O'Brien) that, when considering the activities of the DHSS—they have been regularly considered by the Committee—we must remember that the object of the exercise is not to administer for the sake of administering, but to ensure that money goes to patient care. It should not be wasted on poor procedures, overspending or, as the hon. Member for Glasgow, Cathcart (Mr. Maxton) said, on excessive payments to pharmaceutical companies. The basis of it all, therefore, is ensuring value for money, which means seeing that money is spent properly on patient care, which is what the taxpayers demand.
But there is a second role of the Committee, of which we have heard less today, although it was stressed by the right hon. Member for Ashton-under-Lyne. That is the need—a need which goes back to Gladstone—to scrutinise payments to ensure that they are proper and made without irregularity. Unfortunately, it is still necessary for the Committee to continue that role. It is no secret to anybody sitting in the public proceedings of the Committee or reading the newspapers that, on De Lorean and Wardale, the Committee has had to return to the more historic role of looking at irregularities.
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My hon. Friend the Member for Scarborough (Sir M. Shaw) spoke of what happened when reports were brought before the House. I have no idea what the Committee will say about De Lorean or Wardale, but when those reports are made, they must not be allowed to sit on the table for two years in the way that some of the reports that we are discussing today have. We shall expect them to be discussed by the House, without delay, at length and with full explanations of why things went wrong. I hope that the Minister will bear that in mind when the Committee has reported and the Treasury has produced its minute in reply.
There are three matters to which I particularly wish to draw the attention of the House, the first being the question of the Comptroller and Auditor General's department, the National Audit Office. It must be clear to anybody listening to the debate that the C and AG has an absolutely vital role to play in our proceedings.
Having come to this Committee new in this Parliament, after nine years on other Select Committees, to me the difference between the PAC and other Select Committees is obvious. We in the PAC are lucky in that, while other Select Committees have excellent specialist advisers, the PAC, in effect, has a whole department behind it which can do the in-depth research and investigation that is not available to other Select Committees. Thus, it must be properly staffed.
I appreciate that this issue has gone before the new House of Commons Commission, but certain matters should be before the House. First, the C and AG is proposing an increase in staff. When he gave evidence on 7 November 1983, I asked him:
"You must be the only department of Government which is expecting a 5 per cent. addition in staff numbers this year and more the year after and more the year after that, except possibly the Ministry of Defence."
It does not come easily to me to advocate increasing staff, but for the C and AG's Department there is an overwhelming case for it, and I am glad that apparently that has been accepted.
However, a less satisfactory side of the matter is that of salary scales—not I hasten to say, of the C and AG's Department but of some of the competing organisations. The Committee was not entirely happy with what it heard about some matters relating to the new Audit Commission; this is gone into at length in the eighth report. I hope that there will be no question of a merry-go-round of competition. While we want public officials to be properly paid, we do not want the Audit Commission and the C and AG's department competing against each other for the same scarce resources, with salaries being forced up as a result. That would be detrimental not only to staff morale but to the effective job of the PAC. I hope that the Ministers and others with responsibility for wider staffing considerations will keep a careful watch on that.
The right hon. Member for Ashton-under-Lyne stressed the need for a bipartisan approach in the Committee to the question of Hamilton, and the hon. Member for Glasgow, Cathcart (Mr. Maxton) pointed out in his lengthy speech that that was all very well in Committee but that, once the issues were being debated on the Floor of the House, he would feel entitled to make any points he wished, and I am sure that we all accept that. We are well aware that Hamilton is a highly political issue in Scotland and that there has already been a debate in the House on the matter.

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While the whole affair was, in my view, poorly handled by the Government at the time, the Committee's views, and some of the questions and answers, should not necessarily have led to some of the statements that have been made or to some of the tone that has been adopted. In question 468 I asked Mr. Gilchrist, the valuation officer for the Inland Revenue:
"Do you think that the property was sold on 1 and 8 November at a fair market price?"
He replied:
"We would have preferred the market to have been more tested."
I then said:
"I am not sure that I know what that answer means: does it mean yes, or does it mean no?"
He replied:
"I can neither answer yes or no to it. The fact is that specialised buildings are notoriously difficult to sell. The market for them is unpredictable and erratic. The best that one can do is to advertise as widely as possible and make sure that every single avenue has been explored."
I must say, in fairness to Scottish Ministers, that the point was taken in the Treasury minute, which said:
"The department accepts that there are lessons to be learned from the sale of Hamilton College. Scottish Office departments have already been reminded of the existing guidance and in accordance with the Committee's recommendation full revised guidance will shortly be issued throughout the Scottish Office on the procedure to be followed".
The Treasury minute said:
"the department accepts that it should have attempted to reconcile the views of the Governing Body and the advice of the Chief Valuer that estate agents should be appointed before finally approving the appointment of the selling agents."
It should be stressed, therefore, that the PAC did not say in terms that the building had been undersold—there was no evidence to that effect—and in paragraph 25 we said:
"There can, of course, be no certainty what price would have been obtained for Hamilton College if SED had sought to have its sale handled in accordance with the Chief Valuer's and Solicitor's Office advice."
We criticised the procedures—rightly, in my view, because they were poorly handled—and those points have been met in the Treasury minute. My personal view as a member of the Committee is that that has been satisfactorily resolved as a result of the Committee's investigations.
A report which has not been referred to today—I was not involved in the questioning, although, as it has been approved in this Parliament, I was involved, as were all hon. Members, with it—is the fifth report of this Session on economy measures in the civil, defence and overseas estates. The report makes good reading, and I see the right hon. Member for Ashton-under-Lyne smiling at that remark.
I shall refresh the memory of the House on two delightful exchanges about embassies. An excellent exchange involved the hon. Member for Cathcart when he asked Sir Antony Acland, the top mandarin responsible for those matters at the Foreign Office:
"Would you not agree that the Austro-Hungarian Empire disappeared in 1918?"
Sir Antony replied:
"Yes."
The second delightful exchange occurred when the hon.
Member for Coventry, North-East said:
"Let me be quite honest; you could number the embassies that I have seen on less than the fingers of one hand."
The Chairman, Lord Barnett, commented:
"You are likely to see even fewer now."
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This report must be handled with some care because the impression which tends to be given is that envious hon. Members are sitting around complaining about the way in which mandarins live in luxury in large houses, in a style long since passed, in a lavish style of personal accommodation which appears to have outlived its time. We refer to that in paragraph 31. There is considerable force in those criticisms.
Equally, one may fairly ask whether there is some difference of opinion between the Treasury and the FCO on the matter. Paragraph 54 of the Treasury minute said:
"It is the view of FCO Ministers that there should be more flexibility in the guidelines and their application, and this subject will be discussed with the Treasury. The FCO accepts that space standards for residential accommodation are an essential tool of estate management."
We know what the Foreign Office thinks, but not what the Treasury thinks, still less whether they agree. The PAC will probably be looking for clear indications—to be fair, there are some in the Treasury minute—that the Foreign Office realises that properties must have some relation to the modern style of diplomacy and to public expenditure problems in this country.
Mr. Eric Cockeram: I am grateful to my hon. Friend for giving way. Does he accept that the Government's reply to the comments on accommodation overseas for FCO staff was probably a less ready acceptance of the PAC's recommendations than any report that we have submitted?
Mr. Latham: That is a fair comment. I stress that the report from the Treasury minute appeared to emphasise the view of the Foreign Office, suggesting that Ministers are not a seamless robe on this matter. The Treasury's view is usually given to the PAC on behalf of the Government as a whole.
I hope that it will be clearly understood that the Committee understands that diplomats overseas have a very difficult job, sometimes in unsatisfactory physical conditions and unpleasant climates. They may be in physical danger, and some of them have been kidnapped. Alas, some have even been murdered. No one in the House is under an illusion about the difficulties and importance of the job of a diplomat. Equally, we realise that questions of national prestige may be involved at a particular embassy site. I hope that we shall ensure, if we return to this matter and if there is continual monitoring by the Comptroller and Auditor General, a clear balance in Government thinking between a reasonable position for Britain and her embassies, and maintaining economy in public accommodation, which is a fair balance to obtain.
I aimed to be the briefest speaker in the debate and I expect that I shall succeed in that. What has become clear to me, in the nine months that I have served on the PAC, apart from the great amount of work done by the right hon. Member for Ashton-under-Lyne, is that the Committee is a very real weapon in this House. It is not true that it is all "Yes, Minister" and that anybody can get away with whatever he wants. I should not have liked to be some of the public officials being grilled by the PAC at a public hearing, as they must have had an unpleasant time. If the Committee continues to do its job in that way and report to the House as a whole, it will be doing good for the taxpayers.
7.2 pm
Mr. Willie W. Hamilton: I am the only non-member of the Public Accounts Committee who has taken part in the debate so far, perhaps because hon. Members are fairly thin on the ground.
I served on the PAC for a few years, until the 1983 general election. The debate gives me an opportunity to pay tribute to the hon. Member for Horsham (Mr. Hordern), who I found during my short experience of the PAC to be very assiduous and perceptive. He was not averse to putting his party political points in the nicest possible way. He was a man after my own heart in that respect, except that I do not always make such points in the nicest possible way.
The hon. Gentleman said that it is important to ensure value for money rather than carry out the certification procedure, although that is important. The money involved in whatever area we engage ourselves in is so great and the opportunity for waste so frightening that we cannot but admire machinery invented by the House or the Government to ensure that such waste is reduced to a minimum. I hope to return to that matter later.
I recall, as the hon. Member for Horsham may recall, that he referred to a defence contract involving thousands of millions of pounds of taxpayers' money. The Committee dealt at one stage with the profits of contractors. The Chairman, Mr. Joel Barnett, as he then was, asked Sir Frank Cooper, who was then the permanent secretary at the Ministry of Defence, whether any of those defence contractors had gone into liquidation in the current Session. Sir Frank smiled his quizzical smile and replied, "Not to my knowledge."
It is clear that there are enormous rip-offs of the Ministry of Defence, no less than of the Department of Health and Social Security in relation to pharmaceutical firms. We have had ample evidence in front of us about the pharmaceutical firms, although some of it was erased from the report for good, sound commercial reasons—or so the DHSS and the pharmaceutical firms considered. The profits were enormous. The defence contractors are doing it, too, because of our desperate need to protect ourselves from the Russians. I hope that the Russians are as frightened of that defence expenditure as we are. The Public Accounts Committee cannot find such evidence. Indeed, it gets a minimum of information about how decisions are reached in favour of one weapon rather than another.
The Committee took evidence on the Sting Ray torpedo. We discovered that the Americans were producing a weapon that we thought seemed to do the job equally well but at half the cost. We decided, for good, jingoistic and nationalistic reasons, to take the British weapon. When I started to criticise Sting Ray, I was subjected to fairly gentle abuse by Marconi, at Hillend in Fife, reminding me that my constituents, who elected me, had votes. If I did anything to destroy Marconi's work on Sting Ray, so be it, but I had better watch out. Such pressure can be brought to bear on hon. Members when they criticise, quite properly, the wisdom or lack of wisdom of public expenditure.
I regret that the debate is so poorly attended. It makes absurd our claim to be guardians of the public purse when almost all aspects of government are scrutinised by 20 hon. Members out of more than 600. The advertisement for these debates might be improved if we were to put on the
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Whip that we would talk about nuclear weapons, drug companies' profits or defence contract profits. If that were done, we would sell these debates to the public and to the House. When an hon. Member who is not on the PAC discovers that there is to be a short debate on 46 reports from that Committee, what conceivable interest could there be for him?
The debate is bound to be disjointed because each hon. Member has his own hobby horse or horses. Inevitably that calls into question the way in which we organise our parliamentary year. There should be a Select Committee to consider the way in which we organise our procedure. If more reports from Select Committees, not just the PAC, were published and debated on the Floor of the House as a result of the House sitting for, say, four more weeks each Session, there is bound to be public interest in the work of the Committees and how the Government work and how public money is spent. I hope that that point will be taken on board by the Minister.
I should like to say on a personal note that I served on the Public Accounts Committee for a short time, but I came off it on the ground that I found the work too heavy. We sat for two afternoons a week for two or three hours. The reading involved was demanding, so I gave it up. However, I am now sorely tempted to try to get back on the Committee, as there is a lot of muck to be raked, and I want to rake it. I hope that the Minister is taking what I am saying in good part. I think that he understands the message that I am trying to convey.
I shall devote my remarks to two or three reports. The first is the twenty-second report on the black economy, from the Session 1981–82. I served on the Committee that produced that report. The next report to which I shall refer is the second report for the Session 1983–84 entitled "Prevention and detection of evasion of National Insurance contributions and of fraud and abuse relating to Social Security benefits".
The 1983–84 report describes how in 1980 the Department of Health and Social Security was to allocate an extra 1,050 specialist staff to control and reduce, if they could, social security fraud and abuse. That additional 1,050 staff brought the total number of staff to 5,600, of whom 2,370 were directly involved in anti-fraud activities in local offices and in regional special investigation teams.
We said in the report that the Department of Employment employed at that time the equivalent of 653 full-time officers to detect possible fraudulent claims for unemployment benefit. Therefore, within those two Government Departments, about 6,000 people were engaged on checking fraud and abuse. No one objects to the detection of fraud and abuse wherever they occur in the expenditure of public money.
Paragraph 20 of the report deals with the cost-effectiveness of the employment of such staff. The Department of Health and Social Security estimated that in two years the 2,300 anti-fraud staff had saved about £164 million through terminating suspected fraudulent claims, and that £388 million altogether had been saved. The estimated savings per man employed ranged from £26,000 for local office staff to £90,000 for staff controlling special cases. Those are significant savings which cannot be ignored.
However, I shall compare those figures with the figures given in the twenty-second report of 1981–82 on the black economy. There is a great discrepancy between the cost benefit analysis within the Department of Health and

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Social Security and that of the Inland Revenue. The tax loss in the black economy was estimated at £4 billion a year. That figure was given a year or two ago. As far as I know, no information is available for the present figure, but I guess that it is probably considerably more. What is being done about that? Paragraph 14 states:
"the Treasury said in evidence that they might refuse to allow extra staff for an area of high yield if this conflicted with constraints on the size of the Civil Service".
In other words, the Treasury was saying, "No matter how beneficial it might be to the Revenue to employ extra staff, it is important for us politically to be seen to be reducing the number of civil servants." There is evidence that there is a substantial gain to be had from employing investigatory staff within the Inland Revenue, but the Treasury believes that it is more important to be seen to be reducing the number of staff than increasing its cost-effectiveness. Figures are given by the Treasury in paragraph 15:
"Yields in the Inland Revenue in 1981 were:
£100 million extra revenue from 1,300 staff engaged on selective examination of taxpayers' accounts".
If one reduces that to unitary figures, it means that for every extra 13 staff employed an extra £1 million was gained in revenue. The Treasury states further that the yields were
"£29 million from special investigations by less than 80 staff at Special Offices".
For every two or three extra staff employed, an extra £1 million was gained in revenue. The Treasury states that there was a yield of
"£23 million from 100 staff in Enquiry Branch".
That works out at about £1 million of extra revenue for every four extra staff employed. There is a yield of
"£20 million from 390 PAYE audit staff."
In other words, £1 million of extra revenue is gained from the employment of an extra 19 staff. The report states in paragraph 18:
"The expectation that additional staff would save more revenue than their own cost was not of itself a sufficient criterion for this."
In effect, the Treasury is saying that it is interested not in the cost-effectiveness of employing extra staff, but in reducing the overall number of staff. However, if one looks at appendix I of the report, one sees that the return is considerable. When I was refreshing my memory on these matters, I discovered that Sir Lawrence Airey, the chairman of the Board of Inland Revenue, said in answer to question 2370 that the savings ratio
"is at the top end of the range. It is now up to 19 to 1."
In other words, for every £1,000 in salary to a member of the investigatory staff, one gets £19,000 back. It is much more cost-effective to employ staff in that area than to employ them in investigations for the Department of Health and Social Security, although both are important.
The Government can be criticised for being more energetic and enthusiastic about chasing DHSS fraud and other abuses, which primarily involve relatively poor people, than about employing extra staff to chase the people taking part in the black economy who generally—it is not always true—are better heeled and more prosperous. If the Chancellor of the Exchequer wants to reduce taxation during his term of office, as he says he does, and to get the best value for money, he should study carefully the desirability of switching investigatory staff from the DHSs to the much more fertile black economy.
Similar considerations apply to the supply of drugs to the National Health Service. My hon. Friend the Member
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for Glasgow, Cathcart (Mr. Maxton) and other hon. Members referred to that matter, and it was referred to in the tenth report during the 1982–83 Session. Evidence was given, which was deleted from the report, of the enormous and unjustified profits made by the pharmaceutical companies. Far greater savings can be found there than by messing about yet again with administrative structures within the Health Service or by increasing charges to patients.
There is enormous potential for public expenditure savings in defence, the Health Service and the black economy and I hope that the Government will address themselves to that with great enthusiasm. If they do, they will receive almost unanimous support from the Opposition.
7.21 pm
Mr. Eric Cockeram: I commence my brief contribution by paying tribute to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), who chairs our Committee with great courtesy and attention to detail. I do not know how he handles all the necessary reading and paperwork. He is an effective and popular Chairman, and has had an opportunity to make a significant contribution to Parliament.
Two matters are now taking place of which the House is aware. First, on 1 January 1984 the National Audit Office was set up and, secondly, greater attention is given to value-for-money audits. The shift of emphasis in the Committee will ensure that Parliament gets even better value from the Public Accounts Committee than has been the case previously.
There are 47 reports, but I shall speak about the sixth report from the current Session, 1983–84. The Committee examined the construction and management of factories by the English Industrial Estates Corporation, the Scottish Development Agency and the Highlands and Islands Development Board, and placed particular emphasis on the English Industrial Estates Corporation.
The report reveals that the factories already constructed by that body have a historic cost less depreciation of about £700 million. However, as the historic cost factor must take into account that these factories have been built over a number of decades and that depreciation has been provided for, the true cost is between £1 billion and £2 billion. That is an under-estimate, because the accounts of the English Industrial Estates Corporation do not take into consideration any interest on capital, which they would do if the factories were developed privately. The true cost is still greater.
Last year when the report was published the Committee was told that a further £474 million was to be spent—that was at 1983 prices and, therefore, it is clearly more than £500 million at today's prices. That exercise continues unabated. What is the return on that? The report records concisely that the return is £25·5 million, which is a small return, of about 2 per cent.
If one looks further, one finds that the £25 million worth of rental income is absorbed, as in all good bureaucracies, by considerable administrative expense, which is neatly pitched at £24 million, thereby leaving a profit of El million. That is a fine exercise in accountancy. In true television terms a mandarin can go to the Minister and say "Yes, Minister, but we are making a profit," and so they are, but the profit is £1 million from an estate valued at many billions. The figures are distorted because they do

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not take account of the interest on capital costs. Instead of a £1 million surplus, as shown in the accounts, there is a substantial loss.
The report states that the English Industrial Estates Corporation builds factories only where the private sector is not building them. It is not surprising when losses on such a scale are financed by taxpayers that the private sector does not step in to build factories.
What steps does the English Industrial Estates Corporation take? It records that 23 per cent. of its factories are vacant, so it steps up its publicity campaign. Again the report shows that the cost of publicity for the English Industrial Estates Corporation has multiplied by 50 during the four years covered in the report. Although there has been inflation—happily, it is now only 5 per cent.—a factor of 50 is an extraordinary increase. The corporation is working jolly hard to cover up the fact that 23 per cent. of its factories are vacant, yet it continues to build to the tune of £500 million a year.
The House will recall that one of the Government's policies is to get rid of state landlordism. We have fought two general elections in the past five years. One feature of our manifestos has been the sale of council houses because the Government believe that the state should not be a landlord. Yet in this case the Department of Trade and Industry works hard to get into state landlordism as fast as it can, regardless of the costs of, and the loss incurred by, building the factories, and of the fact that the private sector cannot compete against a state corporation which makes a loss on such a scale. If that is so, somebody somewhere should step back and query the logic of it. I hope that the Minister will attempt to do so tonight.
7.29 pm
Mr. Mark Fisher: I am the first hon. Member to speak in the debate who is neither a current nor a past member of the Public Accounts Committee, and I rise in some trepidation. As my hon. Friend the Member for Fife, Central (Mr. Hamilton) said, the size and display of the Committee's reports was daunting for someone who was not a member of the Committee and even, possibly, for the Financial Secretary.
Having studied some of the reports and noted the degree of scrutiny and interest that they show, I found the prospect of speaking in the debate even more off-putting. I came to the debate to listen and learn. I was rapt by the speech of my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) and, having been held by him, I was drawn further into the debate by the excellent and pugnacious contribution of my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton), and then by the extremely interesting and wide-ranging speech by the hon. Member for Horsham (Mr. Hordern). I am sad to see that he is not in his place although he has been here almost throughout the entire debate. The quality of those speeches drew me into the issue.
I should like to comment on the tenth report of the PAC on the Department of Industry—"Sale of shares in British Aerospace; Sales of Government Shareholdings in other publicly owned Companies and in British Petroleum Ltd." I was a member of the Telecommunications Bill Committee during the earlier part of the Session, and I am now serving on the Ordnance Factories and Military
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Services Bill Committee—those two Bills are concerned with privatisation—and I have served as a member of the Select Committee on the Treasury and Civil Service, which was interested in asset sales.
I was intrigued by the report of the PAC. It is of extreme public importance because it goes to the heart of one of the main strategies of the Government's economic policies—the shedding of the public sector and the privatisation of public assets. That raises so many issues, not just for the future of our industry, the Government's stance and political considerations, but for the economy.
The Chancellor's Budget last week showed how proposed asset sales—£2·6 billion this year—have had a considerable effect upon the apparent nature of the public sector borrowing requirement. That, with the comments by the Treasury and Civil Service Select Committee on how asset sales should be accounted and whether they are being correctly and helpfully accounted by the present procedures, and the real technical difficulties that the hon. Member for Horsham described, make this a difficult matter even if it is thought that the policy is correct. All those matters make the tenth report interesting now. Although it appeared in the 1981–82 Session, it could not be more topical.
The report deals with the sale of the shares in British Aerospace, Cable and Wireless, Amersham International and British Petroleum. It is a short report. The evidence took only one day and three witnesses only were called. However, some striking aspects immediately come off the page when one starts to read. The four share sales were offered at a fixed price. They were all underwritten—we learn from the report that a tender system was considered for Amersham International—and oversubscribed to a greater or lesser extent. The Commission payable on the four share sales came to an amazing £21·3 million. They have a great deal in common. There are matters that the Government should be considering and learning from them.
The other striking comparison—I am sure that even the Financial Secretary will agree with this—is that a poor price was obtained for the shares. There are mixed reasons for that, and the PAC has fairly considered them. The Financial Secretary shakes his head, but he cannot be happy with the price obtained for the shares. As the PAC said, it was perhaps understandable as they were the Government's first attempts at privatisation. They undoubtedly had a mixed, but none the less political, motive for ensuring that the first privatisation moves were successful in so far as the assets were disposed of.
Leaving that and the expense of the underwriting aside, there is the wide public ownership that the Government sought through the sale of these shares. It is clear from the PAC report that that wide ownership was not achieved. It specifies British Aerospace where 158,000 individual shareholdings were taken out on the day of offer, but within 10 months that figure was down to 27,000. That is a reduction of 83 per cent.
The Government, I believe sincerely, make the case for the wider shareholding of the privatised public assets, but they should study the experience of the market and the desire of small individual shareholders to take their profit, particularly when shares are sold at a considerable discount as, in effect, these all were. The temptation for individual shareholders to take their profits in the first year is considerable. One cannot blame them for that, but it makes nonsense of the Government's case. I believe that

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when the Financial Secretary answers the debate he should address himself to that problem. There are lessons to be learnt, and the Government would be exceedingly foolish if they did not read the tenth report of the PAC to see what can be learnt. It is important that the Government should do so, because the four shareholdings considered in the report are minnows compared to what the Government are now proposing.
The Government are to sell a 51 per cent. shareholding in British Telecom—that will be worth approximately £4 billion of taxpayers' money and public assets—and the royal ordnance factories where the fixed and current assets as shown in the 1982–83 accounts stand at £450 million. That scale of privatisation dwarfs the matters dealt with in the report. It is therefore doubly important that we and the Government learn the correct lessons from the report.
The Government will face other problems—foreign shareholdings and alternative means of sale. It is apparent that the idea of a fixed-price issue for an organisation such as British Telecom will not be acceptable or operable. The ideas that the Government are floating around for part-payment of the shares over two or three years is one of a number of possible schemes.
It would he interesting if the Financial Secretary, when addressing himself to the debate and the report, would give some sign that the Government have thought about that problem, are learning and will come out with some more practical and more responsible methods of selling public assets, if that is what they are intent on doing. It is important that the Government proceed responsibly as guardians of the public purse.
There are wider issues that I wish the PAC had had the opportunity, with more evidence and time, to consider. In this report the Committee was interested only in the sale of shares, but there is the vital issue of how the assets are valued. The capital reconstruction, and what is effectively the massaging of accounts, and the handling of depreciation in the company accounts, assume considerable proportions when one considers the size of British Telecom's assets.
In the penultimate year's accounts of British Telecom, depreciation increased suddenly, out of the blue and, for no reason referred to in the accounts, by 24 per cent. in one year. That presents the following year's profit and loss account in a completely different light and makes the business a different and much more attractive proposition for sale.
I believe that when studying the report the Financial Secretary should address himself to that point and say what the Government's policy is on depreciation with regard to the sale of assets, and how far, in all probity, they are prepared to go in reconstructing capital.
I am sad that the hon. Member for Horsham is not in his place because I should have liked the opportunity to have an exchange with him about the role of Civil Service pension funds in all this. He gave the example of the National Freight Corporation. Being on the Committee dealing with the Ordnance Factories and Military Services Bill I have the royal ordnance factories most in mind. In that case the Government have recognised that it will cost them £250 million effectively to buy out the principal Civil Service pension fund for the employees of the royal ordnance factories.
Even if they sell all the shareholding in the holding company—and the Government have not yet disclosed
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what they will do—they are unlikely to raise more than £300 million. That is the sum that the chairman of the royal ordnance factories, Mr. Clarke, has suggested might be the proceeds, although the fixed and current assets are in the book at £450 million, so there could be £150 million sudden discount. Even if the Government got £350 million for all the shares, there would be only a £50 million profit. The pension fund will have to be reconstructed whether or not all the shares are sold, and it is unlikely that they all will be.
Therefore, on selling off the royal ordnance factories the Government will be making a considerable loss—perhaps £50 million, possibly £100 million or even £150 million, plus the discounted loss on fixed and current assets. When the Financial Secretary faces up to those figures and when he considers the points that are validly, sanely and calmly made by the hon. Member for Horsham, surely the financial case for the sales of public assets will disappear over the horizon. The Financial Secretary should address himself to that.
The report shows clearly that there is a vital role for the Public Accounts Committee in future in scrutinising not only the sale of these far bigger assets but the valuation and the preparation for sale. I am not sure whether that is something for the PAC or whether it would be more properly divided between that Committee and the Select Committee on the Treasury and Civil Service. It may be that there is a role for both Select Committees. Between them they owe it to the public and to the House to scrutinise these privatisation plans. They should do it to save both the financial and the political face of the Government. To go ahead without a great deal more serious thought and scrutiny would be thoroughly irresponsible and would not be a sane, sensible and coherent use of public assets.
This is brought home further by the fact that in the Ordnance Factories and Military Services Bill Committee we have been talking about valuation. The Minister of State and the Under-Secretary have rejected the idea of basing it on historic on current cost or on price-earnings ratio. On three occasions, including this morning, they have come up with a brand new theory for the valuation of public assets; it is called by them the theory of usefulness. It has nothing to do with historic or current cost or price-earnings ratio or with any other accepted method of valuation. It is their theory of usefulness.
The Treasury, Treasury officials and the Financial Secretary should have a word with the Ministry of Defence and the Secretary of State, because what is proposed is not satisfactory. It would make a laughing stock of the Government if they valued £450 million of public assets on a wholly specious and meaningless theory of usefulness. If they go ahead on that basis the Public Accounts Committee will have to carry out a serious and substantial investigation.
The tenth report for 1981–82 is extremely important and pertinent. I wish it had been longer. We shall need more reports like it from the Public Accounts Committee and possibly from the Treasury Select Committee. Because of this report the House and the public are greatly in the debt of the Public Accounts Committee.
7.44 pm
Mr. Tony Favell: Like the hon. Member for Stoke-on-Trent, Central (Mr. Fisher), who has spoken so eloquently, I am not a member of the Public Accounts

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Committee and I, too, came here to listen to proceedings rather than to speak. Obviously I cannot speak with the expertise or knowledge that members of the Committee have shown. One thing I have learned is that the work that the Committee does is immensely valuable and is undervalued by the House. This debate should have been held long ago. Debates on reports by the Select Committee should be held regularly.
My attention has been directed to the seventeenth report for 1981–82 which deals with the Department of Health and Social Security; that report was printed on 21 May 1982 yet here we are in March 1984 debating it. There has been a general election in between, but that was on 9 June 1983. We spend a great deal of time in the House discussing how we will raise money and far too little time on how it is spent, which is just as much in the interests of the taxpayer.
If this were a report on the activities of an industrial concern, some of the matters to which the Committee has drawn attention would be hair-raising, to say the least. Paragraph 4 says:
"As regards DHSS's own lack of up-to-date information on manpower in the NHS, the Department told us that their operational need was only for an annual view of the total structure of the NHS payroll, which was obtained by an annual census each September. They now had the provisional figures for September 1981"—
this was in May 1982—
"which was a significant improvement on earlier years."
We are not dealing with a tinpot, tuppenny-ha'penny business but with the largest employer in Europe, a concern that employs 1·25 million people. Here we have the Department that controls this enormous, high-spending Department saying that it is enough to have a census once a year, nine months late, of how many employees the Department has. This is the most extraordinary way to run any concern. I venture to suggest that we would not run even a sports club in this way.
Paragraph 7 reports an improvement on what had gone before:
"On 22 January 1982 the Secretary of State announced in the House of Commons new arrangements to ensure better accountability to Ministers and within the NHS. These would focus on the progress made in each region towards implementing agreed national strategies and determining the action to be taken in the following year."
It was reported that that system would start in 1982–83. In fact, we heard in the debate on the Supplementary Estimates on 8 March that those reviews have been implemented, but this is two years after the event. During that time approximately £32 billion has been spent. If any company were run in this way it would be out of business within weeks. The lack of control is extraordinary.
It was disclosed during the debate on the Supplementary Estimates that the voluntary redundancy programme had been hopelessly underestimated. It was reported that that programme, which took place on reorganisation, had been originally estimated at £8·6 million, but that eventually it cost about £50 million. Again, we are not talking about peanuts. We are talking about approximately £40 million. The explanation given by the Department was that the original estimate was more of a guesstimate. It is simply not good enough to have guesstimates about this amount of public expenditure.
The work of the PAC is vital, and I venture to suggest that without its reports, the improvements that were
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announced during the debate on 8 March for the control of manpower and accountability of the regions within the DHSS would either never have been implemented, or would have been implemented much later. How much better it would be if the Committee's report had been debated on the Floor of the House within a matter of months, instead of two years later. I suggest that a great deal of public money would have been saved, and perhaps the rise in prescription charges announced two weeks ago might not have occurred.
7.51 pm
Mr. Michael Shersby: I am pleased to have the opportunity to participate briefly in this debate. I want first to pay tribute to the Chairman of the Public Accounts Committee, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). I have the privilege of serving on the Committee of Public Accounts, having been a member only since last July. During the 11 years or so that I have been in the House, I have found the Committee's work very worth-while. I have the feeling now that I am at last getting to grips with some of the problems that hon. Members have to consider. Also, I am beginning to find out why taxation has been so high, and why the taxpayer has got poor value for money on so many occasions.
One of the great advantages of the Committee of Public Accounts is that it operates in a non-political way. We operate very much as a team. We have to spend a great deal of time studying the papers that are made available to us for the two meetings that take place each week. that is necessary if the questions that we direct at witnesses are to be of value. So I believe that this Committee and its reports represent one of our most valuable parliamentary activities.
I agree with the hon. Member for Fife, Central (Mr. Hamilton) that it is a great pity that so few hon. Members are present today. Not long ago, this came to the attention of one of my constituents, who wrote me a sharp letter asking why it was that so few of the 650 Members attended debates on the PAC reports, saying that I should do better myself. I was able to write back and point out that not only did I attend the debates, but that I was a member of the Committee. I said that I hoped that he and other members of the public would take more interest in what we did. I am sympathetic to the notion that parliamentary time should be found for more frequent debates, so that we are not faced with a plethora of reports that have to be disposed of in one day. It is a most unsatisfactory procedure.
As I listened to the debate I could not help thinking that one way to deal with the problem would be to have some debates on the Floor of the House and other debates in a Committee upstairs which, of course, would be open to members of the public, so that more scope could be given to the discussion of our reports.
I apologise, Mr. Deputy Speaker, that I have not been present throughout the debates, but I have been in Standing Committee G, which has just completed its thirtieth and—I am relieved to say—its final sitting on the Rates Bill.
I want to comment on one of the reports, which illustrates how the PAC works and how it examines the reasons why the taxpayer has not got good value for money. I refer to the ninth report of Session 1983–84 about Hamilton college of education and the disposal of the land and buildings. There, the Committee was dealing with the

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sale of a college that was built in the mid-1960s, at a cost to public funds of about £2 million. In 1982, agreement was reached for the sale of the main college building, with playing fields and halls of residence, for £680,000—about one third of the original construction costs, and a very small fraction of the current replacement cost of £20 million. How could that happen? How could a Department of State—in this case, the Scottish Education Department—and a small sub-committee of the college, get themselves into a situation where they disposed of a public asset, which today would cost £20 million to provide, for the piffling sum of £680,000? How could the taxpayer expect to receive a satisfactory explanation from those who were responsible? The PAC's job was to find the answers to those questions.
The board of governors of Jordanhill college of education and the joint Jordanhill-Scottish Education Department sub-committee dealt with the disposal of the property. They were responsible for ensuring that the Scottish Education Department was a party to all the discussion. There was no question of the board of governors of the school being solely responsible. It was a joint operation with the Scottish Education Department. As one would expect, the Scottish Education Department took the advice of the chief valuer for Scotland about how to conduct the sale, and it specifically sought advice about whether estate agents should be employed, as well as about the possible selling price. It was eventually agreed that the sale should be handled by the college's own solicitors.
The PAC spent a considerable time on this issue because, certainly to English Members, it seemed unusual that it was handled by the solicitors, instead of by a large and perhaps a well-known estate agent operating in Scotland, with all the benefit of its experience of the property market. In fact, it is not unusual for solicitors to act in that way in Scotland. So perhaps one should not criticise that.
The college was advertised in four papers—The Times, The Scotsman, the Glasgow Herald and The Times Educational Supplement. It appeared in one issue in the period between 14 and 18 December 1981, and in one issue in the period between 11 and 15 January 1982, and 40 brochures were sent to people whom it was thought might be interested in the property, its playing fields, halls of residence and all the other facilities that were available.
My understanding is that the run-up to Christmas and the early part of January is a time when most good Scottish citizens are engaged in activities other than studying the property market and spending sums of about £20 million on property. They may well spend it on other things that they consider are desirable at Christmas time or in early January. Certainly their minds were on other things. One would expect, therefore, after the advertisements had been unsuccessful, that the sellers of the property would have advertised the property far more extensively in the national daily newspapers in Scotland and England during February and March of 1982, and that they would have sought the advice of expert estate agents to make sure of getting a good price for the property. But they did not.
Only four offers were received by the closing date of 23 July 1982. The highest of these was for £1,550,000, but this did not commit the tenderer to complete until he had obtained all planning permissions and development grants and a firm guarantee to buy the developed property. So that particular bidder wanted absolutely everything in return for the price that he was prepared to offer. The only
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other bid for the whole site was dependent on detailed planning permission for change of use of the property. The sum of £650,000 offered was exactly the same as the sum of the two remaining offers.
Before seeking offers, the joint committee had discussed with the local district council the likelihood of obtaining planning permission. In the report it is made clear that the council had concluded
"that permission was unlikely for any use of the main college block for other than educational purposes, although the Council had indicated that they would consider a proposal for conversion of the halls of residence to housing. They were not prepared to allow any development of the playing fields. The Council confirmed this general attitude after the offers had been received, although they indicated that conversion to a hotel and conference centre might be acceptable and other proposals would he considered on their merits."
The local district council was not, therefore, being unreasonable. It considered very carefully the various options open to it and made it clear that conversion to a hotel and conference centre might be acceptable and that other proposals would be considered on their merits. Although I have not had the pleasure of visiting this particular college, it seems to me that, situated as it is, quite near a racecourse, it would not be unreasonable to assume that it would be quite an attractive conference centre or even——
Mr. Maxton: Perhaps I can add a little to this. Not only is it near a racecourse, it is near a big country park and also less than three quarters of a mile from the main motorway between Glasgow and the south.
Mr. Shersby: I am very grateful to the hon. Gentleman. He is very familiar with the area. I remember that during the proceedings of the Committee he drew attention to some of these matters. I am glad that he has refreshed my memory on them today. As he rightly points out, it was not only near a racecourse, it was near a very fine park and had excellent access by motorway. So here we have premises which comprise excellent accommodation, playing fields and all the rest, valued at £20 million in terms of replacement cost, being sold for this comparatively small sum of £680,000.
It was only at this stage, so the Committee of Public Accounts was told, that the Scottish Education Department again sought the advice of the chief valuer. He wrote to the Scottish Education Department in August 1982, giving his views on the way in which the sale had been handled. Although he said that his estimate of £6 million as a possible price represented a sale in the most favourable conditions,
"he was not satisfied that the market had been adequately tested".
Neither was the Committee of Public Accounts.
The chief valuer went on to suggest:
"that public bodies might be interested if they knew how low a price was expected; that the current cost of providing the building would be about £20 million; and that the 34 acres of the site outside the loop of the racecourse could be worth about £25,000 an acre."
Thirty-four acres at £25,000 an acre is a lot of money.
The Scottish Development Department estates office, which was also asked for advice, thought that the offer for the halls of residence was reasonable but that the rest of the college was worth more than £270,000. It even went so far as to recommend that a major firm of estate agents be employed to market this part of the property comprehensively. That did not happen. The Scottish Education Department thought that all the offers were very

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low and considered whether to seek better ones, but decided that the market had been adequately tested and that re-advertising or engaging estate agents
"would be unlikely to produce a different result and would prolong the need to maintain an empty property at substantial cost to public funds."
Obviously it costs a lot to keep a building of this size heated, secure and so on. Nevertheless, the sum mentioned to us for doing that, which I think was in the region of £300,000, is a comparitively small one set against the total cost of this particular college and the price that should have been obtained for it. This is the situation that we were considering. In paragraph 21 of our report, we say:
"In these circumstances we find it most surprising that, limited advertising having produced only four unattractive offers, SED once again rejected the Chief Valuer's advice to use estate agents in conjunction with the District Valuer to apply a much greater marketing effort; and decided to sell at a bottom of the market price."
That sums up the situation very well. In paragraph 24 of the report, we say:
"The Treasury told us that although it was SED's responsibility to sell the property for the best price they could get, they were surprised that SED did not tell them that they had rejected the Chief Valuer's advice on the handling of the sale."
Of course, the PAC shared the Treasury's surprise at the way in which the whole business had been handled.
This case illustrates the way public money is spent and how the taxpayer fails to get value for it. It is also a strong condemnation of the way in which this whole matter was handled by those responsible. It should not happen today. There surely cannot be a Member of the House of Commons selling his house who, if the first estate agent or solicitor did not succeed, would not try another. There cannot be a single Member who would advertise his house in the period immediately before or immediately after Christmas and expect that the maximum number of offers for the house would be forthcoming. Surely he would put his property on the market at about this time of the year. Next week is, I think, the optimum time, when the daffodils are out. It may be a little later in Scotland. Surely these are elementary considerations that would be borne in mind by anyone seeking to sell any property anywhere.
The case also illustrates the valuable work done by the PAC. I hope that the officials and Ministers concerned take note of what has happened and make quite sure that they put in place new procedures that will ensure that it cannot happen again. I hope very much that the House will be told what steps have been taken by the Scottish Education Department to ensure that when in future it disposes of property it will be obliged to do so in such a way that the maximum number of people know about it and that it stands a really good chance of getting a fair price for the public asset that it is responsible for handling.
8.9 pm
Mr. Lewis Stevens: I add my tribute to the work of the Public Accounts Committee in looking at the expenditure of the various Departments. I am not a member of the Committee and I have found it intriguing to read some of the reports—not all of them by any means—that it has presented. The one that caught my attention is the twenty-second report, which concerns itself with "taxpayer compliance and the black economy". Few hon. Members on either side of the House would
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disagree that the black economy needs sorting out so that we can get the maximum amount into the Government purse.
We also recognise the dangers of the black economy. It makes some businesses unfairly competitive. In effect, they have an unofficial Government subsidy helping their prices. The smaller business can undercut many of the more reputable firms. On more individual matters, the casual worker can nip in and do unfairly priced jobs. We hear much about the so-called cowboys who thrive on the black economy. We need to put this right.
There are some things in the report that caused me concern. When I read it from the back, as I normally read a newspaper, I noticed from the table on criminal proceedings, given on page 55, that there were only 174 prosecutions and only 157 convictions. We have a good idea that there are many people involved in the black economy, so that is a comparatively small number. That information is brought out well by the report.
I am surprised to find that I greatly agree with some of the comments by the hon. Member for Fife, Central (Mr. Hamilton). That may not do my political career too much good, but I sympathise greatly with his points about the black economy.
It seems to me that the report, although accepting that the black economy is costing about £4 billion, hesitated to say that something has to be done urgently because of the large sums of money involved and the unfairness of the system. There are one or two points in particular. It did not go into any depth about how the Inland Revenue operates. The report looks at the American ability to take samples of taxpayers, to examine in depth what their accounts are about and to use random samples to improve the position. It says:
"We have not considered the full implications of removing the limitation from the Inland Revenue. But, considered solely in terms of efficiency in combating tax evasion, the limitation seems regrettable because the use of modern statistical methods might well assist the Department".
Knowing at first hand the ability of many civil servants, and that the techniques within the Civil Service are usually modern, I am aware that we already use some of the modern statistical techniques available to pinpoint the more likely cases that could be looked at. I should like to hear that the Treasury has added into the Inland Revenue better statistical methods, particularly the use of computers, to try to identify more clearly the cases that we should be looking at. That may need an alteration in the law, but I am sure that, from the records of the Inland Revenue, that analysis could be made to identify problems.
The report goes on to say that one of the problems of the Inland Revenue today is
"difficulty in recruiting suitable staff and retaining trained inspectors."
That would suggest that, perhaps, there is a need for the Inland Revenue and the Government to consider the competition with the accountancy professions and to ask what training the Inland Revenue should be doing to get the type of people that it wants, in particular to investigate company taxes and the evasion of such taxes. Much of that training could be done internally. The Inland Revenue has already transferred staff from one area to another.
The hon. Member for Fife, Central made it clear that he saw the need to put people into the Inland Revenue as a priority, although our overall approach has been to reduce the Civil Service. However, it is important that

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people go into the Inland Revenue. Such a move would be widely cost-beneficial. With £4 billion missing, there is plenty to come in. There is a case for increasing the investigatory staff of the Inland Revenue in that area, and I hope that the Treasury will look at the amount of effort going into investigation in the Inland Revenue.
The DHSS has put a lot of successful effort in the investigation of fraud. It has been criticised for this, but if there is fraud, it does not matter whether it is within the ambit of the Inland Revenue, the DHSS, or Customs and Excise. It is all anti-social and against the public interest in total and that investigatory power should be there. None of us would wish to support the idea that people can get away with the sort of tax evasion that we have known in the past.
Later, the report says:
"The size of the black economy is clearly much influenced by the effectiveness of the means the Government employ to deter fraud and abuse."
That is fairly obvious, and by the sound of it the Inland Revenue has not been particularly successful. On the first page the report says:
"87 per cent. of cases examined … disclosed understatements of profits".
If such a large percentage reveal that, something is wrong, and we should be investigating even more cases.
On page 37, there seems to me to be an element almost of naivety. Sir Lawrence Airey was being examined, and he said:
"There are other areas. There were simplifications suggested in one of the Rayner exercises in relation to Schedule D … we will no longer go hunting for small sums of money like £10 or £15".
It concerns me that in 1981–82 such a basic statistical approach was relatively new and we were not looking for the best return. That is a rather simplistic approach. There are many sophisticated techniques in the Inland Revenue and Civil Service, but it appears that we are not using them to the best advantage, if that is the correct interpretation.
These reports are important. Many of them are two years old, which is something of a disadvantage, but they serve a great purpose. If they draw our attention to subjects such as the black economy and reinforce our determination to get something positive done and give the Inland Revenue the support and facilities that it needs, they will have been well worth while.
8.20 pm
Mr. Terry Davis: Apart from the special debate about premature retirement in the National Health Service two weeks ago, it is two years since we had a debate on the reports of the Public Accounts Committee—a point that has been mentioned by several hon. Members. In the meantime, we have seen a change in the chairmanship of the Public Accounts Committee. Many right hon. and hon. Members on both sides of the House have paid a justified tribute to the work done as Chairman by my former right hon. Friend the Member for Heywood and Royton, Joel Barnett, now Lord Barnett. We have a very worthy successor in my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), who brings some distinction to the chair of the Public Accounts Committee because he was previously for six years a member of the Committee, then became Financial Secretary to the Treasury, then Opposition spokesman—indeed, he spoke from this Dispatch Box during the debate a couple of years ago—and has now become the Chairman of the Committee.
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I served for only a few months on the Public Accounts Committee before I was called to other things, and I found it a most enjoyable part of my time in the House of Commons. Nevertheless, I can assure my right hon. Friend that I have no intention of following him from the Dispatch Box to the chairmanship of the Committee—certainly not within the next two years.
With his typical modesty, my right hon. Friend paid tribute to his predecessor and to the work of the other members of the Committee as well as to the Comptroller and Auditor General and his staff, but many hon. Members in the debate have praised his contribution. It is true that the atmosphere of and the work done by the Committee owe a great deal to the person who is Chairman.
Many members of the Committee, and many other hon. Members, have referred to the length of time that we have waited for this debate. It has been too long, and we are today dealing with too many reports. To try to debate 46 separate reports, some of them dealing with several subjects, is an impossible task for the House. As my right hon. Friend the Member for Ashton-under-Lyne said, each report could be the subject of a debate, and the position is very unsatisfactory. I thought that he was a little kind when he attributed the delay to the general election. It was 14 months between the last debate and the general election, and we have had another nine months since then. It seems to me that the delay has been due to the tradition or convention that the reports of the Public Accounts Committee should be debated once a year. I agree with several hon. Members who have said that we should debate the reports of the Public Accounts Committee more often. The hon. Member for Stockport (Mr. Favell) argued the point most forcefully, and I agree with him. I also agree with the hon. Member for Scarborough (Sir M. Shaw), who said that the value of the debate is lessened by the number of reports and the time that has passed since their publication. I believe that it also affects participation in debates.
Several hon. Members—in particular my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) and the hon. Members for Horsham (Mr. Hordern) and for Uxbridge (Mr. Shersby)—pointed out that very few Members take part in these debates unless they are themselves members of the Public Accounts Committee. My hon. Friend the Member for Fife, Central (Mr. Hamilton) put his finger on the reason for this when he said that the debate is billed as a debate on the reports from the Public Accounts Committee, and therefore other hon. Members tend to leave it to the members of the Public Accounts Committee. I believe that we should have much greater interest and participation in the debates if they concerned subjects rather then reports, and I suggest that the House consider that point. Certainly we are all agreed that we need more debates.
As the hon. Member for Scarborough pointed out, we do not need to debate all the reports of the Public Accounts Committee, but we should at least devote enough time to debating the more important reports to do justice to the work of the Committee. I emphasise that I am not suggesting that a debate in the House of Commons is the only purpose of a report from the Public Accounts Committee, or that we can consider a report as having been finished, or disposed of, as the hon. Member for Uxbridge put it, as soon as it has been debated. On the contrary, we can often learn lessons for the future from the failures of

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the past, as my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Fisher) reminded us in his comments on the tenth report from the 1981–82 session.
My hon. Friend the Member for Normanton (Mr. O'Brien) drew attention to the report on joint financing by the National Health Service and the social services authorities, and pointed out that we could obtain better value for money and that that did not necessarily mean that we spent less money. We may spend the same amount and obtain better value by getting more for our money. That is certainly the philosophy of my right hon. and hon. Friends and myself.
My hon. Friend the Member for Normanton was not a member of the Committee when it considered that particular subject but, as he said, the whole matter should be kept under review. That is a very important part of the role of the Public Accounts Committee. It is important for it to return to some subjects again as it decides from time to time to check on the progress that has been made by Government Departments in the implementation of the Committee's recommendations. It must be emphasised to Government Departments that the House does not regard a report as having been finished with as soon as it has been debated.
My hon. Friend the Member for Coventry, North-East (Mr. Park) and the hon. Member for Scarborough drew attention to the shocking escalation in the cost of the Chevaline project from £175 million to £1,000 million. They referred to the lack of any requirement to disclose costs and increases in costs. As one of them said, that will not do. My right hon. Friend the Member for Ashton-under-Lyne informed the House that in future the Public Accounts Committee will monitor all defence projects that are expected to cost more than £100 million. All hon. Members should welcome that improvement and extension of the Public Accounts Committee's role.
There were some comments about nationalised industries and my right hon. Friend pointed out that the Public Accounts Committee recommended that all nationalised industries should prepare corporate plans, and said that these corporate plans would assist the Government in the allocation of funds. The hon. Member for Northampton, South (Mr. Morris) emphasised that the lack of corporate plans was a serious defect in the way in which nationalised industries are run. I feel, however, that the real failure shown by the report of the Committee is the failure not of the nationalised industries but of their sponsoring Departments.
I would repeat that comment in reply to what was said by the hon. Member for Ludlow (Mr. Cockeram) about the factory building programme undertaken by the English Industrial Estates Corporation. Reading the Committee report, it seemed to me that the strongest criticism concerned the failures of the Department of Industry.
The clearest failure of all identified in these reports is, of course, that in the ninth report of the 1983–84 session on the sale of Hamilton College. Many hon. Members commented on that report. My right hon. Friend the Member for Ashton-under-Lyne and my hon. Friend the Member for Cathcart would be expected to comment on what one of them described, I think, as a rip-off. But some Conservative Members also drew attention to the implications of that report and expressed their concern about what had happened. The hon. Member for
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Northampton, South referred to it in strong terms. The hon. Member for Uxbridge took us through the history of what happened. I shall not repeat his description of that saga. I thought that his summary of events was very fair. I must say that I agreed with another Government Member—the hon. Member for Rutland and Melton (Mr. Latham)—when he said that his conclusion, having listened to all the evidence, was that the matter had been "very poorly handled".
Most of the discussion about Hamilton college of education has centred on the price. That is understandable. People are shocked to learn that this college has been sold for £600,000, when it had been valued at £6 million in favourable conditions, and that therefore a public asset has been sold for, apparently, one tenth of what it might be worth. I believe, however, that the real point is not the price but the way the sale was handled. Having listened very carefully to the hon. Member for Uxbridge, it is clear to me that the Scottish Education Department ignored existing guidelines. It ignored the procedure recommended by the Halliday committee. It ignored the advice of the chief valuer, not once, but twice. It was the hon. Member for Uxbridge who said that the Scottish Education Department had overlooked "elementary considerations". It was he who used the expression "strong condemnation".
I have read with interest the Treasury minute which has been put before the House. It accepts that there were three separate failures by the Scottish Education Department. I shall be grateful if the Financial Secretary will tell us what action has been taken as a result. I accept that steps are now being taken to ensure that nothing of the sort shall ever happen again. So much for the future, but what about the past? If Ministers were not personally responsible for these failures, if follows that civil servants were to blame. I hope that the Financial Secretary will tell the House what disciplinary action has been taken within the Civil Service. I do not ask him to identify the civil servants. I ask him to tell us clearly and without equivocation whether any civil servants have been reprimanded or disciplined in any way for the failures of the Scottish Education Department.
The hon. Member for Rutland and Melton told us that the matter has been "very poorly handled" in his opinion. Poor handling should not be good enough for the Government. What has been done or said to those responsible for the poor handling?
Mr. Willie W. Hamilton: Does my hon. Friend recall the decision of Sir Thomas Dugdale in the Crichel Down affair,? I was a member of this place when Sir Thomas, although not responsible himself for the Crichel Down incident, offered his resignation in the last sentence of his speech from the Government Dispatch box. He felt that the political master responsible for the case must accept responsibility. He took the honourable course and resigned, in striking contrast to the events that have followed the closure and sale of Hamilton college.
Mr. Davis: I remember the Crichel Down affair although I was not a member of this place at the time. I remember discussing it at school in what was then called current affairs. I remind my hon. Friend that there has been another incident in more recent times. It arose in 1979 when the PAC was considering a matter that it thought had been badly handled. The PAC asked the permanent secretary at the Department of Energy what had been done as a result of the failures in his Department. It wanted to

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know what had been done in reprimanding the civil servants who were responsible. On that occasion it was felt that certain civil servants were responsible. It is a matter either of ministerial responsibility or of civil servants falling down on the job. It is clear that the Hamilton college sale was badly handled and, therefore, the Minister concerned must accept responsibility, or we are entitled to be told by the Financial Secretary, who is responsible for the Civil Service, that, through his Department, disciplinary action of an appropriate sort has been taken in respect of those who overlooked elementary considerations. The House is entitled to be told one way or the other.
Several of the reports published by the PAC show that the Committee is anxious to encourage better performance by Government Departments. The hon. Member for Scarborough made a plea for greater attention to be paid to internal audit departments within Government Departments. He drew attention to the need for permanent staff instead of temporary postings. He argued that there should be more trained accountants within internal audit departments. I have a great deal of sympathy with both of the hon. Gentleman's arguments, but I believe that an internal audit department needs both permanent staff and those who are passing through, for the latter group will learn skills and attitudes that they will take elsewhere. There is a danger of putting too much emphasis on permanent staff.
Similarly, there is a danger in putting too much emphasis on trained accountants because others can sometimes contribute to the work of an internal audit department if they have skills other than those that stem from training in accountancy. That is especially so if the aim of the department is to obtain better value for money. I should belatedly declare my interest, because I used to be an internal auditor.
The hon. Member for Scarborough and I are both arguing for a more professional approach by internal departments. In talking about value for money, it is important for departments to be conscious of the need to give value for money in a way that is slightly different from the concept that is often adopted. It is important to emphasise that the assessment of value for money should not be made in isolation, for it will involve the comparison of different programmes, as described by the hon. Member for Horsham.
The hon. Member for Northampton, South, who has been a member of the PAC for many years, argued that there should be a common accounting basis for nationalised industries to assist the PAC and the House generally in their work. In principle, I am inclined to agree with him, but in practice I suspect that there might be some difficulties. Nationalised industries are all engaged in different businesses, and what is appropriate accounting in one type of business or industry may not be appropriate in another. I throw the argument back to the hon. Member for Northampton, South by saying that his suggestion seems to be an excellent one for the PAC to consider.
The hon. Member for Northampton, South said also that he went all the way with the Prime Minister on the question of reducing the number of civil servants, but argued that in some Departments there was a need for redeployment. He referred especially to the need to investigate fraud in respect of benefits, national insurance contributions and tax. According to the hon. Gentleman's
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figures, tax fraud is the most important of the three categories. This brings me to the twenty-second report in the Session 1981–82 on cost-effectiveness of investigation staff and the second report of the Session of 1983–84 dealing with the prevention and detection of evasion of national insurance contributions as well as social security benefit fraud and abuse.
Several hon. Members have referred to the reports, but I am surprised that nearly all of them were Labour Members. They included my hon. Friends the Members for Coventry North-East, and for Fife, Central and my right hon. Friend the Member for Ashton-under-Lyne. Apart from the hon. Member for Northampton, South, I think that the hon. Member for Nuneaton (Mr. Stevens) was the only Conservative Member to refer to the reports. I read them with great interest and I was struck especially by the figures contained in the twenty-second report in the Session 1981–82, which show that, for every official employed in detecting fraud in the Inland Revenue, there was a gain to the Treasury of £92,000 in extra tax, penalties and interest. That amount was contrasted with the average figure achieved by officials employed in the Department of Health and Social Security, which is £38,000. I should add that the figure was £170,000 if the official was checking unpaid contributions instead of checking those claiming benefit. The DHSS does not estimate the total amount of fraud under either heading.
Slightly different figures appeared in the second report Session 1983–84, which showed that the amount achieved by an official in the DHSS was £42,000. The report included a table which showed a spread from £26,000 for local office staff up to £90,000 for staff in specialist claims control. An important phrase appears in the memorandum of the Comptroller and Auditor General. It tells us that these figures for so-called benefit frauds are based on
"estimated savings from the termination of suspected fraudulent claims."
There is a great difference between this work within the DHSS and that undertaken by the Inland Revenue. The money that is recovered by the Revenue is not based on an estimate of suspected fraudulent claims. I draw that fact to the attention of the hon. Member for Nuneaton because he talked about the DHSS as if the figures represented actual fraud. The emphasis should be put on "suspected".
The attitude of many of the staff in the specialist claims control is to stop first and discuss afterwards. Its members of staff come and go. They are specialists in hit and run. The first thing that a member of the specialist claims control will do is to stop the payment of benefits. Later he will talk about whether the benefit was justified. Benefit is often reinstated when the plaintiff appeals, and I am suspicious that the figures in the report do not allow for the fact that benefits have been rightly resumed after a member of the staff of the specialist claims control unit has left the local office. I have some personal experience from constituents' cases to that effect.
The figures show in any case that we get better value for money—and that, after all, is our aim—by employing more people to detect Inland Revenue fraud rather than employing people to stop fraudulent benefit claims.
My right hon. Friend said that the Inland Revenue has estimated that the black economy costs the Treasury a total of £4 billion a year. The Department of Health and Social

