Sitting of 29 April 1985

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

  Electricity Prices
  Mr. Yeoasked the Secretary of State for Energy what assumption about the likely level of electricity price increases during 1985–86 was made in determining the external financing limit for the electrical supply industry for 1985–86.
  The Secretary of State for Energy (Mr. Peter Walker): First, Mr. Speaker, I say on behalf of the House how delighted we are to see you back with us.
  The EFL announced for the electricity supply industry was estimated to be consistent with an average price increase this year below the level of inflation.
  Mr. Yeo: Will my right hon. Friend assure the House that any extra cost in the production of electricity this year resulting from the coal strike will be borne out of general Government revenues and not passed on to electricity consumers?
  Mr. Walker: Yes, Sir. The Government have announced that the EFL remains and that price increases remain as budgeted. Over the past few years there have been improvements, and before this year's rise electricity prices to consumers had fallen on average by 8 per cent. in real terms over the past two years.
  Mr. Harris: Is my right hon. Friend aware, as is my hon. Friend the Under-Secretary of State, that one part of
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  the United Kingdom—the Isles of Scilly—will suffer a 14 per cent. increase in electricity charges this year unless the South Western electricity board changes its mind? Will my right hon. Friend consider electricity prices on the Isle of Scilly as my hon. Friend the Under-Secretary of State has been kind enough to do?
  Mr. Walker: Whatever my hon. Friend the Under-Secretary of State considers, I consider with equal enthusiasm.

  Power Stations (Emissions)
  Mrs. Clwydasked the Secretary of State for Energy if, when he next meets the chairman of the Central Electricity Generating Board, he will discuss sulphur emissions from power stations and the implications for the level of coal burn by the electricity supply industry.
  The Parliamentary Under-Secretary of State for Energy (Mr. Alastair Goodlad): I have discussed this with the chairman of the CEGB on a number of occasions. He is well aware of Government policy on reducing sulphur emissions.
  Mrs. Clwyd: As the Secretary of State for Energy is asking for an additional £2 billion in the Coal Industry Act 1984, would it not make sound economic sense to invest a substantial part of that sum in the only coalfield in western Europe which produces high quality, low sulphur coal, which is South Wales?
  Mr. Goodlad: The availability of low sulphur coal in the United Kingdom is limited. It is to be found mostly in Scotland and Wales and amounts to about 12 per cent. of annual output. It is among the most expensive coal to extract. It is not, therefore, an economically practical method of reducing significantly sulphur dioxide emissions.
  Mrs. Currie: Is my hon. Friend aware that hi south Derbyshire we like coal-fired power stations and that many of my constituents work in them? Is he aware also that we manufacture the gadgets that will help to make them cleaner in future? These are produced by a number of companies in Derby and south Derbyshire. When he meets

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  the CEGB's planners will he urge them, when they next consider building a coal-fired power station, to place it in my constituency?
  Mr. Goodlad: I am aware of my hon. Friend's close interest in stations in her constituency—an interest which I share. I shall draw what my hon. Friend has said to the attention of the chairman of the CEGB.
  Mr. Foulkes: Are the Minister and my hon. Friend the Member for Cynon Valley (Mrs. Clwyd) aware that good quality, low sulphur, low chlorine coal is produced in Ayrshire as well as in Wales and can be produced economically? As there is a great demand for it, and as it is attractive environmentally, is it not stupid of the Coal Board in Scotland to say that there is no long-term future for the Killoch and Barony pits in my constituency?
  Mr. Goodlad: I am sure that the Coal Board's chairman will have heard the hon. Gentleman's words.
  Mr. Chapman: Will my hon. Friend confirm that total sulphur emissions have decreased in the United Kingdom in recent years but that, generally speaking, emissions from CEGB power stations have not? Does he agree that on environmental grounds, and recognising that it is possible economically to take this course, a priority programme should be launched by the CEGB to reduce sulphur dioxide emissions?
  Mr. Goodlad: My hon. Friend is correct in saying that sulphur dioxide emissions have already decreased significantly. They have decreased by about 40 per cent. since 1970 and 20 per cent. since 1980. Emissions from CEGB power stations have decreased since 1979 and it is the Government's intention that further reductions shall be achieved. It is intended to achieve a 30 per cent. reduction on 1980 levels by the end of the 1990s.
  Mr. Eadie: Will the hon. Gentleman confirm that it is not just sulphur emissions from coal-fired power stations that are responsible for acid rain? He spoke about the 30 per cent. reduction target for 1992–93 outlined by the EEC. Will he also confirm that the chairman of the South of Scotland electricity board is claiming that Scotland has already achieved that 30 per cent. reduction?
  Mr. Goodlad: Yes, the hon Gentleman is correct.

  Conservation
  Mr. Hardyasked the Secretary of State for Energy what further initiatives he proposes to take to promote energy conservation.
  Mr. Knoxasked the Secretary of State for Energy whether he is satisfied that existing energy conservation schemes are adequate.
  Mr. Andy Stewartasked the Secretary of State for Energy if he will make a statement on his plans to make 1986 Energy Efficiency Year.
  Mr. Walker: Energy Efficiency Year, which I announced on 1 April 1985, will carry forward the momentum and progress achieved in energy efficiency since I launched the campaign 18 months ago. The year will serve as a focus to get everyone involved.
  Mr. Hardy: Does the right hon. Gentleman accept that much more has to be achieved and that, given the large number of houses occupied by the least well off, who can
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  neither afford to pay for sufficient heat nor make the best use of the heat that they can afford to purchase, some real action is needed? Does he also accept that as much energy can be saved from effective conservation measures at lower cost and with a faster rate of return as can ever be produced by developments such as Sizewell's PWR?
  Mr. Walker: One could quote any development and compare it with savings that can be effectively and efficiently made. I agree that the hon. Gentleman is talking about a sector of enormous potential savings—about £7 billion a year could be saved with such policies. As to those on low incomes, I agree with the hon. Gentleman that much more needs to be done. My Department is encouraging, with some success, the voluntary groups that are bringing to low income families a whole range of aids, such as insulation and the sort of things that will reduce their energy bills considerably.
  Mr. Knox: Are not more powerful financial incentives to consumers of energy needed to get greater conservation?
  Mr. Walker: There is a remarkable range of incentives per industry. We estimate that over £300 million of investments could be made, which would show savings of more than 100 per cent. per annum. There is incredible complacency as well, and if we could remove that in both domestic heating and lighting and in commercial use, a great deal of progress could be made. At the moment, there is a lack of consumer awareness about what can be done.
  Mr. Stewart: During Energy Efficiency Year, will my right hon. Friend be looking specifically at the efficiency of coal-fired boilers? If there are potential savings here, can they be pointed out to industry so that it can reduce its costs?
  Mr. Walker: Yes, in every one of the conferences that we have had on energy efficiency—we have now contacted nearly 15,000 chief executives—part of the demonstration has been to show the advantages looking positively at conversion to coal.
  Mr. Wallace: What co-ordination is there between the energy efficiency office and the Department of the Environment about building standard regulations, which have effects on energy conservation? Will the right hon. Gentleman's Department resist the moves that are believed to be under way to introduce new regulations that will run counter to his aims for greater energy efficiency?
  Mr. Walker: As a former Secretary of State for the Environment, I recognise the wide-ranging problems about building regulations. There is good liaison between the two Departments.
  Mr. Rost: My right hon. Friend will be aware that this week is the 10th anniversary of neighbourhood energy action, which has been so successful in harnessing the community task force to insulate people's homes. Will he ensure that this successful project gets every further encouragement?
  Mr. Walker: Yes.
  Mr. Orme: What are the Secretary of State's views on the Newcastle upon Tyne experiment, in which, as the right hon. Gentleman is probably aware, an office has been

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  set up to deal with both consumers and industry? When will his Department concentrate on consumers as well as industry?
  Mr. Walker: Nobody benefits more from all that we are doing in energy efficiency than the consumer. The whole of the campaign is directed towards helping and assisting consumers to reduce their energy bills. If this campaign is a success, it will primarily be consumers who will benefit.
  Mr. Greenway: Is my right hon. Friend aware that a theatre group from his Department recently visited my nine-year-old son's primary school and acted out the need to save energy, since when he has switched off everything in the house, including his mother's oven, and left on the television?
  Mr. Walker: I have not seen any of these theatrical groups, but I gather from those who have that they have a remarkable impact and are highly successful.

  Coal Industry (Subsidies)
  Mr. Willie W. Hamiltonasked the Secretary of State for Energy what response he has made, or intends to make, to the recent proposals of the EEC Commission contained in the draft communication DG XVII to the Council on the phasing out of all subsidies to the coal industry.
  Mr. Peter Walker: No such proposals have been received.
  Mr. Hamilton: I have seen the document. Does the Secretary of State agree that were these proposals to be implemented they would be an extremely serious threat to the future of our coal industry? Is he aware of estimates that between 150,000 to 200,000 jobs in Europe would be lost as a consequence of implementation? What are his views on the matter? Has he had any consultations? If not, when does he propose to have them?
  Mr. Walker: Funnily enough, I had a consultation this morning when I had a discussion with the Commissioner responsible for energy. That was arranged some time ago. The Commissioner assures me that there are no definite Commission proposals as yet, and he very much wanted to hear our views. In general, in the light of the French Government's proposals substantially to reduce the coal industry in France, only two countries in Europe will have major coal industries. We both have a range of different opportunities and problems. Whatever the Commission does, it must understand that we know best how to tackle those problems.
  Mr. Welsh: When the right hon. Gentleman receives the Commission's report, will he bear in mind that when the Heads of State met about three years ago, with the Prime Minister in attendance, they recommended that EEC coal mining production should be doubled? Does that not mean that the Commission's report will fly in the face of the wishes of the Heads of State?
  Mr. Walker: When almost any organisation or body, including Governments, gets into the game of making predictions, it is normally wrong.
  Mr. Orme: We very much welcome what the Secretary of State said. We hope that he will keep the House fully informed of developments and report on
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  discussions that he may have with the Commissioner and the EEC. Is he aware that when I visited the Nottingham coalfield last week great concern was expressed about these proposals, and that that concern must be allayed?
  Mr. Walker: As I have said, no proposals have been received by the United Kingdom Government. I had a useful discussion with the Commissioner this morning. There will also be discussions in the Council of Ministers, which, from memory, I think will meet on 20 June. As I stated, there are in reality two countries with major coal interests, and those interests must be looked at.

  North Sea Oil
  Mr. Rowlandsasked the Secretary of State for Energy what percentage of United Kingdom North sea oil is refined within the United Kingdom; how many jobs there are in United Kingdom refineries; and how this compares with the figure in May 1979.
  The Minister of State, Department of Energy (Mr. Alick Buchanan-Smith): In 1984, 37·5 per cent. of United Kingdom North sea oil was refined within the United Kingdom. There were some 23,100 jobs in the refining industry in September 1984, compared with about 25,300 in May 1979.
  Mr. Rowlands: I know that the right hon. Gentleman is aware of the shattering blow caused to the communities affected by the BP-Llandarcy announcement, given the hundreds of jobs involved. Is he also aware that people, especially those who work in the refining industry, find it completely incomprehensible that we refine under 40 per cent. of United Kingdom North sea oil and that we have taken just as big a cut in refining capacity as other European countries which do not have a barrel of oil? Will he have urgent talks with the North sea oil companies to see whether they can improve on the amount of North sea oil that goes through our refineries, thereby possibly safeguarding at least some of the jobs in our refining industry?
  Mr. Buchanan-Smith: I wholly appreciate how shattering that news was to the community around the refinery and to those who work there. As the hon. Gentleman knows, last week I met colleagues in the House with an interest in the matter as well as trade union representatives from the refinery. Their views are being made known to the BP management. I remind the hon. Gentleman that we have a considerable refining over-capacity in relation to our demand, and in many cases, because of the nature and quality of North sea crude, it is more economic to export it and to import lower quality crudes to give us the right mix in our refineries.
  Mr. Skeet: Will my right hon. Friend re-emphasise that the cut of the barrel must be aligned to the market and that there is adequate room for rationalisation in the United Kingdom and throughout western Europe?
  Mr. Buchanan-Smith: In contrast with what the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) said, it is perhaps significant that the United Kingdom's reduction in refinery capacity, as a proportion of total capacity, is very much at the lower end compared with many other countries. What has happened in this country is, therefore, to some extent not quite as bad as in some other countries.
  Mr. Coleman: The right hon. Gentleman has indicated his awareness of the redundancies at Llandarcy and the fact that Llandarcy's products, in the main, are to be refined at Texaco's refinery at Pembroke. Is he aware that Llandarcy is the only refinery that is geared to deal with United Kingdom land oil? Will he intevene with his right hon. Friend and urge him to reconsider his decision, which was conveyed to me in a letter, and that representations be made to the BP board to change the decision, in the national interest?
  Mr. Buchanan-Smith: I appreciate the hon. Gentleman's concern. He has, as he says, been in touch with my right hon. Friend about it. I assure him that the views of those who came to see me last week have been conveyed to British Petroleum.
  Mr. Anderson: May we thank the Minister for the sympathetic hearing that he gave us and our trade union colleagues when we met him last week? We gave him evidence of the allegations of a cartel operating within the refining industry in the United Kingdom, and also allegations of various back-to-back arrangements between the several oil companies. Will he look into those allegations and, if necessary, seek to lean upon BP to provide jobs, directly or indirectly, in replacement?
  Mr. Buchanan-Smith: The important point to recognise is that it is a commercial decision of the company. The company is prepared to meet and to discuss the different aspects of it. It has made it clear that the decision was taken in the light of its commercial activities in the United Kingdom.
  Mr. Proctor: I have two large refineries in my constituency, Mobil and Shell, both of which have shed labour in the past few years. Does my right hon. Friend agree that those oil refineries must continue to be efficient in a very highly competitive international market?
  Mr. Buchanan-Smith: I agree with my hon. Friend that it is a highly competitive market. In recent years the downstream refining activities of the oil companies, have been the least profitable parts of their activities. If we are to remain with a strong refining capacity, which I hope we shall, we must be competitive with overseas countries.
  Mr. Barry Jones: Does the Minister understand that, of the 1,000 job losses at Ellesmere Port, 350 fall on employees living in my constituency?
  In the light of the Llandarcy redundancies, I remind the Minister that male unemployment is more than one in five in west Glamorgan. Does he know that Wales has lost 103,000 manufacturing jobs since 1979?
  Mr. Buchanan-Smith: Yes, I am aware of those figures. They were among the points put to me by some of those who came to the meeting last week. As the hon. Gentleman knows, the Welsh Office was also represented at that meeting, and I know that my right hon. Friend the Secretary of State for Wales is fully aware of the position. I have spoken to him since that meeting.

  National Coal Board
  Mr. Douglasasked the Secretary of State for Energy what topics will be discussed when he next meets the chairman of the National Coal Board.
  Mr. Peter Walker: I meet the chairman of the National Coal Board regularly to discuss all aspects of the coal industry.
  Mr. Douglas: When the Secretary of State next meets Mr. MacGregor, will he call into question Mr. MacGregor's view that while running a decentralised operation there should be massive anomalies in the treatment of the labour force from one area to another? Will the Secretary of State ask Mr. MacGregor to explain why it is that miners in Scotland who have been dismissed because of activities outwith the NCB during the dispute have not been considered in terms of the conciliation procedure within the board?
  While we in Scotland expect to be treated differently on occasions, we are not prepared to be treated worse by a Scot who should be sent back to America.
  Mr. Walker: Obviously, Mr. MacGregor meets his regional leaders frequently and has discussions with them. I know that there is a constant exchange of views between them.
  Perhaps greater examination of dismissals before the dismissals took place was made in Scotland than in any part of the country. There was a time when other regions were complaining that the speed with which people were being sacked in those regions was far greater than in Scotland, where cases were being looked at carefully.
  Sir Dudley Smith: Will my right hon. Friend ask the chairman of the NCB to make sure that when the plans for the vast new south Warwickshire coalfield are announced in the not too distant future there will be the widest possible local consultation and a full explanation of the NCB's case?
  Mr. Walker: I shall certainly convey that to him.
  Mr. Mason: Is the Secretary of State aware that in a large number of Yorkshire collieries industrial relations are now at rock bottom and rotten? Is he further aware that in the past 20 years, by custom and practice, and by general agreement between management and men, the trade union branch secretary has been allowed three days on the surface of the mine to look after miners', widows', pensioners' and disabled miners' problems, as well as his own trade union work? The management has now stopped that and is making him work five days a week underground. Apart from the sour and bitter relations that exist at those pits at present, the people who most need his services are being denied it because of the board's action. There is a suggestion that it is by diktat of the chairman of the NCB. What are the Secretary of State's observations about that? Will he ensure that when he next meets the board he will raise that issue?
  Mr. Walker: I shall certainly convey the views expressed by the right hon. Gentleman on that issue. Nobody has previously conveyed any complaint to me, about that issue. Obviously, we shall look into the matter and see whether there is any reason to make a change.
  Mr. Michael Morris: Will my right hon. Friend be able to reassure the chairman that extra resources will be made available for the coal conversion scheme?
  Mr. Walker: Resources are available for the coal conversion scheme. I am glad to report that there are many applications for it. The success of the scheme depends on the degree to which industry can be confirmed in the view that there will be a security of supply.
  Mr. Wrigglesworth: Will the Secretary of State discuss with the chairman of the NCB the management of the Coal Board now that the industrial dispute is over? Does he agree that it would be better if a method of reconciliation could be found, and if all the members of the Coal Board, all the staff and the work force, could be involved in discussions and participate in the new decentralised structure?
  Mr. Walker: A great deal has already been done in the new executive, which is advising and acting in this area and which has a wide range of good top managers. The return to good production figures in many of the pits is encouraging.
  Mr. Ashby: Will my right hon. Friend discuss with the chairman more capital investment in the midlands, where industrial relations are extremely good and where the work force clearly works harder and is more reliable than any other?
  Mr. Walker: The Coal Board has a whole range of potential investment areas. It will certainly be noted that high productivity is an encouragement to investment.
  Mr. Merlyn Rees: Would it be right for a man found not guilty by the courts to be ruled guilty by the NCB?
  Mr. Walker: If the matter was not taken up by the courts, or if there were other reasons for doing so, if anyone from the Coal Board is wrongfully dismissed, he has considerable rights against wrongful dismissal.
  Mr. Favell: Is my right hon. Friend satisfied that the Coal Board has taken proper steps to safeguard from harassment from their colleagues the miners who worked during the strike?
  Mr. Walker: Yes, the management has been firm in taking action against anybody in the industry who has been guilty of harassment. When it has received evidence of harassment, it has taken swift, decisive action.
  Mr. Boyes: In view of the latest demonstration of the evils of apartheid—the shooting of innocent unarmed workers—will the Secretary of State give Mr. MacGregor a categorical statement that under no circumstances must he import coal from South Africa?
  Mr. Walker: As far as I know, no coal is being imported from South Africa. However, I shall convey the hon. Gentleman's views.
  Mr. Peter Bruinvels: As 11,903 miners left the industry between 10 March 1984 and 9 March 1985, what steps will my right hon. Friend take to protect working miners who are still being harassed and intimidated and who need the support of the country?
  Mr. Walker: Obviously, I have been told of a number of individual cases, which I conveyed immediately to the Coal Board. In my judgment, the board has dealt effectively with every case that it has examined and has been reported to me to date. That is the board's intention.
  Mr. Allen McKay: When the Secretary of State next meets the chairman of the NCB, will he ask him to expedite the work of the new review body and to give the numbers of closures required before colliery closures take place, not afterwards?
  Mr. Walker: I believe that a meeting on that subject is taking place tomorrow and I hope that quick progress will be made. Those miners who have taken voluntary
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  redundancy have done so because it was the majority view of the miners that that was necessary, not because the NCB laid down some policy. With his considerable knowledge of the mining industry, the hon. Gentleman will recognise that if miners have to choose between a pit without a future, transfer to another pit, voluntary redundancy or being sent home for four or five months, they may well vote that way. I hope that, in the aftermath of the strike, it will be recognised that it is in the interests of miners to come to such a decision.
  Mrs. Currie: Will my right hon. Friend convey to the NCB the congratulations of the House on the work of the mining research and development establishment at Stanhope-Bretby; which has just received its fouth Queen's award for technology for its work on dust? Does my right hon. Friend agree that that work has so eradicated the dust problem underground that pnumoconiosis should be a disease of the past and that mining in future will be cleaner and safer?
  Mr. Walker: I think that both sides of the House will applaud the work of that establishment.
  Mr. Hardy: I share the Secretary of State's hope that the NACODS agreement will be introduced and operated as from tomorrow, but will he inform the NCB that if it wants to reduce the distrust and suspicion that remains prevalent in the industry, that step tomorrow would be the most useful that it could take?
  Mr. Walker: I cannot say what everybody will be demanding tomorrow, because a number of delegations are involved, not just those from NACODS. I can only say that I want the principles of that agreement enforced as quickly as possible, and I know that that is the view of the NCB. The hon. Gentleman talks about suspicions and so forth, but I hope it will be recognised that a number of decisions made to date have been made not by the NCB working against the interests of the miners but as a result of the consensus of miners.
  Mr. Orme: Does the Secretary of State agree that if the NACODS agreement had been fully implemented there would be no need for the ballot that is now taking place so that its members can decide whether to take industrial action? When the right hon. Gentleman sees the chairman of the NCB, will he ask him to explain why there are such wide discrepancies about reinstatement in different areas? Why is Scotland so different from, say, south Wales, or other areas? Why is the Coal Board carrying out a vendetta against certain people?
  Mr. Walker: There is no truth or substance in that allegation. I have no evidence of that, and if I did I would take action. There is no such evidence. No procedures have taken place for men to take voluntary redundancy, and so on, which have not been on the basis of what the miners themselves wanted.

  Energy Efficiency Programmes
  Mr. Gerald Bowdenasked the Secretary of State for Energy whether he has plans to increase the number of sectors participating in monitoring and targeting programmes for increasing energy efficiency.
  The Parliamentary Under-Secretary of State for Energy (Mr. David Hunt): At present 20 sectors are participating in the monitoring and targeting programme

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  run by the Energy Efficiency Office. In view of the success of the programme in helping firms achieve savings, I plan to increase the number of sectors to 40.
  Mr. Bowden: My hon. Friend will be aware of the pleasure that it gives to hear that the scheme is to be extended, but can he say what savings have already been identified through the pilot scheme?
  Mr. Hunt: Yes. Major successes have been identified in the two pilot sectors. The four mills in the project in the paper and board industry reduced energy costs by £1 million with virtually no investment, and the four mills in the textile industry taking part in the pilot scheme have already identified savings of 18 per cent. Those achievements set a marvellous example for the rest of British industry.

  Coal Industry
  Mr. Proctorasked the Secretary of State for Energy if he will make a statement on the prospects for the coal industry for 1985–86.
  Mr. Peter Walker: 1985–86 will be a year of reconstruction, following the damage done both to mines and to markets by the strike. In order to secure its long-term future, the industry will also need to make progress in bringing down the average costs of production.
  Mr. Proctor: Does my right hon. Friend agree that the industry should look forward rather than back and regain the customers that it lost during the dispute, and that it could best do that by producing a good product, efficiently, at a competitive price?
  Mr. Walker: Yes. There is obviously a considerable task in hand, but nothing could be better than if we could show that productivity was improving and that the product would be reliably and constantly supplied to the market place that is willing to take it. The coal industry has a considerable potential in Britain.
  Mrs. Clwyd: Does the right hon. Gentleman agree that prospects for reconciliation in the coal industry in south Wales would be greatly enhanced if the five men sacked from the Phurnacite plant in my constituency on the say-so of Mr. MacGregor were reinstated forthwith? Two of them were sacked for allegedly spitting at the one working miner among 6,000 in the constituency during the strike. Should they not be reinstated forthwith?
  Mr. Walker: Any decisions on individual cases must be taken by the management, which has taken great care in the matter.
  Mr. Eadie: The Secretary of State has been asked about the prospects for the industry. Does he agree that if there is to be reconstruction and good prospects there must be new investment and new pit sinkings? Is he aware that, even in Nottinghamshire and the midlands, investment contracted between 1979 and 1983–84? In 1979–80, £78 million was invested in north Nottinghamshire. That figure has been reduced to £55 million. In south Nottinghamshire there was a reduction from £55 million to £27 million. In the south midlands there was a reduction from £77 million to £33 million. There is a great deal of reconstruction to be done. The right hon. Gentleman should tell his hon. Friends who represent those areas that without new investment and new pit sinkings the industry will contract.
  Mr. Walker: If the hon. Gentleman wishes me to compare the record of the Labour Government on investment with that of the present Government, I shall be very happy to do so.

  Opencast Workings
  Mr. Skeetasked the Secretary of State for Energy how much coal he anticipates will be drawn from opencast workings in the next five years.
  Mr. David Hunt: The level of opencast output is determined primarily by market demand. I am not in a position to forecast what that demand might be in the next five years.
  Mr. Skeet: Does my hon. Friend realise that opencast working is a most profitable investment and would produce a much better return for the money which the Government are to pour into the mining industry? Should we not lift opencast production from 12 or 15 million tonnes to perhaps 20 million tonnes?
  Mr. Hunt: I agree with my hon. Friend's comment about the opencast industry. The future is very good indeed.
  Mr. Rowlands: It is all very well for Conservative Members to advocate the expansion of opencast working. However, is the Minister aware of the possible environmental consequences of an expansion of opencast working. Do not our communities have as much right to a good environment as those in Finchley, Reigate or the Wirral?
  Mr. Hunt: I agree. I do not think that there is any difference of opinion between the hon. Gentleman and myself on that point. There is always the question—sometimes a very difficult one—of marrying the disadvantages to the environment with the great advantages to the country.

  Double Glazing
  Mr. Parryasked the Secretary of State for Energy if he is satisfied with the contribution double glazing presently makes towards savings in energy resources.
  Mr. David Hunt: Yes, Sir.
  Mr. Parry: The Minister will be aware of the representations made by the Glass and Glazing Federation. Is he aware that since the imposition of value added tax on double glazing hundreds of small companies have gone bankrupt and nearly a thousand jobs have disappeared in the north-west? Does the Minister not agree that VAT is unnecessary in this important sector of industry?
  Mr. Hunt: The imposition of VAT is a matter for my right hon. Friend the Chancellor of the Exchequer. However, the installation of double glazing has many advantages. One of the major objectives of the Glass and Glazing Federation is that householders should use energy more efficiently. That objective has the full co-operation of the Energy Efficiency Office and of my Department.
  Mr. Rost: Could my hon. Friend make any reassuring noises about the future of the home energy audit scheme?
  Mr. Hunt: I very much support the concept of energy labelling, and look forward to further progress towards that end.

  Electricity Industry (Investment)
  Mr. Hannamasked the Secretary of State for Energy when he next plans to meet the chairman of the Central Electricity Board to discuss future investment levels in the industry.
  Mr. Goodlad: I shall be discussing this matter during my regular meetings with the chairman of the CEGB.
  Mr. Hannam: In view of the facts given ealier about the progress made by the CEGB in controlling and reducing sulphur emissions, will my hon. Friend join me in deploring the personal attack on Sir Walter Marshall, the chairman of the CEGB, by the hon. Member for Liverpool, Mossley Hill (Mr. Alton), in early-day motion 583? In contradiction of the views expressed in that motion, will my hon. Friend continue to give the fullest possible support to Sir Walter in the research and development taking place into the control of pollution?
  Mr. Goodlad: I agree that personal attacks are usually regrettable. I thoroughly agree that the CEGB has made and continues to make a substantial contribution to the Government's intention of achieving a further drop in sulphur dioxide emissions. The Board has played a full part in the continued improvement of power station efficiency, the growing nuclear contribution, energy efficiency efforts and in collaboration with my Department on new power station designs to reduce emissions.

  Renewable Resources
  Mr. Chapmanasked the Secretary of State for Energy what is his latest estimate of the proportion of total United Kingdom energy needs which could be met by renewable resources, including solar, geothermal and wind and wave power, in five years' time.
  Mr. Buchanan-Smith: My Department's aims are to encourage the uptake of commercially attractive renewable technologies and to increase understanding of those that are promising but uncertain. We expect only a small input from renewables by 1990, but, in the longer term, this should grow significantly.
  Mr. Chapman: Although I appreciate that only a relatively small proportion of Britain's energy needs can be met by renewable resources, does my right hon. Friend agree that they could form a significant proportion of the energy needed in certain localities? Will he bear that local consideration in mind when assessing the need for research, development and encouragement?
  Mr. Buchanan-Smith: Yes, Sir. That is one reason why a lot of money is being spent on electricity production from wind, as it is specially applicable in some remoter communities. We are watching with interest the progress of the Orkney experiment and the considerable amount of money that we put into it.

  HOUSE OF COMMONS

    Research and Secretarial Staff
    Mr. Greenwayasked the Lord Privy Seal what is the average number of secretaries per hon. Member; and if he will make a statement.
    The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): The average number of
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    secretaries per hon. Member is 0.9. This figure includes only those secretaries who have passes for the Palace of Westminster.
    Mr. Greenway: I am grateful to my right hon. Friend for giving that fascinating figure. Does he agree that some hon. Members receive much more constituency mail than others? Does he think that that is due rather to popularity than to notoriety? Is he aware that secretaries of hon. Members with heavy mail need extra help? Will he consider initiating a typing pool to which the odd tape could be sent for typing up, say once or twice a week?
    Mr. Biffen: I am sure that my hon. Friend is right in saying that the work load varies as between hon. Members and as between various times of the year in respect of all hon. Members. I hope that the present allowances cover the secretarial requirements of hon. Members. 1 would not wish to encourage any into thinking that further provision could be made along the lines that have been suggested.
    Mr. Foulkes: Is the Leader of the House aware that what he has just said is completely wrong and that an increasing number of hon. Members on both sides of the House no longer treat this place as a gentleman's club but as a place of work? Is he further aware that, to provide an efficient service to constituents, there should be adequate secretarial and research facilities? Will the right hon. Gentleman assure us that this matter will be considered again during this Parliament?
    Mr. Biffen: I do not think that the facilities of the Palace have ever—at least in the recent past—suggested that it was a gentleman's club. I have already said that the decisions arrived at last year for the secretarial allowance should be given a reasonable run before reconsideration.
    Mr. Nicholls: Has my right hon. Friend noted during his years in the House that the work output of hon. Members can vary greatly? Does he think it right that, if an hon. Member has a high profile in his constituency and therefore attracts a great deal of work, he sometimes has to pay for extra secretarial work out of his own funds? Does he think that that is proper? If not, does he have any proposals to do anything about it?
    Mr. Biffen: No, I have no proposals. I think that the salary and the secretarial allowance are based on a standard figure. The House has had plenty of experience of working within the secretarial and research allowances and, last year, voted on the level of those allowances.
    Mr. Boyes: Is the Leader of the House aware that when I was a Euro-MP I received about £30,000 for secretarial and research allowances and was able to keep a researcher and a secretary fully occupied? [Interruption.] Is the right hon. Gentleman aware that my research shows that I now do seven times as much correspondence as when I was a Euro-MP? I do not doubt that many hon. Members on both sides of the House have bigger postbags than me, but is it not ridiculous that the allowances for hon. Members do not enable us to employ two good members of staff to cope with all the work that we have to do?
    Mr. Biffen: The House took a view last year on the appropriate level of pay. What the hon. Gentleman has just said reflects as much upon what happens at Strasbourg as on what happens here.

    Written Questions
    Mr. Willie W. Hamiltonasked the Lord Privy Seal whether, in view of the increased numbers of questions tabled for written answer in the last few years, and the increasing cost of answering them, he will bring forward proposals to limit the number of such questions which can be tabled by hon. Members.
    Mr. Biffen: I have no immediate plans to do so, but I note the hon. Gentleman's concern.
    Mr. Hamilton: Is the right hon. Gentleman aware that my figures show that during the last Session there were more than 42,000 written questions, compared with 21,000 four years ago, and that the cost of answering them came to £1·68 million? Is he also aware that there is some evidence that the system is being abused by outside bodies? I can tell him that there are two Conservative Members now in the House who are in the pay of drug companies. During the present Session they have tabled 70 written questions to the Department of Health and Social Security compared with a total of 23 from those two hon. Members in the last four years. Does that not demonstrate a prima facie case of gross abuse whereby the taxpayer is asked to foot the bill for the research of private companies outside the House?
    Mr. Biffen: I have a good deal of sympathy with the hon. Gentleman's concern about the increasing use of written questions which, if they are adjusted on a sittings day basis, have risen from 139 for the Session 1980–81 to 188 in the current Session—an increase of about 43 per cent. I suggest that the specific matters mentioned by the hon. Gentleman touch more on the declaration of interests of hon. Members and that he should refer his remarks to the corresponding Select Committee.
    Mr. Harris: Does my right hon. Friend agree that another factor responsible for the explosion in the number of questions is the increase in the number of hon. Members' research assistants? Is he aware that one hon. Member of whom I know has had at least five research assistants at one time, most of them provided by American universities?
    Mr. Biffen: The Services Committee has recently reported on this matter. I hope that its report will be available to the House fairly shortly.

    Research and Secretarial Staff
    Mr. Dubsasked the Lord Privy Seal what information he has about the number of research and secretarial staff available to elected numbers of national assemblies in France, Germany, Italy, the Netherlands, Belgium, Denmark and the United States of America, respectively.
    Mr. Biffen: The information I have received suggests that there is a considerable variety in the provision made for the funding of Members' personal staff.
    Mr. Dubs: Does the Leader of the House agree that virtually all the Assemblies in the countries listed provide their elected Members with more support than we have? Does he also agree that last year's decision by the House is one which many hon. Members on both sides of the House now regret? Would not the position be different if we had a trade union acting on behalf of our interests?
    Mr. Biffen: I do not think that I am immediately convinced of the last point made by the hon. Gentleman. However, he is right to say that many Parliaments provide more secretarial and research facilities for their Members. It was a matter touched upon by the Top Salaries Review Body in its 20th report, but I have to repeat what I said when I was last asked about this a few weeks ago: I rest upon the vote taken by the House last year.
    Mr. Marlow: Why do some hon. Members seem to manage quite well on the allowances when others who do no more work do not seem to manage adequately? Why are we concerned about public expenditure in every area except when it affects our own allowances?
    Mr. Biffen: My hon. Friend makes a pertinent point. There is such an extraordinary variety of response because, mercifully, the House of Commons is a very varied institution.
    Mr. Soley: Does the Leader of the House realise the intense danger to the House of being regarded by people as increasingly irrelevant? Is not that sense of irrelevance growing, not least because the power of Back-Bench Members has been declining so dramatically? If hon. Members on both sides of the House want to see the power of Back Benchers increased, is not one way of doing that to make sure that they have sufficient facilities to do their job properly? It is not being said that they must do it. We are asking for that service, and the House deserves it.
    Mr. Biffen: If this place is regarded as being so irrelevant, I am surprised that people of such distinction still try to make their way here, not least people in the Brent constituency. If there is one way in which the House of Commons will be cocooned, it will be if it cocoons itself with research assistants.

    Late-Night Sittings
    Mr. Peter Bruinvelsasked the Lord Privy Seal if he will take steps to seek to reduce the number of late-night sittings.
    Mr. Biffen: Business is already planned to take account of the many demands upon parliamentary time, whilst seeking to avoid late-night sittings wherever possible.
    Mr. Bruinvels: Does my right hon. Friend accept that, with the House sitting on average until 12.52 am and with the number of late-night sittings this Session being the highest for the past 11 Sessions, something should be done as a matter of urgency, especially because of the number of Government Bills being passed—60 in 1983–84? Will my right hon. Friend try to speed up decisions on this matter so that the House stops work at 12 midnight?
    Mr. Biffen: I have every sympathy with my hon. Friend's point. I am told that to date, this Session, the House has risen on average at 12.43 am, which is not very different from previous years.

  CIVIL SERVICE

    Secondments
    Mr. Chapmanasked the Minister for the Civil Service how many persons were seconded to the Civil Service during the last 12 months for which figures are available.
    The Minister of State, Treasury (Mr. Barney Hayhoe): There were 116 secondments to the Civil Service from organisations in industry and commerce in 1984. The details are given in a report on the interchange programme published today by the Management and Personal Office, copies of which I am placing in the Library of the House.
    Mr. Chapman: I understand that the number of secondments has increased in recent years. Does my hon. Friend agree that the Civil Service would benefit from a greater increase in interchange? Does my hon. Friend agree that, if there were a reciprocal process, especially with civil servants being seconded to industries, this could only be beneficial?
    Mr. Hayhoe: I agree with my hon. Friend that the interchange programme is generally extremely useful and beneficial to all concerned. The numbers coming into the Civil Service from outside and the numbers seconded from the Civil Service to industries and organisations outside are increasing. I very much hope that this trend will continue.
    Dr. McDonald: Does the Minister accept that the appointment of some people from outside the Civil Service to temporary posts, such as Mr. Levene's appointment, has drawn unprecedented strictures from the Civil Service Commission, which has pointed out that established procedures were set aside in Mr. Levene's appointment? Will the hon. Gentleman give a firm commitment that in future all appointments from within and outside the Civil Service will be based on open competition and not on political patronage of any kind?
    Mr. Hayhoe: The principle of fair and open competition for Civil Service appointments is an extremely important one, which has been maintained over the years and must continue to be maintained. The suggestion that the procedures followed in Mr. Levene's appointment were wrong is misplaced.
    On secondment, it has been the long-standing practice of successive Administrations not to believe that a qualification certificate from the Civil Service Commissioners was required. Only at the time of Mr. Levene's appointment did legal advice come forward saying that such a certificate was required. As my right hon. Friend the Prime Minister has made clear, the Government immediately took steps to recognise the position. In the event, Mr. Levene was not seconded. He was appointed under a fixed term contract not exceeding five years. The proper procedures were followed.

    Trade Unions (Meetings)
    Mr. Parryasked the Minister for the Civil Service when he last met representatives of the Civil Service trade unions; and what subjects were discussed.
    Mr. Hayhoe: I refer the hon. Member to the answer that I gave him on 18 February about my last meeting with the Civil Service unions on 4 December 1984. My right hon. and noble Friend the Chancellor of the Duchy of Lancaster met representatives of the Institution of Professional Civil Servants on 2 April to hear their views in favour of extending unified grading in the Civil Service.
    Mr. Parry: Is the Minister aware that four Civil Service unions are tomorrow meeting the Secretary of
    18
    State for Employment to argue their case for their pay claim to be put to arbitration, which has been refused by the Treasury? Will the Minister support the unions in that modest request?
    Mr. Hayhoe: I hope to be present at the meeting with the unions. The determination of their request for arbitration is a matter for my right hon. Friend the Secretary of State for Employment and I would not seek to prejudge what will happen at the meeting.
    Mr. Wrigglesworth: Has the Minister discussed with the Civil Service unions the possibility of a better and longer term method of determining Civil Service pay, including some element of fair comparison?
    Mr. Hayhoe: Yes. Following publication of the Megaw report, the Government made it clear that they believed that negotiations should take place on long-term arrangements for determining Civil Service pay, based on the Megaw report. The Government's intention was that those negotiations should succeed. In fact, the negotiations ceased at the beginning of last year, but the Government have again made it clear in the current pay round that they believe that it is in the long-term national interest for such an agreement to be achieved, and I hope that substantive discussions can begin soon.
    Mr. Proctor: Has my hon. Friend met the Civil Service trade unions representing Her Majesty's Nuclear Inspectorate, which still has grave reservations about its dispersal to Bootle? If he has not recently met them, will he make arrangements to do so?
    Mr. Hayhoe: That would be a matter for, I think, my right hon. Friend the Secretary of State for Employment, who is responsible for the Health and Safety Executive, of which, I believe, that groups forms part.
    Mr. Williams: When the Minister meets the Civil Service unions, will he explain to them why, when there has been a substantial increase in productivity in the Civil Service as a result of the substantial cuts in manpower, he has allowed the real pay of civil servants to fall by 14 per cent. compared with the 1980 level? Will he also explain why he has allowed a shortfall of 20 per cent. to arise between them and other white collar workers?
    Mr. Hayhoe: I note the base year which the right hon. Gentleman takes for his comparison. It is curious that he does not take as his base the last year for which his Government were responsible. If we take that as the base year, we see that the increase in the earnings of civil servants has well exceeded the rate of inflation.
    Mr. Eastham: When the pilot scheme for the use of the polygraph at GCHQ has been completed, will the Minister hold discussions with the Civil Service trade unions? I remind him that the Select Committee on Employment advised the Government that polygraphs and their tests were useless.
    Mr. Hayhoe: Questions about GCHQ and the use of polygraphs should be addressed in the first instance to my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs.
    Mr. Soley: Has the Minister discussed the morale of civil servants with their representatives? Is he aware that the recent ballots on strike action came dangerously close to calling for industrial action? Does that not show that

    19
    something is seriously wrong with morale? Is not part of the reason for that the way that the Government keep attacking civil servants?
    Mr. Hayhoe: The recent ballots showed that, in what they had been saying before the ballots took place, the leaders of the civil service unions were not adequately reflecting the majority view of their members. I am glad that the unions followed the requirements of the Trade Union Act 1984 and that the public were, therefore, not inconvenienced by strikes called by union leaders who were not fully representing their members.

  ENERGY

    Sizewell Inquiry
    Mr. Heathcoat-Amoryasked the Secretary of State for Energy what is his latest estimate of the final cost to public funds of the Sizewell inquiry.
    Mr. Goodlad: The final cost of the inquiry will become evident only when the inspector has completed his
    20
    report. However, costs up to 31 March 1985 either falling to my Department or recoverable from the CEGB total approximately £2,407,000.
    Mr. Heathcoat-Amory: Does my hon. Friend agree that that inquiry has gone wide of planning, and that the wider policy issues raised would be better decided and discussed by Parliament? Does he agree that future applications to build new types of power stations should be assessed in a way that is cheaper and takes less time?
    Mr. Goodlad: As the House will be aware, the Government have made clear on a number of occasions their view that the inquiry should be full and wide-ranging. Decisions on future inquiries will be taken in the light of circumstances prevailing from time to time.
    Mr. Orme: As there is intense public interest in the inquiry, when will the Secretary of State be able to give the House the time scale of how the matter will be processed?
    Mr. Goodlad: The timing of the report is a matter for the inspector. My right hon. Friend will lose no time when it is in his hands.

Northern Ireland (Local Elections)
3.31 pm
Mr. J. Enoch Powell(by private notice) asked the Secretary of State for Northern Ireland if he will make a statement on the validity of medical cards as evidence of a voter's identity at the forthcoming local elections.
The Minister of State, Northern Ireland Office (Dr. Rhodes Boyson): Because of widespread concern in Northern Ireland about the growth of personation in elections, Parliament has passed the Elections (Northern Ireland) Act 1985, and the Local Elections (Northern Ireland) Order 1985 which applies the main provisions of the Act to local elections. The new legislative provisions include a requirement that a voter must produce a specified document to obtain a ballot paper. These documents are a current full driving licence issued in Great Britain or Northern Ireland; a current British or Irish passport; a current benefits, allowance or pension book issued by the Department of Health and Social Services for Northern Ireland; a medical card issued by the Northern Ireland Central Services Agency for the Health and Social Services; and a certified copy, or extract, of an entry of marriage issued by a registrar general, where the voter concerned is a woman married within the preceding two years.
It has come to our attention that there are some electors holding a medical card issued before 30 September 1973 by the Northern Ireland General Health Services Board, the predecessor of the present Central Services Agency. Some of these electors may believe that these are specified documents entitling them to vote. This is not the case. It is not possible to estimate with any accuracy how many electors hold these older cards and who do not have any of the other specified documents. However, the Chief Electoral Officer issued a statement on Friday 26 April pointing out that anyone who has no other specified
22
document and did not have the appropriate kind of medical card should take steps now, if he or she had not already done so, to obtain a new medical card. Special arrangements have been made to ensure that anyone needing a new medical card can obtain one quickly, and these arrangements will be kept under review.
The Northern Ireland information services have published advertisements in the Belfast and local Northern Ireland press, on the radio and television, and distributed leaflets to households throughout Northern Ireland setting out which documents will be needed. If people remain in doubt on this point, I suggest that they look at these leaflets or at the back of the polling cards which are now being issued and which have a list of the specified documents on the back.
My right hon. Friend the Secretary of State is aware of the understandable concern of Northern Ireland Members and other Members about this matter and is in Northern Ireland this afternoon reviewing the issues involved.
Mr. Powell: As it is the medical card on which, in particular, elderly people and the less well off are bound to rely, and as within the available time it is a physical impossibility to replace the large number of pre-1973 cards which are validly held in good faith, will the Minister ask his colleagues to take the commonsense decision to issue a statement to the effect that valid medical cards, whatever their date of issue, will be treated as effective for the purposes of the 1985 Act?
Dr. Boyson: Older people will be covered by their pension book. We were careful, when the Act was put through the House, to ensure that the people on allowances—those who are most deprived in our society—and the old would be covered. Their pension books will cover them for voting. Since 1973, 1·4 million cards have been issued, in a population of 1·5 million. We are not aware of how many people are left with the old medical cards and do not have a new one. I have heard what the right hon. Gentleman has said, and I shall pass his comments on to my right hon. Friend the Secretary of State.

National Health Service (Private Medicine Abuses)
3.35 pm
Mr. Michael Meacher: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"private medicine abuses within the National Health Service as condemned by the Comptroller and Auditor General's report."
The matter is specific because it has been pinpointed by the Comptroller and Auditor General as the key reason why, almost without precedent, he insisted upon qualifying his certificate to the NHS accounts. In other words, he found the accounting system seriously defective in that respect.
In addition, the Comptroller and Auditor General's report is specific in detailing that which has gone so badly wrong by cataloguing that
"provision of NHS facilities for private patient treatments was not properly authorised; that income collection procedures were defective; that the identification of private, non-resident treatment was inadequate and that charges determined centrally by the health departments did not recover total costs attributable to the treatment of private patients."
The report is also specific when it spells out that other criticisms include
"poor control over the use of private beds, inadequate records of private medical treatment, inaccurate charges and the absence of deposits from private inpatients in advance of treatment."
The matter is important because, in the considered judgment of the Comptroller, as the head of the National Audit Office, the NHS is being cheated, whether by negligence or by fraud, of millions of pounds a year at a time when the Government are enforcing major cuts in other areas of the National Health Service to keep within budgets.
The condemnation by the Comptroller and Auditor General is all the more important because the criticisms made today echo those made by the auditors four years ago. In 1981 Ministers responded by insisting that they would tighten procedures to stamp out abuse. Four years later the statutory auditors have found that the abuses persist—on an even greater scale—so it is important for the House to be given an opportunity to insist that it will not be fobbed off again with the same ministerial excuses.
The issue is important in two other respects. Only 37 district health authorities were selected at random for audit. That is fewer than one fifth of health authorities in England and leaves aside nine in Wales and another 40 in Scotland.
There is no reason to doubt that other health authorities are involved in similar patterns of abuse and defrauding of the NHS, so it is important that the House is able to require the Secretary of State to order that which he has so far refused to order—the auditing of the other 164 district health authorities in England and Wales to recoup the many additional millions of pounds lost to the NHS in those areas.
24
It is also important that the Government, who are soft on private medicine, are made to face the fact that abuses by private practice within the NHS——
Mr. Tony Marlow: On a point of order, Mr. Speaker. Is it in order for the hon. Member for Oldham, West (Mr. Meacher) to make the speech that he would make if the debate were granted? He has been speaking for a considerable time.
Mr. Speaker: I am listening very carefully and I shall decide that.
Mr. Meacher: Thank you, Mr. Speaker. It is important that the Government are made to face the fact that abuses from private practice within the NHS are now on such a scale that they are becoming endemic. After years and years of what the Comptroller and Auditor General identified as
"serious and persistent failures to maintain proper control over income from private patients"
the House needs to state and to endorse the view that the only effective answer to this continuing malpractice is complete separation of the private sector from the NHS.
The matter is urgent because these revelations from the Comptroller and Auditor General have only just been disclosed, and because immediate action is called for to uphold public standards by prosecuting those who are proved to have discredited their position at the expense of the NHS. Above all, it is urgent that effective action be taken now to stop this persistent haemorrhage of public funds.
For all those reasons, I strongly request you, Mr. Speaker, to grant a debate on this crucial subject at the earliest opportunity.
Mr. Speaker: The hon. Gentleman asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"private medicine abuses within the NHS as condemned by the Comptroller and Auditor General's report."
The hon. Gentleman knows that the only decision I have to take is whether to give this matter precedence over the orders set down for today or tomorrow. I have listened carefully to what he has said, but I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 10 and, therefore, I cannot submit his application to the House.

STATUTORY INSTRUMENTS &c.
Ordered,
That the draft Weights and Measures (Liquid Fuel carried by Road Tanker) Order 1985 be referred to a Standing Committee on Statutory Instruments0, &c.—[Mr. Major.]

WELSH AFFAIRS
Ordered,
That the matter of the Welsh economy, being a matter relating exclusively to Wales, be referred to the Welsh Grand Committee for its consideration.—[Mr. Major.]

Orders of the Day

  Finance Bill
  Order for Second Reading read.
  [Relevant document: Eighth Report of the Treasury and Civil Service Committee, House of Commons Paper 306 of Session 1984–85.]
  3.41 pm
  The Chief Secretary to the Treasury (Mr. Peter Rees): I beg to move, That the Bill be now read a Second time.
  Mr. Speaker: I have selected the amendment in the name of the Leader of the Opposition.
  Mr. Rees: The House is now being asked to consider the legislative consequences of the Budget. Although it is in a sense a technical tax measure, I think it right in the first instance to set the Bill in its economic and strategic context, not least because we have the benefit of the eighth report of the Treasury and Civil Service Committee, which will, I am sure, make a useful contribution to our debates. However, it may not surprise the House to know that I do not entirely agree with all of its conclusions.
  When my right hon. Friend the Chancellor of the Exchequer came to the House about six weeks ago to deliver his Budget speech, he did so against the background of some economic turbulence. At home, the miners' strike had just ended and it was possible to calculate that in 1984–85 it had added some £2¾ billion to the public sector borrowing requirement and had worsened the current account by about £4 billion. Abroad, the unprecedented period of dollar strength was coming to an end, and in consequence the foreign exchange markets were unsettled. The paramount requirement was, therefore, for my right hon. Friend to make it clear beyond any risk of misunderstanding or misinterpretation that the Government were totally committed to reducing inflation still further and would not be diverted from the financial strategy which they had followed consistently since 1979.
  I must emphasise that recent policy measures do not reflect any change in policy as some commentators and even, to a degree, the Select Committee have suggested. Rather, they demonstrate the Government's unshakeable resolve to carry out their present policies. The fall in sterling in January posed a clear threat to the ultimate objective of falling inflation. The Government had to react to this in order to maintain sound monetary conditions, and they have taken firm measures to demonstrate that their public sector borrowing and monetary objectives will be met.
  Interest rates will remain at the levels that are judged necessary to achieve the right monetary conditions. That does not represent a break with previous policies. As my right hon. Friend the Chancellor of the Exchequer explained in his Budget speech, the precise combination of monetary growth and exchange rates, necessary to keep our financial policy on track, must be a matter of fine judgment.
  An increase in the reserve of £2 billion was designed—and I am glad to see that it has been accepted by the Select Committee on that basis—to reinforce the realism of our public expenditure plans and does not
  26
  indicate any relaxation of our grip there. It serves to underline the continuing pressures in sensitive areas, as the Select Committee has observed, and the continuing need to contain them.
  Against that background, it was inevitable that our room for manoeuvre in the tax area should be less than we had hoped last year or at the time of the Autumn Statement. I hope, however, that on closer examination of the Bill the House will recognise that it contains many points of interest an even imagination. As hon. Members study the main features of the Bill, I hope that they will be struck by the number of measures which carry forward the theme of tax reform and simplification which was started in last year's Finance Bill. I hope that they will be struck also by the range of measures designed to promote job creation.
  I draw particular attention to the increase in personal allowances—the increase in the married man's allowance, for instance, by 9·5 per cent. and the increase in the single person's allowance by 10 per cent.—in other words, twice that required by statutory indexation. The overall cost of the increases in allowances proposed in the Budget and the Bill is about £1½ billion in 1985–86. This is the fourth successive year that the real value of the basic personal allowances has been increased. They now stand 20 per cent. higher than they were in 1978–79.
  It is a familiar and rather threadbare point that the greatest cash benefits from an increase in allowances go to the higher rate taxpayers. In a sense they do, because we have a progressive tax system, but the greatest proportionate gains go to the lower paid. This year, for example, the combination of the increase in personal allowances and the reduction in national insurance contributions for those earning below £90 per week mean that the budget reliefs have been concentrated on lower income groups.
  I shall give a few examples. A one-earner couple earning £85 per week—a little below half the average wage—will gain an extra £3.43 per week from the Budget when the reductions have taken effect. This will represent an increase in their take home pay of almost 5 per cent. A married couple on £380 a week—about twice average earnings—would gain £2.50 per week, or just about 1 per cent. on their take-home pay. We expect that a positive effect of these measures will be a general encouragement to people to take up lower paid jobs and a sharpening of the incentive for employers to create more jobs for them.
  Another positive effect of these tax measures will be to take a further 800,000 people out of the tax altogether—375,000 more than if the allowances had merely been indexed. For those who argue that many of these people are young people, pensioners and part-timers, I make two points. The first is that we regard it as important—whatever our critics say—to remove as many people as possible with low incomes, whatever the source of that income or their household status, from tax. The second is that the relatively small numbers taken out of the poverty trap show that personal allowances, despite sustained increases under this Administration, are still toe low in real terms. That is one of the reasons why we believe in maintaining a firm grip of public expenditure to keep open the way for further cuts in direct taxes.
  I should emphasise also that our ideas of changing to a new system of personal allowances—in fact a move towards a system of transferable personal allowances—

  27
  will be embodied in a Green Paper which we shall publish later in the year. My hon. Friend the Financial Secretary will refer to that in greater detail when he replies to the debate. This should ensure that we can have an informed debate both in this House and in the country as a whole on the path of tax reform so that we are ready to move when the Inland Revenue has completed its gigantic task of computerising schedule E and case 1 and case 2 of schedule D taxation.
  Mr. Nigel Forman: Does my right hon. and learned Friend understand the argument, which is attractive to many of us, that it would not make sense to rush ahead with extensive and far-reaching social security reforms in early legislation if that would preclude the possibility of linking that reform with an overall review of tax and benefits taken together? Will he bear that point very much in mind in considering the time scale in moving forward with both sides of the public accounts?
  Mr. Rees: I recognise my hon. Friend's concern, which is shared by both sides of the House. That will naturally be an important question. No doubt there will be opportunities for debate, although this is not a matter for me, when reforms in both sectors are made available to the public.
  I draw attention to one further income tax measure—clause 40, which introduces tax relief for half of the class 4 national insurance contributions made by the self-employed. Taken with the measures which the House debated in the Social Security Bill two weeks ago, which cut the class 2 national insurance contributions by £65 per year, these will, I hope, meet the long-felt grievance of the self-employed that their national insurance arrangements put them at a disadvantage as against the employed. Taken together, these two measures will cost around £155 million in a full year. Taken together, they will also, I hope, emphasise our continuing concern for the self-employed, who now number over 10 per cent. of the labour force. They constitute an enterprising, flexible and adaptable element in our economy and will continue, we believe, to make an increasing contribution to our economic growth, particularly as patterns of activity alter.
  The considerable reliefs which we are proposing in these sectors need to be balanced by increases in other sectors. That is why we propose increases in excise duties beyond inflation. We have, however, taken careful account of the position of the industries likely to be affeced, including the employment implications of any changes. In particular, the House will note that we have increased the duty on spirits by rather less than inflation. This is designed to give some relief to the Scotch whisky industry, which we accept has recently experienced particular difficulties.
  Mr. A. E. P. Duffy: Is the right hon. and learned Gentleman aware that the excessive increase in duty on beer is not confined to this year? It has been excessive every year since 1979 and represents the most consistent and longest record of heavy increases in duty on beer.
  Mr. Rees: I take the hon. Gentleman's point, and I know that concern has been expressed from both sides of the House. The hon. Gentleman will be aware of the
  28
  infraction proceedings brought against this country, which made it necessary to adjust the balance between the duties on wine and beer. We felt that it was appropriate to phase these matters in as gradually as possible so that the impact on brewers and consumers was not as sharp as it would have been if we had done it in one year. I understand the hon. Gentleman's concern, but he will understand the constraints upon us, which would have been operative on the Labour Government, of whom he was a distinguished member, if they had still been in office after 1979. He will recall that infraction proceedings had been pending before 1979.
  Again, while we have increased the duty on cigarettes by more than the rate of inflation, we propose no increase in that for cigars or pipe tobacco. That is in part because the health risks attached to them are, on the best evidence available, less than those associated with smoking cigarettes, and in part to mitigate the overall effect of the duty increases on employment in the tobacco industry.
  I should also perhaps refer to the extension of VAT, proposed in clause 10, to newspaper advertising. While we have respected the sensitivities of the powerful advocates of the written word, we hope that the House and the country will recognise that failure to charge press advertising would remain an anomaly. Other forms of advertising are charged—for example advertising on local radio—and although we are not introducing this measure under pressure from the European Commission, I should mention that newspaper advertising is charged to VAT in Belgium, Denmark, France Germany, Italy and Ireland. The yield in a full year will, I hope, amount to £50 million.
  Mr. Robert Sheldon: The Chief Secretary will be aware that this will particularly affect classified advertising. This is the mainstay of local newspapers, as they do not benefit from customers getting the advantage of the input tax. Therefore, classifieds will bear the full increase, whereas large display advertisements by larger companies will receive the benefit of the input tax and will not be affected in the same way. This is a serious disadvantage for local newspapers.
  Mr. Rees: The concerns of local newspapers have been put to us very forcefully by hon. Members on both sides of the House. However, with his long experience in the Treasury, I am sure the right hon. Gentleman will recognise that this has been a continuing anomaly and that this year it was fair to redress the balance between the various forms of advertising.
  Mr. Roy Hattersley: I understand why the right hon. and learned Gentleman said that he wanted to rectify the anomaly, and there will be some support from the Opposition for his wish to rectify it in relation to display advertising. However, the problems of classified advertising are the problems not just of small newspapers, but of families who wish to publish notices relating to births, deaths and marriages. Does the Chief Secretary really believe that such people should be taxed without any possibility of recouping it? Will he think about that again?
  Mr. Rees: We shall certainly reflect on that, and we shall no doubt discuss the detailed consequences when we debate the matter in Committee. I appreciate that classified advertising is on occasion important to the families

  29
  concerned, but I wonder whether it forms a large or important part in their budgets. I understand the concern which has been expressed. We can have a useful debate on the subject, but I do not believe that this proposal will have a serious impact.
  I come now to the business sector. Last year we set in hand a major reform of corporate taxation, and we see no need to alter or modify the rates of corporation tax which we then mapped out. The House will recall that for large companies corporation tax will be reduced to 35 per cent. by 1 April 1986. The rate for small companies has been reduced to 30 per cent. retrospectively with effect from 1 April 1983. We have, however, listened carefully to the various representations made about our reforms of capital allowances, and in particular the withdrawal of capital allowances next year.
  We have considered carefully the argument that the withdrawal of initial allowances next year will lead to a dip in investment. I have to say that we are not convinced of this, for several reasons. First, although allowances will be lower, so too will corporation tax, and business will continue to benefit by nearly £1 billion a year from the abolition of the national insurance surcharge. Secondly, company profits have risen dramatically in recent years, and company finances are in general sound. Thirdly, the new system of allowances will allow most companies to write off their investments against tax at a rate which on average compares favourably with true economic depreciation. Finally, the new rate of allowances has been introduced in three stages and over a three-year transitional period.
  We have, however, thought again about the case for modifying these arrangements for assets with a short life. Clause 54 sets out the change that we propose. It will give businesses the option of keeping investments expected to depreciate rapidly—because of technological obsolescence, for instance—out of the main capital allowance pool. If they are then disposed of at less than their written down value within five years, a balancing allowance will be given. As a result, the cost to the business of the asset will be written off over its life. This measure will, I hope, be particularly useful to high technology businesses, whose capital stock is subject to rapid obsolescence.
  So as to emphasise to the House that our appetite for further tax reform has not been satisfied, I shall turn now to some specific provisions in the Bill. The first are those contained in chapter II of part I which derive from the work of the Keith committee, which we set up in 1980 to review the enforcement powers of the Customs and Excise and the Inland Revenue.
  It has long been felt, we believe, that the powers of these two departments were overdue for re-examination and reform, so as to ensure that they were effective and that a fair balance was struck between the interests of taxpayers and the Government. It was on that basis that we set up a committee in 1980 under the chairmanship of Lord Keith to review this vast and sensitive area. We are greatly in the debt of this committee for its patient, painstaking and thorough review. Chapter II of part I of this year's Finance Bill contains the results of that review in relation to VAT.
  I should emphasise that there was very full consultation on the report itself in 1983–84, and on the draft clauses which were published in November last year. Therefore, no one can say with real justification that the proposals
  30
  have been sprung on an unsuspecting world. I hope also that on close examination they will be seen to strike a fair balance between the interests of the taxpayer and the Government.
  In outline—and we shall no doubt have an opportunity to examine the provisions in more detail in Standing Committee—we propose a revision of Customs and Excise powers in relation to VAT control and investigation work, coupled with increased safeguards for taxpayers. We also propose the introduction of a civil offence code for compliance failures and less serious frauds in place of the present quasi criminal sanctions.
  I should emhasise that, in deference to the many comments and representations received, we have introduced a number of important changes since the Keith report. In particular, we have increased the rights of appeal to cover situations where the taxpayer considers that there has been reasonable excuse for his failure to comply with the law and that he had exercised all due diligence. The default surcharge and misdeclaration penalties have also been targeted more specifically on persistent late payers and substantial errors. The balance of the proposals has thus been tilted further towards the protection of the taxpayer, without, we believe, losing sight of the aim of improving the compliance of dilatory taxpayers.
  If the package commends itself to the House, we expect that it will halve the amount of VAT outstanding—perhaps over £1 billion at any given time—produce an increased revenue flow of £50 million a year, result in a once for all increase in the revenue flow amounting to £600 million by 1988–89, and produce an annual revenue for surcharge, interest and penalties amounting to £150 million over time.
  Mrs. Elaine Kellett-Bowman: With regard to VAT outstanding, will my right hon. and learned Friend, in conjunction with our right hon. Friend the Secretary of State for Trade and Industry, do something about the large number of bankruptcies which are caused by the VAT man taking the first bite of the cherry? The matter is coming up for discussion tomorrow.
  Mr. Rees: My hon. Friend puts me in a difficult position. Those who have been bankrupted, to whom my hon. Friend refers, have, after all, been collectors of VAT on behalf of the general body of taxpayers. Although I would be happy to look at any individual cases where perhaps there has been an excess of zeal in exercising powers, it would be difficult to soften the procedures any further. Indeed, I hope that when they are examined in detail it will be seen that the interests of the taxpayer have been safeguarded.
  Sir William Clark: May I try to elaborate the point which I think my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) was making? Where the Customs and Excise is dilatory in collecting VAT and a firm goes into bankruptcy, the Revenue is protected against the other creditors. That is the anomaly that we have to eradicate.
  Mrs. Kellett-Bowman: Yes.
  Mr. Rees: I apologise to both my hon. Friends. I had not realised that the reference was to the insolvency provisions. It will be a matter for consideration by the House when insolvency legislation is brought before it. I

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  do not think that it will arise out of the provisions in the Finance Bill, but I shall bear in mind what my two hon. Friends have said.
  Mr. D. N. Campbell-Savours: Is there not evidence that many companies, in the rather difficult trading conditions of today, are extending more credit and by doing so are delaying the date on which they will receive the VAT payment which is due to them? In those circumstances, in the event that the Minister presses forward in the way that he suggests—I am not wholly opposed to the proposal, but I am opposed to many parts of it—surely the effect will be to impose a VAT burden on businesses which they cannot afford to pay because they have not themselves been paid. When the rules were readjusted, to what extent was that problem taken into account?
  Mr. Rees: The rules will not alter the chargeable event by reference to which VAT is collected. They are merely, as it were, the collecting mechanisms when a chargeable event has occurred. The hon. Gentleman is suggesting that because credit has been extended in hard times that necessarily alters the chargeable event. There may be odd occasions when that is so, but in general it is not true. The chargeable event remains the same. I think that there will be a chance to examine the matter in detail in Committee and to consider the point that he has made. He might care to give me advance notice of any particular case that he has in mind, so that it can be measured against the provisions.
  Mr. Campbell-Savours: I already have.
  Mr. Rees: I think that there are two points to be debated. The first is whether the chargeable event is set at the right moment. The second is whether the collection mechanisms are sufficiently effective, or too effective. We can consider both points in due course.
  I now move to another area of reform. We are conscious of the fact that, even with the provisions introduced in 1982, capital gains tax can still be regarded as a levy imposed on inflationary as well as real gains.
  Clause 64, therefore, modifies the indexation formula for capital gains tax. The exclusion of the first 12 months' inflation from the allowance for assets acquired after March 1982 is lifted. For assets held in March 1982, indexation on the post-March 1982 gain will be based on the market value of the asset on that date. Indexation will also be extended to losses.
  The effect of the changes is that inflationary gains from March 1982 onwards will be fully offset against the capital gains tax liability. The tax will be charged only on real gains from that date. There remains, however, an element of taxation of inflationary gains made on assets acquired before March 1982. I have to say, in all candour, that to extend indexation to inflationary gains before March 1982 completely would have been too expensive in revenue and staff.
  Finally, I deal with development land tax. In clause 87 we propose the abolition of development land tax. If this move commends itself to the House, it will be the third tax which the Government have abolished in two years. [Interruption.] I am glad that there is enthusiasm on both sides of the House for that bold and far-reaching measure.
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  I have to say that it was the least cost-effective tax in the statute book, raising only £80 million last year at an administrative cost of about £5 million. The net cost of abolition will, in fact, be only about £50 million in a full year, as there should be an increase in income tax, corporation tax and capital gains tax yields on gains previously charged to development land tax. But above all, abolition should remove 200 pages of complex legislation from the statute book and will, we hope, bring more development land on to the market and help the construction industry.
  There are some who have described the Budget—and so, I suppose, by extension, the Finance Bill—as a dull Budget. I would not be dismayed if either were classed as dull. There are occasions for drama and occasions for self-restraint. What is important is that the Budget and the Finance Bill were and are right for the circumstances of this year. The Budget has, I believe, signalled clearly that we have not faltered in our economic objectives.
  The Finance Bill will, I hope, be recognised as a carefully constructed, thoughtful Bill, entirely consistent with our economic strategies, directing reliefs where I believe the country would require them to be directed—particularly to the less well-off, and to the creation of jobs—but also a Finance Bill which carries further forward the process of sensible, enlightened, tax reform which will, over the lifetime of several Parliaments, give us a tax system which is in tune with the times in which we live. It may not dazzle, but nor should it alarm. I hope it will reassure the country that its financial affairs are in firm and competent hands. On that basis, I commend it to the House.
  4.9 pm
  Mr. Roy Hattersley: I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:
  This House declines to give a Second Reading to a Bill which fails to face the real problems of the United Kingdom economy, increases the burden of taxation without providing adequate relief for the lowest paid or desperately needed help to pensioners, the sick and families, and is the product of a Budget which was misleadingly described by the Chancellor of the Exchequer as primarily intended to reduce unemployment.
  The House will have noticed that the Chief Secretary addressed us in a more subdued mood than on the last occasion when he spoke to the House. His new attitude was wholly appropriate for the introduction of this mouse of a Bill, which is not simply regarded as timid but, according to all the evidence, the most unpopular Finance Bill presented to the country since the war—[Holy. MEMBERS: "Rubbish."]—by the most unpopular Chancellor of the Exchequer. That is the clear evidence of the polls.
  If the Chancellor of the Exchequer does not recognise that, we are likely to continue to see not only the downward spiral of the Government's popularity, which we naturally welcome, but the continual debilitation of the economy. The one contribution that the Chief Secretary made to the standing of his Government was the repetition with something approaching conviction that the Bill stood for no change in the strategy, an unshakeable resolve to continue as the Government had begun, and the continuation of the policies which the Government have followed since 1979. The Chief Secretary always manages to make that promise as if he did not realise that the continuation of that strategy was the continuation of a

  33
  strategy which has produced record unemployment, record company liquidations, record real interest rates and a general debilitation of the economy. The right hon. and learned Gentleman may not recognise that, but when one considers his constituency and his majority, one sees that the electors of his constituency will have recognised that by the time of the next general election.
  Six weeks ago when the Budget, on which the Finance Bill is based, was presented to the House, some Conservative Members either genuinely believed or pretended to believe that the Chancellor of the Exchequer intended the Bill to be a major assault on unemployment. Six weeks ago that was their excuse for opposing the one package which would have begun to put Britain back to work—the concentration of available resources on public sector capital investment. By now, even the most gullible Conservative Back-Bench Member must understand the truth.
  There was little in the Budget, and there is virtually nothing in the Bill, which is intended to reduce unemployment. The changes in income tax thresholds, to which I shall return in detail later, were not proposed for that purpose. On the supply side, the argument that unemployment is high because of a lack of incentive to work is plainly preposterous, as a comparison of pay and unemployment benefit demonstrates. Unemployment is high, not because men and women will not look for jobs, but because they cannot find them.
  The demand side case for tax cuts as stimulants to employment can be dismissed in two sentences. First, if there is a need to increase demand, as we believe there is, there are much better ways of using available resources to create jobs, and the best way is investment in public sector capital projects. Secondly, the Government do not believe, and continually repeat that they do not believe, that any increase in demand is necessary. Half the Government's case on unemployment is that demand is adequate. I hope, therefore, that Conservative Back Bench Members who attempt to defend the Budget as a Budget for jobs will not pretend that the reductions to the allowances have anything to do with that objective.
  The Bill does not even acknowledge the need to reduce unemployment, nor does it contain anything specifically with that aim in view. It adds to the annual tax bill, thus compounding the fraud of which the Government have been guilty for six years—the promise of tax cuts and the reality of an increase of £29 billion in the annual tax bill from 1978–79 and 1985–86.
  The Bill is not the product of a Budget for jobs. If the Budget was for anything, it was for sterling. It was made necessary by the way in which the Chancellor and the Prime Minister bungled exchange rate policy in January. Yet the exchange rate remains at its present level only because interest rates are kept artificially and damagingly high, with catastrophic effects for mortgage holders.
  The Chief Secretary rightly said that we must consider the context in which the Bill was introduced. The Bill is introduced with base rates at 12.5 per cent., against a background of a cut in the public sector borrowing requirement, and against a tightening of monetary policy. It increases the tax take by more than £3.5 billion. Against all those background facts, the result of the Bill is far more likely to be an increase in unemployment than a reduction in it. That gloomy fact is confirmed by the Treasury
  34
  forecast that the underlying rate of growth will fall next year and that there will be no improvement in it the year after.
  Two weeks ago, the Leader of the House, knowing what the Bill contained and what the Budget proposed, wrote to his constituents predicting a fall in unemployment before the next general election. I ask the Chief Secretary now, and I shall give way to him at once for his answer, whether, on behalf of the Treasury, he will confirm the prediction by the Leader of the House that unemployment will fall before the next general election. [HON. MEMBERS: "Answer."] I am not surprised that he does not answer. On the radio the Chancellor of the Exchequer pointedly avoided supporting that forecast, and the Secretary of State for Employment has been similarly reticent. That is not surprising, because they both know that what the Chief Secretary this afternoon called the employment creation measures, which are the Government's only gesture to the 3.5 million unemployed within the Budget, of which the Bill is part, will not even be fully effective when we debate next year's Finance Bill.
  The youth training scheme will be phased in after April 1986, the expansion of the community programme will come fully into operation in June 1986, and the changes in national insurance contributions take effect next October.
  The Bill will not even scratch the surface of unemployment, nor will it satisfy the other hopes which the Chancellor excited during the winter to bolster up his flagging popularity in the Conservative party. There were hints of massive tax cuts and claims of massive tax reforms. The Bill provides neither. The Chancellor has discovered that it is far easier to demand tax cuts than to deliver them, and far simpler to advocate tax reforms as a journalist than to implement them as a Chancellor of the Exchequer.
  Last year, at the beginning of his Second Reading speech, the Chief Secretary described the 1984 Bill as a
  "radical and imaginative reform of our tax structure."—[Official Report, 10 April 1984; Vol. 58, c. 248.]
  He was wise not to make such a claim this year. The Chancellor has chosen to hide behind a Green Paper or, to be exact, two Green Papers. We had one about the taxation of working couples in the last Parliament. The great tax reform rabbit pulled out of the hat on Budget day was that we were to have a second Green Paper on these crucial subjects—most notably, important and significantly, on the taxation of working couples. When the Financial Secretary replies, will he tell us why we have to wait for a second Green Paper? Why was the Green Paper of his predecessors not regarded as a basis for action? Is it, as most people suspect and as I suspect, that the Green Paper is regarded as an alternative to action rather than a promise of progress? The Green Paper on tax reform means that there will be no major tax reform in the lifetime of this Parliament. The switch from direct to indirect taxation has been halted, a change of strategy that Labour Members applaud. But that has happened not because the Chancellor has changed his mind but because the Chancellor has lost his nerve. All the heady promises to eliminate distortions, increase incentives and improve the use of resources have been forgotten or abandoned. The Bill contains only three items which the Chancellor was prepared to describe as tax reform during his Budget statement.

