Sitting of 22 April 1985

Preamble
The House met at half-past Two o'clock
The Clerk at the Table informed the House of the unavoidable absence, through illness, of MR. SPEAKER from this day's sitting.
Whereupon MR. HAROLD WALKER, THE CHAIRMAN OF WAYS AND MEANS, proceeded to the Table and, after Prayers, took the Chair, as DEPUTY SPEAKER, pursuant to the Standing Order.

Oral Answers to Questions
  WALES

    Education Expenditure
    Mr. Terlezkiasked the Secretary of State for Wales what the per capita expenditure on books, educational equipment and materials was in (a) South Glamorgan and (b) Wales for the most recent period of 12 months for which figures are available.
    The Minister of State, Welsh Office (Mr. John Stradling Thomas): In 1983–84 South Glamorgan's expenditure per pupil on books, educational equipment and materials in primary and secondary schools was £26.10. The Wales figure was £28.20.
    Mr. Terlezki: I am grateful to my hon. Friend for giving such a good reply. I hope that that expenditure will lessen the scaremongering by the Labour party in the House and in South Glamorgan. Is he aware that the Labour party says that we do not spend as much as we should on education? The record shows that we are spending as much as we can on it in South Glamorgan.
    Mr. Stradling Thomas: I entirely agree with my hon. Friend. So much for the parrot cry of "cuts". Although education resources have been held level in Wales, the number of pupils in schools has declined markedly—by more than 12 per cent. between 1977 and 1984. That is not consistent with allegations about cuts.
    Mrs. Clwyd: Why have the Government £8 per head less to spend per secondary school child in Mid-Glamorgan, which is already bearing the brunt of Government cuts in other respects, than they have to spend per child in England? Does that mean that children in Mid-Glamorgan must get on their bikes and go to England to receive a decent education?
    Mr. Stradling Thomas: No, not at all. In fact, the figures for Mid-Glamorgan are much better than the hon. Lady implied.
    Sir Raymond Gower: Is my hon. Friend aware—I have informed his Department of this — that I have received a number of letters from the parents of pupils after letters had gone out from schools alleging that the shortages of books and other materials have been due to
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    fairly recently imposed financial constraints? Does hot my hon. Friend's answer suggest either that this is nonsense or that, at best, the shortages must be due to maladministration by or maldistribution among schools?
    Mr. Stradling Thomas: I entirely agree with my hon. Friend. It is up to the education authorities to determine how much to spend on school books and equipment as part of their day-to-day running of the education service. There is no doubt that it is difficult to manage these resources, but that is not an argument in favour of cuts. There have not been cuts. In fact, there has been an increase in expenditure on education.

    Llanwern Steelworks
    Mr. Roy Hughesasked the Secretary of State for Wales if he has had any recent discussions with the chairman of the British Steel Corporation concerning future investment at Llanwern steelworks.
    The Secretary of State for Wales (Mr. Nicholas Edwards): I met the chairman most recently in February for a wide-ranging discussion.
    Mr. Hughes: Will the Secretary of State confirm that no concast project has been authorised for the 1985–86 financial year? Is this not a poor reward for the record breaking performance at Llanwern in recent years? Bearing in mind all the delays that have occurred, will the right hon. Gentleman seek an urgent meeting with the corporation's chairman to ensure that this project is given the go-ahead without delay and that resources are provided for it?
    Mr. Edwards: The hon. Gentleman implied that the steel corporation had decided not to go ahead with concast during that financial year. The chairman has made it clear to me that he is very much aware of the importance of concast. We discussed the thorough consideration which the British Steel Corporation is giving to the way in which future investment will take place. Decisions on the corporate plan for that financial year have not been taken.
    Mr. Grist: Will my right hon. Friend hazard a guess as to how much of the investment in Llanwern has been endangered, or at the very least delayed, by the recent miners' strike?
    Mr. Edwards: The BSC chairman recently estimated the cost of the strike for the BSC in 1984–85 to be £175 million. It is too early to judge the final figure, but that money could have been used to reduce losses, to reach profitability sooner and to provide the sort of investment which the Labour party has just urged on us. Of course, throughout that strike the hon. Member for Newport, East (Mr. Hughes) encouraged the miners.

    NHS Facilities (Gwynedd)
    Mr. Bestasked the Secretary of State for Wales if he will make a statement about the provision of National Health Service facilities in Gwynedd.
    The Parliamentary Under-Secretary of State for Wales (Mr. Wyn Roberts): Health services in Gwynedd have been much enhanced by the opening last year of Ysbyty Gwynedd. Substantial redevelopment started at Llandudno general hospital last week. A new subsidiary

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    renal unit is being established and managed for the health authority by Travenol Laboratories. All these developments are being funded by the Welsh Office.
    Gwynedd health authority's provisional revenue allocation for 1985–86 is £46.45 million. This represents growth of 4.7 per cent. over its 1984–85 allocation and includes the balance of the revenue costs of Ysbyty Gwynedd. Additionally, £991,000 has been allocated to it from capital funds for its discretionary use.
    Mr. Best: My hon. Friend will know of the great concern felt by the people of Gwynedd over two issues. I refer first to the ambulance service and to the need for proper provision, given the particular problems of Gwynedd, where there are many remote rural areas. Will my hon. Friend say something about the funding for that? There has been a very good initiative from my right hon. Friend the Secretary of State over the renal dialysis unit, but does my hon. Friend agree that it would be a cruel deception if the people of Gwynedd, who want it so much and who rely so heavily upon having such a unit, found that it did not come to pass?
    Mr. Roberts: My hon. Friend asked about the ambulance service, and I assure him that the revenue resource allocation formula takes account of the district's topography. I understand that there is no case for a special allocation in respect of Gwynedd's ambulance service, but the matter is being considered by the resource allocations working group. It is looking at the effects of sparsity on the formula. There is no question but that the subsidiary renal dialysis unit will go ahead. A contract has been concluded between Travenol Laboratories and the health authority, and it is very much hoped that the unit will open this summer. Of course it will be very much to the benefit of NHS patients in Gwynedd.
    Mr. Wigley: May I press the Minister further about the ambulance service? Is he aware that the pressures on it are very great and that some ambulances have done far more mileage than vehicles with such duties should do? Moreover, is he aware that the greater centralisation arising from the opening of Ysbyty Gwynedd puts greater pressure on the service? It is vital that there should be additional ambulance facilities. Will the Minister give that matter his urgent attention?
    Mr. Roberts: I appreciate what the hon. Gentleman is saying, but that is very much a matter for the resource allocations working group. That group comprises representatives of the Welsh Office and of every Welsh health authority. It is very much a matter for it.
    Dr. Roger Thomas: Is the Minister satisfied with the cervical cytology recall system in Wales? When can we expect the system in that part of the world to be fully computerised?
    Mr. Roberts: We are looking at the system as it operates in all the authorities in Wales. We have set up a special group, which is examining the matter. Whatever changes are required will be made. Of course, we look forward to computerisation.

    Pupil-Teacher Ratios
    Mr. Hubbard-Milesasked the Secretary of State for Wales if he will state the average pupil-teacher ratio in schools in Mid-Glamorgan for each year from 1978–79 to the latest available date.
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    Mr. John Stradling Thomas: From 1978–79 to 1983–84, the average overall pupil-teacher ratios for Mid-Glamorgan schools year by year were 18.7: 1 in the first three years and, thereafter, 18.9, 18.3 and 17.5.
    Mr. Hubbard-Miles: I am grateful to my hon. Friend for that reply, which shows that resources are being made available not only to maintain the standards of education in Mid-Glamorgan but to improve them. Is he aware that the district auditor's report showed that Mid-Glamorgan could save £2 million by reorganising its school meals service and its staffing in higher education?
    Mr. Stradling Thomas: Yes, I am aware of the report. It pointed to ways in which savings could be made by education authorities. Only last week it was reported that a scrutiny of Mid-Glamorgan's school meals and further education services had revealed areas where significant savings could be found. I hope that the authority will act on the recommendations.
    Mr. Roy Hughes: Is the Minister aware that it is absurd to harp on about the teacher-pupil ratio in Mid-Glamorgan when a recent Welsh Office report shows that many families there have difficulty in feeding and clothing their children so as to be able to send them to school in the first place? Is he also aware that they are further disadvantaged by poor housing and lack of public transport? What is being done about those basic issues?
    Mr. Stradling Thomas: I welcome the improved education facilities. The report shows that standards are not dictated by financial resources alone. The inspector's findings suggest that a great deal depends on how the resources are managed. The rest of the hon. Gentleman's supplementary question goes much wider than the main question.

    Local Authorities (Expenditure)
    Mr. Wigleyasked the Secretary of State for Wales what was the final outturn of local authorities' current and capital spending in Wales for the financial year 1984–85; and how this compares with the Government's projections.
    Mr. Nicholas Edwards: Final outturns for 1984–85 will not be available until early 1986. The latest estimates indicate that current spending in the year will exceed the Government's planning total by about £30 million. The provision for capital spending looks like being exceeded by between £10 million and £20 million.
    Mr. Wigley: Will the Secretary of State accept that those figures of £30 million and £10 million are relatively small in the context of local government expenditure in Wales and certainly would not have justified the draconian measures that were taken by the Government to curtail the powers of local authorities? Will he further accept that the major problem facing people in all parts of Wales is unemployment and that capital expenditure by local authorities offers a good tool to try to generate jobs? Will he go back to the Treasury to see whether further funds can be made available in terms of capital expenditure approvals for local authorities in Wales?
    Mr. Edwards: I have on previous occasions pointed out that it is because of the relative constraint by local authorities in Wales on current spending that we have been able to obtain substantial additional capital provision for those authorities. That will continue to be the case, bearing

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    in mind the relationship between the control of current spending and the amount of capital that we can make available.
    Sir Anthony Meyer: Is my right hon. Friend aware that the restriction to 50 per cent. of the capital receipts that local authorities may spend is causing a disproportionate amount of resentment? Will he make representations to the Chancellor of the Exchequer that this restriction should be lifted as soon as the economic situation permits?
    Mr. Edwards: We debated this question at considerable length in the House recently and I have nothing to add to what I said then, except, as I say, that there has been substantial additional capital provision in Wales, where the capital provision per head of the population is nearly double that in England. The accumulated resources, if they were all spent in a single year, would cause difficulties; they will be available for spending by local authorities over the next few years.
    Mr. Rowlands: Has the right hon. Gentleman seen today's Western Mail, which contains a story about a secret report which his Department has on deprivation and need in the Rhymney Valley? Will he make that report, whatever it is, available at least to the authorities concerned? Will he then decide to spend the money necessary to meet the needs and deprivation of our communities?
    Mr. Edwards:The hon. Gentleman should not believe everything that he reads in the Western Mail about secret reports. That report was commissioned by the Welsh Office and carried out by UWIST. Copies of it were provided to the local authority concerned and to the local authority associations. It was part of the work carried out by the Welsh Office to enable better decisions to be taken and for the future consideration of planning allocations to take proper account of these matters. As for the state of housing in the area, it is clear that much more has been spent by the present Government than was ever spent during the last period of the Labour Administration.
    Mr. Roy Hughes: Bearing in mind that there are to be 1,000 redundancies at Courtaulds, over 800 redundancies at St. John's, Maesteg and 750 redundancies at British Petroleum, what additional resources have been made available to local authorities to enable them to cope with the heavy additional welfare problems with which they will be confronted?
    Mr. Edwards: The total provision for local authorities has been announced. When considering urban allocations, the urban programme, urban development grant and other specific matters that arise from time to time we shall take particular note of closures of the kind referred to by the hon. Gentleman.

    Dairy Farmers
    Mr. Geraint Howellsasked the Secretary of State for Wales if he has any further plans to help dairy producers in Wales; and if he will make a statement.
    Mr. Nicholas Edwards: The industry has already welcomed the measures announced on 28 March giving effect to a package of measures allowing greater flexibility in quota management. Over half—54 per cent.—of
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    Welsh dairy producers will benefit from the measures taken to restore to base year 1983 levels quotas totalling less than 200,000 litres.
    Mr. Howells: I am sure that the Secretary of State is well aware, although he will not admit it, that the outgoers scheme is a complete shambles and that the best thing his Government could do would be to scrap the scheme and start afresh. What advice can the Secretary of State give the dairy farmers of west Wales who are dependent upon the extra allocation of quota which is not now available to them?
    Mr. Edwards: Far from being a complete shambles, the scheme will enable us to provide a quota for smaller producers at 1983 levels and also to deal with cases of hardship. It is because all the quota that we would like to include in the outgoers scheme is not included that on 15 April my right hon. Friend the Minister of Agriculture, Fisheries and Food announced that it would be reopened. Producers who did not apply in 1984, and those who did not accept the initial offer, will be able to apply. The scheme is to remain open until Friday 3 May 1985. 1 hope that it will provide additional quota. The more quota that we can obtain from the scheme, which has been continually criticised by the hon. Gentleman, who has alleged that in order to obtain this quota farms are having to be taken out of production, the better it will he for farmers. Some farms must be taken out of production in order to allocate quota to the many farmers who are in real difficulties.
    Mr. Raffan: Will my right hon. Friend undertake to look into the particularly distressing case of Tom Stephenson of Sylvaen farm near Flint and get his Department to recognise that it was an implied term of the compensation agreement made with Mr. Stephenson that because of the effect of the Holywell bypass on his former farm his milk quota would be transferred to his new farm?
    Mr. Edwards: As my hon. Friend knows, we have left these issues to be settled by the tribunal which has been established under the regulations. However, I shall look at the case that my hon. Friend has mentioned, especially as it apparently involves negotiations with my road department. We are considering very carefully whether further provision can be made to deal with those special hardship cases which do not fall within rules which have been applied so far by the tribunal.

    Rate Capping (South Glamorgan)
    Mr. Gwilym Jonesasked the Secretary of State for Wales what penalties he has imposed upon South Glamorgan county council as a result of the rate increases in 1981–82, 1982–83, 1983–84, 1984–85 and 1985–86, respectively.
    Mr. Nicholas Edwards: A local authority incurs rate support grant penalties, not because of rate increases, but only as a consequence of spending in excess of its expenditure target. South Glamorgan suffered a grant penalty of £234,532 in respect of the financial year 1981–82. It has incurred no penalty since.
    Mr. Jones: The penalty in 1981–82 mentioned by my right hon. Friend is hardly surprising as, coincidentally, the rates for that year went up by 54 per cent. South Glamorgan county council's latest rate increase is the

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    highest in south Wales. Does my right hon. Friend agree that the massive rate increases in South Glamorgan during the last four years have been a very significant factor in job losses?
    Mr. Edwards: South Glamorgan's rate increases have varied from year to year. What my hon. Friend has said may be right, taken over a period. However, there have been individual years when the rate increase has been kept down. Nevertheless, it is unquestionably true that high rate increases make it more difficult for industry and business and deter job creation.

    Job Creation
    Sir Raymond Gowerasked the Secretary of State for Wales how many new jobs have been created since 1979; and what are the job prospects for the next year (a) in Wales and (b) in the area of the Vale of Glamorgan.
    Mr. Nicholas Edwards: Comprehensive information on the number of jobs created is not available. Since May 1979 projects for which offers of selective financial assistance were accepted, or which were allocated Government-financed factories, promised to provide over 72,000 jobs; but that figure takes no account of the substantial number of new jobs not involving SFA not taking place in Government advance factories. The latest published figures show that between March and September 1984 there was an increase of 12,000 in the number of people in employment in Wales and between June 1983 and June 1984 there was an increase of about 24,000 in the number of self-employed in Wales. The recent announcements by BP and Courtaulds represent a very severe blow, but that has to be seen in the context of rising investment throughout Wales. In Clwyd alone SFA offers made since the beginning of 1983 promise over 4,800 new jobs and in Wrexham projects involving over 1,500 new jobs have been announced in the past year. Only last week I opened the latest in a string of new high technology companies which will provide an increasing number of new jobs in the Vale of Glamorgan.
    Sir Raymond Gower: I thank my right hon. Friend for that information, but is he satisfied that the Vale of Glamorgan area is receiving a fair proportion of the grants which have gone into the Principality, particularly those from the EC, of which the Vale of Glamorgan area does not seem to have received a fair share?
    Mr. Edwards: That really is not true. There is no doubt that the number of new companies coming into the Vale of Glamorgan area or sites immediately around it is considerable. There have been a large number of recent announcements and new openings. As I said, I opened one such factory only last week and I know a number of other cases which are under negotiation.
    Dr. Marek: Is the Secretary of State aware that the total amount of dicell acetate yarn production in the United Kingdom is about 14,000 tonnes per annum and that the Courtauld plant at Wrexham produces approximately half of that? Is he further aware that if that plant closes the company proposes to increase production by 33 per cent. in its remaining factories in England? How much longer will the right hon. Gentleman allow the dismemberment of our industry and infrastructure in Wales? What will he do to try to help keep acetate yarn production in Wrexham?
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    Mr. Edwards: When the hon. Gentleman talks about dismembering industry in Wales, he must also take account of the 1,500 new jobs in Wrexham from projects announced within the past 12 months. The loss of the Courtauld plant in Wrexham is a sad blow, but a large number of new factories are opening. I have discussed with the chairman of Courtauld the measures which the company can take to help. In particular, I have expressed the view that the company should support the local enterprise trusts and the enterprise zone with senior personnel, in the way that the Thomson group did so successfully in Neath. We shall also be discussing with local authorities any further special measures that are needed.
    Mr. Harvey: I entirely reject the Opposition's approach of throwing money at jobs, but is my right hon. Friend aware that there is concern on the Conservative Benches, too, about the level of unemployment in Wales? Will he consider making representaiions to Courtauld to see whether the decision on the Wrexham plant can be reconsidered?
    Mr. Edwards: I have already discussed the matter with the chairman, and I cannot hold out any prospect that the company will change its decision. We have given substantial financial support to previous investment by the company. Again I must emphasise that we have only recently given substantial financial support to companies such as Sharp, Laura Ashley, Metal Box and F. W. Bender, all of which are setting up in the area and taking on people, and all of which will make a positive job contribution in the months and years ahead.
    Mr. John Morris: Since the Government took office, has not the number of jobs created or projected for west Glamorgan been dwarfed by the job losses? Did not the Government, like Pontius Pilate, wash their hands of the proposed closure of BP Oil at Llandarcy? Will he now give an assurance that BP Chemicals at Baglan Bay is not in jeopardy? How far are those plans affected by the Government's change of philosophy about regional assistance for capital expenditure?
    Mr. Edwards: The right hon. and learned Gentleman will be aware that the area benefits from the highest levels of support under the present regional policy. I am told by the company that the works at Baglan are not immediately affected by those measures.
    Mr. Morris: Immediately?
    Mr. Edwards: I cannot make forecasts about industrial changes that may take place many years ahead. We are talking about the immediate consequences of that decision. I questioned the company's senior management on that point. We have recently made substantial investment to assist the plant, which is doing good business at present. I have no reason to believe that the decision at Llandarcy will affect the position at Baglan at present.
    Mr. Best: Is my right hon. Friend aware that the prospect for further jobs in Wales is inextricably linked with small businesses' prospects of prosperity? Is he further aware that those businesses want access to venture capital more than anything else? Will he report on the development of the welcome addition to that access of the Welsh Development Agency's institutional and venture capital unit?
    Mr. Edwards: We must certainly encourage the development of new small businesses. We recently had a successful venture capital conference in Cardiff, which was attended not just by the Welsh Development Agency, which has launched its own fund, but by a number of other major venture capital organisations. I am glad to say that there is a great and rising level of interest by the growing venture capital market in what is going on in Wales.
    Mr. Abse: The Secretary of State for Wales talks about incoming investment. Will he explain why the LSI Logic factory, which was due to come into my constituency, has been whipped away to Germany, with the loss of 1,000 jobs, because of his incompetence and failure to deal with the Treasury and obtain sufficient funds to allow the company to make a commercial judgment? How dare he tell us that he is looking after inward investment when, in the light of the blows now descending upon Wales, he lacks the confidence to stand up to the Germans and to obtain for us a factory which had almost reached the point of coming into Cwmbran?
    Mr. Edwards: I shall give the company chairman's answer to the hon. Gentleman's question. The chairman wrote to me:
    "Our conclusion, to site this first European plant elsewhere in Europe, was arrived at, after much debate, as the Welsh site and proposal were very attractive. The final decision was based on a combination of market, commercial and financial considerations. I wish to emphasise that for our company, this is only the first of several plants in Europe; and Wales will rank very high in our future plans when we are ready to decide on the next European location.
    In particular, I appreciate your personal involvement and commitment to bringing high technology industry to Wales. You are clearly on the right path, and I anticipate a similar revival to what we have seen here in the State of Massachusetts in the past ten years."
    Mr. Raffan: Following the devastating announcement of a further 595 redundancies at Courtaulds Greenfield in my constituency, in addition to the 202 announced last autumn, will my right hon. Friend do his utmost to impress upon Courtauld that it cannot just up and walk away from a community and a work force which it has described as first class and which has served it so well over 50 years? If the company will not reverse the decision, will my right hon. Friend impress upon it the need to phase in the redundancies to lessen the devastating impact on the local community? Will he consider the possibility of a joint venture with the company to generate local employment? Will he accelerate the urban aid programme to clear derelict land and accelerate SFA applications from companies thinking of coming into the area? Will he impress upon the WDA the distinctive needs of my constituency and urgently consider the designation of Delyn as an EC textile closure area?
    Mr. Edwards: My hon. Friend has, I know, fought gallantly for the plant for a considerable period. We are dealing here with a capital reduction by Courtaulds which goes back to 1977 and has taken place stage by stage. I have already made representations of the kind for which my hon. Friend asked to Sir Christopher Hogg and have pressed on him the responsibility that the company owes to the area. I particularly hope, as I have already mentioned, that it will appoint senior personnel to assist in the development, and that the company will play its part in making land available in the enterprise zone. When we
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    examine the urban programme, SFA applications and the other matters raised by my hon. Friend, the needs of the area will be very much in our minds.
    Mr. Ray Powell: How can this industrial and commercial rapist of Wales come to this House and say that he is on the right lines when, at the weekend, he announced that 700 jobs are to go at Courtauld, and 830 jobs in Maesteg will be lost by the closure of St. John's colliery? He talks about the Laura Ashley company coming into the area, which will mean about 500 jobs in the pipeline in a few years, but on the same day he announces the closure of Borg Warner in Kenbig Hill. Yet he can come here with his usual incompetence and talk to us about new jobs coming into Wales. An investigation needs to be conducted into the closure of factories and units throughout Wales, and particularly at Maesteg in my constituency.
    Mr. Edwards: The new overseas investments attracted to the hon. Gentleman's constituency in the Bridgend area in general last year include Invacare, Acrian, Align-Rite, Biomet—and the Chronar corporation, which I opened last week. Between them they promise about 1,200 jobs. Those people will owe nothing to the hon. Gentleman's assistance and encouragement. Indeed, he encouraged a coal strike that did great damage to employment prospects in Wales.
    Mr. Barry Jones: Do not the losses of Clwyd textile jobs, west Glamorgan petrochemical jobs, Ciwent microchip jobs and south Wales coal jobs—2,300 job losses in nine days, according to a BBC commentator—point to an urgently needed change in Cabinet economic policies?
    With regard to Courtauld, why did the right hon. Gentleman not protest strongly at such sudden closures, with their distressing social consequences for Wrexham and Deeside? What is the right hon. Gentleman prepared to do to secure a change of mind by Courtauld, which seems to have acted without any regard for the generations of loyalty by the people of north-east Wales? We feel let down. Our workers, who have responded magnificently on both productivity and demanning, have been betrayed. We look to the right hon. Gentleman to fight to help the people of north-east Wales on the Courtauld redundancies. He should show more care for rising unemployment throughout Wales.
    Mr. Edwards: I would have been rather more impressed by the hon. Gentleman if he had reminded the House that in 1977, at the time when he was a Minister in the Welsh Office, the Castle works at Flint closed with the loss of 1,500 jobs, and almost simultaneously Courtauld closed another plant at Dowlais, Merthyr, with the loss of 400 jobs. The hon. Gentleman should acknowledge that the decisions are taken by companies which have to deal in an internationally competitive world. They are not taken by Governments.
    I protested to the chairman of Courtauld about the way in which the announcement was made. In fairness to him, I have to say that he had warned me over several years that the future of the Courtauld plant was at risk. Indeed, the hon. Member must have known that perfectly well if he was doing any sort of job as a Member of Parliament. About a year ago, the chairman of Courtauld, when lunching with me, told me that the future of the plant was

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    hanging by a thread. None the less, Courtauld made a massive investment in the plant over the past two or three years. Unfortunately, that investment was not enough to save the plant in a fast changing world market.

    Council House Sales
    Mr. Knoxasked the Secretary of State for Wales how many council houses have been sold to sitting tenants in Wales since May 1979.
    Mr. Wyn Roberts: A total of 41,166 council dwellings were sold to sitting tenants in Wales between May 1979 and 31 December 1984. In addition, 2,374 dwellings were sold by the Cwmbran development corporation and Mid-Wales development.
    Mr. Knox: To what extent have local authorities benefited financially from those sales of council houses?
    Mr. Roberts: Between March 1980 and December 1984 net receipts from sales amounted to about £177 million, which has enabled housing investment programme allocations to be increased and has given local authorities the scope to enhance their programmes from the portion of receipts that they are allowed to retain.
    Mr. Anderson: Does the Minister not feel just a little annoyance at the Conservative party's obsession with the sale of council houses and its lack of concern about the construction of council houses to meet the great demand that we have in Wales?
    Mr. Roberts: The hon. Gentleman knows only too well that the sale of council houses does not affect the totality of the stock that is available. He also knows that those who are buying their council houses would otherwise have remained as sitting tenants. The success of our campaign to sell council houses clearly shows the desire of people in Wales to own their own homes.

  CHURCH COMMISSIONERS

    Stipends
    Mr. Greenwayasked the hon. Member for Wokingham, as representing the Church Commissioners, how many members of the clergy received stipends for the first time in 1984 and in each of the preceding 10 years.
    The Second Church Estates Commissioner, Representing Church Commissioners (Sir William van Straubenzee): There were 404. Information is not available for all of the preceding 10 years, but for 1983 the figure was 423 and for 1982 it was 385.
    Mr. Greenway: I thank my hon. Friend for those figures. Do they not represent a disturbing but slow decline in the number of clergy available in this country, and does that not have serious long-term implications for the life of the Church? Secondly, will my hon. Friend comment on the fact that divorced and separated wives of clergymen are living in penury because proper provision is not made for them?
    Sir William van Straubenzee: Courtesy to the hon. Member for Birkenhead (Mr. Field) means that I must not answer the second part of my hon. Friend's question. I am sure that we can make quick progress.
    With regard to the first part of his question, my hon. Friend asked me in his original question to give the number of clergy receiving stipends for the first time. That is not
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    necessarily the same thing, as he already knows. Of course, I would very much wish to see a sharp increase in the number of men offering themselves for ordination.
    Mr. Cormack: Does my hon. Friend agree that vocations might be increased if certain right reverend prelates stuck to politics rather than straying into unsound doctrine?
    Sir William van Straubenzee: I am certain that it is very much better for a good shoemaker to stick to his last.

    Listed Buildings
    Mr. Chapman asked the hon.Member for Wokingham, as representing the Church Commissioners, if the Church Commissioners will initiate discussions with the Secretary of State for the Environment seeking the removal of the ecclesiastical exemption of listed buildings belonging to them.
    Sir William van Straubenzee: In July 1984 the General Synod, by a large majority, expressed the view that the ecclesiastical exemption should be retained. The commissioners are of the same view. They have made it clear that they are ready to explore ways of improving the existing system.
    Mr. Chapman: As a number of much respected environment groups have expressed reservations about the workings of the ecclesiastical exemption system, may I welcome my hon. Friend's reply and encourage the Church Commissioners to have talks with such groups, including the Victorian Society, as there seems to be at least a lack of information and perhaps quite a lot of misunderstanding about how it can be shown that the ecclesiastical exemption system has strengthened rather than weakened the protection of particular Church buildings?
    Sir William van Straubenzee: I am obliged to my hon. Friend. Through the Pastoral Measure of 1983 the House gave oversight of these matters to the Church Commissioners in the belief that pastoral as well as heritage considerations were involved. In support of what my hon. Friend has said, it is interesting to note that the National Heritage Monitor of 1983 points out that a listed Anglican church has a three times better chance of avoiding demolition than a secular listed building.

    Widows
    Mr. Peter Bruinvelsasked the hon. Member for Wokingham, as representing the Church Commissioners, what financial provisions are made by the Church Commissioners for the widows of clergy; and how much financial support was given in each of the past five years.
    Sir William van Straubenzee: A widow receives half the pension entitlement of her husband. For full service, that amounts to £2,175 per annum. The commissioners' support for widows' pensions annually since 1980 was £3·6 million, £4·2 million, £5·2 million, £6 million and £6·7 million.
    Mr. Bruinvels: I thank my hon. Friend for that very detailed reply. Does he agree that the work carried out by the wives while their husbands are in situ is a splendid example of dedication, and that provision for them in the unfortunate event of their being widowed should take

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    account of those many years of unpaid work? Will the Church Commissioners seek to improve the amounts paid to widows?
    Sir William van Straubenzee: It is the continuing intent of the Church Commissioners to make money available for improvements. The entitlements—I stress that they are entitlements—now turn upon two thirds of full service pension for a serving man. My hon. Friend will be aware that, in addition, widows are eligible for an augmentation grant if their total income, excluding state benefit, is less than £3,625 per year.

    Church Land (Molesworth)
    Mr. Willie W. Hamiltonasked the Member for Wokingham, as representing the Church Commissioners, if he will make a statement on the Church's land ownership at Molesworth, and the progress made in selling it to the highest bidder.
    Sir William van Straubenzee: This is glebe land belonging to the Peterborough diocesan board of finance and the commissioners' consent would be necessary in the event of the diocese putting forward proposals for its sale.
    Mr. Hamilton: Has not CND made a higher bid than the Ministry of Defence for this land? As the proceeds would go to the payment of clerical stipends, does the hon. Gentleman agree that it is deplorable that the Church Commissioners seem to be in political alliance with the Ministry of Defence in a rather disreputable way?
    Sir William van Straubenzee: Untypically, the hon. Gentleman seems not to have grasped the situation. At present, no decision is before the Church Commissioners. With respect, therefore, the hon. Gentleman is not entitled to make any judgment about the commissioners' view, because they have not yet had to form a view.
    Mrs. Kellett-Bowman: If the Ministry of Defence bid did not succeed, would it not become a matter for compulsory purchase, and would that not be to the detriment of the clergy?
    Sir William van Straubenzee: I am afaid that I do not know the answer to that question. It would be for Ministers at the Ministry of Defence to say whether there would be a compulsory purchase order. Personally, I am not aware of any such suggestion at present.
    Mr. Deputy Speaker (Mr. Harold Walker): Mr. Frank Field.
    Mr. Field: Is the hon. Gentleman aware—
    Mr. Deputy Speaker: Order. I was calling the hon. Gentleman to ask question No. 25.
    Mr. Field: I wished to ask a supplementary on this question, Mr. Deputy Speaker.
    Mr. Deputy Speaker: I am sorry, but I am calling the hon. Gentleman to ask question No. 25.

    Clergy Marriages
    Mr. Frank Fieldasked the hon. Member for Wokingham, as representing the Church Commissioners, whether the Church Commissioners were invited to submit evidence to the working party on the break-up of clergy marriages.
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    Mr. William van Straubenzee: No, Sir, but representatives of the commissioners have attended all meetings of the working party and have offered information and advice as and when required.
    Mr. Field: Does the hon. Gentleman agree that when the report is published on what the Church should do about the broken marriages of clergy, the commissioners will have to provide funds rather than mere advice? Will those funds be forthcoming?
    Sir William van Straubenzee: I think that we must wait and see what the working party recommends to the House of Bishops and what action the House of Bishops decides to take. I remind the hon. Gentleman, however, that the commissioners are statutorily bound by this House in terms of the objectives for which their funds may be used.

  WALES

    Wages Councils
    Mr. D. E. Thomasasked the Secretary of State for Wales what assessment he has made of the effects of the abolition of wages councils on employment prospects in Wales.
    Mr. Nicholas Edwards: There is substantial evidence to support the view that a freer wage market would result in more jobs, especially for young people. There is no reason to suppose that these findings do not apply in Wales. Any evidence submitted contradicting this view will be taken into account in our consideration of the responses to the consultative paper.
    Mr. Thomas: Clearly, the Secretary of State's Department is innumerate in this area, as in many others, though not that of education. Does he accept that no more than 450 jobs will be created, that they will be low-paid jobs, and that the whole intention of the scheme to abolish the wages councils is to create sweated labour among young people in Wales and elsewhere?
    Mr. Edwards: I do not accept the hon. Gentleman's figures. I do not know whether they have the smallest validity. The hon. Gentleman will be able to include those figures in the representations that he may make on our consultative paper, and they will be given due weight.
    Sir Raymond Gower: Have wages councils been successful in maintaining high wages?
    Mr. Edwards: No, they have not. In addition, they have prevented the creation of many jobs which might otherwise have been brought into existence.

  THE ARTS

    Musical Education
    Mr. Meadowcroftasked the Parliamentary Under-Secretary of State answering in respect of the Arts what information he has as to assistance currently available to enable children to continue learning to play musical instruments after they leave school.
    The Parliamentary Under-Secretary of State for the Environment (Mr. William Waldegrave): The Arts offer a wide range of amateur and professional

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    opportunities to enable children to continue learning to play musical instruments. Local education authorities provide courses at sixth-form colleges; and support is provided through the mandatory grant system for those taking degree-level courses at universities and polytechnics.
    Mr. Meadowcroft: I know from previous exchanges that the Minister is sympathetic towards my point. Is he aware that many good local authorities, including Leeds, assist young people at school by providing instruments, but that there is no provision after the young people leave school? The problem is shuffled back and forth between the Department of the Environment and the Department of Education and Science, on the ground that it is a leisure facility and an aspect of continuing education. Will the Minister take some responsibility for drawing the matter together and helping young people who wish to continue to learn to play an instrument after they leave school?
    Mr. Waldegrave: As the hon. Gentleman recognises, this is a matter for either the Department of the Environment or the Department of Education and Science. The role of the Office of Arts and Libraries can only be that of a co-ordinator. However, I shall draw the hon. Gentleman's suggestion to the attention of my noble Friend.

    Billericay Arts Society
    Mr. Proctorasked the Parliamentary Under-Secretary of State answering in respect of the Arts what Arts Council funds are available to Billericay arts society in the financial year 1985–86; and if he will make a statement.
    Mr. Waldegrave: The Arts Council funds only activities of a professional nature; but the Regional Arts Association will consider sympathetically any request for project funding.
    Mr. Proctor: Will my hon. Friend encourage, help and advise the arts society in its attempt to transform a historic building, 108 High Street, Billericay, into a modern and thriving arts centre and in particular to gain private sector sponsorship for this worthwhile venture?
    Mr. Waldegrave: I shall be happy to give every encouragement that I can. The scheme is admirable. The expertise required probably rests mainly with the Regional Arts Association or with the Arts Council; but if there is anything that the Office of Arts and Libraries can do to help, it will be delighted to do so.
    Mr. Cormack: So that the honest burghers of Billericay and other places north and south of Watford may enjoy performances of a high professional calibre, will my hon. Friend discuss with our noble Friend the somewhat shortsighted attitude of the Arts Council, and indeed the Government, towards the National Theatre's touring activities?
    Mr. Waldegrave: Wide though my brief is on the affairs of Billericay, it did not take fully into account their relationship to the National Theatre. I have repeatedly defended the Arts Council's general strategy. The citizens of Billericay have benefited from this strategy, because the Regional Arts Association has had a 29 per cent. increase in its funding this year. Devolution to the provinces really means something.
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    Concerts (Pensioners and Children)
    Mr. Greenwayasked the Parliamentary Under-Secretary of State answering in respect of the Arts if the Minister for the Arts will make money available for concerts of artistic worth for pensioners and children; and if he will make a statement.
    Mr. Waldegrave: It is for the Arts Council and not for my noble Friend to allocate funds to arts bodies. Funded orchestras and other arts bodies normally put on concerts that are open to all who wish to attend; but most venues offer seats at concessionary prices for children, students and pensioners.
    Mr. Greenway: Is it not sad that some concerts for children and pensioners have been cut out as a result of reduced spending? Does my hon. Friend agree that those two categories should have priority? Will he consider the possibility of direct funding for concerts for pensioners and children?
    Mr. Waldegrave: Experiments in encouraging the access of specific groups have nearly always proved less effective than the ordinary system of concessionary tickets. Most concert halls and theatres have such schemes.
    Mr. Robert Sheldon: Will the Minister be making representations about the proposed takeover of the Bournemouth Symphony Orchestra by Bristol?
    Mr. Waldegrave: The right hon. Gentleman might feel that I have some interest in this matter. The Bounemouth Symphony Orchestra has always been partly funded by Bristol and I know of no firm proposals to change that. I shall write to the right hon. Gentleman about the latest situation if he would like me to do so.
    Sir David Price: Is not the point that, uniquely, the Bournemouth Symphony Orchestra tours the whole of its region and goes in for community music? Is that not the answer to the question of my hon. Friend the Minister for Ealing, North (Mr. Greenway)? We think in terms not of pensioners or school children but of the community as a whole. The more our big orchestras get out into smaller communities, the better for the purpose behind my hon. Friend's question.
    Mr. Waldegrave: I agree with my hon. Friend. When the Bournemouth Symphony Orchestra comes to Bristol, there are normally concessions for the types of groups to which my hon. Friend the Member for Ealing, North (Mr. Greenway) referred.
    Mr. Faulds: Will the Minister try to get home to his noble Friend the enormous value of concerts for pensioners and children, in a recreational sense for pensioners and in an educative sense for children? Will he add to his representations the value of taking concerts and other artistic manifestations out to factories and such areas, as was done by one of our late lamented Glasgow friends with great success?
    Mr. Waldegrave: I am happy to agree with the hon. Gentleman. I have been to one of the children's concerts which are occasionally held at the Colston Hall, Bristol. They are marvellous occasions. There is nothing in the present arrangements which makes it impossible to have such occasions.
    Mr. Peter Bruinvels: Why are concerts and events for the ethnic community funded, when concerts for children and pensioners, certainly in Leicester, seem not to be?
    Mr. Waldegrave: A local authority might choose that as the best local priority. Some interesting West Indian artistic things are funded in my constituency, and many of them are funded under the aegis of the Manpower Services Commission.
    Mr. Buchan: Does the Minister agree that the most interesting artistic development in the House for a long time is the fact that every Tory Back Bencher is now beginning to feel the squeeze arising from the Government's policy? Does he further agree that pensioners and children are not alone in suffering under the present Government in regard to concerts, as the entire musical and threatrical world has suffered? As for taking the arts to factories, why are trade unions being excluded from the pound for pound scheme in sponsorship?
    Mr. Waldegrave: I was not aware of any properly organised project being excluded. If any is, I shall look into the matter and write to the hon. Gentleman. I do not think that, as the project is funded, anyone is excluded because of who he is. The hon. Gentleman misinterprets the questions that I have been asked by my hon. Friends. I detected no fear or trepidation, but the normal Conservative party and Government interest in these matters and a proper relationship between the spokesman and the Back Benches.
    Mr. Cormack: Can my hon. Friend encourage two birds with one move by discussing with his noble Friend the possiblity of a special grant for the National Youth Orchestra to give a tour of concerts for pensioners?
    Mr. Waldegrave: That would kill or, rather, entertain two birds with one pipe. I shall report my hon. Friend's suggestion to my noble Friend, who will undoubtedly say that such funding is a matter for the Arts Council.

  WALES

    Home Improvement
    Mr. Rowlandsasked the Secretary of State for Wales what is his latest estimate of the number of outstanding home improvement grant applications made under the provision allowing payment of 90 per cent. of the cost of the work.
    Mr. Wyn Roberts: During the two-year period when 90 per cent. rates were generally available for repair and intermediate grants, 141,000 applications for grants of all types were submitted. Local authority returns indicate that 50,000 of these are still outstanding.
    Mr. Rowlands: While most authorities are able to do something about statutory intermediate grants, are not thousands of elderly people—some of them in their 80s —who are awaiting basic repair grants receiving letters stating that they will have to wait two or three years? Will the hon. Gentleman think about a special additional fund to unlock repair grants for old people's properties before it is too late, or does he want to go down in history as the Minister who gave guarantees relating to grants but that people died before they received them?
    Mr. Roberts: The rate at which this backlog will be cleared depends to a significant extent on the action of
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    individual local authorities. Considerable sums of money are being spent on grants—£80 million last year and £107 million the year before—and there is scope for substantial expenditure within this year's gross capital figure of £147 million. Over the last three years we have spent £230 million on private sector renovation—four times as much as the total spent during the whole period of the last Labour Administration.
    Mr. Foot: In view of the huge backlog which has now built up in the home improvement queue, will the hon. Gentleman review the matter afresh? This is an immediate way in which some assistance could be given to deal with desolating conditions in the Rhymney Valley. Other valleys are similarly affected. At the same time as considering the possibility of a much larger house improvement scheme, will the hon. Gentleman also consider restoring the full housing programme to its 1979 level, which would mean many more houses and people in jobs?
    Mr. Roberts: I must remind the right hon. Gentleman that during the Labour Government's period of office the average spend was £29 million per annum over their five-year period, compared with our £72 million per ar num over the last five years. However, I take the right hon. Gentleman's point. We are reviewing improvement grants and will be publishing our proposals shortly.
    Mr. Harry Greenway: On a point of order Mr. Deputy Speaker. I rise respectfully and deferentially. You called each of the questions set down for the hon. Member answering for the Church Commissioners. However those questions began a minute late and finished a minute early, even though some hon. Members still wished to ask supplementary questions on that important subject. Will you take account of the fact that questions to the -ion. Member answering for the Church Commissioners are now held once every six weeks instead of once every three weeks? Will you also consider the possibility of allowing those questions to run full time on another occasion, because the spiritual health of the nation is important? I am not sure—
    Mr. Deputy Speaker: Order. The hon. Gentleman has made his point. The frequency of questions to the lion. Member answering for the Church Commissioners is a matter not for the Chair but for the usual channels. No doubt the hon. Gentleman's remarks will be conveyed to the Leader of the House. The hon. Gentleman must recognise that every hon. Member who tabled a question to the hon. Member for Wokingham (Sir W. van Straubenzee) had his question answered. There were many other questions on the Order Paper awaiting oral answer, and hon. Members were waiting patiently for their turn. I must have equal regard to their interests and rights.
    Mr. Peter Bruinvels: On that point of order, Mr. Deputy Speaker—
    Mr. Deputy Speaker: On the same point of order? I thought that I had dealt with it.
    Mr. Bruinvels: While in no way seeking to challenge the ruling that you have just given, I merely wish to point out that in our country a terrifying number of clergymen are now getting divorced—
    Mr. Deputy Speaker: Order. The hon. Gentleman must not ask me the question that he would like to have asked the hon. Member for Wokingham (Sir W. van Straubenzee).
    Mr. Frank Field: Further to that point of order, Mr. Deputy Speaker. A large number of hon. Members wished to ask supplementary questions to Question No. 25, and I wished to ask a supplementary question to Question No. 24. I do not wish to challenge your ruling, but is there not all the difference in the world between getting an answer and supplementary questions being asked by other hon. Members?
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    Mr. Deputy Speaker: Order. I understand the hon. Gentleman's point but he had one question answered, and for him to want two questions to be answered consecutively when other hon. Members have waited throughout the whole of Welsh Question Time without having a chance to have their questions answered is not reasonable.
    I remind both the hon. Gentleman and the House that it is a matter for the discretion of the occupant of the Chair who is called to ask supplementary questions. I hope that hon. Members will not challenge my discretion. I am trying to do the job as fairly as I can to make sure that the time is shared out fairly. We should now turn to the main business of the day.

Opposition Day
[10TH ALLOTTED DAY]
Opposition Day

  The Welfare State
  3.35 pm
  Mr. Michael Meacher: I beg to move,
  That this House calls upon the Government to withdraw its plans to abolish the State Earnings Related Pension Scheme and its proposals to cut back other key benefits as part of its callous dismantling of the welfare state designed to provide even bigger tax handouts for the rich.
  Mr. Deputy Speaker (Mr. Harold Walker): Order. I have to tell the House that I have selected the amendment in the name of the Prime Minister.
  Mr. Meacher: The motion sets out the demand that we place before the House on behalf of 10 million pensioners, 3.5 million unemployed, 3 million disabled persons and millions of others who may suffer sickness, bereavement or other misfortune.
  The welfare state, while it needs genuine reform and improvement, remains for the British people the ideal of dignity and security against want in the face of economic and other adversity over which the individual has no control. It is against the destruction of that ideal, the intensification of the means-test state without dignity and the dismantled security that we raise our voice today.
  In reply to our motion the Government's amendment is astonishing, not only in its unbounded smugness but in being demonstrably inaccurate and false from start to finish. It begins by noting
  "the Government's commitment to improving the... Health care systems in this country as shown by increased spending on the National Health Service".
  I have news for the Government. Spending is going down, and that is official. Sir Kenneth Stowe, the permanent Secretary at the DHSS, confirmed last week to the Select Committee that current expenditure on the NHS in the last year fell.
  The Government's amendment continues its self-congratulation by noting
  "increased benefit levels for pensioners and others".
  The truth is that by ending the earnings link in the uprating of pensions the Government have lowered the pension for a married couple by £5 a week, every week, below what it would have been if Labour's formula had been continued.
  The Government's amendment then refers to their
  "reducing the burden of taxation and National Insurance contributions".
  That is a rum one. In fact, under this Government, the rate of national insurance contribution has increased by 50 per cent. and the burden of taxation has increased by the equivalent of about 9p in the pound on average for the whole population, except those earning over £20,000 a year.
  The Government's amendment, obviously unable to find anything to say about the Government's social security and health policies that is both positive and truthful, falls back on the Goebbels lie by referring to
  "the Opposition's plans to end mortgage tax relief'.
  As I made unequivocally clear at the time, and since, the paper that I presented last week was a discussion document
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  and not a Labour party policy document. It is only malicious and fabricated press reporting that has implied otherwise. For the Prime Minister to reiterate such scurrilous misrepresentation is despicable, and it demeans her office.
  It ill becomes the Tory Government to raise hackles about mortgage tax relief when, in the so-called Fowler reviews, they are about to abolish not only housing benefit for almost everyone in employment but all supplementary benefit mortgage payments for the poorest families struggling to buy a home. There could be no better proof that the Tory party was founded by the rich, of the rich and for the rich.
  Mrs. Elaine Kellett-Bowman: Is the hon. Gentleman aware that many low wage earners in my constituency are buying their houses with mortgages? What can possibly be scurrilous about the Prime Minister drawing attention to the hon. Gentleman's outrageous suggestions even though he did not particularly want them published?
  Mr. Meacher: I made it absolutely clear that we would continue with a system of housing aid, both for those in rented accommodation and for owner-occupiers struggling to buy a house. The only difference between our two parties is that the Labour party would aim to improve the level of housing aid for the poorest families, while the Tory party is apparently determined to abolish supplementary benefit mortgage aid.
  Mr.Tony Marlow: The House would not want the hon. Gentleman to be misrepresented. He has a wonderful opportunity to set the record entirely right. Can he tell the House that in no circumstances whatever would a Labour Government tamper with mortgage interest relief, particularly for those on above average incomes?
  Mr. Meacher: That is a remarkable statement. The hon. Gentleman has some gall in raising that point when we know that because of the recent, 4 per cent. rise in interest rates monthly payments for those with a £30,000 mortgage increased by £57.60 a month. If the hon. Gentleman wants to assist owner-occupiers, he should have a word with the Government Front Bench and the Chancellor of the Exchequer. I have made it absolutely clear that we would continue the system of housing aid both for those in rented accommodation and for owner-. occupiers.
  The Secretary of State for Social Services (Mr. Norman Fowler): I am not sure that the hon. Gentleman' has entirely answered the point made by my hon. Friend the Member for Northampton, North (Mr. Marlow). What precisely was the status of the considered report which the hon. Gentleman put forward? What is the hon. Gentleman's personal position? Does he actually support the proposals that he put forward a week ago?
  Mr. Meacher: The status of the document has been made absolutely clear, as the right hon. Gentleman would know if he had listened to what I have said, as opposed to listening to what has been said by certain members of the press, who have been determined to misrepresent my statement because of their hostility to the Labour party. That is scarcely new. I have made it absolutely clear that

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  it was a Green Paper, a discussion document, for serious discussion of a serious issue. I put the document in that vein, and I hope that it will be treated in that vein.
  Mr. Frank Field (Birkenhead): Does my hon. Friend realise that there is considerable support from the Labour party for the ideas that he outlines in that discussion document?
  Mr. Meacher: I believe that that is so. I believe that, when people know the purpose of that document, which is to take 8 million people who have been reduced to means tested poverty out of that degrading system, and realise all its implications—anyone is free to see that document, and I hope that it will be treated seriously—they will take a different view. I believe that electorally it has substantial vote winning potential.
  Mr. John Butterfill(Bournemouth, West) rose—
  Mr. Ralph Howell(Norfolk, North)rose—
  Mr. Fowler rose—
  Mr. Meacher: I shall not give way, except to the right hon. Gentleman.
  Mr. Fowler: Does that mean that the hon. Gentleman stands by the proposals that he made a week ago? From what he has just said, he does.
  Mr. Meacher: The Secretary of State should listen to my words. I should like to know whether he intends to abolish supplementary benefit mortgage payments for the poorest families struggling to buy houses and who are on supplementary benefit. That is a rather important question for millions of people who may otherwise lose their homes.
  Mr. Dave Nellist(Coventry, South-East): Will my hon. Friend give way?
  Mr. Meacher: I shall not give way, as I would rather get on.
  Mr. Nellist rose—
  Mr. Deputy Speaker: Order. The hon. Member for Oldham, West (Mr. Meacher) has said that he will not give way. I hope that the hon. Member for Coventry, South-East (Mr. Nellist) heard that.
  Mr. Meacher: The Government have sought to justify this attack on the welfare state on the ground that the social security budget is growing out of control. It is growing, but not because of higher benefits—quite the reverse—but because the Government's other policies are forcing huge numbers of people into dependency. There are now more than 8 million people in supplementary benefit poverty in Britain, which is double the number in 1979. Nearly half of the increase in costs comes from the trebling of unemployment. Huge cuts in housing investment have greatly increased homelessness.
  Mr. Butterfill: Will the hon. Gentleman give way?
  Mr. Meacher: Ishall not give way at the moment. Homelessness has swelled the budget for board and lodging payments. Supplementary benefit board and lodging payments have also been used improperly, and on a substantial scale, to finance an explosion of private
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  sector homes for the elderly. The administration of all these and other claims has added a further £250 million tothe budget.
  The real answer to the growing social security budget is not to cut benefits. Indeed, the hon. Member for Derbyshire, West (Mr. Parris) could not even live for a week on supplementary benefit, and that is before it is cut even further. The real answer is to change the Government's policies which cause the poverty in the first place and which are multiplying the number in poverty every year. Nor need there be a lack of funding for the welfare state if the Government were so minded. Public expenditure constraints did not prevent the Government from finding another £2.5 billion with which to fight the miners, from finding £3 billion for the Falklands, or from finding another £12 billion over this decade for the defence budget, for Trident. It is all a matter of priorities—
  Mr. Charles Kennedy(Ross, Cromarty and Skye): Will the hon. Gentleman give way?
  Mr. Meacher: For this Government, perhaps more than any other Tory Government, the welfare state and the abolition of poverty always come near the bottom of their list of priorities. Nor, contrary to the Government's constant propaganda, is Britain even a high social spender. Indeed, according to a parliamentary answer on 19 November 1984, it is, with the exception of Greece, by far the lowest social spender on health care and social security in the whole of the EC. Moreover, a recent OECD report also shows that the growth rate in welfare spending overall in this country has been one of the lowest of all the 24 countries that make up the OECD.
  The real motivation behind the Fowler reviews is the obsession with redistribution from poor to rich, which is the indelible hallmark of the Tory hard Right gathered round the Prime Minister. Two months ago I asked the Library to calculate the total value of the social security cuts since 1979. I have its letter with me. It estimated the value at £8,200 million. In addition, by taxing unemployment benefit for the first time, the Government have clawed back another £2,700 million from the unemployed since 1982. Therefore, since 1979, social security has been cut altogether by no less than a staggering £10,900 million — enough to provide every pensioner with an extra £22 a week every week this year and to provide every unemployed family with an extra £62 a week every week this year.
  The money did not go to the pensioners or the unemployed. It went to the rich. In every Tory Budget since 1979 the higher rate tax band has been raised disproportionately, capital gains tax and capital transfer tax have been eased and the investment income surcharge, a tax exclusively on those with Stock Exchange holdings in excess of £100,000, has been reduced and has now been abolished.
  Using the Chancellor's Budget statement Red Books —any hon. Member can do the same exercise as I have done—it is clear that the cumulative value of the tax handouts, almost exclusively concentrated on the richest 5 per cent. of the population, can be calculated at £12.9 billion. The closeness of that figure to the total of social security cuts is no accident. Pensioners, the unemployed, the sick, widows and the disabled, all the have-nots, have been squeezed to provide further enrichment, on a truly

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  massive scale, for the haves, who were already rich. It is a despicable philosophy, of which the Conservative party should be ashamed.
  Mr. Kennedy: There will be much sympathy among the poorest groups in society for the hon. Gentleman's attack on the Government in that respect. Will he clarify a point on the question of finance, as he is arguing that money is available to alleviate poverty? Why was the shadow Chancellor of the Exchequer unable to come out with a costed, agreed programme on behalf of the Labour party at the time of the Budget, and why did the hon. Gentleman not provide a costed programme when he launched his semi-official document last week? How much would his programme cost?
  Mr. Meacher: My right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) produced a far more detailed alternative Budget than is traditional. It was provided in very considerable detail indeed, and the hon. Gentleman might care to study it. I wonder whether he has even read it. As for my statement, I presented as a consultative document a 50-page paper, and detailed costings will certainly be presented. If the hon. Gentleman wants independent costings, he can find them this week in The Economist. The costings are not entirely accurate, but they are approximately right—a subject to which I shall return.
  The Prime Minister, far from being ashamed, is no more capable of shame than she is of compassion. That is why this anti-welfare state drive of robbing the poor to pay the rich is now being brought to a climax. The Treasury wants £3 billion to £4 billion of tax cuts out of these reviews, and it will get them. The Secretary of State has been about as effective in defending the welfare state as General Custer was in his last stand. The Chancellor wants £4 billion to dole out as tax reliefs in the run-up to the next election. That is the whole purpose of the Fowler reviews, and the Secretary of State has been a pushover in letting the Chancellor have exactly what he wants.
  The reviews were fixed from the word go. Three of the four major reviews were chaired by Government Ministers. So much for independence. The fourth was led by the chairman of the London Brick Company — presumably chosen because of his intimate knowledge of housing benefit. Of the so-called two independent members of the review into children and young persons benefits, Mr. Parry Rogers, of the Institute of Directors, was forced to declare an interest when the institute gave evidence recommending the abolition of child benefit. The other, Mrs. Barbara Shenfield, just happened to have contributed to an Adam Smith Institute pamphlet opposing the welfare state. The Institute of Directors features again in providing one of the two so-called independants on the supplementary benefit review — presumably chosen because of his vast experience of poverty.
  So much for independent reviews. They were packed with Tory members. The nil extra cost constraint imposed by the Treasury enforced a pure cost cutting exercise and the short time scale precluded serious analysis.
  We do not know how hard the Secretary of State fought in the Cabinet committee, but we know that he has lost every battle down the line. The leaks that I have established from journalists are undoubtedly authentic—[HON. MEMBERS: "Oh."] The Secretary of State is entitled to deny any of the points that I am about to make, and I
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  look forward to hearing whether he denies any of them. From these leaks it is clear that the state earnings-related pension scheme, which would have doubled pensions in real terms by 1998, is to be abolished, with the result that at least 2 million pensioners will remain in means-tested poverty. All the supplementary benefit additional pay ment for diet and heating are to be abolished, including the £5 heating allowance for the over-85s, and all the supplementary benefit single payments for clothing and furniture are to be ended. Housing benefit, which has already been cut by this Government by £200 million, is now to be cut by up to a further £2,000 million, which will literally double the rents of hundreds of thousands of occupational pensioners and low-paid families.
  Supplementary benefit mortgage interest payments are to be abolished for the poorest families struggling to buy a house, which can only have the effect of forcing thousands of unemployed claimants and one-parent families out of their homes and on to the streets. There can be no other consequence of that action. Unemployment benefit, which has already been taxed by the Government, and where the earnings-related supplement has already been abolished, at an average loss to the unemployed of £16 a week, is now to be reduced from 12 to six months, although 1.25 million claimants have already been deprived of it because they have been unemployed for more than a year.
  Sixteen to 18-year-olds are now to be denied supplementary benefit in order to conscript them on to youth training schemes, even though the employers are opposed to the idea because they do not want to train reluctant trainees. The death grant is to be axed, the maternity grant is to be axed—except for the very poorest—and the maternity allowance is to be means-tested for the first time. Family income supplement is to be ended and replaced by family credits, which will reduce the benefit for many families by up to £10 a week and transfer the benefit from the wife to the husband.
  This is not a review of the welfare state. It is a massacre of the welfare state. It represents the ending of the principle of entitlement, it represents an intensification of poverty on an unprecedented scale, and it represents a deterioration back to the means-test state of the 1930s. This is not a new Beveridge. These reviews represent the revival of the mass unemployment, mass poverty and mass dependence on means-tested benefits from which the Beveridge report was intended to rescue this country. It is not a radical reconstruction of the welfare state that is about to be carried through by the Government. It is a radical dismantling of the welfare state. It is the new poor law.
  Nowhere is that more unmistakable than in the Government's plan to axe the state earnings-related pension scheme, and nowhere is it more dishonest or cynical. On 20 May 1983, conveniently just a few days before the last general election, the Prime Minister gave a solemn and binding pledge in a letter to my hon. Friend the Member for Pontypridd (Mr. John), when she said:
  "Nor are there any plans to change the earnings-related component of the state pension."
  That pledge is now being betrayed.
  No less binding, however, was the pledge give by the Secretary of State, when he said:
  "My aim in setting up an inquiry is not to call into question the fundamental pensions structure that was established in the 1970s with all-party agreement, and to which I was a party." —[Official Report, 23 November 1983; Vol. 49, c. 360.]

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  I am glad to see that the right hon. Gentleman nods his assent. How he can renege on such a clear and unequivocal promise without resigning, I do not know.
  The arguments that the Government have given for the abolition of the scheme simply do not hold water. They claim that the scheme cannot be afforded because of the growing number of pensions. The truth is that that number will fall steadily over the years into the next century. The worker-pensioner ratio will improve over the next 30 years. The Government's independent adviser, the Social Security Advisory Committee, recently said:
  "At this distance in time we do not think there can be solid grounds for altering the scheme now for fear of all the worst outcomes occurring steadily for 40 years."
  The scheme could only not be afforded if economic stagnation continued uninterruptedly for the next 40 years. Perhaps, for all I know, that, privately, is the expectation in the minds of some Ministers. It is not consistent for the Secretary of State, when he is trying to convince the nation of the burden of pensions, to assume, as he did in his recent paper "Population, pension costs and pensioners' incomes", an economic growth rate of 1.5 per cent. a year, while at the same time — the Chancellor of the Exchequer, when he wants to preen himself, as he so often does, on the Government's economic success, speaks, as he did on 31 January and in the Budget debate, of growth
  "continuing at 3 per cent. a year". —[Official Report, 31 January 1985; Vol. 72, c. 499.]
  That is simply not consistent.
  The truth is that the Government want to destroy Labour's state earnings-related pension scheme—which I repeat, is the best deal that pensioners have ever had — because of the Prime Minister's obsession with increasing the private sector and limiting the role of the state. As the hon. Member for Brentwood and Ongar (Mr.McCrindle)—I am glad that he is present—has rightly pointed out, those on low incomes, who predominate in the state earnings-related pension scheme, are precisely those who are least able to make adequate provision for themselves in the private sector. Indeed, I go further than the hon. Gentleman. The state earnings-related pension scheme came into being in the 1970s precisely because of the failure of the private sector in the 1950s and the 1960s to provide pensions above the poverty line for over half the population.
  This act of ideological vandalism against the state earnings-related pension scheme ignores the fact that the state pension scheme is inherently better than any private scheme could ever be, because only the state, unlike any private scheme, can give a proper copper-bottomed guarantee against inflation. Only the state scheme, and no private scheme, can ensure that job mobility is not impeded and that insuperable problems of pension transferability do not arise.
  Anyone who destroys the earnings-related pension scheme is the enemy of the pensioner. I vow that the Labour party will fight to preserve that scheme and will take that fight to the country. If the Tory wreckers do destroy it, I give this pledge: because the scheme is the best yet devised for the low-paid, for women and widows, and for guaranteeing protection against inflation, the Labour party will restore it as one of our foremost priorities on winning the next election.
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  Mr. Tim Yeo: As the scheme, unlike private schemes, is not a funded scheme, will the hon. Gentleman tell the House and country whether he proposes to meet its colossal costs after the year 2000 by raising income tax to 50p in the pound, by doubling the rate of national insurance contributions, or by raising VAT to 25 per cent.?
  Mr. Meacher: The best calculation that the Government Actuary can make—I recommend that the hon. Gentleman should look at this independent source—is that there might be an increase in the level of employers' and employees' contributions to 16 to 20 per cent. The present level is 17.6 per cent. In other words, there will be a small difference between even the maximum increase in the level of contributions and that which exists now. It is perfectly affordable.
  The real issue is whether Britain has a Government who can ensure an adequate level of economic growth, not continuing economic stagnation, and the expenditure of £20 billion a year on keeping 3.5 million people unemployed. If we can change the Government, there is no reason why we cannot afford the scheme.
  What we are seeing in the Fowler reviews is the ugly face of welfare capitalism. It is camouflaged by the right hon. Gentleman's claim that his objectives, as he will no doubt say again today, are the targeting of aid, simplification and improving work incentives. Each of those conceals a different reality.
  "Targeting" is a Tory code word for more means testing and for taking more money from the not quite so poor working class to give it to the very poor in the working class, while the rich on £40,000 a year sweep up the increased tax handouts.
  "Simplification" is a euphemism for more cuts and more rough justice. It does not even overcome the fundamental drawbacks of means-tested benefits which the Secretary of State identified in a letter to the Child Poverty Action Group on 30 May 1984 as being
  "complicated to legislate for, administer and understand, and generally the most expensive benefits in terms of manpower needed to administer them."
  "Improving work incentives" is Fowler-speak for saying that the poor need the spur of their poverty in order to escape it, while for the rich it is the rate for the job and no amount of handout is too much.
  Like the rampaging Federation of Conservative Students, these reviews are stained with the goose-step of the new Right. For them—they are well represented in the higher reaches of the Tory party and Parliament—the only acceptable recipients of welfare are the destitute and the deranged and even the most meagre of state benefits fosters irresponsibility. For them to be unemployed is to be workshy. For them, child benefit encourages feckless breeding, and teenage benefits erode traditional parental controls. It is an ugly philosphy, put forward by an increasingly authoritarian party. It is a callous and compassionless view of society which is rejected by the great majority of the British people.
  The Labour party has a different philosophy of care and compassion, of dignity and security against want without stigma. For the pensioners we would restore the link with earnings which the Government so meanly took away—
  Mr. Patrick Nicholls rose—
  Mr. Meacher: No, I shall not give way.