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Security says that it cannot estimate the amount of fraud. I have my own suspicions about why the DHSS prefers to avoid any estimates. I suspect that it may be because the lack of any estimate by the Department enables some extreme Conservatives to indulge in the propagation of myths about scroungers.
The true scroungers in our society are shown by other reports published by the Public Accounts Committee. I refer specifically to the fifth report Session 1982–83, which showed that the defence industry is ripping off the Ministry of Defence. That is the report on pricing and post-costing of non-competitive contracts. The report shows that the target profit rate agreed with the Ministry of Defence remained at 20 per cent. return on capital at a time when it should have been reduced. That cost the Treasury £75 million a year. When the Financial Secretary comes to reply to the debate, I hope that he will tell us whether the review board report, mentioned in that Public Accounts Committee report, has now been received, what has happened to it and whether it has been implemented.
The suppliers to the Minister of Defence were not alone. The other scroungers in our society are the pharmaceutical industry which is also operating on noncompetitive contracts. From the tenth report Session 1982–83, one notes that the Public Accounts Committee found that the return on capital in that industry had risen under this Government from 21 per cent., to 23 per cent. at a time when it should have been reduced.
The PAC has done its job, and done it well. Now we want to know what the Government have done. After all, the Government were elected on a promise to obtain better value for money. What have the Government done to obtain better value for money as a result of these reports?
8.42 pm
The Financial Secretary to the Treasury (Mr. John Moore): This has been a long but enjoyable and illuminating debate, I think, for most hon. Members. It is one from which hon. Members, whether or not they are members of the Public Accounts Committee, will have benefited. I say that as someone who, like the hon. Member for Birmingham, Hodge Hill (Mr. Davis), was, unhappily, able to spend only a few months of my first year in the House on the Public Accounts Committee. Unlike the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), I did not have the privilege of spending six years on it. I was asked to do other things in the spring of 1975. I found that it was the most exciting and interesting Committee on which I served. I enjoyed the five or six months that I spent on the Committee. Throughout the 10 years in which I have been in the House, I have recognised the enormous value of work that it does.
I sympathise very much with the right hon. Member for Ashton-under-Lyne, the hon. Member for Hodge Hill, my hon. Friend the Member for Scarborough (Sir M. Shaw) and many other hon. Members who have commented on the difficulties of having to debate as many as 46 reports. I will make sure that their remarks and the remarks of my hon. Friends the Members for Northampton, South (Mr. Morris), and for Stockport (Mr. Flavell), the hon. Member for Fife, Central (Mr. Hamilton) and my hon. Friend the Member for Uxbridge (Mr. Shersby) about the character and the way in which we debate what I regard as important matters are brought to the attention of the Leader of the
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House. These remarks concern the way in which we debate the reports of the PAC and face difficulties in the work that we all did on the 46 reports.
Despite the work, I join unreservedly those hon. Members who have paid tribute to the Public Accounts Committee, not only for the quality but for the quantity of work that it does. The large number of reports is a testimony to a great deal of hard work put in by the present Committee and by its predecessor chaired by Lord Barnett. Again, I unreservedly echo the tributes that have been paid from both sides of the House to the outstanding work that Lord Barnett did as Chairman of the Committee for so many years.
It was nice to hear the remarks that were made about our colleague, Sir Albert Costain, whom one could not imagine to be absent from the Chamber during debates on reports of the Public Accounts Committee.
All but two of the 46 reports are based on evidence taken by the Committee chaired by Lord Barnett. No doubt the reports of the present Committee, which has already made such a noticeable mark, are the forerunners of many more. On this occasion, I am sure that we would all wish to acknowledge the considerable contribution of their predecessors to the agenda for this debate. They contributed not only to most of the reports that we are considering today, but to the passage of the National Audit Act. I join my hon. Friend the Member for Horsham (Mr. Hordern), the right hon. Member for Ashton-under-Lyne and other hon. Members who said how indebted the House was to my right hon. Friend the Member for Chelmsford (Mr. St. John-Stevas) for introducing that measure. I am sure that he and other hon. Members will readily acknowledge the valuable support of other hon. Members—for example, my right hon. Friend the Member for Taunton (Mr. du Cann), who has long been concerned with parliamentary scrutiny of public expenditure.
The Act is the first substantial piece of legislation on national audit for 60 years. It builds on the massive foundation laid by Gladstone in 1866, and it is a worthy addition. The National Audit Act tackles some difficult issues—for example, the status of the Comptroller and Auditor General. All are agreed that he should be completely independent, yet he works closely with the Public Accounts Committee on behalf of the House. He must also enjoy the confidence of the Government, not only because the Comptroller and Auditor General uniquely enjoys access to the files of Government Departments, but because he is a valuable source of constructive criticism leading to greater efficiency, a high priority for all Governments.
In defining the relationships of the Comptroller and Auditor General to Parliament and to the Executive, the Act sought to some extent to embody existing practices, and that is not easy when practices shaped by a delicate balance of interests have not previously been codified. In other respects, too, the Act is innovatory. It gives the House of Commons an important role in the process of appointing the Comptroller and Auditor General, and firmly establishes that he is an Officer of the House, and the staff of the National Audit Office are not civil servants. A new Public Accounts Commission examines the estimates of the National Audit Office and presents them to the House.
The Act serves another major purpose. It provides a statutory basis for the value-for-money studies which I think have been greeted by both sides of the House as one

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of the key and crucial features of our current debates. They have developed over the years on a non-statutory basis. The studies are important, and the most publicised part of the activities of the Comptroller and Auditor General. It is right that they should be supported by legislation.
The National Audit Office is now in being. I am sure that it will continue to develop and improve its techniques, increase its own efficiency and effectiveness, and provide vital support for the Public Accounts Committee. The Government wish it well.
Many other hon. Members, including my hon. Friend the Member for Horsham, the hon. Member for Normanton (Mr. O'Brien) and my hon. Friend the Member for Northampton, South, who apologised for the fact that he would be absent at the end of the debate, raised legitimately—I think it is an issue that will not go away—the question of the lack of coverage of the nationalised industries by the Public Accounts Committee.
Subsequent to the passage of the National Audit Act, the Government have encouraged the industries to look at possible means of strengthening their arrangements for internal efficiency and for reporting to Parliament. The work of the PAC is particularly important to the Treasury. Indeed, it is a vital part of the process of accounting for the Government's expenditure. In a sense, it substitutes for the shareholders' interest in that most vital line in any company's account, the bottom one. It helps Parliament and the Government to make use of the public accounts.
Our common interest in economy, efficiency and effectiveness is clearly evident from the fact that the Committee's reports more and more emphasise the messages contained in the Government's financial management initiative. We are trying to do things better, the Public Accounts Committee is rightfully exhorting, encouraging and helping us to do so, and we welcome the help.
I shall try to answer as many of the detailed points as I can. I hope that the House will bear with me if I do not have at my fingertips the details of all 46 reports. My hon. Friend the Member for Uxbridge, the hon. Member for Hodge Hill, the right hon. Member for Ashton-under-Lyne, my hon. Friend the Member for Northampton, South, the hon. Member for Glasgow, Cathcart (Mr Maxton) and my hon. Friend the Member for Rutland and Melton (Mr. Latham) all paid attention to the most recent item on the agenda—the sale of Hamilton college. The House has already spent three hours debating this issue, and the mistakes made have been fully acknowledged. Steps have also been taken to ensure that such mistakes are not repeated. The hon. Member for Hodge Hill asked me for that confirmation.
The Treasury minute said that we were, as the Committee suggested, considering whether the guidance to Departments in England and Wales needs any revision. I can now say that it does not, but all Departments have been reminded of that guidance. I cannot comment on all the specific points raised by the hon. Member for Hodge Hill now, but I will endeavour to ensure that they are answered.
There is more than enough meat in the other reports. The Ministry of Defence, the DHSS and the Revenue Departments figure prominently. That is not surprising, considering the size of their operations. Nor is it surprising that the Committee's reports are usually critical. Generally speaking, the Committee's function has been to bring to light what is not satisfactory, with a view to getting it put
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right. Constructive and objective criticism of departmental performance is, as it should be, the Committee's main stock-in-trade.
The Treasury and, I believe, Departments generally welcome examination of the way in which Departments have carried out the policies laid down by the House and by their Ministers. That is not to say that the accounting officers positively enjoy the vast amount of detailed work that they have to put in to be able to answer the Committee's questions. However, I am sure that they accept that it is absolutely right that the PAC, representing the interests of the taxpayer, should be able to call them personally to account, as they do. Of course there must in practice be a great deal of delegation of authority within Departments. However, there can be no delegation of responsibiity or accountability to this House. Ultimately, that accountability is the accountability of Ministers but, for all practical purposes, it is with the accounting officer appointed by the Treasury that the buck stops in departmental administration. I hope very much that as the financial management initiative takes its effect and the Committee moves into the area of the more rounded studies that we have heard about, we shall come to see more reports, such as the third report of the present Session, in which a Department is commended.
I will now dip into what, on the last of these occasions, was aptly called the bran tub. The hon. Members for Hodge Hill and for Fife, Central and my hon. Friend the Member for Nuneaton (Mr. Stevens)—who has no need to apologise for participating in a debate in which most of those present are or have been members of the Committee—the right hon. Member for Ashton-under-Lyne, the hon. Member for Coventry', North-East (Mr. Park) and my hon. Friend the Member for Northampton, South all discussed the detailed reports about the black economy.
Mention was made of the cost-effectiveness of investigation staff. I take the simple point that in purely financial terms it can be profitable to employ more investigative staff wherever their efforts can lead to recoveries of tax or prevention of social security abuse which are greater than the cost of employing them. Cost-effectiveness is not the only factor. Another, which has been central to the Government's policies, is the need to reduce the size of the Civil Service, and yet another is the public acceptability of increased investigation. That has been mentioned in speeches from both sides of the House. A balance has to be struck, and the Government have approached the problem by determining the overall departmental staff allocations consistent with manpower policy, and within them to allocate as many staff as are compatible with the other objectives to the most profitable investigative work. The Departments themselves have been responsible for this as part of their overall responsibility for deploying the resources available to them.
All three Departments involved have greatly improved the cost-effectiveness of their staff allocations to this important work, and we are getting the optimum result in terms of trying to pursue all those objectives at once. The right hon. Member for Ashton-under-Lyne referred—the comparison was made implicitly by other hon. Members—to the way in which the DHSS was relatively unable to be specific about the quantification of the total amount of money lost through fraud, whereas the Revenue Departments had, in evidence, appeared to be more specific. However, the estimates of the Revenue

977
Departments are no more than figures of a global order of magnitude—figures for something which is by definition not capable of calculation.
The Treasury minute in reply to the second report of 1983–84 explains why successive Governments have not attempted the measurement of benefit fraud. It would mean the taking of random samples which would for the most part concern innocent people. However, the minute promises a reconsideration in the light of the Committee's report.
It is hard to quantify in this area, but I draw the attention of the House to the letter written on 17 Febmaiy by Mr. Judd of the Treasury to the clerk of the Committee about aspects of quantification by the Revenue. I am sure that the right hon. Member for Ashton-under-Lyne will not mind if I refer to the letter. Mr. Judd reminded the Committee that
"reliable measurement, or even such measurement as has been done in the case of vehicle excise duty, is not possible."
He then discusses specific direct taxes:
"So far as direct taxes are concerned, Sir Lawrence Airey told the Committee on 28 April 1982 that such evidence as there was would point to the size of the black economy"—
these are the figures on which we have all been working—
"being towards the lower end of the range of 6 to 8 per cent. of GDP; this would represent about £15 billion on which the tax loss could range around £4 billion … The Revenue have always emphasised that these figures are not firmly based on concrete evidence."
We all accept that, but it is important to put the figures in context.
My hon. Friend the Member for Nuneaton asked about efforts to identify and combat tax evasion where the Revenue was unable to examine taxpayers' records on a random sampling basis. Legislation involving the Revenue's powers would be required to enable the Revenue to carry out random sampling. The Revenue's powers were the subject of Lord Keith's committee on enforcement powers of Revenue Departments. The Government will need time to consider the committee's findings; it is still receiving outside advice.
On the question of the Revenue's effort on the black economy, my hon. Friend the Member for Nuneaton will be pleased to know that, although the Revenue, like other Departments, has taken its share of the reduction in the size of the Civil Service, it has been possible to increase the priority given to investigation work and to improve efficiency. There are now 10 special officers compared with four in 1979, and 300 more members of staff engaged on audit work for the next two years. Moreover, an additional 850 staff will be deployed on other investigative work in the next four years.
The hon. Member for Hodge Hill, who has constituency experience, talked of the difficulty of detecting fraud. He was right to remind us that it is a different consideration from that of the Inland Revenue. I am advised that in its second report in the 1983–84 Session the Committee expressed anxiety to the effect that the DHSS was unable to provide a reasonably sound estimate of the extent of benefit fraud. Research into the prevalence of undiscovered benefit fraud has been the subject of much debate recently. There is no easy answer without involving varying degrees of intrusion into the lives of many innocent people, as any statistically reliable
978
study would entail thorough investigation of a random sample of claimants, most of whom would be under no suspicion. It is mainly for that reason that successive Governments have not authorised such a project. We are taking the PAC's recommendations seriously and are reconsidering that point.
Mr. Terry Davis: Perhaps I might put two points to the Minister. First, how is it that the DHSS can estimate the amount that is under-claimed but cannot estimate the amount that is overclaimed? Secondly, is it necessary to have a random sample? Every claimant is supposed to be visited within one year of making a claim and then to be visited again on a three-year cycle. The officers who visit the claimants are supposed to check that they are receiving the right amount of money and sometimes find that they are not receiving as much as they should. I should have thought that, if enough staff were employed to do the job properly, it would be possible not so much to give an estimate as to tell us on a three-year basis how much has been found to be overpaid and how much has been found to be underpaid.
Mr. Moore: The Treasury shares the PAC's interest in this matter, so it is obvious that I shall pursue it further. To the extent that my right hon. and hon. Friends in the DHSS are concerned, I shall ensure that their attention is drawn to what the hon. Gentleman has said. I shall be interested to hear their responses.
Mr. Robert Sheldon: The Financial Secretary to the Treasury is of course aware of the Fisher committee which reported in 1973 on how the samples could be undertaken. Will he now consider that? The report is now 11 years old and most of the arguments that it advanced still apply.
Mr. Moore: I am aware of it, but thought that I was covering some of the basic objections that were regarded as substantive. This is one of those happy debates in which the Treasury, as always, shares the views and interests of the PAC.
The right hon. Member for Ashton-under-Lyne, the hon. Member for Hodge Hill and my hon. Friends the Members for Scarborough, for Northampton, South and for Horsham were rightly anxious about the problems surrounding the initiation of the Chevaline project and whether lessons had been learnt from it. The House will be interested to know that the project costs of Chevaline have not increased in real terms on the revised cost estimate of 1977. The system is now in service and the project is virtually complete, but the key issue is whether lessons from the early project stages have been learnt. The Comptroller and Auditor General's recent report on the Trident project does not dispute that. The Comptroller and Auditor General has examined the financial arrangements for Trident and, I believe, found them satisfactory.
The principal lessons that have been learnt are the need for strong central project management, fully integrated programmes and co-ordinated financial management arrangements from the outset of any major project. An important fact is that the Government accept that Parliament should be better informed about major projects and have taken steps to provide such information regularly to the PAC. That is an important illustration of the way in which the Committee is crucial to how the Government react and act so that we can scrutinise such projects better.
The right hon. Member for Ashton-under-Lyne and my hon. Friend the Member for Scarborough raised the

979
problems of fraud and irregularities in the Property Services Agency. I share and appreciate anxiety about cases of fraud or corruption in the Civil Service. We expect the highest standards of conduct and vigilance from civil servants and Government Departments. That is fully accepted in regard to the recent cases in the PSA. Following the discovery of the cases referred to in the Committee's twenty-fifth report for the 1981–82 Session, the PSA's procedures have been subjected to detailed scrutiny which has most recently resulted in the Wardale Touche Ross report which was published in October 1983.
The Secretary of State for the Environment made it clear that he took the report extremely seriously and that he was determined to do everything necessary to bring about the changes in the management system and management attitude that were called for. The agency began to implement improvements immediately following receipt of an interim report in February 1983. It has now completed work on several of the recommendations and action is in hand to implement the majority of the remaining ones. The PAC has recently examined witnesses from the agency on its response to the Wardale Touche Ross report. When the PAC report is available, the agency will take full account of its conclusions and recommendations in pursuing a programme of improvement initiated by the Wardale Touche Ross report.
My hon. Friend the Member for Rutland and Melton rightly stressed the critical importance of the work being done in that regard. I recognise its importance and the urgency with which it can be pursued. I can do no more than draw the attention of the House to my right hon. Friend the Prime Minister's reply to my hon. Friend the Member for Beaconsfield (Mr. Smith) on 13 March 1984 when she referred to the anxiety of the Secretary of State that the task of following up the report be pursued vigorously, and to the Secretary of State's statement on the same day.
The right hon. Member for Ashton-under-Lyne, the hon. Member for Hodge Hill and my hon. Friends the Members for Northampton, South and for Horsham drew attention to the position of nationalised industries in the production of corporate plans and the need for proper information. Obviously matters have changed considerably. I acknowledge the problem of the dating of reports. We are examining reports which, in many cases, are effectively almost three years old. This year we expect all nationalised industries to produce corporate plans. Since the PAC reported on this subject in 1982, we have made further improvements to the quality and usefulness of the plans. They are more uniform, although, as one who has been Under-Secretary for Energy, I fully accept the point raised by the hon. Member for Hodge Hill about the disparate nature of many of the businesses. All the plans now include better information about matters mentioned in the 1978 White Paper. The corporate plans are more fully integrated within the monitoring framework, and that is a significant development, following the key recommendations of the Public Accounts Committee.
My hon. Friend the Member for Northampton, South raised a considerable number of questions in an outstanding speech. He asked about guidelines on the sale of land. Such guidelines have been re-examined following the Hamilton college affair and will be examined again when the Crown obtains the right to apply for planning permission.
980
My hon. Friend the Member for Northampton, South asked about the accounting of nationalised industries. I have covered that point. I agree that there is a need for consistency, but we must understand the disparate nature of the different organisations. My hon. Friend asked also about up-to-date valuations, which may be needed when preparing for sales. We expect our professional advisers to help on that subject.
My hon. Friend the Member for Scarborough looked for an updating of the key area of internal audit, which was raised in the second report. I learned tonight for the first time that I share a past with the hon. Member for Hodge Hill. I, too, was an internal auditor, but I was given the job to learn to move through and into other areas. Like the hon. Gentleman, I recognise the kernel role of an auditing department and the transience of an audit. There is need for a happy blend of the two elements. My hon. Friend the Member for Scarborough will be pleased to know about the upgrading of internal auditors which has continued since the Treasury minute of July 1983.
Ten training establishments now offer relevant courses, and 370 staff began the first courses last autumn. More than 400 staff will start courses in 1984–85. The senior staff review has shown that there are sufficient accountants in internal audit to fill the posts that require professional qualifications. Although, like the hon. Member for Hodge Hill, I am not an accountant, I am aware that disciplines other than accountancy are important in profess ionalising those areas. Again, the hon. Gentleman and I share a similar view.
The hon. Member for Normanton referred to computers. Outside assistance is still required for computer audit, but we are beginning to train more specialists of our own.
My hon. Friend the Member for Scarborough asked about the successor to Sir Kenneth Sharp. His successor will be an accountancy adviser to the Treasury and will have charge of the Treasury's work on developing internal audits in all Departments. I cannot say exactly when he will be appointed. We would have him now had we found him. It is important to get the right man for this key appointment, and strong efforts are being made to find him.
The hon. Member for Normanton was joined by my hon. Friend the Member for Northampton, South in asking questions about the eighth report on the Health Service. I can bring him up-to-date about the Treasury minute of July 1983. As of March 1984, a joint working group of DHSS officials and local authority associations has been set up to review the working of the joint planning and financing arrangements. The DHSS inquiry into the identification and disposal of surplus property led to specific encouragement to help authorities in November 1983 to pursue an active estate management role with resources released by disposals being recycled for new NHS uses.
My hon. Friend the Member for Northampton, South will be pleased to know that the legislation required to allow Crown departments to obtain planning permission is before Parliament. My hon. Friend the Minister of State, Northern Ireland Office is in the Chamber. I will draw his attention to the fact that my hon. Friend the Member for Northampton, South, in expressing a personal view—I am sure that the right hon. Member for Ashton-under-Lyne will confirm it on another occasion—gave fair warning that the Committee would be concerning itself

981
with De Lorean and other aspects of Northern Ireland affairs and could well be spending more time on such matters.
My hon. Friend the Member for Northampton, South spoke of tax avoidance, at which the Committee had looked in the past, in relation to BL. Paragraph 21 of the Treasury minute says:
"BL has now provided assurances which should prevent any recurrence of the tax avoidance problem."
My hon. Friend the Member for Horsham—in a speech in which he illustrated the qualities that he has displayed throughout the affairs of the PAC—asked two questions, one about EFL overshoot and the other about the special employment measures. I appreciate that he has a strong interest in this area of the nationalised industries, but I must stress that the criticism was about what was happening, and I accept the problem of concerning ourselves with reports that are quite old.
We believe that we are now doing much better, partly because of the Government's success in reducing inflation. It is no longer the case that EFLs are overshot by the sort of figures that my hon. Friend quoted. The special employment measures which have been criticised were instituted in a difficult employment situation. Unhappily, the situation is still not good. The Treasury minute accepts that a better comparative valuation of such measures is desirable.
My hon. Friend the Member for Rutland and Melton asked about the Treasury and the Foreign Office. I should have thought that it was hardly surprising if the Treasury and the Foreign Office—let alone the Treasury and any other Department—started with different views. Indeed, I thought that it was common ground in debates about Whitehall that the views of the Treasury were different from everybody else's. We hope—I say this as a Treasury Minister—to finish in agreement. It is highly undesirable for the Audit Commission to drive up National Audit Office salaries or vice versa. I take the point that my hon. Friend made and we shall take a close interest in the matter.
My hon. Friend the Member for Ludlow (Mr. Cockeram) criticised some aspects of the sixth report concerning factory estates. I remind him that an interdepartmental review has, since June 1983, been considering much the same questions as the Committee recorded. There are no simple answers or measures of efficiency and effectiveness, and the achievement of regional policy objectives is of paramount importance. The agencies, after all, are in business only because the private sector is not interested, and premises are required to attract occupiers. Some intermediate output measures are being explored.
New building is related to demand and vacancy rates and it is hoped in due course to be able to relate costs to common criteria, allowing direct comparisons between agencies. Private sector participation is desirable but it is inherently unlikely in this area on any extensive scale. Sales to occupants are, however, encouraged and help can be given in the form of mortgage guarantees.
Mr. Latham: My hon. Friend has given a rather laconic reply to my questions about the difference between the Foreign Office and the Treasury regarding the overseas
982
estate. Is it of any help to him in his negotiations in trying to get a common line in this matter to be assured that it is an issue on which the PAC will be keeping a close eye?
Mr. Moore: As I said earlier, the Treasury and the PAC seem to speak frequently with one mind and with one voice, and obviously we appreciate help and assistance in this area.
The hon. Member for Hodge Hill asked about the defence position and the review. The current review has been completed. Talks with the contractors' representatives have taken place and new arrangements will come into effect on 1 April 1984. The review board's report will be published soon. It recommended—and the parties have accepted—continued acceptance of the principle of comparability in consequence of which the profit rate is being reduced substantially. I will give the hon. Gentleman any information I can post this debate.
The hon. Member for Fife, Central and for Hodge Hill asked questions about pharmacists, as raised in the 1982 and 1983 reports. The re-examination promised in the Treasury minute was carried out. It showed that the assumption on which pharmacists were reimbursed had been over-generous to them.
Mr. Terry Davis: The Minister is mistaken. I referred to the pharmaceutical industry, not to pharmacists. There is a big difference.
Mr. Moore: Agreement was reached with the pharmaceutical services negotiating committee on a revised scale allowing for past over-reimbursements to take effect from August 1983. Subsequently, legal proceedings challenged the Department's right to recover over-payments in that way, and certain concessions had to be made. I shall deal with the matter later in correspondence with the hon. Gentleman.
I have endeavoured to cover most of the points made in a relatively lengthy debate. I must say to the hon. Member for Fife, Central that if I have missed anything in my remarks I shall give additional details in letters to hon. Members.
My hon. Friend the Member for Uxbridge and the hon. Member for Fife, Central regretted what they described as the relatively poor attendance for the debate. I can do no better than quote from Hansard in 1976:
"The success of the Committee's work cannot and should not be measured by the attendance of hon. Members in this House when the reports are debated, but by the way in which it changes the future of those who appear before it, and changes the way Government operations are conducted."—[Official Report, 22 January 1976; Vol. 903, c. 1623.]
Those were the words of the then Financial Secretary to the Treasury, now Chairman of the Public Accounts Committee, the right hon. Member for Ashton-under-Lyne. I can think of no better way of reaffirming the Government's view of the importance of the PAC and the way in which we seek to act upon its recommendations than by drawing the House's attention at the conclusion of our debate to the right hon. Gentleman's words in 1976.
Question put and agreed to.
Resolved,
That this House takes note of the Sixth to Thirtieth Reports from the Committee of Public Accounts of Session 1981–82, of the First Special Report and First to Eleventh Reports of Session 1982–83, of the First to Ninth Reports of Session 1983–84 and of the Treasury Minutes and Northern Ireland Department of Finance Memoranda on those Reports (Cmnd. 8620, 8757, 8759, 8828, 8995, 9071, 9178 and 9191).

Rate Support Grant Supplementary Report
9.18 pm
The Under-Secretary of State for the Environment (Mr. William Waldegrave): I beg to move,
That the Rate Support Grant Supplementary Report (England) (No. 2) 1983–84, which was laid before this House on 12th March, be approved.
This is the third debate on rate support grant matters since the general election. Last July the House approved the first supplementary report for 1983–84, which implemented holdback of block grant in the light of local authorities' budgets. At the same time, it approved the third supplementary report in respect of 1981–82, which adjusted local authorities' grant entitlements to reflect their outturn expenditure in that year, and on 23 January the House approved the main rate support grant report for 1984–85.
The debate focuses on the second supplementary report relating to 1983–84. It is a short, single-topic report, which simply alters the total of block grant payable to local authorities in the current financial year to reflect the latest estimate of interest rates payable by local authorities in 1983–84 of 10·85 per cent. compared with the 11·5 per cent. that was assumed at the time of the 1983–84 rate support grant settlement in December 1982. The overall effect of the report is to reduce the total of block grant by £44 million. That is equivalent to a reduction of less than three quarters of a penny rate.
Hon. Members may wonder why, at this late stage in the financial year, we do not yet know the actual interest rates paid by local authorities in 1983–84. The interest rates paid by local authorities in any year are a mixture of current and historic interest rates. We shall not know the final picture until August or September, when local authorities will provide the information on the level of interest rates actually paid by authorities in 1983–84.
It is somewhat unusual to have a debate on a supplementary report in March. For the future, I hope that we shall establish a pattern whereby there are no more than three supplementary reports in respect of each financial year—a first, in June or July of the grant year, to implement holdback of block grant in the light of local authorities' budgets and to make adjustments for any changes in variable items as appropriate; a second supplementary report 18 months later to revise authorities' grant entitlements to reflect their outtum expenditure for the year; and a third and final supplementary report the following summer, 27 months after the end of the grant year, to close the books on that year in the light of audited outtum expenditure information.
I should emphasise two points about the proposed timetable. First, we have discussed it in a preliminary way with the local authority associations. They are in favour of fewer supplementary reports, and they would like to close the books on each year as soon as possible after it has ended. The Government share that view. Secondly, however, achievement of the timetable will depend upon local authorities submitting their outturn expenditure information promptly. I believe that the Government and local authorities can work together to ensure that the grant to which local authorities are entitled on the basis of their spending is paid to them as early as possible.
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Hon. Members may reasonably ask why we are making a second supplementary report in respect of 1983–84 at this juncture. There are two reasons. First, the Government's financial management has succeeded in bringing down interest rates faster than we expected, local authorities have been overpaid grant in relation to the current financial year. It is therefore necessary to adjust grant entitlements to reflect the latest assessment of interest rates. Secondly, the House faces the prospect of three further supplementary rate support grant reports in the summer, to which I shall refer briefly in a moment, and all hon. Members may agree that there is advantage in dealing with one now to avoid having four in the summer.
Hon. Members may ask why we are not yet making the second supplementary report. The hon. Member for Blackburn (Mr. Straw) will undoubtedly ask. We have been closeted for a number of weeks in the Rates Bill Committee, in which we work by a process of telepathy, so that we do not need to—
Mr. D. N. Campbell-Savours: Are we to get copies of the Minister's book?
Mr. Waldegrave: I should explain, for the benefit of the assembled masses, that the hon. Member for Workington (Mr. Campbell-Savours) was referring to copies of my book, which was much quoted in the Rates Bill Committee. As stocks seem likely to remain high for an indefinite period, rather like some of the stocks in the nuclear plant to which the hon. Gentleman and I refer from time to time, I shall be happy to send him one with my compliments.
The second supplementary report for 1982–83 will revise local authorities' grant entitlements to reflect their outturn expenditure. The reason why we have not yet made the report is that we believe that grant entitlements should not be adjusted to reflect outturn expenditure until the Department has received audited information for the great bulk of total expenditure. The returns that we have so far account for only about 53 per cent. Moreover, we would not want to make a supplementary report when numbers of audited outturn forms are being returned to the Department each week.
There is another reason. When we come to make the second supplementary report for 1982–83 in the summer it will entail paying some £100 million grant to the Greater London council. The GLC is eligible for the grant because its outtum expenditure is a staggering £177 million less than its budget for 1982–83, showing the customary financial efficiency of that authority under its present regime. It made a complete nonsense of its planning for that year. Because the total of block grant is cash-limited, all other local authorities will contribute to the GLC's £100 million gain. We have delayed making the report, to enable authorities to take account of that contribution in setting their rates for 1984–85. We have now given them notice of the change. Treasurers have known of the situation for some months now.
Mr. Robert Rhodes James: When my hon. Friend is not binding the leviathan of the GLC and arranging for £100 million to go to it, will he think for a moment of the misfortunes of the people of Cambridgeshire?
Mr. Waldegrave: Hon. Members representing Cambridgeshire, Huntingdon and other neighbouring

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counties, some vociferously and others with a silent prayer, make their concerns well known. I accept my hon. Friend's point and recognise the problem faced by authorities as the block grant is cash-limited. When an authority makes a hash of its affairs, as the GLC did in that year, that presents subsequent problems for other authorities. When the system was set up, no one conceived that an authority could miss its budget by £100 million.
Mr. Jack Straw: If, for example, the Government had produced a public sector borrowing requirement of about £5,000 million under their estimate, surely the Prime Minister would applaud the Government's good housekeeping, not their rashness.
Mr. Waldegrave: When the hon. Gentleman worked for the right hon. Member for Bethnal Green and Stepney (Mr. Shore), he became exceedingly learned in these matters. He will be able to explain to the House how the public sector borrowing requirement is the residuary of two large numbers. The GLC managed to miss its target by a high proportion of its total budget. A comparable example would be for the Government to miscalculate the PSBR by about £25 billion, not £6 billion.
I promised the House a trailer for the three supplementary reports, which the Government propose to make in the summer. I have already mentioned the second supplementary report for 1982–83, to adjust grant so as to reflect local authorities' outturn expenditure. There will also be a first supplementary report in respect of 1984–85, to ensure that grant entitlements follow authorities' formal budgets, which we shall receive after the grant year has started in April-May, and to implement holdback of grant as necessary in the light of those budgets. Finally, there will be a fourth and final supplementary report to close the books in respect of 1981–82.
From what I have said, the House will realise that the report that we are debating tonight is modest. As the Secretary of State is bound to do, we consulted the local authority associations about its proposed content last month, and they raised no objection.
Since we are having this debate in March, the House would be surprised if I fail to mention the prospects for rate levels in 1984–85. The newspapers have been full of reports in recent weeks about individual authorities' rating decisions. First, however, I invite the House to look back at what local government and the commentators were predicting at the time of the rate support grant settlement shortly before Christmas. The headlines were of a "Shock Horror" nature. "Hefty rate increases expected" said The Guardian. The Financial Times said:
"Sharp rises in rate bills predicted by local councils."
The Daily Mirror said "Tories drop rates bombshell". The Association of Metropolitan Authorities was as forthright as ever, and said:
"the Government is creating a rates crisis that will hit ratepayers in towns and cities throughout the country. It will fuel inflation, enrage ratepayers, and threaten crucial services".
The Association of County Councils was reported to have predicted rate increases far in excess of inflation, and major cuts in essential services. The hon. Member for Copeland (Dr. Cunningham) predicted:
"a major increase in rates that will be well above the rate of inflation."
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Individual authorities joined the chorus. The finance committee chairman of Greater Manchester issued a press notice claiming that the Government were presenting his authority
"—along with scores of other councils—with an impossible housekeeping problem."
He forecast an increase of 28 per cent.
"just to stand still on services."
I invite the House to consider the relationship between the predictions and the reality. In fact, the chairman of Greater Manchester's finance committee has eviaently solved the impossible housekeeping problem: his council has now decided on a precept increase of just 4 per cent. next year, and apparently boasted that it had done so without hitting manpower or services. This is but one of the death-bed repentances sweeping the metropolitan counties and the GLC, whose abolition we shall bring before the House in due course.
The West Midlands county council has gone for a zero precept increase. The GLC has even managed a reduction—although it is something of a con trick. It could and should have been much larger, since it overrated in previous years. In the event, Cumbria's precept is set to rise by 4 per cent., Avon's by 6·5 per cent. and Northumberland's by 5 per cent. All that shows what can be done when the will is there.
The general picture is now almost complete. Only a handful of authorities, albeit large, have yet to reach final decisions. On the basis of the returns we have, we can be fairly confident that the average rate increase in England next year could be less than 6 per cent., not even one percentage point above the current inflation rate. It will be the lowest figure since the reorganisation of local government undertaken by the Government of my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath).
Mr. Campbell-Savours: Why should that rate of increase be higher than the forecast wage increases in the public sector?
Mr. Waldegrave: Wage increases amount to 65 per cent. of the total cost of authorities. I agree with the hon. Gentleman that it is a perfectly good question to ask of any local authority which has put up its rates by more than the average cost of its wage bill. It is perfectly fair to ask how it is that other expenses increase faster than the wage bill. The hon. Gentleman and I often agree on such matters. It would be a good test of the efficiency of local authorities, and the relationship between their increase in expenditure and their average wage bill. That would be worth exploring.
Mr. Campbell-Savours: Perhaps the Minister misunderstood what I was getting at. Why should those increases be any greater than the increases in wages which can be expected by the consumers who work in the public sector?
Mr. Deputy Speaker (Mr. Paul Dean): Order. We are beginning to get a little wide. This is a fairly narrow report and it would not be appropriate to debate local government finance generally or, indeed, to discuss future years.
Mr. Waldegrave: I believe, Mr. Deputy Speaker, that it is partly my fault that we have widened the debate. I can perhaps pursue the matter with the hon. Gentleman subsequently. We have had a certain amount of crying

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wolf from local authorities in the past year. We must remember that when we hear wolf being cried in other areas.
At the time of the settlement, before Christmas, we said that if local authorities met their expenditure targets average rate increases should be low, and they have been. The remarks were greeted with derision when we predicted what has now happened. Commentators have been driven to say that we are embarrassed by the low figures. If that is embarrassment, please let me have more of it.
Even including the GLC and ILEA, the total of local authorities' budget for 1984–85 is likely to be only 2·5 per cent. above the corresponding figure for 1983–84, which is a pretty remarkable performance. It is below the expected rise in prices over the same period. Up and down the country municipal minds are being concentrated, and the best is yet to come.
The rate support grant supplementary report is a relatively automatic part of the whole machinery of the rate support grant, whose objective is the maintenance and support of the Government's central economic strategy of seeking ever greater efficiency from all the great state institutions. I quote the rate and expenditure figures for 1984–85 to show that for all the stresses and strains, all the justifiable comments and all the improvements that we must still seek, the basic strategy of slowing the growth in local authority current expenditure is now beginning to work. That strategy, of which the report is but a small cog is alive and well. I commend the report to the House.
9.31 pm
Mr. Jack Straw: It is an entirely unexpected pleasure to be replying to the Under-Secretary. I am not sure whether the adjective "closeted" is correct, but we have been thrown together for 30 or more sittings on the Rates Bill, so his words are familiar to me; as I dare say mine will be to him. He kindly offered my hon. Friends on the Committee copies of his book "The Binding of Leviathan", which I think we have used to great effect against the Government's justification for the Rate Bill.
I am looking forward to my autographed copy of that book, which I have not yet received. Perhaps that is my punishment for having dared to raise the matter in the first place.
Mr. Waldegrave: I assure the hon. Gentleman that a copy is on the way so he can refresh himself with the arguments that I deployed, which I think are unanswerable, as to why the Labour party is in terminal decline.
Mr. Straw: It is proof of the wisdom of the Under-Secretary's views, which were expressed in 1977, that we have weighed his words with care. Apart from a minor hiccup at the 1983 election, far from being in terminal decline, we are re-invigorated; that will be proved to the discomfiture of many Conservative Members at the next election.
One of the points made by the Under-Secretary related to the dangers for parties in departing from their principles. The great dangers in that, are all too apparent in the government's present policy towards local Government finance, as the right hon. Member for Daventry (Mr. Prentice) has warned his party only too well. A party which is committed to, and was formed out of, the idea of local democracy, based on the principle that
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power should be decentralised and that too much government is bad—notions of the diffusion of power—is sowing the seeds of its own destruction when it takes upon itself more centralised power than we have seen during peacetime in the 20th century.
Mr. Barry Porter: Rubbish.
Mr. Straw: The hon. Member says "Rubbish", but there are many wise—
Mr. Simon Hughes: He always says that.
Mr. Straw: He does not always say that. He was so confused by the speech of the Under-Secretary that he was sitting there with his eyes gradually narrowing. I think he found it even more confusing than the Chancellor's elucidation of the difference between M1, M3, PSL2 and MO during the early part of his Budget speech, an elucidation which had even the Secretary of State for Industry completely foxed.
I have not on this occasion come armed with the full texts and prophetic notions of the Under-Secretary but I would refer him to "The Binding of Leviathan", which—
Mr. Porter: I bought it.
Mr. Straw: There is a man who thought the market was going up when it was going down. If only he had sat on his hands and taken proper account of the nature of the market, he would have been able to get a remaindered copy cheap or, if he had sat on his hands even longer, he could, like the rest of us, have benefited from the largesse of the Under-Secretary. However, I ought to say that this largesse is being reciprocated with autographed copies of that excellent work, "Putting Blackburn Back to Work".
The Under-Secretary referred to the forecasts of rate increases which are likely this year. The relevance of the increases to this report is that the Under-Secretary was claiming that the lower rate increases have arisen because of the Government's policy on local government finance. I think the Under-Secretary speaks with forked tongue. He condemns local authorities when they put up the rates above the level of inflation; he then seems to condemn local authorities when they put up the rates by an amount below the level of inflation. He cannot have it both ways.
If the hon. Gentleman is not speaking with forked tongue, we must accept that he is commending Labour Avon county council, in which county his constituency lies, for putting up its rates by only 5·5 per cent. arid that he is commending Cumbria for putting up its rate by only the level of inflation. I hope that he is commending the noble county of Lancashire; its rate is to go up by 7·7 per cent. but over half that increase is due to cuts in rate support grant and not to levels of expenditure. I hope too that he will condemn thoroughly the Conservative-controlled district council of Torbay, which is putting up its rates by 20 per cent., and the adjoining authority of South Hams, which is putting up its rates by nearly 30 per cent., as I discovered when I visited that area only three weeks ago.
Mr. Simon Hughes: What is Liverpool going to do?
Mr. Straw: What Liverpool will do is an interesting question. I am sure that you, Mr. Deputy Speaker, would rule me out of order, were I to seek to answer, much as I would wish to. Should the Government decide to provide

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time for a debate on Liverpool, we should be delighted to participate. More to the point, if the hon. Member for Liverpool, Mossley Hill (Mr. Alton) believes that Liverpool has such a fine record over the last 10 years, I suggest that the Liberal party uses one of its Supply days, with which it is amply provided, to mount a full debate on the record of Liverpool, which has brought the council to such a state of financial crisis.
Mr. Simon Hughes: I look forward to the excess number of Supply days which we will get to debate this matter, because it might at least allow people outside the House the opportunity to understand the rate support grant supplementary report, as well as give us an opportunity to put some of the arguments that we otherwise do not have time to put.
Mr. Straw: I am sure that both Conservative and Labour Members would agree that Liberals whinge on almost any excuse. They have many more Supply days than they deserve. One of their Supply days should surely be devoted to the Liberal record in Liverpool, that being the principal factor that has brought the city to its current financial crisis.
Mr. Robert B. Jones: What about the Liberals' attendance record here?
Mr. Straw: I am glad to hear the hon. Member for Hertfordshire, West (Mr. Jones), fresh from smiling at me when I recommended the rerating of agriculture to the Standing Committee, asking about the Liberals' attendance record here. It is a good question. I should point out that the question that is asked in Rochdale—the alternative, as it were, to the question that we are often asked—is not, "Why are you not in your constituency?" but, "Why are you not in Westminster representing our people there?"
Mr. Robin Maxwell-Hyslop: There is an interesting point in connection with the Committee considering the Rates Bill today. Is it not true that the Liberals voted for the rating of agricultural land this morning?
Mr. Deputy Speaker: Order. This debate is ranging very wide. I hope that the hon. Member for Blackburn (Mr. Straw) will not be provoked into going off into highways and byways that have nothing to do with the debate.
Mr. Straw: I would never be provoked, and I am sure that, had a point of order been put to you, Mr. Deputy Speaker, you would have said that how the Liberals or anyone else voted is a matter for the record. No doubt, Hansard for the Committee will be available tomorrow, and I am sure that the hon. Member for Tiverton (Mr. Maxwell-Hyslop) will be the first at the Vote Office to get a copy, hot off the press, to check on the Liberal voting record on the Rates Bill. I hasten to add, however, that the vote was not on the introduction of the rerating of agriculture but on the more modest proposal to introduce a report on that proposition.
As the Under-Secretary said, the scope of the second supplementary report for England is limited. It implements the effects of changes in interest rates between the rate estimated at the time of the original settlement and the revised estimate in the rates for 1983–84. I turn to page 1,
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paragraph 4, of the report. I give that information for the benefit of my three hon. Friends the Members for Worsley (Mr. Lewis), for Burnley (Mr. Pike) and for Knowsley, South (Mr. Hughes), who I know are following this with great assiduity, and who I know are anxious about their reselection, because the constituency parties are thinking of nothing but the Rate Support Grant Supplementary Report (England) (No. 2).
Mr. Allan Roberts: Is my hon. Friend aware that not only his hon. Friends are following the matter with great interest, but also the electors in Bootle? In fact, all the electors in the Sefton metropolitan district authority are following it with great interest. That Conservative-controlled authority, which I have described before as a paragon of underspending virtue, lost nearly £2 million in rate support grant this year from its own Conservative Government, and is likely to lose even more money now as a result of this settlement.
Mr. Straw: As ever, I am grateful to my hon. Friend the Member for Bootle (Mr. Roberts), to whom I defer. He is the chairman of the environment committee of the parliamentary Labour party and he is an expert on these matters.[Interruption.] I know that he has almost learnt this report by heart, including the many tables on multipliers in annex 4.
Mr. Roberts: When my hon. Friend said that I was chairman of the parliamentary Labour party's environment Back-Bench group, Conservative Members seemed to be disparaging. However, the Secretary of State quoted our minutes regularly in the Committee considering the rate-capping proposals. So at least he treats us seriously.
Mr. Straw: That is quite true. In fact, we are conducting our own leak inquiries to discover who has been leaving around copies of our confidential minutes. It is one thing for Civil Service officials or for Ministers to leak minutes, but it is quite another matter when Opposition minutes are leaked. That is much more reprehensible.
As I was saying to my three hon. Friends, they will know that the gravamen of this report arises because the estimated interest rates paid by local authorities have been reduced from 11·5 per cent. to 10·85 per cent. for 1983–84. I am glad to see that my hon. Friend the Member for Knowsley, South, whose constituency party made an excellent choice, if I may say so, is nodding in agreement.
Mr. Porter: I am delighted to help the hon. Gentleman, as I am one of the few people who have actually been ruled out of order once today and have bought my hon. Friend's book, which I found incomprehensible after the second chapter. I also find it incomprehensible, speaking on behalf of the ratepayers of the Wirral district council, when Wirral has been a paragon of virtue, following Government guidelines, both Labour and Conservative. I have received some letters from the Department that my hon. Friend represents which are as incomprehensible as his book. It would appear that this report today will make me even more bewildered about what is likely to happen to those people who try to run a tight ship, as far as expense is concerned. The tighter the ship, the less one gets. Perhaps the hon. Gentleman will tell me how I am to explain that to my constituents.
Mr. Straw: I am grateful to the hon. Gentleman. The Under-Secretary referred to what I picked up when I

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worked, as he once did, as a hack for the Government—different Governments of course, but a similar function. If I may have the hon. Gentleman's rapt attention for a second, the only thing that I learned about the rate support grant when I was at the Department of the Environment is that it is like the Schleswig-Holstein question: only three people have ever understood it. One has emigrated, one has died and the third has gone mad. All three are to be found incarcerated in Marsham street. It is a capricious system which often produces quite unintended effects, which is why the hon. Member for Cambridge, (Mr. Rhodes James) was complaining about the effects that the system has had on Cambridge. It is also why, when one part of it is pushed—it is like a sausage-shaped balloon—another part pops up.
The Under-Secretary again is trying to have it both ways. When the Greater London council anticipated, partly because of its forecasting of the habits of the travelling public in London, that the level of expenditure in London would need to be, as it turned out, £170 million higher than it thought, it was roundly condemned by Conservatives for alleged overspending. Now that, for reasons that I shall detail shortly, the council has spent £170 million less than it thought and is, therefore, within grant and very much closer to the Government's target, the Under-Secretary condemns it again.
The problem for the hon. Gentleman is that he and the Government were really very pleased when the Greater London council went so far above its target as to come outside grant altogether, because that meant that there was more grant for Conservative authorities; he wept crocodile tears when he complained about the Greater London council's budgeting. Now that it has come back into grant and has apparently been a good boy, it means that, because grant is cash-limited, the amount allocated to other authorities will be reduced. The blame for that lies not at the door of the Greater London council but at the door of the Government for cash-limiting the rate support grant in the way they have and for adopting the present formula.
Before I embarked on this small digression—
Mr. John Maples: Is the hon. Gentleman suggesting that the rate support grant should not be cash-limited?
Mr. Straw: No, I was qualifying what I said by talking not only about the fact that it was cash-limited but also about the formula that was applied. I certainly do not believe, however, that it should be cash-limited with the rigidity that the Government suggest. I also believe—I hope that the hon. Gentleman for Lewisham, West will share this view—that when an authority such as the Greater London council which is condemned for overspending and going outside grant, turns out, for perfectly legitimate reasons, to have spent far less than it thought, and a sum much closer to the Government's target, it should be the subject of approbation by the Government.
The Government should explain to authorities that have been gratuitously penalised by the fact that the GLC has underspent that that is the result of the operation of the rate support grant system that the Government have constructed, and not a result of decisions taken by the GLC. The money that other authorities, including my authorities of Lancashire and Cumbria, will lose is money
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that they would not have had in any event had the GLC spent near target or within target when it first decided to budget.
As my hon. Friends on the Back Benches will say, reducing the estimated level of interest from 11·5 per cent. to 10·85 per cent. will mean that authorities in England will lose more than £44 million, or 0·7p in rate poundage terms. We make no particular point, as the proposed reduction is a result of the welcome reduction in interest rates. However, we complain that the Government do not show the same alacrity in bringing forward reports that reflect increases in local authority costs as in bringing forward reports that reflect decreases in costs. It is a matter of great regret that they have not used the opportunity of this report to do a number of things that they could have done.
First, the report does not make any changes to the grant-related expenditure assessments. This means, for example, that allowances for debt charges are still based on estimated capital allocations instead of actual ones, although the actual ones, as the Under-Secretary will accept, have been known for almost 12 months. This and other changes have not been made, and as a result there will be a continued mis-allocation of grants between local authorities until at least next year, when the next supplementary report for 1983–84 is planned.
The Under-Secretary did not explain satisfactorily why it is not possible for the GREAs to be changed to reflect actual capital allocations rather than estimated ones. I hope that the Under-Secretary will deal with that, as well as my other points. I hope that he will deal with the 20 per cent. or 30 per cent. increase in Torbay and South Hams.
Certainly the report does not grant any additional disregards for spending against target. All hon. Members, especially those who wish to reflect the concern of their local authorities, know that authorities continually complain that they have forced upon them national decisions over which they can have no control. These are not reflected in the GREAs or in the targets imposed on them.
One good example is that of police pay. This is negotiated nationally, and there is nothing in practice that local authorities can do about it. It would be wrong if they were to be penalised for increases in police pay above those estimated when the RSG settlement is made. In fairness to the Government, they have accepted in principle that the final RSG settlement should reflect the increase in police pay above that anticipated when the RSG settlement for 1983–84 was approved by the House in early 1983. The Home Office wrote to the official side secretary of the police negotiating board on 18 July as follows:
"For 1983–84, the total of relevant expenditure and the block grant cash limit will be increased to take account of the cost of the police pay settlement in excess of the amount already allowed in the RSG settlement"—
Mr. Porter: What does that mean?
Mr. Straw: It means what it says. The total relevant expenditure is more or less what local authorities spend, and the total of what local authorities spend is a matter of arithmetic. If the hon. Gentleman wants a precise definition of "relevant expenditure", he will have to look in section 56 of the Local Government, Planning and Land Act 1980. I think that what I have read, by the standards of officialese from the Department of the Environment, is pretty clear.