  35
  It is true that the Chief Secretary has reminded us today of a default surcharge and some other reforming measures, but those were not measures sufficiently significant to command the Chancellor's attention when he introduced his Budget to the House. In fact, his entire package of reform on that day consisted of three items, two of them simple abolition. The stamp duty on gifts and other minor transactions is to go and so is development land tax. But the one item that the Chancellor would have condescended to call reform in his mood of last year is the simplification of capital gains tax, which, incidentally, I am sure offers a £155 million reduction to those who pay tax.
  It may be that the Chancellor would argue—I look forward to hearing the Financial Secretary on this point because his parliamentary answers are significant in this debate—that the changes in national insurance payments that were part of the Budget are in themselves an item of tax reform. Were he to do that he would be conceding what the Prime Minister continually denies—that national insurance contributions are a tax.
  I welcome, as did my right hon. Friend the Leader of the Opposition on the day of the Budget, the reduction in employees' contributions. Indeed, we advocated that principle before the Budget as part of the proposals that we made for the sort of Budget that we would like to see. After the Budget we said that the changes were an excellent idea, badly applied. But we have never believed that they could be anything other than an attempt to increase the take-home pay of the lowest paid. We have never believed that an adjustment in the national insurance contributions could be what the Chancellor regards as something synonymous with or comparable to a tax incentive which would in itself create more jobs.
  It is worth noting that even now most contributors to the national insurance scheme are paying more than they did under the Labour Government. They were paying 6·5 per cent. of their calculable earnings in April 1979 and now, unless they are earning £55 a week or less, they are paying 7 per cent. So I hope that as the debate goes on we shall not hear grandiose claims of how the measures to reduce national insurance—which is the background to the Budget—are in some way the alternative to the supply side measures, about which the Chancellor talked in a way which might have induced the unwary to believe that they would be included in the Bill.
  In any event, the Labour party has never believed that such changes to the cost of labour and employment could contribute to the solution of the central problem of the economy, which is the reduction in unemployment. I repeat what I said a moment ago. A point which the Bill seems unable to understand and does not accommodate is that the problem of the economy is neither that wage costs are too high nor that people will not attempt to find work. The problem of the economy and the unemployment which results from that problem is that there is not enough work available because there is insufficient demand and investment.
  Mr. Peter Rees: As I sense that the right hon. Gentleman is leaving the area of tax reform, and as he has told us his position on VAT and, presumably, on indirect taxes, what areas of direct taxation does he feel are ripe for reform which he would tackle if he were Chancellor?
  Mr. Hattersley: The aggregation of the married man's and woman's taxation, the working partnership, has to be tackled. I believe at one time that the Government would tackle that by disaggregation. I suspected that when they did so they would not make sufficient compensation for people at the bottom of the income scale, but that clearly must be tackled and, in his Budget statement, the Chancellor talked as if he accepted the need to do so. I cannot understand why, having had one Green Paper on the subject three years ago, he now requires a second Green Paper on the subject before he is prepared to grasp the nettle. My conclusion from that is that he believes that there are solutions which, while they are right socially and fiscally, may be electorally unpopular, and he therefore postpones them rather than faces them in the way that a proper Chancellor would.
  Having answered that question, let me return to the subject from which the right hon. and learned Gentleman momentarily diverted me. I repeat that the problem of the economy is neither that wage costs are too high to encourage expansion, nor that wages are too low to encourage unemployment in preference to work. In any event, were those problems to be the difficulties which the Government pretend, putting together the income tax proposals in the Bill and the national insurance proposals in the Budget that go with them, the basic income tax structure of Great Britain remains, like the Government, biased against the low-wage earner.
  The national insurance proposals create a series of new wage traps. In a period of tighter money and slower growth they simply result in the encouragement of low paid jobs at the expense of more highly paid employment.
  Mr. Terence Higgins rose——
  Mr. Hattersley: I notice that the right hon. Gentleman wants to intervene. Does he want me to give way now or after I have given examples to demonstrate the point that I was making?
  Mr. Higgins: Later.
  Mr. Hattersley: Taken together with the Bill, the national insurance proposals leave the Government's basic tax record unchanged. Compared with 1979, taxes are higher for the low paid and lower for the high paid. The richer the taxpayer the bigger the tax cut he or she has enjoyed under the Government. Indeed, the Government have a unique record which has not been duplicated in the past 150 years—a record of taking from the poor and giving to the rich. Let me give the House some examples.
  Mr. Anthony Beaumont-Dark: The right hon. Gentleman talks about taking from the poor and giving to the rich, but how will it help Britain's economy to return to what he says he wants—the highest penal rates of taxation, which we inherited? It means that he wants to go back to the days of 95 per cent taxation—[Interruption.] — or 98 per cent. taxation. Who cares which; there is nothing left anyway. Will that not discourage every person who has ever created any wealth? Will that not ruin Britain? Will his envy and malice not destroy Britain rather than rebuild it?
  Mr. Hattersley: All that the hon. Gentleman proves by quoting me as saying that I want to see 98 per cent. taxation is that he reads the Daily Mail and believes it. I have never said that but the Daily Mail continually repeats that I have. During the Budget debate I made it explicitly

  37
  clear that my objection to 98 per cent. marginal rate of taxation was that even when it was in operation the only people who paid it were pop singers with large amounts of investment income and incompetent accountants. Certainly I want to obtain a higher level of taxation from the better off and certainly I want to reduce——
  Mr. Beaumont-Dark: How high?
  Mr. Hattersley: I urge the hon. Gentleman to concentrate, as I urged his colleagues to concentrate during the Budget debate——
  Mr. Tim Eggar rose——
  Mr. Hattersley: I have told the hon. Gentleman on previous occasions that I do not find his winsome ways particularly winning. I propose to answer the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) and then I shall give way to him.
  I urge the hon. Member for Selly Oak to concentrate not on marginal tax rates but on the other forms of allowance that enable the very rich to pay a disproportionately small proportion of their earnings in tax. The hon. Gentleman must explain to his constituents how he can justify a taxation regime that has required higher percentage payments from the worse off and lower percentage payments from the better off. That is an intolerable and unjustifiable system.
  Mr. John Townend rose——
  Mr. Hattersley: No, I must give way to the winsome hon. Member for Enfield, North (Mr. Eggar).
  Mr. Eggar: Will the right hon. Gentleman tell us what the highest tax rate would be if he were Chancellor of the Exchequer?
  Mr. Hattersley: No, of course I cannot. Such a question is preposterous. [HON. MEMBERS: "Oh."] The idea that the Opposition might find themselves incommoded by their inability to introduce the Budget of 1988 in the spring of 1985 is suitable only for schoolboy humour.
  I cannot—and would not as Chancellor—tolerate a situation in which the richest 14 or 15 per cent. of the population enjoys massive tax cuts while the poorest 20 or 30 per cent. pays more. I am determined to redress that balance.
  Sir William Clark rose——
  Mr. Hattersley: I promised to give some examples. I shall do so before I give way. As I said before the welter of interruptions, under the present Government, the richer the taxpayer, the bigger the tax cuts that he enjoys. The statement that drew hon. Members so passionately to their feet—the statement that embarrasses them or that they wish would not be repeated—was that the present Government have a unique record in taking from the poor and giving to the rich.
  A married worker on average earnings with two dependent children will, after the passage of the Bill, pay 3·1 per cent. more in income tax and national insurance contributions than he or she paid in 1978–79. A worker on half average earnings will pay 14 per cent. more. However, a worker on five times average earnings will pay 13.8 per cent. less, and a worker on 10 times average earnings will pay 23 per cent. less. I shall gladly give way to any hon. Gentleman who can justify a system under
  38
  which a taxpayer on 10 times average earnings pays 23 per cent. less tax, while a taxpayer on half average earnings pays 3·1 per cent. more.
  The Financial Secretary to the Treasury (Mr. John Moore): Does the right hon. Gentleman not agree that the people in all the examples that he has given are better off after five or six years of Conservative Government, while they were worse off after the same period of Labour Government?
  Mr. Hattersley: Some people at the bottom of the income scale are absolutely better off, but some are not, and that is a disgrace. What is extraordinary is that the Financial Secretary—and, for all I know, the Chancellor—tries to justify the relative changes. Can he justify the fact that the poor pay more tax, while the rich pay less, simply by saying that there has been a small increase in their gross earnings, net income or real income? No one could justify the comparison that I have made, and the country will note that neither the Financial Secretary nor any other hon. Member tried to justify the relative changes in the tax system.
  Sir William Clark: The whole House would agree that under no circumstances should the right hon. Gentleman, as shadow Chancellor, say what a future Labour Government would do. Of course he cannot give a categorical assurance about future tax rates. However, will he confirm that, in order to raise revenue, the next Labour Government would introduce a wealth tax and cancel mortgage interest relief?
  Mr. Hattersley: In the belief that some hon. Member would be weak-minded enough to ask me about mortgage interest relief, I brought with me a paper from which I could read all the steps that past Labour Governments have taken to assist interest relief to home buyers. The House may be delighted to be reminded of the 11 items of assistance to home ownership introduced by previous Labour Governments. The hon. Member for Lancaster (Mrs. Kellett-Bowman) whispers to me from a sedentary position that that would not amuse her. I shall therefore merely say that the Labour party has no intention whatsoever of abandoning mortgage tax relief. We have made that clear on innumerable occasions. However, as the Conservative party believes that it is in its interests to keep repeating the falsehood, no doubt we shall have to continue to make our position clear.
  Mrs. Kellett-Bowman rose——
  Sir William Clark rose——
  Mr. Beaumont-Dark rose——
  Mr. Hattersley: No, no, no. My assurance that there is no such intention could not be more categorical. Any hon. Members who pursue that line of argument simply show how poverty-stricken are their arguments about the state of the economy.
  There must be a major change in the structure of our taxation system. We have always advocated such a change, and will continue to do so, in the belief that the neglect of the interests of the lower-paid is one of the great scandals that besmirches the Government's record. A Chancellor who had really wished to help the lower-paid, and to give any veracity to interventions such as that of the Financial Secretary, would have constructed a different Budget. He would have increased child benefit at least by

  39
  the percentage by which the tax thresholds were changed. It was the clear intention when child benefit replaced child allowance that whenever there was a major revision in the tax thresholds child benefit would be increased by the same amount. Had that not been so, the simple introduction of child benefit would have penalised families. The Opposition believe that there is overwhelming evidence that the most direct and cost-effective way of alleviating poverty would have been substantially to increase child benefit. Low income families with children have suffered more than any other families during the prolonged recession. The available resources should have been concentrated on their urgent needs.
  By changing the thresholds, the Chancellor has reduced the annual tax bill for a worker earning, say, £5,000, by £90 a year. However, because of the nature of tax thresholds, the same process reduces the tax bill for a worker on £50,000 a year by £565 a year. His tax reduction is six times as great as that enjoyed by the low-income family. The needs of such high-income groups should not be a high priority. The money spent on ensuring that they receive tax reductions should have been concentrated on the lowest-paid and the poor.
  Sir Kenneth Lewis rose——
  Mr. Hattersley: That would have been much more effectively done by using the money available for child benefit in preference to other alternatives. The Government have boasted that the adjustment in the tax threshold has taken 800,000 workers out of tax altogether. That boast requires critical examination, some of which the Chief Secretary anticipated. However, while the hon. Gentleman posed a question, he gave no answers.
  The hon. Gentleman was right to say—if only because he knew that if he did not say it, we would—that very many, if not most, of the workers taken out of tax are young people, married women, pensioners and part-time workers. Those are the groups on whom the Government rely in many particulars. They are the groups on whom the Government depend for their bogus demonstration that they are increasing employment. On this issue, however, they are a particular group which must be analysed in a particular way. Their earnings are often additions to the principal family income, and taking them out of tax is not a head-on assault on poverty, nor is it a change that provides major relief from the wages trap.
  The wages trap bites most severely on heads of households in receipt of family income supplement. Leaving aside the numerous additional wage traps that are almost certainly being created by the new national insurance thresholds which the Chancellor proposes, it is important to examine the wages trap as it applies to and as it might be reduced by the new measures and their removal of 800,000 taxpayers from tax.
  Last year's Finance Bill took 450,000 taxpayers out of tax, but only 2 per cent. of them were heads of households and family income supplement recipients, although they were the people who needed the assistance. Only 2 per cent. of them received it in a form that might have done something about poverty and the wages trap. I should like the Financial Secretary to answer three questions about the 800,000 families or taxpayers who, as a result of the Bill, will not pay tax. How many are in full-time employment? How many are family income supplement recipients, as
  40
  distinct from being on low wages but which receipts are supplementary to the main income in their family? How many were released from taxation in last year's Budget and were recaptured during the financial year, thus enabling the Government to make the same boast twice about the same group of taxpayers?
  The answers to those questions will be revealing in terms of the Chief Secretary's claim and in terms of the nature and character of the Bill. The answers will show that the Bill does even less than was originally thought. As neither the Budget nor the Bill was ever thought to amount to much, that is very little. We are debating a trivial Bill which is the product of an inadequate and uniquely unpopular Budget brought in by an inadequate and uniquely unpopular Chancellor, and it does not deserve the House's support.
  4.42 pm
  Mr. Terence Higgins: The Order Paper draws attention to the report of the Treasury and Civil Service Select Committee on the Budget, which is relevant to this debate. I should like to express my appreciation to the officials of that Committee and to the printers for getting the report out on time. The timetable was tight, because we took evidence from my right hon. Friend the Chancellor, Treasury officials, the Governor of the Bank of England, the Trades Union Congress and the Confederation of British Industry.
  The report is part of a trio, as the Committee also reported on the autumn statement and on the public expenditure White Paper. Many of the comments in the three reports should be regarded as an entity and relevant to the overall appraisal of the Chancellor's economic policy.
  The central innovation in the Budget, and much of the interest in it, centred on changes to social security payments. It is extraordinary that the Finance Bill contains no trace of those proposals. They were instead incorporated in a Bill which has already reached its Report stage. As a result, the House has not been able to debate in detail any of the proposals for national insurance contributions changes which, in evidence to the Treasury and Civil Service Select Committee, the TUC and the CBI said ought to be debated. The Committee strongly recommends that any further significant changes in national insurance arrangements should be debated fully at all stages.
  In eliminating the upper limit of employers' national insurance contributions, rebate is no longer to be given to firms which have contracted out of the Government's pension system. That should be considered. We shall now have three levels at which there is a deterrent for people working overtime or taking on higher paid employment. Although the step is smaller, a greater number of people are affected and deterred. Eliminating the upper limit on employers' contributions will adversely affect high technology, high value added products and those engaged in export industries or in invisible exports, on which we depend heavily. It is wrong that we have had no opportunity to examine those proposals in detail.
  It is abundantly clear, however, that the notion of a contributory principle meaning anything in regard to employers' contributions has now been finally and utterly dispelled. As the Select Committee says at paragraph 42:
  "We cannot see any distinction between the employers' contributions and a straight payroll tax which is a tax on jobs."

  41
  I hope that we shall be able to pick that matter up in the review of social security which is about to be published.
  I welcome another omission from the Finance Bill. Before the Budget there were many rumours about the imposition of VAT on books, newspapers and children's shoes and about changes in pension contributions, pension funds and lump sums. None of that is to be found in the Bill. I greatly welcome that, but it shows the need for a real green Budget in the autumn when we can consider real proposals as opposed to rumours about proposals before the Budget and Finance Bill.
  When giving evidence to us, the Chancellor seemed to hint strongly that he did not think it a good idea to have any estimate of the fiscal adjustment in the autumn statement. The Select Committee strongly believes that to eliminate it would be a retrograde step. We need the best available information. Indeed, it would be rather quixotic to say that information which is published in the Red Book for several years ahead will not be published in the autumn. Without such a concept it is difficult to see how the basic idea of a medium-term financial strategy can exist. The Committee deals with that matter in some detail. It would be quite wrong for the House to be given less information.
  When it came, the Budget did not use the available fiscal adjustment fully. If anything, there was more scope for a reduction in taxation after the autumn statement, but bore the Budget, but that did not happen, and for an obvious reason—the turbulence in the exchange markets between the time of the autumn statement and of the Budget and the introduction of the Bill.
  There is considerable ambiguity about the Government's exchange rate policy. There are obvious reasons why they do not publish a target or a floor. The figure might change from time to time and, if it was not reached, that would be seen as a defeat which would undermine confidence. It would definitely be a help to speculators. However, it is naive and unrealistic for the Government to continue maintaining that they they have no view of what the exchange rate should be. In the relevant parts of the Red Book and ministerial statements, we are told of the monetary growth and exchange rate which are needed to keep financial conditions on track. We cannot have the exchange rate which is needed if we have no idea what it should be. This is a big change. Similarly, we are told that short-term interest rates will be held at levels necessary to achieve the conditions desired by the Government's economic policy.
  Both these are significant changes. We have seen an evolution of Government policy over time. When the Government first came to office, we were told that the object was to set the money supply targets and then interest rates, and the exchange rate would be determined by market forces. Today, the Chief Secretary was anxious to say that there had not been any change in this respect. However, that does not accord with the facts.
  Looking at the way in which the policy has been developing, we see clearly that the Government are intervening in markets not only by way of operations in the market but by the use of interest rates to achieve an exchange rate which they seek to find consistent with their general economic policy. The same applies on the interest rate side. We no longer have a monetarist policy in the sense that the money supply is being controlled. It is not
  42
  technically possible to have both a money supply policy and an interest rate policy, and it is clear that we now have an interest rate policy.
  All this has to be set against a background which has been extremely difficult for the Chancellor of the Exchequer. We understand why the Finance Bill is as unforthcoming as it is because of the general economic environment.
  I believe that the present economic situation is extremely hazardous because of the way in which matters have been developing internationally. We have seen the sterling-dollar exchange rate vary by almost 5 per cent. in three hours. We have seen the sterling-dollar rate go up by 25 per cent. since the floor it hit in February. That is of interest in terms of the dollar. It is more worrying that it has also gone up against the European currencies as well, from the point of view of our competitive position.
  What worries me is that it does not appear that the present international situation is sustainable. There has been an enormous United States deficit. We have seen an inflow of funds from abroad sustaining that deficit. We have seen a rise in the dollar exchange rate and a substantial deterioration in the United States balance of payments matched by a corresponding inflow of funds. That has continued, but it cannot be sustained indefinitely. Sooner or later we are likely to see a so-called "hard landing"—a collapse of the dollar. That will be of vastly more significance than the fiscal measures which we are considering in detail in the Finance Bill.
  That being so, there is an urgent need for a real contingency plan to deal with that possibility. Unless we devise such a plan, the effects may be very serious. The obvious reaction of the United States authorities facing a sudden outflow of funds from abroad is likely to be to raise United States interest rates. That will have serious repercussions on the American banking system, which has had its troubles recently, and disastrous repercussions on such Latin American countries as, Argentina, Brazil, Mexico and so on, which themselves are adversely affected if interest rates go up, but to which a number of American banks are heavily committed.
  We need a degree of co-ordination which we do not appear to have at present. If the position which I have described came about, the right reaction would be for a coordinated reduction of interest rates according to where the money was going. We know fairly quickly where it goes. It goes to Japan, Germany or the United Kingdom. A reduction in interest rates would obviate the need for a rise in American interest rates.
  It would have to be done very quickly because, as I say, at present we can have a 5 per cent. variation in three hours. In those circumstances, it is difficult to tell whether a collapse is occuring. If we are to deter overall chaos in international markets, the central bankers or Finance Ministers will need to make a statement rapidly.
  In the same context, I pick up a point which is not the tactical one but the strategic one. There was some publicity in the Financial Times last Saturday of the response of the Chancellor of the Exchequer to Mr. Shultz's statement about the need for other countries, especially in Europe, to reflate or increase economic activity against the background of the United States rate of growth slowing down. This needs to be considered very carefully. In an earlier report, the Treasury Select

  43
  Committee stressed the need for action to deal with misalignments of currencies which might go on for a considerable time.
  I understand why my right hon. Friend the Chancellor of the Exchequer did not feel that he wanted to go for a general reflation. That has not been his policy. However, we must press for a reduction in the United States deficit and at the same time see whether interest rates generally can be lowered. It does not seem that a degree of international co-operation designed to remove present exchange rate misalignments would necessarily be inconsistent with the view which the Chancellor of the Exchequer expressed the other day.
  If we can generally reduce the level of borrowing it may be that we can reduce interest rates and sustain growth to a level which we would all like to see, but I feel strongly that present circumstances are difficult and hazardous and that it is necessary, especially ahead of summit meetings due to take place shortly, that we should clear our thoughts on this.
  Other than that, the Finance Bill is not, as the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) described it, the most unpopular one in living memory or in the last 20 years. It was not an exciting Budget, and this is not an exciting Finance Bill. It merely falls into place against the broad international economic background about which I have expressed concern.
  4.57 pm
  Mr. J. Enoch Powell: I make my apology in advance. My contribution to the debate will be entirely interrogatory in character. It will be neither condemnatory nor laudatory, but I shall seek to obtain the answer to a specific question which has puzzled me for a long time as I observed the operations of this Government and of the Treasury under this Government.
  On this occasion I have fortified myself against the repeated disappointments I have suffered when endeavouring to pose this question in the unfavourable context of Question Time. I have been able, in the context of a debate, to be forearmed, having attempted to express to the Chancellor of the Exchequer so far as I could the nature of my puzzlement in advance. I look forward with correspondingly greater anticipation to hearing what the Financial Secretary has to say.
  Here are a Government who assert as one of their achievements, of their claims to gratitude, that they have reduced the level of inflation. That is a claim of pure causation—of a relationship of cause and effect between the policies of the Government and the decline in the rate of inflation.
  I will take no notice of the fact that there has been a noticeably similar trend towards a falling rate of inflation in the outside world. That is the kind of observation which is thought relevant when we discuss unemployment but eschewed by the Government whenever they deal with their achievement in the reduction of the rate of inflation. So I will leave it on one side and assume that the Government are making a just and justifiable claim when they say that the fall in the rate of inflation is the result of their deliberate operations and of the nature of their policies. I inquire as to the particular mechanism by which the Government have brought this about.
  44
  There is a curious feature in the Red Book which confronts the seeker for that mechanism. That is the remarkable wealth of vocabulary employed in the various paragraphs to describe the relationship between Government policy and the fall in the inflation rate. It is true that in paragraph 2.01 there is a fairly clear active verb—"achieve". The paragraph states that the strategy
  "is designed to achieve falling inflation".
  That is a firm statement of intended cause and effect. But two paragraphs lower the document merely states:
  "Inflation has been broadly as envisaged".
  Then, in a footnote to paragraph 2.09 on monetary policy we are told:
  "The money GDP figure for 1985–86 is a forecast; and in subsequent years the figures are assumptions."
  So the fall in the inflation rate—though I agree that it is only one of two factors in the movement of money supply GDP—is in danger of being viewed there as a "forecast" rather than the result of an active process.
  As the right hon. Member for Worthing (Mr. Higgins) pointed out, paraphrasing paragraph 2.12, the Government's overriding aim is to maintain conditions consistent with a fall in the rate of inflation. But paragraph 2.16 uses the word "projected". It states that inflation is "projected" to fall to certain levels in subsequent years.
  Take, however, paragraph 2.23, the fiscal projection for the year 1985–86. Inflation is firmly put there at 5 per cent. Admittedly, as the years recede towards the time horizon, inflation declines beautifully—
  "less by degrees and beautifully less"
  as the poet wrote—to 4.5 per cent., to 3.5 per cent., to 3 per cent.
  Here is the basis of my difficulty. If the Government have caused the fall in the inflation rate that we have experienced—if that result is the consequence of their operation of the monetary or other weapons at their disposal—why have they programmed that fall to be 5 per cent., 4·5 per cent., 3·5 per cent. and so on down to a zero which does not appear in any of the tables in the document, although it has featured in the Prime Minister's utterances? If the Government have the secret and are, in fact, working the mangle—in a moment I shall inquire of what nature that mangle might be assumed to be for our purposes—why do they not work the mangle to achieve the Prime Minister's wishes sooner than that distant time to which they have been banished by the projections in the Red Book? Are the Government deliberately ensuring that inflation does not fall below 5 per cent. during the present financial year? That must be the implication. If it was they who brought the inflation rate down from 10 per cent. to 5 per cent., the implication is that the Government will deliberately so behave that inflation shall be 5 per cent.—no more or no less than 5 per cent.—during this financial year, and that they intend so to adjust their monetary mangle during the next financial year that inflation comes out at about 4·5 per cent.
  Such is the nature of my difficulty. If the Government have the power to manipulate the inflation rate and are to that extent in charge—if this is not something that has happened to them, not their one piece of economic good luck, but the deliberate result of their intentions and policy—why do they fix the figures exactly where they have fixed them? And how do they set about ensuring that they achieve those figures and not, by some disastrous

  45
  mischance, a much more rapid fall in the inflation rate, however welcome that fall might be to the head of the Government?
  I can make sense of all the Government's various statements on the assumption that they are following a monetarist policy and regard inflation, for practical purposes in modern times, as the consequence of funding a borrowing requirement by borrowing from banks and not from the public. Their assumption is that, as a result of those inflationary forms of financing a budget deficit, Governments entail inflation upon their unfortunate subjects. I do not believe that the Government have resiled from that position; and in that I differ from the interpretation of the right hon. Member for Worthing and, perhaps, of the Treasury and Civil Service Committee, who drew attention to the significance attributed in the Red Book to the exchange rate and to short-term interest rates. I do not believe that those have been brought in as additional primary factors in the act. The part they play is wholly reconcilable with the monetarist interpretation of inflation as the result of inflationary financing of a Government deficit.
  The short-term rate of interest is clearly relevant to the Government's ability to finance their borrowing requirement, by borrowing from the public. Clearly, if the Government are anxious to avoid failing to do that, they will jack up the interest rate that they offer to the non-banking public to elicit savings from them and, consequently, to avoid inflationary funding of their deficit. So I can relate the references to the short-term interest rate firmly and definitely to the Government's underlying thesis.
  It is in the same context that I believe that we must also understand the Government's movements—I have looked for as neutral a word as possible—in relation to the exchange rate in recent months. When the exchange rate of one's own currency falls, the interest rates available in other countries are correspondingly increased: the effect of a fall in the exchange rate is the same as the effect of a fall in short-term domestic interest rates from the point of view of the Government's funding of their requirements. Therefore, it was a necessary concomitant of the fall in the rate of sterling against the dollar that the Government should shore up their borrowing capability by endeavouring to erect barriers—some in the nature of domestic interest rates, others in the nature of ploys with the exchange rate—against the pull of American interest rates as enhanced by the effect of the exchange rate.
  I felt that the right hon. Member for Worthing fell in his warnings of the future into the converse fallacy of failing to note that, should the dollar plummet, we should not be worried so much by the interest rates offered in the United States, because the exchange rate would offset whatever the United States attempted to do with its domestic interest rates.
  On the whole, therefore, I am confirmed in the thesis, which, admittedly, it is natural and perhaps convenient for me to adopt, that the Government are still monetarist, as their opponents as well as their friends would say, and that they believe they reduced the excessively high inflation rates which we have experienced until recently by abstaining from inflationary funding of a Government borrowing requirement which they have also attempted to curb.
  My difficulty on that assumption comes down to this: since the Government can manipulate the inflation rate by
  46
  eschewing inflationary funding of Government debt, why do they not do the job thoroughly? Why do they not eschew it altogether, as Hamlet might have said, rather than eschew it to a nicely calculated extent which will assure us of a rate of inflation of 5 per cent. during the current financial year and 4·5 per cent. during the coming year?
  My difficulty has been increased by what study I have been able to make of the funding operations of the Government in preceding years. I hope that Treasury Ministers will not think me unreasonably critical if I say that Government funding operations are not always displayed with the greatest promptitude and clarity to the study of the public. Indeed, it is difficult to find out what the Government regard as the leading indicators of the success or failure of the funding of their borrowing requirement.
  For the purpose of my speech, I have therefore been obliged to make assumptions of my own and exposed myself to criticism by informing Treasury Ministers in advance what those assumptions would be. In fact, I will take the total of borrowing from the banks and of the rise in the note and currency issue as representing the inflationary element of the funding of the Government's requirements in a particular financial year. Hon. Members will realise how crude that attempt is, but it is, I hope, sufficient for the purpose of expounding to the House and the Government my difficulty in understanding what the Government have been doing over the past three or four years.
  I have worked out on that basis as best I can the funding for the past five calendar years. Inflationary funding—from the banks or by an increase in the issue—totalled £3,117 million in 1980, £847 million in 1981, minus £1,811 million in 1982, minus £1,359 million in 1983, and plus £1,265 million in 1984.
  If there is any meaning in that pattern—I shall be told before the night is out whether there is or not—it corresponds quite closely with what a monetarist would have expected. He would have concluded that the Government's success in cutting out inflationary funding after 1980–81 had been rewarded in due course in 1982–84 by the fall in the rate of inflation which we have acclaimed. However, he would note that the process seems set to be reversed by the behaviour of the funding mechanism in 1984.
  Those figures, or figures like them, must be those which the Government hold themselves capable of controlling, one way or another, if they are serious and honest in their claim that what has happened to the rate of inflation is a result of their policy and stands to their credit.
  What I fear is that the Government are deliberately trying to have a certain amount of inflation—not too little and not too much—because they think that they can thereby play things along more easily in the next two or three years. What I fear is that the Government have deliberately reverted in 1984–85 to the admission of an element of inflationary financing in the funding of their requirements and that that decision is reflected in the more or less level figures of projected inflation that we have seen for the previous financial year, the present financial year and the next financial year.
  I hope that my puzzlement will be resolved when the debate is wound up. Then perhaps I shall be put out of my agony of wondering why the Government, who are capable of reducing inflation to zero and who were set on

  47
  the course of doing so between 1980 and 1983, deliberately turned aside from that course in the recent past.
  If they did turn aside from it, they are mistaken. I do not believe that by maintaining inflation—still less by renewing and increasing it—the Government will do anything to contribute to the solution of any of our ecomomic problems. It would not be relevant to our trade, to the productivity of our economy, or to the level of unemployment. Instability of the value of money is an absolute evil; it is a fraud practised by Government on the people, from which no good result can flow in any branch of the economy. That is why I hope that I may have been mistaken in my assumptions and will be told so—to my advantage, and perhaps to that of the rest of the House—by the end of the debate.
  5.15 pm
  Mr. Richard Ryder: It is a pleasure to follow the right hon. Member for South Down (Mr. Powell). I am sure that my hon. Friend the Financial Secretary to the Treasury will answer his questions at the end of the debate, but I point out that if public expenditure in the United Kingdom as a whole were as high as it is in Northern Ireland, our inflation rate would not be as low as it is today.
  On Budget day, many of my hon. Friends were pondering who would speak for the so-called alliance. Would it be the leader of the Social Democratic party, or would it be the leader of the Liberal party? Many of my hon. Friends were disappointed because it was neither of them. My hon. Friends should not have been surprised that the leaders of the Liberal and Social Democratic parties did not stay in the Chamber for the debate. They scurried out to be questioned by their friends in television and the media, who they knew would give them some easy questions. They did not stay here to be cross-examined about what policies they would have put forward if they had been in government.
  The SDP and the Liberals left it to none other than the hon. Member for Rochdale (Mr. Smith), who is renowned for his keen grasp of economic matters and his support for the economic policy of the alliance, to spell out what the alliance would have done if it had been in government.
  The hon. Member for Rochdale is guaranteed to provide a little light amusement when he speaks, and he certainly lived up to all expectations on Budget day. He said:
  "I must tell the Government, as an employer, that I do not want wages councils to be abolished, because they protect my business from unfair competition."—[Official Report, 19 March 1985; Vol. 75, c. 817.]
  Does the hon. Member for Rochdale wish to fix all commercial costs by statute to produce fair competition? If so, he is living in the wrong country.
  However, let it be said in defence of the hon. Member for Rochdale that his understanding of economics surpasses that of the leader of the Liberal party. On 17 March the right hon. Gentleman wrote an article in the Sunday Times, in which he called for £4 billion of expansion which, he claimed, would mean a public sector borrowing requirement of £8·9 billion. How on earth, by what calculation, did the right hon. Gentleman reach that figure of £8·9 billion?
  48
  Did he think that after the coal strike the Chancellor, on Budget day, would announce a figure of £4·9 billion for the public sector borrowing requirement? The leader of the Liberal party owes the House an explanation for that bewildering assertion. He also owes the House an explanation of the so-called alliance policy on capital spending.
  On 25 July 1984 the leader of the Liberal party introduced in the House a debate on infrastructure programmes. During the debate he demanded extra capital spending on regional policy, the development of derelict land, environmental upgrading, roads, a national water grid, the sewerage system, bridges and the housing stock, at a cost estimated at £3 billion by the Liberal party's Treasury affairs panel at last year's Liberal party assembly.
  After all that, it came as somewhat of a shock to hear the leader of the Social Democratic party say in the House on 15 January this year:
  "we may have to reduce the amount of money that we put into capital spending"—[Official Report; 15 January 1984, Vol. 71, c. 223.]
  Such fundamental contradictions of policy in the so-called alliance, are not so much tough and tender as disgraceful and dishonest.
  The leader of the Liberal party should also reveal to the House how he would operate his incomes policy, if he is ever given the chance to do so.
  I should like to remind the right hon. Gentleman of what he said at the Liberal party assembly in 1977, the year that he began cuddling up to his natural allies in the Labour party, and was publicly derided by the leader of the Social Democratic party for the terms on which he did so. The right hon. Gentleman said:
  "What sustains me…is our concern for a self-governing society in which participation is more widespread than bureaucratic control".
  Again, it came as somewhat as a shock for me to learn that the hon. Member for Colne Valley (Mr. Wainwright), the Liberal party spokesman on economic matters, told the Liberal party assembly last year:
  "The Government must no longer dodge its duty to manage the centre of the economy."
  Yet his leader at a previous Liberal party assembly had said that he wished to eliminate bureaucratic control. Judging from the Liberal party's plans for an incomes policy, it wants bureaucratic control. Its incomes policy, based on local settlements, would be different for every plant, division and company in every village, town, county and region.
  In the unlikely event of that system being comprehensible, let alone workable, matters would all be resolved by a magic wand—in the form of a brand new national council run by our dear old friends at NEDO. The incomes policy which the Liberal party has put forward is so incomprehensible that I do not believe it could work under any circumstances. Perhaps there are secrets which have yet to be revealed, and the Liberal party spokesman may be able to unravel some of the complexities if he catches your eye, Mr. Deputy Speaker.
  How on earth will the incomes policy of the Liberal party or the so-called alliance work in the real world? I should like to hear from the Liberal party spokesman and from the leader of the Liberal party, who does not often speak during economic debates. The right hon. Gentleman loves his television appearances and exposure——
  Mr. Forman: So do I.
  Mr. Ryder: My hon. Friend never fails to astonish us with his great ability in that medium. I regret that he does not appear often enough.
  The leader of the Social Democratic party has said:
  "I see certain anarchical tendencies in the Liberal Party which makes it difficult for them to stand firm on key policy issues."
  Those words, spoken by the leader of the Social Democratic partner of the so-called alliance, mean that he does not trust the Liberal party when it comes to economic matters, which is small wonder.
  Some of the examples that I have given about the complexities and inconsistencies of the alliance's policy mean that it owes the House an explanation of what it would have done if it had been able to present a Budget to the House. I hope that the Liberal party spokesman will provide the House with answers if he catches your eye later, Mr. Deputy Speaker.
  5.25 pm
  Mr. A. E. P. Duffy: As the speech of the hon. Member for Mid-Norfolk (Mr. Ryder) was plainly directed to the alliance parties, he will not expect me to follow him.
  The Chancellor presented his last two Budgets as "Budgets for jobs". However, there is growing questioning within the OECD about economic policies, in particular the recovery of employment. Hence the attention being paid to the Bonn economic summit due to begin on Thursday.
  The Chief Secretary made only two references to job creation when he opened the debate. The Chancellor's jobs promise shows no sign of fulfilment in Sheffield, where unemployment hovers at about the record mark and long-term jobless totals grow. Approximately 44,000 people in the Sheffield area had no work last month. That figure would be nearer 60,000 if those people whom the Government have removed from the register were included. In January, 45 per cent. of the city's unemployed had been jobless for over a year. Since the Chancellor presented his Budget, British Steel has announced the closure of the Tinsley Park works in my constituency with the loss of a further 1,100 jobs.
  There is no prospect that this year's Finance Bill will begin to provide alternative employment. It is a recipe for growing low-pay poverty, lengthening dole queues and a deepening divide between the well-off in the south and the unemployment-ravaged north. Even the persistent emphasis, modest though it is, on supply side economics is increasingly regarded as misconceived by some hon. Members on both sides of the House and by some people outside the House.
  In a sermon to mark "unemployment Sunday" earlier this year, the Bishop of Sheffield said:
  "Nonsense, I say, is our steady and determined attempt in every walk of life to cut down the numbers of people at work, in the cause of efficiency, lower prices and greater profits."
  His condemnation of that social evil is not new, but he is right to point out once again that technological developments that increase productivity without regard for the people who lose their jobs is wrong.
  There is evidence across the political spectrum that since the Budget more people want to see a more visible commitment from the Chancellor to the creation of real jobs. They are now more sceptical of his plea that only low wages and lower taxes will generate growth. They also wish to see higher public borrowing, higher spending on
  50
  the infrastructure, lower taxes on jobs and a much more vigorous approach to the hard core problem of the long-term unemployed.
  Sheffield city council's attempts to create and defend city jobs through the creative use of its purchasing power and spending has not met with Government encouragement. Government grant cuts and the rate-capping threat have resulted in Sheffield losing £240 million over the last four years. Since 1980, central Government's contribution to spending in Sheffield has dropped from 46 per cent. to 20 per cent.
  Urban programme aid to Sheffield is to be held at its present level of £4·01 million in 1985–86—a decrease in real terms of 5 per cent. In four years the city has slipped from third to 14th place in the table of authorities which receive most Government aid, yet a leading business man in a report last month warned that cuts in Government aid to depressed inner city areas were a grave mistake.
  The Association of British Chambers of Commerce in its report, to which the Sheffield chamber subscribes, roundly criticises plans to slash the aid budget by £138 million over the next three years. The report says this is happening
  "just when the cumulative effect of nearly seven years of urban assistance is having a considerable influence on the physical appearance of the inner cities and on the attitude of those who live there."
  Fear of unemployment has led to depressed wages. Low-pay poverty is on the increase. It is creating crisis and division in the north, according to a study by the Low Pay Unit published last month. The "two nations" divide will worsen with the Chancellor's abolition of the wages councils—the only protection left for low-paid workers who have no trade unions to look after them.
  The Chancellor has even left the man on the dole worse off if he smokes and enjoys a pint. When the Financial Secretary taunted my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) and invited him to state whether workers paying tax were better off than they were in 1979, he neglected to ask a similar question about the unemployed.
  Mr. Moore: I was referring to people in work who pay tax, which was the subject of the question asked by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley).
  Mr. Duffy: I am sorry that my right hon. Friend the Member for Sparkbrook did not whip back with a question about the unemployed because the Financial Secretary would have been obliged to accept that they are about 18 per cent. worse off than they were in 1979.
  The duty on beer has increased by about 7·5 per cent. this year compared with the notional increase in inflation of about 5 per cent. or less. Whitbread Yorkshire, which has important facilities in my constituency, tells me that excessive increases have been imposed upon 30 million bitter drinkers every year since 1979. It has experienced the longest run of heavy beer tax increases on record.
  Not only have the breweries suffered, but working men's clubs—an increasing number of which are closing in Sheffield—have been affected. One went under in the last three weeks. It was a great blow to me. The hon. Member for Lancaster (Mrs. Kellett-Bowman) has referred to the eagerness with which VAT representatives do their job. The people who most embarrassed my friends in the working men's club to which I referred were the VAT men.

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  Cheap labour is the main theme running through the claimed job creation schemes in the Finance Bill, which overlaps training proposals for an extended youth training scheme and more community programme places. Those proposals do nothing to create jobs or to offer the quality and training in new technology and other skills that will be needed by the industries of the future.
  The continuing decline of manufacturing industry has become a national nightmare. One has only to consider my devastated constituency in the east of Sheffield to appreciate the problem. In the first nine months of 1984 Britain had a negative trade balance of £3 billion in maufactured goods. Of the 2·5 million British workers still engaged in manufacturing, only 2 per cent. have any management qualifications and fewer than 5 per cent. undertook to continue their training in any one year. As a result our skills base is stultified. By modern standards and requirements manufacturing is undermanaged and obviously lacking in incentive. Skill training, management training and professional training are solely needed.
  There is not much point in offering training if it leads back to the dole queue. A recent Manpower Services Commission assessment of the YTS shows that four in 10 young people nationwide go straight back on to the dole queue. That overall figure masks the regional variations. The failure of the scheme is only too evident in the youth employment figures for Sheffield, where over 16,000 young people under 25 are unemployed. About 23 per cent. of those aged between 19 and 24 have been unemployed for over two years.
  Mr. Roger Freeman: I apologise for not being in the Chamber for the opening remarks by the hon. Member for Sheffield, Attercliffe (Mr. Duffy) but I share his concern about the number of youngsters who cannot find a job after taking part in the youth taming scheme. However, we must compare what is happening today with what would have happened without a youth training scheme.
  Mr. Duffy: I accept that. I do not suggest that the scheme should be abolished, but that it should be developed. My anxiety is that the YTS does not provide training in the modern and much required skills that can lead on to jobs.
  The right hon. Member for Worthing (Mr. Higgins) referred to the Bonn summit and to the economies of the western world. What should be Britain's attitude to the summit? For some months we have seen signs of an emerging consensus in Europe. As America slows and cuts its excessive budget deficit, so Europe should accelerate by loosening its over-tight fiscal policies.
  The British economy has plenty of spare capacity. Extra demand would affect output rather than prices. The Government's fiscal stance is not neutral but extremely deflationary. The national debt is lower in relation to national income than at almost any time since the war. An expanded budget deficit would not cause financial instability.
  America expanded, as Paul Volcker, chairman of the Federal Reserve Board reminded us. I had hoped that the Chief Secretary would quote Paul Volcker. Over the past two years American expansion and the impact of increased
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  imports on other countries have been responsible for 70 per cent. of growth against only 40 per cent. of OECD output. That era has ended.
  An unmistakable slowdown was reported in the United States in the first quarter. It is time for the Chanellor, in his own words, to "pick up the baton."
  5.38 pm
  Mr. David Howell: Like others, I shall leave wiser folk to answer the conundrums and deep questions which so perplexed the right hon. Member for South Down (Mr. Powell). However, there might be something of an answer to his perplexities in the fact that inflation is at least partly influenced by global developments, whereas, by definition, the Government's policies are confined to the national scene. Between those two facts the discrepancies that so bewilder him may arise. But I am sure that others are better equipped than I to answer his detailed questions.
  There was no need for my right hon. and learned Friend the Chief Secretary to apologise for the fact that the Bill is dull. It seems to be a cautious and prudent affair, but if the alternative is the sort of exciting Finance Bill that we had in the 1970s under a Labour Government, when we spent night after night trying to moderate what later had to be disentangled with colossal and devasting effects for jobs and enterprise, I would rather have fewer exciting Budgets and more dull ones.
  Even since the Budget statement—this is a warning about the dangers of trying to pin too many hopes on a Budget plan or Finance Bill—the underlying factors affecting the financial and economic situation of this and many other nations have changed substantially. I have one obvious point to make to which my right hon. Friend the Member for Worthing (Mr. Higgins) referred in his illuminating speech. The exchange rate has gyrated wildly. I recall that estimates for working out oil revenue in dollars, to be translated into pounds for the coming year, were to be based on a figure of $1·10 to the pound. But that figure has been swept away. The exchange rate has risen to $1·28 and we are now back, I believe, to below $1·20, or thereabouts. It is impossible even to pretend to be able to follow the daily violent movements in our exchange rate against the dollar, the deutschmark or any other currency. There have been huge changes since some of the hopeful prognostications at the time of the Budget.
  A chill wind has blown out of Washington and New York and there has been the faint suggestion—which may be belied by events—that the United States' rate of growth will be considerably less than forecast. That has been accompanied by one or two little clouds, which I hope will grow no bigger than a man's hand, on the horizon of the United States' financial and banking system. That chill wind, too, has had its effect.
  In addition, although our uniquely high interest rates have fallen a little, they still remain very high as a result of various influences, the source of which I find as obscure as the right hon. Member for South Down and my right hon. Friend the Member for Worthing did. I am not at all sure whether our interest rates are being unwound slowly from their high levels simply because it looks bad if they fall too quickly, or whether it is due to some properties of the monetary situation and, if so, which properties. I certainly do not think that it is excessive corporate lending, as has been suggested. Alternatively, it could be to do with

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  a not-too-benign neglect of exchange rates. Whatever the policy, interest rates remain, in real terms, almost uniquely high.
  Another development since the Budget is highly relevant to our condition. I refer to the fact that oil prices have continued, after momentarily firming, on their inevitable, ever-softening course. I say "inevitable" because as long as the international oil industry, aided and abetted by the middle eastern oil producers in OPEC—but, thank goodness, no longer, I hope, by this Government—attempts to maintain a ridiculous artificial price, it will promote the very opposite of its objective, and there will be greater instability and a further softening of the price.
  All those things have occurred, since the Budget, and they demonstrate something that is obvious to us all—that our Budget and our attempts to impose our national economic policy are very much the creatures of international economic forces. It is no news to any of us that those forces are now in severe disarray. As has been observed, our deliberations, tax policy and Finance Bill are only a short step away from the Bonn summit. There are three great crisis points in the international economy, apart apart from the problem of unemployment and under-occupation which is spread across the advanced industrial countries and which represents a major problem for social conditions and for supply-side issues.
  The first great crisis point is the ridiculously large United States' current budget deficit. The second is the huge and growing surplus on Japan's trade with the rest of the world, and the third is the enormous volatility, chaos and weakness within the European currency market, which have led to the oscillations that I have described and to the pound moving, for example, 12 per cent. against the deutschmark in a matter of weeks. That chaos and volatility make it impossible to hedge one's currency—however much one may obtain advice from a financial consultant—or to invest appropriately in forward exchange markets. In practice, it is virtually impossible for the medium-sized exporter to work out his margins, to conduct his trade confidently or to invest in the hope of producing a product for which he has some idea of the profit margin.
  Those are the three crisis points, and I hope that the Bonn summit will lead to a determination to tackle them. That is, of course, a very high hope. We know what happens with such summits. The communiqué has no doubt already been drafted and officials will have been working hard on it. One or two small adjustments will be made during long meetings at the time of the summit. But I fear that there will be a string of generalities and agreements, pointing out that such factors are very worrying. Nevertheless, I retain the idealistic hope that a little more than that might be possible.
  We must move towards more co-ordinated action. It need not necessarily be at the Finance Minister level. I think that Finance Ministers may be right to recognise that there is no institutional jiggery pokery or machinery that they can operate at their level as long as the underlying forces remain out of control, leading to currency volatility. Thus, I am not suggesting the sort of co-ordinated action that might lead to a new Bretton Woods or to anything like that, but rather that the top political leaders of the West and of Japan should make a much more forceful and coordinated declaration of their intention to tackle the various problems falling directly within their scope.
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  That means that the Americans must set about their enormous budget deficit with more seriousness and drive than in the past. The President of the United States has now been pleading with his supporters to take the matter seriously. That pleading comes very late in the day, as we have watched the deficit grow with its consequent destabilising—but so far not too negative—effect on world activity and trade. The time has now come when that cannot be allowed to continue.
  Secondly, there has been no shortage of words and good intentions about the Japanese surplus. We must have had one or two dozen promises or firm undertakings from the Japanese to the effect that, although they rightly do not intend to curb their efficiency in exporting goods that the world wants, they will open up their own markets. But, of course, nothing much has happened. I do not think that anything much will happen if we merely preach to or tell the Japanese to buy inferior electric toasters that they do not want. But something might happen if the Japanese were made to realise that it is now 40 years since the second world war and that although no one wants to encourage the rise of the awful monsters of militarism and Fascism, it is only reasonable that a nation that produces one tenth of the output of the human race and that is the second richest country on earth should play a reasonable part in defence of the values of the free world that have enabled it to prosper.
  The present Japanese defence posture and contribution to defence are grossly inadequate and that, in turn, leads to the conditions in which the Japanese can divert resources into their huge domination of world consumer markets. At first, it was videos, typewriters and cars and now it will be semiconductors, earth-moving machinery and possibly small computers. Meanwhile, others, notably the United Kingdom and the United States, have to divert their resources into necessary but substantial defence obligations. I hope that the Bonn summit is not allowed to pass without some slightly less ambiguous and firmer intentions being expressed by our Japanese friends.
  Thirdly, there is currency volatility in Europe, but could anything more be done if we were able to act as a rather more concerted bloc? A more controversial issue is whether we might gain more than we would lose by joining the exchange rate mechanism of the European monetary system. It is true, as my right hon. Friend the Prime Minister has said, that there is no escape from the transatlantic volatility that all currencies have experienced. However, there has also been enormous currency volatility within neighbouring European countries and this has been evident especially in the movement of the pound against the deutschmark.
  I share the view of those who say that if we were in the exchange rate mechanism we would be in a slightly more robust ship, if not necessarily in a calm sea. If we are talking about short-term measures—and I agree with my right hon. Friend the Member for Worthing that time is short—there should emerge from the Bonn summit a firm sign that we are making preparations to join fully the European monetary system. if we were able to get just that from a Bonn summit it would help to create a background for steadier currencies. It would halt the slide in confidence and lead towards lower real interest rates, which would create conditions for more prosperity and expansion again. After a cautious and prudent Budget this year we should be able to look forward to a more expansionary Budget next year.

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  In fact, I think that it would have been possible this year to take what are called risks—I do not believe that they are—with that "tiny" figure which is called the public sector borrowing requirement, which is the difference between two flows either side of £200 billion. I believe that it would have been possible—the Institute of Directors agrees with this—to add another £1 billion to the PSBR without any inflation risk. That might have provided room for a few more expansionary moves this year. In my book that would have meant tax cuts rather than increased public spending.
  But now that that chance has come, perhaps it is possible to look forward from the Bill to next year when opportunities might arise. That might seem to be a risk, but that is probably when the next opportunities will arise. What sort of expansion do we then want to see? I have no doubt in putting my money on the tax-cutting horse and in arguing for increased incentives and wider ownership. Imagine the opportunities that would lead from beginning seriously to wind down the level of taxation that is taken by the Government. We could start to wind it down towards the levels that operate in Japan and the United States, although those countries are not without their difficulties.
  We read in the newspapers that the Treasury is at its wits' end in its search for new sources of revenue. It is extremely worried about what might happen with existing sources should social security reform move one way politically rather than another. I do not understand why it is at its wits' end because I believe that there is more room than it thinks. First, I take that view for the reasons that I have advanced for adding to the PSBR.
  I recognise the importance of the strategy of reduced borrowing as a term of art not as a scientific matter. The idea that we should drive down the PSBR to a precise figure when it is so hopelessly imprecise is an unwise basis on which to rest our policy. Secondly, tax cuts, when costed in terms of what the Americans call static revenue analysis, lead to some disappointing, gloomy and usually inaccurate conclusions. If we deliberately ignore the fact that certain tax cuts produce more revenue by enlarging the revenue base, we shall find ourselves severely constrained.
  The Institute of Directors has argued vigorously and rightly that we should consider more seriously the beneficial second-round effects rather than the direct revenue effects, which are costed with accountants' precision, and often accountants' inaccuracy, in the Red Book. If we were to do that, we would find room for some bolder tax cuts than anything that has been attempted this year.
  I hope for boldness next year. If we abandoned static revenue analysis the net effect would be enlarged rather than decreased revenues and the borrowing requirement, in so far at that is "vital", would be benefited and not weakened. Other factors reinforcing a prudent control of the supply of money would be strengthened as well. However, I do not believe that I can sell that policy to the Government. I think that it is something that they will come to in due course, but they are not ready for it yet.
  So in the meantime we must accept that static revenue analysis will prevail along with the unscientific rigidity of PSBR calculations. This is the reason why the Government will find themselves with little room for
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  manouevre. This will be the more so as we are apparently fenced off from any prospect of changing the pattern of reliefs as they affect mortgages. We have heard that clearly from the Prime Minister and we heard it today from the shadow Chancellor of the Exchequer. It seems that the two Front Benches and the party leaders have ruled that out. If anyone thought that that was an area that he could raid for more money for tax cuts, he would be disappointed. There is the same unpromising prospect for the revenue hunter who is looking for relief on the pension side. Probably that is right and there, too, matters should be left as they are.
  What can we do within these severe limits? Perhaps we could consider this year the ideas that have been developed and laid before the American Congress in the Kemp-Kasten Act for lowering top marginal rates. Before an Opposition Member says that that is a terrible thing to do, let us bear in mind that it is a policy which produces the same revenue by means of a flat rate tax throughout. Top marginal rates provide a fiesta for lawyers and accountants. They create unfairness and disincentives and they are costly in social terms and in reducing employment opportunities. The Government believe that we have no room for manouvre, but I believe that we have and that we should make a start towards securing a flat rate tax or some such reform.
  Beyond that, of course, I should like to see room found in due course for tax cuts for those on lower incomes. I cannot understand the Labour party's position, for it appears to be miserably hostile to the high taxes that fall on those on low incomes and to the crises in family life that high taxation creates. I should like to hear a more compassionate and understanding attitude expressed by the Labour party and a readiness to consider real needs rather than narrow party interest.
  In the meantime, my priority would be to advance on every front to introduce reforms which would encourage personal ownership. I make a tentative plea to the Government—I shall return to it more strongly when I think that the climate is right and the time more propitious—that they consider properly the idea that is called the loi Monory. That means a huge extension of personal ownership by enabling income for tax purposes to be deducted—up to 15 per cent. of total income—for all purchases of new equity capital in quoted and unquoted companies. The French implemented that policy and it had a great and beneficial effect on many working people and working families. It helped spread ownership in France as we must spread it in Britain. We had a great success here with the privatisation of British Telecom and it should be followed up. I hate to see the momentum easing and being lost. I know that my hon. Friend the Financial Secretary is second to none in his drive and enthusiasm in these matters. I hope that he will push for the development of thinking over the next few months which might lead to something like the loi Monory.
  I return to the international scene. Most of what I have said will come to dust if things go sour in an international financial context, and there is a considerable danger of that happening. Of course there are dangers in the alternative policy of returning to the tight harness of Bretton Woods fixed exchange rates. However, bearing in mind the three crises that I have described, it is time for the leaders of the West to show a co-ordinated determination to tackle these problems before they drag us all down.
  5.59 pm
  Mr. Archy Kirkwood: I always listen with great interest to the speeches of the right hon. Member for Guildford (Mr. Howell), and I did so again this afternoon. He must not be too complacent. We must try to strengthen his arm to dissuade his hon. Friends from some of the rigidities and obsessions of the Treasury Front Bench, particularly about the PSBR.
  The hon. Member for Mid-Norfolk (Mr. Ryder), rather unwisely, attacked my hon. Friend the Member for Rochdale (Mr. Smith). My only regret is that it is I who have to sit on him this afternoon, and not my hon. Friend, because he would find the latter experience more painful. The hon. Gentleman was a little unfair about my hon. Friend, who made a valid contribution. My hon. Friend's remarks were derived from his personal experience, and the hon. Gentleman was unfair to castigate my hon. Friend as he did.
  The hon. Gentleman was also a little unfair to criticise our proposals. I do not know whether he has a copy of them. The hon. Gentleman nods his assent. He will be the wiser for that. He will have to agree that the costings of all the proposals were laid out, and we have to face the fact that they would mean an increase in the PSBR. The net cost to the PSBR would be about £1·9 billion. All these figures have been number-crunched through the various computers which economists use. Our proposals are costed and feasible, but they are feasible only if we have a system of restraining prices and incomes. We face that fact, but other parties do not.
  The hon. Member for Mid-Norfolk legitimately asked us how we would restrain prices and incomes. That would depend on the circumstances in which such a policy would have to be implemented, but the machinery for implementing freezes, if freezes are necessary, would have to be resorted to. Other proposals for fiscal measures which could be taken would make it clear to both sides of industry and the electorate at large that we are serious about setting a climate in which the country would not pay itself more than it could afford. We should not have to resort to this Government's pay policy, which necessitates ludicrously and unacceptably high levels of unemployment on the one hand and the inflexible and grinding imposition of low pay settlements in the public sector on the other. That is not fair, and there is a different way to do these things.
  Mr. Ryder: I am grateful to the hon. Gentleman for the characteristic courtesy that he has shown in dealing with the points that I raised. Did I hear him say that costing for the extra public expenditure proposed by the Liberal party was £1·9 billion net? Is he aware that in the Sunday Times article the leader of the Liberal party suggested that the PSBR would be only £8·9 billion if the Liberal policies were pursued? How was that figure reached?
  Mr. Kirkwood: I do not wish to detain the House, but I can go through the list which I have here.
  Mr. Peter Hordern: Do not bother.
  Mr. Kirkwood: I have been told not to bother, so perhaps I should have this discussion with the hon. Member for Mid-Norfolk later. I am conscious that other hon. Members wish to make their speeches, so I shall not answer him at length. We could face the fact of an
  58
  increased PSBR and increased public expenditure on capital projects. Our scheme holds water, and it stands up under any scrutiny.
  Some of the speeches that we have heard today, particularly that of the right hon. Member for Worthing (Mr. Higgins), have suggested that the time has come for the Government of the day, of whichever party, to look carefully at the framework for introducing Budget statements. It is now old-fashioned, out of date and in sad need of reform. There was much heartache about proposals which it was suggested might be in the Budget, but which were not implemented, such as pension changes and changes in the VAT rules. This year the Budget has taken on board many items of a non-fiscal, non-monetary nature, such as employment and training, and wages councils.
  What is more, the uprating of benefits is now done outside the Budget, in June, while many detailed taxation measures are contained in the Bill. There is thus an incontrovertible argument, one which has already been made by the Select Committee on the Treasury and Civil Service in its report in 1981–82, for changing the procedures that are used before the Budget. We should get the Treasury to come out of its hole much earlier in the year than it does and set a framework within which we can discuss these measures. Proposals can be discussed, so that the Treasury will not lose as many of the arguments as it has this year. It is an unsatisfactory way in which to proceed, and the time has come to review the system.
  This is not a Budget for jobs, but it is a lost opportunity. The Finance Bill 1985 will be seen in retrospect as a lost opportunity to reduce the terrible waste in economic resources. If we took employment back to the 1979 level we would be producing £20 billion more in output a year. Large-scale unemployment creates deep personal misery and threatens social and political stability. The Budget is a lost opportunity to get back to the 6 per cent. unemployment levels that we had only five years ago. from the present 13 per cent. plus level. It is a lost opportunity to learn lessons from the experience of the United States, where unemployment has fallen from 11 per cent. two years ago to about the 7 per cent. mark now.
  The causes of unemployment are clear. The thing that distresses me more than anything else is that the debate has now been so hi-jacked by the Government that people believe that the financial, fiscal and monetary problems are inevitable. These fears are misplaced, and we should use every opportunity to say so.
  The rise in unemployment can be directly attributed to the low level of demand, which has been caused by tight fiscal policy, high tax rates and constraints on public expenditure. The world recession has had an effect, but that is in part due to tight fiscal policies in many countries. It can also be attributed to the high exchange rates that we have had until recently, especially relative to the European currencies. That has made much of our industry uncompetitive and makes it impossible for industry to make sensible plans for the future.
  The Bill enshrines Government policy, which is extremely deflationary. We must make it clear that less deflation is not the same as irresponsible reflation. That is an important point which we would all do well to remember. I welcome the comments made by the right hon. Member for Old Bexley and Sidcup (Mr. Heath). I notice too the evidence given to a Select Committee of the other place by the managing director of GEC, Lord