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  We would preserve and strengthen the state earnings-related pension scheme to ensure that the lower paid getthe best possible deal in retirement, which otherwise they will not get. For families, we would retain and improve child benefit asthe single most important protection against family poverty and against the poverty trap. For the growing army, brought below the state poverty line by Tory policies—it is a growing army of 8 million—we would seek to bring to anend the present degrading supplementary benefit system whereby millions of claimants are herded into offices every week to be dealt with by overworked and underpaid staff in a bureaucratic system fraught with complexity, delays and frustrations on all sides.
  For both tenants and owner-occupiers struggling to buy their houses we would consolidate the provision of housing aid, not decimate it as the Government are planning to do. For the disabled, a vital but all too often forgotten group, a new component is needed — a disability costs allowance—to compensate for the extra costs of living arising from disability. But it will inevitably be expensive and its implementation, as for other objectives, must depend on our economic success in reducing the over-swollen army of the unemployed, which is our highest priority.
  None of that will be brought about by a Government who regard the welfare state with disdain, nor by a Prime Minister who has made it clear that she regards claimants as scroungers and the unemployed as workshy. That is why the Tory dismantling of the welfare state has now become not just a major political issue but a fundamental reason why the Labour party, which believes in the welfare state, will be returned to power at the next election.
  4.9 pm
  The Secretary of State for Social Services (Mr. Norman Fowler): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
  "notes the Government's commitment to improving the Social Security and Health care systems in this country as shown by increased spending on the National Health Service and increased benefit levels for pensioners and others; supports the Government's aim of reducing the burden of taxation and National Insurance contributions especially for the lower paid; notes the Opposition's plans to end mortgage tax relief and increase income tax and National Insurance contributions; and congratulates the Government on having set in hand the most thorough review of the Social Security system for 40 years."
  One of the endearing features of the hon. Member for Oldham, West (Mr. Meacher) is that the weaker his case, the more strident he becomes. There is one difference about his speech today. Normally, he sets up a smokescreen to disguise the fact that the Opposition have no policy. Today, he has set up a smoke-screen to disguise the fact that the Opposition havefound a policy, and that is the policy that he put forward last Monday. I shall come to it in a moment.
  First, I shall set out the facts of the Government's policies. On social security, we are paying higher pensions to more pensioners than ever before. We have increased benefits for the long-term sick and disabled by 30 per cent. We have raised child benefit and one-parent benefit to the highest real value. In the Health Service, more patients are being treated than at any stage in its history. The hospital building programme has been restored after the Labour Government's savage cuts in the capital programme. New forms of treatment are being made available.
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  Today, I am publishing a report that shows that the cost of heart transplants, for example, are lower and the benefits greater than had previously seemed likely. I shall be seeking expert advice on how the Health Service should approach the issue of expanding transplantation in the light of that report.
  In terms of cash provided, the Government are spending over £40 billion a year on social security, over £17 billion a year on the National Health Service and. with local government, some £3 billion on personal social services. In addition, the increased efficiency of the National Health Service is now releasing substantial extra resources for patient care. Last year, health authorities in England, by managing their activities more effectively, were able to release £100 million for developing patient services. I have approved plans for health authorities for the coming year which will release a further £150 million for patient services.
  My Department alone uses over 40 per cent. of total public spending. Against that background, it is ludicrous for the hon. Gentleman to charge that in some way the Government are presiding over the dismantling of the welfare state. We are committing record resources to the welfare state, but, what is more, we are seeking to ensure that those resources are used to more effect than ever before.
  The Government are prepared to have their achievements in office and their policy proposals compared with the previous Labour Government's record and with the plans which are now coming forward from the Labour party.
  Mr. Jack Dormand: I am grateful to the Secretary of State for giving way so early in his speech. As the picture that he has painted is so different front our experiences in our constituencies, despite what he has said, does he feel that there are any weaknesses or deficiencies in the National Health Service, and, if so, what are they?
  Mr. Fowler: All Governments face incredible problems in the Health Service. Unlike the hon. Member for Oldham, West, it has never been part of my case to pretend that by waving a financial wand all the problems of the Health Service—new forms of treatment, waiting lists and hospital building—magically will be resolved at once.
  The Government are now putting to effect more resources than ever before. We are also seeking to ensure that the Health Service uses those resources to better effect. It is a question of the practical policies needed to fulfil the ideals that the hon. Member for Easington (Mr. Dormand) and I share.
  The same charges were made in 1982, 1983 and 1984, in the Opposition's almost annual debate on the dismantling of the welfare state. Until now, the only distinction of the hon. Member for Oldham, West is the rather unlikely one of sounding even more hysterical -.hail the hon. Member for Crewe and Nantwich (Mrs. Dunwoody). Now, for the first time, the Opposition have put forward their policies. For the first time, we are dealing not just with generalities from the Opposition—the hon. Gentleman has set out the policies that he would like to see a Labour Government adopt. Last Monday an official statement said:

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  "Michael Meacher 'Shadow Secretary of State for Health and Social Security' produced his 'considered response' to the Government's review of social security and published two chapters of a full scale book which he intends to publish."
  Nothing that I say should be taken as dissuading the hon. Gentleman from following his published plans. To be fair, the press has been rather hard on the hon. Gentleman, because it takes considerable character to produce the kind of report that he published last Monday. The hon. Gentleman has exposed, clearly and frankly, the ambitions and aspirations of a future Labour Government. The direction of their policy is now clear, and, to put it in language that the hon. Gentleman has used time and time before, he has lifted the veil on Labour's secret manifesto. He has set out what Labour would do in power, in contrast to the evasive generalities with which we have had to deal until now.
  In the light of that, let me take the hon. Gentleman's comparison. Let us compare what the Government are doing with what the hon. Gentleman wants to do. The Government take the view that control of public spending is essential on economic and social grounds. Economic collapse and high inflation affect most the weakest in our society. If one needs any proof and establishment of that, one has only to return to the period between 1974 and 1979 when prices increased by 110 per cent. That was disastrous news for thousands of pensioners.
  The hon. Gentleman has set out a plan for social security which he estimates would cost £7 billion a year. Even on the information that he has provided, it is clear that the cost would be at least twice that—an addition of well over £15 billion to public spending. His plan for the disability costs allowance, which he repeated again in his speech, would cost upwards of £4 billion. His plan to give an educational maintenance allowance to all those aged over 16 still at school would cost up to £1 billion. His income maintenance benefit could involve spending billions of pounds — £2 billion extra on benefits for the unemployed and £1 billion more for single parents. Even on the hon. Gentleman's own costings, the inevitable consequence of his policies would be a massive increase in income tax and national insurance contributions.
  Mr. Meacher: I am sure that it gives the right hon. Gentleman great pleasure to indulge in references to handouts from Conservative Central Office, but I assure him that most people are likely to take a great deal more seriously the kinds of independent costings made by The Economist, which is in no way a Left magazine. Its view is that the total costings would be under £7 billion, of which £4 billion would be accounted for by the abolition, under the consultative document — as a Green Paper proposal—of the married man's tax allowance and the switching of that into a substantial increase in child benefit.
  The disability costs allowance, which we have costed very carefully at between £1.5 billion and £2 billion, is indeed a big extension of the social security system, and I have made it absolutely clear that it could be achieved only if we were to make substantial inroads into the £20 billion that the Government are now spending on keeping 3.5 million people unemployed.
  The remainder of the package—about £1 billion—is easily accounted for by the fact that tax reliefs given to the rich over the past six years are estimated now to have an
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  annual running cost of £3 billion. All that I was modestly suggesting was that we take back, for the purpose of the proposals, one third of that amount.
  Mr. Fowler: The public will decide which of the figures is correct. As the hon. Gentleman well knows, the report in The Economist, to which he refers, takes his own estimates of the figures and makes that quite clear. If the hon. Gentleman's plans are put into the Library, I shall be content to give detailed costings of them. It is clear from the press, from politicians and from all kinds of other commentators that the hon. Gentleman has not done the work on the costings that needs to be done. When he has done that work, he will find that the figure is over £15 billion.
  The hon. Gentleman's plan has been attacked in relation to its effect on mortgage tax relief, and rightly so. Let us not beat about the bush. The hon. Gentleman wants to reduce mortgage tax relief. That is what my hon. Friends said, and they are right. In his consultative document — to which, presumably, at least the hon. Gentleman is committed — he favours a housing allowance. He repeated that this afternoon in the debate. A cash benefit would be payable towards housing costs, whether rented or owner-occupied, and whether the claimant was in or out of work. The level of benefit would relate directly to income, but only those on over one and a half times average earnings would receive less assistance from housing allowance than they do now from mortgage interest tax relief. In other words, the hon. Gentleman has confirmed today that all those on over one and a half times average earnings will be worse off under his plan. [Interruption.] I understand that the hon. Gentleman is standing by the proposals, but the official Opposition are trying to distance themselves from them. I think that the time has come to ask what are the Opposition's policies.
  Mr. Meacher: Will the right hon. Gentleman tell the House whether he defends a system under which those on £30,000 a year receive, according to a parliamentary answer, £32 a week in mortgage interest tax relief, while those on £5,000 a year get only £7 a week? Does he or does he not believe that that is right?
  Mr. Fowler: I believe that the present mortgage tax relief system is broadly right, and I am entirely frank about that. It seems to be common ground now that the hon. Gentleman has confirmed that he is seeking to reduce the amount of tax relief going to all those earning over one and a half times average earnings. That is the message that should go out from the debate this afternoon.
  Mr.>Archy Kirkwood (Roxburgh and Berwickshire): I do not wish to interrupt the right hon. Gentleman's sport in baiting the official Opposition, but it would be helpful to other Opposition Members if he would address himself to the question whether he is considering the abolition of the state earnings related pension scheme.
  Mr. Fowler: If the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) will wait for a few seconds, I shall be dealing directly with the social security review.
  If the hon. Member for Oldham, West wants to have a serious debate about social security, it is important for us to know what he is proposing. He says in his report that he wishes to end the upper earnings limit on national insurance contributions and to bring in higher rates of contribution for high earners. That would mean extra

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  contributions, probably averaging between £20 and £30 a week, for about 3 million people. As I have said, his costings are hopelessly optimistic. To carry out his proposals would mean an increase in the basic rate of income tax of as much as 15p in the pound. It is no good the hon. Gentleman seeking to deny it. He must face the full impact of his proposals. He cannot put up a series of ideas without any thought for the cost, as I am sure his shadow Cabinet colleagues will agree.
  Mr. Dennis Canavan: Will the right hon. Gentleman give way?
  Mr. Fowler: I should like to continue, if I may.
  I am asked about our policy. It is to control public spending and to bring down inflation. It is to encourage industrial investment. [Interruption.] Compared with inflation of 110 per cent. between 1974 and 1979, the Government's achievement on inflation stands very good comparison with that of the previous Labour Government.
  Mr. Canavan: Will the right hon. Gentleman give way?
  Mr. Fowler: Not for the moment.
  The Government's policy is to encourage industrial recovery and to create new wealth, which is essential in dealing with our social programmes. It is to reduce the tax burden, and in particular the tax burden on the lower paid. It is to encourage home ownership with tax relief on mortgages.
  Mr. Meacher: Will the right hon. Gentleman give way?
  Mr. Fowler: Not for the moment.
  It is to continue with our policy of committing resources to our social progremme and to ensure that the money is being used to best effect.
  As for social security, the most significant aspect is the new agreement which now exists between the parties, as I understand it, that there is a need for reform. There is no point in the hon. Member for Oldham, West publishing a book if he does not feel that there is any need for change. It is precisely for that reason that the Government set up their review of social security. Since then there has been an unprecedented debate on the future of social security. We have received about 4,500 pieces of evidence.
  Mr. Nellist: Will the right hon. Gentleman give way?
  Mr. Fowler: No, I will not give way. The hon. Member for Oldham, West would not give way, so I do not see why I should.
  On the question of personal pensions alone, we have distributed over 30,000 consultation documents. We have held almost 20 public hearings of evidence, in which 70 organisations took part.
  Mr. Nellist: Will the right hon. Gentleman give way?
  Mr. Fowler: No, I will not.
  Mr. Nellist rose—
  Mr. Deputy Speaker (Sir Paul Dean): Order. The hon. Gentleman must not persist when the Secretary of State has made it clear that he is not giving way.
  Mr. Fowler: I have given way several times previously, and the hon. Member for Coventry, South-East (Mr. Nellist) is the last person in this House to whom I am prepared to give way.
  Let me be clear —
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  Mr. Nellist rose—
  Mr. Fowler: I shall not give way. [Hoist. MEMBERS: "Why?"] Because of the various actions that the hon. Gentleman has taken.
  Let me be clear that, despite all the predictions and forecasts that have been made about the outcome of the social security review, the Government have not yet reached conclusions. When decisions are made—
  Mr. Nellist: Will the right hon. Gentleman give way?
  Mr. Fowler: —they will be published and there will be a proper opportunity for public consideration.
  I recognise that scarcely a day goes by without someone suggesting a new change in social security that I have in mind. Some of those so-called disclosures have a rather curious ring—
  Mr. Nellist: Will the right hon. Gentleman give way?
  Mr. Fowler: The hon. Member for Oldham, West quoted in his speech one report—
  Mr. Nellist: Will the right hon. Gentleman give way?
  Mr. Fowler: I shall not give way.
  The hon. Member for Oldham, West quoted one report in The Guardian in which he suggested that the Government were going to save more in one area of housing benefit than we spend on housing benefit. If the hon. Gentleman looks at the report, he will see that what is being suggested is that we are going to end housing benefit for all those over supplementary benefit. That is the gist of the report. The Daily Telegraph suggested that I was going to abolish the state earnings related pension scheme. Only a few weeks earlier, on 28 February, the same paper carried a report that the Government were expected to stand firm on their commitment to the state earnings related pension scheme.
  Mr. Nellist: Will the right hon. Gentleman give way?
  Mr. Deputy Speaker: Order. I have already said to the hon. Gentleman that he must not persist if the Secretary of State is not giving way, and it is clear that he is not.
  Mr. Fowler: In a spirit of enormous generosity, I shall give way to the hon. Gentleman.
  Mr. Nellist: It works if one persists, Mr. Deputy Speaker.
  Is it not the height of irony, if not hypocrisy, for the Secretary of State to defend with pride the reduction of inflation under this Government when the price that has been paid is 5 million people without work, 6 million people living in damp houses, 8 million people living on poverty wages, 9.7 million people who cannot afford a week's holiday away from home and an estimated 15 million people living on or below supplementary benefit levels? Is not the real message that the Secretary of State is giving today that, in his Government's understanding, the poor are not yet poor enough for unemployment to fall and the rich are not yet rich enough for investment to take place?
  Mr. Fowler: I know that the hon. Gentleman has been having some reselection problems in his constituency, but that is going a little far.
  It is unlikely that we shall reach a consensus during the debate, but I shall do my best. Surely the hon. Gentleman will accept that the control and reduction of inflation

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  makes sense from not just an economic but a social and industrial point of view. The fact is that if inflation is out of control, the people who suffer most are those on fixed incomes, pensioners and those most in need. That is why I say, and that is why the Government say, that it is essential, on economic and industrial and social grounds, to control inflation. As far as the Government and I are concerned, we stand entirely by that policy.
  The response to the stories that have been circulated must be to wait and see. Let me be absolutely clear. The Government are looking at all the options in terms of social security reform. The Government are reviewing the entire social security system. We are considering all the options in child benefit and supplementary benefit. We are also considering all the options in retirement pensions. That is what the review is about. There is no point in carrying out such a review if I am not prepared to consider all the options that are put to me.
  The Government are carrying out a review that should have been carried out years ago. It should have been conducted long before now, 40 years after Beveridge.
  "It is absurd for the hon. Gentleman to believe that he can try to tie my hands as to what I should consider." — [OfficialReport, 8 November 1984; Vol. 67, c. 231.]
  I used those words in the debate on 8 November, and I stand by them.
  What is significant is that there is now a consensus that change is needed. There is a consensus for three main reasons. The first is the sheer scale of the social security system. By any standards, it is an enormous undertaking, now consuming nearly one third of all public spending and also involving my Department in dealing with well over three quarters of the population as either contributors or beneficiaries. We have some 30 different benefits with their own rules of entitlement and payment. That, I suspect, is why policy reviews in the past have been narrowly focused on one benefit or one small part of the machine. The aim in our review has been to pull all the strands together into a consistent plan. It has demonstrated that there is, it seems to me, a consensus on one point —that virtually everybody regards the present system as too complicated and too difficult for people to understand and for the staff to work. Indeed, the complexity is such that parts of the social security system — here I agree with what the hon. Member for Oldham West said—
  Mr. Canavan: Will the right hon. Gentleman give way?
  Mr. David Winnick(Walsall, North): Will the right hon. Gentleman give way?
  Mr. Fowler: Let me finish the sentence.
  Parts of the social security system are in danger of becoming impossible to operate.
  I give way to the hon. Member for Walsall, North (Mr. Winnick).
  Mr. Winnick: The Secretary of State was not willing to comment on the state earnings related pension scheme other than to tell us about the review. Is it not a fact that, according to a reply that I received from the Parliamentary Under-Secretary, in 10 years' time someone on average earnings will receive an additional £31, and someone on threequarters of average earnings will receive an additional £21? Are not those significant sums? They
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  demonstrate what my hon. Friend the Member for Oldham, West (Mr. Meacher) was saying—that if the scheme is allowe to continue, a large number of people will be able to live in retirement without poverty. Is not that all the more reasonwhy the scheme should remain in existence?
  Mr. Fowler: I shall have to ask the hon. Gentleman to wait and see the proposals. Of course, I am conscious of the points that he puts forward as well as of the need to prevent people in old age sinking into poverty. None of us wants that. However, in this debate I cannot pre-empt the proposals that I shall make.
  Mr. Kennedy: I appreciate what the Secretary of State says about not pre-empting the outcome of the review. In November, the right hon. Gentleman said in the House that he did not intend
  "to call into question the fundamental pensions structure that was established in the 1970s with all-party agreement, and to which I was a party."—[Official Report, 23 November 1983; Vol. 49, c. 360.]
  Does that statement still have the categoric ring that it had when the right hon. Gentleman delivered it in November, or is it now open to doubt?
  Mr. Fowler: I think that the hon. Gentleman is getting his years wrong. He will have to judge all the statements that I and any of my right hon. Friends have made against the criterion of what is proposed. It is ludicrous to try to seek this afternoon to define what that is because the hon. Gentleman cannot see the whole picture.
  Much of the complication in the social security system flows from the piecemeal development and augmentation of the system over the past 40 years. If we are to get rid of as much of the complication as possible, we shall have to decide what is really needed now. That means a reshaping of the system, not a tinkering at the edges. For the review to be a real review, it had to look at all the options—and that is what we have done. There is no point in having a review if every part of the existing structure is regarded as sacrosanct. I am prepared to be held to my commitment to meet social need; I am not prepared to be a prisoner of the existing structure.
  Mr. Robert McCrindle: Will the Secretary of State give way?
  Mr. Fowler: Secondly, when we talk about need, we should be absolutely clear what we mean. Beveridge was talking about poverty against a very different background. There have been enormous increases in the material prosperity of this country since then. There has been a real increase in GDP per head of about 115 per cent. since 1948. That growth in general prosperity has been reflected in the level of all the main social security benefits.
  Mr. Nellist: What about the last six years?
  Mr. Fowler: The basic rate of supplementary benefit has more than doubled since that time and long-term benefits, especially pensions, have improved substantially more.
  Mr. CanavanWill the right hon. Gentleman give way?
  Mr. Fowler: No, I shall not give way.
  Nevertheless, no one can doubt that need exists in this country, and one of our aims must be to target the help available more effectively to meet that need. There are

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  also changes in balance between different groups within the population in need. For example, I think that few would disagree with my diagnosis that one of the areas which today gives most concern is the position of poor families with children — working families and unemployed families. I think that even the Opposition will agree with me about that.
  Thirdly, social security is not somehow isolated from the rest of Government policy. In approaching our review of social security I have sought to avoid the straitjacket of focusing only on the social security system. I have been concerned with how social security relates not just to our social policy and objectives, but to our economic objectives and employment policies. I do not define social objectives merely as greater spending on social security or higher rates of unemployment benefit. I am much more concerned to see people taken off social security benefits and able to support themselves through productive employment.
  Mr. Canavan:The Government have to find the jobs first.
  Mr. Fowler: Yes. Our social policy objectives are the same as our overall policy — to achieve a stronger economy and to tackle unemployment.
  Mr. McCrindle rose—
  Mr. Fowler: The review, therefore, has a number of different objectives—to simplify the elaborate tangle of benefits and entitlements which have built up in the past 40 years, to ensure that the new structure meets today's needs, and to achieve the right relationship between our objectives for social security and our economic and employment policies.
  Mr. Canavan: Will the right hon. Gentleman give way?
  Mr. Fowler: No, I shall not give way.
  For the past 40 years we have reacted to the emergence of various needs, adding to or subtracting from the system until it is difficult to see what the system seeks to achieve. I want a simpler system which is easier for people to understand, a better administered system with more use of computers rather than the filing cabinets to which the hon. Member for Oldham, West referred, a system which places more trust and responsibility with the individual rather than the all-providing state and which places the fewest possible obstacles in the way of employment and economic activity.
  The Government have shown their commitment to the welfare state, but we want a modern welfare state. We want a modern social security system which uses today's methods to meet today's needs and a modern Health Service which uses its resources to maximum effect to meet the varying needs. That is the kind of welfare state that we want, and our proposals will be directed to that end.
  4.44 pm
  Mrs. Renée Short: The Secretary of State ended with a splendid peroration, but he did not say how he expected to achieve the golden age that he described. We have to contend with the situation as it is now.
  Let us cast our minds back to the words of the Conservative party in the general election of 1979—the
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  black day that marked Britain's decline from a caring society seeking to overcome many of the problems that faced us then to the present level of despair and the ever-increasing problems that we now experience. I wonder whether the Secretary of State remembers the commitments that his party made at that time. It promised to rebuild our economy—ha, ha!—and to reunite a divided and disillusioned people. In fact, the Government have created more divisions in society than any of us can remember in our entire political lives. Even their most ardent supporters, if there are any left, cannot claim that they have achieved that commitment. Lord Stockton himself said in another place five months ago
  "it breaks my heart to see what is happening in our country today." — [Official Report, House of Lords, 13 November 1984; Vol. 457, c. 240.]
  I am sure that that sentiment is echoed in the hearts and minds of the overwhelming majority of people today.
  As my hon. Friend the Member for Oldham, West (Mr. Meacher) said, there is enormous wealth for the minority while the majority of families suffer massive, degrading and soul-destroying unemployment, with all the physical and psychological ills that stem from it. When my constituents ask why we are in such a hell of a mess when the Tories promised so much in 1979 and again in 1983, I cannot explain the reasons. We all remember the Prime Minister's cynicism on the steps of No. 10, and I make no apology for reminding the House of it because it will never be forgotten. Then we had North sea oil, which was supposed to be such a splendid stroke of good fortune to revitalise the economy, to allow us to invest in new products and industries and to improve massively the standard of living of our people. Yet rotten housing remains the lot of thousands of families. That is certainly true in the west midlands. Thousands are still homeless and millions are out of work. The young are condemned to despair and the rest now realise what a massive confidence trick the Prime Minister perpetrated on them and what massive damage she has done to the country in the past five and a half years.
  I also cannot explain to my constituents the utter folly of it all. They ask how anyone can claim that there s no money to invest in new jobs or to pull down the ancient, boarded-up houses in my constituency and build new ones. Three and three quarter million homes are still unfit or seriously affected by dry rot, but fewer than 40,000 new local authority homes were started last year. That is a wretched total. Yet there is massive unemployment among building workers, whose skills remain unused while building firms try desperately to find work and to reemploy their former work force. My constituents point out that the Prime Minister found £38 million for the Falklands affair, and I have to agree, but I cannot explain why she was able to find money for that purpose but not for the decent homes and jobs that my constituents and others throughout the country so desperately need.
  When my doctors tell me that we cannot afford to appoint the surgeons and nurses needed for the Health Service and the staff needed to care for the elderly, I have to agree that it is appalling that those skills are being wasted, but I also point out that the people who complain of these things have the power to get rid of the Conservatives in the next general election. I hope that:hey will all take my good advice.
  It is clear, in spite of what the Secretary of State said, that the NHS needs more resources. The Government's

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  policy of high unemployment and growing poverty places ever-increasing demands on the NHS. The privatisation of catering and cleaning is a massive irrelevancy. It creates unemployment among hospital staff — among ancillary workers, many of whom have given unstinting service to the hospital service over many years—in order to enable the Government's pals in private firms to make a profit. Private firms can only make their profits by using the minimum number of staff and providing a restricted service for a reduced number of hours. That is what is happening to services in the hospitals. Private firms could not make their profits otherwise.
  Who would have imagined that we would see the day when trained doctors and nurses would be unemployed? That day has arrived. The Secretary of State should pay some attention to that problem, but he has not even mentioned it. Who would ever have thought that thousands of kidney, heart and cancer patients would die each year because of a lack of facilities for adequate care and treatment? Is the Prime Minister concerned about the fact that the rate of death from cervical and breast cancer is rising in this country, while in America, Canada and Sweden the rates are falling dramatically because the Governments of those countries are determined to support a proper, national well-resourced service?
  The Prime Minister does not trust the NHS. She does not permit it to deal with her own health problems when they arise. However, she should visit some of the NHS hospitals, including some of the teaching hospitals. I know that the staff would very much like her to see the conditions in which they have to work, and the extent to which they suffer from overwork. The Prime Minister should see the Victorian hospitals with their unending corridors. She should see the huge Victorian wards that provide no privacy for patients or doctors. Any hospital in the country could tell the right hon. Lady that, although the Select Committee recommended that more patients should be treated by fully trained doctors, consultants—although they are being trained — are not being appointed. If that situation could be improved, there could be better care for patients, better diagnoses and probably shorter stays in hospital. Those improvements could well save money and enable better use to be made of existing resources.
  The Prime Minister prefers to turn to private hospitals for her own care, but it must have been embarrassing for her when the press uncovered the dreadful story of how the equipment for the latest treatment on her eye had to be borrowed from an NHS hospital. One might have expected the right hon. Lady to declare an allegiance to the NHS from that point on.
  New technology in the NHS needs resources. Caring for the increasing number of elderly patients in more congenial conditions, preferably at home, or in the community, and caring for mentally ill and handicapped patients in the community rather than in massive hospitals, also requires resources.
  The NHS has suffered as a result of the Chancellor's public expenditure cuts. If it is simply to respond to the technological and demographic pressures alone, it requires a growth in funding of at least 1.5 per cent. each year. Yet the health authorities have had to find £48 million from a
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  reduced budget in order to meet part of a pay settlement that the Government refused to meet. Levels of staffing have been cut or frozen, and nurses sacked.
  Mr. Roy Galley (Halifax): Will the hon. Lady give way?
  Mrs. Short: The Royal College of Nursing has drawn attention to the inadequate number of nurses in the wards in many areas, which places a strain on the remaining staff, and can be dangerous for the patients.
  Mr. Galley: The hon. Lady claims that numbers of staff have been cut. How can she say that, when during the last six years more than 40,000 extra nurses and more than 5,000 extra doctors and dentists have been provided? The hon. Lady claims that resources are inadequate. As she knows, the Select Committee last year investigated the matter and found that the NHS had received extra resources of 17 per cent., which at least kept pace with changing demand. The hon. Lady was a party to the production of the Select Committee's document. She accepted the fact that there had been a growth in available resources.
  Mrs. Short: None the less, nurses and doctors are unemployed. Consultants say that they are understaffed and that they have long waiting lists. The hon. Member for Halifax (Mr. Galley) is a valued member of the Select Committee, and I enjoy his company. However, there still remains the fact that disadvantaged patients are suffering. Elderly people are waiting not weeks but years for, for example, hip replacement operations. Despite the fact that resources have been allocated to the NHS, these problems remain. We cannot gloss over the facts. Staff are being sacked, wards are being closed and as a result waiting lists are lengthening.
  The Government are obsessed with reducing taxation for the well off. The Prime Minister's values and social beliefs are those that determine Government policy. In her view, there are masses of people who are scroungers who enjoy living on Government handouts. She wishes to reduce social security benefits and to introduce means tests for many more people. The right hon. Lady even believes that it might be possible to introduce a means test for maternity benefits. That is one of the latest ideas. The Select Committee made it clear that expectant mothers in the poorer sections of the community — those living in the inner cities — require more rather than less support. Better diet and proper rest and care would reduce the perinatal mortality rate of such mothers. The overall rate has fallen, and we are pleased about that, but in some of the industrial areas the perinatal mortality rate is still too high. Many general practitioners tell me that they are in despair about how to reduce the rate.
  Mr. Galley: Will the hon. Lady give way?
  Mrs. Short:I have to believe the letters that I receive from general practitioners working in cities such as Manchester and Liverpool, where conditions are very difficult. Those doctors are not receiving any support in the form of more staff, partners, nurses or community social workers. The situation is bound to affect patient care.
  The Opposition believe firmly in the abolition of poverty. The Government, on the contrary, are creating ever larger areas of poverty and acute distress. They are

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  placing a dreadful burden on our people. The Government insist on managing poverty. Our intention is to eliminate it.
  4.58 pm
  Mr. Robert McCrindle (Brentwood and Ongar): It was correct and timely for the Government to engage in a wide-ranging review of social security, the results of which we look forward to seeing soon. For far too long, like Topsy, our social security system has grown. We have a massively complicated system and cannot always be sure that benefits are directed to those in greatest need. I hope that when the review is enacted in legislation there will be evidence of some streamlining and updating. At the risk of upsetting the hon. Member for Oldham, West (Mr. Meacher), might I add that I hope that benefits will be targeted at those in greatest need.
  Ever since I came to the House there has been a debate across the Floor of the Chamber between those who believe in the universality of benefits and those who, like me, recognise the limits of what we can expect from the taxpayer to finance benefits. I have always taken the view that some selectivity or targeting of benefits to those in greatest need should be the order of the day.
  If economies can be identified during the reviews, that is all to the good. I am even prepared to accept, as a starting point, the requirement that the reviews should result in no extra cost to the Exchequer. There is a good deal of misdirected benefit in the present system, just as there are many people in considerable need who do not receive the assistance which we all want to extend to them.
  I accept that in our present economic circumstances there should be no major increase in the amount of money that we devote to social security, but I hope that I should not be alone in not being happy if the reviews were an attempt massively to save on the present outlay, at the risk of reducing the amount of benefits targeted at those in greatest need.
  The language which the Labour party has employed in these matters in the past few weeks has been excessive to the point at which its credibility, and especially that of its spokesman, has been brought into severe doubt. The Labour party has failed to cost its proposals, in so far as they can he called proposals. Television viewers will have noticed the Opposition spokesman's remarkably slippery performance on "Newsnight" on Friday evening, and again today he was unable to tell us what it would cost to introduce the no doubt desirable benefits which Labour proposes. The hon. Gentleman's failure to do that must lead us to question his credibility. Although I shall have some critical questions to direct to my right hon. and hon. Friends on the Front Bench, the motion employs extravagant terms and will, I hope, be treated with contempt.
  Mr. Frank Field: The hon. Gentleman always listens carefully to these debates, but he is being unfair to my hon. Friend the Member for Oldham, West (Mr. Meacher). My hon. Friend costed his proposals today. The Secretary of State also costed them and reached a figure double that quoted by my hon. Friend. Although there is dispute as to their cost, it is unfair to say that my hon. Friend's proposals have not been costed.
  Mr. McCrindle: I heard my right hon. Friend the Secretary of State, and I heard the hon. Member for
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  Oldham, West on Friday evening and again today. I accept that he has moved since Friday, when he gave no estimate, but that which he gave today was immediately questioned by this side of the House and does not begin to persuade me that I should pay attention to what he says.
  Although this is a debate between the two sides of the House, there is a need for debate within the political parties on the future of social security. If my line is not completely acceptable to some of my right hon. and hon. Friends, I hope it will be accepted that only by exploring different means of achieving the same ends will we be able to target benefits more cost effectively. I must await the final reports, and a good deal of what I shall say is based upon press reports. I have no alternative, as I am not privy to information about the authenticity of those reports.
  I am worried about reports on the state earnings related pension scheme, which have been widespread in the past few days. On the basis of the wish being the father to the thought, the Treasury might assiduously have been peddling to newspapers likely to take its line the thought that there will be a winding up or a substantial revision of the state earnings related pension scheme. For the sake of this debate, I must assume that there is a prospect of some change. I shall react when the proposals are known fully, but there are a few facts of which it would be appropriate for me to remind my right hon. and hon. Friends.
  Before they moved on to higher things, my right hon. Friend the Secretary of State and my right hon. and learned Friend the Minister for Health were, like me, responsible during the passage of what is now the Social Security Pensions Act 1975 for saying that we all wanted to end what was called pensioneering—the tendency for the Labour party to accentuate state pensions when in office, only to find that trend reversed when the Conservatives were in office, when there was emphasis on the desirability of occupational pension schemes. Many of us, including my right hon. Friend and my right hon. and learned Friend, were aware of the damage that that was doing, not least to the future of occupational pension schemes, with which, as the House knows, I have a long association.
  If there is material alteration of the state earnings related pension scheme, the effect on the development of good occupational pension schemes cannot be advantageous. The two systems have co-existed for some 10 years and it would be unfortunate if we were forced to return to pensioneering, of which there was a good deal of evidence in the speeches of my right hon. Friend the Secretary of State and of the hon. Member for Oldham, West.
  People in the state earnings related pension scheme are for the most part lower-paid. I have long professional and political experience of these matters, and such people are the least likely to make pension provision for themselves through private schemes. The pensions industry, to which my right hon. Friend and I look for a massive upsurge of development when decisions on a personal portable pension are announced, is not equipped or especially keen to attract pensions business from such people.
  If SERPS is wound up, and if the encouragement which will no doubt be given is not taken up by those who are principally concerned, I fear that those people will reach retirement age having made no additional provision, as a result of which they will be forced on to supplementary benefit. Before the Government put the final seal of approval on the SERPS proposals, they should make quite sure that that fact has been taken into account and that

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  supplementary benefit is costed just as carefully as the amount necessary to keep SERPS in existence into the 21st century.
  I appreciate the point about the burden on the future working population, but I wonder whether it has not been projected—perhaps because of an inspired leak from the Treasury — on the basis of the worst possible scenario, with virtually no growth anticipated in the economy. SERPS is not a state charity, which recent press reports may have led some people to believe. What comes out of SERPS is related to what the contributors put in. The economics of SERPS must be immune to population statistics and the projected problems of 20 to 40 years hence.
  If the Government decide to take the action which has been widely suggested, I should require much more information about the costing on which such a decision is based. Am I correct in saying that SERPS is effectively a self-financing scheme? How likely is it that personal pensions will be taken up by those manual workers who for the most part are not attractive to pensions interests? Would it not be grossly unfair to give continuing tax concessions to those in occupational pension schemes—which I welcome—and to continue the index-linking of pensions in the public sector at the same time as removing the only basis upon which the people to whom I have referred can build up their basic old-age pensions? The Government must address their mind carefully to these questions before any decision is taken to introduce a move in the direction which has been suggested.
  The hon. Member for Oldham, West was anxious to tell us — it seems that he knew more about the Government's plans than even the Government did—that child benefit now paid to the woman would in future be paid to the man. I have no idea how accurate that is, but one of the advantages of the existing system is that, regardless of the circumstances, the woman can at least rely on a basic income. A fairly strong case would have to be argued before any change took place.
  As one who has supported disproportionate benefit to one-parent families, I am beginning to wonder whether residual poverty in 1985 exists within families irrespective of whether they are one-parent. To that extent, when the review emerges, I hope to see a reassessment of where we pay the disproportionate benefit. We cannot continue to assume that the deserving cases of 1970 to 1980 will necessarily be the deserving cases as we move into the 1990s.
  I have long taken the view that to pay out paltry sums in death grant and maternity allowance to everyone, irrespective of need, is an insult to the great majority of us who do not require them, and a disservice to those who require them at a considerably higher level. There is a case for abolishing these as specific grants and for merging them into supplementary benefit. If that were possible, I hope that the amounts paid would be considerably higher than at present and that they would go only to those with a considerable need.
  Mr. Frank Field: Is the hon. Gentleman aware that if his proposal were implemented, and these grants were made part of the supplementary benefit scheme, the poor in work would be prevented from claiming?
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  Mr. McCrindle: Such facts must be taken into account. However, the hon. Gentleman will be aware that the supplementary benefit scheme is said to be under consideration in the light of family income supplement. There have been reports that FIS might be merged with supplementary benefit. I am not opposed to that idea, and I say that as a long-term supporter of FIS. If that happened, the problem to which the hon. Gentleman drew my attention would, to say the least, be minimised.
  There has been much difficulty with heating allowances, particularly in the last two or three years when there has been a three-tier system. It is my hope that the system of heating allowances will be scrapped, absorbed yet again into the supplementary benefit system and payable to those old-age pensioners who already qualify for supplementary benefit.
  I am not persuaded that the housing benefits scheme meets the needs of those whom it was intended to assist. Therefore, I am prepared to concede that there is scope for considerable rationalisation. Beyond that I would not wish to go today, but those of us who are interested in these matters will look closely at any proposed changes in housing benefits. For the moment, I concede that this is a far from perfect system and that there may well be an argument for changing its direction.
  I am with the Government over a pretty wide area of the revision of benefits. I am with them in their aim for greater simplification. I am with them as they seek to achieve economy while targeting the benefits to those who need them most. But I hope I shall be forgiven for urging caution over the state earnings related pension scheme, because the Government might succeed merely in transferring the problem to supplementary benefit, and that surely cannot be their aim.
  5.18 pm
  Mr. Donald Stewart: I am glad to follow the hon. Member for Brentwood and Ongar (Mr. McCrindle), not least because of his expertise in pensions and other aspects of the welfare state. The hon. Gentleman made some points with which I disagree, but on the whole he delivered a well-argued and well-informed speech which was different from many of those we hear from the Conservative Benches, which merely say "Amen" to the case advanced by the Government.
  The hon. Member for Brentwood and Ongar said that there was a limit on the extent to which funds could be allocated. We must all have regard to that, but many Conservative Members do not accept any limitation on defence expenditure. We are all aware of the astronomical sums spent on Trident, and the abolition of Trident could to a considerable extent alleviate the problems faced by the Secretary of State for Social Services. The right hon. Gentleman spoke with horror of suggestions that taxation might increase. That took some nerve, bearing in mind that he belongs to a party which, since it came to power, has clamped 15 per cent. on practically every transaction.
  Over 40 years ago the Beveridge report foresaw a time when poverty in the United Kingdom would cease to exist. All the major causes of poverty — old age, unemployment, disablement and sickness—were taken care of by a scheme of national insurance with a safety net of national assistance. Although the foundations of the welfare state were laid shortly afterwards, Beveridge's recommendations were never fully implemented. The rot set in right away with the post-war Labour Government. Beveridge

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  had proposed a single rate for retirement pensions, unemployment and sickness benefits of 27 per cent. of average earnings for a single person and 45 per cent. for a couple. These figures would, Beveridge stated, guarantee the minimum income needed for subsistence. However, when the scheme was introduced in 1948, retirement pensions were set at 18.9 per cent. of average earnings for a single person, and 30.5 per cent. for a couple. Flat rate unemployment benefit and sickness benefit were set at much the same rates—a far cry from those originally proposed by Beveridge.
  Any review of the social security system should begin with the acknowledgement that the existing system has never attained the objectives set by its founder. The hon. Member for Wolverhamption, North-East (Mrs. Short) referred to the Secretary of State's peroration. I am afraid that the decoded message of his speech means farewell to the welfare state.
  In theory, the welfare state has looked after its recipients from the cradle to the grave. A quick look at what has happened to the two benefits at each end of the life cycle reveals the ineffectiveness of the system in doing that. I am referring to the maternity grant and the death grant, to which the hon. Member for Brentwood and Ongar referred. The former has remained at £25 for many years, and should be pitched at a higher level, and the death grant of £30 is a poor joke in the worst possible taste. It has not been increased since 1967. Its declining value has been recognised by successive Governments, but none has sought to increase the level of the grant. It should now be around £350 to cover the average cost of a funeral.
  I take issue with the hon. Member for Brentwood and Ongar, who thought that the maternity grant and the death grant should be abolished. When we talk about abolishing such benefits, we should bear in mind that insurance contributions are based on people receiving such benefit. It would be wrong for the benefits to disappear while the level of national insurance contributions is maintained.
  These are far from being the only benefits that are inadequate or have been under attack in recent years. The effects of inflation and the failures of Governments have resulted in a serious erosion of most of the benefits and has brought about a situation in which, far from the supplementary benefit system being a safety net for a relatively small number of people, has become a necessity for 4.5 million people, of whom three quarters of a million are in Scotland. These are the 1983 figures, and no doubt the position has worsened in the meantime.
  Between 1979 and 1983, more than £2,000 million was cut by the Government from the social security budget. Last year benefits rose between 4.7 and 5.1 per cent., but the real increases received by many people did not even reach the level necessary to keep benefits in line with inflation. This was because of new regulations which came into force; for example, the changes in "available scale margin", which did many pensioners out of £1 a week for their heating allowance.
  Since then we have seen a large increase in dental charges, and a massive increase in prescription charges. The changes in the regulations covering board and lodging payments, which are especially damaging in Scotland, will mean an average loss of £13 a week for thousands of unemployed persons in lodgings. Many of them have no homes to which to return and will end up homeless.
  In Scotland, apart from the housing welfare organisations, which one would expect to be concerned
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  about this, the Churches and the Royal Society for the Prevention of Cruelty to Children have expressed grave disquiet, and no wonder, for Government policies will deliberately put people on to the streets. We have now learnt that eight out of the 21 DHSS resettlement and reestablishment centres are to close within three years, including the only one in Scotland, at Bishopbriggs near Glasgow. The Glasgow resettlement unit caters for homeless men and is a vital lifeline for those who find themselves in that unfortunate position. It is typical of the Government to make cuts which affect the weakest and most vulnerable in our society.
  When one looks at the situation in the wider context, the extent to which benefits have been eroded can be clearly seen. Three decades ago our welfare system was the envy of the world. Today, our levels of spending on both health and social security are far lower than those of most other Western nations. Let us consider unemployment benefit as an example. The United Nations Economic Commission for Europe carried out a study which showed that in 1972 unemployment benefit stood at 75 per cent. of earnings, but by 1982 it had dropped to 47 per cent. Most other European countries, by comparison. have improved on the 1972 position—West Germany from 70 to 75 per cent., France from 85 to 90 per cent., the Netherlands from 85 to 89.5 per cent. and Sweden from 77.3 to 80.2 per cent.
  On health care as well, our record is poor and getting steadily worse. Although the NHS is often in the vanguard of the development of modern medicine, it is near the bottom of the league when it comes to applying and supplying established technology. Taking the treatment of kidney failure, the insertion of cardiac pacemakers or coronary bypass operations as examples, we are well behind other European countries.
  The most important reason for this failure is a simple lack of money for the NHS. In the financial year 1980–81, in Scotland, 6.8 per cent. of GDP was spent on health services. This compares with 8 per cent. in West Germany and France, 8.4 per cent. in Ireland and the Netherlands, and 9.6 per cent. in the United States and Canada. The average in the EEC is 7.8 per cent.
  Mr. Galley: Will the right hon. Gentleman clarify why this argument is of any relevance? If administrative costs for health care in France, for example, are much higher than they are in this country, percentages of GDP are irrelevant to the argument.
  Mr. Stewart: When the Prime Minister talks to the House twice a week on the subject of unemployment, she suggests that it is acceptable in the United Kingdom because, she alleges, other countries in Europe are suffering in the same way. That is not quite true. There are countries with unemployment which is infinitesimal compared to unemployment in the United Kingdom. If it is in order for the Prime Minister to measure us against other European countries, it is in order for me to do so as well.
  The health service in Scotland has failed to come up to expectations in recent years. In its first 25 years the NHS in Scotland saw expenditure increase by between 4 and 5 per cent. a year. Since 1973 the average increase has been 1 per cent. in real terms. This is less than half the amount required to maintain standards. No wonder private health care is booming, and no doubt that is what the Government

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  are trying to encourage. The underlying aim is to turn the NHS into a second-class service, and eventually it will be only for those who cannot afford to pay for the best treatment. So far, the Government have been thwarted and forced to back down.
  Scotland has a bad and shameful record of poor health, deprivation and poverty, and that shame should be borne equally by those in government at Westminster and by those Scots who should know better than to let their countrymen suffer in regional poverty. It is estimated that over 1.5 million Scots are living in poverty or on the margins of poverty. Scotland has so many poor because of the failure of Westminster Governments and because we have not yet secured our own independent Parliament.
  The social security review is likely to lead to a further erosion of benefit. I believe that that is what it is intended to achieve. The outlook for the poor of Scotland and the United Kingdom is bleak while they are subjected to these plans.
  5.29 pm
  Mr. Roy Galley (Halifax): Labour contributions have shown how easy it is to misrepresent and exaggerate by using statistics selectively. It was especially disappointing to hear the hon. Member for Wolverhampton, North-East (Mrs. Short) talk about perinatal mortality rates and give the impression that they are terrible. The hon. Lady knows that there are record low levels of perinatal mortality and that during the past five or six years great strides have been made. Not even the hon. Lady has a magic wand to create perfection and a nil rate of perinatal mortality.
  My right hon. Friend the Secretary of State referred to the effective management of NHS resources. It is true that no ministerial team in the history of the Health Service has done more to give value for money to the patient than the current Secretary of State and his team. However, I urge my right hon. Friend to show greater vigour in some of the policies that he is implementing, especially the competitive tendering exercise within the NHS. It is estimated that this year £9.4 million has been saved from the competitive tendering exercise that has been carried out so far, consisting of £8.2 million from contracts awarded to private companies and £1.2 million from contracts awarded in house. Those savings must be offset against redundancy payments which are associated with that contracting out.
  Although one accepts that the policy is just getting into its stride—the circular setting out that policy was issued in 1983—these savings for the benefit of patients are peanuts. With a total budget for these ancillary services of more than £850 million, much larger savings—at least £100 million a year—should be available for patients. The number of private contracts in the laundry sector has fallen from 11.7 per cent. of total contracts in 1981–82 to 9.2 per cent. of total contracts in 1983–84. We need more oomph behind the policy of competitive tendering.
  There is growing concern that some health authorities may be seeking to frustrate the policy, putting the interests of staff before those of patients. Authorities are accountable to my right hon. Friend the Secretary of State for their stewardship, but I should be happier if there were more external audits to ensure that contracts were awarded fairly.
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  Great progress has been made with the appointment of general managers. It is right, however, to express concern about the pace of change and to define the criteria by which the new general management style is to be judged. Personnel changes involve a mammoth management task for the Health Service, but it is about time NHS management board appointments were completed. There are still two vacancies, and only the chairman comes from outside the DHSS and the NHS.
  Mrs. Renée Short: We told the hon. Gentleman what would happen.
  Mr. Galley: I am trying to be constructive, not destructive like the hon. Lady. The quality of board members is high, but we need to appoint speedily outsiders who will bring fresh ideas to the management of the Health Service.
  Many regional and district general managers are in place and the terms seem to be set to make appointments at unit levels. Considerable costs, according to the terms that have been negotiated, might be involved. It is legitimate to put to my right hon. Friend the Secretary of State our concern that those enhanced payments should be justified, and be seen to be justified, by results. There should be clearly defined productivity indices by which Parliament and Ministers can judge the effectiveness of general management policy, of which I am an enthusiastic supporter.
  Another major challenge faced by the Health Service involves the care of priority groups, especially the elderly, and the availability of community care. No one should underestimate the Health Service's achievement in coping during the past 10 years with a 75 per cent. increase in geriatric outpatient attendances, a 70 per cent. increase in inpatient attendances and a more than 90 per cent. increase in day patient attendances. The pressure on that service is continuing, with annual increases of between 7 and 9 per cent. in each of those categories. At the same time, district nursing personnel have been increased to cope with the 1.5 million elderly people treated by nurses in the community. There has been a vast expansion within the Health Service. The average length of stay for geriatric patients has continued to fall. The average stay is now 57 days compared with 100 days in 1973 and 62 days in 1982. That is a significant and welcome improvement.
  It is better for most patients to remain in their homes as long as possible and to spend as little time in the hospital as possible. Adequate community facilities must be available. Bed turnover cannot be the only criterion of success. There is a genuine concern in a minority of cases about elderly people being sent home too soon. I hope that consultants will be encouraged to maintain a flexible attitude, taking full account of individual circumstances. I hope that there will be ever closer liaison between hospitals and social services to ensure that there is adequate home care, including an extension of hospital care in terms of hospital staff visiting geriatric patients in their homes for some weeks after those patients have been in hospital. My constituency and many other parts of the country provide such care.
  Community services are vital. It is especially noteworthy that since 1979 community facilities for the elderly have expanded rapidly. A record number of home helps—more than 30,000—a record number of day centre places and a record number of meals—more than

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  42 million — have been provided for the elderly. Expenditure on services for the elderly is at a record level. In 1983–84 such expenditure increased by between 4 and 5 per cent. All this has been achieved within the context of increasing real expenditure on personal social services of between 12 and 14 per cent. during the past six years. That is an improvement of about 2 per cent. per annum.
  Mrs. Margaret Beckett: Has the hon. Gentleman noticed that it has been shown recently in several cases that expenditure on social services has been increasing because many Labour councillors have refused to obey the request by the Secretary of State for the Environment to cut those services? If one removes from the analysis the expenditure of those rate-breaking councils, the figures are appalling.
  Mr. Galley: The hon. Lady is quite off beat. That is not true. Rate capping is happening this year for the first time. Every time the subject is raised, the Opposition try to blame every conceivable difficulty in local government on the Government's rate capping proposals. Consistently since 1979 expenditure and provision of care in personal social services have increased. The Opposition seek to mislead the public with a plethora of inaccuracies, misinformation, selected statistics, isolated cases of error and scare tactics. They are Meacherisms. The hon. Member for Oldham, West (Mr. Meacher) used the term "scurrilous misrepresentation". That is what we have seen from the Opposition today. We have had scare tactics and false information from them.
  Mr. Richard Tracey: There are not so many of them—only four.
  Mr. Galley: There are not so many of them.
  As more resources and better equipment are being provided for the NHS, as there are considerably more staff now than before and as more patients are being treated, all the evidence is that the NHS is sound. Over the past five or six years we have increased expenditure by nearly 20 per cent. in real terms and there has been better management, which means that an effective response is being made to the growing challenge represented by more people asking for services. On any objective criterion there has been no dismantling of the welfare state. The figures for the number of people being treated and the expenditure incurred show that.
  Rising expenditure and the provision of more care facilities in the personal social services mean that those services are sound. Despite the Opposition's attempts to mislead us into believing that we are spending less on social security, it can be shown that, if one leaves aside the effect of increased unemployment, the amount spent on social security is still rising. The Labour party accuses us of a lack of compassion, but over the past five years about 200,000 more people have received attendance allowance, about 200,000 more have received invalidity benefit and about 200,000 more people have received mobility allowance. That is not a dismantling of the welfare state.
  Any fool can run a national sickness service which judges its success by the number of sick people in its beds. Any fool can damn a service by quoting isolated cases and figures. Any fool can demand more if he does not know how he is to pay for it. The hon. Member for Oldham, West constantly demands more. We have spent more and
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  more on the Health Service, on social services and on social security and we have spent it more effectively, yet the hon.Gentleman still demands more and more. Now we are beginning to see the price that we will be asked to pay. The demand formore comes with a price tag.
  It is well-known Opposition policy to abandon our independent nuclear deterrent, and the Trident programme. Every Opposition spokesman claims that the savings made by abandoning Trident will fund their extravagant programmes. The hon. Member for Oldham, West now claims that the savings from Trident will go towards his expanded Health Service programme. He is, of course, putting aside the Healey speech of 1977 which argued — and there are many Labour party supporters who secretly hold this view — that unless we defend ourselves properly, there will be no hospitals, schools, health centres or doctors, but only a heap of cinders.
  The hon. Member for Oldham, West wishes to scrap mortgage tax relief in order to fund his profligate proposals. The Labour leadership may disown him, but as long as the hon. Gentleman is on the Labour Front Bench no home owner can rest easy. It must not escape the attention of hon. Members that the hon. Gentleman wishes to put a tax on sugar in order to fund more NHS expenditure. That would mean the loss of a considerable number of jobs in my constituency and elsewhere. Now we know that he will have to increase income tax, too, in order to fund his extravagant plans.
  The fact is that the welfare state is being enhanced. But the facts do not seem to play much of a part in the Opposition's thinking. It would seem that the Labour party and the alliance are off their corporate rockers.
  5.43 pm
  Mr. Charles Kennedy (Ross, Cromarty and Skye): The hon. Member for Halifax (Mr. Galley) will perhaps forgive me—and I think that the rest of the House will be grateful to me — if I do not pursue his line of argument. At least, I think that there was a discernible line of argument, at any rate at the end of his speech.
  Mr. Galley: Will the hon. Gentleman give way?
  Mr. Kennedy: No. The discernible thread made itself known when the hon. Gentleman seemed to say that the plan of the hon. Member for Oldham, West (Mr. Meacher) to tax sugar would somehow reduce Halifax to cinders. However, I shall concentrate on some of the areas covered in the constructive speech of the hon. Member for Brentwood and Ongar (Mr. McCrindle) and on the social security review in particular.
  The Secretary of State's speech will have done little to quell the anxiety doubtless building up about the reviews and the way in which they have been structured and conducted. For example, last summer I was invited to give oral evidence, as I believe the hon. Member for Birkenhead (Mr. Field) was, to one of the reviews on young people.
  Mr. Frank Field: I was invited, but the meeting was not held.
  Mr. Kennedy: That may illustrate the very problem that I have in mind. The committee to which I gave evidence was chaired by the then Minister for Social Security, who has now moved to the Northern Ireland Office. Such a far-ranging and profound review—apparently the most fundamental for 40 years—is not

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  well served by changing the personnel halfway through. However much we may disagree with the political views of the personnel involved, I should have thought that consistency was to be welcomed. I mean no disrespect to the present Minister for Social Security. Thus, the hon. Member for Birkenhead made a good point.
  Moreover, the revenue neutral basis on which the reviews must be conducted also gives cause for concern. No proper examination is being made of the hidden welfare state benefits which fall under various tax concessions. That is neither even-handed nor consistent. Indeed, it is particularly curious, given that in the Budget the Chancellor of the Exchequer promised us a Green Paper on the possible integration of tax and benefits. Apparently the possibility has already been precluded of any searching examination being made of the status of pension funds and of other allowances which at present give the better off substantial benefits. In any proper review, all of those things should be considered.
  In conducting these reviews, the Government have made much of simplification. We would all welcome such simplification, and the Secretary of State is right to acknowledge the consensus that exists on that issue. We would particularly welcome simplification if it led to a higher level of take up for some of the very necessary benefits, such as family income supplement. I think that the last set of figures that I saw showed that the take up of FIS was barely 50 per cent. However, I appreciate that the figures involved are sometimes small for the amounts concerned. We would welcome greater simplification if it were aimed at pumping more resources towards those who need them.
  The Secretary of State's speech was significant in revealing that the reviews were clearly a device by which the DHSS could buy some time from the Treasury. The latter has clearly been insisting on major cuts in the social security system. It is bogus to argue, as Ministers do, about the proportion of gross national product currently occupied by social security expenditure, when one reason for the increase in expenditure has been the rise in poverty due to mass unemployment. That is the result of the Government's economic policies. Those on benefits are now to suffer a further cruel blow, because the Government say that as far as possible we must reduce that very dependence which the Government have engendered by their policies.
  The short-term relief, or stay of execution, which the Secretary of State was apparently able to buy from the Chancellor of the Exchequer by initiating this series of wide-ranging reviews will turn into long-term losses for the welfare state. There has clearly been a lack of consultation and co-operation throughout between the Treasury and the DHSS. That was shown, for example, in the deliberations of what I might call the Meacher committee into the question of the poverty and unemployment traps.
  The Inland Revenue, when giving evidence, said that the type of computerisation which could be introduced to integrate tax and benefits, which we on this Bench wish to see, would have to be of a certain type when in place in a few years' time, or it would not be possible to alter it, radically or in the direction in which a future Government might wish to alter it. The evidence that we are getting shows that the Government are not pursuing
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  that line. That is a clear example of that lack of consultation and co-operation between the two Departments involved, and that is greatly to be regretted.
  The state earnings related pension scheme is referred to in the official Opposition motion. I said that there was little in the remarks of the Secretary of State to quell the anxieties. There is no doubt that a legitimate debate could be undertaken into the whole question of SERPS. I listened with interest this morning to some remarks made on the radio by Professor David Donnison, who used to chair the Supplementary Benefits Commission. It cannot be fair—if this is what the Government are intending—to move towards a system by which, for example, the better off, such as retired civil servants, will be guaranteed 50 per cent. pensions, whereas the worse off—those who are poorer because they are at the lower end of the earnings scale even when employed prior to retirement—will remain in a state of poverty compared with others through the abolition of SERPS.
  Not only did Professor Donnison make that point, but he quoted the Social Security Advisory Committee in his support, and the Minister may wish to comment on the remarks of that committee on this score. Does he think that SERPS will run into severe problems of funding in future, although that problem need not arise for another half century? His view on that must have an impact on the political decision which will have to be made.
  Other points can be made in the opposite direction. In other words, these issues go across the political spectrum and are not common to one political ideology. For example, a case could be made for saying that, in its operation, SERPS has regressive features. Arguments could be made pointing to the need—which we on this Bench would support — for further restructuring of national insurance contributions.
  What must be a source of anxiety—I I am thinking particularly of last week's Report stage of the Social Security Bill — is that the private sector, in terms of portable pensions, is not in a position adequately to take the slack which would inevitably result from a straightforward abolition of SERPS without its place being taken by what would need to constitute almost a bridging mechanism between the more private and portable pension society towards which the Government wish to aim and what we have at present, which is a reliance by about 10 million people at the poorer end of the income scale on some form of state earnings-related pension.
  The Secretary of State acknowledged, when responding in his opening remarks to an intervention from me, the importance of the all-party consensus which surrounded SERPS. I appreciate the caveat which the Secretary of State gave about final decisions not yet having been taken. However, if there is to be change, whatever the direction of that change it is crucial that the Government, so far as humanly and politically possible, maintain that all-party consensus.
  In any change affecting pensions in the longer term, the Government should take with them not just the House but the country and, in particular, those who will be ever more dependent upon pensions provided by the state. It is difficult to form a conclusion this afternoon, given the fact that the Secretary of State went to some lengths to say that no conclusion had been reached within the Department to finalise the issue. My hon. Friends and I must therefore reserve judgment on that subject.

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  We are told that the hon. Member for Oldham, West has been much maligned and misrepresented. Despite the fierceness of the exchanges earlier across the Dispatch Box, it must be worrying for the hon. Gentleman to find on this occasion, despite the ferocity of his attack on the Government—I say this from press reports, and I base my analysis on the writings of reputable journalists, and not the scurrilous ones—that he probably got a warmer reception from the Secretary of State today than he got from his leader and fellow colleagues in the shadow Cabinet when he floated his ideas last week.
  Mr. Meacher: The hon. Gentleman is wrong.
  Mr. Kennedy: It is all very well for the hon. Gentleman to say that I am wrong—
  Mr. Meacher: The hon. Gentleman should not believe everything that he reads in the newspapers.
  Mr. Kennedy: If the hon. Gentleman is arguing that we should not believe what we read, he is giving the Secretary of State a handy weapon for defending the Government's position over the welfare state.
  Mr. Meacher: The hon. Gentleman must be more selective.
  Mr. Kennedy: That is an interesting analysis indeed of this debate.
  I have more than a suspicion that the hon. Member for Oldham, West was, as it were, cut loose by some of his senior colleagues to wallow at the Dispatch Box in the uncosted nightmare of his welfare state. I suspect that we shall have severe disagreements with the Government when they come forward with their review of social security. In the meantime, to try to pre-empt what is being done by the Government and come forward with wild and uncosted alternatives is pointless.
  The hon. Member for Oldham, West said that his suggestions had been carefully costed. That was a remarkable statement for him to make, given that the leader of his party spoke in Bristol last week about care in the community, but resolutely refused to make any spending commitments. That is at the heart of what the official Opposition are up to just now, but they are playing into the hands of the Government. In the absence of constructive suggestions, the Government will find it easier to sustain whatever policy they finally decide on for fundamentally restructuring the welfare state. I fear—I hope that I shall be proved wrong—that the Government will damage irreparably the principles and practices of the welfare state. Therefore, the way in which some Labour Members are behaving over this entire matter is at best politically naive and at worst politically cynical.
  Grave concern must be expressed over the way in which the reviews have been established, the manner in which they have been conducted and the apparent loggerhead situation that exists between the DHSS and Treasury Ministers. I have grave doubt whether the result of all that can be the sincere, far-reaching and radical re-examination which the Secretary of State wants to achieve.
  A radical review is necessary if the system is to be made more simple, if more people are to be helped and if we are to remove some of the complexities of the current nightmare of means-tested benefits. Those aims must be achieved if we are to alleviate poverty in Britain. However, I cannot see that being the outcome, and my
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  hon. Friends and I will vote against the Government tonight in view of their record thus far and their approach to the welfare state.
  We need to distance ourselves from the reaction and criticism of the Labour party. I do not believe that a mediocre, Maginot line of defence necessarily provides the best means of defence for the poor people of this country. Therefore, my right hon. and hon. Friends and I will continue to advance these arguments throughout the course of the wide-ranging debate which will follow the Government's announcements on SERFS, the welfare state and social security generally.
  6 pm
  Sir Brandon Rhys Williams: Although this is not a very well attended debate, it is an extremely important one, because it provides the last opportunity for the House to deal with the issues relating to the fundamental reform of the welfare state that are to be discussed in the forthcoming Green Paper. It is therefore particularly appropriate to deal with general principles.
  If I may comment in particular on the place of the welfare state in the functioning of the economy, we have to deal with the redistribution of income in such a way as not to damage the creation of wealth overall. As a society, we need to make the best of our economic opportunities. We must not devise a scheme for the redistribution of income which inhibits wealth creation either by taking too much from earnings, thereby breaking the back of the system, or by distributing too much and undermining the natural personal efforts of the individual to work and his will to save.
  It is a fallacy to suggest that in some way the redistribution of income costs the Exchequer money. If redistribution has genuinely taken place, it does not cost the Treasury anything: the Treasury, or the national insurance scheme, has merely acted as an agent. Those who receive the benefits spend the money. It is the side effects of redistributing income which can damage the economy. Many hon. Members believe that the way in which we are redistributing income now is having a damaging effect upon the will to work and the will to save. If we weaken the functioning of the economy as a whole, we shall, in time, undermine the social services and lower the general standards of living of the population, because we shall all go down together and improverish the whole community.
  I believe that there is a maximum that can be allocated to the functions which can be supported through the redistribution of income. Income tax and national insurance contributions combined should not exceed 40 per cent. of an individual's income. However, because of the expectations of a modern European society it would be difficult to operate an acceptable system if the combined rate of income tax and national insurance contributions were very much less than 40 per cent. If we try to force down the figure, we shall encounter disappointment and resentment.
  On top of the 40 per cent. that it is reasonable to expect the individual to contribute at the margin, I believe that an employer's contribution of 10 per cent. is appropriate as deferred pay and as a means of building up savings to provide for workers in their retirement. If we are to make the best use of the resources available for redistribution — I am referring to resources in cash, not to services supplied in kind—the redistribution must be planned on

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  the basis of a thorough and factual analysis of household needs, or, as was mentioned by my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle), on the basis of a re-analysis. We are dealing with out-of-date ideas.
  Many of us are aware of the fact that there is real poverty, not only in large families but in many smaller families. We need to do more for families and to examine whether too much help is being given in other areas where opportunities are being exploited which the system ought to abolish. We do not know what it costs to raise children in families of different sizes. We ought to be provided with that data, and I hope that the Government will make a special effort to carry out the necessary research. The family expenditure survey is not sufficient.
  We also need to analyse the real costs of pensioners living at home, or in institutions, or on their own. We want old people to be independent, but I do not believe that a sufficiently serious comparison has been made of the household costs of pensioners or of the cost to their families if they are unable to be independent and live on their own.
  The system for the redistribution of income should also encourage the full take-up of entitlement. We cannot say that a satisfactory system exists if half of those who are entitled to benefit decline to draw their entitlement because of resentment, lack of comprehension, or for reasons of pride or fear of disclosure. A system must be introduced which encourages the full take-up of entitlement. It is worth reflecting that family allowancesand now child benefit have a high rate of take-up, whereas selective benefits invariably lag far behind. This provides a lesson which must not be forgotten. As I have often said, the redistribution of income must be comprehensible, easily administered and not humiliating to the claimant; and it must not discourage people from saving.
  I believe that entitlement should be based upon citizenship or it should be derived from the record of contributions. We should aim to reduce to the barest minimum the number of people who are obliged to claim on grounds of need. I should like therefore to spend a little time upon the contributory principle. Many people believe that it is important to rely upon this principle. The reason why the dreadful old national insurance system has lasted so long is that it is felt that there is value in the contributory principle. Although national insurance has become obsolete and incomprehensible, people nevertheless want to hold on to the contributory principle. Therefore, national insurance has not been allowed to die. However, we know that it is a sham. A sham is not a good thing in public life. We ought, therefore, to get rid of national insurance and put something else in its place.
  Let us examine the contributory principle in so far as it affects the current account and separate it from the contributory principle in so far as it affects the capital account. Contributions which enable us to run a system in which total destitution does not exist are one thing, whereas contributions which allow personal nest eggs or retirement benefits to be built up are quite different. The current account and the capital account ought to be kept strictly separate when we are dealing with the contributory principle.
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  As for the revenue account, it is some years since we accepted that the national insurance fund cannot cope on the basis of flat rate contributions. We switched to earnings related contributions for flat rate benefits. I believe that that principle is here to stay, so we must make the most of it. We should recognise that we have blundered into a system which will remain in existence. We should, therefore, ensure that it is comprehensible and seen to be right.
  In so far as we are obliged to pay for flat rate benefits by earnings related taxation, we have to recognise that we are relying upon a deeper concept of the obligations and entitlements of citizens than can be founded on actuarial principles. Earnings related contributions and flat rate benefits have no direct, relationship with each other; yet somehow we feel that this is the right foundation for the redistribution of income. In effect, income tax is not just one more source of revenue for general purposes for the Exchequer; it has become a personal contribution by which each citizen clears his debt to a generous civilised society, which gives him a basic income guarantee, and establishes his claim to benefit from his membership in the same way as every other citizen.
  I believe that we should not abolish national insurance contributions, but, rather, abolish the income tax and call it a contribution. I believe that that should be the foundation of a new self-balancing and self-contained national insurance fund which would draw its revenue from earnings related contributions and pay flat rate benefits in exchange.
  On the capital account, the contributory principle should be funded on strictly actuarial and comprehensible principles. This is a topical subject because it has been so confidently predicted that the Government will abolish the state earnings related pension scheme. I have already said in the House that that scheme should go. Retirement benefits and personal savings plans should be founded on arithmetical calculations and the state earnings related pension scheme is not. There should be no built-in transfer of resources such as is inherent in final salary schemes which all too often have the effect of transferring money from the low to the better paid, as I have said before.
  In the state earnings related pension scheme, which is funded not on lifetime contributions but on a selection of the best 20 years we are adrift from arithmetic and have, unfortunately, also committed ourselves to paying pensions which our children will undoubtedly be unwilling to fund. It is only a matter of time before the House has to abandon the state earnings related pension scheme in its present form because the resources will not be available to meet the commitment. If we do not recognise that this year in five or 10 years' time, we shall recognise it in the end. The longer we leave the reform of the system, the more diffcult it will be in the end to extricate ourselves from promises that ought not to have been made. Therefore the system should be abolished.
  Mrs. Beckett: We have, on occasions, debated this matter before with the hon. Gentleman, but I want to draw to his attention the correspondence between his words on the cost and direction of the state earnings related pension scheme and those uttered in 1954 by the Phillips committee, looking ahead 30 years. It said that the retirement age for men should be raised to 68 and for women to 63 and that there should be no increase in the real value of pensions because the country could not afford

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  it. If that committee had been listened to then, as the hon. Gentleman is hoping to be listened to now, the pension today would be £15.
  Sir Brandon Rhys Williams: I recognise that in making forecasts about population, unemployment, the growth of the national product and other economic circumstances over long spans of time, it is easy to be wrong. I should love to think that I am wrong in predicting that the growth of the British economy over the next 40 or 80 years will be such that we shall not be able to handle the commitments that we are making to ourselves in this particular pension scheme. But it is wrong to make forecasts based on nothing except hope. If we build our pension expectations on hope rather than the reality of the economy, there is a likelihood that we shall be disappointed. A state scheme should not be founded on estimates which could all too easily be proved to be wrong.
  If we abolish the scheme, we must look at the gaps that might be left when it has gone. The Government should encourage savings by all legitimate means. Therefore, I was extremely relieved when the Chancellor committed himself in the Budget to the principle of "save now, pay tax later." All occupational pension schemes in Britain have been built up on the expectation of that tax background and it ought not to be changed for individual personal pension entitlements. Moreover, it should be made available not just to occupational pension funds on an approved list but to every citizen for all classes of saving, including personal pension schemes, nest egg schemes, life insurance and house purchase finance.
  I know that what I am saying is radical, but I believe the options should be offered as an alternative which people embarking on long-term financial undertakings such as house purchase or life insurance should be able to consider. They might not want to use that basis, but I can see no good reason why the principle of "save now, pay tax later" should be confined to approved occupational pension schemes. It should be made available to everyone, subject to some safeguards. It should be used as the incentive to encourage the build up of personal capital along the lines suggested by my right hon. Friend the Prime Minister when she makes it a target that every man should be a capitalist. I hasten to say, because I know that the hon. Member for Derby, South (Mrs. Beckett) would not like it if I did not, that I want every woman to be a capitalist, too.
  Mr. McCrindle: I am following my hon. Friend's arguments closely and I agree that there should be maximum encouragement through tax concessions to persuade people to prepare for their retirement, but if we follow through my hon. Friend's suggestion—that the state earnings related pension scheme should be wound up for the reasons that he has stated—does he agree that there would then be maximum encouragement but no compulsion in attracting the people at present covered by the state earnings related pension scheme to a private pension scheme? Is my hon. Friend about to tell us how he would take care of the situation to which I made reference in my speech of the substantial number of people who, no matter what encouragement they are given, decide for one reason or another not to prepare for their retirement, thereby building up a responsibility on the part of society under our present supplementary benefit system?
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  Sir Brandon Rhys Williams: I am grateful to my hon. Friend for his intervention, because it enables me to tread safely on the ground that I have prepared for myself. We should encourage people to build up nest eggs for family or business needs which are not necessarily available for use only in retirement. How then do we ensure that people's retirement is properly catered for and that they do not fall into the temptation of using their nest egg for some other purpose before they reach the time when they desperately need it, when they are no longer able to work? We should not allow the nest egg to be used before retirement age if it is derived from the employer's contributions. The employer's contributions should become a money-purchase fund, put into trust for retirement as a form of deferred pay. I have already suggested in the House that the employer's contribution should be set at 10 per cent. on top of all wages, so that the entire employed population should receive 10 per cent. on top of their wages from their employers in the form of deferred pay. It is really the national insurance contribution which the employer is already making, but instead of letting it lapse by going straight into the fund and being lost it should be retained as an individual entitlement built up on proper money-purchase principles and indexed in an appropriate way. I hope that I shalt have time to deal with that. The employer's contribution should usually be available only for retirement and the trustees of the schemes should release the money earlier only in exceptional circumstances, such as invalidity and so on.
  The private occupational schemes must be run on lines which conform with public opinion. If we are to abandon the idea of a state minimum scheme, the private schemes must operate on a unisex basis and give fair treatment to the early leaver, including his existing accrued entitlements. I do not want to go over suggestions that I have made before, except to say that by differential tax treatment of the income from the fund in the occupational pension trust so as to favour that part of the fund which is allocated to individuals rather than the unallocated account, we can put the occupational pension schemes in a position, without any element of retrospection, where they would wish to give his full accrued entitlements ro the early leaver.
  There must also be adequate recognition of the claims of mothers—or, indeed, of parents of either sex—-who withdraw from work to be remunerated in cash in order to raise their family. I recognise that the 20-year rule in the existing state earnings related pension scheme was introduced to help women who did not have a full record of contributions; but it was the wrong way to approach it. It might be worth exploring the idea that the parent who is able to draw child benefit should also be entitled to establish a claim to pension rights on that account—in other words, a motherhood pension credit.
  The House has argued for many years the difference between indexation related to the retail prices index and the alternative based on wage rates. At one time we gave pensioners the option of whichever was the best system for them. Neither was right. In future the pensioner's entitlement must be based on the real development of the economy — the actual capital market. I should like savings which are allocated to individuals to fructify in real terms in line with the general development of the wealth of the community. In other words, pensions should be funded on a spread of real assets. In that way, if there is growth in the economy, the pensioners will participate