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The letter from the Home Office went on:
"If representations are made by a local authority association or a local authority, the Government will ensure that no local authority incurs grant abatement because of the additional expenditure due to the pay award."
"Grant abatement" means penalty as a result of a county authority's increasing its expenditure above its target to take account of this pay award, for which it has no responsibility.
This report was an opportunity to honour that pledge by the Home Office, and I hope that the Under-Secretary will explain why the opportunity has not been taken.
There are other disregards which could have been granted in this report. It is known to at least some hon. Members that increased expenditure on urban programme schemes is disregarded for partnership and programme authorities, but is only disregarded for those two categories of authority that take part in the urban programme and not in respect of all the many other authorities that also take part in the programme. Nor is it disregarded for those schemes where urban aid grant is no longer paid and the local authority is expected to find the full cost of the scheme plus grant penalties.
One of the continuing complaints of urban authorities is that their rate support grant, their main programme grant, is reduced, but then the Government say they are a deprived area and will be given urban programme money or other money from special central pools. That is all right—we are pleased for at least a few crumbs from the Secretary of State's table—but the problem for the authorities is what happens when the special grants under the urban programme and partnership schemes run out and the authorities have to pick up the tabs from their mainstream and mainline expenditure. In those cases, at the moment, the authorities do not receive any disregards in respect of those schemes.
Mr. Anthony Beaumont-Dark: It is not a closely kept secret that I have not always agreed with the Government's local government policy. Indeed, only a couple of hours ago we finished an interesting debate. Much as it may have increased personal friendships, it has not increased my regard for the Bill. Would the hon. Gentleman agree that this particular matter is one of those time-honoured systems whereby, had the interest rates gone up, there would have been an automatic ratchet system whereby more interest would have been received? As interest rates have gone down, because of an excellent Budget and an excellent economic situation, this money automatically comes away. Is not the hon. Gentleman spoiling a good case on one Bill by trying to say something entirely irrelevant on this issue?
Mr. Straw: I am chastened by the suggestion by the hon. Member that I am saying something irrelevant to this report. I do not know how I can continue with that.
Mr. Beaumont-Dark: If I have hurt the hon. Gentleman's feelings, I withdraw.
Mr. Straw: I will forbear to continue, not least for reasons which had better not be mentioned in polite company across the Floor of the House.
I said—and I am sure that the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) was listening with rapt attention—that I took no point on the
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claim by the Under-Secretary that rate support grant ought to be reduced by this amount as a result of the anticipated reductions in interest rates. We believe that the Goverment have not shown the same alacrity in reflecting increases in costs which local authorities have had to bear, through no fault of their own, in rate support grant supplementary reports.
Secondly, authorities have benefited by the reduction in interest rates but they have been penalised by the increases in police pay. Some authorities have been penalised by increased expenditure on the urban programme and inner city programmes. Many of those authorities have not been allowed disregards by the Secretary of State while having their grant reduced to take account of reductions in costs which flow from the reduction in interest rates.
As the Secretary of State announced in the rate support grant settlement for 1984–885, he has granted a new disregard for increased expenditure on schemes that are jointly financed by local authorities and area health authorities. The right hon. Gentleman could have used this report as an opportunity to backdate the relief to 1983–84, but he has not chosen to do so. That is the third matter to which I hope the 'Under-Secretary of State will address himself.
Fourthly, the report does not take account of changes in local authority expenditure levels since last year's Budget. I understand that in two months' time, revised estimates would have become available. If the Secretary of State had waited until then, he would have been able to restore penalties, or the sums that were taken away by penalties, to authorities which reduced their expenditure from their anticipated budget levels. As a result of the supplementary report, authorities which have been wrongly penalised because their budgeted expenditure was considerably in excess of their outturn will probably have to wait until June 1985 to restore their grant for the year ending March 1984.
The final issue that I wish to raise was answered in advance by the Under-Secretary of State. It concerns the curious fact that this is a second supplementary report for 1983–84, yet it is being debated before the second supplementary report for 1982–83. The Under-Secretary of State, as candid as ever, said that the reason for the leapfrogging is that the second supplementary report for 1982–83 would implement the £100 million addition to the GLC's resources because the GLC has budgeted much closer to its target than was originally expected.
I understand the paranoia of Conservative Members about the Labour-controlled GLC. That paranoia is reflected in the abuse and vitriol which poured forth from the Secretary of State for Trade and Industry when addressing a rag-bag of representatives from assorted Conservative associations.
Mr. Beaumont-Dark: Tut, tut.
Mr. Straw: The hon. Gentleman may "tut, tut" but I hope that some of the Conservative representatives "tut, tutted" as they listened to the abuse of the political process by the Secretary of State. The right hon. Gentleman will always reduce any debate to its lowest possible level and get out of the gutter through the sewer whenever the opportunity arises.
As two Conservative councillors on the GLC said yesterday, the real reason why the Government dislike the

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GLC is that a Labour group is in control and is implementing faithfully policies which have the support of the majority of Londoners. It seems that they are not concerned about the GLC spending at a different level or having different policies. If Conservative Members wish to challenge what I have just said, and are confident that the GLC's policies do not have the support of Londoners, why are they abolishing elections in London and denying Londoners the opportunity to have their decisions and choices put to the vote? Why are they not putting their judgment to the test as well?
Mr. Beaumont-Dark: While I understand the hon. Gentleman's worry and concern, Mr. Ken Livingstone, if I may say so, has had more ego trips on other people's money than anyone since Genghis Khan. Would the hon. Gentleman not agree that it is not that one wants to abolish the GLC, because it is there, but that there are some people in such great authorities who look upon them as vehicles for building themselves up as people more than as a service to the people by whom they were elected? Ken Livingstone, therefore, has not just become a bogey for us; he has become a menace to the hon. Gentleman, and to the future of local government.
Mr. Deputy Speaker: Order. We must not debate legislation which is not yet before the House.
Mr. Straw: I am grateful to you for that direction, Mr. Deputy Speaker.
Dr. Keith Hampson: This is specific, because the hon. Gentleman has been so selective. The point he makes about the GLC is extraordinary. As I understand the comments of my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark), under this report the GLC will gain the sum of £100 million. I agree with my hon. Friend, therefore, that other local authorities will be asked to contribute and will have this sum deducted in order for it to be paid back to the GLC. The GLC managed at long last to spend £100 million less than its budget—what it intended to do—and it seems to me very positive. That is the reason for the report. I would have thought it was just as appropriate not to single out the GLC argument which my hon. Friend put forward. The argument for doing this is that, so far, the Government have had 53 per cent. of returns from local authorities; that is why they cannot at this point bring in the supplementary report for 1982–83. It is a much more reasonable argument and explanation than the hon. Gentleman is trying to put forward.
Mr. Straw: It was not I who singled out the GLC in the first place, but the Under-Secretary of State, who is very sensitive to criticism on this point—and rightly so. I speculate about what would have happened if the reverse had been the case and if, as a result of changes in local authority budgeting, the GLC had been due for a £100 million deduction from its rate support grant. I wonder whether there would have been all this delay then if the shire counties, instead of losing grant which is rightly the GLC's, were going to gain grant. I rather fancy—I am glad to see the Under-Secretary of State smiling, I think in potential agreement with the point—that, if the boot had been on the other foot, the second supplementary report for 1982–83 would already have been presented to, and passed by, Parliament, with £100 million taken out of
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the pockets of the GLC. The truth is that, as with all other policy decisions of Government in relation to the GLC, this decision is motivated by political spite, and not by proper consideration of the merits of a great city.
Mr. Waldegrave: The money belongs not to the GLC, but to the ratepayers of London, from whom the GLC took it under false pretences.
Mr. Straw: If it belongs to the ratepayers of London, all the more reason why it should be given to the GLC, so that it can hand it back all the faster. It certainly does not belong to central Government, who have been sitting on it for nearly three years.
Mr. Cecil Franks: Will the hon. Gentleman accept that two thirds of the ratepayers are totally disfranchised in the present system, and that 33 per cent. of ratepayers—roughly the number paying domestic rates in the metropolitan counties—have 100 per cent. of the vote? In the same way that we lost the British colonies in America, the colonies in London will be lost.
Mr. Straw: I doubt very much whether you, Mr. Deputy Speaker, would approve if we debated a major part of the Rates Bill, which is what gives business men the vote. I note that an awful lot of business men are represented in the Conservative group of the GLC, and that Lancashire county council is packed full of business men. There are more business men on Lancashire county council than any other occupational group. It is arrant nonsense to suggest that business men do not have votes.
On the strength of the hon. Gentleman's argument, I look forward to his either supporting the re-rating of agriculture or proposing that votes should be taken away from farmers.
Mr. Franks: Can the hon. Gentleman confirm whether ICI has a vote? Can he confirm whether Marks and Spencer has a vote, whether Lewis's or any of the other major ratepayers have a vote? Does he accept that a company such as Lewis's in the city of Manchester can pay £2 million in rates yet not have one vote? That is the equivalent of 15,000 families with an average rate of about £400.
Mr. Deputy Speaker: Order. I hope that the hon. Gentleman will resist the temptation to go very wide.
Mr. Straw: Sir Derek Rayner has a vote, as far as I know, and so does every employee, director and shareholder of Marks and Spencer. Mr. Harvey-Jones, the chairman of ICI, has a vote. Are Conservative Members suggesting that Sir Derek Rayner and Mr. Harvey-Jones should have two votes?
Mr. Christopher Hawkins: We are not suggesting that some people should have two votes, but that—
Mr. Deputy Speaker: Order. I have already ruled that this matter is wide of the debate. I must ask the House to come back to the subject of the report, which is comparatively narrow.
Mr. Straw: As I was saying before I was diverted by Conservative Members who are anxious to use the debate to press their case for two votes for business men in a most disorderly way, the Minister argued that we cannot have

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a second supplementary report for 1982–83—which is leap-frogged by this report—because of lack of information about the full effects of the draft 1982–83 supplementary report which was circulated to all authorities on 3 February. We do not believe that that argument carries much weight. It would have been possible for the Secretary of State to bring that report
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forward in about one month and have laid this report to take account of the disregards and increases in costs on local authorities that I have already mentioned and the reduction in costs that flow from the reductions in the level of interest rates.
My hon. Friends the Members for Newham, North-West (Mr. Banks) and for Liverpool, Broadgreen (Mr. Fields) may want to comment, so I shall bring my brief preliminary remarks to a close.
10.12 pm
Mr. John Maples: I do not intend to follow the hon. Member for Blackburn (Mr. Straw) down the various pathways of the Committee that is considering the Rates Bill. I shall bring the debate back to just one aspect of the report. My remarks will be more in the nature of a question than a speech as I do not fully understand the report and hope that I can get from the Minister an explanation of its effects. If the hon. Member for Blackburn is right and there are only three people in the world who understand the block grant system, I can only hope that the Minister is one. I used to think that the hon. Member for Blackburn knew something about these matters until I discovered that he was expert on the system for everywhere except Lewisham. Every time that I think that I understand GRPs, GREs, targets and block grant, I have only to pick up one of these reports and read it to discover that I probably do not.
I should like to explore what effect the redistribution of the £44 million will have. In the first supplementary report to the 1983–84 rate support grant, block grant was reduced by £280 million because of a £771 million overspend by some authorities. Although that £280 million reduced the total of the Government's rate support, it came from authorities that were being penalised and had overspent. That was fine as it came from them in proportion to their overspending, according to predetermined formula about which they all knew in advance. In this report we are considering a reduction in block grant by £44 million because of an £84 million notional shortfall in interest or a saving that local authorities are assumed to have achieved. I imagine that that is very close to the figure that they have achieved. One would therefore expect that £44 million to be taken from the block grant for different authorities in proportion, in some way, to their net interest costs. However, it seems that that is not what is happening. The reduction of £44 million is being used to recalculate the grant-related poundages of all the different authorities, and by that mechanism to redistribute the whole £11 billion of block grant. If I am wrong, I hope that the Under-Secretary will explain the true position. If I am right, the impact will be very unfair. Interest charges are not proportional to the way in which the block grant was originally allocated; they are proportional to the debt of the various local authorities. However, the different local authorities will be treated as a category. For example, the inner London boroughs will all be treated together by the use of the same adjusted GRP, which has been increased.
It could be that one London borough had twice the debt of another and was paying twice the interest, and yet that the reduction in the block grant of the two authorities was exactly the same. The local authority with the high interest charges would get a bonus, because its interest payments would have been reduced, while the second local authority—whose interest charges would not have fallen so far because it had smaller debts—would receive the same reduction in its block grant.
We are always telling local authorities to be more efficient. I often join vociferously in making that call. They could and should be more efficient. One aspect of greater efficiency and better management control in local authorities is the implementation and enforcement of a budget. If an authority is to produce a budget, it must know about the external factors that are operating on it. It is not
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reasonable to change those external factors more than is absolutely necessary during the course of a year. However, if I am right about the redistribution, the adjustments will bear very little relation to the saving achieved by the different local authorities. The benefits and penalties will be somewhat arbitrary.
I suspect that my understanding of the situation is correct, and I hope that the Minister will explain why the system has this effect and whether it could be changed.
10.17 pm
Mr. Simon Hughes: My neighbour across the borough boundary, the hon. Member for Lewisham, West (Mr. Maples), has raised one of the many issues that will be relevant in the accounting and financial context within which local authorities will have to work as soon as they receive news that the report has been approved by Parliament.
As the Under-Secretary has announced, what we are discussing is the second supplementary report in relation to the past year. It is an interim report designed to deal with an additional factor which is not to be provided for in the normal sequence of reports which we are to receive in the future. The report caters simply for the change in interest rates.
The hon. Member for Lewisham, West has rightly pointed out that the report takes authorities in each grouping together for the purposes of rate support grant and of all the other factors which determine central Government financing of local government, and treats them all equally. It deals with the change in interest payments and therefore the reduced amount of rate support grant generally available by cutting up simply according to category and dividing the amount that the Government are clawing back between groups of local authorities.
This morning I received the rate demand from my own local authority for the coming year. The authority had set out, as it is now bound to do, exactly how the figures were arrived at.
One change in the coming year's grant-related expenditure, which affects the whole of budgeting and, therefore, the rates each Southwark resident pays, is the Government's different assessment of interest charges. It is always difficult for local authorities to know at the beginning of the year the exact changes in GRE, because they do not receive the full report until later. Southwark has been told that its assessment will be reduced because of interest charges. Why can there not be a catching-up operation, which will correct something that has happened?
I take the point made by the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) that we are doing a ratchet job on an overall financial change. We should consider a catching-up operation rather than a supplementary report on the GRE—if we must have such a horrible beast governing local authority finance—for the following year. Why can we not take account of changes in interest rates from one year to another? Local authorities would then at least know the factors affecting the amount of money they will receive from the Government. They could budget in advance rather than look over their shoulders while they are unable to complete their audit accounts for the past year.
I welcome the timetable proposals because they will at least be a marginal improvement on the present system whereby reports often are presented at times unrelated to

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each other. Local authorities can close their books some months after the end of their financial year. It is vital that this occurs as soon as possible. It would be sensible if balancing measures for different years took into account assessments for future years. That would be better than protracting and delaying the settlement of local authority finances for 18 months or two years after the end of the financial year under consideration. This technical point deserves comment. If the Under-Secretary of State cannot say that we should examine this matter now, I hope that he will at least say that he will consider ensuring that changes in, for example, interest rates can be carried forward. We can, therefore, ensure that local authorities have the advance information they need rather than be required to adjust their books retrospectively.
This aspect reflects a fundamental point. Each day local authorities in areas affected harmfully—that is true of most areas, Tory or Labour—by the Government's local government financing arrangements complain that it is impossible to budget and to plan. They complain of the unclear and muddled changes often imposed halfway through the financial year or imposed retrospectively at the beginning of the next financial year. Local health authorities find the Chancellor's cuts almost impossible measures for which to cater, because they come in the middle of a financial year and alter their budget plans. Local authorities find increasing difficulties, even if they understand local government financing, grant-related poundages, grant-related expenditure assessment and holdback, let alone the proposal for changing the multipliers, to which we have just become accustomed, to a new combined multiplier and another set of changes. The local authorities cannot have any type of budgeted planning, because it will last for only a couple of months. The Government's insistence on upholding this mechanism is a fundamental defect in the system. The Government uphold that defect each time another report is tabled.
The hon. Member for Barrow and Furness (Mr. Franks) intervened to ask the naive, simplistic and undemocratic question: why do businesses not have the same rights as individual citizens in the rate-making process? He asked, to put it another way, why businesses contributed such a large part of the rates. The answer lies in the actions of his party, although he has not always been associated with that party. I believe that he started with the Labour party and changed sides.
For about 10 years the Conservative party has been pretending that it will reform local government finance, but it has not done that. I notice, according to a report in the Daily Telegraph about an inquiry into domestic rates, that the Government are toying with the idea of reviewing ways in which the amazing discrepancy between flat owners and house owners, as reflected in the rating and valuation system, might be tackled.
I urge the Government to get the basics right and to stop tinkering with the edges. They should stop introducing bureaucratic measures such as we are discussing tonight, which create not only supplementary reports but supplementary No. 2, No. 3 and even No. 4 reports, extending for years after the financial year has ended, extending for longer than it takes even Members of Parliament to sort out their budgeting, let alone the time it must take the Prime Minister and the Chancellor to sort
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out the nation's budgeting. The Government cannot go on in such a muddled way and expect local authorities to survive, let alone respect a Government who impose such measures on them.
Mr. Franks: The hon. Gentleman said that the argument that business should have a vote represented a simplistic and undemocratic suggestion. So that I may have the benefit of his great experience, will he explain why it is simplistic and undemocratic?
Mr. Deputy Speaker: Order. For the hon. Gentleman to answer that would be straying beyond the terms of the instrument which we are discussing, a point which I have made more than once during the debate.
Mr. Hughes: The point which the hon. Member for Barrow and Furness raised has been argued elsewhere. I accept your ruling, Mr. Deputy Speaker, and I am sure that we shall have an opportunity to debate the issue later in the year when other measures come before the House.
The Minister gave his assessment, based on the latest reports reaching his Department, of the average level of rate increase. It is much lower than we might have expected. But it is considerably higher than any of the figures that he mentioned for all the boroughs in inner London, and for most of the boroughs in London irrespective of the party which controls them.
That applies whether we are referring to the Liberal-run borough of Richmond; Tory-run boroughs such as Westminster or Kensington and Chelsea, which have considerable rate increases for the coming year; or Labour boroughs such as mine in Southwark, which has a rate increase of 16·5 per cent. All of those authorities suffer from a particular disadvantage. Why must all London authorities have such a considerable rate increase this year? I believe the answer to be that their needs are not reflected in any of the criteria that the Government have set out.
Mr. Waldegrave: I hope that I can put the hon. Gentleman out of his agony. There is the argument which he has just adduced, but that is a different one. This year, in particular bacause of a number of changes in the handling of interest receipts and other matters, the share of grants between upper and lower tier authorities—not just in London but outside London as well; this answers the point raised by the hon. Member for Blackburn (Mr. Straw) about Teignmouth and other areas—has been altered in such a way that one must look at the total impact of rates, upper and lower tier together, to get a proper picture.
Mr. Hughes: I accept what the Minister says, but he will have seen the figures and will know that the rate requirement in my borough last year was 116·59p in the pound. Inflation will cater for another lop in the pound this year. Two elements are reflected in the reduction in Government funding, housing subsidy and block grant. Elements such as that eat away at the infrastructure of any inner city borough in London, irrespective of control, because they do not take account of the starting point needs when a higher level of local investment has been adjudged to be necessary by a succession of local administrations, irrespective of party. It is no argument to say that if one adds the GLC, the inner London education authority and the Metropolitan police, they account for the differences,

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because most of their precepts have not been increased, and, as we have debated, there was a decrease in the GLC precept this year.
From the supplementary report, it is clear that the most substantial part of the money that the Government allow local government reflects spending on education. It is £9 billion as opposed to a total of £19 billion allowed for the calculation of the rate support grant—nearly half that total. A long way behind, in second place, comes the money for police and environmental services. There is a factor in that calculation for interest receipts. Needs in respect of police, education and other matters vary from year to year, and are different from one local authority to another. Interest rates do not differ in the same way.
I ask the Under-Secretary to make sure in future that at least local authorities can all have in advance a figure to put into their budget balances calculations for interest receipts and interest rates which will allow them to budget for one element with certainty. The Government's policies completely undermine any certainty of planning. All that the report does is to reinforce the feeling that, although technically the report may produce a justified result, it comes in the middle of a series of reports which together result in a bureaucratic muddle that the Government do nothing but compound by each report that they introduce.
We need a new start, and three phased reports in future are a beginning, but nothing like sufficient to relieve the enormous bureaucratic burden that the Government and their predecessors have imposed increasingly on local authorities in England.
10.31 pm
Dr. Keith Hampson: I hesitate to start with the thought that the debate has a feeling of déjà vu. It sounds pretentious to say that, having been 10 years in the House and having attended many rate support grant debates, I have heard it all before. The hon. Member for Southwark and Bermondsey (Mr. Hughes) made a great cri de coeur about three supplementary reports. The hon. Member for Blackburn (Mr. Straw) belaboured the same point, asking why we are having this report before we have dealt with last year's. Superficially, there is an absurd logic about that, but that is the nature of the business that we are in. It has always been like that.
Mr. Allan Roberts: Have not the Government started a new tradition of introducing rate legislation and rate Bills as often as previous Governments used to introduce interim orders?
Dr. Hampson: Without commenting on whether that is so, that is an irrelevant point. Under the old system, when Governments did not introduce changes every year, this still happened. I think that I am right in saying that never in my 10 years in the House have there not been at least three rate supplementary orders each year.
The old system had the same problems. The basic point is that there is no real problem. In a sense the whole rate support grants system is about equity. If anybody is concerned about equity, it should be the hon. Member for Blackburn. Supposedly, that is the kernel of the Opposition's beliefs. Whatever the formula, we are trying in the rate support grant system to even out our resources so that those parts of the country that are more wealthy and have a higher rateable value do not have a disproportionate quality of service compared with those that have low
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rateable values. That is what it is all about. It would be easy for a Government to say—I am not saying that when we came into office in 1979, it was not a tempting prospect—"Let us do something simple and try to do something with a broad brush," and to ask, "How much should you give per capita, district against district, county against county?" That is not the nature of the game that this or any other Government have been in. The Government have been trying to find a formula that would produce equity in the distribution of resources.
For better or worse, whether under the present block system of GREs or under the old system of multiple regression analysis, one faces the problem of having supplementary reports and trying to catch up. The hon. Member for Southwark and Bermondsey said that local authorities are looking over their shoulders. That has always been the case. They have always had to look over their shoulders because central Government, whatever the system—under this Government, the previous Labour Government, or with multiple regression analysis or block grant—have always been in the business of clawing back, making adjustments or using multipliers. They have all been part and parcel of the system.
Mr. Nicholas Baker: Does my hon. Friend agree that, thanks to the irresponsibility of councils such as the GLC and this complicated system, there are a number of low-spending local authorities that, under the clawback system, find it difficult to run a competent accounting system?
Dr. Hampson: Local authority treasurers are skilful at telling people like my hon. Friend and me that they do not understand the system, that it is incredibly complex, that they have inordinate problems in bringing down their costs, and that the whole thing is made more difficult by the way that Governments are constantly changing. That is par for the course for almost any council treasurer. We have heard it all before. Treasurers manage perfectly well to understand the ground rules. Their political masters are sometimes relatively ignorant and sometimes they are shrewd.
We all know that when it comes to election year, which is what we face with the GLC and the metropolitan counties, the treasurers and their political masters find the system remarkably straightforward to understand, and can find the cuts necessary to keep their rate increases within tolerable bounds. At other times in the political cycle they find it impossible to do so and there are exorbitant increases. At the moment it happens to be expedient to have low increases. I do not accept that they do not understand the ground rules or the system.
Mr. Simon Hughes: Does the hon. Member accept that, none the less, there could be a simpler way, which would be more acceptable to him and to local authority treasurers?
Dr. Hampson: The hon. Gentleman will have to accept what I say. I spent four years in the Department of the Environment, and I believe that the principles of the GRE system are more understandable than those of the old system.
The hon. Gentleman shakes his head, but there were no truer words than those spoken by the noble lord, Lord Wilson in his heyday when he said that a week was a long time in politics. People have extraordinarily short political

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memories. Nothing is shorter than financial memories in local government. People have forgotten the old system. One of the great flaws of the old system, which is why we are here today, is that regardless of what local authorities spent there was an automatic ratchet that ensured that the Government paid out pro rata in accordance with what local authorities spent.
I do not deny that the subject is complex, but since the Government came to office in 1979 they have tried to break away from that system to try to force reality. One of the realities that the Opposition fail repeatedly to understand is that inflation has come down in the past few years and interest rates have decreased progressively.
Opposition Members have been accustomed year after year under their Government to follow the opposite trend, where inflation and interest rates were perpetually going up. Because they have fallen, we can say to local authorities that they have to face reality, that they will not automatically get a Government grant to cover what they have spent, and that they have to accept that pro rata the Government will put in less because local government has fewer overheads and reduced costs.
Whatever hon. Members on the Opposition Front Bench or on the Liberal Benches say about this being confusing and about people not understanding things like multipliers, they understand the system perfectly well. We have gone through it all with the old system and the new. The new system is marginally or, some would say, very much, better than the old. We are dealing with a very simple issue. Because of an adjustment in interest rates we are considering £44 million. All sorts of red herrings have been brought in, such as the GLC and so on.
The question has been raised as to why we are not dealing with the 1982–83 report before the 1983–84 report. The reason is that only 50 per cent. of the audited figures for the previous report have come in. At the end of the day the GLC is the great beneficiary for 1982–83 by £100 million. It is only right that everyone should know in advance, before making decisions, what they will contribute to the finances of the GLC. At long last the GLC managed to cut £170 million off what it had budgeted for, which only goes to show what can be done if there is the will to try.
Apart from all the red herrings, the issue is about £44 million out of what? It is out of £8 billion. That is what we are talking about, despite all the hoo-ha. The hon. Member for Blackburn, who has passion, emotion and eloquence at his disposal, seemed to be extraordinarily ill at ease. I am not surprised, when all he could was marshall the arguments he did to defend his position on this, when it boils down to £44 million out of £8 billion.
10.42 pm
Mr. Allan Roberts: I am pleased to follow the hon. Member for Leeds, North-West (Dr. Hampson), because he addressed himself to the issue we are debating—the fact that the Government wish to alter the rate support grant settlement for 1983–84 and to take £44 million off local government. It is a drop in the ocean compared with the moneys that he says local government is spending, £8 billion, and compared with the £10 billion to £15 billion that the Government will spend on Trident alone.
Dr. Hampson: Exaggerating again.
Mr. Roberts: It increases in price as inflation continues, each time the Secretary of State for Defence produces another assessment.
In the statement on the rate support grant settlement for 1984–85 on 14 December the Secretary of State for the Environment said that relevant current expenditure of £20,389 million was about £44 million more than the provisional figure proposed in October. He heralded that as a great gift. That is exactly the amount that is now being taken away from local government. Why is it being taken away? Because of the reduction in interest rates.
The fact that they have managed to reduce interest rates is heralded by the Government as a great achievement. Everybody will benefit. The owner-occupier who has borrowed money will benefit. Industry will benefit because it has borrowed money. However, the Government will not allow local government to benefit. When I was in local government and we were planning for the future, we made assessments about interest rates; if interest rates came down we thought that the public sector would benefit and we could do more. I am sure that business and the owner-occupier say the same thing.
So why does not the Chancellor come back with Budget interim statements to readjust his Budget, take some more money out of the private sector, take it away from industry, and take it off the owner-occupier? The council tenant is no different from the owner-occupier. He pays the interest to the moneylenders in his rent, because part of the cost on housing revenue account is money borrowed by the local authority to build houses. It is in exactly the same position as the owner-occupier who has borrowed money to buy his house.
Mr. John Powley: Does he pay for the repairs?
Mr. Roberts: Indeed he does—in the housing revenue account. The hon. Member for Norwich, South (Mr. Powley) is about 30 years out of date. He does not realise that the Tories are allowing local authorities to make profits out of their housing revenue account, that the cost of debt charges, maintenance and management is less than the money that is collected in rent income these days, and that the council tenant pays for the repairs, maintenance, management and debt charges—as well as subsidising the ratepayers and allowing the Government to claw back from the housing revenue account.
Mr. Straw: Is my hon. Friend aware that, in Torbay, the district council has made so much money out of council tenants that it is using a £2·5 million surplus on its housing revenue account to subsidise the building of a great white elephant of a new conference centre?
Mr. Roberts: I am pleased to have that illustration. The Government are saying, "We will introduce policies that we say will benefit society, as long as they do not benefit the poor and the needy, the people in need of local authority services". Those people will not be allowed to benefit as a result of the Government's so-called success when interest rates go down. Those who benefit will be the private sector, the owner-occupier and the rich—not the poor, whom the local authorities are there to help. That is what this is about—a mere £44 million that is being taken from the people who need it. It is not being taken from Labour councillors—their attendance allowances, the time they put in, or the effort that they make; it is taken from the needy.
Mr. Waldegrave: The hon. Gentleman is making a wonderful speech, but it does not relate to reality. The Government give grants that are supposed to pay for some of the interest charges. Interest charges are lower, so the Government does not give so much grant. I do not see what the problem is.
Mr. Roberts: The Government make all kinds of assessments. If the situation were as simple as the Minister claims it is, that would be fine. However, the Government give grants on all kinds of assumptions, not just on the assumption of interest rates. They give them on the assumption of what inflation will be. Regularly, Governments determine what the rate of inflation will be, what the rate of pay settlements will be, and what the rate support grant settlement will be. They change over the years, but the Government come back only for a justification to claw back more money from local authorities. The Government's assumptions on what pay levels will be in the public sector determine the rate support grant settlement. The Government do not change that.
However, the Government are not having much success. They claim success on inflation and interest rates.
Mr. Franks rose—
Mr. Powley rose—
Mr. Speaker: Order. Two hon. Gentlemen are getting up. To which hon. Gentleman is the hon. Member for Bootle (Mr. Roberts) giving way?
Mr. Roberts: I give way to the hon. Member for Barrow and Furness (Mr. Franks).
Mr. Franks: The hon. Gentleman was asked a short time ago whether he would comment on the housing revenue account in Torbay. Will he comment on the housing revenue account in Manchester? When he left that city council, as chairman of the housing committee, the housing revenue account had gone from £200,000 to £41 million.
Mr. Roberts: I do not know what the hon. Gentleman is talking about. He did not say what he meant. If he says that we were building and improving a lot of houses and spending a lot of money and getting a very good HIP allocation from the then Labour Government, he is right. If he is saying that the rate fund contribution to the housing revenue account was relatively high in respect of rate fund contributions from Tory authorities, he is right again, because we did not put the rents up when I was the chairman of housing in Manchester. We were quite proud of all that. But it has all altered now.
I can comment on the housing revenue account of Sefton, with which I am more involved at the moment. In the last financial year, the authority made a £100,000 profit out of council tenants and subsidised the ratepayers of Southport. It helped to contribute to the building of a statue of Red Rum, put fairy lights up in Lord street and things like that—quite an effective way of spending the money of the needy council tenants in my constituency who are unemployed.
The point that I was making, which related directly to the taking away of £44 million, because of the fall in interest rates, was that that is the only factor that the Government are cashing in on. They are not taking account of a higher rate of inflation and pay settlements that are higher than originally expected.
1008
The Government do not take account of the levels of unemployment. They are not having much success in that direction. These falls in interests rates, these signs of an turnround in the economy, are not having much effect on the level of unemployment. As unemployment increases in local authority areas such as Sefton and Liverpool, where the needs of the people dependent on local authority services increase, they do not come forward with a rate support grant settlement to alter that, to give more money to take account of levels of unemployment.
Dr. Hampson: As always, the hon. Gentleman is interestingly selective. How does he justify—he has mentioned the odd example—the fact that in this particular year authorities such as Greater Manchester, which I am sure he lauds, West Yorkshire and other noble Labour metropolitan county authorities have managed to have a deathbed repentance and hold their rate increases so low? I believe that in both West Yorkshire and Greater Manchester the increase is down to 4 per cent. and that in the West Midlands, the Birmingham area, the metropolitan county has actually managed a zero rate increase. If they are capable of doing it this year, why did they not do it last year, the year before or the year before that, when they had 20 per cent. or 30 per cent. increases?
Mr. Roberts: In his speech, the hon. Member for Leeds, North-West pretended to understand the way in which the system worked and how, in relation to grant-related expenditure, grants and so on, local authorities were dependent upon the situation that they had inherited. Wisely, Labour local authorities, where there was a continuity of Labour control in the past, built up reserves and put up the rates significantly in years when they were not facing the electorate—something of which the hon. Member accused them only a minute ago. Those reserves can be used now because of the situation that they inherited; the vagaries of the system that his Government introduced in the last or last but one—or was it the one before that?—piece of rating legislation enable them to do just what he describes.
Liverpool is in a different position. It did not build up any reserves because it had been run by Liberal Tories—mostly Liberals, who are the same as the Tories—and it did not maintain any services but cut them to the bone. Now, because of the pattern of past expenditure in relation to the way that the hon. Member's Government assesses things, it gets no grant and has an inadequate target. That is why it faces a massive rate increase and cuts in the rate support grant, and why the Labour local authorities to which he referred and which have enjoyed continuity of Labour control do not. If he does not understand that, his claim to understand the rate support grant system is bogus.
It is bogus in any event, however, because the hon. Gentleman tried to equate what is happening now with what happened previously, under successive Governments and successive rate support grants. He described the system that used to operate before the block grant was introduced—the needs element and the resources element in the rate support grant—whereby local government decided on a global figure of rate support grant, through negotiation with local authority associations, and then distributed it to local authorities according to a certain formula which took account of resources and needs—a very fair system.
If you had high rateable values in an inner-city area such as Liverpool or Manchester, where office

1009
development used to take place—it still does in Liverpool and to some extent, in Manchester—and if your resources were high in terms of the likelihood of collecting rates, and if you were a town like Bootle, which did not have the same commercial development as its neighbour, Liverpool, or like Salford, next door to Manchester, then the way in which the rate support grant settlement was distributed, through the resources element, took account of that. There was a needs element then, but it is now done in reverse.
The old system, before we got what this Government are doing, took account of the needs of an area and how they were distributed. Now, it is done differently, and the greater the need, the more penalties, clawback and holdback there are, and the opposite is done—which is not fair at all. The assessments by previous Labour Governments were to correct the imbalance and to help the people that we support and represent, not the business men whose votes you want to get in, and for whom you are spending all this paraphernalia, bringing £44 million back from local authorities. It is nonsense.
You only have to look at the circumstances today, where the local authorities are being penalised and being brougth into the penalty box and victimised by the Government. They represent not the overspending, profligate local authorities, but the green pastures of Britain. One or two hon. Members got in by mistake and represent areas with needs, and try to compensate now and again. The local authorities that you want to penalise are the ones that you—
Mr. Speaker: Order. The hon. Gentleman keeps bringing me into this; he must not do that.
Mr. Roberts: The local authorities that the Government want to penalise are the ones with the highest percentage of the under-privileged, of those in need, of the disadvantaged, of people who are homeless, of people—[Interruption.]
Mr. Speaker: Order.
Mr. Roberts: I am delighted with the behaviour of the hon. Member for High Peak (Mr. Hawkins). The more he does that, the better. He is one of the ayatollahs—Tory Back Benchers who have no regard or compassion for those in need, and who are interested only in those whom they were elected to represent. That is what this £44 million clawback is about. They do not understand, as has been clear from their speeches, the system that their Government have introduced or the injustice of it. They are interested only in the result, and the result is that those who have will receive, and those who have not will have it taken away from them, including the £44 million.
11.57 pm
Mr. Tony Banks: As I understand it, this supplementary report is not exceptional. It seems to us that the Government are moving rather quickly to reclaim this money. A number of hon. Members, particularly the hon. Member for Leeds, North-West (Dr. Hampson), have asked why we should complain when this report comes before the supplementary report for 1982–83. I can give a good reason why we should be concerned about it. It is that in the 1982–83 report the GLC was to receive the £100 million that the Government owe
1010
it. Will that supplementary report be put before us in June or July of this year? For budget-making purposes in the place the other side of the river that is an imporant consideration.
Dr. Hampson: Will the hon. Gentleman put it on the record that the only reason that the GLC is the beneficiary to the tune of £100 million is that it has managed to spend £177 million—an amazing amount—less than it said that it would? It is only because of that that the Government are retrospectively obliged to pay that £100 million. Will the hon. Gentleman accept that?
Mr. Banks: No, I will not. The hon. Member, in view of his background, should not believe the propaganda that is now being put out by the Department of the Environment.
Dr. Hampson: What is the truth?
Mr. Banks: Very few hon. Members of this House have ever understood local authority finance. There might have been three. Two of them are now dead, I think, and one of them is speaking.
This loose expression of the variance of £177 million, which the hon. Member for Leeds, North-West mentioned, is taken in conjunction with the words "spend" and "expenditure" and there is a failure to highlight the fact that, first of all, block grant is calculated on the basis of the statutory definition of total expenditure, which is, inter alia, the sum of gross revenue expenditure on services, less income from grants and charges, plus the cost of financing capital expenditure adjusted for the effects of any surplus or deficit on

trading operations, interest and balances.
Secondly—and I would ask the hon. Gentleman to think about this—if the variance of £177 million is properly displayed in the context of the true influence of total expenditure, the GLC spending per se was within some 2 per cent., or £28 million, of its budgeted figure for gross expenditure on spending programmes. I should be delighted if the hon. Member for Leeds, North-West would comment on that at some other time.
Why are we waiting for the 1982–83 supplementary report? Most regrettably, I missed what the Under-Secretary said in his opening remarks. I have heard him speak on many occasions in the House, so I can probably guess from experience what was said. I do not suppose it will have spread a great deal of illumination with regard to local authority financing.
The DOE's alleged reason for not publishing the 1982–83 report earlier is that it is awaiting the audited outturn expenditure returns from local authorities. But as I understand it—and again I should be grateful if the Under-Secretary would tell me whether I have got it wrong—by 22 February of this year the DOE had received 408 outturn expenditure forms, which represented about 99 per cent. of total expenditure. Of these, 249 have been audited, which covers about 47 per cent. of total expenditure.
I do not know why over half of all local authorities have not submitted audited figures almost a year after the end of 1982–83, but I do know that the Greater London council submitted its figures in the autumn. It surely must be wrong for Londoners now to suffer delay and cost because of the dilatoriness of others. I should like to know, when

1011
the Under-Secretary is winding up the debate, when we can expect the second supplementary report for 1982–83, because it is very important for the GLC.
I should like to go into much greater detail on the various propaganda sheets that have been put out by the Department of the Environment recently. I can only assume—and I apologise if, so young in this Parliament, I sound over-cynical—that the reason we are not dealing with the 1982–83 supplementary report is that the Minister wants to cause as much doubt, problem and confusion as he possibly can within the budgeting processes of county hall. This fits very well into the general approach that the Government are taking towards the GLC. It is an example of the sheer political vindictiveness that they adopt regarding the affairs of the GLC. They have made a number of totally misleading statements about the budget processes within county hall. I ask the Under-Secretary to give us this evening a categorical assurance that we shall see the 1982–83 supplementary report in June and July of this year.
11.5 pm
Mr. Terry Fields: It is said that it is an ill wind that blows no one any good, and my hon. Friend the Member for Bootle (Mr. Roberts) spoke of the possible effect of the overall saving of £44 million for some local authorities. Labour Members who represent Liverpool constituencies think that it may provide a small windfall for Liverpool. There is all-party acknowledgement of the size of the problem facing the city, its people and the city council.
The Minister has expressed sympathy for Liverpool, but the people want something more tangible than sympathy, from whichever quarter it is expressed. It is an insult to the intelligence of the people to suggest that it is the so-called evil Marxists who are responsible for the city's demise. The Labour party has been in control of the Liverpool council only since May 1983. That is when it inherited the terrible legacy that is causing the present difficulties. It is the Tory Government and their pale-blue shadow in Liverpool, the Liberal party, who are responsible for the city's enormous problems.
We are all aware of the Goebbels-type propaganda from the Government and the Liberals. We are familiar with the attempts to rewrite history. We know the truth, which is being hidden from the people.
Mr. Simon Hughes: Will the hon. Gentleman give way.
Mr. Fields: No.
Environmental problems abound in Liverpool. There are bad housing conditions and no council houses have been built for four years. That is the Liberal party's housing record. There are 220,000 people on the housing waiting list and 1,000 are recognised as requiring special medical priority. These are matters of great concern to us in Liverpool.
We are looking to the Government to assist us in overcoming our problems. I find myself with strange bedfellows, including the Prime Minister, who in 1974 was a Front-Bench member of the Conservative Opposition. In a debate on a rate support grant order she said:
"I agree with the right hon. Gentleman that the debate on the Rate Support Grant Order tends to be a technical debate—
1012
although, because of his action, this will probably be the liveliest debate we have had for many years—but our constituents do not come to us with technical points."
That is especially true of the elderly. The right hon. Lady continued:
"It is no good trying to explain to them an increase in rates by reference to the resources element, the domestic element, the needs element, the relevant expenditure and so on. They say 'I still have to bear a certain percentage of the increase in rates, and what are you going to do about that?' That is what many constituents and many hon. Members will be saying to the right hon. Gentleman today."—[Official Report, 25 March, 1974; Vol. 871, c. 62.]
Statistics can be thrown at me, but I am talking about the terrible conditions in which many of my constituents and many others live in Liverpool. If the Government are genuine in wanting to help resolve Liverpool's problems, they will find that they are able to be flexible and generous against the background of decades of deprivation and industrialisation. We have suffered and we continue to suffer. If the Government are genuine and are not merely making hypocritical announcements, they can do something tangible this week or this day.
Ways and means can be found to assist the people of Liverpool. On its revised figure, the Department has savings amounting to £44 million. That is the opportunity that is presented to the Government. The Chancellor of the Exchequer was able, at a stroke, to raise tax thresholds for high income earners. In so doing he gave away £35 million to 650,000 people. Liverpool has half a million people and we are asking for only £30 million of the £44 million to help us overcome our terrible problems.
In the debate on the Scottish rate support grant order, the right hon. Member for Western Isles (Mr. Stewart) said that his constituents would need £2 million to resolve their problems. The population of the Western Isles is 3,884 and Liverpool's population is 503,770. That means that if the city is treated on a par with the Western Isles it will require £31,600,000. The £30 million for which we are asking is a modest sum despite the criticism that has been expressed.
Mr. John Heddle (Mid-Staffordshire): Will the hon. Gentleman allow me to intervene?
Mr. Fields: No. Statements have been made in the House over the past week or more about the people's right to work.
Mr. Heddle: I should like to intervene on that very point.
Mr. Fields: Liverpool people want to work, but business interests deny them the right to do so. However, Liverpool city council has courageously provided jobs for as many as it can. The panacea to Liverpool's problems and crisis extolled by the Minister will not receive the universal support that he might suggest or believe. Tory politicians locally, at least tenuously in touch with the real world of Liverpool, have said that the Minister's solution is an irrelevance to the needs of Liverpool, and has no bearing on its problems.
For the first time, the debate on Liverpool, in the television programme "World in Action" last night, has raised—
Dr. Hampson: On a point of order, Mr. Speaker. I hesitate to say this, but the hon. Gentleman is debating Liverpool broadly, and now he has moved on to Liverpool as covered on television, but—
Mr. Speaker: I am not certain that that is a point of order. The hon. Member is disagreeing with something that has been said, but I do not think that it is a point of order.
Dr. Hampson: Further to that point of order, Mr. Speaker. My point is that the report affects Liverpool to the tune of £400,000, not £30 million.
Mr. Speaker: That is still a point of argument, I think.
Mr. Fields: The point I am trying to make concerns Liverpool and its crisis. The programme last night raised the issue from the crude gutter politics point of view of seeking to crucify individuals and personalise attacks on Liverpool city councillors. The disgraceful diatribe this afternoon from the Leader of the House was an absolute insult to decent people. [Interruption.] For the first time, on television last night, the truth and the reality of the situation was exposed for people to judge. Independent economists—
Mr. Richard Hickmet rose—
Mr. Fields: No, I shall not give way.
Independent economists and academics have partially analysed the problem, and the Government's proposed solution and figures. In their view, the Minister could not even scratch the surface with his policies. For this reason, too, the courageous stand taken by Liverpool city councillors, the work force, the district Labour party and the people of Liverpool is being vindicated, and will be vindicated in future.
Liverpool's problems will not go away, and will only increase—
Dr. Hampson rose—
Mr. Speaker: Order. I hope that the hon. Member will raise a point of order that I can answer, but I suspect that it will be a point of argument.
Dr. Hampson: On a point of order, Mr. Speaker. It is strictly a point of order. This is a debate concerning a supplementary report, limited to a small amount of money. The hon. Gentleman is speaking to a general debate about the problems of Liverpool. There are other times and places for the hon. Gentleman to speak on such matters.
Mr. Speaker: The hon. Member is entitled to say that he thinks that Liverpool should have a greater share of the grant.
Mr. Fields: Thank you, Mr. Speaker, for protecting me from Conservative Members.
In my maiden speech on 24 June last year, I warned that the Government's policies would provoke a reaction among decent working people. I give further warning tonight that, in Liverpool and elsewhere, this latest attack on democracy and the living standards of the working people will provoke even further social turmoil, because of the anger about the flagrant disregard for people generated by the Government's policies.
The guilty men reside not at the municipal buildings in Liverpool. They reside at No. 10 Downing street, No. 11 Downing street, the Department of the Environment—in every place that the Tory party occupies, pursuing policies disastrous for working people.
Having been exposed to the nation on television, will the Minister and his cohorts on the Front Bench come
1014
clean and admit that they are wrong? Will they also, in an act of magnanimity, extend to the people of Liverpool a lifeline and draw back from the brink of confrontation over rates? Will they give us part of the £44 million saved to give the deprived people of Liverpool a little bit of dignity, because up to now they have done nothing in that direction?
11.14 pm
Mr. Peter Pike: It is a privilege to follow an hon. Member representing Liverpool, because I do not underestimate the problems faced by my hon. Friend the Member for Liverpool, Broadgreen (Mr. Fields). I certainly do not envy Liverpool city council in dealing with the problems that it inherited from those previously in control, resulting from the policies of the Government.
My hon. Friend the Member for Blackburn (Mr. Straw) has referred to the designation of councils as inner urban area authorities, and the fact that partnership authorities receive more favourable financial treatment than other authorities that have only designated status. It should be recognised that councils designated under inner urban area schemes all represent deprived areas. Councils should all be treated equally favourably, whatever status they may have under inner urban area programmes.
I recently received a written answer from the Under-Secretary. I had asked the Secretary of State for the Environment:
"if he will estimate the cost to local government for 1983–84 of additional duties placed on local government by Government legislation since 1979 excluding unified housing benefits."
The answer was remarkable. It was that:
"The likely expenditure effects of new proposals affecting local government are not available centrally and would be too costly to obtain."—[Official Report, 1 February 1984; Vol. 53, c. 221.]
It is gross negligence on the part of the Government if they pass legislation and have no idea what the revenue implications are to be for local councils. Either the Government are dodging answering the question or they are incompetent to pass legislation with financial implications for local government.
I turn to the grant-related expenditure assessment scheme. One accepts that some scheme or formula for grants is necessary, but it should be fair and understandable. The present scheme is neither. I can give two examples. First, allocation of transport grant does not take into account whether a local authority runs its own transport undertakings or depends on the services of the National Bus Company or any other body. Secondly, the allocation for museums and art galleries is based on a factor that has nothing to do with museums and art galleries at all. An authority is awarded grant on the same basis whether or not it is responsible for any museums or art galleries. I could give further examples of similar nonsense, if time permitted. The scheme is unfair and incomprehensible.
11.17 pm
Mr. Straw: This has been a more spirited debate than we had expected when the debate on the Public Accounts Committee collapsed early. There have been incisive contributions from my hon. Friends the Members for Bootle (Mr. Roberts) for Newham, North-West (Mr. Banks), for Liverpool, Broadgreen (Mr. Fields) and for Burnley (Mr. Pike).
I asked the Under-Secretary of State a series of questions about why the report does not make changes to

1015
grant-related expenditure assessments, particularly those related to capital allocations, and why it does not grant additional disregards against target, particularly to take account of the increased level of police pay. My hon. Friend the Member for Burnley asked why it did not deal with other disregards, particularly those related to the urban programme.
My hon. Friend the Member for Liverpool, Broadgreen asked what would happen to the £44 million that is to be retrieved from the local authorities. Is it simply to return to the Treasury, or will local authorities benefit from it in some other way? My hon. Friend the Member for Newham, North-West asked why the Government have done the conjuring trick of producing the second supplementary report for 1983–84 before the second supplementary report for 1982–83. I hope that the Under-Secretary can answer that question more convincingly than he did at 9.15 this evening.
Other than that, the Government act most disgracefully whenever the GLC is mentioned. All of their actions towards the GLC are inspired by political malice of the worst kind.
11.20 pm
Mr. Waldegrave: I never cease to be amazed by the House's capacity to make what look like devious and boring subjects into interesting and major debates. We can congratulate ourselves on that.
Perhaps I can deal first with the couple of points that have been relevant to the report. The first point, which was made by the hon. Member for Blackburn (Mr. Straw) and taken up by my hon. Friend the Member for Lewisham, West (Mr. Maples), was why we have not adjusted the GREs to reflect the position in individual authorities with regard to their interest payments. It would have been possible to reduce the amount of block grant payable to each local authority by adjusting GREs to reflect the effect of lower interest rates on each component but that would have been a relatively lengthy and complicated process. Instead, as my hon. Friend the Member for Lewisham, West correctly said, we have done it in a fairly broad-brush way by adjusting the grant-related poundage for spending in GRE. I think that I can console the hon. Member for Blackburn and my hon. Friend on this point because GREs will be adjusted later in a supplementary report in respect of 1983–84. Therefore, if there are any injustices for authorities, it will come right in the end. There has been no pressure from local authority associations to do it differently.
The hon. Member for Blackburn asked about disregards. We shall take into consideration the disregards that have been urged on us. I might be able to encourage the hon. Gentleman about the police. On the police pay award of September 1983, the Government have given assurances that the cost of the excess of the settlement—8·4 per cent. compared with the assumption in the 1983–84 settlement of 6 per cent.—will be disregarded and this will be implemented in the supplementary report which closes the books on that year. I hope that that meets the hon. Gentleman's point.
The hon. Member for Newham, North-West (Mr. Banks) was kind enough to say that he was not here when I made my first speech. I can only repeat the real arguments that I used then. As other local authorities have to contribute to the payments of the GLC in respect of its slightly fortuitous underspend for that year, it is fair to give
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them a chance to rate for it in 1984–85. My hon. Friend the Member for Leeds, North-West (Dr. Hampson) made that point clearly. As the hon. Member for Newham, North-West said, it is true that only 53 per cent. of the audited figures are in. He might wish that it were otherwise, but that is the case.
Mr. Tony Banks: What does that represent in terms of total expenditure? That was my point.
Mr. Waldegrave: I do not have that figure with me, but I shall write to the hon. Gentleman. It would be most odd to give some audited and some unaudited figures. The hon. Gentleman need not fear a conspiracy. There has never been any question about London ratepayers' money going back to the GLC. I am sure that the House would have more pleasure in returning it if there were some hope of some of it going back to the ratepayers. However, I can give the hon. Gentleman the assurance for which he asked—the second supplementary report for that year will be laid in June or July this year. There is no secret about that.
The point of the hon. Member for Southwark and Bermondsey (Mr. Hughes), is a regular Liberal refrain—why can the world not be different and simpler? Why can everything not be easy? My hon. Friend the Member for Leeds, North-West made an exceedingly clear statement. The hon. Member for Southwark and Bermondsey may be arguing that we can do without an equalisation element in the rate support grant system. I am sure that he is not, although the hon. Member for Bootle (Mr. Roberts) appeared to think that no equalisation was left in the system. Of course there is. Under any equalisation system, there are bound to be complex flows from one authority to another and complicated mechanisms for equalising resources. That is inherent in any system, for example, a local tax system. The hon. Member for Southwark and Bermondsey was fair in saying that the Government are looking for ways to simplify the system. I outlined how we propose to go to a more predictable series of three-year reports, and I believe that the local authorities welcome that measure.
I have another point of encouragement for the hon. Member for Southwark and Bermondsey. With the local authority associations, we are looking at the future treatment of the variable items. Perhaps the system can be altered to give authorities more certainty—for example, about interest rates—at the time of the settlement. En so far as local authorities have had to pay out less, they have not suffered. This measure merely prevents them from getting a windfall gain.
It is a long time since I have had the pleasure of the support of my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) on a local government matter, but his contribution was no less useful and pleasurable for that. He pointed out that we have been making rather heavy weather about a simple report. The order makes an adjustment which would have been made the other way if interest rates had been higher than expected. A great deal of the sound and fury we have heard has been based on a misunderstanding or on a desire to make moving speeches—a desire always apparent among Opposition Members.
I do not take the hon. Member for Liverpool, Broadgreen (Mr. Fields) to task for using this opportunity to make another speech about Liverpool's problems, which I am sure exercise the attention of all hon.

1017
Members. The report has an extremely minor effect on Liverpool, as it does on other authorities. I do not believe that the hon. Gentleman would expect me to respond to his points, except in the most general terms.
Mr. Eddie Loyden: Will the Under-Secretary of State respond to the question about the responsibility of the Government, who have created unemployment in areas such as Merseyside? The Government's complete disregard of those problems has something to do with the needs in that area. The Government should start to respond to those needs.
Mr. Waldegrave: The hon. Gentleman probably knows better than I do that, since 1979, the Government have invested almost £1,000 million in Liverpool in capital flows of one kind or another. Ministers in my Department often come under pressure from other parts of the country for saying that there have been great flows of money towards Liverpool.
Mr. Robert N. Wareing: Will the hon. Gentleman give way?
Mr. Waldegrave: I am coming to the end of my speech. I did the hon. Member for Broadgreen the courtesy of referring to his speech, but this is not a Liverpool debate. We understand the passion and anxiety that all Members representing Liverpool constituencies and other hon. Members must feel. That is why the Government have directed huge flows of money to Merseyside during the past year. I do not believe that anyone can say that the Government have not been aware of the region's problems. In the months ahead, there will be plenty of other opportunities to debate Liverpool's problems. All hon. Members support the Labour Front Bench in urging the Labour group in Liverpool to draw back from the brink of what might be a disastrous and irresponsible course of action. I know that many Conservative Members want to pay tribute to the stand taken by the Leader of the Opposition on this matter. I am not so sure that he is receiving all the support he wants from Labour Back Benchers.
The principle in my first speech involved the evidence of the rating increases across the country. I pay tribute to the local authorities that have achieved the Government's aim. The expenditure increase as a whole, which looks like coming about between 1983–84 and 1984–85, show that the pressures brought to bear to restrain the growth of local authority expenditure are beginning to pay off. That expenditure is now much slower than it was. The rate increases are likely to be at their lowest since the reorganisation of local government brought about by my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath). The level of rate increases in the next year will be within touching distance of the inflation rate. That has not happened during the past 10 years. We can congratulate ourselves on that aspect.
The order is only a small part of the system which is beginning to bring about that satisfactory state of affairs. The debate has been wide-ranging and has touched on many different aspects of the local authority financial system. I hope that I have responded to those points that bore some relation to that order. They were not—
It being half-past Eleven o'clock, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted Business).
The House divided: Ayes 244, Noes 171.

Division No. 196]

[11.30 pm

AYES

Adley, Robert

Finsberg, Sir Geoffrey

Aitken, Jonathan

Fookes, Miss Janet

Amess, David

Forman, Nigel

Ancram, Michael

Forsyth, Michael (Stirling)

Arnold, Tom

Fox, Marcus

Ashby, David

Franks, Cecil

Aspinwall, Jack

Fraser, Peter (Angus East)

Atkins, Rt Hon Sir H.

Freeman, Roger

Atkins, Robert (South Ribble)

Fry, Peter

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

Gale, Roger

Baker, Nicholas (N Dorset)

Galley, Roy

Baldry, Anthony

Gardiner, George (Reigate)

Banks, Robert (Harrogate)

Gardner, Sir Edward (Fylde)

Batiste, Spencer

Garel-Jones, Tristan

Beaumont-Dark, Anthony

Glyn, Dr Alan

Bellingham, Henry

Goodhart, Sir Philip

Bendall, Vivian

Goodlad, Alastair

Benyon, William

Gow, Ian

Berry, Sir Anthony

Gower, Sir Raymond

Best, Keith

Grant, Sir Anthony

Bevan, David Gilroy

Greenway, Harry

Biffen, Rt Hon John

Gregory, Conal

Biggs-Davison, Sir John

Griffiths, Peter (Portsm'th N)

Blaker, Rt Hon Sir Peter

Grist, Ian

Bonsor, Sir Nicholas

Ground, Patrick

Boscawen, Hon Robert

Grylls, Michael

Bottomley, Peter

Hamilton, Neil (Tatton)

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

Hampson, Dr Keith

Bowden, Gerald (Dulwich)

Hanley, Jeremy

Boyson, Dr Rhodes

Hannam, John

Brandon-Bravo, Martin

Hargreaves, Kenneth

Bright, Graham

Harris, David

Brinton, Tim

Haselhurst, Alan

Brooke, Hon Peter

Havers, Rt Hon Sir Michael

Brown, M. (Brigg & Cl'thpes)

Hawkins, C. (High Peak)

Browne, John

Hawksley, Warren

Bryan, Sir Paul

Hayes, J.

Buck, Sir Antony

Hayhoe, Barney

Budgen, Nick

Hayward, Robert

Bulmer, Esmond

Heddle, John

Burt, Alistair

Henderson, Barry

Butler, Hon Adam

Heseltine, Rt Hon Michael

Butterfill, John

Hickmet, Richard

Carlisle, John (N Luton)

Hicks, Robert

Carlisle, Kenneth (Lincoln)

Higgins, Rt Hon Terence L.

Carttiss, Michael

Hind, Kenneth

Chapman, Sydney

Hirst, Michael

Chope, Christopher

Hogg, Hon Douglas (Gr'th'm)

Churchill, W. S.

Holland, Sir Philip (Gedling)

Clark, Dr Michael (Rochford)

Holt, Richard

Clark, Sir W. (Croydon S)

Hooson, Tom

Clarke, Rt Hon K. (Rushcliffe)

Hordern, Peter

Colvin, Michael

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

Conway, Derek

Howarth, Gerald (Cannock)

Coombs, Simon

Howell, Rt Hon D. (G'ldford)

Cope, John

Hubbard-Miles, Peter

Corrie, John

Hunt, David (Wirral)

Couchman, James

Hunt, John (Ravensbourne)

Dicks, Terry

Hunter, Andrew

Dorrell, Stephen

Hurd, Rt Hon Douglas

Douglas-Hamilton, Lord J.

Jackson, Robert

Dover, Den

Jenkin, Rt Hon Patrick

Durant, Tony

Johnson-Smith, Sir Geoffrey

Dykes, Hugh

Jones, Gwilym (Cardiff N)

Edwards, Rt Hon N. (P'broke)

Jones, Robert (W Herts)

Eggar, Tim

Kershaw, Sir Anthony

Emery, Sir Peter

Key, Robert

Evennett, David

King, Roger (B'ham N'field)

Eyre, Sir Reginald

King, Rt Hon Tom

Fairbairn, Nicholas

Knight, Gregory (Derby N)

Favell, Anthony

Knight, Mrs Jill (Edgbaston)

Fenner, Mrs Peggy

Knowles, Michael

1019

Knox, David

Ottaway, Richard

Lamont, Norman

Page, John (Harrow W)

Lang, Ian

Page, Richard (Herts SW)

Latham, Michael

Parris, Matthew

Lawrence, Ivan

Patten, John (Oxford)

Leigh, Edward (Gainsbor'gh)

Pawsey, James

Lennox-Boyd, Hon Mark

Peacock, Mrs Elizabeth

Lester, Jim

Pink, R. Bonner

Lewis, Sir Kenneth (Stamf'd)

Pollock, Alexander

Lightbown, David

Porter, Barry

Lilley, Peter

Powell, William (Corby)

Lloyd, Peter, (Fareham)

Powley, John

Lord, Michael

Prentice, Rt Hon Reg

Lyell, Nicholas

Proctor, K. Harvey

McCrindle, Robert

Raffan, Keith

McCurley, Mrs Anna

Raison, Rt Hon Timothy

Macfarlane, Neil

Rathbone, Tim

MacGregor, John

Renton, Tim

MacKay, Andrew (Berkshire)

Rhodes James, Robert

MacKay, John (Argyll & Bute)

Rhys Williams, Sir Brandon

Maclean, David John.

Ridley, Rt Hon Nicholas

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

Ridsdale, Sir Julian

Madel, David

Rifkind, Malcolm

Major, John

Rumbold, Mrs Angela

Malins, Humfrey

Sainsbury, Hon Timothy

Malone, Gerald

St. John-Stevas, Rt Hon N.

Maples, John

Shaw, Giles (Pudsey)

Marland, Paul

Shepherd, Colin (Hereford)

Marshall, Michael (Arundel)

Shersby, Michael

Mates, Michael

Skeet, T. H. H.

Mather, Carol

Spicer, Michael (S Worcs)

Mawhinney, Dr Brian

Stevens, Lewis (Nuneaton)

Mayhew, Sir Patrick

Stewart, Allan (Eastwood)

Mellor, David

Stewart, Andrew (Sherwood)

Meyer, Sir Anthony

Stokes, John

Miller, Hal (B'grove)

Tapsell, Peter

Mills, lain (Meriden)

Thompson, Donald (Calder V)

Miscampbell, Norman

Thorne, Neil (llford S)

Mitchell, David (NW Hants)

Thurnham, Peter

Moate, Roger

van Straubenzee, Sir W.

Monro, Sir Hector

Viggers, Peter

Moore, John

Wakeham, Rt Hon John

Morrison, Hon C. (Devizes)

Waldegrave, Hon William

Moynihan, Hon C.

Walker, Bill (T'side N)

Mudd, David

Wall, Sir Patrick

Neale, Gerrard

Waller, Gary

Needham, Richard

Ward, John

Nelson, Anthony

Warren, Kenneth

Newton, Tony

Nicholls, Patrick

Tellers for the Ayes:

Norris, Steven

Mr. Archie Hamilton and Mr. Michael Neubert.

Onslow, Cranley

NOES

Adams, Allen (Paisley N)

Clark, Dr David (S Shields)

Alton, David

Clay, Robert

Anderson, Donald

Cocks, Rt Hon M. (Bristol S.)

Archer, Rt Hon Peter

Cohen, Harry

Ashley, Rt Hon Jack

Coleman, Donald

Ashton, Joe

Concannon, Rt Hon J. D.

Atkinson, N. (Tottenham)

Cook, Robin F. (Livingston)

Banks, Tony (Newham NW)

Corbett, Robin

Barron, Kevin

Corbyn, Jeremy

Beckett, Mrs Margaret

Craigen, J. M.

Bell, Stuart

Crowther, Stan

Benn, Tony

Cunliffe, Lawrence

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

Cunningham, Dr John

Bermingham, Gerald

Dalyell, Tam

Blair, Anthony

Davies, Rt Hon Denzil (L'lli)

Boothroyd, Miss Betty

Davies, Ronald (Caerphilly)

Bray, Dr Jeremy

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

Brown, Gordon (D'f'mline E)

Deakins, Eric

Brown, Hugh D. (Provan)

Dewar, Donald

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

Dobson, Frank

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

Dormand, Jack

Callaghan, Jim (Heyw'd & M)

Douglas, Dick

Campbell, Ian

Dubs, Alfred

Campbell-Savours, Dale

Duffy, A. E. P.

Canavan, Dennis

Dunwoody, Hon Mrs G.

Carter-Jones, Lewis

Eadie, Alex

1020

Eastham, Ken

Maynard, Miss Joan

Ellis, Raymond

Meacher, Michael

Evans, John (St. Helens N)

Meadowcroft, Michael

Fatchett, Derek

Michie, William

Field, Frank (Birkenhead)

Mikardo, Ian

Fields, T. (L'pool Broad Gn)

Miller, Dr M. S. (E Kilbride)

Fisher, Mark

Mitchell, Austin (G't Grimsby)

Flannery, Martin

Morris, Rt Hon A. (W'shawe)

Foot, Rt Hon Michael

Morris, Rt Hon J. (Aberavon)

Forrester, John

Nellist, David

Foster, Derek

Oakes, Rt Hon Gordon

Foulkes, George

O'Brien, William

Fraser, J. (Norwood)

O'Neill, Martin

Freeson, Rt Hon Reginald

Orme, Rt Hon Stanley

George, Bruce

Owen, Rt Hon Dr David

Gilbert, Rt Hon Dr John

Park, George

Godman, Dr Norman

Parry, Robert

Gould, Bryan

Patchett, Terry

Hamilton, James (M'well N)

Pendry, Tom

Hamilton, W. W. (Central Fife)

Penhaligon, David

Hardy, Peter

Pike, Peter

Harman, Ms Harriet

Powell, Raymond (Ogmore)

Harrison, Rt Hon Walter

Prescott, John

Healey, Rt Hon Denis

Randall, Stuart

Heffer, Eric S.

Rees, Rt Hon M. (Leeds S)

Hogg, N. (C'nauld & Kilsyth)

Robinson, G. (Coventry NW)

Holland, Stuart (Vauxhall)

Rogers, Allan

Home Robertson, John

Rooker, J. W.

Howell, Rt Hon D. (S'heath)

Ross, Ernest (Dundee W)

Howells, Geraint

Rowlands, Ted

Hoyle, Douglas

Sedgemore, Brian

Hughes, Dr. Mark (Durham)

Sheerman, Barry

Hughes, Robert (Aberdeen N)

Sheldon, Rt Hon R.

Hughes, Roy (Newport East)

Shore, Rt Hon Peter

Hughes, Sean (Knowsley S)

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

Hughes, Simon (Southwark)

Silkin, Rt Hon J.

Janner, Hon Greville

Skinner, Dennis

John, Brynmor

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

Jones, Barry (Alyn & Deeside)

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

Kaufman, Rt Hon Gerald

Soley, Clive

Kilroy-Silk, Robert

Spearing, Nigel

Kirkwood, Archibald

Stott, Roger

Lamond, James

Strang, Gavin

Leighton, Ronald

Straw, Jack

Lewis, Ron (Carlisle)

Thomas, Dr R. (Carmarthen)

Lewis, Terence (Worsley)

Thompson, J. (Wansbeck)

Litherland, Robert

Thorne, Stan (Preston)

Lloyd, Tony (Stretford)

Tinn, James

Lofthouse, Geoffrey

Torney, Tom

Loyden, Edward

Wallace, James

Macfarlane, Neil

Warden, Gareth (Gower)

McKay, Allen (Penistone)

Wareing, Robert

Mackenzie, Rt Hon Gregor

Welsh, Michael

McNamara, Kevin

White, James

McWilliam, John

Williams, Rt Hon A.