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  Weinstock and the chairman of ICI, Mr. Harvey-Jones. They both took the view that the Government's policies have been inimical to manufacturing industry.
  I welcome the setting up of the Employment Institute, with its charter for jobs. It recognises, although it does not spell this out in the detailed way that we do, the need for a prices and incomes policy as a fallback guarantee for future planned expansion. The Government's pay policy does not bear examination.
  The tax threshold changes proposed in the Bill are not the best way of getting help to those who most need it, as the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) said. I am impressed by the estimate of the Institute of Fiscal Studies that the higher thresholds in the single and married man's allowances will take out of tax only 10,000 families faced with the poverty trap at effective marginal rates of 75 per cent. or more. That is not a sensible way to proceed. There are better ways of doing so, such as through family income supplement and the methods that we suggested in our proposals.
  I am also concerned about the changes in the upper earnings limit for employers' contributions, because, as the TUC said in its evidence to the Treasury and Civil Service Select Committee, that could easily be counter-productive, as employers could offload low-paid workers at the bottom end of the wages scale to cope with increased costs in what is effectively now a payroll tax.
  If the Government are intent on going back on the wages councils agreement which has existed in the recent past, they must look at each council in each sector very carefully. I notice that in its evidence to the Treasury and Civil Service Select Committee the CBI advocated that as well. Wages councils have made a valuable contribution in many sectors, although some are more effective than others. I hope that the Government will not swing their axe insensitively and do away with the lot, as that would be a retrograde step.
  As to personal taxation, each time I rise to my feet in this House I exhort the Government to consider all possible ways of integrating the benefits and taxation systems. I hope that the Green Paper heralded in the Budget statement will not be pre-empted by any tax proposals in the forthcoming DHSS reviews. I am told that computerisation has now reached the stage at which we would be able to integrate tax allowances and benefits and that that could appear in next year's Finance Bill. The Government should very much apply their mind to that.
  The Liberal party did its best to expand employee share schemes last year. I was interested to hear the right hon. Member for Guildford refer to the loi Monory, because that has great potential. The French have used it to great effect, and in its French form it could be introduced almost wholesale to this country, to great advantage.
  Last year the Government made a great mistake on capital allowances, especially in relation to their effect on merchant shipping and the way in which they affect partnership farming in Scotland. Many of these partnerships, which have a well-established system of tenant farming, are run skilfully and efficiently, but are still unable to obtain the benefits of the corporation tax which accompanied the changes in capital allowances. That is severely prejudicial to them, and an opportunity should be taken to look at this again.
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  As for the fishing industry, my experience is that the capital allowances changes have made it extremely difficult for share fishermen to change their boats and to bring new people into the industry.
  The package of changes in Customs and Excise and vehicle excise duties has hit the rural areas particularly hard. It is extremely unfair for the Government continuously to increase vehicle excise duty, which has been increased by more than required to keep it within the bounds of indexation. It is also unfair that derv is taxed. The use of this fuel should be encouraged, and to tax it merely increases distribution and travel costs in the rural areas. The financial position of small business men in rural areas, especially in Scotland, because of the revaluation impact north of the border, is now extremely difficult.
  When he replies to the debate, I hope that the Financial Secretary will say something about VAT enforcement proposals. I am concerned that the Bill incorporates extra enforcement powers, although I fully appreciate the need to move in that direction. However, so far as I can recollect, the Keith committee suggested some important safeguards which I believe will not come in until next year.
  Mr. Moore: That is not right, and, more importantly, the Government have added to the safeguards in the measure which we shall discuss in Committee. If the hon. Gentleman is with us again, we shall be able to go into that in more detail.
  Mr. Kirkwood: I cannot say how much I look forward to going back into Committee to engage in long sessions with the Financial Secretary, who deals with these matters in a competent, efficient and courteous manner. I am grateful to him for his intervention.
  The charter for jobs, produced by the new Employment Institute, states:
  "The Government claims its policy would reduce unemployment. Instead it has raised it. We offer an alternative policy which responsible people can support. We ask the Government to heed our suggestions and to restore hope to the millions without work."
  I say amen to that.
  6.16 pm
  Mr. Peter Hordern: No one seems to have found this Budget or Finance Bill very exciting, except for the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), who said that it was an awful Budget. I agree with my right hon. Friend the Member for Guildford (Mr. Howell), who said that he preferred dull Budgets to exciting ones, but even dull Budgets can be carried to excess.
  Some time within the next two weeks, President Reagan will announce the revised version of tax reform which was published by the United States Treasury last November. It would have been helpful had we had before us a tax reform proposal for broadening the tax base, as well as the forthcoming Green Paper. We could even have considered proposed public expenditure at the same time.
  No one in the United States can say with any certainty what its proposals will be, but it is widely thought that the United States Treasury's proposals to exempt husband, wife and child for $2,000 each will be carried and that a three-band rate structure at 15 per cent., 25 per cent. and 35 per cent. will remain as originally published. It is already part of the American tax system that if one's income is below $10,000 the taxpayer may claim the

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  difference. Therefore, the Americans already have a tax credit system, whereas we have been talking about one for 13 years. The Americans propose the lowest tax band at 15 per cent., but ours appears to be stuck at 30 per cent. So far as I know, that is the highest rate of tax at the lowest level of earnings in any western country.
  Everyone knows that our tax system is crying out for reform and that it is so unsatisfactory because our income tax operates on far too narrow a base. Why is it possible to bring about a major reform of taxation in the United States but not in this country? What more favourable time could there have been to achieve this than in the second year of a Parliament from a Chancellor who is said to favour tax reform? The Finance Bill is a disappointment for all of us who had high hopes of this Budget and my right hon. Friend.
  The change in national insurance contributions is important, with its implications of a single unified tax system, but apart from that change the Budget and this finance Bill could have been written on the back of an envelope between lunch and tea on any afternoon—and after a rather long lunch at that.
  It is true that we are to have a Green Paper on the taxation of husband and wife and personal allowances, which follows another Green Paper on the same subject some time ago, but, unlike the United States, we are not to have a Green Paper on broadening the tax base. Even worse, all the tax options appear to have been foreclosed. I do not know all the considerations that there may be in taxing pension funds but nobody has suggested—apart from the pension funds themselves—that that was the only consideration. What should have been under consideration was the broadening of the wole of the base of the taxation and a substantial reduction of direct taxation. To have that option foreclosed, and never to consider a radical reform of direct taxation—as is to be done in the United States—is rather a disappointment. It is all the more disappointing because all idea of reform has apparently been dropped because of the lobbying by the pension funds.
  I do not know whether the broadening of the tax base, as is proposed in the United States, is a good idea or not. I suspect that it is, but whether it is or not, to surrender the right to publish the options is a defeat, and I do not know where the reductions in direct taxation to which we are committed are to come from. They will not come easily from savings in public expenditure unless the pattern of public expenditure itself is changed, and that seems unlikely. There is a limit to the amount by which the rate support grant may be reduced, if it has not already been reached.
  The best course would be to review the whole field of public expenditure and not simply to perpetuate its structure, cutting here and trimming there. As I have said before, it might best be done by the star chamber committee of the Cabinet looking five or more years ahead.
  If, as I think, the tax proposals in the Bill are somewhat disappointing, to put it at its best, at least the Chancellor of the Exchequer is a sound money man. His fiscal rectitude and his general monetary stance are, if I may say so, quite admirable.
  In view of what I am about to say, I want to make it clear that I have been a monetarist since 1966, preceded in this House by the right hon. Member for South Down (Mr. Powell) and a few of my hon. Friends. As one who
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  voted against the last Conservative Government's wildly inflationary policy—and as chairman of the finance committee at that—I was not only one of the first in this House to be a monetarist but, from the way things are going, I confidently expect to be about the last. Having said that, I do not think that the Chancellor has properly described his monetary policy and its consequences, and I do not think that he is speaking with a wholly consistent voice.
  I should like to refer the House to the sale of council houses and to the £5 billion which local authorities have received, of which they are told they may spend only a fraction. The explanation that is offered is that the money received from those sales must be treated as a reduction in the total public sector debt, which in turn affects the PSBR. But what the Government do not say is that the large receipts which the local authorities have are counter-balanced by an equally large debt in the private sector.
  The position is described in a very interesting article in the Bank of England's last Quarterly Review, which shows that the personal sector has, within the last four years, amassed the largest personal indebtedness ever seen. Last year, loans for house purchase were up by 50 per cent. in real terms from the previous record. There is no question but that this is a major change of deep significance, but it is one which was always inherent in the sale of council houses.
  The change of ownership of council house assets cannot of itself cause any extra demand, and for that reason cannot be inflationary. In fact, if 750,000 people decide to borrow to buy existing assets, they are thereby freezing a substantial proportion of their disposable income in buying those assets. Other things being equal, there will be less for them to spend on other things, which is deflationary and should be counter-balanced by the local authorities spending their capital receipts on new council houses or on repairs and maintenance.
  It is perverse to take the public sector in isolation in assessing monetary policy, and doubly perverse not to take into account the use to which those borrowings are being put in the private sector. I am afraid that my right hon. Friend the Secretary of State for the Environment has allowed the Treasury to pull a fast one over him. I do not doubt that the Treasury can do with all the money which is now credited to the accounts of the local authorities. Things have not turned out in other directions as the Treasury hoped, notably in regard to the cost of the coal strike.
  It is praiseworthy to have a low PSBR of £7 billion representing 2 per cent. of GDP, but anybody who thinks that £7 billion is all that the Government intend to borrow is under a serious misapprehension. I do not mean that the estimates are wrong; I leave them to the forecasters. I mean that the way in which monetary policy works demands that the Government must borrow whatever sums are necessary to counter-balance what the banks lend their customers over a certain amount, for that is how the measurement M3 is controlled.
  The more that business booms, and the more that individuals and companies borrow from the banks, the more the Government borrow. It is known as over-funding, and from March 1984 up to February of this year the Government borrowed £12·6 billion through sales of gilts and national savings to counter-balance in part the £17·1 billion lent by the banks in the same period. It

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  follows that if the banks had not lent so much money to their customers to finance expansion, the Government would not have had to borrow so much.
  The consequence is that interest rates will remain high just as long as the economy continues to expand. It has nothing whatever to do with the American deficit; it has nothing whatever to do with the exchange rate; it has everything to do with the Government's need to borrow from the non-bank public to control inflation. That should be spelt out very clearly, for it is wrong for the Chancellor to go about telling people that interest rates are coming down or that he hopes they will. They will not come down until bank lending comes down, and that will not happen until the economy itself slows down. I do not think that the Chancellor wants that.
  I do not think it is right that the City should know about over-funding and its consequences upon interest rates and that the rest of business and industry should not. It is also very important that when the banks start lending less money, and if the economy starts to slow down, the local authorities should then be encouraged to spend their money, and blow the PSBR.
  There are some things that could be done to increase supply, the most important of which is to repeal the Rent Acts. I believe that the Treasury has objections to that, and I dealt with them in the debate last month. Gas and electricity as well as water should be privatised. That would then allow the local authorities to spend as much of their capital receipts as they like under our present monetary conventions, apart from all the other advantages which privatisation would bring.
  I do not think that the tax system is being used as it should be used to help unemployment in the regions. I should have liked to see a differential national insurance contribution or, for example, no contribution for young people in the regions.
  It is not enough to say that the control of inflation is sufficient in itself as an economic policy, or even the best way to reduce unemployment in the long run. Of course I recognise what is being done in training for the young, and for the long-term unemployed, but there are all kinds of rigidities in our system which need to be removed.
  I have mentioned some of the rigidities—for example, the 100,000 acres of land for development held by local authorities and other public bodies which should be sold or given away. Just as a licence to print money is no kind of economic policy, so controlling the monetary aggregates is not a sufficient policy.
  The Bill is, on the whole, a disappointment in comparison with what it might have been. If the United States can contemplate a major reform of its tax system, so can we. I think that the Chancellor could and should have done better, and I hope that he will do so next year.
  6.29 pm
  Mr. Robert N. Wareing: It could be argued that the principal feature of the Bill is that it flows from a Government economic policy which is based on the outmoded theory that the answer to unemployment is lower taxes and, principally, lower real wages. In his Budget statement the Chancellor of the Exchequer said:
  "We cannot even prevent trade unions from pricing their members out of a job."—[Official Report, 19 March 1985; Vol. 75, c. 791.]
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  He argued vehemently, as he has done on many occasions, that workers have a responsibility to price themselves into work. He has used the argument that reduced consumer demand, which came about as a result of wage restraint, would be quickly offset by increased company spending. There is no evidence whatsoever that lower real wages would lead to firms substituting labour-intensive production processes for capital-intensive systems.
  Over the past 20 years manufacturing has increasingly involved the use of high technological systems which displace labour. Investment has often meant the displacement, not the replenishment, of labour. It is unlikely that reductions in real wages, which are an intrinsic part of the Government's policy, will lead firms to jump back into large-scale labour-intensive assembly plants, which were the feature of the economy during the 1950s and, to some extent, the 1960s.
  If low wages will encourage the creation of more jobs, we must bear in mind the fact that wages paid to manual labour in the Third world are about one fifth of the cost of wages of manual labour in the United Kingdom. Large multinational corporations have sold our country short for decades by taking capital created by working people and investing it in low-wage economies such as Taiwan, South Korea, Brazil, and supposedly democratic South Africa—so dear to the hearts of Conservative Members. We are hardly likely to see that capital flowing back to the United Kingdom under the regime which the Chancellor of the Exchequer believes or says he believes to be the answer to our unemployment problem. All too often the motive for new technology is not to improve the living standards of working people, nor even to control labour costs. New technology is used as an instrument to control labour itself.
  In his Budget statement, the Chancellor of the Exchequer gloated that in 1984 investment rose by 13 per cent., and that that was the biggest single increase in any year since 1973. However, he did not say what that 13 per cent. was 13 per cent. of. We know that in 1984 manufacturing investment was 25 per cent. lower than when the Government came to office in 1979. Indeed, manufacturing investment was even lower than during the three-day week under a previous Conservative Government. The latest figures of the Organisation for Economic Co-operation and Development show that United Kingdom capital investment per head in relation to gross national product is one of the lowest in the developed world. That is where the Government's economic policies have led us, and where we shall continue to be led by Budgets of such an uninteresting nature.
  In his bid for lower wages, the Chancellor of the Exchequer also said:
  "Wages councils destroy jobs by making it illegal for employers to offer work at wages they can afford and the unemployed are prepared to accept."—[Official Report, 19 March 1985; Vol. 75, c. 794.]
  I wish that wages councils had been as efficient in increasing minimum wage legislation as the Chancellor says. Their success has been limited because of a lack of resources. I would complain, not that wages councils have been too successful, but that they have dealt inadequately with the problem of policing minimum wage legislation.
  If it is argued that lower real wages mean more jobs, why is it that in my area of Merseyside we have low wages and the highest rate of unemployment in the entire country—20 per cent. unemployment? The Merseyside

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  chamber of commerce, which is not a body which will ballot for affiliation to the Labour party, stated that the loss of special development area status has had a larger negative effect in Merseyside than any positive actions that may have been in the Budget.
  Low wages are the real problem. I have in my possession a copy of the Merseyside county council report on working insecurity. It relates to the abysmally low wages which are paid in that area of high unemployment. I can give the example of a security guard who must work for more than 100 hours a week for less than he would get on the dole. I can tell the House of a security officer who works 80 hours a week on permanent night duty for £73·10 a week. His place of work has no adequate toilet facilities, and he is provided with a plastic bin bag. Another worker works from 7 in the evening to 7 in the morning for six nights a week, yet is classed as a part-time worker. Those are the abysmal circumstances which people face in an area of high unemployment and in a trade which does not have a well organised trade union.
  It has been argued that lower real wages will increase the international competitiveness of British goods. Again, that is a simplistic argument. It ignores the other issues which arise internationally and which are outside the control of the British Government. The United States visible trade deficit increased from $28 billion in 1981 to $123 billion in 1984. That has resulted in protectionist pressures in Congress, where 20 per cent. tariff barriers are being called for. Who is to say that President Reagan will not give in to such pressures? The other factor which must be borne in mind is that the fortunes of the dollar are likely to be reversed—perhaps we are seeing some evidence of that already—in 1985, possibly with damaging consequences for the export trade of many other countries, including the United Kingdom.
  We are told by the Leader of the House that if we continue with the policies that are reflected in the Finance Bill, we can expect a reduction in unemployment by the end of 1985. Not one reputable economic institution is willing to back that claim. None expects a lower unemployment figure than 3·2 million by the end of this year. Only Professor Minford, the Thatcher clone from Liverpool university, expects it to be lower. He suggests an estimated figure of 2·8 million unemployed by the end of 1985. I am not sure whether Professor Minford is a Thatcher clone or whether the Prime Minister is a Minford clone. However, they appear to see eye to eye. If Professor Minford's estimate is to come about, there will have to be an increase of 650,000 jobs, allowing for this summer's school leavers. I can see nothing to suggest that 2·8 million unemployed is a feasible figure, given the Government's policies.
  Mr. Richard Page: Purely for the purpose of the record, my right hon. Friend the Member for Shropshire, North (Mr. Biffen) said that that would be achieved within the lifetime of this Parliament, not in 1985.
  Mr. Wareing: That gives him a little breathing space but I see no evidence that unemployment is falling. It will have to shape up before the end of 1985 if his estimate is to come about.
  When I hear Conservative Members such as the hon. Member for Kettering (Mr. Freeman), who intervened during the speech of my hon. Friend the Member for
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  Sheffield, Attercliffe (Mr. Duffy), suggest that it is better to have the YTS with no jobs at the end than to have no YTS at all, I retort that one of the purposes of the YTS is to depress real wages. One of its objectives is to ensure that younger, cheaper labour takes the place of older workers in industry. When I said that the Government might believe that joblessness can be dealt with by lower real wages, I was assuming that the Government's aim is not to reduce unemployment, rather that they believe that unemployment is a vehicle of their economic policy for disciplining labour in this period of recession.
  I listened with great interest to the speech of the right hon. Member for Guildford (Mr. Howell). He appealed to Labour Members for more compassion. He said that we should have more compassion for tax reforms which reduced taxes not only for the rich but for people lower down the scale. I have news for him. That compassion has been revealed in the Labour party in motion after motion condemning the Government's policies on higher gas and electricity charges and water rates, and their attacks on local authority expenditure levels and the transport supplementary grant. All that has meant higher taxation in terms of real prices for many British people. The people whose shoulders now have to bear the effects of those policies are not those who are best capable of doing so, the richer section of the community, but the poorer members of our population. They are the ones who are made to suffer so that the Government's policies can be carried out.
  The Labour party must pursue and propound Socialist economic policies. I listended with interest to the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) eulogising the work of the Employment Institute, but let me issue a warning to some of my comrades in the Labour movement, including my right hon. and hon. Friends in the House. Although it is true that we can create more jobs by building up the infrastructure, by dealing with the outmoded sewerage system, by producing better roads and schools and preserving our NHS, and by improving the social benefits which are likely to be under attack in the next few weeks when the Government have the courage, after the county council elections, to come forward with the social security reviews, we cannot tax ourselves into a more just society. We cannot create Socialism out of taxation.
  If we leave untouched the great multinational conglomerates which dominate our economy, we shall be faced with the same problems as faced our economy during the 1960s and 1970s. The solution for Labour Members must be for a speedy interpretation and implementation of Socialist economic policies which will bring industry under democratic management and accountability.
  6.45 pm
  Mr. Nigel Forman: I do not intend to follow the hon. Member for Liverpool, West Derby (Mr. Wareing) along the lines that he was arguing. However, I cannot resist the temptation to say a word about the speech of the right hon. Member for South Down (Mr. Powell), even in his absence. It was clear, listening to his interesting and somewhat amusing speech, that he was setting the House of Commons an exam, answering his own questions and then awarding himself a starred first as a result.
  May I humbly sketch the outline of a couple of points in answer to some of his questions? He might find the locus classicus answer—I deliberately put it that way

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  because I know what a great classical scholar he is—to one of his conundrums about the Government's monetary policy in Hansard column 789 of the Chancellor's Budget statement. I say no more than that.
  Secondly, I make the political comment that we as politicians recognise that it is in some strange way, although it might not seem to be the case to a logician, more difficult to nudge, push, cajole or force inflation down from 5 or 6 per cent. to what is called in the jargon stable prices, that it is, paradoxically, to get inflation down from 20 per cent.-plus to 5 or 6 per cent. I do not have the time to outline my reasons for saying that, but there are some powerful political and social reasons for saying so.
  I welcome the Budget and hence the Finance Bill which flows from it, especially, if I might say so in a slightly Irish way, that part of the Budget which is not in the Finance Bill—the restructuring of national insurance contributions in favour of the lower paid, which I warmly commend to the House.
  As many of my hon. Friends have said already, this year's Finance Bill is much less controversial and exciting than last year's. The reason is easy for us all to see. Its final shape was and is very much the result of the period of intensive lobbying that we all underwent over the few months leading up to the Budget which made it effectively politically impossible at that time either to make significant changes in the range of tax expenditures—I am thinking in particular of ways of cutting them back—or significant extensions to the VAT base.
  Like my hon. Friend the Member for Horsham (Mr. Hordern), who made a most interesting speech, I regret the fact that the Chancellor was forced to bury the radical and reforming instincts of his first Budget in this, his cautious and responsible second Budget. We all understand the reasons for that and I shall not weary the House by repeating them, but it is a matter for regret that it was the case. I hope that the change of character and temperament which appeared to be the case in this year's Budget will prove to be only temporary and that he will make a speedy recovery from his illness, if I may put it that way.
  I hope that after the various decisions on social security, which I believe will be announced shortly, and the Green Paper on personal taxation, which we understand from the Budget statement is to be made available by the end of the year, the Chancellor will feel free to revert to his true self and that Dr. Jekyll will triumph over Mr. Hyde.
  The purpose of my brief speech is to put down a few markers about what I should like to see in future Finance Bills when the time is riper for the Chancellor to be more radical. I agree with my hon. Friend the Member for Horsham that we need an income tax structure characterised by lower average rates of tax—I stress the word "average"—a benefit structure characterised by more generous and specific help for the genuinely needy, and a combined tax-benefit system that could eliminate much of the present bureaucratic churning and duplication between the Inland Revenue and the Department of Social Security.
  Fundamental reform of personal taxation along almost any lines must take one of two broad directions. At some point one is bound to reach a fork in the road and to have to decide which road to take.
  I will not characterise the roads as left or right. I will leave it to hon. Members to draw their own conclusions.
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  On the one hand, we could strive heroically over a number of years to separate income tax payers from social security beneficiaries, as at the time of the Beveridge report of 1942 and before the last war. We could attempt to create a vast distance of clear water—in boat race terminology—between the point at which one entered income tax and the point at which one no longer qualified for social security benefit. That approach is remarkably reminiscent of the 19th century principle of less eligibility which originated with the Elizabethan poor law and, although something of a historian, I do not find it very attractive.
  The approach would achieve certain savings on social security, but on the other side of the account it would entail forgoing income tax revenue, and that would be a matter of concern to my hon. Friends on the Treasury Bench. It would be costly in social terms. The efforts necessary to achieve the stretch of clear water would be painful in an old and well-established society such as ours, where vested interests are fixed like barnacles on the bottom of the political boat. It would also be costly in economic terms. According to the Treasury's figures, it would cost about £2,150 million in a full year to raise all the income tax thresholds on the personal side by 10 per cent. in real terms, and that would have to be done on a sustained basis over a number of years in order to achieve the desired effect. On one point, I agree with the right hon. Member for Birmingham, Sparbrook (Mr. Hattersley). It would be better and more cost-effective to raise child benefit significantly, if one were concerned about family poverty—about the area where the poverty trap bites most acutely. Broadly speaking, therefore, I am not enamoured of the clear water route towards solving the problem.
  On the other hand—this is my preferred route—we could attempt a clear and honest integration of the income tax and social security systems based on the eventual introduction of a new, computerised, single tax-benefit system. That would involve a gradually increasing burden of income tax above the line, and a gradually increasing amount of benefit below the line, up to certain predetermined maxima in each direction which would have to be set at relatively modest levels.
  Such a system would be much simpler than the present system. It would be elegant and symmetrical, and it would be compehensive. It would not, however, entirely eliminate all poverty traps. As I have argued elsewhere, it is a chimera to think that one can, or should attempt to, eliminate all poverty traps. There should be higher social priorities than that. However, we need to pay attention to the poverty trap, because it is a matter of acute concern to those who have the misfortune to be caught in it.
  How can we mitigate the poverty trap, while accepting that we cannot eliminate it entirely? One possibility would be to have a significant band of income—perhaps between £60 and £100 a week before tax—which attracted neither taxation nor benefit. That could create a genuine stretch of clear water. We could index each of those thresholds against the possibility that we might have the misfortune to suffer from inflation in the future. We could guarantee that amount of clear water where the tax-benefit position would follow a median line before branching off either to the payment of income tax or to the receipt of benefit.
  If the system that I endorse were to work satisfactorily there would be a need for two other prerequisites. It would imply a consolidation of national insurance contributions into the income tax structure. Hon. Members may ask

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  what would happen to the employers' contribution. As has been said, that contribution is already effectively a payroll tax upon employers. We would merely have to recognise that fact.
  Secondly, it would be important in any integrated system that every adult taxpayer should have a single transferable tax allowance, so that a typical family would have two individual tax allowances. The present spread between those who have one and a half allowances and those who have two and a half would disappear.
  Such a system would prove more acceptable if the tapers were as gentle and simple as practicable within a structure that contained only a few modest rates of taxation and only a few generous and consolidated social benefits. I take heart from leaks in the newspapers that suggest that the social security review will tend towards a more generous and certainly a more consolidated system of social benefits. I recommend such simplification.
  As my hon. Friend the Member for Horsham wisely said, we must learn from across the Atlantic and note the advantages provided by the existing American tax system, let alone by any future system consequent upon present legislative changes. We must attempt to reach a position similar to that outlined by President Reagan's Treasury Department, where there is a higher threshold before one enters tax, fewer tax allowances, fewer bands of tax and a modest top rate. With a structure on those broad outlines, one would probably find—as my right hon. Friend the Member for Guildford (Mr. Howell) also said—that more revenue was raised than with a peaky tax system on a very narrow base with high marginal rates. What is of key importance is the average tax rate and the average tax burden, rather than the marginal rates. As a further advantage, the integration of the Inland Revenue and the DHSS bureaucracies that I have described would probably result in significant administrative savings.
  Such a bold plan would be bound to have political implications. Reform always has. However, the political price of funking reform could be equally great. The main disadvantages would obviously be, from the political and social point of view, the loss of non-means-tested benefits for those on average income and above. They would find that they could no longer claim child benefit, maternity allowances and similar benefits. There would also be the loss of the married man's tax allowance and the fairer redistribution of that allowance throughout the income tax structure in the way that I have described in detailing the single transferable tax allowance.
  The advantages would be infinitely greater. The present Government and future ones would be able to reduce the burden of income tax at all levels of income. That must be one of our strategic objectives. Social benefits could be more attuned to real needs and, I hope, more generous when they were identified. The combined system would be simpler and cheaper to administer. Above all, it would be more in accordance with some rational principles of social justice such as I would like to see injected into these matters.
  Such changes would require great political courage, but it should be possible for this Government of all Governments to press ahead in that direction and to make the changes in a suitably phased way to cushion the losers. We should make no mistake about it, there would be some losers, but nothing that is worth doing is worth doing other than properly. As long as we are honest with people and phase the changes, the plan could be achieved.
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  The Government should outline proposals such as I have described in the coming year, seek a mandate for them as a central part of our manifesto at the next general election and, if re-elected, as I confidently believe we could be, implement them in the first two years of the next Parliament. It would therefore be somewhat unwise to legislate prematurely and pre-emptively on social security in the coming Session, as I gather might well happen, in advance of substantial decisions on personal tax reform, which I cannot envisage being presented to the House before 1986–87 at the earliest. At the very least those two reforms should be brought forward in parallel, so that they are compatible and make a sensible overall change.
  We must focus on average rates of taxation rather than marginal rates in this and future Finance Bills. I deplore the fact that marginal rates of tax have been something of a political obsession for too long. They have been an obsession for the Conservative party because of our fascination with the argument about incentives, which is often misplaced, and they have been an obsession for the Labour party because of its fascination with issues to do with distribution and redistribution without asking often enough how to create fresh wealth and income.
  A sensible Government will concentrate on a system such as I have described. This is our last best chance to do this sort of thing, as computerisation will come in soon. The system would be based on the clear principles of equity, efficiency and simplicity, and be a great boon to the British people.
  7.2 pm
  Mr. Ian Wrigglesworth: I congratulate the hon. Member for Carshalton and Wallington (Mr. Forman) on making bold suggestions about what the Government should do. They bear a strong resemblance to proposals that I and my colleagues have studied recently. There might be some differences, but the general thrust of what he said is similar—as he will know, because he is a great expert on these matters—to what our group under Dick Taverne, the former Financial Secretary to the Treasury, has examined. The group led us to propose at the last general election that we should introduce a basic benefit as a first step towards an integrated system such as the hon. Gentleman suggested.
  The general tenor of the hon. Gentleman's speech bears out the most striking feature of debates on the Budget. I have not counted them but the majority of Conservative Back Bench speeches have opposed the Government's economic strategy. A range of Conservative Members present, and others who are not here today, have consistently opposed the Government's strategy. Again and again we hear the baleful hope that, next year, there will be a change in strategy. I must tell those Conservative Members that the strategy will not change until votes change it. The votes could be in the House, and produce change more rapidly, or outside it. If hon. Members want the strategy to change, they will have to put their votes where their mouths are. I hope that they will forgive me for being blunt, but many of us, who agree with much of what some Conservative Back Benchers say, wish that they would take more action.
  Perhaps I might echo what my right hon. Friend the Member for Glasgow, Hillhead (Mr. Jenkins) said in the Budget debate. I hope that Conservative Members will not leave it until too late. They might regret the social and

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  economic conditions that are to be found in many parts of the country, but they will bear part of the blame if they do not act to change the Government's economic strategy.
  Like others, I find the Finance Bill disappointing. I should like to join the Select Committee in criticising the methods by which we debate changes such as these. We have had other similar legislation and tomorrow we shall have an archetypal example of the wrong way in which to introduce legislation. I refer to the Insolvency Bill. Hundreds of amendments, many of them Government amendments, are being introduced in another place when there should have been a full opportunity for all interested parties to comment before parliamentary proceedings started. We have new procedures to enable draft clauses to be considered. I hope that the Select Committee's proposals about procedure will be taken into account still further. The Government have moved somewhat, but I hope, for the benefit of the country and of good legislation, that they will move further and prevent neurotic debates such as we had before the Budget on the taxation of pensions and other matters, which helped nobody.
  The Select Committee report confirms how deflationary the Budget and the Bill are. The Select Committee bears out the criticisms that I and my colleagues made immediately after the Budget concerning the £2 billion increase in the contingency reserve. The figures show clearly that this strategy will further tighten fiscal and monetary policy. That is quite wrong at the moment in view of our domestic circumstances and international ones.
  It is regrettable that our fears when we first heard the Budget statement have been borne out, and that it offers no hope to the unemployed that there will be any early change in the direction in which the unemployment figures have been going in recent years. That is borne out by the forecasts which various city institutions have been making—I think of Hoare Govett and of Simon and Coates—of increases in unemployment in the period ahead. That is an abysmal state of affairs for the unemployed to have to face and in our view a quite unnecessary one.
  My other comment is on the subject mentioned by the right hon. Member for Guildford (Mr. Howell) about the international scene. The passage of time since the Budget has demonstrated how tragic it was that the Government did not take steps to enter the exchange rate mechanism of the European monetary system. Unfortunately, they have probably missed the boat. Certainly they have missed the negotiating boat because the exchange rate has changed and moved against the pound. I see that today it is knocking on 80 on the index and that the deutschmarksterling rate has gone against us. If we had started negotiating months ago we could have gone in in a much more advantageous position than if we started negotiations today. Helmut Schmidt is to make a speech about this in London this week and will be bearing out the views of Paul Volcker, the chairman of the Federal Reserve Board.
  To compensate for what is happening in the United States, if the United States Government are to rein back on their budget deficit, Europe should lead the way in a concerted effort to take up some of the slack that there will be as a result.
  We would benefit enormously from having the British pound in that exchange rate mechanism. The European Community could play a much bigger role in the economic
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  world than it is at the moment. It could help to increase stability. It was part of our proposals in the anti-inflationary package that we felt was necessary if we were to expand the budgetary policy in the way that we proposed at the time of the Budget. It is most regrettable that the Government have not moved on that before now.
  The hon. Member for Mid-Norfolk (Mr. Ryder), who is no longer with us, made a remarkable speech. He spent all his time commenting on the Budget proposals put forward by the alliance. If that had been the subject under discussion today I should have been delighted to enter into a debate about our Budget priorities published at the time that the Chancellor of the Exchequer made his proposals to the House. My hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) referred to those, but I come back to them because we have seen some remarkable contortions from the other Opposition party both at the time of the Budget and since.
  I say to the hon. Member for Mid-Norfolk, in his absence, that although he may not agree with some of our proposals and priorities, at least we took the trouble to test them on a widely respected economic model and to test out the consequences of the changes that we proposed. It was from the work that we did on that model that we were able to produce the PSBR figure, which he criticised, of £8·9 billion and which we believed, if anything, was a very modest PSBR considering the current circumstances.
  All that I say to the hon. Member for Mid-Norfolk is that if he wants to contrast our figures with others, he should look at the Labour party's proposals. We have seen a terrible exercise in deception by Labour spokesmen, with figures being plucked out of the air, including a fall of 1 million in the level of unemployment in two years. We have seen PSBR figures plucked out of the air as well. None of them add up, and they all lead to the conclusion that they simply would not work.
  Mr. Higgins: The Red Book forecast for the per centage change in GDP in 1984–85 is 3·5 per cent. What are the figures under the hon. Gentleman's proposals?
  Mr. Wrigglesworth: To answer the right hon. Gentleman's question I shall have to run through the various figures that we put into our Budget proposals. We went further than producing just the ones that we chose. We produced the five different simulations that we tried on the economic model so that people could see the consequences of the different options. The PSBR figure of £8·9 billion net was £1·9 billion above the forecast by the Chancellor of the Exchequer for the forthcoming year, and it can be cut by another £2 billion because of the increase in the contingency reserve. I hope that I shall be able to lay my hands on the growth figure, but I had probably better not delay the House by searching for it amongst my papers now.
  I mentioned the Labour party's proposals because one of the biggest holes in what the Labour party proposed at the time and one of the biggest holes in the Government's economic strategy is on the pay front. We hear a great deal from the Chancellor and other Ministers about the level of pay settlements. Looking at various reports such as those coming from Incomes Data Studies and the CBI and the various settlements being made at present, it is clear that the rate of settlements is creeping up. The latest CBI figures show pay increases of between 6·25 per cent. and

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  6·5 per cent. It is creeping up and up. If it continues, it will have a considerable impact upon the Government's forecasts for the year. Yet there seems to be no alternative other than exhortation from Ministers about the threat of further unemployment and higher inflation. Little action is being taken other than squeezing the economy even tighter to try to stop that occurring.
  From the Labour party we have vague words about some sort of agreement with the trade unions, with no flesh being put on the bones and no real acknowledgement that this is the one major area which the country has found to be a problem year in and year out.
  We put forward proposals which we believe would help to deal with this problem. We believe that they should be introduced by the Government to contain pay increases that both damage the employment prospects and give rise to the fear of inflation. We propose both a system of pendulum arbitration built into agreements and a suggestion for an inflation tax. I shall not go through those proposals now, but we believe that the Government and all those who take a serious interest in these matters and are prepared to face the consequences of what they say must accept that pay increases are going up, that if the economy is expanded the danger of those pay increases taking off is great, and that some policy must be introduced to contain those pay increases if the entire exercise is not to be aborted by high inflation and lost job opportunities caused by people taking pay increases which, in effect, are losing other people their jobs.
  I hope that we shall hear from the Financial Secretary about the level of pay settlements and the Government's attitude towards them. Unless they are able to respond in some way and stop pay increases taking off at an even greater level than they have been over recent times, it is clear that even the levels of increased unemployment that such people as Hoare Govett and Simon and Coates are forecasting will be outmatched as a result.
  7.20 pm
  Mr. Richard Page: Today, we begin the technical process of converting the rather broad strategy of the Budget into reality. I shall not detain the House long. One of the advatages of speaking at this stage of the debate is that many of my colleagues have done me the courtesy of making most of my points. I do not propose to gallop over those points too often with great intensity.
  Last year I was struck by a remark by my right hon. Friend the Member for Worthing (Mr. Higgins) when he said that a Budget greeted with acclaim on Budget day can look very different on Second Reading. I believe that this Budget, which was well received on Budget day, will look even better as the year progresses. I am one of those who do not want a series of dramatic Budgets; I prefer a steady economic regime, because the companies and people who must operate under the financial laws that we lay down prefer a degree of continuity from year to year. They do not want something similar to the four Budgets a year that came out under the Labour Government between 1974 and 1979. They want stability so that they can plan ahead.
  Despite the cheap sarcasm of the right hon. Member for Birmingham, Sparbrook (Mr. Hattersley), I believe that my right hon. Friend the Chancellor was right to make unemployment the taget to hit within the Budget. We must achieve a reduction in unemployment or we shall be the victims of the self-same campaign as we successfully
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  waged in 1979 with the slogan, "Labour isn't working". It will be no good Conservative Members arguing that changing working patterns are responsible for unemployment, that the demographic profile is working aginst us, that the black economy means that there really are jobs or that the highest percentage of the population in work is higher in Britain than in the rest of Europe. That being true will not mitigate the fact that the benchmark of success in the next general election will be the level of unemployment, just as the level of inflation was the benchmark of success in some past elections.
  The demographic profile after the next general election will start to turn the other way. Although that will mean a huge pension problem in the early years of the 21st century, it will mean also guaranteed success for the next Government in terms of unemployment figures. I am not pessimistic about achieving a fall in the unemployment figures. Even before this Budget and this Finance Bill have had a chance to work, the number of people in work has increased. During the last general election it would have been difficult to believe a person who had said, "I promise that under our policies half a million more people will be in work 18 months into the period of the next Government." In fact, that is exactly what has happened. Half a million more people are in work than at the time of the last general election. That increase is offset by the increase in the national work force as those leaving education exceed the numbers aging into retirement I welcome the efforts in the Finance Bill to attack unemployment, especially the efforts to erode the poverty trap and launch an assault on the "Why work?" syndrome.
  It is not necessary to outline the objections to the present interplay between income tax and benefits, except to say that morally, if for no other reason, it must be right for it to be more advantageous for someone to work than not to work. I believe that every hon. Member would agree. The only argument must be about the size of the advantage to be gained from working rather than not working. Should it be £5 or £10 a week? I sympathise with the Treasury team about the fact that the room for manoeuvre in this direction was dramatically curtailed because of the antics last year of the leader of the NUM. I, too, live in anticipation that next year there will be a further step to lessen the gap.
  During debates on previous Finance Bills I have made several pleas regarding the whole sector of small business activity, and tonight will not be an exception. A major cause of our unemployment problem is found in the past treatment of our small business sector.
  Mr. Wareing: I am pleased that the hon. Gentleman wants to lessen the gap that separates those who are out of work and those who are in work but are poorly paid. The hon. Gentleman may have heard some of the examples that I gave. How would he solve the problems of a security officer in Liverpool who is employed for 80 hours a week for £73·10? Does the hon. Gentleman advocate giving higher pay to that security officer? If so, how will that be arranged? Will it be done through, for instance, wages councils? Is the opposite the case? Does the hon. Gentleman want an erosion of the present disparate levels of social security benefits?
  Mr. Page: To give a full answer to the hon. Gentleman's questions I should have to run through a series of examples showing how a tax benefit system

  75
  would work. My hon. Friend the Member for Carshalton and Wallington (Mr. Forman) in his valuable and important speech spent considerable time revealing just one method by which the system could work. We have the computer technology to put into effect a system whereby a person could go to work and be paid by his firm, and could, if he was due to receive various benefits from the state system, receive those benefits in the form of negative income tax. He would come away from his 80 hours of work with considerably more money and would not have to go to the state to ask for a particular type of benefit. That would be an immensely simplified system.
  Mr. Wareing: Does the hon. Gentleman agree that that smacks a little of the old Speenhamland system? It would encourage employers to pay low wages. If employers pay low wages, they know that the loss to the employee will be made up out of all the jiggery-pokery of the income tax system. Is that not a recipe for lower wages?
  Mr. Page: Any scheme can have disadvantages. The ordinary taxpayers would have to be protected from that disadvantage. They could not be expected to finance artificially low wages and high benefits. Although I would be delighted to discuss this matter in greater detail, I must progress to the other aspects that I should like to put forward.
  I return to the small business sector. One of our problems is that we adopted a neglectful policy towards small businesses 10 or 15 years ago. People believed that bigger was better and the lack of small business creation at that time has resulted in our not having the number of companies that should be employing 300 or 400 people today.
  The nature of the state is changing and the old patterns of state ownership and intervention are dissolving. Therefore, the role of small businesses has become much more important, especially with the arrival of the microelectronic age. If we are to provide the employment required by those changing patterns, we need the flexibility and adaptability of small businesses. That puts a responsibility on us to reduce as much as possible the burdens imposed on those businesses.
  There is no doubt that the level at which VAT has to be paid results in an unnecessary and bureaucratic burden that is way out of proportion to the activity of many small businesses. More important, the collection of VAT at present levels is uneconomic for the Customs and Excise. The Keith report mentions the economic aspects of VAT collection and we should not let the loss of an opportunity to increase VAT exemption limits go unremarked.
  I am told that the current economic level for the imposition of VAT is £50,000. I see no reason why we should not increase the exemption limit to that level. I know that it would cause difficulties with the European Community, but it is our economy and our income. The exemption limit should be raised.
  Mr. William Cash: Does my hon. Friend agree that the inquiry into the burdens imposed by legislation should be vigorously pursued between now and the autumn? We have some good ideas in the pipeline, but we want action as quickly as possible.
  Mr. Page: I agree with my hon. Friend. I do not know what I have done to deserve being led away from the points
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  that I want to make, but I agree with my hon. Friend that anything that we can do to reduce the bureaucratic load on small businesses should be encouraged. My plea for an increase in the VAT exemption limits comes in that category.
  I welcome the extra category—research and development—that has been introduced into the business expansion scheme. Research and development are vital if we are to keep up with changing technology. I am glad that the Treasury has blocked people involved in property development. The scheme was not set up for such people.
  However, while welcoming improvements in the scheme, I hope that we can further improve its operation, especially by broadening the categories of those who can invest in various schemes. I am sure that the extremely attractive scheme is being only partially used. Allowing a more direct line of investment within a family would provide further expansion and more employment prospects.
  I am worried that some people may be investing in the business expansion scheme through investment companies that are not finding too many schemes in which to place relatively large sums of money. The business expansion scheme is an imaginative initiative and I hope that it will be given as much publicity as possible.
  I am delighted that my right hon. Friend the Chancellor of the Exchequer got rid of development land tax. It was a stupid tax which retarded development and drove up property prices. We are well rid of it.
  I am also grateful for the changes in the writing down of short-term assets. The solution will be widely welcomed by companies engaged in some of the new technology on the new frontiers. If they want to stay in the game, they have to change machinery and equipment at a much faster rate than we have seen in the past.
  I believe that the Budget will be increasingly appreciated as the years go by. It is a sign of the stability in our economy and I look forward to its provisions being implemented in the Bill.
  7.36 pm
  Mr. Harry Cohen: There is a joke about the Budget which takes the form of an extract from Hansard. A Conservative Member asks the Chancellor of the Exchequer. "What about the £3,000 million of tax cuts you promised us?" The Chancellor replies, "£2,000 million of tax cuts? I never promised £1,000 million of tax cuts."
  There were no tax cuts in the Budget. Indeed, the increase in the tax burden since 1979 has been about £22 billion, with the highest proportion falling on those with average or below average earnings.
  The Budget and the Government's policies will have no impact on unemployment, despite £13·5 billion of revenue from North sea oil this year. The Government get more from the oil in five days than the Labour Government got in five years. That money is being squandered to cover up the shambles that the Government have created in the rest of British industry.
  Unemployment is the Government's central weapon of fear and they use it to ensure that pay is kept low so that the private profits of the few big companies and multinationals are kept high. The attacks on trade unions are part of that strategy. That is why tackling unemployment is such a low priority for the Government.
  Mr. Freeman: The hon. Gentleman's remarks prompt me to refer to the report on the Budget by the Select

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  Committee on the Treasury and Civil Service, which refers specifically to the defect of the Budget on employment. Paragraph 44 points out that advisers to the Select Committee forecast that the national insurance contribution changes alone will have a net effect on employment of between 150,000 and 160,000.
  Mr. Cohen: I know a great deal more than the hon. Gentleman about the consequences of the Budget and the Government's economic policies on unemployment in my constituency. I shall mention the national insurance changes later.
  The Government claim to want to leave the economy to the market, but they do intervene—not to create jobs, but to enable greater employer exploitation of workers. The contradiction in that is fundamental. In the prevailing economic circumstances, the Government can never create full employment and maintain the domination of the bosses. That unfair domination, which is reflected in low wages, worsening conditions for workers and unemployment, is so unpopular that those who promote it will be swept aside. The Tory wets know that and are worried about it.
  The Budget and the Government's policies will do nothing to increase employment. The Government continue to hurt ordinary people with their economic and political measures. Some of them were presented in the Chancellor's cosmetic Budget exercise. Cuts in the National Health Service and in local government are still part of the economic strategy. I could give countless examples of those cuts. I shall give an example which affects local government in London. Between 1979–80 and 1983–84 the Government cut the rate support grant by £1·533 billion, the housing investment programme by £2·257 billion and housing subsidies by £791 million. Those cuts total £4·581 billion. It is no wonder that Londoners face higher rates, housing decline and increased unemployment.
  Charges are also up. Since 1979, prescription charges have increased by 1,000 per cent. They are a tax on the sick. Fares, rents, mortgage rates, electricity, gas and petrol have all been forced up to levels which are well above the rate of inflation. Those increases were not presented in the cosmetic Budget. The purpose of the social services reviews is to produce benefit cuts. It is inevitable that the Government will introduce benefit cuts because they are concomitant with their strategy of forcing individuals into low-paid jobs.
  It is appropriate that we are having the debate today, because one of those benefit cuts has already come into operation. It represents the Poor Law for our homeless youngsters. The Government are repeating what the Poor Law said: "Get out of this village and go somewhere else." The Government are forcing youngsters to move from area to area to obtain benefit for decent accommodation. They are turning them into gypsies. Many more horrible benefit cuts will come from the Fowler reviews.
  Low pay is central to the Budget. It is what the Chancellor and the Tory Right want for other people but not for themselves. Emma MacLennan of the Low Pay Unit outlined the current position of the low-paid in the current edition of Spare Rib. She said:
  "Most low-paid workers are women. Last year, nearly eight and a half million workers in Britain were earning less than the 'decency threshold' for wages specified under the European
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  Social Charter (£108 per week, or £2·75 per hour). Five and a half million of them were women, making up over a quarter of the entire adult workforce."
  Mr. Douglas Hogg: The hon. Gentleman has told us about 8·5 million people earning what he calls low pay. How many were part-timers?
  Mr. Cohen: I cannot give the hon. Gentleman the figure, but I have quoted from someone who knows the figures. Part-timers often receive low wages. When talking about hourly rates, part-time workers are at the bottom of the scale. The Government want to increase that figure of 8·5 million. They have introduced measures in the Budget designed to achieve that. They are increasing the taxes on spending. Emma MacLennan states in the same article:
  "On average a low-paid householder will pay an extra £1·10 in expenditure taxes … including prescription and water charges."
  There is a threat to the wages councils. They legally protect the wage levels of about 3 million low-paid workers, of whom 2·5 million are women. The councils set the rates in industries such as textiles and catering. The wage rates are a little over £l per hour. The workers in those industries are the Government's target and scapegoat. The Government make the ludicrous charge that they are overpaid. That is nonsense.
  Wages councils are not without faults. As my hon. Friend the Member for Liverpool, West Derby (Mr. Wareing) said, wages councils are not as effective as they should be because of the lack of enforcement. The Government's proposals will increase sweatshops because those employers who want to pay decent wages will be forced into bankruptcy by sweatshop competition.
  There is an expansion of the youth training scheme. I believe that it should be called CLUC—cheap labour under the Conservatives. To pay £26·25 for 40 hours is dreadful. Not one Conservative Member would work for those rates. What chance will a youngster have to build an independent life—as many want to—on that wage? There is no training. YTS does not offer a real job, and there is no job when the young people leave. There is also the threat of industrial compulsion. The Government threaten, "Either get on the YTS or lose your benefit." So much for the freedom which the Tories espouse so strongly.
  The hon. Member for Stafford (Mr. Cash) is not in his place to hear my comments on the national insurance contribution restructuring. It was outlined in an article by Christopher Huhne in The Guardian on 11 April 1985. He said:
  "The restructuring of National Insurance contributions whereby the low-paid now face lower graduated rates of contribution, payable on all their income when they pass its threshold, will make it cheaper to employ the young and the unskilled. But it will make it a lot more expensive to give them pay rises in return for upskilling or seniority."
  In other words, it will be another low-wage poverty trap. None of the Government's theories about the low-paid pricing themselves out of a job to apply to the rich. The opposite theories apply to the rich. The Government call them incentives. They have cut taxes for the rich. I asked the Chancellor how much had been given to the top 5 per cent. since 1979. He replied that the official figures showed the figure to be about £3 billion. The truth was given by hon. Friend the Member for Oldham, West (Mr. Meacher) last Monday when he said that the figure was nearer £12·5 billion.

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  It is all right for the captains of industry to have big pay rises. The chairman of ICI has just been given a 68 per cent. pay rise. His pay has risen to £287,261 per annum. Recent research compared the pay of the 20 highest paid directors with the average wages of male manual workers. The pay of those 20 directors was the equivalent of the pay of 454 manual workers in 1979. Today, their pay is equivalent to the pay of 722 workers. The gap has widened.
  On 1 October 1984, The Guardian explained what really happened. Under the heading
  "Gradgrind Lawson prescribes the medicine that Charles Dickens scoffed at,"
  it stated:
  "the Chancellor is now setting his sights on reducing real wage increases so people can 'price themselves' back into jobs. For some reason not fully explained, this theory seems to work best among poorer people. Richer people need to have more money to release their 'incentives' from wherever they have been hidden.
  By salary and dividend curbs and, above all, by reducing the marginal rate of tax at the highest rates, Mrs. Thatcher has given what is probably the biggest increase to higher salary earners on record. Whether, five years later amid industrial devastation, low growth and record unemployment you can find tangible evidence of the justification of those incentives is another matter."
  The only consistency in the Government's approach is to give those who have more and to take away from the low paid.
  The myth about workers pricing themselves out of jobs was exploded recently by a Cambridge study, which showed that the poorest 10 per cent. of workers took a pay cut yet suffered most from unemployment. They followed the Government's advice and were hit most by unemployment. That is part of the Government's strategy for an enterprise economy similar to that in the United States.
  The census bureau in the United States recently showed that 30 per cent. of the population has to rely on welfare assistance. That figure is increasing. About 66,454,000 people need welfare assistance under the so-called wonderful United States enterprise economy. A recent Radio 4 programme entitled "Hunger in the United States" illustrated the problem that exists in the richest country in the world. The Chancellor wants to import that capitalist, enterprise economy to Britain.
  We need a different strategy. We need different priorities in all areas. Defence expenditure should be reduced to the proportion of GNP that it is in Europe. We should stop the waste of fortress Falklands, which costs us £3 million a day and the Trident programme which is costing £11·5 million. We must stop handouts to the drug companies and deal with the private drug cheats—which was mentioned during a Standing Order No. 10 application earlier today. The Government have put £75 million aside to hand out to Johnson Matthey if it asks for it. We must also stop bashing trade unions. The miners' strike cost £6 billion. We must reverse tax cuts for the rich and invest in worthwhile projects to create jobs. We must use our North sea oil revenues before it is too late.
  The Guardian of 15 October made a prophetic statement when it said:
  "the next generation will wonder incredulously how it was possible to have earmarked literally not a penny of the oil revenue windfall for modernising Britain's productive capital or infrastructure."
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  We must invest in the public sector because that will have a major spin-off for the private sector. We must invest in skills and in building up our manufacturing industry.
  Lord Weinstock and his friends complain about the decline of the manufacturing industry. Private capitalists are worried about that industry's rundown and the lack of training in skills. They believe that the decline is a hindrance to future wealth. The Prime Minister has not taken that on board. We should expand both manufacturing and service industries. Instead, the Government are imposing cuts on both industries.
  We must assist small businesses, to co-ops and municipal enterprises. Under this Government a record number of bankruptcies have occurred. Since 1979, about 55,000 firms have become bankrupt—that is, 26 per day. That is proof of the bankruptcy of the Tory Government's policies. The enterprise boards should be encouraged.
  Direct public ownership is at the heart of the economy. Major investment is needed to match our nation's needs for job creation. The selling of our national assets to spivs and speculators is a scandal and should be ended. That is the way to a fairer share-out of wealth and to properly paid work. The Tories, and their second eleven the SDP and Liberal alliance, are incapable of achieving that.
  7.57 pm
  Mr. John Maples: The hon. Member for Leyton (Mr. Cohen) spoke with feeling about the consequences of unemployment and low pay, but I shall not discuss those matters because I want to consider tax reform. I am disappointed that the Bill does not propose a comprehensive reform of personal taxation, but I am encouraged by the prospect of a Green Paper, which will provide the opportunity for a wide-ranging discussion on the options. I understand that the Green Paper will cover the waterfront in terms of personal taxation and that it will not deal simply with personal allowances.
  I hope that that Green Paper will deal with the basic options—the substitution of an expenditure tax for income tax, which was analysed in detail by the Meade report. I do not favour that proposal, but it is the only comprehensive alternative. I expect that the Green Paper will deal with what appears to be the preferred policy of the Treasury for raising tax thresholds. I can appreciate the objective, but it seems to be an expensive way of achieving that objective.
  In terms of alleviating the poverty trap, the proposition will take out of taxation few families with children. To make a significant impact on the poverty trap, the married man's allowance would have to be about £5,000 a year, which would cost about £11 billion. If we had £11 billion to play with in this game, many other options might be more attractive to the Government and to the electorate.
  The concept of broadening the tax base and reducing the rates has been mentioned by several of my hon. Friends. It is worth reflecting on what we are trying to do with the income tax system. We are trying to raise £34 billion in revenue for the Government as cheaply, simply and fairly as possible with the minimum pain to the taxpayer and the maximum fiscal neutrality. For such a system we need a minimum number of exemptions from tax and relatively low marginal rates. At present, the opposite applies. We have a relatively low average rate of tax. It would come as a surprise to most people in Britain to be told that income tax revenue as a proportion of total

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  personal income is only 14 per cent. That has been so for 30 or 40 years under Governments of all persuasions. The figure has gone up or down by a percentage point or two, but it has remained at its present figure for a long time.
  At the same time, the marginal rates are high. The combination of income tax and national insurance contributions for most people accounts for about 39 per cent. of each additional pound that they earn. For those on higher pay, the figure is 60 per cent. The reason is that, because of the plethora of exemptions from taxation, only about the half total personal income is taxed. Some bad consequences flow from the high marginal rates. I shall refer briefly to three of them.
  First, we are all concerned to alleviate the poverty trap. Theoretically, it can result in a marginal rate of combined taxation and loss of benefits of about 108 per cent. Of that, 39 per cent. is the combination of income tax and national insurance contributions. It might well be possible to make a more significant impact by reducing that 39 per cent. substantially than by raising tax thresholds to try to create the clear water mentioned by my hon. Friend the Member for Carshalton and Wallington (Mr. Forman).
  Secondly, for almost anyone in work in Britain, the marginal rate of tax and national insurance amounts to 39 per cent. of each additional pound that he earns, he keeps only 61p. If he works an hour of overtime for £5, £2 will be taken away. That is a disincentive and represents quite a substantial take out of very average and sometimes very low earnings. At the other end of the scale there are 60 per cent. tax rates. That hits those whom we seek to encourage because we think that they are a vital factor in the creation of wealth. If they earn an extra £5, £3 will be taken away in tax.
  Thirdly, I turn to the consequence of high marginal tax rates for pay bargaining. The combination of national insurance contributions and income tax means that it will cost an employer £1·81 to put an extra £1 after tax in an employee's pocket. That represents a significant contribution to industrial costs and a significant barrier to increased net wages. Those elements are all the result of high marginal rates of tax. The high marginal rates are made necessary because about half of personal income is not taxed. The great bulk of that is accounted for by personal allowances which are intended, of course, to exempt people on low incomes from tax. But in reality they exempt everyone else from tax on those parts of their income, so the tax rate that is charged on the balance has to be much higher than it would be if it was paid by those who should pay tax on every pound of their income.
  There are also the very politically sensitive subjects of mortgage interest relief and the exemptions from taxation for pension arrangements. They are made necessary largely by the high rates, because those who pay very high rates have demanded exemptions and we have seen an almost self-fulfilling circle. But despite the politically high profile of both of those exemptions—hon. Members on both sides of the House commenting on reducing mortgage tax relief have got into trouble—it is worth, when discussing a Green Paper on the reform of personal taxation, exploring the possibility of people being willing to give up those exemptions in return for a dramatically lower rate of tax. But they will want to know that they will not be worse off. If one asks people whether they are prepared to see their pension arrangements taxed differently, they will say that they are not, but if one asks them whether they are prepared to see those arrangements
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  taxed differently together with a reduction in the basic rate of tax from, say, 30 per cent. to 10 per cent., they may well agree. The tax structure could be dramatically different if we were prepared to do that.
  Rough calculations show that a basic rate of tax at 10 per cent. charged on every pound of income up to average earnings, a 20 per cent. rate of tax from average earnings to twice average earnings, and thereafter a maximum rate of 25 per cent. would produce £2 billion more in income tax revenue than the present system. There are, of course, a few problems associated with that which would have to be dealt with. The very low paid—those who earn less than half of average earnings—would be worse off. But they could be compensated fully at about the cost of that extra £2 billion. I suggest that that should be done through the social security system—through housing benefit or family income supplement—or, if we integrate the tax and benefits systems, that it should be done through that mechanism.
  In terms of pensions, the big losers will be the big gainers, because those who obtain the maximum tax benefit from the present taxation regime for pensions are also those who would be the biggest gainers if we cut tax rates to a 10 to 25 per cent. regime rather than a 30 to 60 per cent. regime. Therefore, there is not a lot to be lost. However, there are some other issues that need to be examined. For example, if we changed the tax arrangements, would they increase corporate costs and thereby industrial costs by requiring bigger contributions?
  Obviously, it is important to ensure that the present level of private pension provision continues, because if it did not, an immense burden would fall on the social security system.
  Mortgages are perhaps the most politically sensitive subject. I calculate roughly that, under this system, most people would be gainers, but there would undoubtedly be some losers and they would again be those on low incomes. However, they could be compensated at a cost of about £600 million. That could be done in a variety of ways, such as by phasing out the present system or by going for some other form of help for particular groups of people, such as those on low incomes, first-time buyers and so on.
  If we could solve those problems—which are important but relatively minor in the context of a substantial reform of the personal taxation system—we could get the same revenue from a dramatically lower rate structure. We would have achieved a cheap, simple and fair taxation system with much greater fiscal neutrality than at present. Earlier, I picked out three elements. Of those, the poverty trap would be reduced from a maximum of 108 per cent. to 88 per cent. Incentives would be increased, because the marginal rate for most people would fall from 39 per cent. to 19 per cent., and at the top of the scale it would fall from 60 per cent. to 25 per cent. The effect on pay bargaining would be that the cost of putting £1 net in the average person's pocket would be £1·36 instead of £1·81.
  I hope that the Green Paper will evaluate a proposal along those lines so that it could at least be a part of the debate. I think that people would give up their allowances and deductions for a 10 per cent. basic rate and a 25 per cent. maximum rate. It is politically attractive, and its consequences would be very beneficial both socially and economically.
  8.5 pm
  Sir Brandon Rhys Williams: I think that it is generally agreed that Britain has made less progress since the war than many other western industrialised countries. I am sure that the consensus is that this country's tax system is far from ideal and that that is one of the reasons for our lack of progress. I should like to feel that the Bill took a major stride forward in compliance with a long-term strategy for reform of the tax system. There is much that is good in it, but much more could have been done. In particular, the Bill could have done more about the relationship between Britain and the EEC.
  Britain's difficulty is that it is still too large, as an economy, to be carried along in a marsupial relationship with one of the other great economies, in the same way as Switzerland is carried along by its relationship with the deutschmark. At the same time, we are too small to constitute a major world economy that can run independent policies and still enjoy the advantages of an economic system of an optimum size, as the Americans and Japanese are able to do.
  Thus we have not succeeded in making a success of the sterling area and have not built up a major source of strength through our special relationship with the dollar. Since 1973, we have been a member of the EEC, but we are still not making a real success of our membership. Many people within the Government and outside believe that it is not prudent to become too closely integrated with the EEC. I am reminded of William Blake's saying:
  "Prudence is a rich, ugly, old maid courted by Incapacity."
  If we continue to sit out every dance and refuse to become too closely involved in the Common Market, we shall not even be rich but just an ugly old maid once the oil has run out. It will then be too late to make the best of our chances under the treaty of Rome.
  If we are going to do more about our membership of the EEC, we should be making rapid progress in integrating our tax system with that of the major industrial countries on the continent. Unfortunately the Bill does all too little in that direction. I shall make my points briefly because they could be raised more profitably in Committee. On current account, it is now generally accepted that in the EEC we need to break down the barriers to the movement of trade in goods and services. We are aware of the dangers of resurgent protectionism and we know about the problems of paperwork at the frontiers, which can lead to the holding up of goods, and so on. But our Government should be making positive strides towards putting our VAT and excise duties on the same basis as those taxes in other Common Market countries.
  I am not saying that the rates should be identical, or that they should be made identical at once, but we should be making much more progress in our tax systems so that those in business throughout the Common Market operate under the same framework of tax law. We have heard some remarkably good speeches on the reform of personal taxation. We should examine personal taxation and our benefit structure and compare it with the systems of other member states. We are not the most incentive-directed country in the European Community and there is no reason why we should not be. The Government should be setting out to make Britain the place where people want to work because of the incentives and general working conditions. I am sure that I could prove that we could introduce a
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  reform of income tax and social security on a revenue neutral basis which would eliminate many of the incentive problems that we find in the present system of taxation, national insurance and our various forms of benefit.
  My hon. Friend the Member for Carshalton and Wallington (Mr. Forman) made an important speech which we shall want to study. I am not certain that I go along with him entirely, because it is my view that we want simultaneous co-ordinated reform and not the integration of tax and social security. However, that is a matter of detail which I shall not go into more deeply at this moment.
  In our relationship with the other member states of the Common Market on capital account there is much to be done to create an integrated European market for capital. The interests of the City and Britain as a whole demand that we should move rapidly to the realisation of the ideals of the treaty of Rome for one capital market, one real rate of interest and ultimately one currency for the entire trading zone. If we moved forward towards the integration of the capital market, we would be able to create conditions in which Britain could safely join the European monetary system. As our capital market in London is not yet integrated completely with Frankfurt, we are in doubt whether we can afford to join a currency system which is presently dominated by the deutschmark. The right way to begin is to put the tax structure in which we operate in the capital markets on the same basis in both countries.
  I have given some study to the way in which we might amalgamate corporation tax in Britain, Germany and other major Common Market countries. It has to be said that the best way to achieve the amalgamation is to move towards co-ordinated and steady year-by-year reductions in the rate of corporation tax in each of the member states so that ultimately we reach vanishing point. It might be necessary to increase value added tax to provide the necessary revenue as we lose the revenue from corporation tax. That would be a healthier way of drawing money from consumers, which is the purpose of corporation tax, than continuing with corporation tax, which is time-consuming and which helps to divide British businesses from the tax conditions which apply in the Common Market.
  I should like also to see a reduction of frictional taxes on the creation of an integrated market for capital. I am speaking about further reductions or the elimination of the stamp duties. It is strange that a Government who are devoted to the success of free enterprise capitalism are still allowing taxes to continue which damage the market for capital in the way that stamp duties do.
  Our capital gains tax, too, is still a tax on inflationary gain much more than a tax on real profit achieved through increasing the value of capital. I was disappointed to hear my right hon. and learned Friend the Chief Secretary say that the Treasury could not allow full indexation in the calculation of capital gains tax because of the loss of revenue that would ensue. My right hon. and learned Friend chose to use an extraordinary word. If we are taxing capital we cannot call the proceeds revenue. That would be possible only in an extremely muddled world. The Treasury should do more to distinguish between capital account and revenue account. My right hon. and learned Friend seemed to be adopting the argument of the alcoholic who says that he cannot give up beer because he cannot lose the income from the returns on the empties.