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  in it. If we go through bad times economically, the pensioners will be on the same footing as the rest of society.
  Many employers cannot afford to run their own pension schemes. If we abolish the present state scheme, there will also still be a need to cope with casual and part-time workers and others who need to belong to an earnings related scheme just like everyone else, even if they have low incomes, but which can cater for their particular working habits. There should therefore be a Post Office scheme which gives indexation by reference to the yield, from time to time, of Government indexed stocks. Employers who take on casual workers even for short periods at low wages should still be obliged to make a 10 per cent. contribution to a Post Office fund on behalf of each worker. The money can then build up on the basis that it has been invested, perhaps notionally, in Government indexed stocks. Private schemes should guarantee at least to do the same.
  I want to deal briefly with householders' costs, household subsidies, mortgage interest relief, which has been made topical by the hon. Member for Oldham, West (Mr. Meacher), and the reform of local authority finance. Local authority finance is all part of the scene and should not be regarded as a separate matter. In seeking for a reform of the rates, we have considered local income taxes, local VAT, a poll tax or lightening the burdens on local authorities by taking them back on to the central Government budget. None of those has proved to be satisfactory. We have talked about rates for years without coming to any conclusion. Rates are an intolerable burden in my constituency, and something must be done as a matter of urgency.
  Mortgage interest relief is a random benefit. I am glad that it was the hon. Member for Oldham, West who put his foot on the mine and exploded a volume of abuse and public reaction. If it had not been him, it might have been me who made the recommendation, because the way in which we help householders is in some respects wasteful and in others insufficiently helpful.
  There is certainly room for reform of the system for the support for house purchase.
  Mr. Winnick rose—
  Sir Brandon Rhys Williams: I have spoken for so long that, unless the hon. Gentleman is determined to press me, I should like to finish my remarks.
  Mr. Winnick: The hon. Gentleman has raised a point that I should like him to clarify.
  Sir Brandon Rhys Williams: When I have finished, the hon. Gentleman may think that I have dealt with it.
  Housing subsidies have a low take-up, and that is most unsatisfactory. Supplementary benefit rent allowances are also unsatisfactory and uneven. I am sure that in some parts of the country they tend to increase rents for low-grade accommodation. Rate support grant is the most uneven and unpredictable of all the forms of subsidy that we pay to householders. Let us be under no illusion: rate support grant is a form of household benefit which reaches householders by indirect and incomprehensible means. The key to the reform of local authority finance is to put householders in a better position to meet their essential outgoings.
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  We look forward to the Green Paper proposals. I am confident that my right hon. Friend will approach them in a generous, sensible and responsible spirit.
  Mr. Winnick rose—
  Sir Brandon Rhys Williams: As I shall not be detaining the House for much longer, perhaps the hon. Gentleman and I can meet afterwards to discuss these points.
  I hope that my right hon. Friend will take account of the effects of taxation as well as the benefit system. My only fear is that his proposals will not be sufficiently radical, comprehensible and firmly based on moral principles. If he listens to what has been said on both sides of the House today, he will be helped in the preparation of his Green Paper, which will be widely read, and with great interest.
  6.23 pm
  Mr. Frank Field: It is usually a pleasure to follow the hon. Member for Kensington (Sir B. Rhys Williams). I am sure that he will understand if I do not pick up all the themes that he illustrated. I disagree with one of the main thrusts of his argument—what should be done about the state earnings related pension scheme. I think it is the first time that there has been such a disagreement when I have followed him.
  What linked the hon. Gentleman's contributions to those of both Front Benches was that he applied a broad brush to a large canvas. I wish to paint a much smaller picture, but first let me make a couple of introductory remarks. The proposals that my hon. Friend the Member for Oldham, West (Mr. Meacher) outlined to the press recently have come in for what some people have taken as an attack. I should like to use the opportunity to put my views on record. If there is any criticism of his proposals, it must be that they are not sufficiently radical and not that they are too radical. Conservative Members will be misreading the feeling on the Opposition Benches if they do not grasp the fact that Labour Members wish a future Labour Government to have an attack on poverty as their number one priority. If we are serious about that, and about delivering money to those at the bottom of our society, the programme will be costly. We must study those costs carefully and set out how they will be met.
  My hon. Friend's proposals were modest. He supported them by limiting the amount of relief going to those buying their own homes. I am one of those Members who wish to see an extension of home ownership on a scale which is not perhaps supported by all Opposition Members. But it is crucial that we consider not only mortgage interest tax relief but the other 100 or so major tax benefits which cramp any Government's style when they try to achieve their objectives.
  One of the main reasons why the Government failed this year, as they did last year and the year before, to deliver on their central election pledge—to cut taxation—is that before the Chancellor rises to deliver his Budget statement he has already forfeited the right to levy taxation on over 50 per cent. of personal income. That income has been exempted by one or other of what should be called "tax benefits."
  If there is to be scope for the proposals that I should like to see brought into operation—taking people out of tax and cutting the rates of tax, as well as building a welfare

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  state which acts as a floor upon which people can build by their own efforts rather than a ceiling which traps them into poverty—the crucial issue of tax benefits must be faced squarely.
  If the Labour party is to become an alternative, radical Government, it must consider applying a policy of cash ceilings on these tax benefits. Only this policy will give the Government room to manoeuvre. It would enable them to raise some benefits, take some people out of tax and cut tax rates. I agree that that would be an approach different from that of previous Labour Governments. It would be a libertarian approach. It would be one which wishes to see people have more money in their wage packets and for them to choose what they do with it, rather than today's paternalistic state whose people receive relief and support only if they spend their taxed income in a way in which the Government approve and support by way of tax benefits.
  Mr. Winnick: My hon. Friend and I may agree or disagree, but I believe that the bulk of tax relief on mortgage interest is justified. Every help should be given to people who are buying their own homes. Does my hon. Friend agree that it is interesting to note that time and again, as they did tonight, Tory Members speak against subsidising the better off, but they are not critical of giving tax relief, without any qualification, to those earning £30,000 or more a year? Is there not an inconsistency and deep hypocrisy in that attitude?
  Mr. Field: There is inconsistency and hypocrisy. One of the good things in the debate has been the efforts—if I can use the phrase in the House—which has been made to rubbish the proposals of my hon. Friend the Member for Oldham, West. I hope that the exercise continues, because I want my constituents to hear what may be on offer to them if we are successful in achieving the election of a future Labour Government. The electoral mine of which the hon. Member for Kensington spoke might be one upon which the Government step rather than my hon. Friend. One of our problems in the past has been to convince voters that we have a programme which will work and will deliver resources and cash to those at the bottom of the scale.
  Again, with reference to my hon. Friend's intervention, I, too, am not in favour of abolishing mortgage interest relief. My proposal is that the cash ceilings, which we have seen applied so ruthlessly to the traditional welfare state, should be applied to those who, in the welfare state, gain tax benefits.
  The Library very kindly did some work for me on four of the major non-personal tax benefits and looked at the extra revenue we would have gained if a cash ceiling to those benefits had been applied at the beginning of the previous Labour Government. Had it been applied, we would have had an additional £17.5 billion to distribute in ways that this Chamber may wish to debate.
  On the one hand, we lament the failure of this House to control Government expenditure; yet, on the other hand, many of us seem unwilling to come to grips with controlling the Government's tax expenditure. If we are serious, we need to begin a debate about those tax benefits which, as I said earlier, exempt over 50 per cent. of all personal income from tax.
  At the beginning of his contribution, the Secretary of State was rightly asked whether he intended to stand by the
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  very clear commitment that he gave to the House not to disrupt current pensions proposals. We learnt from the Secretary of State's reply that there is a new definition of a political commitment. One gives a political commitment and holds to it until one has established reviews. Should those reviews produce proposals — which one has engineered anyway—to abolish a commitment, one has to allow that commitment to be sidestepped.
  I wish to concentrate on my concern over what is to happen to the state earnings related pension scheme. In doing so, I disagree with the hon. Member for Kensington but agree with the hon. Member for Brentwood and Ongar (Mr. McCrindle), because one of the aims of the reviews is supposed to be to give us a more simplified welfare state. There appears to be a possibility that the Government, to save some revenue at some time in the next century, may be prepared to cave in to pressure to abolish the state earnings related pension scheme.. The advantages of the scheme are important, and I shall remind the House of them.
  If the scheme comes to fruition it will be the first scheme to be put on the statute book since Beveridge which offers the hope of breaking the link between poverty and old age. It may not do it as successfully as was hoped by some of those who promoted the scheme in 1975, but it will certainly do it on a scale the like of which has not been seen before. If the Government's aim is to simplify the welfare state and to cut down the numbers claiming means-tested assistance, whether by means of supplementary benefit or, if they have been floated off it, housing benefit, it will be a major error of judgment to overturn the all-party agreement on pensions proposals for the sake of a very small gain in terms of public expenditure in the distant future.
  The second advantage of the scheme—I was so surprised that the hon. Member for Brentwood and Ongar did not make the point that I now wonder whether I fully understand the scheme — is that it sets a minimum standard for the private schemes. In other words, an employer can contract out his employees into private arrangements only if he is offering proposals which are better and more generous than the state minimum scheme. Therefore, one is losing, without any extra civil servants or any bureaucracy whatever, that regulation of the private schemes which has been so beneficial up to now. It has set a minimum floor, and the private schemes, to attract customers, have had to offer something better. I always thought that Conservatives, as a matter of philosophy, were willing to undertake that sort of competition with the state scheme. Now that perhaps competition appears to be tough the only way to compete is to abolish the state scheme.
  The third big advantage of the state scheme is that it offers the best deal to the lowest paid. That aspect was touched on in a number of contributions by Conservative Members. It offers a deal to the low-paid that they are unlikely to get in the private sector, for the very simple reason that much of the private sector is not interested in those on low earnings.
  Because the scheme is so advantageous to the low-paid, and because most women are low paid, it offers the best prospects that women have ever had from any pension scheme, whether private or public. Therefore, if the Government abolish the scheme, they will not simply be

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  taking away the potential pension from the lowest paid; they will be seen to be making a major attack on the future living standards of women.
  The fourth reason why the scheme should be supported is the one that I touched on at the beginning—that it allows us to simplify the welfare state. It guarantees people basic pensions which will take them above the eligibility level for means-tested assistance. How much simpler it would be to float people off poverty by this scheme than by the proposals hinted at by the Government. If the Government's proposals go through, we shall see the first moves towards dismantling the welfare state.
  Some of my hon. Friends, in their eagerness to defend the interests of their constituents and to promote our cause, have sometimes talked about the Government dismantling the social security system. I do not honestly believe that one can make that charge stick at present. There have been cuts, and I shall deal with them in a moment. Those individual cuts have been catastrophic for individual claimants but Opposition Members cannot claim with any seriousness that we have yet seen the dismantling of our social security welfare state. But the leaks of the past 10 days or so concern proposals which, if put into practice, would make that charge stick.
  It is because I want to warn the Government about the moves which may be made, but also to support them when they have managed to resist Treasury attacks, that I say how pleased I am to read that it appears that the Government have been successful in defending the child benefit scheme. If that is correct, they are to be congratulated. I suppose that it is a sign of the times in which we live that Opposition Members can stand up and say that the Government's defence of a basic measure, such as child benefit, calls for congratulations. Be that as it may, it is important to list the advantages. It is the most effective benefit that we have for tackling family poverty. It is the only benefit that we have for maintaining tax equity between those with children and those without children. It is the most effective way of giving people an incentive to work. It is, as we know—thanks largely to the campaign led by the hon. Member for Kensington—a benefit which is paid to women, and it is a crucial benefit to them.
  I should like to underline one of the points made by my hon. Friend the Member for Oldham, West concerning the charge that we are beginning to stick on the Government. I want to play my part in getting that charge to stick, because I believe it will have an effect on the result of the next general election.
  In his opening remarks, my hon. Friend looked, on the one hand, at the tax cuts that have benefited those at the top end of the incomes scale and, on the other hand, at the cuts that have been made in social security so far in this Parliament and in previous Parliaments. As the Minister of State knows, the major cuts have been in breaking the link between earnings and pensions and what are called the long-term benefits.
  I ask the House to recall the 1979 Budget. The surtax payers, as they used to be called, gained £1.6 billion in that Budget. They constituted less than 6 per cent. of all taxpayers. They will go on gaining those tax concessions until we elect a Government who will reverse that 1979 Budget. We are now in the sixth year of tax cuts to the rich, and that gives a total of almost £8 billion. The Library
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  note, prepared some time ago for my hon. Friend the Member for Oldham, West, refers to the cuts in social security since 1979, which equal a little over £8 billion. Therefore, one sees the direction of redistribution under the Government. There have been cuts in the benefits to which many of our constituents were entitled under the previous Labour Government to finance the tax cuts to the richest in our society.
  The Minister of State may not like it when the main Opposition spokesman, in opening a debate, never fails to mention those tax cuts to the rich. I reassure him that many of us in the Opposition are doing our best to make the charge stick that there have been cuts in benefit and that those cuts have almost exclusively financed the tax cuts to the very rich.
  Mr. Butterfill: Will the hon. Gentleman explain how he can talk about cuts when in fact there has been an increase of £8.5 billion in expenditure on social security under this Government, which is a 28 per cent. real increase?
  Mr. Field: I am happy to do so. The hon. Gentleman should ask the Library for a copy of the note that it prepared for my hon. Friend the Member for Oldham, West, published on 6 February this year. In that note, the cuts are set out in detail. It is as well to remember that there are now many more old people claiming old-age pensions, and the Government have done their part to increase the number of unemployed. This is why it is not impossible for the total social security budget to increase. Yet at the same time, and in the way I explained earlier, the Government have made cuts in provisions such as the earnings-related supplement. It is a paradox that the hon. Member for Halifax (Mr. Galley) seemed unable to explain.
  If we look at the figures, we see that the amount spent on health has increased under the Government, yet when I and other Opposition Members and, I guess, many Conservative Members go to our constituencies and see what has happened, we are faced with a catalogue of cuts. It is a paradox that Conservative Members have to explain not only to us but more importantly to the electorate. At the same time they need to try to explain away how they have benefits in order to ensure that the very rich in our society, those who are most privileged, can pick up a cool £8 billion since the Government were returned to power in 1979.
  6.42 pm
  Mr. Patrick Nicholls: I shall talk about the retirement pension, but one remark by the right hon. Member for Western Isles (Mr. Stewart) should not be allowed to go without comment.
  The right hon. Gentleman was comparing at length the deficiences, as he saw them, in the health services provided in various European countries with the way in which he thought they were being provided in this country. One can make a simplistic point that one never spends enough on the Health Service. I doubt that there is anyone in the House who would disagree with the proposition that one can always spend more on the NHS, and spend it usefully, wisely and correctly.
  The reason for that is that there has been a complete transformation—a revolution even—in the various types of medical aid that one can usefully give. The founding

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  fathers of the NHS did not have to consider the sort of things on which we can now usefully spend money, such as transplant surgery and open heart surgery—a whole range of techniques which, when the NHS was founded, would have appeared to be out of science fiction. Unless one does one's forebears the courtesy of looking at the facts as they must have seemed to them, it is incredible that it was thought that once the NHS was established there would be a reduction in cost through the years. It was thought that once the health of the nation was placed on a sensible and positive footing, the costs would decrease. Of course, that has not happened because the more one spends on medical research, the more things there are that can be genuinely done for the citizen, and so more money should be spent.
  The right hon. Member for Western Isles did not address himself to that possibility. However, he quoted highly selectively the statistics that he had managed to get hold of. If he had really wanted to help the House on how our NHS compares with the provision in European countries, he might have drawn to our attention a publication called "Cost and Containment in Health Care", which was produced last year by Professor Abel-Smith. Unless I am doing him an injustice, I would guess that the professor is no particular friend of the Conservative party. Certainly in the past he has been an adviser to two Secretaries of State for Social Services, both Labour. Yet his conclusion, perhaps sorrowful, in that publication was that if one ignores the rhetoric that we hear about increased waiting lists, cuts in NHS, savage reductions and so on, looks at the reality and compares the provision that we make with that on the Continent, in so far as there has been any reining in on the increases made, the Government's record is a great deal better than that of any of our competitors. That is why, when one starts comparing our Health Service with that on the Continent, one must go beyond the rhetoric and look at what has actually been done.
  Mr. Laurie Pavitt: Like the hon. Gentleman, I am a devotee of Abel-Smith. While the hon. Gentleman is referring to that document, will he quote the per capita index that Abel-Smith gave, starting with 580 in the United States, going down through the industrialised countries of Europe and finishing with the British contribution of 230?
  Mr. Nicholls: If we were both armed with the text, I am sure that we could have a medieval debate in which we would go through each point in our respective cases. What the hon. Gentleman says is true, but we cannot follow that line and still conclude the debate at 10 o'clock. We must consider other matters as well such as the expectations and standard of living of any given country. Such things have to go into the equation as well.
  I was picking up the point made by the right hon. Member for Western Isles. He said that it was true, as if it were written in tablets of stone, that our services did not compare well with those on the Continent. The only point that I was making was that when one talks about cuts and reductions, the fact is that a left of Centre academic with impeccable credentials has said, whatever else one might say about the Conservative Government and how frightful they might be, that that specific point was not true.
  Mrs. Kellett-Bowman: I do not wish to enter into any individual medieval joust with my hon. Friend, but does
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  he not agree that if the figures were for state spending in the United States as opposed to the vast amounts spent privately there we would come out a great deal better?
  Mr. Nicholls: My hon. Friend makes a fair point. No one would deny that. Usually, when I have spoken in a debate that has not been as elegant and well mannered as this, and have mentioned those figures and the fact that there was a publication called "Cost and Containment in Health Care" and when I have made that central proposition and said that that was the conclusion that the author reached, I have been howled at and there have been shouts of "Adam Smith group" and so on. When it is then found that that was the conclusion of a Left-wing academic, some people have looked puzzled. I shall finish on a point that I had not intended to make. Sometimes one can be rather too simplistic. I say with great deference to the right hon. Member for Western Isles, with all his experience, that his speech was an example of how simplistic one can get.
  It is not surprising that I wish to talk about retirement pensions as a greater than average number of my constituents live on retirement pensions. I wish to consider the effect on retirement pensioners of what the Conservative party has done and has on offer and of the alternative offered by the Labour party.
  I always find distasteful and ridiculous any claim that one party or the other lacks compassion for retirement pensioners. I do not believe that that is true of the Conservative party and I would never make the mistake of suggesting that the Opposition are lacking in care or compassion for the elderly. It is in no way inconsistent or pejorative to say that, although the Labour Government cared desperately and genuinely about proper services for the elderly—there was no doubt as to their aspirations and the genuineness of their compassion— the record shows that their efforts to provide care for those sections of society who desperately needed it proved in the end to be inept. There is no need to dwell on the fact that for two years running the Labour Government were so strapped for cash that they could not even afford the Christmas bonus or the fact that people who had put something by (luring their working lives to provide a little jam in their twilight years found their savings wrecked by inflation.
  The tragedy of the Labour Government's attempts to care for the elderly was summed up in their attempt to link pensions with earnings. No one would deny that that was a noble aspiration, but for three of the five years in which the link was in operation the Labour Government had to fiddle the figures to provide pension increases below those required by their legislation. With the charity of hindsight, and given that we are now in government, one can sympathise with the dilemma in which the Labour Government found themselves. That dilemma was most graphically illustrated when the then Secretary of State, Mr. David Ennals, was chided for fiddling around looking for ways to get out of implementing the Labour Government's legislation and commented in relation to earnings figures:
  "There is a statutory obligation to take these figures … into account, which was done, but no statutory obligation to get it right".
  Mr. Frank Field: Does the hon. Gentleman accept that many Opposition Members would not seek to defend all the actions of the Labour Government, especially the manoeuvrings on pensions? Will he also accept, however,

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  that pension levels were higher as a result of the formula laid down by the Labour Government—so much so that the Conservatives have found it necessary to abolish the formula and especially the link between pensions and earnings?
  Mr. Nicholls: I in no way wish to attack any Opposition Member for the difficulties that the Labour Government encountered in this area. I do not know whether I am in a minority on this, but I have never found it necessary to attack Socialism, which I abhor, by suggesting that there is a lack of compassion in that system. I would say many other things with which the hon. Member for Birkenhead (Mr. Field) would no doubt disagree, but I would not go so far as that. I was merely pointing out that the dilemma arose because the Labour Government's economic policies made the care that they sought to provide an impossibility.
  The present Government made a pledge to keep retirement pensions in line with inflation. I shall be commenting on that as a mean level of achievement, but at least that promise, which did not raise great expectations, was kept. In the end, one cannot divorce compassion from the social and economic policies which make it possible in practice. Even if we can show that our fiscal policies have allowed us to make better provisions for care than those that the Labour Government achieved, we still need to go further. Just because we are better in one sense does not mean that that is the final word.
  I am concerned about the way in which we sometimes present what we have been able to do for pensioners. The undertaking that we gave was relatively modest, but we stood by it and we have managed to keep pensions just ahead of inflation. In short, we have kept faith with the pensioners. That is true in as much as we said what we intended to do and we carried out our promise to the letter. My postbag, however, which is my most valuable instrument in assessing what is going on out there, shows that a significant minority of pensioners do not believe that the Government have kept faith with them. Why do they make that judgment?
  Mr. Winnick: Because it is right.
  Mr. Nicholls: The hon. Gentleman made no attempt to intervene when I was pointing out as compassionately as possible that the Labour Government's record on care for the elderly, however good its aims and motives, did not stand up in practice—so it ill behoves him to make that comment now.
  Why do some pensioners believe that we have not kept faith with them? Answering that question may have unhappy consequences for some Opposition Members in marginal seats, but it is worth examining for a moment why, although we have carried out our promise to the letter, pensioners are still unhappy. I suspect that it is partly because many of today's pensioners do not know what it was like to be a pensioner under the Labour Government. People now in their early sixties and some even in their early seventies did not experience the wrecking effect on pensions of inflation of 20 per cent. and above, nor did they experience the disillusion of being promised that-pensions would rise with earnings only to find the Government who made that promise using devious tactics to get around their own legislation. Most people
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  who are still working and earning are not seized of the realities of living on a retirement pension. It is only when theyfind themselves living on a pension that they appreciate those realities.
  Mrs. Beckett: The hon. Gentleman mentions manoeuvring and wonders why the pensioners in his constituency are discontented. He may have forgotten or perhaps not even noticed that the Government have twice changed the method of calculation, at a cost to the pensioners on each occasion, as well as delaying payment, sometimes for one week and sometimes for two, which on at least one occasion cost pensioner couples £12.30. Perhaps the pensioners in the hon. Gentleman's constituency remember that.
  Mr. Nicholls: I am not sure that that is the best argument for the hon. Lady to advance. If she wishes to compare the historic and the forecasting methods of calculation she must bear in mind that the basis was originally changed because the Labour Government were strapped for cash. If she does not wish to take my word for it, Barbara Castle's diaries may refresh her memory. The motive for the change on that occasion was scarcely an honourable one. If the hon. Lady is suggesting that there has been chicanery, she should be looking in the mirror of her own party rather than accusing us of devious behaviour.
  If I am right on the first point—and the support that I am receiving from my hon. Friends suggests that I am — a second point follows. We talk about keeping pensions in line with the cost of living, but what is important is the ingredients in the cost of living index. An elderly person may find that the price of biscuits at the local supermarket has risen from 22p to 30p. He will not be consoled by being told that if he had bought a Japanese video recorder instead he would have found that the price had fallen. The things that pensioners of necessity buy are very often the items on the up side of the index, not the down side.
  If we cannot find the answer to that problem, what consolation will there be? If we continue to say that we have kept faith with the pensioners and intend to carry on without any change, it is conceivable that we shall lose office. The mere fact that we were right and that the pensioner's assumptions were wrong will be small consolation; and if the pensioners are misled by the blandishments to which they will be subjected at the next election about all the treats in store for them—free television licences or perhaps even free televisions, massive increases in pensions, and so on—they will subsequently suffer, too.
  As the hon. Member for Oldham, West has been told time and again, it is no good promising those on benefit marvellous treats and goodies if no attempt is made to cost the treats. I often read Tribune for light relief. On 16 July 1982, the author of an article said:
  "A major concern … must be the failure to cost adequately or to make a priority of the social programme."
  Those words may strike a chord in the mind of the hon. Member for Oldham, West. They were written by his wife.
  Something must be done. What is the essence of the problem? The retirement pension for a single person is £35.80 a week. For a married couple it is £57.30. We have kept faith. We have run the nation's finances in such a way as to make decent pensions a reality. Even so, no one can

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  say that £35.80 for a single person or £57.30 for a married couple is a princely sum. I doubt whether any of my hon. Friends would be satisfied for ever and a day if their parents were living on £57.30 a week. It ill behoves the Opposition to criticise us on that score. The pensions may be modest but they are genuine pensions, in that they can be afforded. However, we cannot be complacent about them. We must face the fact that, for our parents and for others, living on that amount of money is not an attractive prospect.
  If something must be done, where is the inspiration to come from? Clearly, it will not come from the Opposition. We saw their track record in office, although I acknowledge that their aspirations were admirable. However, with perhaps the single exception of the hon. Member for Birkenhead, the Opposition are doing no constructive thinking. They are suggesting the old remedies that failed before.
  A long time ago, the hon. Member for Birkenhead gave me a valuable lesson when we were both addressing a grammar school in Dorset. Imitation is the sincerest form of flattery, and I hope that I learnt something on that occasion. But when even the hon. Gentleman—with all his moderation and independence of mind—talks about making cuts so that money can be given to the rich, one begins to despair about what may be in store for the Labour party. It has never realised or acknowledged that there is no question of money being given to the rich. It is the rich, or those who pass for rich, who earn the money in the first place and can pay the taxes that make pensions and benefits a living reality.
  We have heard the hon. Member for Birkenhead musing on the possiblity that mortgage interest relief might have to be cut, even though the Opposition believe in it. Let us consider the reality. One can have interest relief on a maximum mortgage of £30,000. In London, many couples, earning less than hon. Members earn, have to scrape together the money to buy a house costing perhaps £50,000, and £50,000 will not purchase an especially desirable residence in London. That couple will get no income tax relief on £20,000 of the £50,000. The hon. Gentleman does not use the same apocalyptic terms as his hon. Friends would use, but he muses about putting the squeeze on such couples. He must face the fact that, if he did so, couples whose ability to afford private occupation is marginal would decide that it was not worth it.
  My hon. Friend the Member for Derbyshire, South (Mrs. Currie) was wrong to beckon the hon. Gentleman to come and join us. For all his moderation, he makes the fundamental error of not realising that every benefit he wishes to pay, and every good deed he wishes to do, will in the end have to be financed by someone else. If the Opposition cannot provide the answers, where shall we find them? Perhaps because it is a Monday and the dinner hour is approaching, none of my hon. Friends of what one might call the corpulent tendency is present. No one has waddled into the Chamber in order to tell us that the charter for jobs, if extended, will provide the answer to all our ills.
  Mr. Richard Holt rose—
  Mr. Nicholls: Those remarks were not intended to apply to my hon. Friend the Member for Langbaurgh (Mr. Holt).
  The former grandees of our party can give us no help in this area. However, something can be done. We need
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  to recognise that we cannot for ever repeat that we have kept faith with the pensioners and that we intend to keep benefits in line with inflation, and assume that that is enough. We must at least recognise that something else is called for.
  The Government believe, and I share their belief, that their economic policies will in the end bring about a real increase in national wealth. That will bring down unemployment in real terms, so that more people will pay more tax. Money, having fructified in the pockets of the people, will then be available in taxation. The time is bound to come when national resources will be more plentiful. The Government should assure us that, when that happens, the improvement of retirement pensions in real terms will be a high priority. That could be done—taking an analogy from tax thresholds — by increasing the old-age pension progressively beyond the rate of inflation. Alternatively, we could study the ingredients of the cost of living index and include in it some recognition of what retired people have to spend their money on.
  Tonight I ask only for a recognition of the fact that, while the Government are quite right to call attention to what they have achieved for the retired and to the ineptness of the Opposition's attempts to do something similar, something more still needs to be done. The retirement pensioner needs to be assured that at some time in the future, when the resources are available, he will be a priority. That is a realistic demand. It is well within the ambits of Government policy. I hope that my hon. Friend will be able to give me some assurance on that point tonight.
  7.9 pm
  Mr. Laurie Pavitt: Most of the debate has concentrated on social security and social benefits, and it will not surprise the House if I consider what the Opposition regard as the jewel in the crown of the welfare state—the National Health Service.
  The fluency of the hon. Member for Teignbridge (Mr. Nicholls) and his comments on the NHS tempt me to follow him. I thought that I was the only hon. Member to have read Brian Abel-Smith's excellent dissertation comparing health care in Europe. I find that the hon. Gentleman shares the honour with me, and I hope that many more of his hon. Friends have read A. I shall resist the temptation to talk on that subject because of his warning that if we were to enter into such a debate we should be here until midnight and the debate might be like those medieval ones on how many angels dance on the head of a pin. Health provision in the United States is private, but 10.5 per cent. of gross national product is spent on it. The comparable figures are 8.5 per cent. for Canada and 6 per cent. for the United Kingdom.
  I charge the Government with dismantling the NHS by degrees. A fundamental principle has been ignored since 1977. Between 1953 and 1977 there was consensus under such people as lain Macleod, who was the most intelligent Tory Health Minister that we have ever had. The most basic principle was that health care should be free at the time of need and paid for at the time of health. That basic concept has been eroded. Whereas 85 per cent. of the Health Service's resources come from taxation and the average family man with two children pays £1.40 each week for prescriptions, irrespective of whether he has them, now only the sick pay twice.

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  I accuse the Prime Minister of giving an insincere performance on television at the Tory party conference in 1983. Cancer cases face the impact of financial stringency because of the great advances in chemotherapy. At the 1983 Tory party conference the Prime Minister showed a great deal of sympathy for a widow who had to pay large prescription charges, but prescription charges for women who have had mastectomies are diabolical. The loss of a breast is a traumatic experience, but, with chemotherapy, a young woman who has had a mastectomy pays £2 every three weeks for medicines. That is not the worst thing that the Government have done. From 1971 to 1979, prescription charges were 20p—they are now £2. Worst affected are the chronically sick on permanent medication. On 1 April the annual season ticket was increased to £30.50. People such as those who have had a coronary thrombosis must take tablets for the rest of their lives and pay the £1.40 which they pay as taxpayers, and for the rest of their lives the price of the season ticket too.
  There are eight scheduled diseases which the British Medical Association accepts as chronic diseases meriting exemption from prescription charges. There are only 21,000 cases of breast cancer requiring chemotherapy. Exempting women who have had a breast removed from paying £2 every three weeks or £30.50 for a season ticket will not make a large inroad into resources. The Minister knows, as he recently gave me the relevant figures in an Adjournment debate, that it is quite possible to persuade the BMA to accept breast cancer as the ninth scheduled disease.
  When discussing the NHS, the House tends to think of hospitalisation. The Secretary of State and the Minister for Health spend most of their time talking about hospitals. Hospitals absorb the greater part of NHS expenditure, but eyes, teeth and medicines are also important. We have gone back to 1950 in our treatment of the loss of sight and back to Woolworths to buy spectacles. The Government are right to ensure that an ophthalmic prescription must be provided, but that is only half of the story, as there is much skill in fitting the right glasses.
  The Royal National Institute for the Blind and the National League of the Blind and Disabled have campaigned for people with low visual acuity. People with cataracts, who need four or five changes of glasses, face swingeing increases. The price of a complicated lens has increased from £20 to £60 as from 1 April. The Government's recent legislation on ophthalmic services is part of the dismantling process. Old-age pensioners will have to pay for optical services unless they are on supplementary benefit. Such people and the under-16s are to return to a system which I thought we had got rid of with the Geddes axe in the 1930s, as they will get their spectacles on vouchers. It is insulting to people's dignity to have vouchers. Nobody else has such a system — France and Germany have a reimbursement system.
  The increase in dental charges has made nonsense of the principle of free care at the time of use. Because dentists are paid by item of service, people in some parts of the country are told that if work is done on the NHS the dentist cannot do a good job. A constituent came to my surgery on Saturday morning and asked me what to do because he had been told that he required a complicated set of dentures which would cost £56 on the NHS, but that if the dentist did the work privately the job would be done well and cost
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  £190. There are areas such as Leicester where people cannot get NHS dentistry. When talking of the dismantling of the NHS, that is it.
  The Government are implementing the Griffiths report too quickly and without sufficient consultation. It is a major reorganisation. We had the 1974 reorganisation, which was such a disaster that the right hon. Member for Wanstead and Woodford (Mr. Jenkin) had to reorganise it again in 1982.
  Morale throughout the hospital service was shattered. For example, senior nursing officers did not know whether they had a job. Just as morale is being restored, the Griffiths report is being implemented, under which managers will be appointed. Many of them know nothing about the Health Service. When the great supremo himself was appointed, he gave a press conference at which he said, "Everyone belongs to BUPA anyway." He was nudged by a civil servant and then said, "I meant that only my friends belong to BUPA," or words to that effect. In fact, only 3 per cent. of the population contribute to private medicine insurance schemes. He also said, "I know nothing about the NHS, but I am a good learner." I wish someone would appoint me to a £70,000 a year job, because I am also a good learner and would be only too willing to accept the challenge.
  In 55 AD, Petronius Arbiter said:
  "it seemed that every time we were beginning to form into teams we would be reorganised. I was to learn later in life that we tend to meet any new situation by reorganising; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency and demoralisation."
  Review boards can do precisely that. It can seem as though they are doing something, when in fact they are creating even more confusion.
  The NHS is now being undermined as a result of closure by amputation. I pay credit to the Secretary of State and the Minister for Health, who have fought a good battle for the Health Service against all the monetarist pressures within the Cabinet. If only housing had done so well.However, they failed, because in a monetarist economy there is never enough money, but at least they held their corner.
  No Prime Minister will enter a general election without saying, "The Health Service is safe in our hands and we will do more for it." By the same token, no Government will ever say, "We are closing hospitals." I am convinced that, if asked, every hon. Member will say, "But many wards and hospitals have been closed in my constituency. While there may not have been complete closures, there have been effective closures by hiving off bits and pieces, and eventually nothing will be left."
  In my own constituency, the district general hospital in Willesden which once had 130 beds now has only 38 geriatric beds. The Wembley district hospital contained a number of specialties, but about three months ago all the acute beds were closed.
  Mr. Holt: I have far more knowledge of Wembley hospital than has the hon. Gentleman. Does he accept that the building of Northwick park hospital, with all its modern facilities and excellence, has made Wembley hospital obsolete? The two ladies, who are long since dead, who provided the money for Wembley hospital—the Misses Copland—would have been delighted to know that their hospital had become redundant and unnecessary.
  Mr. Pavitt: The hon. Gentleman used to serve on the borough council in my area, which he knows well.
  Mr. Holt: The hospital to which the hon. Gentleman referred was in the ward that I represented for 10 years.
  Mr. Pavitt: Exactly, and the hon. Gentleman will know that the general practitioners of Wembley tried to get together to save the parts that were to be hived off and that their request was refused by the Brent district health authority. He will also be aware that the doctors wanted to meet at Wembley, but that the district health authority forbade them to hold their meeting on NHS premises.
  For many years, the Central Middlesex has been one of the prime district hospitals in the country. When I served on the board, many overseas deputations came to see what a wonderful hospital it was. It then had 750 beds, but that figure has now declined to 450. That hospital pioneered neuro-scientific services. It was the only such service in that part of the country. Those services have now been transferred to Charing Cross, and consequently services which were pioneered in my area have been lost and a department closed.
  I have had extensive discussions with the North-West Thames regional health authority about its plans to close acute beds. It is to be done entirely on a statistical basis, with no regard for the needs of the area or the demographic considerations of inner city areas. The decisions are being based purely on the number of beds and specialties required for a given population. I am fighting for Central Middlesex hospital because at this rate there will be no district general hospital in the London borough of Brent come the next decade. The area has 250,000 inhabitants, yet the number of beds in that hospital has been reduced from 750 to 450. Many inhabitants must therefore attend Northwick park or Hammersmith to get the services they require.
  The Royal Throat, Nose and Ear hospital is pre-eminent for the services that it offers to the deaf. The Golden Square hospital is part of that complex, yet the Bloomsbury health district has decided that it should close. I am glad that the Parliamentary Under-Secretary of State for Health and Social Security is present. When this proposal comes before the Ministry, I hope that it will be realised that demographic change means that there is a greater need than ever for services for the deaf. The elderly and others who suffer from deafness should not be forced to stay at home and be lonely, simply because they cannot hear others. The closure of Golden Square will be a calamity. As well as serving the Bloomsbury area, it is part of the Throat, Nose and Ear hospital and its beds, consultancy services and outpatients clinic are of vital importance to that part of London.
  It is often said that Westminster hospital is the House of Commons hospital. Dozens of hon. Members must owe their lives, or the lives of their wives and families, to the services provided at Westminster hospital. The cardiac surgery department is due to close, and Lord only knows why. There are 10,000 people on the waiting list for bypass cardiac surgery, yet at Guy's hospital that department was scheduled for closure for four months until a millionaire came along and rescued it.
  The Parliamentary Under-Secretary of State for Health and Social Security (Mr. John Patten): I apologise to the hon. Gentleman, but I entered the Chamber about a third of the way through his speech.
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  When I saw his name on the annunciator, I knew that it was more than likely that he would be talking about health matters and felt that it was important for a Health Minister to be present.
  If the hon. Gentleman is so concerned about the welfare of patients treated at Guy's hospital, I hope that he will encourage the local district health authority to put out its services to competitive tender, because by refusing to do so it is throwing away the chance of saving more than £1 million a year.
  Mr. Pavitt: I shall reply to that point in my own fashion and in my own time, but privatisation is another way in which the Health Service is being undermined and dismantled.
  As well as being a teaching hospital, Guy's at present offers a comprehensive service. However, other specialties are threatened, because the only way to increase the number of scanners and other items which such a hospital requires is to take the money from another department.
  Mr. Butterfill: The hon. Gentleman mentioned cardiac surgery. Will he accept that what he describes as cuts under the Government is an increase in the number of operations by over 300 per cent. during the lifetime of this Government? He may call that cuts, but I do not.
  Mr. Pavitt: I have discussed that point with the Secretary of State. I cannot understand how productivity related to the number of people who are ill and have to be served and the increase in the number of operations that have to be performed shows that there is a good Health Service. There is a good illness service. The hon. Gentleman is right in saying that there has been an increase in the number of operations, but there are a number of good reasons for that, not least the new ways in which operations such as hip operations can be done. An increasing number of hip operations are performed, for which I am grateful, but there is still a long waiting list. That is unnecessary, because putting only a little more money into the orthopaedic departments would help solve the problem.
  I predict that services will continue to be amputated from Westminster. There used to be a Professor Trevor-Roper, who was a world expert in ophthalmics, working at Westminster hospital, but when he retired the ophthalmics department ended. When the consultant in cardiac operations retired three years ago, he was not replaced, and the department was run down. It is what in housing we would call blight.
  The greatest oncology surgeon in the world is Professor Harold Ellis. When he goes in about four years' time, I wonder whether that department at Westminster will close. In five or six years' time we may have a geriatric hospital down the road, with all services concentrated at Charing Cross, the Royal Marsden, and Guy's.
  On a number of occasions I have had to listen to the Secretary of State making great claims and saying that we have never had it so good and that there is now £17 million more available than there was under the Labour Government. I find these figures difficult to follow because at the same time as more resources are being spent about 3,000 doctors and 10,000 nurses are on the dole. The last figure that I had from the Secretary of State for Employment showed that 8,900 nurses were unemployed. That was two years ago, but unfortunately I cannot get an

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  accurate figure now. I used to ask for the figure every six months, but on the last occasion on which I asked I was told that the means of collecting the statistics had been changed, so that the figure was no longer available. At the rate at which the figure was rising, I estimate that more than 10,000 nurses are now unemployed.
  When I was a child, which was a long time ago, there used to be a magic show in London called Maskalyne and Devants. At one moment one saw it, at the next one did not. The statistics put out by the Government Front Bench on the NHS are somewhat similar. The Government juggle the selective figures so quickly that I cannot pin down any Minister. I feel that I am back again in the theatre of magic.
  About five factors show that the amount which the Government claim they are putting into the Health Service is unreal. They are the inflation allowance, demographic change, technological change, redistribution and different services. I have a complete brief with which I could weary the House, but I shall not do so. It shows that the Conservative claims of more and more resources being provided are not revealing the truth.
  When all those factors are taken into account, Government expenditure on the NHS looks different from ministerial claims. Out of the 17 per cent. increase claimed by the Government in the five years since 1979, resources have had to increase by 6 to 6.5 per cent. to maintain the level of services. Thus, health authority budgets were cut by 2 to 2.5 per cent. over the five-year period. The real growth in resources in family practitioner services was only 9 per cent., not 17 per cent. I know that the Minister is a student of these matters, and if he wants me to give him the facts and figures, I shall be happy to do so.
  The Royal College of Nursing is not the most Left-wing and Socialist of bodies in the National Health Service, and it has agreed to monitor what is happening through privatisation in the National Health Service. Nurses find that when cleaning is not done, they have to do it. Therefore, the Royal College of Nursing is doing what the Government should be doing and ensuring that sanitary arrangements are correct. When there are incontinent elderly people in hospitals, the laundry cannot just be put out. In renal failure, let us compare the figures for patient care. For every 1 million of population in France, 272 people are under treatment, in Greece 269, in Spain 242, in Italy 227 and in Britain 127.
  In spite of the disastrous impact of the Government, the NHS remains the greatest part of the welfare state, and it needs to be preserved. There has been destruction of staff morale and erosion, although there has not been a frontal attack. The NHS will be safe only in the hands of the Labour Government when they are elected after the next general election.
  7.36 pm
  Mr. John Butterfill: Although I accept the sincerity of Labour Members who talk about the need to maintain the state earnings related pension, we are doing something amoral by maintaining such a scheme when it is not actuarily funded. We are asking future generations of our children and grandchildren to pick up the bill for the pensions that this generation will receive. That is something that no hon. Member would do to his family. He would not expect his children to look after him
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  and to hand to them a mortgaged future. However, we are asking future generations to guarantee that this generation will have complete protection, to be paid for by them. That is why I call it amoral, and I believe it to be amoral.
  Ms. Clare Short: Does the hon. Gentleman mean immoral?
  Mr. Butterfill: No, I mean amoral. There is a difference. Immorality is quite different, and perhaps the hon. Lady would care to go the Library afterwards to pursue the point.
  Mr. Winnick: I do not understand the logic of the hon. Gentleman's argument that it is a sin for one generation to protect the interests of the previous generation. Will not the present generation be protected? Is not that the hallmark of a civilised state? We pay our contributions with the knowledge that not only our parents but ourselves when we retire will not have to live in the poverty in which so many now live. Is that not an important factor to be borne in mind?
  Mr. Butterfill: I did not expect the hon. Gentleman to understand my argument. Perhaps it was a little difficult for him to follow. I shall state it again. We are asking future generations to maintain us. We are imposing a limitless charge on their future earnings. That is amoral.
  Ms. Clare Short: Will the hon. Gentleman give way?
  Mr. Butterfill: I should like to continue.
  Ms. Short: On the question of amorality.
  Mr. Butterfill: I should be fascinated to hear what the hon. Lady has to say. I shall give way.
  Ms. Short: My understanding is that to be moral is to do something that we would all argue is right and decent; to be immoral is the opposite—to behave wrongly and harmfully—and to be amoral is to be neither moral nor immoral. To be amoral is to be neutral morally. Why does the hon. Gentleman use the word "amoral" about something that he clearly thinks is deplorable? The hon. Gentleman is using words wrongly.
  Mr. Butterfill: My understanding differs from that of the hon. Lady. My understanding is that immorality relates to amoral sexual behaviour and amorality relates to something that is not moral. No doubt we can satisfy our curiousity on this point later in the Library. We are digressing from the main subject.
  It was interesting to note the wording of the Opposition motion in referring to the
  "dismantling of the welfare state".
  That is a somewhat extravagant turn of phrase, but we have become used to extravagant turns of phrase from the Opposition when we deal with the welfare state and the NHS. The hon. Member for Oldham, West (Mr. Meacher) manages to take extravagance almost to an art form.
  I understand the reluctance of the hon. Member for Brent, South (Mr. Pavitt) to become involved with figures, because he is confused by figures. He suggests that we confuse figures. It might be of advantage to cite a few figures, because there are absolute figures and there can be no argument about what they are. Since the Conservative party came to power, expenditure on social services has increased by a gross figure of £9.5 billion, and a net figure of £8.5 billion. I shall explain later how this difference arises. In real terms, after allowing for

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  inflation, that is an increase of 28 per cent. I do not understand how there can be any dispute about that or how it can be fudged. It is an increase in numbers and in percentage terms.
  Many Opposition Members say, "All of that expenditure is to pay for the unemployed." That argument does not stand up to the facts. About £3.25 billion of that sum is spent on the unemployed—about one third of the total increase. I do not believe that any hon. Member would not wish that money to be spent on the unemployed. It means that the overwhelming majority of the increase has been spent on real improvements in social services brought about by this Government.
  Mrs. Beckett: Perhaps the hon. Gentleman would bear in mind also the vastly increased numbers of pensioners. The majority of the increase to which he referred has not gone on improved benefits.
  Mr. Butterfill: I should like to correct the hon. Lady. About £1 billion of the increase has gone on pensions, £2.5 billion on benefits, £1 billion on sickness and disability benefits in the long term, £500 million on single parents and, regrettably, £250 million on administration. Only £1 billion of the increase has gone on pensioners.
  Mrs. Beckett: The hon. Gentleman said that the majority had gone on improvements.
  Mr. Butterfill: The majority has; it has not all gone on the increased number of pensioners. We have increased pensions above the level of inflation by more than 6 per cent. There has been not just a money increase but a real increase. That goes beyond the guarantee that we gave as a manifesto commitment to maintain pensions in line with inflation. Once again, the hon. Member for Derby, South (Mrs. Beckett) has not cited statistics correctly. Total expenditure on social services amounts to more than £100 million a day and 77,500 staff are employed. [Interruption.] I am glad that it is recognised that the statistics are accurate.
  Mr. Winnick: I think that the hon. Gentleman has been conscripted by the Whips.
  Mr. Butterfill: The hon. Gentleman is wrong. It was a personal decision to speak today. The hon. Gentleman flatters me by suggesting that I was conscripted by the Whips. I am delighted to think that that could be so in the future.
  The Government have instituted a large number of inquiries into the structure of the enormous machine of state that is the welfare service. There were inquiries in November 1983 on targets; in February 1984 on housing benefits; and in April 1984 on supplementary benefits and families with children—inquiries on a scale not seen previously. It is disgraceful that such inquiries had not been conducted previously in view of the overwhelming part played by social security benefits in the total expenditure. I am delighted that the Government are conducting these reviews. I look forward with great interest to reading the Green Paper.
  I am not completely satisfied about what will happen in certain respects. As the hon. Member for Brent, South knows, I am not entirely happy with what happens with regard to some disabled people, especially the blind. I believe that the review that is being conducted should examine disability in a broad way, because some people with specific disabilities—notably the blind—do not
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  seem to benefit from our system. The majority of blind people do not qualify for mobility or attendance allowances. They do not qualify for most of the allowances that are available under our present system, unless they suffer from a second disability. I believe that my right hon. Friend the Secretary of State should consider those anomalies during his review and ensure that, in future, the criteria for benefit do not leave out certain groups who, on any criteria, should qualify for benefit.
  Hon.Members listened with great interest to what the hon. Member for Oldham, West said about the Labour party's proposals. I do not wish to detain the House by going through each proposal in detail because that has already been done by many hon. Members. In every case the hon. Gentleman's proposed "improvements" would be made completely without a means test. Labour Members seem to have a pathological antipathy to the words "means test" and suffer a gut reaction every time those words are used. I can understand the historical reasons behind that gut reaction, but they should not prevail today. I clo not believe that the circumstances that provoked the initial reaction are applicable in a modern society.
  Mr. Winnick: Will the hon. Gentleman give way?
  Mr. Butterfill: If I may develop the argument a little further, the hon. Gentleman will perhaps understand my point. I have given way to him once already. I shan give way later if the hon. Gentleman is not satisfied with what I have to say.
  This nation spends an enormous amount on social security and on the welfare services. Indeed, it spends an unprecedented amount in actual money and in real terms. But we do not always tackle certain areas of poverty and deprivation. Despite all the money that we raise and distribute, there are some people who we apparently cannot reach and who remain deprived. Areas with which I have been associated in London have substantial pockets of deprivation of which I, and all hon. Members, should be ashamed.
  Why are those people not getting the money that they need? One reason is that we spend a lot of time raising large sums of money in taxation and then redistributing that money to the very people who paid the taxes. Not enough of the money reaches those in need. The w hole principle of universal benefits, regardless of need, is extraordinary, and I am surprised that Opposition Members should advocate it. It means that they would give benefits to the rich as well as to the poor. As I said some weeks ago, it is extraordinary that Members of Parliament, or their wives, should expect to receive child benefit. It is patently clear that no Member of Parliament needs to receive child benefit, given the sort of income that he or she receives. Therefore, it is extraordinary that we should continue to pay universal benefits to millions of people who do not need them, at great adiministrative cost. We should be able to devise some way of arranging the benefits system so that the money goes to those most in need, not indiscriminately to everyone.
  Mr. Winnick: Surely the logic of the hon. Gentleman's position is clear. He must be arguing that tax relief on mortgage interest should be given only to those in need, although that would not be quite my position. Does he argue that those in receipt of more than, say. £25,000 a year should not get tax relief?
  Mr. Butterfill: The hon. Gentleman is being illogical. In the case of mortgage interest tax relief, we are talking not about giving someone money but about taking less of his own money from him. However, in the case of the benefits system, we are talking about giving some people money and giving others, who do not need it, money, too. That is much less logical. The man who receives mortgage interest tax relief, about whom the hon. Gentleman complains, will also receive all the universal payments that the Labour party and the hon. Member for Oldham, West have been advocating. In the Labour party's terms, that must be adding insult to injury.
  Ms. Clare Short: Perhaps I should tell the hon. Gentleman that I have been to the Library and looked up "amoral" in "Chambers Twentieth Century Dictionary." Amoral means
  "non-moral outside the domain of morality."
  I think that the hon. Gentleman meant to use the word "immoral" earlier.
  One facet of means testing that we find objectionable is that people are put through the humiliation of having to declare their income and of having to appeal for something because they are poor. We also question its efficiency. It is enormously inefficient to have a system that requires people to apply time and again, as their circumstances change, and to give all the details of their family's income in order to claim a benefit. It is more administratively efficient to have a tax system that applies across the board, with benefits such as child benefit going to every child in the country. Such a system saves money.
  Mr. Butterfill rose—
  Mr. Holt:Perhaps my hon. Friend will allow me to intervene on that point.
  Mr. Butterfill:Well—
  Mr. Holt:Will my hon. Friend give way on that point?
  Mr. Deputy Speaker (Mr. Harold Walker): Order. We cannot have interventions on interventions.
  Mr. Butterfill rose—
  Mr. Holt: Will my hon. Friend—
  Mr. Deputy Speaker:The hon. Member for Bournemouth, West (Mr. Butterfill) should deal first with the intervention that is before the House.
  Mr. Butterfill:I am obliged to the hon. Member for Birmingham, Ladywood (Ms. Short) for consulting "Chambers Twentieth Century Dictionary." If "amoral" mean "non-moral," it has the sense that I thought it had. But perhaps the hon. Lady and I would differ about what we mean by "non-moral." However, I profoundly disagree with the substance of her intervention. I do not believe that it is necessary to have a system of degrading inquisitions in order to decide who should receive benefits. It should not be beyond our wit to devise a system that does not involve such inquisitions but which nevertheless directs benefits to those who need them most and which does not give them to the rich. I think, for example, of those who obtain substantial tax relief on their mortgage interest, or indeed of Members of Parliament.
  Benefits should be directed towards those who need them. But all the proposals of the hon. Member for Oldham, West specifically rule out the possibility of any form of means test. They all suggested that there should
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  be another grand round of universal benefits. That is where the Labour party has got things totally wrong. Although Labour Members are well meaning, and although no one doubts their sincerity, they would create the conditions that would always doom their policies to failure.
  Mr. Holt: The harps always come out when people talk about means testing, but no one seems to quarrel about the means testing of those with children in higher and further education. Those children's grants are severely truncated if their parents have earned money. Young people are subjected to the results of means testing. There is apparently nothing amoral or immoral about asking someone how high his earnings are but only about asking how low they are.
  Mr. Butterfill: I am grateful to my hon. Friend for making that point, but I think that I have already made my position clear.
  Once again the Opposition seem to have spun an enormous web of mystique around the NHS. They have tried to claim that we have cut expenditure on it. To support that, they talk about a hospital or ward that has closed here or there, but they do not consider the entire picture. Indeed, it was pointed out to the hon. Member for Brent, South that in his constituency a massive new hospital has been built. I am grateful to my hon. Friend the Member for Langbaurgh (Mr. Holt) for pointing that out. The building of that hospital far outweighs the closure of the hospital that the hon. Gentleman complained about.
  We should consider what is being spent on the NHS. Indeed, the figures are well known to Opposition Members and some have even quoted them. Expenditure has increased from £7.75 billion when the Conservative party came into office to £17.5 billion in the current year. By no stretch of the imagination—and Labour Members have certainly stretched theirs this afternoon—can that be called a cut. Of course, one can fiddle about at the edges and find the odd instance of a ward or hospital being closed whilst at the same time forgetting that something has opened in its place. But that increase in expenditure is massive.
  I know that Opposition Members do not like statistics, but I should point out that the number of inpatients has increased by 650,000 since the Conservative party came to office. The number of outpatients has increased, too, by 2.5 million. I do not believe that more people have suddenly become ill in the past five or six years. The point is that we are providing a much higher level of service. In one year, 1982–83, the number of outpatients increased by 300,000 — more than the previous Labour Administration managed to achieve in their entire period in office. Thus, I find the attack by Labour Members on the Government's record in relation to the National Health Service extraordinary.
  The hon. Member for Brent, South said that the number of heart operations was being reduced. In fact, the number of operations for bypass surgery since the Conservative party came to power has increased by 300 per cent. The hon. Gentleman acknowledged that a substantial increase had taken place in the number of hip transplants. Many new techniques have been developed in recent years, and therefore it is difficult to make a comparison between figures in relation to those developments and what occurred previously.
  The hon. Member for Brent, South also complained about the length of waiting lists. In fact, under

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  Conservative rule waiting lists have fallen substantially. There were 752,000 people waiting for operations when the previous Labour Government left power, compared with 508,000 when they came to office, showing that waiting lists increased under them.
  Waiting lists are at their present levels because of disruptions by NHS employees. Those disruptions have interrupted the downward trend of waiting lists. That downward trend has been the pattern under Conservative rule, in marked contrast to the way in which waiting lists increased by 50 per cent. under the Labour Government.
  Mr. John Powley: Does my hon. Friend recall how Labour Members and some of the trade unionists whom they claim to represent supported steps which prevented patients from reaching hospitals to be treated, particularly during the winter of discontent? That shows the contempt that Opposition Members have for the treatment of patients and the degree of concern that they say they have for the NHS.
  Mr. Butterfill: I am grateful to my hon. Friend for reminding the House of that.
  Ms. Clare Short: Why is the hon. Gentleman grateful for being reminded of that?
  Mr. Butterfill: Because it needs to be pointed out. When Labour Members accuse us of not caring about waiting lists, an accusation which they regularly make, they neglect to point out that a major cause of the length of waiting lists has been industrial action which the Labour party supports. They also neglect to point out that waiting lists increased by 50 per cent. under the Labour Government, whereas they have fallen under Conservative rule.
  Ms. Short: I do not believe that.
  Mr. Butterfill: The hon. Lady may not believe what I say, but I have given the facts. She may care to check them in the Library.
  Ms. Short: I shall, in the way that I checked the hon. Gentleman's definition of "amoral."
  Mr. Butterfill: I am sure, when she is checking, the hon. Lady will find —
  Mr. Deputy Speaker: Order. We are having too many sedentary interventions. Sedentary interventions are to be deprecated at any time.
  Mr. Winnick: On a point of order, Mr. Deputy Speaker. The hon. Member for Bournemouth, West (Mr. Butterfill) has been addressing the House for half an hour. He is, of course, entitled to do so. Perhaps he will make it clear whether it is his intention to speak for another half an hour, in which case those of us who are waiting to take part in the debate will not bother to continue to wait in the hope of being called to speak.
  Mr. Deputy Speaker: That is not a point of order.
  Mr. Butterfill: It was not my original intention to speak for this length of time. Regrettably, I have been asked to give way on so many occasions that my speech has taken longer than I had anticipated. I shall, in deference to other hon. Members, conclude my remarks shortly.
  Developments have taken place in many complex treatments, such as laser eye surgery, which is extremely
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  expensive, and did not exist previously. Improvements have taken place in almost every sphere of health. The number of infant deaths, for example, has come down by a third since we came to power. All these developments reflect entirely new standards of health care.
  Other hon. Members have already referred to increases in manpower in the NHS while we have been in office. The number of doctors has increased by 11 per cent. and dentists by 15 per cent. Such statistics can hardly be called cuts. I do not know what warped imaginations Opposition Members have if they can describe such developments as cuts.
  I see improvements occurring in my constituency. We in Bournemouth have waited a long time—longer than my constituents would have wished — for a new hospital. However, we are now getting a major extension of hospital services in the town, with the construction of an enormous new general hospital costing millions of pounds.
  That reflects the restoration of the capital investment programme in the NHS — a programme that was severely slashed by the Labour Government. That is the most significant element in Conservative policies, because, without capital expenditure, none of the other services can be operated. As the hon. Member for Ladywood is interested in statistics, she will be pleased to hear that there has been a 23.5 per cent. increase hi real terms in capital expenditure under the Conservative Government. I am sure that she will enjoy checking that fact when the debate is over.
  We have nothing to be ashamed of in relation to the NHS. Indeed, the Conservative Government have the most impressive record of any post-war Administration, and they are to be congratulated.
  8.7 pm
  Mr. Archy Kirkwood (Roxburgh and Berwickshire): I listened with interest to the remarks of the hon. Member for Bournemouth, West (Mr. Butterfill). I was particularly interested in his opening remarks, when he went at length into what the Government had done for social security benefits and then went on to make his own special case. I do not complain about that because he is well known for his concern for the needs of the blind, but we can all argue special cases.
  I agree with the hon. Member for Birkenhead (Mr. Field) that the Government cannot be accused at this stage of the game of decimating the social security system. However, for those who are in desperate need and have experienced some of the damaging cuts that have individually been implemented by the Government, it is a tragedy, and I include the blind within that number.
  That is why I say that the hon. Member for Bournemouth, West cannot have it both ways. He cannot, on the one hand, say that all is well when, on the other, as he knows—my constituency postbag certainly proves it—many people are suffering a very deprived standard of living.
  Mr. Butterfill rose—
  Mr. Kirkwood: I shall not give way because I intend to complete my remarks within about 10 minutes.
  This is a useful debate. When, initially, I learnt of the subject matter of the debate, I thought that it was somewhat barmy because we would not be able to achieve

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  much. After all, we are looking forward to the Green Paper that is to be published at the end of May or the beginning of June.
  I have changed my mind, however, because the debate has probably taken place in a calmer atmosphere than will be the case when we debate that Green Paper. If our worst suspicions, resulting from leaks that have appeared in the press, are fulfilled hon. Members' tempers on that occasion will be difficult to contain.
  I agree with hon. Members who have said that the system of social security benefits is not perfect. For that reason I welcome the Government decision to examine the system again root and branch. However, I am suspicious of the Government's motivation. The impetus for this reform has, I believe, come not from any need to minister to the deprivations experienced by the poor but, rather, to control the amount of money spent on social security.
  Social security spending must increase because of the demographic changes that are facing the nation. It also has to increase as an inevitable consequence of the Government's policy which has driven more and more people into the hands of the social security system. It is very misleading to treat transfer payments as though they were public expenditure. We have referred to the £40 billion in the social security budget. However, transfer payments are not the same as expenditure on goods and services. They should be regarded as reducing the net yield of tax line tax expenditures—allowances, mortgage interest relief, and so on.
  I believe that personal taxation, employers' national insurance contributions and the benefit system need to be integrated. We on these Benches have advanced that argument for a very long time. It is a great shame that while considering housing benefit, earnings related pensions and family income supplement the Government have not taken the opportunity to consider the tax benefits that accrue to the pension system, mortgages and the married man's allowance. The success of an integrated, fundamental review would have been greater if all of these options had been considered simultaneously.
  The Green Paper that is to be published later this year could have been a valuable addition to the review system. If the four reviews were to report in advance of the Green Paper on the integration of the tax system, it would not necessarily be the most constructive way to proceed. I am desperately worried that the Fowler inquiries will not propose the wide-ranging reforms that are necessary but, according to the leaks in the newspapers, will promise only piecemeal and cost-cutting changes. The Select Committee on the Treasury and Civil Service, which was chaired by the hon. Member for Oldham, West (Mr. Meacher) and published its report in 1983, came to the conclusion that adjustments to the present system would achieve little and that fundamental reform was absolutely necessary.
  Every hon. Member has commented on the proposals of the hon. Member for Oldham, West. Although interesting, I believe that they are idealistic and have not been adequately costed, and they contradict the findings of the Sub-Committee of the Select Committee on the Treasury and Civil Service. He advocates a progressive income tax rate within the main range of earnings around average earnings. That proposal would need to be carefully examined.
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  The biggest shortcoming is that there is to be no increase in the basic retirement pension, apart from a universal heating allowance. Therefore, the elderly would be worse off if supplementary pension as well as supplementary benefit were to be abolished. We on these Benches believe that the whole panoply of the state earnings related pension scheme faces problems. The most worrying is that it provides an insufficient answer.
  For decades to come many old people will have little or no state earnings related pension entitlement. An increase of about 25 per cent. is needed on the basic pension. Supplementary pension and housing benefit costs would fall if the basic pension were to be increased by 25 per cent. However, most of the costs would be met by the abolition of contracting out and by halting state earnings related pensions at the present level of entitlement. The Liberal party gave evidence to the Fowler commission along those lines and set out possible alternatives to the state earnings related pension. However, something along those lines could be considered only if all the money saved were used to increase basic pensions. We also believe that legislation would be required to oblige employers to contribute up to a certain level to the personal pension plans for their employees who do not have occupational schemes or who opt not to join them. That has to be considered in the context of a first step towards a complete reform of the tax benefits system.
  I support what was said by the hon. Member for Birkenhead (Mr. Field) about child benefit. This would be a useful first step towards a tax credits scheme. We believe that child benefit must be left intact and that it should be increased at a faster rate than inflation. Our objective is a tax credit for every individual, with more credits for the elderly and fewer for children, with an intermediate level of claim for young people between the ages of 16 and 18. I support the proposal to establish an educational allowance as a step towards this. This was one of the proposals of the hon. Member for Oldham, West. Within the tax credits scheme there would be an additional credit for sickness and invalidity and there would be extra credits to meet the cost of disablement.
  We believe that universal credits would be too expensive if they were high enough to cover all housing costs. Therefore, it would be essential to be able to withdraw credits. Interim measures would be needed before moving into a fully fledged system in order to reform existing benefits such as family income supplement. In the alliance budget proposals of this spring a courageous and properly costed system was outlined which would increase family income supplement in what we consider to be a sensible way. It would provide much needed relief for low-paid families. We must ameliorate the worst effects of the poverty trap. I accept that marginal rates of 70 per cent. to sometimes as high as 85 per cent. on increased earnings for the low paid would be inevitable under any system at acceptable levels of income tax. Ultimately housing finance will have to be reformed and the inflated price of property will have to be reduced. However, mortgage interest tax relief must be retained, but could be restricted to those who are taxed at 30 per cent. and not given to those who pay at the higher rates.
  The introduction of these benefits leaves a great deal to be desired. The four reviews are at an advanced stage. If there is to be a tax benefit review later in the year, I believe that the evidence should be published. The Green Paper should not be published at this stage. The evidence should

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  be summarised. There ought to be a proper national debate and a thorough-going reform of the taxation system should then be brought forward. Without this, the possibility of creating a new Beveridge, which I believe to be absolutely necessary, will be very remote.
  8.18 pm
  Mr. Richard Tracey: There has been some discussion during the debate about the meaning of the words "amoral" and "immoral". I do not wish to become involved in that debate, although I believe that one or other of those words could be applied to the Opposition motion. I was shocked by its blatant propaganda, and I continue to be shocked by the blatant presentation of that propaganda. I was surprised, too, by the brass neck of the hon. Member for Oldham, West (Mr. Meacher) in wishing to draw attention to himself when it was quite obvious from the response of his hon. Friends this afternoon that they are not very pleased with some of his ideas about the welfare state and the policy of the Labour party.
  Frankly, we know what the Opposition are up to. Not too long ago I read a statement by one of the leading lights of the Labour party which said that probably one of the finest things that the party could concentrate on before the next general election was the NHS and the welfare state. It was felt that the most capital could be made out of that. It is clear that there has been a cynical manipulation of statistics in an attempt to smear the Government. That is a callous campaign, which inspires unnecessary fears, particularly among old people about the sort of treatment they will get from doctors and hospitals in an emergency. We have heard it all this afternoon — the fevered imagination, the fairy tales and the grossly inflated local examples, all of which when looked at in a national context are complete nonsense. I have come to recognise the Labour party's propaganda about the NHS as the big lie strategy.
  It has been well rehearsed this afternoon that in 1985–86 the Government are proposing to spend £17,500 million on the NHS. That is an increase in real terms of 20 per cent. on what the previous Labour Government were spending when they left office. The statistics are there to be read. The Labour Government were spending £7,750 million. There is no question about that, just as there is no question, as my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) pointed out, that in one year alone the Government have brought about a situation in which the NHS has treated 300,000 more inpatients than during the Labour Government's whole term in office. I cannot see how such statistics, and the many others which are on the record, can be questioned by the Labour party in its cynical campaigns.
  In the same way, the Labour party from time to time homes in on waiting lists. It tells us that waiting lists have grown under this Government. But again, as my hon. Friend the Member for Bournemouth, West pointed out, it does not admit that during its period in office from 1974 to 1979 the waiting lists grew. I suspect that that was the Labour Government's own fault, not the result of industrial action. Up to 750,000 people were awaiting treatment in hospital. Those are just a few of the examples that have been well rehearsed during the debate.
  What particularly bothers me, apart from that callous disregard of the feelings of old people and those who may become sick, is that that sort of thing is picked up by some people in the media and used because it is sensational
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  copy. Let me single out one BBC television programme which has been mentioned once or twice in the House over the past two weeks. BBC2 made a programme on the children's heart unit at Guy's hospital. I was appalled to see that at the beginning of that programme a caption was put on the screen saying that the problems had been brought about by Government cuts in specialised nursing services. No attempt was made by the producer of that programme to ask the district health authority what it had been doing about its budgets or what kind of contribution it might have been able to make by greater efficiency to improve the services of that hospital to prevent the problems that were being outlined on our television screens for 40 minutes. That is the sort of thing which causes alarm and great worry among our people.
  I am well aware that other hon. Members wish to build on the case that my hon. Friends have been making this afternoon. We have heard these inflated statistics from the hon. Member for Oldham, West and from his hon. Friends. Let me remind them of something which the right hon. Member for Manchester, Gorton (Mr. Kaufman) said after the catastrophic results which his party suffered at the election. He said that the public could not be entirely conned in the way that the Labour party had hoped. He said that the public could not grasp the enormity of the programme which the Labour party claimed would be put before them if it won the election. In the first year alone it would have cost £45,000 million extra. From where was that to be found? Was it to be found from taxation or national insurance? The British public will not be conned by such nonsense. Nor indeed will they be conned by the sort of talk that we have been hearing today about the Government dismantling the NHS and the welfare state.
  It is easy to build up expectations, as the Labour party is obviously trying to do, but it is far more difficult to deliver those expectations. I can say with complete confidence that the hon. Member for Oldham, West has delivered the next general election victory to the Conservative party, which we would have won anyway. His statements last week, from which the Leader of the Labour party has so assiduously tried to dissociate himself, are some of the most damaging things that have been said during this Parliament. When I worked as a commentator in broadcasting, we would try to spot the moment when a politician would so grievously put his foot in it that he would lose the next election for his party. Last week was that moment for the hon. Member for Oldham, West and the Labour party.
  8.27 pm
  Mr. David Winnick: I think that I can say with confidence that the House is not likely to be conned by the nonsensical remarks of the hon. Member for Surbiton (Mr. Tracey). If he thinks that the campaign of innuendoes, lies and McCarthyism will win the Tory party the next election, he will be proved wrong.
  There is no love, and never has been, by the Conservative party, especially among what could now be described as the "drys", for the welfare state. It is interesting that in today's Daily Telegraph, which presumably reflects the views of the drys more than the wets in the Conservative party, we are told:
  "However, ministerial nerves seem stronger on the question of the State Earnings Related Pension."
  It goes on to say:
  "The provision of an income for retirement is best dealt with through the private sector".