Madden, Max

Winnick, David

Marek, Dr John

Young, David (Bolton SE)

Marshall, David (Shettleston)

Martin, Michael

Tellers for the Noes:

Mason, Rt Hon Roy

Mr. Frank Haynes and Mr. Don Dixon.

Maxton, John

Maxwell-Hyslop, Robin

Question accordingly agreed to.
Resolved,
That the Rate Support Grant Supplementary Report (England) (No. 2) 1983–84, which was laid before this House on 12th March, be approved.

Rate Support Grant Supplementary Report

  BUSINESS OF THE HOUSE
  Ordered,
  That, at tomorrow's sitting, the Motion relating to House of Commons (Services) may be proceeded with, though opposed, until half-past Eleven o'clock or for one and a half hours after it has been entered upon, whichever is the later, and Mr. Speaker shall then put any Question necessary to dispose of proceedings thereon, if not previously concluded.—[Mr. David Hunt.]

  PROCEDURE
  Ordered,
  That Mr. Allen Adams, Mr. A. J. Beith, Mr. Jim Callaghan, Mr. Christopher Chope, Sir Walter Clegg, Viscount Cranborne, Sir Peter Emery, Mr. Greville Janner, Mr. Hugh McCartney, Mr. John McWilliam, Mr. Robin Maxwell-Hyslop, Sir Hector Monro, Mr. Charles Morrison, Mr. J. Enoch Powell, Mr. Fred Silvester and Mr. Roger Sims be members of the Select Committee on Procedure.
  Ordered,
  That the members of the Committee nominated this day shall continue to be members of the Committee for the remainder of this Parliament.
  Ordered,
  That this Order be a Standing Order of the House.—[Mr. David Hunt.]

Heriot-Watt University (Pharmacy Department)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. David Hunt.]
11.42 pm
Lord James Douglas-Hamilton: I wish tonight to raise the issue of the future of the oldest pharmacy department in the United Kingdom, founded in 1776. Edinburgh has had an unbroken tradition of teaching pharmacy for more than 200 years. The school of pharmacy owed its origins to the royal public dispensary, the first to be founded in Britain. Not only is the tradition of a learned profession to be much respected, but Edinburgh, and particularly this department, has become a centre of medical excellence and research.
Edinburgh is rightly known as the Athens of the north, being the capital of Scotland. It is one of the greatest centres of medical learning in the Western world.
Mr. John Maxton: What about Glasgow?
Lord James Douglas-Hamilton: Glasgow is a distinguished city and the university there has a pharmaceutical department. The two cities are not in competition over this. Edinburgh is also the home of the Pharmaceutical Society of Great Britain, the medicines testing laboratory, the pharmaceutical division of the Scottish Home and Health Department and the Pharmaceutical General Council of Scotland. As the Edinburgh Royal infirmary confirms, Edinburgh is such a centre of pharmacy that the lack of a school of pharmacy would be a serious matter. It is necessary to have such a department in a city with the medical standing of Edinburgh.
The allegation has been made that the research at this Department is modest, but there are already signs of growth. Much collaborative work has been undertaken and that is increasing. There are at least 12, if not more, projects with hospitals, industry and university departments. One of the ways in which a small department can build up its strength is by having links with other universities and institutions.
At the site at Riccarton there would be scope for development and such research would increase. Lothian health board has stated that the department of pharmacy is now realising its research potential in what are considered exciting and profitable areas. I am glad to say that this view is supported by the chairman of the Scottish Development Agency, who has written that the department has a substantial role in underpinning the pharmaceutical industry. After all, if there is to be considerable growth in biotechnology this is a development in which pharmacists would be ideally employed.
The matter goes deeper and involves the whole issue of health care. The closure of this department would have an adverse effect on health care since research facilities would no longer be available in the south-east of Scotland. Additional expertise would be lost to a centre of medical excellence. The expertise for continuing professional education would go, and the academic and professional back-up in both hospital pharmacy and community pharmacy would disappear. This would place pharmacy at a serious disadvantage in maintaining an effective health care service in south-east Scotland.

1023
Of course, the standards of training in this department are excellent; 90·5 per cent. of the students get first or second class honours degrees and in the past five years virtually all the students who have qualified have obtained employment. The Minister has not yet published the figures from other departments throughout Britain, but none of them can possibly excel the record of Heriot-Watt and no doubt a great many of them will not come near to equalling it.
In any case, the demand in the east and central belt of Scotland is immense. In 1983, under pressure from the University Grants Committee, the university reduced its intake to 22 students out of 620 applicants. As Boots the chemists confirm, the quality of students produced has been second to none and they are invariably well motivated and trained to meet all their professional responsibilities. Of course, the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) happens to be one of the graduates. The message from hospitals, medical schools, community pharmacists and industry has been that the pharmacy graduates are of the highest quality. This is proved by the fact that they all go on to jobs.
There is a Scottish dimension to this in that 54 per cent. of all graduates are employed in the south-east and central belt of Scotland and 72 per cent. in Scotland as a whole. If the school closes, the Scottish students will be at a disadvantage when applying for Chelsea and Nottingham, as the Scottish educational system does not have A-level certificates. This would seriously reduce the opportunity for Scottish students in south-east Scotland acquiring a university pharmacy education.
The manpower needs of health care industries in southeast Scotland are being actively promoted by the Scottish Development Agency and the role of the department in this part of Scotland complements the departments in Glasgow and Aberdeen. On 17 March 1982, in response to a debate in the House, my hon. Friend the Member for Edinburgh, Central (Mr. Fletcher) said:
"The UGC has assured Heriot-Watt university that it will be given every encouragement to concentrate its activities at Riccarton and to move out of the city centre."—[Official Report, 17 March, 1982; Vol. 20, c. 404.]
It should also be mentioned that there would be a relative increase in the cost of the brewing and biological sciences building at Riccarton if pharmacy were not to move into the same building. Because the accommodation would be shared between two faculties instead of three, the relative cost would go up. Closing this department would turn out be a false economy. In any case, approximately 70 per cent of the students in the pharmacy department are women and the vast majority of the students in the other departments are men, so the inclusion of this department on the site at Riccarton would help to get an appropriate balance between men and women. Sometimes it is suggested that women do not work outside the home all their working lives.
It should not be forgotten that women who have had children or are pregnant often work as locums in pharmacies.
Today the hon. Member for Clackmannan (Mr. O'Neill) took a deputation—I was glad to go with him, along with the hon. Member for Falkirk, West (Mr. Canavan), the hon. Member for Greenock and Port Glasgow (Dr. Godman), who has taught at Heriot-Watt university, and the hon. Member for Roxburgh and
1024
Berwickshire who, as I said, is a graduate—to see the chairman of the UGC. We hope that the Minister will pass on to the chairman the further details that will be mentioned in this debate.
In summary, the essence of the matter is that the UGC is in danger of striking at the heart of the Scottish education system. Since time immemorial, more Scots have gone to university than is the case with their contemporaries in England. They see education as being vitally important, because it touches on the aspirations that men and women have for their children. Napoleon used to say that every French soldier had a field marshal's baton in his rucksack. In much the same way, every Scots student knows that he has the opportunity to attain fulfilment, because he or she has access to the best education institutions in the land. The loss of a centre of excellence would be a thoroughly retrograde step. I believe that it would be worse than a mistake; it would be a blunder.
11.50 pm
Mr. Martin J. O'Neill: It is relatively unusual to have a shared Adjournment debate, but it is part of the all-party nature of the campaign that has been waged in defence of the pharmacy department of Heriot-Watt. The hon. Member for Edinburgh, West (Lord James Douglas-Hamilton) said that today—almost uniquely in perhaps the most warring of all parts of the United Kingdom politically—an all-party deputation went to see the chairman of the UGC. We were unanimous in the view that we put to him, which was that the contribution made by the pharmacy department of Heriot-Watt was not to be seen in a regional sense, which was what the chairman endeavoured to convey to us, saying that his part of England did not have a pharmacy department.
We argue that the pharmacy department of Heriot-Watt not only makes a major contribution to National Health Service provision in east-central Scotland—or the Forth estuary, to put it in its widest geographical context—but is an integral part of the unique contribution that Edinburgh and the east of Scotland make to the whole medical profession and the academic standing of the United Kingdom medical profession throughout the world. Without the pharmacy department, that contribution would be greatly debased.
It is not the students' fault that the numbers are now such that the chairman of the UCC can say, according to the economics of scale, that the pharmacy department is beginning to become an uneconomic unit. In 1981, the UGC recommended that the student intake figures should fall from 60 to 48. Moreover, the pharmacy panel of the UGC—not the most unbiased of bodies, in that it represents a vested interest within the pharmacy business, for want of a better expression—came to the conclusion that perhaps the research side was deficient, as compared with the research dimension of other pharmacy departments.
We would argue that the position of Heriot-Watt has been improving considerably over the past five to six years, that its transition to an institution of higher learning and a university has meant that the emphasis on teaching has taken precedence and that the quality of the teaching is evidenced by the degree performance, which bears comparison with that of any other institution in the United Kingdom. There are dual responsibilities in a department such as pharmacy concerning research and vocational

1025
training. On the vocational training side Heriot-Watt has acquitted itself in such a way that it has been defended across the whole spectrum of the pharmaceutical world, including business, the Health Service and academic institutions; all have been forthcoming and willing to provide the maximum degree of support for the sustaining of this institution.
I do not take the opportunity this evening to knock the Government because at the moment the Government have still to say what they have to say. We have not chased them. It is the University Grants Committee and, in many respects, the internal workings of the UGC that has produced this report. We think that it is wrong. We think that the support of the Department of Education and Science should be placed behind this institution, based not simply on the needs of the Health Service or the pharmaceutical industry but, more than anything else, on the name of Scottish education and the Scottish contribution to medicine, which goes far beyond the confines of the House or the party debates in which we normally participate.
I ask the Minister to use what influence he has—and some of us have become somewhat cynical about the influence that the DES has had in recent years over the UGC, at least in respect of the UGC's willingness to participate in cutting the educational budget. Here is a chance for the Minister to prove that the DES, in the context of an arm's length relationship with higher education, with the UGC, can operate contructively and in defence of higher education and of what we think is one of the outstanding academic traditions in this country, the contribution that the Heriot-Watt pharmacy department has made to the medical service and to higher education and learning in our country.
11.56 pm
Mr. Barry Henderson: I declare an interest as a member of the general convocation of the university of Heriot-Watt and as a Member of the House for a constituency in the Forth valley.
That is the first reason why I am very grateful to my hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) for having initiated this debate. The interest throughout the area is evidenced by the substantial number of hon. Members in the Chamber at this time of night.
Of the graduates who leave the school of pharmacy at Heriot-Watt, virtually all find jobs, and more than half find jobs in central and southern Scotland, including the Fife region. It will, therefore, be clear that any diminution of the activity of that school will have serious consequences for the provision of pharmacy facilities in the region.
Edinburgh is a centre of excellence in the whole of medicine, whether in teaching, research, practice of medicine or, perhaps not least important, in the industrial activities involved in supplying goods and services to medicine. All these are found in the centre of excellence in Edinburgh and the loss of the pharmacy department of Heriot-Watt would be a loss to that total medical excellence.
The University Grants Committee has a difficult job to do. One sympathises with the problems of the chairman and his committee in having to make finely balanced
1026
judgments which will always be very difficult to achieve. Given that situation, there will be times when, at the margin, that judgment must be called in question, and on this occasion I believe that my hon. Friend is right to stress the importance of this department. I believe that with the move to Riccarton there is real scope for the enhancement of its already high reputation, not least in its research facilities. I hope that the UGC, on further consideration, will reprieve this department.
11.58 pm
Mr. Michael Forsyth: I very much appreciate the opportunity to support the initiative taken by my hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton). Having followed the debate in the newspapers before our debate this evening, I have been struck by the extraordinary way in which the UGC operates its peer review system. It is extraordinary that the committee set up by the UGC should conclude that the three departments represented on the committee were the best in the field and that the department that was not represented was somewhat sub-standard.
I find the UGC's explanation that it always appoints the best people to its committees, and that they come from the best departments, unconvincing to say the least. It is clear that the decision has turned, if it has been made, on the basis of its subjective view of the department. However, graduates from that department are able to find jobs, and there is a shortage of people for the posts in hospitals, possibly because of the low salaries for those posts.
The UGC consistently fails to take into account the special nature of Scottish universities, and particularly of Scottish students, who with their examinations taken at highers, find it relatively more difficult to get into English universities. Therefore, to remove this institution would be far more catastrophic in its impact than a cut in a similar department in England. The insensitivity in the UGC is mirrored in the unrest among the vice-chancellors—unrest that was not there when we had the devolution debate.
Perhaps this decision shows that we should move towards a system in which we can get rid of the UGC in Scotland and have the universities supported more on the basis of student choice, which is what the general council of St. Andrews has suggested. If my hon. Friend wants to quell such radical thoughts in the breasts of people in Scotland, I hope that he can reassure us, because this is a matter of considerable concern. If it is decided to close this department, there will be great disappointment.
12 midnight
The Under-Secretary of State for Education and Science (Mr. Peter Brooke): I thank my hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) for raising this matter tonight, and the hon. Member for Clackmannan (Mr. O'Neill) and my hon. Friends the Members for Fife, North-East (Mr. Henderson) and for Stirling (Mr. Forsyth) for joining in this debate. I am conscious of the deep concern of my hon. Friend the Member for Edinburgh, West for the future of the department of pharmacy at Heriot-Watt university, situated in his constituency. The debate, as he points out, is timely in that the University Grants Committee is due to make a final decision about its willingness to continue to fund the school at its meeting on Thursday. My hon. Friend has asked me a number of written questions, and

1027
I am only sorry that in some instances the relevant information is outside the Government's control, and I have not yet been able to write to him.
I shall first say a little about the relationship between the Government and the University Grants Committee. Since the UGC was founded in 1919, it has been a fundamental principle that judgments relating to relative quality and the allocation of resources between individual institutions were matters for peer review by a body composed mainly of academics, rather than matters for decision by Ministers and civil servants. This principle has been upheld by successive Governments.
While pharmacy provision in the universities has only recently come to the fore following the UGC's recommendation to the principal of Heriot-Watt that pharmacy teaching at the university should be discon- tinued, the UGC has been monitoring the number of students studying pharmacy for some time. In 1977, following a report by the advisory panel on pharmacy established by the UGC, the then chairman, Sir Frederick
Dainton, wrote to all universities explaining that it was the panel's view that expansion in pharmacy was not required.
In December 1980 the Pharmaceutical Society of Great Britain published the report of its manpower committee, which concluded that
"the need to reduce the entry to British schools of pharmacy is clearly indicated".
Based partly on the report's conclusion, the chairman of the UGC, in his letter of 1 July 1981 to all universities announcing grant for 1981–82 and giving guidance for succeeding years, said
"The Committee proposes a reduction of about one-quarter in the number of places available for subjects allied to medicine, much of the reduction falling upon pharmacy".
In his specific advice to Heriot-Watt university the chairman recommended
"a substantial reduction in Pharmacy numbers"
and said that:
"the Committee would wish to discuss with the university the possibility of discontinuing Pharmacy".
The UGC's general advice drew criticism from, among others, the university schools of pharmacy and the Pharmaceutical Society of Great Britain, the latter explaining that its survey had been based on figures for 1969 and contending that a reduction of only 10 per cent. was required in the overall entry to pharmacy courses. In September 1981, the UGC established a panel on studies allied to medicine to inquire into and advise the committee on the scale and nature of provision in universities required to meet national needs for education, training and employment in these subjects. Because of the controversy that had arisen over manpower requirements for pharmacy, the panel decided to deal first with the output of university pharmacy graduates in relation to national requirements, taking account also of the nature and academic standard of pharmaceutical education in the courses and the ability of individual schools of pharmacy to make adequate provision.
During the course of its inquiries, the panel held a meeting which was attended by representatives of the NAB pharmacy group, which was undertaking a similar inquiry into pharmacy provision in higher education institutions in the local authority sector, in England and Wales, with the Pharmaceutical Society of Great Britain and with the Department of Health and Social Security.
Among the issues discussed at that meeting were manpower demand, overall intake levels to schools of
1028
pharmacy and the minimum viable size of a school of pharmacy. The meeting estimated that the pharmaceutical profession needed the equivalent of 650 to 700 new full-time pharmacists each year, which the Pharmaceutical Society of Great Britain considered was consistent with its target of 900 new registrations per annum for the United Kingdom. Given that approximately 82 per cent. of entrants to pharmacy courses achieved professional registration, the panel estimated that there would be a need for an annual home and European Community student intake to schools of pharmacy across all sectors of higher education of about 1,000 in the United Kingdom. In arriving at this figure the panel took into account that approximately. 100 overseas students had entered the university and public sector schools annually over the past four years.
As the Pharmaceutical Society of Great Britian supported the continuation of the broad historic balance of two-thirds of the pharmacy student population in the university sector and one-third in the public sector, the panel concluded that overall intakes to university schools of pharmacy should be reduced to 655–34 less than in 1982 and 137 less than in 1979. Together with the national advisory body pharmacy group recommendation for a reduced intake of 350 in 1984–85 and the increase in the entry to Robert Gordon's Institute of Technology course in 1983 to 54, the total intake of home and Community pharmacy students across all sectors of higher education will be 1,059 in 1984–85—an overall reduction of 12·4 per cent. from the 1979 intake.
Mr. Tam Dalyell rose—
Mr. Brooke: I am very pressed for time.
In the light of the panel's assessment of the academic quality of the Heriot-Watt department of pharmacy, the level of intake to the department, and the fact that it would cost approximately £800,000 to transfer the department to the university's new site at Riccarton, the panel recommended that
"the provision of pharmacy courses at Heriot-Watt University should be discontinued and that the students entering:n 1984–85 should be the final intake."
It is appreciated that the closure of the department of pharmacy at Heriot-Watt would result in reduction in pharmacy provision in Scotland. There are however, two other departments or schools of pharmacy in Scotland—
Mr. Robin Cook rose—
Mr. Brooke:—at Strathclyde University, where it is recommended by the UGC panel that the intake should increase, and at Robert Gordon's Institute of Technology, Aberdeen, a central institution which, with the agreement of the Scottish Education Departments, the panel visited and which increased its intake for October 1983 to 60, including six overseas students. The increased intake for Strathclyde recommended by the UGC panel and the increased intake to Robert Gordon's institute will provide Scotland, which has approximately 9 per cent. of the population of Great Britain, with between 12 and 13 per cent. of both the total and university pharmacy places.
Of course, I also appreciate that, as my hon. Friend the Member for Edinburgh, West has pointed out, Scottish students possess Scottish higher qualifications, and not A-levels. I understand, however, that Scottish higher qualifications are accepted by all English universities as general entrance qualifications, although I faculties might have their own additional requirements.

1029
The UGC recognised that its recommendation had significant implications both for the university and for the staff of the school, whose interests the committee appreciated would need to be considered. The committee therefore invited the principal to discuss the matter further, and a meeting with senior representatives of the university and its school of pharmacy took place last month. I understand that at that meeting the principal set out the university's case for the continuation of the school. More recently he submitted to the committee a dossier of information relating to the case for the retention of the department of pharmacy at Heriot-Watt entitled "The Future of Pharmacy", a copy of which he has also sent to me and to my right hon. Friend. The dossier has also been considered by the panel on studies allied to medicine and the UGC medical sub-committee. Representatives of the UGC also met last month representatives of the Pharmaceutical Society of Great Britain.
I can assure my hon. Friend that the UGC is fully aware of the arguments that have been put forward for the retention of the Heriot-Watt department of pharmacy, including the regard in which its graduates are held by the employers of pharmacists, the admirable record its graduates have in obtaining employment, its working relationship with local health services and its long tradition. These facts and others have been put to the committee by the university and the Pharmaceutical society and many other interested bodies. They will all be taken into account by the committee when it reaches its decision about the future of the department of pharmacy.
That said, it is important that the House does not lose sight of the UGC's reasons for recommending the closure of the department in the first place. It is generally agreed that there is a need to limit the number of those entering the profession in order to avoid the prospect of unemployment within the profession. Taxpayers' money spent on educating more pharmacists than are likely to find employment would not be money wisely spent. The UGC panel was aware when considering how best it might respond to the need to limit the overall output of graduates that closure of a school or department was one option and that there would be no volunteers for such a closure. There never are on such occasions. An assessment of relative
1030
quality and a judgment on future provision had therefore to be made. The UGC did not make its recommendation lightly or without regard to the implications of the decision for the university. It knew that its recommendation would be unpopular, but, to its credit, it did not because of that shrink from its responsibility or from making its decision. I shall, of course, ensure that the chairman of the UGC is informed of the debate in advance of Thursday's decision.
Mr. Dalyell: The Minister used the phrase "generally agreed"—generally agreed by whom? When he talks about the numbers of graduates that may be needed, what about the demand of British industry? There is a considerable demand within industry for pharmacy graduates. Does the Minister's reply mean that the Government will never see an expansion in science-based industry? Is that what he is saying? Will the Minister answer the question?
Mr. Brooke: That question has arisen in the dialogue which the UGC has had both with the institution and with others. The UGC has made it clear that there is no logic in the expansion of pharmacy education if there are others in other disciplines who would be appropriate to industry's needs. The exercise involved a decision on what were the UGC's pharmacy requirements.
Mr. Robin Cook: Before the Minister reaches a final view, will he consult the Under-Secretary of State for Scotland with responsibility for Scottish industry, the hon. Member for Eastwood (Mr. Stewart)? He will find that one of the priorities of his Administration and the SDA is to promote the health-care industries for the central belt of Scotland, many of them being in my constituency adjacent to the Riccarton campus. From where are these industries to get the trained pharmacists if we lose the pharmacy department at Heriot-Watt, the one university that is oriented towards business, industry and commerce in Scotland?
Mr. Brooke: To be fair, I gave up time of my own in the debate to allow the maximum number of contributors—
The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at twelve minutes past Twelve o'clock.

DEFENCE
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  Falkland Islands
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PRIME MINISTER
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EDUCATION AND SCIENCE
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  Electronics Industries
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  A80 (Traffic Surveys)
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NORTHERN IRELAND
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  Repairs and Improvement Grants
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  UHT Milk
  UHT Milk
  Bees
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  Housing Executive
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  Tenant Purchasers
  Tenant Purchasers
DEFENCE
  Royal Marines (Commando Forces Band)
  Royal Marines (Commando Forces Band)
  Service Families (Boarding School Fees)
  Service Families (Boarding School Fees)
  Flight Lieutenant Alexander Nicholson
  Flight Lieutenant Alexander Nicholson
  Youth Training Scheme
  Youth Training Scheme
  Trident Programme
  Trident Programme
  British Troops (Secondment Overseas)
  British Troops (Secondment Overseas)
  Falkland Islands
  Falkland Islands

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

English Language School: BBC—Japanese Project
Lord Newall: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they approve of the BBC linking with a Japanese whisky firm to open an English language school when the profits will benefit Japanese shareholders.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): Yes, my Lords. The school will help to spread the knowledge of English in Japan. It will be established without cost to the British taxpayer or licence holder, and will earn revenue for the BBC External Services. I am told that the arrangement is still subject to the formal approval of the BBC Board of Governors.
Lord Newall: My Lords, I thank my noble friend for her very kind Answer. Would it not have been better to have a wider spread of British interests in this organisation in order to improve our balance of payments?
Baroness Young: My Lords, this is an arrangement which has been proposed between the BBC and the Japanese company. I am told that initially the BBC and a British publisher—the Cambridge University Press—will each supply 50 per cent. of the teaching materials, that they will receive income through sales, and that after a period of three years, irrespective of whether the company responsible for the school financially is making profit, a royalty on tuition fees will also be payable to the BBC.
Lord Strabolgi: My Lords, is the noble Baroness aware that the BBC will have control over the academic courses and will also appoint the teachers who will be recruited and appointed in this country? I think that this venture is to be generally welcomed.
Baroness Young: My Lords, I am glad of the comments of the noble Lord, which I can confirm.
Lord Leatherland: My Lords, if I should decide to learn the English language, would I be entitled to a supply of this Japanese whisky?
Baroness Young: My Lords, if the noble Lord, Lord Leatherland, did require to learn the English language then perhaps that might be necessary!
Lord Grimond: My Lords, is the noble Baroness aware that the sale of a liquid made in Japan and masquerading as whisky is, in general, to be discouraged? Has the noble Baroness any knowledge of the BBC insisting that at least the Japanese clearly mark their bottles as not being Scotch whisky?
Baroness Young: My Lords, I have no doubt that the noble Lord has raised an important point, but I think it is rather wide of the Question. If the noble Lord would like to put down a Question on that subject, I will try to answer it.
Lord Kilmarnock: My Lords, is it not the case that the Question displays a rather parochial attitude to the teaching of our language? Should we not congratulate the BBC on having brought off a successful deal?
Baroness Young: My Lords, it is true that for over 40 years of its existence English by radio and television has in fact built up a network of 79 selling agents in 48 countries. The relationship between the BBC and these agents is regulated by contract, and it has proved to be very valuable.
Lord Young of Dartington: My Lords, is the noble Baroness also aware that the BBC approached the British Council with a view to getting financial support, and it was only when that and other attempts failed that the BBC decided to go into partnership with the Japanese concern in order to extend British influence in the world? Is that not all to be very much welcomed?
Baroness Young: My Lords, as I indicated in my original reply, the Government do welcome this proposal.

Wheel Clamping Experiment
2.40 p.m.
Lord Belhaven and Stenton: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will state the purpose of the introduction of experimental wheel clamps in certain areas of central London and whether, in their view that purpose is being achieved.
Lord Lucas of Chilworth: My Lords, the purposes were to deter illegal parking, to improve traffic flow and to increase the availability of short-term parking at meters. The results of the experiment cannot be evaluated until the results of the analysis being carried out by the Transport and Road Research Laboratory become available later this year.
Lord Belhaven and Stenton: My Lords, I thank my noble friend for that reply. Can he tell the House how the success or otherwise of the experiment is being judged, and whether comparisons have been made with other inner city areas and other areas of London where wheel clamps are not being used? Can he say whether anything is being done to increase the amount of legal parking space available in central London?
Lord Lucas of Chilworth: My Lords, as I said in my original Answer, the success or otherwise of the scheme cannot be totally evaluated until we have the results of the monitoring being carried out by the Transport and Road Research Laboratory, and they will not be available until later this year. There are no comparisons being made with other cities, nor indeed other areas outside the experimental area. As regards my noble friend's third supplementary, I am glad to be able to tell him that Westminster City Council are reviewing their area to try to make more meter and resident parking spaces available. With half of Westminster surveyed so far, 400 additional spaces have been identified. Work is also proceeding on new off-street car parks in Westminster, including one at Cambridge Circus, which will be opening later this year with 350 spaces.
Lord Jenkins of Putney: My Lords, is the noble Lord aware that certainly something needs to be done about illegal parking in the West End, because some streets are reduced to a narrow lane of single traffic which makes it almost impossible to get through them? Therefore, some action is to be welcomed.
Lord Lucas of Chilworth: My Lords, I am sure that we would all agree with the remarks of the noble Lord, Lord Jenkins of Putney.
Lord Boyd-Carpenter: My Lords, can my noble friend explain how immobilising a vehicle which ex hypothesi is obstructing traffic assists traffic flow?
Lord Lucas of Chilworth: Yes, my Lords. The immobilising of the vehicle tends to deter that motorist, and indeed others, and that enables a higher turn-round of authorised parking places, which in its turn relieves the congestion.
Lord Molson: My Lords, is it not the case that the regulations under which this clamping is done vary from one part of London to another? If that is so, which are the authorities that lay down the rules? Would the Minister not agree that a motorist resident in London and observing the rules that apply where he lives would find it extremely inconvenient to discover that they do not apply in the same way elsewhere, and that he may find himself unintentionally contravening the regulations in another part of London?
Lord Lucas of Chilworth: My Lords, I am quite sure that my noble friend will recall that the clamping experiment applies to only one area of London. It is an experimental area. Therefore, no comparisons can be made with other areas of London. The regulations form part of the Transport Act 1982, Sections 53 to 55, which enable the experimental period to last up to two years. This experiment began on 15th May 1983.
Lord Fanshawe of Richmond: My Lords, can my noble friend try to bring this evaluation forward? Is he aware that this clamping system is yet one more method of persecuting the motorist and that, in fact, my noble friend Lord Boyd-Carpenter was quite correct when he asked: how do you stop obstruction by putting a clamp on a vehicle which is blocking the road? All you succeed in doing is keeping that vehicle clamped in that position for four hours before the driver can have it released.
Lord Lucas of Chilworth: My Lords, as regards bringing the evaluation forward, I could certainly draw my noble friend's remarks to the attention of my right honourable friend in the anticipation that the Transport and Road Research Laboratory might hasten its evaluation. However, I cannot agree with my noble friend's later remarks with regard to persecution.
Lord Thorneycroft: My Lords, is my noble friend aware that this morning in Portland Square a team were beginning to clamp a car, and indeed continued to clamp it, in front of a driver who had returned and who was anxious to drive his car away? Will my noble friend explain how that improves traffic flow?
Lord Lucas of Chilworth: My Lords, no, I was not aware of what happened in portland Square this morning. Therefore, I am unable to give any explanation as to what might have been done to alleviate the situation at that particular time in that particular place.
Lord Underhill: My Lords, is it not a fact that when the House agreed to this experimental scheme it was fully aware of all the problems, that there were no party Whips anywhere in the House on this issue and that the House was quite prepared to accept it for an experimental period, following which we should assess the position? Is that not the best way in which to leave the matter?
Lord Lucas of Chilworth: My Lords, I am grateful to the noble Lord, Lord Underhill, who reminds us of exactly what happened in your Lordships' House and, indeed, in another place. Comments of the kind that have been made this afternoon will, of course, be taken into account when the evaluation is made.
Baroness Gardner of Parkes: My Lords, can my noble friend confirm that he is aware of the fact that some residents' associations, such as the Knightsbridge Association, have already made their judgment and thoroughly commend the scheme, which has made their streets tolerable and livable? Will my noble friend also confirm that under the legislation there is no cause for a vehicle to be left in an obstructing position? The legislation permits it to be moved to a less obstructing position, where it may be clamped. Will my noble friend give some thought to erecting signs to indicate that a particular area is a clamping area?
Lord Lucas of Chilworth: My Lords, I am grateful to my noble friend for her remarks about the judgment made by certain people in a certain area. She is right when she suggests that the authorities have power to move a car to another place to relieve obstruction. In the case of a high degree of obstruction there is, of course, the additional possibility of removing the car. To erect signs would represent a significant departure from normal policy. It is not the policy to fix signs describing the penalties which would arise in the event of a breach of the law or regulations.
Lord Inglewood: My Lords, can my noble friend say generally whether diplomats' vehicles are treated any

1105
differently from those of the rest of us? Secondly, will he bear in mind that if this procedure proves popular then at least it must be administered equally between one constable and another, whose discretion is considerable in these matters?
Lord Lucas of Chilworth: My Lords, as regards diplomats' cars, there are differences in their treatment, and my noble friend Lord Elton described the differences last year in response to two Questions, on 12th and 15th December. On the point about evenhandedness, it is for the constable on the spot at the time to evaluate the situation and to make his decision. Therefore, there cannot be the evenness of judgment which is implied in my noble friend's question.
The Earl of Onslow: My Lords, on the matter of diplomatic clamping, is it not the case that several countries allow clamping and that we do not; and that various high commissions or embassies in this country are notoriously bad at parking, which gives rise to a great sense of unfairness among those of us—and I am not one, although I suspect it is through luck rather than good judgment—whose cars have been clamped?
Lord Lucas of Chilworth: My Lords, there are differences in some countries, but in the majority of countries the clamping of diplomats' cars is not carried out. Following the announcement to your Lordships by my noble friend Lord Elton of two new measures being taken with regard to diplomats from foreign countries and foreign missions in this country, significant steps have been taken. At the time he made his statement there were 5,700 diplomatic cars which were registered with X-plates and D-plates which claimed total immunity. A thousand of these cars have been removed from that classification by 700 being plated with only the X-plate—that is, with limited immunity—by 200 motor cars being removed from the list of official fleets and by 100 motor cars being removed from the lists of household motor cars. Therefore, there are now only 4,700 motor cars with D-plates with complete immunity, and 1,000 cars previously having immunity are now liable to the full force of the law.

Nicaragua: Rebels' Ammunition
2.51 p.m.
Lord Avebury: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will propose to the NATO council that an investigation be conducted into the manner in which NATO ammunition got into the hands of terrorist "contras" in Nicaragua.
Baroness Young: My Lords, No. I would remind the noble Lord that there is no such thing as NATO ammunition per se. Boxes of ammunition may bear a NATO identification number. This indicates only that the munitions correspond to agreed NATO standards.
Lord Avebury: But, my Lords, is the Minister aware that every day on the border of Nicaragua there are armed incursions from the neighbouring countries which are financed, trained and armed by the CIA? Is the Minister further aware that the terrorists are attacking from the air as well by helicopter and plane and that recently they have been laying mines in Nicaraguan ports, and that this is part of a sustained attempt to undermine the legitimate Government of Nicaragua in which NATO ammunition is being used? Is the noble Baroness aware that when Nicaraguan armed forces were in action against these terrorists they found that ammunition was being used carrying the symbol which the noble Baroness mentioned? Does she not think that since NATO is meant to defend the West, the free world, it is highly improper and wrong for such ammunition to be used to undermine a friendly government?
Baroness Young: My Lords, I do not believe that the noble Lord, Lord Avebury, fully understood the Answer that I gave to his original Question. There is in fact no such thing as NATO ammunition per se. To repeat this allegation, as he did in his supplementary question, confuses rather than elucidates the matter. In fact, the NATO identification number indicates only that the munitions correspond to agreed NATO standards.
Lord Bishopston: My Lords, does the noble Lord's Question not emphasise the importance of strict control of ammunition, or weapons, in NATO countries regarding the export, transport, and particularly the monitoring of such weapons to see that they do not fall into the wrong hands?
Baroness Young: My Lords, the whole control of weapons in NATO is of course another question, and I should be happy to try to answer on that subject if the noble Lord cares to put such a Question down. The whole point about the answer to this Question is that there is no such thing as NATO ammunition per se.
Lord Kennet: My Lords, would the Government consider a plan not to stamp ammunition cases with the letters "NATO" as an indication that they meet NATO standards, in view of the fact that it is obviously inevitable that simple people in a country many thousands of miles away from NATO will take it that NATO means NATO in origin and NATO in use?
Baroness Young: My Lords, I shall draw to the attention of my right honourable friend the point that the noble Lord has made.
Lord Beloff: My Lords, would the noble Minister agree that, in view of the seriousness of the problem of international terrorism, the use of the word "terrorist" to describe a movement in this case of, so far as I can make out, open rebellion is pejorative and does not conduce to enlightenment?
Baroness Young: My Lords, as I would expect from my noble friend, he has drawn our attention to an interesting point.
Lord Jenkins of Putney: My Lords, would the noble Baroness agree that her noble friend is quite wrong in this, and agree that the forces which are invading Nicaragua are armed by the United States, which accounts for the ammunition which has given rise to the Question?
Baroness Young: My Lords, I do not believe that I should be drawn by the noble Lord, Lord Jenkins of Putney, down the path of answering questions about the general situation in Central America.
Lord Avebury: My Lords, does not the fact that the ammunition conforms to NATO standards indicate that it will have been manufactured in a NATO country? If not, could the noble Baroness say in what other countries apart from those which belong to NATO such ammunition is manufactured? If it is manufactured in a NATO country, does she not think that an inquiry into the manner in which it reached the hands of these terrorists is justified?
Baroness Young: My Lords, two examples of manufacturers of such ammunition are Australia and India. Neither is a member of NATO.

The Clergy and Politics
2.56 p.m.
Lord Bishopston: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make a statement on the role of the clergy and politics, in the light of the comment made on 3rd March 1984 by the Under-Secretary of State for Trade and Industry.
The Lord President of the Council (Viscount Whitelaw): No, my Lords; my honourable friend was speaking in a purely personal capacity.
Lord Bishopston: My Lords, I thank the Minister for his reply. May I disarm him by saying that I am not speaking now as the defence spokesman but as a spokesman on ecclesiastical affairs, having, on entering your Lordships' House, tried to avoid confusion by not taking the title of "Lord Bishop"? Is the Minister really surprised that, when he refers to matters of Church and state, the country as a whole should regard the Under-Secretary of State's comments as being those of a member of the Government? Would he also accept that the stricture that clergy should not involve themselves in politics could be seen as a restriction upon the role of the right reverend Prelates and other clergy in this House in their task of conveying to the country the concern not only of the Church but of the nation on matters of cardinal importance?
Viscount Whitelaw: My Lords, I am grateful to the noble Lord for having treated this matter in what I feel is a suitably light-hearted vein. As for what he says about the position of the right reverend Prelates, I have noticed that I am not alone among some of my
1108
colleagues in sometimes disagreeing with the views of right reverend Prelates. Nevertheless, I would stand up to the last for their right to express their views in this House and indeed outside.
The Lord Bishop of Rochester: My Lords, would the Minister not agree that life for him and other spokesmen of Her Majesty's Government, and indeed for spokesmen of Her Majesty's loyal Opposition, would be much duller were it not for occasional clerical competition? Even the activities of certain bishops sometimes have encouraging results in other places.
Viscount Whitelaw: Yes, my Lords, I would agree with the right reverend Prelate. One of the advantages I have found in this House is that it is possible to reply to the views of the right reverend Prelates, which is not always possible on other occasions.
Lord Kinnaird: My Lords, would the noble Viscount not agree, first, that the Under-Secretary of State might have been speaking with his tongue in his cheek? Secondly, would he not agree that, if we all kept our tongues there, life would be rather less tedious?
Viscount Whitelaw: My Lords, I did not ask my honourable friend in what way he was speaking. I merely read the words that he had said, and I hope that they have been treated in a suitable manner this afternoon.
Lord Soper: My Lords, would the Government not be inclined to agree that when this particular criticism is raised it has much more to do with Left-wing politics than politics in general, and that the objection that the clergy should not be involved in politics is generally assumed to mean that they would be all right if they were Right-wing but, if they indulge in Left-wing politics, that is suspicious and probably dubious?
Viscount Whitelaw: My Lords, as I suppose it would be considered that I was in the main a Right-wing politician, whether that would be right or wrong, I have noticed from time to time that right reverend Prelates and other ministers of religion have not always been slow to criticise me. I have taken it in good part and sometimes I have benefited from their criticism, and I hope that I shall continue to do so.
Lord Elwyn-Jones: My Lords, should we not continue to enjoy the benefit of clergy in political matters?
Viscount Whitelaw: My Lords, I frequently agree with the noble and learned Lord, and I certainly agree with him in that.

Business
The Earl of Swinton: 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. The Report stage of the Telecommunications Bill will be adjourned at approximately half past seven for about one hour. During this adjournment the

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Committee stage of the Straw and Stubble Burning Prohibition Bill will be taken. If, as seems probable, the Committee stage is not completed within an hour, it will be adjourned and completed tomorrow after the two short debates.
It may also be for the convenience of the House to know that the Third Reading of the Prohibition of Female Circumcision Bill, which was to have been taken this afternoon, has been postponed until next Tuesday, 27th March.

London Transport (Tower Hill) Bill [H.L.]
Read a second time, and committed to a Select Committee.

Telecommunications Bill
3.2 p.m.
Further considered on Report.
Clause 58 [Vesting of property etc. of British Telecommunications in a company nominated by the Secretary of State]:
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 111:
Page 53, line 5, after ("day") insert (" which shall not be earlier than 9th June 1988").
The noble Lord said: My Lords, this amendment stands in my own name and that of my noble friends Lord Bruce of Donington and Lord McIntosh of Haringey. As your Lordships will see, the amendment seeks to defer vesting day for the new company until a date following the next general election. I realise of course that the next general election might conceivably come after the fifth anniversary of the last election, but this would be unprecedented and the most likely date in my view for the next election is October 1987, but that is not my decision. If it were it would come a lot sooner. But it is my view that it will not be held until October 1987.
Some may see this amendment as a wrecking amendment. If that were so, it would be legitimate to criticise it on those grounds, but it is not. Indeed there is good precedent for delaying the Bill beyond the date of the next general election because when the Government introduced the original Telecommunications Bill in 1982 they said that it would not become operative until after the last general election, which need not have taken place until May this year. As it happens the first Bill fell because the Prime Minister decided to scurry to the country a year before it was necessary to do so.
It is interesting to note that during the interval between the demise of the first Bill and the introduction of the present Bill the Government made significant alterations. During the passage of the present Bill through Parliament the Government have made countless amendments, and additionally have had other amendments imposed on them by this noble House. I discovered that in Committee in this House the Government moved no fewer than 75 amendments to the Bill. On Report stage they have
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moved 145 amendments. In the House of Commons, when I attended in the Gallery, I counted 130 amendments on Report stage; but due to the guillotine the Government amendments were not properly discussed. Most of them were voted upon without discussion. Furthermore, a huge number of Opposition amendments simply fell without discussion or votes. We can see that in the timescale of two years the Government have altered the Bill very substantially indeed, and many other alterations which perhaps should have been made were not made because this very important Bill was guillotined in another place.
The passage of time has therefore had a significant effect on Government thinking—it must have done—and on opinion generally, not least in this noble House. The passage of time has been beneficial. As the Bill has proceeded through this House, there has been increasing unease here and in the country generally. The Opposition parties are opposed to the Bill in principle and they have made no secret of that. But criticism of and unhappiness with the Bill is not confined to the Opposition parties. Criticism and opposition to significant parts of the Bill have come from all parts of the House. The noble Lord, Lord Weinstock, for example, has on many occasions voiced his outright opposition to this part of the Bill in particular, which he believes merely turns a public monopoly into a private monopoly and is therefore against the whole ethos of free competition which the Government pretend to embrace. Only yesterday, during our deliberations the noble Lord, Lord Weinstock, described the Bill in scathing terms as a ridiculous Bill.
The unease about the Bill has been shown by noble Lords opposite through the large number of amendments that they moved during Committee stage—relevant amendments. In this present stage they have come to realise that this Bill has nothing whatever to do with free competition and the free play of market forces, and that the outcome will be a more rigid, inflexible, bureaucratic regime than has ever existed under either the Post Office or British Telecom. It is clear that this Bill is simply not acceptable as it stands. There is need for widespread public consultation, and following that, the consent of the British people, who remain opposed to the Bill in principle, at a general election.
I repeat that this amendment is not a wrecking amendment—how could it be? The Bill is already wrecked not least by the amendment moved yesterday, not by the Opposition parties, but by the noble Lord, Lord Morris, and passed by your Lordships with a comfortable majority against the advice of the Government.
So the Bill has few friends outside the Government. The consuming public are against it. They think it a daft measure. The trade unions are against it, not only because they believe it will adversely affect their jobs and conditions of service, but because they believe that the Bill will harm the telecommunications industry itself. Manufacturers are against the Bill because they see no merit in converting a public monopoly into a private one and because they believe, with every justification, that their industries will be hurt by an influx of foreign equipment, especially from Japan.

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The City is certainly doubtful about the wisdom of the Bill and fearful of the effect on the market of an issue of BT shares amounting to some —4,000 million. It is believed that the stock market and the financial markets simply will not be able to absorb the shock of such a mammoth issue and that the Government will be forced to sell huge chunks of stock to foreign buyers.
In relation to the sale of BT shares to foreigners, I was interested to read a note of a meeting in Tokyo on 20th and 2Ist June 1983 between the DTI and MPT of Japan when this subject came up during discussions. I will quote the relevant paragraph which noble Lords will find interesting, and in some senses perhaps amusing. I quote paragraph 8 which says:
"We took the opportunity to make the point to the Japanese side that it was possible that Ministers might decide to seek to sell shares in BT plc outside the UK and that Japan might be one possible market in which shares would either be sold to the public or placed with individual large firms. The Japanese found it difficult to believe that we were serious in suggesting a Japanese shareholding in BT and pointed out that in Japan there was a law preventing any foreign shareholding in Japanese communications companies".
In fact it would appear that the Government are already making soundings about selling off part of British Telecom to foreign countries, notably Japan.
The press, too, has not been over-enamoured of this Bill and there has been much critical comment about it in several leading newspapers. I will not weary your Lordships with a multitude of newspaper quotes, but there was an article in the Financial Times on 7th March this year which I thought was particularly pertinent and succinct and I will read a couple of relevant passages from the article, which was written by Mr. Alex Henney, who has been a temporary civil servant, is chairman of the London Electricity Consultative Council and last year visited the USA to study utility regulation. So his views are of some import. This is what he said:
"The ill-considered regulatory proposals reflect the main objective of disposing of BT for as high a price possible to reduce the PSBR. They also reflect our political and social values. The U.S. is a society where customers count, where individuals have their say, and where people get cross about poor performance. Despite the rhetoric, in its dealings with (nationalised) industries post-Thatcher Whitehall is often producer-dominated and distrustful of consumers, secretive and suspicious of individualist grit in the corporate state's smooth, and too often slovenly, operation. We are setting up an enormous private monopoly that is unaccountable, under-regulated and largely unassailable. It will take several years"—
and I will repeat that: "It will take several years"—
"to tell whether there is anything in it for the public at large—but several years are an eternity in politics".
That really puts the whole Bill in proper perspective and sums up the views of so many people who have fears about the future effects of the Bill. Since being elected, this Government have slipped on many banana skins, they have lost credibility and electoral support. This amendment, if accepted, may very well prevent the Government from tripping over telephone wires as well as slipping on financial banana skins.
I hope, therefore, that noble Lords will join us in the Lobbies to save the country and, indeed, the Government from the folly of this Bill as it presently stands; because, if this amendment is supported, it will, as I said earlier, give the Government, give the country and give the people concerned with
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telecommunications a breathing space in which the Bill can be improved, and improved to the benefit of the Government and the country as a whole.
3.14 p.m.
Lord Lloyd of Kilgerran: My Lords, I think it was the Economist which recently paid a great tribute to your Lordships' powers of revision of Bills when it stated that your Lordships' House offered the last chance before the monster of British Telecom escaped untamed into the private sector. The article went on to say something to the effect that, unless your Lordships can exercise some control on this monster, all that will be achieved will be rather cheaply to set free a large predator on to the industrial market without achieving the financial benefits hoped for by the Government.
The Telecommunications Bill, so far as I can understand it, has two objectives. It is to restructure BT, it is to remove from BT certain monopoly powers that it has at present and it is to make it subject to a licence, with a director of telecommunications appointed to ensure that this and other licences are effective. Once that has been done, then there is a second main objective: to provide a private company in which all the assets of BT shall be vested. When that is done, this Government-owned company will go to the market in order to sell part of its equity.
The second objective of privatisation, of going to the market, can be contemplated only after BT has been properly reconstructed. Therefore, the first objective of this Bill can stand even if there is a postponement of the forming of the company into which the assets are to be vested and, certainly, even if the privatisation aspect is to be postponed. Therefore, on that argument, I personally take the view that to some extent it is not a wrecking amendment merely to seek to postpone the vesting of the assets of BT into a private company and its sale thereafter.
However, I am not enamoured of the interval of time which this amendment suggests. As your Lordships know, British Telecom has been restructured lately. Over the past few years, dramatic changes have been taking place in its structure. So a restructuring of BT is nothing new in basic principle, but I am not going to take up your Lordships' time by referring to the 1981 Act.
This Bill first of all proposes further major changes in the modus operandi of British Telecom. It seems to me that it is in the interests of British Telecom and certainly in the interests of customers and competitors that it should have time to adjust to these major changes. Yet the Government are determined, it seems, to impose on it within a matter of weeks perhaps, but certainly of months, the further upheaval of this privatisation and sale to the market.
In connection with this amendment, I should like to put to your Lordships what I understand is a simple question you have to answer this afternoon. Are your Lordships satisfied that, in all the circumstances, the structure of BT can be adequately modified and tested so that it is appropriate to vest its property in the company nominated by the Secretary of State under Clause 38 as quickly as the Government desire? And I understand that that is to happen very quickly. I also submit that some delay until the structure of BT has

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been tested for a reasonable period in the market would be a good preparation for a more successful flotation.
It is perfectly clear that the huge and difficult task of modifying the structure of BT has not been achieved by a long way. That the structure has not been finalised, let alone tested, is apparent from the attitude of the Government. The Government themselves in this House have tabled over 200 amendments and, what is more, your Lordships have been promised more amendments at Third Reading. Today, we have in the Marshalled List pages of amendments, not merely consequential ones but amendments occupying whole pages.
My Lords, I do not propose to take up your time by referring to the amendments that have been accepted, sometimes in whole and sometimes in part, as moved from the Benches of this side of the House. A large number of amendments have been withdrawn, and many were put forward by Members on this side of the House, for which the Ministers concerned have expressed great sympathy. On many occasions Ministers have said that they agree with the objectives we have in mind on these amendments; it is not the method of achieving those objectives on which there can be agreement.
It is also very significant that in this House amendments are being dealt with by senior Ministers of the Government. As members of the Cabinet, the noble Lord the Chancellor of the Duchy of Lancaster and the noble and learned Lord and Lord Advocate have both taken the brunt of the more serious amendments put forward. Even what happened in this House yesterday shows that both these Ministers are themselves not wholly satisfied with certain amendments which they themselves have submitted to this House. They are not satisfied that they can in practice achieve the desired results, so complicated are the problems to be dealt with. I think it is fair—certainly I think it is my duty—to refer briefly to what happened yesterday in order to illustrate the point I have made. I have already given notice to the two Ministers concerned that I propose to refer to their speeches of yesterday.
My first reference is at column 979 of your Lordships' Hansard for yesterday. The noble and learned Lord the Lord Advocate, in dealing so fairly as he does with his own amendments, said this—and if noble Lords wish me to read more than I am reading, then I am quite prepared to do so in order that the whole story shall be displayed, and to illustrate the doubt that is in the minds of senior Ministers in regard to certain aspects of this restructuring of British Telecommunications. The noble and learned Lord said:
"Perhaps I might add that since seeing Amendment No. 66 we have been reconsidering our own approach because it might well be sensible to seek a remedy in relation to a prospective breach of a licence condition by reference to something that has happened which shows evidence of the probable contravention. We are considering, therefore, what may be needed as an amalgam of the two approaches, and as I indicated in my opening remarks we certainly had this in mind with a view to considering what improvements might be made on these amendments at Third Reading".
The noble and learned Lord was introducing a package of amendments—about ten or a dozen—at that time.
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As might be expected, I took him up on that point and at column 981, if I may paraphrase to some extent, I said that the noble and learned Lord referred to a very serious commercial and legal problem and that he did not seem to be satisfied with all these amendments, clustered together as they were and as spoken to so clearly by him, because I understood him to say that the Government were proposing to bring in other amendments allied to this group. In view of the anxiety of the noble and learned Lord as to whether the amendments were accurate, I tried to tempt him perhaps to withdraw them.
Something similar happened again when the noble and learned Lord presented amendments at column 989 of yesterday's Hansard. Very fairly, the noble and learned Lord confessed:
"We have had a serious difficulty in formulating these amendments".
If I may jump a few lines to the next complete paragraph, the noble and learned Lord goes on:
"The Government will certainly listen to any views expressed on this point; but in our view what is proposed in these amendments appears desirable".—
"appears desirable"—
"I wished to have that aspect of the matter drawn to your Lordships' attention, in case it was a matter on which your Lordships wanted to express a view which we would certainly find helpful"—[Official Report, 19/3/84; col. 989].
I then took him up gently but rather firmly because I found it difficult to understand, after the noble and learned Lord had made a speech which rather indicated that further amendments were to be moved, why he could not take the matter back; but he felt he could not do so.
Now I come to the noble Lord the Chancellor of the Duchy of Lancaster. This was a very surprising experience for me. At column 1064 I presented an amendment designed to maintain uniformity of certain charges. At this stage we wished to be assured that these charges would be kept constant. The noble Lord, Lord Cockfield, reproved me gently in his charming and attractive manner on the grounds that this was a matter which had been considered on several occasions before. But if I may say so in fairness to myself it was considered in a different context, with different amendments and in different circumstances, although I agree that the theme was generally the same.
I need not read it all out in detail, but in column 1065 the noble Lord, Lord Cockfield, instead of dealing with my amendments in pieces, asked me six or seven questions. He asked, did I think this would take place? Did I think that would take place? I do not want to do any injustice to the noble Lord the Chancellor of the Duchy of Lancaster, but I want to be fair about the atmosphere in which he as a member of the Cabinet approaches the matter. He asked me, the mover of the amendment, to answer all these questions. So my main submission is therefore that even at this stage, on certain very difficult matters there is some doubt in the minds of senior members of the Government.
My general submission is that British Telecommunications is not ready for Clause 58 to operate—that is, not ready yet. It seems to me unlikely that it will be ready for some time before the powers of

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Clause 58 can operate to vest all the assets and property of BT in the private company. In my view, a period of time should be allowed to elapse before vesting in this private company occurs, and before privatisation. On that argument I say that this is not a wrecking amendment. On these Benches we have said over and over again that we think this is a bad and unnecessary Bill, but we do not wish to take a course which will wreck all the basic reasons for this Bill.
I would ask the Government therefore whether, even at this stage, they can give some assurances to the House that there will be a reasonable interval—it is for them to define what is meant by "reasonable interval"—before this vesting takes place, and certainly before the sale of the equity in the market takes place. It seems to me that it is in the interests of the Government, and certainly those of its customers and competitors, to adjust themselves to all the changes proposed in BT. That, in my view, would react favourably to the Government if something similar to what I have adumbrated can take place.
3.29 p.m.
Lord Boyd-Carpenter: My Lords, the noble Lord, Lord Stoddart of Swindon, I hope will not be offended if I say he made what would have been really a most admirable Second Reading speech on the general merits—or, as he sees it, demerits—of this Bill. He devoted practically the whole of his time, save for his concluding remarks, to indicating how critical he was of the Bill as a whole and only referred in his concluding moments to the amendment which he was in point of fact moving.
I found his argument that, because a very large number of amendments had been accepted, the operation of the Bill should therefore he postponed for four years, rather a curious one. I would have thought that the fact that my noble friends on the Front Bench have accepted, with greater or less degrees of willingness, a great many amendments in the course of this Bill was not only a good vindication of the parliamentary process and of the functions of this House as a revising Chamber but also some assurance that this was a Bill which had been very greatly improved during its passage through this House as a result of the contributions of noble Lords in all parts of the House; in other words, that it was a better and more acceptable Bill that it was when it arrived here. It did not seem to me that the argument about the acceptance of a large number of amendments led anywhere near to supporting the proposition which this amendment proposes; that is, that the whole measure should be put into cold storage for four years.
As to the noble Lord on the Liberal Benches, I am not at all sure what he was driving at. He referred to the need for a further reasonable interval for yet further consideration of the Bill: but as I understood him he did not suggest that four years was the necessary interval that he was contemplating, and I certainly understood him to be talking in terms of months. Be that as it may, that is not what this amendment proposes.
I should like to ask the House to consider what would be the effect of accepting this amendment. It
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would mean that for the next four years all those concerned in the operation of this great and very important organisation would live in an atmosphere of uncertainty. They would not know what was going to happen to them or their organisation at the end of the four years. You would be presenting those who were against further investment and further development with the classical argument, "We had better wait and see what happens"; and that, in this area of all areas—this area of fast-moving technology, when we want to see all the amazing developments that are taking place in this field put quickly into use in the field of British communications—would really be a most damaging thing to do.
Equally, the people in the organisation would have to think of themselves. Would it be wise, perhaps, to accept a tempting appointment elsewhere if you do not know whether at the end of the four years you are going to be a company in the private sector or remain a nationalised industry? What about people who are approached to join the organisation, not only on the board but in senior technical levels? What prospects can you offer with certainty when you are trying to recruit staff? I cannot think that anyone who has had responsibility for running a large organisation could conceivably want to do to British Telecom what this amendment would do, and induce an artificial period of four years during which it would be excessively and exceedingly difficult to take long-ranging decisions and even personal appointments and movements in and out of the unit itself would become doubtful and uncertain.
It is perfectly possible to believe, as I know noble Lords opposite do believe passionately, that these proposals are bad. It is perfectly possible to believe, as my noble friend does, that they are very good. It is possible to believe, as some others do, that they are fairly good. But there can surely be no case—and that is why the noble Lord. Lord Stoddart, did not try to make it—for saying that the whole thing should be frozen for four years and that four years' time should be lost in the development of one of this country's major national assets.
Lord Somers: My Lords, your Lordships will realise that I am in no position to speak on behalf of my noble friends on these Benches. We have the rare privilege in Parliament of speaking for ourselves and voicing our own personal opinions. That has one disadvantage, of course, in that we are bound to think for ourselves; but that, I think, is probably quite a good exercise.
I should like to say, as regards the merits of this Bill, that I agree with every single word that was voiced by the noble Lord, Lord Stoddart. I do not, however, agree that this is an occasion to be made into an election issue. I know, of course, that it is an opportunity which is leapt upon by any professional politician with the greatest of eagerness, but I think that before we do that we should stop to think of what the record of the present Government is in other directions. In my opinion, I think it is very good. That may not be everybody's opinion but that is my personal opinion, and I therefore sincerely hope that we shall not take one solitary Bill, which I consider extremely bad, as an opportunity for making it an election issue.
Lord Spens: My Lords, when I introduced the liberalisation group to your Lordships on Second Reading I think I made it clear that we did not necessarily support everything that every member of the group wanted to see happen. But what we did was to work on amendments to try to get more competition into the Bill on the basis that, as regards time, the Bill was going to go through in the way it had been drafted. I do not think I could possibly support the noble Lord, Lord Lloyd of Kilgerran, who was a very useful member of our group, in his statement now that we ought to delay the vesting of the interests of the present British Telecom in the new company.
The Chancellor of the Duchy of Lancaster (Lord Cockfield): My Lords, I was greatly touched by the solicitude shown by the noble Lord, Lord Stoddart of Swindon, for the Government and their fortunes. I shall in due course reciprocate that solicitude. The privatisation of British Telecom was specifically included in our election manifesto. The manifesto reads as follows:
"We shall transfer more state-owned businesses to independent ownership. Our aim is that British Telecom, where we will sell 51 per cent. of the shares to the private sector,"—
and there then follows a list of other state industries—
"shall become private sector companies".
Nothing could be plainer or more specific than that. We won the general election. Had we not won the general election we would not have had the company of the noble Lord, Lord Stoddart of Swindon, in your Lordships' House. I do not know whether during the election he deployed the arguments that he has deployed in your Lordships' House this afternoon, or whether those arguments, if he did deploy them, contributed to the result. But the result was that we did win the election, and we won it handsomely.
Perhaps at this stage I might pay a tribute—and it is a sincere tribute—to the persistence, the courtesy and the good humour with which the noble Lord, Lord Stoddart of Swindon, has always put his arguments forward. We have therefore a mandate for this Bill and we are carrying out an election commitment. To propose deferring the matter until after the next general election would be to defeat the main purpose of the Bill and frustrate the wishes of the electorate. This, therefore, is indeed a wrecking amendment and about that there can be no doubt at all.
The 1982 Bill stood in quite a different category. It was introduced shortly before an election and it was perfectly proper, therefore, that its implementation should be delayed—as a practical matter it had to be, anyway—until after the following election. The present Bill has been introduced just after a general election. In substance, the Bill remains the same as the original 1982 Bill. The changes which have been made, important though they are—and they are important—are peripheral to the main purpose of the Bill and the main structure of the Bill remains unaltered.
The noble Lord, Lord Lloyd of Kilgerran, pleads his case with conviction and fervour but, frankly, it is special pleading. I share the view of my noble friend Lord Boyd-Carpenter, that it really is a most unconvincing argument that, because the Government have shown flexibility and have been willing to meet
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the wishes of the House, the Bill must therefore be a bad one and its operation should be postponed. I have met some pretty leaky arguments in my time, but this one is as leaky as a colander which consists entirely of holes with nothing in between—
Lord Lloyd of Kilgerran: My Lords, it is fitting that the noble Lord should have mentioned "leeks" in the context of referring to me.
Lord Cockfield: My Lords, I entirely appreciate the noble Lord's point and he carries his leek with great distinction. My noble friend Lord Boyd-Carpenter very properly drew attention to the very serious damage which would be done to the organisation, and to all those who work in it, by a protracted period of delay such as the present amendment proposes. Noble Lords opposite have shown throughout our debate great and proper solicitude for the people working in British Telecom. Why, therefore, they would wish to inflict this damage upon them is something which I do not understand.
It would be quite out of order for me to make a Second Reading speech on this amendment. I shall not be tempted to follow the noble Lord, Lord Stoddart of Swindon, down that path. He said, "This Bill is not acceptable as it stands", but it was accepted by your Lordships on Second Reading and that is the simple answer to that argument. I was greatly impressed by what the noble Lord, Lord Somers, said, because he took a statesmanlike attitude towards the Bill. He said that he did not at all agree with it, which is a perfectly reasonable point of view for him to take, but nevertheless he accepted that, in the circumstances, the Bill ought to be allowed to go forward. I resist the amendment on the simple ground that it is a wrecking amendment designed to frustrate the main purpose of the Bill. On that basis, I ask your Lordships to reject the amendment.
3.44 p.m.
Lord Bruce of Donington: My Lords, those of us who have had some experience of parliamentary life are well aware of the phenomenon that, if your opponent makes a speech that is very severely critical of certain aspects of the legislation that has been laid before Parliament, the first epithet that can be levelled against it is that it is a Second Reading speech. I do not propose to make a Second Reading speech, but I do propose to address myself to the amendment itself, which relates to the operation of Clause 58 of the Bill and to the date on which, as the noble Lord, Lord Boyd-Carpenter, is aware, the assets and liabilities—save for the excepted liabilities—will pass over to the successor company.
We have to deal with practicalities. If it were the case that within a matter of months this transaction could take place, and it was perceived generally by the public that it could take place around, perhaps, September or October of this year, then, quite clearly, any amendment postponing it beyond what would appear on the face of it to be a practicable date would amount to a wrecking amendment. But the practicalities are entirely different. There is already very considerable doubt in the City itself, as anybody who moves in the City knows quite well, as to whether