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  We cannot continue damaging our capitalist society by taking money away from private capital through capital gains tax on purely inflationary gains.
  Britain must be the part of the EEC where it is most desirable to save capital, to hold capital, to deal in capital and to invest capital in the confidence that in Britain the investor can make ambitious long-term decisions with the greatest likelihood of those decisions proving profitable and right.
  I promised to speak briefly, Mr. Deputy Speaker, so I shall conclude by making two minor recommendations which, if accepted, would have important long-term consequences. They arise from the ready availability of indexed Government securities. First, we should allow the purchaser of an indexed annuity to claim the same tax exemption as if the annuity increased on a stated arithmetical formula year by year. I am informed that one can buy annuities which increase by 3 per cent., 5 per cent., 7 per cent. or 10 per cent. per annum as a way of protecting oneself from depreciation. However, if someone tries to buy an annuity which is linked to the retail price index he will not be able to enjoy the tax advantages which go with annuities in the normal way. We should try to find a new formula which corresponds to the actual changes in the value of money from time to time.
  Secondly, I repeat the suggestion which I have made in previous years, which is that companies should be permitted to issue debentures or loan stocks on which payments are variable with the performance of the company and are not attached to a fixed rate of interest. The Government are able to raise money now by issuing indexed stocks, but in the private sector companies are not able to do so and to rank such debentures or loan stocks as a prior charge for the calculation of corporation tax. Such a reform would help to fill a gap in the structure of the capital market. It would enable many firms which are now living from hand to mouth and financing their capital position by bank debt to enter into long-term capital commitments. They are afraid to issue equity and they are not able to issue any other form of long-term capital market instrument.
  I have raised these issues in the hope that I shall have the opportunity to pursue them in detail in Committee.
  8.16 pm
  Mr. Ken Weetch: I shall make only a short contribution to the debate and will direct myself to the fundamentals of the Bill. Its main deficiency is that it does not provide for the expansion of the economy. When the Chancellor of the Exchequer made his Budget statement, he said that it was a Budget for jobs. On that count, the Budget and the Bill are complete misrepresentations. It was not a Budget for jobs and I can find no measures in the Bill that will make any inroads into unemployment and reduce the number on the dole. The Budget and the Bill needed a bold initiative that would put into productive employment those who are out of work but nothing of the sort is likely to happen.
  The policy of reflation and expansion would have gone hand in hand with the Government's professed policy of reducing unit costs in British industry. I believe that the many who are unemployed are related directly to the deficiency of demand in the economy. If there is a deficiency of demand and there are many who are unemployed, it means, among other things, that unit costs
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  in British industry must be higher now than if the level of unemployment were lower. The Budget has been a failure on many counts.
  The background to our problems could have provided some stimulus to reflation and greater employment. The conditions for reflation are present. Britain has a strong positive balance of payments. We have unused industrial capacity and many are out of work. Those three factors provide the conditions for some form of reflation and economic expansion, but the Chancellor of the Exchequer, who has been described in some quarters as one of our most orthodox Chancellors, is not in the least orthodox. In a major business recession it is the wrong policy to put restraints on public expenditure. It goes in the opposite direction from that which the economy needs.
  In my time as a Member, I have listened to 12 Budgets and I have listened to debates on 12 Finance Bills. They have all been aimed at one thing but have all failed. They have failed to stop the industrial degeneration of Britain. They have been aimed at stopping our decline, but we have been declining as an industrial nation since we lost the lead in the industrial revolution. The main reason for that is that our main industrial competitors have been more efficient than we have.
  Although the Government point the finger at the fact that British industry is basically uncompetitive, they have the wrong solution to the difficulties. What is needed is a Finance Bill that attempts the long-term restructuring of the British economy, and the long-term aims of the Bill are at fault.
  I pinpoint one of the basic problems, and I ask the Chancellor an open question. What will happen to the British economy when the oil runs out? If we did not have this source of revenue, we would almost be in the knacker's yard by now. It is only a matter of time before this pot of gold that we found at the bottom of the garden disappears, and we shall be up against it to pay our way in an increasingly competitive industrial economy.
  My next point is my most controversial. In many instances Britain has lost the day in the world of mass cheap manufactures. Many other nations with natural advantages do many of the things better. We did things better 50 or 60 years ago, but the natural advantages have now passed elsewhere. Therefore, the central aim of the Finance Bill should have been to give British industry the push towards high-technology industries, where design and high quality of output would be responsible for penetrating world markets. I do not see this in the Budget either.
  It is very disappointing trying to look ahead to see where the British economy is going. How will it create the wealth that we need for a good infrastructure, social services and the rest of the things that have to come out of the increased yield that the economy produces? Unless something radical is done—it cannot be done in this Budget because it is now water under the bridge—and unless the Chancellor reshapes his thinking, the British industrial decline will go on because nothing fundamental is being shaped to put it right. Unless something serious happens and we change our ways, we have a bleak future.
  The Prime Minister talks about Victorian values, and I have also heard her talk about how the British economy expanded in Victorian times. However, in those times, we had low industrial costs because we had a cheap food policy. We now have the reverse—a dear food policy because of membership of the EEC. That will continue to

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  be a direct cost on manufacturing business. In other words, the Prime Minister may be pointing to Victorian times as the example for expansion, but we are pursuing the wrong policies on manufactures and the cost of food and raw materials for that.
  I see no hope in this Budget. Unless there is radical change in the Chancellor's thinking, the British economy will continue to decline.
  8.24 pm
  Mr. Tim Yeo: The hon. Member for Ipswich (Mr. Weetch) criticised the Budget for not dealing with unit costs, but he ignored the fact that, by the reduction in the employers' national insurance contribution, the Budget has reacted directly on industrial costs. He bemoaned the fact that we have not recreated the industrial revolution and kept modern. One of the outstanding success stories in business terms, which is on his doorstep and mine, is the Felixstowe docks. It is planning a major expansion, which is justified by the tremendous switch of business from other ports to Felixstowe, which is the most efficient and rapidly growing container port in Britain and the Common Market. The expansion will create 1,000 permanent jobs in Suffolk, and a large number of additional ones during the construction stage, but the hon. Member for Ipswich is opposing it. He is resisting this tremendous job-creating project, which is building up one of the most efficient companies, and it is left to the Conservative party to see the project through in the face of opposition.
  The debate has ranged widely and many interesting angles have been raised. I am sorry that there is not time to follow them up, but rather quixotically I wish to talk about the Finance Bill, which has been said to be boring. Like my right hon. Friend the Member for Guildford (Mr. Howell), I was relieved that it was a rather boring Finance Bill, and that a great many things that might have been in it were not. A number of us share the widespread relief that proposals for changes in the taxation of pensions and in the VAT base are not there.
  If we are to try to extend the tax base, the only way to do it is in one major step. It is no good tinkering with adding VAT on to one or two things. We need to have a massive extension of VAT so that, at the same time, there can be massive and discernible tax cuts so that people can see the advantages and the disadvantages side by side. The most interesting aspects of the Budget were dealt with not in this Bill but in the Social Security Bill, and I warmly welcome the fact that at last we have dealt with the reduction of both employers' and employees' national insurance contributions.
  There are three aspects on which I shall touch. The first is income tax. It is right that a significant and substantial part of this year's overall reliefs should be granted through national insurance contributions. However, given that we are also dealing with income tax, it is also right that some of the give-away should go in raising tax thresholds. I hope that we shall continue to move ahead on both these fronts.
  Let us not stop at what we have done on national insurance contributions this year, because their reduction is by far the most effective way of relieving the state's grip on people on relatively low wages. It is important that we should continue to raise the rate at which low earners have to pay the full rate of national insurance contributions.
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  Most people agree that those on low wages are still paying too much in tax and national insurance contributions, and the more that we can lighten that burden the more we will improve incentives for people to take jobs. That is particularly important for youngsters.
  The real interest in the future of income tax will come with the publication of the Green Paper, and I look forward to what my hon. Friend the Financial Secretary will say about that. We should look at the reform of income tax in conjunction with whatever we are to do as a result of the social security review. The two issues are closely intertwined. I hope that eventually this will lead to a unified tax-benefit system. I have no doubt that some of my hon. Friends will go on saying that, as they have done for a number of years, and I shall go on saying it as I have over the couple of years that I have been here. I hope that eventually the plea will not be entirely in vain.
  Secondly, I confess to some disappointment with what the Bill proposes on capital gains tax. The improved indexation that it introduces is very welcome, but the basic problem remains that by 1982 the rapid period of inflation had ended and had been reduced by the Government or, as the right hon. Member for South Down (Mr. Powell) might say, by factors which were more reflective of international developments. At any rate, it had fallen to relatively low levels.
  Long-term investors, particularly those with long-term holdings in private businesses which they were building up, still pay substantial capital gains tax on gains which have nothing to do with real gains but which are merely the consequence of the high rate of inflation during the 1970s. I urge the Chancellor next year to consider extending indexation back to the early 1970s. By definition, that will help long-term investors. Assets which have been held for at least four years would benefit. The real saving would be for those who held their investments for a considerable period, perhaps eight or 10 years. It is important to give them some relief.
  My third point relates to VAT. I must record my great disappointment that the threshold for registration of businesses for VAT purposes remains at such a paltry figure as £19,500. The potential loss of revenue to Customs and Excise would be minuscule if that threshold were substantially increased—I would recommend to at least £50,000 without delay. That would be welcomed by small business men throughout the country.
  The burden associated with the filling in of VAT forms, the tedious administration which accompanies that, and the extra record-keeping which is necessary is extremely onerous, and any Government who are really interested in helping small businesses should move in this direction without delay.
  If the objection to making this change is our membership of the EEC, we should seek to deal with that within the EEC as soon as possible. It is a phoney objection, because our contribution to the EEC budget is based on a formula which is not directly related to the EEC budget is based on a formula which is not directly related to the VAT collected in this country. However, nothing will do more to diminish the popularity of British membership of the European Community if all it does is increase the £20 million a day which is already spent on buying and storing food which no one in the member countries eats and as a consequence blocks desirable and relatively simple reforms such as the raising of the VAT threshold.

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  I am happy about the extension of VAT to newspaper advertisements in every respect except one—the effect on charities. The charities VAT reform group was bitterly disappointed that no significant VAT relief was granted this year, particularly as the group made constructive suggestions about specific reliefs which could be granted to charities—for example, those which performed services similar to those performed by local authorities.
  The extension of VAT to newspaper advertisements is a considerable extra burden on charities. They are not allowed to advertise on television, and use newspaper advertisements as the main method of fund-raising. The research already carried out by the charities VAT reform group shows that 108 major charities in this country will pay more than £1 million a year in extra VAT on newspaper advertisements. The National Council for Voluntary Organisations wrote to The Times on 27 March together with a number of other leading charities, and said:
  "The tax on advertising by charities will be infinitely more damaging to the vast majority of voluntary organisations than the modest benefit which will accrue from the Chancellor's concessions".
  I urge my right hon. Friend and his Treasury colleagues to think about this further. Nearly all charity advertising is done by reputable charities which carry out valuable work on behalf of the community. Many, such as Oxfam, will be hit for the first time by this new extension of VAT, and others, such as Help the Aged, will suffer a significant increase in their burden. However, with that modest caveat, I am happy to commend this boring Finance Bill to the House.
  8.34 pm
  Mr. Roger Freeman: In the brief time available, I wish to concentrate on capital investment. The background in the Red Book shows that for 1984 total fixed investment was up in real terms by 6·5 per cent. compared with 1983. In 1985, the rate of increase has slowed to 2 per cent., and in the first half of 1986, compared with the first half of 1985, it is estimated that it will slow again to 1 per cent. If anything, that shows a maturing of the normal capital investment cycle.
  That is corroborated by the CBI in its evidence to the Treasury and Civil Service Select Committee, where in paragraph 55 it also confirms that the rate of increase of business investment is slowing down in real terms. There is nothing to be ashamed of about the normal operation of the business cycle when it comes to investment, but the Bill must be judged in that context.
  I welcome the Bill for what it contains, but I have three suggestions as to what it should contain, if not this year, then next year. Clause 42 provides for the extension of the business expansion scheme to cover research and development schemes. That is right. Clause 54 relates to the depooling of short-life assets, and, although I am concerned about the mechanical operation of the clause, it should be welcomed. Clauses 61 and 62 deal with a shorter depreciation period for patents and know-how. That is a tidying-up operation, and is to be commended. The Chancellor has also retained the scientific research allowance at 100 per cent., and that is also to be welcomed.
  That brings me to the three aspects that I should have liked the Bill to contain. Indeed, at a later stage I hope to table amendments to that effect.
  First, the introduction of private sector capital into public sector projects is important. The House will know
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  that since the Ryrie rules were promulgated in 1981, governing the way in which private capital can be introduced into public sector projects, there have been no examples, certainly none that I can think of. While I do not quarrel with those rules, I suggest that, possibly through the establishment of a new kind of company arid a new kind of tax status, the water industry or local government, which converts waste to steam generation and heat, should be permitted to proceed so that we can test whether a project is able to meet the Ryrie rules to protect the taxpayer and not to enjoy any undue preference because of an implicit or explicit state guarantee. Now is the time to adopt such an approach, particularly in the water industry, because if we do not, water industry charges next year will rise at the same rate as this year. If we can meet some of the capital investment requirements of the water industry through private capital, so much the better.
  Secondly, a new clause is required to cover the introduction of industrial revenue bonds, which are widely used in the United States. The theory behind them is simple. If industrial companies building new plant and installing new equipment can satisfy local authorities that they are genuinely creating new jobs, they will be permitted, up to a certain limit—say, £10 million per company and perhaps a total limit for the entire economy of £1 billion—to issue those bonds, interest on which would be tax-free.
  The whole purpose of industrial revenue bonds is to cheapen the cost of finance to new companies and to lengthen the maturity of those debentures. Such a move would be helpful. If I am challenged on how we should pay for such a scheme, my opinion is that, when the business expansion scheme is reviewed in a year or two, some of that subsidy should be used. It is running at the rate of at least £50 million a year of revenue forgone because individuals can offset the investment against their marginal rate of tax. Some of that subsidy could be used to introduce industrial revenue bonds, which would meet a different industrial requirement.
  There is a fine industrial estate in my own constituency, but it is not an enterprise zone. The introduction of new bonds such as these would definitely help business men on that industrial estate who are seeking to expand their enterprises. If a new clause, tabled at a later stage in the progress of the Bill, is unsuccessful, serious consideration should at least be given to it; but we shall return to that.
  We must give serious consideration to research and development partnerships. There are medium-sized companies in Britain which have the fruits of excellent research which are not being exploited, either because they do not have access to sufficient capital—perhaps their debt to equity ratio is far too high—or perhaps the hurdle rate for judging investments is so high that certain projects fall just beneath it, but they would still be justified from a general economic standpoint.
  I know of many companies in that position. There could be amendment not only to our tax laws but to our partnership laws. I have in mind the Limited Partnerships Act 1907. If we could amend our partnership laws and tax laws to permit companies to set up partnerships where the limited partners would be institutions investing money, the company would remain the general partner and have the right to exploit commercially the fruits of any further development. We could give the City institutions investing in those partnerships the right to pass through the tax

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  benefits upon any expenditure on the research and development projects. Then I believe that we could unlock several projects which at the moment in several companies are unlikely to see the light of day. Therefore, I do not believe that clause 42 goes far enough.
  I have talked of the natural investment cycle and the fact that it appears to be slowing down. That is borne out not only by the Government but by the CBI. But the attitude to capital investment at the moment is very good. The profit motive, in which the Government believe, is reflected in the substantially increased levels of profitability. That is good for investment because it gives business men confidence.
  Short-term interest rates are far too high. As the CBI pointed out to the Treasury Select Committee, business men believe that those short-term interest rates are kept high—as the right hon. Member for South Down (Mr. Powell) indicated earlier—either for exchange rate reasons or for monetary policy reasons to control the growth in the money supply. Business men believe that those rates will come down soon. That is why the CBI is forecasting 4 per cent. growth in real terms in the GDP this year, and why capital investment is still rising in real terms. Nevertheless, the overall level of capital investment, particularly in the private sector—we understand the reasons for its restraint in the public sector—is still too low.
  I have referred briefly to why and how in the public sector we can increase the level of expenditure on public sector projects by introducing private sector capital. In the private manufacturing sector, I have indicated how, through the introduction of industrial revenue bonds, we can bring in new sources of finance and enable companies to borrow long-term at, I hope, a lower fixed rate of interest.
  In research and development, I have illustrated how certain projects are being missed and how, if we amend our tax laws, we can permit the introduction of limited partnerships. I hope that those are constructive propositions. I greatly welcome the Bill.
  8.43 pm
  Mrs. Edwina Currie: I have previously had the opportunity, during the Budget debate, to speak on some of the general economic issues. Therefore, like my hon. Friend the Member for Suffolk, South (Mr. Yeo) I should like to concentrate on the Bill, and in particular on chapter II, on the implementation of volume 1 of the Keith committee report.
  My interest in VAT arose when local traders started to tell me about the problems they were having with the VAT man. I will quote from a typical letter which arrived in September. My constituent wrote to me saying:
  "At the moment I am being hounded by the Customs and Excise (VAT) Office in Derby for £465. My wife has had two visits from, we presume, the Bailiff working for them. As I am out at work all day and into the evening, trying quietly to earn a 'crust', and they, presumably don't work after five, they are unable to call when I am at home, so my wife gets all the 'flak' which is flying about.
  I have every intention of paying this amount (I'm not going to 'skip' the Country), as soon as I have the money in the bank to do so. I am sorry if this amount is upsetting Nigel Lawson's balance of payments deficit, but I am trying to do something about it. I am at my overdraft limit and the bank will not give
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  me any more money, neither do I wish to increase my overdraft in excess of the present amount, as the interest rates are crippling anyway."
  That was back in September and they are a bit higher now.
  "If I took up the profession of Sculptor to knock a 'heap' of horse manure into shape, I would be able to get a grant from the Arts Council and would never again have to worry about VAT, but as I am a service industry, I can't."
  We cannot have that sort of thing in south Derbyshire, so I wrote to the VAT man and received a reply that indicated that my constituent, in common with a fair number of my constituents, is sending his VAT return in late; indeed, his returns have been late seven times since August 1982.
  I then sent off another letter concerning a constituent who was also complaining bitterly about being hounded by the VAT man. The reply said that in the case of that gentleman
  "no returns have been rendered at all since June 1980. We might well have prosecuted some time ago for failure to render returns but we have not yet done so. One of my staff visited him in early 1981 to attempt to establish the tax due but found that he was unable to reconcile even those periods up to June 1980 for which your constituent had rendered returns."
  At that point I thought that there was something to be investigated, and I have to thank Mr. E.N. Taylor, the east midlands collector at Nottingham and his staff, for the painstaking efforts that they made in taking this particularly ignorant Member of Parliament through the intricacies of VAT, and particularly the things that all our constituents get up to.
  I should like in passing to pay tribute to the Customs and Excise staff. We should recognise how fortunate we are to have honourable, decent, painstaking men and women such as them. We take it so readily for granted that they do their job in an incorruptible way. There are very few countries in which one can begin to assume that.
  Mr. Taylor said to me, "Take a look at the Keith committee report. If that is implemented—especially the part dealing with automatic penalties—our job will be a lot easier. We shall be able to do our job better, recover more money for you, keep the tax base narrow, and not widen it to include more items".
  I cannot confess to having read all three volumes of the Keith committee report, but I have read the first volume, which shows an alarming state of affairs. Paragraph 3.1.13 says:
  "the Department estimated for us that the scale of delays in paying VAT during the middle of 1982 meant that on average and at any one time some £1,700 million of tax was outstanding beyond the due date."
  The paragraph goes on to say:
  "in normal years, with the current structure and rates of tax, the average amount of tax outstanding after due date is some £1,000 million. At an interest rate of 10 per cent. this is equivalent to an interest free unsecured loan to VAT traders worth £100 million per annum."
  My hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe) said in this House on 21 March that the figure outstanding was now £1,200 million, which suggests that we have a much improved situation. Certainly the letters from constituents suggest that the VAT man in Derby has been working overtime. Therefore, perhaps in many cases the powers were there all the time and were not used in the way that they should have been.
  In the past year matters have come to a head and action has had to be taken. Two out of five VAT inspector visits now find under-declarations. It is estimated that in

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  1984–85 £390 million was under-declared and only £7 million was over-declared, so the ratio of errors in favour of the payer has been about 55:1.
  For 12 years the 1·5 million registered businesses in Britain have had a comparatively easy ride for the payment of VAT. They collect the money from customers, they put it in their own accounts and they fail to account for it separately. They treat is as an interest-free loan to the company and they get very cross when the VAT man does his job, as if he were some latter-day pirate. At the same time they are often asking for Government assistance. They should ask where all that money is supposed to come from.
  VAT is the most unpopular tax of all and it is uniquely difficult for small businesses to deal with. I believe that is was Edmund Burke who said:
  "To tax and to please is not given to men".
  I suspect that it is not given to women either. A public relations task of some magnitude is now required; otherwise many small businesses will not know what has hit them when the Keith committee report is implemented through this Bill. We have to get it across to business men that they have no choice about paying VAT. They are wrong to treat is as a profits tax which is only to be payable when the company is in funds. They are wrong to argue about one assessment while forgetting that others are accruing under their noses. They are wrong to react in a hurt and bewildered way when they are duly pulled up. The VAT man is doing a job on behalf of us all.
  The question of who pays VAT and who does not requires continuing and serious discussion. My hon. Friend the Member for Suffolk, South (Mr. Yeo) raised that matter. At what level should the threshold be fixed, and what are its economic effects at different levels? My hon. Friend said that the threshold should be as high as possible, and we would all support that. No one likes paying tax. It would minimise bureaucracy and assist small businesses, especially those starting up. However, another point of view is put forward by the Building Employers Confederation, which is that the threshold should be at zero. The idea is that everyone will pay, which will reduce the opportunities for cowboys and will be fairer. I suspect that the confederation's confidence in such a change is misplaced because if would certainly increase the black economy, and simply push the threshold effectively to a point at which one either declares for VAT or does not delcare.
  I congratulate my right hon. Friend the Chancellor of the Exchequer on managing to take both lines at once. He took the second line of a zero threshold with VAT on building last year, and the first line of raising the threshold overall in this Bill. He has managed to get the matter right, effectively facing both ways at the same time. If we can keep tax income down in that sort of way, there will also be continued pressure to keep public expenditure down. That is an outcome devoutly to be wished.
  Overall, I welcome the changes, and hope that after some consideration my slow-paying small business people in south Derbyshire, who work extremely hard to pay the money that they earn, will also welcome them eventually. I look forward to the detailed discussion of these clauses in Committee. I hope that the Chancellor will bear in mind that VAT is a considerable burden, particularly on small businesses which we very much wish to encourage.
  8.51 pm
  Mr. Robert Jackson: This is the third year of the operation of the business expansion scheme, and it is likely to be a key year which will make or break the scheme. Whether the scheme is to be a significat new development in the market for venture capital will be established by what happens this year.
  This third year is so important because it is now that a pattern of interest, or lack of interest, of potential investors through the BES will be consolidated and established. In 1983, its first year, there was a great deal of interest in the BES, but last year, its second year, there was a considerable decrease as investors waited to see how the efforts made in the first year paid off. This year must see a substantial increase in last year's performance if the pattern of the BES is to be one of expansion rather than of contraction and decline after a promising beginning.
  I fear, however, that the Finance Bill does not recognise the strategic significance of this year in the development of the BES. I regret that the Bill does not advance new proposals to make BES more attractive. It is a mistake to wait for a review and to overlook the psychological significance of this year.
  Mr. Freeman: I know that my hon. Friend is pressed for time, and I am grateful to him for giving way. Does he agree that one helpful amendment to the business expansion scheme may be to permit investors to enter some sort of small business investment company to enable them to attract tax relief at the moment of investment?
  Mr. Jackson: I thank my hon. Friend for his suggestion. It is one of many that can be made about the improvement of the BES. I shall refer briefly to it during my speech.
  Before I say a few words about such specific measures which may help the scheme, it is worth reminding ourselves why the scheme is so important and deserving of the high hopes which the Government placed in it at its launch. During the past 40 years, since Governments first began to assume a wider responsibility for the overall performance of the economy, successive Administrations have wrestled with the problem of how best to encourage high-risk investment. Historically, the trend has been for Governments to become less confident, in the light of their experience, of their ability to pick winners and to finance them by the direct provision of capital for investment. That has been the case in Britain and, as my right hon. Friend the Member for Guildford (Mr. Howell) pointed out, in other countries, such as France.
  This is why we have decided to look at another approach, which seeks to encourage high-risk investment, not only directly but also indirectly—not only by the direct application of taxpayers' money under Government management, but by its indirect application under the management of individual taxpayers or their agents. That is the underlying philosophy of the BES. It is a good philosophy, but it needs to be followed through with greater vigour than is envisaged in this Finance Bill.
  If taxpayers' money is to be applied, whether directly or indirectly, it should of course only be applied under careful control. But it is precisely the character and degree of control that is inescapable in the activities of Government Departments in our sort of parliamentary democracy, which has made them such unsatisfactory agents for direct risk-bearing innovative investment. I fear

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  that the character of the control which the Government, through the Inland Revenue, are attempting to apply to their indirect support for risk-taking investments through the BES, may stultify the Government's efforts to promote such investment.
  It would be churlish not to recognise the limited positive proposals for improvement in the BES in the Finance Bill. I also welcome the proposal to remove investment in property developments as a qualifying object for BES investment. Obviously, it is right that when the Government provide tax relief to encourage economically worthwhile risk-bearing investments, they should do so only for that limited class of investments.
  I do not quarrel with that approach to the control and direction of such publicly supported investments. I am worried, however, about the effect on the BES of other controls and restrictions which are a serious impediment to investment through the scheme.
  The details of these restrictions may be dealt with in Committee and I note the suggestion of my hon. Friend the Member for Kettering (Mr. Freeman). Many details need to be considered, and I hope that we shall have the opportunity to do so. I shall cite briefly one of those restrictions which has been operating to our disadvantage and which may be one of the most important of them. It is a requirement of the BES that the investor cannot make his claim for relief at the time of making the investment. Simply to provide the Inland Revenue with an assurance that the money is being genuinely invested in BES, and within a reasonable period, the investor must wait for his relief until after the investment has been made. This has been found to be a serious restriction on the interest that investors have in investing through approved funds under the BES.
  We need to reconsider that and to find other ways of dealing with the problem. The experience of the first two years of the BES shows that that and other restrictions have a discouraging effect—for example, restrictions on the deferment of the investment until after the commencement of trade, on the disposal of shares within the five-year period, on dealings in securities at the time of disposal, and restrictions affecting investment in overseas subsidiaries and in minority shareholdings in subsidiaries or sub-subsidiaries. Royalty income has been dealt with in the proposals but we need to look further and deeper at that also. All these represent a serious impediment to investment in business expansion scheme funds, and we must ask whether those restrictions are necessary. Could their object be met in other, perhaps looser but certainly less destructive, ways?
  I repeat that we cannot wait for the review because this is a year which will determine whether the business expansion scheme will turn out to be something that will develop and improve in future, or fall back and decline from its worthwhile and useful early beginnings.
  Those are serious questions about the working of one of the most important, if not one of the most expensive, policies that the Government are pursuing in the industrial field. A great deal of cost is attached to direct support for investment in the public sector by Government but we must look at the potential for growth in the private sector. The hon. Member for Ipswich (Mr. Weetch) referred to the need to invest in high technology and the way to do that is through such instruments as this scheme.
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  I welcome the overall thrust of the Budget but I regret that its thrust does not go far enough in respect of the business expansion scheme.
  8.59 pm
  Mr. Terry Davis: The most significant feature of the debate and the most succinct comment that can be made on the Bill is that hardly anyone on the Government Benches has referred to the Bill. The right hon. Member for Worthing (Mr. Higgins) came to the Bill in the last sentence of his speech, only to describe it as unexciting. The hon. Member for Horsham (Mr. Hordern) dealt with the Bill in his first sentence when he described it as dull and then proceeded to discuss monetary policy and the Government's errors in that area.
  After describing the Bill as boring, the hon. Member for Suffolk, South (Mr. Yeo), like the hon. Member for Kettering (Mr. Freeman), told us that he would correct the balance and promised to talk about the Bill. But I had the impression that they both proceeded to spend most of their time complaining about what is not in the Bill. I think that Hansard will show that the hon. Member for Suffolk, South had more to say about the Felixstowe and Railway Dock Bill than the Finance Bill.
  The hon. Member for Wantage (Mr. Jackson) made an interesting speech but he discussed the difficulties of the business expansion scheme rather than the contents of even that one clause of the Bill. The right hon. Members for South Down (Mr. Powell) and for Guildford (Mr. Howell) did not mention the Bill at all.
  The hon. Member for Mid-Norfolk (Mr. Ryder) treated us to a carefully prepared analysis of speeches made by the leaders of the Liberal and Social Democratic parties and the differences between them, but he did not even mention the words "Finance Bill". His speech drew a predictable response from the hon. Member for Stockton, South (Mr. Wrigglesworth). I shall deny myself the pleasure of commenting on that speech. In particular, I shall not stoop low enough to reply to an accusation of deception from someone who stands as a candidate for one party at a general election and then, having been elected as a candidate for that party, joins a different party and sits in this House wearing different colours without submitting himself to the judgment of the electorate. If that is not deception, I do not know what is.
  The hon. Member for Hertfordshire, South-West (Mr. Page) did talk about the Bill, but he began by referring to the Government's estimate of the increase in the number of people in work. He claimed as a statement of fact that 500,000 more people are in work than were in employment two years ago. I shall not go into detail again because I dealt with those phoney figures in the Budget debate on 25 March. I simply remind the House that the Government's figures for the number of people in work have been adjusted by a total of 580,000 for assumed—I emphasise that word—new jobs. I add simply that, as I understand it, the only change since I explained those figures on 25 March has been that the Government have now admitted that one reason that they contain a bigger increase in the number in work since March 1983 is that they have revised downwards the figures for March 1983.
  In other words, the Government now admit that fewer people were in work in March 1983, at general election time, than they previously claimed. They exaggerated the number of people in work in March 1983, and we are now asked to believe, on the basis of their new, estimated,

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  revised and adjusted figures for September 1984, which incidentally they have just increased, that there has been an even bigger increase than they had previously claimed in the number of new jobs created. The Government's figures for the number of new jobs arising in the past two years have been revised and adjusted so often that they are simply incredible. However, even on the Government's own figures, 1 million fewer people are in work today, counting employed and self-employed people together, than were in work when the Government were elected in 1979.
  The hon. Members for Kensington (Sir B. Rhys Williams), for Lewisham, West (Mr. Maples), and for Carshalton and Wallington (Mr. Forman) also began by praising the Bill. At any rate, they genuflected in that direction. However, they then went on to discuss what one of them called the missed opportunity for genuine reform of the tax-benefit system. In typically thoughtful speeches, all three hon. Gentlemen described their own ideas and the changes that they would suggest, but they were handicapped by the lack of hard informaton about the Green Paper on taxation—what we might call the Green Paper mark 2. The Chief Secretary's decision to leave it to the Financial Secretary to deal with that subject in his reply to the debate does not augur well for the full, open and public debate that will be needed if the Government are interested—this may be a vain hope—in obtaining agreement between both sides of the House about the structure of the personal tax system. How can the Financial Secretary reply to speeches about the Green Paper when no one can comment on the ideas, proposals or arrangements about which we have not been told? The Chief Secretary should have revealed whatever the Financial Secretary is about to tell us. It is an abuse of the wind-up speech to use it for an announcement of the Government's intentions.
  The Chief Secretary did deal with the Finance Bill at length. In fact, he scarcely dealt with anything else. That was remarkable in itself. I cannot remember ever having heard such a speech from the Chief Secretary. He carefully avoided giving any carefully selected statistics designed to show that the British economy has never been in better health. I do not know whether I prefer low-key, defensive speeches such as today's or the more offensive—in the sense of aggressive—speeches that we have come to expect from the Chief Secretary. I am perhaps more worried when he is defensive because I wonder what he knows that we do not know. I wonder what bad news may be around the corner. Perhaps I am wrong, and the Chief Secretary is not so much worried as relaxed. In that case, I am even more concerned because those who live and work in this country—or who do not work because they cannot find work—cannot afford to share the Chief Secretary's relaxed attitude.
  Although the Chief Secretary's speech was notable for the lack of statistics, he repeated one figure from the Budget debate. It was the one figure that never fails to appear in speeches by the Chief Secretary at this time of year—the figure for the number of people taken out of tax. According to the Chief Secretary, the Finance Bill "takes a further 800,000 people out of tax altogether". Let us set aside the fact that those people are not taken out of tax altogether. They are still required to pay national insurance contributions and the indirect taxes such as VAT that have been increased or extended in scope by almost every Budget or Finance Bill introduced by the present
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  Government. But let us take the Chief Secretary's phrase about people being taken out of tax as meaning that those people are no longer liable to pay income tax and consider his claim that, this year, as a result of this Bill, 800,000 people will no longer be liable to pay income tax.
  At first sight, that seems an impressive figure. Of course, it is less impressive than last year's figure as we were told then that 850,000 people would no longer be liable to pay income tax, and it is much less impressive than the year before when the figure was 1·25 million, or the year before that, when it was 1·2 million. That takes us back to 1981, the year when nobody was taken out of tax because the Government did not change personal allowances but went back on all their promises and fine words about the Rooker-Wise amendment. The year before that—1980—was a bumper year, when the Chief Secretary boasted of taking 1·3 million people out of income tax. The figure was the same in 1979 after the general election. If we take all of those years, we find that the Government have claimed to have taken a grand total of nearly 7 million people out of income tax.
  Sir William Clark: That is silly.
  Mr. Davis: The hon. Member for Croydon, South (Sir W. Clark), the chairman of the Conservative Back Bench committee, has, with his usual quick wit and perspicacity, realised that the figure is bogus. Each year, the Chancellor claimed to have taken thousands of people out of tax, when most of them were the same people whom he had claimed to have taken out of tax the year before. As taxpayers, those people lead a yo-yo existence. The Chief Secretary raises the tax thresholds so that they are not liable to income tax, but their next wage increase puts them dust over the threshold, thus enabling the Chief Secretary to take them out of tax again the next year and to claim the credit all over again.
  I must be fair to the Chief Secretary and the Government. I accept that fewer people are paying income tax today than six years ago, but they are 2 million fewer rather than 7 million. A table in the Inland Revenue's statistics shows that the number paying income tax has gone down from 26 million to 24 million. That 2 million is a figure that my right hon. and hon. Friends will recognise, because it is exactly the same as the increase in the number of unemployed. It is no coincidence that, under the Conservative Government, the reduction in the number of taxpayers is exactly the same as the increase in the number of unemployed. To use the phrase of the right hon. Member for South Down, those 2 million people have been put through the monetary mangle.
  Those 2 million people would much rather have jobs and pay income tax than sit at home not working and not paying income tax. My hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy) described those people movingly today. Like my hon. Friend, I never thought that I would see the day when a Christian church would designate an "Unemployment Sunday." As my hon. Friend said, there is no prospect of this year's Finance Bill providing employment opportunities for the unemployed of Sheffield. There are 60,000 such people in that city alone and a further 3·25 million spread throughout the country.
  My hon. Friend the Member for Ipswich (Mr. Weetch) reminded us that the Budget is supposed to be a Budget for jobs. Presumably the Government regard the Bill as a

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  Bill for jobs. I have gone through it carefully and, like my hon. Friend the Member for Ipswich, have had great difficulty finding anything which can be described as likely to create jobs or encourage their creation. Indeed, one of its earliest clauses seems designed to kill some jobs. Clause 5 changes the taxation on wines so that the tax on blended wines such as vermouth and some sherries is higher if the blending is done in Britain. One employer has already complained to several hon. Members on both sides of the House that the clause has put 50 jobs at risk in one new town. That is a detailed point which we shall discuss in Committee, but let us suppose that the employer is right and the Bill costs 50 jobs in that new town. How does it help those 50 people to obtain new jobs or, if they are to follow the advice of the Prime Minister, how does it help them to become self-employed?
  The Chief Secretary claimed that the Bill is evidence of what he called the Government's increasing concern for the self-employed.
  Mr. Peter Rees: Continuing.
  Mr. Davis: The Government's concern is not increasing but continuing at its previous level.
  Let us suppose that one of these newly unemployed people decides to become self-employed and sets up in business repairing television sets or engages in a similar small enterprise. What is the first provision in the Bill that he finds affecting his new enterprise? He will find that he is taxed when he was not taxed before. Anyone setting up that sort of business will traditionally obtain customers by advertising in his local newspaper. Now, for the first time, he will pay value added tax on his advertisement.
  My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) commented on the effect of this extension of VAT on local newspapers. My right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) drew attention to its effect on families. The hon. Member for Suffolk, South referred to charities.
  Sir William Clark rose——
  Mr. Davis: The hon. Member for Croydon, South has been notable during the debate by his absence from the Chamber. Throughout most of the debate he has not been present. However, for personal reasons, I shall give way to him.
  Sir William Clark: If anyone sets up a new business and advertises, he pays VAT. But no doubt he has sales. He pays VAT on his advertising, but he can set off that against the VAT on his sales.
  Mr. Davis: That occurs only when he is registered. I am talking about someone setting up in business for the first time as a small trader. He will not be registered immediately. He will not be able to set off the tax that he pays against the tax which he collects. The very small business man with a turnover which is too low, as the hon. Member for Derbyshire, South (Mrs. Currie) explained, will see an increase in his real costs. If he expands, as we hope he does, and is registered for VAT, he looks further in the Bill and comes to clauses 11 to 32 and two of the schedules, covering a total of 36 pages in the Bill, which provide for the implementation of the Keith report.
  The Opposition hold no brief for people who escape paying over to the Treasury the money which in effect they
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  have collected through the VAT which has been charged on their invoices. But is it really necessary to go into this much detail, with 36 pages of a Bill, to collect that money and to provide proper enforcement powers for the Customs and Excise? We shall deal with that in Committee. Meantime, I can tell the hon. Member for Derbyshire, South that the experiences of her constituent are as nothing compared with what will happen if this chapter is enacted. It is obviously a complicated tax, as the hon. Lady's speech showed in a way that she did not realise, and we shall certainly be looking at it.
  This new business man who has lost his job as a result of clause 5 and is managing, through his own efforts, to flourish will also be charged national insurance contributions as a self-employed person. No doubt he will come to clause 40, which is one of those recommended to the House by the Chief Secretary. Our new small business man will soon find out that, when he is making £100 a week, he is only 19p a week better off as a result of clause 40. Anyone making £200 a week will be £1·14 a week better off. Someone doing rather better and who is now making £265 a week will receive £1·70 as a result of clause 40. That person is receiving the full amount of £90 a year.
  Our new business man will say, "Why should I do it this way? Why have the Government decided to give me tax relief on my class 4 contributions instead of simply reducing the rate of class 4 contributions? Why should I lose cash flow? Why should I be able to get it back only when I settle my income tax? Why should I incur all the additional paperwork which otherwise as a small business man I should not have to incur, because I shall have to include this in my tax return?" If the rate of national insurance contributions for that person were reduced, the position would be much more straightforward and, of course, it would require less paperwork by the Inland Revenue and fewer staff to administer it.
  Why not simply reduce the rate? I can explain it to that new small business man. The reason why the Government have chose the most complicated way possible to reduce class 4 contributions is that in that way, just as with any change in tax allowances, they can give more money to the higher paid taxpayer. The person earning more than £45,000 a year and paying the highest rate of tax receives not £90 but £180 a week as a result of this measure. That is one way of ensuring that people on the highest incomes receive more, instead of the people on the lowest incomes.
  Mr. John Powley: Will the hon. Gentleman give way?
  Mr. Davis: The hon. Gentleman has not been present at all for the debate.
  Mr. Powley: The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) will confirm that I was present. I listened intently to what was said. I apologise for the fact that I have not been present for the whole of the debate.
  It has been my experience as a small business man during the past 24 years that the burden imposed on small businesses has been onerous under successive Labour Governments but that burden has been eased—although not completely removed—under successive Conservative Governments. The hon. Gentleman should remember that the burden of the national insurance surcharge was

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  imposed on small business men and that acted as a disincentive to jobs. The selective employment tax imposed a further burden on people in small business.
  Mr. Davis: That sounded more like a speech than an intervention. It was the speech that the hon. Gentleman could have made if he had taken the trouble to be in the Chamber and had tried to catch your eye, Mr. Deputy Speaker. The answer to the hon. Gentleman's point is that I am not surprised that he remained a small business man.
  A whole chapter in the Bill is devoted to the capital gains tax. The Bill refers to a series of changes designed not to tighten up the administration of this tax, like VAT, but to make life easier for people with capital gains of £5,900 a year at a cost to other taxpayers of £155 million a year. I assume that that is one of the points that the Chief Secretary described as being "of interest and imagination." In fact, the Government are using this measure to encourage the return of what is known as bed and breakfasting. This refers not to the type of bed and breakfast arrangements to which increasing numbers of homeless and unemployed young people are being driven—young people being turned into tramps by the social security regulations which came into effect today—but to the arrangement by which people with large shareholdings can reduce their liability to capital gains tax and take themselves out of tax by engaging in paper transactions that have as much real existence as that half a million jobs which the Government claim have been provided during the past two years.
  That is the point of the Finance Bill—many little extras for people who are wealthy and little or nothing for people who struggle to make ends meet, the people described by my hon. Friends the Members for Leyton (Mr. Cohen) and for Liverpool, West Derby (Mr. Wareing).
  The Bill, like the Budget that it represents, is totally inadequate and almost wholly irrelevant to the problems of unemployment and poverty. The Labour party will therefore vote against it.
  9.23 pm
  The Financial Secretary to the Treasury (Mr. John Moore): I start by joining my right hon. and learned Friend the Chief Secretary in welcoming the report by the Treasury and Civil Service Committee. We have heard two noteworthy contributions—by the Committee's Chairman, my right hon. Friend the Member for Worthing (Mr. Higgins), and by my hon. Friend the Member for Kettering (Mr. Freeman). I know that my right hon. Friend the Member for Worthing will understand when I say that, as we shall be responding later to the Committee's report, it will be more relevant to note his points then.
  I should like to touch on one important point which my right hon. Friend the Member for Worthing made in his speech and which was covered in the Committee's report. The report is wrong in its comments on an aspect of fiscal adjustment. The report states that the forecast of a £1·5 billion fiscal adjustment in last year's "Autumn Statement" was not "properly qualified". The text of the "Autumn Statement" stressed the uncertainty of the estimate, as did the Chancellor's autumn statement. The other two instances quoted in the report are my speech to the Sun Life Assurance conference and the Chancellor's Sunday Times article which also—I stress this point—qualified the forecast. I have the relevant references. It is right to point out that the qualifications were significant.
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  My right hon. Friend the Member for Guildford (Mr. Howell) drew attention to the fact that the PSBR, and hence the fiscal adjustment, is the difference between two large numbers. The gross flows on each side of the account approach £200 billion a year. Therefore, a small error in expenditure or revenue, or in both, results in a substantial error in the PSBR.
  The average absolute margin of error around the PSBR forecast made in the autumn for a subsequent year is plus or minus £4·5 billion. That is comparable in size to, if not larger than, the comparable fiscal adjustment, so the publication of the potential fiscal adjustment in the autumn cannot commit the Chancellor to a course of action in the spring, because that must be a matter for judgment at the appropriate time.
  My right hon. Friend the Member for Guildford gave us a perceptive overview of the many problems on the world trading and economic scene. I particularly appreciated his comments about tax reductions and wider share ownership. He and the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) mentioned the loi Monory. This is probably not the moment to go into that, but the hon. Member and my right hon. Friend have both shown a commitment, which we share, towards wider share ownership. I particularly welcome that.
  Mr. Hattersley: Many Opposition Members would welcome the Financial Secretary's comments on the grotesque imprecision of the public sector borrowing requirement calculation. As the imprecision is so huge, how can the Government base so much of their planning on a precise forecast of the PSBR? As it is so huge, why cannot another £2 billion—half the margin of error—be used to stimulate employment?
  Mr. Moore: I am surprised that the right hon. Gentleman has only just discovered that such forecasts are hedged with, shall we say, warnings. The right hon. Gentleman should have noted that in the autumn statement and most other speeches on the subject.
  My right hon. Friends the Members for Guildford and for Worthing and the hon. Member for Sheffield, Attercliffe (Mr. Duffy) stressed the importance of the Bonn summit. I will draw the attention of my right hon. Friend the Prime Minister to what has been said on that subject.
  With typical courtesy, the right hon. Member for South Down (Mr. Powell) had already written to my right hon. Friend the Chancellor of the Exchequer on the point that he elaborated today. It seemed that there were two aspects—the substance and the inflationary financing. I should like to cover them briefly. If the hon. Gentleman wishes, I could come back to them, but perhaps we shall not wish to spend too much time on them. My hon. Friend the Member for Horsham (Mr. Hordern) and one or two other hon. Members are far more erudite than I on this subject, but the right hon. Member for South Down made some important points.
  The right hon. Gentleman asked why we would not make faster progress towards zero inflation. The speed at which we get the economy to zero inflation is a matter of judgment. If we go too fast, expectations may not adjust quickly enough and we shall get unacceptable transitional costs. However, the 3 per cent. inflation assumed for 1988–89 is a substantial step down from the 5 per cent. expected for 1985–86.

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  The right hon. Gentleman's measure of inflationary financing—he rightly said that it is difficult to be precise in some of these figures—showed only part of the story. In 1984, the inflationary impact of increased nationalised industry borrowing from banks was more than offset by additional sales of gilts to the rest of the private sector. As a result, the overall public sector contribution to monetary growth in 1984 was not expansionary by £1·3 billion, but contractionary by just under £1 billion.
  The figures showing the public sector contribution to the growth of sterling M3 on the conventional definition—I have the conventional definition and comparisons and I had better put them into a letter for the right hon. Member for South Down—can be derived from the Central Statistical Office publication "Financial Statistics". The Government have no intention of financing themselves in an inflationary way by borrowing from the banks and printing money. The commitment to broad targets and narrow money guarantees that inflationary pressures from elsewhere will not undermine counter-inflationary objectives.
  Mr. J. Enoch Powell: The essential answer that the Financial Secretary is giving is that the Government are engineering a deliberate downward movement in the rate of inflation. I am still not clear about the instrument and the delicacy of the instrument which enables them to proceed by 1 per cent. or 0·5 per cent. annual steps on that downward path.
  Mr. Moore: The right hon. Gentleman is correct in his assessment as to the degree to which the Government feel that the pace and pattern and the degree to which they are achieving their objectives are different from what some might wish. The debate on the instruments used for fine tuning might be better held at some other time. I know that my right hon. Friend the Chancellor of the Exchequer will be more than happy to address himself to the issue.
  In general, the Finance Bill proposes little change in oil taxation, thus helping to create the type of fiscal stability which is welcome to the oil industry at present. There is one aspect of the few minor changes being introduced that has caused some interest. It relates to our proposal to withdraw immediate petroleum revenue tax relief for onshore exploration and appraisal with effect from Budget day 1985.
  A number of companies, in particular small British companies operating onshore, have emphasised the extent to which they have made plans and entered into commitments on the basis that that relief would continue as at present. It is the Government's view that the existing immediate PRT relief for onshore expenditure which involves the Exchequer in providing an unnecessary subsidy and distorts the position of companies generally should be removed. We are now satisfied that withdrawing the relief from Budget day this year could create genuine difficulties for companies. We have therefore decided to defer for 12 months the date upon which the revised PRT rules for onshore exploration and appraisal will come into effect.
  That will enable those who are or could be affected by the change to revise their plans accordingly. We shall thus be bringing forward in Committee a Government amendment designed to defer the starting date of the onshore change to 1 April 1986.
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  A great deal of attention has been paid to tax reform throughout the debate. Many right hon. and hon. Members have contributed. Notable was the first contribution of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). There has been what I thought was only somewhat ill-informed comment outside the House, but it has been added to by the right hon. Gentleman who seemed to think that this year's Budget signalled the end of the Government's tax reforming intentions. I hope that I can reassure my hon. Friends the Members for Horsham and for Carshalton and Wallington (Mr. Forman), who made a speech that would merit reading by all hon. Members, that nothing could be further from the truth than to suggest that the Government's tax reforming intentions are over.
  The Finance Bill continues provisions that will abolish one tax, and radically reform two others, and a number of measures designed to stop tax losses through artificial avoidance and improve the efficiency with which tax is collected. My hon. Friend the Member for Kettering, in his short but notable contribution, drew our attention to the way in which a chunk of the Finance Bill, which has not yet merited the attention of the House on Second Reading, although it has been noted by outside commentators, continues in clauses 52 to 63 the major pattern of reform of the Income and Corporation Taxes Act 1970. Those clauses introduce a major change to short-life assessment which has been broadly welcomed by both sides of the House and by industry. It was a significant feature of the tax reforming Budget.
  The Bill contains several reforms. Clause 87 abolishes development land tax, which was welcomed by my hon. Friend the Member for Hertfordshire, South-West (Mr. Page). This is the third tax which the Government have abolished in the last two years. The tax is costly for the Revenue to collect and for the taxpayer. Abolition will reduce administrative costs for the Revenue, remove a burden from industry and release land for development, thereby benefiting employment in the construction industry.
  Reference has been made to clause 64. My hon. Friend the Member for Suffolk, South (Mr. Yeo) wanted us to go further with capital gains tax reform. I remind him that considerable revenue is at stake in the inflationary gains which are not relieved in the pre-1982 period. Clause 64 reforms and simplifies capital gains tax indexation. The indexation provisions will now apply to the first 12 months of ownership of an asset and so will remove from tax any inflationary gains since 1982. The tax will thus only be charged on real gains made on post-1982 acquisitions cost, the tax charge on pre-1982 inflationary gains will be substantially reduced. The proposal to apply indexation to losses as well as gains will meet another longstanding criticism.
  The changes will make the tax much fairer. Since the changes enable a form of share pooling to be introduced they will make life simpler for the taxpayer and his advisers. I know that that is hard to believe in view of the complexities involved, but when the reforms are examined in Committee the outside world will understand the reason for the changes.
  It is not possible to restore the pooling arrangement in its pre-1982 form since it must take account not only of the indexation relief, but of the provision to base the relief on the March 1982 value of an asset. Our proposals have

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  been widely welcomed because they represent a valuable simplification in an admittedly complex area of the tax law.
  Two other tax reforming clauses have been much welcomed by both sides of the House and the outside world. Clauses 65 and 66 reform capital gains tax retirement relief. That should encourage small business men to pass on their businesses to the younger generation rather than to battle on, perhaps in poor health, because of a tax penalty on retirement. Assets will be passed on to more energetic managment and the market opertion will be improved.
  Reference has been made to the large number of clauses—74 to 83—which might be boring but which will be of genuine benefit. The clauses simplify and modernise the ancient stamp duties. The majority of nominal fixed duties will disappear and the administration of the remainder will be simplified. This overhaul provides for the repeal of 13 pages of legislation and reduces by over 40 per cent. the number of documents which require stamping. The associated revenue loss will be less than 2 per cent. of the total yield.
  Some reforms in the Budget will make the tax system fairer by preventing artificial avoidance devices and by stopping people exploiting the system to the detriment of taxpayers in general. Every person who gets away with not paying tax by exploiting a loophole in the system increases the burden on the generality of taxpayers.
  Clauses 69 to 73 give legislative effect to the action announced in February to bring bond washing to an end. I refer to the avoidance of tax by turning income on fixed interest securities into capital gains which are then taxed at the lower rate, or, if held for 12 months or more, not taxed at all. The measures to stop bond washing will take effect next year and are expected to raise £300 million in a full year.
  Clause 45 prevents partnerships from manipulating existing rules of partnership taxation to reduce their tax liability. The change responds to criticisms by the Public Accounts Committee about what happened previously and follows consultation last year. Clause 46 closes loopholes on limited partnerships and is related to clause 45.
  The Chief Secretary has dealt with clauses 11 to 30 which make changes in the collection and enforcement of value added tax and are based on recommendations by the Keith committee. I pause only to note them as further examples of Government action to improve compliance and to reform tax collection. I was pleased to note the support of my hon. Friend the Member for Derbyshire, South (Mrs. Currie) for that part of the Bill.
  Like many right hon. and hon. Members, I shall look beyond this year's Finance Bill to the Green Paper that will be published later this year on the reform of personal taxation. It will cover several aspects of the development of income tax after computerisation. But the centrepiece will be the proposal for single transferable votes—[Interruption.] I should have said the proposal for single transferable allowances. In this House, the last thing that hon. Members forget is votes.
  The right hon. Member for Sparkbrook asked whether we were simply repeating another Green Paper. The last Green Paper set out wide-ranging options on the taxation of husbands and wives. We now propose to consult on one key option—fully transferable allowances. Many hon. Members have already welcomed the fact that the forthcoming Green Paper will cover wider issues, such as
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  the possibility of non-accumulation and self-assessment. The idea is that everyone should have the same standard allowance, and married people without enough income to use up their allowance should be able to transfer to their partners the unused balance. Thus the aggregation of the husband's and wife's income for tax purposes would end, and married women would have the privacy and independence that they have a right to expect in tax matters, as elsewhere.
  One-earner couples would clearly benefit and the current discrimination against them would end, allowing married women to decide whether to take paid employment or to stay at home, perhaps to bring up children, without the choice being biased one way or another by the tax system. The poverty and unemployment traps would be relieved and future increases in personal allowances would be more effective in reducing the numbers in the traps. Our intention is to phase in the system so that no couples lose in cash terms. With legislation in 1987, the system could be in place by 1990.
  Many right hon. and hon. Members have questioned the delay between the publication of the Green Paper and the implementation of the proposals. They have asked why fully transferable votes cannot come in before 1990—[Interruption.] I should have said fully transferable funding, and I apologise to the House for repeating that slip twice. However, I am facing the right hon. Member for Sparkbrook, and am obviously obsessed by that subject.
  We need to understand what is needed to run a new system. First, the Revenue will need very detailed information which it simply does not have at present about husbands and wives. Secondly, it will need a completely computerised system, allowing it to switch the information from one office to another in order to enable, for example, people changing their employment to allow their spouses to benefit. We need all the necessary information from something in excess of 12 million married couples. That is not only an extremely labour-intensive job, but obviously, the records are currently all on paper. We shall need to have a system that allows those records to be moved quickly, other than in a paper form, from one tax office to another.
  The Revenue is in the midst of two major changes. The first is a fundamental reorganisation and change in the overall system of Revenue tax offices. There are more than 600 offices, and those who know something about the Revenue will be well aware of the enormity of that task. Secondly, the Revenue is engaged in the largest computerisation programme in the western world. The records of 28 million taxpayers are being computerised, including the records of 1·1 million employers and of more than 3·5 million of those who are schedule D linked.
  Hon. Members will be pleased to know that that programme is running to time and cost. But its completion is an essential feature, because we cannot begin to operate a new fully transferable computerised system with a data transmission network for the computer-based national index until the full range of facilities is in place, in about 1989.
  Mr. Kirkwood: Will the Minister give an assurance that in the midst of that substantial reorganisation the Inland Revenue will have the time to contact the DHSS in order to ensure that nothing in the social security review will cut across any of the future options?
  Mr. Moore: I can so reassure the hon. Gentleman. The relationships between the two are close. In the meantime, there are actions that the Government can and must take. First, we must produce the Green Paper, which will recommend a series of major changes and will merit full public consultations. Secondly, we must ensure that the computer systems and software are compatible with the computerisation of the Revenue programmes and with the proposals that we shall put in the Green Paper. Thirdly, we must have legislation ready for the changes to be in place in 1987. Fourthly, we must have Revenue ability, once the tax office reorganisation and computerisation programme is over, to collect and prepare the needed data for the new system. That collection should be starting at some time in 1987–88 depending on the pattern that I have outlined. These are some of the crucial reasons why there is a need for consultation and considerable activity before we can introduce the new system.
  Mr. Forman: As many hon. Members on both sides of the House are concerned about the possibility of integrating the two systems, does my hon. Friend accept that in terms of the timetable he has outlined it might be useful either to find ways of speeding up the Inland Revenue's timetable or slightly delaying the social security changes that might flow from the forthcoming White Paper? It is important in one way or another to bring the time scales of the two exercises into line.
  Mr. Moore: I hear the point that my hon. Friend is making and I shall concern myself with it. My right hon. and hon. Friends and I have considered with great care the time frame surrounding the Revenue's activities in this area. I am as sure as one can be in this world that it is not seeking to create unnecessary delays. I shall consider what my hon. Friend and others have said about integration.
  I shall take up another major theme of the debate which featured in the speeches of the right hon. Member for Sparkbrook and the hon. Members for Birmingham, Hodge Hill (Mr. Davis), for Attercliffe, for Ipswich (Mr. Weetch) and for Roxburgh and Berwickshire. The right hon. and hon. Members addressed themselves to jobs and the degree to which they wondered whether the Government were putting sufficient emphasis in the Bill on the need to create employment. They expressed concern about the budgetary strategy in that respect.
  The Government's critics on unemployment fall very much into two camps. First, there are those who argue that the way to increase jobs is to increase nominal demand by running a higher level of public borrowing that is accompanied by faster monetary growth. That argument was adopted by the right hon. Member for Sparkbrook and the hon. Member for Roxborough and Berwickshire. It is their diagnosis that the economy is suffering from a lack of nominal demand but that is quite false. The money GDP rose by 7 per cent. last year and it should rise a little faster this year as the economy recovers from the coal strike. I believe that there is no shortage of demand.
  The challenge is to convert that growth in nominal demand into real growth and to damp down the inflationary components. This process will not be aided by increasing the overall level of demand. The answer is to concentrate on improving the underlying supply side performance and the competitive position of the economy. Modest increases in nominal demand will then be translated into real demand for domestic goods and services and will not be dissipated into inflation.
  108
  The previous Labour Government and other Governments attempted to achieve growth by stimulating demand. When the Labour Government were in office, nominal GDP increased by 125 per cent. but the increase in real output was less than 10 per cent. and the rest was inflation. Every £100-worth of extra demand generated £8 of extra output and £92 of inflation. That is an insidious process. Every extra fix of demand generates more inflation, threatens the competitive position of the economy and reduces its capacity to convert nominal demand into domestically produced goods, services and employment. Last year nominal demand rose by 7 per cent. and within that real GDP increased by 2·5 per cent. That is a considerable improvement in the split between real output and inflation compared with the position that prevailed in the mid and late 1970s. It reflects an improvement in the supply side of the economy, which is the only effective way of generating lasting employment opportunities.
  A second group of critics of our policies does not call for reflation but argues that our limited fiscal leeway should have been devoted to increasing public expenditure rather than cutting taxes, and this has been mentioned today. Such critics misunderstand the nature of the job creation process. Their argument is based on the assumption that the employment effects of higher public spending would be greater than from tax cuts. I agree that, initially, public spending could create more jobs than tax cuts, but it depends on the type of expenditure involved. The extra money devoted to increasing public sector employment will increase jobs, but the demand effects on employment from both higher expenditure and tax cuts will be temporary.
  Permanent jobs will be created if the supply side performance is improved, as my right hon. friend the Member for Guildford said. Tax cuts will have this effect by increasing the willingness to work and inducing workers to accept lower wage settlements. The supply of labour and its quality will be improved, industrial costs will be reduced and our competitive position enhanced. These will bring lasting improvements to the supply side of the economy and will provide permanent jobs within a competitive economy.
  The right hon. Member for Sparkbrook went, in some detail, into a discussion of the relative nature of the tax and national insurance burdens.
  Mr. Hattersley: Does the Financial Secretary believe his comments about employment? I ask him the question that I asked the Chief Secretary. Does the Treasury endorse the judgment of the Leader of the House that unemployment will fall before the next election?
  Mr. Moore: It is always better to use the precise words that people have used. There is no difference between the views of my right hon. Friend the Leader of the House and that of the Government. So that the right hon. Member for Sparkbrook can share his obvious knowledge of what my right hon. Friend said, I shall read out my right hon. Friend's words. He said:
  "I believe, however, that the underlying strength of the economy will, in time, reverse this situation. That will be the most decisive moment during this Parliament."
  I see no way that either I or my right hon. Friend the Chancellor can disagree with that statement.
  Mr. Duffy: Are there not some infrastructure arguments—selective, I grant—that would improve the Government's supply side measures?
  Mr. Moore: We can always look at legitimate infrastructure problems. When I wound up my contribution to the Budget debate, I addressed in detail the judgment as to the totality, its impact on the overall interest rates and inflation, and the relative performance of Her Majesty's Government in comparison with other Governments in terms of the commitment to the infrastructure, whether it be to roads, sewers, hospitals or prisons. I went into the matter in some detail, but I shall write to the hon. Member for Attercliffe, because he has a valid point. We think that we have the judgment right on the quantum, the quality and the relative terms.
  Mr. Wrigglesworth: The hon. Gentleman is replying to his critics, who want to increase demand in the economy. Will he recognise that the conditions today are different from those of the 1970s, when there was an oil price increase in 1973 and 1979? There was also a different balance of payments position then because now we have North sea oil revenues coming into the Treasury.
  Mr. Moore: The conditions are different in that we have at last got control of our borrowing requirement and are beginning to get control of the pattern of increasing inflation. To the extent that we have got control of the economy, we shall not lose that control again.
  I thought that it was almost an affront to the House that the right hon. Member for Sparkbrook tackled two points about taxation that I should have thought he would have preferred to ignore. One was the burden of taxation on employers. I remind the House of two points. One is that during the period of this Government, the per centage of total taxation carried by employers has been reduced from 14·1 per cent. to 9·1 per cent. Secondly, my hon. Friend the Member for Norwich, South (Mr. Powley) rightly drew attention to the fact that we have removed that burden on employers of the national insurance surcharge—a burden of £3·7 billion.
  Secondly, the right hon. Member for Sparkbrook spoke about the impact on those who are least well-off and about the pattern of taxation and national insurance charges during the period of this Government. It is difficult for Opposition Members to understand, but most of us are more concerned with the genuine quality of life of those in work than with attitudes on envy and redistribution—[Interruption.] While the right hon. Member for Sparkbrook giggles, let me remind hon. Members of the relevant data for the pattern of those on half average male earnings during Labour's period of office. The real take-home pay, or real wealth, for a married person with two children went up 4 per cent. That is excellent, but during our period of office over a similar period, that pay has gone up by 12 per cent.
  For a person on average earnings, take-home pay went up by 1 per cent. during Labour's period of office, but by 13 per cent. during our period of office. The earnings of a single person went down 3 per cent. during Labour's period of office. These are not palatable figures, but show the reality of what happened to people on lower earnings. They show the way in which those in work have benefited far more during the period of office of the Conservative Government.
  110
  Let us take a person on twice male average earnings, which is not excessively wealthy. During Labour's period of office, real take-home pay went down by 2 per cent., whereas it has gone up 14 per cent. in the last five or six years. If one is on five times male average earnings, take-home pay has gone up 28 per cent. under the Conservatives, whereas it went down 17 per cent. under Labour.
  I accept that there is a differential between the higher and lower figures because in a progressive tax system, any changes will by definition benefit those further up the scale. It is appalling that Opposition Members should argue as if those in work were worse off. I entirely accept the figures for taxes, because I announce them, but I assumed that those in Government sought to concern themselves with whether or not people were better or worse off. Under our combined policies, people on half average earings are better off, as are those on whole average earnings. That is the relevant point which should be put across.
  I know that many of the points that have been made in the debate will be considered by those of us who have the privilege of serving in Committee. Today, we are considering the underlying principles. This Finance Bill contains measures to improve incentives, promote job creation, stimulate enterprise and reform and simplify the tax system. Income tax is reduced, capital gains tax reduced and reformed, stamp duty overhauled and development land tax abolished. There are proposals to assist research and development, high technology industries and the process of innovation. There are new incentives for the self-employed and measures to protect the national heritage and to encourage charitable giving.
  The Bill therefore contains specific measures which, taken with the others announced by my right hon. Friend the Chancellor in the Budget, provide the firm financial framework within which industry can create jobs. On that basis, I commend it to the House.
  Question put, That the amendment be made:—
  The House divided: Ayes 172, Noes 278.

  Division No. 195]

  [10 pm

  AYES

  Abse, Leo

  Clark, Dr David (S Shields)

  Anderson, Donald

  Clarke, Thomas

  Archer, Rt Hon Peter

  Clay, Robert

  Ashley, Rt Hon Jack

  Clwyd, Mrs Ann

  Ashton, Joe

  Cocks, Rt Hon M. (Bristol S.)

  Atkinson, N. (Tottenham)

  Cohen, Harry

  Bagier, Gordon A. T.

  Coleman, Donald

  Banks, Tony (Newham NW)

  Concannon, Rt Hon J. D.

  Barnett, Guy

  Cook, Frank (Stockton North)

  Barron, Kevin

  Corbyn, Jeremy

  Beckett, Mrs Margaret

  Cowans, Harry

  Benn, Tony

  Cox, Thomas (Tooting)

  Bidwell, Sydney

  Craigen, J. M.

  Blair, Anthony

  Cunliffe, Lawrence

  Boothroyd, Miss Betty

  Cunningham, Dr John

  Boyes, Roland

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

  Bray, Dr Jeremy

  Deakins, Eric

  Brown, Gordon (D'f'mline E)

  Dewar, Donald

  Brown, Hugh D. (Provan)

  Dixon, Donald

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

  Dobson, Frank

  Buchan, Norman

  Dormand, Jack

  Caborn, Richard

  Douglas, Dick

  Callaghan, Rt Hon J.

  Dubs, Alfred

  Campbell, Ian

  Duffy, A. E. P.

  Campbell-Savours, Dale

  Dunwoody, Hon Mrs G.

  Canavan, Dennis

  Eadie, Alex

  Carlile, Alexander (Montg'y)

  Eastham, Ken

  Carter-Jones, Lewis

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

  111

  Evans, John (St. Helens N)

  McTaggart, Robert

  Ewing, Harry

  Madden, Max

  Fatchett, Derek

  Marek, Dr John

  Faulds, Andrew

  Marshall, David (Shettleston)

  Field, Frank (Birkenhead)

  Mason, Rt Hon Roy

  Fields, T. (L'pool Broad Gn)

  Maynard, Miss Joan

  Fisher, Mark

  Meacher, Michael

  Foot, Rt Hon Michael

  Michie, William

  Forrester, John

  Mikardo, Ian

  Foster, Derek

  Miller, Dr M. S. (E Kilbride)

  Foulkes, George

  Mitchell, Austin (G't Grimsby)

  Fraser, J. (Norwood)

  Morris, Rt Hon A. (W'shawe)

  Freeson, Rt Hon Reginald

  Morris, Rt Hon J. (Aberavon)

  Garrett, W. E.

  Oakes, Rt Hon Gordon

  George, Bruce

  O'Brien, William

  Gilbert, Rt Hon Dr John

  O'Neill, Martin

  Godman, Dr Norman

  Orme, Rt Hon Stanley

  Golding, John

  Owen, Rt Hon Dr David

  Gould, Bryan

  Park, George

  Gourlay, Harry

  Parry, Robert

  Hamilton, James (M'well N)

  Pavitt, Laurie

  Hamilton, W. W. (Central Fife)

  Pike, Peter

  Hancock, Mr. Michael

  Randall, Stuart

  Hardy, Peter

  Redmond, M.

  Harman, Ms Harriet

  Rees, Rt Hon M. (Leeds S)

  Harrison, Rt Hon Walter

  Richardson, Ms Jo

  Hart, Rt Hon Dame Judith

  Roberts, Ernest (Hackney N)

  Hattersley, Rt Hon Roy

  Robinson, G. (Coventry NW)

  Haynes, Frank

  Rooker, J. W.

  Heffer, Eric S.

  Rowlands, Ted

  Hogg, N. (C'nauld & Kilsyth)

  Ryman, John

  Holland, Stuart (Vauxhall)

  Sedgemore, Brian

  Home Robertson, John

  Sheerman, Barry

  Howells, Geraint

  Sheldon, Rt Hon R.

  Hughes, Robert (Aberdeen N)

  Short, Ms Clare (Ladywood)

  Hughes, Roy (Newport East)

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

  Hughes, Sean (Knowsley S)

  Silkin, Rt Hon J.

  Hughes, Simon (Southwark)

  Skinner, Dennis

  Janner, Hon Greville

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

  John, Brynmor

  Soley, Clive

  Jones, Barry (Alyn & Deeside)

  Spearing, Nigel

  Kennedy, Charles

  Stewart, Rt Hon D. (W Isles)

  Kilroy-Silk, Robert

  Stott, Roger

  Kirkwood, Archy

  Straw, Jack

  Lambie, David

  Thomas, Dr R. (Carmarthen)

  Lamond, James

  Thorne, Stan (Preston)

  Leadbitter, Ted

  Wainwright, R.

  Leighton, Ronald

  Wallace, James

  Lewis, Ron (Carlisle)

  Wardell, Gareth (Gower)

  Lewis, Terence (Worsley)

  Wareing, Robert

  Litherland, Robert

  Weetch, Ken

  Lloyd, Tony (Stretford)

  Welsh, Michael

  Loyden, Edward

  White, James

  McCartney, Hugh

  Williams, Rt Hon A.

  McDonald, Dr Oonagh

  Woodall, Alec

  McGuire, Michael

  Wrigglesworth, Ian

  McKay, Allen (Penistone)

  McKelvey, William

  Tellers for the Ayes:

  Mackenzie, Rt Hon Gregor

  Mr. John Maxton and

  Maclennan, Robert

  Mr. John McWilliam.

  NOES

  Adley, Robert

  Bendall, Vivian

  Aitken, Jonathan

  Bennett, Rt Hon Sir Frederic

  Alison, Rt Hon Michael

  Benyon, William

  Amery, Rt Hon Julian

  Best, Keith

  Amess, David

  Bevan, David Gilroy

  Ancram, Michael

  Blackburn, John

  Arnold, Tom

  Blaker, Rt Hon Sir Peter

  Ashby, David

  Body, Richard

  Aspinwall, Jack

  Boscawen, Hon Robert

  Atkins, Rt Hon Sir H.

  Bottomley, Peter

  Atkinson, David (B'm'th E)

  Bottomley, Mrs Virginia

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

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

  Baker, Nicholas (N Dorset)

  Bowden, Gerald (Dulwich)

  Baldry, Tony

  Boyson, Dr Rhodes

  Banks, Robert (Harrogate)

  Braine, Rt Hon Sir Bernard

  Batiste, Spencer

  Brandon-Bravo, Martin

  Beaumont-Dark, Anthony

  Bright, Graham

  Bellingham, Henry

  Brinton, Tim

  112

  Brittan, Rt Hon Leon

  Hannam, John

  Brown, M. (Brigg & Cl'thpes)

  Hargreaves, Kenneth

  Browne, John

  Harris, David

  Bruinvels, Peter

  Harvey, Robert

  Bryan, Sir Paul

  Haselhurst, Alan

  Buchanan-Smith, Rt Hon A.

  Havers, Rt Hon Sir Michael

  Buck, Sir Antony

  Hawkins, Sir Paul (SW N'folk)

  Budgen, Nick

  Hawksley, Warren

  Bulmer, Esmond

  Hayes, J.

  Butcher, John

  Hayhoe, Barney

  Butler, Hon Adam

  Heathcoat-Amory, David

  Butterfill, John

  Heddle, John

  Carlisle, John (N Luton)

  Henderson, Barry

  Carlisle, Kenneth (Lincoln)

  Hickmet, Richard

  Cash, William

  Higgins, Rt Hon Terence L.

  Channon, Rt Hon Paul

  Hind, Kenneth

  Chapman, Sydney

  Hirst, Michael

  Churchill, W. S.