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  There is no doubt in the mind of the Daily Telegraph that the state earnings related pensions scheme should be abolished.
  The Prime Minister has repeatedly referred to the United States as the ideal place where there is no Socialism. What she really means is that there is no welfare state there with anywhere near the same provisions as Britain. That is why she holds up the United States in such glowing light. Can there be the slightest doubt in the House of the right hon. Lady's distaste, perhaps even contempt, for state provision except for the very poorest? If ever there was a Tory Member with very little sympathy for state provision, it is the Prime Minister. Every Conservative knows that to be the case.
  Between the Labour and Conservative parties there is what can only be described as a philosophical difference in attitude and ideas on state provision in welfare and pension entitlement. The Labour party's attitude was illustrated during 1945–50 and when it was last in office. The Labour party believes that the state has a duty to try to provide benefits and that people should not have to rely on the private sector.
  Today, the Secretary of State argued a poor case. He knew that it was when he referred to the large sums being spent on social security. As he knows well—who better — that is due largely to the return of mass unemployment. I have always argued that, however important the social and welfare reforms carried out in the immediate post-war years, the most important was the maintenance of full employment in peacetime. It helped to ensure that the kind of poverty and destitution known before the war were not repeated after 1945.
  All the evidence that we now have from our constituencies shows that poverty has returned with a vengeance. I receive—I am sure that I am not the only Member — many letters from constituents on matters affecting social security. I have received more during the past two or three years from people who have to try to manage with their families on the lowest possible income. Of course, some of my constituents come to see me at my surgeries over their problems.
  It is interesting to remember that the hon. Member for Derbyshire, West (Mr. Parris) spent a week in front of the television cameras trying to live on supplementary benefit. I watched the programme with interest. At the end of the week the hon. Gentleman was honest enough to admit that he could not manage. He tried to live for a week on the lowest income provided by the state. There are occasions when it seems that the hon. Gentleman is still trying to recover from the experience.
  Millions of people, however, have to go through that experience not for one week, one month or even one year. They have to live on such levels year in and year out. They have to live in such poverty because they are unemployed or disabled or both, or because they have to rely upon the present state basic pension and supplementary benefit. If it were difficult for the hon. Gentleman to try to live that type of life for one week, how much more difficult is it for our fellow citizens who have to endure such hardship and acute poverty for years? If they are of employment age, they can look forward only to retiring on the basic pension. We have a Government who have no intention of reversing the tide of mass unemployment. Ministers no
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  longer refer to the concept of full employment. They do not even pretend that they intend to see the end of mass unemployment.
  We are debating the dismantling of the welfare state. No Government, not even this one, would try to abolish it in one go. They have too much electoral sense. That is why, for example, they refer to maintaining the National Health Service. The Government, and the Secretary of State—I am not being personal—as a member of the Cabinet, are trying to undermine as much of the National Health Service and the welfare provision as possible.
  This month, for example, we have seen substantial increases in dental charges. That is of course in addition to the other dental increases which have occurred between 1979 and 1984. New regulations restrict the supply of National Health Service glasses to children under 16 and families in receipt of supplementary benefit or family income supplement. Everyone else has to obtain his glasses in the private sector. That includes many pensioners who do not receive supplementary benefit.
  The cost of prescriptions when the Conservative party took office was 20p. Since then, they have increased continually, and a prescription now costs £2 per item. The increase has been 1,000 per cent. since 1979. That is what I mean by saying that welfare provisions have been eroded by a Government who have never believed in the welfare state.
  The reviews which have been set up by the Secretary of State are meant only to find ways of pushing through what the Treasury wants—large social security savings. I refer again to the leader in today's Daily Telegraph which states
  "The Social Security Secretary Mr. Norman Fowler has argued that reform must ensure that money goes to those who need it but that there must be no reduction in the amount spent. The Treasury is insisting on savings."
  I am not sure though that the right hon. Gentleman has defended welfare and social services in the Cabinet as much as he should. We often gain the impression that,although he may have put up an initial fight against the Treasury, at the end, perhaps because he does not want to find himself on the Back Benches, he is willing to go ahead with what the Treasury wants. Perhaps he is right from the point of view of his career.
  Mr. Fowler: That is cheap.
  Mr. Winnick: I do not believe that it is cheap. The right hon. Gentleman is aware that he has a leader who has no sympathy for the welfare state. If he makes a stand on all those issues against the Treasury he is unlikely to advance his career. I believe that my points are valid.
  Mr. Timothy Wood: Is it not absurd that there is an overlap of several hundred thousand families in the welfare state at the moment who pay tax and receive benefits? Does the hon. Gentleman not think that it is high time that we had reviews to resolve some of the present anomalies?
  Mr. Winnick: As I have argued in interventions, it is remarkable that those who argue constantly the same point that the hon. Gentleman has made defend the present arrangements for tax relief on mortgages. I take the view—I have made my position clear elsewhere and in interventions today—that it is right that those people who are buying a house should receive assistance. I am in favour of home ownership, as are all my right hon. and

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  hon. Friends. We always have been, or otherwise we should not have introduced the option mortgage scheme in the 1960s which undoubtedly made it much easier for people on lower incomes to buy their own homes. If we were against owner occupation, why would we have introduced the option mortgage scheme?
  I do not find it easy to understand the hon. Gentleman arguing for means testing and the rest. The same hon. Gentleman would argue that it is right for someone earning £30,000 or more—perhaps himself—to receive benefit by way of mortgage tax relief. A Conservative Member said today that that was not so. It only meant that someone was paying less tax. That argument does not stand up, because if that person did not receive tax relief on his mortgage, or did not have a mortgage, he would have to pay his full share of tax. He is clearly being subsidised because he pays less tax. It is odd that Conservative Members—including the Government Front Bench—who are always on about means-tested benefits consider it right that those with the highest incomes should receive open-ended assistance from the state to buy their own houses.
  The reviews have led to various leaks. It would be interesting to know whether any of them are correct. Will basic unemployment benefit be reduced? Will it be paid for six months only and not 12 months? Will heating additions be abolished? We have been arguing throughout the winter that there should be an increase in heating additions, and that it is wrong that so many people on low incomes should receive no assistance with their heating bills, or, if they do, that it is small and inadequate. Will housing benefit be reduced? That would mean a large number of people paying far more in rents and rates. We are worried by one of the leaks which suggests that it will be recommended that unemployed house owners receiving supplementary benefits will no longer receive assistance in paying their mortgages or the interest on those mortgage payments. As my hon. Friend the Member for Oldham, West (Mr. Meacher) said in opening the debate, in that event they would be thrown out on the streets. These are matters of great concern.
  I am convinced that the state earnings related pension scheme provides a means of ensuring that if one retires having made no private provision, one will not live in the kind of poverty in which so many pensioners are now having to live.
  When the Secretary of State was speaking, I drew attention to an answer that I received from one of his junior Ministers. It was to the effect that if someone has been in the scheme from the beginning, in 10 years' time, in 1995, such a person, on average earnings, will receive an additional £31; someone on three quarters average earnings will receive an additional £21; and someone on half average earnings will receive an additional £11.90. At the beginning of the next century, the people in the three categories that I have mentioned will receive £36.50, £25.20 and £14 respectively in addition to the basic pension. Those are significant sums.
  The people to whom we are referring in the state scheme will know that when they retire, although they will not be living in luxury or anything near it, they will not have to live on the same pittance that retired people now have. That is why we must be concerned about the constant rumours and leaks to the effect that there will be a recommendation that the state earnings related pension scheme should be abolished. If our fears are proved correct
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  and that is to be the recommendation, and if the Cabinet agrees to it, how many Conservative Members will defend the scheme? One or two hon. Members who have spoken in the debate have said that they do not believe in the scheme. We know the views of the Daily Telegraph, or of the person who writes that newspaper's leader. Will Conservative Members betray their constituents who are in the scheme and who have paid into it over a considerable period by taking away the pension entitlements that many people of working age look forward to receiving in due course?
  Since the Government have been in office, very large sums have been given to the richest and the most prosperous. Such people have done very well out of the Government and have every reason to be grateful to the right hon. Lady's Administration. But for many others the Government have been a curse. Large numbers of people, including my constituents, have been denied their right to earn their living. Large numbers of people, including my constituents, and many others throughout the country, are living in poverty and near poverty because of measures taken by the Government.
  When Conservatives ask what the Labour party has done for pensioners, I wonder how many pensioners today would be only too pleased to have the same progress that was made when the Labour party was in office? They will remember that the Labour Government tied the state pension to earnings or prices, whichever were the greater.
  It is understandable that there is such a feeling of bitter resentment on the part of so many people who have been the victims of the Government's policies and of the contempt that the Government have shown for them. It has been a Government for the rich and the most prosperous. It has been a Government that has shown utter contempt and indifference for the people who are most in need, the people who need the welfare state and for whom it was first established. When the Labour party is returned to cffice it will make good the damage that has been done by the Conservative Government. We shall return to the provisions established in the 1945 Parliament.
  8.45 pm
  Mrs. Edwina Currie: The debate started by being entertaining, when we had the bon. Member for Oldham, West (Mr. Meacher) behaving like a little boy hurt, with a look on his face which Conservative Members will cherish for a long time. He was having a go at the press and accusing all and sundry of malice aforethought and so on, as if any of the things that he said in The Guardian in recent weeks mattered. It would have been nice to hear from him and his hon. Friends on the Opposition Front Bench whether he and they still agree with his comments in what he calls his "New Income Protection Plan", and whether he still stands by any of the things that he said to the newspapers. His role as a sacrificial lamb has been highly entertaining—novel, but, I suspect, highly misleading.
  If the Labour party really thinks that those on £15,000 a year are rich, or think themselves as rich, it is totally out of touch with the way in which this country has been changing in recent years. If it thinks that the country would vote for Labour housing policies such as the abolition of mortgage tax relief for owner-occupiers, or for such housing policies as building acres more of windswept council estates of which we see only too many in our cities, or of tower blocks which are never repaired because

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  Labour councillors are too busy spending the money on women's committees and sending people to Greenham Common, it has another think coming.
  Ninety per cent. of those of working age have said that they want to own their own homes. That is exactly what Conservative policy has been, and it has helped us to win two elections. People do not wish to be dependent upon the welfare state for the provision of their accommodation, and that is the way that they will continue to vote in future.
  Mr. Robert Hughes: Will the hon. Lady give way?
  Mrs. Currie: I do not have time to do so.
  The Labour motion seeks to identify an attack on the welfare state by the Government. It is interesting that the motion does not mention the National Health Service.
  Several Hon. Members rose—
  Mrs. Currie: Hon. Members who are seeking to intervene have not been here for most of the debate. As time is now short, and other hon. Members wish to be called, I think that it is inappropriate to allow interventions.
  It is interesting that the Opposition motion does not mention the National Health Service, because there has been a substantial increase in resources and a substantial improvement in results, to which several of my hon. Friends have drawn attention. I should like to mention the capital schemes, the building of new hospitals and new units which have proceded apace under the Conservative Government. In England alone, 50 major hospital schemes have been started on site since 1979. They are schemes costing over £5 million each. At present there are 152 hospital schemes of more than £2 million each being planned, designed or constructed in England alone, costing more than £1 billion. The buildings for 23 schemes are expected to be completed in 1985. I say to Labour Members who represent London seats—for example, the hon. Member for Brent, South (Mr. Pavitt)—that much of that building is going on in other parts of the country, such as the Trent region, which covers my own constituency. Indeed, in Trent and in the Southern Derbyshire health authority there has been a substantial increase in the number of people on the payroll, and we have vacancies for nurses. Anyone in the south of England looking for a nursing job is very welcome in my constituency, where we have a substantial number of vacancies. The hon. Member for Derby, South (Mrs. Beckett), whose constituency is in the same district health authority, can confirm that. Indeed, she is nodding her head in confirmation. In my area there has been a rapid drop in waiting lists—at last, I have to say, because our waiting lists have been among the worst in the country.
  The hon. Member for Oldham, West said that the welfare state was near the bottom of the Government's priorities. That does not accord with the facts. Social security is the largest single Government programme. It accounts for 30 per cent. of all public expenditure, with total cost of £40 billion, and rising. It is the only Government Department in that position. The rate of growth has doubled inside five years and that makes the Labour motion absolute nonsense. [Interruption.] It is not just a matter of unemployment; it is also a matter of
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  increasing benefits to pensioners, the sick and the disabled and a large number of other people. It also, to a substantial degree, makes nonsense of any priorities, such as defence and overseas aid which other Departments may wish to claim, as well as all the other things on which we should like to spend our money.
  I have sat through many social security debates since I came into this House and I am glad to see my hon. Friend the Member for Braintree (Mr. Newton) in his place, because I should like to suggest that we could do with some new scientific laws. Sir Isaac Newton was a Member of this House many years ago, and my hon. Friend the Member for Braintree is by no means a lesser Newton. We should propose a new set of Newton's laws. I suggest that they be called Newton's four laws of action and reaction for social security.
  Law No. 1 should be: "Whatever the social problem, a benefit will be devised" — even when it might be much better to leave well alone.
  Law No. 2 should be: "Whatever the benefit, somebody will abuse it". If we need any evidence, look at the debates that we have had on board and lodging allowance, on housing benefit, and even at the rapid increase in the number of people claiming invalidity benefit, even though there seems to be no evidence that morbidity in that age group has increased.
  The third law should be: "The cost of the benefit will escalate". The escalation will be in direct proportion to the surprise of the Ministers concerned.
  The fourth law should be: "No benefit can be cut, ever". That is not what we want, but in practice it is exactly what happens. Perhaps one can have a corollary—that whatever the Minister does to try to improve matters, somebody will not like it.
  The motion mentions the state earnings related pension scheme. It is probably as good an example as any. The hon. Member for Derby, South mentioned the Phillips committee, but in 1954 there were fewer than 7 million pensioners. Now there are 9.25 million, and by the time I am touching 80, which is the point at which SERPS becomes fully operational, there will be 12.5 million pensioners, and the number of contributors, in comparison to the number of claimants, will be 1.8:1. At that stage the social security budget for SERPS alone will have to be increased by approximately one third. On the best assumptions, the contribution rate will have to rise to 20 per cent., and on the worst assumptions it could be 26 per cent. or more. In other words, our grandchildren will be paying at least a quarter of their income on top cif income tax to pay for our pensions. The question that we have to answer is this: do we really want to commit the state to that level of investment on one item alone, pensions? What about investment in industry? What about investment in education? What about training?
  I am deeply worried, not just at the effects of encouraging people to rely entirely on the state instead of planning for their own future. We should be concerned not just at the sheer expense of providing all and sundry with whatever benefits they ask for and increases above inflation to boot. We should be concerned at the damaging effects on our future growth and strength of diverting such a large percentage of our resources into that activity. There are always more ways, and better ways frequently, of spending the money. Some of the thrust of Government policy has to be the continuing and steady encouragement of industrial and commercial development so that

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  somebody will generate the surplus income in future to pay for all the benefits, for the Health Service and for the public services which we all so glibly want and for which we all seem so deeply reluctant to work and pay.
  One man's priority is another man's extravagance. If we too readily invent benefits, add to them and increase them, the day will come when we beggar the nation, and then it will be too late.
  8.52 pm
  Dr. Roger Thomas: For a moment, I should like to follow the hon. Member for Derbyshire, South (Mrs. Currie) into physics. She quoted to us the four laws of Newton. I am afraid that when she speaks she reminds me of Charles's law, in that a given mass of gas increases directly with the absolute temperature.
  The hon. Lady mentioned nurses in her constituency. I should like to tell her about nurses in my constituency. Eight nurses qualified at the local district general hospital. Not one of those eight could be offered a permanent post, yet we all know that when nurses qualify they are expected to serve a so-called six-month probationary period. Without having served that probationary period, those nurses cannot hope to get a permanent job elsewhere until they satisfy the nursing authorities that they are proficient at their work.
  For about 31 years, the welfare state has been in the hands of Governments who respected it. From 1948 to 1979, those Governments adhered to the principles of the welfare state, and through those Governments it commanded a great deal of cross-party support. The people were particularly proud of it.
  Tonight, we have heard statistics about waiting lists and the increase in inpatients over the past five or six years. I remind the House that one can cook inpatient waiting lists and outpatient lists as well as unemployment figures. Let us consider an ear, nose and throat waiting list in any hospital. For example, 350 children might be waiting for tonsil and adenoid operations. One may search down that list and decide to write to the parents. By the time the letters arrive so many of the children have been totally cured of the condition for which they were originally to have the operation that, at a stroke, the number can be reduced to well below 350.
  There are long waiting lists of patients for cataract operations. But some of those patients waiting for operations will never be contacted, because they are not on this earth to be contacted. Thus, again, one can eliminate or reduce waiting lists as one wishes.
  We know that there are practically no domiciliary midwifery cases. All infants are now born in hospital. That is another reason why, over the past few years, there has been a steady increase in the number of cases receiving inpatient treatment.
  I can assure the House that the morale of the medical profession has never been so low for a considerable number of years. It is low not only among ancillary staff who were badgered into submission when they tried to strike for better conditions in 1982, but among nursing staff, consultants and general practitioners.
  The general practitioners, first hit by the deputising service fiasco, then by the limited list fiasco, are now in an uncertain position. Since the visit of the Minister for Health to the Harrow private clinic, we do not know what to expect with regard to general practice. We are now
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  keenly waiting for the so-called Green Paper on primary medical care, although so many things in that Green Paper have already been leaked.
  Apparently, it is being considered down at the Elephant and Castle whether we shall have a salaried service within the NHS. Alternatives that are being considered are that doctors will no longer be paid for items of service. And so it goes on. At the moment, there is a gradual demoralisation among general practitioners. Who Knows what they will get in return for the apparent bonus of being able to advertise their services. I should have thought that it went very much against the Hippocratic oath. If doctors were allowed to advertise their services, it would lead to utter chaos in the GP service and primary medical care.
  Among consultants, too, morale is at a low ebb. Consultants will confirm that the increase in administration means that they spend less and less time in the operating theatre or on surgical rounds and more and more time attending committees which do not achieve any improvement at the sharp end of the service. The Government said that the limited list would save £75 million per year, which could then be used at the sharp end of the National Health Service, but there is no more reason for us to believe Ministers now than there was to believe that the National Health Service was safe in the hands of the Prime Minister, as she claimed at the general election.
  I recently asked the Secretary of State how many geriatric beds are available in this country now compared with 1979. There has been an increase of 0.002 per cent. in England and 0.005 per cent. in Wales, but demographic changes mean that there are now far more people over the age of 65 and hundreds of thousands over the age of 75 who need to go into hospitals of that kind when they are ill. Medical practitioners cannot get patients into hospitals because the hospitals are full of chronically sick people, often chronic orthopaedic patients who cannot be taken out into the community.
  We heard a great deal from the Government about community care, but it was just another gimmick—just another way of getting care on the cheap—and it has not worked. Nursing staff and community nurses are now discovering that it is impossible to provide in the home the nursing services that were previously provided in the hospitals.
  The catalogue goes on and on. If this is not demolition of the Health Service, it is certainly utter demoralisation. Ministers complacently tell us that more is being spent here, there and everywhere. Anyone who wants to know how much more is really being spent should visit the hospitals and talk to the staff who care for the sick and for those unable to fend for themselves. That is where the truth is to be found, not in statistics from the Elephant and Castle. Thirty-five years after the inception of the National Health Service there is discontent, misery and demoralisation, and it is time that that was put right.
  9.1 pm
  Mr. Tony Fayell: For too long, in my view, we have distributed social benefits without proper thought not just for the taxpayer, who has to provide them and who is often no better off than the recipient, but for the long-term effect on the recipients themselves. I was therefore delighted to hear my right hon. Friend the Secretary of State say today that the review would ensure that social security was not divorced from the rest of Government policy, especially employment policy. The

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  reduction of unemployment is the major task facing the Government, but I believe that in some ways the present social security system exacerbates the problem. Indeed, I believe that in some respects it positively harms the longterm employment prospects of the recipient. I shall give just two examples.
  A 16-year-old leaving school in July is entitled to £17.30 per week supplementary benefit in September if he has not found work, and even if he has not tried to find work and is not prepared to undertake youth training. That cannot possibly be in the long-term interests of the school leaver. We must do everything in our power to encourage school leavers to take training. We all appreciate the value of education because we have the knowledge and experience to realise how well our education and training has served us, but young people of 16 often do not appreciate the importance of education and training, and I believe that offering supplementary benefit to them as soon as they leave school discourages them from taking the training that is so vital in the job market today.
  It is true that many of the young unemployed live in areas of high unemployment, but nothing is for ever. History repeats itself. The unemployment of the 1920s and 1930s went away. Last week the Prime Minister told us that 300,000 new jobs had been created in the past 18 months. The 16 to 18-year-olds will not stay the same age for ever. They may lose their chance of education and training. By not encouraging them now to take the training that is so necessary we shall condemn them, in the long term, to the scrap heap. I urge my right hon. Friend seriously to consider giving every possible encouragement to those young people to train now.
  Rate rebates offer another example of how social security works to discourage employment. One household in three in Britain now receives rate rebates through the housing benefit system. The proportion is even higher in parts of the country where unemployment is highest. In Liverpool, half the ratepayers now receive rate rebates. In Sheffield and Manchester the percentage is about 42 or 43 per cent. Only about a quarter of the electors in Liverpool, Manchester or Sheffield pay full rates. In those areas there are no longer any votes in saving money. Votes are to be gained only by spending money. Votes are attracted by vastly increased and expensive services in areas that are ravaged by unemployment.
  What is the effect of high spending in such cities? High spending results in fewer jobs. Those who are in employment and pay full rates leave for less highly rated areas. Stockport is fortunate. In Manchester the rates are 50 per cent. higher than in Stockport. There is in consequence a massive exodus from Manchester to Stockport, not only of domestic ratepayers, but of commerce and industry. Businesses are driven away from Manchester and investment discouraged. Housing benefit and high rates exacerbate the problem of unemployment. Our once-great northern industrial cities are in a downward spiral.
  Mr. Kevin Barron: Will the hon. Gentleman give way?
  Mr. Favell: I do not have time. Unless local authorities are encouraged to reduce rate levels, that spiral will become an uncontrollable spin. I urge my right hon. Friend to take advantage of the reviews to deal with the problem.
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  9.8 pm
  Mrs. Margaret Beckett: I wish to begin by quoting some words of the hon. Member for Brent, North (Dr. Boyson), written before he became a Minister in the Department of Health and Social Security. The hon. Gentleman was, of course, in the Department when the decision to institute the reviews was taken. In 1978—no doubt the Prime Minister read these words—he wrote:
  "Conservatives must actively work for the welfare state to wither away as personal freedom and independent provision take its place."
  That work is what we are debating tonight. We are talking not about certainties or the matters on which the Prime Minister loves to tell us that there is no alternative, but about choices. The record shows us what choices the Government have made. Their social security budget, and the way in which they have changed it in recent years, casts a light on the choices that we may expect them to make through the social security reviews, and the reasons for those choices.
  In his pertinent speech, my hon. Friend the Member for Oldham, West (Mr. Meacher) made clear the extent and nature of the choices that the Government have had, and he contrasted the savings that have been made in every Social Security Bill that the Government have presented to the House since 1979—they now total £11 billion—with tax handouts to the wealthiest, which have been given in every Budget—and now total £13 billion.
  One of the most frightening features of these debates for the prospect of peace and harmony is the gulf of understanding and experience which opens between the two sides of the House. I sometimes wonder whether Conservative Members know what their Government's record is, or whether they understand the reality of life for those on pensions or benefits. They will not know if they listen to the Secretary of State. It has been a feature of several recent Question Times that Conservative Members have risen, one after the other, to say that, although they do not question the Government's wonderful record as they have done great things for the NHS, could the Secretary of State explain why a ward or hospital in their constituency is closing and could he tell them how to reassure their pensioners. Our clear message to them and the country is that the Government's arguments and figures on the whole of the welfare state are as phoney as their arguments and figures on the NHS, which even Tory Back Benchers are beginning to see through.
  Tory Back Benchers are beginning to see through the arguments and figures partly because of the many benefits that the Government have abolished, such as industrial injury benefit, the earnings related supplements to unemployment and sickness benefits and the child addition to benefits, and partly because of the many benefits that the Government have reduced — for example, the 5 per cent. abatement of unemployment, sickness and invalidity benefits. Recently, the invalidity benefit abatement has been restored, only to be offset by other changes in invalidity benefit which mean that, once again, the Government are making a net saving in social security expenditure at the expense of some of the most vulnerable in our society.
  Once again there is late payment of pensions and of invalidity benefits this year so that the Government can save money at the expense of those groups. Lest hon. Members still doubt — there seems to be some lack of

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  understanding of the Government's cuts in social security spending—I shall quote what the Secretary of State said on 13 October 1983. He said, with approval:
  "We should remember we have already done a great deal to contain expenditure by abolishing earnings related supplement, by making unemployment benefit taxable and by withdrawing it from better off occupational pensioners."
  When it suits them, the Government claim credit for their social security reductions.
  The decision in 1980 to cut the link between pensions and benefits and earnings as opposed to the link between pensions and benefits and prices—that vital principle established by the Labour Government which increases the value of pensions and benefits as earnings increase—has most eroded the provision of the welfare state. It means that pensions and benefits at best stand still against prices but are frozen so that people dependent on them are less and less well off compared with those in work. For the benefit of Conservative Members who seem to have a different experience of the scheme, I should like to highlight a few of the facts about it as many of them seem to imagine that it is over-generous. That misunderstanding appears to fuel the pressure on and from the Government to cut social security still further through their reviews.
  A survey carried out in 1983 showed that 3 million people cannot afford to heat even their living area properly, that at least 5 million regularly left out a major item of food, such as a joint, that 500,000 children do not get three meals a day because they do not have the money, that about 6 million people who depend on benefit lack a major piece of clothing, such as a warm waterproof coat, that more than 3 million lack items such as carpets, fridges or washing machines, that 3 million cannot afford birthday or Christmas celebrations, and that 10 million could not pay for even one week's holiday.
  Hon. Members have talked about the social security scheme. I wonder whether the hon. Member for Stockport (Mr. Favell) is aware that all entitlement to one single penny of housing benefit ceases well below average earnings for those who are on average rents.
  The rise in housing benefit has resulted from the rise in rents, which have been forced up by the Government. I wonder how many Conservative Members fully realise that, apart from having his housing costs met, a single householder under 60 gets £28.05 a week to meet the rest of his needs and that a couple get £45.55. All hon. Members will he aware that there is no meals allowance in this House, but I understand that in another place the meals allowance is about £40 a day — over £10 more than a single householder under 60 is expected to live on for a week.
  Someone on supplementary benefit is allowed to earn £4 a week or, since the changes the Government made in 1981, to receive £4 a week in cash or kind. Once he receives more, he loses every penny over that value—a 100 per cent. deduction. I referred earlier to a gulf in experience. The contrast between what I have just said and capital transfer tax might be illuminating to Conservative Members. Instead of a 100 per cent. deduction over the threshold, the tax on gifts starts to apply at 15 per cent. In addition, there is a difference between the thresholds. Instead of £4 a week, that tax, even at 15 per cent., begins to bite only when gifts have amounted to £68,000. I calculate that to be about 300 years' worth of supplementary benefit exemption.
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  The average cost of private health insurance, even as a supplement to the NHS, for a two-child family with a non-working wife is at present about £12 or £15 a week. The average cost of an occupational pension for such a family is about £10 a week. Those who have such supplementary health and pension provision—I suspect that many Conservative Members and their constituents have—might in future try to remember that what they spend on supplementing what the state provides in pension and health care is what people on supplementary benefit must live on.
  Those Conservative Members or their constituents with children boarding at public school will be paying an average of £160 per child per week—seven times as much in school fees alone as someone in receipt of supplementary benefit must live on. That is the gulf which exists between the experience of different groups in our society, and that is why the Opposition sometimes get excited when we listen to Conservative Members telling us how over-generous they consider the scheme to be.
  Mr. Nicholls: As school fees are not tax deductible, such people will have paid sums in taxation which make benefits a reality. Does the hon. Lady realise that the ability of people to pay after taxation is concomitant with paying the tax which makes those benefits possible?
  Mrs. Beckett: This is not the occasion to debate public school provision, although I am quite willing to enter into such a debate. However, most of our senior public schools are charities and receive tax and rate relief because they were founded to educate the poor. I am referring to the difference in levels of expenditure and income. I wonder whether the hon. Gentleman knew what the supplementary benefit level was. If he did, he was probably in a minority among his colleagues.
  Those who have never wanted and those who never expect to want in future are very quick to talk about the burden of the welfare state, just as those who have never been seriously ill and think that it is because they are virtuous rather than fortunate seem to despise the NHS.
  The Government's main charge over recent weeks, and the charge they intend to try to sustain in the reviews, is that the burden of expenditure overall on social security is too great, is rising and must be cut. The Government have already cut it not just by the detailed changes that they have made in benefit, but by the major change in linking pension and benefit increases only to prices. By that change, they have not only withheld benefits from those in need but destroyed the basis of their own case.
  It is often quoted that a pensioner couple have had £5 a week withheld from them by this change. It is less often quoted that someone receiving invalidity benefit has lost £7.35 a week by the Government breaking the link between the benefit and prices, and by the other changes The Social Security Bill will make another net saving at the expense of pensioners.
  When we hear claims from the Government about the extravagance of the social security budget and the state earnings related pension scheme, it is hardly ever quoted that benefits linked only to inflation are basically standing still. The Child Poverty Action Group, in its excellent book, "The DHSS in Crisis", which is meant to be read in the context of the Government's reviews, pointed out that although the bill for social security is likely to rise

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  because of demographic changes and changes in prices, as a percentage of GDP, the bill will fall over the next few years.
  Similarly, the Government say that they are worried about the cost of SERPS in the next 20 to 30 years. However, because the basic pension is linked only with prices, those who retire this year or in the next 10 years will see the value of their total pension, including the earnings related element, so eroded that in 10 or 20 years—the period of time about which the Government claim to be concerned—it will fall back to the relative value of the pension today. Therefore, if the Government abolish the earnings related element, the total pension will be worth far less than it is today, and the pensioners of 10 or 20 years' time will suffer.
  Earlier, the hon. Member for Suffolk, South (Mr. Yeo) referred to a terrible thing—the calculation that total national insurance contributions might rise to about 21.6 per cent. of GDP if we maintained SERPS. He wondered how that could be afforded. I am sorry to have to say in his absence that the hon. Gentleman was clearly not aware that this is compared directly with a value of 17.6 per cent. for the same figures today; and therefore it could be argued that we can cope with such an increase.
  Clearly, the hon. Member for Suffolk, South was even less aware—and I sometimes wonder whether the Secretary of State is aware—that if the basic pension remains linked only with prices, in the 10 or 20 years' time about which the Government are having nightmares the national insurance contribution will be not 21.6 per cent. in total, but less than 10.3 per cent. because the value of the total pension is so eroded by the link of the basic pension only with prices. The value of the pension and of the national insurance contribution needed to sustain the pension will significantly fall. That destroys everything that the Government are saying about the need to abandon, abolish or weaken SERPS. The Government have already weakened it so much that their fears are ill-founded.
  I am sorry that the hon. Member for Bournemouth, West (Mr. Butterfill) is not here, because I do not like commenting on his remarks in his absence. Much has been said about the amorality or immorality of SERPS, so I shall leave Conservative Members with a final thought about the comparisons of costs. It is true that we are talking about putting a lot of money into SERPS and the basic state scheme. It is true that we are putting thousands of millions of pounds into state pensions. Indeed, we are putting in as much this year and last year as we spent on alcohol. That puts into context the Government's remarks about the extravagance of our devotion to the state pension scheme.
  The Government say that everything has changed since 1975. The hon. Member for Derbyshire, South (Mrs. Currie) has clearly been taken in by this fiction. The number of pensioners has not changed since 1975. I should have thought that a little simple arithmetic would show any hon. Member that the number of 10 million pensioners was due to increase to 12 million. That was known in 1975 when the state earnings related plan was revised. The prediction about the number of contributions has not changed significantly. There are some marginal differences, but well within any possible margins of error.
  What has changed since 1975 is the priority that the Government are prepared to give to ensure dignity and
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  freedom from want in retirement. The Prime Minister likes to talk about people taking more responsibility and providing for themselves in old age. Her lack of understanding of the practicalities involved in people trying to provide for themselves in old age has been evident for at least 10 years. I recall listening to the right hon. Lady during the debate on the Finance Bill 1974 when she was a shadow Treasury Minister, although not shadow Chancellor. The House was debating the level of exemption from capital transfer tax for gifts given to a child on the occasion of his or her marriage. The Labour Government proposed that the exemption level should be set at £2,000, which, I understand, is now worth about £5,300. The right hon. Lady said that that was not enough. There was a certain amount of hilarity among the Labour Members present who asked her how many members of the public she thought could give their children wedding presents to the value of even £2,000. The right hon. Lady said that they could not give such presents, because they did not save.
  Such people do not save because they cannot save, because during their lives they never earn sufficient to save enough to think of giving children presents worth thousands of pounds when they marry. Those people certainly never earn enough during their lives to save to cover the cost of their retirement. Any justification for arguing that people should save to cover the costs of their retirement disappears when simultaneously the Government do everything that they can to reduce or hold down wages.
  The record of the Government, who have had more money every month from the North sea than the Labour Government had during their five years in office, is one of meanness and mismanagement in social security. The Government's record makes us fear for the future. We wonder what they will do in their social security reviews. The Secretary of State made a great point of telling us that all the anxiety and complaints were misplaced because he had to be prepared to consider any proposal if he wanted to review the pension and benefit system. The right hon. Gentleman did not say that he meant that he was prepared to look at anything, except increased costs in the service, improving the service so that it might give more to claimants and interaction between the pension and benefits system and the taxation system. His colleagues will not permit him to do so.
  For the welfare state we pay when and as much as we can so that we can draw on it as of right when we are in need. The hon. Member for Bournemouth, West asked why the Labour party was so antagonistic to means-tested benefits. He asked why our hackles rise when means-tested benefits are mentioned. Our hackles rise then for the same reason as they rise when we hear the Prime Minister talk about Victorian values and hear the Secretary of State in various speeches on different occasions pushing voluntary organisations forward, demanding that they play a greater role in social services and education and talking about a greater role for the private sector in health care.
  On all those matters our hackles rise for the same reason. By and large, it is among Opposition Members that there are to be found those whose parents and grandparents remember the means test. It is Opposition Members who remember the bitterness that lasted generations from the days of services being provided through charity and of the concept of the deserving and undeserving poor. Those who were prepared to smarm their way round those in authority

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  in a manner that seems to returning to fashion in the Conservative party found themselves better off than those who tried to maintain some independence.
  The days when those who were wealthy and who chose to do so provided education and hospitals out of the kindness of their hearts are days that Opposition Members remember perhaps without the generosity that Conservative Members might wish for. We remember charity schools and hospitals, and so we are wedded to the concept of a welfare state that provides services as of right, and for which the community as a whole pays—services that most of us on this side of the House could never hope to provide for ourselves.
  The welfare state and the NHS can be summarised very simply by saying that they are Socialism in action. That is, of course, what the Prime Minister so much dislikes about them. The creation of the welfare state is the greatest pride and achievement of the Labour party and the Labour movement — [Interruption.] Conservative Members who sneer and snigger should remember that it is also something in which the British people take great pride. Since the Conservative party came to power in 1979, it has tampered with the welfare state and damaged and weakened it. Before the Government finally make their decisions and publish their reviews, the purpose of this debate is to warn them that if they now seek to destroy the welfare state the British people and not just the Labour party will destroy this Government and their party with them.
  9.32 pm
  The Minister for Social Security (Mr. Tony Newton): The debate has been something of a classic of its kind in that it was widely heralded in the press, and trailed on the radio by the hon. Member for Oldham, West (Mr. Meacher) this morning as a slashing attack and an all-out assault that would save the nation from disaster. When he came to the House early this afternoon, attended by a group of supporters who would have comfortably filled a minibus, he made a speech based on assorted press cuttings while denouncing the press as biased and unreliable. Only two of the official Opposition Members then in the House showed any inclination to speak in the debate and, as far as we could judge, all the other Opposition Members spoke because a panic-stricken Whip had fled from the Chamber and had gone rushing round the House.
  Mr. Meacher: The hon. Gentleman must be able to do better than that.
  Mr. Newton: I may well do better than that, but the hon. Gentleman will have to do better than that, too, if he wants to carry his party with him. Of course, we all know that the motive behind the debate was not to illuminate the Government's work or plans but to cast back into the shadows the work of the hon. Member for Oldham, West as shadow Secretary of State. Until last week I had never thought of the Leader of the Opposition as being closely paralleled by the Duke of Wellington. But it suddenly came into my mind that it is said that, when looking at his own soldiers, the Duke of Wellington thought:
  "I don't know what effect these men will have upon the enemy, but, by God, they frighten me."
  Now I know how the Leader of the Opposition felt last week when he contemplated the hon. Member for Oldham, West and his paper.
  Mr. Walter Harrison: The Duke of Wellington won and my right hon. Friend the Member for Islwyn (Mr. Kinnock) will win, too—and I am referring to the next general election.
  Mr. Newton: The monument to the hon. Member for Oldham, West is likely to be a new posting before long.
  Taking the debate at its face value, I will deal with at least some of the allegations that have been made about the Government and the welfare state. Although most of the debate, understandably—in view of the w ay in which the hon. Member for Oldham, West opened it—has concentrated on social security, which was the subject of most of the publicity that surrounded the debate, it is only fair to those who referred to the NHS to place on record some of the facts and figures about what has happened in the service in the last four or five years.
  There are now 57,000 more nurses and midwives than there were; over 5,000 more hospital doctors and dentists; 2,500 more family doctors; and over 13,000 more radiologists, laboratory technicians and other professional staff. [Interruption.] Opposition Members may not like listening to these figures, but it is time again to put them firmly on the record.
  In 1983, by comparison with 1978, the NHS in England was treating about 650,000 more inpatients and over 2.5 million more outpatients; it was providing almost 3.5 million more courses of dental treatment; and there were over 650,000 more visits by health visitors and home nurses to elderly and sick people at home. The hon. Member for Wolverhampton, North-East (Mrs. Short), who is not in her place, would be interested to know that it had succeeded in reducing the degree of perinatal mortality by about one third in just five years.
  That is the record not of a Government who are dismantling anything but of a Government who are steadily building a better health for the nation.
  Mr. Pavitt: In regard to the statistics of hospital inpatients and outpatients, does the Minister recall that the present Prime Minister said in 1978 that there were 50,000 unnecessary deaths from emphysema, lung cancer and chronic bronchitis? That figure is now 100,000, mainly because the Government have run away from doing something about cigarette smoking. Will the hon. Gentleman take responsibility for that increase?
  Mr. Newton: The hon. Gentleman knows that statistics such as those have no validity unless they are related to the overall morbidity and mortality statistics and reflect the extent to which people live longer and reach the stage when they may suffer the consequences of those types of disease. The hon. Gentleman knows that he oversimplifies the point.
  My hon. Friends and I do not pretend that there are not still many problems to be overcome in the NHS. It is, however, foolish nonsense for anybody contemplating the statistics to suggest that the Government are dismantling the welfare state. Some of the figures that have been quoted about the NHS have concentrated completely on revenue spending. The Labour record on cutting the NHS hospital capital building programme was appalling. If ever there was a dismantling of the hospital service in the sense of failing to put new capital investment into it, that occurred in response to IMF demands in 1976 and the penalties that were then inflicted on this country and its health service for the profligacy of Labour Members in the

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  previous two years. That was when the future of the National Health Service was being dismantled. It is in the restoration and growth of the capital programme that the foundations are being laid for still more of the improvements of the kind to which I have referred in the last few minutes.
  I turn from the National Health Service to the main thrust of the debate on social security. One of my hon. Friends has already referred to the increase of £8.5 billion, or nearly 30 per cent. in real terms, in the social security budget during the years from 1979–80 to 1984–85. This is not mainly or solely due to unemployment. Well over half — nearly £5 billion — is the result of this Government meeting the needs of many hundreds of thousands of additional retirement and invalidity pensioners and of claimants to mobility and attendance allowance. It is also because the Government have kept faith with their promise to protect the value of the retirement pension. While prices have risen by about 77 per cent., the pension has risen by nearly 84 per cent. Pensioners have enjoyed a real increase in their standard of living. This has more than fulfilled the promise made by the Government.
  Nor are retirement pensioners alone in their position having been improved. For the sick and disabled, the real value of the mobility allowance has been increased. It has been made tax free. We have ended the so-called invalidity trap which, to the shame of the Opposition, kept so many tens of thousands of the long-term sick and disabled trapped within the lower rate of supplementary benefit instead of enjoying the higher, long-term rate. We have heard nothing about that today. However, that trap was ended by this Government and has benefited 70,000 invalidity pensioners.
  Last November, the Government replaced two old benefits by the new severe disablement allowance which, when it is fully built up, is expected to result in 20,000 more people benefiting than benefited under the previous system, and it will end—I am sorry that the hon. Member for Barking (Ms Richardson) is not here, because I am sure that it is a point she would have appreciated—the discrimination against disabled married women which the Labour Government left behind.
  For war pensioners the Government have introduced, in parallel with the mobility allowance for civilian pensioners, a generous new mobility supplement to replace the old vehicle scheme. Pensions for war widows have been fully exempted from tax. Last November higher allowances for all war widows over 65 were introduced.
  The hon. Member for Derby, South (Mrs. Beckett) referred to the Social Security Bill which was debated last week. She mentioned almost everything except that last week the Government invited the House to approve the final removal of the married women's half test—another discriminatory measure. This proposal will bring another £25 million of benefit in the early stages to about 25,000 married women who were previously discriminated against under the social security system.
  As with the National Health Service, those are not the facts and figures of a Government whose Ministers do not care or of a Government who are dismantling the welfare state or damaging the social security system. They are welcome, sensible improvements to the social security system. They are made possible by welcome, sensible
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  changes in other ways which have enabled us to concentrate our resources more effectively upon those most in need.
  Although I shall try to be fair to every Opposition Member, hard though it is at times to be fair, I shall be especially fair to the hon. Member for Birkenhead (Mr. Field). He very frankly said—I think I took down his words accurately and hope that I am not misrepresenting him—that it was not possible for Opposition Members to claim with any seriousness that there has been any dismantling of the welfare state. He is right about that and I am grateful to him for the fair-mindedness with which he put that point.
  Mr. Frank Field: The hon. Gentleman's writing must have let him down. I said that we could not claim that there had been a dismantling of the social security system. What worries me is the proposals which have been discussed in the press as likely to come from the social security reviews. I hope that the hon. Gentleman will take this opportunity to say, for example, that the state earnings related pensions scheme will not be abolished.
  Mr. Newton: I was just about to deal with the reviews. The charge in the motion, as the hon. Gentleman readily recognised, and has fairly recognised again in the past few moments, is that nothing has happened at all. The record clearly does not begin to sustain for a moment the charge of dismantling the welfare state or the social security system in particular. The charge relates to nothing except what the hon. Member for Oldham, West says that he has read in the papers about the proposed outcome of the social security review.
  I cannot respond tonight either to the questions posed by the hon. Member for Birkenhead or to some of the points raised by hon. Members on both sides of the House about the outcome of the social security review, for the good reason, as my right hon. Friend the Secretary of State made clear, that the Government have not yet made their final decision on the outcome of the social security review. [Interruption.] We believe in collective decision-making and consulting our colleagues.
  Mr. Michael Cocks: Who was consulted on the employment of the hon. Member for Suffolk, Coastal (Mr. Gummer)?
  Mr. Newton: Obviously not the Labour Chief Whip; nor, as a matter of fact, was I.
  Even if I am not in a position tonight to say anything more about the outcome of the reviews, I can tell the House that the social security review was set up not to dismantle the social security system, but with exactly the opposite purpose—to try to make sure that in a world in which resources will never be as large as any or all of us would like, what the Government, or any Government, can make available for social security spending meets the needs of today and tomorrow instead of being so ruthlessly concentrated, as in the Opposition's minds, on the needs of yesterday.
  As my right hon. Friend has emphasised time and again, we are seeking to bring about a use of whatever resources are available for the social security system in a way which is most effectively aimed at the least well-off in our community, and a use of resources, however large they may be, within a system which is simpler and easier for people to understand. In view of the strictures of the

  707
  hon. Member for Oldham, West on the supplementary benefit system, it is hard to see that he can object to that objective.
  We are also seeking to ensure that our social security system is effectively related to wider policies of the Government and wider policies which any sensible Government would need to have to restrain inflation, to generate economic growth and thus to make sure that we have the resources on which any social security system must in the end depend.
  As my right hon. Friend made clear, the review has had a significant independent input. It has been based on probably more open public consultation than any comparable exercise in history, including not only the widespread receipt of evidence from those who chose to give it, but public hearings for those who wished to put their views in person. We are now considering the conclusions from all that work and will put them before the House as soon as possible.
  I wish that the same could be said for the conclusions, if that is what they are, of the hon. Member for Oldham, West. I say, "if that is what they are" because we repeatedly failed to get any serious answers from him in the course of his speech about precisely what the status of those proposals is or even what they mean. I should like to ask a few questions of the hon. Gentleman. How many people did he consult in drawing up his proposals? No one has yet emerged in the papers who has been consulted in any way, right up to the top of the hon. Gentleman's own party. How much evidence did he receive? How many public hearings did he have? How many members of the public said, "We must have an end to mortgage tax relief'?
  Mr. Meacher: How many people came to the hon. Gentleman's reviews and asked for an end to supplementary benefit mortgage payments for the poorest people? If those are removed, as is confidently predicted, how does he justify the fact that unemployed claimants and single-parent families will be left without a house and thrown on to the streets because they will no longer be able to meet their mortgage payments?
  Mr. Newton: The only confident predictions that have been made tonight about the outcome of the reviews have been made by the hon. Gentleman on the basis of the odd press cutting that he seems to have seen. I do not propose to comment further on such speculation and rumour.
  I should like to know from the hon. Gentleman what he has done to cost his proposals, because that too is a mystery. It is not clear whether they are costed on his authority or that of The Economist, because I rather understood him to say, when he was asked about the cost of his proposals, that we should look at The Economist.He was conveying the impression that a great independent exercise undertaken by that prestigious magazine would illuminate the matter for us. When I looked at The Economist, it was clear that it had used the figures which the hon. Gentleman gave it. They are not even the ones which he got out of his computer, because they have not been in the computer yet. As far as I can see, they are merely his jottings on the back of an envelope.
  As my right hon. Friend said, we reckon that the cost of the hon. Gentleman's proposals is at least twice what he suggested. It seems to me that it is at least £15 billion.
  Mr. Fowler: At least.
  367
  Mr. Newton: At least, as my right hon. Friend emphasises. That is what will be required to pay for what the hon. Gentleman has proposed.
  I should like to ask the hon. Gentleman one or two detailed questions about the proposals. As I understand it, he proposes a large increase in child benefit, to be paid for by abolishing the married man's tax allowance. That amounts to a substantial increase in taxation to finance a significant increase in social security benefits. Does the hon. Gentleman intend to have with that a drastic lowering of tax thresholds and the bringing into taxation of another 1 million people who are not currently in taxation? Has he thought about that?
  I considered some of the alternative ways of financing the other proposals which the hon. Gentleman has listed in his document. I see the suggestion that we might have a combined rate of national insurance and taxation on "all personal income". I do not know how carefully that has been considered. If it means what it says, it means the ending of personal allowances, the bringing of 12 million more people into taxation, and presumably seeking to collect income tax on every tiny morsel of part-time income. Does the hon. Gentleman mean that? I do not believe that he knows what he means. If it does not mean that, what does it mean? It cannot mean anything else.
  If the hon. Gentleman does not know the answer to that, let us return to the proposal about which he seems to have the answer and about which the rest of us are still mystified. I quote from the paragraph on housing allowance in his paper:
  "The level of benefit would relate directly to income, but only those on one and a half times average earnings would receive less assistance from housing allowance than they do now from mortgage interest tax allowance."
  That is no slip of the tongue; it is in the roneod version of the document. It can mean only two things. One is that mortgage interest tax relief is to be abolished. The other is that people earning more than one and a half times average earnings — a minimum of nearly 2 million people—will get less help with their housing costs; in other words, they will not only lose their mortgage income tax relief, but will not be compensated in any way for that.
  What I and my hon. Friends want to know—and, above all, what at least 2 million people in the country want to know — is whether that is what the hon. Member proposes to do. Will he tell us? There is only one conclusion to be drawn: that there is a clear-cut threat to a large number of people, running to millions, that they will have their housing assistance savagely cut in a form which will make nonsense of all the recent lip service about encouraging owner-occupation.
  Mr. Meacher: That is pretty rum, coming from a Government who have produced the highest level of mortgage interest ever in this country and the lowest level of housing starts since the war, and who in the past few months have produced an increase in mortgage interest, as a result of a hike in interest rates, of £57.60 a month for those with a £30,000 mortgage. Perhaps the Minister would like to explain how that is helping owner-occupiers.
  Mr. Newton: We now have a little more illumination on the hon. Gentleman's approach.
  Mr. Harrison: On a point of order, Mr. Deputy Speaker. I thought that this was a National Health Service debate, not a housing debate. We were talking about the destruction of certain services. I did not know that the Department of the

  709
  Environment was entering into the discussion. I thought that my hon. Friend the Member for Oldham, West (Mr. Meacher) was dealing with the health services and the social services. I did not know that the Minister spoke for the Department of the Environment—
  Mr. Deputy Speaker (Sir Paul Dean): Order. It is a very wide-ranging debate.
  Mr. Newton: It seems to range wider by the moment. The right hon. Member for Wakefield (Mr. Harrison) has raised another interesting question. Did the hon. Member for Oldham, West consult the shadow spokesman for the Environment? [Interruption.] I said "The right hon. Member for Wakefield," for whom I have the highest regard. If so, the shadow spokesman for the Environment was the luckiest bloke in the House.
  We now have some further illumination of the hon. Gentleman's answer to the problem. He is to withdraw mortgage interest tax relief. He is to reduce the housing help to everybody earning above one and a half times average earnings. His apparent answer is to increase expenditure by £15 billion, thus driving up interest rates even further. Then he is to take away the assistance by reason of what he has to pay in interest charges. [HON. MEMBERS: "Rubbish."' If that is rubbish, it has not been denied. I have given the hon. Gentleman enough opportunities to deny it.
  The position is this, and the whole House knows it. If there is a serious threat to the welfare state, it comes not from the Government—either now or in the future. It comes from the policies put forward by the hon. Gentleman and his hon. Friends in terms of a renewed surge of inflation, which would hit every pensioner and every less-well-off person harder than anything else. It comes from the threat of higher taxation at every level, which the hon. Gentleman has not denied, the consequences of which will be to raise even further the unhappy total of the unemployed. It is a threat to home ownership, and to all the wishes of people to exercise their own choices with their own money. That is the threat that we face. It is the threat of the hon. Gentleman's proposals. There is no threat from the Government's social security proposals.
  Question put, That the original words stand part of the Question:—
  The House divided: Ayes 167, Noes 276.

  Division No. 188]

  [10.00 pm

  AYES

  Abse,leo

  Boyes, Roland

  Anderson, Donald

  Bray, Dr Jeremy

  Archer, Rt Hon Peter

  Brown, Gordon (D'f'mline E)

  Ashley, Rt Hon

  Brown, Hugh D. (Provan)

  Jack Ashton, Joe

  Brown, Ron (E'burgh, Leith)

  Atkinson, N. (Tottenham)

  Buchan, Norman

  Bagier, Gordon A. T.

  Caborn, Richard

  Banks, Tony (Newham NW)

  Callaghan, Jim (Heyw'd & M)

  Barnett, Guy

  Campbell, Ian

  Barron, Kevin

  Campbell-Savours, Dale

  Beckett, Mrs Margaret

  Canavan, Dennis

  Bell, Stuart

  Carter-Jones, Lewis

  Benn, Tony

  Clark, Dr David (S Shields) h)

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

  Clarke, Thomas

  Bermingham, Gerald

  Clwyd, Mrs Ann

  Bidwell, Sydney

  Cocks, Rt Hon M. (Bristol S.)

  Blair, Anthony

  Cohen, Harry

  Boothroyd, Miss Betty

  Concannon, Rt Hon J. D.

  710

  Conlan, Bernard

  McTaggart, Robert

  Cook, Robin F. (Livingston)

  McWilliam, John

  Corbett, Robin

  Madden, Max

  Cowans, Harry

  Marek, Dr John

  Craigen, J. M.

  Marshall, David (Shettleston)

  Crowther, Stan

  Mason, Rt Hon Roy

  Cunliffe, Lawrence

  Maxton, John

  Cunningham, Dr John

  Maynard, Miss Joan

  Davies, Rt Hon Denzil(L'Ili)

  Meacher, Michael

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

  Michie, William

  Deakins, Eric

  Mikardo, Ian

  Dewar, Donald

  Mitchell, Austin(G't Grimsby)

  Dixon, Donald

  Morris, Rt Hon A.(W'shawe)

  Dobson, Frank

  Morris, Rt Hon J.(Aberavon)

  Dormand, Jack

  Nellist, David

  Dubs, Alfred

  Oakes, Rt Hon Gordon

  Dunwoody, Hon Mrs G.

  O'Brien, William

  Eadie, Alex

  O'Neill, Martin

  Ellis, Raymond

  Park, George

  Evans, John(St. Helens N)

  Patchett, Terry

  Ewing, Harry

  Pavitt, Laurie

  Faulds, Andrew

  Pendry, Tom

  Field, Frank (Birkenhead)

  Pike, Peter

  Fields, T.(L'pool Broad Gn)

  Powell, Raymond(Ogmore)

  Flannery, Martin

  Prescott, John

  Foot, Rt Hon Michael

  Randall, Stuart

  Forrester, John

  Redmond, M.

  Foster, Derek

  Rees, Rt Hon M.(Leeds S)

  Foulkes, George

  Richardson, Ms Jo

  Fraser, J.(Norwood)

  Roberts, Allan(Bootle)

  George, Bruce

  Roberts, Ernest(Hackney N)

  Gilbert, Rt Hon Dr John

  Robinson, G.(Coventry NW)

  God man, Dr Norman

  Rooker, J. W.

  Golding, John

  Rowlands, Ted

  Gould, Bryan

  Ryman, John

  Gourley, Harry

  Sedgemore, Brian

  Hamilton, James (M'well N)

  Sheerman, Barry

  Hamilton, W. W.(Central Fife)

  Sheldon, Rt Hon R.

  Harman, Ms Harriet

  Short, Ms Clare(Ladywood)

  Harrison, Rt Hon Walter

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

  Hart, Rt Hon Dame Judith

  Silkin, Rt Hon J.

  Healey, Rt Hon Denis

  Skinner, Dennis

  Heffer, Eric S.

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

  Hogg, N. (C'nauld & Kilsyth)

  Snape, Peter

  Holland, Stuart(Vauxhall)

  Soley, Clive

  Home Robertson, John

  Spearing, Nigel

  Hoyle, Douglas

  Stott, Roger

  Hughes, Robert(Aberdeen N)

  Strang, Gavin

  Hughes, Roy(Newport East)

  Thomas, Dafydd(Merioneth)

  Hughes, Sean(Knowsley S)

  Thomas, Dr R.(Carmarthen)

  Hughes, Simon(Southwark)

  Thompson, J.(Wansbeck)

  John, Brynmor

  Thorne, Stan(Preston)

  Jones, Barry (Alyn & Deeside)

  Tinn, James

  Kaufman, Rt Hon Gerald

  Torney, Tom

  Kilroy-Silk, Robert

  Wardell, Gareth(Gower)

  Lambie, David

  Wareing, Robert

  Leadbitter, Ted

  Weetch, Ken

  Leighton, Ronald

  Welsh, Michael

  Lewis, Ron(Carlisle)

  White,james

  Lewis, Terence(Worsley)

  Wigley,Dafydd

  Litherland, Robert

  Williams, Rt Hon A.

  Lloyd, Tony(Stretford)

  Winnick, David

  Loyden, Edward

  Young, David

  (Bolton SE)

  McCartney, Hugh

  McDonald, Dr Oonagh

  Tellers for the Ayes:

  McKelvey, William

  Mr. Frank Hynes and

  Mackenzie, Rt Hon Gregor

  Mr.Allen Mackay

  McNamara, Kevin

  NOES

  Adley, Robert

  Atkins, Robert(South Ribble)

  Aitken, Jonathan

  Baker, Nicholas(N Dorset)

  Alexander, Richard

  Baldry, Tony

  Alison, Rt Hon Michael

  Batiste, Spencer

  Amery, Rt Hon Julian

  Beaumont-Dark, Anthony

  Ancram, Michael

  Bellingham, Henry

  Arnold, Tom

  Bendell, Vivian

  Ashby, David

  Benyon, William

  Aspinwall, Jack

  Best, Keith

  Atkins, Rt Hon Sir H.

  Biffen, Rt Hon John

  711

  Blackburn, John

  Gow, Ian

  Blaker, Rt Hon Sir Peter

  Gower, Sir Raymond

  Body, Richard

  Greenway, Harry

  Bonsor, Sir Nicholas

  Gregory, Conal

  Boscawen, Hon Robert

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

  Bottomley, Peter

  Griffiths, Peter(Portsm'th N)

  Bottomley, Mrs Virginia

  Grist, lan

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

  Ground,Patrick

  Bowden, Gerald (Dulwich)

  Grylls, Michael

  Boyson, Dr Rhodes

  Gummer, John Selwy

  Bright, Graham

  Hanley, Jeremy

  Brinton, Tim

  Hannam, John

  Brittan, Rt Fion Leon

  Hargreaves, Kenneth

  Brooke, Hon Peter

  Harris, David

  Browne, John

  Harvey, Robert

  Bruinvels, Peter

  Haselhurst, Alan

  Bryan, Sir Paul

  Havers, Rt Hon Sir Michael

  Buchanan-Smith, Rt Hon A.

  Hayes, J.

  Budgen, Nick

  Hayhoe, Barney

  Bulmer, Esmond

  Hayward, Robert

  Burt, Alistair

  Heddle, John

  Butcher, John

  Hickmet, Richard

  Butterfill John

  Hicks, Robert

  Carlisle, John(N Luton)

  Higgins, Rt Hon Terence L.

  Carlisle, Kenneth(Lincoln)

  Hogg, Hon Douglas(Gr'th'm)

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

  Holland, Sir Philip(Gedling) Holt, Richard

  Cash, William

  Holt, Richard

  Channon, Rt Hon Paul

  Hordern, Peter

  Chapman, Sydney

  Howard, Michael

  Chope, Christopher

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

  Churchill, W. S.

  Howell, Rt Hon D. (G'ldford)

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

  Hubbard-miles, Peter

  Clark, Dr Michael(Rochford)

  Hunt, John (Ravensbourne)

  Clark, Sir W(Croydon S)

  Hunter, Andrew

  Clarke, Rt Hon K.(Rushcliffe)

  Irving, Charles

  Cockeram, Eric

  Jackson, Robert

  Colvin, Michael

  Jones, Robert (W Herts)

  Coombs, Simon

  Joseph, Rt Hon Sir Keith

  Cope, John

  Kellett-Bowman, Mrs Elaine

  Cormack, Patrick

  Kershaw, Sir Anthony

  Couchman, James

  King, Roger (B'ham N'field)

  Cranborne, Viscount

  King, Rt Hon Tom

  Critchley, Julian

  Knight, Gregory (Derby N)

  Crouch, David

  Knowles, Michael

  Currie, Mrs Edwina

  Knox, David

  Dickens, Geoffrey

  Lamont, Norman

  Dicks, Terry

  Lang, Ian

  Dorrell, Stephen

  Latham, Michael

  Douglas-Hamilton, Lord J.

  Lawler, Geoffrey

  Dover, Den

  Lawrence, Ivan

  Dunn, Robert

  Lawson, Rt Hon Nigel

  Durant, Tony

  Lee, John (Pendle)

  Dykes, Hugh

  Leigh, Edward (Gainsbor'gh)

  Edwards, Rt Hon N. (P'broke)

  Lennox-Boyd, Hon Mark

  Eggar, Tim

  Lester, Jim

  Emery, Sir Peter

  Lightbown, David

  Evennett, David

  Liley, Peter

  Eyre, Sir Reginald

  Lloyd, Ian (Havant)

  Fallon, Michael

  Lloyd, Peter (Fareham)

  Farr, Sir John

  McCrindle, Robert

  Favell, Anthony

  Macfarlane, Neil

  Fenner, Mrs Peggy

  Mackay, John (Argyll & Bute)

  Fletcher, Alexander

  McQuarrie, Albert

  Fookes, Miss Janet

  Madel, David

  Forman, Nigel

  Major, John

  Forsyth, Michael (Stirling)

  Malone, Gerald

  Forth, Eric

  Marland, Paul

  Fowler, Rt Hon Norman

  Mather, Carol

  Fox, Marcus

  Mawhinney, Dr Brain

  Fraser, Peter (Angus East)

  maxwell-Hyslop, Robin

  Freeman, Roger

  Merchant, Piers

  Fry, Peter

  Meyer, Sir Anthony

  Gale, Roger

  Mills, Sir Peter (West Devon)

  Galley, Roy

  Miscampbell, Norman

  Gardiner, George(Reigate)

  Mitchell, Daivd (NW Hants)

  Gardner, Sir Edward(Fylde)

  Moate, Roger

  Glyn, Dr Alan

  Molyneaux, Rt Hon James

  Goodhart, Sir Philip

  Morrison, Hon C. (Devizes)

  Goodlad, Alastair

  Nelson, Anthony

  Gorst, John

  Newton, Tony

  712

  Nicholls, Patrick

  Stewart, Allan (Eastwood)

  Normanton, Tom

  Stewart, Andrew (Sherwood)

  Norris, Steven

  Stewart, Ian (N Hertf'dshire)

  Ottaway, Richard

  Stradling Thomas, J.

  Parkinson, Rt Hon Cecil

  Sumberg, David

  Parris, Matthew

  Taylor, John (Solihull)

  Patten, Christopher (Bath)

  Taylor, Teddy (S'end E)

  Patten, J. (Oxf W & Abdgn)

  Tebbit, Rt Hon Norman

  Peacock, Mrs Elizabeth

  Terlezki, Stefan

  Percival, Rt Hon Sir Ian

  Thatcher, Rt Hon Mrs M.

  Porter, Barry

  Thomas, Rt Hon Peter

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

  Thompson, Donald (Calder V)

  Powley, John

  Thompson, Patrick (N'ich N)

  Price, Sir David

  Thorne, Neil (llford S)

  Prior, Rt Hon James

  Thornton, Malcolm

  Raffan, Keith

  Thurnham, Peter

  Rathbone, Tim

  Townend, John (Bridlington)

  Rhys Williams, Sir Brandon

  Tracey, Richard

  Ridley, Rt Hon Nicholas

  Twinn, Dr Ian

  Roberts, Wyn (Conwy)

  van Straubenzee, Sir W.

  Robinson, Mark (N'port W)

  Vaughan, Sir Gerard

  Roe, Mrs Marion

  Viggers, Peter

  Rossi, Sir Hugh

  Waddington, David

  Rost, Peter

  Wakeham, Rt Hon John

  Rowe, Andrew

  Waldegrave, Hon William

  Rumbold, Mrs Angela

  Walden, George

  Ryder, Richard

  Walker, Bill (T'side N)

  Sainsbury, Hon Timothy

  Walker, Rt Hon P. (W'cester)

  St. John-Stevas, Rt Hon N.

  Waller, Gary

  Sayeed, Jonathan

  Walters, Dennis

  Shaw, Giles (Pudsey)

  Wardle, C. (Bexhill)

  Shaw, Sir Michael (Scarb')

  Warren, Kenneth

  Shepherd, Colin (Hereford)

  Watson, John

  Shepherd, Richard (Aldridge)

  Watts, John

  Silvester, Fred

  Wells, Bowen (Hertford)

  Sims, Roger

  Wells, Sir John (Maidstone)

  Skett, T.H.H.

  Wheeler, John

  Smith, Tim (Beaconsfield)

  Whitney, Raymond

  Soames, Hon Nicholas

  Wiggin, Jerry

  Speed, Keith

  Winterton, Mrs Ann

  Speller, Tony

  Winterton, Nicholas

  Spencer, Derek

  Wolfson, Mark

  Spicer, Jim (W Dorset)

  Wood, Timothy

  Spicer, Michael (S Worcs)

  Woodcock, Michael

  Squire, Robin

  Yeo, Tim

  Stanbrook, Ivor

  Young, Sir George (Acton)

  Steen, Anthony

  Stern, Michael

  Tellers for the Noes:

  Stevens, Lewis (Nuneaton)

  Mr. Tristan Garel-Jones and

  Stevens, Martin (Fulham)

  Mr. Michael Neubert.

  Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 33 (Questions on amendments):—
  The House divided: Ayes 274, Noes 184.

  Division No. 189]

  [10.14 pm

  AYES

  Adley, Robert

  Biffen, Rt Hon John

  Aitken, Jonathan

  Blackburn, John

  Alexander, Richard

  Blaker, Rt Hon Sir Peter

  Alison, Rt Hon Michael

  Body, Richard

  Amery, Rt Hon Julian

  Bonsor, Sir Nicholas

  Ancram, Michael

  Boscawen, Hon Robert

  Arnold, Tom

  Bottomley, Peter

  Ashby, David

  Bottomley, Mrs Virginia

  Aspinwall, Jack

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

  Atkins, Rt Hon Sir H.

  Bowden,Gerald (Dulwich)

  Atkins, Robert(South Ribble)

  Boyson, Dr Rhodes

  Baker, Nicholas(N Dorset)

  Bright, Graham

  Baldry, Tony

  Brinton, Tim

  Batiste, Spencer

  Brittan, Rt Hon Leon>

  Beaumont-Dark, Anthony

  Brooke, Hon Peter

  Bellingham, Henry

  Browne, John

  Bendall, Vivian

  Bruinvels, Peter

  Benyon, William

  Bryan, Sir Paul

  Best, Keith

  Buchanan-Smith, Rt Hon A.

  713

  Budgen, Nick

  Hayward, Robert

  Bulmer, Esmond

  Heddle, John

  Burt, Alistair

  Hickmet, Richard

  Butcher, John

  Hicks, Robert

  Butterfill, John

  Higgins, Rt Hon Terence L.

  Carlisle, John (N Luton)

  Hogg, Hon Douglas (Gr'th'm)

  Carlisle, Kenneth (Lincoln)

  Holland, Sir Philip (Gedling)

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

  Holt, Richard

  Cash, William

  Hordern, Peter

  Channon, Rt Hon Paul

  Howard, Michael

  Chapman, Sydney

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

  Chope, Christopher

  Howell, Rt Hon D. (G'Idford)

  Churchill, W. S.

  Hubbard-Miles, Peter

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

  Hunt, John (Ravensbourne)

  Clark, Dr Michael (Rochford)

  Hunter, Andrew

  Clark, Sir W. (Croydon S)

  Irving, Charles

  Clarke, Rt Hon K. (Rushcliffe)

  Jackson, Robert

  Cockeram, Eric

  Jones, Robert (W Herts)

  Colvin, Michael

  Joseph, Rt Hon Sir Keith

  Coombs, Simon

  Kellett-Bowman, Mrs Elaine

  Cope, John

  Kershaw, Sir Anthony

  Cormack, Patrick

  King, Roger (B'ham N'field)

  Couchman, James

  King, Rt Hon Tom

  Cranborne, Viscount

  Knight, Gregory (Derby N)

  Critchley, Julian

  Knowles, Michael

  Crouch, David

  Knox, Davidc

  Currie, Mrs Edwina

  Lamont, Norman

  Dickens, Geoffrey

  Latham, Michael

  Dicks, Terry

  Lawler, Geoffrey

  Dorrell, Stephen

  Lawrence, Ivan

  Douglas-Hamilton, Lord J.