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this transfer can take place, and the privatisation aspect of it can be consummated, within the next two years—and for a very good reason.
I should just like to read one excerpt from a feature that appeared in last week's New Statesman under the authorship of Mr. Philip Geddes. The New Statesman may not be everybody's cup of tea. There may be violent disagreement with the political angle that it takes from time to time. Nevertheless, your Lordships may find that there is an element of truth in what it says, as I shall seek to prove. It says this:
"The rules of the Stock Exchange state that any company seeking a full Stock Exchange listing in Britain has to produce properly and professionally audited accounts going back over at least five years so that investors can make a real judgement of the company's performance. On top of that companies must have complied with various accountancy standards—for example, on depreciation rules for the cost of capital investment".
I shall not read it all, but there is a further observation which, with your Lordships' leave, I propose to produce as evidence to show that it has validity. It continues:
"Either BT has to produce properly audited and prepared accounts for the past five years—a gargantuan (probably impossible) task which would take several years and employ thousands of chartered accountants—or the rules have to be changed".
I do not associate myself with the element of exaggeration that has crept into that observation. But I can tell the House—and any members of the Stock Exchange who are also Members of your Lordships' House will not, I think, dissent from what I have to say—that the rules of the Stock Exchange are very strict indeed. It would not be safe for anybody to assume—because the Government themselves, for reasons of their own, have recently been very accommodating towards the Stock Exchange and have passed certain budgetary measures that have met with large-scale Stock Exchange approval—that the Stock Exchange would for one moment abandon those high standards which it has insisted upon, and which are indeed enshrined in its yellow book, Admission of Securities for Listing.
One of the requirements of the Stock Exchange is that to the company concerned—in this case British Telecom—there have to be joined reporting accountants. Reporting accountants are required, by their own standards of auditing and accounting practice, to comply with certain rigid professional requirements. There can be no doubt that a reporting accountant, in conjunction with the auditors in this case, would have very great difficulty in producing the accounting statements which are required for incorporation in the prospectus issued by any company seeking a listing on the Stock Exchange.
The noble Lord, Lord Orr-Ewing, will recall that in Committee he complained of accounting standards when he discussed one of the relevant matters. Nor is it any answer for the Government to say, "British Telecom have not kept proper accounts; this is one of the reasons for privatisation". In fact, when it was under direct Government control the Post Office did not keep accounts that would stand up to the normal standards required by commercial firms. Nor, indeed, do Her Majesty's Government. In fact, Her Majesty's Government's own standards of accounting are abysmal. Everybody knows that they consist merely of
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cash-in and cash-out. The question is whether it will be possible within the next foreseeable period of time for a listing to be obtained.
May I give some examples in support of what I have said and in support of the generality contained in the New Statesman article from which I have quoted. The first point to be borne in mind is that the accounts for the year ended 31st March 1982 and the accounts for the year ended 31st March 1983 both contain auditors' qualifications. These qualifications are significant. I have not had time to examine the accounts for the years 1980, 1979 or 1978. But this much I do know: that changes have in fact taken place of which reporting accountants are bound to take notice and which are bound to cause them a very considerable amount of work before they can produce a reporting accountant's report of the standard required by the London Stock Exchange.
May I quote a passage from the report of the chairman which accompanied the accounts for the year 1981–1982:
"The cost of installing equipment in customers' premises, including the wiring, are now charged against profits at the time the expenditure is incurred rather than being charged over a number of years, as has been the practice in the past. These costs are now fully recovered in the connection charges made to customers".
The report continues
"Most types of small value plant and equipment are also being charged directly against profit. These changes have had the result that costs of —847 million, which had been capitalised in previous years, have been eliminated from the fixed asset figures in the accounts and charged against reserves."
May I also read to your Lordships an additional observation which is contained in the chairman's statement accompanying the accounts for the year 1982–83. The chairman referred to the decline in absolute profits during the year and said:
"This arises in large part from a further re-assessment of asset lives and reflects a continuation of the process which I described in my report last year of adapting our accounts to reflect more accurately the new competitive and technical environment in which we are now operating."
I am not querying the rectitude of the chairman in this respect. I admire his frankness. But what he has said, and the qualifications contained in the auditor's report, mean that the reporting accountants will have enormous difficulty in producing the appropriate adjustments to the accounts for the last five years in order to arrive at a true figure of the fair and reasonable profit for each year, so that the prospective investor may be able to arrive at that degree of objective judgment which he is required to exercise, and which he desires to exercise when he considers investing in any public company. In other words, in order to achieve an accurate prospectus, without which there can be no consent to the issue by either the reporting accountants or the auditors of the company, a very considerable amount of work will have to be done. In some quarters in the City not a period of months but possibly years will be taken in order that Stock Exchange and professional standards can be achieved. This is one difficulty which the noble Lords eloquence cannot wish away.
Now let me consider the position if the Bill ultimately receives Royal Assent. After Lords amendments have been considered in another place and the Bill has been returned to your Lordships and duly passed into law, what will happen if, month after

1121
month (and I say it will be a matter of years, if Stock Exchange standards are adhered to) the company is still not privatised? The noble Lord, Lord Boyd-Carpenter, referred to uncertainty. That is undoubtedly the case. I well remember how that argument was pooh-poohed by the Conservative Party when the Shipbuilding Bill was held up by your Lordships' House. The argument about the uncertainty for employees was given a very scant response.
In this case the House should be well aware that what is at stake here is a change in ownership, not necessarily a change in management. If the shares in the new company are held in the fragmented form which the Government affects to wish to happen, the effect of the very wide shareholding outside the shareholding held by the Government will be marginal upon the structure of the board or upon the structure of the management. I do not believe that any period of uncertainty would arise for the workers and management in British Telecommunications. There might be ushered in an era of hope. But, leaving that completely aside, this amendment asks the House to face up to the facts as they are. And the fact of the matter is—and I invite the noble Lord to disprove it—that the issue cannot take place within months, and possibly years, owing to the precise defects to which I have referred.
Lord Cockfield: My Lords, before the noble Lord sits down, I wonder whether he would permit me to put one single point to him. Your Lordships' debates are widely reported outside this House, and great attention is paid to the noble Lord. I can tell him that the very firm intention of the Government is that privatisation should take place this year.
Lord Bruce of Donington: My Lords, I am grateful to the noble Lord. May I just say to him, as kindly as I can, that not even the noble Lord, and all the power that he and his Government can carry behind them, are likely to be able to shift a professional resolve, firmly held in the Stock Exchange and in the accountancy profession, to insist on the maintenance of accounting and prospectus standards which they have always insisted upon in the past.
Lord Diamond: My Lords, I will delay your Lordships for the minimum time but I think it is right that we on these Benches—by which I mean the two participating parties in the Alliance—should make our position clear. We regard this as an unfortunate amendment. This amendment, as has been made clear by the mover and seconder, and by all who have spoken in favour of it, goes to the heart of the Bill. Every speech that has been made from the Labour Front Bench has been a Second Reading speech; it had to be, because if one puts down an amendment that goes to the heart of a Bill and one is speaking relevantly to the amendment, then it has to be a speech which is in effect a Second Reading speech.
It is clear to everybody in this House, I hope, that we on these Benches are wholly opposed to this Bill. That has been made clear by all my colleagues—both Liberal and SDP—who have spoken on this Bill, and by statements made in another place and outside this House. I have no need to waste your Lordships' time
1122
because I am sure that everyone throughout the House knows our views on this Bill. They are the same as those expressed by the noble Lord, Lord Somers, for his part. He and I must be affected by the astrology of the matter because we were both born on the same day in the same year.
We in this House have a responsibility and a duty. We have to recognise what happens in elections—especially in regard to clearly-defined mandates and clearly-defined majorities. Unfortunate as that majority is—and those of us who find ourselves in a party where every supporter had in effect one-tenth of a vote are particularly disinclined to accept the result of the general election—we have to take the rules as they are.
Also, we must have regard to our relationship with the other House, which has passed this Bill on to us. We have approved it, or we have not opposed it, at Second Reading. We do not want a confrontation with the other House. That would have the most damaging effects. Those of us who are seeking to become the next Government do not wish to establish a precedent which the Opposition party of the day can quote to demonstrate that one need not pay any regard to a mandate or to a decision of the other House, or to a decision on Second Reading, but that one can do what one thinks best to upset that Second Reading by means of an amendment.
We consider that to do that is not to be thinking of the future in very clear terms. The difference will be simply this: whereas all of us sitting on this side of the Chamber might decide to oppose this amendment, we should fail to carry our opposition. If the position were reversed and the same precedent was quoted, then of course a Tory opposition would be in a position in this House, for a very long time ahead, to carry that opposition into effect, if they so desired. To establish a precedent of that kind would be both unconstitutional and extremely unwise for any party that is pretending—and I use that word in its old sense—to form the Government in the future.
Therefore, although my noble friend Lord Lloyd of Kilgerran has made it quite clear that the date is an unfortunate choice and can only refer to a general election—as the noble Lord, Lord Somers, has said—and cannot refer to any argument about whether the Stock Exchange is suffering from indigestion and ought to wait a second year or another 12 months beyond that, all the other arguments about intervening dates are irrelevant. The date in this amendment is a date chosen simply having regard to the date of the last general election. In those circumstances, as we cannot possibly support the Bill and as to oppose this amendment might be read as supporting the Bill, we shall all abstain.
Lord Stoddart of Swindon: My Lords, since we have had a long debate on this amendment, I will not seek to delay the House further by summing up. I wish to press the amendment.
4.5 p.m.
On Question, Whether the said amendment (No. 111) shall be agreed to?
Their Lordships divided: contents, 75; Not-Contents, 168.

DIVISION NO. 1

CONTENTS

Ampthill, L.

Jeger, B.

Barnett, L.

Jenkins of Putney, L.

Bernstein, L.

John-Mackie, L.

Birk, B.

Kearton, L.

Bishopston, L. [Teller.]

Kirkhill, L.

Blease, L.

Leatherland, L.

Blylon, L.

Listowel, E.

Boston of Faversham, L.

Llewelyn-Davies of Hastoe, B.

Bottomley, L.

Lovell-Davis, L.

Brockway, L.

McIntosh of Haringey, L.

Brooks of Tremorfa, L.

MacLeod of Fuinary, L.

Bruce of Donington, L.

Milford, L.

Carmichael of Kelvingrove, L.

Mishcon, L.

Cledwyn of Penrhos, L.

Molloy, L.

Collison, L.

Oram, L.

Cooper of Stockton Heath, L.

Peart, L.

Darling of Hillsborough, L.

Phillips, B.

David, B. [Teller.]

Plant, L.

Davies of Penrhys, L.

Ponsonby of Shulbrede, L.

Dean of Beswick, L.

Prys-Davies, L.

Delacourt-Smith of Alteryn, B.

Rhodes, L.

Ross of Marnock, L.

Denington, B.

Sefton of Garston, L.

Donnet of Balgay, L.

Serota, B.

Elwyn-Jones, L.

Shackleton, L.

Ennals, L.

Shinwell, L.

Ewart-Biggs, B.

Stallard, L.

Fisher of Rednal, B.

Stewart of Alvechurch, B.

Fitt, L.

Stewart of Fulham, L.

Gaitskell, B.

Stoddart of Swindon, L.

Gallacher, L.

Stone, L.

Glenamara, L.

Strabolgi, L.

Graham of Edmonton, L.

Taylor of Blackburn, L.

Gregson, L.

Underhill, L.

Hatch of Lusby, L.

Wells-Pestell, L.

Houghton of Sowerby, L.

White, B.

Howie of Troon, L.

Wilson of Rievaulx, L.

Jacques, L.

Wootton of Abinger, B.

NOT-CONTENTS

Adeane, L.

Craigmyle, L.

Ailesbury, M.

Cranbrook, E.

Alexander of Tunis, E.

Cullen of Ashbourne, L.

Allerton, L.

Daventry, V.

Alport, L.

De Freyne, L.

Atholl, D.

Denham, L. [Teller.]

Auckland, L.

Digby, L.

Avon, E.

Drumalbyn, L.

Baker, L.

Duncan-Sandys, L.

Bauer, L.

Dundonald, E.

Belhaven and Stenton, L.

Effingham, E.

Bellwin, L.

Ellenborough, L.

Beloff, L.

Elliot of Harwood, B.

Belstead, L.

Elton, L.

Berkeley, B.

Enniskillen, E.

Bessborough, E.

Faithfull, B.

Birdwood, L.

Fanshawe of Richmond, L.

Bolton, L.

Feversham, L.

Boyd-Carpenter, L.

Forte, L.

Brabazon of Tara, L.

Fortescue, E.

Broxbourne, L.

Fraser of Kilmorack, L.

Bruce-Gardyne, L.

Gainford, L.

Caithness, E.

Gardner of Parkes, B.

Campbell of Alloway, L.

Gibson-Watt, L.

Campbell of Croy, L.

Gisborough, L.

Cathcart, E.

Glanusk, L.

Chelwood, L.

Glasgow, E.

Clitheroe, L.

Glenarthur, L.

Cockfield, L.

Gormanston, V.

Coleraine, L.

Gowrie, E.

Cork and Orrery, E.

Granville of Eye, L.

Cottesloe, L.

Gray of Contin, L.

Craigavon, V.

Greenway, L.

1124

Gridley, L.

Mountgarret, V.

Hailsham of Saint Marylebone, L.

Moyne, L.

Murton of Lindisfarne, L.

Halsbury, E.

Newall, L.

Harvington, L.

Northbourne, L.

Hawke, L.

Northchurch, B.

Hayter, L.

Nugent of Guildford, L.

Henley, L.

Onslow, E.

Hill of Luton, L.

Orkney, E.

Hives, L.

Orr-Ewing, L.

Home of the Hirsel, L.

Pender, L.

Hornsby-Smith, B.

Peyton of Yeovil, L.

Hylton-Foster, B.

Porritt, L.

Ilchester, E.

Portland, D.

Inglewood, L.

Rankeillour, L.

Kaberry of Adel, L.

Reay, L.

Killearn, L.

Redesdale, L.

Kimberley, E.

Reilly, L.

Kinloss, Ly.

Renton, L.

Kinnaird, L.

Rochdale, V.

Kitchener, E.

Rosslyn, E.

Lane-Fox, B.

Saint Oswald, L.

Lauderdale, E.

Saltoun, Ly.

Lawrence, L.

Sandys, L.

Lloyd of Hampstead, L.

Selkirk, E.

Long, V.

Sempill, Ly.

Loudoun, C.

Sharpies, B.

Lucas of Chilworth, L.

Shaughnessy, L.

Luke, L.

Skelmersdale, L.

Lyell, L.

Somers, L.

McAlpine of Moffat, L.

Spens, L.

McAlpine of West Green, L.

Stamp, L.

McFadzean, L.

Stodart of Leaston, L.

Mackay of Clashfern, L.

Strathspey, L.

Macleod of Borve, B.

Suffield, L.

Mancroft, L.

Swinton, E. [Teller.]

Margadale, L.

Terrington, L.

Marley, L.

Teviot, L.

Marshall of Leeds, L.

Thomas of Swynnerton, L.

Masham of Ilton, B.

Thomeycroft, L.

Maude of Stratford-upon-Avon, L.

Todd, L.

Torphichen, L.

Melville, V.

Tranmire, L.

Merrivale, L.

Trumpington, B.

Mersey, V.

Tweedsmuir, L.

Middleton, L.

Vaux of Harrowden, L.

Minto, E.

Vickers, B.

Molson, L.

Westbury, L.

Monson, L.

Whitelaw, V.

Montgomery of Alamein, V.

Windlesham, L.

Morris, L.

Wynford, L.

Mottistone, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
Clause 59 [Initial Government holding in the successor company]:
4.15 p.m.
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 112:
Page 54, line 27, leave out ("not") and insert ("subject to an affirmative resolution of both Houses of Parliament").
The noble Lord said: My Lords, I move this amendment formally at this stage, I beg to move.
Lord Bruce of Donington: My Lords, both this and the next amendment are concerned with the operation of Clause 59, which describes the procedure by which the initial Government holding in the successor company is established. The decisions here are of some importance, and very considerable sums are involved. It is not merely the issue of shares that is involved but also that of securities; and securities, as the noble Lord knows, include debentures. Under later

1125
clauses of the Bill the debenture position will be discussed when the extinguishment of loans by the Secretary of State to British Telecom is debated.
We do not consider it wise that these should be left purely as they are. We do not consider it wise that these should be left entirely to the Secretary of State. The sums of money involved will be very considerable, and the issues involved will be very important indeed. We consider it vital that these arrangements are subjected to the scrutiny of Parliament, not merely by the negative procedure but by the affirmative procedure, so that any disposal of the securities is laid fully in the open and both Houses of Parliament know exactly what is happening.
Clause 59(5) states that the Secretary of State can exercise a power conferred on him by the section to dispose of any securities. This right of disposal becomes a little more apposite when one considers the provisions of paragraph 39 of Schedule 5 when certain debentures are to be transferred, or power is taken to transfer debentures, back to British Telecom. These are all matters of considerable importance, and over a period of four years may involve sums of well over —1,000 million, or their equivalent value. As I said, for this reason we think that it would be wise if both Houses of Parliament were kept precisely informed as to exactly what is happening.
Lord Cockfield: My Lords, when a similar amendment was tabled in Committee, I assured your Lordships that we were not seeking any discretion here beyond what had been conferred in past privatisation legislation. Parliament's broad authorisation for the privatisation is being sought through this Bill itself. It would be impracticable and inappropriate to have to seek specific approval for the details of issues of securities and share sales in advance, though the details will in fact emerge in a most public way on the occasion of British Telecom's flotation. On these grounds I suggested in Committee that the amendment was unnecessary and could obstruct the flotation. I have heard nothing since to change that view.
The noble Lord, Lord Bruce of Donington, has touched upon the question of the assignment of debentures to the statutory corporation to enable it to discharge the "excepted liabilities", as they are described—that is the sums due under British Telecom's deed of covenant to the BT and Post Office pension funds—and these liabilities are not to be transferred to the successor company. There are, as the noble Lord himself indicated, amendments on this particular issue which we shall come to later—possibly much later—tonight. Perhaps it would be more appropriate to go into that very complex subject on that occasion. It requires explanation in some detail. I shall endeavour to do that when we come to the amendments, and I think that the noble Lord would not want me to go through the same explanation twice. I am perfectly willing to do so if he so wishes, but I think that it would be more appropriate to do it on Amendment No. 135 when we come to it.
So far as the general powers of Clause 59 are concerned, they are fundamental to the establishment of a correct capital structure for the successor company's start in the private sector. The clause is
1126
widely drafted to allow the Secretary of State to require the issue of "securities", a term which includes all types of stock within the definition in Clause 71. This flexibility is essential for two reasons.
First, the British Telecom package will consist of a number of interrelated elements. The capital structure of the successor company will be just one element in this package, and it will itself reflect a number of complex issues, including the business future needs, the need not to give the company any unfair advantage in relation to its competitors and the taxpayers' interest in both the equity which will be sold and the debt still owed to the Secretary of State. So the BT package and the uses of the general powers under Clause 59 will depend on a complicated interweaving of issues. There can he no set formulae incorporated in the Bill, and there must be discretion to move away from BT's present capital structure simply because this may not be appropriate to the successor company's start in the private sector. It would not be in accordance with precedent or desirable in itself for Parliament to be involved in this level of detail.
The second reason for retaining flexibility is that the elements of the BT package will only be brought together much closer to the time of the flotation—for example, we shall need to see BT's most up-to-date forecasts for the successor company's capital structure, and gauge the state of the market right up to the last minute for share placing. This does not make parliamentary approval over each and every use of the powers in Clause 59 feasible.
So with the issue of securities, as well as their disposal under Clause 59, the Government must retain flexibility and a degree of discretion. Parliamentary approval would be impracticable, as indeed has been recognised in past privatisation legislation. For these reasons I hope very much that the noble Lord will not press this amendment.
Lord Bruce of Donington: My Lords, I am most indebted to the noble Lord for his reply. Of course I am not asking that at this stage he should embark on more detailed explanations of the application of paragraph 39 of Schedule 5 and various associated matters which are the subject of later amendments. My concern here is with the magnitude of the operation that is to take place. It is one thing to privatise an organisation or a conglomerate with assets of up to —500 million. It is another thing altogether to embark on the privatisation of a company or corporation which, after taking credit for the excepted liabilities, will have a net equity in book value terms of something approaching —6,000 million. This is a very large operation indeed.
I do not think that the noble Lord's argument about flexibility entirely holds good. It is true that the company's directors, legal advisers, accountants, stockbrokers and hankers reserve to the last possible moment the placing value in order to fix the correct price at which the shares should be put on the market. But these are matters associated not with information already in their possession but with the developing state of the market, which, as the noble Lord will apprehend, varies from day to day. There may be certain overseas developments, financial catastrophies or a whole series of things which up to the last moment

1127
may affect the judgment of the issuing company's bankers, auditors, stockbrokers, and so on, as to what the placing price should be. But the other matters which relate to forecast will not change.
As the noble Lord will be aware, the forecast of the company's future prospects is subject to the oversight of the reporting accountants who have to satisfy themselves that the forecasts are based upon certain sound criteria, even though of course nobody can peer into the future. In short, all the structural factors which go into the prospectus are well known for quite a time before the issue takes place. The real question is whether, in view of the magnitude of this operation—and it is very large indeed—Parliament should be involved in it.
The noble Lord has from time to time delivered himself of observations concerning the ability of Whitehall to deal with matters of this kind. Many of the arguments for privatisation have centred on the business of removing the dead hand of Whitehall from the control of an enterprise. Is that same dead head capable of making the flexible decisions to which the noble Lord refers? I have not the slightest doubt that if it were in the noble Lord's hands his judgments would be of tremendous significance and validity. Apart perhaps from having a marginal argument with him, I would not presume in any way to question his ability to deal with that situation. But this does not mean that Parliament itself should not have an opportunity to consider this matter. There are people with tremendous day-to-day business and professional experience in another place. It is well known that your Lordships' House is not without its experts in practically every field. Surely therefore it is right that with an issue of this kind, of the magnitude we are now talking about, running into thousands of millions of pounds—not merely 10 millions or 100 millions—where the nation's assets, the public assets, are being transferred supposedly for value—hopefully for value—into the hands of the rentier, surely Parliament ought to be consulted before any final formulations take place. I have no desire to prolong the arguments indefinitely but I can assure the noble Lord that these are not items which I am raising in any fractious or purely party spirit.
They seem to me to be a matter of securing proper parliamentary control. The noble Lord has very often paid some tribute to the advantages of having parliamentary control. As I say, I cannot see why, with an operation of this magnitude, Parliament should not be involved in the manner suggested by this amendment. Therefore, although I do not wish to cross swords too often with the noble Lord—I am most anxious to accommodate myself to his wishes wherever I can possibly do so—I do not think that I can do so on this amendment and I regret that I have to press it to a Division.
Lord Peyton of Yeovil: My Lords, I recognise that this is a day dedicated to the exhibition of the talent which exists on the Front Benches of your Lordships' House. I hope that it will not be regarded as grossly indelicate if therefore I intervene very shortly on this particular amendment. It is to say this. I can conceive of no possible element of helpfulness which would be
1128
generated by the kind of parliamentary intervention suggested by the noble Lord.
4.31 p.m.
On Question, Whether the said amendment (No. 112) shall be agreed to?
Their Lordships divided: Contents, 102; Not-Contents, 152.

DIVISION NO. 2

CONTENTS

Airedale, L.

Kirkhill, L.

Amherst, E.

Leatherland, L.

Aylestone, L.

Listowel, E.

Barnett, L.

Llewelyn-Davies of Hastoe, B.

Bernstein, L.

Lloyd of Kilgerran, L.

Birk, B.

Lovell-Davis, L.

Bishopston, L.

McIntosh of Haringey, L.

Blease, L.

MacLeod of Fuinary, L.

Blyton, L.

Mais, L.

Boston of Faversham, L.

Mayhew, L.

Bottomley, L.

Mishcon, L.

Brockway, L.

Molloy, L.

Brooks of Tremorfa, L.

Mulley, L.

Bruce of Donington, L.

Oram, L.

Carmichael of Kelvingrove, L.

Peart, L.

Chitnis, L.

Perry of Walton, L.

Cledwyn of Penrhos, L.

Phillips, B.

Collison, L.

Plant, L.

Cooper of Stockton Heath, L.

Ponsonby of Shulbrede, L. [Teller.]

Darling of Hillsborough, L.

David, B. [Teller.]

Prys-Davies, L.

Davies of Penrhys, L.

Raglan, L.

Dean of Beswick, L.

Rathcreedan, L.

Delacourt-Smith of Alteryn, B.

Rochester, L.

Diamond, L.

Ross of Marnock, L.

Donaldson of Kingsbridge, L.

Sainsbury, L.

Donnet of Balgay, L.

Seear, B.

Elwyn-Jones, L.

Sefton of Garston, L.

Ewart-Biggs, B.

Serota, B.

Ezra, L.

Shackleton, L.

Fisher of Rednal, B.

Shinwell, L.

Fitt, L.

Simon, V.

Gaitskell, B.

Stallard, L.

Gallacher, L.

Stedman, B.

Gladwyn, L.

Stewart of Alvechurch, B.

Glenamara, L.

Stewart of Fulham, L.

Graham of Edmonton, L.

Stoddart of Swindon, L.

Gregson, L.

Stone, L.

Grimond, L.

Strabolgi. L.

Hampton, L.

Strauss, L.

Hanworth, V.

Taylor of Blackburn, L.

Hatch of Lusby, L.

Tordoff, L.

Hooson, L.

Underhill, L.

Houghton of Sowerby, L.

Whaddon, L.

Howie of Troon, L.

White, B.

Jacques, L.

Wigoder, L.

Jeger, B.

Willis, L.

Jenkins of Putney, L.

Wilson of Rievaulx, L.

John-Mackie, L.

Winstanley, L.

Kearton, L.

Wootton of Abinger, B.

Kennet, L.

Young of Dartington, L.

Kilmarnock, L.

NOT-CONTENTS

Adeane, L.

Bolton, L.

Alexander of Tunis, E.

Boyd-Carpenter, L.

Allerton, L.

Brabazon of Tara, L.

Alport, L.

Broxbourne, L.

Atholl, D.

Bruce-Gardyne, L.

Auckland, L.

Caccia, L.

Avon, E.

Caithness, E.

Bauer, L.

Campbell of Alloway, L.

Belhaven and Stenton, L.

Campbell of Croy, L.

Bellwin, L.

Cathcart, E.

Beloff, L.

Chelwood, L.

Belstead, L.

Clitheroe, L.

Berkeley, B.

Cockfield, L.

Bessborough, E.

Coleraine, L.

1129

Congleton, L.

Marshall of Leeds, L.

Cork and Orrery, E.

Masham of Ilton, B.

Cottesloe, L.

Maude of Stratford-upon-Avon, L.

Craigavon, V.

Craigmyle, L.

Melville, V.

Cranbrook, E.

Merrivale, L.

Daventry, V.

Mersey, V.

Denham, L.

Middleton, L.

Digby, L.

Minto, E.

Dilhorne, V.

Molson, L.

Drumalbyn, L.

Monson, L.

Eccles, V.

Montgomery of Alamein, V.

Ellenborough, L.

Morris, L.

Elton, L.

Mottistone, L.

Enniskillen, E.

Mountgarret, V.

Faithfull, B.

Moyne, L.

Fanshawe of Richmond, L.

Murton of Lindisfarne, L.

Forte, L.

Newall, L.

Fortescue, E.

Northchurch, B.

Fraser of Kilmorack, L.

Nugent of Guildford, L.

Gainford, L.

Onslow, E.

Gardner of Parkes, B.

Orkney, E.

Gisborough, L.

Orr-Ewing, L.

Glanusk, L.

Pender, L.

Glasgow, E.

Peyton of Yeovil, L.

Glenarthur, L.

Rankeillour, L.

Gormanston, V.

Reay, L.

Gowrie, E.

Redesdale, L.

Gray of Contin, L.

Renton, L.

Greenway, L.

Rochdale, V.

Gridley, L.

Romney, E.

Hailsham of Saint Marylebone, L.

St. Davids, V.

Saint Oswald, L.

Halsbury, E.

Saltoun, Ly.

Hampden, V.

Sandford, L.

Harvington, L.

Sandys, L.

Hawke, L.

Selkirk, E.

Henlev, L.

Sempill, Ly.

Hill of Luton, L.

Sharpies, B.

Hives, L.

Shaughnessy, L.

Hornsby-Smith, B.

Skelmersdale, L.

Hylton-Foster, B.

Somers, L.

Ilchester, E.

Spens, L.

Kaberry of Adel, L.

Stamp, L.

Kimberley, E.

Stodart of Leaston, L.

Kinloss, Ly.

Strathspey, L.

Kinnaird, L.

Suffield, L.

Lane-Fox, B.

Swinton, E. [Teller.]

Lawrence, L.

Terrington, L.

Lloyd of Hampstead, L.

Teviot, L.

Long, V. [Teller.]

Teynham, L.

Loudoun, C.

Thomas of Swynnerton, L.

Lucas of Chilworth, L.

Thorneycroft, L.

Luke, L.

Todd, L.

Lyell, L.

Torphichen, L.

McAlpine of Moffat, L.

Trumpington, B.

McAlpine of West Green, L.

Tweedsmuir, L.

McFadzean, L.

Vaux of Harrowden, L.

Mackay of Clashfern, L.

Westbury, L.

Macleod of Borve, B.

Whitelaw, V.

Mancroft, L.

Windlesham, L.

Margadale, L.

Wynford, L.

Marley, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
[Amendment No. 113 not moved.]
4.40 p.m.
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 114:
Page 54, line 33, leave out ("the Consolidated Fund") and insert ("a Communications Industry Fund, to be used for the development of the United Kingdom communications industry including telecommunications, micro-electronic and satellite technology; this fund shall be administered by the Secretary of State, who shall take account of the views of the Director, and of a Communications Industry Council set up specifically to advise the Secretary of State on the use of the Communications Industry Fund.").
The noble Lord said: My Lords, I beg to move this amendment, which stands in my name and in the names of my noble friends Lord Bruce of Donington and Lord McIntosh of Haringey, and the noble Lord, Lord Lloyd of Kilgerran. If it is convenient to the House, I think that this amendment can be taken together with Amendment No. 115.
Amendment No. 115: Page 54, line 34, at end insert ("and used specifically for the further development of communications especially telecommunications, space communications and information technology.").
These amendments seek to set up a communications industry fund, for the development of the United Kingdom's communications industry, including telecommunications and microelectronic and satellite technology. The fund would be administered by the Secretary of State and he would be advised by a council. The purpose of the amendments is radically to change the use to which the proceeds of the sale of British Telecom would be put, rather than to have the money simply transferred to the Consolidated Fund to be used in the main on current expenditure. We have talked about this point many times before in your Lordships' House. We think it quite wrong for capital receipts to be used for current expenditure or for tax hand-outs to suit the Government's particular political purposes at any given time. We believe that such receipts should be used for the future development of our industry; in particular, the telecommunications industry and the other industries that I have mentioned.
The proceeds of the sale would go instead into a special fund which would be used and administered in the interests of the United Kingdom's sunrise industries—industries which, incidentally, the Government very much favour; though I am sorry to say that they seem to favour them to the detriment of some of the basic and heavy industries, which I and my noble friends believe is a mistake. Indeed, we are in good company, because I notice that yesterday in another place Mr. Edward Heath thought it was complete and utter folly to neglect our industries, such as shipbuilding, steel and coal, and rely merely on the City and other sectors to bring about the recovery in the economy that is so necessary.
As I have said, under the amendment there would be a new council, which would have the job of advising the Secretary of State on the use of the fund. I would envisage that members of the council would include people of great expertise in the new sunrise industries, which find favour with the Government and indeed with ourselves.
I believe that the amendment recognises a basic truth. If the United Kingdom is to develop an economy capable of competing in high technology, the state must be prepared to step in with financial assistance and some strategic, nationally planned guidance. To leave it all to the banks and finance houses and to the invisible hand of the free market, rather than to have some form of indicative planning, is a recipe for confusion as well as, I believe, disaster. The market has proved quite unable to meet the needs up to the present time and there is no indication at all that it will meet the needs of the future. Therefore the amendment is necessary to ensure that there is some public intervention and guidance in bringing this

1131
country into the field of advanced technology, high technology, information technology and so forth.
That point is particularly true when seen against the level of involvement in assisting sunrise industries in other advanced, capitalistic societies. Even in the United States (not to mention Japan) where Ronald Reagan rules, 50 per cent. of research in the giant Bell laboratories, which is A T & T's research and development arm, is Government funded. That is the kind of thing we want to see happen here, and the proceeds of the sale of British Telecom would provide welcome funds for the development of these advanced technology industries.
I am not suggesting that the amendment is precisely worded. I think perhaps it could be improved, but I believe that it is one that the Government should accept for their own sake, as well as for the sake of the country. The amendment provides a vehicle with which to develop the principle of state assistance for research and development, for pioneering new techniques and products, and for developing existing inventions into marketable commodities. As I undersand it all of those are the aims of the Government; they are certainly the aims of the Opposition, and the aims of every noble Lord in this House. Indeed, I believe that they are the aims of the whole of the country, and that is why I consider that the amendment is relevant and should be very seriously considered by, and we hope accepted by, the Government.
The great advantage of using the proceeds of the sale of BT in this way is that over a period of time as much as £4 billion of public money could be pumped into the sunrise industries without any increase in planned public expenditure, unless of course the Chancellor last Tuesday was taking advance account of the £4,000 million proceeds of the sale of British Telecom. Perhaps the Chancellor was doing that; I have not gone into his Budget accounts in detail. But I sincerely hope that he did not take that into account, for it really would be counting his chickens before they were hatched and it could be disastrous for him in the long term. What we suggest would provide a fund of money for these new industries, which we shall need if we are to compete in the markets of the world.
As I have said, the amendment provides a useful vehicle for the Government and one which I hope they would welcome, so that they can show that they want to be involved in the rebuilding of Britain through the sunrise industries, as well as of course through the heavy industries that I have mentioned. If they want to do that, I feel sure that they will wish to accept the amendment. If they do not, I sincerely hope that noble Lords in all parts of the House will vote in the Division which would follow. I beg to move.
Lord Ezra: My Lords, I should like to support the amendment so ably moved by the noble Lord, Lord Stoddart. As he stated in moving the amendment, it is common ground in this House that we should be supporting, by all the means at our disposal, the development of our communications industry. What more appropriate means could be devised than to use all, or at least a major part, of the proceeds from the sale of the telecommunications industry to the public
1132
for the further development of the industry it represents?
We are increasingly likely to be at the mercy of competition from vast countries like the United States or the concentrated resources of Japan, in this very field. As the noble Lord clearly pointed out, in both of those countries a very substantial amount of public funding is made available in the crucial field of industrial development. There is nothing wrong with dedicating certain portions of public funds for particular purposes. It has not been the practice in this country but it is being developed increasingly in other countries. In the United States more and more dedicated funds are being established and in Canada, in the Province of Alberta, they have dedicated substantial funds from the proceeds of their raw materials for the development of their industry.
Therefore, I can see no reason why there should not be embarked upon in this Bill—which after all is a momentous development in our industrial life—a new venture which would provide resources very relevant to the purpose of the Bill for the further promotion of the communications industry and of all the knowledge and research which lie behind it. I very strongly recommend that this amendment be adopted by the House.
Lord Weinstock: My Lords, I apologise to the noble Lord, Lord Stoddart of Swindon, and the noble Lord, Lord Ezra, for appearing to bite the hand which is attempting to feed me. But I see no particular reason why the proceeds of any particular measure—the sale of Government assets or of state-owned assets—should be applied to any particular purpose. While I hope that the Government will support in the future, as they have (I must acknowledge) in the past, these new industries and the development of new technologies which will come in the future at an ever-increasing rate, I do not think that this amendment is an appropriate way in which to secure that object. As much as I sympathise with its aims and the desire of noble Lords to see that our industry is kept up to date with such financial help as would be appropriate from the Government, I do not consider that this amendment is the proper means to achieve those objectives.
4.53 p.m.
Lord Cockfield: My Lords, a similar amendment was moved in Committee and I then said that it would run contrary to our general policy towards industry. This still holds despite the change in prospective beneficiary under the present amendment from manufacturing industry to the communications industry. It would be inconsistent with our general approach to use the proceeds of sale to set up a fund to hand out money to a particular sector as an addition to the existing instruments of regional and industrial policy. The noble Lords sponsoring this amendment have switched from manufacturing industry to the United Kingdom communications industry. It would be interesting to know just why. One might ask, for example, why they have left out biotechnology, which is another important new technology, or the robotics industry, which will have much to contribute to the future.

1133
The noble Lord, Lord Stoddart, displayed in his speech a degree of schizophrenia in these matters. After talking about the immense importance of new technologies, he then said that it would be a mistake to favour new technology and he quoted with approval a speech made in another place by one of my right honourable friends. A boatman, as the noble Lord knows, is somebody who faces one way and proceeds in the opposite direction. The noble Lord gave a remarkably good impersonation of a boatman.
There is neither rhyme nor reason in the blanket assistance that is implied by this amendment. Also, on this point, the noble Lord, Lord Weinstock, is entirely right: the amendment is a recipe for duplication with existing schemes. Where the need is demonstrated and where there is an opportunity, we have shown a willingness to assist new technologies. Perhaps I may refer in particular to the announcement made yesterday by my right honourable friend the Secretary of State for Trade and Industry of a —120 million extension to the micro-electronics industry support programme which will be aimed at encouraging the production and use of micro-electronics components in United Kingdom industry.
I covered the general issue very fully in our debate in Committee and I then said that we did need to take a view about all the calls made upon the public purse together, in order to arrive at a properly determined list of priorities. This amendment ignores these extremely important considerations.
The noble Lord, Lord Stoddart of Swindon, is a firm advocate of a planned economy. We on this side of your Lordships' House do not believe in a planned economy. It is something which has been tried and it is something which has been demonstrated to fail. It has never produced as good a standard of living for our people as an open, freely-operating market economy. Our policy towards British Telecom and towards the privatisation of British Telecom is aimed at allowing market and competitive forces to come into play, subject always, of course, to the protection for consumers which we have discussed elsewhere in the Bill. It would be a distortion of this purpose and a misuse of the present Bill, to give the Government the sort of role envisaged in the present amendment. For all those reasons, I must resist the amendment.
Lord Stoddart of Swindon: My Lords, I am most unhappy that the noble Lord, Lord Cockfield, should resist this amendment because I believe that it is a good amendment and, indeed, a forward-looking amendment.
I know that previous Governments have frowned upon the hypothecation of revenues; that has always been the case. I well understand the arguments which have been put up by Government and, indeed, which appear to be being put up by the noble Lord, Lord Cockfield, this afternoon, but I read the Budget speech of Mr. Lawson and there, for the first time, we had a Chancellor of the Exchequer actually envisaging that some revenues might have to be hypothecated. Therefore, in fact, we have a clear lead from the Chancellor of the Exchequer that the hypothecation of revenues may now be legitimate. That of course is what we seek to do in this amendment. The noble Lord, Lord Cockfield, need not be worried any longer
1134
that his friend the Chancellor will jump on him if he dares to accept something which would hypothecate revenues.
The noble Lord also asked why we switched our amendment from manufacturing industry to the communications industry. We thought about this very deeply and, I hope, very clearly and we decided to switch because as this money was coming from the communications industry we felt that perhaps it ought to be used exclusively for the future development of the communcations industry and associated industries. That is one of the reasons why we changed the direction of the amendment, albeit the basis of the use of funds is still the same.
Secondly, I have to confess that we changed the amendment because we thought that it would be more acceptable to the noble Lord, Lord Cockfield. Because this amendment is so specific, we thought that it would commend itself to him. I am sorry that it has not.
The noble Lord also implied that I was speaking against the new technological industries. If I did that, I certainly did not mean to. Let me clarify what I said. When North Sea oil runs out, I do not believe that we can exist as a nation simply on the new technological industries. We need the traditional heavy industries, like steel, shipbuilding and coal, just as much as we need the industries of the new technologies, and we must have both. That is why we believe that this fund of money which will become available should be used for the development of new technology.
The noble Lord also mentioned (I shall not say boasted) the measures announced by Mr. Tebbitt in another place yesterday, which are to help new technology. But that was a drop in the ocean of investment money that is needed to develop new technology if we are to compete with other countries like Japan and the United States, as was mentioned by the noble Lord, Lord Ezra, when he made his admirable speech a few moments ago. It represents about 0.003 per cent. of our total GDP. That simply is not good enough. It will not wash, and it will not bring about the improvement in and the expansion of new technology that we need.
Finally, I think that the noble Lord was teasing me a little when he said that a planned economy had never benefited the people of this country or their standard of living. I am surprised that he should have said that because in this country we had a planned economy under Clement Attlee from 1945 to 1951; we had a planned economy under Mr. Winston Churchill from 1951 to 1954; we had a planned economy under Mr. Anthony Eden from 1954 to 1958; we had a planned economy under the noble Earl, Lord Stockton, from 1958 to 1962; and, indeed, we had a planned economy under the right honourable Edward Heath from 1970 to 1973, and he is regretting that we do not still have a planned economy because he believes that the capitalist monetarist theories of this present Government have been a disaster for this country.
Under all those circumstances, and bearing in mind what I have said and what other noble Lords have said, I hope that the noble Lord will accept this amendment. If not, I shall certainly press it.
Lord Peyton of Yeovil: My Lords, what strange debates we are having this afternoon! We have just had

1135
a rather brief, misleading and inaccurate history lesson from the noble Lord, Lord Stoddart; before that there was an effort to wreck this Bill, and also an effort to amend the Conservative Party's manifesto at the last election, which I should have thought was a very odd thing to try to do in your Lordships' House.
We now have a specific amendment in front of us which apparently has two purposes. One is to change the basis of Government accounting. I would agree with anyone who suggests that the system of Government accounting is not wholly deserving of praise. It could, indeed, attract almost any adjective from "informal" to "awful", but this surely is hardly the place to change it. I am sure that the noble Lord, Lord Stoddart, will recall that it has existed in its strange state under many successive Administrations.
The second thing which the noble Lord evidently seeks to do is to foist upon us a council for the communications industry. If your Lordships will reflect, of the councils which Parliament in its wisdom has set up, not all of them—and I do not wish to go into their records in detail—have had very happy records and few of them have earned the gratitude of their country. I very strongly believe and fear that if a council for the telecommunications industry were set up, far from being a gathering of experts who would show this country the way into the new world of high technology, it would be a council largely composed of people who did not have very much else to do, who could easily be spared to attend meetings of the council and who, in attending meetings of that council, would take up the time of those who could not be spared. I very much applaud my noble friend's rejection of such a silly idea.
5.7 p.m.
On Question, Whether the said amendment (No. 114) shall be agreed to?
Their Lordships divided: Contents, 92; Not-Contents, 140.

DIVISION NO. 3

CONTENTS

Airedale, L.

Elwyn-Jones, L.

Amherst, E.

Ennals, L.

Aylestone, L.

Ewart-Biggs, B.

Bernstein, L.

Ezra, L.

Birk, B.

Fisher of Rednal, B.

Bishopston, L. [Teller.]

Fitt, L.

Blease, L.

Gaitskell, B.

Blyton, L.

Gregson, L.

Boston of Faversham, L.

Grimond, L.

Bottomley, L.

Hampton, L.

Brockway, L.

Hanworth, V.

Brooks of Tremorfa, L.

Hatch of Lusby, L.

Bruce of Donington, L.

Hooson, L.

Carmichael of Kelvingrove, L.

Houghton of Sowerby, L.

Chitnis, L.

Howie of Troon, L.

Cledwyn of Penrhos, L.

Irving of Dartford, L.

Collison, L.

Jeger, B.

Darling of Hillsborough, L.

Jenkins of Putney, L.

David, B.

John-Mackie, L.

Davies of Penrhys, L.

Kaldor, L.

Delacourt-Smith of Alteryn, B.

Kearton, L.

Kilmarnock, L.

Diamond, L.

Kirkhill, L.

Donaldson of Kingsbridge, L.

Leatherland, L.

Donnet of Balgay, L.

Listowel, E.

1136

Llewelyn-Davies of Hastoe, B.

Serota, B.

Lloyd of Hampstead, L.

Shackleton, L.

Lloyd of Kilgerran, L.

Shinwell, L.

Lovell-Davis, L.

Simon, V.

McGregor of Durris, L.

Stallard, L.

McIntosh of Haringey, L.

Stedman, B.

Mayhew, L.

Stewart of Alvechurch, B.

Mishcon, L.

Stewart of Fulham, L.

Molloy, L.

Stoddart of Swindon, L.

Mulley, L.

Stone, L.

Northfield, L.

Strabolgi, L.

Oram, L.

Strauss, L.

Peart, L.

Taylor of Blackburn, L.

Perry of Walton, L.

Tordoff, L.

Phillips, B.

Underhill, L.

Ponsonby of Shulbrede, L. [Teller.]

Whaddon, L.

White, B.

Prys-Davies, L.

Wigoder, L.

Rathcreedan, L.

Willis, L.

Rochester, L.

Winstanley, L.

Ross of Marnock, L.

Wootton of Abinger, B.

Sefton of Garston, L.

Young of Darlington, L.

NOT-CONTENTS

Ailsa, M.

Halsbury, E.

Alexander of Tunis, E.

Hampden, V.

Allerton, L.

Harvington, L.

Alport, L.

Hawke, L.

Atholl, D.

Henley, L.

Auckland, L.

Hill of Luton, L.

Avon, E.

Hives, L.

Bauer, L.

Hylton-Foster, B.

Belhaven and Stenton, L.

Ilchester, E.

Bellwin, L.

Kaberry of Adel, L.

Beloff, L.

Killearn, L.

Belstead, L.

Kinloss, Ly.

Bessborough, E.

Kinnaird, L.

Bolton, L.

Lauderdale, E.

Brabazon of Tara, L.

Lawrence, L.

Broxbourne, L.

Long, V. [Teller.]

Bruce-Gardyne, L.

Loudoun, C.

Caccia, L.

Lucas of Chilworth, L.

Caithness, E.

Luke, L.

Caldecote, V.

Lyell, L.

Campbell of Alloway, L.

McAlpine of West Green, L.

Cathcart, E.

McFadzean, L.

Chelwood, L.

Mackay of Clashfern, L.

Cockfield, L.

Macleod of Borve, B.

Coleraine, L.

Mancroft, L.

Cork and Orrery, E.

Margadale, L.

Cornwallis, L.

Marley, L.

Cottesloe, L.

Marshall of Leeds, L.

Craigavon, V.

Maude of Stratford-upon-Avon, L.

Craigmyle, L.

Daventry, V.

Melville, V.

Denham, L.

Merrivale, L.

Digby, L.

Mersey, V.

Dilhorne, V.

Middleton, L.

Drumalbyn, L.

Molson, L.

Eccles, V.

Monson, L.

Ellenborough, L.

Montgomery of Alamein, V.

Elton, L.

Morris, L.

Enniskillen, E.

Mottistone, L.

Faithfull, B.

Mountgarret, V.

Fanshawe of Richmond, L.

Murton of Lindisfame, L.

Fortescue, E.

Newall, L.

Fraser of Kilmorack, L.

Northchurch, B.

Gardner of Parkes, B.

Nugent of Guildford, L.

Gisborough, L.

Onslow, E.

Glanusk, L.

Orkney, E.

Glasgow, E.

Pender, L.

Glenarthur, L.

Peyton of Yeovil, L.

Gormanston, V.

Porritt, L.

Gowrie, E.

Rankeillour, L.

Gray of Contin, L.

Reay, L.

Greenway, L.

Redesdale, L.

Gridley, L.

Renton, L.

Grimston of Westbury, L.

Rochdale, V.

Hailsham of Saint Marylebone, L.

Romney, E.

St. Davids, V.

1137

Saint Oswald, L.

Swinfen, L.

Saltoun, Ly.

Swinton, E. [Teller.]

Sandford, L.

Terrington, L.

Sandys, L.

Teviot, L.

Selkirk, E.

Thomas of Swynnerton, L.

Sempill, Ly.

Thorneycroft, L.

Shannon, E.

Torphichen, L.

Sharples, B.

Trumpington, B.

Skelmersdale, L.

Tweedsmuir, L.

Somers, L.

Vaizey, L.

Spens, L.

Vaux of Harrowden, L.

Stamp, L.

Whitelaw, V.

Stodart of Leaston, L.

Windlesham, L.

Strathspey, L.

Wynford, L.