  Hogg, Hon Douglas (Gr'th'm)

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

  Holland, Sir Philip (Gedling)

  Clark, Dr Michael (Rochford)

  Hordern, Peter

  Clark, Sir W. (Croydon S)

  Howard, Michael

  Clarke, Rt Hon K. (Rushcliffe)

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

  Colvin, Michael

  Howarth, Gerald (Cannock)

  Conway, Derek

  Howell, Rt Hon D. (G'ldford)

  Coombs, Simon

  Howell, Ralph (N Norfolk)

  Cope, John

  Hunt, David (Wirral)

  Cormack, Patrick

  Hunter, Andrew

  Corrie, John

  Jackson, Robert

  Couchman, James

  Jenkin, Rt Hon Patrick

  Cranborne, Viscount

  Jessel, Toby

  Critchley, Julian

  Jones, Gwilym (Cardiff N)

  Crouch, David

  Joseph, Rt Hon Sir Keith

  Currie, Mrs Edwina

  Kellett-Bowman, Mrs Elaine

  Dickens, Geoffrey

  Kershaw, Sir Anthony

  Dicks, Terry

  Key, Robert

  Dorrell, Stephen

  King, Roger (B'ham N'field)

  Douglas-Hamilton, Lord J.

  Knight, Gregory (Derby N)

  Dover, Den

  Knight, Mrs Jill (Edgbaston)

  du Cann, Rt Hon Sir Edward

  Knowles, Michael

  Dunn, Robert

  Knox, David

  Edwards, Rt Hon N. (P'broke)

  Lamont, Norman

  Eggar, Tim

  Latham, Michael

  Evennett, David

  Lawler, Geoffrey

  Eyre, Sir Reginald

  Lawrence, Ivan

  Fairbairn, Nicholas

  Lawson, Rt Hon Nigel

  Fallon, Michael

  Lee, John (Pendle)

  Farr, Sir John

  Lennox-Boyd, Hon Mark

  Favell, Anthony

  Lester, Jim

  Fenner, Mrs Peggy

  Lewis, Sir Kenneth (Stamf'd)

  Finsberg, Sir Geoffrey

  Lightbown, David

  Fletcher, Alexander

  Lilley, Peter

  Forman, Nigel

  Lloyd, Peter, (Fareham)

  Forsyth, Michael (Stirling)

  Lord, Michael

  Forth, Eric

  Lyell, Nicholas

  Fowler, Rt Hon Norman

  McCurley, Mrs Anna

  Fox, Marcus

  Macfarlane, Neil

  Franks, Cecil

  MacKay, Andrew (Berkshire)

  Fraser, Peter (Angus East)

  MacKay, John (Argyll & Bute)

  Freeman, Roger

  McQuarrie, Albert

  Fry, Peter

  Madel, David

  Gale, Roger

  Major, John

  Galley, Roy

  Malins, Humfrey

  Gardiner, George (Reigate)

  Malone, Gerald

  Garel-Jones, Tristan

  Maples, John

  Glyn, Dr Alan

  Marlow, Antony

  Goodhart, Sir Philip

  Mates, Michael

  Goodlad, Alastair

  Mather, Carol

  Gorst, John

  Maude, Hon Francis

  Gow, Ian

  Mayhew, Sir Patrick

  Gower, Sir Raymond

  Mellor, David

  Grant, Sir Anthony

  Merchant, Piers

  Gregory, Conal

  Meyer, Sir Anthony

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

  Miller, Hal (B'grove)

  Griffiths, Peter (Portsm'th N)

  Mills, Sir Peter (West Devon)

  Grist, Ian

  Mitchell, David (NW Hants)

  Ground, Patrick

  Moate, Roger

  Grylls, Michael

  Monro, Sir Hector

  Hamilton, Hon A. (Epsom)

  Moore, John

  Hamilton, Neil (Tatton)

  Morris, M. (N'hampton, S)

  Hampson, Dr Keith

  Morrison, Hon P. (Chester)

  113

  Moynihan, Hon C.

  Shaw, Giles (Pudsey)

  Murphy, Christopher

  Shaw, Sir Michael (Scarb')

  Neale, Gerrard

  Shepherd, Colin (Hereford)

  Needham, Richard

  Shepherd, Richard (Aldridge)

  Nelson, Anthony

  Shersby, Michael

  Newton, Tony

  Skeet, T. H. H.

  Nicholls, Patrick

  Smith, Sir Dudley (Warwick)

  Normanton, Tom

  Soames, Hon Nicholas

  Norris, Steven

  Speed, Keith

  Oppenheim, Phillip

  Spence, John

  Osborn. Sir John

  Spencer, Derek

  Ottaway, Richard

  Spicer, Michael (S Worcs)

  Page, Sir John (Harrow W)

  Stern, Michael

  Page, Richard (Herts SW)

  Stewart, Allan (Eastwood)

  Parris, Matthew

  Stewart, Andrew (Sherwood)

  Patten, Christopher (Bath)

  Stewart, Ian (N Hertf'dshire)

  Patten, J. (Oxf W & Abdgn)

  Terlezki, Stefan

  Pattie, Geoffrey

  Thompson, Donald (Calder V)

  Pawsey, James

  Thorne, Neil (Word S)

  Peacock, Mrs Elizabeth

  Townend, John (Bridlington)

  Pollock, Alexander

  Vaughan, Sir Gerard

  Portillo, Michael

  Viggers, Peter

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

  Wakeham, Rt Hon John

  Powell, William (Corby)

  Waldegrave, Hon William

  Powley, John

  Waiden, George

  Prentice, Rt Hon Reg

  Walker, Bill (T'side N)

  Price, Sir David

  Wall, Sir Patrick

  Prior, Rt Hon James

  Ward, John

  Proctor, K. Harvey

  Wardle, C. (Bexhill)

  Pym, Rt Hon Francis

  Watson, John

  Raffan, Keith

  Watts, John

  Rees, Rt Hon Peter (Dover)

  Wells, Bowen (Hertford)

  Renton, Tim

  Wells, Sir John (Maidstone)

  Rhys Williams, Sir Brandon

  Wiggin, Jerry

  Ridley, Rt Hon Nicholas

  Wilkinson, John

  Rifkind, Malcolm

  Winterton, Mrs Ann

  Rippon, Rt Hon Geoffrey

  Winterton, Nicholas

  Roberts, Wyn (Conwy)

  Yeo, Tim

  Rumbold, Mrs Angela

  Younger, Rt Hon George

  Ryder, Richard

  Sainsbury, Hon Timothy

  Tellers for the Noes:

  St. John-Stevas, Rt Hon N.

  Mr. Michael Neubert and

  Sayeed, Jonathan

  Mr. Ian Lang.

  Question accordingly negatived.
  Main Question put forthwith pursuant to Standing Order No. 41 (Amendment on Second or Third Reading), and agreed to.
  Bill accordingly read a Second time.

FINANCE BILL (COMMITTAL)
Ordered,
That Clauses Nos. 3, 10, 35, 40, 54, 64 and 87 and Schedules Nos. 12, 16 and 22 be committed to a Committee of the whole House;
That the remainder of the Bill be committed to a Standing Committee;
That, when the provisions of the Bill considered. respectively, by the Committee of the whole House and by the Standing Committee have been reported to the House, the Bill be proceeded with as if it had been reported as a whole to the House from the Standing Committee.—[Mr. Moore]
Committee tomorrow.

STATUTORY INSTRUMENTS, &c.
INTERNATIONAL IMMUNITIES AND PRIVILEGES
Motion made, and Question put forthwith, pursuant to Standing Order No. 79(5) (Standing Committees on Statutory Instruments, &c.)
That the draft Specialized Agencies of the United Nations (Immunities and Privileges) (Amendment) (No.2) Order 1985, which was laid before this House on 3rd April, be approved.
That the draft Eumetsat (Legal Capacities) Order 1985, which was laid before this House on 3rd April, be approved.—[Mr. Archie Hamilton.]
Question agreed to.

WELSH GRAND COMMITTEE
Ordered,
That, during the proceedings on the matter of the Welsh economy, the Welsh Grand Committee have leave to sit twice on the first day on which it shall meet; and that, notwithstanding the provisions of Standing Order No. 67 (Meetings of standing committees) the second such sitting shall not commence before Four o'clock nor continue after the Committee has considered the matter for two hours at that sitting.—[Mr. Archie Hamilton.]

Death Grant
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Archie Hamilton.]
10.15 pm
Dr. John Marek: Hon. Members are not accustomed to leaving the House at this early hour. Perhaps they will stay and listen to what we have to say.
I wish to discuss a matter that affects my constituents and those of hon. Members on both sides of the House—the failure of the death grant to provide realistic help to people who have to pay inevitably large and sometimes unexpected funeral bills.
The death grant was introduced in 1949, when it stood at £20. That sum was then sufficient to cover the cost of a basic funeral. It was intended that the grant would save the elderly the worry of having to find the money to give themselves a decent burial and remove the spectre of a pauper's funeral from those who had no savings. Thirty-six years later, funerals cost on average 20 times as much as in 1949 and yet the death grant has increased by only £10, now standing at a meagre £30. It was increased to £25 in the 1950s and to £30 in 1967. The sum represents negligible help with the funeral bill, and the original intention of the grant is no longer being met.
Elderly people still feel that they must go without food, heat and other necessities to put aside enough money to pay for their funerals. Paupers', or contract, funerals still exist and a growing number of bereaved relatives are forced to turn to the social security system for extra help. In 1983, 13,000 recently bereaved people had to undergo the distressing and undignified process of being means-tested for a single payment to cover funeral costs.
The Government's 1982 consultation paper conceded that a major reform of the death grant was needed as the present system did little for those needing help. There is widespread support in the country for the Government's belief that the system needs urgent reform. We have now waited nearly two and a half years for the Government to bring their deliberations to a conclusion. In the meantime, the real value of the grant has been further eroded. More and more of the costs of the funeral have to be met from other sources. Thousands of people continue to go without, in order to pay for the funeral that they believe is their own responsibility. I am sure that hon. Members will know of many old people who worry needlessly and endlessly about how they will be buried and whether there will be enough money in their estate when they die to give them a decent funeral.
The death grant has failed to meet its original objective. I am sure that the Government will not disagree with the view that self-reliance is a good thing and is to be encouraged among those whose resources are adequate. However, a growing number of people are unable to pay for their own funeral both because funeral costs are rising and because people live longer in retirement, using up their savings.
As the number of people unable to provide for their own funeral grows, so the onus of responsibility for footing the bill has fallen more and more on the shoulders of the bereaved, who are increasingly subjected to distress over how to find the money. Those who qualify for supplementary benefit payments have to endure the upsetting and undignified means test at a time of bereavement. The procedure is unacceptably harsh, but
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they have to go through it in order to obtain extra help through the single payment system. The means-testing of the bereaved cannot be allowed to continue. It was the main reason for the overwhelming rejection of the Government's 1982 dual means test proposals. I do not want to pre-empt discussion of the Government's forthcoming proposals for reforming the death grant, which I understand may form part of the plans for reforming the social security system. However, it may be opportune to consider possible outcomes of their deliberations on the matter.
Of all the solutions that might emerge, a grant which lays the burden of responsibility firmly on the shoulders of the bereaved while not at the same time covering the full cost of the funeral would be the worst possible. The deceased, the state and the bereaved should all bear some responsibility for funeral costs—the deceased and the bereaved because they want a dignified funeral and the state because it requires funerals to be in accord with legal and public health requirements.
In an ideal world, the obvious and complete solution, which would ensure that the standards of funerals required by the state, the deceased and the bereaved are met would be a universal death grant which covered the costs of a funeral. That view is sponsored by the Dignity in Death Alliance, represents the views of nearly 50 charities and pensioners' groups throughout the country and reflects the obvious fact that death is universal and comes only once and that national insurance contributions are nearly universal. I am aware that we do not live in an ideal world and that money is limited. Judgments have to be made by any Government about priorities of need and entitlement. I do not underestimate the difficulties that a Government have in devising a system which assists all those in need with funeral charges at minimal cost to themselves.
Perhaps I might help the Government by reminding them of their 1982 proposal to means-test the estate of the deceased. The deceased's estate, as valued through probate, is already used in assessing applications for single payments. The Welsh Consumer Council said in its 1984 submission to the Government that it is not unreasonable to use the deceased's estate as a means of determining eligibility for grant. I agree with that principle and believe that a full death grant should be paid immediately and that, if the deceased's estate is worth more than, for example, £5,000, some repayment of the grant should be made. Such a procedure would allay the worry of the bereaved in many cases and of the deceased before death. They would be certain of dignity in death. I look forward to discovering whether the Government's proposals, when they come, will reflect the serious consideration that that option deserves.
It would be remiss of me not to mention an issue that is often raised at my constituency surgeries—the relationship between funeral costs and the death grant. Death grant should be set at a level that covers the total cost of the funeral. Although the cost varies from one part of the country or another, I estimate that a reasonable and proper funeral without any excess costs about £500. If, in our less than ideal world, we cannot provide that by way of grant—I suspect that that will be the Minister's answer—we should at least cover the cost of discharging the minimal responsibilities of the deceased and the community.
Funeral directors and local authorities have a part to play in keeping costs down, but we must acknowledge the

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fact that funerals are expensive in Britain because public health standards and proper disposal procedures have to be maintained, burial grounds have to be sited away from other activities, religious requirements have to be fulfilled and we expect to maintain the identity of the deceased. Those are standards set by a civilised society and are not luxuries to which only the affluent are entitled. The least that we should expect to pay to discharge the community's and the deceased's minimal responsibilities is about £300 at 1984 prices. The full amount should be made available to eligible estates and the grant should be reviewed regularly—and preferably be index-linked—to ensure that it remains adequate.
10.23 pm
The Minister for Social Security (Mr. Tony Newton): It is conventional to congratulate an hon. Member on having the good fortune to gain the opportunity of an Adjournment debate and on his choice of subject. I readily congratulate the hon. Member for Wrexham (Dr. Marek) on his good fortune, but he will realise that the subject puts me in a singularly difficult position because we are in the middle of a social security review. I know that he will understand if I cannot say as much as I should like or what I hope will be possible.
I recognise that the subject raised by the hon. Gentleman is one of very great concern to many people, especially pensioners, and that that itself has been reflected in the interest shown by other hon. Members. There has been one early-day motion, No. 128, on the Order Paper since last November; another one, No. 635, was tabled fairly recently; and I see that hon. Members were even ingenious enough to import the death grant into yet another early-day motion, No. 531, which purports to be about value added tax on newspaper advertising. The exercise of that ingenuity is some reflection of hon. Members' interest in the subject.
I can assure the hon. Member without qualification that Ministers—and not just me as a Minister responsible for social security—recognise that there is a good deal of concern about this matter. If we did not, in any event it would be drawn to our attention by the considerable volume of correspondence which we receive, by early-day motions, and by the number of occasions that the matter is mentioned when we meet groups concerned especially with pensioners, as I did for example when recently I met a deputation from the Dignity in Death Alliance.
In seeking to respond to the speech of the hon. Member for Wrexham, I need just to make the point that in looking at where we should go from where we are now there is some merit in considering how we got to where we are now and in going briefly over the history of the death grant.
Prior to the introduction of the welfare state, or the set of institutions and policies collectively described today as the welfare state, most people had policies with industrial life offices to help meet funeral expenses. But that provision was subject to a good deal of criticism, for a variety of reasons. One was that there were very high administrative costs. I am told by the experts in my Department—for all I know they may have been there between 1937 and 1940—that in those years just before the war about 37·2 per cent. of premiums to industrial life offices were going in administration costs. I am also told
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that it often proved that policies had lapsed through nonpayment, which obviously caused difficulties when the eventuality arose, and that in other cases the companies which provided the policies were wound up.
When the then Sir William Beveridge was looking at all these issues in the course of his work during the war, he came to see state provision as a cheaper and more efficient alternative to the industrial life office and other non-state provision which had existed before the war. He envisaged a grant sufficient to meet funeral costs, with different rates for adults and children.
There was to be no grant for people who were past retirement age when the scheme was introduced. As the hon. Member for Wrexham acknowledged, it is a national insurance benefit. There was to be a half rate for those within 10 years of retirement. It is those provisions that explain why even now—this is not always easily understood—men aged 102 or more and women who are now aged 97 or more are not entitled to any death grant because they were not covered by the scheme when it came into effect in 1948. It also explains why people who are 10 years younger—down to 92 in the case of men and 87 in the case of women—only get £15 instead of the ordinary rate of £30.
As the hon. Member acknowledged, since 1948 the grant has been increased only twice from the figure then set—once in 1958 under a Conservative Government, and once in 1967 under a Labour Government. It is clear that under Administrations of both political colours the idea of a generalised increase in the death grant has never really been afforded very high priority, and it is now nearly 20 years since any Government made an increase. It must be acknowledged—in view of the fair way in which the hon. Member put his points, I think that he would do so—that the world has changed a great deal since Beveridge was writing in the 1940s. Social conditions have generally improved or, at the very least, changed—I would say that they have improved, and I hope that I would carry the hon. Gentleman with me—and that has been reflected in, among other things, a large increase in personal wealth throughout the community including pensioners. More people own their own homes, have the benefit of life assurance policies or have built up savings in other ways. I do not intend to imply that that is universal, but the scale of personal assets is larger than it was 30 or 40 years ago when this system came into effect.
In 1974, the Department conducted research which showed that only 7 per cent. of those responsible for paying for funerals said that they had any difficulty in finding money to meet funeral costs. That appeared to be because of the availability of insurance and other assets and because a much smaller proportion of people, compared with the late 1930s and 1940s, died leaving no assets.
It is important to make those points because, as with any other problem of social security or politics, it is necessary to see one need and one set of concerns in perspective and in relation to others. It seems clear that the great majority of people do not have any great difficulty in meeting funeral costs.
I must place on the record, if only for the completeness of the debate, some of the figures detailing what would be required to meet claims that are sometimes made in relation to death grant. Using the March 1985 retail price index, to restore the grant to its 1967 value, when it was last increased, it would have to be increased from £30 to

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£175, which would cost about £85 million a year extra in 1984–85 if the other conditions for giving the grant remained unchanged. To extend such a grant to cover all deaths—to remove that residual contributory element to which I have referred—where at present no grant or only a reduced rate is paid would cost a further £10 million. That would leave us with a total cost, including administration, of about £130 million.
Using the March 1985 RPI, to restore the death grant to its value at introduction in 1949, it would have to be increased to about £225, which would cost about £110 million a year extra in 1984–85. To remove the residual effects of the contributory basis on which the grant was introduced would cost a further £20 million. The total cost of paying the grant would be about £160 million.
I turn to the point raised by the hon. Member towards the end of his speech about covering reasonable funeral costs. The figures that I have before me relate to a cost of about £350, rather than £500, although I do not wish to argue about what is a reasonable figure. The estimates that I shall cite are lower than would be required to meet the figures suggested by the hon. Gentleman. On 1984–85 figures, to pay a death grant at the rate of £350 would cost about £185 million a year, with another £30 million being required to pick up the reduced rate cases, giving a total cost of about £240 million.
I would say only—I would not wish to labour this point too much—that, even against the background of the huge social security budget, the additional sums involved in any of these proposals, which range from a little under £100 million to more than £200 million, are substantial when compared with the costs of many other requirements.
Dr. Marek: I was not asking for a grant without some form of clawback, perhaps related to the sum of £5,000 where it would be necessary to have a grant of probate, so that costs would come down considerably.
Mr. Newton: I accept that. I do not suggest that the hon. Gentleman made an unreasonable or strident speech, but I thought it sensible for me to put on record the sort of sums that we could be talking about for some of the
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suggestions that have been made and to stress the point of which I, as the Minister with responsibilities for the needs of disabled people, am particularly conscious, which is that the costs have to be judged against the many other claims for improvements in benefits. They may be desirable, but they have to compete for available resources.
The hon. Member noted that for the relatively small number of people who find difficulty in meeting the cost of a funeral, there is the possibility of help through the supplementary benefits system. In 1982, about 12,500 families received single payments, in addition to death grant, averaging about £210, to help with funeral costs.
I noted carefully what the hon. Gentleman said about people's feelings about supplementary benefits means-testing at the time of bereavement. I shall not dismiss that.
As the hon. Gentleman said, the Government put forward for consultation nearly three years ago a variety of proposals for changes in the system which it was felt would lead to better targeting of available resources and give greater help to those who needed it. I shall not go through all the options in the appendix to the consultation paper—the hon. Gentleman will have read them—but there were three major options for paying a much larger grant, ranging from £150 to £250, to those most in need.
No clear public consensus about any of the options emerged from the consultation process and, as a result, the Government have continued to consider the matter and are carrying forward that consideration in the current review of social security as a whole. The hon. Gentleman will understand that I cannot make any promises about the future of social security or about the vexed question of the death grant.
However, we have noted what the hon. Gentleman has said and the concern that he expressed on behalf of his constituents. I hope that it will not be too long before we can make proposals that, whether or not he finds them to his liking, will carry forward the public debate on the subject and produce a more acceptable position. I am grateful to the hon. Gentleman for the trouble that he has taken to enable me to put that point on record.
Question put and agreed to.
Adjourned accordingly at twenty-two minutes to Eleven o' clock.

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

London Traffic Delays: Coaches and Lorries
Lord Boothby: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will take steps to impose restrictions on coaches and heavy lorries in London in order to prevent inordinate traffic delays.
Lord Brabazon of Tara: My Lords, coaches and heavy lorries are already subject to a number of local authority traffic regulations in London. Urgent consideration is being given, with the authorities concerned, as to the scope for action over increased volumes of coaches in London this summer.
Lord Boothby: My Lords, arising out of that Answer, is the noble Lord aware that unless something really drastic is done by somebody to stop or to limit the parking of these juggernauts all over central London, traffic will gradually grind to a standstill?
Lord Brabazon of Tara: My Lords, we are of course concerned. That is why we are examining the situation to see how we might assist the authorities more directly in resolving the problems.
Lord Granville of Eye: My Lords, is the noble Lord aware that some of the continental day coaches come to the centre of London, put down their passengers and then cruise around empty for two or three hours, and that this in itself is causing serious traffic delays?
2
Furthermore, has he seen the Embankment, which has now been turned into a very large coach station, which is also causing serious traffic delays?
Lord Brabazon of Tara: My Lords, the problem is the difficulty in finding places in which to park these coaches in London when they have disgorged their tourists. I am sure that noble Lords will agree that the tourist industry is of great importance to London and the economy, and that we should not try to prevent tourists from coming here.
Lord Ezra: My Lords, is the noble Lord aware of the intense and growing concentration of coach traffic in the Victoria area around the coach station? Is he further aware that in recent tests carried out the emissions of smoke and sulphur dioxide in Ebury Street (which is a residential area) were in excess of the EC limits? What are the Government going to do about this threat to health and the environment in this important part of central London?
Lord Brabazon of Tara: My Lords, I am well aware of the concern of the noble Lord, Lord Ezra, for the Ebury Street area and Victoria Coach Station. I was not aware that the smoke was in excess of the limits allowed. I can say that it is primarily a matter for the GLC, which is the traffic authority, and of course Westminster City Council. However, I hope that that will not long remain so. I would say that I believe that there are certain plans in hand which might alleviate the situation in Ebury Street.
Lord Diamond: My Lords, will the noble Lord accordingly support us when we come to the appropriate amendment in the Bill?
Lord Brabazon of Tara: Certainly not, my Lords.
Lord Cledwyn of Penrhos: My Lords, I wonder whether the noble Lord would be kind enough to say a little more about the examination which is being conducted. Can he tell us what are the terms of reference of the examination, who and how many are conducting the examination, and when the Government will be in a position to announce the result of it?
Lord Brabazon of Tara: My Lords, it is early days at the moment. The noble Lord may well be aware that the GLC is currently conducting its own investigation, and I believe submissions have to be in by 31st March. We shall be interested to see the conclusions. As for our own investigations, we are discussing the situation with the local authorities concerned, the operators and so forth.
Lord Mowbray and Stourton: My Lords, would it not be possible for Her Majesty's Government, in conjunction with the GLC or whatever other body, at least to see that juggernauts unload their heavy loads into smaller lorries before coming into the very centre of London?
Lord Brabazon of Tara: My Lords, as the noble Lord may be aware, there is already a ban in certain areas of central London on lorries of over 40 feet—and I believe that the area is bounded by Vauxhall, Blackfriars, King's Cross and the Edgware Road—for those not requiring access to central London. As to larger lorries transferring their loads to smaller lorries, I am not sure that that would have the desired effect as it would result in more lorries and not fewer.
Lord Lloyd of Kilgerran: My Lords, in view of the basically unsatisfactory answer of the noble Lord the Minister to my noble friend Lord Ezra, can the noble Lord give an undertaking that the pollution difficulties to which my noble friend referred, and of which the noble Lord the Minister had no knowledge, will be looked into in the near future?
Lord Brabazon of Tara: My Lords, I apologise if my answer to the supplementary question of the noble Lord, Lord Ezra, was unsatisfactory. I shall look into the question which he has raised and see what conclusions we come to.
Viscount Trenchard: My Lords, has my noble friend an estimate of the degree to which the problems that are being complained about will be alleviated when the M.25 is completed?
Lord Brabazon of Tara: My Lords, I hope that the problems of lorries using London as through traffic will be very considerably alleviated when the M.25 is completed. In regard to tourist coaches, etc., I do not think there will be any difference.
Baroness Fisher of Rednal: My Lords, is the noble Lord aware that adjacent to St. Margaret's in Parliament Square there is a private hire coach parked every day of the week advertising the three trips which it does round the London sights? Will he look into the matter, because it is causing extreme congestion in Parliament Square itself?
Lord Brabazon of Tara: My Lords, I am not aware of the particular matter to which the noble Baroness refers. I would point out that under the London Regional Transport Act 1984 licences for local excursions and tours can be refused if the traffic commissioners consider that the proposed stopping places would be prejudicial to the safety or convenience of the public. I shall draw the noble
4
Baroness's remarks to the attention of the appropriate quarter.

EMS Exchange Rate Mechanism
2.45 p.m.
Lord Reay: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government when they propose to join the exchange rate mechanism of the EMS.
The Chancellor of the Duchy of Lancaster and Minister for the Arts (The Earl of Gowrie): My Lords, the Government have no objection in principle to joining the EMS exchange rate mechanism, but the question of participation requires assessment of a wide range of factors. For instance, recent experience has shown that sterling responds very differently from other EMS currencies to dollar and oil market developments.
Lord Reay: My Lords, may I thank my noble friend for that reply? Would he agree that in recent months the movements of the pound against the dollar have been greater than the movements of continental currencies against the dollar? Also, would he agree that this is probably at least in part due to the fact that currencies within the EMS are less attractive to speculators than currencies outside the EMS and that therefore if this country were to join fully the EMS this should give some stability for the currency and be of help to British manufacturers as well as those responsible for making Government forecasts?
The Earl of Gowrie: My Lords, I have considerable sympathy, as I think my noble friend is aware, with the desire of manufacturers and exporters to have greater certainty; but this is not a world in which certainty about exchange rate movements, whether within the EMS or outside it, is very easy to achieve. The fluctuations mentioned by my noble friend, had they taken place within the exchange rate mechanism, would not have been very material because as a second reserve currency linked to oil factors there would have been volatility for sterling in any case.
On the question of speculation, when a fluctuation is not containable, even though it might take place within the exchange rate mechanism, the slowing down of the adjustment process through the ERM is an invitation to virtually risk-free speculation, and the Government of course would be highly criticised if we promoted that.
Lord Diamond: My Lords, what is the point of the noble Earl rehearsing the arguments against the principle of joining when he has already told us that he is in favour of joining? He is one of the principal members of the Government. Is the noble Earl aware that there is a huge body of expert opinion, including the Governor of the Bank of England, which has recommended that we should be joining the EMS now? What is the reason for further delay?
The Earl of Gowrie: My Lords, I was not rehearsing an objection to joining in principle. Indeed, in my original Answer to my noble friend I said that the Government had no objection in principle. I said that it was not as easy, given petro-currency fluctuations, as many people thought. As to the Governor of the Bank of England, he has been prayed in aid on this subject before so I took the precaution of looking up what he actually said. It is somewhat equivocal support because the Governor said that joining would produce other problems. If I may quote him, he said:
"You see, our membership might change the actual working of the system itself".
Lord Bruce-Gardyne: My Lords, would my noble friend agree or not agree that if the primary purpose of Government policies is the abatement of inflation by the application of monetary discipline at home, then membership of the EMS would be contra-indicated? But if on the other hand the Government's primary purpose has been the achievement of an exchange rate level, whether disclosed or not, then logically it would follow that membership of the EMS would be indicated.
The Earl of Gowrie: My Lords, in logic I think my noble friend is quite right. This is why the Government have no objection in principle to joining. The trouble is that movements of oil prices round the world are not dictated by logic and we are uniquely affected by them.
Lord Ezra: My Lords, would the noble Earl not agree that this petro-currency argument is being overdone? It was not so long ago that the Government were saying that only 6 per cent. of our national product was due to oil. We cannot keep on using this argument in opposite directions. The sooner we strengthen the European monetary system, the sooner we can bring some stability to world currencies.
The Earl of Gowrie: My Lords, if I may respectfully say so to the noble Lord, he is wholly wrong. Even if only three per cent. of our economy were affected by oil price movements, that would have a very considerable effect on the movements of sterling.
Lord Stoddart of Swindon: My Lords, is the noble Earl aware that the Opposition understand the difficulties which the Government have in this matter? Would he agree that, in spite of what the noble Lord, Lord Ezra, has said about sterling as a petro-currency, the fact is that the world sees sterling as a petrocurrency and reacts accordingly? Is it not a fact that if we at this present time go into the EMS the divergence limits will have to be very high indeed, perhaps as high as 25 per cent.? Would he also say what he thinks the rate against the ecu would have to be if we entered the EMS? Would it not have to be much lower than the present rate of 1.82 ecus to the pound?
The Earl of Gowrie: My Lords, I do not believe that I can comment on the noble Lord's latter point because, as I have said, we would remain subject to petro-currency regulations and fluctuations even within the EMS. As to the noble Lord's former point, I am glad if somewhat surprised to be rescued by the noble Lord, Lord Stoddart of Swindon, and I think
6
that what he says on this occasion has considerable merit.

Argentina: Commercial Links
2.50 p.m.
Lord Molloy: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what progress has been made towards stabilising commercial links with Argentina.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, the Argentine Government could take a major step towards the normalisation of our bilateral relations by agreeing to the reciprocal lifting of trade restrictions. We have made a number of proposals to achieve this.
Lord Molloy: My Lords, I thank the noble Baroness for that reply. Does she not agree that the Answer itself indicates that very little progress has been made? I believe that the new rulers of Argentina, who were opposed to the attack on the Falkland Islands, want to have a solid relationship with us. It might be well worth our while appointing a commission, perhaps under the Lord Privy Seal, to go to the Argentine to sort out the real problems there and overcome them in the interests of both countries.
Baroness Young: My Lords, we have tried on a number of occasions to achieve better bilateral relations with Argentina. One area where we believe we could make progress to the benefit of both ourselves and Argentina is that of trade and commercial relations. Unfortunately, Argentina has been unwilling to discuss this matter unless the issue of sovereignty is also discussed—which is unacceptable to us.
The Earl of Kimberley: My Lords, can my noble friend say whether any progress has been made, in respect of trade relations with Argentina, about the 200-mile exclusion fishing zone for our country and for the Argentine?
Baroness Young: My Lords, that is a very interesting point, but it is wide of the original Question. However, if my noble friend would care to put down a Question on this subject, I shall be happy to answer it.
Lord Kilmarnock: My Lords, will the Government lift the absurd ban on the import by British booksellers of books from the Argentine? This ban has absolutely no effect other than to prejudice the British book trade.
Baroness Young: My Lords, the Government recognise that special considerations apply to books. Indeed, we have repeatedly urged the Argentine Government to lift reciprocally all remaining commercial and economic restrictions between our two countries.
Lord Cledwyn of Penrhos: My Lords, last week the noble Lord, Lord Trefgarne, said in the debate on the Falklands that the Government were taking a constructive approach towards the rescheduling of the Argentine debt. Can the noble Baroness tell the House what form that constructive approach is taking?
Baroness Young: My Lords, the agreement reached at the Paris club meeting on 15th and 16th January on the rescheduling of Argentina's official debt is an important contribution to the economic adjustment programme of this third largest international debtor.
Lord Morris: My Lords, may I ask my noble friend whether one of the Government's proposals to the Argentine Government is that they now officially declare, at last, cessation of hostilities?
Baroness Young: My Lords, the Government of Argentina have not yet officially declared a cessation of hostilities—but we have still said that we would like to have better bilateral relations, including trade relations.
Lord Molloy: My Lords, is the noble Baroness aware that while the argument she submits apropos sovereignty of the Falklands is a very real one, that should be no reason or obstacle in the way of seeking to establish the kind of relationship for which I asked in my original Question?
Is the noble Baroness aware also that preliminary steps were taken by the British chairman of the IPU and many of his colleagues just under a year ago? It seemed to us then that if there could be something like a trade mission the very agreement to that by the Argentine would help to improve our relationship—which would be very beneficial to Great Britain and to the Argentine itself, and would therefore mean that both nations would gain something.
Baroness Young: My Lords, the Government have raised on five occasions, through the presidency of the European Community, the possibility of lifting trade restrictions. We tried in our long, complex negotiations leading up to Berne to do so again; and we have tried again subsequently. But for the reason I have already given, nothing, unfortunately, has come of these.

Civil Defence: Public Shelters
2.54 p.m.
Lord Murton of Lindisfarne: 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 by what date they will issue guidance to local authorities to enable them to identify suitable public shelters for civil defence purposes.
The Parliamentary Under-Secretary of State, Home Office (Lord Glenarthur): My Lords, we plan to issue this guidance as a supplementary handbook to the
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consolidated guidance on emergency planning in the next few weeks.
Lord Murton of Lindisfarne: My Lords, I thank my noble friend for that reply. Has any study been made of the practice adopted by the Swedish and Swiss Governments, whereby they incorporate in new structures—in both commercial and industrial buildings—public shelters?
Lord Glenarthur: My Lords, the Civil Defence (General Local Authority Functions) Regulations 1984 require local authorities to make plans for utilising existing structures, and indeed natural features, as shelters for the public. The Government have also published advice on various kinds of contingency and purpose-built domestic shelters. I am sure that the kind of consideration to which my noble friend referred will have been taken into account.
Lord Jenkins of Putney: My Lords, is the noble Lord aware that both the Swedish and Swiss Governments, given as an example by his noble friend, have no nuclear weapons upon their soil? Is he aware also that it is a condition of effective civil defence to get rid of the nuclear weapon? Will he take a lesson from the suggestion of his noble friend?
Lord Glenarthur: My Lords, I do not agree with the noble Lord. I suggest that the best way to meet the kind of concern which he often expresses is to rely on our policy of deterrence.
Lord Renton: My Lords, will my noble friend ensure that the shelter policy is co-ordinated with the Government's crisis relocation plans?
Lord Glenarthur: My Lords, I am sure that it is one of the many factors taken into account.

Business
2.56 p.m.
Lord Denham: My Lords, at a convenient moment after 3.30 p.m. this afternoon my noble friend Lord Lyell will, with the leave of the House, repeat in the form of a Statement an Answer to a Private Notice Question in another place on the use of medical cards as proof of identity in Northern Ireland local elections.
It may be for the convenience of the House if I announce that the Committee stage of the Local Government Bill will be adjourned at approximately 7.30 p.m. for a short period, and that during this adjournment the Eumestat (Legal Capacities) Order 1985 and the Specialised Agencies of the United Nations (Immunities and Privileges) (Amendment) (No. 2) Order 1985 will be taken.

Royal Bank of Scotland Bill
Read a second time and committed to an Unopposed Bill Committee.

Standing Orders (Public Business)
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move the first Motion standing in my name on the Order Paper.
This and the second Motion both put into effect the recommendations of the First Report from the Procedure Committee to which your Lordships agreed on 18th April last—although your Lordships spent rather more time discussing our recommendations on Starred Questions. I beg to move.
Moved, That the Standing Orders relative to public business be amended as follows:
Standing Order 33
Leave out the words "unless the House so order".—(Lord Aberdare.)
On Question, Motion agreed to.

Standing Orders (Public Business)
Lord Aberdare: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That, notwithstanding the terms of Standing Order 37, business may be postponed without notice with the unanimous leave of the House until further order, as recommended in the First Report of the Procedure Committee, agreed to on 18th April 1985.—(Lord Aberdare.)
On Question, Motion agreed to.

Local Government Bill
2.58 p.m.
The Minister of State, Department of the Environment (Lord Elton): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Elton.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Baroness Birk Baroness Birk moved Amendment No. 1:
Before Clause 1, insert the following new clause:
("Commitee of Inquiry.
.—(1) Not later than one month after the passing of this Act there shall be established a committee of inquiry ("the Committee") which shall inquire into and report on the best means for securing the future provision of services undertaken by the Greater London Council and the metropolitan county councils before 1st April 1986.
(2) The Committee shall make its report no later than 1st February 1986.
(3) Schedule (Independent Committee of Inquiry) shall have effect with respect to the membership and powers of the Committee.")
The noble Baroness said: I move this amendment which stands in my name and the names of the noble Lords, Lord Evans of Claughton and Lord Kissin, and the right reverend Prelate the Bishop of Liverpool. If the Committee agree, with Amendment No. 1 I shall
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speak to Amendments Nos. 24 and 141, which are consequential.
Amendment No. 24: Before Schedule 1, insert the following new schedule:
("Independent Committee of Inquiry
1. In preparing its report the Committee of Inquiry ("the Committee") established by section (Committee of Inquiry) of this Act shall consider such matters as it thinks appropriate.
2. The Secretary of State shall assist the Committee by making available to it such information and documents as the Committee considers relevant to the preparation of its report.
3. The Greater London Council and the metropolitan county councils shall assist the Committee by making available to it such information and documents as the Committee considers relevant to the preparation of its reports.
4. The Committee shall consist of members appointed by the Secretary of State, in such a manner that—

(a) the Committee consists of such number of members as the Secretary of State thinks fit;

(b) the members of the Committee are suitably qualified to undertake the inquiry mentioned in section (Committee of Inquiry) above by virtue of experience of, or capacity in.local government or related or relevant fields;

(c) the members of the Committee include persons representative of bodies representative of local authorities in England;

(d) no member of the Committee is —

(i) a member of Parliament:

(ii) a Crown servant;

(iii) a member or employee of any body to which functions, property, rights or liabilities will be transferred by or under this Act;

(iv) a member or employee of the Greater London Council or a metropolitan county council;

(v) a member of the staff commission.")

Amendment No. 141: Clause 98, Page 71, line 33, at end insert —
("(5) Notwithstanding subsection (1) above, an Order under this section may include provisions to implement recommendations of the report of the Committee of inquiry referred to in section (Committee of Inquiry) of this Act, and no Order shall be made under this subsection unless a draft of it has been laid before and approved by a resolution of each House of Parliament.")
Two weeks ago the House approved the Second Reading of this Bill. The amendment seeks in no way to challenge that decision or to delay the timetable for abolition set out in the Bill. The amendment calls for an independent inquiry to report on the best means of securing the future provision of those services currently undertaken by the GLC and the metropolitan counties. I appreciate that this is an unusual request at this time. It is very strange and unique to ask for an inquiry during the passage of a Bill, but this is a very strange and very unique Bill, as I hope the noble Earl will take into account. Therefore, one must find a way of trying to improve on what at the moment is a completely chaotic situation.
The Government have not held an inquiry and, without going into the details of the various commissions and inquiries, it has certainly never been known in recent times for a major reorganisation of this sort to take place without an inquiry or a Royal Commission preceding it. That has not happened. What has happened is that informed opinion, be it professional, academic, political, from local government, or even from industry and commerce, has been critical of the proposals and has informed the Government of the doubts and criticisms but has so far made no headway at all.
Under the amendment there would be no delay. The Secretary of State would be able to choose to act, or not to act, on the findings. Parliament would also have a chance to vote, before abolition became effective, on any order which the Secretary of State may decide to lay before it. A complete lack of consensus has arisen

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during the Bill. Although there is always a certain amount of conflict and disagreement on any legislation, particularly this sort of legislation which is changing the structure of local government, I do not think I have ever known a situation quite like this—and I am not referring to my own direct experience but to my reading and a knowledge of the history of local and central Government. Inquiries in the past did not in any way support the type of proposals contained in the Bill; in fact, they were highly critical of them. The Marshall Inquiry, the Herbert Commission and the Redcliffe-Maud Royal Commission all overwhelmingly opposed what is being done. The independent reports were critical not only because of their concern for the way the functions were to be carried out but also because of the higher cost and, as they saw it, the lower effectiveness and lower cost-efficiency—and that is an aspect for which the Government are always saying they have a great regard.
Moreover, the Bill does not meet the Government's objectives. The noble Viscount the Leader of the House was kind enough in winding up at Second Reading, at col. 582, to remind us of those objectives. He said:
"For the avoidance of any doubt I shall repeat the relevant passage from our election manifesto:
'The metropolitan counties and the GLC have been shown to be a wasteful and unnecessary tier of Government. We shall abolish them and return most of their functions to the boroughs and to the districts'."
A noble Lord: Hear, hear!
Baroness Birk: Yes, the noble Lord may say "Hear, hear", but that is not what is happening. Something entirely different is being done. The functions are not going to the boroughs and the districts. The boroughs and the districts will be handling much less of the expenditure of the services with which the metropolitan counties and the GLC are concerned than will the joint boards, joint committees and other quangos. In fact, 31 per cent. of expenditure of the GLC will go directly to the boroughs and 18 per cent. directly to the districts. Therefore, it will not be simpler and the services will not be closer to the voter, though that was the point made by the noble Lord, Lord Elton, when he opened the debate at Second Reading. Local democracy and accountability will be far less and not greater. That has been pointed out by numerous newspapers and various people who have commented on this.
The Bill is also quite upside down; it is the wrong way round. It is like looking through the wrong end of a telescope. When an investigation is undertaken and a decision arrived at on legislation concerning the structure of local government it is normal to establish which functions are necessary, how best the services can be provided and what structure can ensure that, and to establish in what way services can be improved on what has happened in the past. But the Government have not done that. They have decided to change the structure first without analysing whether the functions were necessary, whether they could be improved, or whether some of them were needed at all.
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Having started on that, the Government then decided that they were stuck with looking at the functions and receiving the comments from another place, from outside organisations and now, as the Bill goes through this House, from your Lordships. Having started on abolition, they then set up some inquiries into matters fundamental to local government. There is an internal inquirv on finance which is under the aegis of the Department of the Environment, and there is the inquiry headed by Lord Widdicombe on accountability. But that, again, is the wrong way round. If the Government really want to benefit from these inquiries, they should, wait until they have the results; but they are not doing so.
One might ask: what can an inquiry in this short timescale achieve? I felt that it was important we should draft this amendment in such a way that it could not be accused of being a wrecking amendment. It is not a delaying amendment. It is a very practical and pragmatic amendment. There is no need for noble Lords to laugh about that. Nothing else has been put up in its place that is going to make any sense at all. If the noble Lord can come forward with something which would do this job even better and produce a better Bill, I am sure that we would listen with great attention and he would receive support if he came forward with a solution; but he knows that he cannot.
There is a short timetable, but there is nothing to stop the Secretary of State from setting up the inquiry before the Bill is passed, if he wants to do so. First, there is a great deal of evidence already available taken from other inquiries and so a great deal does not have to be initiated. Secondly, it would be a means of damage limitation. It would stop the amount of damage which will result from the Bill if it continues in its present extraordinary and somersaulting style. It would be able to prescribe a proper timetable for what happens after 1st April 1986, and it would result in a greater certainty, which would facilitate the changeover.
It would also establish what will happen to services. For example, on the one hand, there are the voluntary organisations, about which there is a great deal of concern. The noble Viscount the Leader of the House referred to them in winding up the debate. Things have not been settled in anything like a satisfactory way so far as they are concerned. Another example—and there are many—is the question of waste disposal.
The Government in their White Paper Streamlining the Cities have concentrated on a thread that has run all through the arguments for the Bill. They say that they are streamlining. The result is entirely the opposite. Every concession that they have been forced to make, even though it has been unsatisfactory, has cut down the streamlining. Even the unsatisfactory way in which they are now proposing to deal with the voluntary organisations means setting up various additional types of organisation, all of which makes the changes more costly, longer delayed and less efficient.
The arts funding, which is to be transferred to the equivalent of quangos, is suffering the same sort of fate and great fears have been expressed. The funds are now to be channelled through the Arts Council; so the borough influence has once again been eroded. Historic buildings are another example. There was a

13
great deal of uncertainty, concern and great pressure from the many organisations involved. It has now been announced that the main functions will be transferred to the Historic Buildings and Monuments Commission rather than to the boroughs. The boroughs do not come into many of the matters that arise.
Then there is the Inner London Education Authority. The only substantial concession made by the Government in the White Paper consultation was to announce that ILEA will not be abolished with the GLC but that it will be a strategic elected authority. I am pleased that the Government did that, but it is curious, as it is entirely contrary to what they are doing on everything else. ILEA has twice as many staff as the GLC and a high expenditure in comparison; so it is a peculiar juxtapositioning. It is yet another example of the way the proposals have not been thought out. It is a hand-to-mouth way of doing things and can hardly be described as good or even passable legislation.
ILEA again is in an extraordinary position. Although it is to have a different status from the GLC and the other bodies, it can still within five years be abolished by the Secretary of State, and so there is a double jeopardy. There are two forms of change. There is the change now and then the threat hanging over its head of reorganisation or abolition after 1986. That is another illustration of why it is necessary for us in this Chamber to do something, however minor, to make a Bill which many of us on this side of the Committee consider unnecessary and wrong in any case a bit better. But if it is to be passed, it must be improved.
3.15 p.m.
After all, I do not think that there is a difference of opinion. We on these Benches certainly do not think that the GLC or even the metropolitan counties are perfect. As in almost any organisation, it would be possible to cut costs and make them more efficient. But the Government do not have to throw all the babies out with all the bath water, which is exactly what the Bill is doing.
I immediately agree that the inquiry which we are proposing is limited, but it could still have an impact. It could look at the administrative, financial and managerial aspects of the change. On Second Reading the vast majority of speakers in this House, even those who supported the abolition proposals, had caveats. They agreed; but they were concerned about this or that. It may have been archives, voluntary organisations, waste disposal and a whole list of other functions. Those have not yet been worked out. Instead of jumping from one thing to another, it would be very much better for everyone to know that at the end of the day an independent inquiry would be sorting out the practical problems associated with the Bill. That would also have the advantages that have been pointed out and cover matters mentioned in other amendments.
In the Commons the Bill was guillotined at Clause 16 and so it is just not true that it has had a thorough going over in another place. Let me give one example—and I have a list of the hours and minutes spent on various important aspects of the Bill. For
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example, only one-and-a-half hours were spent discussing the creation of joint boards. Is it really right that we should let a Bill go through largely unamended and on which in the elected Chamber only one-and-a -half hours were spent on such an important aspect? That provision would remove from an elected authority the power to carry out certain functions and give it to a completely indirectly elected body.
This legislation will not only affect the consumers of the services or the staff of the GLC and the metropolitan counties who are uncertain about their fate at the moment. Indeed, I understand that some of the better ones are resigning, since they do not know what will happen. I believe that it will also mean an increase in costs, a decrease in efficiency and a loss for the people of this country of the services which up to now they have received. I beg to move.
Lord Evans of Claughton: I have always said —
Lord Elton: The noble Lord is in doubt as to whether to give way. So am I. I was proposing to speak next. If he feels—
Lord Evans of Claughton: The noble Lord may go ahead.
Lord Elton: I am much obliged to the noble Lord. I think I take no advantage from this because he will be able to dismember what I have left on the table after I have sat down, though perhaps with less facility than the noises made by his friends and supporters would suggest.
It is, I suppose, understandable that the noble Baroness should have used this amendment as an opportunity to deploy the distaste which she feels for a great many of the matters within the Bill. I think that is a natural temptation. It falls, moreover, within the scope of the amendment, and so I do not take her to task for it. She proposes an inquiry which she hopes, I do not doubt, would take the same view of those matters as she does and would be able to deploy the same arguments with the added force of independence immediately before abolition. I do not propose—
Baroness Birk: I am sorry to interrupt the Minister so early on, but I think it would be a pity if we started off on the wrong foot. It would have been unfair of me not to have made it clear that I did not like the Bill, but I think that I also made it clear to the point of tedium that I was discussing a very narrow amendment and a limited inquiry in order to improve the Bill. That is what the amendment is about. It is no good the Minister trying to widen it.
Lord Elton: Whatever else the noble Baroness has said, it has not been tedious, particularly the last remark she made. The noble Baroness, speaking for the official Labour Party, has invited your Lordships to amend this Bill so that the Secretary of State shall appoint a committee of inquiry to report to him before the Bill becomes law. The committee would be required to consider almost exactly the same matters that the other place considered in Committee on the Bill, and those matters are almost exactly the ones that your Lordships will be considering for a great many

15
days to come, both in Committee and on Report, and, if I know the noble Baroness, at Third Reading as well. All those discussions will be before the Bill is on the statute book and will be capable therefore of altering the appearance of the Bill and its effect.
The inquiry over this well-trodden ground is to occupy the people appointed to carry it out until the 1st February next year. They must then report. The report would go to my right honourable friend the Secretary of State, who would consider it. When he had considered it, he would be empowered by the noble Baroness's amendment to return to the matters exhaustively considered by both Houses of Parliament and to draw up statutory instruments changing those matters which could both decide the detail of what Parliament had left general and the way in which Parliament had already disposed of these matters, and ask Parliament to agree to them. It is not merely the circularity of this procedure that I find odd; I find both the proposal and the grounds on which it is made odd in a number of ways.
The first oddity is this. The noble Baroness accuses us of legislation without public inquiry. She does so, I repeat, as the official spokesman of the Labour Party. But it was the Labour Party that was in government in the early part of 1979 and which then published a White Paper called Organic Change. That White Paper put forward firm proposals for reorganising local government; but there was no committee of inquiry set up before her party came to these conclusions and made that commitment. Your Lordships will say, "Well, the inquiry is the thing; it doesn't matter when you have it, provided you have it before it is too late, and they haven't mentioned it in the White Paper but they would have had it all the same".
I accept that they are not too fussy about timing, and you could not leave things much later than it is proposed to leave them in this amendment. It does not even start until the Act is on the statute book, but that does not affect the oddity of the case at all. The Organic Change and the Labour Party's plans were put into cold storage by the election in 1979 and your Lordships who have political affinities then moved to opposite sides of the House, although it is perfectly true that the Liberal Party remained firmly upon its ample seat and they were joined in a lateral move by a good number of socialists.
Our next glimpse of the process of the Labour Party evolving this policy was given to us shortly before the next general election campaign when the right honourable Member for Manchester (Gorton) said, "We shall set up no more inquiries; we shall legislate and we shall legislate so that these reforms will be in force during the lifetime of the next Parliament". No mention of time for an inquiry there.
There is another example of circularity because the reforms he was promising to bring in without further inquiry, which his party now tells us is essential, were designed, in his own words, to create unitary district authorities which shall be responsible for all the functions in their area that they can sensibly undertake. That is exactly what we are now doing and exactly what he and his friends are expending such large amounts of political energy in trying to prevent.
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I shall not dwell on this, we all have the right to change our mind, as the noble Baroness will no doubt shortly remind me. But let us accept that the noble Lords opposite have suddenly been struck with a revelation and now believe, mistakenly but genuinely, that an inquiry really is necessary after all. Again, I look for a precedent: how long should it take? The precedents appear to be the Herbert Commission and the commission presided over by my late noble friend Lord Redcliffe-Maud. The first was set up in 1957; it did not report until 1960. The second met for the first time in 1966 and did not report until 1970. Roughly three years therefore seems to be par for the course for this sort of work.
How long do the amendments give the committee for its work?—from August to February. Worse is to follow: every single recommendation they will make will have to be implemented between 1st February and 1st April. How often have we heard noble Lords and Baronesses opposite saying, "We will never get the Bill implemented in the eight months that we have allowed"? They will not be able to use that argument again because they are now proposing only eight weeks. The phrase that the noble Baroness aptly used was, "at the end of the day". It would not be eight weeks just for the changes recommended by the committee because the committee can touch on anything it wishes and none of the other arrangements could therefore be made until the committee had tabled its report. That I find particularly odd; after all, the Opposition obviously have given careful thought to timing; they have an amendment down on the Marshalled List to delay implementation by a year.
But the extraordinary thing is that change is not proposed in this amendment. The idea of delay to make this very odd proposal possible has been considered, it seems, and rejected. The result of this is that the proposal now before your Lordships is not only absurd, it is a recipe for total chaos and absolute breakdown. It is, in a word, a "wrecking" amendment designed to overturn the principle enshrined in this Bill which has been endorsed by your Lordships by a very substantial majority.
Lord Mishcon: The noble Lord the Minister is most courteous, but why does he assume in the course of a very lucid but, as far as I can see, bad argument so far that the committee of inquiry will find so much in this Bill that is wrong?
Lord Elton: I was simply going on the speech with which his noble friend introduced the amendment because that it is clearly her hope. I should not wish to disappoint her at this early stage of the argument. We have here a Bill that rests upon mature reflection of grounds so thoroughly covered by inquiries that even the Opposition's official spokesman on the environment said that no further inquiry was needed before his party did almost exactly what we now propose to do. The proposal was published in our manifesto. Even with a timetable Motion—and I come now to a point which the noble Baroness treated with some care—this Bill was discussed in a longer Committee stage than they have had in another place for at least the past 15 years. The Committee should know that it was debated for twice as long as the London Government Bill which brought in the GLC in 1963.

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It is not the function of inquiries to intervene in legislation in the way here proposed. For the party opposite to complain at one moment that the Secretary of State has too many order-making powers and then to give him this battery of additional order-making opportunities makes a mockery of the logic with which the party opposite seeks to oppose this Bill. That must be the consideration on which your Lordships decide how to vote at the end of this debate. There are many issues which the noble Baroness has raised and which run off temptingly to be followed, not as red herrings—because they do not run!—but like hares which I disdain to hunt.
We shall be discussing, for instance, the proportion of the money now expended by the upper tier authorities that will be expended by the lower tier authorities. The noble Baroness has arrived at her remarkable percentages by treating anything which is spent collectively by the councils in the lower tier as though it were somehow outside local government, which it will not be. But we shall bandy words about that in the future. She can shake her head against me then if she wishes.
At the moment, all I ask is that your Lordships see this amendment in its true colours. It is put before your Lordships as an appropriate and emotive wrecking amendment to get the Opposition off to a flying start in opposing the Bill. It would make it impossible to implement the Act (as it will be) as it should be implemented. The inquiry will come too late to change the substance of the Act in any case. The Act itself will have been debated in detail for a record number of hours for legislation of this sort.
I ask the Committee to dismiss this amendment, so that we can get on with our proper job of seeing what improvements can be made to the Bill before it hits the statute book, rather than asking some appointed committee to wring its hands over lost opportunities when it is too late.
3.30 p.m.
Lord Evans of Claughton: I shall not seek to demolish the argument of the noble Lord the Minister. I shall merely seek, I hope, to obfuscate some of the more outrageous things that he has said. Whatever else I regard this amendment as—and I certainly do not regard it as the greatest result of human enterprise and thought—I do not think it is a wrecking amendment. It is seeking, within the timetable of this Bill, to produce an opportunity for inquiries to be made in an objective way about the clauses in the Bill which we find objectionable, yet not to prevent the Bill becoming law on the appointed day. Thus, I do not think it is a wrecking amendment. The criticisms the noble Lord makes may be perfectly valid, but I do not think it is valid to say that it is a wrecking amendment.
As I said in the Second Reading debate, we on these Benches are not opposed to reform of local government. We do not think that the system under which we have been living since 1973, and in the case of London for longer than that, has been the most perfect form of local government to be devised. We certainly do not think that. The Committee will recall that the 1972 Act called for a review of its own legislation within a 10- to 15-year period after the
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coming into operation of that Act. It really can be argued that this is in furtherance of that commitment contained in that Act.
Frankly, as I think has been said, however much I try to look at it and however fairminded and objective I try to be—and as the Committee knows, we on these Benches are always objective and fair-minded—what is being done by the Government in this legislation is a great leap in the dark. There has been no means by which to light the path to this legislation.
The noble Lord the Minister mentioned organic change. I remember the Labour Party's proposals to change the status of such great cities as Bristol, Leicester and so on. I cannot help feeling that legislation would hardly have followed the White Paper there. I am quite sure there would have been detailed examination and discussion. I should have thought that there was very broad all-party agreement that cities such as Bristol, Leicester, Nottingham and so on should have greater powers. Therefore, I do not think that that is a very serious comparison.
If we leave out the Liberal legislation of the 1900s and come rather more recently to various Conservative and Labour legislation for Greater London and the metropolitan areas, what always strikes me is this. The Herbert Commission itself proposed two tiers for London, which was legislated on. The inquiry chaired by the noble Lord, Lord Marshall of Leeds, confirmed the need for a strengthened strategic authority for Greater London. The Redcliffe-Maud proposals, which the noble Lord the Minister mentioned, recommended a thorough re view for the rest of the country. That took over three years to carry out, as the noble Lord said, and concluded that planning, transport and major development services should be in the hands of one authority in urban areas, which should be big enough to encompass where people live, where they work, where they shop and where they find their recreation. I should have thought that that still largely applies in metropolitan areas. One might say that it applies even more now because of the serious problems of the inner urban areas in this country.
The Government White Paper, received. I think it is fair to say, an almost totally hostile response. Perhaps the noble Lord the Minister will challenge the fact that these studies were independent, but I believe that the organisations, such as the Institute of Local Government, P.A. Management, and Coopers and Lybrand, were objective in their studies. All those studies condemned the proposals. I ask the noble Lord the Minister to bear very much in mind that despite those reports from those various bodies, the Government themselves recognise the regional needs of various parts of the country outside the local government network. For instance, in Merseyside we have a Merseyside Task Force set up by this Government; we have a Merseyside Development Corporation, and so on. Yet, in spite of the recognition of regional needs accepted by the Government in these various bodies, this Bill seeks quite literally to disfranchise 11½ million electors without any serious attempt to justify the actions or to consider present public opinion.
I make no apology for mentioning Merseyside. I am sure that the right reverend Prelate will talk much

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more effectively about it than I. A MORI poll recently indicated that in Merseyside 73 per cent. of the people polled believed in the need for a single county authority and 62 per cent. disapproved of the Government's proposals.
It might be interesting to know about a similar poll—not the same one—in which people were asked whether the proposal to reorganise local government influenced them in their voting at the last General Election. Fewer than 1 per cent. said that they were influenced by local government reforms proposed in the Conservative manifesto. So much for manifestos. Indeed, the right honourable lady the Prime Minister has herself poured quite considerable scorn on the obsessive view of the importance of the manifesto.
I agree that if they wish, the Government can, and no doubt will, ride roughshod over the latest public opinion, quite apart from public opinion at the time of the General Election; public opinion as exposed by opinion polls very recently. They can ride roughshod over public opinion. However, if they intend to do that, surely they should be willing to provide some justification by being prepared to accept an objective, independent inquiry of some kind. Sometimes I think that the only reason they oppose this and other similar amendments is that they know only too well what the result of such an inquiry would be.
Lord Campbell of Alloway: The inquiry proposed by this amendment—
Noble Lords: Order!
Lord Kissin: I have put my name to the noble Baroness's amendment because I want to express my disquiet at the way the Government have chosen to proceed in this matter. The inquiry should, in nomal circumstances, have preceded the Bill, but it is too late to alter this course. However, I am speaking in support of the amendment of the noble Baroness, Lady Birk, because I hope that the Government will reconsider some kind of procedure so that Parliament can exercise its function. It can exercise its function only if it is clear what are the Government's plans for future action and how clearly they are defined. Therefore, an assurance from the Government that some kind of inquiry will be promoted immediately after the Bill would relieve many anxieties.
I share the view of the noble Lord and the noble Baroness, Lady Birk, that this is not a wrecking amendment in any shape or form. There are many parts of this Bill which I and many Members of the Committee welcome. However, the issue is one which I am sure attracts everybody's attention. We have been bombarded with correspondence from politically diverse sources. What clearly emerges from all the letters that I have received is that only an infinitesimal percentage is supporting the abolition of the metropolitan councils without qualification or reservations.
This shows to what extent the public has been confused by the changes that this Bill is proposing to bring about, It shows also to what extent much more detailed clarification is required in certain material
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aspects of these changes before the inhabitants of London and the greater metropolitan areas will be satisfied that their requirements, and their specific situations, will receive a sensitive reaction from the authorities that in future will look after them.
It is clear from the Government's statement that no final decision has been taken as to what kind of strategic plan will be implemented. I am supporting the case for an inquiry because it deals with the reorganisation and the reconstruction of a complex business operation which is carried out at the moment by the metropolitan councils and other bodies. Many noble Lords have far greater experience than I of conducting large businesses and industries. I wonder how many of them would set about large-scale organisational change without a much clearer and much more defined view of the planning and budgetary implications of their decisions. I believe that very few people in commerce and industry would wind up departments and subsidiary companies, and their organic structures, without establishing beforehand the profitability and the rationality of their actions, and the consequences for employment problems, and the availability of alternatives, plus an evaluation of the financial and organisational effectiveness of their plans.
I repeat that it is not simply an abstract question of democracy. The real issue is for whose benefit the strategic planning is to be carried out. As an example, it is often believed that the construction of motorways within urban areas is detrimental to the inhabitants but beneficial to those living outside who wish to drive through these areas to work. The refusal of the GLC to build roads and the criticism of the noble and distinguished Leader of the House show that this is an issue of critical importance. One could give numerous examples of the unresolved problems in this area that the Bill creates, but I am sure that there are many noble Lords better qualified to point to examples in areas with which they are acquainted. If these problems cannot be resolved by the boroughs and the shires, the Secretary of State is now to be saddled with taking the decisions. It is not clear, therefore, where the savings which the Government hope for would be achieved if problems cannot be identified and quantified before the Bill is implemented. Has the Secretary of State a surplus capacity of manpower in his department to deal with this?
Many questions will be asked. I should like to raise one that is near to me. I live on Hampstead Heath. This is a leisure centre for the benefit of all Londoners. Its future is very uncertain. It is not clear at the present time whether the local authorities are willing to take up this responsibility. If a new authority is to be created, as indicated, to deal with such problems, does the Bill give any guidance as to the cost, and what powers it will have? The Bill creates controversial situations where certain planning functions will be centralised and thus less flexible to respond to local needs, while planning will still be the responsibility of the elected shires and boroughs. This is, I fear, a recipe for disaster. It will create serious resentment. Planning decisions on behalf of London, unless more precisely defined, will lack legitimacy and democratic approval.
I feel that we have reached the stage where a considerable number of noble Lords are of the opinion

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that greater clarification is necessary. I feel, too, that other noble Lords are of the opinion that all is very clear and that everything will go through very smoothly. I believe that the Bill in its present form shows a lack of understanding of how cities grow and how local government and strategic planning need to be re-adapted as a consequence. The existing district boundaries were drawn up on the assumption of a two-tier structure. Boundaries that appear to be reasonable on that assumption appear much less reasonable when they become single-tier, all-purpose authorities. Thus, while the urban areas are expanding in size they will be governed by a large number of small authorities. London faces a serious and fundamental planning problem. Random examples are the de-population of some inner city areas, transport planning and the impact on employment patterns of the M.25 ring motorway. All these are problems which can be tackled only in a London-wide context.
The Royal Commission on Local Government of 1966–69, under Lord Redcliffe-Maud, recommended in its majority report a single-tier authority for all areas in England, with the exception of the West Midlands, Merseyside and the Greater Manchester areas. London was outside its terms of reference. For those areas it recommended a two-tier system (and I quote)—
3.45 p.m.
Lord Elton: If the noble Lord will permit me, I am anxious to clear my mind on his argument. It seems to me that the Bill is constructed clearly on the basis of having one-tier government, which is a principle that we have accepted. The noble Lord is arguing in favour of an inquiry. The argument that he is now adducing appears to be that the inquiry should recommend a two-tier system. If I have misunderstood, I apologise and I should like to be put right, because, clearly, that is something that could not be accomplished in eight weeks after enactment.
Lord Kissin: I am not pleading one-tier or two-tier: I am reporting what the inquiry of 1966–69 under Lord Redcliffe-Maud said. It stated:
"Nowhere else in England did we find the circumstances found in these three metropolitan areas. To break up these three areas among unitary authorities with populations in the range of 250,000 to 1.000,000 would hopelessly fragment responsibility for planning and transportation".
Contrary to this recommendation, the Government are now proposing a two-tier system where the Royal Commission recommended a single-tier system, and single-tier all-purpose authorities for areas where the Royal Commission recommended a two-tier system. If it is a question of handing back functions to the boroughs, as the Government propose, all boundaries which were established in 1971 should be reexamined. I believe that if the Bill is to be effective, we now have the opportunity, were the Government to allow us to take it, of making a decision that in a historical perspective seems to be the best possible solution available at the present moment.
To summarise, I am not supporting the amendment in order to defend the actions or leaders of the GLC or the other metropolitan councils. My objective is to
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make this Committee conscious that the alternatives being chosen can be defended and their effectiveness can be proved. For this purpose, it is essential to consider the creation of an entirely non-political body, without any vested interest in the issue, that will define the priorities, specify and quantify (in view of the very contradictory reports on expenditure and savings that have been made by accountants and Government) and recommend, in the light of its findings, the immediate and long-term solutions.
This is equally important, I believe, for the Government. I believe that the Government do not want to be reproached with the accusation that this Bill is introduced because of their dislike of certain established institutions and their personal leadership. Neither, I am sure, will the Government wish to be accused of introducing these measures to give the boroughs and shires, for political reasons, a different balance of political power. I trust the Government wish this Bill to be seen to be introduced for the benefit of the population that has to live with the consequences of this concept. It is for this reason, I believe, that this amendment should be fully considered and supported.
Lord Campbell of Alloway: The inquiry proposed by this amendment, irrespective of whether or not it be preceded by a Royal Commission, would in effect defeat this Bill. Whatever has been said by the noble Baroness, Lady Birk, by the noble Lord, Lord Kissin, and by the noble Lord, Lord Evans of Claughton, that would be the effect; and that would have the effect of a wrecking amendment. It invokes the delaying powers—notwithstanding that it was said to the contrary by the noble Baroness, Lady Birk—not the revisory role to improve the Bill.
In those circumstances, to carry such an amendment as this would be contrary to the spirit of both the Salisbury and the Carrington Conventions—that resort to the delaying power should not be had to defeat a Bill which was passed in another place which reflects a manifesto commitment and which thwarts—these are the words of the Carrington Convention—the will of the electorate as expressed in another place. The facility—
Baroness Birk: I wonder if the noble Lord will give way for a moment. I am sorry, but I really cannot let him get away with saying that the amendment I moved is a wrecking amendment which would delay the Bill. It does not have to delay it at all. The arrangements would go on as the Government want them to go on while the inquiry sat. The inquiry would report; it would then be up to the Secretary of State—as the Minister pointed out, there is a problem, and I see it; but it is the only fair and right way to do it—to take action or not. It is quite wrong and totally unfair and inaccurate for the noble Lord to say, with all the magisterial authority at his command, that this is a wrecking amendment which would delay the Bill. It is not.
Lord Campbell of Alloway: I have no authority whatever, magisterial or otherwise. As the noble Baroness knows, I never wilfully intended or sought to be unfair in your Lordships' House. I am saying what