  Lawson, Rt Hon Nigel

  Dover, Den

  Lee, John (Pendle)

  Dunn, Robert

  Leigh, Edward (Gainsbor'gh)

  Dykes, Hugh

  Lennox-Boyd, Hon Mark

  Edwards, Rt Hon N. (P'broke)

  Lester, Jim

  Eggar, Tim

  Lightbown, David

  Emery, Sir Peter

  Lilley, Peter

  Evennett, David

  Lloyd, Ian (Havant)

  Eyre, Sir Reginald

  Lloyd, Peter, (Fareham)

  Fallon, Michael

  McCrindle, Robert

  Farr, Sir John

  Macfarlane, Neil

  Favell, Anthony

  MacKay, John (Argyll & Bute)

  Fenner, Mrs Peggy

  McQuarrie, Albert

  Fletcher, Alexander

  Madel, David

  Fookes, Miss Janet

  Major, John

  Forman, Nigel

  Malone, Gerald

  Forsyth, Michael (Stirling)

  Marland, Paul

  Forth, Eric

  Mather, Carol

  Fowler, Rt Hon Norman

  Mawhinney, Dr Brian

  Fox, Marcus

  Maxwell-Hyslop, Robin

  Fraser, Peter (Angus East)

  Merchant, Piers

  Freeman, Roger

  Meyer, Sir Anthony

  Fry, Peter

  Mills, Sir Peter (West Devon)

  Gale, Roger

  Miscampbell, Norman

  Galley, Roy

  Mitchell, David (NW Hants)

  Gardiner, George (Reigate)

  Moate, Roger

  Gardner, Sir Edward (Fylde)

  Molyneaux, Rt Hon James

  Garel-Jones, Tristan

  Morrison, Hon C. (Devizes)

  Glyn, Dr Alan

  Nelson, Anthony

  Goodlad, Alastair

  Neubert, Michael

  Gorst, John

  Newton, Tony

  Gow, Ian

  Nicholls, Patrick

  Gower, Sir Raymond

  Normanton, Tom

  Greenway, Harry

  Norris, Steven

  Gregory, Conal

  Ottaway, Richard

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

  Parkinson, Rt Hon Cecil

  Griffiths, Peter (Portsm'th N)

  Parris, Matthew

  Grist, Ian

  Patten, Christopher (Bath)

  Ground, Patrick

  Patten, J. (Oxf W & Abdgn)

  Grylls, Michael

  Peacock, Mrs Elizabeth

  Gummer, John Selwyn

  Percival, Rt Hon Sir lan

  Hanley, Jeremy

  Porter, Barry

  Hannam, John

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

  Hargreaves, Kenneth

  Powley, John

  Harris, David

  Price, Sir David

  Harvey, Robert

  Raffan, Keith

  Haselhurst, Alan

  Rathbone, Tim

  Havers, Rt Hon Sir Michael

  Rhys Williams, Sir Brandon

  Hayes, J.

  Ridley, Rt Hon Nicholas

  Hayhoe, Barney

  Roberts, Wyn (Conwy)

  714

  Robinson, Mark (N'port W)

  Thomas, Rt Hon

  Roe, Mrs Marion

  Peter Thompson, Donald (Calder V)

  Rossi, Sir Hugh

  Thompson, Patrick (N'ich N)

  Rost, Peter

  Thorne, Neil (Ilford S)

  Rowe, Andrew

  Thornton, Malcolm

  Rumbold, Mrs Angela

  Thurnham, Peter

  Ryder, Richard

  Townend, John (Bridlington)

  Sainsbury, Hon Timothy

  Tracey, Richard

  St. John-Stevas, Rt Hon N.

  Twinn, Dr Ian

  Sayeed, Jonathan

  van Straubenzee, Sir W.

  Shaw, Giles (Pudsey)

  Vaughan, Sir Gerard

  Shaw, Sir Michael (Scarb)

  Viggers, Peter

  Shepherd, Colin (Hereford)

  Waddington, David

  Shepherd, Richard (Aldridge)

  Wakeham, Rt Hon John

  Silvester, Fred

  Waldegrave, Hon

  Sims, Roger

  William Walden, George

  Skeet, T. H. H.

  Walker, Bill (T'side N)

  Smith, Tim (Beaconsfield)

  Walker, Rt Hon P. (W'cester)

  Soames, Hon Nicholas

  Waller, Gary

  Speed, Keith

  Walters, Dennis

  Speller, Tony

  Wardle, C. (Bexhill)

  Spencer, Derek

  Warren, Kenneth

  Spicer, Jim (W Dorset)

  Watson, John

  Spicer, Michael (S Worcs)

  Watts, John

  Squire, Robin

  Wells, Bowen (Hertford)

  Stanbrook, Ivor

  Wells, Sir John (Maidstone)

  Steen, Anthony

  Wheeler, John

  Stern, Michael

  Whitney, Raymond

  Stevens, Lewis (Nuneaton)

  Wiggin, Jerry

  Stevens, Martin (Fulham)

  Winterton, Mrs Ann

  Stewart, Allan (Eastwood)

  Winterton, Nicholas

  Stewart, Andrew (Sherwood)

  Wolfson, Mark

  Stewart, Ian (N Hertf'dshire)

  Wood, Timothy

  Stradling Thomas, J.

  Woodcock, Michael

  Sumberg, David

  Yeo, Tim

  Taylor, John (Solihull)

  Young, Sir George (Acton)

  Taylor, Teddy (S'end E)

  Tebbit, Rt Hon Norman

  Tellers for the Ayes:

  Terlezki, Stefan

  Mr. Ian Lang and

  Thatcher, Rt Hon Mrs M.

  Mr. Tony Durant.

  NOES

  Abse, Leo

  Cohen, Harry

  Alton, David

  Concannon, Rt Hon J. D.

  Anderson, Donald

  Cook, Robin F. (Livingston)

  Archer, Rt Hon Peter

  Corbett, Robin

  Ashley, Rt Hon Jack

  Cowans, Harry

  Ashton, Joe

  Craigen, J. M.

  Atkinson, N. (Tottenham)

  Crowther, Stan

  Bagier, Gordon A. T.

  Cunliffe, Lawrence

  Banks, Tony (Newham NW)

  Cunningham, Dr John

  Barnett, Guy

  Davies, Rt Hon Denzil (L'lli)

  Barron, Kevin

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

  Beckett, Mrs Margaret

  Deakins, Eric

  Beith, A. J.

  Dewar, Donald

  Bell, Stuart

  Dixon, Donald

  Benn, Tony

  Dobson, Frank

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

  Dormand, Jack

  Bermingham, Gerald

  Dubs, Alfred

  Bidwell, Sydney

  Dunwoody, Hon Mrs G.

  Blair, Anthony

  Eadie, Alex

  Boothroyd, Miss Betty

  Ellis, Raymond

  Boyes, Roland

  Evans, John (St. Helens N)

  Bray, Dr Jeremy

  Ewing, Harry

  Brown, Gordon (D'f'mline E)

  Faulds, Andrew

  Brown, Hugh D. (Provan)

  Field, Frank (Birkenhead)

  Brown, Ron (E'burgh, Leith)

  Fields, T. (L'pool Broad Gn)

  Buchan, Norman

  Flannery, Martin

  Caborn, Richard

  Foot, Rt Hon Michael

  Callaghan, Jim (Heyw'd & M)

  Forrester, John

  Campbell, lan

  Foster, Derek

  Campbell-Savours,Dale

  Foulkes, George

  Canavan, Dennis

  Fraser, J. (Norwood)

  Carlile, Alexander (Montg'y)

  Freud, Clement

  Carter-Jones, Lewis

  George, Bruce

  Cartwright, John

  Gilbert, Rt Hon Dr John

  Clark, Dr David (S Shields)

  Godman, Dr Norman

  Clarke, Thomas

  Golding, John

  Clwyd, Mrs Ann

  Gould, Bryan

  Cocks, Rt Hon M. (Bristol S.)

  Gourlay, Harry

  715

  Hamilton, James (M'well N)

  Owen, Rt Hon Dr David

  Hamilton, W. W. (Central Fife)

  Park, George

  Hancock, Mr. Michael

  Patchett, Terry

  Harman, Ms Harriet

  Pavitt, Laurie

  Harrison, Rt Hon Walter

  Pendry, Tom

  Hart, Rt Hon Dame Judith

  Penhaligon, David

  Healey, Rt Hon Denis

  Pike, Peter

  Heffer, Eric S.

  Powell, Raymond (Ogmore)

  Hogg, N. (C'nauld & Kilsyth)

  Prescott, John

  Holland, Stuart (Vauxhall)

  Randall, Stuart

  Home Robertson, John

  Redmond, M.

  Hoyle, Douglas

  Rees, Rt Hon M. (Leeds S)

  Hughes, Robert (Aberdeen N)

  Richardson, Ms Jo

  Hughes, Roy (Newport East)

  Roberts, Allan (Bootle)

  Hughes, Sean (Knowsley S)

  Roberts, Ernest (Hackney N)

  Hughes, Simon (Southwark)

  Robinson, G. (Coventry NW)

  John, Brynmor

  Rooker, J. W.

  Johnston, Russell

  Rowlands, Ted

  Jones, Barry (Alyn & Deeside)

  Ryman, John

  Kaufman, Fit Hon Gerald

  Sedgemore, Brian

  Kennedy. Charles

  Sheerman, Barry

  Kilroy-Silk, Robert

  Sheldon, Rt Hon R.

  Kirkwood, Archy

  Short, Ms Clare (Ladywood)

  Lambie, David

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

  Leadbitter, Ted

  Silkin, Rt Hon J.

  Leighton, Ronald

  Skinner, Dennis

  Lewis, Ron (Carlisle)

  Smith, C.(Isrton S & F'bury)

  Lewis, Terence (Worsley)

  Snape, Peter

  Litherland, Robert

  Soley, Clive

  Lloyd, Tony (Stretford)

  Spearing, Nigel

  Loyden, Edward

  Steel, Rt Hon David

  McCartney, Hugh

  Stewart, Rt Hon D. (W Isles)

  McDonald, Dr Oonagh

  Stott, Roger

  McKelvey, William

  Strang, Gavin

  Mackenzie, Rt Hon Gregor

  Thomas, Dafydd (Merioneth)

  Maclennan, Robert

  Thomas, Dr R. (Carmarthen)

  McNamara, Kevin

  Thompson, J. (Wansbeck)

  McTaggart, Robert

  Thorne, Stan (Preston)

  McWilliarn, John

  Tinn, James

  Madden, Max

  Torney, Tom

  Marek, Dr John

  Wainwright, R.

  Marshall, David (Shettleston)

  Wallace, James

  Mason, Rt Hon Roy

  Wardell, Gareth (Gower)

  Maxton, John

  Wareing, Robert

  Maynard, Miss

  Joan Weetch, Ken

  Meacher, Michael

  Welsh, Michael

  Meadowcroft, Michael

  White, James

  Michie, William

  Wigley, Dafydd

  Mikardo, Ian

  Williams, Rt Hon A.

  Mitchell, Austin (G't Grimsby)

  Winnick, David

  Morris, Rt Hon A. (W'shawe)

  Wrigglesworth, Ian

  Morris, Rt Hon J. (Aberavon)

  Young, David (Bolton SE)

  Nellist, David

  Oakes, Rt Hon Gordon

  Tellers for the Noes

  O'Brien, William

  Mr. Frank Haynes and

  O'Neill, Martin

  Mr. Allen McKay.

  Question accordingly agreed to.
  Mr. Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.
  Resolved,
  'That this House notes the Government's commitment to improving the Social Security and Health care systems in this country as shown by increased spending on the National Health Service and increased benefit levels for pensioners and others; supports the Government's aim of reducing the burden of taxation and National Insurance contributions especially for the lower paid; notes the Opposition's plans to end mortgage tax relief and increase income tax and National Insurance contributions; and congratulates the Government on having set in hand the most thorough review of the Social Security system for 40 years'.

  The Planning System
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Garel-Jones.]
  10.26 pm
  Mr. Peter Thurnham: This is the second time that I have been called for an Adjournment debate, and on both occasions I have been doubly fortunate. The first occasion was the day after the House had been suspended and the previous day's Adjournment debate had been lost. On this occasion, I nearly lost the notes for my speech on a District line train at six o'clock on Friday morning. The quick wits of Mr. Kingham, the station foreman at South Kensington station, together with the alertness of Mr. McConnachie of Baron's Court station saved the papers that I had inadvertently mislaid. When I read the Government's report "Burdens on Business", I thought that many of our obsolete planning restrictions should be lost.
  It is estimated by Barclays bank that unnecessary planning delays and restrictions cost £1,000 million per annum. The Financial Times estimated that perhaps 1 million jobs have been lost in the past five years through restrictions on business. I have received complaints in my constituency about delays to business through planning restrictions, and that is why I have chosen the subject of simplyfying the planning system for my debate tonight.
  Furthermore, from my experience in building up a business employing over 500 people, I know the extreme frustration caused by unnecessary legislative restrictions, delays and uncertainties. I shall be pleased to hear what my hon. Friend the Under-Secretary of State for the Environment has to say about the Government's intentions to act, as I hope that they will, on their "Burdens on Business" report. I am happy to put forward a 10-point action plan to improve employment prospects both in my constituency and elsewhere in the country.
  First, I feel that Parliament should remove the beam from its eye. We should rid ourselves of all surplus planning and other legislation. I support the proposals put forward last Wednesday by my noble Friends in the other place to set up a Joint Standing Committee of both Houses to prepare a miscellaneous provisions Bill as an annual springclean of Government legislation to clear away all redundant legislation that causes unemployment. For example, we should not have a law that forces the tiniest limited liability companies to go to the expense of preparing and filing annual statutory audited accounts. We should not put the same expenses on the smallest and on the largest companies.
  Secondly, new legislation to streamline existing procedures is needed. For instance, fire regulations should be covered by a general statutory duty enforced with as much freedom of choice and by the same authority as will enforce the new building regulations. The fire insurance companies could act in the same way as garages which issue MOT certificates for vehicles.
  Thirdly, we should enact the legislation for simplified planning zones so that councils can use this option to take the initiative in granting planning permission in advance of an application. Governments should be empowered to declare compulsory SPZs in areas where planning authorities are clearly inefficient. I am glad to say that the London boroughs are at the bottom of the efficient list, while northern authorities are the more efficient. The long

  717
  delays over the London STOLport are an example of how Governments should streamline the appeal process. Mowlem did all its preliminary work and put in its planning application in no more than 12 months, but it has been kept waiting for more than two and a half years for planning permission. Not only Londoners but northerners and other provincial travellers look forward to using this airport sooner rather than later. Mowlem deserves better treatment for its initiative, which is now waiting for the Government's decision.
  Fourthly, we should amend the 1971 Act to make it easier for small businesses to make small extensions of up to, say, 15 per cent. and for local authorities to grant changes-of-use planning permission, especially for mixed use and from warehouse to general industrial use as well as from general industrial to warehouse use. From my experience, I know the difficulty of finding premises that are 50 per cent. office and 50 per cent warehouse. Yet these are the sort of premises that are most needed by many of the new technologies.
  Fifthly, we should remove the powers of local authorities to prevent council house tenants from starting businesses in their own homes, as long as it does not in any way offend our common laws of nuisance, noise and so on. Millions of tenants are denied the chance to start a business in their spare time or to employ themselves usefully at home if they become unemployed. No wonder there is so much vandalism and hooliganism if people are not allowed to occupy themselves usefully. In my constituency, many empty council houses are boarded up because no wants to live in them. Why not allow these buildings to be usefully occupied by small businesses, instead of being used as targets for vandals with nothing else to do? Council house tenants should not have to worry if some one is using a typewriter or computer next door, so long as there is no noise or nuisance.
  Sixthly, we should put more teeth into the planning circulars issued to local authorities. For instance, circular No. 22/80 says that councillors should not make the mistake of
  "enforcing the rigid separation of employment and services—especially small scale — from the residential communities which they support".
  In practice, the opposite happens. A playgroup run by Mr. and Mrs. Whenlock from their home in Egerton was opposed by Socialists on the council on the grounds that that it was a business in a residential area. Where should a playgroup be but in the community that it serves? It is all very well for councillors to attempt to protect local interests and for officials to protect their structure plans, but it is central Government who have to pick up the bills for the unemployment that results. If unemployment benefit had to be paid out of the local rates, local planners would have a real incentive to encourage small businesses instead of standing in their way.
  Seventhly, I should like my hon. Friend the Under-Secretary of State to introduce a timetable for district authorities to produce individual unitary plans to replace the metropolitan structure plans. Bolton council has an opportunity in 1986 to rid itself of the straitjacket of the Greater Manchester council structure plan and provide development opportunities, free of constraints from imagined fears about the effect on other districts.
  718
  Eighthly, we should empower the officers of local authorities to issue immediate planning permission, only refusals and appeals going to committee. Eight weeks is too long to delay for most small businesses, which want immediate decisions. Councillors should appoint officers of the right calibre to make quick decisions themselves, and only refer to the committee the refusals and appeals. There is no need for every single application to be delayed for a committee decision. Councillors should be content to see the list of decisions, and bring to committee only those that they oppose.
  Ninthly, we should ensure that when decisions go to appeal, the councils bear the costs when the decisions go against them. That would discourage councils from being so restrictive and from forcing small businesses to incur costs which they cannot afford.
  Tenthly, councils should not be tempted to act as large-scale developers. They should be compelled to dispose of surplus land holdings and discouraged from acting so as to lay themselves open to allegations of misuse of their powers as planning authorities by attempting to dictate the development of their own sites. A tendency to draw magic lines on the map means that in a town such as Bolton perfectly sensible schemes to redevelop eye-sores such as Prospect Mill are opposed because they do not fit in with the council's preconceived ideas. Tens of millions of pounds of development could get under way immediately in Bolton, with jobs for many hundreds of people, if the council was not so blinded by its excitement over the Bark street project, worthy as that may be.
  I shall give some examples of the problems and delays caused by planners. For 10 years the retailer MFI was prevented from coming to Bolton. Recently, the proprietor of another firm, a frozen food business, has been told that he must wait three years before he can have a suitable site in Bolton. An exciting new development such as Dave's Aquarium, the largest retail aquarium in Europe, was held up because the GMC structure plan made no provision for novel opportunities made possible by cheap air freight from the far east. An entrepreneur, Mr. Fred Bridge, is wondering whether it is worth all the hassle to go ahead with his next new project, which would employ 100 people.
  I believe that Bolton council is probably better than most councils in wishing to encourage employment, but its answer to these questions is:
  "It is important to have a consistent policy framework to ensure that incompatible uses are avoided."
  But what is consistent or compatible about Bolton's 17,000 unemployed people? Where is the plan that encourages the initiative to provide employment? Where is the plan for 17,000 jobs?
  In conclusion, we were once thought of as having the finest planning system in the world, but it did not plan for 3 million unemployed. The recent publication, "The Cambridge Phenomenon," helps to explain why. In the 1950s and 1960s Cambridge council had a policy of restricting any individual business in Cambridge from taking on more than five extra employees. Indeed, IBM, the world's leading computer manufacturer, was refused planning permission to establish its European research headquarters in Cambridge. The whole country is now paying the price for such attitudes. But I wonder whether we are any better at planning today. Do we still have two worlds: the world of the planners and the real world?

  719
  Next month we have Enterprise Week, and 1986 is designated as Industry Year. I hope that both occasions will see a bonfire made of restrictions. If not, both taxpayers and the unemployed should rise up and demand to be freed from the bonds that tie us all down.
  10.38 pm
  The Parliamentary Under-Secretary of State for the Environment (Mr. Neil Macfarlane): I am grateful to my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) for the way in which he introduced this important subject, and I congratulate him on his shopping list and on the 10 points that he raised. I shall certainly take note of them.
  This subject is very important and highly topical. Simplifying the planning system is a subject of national and local interest. Whether one is a developer, employer, householder or someone who enjoys good countryside and good architecture, it is vital that the development control system is easy to use, effective and efficient.
  My hon. Friend mentioned a number of cases in which he suggests local planning authorities have been less than helpful to businesses seeking to expand. I am sure he will understand that it is difficult for me to comment on particular cases, although many of those that he quoted tonight are familiar to me, because he has, as a diligent Member of Parliament, approached me about the background. Obviously many of the details are important, and I shall be glad to look into them separately and write to him about them at a later stage. I should also be glad to write to him more fully about many of the points that he has raised tonight. It might be helpful, in that context, if I emphasised just how much we have already achieved in this field.
  The Government have done much to make the planning system more efficient. About 90 per cent. of all applications are now granted and 70 per cent. of decisions are issued within eight weeks. The appeal system, administered by my Department, exists to ensure that over-zealous refusals of permission are promptly remedied. The whole country is now covered by up-to-date development plans which set a coherent context for decisions on individual applications.
  The system and its operation can, and will, be further improved. There have, however, already been impressive achievements, and I shall set the background to the situation. Local planning authorities continue to deal with over 400,000 applications every year, and since 1979 the proportion decided within eight weeks has risen by 17 per cent. The number of appeals received by my Department was 25 per cent. higher last year than in 1979, and the number of full-time planning inspectors employed to deal with them was 10 per cent. lower, yet the great majority of appeals were still decided more speedily. These figures represent the cumulative effect of many small decisions and improvements in efficiency, each one in itself perhaps unspectacular, but the whole now reaping sound rewards in terms of speedier decisions and an earlier response to the developer.
  Improvements in management have played their part. They have done this within the context of a more flexible framework. In 1979 we introduced the Local Government Planning and Land Bill, which concentrated development control functions at district council level and simplified procedures for the adoption of local plans. In 1980 we issued a new circular revising the basic ground rules for
  720
  development control and giving special emphasis to the need for a positive approach, for efficient decision-making and for the application of sensible yardsticks in dealing with the sometimes difficult issues of small firms, housing land and the enforcement of control.
  Also in 1980, we issued a consultation paper on streamlined appeal procedures, a paper which we foLowed up with a management consultants' study, with many detailed changes of practice and with the issue of a circular stressing the value of early appeal decisions.
  In 1981, we revised the Town and Country Planning General Development Order, increasing the range of home and industrial extensions which can be built without the need to make a planning application, and creating new rights to use small warehouses as industrial buildings and vice versa, a point raised by my hon. Friend, and I shall be happy to develop it in correspondence with him in due course.
  Also in 1981 were the new regulations transferring all classes of planning appeal to planning inspectors for decision. Since then only 5 per cent. of cases have had to be recovered for detailed consideration in my Department, which has meant substantially quicker decisions on many appeals.
  Within the last couple of years we have put out a new code of practice on the determination of planning applications, which has made a contribution to the progress which planning authorities have made in this area. We have issued a new booklet of guidance for industrial developers, coupled with a hard-hitting circular on industrial development. We have puplished a new memorandum giving detailed guidance on the content and procedures of structure and local plans.
  Early this year we gave comprehensive new advice, for the first time in 17 years, on the use of planning conditions, emphasising their crucial role in allowing development to proceed and the importance of ensuring that the restrictions they impose on development are confined to what is strictly necessary.
  These measures have been effective and successful, but there can be no complacency in trying to improve the planning system. That system has a complex task. It must preserve our heritage in the towns and in the countryside, it must maintain and improve the amenity of the public, and it must be quickly responsive to the changing needs of society for new developments and new land uses which will contribute to economic growth and the provision of jobs. These objectives are not always easy to reconcile, but we must be alert to every opportunity which will allow us to streamline the system. We have not been backward in trying new approaches.
  In the Local Government Planning and Land Act, for example, we took powers to create new enterprise zones, where a scheme could grant a general and broadly-based planning permission so that developers could go straight ahead with their projects without awaiting the determination of an application. The enterprise zone idea has been a great success. An independent report commissioned by my Department and published last year shows that, even then, 10,000 new jobs in just over 1,000 firms had been attracted in the first 11 zones. The house will appreciate that not everywhere can be an Enterprise Zone.
  We have now suggested building on the success of the enterprise zones by creating a new type of zone, a simplified planning zone, with a planning scheme which, once adopted by the local authority, will act to grant a

  721
  similar broadly-based permission tailored to the area involved and in many cases eliminating the need to seek specific permission.
  Last year, when we consulted on simplified planning zones, we also sought comments on another idea to reduce the scope of control in line with local circumstances. This proposal would involve, where planning permission could be granted for a number of alternative uses on the same site, an ability to change freely between those uses once the original permission was granted, with no need to go back to the planning authority for a fresh permission on each occasion. A provision of this kind would be particularly useful for some new technology firms, a point mentioned by my hon. Friend as one of his 10 conditions for improvement.
  Both of these proposals would enable us to make important advances in reducing unnecessary regulatory controls. Both my hon. Friend and I want this. It can be done in a way which can be carefully tailored to the circumstances of each case and each area. We are still considering responses to consultation on simplified planning zones, and I am certain that my hon. Friend will appreciate that I cannot comment further at this stage on his remarks about them. If, having considered the results of consultation, we proceed with our SPZ proposals, I hope that we shall find an early opportunity in the next Session to translate both of these new ideas into legislation.
  I do not intend, however, that we should await that opportunity before taking further steps to reduce unnecessary burdens in the planning field, for although much has already been achieved it is clear that further opportunities for streamlining are now before us.
  My hon. Friend laid stress in his remarks on the need for planning control to be particularly responsive to the needs of small businesses. I echo his sentiments 100 per cent. Our principal circular on development control policy, circular 22/80, places great emphasis on small firms and their problems, and I am glad to reaffirm its message this evening. Small businesses are important in themselves, in their economic contribution and in creating jobs. If allowed to grow they can multiply the benefits they provide. Planning control must not stand needlessly in their way. Old-fashioned prejudices against commerce in residential areas or the countryside, or against people working from home, must not be allowed to stand in the way of enterprises. Many small firms are perfectly acceptable in such circumstances, although there will obviously be cases where the impact of a business on amenity is unacceptable. We have made our policy clear on these matters and we will impose it through the appeal system. But there is more that we can and will do.
  Let me take the example of telecommunications, a new and burgeoning industry with which I know my hon. Friend is familiar and one which involves many small firms in many different roles.
  The liberalisation of telecommunications and the promotion of growth and competition in this field inevitably raise planning issues. It is an area of rapid technological change and we have to respond to innovations such as cellular radio, broadband cable TV and microwave systems. Planning policies must ensure that no unnecessary impediments and obstacles lie in the way of such developments, since development, very
  722
  prominently in this field, represents economic growth, new jobs and greater prosperity. In 1982 a special development order was made which granted planning permission for the carrying out of development for the Mercury system on British Rail land. This was a most important step within deregulation.
  A number of broader charges are currently in hand to ensure that the planning system reflects the needs of today and does not subject minor telecommunications development to otiose procedures and regulatory impediment. Our proposals will mean that all telecommunications operators with a public service obligation under the terms of their telecommunications licence will enjoy freedom from planning control when installing apparatus such as wires, poles, ducts, and smaller masts and antennae, subject to reasonable size and other limits.
  This will be achieved by amendments to the Town and Country Planning General Development Order to be introduced in the next few months. The order will also be amended to permit other users of telecommunications, again without the need for a planning application, to install microwave and satellite dish antennae on larger buildings. We intend to take a very close look at any further procedures which may be necessary, because we recognise fully their effects on small firms.
  My hon. Friend will be familiar with the report, published last month, of the Government's scrutiny of legislative and administrative burdens on business—he touched upon this in his remarks—and in particular their impact upon small firms. He will know the welcome which that report gave to our proposals to introduce simplified planning zones and greater freedom to change the use of buildings. We will be examining the other proposals in that report very carefully over the coming months and seeing how much we can add to them to create a package which has a real impact on the problems of small firms. But I would like to announce today two specific initiatives which I intend to take to ease the impact of the planning system on small firms.
  First, I intend to issue a new circular to local planning authorities giving further guidance on the treatment of small firms. In part this will be a statement of good practice, drawing firmly to the attention of authorities the problems that businesses have in finding out what is expected of them, and by whom. But in part it will be a statement of policy which authorities will be obliged under the planning Acts to take into account in their decisions. It will reaffirm and elaborate on existing advice and make it clear that the planning approach to business development must be positive, not protectionist.
  Secondly, I propose to publish a new handbook which will tell small business men, in a clear and down-to-earth way, what to expect of the planning system, when they need permission, and how to go about getting it when they do.
  We have already achieved a great deal in making the planning system more prompt, more efficient and more responsive to enterprise. It is becoming clear that one of the major remaining problems is the difficulty which planners have in understanding what it is like to run a small business and that which entrepreneurs have in finding their way around the planning system. This is a real problem. It can lead to firms buying premises which are quite unsuitable in planning terms, failing to present a proper case for permission, believing permission is needed when it is not and suffering enforcement action unnecessarily.

  723
  It can lead to firms failing and to jobs being lost. I fully accept the figure given by my hon. Friend in his opening remarks. The Government are making a real effort to improve understanding, and our new circular and handbook will make a real contribution to that effort.
  My hon. Friend has often expressed his concern in the past about building regulations both formally and informally. The Government are already engaged on a fundamental review of the building regulations. The object of the review is the simplication of building control procedures and their requirements. The first stage of the review will be completed later this year when new building regulations will be made. The new regulations will be much simpler in form than the current ones. They will give complete exemption to many more kinds of work. They will introduce quicker, less detailed procedures and they will also provide for private certification of building work by approved inspectors as an alternative to local authority control.
  The new regulations will be supported by documents giving clear, practical guidance on how to comply with the requirements. All those improvements, making the regulations simpler to understand and quicker to use and exempting some work altogether, will, I hope, be of help to small businesses.
  In the first stage of the review we have recast the existing requirements in the way that I have described. The
  724
  next stage, which is about to start, will be to review the scope and content of the regulations to see that they are the minimum required to ensure reasonable standards of health and safety for people in and around buildings. That part of the review will cover all the requirements in the regulations, including those on fire safety.
  There is obviously no intention here of abanconing basic safety standards, but there is scope for making the regulations simpler and less onerous. The scrutiny of administrative burdens on small businesses has pointed the way and highlighted in particular the problems of the conversion of existing buildings for commercial use. That scrutiny recommended that the Department's review should proceed with all speed, and that is the Government's intention.
  The simplification of the planning system is the subject of the debate and that is the Government's strategy. I shall develop many of the points that my hon. Friend has raised tonight in correspondence with him, but I am grateful to him for giving the House the opportunity of discussing this important subject. It is our intention to make all haste. Simplifying the planning system is one of the most integral and important means that we have to regenerate the economy at all levels.
  Question put and agreed to.
  Adjourned accordingly at seven minutes to Eleven o' clock.

CHURCH COMMISSIONERS
  Molesworth (Land Sales)
  Molesworth (Land Sales)
ATTORNEY-GENERAL
  Northern Ireland (Criminal Cases)
  Northern Ireland (Criminal Cases)
PRIME MINISTER
  Football Hooliganism
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  Multi-fibre Arrangement
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  Export Orders
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  Nurses and Widwives (Pay Review Body Report)
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  Social Services Departments (Supplementary Employment Grant)
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HOME DEPARTMENT
  Metropolitan Police (Recruitment)
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  ARWEN 37 Weapon
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  Metropolitan Police (Water Cannon)
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  Metropolitan Police (Armoured Vehicles)
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  Television (Background Noise)
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  British Nationality
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ENERGY
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EMPLOYMENT
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ENVIRONMENT
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SOCIAL SERVICES
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TRANSPORT
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SCOTLAND
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FOREIGN AND COMMONWEALTH AFFAIRS
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EDUCATION AND SCIENCE
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NATIONAL FINANCE
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THE ARTS
  European Community
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  Hallé Concert Society
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  Philharmonic Hall, Liverpool
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NORTHERN IRELAND
  Alexander and Green
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  Industrial Disputes (Statistics)
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  Community Physicians
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AGRICULTURE, FISHERIES AND FOOD
  Pâté de Foie Gras
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  Badgers
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  Tributyl-tin Oxide
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  Chemicals (Draize Test)
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  Rented Farms
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  Emergency Slaughter
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  Imported Animals
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  Animals (Slaughter)
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  Research and Development
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  Third World Countries
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  Young Farmers
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DEFENCE
  Arms Supplies (Sri Lanka)
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  Equipment Costs
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  RAF Trainer Aircraft
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  NATO Budget
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  Falkland Islands
  Falkland Islands

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

Minimum Wages: ILO Requirements
Lord Davies of Leek: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what effort they will make to maintain minimum wage rates in industry as required by ILO Convention No. 26, if the wages councils machinery is abolished.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, our adherence to International Labour Convention 26 limits the Government's ability to promote employment opportunities and we therefore propose to deratify the convention subject to the consultations required by ILO rules. In the event that we proceed with deratification, our obligations on minimum wage-fixing will in due course come to an end.
Lord Davies of Leek: My Lords, I thank the Minister for that Answer. Is he aware that modern Conservatism has moved many miles away from the old compassionate Conservatism of the past history of its great movement? Does he not realise that the labourer is worthy of his hire, and that the road that we are taking means that we shall have cheap labour which will not give us the best value for money?
Lord Belstead: My Lords, I do not agree with that. The Government do not agree with that. People need to price themselves into jobs, and wages councils almost certainly are not helping with that process at the present time.
Lord Dean of Beswick: My Lords, can the Minister tell the House why the Government continue with this fallacy of lowering wage rates at the bottom end of the scale, among the poorest paid section of our community, when in fact they are already lower-paid than most of their contemporaries in Europe?
Lord Belstead: My Lords, there are a lot of different surveys and views on this. Surveys by the Institute of Directors and Industrial Relations Review Report indicate that employment is jeopardised by wages council pay rates, particularly for young people. Indeed, the consultation paper which my right honourable friend the Secretary of State issued on 21st March referred to a growing body of evidence on this. What is certain is that youth rates in wages councils are higher in relation to adult rates than outside wages councils' settlements. This has an adverse effect on jobs.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that the true compassion for the unemployed is
898
to take every measure possible to increase employment, and that the step which the Minister has announced will undoubtedly help this and is in the true tradition of Conservative compassion?
Lord Belstead: My Lords, may I make it clear that what the Government are saying is that they intend, after consultation, or subject to consultation, to deratify the convention. The consultation paper which my right honourable friend has put out has made clear that there are two main options after that. There could be abolition of the wages councils or there could be fairly fundamental reform. Either way I would guess that we would be going along a road which my noble friend Lord Boyd-Carpenter would approve, and the Government most certainly agree with my noble friend.
Lord Cledwyn of Penrhos: My Lords, is the noble Lord aware that the policy of pricing into jobs was the policy of successive Conservative Governments over a period of a century and more, and that the result was lower wages and poor conditions? Is he aware that that was the case, and is that what he means by "pricing into jobs"?
Lord Belstead: No, my Lords; we do not mean that, but we do mean that the rigidity and inflexibility of the wages councils' system is something which needs to be looked at fundamentally. That is why my right honourable friend has put out his consultation paper and now awaits reactions to that by 31st May.
Viscount St. Davids: My Lords, has the noble Lord any figures to show the percentage of apprentices' wages to adult wages in this country as compared to those of other countries? If he has, would it not be of great interest if he could tell the House? If he has not, can he put them somewhere where they will be obtainable to the House?
Lord Belstead: My Lords, I shall certainly see whether I can do that for the noble Viscount. I must apologise in that I do not have those figures with me.
Lord Wallace of Coslany: My Lords, is the noble Lord aware that he said that workers must price themselves into a job? Is it a fact then that the Government think that the workers should shop around on their bikes? Is he further aware that what he has said is a certain recipe for considerable industrial unrest?
Lord Belstead: My Lords, I would not accept for one moment the last assertion which the noble Lord has made. On the first part of his question, the Government believe that either the route of reform or possibly the route of abolition—and we genuinely are waiting to see what interested parties think about these in the consultation period—provides benefits in the creation of employment.
Baroness Seear: My Lords, does the noble Lord not agree that the rates for young people should be distinguished from rates for adults? A large number of wages councils are concerned with rates of pay for women, which are at an extremely low level already. Does he agree that in reviewing the question of wages

899
councils the two issues, including the appropriate rates for youngsters, especially if they are in the process of learning a job, and the rates that apply for adult women on unskilled and semi-skilled work, which are already at a low level, should be considered separately?
Lord Belstead: My Lords, that is precisely the sort of matter which the Government would wish to take into account during the consultation period.
The Earl of Onslow: My Lords, is my noble friend aware that there is an enormous difference between the cost of employing somebody and the cost of what that person receives? At certain low wage levels the cost of what that person receives in real take-home pay can go down with an increase in his monetary wage. This has a disastrous effect, first, on the inflationary costs of the company and, secondly, on labour relations. Is my noble friend not aware that it is vitally important that the review of tax and social security which is being undertaken at the moment by the Government should be expedited and should be as thorough as possible?
Lord Belstead: My Lords, we are getting a little wide of the original Question, but I agree with my noble friend.
Lord Gallacher: My Lords, can the Minister tell the House whether, if the Government decide to take the route of abolition, that will include the Agricultural Wages Council?
Lord Belstead: My Lords, a statement was made that the Agricultural Wages Council, which falls under a different convention, will be continuing for the next 10 years.
Lord Brockway: My Lords, in applying their policy of lower wages can the Government not have consideration for those who are on the lowest level? Would the Minister not agree that the wages councils have saved thousands of people from being driven below the hunger level?
Lord Belstead: My Lords, I am bound to say to the noble Lord that, as the consultative paper makes clear, the opposite appears to be happening at present. A great number of workers who fall within the scope of the wages board are apparently content with the minimum being offered statutorily. In other words, there is no competition, either from those who are employed or from those who are employers, to try to offer better wages in some cases than those that are being set down statutorily. This is yet another reason why the Government believe that the present situation is unsatisfactory. It needs to be looked at. We have not said definitely what we wish or think we ought to do. My right honourable friend has put out this consultative document. It came out on 21st March and I know that he genuinely wants views to be given on the paper.
Lord Elwyn-Jones: My Lords, was not the purpose of the wages councils to prevent exploitation of workers? If the councils are to go, what steps do the Government intend to take to prevent exploitation in the way that used to be prevented by wages councils?
Lord Belstead: My Lords, this is precisely the kind of point on which we wish to hear views during the period that I have mentioned.

Regional Aid and Inward Investment
2.46 p.m.
Lord Diamond: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps are being taken to monitor the effects on inward investment of the recent reductions in regional aid.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, from the beginning of this year we are collecting statistics on a quarterly basis from the relevant industrial development agencies in the United Kingdom in respect of both active projects and investment decisions within their localities.
Lord Diamond: My Lords, can the noble Lord the Minister tell me whether the press is correct in asserting that it is the reduction in regional aid which has enabled West Germany to outbid the offer made by the Welsh Development Agency to an American chip manufacturer who was going to invest in Cwmbran no less than £40 million, leading to the creation of 600 new jobs?
Lord Lucas of Chilworth: My Lords, I do not believe that the report to which the noble Lord, Lord Diamond, refers is, in fact, correct. My understanding is that the company decided to locate in Germany because most of its customers were in Germany. I should add that I have recently returned from Germany, where I did not hear any comment from potential investors in this country that would give rise to the thought in my mind that the change in assisted area incentive grants is the first and only consideration of inward investment plans.
Lord Diamond: My Lords, in view of the lack of competition, may I ask yet another question? Will the noble Lord the Minister be good enough to look into this himself? It is a serious allegation; 600 jobs are a lot of jobs. I should be grateful if he would look into it.
Lord Lucas of Chilworth: My Lords, I reiterate what I said in answer to the noble Lord's first supplementary question. However, I should be glad to have a further look. If I find on considering it further that the information I have given is not correct, I will write to him; if it is correct, I will not.
Lord Cledwyn of Penrhos: My Lords, in view of the severe unemployment situation in that area, can the noble Lord tell the House what consultations took place with the Welsh Development Agency on this issue? Can he say whether the agency was fully consulted and, if so, what was its reaction to the present situation?
Lord Lucas of Chilworth: My Lords, I very much regret that I cannot give the noble Lord the Leader of the Opposition that information. It is a little wide of the original Question. If he would particularly like an answer, I will certainly investigate it.

Diet Guidance
2.48 p.m.
Lord Gainford: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether any guidance is being prepared for the public on the importance of a healthy diet.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Baroness Trumpington): Yes, my Lords. We expect guidance from the Joint Advisory Committee on Nutrition Education to be available later this year.
Lord Gainford: My Lords, arising out of that reply, for which I thank my noble friend the Minister, will Her Majesty's Government encourage the producers of food wherever it is practical to state the calorific value on labels on their cans and products?
Baroness Trumpington: My Lords, in answer to my noble friend, last month, following a request by food industry representatives, the Ministry of Agriculture, Fisheries and Food circulated consultation guidelines for a voluntary scheme which would indicate calorific values.
Lord Shinwell: My Lords, if I may ask for information, can the noble Baroness tell us whether, when the Government decide what is a healthy diet, we can be assured that everybody in the country is going to get it?
Baroness Trumpington: My Lords, the noble Lord's supplementary question is very wide. We cannot ensure anything in a free country where people can make their own choices.
Lord Annan: My Lords, would not the noble Baroness agree that there is no lack of guidance and that every newspaper and every magazine has guidance on the question of diet? Would not the noble Baroness agree that the difficulty for certain Members of your Lordships' House, such as myself, is how to follow it?
Baroness Trumpington: My Lords, I have been thinking that there must be a reason why I should be working at a place called the Elephant. I agree with the noble Lord.
The Earl of Radnor: My Lords, on a more serious note, is my noble friend aware that there are great differences within the medical world on diet and that any precipitous action taken on the lines of the Question originally asked could do damage to certain sections of the farming industry and should not be undertaken lightly at all? Is she further aware that a little of what you fancy does you good?
Baroness Trumpington: My Lords, I should have thought that I was the living example of that.
Lord Wallace of Coslany: My Lords, can the noble Baroness say whether the Government might consider stressing the value of home-grown vegetables and, in addition to that, give a little more positive effort in the provision of allotment gardens?
Baroness Trumpington: My Lords, the noble Lord is well known for the interest he takes in the growing of vegetables. I am sure that he produces excellent quality.
Lord Rea: My Lords, can the noble Baroness give us a few more details as to the progress of the food-labelling recommendations by the Ministry of Agriculture, Fisheries and Food which she mentioned in her first reply?
Baroness Trumpington: My Lords, the guidelines which I mentioned would complement the proposed statutory requirement for fat-content labelling. The Government are considering whether to prescribe by regulation a standard format for the voluntary information so as to avoid the possible confusion among consumers that differing formats might cause.

National Bank of New Zealand Limited Bill
2.53 p.m.
Read a third time, and passed, and returned to the Commons with amendments.

Lloyds Bank (Merger) Bill
Read a third time, and passed, and returned to the Commons with amendments.

House of Lords Offices
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move that the Second Report from the Select Committee be agreed to.
Moved, That the Second Report from the Select Committee be agreed to.—(Lord Aberdare.)
The report was as follows:
1. Staff of the House
A report from the Sub-Committee was received.
The Committee were informed that reviews of the work of the Hansard editors and reporters and of the doorkeepers and attendants had been concluded. The Committee agree the Sub-Committee's recommendations for a restructuring within the grades and authorised revised rates of pay.
2. Library
A report from the Sub-Committee for the year 1984 was laid before the Committee.
3. Refreshment Department
A report from the Sub-Committee was received.
The Committee agreed to the Sub-Committee's recommendation that the Hotel and Catering Workers' Union be granted representative capacity for members of the Union employed in the House of Lords Refreshment Department and approved the terms of a recognition agreement.
4. Insurance for Lords
The Committee approved an increase in the personal accident insurance cover for Lords whilst on Parliamentary duty.
5. Speakers' Conferences
The Committee authorised provision for the reimbursement of additional costs incurred when the wife of a Lord Chancellor, or his representative as Speaker, accompanies her husband on official duties.
6. Parliamentary Delegations
The Committee approved a change in the conditions relating to the costs of travel by members of U.K. Delegations to European Assemblies and authorised a revised daily rate of subsistence.
7. Parliament Office
The Committee were informed that Mr. B. P. Keith had been promoted to Chief Clerk, Committee Office and that Mr. E. J. J. Wells had been appointed Clerk to fill the vacancy resulting from the retirement of Mr. E. D. Graham, C.B.
8. Hansard Reporting Staff
The Clerk of the Parliaments informed the Committee of the following changes in the Editorial staff on the retirement of Mr. D. A. Dumbreck, O.B.E., the Editor of Debates, on 1st April 1984:—

Mrs. M. E. E. C. Villiers to be Editor,

Mr. W. Frensham to be Deputy Editor,

Mr. W. J. Reid to replace Mr. Frensham as an Assistant Editor.

The Committee expressed their appreciation of Mr. Dumbreck's long and valuable service to the House.
The Committee also authorised the payment of revised attendance fees and charges for temporary reporters and agency typists.
9. Revised Scales of Pay
The Committee confirmed the application of the following Civil Service memoranda to applicable staff of the House of Lords:—

CM/674

Revised rates of pay for certain Clerical Executive grades

CM/676

GM/336

Fees for Academic Consultants.

10. Official Shorthand Writer
The Committee authorised the restructuring of the scale of fees paid to the Official Shorthand Writer and provision for a share of the cost of word processor training expenses.
11. Superannuation
The Committee were notified of the following awards made under the House of Lords Staff Pension Scheme:—

(a) Pension and lump sum to Sir David House, G.C.B., K.C.V.O., C.B.E., M.C., Gentleman Usher of the Black Rod, who retired on 14th January 1985.

(b) Pension and lump sum to Mr. E. D. Graham, C.B., Principal Clerk, who retired on 1st January 1985.

(c) Pension and lump sum to Mr. D. A. Dumbreck, O.B.E., Editor of Debates, who retires on 1st April 1985.

(d) Pension and lump sum to Mr. A. J. Phelps, C.B., Committee Clerk, who retires on 6th April 1985.

(e) Pension and lump sum to Mr. F. W. Guy, Clerical Officer, who retired on grounds of ill-health on 1st January 1985.

(f) Widow's Pension and lump sum death benefit to Mrs. J. Healey, valid nominee of A. J. Healey, former Senior Attendant, who died on 25th December 1984.

(g) Widow's Pension and lump sum death benefit to Mrs. J. P. Codling, valid nominee of R. H. Codling, former Attendant, who died on 3rd March 1985.

(h) Pension and lump sum to Mrs. S. E. Austin, Housemaid, who retired on 3rd February 1985.

(i) Revised Pension and lump sum to Mrs. L. Hall, B.E.M., Housemaid, who retired after re-employed service in 13th January 1985.

(j) Preserved pension and lump sum to Miss V. J. Charrington, Personal Secretary, who resigned on 21st September 1984.

(k) Preserved pension and lump sum to Mr. P. C. Neary, Attendant, who resigned on 13th July 1984.

904

(l) Preserved pension and lump sum to Mrs. D. L. Stokes, Housemaid, who resigned on 7th September 1984.

(m) Preserved pension and lump sum to Mrs. N. E. Diflley, Shorthand typist, who resigned on 22nd February 1985.

(n) Short service payment to Miss C. J. Brace, Personal Secretary, who resigned on 20th March 1985.

(o) Short service payment to Mrs. S. M. King, Cashier, who resigned on 30th November 1984.

(p) Short service payment to Miss E. Titmarsh, Clerical Officer, who resigned on 1st February 1985.

(q) Short service payment to Miss J. V. Davey, Housemaid, who resigned on 11th January 1985.

(r) Short service payment to Miss J. M. Cowan, Housemaid, who resigned on 15th February 1985.

(s) Short service payment to Mrs. P. M. Manson, Housemaid, who resigned on 2nd March 1985.

(t) Notional Transfer Value in respect of Mr. D. R. Beamish, Senior Clerk, who was seconded to the Treasury on 1st April 1983.

(u) Notional Transfer Value in respect of Miss M. B. E. Babington, Reporter, who transferred to the House of Commons on 3rd December 1984.

On Question, Motion agreed to.

The Falkland Islands
2.55 p.m.
Lord Shackleton Lord Shackleton rose to call attention to the development of the Falkland Islands and dependencies, the new constitution and future prospects; and to move for Papers.
The noble Lord said: My Lords, I rise to move the Motion for Papers standing in my name. Perhaps I may begin by apologising to your Lordships for the fact that an article I planned two months ago has appeared in The Times today, the day of the actual debate. I cannot blame the The Times because I was very late in submitting it; although the editing that made reference to today's debate was not mine, but was intelligence on the part of The Times. I must say that if anyone else had done it, I should have been critical. I apologise to your Lordships. I think that one wants to be careful that one does not use the public press to debate in advance what is being debated in this House. I hope that your Lordships will accept this apology. I was faced with a problem: either to say, "Do not publish it at all" or to be out of date. The only advantage I can see, since there are a number of speakers who are taking part in this debate, is that if enough of your Lordships have read the article, that will perhaps shorten by my speech.
Secondly, I should like to say that I am extremely sorry that the noble Baroness, Lady Young, through no fault of her own, is almost on her way now to Brazil, to attend the funeral of the President-Elect of Brazil. I know that she was very anxious to take part in this debate and has taken a deep interest in the Falklands. I am sure that we shall all miss her and certainly we exonerate her from any discourtesy to your Lordships' House because she clearly had to go. At the same time I am very glad that the noble Lord, Lord Trefgarne, who has been to the Falklands and has taken an interest, will be replying, aided no doubt by the speech that the noble Baroness, Lady Young, would otherwise have delivered.
Let me also say—and this may also be a comfort to your Lordships—that I do not propose to make any

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reference to the "Belgrano" on this occasion. The Motion is worded in terms wide enough to enable us to discuss (to use a word that I confess I do not like) the geopolitics of that part of the world. It is a word that is used frequently by the Argentines in relation to the Antarctic. Because there are many more of your Lordships taking part in the debate than I expected, I propose to try to shorten my speech and certainly not to go into some of the arguments which appear in The Times today, for which I again apologise.
As I say, the Motion is wide enough to cover any aspect of that part of the world. There is, in fact, an argument as to what the word "dependencies" means, because South Georgia and the South Sandwich Islands, I understand, have been dependencies of the Falklands and still are so, but will not be so in a few months' time when the new orders are introduced.
In a sense they have been separate from the Falklands; and it is worth reminding your Lordships of the geography of that part of the world. Whereas the Falklands is the same latitude South as London is North and is the ultimate temperate place, never very cold, never very hot, South Georgia—a mere 100 miles further south, although 700 miles to the south-east—is on the same latitude as Manchester, but is sub-Antarctic, with glaciers going down to the sea. It is in that area that there are to be found, in perhaps the richest part of Antarctic waters, the krill, the squid and those fish which have not already been fished out in the absence of proper control and the operation of proper fishing limits.
Let me deal very briefly with the constitution because, in a sense, it has been a trigger for this debate. It was proposed that there should be an Unstarred Question to discuss the constitution and the noble Baroness, Lady Vickers, would have put that down. I am very grateful to her for letting us widen this now and I am grateful to the Government for providing time so that we can debate the whole subject. The noble Baroness, Lady Vickers, has played a very important role in relation to the Falklands. She was responsible for the matter of nationality in the Falklands and I am very glad that she is taking part in this debate.
As I say, the debate is wide enough to cover any issue, but the constitution itself is not unimportant. It has built into it the provision of human rights, and although this is contained in an international convention, I think it is a pity that the Argentine has not yet subscribed to that particular convention. The fact remains that the power with regard to the future of the Falklands rests ultimately with the Secretary of State, with the Government and with Parliament. No position in that has been altered, though it has been thought that by building in, very properly, the rights of the islanders under the UN provisions, this alters the British position.
I shall want briefly to say something about the relationship of the Falklands to that area, including the Antarctic, but first of all I should like to make some comments on the report of the Select Committee of the Commons. I am bound to say that in certain respects they have got it right and in other respects they got it wrong. I think they were wrong in criticising the excellent chief executive of the Falkland Islands Development Corporation and indeed the concept of
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the Falkland Islands Development Corporation. We originally called it the Falkland Islands Development Agency in our report because we thought the word "Corporation" might frighten the Government since it could have sounded too much like nationalisation. The Government changed it back to "Corporation".
The intention was not only to provide a capability which was carefully clued-in to the Government because the chief executive of the Falkland Islands Development Corporation is also the Government chief executive under the Governor and is answerable directly to the Governor and to the Executive and Legislative Councils. Mr. Taylor, Mr. Simon Armstrong and others have done a first-class job in a very short time. One has to remember that setting up an institution of this kind with very little resources, in an island with a population of only 1,800, is not easy; and a degree of progress is being made.
However, there is one area where I would wish to be critical and that is the failure to move more rapidly on land reform. I was quoted by the Foreign Secretary when I said in an earlier debate that no other author of a report had had quite so much carried out by a Government. But the fact is that there has been a failure to tackle, on a radical basis, the whole question of land reform. This is partly because the English do not really understand reform in the way that the Scots and the Irish do. The object was twofold. One was to stop the drain of profits from the islands back to this country. As we pointed out, those profits had produced tax revenue to the British Government greater than the sums we were giving in the way of aid. That is certainly not so now.
Secondly, we needed to establish a degree of independence, pride and self-sufficiency among the islanders by enabling them to own their own farms. The degree of progress that has been made, though limited, has shown some success. But I would urge on the Government that the policy of gradualism is not sufficient at the moment to ensure the long-term viability of the Falklands. After all, it is for the Falkland islanders, in the first instance, that we are spending the money that we are spending on defence, though of course it is also in the interests of international peace. Such farms that have been broken up and sold are working successfully and I would hope to see more rapid progress.
It has been argued by the Government that there are not the people in the Falkands who are capable of taking over these farms; but I beg to differ on this and I should like to see the evidence on which that statement is made. The fact is that if the Falklands are to survive and if there is to be a degree of independence and an opportunity for development in the Falklands, possibly also with the help of emigration, then more progress is needed in making farms available. I would beg the Falkland Islands Company, a subsidiary of Coalite, whose record in maintaining their farms has been good—let me stress that I am not wholly critical, but they have not recently made any farms available in this connection—to bear this in mind. I would beg them, as the principal owners in the Falklands, to give some thought to the need. We argued in our report that there must be a response from the Falkland islanders and the companies if the continuing

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occupation by the genuine totally British people in the Falkland Islands was to survive and be justified.
I should now like to deal with a number of points, though I do not propose to take very long because I know that a number of my colleagues who have themselves been to the Falklands will contribute. I should like briefly to refer to the use that may be made of the airfield. We recommended that Stanley airfield, which was being built with a permanent runway in 1976, should have been enlarged to enable its use by wide-bodies jets and international aircraft. At that time it would have cost about £5 million. Against that, the cost will now be somewhere around £250 million. We recommended that because we saw the future value and development of the Falkland Islands depending very much in the long run—though we were unable, I admit (and we made this clear), to provide an analysis of costs—upon an improvement in communication.
Next month this new airfield is going to be opened. It is extremely important that it plays a major role (and the Ministry of Defence have paid for it) in the defence of the Falklands, but we hope that it will lead to a reduction in the costs of the defence forces and that it also has a role in support of civilian activities. I would only briefly mention tourism, about which the noble Lord, Lord Mountevans, will be speaking, the support of our Antarctic developments and, above all, fisheries. Other noble Lords will be able to talk at length on the development of fisheries, which are of the greatest importance. I shall briefly touch on this later.
At the moment the Ministry of Defence are not showing the degree of co-operation that I would have hoped for in encouraging and developing the use of the airfield for civilian purposes. The prices they are prepared to charge are excessive, in the view of experts, and it is absolutely vital that some civilian use should be made of the airfield. I would say to the noble Lord, Lord Trefgarne, who I know well understands this, that the Government and the Ministry of Defence should be more forthcoming over the development of civilian use of the airfield.
There are certain aspects of military use which would be worth looking at. Sketchleys, the dry cleaners, were prepared to set up a cleaning establishment in the Falklands and they hoped to get service from the military. I understand that now the military are going to put their own cleaning facilities there. It is important that some of these smaller developments should be encouraged. That is not to say that relations with the military in the Falklands are bad; they are in fact very satisfactory and in particular where there is good leadership in the units. Nevertheless, there is the same argument about co-operation with the military which we always hoped would bring in revenue and development as regards the civilian population. This applies to horticulture, and there are other important projects of a kind which in any case need to be pressed forward. There is the spinning and weaving at Fox Bay which is coming along quite well. This is not of course an argument in relation to the military. There is even the possibility of some co-operation with St. Helena. There is tourism and there is the possibility of selling food, whether it be mutton or fish, to the military.
I should like briefly to turn to the fisheries side. It is probable—and other noble Lords will know more about this subject than I do—that one of the wealthiest fishing grounds in the world is to be found off the Falklands and South Georgia. It is calculated that the present fishing, already employing over 100 fishing vessels—there are 25 in Berkeley Sound alone, just to the north of Stanley—is yielding profits of several hundred million pounds. There is a prospect, once a fishing limit is introduced, of a revenue of something like £50 million which would come to the Falklands and which would be a tremendous bonus, bearing in mind that the present revenue of the Falklands Islands Government is something like £4 million or £5 million.
Therefore, I urge the Government—and indeed the Foreign Secretary mentioned this in another place—to show a willingness to press on, despite the difficulties and the fact that they are confronted by a possibility of complaints from the Argentine. Already the Argentine industry is calling for these limits and saying that, if the British claim to operate a limit around the Falklands and to command those waters they should enforce fishery limits. This has been agreed by fishery interests, whether they be Soviet, Polish, Japanese or, especially, Spanish. There is a vital need not only from the standpoint of revenue, but from the standpoint of conservation, since otherwise these rich fishing grounds may be fished out. I hope that when the Government hear the arguments of my colleagues in this debate they will move rather more rapidly than they have so far done. Already there are signs that some of the fish off South Georgia, such as the notothenia and the Antarctic cod, have been destroyed.
Let me now turn briefly to the question of British possession in the Antarctic and in the Falklands. I have argued on several occasions that the overlapping claims of the British, the Argentines and the Chileans are a possible source of danger. When the Antarctic Treaty was first signed, it dealt with a situation of great danger as between those three countries and indeed between the super-powers. I hope that we shall see the Falklands as playing a role not just to hold the British interest there but in maintaining peace in a part of the world where in another 25 or 50 years' time there could be a real threat to peace, and therefore to the peace of the world.
The present defence costs are something less—and perhaps the noble Lord, Lord Trefgarne, can help us on this—than 3 per cent. of the defence budget. Although we have given up our responsibilities for Pax Britannica, this is one area that we can afford. If we were to withdraw at this moment, it would weaken our own claims, our stabilising role and our scientific development. One has only to think if General Galtieri had not been removed from the Falklands how far these Antarctic treaties would be endangered.
It is a pity that the Select Committee in the Commons failed to take a view on whether the British claims were good. They said, in effect, that they were not competent to do so. But if one looks at the authorities, whether they are people like Professor Fawcett, Professor Medford or Professor Higgins, all of whom are leading international lawyers of great distinction, one can see that the claims are pretty good.

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It has been suggested that the Duke of Wellington was doubtful about the claims but, after all, that was 150 years ago and we have been there for 150 years since then, so he might have taken a different view today.
I ask your Lordships to regard the Falklands not as a source of loss and a drain on our resources, but in the sense of our duty, our obligation, to people who are wholly British, and furthermore as a possible opportunity of enriching this country. Would it be too much to hope that the British distant water fishing industry might be revived? Other countries are down there in very large numbers. I hope therefore that when we have a reply from the Government we shall hear that they will move on the fisheries side, that they sustain the British position and indeed that they will even be willing to open talks with the Argentines about a possible agreed fishery plan.
This would not be popular in the Falklands or in the Argentine, but those who urge us to talk to the Argentines would say that this is an opportunity of achieving some co-operation. But it will call for an initiative from the Government. This is not to say that we differ, any more than the all-party Select Committee did, about the validity of sovereignty and the possibility of discussing it at this moment; but this is a step that could be brought forward. The value of this co-operation—which incidentally was sustained all the time during the Falklands war so far as the Antarctic was concerned—might be extended northwards to take in the fisheries, but I make no constitutional suggestion for this.
We have to bear in mind that the Argentines still talk about the Antarctic as Argentine and the Chileans talk about it as Chilean. I hope therefore that if we sustain a strong position in the interests of the Falkland islanders and in British interests, we shall make a contribution to peace in that part of the world. Otherwise in 25 or 50 years' time we shall be regretting that we failed to take the necessary steps. My Lords, I beg to move for Papers.
3.16 p.m.
Lord Kennet: My Lords, the House is indebted to the noble Lord, Lord Shackleton, for bringing forward this Motion. Not the first time he has made it possible for us to discuss the Falklands in recent years. We are sorry that the noble Baroness, Lady Young, is not here to answer and even sorrier to know of the cause of her absence. It is indeed a bitter thing that President Neves should have been removed by death, thereby perhaps in some sense weakening the chances of another Latin American country to be able to fight its way out of military dictatorship and into democracy, I hope not too much weakening it. The House will welcome the presence of the noble Lord, Lord Trefgarne, in her stead.
I start with fisheries, and with a contentious remark. I shall not be making many so I hope that the noble Lord, Lord Trefgarne, will not be sharpening his knife too audibly. The record of this Government and of other Community governments over the past 20 years in fisheries matters has been very poor, sometimes disastrous. We went wrong time after time. We went wrong in those pathetic cod wars with Iceland when we thought it was more important to uphold international law than to face the realities of nature. We were proved
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wrong on that and partly as a result have largely lost our fishing fleet, or at least the distant water part of it. The fact that Norway did not adhere to the Community when it could have done—and what an accession of geo-political strength that would have been—was very largely due to wrong policies on fish. We have lost Greenland to the Community—which is an even greater geo-political loss—on fish. When we ourselves came in, there were convulsions for eight or 10 years about getting our own fisheries regime accommodated to the virtually non-existent one in the Common Market. We now face the virtual certainty of the same again with the accession of Spain with its, in European terms, super-colossal fishing fleet. It is of interest that it was only last year, 1984, that the European Commission completed its study of the 512 national laws in effect among member states controlling fisheries. Only now does it know what was there before it came on the scene.
A fisheries regime around the Falkland Islands need not be extremely onerous in terms of enforcement. The Government should study—I am sure that they have—the regimes in force now around Papua-New Guinea and around the Solomons—hardly mighty military powers, and neither of them enjoying the automatic protection of a mighty military power. They have diplomatic and administrative fishery regimes which I am informed work reasonably well. If they can, so can the Falklands. Such a regime, if it was properly constructed, could help to reduce the potentially lethal effect of the Spanish fishing fleet on the European ponds.
In order to construct this properly—there is a lot of talk about this these days, and here I wish to ask a question of the Government—the possible role of the European Community down there in the South Atlantic comes in. What is the law about Community administration, Community regulations, around the extra-European dependencies and possessions of member states of the Community? What is the experience of France in the Caribbean and in the Pacific? What is our own experience in the Caribbean? Is it true that the Government would favour a Community arrangement for Falkland fisheries? There are many good things about this. If they did, it would be extremely difficult. But there are now so many rumours that it is perhaps nearing the time when the Government ought to say something about their intentions, one way or the other. The phrase has been used that there should be a "multilaterally based" fisheries regime. So there should, that is clear, but what sort? Should it be a Community arrangement, or would it be a South Atlantic Fisheries Committee like the North Atlantic one—that is a poor precedent. Let us hope to learn something from the noble Lord, Lord Trefgarne, at the end of the debate.
Perhaps I may now turn to relations with Argentina. There is routine support for Argentina from all the Latin American countries, but they cannot do much to support Argentina in their policy because they are too broke to do it. I want to focus attention upon China, because China is another matter. There has recently returned a Chinese Antarctic expedition of 500 people. It was in Antarctica for some time. While it was there it enjoyed Chilean and Argentine logistic support. China has entered a nuclear energy arrange-

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ment with Argentina. Of course, neither Argentina nor China has signed the test ban and China in point of fact looks like edging closer towards it than does Argentina, which is still a completely undisciplined power in the nuclear field. It accepts none of the international treaties.
Now China also supports the Argentine claim against Britain to the Falklands. This is rather a serious matter and the Government ought in my submission—perhaps they are—to be keeping fairly close to China and taking every opportunity to explain to them that it is not like Taiwan. It may be that China thinks it is, and it should not be difficult to talk about that with China before things get any worse.
I should like to say one word about the new constitution of the Falklands. I hope also that the noble Lord, Lord Trefgarne, may be able to say something about this at the end of the debate. In the Commons debate of 14th March the Foreign Secretary said—and this is visible for all to read—that the new constitution confirms and enshrines the right of self-determination for the islanders. He then went on to say that it had been suggested that this might mean that the British Parliament was no longer master of the situation, and he assured the House that that was not the case and that Parliament was still the ultimate arbiter of the fate of the Falkland islanders.
I do not say that it is impossible, but it is a little difficult for the layman to reconcile those two statements. I expect it can be done. Let us suppose that the Falkland islanders decided to exercise the right of self-determination conferred upon them by Britain in their new constitution in a way which is unwelcome to Britain. Is it thinkable that they should do that? Let us suppose that they refused to do something which we think they ought to do in future. How is it that those two statements can be reconciled? I am sure that it can be done by the greater skill of the noble Lord.
As to the long-term settlement of the Falkland Islands themselves, there are so many intelligent, constructive and sensible solutions to it. There could be a trusteeship under the United Nations, as has been argued before from these Benches both in this House and in the other place. My right honourable friend Dr. Owen has urged it with strength in one of its versions. One version would be under the General Assembly, which has its advantages; another, and I think preferable, version would be under the Security Council, under Articles 82 and 83 of the Charter. We could do that and that would be good.
There is the possibility of shared sovereignty. This is something not unfamiliar in Argentina. They share the sovereignty of an island with Uruguay; it is called Martin Garcia, and the experiment has evidently been a success. This might be sensible at the end of the day. There is the possibility of lease-back. I fear that this would not be sensible because it would involve the cession of sovereignty to the other side. It is a solution which was advanced by the Government to the House of Commons before the Falklands War and was rejected by the House of Commons at that time, and it is difficult to imagine that it could be accepted now. That is, it is difficult to imagine how it could be accepted without the islanders' consent. With their consent, anything could be done in time.
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For two years now many of us have been urging on the Government these very sensible, moderately sensible and less sensible solutions. The Government have not been saying much, and we have been biding our time. It now seems to me that the difficulties of simply commencing communication with Argentina are beginning to bulk dangerously large. It is quite simply impossible to get them to talk about any of the preliminary things which have to be talked about before we can come to the main issue. You cannot talk unless you talk; they will not talk unless we agree to talk about the main issue at once. I have to say that I do not think that the Government are to blame for this. It was not quite clear at first to an outsider. It now is clear after attempts at various levels have come either to grief or to nugatory results. It is serious and I want to say that I at least sympathise with the Government in the difficulties they have and to which they can find no very obvious solution. You cannot leap a wall of political weakness on the other side.
There have been new staff appointments in Argentina, involving chiefs of the military staff. We do not know the people because we have no diplomatic representation there. Foreigners do not know them because it is difficult to get there. They do not come here. It is alleged that these are extreme Right-wingers; militarists and highly anti-British, and that the appointments are a victory for the military wing which is still so strong in Argentine politics. I do not know; I cannot know; it may be that those appointments were the cost of permission to President Alfonsin to continue for a while longer. Clouds are gathering. Today, after two years of military trials of the alleged war criminals in Argentina, trials carried out by their own people within the Armed Forces, civilian trials are beginning—actually today, this Monday. There is a list of 2,000 witnesses to be heard in that series of trials. It may be that the trials will be more notable for duration than for results. The internal situation is becoming cloudier and tenser day by day.
Meanwhile, the Argentine Government are beginning to lean perceptibly towards one of the longterm solutions, lease-back, which I described a moment ago as moderately sensible but probably not very, and probably not acceptable. Those of us who have been to Buenos Aires since the war and have talked to Argentine politicians know that the names of senators and congressmen Storani, Gass, and Berhongaray are powerful names in that hesitant democracy. They have all leaned to lease-back. I regret it. I am afraid that there are in our Parliament those who have proferred lease-back to them, unofficially of course—everyone understands that it is unofficial—as if it were on a par with more acceptable solutions, such as United Nations trusteeship or even shared sovereignty. It could be that that will cloud the domestic scene in Argentina yet more.
But now there is little we can do. British parliamentarians have been down there; I was one of them, 10 months ago. It was not very pleasant; our lives were threatened; we were pelted with eggs, which was less important, and the lives of some other people were lost. There were explosions for which the so-called credit was claimed by a nationalist organisation protesting against our presence. We learnt later that there had been an inquiry into the explosion, in which

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there were eight dead. It was found that that claim had been falsely made and that the explosions were an accident—so it was asserted. I am merely making the point that it was not a very pleasant visit. It is an unfortunate fact that since then no Argentinian parliamentarians have been willing to come to Britain on a return visit. There have even been among them those who have denied that any British parliamentarians have been down there; but such things happen in darkening scenes.
I believe that all that the British public and Parliament can do at the moment is to wish strength and luck indeed to President Alfonsin in holding his country on a democratic even keel, and to wish that he may continue to endure in a situation which is by no means becoming easier from the point of view of an early and beneficial solution to the Falklands problem.
Baroness Gaitskell: My Lords, may I ask the Minister a question that might be considered plainly naïve? I was in America when the Falklanders first wanted to stay there years ago. I should like to know whether it is really fair now that we should say that the Falklands belong to us. What gives us the right or the reason to say that that should be so?
The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): My Lords, as that question was specifically directed to me, perhaps this is hardly the moment for me to answer it. If it was, I fear that I could not do so except at inordinate length.
3.31 p.m.
Baroness Vickers: My Lords, I certainly agree straight away with the noble Baroness, in the question that she put. Perhaps I may first thank the noble Lord, Lord Shackleton, for so kindly referring to me and also for introducing this debate. He is the expert on this subject in this House and we were very pleased to hear what he had to say. I was also glad to hear the noble Lord, Lord Kennet, because, although he sometimes takes a different view from me, he has been to Argentina as well and so he has seen both sides. I should like to thank the Chief Whip for giving us time for this debate, and the Falklanders for their fortitude during the invasion and for the way in which they have helped to build up their country since. They deserve the greatest praise possible.
I agree with some of the suggestions made by the Foreign Affairs Committee. However, some—which have been mentioned already by the noble Lord, Lord Shackleton—are not so pleasing. The Government's agreement to the suggestions made by the Falklanders concerning their own constitution was very welcome, and I thank them for that.
It is curious that in this age of technology, which brings the furthest corners of the world together, we always worry about instant communication. We persistently hear the suggestion that the Falkland Islands are so far away. They are not really so far away. We have international links with them by phone and telex, and there will soon be regular air flights. But despite those achievements, the islanders need somebody to speak for them in this House. I hope that we shall have a debate on the Falklands at least once a year in order to keep in constant contact with them.
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Successive Governments in this country have been criticised, particularly in the recriminations following the Falklands war, for not reaching—as the noble Lord has just mentioned—an understanding with Argentina over the islands. In my view, the phrase "an understanding" is a cosy term for a transfer of sovereignty. Argentina has never been prepared to enter into discussions except on the basis of the transfer of sovereignty. I cannot agree with the idea of lease lend because it will only lead to the same troubles we now have in Hong Kong, and that would be very unfortunate.
There will be no changes under a civilian Government, as we saw, regrettably, at the Berne meeting. The present Argentine policy towards the Falklands does not differ, as I understand it, from that of its predecessors except in one respect. I believe that the likelihood of Argentina resorting to armed invasion has definitely retarded and I do not imagine that they will suggest taking that action again. But their ideas have not changed.
Democracy is so deep-rooted in this country that we tend to believe that it is so in many other countries which say that they are to become democratic—hut in the sunny climate of Argentina, democracy has often wilted. No elected Government in Argentina since the 1930s has served their full term of office without military intervention.
I shall illustrate that point by reference to a recent poll in the Argentinian newspaper Clarin published on the 2nd April in which Argentine armed forces personnel were asked questions regarding democracy. Some 61 per cent. said that they would support a coup if the Government there made a sharp turn to the Left; 78 per cent. did not believe in elections as a means of deciding the future of the country; 63 per cent. believed that a strong leader would run the country better than all laws and discussions; 38 per cent. thought that there was a large possibility of war with one of Argentina's neighbours; and 54 per cent. believed that there was a chance of internal conflict in Argentina. Those figures do not speak very well for future relations with the Argentines.
Members of your Lordships' House have a proud record in sustaining and encouraging fundamental freedoms. Your Lordships have fought extremes in all their repulsive guises; for the rights of individuals, for the rights of great countries, and for the rights of little nations. I do not believe that anyone in this House would wish to cast the Falklanders adrift into the fierce political currents of Argentina's political extremes.
I hope, as everyone in this House hopes, for the success of President Alfonsin's experiments with democracy. I hope for peace and security in the South-West Atlantic and on the Latin American mainland. But one cannot buy democracy for Argentina by handing over the Falklands. That is a price we cannot afford and must not pay.
There is one matter in which we could accede to the requests of the Argentine Government. It is a matter we should have dealt with years ago. On 19th March this year, the Argentine Maritime Resources Secretariat issued a statement that it had pointed out the conservation threat posed by Britain allowing uncontrolled fishing in Falkland waters. This was reported in the Buenos Aires Herald of 20th March.