Suffield, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
[Amendment No. 115 not moved.]
Clause 60 [Conversion of certain loans transferred to the successor company]:
5.16 p.m.
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 116:
Page 55, line 21, leave out lines 21 and 22 and insert—
("(4) For the purposes of subsection (2) above—").
The noble Lord said: My Lords, this amendment is concerned with the operation of Clause 60 of the Bill, which deals with the conversion of certain loans transferred to the successor company. At the end of the financial year ending 31st March 1983 there were loans from the Secretary of State to British Telecom amounting to £2,943.7 million. That was the amount according to the accounts. But of course the accounting period has now ended, and earlier, during last month, I put down a Question to the noble Lord so that we could have the make-up of the amounts of capital and interest receivable by the Secretary of State, both principal and interest, until all the loans were repaid.
The noble Lord was kind enough to oblige me with all the figures for the years 1984–85 right the way through to 2003–04, which showed a schedule of the loans and how they were going to be repaid in terms of both principal and interest. Although the sums involved are rather more than one normally deals with, perhaps it may be for the convenience of your Lordships if I say that the loans and interest repayable by British Telecom back to the Secretary of State over the next 20 years would amount to something like £6,084 million.
Clause 60 seeks to give power for the extinguishment of these loans, and the substitution in place of the loans of debentures in favour of the Secretary of State. There are other matters concerned with the debentures which we shall find it more convenient to discuss at a later stage. However, on the assumption that this operation went through—that is to say, all the loans made by the Secretary of State to British Telecom were in fact converted into debentures—the state would lose nothing.
On the assumption that the terms of repayment and the amount of interest due to the Secretary of State over the period were apportioned over the life of the proposed debentures, once again the Secretary of State ultimately would lose no money. All he would have
1138
would be debentures in place of his entitlement under whatever loan documents passed between himself and British Telecom. So far, so good.
The Bill itself in subsection (4) says this:
"Except as may be agreed between the Secretary of State and the successor company".
Then, this is the provision I seek to remove and to replace by the words, "For the purposes of subsection (2) above". It provides:
"the aggregate of the principal sums payable under debentures issued in pursuance of this section shall be equal to the aggregate of the sums the liability to repay which is extinguished by the order; and (b) the terms as to the payment of the principal sums so payable, and as to the payment of interest thereon, shall be the same as the corresponding terms of the transferred loans specified in the order".
The words that give me some trouble are the words:
"Except as may be agreed between the Secretary of State and the successor company".
Clearly, if the successor company had it in mind it could persuade the Secretary of State to extinguish a greater amount of loan than was covered by the debenture. I know that that is not the noble Lord's intention. I read his explanatory note, which is admirable in its way and deals with certain taxation aspects of the matter which, if my memory serves me aright, are covered by Section 48(10) of the Finance Act 1981, which ensures that there is no taxation disadvantage as a result of this operation. Indeed, that may be necessary, and I am not disputing the necessity for the noble Lord to bring himself within that clause.
What bothers me are the words, "except with the agreement of the successor company." I repeat that if the successor company comes to the noble Lord and says, "It will be convenient for us to have at least half of this loan extinguished because it would help our prospects considerably", and if the company succeeded in persuading the noble Lord about that—and the noble Lord's party is not exactly hardhearted when it comes to the vested interests which sustain it either financially or by their broad and general support at election time—then I seek to prevent the noble Lord from succumbing to that spirited generosity which he might be tempted to exercise in favour of his friends. All this amendment seeks to do is to ensure that the state does not lose any money; that when a debt is extinguished then it is covered by a debenture on the terms substantially as set out in Clause 60(4).
Perhaps I should mention this further point because the noble Lord has been a little silent on it so far. It arises on this clause. I should inform your Lordships that it is not a Second Reading point. It is a point on which possibly the City would desire to have some earnest information. When the Bill says "debenture", what kind of debenture do the Government have in mind? What kind of rights will attach to the debenture? Is the debenture to be redeemable over a period of time, roughly in accordance with the loan schedules of the original loans by the Secretary of State? Is it to be secured by a charge on any of the assets of the successor company to British Telecom? Is there to be a floating charge on the assets for the time being of the successor company? What kind of debenture do we have in mind?
It will be necessary for those who propose, when eventually the prospectus arrives, to invest their

1139
money in acquiring the Government's shares to know what claims there are on the business of the company prior to their own equity claims. Perhaps it would be of advantage if the noble Lord took this opportunity, although it does not arise specifically on this amendment, to take us a little more into his confidence and to give us in general terms, without necessarily committing himself—because he may want to consult his stockbroker, his advisers, his accountants, his lawyers, his bankers and everybody else before he commits himself—a rough idea of what he has in mind. That would reassure the City to the extent that it may need to be reassured, as it will have to be reassured because a long time will elapse before the prospectus ever sees the light of day.
I sincerely hope that the amendment will commend itself to the House. I repeat that it does not seek to make any party point. It seeks to close a loophole which exists by virtue of the wording that has been used in the subsection. I repeat that I am sure the noble Lord would not wish to use it in the sense that I have suggested he might be able to use it. I agree that his purpose in introducing this wording may have been totally different. But we are dealing with what will become an Act of Parliament. I should not like it to be said at some later stage, if, for some reason, perhaps, some other Government or some other Minister were to extinguish a loan to the successor company without due consideration, that your Lordships' House, in relying on the good intentions of the Government, left a loophole for a successor Government, of whatever hue it might be, to drive a horse and carriage through the expressed intentions of the noble Lord. I beg to move.
Lord Cockfield: My Lords, this is essentially a technical matter. It does not raise any point of political importance, and perhaps I might discuss it on that basis. I am sure that would be acceptable to the noble Lord, Lord Bruce of Donington, because we should like to allay some of the anxieties that he has expressed. I should start by saying that although Clause 60 is long and complex, its main objective is to close a tax loophole. That is a matter on which there would be no disagreement on any side of the House.
The amendment is directed to a specific point; namely, to prevent the powers in Clause 60 being used to reduce British Telecom's debts to the Government. That is the essential point of it. I must make it clear from the outset that the clause is not intended to be an instrument for reducing the monies due from British Telecom to the Government. An undertaking to this effect was given in another place when the clause was first introduced in the original 1982 Bill. I will repeat that undertaking to your Lordships today. I am quoting from the Official Report of Standing Committee H on 3rd March 1983, column 1390. The undertaking was as follows:
"We shall not seek to use powers under this Clause either to impose additional debt burdens on the successor company or to relieve it of the burden attaching to the servicing and repayment of NLF debt so transformed"—
that is, so transformed into debentures.
The Government have not yet decided the successor company's capital structure. Our aim is to give the successor company a sound capital structure to start
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off in the private sector. If it was judged appropriate to improve the successor company's debt-to-equity ratio, one way to achieve this would be through Clause 61 which would allow the Secretary of State to subscribe for new shares and offer up debentures in payment for them. This method would not be affected by the amendment. It would not in any case amount to a write off of the public investment in British Telecom since Government loans to British Telecom would be replaced by Government-held equity. So the degree of flexibility provided for in subsection (4) of the clause does not have a sinister intention. Rather it is aimed at allowing British Telecom's debt to be on appropriate terms.
It would allow a different schedule of repayment of the debentures to be adopted. Debentures might need to be re-financed by new borrowing as they are repaid, so that the repayment schedule must take into account both prudent financial planning by the company and the capacity of the market for new borrowings. In the past, when NLF loans were issued to British Telecom, these considerations did not apply because the Government raised the required funds to refinance the NLF loans. The result is that the schedule for British Telecom's NLF finance—and this comes out very clearly in the written reply that I gave to the noble Lord—shows sharp fluctuations from one year to the next and it may well be desirable to smooth out these fluctuations before the successor company is floated.
Such rescheduling of British Telecom's debt might involve a change in the apportionment of payments as between interest and capital which would not necessarily mean any reduction in the overall debt burden. As I have said, Government have other powers to implement the capital structure which they determine as appropriate for the successor company. This is the type of issue which underlies the need for flexibility over the terms of the debenture. I have repeated the undertaking that we will not use the powers under this clause to write off British Telecom's debt. The noble Lord has, of course, a legitimate anxiety on this point. I hope that I have met that anxiety.
Perhaps I might go further and say that under Subsection (3) of Clause 60:
"The Secretary of State shall not make an order or give a direction under this section at a time when the successor company has ceased to be wholly owned by the Crown.".
In other words, the powers under Clause 60 relate to the period when the successor company is still wholly owned by the Crown so that any rescheduling of the debt would accrue to the benefit of the Exchequer and not to the benefit of anybody else. Although our clear intention is that the debt burden should not be altered by virtue of the conversion of the NLF loans into debentures—not by virtue of that—the fact of the matter is that if there were any change, the benefit would accrue to the Crown, to the Exchequer and not to people outside.
I hope very much indeed that on that basis the noble Lord would feel that I have answered the questions that were worrying him—quite legitimately worrying him, I accept. He also asked various questions about the terms of the debentures. This is a matter on which I would not be in a position to give an answer this afternoon. We act on advice from merchant bankers

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and from leading experts in this field; and the exact terms of the debentures will depend upon the circumstances existing at the time and on the advice that we were given. But as far as this clause is concerned—and there are powers to alter the structure elsewhere in the Bill—it is not intended either to impose an additional burden on British Telecom or to relieve them of a burden. I would hope that this explanation meets the point that the noble Lord raised.
5.35 p.m.
Lord Bruce of Donington: My Lords, I am grateful to the noble Lord for the comprehensive nature of his reply. May I tell him on behalf of those who sit on this side of the House that his explicit undertaking is fully acceptable to us? We are quite sure that he would not have given it without complete authority to put himself in that position. However, it indicates that my anxieties concerning the actual wording of the clause had their validity for otherwise it would not have been necessary to give the undertaking. I quite understand that the noble Lord is not in a position to give us further particulars at this time—not even off the cuff—concerning the debentures. This may have to wait for two or three years' time when the issue becomes feasible.
In the meantime and in a spirit of reciprocity I have endeavoured to do one or two little sums for his assistance. He mentioned that it would be necessary—and I quite accept the point—to smooth out the repayments of principal and the payments of interest over the whole period covered by the loan or, indeed, perhaps over some other period, possibly shorter. If he adopted that course, he ought perhaps to be aware that there are certain disadvantages from the point of view of the cash flow to the Exchequer. We are all concerned with taxpayers' money, and since we are operating within cash limits any money that ought to come into the Exchequer in the normal way which no longer comes into it until a later date means that a fresh pressure is put on the Government and, particularly, on the Government's expenditure limits which are defined presumably on the basis not only of making allowance for the PSBR but also on the basis of the income projected.
If the noble Lord's department issued debentures on a 20-year basis—which covers the life of the present series of loans—and spread the interest over on the principal also spread over, it would mean that they would receive on a 20-year debenture only interest for the first four years. I am dealing with a four-year period because it covers the remaining period of the Government being in office, unless there are any more banana skins. This interest would be of about £681·2 million. If they are a 10-year debenture, the receipts of interest during that four years would be £1,362·6 million. Under arrangements that now exist, assuming that the loans were not disturbed in any way or converted into debentures, the Government would receive over the next four years some £279 million only by way of principal and some £1,048 million in terms of interest, which makes a total of £1,427 million receivable by them in cash over the next four year period. If they converted into a 20-year debenture, there would be a shortfall to the Exchequer
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of £846 million. If it is on a 10-year debenture (which would imply, obviously, a higher rate of interest) then the shortfall would be only £64·7 million.
The point that I am making to the noble Lord is simply this: privatisation is not without its disadvantages, and if the noble Lord is talking about cash flow—which is what they are fundamentally concerned with—this conversion into debentures, within the context of the noble Lord's remarks, is going to be a pretty costly operation and to some extent will take away the benefit that his right honourable friend the Chancellor of the Exchequer hopes to obtain by the sale of the shares in the successor company, But, that is by way of reciprocity to alert him possibly to an argument that I may embark upon at a later stage on this particular subject. In the meantime, we are glad to accept the noble Lord's assurance and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 63 [Target investment limit for Government shareholding]:
Lord Cockfield Lord Cockfield moved Amendment No. 116A:
Page 57, line 7, leave out ("made by statutory instrument")
The noble Lord said: My Lords, this is simply a tidying-up amendment. The words in question in fact do appear in Clause 97 and it is quite unnecessary for them to be repeated again in this particular clause. It is simply to tidy up the drafting; it has no meaning otherwise.
On Question, amendment agreed to.
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 117:
Page 57, line 24, leave out paragraph (a).
The noble Lord said: My Lords, I beg to move the amendment standing on the Order Paper in my name and those of my noble friends; associated with it, of course, and to be read together with it, is Amendment No. 118:
Amendment No. 118:
Page 57, line 25, leave out ("and (b)").
My Lords, it will be recalled that Clause 63 give the Government power to set a target investment limit for the Government shareholding in the new successor company. Before I proceed with that aspect of the matter, may I recall to the mind of the noble Lord the words that fell from his lips when we were discussing the previous amendment, when he indicated that one of the ways of getting over the debenture difficulty, which we discussed together at some technical length, would be the issue of equity in place of debentures in the new company. I suddenly thought at the time that he was already limiting himself by fixing targets under Clause 63; how does that square with what he has just told me about substituting equity shares for debentures in complying with the previous section? I thought it would he unkind to do it at that stage because he had been so accommodating in his undertaking, but I feel it proper to refer to the point now.
There is nothing to stop the Government from fixing a target investment for a Government shareholding in the successor company. I believe that initially it will be

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set at 50 per cent. and, according to the provisions of the clause, they can alter this target from time to time. Doubtless the noble Lord will bear in mind that any shareholding above 30 per cent. (or possibly sometimes even lower under conditions where shareholdings are quite widely fragmented) in fact still gives an effective control. Presumably it is with that in mind that the noble Lord has sought the authority of the Bill itself to fix new investment targets, and this one—No. 4—has a ratchet effect. Once a target is fixed, the next target certainly must not be higher than the previous one; in fact it must be lower so there is a ratchet effect downwards. The noble Lord was quite frank about this. His Notes on Clauses expressed the reason quite succinctly.
The reason why this is being done is to make it more difficult for a successor Government to re-nationalise. This is the main purpose. If the Government's holding progressively disappears and disappears to a point where it becomes insignificant in terms of the exercise of any control or the presence of any significant Government stake, in the view of the noble Lord it is unlikely to be easy to renationalise except by having fresh legislation. I hasten to assure him that there are ways which have been thought out to circumvent the noble Lord, but it would not be proper, of course, and it would not be in accordance with party security to inform him what ideas we have in mind to circumvent him.
Nevertheless, it is an undesirable feature in a Bill to build in a ratchet factor of this kind. I was rather hoping that the noble Lord would take the confident view that the benefits of privatisation would be so manifest to all the consumers, to all the manufacturers, to all the politicians and to the whole world that no one would ever dream of wanting to depart from the privatisation of the concern. Evidently the noble Lord is not so confident. He may think that after a while the public will be disenchanted and therefore he has to build something into the Bill to prevent the easy undoing of the evil. I use the word "evil" only in the pejorative sense, not in any sense of real evil, but evil that he has done to the economy. I should have thought his own confidence in the efficiency and attractiveness of what his Government proposes to do would make such a step unnecessary. In any event, if the ratchet effect were put into a Bill of this kind with deliberate intent, regardless of what the consequences would be, this would be very undesirable. I beg to move.
Lord Cockfield: My Lords, may I deal with the technical point before dealing with the political point? The powers in Clauses 59 and 60 are expressed to be usable only in the period before the successor company ceases to be wholly owned by the Crown. That appers in Clause 59(2) and again in Clause 60(3). The target investment limit deals with the situation when and after the successor company is privatised. That is the answer to the preliminary technical point raised by the noble Lord, Lord Bruce of Donington.
Subsection (4)(a) of Clause 63, which is the matter to which the amendment relates, is designed to block a loophole which could have been exploited by a future Labour Government to renationalise British
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Telecommunications without full and proper parliamentary authority. Therefore, it is a vital element in this Bill. The Government shareholding in normal circumstances cannot exceed the target investment limit. By providing that each new target investment limit must be lower than its predecessor, subsection (4)(a) ensures there can be no increase in the shareholding of the Government by the device of setting a new increased investment limit and then purchasing shares in the market. Therefore, the subsection prevents renationalisation of British Telecommunications by a future Government simply buying shares in the market.
Subsection (4)(a) therefore ensures that primary legislation would be required if a different administration wanted to renationalise British Telecommunications. It is surely right and proper that a privatisation brought about by primary legislation should require fresh primary legislation to reverse it. Indeed, I am very much surprised that the noble Lord, Lord Bruce of Donington, who has throughout advocated greater parliamentary involvement and who advocated the affirmative resolution procedure for the target investment limit during Committee stage, should now be prepared to put forward an amendment which would deny Parliament the right to primary legislation on such an important matter.
I suggest that the purpose of the amendment is simply to undermine the privatisation of British Telecommunications by creating doubt and uncertainty. Privatisation is an integral part of the Bill and is something for which we have an electoral mandate. On this ground alone, quite apart from the other points I have made, I must ask your Lordships to reject the amendment.
5.50 p.m.
Lord Bruce of Donington: My Lords, I am most disappointed with the noble Lord's response. May I point out to him that had he taken the suggestion that all these matters be brought under parliamentary control his anxieties would not have existed, because parliamentary control would have secured the operation of the "ratchet clause" as well as the other clause, so that in rejecting my suggestion that the whole thing should be brought under parliamentary control he has only contributed to the uncertainty.
I still think it is a bad thing to take a specific step of this kind. Governments in the normal way do not, in the absence of legislation, need any particular parliamentary power to invest in ordinary companies today. They already have sufficient powers to do that. I think it is called in some quarters "back-door nationalisation", but there is nothing inherently wrong in any government buying shares in any particular company so long as they can account to Parliament for their money in the usual estimates and eventually on appropriation account, and so on, and also, in important circumstances, by parliamentary debate.
The noble Lord has made quite clear his determination that all possible resistance will be encountered by an incoming Labour Government to do what is the proper thing, and I hasten to assure him that this Bill will be repealed—there is no question about that—and in such a form as to cause the minimum dislocation to any practical steps that have

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already been taken. But certainly if we have the privatised organisation, together with this terrific machinery of regulation which the noble Lord is establishing, on the assumption that it does not collapse of its own accord, it will certainly be necessary for us to take steps to protect the whole telecommunications industry and to protect the consumer in due course by restoring British Telecom to what it was before: a responsible public service. I am sorry the noble Lord cannot accept the amendment, but I have no desire to ask your Lordships to tramp through the Lobbies on this occasion and I beg to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 118 not moved.]
Lord Stoddart of Swindon Lord Stoddart of Swindon had given notice of his intention to move Amendment No. 119:
After Clause 66, insert the following new clause:
("Duties of successor company.
The successor company shall satisfy the Secretary of State that it will—

(a) establish adequate consultative procedures including provision for industrial democracy;

(b) negotiate terms and conditions of employment including pay, promotion, job security and pensions;

(c) promote and encourage satisfactory levels of recruitment training, safety, health and welfare, for its employees.").

The noble Lord said: My Lords, I am in some difficulty here and I hope that you will bear with me. I notice that an amendment in identical terms to this was discussed and voted down at Committee stage, but we felt so strongly on the matter, which we felt to be of prime importance, that we put this amendment down for Report stage. However, in our view, it would be an abuse of the procedures of your Lordships' House to move this amendment again, and we do not wish to countenance such an abuse. Therefore, on the basis that perhaps the Government may have some discussions on this before Third Reading, I do not propose to move the amendment.
[Amendment No. 119 not moved.]
Clause 68 [Application of law in relation to offer of shares or debentures of the successor company]:
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 120:
Page 61, line 10, leave out ("includes") and insert ("comprises").
The noble Lord said: My Lords, I beg leave to move this amendment and I propose to take Amendments Nos. 120, 121 and 122 together.
Amendment No. 121: Page 61, line 17, at end insert ("and of subsection (6) of section 38 of the Companies Act 1948").
Amendment No. 122: Page 61, line 41, leave out ("any document") and insert ("the notice given by the Secretary of State under subsection (2) above").
The first amendment would take out the word "includes"—a rather ambiguous word—and to insert the word "comprises". The reason is that we are dealing here with a prospectus, except in certain circumstances which are laid down in later parts of the Bill, and in our view it is not desirable that it should go beyond the items that are set out in Clause 68(2)(a), (b) and (c). We have in paragraph (a) the following—
"a brief description of the shares or debentures offered, the terms of the offer, the successor company's business and its financial position".
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In paragraphs (b) and (c) we have the following:
"an addition of the places in the United Kingdom where copies of the offer prospectus are to be available for inspection by members of the public: and (c) a statement of the effect of subsections (4) and (5) below".
These lay down various other conditions. We do not think that "includes" is right, because a lot of other documents could be incorporated in the same package.
Amendment No. 121 has the intention that the subsection referred to should also state the requirements of Section 38 of the Companies Act 1948, which are in fact an authentication of everything that is sent out. If the noble Lord refers to Clause 38 of the Companies Act he will find that it requires that the documents be true and fair, and all the rest of it, and we think it would be advisable for that to be included.
Amendment No. 122 refers to subsection (5) in regard to the prospectus and would make it read as follows:
"(5) Where a form of application is issued without a full prospectus, neither the form of application nor the notice given by the Secretary of State under subsection (2) above which is issued with it shall be regarded"—
and so on.
It prevents, therefore, the inclusion of any other documents and in our view makes the matter more precise. At the same time we have to reiterate our own dismay that it should he necessary in this legislation to make a special exemption to British Telecom or to the successor company for the issue of this prospectus. Of course, we do not know how this is going to he done, but we do know that purely because the number of prospective investors is large the normal requirements of the Stock Exchange in regard to the prospectus are not going to be carried out in this particular case. We do not view that with any approval at all.
We may introduce an amendment on Third Reading, unless the noble Lord anticipates us by making it compulsory under this clause to have a copy of the full prospectus available at every Post Office throughout the United Kingdom. That might minimise a certain amount of the damage that is being done by having an abbreviated prospectus in accordance with this particular clause. But that is for later, and I beg to move.
Lord Morris: My Lords, I am concerned about this amendment because the word "includes" is necessarily broad and the word "comprises" would surely mean that those matters which should be included in the notice could comprise these items, to the exclusion of anything else. I think it would be damaging to restrict it in this way. As such it would be damaging to restrict what should go into the prospectus, leave it more open.
The Lord Advocate (Lord Mackay of Clashfern): My Lords, I am grateful to my noble friend Lord Morris. That is our objection to the first amendment, No. 120. The object of all the provisions with which this part of the Bill is dealing is to provide a minimum standard of protection, and it would seem unwise to provide unnecessarily for a restriction of the information which could be put into the notice.

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The second Amendment, No. 121, asks that a statement of the effect of Section 38(6) of the Companies Act 1948 should be put in. As I understand Section 38(6), it provides that nothing in Section 38 will diminish any liability incurred under the general law or under any other section of the Companies Act 1948. I must confess I cannot see the point of putting that kind of observation at the end of the notice, and it does not appear to reflect exactly what the noble Lord. Lord Bruce of Donington, had in mind when he spoke earlier. If I may say so with all respect, I could see much more force in having something in the notice on the lines of what he described in his speech, rather than the provision of the section. It may be that he will want to give some further consideration to that aspect of the matter.
So far as the third amendment, No. 122, is concerned, that is, in effect, to remove the words "any document" from subsection (5). Again, it appears right to preserve flexibility in precisely what one sends out, so long as the Secretary of State is responsible for it, and that is the situation. So long as a proper notice is issued with the application form in circumstances where the full prospectus is very widely available, I can see no reason why additional, helpful information should not be included with the documentation.
There is a more technical reason why the words "any document" should stay. In the very unlikely case that the notice under subsection (2) was not properly issued, and was not a proper notice in the terms of subsection (2), it would not amount to a,
"notice given by the Secretary of State under subsection (2)".
Since this document is issued by the Secretary of State on his sole responsibility, it would not be fair that other persons, such as the directors of British Telecom, should bear any liability for damage caused by that defect.
Such a document should not be regarded as a prospectus or circular, any more than a properly issued notice would be, so far as these other persons are concerned. That is the purpose of the last four lines of subsection (5). Therefore, while I appreciate a good deal of what the noble Lord has said, and, in particular, the indication he gave of what might be his intention at a later stage of the Bill, I hope that in the light of these explanations he may feel able not to press these amendments.
Lord Weinstock: My Lords, before the noble and learned Lord sits down, I must apologise to the noble Lord, Lord Bruce of Donington, for the fact that I did not hear his opening remarks concerning this amendment. I did not know that Amendments Nos. 120 and 121 would be considered with Amendment No. 122, and the annunciator screen outside did not indicate that they were being so considered.
In moving in Committee the amendment which is now Clause 68 of the Bill, the noble and learned Lord the Lord Advocate said that it would permit the Secretary of State to issue application forms for British Telecom PLC shares without a full prospectus. The noble and learned Lord justified this on the ground that it is to meet an exceptional need with an exceptional measure. In other words, the Government have decided to change the normal rules for protecting
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investors, simply because it suits them to do so. The noble and learned Lord asserted that, far from withdrawing the protection of the law from those investors, the Government are giving them all the protection of the law and more. If this were the case, other companies would presumably be allowed to invite subscriptions from the public for shares, in the same way as the Government here seek to do.
But, of course, that is not the case. The real reason for the clause is that the Government are rushing to remove all obstacles, legal and other, to get their hands on the proceeds of the sale of the BT shares. Clause 68 demonstrates a wanton disregard for the principle of equal treatment under the law. I urge your Lordships to vote in favour of this amendment, which attempts to reduce a thoroughly undesirable deviation from the normal practice. If, on the other hand, the Bill stands as it is at present, I give notice that I intend to refer further to the matter, among others, on Third Reading.
Lord Bruce of Donington: My Lords, I thank the noble and learned Lord the Lord Advocate for the remarks he made in response to the amendment that I moved. I think there was a slight misunderstanding between us. My proposed insertion of a reference to subsection (6) of Section 38 of the Companies Act was to remind the general public that the Secretary of State himself had the same liabilities as directors, under the Companies Act, for any misleading statements that are made. It it rather an obverse way of putting it, but that was my intention.
In regard to subsection (5), the reason for that amendment, as I have already explained, is so that a cascade of documents does not go into the same envelope as any abbreviated form of prospectus that goes out. As the noble and learned Lord knows full well, the normal practice is that when prospectuses are sent out they are accompanied by an application form and that is the lot. There is not a lot of blurb going with it, advertising the virtues of the issue or making any other statements, whether in printed form or otherwise, to persuade investors to invest, notwithstanding the contents of the prospectus. It is with the objective of restricting the material that can be sent to these prospective investors that I am principally concerned.
I am completely at one with the noble Lord, Lord Weinstock, in deploring the fact that there should be this special departure, in this special circumstance, from the law that applies generally to those who issue invitations to the public to invest. But I am bound to accept the Bill as it is now and must try to limit its damage, if that is possible.
If the noble and learned Lord gives me an undertaking that when these documents are issued the Secretary of State will take full personal responsibility that they will be confined to a summary of prospectus—whatever form that may take, and of which I entirely disapprove—and an application form, and will not have any Government blurb offering further inducements to investors, then I shall withdraw the amendment. Is the noble and learned Lord in a position to give that undertaking, that the only departure from the normal issue of a prospectus will by the issue of an abbreviated form of prospectus,

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rather than a full one, and that no other documents will go out with the application form?
Lord Mackay of Clashfern: My Lords, with the leave of the House, I sought to explain fairly fully in Committee why we wished to make possible this course of action in this case. It appears impracticable to achieve a wide circulation of a prospectus of the size that this one would be in the time that is available from the date at which the price is fixed to the date at which the prospectus has to be issued. As I explained at the Committee stage, and your Lordships accepted my explanation, there is a good reason for doing this. It is highly desirable that the shares of British Telecom should be spread as far as possible.
I understand what the noble Lord, Lord Bruce of Donington, has suggested in his amendments. The point I have made is that the Secretary of State will be responsible for every statement in these documents. I do not consider that the amendments which the noble Lord has put forward are desirable in the interests of the objectives which he has in mind. It does not seem to be right unduly to restrict the way in which these minimum conditions are met in the circumstances with which we are faced. Therefore, as I have already said, it is apparent that the Secretary of State will have responsibility for all that goes into documents issued by him. The purpose of the last part of Clause 5 is to maintain that position, and it seems to me that this is sufficient to meet the point which the noble Lord has made.
On Question, amendment negatived.
[Amendments Nos. 121 and 122 not moved.]
6.12 p.m.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Glenarthur The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Glenarthur) moved Amendment No. 123:
Before Clause 72, insert the following new clause:
("Restriction on revocation or variation of certain wireless telegraphy licences.
. The following section shall be inserted in the 1949 Act immediately after section 3—
"Restriction on revocation or variation of certain wireless telegraphy licenses.
3A.—(1) Subject to subsection (2) below, this section appies in any case where a wireless telegraphy licence is granted to any person who holds a licence granted under section 7 of the Telecommunications Act 1984 ("the telecommunications licence") authorising the running of a telecommunication system ("the system"), and the wireless telegraphy licence authorises all or any of the following, that is to say—

(a) the establishment of stations for wireless telegraphy or the installation of apparatus for wireless telegraphy, being stations or apparatus forming or intended to form part of the system;

(b) the use of any such stations or apparatus in running the system; and

(c) the installation and use for the purposes of the system (whether by the holder of the licence or by any other person) of any such apparatus connected or intended to be connected to the system.

(2) This section does not apply unless the telecommunications licence is one to which section 8 of that Act applies (licences including conditions imposing certain obligations with respect to the provision of telecommunications services or other matters).
(3) In any case to which this section applies the wireless telegraphy licence may include terms restricting the exercise by the Secretary of State of his power under section 1(4) of this Act to revoke or vary the licence.
(4) Without prejudice to the generality of sub-section
(3) above, the terms that may be included in a wireless
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telegraphy licence by virtue of that subsection include, in particular, terms providing that the licence may not be revoked or varied except with the consent of the holder of the licence or (as the case may be) in such other circumstances and on such grounds as may be specified in the licence.
(5) Any such circumstances or grounds may relate to matters relevant for the purposes of the Telecommunications Act 1984 as well as to matters relevant for the purposes of this Act (and may, in particular, be dependent upon action taken under that Act in relation to the telecommunications licence).
(6) A wireless telegraphy licence containing any terms included in the licence by virtue of subsection (3) above may also provide that regulations made under section 3 of this Act—

(a) shall not apply in relation to any station or apparatus to which the licence relates; or

(b) shall apply in relation to any such station or apparatus to such an extent only, or subject to such modifications, as may be specified in the licence.

(7) Notwithstanding any terms or provisions included in a wireless telegraphy licence in accordance with this section the Secretary of State may at any time, by a notice in writing served on the holder of this licence, revoke the licence or vary its terms, provisions or limitations, if it appears to him to be requisite or expedient to do so in the interests of national security or relations with the government of a country or territory outside the United Kingdom.
(8) Expressions used in this section to which a meaning is given for the purposes of the Telecommunications Act 1984 have the same meaning in this section; and section 99(4) of that Act (interpretation of power of Secretary of State to give a direction if it appears to him to be requisite or expedient to do so as mentioned in subsection (7) above) shall apply in relation to the power of the Secretary of State under subsection (7) above to revoke or vary a wireless telegraphy licence as it applies to any power of the Secretary of State under that Act to give such a direction.".")
The noble Lord said: My Lords, at the Committee stage, in response to an amendment tabled by my noble friend Lord Trenchard, the Government undertook to put down an amendment at Report to enable the Secretary of State to grant some security of tenure of wireless telegraphy licences to public telecommunications operators who need such licences to run their systems. This new clause is the result. As I said at the time, the Government agree that there is a need for some security of tenure when wireless telegraphy licences are issued to holders of public telecommunications licences, such as Mercury, the Cellular Radio Consortia and British Telecom. The new clause is designed to ensure that this can be provided.
The amendment will enable the Secretary of State to grant, within certain limits, security of tenure of a wireless telegraphy licence to holders of a telecommunications licence under Clause 7 of the Bill, to which Clause 8 applies. That is subsections (1), (2) and (3). This will cover public telecommunications operators and any other holder of a similar telecommunications licence, even if not yet designated under Clause 9 as a public telecommunications operator.
The provision allows the Secretary of State to provide for revocation or variation only with the consent of the licensee or in such circumstances and on such grounds as may be specified in the licence. That is subsection (4). It does, however, also provide for revocation or variation, notwithstanding that provision, in the interests of national security or

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relations with a government outside the United Kingdom. That is subsection (7).
The clause also contains a provision to ensure that any regulations made under Section 3 of the Wireless Telegraphy Act 1949—there are none at present—about the use of wireless telegraphy do not impose requirements, in the case of licences containing security of tenure provisions, which conflict with those provisions—subsection (6) refers to that—and one which makes it clear that the circumstances or grounds for revocation or variation can include ones relating to matters relevant to this Bill. That provision is contained in subsection (5). This latter provision is desirable to make it clear that a wireless telegraphy licence can, under this section, be varied or revoked in line with any action taken in respect of the relevant telecommunications licences. This is appropriate because it would be a nonsense if it were not possible to keep the two in line with one another. I hope, after that explanation, that your Lordships will find the new clause to be satisfactory. I beg to move.
Lord Glanusk: My Lords, my name was associated with that of my noble friend Lord Trenchard at the Committee stage. In his unavoidable absence may I thank very sincerely my noble friend Lord Glenarthur for moving this new clause, which fully covers the amendments which we tabled. In subsection (3) we should perhaps have liked to see the word "shall" rather than the word "may", but I do not think that we shall argue over it. I am most grateful.
On Question, amendment agreed to.
Clause 74 [Substitution of new section for section 7 of the 1967 Act]:
Lord Lyell Lord Lyell moved Amendment No. 124:
Page 65, line 19, at beginning insert ("(1)").
The noble Lord said: My Lords, I beg to move Amendment No. 124, and with your Lordships' permission I should like to speak to Amendment No. 125.
Amendment No. 125: Page 67, line 47, at end insert—
("(2) Any order made under section 7 of the 1967 Act which is in force immediately before this section comes into force shall have effect—

(a) as if made under the new section 7 substituted by subsection (1) above; and

(b) as if it restricted, in the case of wireless telegraphy apparatus of any class or description specified in the order, the actions

mentioned in subsection (3)(a) and (d) of the new section; (and any such order may accordingly be varied or revoked by an order made under the new section).").
These two amendments are technical and are designed to ensure that orders made under the existing Section 7 of the Wireless Telegraphy Act 1967 are saved, pending the making of fresh orders under the new Section 7 which your Lordships will find in Clause 74 of the Bill.
I should briefly explain that this provision is necessary because the new Section 7 does not simply amend the existing order-making powers. It substitutes different ones. Accordingly, the contents of the orders under the new section will have to be fuller than they are at present. Any existing orders will, I understand, fall once the new section is in force. The
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amendment, which provides for any existing order to have effect as if it had been made under the new section, is intended to avoid any such situation arising. I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 125:
[Printed above.]
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 126:
After Clause 84 insert the following new clause:
("Wireless telegraphy functions of Director.
. It shall be the duty of the Director—

(a) to exercise such functions as may be assigned to him under any enactment relating to wireless telegraphy; and

(b) to provide the Secretary of State with such services as the Secretary of State may require him to provide for purposes connected with the exercise by the Secretary of State of the Secretary of State's functions in relation to wireless telegraphy.").

The noble Lord said: My Lords, this amendment was spoken to with Amendment No. 95. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 126A:
After Clause 86, insert the following new clause:
("Radio interference service.
.—(1) The payment out of money provided by Parliament of any expenses incurred by the Secretary of State in providing a radio interference service is hereby authorised.
(2) In this section "radio interference service" means a service consisting in the giving of advice and assistance (whether free of charge or otherwise) to persons complaining of interference with wireless telegraphy.").
The noble Lord said: My Lords, with the leave of the House, I beg to move Amendment No. 126A. At the same time I should like to speak to Amendment No. 141, the last amendment on the Marshalled List, as the amendments are related.
Amendment No. 141: Line 18, after second ("apparatus") insert ("to give statutory authority for the payment out of money provided by Parliament of expenses incurred by the Secretary of State in providing a radio interference service").
Amendment No. 126A, which adds a short new clause to the Bill, is intended to put on a statutory basis the power of the Secretary of State to meet the costs of the radio interference service which is provided on his behalf to investigate complaints of interference to authorised radio services, from whatever source. The related amendment, Amendment No. 141, amends the title of the Bill to take account of this new clause.
The radio interference service originated in the Post Office when the latter had responsibility for radio regulatory matters and there it stayed until the creation of British Telecom in 1981, when it passed to the latter body. Over the years, however, it has had several masters, as responsibility for radio regulation has shifted from one Government department to another. During all this time, however, the service has been funded by Parliament. Currently its costs are split between the Home Office, which pays for the investigation of complaints as to sound and TV broadcasting, and recoups the money from the TV

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licence fee revenue, and the Department of Trade and Industry. That is on two separate Votes. However, there has never been any express statutory provision for the expenditure. The Government are therefore taking this opportunity to make such provision. The amendment makes clear the Secretary of State's authority to pay for a radio interference service and so removes any doubt regarding the basis of the expenditure on the service. I beg to move.
Lord McIntosh of Haringey. My Lords, I have no wish to oppose this amendment but merely wish to pay tribute, as one who lives in the lee of a large block of flats which have minicab radio operators' aerials on their roofs, to the work of the radio interference service. I am delighted to see that its financing is being given statutory authority.
On Question, amendment agreed to.
The Deputy Speaker (Baroness Wootton of Abinger): My Lords, the next two amendments are printed in the wrong order on the Marshalled List. We shall have to take Amendment No. 126C before Amendment No. 126B.
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 126C:
After Clause 88, insert the following new Clause—
("Power of Secretary of State to make orders under Fair Trading Act 1973 etc.
—(1) Where in the circumstances mentioned in subsection (2) below the Secretary of State by order exercises any of the powers specified in Parts I and II of Schedule 8 to the 1973 Act or section 10(2)(a) of the 1980 Act, the order may also provide for the revocation or modification of licences granted under section 7 above to such extent as may be necessary to give effect or to take account of any provision made by the order.
(2) Subsection (1) above shall have effect where—

(a) the circumstances are as mentioned in section 56(1) of the 1973 Act (order on report on monopoly reference) and the monopoly situation exists in relation to a commercial activity connected with telecommunications;

(b) the circumstances are as mentioned in section 73(1) of that Act (order on report on merger reference) and the two or more enterprises which ceased to be distinct enterprises were engaged in such an activity; or

(c) the circumstances are as mentioned in section 10(1) of the 1980 Act (order on report on completion reference) and the anti-competitive practice relates tothe production, supply or acquisition of telecommunication apparatus or the supply or securing of telecommunication services.

(3) Expressions used in this section which are also used in the 1973 Act or the 1980 Act have the same meanings as in that Act.")
The noble and learned Lord said: My Lords, this is a largely technical amendment. It introduces a new clause which gives the Secretary of State power to modify the provisions of telecommunications licences when he makes orders under the Competition and Fair Trading Acts to the extent necessary to give effect to such an order.
Normally, if it is necessary to modify conditions in telecommunication licences this will be done under the procedures set out in Clauses 12 to 15. These set out precise procedures on how licences can be amended. However, circumstances could arise when the Monopolies and Mergers Commission considered matters relating to telecommunications on a monopoly reference under the Fair Trading Act, or on a competiton reference under the Competition Act.
The commission could recommend that a telecommunications operator should cease engaging in a particular practice, should terminate a particular agreement, or, if there is a merger, that he should not acquire a rival's telecommunications business. The Secretary of State would then be in a position to make a formal order terminating the practice or requiring the agreement to be changed, or controlling the merger. These things would all he done under the Fair Trading and Competition Acts using the powers contained in those Acts.
It is possible that an order made under the Fair Trading or the Competiton Act might be incompatible with a provision in a telcommunications licence. For example, an order under paragraph 12 of Schedule 8 to the Fair Trading Act following a merger reference could prohibit a person who held a telecommunications licence from providing particular telecommunications services but the licence of the person concerned might permit him to provide those services. It is obviously desirable that the licence should be brought into line with the order, and this new clause makes provision for this.
It may be helpful if I emphasised that this power to modify licences is very limited. The power can only be exercised if the Secretary of State makes an order, which is something he has done very rarely—and then its extent is limited to what is necessary to give effect to or take account of any provision made by the order in question. The new clause does not in any way alter the normal procedures which ensure that the modification of licence conditions is carried out independently of Government and under procedures which ensure due process and an opportunity for representations to be made. I beg to move.
On Question, amendment agreed to.
6.25 p.m.
The Deputy Speaker: My Lords, we now return to Amendment No. 126B.
Lord Glenarthur Lord Glenarthur moved Amendment No. 126B:
After Clause 88, insert the following new Clause—
("Prohibitions and restrictions applying to lessees with respect to telecommunications.
.—(1) Subject to subsection (4) below, where any provision contained in a lease to which this section applies, or in any agreement made with respect to premises to which such a lease relates, has the effect of imposing on the lessee any prohibition or restriction with respect to any of the matters falling within subsection (3) below, that provision shall have effect in relation to things which are done—

(a) inside a building, or part of a building, occupied by the lessee under the lease, or

(b) for the purposes connected with the provision to the lessee by any public telecommunications operator of any telecommunication services,

as if the prohibition or restriction applied only where the lessor has not given his consent in relation to the matter in question and as if the lessor were required not to withhold that consent unreasonably.
(2) Where a provision of a lease or agreement imposes (whether by virtue of this section or otherwise) a requirement on the lessor under a lease not to withhold his consent unreasonably in relation to any matter falling within subsection (3) below, the question whether that consent is unreasonably withheld shall be determined having regard to all the circumstances and to the principle that no person should unreasonably be denied access to a telecommunication system.
(3) The matters falling within this subsection are—

(a) the running of relevant telecommunication systems;

(b) the connection of any telecommunication apparatus to a relevant telecommunication system or of relevant telecommunication systems to each other; and

(c) the installation, maintenance, adjustment, repair, alteration or use, for purposes connected with the running of a relevant telecommunication system, of any telecommunication apparatus.

(4) The Secretary of State may by order provide, in relation to such cases, prohibitions or restrictions as are specified in the order, or are of a description so specified, that subsection (1) above shall not apply.
(5) This section applies to any lease for a term of a year or more granted on or after the day on which this section comes into force; by the Secretary of State may by order provide that this section shall apply, subject to such transitional provisions as may be contained in the order, to leases granted before that day.
(6) This section is without prejudice to paragraph 2(2) of the telecommunication code.
(7) In this section—
"alteration" and "telecommunication apparatus" have the same meanings as in Schedule 2 to this Act;
"lease" includes any leasehold tenancy (whether in the nature of a head lease, sub-lease or under lease) and any agreement to grant such a tenancy, and cognate expressions, and references to the grant of a lease, shall be construed accordingly;
"relevant telecommunication system" means a public telecommunication system or a telecommunication system which is, or is to be, connected to a public telecommunication system.").
The noble Lord said: My Lords, it may be for the convenience of the House if I speak also to Amendments Nos. 128BZP and 129AB.
Amendment No. 128BZP: Schedule 2, page 103, leave out from beginning of line 38 to end of line 6 on page 104.
Amendment No. 129AB: Schedule 2, page 122, line 6, leave out ("8").
As your Lordships will be aware from the Marshalled Lists, we have put forward a significant number of amendments to Schedule 2 to the Bill to meet the concerns expressed at Committee stage about the principle of occupier only consent. I shall comment in detail on the effect of our suggested changes when we reach Amendment No. 128BA, but I should say that this new clause and the deletion of paragraph 8 of Schedule 2 (that is, Amendments Nos. 128BZP and 129AB) are one of the products of our reconsideration of the provisions governing the installation of telecommunication apparatus on private land.
On that issue, I will simply say now that except where apparatus is intended to provide a service to the occupier himself, we are proposing to revert to established procedures so that operators will in practice be required to obtain the consent of the freeholder and any lessee as well as the occupier. I am not proposing that we debate the merits of that policy in relation to these amendments, but that background will help to place them in context.
Perhaps I may comment first on Amendment No. 128BZP, which seeks to delete paragraph 8 of Schedule 2. That paragraph was originally included in order to support the principle of occupier only consent by removing any liability a tenant might have if he gave his consent to the installation of telecommunication apparatus in breach of a provision in his tenancy agreement. Having moved away from the principle of occupier only consent except in
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relation to what I might conveniently call "service lines", we see no need to retain paragraph 8. As far as "service lines" are concerned, the amendments I shall be moving later make clear that an occupier's consent will bind his landlord, though this new clause could, if necessary, be invoked in support of that principle. The deletion will also remove the difficulty to which Amendment No. 128C addresses itself; namely, that restrictions imposed for the protection of the environment, for example by the National Trust, might be made void by paragraph 8 as it is currently drafted.
The more important reason for bringing forward this amendment is that our re-examination of this whole area has identified a potential gap in the legislative framework governing the installation of telecommunication apparatus. The Telecommunications Code will be applied only to a limited number of operators. These operators will be licensed to run defined systems and to install apparatus under the code for the purposes of their systems. Those systems will end at what we all call the socket into which our telephone is plugged. At present, BT's system—which is run under its exclusive privilege—includes the telephone and any other attachments—for example, a private automatic branch exchange—which lie on the subscriber's side of the socket. In future, this kind of apparatus will not form part of the code operator's system and, as a result of the Government's liberalisation policy, the supply, installation and maintenance of such apparatus will be open to competition from companies having no connection with the relevant code operator. Thus, irrespective of the provisions in the Telecommunications Code, a landlord might have a legal right to use a restrictive term in a lease to prevent a tenant having even a telephone, since even when it is installed by a Telecommunications Code operator it would not be installed under the code. In commercial premises similar problems might arise where a tenant wished to install a private telecommunication system connected to a public system.
This new clause is complex, but its general intention can be simply stated. It is to ensure that landlords cannot use restrictive terms, in leases unreasonably to prevent the installation of telecommunications equipment and the running of telecommunication systems intended for the benefit of lessees in buildings or on land they occupy. The test of reasonableness is an important safeguard because there are circumstances in which it would be quite reasonable for a landlord to withhold his consent; for example, where the fabric of a building has some particular artistic or architectural merit and the installation of wires and so on would do irreparable damage.
There are other safeguards built into the clause. Subsection (5) makes it clear that the clause will bite automatically only on new agreements, and the Secretary of State is given a specific power under subsection (4) to disapply the effect of the clause by order in relation to particular cases or types of restriction where, perhaps for environmental reasons, it may be thought inappropriate to interfere with the terms in leases. This will be accomplished in the order bringing the new clause into effect. As far as existing leases are concerned the clause would only have effect

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if the Secretary of State exercised his power to apply to them by means of an order subject to the negative resolution procedure.
At its simplest, all we are attempting to do with this clause is to ensure that if in future there are cases of landlords harassing their tenants by obstructing their access to telecommunication systems—as, regrettably, there have been in the past—the necessary statutory provisions are available to prevent such behaviour.
Since we tabled the amendment we have become aware that a slight extension may be necessary to the drafting in relation to systems which are not public telecommunications systems, but this is a matter to which I propose returning on Third Reading. On that basis, and with this rather lengthy explanation, I beg to move.
Lord McIntosh of Haringey: My Lords, again I do not wish to oppose the amendment and I certainly do not want to involve myself any more deeply than I did in Committee in the lengthy debate between the Government and the noble Lord, Lord Howard of Henderskelfe. However, I should like to ask the noble Lord. Lord Glenarthur, before he concludes his remarks on this amendment, to add to the indications he has just given that there will be further amendments on Third Reading. I should like him to confirm that my understanding is correct that the undertakings given to me yesterday by the noble and learned Lord the Lord Advocate are related to these points. I refer to the amendments on Clause 10 that he undertook to consider on Third Reading concerning the register of directions and the conditions to he provided for under the telecommunications code. I do not think it is a controversial point. I just want to be clear about my own understanding.
Lord Glenarthur: My Lords, with the leave of the House, I think the noble Lord is correct. As I said at the end of my speech, we will be looking at this clause to see whether any further change is necessary. I am sure that what my noble and learned friend said yesterday will apply, and I will do just that.
Lord Middleton: My Lords, this amendment is impingeing on the Government's response to the debate in Committee which followed the amendment of the noble Lord, Lord Howard of Henderskelfe, so perhaps it will be better if I reserve what I have to say until we come to Amendment No. 128BA.
On Question, amendment agreed to.
Clause 90 [Use of certain conduits for telecommunication purposes]:
Lord Glanusk Lord Glanusk moved Amendment No. 126D:
Page 82 line 4, at end insert—
("() Without prejudice to subsections (1) to (4) above, the Secretary of State may by order provide for any local Act under or in accordance with which any conduits (whether or not relevant conduits) are kept installed in streets to be amended in such manner as appears to him requisite or expedient for securing—

(a) that there is power for those conduits to be used for telecommunication purposes;

(b) that the terms (including terms as to payment) on which those conduits are used for those purposes are reasonable; and

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(c) that the use of those conduits for those purposes is not unreasonably inhibited (whether directly or indirectly) by reason of the terms of any consent, licence or agreement which has been given, granted or made in relation to any of those conduits for the purposes of that Act.").

The noble Lord said: My Lords, if I may I should also like to speak to Amendment No. 126E.
Amendment No. 126E: Page 83, line 2, after (" "alteration" ") insert (", "street" ").
At the end of 1982 in our discussions on the cable and broadcasting White Paper I advocated the use of main drains and sewers for the use of cable companies in the laying of fibre optic cables. I am now informed that there are many miles of other types of conduit and ducting under our city roads which are no longer used. The commonest type of this ducting is that which was laid in the Victorian era for supplying power to the tramways in the cities, much of which still exists but is empty of cabling.
These ductings would be ideal for use by the independent companies who will be seeking licences from Oftel both for telecommunication systems and for cable systems. To start with it will only be Mercury which will be involved but we hope that at a later date there will be other major communication companies, after the duopoly expires. The use of this ducting for this purpose will not only assist the cable laying companies financially but also assist the general public as it will render unnecessary a mass of road digging in our main thoroughfares and avoid considerable disruption to vital traffic. The only difficulty is that some of this ducting in some parts of the country is covered by various 19th century legislation and local by-laws. It is the purpose of this amendment to simplify the complex and cumbersome legal processes required to amend such Acts.
The second amendment, No. 126E, is consequential on the first amendment and merely defines the word "street" in the same way as it is defined in Schedule 2 to the Bill. I beg to move.
Lord McIntosh of Haringey: My Lords, I believe that there is a kernel of good sense in this amendment in that it is undesirable to have unnecessary ducting or cabling beneath our streets or anywhere else. It is desirable to secure that there is efficient use of the transmission facilities available. However, I should like to ask the Government in their reply to the amendment to make clear whether the amendment actually achieves that more limited objective. It seems to me from reading the wording of the amendment that there is the possibility of extending the permission for public telecommunications operators—those who I understand from Clause 9 have wayleave rights—to install new conduits and to go against the objective which I understand the noble Lord, Lord Glanusk, is looking for. If that is the case, and there is the possibility of having more and more operators gaining access underneath our streets and in other areas where this access would cause damage, I hope it will be discouraged and resisted.
Lord Glenarthur: My Lords, I do not think I need respond at great length to this amendment and the amendment that is consequential to it. As my noble friend said, it would enable the Secretary of State to amend by order, subject to the negative resolution

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procedure, local Acts under or in accordance with which conduits are kept and stored in the streets so that they can be used for telecommunications purposes. As your Lordships know, we are keen to encourage the use of the existing duct systems wherever possible so that telecommunication operators can have the opportunity of undergrounding (that is not a word I particularly like) their apparatus without the expense and disruption inevitably associated with the installation of new techniques.
This is not about new conduits but is concerned more with the use of existing conduits, and I hope that that answers the noble Lord, Lord McIntosh of Haringey. On the basis that the Government are willing to accept these amendments, if that is the wish of your Lordships, subject only to the qualification that we might want to make some very minor drafting changes on Third Reading, I hope that the House will be satisfied with that reply.
Lord Morris: My Lords, I support this amendment in principle. However, I should like to ask my noble friend for clarification on one point. I am referring, to use another horrible word, the overground conduits, of which there are now many unused along the railway lines. Is there provision in the Bill for the use of such conduits on the property of British Rail? There are many that could well be used.
Lord Glenarthur: My Lords, with the leave of the House, I am afraid I do not know the answer to that point, but in any case it is wide of this particular amendment.
Lord Mottistone: My Lords, I support the amendment of my noble friend Lord Glanusk without qualification for the reasons he most sensibly put forward. I hope that the House will give the support that has been recommended by my noble friend on the Front Bench.
On Question, amendment agreed to.
Lord Glanusk Lord Glanusk moved Amendment No. 126E:
[Printed above]
The noble Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
6.39 p.m.
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 126F:
After Clause 90, insert the following new Clause:—
("Power of Post Office to provide telecommunication services etc.
.—(1) In section 7(1) of the Post Office Act 1969 (powers of the Post Office) after paragraph (b) there shall be inserted the following paragraph—
"(bb) to provide, in such parts of post offices as are open to the public (whether for the transaction of postal business or otherwise), such services provided by means of telecommunication systems as it thinks fit;".
(2) In section 29(1) of that Act (exclusion of liability of Post Office etc. in relation to telepost services) paragraph (c) shall he omitted.
(3) In section 86(1) of that Act (interpretation of Part III), for the definitions of "telecommunication system" and "telepost services" there shall be substituted the following definitions—
"telecommunication system" has the meaning given by subsection (1) of section 4 of the Telecommunications Act 1984 (read with subsection (1A) of that section);
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"telepost service" means a service whereby the Post Office does all or any of the following things, namely—

(a) receives or collects in whatever form communications which are to be sent by means of a telecommunication system;

(b) sends or receives by means of such a system communications which have been received or collected, or are to be delivered, by it in whatever form; and

(c) delivers in whatever form communications which have been sent by means of such a system." ").

The noble and learned Lord said: My Lords, with this amendment I should like to speak also to Amendments Nos. 128ZA, 131ZB, 131ZA, 137, 138 and 139.
Amendment No. 128ZA: Clause 192, page 91, line 20, at end insert ("and (Power of Post Office to provide telecommunication services etc.)").
Amendment No. 131ZB: Schedule 4, page 148, line 18, leave out from beginning to ("(powers") in line 20 and insert ("In section 7(1) of the Post Office Act 1969").
Amendment No. 131ZA: Schedule 4. page 148, line 24, leave out sub-paragraph (3).
Amendment No. 137: Schedule 7, page 204, line 37, column 3, at end insert— ("Section 29(1Xc).").
Amendment No. 138: Schedule 7, page 206, line 9, column 3, at end insert— ("Section 58(4).").
Amendment No. 139: Schedule 7, page 206, line 16, column 3, leave out ("51(9)") and insert ("51(2) and (9)").
The effect of the amendments is to empower the Post Office to provide certain services using telecommunications systems and an extended range of telepost services. The Government have taken the view that the Post Office's current powers contained in Section 7 of the Post Office Act 1969, as amended by the British Telecommunications Act 1981, unduly restrict the Post Office's ability to adapt the services which it offers to reflect changes in technology.
Advances in technology offer both a threat and an opportunity to the Post Office no less than other organisations. The threat is to the traditional paper-based mails service and comes from alternative forms of communications—from the telephone to the more sophisticated systems which enable machines to talk to each other. The opportunity is for the Post Office itself to adapt to this new technology both by improving existing services and by developing new ones to complement and, to some extent, in the longer term replace its traditional business.
The 1981 Act enabled the Post Office to provide telepost services, a term which covers activities which are sometimes described as electronic mail and involve messages being communicated part of the way via telecommunications systems. However, as defined in the 1981 Act, telepost services require the message to be in material form at some stage in the process of transmission.
The Government consider that this restriction should be removed. With changes in technology, users of this service are likely more and more to move to wholly electronic message communication. The Government would wish the Post Office to be able to respond to such technological changes and to continue to be able to compete with BT and other organisations providing these services. The new powers, like the existing telepost services, will confer no monopoly privilege on the Post Office.
The Post Office also runs the largest retail network in the country through its 22,000 Crown and sub-post offices. The main business of these offices is handling

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money—Government money for paying pensions and other benefits; Girobank money; bill payments and the like. This clause will ensure that the Post Office has the powers to automate this cash issuing operation and indeed to automate many of the other services currently available at Post Office counters. I am sure that your Lordships do not need me to convince you of the valuable role played by post offices in the local communities which they serve. The successful introduction of automated facilities at post offices will provide a further valuable service and the additional business generated will help the Post Office to maintain a widespread and viable counter network.
The extended powers do not permit the Post Office to provide telephone services and thus recreate the old General Post Office system. They are designed to help the Post Office look forward to improve the efficiency of its operations and to offer customers attractive and up-to-date services. It will be up to the Post Office to compete effectively and develop services which customers will want to use.
Because of the special circumstances of the business, the Post Office has traditionally enjoyed certain limitations to its liability in tort—in delict. These were transferred to the Post Office Corporation from the Postmaster General in 1969. The Telecommunications Bill repeals Section 23 of the 1981 Act which limits British Telecom's liability in tort in relation to telecommunications and the Post Office will be treated in the same way in relation to the services which the new clause will permit it to provide using telecommunication systems.
The Government have also decided that the present limitation to Post Office liability in tort in respect of postal and telepost services which is contained in Section 29 of the Post Office Act 1969 should be amended, and the new clause removes the statutory exclusion from telepost service. This will ensure that the Post Office will enjoy no special advantage vis-à-vis competitors providing telepost services, but the position with regard to ordinary postal services is unaffected.
I have spoken to Amendment No. 126F presently before your Lordships. In moving that amendment, I listed a number of others covered by what I have now said. I should like to add to that list Amendment No. 140.
Amendment No. 140: In the Title, line 6, after ("services") insert ("and certain related services").
I beg to move.
On Question, amendment agreed to.
Clause 92 [Power of Secretary of State to give directions]:
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 126G:
Page 84, line 27, leave out from beginning to ("is") in line 30 and insert—
("(5) A person shall not disclose, or be required by virtue of any enactment or otherwise to disclose, anything done by virtue of this section if the Secretary of State has notified him that the Secretary of State is of the opinion that disclosure of that thing").
The noble and learned Lord said: My Lords, this amendment is designed to make a small change to Clause 92, but it is a change of some importance. Clause 92 enables the Secretary of State to give
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directions to the director, to public telecommunications operators and to approved contractors if he thinks it necessary in the interests of national security or relations with the Government of a country or territory outside the United Kingdom.The need for this power of direction is well established, but I should perhaps remind your Lordships' House that the nation depends on British Telecommunications for virtually all its defence communications. It is essential that these communications should be safeguarded and that secret communications should be kept secret.
Subsection (5) enables the Secretary of State to direct that any direction he gives shall not be disclosed if he thinks disclosure would be against the interests of national security or relations with an overseas Government. The need to avoid disclosure of directions is again well established; if matters are to remain secret they need to be known only by those who actually need to know about them.
Subsection (5) as drafted does not fully achieve this result. Companies are placed under various duties to disclose information under other Acts of Parliament and subsection (5) does not override these duties to disclose. Amendment No. 126G repairs this deficiency. It provides that, if the Secretary of State gives a direction that national security requires that information should not be disclosed, then the recipient of the direction is excused any duty to disclose information which is imposed on him by any other Act or otherwise.
As I am on my feet, perhaps I may also speak to Amendment No. 126H.
Amendment No. 126H: Transpose Clause 92 to after Clause 88.
This amendment simply moves Clause 92 to a more appropriate place in the Bill. I beg to move.
On Question, amendment agreed to.
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 126H:
[Printed above.]
On Question, amendment agreed to.
Clause 93 [Power of Director to require information etc.]:
Lord Lyell Lord Lyell moved Amendment No. 126J:
Page 85, line 10, leave out from beginning to ("or") in line 12 and insert ("arc in that person's custody or under his control").
The noble Lord said: My Lords, with this I should also like to take Amendment No. 126K.
Amendment No. 126K: Transpose Clause 93 to after Clause 51.
Amendment No. 126J is purely drafting. We hope that it both improves the grammar and omits some unnecessary words. Amendment No. 126K fulfils a commitment that I gave on the first day of the Report stage to look carefully at the individual clauses in Part VII of the Bill to see whether any of these could be moved into Part III. I suggested at that time that Clause 93 was an obvious candidate for such a move. The noble Lord, Lord Lloyd of Kilgerran, and my noble friend Lord Morris brought this to my attention. We are very grateful to them. Amendment No. 126K achieves this object.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 126K:
[Printed above.]
On Question, amendment agreed to.
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 127:
After Clause 95, insert the following new clause:
("Application to territorial waters and the continental shelf etc.
.—(1) An Order in Council under section 23 of the Oil and Gas (Enterprise) Act 1982 (application of civil law) may make provision for treating for the purposes of this Act and subordinate legislation made under it

(a) any installation in waters to which that section applies and with respect to which provision is made under that section; and

(b) any waters within five hundred metres of such an installation,

as if they were situated in such part of the United Kingdom as may be specified in the Order; and different provision may be so made for different purposes.
(2) In section 6 of the Continental Shelf Act 1964 (which makes, in relation to the Wireless Telegraphy Act 1949 and regulations made under it, provision corresponding to that made by subsection (1) above) for the words "an area or part" there shall be substituted the words "waters to which that section applies and".
(3) In relation to any time before the coming into force of the said section 23, subsection (1) above shall have effect as if—

(a) for the words "section 23 of the Oil and Gas (Enterprise) Act 1982" there were substituted the words "section 3 of the Continental Shelf Act 1964"; and

(b) for the words "waters to which that section applies and" there were substituted the words "an area or part".

(4) In this section—
"installation" includes any floating structure or device maintained on a station by whatever means;
"subordinate legislation" has the same meaning as in the Interpretation Act 1978.").
The noble and learned Lord said: My Lords, at present the Bill covers the United Kingdom, but this does not include the continental shelf or territorial waters. However, circumstances may arise when it may be desirable to extend the Bill's powers to these areas. For example, we might want to licence the running of a telecommunication system on an oil rig. This new clause therefore enables the provisions of the Bill to be extended by an Order in Council to United Kingdom territorial waters and to the continental shelf. I beg to move.
On Question, amendment agreed to.
Clause 97 [Orders and schemes]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 127A:
Page 88, line 1, after ("102(5)") insert ("or paragraph 1 of Schedule 5").
The noble Lord said: My Lords, this is an amendment to tidy up the drafting. I beg to move.
On Question, amendment agreed to.
Clause 99 [General interpretation]:
6.50 p.m.
Lord Glenarthur Lord Glenarthur moved Amendment No. 128:
[Printed earlier: col. 604].
The noble Lord said: My Lords, this is consequential. It was spoken to yesterday on an earlier amendment. I beg to move.
Lord McIntosh of Haringey: My Lords, I think it would be a kindness to pause for a moment to allow the noble Lord to find to which amendment he spoke yesterday, to which this is consequential.
Lord Mottistone: My Lords, my notes say Amendment No. 129 was the one he spoke to yesterday.
Lord Glenarthur: I am grateful to my noble friend.
On Question, amendment agreed to.
Clause 101 [Amendments, transitional provisions and repeals]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 128ZE:
Page 90, line 44, leave out from beginning to end of line 4 on page 91.
The noble Lord said: My Lords, it might be for the convenience of the House if I spoke to Amendments Nos. 128ZE, 128ZD and 128ZC.
Amendment No. 128ZD: Page 91, line 10, at end insert—
("(5D) If it appears to the Secretary of State requisite or expedient to do so in order to secure that telecommunication services provided before the appointed day by means of any existing apparatus continue to be available after the appointed day, he may by order make provision with respect to the terms on which existing apparatus is kept installed on any premises; and such an order may, in particular—

(a) provide for the terms of agreements in pursuance of which existing apparatus is kept installed on any premises to have effect with such modifications as may be specified in the order;

(b) impose obligations in relation to existing apparatus on persons who own or use such apparatus or who own interests in, or occupy, premises where such apparatus is kept installed; and

(c) provide, for the purposes of any provision contained in such an order by virtue of paragraph (a) or (b) above, for such questions arising under the order as are specified in the order, or are of a description so specified, to be referred to, and determined by, the Director.").