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I believe to be right. The noble Baroness is entitled to say what she believes to be right. I have heard her repeat three or four times this afternoon what she believes to be right; and all I am saying, with the greatest respect to her, is that I remain wholly unconvinced and that I regard this as a wrecking amendment.
Furthermore, the facility to carry such an amendment, to defeat the Bill in the exercise of the delaying power, must assume a very high order of self-restraint where, as I understand it, amendments to this effect have been moved and rejected in another place and where the Government, in their second term of office, have a very substantial overall working majority in that other place. Surely it is of importance that your Lordships' House, albeit in Committee, should not be seen to overreach its powers if there be any reasonable doubt at all about it, and so slight our own status and even perhaps impose reform.
As to the merits, what useful purpose could any such inquiry serve? Before the last election, as my noble friend Lord Elton said, the Labour Party pledged itself in effect to create what we are creating: unitary district authorities responsible for all functions in their area. It cannot be that, just because the Labour Party does not have its hand on the tiller of government, there should now be an inquiry if it was not necessary before. I refuse to believe that that can be the reason.
It is of vital consequence to any administration that local government should not continue to flout or confront the policies and authority of central Government in those matters which properly lie within the province of central Government. Such is the very exercise in political confrontation which as I see it lies very close, without any authority, to the heart of this matter. The traditions of local government as I understood them have been breached, and this has led to a very substantial and unacceptable abuse of the rating system. What is this voice for London? Who yet has ever spoken for London? Assuredly one presumes it is not Mr. Livingstone. It is said that such a body could offer workable solutions, co-ordinate effective execution of functions, afford machinery for rate equalisation, and even avoid re-instatement of the GLC. But really, apart from the propaganda of political confrontation, what has this voice to say? Why just London? Who shall speak to whom? By what authority and with what authority?
London's Conservative borough leaders who affirm total support for the abolition of the GLC do not wish to see that principle weakened. I support them, and I am a Conservative. London's Conservative borough leaders who affirm total support for the abolition of the GLC do not wish to see that principle weakened by an elected forum for Greater London imposed over the structure of borough government; and even the proponents of this body accept that it will not be an executive body, that it will not have discretionary powers, that precepting powers will be under constant review by Government.
Lord Tordoff: I wonder if the noble Lord would give way. I should like to take him back, because it seems to me that in some way or other he has drifted on to Amendment No. 8. I should like to challenge him on
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his response to the noble Baroness, Lady Birk. He repeated again that this amendment was in some way a delaying amendment, an amendment that would delay the provisions of the Bill. That cannot be correct within the terms of the amendment as it is laid down, and I should like the noble Lord to tell the Committee in what way he can point to this amendment as in any way delaying the action of the Bill. If that were the case, then his arguments about the Carrington and Salisbury conventions would have validity; but as I read it this makes no change whatsoever to the timing of the Bill or to its operation when it becomes enacted.
Lord Campbell of Alloway: For the reasons given already by my noble friend Lord Elton, this clearly is going to delay the Bill. As to—
Lord Elton: It is not going to delay the Bill. If the findings of the committee are going to be so trivial that they can be done in four fortnights before implementation, it scarcely is worth having the inquiry.
Lord Tordoff: If the inquiry came up with that conclusion, that might delay the Bill; but then presumably the Government would have the good sense to take notice of the inquiry. This amendment does not delay the Bill.
4 p.m.
Lord Campbell of Alloway: To answer the noble Lord, not only does this amendment delay the Bill but the referendum amendment delays the Bill and the delaying amendment delays the Bill. All three are designed to use the delaying power, not the revisory power, which is quite contrary to the Salisbury and Carrington conventions. I stand by my assertion. I am sorry that I interrupted the noble Lord.
Lord Diamond: I rise, not to discuss the merits of the proposal—because there are many other noble Lords who are more capable of doing that than I and who, no doubt, will want their views to be heard—but because I am very interested in the continual allegation, unfortunately asserted in the first place by a Minister on the Front Bench, that this is a wrecking amendment. It is of little help to your Lordships' Committee that such a suggestion should have been made, and it shows little respect for the careful thought that has been given to this problem by all noble Lords concerned—Front Bench and Back Benches—for a considerable period.
Therefore, if the Committee will be good enough to allow me, I want to demonstrate why, in my opinion and in the opinion of all of us on these Benches, the noble Lord, Lord Elton, was grievously at fault and causing harm to his own party and to what we are all trying to achieve for the future good conduct of business in your Lordships' House by alleging that this is a wrecking amendment. Let us go over the points one by one to get rid of those aspects that are not relevant.
Lord Campbell of Alloway: I gave way to the noble Lord. Is this in order!
Lord Diamond: I thought that the noble Lord had completed his remarks. I apologise.
Lord Campbell of Alloway: I gave way because I understood that the noble Lord wished to ask a question.
Lord Diamond: I beg the noble Lord's pardon. I apologise.
Lord Campbell of Alloway: No, I had not finished my remarks; and, of course, I pay the greatest respect to the care taken by noble Lords—more so those on the Back Benches than on the Front Bench, but perhaps that is because I sit on the Back Benches.
However, before I return to this amendment, perhaps I may comment on the constitutional aspect. Surely noble Lords on all sides of the Committee would accept that the abolition of the GLC is the last logical step in a process of devolution of power that has gone on now for some 20 years. Today the GLC, in contrast to the old LCC, is responsible only for about one-tenth of services and about 11 per cent. of current expenditure on local services in London. The inevitable duplication of functions by erecting this two-tier system is wholly unacceptable and—and this leads me back to the constitutional issue—wholly contrary to the principle and spirit of the Bill. On the merits of this amendment, there is no justification for resort to the delaying power. In any event, this would conflict with the spirit of the unwritten constitution as expressed in those conventions.
Although it is of importance that the Government should be supported by a massive rejection of this amendment if it is taken to a Division, I suggest to the Committee that it is of far greater importance that the delaying power, which this is, should be exercised with restraint. It is not a question of procedure which falls within the remit of the Table or the Procedure Committee: it is a constitutional question which lies within the exclusive competence of your Lordships' Committee, as advised through the usual channels. In this matter, of course, I defer to noble Lords on all sides of the Committee who have greater wisdom and experience than I in these matters. What I have said I have said because I believe it to be right.
Lord Somers: This amendment really seems to—
Lord Diamond: If I may—
Lord Somers: I think the noble Lord has had his say. This amendment seems to suggest a most unprecedented procedure. After all, in the past we have had many highly controversial Acts which have been passed by Parliament, but I do not recall a single instance in which a process such as this has been suggested. I believe that those who are so keen to preserve the electoral system that we have today, and who quote it whenever it is in their favour, should remember that this Bill now before us has been passed by the elected Government of this country and, therefore, I cannot see why it should be necessary or even possible to question whether it is, or even should be, the law of the land.
Lord Diamond: I regret that I cannot support the sentiments that have just been expressed and which would virtually reduce your Lordships' House to a nullity so far as this Committee stage is concerned. We all know that we have a duty to improve a Bill which has been passed by another place, and not to reject it. It is because of that that, when the Second Reading of this Bill recently came before your Lordships' House, we were all extremely careful that no word was put on the Order Paper which would have delayed the passing of this Bill by one moment. An additional view was expressed which had no impact and no legal or other kind of effect on the way in which, at the end of that day's debate, the Government could and would be able to proceed with getting this Bill on to the statute book.
It is because various allegations have been made that this is or is not a wrecking amendment that we are in a little difficulty over the use of our terms, and that is why I thought it would have been of some help, if the noble Viscount the Leader of the House had been agreeable, to invite the appropriate committee to consider where we had reached on our various conventions. If we had then received such a report and had all agreed to it, there would then have been a written statement as to where we had reached with regard to those conventions. The noble Viscount the Leader of the House thought that that proposal was a little premature, which is no great criticism, and did not wish to proceed in that way. Therefore, it falls to me to say why those of us on these Benches who take a very clear and, if I may say so, purist view about the responsibilities of your Lordships' House in relation to another place—a very responsible view indeed; more responsible than some of the statements made by Ministers of this Government—have been most anxious not in any way to ally ourselves with wrecking amendments.
The normal form of a wrecking amendment occurs on Second Reading, where we have a clear convention, so far as we on these Benches interpret it, that we do not vote against a Bill which has been passed in another place, they being the elected Chamber and we not. We do not need anyone to suggest that the justification for that is that the Bill was preceded by a statement in the party's manifesto at election time. I think that too much can be made of manifestos. In so far as we interprete the situation, it matters not to us whether it was in the manifesto or not in the manifesto. We already know that a vast majority of people are totally unaffected by what is stated in the manifesto.
Lord Campbell of Alloway: Would the noble Lord give way?
Lord Diamond: In a moment, if I may just finish this part of my argument. If it is a minor point it goes with the rest, and the elector tends to vote for the leader, for the general principles, and for his understanding of the situation and not for a particular, detailed clause. Therefore, it remains our view that whether it is in the manifesto or not, we are still committed in your Lordships' House by convention—as indeed everything is by convention in your Lordships' House—not to support an amendment which would

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have a wrecking effect; that is to say, delay the implementation of a Bill coming from the other place if it has been passed by that elected Chamber.
Lord Campbell of Alloway: I am grateful to the noble Lord. Does the noble Lord agree that it is an integral part of the Salisbury convention that it was a commitment in the manifesto? It is expressly stated.
Lord Diamond: Of course I agree. It is on record that it is there. I am saying that we have gone further than that, and more to the noble Lord's liking if he follows my argument. We have gone beyond that. This House develops its procedure by convention, and in my view it has developed by now a clear convention, acceptable on both sides of the House, that it does not vote against Bills which have received a Second Reading in another place. I say further that that convention applies whether or not that Second Reading was preceded by, and therefore to a tiny extent supported by, a previous statement in the party's manifesto.
Now we have got to that point we have to consider whether this is a wrecking amendment; whether this delays the operation of the Bill if the Government see fit to carry out their undertaking, and if the Government consider that what they are doing is right and cannot be controverted by people ascertaining the facts. Presumably the Government do so think, and therefore this amendment starts with the words:
"Not later than one month after the passing of this Act".
I had nothing whatever to do with the drafting of this amendment. I have nevertheless nothing but admiration for an important amendment which comes No. 1 on the Marshalled List which says:
"Not later than one month after the passing of this Act".
The words contemplate the passing of this Act and nothing else. They do not contemplate the delaying of this Act.
I was unable to follow what the noble Lord who preceded me said in a single instance with regard to the delaying of the Act. The words here are as clear as a bell:
"Not later than one month after the passing of this Act".
Therefore, the Act is contemplated as passing in the normal way and there is nothing that we are doing to delay it.
4.15 p.m.
The amendment further goes on to say:
"The Committee shall make its report no later than 1st February 1986".
It is a great pity that somebody of the intelligence of the noble Lord, Lord Elton, wilfully changes that into:
"The Committee shall make its report on 1 st February".
I do not know why he continually did that and based his argument on it. It does not say that, and we all know that it does not say that. It says no later than that.
If the Committee is able to report much earlier, so much the better. If the Committee divides itself, as many committees do when there is urgency, into five, six, seven or eight sub-committees in order to examine the different aspects and collate its views very fast, it
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may indeed be able to report earlier. One does not know. If it reports on 1st February, on the latest date, and this poses a problem, what can the problem be? It is a problem entirely within the Government's discretion, and any problem within the Government's discretion with the present majority which the Government enjoy in the other House cannot be put forward as a wrecking amendment. The Government can do exactly as they want—some people would say "unfortunately"—in the other place, and we all know that.
The Government therefore can decide at the time whether they want to delay anything, or whether they do not want to delay anything, in the minor procedures of sorting things out consequential upon the coming into effect of this Bill. That is entirely within the Government's powers and discretion. There is nothing whatever that we can achieve, if we want to pass this amendment, which would delay in any way what the Government wish to do and are set on purpose to do. It contemplates the passing of the Act. It provides a date which is before the Act comes into effect, and there is a further amendment saying that if the Government have any real doubt as to whether they can now achieve that date, let it choose a date a year later, so letting them out of their difficulty in that way.
I apologise for delaying the Committee on a constitutional matter rather than on the substance of the amendment; but for these reasons we on these Benches must reject any suggestion, be it from the Front Bench or anywhere else, that this is a wrecking amendment. We do not regard it as such, and we think it much better that your Lordships should have regard to the substance of the argument rather than be diverted by an unsustainable claim that this is a wrecking amendment.
Lord Beloff: If we are to accept the argument put forward by the noble Lord, Lord Diamond, that this is not a wrecking amendment, we are left with only one alternative adjective to put to the amendment; namely, that it is a frivolous amendment, an amendment which may not delay the passing of the Bill but which will delay your Lordships' Committee in coming to grips with the various important issues of substance in the Bill which we have to discuss, and may indeed occasionally have to amend.
It is frivolous for these reasons. First, it is to put the thing on its head to have an inquiry about a measure which is already in the form of a voluminous Bill in which all the matters that the inquiry would look at are specified. It may well be that noble Lords would wish them to be dealt with differently, and that can be done by amendments to the substance of the Bill. The existence of an inquiry would only be justified either if there were no Bill before your Lordships, if this were a preliminary, or if it were possible to assume—which it is not—that after the campaign (and the noble Lord, Lord Kissin, mentioned the campaign, the amount of correspondence and propaganda that we have all received) it was seriously thought that there were any issues of substance which had not been ventilated in another place, or in the press, or in public meetings, or in any other way. There is nothing new that anyone could suggest that the inquiry could come up with.

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If one has listened carefully, as I have, to the speeches of the noble Baroness, Lady Birk, and the noble Lords, Lord Evans of Claughton and Lord Kissin, they certainly produced criticisms of the substance of the Bill, some of which might indeed come within the purview of an ordinary amendment; but they at no point suggested anything novel. What is the point of an inquiry when we know the substance into which it is to inquire?
The second reason why I believe this to be frivolous is that one would have to assume that the Secretary of State, however impartial, however well informed, however desirous of meeting the wishes of your Lordships' House, supposing the Committee were to pass this amendment, could find a group of people who had been so cut off from the debates which have been going on in this country for the past 18 months that they would come to it uncommitted and with a fresh mind.
They certainly would not find it in the walk of life from which I come—academia—because various academics who have specialised in these subjects have taken sides for and against on most of these issues. They could hardly find it in public life where people are deeply divided over this. I suppose they might ask someone from Australia or some other distant country where little is known about our domestic affairs, but one cannot seriously suggest that the Secretary of State could, at this juncture, find people who would be universally accepted as knowledgeable and impartial on this inquiry. Therefore I say that perhaps it is not a wrecking amendment. Perhaps my noble friend went too far in calling it a wrecking amendment; but a frivolous amendment it certainly is and the sooner your Lordships dispose of it and allow us to get on with issues of substance, the better.
Lord McIntosh of Haringey: The noble Lord, Lord Beloff, describes himself as coming from academia. The noble Lord, Lord Campbell of Alloway, described himself as a constitutionalist. I make neither claim. I am on these Benches because I take a political whip; I am a politician. I suggest that all of us who take a political whip are, when we are here, acting as politicians. It is the duty of politicians not to indulge in constitutional debate in the abstract but to consider the issues before the Committee and the way in which they have been tackled over the past two-and-a-half years. The conclusion one might draw after considering the powers of the GLC and the metropolitan counties, and what has been proposed, is being proposed and will be proposed is to happen to those powers, is that the process of reform, as it is called, is by no means confined to debate either in another place or in this Chamber.
Before the Bill ever reached another place there were changes of mind by the Government on travel for old age pensioners. It was decided that it should be a statutory responsibility of the London boroughs to maintain that travel. There were changes of mind about the arts, where it was decided that the Arts Council should have a greater role and the borough councils a lesser role than had originally been intended. There were changes of mind about historic buildings and monuments, where it was decided that the borough councils should have a lesser role and the
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Historic Buildings and Monuments Commission should have a greater role. There was a major change of mind about the ILEA, where it was decided that the Inner London Education Authority should be a directly-elected authority and not elected by the constituent borough councils.
I make no complaint about any of those changes. They have not taken place on either green or red Benches, but as part of a continuing process of public debate about matters of great importance to 114 million people. When I look at the Bill we have before us it is clear that the debate is by no means resolved either by the Bill or by amendments which will no doubt in due course be put forward or have been put forward in another place. There are huge gaps in the Bill. There is no reference to training or job creation or what happens to archives. There are amendments on these points but there is nothing in the Bill about them. There is no adequate reference to what happens to the green belt—I am thinking particularly of London; forgive me—or the role of the Greater London Council in its relations with the South-East England Regional Planning Authority. There is no particular reference to parks and sports provision. That is what is not in the Bill.
What is in the Bill—I believe it is mentioned 132 times—are reserve powers for the Secretary of State. What do those reserve powers mean? They mean that the Secretary of State and his civil servants will continue to be making decisions affecting the future of those who live in London and in the metropolitan counties after this Bill has reached the statute book. In other words, the debates have not concluded, the decision has not been concluded and there will be many issues both before and after the passing of this legislation which will require to be resolved. It is for that reason that I claim that the amendment which seeks an inquiry is simply bringing that process out into the open. It is giving independent people the responsibility for considering issues which will still have to be resolved; making those decisions in the open and not in the towers of Marsham Street and making the people concerned, the electorate of the GLC and the metropolitan counties, aware of what is happening. In that sense I agree strongly with the noble Lord, Lord Diamond, that this cannot be said to be a wrecking amendment. It is an amendment to redeem the deficiencies of the thinking processes which the Government have no doubt gone through. It accepts that the Bill will, in some form, reach the statute book. It merely tries to bring the debate out into the open.
Finally, I take some wry amusement from the claim that the Bill is justified because it appeared as a manifesto commitment. I took a major part in putting into the manifesto of the London Labour Party in the 1981 Greater London Council elections a policy which became known as, "Fares Fair". It was a moderate policy of reducing London passenger fares to the 1979 level. It was the noble and learned Lord, Lord Denning, and your Lordships' House, in its judicial capacity, who said that the fact that it was a manifesto commitment was neither here nor there; and they overturned that policy (which was clearly a major part of our election campaign) on those grounds.
I also take some wry amusement from the rejection by the noble Lord, Lord Elton, of the idea of inquiries.

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We are not to have an inquiry into the whole of the Greater London Council and its future, but his right honourable friend the Secretary of State for Transport has insisted on an inquiry on the Greater London lorry ban proposed by the GLC after its manifesto commitment and after a lengthy and extensive inquiry of its own. I appreciate that the arguments for and against inquiries on precedent can work both ways, but it certainly does not work entirely in favour of the Minister's arguments.
Lord Boyd-Carpenter: I agreed with the noble Baroness, Lady Birk, on one point in her speech when she said that this was an unusual request embodied in the amendment. Indeed it is. When a measure has been preceded by a paving Bill, has itself passed the House of Commons by large majorities and has already received a Second Reading by another large majority in this House, it is, as she would agree, unusual to say at this stage that one wants an inquiry. But the noble Baroness, and, to some extent, the noble Lords, Lord Diamond and Lord Tordoff, showed extreme sensitivity to the suggestion that this was intended as a delaying measure. I will not use the pejorative phrase "wrecking", because wrecking is a subjective impression; though I harbour a suspicion that were it to wreck the Bill the noble Baroness would not go into mourning about it.
That is a delaying amendment is the proposition that I should like to contest. It is a presumption in our courts of law that the sane man—I suppose that includes the sane woman—intends the natural consequences of his acts. I would ask the noble Baroness to contemplate what would happen if her amendment were carried. I concede at once that it does not directly amend the date of 1st April 1986 as the effective date of the Bill. I accept that at once. But perhaps the noble Baroness will go with me in working out what will happen.
It is likely, as far as one can speculate, that the measure will receive Royal Assent towards the end of July, late in the summer. Under this amendment, within a month of that—that is, during the month of August—an inquiry would have to be appointed. I leave aside the point that has already been made about where one would find impartial people who had lived so long in an ivory tower that they had escaped the deluge of propaganda to which your Lordships have been subjected on this issue and could approach the matter with a fresh mind. But they would not start work—and I stress this point—until well into August, or perhaps the end of it, right into the holiday season. This amendment requires that they shall report by 1st February. All of us who have experience of public inquiries into complex and important issues such as this know that that would be an almost unprecedentedly short time. Therefore, it seems reasonable to assume that it is highly unlikely that they would beat the 1st February date by more than a few days.
4.30 p.m.
Two things would then happen. Either their report would include substantial proposals which, in the view of the inquiry, would improve the Bill, or it would not. But take those two alternatives. Let us suppose that it
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did. Would noble Lords opposite not press by every legitimate parliamentary means for the implementation of those substantial improvements in the Bill? And do they really believe that, if that were so, it would be possible to legislate an amending Bill through and put it into effect by 1st April, within a matter of eight weeks? Do they really think that? Or, alternatively, the recommendations would be trivial and unimportant, in which case have we not put some otherwise busy and, no doubt, significant people to a great deal of unnecessary work and imposed a certain additional public expenditure to no point whatever?
But obviously the noble Baroness believes—her whole speech was riddled with the contention—that this inquiry would come out with substantial proposals. In order to demonstrate that it would not therefore be her intention to delay the Bill, she will have to say on behalf of the Opposition that they would not press in any way for those recommendations to be implemented. Can she say that? Does she really think that that would be their attitude? Your Lordships know perfectly well that every parliamentary device that could be used would be used to press for further legislation and delay.
Therefore, while ingeniously the noble Baroness is not specifically seeking to amend the 1st April date—she does not come openly forward with that suggestion—yet the reality of what she is proposing, unless the whole exercise turns out, as it might well, to be a waste of time, is that very substantial delay, probably of a further year, would be involved. So I hope your Lordships will feel prepared to deal with this amendment on that basis.
Of course, noble Lords on the Bench opposite are fighting every inch of the way to delay the Bill. They want their friends across the river in County Hall to remain for another year or so in charge of the political patronage, in charge of the funds which can be used for political propaganda and which are being used, as every one of your Lordships knows, on a most lavish scale for political propaganda. They want to see that continued for a year. But, surely, it would be more open and more in accordance with debate in this Committee if the noble Baroness were to avow that and to say openly that she is fighting to try to delay this Bill. This is quite an ingenious device for doing it, but perhaps not quite ingenious enough.
The Lord Bishop of Liverpool: I would certainly not have put my name to the amendment if I had believed it to be a wrecking amendment, nor if I had believed it to be a frivolous amendment. I support the noble Baroness in calling for a committee of inquiry—and I use the words on the Marshalled List, which show that there is an agenda with strict limits to it for such an inquiry—to
"report on the best means for securing the future provision of services".
That assumes that abolition has happened and that we are looking at how those services may best be provided.
I put my name down in this way because I believe that the Bill is something of a blunderbuss. It fires at a target and hits a great many passers-by at whom it was never meant to be aimed. There is no doubt that the elected Government of the day have to win their way.

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That is not in question. But the debate on the Second Reading in your Lordships' House made it clear that there is much more complexity and much more very genuine anxiety about the future provision of services than had been supposed.
For example, the noble Lord, Lord Plummer, made clear what a major exercise is needed to hand over the responsibilities of the Greater London Council. I hope that this Committee will improve the Bill and clarify and sharpen its aim in the next few days. But many matters are clarified only as we now look beyond the life of the metropolitan counties. I believe that the inquiry that we propose would make it possible for the Government to understand better some of the issues as they emerge in planning the handover. That is the very point that we want to make: that some of the ground is not well trodden, to quote the phrase that the noble Lord, Lord Elton, used. How many noble Lords knew that the issues mentioned by the noble Lord, Lord Plummer, existed? Was there nothing new in what he told your Lordships? Was it all covered in the Bill? I thought not.
I turn to the issue of planning. The London Planning Commission and the voluntary planning conferences in the metropolitan counties are given neither the power nor the resources necessary to plan or to create the essential supports. Their ability to create the right conditions in which private investment will be attracted into economic regeneration will be small. I remind your Lordships of the very genuine fears expressed on all sides at Second Reading about the future of voluntary bodies. I am bound to say that I personally believe that there will need soon to be a whole new deal between the state and the voluntary movement.
The noble Baroness. Lady Faithful!, told us the truth about local government officers faced with painful cutbacks. They do provide for their own staff, and always have done, before deciding whether to give grants to voluntary bodies. A new deal between the state and the voluntary movement may be a little further into the future but the immediate needs of voluntary bodies on transition to new authorities cannot be met by the very modest block figure which the Secretary of State has promised so far.
I have spoken in another situation of comfortable Britain and the other Britain which is mostly to be found in our great cities. Many people in comfortable Britain have told me of their deep concern to understand better what life in big cities is about and to prevent the increase of divided Britain. May I say that I hope that noble Lords who do not experience the life of urban areas at first-hand will think twice before voting against this amendment or against other amendments. Especially, I think of those who seek to provide successor bodies to take the overall view in a great city, for great cities are both a collection of villages and are not a collection of villages. When it comes to information for would-be developers, for putting together a package of different resources, for getting transportation right and for the provision of effective services, great urban areas are not a collection of villages or towns. They are a common interest which reaches right across the sectional interests of boroughs or districts.
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Whatever the Labour Party or the Conservative Party ever said when I was deeply a Londoner for many years, I always believed profoundly in the need for an overall authority with greater powers, and not less. The aim of this Bill needs to be much sharper than its hopeful wishes about joint boards. That is what I put my name down to hear something about through an inquiry. It is difficult to see how the proposals in the Bill would provide a more effective and less costly delivery of services.
The complex arrangements of joint boards,joint committees, voluntary joint arrangements, residuary bodies and greater Civil Service involvement in local matters will be confusing to the public and are likely to give rise to more conflict, more tension and more bureaucratic delay. With our experience (which your Lordships may not share) of Liverpool City Council, for example, and of Sefton Borough Council, this is something that we can do without. I believe that the committee of inquiry for which we ask would give a further chance to look at the realism of providing the services which have been offered by the metropolitan counties. Why has there been such reluctance for such an independent inquiry? The nearest we have come to an independent inquiry is that being carried out by the Select Committee of your Lordships' House on Science and Technology. Noble Lords pointed out at Second Reading that that Committee of the House warned of the waste of breaking up skills and proven teams.
Noble Lords will not be surprised that I come back for a moment to Merseyside. Not for the first time the debate on this Bill has drifted away into being an argument about the Greater London Council. It is not seriously questioned by anyone known to me that Merseyside is a reality in social, economic and cultural terms; no unreal SELNEC was invented to deal with Merseyside. It is worth noting that over 40 years ago a Merseyside plan was produced which covered an area extending from the Ribble estuary in the north to the Mersey at Widnes and including the whole of the Wirral peninsula, an area greater than the present county of Merseyside.
Liverpool City Council recommended a similar area to the Redcliffe-Maud Commission in 1962 as the most appropriate area of operation for a new county authority. I very much regret, if I may say so, that the noble Lord, Lord Sefton, is not able to be in his place because of the illness of his wife. I should like to suggest that our prayers and best wishes for her recovery are heard. He would have been able to speak with great authority about the overview which the city council, and then, subsequently, the county council, has been able to have. I make this point because at Second Reading noble Lords on the Government side of the House told us repeatedly that proud cities did not welcome the metropolitan counties. That may have been so in some cities; and I do not pretend metropolitan counties have always been popular. I want to suggest that some have been winning their way in a very real and genuine way.
In its evidence to the Redcliffe-Maud Commission Liverpool City Council concluded that the redeployment of Merseyside's population is of such a scale and demands such urgent solution that the responsibility for this solution and the power to

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achieve it must rest with one authority. It also recommended that the employment pattern on Merseyside calls for a highly integrated transport system and recommended that the police, fire, civil defence and possibly (it said) main drainage, sewage disposal and further education should be responsibilities of the proposed county council.
Looking at Merseyside as a whole, establishing and reviewing the overall direction of policies and allocation of resources to the area are necessary now more than ever. I wish that your Lordships could have spent an evening last week with a group of directors of major companies in Merseyside, a group which Archbishop Warlock and I invited last year to come together. The group was trying to look at possible new areas of development for jobs in Merseyside. At several earlier meetings of our group it became clear that the Merseyside County Council has acted as a very important catalyst, providing information and bringing together public and private sector resources. Last week the chairman of the English Tourist Board came to meet with us. We had been taking a serious look at the possible development of tourism in Merseyside. Much credit was given at that meeting to Merseyside County Council for the progress made by it in promoting tourism. There was a promise of energetic support from the English Tourist Board when—and there came repeatedly this key phrase—"you've got your act together" after abolition of the body which all present agreed had got its act together.
We need a committee of inquiry to make sure that such a co-ordinating body comes into being in each necessary area of interest with the very different and particular needs and resources of each of the metropolitan counties. The noble Viscount the Leader of the House assured me during the Second Reading debate of his readiness to listen. I readily acknowledge his readiness to listen. That was not quite what I asked him. I asked him that the Government not only listen, but also enter into the debate on its merits.
This Bill is something of a blunderbuss. I hope that the Government and their critics in this matter will be willing to sharpen their aim as particular services are looked at. I hope that the Government might see a committee of inquiry as a useful tool to help make provision for services as some of these complex issues emerge more clearly.
4.45 p.m.
Lord Howie of Troon: I should like to assure the noble Lord, Lord Boyd-Carpenter, that there are many noble Lords on this side of the Committee and in other parts of the Chamber who support this amendment without being in any way interested in the powers of patronage on the other side of the river, nor necessarily supporting some of what he thought was the lavish public expenditure. I think that when the noble Lord reflects on the closing parts of his speech he will realise that he has been less than generous to many of his colleagues on this side of the Committee.
However, there was a more important part of his speech at the beginning when the noble Lord, Lord Boyd-Carpenter, said that it was somewhat unusual
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for an inquiry to be requested at such a late stage in the progress of a Bill through Parliament. He was, of course, right; it is unusual. And what is more unusual is that a piece of legislation of this nature and of this constitutional importance should have come forward without a public inquiry in the first place. It is only because, unusually, there was no public inquiry at the beginning that we are now asking, unusually, for a public inquiry at the end.
Lord Graham of Edmonton: Well said!
Lord Howie of Troon: I think that that is an important and crucial factor in the debate today.
There are only two other points to which I wish to refer which have been raised in the debate. One is that this amendment is a wrecking amendment and the other is that it is a frivolous one. The accusation that the amendment is a wrecking one has I think been totally demolished by the noble Lord, Lord Diamond, and I endorse every word he said in demolishing it. We should really hear no more of that argument today or at any other time in the future.
I turn to the argument that it is frivolous, which was raised first by, I think, the noble Lord, Lord Beloff, opposite and I think was repeated a little later by the noble Lord, Lord Boyd-Carpenter. Both of them, I think, saw that part, at least, of the frivolity lay in the unlikelihood of the Government being able to appoint a committee who were unaware of the arguments and who had been, I think, protected from them in some way, almost as though they were a jury of some kind. But we know that that is not the reality of committees.
I would remind noble Lords that it is within the memory of your Lordships' House that not terribly long ago a committee of inquiry was set up into the Falklands war. It can hardly be said that the members of that committee did not know anything about the Falklands war; and most of them had been involved in the policies which led up to it. I do not want to talk here about the Falklands war as something in itself. I am saying merely that it was found possible to appoint a committee to deal with that highly contentious matter even though everybody in the country knew what was thought to be all about the Falklands war. But we know that as time has gone on more and more factors have appeared which we did not know about. The right reverend Prelate who spoke a moment ago said that the same thing is true in regard to this Bill. Why should we assume that nothing new can be found about this matter just because we have spoken about it and just because the Commons has been guillotined on it? I do not think that the wrecking accusation stands and I do not think that the accusation of frivolity stands.
To turn to the last element in the frivolity argument, which was the time available for the Committee, it will again be within the recollection of the Committee that the committee on the Falklands war was asked specifically to report quickly and it managed so to do. What was perfectly possible and what was done by that committee not so terribly long ago could certainly be done by the committee proposed here. This amendment is a sound and sensible one and ought to be supported.
Lord Hunt: I rise to—
Noble Lords: Lord Bellwin.
Lord Bellwin: I do not want to make a long speech, but there is one factor which has not been referred to. Whatever else the amendment is, whether it is wrecking, frivolous or whatever, it certainly is delaying, because it has already delayed us for almost two hours in our consideration of the Bill.
The one point I want to make is that this proposal for an inquiry is nothing new at all. It was put forward to us and was almost a major plank of the Opposition's proposals when we were debating this question under the Local Government (Interim Provisions) Bill, the paving Bill, as it was then called. It was put forward, it was debated, it was voted upon at Second Reading and at various stages, and it was rejected. We have had exactly the same thing during the passage of this Bill. We had 11 hours of discussion under the reasoned amendment on Second Reading. Perhaps, as an aside, I may say this to the noble Lord, Lord Diamond. I wonder, with his great concern for the constitutional proprieties, how happy he is that we have these reasoned amendments which enable the Opposition not to vote against at Second Reading but to vote for something which at least has a major impact upon the thinking of those who then consider the Bill; but that is for another day.
Lord Diamond: The noble Lord has challenged me. Perhaps I may say that, so far as all of us on these Benches are concerned, we have not once put our names to any amendment which would seek to delay the Second Reading of any Bill passed by the other place.
Lord Bellwin: I still say that that is for another day.
For the moment I would refer your Lordships' Committee to the 11 hours of the Second Reading debate, when every opportunity was given to everyone to raise everything. Inquiries were mentioned then as they have always been mentioned. It was overwhelmingly, disastrously, dramatically rejected by your Lordships' House at that time. So here we have it yet again, albeit in another form. That is what it is. We are now being asked to vote on exactly the same thing; only now it is not as part of something else but is on its own. That is my major objection to it.
The right reverend Prelate the Bishop of Liverpool was referring to other matters, arguably Second Reading matters. I do not want to do that. However, I must say to him with great respect—I think he knows that I have that for him—that I come from an urban background. I was brought up in such a background and as a boy saw conditions which were a darn sight worse than whatever applies today. When I see what has been done since then, not disallowing what still needs to be done—goodness knows, my job in the past two years took me in among that—I say that we have to keep this in proportion.
I maintain that whatever may be the case in Merseyside, certainly I do not accept that in West Yorkshire and in Leeds services are at all better now than they were before the reorganisation 10 years ago. I certainly acknowledge that there are some specialist
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groups which do some very good cross-boundary work. I hope that within the Bill we will ensure that those are not lost, indeed, that they are enhanced, that they go to the right home and are dealt with properly. I certainly am all for that. But I do not accept that basic services, the ones which are going to be returned to the boroughs, are in any way better now than they were previously; on the contrary. When on Second Reading I said that there are many Labour leaders who privately cannot wait for the day when they get these services back into the metropolitan districts I knew exactly what I had in mind, and it is only out of my concern for their future political aspirations that I do not name them. That would be the last thing that they would want me to do.
As I said, I do not want to make a long speech. I wish to say only that I believe that this question of an inquiry is a matter which has been well debated, talked through and rejected several times. To me it would mean at the very least delay. I thought that my noble friend Lord Boyd-Carpenter made a most telling speech when he said what would be the practical effect of it. I was very convinced by that. I hope that your Lordships' Committee will also be convinced by it and will reject the amendment out of hand.
Lord Hunt: I rise to support this amendment and in doing so perhaps I may say that I had no part in the discussions leading to the framing of it, nor in the decision to put it down for discussion in this Committee. We have heard a great deal about whether it is a wrecking amendment. Perhaps I may say that had that been the intention, I would not have dreamt of coming to this Committee with the idea of supporting it; and nothing I have heard during this long to-ing and fro-ing about whether or not it is a wrecking amendment has persuaded me that it is. Nor—and I was very glad to hear the noble Lord, Lord Boyd-Carpenter, make the distinction—am I persuaded that the word "delay" equates with the words "wreck" or "destroy". If that is not so, we need to refer to the Oxford English Dictionary.
The purpose of this amendment does nothing to invalidate the main intention of the Bill; it seeks to improve it. That is why I am rising very briefly in support of it. We have heard most of the reasons in support of setting up a committee of inquiry to look into the provisions of services in the GLC area and the metropolitan counties. I wish to refer to the provision of services by the voluntary organisations and to a point that has not yet been raised. That is the only reason why I am speaking now. It is sometimes helpful to take a specific instance to illustrate a point. I make no apology for making a reference to an organisation, the Rainer Foundation, in which I have an interest to declare—a completely non-financial interest—simply to illustrate a point which I believe is, if not general to, shared by a great many other voluntary organisations working in London and in the metropolitan counties.
The Rainer Foundation provides services to young people mainly in the south of England and mainly in London. I shall touch on just four to make my point. We provide among many others two schemes in Lewisham, one scheme in Southwark and another scheme which spans three boroughs, Islington. Brent and Haringey. The kind of work that is being done

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includes accommodation for homeless young people and community based schemes for young offenders and for others who are at risk of falling foul of the law; and in connection with those we operate YTS schemes Mode 2.
5 p.m.
I now come to my main point. It would be very difficult to describe to this Committee the degree of depression, the level of anxiety and the state of pessimism among staff working in these difficult and extremely important areas. It is difficult in terms of the areas in which they are working; it is extremely important in terms of the nature of their work. The work is not of a popular kind. It is not of a kind likely to win public sympathy and practical support and draw anything like sufficient compensating funds from the private sector; and yet it has a direct bearing on public order and on the prevention of crime.
There is no confidence among the workers to whom I am referring on those four specific cases—and they are only typical of a great many others—that this Bill as drafted will ensure the necessary on-going funding adequate for the job that they are doing; funding either from the boroughs in which they are working (either by individual boroughs or a collection of boroughs) or by the Government funds which will replace those at present provided by the GLC.
It is not too much to say that this uncertainty and anxiety has adversely affected the quality of the work which the social workers have been doing in those schemes for many months past. This is bound to persist under the present terms of the Bill, at least until late autumn—when the prospects or otherwise of funding by the boroughs and their share of Government funds are made known. An inquiry such as that advocated in this amendment would at least ensure in such schemes as these (apart from giving confidence to social workers) that the soundest and fairest alternative methods of funding voluntary-based services have been thoroughly examined by an independent and expert body. It would provide a breathing space during which morale among social workers could be restored. I join with others, such as my noble friend Lord Evans, who spoke of the tendency of the Government to rough-ride over public opinion. The noble Lord, Lord Beloff, called this a frivolous amendment. What can be more important than taking some account of the social workers working in these fields, and what is frivolous about taking their views into account?
Baroness White: I am sorry if I interfere with the speech of the noble Earl, Lord Gowrie; the noble Earl is not by any chance making a statement now? If he is not doing so, then I will proceed.
I have had almost 40 years' experience in this Palace of Westminster and I can truthfully say that on no previous occasion have I known of a Bill which has been the subject of such universal concern expressed by those most closely concerned with the functions relevant to the proposed legislation. Noble Lords in all parts of the Committee have received a vast amount of
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correspondence. We are accustomed to that but, as a rule, the quality of such correspondence is not that which has been seen on this occasion. In the past, very often, particular points of interest, pressure or emotion have arisen which meant that we received a large postbag. But even if such views are not expressed on identical postcards, we know very well that they are in effect propagating just one or two particular points of view.
This time the difference is that a vast range of persons in various areas of activity are deeply concerned, deeply puzzled and deeply apprehensive—if not actually distressed—about what is intended under the proposed legislation. I would ask noble Lords who are hesitating over this amendment whether they have encountered enthusiastic support for these proposals from any reputable professional organisation closely connected with local government functions. It is astonishing the way in which one profession after another has written to us expressing doubts, concerns, hesitation and apprehension. Those organisations have not been convinced. With great respect to noble Lords on the other side of the Committee who are opposing this amendment (and they are by no means unanimous), this situation is one which should cause us considerable concern. It causes me very great concern.
I do not profess to have specialised knowledge of all the areas about which I am now receiving correspondence. It is not easy to come to a measured judgment in areas in which one does not have expert knowledge. However, the people who have been writing are of a standing and experience which makes one regard their opinions with considerable respect.
This is indeed an unusual situation—to encounter such a wide range of concern. I would have thought that that in itself would surely have persuaded the Government that this is an occasion when further inquiry is necessary—even if they propose to get this measure through. I do not imagine that any of us dispute that this measure will reach the statute book in some shape or form. We are simply saying that the Government should do the minimum damage possible and not the maximum damage possible in implementing this legislation.
I call in aid an area with which I do have some acquaintance. It is exemplified in the report—most unusually, an interim report—of a Select Committee of our Lordships' House. It was the report so eloquently referred to on Second Reading by the chairman of the respective committee of your Lordships' House, the noble Earl, Lord Cranbrook. It is the interim report of your Lordships' Select Committee on Science and Technology, dealing with the provision of scientific and technical services as affected by the Local Government Bill we are now discussing.
I do not know whether the noble Lord, Lord Bellwin (who now has many preoccupations other than reading parliamentary papers), has had an opportunity of really studying the report, but it is a very serious document. I do not wish to go through the details of the report as that was done by the noble Earl, Lord Cranbrook; but I should like to remind the Committee of the conclusions unanimously reached by that all-

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party committee of your Lordships' House, in which they stated, and I quote from the final paragraph of the report:
"The Committee repeat their conviction that the administration of local government in Greater London and the metropolitan counties depends for its effectiveness on preserving the integrity of many of the specialist services built up by the GLC and the county councils. … Further challenges lie ahead. The great conurbations require specialist staff and facilities to meet them. Economic, efficient and forward-looking services demand excellence, integration and continuity. The existing services should be improved, not by being dismembered but by being encouraged to progress. Centres of excellence are slow to develop but easy to destroy".
The committee made various detailed recommendations, with which I will not weary your Lordships, but it is perfectly clear that the committee, which went into these matters with great thoroughness and with a considerable degree of expertise at its disposal, recognised that there is virtually no chance of a satisfactory transfer of functions by the date of abolition. They also assumed that this Bill, in some shape or form, would reach the statute book.
The report argued that if arrangements had not been finalised the scientific and technical services, with staff, should be transferred initially to a residuary body. This would minimise disruption until longer-term arrangements could be made. Even this would lead to a period of inaction and loss of dynamism and the interim period should therefore be kept to a minimum.
If for no other reason, a committee of inquiry of the kind suggested by my noble friend should proceed forthwith to investigate the best way of making a thoroughly unsatisfactory situation at least better than it may otherwise be. That is the purpose of this amendment. And—mutatis mutandis—one could say the same of other areas. When it comes to strategic planning, transport, etc., no one knows how they will be handled. They are not being transferred to the boroughs.
We are all mature, intelligent people and we know what is going on. Those functions will not be transferred to the boroughs, except in part. There are considerable areas where nobody knows what really is the best way of coping with the situation if the GLC and the metropolitan counties are to be dismembered and destroyed. It is not for us to go into detail here and now, but there is a serious case to be made for the amendment which is now before the Committee. If we are to keep to the Government's proposals and timetable, then all the more reason why this amendment should be adopted and some proper, rational discussion undertaken on the methods by which this botched legislation can be improved.
The Earl of Perth: I came to this Committee stage this afternoon without any preconceived idea, one way or the other, on the amendment. However, the more I listened the more it struck me that, in a way, this amendment is something of a derogation of the powers of the House itself. What is it suggesting? It is suggesting that the House, in this Committee stage and in other stages, goes with the greatest care into all the various points raised by many of your Lordships and then assumes that the work must be done again by a committee. I find that some sort of reflection on your Lordships' House.
42
I believe it was the noble Lord. Lord McIntosh of Haringey, who pointed out how in the past year or two the Government, under pressure, have considerably changed the Bill for the better. If that is right to date why should it not go on that way, because our Lordships will be trying to improve the Bill in one way or another? To suggest that after we pass the Bill we should then start all over again and legislate in eight weeks—because that is about the timetable, as your Lordships have heard from the noble Lord, Lord Boyd-Carpenter—is, if not frivolous, certainly not a practical suggestion.
The only other point that has occurred to me in listening to your Lordships is that if this committee were to be set up it would be faced with an enormous amount of work. We all know of the representations that we have had. The right reverend Prelate said that we must consider, in particular, Merseyside. We must consider London and all the various metropolitan counties in that very short time and produce an answer by the beginning of February and finish the legislation by 1st April. Somehow, that date is one which I find totally appropriate. I do not think that this is an amendment which we should take seriously.
Lord Hatch of Lusby: I can assure the noble Lord, Lord Boyd-Carpenter, that no one in this House wants to extend the patronage of our friends on the other side of the river. What we wanted to do, and what the Government have prevented us from doing, was to ensure that they went to the electorate on Thursday of this week. That was the whole objective of our exercise last year. I can also assure the noble Lord, Lord Beloff, that there is nothing frivolous in this amendment. It is not frivolous when we are investigating what I believe—and the noble Earl who is to wind up will correct me if I am wrong—is the first time since 1832 that any of the British people have been deliberately disenfranchised. That is not frivolous.
The right reverend Prelate the Bishop of Liverpool, the noble Lord, Lord Hunt, and my noble friend Lady White have all pointed to specific issues that should be the subject of an inquiry and to which the Government have given no answer and can give no answer at this stage. Nor can they give any answer to what will happen when the several million people (I shall not put a figure on it) whom we know are to be disenfranchised lose their votes. The noble Lord, Lord Elton, said at the beginning of the Second Reading debate that democracy involves power coming as close as possible to the voters. Is that going to come through this Bill? If so, how? We are entitled to an answer; and not just a political answer but an answer as to what will happen to these powers. To what extent is this an increase in the power of the executive? To what extent, as the Government claim, is this going to save money? No one can give a specific answer. These are all matters for which an inquiry is necessary.
5.15 p.m.
The Bill contains proposals for a major constitutional change and it comes without precedent because no public inquiry has been carried out as a basis for it. That sentence should be quoted. It is not mine. It is a sentence of the right honourable Edward Heath speaking in another place on 4th December. I

43
suggest that he speaks for one kind of Conservative and that his words should be listened to by that kind of Conservative who is in this Committee this afternoon. I suggested that in my Second Reading speech. The noble Viscount the Leader of the House thought he was very clever in turning round my history on Joseph Chamberlain and his family. If he had known anything about the spirit of that history he would have known that if Joseph Chamberlain had been alive for the last decade he would have been leading not Birmingham but the West Midlands County Council. His whole effect was to spread the democracy of local government and to spread accountability, which this Bill is taking away.
What the noble Viscount the Leader of the House did not say, and did not answer when I specifically asked him was whether the logic of this Bill is to be applied to the shire counties. He never mentioned that in his winding-up speech. I suggest that an inquiry of this kind should look at the implications contained within the Bill for the shire counties. I asked the noble Viscount, quite deliberately and specifically, when he was sitting in his place: are we to take it that the shire county elections on Thursday of this week are to be the last? If not, where is the logic of the Government's argument? Are not those shire counties, the county councils, just as subject to the logic of the Government's argument as are the metropolitan counties and the GLC? If not, we should be told where the logic goes wrong. I suggest that this can only be done by looking objectively at the whole structure of local government.
I also suggest that those who have argued that the Bill has been put through the whole process of Parliament are using a very dubious argument. We know (and I said this at Second Reading) that when the guillotine fell in the other place there were 55 hours left to discuss nearly 70 clauses. I gave the time that was taken on important clauses. Surely that is not the kind of democracy which noble Lords opposite consider to be a substitute for an independent inquiry or an examination of the proposals put forward by the Government. So the Bill comes to us, the unelected House, without the elected House having had the opportunity of a thorough examination and we are put into the position of an inquiry. But what happened two weeks ago tonight? It was not noble Lords who are sitting on these Benches here who took part in that vote. It was amusing to see during that afternoon, that even the attendants did not know some of the noble Lords who were here. I sympathised even with the clerks, who had to consult Dod's to try to match pictures with faces they had never before seen.
The majority mentioned this afternoon was not a majority of the people who have been discussing the Bill. It was a majority of those whom the noble Lord the Government Chief Whip had been able to persuade or coerce to come here to cast their votes. When? It was at a quarter to two in the morning. Why? It was because the Government Chief Whip knew that his three-line whip would not continue on the Tuesday.
Surely, had we been serious and put ourselves in the position of being an impartial, objective inquiry into the issues of the Bill, the Government would not have
44
hesitated for a moment. When they saw the list of speakers—and they knew the list of speakers because we all knew it before the Easter Recess—they would have immediately agreed to a two-day debate. That would have been sensible, instead of forcing or coercing people. Some of my dearest colleagues on this side of the House—and I am sure that there were noble Lords on the other side of the House—risked their health to stay up until a quarter to two in the morning to cast their vote. Is that the way to conduct a serious inquiry and investigation into the Bill? I suggest that it is not.
I suggest that there is a case for an independent inquiry after the Bill has been passed to bring out the issues which the Government have not been able to answer authoritatively and to examine the repercussions of aspects that their own supporters—I have quoted Mr. Heath and I could quote others—have shown to be offensive to the concept and tradition of conservatism as they have known it. This inquiry would give the Government one further opportunity to avoid a clash with common sense as well as with democracy, and we are offering them that opportunity this evening.
The Earl of Gowrie: I sense that the Committee may wish now to come to a decision on this issue, and I shall simply try to respond to some of the specific points that have been made rather than rehearse all the arguments, which have been well put. Speaking for myself, I have found it an extraordinarily lively and interesting debate. I say that as something of a "rookie" in local government legislation.
However, I must say to the noble Lord, Lord Hatch, that I am not such a "rookie" as to make the confusion with the shire counties. One reason why the Government are seeking your Lordships' assent to this legislation is because the shire counties carry out over 80 per cent. of the services in their areas, whereas the metropolitan counties carry out only 26 per cent. and the GLC 11 per cent. That is what we mean by a wasteful and expensive tier of bureaucracy.
I also say to the noble Lord, Lord Hatch, that those of us on this side of the Committee who bear the affection and admiration for my right honourable friend Mr. Heath that I do would rather seek to protect him from the embraces of the noble Lord, Lord Hatch. I think that the Opposition could perhaps choose a more subtle figure to put up if that point is to be made.
I do not propose to deal with the argument as to whether this is a wrecking amendment. Let me give the noble Baroness the benefit of the doubt. Let me act the soft policeman, so to say, to my noble friend's hard cop and suggest that it may not be a wrecking amendment. But if it is not, it certainly does not seem to be an amendment of very great substance. I thought that that point was answered admirably from slightly different perspectives by my noble friends Lord Boyd-Carpenter and Lord Beloff, and also, of course, by the noble Earl, Lord Perth. He made the sensible point that many of the things that the inquiry might deal with could be perfectly wisely, legitimately and properly dealt with by your Lordships' House as the Bill proceeded on its way.
Let me say one quick personal thing about the whole issue of an inquiry. I am 45 years old, and I cannot

45
remember a time during my adult life when some inquiry or other into the workings of local government and its finances has not been taking place. There was the Royal Commission on Local Government in Greater London which was set up in 1957 under Sir Edwin Herbert and which reported in 1960. There was the London Government Act of 1963, which created the GLC and the 32 London boroughs. There was the Royal Commission into the workings of local government under Sir John Maud, later Lord Redcliffe-Maud, which was appointed in 1966 and reported in June 1969. There was the then Conservative Government's 1971 White Paper, Local Government in England. There was that Government's Local Government Act in 1972. In addition, under the Labour Government the GLC itself set up the Marshall Inquiry under the noble Lord, Lord Marshall of Leeds, which reported in July 1978.
We have been deluged with inquiries, debate, knowledge and information. It would seem to me wholly redundant to go down that road again. The reason we are being urged to do so is simple. Those who are opposed, perfectly honourably, to our proposals and legislation believe that it will help them in their campaigns against them. That point could not have been put more clearly than it was by my noble friend Lord Boyd-Carpenter.
I was stung by one criticism. Happily, a Back-Bench Member of the party opposite came to my aid. I was stung by the noble Baroness when she said that no one was making any headway against the Government in respect of criticisms of this legislation. In fact, the noble Lord, Lord McIntosh of Haringey, with his great experience of local government, came to my rescue. The Government have consulted widely, as I know as a principal participant on the arts sides in this respect, and they have substantially modified some of their original propositions before the legislative process.
There is the very substantial modification of the ILEA proposals. There are the suggestions that boroughs and districts will prepare single unitary development plans instead of being responsible for separate structure and local plans—and I believe that that answers in some measure the criticisms made by the noble Baroness, Lady White. Also, in my own field there is the additional central Government funding—which will of course be partially distributed through regional arts authorities—to pick up some of the arts expenditure of the GLC and the metropolitan county councils. That was a complete change of tack by the Government as a result of representations and consultations. There were the changes for the voluntary bodies. The Government will provide transitional funding of schemes to the total value of £10 million for the first four years following abolition, and the Bill provides for a scheme of joint funding by all boroughs and districts of countrywide projects. Previous to that change voluntary bodies supported by the GLC or the metropolitan county councils would in future have had to look to boroughs or districts for support.
5.30 p.m.
I, like the Committee, was moved and impressed very much, if I may say so, by the speech of the right reverend Prelate the Bishop of Liverpool. I hope that
46
the changes and modifications, of which perhaps he did not take sufficient account, will answer some of the points that he made. I think it is also important to say to the right reverend Prelate that you do not have to be a city or an inner city with a metropolitan county council to have great inner city problems or to make sterling attempts to tackle them. To say that would be rather rude, I think, to the difficulties of such great cities of ours as Bristol, Cardiff, Glasgow and others.
When I think of an inner city area like central Birmingham, I must say that this debate was much too interesting for me to indulge in the fantasy of composing a speech in the style of the late Joe Chamberlain on what he would have thought of the West Midlands County Council. I have been enormously impressed, when I have been in Birmingham, by how little that city, which is not held in hands politically sympathetic to my own, think of the metropolitan county council. I am sharply aware that there are no proposals that I know of by the Labour Government to put those county councils back into being, should they win an election.
The noble Baroness also said there was no consensus of this issue. One of the puzzling things of contemporary politics is that the tone of debate and altercation has become much sharper in recent years. Yet I would suggest that some of the analyses or the problems have become much closer. It seems to me that the Alliance, the Labour Party and the Conservative Party have been alike in their analysis that these structures (which were brought into being, as I fully acknowledge, by a Conservative Government) have not only been less than perfect but have actually aroused local government spokesmen of all opposition parties to declare that they would wish to see them at an end.
The noble Lord, Lord Evans of Claughton, I think rather let the side down by saying that he was not opposed to reform: with characteristic liberal invective, he was simply opposed to doing anything about it. I welcome the noble Lord. Lord Evans, to the reformists, and I hope that he will get off the fence on this issue.
I was also concerned—I did not seek to interrupt him because he made the point very quickly and passed over it—lest any of the remarks of the noble Lord, Lord Kissin, about Hampstead Heath should create anxiety in this Chamber or outside. The noble Lord said that Hampstead Heath's future was very uncertain, as if in some way this enormous acreage was going to be hived off or sold in some way. Whatever body ends up with formal responsibility for Hampstead Heath, what we all mind about is that it should continue to be Hampstead Heath, which is precisely what will happen. Under present arrangements, if anything sinister were to be done to it—and this applies to many areas covered by the Bill—the Secretary of State of the day could, of course, prevent it. I cannot imagine any Secretary of State of the day not doing so.
It was a particularly interesting debate, and I think that probably now is the time to take a decision on it. I believe it is not unfair of me to suggest that in this respect the Opposition—however sincere their opposition to the Bill generally—are being a little

47
cynical and a little opportunistic. They have, through the pronouncements of their spokemen, on many occasions in recent years, and even since the general election, attacked the structure of local government as covered by the MCCs and the GLC. They have now tried to climb on a bandwagon created, I would say, very temporarily and with unscrupulous use of public money by a handful of bright Labour politicians in these areas. They will find this a very expensive mistake, as it will land them with commitments at the next election which they will regret.
I do not think the noble Baroness has one of her elegant legs to stand on in respect of this amendment, and I ask the Committee not to fall for her.
Lord Hatch of Lusby: Before the noble Earl ceases to share his random observations with us, I took particular note of his almost concluding sentence about the Opposition being cynical and opportunist. Would he say that his right honourable friend in another place, for whom he expressed so much affection, was being cynical or opportunist when he said (and I will repeat to the noble Earl the words of the right honourable gentlemen Mr. Edward Heath):
"The Bill contains proposals for a major constitutional change and it comes without precedent because no public inquiry has been carried out as a basis for it".
The Earl of Gowrie: I dealt with that point at the beginning of my remarks. What I had in mind was pronouncements like that of the then official Opposition spokesman on the environment, Mr. Kaufman, when he said as late as December last year:
"We should not regard the existence of the GLC as sacrosanct. In my view it is an enormous bureaucracy which has a dubious role to play".
Baroness Birk: We have had a long and lively debate, as the noble Earl said. If I may, I think I shall first take up some of the remarks of "the soft policeman", as he termed himself, before I get to "the hard cop". If this amendment and the debate are not something of substance, I am surprised that we have had a Cabinet Minister wheeled in to wind up on it. We have had our very distinguished Minister of State, who took it to himself to speak immediately after me, and we have had (I do not know how to describe them) all the noble Lords—Lord Boyd-Carpenter, Lord Campbell of Alloway, Lord Beloff and now Lord Bellwin—who are all highly qualified to speak and who all come to the aid of the party at a very high level. So I do not think one can talk of this as not being of any substance.
The noble Earl, Lord Gowrie, referred to the noble Earl, Lord Perth, and his point about the Committee carrying out the work of any inquiry. The Committee would still carry on with discussing the Bill, moving amendments and hopefully winning some of them or getting some change of heart from the Government, even if the inquiry were set up. But an independent inquiry would not be subject to three-line whips. It would not be negating what had been decided in Committee and altering it on the way.
The noble Earl also referred again to the question: Why have an inquiry, particularly when legislation is going on? With the Herbert Commission we had a
48
commission of inquiry and then legislation; with Redcliffe-Maud we had a commission and then legislation. Now we have the legislation without an inquiry. That is the tremendous difference. I have never pretended for one moment—and I said this right from the beginning—that I thought it was very satisfactory to have to ask for a committee of inquiry during the passage of a Bill. But there is no alternative when there has not been any inquiry before the legislation; when it is something that affects so many people, so many areas, and so many lives that we have a duty to do what we can to try and improve it, even though it means a committee of inquiry which will be sitting, not for eight weeks but for something like six months. Surely it is not beyond the powers of this Parliament and of the Government that if there are proposals put forward which the Government genuinely think would improve this Bill they should then produce them and go forward with them.
The noble Lord, Lord Boyd-Carpenter, was mainly taking me to task. I shall not go into that matter since my noble friend Lord Howie answered the point about it being an unusual Bill. However, the noble Lord asked me about pressing for the implementation of proposals. I should say that the boot or shoe is entirely on the other foot. This is entirely in the Government's hands. When the committee of inquiry, which I hope will be set up, is set up, the Government can get it to work very much earlier. Incidentally, there is no substance in the argument of not being able to find people who look at a matter independently. Everybody brings themselves and their own prejudices to other things they do, but when they have something in front of them to consider and terms of reference (and they will be fairly narrow) I do not think that will be a problem. That point was also dealt with.
However, if the committee then come forward with certain very specific proposals which they feel would greatly improve this legislation, it will be for the Government to decide what they will do. It does not rest with the Opposition. It is up to the Government to decide whether they want to go ahead with legislation which will not work out and has a great many faults in it. It is up to them to decide whether they will get the change through very quickly or whether they will, of their own volition, decide that they would rather present a better piece of legislation to the country (not just to the Houses of Parliament) and will therefore make up their own minds to have some delay if they think it is necessary. This is nothing at all to do with the Opposition parties; it is entirely up to the Government.
The noble Lord, Lord Bellwin, talked about the Second Reading debate. He seemed to imply that we were debating an inquiry. We were not. We were not debating an inquiry; but the question of an inquiry came in. It was mentioned by nearly a dozen people during that debate. The noble Lord also talked again about services being returned to the boroughs. One of the problems of the Bill is where the services are not returned to the boroughs and where they cannot be effectively given to the boroughs because they are services which cover a very much wider area.
The noble Lord, Lord Elton, when he opened, referred to the manifesto of 1979 and made very much of the fact that there was no mention of an inquiry. As

49
to that, and as to his reference to my right honourable friend in another place and what he said at a party conference, I must say with great respect that that is rather scraping the barrel for arguments against the amendment and in favour of the Bill.
In relation to what my right honourable friend said about an inquiry, people say things at party conferences which either do not necessarily carry the weight of their party or which they do not necessarily stick to. I shall swop the noble Lord that one for a comment that was made at a party conference by the present Secretary of State for the Environment on 10th October 1983. He said:
"I am a Tory and I have been brought up as a Tory. I believe the burden of proof is upon the man who advocates change, and if he does not satisfy that burden of proof, then change should not be made."
He has obviously changed his mind about that, has he not? There we are. Thus, these are not very good precedents to follow.
The question whether or not we should go ahead with this amendment was, if I may say so, put succinctly and well by my noble friend Lady White, who is a member of the main Select Committee on Science and Technology, although not of the subcommittee which has reported. Her arguments on the need for this were on a completely apolitical basis—
Noble Lords: No!
Baroness Birk: Yes, they were, because she was quoting what had been said by the Sub-Committee on Science and Technology. One of the other points she made, which I should like to reinforce, is this. We are all aware of the amount of material we have received and of pressures and discontent from organisations of every kind. I shall not take up the time of the Committee by listing them, because we know them. However, I think there is something of which we should take note. It is that I am sure all of us have received and are continuing to receive more and more updated material since this Bill went through the House of Commons. It did not stop there. Thus the dissatisfaction is just the same, and in many cases is greater. Now it is being transferred to this Chamber, and we are being asked what we can do.
I would say only this in ending, before I test the feelings of the Committee on this matter. What are the Government afraid of? If the Government feel that they have this matter right and that any independent committee that is set up will reinforce it or may feel that it can make some suggestions which will help it along, then they have nothing to fear. As I have already argued, there is no question of delay in this amendment. It is entirely in the hands of the Government; it is entirely in the hands of the Secretary of State. I regret the fact that, as the Minister pointed out, it is giving him yet another power. However, as we were determined not to have an amendment which would incorporate delay or which would be in any way a wrecking amendment, this was the only way to do it.
Therefore, rather than consider that this amendment is ingenious, opportunist, cynical, devious or any of the other flattering remarks that have been made about it (and I do not think that that kind of flattery will get anyone anywhere) I should have
50
thought the Committee would have accepted it and would not have looked behind it and tried to find all kinds of sinister motives which are not there. I can see the Chief Whip grinning at me. I always like to grin back at him. However, I mean it. It is absolutely true.
I think many Members of the Committee and many people are extremely seriously concerned, including those who are in favour of the abolition of the GLC and the metropolitan counties but are concerned at the way in which it is being carried out by this Bill. I ask the Committee to support the only way we have at the moment of trying to come to grips with this very difficult problem.
5.47 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 137; Not-Contents, 196.

DIVISION NO. 1

CONTENTS

Airedale, L.

Gifford, L.

Amherst, E.

Gladwyn, L.

Ardwick, L.

Graham of Edmonton, L.

Attlee, E.

Gregson, L.

Aylestone, L.

Grey, E.

Bacon, B.

Hampton, L.

Banks, L.

Hanworth, V.

Barnett, L.

Harris of Greenwich, L.

Beaumont of Whitley, L.

Hatch of Lusby, L.

Bernstein, L.

Hayter, L.

Beswick, L.

Henniker, L.

Birk, B.

Houghton of Sowerby, L.

Blyton, L.

Howie of Troon, L.

Boston of Faversham, L.

Hunt, L.

Bottomley, L.

Ingleby, V.

Briginshaw, L.

Irving of Dartford, L.

Broadbridge, L.

Jacobson, L.

Brockway, L.

Jacques, L.

Brooks of Tremorfa, L.

Jeger, B.

Bruce of Donington, L.

Jenkins of Putney, L.

Buckmaster, V.

John-Mackie, L.

Campbell of Eskan, L.

Kaldor, L.

Carmichael of Kelvingrove, L.

Kearton, L.

Chitnis, L.

Kennet, L.

Cledwyn of Penrhos, L.

Kilmarnock, L.

Collison, L.

Kissin, L.

Croham, L.

Lawrence, L.

Darling of Hillsborough, L.

Leatherland, L.

David, B.

Listowel, E.

Davies of Leek, L.

Liverpool, Bp.

Davies of Penrhys, L.

Llewelyn-Davies of Hastoe, B.

Dean of Beswick, L.

Lloyd of Kilgerran, L.

Delacourt-Smith of Alteryn, B.

Lockwood, B.

Lovell-Davies, L.

Denington, B.

McIntosh of Haringey, L.

Derby, Bp.

McNair, L.

Diamond, L.

Mais, L.

Donaldson of Kingsbridge, L.

Mayhew, L.

Donnet of Balgay, L.

Melchett, L.

Elwyn-Jones, L.

Mishcon, L.

Ennals, L.

Molloy, L.

Evans of Claughton, L.

Monkswell, L.

Ewart-Biggs, B.

Murray of Epping Forest, L.

Ezra, L.

Nicol, B.

Falkender, B.

Northfield, L.

Falkland, V.

Ogmore, L.

Fisher of Rednal, B.

Paget of Northampton, L.

Fitt, L.

Phillips, B.

Foot, L.

Pitt of Hampstead, L.

Gallacher, L.

Ponsonby of Shulbrede, L. [Teller.]

Galpern, L.

George-Brown, L.

Rathcreedan, L.

51

Rea, L.

Stoddart of Swindon, L.

Reilly, L.

Stone, L.

Rhodes, L.

Strabolgi, L.

Ritchie of Dundee, L.

Taylor of Mansfield, L.

Robson of Kiddington, B.

Tordoff, L. [Teller.]

Rochester, L.

Wade, L.

Ross of Marnock, L.

Wallace of Coslany, L.

Sainsbury, L.

Walston, L.

Scanlon, L.

Wedderburn of Charlton, L.

Seear, B.

Whaddon, L.

Serota, B.

White, B.

Shackleton, L.

Wigoder, L.

Shinwell, L.

Willis, L.

Simon, V.

Wilson of Langside, L.

Soper, L.

Wilson of Rievaulx, L.

Stallard, L.

Winchilsea and Nottingham, E.

Stedman, B.

Stewart of Fulham, L.

Winterbottom, L.

NOT-CONTENTS

Abinger, L.

Fisher, L.

Ailesbury, M.

Foley, L.

Airey of Abingdon, B.

Fraser of Kilmorack, L.

Alexander of Tunis, E.

Freyberg, L.

Allerton, L.

Gainford, L.

Ampthill, L.

Gardner of Parkes, B.

Barber, L.

Gibson-Watt, L.

Bathurst, E.

Glenarthur, L.

Belhaven and Stenton, L.

Gowrie, E.

Bellwin, L.

Grantchester, L.

Beloff, L.

Granville of Eye, L.

Belstead, L.

Gray, L.

Bessborough, E.

Gray of Contin, L.

Bethell, L.

Greenway, L.

Bledisloe, V.

Gridley, L.

Boardman, L.

Grimston of Westbury, L.

Bolton, L.

Haig, E.

Boyd-Carpenter, L.

Hailsham of Saint Marylebone, L.

Brabazon of Tara, L.

Braye, L.

Halsbury, E.

Bridgeman, V.

Hardinge of Penshurst, L.

Brougham and Vaux, L.

Harmar-Nicholls, L.

Broxbourne, L.

Harvey of Tasburgh, L.

Bruce-Gardyne, L.

Harvington, L.

Caccia, L.

Henderson of Brompton, L.

Caithness, E.

Henley, L.

Cameron of Lochbroom, L.

Hertford, M.

Campbell of Alloway, L.

Hives, L.

Carnegy of Lour, B.

Home of the Hirsel, L.

Carnock, L.

Hood, V.

Cayzer, L.

Hornsby-Smith, B.

Chelmer, L.

Hylton-Foster, B.

Chelwood, L.

Ironside, L.

Clinton, L.