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As the noble Lord, Lord Shackleton, said, the present position with regard to a fisheries policy around the islands is nothing short of a national scandal; that is not the word he used, but I shall say it.
In 1977, the Falkland Islands Council passed a resolution requesting the setting up of a licensed fishing zone. They did not get it. In 1983 they again passed a similar resolution. Still nothing has been agreed. We hear that the Government are discussing a multilateral approach. Why not a unilateral approach that leaves control and profits in British hands?
I shall not go into all the details as the noble Lord, Lord Shaclkleton, has already given so many. But if the Navy cannot do the job of policing the area I should be most surprised. I suggest that two surveillance ships and back-up aircraft would be needed, which I understand would cost between £5 million and £6 million per annum. This sum could be easily found out of the profits on fishing licensing.
The question of the different catches has already been mentioned, so I shall not deal with that point. However, I should like to make one other suggestion. I understand—and I have only received this information recently—that the European Commission has been dealing with the question of community-associated status for Greenland, thus putting that country on a similar footing to the Falklands. The treatment of fisheries is a key feature, as we know, of Greenland's disengagement, if it wants to leave the EEC. Article I of the protocol on special arrangements for Greenland links the import treatment of fishery products from Greenland with the possibilities of access to Greenland fishing waters granted to the Community.
The recent growth of fishing activity in the Falklands area has significant potential for both the islands and the common fisheries policy. It is suggested that the control development of the fishery could help to reduce a threat to the future of the CFP, provide a secure future for a number of Community-distant water vessels, provide much needed employment and development in the Falklands, and tie them much closer to the European Community. So I hope that noble Lords will agree that this is a fairly useful suggestion. I shall cut out the rest of my comments in that regard because I do not want to repeat what was said by the noble Lord, Lord Shackleton.
A further reason for the zone for which we are asking is in regard to the future of the islands. Following the Falklands war the sum of £31 million was given to the islands for various purposes. This £31 million assumed within it all pre-war funding. Out of it the development corporation received a mere £4·5 million. This money is likely to run out in approximately two years. For various reasons costs have risen, as was mentioned by the noble Lord, Lord Shackleton, as regards the air strip. The roads, hospitals, better health and education all require paying for. The Falkland Islands are not a grant-in-aid colony. They take pride in being self-sufficient and run a local budget. Therefore, unless they are given means by which they can raise sufficient revenue to cover the additional costs, they will be in a very difficult position. The cost of maintaining the new infrastructure falls naturally on local resources.
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Notwithstanding the extra work of the development corporation under the leadership of David Taylor, which has initiated many new projects, a major new source of income must be found, and found quickly. It is in British and international interests that a fishing zone should be established as a matter of high priority.
I should like to mention the new constitution. I am very concerned—perhaps too late—about the separation of South Georgia from the Falkland Islands under the new constitution. I have examined the Laws of the Falklands, a Falkland Islands government publication, which shows quite clearly that the dependencies were dependencies of the Falkland Islands. To suggest that they have always been administered separately from the Falkland Islands, but administered from Port Stanley merely as a matter of convenience, is not, I understand, legally true. There appears to be no good reason for separation of the Falkland Islands from their dependencies and there are a number of reasons why that is a thoroughly bad arrangement. I understand—and this is why I say that I may be rather late in raising this matter—that statutory instruments were laid before Parliament without anyone making an objection and, therefore, they will stand. This happened on 18th April. Perhaps the Minister will confirm that.
In-shore fishing is doing extremely well on crabs, scallops, clams and mussels, which I believe will provide a good revenue for the future. However, as mentioned by the noble Lord, Lord Shackleton, there are people who want land. I understand that there are between 16 and 20 young farmers who are anxious to obtain land. I hope something can be done about that. As I suggested some time ago, there is a need to start market gardening. If these young farmers can obtain the land—and market gardening does not take a great deal of land, with the methods it is suggested they should use—they could negotiate a contract with the military which would be of great value to them. It is unfortunate that the sons of the farmers who are there cannot have an opportunity to obtain land. I realise there is the difficulty of payment. I was told that, roughly, payment for land is based on the number of sheep that you have; between £12 and £14 for each animal is paid for the land you want. I do not know how true that is, but it seems to be a good way of making the calculation.
There are two further points I wish to make. The first concerns the wild-life. There is tremendous wildlife on these islands which will be a great thrill for the tourists when the tourist season starts, as I am sure it will. People will want to see these various specimens and also the wild flowers, and so on. I hope that the tourists will realise that many of these animals, penguins, and so on, will be very nervous and frightened. I do not want them disturbed so that they go to other islands. That would be a great pity.
Perhaps one arrangement we might make with the Argentines is to see whether they will go to the graves of those who are buried at Goose Green. I think it would be an advantage if this could be arranged with the International Red Cross, as was at one time suggested.
There is one further point, which is not a political point. The noble Lord, Lord Strathcona, is, I am told, arranging a dance which I understand I can advertise.

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It is to be held on 5th June for the trust fund for the Falklands. I expect that the noble Lord will have something more to say about that.
Finally, I thank the retiring Governor, Sir Rex Hunt, for all the work he has done in the past. I wish him success in his retirement. I also hope that the new Governor will be welcomed and that he will be successful in keeping the island happy and peaceful.
3.46 p.m.
Lord Mountevans: My Lords, I too, open my remarks by thanking the noble Lord, Lord Shackleton, not only for introducing his Motion but also for the wide-ranging way in which he did so. I have to confess that my own little axe to grind is that I feel almost humble in the context; at the same time I feel somewhat enchanted that three of the first four speakers in the debate represent families which have an extensive and long connection with the Antarctic.
The preceding speakers have already shown what a wide-ranging debate we are likely to have this afternoon. I shall take up but a few moments of your Lordships' time on the topic of tourism. Having studied the subject in the context of the Falkland Islands for some 18 months, I believe that tourism is an industry which can make a significant contribution to the achievement of what the noble Lord, Lord Shackleton, called a degree of self-sufficiency and independency.
There is considerable potential in the Falkland Islands as a tourist destination. There are no small number of people who will wish to go there because no one has ever gone before. In the tourism business we call them the blue-rinse set and we tend to think of "Dallas". But they are affluent people who, if they can reach the islands and if, when they are there, there are ways in which they can spend their money, will leave a significant quantity of it behind. There are also those who wish to go because of the outstanding flora and fauna to be found in the Falklands. Not only are there the marine mammals, the penguins and the land birds; there is also the sheer collective environment in which they find themselves. There are those people who will go for the game fishing which, I am told, is almost too good to be true. There are those people who will go for the wrecks; wreck diving and the opportunities that the wrecks offer. The legacy of the gold rush and the Cape Horn route could make the Falklands a scuba divers' Everest—if that is not an appallingly mixed metaphor.
We must not overlook the military historians. We fought an extremely inspired war in liberating the islands and there are many people who should like to see the ground on which the war was won. Finally, we must not forget the friends and relatives of not only those who died in liberating the islands but also those who are now serving there.
So much for potential, but there are constraints. There is the access problem, which was touched upon by the noble Lord, Lord Shackleton. Whoever operates the planes, and whatever sort of agreement the long-haul aircraft operate under, I hope that opportunity will be found to encourage tour operators to take seats on the planes, not least because by paying their fares and taking up capacity tourists will, after all, be subsidising the cost to the Ministry of Defence, which is actually operating the flights.
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There is a problem of internal communication. There is a problem of accommodation. Work is being done on exploring the possibilities of an international standard hotel, of developing guest houses. It was my pleasure to take the general manager of the Development Corporation down to the Isles of Scilly last February, partly because in terms of Europe the Isles of Scilly most closely resemble the Falkland Islands, and also because I thought that they had a guest house concept to show him which could economically be transferred to the Falklands Islands.
I would ask the noble Lord the Minister to encourage and support the Development Corporation and, indeed, the islanders in the steps which they are taking to capitalise on the marvellous tourist opportunities to be found in the Falklands. With Government support I am sure that a product will emerge. It will be an attractive product and, as I have said earlier, it will make a contribution to the viability of the islands. More importantly, I would beg the Minister to use his good offices to ensure that whatever product emerges does not fail for want of long-haul access.
We know that there will be aircraft from Britain. It has been suggested that there could be aircraft flying from southern Chile, involving a five-hour great circuit avoiding Argentinian airspace. However, in regard to the numbers of tourists that the Falkland Islands can and will be able to accommodate I cannot think of a plane that has the ability to stay in the air for long enough to run such a circuit. While I would not urge, ever, that we should indulge the Falklands in what one might call subsidised tourism in pursuit of foreign currency earnings, there are difficulties between the civilian interests which are seeking to develop a tourist industry and the Ministry of Defence over access in regard to the aircraft and I hope that the Minister will work towards a rational solution of these difficulities.
It is often said—and the noble Baroness, Lady Vickers, touched on this—that tourism destroys the very things which it seeks to enjoy. Because we have constraints in developing a tourist product in the Falkland Islands, we can look for a controlled growth of a tourism industry. I hope that we shall be able to give it every opportunity, and in doing so strengthen not only the islands and the islanders' pride in themselves, but also the image that the islands enjoy among the great public around the world.
3.52 p.m.
Lord Buxton of Alsa: My Lords, I, too, should like to thank the noble Lord, Lord Shackleton, very much for initiating this debate. He and I have long been associated together and indeed we have a friendship brought about by these matters. We have been to the Falklands together. I am very glad that he is going to wind up the debate and no doubt he will round off many of the points that some of us are making.
I should like to add only one or two points since so much has been said, and I am sure is going to be said, about the fisheries, but it is an aspect which I believe to be valid. It is not true to say that we cannot police fishing zones. This has been said in the Government's reply to the report of the Foreign Affairs Committee. Fishing rights are jeolously wardened and guarded by

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those who pay for them, and poachers are almost invariably reported by the rightful parties. This happens everywhere. Most of the permit holders prefer to have things properly regulated rather than to have a free-for-all which only hastens the exhaustion of stocks. Therefore, I do not believe that there will be difficulties with other nations; I am sure that most will welcome it.
The noble Baroness, Lady Vickers, has referred to the question of wildlife. The noble Lord, Lord Mountevans, referred to tourism. I should like to add my own points on that. There is a further grave consequence of the absence of fisheries control which has long-term dangers for the Falkland Islands' economy. I have always felt inhibited about mentioning wildlife in a Falkland Islands debate. I was very careful in all the debates during the time of the journey of the task force in the war not to mention penguins because it would have sounded so superficial in the light of the human and political overtones that seem to overwhelm this whole subject. Whereas the human race may want to exploit to the full the resources of fish and krill for commercial advantage, the beings that also are totally dependent on them for their existence are the wild creatures—the seals, the sea lions, the penguins, the albatrosses, and the huge colonies of sea birds. In the long term these may constitute the Falkland Islands' most important resource. If hordes of foreign vessels are allowed to scoop out marine food stocks to exhaustion, the Falkland Islands' main potential for tourism will be strangled before birth.
In connection with the new airport I have been asked many times: is it really true that there are so many rich American birdwatchers who will go all the way down there, who can afford to fly to the new airport to see penguins? That is exactly the sort of question that would have been asked about Kenya and Tanzania in the 'thirties and 'forties when safaris were major adventures, expensively arranged for opulent visitors from America and Europe. Today holidaymakers in their tens of thousands go on charter flights and tour all over the game parks. Wildlife tourism is one of the most important sources of revenue for the East African countries that have managed to conserve their wildlife.
It is not a digression to say that last month I was in the Galapagos Islands in the Pacific, for the first time since 1964. Then in five days we saw only one Ecuadorian tuna fishing boat. There were no arrangements for tourists, and no accommodation. Last month, 21 years later, there were swarms of tourist boats, including two large cruise ships, served by daily flights from Ecuador to an American war-time air strip on one of the islands. There are one or two hotels and other facilities, and every single one of the 25,000 visitors who go every year at the moment—they are expecting it to rise—go to see the birds, strange animals and reptiles. Compared with 21 years ago, Academy Bay, where the Darwin research station is established, looks like a miniature Cowes, or Cannes, in the South of France.
If they are well organised—and the Galapagos are—there is no harm whatever to wildlife. Ecuador, possessing a wildlife situation of international prestige
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and renown, was prepared to spend serious money on conservation. By wardening and sound organisation, and by control of access, but also primarily by especially controlling fishing and fishery limits, Ecuador has an iron grip over the whole situation and are doing very well out of it.
I feel sufficiently familiar with this subject to say that the differences in climate between East Africa, the Galapagos and the Falkland Islands are irrelevant so far as birdwatchers interested in strange breeds and naturalists are concerned. They expect to endure exactly the same conditions as the wildlife enjoy or thrive in.
Before long, and as soon as it is made practical, the new airport in the Falkland Islands will throng with charter parties, just like Nairobi or the Galapagos. Wildlife conservation is, therefore, an excellent investment. Unless we are prepared to invest in conservation and national parks, as in Kenya and Ecuador, and unless we first conserve the fisheries and marine resources on which the wildlife depends by means of established fishing limits, much of the Falklands' best prospects of economic viability will disappear.
I hope that I have said enough on fishing limits. I believe that there is practically only one solution. The Foreign Affairs Committee has suggested that on certain subjects there should be unilateral declarations. I believe, quite honestly, that the only way to deal with fishing limits is to have a unilateral declaration.
If I may return to my oft-repeated argument on defence, whatever the national instincts in reacting to the evil invasion and coming to the rescue of the British citizens in the Falkland Islands, I believe that that is not in the long term the most vital significance of the vast and costly effort. It is the defence of our sea lanes and security for the free world. What was at stake fundamentally was the protection of the free world in certain circumstances. On those grounds it is imperative that the Falkland Islands are always in safe and sound hands. I need not even go so far as to be partisan and say, "in British hands", though of course that is the only solution. But they must be in safe and secure hands. I do not believe that anybody in this House would claim that at present or in the foreseeable future Argentine hands are safe and sound.
We know that the Falklands probably saved our lifelines in two world wars—and then it was not even apparent that the Panama Canal might ever be closed. Since the Second World War the Suez Canal has been closed once and could well be again by the look of things, so we have proof and precedent that strategic canals are vulnerable to closure.
If anything, the Panama looks the more likely of the two to be closed at the present time against the current political trends in Central America. If that happens, a secure base in the Falklands would become crucial to sustaining the free world. Obviously the United States is aware of that, and its intervention in Grenada was clearly related to such a possibility. As I mentioned, I was in the Galapagos the other day, 600 miles west of Panama, where the American-built tarmac strip has proved providential for tourists. That was laid down by the United States in the Second World War to protect the Panama Canal from the possibility of

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attack by Japan. The threat posed to the canal today from inside Central America is far more menacing than it ever was from Japan.
I have explained this before, but I trust that your Lordships will forgive me: the tip of South America is not far from the Antarctic peninsula. There is therefore a narrow channel between the two, called the Great Passage. South of that, on the Antarctic peninsula, or the islands by the peninsula, Russia and others have large scientific bases in the South Shetland Islands. Whatever the Antarctic Treaty says, those are thinly disguised strategic bases, and if Argentina was not a totally dependable ally of the democracies the sea lanes round Cape Horn could be seriously menaced in certain circumstances, if not made unsafe. That would definitely threaten the survival of Europe and the free world. Only the Falkland Islands could then provide the West with surveillance, early warning and some security for its vital supplies by sea. Whatever developments there are in the air, we shall always be totally dependent on vital supplies by sea.
The other factor which makes the Falklands and its new airport possibly the greatest prize of all—and this has been referred to by previous speakers--is secure access in the future to the Antarctic. Most industrial nations are now looking south. Even India is putting down a marker and establishing a scientific base on the Antarctic continent. Any of those nations would give their eye-teeth for the Falklands and particularly for its new airport, and none would dream of giving it up to a vociferous and bellicose neighbour. It may sound fanciful but it is my belief that the new airport may one day appear as of as much significance as Suez did to Disraeli.
As a conservationist I am instinctively against development, especially in the Antarctic, but I have been in the wildlife game around the world too long not to know and accept that the human race will never be prevented from exploiting valuable resources, wherever they are. All we can do—and what we have to do—is take every conceivable step to protect and conserve the natural systems in advance, before the machinery moves in and not, as was the case over the Falkland fisheries, wait until it is all over.
Finally, I believe that if we had not given the wrong signals, first to Peron and then to the junta, but had maintained our traditional and successful stance, which lasted for over 130 years, Sr. Alfonsin would not now be demanding sovereignty. He is merely compelled to do so politically because of the head of steam given to Malvinas mythology over the past 18 years. We have only ourselves to blame. But after the invasion it is really time that we cleared our minds about the best interests of the free world, about the unique prize that we possess and about the possibly spectacular potential that the new airport may offer to future generations.
4.5 p.m.
Lord Strathcona and Mount Royal: My Lords, I am always lost in admiration for my noble friend Lord Buxton for never saying, "I told you so". I well remember the warnings that he gave us before the Falklands conflict developed. Of course we are all lost in admiration for the authority with which the noble Lord, Lord Shackleton, introduced the debate and the
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tour d'horizon, if one can call it that, of the Falkland Islands which he gave us and in which he touched on so many issues.
My connections with the Falkland Islands were almost exactly 15 years ago when I arrived on a small trawler in the normal force 10 gale that was blowing at the time. That visit has left a more or less indelible mark upon me in that I grew my beard at the time and have had it ever since. Indeed, it has been alleged in a newspaper that the present Prime Minister does not care for Ministers with beards. Perhaps that is how I come to be speaking from the Back-Benches on this occasion.
Since then I have become president of a small trust—the Falkland Islands Trust—which is not to be confused with other more grandiose organisations. That small trust antedates the conflict. Indeed, my noble friend Lady Vickers was kind enough to say that we are having a fund-raising occasion in about a month or six weeks' time. Finally, in order just to clear it out of the way, I tell your Lordships that I speak as a member of the fish and fishery interests of the Fishmongers' Company here in the City of London.
On the occasion when I went down to the Falkland Islands we were salvaging a ship—one more commercial ship. It was possibly one of the most significant ships ever built, and it is now being restored in Bristol. It was built by a forebear of the wife of the noble Lord, Lord Campbell, if I may say so. The striking thing about Port Stanley is that there are something like 70 wrecks littered around. There may be a good many more since I was last there. That is not historical accident. It is precisely because of the significance of the Falkland Islands. Particularly in the days of the Cape Horn route, they were the only refuge of so many ships. It is that which brings home to me the area about which I want to talk, which concerns the sea resources surrounding those islands.
Again to relate the situation in the Falkland Islands to something a little closer to home, at any rate as far as I am concerned, one is talking of an area of islands which, if they were plonked down off the west coast of Scotland, would stretch somewhere from Islay to Skye, be inhabited by a population half that of the island of Islay alone. It is a very thinly populated area and the sea is a crucial resource.
I believe that we are in danger, literally, of missing the boat. First, it is shaming to have to admit after all these years that we frankly do not know what the quantity and value are of the fish resources around the Falkland Islands. Some facts are known. Luckily I think that the parameters and percentages are such that, even if the suppositions are wrong by substantial percentages, the argument still holds good. I am told that at this moment there are some 22 Japanese vessels of the charmingly called Kanagawa Fish Jiggers Association. I understand the jiggers are so called because when they fish they literally jig the lines up and down off the vessel. Being Japanese, of course they do it mechanically; they would not do it in a good old-fashioned way. These ships are catching 16 tonnes of fish per day each in one area some 70 miles north of the Falkland Islands. They expect to catch £30 million-worth of fish this season. Next year they intend to expand their fleet by a factor of four, largely because of the restrictions being imposed in the fishing

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areas of the exclusive economic zone around New Zealand.
One other fact that we can cling on to is that the Minister in another place, John Stanley, said in answer to a question that there was an average of 40 to 60 ships fishing in the Falklands EEZ area at any one time and sometimes the number went up to 100. It is here that the figures become a little more vague. However, if you extrapolate those figures it looks as if the value of the potential catch around the Falkland Islands is of the order of £200 million to £400 million a year—and what is a couple of hundred millions when you are arguing about figures like this? This is thought to be a conservative estimate of the total sustainable yield of fish from the area but one has to emphasise that we do not really know.
The worry about these resources that has already been referred to by a number of noble Lords is twofold. First there is the international, ecological and commercial concern at the overfishing which is taking place due to a total absence of any control. It is worth bearing in mind that if this situation exists, even if you are a responsible commercial concern with an ecological viewpoint, the temptation to go out and grab everything you can before somebody else comes and grabs it from under your nose is almost irresistible. Of course it is highly unsatisfactory in the long term. However, it has happened all over the place. In particular I am told that it has happened with the cod in South Georgia.
The second unhappiness about this situation is that neither the Falklands nor the United Kingdom are deriving any benefit from what is going on. Here we have resources which are almost certainly being overexploited by others. Indeed, by a complicated train of trading relationships, I understand that it is highly probable that the squid exports by the Japanese and others from the Falklands area are ultimately having an adverse effect on the export price which our own fishermen are receiving from their mackerel sales. That is a complicated chain which needs to be developed. Possibly other noble Lords may care to refer to it.
Licence fees in the order of £100 per tonne of fish, or perhaps 10 per cent. of the value being fished, are quite an accepted norm in the industry. This is the way one gets at the potential licence value of the fishery round the Falkland Islands being of the order of £20 million to £40 million per annum. As the noble Lord, Lord Shackleton, said, one has to set this against a total budget for the island of the order of £5 million.
As a number of noble Lords—I believe in particular the noble Lord, Lord Buxton—emphasised, the nations which are already fishing there would themselves welcome some degree of regulatory regime so that they would not be forced to go into what they know is an over-exploiting situation because there simply is no way out. Thus we should not imagine ourselves necessarily meeting all that much opposition so far as the regulation is concerned. I hardly think we can expect these fishing interests to be totally welcoming towards paying a licence of 10 per cent. of what they take. However, if that means continuity for their business, I believe they will be prepared to accept it.
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I have no doubt at all that when the noble Lord comes to answer he will tell us that the cost of policing a fishery zone of this kind would be prohibitive. I am quite sure that the Ministry of Defence, with a little help from the Treasury, will produce figures to show that this policing would be unacceptably expensive. I have to tell the noble Lord right now that I am sure that I am not alone in saying that we will take a fairly jaundiced view of these figures and a very large pinch of salt. The Treasury can prove almost anything if they put their minds to it.
However, to be more realistic, those who have given some thought to this matter have suggested a figure of around £5 million a year for the cost of policing with airplanes and perhaps two ships. Again, bear in mind that it is likely that there will be at least a degree of co-operation from those nations already fishing in the area. Thus it should not be necessary to put an inspector on every ship. However, there may have to be a series of visiting inspectors who check periodically that the ships which are fishing in the area do what they have undertaken to do.
Furthermore, we have, for perfectly respectable and understandable—but perhaps unfortunate—reasons, a massive military presence of all three elements of the forces in the area at the present time: we have radar; once the airport is opened we shall increasingly have surveillance aircraft; and we have a naval presence. We should remember that fishery protection around our own waters is undertaken by ships which are our own. Thus, not only is the task of fishery protection by no means unprecedented for the Royal Navy but also I would suggest that we should look carefully to make sure that we are talking about the incremental costs that would be added if fishery protection was added to the duties already being undertaken around the island. It is not as though we were starting out to police a new EEZ from scratch.
It certainly has been alleged—and indeed the Argentinians are alleging—that if we shout so loud about our sovereignty of the islands, then surely, even if they are expensive, we should discharge responsibly the duties that go with the sovereignty—that is to say, the responsible management of the sea resources surrounding the island. Thus, if one can accept a figure of £5 million to police the area, one sets it against a total income of £20 million and one is left with £15 million for contributing towards the infrastructure to support the kind of fishing industry that one would hope to build up in the islands.
Here, as the noble Lord, Lord Shackleton, has already pointed out, the new airport, which is due to open next month, will be an invaluable asset, provided the military are not too possessive of it or, again, the Treasury does not get too deeply into the costing of the landing fees for the use of it. In addition to the value of the airport for personnel and for urgently needed parts for communications generally, it is quite clear that a fishing industry established in this area would require all the usual infrastructure of port facilities, fuelling, maintenance and ultimately a factory and freezer facilities.
I believe that I am right in saying that at present large quantities of refrigerated containers are being shipped out to the islands with stores, equipment and food for the people and the troops living there. These

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containers are then coming back empty. The same is true of merchant vessels going out there. Would it not be very satisfactory if we were able to provide a return cargo for ships which were making the trip anyway and which thereby would get payment for the two-way trip in the traditional tramp steamer manner? I believe that I am also right in saying that there are a number of fishery and commercial undertakings in this country which have expressed a serious interest in developing this kind of activity provided that they have the protection of the control that the exclusive fisheries zone or the exclusive economic zone would give them.
In passing, one should emphasise that it is not a complete 200-mile limit all around the islands. The distance to the Argentine mainland is a little less than 200 miles. There would be a median line between the two. If, as a result of this activity, we could see a revival of our deep sea trawler fleet, this would not only be very satisfactory to distressed areas in this country, especially the North-East coasts of both England and Scotland, but it would also go some way to giving a little comfort to those who worry, as I do, about the decline in the size of our merchant fleet, the numbers of men who run it and the possible need for those resources in times of crisis. A revived trawler fishing industry would not only have commercial benefit but would also have potential military benefit.
The final pressure for getting on with doing something about the fishery problem is the political dimension, which has already been mentioned. No one wants to minimise the difficulty and the delicacy of negotiating with the Argentinians on the regime that is to apply in the South Atlantic. I would suggest, however, that exploitation of these fishery resources is the unique common interest that we share with the Argentine. There is evidence, already quoted by the noble Lord, Lord Shackleton, in a report from the Eurofish Group—it is, as a matter of fact, a very inaccurate report—according to which it is said that the Argentine is complaining that Britain, in declaring a 200-mile exclusion zone around the islands, has failed to take responsibility for making rational use of the waters' resources. The report goes on to say that the number of ships using these waters for fishery purposes, primarily from the Soviet bloc, Japan and Spain, has quadrupled since the conflict with Britain.
Argentina is therefore aware of the problem just as much as we are. Surely, it is not beyond the wit of man to find some way, without prejudice to the question of sovereignty, to establish a common interest with Argentina in protecting what is a mutual resource. Let us go ahead and do it unilaterally if necessary, but let us extend the hand of commercial friendship and let us show the magnanimity in victory for which we are traditionally supposed to be famous by encouraging the Argentinians even if, on a cold and cynical point, you want to be able to say, "At least we tried but all that happened is that we got kicked in the teeth. So we had to go it alone in the end".
I would urge the Government to do three things at their earliest convenience, not that I place a great deal of faith in how they might interpret that. Nevertheless, I say it. First, they should announce their intention to declare an exclusive fishery zone up to 200-miles or the median line between the Falklands and the Argentine. There is, of course, ample legal precedent
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for this. It is a practice widely adopted by many nations and one which, incidentally, I believe started among the South American nations many years ago.
Secondly, and perhaps even more urgently, they should establish a major research programme, probably with the collaboration of the Navy, to establish what is the sustainable fishery level of yield in this area. Thirdly, they should invite Argentina to join in a collaborative control regime for the fishery without prejudice to the issue of sovereignty.
Uniquely, among political arrangements, this seems to be likely to benefit the Falklands, Argentina, the international fishery interests and the United Kingdom. What more, my Lords, can one ask? Let us get on with it.
4.26 p.m.
Lord Energlyn: My Lords, engraved on my mind is the second speech I made in your Lordships' House, when the noble Lord, Lord Shackleton, with his usual courtesy but nevertheless crystalline clarity, showed me the distinction that one has to make between geopolitics and geology. I shall therefore make my position clear. It is as a geologist that I speak at the moment. When the noble Lord's father was on his way to the South Pole he called in to see his old friend, the man who became Sir Edgworth David, the son of the Bishop of Llandaff who at the age of 16 was declared an incurable tubercular and who was advised to take up geology as an out-of-door occupation.
He went out as a young fellow and discovered the margin of the Ice Age for the first time in South Wales. He then went to Australia and founded the New South Wales coalfield. He was also the chief geologist of the Australian army. The noble Lord's father and Edgworth David were great friends. Sir Ernest persuaded Edgworth David to go with him to the South Pole for the ride. He went unprepared. When he reached Antarctica he saw Mount Erebus. Here was a volcano blowing its head off. Without any equipment, up goes David, in typical British fashion—I might almost be tempted to say Welsh fashion, but be that as it may—to discover how the volcano works. That was the first time that it had ever been done. He came down to find that he was marooned, along with the noble Lord's father. They put their heads together. This is my understanding of the sort of conversation that took place. Edgworth David said, "Now look, Ernest. You go off to the South Pole. We have both worked out where the magnetic South Pole is. When you get there pop across and meet me."
That is what they did. It was the first time that anyone had ever reached the magnetic South Pole. It was an enormous achievement, and it illustrates the point that I am trying to make—the great involvement of British geologists, British scientists and British geographers in Antarctica. This is a point that the noble Lord, Lord Shackleton, was seeking to establish in his remarkable speech.
Staying within that theme, one has to remember that Antarctica is a fragment of the earth's crust that has been divorced from Africa. About 250 million years ago, during the split-up of the continents, this fragment of Africa was forced southwards. It therefore contains much of the mineral matter that we now know exists in South Africa. No diamonds, so far as I

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know, have yet been discovered in Antarctica. But most of the other minerals exist. On the other hand, one must not be too flamboyant in one's assessment of the mineral resources of the Falkland Islands. They are not particularly spectacular. As the noble Lord pointed out, it is to South Georgia that perhaps we must look in the future to the mineral developments in Antarctica.
At the time of the Scott expedition there was a geologist called Raymond Priestley, who eventually became Sir Raymond Priestley. He was a very famous geologist. It is a long story, but eventually he endowed me with some of the specimens collected on that ill-fated expedition. Among the specimens was a lump of sandstone which he had derived from a huge bluff of sandstone which ran several hundreds of miles, which he called the "Beacon sandstone", for obvious reasons. I took this sandstone. At that time I had invented a technique for looking at the potential of oil in rocks, and Dr. Elliot and I were able to establish for the first time that there was a potential of oil-bearing rocks in Antarctica. That is the kind of picture that we geologists have. You have few exposures to look at. You have to extrapolate bits and pieces of evidence, and from this draw conclusions.
We have heard talk quite widely of potential oil fields, and so on. In the islands themselves there might be pockets of natural gas, but they will be very limited indeed. What is important in the islands, as has been pointed out by the previous speaker, is the enormous reserves of fish. As these are cropped, naturally one would look for by-products to be derived from these fish in situ as distinct from exporting them as frozen food. In addition to that you have the flora of the sea floor, and from these we now know quite well that they could be a major source of alginates. Again this is a small industry but nevertheless an important industry which could provide considerable income for the islanders.
Above all, the islands have clean air. Although they have a small population they could develop clean air activities, namely electronics. One could have developed on the islands electronic factories which would produce extremely lucrative exports all over the world. This of course raises the issue of the airfield. In my opinion the airfield should be used for the dual purpose of defence and air freight. Therefore it would begin to pay for itself in a short period of time.
The other thing that the islands need is water. Before you can make alginates, or before you can have an electronics industry, or before you can have water, you need energy. At the moment, so far as we know, there are no resources of solid fuels or liquid fuels in any quantity. They would have to be imported. Therefore you turn your mind to the possibility of harnessing wave power, which is difficult and chancy. One might put one's thoughts to the harnessing of wind power. That is another difficult and complicated engineering matter.
One thing to which I should like to draw your Lordships' attention is the picture of Sir Edgworth David climbing in his plimsolls up the side of Mount Erebus, seeing it spouting out hot steam indicating that underneath there must be hot rocks. It is these hot rocks which allow the fish to breed in such enormous
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quantities. Therefore what it means is that if one sank a bore hole into these hot rocks one could develop a geothermal power station. This could be the source of energy which the islands need for their future development.
One of the best contributions we could make while we have our engineers there constructing the aerodrome is to sink a few deep bore holes—it would not cost very much—to see whether the hot rocks are capable of producing steam and giving to the islanders that which they need: namely, electrical geothermal energy.
4.34 p.m.
The Earl of Onslow: My Lords, that must be the most original speech, in the best possible sense, that we have heard about the Falkland Islands. When the Suez crisis was on Lady Eden complained that she felt that the Suez Canal was running through her drawing room. I have a feeling that the noble Lord, Lord Trefgarne, is going to have a feeling that fish are swimming about his. I am not going to be original in my speech, like the noble Lord, Lord Energlyn, but I am going to hammer home the point about fish and the Falkland Islands' natural resources.
Those of us who have actually had Falkland Islands' snipe walking around our feet; those of us who have stood within five feet of a spitting, brawling, messmaking, fish smelling, arguing colony of penguins; those of us who have seen elephant seals huffing and puffing and flipping sand all over themselves; those of us who have seen the enormous variety of the Falklands Islands' bird life and sea life will remember that it is totally and utterly engraved upon our minds. It is something which is very special at a world level.
As the noble Lord, Lord Buxton, said, that wildlife is totally dependent upon fish. If we destroy the fish life we shall destroy the wildlife. If we destroy that, we shall make the Falkland Islands uninhabitable, and all there will be will be a totally useless airfield on an uninhabited island. If, however, we take sensible actions to conserve the fish and equally sensible actions to conserve the wildlife, we then have a development potential for the Falkland Islands which makes sense economically, socially and strategically.
It is impossible to underline too much the importance of the Government's now—preferably yesterday, or better still the day before yesterday—imposing a 200-mile fishing limit. To say that it is going to offend somebody is not good enough; if you say that we have to negotiate a multilateral limit, we know how long that will take. It also, I would suggest to Her Majesty's Government, shows a doubt on the rights which the British have to the Falkland Islands. To go and correctly reconquer the Falklands because you have no doubt, and then to signal doubt in the next breath in failing to put down your 200-mile fishing limit in such a way that even the Argentinians are complaining about it, seems to me to show lack of a certain drive. There is also, I believe, no conservation input in the Falkland Islands' Government. In other words, when a development is planned there is not conservation advice immediately available.
This is no criticism of the Falkland Islands' Government. I think it is a criticism of the Overseas

929
Development Authority. The Falkland Islands are in an almost virginal state from the wildlife and natural resource point of view. It is now that one should put in the conservation input before it is ruined, before we have dug out all the hedges in Leicestershire, before we have prairie-farmed some of it. Before we do something we want to know what effect it is going to have in the long term and on conservation. Of course we want wool developed. Of course we want the idea of a clear air electronics industry, but that can only be developed if there is a proper conservation input at the beginning rather than letting black Birmingham-type smoke stacks belch away. I am not suggesting that that is going to happen, but it is important that we should have that in mind.
We have had reference to the possibility of £20 million a year, at its most conservative, being the cost of a licence fee on the 200-mile limit. The Ministry of Defence suggests that it would cost £13 million to police that 200-mile limit. I would suggest that a profit of £7 million is better than no profit at all. It has been suggested by equally intelligent people that it is not going to cost £13 million but nearer £5 million, and that the take on the licence fee could possibly be as much as £40 million. I believe, for instance, that the Japanese chomp their way through 500,000 tonnes of squid a year. I am tempted not to read out the bit about the Kanagawa Squid Jiggers Association, but it is worth repeating. It has 22 vessels reporting some 16 tonnes of squid per day, and the squid is worth some 1,300 US dollars per tonne. This is one company of one country.
To return for one brief moment to the conservation aspect: on Ministerial initiative taken in 1983 Professor Dunnet of Aberdeen University was asked to report to the ODA on conservation aspects in the Falkland Islands. Professor Dunnet has acted for some time as an adviser to the ODA. He duly reported back in 1983, but the report has vanished; no one has seen it. Can my noble friend tell us something about it? Judging by the look on his face it comes as a total surprise to him; but can he please find out for us and let us know?
I think that I have said enough about the fact that the whole ecology rests on fish. This is obvious and can only be further underlined. My World Wildlife brief reads:
"This is the single most important conservation problem. Fishing vessels from 16 countries operated within 150 miles of the Falklands in 1984, according to John Stanley in a written Commons Answer on 14th December 1984 (Bulgaria, Denmark, East Germany, Finland, Italy, Japan, Liberia, Norway, Panama, Philippines, Poland, Spain, Sweden, Taiwan, USSR and West Germany)".—
not a single British trawler!
"Of these, Polish and Spanish vessels are fishing the area most intensively. Nobody knows how much fish is being caught because only the Poles submit catch statistics, but the Poles alone are catching about 250,000 tonnes a year. The total catch is almost certainly over 500,000 tonnes and may be much more. Nobody knows whether this level of exploitation is sustainable because almost nothing is known of the size of the stocks, but if catches of similar levels around South Georgia are anything to go by (which almost eradicated stocks of Antarctic Cod in the early 1970s) it almost certainly is not".
There are, for instance, no regulations within the three-mile limit regarding net size or how fishing should be carried out, which any sensible fishery regime should apply.
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There is little more to say. The non-introduction of a fishery regime with established total allowable catches and the continuation of the present free for all allows two bad problems: the early decimation of the fish and the effect upon world prices and trading. The noble Lord, Lord Strathcona, mentioned this. He said that he hoped that somebody else would take it up, and as I have the same brief that he had I shall try to develop it a little. The brief says:
"The 'knock-on' aspect of item 2 is such that severe difficulties will arise in trading positions such as the Scottish mackerel and herring, as prices will be lower due to trade off values dropping. For instance Marr (Seafoods) … have already drawn up contracts to take squid products from the South Atlantic primarily to the Falklands of up to 60,000 tonnes. This will be marketed worldwide, but especially to Japan. A large part of this product has been exchanged for Scottish mackerel and herring with Eastern bloc countries who play a major role in Falkland fishing operations. They are now pressing us"—
that is Marr—
"to accept much lower values for UK mackerel and herring. For our government to allow such a situation to continue shows a complete lack of understanding, is financially ridiculous for UK interests and would we believe be totally unacceptable to the British taxpayer"—
that is, if it were totally understood, which I do not think it is. It certainly came as a surprise to me.
There is one further matter arising on the airport. It will enable rapid turn-rounds of trawler crews, provided they are established out there. This means that the Ministry of Defence have to think of it not purely as a military base. I suggest that also they have to put themselves in the minds of Thomas Cook and set themselves the task of providing a proper airfield. The noble Lord is wincing with horror at the thought, but it is true; this has to be done. Otherwise we shall not have the proper civilian development on the island. After all, the military are present for the service of the civilians—not the other way round.
I make this one final point. Except for the two noble Lords sitting either side of the noble Lord, Lord Trefgarne, grouse shooting is out of fashion in this Government. I suggest that if either the noble Viscount, Lord Whitelaw, or the noble Earl, Lord Swinton, ran their grouse moors in the way that the British are at the moment running the Falkland Island fisheries they would not be able to have the marvellous crop of grouse that they have for their own and everybody's economic enjoyment.
4.45 p.m.
Lord Campbell of Croy: My Lords, I am sure we all are grateful to the noble Lord, Lord Shackleton, for this debate and also for the way in which he so helpfully introduced it in his admirable speech. At his suggestion, I intend to address my remarks to sea fisheries as a subject on its own. This is because its importance has increased greatly since the Shackleton Report on the Falkland Islands and, as I hope to show, within the last two years. There are certain valuable fishing opportunities in the seas around the Falklands which have a significance for fishing countries throughout the world. These opportunities can be improved if continuing stocks of fish can be assured and if some facilities on shore are provided and guaranteed. They can be helpful to those European countries which still have elements of distant water fleets remaining. The opportunities in the Falkland Islands could take pressure off European waters,

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pressure which was considered recently in a debate in your Lordships' House on 11th March. I need hardly say that, if properly taken up, these opportunities would also lead to very helpful development on the Falkland Islands.
The House will know from the concern which I have expressed on several occasions during the past year that I have Spain particularly in mind. I take this opportunity of congratulating the Government on obtaining what seems to be a realistic agreement on sea fisheries on the accession of Spain on 1st January. We do not know the details, but from what we have heard the Government appear to have achieved about the best deal that was possible. Nonetheless, I still foresee that there will be more catching power within the EC than can be deployed in European waters without serious risk to fish stocks there. Spain, I should remind your Lordships, has a fleet which has been operating off the African countries and I hope that Spanish vessels will continue as long and as much as possible to fish off those shores. However, there are still elements of the Spanish distant water fleet needing worthwhile fishing grounds elsewhere. Bearing in mind size and freezing capacity, those Spanish vessels can fish a long way from home.
A significant factor is that Spanish ships are accustomed to fishing for hake and blue whiting, species which are in abundance round the Falkland Islands. They have found and retained markets for those fish also in Spain and elsewhere. If we compare the sizes of fleets in Europe in tonnage—which I suggest is the best method of comparison—the Spanish fleet is about 60 per cent. of the size of the present EC members' fleets put together. It is sometimes stated that the Spanish fleet is as large as or larger than the EC members' fleets, but that is in numbers. Tonnage is a better guide because many of the Spanish boats are small, operating locally, mostly for shellfish for which there is a large market within Spain. They are not competing with British fishing vessels because they are never far from their home port.
At the other extreme, there are very large and mostly modern distant water vessels. Although the world's distant water fleets, including Britain's, have been disappearing fast, Spain's has contracted little because of agreements and joint ventures with many other countries in Africa and elsewhere.
Those distant water vessels should not expect to compete in waters round the United Kingdom unless opportunities elsewhere are denied to them. It is in Britain's interest that opportunities should not be denied elsewhere to those Spanish vessels. Some have been fishing round the Falkland Islands and are fishing there now, but without a proper system of conservation and management and without facilities on the islands which would transform this into a regular and substantial fishing operation. The remaining part of the Spanish fleet, some 300 to 400 vessels, are the middle section which do expect to fish in European and North African waters and are the potential competitors of other EC fishermen in the EC pond.
To try to ensure that I am not misunderstood or misquoted by over-simplification, I must make it clear that I am not suggesting that these vessels, the middle
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section, should be sent forthwith to fish over 7,000 miles away off the Falkland Islands. Some in due course might find that profitable, but only with much preparation beforehand and in concert with their big brothers of the distant water fleet. Even after Spain and Portugal join the EC in January, the EC fleet will be third in size in the world after Japan and the Soviet Union.
This brings me to the present position in the seas round the Falkland Islands. No fishing limits are observed; not only Spain but several other nations, notably the Soviet Union, Japan and Poland, have fishing vessels operating there, clearly to their financial advantage. Without any supervision or co-ordination, there is a danger that stocks may be seriously damaged; and this happened some years ago after a concentration of Soviet fishing effort round the Falkland Islands. I recognise that there is some difficulty for the United Kingdom Government in declaring and controlling a 200-mile fisheries limit. The whole question of relations with Argentina and other South American countries is involved. But I would remind your Lordships that the rest of the world accepted de facto the extension of fishing limits to 200 miles in 1976 and 1977. From the Opposition Front Bench, I was dealing with the Bill on this which passed through your Lordships' House at that time, and I remember it well. That de facto establishment throughout the world of 200-mile fishing limits was established by customary law in anticipation of the United Nations Law of the Sea Convention.
As a result, 200 miles is now universally accepted for fishing limits and it would be expected for substantial, inhabited islands like the Falkland Islands, whatever is the sovereignty position. I would not press the Government to take action which they calculated would be regarded as highly provocative. What I would point out is that it is in everyone's interest to reach the kinds of agreements which would normally accompany 200-mile fishing limits. In addition, fishing vessels of other countries would be able to use land-based facilities which would greatly help them as they are having to operate far from home. It would be very beneficial to the development of the Falkland Islands and would add employment for the islanders. Such agreements would also provide arrangements which would ensure conservation while opening opportunities for valuable catches. The 200-mile fishing limit may not immediately be possible though I hope it will be possible soon, but in the meantime beneficial agreements, agreements of the kind that I have suggested, should not be delayed.
I should like to ask the Government—for reply this evening if possible—whether they are actively seeking such agreements. It has been mentioned during the debate so far that the Argentines, presumably the Argentine fishermen's organisation, are complaining that there is no fisheries' limit arrangement and that there is no supervision of such a zone. Can my noble friend, when he replies, confirm this and say what is the position of the Argentine Government themselves if their views are known?
It is clear that there are extensive resources of fish in the waters round the Falklands Islands and round South Georgia. They are being exploited now by the fleets of other countries in a haphazard way which

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would deplete and in due course decimate the stocks. Some of these species are not familiar to British housewives but there is no reason why British fishermen should not in due course join in the fishing in that area. For example, British fishmongers' slabs do not often have squid on them. Very large quantities are now being caught around the Falkland Islands. There seems an inexhaustible demand for squid in Japan. Squid has been an export from Britain for years. It is a by-catch for British fishermen.
I recall 25 years ago that fishermen in the Moray Firth, when they caught squid with their other catch, would simply throw it over the side. Then they discovered it was a delicacy in Mediterranean countries, and I am glad to say that exports were arranged. I had a picture in my mind then of British holidaymakers in Rome or Florence sitting down perhaps to a very expensive meal and not realising that the squid they were eating had been landed at Lossiemouth and flown to Italy. In the same way, squid is a valuable catch and the squid fishery alone around the Falklands Islands is a source of this species for parts of the world which at present cannot get enough of it. The potential for the Falklands' economy in the fisheries round the Falklands and South Georgia is very great, but I would tell the Government that I think that action is necessary soon.
4.58 p.m.
Lord Elibank: My Lords, I find myself in this debate in the unhappy position of being in a minority, I think probably of one, in viewing the plans of the Government and their many supporters round the House with an increasing measure of incredulity. I propose to take advantage of the point made by the noble Lord, Lord Shackleton, that we should treat this debate in the broad, general sense. I know that some of the points that I may have to make may be unpopular but at least I can offer your Lordships the consolation that I shall make no further mention of fish.
My difficulties start with the campaign itself two years ago and the objectives of the various parties who went into that campaign. The objective of the Government, as far as I can see, has always been consistent and clear. It was to protect the democratic right of the inhabitants of the Falklands to decide their own future as they thought best. The difficulty that I see is that, in my view, the British people went into this debate with another objective which was, quite simply, revenge. They were appalled by the sight of a foreign army on their island, by the molestation of their citizens, by the taking prisoner of their troops and by the hauling down of the Union Jack over Port Stanley. The relevance of this seems to me that when the war was finished, when our troops had gloriously completed their campaign, the objective of the people of this country was met in full. Their interest in and commitment to the Falkland Islands sharply diminished and in many cases it disappeared all together. It is against that background that one ought to try to look at some of the proposals which have been put forward and to attempt to weigh what measure of support they would have in this country.
As I understand it, the Government have two main pillars in their policy towards the Falklands. One is quite obviously defence—defence of the people and
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their rights, defence of the mineral and fishing resources and so on, in the area—and also the protection of such mineral rights as exist in Antarctica, assuming that we can maintain our interest in that area. The other pillar, as I see it, is an attempt to promote the economic viability of the Falklands now and in the future by means of whatever sensible investments are available.
If we look at defence—and a number of speakers have touched on this during the debate—one or two points strike us straight away. The first and the most obvious is the outlay of money. The noble Lord, Lord Shackleton, if I am quoting him correctly, mentioned 3 per cent. of the defence budget. That is a pretty miserable percentage of anything, but of course when it is 3 per cent. of an enormous lot of money it still becomes quite a strain on the Exchequer.
The other undoubted effect of our concentration on these islands is the distraction of our resources, military, material and intellectual, from the theatre in which our life depends: the European theatre. I think that is wholly wrong for a country with the limited resources, both military and financial, that we can command.
There has been a certain reference during this debate to the usefulness of the Falklands as a defence outpost in any future conflagration. I would put it to your Lordships that any such conflagration, which I suppose is more likely to take place in Antarctica than elsewhere, will be settled either under the aegis of the United Nations in a peaceful atmosphere of some compromise, or by means of some eyeball-to-eyeball confrontation between the great powers, if we are as unfortunate as that. I cannot really believe, in either case, that a few battalions of British troops, a squadron or two of ships and the equivalent number of Hawker Harriers is really going to be able to play an important role in the determination of the outcome of such a conflagration. I believe we deceive ourselves if we think that the success we won in the modest war fought in the Falklands will ensure our success in any similar venture. I would suggest to your Lordships that the mini-war we fought in the Falklands was the last one of that sort. The next conflagration will be more serious and will involve more powers; and our military resources will be marginal to the achievement of success in it.
So far as the mineral rights are concerned, some reference has been made to oil, of which there is undoubtedly a large quantity around the Falkland Islands, but of course in the current state of the world market, with prices falling and the market in a state of over supply, the commercial viability of the exploitation of oil around the Falklands is very limited. In fact, in my submission it is simply not realistic in the immediate future and probably not in the long-term future. I suspect that broadly the same would be true of the minerals of Antarctica.
To look again at the economic viability, I think there is one basic fact to be borne in mind about the population of the Falklands; that is, that prior to this campaign it had been in more or less steady decline for a number of decades. That, it seems to me, is the fate of outlying, isolated islands and locations throughout the world, not only British, but of any other nationality. The attraction of city life, if may one put

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it that way, is so great, particularly to the young, that I cannot envisage the younger generation wishing to live and farm in the Falklands for a number of decades in the future. I believe that had it not been for the campaign, it is quite likely that the decline in the population that we have seen would have continued until the islands were finally depopulated and the only presence on them would be either a British or an Argentine garrison.
The injection of the cash which Her Majesty's Government are putting into the Falklands at the present time surely can arrest and possibly reverse this trend for a period of time, but, I would respectfully suggest to your Lordships, in the end the Falkland Islands are doomed to depopulation. One thinks that only 400 miles away is the land of the Argentine which, whatever may be said about her international currency failings, is a glorious country, rich in agricultural resources, and offering a way of life which one would have thought was far more attractive than life on a somewhat barren island.
Lord Shackleton: My Lords, may I interrupt the noble Lord?
Lord Elibank: Yes, my Lords.
Lord Shackleton: My Lords, I am mystified by the noble Lord's reference to a "campaign". I am not sure what he is talking about.
Lord Elibank: My Lords, when I said "the campaign", I was referring of course in the first instance to the military campaign of two years ago. I thought I had made that abundantly clear. If I have misled the noble Lord in any way, I should be happy to clarify it. That is the only campaign to which I intended to make reference. I had no other purpose in mind.
What I have said is all by way of criticism, and I think it behoves anyone in my position, who has criticised the tremendous efforts made by the Government and others to further the cause of the Falklands, at least to put forward his alternative views. I believe—and this may be an unpopular thing to say—that we should hand over the Falkland Islands in toto, with sovereignty and full control, to the Argentine Government within a measurable space of time. If we try to assess what that time should be, personally I would say that five years is ample time for the inhabitants to consider their position and whether they wish to stay or to go. At the end of that time it would be for the British Government to offer a generous measure of compensation both to those who stay and to those who wish to go.
I would not be in favour, as has been mentioned by one or two speakers today, of an elaborate treaty, attempting to safeguard the rights of our citizens, whether it be in relation to language or law, or economically. I am afraid that I have insufficient confidence in the integrity of future Argentine governments to suppose that any such agreement would be worth the paper on which it was written. That is why I favour a clean break.
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I believe that if we did that, we would satisfactorily honour our commitment to the inhabitants and I believe that we would also restore our very damaged relations with the Argentine and, to a lesser extent, with the rest of South America. I also believe that we would relieve the British Exchequer of an intolerable burden.
Lord Somers: My Lords, may I just point out one thing to the noble Lord? Has he remembered that the Falklands are within a fairly short distance of a large and powerful country which is only too anxious to take them over and which regards them already as her own property? If they were to have their own sovereignty and we were completely to wash our hands of the Falkland islanders, how on earth would they ever be able to defend themselves?
Lord Elibank: My Lords, the answer to that is that if we handed over complete sovereignty of the Falklands to the Argentines, it would clearly no longer be our responsibility. It would give this warning period of five years for them to make up their minds, but any Falkland islander who stayed would become subject to Argentine foreign policy and system of law.
Lord Buxton of Alsa: My Lords, may I clarify to the noble Lord—although I do not think it is necessary for anybody else—that I never said anything about a conflagration in the South Atlantic. I was saying that in the event of a conflagration in the northern hemisphere, where it is most likely to be, it is then vital to have safe and secure maritime communications in the south.
Lord Elibank: My Lords, I can only accept the noble Lord's clarification. I did not have his speech particularly in mind when I was talking about a conflagration. It was my thought that any relevant conflagration would be in Antarctica or around south America. But I take his point that we do not want one to originate anywhere.
5.11 p.m.
Lord Morris: My Lords, I do not think it will come as any surprise to the House, least of all to the noble Lord, Lord Shackleton, if I do not follow the noble Lord who has just spoken, except to say that there are values other than economic, and also that expediency is ever the enemy of justice. But I should like to say that to take part in a debate led by the noble Lord, Lord Shackleton, is both a daunting experience and an extremely stimulating privilege. It is my suggestion that it would take a brave and indeed arrogant Government to ignore his views. Those two previous Governments who ignored the major recommendation of the first report of the noble Lord, Lord Shackleton, in 1976, to lengthen and improve the runway at Stanley—so major a recommendation that it was telegraphed to Her Majesty's Government well in advance of the publication of the report—have both learned to live with the knowledge that the cost of ignoring that advice was not just in money but also in lives.
As long ago as 1977 the noble Lord, Lord Shackleton, wrote to me a letter suggesting inter alia,

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no doubt with tongue in cheek, that the older he became, the more he was convinced that all Governments, of whatever colour, are nothing other than thoroughly dishonest. As a parliamentarian, I believe that this healthy scepticism is as good a premise to start with as any. Indeed, one of the first actions of the Conservative Administration in May 1979 was to tell a barefaced fib that,
"the majority of the Shackleton recommendations"—
that is, the 1976 recommendastions—
"have now been implemented".
Lord Trefgarne: My Lords, I remember very well the case that the noble Lord describes. It was I who made that assertion on behalf of the Government and I stand by it to this very day.
Lord Morris: My Lords, my memory serves me that it was one of my noble friend's colleagues who originally made the assertion in reply to a Question for Written Answer in another place. I am surprised that my noble friend takes credit for that statement, because it is one for which I myself should not like to take credit.
Lord Trefgarne: My Lords, in that case my noble friend cannot count.
Lord Morris: My Lords, that is as may be. The point is that I well remember his response on that occasion, when he rather airy-fairily suggested that he did not want to get into the qualitative and quantitative argument. But that is a detailed point. The major dishonesty of which we must be very careful is that of any Government if they are so vague, so vacillating and so insecure in their convictions that predators of one's own interests, and indeed of the free world's, are encouraged to feed off those interests.
For years now we have been reminded on numerous occasions that the Foreign Office, rather like Mae West, "just love foreign affairs". What I ask is: what of their love of a clearly stated foreign policy? As we have been reminded by the noble Lord, Lord Buxton, on a previous occcasion, there is no such confusion between strategy and tactics by the Soviets, who have stationed their major scientific posts in the Antarctic smack opposite Cape Horn, the Cape of Good Hope and the toe of the South Island of New Zealand—the three nearest landfalls to Antarctica.
One is reminded of a famous chapter in A. G. McDonnell's England their England, which I might add was written in 1925, where the raconteur is working as a personal assistant to a United Kingdom delegate to the League of Nations, who is planning to deliver a speech of the greatest importance to the League of Nations in plenary session. Upon asking two beautifully dressed young men from the Foreign Office what was the policy of Her Majesty's Government on this subject, the personal assistant received looks of astonishment that are reserved only for congenital idiots and the reply:
"Her Majesty's Government do not have a foreign policy, except maybe for one—that we must be nice to the French".
It is for this reason that I most warmly welcome the new constitution of the Falkland Islands, in that it is a major statement of foreign policy and, as such, I
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congratulate Her Majesty's Government on having the courage to resist the pleadings of those who suggest on so many occasions that we must not upset the Argentinians.
Similarly, I welcome the continued assurances of Her Majesty's Government that they are confident and secure in their case for sovereignty of the Falkland Islands and the dependencies, and that such a subject is not for debate with those who table claims, all of which must be spurious by their very nature. But I believe that this firm statement as such by Her Majesty's Government is not enough. Her Majesty's Government must be aware that for decades the history of Argentina has been written and re-written by Argentinians for Argentinian hearts and minds. True security in the whole of the south-west Atlantic lies in the success of successive Governments to state the United Kingdom's case to the people of Argentina, not just government to government but, to borrow the motto of the BBC, nation unto nation.
Your Lordships will recall the truly magnificent diplomatic endeavours of our representatives in Washington and the United Nations in the spring of 1982. However, I have strong reasons to believe that our most powerful allies believe that our on-going interest in the south-west Atlantic is at best eccentric and at worst positively Gilbertian. I ask my noble friend to tell your Lordships' House what is being done in this direction. In case my noble friend thinks that I ask this question lightly, may I ask him whether he has counted, or has lost count of, how many times the leader of the new democratic Argentina, President Alfonsin, has taken the opportunity to state the purity of the Argentinian claim and to insist upon negotiations, upon the unnegotiable?
Furthermore, I ask my noble friend, and other noble Lords who have so far been so patient with me, to consider this short extract. It comes from a quasi-official publication written by an Argentine Admiral, Admiral Fraga, as recently as 1984, if I recall rightly, and it is called Introduction to Antarctic Geopolitics. This short extract reads:
"this"—
this is Argentinian ambitions in that area—
"will also be achieved with permanent and effective presence in all our waters and our Antarctica, upholding our rights and our titles but accompanying them with extensive scientific/technical and logistic activity, so that wherever the Argenine flag may flutter one may know of our irrevocable spirit of struggle at all times in order to satisfy as far as possible Argentine aspirations and interest in Antarctica".
5.19 p.m.
Lord Cledwyn of Penrhos: My Lords, we are extremely grateful to my noble friend Lord Shackleton, for enabling us to have this debate and for his opening speech, which again showed his great knowledge of the South Atlantic and its problems. The economic study of the Falklands, published in 1982, over which my noble friend presided, is of very great value, as indeed the Government themselves have recognised.
No one is more entitled than my noble friend to look critically at the progress which has been achieved and the problems which remain. As he made clear in his remarks, these are formidable indeed. Other noble

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Lords who have spoken have also shown a great knowledge of the area and I think that by now all the topics of importance and also of controversy have been covered. I should like at this stage to add my good wishes to the retiring Governor, Sir Rex Hunt, who conducted himself with courage and dignity at a time of crisis.
I shall try to deal very briefly with what I see as the main issues raised in this debate. They come under three headings. The first is the current state of the Falkland Islands. The Foreign Affairs Committee of another place described the Government's responsibilities quite clearly. The report is in my view an extremely important document. It said:
"The islanders went through a traumatic experience which they will not forget in a hurry. The infrastructure of the islands was badly damaged".
The report of the Select Committee goes into this in great detail. I do not propose to quote from it at length but one paragraph summarises the position. Paragraph 167 contains the final assessment of the committee:
"As an urgent response to an allegedly critical situation it is difficult to imagine any enterprise being proceeded with at a more funereal pace. The Falkland Islands Government representative, Mr. Monk, described the ODA's approach to the establishment of the FIDC as 'very sluggish'. It had tended to hold up all sorts of small development. This sluggishness has undoubtedly given rise to understandable, and in our view, justified resentment in the Falkland Islands".
Those were the conclusions of the All Party Committee in another place. Perhaps the noble Lord will be good enough to comment on this when he replies.
The noble Baroness, Lady Young, whose absence we regret but understand, recognised that the recommendation of my noble friend in relation to the land reform programme, to which my noble friend referred in his speech, was one of the most important in his report. Yet it has been given very low priority by the Government. This again is something on which the noble Lord may wish to comment. The £4.6 million out of a total development grant of £31 million indicates the true importance attached to the corporation by the Government, as the committee itself pointed out.
My noble friend mentioned the importance to the economy of the fishing industry. This has been underlined in some very impressive speeches by a number of noble Lords. My noble friend's study recommended a 200-mile limit. It is only fair to remind ourselves that this recommendation was in fact backed up with a great deal of detailed argument. We also know about the extensive operations of foreign fishing fleets around the Falklands and also further south around the dependencies. The Select Committee in another place, while agreeing that there is a strong case for the regulation and licensing of fishing, does not favour the 200-mile limit in view of what it calls:
"the considerable political and practical problems to be overcome".
I do not dismiss these arguments lightly and I do see merit in their recommendation for an indigenous fishing fleet in the Falkland Islands, but it would be interesting to know the Government's views and intentions at this time. I think that they will need to
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take very careful account of the important speech made by the noble Lord, Lord Buxton, who is also one of the experts in this area, and of the detailed recommendations of the noble Lord, Lord Strathcona, and of the remarks of the noble Earl, Lord Onslow, and the noble Lord, Lord Campbell of Croy.
The right honourable and learned Gentleman the Foreign Secretary has spoken in another place of what he described as a,
"multilaterally based conservation and management scheme".
It would be helpful if we could be told today what precisely that means. Have any other countries been approached about this proposal, and if so, which countries and what has been their response? The noble Lord, Lord Kennet, asked about possible European Community involvement. Perhaps we could be told if any or all of our Community partners have been consulted by us on the question.
Other matters upon which we would appreciate comment are the reported granting of prospecting rights in the Falklands to the company known as Firstland Oil and Gas. What is the scope of the rights granted to this company and what potential revenues and taxes have the Government agreed with the company? I do not know a great deal about this company; perhaps the noble Lord can enlighten us about that as well.
My noble friend referred, as did other noble Lords, to the new airfield. There is as the House will know some concern about the latest estimated cost of the airfield and also the army base, especially given the overall expenditure there compared with the severe stringencies we have to endure here at home. There are reports which put the cost up substantially by as much as £70 million. We should be grateful if the noble Lord could clarify the position and also tell us the latest position about the civilian use of the airport.
We have heard from my noble friend and others about the constitutional development. This is of the first importance both to the islanders and to ourselves. No one can argue that the proposed new arrangement is a great constitutional advance, and we noted with interest the Foreign Secretary's remark in another place on 14th March when he said:
"The ultimate authority in matters affecting any dependent territory is of course this Parliament".—[Official Report, Commons 14/3/85. col. 494.]
That is something that we and others must always bear in mind.
I should be grateful if the noble Lord would clarify one matter about the separate constitutions. We understand that the Governor of the Falklands will be Commissioner for South Georgia and the South Sandwich Islands and will consult the Falklands Executive Council about matters relating to the dependencies. It must be doubtful whether it is prudent in the longer term to establish this kind of relationship between the two territories. They are not and never have been one constitutional entity. To establish this link could prejudice the position later on. The Government may be well advised to think again about the implications of this new move.
In parenthesis, I should like to ask—and I should really know the answer—why the two Orders in Council which set up the new constitution are not