Amendment No. 128ZC: Page 91, line 14, at end insert—
(("(7) In this section—
"existing apparatus" means any telecommunication apparatus (within the meaning of Schedule 2 to this Act) which—

(a) was installed on any premises before the appointed day, and

(b) cannot, after the appointed day, be kept installed there by virtue of any right conferred by or in accordance with the telecommunications code;

"local telegraph Act" means a local Act which incorporated a telegraph company or the Bill for which was promoted by such a company; and
"subordinate legislation" has the same meaning as in the Interpretation Act 1978.").
In the interests of brevity may I merely say that these amendments provide the Secretary of State with powers to make orders to ensure that telecommunications services, which are provided by means of apparatus installed before the appointed day when the main provisions of the Bill enter into force, continue to he provided in circumstances where any person seeks to have the apparatus removed. So the amendments deal with what is a hypothetical problem which we hope will not arise in practice. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 128ZD.
[Printed above].
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 128ZC.
[Printed above.]
On Question, amendment agreed to.
Clause 102 [Short title, commencement and extent]:
Lord Lyell Lord Lyell moved Amendment No. 128ZB.
Page 91, leave out line 20 and insert—
("Sections 88 and (Power of Secretary of State to make orders under Fair Trading Act 1973 etc.);
sections 89 and 90;").
The noble Lord said: My Lords, this is consequential. It follows from amendment 126C. I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 128ZA:
[Printed earlier.]
The noble Lord said: My Lords, I beg to move. This is consequential. It follows from amendment No. 126F.
On Question, amendment agreed to.
Schedule 2 [The telecommunications code]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 128A:
Page 95, line 4, at end insert—
(" "the physical environment" includes—
() the architectural, archaeological or historic character of any building, structure, feature or area,
() the natural beauty and amenity of the countryside or an open space or garden, and
() the conservation of wild life or any physiographic feature;").
The noble Lord said: My Lords, in rising to speak to this amendment, let me first of all pay tribute to the veritable deluge of amendments which the Government have tabled on Schedule 2, which, to the best of my limited understanding, seem genuinely designed to meet a large number of the points, and appear to meet a large number of the points which were raised by other noble Lords and myself in Committee. That means that I shall be able not to move a large number of the amendments which are down in my name and that of my noble friends.
That is not the case, however, for Amendment No. 128A, because I read very carefully the reply which the noble Lord, Lord Glenarthur, gave when I moved the same amendment—and I apologise for it being the same amendment; that is because I think the wording is right—at the Committee stage. The noble Lord said in response to the amendment that what was proposed—and I am referring to column 146 of Hansard—was a third avenue which amounts to a planning control for the telecommunications code itself. If that had in any way been the case with the Bill as drafted at that time, it certainly will not be the case after the amendments to Schedule 2, which the Government are proposing, have taken effect. As I understand it, it is now proposed that both in the licensing procedure, in the telecommunications code itself and in the register, there shall be full recognition of the rights and duties of local authorities, in relation to the enforcement of the protection of the physical environment. That points up what I was trying to argue at the Committee stage, which is that the
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purpose of this amendment and related amendments is to seek redress in the county courts rather than to create a third avenue amounting to a planning control for the telecommunications code.
The noble Lord then went on to use what I believe to be the weakest of all arguments for spelling things out in legislation, which is that it appears likely to exclude those areas not specifically mentioned. If that were the case, it would apply with much greater force to the definition of the physical environment which appears in Clause 10 of the Bill. What we are proposing to do here is actually to reduce the risk that the definition should be weakened by appearing to exclude those areas not specifically mentioned by reducing the number of areas not specifically mentioned and covering the architectural, archaeological or historical character of buildings, structures features or areas, the natural amenity and the conservation of wild life and physiographic features.
I put it to the Government that since they have already attempted a much simpler definition of the physical environment for the purpose of the Bill as amended, and for the purpose of the many amendments on this subject which are going to come before the House, that it would be graceful and not at all inconsistent with their objectives if they were now to accept this amendment. I beg to move.
Lord Morris: The noble Lord, Lord McIntosh of Haringey, referred in moving this amendment to related amendments. I suspect I understand by that, that he is speaking to these related amendments as well. I am thinking in particular of Amendment No. 128L on page 19 of the revised Marshalled List which hangs on No. 128A. I think it may be of convenience if I speak to that amendment now.
Lord McIntosh of Haringey: With your Lordship's leave, nothing would have pleased me more than to do the House the courtesy of referring to as many amendments as possible and curtailing the speeches. The problem is that the amendments to which I would wish to refer include some of my own, as the noble Lord has indicated, but also include many more of the Government's amendments. I think it would be quite unusual for me to seek to refer to amendments which have not yet been moved or not yet been spoken to by those under whose name they appear. I hope that the House will accept that explanation of the difficulty I have in being precise about what future amendments could actually be referred to when I spoke on No. 128A.
Lord Morris: My Lords, if I may just say, with the leave of the House, that I do believe that this amendment really is wholly unnecessary, although I do of course sympathise with intentions behind it. The major reason is that the concern with regard to the environment is more than well covered in two respects. One is by virtue of the provisions of Clause 10(4)(a) which says,
"Without prejudice to the generality of subsection (3) …conditions there mentioned may include"
et cetera—
"that the physical environment is protected and, in particular, that the natural beauty and amenity of the countryside is conserved.".

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This fundamental principle is covered very fully indeed, as the noble Lord, Lord McIntosh, is well aware, in the draft—I repeat, draft—licence of British Telecommunications with regard to conservation areas, national parks and maintainable highways. But, above all, I draw your Lordships' attention to one particular item in the draft licence, which reads:
"The licensee"—
and this would, of course, in practice be all other major licensees—
"shall prepare, in consultation with the Secretary of State, a code of practice on the installation of telecommunications apparatus"—
and that, of course, would include poles, lines, dishes or any apparatus—
"not contained in a building and shall comply with a direction given to him in writing by the Secretary of State, which requires him to follow that code of practice.".
So it is inconceivable that the Secretary of State would not follow the guidelines laid down by virtue of Clause 10 of the Bill, given the drafting of the code of practice which is to be brought forward at a future date. On those grounds, among many others—which I shall not mention, since I have no wish to delay the house—I believe that the amendment is totally unnecessary.
Lord Boyd-Carpenter: My Lords, may I ask the noble Lord who moved the amendment something for my own information and perhaps for that of your Lordships. It concerns the reference to "any physiographic feature". That is not a formula that I am accustomed to reading in statutes and perhaps the noble Lord can tell us what it means and maybe illustrate the answer by giving an example.
7 p.m.
Lord Glenarthur: My Lords, I am sorry that the noble Lord, Lord McIntosh, feels unable to move quite as speedily with this amendment as he hoped to do with others, and I am afraid that as a result I shall have to explain my point at rather greater length. When we previously considered this amendment I indicated that the Government would be willing to consider an amendment to Clause 10 of the Bill to refine the existing description of the physical description in subsection (4). I should like to explain in a little more detail than I did on that occasion why we think that that would be a more appropriate course than to adopt the present amendment and those for which it is intended to provide a base.
I hope that I may be forgiven for a somewhat lengthy exposition because I want to demonstrate that there is absolutely no difference in objective between the Government and the noble Lord who has put forward the amendment. I hope that your Lordships will acknowledge the truth of that observation, given our readiness to accept the noble Lord's amendment to Clause 10, which now places an unambiguous statutory duty on the Secretary of State to include in licences which apply to the telecommunications code conditions designed to secure the protection of the physical environment. Where we differ is in relation to the means, not the ends.
As I understand it, the main argument put forward in favour of the approach which is inherent in this amendment and related amendments is that the
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environmental protection applying to the exercise of telecommunications code powers and rights should be easily accessible in one place; namely, in the code itself. However much one might endorse the desire for simplicity, it is just not realistic to have a single guide to the installation of telecommunications apparatus.
Telecommunications development has to be seen in the context of development generally, the principal legislative arrangements for which, as I said when we previously debated this matter, are to be found in the Town and Planning Acts. British Telecom at present enjoys a special statutory exemption from the need to obtain planning permission, but because of its change in status, and because of the arrival of other apparatus, we have reached the conclusion that telecommunications development must in future be brought squarely within the ambit of planning controls. Hence the proposals in the recent consultative document on the revision of the general development order which describes the circumstances in which, in the Government's view, it would be reasonable for operators to whom the powers of the telecommunications code have been granted to install minor apparatus without the need to obtain specific planning permission for every individual wire or pole.
No doubt if we were envisaging a requirement that every single piece of apparatus should be specifically approved, we might not be having this debate today. But that, as I am certain we all recognise, is not a practicable proposition. The planning system simply could not cope and there would be intolerable delays in the provision of service. So the question arises as to how any potential abuse or any damaging side effects of this necessary freedom are to be avoided. The noble Lord opposite seems to be suggesting that the telecommunications code itself should contain vague statutory duties, which we shall be debating in the context of later amendments. But, if I may comment on the general approach, it seems to me quite inappropriate, since the code is concerned with conferring particular rights and powers within the existing framework of planning legislation. To add another avenue of planning or environmental protection could well, therefore, create confusion instead of introduce clarity.
We have, therefore, devised a regime under which the telecommunications code will be applied by means of a licence granted by the Secretary of State. The licences applying code powers will be framed under Clause 10, which now makes clear that the Secretary of State will include within them exceptions and conditions qualifying their use—conditions and exceptions designed to secure the protection of the physical environment. Exceptions limit the extent to which code powers may be used. Conditions qualify the way in which they may be used. The exceptions will set precise limits, as, for example, in the British Telecom draft licence, which indicates by way of illustration that in its case code powers may be used to install apparatus in conservation areas in only very limited circumstances, and that certain consultation procedures must be followed before installation work is undertaken in other specified areas, such as areas of outstanding natural beauty. If British Telecom, or any other licensee, fails to observe one of its licence conditions, it will be in the position of using its code

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powers unlawfully and therefore will be subject to legal challenge.
I suspect, however, that a good deal of the very genuine concern that exists in this area arises not so much from the continuing activities of British Telecom, but from the advent of new operators whose track records are unknown. That is why we have provided for full public consultation under Clause 10 of the Bill before the Secretary of State applies code powers. The Secretary of State has to publish a notice stating that he proposes to grant code powers to a particular operator, and setting out the conditions and exceptions he considers it appropriate to include in the licence. He must publish the notice in a manner which will bring it to the attention of persons likely to be affected, and he must reconsider his proposals in the light of any objections or representations received. Having done that, he must publish a further notice stating what he has done and setting out the conditions and exceptions subject to which the code is to he applied.
I believe that in practice this approach will offer far more effective safeguards than the approach which has been suggested by the noble Lord—more effective because they will be more easily comprehended by both operators and the public, and more effective also because their precision will mean that they can be enforced much more easily. In that sense it is also fairer to operators in that it will offer clearer guidelines as to what is, and is not, permissible.
But I see another great virtue in the Government's approach in that it offers a measure of flexibility. What may be environmentally acceptable to the residents of one area, may be quite unacceptable somewhere else, and the system we are proposing allows for that. It is also flexible in another sense. In the light of the amendments to Clause 10 which were agreed by your Lordships, licence conditions and exceptions can now be modified if, in the light of experience, the Secretary of State is convinced that the protection of the physical environment demands some strengthening of the initial safeguards. This I think is a very significant improvement in the Bill.
Perhaps in conclusion I may summarise our basic objection to the approach of the noble Lord's amendment and related amendments. It is that the telecommunications code is essentially concerned with land law. It confers certain privileges on telecommunications operators to whom it is applied. The code then sets out to ensure that the exercise of the various powers takes place within a framework designed to protect the rights of landowners and their tenants. The code has nothing whatsoever to do with planning law and the protection of the environment. That is a matter for planning legislation. As I have already indicated, the effect of planning law in this context has to be looked at against the background of the conditions and exceptions that we propose to include in licences under Clause 10 of the Bill—conditions and exceptions designed to qualify the way in which code powers may be exercised. To attempt to achieve in Schedule 2 itself what are, I would emphasise, our common aims would at best be ineffective and at worst result in a great deal of confusion and duplication. I hope, therefore, that the noble Lord will not press the amendment.
Lord McIntosh of Haringey: My Lords, I am most grateful to the Minister for his explanation and in particular for the last part of it, which I think epitomises very clearly the attitude of the present Government to a large number of social issues. The noble Lord says, quite rightly—I do not disagree with him—that the telecommunications code is concerned primarily with land law. It is concerned with landowners and tenants, and it is only the interests of landowners and tenants or occupiers which are considered important enough to be included in legislation in this way. Indeed, much time has been spent, in particular in Committee, and much time could be spent if all the amendments were debated this evening, in protecting the interests of landowners and occupiers. But when it comes to the general public, those who have a concern for the physical environment, those who seek to enjoy the countryside and those who are landless—whom I dare to say we perhaps represent more adequately than noble Lords on the Government Benches—their interests are not to be protectd by legislation; they are to be protected in a much less secure way by means of the licence.
I do not accept the arguments of the noble Lord, Lord Morris, that it is adequate to say that there is provision—and he quoted from the British Telecom draft licence—in the licences of any operators, even including the public telecommunications operators. The fact of the matter is that the licence is a very insecure protection. A licence granted under the provisions of the Act may be modified with the agreement of the director without reference to the general public. There is no necessary or clear protection for those who do not have the kind of resources that landowners and land occupiers have to ensure that their rights are maintained. It is not good enough to say that these are provided for in the licence. What must be provided for is a means of access, a means of control, a means of appeal and a means by which the rights of the unprotected are more adequately protected than they are at present.
I do not deny that the Government have made and are proposing to make some significant concessions towards my point of view. I listened very carefully to the noble and learned Lord the Lord Advocate yesterday when he undertook to make further amendments at Third Reading to strengthen Clause 10 in the direction that I wanted him to do. I appreciate that the amalgamation of subsections (4) and (5) of Clause 10 is an improvement because it increases the scope of the definition of the physical environment contained in subsection (4). I appreciate that by reading together Clause 10 and Clause 19 it is possible to see protections which might not be apparent from reading the Bill seriatim. I appreciate that amendments already made to Clause 10—in addition to Amendment No. 53, to which I referred—improve the situation.
Therefore, I am not in that sense, strictly speaking, accusing the Government of bad faith; but I am saying that in their whole attitude towards this matter they are revealing a sense of priorities which I do not believe reflects the view of the general public as between those who wish to preserve the physical environment and the countryside but have no status to do so, and those who are so fully protected in the Bill—the landowners and the land occupiers.

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Therefore, it is only because this matter has been given a very full going over both in Committee and now, that I will seek leave to withdraw the amendment. I have a duty towards the noble Lord, Lord Boyd-Carpenter. The noble Lord has, not for the first time, taught me a lesson, which is not to take wording from other legislation when you do not have officials in a Box and somebody to run backwards and forwards with notes. As I understand it, the wording comes from the Countryside Act 1968. I confess that when I read it in great detail I can find no more plausible explanation than that physiographic features must be those which are not included in paragraphs (a) and (b) of the definition. But in the absence of greater expert and legal help I can do no better than that in response to the noble Lord. However, with those very strong provisos against the attitude of the Government to this whole matter, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 128E not moved.]
7.15 p.m.
Lord Glenarthur Lord Glenarthur moved Amendment No. 128BA:
Page 96, line 3, at end insert—
("1A) A person who is the owner of the freehold estate in any land or is a lessee of any land shall not be bound by a right conferred in accordance with sub-paragraph (1) above by the occupier of that land unless—

(a) he conferred the right himself as occupier of the land; or

(b) he has agreed in writing to be bound by the right; or

(c) he is for the time being treated by virtue of sub-paragraph (2) below as having so agreed; or

(d) he is bound by the right by virtue of sub-paragraph (3) below.").

The noble Lord said: My Lords, it might be for the convenience of your Lordships if I speak to a whole long list of amendments together. Amendment No. 128BA is the primary amendment, hut the associated amendments are: Amendment Nos. 128BB; 128BC; 128B0; 128BZG: 128BZD: 128BZE; 128BZF; 129ZA; 128BD; 128BW: 128BX; 128BY; 128BZB: 128BZM; 128BE; 128BF; 128BL; 128BM; 128BP; 128BR; 128BZC: 128FA:
Amendment No. 128BB: Page 96, line 5, after ("land") insert—
("for purposes connected with the provision, to the occupier from time to time of that land, of any telecommunication services")
Amendment No. 128BC: Page 96, leave out lines 14 to 18 and insert—
("then, subject to paragraph 4 below, that right shall (as well as binding the person who conferred it) have effect, at any time when the person who conferred it or a person bound by it under sub-paragraph (1A)(b) or (3) of this paragraph is the occupier of the land, as if every person for the time being owning an interest in that land had agreed in writing to the right being conferred for the said purposes and, subject to its being exercised solely for those purposes, to be bound by it.").
Amendment No. 128B0: Page 98, line 24, leave out from beginning to ("sub-paragraph") in line 30 and insert—
("(2) Where a right has been conferred in relation to any land in accordance with paragraph 2 or 3 above and anything has been done in exercise of that right, any person who, being the occupier of the land, the owner of the freehold estate in the land or a lessee of the land, is not for the time being bound by the right shall have the right to require the operator to restore the land to its condition before that thing was done.
(3) Any duty imposed by virtue of").
Amendment No. 128BZG: Page 101, line 44, at end insert—
("(8) Except in the case of apparatus installed in pursuance of a right which by virtue of paragraph 2(2) above bound every
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person with an interest in the land at the time it was installed, the court shall, in determining for the purposes of paragraph 5 above whether any telecommunication apparatus should continue to be kept installed on, under or over any land, disregard the fact that the apparatus has already been installed there.").
Amendment No. 128BZD: Page 101, leave out line 30 and insert—
("Acquisition of rights in respect of aparatus already installed
5A.—(1) The following provisions of this paragraph apply where the operator gives notice under paragraph 5(1) above").
Amendment No. 128BZE: Page 101, line 39, at beginning insert ("(2").
Amendment No. 128BZF: Page 101, line 42, leave out ("this paragraph") and insert ("paragraph 5 above").
Amendment No. 129ZA: Page 117, line 24, leave out ("paragraph") and insert ("paragraphs 5A(3) and").
Amendment No. 128BD: Page 96, line 23, after ("shall") insert ("(except in so far as the contrary intention appears)").
Amendment No. 128B W: Page 100, line 36, leave out ("an") and insert ("that person or any").
Amendment No. 128BX: Page 100, line 43, leave out ("an") and insert ("any person or any").
Amendment No. 128BY: Page 101, line 13, at end insert ("person or any").
Amendment No. 128BZB: Page 101, line 24, at end insert ("person or any").
Amendment No. 128BZM: Page 102, line 23, at end insert—
("() In determining what amount shall be specified in a term of an order under paragraph 5 above the court shall take into account any compensation paid under paragraph 4(5A) above.").
Amendment No. 128BE: Page 96, line 34, leave out sub-paragraph (4).
Amendment No. 128BF: Page 96, line 49, after ("sub-paragraphs") insert ("(1A)").
Amendment No. 128BL: Page 97, line 28, after ("tenancy") insert ("but not a mortgage by demise or sub-demise").
Amendment No. 128BM: Page 98, line 11, leave out from beginning to ("shall") in line 12 and insert—
("(4) Sub-paragraphs (1A) to (7) of paragraph 2 above, except sub-paragraph (2)").
Amendment No. 128BP: Page 98, line 36, leave out ("or 3").
Amendment No. 128BR: Page 99, line 9, leave out head (b) and insert—
(b) the owner of the interest becomes bound by the right or variation by virtue only of paragraph 2(2) above.").
Amendment No. 128BZC: Page 101, line 27, leave out ("that person") and insert ("the person the need for whose agreement is dispensed with").
Amendment No. 128FA: Page 111, line 4, leave out ("paragraph 2(3)") and insert ("paragraph 2(1A)(b) or (d)").
This long sequence of amendments represents our response to the criticism that was made by the noble Lord, Lord Howard of Henderkelfe, and others at the Committee stage about the provisions in Schedule 2 to the Bill relating to the installation of telecommincations apparatus on private land. I need hardly remind your Lordships that it was the principle that became known as "occupier only consent" which was the chief cause of concern. In view of the concern that was expressed I hope that I might be forgiven if I explain what we propose in some detail.
As the telecommunications code is currently drafted, an operator may go ahead and install his poles and wires. et cetera, with the occupier's agreement provided that the occupier is himself the freeholder or a tenant with a lease for a year or more. The noble Lord, Lord Howard, and others advanced powerful arguments against the Government's approach, not least of which was that the inability of landowners, particularly in the counytryside, to influence the way in which apparatus was installed, would have detrimental consequences for the environment.
In the light of that debate, we have looked again very carefully at the provisions of the telecommunications code to see whether amendments could be made. In doing so we began from what I think is a shared assumption among your Lordships; namely, that where a tenant merely wishes to consent to the installation of apparatus for the purpose of providing a service to himself on the land which he occupies, he should be free to instruct the operator to go ahead without having to seek his landlord's permission. But beyond what is loosely termed the "service line case" we now accept that operators should in general be required to seek the agreement of the owner of the land and any superior lessee as well as the occupier before any installation takes place.
We have chosen a very different approach, however, for the one proposed earlier, by the noble Lord, Lord Howard, and I should like to explain why. The noble Lord drew a distinction between rural and urban areas by reinstating the full range of consents in relation to certain defined types of rural land and by introducing what amounted to a prior notification procedure elsewhere. One major drawback if we were to adopt this course would be that there would be arbitrary lines on the map on either side of which there would be quite different regimes governing the installation of apparatus. A further difficulty of the prior notification procedures suggested in the second half of the noble Lord's amendment was that it would sit very uneasily with the objection procedures already contained in paragraph 17 of the code.
The conclusion we have reached therefore is that in order to respond fully to the noble Lord we need to go considerably further than the compromise which he proposed. We take the view that in the long run it will be better for telecommunications operators to have a single procedure which applies everywhere and which can be translated into straightforward working instructions for their employees. What we propose therefore is that in all cases, except those involving service lines, operators will be put into a position where they will feel obliged—except where it is wholly impracticable—to seek the consent of the freeholder and any superior lessee as well as the occupier before installing their apparatus.
Your Lordships will not find that stated explicitly in the amendments that we are now considering, as those amendments are designed to fit into the existing structure of the code, which, as your Lordships will he aware, is long and complex in any case. But I can assure your Lordships quite categorically that what I have described will indeed be their effect. It will be achieved as follows. Amendment No. 128BA introduces a new sub-paragraph into paragraph 2 of Schedule 2, which provides that, except in a service line case, an occupier's consent will not bind a freeholder or a superior lessee unless, to use the language of the draftsman, that other person "has agreed in writing" that he should be bound.
The consequences for the operator of not obtaining those agreements are set out in Amendments Nos. 128BO and 128BZG. Amendment No. 128BO modifies paragraph 4 of the code so that a freeholder or superior lessee who was not bound—that is, a freeholder or superior lessee whose agreement was not obtained—would, immediately he discovered that the
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installation had taken place, have a right to require the apparatus to be removed and the land to be made good. This contrasts with the position under the code as currently drafted, which provides such a right only when the owner or superior lessee reoccupies the land.
The proposed new right would be exercisable from the outset, and if the operator declined to comply with a request to remove his apparatus, the question of whether the apparatus should stay in place would fall to be determined by the court. Amendment No. 128BZG provides that in such a case the court will disregard the fact that the apparatus has already been installed. In other words, the court will ignore the inevitable expense incurred by the operator if he has to remove his apparatus and restore the land to its former condition and put the apparatus somewhere else. In such circumstances the landlowner's rights will be just as much protected as if the hearing had been convened before the installation took place by an operator seeking a court order to dispense with the agreement of someone whose consent had been refused.
I might mention one further incentive on the operator—and I shall speak to it separately in due course—not to rely simply on the occupier's consent. Amendment No. 128BM is designed to take away from the operator the ability under paragraph 4(1) of the code to claim a defence of statutory authority against actions for damages by freeholders or superior lessees whose agreement has not been sought.
As I have already indicated, these provisions do go further than the earlier amendment that we considered at the Committee stage. As I have also said, there is no explicit statement that the full range of consents are required before the operator can go ahead. But, faced with the prospect of a landlord, whose agreement had not been obtained, requiring the immediate removal of his apparatus and a court hearing in which no account will be taken of the expense falling on the operator as a result of a decision in favour of the landlord, it would be a very foolish operator indeed who did not make sure that he obtained the full range of consents before he began the installation.
At the same time we believe that this structure overcomes a significant difficulty which arises under the Telegraph Acts and which would continue to be faced in future if we tried to replicate them. The difficulty is: what should an operator do when, particularly in urban situations, there is a complex chain of ownership and it is simply not practicable to identify all the superior interests? The Telegraph Acts do not contain any indication as to what is reasonable or practicable in this context. One of the reasons why the Government originally decided to adopt the principle of occupier-only consent in the telecommunications code was that it was not possible to devise a legislative definition of the circumstances in which it would be reasonable to waive the requirements for the full range of consents on the grounds of impracticability.
Under the scheme in our amendment this problem is resolved by leaving the decision with the operator, who will, in the light of the very strong incentives which exist, have to make a rational judgment to obtain the full range of consents which I have just outlined. I fully realise the strength of feeling which lay behind our earlier discussion and the amendment of the noble Lord, Lord Howard of Hcnderskelfe. That is

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why I have explained at some length how we see these amendments giving effect to the policy objective that the agreement of landowners and superior lessees should be obtained before telecommunications apparatus is installed on their land. I have indicated the main amendments which will achieve that result.
As your Lordships will appreciate, a change of this significance involves this very large number of consequential amendments. I hope that, if the principles which I have just outlined are acceptable, I can move the consequential amendments formally and, where possible, en bloc. I am advised that I did not mention Amendment No. 128BQ.
Amendment No. 128BQ: Page 99, line 3, leave out ("or 3").
I should have spoken to Amendment No. 128BQ in addition to the others which I read out. I beg to move.
Lord Middleton: My Lords, as my noble friend has just reminded us, in Committee the noble Lord, Lord Howard of Henderskelfe, drew your Lordships' attention to the shortcomings of the Schedule 2 code which governs the acquisition by licensed operators of rights over land. As my noble friend has also just reminded us, in doing so the noble Lord, Lord Howard, received strong support from all sides of the Committee. He withdrew his amendments on a promise by my noble friend Lord Glenarthur that the Government would try to improve the code in order, so far as possible, to meet our objections. This long series of amendments is the result.
The first objection was that the Bill broke entirely new ground by introducing occupier-only consent for works, and this was acknowledged at the time by my noble friend Lord Glenarthur. Under previous legislation—much of it introduced by the party opposite—virtually all other undertakers, whether they seek wayleaves for electricity lines or for oil or gas pipelines, require owner consent. The result of this well-tried statutory procedure has led to a very sensible series of arrangements and terms negotiated and agreed between, on the one hand, the operators and, on the other hand, the owners and farmers' organisations acting for all their members. Standardised terms have greatly speeded up the acquisition of rights over land, and in all cases these procedures seem to be working very well.
There were also strict conservation and aesthetic reasons for owner consent, and we have heard examples given in Committee. Yet all the weight of this legislation and practical experience was ignored when Schedule 2 was originally written. There was some acknowledgment of an owner's rights because under paragraph 4, as it then was, the owner, on resuming occupation—whatever that might be—was given the right to demand that the apparatus to which a tenant had consented could be removed and the land restored. There were, of course, certain safeguards built in for the operator under paragraph 21. But we were edging into the world of Alice in Wonderland.
The other objection—and to my mind it is a serious one—where there is an important principle at stake was as follows. Paragraph 8 of Schedule 2 could render unenforceable between the original parties an existing contract. The idea was to indemnify a tenant where, as was frequently the case, his tenancy agreement
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forbade him from creating a wayleave agreement that would bind the owner's land without the owner's consent. Already there are too many examples of legislation which nullifies existing contractual arrangements freely entered into, but this is the first time that I have seen such a thing proposed by a Conservative Government.
Therefore, to what extent do these Government amendments meet our objections? Since the Committee stage the Government have gone to considerable pains to meet them. My noble friend has just explained how this has been done. I am sure that the noble Lord, Lord Howard, if he had been able to be here tonight would have joined me in expressing his appreciation for what the Government have done. I am sure that our gratitude will be shared by all who are concerned by these strange aberrations by a Conservative Government.
As my noble friend explained, the effect of this series of amendments will be to create powerful disincentives for an operator to fail to get an owner's consent in writing at the time an operator grants installation rights. At the same time the occupier who merely wishes to have his own premises connected is treated as a special case, as we have always agreed that he should be, and the owner does not have to come into it. In all other cases if an apparatus is constructed to which an owner objects, then not being bound by the occupier's consent he can right away apply to the court for its removal and the court will look objectively at whether or not the apparatus should be installed, and if so whether it is being installed in the right place, and the court must disregard the fact that it has actually been installed. If so the operator, as my noble friend said, will in practice make every attempt to get it right first time and to seek prior consent from the owner. Furthermore, the offending paragraph 8 is removed so that a tenant would be at risk now if he grants rights without first obtaining consent under his agreement.
I hope that these amendments will be agreed to. If they are, then telecommunication operators will have in practice to proceed in just the same way as other utility undertakers. Occupier-only installations will not be hindered because service lines, as I read it, are provided for under the amended sub-paragraph (2). I understand the drafting difficulties which have led the Government to write into Schedule 2 what virtually amounts to owner consent by such a roundabout route. We shall still have a schedule that is convoluted and by no means easy to interpret. Nevertheless, by these amendments it will be greatly improved.
I am grateful to the Government, and perhaps my noble friend on the Front Bench will forgive me if I put in a slightly sour note. It would have been much better if they had started down the right road—which is the road that is signposted "owner consent"—in the first place. It would be wrong for the code in this Bill to be used as a precedent for acquisition of rights over land. Having said that, I support my noble friend and I commend this series of amendments.
7.32 p.m.
Lady Saltoun: My Lords, I should like to join the noble Lord, Lord Middleton, in thanking the Government—and the noble Lord, Lord Glenarthur, in particular—for the trouble they have taken over this

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group of amendments which are much more important than many people realise. The principle of occupier only consent not only undermines the rights of property owners in rural areas and the rights of big land owners, but it undermines the rights of every owner of his own house and garden in an urban area who lets that house and garden and who, had the Bill passed in its original form, could no longer have prevented the occupier agreeing to the placing of telecommunication equipment on, or through, his land by a clause in his lease.
It seemed a strange thing for a Government committed to private ownership to do. Although I could not understand these amendments until the noble Lord, Lord Glenarthur, explained them, and I am not quite sure that I do now, I am assured by clever people who do that they are all right and do in fact, in the most extraordinary "upside down, Looking Glass land" way, do exactly what we wanted. I am therefore obliged to the Government for them and for being saved, I hope, another battle and a division.
Lord McIntosh of Haringey: My Lords, I shall not attempt to follow the passion with which the landowners and their representatives treat this matter.I may even be out of order because the noble Lord read the amendments to which he was speaking so rapidly—and sometimes not in the order in which they appear on the Marshalled List, to make it even more difficult—that I am not certain that he is speaking to the two to which I wish to refer, which are Amendment No. 128BE, which removes subparagraph (4), and No. 128BN.
My question is a naive one about No. 128BE. If the exception of apparatus exceeding 15 metres in height is removed here, where is it preserved? My question on 128BN relates to my own subsequent Amendment No. 128C. Does the covenant to which this amendment refers cover the covenants "imposed by or for the benefit of the National Trust, the National Trust for Scotland, local authority or any other body for the protection of the physical environment"? In other words are the Government able to tell me that in the course of these amendments there is an amendment which makes my subsequent amendment unnecessary?
Lord Glenarthur: My Lords, with the leave of the House may I respond briefly to the noble Lord, Lord McIntosh? I did not speak to No. 128BN. I could do so in a moment. The second half of No. 128BN is addressed to a concern raised by both the noble Lord and the noble Lord, Lord Howard; namely, that bodies like the National Trust having the benefit of certain types of covenants or agreements, the object of the amendment is to avoid any possibility that a defence of statutory authority could be invoked by an operator relating to the inaction over agreements of this kind that might be designed to protect the environment. I hope that is some reassurance.
As to No. 128BE, that amendment deletes subparagraph 2(4) which provides that in a case of apparatus over 15 metres high the operator needs to obtain the agreement of the occupier, lessee, and freeholder. This sub-paragraph is now redundant following the amendments to paragraph 2 which will
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in practice require the consents of those individuals to be sought. I hope that, with that explanation, the noble Lord is satisfied.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 128BB:
[Printed earlier: col. 1171.]
The noble Lord said: My Lords, I beg to move Amendments Nos. 128BB, 128BC, 128BD, 128BE and 128BF en bloc. I beg to move,
[Printed earlier: cols. 1171 and 1172.]
On Question, amendments agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 128BG:
Page 97, line 7, after ("paragraph") insert ("and paragraphs 3 and 4 below").
The noble Lord said: My Lords, I beg to move Amendments Nos. 128BG, 128BH, 128BJ and 128BK, en bloc. They are all drafting amendments. I beg to move.
Amendment No. 128BH: Page 97, line 9, leave out ("the application of this paragraph") and insert ("relation").
Amendment No. 128BJ: Page 97, line 14, leave out ("the application of this paragraph") and insert ("relation").
Amendment No. 128BK: Page 97, line 19, leave out ("the application of this paragraph") and insert ("relation").
On Question, amendments agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 128BL:
[Printed earlier: col. 1172.]
The noble Lord said: My Lords, I beg to move Amendment No. 128BL right through to 128BR en bloc. They all refer to the earlier one. I beg to move.
[Above amendments printed earlier, except Amendment No. 128BN col. 1172.]
Amendment No. 128BN: Page 98, line 23, at end insert ("except as against—

(a) a person who, being the owner of the freehold estate in that land or a lessee of the land, is not for the time being bound by the right; or

(b) a person having the benefit of any covenant or agreement which has been entered into as respects the land and which, by virtue of any enactment, binds, or will bind, persons deriving title or otherwise claiming under the covenantor or, as the case may be, a person who was a party to the agreement.").

On Question, amendments agreed to.
Lord Denham: My Lords, we have now reached the point where it is generally agreed that we should adjourn for dinner. In moving that further consideration on Report be now adjourned, I think it is fair to inform your Lordships that the Report stage of the Bill will he resumed at 8.40, giving exactly an hour, if the intervening business has been concluded in the meantime. I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.

Law Reform (Husband and Wife) (Scotland) Bill
Brought from the Commons; read a first time, and to be printed.
Prescription and Limitation (Scotland) Bill
Brought from the Commons; read a first time, and to be printed.

Straw and Stubble Burning Prohibition Bill [H.L.]
7.42 p.m.
Lord Alport: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Alport.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD AIREDALE in the Chair.]
Clause 1 [Straw and Stubble Burning]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 1:
Page 1, line 6, leave out from first ("to") to ("on") in line 7 and insert ("unbaled straw").
The noble Earl said: This amendment stands in my name and in that of my noble friends Lord Stanley of Alderley and Lord Saint Oswald.
At Second Reading my noble friend Lord Alport put me into the category of those with entrenched vested interests. I think he now understands that I do not have these vested interests because I am not a farmer; I am a mere countryman who happens to have taken up land agency as one of his professions.
Farmers have to co-exist with a high level of public interest in the countryside. I believe that the right way to go forward is by co-operation rather than antagonism and by foresight rather than by rearguard action. I should prefer to see no straw or stubble burning, but not only must there be a means of utilising that surplus straw—and there is no evidence that this can be undertaken in the next five years—there must also be a prevention of further and abnormal use of chemicals for the control of weeds.
We are, therefore, faced with this Bill. I should very much like to see a shortened Bill after today, and my noble friend Lord Belstead has kindly produced the model by-laws. I should like to see a simple Bill saying that the model by-laws should be on a national basis and that any serious offender should be banned from burning straw. Let us see how that works and return to discuss the matter in five years' time.
However, turning to the meat of my amendment, it is to leave out the words, "to stubble or to straw (whether baled or unbaled)" and to insert the words "unbaled straw".
The purpose and effect of this amendment are to remove from the ambit of licensing the burning of stubble, which is not normally problematical, and of baled straw, which is only very rarely done. There is a substantial difference between burning stubble and burning unbaled straw. I was interested to read the 10th report of the Royal Commission on Environmental Pollution, which was published in February this year. In paragraph 2.8, it states:
"In 1983 most of the public complaints about straw burning related to the deposition of smuts from the incomplete combustion of the straw".
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There is no mention of stubble, only straw. The report continues in paragraph 2.11 to say:
"We therefore recommend that the Government should announce the introduction of a legislative ban on straw burning on stubble fields to take effect in five years' time."
In other words the report has drawn to my mind the difference that I also draw between straw and stubble. We have been burning stubble for many years, for generations, and it has not caused severe problems. We have been burning unbaled straw, which has caused some problems, in the last few years with the dry summer weather. There is, therefore, this difference and I believe it is an important difference. A farmer should be allowed to burn his stubble under supervision and in accordance with the model by-laws. I am grateful to my noble friend Lord Alport for pointing out the fact that I did not include the word "stubble" in my later Amendment No. 26 and I give the undertaking to the Committee that I will, if this amendment is accepted, bring in the words "or stubble" after the word "straw" at a later stage. Thus the farmer, who, hopefully, does not have to have a licence to burn stubble, will have his actions controlled by the new and very draconian model by-laws. I beg to move.
Lord John-Mackie: In moving this amendment the noble Earl said that there was a world of difference between burning straw and stubble. Today we have wheats from which we can literally take the top and leave two feet or two and a half feet of stubble. I feel that has done quite a lot, especially with the new combines we have and there is the grave danger that people will use that method as a means of overcoming the by-laws if the noble Earl's amendment is accepted.
I give your Lordships an experience that I had myself many years ago when I was dairying and did not burn straw as I required the straw for the stock. I was on a walk just before dinner one evening and discovered a small open bale behind a hedge not three yards off the headland. I thought that when the plough came along that would be a nuisance and that I would burn it. I was in the shelter of the hedge and did not realise that there was a wind. Before I could stop it the fire spread and started to cross the field. I had only a walking stick and it was making for my neighbour's field. I vigorously beat it with the walking stick but could not control it. Fortunately, as I am very seldom late for dinner, my family came to look for me and saved what could have been a difficult situation. I think it would be a pity to miss out stubble burning from the point of view of long stubble for, like thick short stubble, it is just about as dangerous.
The Earl of Onslow: I hope very strongly that my noble friend Lord Alport will resist this amendment very firmly. I can see the innocent look on somebody's face when a great cloud of smoke goes across wherever it is, in spite of the model by-laws, and hear him saying, "I am very sorry, sir; I was only burning stubble". If a bit of loose straw which was left behind from baling has fallen off the back of a combine, how does one say whether that is stubble or straw? Will one have to go round the bit of loose straw? We cannot honestly differentiate between stubble burning and straw burning.
It is absolutely essential for the landowning and the farming community to realise and get into its head

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(which some members of it are not capable of doing) what offence this particular habit gives to the vast majority of the British people. We should be mad not to take that into account. The farming community is a privileged community and long may it go on being a privileged community because I am part of it and I like being privileged, but unless your Lordships take into account the things that are said by other people and take into account other people's views, more privileges will be taken away from the farming community. Then I would start to squeak; and I do not want to start to squeak. It is essential to resist this amendment and I hope that my noble friend Lord Alport will so do.
Lord Hooson: From these Benches, I, too hope that the noble Lord, Lord Alport, will resist this amendment. It seems to me that the degree of casuistry involved in the advocacy of the noble Earl, Lord Caithness, of his amendment was astonishing. In modern times—and we are really dealing with modern times—as the noble Lord, Lord John-Mackie, has said, all you need to do is to use the modern combine, cut off the head and you can leave a stubble as long as you like. Also, of course, these days very rarely is the stubble burned separately from the straw.
Lord Gisborough: There was a very serious accident near Perth where, as I understand it, the stubble itself was so dry that it exploded and in one moment the fire ran through the stubble, fairly short stubble, very' much faster than one could run to put it out. I have never seen it myself but I understand that it can explode in very dry conditions.
Viscount Mountgarret: I must correct my noble friend. I am afraid that what he says is not correct. It was a bale of straw that caught fire and caused the smoke and the incident to which he referred. I, too, think that my noble friend Lord Onslow is trying to split hairs to pretend that there is no difference between stubble burning and straw burning. It is not so. The amount of smoke or smut given off in the burning of stubble is infinitely less than it is from burning unbaled straw and there should not be this concern or the inconvenience caused to people if the stubble—and I emphasise "stubble" as opposed to "straw--is burned. To say that you then have to try to go round little pieces of straw that drop off the back of the combine is splitting hairs. That in itself is not going to give rise to unacceptable amounts of smoke. I think that the lily is being somewhat painted in this matter.
I think the noble Lord, Lord John-Mackie, said that the stubble is left about two feet high. I have never known any stubble anywhere in England today which is left at that height with the exception, perhaps, of oilseed rape stubble, if it is called stubble. That is rather longer. There is no possible way of getting rid of oilseed rape stubble other than by burning it. You cannot chop it, you cannot plough it in, and if we are not going to he allowed to burn that stubble, how are we going to get rid of the residue or the stubble of oilseed rape? I think that this amendment should be accepted in principle.
Lord Moyne: I should like to underline the importance of burning. The Bill does permit burning
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in the case of oats. You cannot spray wild oats because you kill the oats. Therefore, it is absolutely essential when you cannot completely control something to be able on occasion to burn. The Bill does not prevent that. It seems to me a point that ought to be made.
Lord Northbourne: Unlike the noble Earl, Lord Caithness, I am a farmer and not ashamed of being one. I think that it is absolute arrant nonsense to say that there is not a difference between the burning of unbaled straw and the burning of stubble. Undoubtedly there is. Whereas the burning of unbaled straw is a hazard and has caused pollution, to which people can reasonably object—and all of us would like to see straw put to a better use, although there are considerable difficulties in doing so—in the case of stubble it is an important agricultural operation.
If we are to go on growing substantial areas of autumn crops and cereals, we really need this operation in farming in order to kill the carriers of diseases and pests. If we do not use this method of killing them we shall have to use more chemicals in the following year, which I personally do not think is in the public interest and certainly it is not in the economic interest of the country. I would suggest that stubble burning ought to be in operation and available to farmers without any unreasonable restriction.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): I wonder if I might say a brief word on behalf of the Government on this, the first of the amendments on the Marshalled List. My noble friend Lord Caithness was good enough to refer to the new model by-laws which we have published today. I asked that copies should be sent to all noble Lords who spoke on Second Reading on my noble friend Lord Alport's Bill. I hope that those copies have fallen into the hands of your Lordships. The model by-laws are substantially toughened and broadened in scope and, we believe, will give local authorities every opportunity to crack down upon anyone who burns straw and stubble without paying due regard to the interests of the public and the environment. I have every hope that local authorities in straw burning areas will grasp the opportunity offered to them and will revise their by-laws in accordance with the model.
I agreed with many things that my noble friend Lord Caithness said in moving this amendment. He spoke of the need to try to proceed through co-operation and not coercion; he referred to the new by-laws as draconian, and certainly they are very strict. My noble friend expressed the hope that we give the by-laws a chance. This, regrettably, is what my noble friend Lord Alport is not prepared to do in bringing this Bill forward.
I do not agree, if I may say so, with the noble Lord, Lord Hooson, in his criticism of my noble friend. For instance, Lord Alport's Bill as drafted, as I understand it, would prevent completely the burning of straw used, for instance, for the protection of strawberries, which is a practice followed by many fruit producers after the strawberry harvest. I think that we would perhaps do well, in looking at this Bill, to consider that there may be some fault on their sides. In other words, I am saying that I do not think that the Bill, even

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according to my noble friend's own criteria—and, of course, it is a Bill with which the Government do not agree—is necessarily right.
At the same time, I must say, with respect to my noble friend Lord Caithness, that I think that the amendment, according to the Government's own criteria, goes a little far. Our by-laws would allow the burning of stubble but under conditions controlled by the by-laws. Of course, this amendment would completely exempt stubble burning from the rules which would be brought in by this Bill. That is the difference—and it is a fairly narrow one but it is a difference—between the Government's position and my noble friend's amendment. I thought that I ought to point that out in saying also one or two other general remarks on this the first amendment.
Lord Hooson: Before the noble Lord sits down, would he not agree that the Bill put forward by Lord Alport in no way prevents the burning of straw on strawberries and in no way prevents the burning of stubble? All it does is to license it.
8 p.m.
Lord Belstead: That is in precise contradiction to what I said, so I do not agree with the noble Lord, Lord Hooson.
Lord Howie of Troon: Is this not really getting very near the bottom of the strawberry barrel? Is it not the key to the whole thing. The question which arises is really this: to what extent would these model by-laws actually be applied? It is all very well to set up a series of model by-laws and to ask people to take them into account, but to what extent does the noble Lord the Minister expect these by-laws actually to be applied? If they are applied, something is done; if they are not applied nothing is done, so where do we stand?
Lord Belstead: The Home Office is sending out a circular letter at the same time as the publication of the by-laws, explaining in great detail the effect of the by-laws, which have been discussed with the local authority associations. The remarks and observations of the local authority associations and, indeed, the environmental and farming interests have all been taken into account and now the final draft of the bylaws is being sent out. A circular letter is being sent out by the Home Office drawing to the attention of the local authorities all the details and expressing the firm hope that they will incorporate these new model bylaws into their own by-laws.
Lord Howie of Troon: Does the noble Lord the Minister think they will?
Lord Belstead: I do, because the one area of agreement which I have with my noble friend Lord Alport in producing this Bill is that the Government believe something needs to be done—
Noble Lords: Hear, hear!
Lord Belstead:—and it is for that reason that, as my noble friend Lord Caithness was good enough to say, the new model by-laws are very strict. We have
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said in the circular letter that the Home Office now will bring in an order to increase the maximum fine to £2,000 for any one offence of straw or stubble burning. That will come into effect on 1st May.
Lord Houghton of Sowerby: May I ask the noble Lord the Minister why the draft new guidelines have been sent only to those noble Lords who spoke during the Second Reading debate? Does it not count that one has sat right through the debate, albeit without saying anything? Those who want to facilitate business are deprived of the opportunity of looking at what the Government are up to. Why do the guidelines come out at the moment when there is a Bill reaching Committee stage on this very subject? It is astonishing how we behave sometimes! Governments get cracking when someone else makes a move. They want to forestall someone else who is going to make a move on a matter of this kind. I will not comment on this amendment at the present time, except to remark that we have a numerous attendance of noble Lords on a subject which I must say does not excite quite so much interest among other noble Lords.
But I will say this in conclusion: I would comment on this amendment that although I am sure those of us who live in the country all listen with great respect to the plea by the farmers to have an opportunity of doing their job properly, they are really an awful nuisance to those of us who do not set fire to stubble but have to breathe other people's smoke. My own view is that stubble burning is a form of arson and has to be regarded as such in looking at whether we should permit it or not and, if we do, under what conditions.
Lord Belstead: I hope that noble Lords will forgive me, and I promise I will not intervene again on this first amendment. I hope the noble Earl, Lord Erroll, will forgive me. I hope that the noble Lord, Lord Houghton, does not think I have been discourteous. We have been involved in many debates in the past and he always treats me with great courtesy and I try to do so in return.
The reason why the by-laws were only publised today is that they have taken many many months because of the enormous amount of consultation there has been with environmental groups and with farming groups: there has been consultation also with local authorities, although my right honourable friend the Minister announced that this was the direction in which he wanted to go. I realise that it is not the direction in which my noble friend Lord Alport wants to go but it is the direction in which my right honourable friend wished to go as long ago as last October.
Perhaps I may round off by saying that, although I tried to get copies of the by-laws into the hands of those who spoke on Second Reading, there are copies deposited in the Printed Paper Office and I know my noble friend the Deputy Chief Whip on the Government side, who is quick on his feet, will be only too ready to get a few copies and to hand one to the noble Lord, Lord Houghton.
Lord Gisborough: Can the noble Lord the Minister say whether these by-laws are now a matter of fact? If so, why have they not come before the House for consideration?—because I think they are totally

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absurd. I did not know whether to laugh or to cry when I read them. There is criticism to be made of all of the paragraphs, but, to start with, we have Saturday, Sunday and Bank Holiday—no burning. But what does the Minister think farming is all about in the North of England, where we have very few days to get the corn in? If he imagines that everyone happily goes home at weekends during harvest and does not do anything, he cannot know much about farming. At weekends when the weather is right, we must get on, and it is unbelievable to think that everyone must just knock off. It may have been raining for a whole week. Every paragraph is either stupid or absurd. A little consultation or debate in this Chamber would have been better before the Government accepted this.
The Earl of Erroll: While I agree with the noble Lord, Lord Gisborough, about farming not being a Monday to Friday job, I should like to return to the amendment we were discussing, which was the distinction between stubble and straw. Whether we are talking about this Bill or about by-laws, it is important that we make the distinction, because, whereas straw can be removed from the fields, stubble cannot. There is a problem, as the Ministry of Agriculture tests show, that if you plough it back into certain soils you reduce your yields by between 5 per cent. and 15 per cent. No one has found a way round this, short of spending considerable amounts per acre in putting enzymes or other chemicals on the soil to degrade this stuff so that the bacteria do not break down the cellulose and put toxins in the soil which will retard the next crop.
The point is that with the present EEC structure probably collapsing and with the possible drop in the price of corn, in agriculture we are going to have a financial problem. Farmers may have made a 37 per cent. increase in their income two years ago, but their income dropped by 10 per cent, last year, and the new trend may go on, in which case we shall have a problem in agriculture if we seek to prohibit measures which do allow economic farming and which enforce the use of chemicals which the environmentalists will not like either. We are between the devil and the deep blue sea. But in prohibiting the burning of stubble as opposed to straw, and stubble which is not removable, we may be giving ourselves extra problems and we should make a distinction between the two whether it is in this Bill or in the by-laws, and we should be aware of it.
The Earl of Onslow: My I raise this one point? If there is a discharge into a river by a chemical manufacturer, he is not just allowed to bung toxic substances into the river; he has to pay for the river not to be toxic and to make sure that any effluent from his factory is clean. I really do not see the difference if the community says, which I think it is saying, that the effect of stubble burning except under licence, which is what the NFU wants, is going to be allowed. If, then, we do not have the controls on it, we are asking that the farming community shall have extra privileges even over and above any other manufacturing business. Any business has got to pay for its own cleaning-up operations. That is the argument about the 5 per cent. or the 15 per cent. yield and the putting on of expensive chemicals.
Lord John-Mackie: I would like to make a plea. I quite agree with the noble Lord that there is a difference between burning stubble and burning unbaled straw, but what I meant the noble Lord to appreciate was that there are almost equal dangers from burning stubble and burning straw. That is the point I wanted to make. Of course there is a difference in burning particularly short stubble. My experience was with barley stubble, and it was quite a dangerous situation.
There is a lot of bandying about of how much people know about harvesting and so on in various quarters. If you want to burn straw properly, and the stubble with it, then you certainly should not cut a short stubble. We always leave at least a foot if not more, but there is nothing to stop you leaving up to two feet and even more, depending upon the height of the wheat, and so on. To say that you cannot do it or that nobody does it, it is quite ridiculous.
Viscount Ridley: Might I ask my noble friend on the Front Bench whether he would not agree that the bylaws—admittedly we have not had very long to study them—would make the burning of stubble or straw so prohibitively expensive that the objects of this Bill will be achieved by the by-laws alone?
Lord Belstead: No, I do not agree with my noble friend on that point.
Lord Saint Oswald: I am puzzled by certain aspects of the debate so far. For the first time in my life—and probably for the last—I find myself in profound disagreement with my noble friend the Minister. It is almost a miracle in our relationship. I also disagree with other speakers who say there is not sufficient difference between straw and stubble. There is an immense difference, and my noble friend Lord Onslow certainly did not convince me that a difference cannot be found. In fact my noble friends Lord Caithness and Lord Northbourne themselves spelt out the difference that exists. As the noble Lord, Lord Alport, himself will be well aware, the burning of stubble is not a modern system, technically wicked or corrupt. It has been applied during long ages of history and reference to it is to be found in the Bible itself. The noble Lord may perhaps have in his own mind those inspiriting words:
"In the moment of God's coming to them they will kindle into flame like sparks that sweep through the stubble. They will be judges and rulers over the world and the Lord will be their king for ever and ever".
This reference is to the souls of the just, no less; and an evil analogy would not have been applied to them in the Good Book. It is the wisdom of Solomon and not the common sense of Caithness, Stanley of Alderley and Saint Oswald, and so on, which the noble Lord is defying, if he is going to defy it. Stubble burning really is as necessary in agriculture today as it was in the days of Solomon, when it certainly was not licensed.
I want to say a word, and only a word, about the true toughness of the new by-laws, which the NFU have accepted. I think they have been very farsighted and even very generous in accepting them. Farmers are accepting them. The fines which go with breaking the by-laws are going to make things extremely difficult. The difficulties attached to increased firebreaks are

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going to impose enormous difficulties, especially on small farmers. If this Bill were to go through in its present form, I believe that many small farmers would be driven out of business and I think we should keep this in mind at every stage of the Bill, especially in regard to the present amendment, which I fully commend to your Lordships.
Lord Moyne: I should like to refer to one particular point, which is the forbidding of leaving any ash on the ground. It seems to me that unless vacuum cleaners are to be used, that cannot be carried out. It says that it has not been incorporated; and how else, if it is not incorporated, are you to remove it? This refers to No. 8 of the by-laws.
Lord Alport: I am most grateful to all noble Lords who have taken part in this debate, which has proved to be not only a longer but a much more interesting one than I anticipated when I first saw the Marshalled List.
Lord Henderson of
Brompton: I hope the noble Lord will feel himself to be grateful also to those who have not spoken.
Lord Alport: However, there are two general points I should like to make. First of all, in answer to this amendment, the Bill as it stands, and the Bill as amended by the amendments that I have tabled, does not prevent straw or stubble burning. In the first place, a licence is obtainable in order to burn stubble or straw and it is available to everyone who wishes to do so. Your Lordships will see as a result of later amendments that if by any chance any farmer does not receive a licence, he has recourse to the law courts in order to obtain his rights; so there is no question of this Bill stopping straw or stubble burning. It does not do so.
The second point I should like to make is a very general one and it follows in some degree the point made by my noble friend Lord Onslow. That is, the arguments that we have heard for the most part have been made from the farming interest. I know very well that the farming interest at the present time is in an anxious state. I understand the concern that the present situation, with regard to the CAP and so on, gives them. At the same time I think that the farming interest, both in this House and outside it. must remember that there are other people who live in the countryside besides farmers. Not everybody, by any manner of means, is content indefinitely to endure year after year the consequences of straw and stubble burning which we experienced not only last year but which have been going on during the past 10 years.
I would very strongly advise—and not simply because I am advocating this Bill (my Bill, I suppose it is) but simply from my knowledge of the politics of the countryside and of this country—my noble friends who, quite rightly and properly represent the farming interests in this House and who have put their point of view, to remember that the farming industry at this present time cannot afford to be regarded as anti-social and an enemy of the general community in the villages and the country towns of Britain. I therefore implore them to take a reasonable view of this.
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The issue of this amendment is whether stubble should be included in the licensing system which the Bill would set up. I think my noble friend the Minister made it quite clear that from the Ministry's point of view the objections to straw burning uncontrolled are equally objections to stubble burning uncontrolled. Indeed, the model by-law, of which I received a copy on which I spoke in the last debate, says this:
"No person shall, on agricultural land, commence to burn any straw or stubble remaining on such land after the harvesting of any cereal crop which has been grown thereon, or cause or permit to commence the burning of such straw or stubble at any time."
Then it goes on to give further provisions. For the past 10 years and more, the problem of burning straw and stubble has been regarded as a single problem within the farming industry and so far as the countryside is concerned.
The noble Lord, Lord John-Mackie, has quite rightly pointed out that under the modern breeds of cereals, the cutting of the straw is at a height from the ground which is much higher than used to be the case, so far as I can remember it in earlier days. Therefore there is a danger to the environment, a danger of pollution: and there is a danger to health and all the rest of it that comes from stubble burning as well as from straw burning. It is not sufficient to make provisions merely to prevent straw and stubble burning: the anti-social aspects of both are in fact the same.
The noble Lord who spoke from the Cross-Benches earlier said that it would cost the farmers some additional expense in order to prevent the hazard produced by stubble burning. As my noble friend Lord Onslow said, this is something which industry as a whole—and the agricultural industry is a great industry—and in particular urban industry has been compelled to do for years past and for decades past. The farming industry must bring itself up to date, not only in its methods—and nothing is better, in my view, than seeing the wonderful countryside of Essex and the efficiency of the farming there—but mentally, so to speak. It must realise that some of the aspects of the present methods of cultivation cannot be allowed to continue, and would not be allowed to continue in any other industry.
I have been astonished since Christmas, when I followed to the best of my ability the technical journals of the farming industry, to see how often now there appear to be articles showing that the incorporation of straw and stubble in the land is not only not the disadvantage which had been claimed in the past, but in many cases can be an advantage, whether the land is light land or heavy land. If noble Lords would like to have evidence of that, they can look at this week's issue of the Farmers' Weekly.Progress is being made here, and there will he much more progress over the next 10 years.
But the fact of the matter is that the Bill as it stands not only does not prevent straw or stubble burning during the next five years, but, if my forecasts of the changes that will take place do not eventuate, then—as your Lordships will see from the amendment which I have put down later in the Bill—the Secretary of State has discretion at the end of five years as to whether or not a ban is to be introduced. I ask my noble friends to withdraw this amendment. I understand the concern

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which they have. I hope that they will take notice of what my noble friend the Minister has said, because if they do not withdraw the amendment then I shall ask the Committee to divide against it.
8.22 p.m.
Lord Stanley of Alderley: Before my noble friend replies, I have a couple of small technical points on which my noble friend Lord Alport is at fault. First, I am amazed that he says that straw is now combined higher than it was. Any reasonable farmer today will make his combine driver drive as low as he possibly can. I shall not go into the details, but I could show my noble friend in practice. There is another small point on which my noble friend might even have misled the Committee. He said that the Bill is not banning straw burning, but I would quote to him Clause 2(1) which reads, "A local authority may grant a licence". If it does not want to grant a licence, it need not do so. So before my noble friend gets up, I am assuming that he will accept the principle that the local authority "shall" and that he will accept the amendment of my noble friend Lord Mountgarret on this small point.
I have one final point on the question of incorporation. I can assure my noble friend, though I am sure that he is enormously knowledgeable on agriculture, that incorporation is extremely detrimental to the yield. I am not making a great point of that at this stage. I am just saying that, in some cases, it is totally impossible to incorporate under present conditions, but we shall come to that later. I finish on a happier note by saying that I hope very much we are at one on the question of licences. I have down a large number of amendments with my noble friends on how these licences should be granted, and I hope very much that my noble friend Lord Alport will come along with us on them. But I think that he has slightly misled the Committee on the two points that I have mentioned.
Lord Alport: Perhaps I may answer my noble friend. I would draw his attention to Amendment No. 23, after Clause 2, which reads:
"A licence to burn straw or stubble shall not be unreasonably withheld from any person applying to a local authority for such a licence".
So if, by any chance—and my noble friend referred to another amendment that has been put down by, I think, my noble friend Lord Mountgarret—a local authority refuses unreasonably to grant a licence, then there is the law. But may I advise the Committee that we have about 10 minutes or so in which to complete our consideration of this section of the Bill. If it was your Lordships' decision that the Division should now take place, that would enable us to conform with what I know both Front Benches wish to happen, which is to give an hour to our deliberations on this Bill and then to return to the Report stage of the Telecommunications Bill.
The Earl of Erroll: Before the noble Lord sits down, I do not see that paragraphs (a) and (b) of Clause 2(4) do not ban straw burning after 1st January 1989.
Lord Alport: My Lords, if the noble Earl looks at the Marshalled List, he will see a very substantial amendment which I have introduced which changes that, so I suggest that he looks at that.
Viscount Mountgarret: I have one further point about the word "unreasonable". Who is to decide what is unreasonable? It is very airy-fairy. One local authority may do one thing and another authority may do something else.
Lord Alport: I do not want to go on to another amendment, but the decisions will be made by the court and that is the right place for them to be made.
Viscount Mountgarret: We are talking about harvesting in July, August and September. If you apply to the court it might be October, November, December or Christmastime before you get there. Meantime, the straw and stubble lies there. I am sorry, but we are probably getting off the theme of the amendment.
The Earl of Caithness: What an interesting debate we have had. I should like to take up two points and, first, the point of the noble Lord, Lord John-Mackie. I would willingly at a later stage bring forward an amendment to limit the height of stubble, if that is of concern to him. The stubble has to be below a certain height in order that you can burn it without licence. The second point was made by my noble friend the Minister, on which I think he was wrong. He thought that I wanted to exempt stubble burning from the by-laws. That is the last thing I want to do. I want to make it absolutely certain that, even if someone gets a licence, he should be subject to the by-laws and subject on a national basis.
My noble friend Lord Onslow said that there is public disquiet about the smoke. I agree with him that there is public disquiet, but it is our duty to warn the public that, if they get rid of the menace of the smoke, they will create a far worse menace by the extra chemicals which will have to be put on the land. I wonder how my noble friend would see farmers being responsible for the residue of chemicals from their land which has not been absorbed by the plant and the soil. After chemicals have been put on in large quantities in order to get rid of stubble and straw, they will get washed through after a heavy thunderstorm—and how will the farmer compete with that? That is far more of a menace to the public than smoke. The public have to be educated on this point and it is our duty to educate them. In view of what has been said, and in view of the hour, it would be unwise for me to take this amendment to a Division at this stage. However, I should like to come back to it at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Caithness The Earl of Caithness moved Amendment No. 2:
Page I, line 7, leave out ("or derived from").
The noble Earl said: This is a simple amendment to leave out the words "or derived from". The effect of this amendment is that one should not need a licence to burn straw which has been removed from agricultural land. This is a fairly obvious amendment. If one has a few bales left over in the early spring, there is no need to apply for a licence to burn that or to burn the straw which is a result of mulching strawberries. It would be far better and simpler if this amendment were carried, and it would expedite the situation for farmers. I beg to move.
Lord Alport: Perhaps I can save the time of the Committee by saying that I am very happy to accept this amendment.
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 3:
Page 1, line 10, leave out ("carries a licence granted") and insert ("has been granted a licence").
The noble Earl said: I should like to thank my noble friend for accepting the last amendment. I trust that he will accept this purely technical amendment, which I beg to move.
Lord Alport: Again, I can save the time of the Committee by saying that I am very happy to accept this amendment, which is an improvement on the present wording of the Bill.
On Question, amendment agreed to.
Clause 1, as amended, agreed to.
Lord Alport: We are about to turn to Clause 2, Amendment No. 4, which is a major amendment. It represents a decision which is most important both from the point of view of my noble friends who have tabled the amendment and from the point of view of the Bill. If it is agreeable, I believe that we ought to adjourn during pleasure for the next 10 minutes and return tomorrow to the Bill, since the Committee stage is to be resumed tomorrow after the two short debates. Then we shall have full time for the arguments about what I believe to be a very important amendment to be deployed.
Lord Skelmersdale: I am extremely grateful to my noble friend for his consideration of the Committee. Therefore, I beg to move that this House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
Lord Skelmersdale: My Lords, I beg to move that this House do now adjourn during pleasure until twenty minutes before nine o'clock.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.32 until 8.40 p.m.]