Kaberry of Adel, L.

Colville of Culross, V.

Kemsley, V.

Cork and Orrery, E.

Kimberley, E.

Cottesloe, L.

Kinloss, Ly.

Cowley, E.

Kinnoull, E.

Cox, B.

Kintore, E.

Craigavon, V.

Lane-Fox, B.

Cranbrook, E.

Lauderdale, E.

Crathorne, L.

Layton, L.

Crawshaw, L.

Lindsey and Abingdon, E.

Cullen of Ashbourne, L.

Loch, L.

Davidson, V.

Long, V.

De Freyne, L.

Lucas of Chilworth, L.

De La Warr, E.

Luke, L.

Denham, L. [Teller.]

Lyell, L.

Digby, L.

McAlpine of West Green, L.

Drumalbyn, L.

McFadzean, L.

Dudley, E.

Macleod of Borve, B.

Dundee, E.

Malmesbury, E.

Eden of Winton, L.

Mar, C.

Elibank, L.

Margadale, L.

Ellenborough, L.

Marley, L.

Elliot of Harwood, B.

Maude of Stratford-upon-Avon, L.

Elton, L.

Enniskillen, E.

Merrivale, L.

Erne, E.

Mersey, V.

Faithfull, B.

Middleton, L.

Ferrers, E.

Minto, E.

52

Molson, L.

St. Davids, V.

Monk Bretton, L.

Salisbury, M.

Moran, L.

Saltoun of Abemethy, Ly.

Mottistone, L.

Sandford, L.

Mountgarret, V.

Sandys, L.

Mowbray and Stourton, L.

Savile, L.

Moyne, L.

Seebohm, L.

Munster, E.

Selkirk, E.

Murton of Lindisfarne, L.

Shannon, E.

Napier and Ettrick, L.

Shaughnessy, L.

Nelson of Stafford, L.

Sherfield, L.

Newall, L.

Skelmersdale, L.

Norfolk, D.

Somers, L.

Nugent of Guildford, L.

Stamp, L.

Onslow, E.

Strathcarron, L.

Orkney, E.

Strathspey, L.

Orr-Ewing, L.

Suffield, L.

Pender, L.

Swinfen, L.

Penrhyn, L.

Swinton, E. [Teller.]

Perth, E.

Terrington, L.

Porritt, L.

Teviot, L.

Portland, D.

Teynham, L.

Quinton, L.

Thomas of Swynnerton, L.

Radnor, E.

Thorneycroft, L.

Rankeillour, L.

Torphichen, L.

Rawlinson of Ewell, L.

Trefgarne, L.

Reay, L.

Trenchard, V.

Redesdale, L.

Trumpington, B.

Reigate, L.

Tryon, L.

Remnant, L.

Vaux of Harrowden, L.

Renton, L.

Vickers, B.

Renwick, L.

Vinson, L.

Rochdale, V.

Vivian, L.

Rodney, L.

Ward of Witley, V.

Romney, E.

Westbury, L.

Rotherwick, L.

Whitelaw, V.

Rugby, L.

Young, B.

St. Aldwyn, E.

Young of Graffham, L.

Resolved in the negative, and amendment disagreed to accordingly.
5.57 p.m.
Viscount Long: I beg to move that the House do now resume for the Statement.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Gaming (Bingo) Bill
Brought from the Commons; read a first time, and to be printed.
Motor-Cycle Crash-helmets (Restriction of Liability) Bill
Brought from the Commons; read a first time, and to be printed.

NI Local Elections: Proof of Identity
5.58 p.m.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Lyell): My Lords, with your Lordships' leave, I shall repeat an Answer to a Private Notice Question on the validity of medical cards as evidence of a voter's identity at the

53
forthcoming local elections in Northern Ireland that has just been given in another place:
"Because of widespread concern in Northern Ireland about the growth of personation in elections Parliament has passed the Elections (Northern Ireland Act) 1985, and the Local Elections (Northern Ireland) Order 1985 which applies the main provisions of the Act to local elections. The new legislative provisions include a requirement that a voter must produce a specified document to obtain a ballot paper. These documents are a current full driving licence issued in Great Britain or Northern Ireland; a current British or Irish passport; a current benefits, allowance or pension book issued by the Department of Health and Social Services for Northern Ireland; a medical card issued by the Northern Ireland Central Services Agency for the Health and Social Services; and a certified copy, or extract, of an entry of marriage issued by a Registrar General, where the voter concerned is a woman married within the preceding two years.
"It has come to our attention that there may be some electors holding a medical card issued before 30th September 1973 by the Northern Ireland General Health Services Board, the predecessor of the present Central Services Agency. Some of these electors may believe that these are specified documents entitling them to vote. This is not the case. It is not possible to estimate with any accuracy how many electors hold these older cards and who do not have any of the other specified documents. However, the Chief Electoral Officer issued a statement on Friday 26th April pointing out that anyone who has no other specified document and did not have the appropriate kind of medical card should take steps now, if they had not already done so, to obtain a new medical card. Special arrange-merits have been made to ensure that anyone needing a new medical card can obtain one quickly and these arrangements will be kept under review.
"The Northern Ireland Information Services have published advertisements in the Belfast and local Northern Ireland press, on the radios and television, and distributed leaflets to households throughout Northern Ireland setting out clearly which documents will be needed. If people remain in doubt on this point, I suggest that they look at these leaflets or at the back of the polling cards which are now being issued and which have a list of the specified documents on the back.
"My right honourable friend the Secretary of State is aware of the understandable concern of Northern Ireland and other Members of another place about this matter, and this afternoon in Northern Ireland is reviewing the issues involved".
My Lords, that concludes the Answer.
Lord Mishcon: My Lords, I am sure that the House is grateful to the noble Lord for repeating a Statement made in another place, but I believe that your Lordships will find that it is a very regrettable Statement. The fact of the matter must be that the Government made a mistake in the drawing up of this order. It is a very important order because a ballot paper will not be issued to a voter who has taken the
54
trouble to go to a polling booth if the wrong kind of medical card, which is surely by the Government's error, is produced. I well understand that if an error has been made, not only is it right and proper to concentrate upon the error and to allot blame, because all of us are capable of making mistakes, even the distinguished Northern Ireland Office; it is also the duty of somebody, and especially an important Government department, in regard to the exercise of a democratic right which is so vital in Northern Ireland, where a mistake has been made, to take all appropriate measures to put it right.
The mere issuing of a notice, that may or may not be seen, stating that people are advised to try to change an old medical card for a new one, is really riot sufficient. It is not sufficient to say, as the noble Lard the Minister faithfully repeated as having been said in another place, that one cannot estimate the number of people involved. It may be a very great number, but even if it is two people who are wrongly affected by the Government error, to me and to my noble friends, if I may say so, that is a grave miscarriage of what ought to take place.
I do not understand at this moment why the Government cannot do a very sensible thing with two very sensible Houses of Parliament; that is, immediately to put an amending order before both Houses saying that the hospital card referred to does, indeed, cover those issued before September 1973. I am sure that this noble House will co-operate with the Government to put that right, and I hope that I am right in assuming that another place, for which this House has the greatest respect—I nearly said "the gravest respect"—will take exactly the same measures as this House would do.
It is therefore with regret that I have heard this Statement. I hope that the noble Lord the Minister will be able to deal satisfactorily with what I have just said on behalf of my noble friends.
Lord Donaldson of Kingsbridge: My Lords, I normally defend the Government against missiles from the Labour Party over the Northern Ireland situation, but I cannot on this occasion. It seems to me absolutely ridiculous that over 100,000 people, which I believe is the estimate, should be left with no medical card which is suitable. Clearly they may have other things—the medical card is only an alternative to five others—but these are very simple people and particularly in the backwoods, as it were, of Northern Ireland they will trot up to the polling booth and say, "I'm all right. I've got my medical card", but if it was issued before 1972, they will be turned away. There would very properly be a major scandal, and I do not think the Government would have a leg to stand on.
It cannot be impossible to put this right. I defy any Government to say that between now and 15th May they cannot make, in some ingenious way or another, the cards issued before 1972 as valid as those issued after 1972. I really do not think we can support them on this, and I hope very much that the noble Lord will be able to persuade his friends that something more serious has to be done about it.
Lord Lyell: My Lords, I am grateful for the attention that has been paid to this Statement and especially for

55
the comments which have been made by the two noble Lords. The noble Lord, Lord Mishcon, pointed out that an error had been made. Indeed, we have to admit that there is a lack of clarity in this particular leaflet that I have here. It refers to "a medical card" and in smaller print that seems perfectly legible to many of us it states,
"a medical card issued by the Northern Ireland Central Services Agency".
The noble Lord, Lord Mishcon, and the noble Lord, Lord Donaldson, both raised the question of various ingenious measures being available to attempt to rectify this error. Both noble Lords who have spoken considered the possibility of a change in the legislation. I am able to tell them both that my right honourable friend the Secretary of State is urgently considering a number of possibilities, but legislative changes would be more difficult than might be imagined, even by the noble Lord, Lord Donaldson. I say that because the present definitions were certainly in accordance with the wishes of your Lordships, and in another place during the passage of the Bill they were incorporated in the body of what is now the Elections (Northern Ireland) Act 1985. We would need to carry out various other amendments to other pieces of legislation. I would remind your Lordships that there are precisely 16 days, two weekends and a bank holiday to attempt to carry this legislation through both your Lordships' House and, as the noble Lord, Lord Mishcon, has pointed out, another place. But I stress that my right honourable friend is considering a number of possibilities and I could not rule out anything at this stage. I should not want to say anything more on the legislation tonight.
Lord Mishcon: My Lords, I am much obliged to the noble Lord the Minister for what he has said. He has gone as far as he possibly can with his limited remit, and I quite understand that, but I hope that this promise to do everything that is possible will be translated into practice. At the moment I do not have a reasonable explanation as to why amending legislation cannot be rushed through so that an error can be corrected. At the same time I am perfectly sure that the department can try to see to it that the new medical cards are substituted for the old in as many cases as possible so as to limit the amount of harm that is done. It really is incumbent upon the Secretary of State—I say this with all the emphasis that I can command—to do everything, however inconvenient it may be, to put right this wrong; otherwise we shall be seriously interfering with a very important democratic right in an area where we all want to see it properly exercised.
Lord Lyell: My Lords, briefly, may I say that I shall certainly convey the concern felt by your Lordships to my right honourable friend. However, I would stress to the noble Lord, Lord Mishcon, and to your Lordships that this particular problem has been in the headlines of both Northern Ireland daily newspapers and Sunday newspapers. I do not know whether the noble Lord, Lord Mishcon, saw them over the weekend, but I certainly did not, although I believe that they are generally available. I understand that the problem has been on the headlines of both channels of
56
Northern Ireland television as well as on both radio stations in Northern Ireland. Therefore, I hope that as I speak we are doing our best; but I shall certainly convey your Lordships' concern to my right honourable friend.

Local Government Bill
6.12 p.m.
House again in Committee.
Lord Broadbridge Lord Broadbridge moved Amendment No. 2:
Before Clause 1, insert the following new clause:
("Referenda
.—(1) Before the 1st April 1986 a referendum shall be held in Greater London and each metropolitan county in accordance with Schedule (Referenda) to this Act on the question whether effect is to be given to the provisions of this Act as regards Greater London or the Metropolitan county, as the case may be.
(2) If it appears to the Secretary of State that less than 40 per cent. of the persons entitled to vote in a referendum in any of the areas mentioned in subsection (1) above have voted "Yes" in reply to the question posed in the Appendix to Schedule (Referenda) to this Act or that a majority of the answers given in any such referendum have said "No" he shall lay before Parliament the draft of an Order in Council for the exclusion of Greater London or the metropolitan county, as the case may be, from the provisions of this Act.
(3) If a draft laid before Parliament under this section is approved by a resolution of each House, Her Majesty in Council may make an Order in the terms of the draft.").
The noble Lord said: As I mentioned in my Second Reading speech, I wish to put before noble Lords a proposal that provision should be made for a referendum in the GLC and the metropolitan counties before this Bill can become law. A schedule to the Bill detailing the exact wording of the proposed referendum is also presented to the Committee as Amendment No. 25, on page 12 of the Marshalled List which, with the leave of the Committee, I should like to speak to now as it is consequential.
Amendment No. 25: Insert the following new Schedule—

SCHEDULE
REFERENDA
Date of referendum
1. The referendum shall be held on such single day before the 1st April 1986 as Her Majesty may by Order in Council appoint.
Persons eligible to vote
2. Those entitled to vote in the referenda shall be—

(a) the persons who, at the date of the referenda, would be entitled to vote as electors at a parliamentary election in any constituency in Greater London or the metropolitan county.

(b) peers who at that date would be entitled to vote as electors at a local government election in any electoral area in Greater London or metropolitan county.

Question to be asked and form of ballot paper
3. The question to be asked for the referenda and the form of the ballot paper to be used for that purpose shall be in the form set out in the Appendix to this Schedule.
Conduct of referenda
4. Subject to the following provisions of this Schedule, Her Majesty may by Order in Council make provision as to the conduct of the referenda and apply in relation to it, with such modifications or exceptions as may be specified in the Order, any provision of the Representation of the People Acts, any provision of the enactments relating to returning officers and any provision made under any enactment.
5. An Order in Council under this Schedule shall not charge any sum on the Consolidated Fund but may provide for the expenses of the returning officers to be defrayed as administrative expenses of the Secretary of State.
6. The functions which, in relation to a parliamentary election, are conferred on returning officers by any provision applied by an Order in Council under this Schedule shall in

57
relation to the referendum be discharged by the persons who under section 41 of the Local Government Act 1972 are, or may discharge the functions of, returning officers at elections of councillors of London boroughs or metropolitan district councils.
7. The Secretary of State shall appoint a Counting Officer for each of the relevant areas.
8. The Counting Officer shall certify the number of ballot papers counted by him and the number of respective answers given by valid votes.
9. The Greater London Council or a metropolitan county council shall place the services of its officers at the disposal of the counting officer for the relevant area, and if the Greater London Council or the metropolitan county council or the Counting officers for the relevant area so requests, the council of any London borough or metropolitan district shall place the services of its officers at the disposal of the counting officer for the relevant area.
Exclusion of legal proceedings
10. No court shall entertain any proceedings for questioning the numbers, as certified by the Counting Officer for the relevant area, of any ballot papers counted or answers given in any of the referenda.
Orders in Council
11. No recommendation shall be made to Her Majesty in Council to make any Order under this Schedule until a draft of the Order has been laid before Parliament and approved by resolution of each House of Parliament.
12. In this Schedule "relevant area" means Greater London or a metropolitan county.

APPENDIX
Form of Ballot Paper
Parliament has decided to consult the electorate in (name of area in which referendum is held) as to whether effect is to be given to the provisions of the Local Government Act 1985 as regards (name of area in which referendum is held).
DO YOU WANT THE PROVISIONS OF THE LOCAL GOVERNMENT ACT 1985 TO BE PUT INTO EFFECT AS REGARDS (NAME OF AREA IN WHICH REFERENDUM IS HELD)?
Put a cross (X) in the appropriate box.

YES

NO

").
There is political precedent for a major constitutional Bill to allow for the holding of referenda. At the opening of the Second Reading debate in another place on the Scotland and Wales Bill in December 1976 a reasoned amendment was tabled requiring referenda to be held in Scotland and Wales before the Bill came into effect. The amendment was tabled by the Labour Member for Pontypool. On the opening day of the debate, the Speaker ruled that the amendment should not be moved that day, but the debate which followed demonstrated widespread inter-party support for the idea of referenda. The Conservative Member for Swansea-East expressed the views of many when he said:
"For a major constitutional change such as this, when the rules of the game are to be altered, one needs an endorsement greater than that provided by this House".
For "House" we might today read "Parliament". The Conservative Member for Milton Keynes admitted that since there had been a referendum on Europe, and because a major constitutional issue was in hand, he supposed that one could not logically oppose the holding of a referendum on that occasion, too.
Finally, in a long letter to The Times on 14th December, 1976, the noble Lord, Lord Home, said, also on that subject, that while Parliament and the country continued to be at sixes and sevens we will see how the present Bill fares, but is it not better to ascertain the true opinion of the people, and soon, and
58
to frame a Bill afresh with their expressed wishes in mind? By quoting the noble Lord, I hasten to add that I have no reason to suppose that he shares my views on this particular amendment.
One argument then held against the holding of referenda centred around doubts as to the dissemination of appropriate information to the potential electorate who might be unable to make an informed decision if asked to cast a vote. After the publicity given to the areas affected by this Bill, it is hardly credible that the same argument could be used now.
Therefore, for pan-European Government reorganisation we had a referendum about joining the EEC; for national Government reorganisation we were going to introduce referenda on an already published Bill, but the Bill failed on 22nd February 1977. So why not one for local government reorganisation legislation? In almost every other democracy this legislation would be subject to some constitutional check so that the evident misgivings of many of our Parliament and people could find expression. In Britain no such check exists, and furthermore our electoral system allows a party representing the largest minority to interpret its mandate in any way it pleases.
It is the false doctrine of the mandate which lies at the root of the trouble. Even if one ignores the fact that the Government's parliamentary majority rests on the support of just over two out of five voters, there is no way of determining whether or not even those who actually voted Conservative sought to authorise the abolition of the GLC and the metropolitan counties as a specific issue.
Let us remember that when the Government proposed in their manifesto to abolish these bodies it was not apparent that no elected body would supersede them. The Government argue that devolution of powers is to elected district councils whose people will therefore get their own way, but that is not so. If we take the GLC as an example, then, as has already been said during the Second Reading debate, 66.8 per cent. of the current gross budget of £12 billion will go to 59 quangos, non-elected bodies or the Secretary of State. The amount over which the electorate have control falls from 100 per cent. to 33 per cent., the balance massively to strengthened non-elected centralised authorities. Because the voter cannot make his views known on specific issues, there is no way of preventing fundamental changes passing into law which the majority of those concerned do not desire.
In these circumstances, only one instrument exists which can determine whether electors approve a specific proposal, and that is the referendum. It alone offers a check upon Government which is truly popular and democratic. Although this House, through the so-called Salisbury Convention, lacks the constitutional authority to kill the Bill, it can nevertheless seek to make its coming into effect dependent upon popular approval. This would allow Conservative Peers to express their anxieties without openly opposing the Government too.
Last year opinion polls indicated a consistently rising opposition to abolition, now running at 74 per cent. From this one might deduce that a referendum

59
might not endorse abolition. But this could be deceptive.
Lord Elton: Will the noble Lord kindly tell us which opinion poll is running at 77 per cent.? The latest one I saw showed a considerably lower figure.
Lord Broadbridge: I believe that it may be 71 per cent.
Lord Elton: I think that it is 61 per cent.
Lord Broadbridge: As I understand it, the figures were as follows: in January 1984, 50 per cent; in June 1984, 66 per cent; and in October 1984, 71 per cent. I had understood that it was 74 per cent. now; but if I am wrong, I apologise to the noble Lord.
Lord Graham of Edmonton: If the noble Lord would allow me, he may perhaps find it more conducive to the argument to point out the very low percentage of those who were in favour of abolition.
Lord Broadbridge: Yes, that is the case.
Lord Graham of Edmonton: Perhaps I may help the noble Lord by pointing out that in the same polls—
Lord Broadbridge: I believe it was 77 per cent. but perhaps we have now cleared up that point. From this one might deduce that a referendum might not endorse abolition but that could be deceptive. In a referendum campaign both sides would have to win over the uncommitted vote—for the referendum is a uniquely educative device requiring the citizen to offer a definite opinion upon a specific proposal. It is, as James Bryce noticed:
"unequalled as an instrument of practical instruction in politics".
Parliament therefore ought to vindicate its claim to be a check on Government by insisting that neither the GLC nor the metropolitan counties are consigned to the dustbin of history without the people being consulted. I beg to move.
Lord Campbell of Alloway: I apologise to your Lordships and to the noble Lord for not having been in my place when the noble Lord started to move his amendment. Very briefly, surely the system is as follows. The noble Lord speaks about constitutional checks in other systems; but the other systems have written constitutions, and we have no written constitution. Our only checks are our unwritten constitution and the conventions by which we observe it. Surely it is not in accordance with the conventions or traditions to have a referendum other than on a national issue, and I would suggest that this does not qualify in that category.
Lastly, noble Lords, on this amendment at all events, cannot assert that this is some mere resort to the revisory role to improve the Bill—I use the words of the noble Baroness, Lady Birk, in her absence, as she is not in her place—
Noble Lords: She is!
Lord Campbell of Alloway: I am grateful. I was just about to say that as the noble Baroness is not in her place there will be no amusement in carrying on the discussion on this matter; but as she is in her place I will say that this in fact is different in quality from the previous situation. Here it cannot be asserted—although I do not give at all on the point I made on the first amendment—on this amendment that this is a resort, using the word as the noble Baroness used it, to the revisory role to improve the Bill. Therefore it is a clear and unequivocal resort to the delaying power to delay the Bill, to defeat the Bill, if a referendum so decides. That, I would have suggested, is contrary to the ordinary constitutional conventions.
Lord Evans of Claughton: Perhaps I may speak in support of the noble Lord's amendment. I hasten to say that I speak in my personal capacity and not as a member of the Alliance parties. No doubt the terrible disciplinary actions taken against recalcitrant Tory Peers wil be visited on me for this stepping out of line.
I speak for this amendment because I feel strongly for once. The noble Lord, Lord Elton, detected a certain lack of enthusiasm about my earlier remarks. I would say that I do not regard all reforms as necessarily improvements, and I certainly do not regard this Bill as a reform nor as an improvement. Normally I, like my party, am opposed to the use of referenda in our system. But I do not regard the circumstances of this Bill as normal. They are unusual, if not unprecedented.
I am concerned, as I believe is the noble Lord, Lord Campbell of Alloway, by the constitutional implications—not so much by what we are proposing in this amendment but the constitutional implications of the legislation. The Secretary of State is not just abolishing one tier of local government and returning the powers to the districts, as has been said. He is in fact destroying one elected level of local government and replacing it by nominated boards, or indirectly-elected boards. That is a different matter.
Sixty-seven per cent. of the total expenditure of metropolitan counties is on functions that will remain with statutory, county-wide, non-elected bodies. Therefore 67 per cent. of the functions of the metropolitan counties will be carried out not by elected district councils but by either indirectly-elected joint boards or by nominated bodies. A third of Greater London's total gross expenditure will go to non-elected London-wide bodies. Secondly, many of the powers that are being said to be returning to the districts are powers that they never previously had. I am not saying that that is a good or a bad thing, but just that many of the powers being given to the districts are not entirely powers that are being returned to them. Thirdly, as the noble Lord said, there is growing evidence that the electors are opposed to abolition.
A Mori poll in the Sunday Times this year still indicated 50 per cent. of the population were opposed to abolition in Great Britain as a whole. That is a figure that we might possibly guess would be higher in metropolitan areas. Local polls carried out in Greater Manchester, Merseyside, West Midlands and West Yorkshire in 1983 and 1984 indicated then that the majority of those interviewed during the surveys were

61
in favour of retaining the county councils: the figures being 66 per cent. in Greater Manchester, 70 per cent. in Merseyside, 63 per cent. in West Midlands, and 70 per cent. in West Yorkshire. Supporters of abolition in these cases are respectively only 15 per cent., 17 per cent., 19 per cent., and 19 per cent.
There was another opportunity of the kind that several of your Lordships might have preferred—the noble Lord, Lord Boyd-Carpenter, mentioned this during Second Reading—and that is the kind of election which takes place at ballot boxes. But you see, this Government chose to prevent us enjoying the privilege of having that vote on 2nd May this year by abolishing those elections. Therefore, I would say that such evidence as we have indicates—perhaps because of the propaganda (who knows?); but that is a good thing; it is an educative process—that more and more people feel that they are sorry, and regret the possibility of the disappearance of their county council.
What the Government are doing—and this is why it is a constitutional issue—is saying that an existing tier of local government should no longer be organised through direct elections but administered by joint boards, committees, Government appointees, and in far too many cases by the Minister himself. As the noble Lord, Lord Broadbridge, said, the abolition of elections would be a constitutional matter in any country with a written constitution, and it sets a dangerous precendent in this country which has an unwritten constitution.
No form of impartial or objective inquiry has been made, nor now will be made. Nor has any chance been given by local elections being held on 2nd May this year. There is no authority in this country separate from Parliament which can ensure that traditional constitutional conventions are observed. As the noble and learned Lord, the Lord Chancellor has said, we can be, and are these days, subject to constitutional dictatorship. In these circumstances, and in the light of the constitutional position, but while being aware of the remarks that the noble Lord, Lord Campbell, and many others have made, I am of the opinion that the circumstances here are at least as unusual as the circumstances proposing to set up a Scottish and Welsh Parliament. In fact, Greater London has a much larger population, I am sorry to say, than Wales. It is an important matter. If it was good enough for the Welsh and the Scots to have a referendum which went against the wishes of the then Government, why should it not be good enough for the large number of electors in metropolitan areas—11½ million—to have the same opportunity of expressing their views?
Lord Wilson of Langside: I should like to support this amendment. There was a time when I took what I think was the traditional lawyer's view expressed by the noble Lord, Lord Campbell of Alloway, that referenda were not appropriate to our constitutional arrangements. What converted me was the experience which some of your Lordships will recall in 1978 and 1979 with the legislation for legislative devolution to Wales and to Scotland. So far as Scotland was concerned this was, in the view of many of us, a piece of that Labour Government's legislative folly which was not largely removed in scale or conception from
62
the particular Bill which is under consideration now by your Lordships' Committee.
6.30 p.m.
The position in those years with regard to public opinion polls is of interest and relevance. In Scotland all the opinion polls showed a large majority in favour of what was then called a Scottish assembly. They ranged from percentages of 60 to 80. Even the polls taken by the Royal Commission on the Constitution in the mid-1970s showed overwhelming majorities in favour of this. I am sure that this coloured some of the findings or conclusions of that distinguished Royal Commission.
When it came to the bit, as your Lordships will remember, the people showed themselves wiser than the Government. In Wales the proposals were overwhelmingly defeated. In Scotland some 67 per cent. of the electorate either voted against the Bill or refrained from voting when it had been widely said that an abstention was the same as a no vote. This converted me to the possibility that when Governments were foolish perhaps ordinary people could avoid that kind of political folly. Of course there would have to be a properly conducted and financed campaign because when complex administrative and constitutional questions are brought before the people the people have to be properly instructed on the arguments. That was what took place then. It converted me to the view that when Governments are indulging in constitutional absurdities there is much to be said for putting one's trust in the people.
Lord Boyd-Carpenter: I have only one point that I should like to submit to your Lordships' Committee on this because I have no great general enthusiasm for referenda. My point relates specifically to Greater London. As I understand the amendment proposed by the noble Lord, Lord Broadbridge, the referendum for Greater London would apply only to those who are electors in Greater London; that is to say, in general, residents of the Greater London area. I observed on Second Reading that Greater London is a purely arbitrary division of the South-Eastern region and a large proportion of the rates in Greater London are paid by people who reside outside it but commute every day to do their work. They pay rates on their offices, their factories and their general places of work.
The question of the removal of a tier of local Government is relevant from a ratepayer's point of view. If one applied a referendum to Greater London, one would have an unfair situation in which those who contribute a large proportion of the rates would have no vote, while large numbers of people who benefit from the payments made by local authorities, but who do not contribute directly to the rates, would have a vote. That illustrates the awkwardness in the Greater London context of this referendum proposal.
Lord Howie of Troon: Is it not the case that the example that the noble Lord cites is exactly the same in relation to the electorate for local authorities? If he follows his logic through with regard to the referen-dum, he must therefore ask whether the people who live out of London and yet work in it, or in the areas of other local authorities, should have a vote in a local election? This is the same thing, is it not?
Lord Boyd-Carpenter: If the noble Lord would be so courteous as to consult my Second Reading speech, he would see that I am very much with him in that proposal. One of the arguments which I adduced for the abolition of the GLC was precisely that. It levies rates via the precept on a large number of people who do not have votes in its area. Consistency, with respect, is said to be a characteristic of little minds, but I am wholly consistent in this in supporting the abolition of the GLC and in raising the point that a fair referendum for Greater London would be possible only if one included the whole of the South-East region. It is from the South-East region that those who contribute a large proportion of the rates come.
I do not know enough of the situation in the other metropolitan authorities to be able to propound a view, though I would guess in the case of the West Midlands that there may be something of the same situation, as I have had some experience there. I base my argument on Greater London. This is what distinguishes this from the referenda in Scotland and Wales where we were dealing with identifiable and large sections of the United Kingdom with a substantial life of their own. Part of the problem with which the Government are struggling in the whole of the Bill is that the arbitrary drawing of a line around Greater London—a line in a part of the world with which I am familiar includes Kingston-upon-Thames in Greater London, but excludes Esher—creates these problems. What would make it worse would be to introduce a referendum limited only to Greater London electors.
As your Lordships will be well aware, Gallup polls, expressions of political opinion taken irrespective of what I call inner London, may produce a wholly different result from similar explorations of public opinion through Sussex, Kent, Surrey, Buckinghamshire and Essex. That illustrates the difficulty behind this proposal. I should, therefore, feel unhappy at the idea of these referenda taken in limited areas. I feel that in our unitary system of Government it is better to rely on elections to Parliament.
Lord Graham of Edmonton: The Committee should be indebted to the noble Lord, Lord Broadbridge, for giving us this opportunity of examining whether, in a complicated and complex situation, the use of the device of a referendum has any part to play in convincing either the Government or those who oppose the Government view that the proposals which the Government seem hell bent on proceeding with, come what may, are the wishes of the people who will be affected.
I am grateful to the noble Lord, Lord Boyd-Carpenter, for his contribution. He can see merit, if there is to be a referendum, for widening it beyond London to the South-East region because some people who live in the South-East region work in and pay rates in London. If he cares to move for a referendum in the South-East, I shall certainly second that.
Lord Boyd-Carpenter: In spite of that generous offer, I did, he may recall, express a certain lack of enthusiasm for referenda in general and therefore I do not think that the noble Lord will have to over-exert himself in supporting me on that.
Lord Graham of Edmonton: Like the noble Lord, I am not in favour of over-exerting myself. The dilemma faced by the Committee is that there is evidence produced by the opponents to the Bill that the Government do not attempt to deny. When we assert by the best means we can achieve that the people who live in the metropolitan areas do not want the legislation, or when we say that the people in Greater London do not want the abolition of the GLC, the Government do not answer the arguments. The noble Lord, Lord Broadbridge, made his case about the percentages. The building across the road has had a sign up for some time saying, "74 per cent. say No". The Minister is entitled to question the manner in which that figure has been produced; I do not. Either you broadly agree that there is a place for the public opinion poll in testing public opinion, or you do not—
Lord Elton: I intervene because the figure that the noble Lord quoted was not 74 but 77, which I have never seen advanced anywhere; and I am told that it is wildly out of date.
Lord Graham of Edmonton: Perhaps I may quote to the noble Lord a public opinion poll that was given three days ago on Thames Television. That poll, which was taken with a sample of 1,000 people, showed that 16 per cent. were in favour of the abolition. Seventy per cent. were against it. The Minister may say that instead of 78 the real figure was 74 and now it is down to 70. The point that I seek to make is that, whatever one says about a figure of around 70 per cent. who are against, the number who are persistently in favour remains at less than 20 per cent.
I am not arguing that that should be the sole criterion, because the Government will argue that there were other opportunities almost two years ago in a general election. Everyone in the country was given the opportunity of expressing his or her views. The Minister will know—because he will have looked very carefully at the figures and at the analyses that were produced—that in the metropolitan areas only 36 per cent. of the people supported the Government's case.
If we rest the case, as we do, upon the sanctity—and the Government have the authority—of the manifesto, let me quote two pieces of evidence for it. At Second Reading in another place the Member for Old Bexley and Sidcup said:
"the proposals … were put in nine days after the election was called against the wishes of the party policy committee. They were inserted without the general agreement of those who had been London Conservative Members".—[Official Report, Commons, 4/12/84; col. 191.]
Either the Minister will say that that is not the truth or he will simply ignore it and allow the words to have some significance in the debate. If, as I accept, it is the truth, then it is a damning indictment of the base from which the Government put that manifesto commitment before the country.
Even if we say that all the processes took place, the noble Lord, Lord McIntosh of Haringey, made a broad allusion to the sense and the place of the manifesto. Of course the noble Lord opposite raised in aid what one would call the Salisbury doctrine of the power of the manifesto. This is what the noble and

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learned Lord, Lord Denning, a Member of this House who is highly respected, said in respect of the attempt by a political party to use a manifesto commitment to put through its policy—and that was the GLC in 1981. This is what the noble and learned Lord, whose views are every bit as worthy of being listened to with care as those of Lord Salisbury said in the case against Bromley:
"A manifesto issued by a political party in order to get votes is not to be taken as gospel. It is not to be regarded as a bond, signed, sealed and delivered. It may contain, and often does contain, promises or proposals that are quite unworkable or impossible of attainment. When a party gets into power it should consider any proposal or promise afresh on its merits, without any feelings of being obliged to honour it or being committed to it. It should then consider what is best to do in the circumstances of the case and to do it if it is practical and fair"—
Lord Campbell of Alloway: Will the noble Lord accept that what the noble and learned Lord, Lord Denning, was saying was in relation to the legality of an administrative act and that what we were considering on the previous amendment of the noble Baroness, Lady Birk, and to some degree in another context are considering on this amendment, has nothing at all to do with that but with issues which relate to the unwritten constitution? I hope the noble Lord will agree with me that they are totally disparate issues.
6.45 p.m.
Lord Graham of Edmonton: I am not as competent as the noble Lord to argue legal niceties and to differentiate. I simply look at the sanctity and the authority of a political body to pursue its manifesto commitments. I am quite happy to leave the record to be seen and read by those who are interested, but there is a contradiction in the attitude of noble Lords opposite. The Minister who will reply, and to whom we listen with great respect, must understand that those who are putting this forward are genuinely frustrated and are seeking to find means of convincing the Government that it is still not too late.
The Government may well be right. An indepen-dent survey may very well prove that all these public opinion polls have been somehow weighted or affected, that the wrong questions have been asked, etc. If it is to be a proper Government referendum, there may be some merit in it. I am not arguing the case for or against a referendum. I am saying that there are people who are frustrated and who are seeking to find a means of saying to the Government, "It may not be too late. It may be that you will be able by using the consultative process to strengthen your arguments and therefore to convince this House". We simply look at the 5,000 responses which have been made to Streamlining the Cities, which is the base from which this whole argument was launched. An overwhelming number of them were from individuals and small organisations. But very weighty and powerful bodies said, no. We scratch our heads and ask, "What will it take for the Government to believe that they may be wrong?" The Government are arrogant in refusing to believe that there is anyone, apart from themselves, who can interpret what has been said by the people. So that having rejected the inquiry and having, as I suspect, rejected this amendment, I believe that the
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Minister ought to have better arguments to convince us that what the people have said is wrong.
The Earl of Onslow: I hope that noble Lords on the Front Bench will resist this amendment absolutely. Referenda are the instrument of dictators. They were Instruments of Hindenberg, of Napoleon and also, I believe, of Hitler. Referenda are easily fixed, the boundaries are easily moved and they undermine the sovereignty of Parliament. Referenda were introduced into this country's political being by the erstwhile second Viscount Stansgate, who thought that he could persuade the British people and the noble Lord, Lord Wilson of Rievaulx, to stay out of the Common Market, because that is what he wanted and he thought that he would pray in aid the advice of the British people, but they said "Nay". That is a very bad precedent for the use of a referendum. The noble Lord, Lord Bruce of Donington, said that it is a bad precedent and I could not agree more with him.
We have a parliamentary democracy and it is that democracy that is supreme. The Sovereign in Parliament is supreme. Does a referendum stop at Esher, at Guildford, at Solihull or at Cornwall? Everybody in the United Kingdom is interested in the future of the metropolitan counties. Is it only the metropolitan counties that will have the vote or is it everybody? I suggest that if there is a referendum—which I would abhor, because it is a constitutional abortion—then it should be to the whole country.
If the referendum is to the whole country, where do we stop? Do we stop at Bills to abolish local authorities? Do we go on to Bills to abolish hare coursing, on to Bills which say how many chiropodists can operate on your big toe; or do we say that the referendum applies only to Bills to abolish metropolitan counties? I think that this is something up with which we should not put. I hope that my noble friend will resist it very strongly.
Lord Wallace of Coslany: There is a point that I should like to raise. It was raised by the noble Lord, Lord Boyd-Carpenter. I am involved in, and live in, the Greater London area—a part of the Greater London area which at one time was in the county of Kent. Now we have a London borough which has far greater powers than the magnificent city of Norwich, which has been reduced to the level of a district council. Those people who live on the outskirts of Greater London and who travel into London and sometimes pay rates in London have the benefit of the county councils; whereas, in my case, my county council will be removed and my local authority will have powers even greater than exist in such cities as Norwich.
This is where I think the Government have made a profound mistake. Instead of messing about with these little pieces of administration, mainly because of the political powers, possibly, why not follow what the noble Lord, Lord Bellwin, said when, on the Local Government (No. 2) Bill, I tried to raise an amendment to restore to the city and other large councils the powers which had been removed? Lord Bellwin then said that at some time there must be a reform. The noble Lord, Lord Evans, did not support me then because he said that the time was not ripe. If the time is ripe now to abolish the GLC and the

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metropolitan counties, why is the time not ripe now to have a proper reorganisation and to give to some of these councils the chance to have back the powers that have been lost to the county councils? Therefore, we in the Greater London area have an equal right to vote in a referendum. Those who are lucky enough to live in the county-governed area will keep it, and they should not worry about losing their chance to vote.
Lord Beloff: I think that the proposal for a referen-dum, if it is genuinely made, must be seriously considered. Reference has been made to the precedent of the referendum on staying in the European Communities. If I remember correctly, very great efforts were made to see that both sides in that argument had a full opportunity of presenting their case; that in no way was the accretion of funds to one or other side to influence voters; and that the whole thing took—as it should, if one takes a referendum seriously—a very long time. Therefore, I must presume that those who intend a referendum intend again a form of delay.
But there is another point. I do not think that it is proper, correct or very helpful for noble Lords opposite to justify their support for a referendum on the grounds of the showing in public opinion polls. Whether the figures are 70 per cent. or 74 per cent. seems to me to make no difference at all; because the public opinion polls to which reference has been made have not been conducted in the same impartial spirit, not in connection with the questions but in connection with the propaganda to vote in a particular direction. If I had had the money which has been available from the public purse to the GLC or the metropolitan counties to launch a campaign leading to success in a public opinion poll, there is almost nothing, I think, that I could not have persuaded the British electorate to agree to.
The Government, on the other hand, who support abolition, have not had access to such money. As everyone knows, there is a very considerable constitutional and legal inhibition on Governments using public money in order to promulgate partisan purposes. Frankly, we do not know what are the opinions of the ordinary citizen, whether in the metropolitan counties or in the nation at large on these issues.
The final point, if I may, is this. The noble Lord, Lord Broadbridge, rather dismissed the view that possibly the issues are complicated and technical for the ordinary voter. I can only say that there have been some inquiries—and many of your Lordships may have seen the results on television—which suggest that most of the inhabitants in these areas could not tell you, if asked, which were the powers of districts and which were the powers of the upper tier. These are not matters which normally concern the citizen. Yet how can he decide on these proposals without that informa-tion? If we are to have a referendum, we cannot possibly have one in the time which is proposed to be allotted to it.
Lord Hatch of Lusby: The noble Lord who has just sat down has again this afternoon, as have many of his colleagues, castigated the GLC for the amount of
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money that they have spent on advertising. I did not hear any speaker from the other side of the Committee using the same argument when the National Coal Board was spending taxpayers' money day after day on advertising its case against the strike. I agree with the noble Lord that it takes time and takes education to organise a referendum. This could be a good thing: it could be educative. It could be educative provided that there are reasonable amounts of money available for those on both sides and if it were conducted in an orderly way.
But it is not enough to say that the figures which have been produced by my noble friend Lord Graham and by the noble Lord, Lord Evans, have been the result of a propaganda campaign. If you think that, all right—test it! There was an opportunity to test it this week, on Thursday, if you wanted it by ballot box. There is an opportunity, if you want it by direct vote, to accept this amendment for a referendum. But it really is not good enough to say, "We do not believe any of the figures and we are not going to find out".
The real problem here, as I see it, is that the Government have got themselves into a situation (whether or not deliberately) in which it appears to everybody that they are taking this action for party political purposes. Why did they not introduce this Bill before 1981? Why was it not introduced when Sir Horace Cutler was the leader? Why has there been this tremendous propaganda campaign against the GLC in particular, and to a lesser extent against the metropolitan counties, only after the electors had elected Labour majorities? If the Government are serious, they have the onus on them to show how they are going to meet the figures that have been given, as the Minister intervened during the speech of the noble Lord, Lord Broadbridge.
The Earl of Onslow: Will the noble Lord give way?
Lord Hatch of Lusby: I shall do so when I have finished this part of my speech. In addition to the figures that have already been given, I should like the Minister to answer both the figures which have been given by my noble friend Lord Graham and the noble Lord, Lord Evans, on the poll that was taken by Thames Television last week, and, in addition to that, the figures—the 77 per cent.—given in the inquiry that was made on this poll. This is where the 77 per cent. of those who voted come in.
The Earl of Onslow: Now that the noble Lord has shut up—
7 p.m.
Lord Hatch of Lusby: No, I shall give way when I finish this section of my speech. The 77 per cent. voted in favour of the inquiry which we have now turned down, but only 12 per cent. voted against that. The figures have been given showing the very small number who are in favour of abolition either of the GLC or the metropolitan counties. Does this not put the onus on the Government to say who they are representing?
The noble Earl, Lord Onslow—I shall give way to him after I have made this point—suggested that any referendum should take place right across the country.

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If he had been in the Chamber this afternoon—I do not think he was—he would have heard his noble friend Lord Gowrie partly answer the point when he responded to my challenge that the logic of the Government's case was to abolish the shire counties. It is not the electors in the shire counties who are being disfranchised; it is the electors in the area of the Greater London Council and the metropolitan counties. They are the people who are entitled to say whether or not they should be disfranchised; not the rest of the country. If the noble Earl would like to intervene now, I should be happy to give way to him.
The Earl of Onslow: Several sentences after the noble Lord, Lord Hatch, said he would give way I shall now answer that one point about why it was decided to abolish the metropolitan authorities in 1981. It is just possible that they started behaving—especially the GLC—in a manner of quite extraordinary irresponsibility. The noble Lord, Lord McIntosh, was elected as the leader of the GLC when they came to power. There was a putsch and Mr. Livingstone was put into place. They then proceeded to issue money as if it were printed by somebody else. They behaved in a manner of nearly criminal irresponsibility with other people's money. That is why it was decided to abolish them.
Lord Hatch of Lusby: So now we have it. We are not being asked to abolish the Greater London Council because it is inefficient; we are not being asked to abolish it because it is an unnecessary second tier; we are not being asked to abolish it because it is not doing its job; we are being asked to abolish it because the noble Earl, unelected, does not like what it is doing. That is what it comes to. That is precisely what it comes to—because he does not like what it does.
Why not allow the electors to decide? The noble Earl was talking about a referendum being a recipe for dictatorship. Is this the concept of democracy that the noble Earl has; the democracy which allows an unelected Member of this House to abolish the right of the electors to decide whether the members of the GLC are doing what they want—not what he wants, but what they want—and which allows them to decide on Thursday of this week that if they do not like what their members are doing, they turn them out? Is this not what we mean by democracy? Is not this the issue that all the time has lain between us?
I do not believe that it has lain simply between the two sides of this Chamber. I believe that there are members on the other side who are just as worried as we are. I quoted one of their leaders this afternoon in the previous debate. It is not all Conservatives who would abolish the democratic local government system in the way that the noble Earl, Lord Onslow, would do.
We have had figures given on public opinion. What we have not had—I hope that the noble Lord the Minister who is to speak for the Government will give us them—are the responses to the submissions made regarding the Government's own paper. We have never had these published. I understand that there were at least 2,000 responses from very important institutions in this country. Why will the Government not tell us? Will they tell us tonight? Why have they not published them?
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I cannot see how any member of the Government can say that they are representing anyone apart from the 15 per cent. or 16 per cent. who support them, as we have seen in the opinion polls. Apart from that tiny minority I cannot see that they are representing anyone in pursuing the Bill in the way they are doing. If they say, "Oh yes, we are", why have they turned down the opportunity of elections this week? Why is it that they are presumably opposed to a referendum? Why is it that they reject the opinion polls? The answer is quite simple. The opinion polls are against their. Every test that has been taken over the past two weeks has shown that if there were an election in the GLC this week, the Conservative Party would be almost swept out of County Hall.
But there is a more serious issue and it is one which was raised by the noble Lord, Lord Campbell of Alloway. I am sorry that he is not in his place because he raised an issue which we ought to take seriously. He raised the issue of the written and the unwritten constitution. He pointed out that we do not have a written constitution. No, we do not. I presume that most noble Lords do not want a written constitution. But an unwritten constitution depends upon the observance of conventions. I would suggest that in all the lead-up to this Bill those conventions have been flouted.
There is the convention that on a matter of constitutional importance—surely this is a matter of constitutional importance—the two sides get together, that there is an independent inquiry, that there are wide tests of opinion, and that they are all taken into consideration before any drastic change in the constitution is made. It was done, as has been mentioned, in the case of Wales and Scotland. It was done in the case of the European Community.
Personally I do not like the referendum. I think it should be used only as a matter of last resort when on a constitutional issue. I am frightened of the use of the referendum on single policy issues when opinion can very easily be swayed by the lowest common denominator in the media. But when it comes to a constitutional issue and when the conventions that govern our unwritten constitution have been flouted, then it seems to me that our constitutional rights and the protection which this Committee should afford to those whose constitutional rights are being removed are under threat. Therefore, while still disliking the referendum as a general rule, when it comes to a constitutional issue I think at least the Government have a serious question to answer. There is an onus on the Government to answer it.
They have to say why it is that they are flouting every test of public opinion, refusing the democratic process of elections, going against the advice of major institutions in this country and breaking the conventions on which our unwritten constitution depends. The consequence of that could very well be a campaign for a written constitution, which none of us would want. I would suggest that the onus is on the Government to answer why it is that they are pursuing this line in defiance of every expressed form of public opinion from individuals and organisations.
Lord Elton: The amendment in the name of the noble Lord, Lord Broadbridge, which he ably

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introduced a little time ago, would provide for referendums—if that is the plural; there is a difference on that—in London and each of the metropolitan counties on whether the GLC and each metropolitan county council should be abolished. The electorate would be asked: do you want the provisions of the Local Government Act 1985 to be put into effect as regards the area in which you live?
As the noble Lord, Lord Evans of Claughton, rightly said, this does raise a matter of important constitutional principle. A referendum on abolition would, I believe, breach the principle of the sovereignty of Parliament. As I made clear when this Bill received its Second Reading in your Lordships' House, the powers and duties of the GLC and the six metropolitan county councils have their origin in Parliament. It was from Parliament that they obtained their power to raise money and it was Parliament which gave them the power to spend it and the functions on which to spend it.
It is right that it should also be Parliament that decides—and by giving this Bill its Second Reading your Lordships already have decided—whether those powers and duties should be recalled and redistributed. The noble Lord, Lord Broadbridge, and others have sought to argue that our proposals for abolition are in some way like the proposals for devolution in Scotland and Wales. Indeed, I note that the terms of the amendments themselves draw very heavily on the provisions of the Scotland Act 1978.
I must tell your Lordships that the two cases are entirely different. The EC referendum is not a valid precedent. At the time of the EC and devolution referenda, it was argued that it was right to consult the people directly because both issues involved mimicking the powers of Parliament. This party did not accept that argument at the time but it was at least a reasonable point of view to advance. No such argument can be advanced in the case of abolition because this Bill will leave the powers of Parliament entirely undiminished. Indeed, it is that to which noble Lords opposite seem to take offence.
The argument has also been advanced that the reorganisation is somehow unique. The fact that there has been no recent inquiry into local government structure, it is suggested, justifies a referendum. But a referendum and an inquiry have entirely different purposes. An inquiry—as was made quite clear by noble Lords opposite during our latest debate on this Bill—would be held to decide how to implement the Bill and not to decide whether to implement it. When we suggested that there might be a thought in their minds that an inquiry might prevent implementation, we were castigated for advancing a fallacious argument.
This Government do not need a referendum because they know their own mind. That is more than can be said of Labour, because on the issues of both the EC and devolution for Scotland and Wales the Labour Government were split. The referenda were attempts to paper over the cracks. The Government of the time could not decide and so they handed over the responsibility for making the decisions to the electorate. On both occasions, as I have already reminded your Lordships, this party opposed the
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referenda. We are no less opposed to them now than we were then.
Abolition is no different in principle from many other matters which Parliament is asked to decide during its five-year life span. If we held a referendum on this question, people would have a right to expect one on every other major item of legislation, regardless of the manifesto on which the Government were elected and regardless, I should add, of the party that was in power at the time. In my interventions earlier I had not sought to argue the relevance of the figures in the current polls; I merely begged that if figures were used, they should be accurate figures. I think that was a fair request to make. So much has been suggested outside this House that is entirely misleading that it would be a pity if that habit spread to your Lordships' Chamber.
One cannot govern by referenda. Between elections, the monitor of government is Parliament. This amendment is asking the electorate to do Parliament's job for it. That is, I repeat, a serious and unacceptable breach of our constitutional traditions. If the Labour Party does support this proposal—and I am surprised to hear that it proposes to do so—I expect it to say at once that its recent proposals to abolish mortgage interest tax relief should be subject to a referendum as well.
7.15 p.m.
Lord Graham of Edmonton: If I may intervene, I should like to make it clear, to remove any doubt, that I never argued that this side of the Committee would be supporting this proposal. I said that I was arguing neither for nor against. As a matter of fact, the Minister has given me an opportunity to say that I am advising my colleagues who seek advice to abstain.
Lord Elton: The noble Lord has given as much pleasure to me as he has withdrawn comfort from those who support this amendment. I wonder whether it is necessary for me to adduce much more argument against it, because your Lordships are getting hungry. I will merely remind your Lordships again that the Bill carries out an undertaking that was in the manifesto on which this Government were elected. The electors are not being disenfranchised; they have already cast their votes.
There were interesting opinions quoted by the noble Lord, Lord Graham of Edmonton, about the validity of a manifesto, but the plain fact is that everybody knows that under the constitution as we now have it any party is not only free but is expected—our party is certainly expected—to honour its election manifesto (I would not answer for the party opposite) during the life of the following Parliament. Noble Lords opposite are the first to complain if we look like failing to do that. The question which this amendment seeks to reopen is, in effect: should the Bill be implemented? Your Lordships have decided that question once and I suggest your Lordships decide it again quite unmistakably, by rejecting this amendment.
Lord Jacques: It is widely accepted throughout the world, and not just in this country, that there is a case for treating changes to the constitution differently from other changes to the law. The point that has been

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made about whether this or that should be subject to a referendum is almost completely irrelevant. We are dealing here with constitutional changes. There is a widely-held opinion that the two should be treated differently because of the importance of constitutional changes, because of the need for stability, and because of the fact that it is well known that political parties use changes in the constitution to their advantage.
For example, there is very strong circumstantial evidence that the party opposite has used local government reform to its advantage during the whole of the post-war period. It first abolished the LCC because it thought that by having a wider area there would be a greater chance of there being a Conservative majority more frequently, and it sub-stituted the GLC. Now that that has not worked, the party opposite wants to abolish the GLC.
The party opposite almost completely ignored the report of the commission on local government in the early 1970s. Why? Because it wanted to take away the powers of the shires and substitute unitary government. We all know that the power of the party opposite is mainly in the shires. Therefore it wanted to keep the shires. Let none of us have any doubt at all that changes in local government have been used to party advantage. I believe that constitutional changes should be different from other changes to the law. A referendum is one way of making them different, and I shall support this amendment.
Lord Broadbridge: I should like to thank all speakers from both sides, whatever they have said. I shall be brief because I realise that the time is right for dinner. I said speakers from both sides and possibly I should have said those down the middle as well because the noble Lord, Lord Boyd-Carpenter, was somewhat down the middle. He was much concerned with lines and I can really only draw to mind the well-known Motion at the Oxford Union:
"That in the opinion of this house the line must be drawn somewhere".
The noble Lord also implied that minds could be bent by spending. That is why I said that the results could well be deceptive and might not necessarily turn out as the opinion polls have indicated. Your Lordships will see that as an Independent I am not particularly interested in trying to defeat, delay or otherwise wreck the Government but more to find out what the electorate really thinks; for which we go back to our grass roots.
I am sorry that the noble Earl, Lord Onslow, thinks that I am a dictator. I said at Second Reading that I felt to some extent that opinion in this country—and these are the words I used—was that referenda were the province of banana republics and foreigners. Therefore, I am not entirely surprised that as an eminent member of this country's society he should view me as representing that point of view. However, I believe that people are coming over to them slightly more than in the past.
Finally, I should like to thank the Minister for his reply. He mentioned that the amendment would be a breach of the sovereignty of Parliament; but presumably if Parliament were to vote for the principle of a referendum it would not be breaching its own sovereignty. There could only be a breach of
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sovereignty if somehow one was to get a referendum through the back door and produce something which might reverberate to the detriment—to use a well-known expression—of Parliament without Parliament being able to counter it in any way. After all, we are masters of our fate this evening. If we do not want a referendum then we will not have one. The Government know their own mind but my view is that perhaps at the moment the Government do not know the electorate's mind.
However, perhaps because I am in a slightly statistic-cal mood this evening, having thought of a referendum all day and was well aware before the Committee stage began that noble Lords on the Opposition Benches were not in favour of the amendment and were not proposing to support me, I should like to find out what is the real opinion of the Committee. It is a little difficult to do so on a statistical sample of 10 or 15 people. Not every noble Lord who has been against the amendment has indicated that he would totally oppose it. I deliberately made a brief opening speech n order to allow a little extra time, and I should therefore like to press my amendment.
7.22 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 23; Not-Contents, 173.

DIVISION NO. 2

CONTENTS

Airedale, L.

Houghton of Sowerby, L.

Banks, L.

Howie of Troon, L.

Broadbridge, L. [Teller.]

Ingleby, V.

Buckmaster, V.

Jacques, L.

Campbell of Eskan, L.

Jenkins of Putney, L.

Chichester, Bp.

McNair, L.

Evans of Claughton, L. [Teller.]

Mais, L.

Melchett, L.

Gifford, L.

Molloy, L.

Grey, E.

Pitt of Hampstead, L.

Hampton, L.

Wallace of Coslany, L.

Hatch of Lusby, L.

Wilson of Langside, L.

NOT-CONTENTS

Abinger, L.

Campbell of Alloway, L.

Airey of Abingdon, B.

Carnegy of Lour, B.

Allerton, L.

Carnock, L.

Arran, E.

Chelwood, L.

Astor, V.

Clitheroe, L.

Atholl, D.

Coleraine, L.

Barber, L.

Colville of Culross, V.

Bathurst, E.

Colwyn, L.

Belhaven and Stenton, L.

Cork and Orrery, E.

Bellwin, L.

Cottesloe, L.

Beloff, L.

Cowley, E.

Belstead, L.

Cox, B.

Bessborough, E.

Craigavon, V.

Birdwood, L.

Craigmyle, L.

Boardman, L.

Cranbrook, E.

Bolton, L.

Crathorne, L.

Boyd-Carpenter, L.

Cullen of Ashbourne, L.

Brabazon of Tara, L.

Davidson, V.

Bridgeman, V.

De Freyne, L.

Brougham and Vaux, L.

De La Warr, E.

Broxbourne, L.

Denham, L. [Teller.]

Caccia, L.

Digby, L.

Caithness, E.

Dilhorne, V.

Cameron of Lochbroom, L.

Drumalbyn, L.

75

Dudley, E.

Middleton, L.

Dundee, E.

Minto, E.

Elibank, L.

Molson, L.

Ellenborough, L.

Monk-Bretton, L.

Elliot of Harwood, B.

Mottistone, L.

Elton, L.

Mountevans, L.

Enniskillen, E.

Moyne, L.

Erne, E.

Munster, E.

Faithfull, B.

Napier and Ettrick, L.

Ferrers, E.

Nelson of Stafford, L.

Ferrier, L.

Newall, L.

Fisher, L.

Norfolk, D.

Fraser of Kilmorack, L.

Northesk, E.

Freyberg, L.

Nugent of Guildford, L.

Gainford, L.

Onslow, E.

Gardner of Parkes, B.

Orr-Ewing, L.

Geddes, L.

Pender, L.

Gibson-Watt, L.

Penrhyn, L.

Glenarthur, L.

Plummer of St, Marylebone, L.

Gowrie, E.

Gray, L.

Quinton, L.

Gray of Contin, L.

Rankeillour, L.

Gridley, L.

Reay, L.

Grimond, L.

Redesdale, L.

Grimston of Westbury, L.

Reigate, L.

Haig, E.

Remnant, L.

Hailsham of Saint Marylebone, L.

Renton L.

Renwick, L.

Hardinge of Penshurst, L.

Rochdale, V.

Harmar-Nicholls, L.

Rochester, Bp.

Harvey of Tasburgh, L.

Rodney, L.

Harvington, L.

Romney, E.

Henley, L.

St. Aldwyn, E.

Hives, L.

Salisbury, M.

Home of the Hirsel, L.

Saltoun of Abernethy, Ly.

Hood, V.

Sandford, L.

Hornsby-Smith, B.

Sandys, L.

Hylton-Foster, B.

Savile, L.

Ironside, L.

Seebohm, L.

Kaberry of Adel, L.

Shaughnessy, L.

Kemsley, V.

Skelmersdale, L.

Kinloss, Ly.

Southwark, Bp.

Kinnaird, L.

Strathcarron, L.

Kintore, E.

Swinton, E. [Teller.]

Lane-Fox, B.

Taylor of Blackburn, L.

Lauderdale, E.

Teviot, L.

Lawrence, L.

Thomas of Swynnerton, L.

Lindsey and Abingdon, E.

Thorneycroft, L.

Liverpool, Bp.

Torphichen, L.

Loch, L.

Trefgarne, L.

Long, V.

Trenchard, V.

Lucas of Chilworth, L.

Trumpington, B.

Lyell, L.

Tryon, L.

McAlpine of West Green, L.

Vaux of Harrowden, L.

McFadzean, L.

Vickers, B.

Macleod of Borve, B.

Vinson, L.

Malmesbury, E.

Vivian, L.

Mar, C.

Ward of Witley, V.

Margadale, L.

Westbury, L.

Marley, L.

Whitelaw, V.

Maude of Stratford-upon-Avon, L.

Windlesham, L.

Yarborough, E.

Merrivale, L.

Young, B.

Mersey, V.

Young of Graffham, L.

Resolved in the negative, and amendment disagreed to accordingly.
7.32 p.m.
Lord Skelmersdale: In moving that the House do now resume it would be appropriate to tell your Lordships' Committee that we shall not return to this stage of the Bill until 8.30 p.m. I beg to move that the House do now resume.
Moved accordingly and, on Question, Motion agreed to.
House resumed.

Specialised Agencies of the United Nations (Immunities and Privileges) (Amendment) (No. 2) Order 1985
Baroness Young Baroness Young rose to move, That the draft order laid before the House on 3rd April be approved. [18th Report from the Joint Committee.]
The noble Baroness said: My Lords, I beg to move that the draft order be approved. With your Lordships' permission, I shall speak at the same time to the draft Eumetsat (Legal Capacities) Order 1985.
The first draft order before your Lordships relates to the World Health Organisation. The order is very specific, conferring only exemptions in respect of social security contributions on officers of WHO who are neither United Kingdom nationals nor permanently resident in the United Kingdom. This order would enable effect to be given to an Exchange of Notes between Her Majesty's Government and WHO.
This draft order will have no effect on the Exchequer. WHO currently employs only one staff member in the United Kingdom and he is permanently resident here, and is therefore unaffected by this order. If in future there are in the United Kingdom officers of WHO not contributing to the national insurance scheme, they will, by the same token, be unable to claim from it; so again there will be no effect on the Exchequer. WHO currently enjoys other immunities and privileges under the Specialised Agencies of the United Nations Order 1974.
I am confident that the objectives of WHO are well known to your Lordships. It aims at the,
"attainment by all peoples of the highest possible level of health",
and its range of activities includes directing and co-ordinating the promotion of world health generally and working to eradicate disease and to maintain standards of medical training. It counts among its considerable achievements the virtual eradication of smallpox and significant progress in the containment and control of malaria, tuberculosis, trachoma and bilharzia. I believe that these are achievements worthy of congratulation and our continued support.
I now turn to the draft order concerning the European Organisation for the Exploitation of Meteorological Satellites (Eumetsat). Under an international convention of 1983 its objective is to co-ordinate and develop European satellite systems for weather forecasting. The signatories to the convention include most Western European countries, including the United Kingdom.
Article 1 of the Eumetsat Convention provides that the organisation shall have legal personality, and that it shall in particular have the capacity to acquire and dispose of movable and immovable property and to be a party to legal proceedings. That is the sole purpose of the draft order before your Lordships. It would confer no immunity from jurisdiction on the organisation or its staff.
Eumetsat is a new international organisation and its work will be essential to the future needs of European weather forecasts. Although Eumetsat is powerless to improve the weather, given our national preoccu-pation with it, I venture to guess that your Lordships would welcome any improvement in the accuracy of

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the forecasts. I hope that your Lordships can show your support of the work not only of Eumetsat but of WHO by approving these draft orders. I beg to move.
Moved, That the draft order laid before the House on 3rd April be approved. [18th Report from the Joint Committee.]—(Baroness Young.)
Lord Boston of Faversham: My Lords, your Lordships will be grateful to the Minister for explaining the purposes of the two orders. Both deal with international immunities and privileges, so it is indeed appropriate to take them together. I hope that it will be no less acceptable to your Lordships if I say straight away that on behalf of noble Lords on these Benches I am able to welcome the orders and need not detain your Lordships more than a few minutes.
I could not help noticing on one recent occasion when the House debated another order under the same general heading that the body being dealt with not only had a somewhat pretentious title—the World Intellectual Property Organisation—but also had what my noble friend Lord Cledwyn described as a somewhat frivolous acronym, WIPO. I am relieved to see tonight that at least one of the bodies with which we are dealing this evening, the World Health Organisation, has not only a happier acronym but also one which is perhaps, one might almost say, wildly popular in some quarters, especially with the young, for we are after all dealing here with "The Who".
Having begun on what I hope is that harmonious note, I may continue. As the noble Baroness indicated, the WHO is a thoroughly worthwhile organisation. It does admirable work and has some notable achievements to its credit. There are just two points that I should like to raise with the Minister, if I may. Can she give us any idea of the number of people likely to be affected under the terms of the order, and can she say whether those WHO officers who might be entitled to benefit under our social security system through some quite separate entitlement will not be precluded from benefiting under any entitlement of that kind? She has already explained that the order applies to officers of the WHO who are not British citizens, British dependent territories citizens or permanently resident in the United Kingdom. But it could be that an officer of the WHO who is not in one of those British citizen or resident categories might be a citizen of a country with which we have a reciprocal arrangement on social security matters; in which case, may we take it that a person such as that will continue to qualify for any benefits arising from that entitlement even though that person was ruled out as an exempt person for strictly WHO purposes?
I now turn to the Eumetsat order. The purposes of the organisation itself are clearly beneficial, as the noble Baroness indicated, serving the various needs associated with weather forecasting—farming, travel, warning of possible disasters, safety needs generally and presumably defence. Clearly it is necessary, as the Minister indicated, for the body to be granted legal capacity so as to function properly. That capacity would include power to acquire and dispose of movable and immovable property, as we have heard. Presumably that would cover property in any of the member states.
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We see from the convention that the body is provisionally based in Paris in premises of the European Space Agency. I am wondering whether the noble Baroness can say where it is likely to be based permanently and whether there is any present likelihood that Eumetsat would wish to acquire real property in this country. I wonder, too, whether it really needs to have separate premises of its own. Could it perhaps manage just as well, and so keep down costs, by continuing to share premises with a body like the European Space Agency or another international body?
In mentioning costs perhaps I could ask the Minister whether she is satisfied that there will be adequate machinery for keeping costs under control. It is known that there is a belief among some within the aerospace industry that high technology costs much more through international collaboration than if confined to one country, or even to one company, paradoxical though that might seem to some people. The Minister will know, for instance, that a committee under Sir John Kendrew is examining the organisation CERN to see whether we get value for money. I wonder whether there is a similar monitoring committee needed or contemplated for Eumetsat.
My only other point concerns the power to make contracts which are to be included among the legal capacities for Eumetsat. The convention itself provides for the organisation to conclude agreements with non-member states as well as with member states, or bodies in non-member states as well as those in member states. I am wondering whether, so far as the non-member states and bodies in those states are concerned, that means that if Eumetsat, say, provided services through contracts of that kind it would be able to charge for those services and so perhaps provide a useful source of revenue. Whether or not the Minister is able to provide answers tonight—and I appreciate that with these technical matters it might not be possible on this occasion—or indeed whatever answers the Minister is able to provide now or later, I can still join her in commending these orders to your Lordships.
Lord Walston: My Lords, from these Benches may I very briefly add our support for these two draft orders. They are not of enormous significance in themselves. They certainly do not involve this country in any awkward obligations. But I should like also to underline the point raised by the noble Lord, Lord Boston, concerning the entitlement to health services of those who otherwise would be entitled to them but who are not British nationals. That I believe to be an important minor point. Apart from that, I should like to support any activities of the kind to which these draft orders apply. Although we are not altogether happy, particularly at the present time, with some of the meteorological forecasting which we listen to, it cannot be the full fault of the forecasters. I wish they had recently been more often wrong than right, but they have been remarkably and uncomfortably accurate.
The advances that have been made in meteorological forecasting are really quite remarkable and of enormous benefit, not only to farmers (although to a certain extent they benefit from them), but to

79
many other people, private citizens, and undoubtedly to travel, aeronautics and aviation and in many other ways. Anything that this country can do by way of facilitating their work is undoubtedly worthwhile and to the benefit of all of us, particularly to us as a maritime nation and as a nation which is very much engaged in the aviation industry.
With regard to the World Health Organisation, here too the results are even more remarkable. They have been going very much longer. They certainly would not claim that the disappearance of smallpox from the world at large is due entirely to them, but they have undoubtedly played a very major role in ridding us of what used to be one of the great scourges of the world. There are many other cases where their activities have been of inestimable benefit, above all to the third world but also to those of us living in what is sometimes inaccurately called the developed world. There is still a great deal of work to be done.
The noble Baroness mentioned bilharzia; that is something which is well on its way to being conquered, due in large part to the activities of the World Health Organisation. It has for many years been a most debilitating disease in many tropical countries. The effect it had in the early days when it was first discovered in Egypt is well known to all your Lordships. But there are many other diseases, including malaria, which at one time we thought was well on the way to being conquered but which now appears to be having a very unfortunate recrudescence, as a result of the resistance of the organism to the various forms of quinine derivatives and synthetic treatments which have been evolved. There is still scope for an enormous amount of work for WHO to do in maintaining our control over existing known diseases and in discovering means of treating some of the new diseases which are now arising. So anything we can do in this country to facilitate their work deserves wholehearted support which we, from these Benches, certainly give.
7.47 p.m.
Baroness Young: My Lords, I should like to thank the noble Lords, Lord Boston and Lord Walston, for saying they will support these two orders. The noble Lord, Lord Boston, has asked me a number of questions and I shall certainly do my best to answer them. On his point about acronyms, I agree with him: I think we have some rather strange ones. I cannot help thinking, in the case of WHO, that WHO knows; and that is perhaps why Dr. Who goes under that name. In regard to the number of people likely to be affected by the order, it is in fact one person to whom I referred in my opening remarks.
His second question, referred to also by the noble Lord, Lord Walston, was: if an official of WHO comes from a country where we have reciprocal arrange-ments, would he retain that entitlement as a WHO official? The draft order would exempt the official from the United Kingdom system. What his position would be under his own national system would of course depend upon the law of his own country. On the various questions that the noble Lord —
Lord Walston: My Lords, may I interrupt the noble Baroness and ask for clarification of this point. The Minister tells us that in this matter the official would still be subject to the laws and regulations of his own country. Does that mean that if his country had reciprocal arrangements with the United Kingdom he would still be entitled to those facilities?
Baroness Young: My Lords, my understanding of the situation is that that is the case, but if there is any doubt about it I shall of course write to the noble Lord.
On the particular points which were raised about Eumetsat, first of all I can confirm that it has the power to acquire property in any of the member states. So far, no decision has been taken about where it might acquire property, but we do not expect it will be in the United Kingdom. On the question of whether there is any indication that Eumetsat is likely to acquire property in this country, the answer is that we do not have any indication of that nature. But we are required by the convention to give it the power to acquire property.
The noble Lord, Lord Boston, asked me a series of questions, one of which was whether or not we were satisfied with the machinery for keeping Eumetsat costs under review. To this I think I can only respond that this is a new body and that we would expect that the United Kingdom representative would try to keep costs to a minimum consistent with the proper functions of the organisation.
The noble Lord then asked me whether or not we needed a similar committee to that under Sir John Kendrew, which is looking into CERN. At this stage, the answer I think would be, no, because it is a new organisation; and that committee is doing something, which is having a review of an organisation which has been in existence for some little time. Thus the positions are not the same.
The noble Lord asked me whether or not the new organisation has power to make contracts. The answer is, yes it does. He then went on to ask whether or not it can charge for services of concluding agreements with non-member states and so bring in revenue to keep costs down. I think this is a very interesting suggestion, and if I may say so seems a very sensible one. I shall undertake to draw it to the attention of those who will be involved with this organisation.
I hope that that has covered all the points that have been raised this evening. As I say, I should like to thank both noble Lords for their support for these orders. I think we can further agree that we all hope that as a result of them the weather will improve. I beg to move.
On Question, Motion agreed to.