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subject to the normal affirmative or negative procedure, which would enable us to debate the orders in another place and here as well. There must be a good explanation and perhaps this was written into a statute at some stage. I understand from my noble friend that in the absence of a debate on the orders, the Government have been good enough to allow time for this debate, and we of course appreciate that.
There are several other internal problems. We have heard several most interesting speeches, including one on tourism by my noble friend Lord Mountevans, and by the noble Baroness, Lady Vickers, who raised a number of interesting points. However, I shall move quickly to my second heading; namely, the future of Antarctica, in which my noble friend Lord Shackleton has a deep interest.
We know that in due course the Antarctic Treaty will be reviewed, with all that implies. It is clearly vital that any final solution should be based on international agreement. The alternative is a dangerous free-for-all—an Antarctic Klondike rush; although my noble friend Lord Energlyn was cautious about the possibility of that and about the range and volume of resources in the Antarctic. Renegotiation of the treaty at this time does not seem to be practicable; but we and other countries should be thinking in the longer term and preparing for talks when the moment is right. The Falklands, South Georgia and the Sandwich Islands are obviously important in this context. As I have suggested, the Government should not commit us in advance or box Britain into an awkward situation, in view of the implications for the islands generally.
My third heading is our relations with Argentina and the possibilities of improving them. Given the change of Government in Buenos Aires and the genuine goodwill which I believe exists in this country for President Alfonsin—goodwill which is reciprocated, I understand, by many elements in the Argentine itself and certainly, as I well know by the Welsh colony in Patagonia—it is tragic that we have not been able to make more progress by now. We much regret the collapse of the Berne talks. They should never have broken down as they did, although we understand the reasons. The one word that stands between the Argentine and ourselves, between success and failure, is, as we all know, the word "sovereignty".
President Alfonsin cannot and should not forget the responsibility of his predecessors. The British Government must not forget the feelings of Argentinians about the islands. Nor must they forget the comparative fragility of the new Government, which every democracy in the world must try to sustain. We must find a way to include this issue on an agenda for debate at some stage, and we hope that will be at an early date. The Argentinians must not make sovereignty so urgent and strident a clarion call at this time. They must remember the history of the past few years, the illegal invasion under the Galtieri Government and the blood that was shed. A failure to appreciate that was the weakness in the courageous speech made by the noble Lord, Lord Elibank.
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Sir Nicholas Henderson, our former ambassador in Washington, gave good advice when he said:
"Let us sit down together with an open agenda so that we can define what we are going to discuss later on".
And in paragraph 96 of the Select Committee Report, the same point is made:
"This does not mean that the United Kingdom Government should not agree to the inclusion of the 'sovereignty issue', as at present defined by Argentina, on the agenda for talks in the immediate future, but it does mean that they should be willing to discuss the means by which progress can be made to try to find a negotiated settlement with Argentina as requested by the United Nations. Unilateral moves by the United Kingdom Government, not related to the question of sovereignty, should also, however, be considered".
That was the recommendation of the multi-party Select Committee in another place.
This country has had a good deal of experience in these matters. I notice that in the context of the Falklands both Hong Kong and Gibraltar have been mentioned from time to time by noble Lords and by others outside. The Government deserve all praise for their conduct of the Hong Kong negotiations but I do not believe that the situation there is analogous to the Falklands. We held Hong Kong on a lease which ends in 1997, and that is that. Yet for all that Government spokesmen have demurred, I believe that Gibraltar is a different case. It is an example of the Government's ability to conduct negotiations with Spain on a range of crucial matters, and to discuss them successfully, while not excluding sovereignty absolutely from the agenda.
I note that in The Times last Friday the Government have suggested a resumption of talks with the Government of Argentina. If that report is true then we warmly welcome the Government's initiative. I hope that the Argentine will respond constructively. An end must be brought to public recrimination and propaganda if any settlement is to be reached, and if success is to accompany talks. The first step must be for us to lift the exclusion zone and for the Argentine formally to end hostilities. But once that is done—and with goodwill it can be done—I believe we can then make progress.
5.37 p.m.
Lord Trefgarne: My Lords, perhaps I may add my vote of thanks to the noble Lord, Lord Shackleton, for introducing this debate this afternoon. Since the last major debate in this House on a broadly similar theme in December 1983, there have been major advances in the development of the islands. The new constitutions have been promulgated for the Falklands and for the dependencies, which are to be known as South Georgia and the South Sandwich Islands.
We stand firmly by our commitments to enable the islanders to live in peace and security under a government of their own choosing, and in that setting to promote their political, social and economic development. These commitments govern our approach to all the issues under discussion today. I wish I could report advances in improving our bilateral relations with Argentina, which, traditionally, had been comparable with the good relations we continue to enjoy with the rest of South America. Noble Lords will, I am sure, like the

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Government, be thinking particularly of Brazil. It was with great sorrow that we learned of the tragic death of the Brazilian president-elect, Dr. Tancredo Neves. His long experience in Brazilian political life and his talent for reconciliation will be sorely missed. My right honourable friends the Prime Minister and the Secretary of State for Foreign and Commonwealth Affairs, and the Lord President of the Council, have sent messages of condolence. Indeed, my noble friend Lady Young has left this afternoon for the funeral, and that is why I stand before your Lordships tonight.
I should like to pay tribute to Lord Shackleton's contribution to the development of the islands. His two economic studies of the Falklands, drawn up in 1976 and 1982, remain basic texts for any discussion of this subject. As the noble Lord himself recognised in the debate last December, the Government have implemented the great majority of his recommendations.
One of our first tasks after liberating the islands in June 1982 was a rehabilitation programme. A total of £15 million was allocated for this. The tasks were daunting. The larger projects in particular were hampered because of factors such as shipping congestion in Port Stanley and overburdened local resources. Although port handling facilities have been immeasurably improved since then, other constraints remain and will inevitably influence the pace of future economic and social development.
The Government responded in December 1982 to the recommendations in the noble Lord's study of that year, by making an allocation of £31 million for the development of the islands' economy over a five- or six-year period. This has been used to take forward a number of the noble Lord's recommendations. A central element in these was the establishment of an agency to co-ordinate and stimulate development. The Falkland Islands Development Corporation began to operate last summer and has made an encouraging start under the management of David Taylor as chief executive and Simon Armstrong as general manager. I had the privilege of meeting both these gentlemen when I visited the Falklands earlier this year and was able to be briefed at first hand on the activities of the corporation.
Several of the noble Lord's recommendations related to the development of the islands' natural resources, especially wool, inshore fisheries and tourist potential. These are being implemented under the auspices of the corporation, and I shall have more to say on some of them in a moment. The noble Lord's study also touched upon infrastructure needs. Our allocation included provision for upgrading essential services, such as Stanley's electricity and water supply, which were not dealt with explicitly in the report, as well as proposals for harbour improvements.
In a few areas, however, the Government do not share the noble Lord's views. Land transfer, which he has raised again today, is one of these. The Government still consider a gradual approach to land redistribution, under the auspices of the Falkland Islands Development Corporation, to be more in keeping with the capacity of the islands' existing agricultural population and more consistent with
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realistic immigration prospects, than the scale and rate of redistribution recommended by the noble Lord.
Before the conflict in 1982, the Falkland Islands Government had virtually completed the subdivision of one farm, Green Patch on East Falkland, into six smaller units. The subdivision of a second farm, Roy Cove on West Falkland, again into six units, was interrupted by the invasion. Over the past two years, as well as completing the formalities on these earlier subdivisions, the Falkland Islands Government have been involved with arrangements for the subdivision of two further properties. These are Packe Brothers Farm on West Falklands in 1983, which has been split into eight units; and, most recently, San Carlos on East Falkland, whose sections have been purchased by seven individuals.
Twenty-seven farms have been created from these four subdivided properties—over half since the end of 1982. They account for about 408,000 acres of the total acreage and farmland and roughly one-fifth of the islands' livestock. In addition, there are about 10 independently-owned small farms, mainly small islands; and the Falkland Islands Company is encouraging share farming on some of its farms. There is still much to learn about the process of land redistribution. The administrative and legal problems are considerable and there are many issues relating to the existing subdivisions to be resolved.
Detailed statistics are not yet available for production on the most recent subdivisions. The evidence suggests that productivity on the Green Patch holdings, however, has increased by some 15 per cent. since subdivision, and the trend is still rising. If this pattern repeats itself elsewhere the prospects for small farming appear good. The higher rural incomes generated could, in time, encourage opportunities for specialisation, such as contract shepherding or the provision of mechanised services. At the same time, the evidence about the number of islanders wishing to own their own land is not easy to assess with precision. Some islanders prefer to be employed on a large farm rather than be self-employed. Others perhaps lack the necessary managerial and entrepreneurial skills, or the necessary finance. Yet others are interested only in specific parcels of land. These are among the reasons why the process of land redistribution should be a gradual one.
The Falkland Islands Development Corporation has an important role to play in fostering a land redistribution programme which keeps pace with demand. The corporation has already prepared a package of measures to assist farmers with land and livestock improvement. Roughly three-quarters of the small farmers have applied for assistance under this scheme. The main priority is fencing, which is essential for proper management and productivity improvements on the subdivisions. A farm management adviser has now taken up post, and will be working in close co-operation with the Agricultural Research Centre.
The main aim of the development corporation is to identify and support small-scale commercial enterprises, including those based on the islands' chief natural resources, and to promote some diversification in their economy. A wool mill, which will produce yarn and knitted goods, has been established at Fox

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Bay East on West Falkland, and should be opened next month. Fox Bay East is also the base for a pilot inshore fisheries project which is examining the commercial potential of shellfish resources. The initial results have been encouraging. The corporation is also working on proposals for the development of small-scale industry and services, including tourism, and has commissioned a survey of the islands' transportation needs. It is meanwhile heartening to be receiving reports that various individual islanders are engaging in successful small-scale enterprises.
I turn now to the question of fisheries. Many noble Lords have today talked, quite rightly, about their concern over the depletion of fish stocks. The Government are fully aware of the increasing need for an appropriate conservation and management regime in the south-west Atlantic. Under normal conditions the unilateral declaration of a 200-mile limit could have been an appropriate response to the problem. But there are particular political and practical difficulties involved in the circumstances of the Falklands. We have therefore decided to adopt a different approach. As my right honourable and learned friend the Foreign Secretary said in another place on 14th March, we have decided to explore the possible ways in which a multilaterally-based regime for fisheries conservation and management might be established. We are taking steps to develop that approach. Noble Lords will appreciate that it would not be helpful to go into greater detail at this stage. This is an important and complex subject which we need to follow up on a confidential basis.
I hope your Lordships will not underestimate the difficulty of policing such a unilateral zone if it were to be declared. My own view is that the costs, for example, would be substantially greater than some of the figures which have been mentioned in your Lordship's House this evening. It is perhaps worth recalling that a number of the nations whose vessels are fishing in the zone now are among those who do not support our claim to the sovereignty of the Falkland Islands and thus, if we were to declare a unilateral limit, we might find ourselves in much greater difficulties in policing it than noble Lords imagine.
The Earl of Onslow: My Lords, before the noble Lord leaves that point, can he say what will happen if we do not get multilateral agreement? Will he consider putting a time limit on getting multilateral agreement?
Lord Trefgarne: My Lords, my noble friend is putting what I regard as a hypothetical question. We have embarked upon a policy of securing a multilateral regime for the area concerned. I hope and believe that that is attainable, and I would rather not speculate on a course that we might seek to adopt if, in the end, that was not possible. We have not yet determined that it is not possible. On the contrary, I hope and believe that it will be.
Lord Strathcona and Mount Royal: My Lords, may I ask my noble friend again whether he has put a timescale on how long he thinks it will take him to decide either that it is possible or that it is not possible? If it is more than couple of years what we are being told
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is that he can forget it because there will not be anything left.
Lord Trefgarne: My Lords, again I hesitate to put a rigorous time barrier on such discussions. My own experience in these matters, such as it is, leads me to suppose that a barrier of that kind is not the way to achieve the aims that we all want to achieve. Therefore, I hope my noble friend will forgive me if I do not answer his question in a specific way.
A key element in the development of the islands is the new airport at Mount Pleasant, 30 miles from Port Stanley. This meets another of the recommendations of the noble Lord, Lord Shackleton. We expect the civil and developmental role of the airport to become progressively more important. From the beginning it will be used by civilian passengers travelling on internal flights and on airbridge flights to Britain. When completed, it will be available for commercial operators wishing to establish external air services. Meanwhile, it will retain the function of enhancing our rapid reinforcement capability. As my right honourable friend the Secretary of State for Defence has explained, once the airport is completed in 1986 it should be possible to reduce the level of forces permanently stationed on the Islands.
The main, 8,500-foot runway will opened by HRH the Prince Andrew next month. The airport is due to become fully operational in early 1986, after the second runway, needed for all-weather facilities, is completed. In this context I should once again make clear that allegations that we are establising a strategic or NATO base in the Falklands are totally without foundation.
Another important achievement to which the Motion draws attention has been the introduction of new constitutions for the Falkland Islands and for the dependencies, replacing the constitutions dating from 1948. A Select Committee of the Falkland Islands Legislative Council had embarked on a review of the constitution before the Argentine invasion of 1982. Her Majesty's Government accepted all the Select Committee's main recommendations, which enhance the democratic nature of the islands' administration, and have since taken full account of other views expressed by island councillors.
Orders in Council containing the new constitutions were made by Her Majesty on 20th March and laid before Parliament on 28th March. The constitutions will come into effect on the day of the general election to be held in the Falkland Islands later this year. The noble Lord, Lord Cledwyn, asked me specifically about the legislative provisions which provided for this parliamentary procedure. It is the British Settlement Act 1887.
Lord Kennet: My Lords, before the noble Lord leaves the constitution, can he tell the House anything about the apparent contradiction between the islanders having self-determination—which is enshrined in the constitution—and this Parliament remaining the arbiter of their fate? Have they a veto over their future? If not, can the noble Lord explain why?
Lord Trefgarne: My Lords, no, In the last resort, decisions as to the constitutional disposition in the

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Falkland Islands remain for the Westminster Parliament. The Falkland islanders do not have a veto, but of course we take their views very closely into account.
Lord Kennet: My Lords, what then is the meaning of "self-determination" in this context?
Lord Trefgarne: My Lords, I think that it therefore devolves upon us to take account of the views of the Falkland islanders, as we have been doing ever since we became responsible for these things some years ago. We also keep in mind the conclusions of the noble Lord, Lord Shackleton, in his reports on the dependencies' potential, particularly in terms of marine resources. We have noted the noble Lord's view that further investigation into this potential is necessary. The British Antarctic Survey continues its important activities.
As for the importance of the Falkland Islands and dependencies in relation to Britain's activities in Antarctica, Mount Pleasant's role would clearly include use as a stepping stone to Antarctica, though both Chile and Argentina have well-equipped airports and harbours nearer to Antarctica than the Falklands. Facilities in the dependencies, on the other hand, would have to be developed almost from scratch.
Your Lordships will I am sure agree that it is important to prevent our dispute with Argentina over the Falkland Islands affecting the operation of the Antarctic Treaty. We do of course continue to take part in Antarctic Treaty system meetings at which the Argentines are also present. We are aware that this most valuable treaty may be reviewed in 1991, and we shall work constructively in that context.
I should now like to turn to the question of our relations with Argentina. During the last debate on the Falklands in this House my noble friend Lady Young expressed the hope that the new Argentine Government under President Alfonsin would respond contructively to our proposals for the improvement of these relations. So far they have adopted a position on sovereignty every bit as unyielding as that of their predecessors. Members of the Argentine Government suggest that Britain is intransigent in refusing to discuss sovereignty over the islands. But the fact is that it is Argentine insistence on making agreement to discuss sovereignty a precondition to talks on any other aspects of our bilateral relations that prevents any movement out of the present impasse.
We, the islanders, have noted statements by President Alfonsin and other members of the Argentine Government that they intend to pursue their claim to the Falklands by peaceful means. But the Alfonsin Government have refused to declare a definitive cessation of hostilities and continue to make it clear that discussion of sovereignty, however extensively it may be disguised, could only have one outcome: the transfer of sovereignty to Argentina irrespective of the wishes of the islanders. We cannot simply ignore the events of 1982—and our commitments to the islanders—by engaging in discussion of sovereignty.
We are persevering in our efforts to persuade the Argentine Government that the only realistic way
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ahead is through discussion of practical measures where progress would be of benefit to both sides. Earlier this year we transmitted the latest in the series of messages that we have been exchanging with the Argentines through the protecting powers. The details must remain confidential, but that message once again put forward practical steps that would enable confidence to be re-established between our two peoples. We look to the Argentines for a constructive reply.
The Government continue to believe that an improvement of commercial and economic relations would be the natural starting point in the improvement of bilateral relations. Both sides have an interest in improved trade, and the Argentine Government have publicly stressed the need to increase their exports as a contribution to tackling their daunting economic problems. Both Her Majesty's Government and the European Community have several times proposed a reciprocal lifting of the trade embargo that has been in place since the conflict. I should add that the British Government have also taken a consistently constructive approach to the international arrangements for the rescheduling of Argentina's official debt in the Paris club context. I would also remind your Lordships—as we have reminded the Argentine Government—of our continuing readiness to see a properly supervised visit to the Falklands by the next-of-kin of Argentine servicemen who died there in 1982.
I now turn to some of the other points that have been raised during the course of the debate this evening. The noble Lord, Lord Shackleton, in his opening remarks, and several other noble Lords referred to the fact that we had separate constitutions for the dependencies. The dependencies are a separate, United Kingdom-dependent territory with their own laws and revenues. They will continue to be administered from Port Stanley purely as a matter of convenience. They have no indigenous or permanent population. The detailed provisions of the new constitution for the Falkland Islands—revising and developing the representative government there—would be far in excess of the needs of the dependencies. That is why we decided to proceed in the separate ways that we did.
The noble Lord, Lord Cledwyn, asked me about the Firstland Oil and Gas Company. The licence granted to Firstland Oil and Gas confines the company to onshore exploration only. It has no implications for possible off-shore activity. Details of the licence were given in a letter from my honourable friend the Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs to the honourable Member for Linlithgow, which was published in Hansard on 25th October. Further details were given in a letter from my right honourable friend the Prime Minister to the honourable Member for Carrick, Cumnock and Doon Valley, which was also published in Hansard—this time on 4th February.
The noble Lord, Lord Shackleton, in his remarks referred to the possibility of extending the provisions of the Antarctic Treaty. As my noble friend Lady Young told your Lordships on 6th December 1983, the extension of the Antarctic Treaty area to include the Falklands and the Falkland Island dependencies

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would require the unanimous consent of all 16 consultative parties. It would give not only Argentina but also the Soviet Union and Poland the right to establish scientific stations on sites of their choosing and to man them with military, though unarmed, personnel. The Antarctic Treaty is—
Lord Shackleton: My Lords, I made no such recommendation for the reasons that the noble Lord is now giving.
Lord Trefgarne: My Lords, I apologise if I misinterpreted the remarks of the noble Lord. Perhaps it is of benefit to other noble Lords that I can explain the difficulties of that proposition. As I said, the Antarctic Treaty is geared to territory where there is no permanent population. Its direct application would therefore not meet the situation of the Falkland Islands.
May I make another point about the fishing problem which was in the mind of many noble Lords who spoke? It is worth recalling that on 22nd July 1982 when we announced the lifting of the 200-mile total exclusion zone, we established and replaced it with a protection zone of 150 miles radius. Through the protecting powers we asked the Argentine authorities to ensure that their warships and military aircraft did not enter the zone, but Argentine civil aircraft and shipping were also requested not to enter the zone unless they had the prior agreement of the British Government. It is interesting to note that not one of them has applied for that permission since that time.
The noble Lord, Lord Shackleton, asked me too about interim operations at the Mount Pleasant aerodrome, I think with particular reference to civilian facilities. Operations in the period up to the completion of the aerodrome will have to be restricted to minimise disruption to the continuing works; but there will be at least as many places available for civilians on the wide bodied Airbridge as on the present Hercules and airsea services combined. I know that that was very much a matter in the minds of Falkland Islanders when I was there a few months ago. I hope that I was able to reassure them along those lines in the remarks that I made.
I believe that I have covered the point about the separate constitutions. I have recited the Act of Parliament under which they were made. Drafts of both orders were placed in both Libraries of Parliament for the benefit of your Lordships and Members of the other place.
The noble Lord, Lord Mountevans, referred to tourism. The Falkland Islands Development Corporation recognises the importance of tourism in diversifying the economy of the Falkland Islands. It agrees with the noble Lord that specialist tourism—wildlife, historic shipwrecks, and so on—offers the greatest potential. The guesthouse concept to which he referred is being developed. Spare accommodation on two farms is being converted into guesthouses. The development corporation has also commissioned the British Tourist Authority to undertake a market survey in Western Europe and North America to assess the market potential more accurately.
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My noble friend Lord Onslow referred to Professor Dunnet's report on conservation. It is true, as my noble friend explained, that he prepared a report on the conservation and ecology needs of the Falkland Islands Government. That was commissioned by the Overseas Development Administration on behalf of the Falkland Islands Government who have had to consider the implications of implementing his recommendations in the light of other calls on their financial resources. Other expenditure has had to take priority, anyway for the time being.
Several noble Lords have referred to the strategic importance, as they see it, of the Falkland Islands, particularly if, for example, the Panama Canal were to be closed. Your Lordships may be influenced by recollection of the exploits of Her Majesty's ships using the Falklands' harbours in both world wars and point to the Falkland Islands' continuing significance if it becomes necessary to ensure security of passage in that area for the defence of freedom. But advocates of that view must recognise that changes in many aspects of naval warfare since the Second World War make it much less likely that Falkland harbours would play the same role in any future period of crisis, tension or war.
I say again, as I said earlier in my remarks, that there is no question of turning the Falkland Islands into some sort of NATO fortress. That is most certainly not the purpose of our military presence there. For the future, we prefer to think in terms of the islands role in facilitating access to economic resources in the South West Atlantic and Antarctica, particularly through civilian use of the new all-weather airport at Mount Pleasant.
My noble friend Lord Elibank suggested that we should hand the Falkland Islands over to Argentina. Needless to say, I profoundly disagree wtith my noble friend. Has he considered, I wonder, the rights and wishes of the Falkland Islanders themselves? If he has been there, as a number of your Lordships have, he will know very well that that does not for a moment comply with their view. Has he considered the implications of what he suggests for the rule of international law? I do not for a moment think that we could acquiesce in a suggestion that any country could have what it has sought to take by force. Has he considered the implications of the views of the Scecurity Council of the United Nations in this matter when it passed its resolution following the Argentine invasion in 1982? Above all perhaps, has he considered the feelings of the relatives of 256 or so British men who give their lives in that conflict?
My noble friend Lord Morris made an interesting speech, as he always does, but I hope perhaps that he will take a little more care with the drafting of some of his remarks in the future. He also explained how President Alfonsin so often repeats his claims to the sovereignty of the Falkland Islanders. I think he compared that unfavourably with the remarks of the British Government. Perhaps he was thinking that we do not declare our claim often enough. As far as concerns President Alfonsin, methinks he does complain too much.
I have been asked, too, about the cost of the airport which is presently under construction. As The Times reported on 6th April, the PSA's present estimate of the cost of the works at Mount Pleasant is £395

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million updated to September 1984 prices. That is made up of £276 million for the airport and £119 million for the additional garrison works which were announced by my right honourable friend the Secretary of State for Defence on 21st September last year. That is the expenditure which the Treasury has approved. Suggestions that the cost of the works will turn out to be higher are therefore purely speculative. Indeed there was no evidence of that when I was there recently.
Our efforts to improve relations with Argentina are in no way incompatible with our commitments to the islanders: I have described the progress made on a wide range of development projects currently under way in the islands. A reduction in tension in the South Atlantic would allow us to reduce our defensive military presence in the Falklands and to concentrate on its economic and social development. We would also hope to see increased co-operation with Argentina and others in the development of the resources of the wider region. A report on the Falklands by the Foreign Affairs Committee of another place recently endorsed these twin themes of Government policy. I hope that they will also receive the approval of your Lordships.
6.7 p.m.
Lord Shackleton: My Lords, I am conscious that we have had a certain refreshment in numbers of Peers who have now joined us, no doubt not to take part in the debate on the Falklands or even to listen to us, but to proceed onto the other very important business that follows. None the less, in winding up I should like to make a few remarks. I again repeat my apologies for the fact that the article which I planned for The Times two months ago not by my deliberate intention appeared today. I again repeat that I think that it is undesirable for noble Lords to use the public media to further their arguments in a debate which is to take place, and I censure myself. But it meant that I was able to make a rather shorter speech, with somewhat regrettable consequences, as I was not able to deal with some of the arguments on the Antarctic, and I think that I must say something on that. I must say something also to the noble Lord, Lord Elibank, whose speech I admired. It was a brave speech in the circumstances.
The BBC correspondent, Robert Fox, when he returned from the Falklands complained to me that one of the difficulties was that the Shackleton reports were now treated as holy writ and that therefore it was a matter of interpretation. Who am I to quarrel with the different interpretations that may be put upon the words that I utter? But I am bound to say to the noble Lord, Lord Trefgarne, who has done extraordinarily well at very short notice in the absence of his noble friend, that I have never myself said that the great majority of my recommendations have been carried out. What I said—and it was quoted in another place; I cannot remember the exact words—was that no other author of a report had had so much carried out by a Government.
However, as I shall seek to show, there are certain quite important omissions from my original report. The main one is the absence still of any encouraging noises on conservation from the Government. This is
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very relevant to the argument both on fisheries and on conservation generally. I think this is a tragedy. This was one of the recommendations in our 1976 report and in our 1982 report. The noble Lord refers to the progress that has been made. It is nine years since the first report and we still have Green Patch brought up as an argument for progress.
I said on that occasion, and I have said more recently, that unless the Government proceed with more vigour in the development of the Falklands and the reform of the land tenure there is no point in our seeking to hold on to the Falklands because the numbers will go. The noble Lord, Lord Elibank, will be proved right unless there is some progress on this.
As has been made clear, the fisheries in particular could provide for the Falklands revenue vastly in excess of what they are receiving at the moment from farming. This has been shown courageously and the same recommendations have been made as were made by Gordon Eddie in my report in 1976. Marr and Sons and a number of others including the noble Lord, Lord Strathcona, have indicated that we can now proceed more forcefully than in the past. I would ask the noble Lord to urge his officials, to consult his colleagues, to consult those with expert knowledge on this matter and to proceed with greater vigour on the development of the fisheries.
There have been several references to the Antarctic. I think there is some misunderstanding about the Antarctic Treaty. It is a treaty without limit. It is an indefinite treaty. In relation to the 1991 review date, so many subscribing nations could ask for a review but it does not mean that that treaty will not go on. However, what we were arguing, and what I was arguing, is this. For want of (if I dare use the word) "geopolitical" gain, which has certainly been used by the Argentines, I want to see a solution, not to bring the Antarctic Treaty to cover the Falklands, for various reasons, but a degree of co-operation between the Argentine, Britain and Chile. I particularly stress Chile because the Chilean Ambassador, who had read my article (and I apologise again about that) said that the Chileans are not seeking, in their little colony of children and a school in the Antarctic, to disrupt the Antarctic Treaty. Would that the Argentine Ambassador had been here to say the same thing!
I commend the Government for their determination to go on trying to find some kind of accommodation with the Argentine. I am sure that those of us who have talked with them in the past will find great friendliness. Certainly after the previous break in relations, for which I inadvertently was responsible in 1976, I was a welcome visitor to every party at the Argentine Embassy, when the chargé d'affaires attributed the fact that he had been left for an extra three years in London entirely to my doing; and this suited his children's education. There is no basic hostility between the Argentine people and the British people. I urge the Government to look, in the context of possible negotiations, on the fisheries and on conservation to see whether we should not make a gesture and try to make a proposal of the kind that I have mentioned.
I shall not proceed to debate further with the noble Lord, Lord Elibank. I ask him to consider that there is a point of view such as he holds and many people hold.

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I think it would be wrong. Nor do I think it necessary, quite apart from the fact that it is arguably dishonourable, to hand over the Falklands without a determined effort to do the duty that I think we can do. I am grateful to the many noble Lords who have taken part in this debate. It has been a useful one. I am certainly grateful to the Government for providing the time, and I ask leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Agricultural Training Board Bill
Brought from the Commons; read a first time, and to be printed.
Hill Farming Bill
Brought from the Commons; read a first time, and to be printed.

Lead in Petrol: ECC Report
6.16 p.m.
Lord Nathan Lord Nathan rose to move, That this House takes note of the report of the European Communities Committee on Lead in Petrol and Vehicle Emissions (5th Report, 1984–85, H.L. 96).
The noble Lord said: My Lords, this report deals with two directives, one concerned with lead in petrol, No. 7805/84, supplemented by 9613/84, and one concerned with vehicle emissions; that again is under 7805, supplemented by 10080/84. The latter—that is, the emissions directive—relates to both petrol and diesel vehicles of less than 3,500 kg in weight.
Notwithstanding the compromise agreement reached at the meeting of the Council of Ministers on 20th March—that is, after our report was completed but before it was published (to which I shall refer later)—the issues to be addressed remain those which we considered in our report. They represent a further step in the control of vehicle emissions, which started in 1970, by the adoption of Regulation 15 of the United Nations Economic Commission for Europe, implemented in the European Community by directives.
The United States has adopted legislation similar in type to Regulation 15 but specifies a different test drive cycle and more stringent emission limits. The Japanese have adopted similar controls to combat severe pollution in their cities. In recent years Switzerland, Sweden and Australia have adopted standards based on those of the United States. The proposals which are the subject of our report represent a further step to contol pollution from vehicle exhausts, leading to the adoption of standards similar to those applicable in the United States.
Concern about this pollution originally arose from its local effects in the form of photo-chemical smog, particularly in areas such as Los Angeles, Tokyo and the Ruhr Valley. These problems also exist to some extent in the United Kingdom, as was noted in the tenth report of the Royal Commission on Environmental Pollution, where its effects are also illustrated by photographs. We received evidence that the development of photo-chemical smog could be
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forecast as it occurs in certain climatic conditions; and in the Ruhr Valley, when these conditions are imminent, warnings are given requiring cars to stay home. As we mentioned in our report on air pollution, there is substantial though not conclusive evidence that ozone (O3) contributes to the formation of acid deposition. Ozone in high concentrations is usually the result of exhaust emissions of motor vehicles. Thus pollution and the pollution effects of vehicle emissions are matters of importance.
The lead directive largely arises from firm initiatives taken by the Government following acceptance of the recommendations of the ninth report of the Royal Commission in which it was recommended that by 1990 at the latest new cars should be required to run on lead-free petrol. There is little I wish to say about the lead directive, not least because a directive was made by the Council of Ministers on 20th March this year—No. 85/210/EEC. I have just received a copy of that directive and I have had no proper opportunity of considering its terms. However, at first glance it seems to me there is a difference between that and the lead directive which was under consideration by us, For our consideration we had before us a directive which prescribed that vehicles of new types (which is a technical term) registered after 1989 would be required to run on lead-free petrol, and that all cars registered after 1991 would be required to run on lead-free petrol. As I understand the council directive, which has just come before me, there is no such provision; merely provision that lead-free petrol shall be available in all countries of the Community from 1989. This is a matter that may require consideration in conjunction with the emissions directive where the way perhaps is still open.
The use of lead-free petrol is an essential prerequisite to the introduction of emission controls according to existing technology. This is because lead in petrol makes the catalysts, which are an essential element in emission controls, useless. Catalysts are required not only where three-way catalytic converters are fitted but also in the case of lean burn engines to which an oxidation catalyst must be fitted to control emissions of hydrocarbons.
With regard to emission controls, the directive proposes that these be introduced in two stages. The second stage, which would result in emission controls roughly equal to the standards required in the United States, are to be introduced in 1995. The first stage, involving less stringent standards, is to be introduced for new types of vehicle—"new type" is a technical term—in 1989 and for all registrations from 1991. The Stage II standard, that is the United States standard, has been applied in the United States and Japan for some 10 years past, and has been, or is being adopted, by Australia, Switzerland, and Sweden. The means of achieving these standards are well known and involve the use of catalytic converters. It is tried and tested technology.
The first question that the Committee had to consider was why it was proposed that there should be a less stringent Stage I standard, with introduction of the Stage II standard being deferred until 1995. It appeared to us that the reason for this proposal was to encourage the manufacture of lean-burn engines which are likely to be able to achieve Stage I standards.

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There is, however, no evidence that lean-burn will, by 1995, be capable of achieving Stage II standards. We were therefore concerned that the motor industry would gear itself up to producing lean-burn engines which would be costly and to which their manufacturing facilities would be devoted. If, therefore, it turned out that lean-burn engines were incapable of meeting the Stage II standards by 1995, the industry would naturally apply the greatest pressure to modify the Stage II standards to enable them to comply with whatever standards were adopted. We therefore foresaw the possibility that Stage II standards, that is, the United States standards, might not be achieved, at any rate by the time envisaged.
Since the objective of the directive is to establish the lowest practicable and economic emission levels at an early date, we did not believe that the introduction of the Stage I standards would be helpful. Rather, we considered that it would be better to defer until 1991 from 1989 the introduction of emission controls and that when they are introduced in 1991 they should be in respect of all new registrations of vehicles and that the Stage II standards, the United States standards, should apply. We recognised that this might well mean that the catalytic converter route would have to be followed on the basis that the lean-burn engine might be incapable of achieving Stage II standards by that date.
Questions have been raised with regard to the additional cost arising from the use of catalytic converters. These costs represent, first, the cost of the catalytic converters; secondly, the control mechanisms for the engine, primarily mixture controls; and, thirdly, installation costs, different exhaust types and floor pan shapes. The cost of the catalytic converters themselves is said to be around £50 per car. The rest of the system, it is suggested, might add an additional £500 per car. However, some of this cost will be once only at the start of production. This system cost which stems from the European quality car export models in limited production is likely to decline with volume production in the family car ranges. It will still, of course, result in an additional cost. If, however, these costs are compared with the additional costs of lean-burn over a normal engine, we arrived at a very similar figure. This is because the lean-burn engine requires at least equally sophisticated control mechanisms to maintain good driveability and an oxidation catalyst is required.
The directive is, of course, concerned with controlling vehicle emissions and certain limits are prescribed both for Stage I and for Stage II. There is, however, currently, as we found, no method of measuring the actual emissions of vehicles in use. For this reason, test cycles are established that should be designed to reflect in the laboratory use to which a car on the road would actually be put. Therefore, the actual emissions of vehicles in use are a projection of the result of such tests, the crucial element of which is the validity of the test cycle. The United States test cycle has been developed over several years and appears reasonably to reflect the actual use of a car kept in the surburb of a city and includes an element of acceleration, high
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speed on motorways, traffic congestion in cities, and so forth.
The present test cycle under the United Nations Economic Commission for Europe, Regulation 15, however, appears to us to have little relationship to the use of a car in service in that there is no adequate provision relating to acceleration, which is in Europe generally much more severe than in the United States, nor to high speed motoring, to which the same applies. On the contrary, it has been said that the European test cycle reflects a car going down the Champs Elysées at an average speed of 11 miles per hour. The validity of a test cycle is therefore a crucial element to ensure that the emission standards desired are likely actually to be achieved. Much work requires to be done in Europe to develop an appropriate test cycle unless, indeed, the United States test cycle, with any appropriate modifications for European conditions, were to be adopted. Such modifications might include the addition of an element of motorway cruising at 70 miles an hour, since the United States test cycle stops at 57 miles an hour. This is, indeed, the course that we recommend in our report as being appropriate in the context of adoption of the Stage II, United States, emission standards.
While it is known that the catalytic converter system will achieve Stage II standards in accordance with the United States test cycle, it is vital for the industry, particularly if it adopts the lean-burn route, to know at the earliest date what test cycle is to be adopted in order to ascertain whether it can achieve the required limits in accordance with it. The Brussels Commission, in the Vehicle Emissions Directive, expressly refrains from prescribing the means, whether by catalytic converter, lean-burn or otherwise, by which the prescribed emission standards shall be achieved. The Committee does so, too.
Following completion of our report and just before its publication, there was a meeting of the Council of Ministers on 20th March last at which the Council agreed in particular the framework for a new directive relating to emission controls to be substituted for the one which is the subject of our report.
According to the Minister in a written reply in another place (House of Commons, Official Report, 25th March, 1985, Written Answers, col. 5) it appears that it is intended that catalytic converters would be required for vehicles over 2,000 cc—that is, two litres—while vehicles of between 1,400 and 2,000 cc would have engines based on "simple lean-burn technology", combined with oxidation catalysts (not three-way catalysts) or comparable cost-effective technology; and present limits for small cars (below 1,400 cc will be tightened from 1990 as an interim stage before further emission reductions to be agreed in 1987. The agreement by the Council of Ministers means that the existing proposed directive considered in our report will be referred back to the Commission, who are required to produce a fresh directive by June of this year.
It is clear that this new agreement starts from the proposition that different technical criteria shall apply to engines of different cubic capacities. There is no indication of what emission standards are to be achieved by any of these classes of engine, including engines of "simple lean-burn type". It appears to

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undermine the main purpose of the original proposed directive, which was to reduce emissions to specified limits by specified dates and thus to remove the thrust of the proposed measures from environmental concern to concern about the development of the motor industry.
We shall no doubt be studying that new directive when it is available. We shall consider particularly what emission standards are proposed; the legality of the arrangement will also require consideration and no doubt will its effect on imports and exports to and from the Community.
We have noted in our report that departmental responsibility in this country in relation to the proposed Emission Control Directive was vested in the Department of Transport, whereas the Lead Directive was in the hands of the Department of the Environment. For the reasons stated in our report we regard the further control of vehicle emissions as important, and the apparent change of direction brought about at the Council meeting on 20th March gives cause for concern.
There is a further point to which I draw your Lordships' attention. The Federal Republic of Germany had proposed some time ago to introduce financial incentives to encourage the purchase in Germany of vehicles meeting the equivalent of the United States' emission standards prior to the dates specified in the original draft directive. We expressed in our report our concern that such financial incentives could affect the internal market of the Community.
In the written reply to which I have referred the Minister states that,
"individual member states—such as the Federal Republic of Germany—with serious environmental problems will be able to start a limited incentive scheme from July this year to encourage the voluntary purchase of cars meeting the new limits".
It seems that the same result will ensue from this agreement as that about which we expressed concern.
In conclusion, we consider that the directives under review in our report represent a desirable step forward in pollution control, and our criticisms and recommendations are limited to points of detail in an approach which we consider to be fundamentally sound. They lead to the introduction into the Community of emission standards equivalent to those applicable in the United States.
There are certain questions arising out of the agreement of 20th March which I think it reasonable to put to the noble Lord the Minister for his consideration and, I hope, his answer. They are as follows. First, with regard to the intermediate size of engine (that is, between 1,400 and 2,000 cc) are the Government satisfied that engines based on "simple lean-burn technology", to use their own words, will be available at a price, and with a performance, acceptable to the public? Secondly, what is the Government's assessment of the effect of the agreement on imports of cars of this category into the Community and the prospects of exports from the Community? Thirdly, what is the Government's assessment of the reductions in pollution from the proposed controls over emissions in respect of all three categories of engine size? My Lords, I beg to move.
Moved, That this House takes note of the Report of the European Communities Committee on Lead in Petrol and Vehicle Emissions (5th Report, 1984–85, H.L. 96).—(Lord Nathan.).
6.36 p.m.
Lord Strathcarron: My Lords, I am grateful to the noble Lord, Lord Nathan, for initiating this debate on what is a complex subject on which many points have still to be decided. While fully appreciating the need to reduce harmful emissions I feel that the damage caused should be put in proper perspective. Last month the Bureau Permanent International des Constructeurs d'Automobiles held a meeting in Paris and issued a full report on their findings. I shall not read from it, but their conclusion was that motor vehicles are only responsible for about 6 per cent. of acid rain.
However, feelings on the Continent run high, particularly in Germany and Sweden. I was at the Geneva Motor Show last month and was in conversation with some German environmentalists who were absolutely convinced that we in Britain were destroying their forests. I pointed out that more harmful deposits come from factories and power stations than from motor car exhausts, and that we in this country have a good record in controlling factory pollution.
Vehicle exhaust emissions have been the subject of increasingly severe legislation in Europe since the 1970s, but manufacturers have been able to meet the tougher standards as technology has advanced. The effect on vehicle prices has been small and has been more than compensated for by better economy.
Research has narrowed the problem of exhaust emissions down to three main constituents. There is carbon monoxide, which even in diluted form is poisonous; there are unburnt hydrocarbons, which strong sunlight can turn into atmospheric smog, in conjunction with oxides of nitrogen, which can also contribute to what is known as acid rain.
The problems of emissions have been seen as more pressing in some countries than in others due to local traffic and weather conditions: hence, the regulations in the United States of America and Japan—and Los Angeles and Tokyo were particularly bad in this respect—have been much stricter and necessitated the fitting of catalytic converters and complex engine control systems.
In Europe, regulations have been introduced stage by stage and have been met by progressive technological innovation. The effects have been such that new petrol driven cars are now emitting some 70 per cent. less carbon monoxide and 50 per cent. less hydrocarbons and oxides of nitrogen than pre-1970 cars. It was originally proposed by the European Commission that further reductions should be applied in two stages, 1989–91, and 1995, but pressure from West Germany forced a general review of the situation in March of this year.
The German government was under heavy political pressure from the Green parties to apply more stringent emission controls much more quickly. This was largely due to the theory—still not substantiated—that damage to forests was being

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caused mostly by car exhausts. In effect, Germany wanted the emissions programme accelerated under the threat that they would "go it alone" if other member states did not fall into line.
The levels proposed by West Germany were such that they could only be met by fitting three-way catalytic converters. It was the contention of most other European Community member states that to adopt this solution as the only way was not satisfactory, being expensive, wasteful of fuel and of doubtful efficiency over the total life of the vehicle. Led by Britain, they maintained that levels set should be slightly less stringent and achievable by the so-called "lean-burn" engines, which were already well advanced and thus provided an alternative technical solution. Several examples of these engines are already in production.
On costs, a three-way catalytic converter could add up to £500 more to the cost of a car, whereas simple lean-burn engines would cost only about £75 to £150. Looking ahead to 1990 the total amount paid by British new car purchasers would rise by about £1,000 million should catalytic converters become compulsory on all new cars. They would also increase petrol consumption by about 5 to 10 per cent., which would mean an additional consumption of up to 500 million gallons or up to £1 billion on annual fuel costs at today's petrol prices.
When lead-free petrol is finally introduced in Europe large supplies of the leaded fuel will still have to be available for the enormous number of cars which are on the road already. In America, after many years of using unleaded petrol, three qualities are still in general use. These are low octane unleaded petrol, high octane unleaded petrol, which is considerably more expensive, and the old type of leaded petrol.
On 20th and 21st March the EEC Environmental Council reached agreement on future car emission standards for the European Community. Larger cars, that is over 2 litres, would have catalytic converters on new models by 1st October 1988. These would have to run on unleaded fuel which would have to be available by that date in all European countries. For medium cars of 1400 cc to 2000 cc lean-burn engines would be acceptable as a compromise after 1st October 1991 and Stage I for the smallest cars up to 1400 cc. The second stage for this category will be agreed by January 1987.
United Kingdom acceptance is conditional on limits proving acceptable. Denmark and Greece have minor reservations; France, Germany and Italy have accepted the proposals.
Tax incentives to encourage the use of catalytic converters may not start before 1st July 1985. However incentives given will have to be less than the costs involved in equipping a car to meet the new European standards. In Germany catalytic converters are available as an after-market sales item for cars that are already running. By the end of 1985, the Commission will advance further proposals about emissions from vehicles over 3·5 tons, diesel engines and possible speed limits in countries where these do not apply, such as Germany. The motor industry has done well in steadily reducing harmful emissions in the
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last 15 years. Let us hope that, before the new regulations become compulsory, the motor industry will be ingenious enough to come up with a satisfactory alternative solution to the catalytic converter and the tremendous cost involved, which will ultimately have to be borne by the British motoring public.
6.45 p.m.
The Earl of Shannon: My Lords, I wish to speak most strongly in support of the points which have already been made most admirably by the noble Lord, Lord Nathan. In considering the draft directives, the sub-committee, of which I had the privilege of being a member, was faced with deliberating on a three-fold problem. I apologise for repeating some of these points, but they are essential to the argument.
The first problem was lead. That is easily overcome; one merely removes it. Secondly, the other combustion products, as the noble Lord, Lord Strathcarron, has told us—carbon monoxide, oxides of nitrogen and unburnt hydrocarbons—are difficult to remove totally unless the engine is turned off. Thirdly, there are the economic implications of any regulations that might be made.
Let us consider for a moment the magnitude of the problem. The evidence submitted to the sub-committee varied widely. Having had slight experience of this before, I noticed that it is in common with the evidence submitted on many environmental problems and they are not easy of definition. The effects of lead particularly are difficult to quantify. Clearly there is a risk although experts seem to disagree on the amount of lead which does damage to the human system. The effect of the other pollutants is extremely difficult to quantify. But, above all, one must try to keep in perspective how much comes from each particular source compared with other sources. One does not wish to become hysterical and insist on restrictions way beyond what is normally practicable. We do not wish to be seen to be straining after a gnat, if this is not a major source. The committee was quite right to point out in its report that it considered that the probable risks should be avoided and that it would be prudent to take further regulatory action.
To take the pollutants individually, starting with lead, it might be advantageous to consider the history of how it got there in the first place in order to enable one to appreciate the implications of its removal. Before the war, unless the motor fuel was particularly well and carefully refined, using it in a motor car engine could lead to what was known as pre-ignition, pinking or knocking. The fuel companies adopted various additives, including such things as alcohol, to overcome this. The compression ratio of engines in those days was about 6:1 and sometimes as high as 7:1. However, the efficiency of an internal combustion engine is directly related to its compression ratio; that is how much one can squeeze the charge before it is fired. The higher the compression ratio, the more it can be squeezed and the more efficient will be the engine. But if the fuel is not good enough to take squeezing, the result will be pre-ignition and this knocking.

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Since the 1940s, it has been discovered that lead compounds raise what is called the octane level of fuel considerably and enable higher compression ratios to be used, and therefore more efficient engines. I seem to remember in my days when I ran a petrol point for the Army during the war, that the bulk of the petrol in those days was round about 70 octane. We had some special 80 octane for armoured cars and tanks. Now we enjoy octane ratings in the very high 90s, and the compression ratios of engines today are round about 10:1 and, sometimes, 14:1, making these engines much more efficient compared to their predecessors.
However, engine design nowadays has advanced considerably since those days so that we would not necessarily be dropping back to our pre-war efficiency; but the extra refining that would be needed to raise the octane level of this unleaded fuel could bring in its wake an increase in the benzine content which itself is another harmful pollutant. It looks now as though we shall have to accept a marginally lower performance from our engines with unleaded fuel; but, on balance, there is no doubt that it will be worth it. I agree with the committee's view that unleaded petrol should be made available at the earliest reasonable period before 1989 when it becomes compulsory and also that all newly-registered vehicles after that date should run or he able to run on unleaded fuels. I disagree that it should only be new models being type-approved that should meet this requirement.
It may be (although I think that it is probably unlikely) that, in view of the very intensive research which has been carried out by the oil companies, another "lead" will be discovered as a suitable antiknock agent. But if this new wonder product is discovered, then, before it is used, I think that it should be subject to the most stringent checks on any possible effects—which of course was not done with lead—so that we do not bequeath to succeeding generations the difficulties in which we now find ourselves.
Leaving lead aside for a moment, may we look to the other combustion products. These are not so simple and cannot be removed just like that. Here, as your Lordships have heard, the committee received evidence on two main methods of reduction for these pollutants. The first of these, was the lean-burn engine or simple lean-burn technology. I think it is simple. Basically, for those who do not already know, it means running an engine on a selectively lean mixture at certain speeds and loadings. It is effective at reducing pollutants within its own limitations of speed and load. It requires a re-design of the combustion chamber of the engine to achieve turbulence more effectively to create the full combustion of a weak mixture and avoid the flame-out that can happen if, for instance, on a cold morning the choke is let in too early and the engine is liable to splutter and stop. When the engine is at its normal operating temperature it will run quite well on that mixture. It also requires accurate metering of the fuel and air consumed. Obviously, it provides very good fuel economy but only when well adjusted.
However, the whole system falls down completely when you wish to get the maximum power out of your engine for acceleration, perhaps in an emergency, when the whole system requires that you revert to the normal mixture with the normal pollutants on those occasions. Lean burn will no doubt reduce emissions
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overall; but I suggest that it will do little in the place where it is most required: that is, in the urban drive cycle where one is continuously accelerating and braking. I am therefore driven to the view that in spite of the strong support of the motor industry and their issued briefs, lean burn is only a partial preventive. Unless there is a quantum leap in lean-burn technology, which is at present only trying to run your engine as well as possible on too weak a mixture, the motor industry could well find themselves going up a technological blind alley. If they feel that they can just scrape by now, any later tightening up of the emission standards will put this course right out of court, even with an oxidation catalyst.
From the evidence produced to the committee, I am of the opinion that the most promising and probably the only really effective course to follow is that of the three-way catalytic converter. This is in spite of its cost which I think has been somewhat overrated on subjective evidence because much of the ancillary equipment cannot be too different from that required for the lean-burn engine, anyway. However, this course requires that urgent steps should be taken to define an appropriate European drive cycle, so that we do not just blindly adopt the American drive cycle with possibly one or two small adjustments. We must also have regular tests to ensure that emission standards are being properly adhered to. If this is to form part of an expanded Ministry of Transport test, then it may be of great interest to note from evidence produced to the committee that the Japanese already include emission monitoring in their annual tests—the charge for which is well below the current charge for a similar test without emission monitoring in this country. Therefore, there can be no justification for increasing the charge in this country should emission monitoring be introduced.
Furthermore, as even the smallest use of unleaded fuel will poison a catalytic converter, the strictest precautions must be introduced to ensure that leaded fuel is not used, even inadvertently, in cars so equipped. Unleaded fuel must be cheaper than leaded. No doubt fiscal arrangements can be made to ensure this for the desirable fuel so that we do not end up with the trouble that the Americans got into when they made unleaded fuel more expensive than leaded fuel, with the result that everybody was quite happily poisoning their converters and not worrying about it.
To turn to the economic effect in the European Community, the respective motor industries are nationally very important both economically and as employers of the national work forces. Harmonisation of standards is therefore essential from the point of view of a European market. And that market should be harmonised with the other world markets which are increasingly adopting standards similar to the Stage H proposals of the European Commission. There is no use in having a home European market requiring a different product from the other world export markets. I therefore agree with the Committee in their recommendation that the earliest possible decision should be made to adopt the Stage II proposals and not have any misleading Stage I interim standards. Industry must have the maximum time to prepare and to make their decision whether to adopt the three-way catalyst or to achieve the great leap required in lean-

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burn technology, which, for my part, I very much doubt can be done.
7 p.m.
Lord Nugent of Guildford: My Lords, I have listened, fascinated, to the noble Earl, Lord Shannon, giving his technical explanation of the very complex situation which we had revealed to us in evidence with, I should record, the maximum assistance from the very able technical advisor and the extra technical advisor for the occasion.
I should like to begin by congratulating my noble friend Lord Nathan on his lucid exposition of this very complex affair and also to thank him for his leadership of our committee. It is a major undertaking, because it means that he really has to understand all the arguments whereas we can just listen and take them in gradually, according to how we feel. However, he has led us most admirably in a very difficult field and I believe we have produced a useful report, although in the event it seems to have been turned on its head by the Minister.
I was convinced, as was the noble Earl, Lord Shannon, that what we were recommending was the right course and I certainly do not intend to go over the technical arguments which the noble Earl has so brilliantly exposed as to why we thought it was desirable to go straight to Stage II so that we could give industry the maximum time to adapt its techniques to meet this requirement. Also, although the lean-burn technology certainly appeals strongly to me as being a preventive rather than a cure, which is attractive in itself, and is also a major economiser of fuel, it is evident that the technology of the lean burn is very far from fully developed and adequate yet and indeed it needs the oxidation catalyst for the smaller engines and the platinum catalyst for the larger ones. It is not certain—and I was very interested to hear it so convincingly said that it is not certain—that they will find a solution, although the motor industry is of course very convincing.
I certainly took the point, which has been so convincingly made, that a large part of the market for the world—the USA, Japan, Sweden, Switzerland and Australia—has already gone to the Stage II standard. Therefore it does not seem to be very good sense, in market terms, to set that off for another 10 years, and I thought there were strong market considerations as well as environmental ones. It was against that background that I went along with the burden of the report that we should recommend that Stage II standards should be reached by 1991 in one stage rather than in two, although that would create difficulties for the lean-burn techique, and catalysts would be required as well.
Turning to what has happened since, there was the Minister's statement (of which the noble Lord, Lord Nathan, reminded us) in the Commons on 25th March on the decision by the Council of Environment Ministers meeting in Brussels on 20th March. They really have decided to take a completely different approach. Their decision in effect says that the pace of progress is to be dicated by the mechanical and engineering technology available rather than by the environmental requirements of improving the
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emissions which the original proposal from the Commission had put before us.
Of course, one understands that the three-way catalyst is a good deal more expensive than the lean-burn technique, but, in terms of aiming for an improvement in standards of emission and a reduction in pollution of the atmosphere, it must be regrettable that this decision has been made, and all the more so in the light of the bargain that was made with the Germans to allow this financial tax incentive, which is clearly a regrettable distortion of trade.
I suppose one can see that, while conserving the atmosphere has perhaps not received the emphasis that it should, there is some consolation in the ministerial decision in terms of resources of finance and engineering. I would hope that when the Commission come up with their redraft, which they have been asked to give by, I think, June, they will produce a new set of proposals which will be rather more convincing than the sort of compromise we have in front of us now, and that they will give a clear lead as regards the improvement in the environment and the reduction of pollution which we all wish to see, in the stage which is to come after this rather "compromise" arrangement.
There are three short points that I should like to make. I think it is important to put on the record the point made by the noble Earl, Lord Shannon, that the injury to health from lead, although one thinks that there probably is a case, is not proven. However, I go along with the general policy of avoiding further pollution of the atmosphere wherever possible. Coming back to the three-way catalyst, we were assured that supplies of platinum are adequate, so one of the anxieties that had been put before us was removed.
I entirely go along with the necessity to have an improved drive-cycle for Europe. Whether it should be the American drive-cycle, which seems to me to be considerably better than the European, I would not be sure. But of course I do take the point that the European pattern of driving is different from the American one, and of course the drive-cycle is a crucial factor in this picture. We must try to get it right. But, again, when these new standards are established it is evident that there will need to be annual monitoring of the condition of catalysts in order to keep them in good condition.
I conclude by again thanking the noble Lord, Lord Nathan, for his admirable leadership and would say that, although our recommendations are not immediately to be accepted, I feel certain that they will be valuable and influential for the future.
7.8 p.m.
Lord Energlyn: My Lords, the noble Lord, Lord Nathan, has led a brilliant investigation into this very controversial and complex subject. I should like to congratulate him and his committee on producing a brilliant report, which in fact goes beyond a report really. It will become a kind of textbook, to which people such as myself will refer for important and ongoing information. It also seems as though I am to be in the honourable position of having a running duet with the noble Lord, Lord Nugent, as we are going to move very smoothly from hydrocarbons now to water

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in a moment. Certainly I agree with his masterly summing up and with the cautionary words at the end of his speech; I agree with him entirely.
On this business of lead poisoning it is so easy to advocate how virile a poison it is, but it is extremely difficult to know how it behaves. So I think that one should introduce elements of caution in analysing medical statistics which concern things such as lead in the atmosphere.
I should like to take the report as a textbook, because it raises some very fascinating conclusions. For example, I would commend to your Lordships the part of the evidence given by Johnson Matthey on catalysts. You have there a remarkable exposition of how catalysts work, and do not forget, my Lords, that we do not know precisely how a catalyst works, although we know how it behaves. So the behaviour of catalysts is brilliantly explained in the evidence given by Johnson Matthey. To someone such as myself what it says is that at long last we now appreciate the importance of catalysis in the internal combustion engine, so that it brings into prominence some of the adventurous things that are destined to be done in the future.
For example, if round about 1920 Diesel had known about catalysis, he might well have succeeded in maintaining coal as the fuel for the first diesel engine. If he had known that he could have had a triple catalytic event, he would have solved most of his problems, because the trouble with the original diesel engine was that the coal combusted beautifully by compression, as was explained so brilliantly by my noble friend, Lord Shannon, as it does in a coalmine explosion—but the coal contained inert inorganic matter, which simply wore out the bearings of the engine. That is why he turned to an oil and that is how diesel oil was born.
As the noble Earl knows, he and I have been involved in experiments connected with mixing oil and water. If we could find the right catalyst for oil and water, we should get an entirely different internal combustion engine and, moreover, a source of fuel that is quite different from anything that we are using at the present time. So this report could well give encouragement to people who are thinking into the future and the future of engines. For example, the toroidal engine might come into its own, because of the findings of this report. So I really congratulate the noble Lord, Lord Nathan, and his Committee, and I also commend this report to all the experts in this country who are concerned with fuel and fuel technology.
7.12 p.m.
Lord Rugby: My Lords, I cannot claim any very great knowledge of chemistry and my recent introduction to the Committee has brought me face to face with a new chemical terminology, with mnemonics, with which many people are familiar but which were unfamiliar to me, and with quite a considerable degree of technical jargon. Therefore, to begin with I have had to adjust myself to this unfamiliar language, in order that I could start thinking in the wider context of the European and the global problem of lead pollution and the gas emissions with which it is concerned.
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It is more as a farmer perhaps that my awareness of environmental changes has made its main impact, because over the last 30 or 40 years the evidence of change is enormous and the change in our environment has probably been manifesting itself very largely because of the gas emissions which cars give out and which are now in need of positive and decisive legislation. Failure to act now must surely lead a serious indictment onto those whose task it is to safeguard the future of the environment for our children and our children's children.
The difficulties of obtaining concerted action are immense, when one is dealing across the borders with national chauvinistic attitudes, with the large consortiums which are able to exert considerable commercial pressure and with all the conflicting opinions. Neverthless, the orders must come down from the bridge of the ship in response to a chorus of alarm from below decks. To disregard those voices would be a failure to realise icebergs lie in our path and instead of our changing course, which apparently we are not prepared to do, according to the most recent Directive, we are just carrying on as before. It strikes me as being the typical Titanic action of the captain saying, "Carry on on and disregard any alarm bells from below." It is a dangerous situation. An instance could be seen on our screens last night at the national racing grand prix. In one fell swoop, it demonstrated hideous noise pollution and souped-up engines delivering both lead and toxic pollutants into the atmosphere on a grand scale. And to what purpose?—speed for speed's sake.
The motor industry will move only if and when it is given a stringent deadline to which to work, such as has been done in other countries, notably Japan. Our motor industry is an innovative industry and such challenges are well within its capability. The Japanese motor industry is already geared to a 90-octane fuel level without any lead input in all but 1 per cent. of its vehicles, and that 1 per cent. is purely and simply for imported vehicles. If they can do it, so can we. The petroleum industry will, by definition, be bound to object on economic grounds. But it is they, and they alone, who must come up with a new fuel. Inevitably, there will be competition from alternative and less toxic energy sources and the challenge is one of overwhelming responsibility to the community at large.
Having begun my association with this Committee with an uncommitted mind, I find myself responding to the sheer weight of facts in a positive way and the facts are here lucidly marshalled in this 5th report. Although I was unable to be present at one meeting, I have read the submission by Mr. Russell Jones on behalf of the Campaign for Lead-free Air, and I should like to quote what he said. He referred to the speech by Lord Asquith,
"who once said that the motor car is a luxury that is apt to degenerate into a nuisance. My view is that the motor car is a necessity that is rapidly turning into a menace from both the health, and the environmental point of view".
He went on to say:
"To put that into perspective, the percentage of trees showing damage in West Germany has gone up from 8 per cent. in 1982 to 50 per cent. in 1984. It seems to me that the scale and speed of that change is quite appalling. I think that any solution that does not propose to do anything about that until 1995 is inappropriate, to say the least".

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I should like to thank the noble Lord, Lord Nathan. He steered us through these Committee meetings in a most admirable way and he had to do it under the very great duress of having a major operation on his eyes, which is a quite remarkable achievement. Also, his deposition today was most splendidly given. It was very heartbreaking to have been told at the last moment that practically all of his deliberations have been overturned by a more recent edict from the EEC. It appears now that the motto for the EEC is festina lente; in other words, Go slow. Unfortunately, this is a compromise and I do not know whether it is acceptable. But my own belief is that the report which has been produced by the Committee is a most excellent one and apart from the timing, which we have now been told to accept—and I think that we must accept it very reluctantly—I must agree with everything that is stated in the report, and I commend it.
7.19 p.m.
Lord Carmichael of Kelvingrove: My Lords, I think everyone will pay tribute to the noble Lord, Lord Nathan, for initiating this debate this evening. It is interesting that the debate is being handled by the Ministry of Transport although at least four Ministries are involved in the issue. I am sure that, like me, the noble Lord will have looked at this report with great care and will realise that it is not the normal run we have in transport when we discuss congestion in towns, accident rates or matters requiring less expert and less detailed knowledge.
I think that from the speeches we have heard and from the report itself it is clear that an amazing job was done by members of the committee in simplifying as much as they were able the very many points and the highly technical difficulties that arise when petrol, leaded or unleaded, is burned in an internal combustion engine. There is no doubt that the internal combustion engine has been a real boon to mankind in many ways, but it has also caused a great many problems.
Noble Lords who have read the report of the Select Committee will be well aware that it is highly technical We are very grateful for the work that has been done. Many organisations have written in, some perhaps in response to the report and some perhaps because they did not feel that they had put their message across properly in the evidence they gave to the committee; or perhaps because they had had second thoughts on it, or because they are extremely involved in the motor car industry. These organisations have a part to play as well in helping us to try to make up our minds. I agree of course that the Society of Motor Manufacturers and Traders, the various motor companies, the various motoring organisations and the chemical companies all write from their own point of view and try to stress in various ways their interest in the timing and the implementation of these controls. That is as it should be. All the groups which have written have a very material interest in the internal combustion engine and most of them have great experience.
The Select Committee report deals with a great many of their points. The conclusions of the report appear to dismiss those points, though not lightly; but
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a decision had to be made and the Select Committee made a decision contrary to most of the feelings in the motor industry and in motoring circles. That was how I read the report. An answer in paragraph 36 on page 16 was to me the crux of the way I read the rest of the report. Towards the end of that answer, this statement is made:
"To go for the 3-way catalyst system would be to adopt technology which is probably on the way out anyhow and would be extremely expensive to introduce in Europe, for what might be only a temporary stage".
It goes on to say:
"It simply impedes a number of developments in engine technology which everyone wants to see for other reasons, mainly in terms of energy conservation".
I have been on many committees with the noble Lord, Lord Nugent; I think that actually he was the chairman of one of the committees of which I was a member. When you produce a report after sitting for hours and it is handed down to people who have not been sitting on the committee as long, there is always a slight feeling of being let down when they take the opposite point of view. But one of the reasons the report is produced is to explain to people the wide-ranging possibilities. Then when you throw it into a wider circle of Members of Parliament and Members of this House they put their own interpretation on it, and that interpretation is just as valid from their point of view.
Many of the points that have so far been made have been about the timing of the different stages. Perhaps the Minister can tell us whether there is a possibility of improving the timing that has been suggested. After the marathon meeting in Brussels on 20th March the Minister for the Environment—not, incidentally, the Minister for Transport—in reply to a Written Question in another place said:
"Each category of vehicle will have standards appropriate to that category. In industrial terms this means that expensive three-way catalytic converter technology may now be required only for large vehicles over 2,000 cc".—[Official Report, Commons, 25/3/85; col. 5.]
Is the Minister uncertain whether the smaller vehicles will need converters as well, which would push the whole question back even further, or is he confident that in the immediate future only the larger vehicles will need the converters?
We are reaching out to the comparative layman. We are really at the point of saying that we want emissions controlled, that we want them controlled as fast as possible, and the question is whether the lean-burn engine or the converter is the best way. I tend to lean towards the converter at this stage where there is promise. From some of the material I have received there seems to be a great deal of promise of highly efficient lean-burn engines ready to come on to the market. I understand that Ford already have a number of engines on the market. Some British Leyland cars are fitted with lean-burn engines. It is the first stage, I agree, but Ford expect that by the end of the year they will have a more efficient engine. The second stage of the lean-burn engine will be on the market at the end of the year. Toyota are also at an advanced stage in lean burn in Japan. Full lean burn later this decade should come from Ford of Europe.
On the question of costs, I accept the fact that we have perhaps been given by the commercial

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companies the best dressed presentation that is possible, but it appears that the lean-burn engine is much cheaper than using the catalyst system. It is cheaper to operate and there are no additional costs. Fuel consumption should be slightly better. The catalyst system, on the other hand, shows a deterioration of anything up to 10 per cent.
I agree that I do not have the knowledge and information on performance which was given by one noble Lord. This may alter things entirely. That perhaps is one of the points that may have come out more clearly in general discussions in the committee—that the systems which are being spoken about, the lean burn, will not give the same performance. I would argue that many of our engines probably have a performance far beyond what we really need for the conditions that exist in Britain. There are production cars now capable of being driven at well over 100 miles per hour, and one wonders just how many drivers are able to handle a car that can be driven at that speed. But it is a matter of choice.
I wonder not about the Minister's reply tonight but about the considered reply of the combined Ministries to the report, which I believe has not yet been officially published. It is normal for departments to reply to a report. We shall certainly look forward to hearing the considered reply of the four Ministries concerned—those covering transport, the environment, energy and industry. I suggest that both British and European manufacturers would not wish to tool up unnecessarily. I can quote from an article in the New Scientist recently, which dealt most succinctly with this subject:
"Manufacturers do not want to have to tool up production lines to fit catalytic converters when they may soon be able to reduce emission with a new design of engine, combined with a leaner mix of fuel and air".
I realise that the information I have is probably very lean (if I may use that word) compared with that available to the members of the sub-committee, but still it seems to suggest that we would be better off not to let ourselves, if I may quote from The Times of 22nd March:
"be shamed into adopting flawed and expensive solutions against our better judgment, when far more satisfactory ones may well be found just round the corner, either with motor exhausts or"
because the article was dealing with the whole question of pollution—
"with power station fumes".
New limits have been set and the public are now unwilling to accept the old pollution limits. If political pressure continues the industry will surely gear itself to meet the problem. To me, the idea of going for a lean-burn engine is much more practical, despite the great work of the sub-committee, than going up what I consider to be the cul-de-sac represented by the three-way catalytic converter.
7.32 p.m.
Lord Brabazon of Tara: My Lords, I too should like to thank the noble Lord, Lord Nathan, for initiating what has been a most interesting and important debate on a very topical subject. I am grateful also to the members of Sub-Committee G of the Select Committee on the European Communities for all their work. The report assembles a great deal of up-to-date
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information from experts in the field of lead in petrol and vehicle emissions. It is a mine of information on these subjects. As the noble Lord, Lord Carmichael of Kelvingrove, has said, it is an extremely technical subject and, in parts certainly, beyond my knowledge.
The sub-committee took as their starting point the proposals made last summer by the European Commission. In the normal course of events, one would not have expected decisions on those proposals to have been made for a considerable period of time, certainly going beyond the four or five months the sub-committee have taken to assemble the evidence, draft and publish their report. But on this occasion the Community has moved fast. The main decisions have been taken by the Council of Ministers, though the details on vehicles emission standards have still to be worked out and incorporated into a directive which can be formally adopted. I shall try later in my speech to set out what the Council of Ministers did decide last month, how the work is being taken forward and its long-term implications.
First, lead. At the time when the sub-committee took evidence the Community had already decided in principle to move to unleaded petrol for new vehicles after a suitable lead time to allow the oil and motor industries to make the necessary investments. The main decisions required were as to the number of grades of unleaded petrol and their octane number, and the precise timing for introducing the changes. The sub-committee received a range of views on this aspect from the industries and other organisations concerned.
In the event, the Council decided last December that a single mandatory grade of unleaded petrol, at 95 RON octane rating, must be generally available at the pump throughout the Community by October 1989: though another lower octane grade of unleaded may be introduced as well. The new lead in petrol directive incorporating this was adopted on 20th March as Directive 85/210/EEC. I am sure the House will agree that this is a very satisfactory result for the United Kingdom.
The precise phasing-in arrangements for new cars have not yet been decided. The Commission proposed that all new type approvals from 1st October 1989 and all new registrations from 1st October 1991 should be capable of running on unleaded petrol. The Government are pleased that the sub-committee accept their view that it would be sensible for the vehicle directive to enable member states to require all new cars with petrol engines registered from October 1989 to be capable of running on 95 octane unleaded petrol.
Of course we would not expect the motor industry to change every engine on its whole production on the same day; nor can manufacturers control the dates at which new vehicles are first registered. What is important is that we should be put in a position to settle arrangements with our manufacturers to phase out old designs and bring in new designs over as short a period as is practicable, around the second half of 1989, when the new petrol will be becoming increasingly available. It is our objective to get the necessary provisions in the vehicle directive to enable us to do just that.