Telecommunications Bill
Consideration of amendments on Report resumed.
[Amendments Nos. 128BS to 128BV not moved.]
Lord Glenarthur Lord Glenarthur moved Amendment No. 128BW:
[Printed earlier: col. 1172.]
The noble Lord said: My Lords, perhaps I may speak to Amendments Nos. 128BW, 128BX and 128BY together.
[Printed earlier: col. 1172.]
These three amendments are consequential upon an earlier amendment and I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 128BX.
The noble Lord said: My Lords, this amendment is consequential with Amendment No. 128BY. I beg to move these two amendments en bloc.
On Question, amendments agreed to.
Lord Lyell Lord Lyell moved Amendment No. 128BZ:
Page 101, line 22, at end insert—
("(5A) For the purposes of proceedings under this paragraph in a county court in England and Wales or Northern Ireland, section 63(1) of the County Courts Act 1984 and Article 33(1) of the County Courts (Northern Ireland) Order 1980 (assessors) shall have effect as if the words "on the application of any party" were omitted; and where an assessor is summoned, or, in Northern Ireland, appointed by virtue of this sub-paragraph—

(a) he may, if so directed by the judge, inspect the land to which the proceedings relate without the judge and report on the land to the judge in writing; and

(b) the judge may take the report into account in determining whether to make an order under this paragraph and what order to make.

In relation to any time before 1st August 1984, the reference in this sub-paragraph to section 63(1) of the County Courts Act 1984 shall have effect as a reference to section 91(1) of the County Courts Act 1959.").
The noble Lord said: My Lords, at Committee stage of this Bill on 20th February my noble friend Lord Kinnoull tabled Amendment No. 85LB. That amendment sought to provide that persons whose agreement is dispensed with by the court under paragraph 5 of the Telecommunications Code would have the option of requiring that the financial terms of the court order should be determined by the Lands Tribunal.
When I was replying to that amendment, I suggested that the essence of my noble friend's argument was that if difficult cases were to arise in this particular area it might be desirable to call upon expertise in the valuation field. I acknowledged then that there was some force in that argument. I went on to add that, having considered the matter, the Government had concluded that it would be appropriate for the court to have access to relevant expertise in the valuation field so as to assist the court in coming to a conclusion on the terms that would have to be included in the order. I gave my noble friend Lord Kinnoull an undertaking that we would come forward with the necessary amendment at Report stage to ensure that a county court judge would be able to summon an expert assessor and authorise him to inspect the relevant land and to report back to the court as to the terms that should be included in any order.
I went on to point out that we considered that that particular action would be a significant improvement in the jurisdiction under the code as it stands at present; moreover, an improvement which would not involve any of the procedural inefficiency associated with a reference in any particular case to the Lands Tribunal.
This amendment represents the Government's reply in response to the undertaking I gave. The only point I would add by way of explanation—which I am sure will make my noble and learned friend happy—is that no amendment is needed to Scottish enactments because in our country (in Scotland) the Sheriff Court already has a complete discretion to determine its own procedure in this kind of matter. I hope that I have

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been able to set at rest any doubts which my noble friend Lord Kinnoull may have had. I beg to move.
On Question, amendment agreed to.
[Amendment No. 128BZA not moved.]
Lord Glenarthur Lord Glenarthur moved Amendment No. 128BZB:
[Printed earlier: col. 1172.]
The noble Lord said: My Lords, this amendment is consequential. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendments Nos. 128BZC to 128BZG:
[Printed earlier: cols. 1171 and 1172.]
The noble Lord said: My Lords, Amendments Nos. 128 BZC to 128BZG are consequential. I beg to move these amendments en bloc.
On Question, amendments agreed to.
Lord Glenarthur Lord Glenarthur moved Amendments No. 128BZH and 128BZJ:
Page 102, line 2, leave out ("agreement") and insert ("order").
Page 102, line 9, leave out ("agreement") and insert ("order").
The noble Lord said: My Lords, this amendment is a drafting amendment together with Amendment No. 128 BZJ. These amendments have been referred to earlier. I beg to move them en bloc.
On Question, amendments agreed to.
[Amendment No. 128BZK not moved.]
Lord Lyell Lord Lyell moved Amendment No. 128BZL:
Page 102, leave out lines 13 and 14 and insert—
("(A) In determining what terms should be specified in an order under paragraph 5 above requiring an amount to be paid to any person in respect of—

(a) the provisions of that order conferring any right or providing for any right to bind any person or any interest in land, or

(b) the exercise of any right to which the order relates, the court shall take into account the prejudicial effect (if any) of the order or, as the case may be, of the exercise of the right on that person's enjoyment of, or on any interest of his in, land other than the land in relation to which the right is conferred.

(2) In determining what terms should be specified in an order under paragraph 5 above requiring an amount to be paid").
The noble Lord said: My Lords, this amendment is designed to clarify what is already implicit in paragraph 6 of the code and involves no change in policy. Your Lordships will see that paragraph 6 deals with the terms as to compensation which the court includes in the order when it is dispensing with an agreement needed by a telecommunications operator in order to install apparatus on private land. The need for the amendment arises because it has been suggested to us that the mere existence of paragraph 16 of the code casts doubt on the ability of the court to make provision in an order for compensation in relation to any prejudice—I think that is the legal term—caused by the installation of apparatus to a landowner's interest in neighbouring land as well as the land on which the apparatus is actually installed.
It never was our intention that paragraph 16 of the code, which is a general provision requiring operators to pay compensation for what is fascinatingly called injurious affection to neighbouring land, should have this particular effect. The amendment makes clear that there is no constraint on the court in this particular
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regard. I should like to stress that in moving this amendment I want to indicate to your Lordships that in considering the various questions asked by the noble Lord, Lord Grimond, at an earlier stage we now recognise the necessity for further amendment in relation to the compensation provisions of the code.
The difficulty that is presented to us arises in the context of paragraph 11. I am afraid we have not been able to frame the necessary provision in time for today's proceedings, and we shall be obliged therefore to bring it forward at the next stage of the Bill. With that, I beg to move.
On Question, amendment agreed to
[Amendment No. 128BZM not moved.]
Lord Glenarthur Lord Glenarthur moved Amendment No. 128BZN:
Page 102, line 47, leave out ("an") and insert ("any person or any").
The noble Lord said: This is a consequential amendment. I beg to move.
On Question, amendment agreed to.
The Deputy Speaker (Lord Aylestone): My Lords, in calling Amendment No. 128BZP I have to tell the House that if this amendment is agreed it will not be possible for me to move either of the following two amendments.
Lord Glenarthur Lord Glenarthur moved Amendment No. 128BZP:
[Printed earlier: col. 1155.]
The noble Lord said: Before I formally move this amendment perhaps I could elaborate a little on what I said in relation to my earlier remarks in connection with the primary amendment, so to speak, on Schedule 2, to which we referred a little earlier. I spoke in relation to the comment of the noble Lord, Lord McIntosh of Haringey, about the National Trust. What I said then was that the second half of the amendment was addressed to that particular concern. I should like to confirm that we have discussed with officials of the National Trust the effect of the amendments that we are moving. I am advised that they are content on the basis of assurances given about certain matters to be dealt with by way of licence conditions that Schedule 2 as modified by our amendments will be adequate to meet their concerns. I hope also that they will be adequate to meet the concerns of the noble Lord, Lord McIntosh of Haringey. I beg to move.
Lord McIntosh of Haringey: My Lords, I do not know whether I should declare an interest as a life member of the National Trust for Scotland. In any case I express my gratitude to the noble Lord, Lord Glenarthur, for the assurances that he has given. I take it that, if the National Trust for England and Wales is satisfied, the other bodies to which we have referred—in particular local authorities because those are by far the most numerous bodies referred to in my amendment—will also be satisfied with the assurances.
On Question, amendment agreed to.
The Deputy Speaker: I cannot call either of the next two amendments on the Marshalled List. The next amendment is Amendment No. 128CA.
[Amendments Nos. 128BZQ and 128C not moved.]
Lord Glenarthur Lord Glenarthur moved Amendment No. 128CA:
Page 104, line 10, after ("apparatus") insert (",or keep telecommunication apparatus installed.").
The noble Lord said: My Lords, this is a drafting amendment. I beg to move.
On Question, amendment agreed to.
[Amendment No. 128D not moved.]
[Amendment No. 128E had been withdrawn from the Marshalled List.]
8.55 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 128EA:
Page 104, line 35, leave out paragraph 10.
The noble Lord said: My Lords, I introduce this amendment with the intention of seeking suitable assurances from the Government which, from their previous statements, I believe may be given. The question of flown lines is of course one of very great importance for the environment. As the paragraph stands, it appears to allow lines to be flown over property provided that does not affect access or the business of the premises. There is also wording about whether the lines are three metres above ground or within two metres of a building and are not connected to a bracket or pole.
I understand that BT's practice—I may say a somewhat undesirable practice and sometimes very undesirable—is to have what it calls a maypole of telephone wires going from a single telegraph pole. Clearly this is by no means as satisfactory as what the noble Lord calls "undergrounding"; but it is important that there should be the maximum discouragement for this kind of flown line and the maximum encouragement for BT and any other operator to reach a suitable agreement for placing the lines underground. I ask the noble Lord to give assurances that the licence does make it possible for the operator to be leant on in that way.
Lord Glenarthur: My Lords, perhaps I should start by saying that when I first met this Bill in its very early form I was a practising pilot and was probably the last person to understand how a line could possibly fly. However, perhaps I may explain that the code itself does give operators the right to fly lines—that is, to hang wires from a post or other fixing on one piece of land so that they pass, or fly, over other land without the consent of the person owning or occupying the second piece of land above which the lines pass.
The need to fly lines in this way arises in two principal circumstances: when a line is strung between poles along a road, such a line passes over adjoining land where the road bends, and where a line is strung between a pole in the street and a subscriber's house, for example, the line may pass over the corner of a neighbour's garden. This is similar to the power which British Telecom has always had under the powers of the Telegraph Act to fly wires. Its continuation is essential in two important respects. One is concerned with environmental protection and the other the cost of providing telecommunication services.
From an environmental point of view, the ability to fly lines in the circumstances I have described greatly reduces the number of poles that may be required to
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suspend a particular line. That is obviously desirable on environmental grounds alone, since in an ordinary residential street a single pole may provide a service by means of flying wires to a dozen or more subscribers—the maypole effect to which the noble Lord referred. The absence of such a power would also seriously delay the provision of services if in every case where a wire has to fly over the corner of neighbouring land the consent procedures have to be followed. A further very serious consequence of removing the power would be to increase significantly the cost of installing apparatus, particularly in rural areas.
I hope, therefore, that the noble Lord will not wish to press his amendment. There certainly are specific safeguards to ensure that the power is not used in such a way as to damage the interests of individuals. The headpiece of paragraph 10 provides that the owners and occupiers of land must give their consent in any case where the flying of a wire appears likely to obstruct access to their land. Apart from that specific requirement, occupiers and owners are protected in the following ways. Most importantly, they can object to the installation under paragraph 17 of the code. Secondly, the wires must be placed at a height of at least three metres and must not obstruct any business carried out on the land. Thirdly, the operator is required to alter or remove them if the occupier or owner wants to develop his land. But beyond those specific protections, paragraph 10, just as any of the other powers contained in Schedule 2, can be used by an operator only if his licence authorises him to do so. Whenever a licence applying code powers is granted, the Secretary of State will consider whether it is appropriate for the particular operator to have the particular powers in the code and, if so, whether their exercise should be qualified by particular conditions. I hope, therefore, that the noble Lord will be able to withdraw his amendment.
Lord Morris: My Lords, if the amendment were passed, another deleterious effect would be that it would undoubtedly upset the bird population considerably.
Lord McIntosh of Haringey: My Lords, I fear that I shall have to rely on the last sentence of what the noble Lord. Lord Glenarthur, said and his statement that the Secretary of State may under suitable circumstances—clearly only if there are major abuses taking place; I quite understand that point—intervene to ensure that licences and the practices of operators take account of this quite serious environmental point, even though it may cause amusement to the noble Lord, Lord Morris. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 128F not moved.]
9.2 p.m.
Lord Glenarthur Lord Glenarthur moved Amendment No. 128FA:
[Printed earlier: col. 1172.]
Page 111, line 4, leave out ("paragraph 2(3)") and insert ("paragraph 2(1A)(b) or (d)").
The noble Lord said: My Lords, this is a consequential amendment. I beg to move.
On Question, amendment agreed to.
[Amendment No. 128FB not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 128G:
Page 111, line 34, after ("completed") insert ("altered").
The noble Lord said: My Lords, with the leave of the House, I should also like to speak to Amendments Nos. 128H, 128J and 128K.
Amendment No. 128H: Page 111, line 36, leave out ("at a height of 3 metres or more").
Amendment No. 128J: Page 111, line 39, after ("completion") insert ("or alteration").
Amendment No. 128K: Page 11 I, line 40, after ("in") insert ("or has a legal right of access to").
There is a significant point about Amendment No. 128G. This is simply that the paragraph as at present worded provides for objections after the completion of installations, whereas, as we all know, in practice protection is required when existing apparatus is altered, particularly by being replaced with something which is larger, more obvious or designed differently from the original. Although I appreciate that the Government have these concerns generally in mind, I seek some assurance that it is their intention to see that the legislation also covers this sort of alteration. I beg to move.
Lord Lyell: My Lords, I can assure your Lordships that it is the Government's intention to allow the objection procedures provided for in paragraph 17 to be available not only when apparatus is first installed but also when it is significantly altered. I hope that that takes care of what the noble Lord spoke of earlier when he mentioned the maypole. I must say that it is something which I have not yet seen, but we shall doubtless look forward to it at a later stage in the year. We believe that the existing draft of the paragraph already achieves the noble Lord's objective.
Your Lordships will have observed that the paragraph is stated (by sub-paragraph (1)) to apply,
"where the operator has completed the installation … of any telecommunication apparatus".
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This does not merely refer to the first occasion on which any apparatus is placed on a piece of land; it refers just as much to every other subsequent occasion when any apparatus is installed or placed on a piece of land.
It is true that paragraph 17(3) provides that the objection procedure will not be available when any apparatus merely replaces existing apparatus which is not significantly different or which is not in a significantly different position. I believe that your Lordships would not wish the procedure to have to be gone through again simply because a telegraph pole at the end of its useful life has been replaced by another pole a few feet away. It is almost impossible to put the new pole in exactly the same spot. It may be a matter of only one foot, as we would have it, although my noble friend Lord Orr-Ewing, may take us to task on this-33 centimetres or thereabouts. Technically it is difficult to fit a new pole in exactly the same spot. However, if there is a significant change in the apparatus or its positioning, the exemption in subparagraph (3) will not be available to the operator and the installation of the new piece of apparatus will open up the possibility of objection under paragraph 17.
I hope that that somewhat convoluted argument will have been the cause of at least some amusement if it is not to the entire satisfaction of the noble Lord.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord. I think that that explanation meets the point with which I was concerned—a larger or more offensive installation. If it is true that completion of an installation covers that point, I am happy to seek leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 128H, 128J, 128K, 128L, 128M, 128N, 128P, 128Q and 128R not moved.]
9.8 p.m.
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 129:
Page 114, line 19, at end insert—
("() The operator shall pay such reasonable costs of the lopping as may be incurred by the occupier of the land in question.")
The noble Lord said: My Lords, I beg to move Amendment No. 129 standing in my own name and the names of my noble friends Lord Bruce of Donington, Lord McIntosh and the noble Lord, Lord Lloyd of Kilgerran. It will be obvious to the House what I am seeking to do because it appears to me that unless this amendment is passed there will be an injustice and indeed an anomaly. When telephone installations, telephone wires and what have you are place along a road it may very well be that when they are constructing, there is no obstruction by trees at all, but, during the course of a number of years, then of course trees grow and obstruction may occur. That is perfectly reasonable and understandable. Basically, it is not the fault of the occupier of the land, whether he be a householder or any other sort of occupier, that the trees go on growing. Of course it is perfectly reasonable that they should be required to lop them, preferably with consent.
But it can be a very expensive business to lop trees, and even in one's own garden there may very well be a large tree that is obstructing a telephone wire. It might require expert assistance to lop that tree in a proper fashion, certainly without damage to the property and without damage to the telephone lines. In the case of some trees, the expense could run into perhaps some hundreds of pounds in rare exceptions. I think it will be clear to your Lordships that this could cause great hardship to many people. Ordinary householders on normal wages—certainly pensioners—would be caught unless the amendment, either as I have written it or perhaps altered by the Government at a later stage, is carried.
There seems to be an anomaly too, because if noble Lords will examine the paragraph closely, they will see that an operator may serve a notice on an occupier of land, requiring him to lop the trees. As the paragraph stands, if the occupier does the lopping, he will do it at his own expense. If he does not resist the notice and he does not lop the trees, then the operator may go in and lop the trees, which he will do at his own expense. If the occupier resists the notice and the matter is decided by the court in the favour of the operator—in other words that the trees are to be lopped—the court can also design that payment shall be made by the operator for the cost of lopping the tree and also the payment of any compensation for damage done by the tree lopping.
It may very well be that I am misreading the paragraph. I do not think I am, but I hope that I have been able to persuade the House that there is an anomaly here and injustice could be caused. I therefore hope that the Government will either be prepared to accept the amendment, explain to me that I am wrong, or, if I am not wrong and the amendment is not in good order, then I hope that they will come forward with their own amendment to put this
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anomaly and injustice right at Third Reading. I beg to move.
Lord Lyell: My Lords, the noble Lord, Lord Stoddart, moved his amendment with customary grace. I think he will agree that certainly I am not a lawyer. I do not know that he is. I think I quote him correctly, and I suspect he was reading from subparagraph (1) of paragraph 19. He will see—and perhaps your Lordships may see—that after we have disposed of sub-paragraph (1)(a) and (b), we can see that the paragraph reads:
"The operator may by notice",
et cetera,
"require the tree to be lopped".
I think that differs in a slight degree from what the noble Lord was suggesting, which was that the poor occupier should have to risk life and limb doing it himself. But I hope that in the course of my remarks I may put the noble Lord's mind at rest, and indeed any possible risk to occupiers who would interpret sub-paragraph (1) of paragraph 19 in meaning that they, the occupier, would have to carry out the lopping of the tree. I think that the paragraph is quite specific. It requires the tree to be lopped,
"so as to prevent the obstruction or interference".
I assure the noble Lord. Lord Stoddart, and your Lordships that there is no difference at all in policy between the Government and the noble Lord. I stress that our intention is that if a telecommunications operator, for any reason, wants to have a tree lopped, he should pay the occupier any costs that he incurs in the lopping. I stress to the House that that is what Paragraph 19 achieves, though the draftsman has not expressed it in the terms of this amendment, for reasons which I shall venture to explain.
Your Lordships will see that Paragraph 19, which is so artistically headed, "Tree lopping", provides that if an operator seeks to have a tree lopped, he must serve a notice on the occupier of the relevant land. The occupier is not compelled to agree, for obvious reasons; to give operators of telecommunications systems an untramelled right to lop trees would be quite unacceptable. Thus, if there is an objection by the occupier, the only way in which the operator can pursue his objective is if he is able to secure an order from the court. I think that the noble Lord, Lord Stoddart, would agree that that is a vital safeguard, and it determines the entire structure of the paragraph.
If we look at the foot of page 114 of the Bill, we see sub-paragraph (5). This makes clear that on application by the occupier, the court will order the operator to pay him (that is the occupier) such expenses as it thinks fit; in other words, the reasonable costs referred to in the amendment of the noble Lord, Lord Stoddart. It may be thought that that appears to be unsatisfactory because it obliges the occupier to apply to the court to recover his expenses. I stress to the noble Lord, Lord Stoddart, that that is not so because in practice what will happen is that the occupier will say to an operator of a telecommunications system who for some reason wants to have a tree lopped, that he will agree only if the operator agrees to pay the costs.

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If the operator is serious in his intention, he will comply with that reasonable request because he will know that if he does not comply, the occupier can object by serving a counter-notice, and that he (the operator) will then be faced with the expense and inconvenience of having to obtain a court order so as to be able to proceed with perfectly reasonable tree lopping to prevent undue obstruction or damage to the telecommunications system. Even if the operator were so obtuse or foolish as to proceed in that way, the court itself would have regard to the tailpiece of subparagraph (5) in making an order. I would argue that the amendment is unnecessary in order to achieve the effect that is so eloquently argued by the noble Lord, Lord Stoddart.
I should like to refer briefly to the drafting. We think that the amendment would have undesirable results because it appears to sever the connection between the costs of the lopping and the compensation for any loss or damage suffered as a result of the lopping of the tree. For instance, in the case of a rather exotic species there may be some damage to the tree. In our view both the costs of the lopping and the compensation for any loss or damage are important and it is right that the occupier should be compensated in both respects. I hope that the noble Lord, Lord Stoddart, will agree that that is certainly the aim of sub-paragraph (5), and we believe that that is what it achieves. I hope, too, that in the light of that explanation the noble Lord, Lord Stoddart, will feel that his fears are unfounded in regard to the lopping of trees which may be growing in someone's garden.
Lord Stoddart of Swindon: My Lords, I thank the noble Lord for that explanation, which I think makes the position clearer. It certainly makes clear that occupiers are in fact on an equal footing and that they can recover the costs or that the work will be done by the operator himself. I think that the noble Lord has satisfied me completely on that point. There is only one aspect which worries me. Let us consider an old person who suddenly has served on her a notice from an operator. The notice might say nothing about the operator being liable for the costs. Therefore, the old person may be extremely worried and concerned when she receives a notice from what she thinks is a statutory undertaking, saying "Your trees are damaging our lines; you must have then lopped". Being a good citizen, she will not want to hurt anybody and so off she goes and gets somebody to lop the trees. That will be the end of the matter; but of course she will be put to expense because she does not know the law. She will not have read Schedule 2 paragraph 19 of the Telecommunications Act 1984.
If there was some way in which we could get over the problem, I would be very much happier. Clearly my amendment will not achieve the purpose which I sought and I will certainly withdraw it. But if the Government can think of any way to get over the problem which I have just outlined, I would be extremely obliged and so, I am sure, would almost all occupiers of land.
9.20 p.m.
Lord Donaldson of Kingsbridge: My Lords, what is the difficulty in adding to paragraph 19 where it says:
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"the operator may by notice to the occupier of the land on which the tree is growing require the tree to be lopped so as to prevent the obstruction or interference".
the following words:
"and will be liable for any expenses"?
What is the problem? Why not add those words?
Lord Lyell: My Lords, with the leave of your Lordships' House, perhaps I can try and explain the position to the noble Lord, Lord Stoddart. I understand that any licence conditions for a telecommunications system will ensure that the occupier's right to serve a counter notice—or indeed any of the other rights available to the occupier—will be fully explained in any notice served by an operator. So if an old person who was not too well acquainted with official forms were to receive a notice from an operator, we would hope that the licence conditions would ensure that the rights of the occupier were clearly and fairly simply stated.
I hope that my explanation on the query raised by the noble Lord, Lord Stoddart, also satisfies the query raised by the noble Lord, Lord Donaldson. I hope that the explanation that I have been able to give has persuaded your Lordships that any expenses incurred in the lopping of trees would be met by the operator at no cost to the occupier.
Lord Stoddart of Swindon: My Lords, before the noble Lord sits down, I wonder whether he would go a little further in relation to the licence? He said that he hoped that the licence would cover this situation. Can he go a little further and say that the licence will cover it—not that he hopes it will cover it, but that it actually will do so?
Lord Lyell: My Lords, by leave of the House—and I would not want to stretch the rules of your Lordships' House further—my instructions are that licence conditions will ensure the occupier's rights; I understand that there are nodding movements to my left.
Lord Stoddart of Swindon: My Lords, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Glenarthur Lord Glenarthur moved Amendment No. 129ZA:
[Printed earlier: col. 1172.]
The noble Lord said: My Lords, this amendment is consequential. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 129A:
Page 118, line 6, at end insert—
("Denial of access to a telecommunication system
—(1) Sub-paragraph (2) of this paragraph shall apply where the court must have regard to the principle that no person should unreasonably be denied access to a telecommunication system under paragraphs 5(3), 8, 13(4), 14(4), 17(8) and 20(4) above.
(2) It shall not be unreasonable to deny access to a telecommunication system where the access can be given only by causing undue damage to the physical environment and the access is not essential for the safety or reasonable welfare of the persons requiring it.").
The noble Lord said: My Lords, this is a very difficult subject and I appreciate that one is always at risk in seeking to change one word for another word meaning almost the same thing. As your Lordships will know, I have been critical of other noble Lords who have been playing that game with words at earlier stages of the Bill. But the case here does justify such an attempt because we do have six references in the telecommunications code to the conditions under which:
"no person should unreasonably be denied access to a telecommunications system".
Nobody wants to deny access to a telecommunication system unreasonably, but there must be some sort of a balance somewhere, and the attempt that we make here in the second part of this amendment is to say that a balance must be struck between,
"causing undue damage to the physical environment and the access",
when it is not essential,
"for the safety or reasonable welfare of the persons requiring it".
The wording may not be acceptable; it may not be wording that lawyers or draftsmen would like. But I think that noble Lords will understand what it is we are trying to do.
We are trying to recognise that unreasonable denial of access to a telecommunication system is not absolute, that damage to the physical environment is not negligible, and that some way must be found of giving some emphasis—some weight—to the physical environment in these difficult considerations. In that sense, the amendment is a probing amendment hoping that the Government will find some way of assuring us that a reasonable balance is possible. I beg to move.
Lord Glenarthur: My Lords, we considered amendments at an earlier stage which referred to the concept of undue damage to the physical environment. I made the point then that it was very difficult to provide a meaningful description of what "undue physical damage" constitutes. I think that the noble Lord has probably recognised the validity of the criticism which was levelled then, for this amendment apparently qualifies the concept by reference to "safety or reasonable welfare". However, these refinements make matters worse rather than better. I do not have too much difficulty with the concept of safety, but "reasonable welfare" is a matter on which views might differ considerably.
Perhaps I may illustrate the latter point. Ten years ago, or perhaps even five years ago, I think that we might all have agreed that reasonable welfare in this context could relate only to the technology of the telephone. And I suspect that that is what the amendment is really trying to say: reasonable welfare requires reasonable access to a telephone. But recent developments and the Government's policy are designed to encourage the growth of a wide range of other services which will be provided via the telecommunication system. This, for example, is what
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lies behind our promotion of broad-band cable systems: the hope and expectation that people will be able to benefit not just from a wider range of entertainment, but also from the development of interactive services.
That is an important consideration, but there is a more profound objection on our part to introducing a test of this kind into the telecommunications code. The background to that objection has been explained in our responses to the other related amendments which have been moved by the noble Lords opposite. Perhaps it would be helpful if I summarised it. What it amounts to is that we have developed proposals which are designed to fit into the existing statutory framework for the protection of the environment through the planning legislation, supplementing that with provisions in the Bill explicitly designed to secure that the environment is fully protected. We have devoted a great deal of effort to ensuring that the arrangements we have proposed will work in the context of a revision of the general development order proposals for which have recently been published. Licence conditions will be framed against the background of the GDO in its final form after the various representations have been considered, and they will be framed only after full public consultation in each case.
This and related amendments can only have one of two objectives: either to tear up this approach and start again, or to superimpose on to that approach a quite separate set of requirements designed to achieve the same results. I assume that the noble Lord opposite does not have the first objective in mind since presumably he would have come forward with rather more numerous amendments both to the Bill and the code. But even if that was his objective, I have to advise your Lordships to resist it for two reasons.
First, environmental protection is a matter of too much importance to be the subject of such a radical change of approach at this late stage in the Bill. I do not say that the approach suggested by the noble Lord could not be made to work in any circumstances, but I do say that it would require a far greater restructuring of the telecommunications code than he appears to contemplate, and that is something we could not possibly undertake with any certainty of success at this stage of the Bill's progress. However, even if these suggestions had been put forward at a much earlier stage, the Government would, I think, have sought to argue against them for a second reason. This is that, while statutory provisions in the code may be thought to guarantee that the environment will be protected, in practice that guarantee could only be achieved by introducing very severe restrictions which would stifle telecommunications development. It would be necessary to do that from the outset in order to take account of the difficulty of finding parliamentary time to modify the relevant statute in the event that experience showed it to be too lax. It is that ability to respond flexibly to our experience of these matters in the new era of telecommunications which is such a powerful justification for the approach we have been advocating.
I think we all share a common objective. My basic point is that we should bend our efforts to ensuring

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that the structure already in the Bill is perfected. I hope that our amendments in this area, our ready acceptance of the amendment proposed by the noble Lord, Lord Stoddart, on the first day of the Report stage to place a statutory duty on the Secretary of State to frame licence conditions designed to protect the environment, and our willingness to consider further amendments in the light of the debate yesterday on Clause 19 are ample demonstration of our goodwill. I hope that the noble Lord will not press his amendment.
Lord McIntosh of Haringey: My Lords, I am deeply unimpressed and unconvinced by the detailed arguments of the noble Lord, although I have no doubt about his goodwill. We have proposed both in Committee and Report a number of detailed amendments designed to strengthen the telecommunications code. A number of these have been withdrawn, or not moved, on the basis of assurances that have been given. We are grateful for those assurances and believe that the situation is not as bad as it was before. But the noble Lord has not answered—except to say that it is too late to move this kind of amendment—the major point that I was trying to make.
There is a strong imbalance between the heavy restrictions on unreasonable access to a telecommunications system—and remember that a telecommunication system does not now consist only of telephony: it may consist of a whole number of data and cable entertainment services which could not necessarily be thought to be important for the safety or reasonable welfare of subscribers—and any concern expressed here in the code for the physical environment. But it is certainly true that, having not succeeded with earlier amendments, it is a late stage in the Bill to attempt to move them. We shall have to read what the noble Lord has said, see whether there are any crumbs of comfort in it, and consider our position on that basis. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey had given notice of his intention to move Amendment No. 129AA:
[Printed earlier: col. 1023.]
The noble Lord said: My Lords, on the basis of the assurances given yesterday by the noble and learned Lord the Lord Advocate in columns 1025 and 1026, I believe that it is not necessary to move this amendment.
[Amendment No. 129AA not moved.]
Lord Glenarthur Lord Glenarthur moved Amendment No. 129AB:
[Printed earlier: col. 1155.]
The noble Lord said: My Lords, this is consequential on 126B. I beg to move.
On Question, amendment agreed to.
9.33 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 129B:
[Printed earlier: col. 1021.]
The noble Lord said: My Lords, again we have made considerable progress towards the achievement of codes of practice for telecommunication installations. There have been some indications that there will be some uniformity in the wording designed to protect the physical environment in licences for public telecommunication operators. On that basis perhaps the issue is less black and white than it might otherwise have seemed.
However, it is worth at least making the point that it is possible to have a code of practice which would be applicable to all telecommunication operators. The code of practice we propose in this amendment is based on condition 5 of the draft BT licence and on paragraph 69 of the explanatory notes on the draft. It extends that to some extent and it is necessary to show that such a code of practice is possible and could be made generally applicable without collapsing into absurdity.
The second point that is worth making, and the reason I move this amendment, is the issue of the code of practice being independent of British Telecom or of negotiation with BT or any other individual operator; that is why we are proposing that such a code should be prepared, published and kept up to date by the British Standards Institution. This is not a radical departure. There are a number of examples where the British Standards Institution performs this function, or comparable functions, for the Government when there are regulatory problems.
I believe that it would be possible for the Government to show some indication that they value the formulation of uniform, readily understandable, well-tested, well-prepared, professionally prepared codes of practice which could apply to all operators and could be readily known to members of the general public. On that basis, I beg to move the amendment.
Lord Lyell: My Lords, if I may I shall seek to calm some of the concern in the mind of the noble Lord, Lord McIntosh of Haringey, and indeed that of his noble friends and any other of your Lordships who might worry about the code of practice in the Bill and whether this is the relevant area in which we should be seeking to insert a code of practice.
I deal first with the structure of the Bill. We do not think that it is right or appropriate to graft a provision of this kind on to the telecommunications code itself. The telecommunications code is concerned with conferring powers on operators of telecommunications within the framework of specific procedures which are designed to protect the rights of individuals which may be affected by the exercise of these particular powers. The main code applied under Clause 10, which is expressly intended to give effect to the code, can only be applied by licence except when the Secretary of State or a Northern Ireland Government department is proposing to run a telecommunications system. Otherwise only the Secretary of State can grant a licence applying the code. When he does so, he is obliged—I stress that

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word—as a result of an amendment which has already been accepted by your Lordships, to include in the licence conditions and exceptions designed to secure the objective set out in Clause 10(4).
I focus your Lordships' attention on subsection (4)(a) and (b), which refer to the protection of the physical environment and, above all, the need to ensure that no greater damage is done to streets or interference caused to traffic than is reasonably necessary.
I want to make it clear that it makes no sense to have Clause 10 setting the framework for licence conditions designed to deal with the kind of matters referred to in the amendment and then, quite separately, to refer to them again in the way that this amendment proposes to do in Schedule 2.
Certainly the main thrust of our argument is that the Government have made it quite clear that the British Telecom draft licence represents the minimum requirements that will be placed on any operator. In considering one example, the licensing of local systems, tighter restrictions may be imposed in the light of local representations.
The concept of a code of practice is a flexible one and it may even turn out that all the matters which are considered for inclusion in a BT code of practice could be better and more practicably dealt with by means of individual licence conditions in the licence itself. In view of the concern expressed by the noble Lord, Lord McIntosh, and by your Lordships about the need for an easily accessible set of rules governing the installation of telecommunications apparatus, it may be that this is something that we should look at again.
We believe that there is a slight misunderstanding in the mind of the noble Lord. Lord McIntosh, which underlies some of the details in the amendment. First, on the argument that has been deployed by the noble Lord in moving the amendment, that it could bring the relevant control to the attention of those who might be interested, we do not think that this would survive any undertakings we have given to amend Clause 10 so that operators will be required to make their licences and any codes of practice available in the locality they serve.
The second point—and I hope that I have not replied at too great length, but I am sure that Lord McIntosh would agree that it is a detailed point—in my argument is that the first part of the noble Lord's amendment appears to reflect a belief, rightly or wrongly, that the licensing arrangements will not be independent. The amendment refers to a code of practice to be drawn up by the British Standards Institution on the grounds, we presume, that the BSI is a respected independent body. We would not quarrel with that. But we would question whether the BSI has the resources or the experience to become involved in an area where one of the main objectives is the protection of the physical environment or whether it has been consulted on the matter by those who are interested in the matters raised by the noble Lord.
So far as we are aware, we have taken the view that the protection of the environment and the other matters which have to be considered in the context of applying the telecommunications code were of such importance that they should remain in the hands of
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the Secretary of State rather than be delegated to the Director General of Telecommunications. So far as the code of practice is concerned, there is no question of leaving it to be determined by BT or any other operators, though it makes sense for BT to do much of the preliminary work. We believe that they have a good record in these matters and they have a great deal of experience.
As Part 5 of BT's draft licence is drafted, it is clear that the terms of any code of practice are as much under the Secretary of State's control as any of the other licence conditions. Condition 5 says that the licensee shall prepare and, in consultation with the Secretary of State—and I think it is very important that the licensee must consult the Secretary of State—shall comply with a direction from the Secretary of State to follow that code of practice. The Secretary' of State will not issue such a direction unless he is satisfied that the code of practice is adequate. I emphasise once again that the conditions of the licence will be determined by the Secretary of State.
I have been a little detailed. I hope I have not over-egged the pudding; but I feel sure that the noble Lord, Lord McIntosh, will see fit to sample what I have set before him.
Lord McIntosh of Haringey: My Lords, I think that my response to that must be modified rapture. There are a number of substantive points which I believe to be helpful. I believe the exposure of these arguments in debate will encourage further improvement. First, may I recognise that the amendments which have been made so far at Report stage have improved the publicity given to the detailed conditions of licence and have made it more possible for objectors, or potential objectors, to understand what it is they are having to deal with. The whole concept of the local availability of the register is a valuable one, and I am grateful to the Government for that.
Secondly, I am grateful to the noble Lord, Lord Lyell, for what he has said about the strength of licences other than the BT licence. He gave the valuable assurance this evening that other licences will not in any way be weaker than the BT licence in this respect. BT have indicated that for cable operators, for example, they could be stronger or more onerous on the operator. That is a valuable undertaking and one it would be unreasonable for us to ignore.
The noble Lord also expressed the hope that further improvements would be possible in the future. I do not know what he considers to be the future—whether he is thinking about Third Reading or whether he is thinking about amendments to be proposed in another place. That, too, although it falls short of an undertaking, is not unwelcome. I do not believe that in his response we have achieved the uniformity and universality we were looking for in the amendment, but I do believe the debate has indicated their importance and that the Government recognise that. On that basis, I beg leave to withdraw the amendment.
Amendment by leave, withdrawn.
Lord Glenarthur Lord Glenarthur moved amendment No. 130:
[Printed earlier: col. 604.]
The noble Lord said: My Lords, this is consequential on Amendment No. 129. I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 131:
Page 132, line 20, at end insert—
("The Cinematograph Act 1909.
In section 1(3) of the Cinematograph Act 1909 (provision against cinematograph exhibition except in licensed premises) for the words from "distributed" to the end there shall be substituted the words "programmes included in a cable programme service which is, or does not require to be, licensed under Part IV of the Telecommunications Act 1984".").
The noble Lord said: If I may move both amendments Nos. 131 and 132, I will speak to the two together, my Lords.
Amendment No 132: Page 182, line 38, at end insert—
("The Cinematograph (Amendment) Act 1982.
In section 1 of the Cinematograph (Amendment) Act 1982 (extension of Cinematograph Act 1909 to certain other exhibitions of moving pictures) for the words from "distributed" to the end there shall be substituted the words "programmes included in a cable programme service which is, or does not require to be, licensed under Part IV of the Telecommunications Act 1984".").
These are consequential amendments and I am glad to tell your Lordships, particularly looking at Amendment No. 131 that these were spotted after a computer search—which goes well with the Cinematograph Act of 1909—as a result of the inclusion of Part IV (Clauses 54 to 57) of the Bill before us on licensing of cable programme services which replaces and updates provisions in the Post Office Act 1969. The Cinematograph Act 1909 and the Cinematograph (Amendment) Act 1982 at present include references to the licensing of programmes under the 1969 Act and these amendments simply update these to refer to Part IV of the Bill. The amendments will only have a limited life since, as with the whole of Part IV, they will be taken over by the Cable and Broadcasting Bill when this comes into force—the point raised by the noble Lord, Lord Mottistone, and I hope this will be of some interest to him. I beg to move.
On Question, amendment agreed to.
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment Nos. 131ZB and 131ZA:
[Printed earlier: col. 1160.]
The noble and learned Lord said: Perhaps your Lordships will agree to take on en bloc amendments Nos. 131ZB and 13IZA. Both have been spoken to already with Amendment No. 126 F. I beg to move, my Lords.
On Question, amendments agreed to.
9.50 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved amendment No. 131A:
Page 149, line 36, leave out sub-paragraph (2).
The noble Lord said: In moving this amendment I should like to speak also to amendments Nos. 13IB and 131C, my Lords.
Amendment No. 131B: Page 153, line 27, leave out ("In").
Amendment No. 131C.: Page 153, line 28, leave out from ("Telecommunications)") to end of line 33 and insert ("shall cease to have effect.").
The argument in all three cases is extremely simple. The Bill provides for taking away the planning Act exemptions which British Telecommunications has now and which are in the future intended after it is privatised. In this amendment we see no reason why
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the removal of these exemptions should not be implemented straight away. In other words, that is during the interim period before BT PLC comes into being. I beg to move.
Lord Mackay of Clashfern: Very shortly, the reason is that it is intended to cover this matter in a general development order. The general development order will cover this matter and other matters. It is very much hoped that it will be ready in time to take over; but because of the range of matters covered we cannot be certain of that; and that is the reason for this provision, my Lords.
Lord McIntosh of Haringey: I am grateful to the noble Lord. That seems to be a reasonable alternative. I beg leave to withdraw the amendment, my Lords.
Amendment, by leave, withdrawn.
Lord Lyell Lord Lyell moved Amendment No. 131AA:
Page 150, line 27, leave out sub-paragraph (7).
The noble Lord said: This is a technical amendment which deals with the repeal of a section in the Town and Country Planning Act of 1971. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 131B and 131C not moved.]
Lord Lyell Lord Lyell moved Amendment No. 132:
[Printed above: col. 1209.]
The noble Lord said: I spoke to this a few moments ago. I beg to move, my Lords.
On Question, amendment agreed to.
Schedule 5 [General transitional provisions and savings]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 132A:
Page 185, line 42, after ("(1)") insert ("Subject to the following provisions of this paragraph,").
The noble Lord said: It may be convenient if, with this amendment, I took amendments Nos. 132B, 132C and 132D, my Lords.
Amendment No. 132B: Page 185, line 46, leave out (", subject to sub-paragraph (3) below,").
Amendment No. 132C: Page 186, line 5, leave out from ("send") to end of line 22 and insert ("to the Secretary of State—

(a) in the case of each of those licences which is contained in a single document, that document or a copy of that document or of such parts of it as contain the provisions of the licence; and

(b) in the case of each of those licences which is not so contained, a bundle of documents consisting of either the original or a copy of, or of the relvant part of, every document in the possession of British Telecommunications which is capable of being relied on as evidence of, or of any provision of, that licence.

(3) Where a licence has effect by virtue of sub-paragraph (1) above as if granted by the Secretary of State under section 7 of this Act—

(a) sections 7(7) and (8) and 19(2) of this Act shall not apply in relation to the licence;

(b) any provision of that licence made, or having effect as if made, by virtue of section 15(4) of the 1981 Act, being a provision under which any amount would fall to be paid after the appointed day to British Telecommunications, shall have effect as if it required that amount to be paid to the Secretary of State;

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(c) the Secretary of State may revoke that licence at any time before the end of the relevant period and any provision of that licence under or in accordance with which the licence may be revoked by British Telecommunications shall be deemed to be omitted; and

(d) the licence shall expire at the end of the relevant period unless before the end of that period it has either been revoked under this paragraph or expired in accordance with its terms.

(4) Before revoking a licence under this paragraph the Secretary of State shall give notice—

(a) stating that he proposes to revoke the licence;

(b) stating the reason why he proposes to revoke the licence; and

(c) specifying the time (not being less than 28 days from the date of the giving of the notice) within which representations or objections with respect to the proposed revocation may be made,

and shall consider any representations or objections which are duly made and not withdrawn.
(5) A notice under sub-paragraph (4) above shall be given—

(a) in the case of a licence granted to a particular person, by sending a copy of the notice to that person; and

(b) in any other case, by publication of the notice in such manner as the Secretary of State considers appropriate for the purpose of bringing the matters to which the notice relates to the attention of persons likely to be affected by them.

(6) Any sums received by the Secretary of State under this paragraph shall he paid into the Consolidated Fund.
(7) In this paragraph "the relevant period" means the period of two years beginning with the appointed day or such other period beginning with that day as the Secretary of State may by order prescribe for the purposes of this paragraph.").
Amendment No. 132D: Page 186, line 46, at end insert ("and, in its application in relation to such an approval, the reference in section 22(12)(a) to a copy of the approval shall have effect as a reference to a copy of the particulars so sent to the Secretary of State").
In the interests of brevity, essentially what we wish to do with these amendments is to update and replace existing licences so that they reflect the provisions of the Bill. These amendments enable that to be done. Amendment No 132D simply corrects a mismatch between paragraph 2 of Schedule 5 and Clause 22(12). I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 132B:
[Printed above.]
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendments Nos. 132C and 132D:
[Printed above.]
On Question, amendments agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 133:
Page 189, line 42, leave out ("which") and insert ("and").
The noble Lord said: This is purely a drafting amendment. I beg to move, my Lords.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 134:
Page 190, line 38, leave out ("or") and insert ("for").
The noble Lord said: This is also a drafting amendment, and I beg to move, my Lords.
On Question, amendment agreed to.
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 135:
Page 194, line 8, leave out ("with the approval of the Treasury") and insert ("subject to an affirmative resolution (which shall set out specifically the nominal value, issue price and remaining interest to maturity of the transferred debentures) of both Houses of Parliament").
The noble Lord said: This, my Lords, refers to paragraph 39 of Schedule 5, which has been mentioned by the noble Lord, Lord Cockfield, and myself earlier on in the course of the debate. Noble Lords will recall that, under the earlier part of the Bill, when the transfer of assets and liabilities of British Telecom to the successor company takes place there are certain excepted liabilities that remain, and remain within British Telecom itself. So when that operation takes place, all that British Telecom has are the excepted liabilities. These liabilities comprise the liability stated in the last balance sheet of British Telecom in respect of the pension fund. As at 31st March 1983 that figure was put at £1,125 million. As from the date when the transfer of assets and liabilities, except the excepted liabilities, takes place, the liability in respect of the pension fund formerly assumed by British Telecom will remain there.
Also, under the provisions of the earlier section, debentures were created in place of the existing liability of the old British Telecom to the Government, by virtue of which the Government find themselves in the possession of debentures in place of their entitlement to the previous loans. To use a vulgar expression of today, they merely hang on to them. However, in effect, they assume responsibility for the payments that are due under the pension fund and this is accomplished under paragraph 39 whereby, from time to time, assets are transferred from the Secretary of State to British Telecom in order that it can satisfy its liability under this head.
It is therefore important—and I think it is a wholly desirable arrangement—that the state should, in effect, resume responsibility for the liabilities to these pensions, the details of which I shall not go into any further because they are not material for the purposes of my argument. What is important, however, is that the public at large should know exactly what has happened on the privatisation. The first point is that the successor company is relieved of that liability, and therefore the equity in British Telecom that is taken over is worth at least £1,125 million more than it was before the transfer took place. It is hoped that those who eventually purchase the shares, as and when a prospectus turns up, will pay a sum for the Government's shares that reflects that increased value in the equity. Opinions differ as to whether a really adequate price will be received by the Government in respect of the up to 49 per cent. of the equity holding that is held by them.
The other thing that it is important to realise is that from time to time the Government will part with a public asset, the public asset being the debentures which have been handed to them in place of the liability previously owing to them. In other words, every time a transfer is made—to use the term in subparagraph (2) of paragraph 39—the public assets in the possession of the Government are lessened thereby. As I have said, I have no argument with the arrangements,

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so long as the public know what is happening and that there has been a diminution in the assets in the hands of the Government.
The purpose of Amendments Nos. 135 and 136, which in view of the time I should like to take together, is to make quite sure that Parliament and the public know exactly what is happening so that these transactions, which otherwise might prove to be a little mysterious, are not covered up in any way and Parliament knows all the time what assets are flowing from the Government in satisfaction of these various liabilities which in effect they have assumed by the terms of privatisation. One wants to keep control of it—hence the wording of Amendment No. 135. During the transitional period it is important that the Secretary of State should prepare and submit to Parliament a full account of exactly what has happened, showing in particular

"(a) the nominal value, issue and interest ordinarily receivable to maturity of all debentures transferred under subsection (2) above; and

"(b) the excesses and deficiencies arising under subsections (4) and (5) above".

The purpose of the amendment is quite straightforward. There is nothing, to use a term, "up my sleeve". My only hope in submitting the amendment is that the Government will accept it, thus showing that they do not want anything up their sleeve, either. I beg to move.
10.2 p.m.
Lord Cockfield: My Lords, these are accounting matters. They need, therefore, to be dealt with, with care. May I first explain why the deed of covenant obligation, referred to in the Bill as "the excepted liabilities", is to remain with the statutory corporation and the method by which the obligation will be met. The deed of covenant obligation is to make payments to the BT and Post Office pension funds in respect of deficiencies relating to the service of Post Office employees before 1969. It would be incongruous for such an obligation to form part of BT PLC'S balance sheet. Anxieties were also expressed by the staff about this liability being left with the successor company, and fears that the pension rights of existing members might be prejudiced if for any reason the new company could not or did not meet the obligation under the deed of covenant. The solution adopted, of not transferring the liability to the new company but leaving it with what is called the shell company, with special provision in pargraph 39 of the fifth schedule that the liability would be met, was designed to meet both points of view that I have described above.
Against this background, the specific response I would make to the amendments is that they would have little practical effect. The purpose of Amendment No. 135 is to require parliamentary approval for the details of the debentures assigned to the corporation —that is, to the shell company. But the deed of covenant obligations are fixed, and that effectively determines the amount of the debentures that will be required. Thus, Parliament could hardly reject the assignment of debentures to BT—that is, to the shell company—without undermining the whole basis on which the deed of covenant obligation is to be met.
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As to Amendment No. 136, which would require the Secretary of State to report to Parliament on his transactions with BT, the shell company under this paragraph, I believe that the information which the noble Lord is concerned about will be adequately covered by the existing sub-paragraph (6) of paragraph 39. That requires BT to keep proper accounts, to report to the Secretary of State at the end of each financial year, for the Secretary of State to consider the report and to lay copies of it before each House of Parliament. So the transactions will be completely open, and the report on the transactions is required to be laid before each House of Parliament.
Having dealt with the specific effect of the amendments, may I now turn to the point which I believe underlies the concern which has been expressed by the noble Lord and others on this matter; namely, the belief that the assignment of debentures to BT to meet the deed of covenant obligation will involve a loss of debt owed to the Exchequer. This is not so at all. Under Clause 60, British Telecom has to issue debentures to the Government in satisfaction of the NLF loan.
It would have been perfectly feasible for the same course to have been followed in the case of the excepted liabilities. That is, British Telecom could have been required to issue debentures to the Secretary of State equivalent to the liability under the deed of covenant. This would then have meant that the new company—British Telecom PLC—would have started life with a debenture debt in round figures of approximately 0,000 million for the NLF loans and £1,250 million for the deed of covenant. These are not intended to be exact figures; I give them for purposes of illustration, but they are of the right order of magnitude.
Obviously, the total of those two figures would not represent the full value of the business. Therefore, under Clause 59 the Secretary of State could and would require the new company—that is British Telecom PLC—to issue securities to him. These securities could take the form of equity capital, debentures, or any other securities. We should then have a company with so much equity and so much debt—all of it together constituting the capital of the new company. The balance between debt and equity might not, however, be right in terms of a desirable capital structure. It would then be open to the Secretary of State to rebalance the total as between debt and equity by using his powers under Clause 59 and Clause 61.
Rather than have this complex route for dealing with the excepted liabilities—and frankly I confess that, presentationally, it would have had some advantage to have gone all the way round that way—the Government have put themselves in the position of being able to go directly to the final answer by not providing for the issue of debentures specifically to cover the covenant debt and by relying upon their powers under Clause 59 to achieve both the right total capitalisation and the right balance between debt and equity.
The course adopted in the Bill is a simpler, more direct route. The end result is precisely the same. This, of course, is what really matters. It is important—and here I entirely agree with the noble Lord, Lord Bruce

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of Donington—that on privatisation the capital of the company should be fixed at a proper level and that a proper price should be secured for the shares. On this I agree. It is our intention to ensure that that is so.
I hope that what I have said does make the position clear and that. in the light of the full explanation I have given, the noble Lord will be willing to withdraw his amendments.
Lord Bruce of Donington: My Lords, I am greatly obliged to the noble Lord the Minister for his very full reply. I immediately concede that what I sought to achieve by Amendment No. 136 is in fact achieved by paragraph 39(6). Therefore, the disclosure particulars are satisfactorily provided for.
I must join issue with the noble Lord on one point because there is still a marginal difference between us. The fact is that in assuming the liability formerly held by British Telecom, the Government are taking on a liability which they are discharging in the process of time. One must bear in mind—and I shall not question the noble Lord on this—that it may be that this liability under the deed of covenant will be rather larger due to the indexation provisions, so that the £1,250 million may prove to be an under-estimate. But there can be no doubt that public assets will be depleted to meet that.
On the other hand, the only countervailing balance will be the extra amount that will be received by the Government on the sale of shares in the company in which there is now a greater equity by virtue of the fact that the £1,250 million is taken out. Whether or not that will be sufficient to cover this liability which is quite properly assumed by the Government is another question altogether. One sincerely hopes that it will.
My purpose is discharged by having this matter aired quite publicly and openly so that people know what is happening. I am greatly obliged to the noble Lord for having assisted the House and for having assisted myself in learning his complete views on the subject. I am greatly obliged to the noble Lord and I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 136 not moved.]
Schedule 7 [Repeals]:
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 137:
[Printed earlier: col. 1160.]
The noble and learned Lord said: My Lords, with the leave of the House I will take Amendments Nos. 137, 138, 139 and 140 together.
[Printed earlier: cols. 1160 and 1161.]
These are all consequential on Amendment No. 126F, to which I have already spoken. I beg to move.
On Question, amendments agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 141:
[Printed earlier: col. 1152.]
The noble Lord said: My Lords, last but not least I move this amendment, which is consequential on Amendment No. 126A. I beg to move.
Lord Bruce of Donington: My Lords, perhaps this would be a convenient opportunity on behalf of my noble friends on this side of the House to thank the noble Lord, Lord Cockfield, and his associates for the very courteous way in which they have dealt with all these matters on this Report stage.
Lord Donaldson of Kingsbridge: My Lords, I should like from these Benches to be associated with those sentiments.
Lord Cockfield: My Lords, on behalf of myself and my noble friends, I am most grateful for what the noble Lords have said. We have appreciated the very fair way in which the arguments have been conducted.
On Question, amendment agreed to.
House adjourned at fourteen minutes past ten o'clock.

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