Eumetsat (Legal Capacities) Order 1985
7.50 p.m.
Baroness Young: My Lords, I beg to move.
Moved, That the draft order laid before the House on 3rd April be approved. [18th Report from the Joint Committee.]—(Baroness Young.)
On Question, Motion agreed to.
The Earl of Caithness: My Lords, I beg to move that this House do now adjourn until 8.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.51 to 8.30 p.m.]

Local Government Bill
House again in Committee.
Clause 1[Abolition of GLC and metropolitan county councils]:
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 3:
Page 1, line 12, at end insert—
("( ) Before the abolition date the Audit Commission shall report on the anticipated effect of the provisions of this Act on the efficiency, effectiveness and economy of local government in Greater London and the metropolitan counties.").
The noble Lord said: I have no doubt, unless the Government intend to accept the amendment (which, in all reasonable logic they should for their own advantage), that the same considerations are in their minds as applied to Amendment No. 1; that is to say, that this amendment is somehow a wrecking amendment calculated to delay the operation of the Bill. It is right therefore that I should say that the only circumstances in which there could be any delay in the implementation of some or all of the provisions of the Bill, as distinct from the Bill's enactment, would be those in which the Government themselves were persuaded by the report that this amendment envisages that they really ought to do some more thinking. It would, of course, be entirely open to the Government to take no notice at all of the report, in which case they could have no legitimate complaint.
If I may say so, I think that the Government today have been a little tetchy and rather nervous in their over-reaction to the proposals introduced by my noble friend Lady Birk. It is perhaps unfair of me to tackle the noble Lord in the absence of his three stalwarts who always appear on occasions where there is some difficulty. Oh, I observe that one of them is here—the noble Lord, Lord Beloff. The two others are the noble Lords, Lord Campbell of Alloway and Lord Boyd-Carpenter. Their absence is perhaps a sign of contrition. Are the Government really saying, or will they say, that there are no facts at all that can emerge from any inquiry or from the compilation and submission to them of a report? Are they really saying that there are no circumstances in which they would be prepared to change their minds?
Let us say—I hazard the thought for a moment, but I can return to it if challenged—that a report of an independent body, let alone the Audit Commission, to which we shall return presently, reported after considerable research and inquiry to the Chancellor of the Exchequer that, unbeknown to the Department of the Environment, the implementation of the abolition proposals would mean an increase of around £750 million to £1,000 million in the public sector borrowing requirement. What would happen, for example, if in the middle of the deliberations of
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Cabinet Committee MISC 95, the Cabinet Committee presided over by the Prime Minister to see through to the bitter end the abolition of the GLC and the metropolitan counties, the Chancellor of the Exchequer came along and said: "Look, boys, you had better think again. On the information that I now have at my disposal, after due inquiry, the public sector borrowing requirement will rise astronomically"? What would happen? Would the noble Lord say: "I am terribly sorry. Our minds are made up. We promised the electorate. We are bound by the mandate. We shall simply have to do it and have to wear it".
Or, let us say that an independent body, between now and the coming into operation of the Act, on further detailed inquiry, properly documented—not trivial stuff, or not stuff that the noble Lord. Lord Beloff, would regard as trivial—came up with the information that, contrary to previous supposition, local authority expenditure far from decreasing (a figure has been mentioned of £100 million, to which I shall return presently) would actually increase by £250 million a year. I am not saying that this would happen. I shall not offer any opinion at all, the noble Lord will be relieved to hear. As yet, I have not all the information at my disposal to enable me to take on the noble Lord on the question of figures.
Let us say, however, that it did happen; let us say that it did occur. What would be the noble Lord's attitude? What would be the attitude of the DoE? What kind of discussion would take place in Cabinet? Is it to be imagined for one moment that if these eventualities were to be revealed authoritatively the Government would still stick precisely to the proposals (which, as we know, are far from complete) that are before us today? Or would they decide that, after all, government is to some extent a matter of prudence and public responsibility and that perhaps they ought to think again about certain matters? What is wrong with that?
The question of time has been mentioned. The noble Lord, Lord Bellwin, objected earlier to the passage of ten hours as being a waste of time. I wonder whether, in ordinary practical terms, the time limit that the Government have set themselves has any relevance whatever to the real issues at stake; whether the mere effluxion of time has any relevance at all when it comes to consideration of individual people living their own lives up and down the country it the various metropolitan city areas; whether it has any relevance if the Government decided, for example, on the information at their disposal, that they should perhaps postpone certain matters. I am not saying that they should; I am merely hazarding the possibility that they should perhaps postpone certain things for six months because we do not have enough information on them yet.
What is sacrosanct about the time? Why the hurry, anyway? Some noble Lords have said: "It's in the manifesto. We said we'd do it, and therefore we've got to do it", and there is all this necessity for speed, for decisiveness, for action. They have been promising to abolish the rates for 10 years, and there does not seem to have been any particular urgency there, except perhaps recently, when it has evidently sunk into the head of the right honourable lady the Prime Minister

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that there is some grave concern about the way in which all these local authority finance matters are being dealt with.
I do not know what motives the Government had for introducing the Bill at all. It has been said—unkindly, perhaps—that the motives were profoundly political. We know very well that the matter was not discussed at the ruling organ of the Conservative Party prior to the conference announcement itself. We have heard that today. As my noble friend Lord Irving of Dartford put it: could it be political spleen that is the real reason? He quoted Mr. Norman Tebbit's utterance in 1983—I can put a more precise date to that if the noble Lord requires it—when he said: "The GLC is typical of this new, divisive form of socialism, so we shall abolish it". There was no question of any motive there other than the political motive.
Indeed, if the noble Lord challenges me I can be a little more lurid than that and quote from a speech that the right honourable gentleman made on 14th March, 1984, as reported in the Financial Times the next day—a speech which carries no hint of the honourable motives that have since adorned Government argument as justification for the Bill. Indeed, the Government have made their case fundamentally on the question of cost. In the early stages—I am talking now of October 1983—in the course of their document Streamlining the Cities, the White Paper said:
"It is not possible to put a figure on the savings arising from abolition or the transitional costs. These will depend largely on the way in which the transfer of functions is achieved and on decisions to be taken by the authorities concerned".
So at the stage of the White Paper they had not really made up their minds whether or not there was going to be any saving.
Quite clearly, that state of affairs could not last because the Government had already apprehended that the public at large were highly suspicious of what they conceived to be the political motive for abolishing the GLC and the metropolitan counties, their chief sin obviously being that they returned Labour majorities. They were getting a bit nervous about it. This has been quite evident in their utterances since. We now learn in the Bill that the savings are going to be of the order of £100 million. I shall return to that presently. That may or may not be so.
8.45 p.m.
The noble Lord, Lord Elton, in the course of his Second Reading speech, delivered himself of the argument that put the question of financial saving and of costs quite squarely at the head of the reasons for abolition. The whole thing was wasteful and therefore considerable savings could be made, he said: I followed what the noble Lord said, and just to refresh his memory, during the Second Reading debate, he said:
"It will result in savings. There will be costs in the first year. Thereafter, savings will come to some £100 million a year from rationalisation alone. This does not include anything that can be saved by the successor authorities changing their policy."—[Official Report, 15/4/85; col. 446.)
Then, a little later on he said that the abolition would save money; and that view was reinforced by the noble
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Lord, Lord Bellwin. In fact, in the debate on the ill-fated paving Bill, in which your Lordships ventured to exercise their considered wisdom and will to some little effect, the noble Lord, Lord Bellwin, in his inimitable style—and it is very difficult indeed to combat arguments presented with such charm and with such obvious sincerity—put his hand upon his heart and said that he was absolutely convinced that there could be great savings of money effected.
In many ways I regret that the Government should have put the saving of money as the central reason for the changes that they propose. There are many other considerations—considerations with which the right reverend Prelate the Bishop of Liverpool would be able to deal more effectively than I. There are considerations of (dare I mention it?) human wellbeing, serenity of mind, personal happiness and future prospects and purposes for individuals. There might be a whole number of other things on which any Government having the welfare of the people at heart could have staked their case, but they preferred cash. After all, the "naked cash nexus twixt man and man", referred to at one time by Marx, is the only language which the Golvernment really understand and care about. It is money, it is the till ringing, that calls the tune. So we shall take the Government on those lines.
It is not my intention to put before the Committee any evaluation as to whether these changes will produce savings or otherwise. I do not have the material and, as I shall show presently, the Government are evidently quite willing to provide what material they have themselves; but it did come under the purview of a distinguished firm of chartered accountants, Messrs Coopers and Lybrand, who produced a series of reports on these subjects and came to some conclusions, of which your Lordships perhaps would care to be made aware. I am not saying that I or my noble friends on this side of the Committee put ourselves behind these estimates. We merely say that they are estimates that ought to be taken into account. Coopers and Lybrand produced a detailed report, taking them some five months to accomplish working pretty intensively. As your Lordships know, they are one of the most distinguished firms of chartered accountants in the world, or certainly in the United Kingdom, and they said:
"With a uniformly high level of co-operation, we estimate … a total cost of change ranging from a saving of £4 million per annum to an extra cost of £9½ million per annum".
Then they say that with the more limited level of co-operation they estimate that the change in annual operating costs would range from an extra cost of £11 million per annum to an extra cost of £21 million.
However, that was not all. That report was published in February 1984, but they had an opportunity to up-date it, which they did, as recently as November 1984. They had another go at it. In the up-dated report they changed the figures slightly. The estimated savings on the basis of full co-operation were down from £4 million to £2 million, and the extra expenditure was up from £9·5 million to £14 million, which was the range of variations in costs that they apprehended. Without co-operation the figure in the first report of an extra £36 million was changed to £38 million, and the upper part of the bracket was changed from £61 million to £69 million. So they had a fair go at it.

85
It is only fair to say that Price Waterhouse, another firm of very eminent chartered accountants, also had a go at it and produced a slightly different report. They estimated that there would be a saving of some £35 million annually. They made no differentiation as to "with full co-operation" or "limited co-operation"; they merely put it at that figure. However, I have to say in fairness to Price Waterhouse, which is an equally eminent firm of accountants as Coopers and Lybrand, that the report took only a couple of weeks, which is not a very long time; that only a few of the metropolitan district councils were consulted; that their conclusions were based on a mathematical extrapolation of the results that they had found in the case of the limited number of metropolitan districts which they consulted; and that it ignored transition costs. In addition, as the Committee will observe if they have seen the Price Waterhouse report, their figure of £35 million was precise—a precision which is perhaps a little odd considering that they took only two weeks to prepare their document as against the wider parameters of Coopers and Lybrand.
Therefore, we have two conflicting opinions. It is not for me to arbitrate between them, except to illustrate that there is a degree of dubiety. There are two conflicting opinions: one based on a study of some five months, with an extra month for up-dating; and one based on a fortnight. I put it no higher than that.
The GLC Director-General, who I believe has a very high reputation in the City of London, put the matter very differently. I quote one or two of his remarks. He said:
"Amongst the claims and counter claims there is one inescapable fact. In the Government's own terms, the case has not been made. Surprisingly, even on the assertions made by Government, abolition would not be justified in financial cost/benefit terms".
Therefore, there is still some dispute about it. Noble Lords will be aware that among the other opinions canvassed were those relating to the debt of the GLC in particular and of the metropolitan counties. A very eminent firm of stockbrokers, Messrs. Fielding, Newson-Smith and Company, who are well known to Members of the Committee, came to the conclusion that:
"The abolition of the GLC and the six MCC's may have macroeconomic implications opposite to those intended.
A once-and-for-all reduction in the rates burden of the GLC and West Midlands ratepayers following the extinction of the Capital Fund may in time be reversed".
They go on to say:
"The GLC have been able to keep its interest costs relatively low. The incurring of additional external indebtedness by other London boroughs could lead to an increase in the average interest cost relative to what it would have been".
The Financial Times, in a feature to which I can draw the Committee's attention, was extremely alarmed about this and envisaged the increase in the public sector borrowing requirement as a result of the new arrangements so far announced for internal funding of debt and the relatively lower rates of interest that had been charged to the GLC and the metropolitan counties, and anticipated that there was a likelihood that the public sector borrowing requirement might have to increase by some £750 million.
There is a further matter. At the moment we are bedevilled by not really having the facts. Investigations have been made by two eminent firms of accountants;
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investigations have been made within the GLC itself. But the GLC sought to obtain further and better particulars, and therefore one was very much alarmed—at least I was—to read in my professional weekly journal of 25th January that the GLC had instructed another very eminent firm of accountants, Touche Ross—Coopers and Lybrand and Price Waterhouse dealt with the metropolitan county situation. The report in Accountancy Age for 25th January says:
"Touche Ross's investigation of the government's case for abolishing the Greater London Council has been called off because the Government has refused the firm access to its figure".
May I ask, why? Why should the Government refuse an independent firm of accountants of very high repute in an investigation to ascertain where the truth really lies? In the same edition of the magazine this evident inability or unwillingness by the Government to provide facts receives adverse comment as follows:
"A report by a London School of Economics research team on the GLC abolition says: 'Central Government's failure to provide any estimate of the costs of the reorganisation process must cast doubt on the claim that abolition is a transparently cost-effective measure'".
I could go on if necessary and quote from The Times—despite the fact that The Times has rather tended to become a Conservative Party news sheet over the past eight or nine months, or since its new editorship—which casts equal doubts on the Government's ability, or willingness, to produce figures.
9 p.m.
I repeat that it is not for me, and certainly it is not for Her Majesty's Opposition or for members of the Alliance parties, to spend an enormous amount of time and indeed money—and your Lordships' House is not renowned for the excessive remuneration it pays to your Lordships for the services provided here—in order to make these detailed investigations. It is of course up to the Government. What are the Government afraid of?
The really independent body set up by the Government themselves is the Audit Commission. The Audit Commission is in many ways their own creature. It was set up under the Local Government Finance Act 1982. I remember the noble Lord, Lord Bellwin, describing it in the most glowing terms. We have the opposition function to perform as Her Majesty's loyal Opposition in your Lordships' House, and speaking on behalf of my noble friends behind me I ventured to query a whole series of the suppositions on which the Government set up the Audit Commission. But it was to be an independent organisation, and they challenged any kind of suggestion that it was going to be dependent upon the whim of Government. It was a completely independent organisation upon which they set great store.
Its purpose was, among other things, aside from the district audit and the auditing of accounts of local authorities in the financial and statutory sense, to inquire into the efficiency, effectiveness, and economy of local government. Indeed what better organisation has been devised? What have the Government to fear from it?
I have here some copies of the excellent reports which it has so far produced. I am well aware that your

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Lordships regard accounting matters with a degree of boredom that is established by the somewhat uninteresting parameters of the subject it covers. But since the Government themselves have made costs and the saving of money their principal plank in the whole business, perhaps your Lordships would care to take more than a passing glance at the excellent reports which have been produced by the Audit Commission.
I do not want to embarrass the noble Lord too much because I am feeling in a benevolent frame of mind tonight. I have not said anything controversial at all. However, I am bound to point out that the investigation of the Audit Commission into capital expenditure controls in local government in England has shown that the Government are probably responsible for about £1,000 million waste in connection with their changes of mind as to what local authorities should be permitted to spend in terms of capital expenditure.
Your Lordships may well remember that, contrary to the oft expressed desire for economy and cutting down expenditure, immediately before the General Election the then Minister at the Department of the Environment, one Mr. Heseltine, got very funky indeed and sent out a plea to councils saying, "Spend, spend, spend, spend." There was therefore some easement in the economy, and the Conservative Party were returned to office. Immediately they got back the restrictions on local authority spending their own capital funds, which they had realised from the sale of their own houses, were clamped right back on again. The Audit Commission in this particular report—and I commend it to your Lordships—shows the disastrous consequences which are going to flow from this.
We are in some trouble. In this House your Lordships can of course study reports of this kind. I have no doubt that most of your Lordships, being public-spirited Members of your Lordships' House, have studied these reports in detail. The general public has not. One does not get documents such as this featuring in such gems of newspapers as the Daily Express, the Daily Mail, the Sun—the Daily Mirror, I do not mind. One finds mention in the Financial Times, however, which has a somewhat restricted circulation, and also in the Guardian. All I am doing is seeking to establish that there is a competent organisation available for this purpose.
Moreover, it is in accordance with the law. Section 26 of the Local Government Finance Act 1982 says:
"The Commission shall undertake or promote comparative and other studies designed to enable it to make recommendations for improving economy, efficiency and effectiveness in the provision of local authority services and of other services provided by bodies whose accounts are required to be audited in accordance with this Part of this Act, and for improving the financial or other management of such bodies".
Then in Section 27(1) of the Act—I hesitate to remind the Government of their own legislation but it is sometimes necessary because one forgets it—it is stated:
"In addition to the studies referred to in section 26(1) above, the Commission shall undertake or promote studies designed to enable it to prepare reports as to the impact—

(a) of the operation of any particular statutory provision or provisions; or

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(b) of any directions or guidance given by a Minister of the Crown (whether pursuant to any such provision or otherwise), on economy, efficiency and effectiveness in the provision of local authority services and of other services provided by bodies whose accounts are required to be audited in accordance with this Part of this Act, or on the financial management of such bodies".

Therefore, quite clearly the purpose is within the authority of this body. Have I the Chief Whip with me?
Lord Denham: If the noble Lord would give way, I would point out that he has been speaking to an amendment, one of many amendments, for 36 minutes; 37 minutes now, I beg the pardon of the Committee. It is an amendment to Clause 1 of this Bill. Other noble Lords may wish to speak to this. If this is not a filibuster and if this is not an Opposition trying to defeat the processes of Parliament, I do not know what is. I hope that noble Lords opposite will not behave in this way on a Government Bill. We never did when we were in Opposition. It is absolutely monstrous that any noble Lord should take 37 minutes, twice as long as should be taken for a Second Reading speech—
Lord Bruce of Donington: May I—
Lord Denham: If the noble Lord will give way, that is twice as long as should be taken. This must never be done. It is a negation of Parliament and I hope that noble Lords opposite will never, throughout the course of this Bill or the other Bills in this Session, behave in quite this way again.
Lord Bruce of Donington: I take note of what the Government Chief Whip has to say. On reflection, he may find that he has been overcome a little by the exuberance of his own verbosity.
Noble Lords: Oh!
Lord Bruce of Donington: What I have been trying to do—does the noble Earl, Lord Gowrie, wish to say something?
The Earl of Gowrie: If something cannot be said in about 10 or 12 minutes, it is not worth saying. This has been absolutely evident.
Lord Bruce of Donington: I am grateful to the noble Earl. I shall take the opportunity of reminding him of that on a suitable occasion. All I have been doing is trying to protect the Government from the consequences of their own folly. I get no thanks for this at all. I perform this service entirely for the benefit of the Government, in the hope that they are sufficiently open minded occasionally to admit the possibility that they might be wrong.
There is no better way of establishing whether they are right or wrong than by having this independent inquiry as to who is right. If the Government reject that, as I am quite sure they will, they show that they are afraid of the truth and that the real reason they want to pursue this particular legislation is not for the high minded (if that it may be called) purpose of saving money, but purely for petty, political spite unworthy of any Government.
Lord Mottistone: Does the noble Lord not think that in five minutes he could have put his point succinctly? Then we would all have listened to it and heard just as well what he wanted to say. That would have been better than his rambling on, quoting or not quoting, and wasting the time of the Committee. This House has the immense privilege of being self-disciplined, but it requires us all to be self-disciplined, including the noble Lord who has just spoken. It would have greatly helped us all had he been succinct in his statement, and he might have convinced us the better thereby.
Baroness Birk: Does the noble Lord not agree that it would be better if we proceeded with the amendment instead of having all these recommendations?
Lord Elton: I think your Lordships have indicated that whatever the merits of the speech of the noble Lord, Lord Bruce of Donington, we have consumed a lot of time, and your Lordships would not want to consume much more. I certainly intend to be very brief. I was impressed by the command that the noble Lord, Lord Bruce, had over his copious sources, though perhaps if he had been less free in his use of them, that would have helped us along.
He started his speech by producing a hypothetical figure of £750 million added to the public sector borrowing requirement and saying that he took no view as to whether or not that was a likely result. He was completely impartial in the matter. He did not think it was for him to judge. He then had recourse to his copious sources and produced a large number, supporting the general hypothesis that the Chief Secretary to the Treasury might burst into a later Cabinet meeting and say "My God, we got this wrong. We have to stop". It was kind of the noble Lord in going through his sources to mention Price Waterhouse. He did not mention that they were assisting the metropolitan district councils in an inquiry.
Lord Bruce of Donington: I did.
Lord Elton: If he did, I merely endorse that that is what they were doing. The results which they had were fairly closely compatible with those of the Government themselves.
I do not want to make a great issue of all this. I want to refer the noble Lord, as he has already been referred, to the Explanatory and Financial Memorandum at the beginning of the Bill, which sets out what we believe broadly will happen as a result of abolition. I would remind him that when Touche Ross applied for figures my department sent the Greater London Council all the information it had which was relevant to the questions which Touche Ross asked. We were not able to answer most of the questions, which related to the details of implementation of the post-abolition arrangements and which could be answered only by the GLC itself or by the successor boroughs. So the noble Lord need not accuse us of keeping the door shut when honest inquiries were made.
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9.15 p.m.
The noble Lord also mentioned a report of the Audit Commission, which he flourished in our faces from the other side of the Table. It is scarcely relevant to this debate and, in any case, the Comptroller and Auditor General has since produced what in our view is a much more balanced report which will be considered by the Public Accounts Committee of another place. I am glad to see that the noble Lord has it in his hand and he will doubtless find it reassuring.
But what is the machinery into which the noble Lord wants to put the figures which he gleefully expects to come out of this inquiry? The machinery is an Audit Commission report. I am sure he knows that the Audit Commission already has the power to perform an investigation into the operation of statutory provisions. It is of course already open to it to decide whether or not to undertake such a study. The amendment seeks to require it to do so in the period between Royal Assent and the abolition date and to look at the anticipated effects of this legislation.
I am not sure that I can see the point of that, because there is something missing from the noble Lord's machine, as the amendment, unlike the first one that we debated, does not seek at all to bring the report into the process of legislation. The Act will be on the statute book when the commission begins its work. Abolition will have been fixed and become inevitable by law for a date soon after it reports, and nobody will be required to do anything whatsoever about the report that it makes.
The noble Lord made a virtue of that and said that the Government could ignore it completely it- they wanted. One can only interpret that in one of two ways. Either the noble Lord is looking for the Oposition to have a chance to say, "I told you so" if the report is as they expect, or, I presume, to ignore it, if it is not; or they are seeking to supply a sound effect from the wings of abolition. But in any event this is an extraordinarily bad time. May I have the attention of noble Lords opposite? The Committee is not at prayer. If the noble Lord is not at prayers, he is either standing or sitting and I cannot make out which it is.
What I want to say to your Lordships is quite simply this. We accept that abolition will make extraordinary demands upon the abolition authorities and the successor bodies. The less extra work we give them to do at this stage the better. If the work that is proposed, as it is proposed in this amendment, cannot be incorporated in legislation, then it is without point. It is an unnecessary labour imposed upon people who already have their lives made difficult enough by their employers refusing to let them do this work in a timely way now, so that it must be done in great haste later. There is no point to this amendment and I ask your Lordships to reject it.
Lord Bruce of Donington: I am most grateful to the noble Lord for his most courteous and detailed reply. I agree entirely with him that on the report becoming available it would be open to the Government either to accept its recommendations in whole or in part, or to reject them. The important point about the report is that it would be a public document and it would be one against which the public would be able to judge

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the adequacy or otherwise of the measures which the Government take to implement their Bill. As I said, I am most grateful to the noble Lord. So grateful am I that, without detaining the Committee any further, I beg leave to withdraw the amendment.
The Deputy Chairman of Committees (Lord Ampthill): Is it your Lordships' pleasure that this amendment be withdrawn?
Noble Lords: No!
On Question, amendment negatived.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 4:
Page 1, line 15 leave out ("1986") and insert ("1987").
The noble Lord said: I beg to move Amendment No. 4 which deletes the operative date for the abolition and inserts "1987". This amendment takes the Government on from the first amendment of today when, in effect, they ridiculed the arguments that were being put from this side of the Committee that time was needed in order to assess the various aspects of what was required. The Government then said that the inquiry would produce too little time. What we say to the Government is, "Fair enough!" But if in fact in order to be quite clear as to the implications of the Bill we need a little more time, this amendment is saying to the Government, "Get your Bill; get the Royal Assent! But, instead of making it operable from 1986, make it operable from 1987". I know the argument will come from the other side of the Chamber that this is simply and wholly a delaying tactic.
I very much hope that noble Lords opposite will listen carefully to the argument. They are not my arguments or partisan arguments; they are arguments which are based on experience. I happen to have served as a councillor in the London Borough of Enfield during the 1960s. In 1963, we had the London Government Bill and Act, then there were elections in 1964 and then the operative date was 1965. I can tell the Committee that even with a reasonable timescale, not a generous one, the period of 18 months was not too long in order to do a number of very complicated and at times very distressing things in respect of staff disposition.
The London boroughs of Edmonton, Enfield and Southgate formed the London Borough of Enfield. Even on a small scale such as that, there was a range of matters that needed a long time in order to be effected. To my mind, one of the points that the Government fail to take on board seriously is the consequence of their decisions. They simply say, "We take the decision, we set the date; and we are not prepared to take seriously on board what needs to be done in between". May I remind the Committee that from the time that this Bill gets the Royal Assent—and let us guess and say that that will be July—until the time that it needs to become operable is about eight months. I am sure that the Government would not expect anyone else to assume what this House will do, and I am sure the Government will not anticipate what they want the House to do and in effect start to work before that date. That eight months is half the period
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of time in which any other comparable change in management and arrangements have been made.
Quangos will need to be established and staffed. They will need to create initial budgets and plan their organisation. The staff of the metropolitan counties and the GLC will have to be identified collectively in groups for dismissal and then individually sacked where they are not required. The staffs of the metropolitan authorities and the GLC, where necessary, will have to be transferred to successor bodies.
New office accommodation will have to be found, rented or purchased. The files, computer programs, information systems, legal records, etc. presently held merely with the GLC are enormous in quantity. I think that the House was indebted to the noble Lord, Lord Plummer, and impressed by the information that he gave at Second Reading about the physical enormity involved in having to do things with the files and computers. Proper joint working arrangements will be established by the joint boards. The Secretary of State will have to make decisions and give guidance on hundreds of issues. There could be legal disputes on the distribution of property and assets. Again, the noble Lord, Lord Plummer, enlightened the House as to the size of the GLC property portfolio.
The London boroughs will in some respects be acting as joint strategic authorities for the first time. All these things will be happening at a time when the metropolitan authorities and the GLC will have the enormous job of coping with their current services and with the running down of them. I say to the Government that if they are really serious about getting it right and not getting it quick, this is an opportunity for them to respond.
This amendment does not deny the Government the Bill. What we are saying is, "Please understand that there are lives at stake, professional lives at stake, as well as a range of other matters, and time is needed for the Government to work in collaboration with the staffs of the metropolitan counties and the GLC". I hope that the Minister will look upon this amendment as I do as yet a further attempt to bring some measure of acceptance and understanding once the Bill becomes an Act. Once it does we are saying, "Please take more than eight months because it needs more than eight months to make sure that it gets off to a good start". I beg to move.
Lord Campbell of Alloway: This is the last of the delaying power amendments. The rest all fall within the revisory rôle. I hope that the Committee will alow a very brief intervention not to repeat, I assure your Lordships, but merely to apply to this amendment the argument already deployed in relation to Amendments Nos. 1 and 2.
I have of course listened with great attention and respect to the arguments on the merits deployed by the noble Lord, Lord Graham of Edmonton, but whatever else may be said about this amendment, even at this late hour, it is a plain resort to the delaying power of your Lordships' House and Committee under the Parliament Act. Again, in effect, this amendment defeats the Bill. It thwarts the will of the electorate in another place which reflects the manifesto commitment. It is contrary to any convention that I

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have been able to discover to resort to the delaying power in such circumstances on the assumption that the resort to the delaying power is to enable the House to invoke its revisory role. Such, indeed, has never been within the spirit of the Salisbury or the Carrington conventions and to carry this amendment would therefore constitute a very substantial departure.
On the merits, this is yet another manifestation of the Labour Party's implacable opposition to the principle of this Bill. Surely it would be preferable that we should proceed to discharge the revisory role in Committee, seek to improve the Bill—a process which would be inhibited only if this amendment were to be passed. My hope is that this amendment will not be pressed in those circumstances to a Division either on the constitutional ground or, indeed, on the merits. I apologise for taking so long.
Lord Wilson of Langside: I rise only to observe that, frankly, I cannot understand the assertion of the noble Lord regarding the Salisbury and the Carrington conventions to which he referred. I tried to rise on this point at an earlier stage during the debate on the first amendment, but obviously the Committee had had enough and so I did not pursue it. Frankly, I do not understand that assertion. I think the noble Lord is wrong about this.
But if he is right that it is inconsistent with the Carrington and the Salisbury conventions to which he has referred, I do not think that that is fatal to the argument in support of the amendment. When the noble Lord first spoke of it I remembered that it was some six or seven years since I last reflected on the implications constitutionally of the Carrington and Salisbury conventions. I had my doubts then about the validity of the noble Lord's argument. At this late hour of the night I do not want to enter into the constitutional implications of this matter, but I took the opportunity to have a quick look in the Library at such works of authority on the British constitution as I could find. I just wanted to put on record my belief that the noble Lord's argument is full of fallacy.
9.30 p.m.
Lord Monkswell: I should like to support this particular amendment because I believe that the Government do not appreciate the situation that we are trying to present from this side of the Committee. We are in Committee and, by convention, this Chamber seeks in Committee to revise and improve Bills which come before us. The argument we have heard this afternoon presumes on the Government's point of view that we are engaged in activities which wholly have to do with wrecking this particular piece of legislation. I hope that the Government will take on board that we on this side of the Committee—or should I say that I, from my point of view—look on this stage of the proceedings and deliberations on this Bill from the point of view of improving the Bill, rather than seeking to wreck it.
I must take issue with the statement made by the noble Lord, Lord Elton, a few moments ago, when he said that if local authorities subject to abolition under this Bill were not complying with the requirements of the Government, this was because of the arguments
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and control of the political leadership of those authorities. I have to advise the Government that that is not wholly true. In fact, there is a great deal of resistance to the plans this Bill brings before us from the employees and (dare I say it?) the local populace who are subject to the provisions of the Bill.
If it were just the political leadership that was opposed to this Bill and which was seeking to delay it or inhibit introduction of the changes it proposes, then I would accept that the Minister had a valid argument in saying that opposition does not matter because as soon as the Bill is passed the political issue will be over and the will of Parliament will have been expressed; and thus the local authorities will have to abide by it. It is a deeper problem than that. With this Bill, we are faced with major changes in a vast number of activities of local government. These will involve an enormous amount of work on the part of those bodies which are to be abolished—the employees thereof, etc.—and by those who will have to take on the work currently being done by the bodies subject to abolition. The Government do themselves no service when they say that their original plans—conceived some years ago, they have now said—can be carried through in their entirety, given the situation we are faced with in the communities at large.
The Government would do well to recognise that those of us on this side of the Committee are seeking to improve the Bill. We are not seeking to wreck it. We are genuinely concerned about the provision of services in our local communities and how they will best be transferred from one authority to another. To say that all that we on this side of the Committee are intent on is to wreck and destroy the Government's will in abolishing these authorities is just not true.
I must plead with the Committee to recognise the reality of the practical difficulties of transferring functions from one body to another; the enormous difficulty of setting up new arrangements for the control of, and activities associated with, for example, waste disposal. It will have a major effect on the community at large. Only today we have received representations from local authority associations which are outwith the metropolitan counties. They are concerned about the situation with which they will be faced because of the change in the way that waste disposal will be effected. That is just one factor of a whole range of different factors that will have to be taken on board, accommodated, and planned for and for which transitional provisions will have to be made. To cope with this is asking rather much of our dedicated local authority employees and their communities in the very limited timescale that the Government are proposing.
I beg the Government to acknowledge that we on this side recognise the will of the people as expressed by the other place, and we shall seek, and are seeking, to improve the Bill and to come to the assistance of the Government wherever we can. This is one such area. By delaying the provisions of the Bill for one year we are making that appeal, given the situation within the metropolitan counties and within the GLC. I agree that there has been prevarication in the areas I have mentioned to assisting the Government, but one could argue that that is constitutional and legitimate because the Bill has not yet become an Act. There is always the

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chance, as those people in the local authorities see it, that the Bill may not become an Act at the end of the day, and it is not until it becomes an Act that the people who are involved in the provision of these services, the transfer of these services, and so on, will recognise and obey the will of Parliament.
Until that time comes we must accept that they will endeavour in the best way that they can, subject to the limitations of law, to delay what they see as anti-social, counter-productive, inefficient proposals being carried through. We must recognise that they have legitimate responsibilities in adopting the tactics that they have; and we must recognise that fact, take it on board as a practical reality and reflect the practical situation in the country.
Lord Mottistone: Will the noble Lord allow me to intervene? Is he naturally verbose or is he filibustering?
Lord Monkswell: We have had one occasion this evening which has disturbed us on this side of the Committee very much. I take great personal exception to the suggestion that we are engaged in filibustering.
Lord Mottistone: Will the noble Lord answer my question? Is he naturally verbose or is he filibustering?
Lord Monkswell: I think that noble Lords have had some experience of my contributions. If I can keep my contributions short, I shall do so. If the realities of the situation demand that I take some time to explain them to your Lordships, I am sure that your Lordships will appreciate that. It ill behoves Members of the Government Benches to suggest that we on this side, when engaged in deliberations which are trying to improve this Bill—and on many sides of the Committee there have been criticisms about it—should—
Lord Mottistone: Filibuster.
Lord Monkswell: No, I am not engaged in a filibuster. I am trying to explain the practical realities and difficulties of this Bill and the reasons why the Bill should not come into effect for one year beyond the period that the Government seek to dictate.
The Earl of Gowrie: I was certainly prepared to extend a metaphorical and ecumenical hand to the noble Lord, Lord Monkswell, while congratulating him on the speed with which he has become an expert on the constitutional procedures and conventions of this House. I think that the point raised by him and by the noble and learned Lord, Lord Wilson of Langside, and others about the Salisbury and Carrington conventions, as they are called, is that this House has every right, indeed a duty, to try to improve Bills by revising them. Our problem in this case is that some latitude has been given to the word "revision" by a series of amendments which are designed to stop the Bill from coming into effect. That would, I think, perhaps be more convincing if the Bill were first revised and then perhaps later there were suggestions that the Bill should be delayed in coming into effect.
I come to the other point in the noble Lord's argument which perhaps prevents me from being as ecumenical as I should like to be to the noble Lord, Lord Monkswell. It is the really extraordinary suggestion he made that, on the one hand, there are severe practical difficulties facing organisations and authorities, given the removal as proposed of this tier of local government, and that, on the other hand, the severe practical difficulties can in some ways be improved by the staff of these authorities not being allowed by their political masters to co-operate with the preparation of the legislation or with the preparation of conditions leading up to such time as the legislation becomes an Act.
I know very well in my own immediate sphere of responsibility in respect of the arts that there has been the bureaucratic equivalent, if one likes, of filibustering, and that hard-pressed officials, who I in no way blame for this, have not been allowed by their political masters to co-operate with us in order to get as smooth a transition as is possible. We can all take different views about the wisdom or otherwise of any given political decisions, but to argue on the one hand that one of the reasons the political decisions are no good is that people are forced not to co-operate with them is extending argument to unreal limits, and I regret that the noble Lord. Lord Monkswell, did that.
I believe that some of the directives being put to the professional staff (who I in no way blame) of the GLC and the metropolitan county councils are deeply disturbing to the staff themselves and can only add to the anxieties which the noble Lord, Lord Monkswell, and others are accusing us of generating. I think that this is—
Lord Monkswell: Will the noble Earl give way?
The Earl of Gowrie: I will give way, but I should like to finish this point, I think that this is a cruel and cynical use of unpolitical and unelected officials. I hope that the noble Lord will use his new and considerable influence as a Member of this House to ask all authorities to desist.
Lord Monkswell: The noble Earl, Lord Gowrie, has repeated the fallacy of the noble Lord, Lord Elton, which I sought to correct. The activities of the employees of these authorities are not solely
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determined by the political direction of their masters. They have themselves taken objection to the Bill and are seeking not to involve themselves in helping the Government in the procedure of transferring power.
9.45 p.m.
The Earl of Gowrie: I cannot believe that the noble Lord believes that. My only advice to him is to pull the other one.
To turn to the amendment from which we have somewhat strayed, its purpose and effect is to postpone the abolition date by a year. The Government at a very early stage made it clear that we intend abolition of these authorities to take place on 1st April 1986. That has been long known. It was stated in the White Paper and this Bill was introduced, as promised, early in this Session in line with the timetable that we proposed.
It has been argued that more time is needed to put our plans into effect. I cannot see on what basis that argument is adduced. The boroughs and districts—the successor authorities—are already fully functioning local authorities. They are not untried maidens in that respect. That contrasts with the situation in both 1963 and 1965 and 1972 and 1974 when all the successor bodies were new authorities created by the legislation. Thus some of the bodies taking over most of the tasks of the GLC and the MCCs are already in place and they can begin planning for the transfer from an early stage, particularly if this planning is not prevented or obstructed in the ways in which the noble Lord, Lord Monkswell, and I have recently been debating.
Government departments have already issued to all the boroughs and metropolitan districts some guidance on preparing for transferred functions, with more to follow. Section 5 of the paving legislation is being used both by central Government and by successor authorities to obtain the information needed from the GLC and the metropolitan county councils. There is no reason why this should be a very complicated or difficult provision because the GLC and the metropolitan counties are so much the minor partner in the provision of services in their areas that the extra activity to be taken on by each borough and district is really comparatively small.
My right honourable friend the Secretary of State will shortly be bringing forward proposals for initial appointments of residuary body members on an advisory basis to make a start on planning for their important role. One of the priority tasks to which we shall ask them to address themselves is the identification of staff currently employed by the GLC and metropolitan county councils in areas like finance, superannuation and property, and of course I include key computer staff whom they will need to take on to carry out the responsibilities they will inherit.
As to timing, the new joint authorities will formally be in place from September 1985 and they will have absolutely adequate time to prepare their budgets for 1986. There is nothing to prevent, once more, the borough and district members who make up these authorities from meeting at an earlier stage to give preliminary thought to their needs. Of course, the executive parts of the new authorities will not be

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radically altered at the moment of transfer. The services will be provided over precisely the same geographic area as at present and there will therefore be no difficulty in ensuring continuity of operation of the services.
But the present amendment would introduce unnecessary delay and thereby increase the personal and human uncertainties for the staff concerned. The GLC and some of the metropolitan counties would no doubt continue using the period of delay for obstruction, including the unreasonable use of public funds for propaganda right until the end. I can therefore see no reason whatsoever to delay the implementation of an improved system of local government for the conurbations. I would ask the Committee to reject the amendment.
Baroness Lockwood: I really must take issue with the noble Earl on two points he has made. The first one is the reference to the fact, from his point of view, that the successor bodies are already there in order to take over these services. The second is that the boroughs are able to take over the services. The successor bodies are not there. Most of the services will be taken over by new bodies which have to be established, and we hear from the noble Earl that they will be established at the beginning of September. But they will be the bodies who will take over the major services; therefore it is not correct to say that they are already there.
Secondly, the noble Earl said that there would be no difficulty in the boroughs taking over the functions, most of which he said they already carry out in local authorities; and therefore they could take them over quite easily. The report of the Select Committee of your Lordships' House, which has already been referred to this afternoon, indicated quite clearly that there is a whole range of very important and indeed essential technical services, including waste disposal, highways and transportation, which need to be taken over not by the boroughs but by some joint authority. Therefore, there is much work still to be done in determining how and in what administrative ways these services shall be taken over.
Therefore, I should like to support this amendment. I hope the polemics about it have disappeared. I speak as one who is concerned about the quality of these services. If the quality of the services is to be maintained, I suggest that cannot be done within the short period of eight months after the new bodies are set up.
Lord Graham of Edmonton: The Minister who replied quite fairly sought to demonstrate that what is now in train is reasonable and is based upon the acceptance, the inevitability, first, that the Bill will finally become an Act, and, secondly, that it will become an Act substantially whole in all those parts that we have yet to debate. I simply say this to the noble Minister and to the supporters of the Government. If they really believe that the atmosphere in terms of relationship between central and local government in 1985 is on a par with the
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relationship between local and central government in 1972 and 1973 and in 1963 and 1964, then with the greatest respect, they do not know what they are talking about.
I happen to have served in local government at the time. Although it is 22 or 23 years ago, and there were political differences, having fought the political argument there was a general acceptance of what was going to happen: "All right; we have had a good fight and will go forward". That was because there was proper preparation in the form of an inquiry or a commission and the ground had been prepared.
Regardless of the charges the Government make about the Labour Party or individuals, they have decided on this occasion that they will use some short cuts. I say to the Minister that the short cut with which we are now faced—and that is starting cold from July of this year, though the Minister wants us to start now—is a recipe for bureaucratic choas. The consequences of that will not be felt until after 1st April 1986.
The Minister makes play of the fact that there are politically elected councillors who are deliberately instructing their employees not to co-operate. I do not disagree: that probably is the situation. What the Government are inviting the councillors to do is to help the Minister to cut their own local government throats. What those individuals are saying is, "We shall not make it easy for the Government to get their way".
In the other place there were issues of a major character which were carried by the Government (with their huge majority) by only 23. Last year, on the paving Bill, there was an issue on which the Government's main thrust in legislation was negatived by this Chamber exercising its way. There must come a point when it is clear beyond peradventure that the will of the Government will be carried in this and in another place. I simply say that the Government are failing to understand the matter.
I am sorry that they are ignoring the advice of professionals, voluntary bodies and councillors. I ask the Government to forget the politicians but to listen to the voices of the voluntary bodies. They have sought to collaborate with the Government for a long period of time to produce a modus operandi for the voluntary bodies. This has yet to emerge. We are saying that more time is needed, not only in that field but also in the field of housing and in the transfer of the major physical resources.
The Government are perfectly entitled to reply that they in fact said, as early as they did, that 1st April 1986 was to be the day, but the reality is this. Thanks to the change in the Government's ambitions in the paving Bill, there was a change in respect of that particular matter. People outside are saying, quite rightly—not illegally, not criminally; and certainly they are entitled to say it—"We want to make sure that there is no other alternative."
The offer given to the Government in the amendment is not unreasonable. If the Government intend, as I believe they might, to remain the Government of this country after April 1987, the Bill will not only have Royal Assent but will be a fait accompli before they go to the country. There is no

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question that within this Parliament the intentions of the Government will be given substance.
The Minister says that the GLC and others have frustrated the intention of the Government to make progress. My information is that the GLC has done nothing of the kind in relation to information on the current situation, works and costs. What they have been laggardly in doing is in assisting the Government to set up the successor bodies, authorities and arrangements that the Government have in mind. The Government have to take on board that they have a major responsibility for that being so, due to the climate that they have created. This raises an important point. When are this House and another place going to accept that there is no point in opposing, revising or seeking to amend? At what point are the Government entitled to say that they have a mandate, a Second Reading or whatever it is, and that there should be no form of opposition, reluctance or truculence?
The Earl of Gowrie: I have made clear when debating some previous amendments that the Government consulted on aspects of this legislation, not least in my own area concerning the arts, and very considerable amendments were made. If your Lordships put forward amendments and carry them, the Government will consider them most carefully.
Lord Graham of Edmonton: If the Minister is inviting us to accept the dictum that should this House carry matters, that is the end of it, that what this House decides will be accepted by the Government, then that is very interesting in the light of developments that are perhaps not too far away. Of course, the noble Earl did not say that. I am entitled to interpret—
The Earl of Gowrie: No.
Lord Graham of Edmonton:—what I believe the Minister said in my own way, as well as is the noble Lord, not from a somnolent position but certainly lying back and perhaps enjoying it. The Minister has failed to convince me of the defence of the Government's attitude in these matters. He has, however, said enough to convince me that because of the lateness of the hour this is not an appropriate time to press the amendment. There will be other opportunities when this can be done. I beg leave to withdraw the amendment.
The Deputy Chairman of Committees: Is it your Lordships' pleasure that this amendment be withdrawn?
Noble Lords: No!
On Question, amendment negatived.
Baroness Birk Baroness Birk moved Amendment No. 5:
Page 1, line 15, at end insert—
(" ( ) Before the abolition date the Secretary of State shall lay before both Houses of Parliament a report detailing the criteria for the exercise of the powers and the performance of the duties, including powers of guidance, vested in him under this Act, and on the anniversary of the abolition date and annually thereafter he shall lay before both Houses of Parliament a report detailing his use of these powers in the year preceding that date.").
The noble Baroness said: It would be nice—I wonder what the Government Chief Whip is trying to
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say to me? Can he put it into words? I am not used to sign language. I shall sit down.
Lord Denham: I must apologise to the noble Baroness. I was not actually making gestures at her, but at one of her noble friends elsewhere on the Front Bench. I hope that she will continue because I wish so very much to hear what she has to say.
10 p.m.
Baroness Birk: I do not think that the noble Lord is, but perhaps he will wait until I am out of the way to make signs. I hope, quite seriously, that we can rest ore a little better humour in the Committee than has existed for the last couple of hours. It seems quite wrong. We are debating a very important Bill. There are, I agree, strong feelings about it. But it will not get us anywhere at this very early stage of the Bill if one gets upset about it. So, after that ticking off, I hope that everyone will behave better.
The amendment to which I am speaking now is concerned with the powers of the Secretary of State. One of the worst and most worrying features of this Bill is this. The Government have been saying all the time that the intention of the Bill is to restore powers or give extra powers to the smaller local authorities, the boroughs and districts. Indeed, the noble Lord, Lord Elton, repeated the intention at Second Reading when he stated that the Government proposals
"will give electors a closer interest in local government affairs".—[Official Report, 15/4/85; col. 446.]
In fact, what has been happening in the whole range of Government legislation on housing, on local government, on all the kindred arrangements and other pieces of legislation, has been that there has been a continuous move towards the centre, and rather than give more powers to local electors, there has been far more power taken by the Secretary of State. This has increased even more so in this Bill, so that now we have the political power removed from the directly-elected politicians. It has been placed in the hands of Ministers, civil servants and the appointed members of the various joint boards, joint committees and other quangos.
As I mentioned at Second Reading, this means that over 123 powers, either direct powers or permissive powers—or words to the effect that the Secretary of State can, will, shall—may undertake certain functions. This runs throughout the Bill. As we know very well, this does not mean for one moment that the Secretary of State is going to sit down and look at all these applications. This is passing it straight from the hands of the local authority, where it should be, right to the centre, to Whitehall and to the Ministry, and it will be dealt with there by civil servants. There is nothing wrong and a great deal of good to say about civil servants; but they should not be in the position of making policy, which in fact they will be when they are given these powers which it is quite impossible for the Secretary of State; obviously, or indeed even his junior Ministers, to exercise one by one.
Among these 123 powers, which I shall not go into in detail tonight, over 40 are of considerable size and influence. There will be power, for instance, automatically to rate cap the 18 new joint boards even before they come into existence, and without any of

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the proposed safeguards against designation written into Part 1 of the Rates Act 1984. That point, if Members of the Committee want to find it, is in Clause 66. He will be able to prescribe schemes for the 18 new joint boards covering a number of employees including policemen and firefighters, the boards' services, their organisation and their arrangements for the management of their affairs. That is to be found in Clause 83.
Therefore, the spending, staffing and management structures of the appointed boards, inheriting 67 per cent. of the metropolitan counties' activities, will be under the direct control of the Secretary of State. He will be able to make arbitrary decisions about block grant in relation to the new and existing authorities, and force his guidance on district councils in respect of their planning. That is under Clause 3 and Schedule 1. Highways and road traffic are covered in Clause 7 and Schedules 4 and 5. He will be able to create six non-elected joint boards for waste disposal without any prior inquiry. Therefore it is no wonder that we have this afternoon been anxious—unfortunately unsuccessfully—to get a committee of inquiry set up, and also why my noble friend has just now moved the amendment to delay the year of implementation, not the passing of the Act but the implementation.
He can transfer airport interests to a joint committee or joint board at his own discretion; he can make orders without any prior inquiry breaking up proposed police, fire and public transport boards. It is interesting that on 28th November Coopers and Lybrand came to the conclusion that any such break-away could be expected to result in cost increases and there was no evidence to suggest any improvement in the effectiveness of the services. As costs and cutting costs have been one of the planks on which the Government originally said that they were basing this Bill, this is a matter of enormous concern.
The Secretary of State can create a series of centrally funded county museum trusts without any consultation, create a salaries review board and—for this there has been no precedent in any previous reorganisations—demand detailed staffing information from existing district councils across the whole range of their services. When it comes to the new residuary bodies, which were not proposed in the White Paper and thus have not been the subject of consultation, these new bodies are to be under the Secretary of State's control through directions as to how they are to exercise their functions. In their report published on 28th November, Coopers and Lybrand estimated additional transitional costs caused by the creation of the six residuary bodies of up to £15 million. These residuary bodies can be in operation for five years anyhow and then the Secretary of State has the opportunity and the power to let them continue if he wishes to do so.
It is for this reason that we ask that:
"the Secretary of State shall lay before both Houses of Parliament a report detailing the criteria for the exercise of the powers and the performance of the duties, including powers of guidance, vested in him under this Act",
and afterwards:
"annually thereafter he shall lay before both Houses of Parliament a report detailing his use of these powers in the year preceding that date".
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That is the reason for this amendment. It does not seem to me that there can necessarily be any argument about it because all that the Secretary of State has to do is to give the information which he will have. I beg to move.
Lord Elton: If none of your Lordships has any views on this, I shall volunteer my own. The noble Baroness has put it to noble Lords in a charming and friendly manner—and I reciprocate; I consider myself admonished with the rest of your Lordships by her elegant forefinger—that the Bill is imperfect because it contains such a very large number of powers which can be exercised by the Secretary of State. Certainly in the Bill there is a substantial number of such powers. I cannot make them reach quite her total, but I get to around 112, which is a substantial number of powers which are conferred on the Secretary of State or other Ministers.
But these do not represent a takeover by central Government. Many of them are essentially minor. My right honourable friend the Home Secretary may, for example, under Clause 14 prescribe the date by reference to which the population of an area is calculated for the purpose of apportioning the costs of probation committees. Many are transitional. My right honourable friend may, for example, provide by order for the appointed day for establishment of the new authorities. There are also powers to make necessary consequential changes by order. But they are only powers to make consequential changes; they cannot be used to overturn the provisions of the Bill.
At the centre of these powers is Clause 98, which gives the power to make incidental, consequential and transitional provisions. However, if your Lordships look at the equivalent Section 84 of the London Government Act 1963 or Section 254 of the Local Government Act 1972, you will find that the purposes to which they have been put have been extremely modest, such as the dissolution of the Osgoldcross Joint Cremation Board and the revision of the constitution of the Chichester Harbour Conservancy.
In a piece of legislation of this scope it is necessary to leave a number of reserve powers in the hands of the Secretary of State in order that the legislation itself shall not be forced to make determinations too precise and too inflexible to satisfy the needs of the situation when one comes to it.
In 1972 we had an Act of Parliament for purposes of a reorganisation of local government, and I noticed that there were rather more powers given to the Secretary of State in the clauses of that Bill than there are in the clauses of this Bill. Therefore your Lordships should not regard this as an unprecedented step. It is a well proven way of conducting legislation in detail without binding the people who are forced to carry out that legislation within a straitjacket which cannot be altered.
The advantage of this is that the orders can be made in the light of the inquiries made as the date approaches. I think that your Lordships should not be as alarmed by this measure as the noble Baroness has suggested.
Baroness Birk: The Minister has not yet said whether he agrees with the amendment. He has explained that it is not at all alarming. If that is so, I

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take it that he would have no objection to the Secretary of State laying before both Houses of Parliament a report detailing the necessary criteria.
Lord Elton: l should. The noble Baroness is right to tell me that I should have told your Lordships' Committee that the Government do not propose to accept the amendment because we do not think it is necessary.
Baroness Birk: I find that a strange answer. If the Government do not think it is necessary, I again come back to the point I was making. We are in a parliamentary democracy, not an authoritarian state, and people are concerned about this matter, as are other political parties. We are all, I hope, moving towards, or we feel that we should like to move towards, more open Government. In those circumstances what on earth is wrong in the Secretary of State giving an account of what he is doing?
The Minister has said that this is not unprecedented. It is unprecedented to the extent of the height which the pyramid has now reached. That the Secretary of State, or Ministers, take on powers is something that we are used to, but it is the cumulative effect of these powers which is becoming highly dangerous and worrying.
If the Minister says that it is all right and can all be explained clearly, and that there are some small powers or some small functions, what on earth is wrong with giving a report on them? Surely they will have to be noted, anyhow. The information will not be difficult to elicit.
I find the reply unsatisfactory. I suggest that in that case and in view of the lateness of the hour the Minister considers taking this back and looking at it, and perhaps we can return to it at the next stage. I think he is fair, and he will probably agree that by his negative response he has not really given me a sufficient answer.
Lord Elton: The noble Baroness is entitled to her sufficient answer. If she wishes me to dilate, I would say this about the idea that a Secretary of State who is given a range of subordinate powers such as this should be required to specify for every single one of them the criteria by which he should use them. That would mean describing the parameters on either side of the discretion that he will not transgress and examining in detail each case. That idea and the proposal that he should report to Parliament on this is an entire departure from parliamentary procedure. It would generate an enormous amount of Civil Service work and it would not amount to open Government. It would amount to the proliferation of publications which your Lordships do not wish to see. I should like to dispose of this now, not at Report.
10.15 p.m.
Baroness Birk: In that case, I find it totally unsatisfactory, because nobody has asked the Minister or the Secretary of State to take those powers unto himself. When Secretaries of State do this they must find some method of making it clear and explaining what they are doing to the people. I think we are all entitled to know. It is our money they are using, not their own. Again, because of the lateness of the hour I
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shall not press this at the moment, but I shall return to it at Report stage.
The Deputy Chairman of Committees: Is it your Lordships' pleasure that this amendment be withdrawn?
Noble Lords: No!
On Question, amendment negatived.
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 6:
Page 1, line 15, at end insert—
(" ( ) Before the abolition date the Secretary of State shall lay before both Houses of Parliament a report detailing the proportion of the budgeted net revenue expenditure of the Greater London Council and each metropolitan county in the financial year 1984–85 which, had this Act been in force, would have been in that year expenditure of the councils of London boroughs or metropolitan districts; joint authorities established under this Act; other non-elected bodies; and Government departments ").
The noble Lord said: Once again I am trying to be helpful to Her Majesty's Government. Your Lordships will recall from reading a document that was published as Cmnd. 9058 and called Financial Management in Government Departments that it was there revealed that the Government are spending some £965,000 per annum on improving their management services. The relevant paragraphs are on pages 52 and 53 of the report in question. I mention this because on 21st December last, despite all the effort that had been made in tightening up Government management, a £700 million error was made in drafting an order for the rate support grant; that is, £700 million was the size of the mistake made in the Department of the Environment. This was when £965,000 per annum was being spent on internal financial control.
I mention this because all this amendment requires is an internal exercise by the Department of the Environment which any prudent business of a large size would carry out in the event of reorganisation. It would endeavour to do a series of sums internally by the use of a suitable number of spread sheets, if done manually, or by computer—I have no doubt the DOE has done that—to determine the effect of any steps to be taken had they been taken now. In other words, they could envisage the situation and could have their own internal checks. There is nothing more in the amendment than that. It is purely to ensure that the DOE has its sums right. It made an error of £700 million on 21st December last: who knows it may not have made other errors in the advice it has given to Ministers? This is a double entry check, in effect, to make sure that the Ministry is doing its own sums properly, as Ministers are entitled to expect.
If the Government accept this amendment they are helping themselves, and the next time they come to your Lordships' House after abolition they will be able to say: "True enough; we did all our sums. There were one or two corrections here and there, but by and large we have done the job properly". If they do not do the proper checks they will be in the same position as they are now—they will not have the remotest clue what will happen. I beg to move.
Lord Skelmersdale: It seems to me that the noble Lord, Lord Bruce of Donington, has come to the conclusion that the boroughs and districts will not be

107
the main bodies taking over the roles of the GLC and the metropolitan counties. Nothing could be further from the truth. However, I can readily see how he has been persuaded to this view.
The GLC have put considerable effort into confusing this issue with a barrage of misleading statistics. They claim that their current spending is £1,874 million a year. It is not. They spend around half of that. How then, the noble Lord will ask me, did they arrive at that figure? The answer, as the noble Lord, Lord Bruce, will well know, is by astute accounting. They have added to their base spending figure of £712 million the money that will be spent by the Inner London Education Authority. This is quite unreasonable. The GLC do not control the budget of the ILEA or its policies now, nor will the boroughs after implementation.
Another way in which the GLC's figures have been inflated is over the subject of transport. Since the London Regional Transport Act, which was the subject of long debates in your Lordships' House last year, LRT has had no involvement with the GLC, except as a precepting body. It has nothing to do with this Bill. It is therefore unreasonable to include the GLC's spending on supporting LRT in this comparison. We have done our figures. I could go on at greater length, but perhaps the noble Lord, Lord Bruce, will allow me to turn to the amendment itself, which reads:
"Before the abolition date …"
there shall be
"a report detailing the proportion of the budgeted net revenue expenditure of the Greater London Council and each metropolitan county in the financial year 1984–85 which, had this Act been in force, would have been in that year expenditure of the councils of London boroughs or metropolitan districts",
and so on—meaning all the successor bodies. I am sure that the noble Lord will accept that reading. This amendment should never be implemented, for one single, simple reason. We do not know, we shall never know, how the bodies in question would have done anything, because they were not there. Therefore, I invite the noble Lord to withdraw his amendment.
Lord Bruce of Donington: I am very relieved that eventually, after reading something which had no relevance at all to the amendment, the noble Lord got down to the amendment itself. I completely understand that the Government are not intellectually capable of putting themselves into the position which this amendment seeks to put them in, of thinking what the state of affairs would have been. I can assure the noble Lord that this is quite elementary in business. If he will consult with his business colleagues, who are well familiar with the process of preparing cash flows on certain assumptions, he will understand. However, the noble Lord is apparently determined not to understand the amendment. I deeply sympathise, but I am merely trying to be helpful to him, as many of his noble friends will be able to tell him afterwards. What I said was perfectly reasonable and what I am asking for is even more reasonable. I am only trying to help the noble Lord. He should not be so injured by it. I really cannot understand it.
Lord McIntosh of Haringey: I do not know whether my noble friend is seeking to withdraw the amendment, but another word or two is in order. The noble Lord, Lord Skelmersdale, is incapable by his nature of being abusive, but he has delivered a most abusive speech and he has delivered a speech to an abusive brief. It was quite irrelevant for him to speak about the views of the GLC and the way in which the GLC have presented their statistics, in the face of an amendment moved by my noble friend which puts a demand which cannot be seen as anything other than perfectly reasonable. The demand is that there should be some estimate made by the Government of that proportion of the expenditure of the directly elected authorities—in other words, the GLC and the metropolitan counties, and the London borough councils and the metropolitan district councils, respectively—which would continue to be the responsibility of directly elected bodies, and that proportion which would become the responsibility of quangos and of Government departments.
There is nothing unreasonable in that. It is a proper consideration. It does not deserve the dismissive comments of the noble Lord, Lord Skelmersdale, or the tone in which this debate is being conducted. It is not just a matter of what the GLC have been saying or, indeed, what the metropolitan counties have been saying. For example, the Society of Chief Executives in the London boroughs has expressed at some length its very detailed concern about the situation of the capital debt of the Greater London Council. It has expressed very detailed concern about staffing matters and about the conflict of evidence—and there is a conflict of evidence—on expected savings. There has been very much concern, not just about the future of individual services but about the whole financial structure of local government in London and in the other metropolitan areas. I really think that we deserve a more serious and considered reply than we had from the Minister on this occasion.
Baroness Lockwood: I, too, should like to support this amendment. It seems perfectly reasonable to ask the Government to give us a breakdown of the financial estimates which are contained in the Bill. The Ministers opposite have indicated, both at Second Reading and today, what advantages, financial and otherwise, they think are going to be achieved by the passing of this Bill. Surely therefore we are entitled to know how those sums are made up. I would suggest to the noble Lord that it is not an impossibility. I hope the Committee will forgive me if again I refer to the work of the Select Committee. When the Select Committee visited West Yorkshire in order to look at the engineering and the transport services, we were so impressed by the services which we saw that we asked for a breakdown. They were able to provide a break-down of the financial costs.
They gave four possible alternatives for those services. The alternatives were estimates on the services if they were broken down on a borough basis or on a joint basis between one or two districts or taken over in their entirety. The four estimates which the department were able to produce for the Select Committee—and it is all part of the evidence of the Select Committee, which is public property—indicated quite clearly that there was a difference in the

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cost of the services according to the kind of successor body that was to operate. Surely, if that could be done by one department, it could be done by the Government on behalf of all the services which are involved.
Lord Bruce of Donington: In order to allow the Government time to study the amendment, I ask the leave of the Committee to withdraw the amendment.
Lord Denham: My noble friend may wish to reply to the noble Baroness. The noble Lord, Lord Bruce of Donington, has made a speech this evening on one amendment, a different amendment, which was the most enormous filibuster that I have ever heard in this House. All right. We want to get this amendment out. My noble friend will reply to that.
Lord Skelmersdale: I have detailed figures which I shall be perfectly happy to make available to noble Lords, perhaps by putting them in Hansard. I did not use them for a very good reason. I thought that they would be unintelligible, certainly to me, at this time of night. And if I cannot understand them when delivering them, then of course it makes it rather difficult for noble Lords opposite to understand them.
However, perhaps I could say that the situation in London is quite clear. The GLC proper had current spending of about £350 million last year, excluding the ILEA and the payments made to LRT. That is a reasonable measure of the level of service activity. A small amount of that—around 5 per cent.—will become the responsibility of bodies outside local government. The rest becomes the responsibility of the boroughs jointly or individually. About one-quarter is spent on the fire services and three-quarters on the other activities being taken over by the boroughs.
As I have said, I had no intention of being—I cannot remember the expression used by the noble Lord, Lord McIntosh, but whatever it was—
Lord McIntosh of Haringey: It was "abusive".
Lord Skelmersdale: I had no intention of being abusive to the Committee. I delivered my speech for exactly the reasons which I have just given.
On Question, amendment negatived.
Baroness Nicol Baroness Nicol had given notice of her intention to move Amendment No. 7:
Page 1, line 15, at end insert—
(" ( ) Before the abolition date the Secretary of State shall publish, subject to the consent of the authors—

(a) all responses to the White Paper "Streamlining the Cities" (Cmnd. 9063);

(b) all responses to consultation documents associated with that White Paper; and

(c) all other representations not otherwise covered by this section which express support for all or part of the provisions of this Act.").

The noble Baroness said: In order that the Committee may recover its normal good temper and courtesy, I shall not move this amendment.
[Amendment No. 7 not moved.]
Clause 1 agreed to.
Lord Denham: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at half-past ten o'clock.

  NEW ZEALAND RUGBY TEAM: SOUTH AFRICAN TOUR
  NEW ZEALAND RUGBY TEAM: SOUTH AFRICAN TOUR
  BAND III: PROPOSALS FOR LARGE RADIO SYSTEMS
  BAND III: PROPOSALS FOR LARGE RADIO SYSTEMS
  EMPTY PROPERTY: USE FOR THE HOMELESS
  EMPTY PROPERTY: USE FOR THE HOMELESS
  YOUNG PEOPLE IN CARE: HOUSING PROVISION
  YOUNG PEOPLE IN CARE: HOUSING PROVISION
  MINESTONE: USE IN CONSTRUCTION PROJECTS
  MINESTONE: USE IN CONSTRUCTION PROJECTS
  GRAVEL EXTRACTION: ENVIRONMENTAL EFFECTS
  GRAVEL EXTRACTION: ENVIRONMENTAL EFFECTS
  DISASTER RELIEF: VE DAY MEMORIAL PROPOSAL
  DISASTER RELIEF: VE DAY MEMORIAL PROPOSAL
  UK 200-MILE ZONE: AUTHORISED ACTIVITIES
  UK 200-MILE ZONE: AUTHORISED ACTIVITIES
  DRUG DETECTION DOGS
  DRUG DETECTION DOGS
  TRANSPLANT UNITS: DISTRIBUTION
  TRANSPLANT UNITS: DISTRIBUTION
  ADDENBROOKE'S HOSPITAL: CLEANING CONTRACT
  ADDENBROOKE'S HOSPITAL: CLEANING CONTRACT
  "STATEMENT ON THE DEFENCE ESTIMATES 1985"
  "STATEMENT ON THE DEFENCE ESTIMATES 1985"
  THE BELFAST INTEGRATED OPERATIONS DOCUMENT
  THE BELFAST INTEGRATED OPERATIONS DOCUMENT
  EDUCATION ACT 1981: CHILDREN WITH STATEMENTS
  EDUCATION ACT 1981: CHILDREN WITH STATEMENTS