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I turn now to the vehicle emission proposals applying to the three gases—carbon monoxide, hydrocarbons and nitrogen oxides. The Commission's proposals cover emissions of these gases from the exhausts of all vehicles of up to 3.5 tonnes in gross weight, including vehicles with diesel engines. But they do not address the problem of diesel smoke either from light vehicles with diesel engines, or from heavy trucks and buses of more than 3.5 tonnes weight. The Government regard diesel smoke as a serious environmental problem, and we look forward to commission proposals to tighten up the standard in the present directive on smoke from diesel engines.
Before describing the agreement reached last month, it is important to put vehicle emissions in a historic perspective, and this is helped a lot by some of the evidence which was produced for the subcommittee. Carbon monoxide is produced in much greater volume than the other pollutants in car exhausts, and the original legislation on vehicle emission control was directed specifically at carbon monoxide. The underlying reason was concern about possible effects on public health in urban areas where traffic build up could cause, especially in windless conditions, substantial kerbside concentrations of CO.
The particular concern is now much diminished as CO levels have come down with the more efficient combustion techiques used in engines developed by the motor industry during the 1970s. Carbon monoxide is, of course, rapidly dispersed and eventually oxidised to carbon dioxide—the effect of motor vehicle control is merely to increase CO2 formed in the engine, rather than in the outside air. It follows that further control of carbon monoxide from car exhaust, though helping in some special circumstances will make little difference to atmospheric environmental problems such as acid rain or the formation of ozone or other pollutants causing haze or possible damage to trees.
It is the nitrogen oxides and hydrocarbons which may contribute to these environmental problems which are of such concern at the present time. The expert bodies and interested organisations submitting evidence to the sub-committee were rightly cautious about the way in which these gases in the atmosphere gave rise to damaging pollution. But one important fact came through quite clearly. It is clear that cars and other light vehicles in use at the present time contribute only a proportion of the total of nitrogen oxides and hydrocarbons in the atmosphere.
The most authoritative figures for the United Kingdom were presented to the sub-committee by Warren Spring Laboratory. They estimate that United Kingdom petrol engine vehicles are responsible for 29 per cent. of national emissions of nitrogen oxides from man-made sources. Warren Spring estimate that exhaust emissions from petrol engined vehicles contribute 11 per cent. of the national total of hydrocarbons—but, eliminating natural gas leakage (which is mainly unreactive methane) from the national total, that percentage would approximately treble.
In round terms then, exhaust emissions from cars and other petrol engine vehicles in current use in the United Kingdom are contributing around one-third of
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the reactive hydrocarbons and nitrogen oxides in our atmoshere. That proportion is based on car use as it was in 1984 with cars of all ages on our roads but with the newer ones built to conform with the technical standard known as ECE Regulation 15/03. The estimates do not take account of improvements to that standard already agreed and due to be implemented in the Community next year; nor do they take account of the improvements proposed by the Commission for 1989 and achievable without the use of catalyst technology for the great majority of cars. The potential improvement from these uncontroversial changes, agreed by the motor industry, are set out in Table 6 shown on page 91 of the Select Committee's report. Those two measures alone will achieve, by the end of the decade, a 43 per cent. reduction in the combined total of nitrogen oxides and hydrocarbons permitted under the standard.
So that is the perspective against which we should view the current controversy. We are already at a position in 1985 when the effect of 15 years' work has been to take carbon monoxide off the agenda as a significant problem and to reduce hydrocarbons and nitrogen oxides from motor vehicles to a level representing roundly one-third of the totals in our atmosphere. And we have in the pipeline measures that, without the use of expensive catalyst technology, will produce a very substantial further reduction in emissions of these gases over the next few years. These improvements are all achievable by better control of the combustion process in petrol engines—and in particular the use of leaner air fuel mixtures—with substantial advantages in fuel economy and at modest cost to the consumer.
The Government's view remains that this is the sensible way forward as regards car emission control in this country. We are obviously fortunate in not suffering the problems of smog or forest damage that have caused some other countries to take a much more severe view of car exhaust emissions. For these reasons, the Government do not intend to impose standards on vehicles sold or used in this country which would require manufacturers to use catalyst technology. We shall do nothing in the United Kingdom to stand in the way of our manufacturers developing technology to make the most efficient use of fuel, and at the same time bringing about an estimated average 43 per cent. reduction in exhaust emissions permitted from each new car by the end of this decade.
I must emphasise that this policy is fully consistent with the directive which we expect to be agreed this June following the guidelines agreed by the Council of Ministers last month. That directive will be, like all the directives governing vehicle standards, a permissive directive enabling member states to apply standards to various categories of vehicles from specified dates in the future, but leaving member states free to apply less strict standards if they so choose.
We expect the directive to contain the following specific provisions. For cars of above 2-litres member states will be allowed to require emission levels of equivalent severity to those applied in the United States of America by the federal 1983 standard. The earliest date of any such requirement in Europe will be 1st October 1988 for new type approvals and 1st

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October 1989 for newly-registered vehicles. It seems that at least three member states—Germany, Luxembourg and Denmark—will take advantage of this provision; the cars likely to be sold in those markets will be models based on ones that have been developed for export to the United States of America and are fitted with the three-way catalyst system.
For medium size cars of 1.4 to 2-litres, a technologically more satisfactory route will be possible. The agreement specifies that for these medium size cars the standard should be achievable by simple (that is single point fuelling) lean-burn techniques combined with oxidation catalysts or comparable cost effective techniques. We expect the additional costs of this type of technology to average £150 per car, compared with £500 for the three-way catalyst system. The fuel economy savings of lean-burn technology will be largely preserved, and the relative simplicity of the control system will increase the likelihood of it remaining effective in service and will keep down maintenance costs. Lean-burn engines are more than just the pious hope of boffins in laboratories far removed from production reality. We have had "first generation" lean-burn engines actually in production for some time; take the Jaguar V12, for example. I understand that later this year Ford Motor Company will be producing a "second generation" engine—that is, an engine running consistently with an air-fuel ratio in the range 18:1 to 20:1—at their Bridgend plant at a rate of half a million units per year. I can say to the noble Lord, Lord Nathan, that I am in no doubt that the advantages of lean-burn will mean that almost all manufacturers will have to adopt this technology sooner or later; but I am pleased to report that United Kingdom engineers from several organisations are in the forefront of these developments. Of course, the extra work to adapt these engines so that oxidation catalysts can work effectively will take some time, and therefore the earliest applications dates for this standard are 1st October 1991 for new type approvals and 1st October 1993 for all new registrations. A single path of engine development will serve both for markets which demand this standard and for those parts of Europe in which there is no demand on environmental grounds for cars to be equipped with catalysts. I hope that answers the second question of the noble Lord, Lord Nathan.
For small cars of up to 1·4-litres the agreement provides for the Commission's Stage I limits to be applied to new type approvals from October 1990 and for new registrations from October 1991. The Council has agreed that this standard should be tightened three years later—the tighter standard has to be worked out over the next two years for an amendment to the Directive to be made in 1987. No particular technology or other conditions are specified as regards this tighter standard.
Those are the main features of the agreement as regards the future emission standards which member states will be permitted to apply to vehicles sold and registered in their territories. Apart from the Stage I limits for small cars, precise emission values have yet to be agreed; and this is the major task over the next two months. These emission values will in the first place be specified in relation to the existing European test cycle. It is widely recognised that as it stands this test cycle is too orientated to driving conditions on
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unimproved urban roads. The actual cycle is represented on page 187 of the sub-committee's report, from which it can be seen that there are some peaks of 31 miles per hour, but an average speed of only 12 miles per hour. Several noble Lords mentioned that. The United States' federal test cycle is similarly urban but, reflecting the existence of some high class urban roads in American cities 20 years ago, there is one peak of 55 miles per hour and an average speed of nearly 20 miles per hour. The urban character of both cycles reflect the concern of 15 years ago with carbon monoxide in congested urban areas and, in the United States of America, with photo-chemical smog which afflicted, and still afflicts, the Los Angeles urban area.
Several noble Lords, and expert witnesses to the sub-committee, pointed out the weakness in these test cycles. To meet concern about forest damage or acid rain it is necessary to control pollution from cars on motorways and other inter-urban roads as well as in the urban areas. This can only be done effectively and surely if the test cycle includes simulated driving at typical high speeds. So the council have agreed that work should be done over the next two years to formulate additional non-urban driving sequences which, with appropriate emission limit values, can be added to the standard. This way of proceeding differs from that recommended by the sub-committee in paragraph 79 of its report, but we believe that it meets the objective more effectively.
Although not part of the Commission's proposals, the German proposed legislation has led the Council to consider the question of fiscal incentives for purchasers of cars that achieve lower emissions than those prescribed in the legal standard. I do not propose to say anything about the legal arguments surrounding this question of fiscal incentives. In effect the Council has taken a political view on those difficult questions in the context of their overall agreement by laying down a set of conditions for the incentives which limit their value so as to reduce the extent to which they are likely to distort the internal market. The conditions are as follows: the incentive should relate to achievement of an agreed standard, but before the standard can be made mandatory; the starting date for compensation may not be earlier than 1st July 1985; the compensation must be significantly less than the additional costs involved in equipping a car to meet the new mandatory standards; and, in the period before the adoption of the second stage standard for small cars, compensation to the purchaser of a small car is payable for emission levels no more than 15 per cent. better than the first stage standard for carbon monoxide and for the total of hydrocarbons and nitrogen oxides; and the value of the compensation which may be paid over three years should not exceed in total the equivalent of 750 Deutschmarks.
It remains to be seen how fiscal incentives will work in practice. There is no doubt that a number of cars fitted with the three-way catalyst system will soon be made available in Germany at a competitive price, when account is taken of the tax remission made available to the purchaser. But how extensive the consumer demand is, and how the cars actually perform, remains to be seen.
The noble Lord, Lord Nathan, asked what our assessment would be on the reduction of pollution as

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a result of the 20th March agreement. We cannot be precise about that yet because the exact limits are still to be settled. We do not know which other member states will choose to implement this permissive Directive. As I have already indicated in my speech, pollution from cars is falling at a considerable pace. Without using any catalyst technology at all, we can expect a reduction of around 40 per cent. over a period of six or seven years. Where catalysts are used, the reduction could be even greater if the catalysts are properly maintained.
Several noble Lords have suggested that the US Federal Standard is being adopted throughout the world as compared with the United Nations-ECE standard. This is not so. In most of the world, the ECE standard is accepted, and in particular in those developing countries where the major future markets lie. In fact, only one country—the USA—at present requires the so-called Stage II standard, and adoption of this in Australia and Sweden is only a future intention which may or may not be realised.
My Lords, I hope that I have covered most of the main points which noble Lords have raised. I should once again like to thank the noble Lord, Lord Nathan, for initiating this debate.
Lord Nathan: My Lords, it remains for me to thank most warmly those who have participated in this debate. We have had from the noble Lord, Lord Strathcarron, an interesting survey of the history of the motor industry an its achievements over the years. We have had from the noble Earl, Lord Shannon, an expert assessment of the technical factors with which we have been confronted. We have had wisdom from the noble Lord, Lord Nugent, which of course we also enjoyed on the Committee. With regard to the noble Lord, Lord Energlyn, I must disclaim any intention on the part of the Committee under my chairmanship of going into oil and water mixtures. This is the sort of thinking which I have been trying to avoid with my own car, but it is nice to know that our report, innocently though it was composed, has led your Lordships into these remote pastures. We look forward to ever new fields.
I have also to thank the noble Lord, Lord Rugby, a member of the Committee, who participated very fully, for his contribution to the debate. I was interested in the comments of the noble Lord. Lord Carmichael, and I hope that he did not feel—which was certainly not the case—that the Committee was in any way biased against the motor industry. That was, indeed, far from our thoughts. We came to our conclusions on the evidence before us, be it right or wrong, and we were greatly assisted by the evidence which was provided to us by the motor industry.
I am grateful for the detailed and careful reply of the noble Lord, Lord Brabazon of Tara, on behalf of the Government. He will not expect me, nor would it be right of me, to comment on his statement. It is something which I and I know all other Members of the Committee will wish to read and consider in great detail. It is, therefore, my task to thank your Lordships for noting the contents of our report, and I hope that in some respects at least it may have been helpful.
On Question, Motion agreed to.

The Water Supply
7.55 p.m.
Lord Nugent of Guildford Lord Nugent of Guildford rose to ask Her Majesty's Government what provision they propose to make for maintaining existing safeguards for the purity of water supply and the protection of the environment in the event of privatisation of the water industry.
The noble Lord said: My Lords, this Question concerns the discussion paper which has been issued by the Department of the Environment with regard to the possibility of water authority privatisation. There are some critical questions to ask.
First, I should declare my support for private enterprise for the very best possible reason: that it has always supported me. My background is that when I started between 50 and 60 years ago I worked on a farm without resources other than what I earned. From scratch I managed to get together the resources by one means and another to get a farm and start on my own and make a success of it. Therefore, I know the virtues of private enterprise. I believe that any aspect of life which has to meet trade in the market is best handled by private enterprise where the incentive is really with the person running it.
I therefore support my noble friends in their general policy in returning to private enterprise a number of large industries, many of which were wrongly nationalised in the past, but the term "privatisation" always gives me a pain in the neck; if only some other word could be found perhaps it would be better. However, I think the policy is correct.
It would be a mistake to think it should be the universal solution to everything, that it should be a dogma that we must return or make into a private company every aspect of life. The modern water industry is certainly an aspect of our economy which I think should not be considered in that context. The modern industry was conceived by the Water Act 1973. A Conservative Government, under the really remarkable vision of my right honourable friend Mr. Peter Walker, created the modern industry. It has the really splendid feature of unified river basin management—single management of the whole water cycle. Both in the interests of safeguarding adequacy and purity of supply and conservation of the water environment this structure of the water industry is recognised as the best in the world and is the envy and admiration of all overseas visitors to this country. All of them suffer in their own countries from fragmentation of functions and all the conflicts and inefficiencies that that entails.
My party, splendid though it is, has never taken credit for creating this excellent structure. There were no fewer than 1,400 separate local sewage authorities, 167 water undertakings based on local authorities, and 29 river authorities. That is nearly 1,600 bodies altogether, many of them highly defective, and they were all brought together into 10 regional water authorities. For 11 years it has worked, and the truly excellent labours of those who work in this industry have gone largely unsung.
My party on the whole was very surprised to find that it had actually nationalised an industry. However, decapitating the industry two years ago by abolishing

977
the National Water Council—a very strange reward for good behaviour—is now proving to have been a great handicap. It has deprived the industry of an effectively constituted mouthpiece to express the general view of the regional water authorities that privatisation could be seriously against the public interest.
Under the present structure of management great progress has been made in strengthening the security of supply, which stood up remarkably well in the semi-drought conditions of last summer, and in cleaning up polluted sections of our rivers. The management structure exists to continue these desirable trends; but here I express to my noble friend the caveat that the Department of the Environment's progressively tighter financial squeeze is already showing signs of causing deterioration. Personally I await with anxiety the river pollution survey due this year—due every five years—because I fear that it will show that there is deterioration taking place. This is unavoidable unless there is adequate capital spending year by year.
Against that background of the current working of the water industry, I should like to look at what is proposed in the Government's discussion paper. The privatisation of the 10 regional water authorities complete I do not propose to discuss, because I am sure that nobody will think that that is in any way possible. But the paper sees the privatisation of the operational functions of supply and sewage treatment and disposal as being the easiest to arrange. I would agree with that. Private companies could carry out those functions. The example of the 30 private water companies which operate with complete satisfaction confirms that such a structure would be viable for the whole country—I suppose one for each regional water authority area for supply—and probably a parallel structure of private companies for sewage service could be set up. There would be more practical difficulties, but it would be possible.
That then leaves what the discussion paper calls the environmental regulation and community services to be provided for. Those fall broadly under the heading of river management and include such matters as allocation of different waters among uses which may be incompatible; management of those waters and licensing of users; augmentation of resources by reservoirs or boreholes; and the upgrading of standards and facilities. But at all stages those functions imply a jurisdiction over the use of water, whether for the water authority's own operational purposes, by individual users or for the public good.
The discussion paper asks how that broad complex of regulation and function could be provided for. The answer is that it could not be performed by a private company operating for profit in any circumstances and would certainly have to be performed by a public authority appointed by Her Majesty's Government and accountable to Parliament. One would be needed for each of the existing 10 regions of the water authorities. Also a national co-ordinating authority would be necessary at the centre. The whole of this structure would resemble our old friend the river authority of the past, writ large.
The paper refers to the fisheries function as a complex mixture of regulation and operation—I can confirm that—closely related to river basin
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management. It can never be self-financing, and there are important aspects of conservation. Fisheries therefore would have to be combined in the ambit of the river management authorities.
I shall spare your Lordships a discussion on land drainage for flood and coast protection. Interwoven as it is with the farming world, it is a subject of great complexity. Suffice it to say that it is essentially a non-profit-making affair and is dependent on a system of grants which is now the subject of a Ministry of Agriculture, Fisheries and Food review. My noble friend Lord Belstead will know all about that.
However, I have said enough to indicate the main activities of regional water authorities which it would be possible to operate by private companies—water supply and sewage treatment and disposal. But to provide the necessary safeguards it would be essential to set up a structure of river basin authorities, one for each region, and a national co-ordinating authority at the centre responsible for overall water conservation and supply, for maintenance of river quality objectives, particularly control of discharges, and for ensuring the quality of drinking water, with an adequate research capacity to back it up.
That monitoring authority should also be required to monitor the level of charges levied by the operating companies on their customers so that there is no danger of a monopoly position and exploitation. This regional structure of monitoring and regulating authorities would be expensive and would have to be financed by a levy on the operating companies.
The public health factor deserves a special mention beyond what it is given in the discussion paper. The fact is that completely reliable, pure drinking water does not happen by accident. We are richly blessed in this country that we have it. Almost everywhere else we go in the world except America, we take jolly good care not to drink the tap water. In this country we know that it is safe everywhere. That is especially commendable when there is a substantial element of re-use, as there is, for instance, from the River Thames and from some other rivers, which have to carry the effluence of sewage works and industries throughout the country. Throughout the world every year more tens of millions of people—tens of millions of people!—die of water-borne disease than any other single cause. Those diseases include typhoid, cholera and hepatitis, to name but a few of the worst. Those epidemics were serious here in Britain, even in the lifetime of some of our oldest noble friends such as Lord Shinwell and Lord Brockway.
Today the danger here is increased by the presence of many of our citizens who have families overseas, living in countries where those diseases are endemic and whom they visit for holidays. The danger of virus carriers returning here is obvious.
Protection against those dangers is secured by good management continuously at every point and eternal vigilance at the critical points. I refer to monitoring of effluent discharges, regular monitoring of river samples, laboratory research to monitor changes—changes are happening all the time—and ground-water monitoring, especially for nitrate buildup, which is already disturbingly high in East Anglia particularly. The fact is that environmental factors are

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continuously at work to cause changes in water quality and composition. High-class research must be continuous to keep track of the changes that are taking place and especially the possibility of new viruses.
The existing structure of regional water authorities provides all those safeguards woven into their operations and backed up by the Water Research Centre which they finance. A new privatised water industry would have to reproduce all that as a separate, independent structure, monitoring authorities.
This brief analysis of the prospect of privatising the water industry indicates that it is theoretically possible for private companies to be run for some of the operations, but at the heavy price of breaking up the present admirable structure of unified river basin management. The complex structure of private companies and public monitoring authorities which I have described is unlikely to be operable cheaper than the existing structure because of the large element of duplication. It would probably be more expensive. The Government discussion paper asks all the important questions save one, and that I put to my noble friend: what would be the point of this privatisation?
8.8 p.m.
Lord Energlyn: My Lords, the noble Lord, Lord Nugent, is unquestionably the outstanding authority on the conservation and administration of our water supplies. It is therefore, I think, very fine of him to present this Question in your Lordships' House. Surely the Government will heed what he has said in the past 15 minutes. It was a brilliant survey of the situation. As he says, if one looks at the document it is full of questions but rather thin on answers. The one question that it does not ask is: what is good about this present system?
If one tries to answer that, one is bound to agree with what the noble Lord has so forcefully and so clearly expressed this evening. As he said, where else in the world can one turn on a tap and drink mains water safely? There is nowhere that I know of. Why change the system that makes that remarkable situation a reality? From the time of Elizabeth I this industry has grown because, if I may remind your Lordships, she granted a charter in Hull in order to purify the water to suppress the onset of the plague. The whole attitude to water has grown from those primitive days because people realised how dangerous it was to willy-nilly consume water from any source whatsoever.
Not surprisingly, we were the first people in the world to institute a geological survey of underground water supplies. We were the first people in the world to monitor underground water supplies and to demonstrate the principles of hydrogeology upon which is based our understanding and use of underground supplies. For example, there were events such as those that took place in Trafalgar Square. Originally those fountains were artesian but the chalk waters were overpumped by the hotels, office buildings, and so on, all around them. The water table dropped and the artesian head was destroyed.
Similarly, on the coast, due to the drop in hydrostatic pressure the sea moved into the chalk and
980
polluted the underground supply until it is now unusable. Likewise, in the Humber Estuary the same battle has been going on. It would not have been controlled if it had been left entirely to individual undertakers to institute such controls. Wherever in the world you turn you will see that Britain has been taken as an example of how to develop and how to control underground and overground water supplies. As the paper says, and as the noble Lord, Lord Nugent, has pointed out, there are really four types of water. They are: agricultural water, industrial water, domestic water and drinking water. The interesting point is that it is drinking water that dominates the purity of the other three categories. It could be argued that it is not necessary to have this high degree of purity of water for many industrial uses, particularly for cooling purposes; but we have. A bureaucratic approach like this may be to say, "Oh yes, well, we can do something about that", but it is physically impossible to distribute those four types of water independently around the country.
Indeed, as a side shot, what has been the reason behind the growth over the past decade of the consumption of bottled water? It is to try to drink water which has particular drinking properties. It does not contain chlorine, which offends many people, so they prefer to drink non-chlorinated water. But all the time they are drinking safe water. While there is a possible plausible argument for privatising certain aspects of our water supply, I think that on balance the Government have enough troubles on their shoulders and should leave this one alone.
8.13 p.m.
Baroness White: My Lords, I am sure that we are all very deeply indebted to the noble Lord, Lord Nugent, for drawing attention at this early stage to some of the problems which would be associated with any attempt at wholesale privatisation of the water industry in this country.
After the brilliant introduction by the noble Lord, Lord Nugent, I feel that it would perhaps be inappropriate for one to attempt to go into great detail tonight. I say this also partly because, as is known to some of us, the water authorities themselves are holding discussions and have been asked by the Minister concerned to present him in due course with their conclusions. Until we know in greater detail what they are thinking, perhaps it would be impertinent for some of us to intervene too much in detail.
However, having said that, there are certain basic considerations which are obvious to anyone with a reasonable knowledge of the industry, of its structure and of its functions. The noble Lord, Lord Nugent, is the acknowledged expert in this House on this matter; but I think that those of us who are proposing to take part in this debate also have at least a fair degree of familiarity with the industry and some of its major problems.
Unfortunately, such acquaintance seems to have been lacking in whoever drafted the discussion document issued on the 3rd of April and currently in circulation under commendation of the Minister of State at the Department of the Environment, Mr. Ian Gow. One is relieved to learn that at least it is not regarded by Mr. Gow as a formal consultation

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document. If it were, I am afraid it would have to be regarded as totally inadequate.
It so happens that on Monday, Tuesday and Friday of last week, I had the pleasure of being in the company, consecutively, of the leading personalities, as members or officers, of the Water Companies Association, who are this year celebrating their centenary; of the chairmen of the water authorities in England and Wales, and finally of the senior members and executives of our Welsh water authority, which is the one with which I am most familiar.
We did not meet on any of these three occasions primarily to discuss the Unstarred Question of the noble Lord, Lord Nugent, but inevitably it became a major topic of conversation. In these three fora that I have described, there were people of very different points of view as regards the political organisation of our economy. However, on two matters I found absolute unanimity.
I am sorry to say that the first matter was that the discussion document is not really worthy of respect. I found there was very strong feeling about this; that people should not have been asked to base their discussions on a document which failed to show evidence of grasping the very serious fundamental problems which the noble Lord, Lord Nugent has so admirably described tonight. I think one should say that.
Secondly there was complete accord with the opinion that whatever changes, if any, may be in view, we must not destroy the great advance made in the 1973 Water Act, which for the first time brought the management of the total water cycle into integrated control on the basis of the major river catchment areas of this country. This was a tremendous advance. I played a modest part in this House when that legislation was going through. That was what introduced me to the intricacies of the water industry. No one can doubt that this structure is of absolutely basic and fundamental importance to the satisfactory management of our water supply, sewage treatment, and all the other ancillary considerations which apply.
It is accepted by everyone that to break up this system would be a criminal offence, in political terms. I cannot believe that the Government have any such intention. I hope that the Minister will make that perfectly clear tonight in his reply, though one appreciates that at this stage perhaps he will not be able to go into it in very great detail.
If one is going to maintain this system, which has proved to be one of the most successful anywhere in the world, then it inevitably imposes considerable restraints both on the degree and the method of any privatisation which it might be sensible to contemplate. The present Government must surely recognise that the water industry is not a good candidate for wholesale privatisation. I am delighted and extremely grateful to the noble Lord, Lord Nugent, for the way in which he has made this absolutely clear, beyond any peradventure.
It must be recognised that this is so even by those who are strongly in favour of privatisation in most circumstances, just as, equally, it must be acknowledged by those whose obsessions lie at the other end of the spectrum that in a free country, you cannot nationalise everything. Similarly, you really cannot
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privatise everything. Having said that, there are a couple of other points that I would make before turning to the purity of drinking water and the protection of the environment, which I had supposed would be the main subjects of the dissertation of the noble Lord, Lord Nugent.
The first matter is that the impetus of current Government interest in possible privatisation must stem, partly at least, from the recent very well publicised complaints of the chairman of the Thames Water Authority about the restraints on financing his operations. I see that the noble Lord, Lord Skelmersdale, shakes his head. I should be astonished if that had had no influence whatever on Her Majesty's Government. Be that as it may, one must emphasise that Thames is one of the few water authorities, if not the only one, in the country in a position to do all that Mr. Roy Watts would wish to do. There are other authorities, including the one in Wales, that are not so well placed for some of the enterprises that a well-heeled water authority in the South-East of England might wish to undertake. Nevertheless, I believe that the basic grievance and complaint about hindrance on financial grounds is justified. It is not only a matter of cuts. It is a matter of the way in which the financial arrangements are conducted. This has been a matter of concern to me for many years, particularly since my modest previous preoccupation as chairman of the Land Authority for Wales. There I learned something of the way in which Treasury financial constraints impede progress if one is trying to make a public service industry enterprising.
No one at the Treasury under either Labour or Conservative administrations, I am sorry to say, has really faced the problem of how best to finance such organisations so that they are both accountable and enterprising at the same time. The nonsense of end-of-year accounting and the kinds of restraint placed on sensible borrowing for capital works intended to last for decades ahead is so ludicrous that one is ashamed at the failure of successive Governments to deal with it. We cannot go into this subject tonight in any detail. My own view is that it is at the root of some of our major national discontents.
In certain areas, the water industry could provide a good example of genuine public and private partnership. An example to which one obviously turns is the relationship of the water companies. Nowadays, there are not so many of them. But those which have survived have, on the whole, been successful and some even distinctly enterprising and innovative in the technical administration of their organisations. However, they are not ordinary commercial private companies. They are statutory companies. They have to comply with a very detailed system of organisation and responsibility. They can work satisfactorily only within the total framework of the water industry as established by the Act of 1973. It would be an entirely different ball game if one tried to run the whole water industry on the basis of ordinary private commercial companies. The statutory water companies have certain advantages. Many of them are successful and in some respects extremely interesting in the way that they operate. But they are entirely dependent on being part of a total system. Nevertheless, they bring in an element which, I think, is acceptable and can be most valuable.

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Similarly, the water authorities are under encouragement from the Government, as one would expect, to put a good deal of their work in certain directions out to contract. We know that this can have its dangers, but it can also have its advantages. I was interested to learn over the weekend that the Welsh Water Authority, according to the most recent estimate, puts out 87 per cent. of its capital works programme to competitive tender. I do not see that the Government can have any cause for complaint about that. My view is that a new approach to financing and also to co-operation with private enterprise at certain levels would meet many of the aspirations of even the present Administration, without the danger that has been so vividly described by the noble Lord, Lord Nugent, of destroying a system that is of inestimable value to the country as a whole.
If Mr. Gow persists, we shall have to discuss these issues again in very great depth. Meanwhile, it is most appropriate that the noble Lord, Lord Nugent, should point out the problems. I had supposed that he would be going into greater detail on the purity of our water supply and the protection of the environment. I had originally supposed that the water quality issue might be the easier of the two areas to deal with. On reflection, I am not so sure even about that. There are ongoing problems of contamination by farm and industrial wastes as well as the risks arising from our rundown sewerage and water supply infrastructure, to which I would expect the noble Lord, Lord Sherfield, to make some reference.
To deal with this complex of considerations, one cannot rely simply on an external monitoring system without, as the noble Lord, Lord Nugent, said, having a quite unnecessary and unacceptable degree of duplication. To my mind, it simply makes no sense. One of the virtues of the integrated control and management of the system, subject to EC and other conditions, is that it is now, on the whole, working well. It would be an absurd extravagance to split this integrated organisation into two. I just hope that the Government will have the good sense to think again.
Similarly, on the protection of the environment, over the past decade and particularly since we have inplemented the Control of Pollution Act, even if by very slow stages, and also the Wildlife and Countryside Act, which placed obligations on the water authorities towards furthering conservation, there has been a very marked improvement. As someone who has worked for many years with voluntary bodies, I can say that we have been slowly building up a very good relationship, at any rate with the water authorities that I know best. Inland drainage has been the least satisfactory area, but even that is currently under discussion and some improvements may come about. Again, the whole matter is integrated with the total water cycle and river catchment managment. The prospect of an attempt to break this up into commercially viable units, if such could be achieved, which I very much doubt, and subject to the constraints that would be unavoidable, frankly fills me with foreboding. One can only hope that wiser counsels will prevail.
8.29 p.m.
Lord Molson: My Lords, my right honourable friend the Secretary of State for the Environment, at the last Conservative Party conference, declared his political faith in forthright terms. He said that as a lifelong Conservative he considered that the burden of proof in favour of a change was on those who advocated it. If he applies that criterion to the discussion paper on water authority privatisation he will proceed no further in this matter. The only argument I detect in the whole document in favour of privatisation is the statement in paragraph 3:
"Privatisation is a key element in the Government's overall strategy".
I take leave to say again, as I have said before, that the policy of this Government is too much influenced by doctrinaire dogma and too little by the old-fashioned Conservative pragmatic view that if something is working well, leave it alone.
I am no expert on water problems like my noble friend Lord Nugent, who has made so convincing a speech in opening this debate, but it happens that as a Member of Parliament I have had an ordinary politician's working experience. The first painful experience was in 1931, only weeks after I had been elected for Doncaster, when several hundreds of my constitutents were evacuated from their homes owing to an overflow of the River Don. Much has been done since then, by the legislation imposing on water authorities responsibility for land drainage and flood protection, to prevent future disasters of that kind. It would be unwise to change a system which is working well.
From Doncaster I moved to the High Peak where naturally I was concerned because reservoirs in my constituency provided water for Manchester, Stockport, Derby and Sheffield. When my constituency was supplying necessary water for all those great towns it was natural that I should accept three postulates: first, the vital importance of water as a national asset; secondly, the need to co-ordinate all the resources of the large catchment area which was my constituency; and thirdly, the importance of unified management from my moorlands to the urban consumers far away.
Privatisation in any shape that I can understand, and which the discussion paper suggests, negates every one of my three postulates. I should have thought that each was obvious and uncontroversial. Let me pick out one word in the discussion paper as a merit of privatisation—"competition". That is precisely what was fortunately avoided in the High Peak. The thirsty industrial towns in the Midlands did not compete against each other but co-operated—to their advantage and not to the disadvantage of my constituents.
If this were a full-dress debate on a proposal to privatise the water industry I should take almost each question asked in this paper and should give an answer in the negative. Speaking on an Unstarred Parliamentary Question, I shall be brief and make only three additional points. The paper, at paragraph 19, says that there would have to be Government regulation of the private companies' financial arrangements so that they could not,
"exploit a monopoly position to the detriment of its customers".

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So there would be Government regulation in detail of the private companies' finances. That would not reduce bureaucratic control; it would only complicate it. In the same paragraph it is stated that the charges must provide for reasonable dividends to the shareholders. That would mean higher water charges.
The present system by which the Government can give directions to the water authorities is not unreasonable. I have not criticised the system although I did criticise the directive to the Thames Water Authority to increase the water charges beyond what it considered to be justified and necessary.
To provide sufficient financial inducement for private investors to buy the £57 billion assets would involve greatly increased water charges because the return would have to be substantially more than the present yield. The Government admit that, and they say that the yield is too small. That is why they have issued these directives. So it follows quite clearly that the effect of that would be to raise charges. All these principles would involve also, as the paper implies, financial regulation to avoid abuse of the monopoly power. That is in paragraph 24(d).
In addition to these financial regulations there would have to be what is called in the paper a regulatory agency. This, it is suggested, might be a central regulatory body on the model of the Office of the Director General of Telecommunications. It might need, and I quote:
"a network of regional bodies mirroring the operational structure of the industry. It might be an additional responsibility of the Office of Fair Trading"—
and significantly the words are added—
"suitably expanded".
So this would be a new nationwide bureaucracy to supervise the obligations, objectives and operations of the privatised water undertakings.
I was under the impression that it was the intention of this Government to reduce bureaucracy. This paper demonstrates quite conclusively that privatisation of the water authorities would add a new bureaucracy, and perhaps two. There is no evidence that privatisation would increase the efficiency of the service to compensate for these new bureacracies. Indeed, the paper emphasises so strongly all the difficulties inherent in its own suggestions that (I quote from paragraph 22):
"if it is decided in principle to proceed",
it will be only for the doctrinaire reason that,
"privatisation is a key element in the Government's overall strategy".
The Secretary of State claims that as a Conservative he does not seek to make changes for the sake of change nor for the sake of ideological doctrine. If so, and if he carries that out, he will not proceed any further in this matter.
8.40 p.m.
Lord Sherfield: My Lords, I am very glad of the opportunity to join in this debate on the question posed by the noble Lord, Lord Nugent of Guildford. Nobody that I know knows more about the water industry than the noble Lord, though perhaps the noble Baroness, Lady White, is proxime accessit. I feel rather diffident about intervening in the debate. But I
986
was the chairman of the sub-committee of your Lordships' Select Committee on Science and Technology which in December 1982 produced a report on the scientific and technological aspects of the water industry, and I have, not unnaturally, continued to take an interest in its progress. I should add that the noble Lord, Lord Nugent, was a co-opted member of the sub-committee and his great experience was of enormous value to us. The Select Committee's Report was debated on 25th April 1983 and the definitive response from the Government to the Committee's recommendations was received on 9th November of the same year. The Select Committee found the Government's response forthcoming and generally satisfactory. But it was concerned with research and development and not with politics or administration.
The water industry had sustained a major reorganisation in 1973. While the Select Committee's inquiry was in progress, the Government announced their intention to abolish the National Water Council. This policy was enshrined in the Water Act of May 1983 which, in addition to the abolitions, streamlined the authorities and entrusted the management of each authority to an executive board of between 12 to 15 persons on average. Following the passing of this Act, the Water Authorities Association was set up to coordinate policy, and consumer consultative councils were established to replace consumer representation on the authorities.
All this took some time and the new arrangements are therefore quite young in age. I, certainly, and probably most of my colleagues on the Select Committee—though of course I cannot speak for them—believe that the water industry, thus twice restructured in a decade, should now be allowed to settle down to a period of stable and steady development, especially in the applications of new technology to its major poblems of leakage control, the renewal of the ageing and rapidly deteriorating water delivery and sewerage systems, and the maintenance of the quality of the water itself. Unfortunately, the Department of the Environment, "like fidgety Phil, couldn't sit still", and in a debate on the water industry in another place on 7th February the Minister raised the issue of privatisation, and so, well before the new management of the water authorities had had time to settle down, threatened to throw the whole organisation back into the melting pot.
Acting with unaccustomed speed, the Department of the Environment has now addressed what is described as a discussion paper to the water authorities. This discussion paper has already been knocked about a bit by previous speakers, but I propose to give it one or two further knocks. It is an unusual document to issue from a Government department. It is uncharacteristically succinct. It starts by stating the benefits of privatisation in general, and in the course of 36 short paragraphs it succeeds in asking 49 questions, some of them rhetorical. Moreover, some of these questions are fired off in salvoes like multiple warheads in a ballistic missile. I give one example. It reads:
"On water conservation it would be desirable to ensure that supply in the longer term is safeguarded and sources used economically. How could this be guaranteed? Would it be necessary to establish a National Water Conservancy of some kind? How would the competing claims of undertakers be resolved?"

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If I were a busy executive of a water authority I should be tempted to answer those questions by simply saying, "How indeed?" But I am sure that the water authorities will be far more polite than I would be.
Seriously, the normal practice would surely be for the department to sit down to think the matter through, and then to send a policy document round for comment and not expect the recipients to do the thinking for the department. This document is just a substitute for thought. It may be due however to the trimming down of the water directorate in the department itself. In our 1982 report we drew attention to the lack of strategic thinking in the department. The situation does not appear to have improved in this respect.
I should like to assure the noble Lord on the Front Bench that I, too, like the noble Lord, Lord Nugent, am a supporter of the principle of privatisation. But in my opinion, as in his, privatisation should be a policy not a dogma. There is an old saying that any stigma is good enough to beat a dogma with, but policy statements deserve and receive reasoned criticism and consideration. At the moment, we do not have a policy statement, only a rather hastily compiled list of questions.
Privatisation, as experience has shown, is not an easy process, but some industries and parts of industries are appropriate candidates, some are less suitable but possible, some may be suited for a trading fund—though the precedent of the Ordnance Survey trading fund in this House is not a very happy one—and some, in our complex modern mixed economy, are not suitable at all. At first sight, the water industry is in the last category. The noble Lord, Lord Nugent, gave some of the reasons with great force and clarity. I venture to add just a couple more. In such major upheavals in an organisation—there are other examples around—there must always be concern about the effect on scientific research and development. This is particularly important in the water industry in which the Water Research Council has established a notable reputation for excellence. Has any thought been given to this aspect of privatisation? In the discussion paper I have found no mention of it. Perhaps the Minister will be able to enlighten the House?
The second point has already been dealt with by the noble Baroness, Lady White. I will simply add that the statutory water companies are mentioned in the department's paper as supplying 25 per cent. of the country's water, but there is no question about the effect on them of the privatisation of the rest of the industry. It is not even clear whether the questionnaire has been sent to them. Possibly, the noble Lord may know the answer to that.
Anyway, my Lords, what is the rush? As I have said, the industry has just been reorganised for the second time in 10 years. The new regime should be given adequate time to find its feet and the department should take adequate time to find some practical solutions to the many difficulties which, to do them justice, they clearly perceive.
It is possible that the noble Lord who is to reply to
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this debate can make a persuasive case for the privatisation of the industry. Indeed, I am sure he will make a fine attempt at it. But I think he will have great difficulty in making a case for the paper which has been sent to the water authorities by his noble friend.
8.50 p.m.
Lord Craigton: My Lords, I am grateful to my noble friend for allowing us to discuss this important subject. Some years ago the Thames Water Authority tried a much-criticised experiment of returning the salmon to the River Thames. It incurred a great deal of expense and much criticism and it was successful. When I take my boat up the Thames, I find that the towpath is perfectly satisfactory, I do not slip into the river; I find that the stiles which are put up blend with the scenery and are perfect; I find good moorings with no charges made—and all this adds to the beauty, the environment and the use of the river. None of those things could be expected of private enterprise because there is no profit in it.
But, as has been said already today, there is another view which is equally valid. We no longer have to prove that denationalisation benefits both the state and the customer. This is an accepted fact; so it must be right to pass the profitable parts of industry, or the parts that can be made profitable, to private enterprise. I expect that, when this is done, if it happens, I shall get a better supply in my own home. I might even be connected with the main drains; and certainly there will be fewer leaking mains. These two facts are not opposing, they are complementary. With great humility and having read with great interest and much value the discussion paper, I have simply come here this evening to suggest what I believe is a possible pattern of control.
There must be a Minister responsible and answerable to Parliament and to the European Community. The non-profitable activities—there are about a dozen of them and they are very important—must remain so far as is practicable exactly as they are. I do not see why the state should go to the trouble and expense of changing the departmental responsibilities that are giving us so much good service now. The Minister must issue operating licences to take over profitable parts of the industry to a strategically and operationally correct number of private undertakings—no more.
The private undertakings will go public, as others have already done, and the essential element of competition—and this is the point raised by my noble friend Lord Molson—will remain in the prestige and the quoted share price. Interests can be met and will be met by the terms of the licence. We have experience in this country of the issue of licences in relation to broadcasting. I see no reason whatever why the private enterprise water authorities should not be licensed.
But I see one difficulty of which no mention has been made today which faces the whole operation. It is this. To put right the infrastructure after decades of neglect needs more capital than can make privatisation a worthwhile investment. That is absolutely certain. The Government now have an opportunity to face up to this matter and to draw a line for each undertaking below which the State will have to pay for putting right past neglect. That is my

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suggestion. I believe it is a workable one. I am grateful to my noble friend Lord Nugent for letting me make this speech.
Lord Energlyn: My Lords, before the noble Lord sits down may I ask him how he would picture the privatisation of the sewage stations? These are the most incredible institutions in this country. If I may make one statement, it is said that what Mogden, of the Thames Water Authority, does today the world will do tomorrow. They are quite fantastic.
Lord Craigton: My Lords, the principle of privatisation is that if the operation is being paid for now and can be run at a profit or if it is not making a profit now and if, run by private enterprise, it can be run at a profit, then for both the user and the taxpayer it will pay to nationalise. If not, it should remain as it is and its influence on the private undertakings should be the subject of a licence.
8.55 p.m.
The Earl of Halsbury: My Lords, I must apologise to those of you who thought, when the noble Lord, Lord Craigton resumed his seat, that you would be finished with the matter and could relax and listen to the Front Bench before going home. Whether I put my name down or only dreamt I did, I do not know; and the Whips' Office have not been able to resolve the question either. It was always my full intention to support my noble friend Lord Nugent of Guildford in this debate. We are all very grateful to him for giving us an opportunity to discuss something so very important as water.
I distrust fashionable phrases, fad phrases, popular phrases, until I find out what they really mean in a given context. Privatisation is just such a one. It is very fashionable nowadays in Government circles, which means (by the natural process of politics) that it is very unfashionable in opposition circles. What does it mean in the context of a public utility? I shall refer to three: gas, water and electricity. In regard to gas, I spent a quarter of my working life as a director of one of our regional boards and my knowledge is based on first-hand experience. So far as electricity is concerned, my long personal friendship with the late Sir Ronald Edwards, chairman of the central electricity authority, gave me the opportunity over many lunches to discuss with him the true problems of running public utilities on a national basis. For water, I turn to my friendship with the noble Lord, Lord Nugent of Guildford, who has taught me a little of what he knows so much of.
What is the object of the exercise? Is it to promote efficiency by allowing customer choice to interact with the price mechanism? If that is what it means, it is a clean impossibility. The connection of a householder to his mains, the connection of an industrial user to his mains, is a major piece of capital investment. It cannot be altered. You cannot run two water mains down one high street and then have men permanently digging up the pavement to connect the customer to one main rather than another because there has been a small shift in the price. No likely price differential could possibly pay for decoupling and recoupling to other mains. And, as I say, think of the confusion on our pavements!
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If privatisation is to promote competition, it cannot be competition of that kind. It must be by some alternative mechanism. You can decouple mains supply and distributional networks. This, to some extent, is what happens in the gas industry as it now is. The gas fields are in the hands of BP, Shell, Esso, Phillips, Conoco, and so on. They act as independent suppliers to British Gas who own the high pressure mains, and then, when they let down the pressure, delegate the local distribution to local executives of the old regional board variety.
In principle, you could do this with the electricity authority. You could decouple the Central Electricty Generating Board, privatise it among a lot of competing customers and then let them sell their output to the grid and the central electricity authority. But that end in view could only be achieved in reality if there was sufficient spare capacity to give the monopoly buyer a real choice of where he was going to buy. In terms of misuse of resources, you would lose on the swings what you gained on the roundabouts, and I see no point in it.
In the case of gas, however, there is a virtual abundance of spare capacity by simply turning on the taps for a time which is long by comparison with the usual terms of pricing contracts. But I doubt whether the housewife would get more joy from this by way of price reductions.
Another comparison and difference is this. Gas and electricity have no natural boundaries. You can transmit or pipe them from anywhere to anywhere else, but the river basin has a natural boundary, delimited by its component watersheds. It therefore must be treated as a natural unit and be the concern of a board set up independently of local government, because the watershed will criss-cross over more than one county. Another difference is that gas and electricity are not recycled. Water is; and therefore it must be purified to requisite health standards. Water can of course be carried across watersheds in aqueducts or similar devices. Therefore if there are a number of catchment areas, what is surplus to one can be distributed in another; and so the terms of inter-trading between independent organisations represent a problem that has to be solved.
Yet as I pursue this matter that elusive thing, the promotion of efficiency, always seems to slip through one's grasp. How can that be resolved? Horizontal organisations, all doing the same sort of job in different places, can be made to adopt uniform accountancy procedures, the management statistics can be compared on the same basis and the most efficient of the local boards used as a stick with which to beat the less efficient. That was how the gas industry worked under Sir Henry Jones when he was chairman of the Gas Council. Only one thing was denied us: the money market. We had no independent borrowing powers, apart from local overdraft facilities. The Treasury insisted on doing the borrowing for us because, as it asserted, it could borrow cheaper than we could. And of course what it lent us went with Treasury control over the investment to which the borrowings were put—control by a body which had no responsibility at all for performance. And where you have Treasury control, there you have the basis for political interference.

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I remember very well how, in the Six-Day War, the oil companies all put up the prices of oil simultaneously and the cement industry raised its prices immediately because of the increased cost of oil. The gas boards were not allowed to do so. So what happened? We simply squandered the accumulated reserves of years by selling gas at a loss, and then had to put up the price of gas in the end. That is what you get out of Treasury control. I often used to argue with chairman after chairman—I had about three of them altogether during my period of service—that what we would give our eyes and ears for would be independent access to the City of London to borrow money on our own terms and theirs, without any control over what we did with it.
So, putting all this together, I would postulate a national body or authority, acting as supervisor for the purpose of supply, storage, recycling and distribution in each river basin, delegated to subordinate boards in each. The authority would be responsible for keeping the subordinate boards on their toes and would borrow what was needed on the market to top up whatever surplus was generated out of its present policies. Of course it would not be fair to ask it to put on to the price the cost of repairing past negligence—the point made by the noble Lord, Lord Craigton, who preceded me. I would certainly agree with that. It is the business of Government to do that. Its terms of reference would be to see that the in-house engineering facilities provided were minimal and the amount of work put out to competitive tender with the engineering industry maximal. I think that point was made by the noble Baroness, Lady White. This is not very unlike what we now have, or could have.
The three kinds of work referred to in the discussion paper—operational activities, environmental operation and regulation and community services—should stick together under one main authority which would probably have separate executives to manage all three of them independently, with a similar structure on the central authority; so that you would have a typical line-and-staff problem to solve. But these things are not insoluble. The problem of writing terms of reference is really the basic issue; the rest is shadow boxing. Privatisation is a nostrum that I simply do not accept as a cure-all for everything; but I believe I am now repeating what has been said by other speakers and I shall resume my seat.
9.5 p.m.
Baroness Nicol: My Lords, it was my intention not to refer tonight to privatisation, but in view of the bait that has been thrown out from so many previous speakers I will make some comment on it. Most speakers—all but one, I think—have agreed that privatisation is not appropriate for this industry. The noble Lord, Lord Craigton, has made an interesting suggestion and I should like to study it a little more before making any comment on it. But even the noble Lord feels that straight privatisation is not a solution. There has to be a fairly complicated superstructure in order to keep it in its right position. We are very grateful indeed to the noble Lord, Lord Nugent, for giving us the opportunity to discuss this, at what I think is an appropriate moment, because I hope that at the end of this there will be a very strong message back
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to the right honourable Minister as to the views of this House.
One thing is clear: you cannot have competition in a monopoly. Privatisation relies on competition for its success, and you cannot have it in a monopoly. You cannot have commercial sanctions against defaulters where the commodity which you are supplying is essential to life and there is no alternative for them. This, I think, is something which is overlooked. In the days before every house had piped water, water was freely available in other ways, either by means of wells in rural areas or communal pipes in urban areas. That situation no longer exists. So is the suggestion that if the charges are such that some people may not be able to pay, they should be cut off? Surely that cannot be so, and perhaps the Minister will tell us what particular solution can be put forward for that.
As the noble Baroness, Lady White, and the noble Earl, Lord Halsbury, have said, the solution to the problem may well lie somewhere in between, but one item which should be taken very seriously is the need for existing water authorities, if they remain, to be allowed to take commercial decisions. I think most of us were horrified earlier this year at the difficulties of the Thames Water Authority in connection with its rates and the fact that it was not allowed to approach the question of its debts and of raising capital in a commercial way. Many of us questioned that at the time and will continue to question it. I think that that is true of other authorities also. However, let me return to the document which gave rise to this discussion and look a little at its status. It is not really, as many speakers have said, a serious consultation document; it is simply a series of questions. In my view, a kite was being flown. I think that that kite is being tugged at pretty fiercely tonight.
The first criticism I would make of it is the very limited circulation, Even in flying a kite, you need to fly it over a wider area. The views which should have been sought should have included those of the local authorities, the Ministry of Agriculture, Fisheries and Food, conservation bodies and consumer organisations. Without their views, any decision or any further action on the lines of this document would be made on insufficient evidence and most of us here would find it completely unconvincing and scarcely worthy of consideration.
There was a Green Paper issued by the Ministry of Agriculture, Fisheries and Food in March this year—that is, only last month. It was called Financing and Administration of Land Drainage, Flood Prevention and Coast Protection in England and Wales. It set out to examine all the possible financial alternatives which are open for these operations. Nowhere that I can find is privatisation mentioned as an alternative. Page 7, paragraph 2.17, reads:
"The Government would welcome the views of interested parties on questions relating to Exchequer grant discussed above"—
I shall not weary your Lordships by reading too much of it, but it goes on—
"(a) Water Authorities"—
and these are the alternatives offered to the water authorities—

"(i) to retain the present system; or

(ii) to move to a single fixed rate or to a system of two or three fixed rates, to be allocated by Ministers; or

(iii) to change over to a block grant system".

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There was no word of privatisation and that was in March this year. We have to ask: does the MAFF know what the DoE is doing, does the DoE know what action the MAFF is taking, or do they just fall out with each other and not discuss these matters at all? I had better return to that and come to all the general privatisation points later because I want to get on to the main questions which were asked tonight.
I now come to two items; one is the purity of water and the other is the need to protect the environment. We have a right to expect that the purity of water supplies will be guaranteed by existing legislation, whatever happens to the rest of the industry. However, the quality of our water is in some areas already suspect, despite the encouraging words of the noble Lord, Lord Nugent; and I believe that we have one of the best water supplies in the world. But there are difficulties arising, as has been said by one or two other speakers, as more chemicals find their way into our water sources and as our sewerage system becomes less efficient through age and dilapidation, so that rivers and estuaries are becoming more polluted.
We are in danger of failing to meet our own required standards, not to mention the new EEC regulations. The need for continuing research, which the noble Lord, Lord Nugent, mentioned in particular, as well as for capital investment in the infrastructure, is essential. It will be interesting to hear what measures are proposed by the Government—and I hope that the Minister has this answer ready—to persuade any potential purchasers of the industry that they should make the enormous investment necessary to maintain and enhance existing standards of water quality.
Turning to the question of environmental protection, it is unlikely that the existing safeguards under Section 22 of the Water Act 1973 or the Countryside Act of 1968 could be transferred to private organisations. They are not the type of responsibility, in their present form, that could be transferred. The Wildlife and Countryside Act might offer some safeguards on SSSIs, but they are not notably successful in other fields and the Government appear to be resisting attempts which are being made from other quarters to strengthen them. We shall come to them also on another evening.
Many of the activities of the water authorities interact with the environment, and their particular responsibilities include the development of water resources, water abstraction, sewage disposal and the treatment of industrial and other wastes. The list is long and probably everyone here knows it better than I do. Some of the duties which need to be undertaken are of a policing nature and I think that the structure suggested by the noble Lord, Lord Craigton, might meet that point, but I need to study it a little more carefully. The existing performance of water authorities has been criticised primarily because of the present limited levels of capital investment. Commentators have questioned whether privatised bodies can attract sufficient additional investment over and above the present levels to make policing of these activities a reality. That is a question which I hope the Minister can answer.
The Select Committee on Science and Technology in its report on the water industry in 1982, which was referred to earlier by the noble Lord on the Cross-
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Benches, made some very strong recommendations. On page 63, paragraph 636, and again in its recommendations—I shall précis them to prevent reading too many—it recorded its concern about the possible destruction of features of scientific interest and advised urgent action. I think some action has been taken, but that was more than two years ago, and much of the work remains to be done. In the event of privatisation what specific provision would be made for this particular safeguard? The Minister must have been expecting to have to answer that question and I hope that he will have a reply ready.
In the Falklands Islands debate earlier today the noble Earl, Lord Onslow, said how important it was to know the conservation implications of your actions before you carry them out. If it is important in the Falkland Islands, my Lords, how much more important it is that we should know the conservation consequences of actions proposed in this overcrowded and already over-polluted island. The present state of the purity of our water supplies and the lack of interest shown by the Government in the care of the environment in relation to water authority functions makes one uneasy about the quality of safeguards which might be built into any privatisation proposals. The noble Lord, Lord Nugent, is right to question this point, and I hope that the message that goes back from this evening's discussion will prevent the Government putting their hand to this particular political plough while they can still not do so without embarrassment. If they proceed any further, they will find that this is something they should not have done.
We share the concern of the noble Lord, Lord Nugent, and the concern expressed by other noble Lords present, and we look forward to some reassurance from the Minister that this is in fact a kite that is being flown and not a serious recipe for action.
9.16 p.m.
Lord Skelmersdale: My Lords, the House will be most grateful to my noble friend Lord Nugent for raising this evening this important and topical subject of the future of the water industry. We know him as a world renowned expert in his subject and a distinguished chairman of the National Water Council. During my time in your Lordships' House I have learnt an enormous amount from him both on Sub-Committee G of your Lordships Select Committee on the European Community and more recently since I have been privileged to speak for the Government on water matters.
Personally I regret that he was unlucky the other day in the ballot for short debates, as there would then have been more Members of the House present to give their views on this issue. However, perhaps I am wrong in this, as I well remember my noble friend asking me a question when I was winding up a debate on the water industry some two years ago, and, having heard my reply, saying in a loud and probably justifiably annoyed voice: "A very bad answer". I trust that neither he nor anyone else will feel moved to voice the same opinion this evening.
You see, my Lords, there is as yet no answer to my noble friend's Question, which asks Her Majesty's Government,

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"what provision they propose to make for maintaining existing safeguards for the purity of water supply and the protection of the environment in the event of privatisation of the water industry".
The reason for this is simple. Contrary to popular belief, which was almost mentioned by the noble Baroness, Lady White, the Government have not decided to privatise the water industry. What we have done, however, is to start on an exercise to discover how we would arrange the affairs of the water industry if we did so decide. To help with this project we have recently published a discussion paper, to which nearly all your Lordships have referred this evening.
My noble friend Lord Molson underrated this document, as I shall explain a little later. For the moment let me say that he has, I feel, misunderstood the use of the word "might" which, as he said, appears several times in that document. Again, the noble Lord, Lord Sherfield, perhaps almost in contradiction of that view, criticised the department for what he feels is a pre-Green Paper. I shall return to this point, too.
Just now I should say that I speak for a Government who believe, in a nutshell, that the state should not run industries, except in very exceptional circumstances. I am on record as defining these as being for purposes of national security, for some defence and wide public consumer purposes and for temporary health care where large numbers of employees are involved. It was, after all, a Conservative Government who nationalised Rolls-Royce.
Since I said this some years ago the Government have come to reassess these ideas. We have come to the conclusion that there is a halfway house, where some functions are provided by the private sector, others by the public sector, within the same industry. It was exactly this realisation that prompted the extremely successful return to the private sector of British Telecom. What we need to discover, and ultimately to decide, is whether, and, if so, how, the water industry should fit into this mood of national realism. As the noble Lord, Lord Energlyn, said, the discussion document is full of questions but not of answers. The noble Lord was quite right; that is fully intentional.
I start from a position where I am convinced that it could be done. I accept without question my noble friend's view that the structure of the industry in this country is the envy of many parts of the world. As has been pointed out so cogently, this envy is caused by the fact that we have water authorities in England and Wales with boundaries related to river basins, so that each authority has responsibility for the whole water cycle within its catchment area.
This reform was brought about by the Water Act 1973. That Act followed the 1971 Report of the Central Water Advisory Committee which argued for strong regional water authorities to ensure proper co-ordination in the planning of river management, water supply, sewerage and sewage disposal, a region for this purpose being defined as:
"a river basin or grouping of river basins which is sufficiently large to be reasonably self-sufficient in water resources".
My noble friend Lord Nugent will remember that phrase well because he was a member of that committee.
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If, as my noble friend said, this has not been credited to a Conservative Government heretofor, I intend to do so right now. My detractors may call me an opportunist; all right—let me be an opportunist now. My noble friend is quite right; the Government of my right honourable friend Mr. Edward Heath and under the then Secretary of State, Mr. Walker, took on board most of the conclusions in the report.
Should privatisation go ahead, it need not threaten this aspect of our present organisation, but we shall have to consider very carefully whether any changes are required. This evening your Lordships have made clear your support for the river basin concept, and I believe that it is supported by the water authority chairmen. I can assure the House that the most careful attention will be paid to this view.
In the main part of my speech, however, I want to look at the discussion paper and how the Government will treat the responses to it. The noble Lord, Lord Energlyn, said that this paper is full of questions but not of answers; I have already made reference to that point. The paper makes reference to the importance of privatisation as a means of freeing enterprises from state control, reducing the size of the public sector, and spreading ownership more widely. It should come as no surprise therefore that we are looking at the possibilities for the water industry.
First, why have we embarked upon this exercise at all? During the debate in another place earlier this year on the Water Authorities (Return on Assets) Orders for 1984 and 1985, concern was voiced in some quarters about the controls exercised over the water industries. The authorities themselves have pressed for greater flexibility in their financing arrangements. This was a point to which the noble Baroness, Lady White, referred.
One chairman at least suggested privatisation as the way forward. It was against this background that my honourable friend the Minister for Housing announced that the Government,
"will be examining the possibility of a measure of privatisation in the industry".—[Official Report, Commons, 7/2/85; col. 1144.]
We are giving high priority to this exercise, bearing in mind that the privatisation of the water authorities, with their total assets valued in excess of £27 billion and a total workforce in excess of 52,000 people, would mean a substantial enlargement of the private sector.
The discussion paper was sent to water authority chairmen on 1st April. A copy was also sent to the chairman of the Water Companies' Association. Equally, it is not a formal consultation document. Its purpose is to identify the many complex issues which need to be addressed and on which the views of those most directly involved—the water authorities and the statutory water companies—will be particularly useful at this early stage.
As well as this, I should say that the discussion paper is not in any sense a confidential or private document. A copy has been placed in the Library of the House; and, in answer to my noble friend Lord Craigton, it is freely available on request from the department. We hope that those people who feel that they will be concerned by its possible implications will read it.

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I have already mentioned the river basin structure alluded to by my noble friend Lord Nugent as a possibility. Equally, the discussion paper recognises other possibilities. I have also referred to the arrangements established in the recent successful privatisation of British Telecom. That company continues to have public service obligations—for example, the provision of the emergency system to contact the fire, police and ambulance services. This is provided for through the mechanism of a licence policed by a regulatory body. An analogous system might well be developed to provide for the public service functions of the water authorities.
Noble Lords also expressed concern that public health, and in particular the quality of drinking water put into the supply, will not receive the attention it deserves under privatisation. Linked with this is the concern about protection of the environment. The need to ensure that standards of water supply are maintained and that the environment continues to be protected is not in dispute. These objectives are enshrined in statute. They have been consistently stated and pursued by all Governments since before the war. A little later they were advanced by my noble friend Lord Nugent himself, as chairman of the Thames Conservancy and of the National Water Council, and particularly in the policy document River Quality: The Next Steps, which set out in 1976 policies which we carried forward, notably through the implementation of the Control of Pollution Act. Specific reference is made in the discussion paper to safeguarding the water environment and the quality of water in supply. But the paper does not, nor did it ever intend to, come up with answers on how this should be done. That is not its purpose. Its purpose is to invite those directly involved to say how they consider these important objectives could best be achieved.
The discussion paper does make specific reference to the safeguarding of the customer's interests and ensuring that the standard of service he receives is maintained. Again, having stated its objective, the paper asks those directly involved how this can best be done. The paper notes that under privatisation the Government will continue to exercise their responsibilities, for example, under the EC drinking water directive, but the paper also recognises that many aspects of standards of service, such as reliability and pressure, which do not constitute a health risk, also need to be maintained and it asks how these can best be ensured. It is also clear that whatever changes may be made there will have to be safegurds to ensure that the monopoly is not abused and that proper standards are kept up.
In the course of this short debate, various points have been raised to which I will, I hope, provide some answers within the remit that I announced in my opening words. For example, the noble Lord, Lord Energlyn, asked my noble friend Lord Graigton, who, incidentally, I thought was perhaps my only pure supporter on this issue, about sewerage. I give him my answer. Sewerage arrangements were reconsidered during the passage of the Water Act 1983 and the Water Authorities Association has recently agreed new model arrangements with the local authority associations. The future of these arrangements will be one issue requiring attention in the event of
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privatisation. This is an area where the principle of unified responsibility for the whole water cycle has particular application.
I also wondered during the course of the debate whether the noble Baroness, Lady White, and her noble friend Baroness Nicol, had read the New Scientist article in its issue of 18th April, which made many of the same points that they did. In any event, I believe that in general the standard of water services in this country is good. There are problems in some areas, but it is easy to exaggerate their severity. Naturally, authorities draw attention to problems in their annual plans. It would be surprising if they did not do so because they are the main source used by them for bullying the Government into providing extra resources. We believe that the level of investment now planned will deal with the various problems which water authorities have at an acceptable rate.
My noble friend Lord Nugent spoke briefly—as indeed did other noble Lords—about water companies. The statutes governing the operation of the companies limit the amount of dividends that the companies can pay and the amounts that can be put to reserve or carried forward from year to year. The future position of water companies will need to be considered if the water authorities are privatised because they are presently agents of the water authorities. The question of economic regulation of the water authorities will also arise because of the natural monopoly position of most water services.
My noble friend Lord Nugent raised a number of other questions. For example, he very naturally—in view of the terms of his Question—raised the subject of conservation. To that I would say that if the river basin principle is maintained, it will be in the interests even of privatised companies to safeguard their water resources. Perhaps this is unfair, but I rather suspect that my noble friend—and I have an even stronger suspicion that this also applies to the noble Baroness, Lady Nicol, and my noble friend Lord Craigton—was thinking of other than conservation from the point of view of water stocks, if I may put it that way. They were talking about conservation as has been defined in the Wildlife and Countryside Act 1981.
In the privatisation of British Telecom an organisation was proposed, ultimately adopted and put on to the statute book. It was OFTEL, the Office of Telecommunications. This office is in the process of making exactly the same reulations for those functions of telecommunication which cannot satisfactorily be undertaken by a private company, or indeed a group of private companies. I cannot see any good reason why, if the privatisation of the water industry goes ahead, such an organisation could not be created.
Another point that was raised this evening was that of EEC legislation. Privatised companies will be bound by EEC legislation, just as private companies are in other industries already, and indeed as are the British Government—a subject about which your Lordships frequently make much complaint. The Government are bound to retain machinery to ensure this.
On land drainage matters, I hope I do not have to remind the House that I also speak for the Ministry of Agriculture, Fisheries and Food. I can tell my noble friend Lord Nugent that the discussion paper notes the difficulties, and the Government as a whole would be

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looking for the best way of maintaining these activities in the event of privatisation. If it is not the best way, your Lordships will be the first people to point that out.
The noble Lord, Lord Sherfield, said that the new arrangements for the water industry were quite young in age. He suggested that the water authorities should settle down after two major changes in a decade to a period of quietude. He went on to criticise at great length the type of discussion paper that this debate is all about. Why should we not have a pre-paper? Why should the Government say, "This is what will be done. How should we do it?". Why should they not say, "We are thinking of this. We should like to hear of any objections to it". It is in no sense meant to be a Green Paper or, incidentally, a pre-Green Paper. It is meant to be judged on its merits.
The noble Baroness, Lady White, said that the paper had previously been written by people who knew nothing about the water industry. Who better to question an industry than people who know little about it? Incidentally, I do not accept criticism in that connection. I believe that those people in the Department of the Environment who wrote it know quite a lot about the water industry, having been in control under my right honourable friend the Secretary of State for a number of years, advising him and conducting negotiations with the water industries.
Baroness White: My Lords, I was echoing very largely the sentiments expressed to me in the various groups that I indicated, where I could find no one with a really good word to say about the discussion paper. They are the people who know. I am an amateur, as is the noble Lord. I was echoing opinions of people who are experts and who know what they are talking about.
Lord Skelmersdale: My Lords, I freely admit to being an amateur. I am even more of an amateur than the noble Baroness has just admitted that she is.
Baroness White: My Lords, I am sure the noble Lord is.
Lord Skelmersdale: Nonetheless, my Lords, the fact that we have a presumption in this country that Government discussion papers are by way of a Green Paper does not automatically mean that all Government discussion has to be promoted by a Green Paper. I fully accept the point made by the noble Baroness and the noble Lord, Lord Sherfield, that this is novel, but that does not necessarily mean that it is bad.
It is always refreshing in your Lordships' House to hear the noble Earl, Lord Halsbury, speak. He spoke about Treasury control of the finances of the gas industry. In effect, he asked whether some sort of refinement of Treasury control for nationalised industries would be possible either alongside or in place of a possible privatisation exercise, which I had the impression he would prefer. I freely admit that that is something that we shall have to consider.
I willingly pay tribute to the report of the Select Committee on Science and Technology, principally on research in the water industry. That committee was
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chaired by the noble Lord, Lord Sherfield. Although it is not directly relevant to the context of the debate, I should tell him that the Government's response included the establishment of a committee to advise them on long-term research requirements. That committee has been established and is working to produce its report. I hope that that will help the noble Lord in his consideration.
Lord Sherfield: My Lords, will the noble Lord give way for a minute? My question was, what is the effect of these proposed arrangements on research and development in the water industry in the future?
Lord Skelmersdale: My Lords, I am very grateful to the noble Lord for that amplification. The answer is that there need not be an effect. As I have been at pains to point out, I fear over far too long now the Government have not yet made up their minds on this issue. They have promoted discussion as to how it might be done if it were done.
The noble Baroness, Lady Nicol, said, among other things, that you cannot have privatisation in a monopoly. I suspect that she is joining the amateurs in discussion of the water industry. I should remind her that the same was said before the appearance of Mercury on the telecommunications scene. The noble Baroness will recognise that the competition was of very recent origin. Even my noble friend Lord Nugent will agree with me that private water supplies and the already private water companies are of many years' standing. Competition already exists on the supply side of the water industry. Why should it not exist also on the other side of the water industry?
Again the noble Baroness asked how we would satisfy potential investors. This is not a question for today but, I suggest, for another day. Today I should have answered the assertions of the noble Baroness about the uncompetitiveness of the water authorities and her fear that they are being unjustly got at by the Government in their recent directions to the water authorities on the matter of finance. I would have done so, but I realise that I have now been speaking for 25 minutes. Therefore I refer the noble Baroness to my remarks in the Official Report of 14th February this year at column 305.
In conclusion, I say this. We have now entered into a public discussion of the privatisation of the water industry. Can it be done at all? How can it be done? To what extent can it be done? I do not know the answers to those questions. What I do know is that the time is right to examine them. This Government are an inquisitive Government, a practical Government, a reforming Government. We should look at all aspects of the public sector to see if things can be done better, both within and without the public sector. Today we are looking at the water industry; tomorrow is for tomorrow.
Today I end as I began. I am grateful to my noble friend Lord Nugent for giving me the opportunity to put the Government's position firmly before this House with the assurance to the House that the Government will treat this debate as a verbal answer to the questions being asked about water industry privatisation.

Betting, Gaming and Lotteries (Amendment) Bill [H.L.]
Returned from the Commons agreed to.
House adjourned at seventeen minutes before ten o'clock.

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